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Federal Reserve Bank of St. Louis
Dates of Regular Meetings of Legislatures
f Alabama, Second Tuesday in May, 1943, and every odd year.
Alaska, A Territory____ January--- — — ---------- Every odd year.
Arizona___ _________ .January------- ---------------Every odd year.
/Arkansas.— — „ — — January---------------------Every odd year.
California__ ________„January----------------Every odd year.
Colorado ______ — ____ .January----------------- „-E very odd year.
Connecticut___________ January
--------- --------- --------- — Every odd year.
Delaware_____________ January----------Every odd year.
District of Columbia____ Congress of the U. S._— Third day of January in
each year.
Florida._____ ___ _____ April_____________ - — Every odd year.
♦Georgia_______.January or Ju ly----------------— Every odd year.
January------------------------- _ Every odd year.
Every odd year.
January___________
Every odd year.
January------------------------Every odd year.
January------------------------Every odd year.
January------------------------Every even year.
January------------------------Every even year.
May__ __________________
January-------------------------- Every odd year.
Every odd year.
January------------------------Every
odd year.
January------------------------Every
odd
year.
January------------------------Every
odd
year.
January_______ _ —
Every
even
year.
January-----------------------^ Mississippi---------------------Every
odd
year.
_ January ___________
V M iR S f m r i
Every odd year.
Montana ------------------- — __January------------------------Every odd year.
Nebraska------------------------ __January------------- ----------Every odd year.
Nevada -------------------------- January-----------------------Every odd year.
New Hampshire-----------__January------------------------Every year.
January
________
N p w Tp r s p v
Every odd year.
January _____________
N f> w M p y i c o
Every year.
New York---------------------- . . . January-----------------------Every odd year.
January----------------North Carolina..— -Every odd year.
January----------------North Dakota----------Every
odd year.
January___________
Ohio
Every
odd year.
.
.
.
January---------------Oklahoma --------------Every
odd year.
Oregon------------------- __January--------------- Every
odd year.
Pennsylvania — ------- ...January — — -----Every
year.
January___________
Philippine Islands-----Every
year.
Rhode Island..— ---- January---------------January---------------- ___ Every year.
jSouth Carolina--------Every odd year.
JSouth Dakota----------- January---------------Every odd year.
is/ Tennessee--------------- January--------- ------Every odd year.
Texas___ 1-------------- January---------------Every odd year.
January
_________
Utah
Every odd year.
January----------------Vermont --------—----Every even year,
January------ --------Virginia----------------Every odd year.
Washington------------ January__________
Every odd year.
West Virginia, 2nd Wednesday in January _
Every
odd year.
January---------------W isconsin------------Every
odd year.
January---------------W yoming---------------
Idaho -------------- .----------- —
^Illinois
____
^/indiana--------------------------Iowa— !--------------------------¿Kansas----------------------------vfKentucky—_ — ------------Louisiana ----------------------Maine_____________________
Maryland ----------------------Massachusetts —— —
/Michigan-------------------------
*N ote: O rg a n iza tio n se ssio n li m i te d to te n d a y s b e g in n in g se c o n d M o n d a y in J a n u a ry . R e g u la r
se ssio n s l im ite d to s ix ty d a y s b e g in n in g th e second M o n d a y a fte r J u ly 4 or p r io r to th a t tim e , i t th e
iL e g is la tu m a tth e o rg a n iza tio n l e s s io n so v o te s. In b o th 1933 a n d 1935, th e L e g isla tu re v o te d to h o ld
th e re g u la r session o f s ix ty d a y s im m e d ia te ly fo llo w in g o r g a n iz a tio n se ssio n .
t O rg a n iza tio n sessio n se c o n d T u e sd a y in J a n u a ry n e x t su cc eed in g th e e le c tio n o f leg isla to rs n o t
lon ger th a n te n d a ys, n o o th e r b u sin ess.
1948
A noikefr
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Federal Reserve Bank of St. Louis
9 **u p A o o e m e *U
For the greater convenience of Directory users,
the List of Bank Recom m ended Attorneys is bound
separately, a n d a copy m ailed to all subscribers
shortly after delivery of the Directory .
W e are
constantly
endeavoring
to
make
the
BLUE B O O K of greater service a n d convenience
to users and, we believe, this new arrangem ent
of the Attorney Section will make the Directory
less bulky a n d therefore easier to handle a n d use .
W e also believe that users of the Attorney List
will find that, compiled in a separate book, it will
be more convenient, efficient a n d serviceable.
INTEREST RATES, GRACE ON SIGHT DRAFTS, AND STATUTES OF LIMITATION
For further information see also “Laws” of each State, indexed in back of this Volume
STATES
AND
TERRITORIES.
Alabama — -----------A laska___________
Arizona-----------------Arkansas--------------California ------------Colorado--------------Connecticut----------Delaware--------------District of Columbia.
Florida______ _____
Georgia-----------------Hawaii-----------------Idaho ____________
Illinois______—-----Indiana-----------------Iowa______________
Kansas.
Kentucky---------- ----Louisiana---------------Maine_____________
Maryland___ _— -----Massachusetts-------- Michigan— --------—
Minnesota--------------Mississippi — -— —
Missouri— ------------ —
Montana______— —
Nebraska---------------Nevada--------- -------New Hampshire—----New Jersey------------ a
New Mexico----- -----New Y ork-------------North Carolina------North Dakota-------—
Ohio------- --------------Oklahoma-------- -----Oregon-----------------Pennsylvania----------Philippine Islands.
Puerto Rico-----------Rhode Island----------South Carolina-------South D akota--------Tennessee------ T- ~ T
Texas------- ------------U ta h --------- i --------Vermont--------------Virginia-------1-------Washington-----------West Virginia-------Wisconsin-------------Wyoming--------------A lberta---------------British Columbia----Manitoba.
New Brunswick — ;----Nova Scotia-------------Ontario-------Prince Edward Island.
Quebec--------------------
STATUTES OP
INTEREST RATES—NOTES AND ACCEPTANCES—GRACE
Notes and
Notes
Rate
Acceptances
Legal
and
Open
Holidays
by
Due on
Rate of
W ritten
Acfalling
on
Sight
Notes.
i n t e r e s t Contract
Con
ounts.
Sunday
Holi Half
tracts.
are
days. Days.
Drafts,
Bills.
observed
Are payable
the day—
fears. Years.
Per ct. Per cent, and protestable
t he day—
6
3
No grace No grace
After
After After
6
6
No grace No grace
After
After After
8
6
3
No grace No grace
A fter
After
8
5
3
No grace No grace
After
After After
10
I 4
4
No grace No grace
After
After
10
6
6
No grace No grace
After
Any rate If After
6
6
No grace No grace
After
After After
12
6
3
No grace No grace
A fter
After After Z
6N
3
3
No
grace
No
grace
After
After
After
8
5
3
No grace No grace
After
After After
10
6
4
No
grace
No
grace
After
After
After
8E
No grace No grace
After
After A fter
12
5
4
No
grace
No
grace
A
fter
After
After
8
10
5
No grace No grace
A fter
7(m) After After
10a
6
No
grace
No
grace
A
fter
A
fter
After
8
10
5
No grace No grace
After
7(m) After After
5
3
No grace No grace
A fter
d
After
10
5-15
5
No grace No grace
On
After
After
6®
5-10
3
No
grace
No
grace
A
fter
A fter
After
8X
6-20
6
No grace No grace
A fter
Any rate After After
3-12
3
No grace No grace
After
6(e) (M) After After i
6
61
No grace Grace
After
Any ratei A tteri A tte ri
6
6
No grace No grace
After A fter Z After
7
6
6
No
grace
No
grace
After
Z
After
A
fter
8
6
3
(c)N o grace
Grace
After A tte ri
(C)
8
10
5
No
grace
After
A
fter
After
No
grace
8
5
8
A fter
After After
No grace No grace
10
5
4
After
After A fter
No grace No grace
9 (k )
6
4
No grace No grace
After
After
12
6
6
No grace Grace
After
Any rate H After After
6
6
After
No grace Nograce
6B After A fter t
6
4
No
grace
No grace
After
After After
12
6
6
No grace No grace
After
61B 1 After After
3
3
No
grace
A fter
After
No grace
6
6
6
No grace No grace
After
7
After A fter
15
6
After
After After
No grace No grace
8
5
3
After A fter(f A fte r(h ) No grace No grace
10
6
6
After
No grace No grace
10
After A fter
6
6
No
grace
A
fter
A
fter
No
grace
After
6U
10
6
A fter
No grace No grace
♦
After A fter
A fter
No grace No grace
,After
12
6
6
A fter
A fter A fter
No grace Grace
V
6
6
A
fter
No grace No grace
After After
7
6
6
After
After After
No grace
8
6
6
A fter
After After
No grace
60
4
2
A fter
A tte ri A fter
No grace
10
4
6
A fter
No grace
10P After After
6-14
6
A fter
No grace
After After
8
3
5
After
No grace
6B1 A fter A fter
3
6
After
No grace
A fter
12
5
10
A fter
No grace
After A fter
6A
6
6
After
No
grace
After
10
8
10
After
No grace
After After
10
6
6
Grace
A
fter
Grace
Any ratei After
6
6
Grace
A fter
Grace
Any ratei After
8
6
A
fter
Grace
Grace
Any ratei A fter
6
6
Grace
After
Grace
Any ratei After
6
6
Grace
After
Grace
Any ratei After
6
6
Grace
After
Grace
Any ratei After
6
6
Grace
Grace
Any rate A fter
A fter
5
5
Grace
Grace
Any ratei After
A fter
6K
6
Grace
Grace
Any rate! After
After
S a t u r d a y Is a h a lf h o lid a y o n ly d u r in g J u n e , J u ly a n d A u g u s t in c itie s o f 2 5 ,0 0 0 .
W h e re i t is a h a lf h o lid a y , p r e s e n ta tio n fo r a c c e p ta n c e m a y b e g iv e n o n t h e
n e x t s e c u la r o r b u s in e s s d a y .
( t) A n y r a t e a g re e d u p o n i n w r itin g is le g a l o n c o lla te r a l d e m a n d lo a n s o f $5 ,0 0 0
a n d o v e r.
(^[) S e e la w s , in d e x e d in b a c k o f t h i s v o lu m e .
Asrt S e c tio n 8 8 3 - i- 1 4 o f t h e K e n tu c k y S t a tu t e s p r o v id e t h a t a p e t t y lo a n c o m p a n y ,
m
D roD eriy lic e n s e d m a y l e n d n o t e x c e e d in g $ 3 0 0 .0 0 o n a n i n te r e s t r a t e o f 3 Mi %
p e r m o n th o n a n y p a r t o f t h e u n p a id p r in c ip a l b a la n c e n o t in e x c e ss o f $ 1 5 0 .0 0
a n d 234 % p e r m o n th o n t h e r e m a in d e r .
1 2 % w h e n t h e r e is s e c u r ity ; 1 4 % w h e n th e r e is n o s e c u r ity .
t m » 8 “ i n s t r u m e n t s fa llin g d u e S a t u r d a y a re t o b e p r e s e n te d f o r p a y m e n t o n
^
th ft ripvt, s u c c e e d in g b u s in e s s d a y . e x c e p t t h a t in s t r u m e n t s p a y a b le o n d e m a n d
m l y a t t h e o p tio n o f t h e h o ld e i, b e p r e s e n te d f o r p a y m e n t b e fo re 12 o ’c lo c k
n o o n o n S a t u r d a y , w h e n t h a t e n ti r e d a y is n o t a h o lid a y .
( a) D e b t s c h a rg e d o n l a n d a lth o u g h b y s e a le d in s t r u m e n t s a r e o u tla w e d in t e n
y e a rs .
(a) N o te s : 10 y e a rs, C o n tr a c ts in w ritin g o th e r t h a n fo r p a y m e n t o f m o n e y : 20 y e a rs.
(b) n o l im ita tio n s o n j u d g m e n ts o b ta in e d i n t h is s t a t e a g a in s t fo re ig n c o rp o r a tio n s .
(A)
/*•,
(
(B )
( B 1)
(C)
(D )
(E )
(F )
(G )
(H )
(I)
w
(J);
(K )
(L )
(M )
,-s o rta v s o t G raCe a llo w e d o n D r a f ts o r B ills o f E x c h a n g e m a d e s e p a r a te w ith in
(c) th fe S t a te a t t i g h t , u n le s s t h e r e is a n e x p re s s s ti p u la t io n t o t h e c o n tr a r y . (D e c .
2741. C o d e 1930.)
(d) N o p r o v is io n e x c e p t b a n k s m a y p a y c h e c k s a n d d r a f t s o n S a t u r d a y a f te r n o o n
o r le g a l h o lid a y .
(e) A c o rp o r a tio n m a y a g re e t o p a y a n y r a t e o f i n te r e s t a n d m a y n o t p le a d u s u r y ,
m W h e n S a t u r d a y is n o t o th e r w is e a h o lid a y p r e s e n tm e n t f o r a c c e p ta n c e m a y b e
' • m a d e b e fo re 1 2 :0 0 o’c lo c k n o o n o n t h a t d a y .
T;
T <—ncpa u n d e r S m a ll L o a n A c t '$ 3 0 0 .0 0 m a x im u m ) . S t a t e B a n k in g D e p a r t (g) m e n t d e te r m f n e s a n d fix es r a t e s b u t c a n n o t e x c e e d 3 )4 % P e r m o n th o n u n p a id
p r in c ip a l b a la n c e o f $ 1 0 0 .0 0 o r le ss o r 2 )4 % i n e x c e s s o f $ 1 0 0 .0 0 .
fh l J a n u a r y 1, F e b r u a r y 2 2 , J u ly 4 , D e c e m b e r 25 a r e t h e o n ly h o lid a y s f a llin g o n
( ) s u n d t y to b e o b s e rv e d t h e d a y fo llo w in g .
_
_
,
(j) 8 y e a rs o n s p e c ia ltie s : 15 y e a rs o n a c tio n s o f C o v e n a n t o f s e is in . ( S ta t u te s o f
L i m i ta t io n ) .
(R) See “ C h a tte l L o a n s “ u n d e r N e b ra s k a L a w s.
£j oor
/ \ TT«/!/«*
Qm»li T,nan A c t lic e n see s m a y c h a rg e i n te r e s t a t n o t t o e x ceed
(m ) p e r m o n th u p o n ‘a n y U n p a id bStaSSS o f t h e p r in c ip a l o f t h e lo a n n o t e x c e e d in g
$150 a n d 2 % p e r m o n th o n a n y p a r t o f t h e l o a n in e x c ess o f $1 5 0 a n d n o t
(N )
(O)
(P)
(R )
...
Judg
ments.
Sealed
Instru
ments
wit
nessed,
Years.
Years.
20
10
5
3-10
51
6-201
201
10E
12
20
7
10
10
6
5
6
7L
20
20(n)
5
15
10
20
12(b)
201
10
10
7
10G
10
5-101
6
20
20
7
20
10
10
26x
5
10
20T
101
5
10
20
10
5
15
10
20
12
20
10
I
6
17
20 8.
12
20W
20
_____________
6
10
8
6
20
16
—
20
10
6
15
5
10
20J
10
20
6-20
201
10 '
4
6
8-15(j)
10
6D
10
10-20
10
6R
20
6K
20
20
20
20
5-30
6
20
20
10-201
10
10
8
8
10
6
10E
10-20
5
10
20
10
20
20
20
20
30
10
C o rp o ra tio n s n o t e n title d t o s e t u p d efen se
i^ S n in s
($300 m in im u m : in te re s t r a te is 314 % p e r m o n th o n t h e firs t $ i w , o r rem am
b a la n c e , a n d 2 34% p e r m o n th o n r e s t.
— n m inim um )
A c o rp o r a tio n c a n n o t p le a d u s u r y . U n d e r s m a ll l o a n a c t ($300 m in i
i n te r e s t r a t e is 2 34 % p e r m o n th .
A c o rp o r a tio n c a n n o t p le a d u s u a r y .
G e n e ra lly t h e d a y fo llo w in g b u t th e r e is n o leg a l p ro v is io n f o r tm s .
I f i t c o n s ti tu t e s a c o n tr a c t.
M u s t b e rev iv e d e v e ry 10 y e a rs t o c o n tin u e a s lie n o n r e a l e s ta te .
tQ
U n d e r S m a ll L o a n A c t, a s a m e n d e d 1935 s e ss io n , i n te r e s t o n lo a
$ 3 0 0 m a y b e c h a rg e d a t t h e r a t e o f 1 )4 % P e r m o n th .
M u s t b e ren ew ed e v e ry th r e e y e a rs t o c o n tin u e a s a Ue® °® r e ®" —0 0 ¿ . y M
U n d e r s m a ll lo a n a c t a s a m e n d e d 1933 in te r e s t o n lo a n s u p t o $
c h a rg e d a t r a t e o f 2 % p e r m o n th .
. —a
— a the
T h e B a n k A c t l im it s t h e r a t e c h a rg e d by in c o r p o r a te d b a n k s t o 7 % . a n ^ %
M o n e y le n d e rs ’ A c t l im its t h e r a t e t o b e c h a rg e d b y m o n e y ie n a e r
U n d e r T h e S m a ll L o a n s A c t ($ 5 0 0 .0 0
v a n c e d a n d m o n th ly b a la n c e s r a t e 2 % P e r t a o n t h fo r l o a n
“ fle e
fl{teen
o r le s s a n d 1 % p e r m o n th lp lu s s u c h p r o p o r tio n o f 1 % p e r m o n tn a s
is o f t h e p e rio d o f t h e l o a n e x p re s s e d i n m o n th s f o r a lo n g e r p e n o u .
R e b u t ta b l e p r e s u m p tio n o f p a y m e n t.
L im ita tio n s f o r c h a rg e s o n l a n d is t e n y e a r s .
J u d g m e n t s m u s t b e r e v iv e d e v e ry 7 y e a rs , m a x im u m 20 y e a rs .
L icen sed lo a n b ro k e rs m a y c h a rg e 3)4 % p e r m o n th o n
O n c o lla te r a l d e m a n d l o a n s o f S5>0°P a n d o v e r, i ^ a ^ e h a r g e 'o V o o n loans
u p o n in w r itin g is le g a l. L ic e n s e d l o a n b r o k e r s m a y c n a rg e o /o
n o t e x c e e d in g $500., w i t h a n a d d it i o n a l in v e s t ig a t io n fe e n o t t o e xceed
j
L icen sed S m a ll L o a n C o m p a n y m ax im u m $ 300.00 im ay
A n n u a lly or
m o n th fo r n e c e s s a ry e x p e n se s o f c lo sin g l o a n p lu s 6 % in te r e s t a im
U n d er PSm T ll L o a n s A c t ($300 m a x im u m ) i n te r e s t o f 3 % a m o n th m ay W
c o n tr a c te d .
E x c e p t c h a rg e s o n l a n d w h e n i t is t e n y e a r s .
N o s t a t u t e : c o m m o n la w p r e s u m p tio n o f p a y m e n t a p p lie d .
ft*
(T) M ust be revived every five years after entry, to retain lien on ^
(U)
m o n th s . Loan n o t e n fo rceab le if A c t is v io la te d .
e8^ balance,
■
interest,:
( W ) N o te u n d e r s e a l d o e s n o t h a v e t o b e w itn e s s e d t o b e g o o d fo r tw e n ty y
W it h o u t s e a l, g o o d f o r th r e e y e a r s .
k
n n0 m ay be
e r e s t o n lo a n s u p t
(X) Uc hnadrge re ds ma ta llt h em roant ee yo fl e3n)4d e%r s p ae cr t,m ionnt th
. A c t N o . 40 o f 1924
(Z) Demand instrument, may,.at option of .h pldey. b e p r ^ e i r t e d --------- ------1
n o o n o n S a t u r d a y u n le s s s u c h S a t u r d a y b e a w h o le h o lid a y .
(n ) j u d g m e n t o f a c o u r t o f r e c o r d is a lie n o n r e a l e s ta t e f o r t e n y e a rs a f te r
t h e r e n d itio n th e r e o f.
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Federal Reserve Bank of St. Louis
LIMITATIONS
1950
DIGEST OF BANKING AND COMMERCIAL LAWS
C O M PIL E D E X P R E S S L Y FOR E A C H E D IT IO N OF T H E R A N D M cN A L L Y B A N K E R S D IR E C T O R Y
by prominent Attorneys in each State of the United States and each province of Canada, the name
of the compiler appearing at the head of each State. The Laws are entered alphabetically
according to States. Provinces of Canada are listed last.
IMPORTANT:
The states in which the Uniform Negotiable Instruments Law is in effect are listed on page
2108.
For Tabulated In form ation , for q uick reference in regard to Interest Rates, Days of Grace,
and Statutes of Limitations, see page 1938.
of paym ent is given to one or more creditors, shall enure to the benefit
of ail the creditors equally, but this section shall not apply to m ort
gages, pledges, or pawns given to secure a debt contracted contem
poraneously with the execution of the m ortgage. All assignm ents by
a debtor made with intent to hinder, delay, or defraud creditors are
void. All deeds of assignm ent for the benefit of creditors shall, as
soon as executed, be filed and recorded in the office of the judge of
probate of the county in which the property is situated. Every
judgm ent confessed, attachm ent procured by the debtor, or other dis
position of property by which a debtor conveys all, or substantially
all, of his property which is subject to execution in paym ent or as
security for a debt shall be deemed a general assignment.
A tta c h m e n t process will issue upon affidavit by the creditor or his
agent of the am ount due and th a t the debtor absconds, or resides,
out of the State, or secretes himself so th a t process cannot be served
upon him, or is about to remove out of the S tate, or has or Is about to
fraudulently dispose of his property, or fraudulently withholds money,
chattels, or effects which are liable to the satisfaction of his debts:
plaintiff m ust give bond in double the am ount claimed. A ttachm ents
will issue for th e following dem ands: 1. To enforce the collection of
a debt, w hether it be due or not, a t the tim e the attachm ent is taken
out. 2. For any moneyed dem and, the am ount of which can be
certainly ascertained. 3. To recover dam ages for a breach of con
tra c t when th e dam ages are not certain or liquidated. 4. W hen
th e action sounds in dam ages m erely in following cases, v iz.: 1. W here
defendant is a non-resident. 2. W hen the defendant has absconded.
3. When defendant has secreted himself. 4. When defendant is
about to remove from the S tate. 5. When defendant is about to
remove his property from S tate. 6. W hen defendant is about to or
has fraudulently disposed of his property or fraudulently withholds
same. One non-resident m ay sue out an attachm ent against another
non-resident by m aking oath th a t the defendant has not sufficient
property within the S tate of his residence wherefrom to satisfy the
debt. A ttachm ents m ay be sued out in aid of a pending suit when
any of the above grounds exist by making affidavit and executing
bond. G arnishm ent process will issue in aid of attachm en t in aU
such cases. G arnishm ent m ay be dissolved by giving bond. In all
cases of attachm ents sued out by a resident solely upon the ground
th a t the defendant is a non-resident, the attachm ent m ay Issue w ith
out giving bond, b ut if defendant appears and pleads, bond m ust be
given or the attach m en t dismissed.
B a n k s. S tate Banks of discount and deposit m ay be established
by individuals or Corporations, b u t before organization m ust obtain
perm it from S uperintendent of Banks. Before issuing perm it Super
intendent of Banks m ust investigate as to public necessity of bank in
com m unity where sam e is proposed and th e fitness and character of
individuals proposing to organize bank, or if corporation, th e character
and fitness of stockholders proposing to incorporate bank. Appeal
from Superintendent’s refusal to issue perm it m ay be taken to S tate
Banking Board.
Paid capital stock of s ta te banks shall be n o t less th a n 25,000 in '
cities of less th an 3,000 population; in cities of 3,000 to 6,000 popu
lation, 50,000; in cities of 6,000 to 50,000 population, 100,000; in
cities of over 50,000 population, 200.000.
R e s e r v e s . Cash reserve of 15% of dem and deposits required to be
m aintained; three-fifths of which am ount m ay consist of balances
due by banks and bankers.
Reserve of 10% of net earnings required to be set aside annually
until surplus equals 20% of capital stock. Dividends in excess of
90% of net earnings prohibited u n til such surplus equals 20% o f
th e capital stock.
There is no stockholder’s liability in Alabama, other th an am ount
subscribed to capital stock; in other words, if th e subscriber has paid
for his capital stock, there is no liability.
Subject to th e foregoing, banks are incorporated under th e general
banking incorporation laws of the S tate.
T here is no provision of law for the establishm ent of banks of issue.
Open depositors and savings depositors are on equal footing in th e
event of insolvency.
Banks are prohibited from receiving, directly or indirectly, a greater
rate of interest th a n 8% .
S tate Banks are under th e jurisdiction and control of Superintendent
of Banks, subject to review by S tate Banking Board.
E x a m in a ti o n s a n d R e p o r t s . Exam ination of bank by superintendent
required to be m ade a t least twice each year provided, however, only
one annual exam ination required of bank, deposits in which are
insured by Federal D eposit Insurance C orporation. AU banks
required to m ake reports on call of superintendent a t least twice a year.
L o a n L im ita tio n s .
Loans to officers and employees prohibited
w ithout approval of B oard of D irectors of Loan Com m ittee; and in
no event to be in excess of 20% of capital surplus and undivided
profits.
Loans in excess of 20% of capital unim paired surplus and undivided
profits to any one person, firm or corporation prohibited. Loans
exceeding 10% of capital surplus and undivided profits m ust be am ply
secured. Loan lim itations do n ot apply to bona fide loans m ade on
security of agricultural, m anufactured, industrial products, livestock
or other liquid securities having a m arket value and for which there
is a ready sale in open m arket, title to which by appropriate transfer
is taken in th e nam e of th e bank, in which event n ot more th a n 80%
of m arket value shall be loaned thereon.
Lim itations do n ot apply to bonds o f th e U nited States, or this
sta te or the several counties, districts of m unicipalities thereof.
Loans on stock of own bank prohibited.
B r a n c h B a n k in g .
Recent Act perm its banks having capital and
surplus in excess of one million dollars and in counties in excess of
250,000 inhabitants to establish branch banks in such counties.
According to present population this applies only to Jefferson C ounty.
B ills of L a d in g . Uniform bill of lading act in force. Bills to
specified person non-negotiable. Bills to order of are negotiable.
B lue Sky L aw . I t is unlawful to sell or offer for sale in this
S tate any speculative securities w ithout first obtaining perm it from
the State Securities Commission.
C o lla te ra ls. Receipt m ust be given if dem anded. Pledges or col
laterals not transferable w ithout transfer of the debt; after two days
notice in writing collaterals m ay be sold, by advertising for five days
a t public outcry.
C o n d itio n a l S ales are good between the parties, but void where
personal property delivered to vendee as against DurChasers for a
valuable consideration, m ortgages, judgm ents creditors, and land
lords w ith liens w ithout notice, unless in writing and recorded in the
office of th e probate judge.
SY N O P S IS OF
THE LAW S 'OF ALABAMA
RELATING TO
B A N K IN G A N D COM M ERCIAL U S A G E S .
Revised by B a l l a r d & B a l l a r d , A ttorneys a t Law, F irst N ational
Bank Bldg., M ontgom ery, Ala.
A c k n o w le d g m e n ts or proof of real estate Instrum ents m ay be
taken before one of the following officers: 1st. W ithin this S tate,
Judges of th e suprem e court, court of appeals and circuit courts and
the clerks of such courts, chancellors, registers in chancery, judges of
the courts of probate, justices of the peace, and notaries public. The
official should certify th a t the person signing the conveyance is known
to him and acknowledges th a t “ being informed of the contents of the
conveyance he executed the sam e voluntarily on th e day th e sam e
bears d ate.” 2d. O utside of S tate—Judges and clerks of any federal
court, judges and clerks of any court of record in any sta te , notaries
public, or commissioners appointed by th e governor of this S tate or
commissioners of deeds for th e sta te wherein the acknowledgm ent is
taken beyond th e lim its of the U nited States, by the judges of any
court of record, m ayor or chief m agistrate of any city, town or borough,
or county, notaries public, or by any diplom atic, consular, or com
mercial agent of th e U nited States. Foreign officers m ust attach
official seal which fact m ust appear in certificate. For form s of
deeds see “ Conveyances.”
A ctio n s. All ordinary suits a t law are commenced by suing out
a summons which m ust be accom panied by a com plaint stating the
cause of action. N on-resident plaintiffs are required to give security
for costs. When two or more persons are jointly bound by judgm ent,
bond, or agreem ent, th e obligation is several as well as joint.
A ctio n s o n A c c o u n t. Suits upon open accounts m ay be accom
panied by itemized, verified statem ent of the account, which when
(lied with th e summons and com plaint m ay be admissible in evidence
to prove th e account unless its correctness is denied under oath by
defendant within th e tim e allowed for pleading. Such statem ents
must be sworn to by a person having knowledge of the correctness
of the account and m ust show th a t the am ount is due and unpaid
after allowing all offsets and counter claims and when sworn to out
side State, m ust bear official seal of officer.
A cce p ta n ce. Unconditional promise in writing to accept a bill
before or after drawn is good in favor of all who take it upon faith
thereof for value. T he holder m ay decline a qualified acceptance and
treat the bill as dishonored; if he takes qualified acceptance drawer
and endorsers are discharged.
A C h e ck is a bill of exchange on a bank payable on dem and;
must be presented -within reasonable tim e after issue and if dishonored,
notice m ust be given or draw er is discharged to the extent of loss
caused by delay; does not operate to assign any part of draw er’s funds
In bank, and bank is n ot liable Unless it accepts or certifies. If holder
has check certified the draw er and endorsers are discharged. The
making, uttering, drawing, or delivery of a check, draft, or order
upon which paym ent is refused upon due presentation because of
lack of funds shall be deemed prim a facie evidence of intent to de
fraud and p arty m ay be convicted of a misdemeanor.
The present negotiable instrum ent law of Alabama, consisting of
198 sections w ent in to force A ugust 26, 1909 (Acts 1909, page 156).
Its provisions do n o t apply to instrum ents m ade prior thereto, and
is substantially uniform negotiable Instrum ents Act. T he a ct so
m aterially changes th e law in this S tate as to suggest th e propriety
of special exam ination in any doubtful case.
A d m in is tr a tio n of estates is had in the probate courts of dece
dents’ residence. All claims m ust be presented by filing a verified
statem ent thereof in the office of the Judge of P robate in which
letters are granted within six m onths after granting of letters testa
m entary or of adm inistration. Adm inistration of intestate is granted,
1st: To th e husband or widow; 2d: The next of kin entitled to share
in the distribution of the estate; 3d: T he largest creditor of the in testate
residing within this S tate; 4 th: T he C ounty or general adm inistrator;
5th: Such other person as th e judge of probate m ay appoint. There
can be no appointm ent until after expiration of five (5) days from
date of death. Preference m ust be exercised within forty days or
rights relinquished. If several entitled to adm inister, m en are pre
ferred to women and whole blood to half blood. Nonresident execu
tors and adm inistrators m ay sue in this S tate by recording in probate
judge’s office copy of letters and giving bond to faithfully adm inister
Property. A nonresident m ay be appointed adm inistrator or executor
of a deceased resident’s estate. Adm inistrations m ay be rem oved
to court of equity.
A ffidavits m ay bo taken within the S tate before every judge or
clerk of any court, justices of the peace, and notaries public or any
other person Invested by law with judicial functions. Outside the
State and within th e U nited S tates m ay be tak en before any judge or
clerk of federal court, judge of any court of record in any state,
notaries public and commissioners appointed by the governor. For
eign officer taking affidavit m ust attach seal which fact m ust be
recited in th e jurat.
Aliens. “ Foreigners who are, or m ay hereafter become, bona fide
residents, of this S tate, shall enjoy the same rights in respect to th e
possession, enjoym ent, and inheritance of property as native-born
citizens.”— Sec. 34, Const.
A lte ra tio n s. When a negotiable Instrum ent is m aterially altered
without the assent of all the parties liable thereon, it is voided
except as against a p arty who has himself m ade, authorized, or
assented to the alteration and subsequent endorsers. B ut when an
nitnu n eiit has been m aterially altered and is in the hands of a holder
in due course, not a p arty to the alteration, he m ay enforce paym ent
cnereof according to its original tenor. M aterial alterations consist
ni an y ,cfianf?cs m date; sum payable Interest on principal; tim e or
Place of p a y m e n t; num ber and relation of parties: medium or currency
in which paym ent is to be made.
Assignments and Insolvency. E very general assignm ent made
5?j a debtor, or conveyance by a debtor of substantially all of his
property in paym ent of a prior debt, by which a perference or priority
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54
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1951
1952
B A N K IN G A N D C O M M E R C IA L L A W S— A L A B A M A
Conditional contracts of sales must be recorded in office of the
Judge of Probate of the county in which the property is located,
to be valid against subsequent purchasers, judgment creditors, or
mortgagees without notice, except in counties having a population
of more than 80,000 when contract is for a less amount than »200.00.
If the property is removed to another county, contract must be
recorded in latter county within three months after removal.
Conveyances, All persons of the age of twenty-one years, not
under some legal disability, may convey their real estate or
any interest therein by instrument in writing signed by the grantor
or his agent duly authorized in writing, and attested by one witness, or
If the grantor cannot write, by two witnesses who are able to write,
and who sign their names as witnesses. If the grantor is not able to
sign his name it must be written for him, and the words “his mark
written over or against it. The person writing his name must sign
as a witness. A parol lease,for less than one year is valid. A married
woman over eighteen years of age may convey dower in her husband i
lands, and has generally the same rights as married women over twentyone years of age. The husband must join in any conveyance of the
wife’s separate estate. Conveyances, to operate as notice, must be
acknowledged and recorded. General acknowledgment must be
signed to make instrument self-proving. Married women must
acknowledge twice in the event the homestead is conveyed. Form
of general acknowledgment is as follows:
The State of Alabama....................... County.
* *
.................................................................................. a (style of officer),
hereby certify that.................................................. whose name is signed
to the foregoing conveyance and who is known to me, acknowledged
before me on this day, that, being informed of the contents of the
conveyance, he executed the same voluntarily on the day the same
bears date. Given under my hand and seal, this.................. day of
.................. A. D
(Seal^
.................................................. Notary Public
No time is required within which conveyances shall be recorded.
They operate as notices from date of delivery to probate judge for
record. (See Acknowledgments.) They may be used as evidence
without further proof of execution. Leases limited to 99 years, but
lease for more than 20 years void as to excess unless acknowledged and
approved as real estate conveyances and recorded in one year after
execution. A married woman must make the following acknowledg
ment to a conveyance of a homestead:
State of.................. . County of..................
I
........ .. .judge of.............. (or other officer) do hereby certify
that, on the.................. day of........................ 1 9 . . . . , came before me
the within named..........................................known to me (or made
known to me) to be the wife of the within named............ ........... ....
who, being examined separate and apart from her husband touching
her signature to the within.......... .
acknowledged that she signed
the same of her own free will and accord, and without fear, constraint,
or threats on the part of her husband.
.
In witness whereof, I hereto set my hand and official seal this
...................... day o f.......................19. —
(Official Character.)
Corporation to make following acknowledgment:
. . . . ...... .................... ....... that........................................................... .
whose name as....................................of the said corporation, is signed
to the foregoing conveyance, and who is known to me, acknowledged
before me on this day that, being informed of the contents of the
conveyance, he, as such officer, and with full authority, executed the
same voluntarily for and as the act of said corporation.
Corporations. All corporations are formed under the general
state law; creation under a special act is not permitted. Three or
more persons may incorporate and articles of incorporation are filed
in the office of the Judge of Probate in the county in which the cor
poration has its principal place of business. Certificate of incorporation
must contain a verified statement showing the amount of capital stock
paid in, which shall not be less than 20% of the total subscription.
Stockholders are liable to creditors for unpaid subscriptions to the
capital stock. Corporations may be sued in any county m which
. it does business by agent,
,. , , , *
» i:
Days of Grace are abolished. (See Negotiable Instruments.)
Depositions. In cases at law, depositions may be taken of wit
nesses who cannot be present at the trial in the following cases:
When the witness is a female; when the witness is too sick to attend
court; when the witness resides more than 100 miles'from the place of
trial, or is absent from the State; when the witness is about to leave
the State, and not return in time for the trial; when the witness is the
sole witness of the facts: when the witness is one of the officers desig
nated in Code section 7744, Code of 1923 (last code). Affidavit must
be made of one of the above facts, and of the materiality of the witness.
May be taken on interrogatories by a commissioner appointed by the
court for that purpose. The commissioner may be any suitable person,
need not be an officer. In equity suits, where witnesses live within
100 miles of the place of trial, depositions may be taken by oral
examination before the register, or a special examiner, or commissioner
appointed for the purpose.
Descent and Distribution. The real estate of persons dying
intestate, in this State, descends, subject to the payment of debts and
the widow’s dower as follows: First to the children of the intestate
or their descendants per stirpes in equal parts. Next, to the parents.
If they survive, in equal parts. If only one parent survives, then
one-half to such parent and one-half to the brothers and sisters of the
deceased or their descendants, and if there be no brothers and sisters
and their descendants, then the whole estate shall go to the surviving
parent. If there are no children or their descendants, and no father
or mother, then to the brothers and sisters of the intestate, or their
descendants, in equal parts. If there are none of the above to take,
then the whole to the husband or wife of the intestate, and if there be
no husband or wife or none of the foregoing living, then to the next
of kin in equal degree In equal parts. If there are no next of kin
it escheats to the State. The personal estate is distributed the same
as the real estate, except that if there are no children the widow is
entitled to all of the personal estate. If but one child she takes onehalf. If not more than four children to a child's part and if more
Him four to one-fifth. Posthumous children take as others. Illegiti
mate children inherit from their mother. The husband upon the
death of the wife is entitled to half of her personal estate absolutely,
and to the use of all of her real estate for life, unless he has been divested
of all control over her estate by a degree of the chancery court.
Damages recovered by personal representative for death of deceased
are distributed according to statute of distribution and are exempt
from payment of debts.
Discovery. Either party to a suit at law or in equity may examine
his adversary by filing written interrogatories and making affidavit
that answers will be material evidence for him.
Dower. Unless the wife has relinquished her right of dower in the
manner provided by statute she is. upon the death of the husband,
entitled to dower In all lands of which the husband was seized in fee
during the marriage, or of which another was seized to his use or to
which he had a perfect equity, having paid all the purchase money
therefor. The dower interest is one-half when the husbanu leaves no
Hnflfti descendants, and one-third when the estate is insolvent or the
husband leaves children or their descendants. If the wife has at the
death of the husband a separate estate equal in value to her dower
Interest, she shall not have dower, and if of less value is only entitled
to such amounts as with her estate will make the full value of the dower.
Executions. Property subject to: 1st: On real property to
which the defendant has a legal title or a perfect equity, having paid
the purchase money, or in which he has vested interest, in possession,
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Federal Reserve Bank of St. Louis
reversion, or remainder, whether he has the entire estate, or is entitled
to It in common with others. 2d: On personal property of the defen
dant (except things in action), whether he has the absolute title there
to, or the right only to the possession thereof for his own life, the life
of another, or a less period. 3d: On an equity of redemption in either
land or personal property, when any interest less than the absolute
title is sold. The purchaser is subrogated to all the rights of the
defendant, and subject to all his disabilities. Writ of fieri facias is a
lien only within the county in which it is received by the officer, on
lands and personalty of defendant subject to levy and sale, from the
urn« only that the writ is received by such officer and continues as
long as writ is regularly delivered to the sheriff without the lapse of an
entire term. A statement of a judgment certified by the clerk of the
court may be filed in the office of the judge of probate, which makes
the judgment a lien within the county in which it is filed for ten years
thereafter. Execution may be issued on such judgment at any time.
Executions issued by justices are liens on the property of the defen
dant, on which they are levied, from the time of the levy. An order
must be obtained from the circuit court for the sale of lands levied on
under execution from a justice’s court. No stay of execution in circuit
court except by appeal, and supersedeas bond which delays collection
until affirmance by supreme court, and entails 10 per cent damages,
with legal interest and costs. In justice’s court stay is granted on
good security, below #20, thirty days over #20, sixty days.
Exemptions, Homestead not exceeding 160 acres and #2,000 in
value.
Personal property to the amount of #1,000. Exemptions of personal
iroperty may be waived by instrument in writing except as to certain
iousehold furniture and provisions and wages to amount of #25.00
E
per month.
Foreign Corporations. Before engaging in business in the State,
corporations are required to file in the office of the Secretary of State
a certified copy of its charter and designate a known place of business
in the State and an authorized agent residing in the State upon whom
service of process may be had. Foreign corporations failing to comply
with foreign corporation laws become liable for penalty of #1,000.00
for each act which constitutes doing business in the State. Agents
of such corporations who have not complied with foreign corporation
laws are also liable for penalty of $500.00 for each act, and all contracts
of foreign corporations who have not complied with Alabama laws are
void. Foreign corporations are required to pay license fees ranging
from $25.00 upwards according to the amount of capital invested in
the State and to procure a permit on the first of each year from the
Secretary of State. Charge for this permit is $10.00 per year.
Frauds, Statu te of. In the following cases, every agreement: or
note or memo thereof, expressing the consideration, is In writing and
signed by the party to be charged: 1st. Every agreement which by
its terms is not to be performed within one year from the making
thereof. 2d. Every special promise by an executor or administrator
to answer damages out of his own estate. 3d. Every special promise
to answer for the debt, default, or miscarriage of another. 4th. Every
agreement, promise, or undertaking, made upon consideration of
marriage, except mutual promises to marry. 5th. Every contract
for the sale of lands, tenements, or hereditaments, or of any interest
therein, except leases for a term of not longer than one year, unless
the purchase money, or a portion thereof, be paid and the purchaser
be put in possession by the seller.
Garnishm ent may issue in any case after suit commenced upon
affidavit of necessity and bond as in attachment cases, or after judg
ment, without bond.
Holidays. The following are the legal holidays: Sundays; Janu
ary 1 (New Year’s Day); January 19 (Robert E. Lee’s birthday);
February 22 (Washington’s birthday); Mardi Gras Day, which is
Tuesday before Ash Wednesday; April 13 (Jefferson’s birthday):
April 26 (Confederate Memorial Day); June 3 (Jefferson Davis
birthday); July 4 (Independence Day); first Monday in September
(Labor Day); October 12 (Columbus Fraternal Day). Where
October 12th falls on Sunday there is no provision that the following
Monday is a holiday. Extra Session 1933, page 183-4. November 11
(Armistice Day); Thanksgiving Day; December 25 (Christmas Day).
If a holiday falls on Sunday, the following Monday is a holiday.
Husband and Wife. The wife has full legal capacity to contract
as ¡f she were sole, except that she can not alienate or encumber her
real estate without the husband joining in the conveyance, unless the
husband be insane or has abandoned her, or is a non-resident, or is
imprisoned under a conviction for crime for a period of two years or
more, in which cases the wife may convey it as if she were sole.
Husband and wife may contract with each other, but the wife can
not be surety for the husband. All of the property and the earnings
of the wife are her separate estate, and are not liable for the debts of
the husband. The wife must sue and be sued alone for all matters
relating to her separate estate or contracts, and for all torts to her
person or property. Divorce bars dower and husband’s courtesy.
Interest. Legal rate 6%; 8% permitted by contract.
Judgm ents of courts of record are proved by a certified transcript.
Judgment not a lien, but when a ceritfled statement thereof, made by
the clerk of the court is filed in the office of the probate judge. It
becomes a lien on all property of the defendant therein in the county,
which is subject to execution for ten years, to enforce which execution
may issue at any time within that period. Execution received by
sheriff during life of defendant may be levied after his decease or alias
execution issued and levied if there has not been lapse of entire term
so as to destroy lien originally created. Above applies to executions
from circuit and chancery courts. An execution issued by a justice
of the peace is a lien only from time of its levy. All agreements to
confess judgment, or to authorize another to confess judgment, made
before the commencement of the suit in which such judgments are
so confirmed are void.
Lien for R ent. The landlords of any store house, dwelling house,
or other building, shall have a Hen on the goods, furniture and effects
belonging to the tenant, and sub-tenant for his rent, which shall be
superior to all other liens, except those for taxes, also on crops grown
on rented premises for rent and advances.
Lim itations. Notes and stated accounts, six years; open accounts,
three years; sealed instruments, real actions, and motions against
officers, ten years; judgments, twenty years; actions on the case, one
year. Bar created by statute can only be removed by a partial pay
ment, made on the contract before the bar is complete, or by an uncon
ditional promise in writing. If anyone entitled to bring an action,
or make an entry on land, or defense founded on title to real estate,
be at the time such right accrues, within the age of twenty-one years,
or insane or imprisoned on a criminal charge for a term less than lire,
he shall have three years, or the period allowed by law, for bringing
such action, if the period allowed by law be less than three years, after
the termination of such disability to bring such suit, etc., but no action
can be commenced after twenty years. Statutes of limitation apply
to married women’s separate estates. Actions founded on a promise
in writing not under seal, or for trespass to person or property, must
be brought within six years. Statutes of limitation are made appli
cable to equitable as well as legal demands, but do not run against direct
trusts. Any agreement or stipulation to shorten the period prescrioea
by law for the bringing of any action is void. Actions seeking relier
on the ground of fraud where the statute created a bar. the cause or
action begins to run upon discovery of the fraud by aggrieved party.
No promise or acknowledgment is sufficient to remove the bar to a
suit, except a partial payment made upon the contract by the party
sought to be charged before the bar is complete, or an unconditional
promise in writing, signed by the party to be charged thereby.
Married Women. (See Husband and Wife.)
Mechanics' Lien.
Contractors, including subcontractors.
B A N K IN G A N D C O M M E R C IA L L A W S— A L A SK A
mechanics, material men, and laborers have a lien on houses built
and the ground on which they stand upon complying with the law.
M o rtg a g e s are executed and acknowledged in the sam e m anner as
deeds. M ay be foreclosed by bill in equity, or if there be a provision
to th a t effect, by sale under power, upon such default as authorized
a sale. All m ortgages are void against creditors or purchasers w ithout
notice, unless recorded. M ortgages operate as notice from day of
delivery to probate judge for record. T here is no fixed tim e within
which th ey shall be recorded. Hom estead realty cannot be m ort
gaged or otherwise aliened w ithout th e voluntary signature and assent
of wife, evidenced by acknowledgment, upon private exam ination
separate an d a p a rt from th e husband, and certified. All mortgages
m ust be in writing, signed by the m ortgagor. P aym ent of m ortgage
debt m ade before o r after m atu rity of debt, revests in the m ortgagor,
or his assigns, th e title to the real or personal property m ortgaged, if
made in th e lifetim e of th e m ortgagor; if m ade after his death, such
paym ent revests title to personal property in the personal representa
tive, and title to realty in the heirs, devises, or legatees of the m ortga
gor. C h attel m ortgages m ust be in writing. W hen th e m ortgagor
is sued by th e m ortgagee for possession of the m ortgaged property,
he m ay defend by showing paym ent of the debt, or p a rt paym ent and
a ten d er of th e balance, or m ay pay it after judgm ent.
N e g o tia b le I n s t r u m e n t s . Uniform Negotiable Instrum ents Act
effective Ja n u ary 1, 1908. See full tex t of th e law following “ Digest
of B anking & Com m ercial L aw s.’’
P a r t it i o n . P artitio n of real or personal property m ay be m ade,
upon application of any ten an t in common in either C ourts of P robate
or C ourts of E q u ity , and m ay be sold for division if it can not be
equitably divided.
P o w ers o f A tto rn e y . Powers o f attorney or o ther instrum ents
conferring au th o rity to convey property m ust be proved or acknowl
edged in th e same m anner and m ust be received as evidence to the
same extent as conveyances (see Conveyances), and m ust be executed
as conveyances. A power of attorney to relinquish dower m ust be
executed by husband and wife jointly. H er signature m ust be
acknowledged as required for conveyances of land.
P r e s e n tm e n t. Is n ot necessary to charge one prim arily liable
except in case of bank notes; if payable a t special place ability and
willingness to pay it there a t m atu rity is equivalent to a ten der: if
not on dem and it m ust be presented on day it falls due, if on dem and
then within a reasonable tim e after its issue, except a bill of exchange
must be presented within reasonable tim e after its last negotiation.
P ro b a te L aw . A court of probate, consisting of one judge, is
established for each county in the S tate. This court has jurisdiction
of th e probate of wills, of granting letters testam entary and of adm in
istration, an d th e repeal or revocation of th e same; of th e settlem ents
of accounts of executors and adm inistrators, of the sale and disposition
of the real and personal property belonging to, and the distribution of,
intestates' estates. Also of th e appointm ent, removal, and settlem ents
of guardians for minors and persons of unsound mind, tbe binding o ut
of apprentices, th e allotm ent of dower, and tbe partition of land belong
ing to jo int owners. A court of probate m ust be held a t tbe court
house of each county on the second M onday of each m onth, and the
judge m ay hold special or adjourned term s whenever necessary, b ut
such court m ust a t all tim es be considered open, except on Sundays.
It also keeps a record of deeds, mortgages, and instrum ents entitled
to record.
P ro m is so ry N o te .
P r o te s t.
(See N egotiable Instrum ents.)
(See N egotiable Instrum ents.)
P r o te s t o f F o re ig n B ills.
(See Negotiable Instrum ents.)
Replevin. W rit of replevin lies to recover property in custody of
an officer of the law, and is limited to this. Tbe action of detinue
lies to recover personal property in all other instances.
Sales.
Uniform sales act in force.
Sales i n B u lk . Sales of all or substantially all of stock of m er
chandise except in regular course of trad e is prim a facie fraudulent
and void against creditors unless th ey are notified in writing prior to
the sale in m anner prescribed by sta tu te.
.T a x e s become due October 1st, and delinquent on th e 31st of
December of th e year for which tbey are levied and lands m ay be
sold by proceedings h ad in the P robate C ourt commenced in the
month of M arch following the due date of taxes provided tb e personal
property is insufficient to pay taxes. The rate of taxation is 6 | mills
or sixty-five cents on each $100.00 on am ounts assessed. T his is for
State purposes only. M unicipalities m ay levy taxes a t the rate of
fifty cents on each $ 100.00 except th a t certain nam ed municipalities
of the larger class m ay levy a larger am ount by special constitutional
provision. Counties m ay levy sim ilar am ount to th e municipalities
except th a t certain special taxes varying in different counties are
levied In addition. Assessments based on 60% of the valuation of
the property. Counties m ay vote additional levies for specific
purposes and m ay secure th e same by bonds. The purchaser of lands
sold for taxes receives from th e tax collector a certificate of purchase
showing a description of th e property, the date and am ount of assess
ment, th e taxes, costs, and fees, etc., and after th e expiration of th ree
years from th e date of sale, the purchaser m ay get a deed from the
Judge of P robate. T he delinquent tax payer has th ree years from
date or sale In which to redeem. After purchaser goes into possession
under a deed and keeps possession for three years recitals in th e deed
are held to be tru e and cannot be disproved. On redem ption, the
person redeeming pays th e am ount of taxes for which tbe land sold,
costs of sale, w ith in terest a t 8 % per annum and all taxes paid sub
sequent to th e sale by the purchaser with interest thereon a t 8 % per
annum. W henever land Is sold for sta te or county taxes, and from
any cause such sale is invalid to pass title to purchaser, sale operates
as transfer to purchaser of lien of sta te or county, on the property for
payment of taxes for which sold. All cotton factories or cotton mills
a“d certain other industries which shall be constructed in this S tate
snail be exem pt from taxation for a period of 5 years.
. ^U ls. All wills of real or personal property must be in writing
signed by the testator and declared his last will and testament in the
PJejpence of two witnesses who must sign as witnesses in the presence
or testator. Unwritten will of personal property valid only when
P“ e Property does not exceed $500 in value, and must be made dur
ing last sickness by testator at his home. Persons nresent must
9® called on to witness that it is testator’s will and must be re"C ed.
s i t in g by one of the witnesses within six days. Minor
ght6dn may make a will of personal property. No will effective
"riVi Pro oated. May be contested in probate or chancery court,
widow may within six months dissent and take dower.
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1953
S Y N O P S IS O F
THE LAW S OF ALASKA
R E LA TIN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by M . E . M o n a g l e , 206 Seward Bldg., Juneau, Alaska
(See card in A ttorneys List)
A c k n o w le d g m e n ts . (See Deeds.)
A ctio n s. T he distinction between actions a t law and suits In
equity and all form s of pleading heretofore existing in actions a t law
and suits in equity are abolished, and there is b u t one form of action,
denom inated a civil action, for the enforcem ent or protection of pri
vate rights and th e redress or prevention of private wrongs. E very
action m ust be prosecuted in the nam e of the real p arty in interest,
except th a t an adm inistrator or executor, a trustee of an express tru st,
or a person expressly authorized by sta tu te m ay sue w ithout joining
with him the person for whose benefit th e action is prosecuted; but
the assignm ent of a thing in action n ot arising out of contract is not
authorized.
A ffidavits. An affidavit or deposition taken o ut of Alaska, other
wise th an upon commission, m ust be authenticated as follows; 1 .
I t m ust be certified by a commissioner appointed by tbe governor of
Alaska to take affidavits and depositions in the state, territory , district
or country where tak en ; or, 2 , it m ust be certified by a judge of a
court of record having a clerk and a seal to have been taken and sub
scribed before him a t a tim e and place therein specified,, an d the
existence of th e court, th e fact th a t such judge is a m em ber thereof
and the genuineness of his signature m ust be certified by th e clerk
of th e court, under th e seal thereof. In all affidavits or depositions
witness should speak in th e first person.
A liens. Any alien who is a bona fide resident of th e U nited States,
or who has declared his intention to become a citizen, o r whose rights
are secured by treaty , m ay'acquire and hold lands upon the sam e term s
as a citizen. Any alien m ay acquire lands by inheritance or in th e
ordinary course of justice in th e collection of debts, an d m ay acquire
and enforce liens upon lands, b u t such lands m ust be sold within ten
years. Any alien m ay also acquire and hold lots or parcels of land
In any incorporated or p latted city, town, or village, or in an y mine
or mining claim, b u t is n ot authorized to acquire title from the United
States to any of the public lands.
A s s o c ia t io n s . A non-profit Co-operative Association m ay be formed
by fifty or m ore persons, a m ajority of whom are residents of th e T erri
tory, engaged in th e production of agricultural or aquatic products.
The corporation may be organized with or without capital stock.
Articles m ust be subscribed b y incorporators and acknowledged
by a t least one of them and filed in th e m anner of any corporation
In th e Territory.
M eetings, other th a n those provided for in th e by-laws, m ay be
called by a petition of 40% of th e mem bers.
M arketing contracts are provided for, b u t are n ot binding for a
period exceeding ten years.
A tta c h m e n t. T he plaintiff, a t the tim e of issuing th e sum m ons
or afterw ards, m ay have the property of defendant attached in a n
action upon a contract, express or im plied, for the direct paym ent o f
money, and, 1 , which is n o t secured by m ortgage, lien, or pledge upon
real or personal property, or if so secured, when the security has been
rendered nugatory by the act of the defendant; or, 2 , against a non
resident defendant. T he w rit issues whenever the plaintiff, or any
one in his behalf, files an affidavit.showing th a t defendant, is indebted
to plaintiff (specifying th e am ount of indebtedness over and above all
legal set-offs or counter-claims) upon a contract, express or im plied,
for the direct paym ent of m oney; th a t the paym ent has n o t been
secured by m ortgage, lien, or pledge upon real or personal property;
and th a t th e sum for which attach m en t is asked is an actual, bona fide
existing debt due and owing from plaintiff to defendant; and th a t th e
attachm ent is n ot sought nor th e action prosecuted to hinder, delay
or defraud any creditor of th e defendant. Plaintiff m ust also file an
undertaking, w ith one or m ore sureties, in a sum n ot less th an $ 10 0 ,
and equal to the am ount for which he dem ands judgm ent, conditioned
th a t plaintiff will pay all costs adjudged and all dam ages sustained
by reason of th e attach m en t if th e sam e be wrongful or w ithout suffi
cient cause, not exceeding th e am ount specified.
B a n k s a n d B a n k in g . T he banking business is regulated b y th e
T erritorial Banking Board. B oard m ay declare Banking H oliday a t
any tim e it sees fit. E very bank w hether incorporated or p riv ate Is
required to m ake quarterly reports an d also special reports to th e
Banking Board.
Paid in capital stock of an incorporated b ank m ust be n ot less th an
$25,000, except in towns th a t have a population of n ot to exceed 1,000
people w ithin a five-mile radius thereof, th e paid in capital stock m ay
be not less th a n $15,000, providing th e consent of th e B anking B oard
is first obtained. Individuals and partnerships have th e sam e require
m ents as to capital actually invested. However, w ith th e permission
of Banking B oard a bank m ay reduce its capital stock to $15,000
where its deposits have n ot exceeded $ 100,000 a t any tim e during p ast
fifteen m onths. On th e other hand B anking Board m ay require bank
to increase capital stock to $25,000 where deposits have exceeded
$150,000 for a period of nine m onths. (Laws 1917, c. 7, amoufUng
1913, c. 48.)
T hree or more persons m ay incorporate to carry on th e banking
business, b u t one of said persons m ust be resident T eirito ry . N o
bank incorporated w ithin T erritory is authorized to carry on their
business until it m eets th e requirem ents covering paid up stock nor
u ntil said stock is paid in full. The list of subscribers to th e C apital
stock of an incorporated bank m u st be filed with B anking B oard and
give name, residence and am ount subscribed by each stockholder.
T here are special corporate laws regulating th e procedure of incor
porating banks.
N o bank is allowed to m ake loans greater th a n th e suin of $1,000
to any person w ithout such loan having been approved by th e B oard
of Directors; or a loan exceeding 35% of its com bined capital and
surplus in any case. B anks m ay n ot give preference except to T erri
to ry to secure T erritorial funds and to th e U nited S tates; b u t bank
is allowed to borrow n ot to exceed its paid up capital, and m ay pledge
not to exceed 50% of am ount borrowed as collateral security. A
reserve of 2 0 % of its dem and liabilities m ust be k ep t on hand a t all
tim es by every bank in th e territory. Ch. 31 Laws 1915. Any
authorized bank can postpone paym ent of deposits.
B a n k C o lle c tio n C o d e. N one in effect in Alaska.
B ills a n d N o tes. T he uniform N egotiable In stru m en t act h as
been adopted.
C h a tte l M o rtg a g e s. Any interest in personal property, capable
of being transferred, m ay be m ortgaged; b u t the m ortgage is void as
against _creditors and subsequent purchasers and incum brancers in
good faith and for value, unless possession of the property be delivered
to and retained by the m ortgager or the m ortgage provide th a t th e
property m ay rem ain in th e possession of the m ortgagor and be ac
com panied by the affidavit of all th e parties thereto th a t th e sam e is
m ade in good faith to secure th e am ount nam ed therein, and w ithout
design to hinder, delay, or defraud creditors, and be acknowledged
and filed. The m ortgage m ust be acknowledged by the m ortgagor
as a conveyance of real property is and be filed in the office of th e
recorder of the precinct where the m ortgagor resides and of th e p re
cinct where th e property is. W ithin th irty days next preceding the
expiration of one year from th e date upon which such indebtedness
becam e due a verified statem en t of th e interest of th e m ortgagee in th e
p roperty a t th e tim e th e sam e is renewed, m ust be filed in th e office
where th e original was filed, and th e lien is thereby extended another
1954
B A N K IN G A N D C O M M E R C IA L LAW S— ALA SK A
year. C h a ttel m ortgages are foreclosed in th e sam e m anner as m ort
gages an d liens upon real property, b u t a clause m ay be inserted m a
m ortgage authorizing th e m arshal to execute th e power of sale therein
g ranted to th e m ortgagee.
C o rp o ra tio n s . Dom estic C orporations. T hree or more ad u lt
persons m ay form a stock corporation for any lawful purpose, whose
chief business shall be in the T erritory, except for th e purposes of
brokerage, or loan, tru st and guaranty associations. A t least one
director m ust be at resident of Alaska.
. .
Shares of stock are not assessable unless original or am ended
Articles of Incorporation expressly confer au th o rity to levy assess
m ent, or unless stock certificates provide for assessments, except
Insurance and Banking shares, which are assessable to certain lim its
by operation of law.
F o re ig n C o rp o ra tio n s . E very corporation or joint stock com pany
organized under the laws of the U nited States or any sta te or territory
shall, before doing business within th e district, file in th e office of the
auditor' of th e district and in th e office of th e clerk of th e district
court for the division wherein it intends to carry on business a duly
authenticated copy of its charter or articles of incorporation, and or
any am endm ents thereto, and also a financial statem ent, giving
certain sta tu to ry inform ation, verified by tne oath of its president
and secretary and attested by a m ajority of its board of directors.
T hereafter such statem ent m ust also be so filed within sixty days aifer
Jan u ary first of each year. T he corporation m ust also file in the same
offices th e appointm ent of a resident of Alaska upon whom service
of sta tu to ry service or process m ay be m ade. T he consent or tne
sta tu to ry agent is no longer required by sta tu te, b u t since there Is no
cost for filing th e consent it is b etter procedure to file same.
D eed s. A conveyance of lands, or of any estate or inverest therein,
m ay be m ade by deed, signed and sealed by the person from whom
th e estate or interest is intended to pass, and acknowledged or proved,
and recorded, w ithout any other act or ceremony, provided, however,
th a t in all deeds or conveyances of th e family home or hom estead
m ade by a m arried m an, or a woman, th e husband and wife shall
join in such deeds or conveyances. A quic-claim deed passes all the
estate which th e grantor could convey by deed of bargain and sale.
N o covenants are im plied in any conveyance. T he term heirs,
or other words of inheritance are not necessary to create or qonvey
an estate in fee simple. Wife m ay convey her lands w ithout joinder
of husband. W ithin th e district deeds m ust be executed in th e
presence of two witnesses, who shall subscribe their nam es as such;
and th e person executing a deed m ay acknowledge the execution
before a judge, clerk of th e district court, notary public, or com
missioner within the district, and the officer taking the acknowledg
m ent m ust indorse thereon a certificate of acknowledgm ent and the
true d ate of m aking the sam e under his hand.
D e p o s itio n s . T he testim ony of a witness, in the district, m ay be
taken by deposition, In an action, a t any tim e after the service of
the summons or .the appearance of th e defendant, and in a special
proceeding after a question’ of fact has arisen, when, 1 , the witness Is
a p arty to the action, or proceeding, by the opposite p arty ; 2 , the
witness's residence is more th an one hundred miles from the place of
trial* 3 , the witness is about to go more than one hundred miles beyond
the place of trial; 4 , the witness is too infirm to atten d the tria l; or, 5,
the testim ony is required upon a motion, or in any other case where
the oral exam ination of the witness is not required.
. . .
.
The testim ony of a witness, o ut of the district, m ay be taken by
deposition, by commission issued, upon eight days' notice to the other
party, by the clerk of the court, or justice of the peace in a cause in his
own court, to a person agreed upon by the parties, or, if they do not
agree, to a judge, justice of the peace, notary public, or clerk of a
court selected by the officer issuing the commission.
The am ount of the commissioner's fees should be indorsed upon the
deposition.
D e sc e n t a n d D is tr ib u tio n . The real property of an intestate
descends in equal share to children and to th e issue of any deceased
by right of representation; and if there be no child of Intestate living
a t th e tim e of his or her d eath, to all his or her other lineal descendants;
and if all such descendants are in the sam e degree of kindred to the
intestate, they take equally; otherwise, by representation. 2 . If
in testate leave no lineal descendants, to his wife; or if intestate be
a m arried woman, to her husband; and if intestate leave no wife nor
husband, to th e parents equally or th e survivor. 3. If Intestate
leave no lineal descendants, neither husband nor wife, nor parents,
such real property descends in equal shares to his brothers and sisters,
and to th e issue of any deceased brother or sister by right or repre
sentation. 4. If Intestate leave no lineal descendants, nor rather,
brother, nor sister, living a t tim e of his or her death then real property
descends to m other, to exclusion of issue of any deceased brothers
or sisters 5. If intestate leave no lineal descendants, neither Hus
band nor wife, nor father, m other, brother, nor sister, such real
property descends to his next of kin in equal degree, excepting th a t
when there are two or more collateral kindred in equal degree b ut
claiming through different ancestors, those who claim through the
nearest ancestor are preferred. 6 . If intestate leave one or more
children, and th e issue of one or more deceased children, and any
of such surviving children due under age w ithout having been m ar
ried all such real property th a t came to such deceased child by
inheritance from such intestate descends in equal shares to the other
children of such intestate and to the Issue of any other children who
have died, by right of representation. B ut if all the other children
Of in testate be dead, and any of them have left issue, such real prop*erty so inherited by such deceased child descends to all the Issue or
such other children of th e intestate in equal shares, if they are In the
sam e degree of kindred to such deceased child; otherwise, they
tak e by right of representation. 7. If intestate leave no lineal
descendants or kindred, such real property escheats to th e territory
of Alaska. Personal property same as real property except (1) apparel
and ornam ents to widow (2) paym ent of debts (3) sam e as real prop
erty except (a) if husband and issue, half to husband ; if no issue,
all to husband; (b) if widow and issue, half to widow; if no issue,
all to widow; (5 ) if no husband, widow or kindred, all escheats to
P roperty escheated to th e T erritory m ay be recovered by bringing
petition for said recovery w ithin seven,years after judgm ent entered
in escheat proceedings.
D ow er a n d C u rte s y . The widow of every deceased person Is
entitled to dower, or the use during her natural life of one-third p art
In value of all the lands whereof her husband died seized of an estate
of inheritance. E states by C urtesy are abolished.
E v id en ce. No person m ay be excluded as a witness on account or
being a p arty or interested in the event of an action or proceedings,
having been convicted of a crime, or his opinions on m atters of religious
belief. Persons of unsound mind and children under ten years of age
who appear incapable of receiving ju st impressions of the fact respect
ing which they are examined or of relating them truly m ay not be
witnesses. An attorney m ay not, w ithout his client’s consent, be
exam ined as to com m unications m ade by his client to him or his advice
thereon. A priest m ay not, without the consent of the person making
th e confession, be exam ined as to any confession m ade to him in his
professional capacity, in the course of discipline enjoined by the church
to which he belongs. A physician or surgeon m ay not, against the
objection of his patient, be examined, in a civil action, or proceeding,
«s to inform ation acquired in attending the patient which was neces
sary to enable him to prescribe or act.
E x e c u tio n s. CSee Judgm ent and Execution.)
E x e c u to rs a n d A d m in is tr a to rs . Non-residents and infants can
not be appointed or act as executor or adm inistrator, b u t a m arried
woman if a resident; m ay act as either executor or adm inistrator.
W hen a will is proven letters testam entary are issued to the persons
therein named as executors, or to such of them as give notice of their
acceptance of th e tru s t and are qualified. Adm inistration is granted
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as follows: 1. To th e widow or next of kin, or both, in th e discretion
of the c o u rt; 2. To one or more of th e principal creditors; or, 3, to any
person com petent and qualified whom th e court m ay select. If
deceased were a m arried woman adm inistration shall in any case be
granted to the husband; if qualified, and he apply therefor within
th irty days. Claims are paid in th e following order: 1. Funeral
charges. 2. Taxes due the U nited States. 3. Expenses of last
sickness. 4. All other taxes. 5. D ebts preferred by the laws of the
U nited States. 6 . D ebts which a t the death of the deceased were a
lien upon his property, in the order of the priority of the liens. 7.
D ebts due for wages earned within ninety days im m ediately preceding
death of decedent. 8 . All other claims.
E x e m p tio n s . 1. Earnings to am ount of $100 of judgm ent debtor,
for personal services rendered within th irty days next preceding the
levy or execution or attachm ent, when necessary for the use of his
family supported in whole or in p art by his labor. 2. Books, pictures,
and musical instrum ents owned by any person, to th e value of $75.
3. Necessary wearing apparel owned by any person for the use of
himself or family, b u t watches or jewelry exceeding $100 in value
are not exempt. 4. The tools, implements, apparatus, team , vehicle,
harness, or library necessary to enable any person to carry on the
trade, occupation, or profession by which such person habitually
earns his living, to the value of $500; also sufficient q u an tity of food
to support such team , if any, for six m onths; the word “ team ” being
construed to include not more than one yoke of oxen, or a span of
horses or mules, or two reindeer, or six dogs. 5. The following prop
erty, if owned by the head of a family and in actual use or kep t for
use by and for his family, or when being removed from one habitation
to another on a change of residence: Ten sheep, with one year’s fleece
or the yarn or cloth m anufactured therefrom ; two cows and five
swine; household goods, furniture, and utensils to the value of $300;
also food sufficient to support such animals, if any, for six months,
and provisions actually provided for family use and necessary for the
support of such person and family for six m onths. 6 . The seat or
pew occupied by the head of a family or his family in a place of public
worship. 7. All property of any public or m unicipal corporation.
No article, or the proceeds derived from its sale or exchange, is exempt
from execution on a judgm ent recovered for its price. Life Insurance
policies and reserves or present value thereof are exem pt.
G a r n is h m e n t. (See A ttachm ent *
H o lid a y s. T he legal holidays are Sundays; Jan u ary 1 (New Year s
D ay); F ebruary 12 (Lincoln’s b irth d a y ); February 22 (W ashingtons
b irth d a y ); M arch 30 (Sewards D ay in comm em oration of th e signing
of th e T reaty ceding Alaska to th e U nited S ta te s); M ay 30 (Memorial
D ay); Ju ly 4 (Independence D ay); th e first M onday in September
(Labor D ay); October 18 (Alaska D ay); N ovem ber 1 1 ^(Armistice
D ay); December 25 (Christm as D ay), and any day designated by
public proclam ation by the President of th e U nited S tates or the
Governor of th e T erritory of Alaska, as a legal holiday, or as a day
of Thanksgiving; th e day known and observed as Memorial or Decora
tion D ay and the day on which a general election is held throughout
th e T erritory of Alaska.
H o m e s te a d . The hom estead of any fam ily, or the proceeds
thereof, is exem pt. Such hom estead m ust be th e actual abode of,
and owned by, such family or some m em ber thereof, and not exceed
$2 500 in value nor exceed 160 acres in extent, if n o t located In a town
or city laid off into blocks or lots; o r if located in any such town or
city one-fourth of an acre. This exem ption does n ot apply to decrees
for the foreclosure of any m ortgage property executed; b u t if the
owners of such hom estead be m arried, the m ortgage m ust be executed
by husband and wife.
I n t e r e s t . The legal ra te of interest is 6 per cent, b u t on contract
interest a t the rate of 8 % per cent m ay be charged by express agree
m ent of th e parties. Judgm ents bear interest a t 6 %. If Usurious
interest has been received or collected th e p a rty paying th e same, or
his legal representatives, m ay, by action brought w ithin two years,
recover double th e am ount of such interest. I f it is ascertained in
any action upon contract th a t an unauthorized rate of interest has
been contracted for, judgm ent m u st be rendered, against th e defendant
for th e am ount due, w ithout interest, and against th e plaintiff for
costs. I f the ra te contracted for is 8 per cent or less, th e debtor may
also agree to pay the taxes upon th e debt, credit, or m ortgage.
J u d g m e n t a n d E x e c u tio n . A judgm ent is docketed imme
diately after entry. At any tim e thereafter while execution may
issue a certified transcript of the docket m ay be filed In the office
of the recorder of any recording district, and from the date of docket
ing a judgm ent or transcript thereof the judgm ent is a lien upon
all the real property of the defendant within the recording district
or districts where docketed, or which he may afterw ards acquire
therein during the tim e an execution m ay issue. If no execution
issues within ten years the lien expires, b u t is renewed if afterwards
leave Is given to issue execution and a transcript of the docket of
the order docketed with the recorder.
Execution m ay issue a t any tim e w ithin five years from the entry
of the judgm ent, and thereafter on order of the court m ade on motion
of the p arty in whose favor the judgm ent was given. Such motion
m ust be subscribed and verified as a com plaint, and summons must
be served upon the judgm ent debtor or his repräsentatives, to which
he or they m ay dem ur or answer. The order made m ust be dock
eted as a judgm ent. Execution m ay be against the property of the
judgm ent debtor, his person, or for the delivery of the possession
of real or personal property, or such delivery with damages. Execu
tion from the district court is returnable within sixty days; from the
commissioner’s court within th irty days. U ntil a levy property is
not affected by the execution.
L ic e n se s.' (See Taxes.)
L ie n s. Every mechanic, artisan, m achinist, builder, contractor,
lum ber m erchant, laborer, team ster, draym an, and other person
performing labor upon or furnishing m aterial of any kind to be used
in the construction, developm ent, alteration, or repair, either in whole
or in part, of any building, wharf, bridge, flume, ditch, mine, tunnel,
fence, m achinery, or aqueduct, or any structure or superstructure,
has a lien upon the same for the work or labor done or m aterial fur
nished a t the instance of the owner of the building or other improve
m ent or his agent; and every contractor, sub-contractor, architect,
builder, or other person having charge of the work, in whole or in
part, is, for this purpose, deemed the agent of the owner.
S tatu to ry liens given to : (a) person who makes, alters, repairs, or
bestows labor on any article of personalty a t request of owner or lawiui
possessor; (b) person who is a common carrier or who shall, a t request
of owner or lawful possessor, carry, convey, or tran sp o rt personalty
from one place to another; (c) any person who shall safely keep or
store any grain, wares, merchandise, and personalty a t request or
owner or lawful possessor; (d) any person who shall pasture or reea
any horses, cattle, hogs, sheep or other live stock, or bestow any lapor,
care or attention upon them , a t request of owner or lawful possession,
(e) laborers and loggers for labor on or in assisting to obtain any sawlogs, spars, piles, cordwood, fuelwood, shingle bolts, or owjer timer,
(f) laborers, m aterial men and contractors for work, labor and materials
for the construction altering, digging, drilling, boring, operating,
com pleting or repairing of gas wells, oil wells, or other wells, gas pipe
lines or oil pipe lines; (g) laborers and m aterial men for labor or
m aterials furnished th a t contribute to th e preparation of fish or
aquatic anim als for food, fish meal, fertilizer, oil or other article oi
commerce; (h) laborers, miners and watchm en for labor and work in,
on or about mines and mining property.
L im ita tio n s . Civil actions m ust be commenced within the
following periods after the cause of action accrued: W ithin ten
years—action for the recovery of real property, or the; possession
thereof; upon a judgm ent or decree of any court of the U nited States,
or of any state or territory within the United States; upon a seaiea
instrum ent. W ithin six years—action upon a contract or liability,
express or implied, except judgm ent or sealed instrum ent; upon a
B A N K IN G A N D C O M M E R C IA L LAW S— A R IZ O N A
liability created by sta tu te, other th an a penalty or forfeiture: for
waste or trespass upon real property; for taking, detaining, or injuring
personal property, including an action for the specific recovery thereof
on a m utual, open and current account. W ithin three years—
action against a m arshal, coroner, or constable, upon a liability
incurred by th e doing of an act in his official capacity or in virtu®
of his office, or by th e omission of an official d uty, including the
non-paym ent of money collected upon execution, b u t not an, action
for an escape; action upon a s ta tu te for penalty or forfeiture, where
the action is given to th e p arty aggrieved, or to such p arty and the
United States, except th e s ta tu te prescribe a different lim itation
W ithin tw o years— action for libel, slander, assault, battery, seduc
tion, false im prisonm ent, or for any injury to the person or rights
of another n o t arising on contract; upon a s ta tu te for a forfeiture
of penalty to th e U nited States, W ithin one year—action against
the m arshal or other officer for th e escape of a person arrested or
imprisoned on civil process; upon a s ta tu te for the penalty given
In whole or in p art to th e person who will prosecute, b u t if n ot com
menced w ithin one year by private p arty m ay be within tw o years
by th e U nited States.
No acknowledgm ent or promise is sufficient to take th e case o ut of
the operation of th e s ta tu te unless some m em orandum is m ade in
writing and signed by th e p arty to be charged or some paym ent m ade
on principal or interest. I f case is with reference to realty th e instru
m ent signed by th e p arty to be charged m ust be acknowledged and
recorded in th e office where original instrum ent or contract filed or
recorded. S tatu te does not run while p arty out of th e T erritory
or concealed therein.
M a rrie d W o m en . The property and pecuniary rights of every
married woman a t th e tim e of m arriage, or afterw ards acquired
by gift, devise, or inheritance, or by her own labor, are not subject
to the debts or contracts of her husband, and she m ay manage, sell,
convey, or devise the sam e by will to the same extent and in the
same m anner th a t her husband can property belonging to him. For
civil Injuries dam ages m ay be recovered from a m arried woman
alone, and her husband is not responsible therefor. C ontracts m ay
be m ade by a wife, and liabilities incurred, and the same enforced
by or against her to the sam e extent and Id the sam e m anner as if
she were unm arried. All laws which impose or recognize civil disa
bilities upon a wife which do not exist as to the husband are repealed.
Wife m ay record list of her personal property and such list is prim a
facie evidence of her separate ownership, and property not so registered
is deemed prim a facie the property of the husband. N either husband
nor wife is liable for the debts or liabilities of the other incurred
before m arriage. Husband and wife m ay m ake conveyances and
transfers and create liens between themselves, and either m ay con
stitute the other his or her attorney in fact. A woman becomes of
age a t twenty-one or upon being m arried according to law.
M o rtg ag es. M ortgages are executed, acknowledged, and recorded
in the same m anner as deeds. No covenant is implied for the pay
ment of the sum intended to be secured. Record of assignm ent is
not notice to the m ortgagor, his heirs, or personal representatives.
Mortgage m ay be discharged by entry in margin of record signed by
mortgagee or his personal representative or assignee and witnessed
by the commissioner or deputy, or by certificate executed and- ac
knowledged as other conveyances. Foreclosure is by action of an
equitable n atu re in which a deficiency judgm ent m ay be had.
B ut judgm ent of foreclosure does not bar equity of redem ption and
property m ay be redeem ed in th e sam e m anner and effect as real
property sold on an execution issued upon a judgm ent for paym ent
of an unsecured debt. No m ortgage m oratorium on foreclosure has
been enacted.
N e g o tiab le I n s t r u m e n t s . Uniform Negotiable Instrum ents Act
(adopted April 28, 1913). (See com plete tex t following Digest of
Banking an d Comm ercial L aw s.’’)
R eco rd s. An unrecorded conveyance of real property is void
as against any subsequent innocent purchaser in good faith and for
a valuable consideration whose conveyance is first duly recorded.
A commissioner is ex-officio recorder of a recording district, the
boundaries of which are fixed by the court. Conveyances of lands
not in any recording district are recorded w ith the clerk of th a t divi
sion of the district co u rt within the lim its of which such lands are
situated.
Replevin. The plaintiff, a t any tim e after the commencement
ofan action to recover the possession of personal property and before
judgment, m ay claim the im m ediate delivery of such property upon
filing an affidavit showing th a t he is the owner of the same or entitled
to the possession thereof; th a t the property Is unlawfully detained
by defendant; the alleged cause of detention; th a t the same has not
, n .taken for a tax assessment or fine, pursuant to a statute, or
seized under an execution or attachment against the property of
the plaintiff; or. If so seized, that it is exempt: and the actual value
*
Pr°Perty and by delivering an undertaking in twice the value
or the property to be replevined to the Marshal or officer retaking
the property.
Service.
(See Actions.)
Supplementary Proceedings.
(See Judgm ent and E xecution.)
T axes. No general property tax except in M unicipal corporations,
but both the United S tates and the territory levy and collect license
taxes upon occupations and businesses, the am ount of which differs
on the several different occupations and businesses. Profit taxes on
sale, where lien continues in favor of T erritory for six m onths after
report of taxes due said T erritory.
.U n ifo rm la w s: Negotiable instrum ents act; bills of lading a ct;
air licensing act; general partnership act; lim ited partnership act;
ioreign acknowledgements act; sales act; stock transfer act; warehouse
receipt act; conditional sales act; desertion and non-support; federal
tax lien registration act; foreign depositions act; foreign executed
wins; extradition of persons of unsound m ind; tax on transfer of
personal p roperty of non-resident; proof of statu tes.
E very person of twenty-one years of age, of sound m ind,
may dispose of all his or her property by will saving a widow’s dower,
vvin m ust be in writing, signed by the testato r, or under his direction,
presence, and atteste d b’y tw o or more com petent witnesses subscriDing their nam es in th e presence of the testa to r provided th a t
olographic wills, w ith or w ithout attestatio n , shall be adm itted to proDate the sam e as other wills and proved the same as other private
writings.
W ill” includes “ Codicils.” A will by an unm arried perrevoked by his subsequent m arriage. Children or descendants of
dioJiie? no^ nam ed or provided for in the will take as if testa to r had
, , e?ta te ' A m ariner a t sea or soldier in m ilitary service m ay disTOifi.21
Personal p roperty as a t common law. Proof of nuncupative
ke m ade within six m onths, and the words or their substance
„„n eed to writing within th irty days after they are spoken. A person
a S iS * property in, b u t not an inhabitant of, the district m ay devise
wiii K<Jueat,b th e sam e according to th e laws of his domicile. If such
w ithout th e district, copies of th e will and the probate
S K
certified by th e clerk of th e court In which it was probated,
wjin th e seal of th e court affixed thereto. If there be a seal together
Iflcate o f th e chief judge or presiding m agistrate, th a t th e
tho iP™ «e “ Jn due form, and m ade by the clerk or other person having
nr
custody of th ereco rd , m ay be recorded, adm itted in evidence,
or contested and annulled as if executed and proved within th e district.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1955
S Y N O P S IS O F
THE LAW S OF ARIZONA
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by W i l s o n , C o m p t o n a n d W il s o n , A ttorneys a t Law, Flag
staff, Arizona.
(See Card In A ttorneys List)
A c c o u n ts. When stated draw interest; when action is upon open
account and affidavit of party, his agent or attorney, is attach ed ,
stating th a t such “ account is within affiant’s knowledge, ju st an d true,
th a t it is due, and th a t all ju st and lawful offsets, paym ents and credits
have been allowed,” is prim a facie evidence, unless a t least one day
before trial, defendant files-written denial of any item under oath.
A ck n o w le d g m e n ts. The form of an ordinary certificate of ac
knowledgment shall be substantially as follows:
“ S tate of Arizona,
i
County o
f
'...................................................... .. ) 88
This instrum ent was acknowledged before me t h i s . . . .........day
o f................... A. D ........................by (if by a natural person or persons
here insert nam e or nam es; If by a person acting In a representative
or official capacity, or as attorney in fact, then insert nam e of person
as executor, atto rn ey in fact, or other capacity; if by an officer or
officers of a corporation, then insert nam e or nam es of such officer
or officers as the president or other officer of such corporation, nam ing
it).
A•
B
N otary Public.’ ” * ’ '
’ (Or other officer’) ’
(M y commission expires.................................. ......) ”
Every instrum ent affecting real property in this state executed,
acknowledged and certified in any other state or territory In accord
ance with the laws of such sta te or territory, shall be valid and en
titled to record as if executed in accordance with the laws of this
state.
A ctio n s. D istinction In forms between law and equity are abol
ished. Pleadings are; Com plaint and answer, and in some cases a
reply.
A d m in is tr a tio n of E s ta te s . Lie in Superior C ourt. No public
adm inistrator. W here person dies intestate letters shall issue.
A ffidavits. M ay be taken before any officer authorized to take
acknowledgments.
A llens. Unless rights are secured by treaty cannot hold land in
the state, m ay acquire by inheritance, or in ordinary course of jus
tice in the collection of debts; m ay acquire liens on real estate, m ay
lend money and secure sam e on real estate, b ut title so acquired m ust
be sold within five years; m ay acquire patented mines and hold
stock in domestic corporation owning unpatented mines.
.T h e laws provide th a t th e laws of th e sta te pertaining to aliens,
shall not be construed as to conflict in any m anner with any rights
existing under and by virtue of any tre a ty of the U nited S tates with
any other country.
A ppeals. Appeals are allowed from justice of peace to superior
court in certain cases and from superior court to suprem e court,
except in actions of forcible entry and detainer where rental value
of property is less th a n $300 per year.
A rre st, Abolished in civil cases, debtor fraudulently rem oving
Property out of territory or concealing it m ay be prosecuted crim inally.
A tta c h m e n t. W rit will issue on affidavit showing: 1. T h a t de
fendant is indebted to plaintiff upon a contract, express or implied;
for the direct paym ent of money and th a t such contract was m ade
or is payable in this S tate, and th a t the paym ent of sam e has n ot
been fully secured by m ortgage or lien upon real or personal property,
or pledge of personal property, or if originally so secured, th a t such
security has, w ithout any a ct of plaintiff or the person to whom th e
security was given, become valueless, and shall specify the ch aracter
of the indebtedness, th a t the same is due to the plaintiff over and
above all legal set-offs or counter-claim s, and th a t dem and has been
made for the paym ent of am ount due; or 2 T h a t defendant is indebted
to plaintiff, stating am ount and character of debt; th a t same is due
and payable over and above all legal set-offs and counter-claim s, and
th a t defendant is a non-resident of this S tate or Is a foreign corporation
doing business in this S tate; or 3. T h a t the action is brought upon a
judgm ent of another S tate or territory of the U nited States, or of the
D istrict of Colum bia; or 4. T h a t an action is pending between the
parties, and th a t defendant is about to remove his property beyond the
jurisdiction of the court to avoid paym ent of judgm ent; and 5. T h at
the attachm ent is n ot sought for a wrongful or malicious purpose, and
th a t the action is not prosecuted to hinder or delay any creditor of
defendant. No such attachm ent shall issue until suit has been duly
instituted, b u t it m ay be issued in a proper case either a t the com
mencement of the suit or a t any tim e during its progress. The w rit
m ay issue, although plaintiff’s debt or dem and be not due and under
specified facts of intent to defraud; no final judgm ent shall be rendered
until such debt or dem and shall become due. W rit m ay issue a t or
after action begun upon plaintiff or some one In his behalf filing the
affidavit, and upon filing a bond w ith two sureties in an am ount equal
to am ount sued for. Sureties can be compelled to justify upon
notice. When more th an one attach m en t is levied on same property
writs take priority according to tim e of levy. (See Liens, Garnish
ment.)
B a n k s a n d B a n k in g . All s ta te banks are under th e supervision
of the S tate B anking D epartm ent under th e m anagem ent of th e
Superintendent of Banks. In addition to com plying with th e general
corporation laws, banks m ust procure perm it from S uperintendent of
Banks before transacting business. T erm “ b a n k ” includes com
mercial banks, savings banks and tr u s t companies. P riv ate or
partnership banks are prohibited. Incorporators are governed by
general corporation laws b u t shall be investigated as to character
and integrity. W here bank is located in city or 20,000 or less inhabi
tan ts, the directors m ust own a t least $200.00 par value of th e stock
and a t least $500.00 where located in city of m ore th a n 20,000 inhabi
tan ts. Notice of personnel of directors m ust be posted. Officers
m ust give bonds. E very bank other th an m utual savings banks
m ust have capital stock of not less th a n $25,000, and in cities of from
5.000 to 15,000 inhabitants n o t less th a n $100,000, in cities of over
50.000 not less th a n $20 0 ,000 . Certificate of incorporation will issue
only after it appears, b y affidavit of n o t less th a n th ree of th e incor
porators, th a t the required am ount of capital stock has been paid
in, and certificate of am endm ent to articles of incorporation only
after it appears by affidavit th a t all of th e increased capital has been
paid in cash. No banking corporation is required to have m ore th a n
$2,000,000 capital. Of funds available for dividends n ot less th a n
25 % of net profits shall first be carried to a surplus or reserve fund u n til
such fund shall equal th e capital stock. Com m ercial banks m ust m ain
ta in as a reserve an am ount equal to 15% of th e aggregate am ount of
th eir deposits and dem and liabilities, and in cities of over 50,000 a
20% reserve shall be m aintained. Savings banks m u st m aintain a
legal reserve equal to 1 0 % of their deposit liabilities. Provision is
m ade requiring every bank to m ake n o t less th a n three verified
reports each year showing th e financial condition, which reports m ust
be published in a newspaper. T he commercial banks m u st be exam
ined a t least twice a year an d all other institutions receiving deposits
a t least once a year. T he to ta l liability to any b ank of an y person
for m oney borrowed shall a t no tim e exceed 15% of th e am o u n t of
th e capital stock paid in an d of th e surplus earned and set aside;
provided th a t loans m ay be m ade u p to 25% when secured by readily
m arketable non-perishable, sta p le com m odities in warehouse or in
tran sit. Loans to officer or director shall n ot exceed 10% and to ta l
loans to officers shall n o t exceed 25% . Stockholders of banks are
liable for all contracts, debts or engagem ents to extent of p a r value
1956
B A N K IN G A N D C O M M E R C IA L L A W S— A R IZ O N A
of th eir stock, in addition to am ount invested in stock. L iability
m u st be enforced w ithin three years after closing of b ank and m ay be
enforced im m ediately if in judgm ent of superintendent of banlm or
receiver assets are insufficient to m eet liabilities. Bamts m ay open
branch offices by permission from Superintendent of Banks if tney
have a p aid in capital and surplus of n o t less th a n $50,000 plus $15,000
of additional capital and surplus for each branch so authorized.
In d u strial banks are subject to th e sam e laws of organization end
supervision as other banks, and are authorized to accept deposits ana
issue investm ent certificates for th e same. Industrial bank loans or
discounts to any one person, firm or corporation shall n ot exceed
$1,000.00, and interest is allowed up to 10 %. M inim um capital in
cities of less th a n 15,000 inhabitants is $ 1 5 ,000 .0 0 , in cities of 15,0 0 0 to
50,000 in h ab itants is $50,000.00, and m cities of m ore th a n 50,000
in h ab itan ts is $100,000.00. Industrial banks shall n ot carry com
m ercial or dem and banking accounts nor accept tru st or act as trustee,
nor deposit its funds w ith any banking corporation except such as
m ay be designated by vote of m ajority of directors a t a m eeting duly
called a t which a quorum is in attendance. T hey shall purchase and
hold so m uch of th e stock and assume and discharge such obligations
as shall be required for m aintaining deposit insurance in th e Federal
D eposit Insurance Corporation. Stockholders liability sam e as other
banks. Regulation, exam ination and taxation sam e as commercial
banks. Same legal reserve as savings banks.
.
Any banking institution, upon au th o rity of a m ajority of its board
of directors, m ay do anything necessary to tak e advantage of pro
visions of section 12B of federal reserve a ct as am ended, acquire
securities of th e federal corporation, and comply w ith regulations and
requirem ents thereof. (See Interest.)
, L
Any b ank which receives tr u s t funds m u st pledge its assets to secure
such funds in compliance w ith requirem ents of federal reserve bamc
if a m em ber, or, if n o t a m em ber, in accordance w ith rules and regu
lations prescribed b y superintendent of banks.
B ills a n d N o tes. The negotiable instrum ent code adopted by the
Amnrinan B ar Association is in force. Jo in t obligor m ay be released
w ithout releasing others. (See Holdings.)
B o n d s. Any standard surety com pany, organized under laws of
U nited S tates or of any state, m ay execute bonds in judicial proceed
ings w ithin the sta te when th ey have complied w ith license laws.
(See G u aran ty Companies.)
.
,
..
C h a tte l M o rtg a g e . To be valid against others th an the parties
thereto, chattel m ortgage m ust set o ut the residence of the m ortgagor
an d the m ortgagee, the sum to be secured, the rate of interest to be
paid and tim e and place of paym ent of the d eb t secured, and be
accom panied by the affidavit of both m ortgagor and mortgagee th a t
th e m ortgage & bona fide and m ade withoiU; design to defraud or
delay creditors. Void as against creditors of m ortgagor and subse
q u en t purchasers, mortgagees or lien holders in good faith unless
Im mediate delivery of the m ortgaged property is m ade to the m ort
gagee and th e change of possession is actual and continued, unless the
m ortgage or a tru e copy thereof shall be forthw ith deposited and filed
in the office of th e recorder Of the county where the property shall
th en be situ ated and in th e county of residence of m ortgagor, if a
resident of Arizona, except in th e case of a m ortgage on autom obiles,
in which case it m u st be filed, w ith th e sta te m otor Vehicle Division
an d a new certificate of title issued showing th e lien. Removal, sale, or
other disposition of m ortgaged p roperty w ithout consent of m ortgagee
entitles m ortgagee to im m ediate possession of it, and such rem oval,
transfer, or sale, or subsequent encum brance is felony. I f m ortgagee
perm its m ortgaged property to be rem oved to another county, ne snail
w ithin one m onth record his m ortgage in such other county, o n a tte i
m ortgage m ay be foreclosed by notice and sale or by proceedings in
superior court. M ortgagee m ay obtain possession of property on
default and sell after notice which m ust be served on owner. After
notice m ortgagor m ay contest as to am ount due and rig h t to foreclose
an d have proceedings transferred to superior court. U pon stocK of
goods, wares and m erchandise w ith continued possession in m ort
gagor, void. I f copy is filed w ith recorder, original m ust be acknowl
edged, an d copy certified to by county recorder.
C la im a n d D elivery. (See Replevin.)
C o lla te ra ls. N o sta tu to ry provisions— common law prevails.
C o m m u n ity P ro p e rty . (See Conveyances.)
C o n d itio n a l S ales. W here title rem ains in vendor until purchase
price is paid, void as to persons n ot parties thereto, and persons
w ithout notice, unless subscribed, and filed w ith county recorder.
C o n tr a c ts . (See Bills and Notes.) One or more obligors on a
jo int or joint and several instrum ent m ay be released w ithout releasing
th e others, and m ay be sued separately under certain conditions w ith
o u t releasing th e others. M arried women m ay contract as if sole,
as to their separate property.
, , , , . . . _____
C o n v ey an ces. Conveyances of estate in lands for term more than
one y ear shall be by instrum ent in writing subscribed by p arty making
It. or his agent, duly authorized thereto by writing. A conveyance Is
n o t effectual against creditors or bona fide purchasers unless recorded
in recorder’s office in county where land is situate. A conveyance
purporting to convey a greater estate th an th e grantor has passes only
th e estate th a t he actually has. A general grant or devise passes the
fee unless expressly lim ited to a less estate. All deeds to com m unity
realty m ust be signed by both husband and wife except as to un
patented mining claims. Deeds m ust be signed and m ust be ac
knowledged before some officer authorized to take acknowledgm ent,
and properly certified by him to entitle same to registration. Xhe use
of th e word “ g ra n t” or “ convey” implies the following covenants and
none other 1. T h at previous to the tim e of the execution of the
conveyance the grantor has n ot conveyed the sam e estate, ?r
right, title or interest therem , to any person other th an th e grantee.
2 ? T h a t such estate is a t the tim e of th e execution of such conveyance
free from incumbrances. M arried women 21 years of age aim upward
m ay convey their own lands w ithout being joined by their husbands.
(See Acknowledgment, Dower, H usband and Wife, Hom estead.)
C o rp o ra tio n C o m m is sio n , organized under C hapter 90, F irst
Session, Laws 1912. H as general supervision of corporations.
C o rp o ra tio n s In G e n e ra l. Any num ber of persons m ay become
incorporated for the transaction of any lawful business. Before com
mencing any business, they m ust adopt articles of incorporation
Which shall be signed and acknowledged by them as deeds and be
filed in the office of the C orporation commission a t th e S tate C ap ital
an d a certified copy thereof filed in the office of the C ounty Recorder
in each county in the sta te in which they t r a n s a c t business. TLhe
articles of incorporation m ust contain: 1. The nam e, residence and
P o st Office address of incorporators, the nam e of the corporation,
which nam e shall indicate th e character of business to be conducted,
and its principal place of transacting business. 2. The general
natu re of th e business proposed to be transacted. 3. The am ount of
capital stock authorized and the tim es when and conditions upon
which it is to be paid in. Stock w ithout p ar value
be issued. 4.
T he tim e of th e commencement and term ination of the corporation.
5. B y w hat officers or persons th è affairs of th e corporation are to be
c o n d u c t e d , a n d t h e t i m e s a t w h i c h t h e y a r e t o b e e l e c t e d . __ 6 . l n e
h ig h e s t a m o u n t o f in d e b te d n e s s o r lia b ility t o w h ic h t h e c o rp o ra tio n
is a t a n y t im e t o s u b je c t its e lf , w h ic h m u s t n o t e x c e e d tw o - th i r d s o f
its c a p ita l s to c k .
I n c a se n o p a r v a lu e s to c k in d e b te d n e s s s h a ll b e
c o m p u t e d b y r u le s a n d r e g u la tio n s o f C o r p o r a tio n C o m m is s io n .
P ro v id e d s u c h lim ita tio n s h a ll n o t a p p ly t o in d e b te d n e s s a u th o riz e d
b y t h r e e q u a r t e r s o f t h e v o te s c a s t w ith r e s p e c t th e r e to , in c o n fo r m ity
w ith p r o v is io n s o f A r tic le s o f I n c o r p o r a tio n a n d b y - la w s o f a n y s u c h
c o rp o r a tio n , a t a la w f u l m e e tin g o f th e _ s to c k h o ld e r s th e r e o f , a n d
a p p r o v e d b y t h e C o r p o r a tio n C o m m is s io n ; t h e r e d is c o u n tin g o r
s e c u r itie s r e p r e s e n tin g la w fu lly m a d e lo a n s , o r t h e p le d g in g o r g u a r a n
te e in g o f s a id s e c u r itie s , w ith t h e F e d e r a l I n te r m e d i a t e C r e d it B a n k ,
t h e R e g io n a l A g ric u ltu ra l C r e d it C o rp o ra tio n , o r a n y o th e r F e d e ra l
A g e n c y o r a n y B a n k o r B a n k in g i n s t it u t io n , if a u th o r iz e d b y A r tic le s o f
I n c o r p o r a t i o n , a n d a p p r o v e d b y t h e C o r p o r a t i o n _ C o m m i s s io n ,. s h a l l
n o t b e c o n s tr u e d a s a c re a tio n o f in d e b te d n e s s w ith in th e m e a n in g o f
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th is section. 7. W hether p riv ate property is to be exem pt from
corporate debts. Unless so exem pted stockholders are liable :Tor th e
debts of th e corporation in th e proportion which their stock bears to
th e whole capital stock. M u st be published for six tim es to some
newspaper in th e county where th e principal business is located.
Proof of publication m ust be filed w ith th e C orporation Commission.
Corporations to endure for tw enty-five years. Corporation m ust file
in office of Corporation Commission an appointm ent of agent wno is
a bona-fide resident of this s ta te for three years prior thereto, on
whom all notices and process including sum m ons, m ay be served and
constitutes personal service. Charges for incorporation. Recorder s
fees, 20 cents folio. Recorders fees, certified copy, 20 cents folio.
Recorder’s fees certificate to copy, 75 cents. C orporation C om nlssion’s fees, filing cost copy, $10. C ertificate of
corporation $5.00. Certificate of incorporation $ 1 0 .0 0 . Corporation
Commission’s fees, filing appointm ent of agent, $5.00. W here charter
provides assessments m ay be levied on shares to par value.
C o r p o r a tio n s , F o re ig n . Before it can tran sact business it m ust
file certified and duly authenticated copy of Articles w ith Corporation
Commission and also an appointm ent of agent upon whom a service
personal to th e corporation m ay be m ade in each county in whicb it
transacts business. Publish its Articles of Incorporation and file
affidavit thereof as required of dom estic corporations. P ay license
fee of $15.00.
,
. , ,
A fter compliance w ith laws to tran sact business has sam e rights
an d privileges as dom estic corporation except th a t i t cannot a ct as
executor, adm inistrator, trustee, guardian of estate of minrar or
incom petent, or in an y other fiduciary capacity except as testam en
ta ry trustee. Alien corporation cannot own or hold lan d in state.
C o rp o ra tio n s , I n s u r a n c e . M ay be organized under provision
peculiarly applicable to insurance companies.
C o rp o ra tio n s , R a ilro a d ; Are organized under a sta tu te espe
cially providing for them .
_
_
, _ , .__,
C o rp o ra tio n s . S av in g s a n d L o a n . (See Banks and Banking.)
C o rp o ra tio n S to c k , T ra n s fe r o f. T ransfer of stock shall n o t be
valid, except as between th e parties thereto, until th e sam e is regularly
entered upon th e books of the com pany, so as to show th e nam es of the
person by whom and to whom th e transfer is m ade; th e num ber of their
designation of th e shares, and the date of the transfer.
C o sts. Plaintiffs who are non-residents, or those who own no
property upon which execution m ay be levied, are required to give
security for, within ten days a fter order m ade; bonds for, m ust
authorize judgm ent to be entered against sureties.
C o u rts . Are the Supreme C ourt of thè S tate, th e U. S. d istrict court
for th e D istrict of Arizona; one superior court for each C ounty, except
in counties having over certain population ip which event tw o or more
superior courts, justices of th e peace,^police courts, recorders or cities.
T he superior court of th e several counties is a court of general juris
diction, both civil and crim inal. I t has both original and appellate
jurisdiction. I ts original jurisdiction extends to all civil oases where
th e am ount involved exceeds $200 exclusive of interest, and in all cases
involving th e title to or possession of real estate. Justice courts nave
general jurisdiction when am ount in controversy d.oes n o t exceed
$200.00, except when title to real estate is involved. Police courts in
incorporated tow ns or cities have jurisdiction of cases arising^ under
city ordinances and concurrent jurisdiction w ith justice courts over
violations of law com m itted w ithin city lim its. (See Jurisdiction.)
D ays o t G ra c e . N one.
,
, .. _
D ep o sitio n s. M ay now be taken either upon oral examination,
and cross-examination or upon w ritten interrogatories and cross
Interrogatories, as is generally provided.
D e s c e n t a n d D is tr ib u tio n . T he law of com m unity property
prevails. Upon th e d eath of husband or wife in testate, one-half of
th e com m unity property goes to th e survivor
th e _othOT hair
goes to his or her descendants. In th e absence of such descendants
th e entire com m unity estate goes to th e survivor.
T he interest of
either spouse in th e com m unity is subject to testim en tary disposition.
T he entire com m unity estate 6 charged w ith debts against it.
T he separate estate of in testate shall descend as follows: P e rso n a l
P r o p e rty : one-third to th e surviving spouse and th e rem aining twothirds to descendants. In absence of such descendants th e entire
personal estate goes to surviving spouse.
R e a l E s ta te . E sta te for life in one-third to surviving spouse with
rem ainder to descendants. If no descendants one-half to surviving
spouse and th e other one-half shall pass according to rule of descent R-ncl
distribution; provided th a t if th e intestate leaves n either fath er nor
m other, th en th e surviving spouse shall be entitled to th e whole or
such real estate. I f no husband or wife survive intestate, all separate
property shall pass as follows: 1 . to children of intestate and his or her
descendants. 2. I f no such children or descendants th en to fath er and
m other in equal proportions. I f only one p aren t survives, th en onehalf will pass to such parent and th e other half to brothers and sisters of
Intestate and their descendants. I f no brothers or sisters, th en the
whole estate shall pass to th e surviving Parent.
I f no brothers or
sisters or parents th en th e inheritance shall divide into m oites, one
of which shall go to th e paternal grand parents an d th eir descendants
and th e other to th e m aternal grand parents an d th eir descendants
(See Dower, H usband and Wife, H om estead).
D ow er. Dower is abolished.
..
E vidence. T h e c o m m o n law rules have n o t been c o d i f i e d . Parties
m ay be exam ined and the other side n ot concluded thereby. Statutes
of other states and territories purporting to be printed under authority
m ay be read. No one is incom petent to testify because of religious
belief. Certified copies of all records in sta te m ay be read. Certi
fied copies of records of all notaries m ay be read. C ourt m ay order
inspection or copy of docum ents.
_..
E x e c u tio n s. Upon a judgm ent of superior court, executions may
be issued to any county. Lien of dates from levy, and if on real Pr°P"
erty, th e description Is endorsed on execution and filed with county
recorder A range levy m ay be m ade upon all of stock under a certain
brand in' sam e m a n n li as upon real estate (See Judf^nent,=Liens.)
Proceedings supplem ental to execution— when retu rn ed unsatisfied
creditor is entitled to an order requiring debtor to answ e r conceming
his property, b u t n ot elsewhere th an in the county of his residence.
T hird parties m ay, upon affidavit, be required to surrender property.
C ourt or judge m ay order suit brought to determ ine th e denial of
° WE x em p \io n s.aVE very°person who is th e head of a family, and
whose fam ily resides w ithin this state, m ay hoid as
exem pt from attachm ent, execution and forced sale,, real property
to be selected by him or her. which hom estead shall be to one com
pact body, n ot to exceed In value four t ^ p o s a ^ dollars upon flling
affidavit designating such hom estead in th e Office o. th e County
Recorder in county where property is situated. Such homestead
exem pt from d a t e o f filing said affidavit The following property
shall be exem pt from execution, attachm ent; and sale on any nrwees»
issued from any court: 1. T he fam ily bible. 2, A seat or pew m
any house or place of public worship. 3. A lot in any burial ground.
4. Necessary household, table and kitchen furniture, in<^ p d in g , ,■
5. The tools or im plem ents of a mechanic or artisan oecessary to
carry on his trade, etc. 6 . The sewing m a c h i n e and implements
of a seam stress actually used in pursuing her vocation. 7.
watch, one sewing m achine, one typew riting m a c h i n e a n d one Di
cycle 7a Five milch cows. 8 . The cam ping outfit of every
prospector in th is state, including his mining tools, saddles and burros.
9. T he farm ing utensils and im plem ents of husbandry o i ®.®,"6
etc. 10. P oultry n ot exceeding in value twenty-five dollars.^
;
Two horses and two mules and th eir harness; one cart or wagon,
one dray or tru ck ; one coupe; one hack 0 ^ ,cJ m age^ f „ onrie_® maI1
horses or one autom obile by th e use of which a ca™ an , nloaborer
truckm an, huckster, hackm an, team ster, chauffeur. or other labore
habitually earns his living, and one horse w ith vehicle or harnessor
other equipm ent used by a surgeon, physician, constable or clergy in
B A N K IN G A N D C O M M E R C IA L L A W S— A R IZ O N A
In th e legitim ate practice of his profession, with food for such horses
or mules for one m onth. 12. Fuel necessary for th e use of the
debtor and his fam ily for th e period of six m onths. 13. T he presses,
stones, type, cases and o ther tools and im plem ents used by any
person or copartnership in printing or publishing a newspaper or in
conducting an y printing establishm ent or by any person hired to use
them ; n ot exceeding two thousand dollars in value; together with
stock in trad e not exceeding four hundred dollars in value. 14. The
library and philosophical and chemical or other apparatus belonging
to an a used for th e instruction of youth in any university, college,
sem inary of learning or school. 15. All m oneys received by or
payable to a surviving wife or child upon th e life of a deceased husband
or father, not exceeding ten thousand dollars. 16. All moneys
arising from fire or other insurance upon any property exem pt from
sale on execution. 17. All moneys, relief, or other benefits payable
to or to be rendered by any police departm ent association, fire
departm ent association, beneficiary association, or fraternal benefit
association, and any person entitled to assistance therefrom , or to
any certificate holder thereof or beneficiary under such certificate.
18. Any claim for dam ages recoverable by any person b y reason
of any levy upon or sale under execution of his exem pt personal
property or b y reason of the wrongful taking or detention of such
property by an y person, and any judgm ent recovered for such
damages. 19. T he earnings of th e m inor child of any debtor or the proceeds thereof by reason of any liability of such debtor not
contracted for th e special benefit of such m inor child. 20. One
half of th e earnings of the wages or salary of any person for his per
sonal services rendered a t any tim e within th irty days next pre
ceding th e levy of attachm ent, garnishm ent or execution when it
appears by th e affidavit of th e debtor or otherwise th a t such earnings
are necessary for th e use of the fam ily residing in th is state, supported
in whole or in p a rt by him. 21. All arms, uniform s and accoutre
m ents required t>y law to be kep t by any person, a n a also one gun
to be selected by th e debtor. 22. All fire engines...........of any fire
departm ent. 23. All courthouses, jails, etc. The property de
clared to be exem pt by this chapter shall not be exem pt from a t
tachm ent or sale in any action brought or judgm ent recovered for
the purchase price of such property so long as such p roperty rem ains
In th e possession of th e original purchaser. (See Hom estead. Liens.)
F ra u d s a n d F r a u d u l e n t C on v ey an ces. Agreem ents m ust be in
writing and signed b y the.parties to be charged: 1. By an executor
or adm inistrator to answer for the d eb t of his testa to r or intestate out
of his own estate. 2. B y a person to answer for th e debt, default or
miscarriage o f another. 3. To charge any person upon an agreem ent
made upon consideration of m arriage 4. For sale of real estate or
lease thereof for a term longer th an one year. 5. Those which are
not to be performed within the space of one year after th e m aking
thereof. 6 . A co n tract to sell or a sale of any goods or choses in
action, of value of $500.00, or upwards, unless buyer accept and
actually receive th e sam e or give som ething in earnest to bind the
contract. 7. An agreem ent authorizing or employing an agent or
broker to purchase or sell real estate, or mines, for com pensation or
commission. 8 . An agreem ent which is n ot to be perform ed during
lifetime of th e promisor, or an agreem ent to devise or bequeath any
property, or to m ake any provision for any person by will. Every
gift, conveyance, or assignm ent, or transfer, or charge upon any
estate, real or personal; any suit commenced on decree, judgm ent, or
executions suffered or obtained, or any bond or other w riting given
with in ten t to delay, hinder, or defraud creditors, purchasers or
other persons, shall to such persons be void. All bargains, sales,
and other conveyances of lands, tenem ents, and hereditam ents,
deeds of settlem ent of m arriage, deeds of trust, and mortgages, are
void as to creditors and subsequent purchasers, w ithout notice,
unless properly recorded. T he creditor m ust be a judgm ent creditor,
and notice m ust be prior to date of judgm ent lien. A judgm ent
creditor m ay be an innocent purchaser. E very gift, conveyance,
assignment, transfer or charge m ade by a debtor, which is n ot upon
consideration deemed valuable in law shall be void as to prior credi
tors, if debtor had n o t then other property in the S tate sufficient
to pay all his indebtedness. N o t on th a t account, however, void
as to subsequent creditors. No gift of any goods and chattels shall
be valid unless duly acknowledged, or proven and recorded, or by
will, or unless actual possession shall have come to and rem ained
with th e donee or some one claiming under him. F raudulent in ten t
Is a question of fact and n ot of law. Conveyance shall not be adjudged
fraudulent m erely because not for valuable consideration. I f any
person shall do or tran sact business as a m erchant or trad er, w ith the
addition of th e words agent, factor, company, or & Co., or words of
like significance or im port, and shall fail to disclose the nam e of his
principal, or partn er, or other person who m ay be interested in such
business by a sign in letters easy to read, placed conspicuously a t the
lace where such business is transacted, or if any person shall transact
usiness in his own nam e, w ithout any such addition, all the property,
stock, money and choses in action used or acquired in such business
except such property as m ay be exem pt from execution, shall, as to
the creditors of any such person, be liable for his debts, and be. In all
respects, treated in favor of his creditors as his property. Crim inal
prosecution for fraud is provided. (See Conditional Sale.)
G a r n is h m e n t. W rit m ay issue: 1. W here writ of attachm ent
has issued. 2. Upon affidavit th a t the d eb t is ju st due, and unpaid,
and th a t defendant has not, within affiant's knowledge, property in
his possession subject to execution sufficient to satisfy such debt, and
that the w rit is not sued o ut to injure either the defendant or garnishee.
3. Upon judgm ent, when affiant m akes affidavit th a t th e defendant
has not, within his knowledge, property in his possession w ithin this
State sufficient to satisfy said judgm ent. Proceedings under sub
division 2 requires a bond in th e am ount of th e debt, conditioned
th at plaintiff will prosecute th e su it to effect, and pay all dam ages
and costs th a t m ay be adjudged against him for wrongfully suing
out the garnishm ent. T he proceedings are docketed and judgm ent
rendered as if in an independent proceeding. Salaries of all public
officers of th e S tate of Arizona or any of its political subdivisions are
subject to garnishm ent. (See A ttachm ent.)
H o lid ay s. T he following days are legal holidays: Sundays;
January 1 (New Y ear’s D ay); F ebruary 14 (Admission D ay— sta te
hood); F ebruary 22 (W ashington’s birthday) ¡ second Sunday in M ay.
known as M o th er’s D ay; M ay 30 (Memorial D ay); Ju ly 4 (Inde
pendence D a y ); first M onday in Septem ber (Labor D a y ); October 12
(Columbus D ay); general election day; N ovem ber 1 1 (Armistice
Day); Thanksgiving D ay; December 25 (Christm as D a y ); and
Arbor Day, which is F riday following April 1 in Apache, N avajo,
Coconino, M ohave and Y avapai counties, and Friday following
February 1 , in all other counties. Any prom issory note, bank check,
bill of exchange, acceptance, or other negotiable instrum ent, m ade
Payable a t any fu tu re period, which falls due on any of these days
mentioned, shall be considered due and collectible on th e day following,
and when any holiday, except M other’s D ay, shall fall upon Sunday,
then th e M onday following shall be considered as a legal holiday.
Writs of injunctions, attachm ents, replevin, and prohibition m ay be
issued and served on.
H om estead. D eed to, must be signed by husband and wife. (See
§
Exemptions.)
H u s b a n d a n d W ife. All property, both real and personal, of
the husband or wife, owned or claimed by him or her before m arJJhge, and th a t acquired afterw ard by gift, devise, or descent, as also
the increase, rents, issues, and profits of the same, shall be his or her
separate property. The earnings and accum ulations of the wife and her
honor children in h er custody while she has lived or m ay live separate
»nd ap art from her husband, shall also be th e separate property of the
wife. All property acquired by either husband or wife during the
marriage, except th a t wbicb Is acquired by gift, devise, or descent, or
earned by th e wife and her m inor children while she has lived or m ay
uve separate and ap a rt from her husband, shall be deem ed the common
property of the husband and wife, and during the coverture personal
Property m ay be disposed of by the husband only- M arried women
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1957
of the age of tw enty-one years and upw ards shall have th e sam e legal
rights as m en of th e age of twenty-one years and upwards, except the
right to m ake contracts binding the common property of the husband
and wife; and shall be subject to the same legal liabilities. (See
Dower. Conveyance.)
I n j u n c t io n . Is issued, where p arty Is entitled to relief and
restraint, is required of some prejudicial act; where, pending litiga
tion, an a ct is done which tends to render judgm ent ineffectual, and
when applicant is entitled under principles of equity. U nder certain
conditions m ay be granted ex parte a t cham bers or by consent.
Bond m ay be fixed by judge and approved by clerk, except to restrain
collection of m oney judgm ent, when it m ust be double the am ount of
such judgm ent.
I n ju r ie s —P e rs o n a l. W orkm en’s Com pensation A ct in force. ,
I n s u r a n c e . (See special chapter pertaining to Insurance.)
I n t e r e s t . M ay contract, in writing, for any rate of, not exceeding
8 per cent per annum . Any rate exceeding th is is usurious. W hen
no express contract, on bond, bill, note, or instrum ent of writing,
or judgm ent, for m oney lent, or due on settlem ent of accounts from
date of ascertained balance, and m oney received for use of another.
Interest is com puted a t 6 per cent per annum .
Person, partnership, corporation, bank or tru s t com pany, national
bank doing business in s ta te m ay m ake installm ent loans n o t to
exceed $ 1,0 0 0 w ith to ta l interest or discount of 8 % added to principal
calculated from d a te of indebtedness.A ny additional sum s charged
except recording fees an d fees for acknowledgm ent constitute usury.
J u d g m e n ts . Judgm ents of superior courts become a lien upon all
real estate of judgm ent debtor in th e county as soon as entered an d
docketed. U pon filing w ith th e clerk of th e superior court a tran scrip t
of judgm ent from justice court or of superior court of another county,
the sam e becomes a lien on all real estate of judgm ent debtor in the
county. No execution can be issued on an y judgm ent after th e
expiration of five years from the date of its rendition and entry, unless
such judgm ent be revived by scire facias or action for d eb t be brought
thereon within such five years.
J u d ic ia l B o n d s. (See Bonds.)
Levy. (See Executions.)
L icenses. F or gambling prohibited.
L ie n s. All persons who m ay labor or furnish m aterials In th e con
struction or repairing of an y building, superstructure, canals, dam s,
mines, or o ther im provem ent, or cuts cordwood. shall have a lien on
the same, and in case of buildings and superstructures, on th e lot of
land whereon the sam e is situ ate and connected therew ith. To fix
and secure th e lien, th e person performing labor or furnishing m aterial
m u s t, within sixty days after th e com pletion of such labor or th e fur
nishing of m aterials, file his contract in th e office of th e county recorder
where the property is situate. I f tb é .contract be verbal, a duplicate
copy of the bill of particulars should be m ade, under oath, an d one
delivered to th e recorder and filed for record and th e other furnished
the party owing the debt, or his agent. L aborers’ and like liens are
preferred to all subsequent liens, mortgages, and incum brances, and
such as lien claim ant had no notice. Suit to foreclose such liens m ust
be commenced within six m onths after filing th e sam e in the recorder’s
office. In case of the levy of w rit of attachm ent or execution, clerks,
laborers, and employes of debtors have a preference claim for wages
for service perform ed sixty days before levy of. writ, n ot exceeding
$200 . upon filing notice of claim unpaid w ith creditor, debtor, an d
officer executing w rit. Proprietors of hotels, boarding houses, and
lodging houses have special lien on all property or baggage deposited
with them by guests for price of guests’ entertainm ent. Agister and
liveryman, garagem en, have lien by sta tu te. (See Judgm ent, M o rt
gage.)
L im ita tio n s . To recover realty against person in peaceable and
adverse possession under color of title, three years; against sucb posses
sion where person pays taxes and has deed recorded, five years, other
wise ten years; to recover lots in city or village against person having
recorded deed, and pays taxes, five years; where p arty in possession
claims by right of possession only, tw o years as against one seeking to
recover possession and showing no b e tte r right. Personal Actions—
One year: M alicious prosecution, false im prisonm ent, libel, slander,
seduction, breach of promise. A ction on liability created by sta tu te,
other th an a penalty or forfeiture m ust be brought within one year
from discovery of fraud. Two years: Personal injuries, trespass to
property, detention or conversion of personal property to own use,
taking and carrying aw ay goods and chattels: and injuries to person
wnere d eath ensues,to accrue from date of death. T hree years:
Actions for deb t n ot in writing; on stated or open accounts other
th an m utual between m erchants or their factors and agents: all
accounts, except as between m erchants and factors and agents, limi
tations run from d ate of each item of delivery. Actions for relief
on ground of fraud or m istake. Four years: F or penalties or dam
ages on any bond to convey real estate; between partners for settle
m ent of partnership accounts; on m utual or current accounts between
m erchants, their factors or agents, to accrue from cessation of deal
ings; upon judgm ent or instrum ent w ithout th e S tate’; bonds of
executors, adm inistrators, or guardian, after death, removal, etc.;
specific perform ance; to contest will after discovery of fraud; and
where no provision is otherwise m ade. Five years: On domestic
judgm ent where execution has been issued within one year after
rendition. Six years: debt evidenced by w riting within th e state.
Action to foreclose lien of mechanic or m aterialm an m ust be brought
within six m onths after filing for record.
M in e s unpatented áre real estate for the purpose of inheritance and
conveyance. Those being com m unity p roperty m ay be conveyed by
spouse having title or rig h t of possession w ithout other spouse join
ing. Location requires seven m onum ents, th ree a t each end, and
one a t discovery, in which notice is to be placed on discovery; title
work consisting of a sh a ft 4 x 6 x 8 feet deep, or its equivalent in
an open cu t so th a t m ineral in place is discovered 8 feet from th e
surface m ust be done and notice recorded within three m onths, and
annual assessm ent work am ounting to $ 10 0 , m aintained each year
thereafter, u ntil p a te n t is ordered.
M o rtg a g e s. All m ortgages of real property and all deeds of tru st
In the nature of m ortgages shall, notw ithstanding any provision in the
mortgage or deed of tru st, be foreclosed by action in a court of com
petent jurisdiction. F ailure of m ortgagee to lawfully release a
satisfied m ortgage for ten days after dem and for the release, subjects
him to liability for $100 and actual damages. M ortgages on real
estate are executed, acknowledged and recorded as conveyances of
real estate. (See Conveyances, C hattel M ortgage, Acknowledgments.
Redem ption.)
N e g o tia b le I n s t r u m e n t s . Uniform N egotiable Instrum en ts Act
adopted. See com plete tex t following “ D igest of Banking & Com
mercial Law s.”
N o ta ry P u b lic . In all certificates and acknowledgm ents the date
of expiration of commission m ust be stated, as “ commission expires".
N otary m ust reside in county for which appointed and has no juris
diction outside of said county.
N o tes a n d B ills o f E x c h a n g e . (See Bills and N otes).
P a r tn e r s h ip s using fictitious nam es m ust file w ith C ounty Recorder
certificate showing nam es of partners and their residences, which
m ust be signed and acknowledged by all partners.
P ow ers of A tto rn e y . No special sta tu to ry provisions relative to.
To confess judgm ent m ust be executed subsequent to m atu rity of debt
confessed, and m ust be acknowledged. To convey lands or release
mortgages should be acknowledged as deeds, and recorded.
P ro b a te L aw . (See Savings B anks and A dm inistration of E states.)
P ro te s t. L iability of draw er or indorser of bill or note m ay be
fixed by regular p ro test an d notice, etc., according to th e negotiable
instrum ents code. (See Bills and N otes.)
R e co rd s. T he superior courts of each county are courts of record.
The recorder’s office in each county relates to titles of real estate
and personal property, and probate record instrum ent therein is
B A N K IN G A N D C O M M E R C IA L LA W S— A R K A N SA S
1958
notice. T he m inutes of the S anitary Lave Stock Board are notice of
all brands and m arks of live stock.
R e d e m p tio n s . From Sheriff or Judicial sales, six m onths, by
Judgm ent debtor, or successors in interest. Senior creditor subsequent
to judgm ent having a lien on th e premises sold, m ay redeem within
five days after expiration of said six m onths, and each subsequent
lien holder, according to priority of lien, w ithin five days after time
allowed th e prior lienholder, by filing w ith C ounty Recorder statu to ry
notices of intention to redeem. The same rule applies to foreclosure
of m ortgages and tr u s t deeds. R edem ption from ta x sales 5 years,
b u t su it m ay be brought by holder of certificate of purchase to fore
close rig h t of redem ption after 3 years.
.. . .
R e p le v in . For possession of specific personal property which has
n ot been seized under any process, execution or attachm ent against
the property of the plaintiff.
S ales. T h e “ uniform sales law ” is in force.
S eals. Addition or omission of seals or scrolls to Instrum ents of
writing in no way affect the force and validity of the instrum ent.
Instrum ents executed by corporations m ust have a corporate seal
a t S erv ice. All summons upon persons shall be personal, or by leaving
a copy w ith copy of com plaint a t the usual place of residence m
defendant, w ith som e person of suitable age and discretion then
residing therein, or to an agent authorized by appointm ent or by
law : upon a dom estic or foreign corporation or partnership or other
unincorporated association subject to su it under a common nam e,
b y delivering to an officer, a m anaging or general agent, or any other
agent authorized by appointm ent or b y law, and, if agent i s one
authorized by s ta tu te and th e sta tu te so requires, by also mailing to
defendant, upon th e s ta te or a m unicipal corporation or other govern
m ental organization thereof subject to suit, by delivering to chief
executive officer or th e secretary, clerk or recording officer thereof.
S u its . (See Actions.)
T ax es. Aside from those levied by legislative enactm ent for
specific purposes, as for the construction and m aintenance of public
institutions, etc. S tate taxes are levied by the S tate Board of E qual
ization; county taxes by the boards of supervisors of the several
counties, and city taxes by the common councfis of the various cities.
Railroads are valued for the purpose of taxation by the S tate B oard of
E qualization. O ther property is valued by county assessors. The
assessing of value begins m Jan u ary of each year. The lien attaches
on th e first M onday of January of each year. One-half of taxes be
come due and payable on first M onday in Septem ber and becwne
delinquent on the first M onday in Novem ber next thereafter. Re
maining one-half become due and payable on first M onday in M arch
and become delinquent on first M onday in M ay next thereafter.
T he penalty for delinquency is 4 per cent added thereto and interest
from d ate of delinquency until paid a t rate of 10 per cent
a^um k
C ounty T reasurer shall advertise property for sale for delinquent
taxes and sell sam e not earlier th an th e first of October nor later th an
th e first day of November'. '
T ra n s fe r o f C o rp o ra tio n S to c k s. (See Corporations.)
W a re h o u s e s. Personal property in, m ay be sold for unpaid
W ills. Wills m ust be in w riting, signed by the testator, or by some
one for him , in his presence and by his direction, and m ust be attested
by tw o or more credible witnesses above th e age of fourteen years. In
th e presence of each other and the testator.
W hen the will is wholly
w ritten b y th e testator, no witnesses are necessary. N un-cupative
wills m ay be m ade when property willed does not exceed in value
$50, unless it be proved by three credible witnesses th a t th e testator
called on some person to take notice and bear testim ony th a t such is
his will, and th a t the testim ony, or the substance thereof, was com
m itted to w riting w ithin six days after the making of such will; in
such case th e am ount willed is not lim ited. Wilis are revocable by
subsequent will, codicil, or declaration in writing, executed with like
formalities as in execution of will, or by testa to r destroying, canceling,
or obliterating the same, or causing it to be done in his presence, or
by subsequent m arriage, and no provision is m ade for wife. Foreign
wills, th e probate whereof is duly authenticated, m ay be probated
here. Contests of wills can not be initiated after one year from date
of probating.
S Y N O P S IS O F
THE LAW S OF ARKANSAS
RELA TING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S .
Revised by S y d n e y S. T a y l o r , A ttorney a t Law, A rkansas N ational
B ank Bldg., H ot Springs N ational P ark. Ark.
A c c o u n ts . In suits upon accounts th e Affidavit of th e plaintiff
th a t th e account is ju st and correct shall be sufficient to establish
th e sam e unless th e defendant shall under oath deny th e correctness
of th e account, either in whole or in p a rt; in which event th e plaintiff
shall be held to prove such p a rt of his account as is th u s denied by
other evidence.
A c k n o w le d g m e n ts m ay be taken w ithin th e S tate before the
suprem e or circuit court, or a judge thereof, county and probate
court, or by county or probate judge, or clerk of any court or record,
or if acknowledgment is taken before a Justice of Peace it should be
a Justice of Peace of its county where real estate is located, or notary
public: elsewhere in th e U nited S tates before any court having a seal,
or clerk of such court, notary public, unless taken out of state, commissioner of Arkansas; w ithout th e U nited States before any court
having a seal, m ayor of a city having a seal, United S tates consul,
or any officer authorized by th e laws of such country to p robate
conveyances of real estate, provided he has a seal.
A d m in is tr a tio n of E s ta te s . Executors and adm inistrators m ust
be residents of th e S tate and m ust give bond in double th e value of
th e personal property. Claim s are classified as follows: First,
funeral expenses and of last illness, wages of servants and medical,
medicine, and hospital bills; Second, judgm ents rendered against th e
deceased in his lifetim e which are liens on th e lands of th e deceased:
T hird, all dem ands w ithout regard to quality which are exhibited
to th e adm inistrator within six m onths after th e granting of the
letters; F ourth, all dem ands as m ay be exhibited after six m onths
an d w ithin one year after th e granting of the letters of adm inistra
tion. All dem ands n ot presented w ithin one year are barred by
lim itation. D em ands m ust be authenticated by an affidavit to th e
effect th a t nothing has been paid or delivered tow ard th eir satisfaction except w hat is credited thereon, and th a t th e sum dem anded,
nam ing it, is justly due. Dem ands m ust first be presented to the
executors or adm inistrators for action and if disallowed by him m ay
be presented to th e p robate court for allowance. N otes and debts
secured by m ortgages m ust be probated as any other claim if it is
desired to hold th e estate responsible.
A ffidavits in this S tate are m ade before a judge, justice of the
peace, notary public, or clerk of th e court; w ithout the S tate before
a judge, m ayor, notary public, justice of the peace or commissioner
for th is State.
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A s sig n m e n ts fo r t h e B e n efit of C re d ito rs , are a very popular
m ethod of winding up insolvent concerns where there is a prospect
of a reasonably good dividend. As soon as th e assignm ent is niade
it is th e d u ty of th e assignee to tak e im m ediate possession of th e
property, m ake a detailed inventory of sam e and file th e deed with
th e chancery court together w ith th e bond in double th e am ount of
th e value of th e property. T he sale and distribution of th e assets
and th e entire adm inistration of th e estate is handled under th e direc
tion of th e chancery court. Releases m ay be exacted as th e condition
for participating in th e assignm ent.
A tta c h m e n ts m ay be sued out where th e defendant is a foreign
corporation or non-resident, or being insolvent has been absent from
the S tate four m onths, or has left th e S tate w ith in ten t to defraud his
creditors, or has left th e county of his residence to avoid th e service of
summons, o r conceals himself so th a t sum m ons can not be served on
him, is or about to remove or has rem oved a m aterial p a rt of his prop
erty out of th e S tate, not leaving enough to satisfy his creditors, or has
sold, conveyed or otherwise disposed of his property, or suffered it to be
sold w ith the fraudulent intent to cheat, hinder, or delay his creditors,
or is about so to do. I t is obtained by fll'ng an affidavit statin g the
nature of th e plaintiff’s claim, th a t it is just, Its am ount and th e exist
ence of the ground, and by giving bond conditioned to pay all damages
the defendant m ay sustain if th e attachm ent is wrongfully sued out.
- The defendant is allowed to traverse the attachm ent, and the affidavit
and traverse then stand as pleadings upon which th e issue is tried.
If the attach m en t Is dissolved, the defendant m ay have an assessment
of damages upon the bond in the sam e suit. Persons claiming the
attached property m ay interplead in the sam e action. A ttachm ents
m ay be sued out before the debt is due where the defendant has sold,
conveyed, or otherwise disposed of his property, or perm itted it to be
sold with the fradulent in ten t to cheat, hinder or delay his creditors,
or is so to do, or is about to remove his property, or a m aterial part
thereof, o ut of the S tate with the in ten t of cheating, hindering or delay
ing bis creditors.
B a n k s . T he banking business is controlled b y a S tate Bank
D epartm ent under th e direction of a bank commissioner and a sta te
bank board. T he S tate Bank Board is composed of five members,
all of whom m ust be residents of this S tate of th e age of thirty-five
years or over, two of whom shall be active bankers, a t least one of
whom shall in no event be an officer or director of any bank or tru st
com pany of th e S tate of A rkansas and all of whom shall be appointed
by th e Governor.
All applications for charters for th e new banks an d for approval
of am endm ents of th e charters of existing banks shall, im m ediately
upon their filing w ith th e S tate B ank Commissioner, be sub m itted to
th e board for investigation and for approval or disapproval by it.
I f th e application be approved, th e B ank Commissioner m ay, in th e
event th a t he also shall approve th e application, gran t th e charter
therein requested or approve th e proposed charter am endm ent, n o
bank or tru s t com pany shall change or rem ove th e location .or its
banking house, office or place of business from one tow n or city to
another save by charter am endm ent first approved by th e Bank c o m
missioner and th e S tate Banking Board.
In th e event of great financial stress or other emergency any city,
county or regional clearing house association of banks or tru s t com
panies in this sta te m ay, w ith th e approval of th e bank commissioner
and th e Governor, restrict th e right of any bank or tru s t companies
whose banking houses or places of business shall be located w ithin the
territorial boundaries of such clearing house to pay checks or other
orders draw n upon or against deposits for such tim e, to such extent
and in such m anner as shall to it appear necessary or desirable for
th e protection of depositors and other creditors.
E very bank shall, a t all tim es, have on hand as a reserve an am ount
equal to a t least fifteen per cent of th e aggregate sum of its deposits.
A p a rt of said fifteen per cent shall be in cash in th e vaults an d the
rem ainder thereof m ay be held on deposit subject to check w ith any
other bank which m ay have been approved by th e Commissioner as
reserve agents.
Any five or more qualified n atu ral persons, a m ajority of whom
«■hail be bona fide residents of Arkansas, who m ay desire to associate
them selves by articles of agreem ent for th e purpose of establishing
an y bank or tru s t com pany, m ay apply to th e Commissioner to be
incorporated and shall subm it th eir proposed articles of agreem ent in
dUThe^stock of every bank shall be deem ed personal p roperty an d in
case of sale shall be transferred only on th e books of th e bank. W hen
ever any stockholder m ay wish to transfer his stock, certificates in
duplicate of such transfer, signed by th e President and Cashier or
Secretary, and setting forth th e nam e and residence of th e transferror
and transferee, shall first be sent to th e B ank Commissioner. The
Commissioner shall thereupon endorse upon said duplicate certificate
his approval or disapproval of th e transfer showing th e d ate thereof.
A fter m aking such endorsem ent, th e Commissioner shall, w ithin 30
days from the receipt of such certificate, forward th e original copy
of th e certificate to th e Bank. T he Bank m ay th en file th e certificate
with th e Clerk of th e C ounty in which th e b ank is located. N o trans
fer of bank stock shall be valid as against creditors of th e transferror
T he affairs and business of any incorporated bank shall be m an
aged and controlled by a board of directors of n ot less th an th ree who
shall be selected from th e stockholders a t such tim es in such manner
as m ay be provided by its by-laws. No person shall be eligible to
serve as a director of any bank unless he shall be a bona fide owner or
stock fully paid up and n ot hypothecated of th e par value or $500.
N o bank shall engage directly or indirectly in trad e or commerce
by buying or selling goods, chattels and m erchandise nor m ay It
purchase or hold its own capital stock unless such purchase shall
be necessary to prevent loss upon a debt previously contracted in
good faith; and stock so purchased or acquired shall, w ithin twelve
m onths of its purchase, be sold or disposed of a t private sale. A
bank m ay hold and sell all kinds of property th a t m ay come in to ,« 8
possession as collateral security for loans or any ordinary collection
or debts b u t m ust dispose of it as soon as possible and within twelve
m onths. Banks can not lend money on their own stock.
N o stockholder of any bank whose deposits are insured by the
F. Di I. C. shall be subject to any assessment or liability imposed
by any law of this S tate upon stockholders of banks. Upon th e date
of procuring such insurance th e stockholder of said Bank shall be
released and relieved from all liability imposed by an y law of this
S tate upon any bank stockholders. The purpose and in ten t of this
sta tu te are to m ake th e stockholders of banks whose deposits are
insured by th e F. D. I. C. liable to th e sam e extent as stockholders
of ordinary business corporations b u t no further.
W henever a sta te or national bank whose deposits are insured by
th e F. D. I. O. shall be appointed as an executor or adm inistrator or
guardian and th e moneys to come into its hands do n o t exceed Five
T housand Dollars. I t is n ot necessary th a t th e said bank execute
a bond. If the am ount exceeds Five Thousand Dollars th e bank or
tru s t com pany is required only to give bond and security for the
excess.
If a check is presented for paym ent more th a n six m onths after
its date th e bank m ay a t its option refuse paym ent unless expressly
instructed by th e draw er a t or prior to such presentation to pay same.
Acts required on a holiday m ay be done upon th e next succeeding
business day.
„ , ,
.
.
Real estate acquired through th e collection of debts previously
contracted in th e due course of business shall n ot be held by tne
bank as an asset for a longer period th a n five years. In terest on
¿deposits in excess of four per cent is prohibited,
jjr A bank m ay n ot loan over tw enty per cent of its capital stock to
' any one person.
B A N K IN G A N D C O M M E R C IA L L A W S— A R K A N S A S
B ills a n d N o tes. W ith a few m inor variations th e Arkansas Act
is a literal copy of th e Uniform Negotiable Instrum ents Law. Bills
and notes given for any p atented machines, instrum ents or im plem ents
of an y kind to a citizen of this S tate are not commercial paper, unless
it shall be executed on a printed form and show th a t it is executed
in consideration of a p atented machine, etc. and no person should
be considered an .innocent holder of sam e though he, m ay have given
value for sam e before m atu rity and th e m aker m ay m ake any defense
to th e collection of sam e in th e hands of any holder. All such notes
n ot showing on th e face for w hat th ey shall be given are void. This
does n o t apply to m erchants or dealers who sell p atented things in th e
usual course of business. N o note given for prem ium s on insurance
in th is S tate shall be negotiable u ntil th e policy for which th e said
note was given as paym ent for prem ium thereon shall have been
issued and delivered to th e m aker of th e note and all notes so given
shall set forth w hat purpose th ey were given. T he following dam ages
are allowed where a bill is protested for non-acceptance or non-pay
m ent. I f th e bill is draw n on any place in this State, 2 per cent; if
the bill is draw n on an y person in payable in Alabam a, Louisiana,
Mississippi, Tennessee, K entucky, Ohio, Indiana, Illinois, or M is
souri, or an y p oint on th e Ohio River, 4 per cent; if draw n on any
other place in th e U nited States, 5 per cent; if beyond th e lim its of
the U nited States, 10 per cent. For a non-paym ent after acceptance
within this S tate, 2 per cent; w ithout th e S tate, 6 per cent; foreign
countries, 10 per cent.
B ills o f L a d in g . (See W arehouse Receipts and Bills of Lading.)
B lu e S k y L aw . T he S tate B anking D epartm ent has full au th o riiy
to perm it or prohibit th e sale of contracts, stocks, bonds and other
securities in Arkansas. An application m ust be m ade and permission
obtained before said securities can be offered for sale. Suits m ay be
commenced against every foreign or dom estic com pany holding per
mits issued by th e Arkansas B ank Commissioner for any cause of
action arising o u t of th e sale or offer for sale of any of its securities
and process m ay be served on th e B ank Commissioner.
C o lla te ra ls are governed by th e law m erchant.
C o n tr a c ts touching commercial m atters are governed b y th e law
m erchant.
C o n v ey an ces. A m arried woman m ay convey her separate real
estate by deed of conveyance executed by herself th e sam e as if she
were a feme sole. A m arried woman m ust join in th e Deed of her
husband to relinquish her dower and hom estead rights and m ust
acknowledge sam e in th e proper m anner. All acknowledgments should
be in th e proper sta tu to ry form . T he legislature from tim e to tim e
enacts curative acts.
C o rp o ra tio n s . T hree or m ore persons of full age m ay form a
corporation for an y lawful purpose by filing in th e office of th e Secre
tary of S tate articles in duplicate originals showing th e nam e of th e
proposed corporation, which m ust end w ith th e abbreviation “ in c .”
or m ust include th e word corporation. T he Articles m u st sta te
the purpose of th e corporation; th e duration m ay be perpetual or
limited; it m u st sta te th e nam e of th e county and th e city in which
its principal place of business is located and th e nam e of its resident
agent and th e to tal num bers of shares of stock which th e corporation
shall have a u th o rity to issue m entioning th e par value of each share
or statin g th a t th ey are to be w ithout par value. The am ount of
paid-in capital w ith which th e corporation will begin business shall
not be less th an $300.00. The nam e and address of th e incorporators
and th e num ber of shares subscribed for by each and an y general
provision for regulation of th e corporation. The following are
excluded from th is form of incorporation; banks, tru s t companies,
railroad companies, corporative m arketing association, fratern al
benefit societies, fairs or expositions. T he later are all covered by
special acts. Upon filing w ith th e Secretary of State, th e duplicate
copy bearing th e file m ark of th e Secretary should be filed w ith th e
County Clerk in th e C ounty in which th e corporation has its place
of business. E very holder of shares of stock n ot fully paid shall be
personally liable for any debt of th e corporation to an am ount equal
to th e unpaid balance. T ransfer of stock is guided by th e Uniform
Stock T ransfer Act. Any foreign corporation seeking permission
to do business in th is S tate m u st file w ith th e Secretary of S tate a
copy of its articles of incorporation together w ith a statem ent of its
assets and liabilities an d th e am ount of capital employed in th is
State and shall also designate its general office or place of business
in this S tate and shall nam e an agent upon whom process m ay be
served.
C o sts. A plaintiff who is a nonresident of this S tate, or a corpora
tion other th an a b ank created b y th e laws of this S tate can be required
on notice to file a bond for th e paym ent of all costs which m ight accrue
in th e action which it has brought.
C o u rts. T he suprem e court is held a t L ittle Rock and has juris
diction of appeals from th e circuit and chancery courts. T his S tate
has separate chancery courts which handle all equity m atters including
divorces and foreclosures of liens. T he C ircuit C ourt shall have juris
diction in all civil an d crim inal cases, th e exclusive jurisdiction of
which m ay not be vested in some other court. In other words, th e
circuit court is th e general tria l court of all cases. The probate
court has jurisdiction of all probate m atters b u t is presided over by
the chancellor. However, this court is entirely separate from th e
chancery court. Justice courts and m unicipal courts have exclusive
jurisdiction in all m atters of contract where th e am ount in contro
versy does n o t exceed th e sum of $ 100.00 and concurrent jurisdiction
in m atters of contract, where th e am ount in controversy does not
exceed th e sum of $300.00 exclusive of interest, and has concurrent
jurisdiction for th e recovery of personal property where th e value
does not exceed th e sum of $300.00. M ost of the cities have abolished
justice courts and have m unicipal courts exclusively.
C o u rtesy . Upon th e d eath of a m arried woman intestate, her
husband shall be entitled to one-third of her real property for life, and
one-third of her personal property in fee, where she leaves descendants;
but th e rights of th e husband shall be lim ited to such proportionate
share after th e paym ent of all her debts.
Deeds. (See Acknowledgments and Conveyances.)
D ep o sitio n s m ay be taken In the S tate before any judge or clerk of
• c o u r t of record, justice of the peace, m ayor, or notary public; out
or the S tate before a commissioner for this State, judge, justice of the
peace, mayor, notary public, or person commissioned by the court or
by consent of parties.
. D escents a n d D is tr ib u tio n s . P roperty descends to children and
cne*r descendants in equal parts; if no children, then to father, then to
mother, then to brothers and sisters and their descendants in equal
parts, and in default of such to th e nearest lineal ancestor or his
descendants in equal p arts per stirpes. Illegitim ate children inherit
M a transm it an inheritance from th e m other in the sam e m anner as
illeg itim a te . I f th e parents of illegitim ate children subsequently
intermarry and th e fath er recognizes them as his, they shall be deemed
legitimate. In default of heirs the whole property goes to husband
or wife, and in th eir default to the S tate. I f the estate is ancestral it
goes to the blood of th e ancestor from whom it was derived. Rela
tions of the half-blood inherit equally. Heirs take as tenants in
common.
p ^ iy o rc e . I t is necessary th a t a person be a resident of th e S tate
*easi 2 m onths prior to th e filing of th e Com plaint in th e divorce
action and a final decree cannot be had unless he has been a resident
at least 3 m onths in th e S tate a t th e tim e th e decree is entered.
are granted by th e Chancery C ourt and in H ot Springs th e
i f ™ 1 k *n session all of th e tim e and all proof is subm itted on deposirrSP8’ j n ot being necessary for th e plaintiff to appear in th e courtm person. T he grounds for divorce are: Where either p arty ,
at tne tim e of th e contract, was or is im potent; desertion for the period
oi one year; where he or she had a form er wife or husband living a t the
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1959
tim e of th e m arriage sought to be set aside; where either p a rty shall be
convicted of a felony; where either p a rty shall be addicted to b ab itu a
drunkenness for the, period of one year, or shall be guilty of such
cruel and barbarous treatm en t as to endanger th e life of th e other,
or shall offer such indignities to th e person of th e other as to render
th e condition intolerable; where either p a rty shall have com m itted
ad u ltery subsequent to such m arriage; separation for three years
w ithout cohabitation.
D ow er. Where there are children the wife takes one-third of the
husband's personal estate absolutely and ohe-third of the real estate
of which he was seized a t any tim e during the m arriage, for life. W here
there are no children she takes in a new acquisition one-half of th e real
and personal estate absolutely as against heirs, or one-third absolutely
as against creditors. I f it is an ancestral estate, she takes one-half for
life against heirs and one-third for life against creditors. H usband
takes same interest in wife’s property by courtesy after death of wife.
I f wife kills husband or husband kills wife and is convicted of m urder
in first or second degree for such homicide their dower and curtesy
rights are forfeited.
E x e c u tio n s from the circuit court are returnable in sixty days,
those from justices’ courts within th irty . T hey m ay be stayed for
six m onths b y giving bond. T hey are a lien on th e personal prop
erty of th e defendant in th e county from th e tim e they come to th e
officers’ hands. T he officer before levying on personal property, th e
title to which is doubtful, m ay require th e plaintiff to give him an
indem nifying bond, and then su it m ust be brought by th e claim ant
upon th e bond. T he defendant and other judgm ent creditors have
one year in which to redeem from th e sale of real estate. In case th e
w rit is returned nulla bona th e plaintiff m ay proceed by bill of dis
covery against th e defendant and examine him on oath, and enforce
a surrender of concealed property by im prisonm ent.
E x e m p tio n s . U nm arried persons are entitled to $200 and m arried
persons and heads of families to $500 in selected articles of persona)
property as exem pt against debts by contract. No personal property
exem pt as to to rt judgm ents b u t hom estead is so exem pt. Persons who
are m arried or heads of families are entitled to a hom estead as against
all debts, except th e purchase-m oney, specific liens, laborers, and
mechanics’ liens, taxes and claim s for tru s t funds converted. The
hom estead in th e country is n ot to exceed 160 acres, and in tow n not
to exceed one acre, nor to be w orth m ore th an $2,500, b u t th e country
hom estead is n o t to be reduced to less th an 80 acres nor th e town
hom estead to less th an one-fourth of an acre, regardless of value.
T he hom estead «roes to th e widow and m inor children after th e hus
band’s death. T he hom estead can only be conveyed by deed in
which th e wife joins and which is acknowledged by her, and if th e
husband neglects to claim th e hom estead th e wife m ay do so.
F r a u d . S ta tu te of F rauds has been re-enacted in this S tate and
a S tandard B ulk Sales Law.
G a r n is h m e n ts m ay be sued o ut pending suit upon giving bond
in double th e am ount garnished, or after judgm ent w ithout bond.
G arnishm ent m ay be discharged and funds or p roperty in hands of
garnishee released by filing bond for double the am ount of sum
garnished. U pon judgm ent being rendered against defendant sum
m ary judgm ent m ay be rendered against sureties on bond. A ct 177
of Acts 1925.
H o lid a y s. T he legal holidays are: Sundays; Ja n u ary 1 (New
Y ear’s D ay); Ja n u ary 19* (Robt. E . Lee's b irth d ay ); F ebruary 22
(W ashington’s b irth d a y ); M ay 30 (Decoration D a y ); Ju n e 3 * (Jeffer
son D avis’ b irthday); Ju ly 4 (Independence D ay); first M onday in
Septem ber (Labor D ay); October 1 2 * (Colum bus D ay); general
election day; N ovem ber 1 1 (Armistice D ay); Thanksgiving D ay;
Arbor Day* (first S aturday in December, a special day) ; an d D e
cem ber 25 (Christm as D ay). W hen bills become due on an y of
these days, th ey are payable th e next business day. October 12th
is Colum bus Day* (a public holiday, b u t n ot affecting commercial
paper, or th e execution of w ritten instrum ents, nor interfering with
judicial proceedings).
*These days are not generally observed. Banks are open.
H u s b a n d a n d W ife. (See M arried Women.)
I n ju n c tio n s m ay be issued by circuit judges, chancellors, or the
judge of any court In which suit is brought. The person applying
for th e injunction m ust give bond as th e court or judge m ay direct in
absence of both circuit and chancery judges, county judge m ay issue
injunction.
In so lv en cy . The Supreme C ourt has held th a t the Federal B ank
ruptcy Act has suspended the S tate insolvency laws.
I n te r e s t. T he legal rate of interest is 6 per cent, b u t parties m ay
contract in w riting for not exceeding 10 per cent. In terest exacted in
excess of 10 per cent forfeits th e debt. In com puting the interest
commissions paid to the agent of the lender are counted as interest.
Where usury is charged the borrower m ay go into equity and have the
debt and securities cancelled w ithout tendering the am ount lawfully
due. Judgm ents bear the same rate of interest as the obligation sued
on. Judgm ents against counties bear no interest.
J u d g m e n ts . A judgm ent of a court of record shall be a lien on th e
real estate owned by th e defendant in th e county in which th e judg
m ent was rendered from th e date of its rendition for a period of three
years b u t it is not a lien on th e land of a defendant in other counties
unless a tran scrip t of th e judgm ent is filed in th e office of th e clerk
of each county in which th e real estate is situated. Judgm ents of th e
U nited S tates C ourts can be m ade liens on th e real estate by filing a
transcript in th e office of th e circuit clerk. A judgm ent of lower
courts m ay be ab stracted an d filed in th e office of th e circuit clerk
whereupon it becomes lien on real estate for a period of three years.
C ircuit C ourt liens m ay be continued in force by reviver. A judg
m ent of th e circuit or chancery court is good for ten years an d can
be revived any tim e during th a t period, m aking it good for another
ten years. Judgm ents of M unicipal and J. P . C ourts are only good
for five years.
J u r is d ic tio n . (See Courts.)
L ie n s. M echanics, builders, artisan s laborers, and others doing
any work upon or furnishing any m aterial for any building or erection
under any contract with the owner or his agent, contractor or sub
contractor- shall have for such work or m aterial furnished a lien on
the building or im provem ent together w ith the land on which it stands
to the extent of one acre if in the country; if in a city the lot or land
upon which the erection is situated. H otel keepers have lien on
baggage and personal effects of guests. Liverym en have lien on all
stock and property left in th eir care.
L im ita tio n s . Suits for the possession of real estate m ust be
brought within seven years, saving to minors and lunatics three
years after their disabilities are rem oved. Actions for recovery of
lands sold a t judicial sales m ust be brought within five years, saving
to minors and lunatics three years after rem oval of disabilities.
Actions for the recovery of lands held under tax title m ust be brought
In two years. Actions for forcible entry and detainer, on contracts
not in writing, for trespass and for libel, within three years. Actions
for criminal conversation, assault and battery, false im prisonm ent,
and slander, within one year. Actions on w ritten instrum ents, within
five years; on judgm ents, within ten years; on bonds of executors
and adm inistrators, w ithin eight years. In all cases, except actions
for the recovery of lands, minors and lunatics have, after removal
of their disability, the sta tu to ry period in which to sue. Verbal
promises or acknowledgm ents do not take a claim o ut of the sta tu te.
One year is allowed after dismissal of a su it in which to begin a new
action. No person can avail himself of a disability which did not
exist a t the tim e the right of action accrued. No endorsem ent of pay
m ent m ade by the payee ,or on his behalf Is sufficient proof to take
the case out of the sta tu te .
1960
B A N K IN G A N D C O M M E R C IA L L A W S— C A L IF O R N IA
M a rrie d W o m e n . T he property, real and personal, of m arried
women rem ains their separate estate as long as they choose, and m ay
be devised or conveyed w ithout the husband’s assent, and is not
subject to his debts. I f she dies w ithout m aking any disposition of
her real estate, he is entitled to curtesy if th ey have or have had issue
born alive. She m ay carry on any business or perform any services
on her own account, and her earnings are hers, and she m ay sue alone
in respect of her separate property. She can bind herself by contract
only in reference to her separate estate or business. She can not
enter in to partnership w ith her husband. I f she does not file a
schedule of her personal property, th e burden of proof is on her to
show th a t it is hers.
M o rtg a g e s . Deeds of tru s t should be properly acknowledged and
filed for record, otherwise are n ot such liens as would effect th e title
of th e th ird person. M ortgages of real estate should be recorded
in th e county where th e land lies. M ortgages are barred five years
after th e m atu rity of th e obligation which it secures unless a notation
is m ade on th e m argin of th e record showing paym ent of interest
or p a rt of th e principal. M ortgages are foreclosed in th e chancery
court an d sold by commissioner appointed by th e court. C hattel
m ortgages m ay be filed as other m ortgages or m ay be filed b u t not
recorded. T hey should be filed in th e county in which th e property
is located.
C h attel M ortgages m ay be acknowledged and filed as other m ort
gages, or th ey m ay be endorsed “ T his instrum ent is to be filed b u t not
recorded,” signed by the m ortgagee, and m ay th en he filed in the
recorder’s office w ith the sam e effect as though recorded. M ortgages
of personal property reserving in th e m ortgagor th e power of disposi
tion are fraudulent.
M o rtg a g e s a n d D eeds of T r u s t m ay be enforced by foreclosure
a t an y tim e within th e period prescribed by law for foreclosing m ort
gage or deed of tru st so far as th e property m entioned and described
m such m ortgage or deed of tru st is concerned, b u t no claim or debt
against th e estate of a deceased person shall be probated against
such estate w hether secured by m ortgage or deed of tru st or not
except within th e tim e prescribed by law for probating claims against
said estate.
N e g o tia b le I n s t r u m e n t s . T he U niform N egotiable Instrum ents
Act adopted. (See com plete tex t following “ D igest of B anking and
Com m ercial Law s.”
P ro b a te L aw . (See A dm inistration of E states.)
P r o te s ts . (See Bills of Exchange and Prom issory N otes.)
R e co rd s. (See Acknowledgments, Conveyances, M ortgages.
C h attel M ortgages, and Powers of A ttorney.)
R e d e m p tio n . Owners of real estate sold for taxes m ay redeem
from such sales w ithin tw o years after sale.
R e p le v in . T he plaintiff in replevin m ay file an affidavit describing
th e property, stating its value and the am ount of damages he expects
to recover, his title, th a t the property is wrongfully detained by the
defendant, th a t it has not been taken for a tax or under process against
plaintiff, an d th a t his cause of action has accrued within three years,
and upon giving bond-in double its value, the property shall be taken
from th e defendant and given to the plaintiff pending the suit, unless
th e defendant w ithin two days after it is taken gives a cross-bond.
R e v isio n . T he last revision of the sta tu tes was in 1937.
S ales. Conditional sales contracts do n o t have to be recorded.
U pon breach b y th e vendee th e vendor m ay either repossess th e
p roperty or sue for its value.
T ax es. All property should be assessed for taxes between th e
first M onday in Ja n u ary and th e 10th day of April, in th e county in
which th e pro perty is located. T he S tate T ax Commission has
general supervision and control of th e ta x m atter. Taxes m ay be
paid in th ree installm ents, th e first quarter being payable between
th e first M onday in Jan u ary and th e 10th of April, th e second being
payable before th e 10th of Ju ly and th e balance being payable before
October first. If taxes are not paid by th a t d ate all delinquent
property is sold by th e collector under proper notice for th e taxes.
T he taxes are a first lien upon all real and personal property.
T e s tim o n y . (See E vidence.)
T ra n s fe r o f C o rp o ra tio n S to c k . (See Corporations.)
T r u s t C o m p a n ie s m ust have a paid-up capital of $50,000, and
In counties w ith a population exceeding 50,000, th ey m ust have a sub
scribed capital of n ot less th an $100,000. T hey m ay exercise all the
powers commonly conferred on such companies.
W a re h o u s e R e c e ip ts a n d B ills of L a d in g shall n ot be given
except where th e commodities m entioned are received on the premises,
and are under the control of the warehousem an a t the tim e of its
issuance. No warehouseman shall sell, encum ber, ship, or remove
any such com m odity for which a receipt has been given w ithout the
w ritten assent of the holder of the receipt. T he same provisions cover
owners and agents of boats and vessels. All warehouse receipts and
bills of lading are m ade negotiable by w ritten endorsem ent and
delivering th e same as bills of exchange and promissory notes, and no
printed or w ritten conditions, clauses, or provisions inserted in oi
attach ed to th em shall in any way lim it their negotiability or im pair
th e rights and duties of the parties thereto, or persons interested
therein, or such conditions shall be void. W arehouse receipts given
by any warehouseman or o ther person for goods and other com
m odities deposited, and all bills of lading given by any carrier, boat,
vessel, railroad, transportation, or transfer company m ay be trans
ferred b y endorsem ent and delivery; and the transferee shall be
deemed to be th e owner of such com m odities so far as to give validity
to an y pledge, lien, or transfer given, m ade, or created thereby; and
no property so stored or deposited shall be delivered except on sur
render and cancellation of such receipts and bills of lading, unless
such receipts and bills of lading have the words “ n ot negotiable”
plainly w ritten or stam ped on their face. A carrier m ay however
deliver to shipper or consignee goods w ithout presentation of bill of
lading upon receiving from such shipper or consignee bond in double
th e value of th e goods conditioned for, delivery to th e carrier there
after th e original bill of lading (acts 1907). Penalties are denounced
against an y warehouseman or other person who shall violate any of
the provisions of this sta tu te . So m uch of th e act as forbids the
delivery of property except th e surrender and cancellation of the
original receipt or bill of lading shall not apply to property replevined
or rem oved by operation of law.
W ills. A will m ust be subscribed by th e te sta to r or by some person
for him a t his request in the presence of two attestin g witnesses, and he
m ust acknowledge it to be his will to each of them . H e m ust declare
a t th e tim e of his subscription or acknowledgm ent to th e witnesses
th a t th e instrum ent is his will and testam ent. T he witnesses m ust
sign th eir nam es a t th e end of the will as witnesses a t the request of
th e testato r. If, however, th e entire will is in the hand-w riting of the
testator, it need n ot be attested, b u t m ay be proved by three witnesses
fam iliar w ith th e hand-w riting. Such will, however, can not be
pleaded in b ar of an atteste d will. Wills are revoked by m arriage and
b irth of issue, unless provision for such issue is m ade by settlem ent,
or is provided for in the will. T he will of an unm arried woman is
revoked by her m arriage. A fterbora children, not m entioned in the
will, tak e th eir regular distributive share. I f the testa to r fails to
m ention in his will any child, or its legal representatives, living a t th e
tim e of executing th e will, he shall, as to such child, or its represent
atives, be deem ed to have died intestate, and such child, or its rep
resentatives. is entitled to its regular share.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
S Y N O P S IS O F
THE LAW S OF CALIFORNIA
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S .
Revised b y T a n n e r . O d e l l & T a f t ,
A ttorneys a t L aw , S uite 524 Van N uys Building.
Los Angeles.
(See C ard in A ttorneys’ List.)
A c c o u n ts. An account is assignable, and the assignee m ay m ain
tain an action thereon, although the account is assigned m erely for
collection. An action to recover a balance due upon a m utual current
and open account or upon an open book account is barred after four
years. T he cause of action on an open account is deemed to have
accrued from th e date of th e last item . In th e case of a book account
consisting of a single item it becomes outlawed four years after its
date. (See Actions and Lim itations.)
A c k n o w le d g m e n ts . Before an Instrum ent can be recorded, its
execution m ust be acknow ledged' by th e person executing it, or if
executed by a corporation, by its president or secretary, or other
person executing th e sam e on behalf of th e corporation, or if a p art
nership by a m em ber thereof (to be so identified in th e acknowledge
m ent) or proved by a subscribing witness, or by judgm ent in an
action brought for th e purpose. T he proof or acknowledgment of
an instrum ent m ay be m ade a t any place w ithin th e S tate before
a justice or clerk of th e suprem e court, and within th e city, county
or tow nship for which th e officer was appointed or elected, before
either: (1) A clerk of a court of record; (2) a county recorder; (3) a
court commissioner; (4) a notary public; (5) a justice of th e peace.
Officers taking and certifying acknowledgm ents or proof of instrum ents
for record m ust authenticate their certificates by affixing thereto their
signatures, also their seals of office, if by th e laws of th e S tate or coun
tr y where th e acknowledgm ent or proof is taken, or by au th o rity of
which th ey are acting, they are required to have official seals. Acknowl
edgm ents taken o ut of this S tate b u t w ithin th e U nited States, to be
used within this S tate, m ay be taken before a n otary public, a com
missioner appointed by th e governor of this S tate, a judge, or clerk of
a court of record, or in foreign countries a m inister, counsul, viceconsul, or consular agent of th e U nited States, or a judge of a court
of record or a n o tary public.
A c tio n s . All civil actions are commenced by filing a com plaint
upon which plaintiff m ay, a t any tim e w ithin one year thereafter,
have a sum m ons issued. T here is b u t one form of action and th e only
pleadings allowed are: 1. T he com plaint. 2. T h e dem urrer.
3. T he answer. 4. T he dem urrer to th e answer. 5. T he cross
com plaint. 6 . T he dem urrer to th e cross-complaint. 7. The
answer to th e cross-com plaint. 8 . T he dem urrer to th e answer.
M otions to strike and to m ake more certain m ay be m ade. Bill of
particulars m ay be dem anded.
A d m in is tr a tio n of E s ta te s . E states are adm inistered in a
departm ent of th e Superior C ourt under a P rob ate Code. For
in testates letters of adm inistration are issued upon petition. For
wills th e nom inated executor takes o ut letters testam entary, or some
one eligible petitions for letters of adm inistration w ith th e will annexed.
R ights to letters begin w ith surviving spouse an d proceed through
ten classifications, preference being given those of th e whole blood
over those of th e half. A dm inistrators m ust give a bond as fixed by
th e court, b u t executors m ay be relieved of bond by th e term s of the
will..
Six m onths is given after th e first publication of notice to creditors
for presentation of claims. Rejected claim s m ust be sued upon
w ithin three m onths after notice of such rejection. Claim s are mar
shalled under nine preference provisions. E states of $2500 or less
are subject to sum m ary disposition.
A ffidavits. An affidavit to be used before any court, judge, or
officer of this S tate m ay be tak en before any officer authorized to
adm inister oaths. In this S tate every court, every judge or clerk of
any court, every justice and every notary public, and every officer or
person authorized to take testim ony in any action or proceeding, or
decide upon evidence, has power to adm inister oaths an d affirmations
An affidavit taken in another S tate o f th e U nited S tates to be used
in this S tate, m ay be taken before a commissioner appointed by the
governor of th is S tate to take affidavits and depositions in such other
S tate, or before any notary public in another S tate, or before any
judge or clerk of a court of record having a seal. An affidavit taken
in a foreign country to be used in th is S tate, m ay be taken before an
am bassador, m inister, consul, vice-consul, or consular agent of the
U nited States, or before any judge of a court of record having a seal.
In such foreign country.
A lien s. I. All a l i e n s e l i g i b l e t o c i t i z e n s h i p m a y t a k e , h o l d a n d
d is p o s e o f D r o p e r ty . r e a l a n d p e rs o n a l, w i t h in t h i s S ta te .
2.
All aliens not eligible to citizenship m ay acquire and possess land
in accordance with th e term s of any existing tre a ty with any foreign
country of which such alien is a citizen, and not otherwise. N or can
such be guardian of any estate consisting in p a rt or whole of real estate.
No non-resident alien can tak e by succession unless he appear
and claim w ithin 5 years after death of decedent. N o alien m ay be
employed upon any public work except in cases of extraordinary
emergency. N o alien shall be em ployed in any d ep artm en t of the
sta te , county or city. N o alien m ay own or possess or have u nder his
control any firearm s capable of concealment.
A rre s t. In an action for the recovery of money, upon a contract,
express or Implied, the defendant m ay be arrested if about to depart
from the State w ith in ten t to defraud his creditors, upon order of
court based upon affidavit therefor, also in an action for money or
other property embezzled or fraudulently m isapplied b y a public
officer, officer of a corporation, or an attorney, factor, broker, agent,
or clerk in the course of his em ploym ent, or by any person in a fidu
ciary capacity; also in actions to recover th e possession of personal
property where it has been concealed or rem oved or disposed of to
prevent its being found; also in cases where the defendant has been
guilty of a fraud in contracting the d eb t or obligation for which action
Is brought; or In concealing or disposing of property; also when the
defendant has rem oved or disposed of his property or is about to do
so w ith in ten t to defraud creditors. Bail given upon arrest is liable
upon judgm ent secured.
A s s ig n m e n ts fo r t h e B e n e fit of C re d ito rs . T here are statutory
provisions for assignm ents b u t they are so seldom resorted to th at
their place in th e s ta te ’s commercial code is negligible.
A tta c h m e n ts m ay be issued a t th e tim e of or any tim e after
issuing th e sum m ons, and prior to judgm ent, where am ount sued for
is not less th a n $15.00 (no attachm ent issues from sm all claims court)
as is hereinafter provided. All property n ot exem pt from execution
m ay be attached. I f attachm ent is to recover for necessaries the
affidavit m ust so sta te including th e character or n atu re constituting
the alleged necessaries. An attachm ent lien upon real property
continues for three years and m ay be extended for tw o years more
and thereafter from tim e to tim e. On personal property an attach
m ent continues three years. A ttachm ent issues upon affidavit alleging
(1 ) indebtedness m ade and payable in this sta te and not secured: or
(2) defendant is non-resident or cannot be found; or (3) th a t cause or
action is damages, fraud or wrongful act of defendant; (4) th a t attach
m ent is n ot sought to delay or defraud creditors.
Bond m ust be filed w ith th e clerk before w rit issues, to protect de
fendant if plaintiff fails to recover.
B A N K IN G A N D C O M M E R C IA L L A W S— C A L IF O R N IA
B a n k s. C annot pay interest on dem and deposits. T he business
of banking m ay be carried on only by corporations organized for such
purpose under th e California B ank A ct ana N ational Banks. B u t
three classifications are perm itted: Commercial banks, savings banks,
tru s t companies. B anking corporations m ay be organized by n ot
less th a n th ree persons. W here banks have complied w ith th e pro
visions o f recent legislation th e stockholders are no longer liable
for th e debts of th e bank. D irectors m u st each own stock of th e
par value of n o t less th a n $500. Provisions are m ade for branch
banks; also for issuing an d retiring preferred stock. A b ank or
ganized under th e laws of another s ta te m ust com ply w ith all th e
requirem ents of th e C alifornia B ank Act. A banker has a gen
eral lien dependent upon possession of all property in his hands
belonging to a custom er for balance due from custom er in th e course
of business. E very bank m u st designate th e character of its business.
By virtu e of th e existing California Bank Act all banks, foreign and
domestic except N ational Banks, are under the supervision of th e
S tate S uperintendent of B anks and m u st obtain a certificate of
au th o rity to do a banking business. T he Act sets forth th e m inim um
requirem ents regarding capital and surplus, such requirem ents being
identical for both commercial and savings banks, as follows: $50,000
in cities of less th an 25,000 in habitants; $100,000 in cities of from
25.000 to 100,000 in h abitants; $200,000 in cities of from 100,000
200.000 in h ab itan ts; $300,000 in cities of over 200,000 inhabitants.
Commercial an d savings banks m ust have a surplus of 25 per cent of
capital stock. C ap ital and surplus m ust be a t least 10 per cent of
deposit liabilities u p to $1,000,000— 5 per cent of any am ount in
excess of $ 1 ,000 ,000 . F or savings banks a decreasing per cent on
larger am ounts. Special reserves against unsecured deposits are
required of commercial banks, unless th ey are members of th e Reserve
bank. Am ount of reserve is regulated by sta tu te. B ank officers
cannot be borrowers from their bank. All sta te banks are eligible to
become m em bers of th e Federal Reserve Bank. Any bank to become
member of th e Federal Hom e Loan B ank m ust have th e previous
written consent of th e superintendent of banks. T ru st companies
likewise operate under th e supervision of S tate S uperintendent of
Banks, and m ust deposit cash or securities with S tate T reasurer to
insure faithful perform ance of tru sts: T he m inim um deposit required
is $ 10 0 ,000 , and th e am ount varies according to population and
am ount of th e res. A ny savings bank m ay discount or purchase
bankers’ acceptances eligible for discount by th e Federal reserve bank,
and m ay purchase, hold or sell real or personal property, as follows: (1 )
The real estate, furniture, fixtures, etc., in which its business m ay be
conducted, such real estate, etc., not to be carried on the books of such
bank as an asset to an am ount exceeding one-half its paid-up capital
and surplus except w ith th e w ritten consent of the Superintendent of
Banks. Commercial banks are restricted to one-half such am ount.
2) Such as m ay have been m ortgaged, pledged or conveyed to it in
(trust for its benefit in good faith, or m oney loan in regular course of
business. (3) Such as m ay have been pin-chased a t sales under
pledge, m ortgage or deed of tru s t m ade for its benefit or money loaned
and such as m ay be conveyed to it by borrowers in satisfaction and
discharge of loans. (4) Gold and silver bullion, and U nited States
M int Certificates. (5) Bonds and other securities of certain classes
as are set forth in Section 61 of California Bank Act. Savings banks
m ay n o t m ake loans for longer periods th a n ten years. T here are
many other m inor restrictions on loans. W ith some exceptions
no commercial bank can lend m ore th a n 10 per cent of its capital
stock on unsecured loan, or 15 per cent, in addition to th e am ount
th a t m ay be loaned w ithout security, upon security w orth a t least
15 per cent m ore th a n th e am ount loaned so secured, provided th e
to tal am ount cannot exceed 25 per cent in all and separate note
m ust be taken for th e unsecured and th e secured loan, or 25 per cent
upon security w orth a t least 15 per cent m ore th an the am ount of the
loan so secured, or 40 per cent upon commercial or business paper
actually owned by th e person negotiating sam e to th e bank and are
endorsed by such persons w ithout lim itation. B ut commercial banks
may accept d rafts or bills of exchange having n ot more th an six m onths
sight to rim growing o ut of transactions involving im portation or
exportation, of goods or involving dom estic shipm ent of goods providing
shipping docum ents are attached as security or are secured by w are
house receipts or other m unim ent of title. N o bank shall hold as
security for loans more th an 25 per cent of the capital stock of
another bank, nor loan in excess o f 10 per cent of its assets upon th e
security of capital stock of any corporation. A bank organized or
doing business tn th is sta te m ay refuse paym ent of check or d raft,
except cashier’s check or bank d raft, if presented for paym ent more
than six m onths from its d ate unless expressly instructed to pay by
drawer or m aker, and no liability shall attach to drawer or m aker
by such non-paym ent! To stop paym ent on a check th e notice
therefor in writing m u st be delivered to th e particular branch upon
which it is drawn.
Any bank m ay purchase Class A stock in th e Federal Bank Deposit
Insurance Corporation and w ith th e approval of the superintendent
of banks m ay become a m em ber of th e T em porary Federal D eposit
Insurance Fund.
In addition to all other holidays banks are perm itted to close all
day on S aturday. General practice, however, continues to be to
close on S atu rd ay afternoon only. ■
B ills a n d N o tes. T he Uniform N egotiable Instrum ents Law is
In force. S tatu tes of 1917. C hapter 751.
B re a c h o f P ro m is e . Breach of prom ise to m arry, or for aliena
tion of affections, are no longer bases for action for dam ages; neither
is seduction of a fem ale over th e age of consent a basis for action.
B u lk S ales. (See F raudulent Sales and Conveyances.)
C h a tte l M o rtg a g e s m ay be m ade upon all personal property,
including growing crops, except such as is n ot capable of m anual
delivery, articles of wearing apparel and stock in tra d e of merchandise.
Recording m u st be m ade of growing crops in th e C ounty where th e
land is situ ated ; if of anim ate personal p roperty other th an growing
crops in th e C ounty where th e m ortgagor resides a t tim e of th e m o rt
gage, or if he is a non-resident th en in th e C ounty where the p roperty
is a t date of m ortgage; of all other personal property in th e C ounty
where th e m ortgagor resides a t th e date of th e m ortgage and also in
the C ounty where th e p roperty is located a t th a t date, and to which it
m ay be th ereafter rem oved. As notice to th ird parties it continues
for four years only unless re-recorded. T his provision does n o t apply
to ch attel m ortgage executed to secure paym ent of order or decree of
a court of record, or of indebtedness perm itted to be incurred b y th e
Commissioner of C orporations or th a t is m ade by a public u tility under
the Public U tility act. On a m otor vehicle th e instrum ent m ust be
deposited w ith th e sta te m otor vehicle departm ent in lieu of recording.
M oratorium on foreclosure under conditions has been , extended
to July 1 ; 1941.
.C o d e s, California laws have been codified under sixteen titles:
civil procedure, probate, civil, penal, political, agricultural, business
and professional, fish and game, harbors and navigation, insurance,
labor, m ilitary and veterans, school, streets and highways, vehicle,
welfare and in stitutions; and u n til codified th ey m ake a volum e of
general laws.
C o lla te ra ls. Are governed by the law relating to pledges of per- .
sonal property. D elivery of th e thing pledged is essential to th e
validity of th e bailm ent. Before th e property can be sold th e pledgee
m ust dem and perform ance from th e debtor, if he can be found, and
m ust give actu al notice to th e pledgor of th e tim e and place a t which
the property pledged wiil be sold, a t such a reasonable tim e before
the sale as will enable th e pledgor to atten d , b u t notice of th e sale
m ay be waived b y th e pledgor a t any tim e. T he sale m u st be by
public auction. T he pledgee, or a pledgeholder, m ay purchase th e
property pledged when' th e sam e is sold a t public auction. A pledgee
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1961
can n ot sell an y evidence of debt (collateral) pledged to him , except
th e obligations of governm ents, states, or corporations; b u t he m ay
collect th e sam e when due.
C o n tr a c ts . C ertain contracts are invalid unless th e sam e or
some note or m em orandum thereof is in writing. (See S tatu te of
Frauds.) A contract for personal services cannot be enforced specifi
cally b u t its breach m ay be com pensated by damages.
C o n v e y an ces. An estate in real property, other th an an estate a t
will, or for a term n ot exceeding one year, can be created or transferred
only by operation of law, or by an instrum ent in writing, subscribed by
th e p a rty disposing of th e sam e, or by his agent thereunto authorized in
writing. Leases of agricultural land for a longer period th an fifteen
years and of city property for a longer period th an ninety-nine years are
void w ith some exceptions. A fee simple title is presum ed to b e in
tended to pass by a grant of real property, unless it appears from th e
face of th e grant th a t a lesser estate was intended. A grant of real
property m ay be m ade in th e following form : “ I, A. B .,ig ran t to
C. D. all th a t real property situ ated in (insert nam e of county) county.
S tate of California, bounded (or described) as follows; (Here insert
description, or if th e land sought to be conveyed has a well-established
descriptive nam e it m ay be described by such as for instance: ‘The
N orris R anch. ’) W itness m y hand th is (insert) day of (insert m onth).
19—A. B .” “ G r a n t” im plies present ownership in grantor, free from
incum brances m ade or suffered by grantor. Subsequently acquired
title passes to grantee. Instrum ents entitled thereto m ust be recorded
in th e county where th e property is situated. An instru m en t of
later date, acquired for a valuable consideration in fu ll faith, takes
precedence of one of earlier d ate b u t subsequently recorded. Jo in t
■tenancies m ay be created by th e owner or owners by w ritten and
recorded conveyance by and to them selves.
C o rp o ra tio n s . P riv a te corporations m ay now be form ed b y three
or more persons. T he form er provisions holding each stockholder
liable for a pro ra ta of debts have been repealed. All original papers
for organization are now filed w ith th e secretary of state. Certified
copy of articles m ust be filed w ith C ounty Clerk in C ounty w here its
principal place of business is. C apital stock of a corporation organ
ized for pecuniary profit can only be issued u n d e r au th o rity of th e
S tate Commissioner of C orporations.
C o u rts . E ach county has a Superior C ourt, w ith from one u p to
fifty judges. Several of th e larger cities have M unicipal C ourts w ith
jurisdiction in law cases to $2,000. Such cities also have police
courts, and th ere are also justice’s courts in tw o classes according to
lim it of jurisdiction. T rial courts are, in contem plation of law, in
continuous session, holidays excepted.
Between th e Suprem e C ourt of seven judges and th e tria l courts
there are D istrict C ourts of Appeal, of which there are five divisions
of three judges each. T he bulk of appeals goes first to these in ter
mediaries, from whose decisions th e Suprem e C ourt m ay, in its dis
cretion, g ran t a fu rth er hearing before itself. Crim inal cases involving
capital punishm ent and cases in equity and cases involving title of
real estate or taxes are appealed directly to th e Suprem e C ourt.
All appellate courts have original jurisdiction for w rits of m andam us,
habeas corpus, etc.
D e p o sitio n s. T he deposition of a witness o ut of this S tate m ay
be taken upon a commission issued from the court under th e seal of
the court, upon an order of th e court, or a judge or justice thereof, on
the application of either p arty , upon five days’ Drevious notice to the
other, plus one day ’s additional notice for each one hundred miles
of travel betw een residence of witness and place of deposition or by
stipulation of th e parties w ithout an order of C ourt. I f th e court be a
justice’s court, th e commission shall have attach ed to it a certificate
under seal by th e clerk of th e superior court of th e county to th e effect
th a t th e person issuing th e sam e was an acting justice of th e peace a t
th e d ate of th e commission. If issued to any place w ithin th e U nited
States, it m ay be directed to a person agreed upon by th e parties, or if
th ey do n ot agree, to any n otary public, judge or justice of th e peace or
commissioner selected by th e court, or judge, or justice issuing it. If
issued to any country out of th e U nited States, it m ay be directed to a
m inister, am bassador, consul, vice-consul, or consular agent of th e
U nited S tates in such country, or to any person agreed upon b y th e
parties or judge of a court of record in such country. Depositions m ust
be taken in th e form of question and answer. T he words of th e witness
m ust be w ritten down, in th e presence of th e witness, by th e officer
taking th e deposition or by some indifferent person appointed b y him.
I t m ay be tak en down in short hand in which case it m ust be tra n
scribed to long hand by th e person who took it down. W hen com
pleted, it m ust be carefully read to or by th e witness and corrected by
him in any particular, if desired, by writing, or causing his corrections
to be w ritten a t th e bottom of th e deposition, and m u st th en be sub
scribed by th e witness. Corrections m u st be initialed b y officer before
whom deposition is taken. I f th e parties agree in w riting to any o ther
mode, th e m ode so agreed m u st be followed.
Depositions in th is S tate. T he testim ony of the witness in this
State m ay be taken by depositions in an action a t any tim e after the
service of sum m ons or the appearance of defendant, and in a special
proceeding after a question of fact has arisen therein, in certain
enum erated cases. Deposition of a p a rty to th e action m ay be tak en
under a cross-examining s ta tu te .
Depositions for use out of th e S tate. A ny p a rty to an action or
special proceeding in a court or before a judge of a sister state, m ay
obtain the testim ony of a witness residing in this S tate, to be used in
such action or proceeding, in the cases m entioned following: I f a
commission to tak e such testim ony has been issued from th e court,
or a judge hereof, before which such action or proceeding is pend
ing, on producing th e commission to th e Clerk of th e Superior C ourt
of th e county in which such witness is to be examined., with an affi
dav it satisfactory to him of th e m ateriality of th e testim ony, he
m ay issue a subpoena to th e witness, requiring him to appear and
testify before th e commissioner nam ed in th e commission, a t a specified
tim e and place.
D e s c e n t a n d D is tr ib u tio n o f P ro p e rty . T here is no dower
right, b u t all p roperty acquired during continuance of th e m arriage
relation (except by gift, devise or inheritance) is com m unity property,
one-half of which goes to th e surviving spouse, an d in absence of
testam entary disposition th e survivor takes all. A widow, however,
m ay have th e whole estate, if less th a n $2,500, set off to her. All
property n ot com m unity is separate, and if n o t disposed of by will is
distributable; first to th e surviving spouse and children. I f no su r
viving spouse then all to child or children. I f surviving spouse and
one child, half to each; if m ore th a n one child one-third to surviving
spouse, rem ainder to issue; in absence of children one-half to th e sur
viving spouse rem ainder to lineal descendants of decedent or their
children. Those next entitled to inherit are, in their order: father
and m other, or if neither, th en brothers and sisters; if there are none
of any of these th e surviving spctuse takes all. I f there be no su r
viving spouse then th e next of kin ta k e in equal degree. Illegitim ate
children inherit from th e m other, and from th e father where p arentage
has been acknowledged in w riting. W here widow or widower dies
intestate, and th ere has been no issue, com m unity property goes half
an d half to th e lineal descendants of each spouse. N o assignm ent of
an interest, power of atto rn ey to a c t nor contract for com pensation
of an agent is of an y force u n til approved by th e court.
E x e m p tio n s . E xem ptions from attachm ent, judgm ent an d forced
sale are very liberal, and th e list is gradually increasing to include
some of th e later inventions and im plem ents of labor an d production.
An autom obile is now exem pt if of value of $100 or less. .Unem ploy
m ent and several other benefits under recent legislation are also
exem pt.
F r a u d . (For F raudulent D ebtors, see A rrest.) In certain actions
involving m oney where fraud is charged, th e debtor is subject to
arrest. These include actual fraud, alw ays a question of fact, and
prom ises m ade w ithout any intention of perform ing; m isdirecting a
prospective hotel guest is a misdem eanor, as is also any false repre
sentations m ade for th e purpose of procuring public relief.
1962
B A N K IN G A N D C O M M E R C IA L LA W S— C A L IF O R N IA
F r a u d u l e n t S ales a n d C o n v e y an ces. Sale* transfer, or assign
m ent of a su b stantial p a rt of stock In trad e, except in ordinary course
of business, and sale, transfer, assignm ent, or m ortgage of fixtures or
equipm ent of m erchant is void as to existing creditors unless seven
days prior th ereto seller or purchaser record w ith C ounty Recorder a
notice of such intended sale, transfer, etc. T he notice m ust conform
to certain sta tu to ry requirem ents.
H o lid a y s. T he legal holidays are: S aturdays after 12 noon for all
public business (banks m ay claim th e entire day); Sundays; January
1 (New Y ear’s D a y ); F ebruary 12 (Lincoln’s b irth d a y ); F ebruary 22
(W ashington’s b irth d ay ); M ay 30 (M em orial day); Ju ly 4 (Inde
pendence D a y ); first M onday in Septem ber (Labor D a y ); Septem ber
9 (Admission D ay); October 12 (Columbus D ay); general election
d ay ; M ay an d A ugust prim ary election days; N ovem ber 11 (Armistice
D ay); T hanksgiving D ay; and December 25 (Christm as D ay). M on
d ay is holiday if holiday falls on Sunday. Injunctions and w rits of
prohibitions m ay be issued and served on an y day. C o n tracts m ade
on a holiday are valid. In th e larger counties a designated judge of
th e superior court is available nights and every day in the year for
issuing and approving bail, original w rits and issuance of release for
a person’s p ro perty or title thereto.
H o m e s te a d . T he hom estead consists in the Interest of the claim
an t, divided or undivided, in the dwelling house in which the claim ant
resides, an d in th e land on which the same is situated, selected, if the
claim ant be m arried, from com m unity property, or the separate
property of th e husband, or. w ith the consent of the wife from her
separate property. T he hom estead can n ot be selected from the
separate p roperty of th e wife w ithout her consent, shown by her making
or joining th e declaration of hom estead. T he hom estead is exempt
from execution or forced sale, except in satisfaction of judgm ents
obtained. 1. Before th e declaration of hom estead was filed for
record, an d which constitutes liens upon th e premises. 2. On debts
secured by m ortgage or tru s t deed, of date prior to declaration, or
proper execution subsequent. H om esteads m ay be selected and
claim ed: 1. I f n ot exceeding $5,000 in value by any head of a fam ily.
2. I f n o t exceeding $1,000 in value, by another person. U pon death
of either spouse, if hom estead is selected from com m unity property
or from separate property of spouse joining therein, title thereto vests
in survivor , otherwise th e heirs or devises of th e person whose property
was selected.
H u s b a n d a n d W ife. The husband is the head of the fam ily.
H e m ay choose any reasonable place or mode of living, and th e wife
m ust conform thereto. In other respects their interests are separate
except as to com m unity property. N either husband nor wife has
an y in terest in th e separate property of th e other, and either m ay
en ter into an y engagem ent w ith th e other, or w ith any other person,
respecting sep arate property, which either m ight if unm arried. All
p ro p erty of either, owned by him or her before m arriage, and th a t
acquired afterw ard by gift, bequest, devise or descent, is th e separate
p ro p erty of such person. All other p roperty acquired after m ar
riage b y either husband or wife or both, is com m unity property,
except th a t a m arried woman m ay acquire and hold shares in build
ing and loan associations as her separate p roperty; m ay transfer
shares of corporate stock generally as if unm arried. P roperty con
veyed to a m arried woman b y an instrum ent in w riting is presum ed
to be her sep arate property. P ro p erty conveyed to husband and
wife as such is presum ed to be com m unity property. A m arried
wom an m ay become a sole trad er by au th o rity of court, th u s con
verting a lim ited am ount of com m unity p roperty into her separate
estate. T he husband has th e m anagem ent and control of th e com
m unity property, w ith absolute power of disposal other th a n te s ta
m entary, provided th a t he cannot m ake a gift of th e sam e or convey
th e sam e w ithout valuable consideration, unless th e wife consents in
writing, either personally or by her authorized agent, and provided
th a t in th e execution of any instrum ent by which com m unity real
property, or any interest therein is leased for a longer period th an one
year, or is sold, conveyed, or encum bered, th e wife and husband m ust
join in th e execution of any such instrum ent. T he com m unity
p ro p erty except earnings of th e wife is n ot liable for th e contracts
of th e wife m ade before or after m arriage, unless secured by a pledge
or m ortgage thereof executed by t h e 1 husband. E xcept for th e
necessaries of life th e husband is n ot liable for dam ages or to rts com
m itted by wife except in a case where he would be jointly liable with
her if th e m arriage did n ot exist. N either th e separate property of the
husband nor his earnings after m arriage is liable for th e debts of the
wife contracted before m arriage, and th e separate property of the wife
is n o t liable for th e debts of her husband, nor for debts secured by
m ortgage or other hypothecation of com m unity p roperty unless ex
pressly assented to by her in writing, b u t is liable for her own debts
contracted before or after m arriage. C om m unity property is not
liable for contracts of th e wife m ade after m arriage unless secured by
pledge or m ortgage executed by th e husband. A husband and wife
m ay hold p roperty as joint tenants, ten an ts in common, or as com
m u n ity property. U pon d eath of husband or wife intestate, th e
entire com m unity p roperty goes to th e survivor. E ith er th e husband
or th e wife m ay subject one-half of th e com m unity property to testa
m entary disposition by will, th e wife’s right so to do being subject
to special sta tu to ry conditions.
I n te re s t'. T he legal ra te of interest is 7 per cent and is due upon
judgm ents after rendition and upon other obligations unless there is an
express contract in w riting fixing a different rate, which, however, is
lim ited to 10 per cent w ith severe penalties for any agreem ent or
subterfuge b y which th e lender profits above th a t rate. On loans
of $300 or less, secured by pledge or ch attel m ortgage or assignm ent
of wages, 10% annual interest m ay be agreed upon. All other charges
against th e borrower shall n o t exceed: on am ounts of $ 10 0 or under,
2
per m o n th; on am ounts in excess of $ 10 0 , 2 % per m onth.
J u d g m e n ts . Judgm ents, including those of inferior courts if an
ab stract be recorded w ith th e county recorder, are a lien on real
p roperty for five years, an d m ay be renewed by an action, or still
enforced b y order of court. T he lien expires, however, unless th e
judgm ent is renewed. (Recording is required for all judgm ents
to co nstitute a lien).
L ie n s. M echanics, m aterial-m en, contractors, sub-contractors,
artisans, architects, machinists, builders, miners, team sters, dray
men and all persons and laborers of every class performing^ labor
upon or furnishing m aterial to be used in or furnishing appliances,
team s an a power contributing to th e construction, alteration, or
repair of any building, wharf, bridge, ditch, flume, aqueduct, wen,
tunnel- fence, m achinery, railroad, wagon road, or other structure,
have liens upon the property upon which they have worked or fur
nished m aterial, and any person perform ing labor in a m ining claim
has a lien upon th e same, and the works owned and used by th e owners
for reducing the ores from such mining claim, for the work or labor
done. T he common carrier has a lien upon the luggage of a passenger
for th e paym ent of his fare. One who sells real property has a ven
d or’s lien thereon. Im provers of personal property, depositaries for
hire, veterin ary surgeons, garages, livery stable keepers and persons
pasturing horses or stock, have a special lien, dependent upon posses
sion. Factors, warehousemen, banks, and laundry proprietors have
a general lien, dependent on possession, on any personal property in
th eir hands. Seamen have general liens Independent of possession:
Owners of anim als used for propagating purposes have a lien for the
agreed price upon th e offspring. Loggers rendering services upon
logs, bolts and other tim ber have a lien thereon for the am ount due
for their personal services. A personal judgm ent m ay be had against
th e debtors w ith or w ithout attachm ent for security, w ithout infringing
th e rig h t to a m echanic’s lien when legally established. Landlords and
innkeepers have hens on th e personal p roperty of guests.
E very person perform ing work or labor In, w ith, about, or upon any
threshing machine or engine, horse-power, wagon, or other appliance
thereof, while engaged in threshing, has a lien thereon to the extent
of th e value of his services, for ten days after ceasjng work or labor,
provided, within th a t tim e, an action is brought to recover the am ount
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Of the claim, persons repairing or altering any personal property have
a lien for th e reasonable value of such service. P est destruction in
orchards by authority of s ta tu te creates a lien against th e realty
involved in favor of th e county causing such destruction. T he lien
of a garage m an for work on a vehicle (dependent upon possession) is
valid up to $ 10 0 if th e work is done on th e order of other th an the
owner; b u t n o t for more unless th e owner had previous notice of th e
work to be done.
L im ita tio n s . If real estate is held adversely for five years, such
adverse possession ripens into title If claim ant pays taxes for five years,
except against infants and persons under disability. T he periods pre
scribed for the com m encement of actions other th an for the recovery
of real property, are as follows: W ithin six years, upon certain corpora
tion bonds and notes. W ithin five years: (1) An action upon
a judgm ent or decree of any court of th e U nited States, or of any
S tate w ithin th e U nited States. (2) An action for mesne profits
of real property. (3) Action by heir unknown a t tim e an escheat
estate is distributed, counting from d ate of decree. W ithin four years:
(1) An action upon any contract, obligation or liability founded upon
an instrum ent in writing, executed in th is State. (2) An action to
recover a balance due upon a m utual open and current count or upon
an open book account. W ithin three years: (1) An action upon a
liability created by sta tu te, other th an a penalty or forfeiture. (2 )
An action for trespass upon real property. (3) An action for taking
detaining or injuring any goods or chattels, including actions for the
specific recovery of personal property. (4) An action for relief on the
ground of fraud or m istake, th e cause of action in such case n o t to be
deemed to have accrued until th e discovery by th e aggrieved p arty of
th e facts constituting fraud or m istake: W ithin tw o years: (1) An
action upon a contract, obligation or liability not founded upon an
instrum ent of writing, (2) An action on a debt, liability or obligation
evidenced by an abstract, guarantee or certificate of title; and such
action shall not be deemed to have accrued until the discovery of the
loss or dam age. (3) An action for foreclosure of a lien securing an
assessm ent against real p roperty for street im provem ent: b u t tim e
does n ot commence to ru n until the last installm ent becomes due. (4)
An action against a sheriff, coroner, or constable, upon a liability in
curred by th e doing of an a ct in his official capacity, and in virtue of his
office, or by the omission of an official duty, including the non-pay
m ent of m oney collected upon an execution; b u t this subdivision doe»
not apply to an action for an escape. W ithin one year: (1) An action
upon a sta tu te for a penalty or forfeiture, when the action is given to
an individual or to an individual and the S tate, except when the
sta tu te imposing it prescribes a different lim itation. (2) An action
upon a sta tu te, or upon an undertaking in a crim inal action, for a
forfeiture or penalty to th e people of this S tate. (3) An action for
libel, slander, assault- battery, false im prisonm ent, or seduction, or
for injury to or for the death of one caused by the wrongful act or
neglect of another, or by a depositor against a bank for th e paym ent
of a forged or raised check, or a check th a t bears a forged or u n author
ized endorsem ent. (4) An action against a sheriff, or other officer for
th e escape of a prisoner arrested or imprisoned on civil process.
(5) An action against a m unicipal corporation for dam ages or injuries
to property caused by a m ob or riot. W ithin six m onths. (1) An
action to recover property seized by tax collector. (2) To recover
corporation stock sold for delinquent assessment. N in ety days for
recovery of or conversion of personal property, bags, tru n k s, etc.,
left in hotel, lodging house, etc. To actions brought to recover
m oney or other p roperty deposited w ith any bank, banker, tru st
com pany, or savings and loan society, th ere is no lim itation. If
when th e cause of action accrues against a person, he is o u t of the
State, th e action m ay be commenced w ithin th e term herein limited,
after his retu rn to th e S tate, and if, after the cause of action accrues,
he departs from th e S tate, th e tim e of his absence is not p a rt of the
tim e lim ited for th e commencement of th e action. And if th e person
entitled to bring th e action be, a t th e tim e th e action accrued, either
a m inor, insane, imprisoned for a term less th an life, or a married
woman, and her husband is a necessary p a rty with her in commencing
such action, th e tim e of such disability is not a p a rt of th e tim e limited
for th e commencement of th e action. No acknowledgm ent or prom
ise is sufficient to tak e a case out of th e operation of th e sta tu te of
lim itations, unless th e sam e is in writing, signed by th e p a rty to be
charged. P a rt paym ent will not tak e th e case out of th e s ta tu te of
lim itations. W here a Cause of action has arisen in another State,
an d would be barred by th e s ta tu te of lim itations of th a t S tate, an
action cannot be m aintained here, except in favor of one who has
been a citizen of this S tate and has held th e cause of action from the
tim e it accrued. T here is no lim itation upon actions to recover money
or property w ith banks or tru st companies. (See Accounts.)
T here are now in force various m oratorium acts concerning mortgage
foreclosures, tax redem ptions, building and loan operations and similar
m atters, which for th e present modify former sta tu tes of lim itation,
which are of a tem porary character, and changed w ith each session of
th e legislature. Act of 1939 extends tim e to Ju ly 1, 1941 under
sta te d conditions.
M a rrie d W o m e n . A m arried woman m ay be sued w ithout her
husband being joined as a p arty and m ay sue w ithout her husband
being joined as a p arty in all actions, including those for injury to
her person, libel, slander, false im prisonm ent, or m alicious prosecution,
or for the recovery of her earnings or concerning her right or claim to
the hom estead property. A m arried woman m ay become a sole
trad er by the judgm ent of the superior court of the county in which
she has resided for six m bnths next preceding th e application. The
husband of th e sole trad er is not liable for any debts contracted by
er in th e course of her sole tra d e r’s business unless contracted upon
his w ritten consent. A m arried woman m ay convey her separate
property w ithout consent of her husband, and is n ot liable for th e debts
of her husband, b u t is liable for her own debts contracted before or
after her marriage. She m ay contract as a femme sole so a s 'to bind
her separate property. The wife m ay m ake a will of her separate
property and under sta tu to ry conditions of one-half th e community
property. T he earnings of th e wife are not liable for th e debts of her
husband unless it be com m unity property, and are liable for her
contracts. .
M e c h a n ic s’ L ie n s. (See Liens.)
M o rtg a g e s. Any interest in real property which is capable oi
being transferred m ay be m ortgaged. A m ortgage can be created,
renewed, or extended only by w riting executed with the formalities
required in th e case of a g rant of real property. I t requires the
signature of th e wife except as to property which is th e separate
estate of th e husband, and in practice th e wife’s signature should
always be required. E very transfer of an interest in real property,
other th a n in tru st, m ade only as th e security for th e performance
of any act, is to be deemed a m ortgage, and th e fact th a t th e transfer
was m ade subject to defeasance on a condition m ay, for th e purpose
of showing such transfer to be a m ortgage, be proved (except as against
th e subsequent purchaser or encum brancer for value and without
notice) although th e fact does not appear by th e term s of th e instru
m ent. A m ortgage is a lien upon everything th a t passes by a grant
of th e property. A m ortgage does not entitle th e m ortgagee to the
possession of th e property. T he assignm ent of a debt secured by a
m ortgage carries w ith it th e security. W hen a m ortgage is satisfied
or th e m ortgage indebtedness paid, th e m ortgagee m ust satisfy the
m ortgage oi record under penalty. A m ortgagee m ay foreclose the
rig h t of redem ption of th e m ortgagor. (See also T ru st Deeds.)
M oratorium legislation in 1933 provides against deficiency judgm ent
after a sale on foreclosure and for relief from foreclosure when th e right
of foreclosure has been accelerated by defaults in th e term s or the
obligation. T his legislation is of a tem porary n atu re as well as
sim ilar legislation in 1935, 1937, an d 1939.
N e g o tia b le I n s t r u m e n t s . T he Uniform Negotiable Instrum ents
Act adopted. (See com plete tex t following “ D igest of B anking and
Com m ercial Laws.)
B A N K IN G A N D C O M M E R C IA L L A W S— C O L O R A D O
N o tes a n d B ills o f E x ch an g e. (See Bills and Notes.)
P led g e. (See Collaterals.)
P o w ers of A tto rn e y . An atto rn ey In fact m ay be appointed for
any purpose for which an agency can lawfully, be created. Powers of
attorney can only be conferred by an instrum ent in writing subscribed
by th e principal which m ust particularly specify the powers con
ferred. If th e instrum ent contains a power to convey or execute
Instrum ents affecting real property, it m ust be duly acknowledged
and m ust be recorded in the county w ithin which the real property
to be conveyed or affected is situated. No such instrum ent which has
been so recorded is revoked by any act of the p a rty by whom it was
executed, unless th e instrum ent containing sued revocation is also
acknowledged or proved, certified, and recorded in the sam e office
in which th e instrum ent containing the power was recorded. When
an atto rn ey in fact executes an instrum ent transferring an estate
in real property, he m ust subscribe the name of his principal to it.
and his own nam e as atto rn ey in fact.
P ro b a te L aw . T he superior court has jurisdiction of proceedings in
probate, which m ust be in stitu ted (1) In th e county in which the
decedent was a resident; (2 ) in th e county in which he m ay have died,
leaving estate therein, he not being a resident of the S tate; (3) in the
county in which any p a rt of the estate m ay be, if th e decedent died out
of th e S tate and was not a resident. (4) In any county in which any
part of th e estate m ay be, or the decedent not being a resident of the
State nor leaving an estate in the county of death. (5) In other cases
where application is first m ade. Any person interested m ay petition
for probate of a will or m ay contest such probate before letters issue
or thereafter w ithin six m onths. I f no hom estead has been previously
selected, th e court m u st select, designate and set a p a rt and cause
to be recorded a hom estead for th e use of the surviving husband
or wife, or of th e m inor children, or if there be no surviving hus
band or wife, then for th e use of th e m inor children out of th e common
property, or o u t of th e real estate owned in common by th e decedent
and th e person or persons to whom th e hom estead is set ap art, or
if there be no common p roperty and no such jointly owned property,
then o u t of th e real estate belonging to th e decedent as his own separate
property. P ro p erty so set a p a rt is not subject to fu rth er adm in
istration. I f upon th e re tu rn of th e inventory it appears th a t th e
value of th e whole estate does not. exceed $2,500, th e court m ay set
ap art th e whole of th e estate for th e use and support of th e widow
of th e deceased, and if th ere be no widow, then to th e m inor children
of deceased. W here an entire estate is of personal property of less
th an $1,000 value no co u rt proceedings are necessary. Sales encum
brances an d im p o rtan t leases m ust be sanctioned by court order.
(See A dm inistration of E states, Claim s against E states, Descent and
D istribution.)
P r o te s t. (See Bills and Notes.)
R e p le v in . T here is no action of replevin in this S tate, b u t the
action of claim an d delivery is a su bstitute and very sim ilar in its
provisions.
S ale o f S to c k S h a re s. P erm it m ust be obtained from S tate Cor
poration Commissioner on all original issues of stock of corporations
organized for pecuniary profit. W e have an elaborate “ Blue S k y ”
Law.
S t a t u t e o f F r a u d s . A will m ust be In writing, except a nun
cupative will. (See Wills.) An agreem ent not to be performed
within a year from m aking it m ust be in writing; also a special prom
ise to answer for th e d ebt, default, or miscarriage of another with
certain sta tu to ry exception which in th e S tate are sim ilar to those in
most other jurisdictions; also agreem ents m ade in consideration of
m arriage other th a n a m utual prom ise to m arry; also an agreem ent
for th e sale of goods an d chattels or things in action a t a price not
less th an $500, unless th e buyer accept and receive p a rt of th e same
or pay any p a rt of th e consideration. Goods m anufactured especially
for th e buyer, n o t suitable for general sale, are excepted from this
rule. No estate in land will pass other th a n leases not to exceed one
year, unless in writing. An agreem ent authorizing or employing an
agent or broker to purchase or sell real estate for com pensation or
for a commission; an agreem ent by its term s not to be perform ed in
the lifetim e of th e prom isor or to m ake, devise or bequeath or m ake
any provisions for any person b y will, m ust be in writing. No evi
dence is adm issable to charge a person upon representations as to th e
credit of another, unless th e representations be in writing. However,
where prom isor has received property to apply pursuant to promise
or a discharge of an obligation in consideration of th e promise, or
where a creditor p arts w ith value or where th e new promise is sub
stituted for th e old debt, or where levy or execution is released or
there is benefit m oving to prom ise from any p arty or where a factor
undertakes for a commission to guarantee a sale, contracts to answer
for the default of another need n ot be in writing. Transfer of personal
property capable of m anual delivery, except wine in cellars and tanks,
when n ot accompanied by delivery and change of possession are
deemed fraudulent as to th ird parties unless notice of intention of
sale is recorded seven days before transfer is m ade in accordance w ith
law.
S u p p le m e n ta r y P ro c e e d in g s. W hen an execution is returned
unsatisfied, th e judgm ent creditor can obtain an order requiring the
judgment deb to r to appear and answer concerning his proDerty before
the judge or referee.
Taxes. On th e fifth d ay of December of each year taxes become
delinquent, except th e last half of th e real property taxes, and th ere
after 8 per cent is added for delinquency; provided, th a t if th ey
be not paid before th e 20th d ay of April next succeeding, 6 per cent
is added for delinquency. On th e 20th day of April, of each year, all
the unpaid portion of th e rem aining one-half of the taxes on all real
property is delinquent, and thereafter 3 per cent is added for delin
quency; and provided fu rth er, th a t th e entire tax on any real property
may be paid a t th e tim e th e first installm ent as above provided is due
and payable: and provided fu rth er, th a t th e taxes on all personal
property, unsecured by real property, shall be due and payable
immediately after th e assessment of said personal property is m ade.
Legislation of 1935 imposes income taxes of practically 51 % of those
provided by Federal laws. T here is also a sales tax of 3% except
on foods. By m oratorium legislation in 1935 and 1937 interest and
penalties on tax delinquincies m ay be avoided under certain tem
porary conditions. In heritance taxes are also levied on estates of
deceased persons w ith exem ptions of lim ited am ounts.
T ru s t D eeds. T ru st deeds as security are in general use, and are
usually preferred to m ortgages by banks and other lenders, as a right
of redemption does n o t exist after foreclosure of tru st deed by tru stee’s
sale. Also, th e m ethod of foreclosure is more simple. To foreclose
the beneficiary m ust record w ith th e C ounty Recorder a three-m onths
notice of his election to cause th e property to be sold and thereafter
the trustee m ust give notice of tim e and place of sale by posting in
statutory m anner an d by publishing copy once a week for tw enty
days in newspaper of general circulation. Should such sale result in a
deficiency, judgm ent for sam e m ay be recovered in appropriate action,
but action therefor m u st be begun within three m onths after th e
time of sale. (See M ortgages.) T ru st Deeds m ay also be foreclosed
by an action in court.
A tem porary m oratorium a c t also modifies foreclosure proceedings
under tr u s t deeds u p to Ju ly 1, 1941.
..5P18, E very person over th e age of eighteen years, of sound
™ma,_may, by last will, dispose of all his estate, real and personal.
“ M M ® ? woman m ay dispose of all her separate estate by will w ith
out the consent of her husband, and m ay alter or revoke th e will in like
manner as if she were .single; she m ay also under cërtain conditions,
rnspose of by will one-half of th e com m unity property. H er will m ust
sxecuted and proved in like m anner as other wills. E very will
other th an a nuncupative will m ust be in writing, and every will other
an holographic will an d a nuncupative will, m ust be executed and
attested as follows: l . I t m ust be subscribed by th e testa to r himself.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1963
or some person in his presence, and by his direction m ust subscribe
his nam e thereto. 2. T he subscription m ust be m ade in th e presence
of th e attesting witnesses, or acknowledged by th e te sta to r to them
to have been m ade by him or by his auth o rity . 3. T he testa to r
m ust, a t th e tim e of subscribing Or acknowledging th e same, declare
to th e attesting witnesses th a t th e instrum ent is his will, and 4. There
m ust be two attestin g witnesses, each of whom m ust sign his nam e
as a witness a t th e end of th e will, a t th e te sta to r’s request, an d in
his presence. An holographic will is one th a t is entirely w ritten, d ated,
and signed by th e hand of th e testa to r himself. I t is subject to no
other form, and m ay be m ade in or o ut of this S tate, and need n o t be
witnessed. A nuncupative will m ay dispose of personal property
only and of value not exceeding $1,000. A witness to a will should
always w rite his nam e and residence. All devises or gifts to a sub
scribing witness are void unless there are two other com petent sub
scribing witnesses unless such witness is entitled to a sh a re , if there
had been no will. N o will m ade out of this S tate is valid as a will
in th is S tate, unless executed according to th e provisions of th e code,
except th a t a will m ade in a S tate or country in which th e testa to r
is domiciled a t th e tim e of his death, and valid as a will under th e
laws of such S tate or country is valid in th is S tate as to personal prop
erty. Wills proven o ut of sta te m ay be recorded in county where
testa to r has left real estate. A ncillary adm inistration is usually
necessary.
Bequests for ch arity are void unless m ade more th a n th irty days
before death and m ust in no case exceed more th a n one-third of th e
estate unless there are no legal heirs, except th a t bequests to th e
S tate or a political subdivision or to educational institutions exem pt
from taxation, and other sim ilar institutions, under certain conditions,
are n ot so lim ited. Also, bequests to charity by will m ade six m onths
or more before death are n ot so restricted unless: there are living
spouse, child, grandchild or parent, and these m ay in w riting executed
a t least six m onths before th e te s ta to r’s d eath waive th e restriction.
Wills are revoked by m arriage unless provision for th e sam e or an
intention not to provide clearly appears.
S Y N O P S IS O F
THE LAW S OF COLORADO
RELA TING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by J. F rederick Schneider, A ttorney a t Law,
M ajestic Bldg., D enver.
(See card in A ttorneys List)
A c k n o w le d g m e n ts . T he sta tu to ry form an d m anner of re a
estate acknowledgm ent are as follows:
STATE O F ...
COU NTY OF
The foregoing Instrum ent was acknowledged before m e t h i s . . . . . .
day o f ....................... 19 ......... b y .. : ..................................................... (if by
natural person or persons here insert nam e or nam es; if by person
acting in representative or official capacity or as attorney-in-fact,
then insert nam e of person as executor, attorney-in-fact or other
capacity or description; if by officer of Corporation, th en insert nam e
of such officer or officers as th e president or other officers of such
corporation, nam ing it. I f acknowledgm ent is taken by notary
public, th e date of expiration of commission shall also appear on
th e certificate.)
W ITN E SS m y hand and official seal. (If acknowledged before
notary, th e date on which his commission expires m u st be here stated.)
T itle of Officer.
For chattel m ortgage form , see “ C h attel M ortgages.” T he
acknowledgm ent m ay be before th e clerk of any court of record,
commissioner of deeds, or n o tary public, or certain other specified
officers.
A d m in is tr a tio n of E s ta te s . All dem ands not exhibited in six
m onths are barred, unless such creditor can find other estate of th e
deceased._not inventoried. Claims are classified for paym ent, ordinary
debts being in th e fifth class. Creditors having liens can foreclose
a t any tim e by court action, b u t cannot foreclose w ithout court
action w ithin one year w ithout permission of court. A dm inistration
is granted to surviving husband or widow, or next of kin of an intestate,
if they will accept or are n ot disqualified; if no such relative appears
w ithin tw enty days after death of intestate, adm inistration m ay be
granted to a creditor ; if no creditor appears in ten days after tw enty
days from death of intestate, or if next of kin files w ritten relinquish
m ent county judge m ay select adm inistrator. In counties having a
population of more th a n 50,000 on default of relatives adm inistration
is m ade by public adm inistrator. An abbreviated form ot adminis
tratio n is provided for estates of $2,0 0 0 or less, and where less th a n
$300, adm inistration m ay be waived. (See W ills; H usband and Wifè;
Descents and'D istributors.)
A s sig n m e n ts. Assignments for th e benefit of creditors are pro
vided for. Assignments of wages n ot due a t th e tim e of th e assign
m ent, or of other sum s to become due to th e assignor, are invalid unless
recorded with th e recorder of th e county where th e wages are to be
earned, or th e sums are to become due, within five days from th e d ate
thereof. If th e assignor is a m arried m a n o r wom an, residing w ith th e
wife or husband, he or she m ust join in th e assignm ent. T here are also
provisions regulating assignm ents to wage-brokers and others.
A tta c h m e n ts . In actions on contracts, express or im plied, or in
to rt against a non-resident, th e plaintiff m ay have th e defen d an t’s
property attached, upon filing a bond in double th e am ount sued for,
with affidavit “showing th e existence of sta tu to ry grounds, consisting,
in general, of th e defendant’s non-residence or frau d .” Garnishee pro
cess will issue in aid of attachm ent when m oney or p roperty of th e
debtor is found in possession of th ird persons.
Banks. K inds Permitted. B anks of D eposit and Discount, which
m ay have a savings departm ent and a tru s t departm ent; T ru st,
D eposit and Security Com panies ; T ru st companies, which m ay
engage in general banking; Industrial B anks; C redit Unions. The
discussion which follows is necessarily lim ited to Banks of D eposit
and Discount.
Supervising A uthority. T he S tate B ank Commissioner.
Incorporators. A ny num ber of persons n ot less th a n three.
Officers and Directors; T he officers, usually a president, vicepresident and cashier, are elected annually by th e board of directors.
T he directors m ay be from th ree to tw enty-one in num ber, m ust give
bond, m ust own a fixed am ount of stock free from indebtedness, and
m ust never have been convicted of a felony or a violation of banking
laws. T hey m ust a tte n d m eetings m onthly.
Capital Stock and Surplus Requirements. T he m in im u m paid-up
cash capital required to commence business, is $25,000 in cities or
towns of 4,000 or less; $50,000 in cities of from 4,000 to 50,000; $100,000
in cities of more th an 50,000 ; to which m ust be added, in each case.
1964
B A N K I N G A N D C O M M E R C IA L L A W S— C O LO R A D O
a
surplus of 10% of th e capital stock. T he capital and surplus
th ereafter m aintained m ust also equal 1 0 % of th e average daily
deposits for th e preceding calendar year, . __ v k M ü i ï
R eserves.
Reserves are required to be m aintained m an am ount
equal to 15% of all deposits
“
. Æ
,
..
.
E x a m i n a t i o n s a n d R e p o r t s . Exam inations by th e S tate Bank
Commissioner are m ade a t least twice a year; directors m ust prepare
an d file a detailed report a t least three tim es a year. T he dates of
exam inations and reports are determ ined by th e S tate B ank Com
missioner.
i
L o a n L i m i t a t i o n s . N o loans are perm itted on a b an k s own stock
or to its officers. .Loans on real estate cannot exceed. 25% of its
interest bearing securities except th a t up to 50 % of its savings deposits
m ay be so invested. N o commercial loan can exceed 15% or th e
b an k ’s capital and surplus except th a t loans fully secured by collat
erals of definite value in excess of th e loan are not so limitedS to c k h o ld e r s ' L i a b i l i t y .
Shareholders are individually liable for
th e corporations’ indebtedness to th e extent of double th e am ount
of th eir stock therein, a t par, in addition to th e am ount invested in
such shares. T his liability is n o t subject to offsets on acçount of
deposits.
B r a n c h B a n k in g is prohibited.
s
Federal D eposit Insurance C orporation authorized to act as liqui
d ato r of closed banks.
F e d e r a l D e p o s i t I n s u r a n c e . Banks authorized to m ake loans in
co-operation w ith N ational Housing Act. M ortgages insured by the
Federal Housing A dm inistrator eligible for investm ent.
B a n k s, M isc e lla n e o u s . Savings Banks, T ru st Companies, either
Independent or as a p a rt of a bank, Industrial Banks and Credit
Unions are all authorized and are regulated by th e S tate B ank Com
missioner.
. . .
B lu e S ky L aw . All corporations organized in Colorado who desire
to place on sale to th e public, securities in certain classes m ust comply
w ith th e “ Securities A c t " or “ B lue Sky Law” of 1923 as am ended
in 1931, which provides th a t two copies of prospectus issued shall be
filed w ith th e Secretary of S tate setting forth certain inform ation
w ith reference to th e com pany and th e Secretary of S tate shall charge
and collect a fee of $10 for th e filing of such prospectus. Securities
salesmen m ust fu rth er register under th e Act of 1931 w ith th e Secre
ta ry of S tate. In 1933 an am endm ent was passed extending th e
scope of th e form er acts, and empowering th e Secretary of S tate to
prohibit th e sale of securities by insolvent, unlawful, fraudulent
or unsound issuers.
B u ild in g & L o a n A sso ciatio n s are authorized and are regulated
by a Building and Loan D epartm ent under a com plete code adopted
and in effect Ju n e 8,1933, and am ended by A ct of Legislature, effective
M ay 17, 1939.
C h a tt e l M o rtg a g e s as between th e parties are good u ntil th e
indebtedness is paid or barred by lim itation. T o be valid as to th ird
persons th ey m ust sta te th e am ount and m atu rity of th e debt, describe
th e property, and be acknowledged and filed or recorded. T he form
of acknowledgm ent is “ T his m ortgage was acknowledged before me
th is ...............d ay o f----- . . . . . . . . . 19------* V?- • ; / • v —
m ortgagor” ; if bv a corporation or partnership, th e form is varied to
read “ b y .........................................f o r . ............................... .... .m ortgagor."
T h e n o tary m ust s ta te when his commission expires. T he lien
rem ains good u n til th e m atu rity of th e indebtedness b u t not to exceed
tw o years if for n o t over $2,500, for five years if for from $2,500 to
$2 0 ,0 00 , an d for ten years if for over $2 0 ,000 , b u t as to m ortgages for
over $2,500 a sworn statem ent m u st be filed every tw o years beginning
w ith th e second anniversary showing good faith and th e am ount
unpaid. Possession m ay be taken a t any tim e w ithin six m onths after
th e m atu rity nam ed, or to which it m ay have been extended, and the
m ortgage m ay be extended or fu rth er extended by filing or recording
a sworn statem ent showing to ta l paym ents, am ount unpaid, th a t the
deb t is due, an d th a t it is extended to a definite sta te d tim e, not exceed
ing tw o years. D uring said six-m onth period th e debt m ay be paid
an d th e lien discharged as a t m atu rity . M ortgages of stocks of
goods which reserve possession and power of sale to m ortgagor, are
void as against creditors and bona fide purchasers. Disposing of
m ortgaged p roperty is larceny. C h attel m ortgages upon household
goods used by th e fam ily, when m ade by husband or wife residing
w ith th e other, m ust be m ade by husband and wife jointly.
C o lla te ra ls . Shares of stock m ay be validly pledged only by
delivery of th e certificate properly indorsed. Persons holding stocks
in corporations as collateral security are n ot personally liable as stock
holders for corporate debts. A pledgee of stock m ay represent sam e
a t corporate m eetings.
__ ■ .. . , ■_
C o m m e rc ia l P a p e r is governed by th e uniform Negotiable In stru
m ents Act adopted in 1897. See com plete tex t of uniform law else
where in th is publication.
.
.
„
C o n d itio n a l S ales. C onditional sales contracts give th e seller
no rights as against purchases for value w ithout notice from a buyer
in possession, and should, never be used in this sta te , a chattel mort«
gage being th e only satisfactory form of security.
C o n v e y an ces. No joint tenancy in real property unless expressly
declared in the deed, except in certain particular cases. Unless
so declared grantees shall be deem ed tenants in common. Lands
not in possession m ay be conveyed. N o t necessary for wife to jom
in deed except in a conveyance of a m ortgage or a hom estead,
entered as such of record. W itnesses are unnecessary. Seals are
n o t necessary excepting in th e case of corporations, b u t a printed or
inir seal is advisable. Unacknowledged deeds are deem ed notice from
th e d a te of filing b u t th ey can n ot be read in evidence unless subse
quently acknowledged or proved, unless they are on record for over
tw en ty years. (See Acknowledgments; H usband an d Wife.)
C o rp o ra tio n s . Colorado corporation laws are broad and flexible
T hree or more residents or non-residents m ay form a Colorado corp
oration by signing, acknowledging and filing w ith th e Secretary of
S tate a certificate stating th e nam e (containing “ Associatitm,
Com
pan y .” “ C orporation,” “ C lub,” "Incorporated,
Lim ited.
So
ciety,” “ U nion,” “ Syndicate," “ Co.,” “ In c,,” or Ltd- ), objects,
term of existence, which m ay be perpetual, th e am ount of stock which
m ay have any or no p ar value and m ay be divided into classes with
respect to voting power, preferences, participation, etc., th e num ber
o f directors, who m ay be classified according to term of office, location
o f principal office, and w hether cum ulative voting is allowed, and.
If desired, special provisions lim iting or regulating powers of th e
com pany, directors, stockholders or any class thereof. Droviding for
compromises between th e corporation and its creditors or stock
holders, giving th e board of directors power to sell or m ortgage, giving
to stockholders a preem ptive right to subscribe to additional stock
issues, requiring more th a n th e legal proportion of voting for cor
poration action, or perm itting th e directors to m eet out of th e sta te
or to m ake by-laws. Filing fees are $20 plus 20c per thousand capital
In excess of $50,000 capital or shares of no par stock, plus $5.00 for
certificate. Stock m ay be issued full paid and non-assessible for prop
erty or services. Stockholders are liable for th e am ount rem aining
unpaid on stock. W hen fully paid a certificate thereof should be filed.
S tock is transferred only by delivery of th e certificate, unless th e by
laws otherwise provide for. Unless th e certificate of incorporation
otherw ise provides, m ining and m anufacturing companies can encum
ber their property only by authority of a m ajority of stockholders.
T he certificate m ay be am ended in any respect excepting to change its
original purpose. T he term of existence m ay be extended from tim e
to tim e and th e corporation m ay be dissolved by a vote of tw o-thirds
of th e stockholders. Foreign corporations are prohibited under
penalty from transacting business u ntil they file a copy of their charter
of incorporation and a certificate identifying th e act under which it
is organized and a certificate appointing an individual or corporate
agent for th e service of process and pay a fée of $30 plus 30c on each
thousand dollars in excess of $50,000 represented by capital in Colo
rado, plus $5.00 for a certificate of au th o rity an d $5.00 for designating
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agent. Foreign corporations cannot m ortgage property as against
citizens w ithout published notice. E very corporation foreign or
dom estic m ust on or before M arch 15th. or th e next business.day,
file an annual report as to its officers, stock and condition, on forms
furnished by th e Secretary of S tate, paying a fee of $5.00, unless th e
capital is $ 10,00 0 or less when th e fee is $ 1 .0 0 , and for wilful con
cealm ent of any m aterial fact or failure to file such report th e directors
and officers become liable for th e debts contracted in th e preceding
calendar year up to $1,000 each. An annual license ta x of $ 10.00
plus 10 c per thousand dollars capital or shares of no p ar stock above
$ 100 ,0 0 0 m ust be paid by all foreign or dom estic corporations on or
before M ay 1st, failure to pay resulting in forfeiture o r rig h t to do
business subject to reinstatem ent w ithin tw o years.
Special sta tu to ry provisions in addition to those governing general
business corporations apply to title and guaranty, banking, insurance,
mining, telegraph, ditch and reservoir, flume and pipe line, w ater
users, toll road, bridge and ferry, gas, cem etery, cooperative, religious
and for non-profit and other corporations.
O ther provisions of the Revenue bill, approved August 4, 1917,
and this act regarding annual reports, assessm ent of tangible and
intangible property, etc., too voluminous to be quoted, m ake it
advisable th a t care should be exercised by both dom estic and for
eign corporations operating in th e S tate to acquaint them selves fully
with its requirem ents.
__ - „ ^
». „
D e p o sitio n s. T he deposition of a witness o u t of th e S tate shall
be taken upon commission issued by the clerk of th e co u rt where
the suit is pending on the application of either p a rty on five days
previous notice to th e other, which notice shall be accompanied
by a copy of th e interrogatories to be attached to th e commission.
I t m ay be issued to a person agreed upon by th e p arties or to any
judge or justice of the peace, or to a commissioner appointed by the
governor of th e S tate to take affidavits and depositions in other States
and T erritories, or to a notary public. T he adverse p arty m ay file
and have attached to th e commission such cross-interrogatories as
he m ay desire. P arties m ay agree by w ritten stipulation to take
the deposition orally, or, upon proper cause shown, m ay obtain an
order of court directing it to be so taken. Depositions can be taken
a t any tim e after sta rtin g suit. E ith er p a rty m ay have a deposition
taken in th is s ta te a t any tim e after commencing su it and m ay therein
exam ine th e adverse p a rty as under cross-examination.
D e sc e n ts a n d D is tr ib u tio n s . T he estate of an In testate descends
one-half to th e surviving husband or wife, and th e residue to the
surviving children and descendants of children, if an y ; if none,
then th e whole descends to such surviving husband or wife. E xcept
as enum erated th e estate of every in testate descends: 1. To his
children surviving, and the descendants of his children who are dead,
the descendants collectively taking the share which th eir parents
would have taken if living. 2, I f no children nor th eir descendants,
then to his fath er and m other, share and share alike, and if one dead,
then to th e other: if ho fath er or m other, th en to his brothers and
sisters, and to descendants of brothers and sisters who are dead,
the descendants collectively, taking th e share of th eir im m ediate
ancestors in equal parts. 3. If none of th e foregoing living, th en to
the grandfather, grandm other, uncles, aunts and th eir descendants,
th e descendants taking collectively th e share of their im m ediate
ancestors in equal parts. 4. I f none of th e relatives above enu
m erated be living, then to th e nearest lineal ancestor and their descend
ants, the descendants collectively taking th e share of their im m ediate
ancestors in equal parts. All posthum ous children or descendants
of th e intestate, inherit as if bom in th e lifetim e of th e intestate,
and all children of the half blood an d all legally adopted children
shall inherit as children of th e whole blood. Illegitim ate children
inherit if parents subsequently Interm arry. Convicted M urderers
shall not Inherit property of victim .
, ,, , i
D ow er. Common Law Dower and curtesy are abolished, as such,
b u t neither husband nor wife can by will devise more th a n one-half
of her estate aw ay from th e other w ithout his consent.
E x e m p tio n s . These consist, in brief, of a $2,000 hom estead, 60%
of th e wages of th e head of a fam ily, and specified personal property
of certain classes of persons of from $100,00 to $300,00 in value.
F ra u d s , S t a t u t e of. The following m ust be i n w riting: Con
tracts for leasing of land for period longer th an one year or for the
sale of lands, or any interest in lands; every agreem ent which by
its term s is not to be perform ed w ithin one year: every special
promise to answer for th e debt, default or miscarriage of another;
every agreem ent, promise, or undertaking m ade upon consideration
of m arriage, except m utual promises to m arry, and every contract
for the sale of any goods, chattels, or things in action, for th e price
of $50 or more, unless the buyer accepts and receives p a rt of such
goods or the evidence of some of them , or the buyer a t th e time
pays p a rt of the purchase money.
G a r n is h m e n t. (See A ttachm ents.)
H o lid a y s. T he legal holidays are: Sundays; Ja n u ary 1 (New
Y ear’s D a y ); F ebruary 12 (Lincoln’s b irth d a y ); F ebruary 22 (Wash
ington’s b irthday); M ay 30 (Memorial D ay); Ju ly 4 (Independence
D a y ): A ugust 1 (Colorado D a y ); first M onday in Septem ber (Labor
D a y ); October 12 (Colum bus D a y ); general election d ay ¡N ovem ber 11
(Armistice D ay); Thanksgiving D ay; December 25 (Christm as Day).
I f any such holiday falls on Sunday, th e M onday following or the
preceding Saturday in th e case of Novem ber 11th are legal holidays
for all purposes including presentm ent of commercial paper. Third
F riday in April, second F riday in M ay, and October 12th are holidays
n ot affecting business transactions. S aturday afternoon m cities or
25,000 and over in June, Ju ly and August, on which days commercial
paper m ay be presented in. th e forenoon or th e following IHonday.
H u s b a n d a n d W ife retain their separate property, real, personal
and mixed owned a t m arriage, and any such property which shall
come to either of them by descent, devise, or bequest, or th e g ut
of any person, for their own separate use. Such p roperty of the
wife is n ot liable for th e husband’s debts except as hereinafter stated.
Wife m ay carry on tra d e or business, sue and be sued, Contract debts,
and execute prom issory notes, bonds, bills of exchange, an d other
instrum ents precisely as if sole and m ay convey real e state without the
husband joining in th e deed. Any chattel m ortgage upon, or sale or,
th e household goods used by th e fam ily, and any conveyance of, or
m ortgage upon, a hom estead, and any assignm ent or fu tu re wages,
or sum s to 1)0 come due in th e future, when m ade by husband or wue
residing w ith th e other, m ust be joined in by th a t other. A married
woman m ay m ake a will, b ut neither husband nor wife shall devise or
bequeath m ore th a n half of his or her property aw ay from th e other
w ithout th e consent in writing of th e other, executed after death or
th e te sta to r or of testatrix. M arriage revokes a will previously made.
T he husband is liable for th e debts and liabilities of th e wife contracted
before m arriage to th e extent o f th e real and personal property he
m ay receive w ith or through her, or derive from th e sale or ren t oi
her lands, and no further. T he expenses of the fam ily and th e edu
cation of th e children are chargeable upon th e property or botn
husband and wife, and in relation thereto th ey m ay be sued jointly
or severally. E ith er husband or wife living together can separately
declare property of record in th e nam e of the o ther A Homestead,
by an entry of record over his or h er signature. N either can mortgage
nor convey hom estead w ithout th e signature of th e other.
.
I n t e r e s t . T he legal ra te was 8 % from th e organization of th e state
up to M arch 7, 1936, when it became 6 %, b u t any other ra te m ay o e
fixed by agreem ent w ith th e exception of loans of $300 or less upon
which th e m axim um ra te is 1 2 per cent.
J u d g m e n ts . A transcript of judgm ent m ay be filed In th e office
of th e county clerk and recorder of any county in th e S tate, ana
thereupon such judgm ent becomes a lien upon all real property
owned by the judgm ent debtor in th a t county. T he lien holds for
six years from th e d a te upon which filed, and successive transcripts
m ay be filed. Justice court judgm ents expire in six years; judgments
of courts of record in tw enty years, unless revived by appropriate
proceedings. (See Executions.)
B A N K IN G A N D C O M M E R C IA L L A W S— C O N N E C T IC U T
L im ita tio n s —P e rs o n a l A c tio n s . All actions upon an y con
tra c t or liability express or im plied m ust be begun w ithin six years
next after th e cause of action accrues. In actions on account th e
last item proved fixes th e d ate. Bill of relief in th e case of eauitable
tru sts shall be filed w ithin five years; personal actions on any contract
other th a n th e above an d bills for relief on th e ground of fraud shall
be filed w ithin th ree years after discovery, by aggrieved p arty , of
facts; an d all actions based on im plied or constructive fraud m u st be
commenced w ithin 3 years after act complained of. T he doctrine of
laches applies in equitable proceedings. Additional sta tu te s govern
lim itations in certain unusual proceedings. T he lim itation does n ot
app ly to m inors, m arried women or persons insane, in prison or absent
from th e U nited States; and legal representative of a person under
disability has n o t less th a n 2 years a fter appointm ent to ta k e action,
unless person under disability dies, in which case executor or adm in
istrato r has 1 year after death. P aym ent, new prom ise in w riting
or absence from th e s ta te extend th e period.
— B e a l A c tio n s. Actions to recover real property
m ust be brought w ithin not m ore th a n 18 years a f t » th e right accrued
as defined by extensive sta tu to ry provisions. I f th e claim be against
an actu al resident holding under fee or tax title, or against a person in
possession of land under claim or color title or having color of title to
vacant land, an d having paid taxes for seven years, th e action m u st be
brought w ithin seven years a fter th e right accrued.
M a rrie d W o m e n . (See H usband and Wife.)
M e c h a n ic s’ L ie n s. Mechanics, m aterial-m en, contractors, sub
contractors, builders, m iners, and all persons of every class perform ing
labor upon, or furnishing m aterials used in th e construction or repair
of an y building, or any o th er structure or im provem ent upon land,
also all who have rendered their professional, skilled service upon
such structure, have a lien upon the property, also those who work or
furnish m aterials or m achinery for th e working of a m ining claim
or m ineral deposit shall have a sim ilar lien. Liens rank in th e follow
ing order: 1 . Laborers or mechanics working by the day or piece,
without furnishing m aterial. 2. Sub-contractors and m aterial-m en,
whose claims are eith er entirely or principally for m aterials, m achinery
or other fixtures. 3. All principal contractors. Laborers are allowed
one m onth, m aterial m en two m onths, and th e original contractor
three m onths after th e com pletion of the structure, w ithin which to
file claim of lien. Action to enforce such lien m ust be commenced
within six m onths after com pletion of the building upon which it is
claimed.
M o rtg ag es. Ordinary m ortgages on realty are in common use;
also deeds of tru st to a public trustee and to private trustees. A
tru st deed to p riv ate tru ste e is foreclosed as a m ortgage. In case
the public trustee is nam ed, th e property is sold by him as provided
in th e deed, after advertisem ent in a newspaper designated in the
tru st deed, and such advertisem ent shall n ot be less th an four weeks.
Upon a sale by th e public trustee, a certificate of sale is issued. Re
dem ption m ay be m ade by th e grantor w ithin six m onths. W ithin
10 days thereafter, if notice of intention to redeem has been filed w ithin
six m onths, subsequent encum brancers or lienors m ay redeem in order
of priority.
N e g o tia b le I n s t r u m e n t s . Uniform Negotiable Instrum ents Act
adopted 1897. (See com plete tex t following “ Digest of Banking and
Commercial Laws.)
P a r tn e r s h ip s . General partnerships are governed by th e rules
of th e common law ordinarily applicable, w ithout sta tu to ry change,
excepting th a t individuals or p artners doing business under any
name other th a n their personal nam es m ust file an affidavit showing
the real persons represented, or m ay n ot bring suits upon debts due,
and m ay be convicted or fined. Lim ited partnerships are organized
under th e uniform lim ited partnership act adopted in 1931. A
limited p artnership is form ed by signing a certificate in s ta tu to ry form.
A lim ited p artn er is n o t liable to creditors beyond th e am ounts sta te d
in such certificate unless he takes control of th e business. T he rights
of th e p artners, rights of th ird persons, m ethod of conducting th e
partnership, its dissolution, etc., are m inutely provided for.
P ow ers o f A tto rn e y . Powers of attorney for the conveyance
of lands m ust be acknowledged in th e sam e m anner as deeds, and
must be recorded in th e sam e county wherein the real property to
be conveyed is situ ate.
S ales o f P e rs o n a l P ro p e rty . E very sale or assignm ent of goods
and chattels in th e possession or under the control of the vendor
is void, as against creditors or subsequent purchasers in good faith,
unless accompanied by im m ediate delivery and followed by actual
and continued change of possession. Sales of any portion of a stock
of m erchandise otherwise th an in th e ordinary course of trad e are
prima facie fradulent and void against creditors, unless seller and
purchaser together, before sale, m ake inventory, showing q u an tity
and cost price of th e various articles; and unless purchaser m akes
full inquiry of th e seller as to nam es and addresses of all creditors
of seller, and th e am ount due to each, and obtains an answer; and
notifies each creditor of th e proposed sale, the cost price, and the
proposed selling price; and unless th e purchaser retains the Inventory
and w ritten answer a t least six m onths after the sale. T his act
does n ot apply to sales by legal representatives of public officers
conducting sales in th eir official capacity and there are some other
exceptions to th is law. (See H usband and Wife.)
S e c u ritie s A c t. See Blue Sky Law.
T axes. A schedule of taxable property in each county w ith the
owner’s valuations m ust be filed between April 1 and M ay 20. Taxes
are assessed after a review of valuations in August. Taxes levied
are a lien on real estate u n til paid, as also upon stocks of goods includ
ing new goods added thereto. Taxes m ay be paid in tw o sem i-annual
installm ents; th e first on or before th e last day of February, and the
residue on or before th e last day of July of th e year following th e one
in which th ey are assessed. T ax sales are held in Novem ber when
tax certificates are given to purchasers on which treasurer’s deed
may issue after th ree years. P rior to sale delinquent taxes bear
interest a t 6 per cent per annum from M arch 1 to Ju ly 31 and a t 8 per
cent per annum from Ju ly 31 to d ate of sale; plus a 10 per cent p enalty
if th e first half be not paid by April 30; a fter sale a t 18 per cent per
annum for th e first six m onths, 1 2 per cent thereafter. Household
goods to th e value of $200 belonging to a head of a fam ily are exem pt
from taxation. A graduated sales tax law was passed in 1935 to raise
revenue for relief. In 1937 an income ta x law was enacted.
A 2% tax on services passed in 1937 and was re-enacted in 1939
with m inor changes requiring all persons including corporations, tru sts,
estates, syndicates, etc., to pay a tax on services rendered, except
medical, undertakers an d religious. A ct term inates June 30, 1941.
U n c la im e d D o r m a n t B a n k D e p o sits. A list of all deposits w ith
names and last known addresses of depositors which have rem ained
unchanged except for credits for interests for ten years or m ore or
which have for ten years rem ained unclaim ed shall be published in
one issue of a newspaper of general circulation in th e city where the
deposit is located, sworn to by th e cashier a t any convenient day
during M arch in each year.
W ills. M ales of th e age of tw enty-one years, and females of
the age of tw enty-one years, m ay dispose of th eir real and personal
property by will b u t personal property m ay be disposed of by will
by any person of th e age of seventeen years. F or restrictions as to
married persons, see “ H usband and W ife.” All wills, w hether of
realty or personalty shall be in writing signed by the testa to r or
some one for him in his presence and a t his direction, and attested
in his presence an d in th e presence of each other by tw o or more
»edible witnesses. Unless otherwise expressed in th e will an afterborn child will share in th e property. Devises and bequests to w it
nesses are null an d void, unless th e will be atteste d by a sufficient
number of witnesses exclusive of such persons. No will can be revoked
otherwise th an by th e subsequent m arriage of th e testa to r, or by
burning, tearing, or obliterating th e sam e by th e testa to r, or in his
presence an d by his direction an d consent, or by another will or codicil,
declaring th e same, duly signed and witnessed. T he property devised
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1965
by will m ust be adm inistered by th e county court, and all pro p erty
of non-residents m ust generally be adm inistered to clear title to real
property situated in this S tate. (See H usband and Wife. Descents
and D istributions. A dm inistration of E states.)
S Y N O P S IS O F
THE LAW S OF CONNECTICUT
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by C a r l e t o n K . M a t h e s , A ttorney a t Law,
T erryville, Conn. (See C ard in A ttorneys List)
A c c o u n ts. In all actions for a book debt, th e entries of the
parties in th eir respective books shall be admissible in evidence.
(For lim itation of actions on accounts, see Lim itations to Suits.)
A c k n o w le d g m e n ts . (See Conveyances.)
A d m in is tr a tio n o f E s ta te s . The Drobate court has jurisdic
tion of deceased estates. Bonds which' m ust be furnished b y th e
adm inistrators or executors, are usually m ade double th e estim ated
value of th e personal property. Bonds of surety companies authorized
to do business in th e S tate m ay be accepted. N o t less th an six m onths
are lim ited for th e presentation of claims against deceased estates.
Such claims are presented to th e adm inistrator or executor if th e
estate is solvent, or to commissioners appointed by th e p robate court
if th e estate is insolvent. Creditors n ot inhabitants of th is S tate
m ay exhibit their claims against any estate which has n o t been repre
sented insolvent, a t any tim e w ithin one year after order of notice,
and if presented m ore th a n six m onths after order of notice, shall be
entitled to paym ent only o ut of th e clear estate rem aining after pay
m ent of claims exhibited w ithin tim e lim ited. Twelve m onths is th e
usual tinie allowed for th e settlem ent of deceased estates.
A ffidavits. Civil actions do n ot ordinarily have to be supported
by affidavits. Affidavits have no w eight as evidence, and are never
adm itted as such.
A liens. Any alien resident of any of th e U nited States, and
any citizen of France, so long as F rance shall accord th e sam e rig h t
to citizens of the U nited States, m ay purchase, hold, inherit, or
transfer real estate in this S tate in as full a m anner as native-born
citizens.
A rb itra tio n . P arties to any controversy desiring to subm it the
same to arbitration under a rule of court, and having signed and
sworn to an agreem ent to th a t effect, m ay, upon filing this agree
m ent in the court having jurisdiction of th e subject m atter, have
this agreem ent entered of record and obtain a rule of court th a t
the said parties shall subm it to and be finally concluded by such
arbitrationA s slg n m e n ts i n In so lv e n c y . Operation of this se c tio n ' sus
pended during continuance of U. S. B ankruptcy Act.
A tta c h m e n ts . A ttachm ent m ay be m ade upon th e original
process, and is served by attaching the goods or lands of th e defend
ant, or, if sufficient goods be n ot found, th e person in actions where
there is fraud in contracting th e d eb t or concealing property o r refus
ing to pay an adm itted debt. A ttachm ents m ay be granted upon all
com plaints containing a money dem and. Supplem ental attach m en t
m ay be ordered by the court upon application a t any tim e during
the pendency of the action. I f th e plaintiff be a non-resident, he is
required to furnish a bond for prosecution from tw enty dollars to one
hundred and forty dollars, according to am ount attached. An a tta c h
m ent lien expires unless execution is levied w ithin sixty days after
final judgm ent upon th e attach ed personal property, or within four
m onths upon th e attached real estate. (See Exem ptions.)
B a n k s S t a t e a n d T r u s t C o m p a n ie s .
Capital Stock. $100,000.00 in cities of less th a n 50,000 population;
$200,000.00 in cities of over 50,000 population, p ar value n ot less th an
$50.00. T he capital stock, together w ith a surplus of a t least 100%
of the am ount of such capital stock- m ust be paid in cash.
Charter Fee. $1.00 for each $1,000.00 of th e capital stock.
Reserves. 12% of dem and and 5% of tim e deposits.
Incorporators. N ine or more persons.
Officers and Directors. U sual officers—by-laws are subject to
approval by th e B ank Commissioner. D irector m ust be a stockholder
and own a t least $500.00 of th e capital stock.
Supervising A uthority. B ank Commissioner, S tate Capitol,
H artford. Conn.
Examinations and Reports. All banks are exam ined annually or
oftener by th e B ank Commissioner. B anks are required to m ake
not less th a n three reports annually w ithin ten days after request
from th e B ank Commissioner.
Loan Limitations. N o one person, corporation or firm m ay borrow
more th an 10 % of th e am ount of th e capital stock. P aper of executive
officers and clerks m ay not be discounted. N o director m ay be
obligated in an am ount exceeding 5% of th e combined capital and
surplus. Penalty. $1,000.00 or n ot more th a n one year or both .
Stockholders Liability is lim ited to paym ent in cash for stock p u r
chased. No double liability.
Savings Banks. M ay p ay an order for not exceeding $500.00 n o t
withstanding d eath of draw er if m ade w ithin th irty days from death,
and a t any tim e if B ank has n ot actual notice of drawer.
Limitation on L.oans by Savings. Loans on capital stock as collateral
security m ust be on stock which paid dividends n ot less th a n 4%
during th e two fiscal years of th e corporation preceding th e d a te of
th e loan; such loans lim ited to $ 1 0 ,000.00 or A of one per cent of th e
bank deposits and th e aggregate to tw enty per cent o f its deposits and
surplus account combined.
B ills of E x ch an g e. (See N otes and Bills.)
B ills of L a d in g . Uniform Bills of Lading Act passed in 1911.
C h a tte l M o rtg a g e s. (See M ortgages, C onditional Sales, and
Interest.)
C o lla te ra l I n h e r ita n c e o r S u ccessio n T ax . (See Taxes.)
C o n d itio n a l S ales. All contracts for th e sale of personal property,
conditioned th a t th e title thereto shall rem ain in th e vendor after
delivery, shall be in writing, describing th e property and all conditions
of such sale, and shall be acknowledged before some com petent
au th o rity and filed w ithin a reasonable tim e in th e tow n clerk’s office
in th e tow n where th e vendee resides; b u t th e provisions of th is act
shall not apply to household furniture, m usical instrum ents, phono
graphs, phonograph supplise, radios, bicycles or property exem pt from
attachm ent and execution. If not m ade as required, th ey are held te
be absolute sales, except as between th e vendor and vendee or their
personal representatives. A crim e to conceal or convey personal
property held on such conditional sale.
1966
B A N K IN G A N D C O M M E R C IA L L A W S— C O N N E C T IC U T
C o n d itio n a l S ales C o n c e rn in g B u ild in g E q u ip m e n t. Any
contract for th e sale of a portable garage or other portable building,
or electric light fixtures, or plum bing fixtures, or elevators, or building
m aterials, or any equipm ent used in any building and so placed as to
apparently form a p a rt of such building, conditioned th a t the title
thereto shall rem ain in th e vendor after delivery, shall be in writing,
describing th e property and all th e conditions of the sale, and shall
be acknowledged before some com petent authority, and filed within
a reasonable tim e in the office of the town clerk in the town where
the real estate upon which such articles are placed is situated.
T he vendor’s rights under such conditional sale contract shall not
be valid or enforcible against any bona fide purchaser or m ortgagee
of th e real estate upon which such property shall be placed unless and
untQ such contract, together with a statem ent of the nam e of the
record owner of such real estate,shall be filed in the land records of
th e tow n in which such real estate is situated as provided for in sec
tion one hereof: and any bona fide interest in such real estate ac
quired for value after th e date of such contract and recorded In said
land records before such conditional sale contract shall be filed as
provided in section one hereof shall be prior to and be protected against
th e claims of th e vendor under such conditional sale contract.
C o n tr a c ts . O rdinary provisions of S tatute of F rauds apply.
C ourts of probate having jurisdiction of the settlem ent of the estate
of any deceased person m ay, concurrently with the courts of equity,
authorize th e executor or adm inistrator to convey the title of the
deceased in any real estate to any person entitled to it, by virtue
of any contract of such deceased person, and th e court of probate
in which th e guardian of any m inor has been appointed m ay, in
like m anner, order such guardian to convey the interest of his ward
in any real estate which ought in equity to be conveyed to another
person. C ontracts for th e conveyance of lands or of any interest
therein, m ay be recorded in the records of the town in which such
lands are; and such record shall be notice to all the world of the
equitable Interest thus created. Gaming or wagering contracts
are void. C ontract of incanable person pending appointm ent of
conservator or applicant void when selectm en have filed in town
clerk’s office certified copy of application in case of incapable person,
an d co n tract of spendthrift void when selectm en have filed in tow n
clerk’s office certified notice of proposed appointm ent in case of
spendthrift. No person who receives a valuable consideration for
a contract, express or implied, m ade on Sunday, shall defend any
action upon such contract on the ground th a t it was so m ade until
he restores such consideration. T he Uniform Sales Act passed in
1907 covers contracts to sell. (See Sales by R etail Dealers.)
C o n v ey an ces. All conveyances of land m ust be In, writing,
signed, sealed, and acknowledged by th e grantor, and attested by
two subscribing witnesses. The word “ seal” or the letters (L. S.)
m ay be used for a seal. T he acknowledgm ent is m ade by the grantor
before a judge of a court of record of this S tate or of the U nited
States, a clerk of the superior court, court of common pleas, or dis
trict court, justice of the pease, commissioner of the school fund,
commissioner of the superior court, notary public, tow n clerk, or
assistant town clerk, if in th is S tate, and if in any o th er S tate or
T erritory of th e U nited States, th en before a commissioner appointed
by the governor of this State and residing therein, or any officer
authorized to take the acknowledgement of deeds in such S tate or
Territory, and if in a foreign country, before any consul of the U nited
States, or n otary public, or justice of the peace in such foreign country.
Conveyances of real estate situated in th is S tate, executed and
acknowledged In any other S tate or Territory, in conform ity w ith the
laws of such State or T erritory, are valid. I f the land conveyed
belongs to th e wife, th e husband should join in the conveyance, if
married before April 20, 1877. I f the land conveyed belongs to the
husband, the wife need n ot join in the conveyance. N o separate
examination of a m arried woman is required in taking her acknowl
edgment. Conveyances, including leases for more th an one year, to
be effectual against any other person th an th e grantor and his heirs
m ust be recorded on the town records of the town in which the land
lies.
C o rp o ra tio n s. Corporations m ay be formed under the general
laws by three or more persons for the transaction of any lawful busi
ness except th a t of bank, savings bank, tru st com pany, building
and loan association, insurance company, surety or indem nity
company, steam railroad or street railway com pany, telegraph com
pany, and gas and electric lighting, w ater com pany, or any company
which shall need to have the right of em inent domain.
A certificate of Incorporation m ust be filed, signed, and sworn to
by a t least three of the incorporators, giving the nam e and location
of th e corporation, th e nature of th e business, the am ount of authorized
capital stock, which m ust not be less th a n $ 2 ,000 , num ber of shares
an d par value of each, am ount of capital stock w ith which it will
commence business, which shall n ot be less th an $1,000. A certified
copy m u st be filed in the town clerk’s office.
T he organization fee m ust * e paid to th e S tate, of one dollar, on
every thousand of its authorized capital stock up to five million, no
paym ent to be less th an $50.
Stock m ay be paid for either in cash or property, b u t if i in prop
erty, a m ajority of th e directors m ust m ake and sign upon a record
book a statem ent of th e am ount for which the property is received
and its actual value. In case of fraud in such valuation, directors
personally liable.
Certificate of organization m ust be signed and sworn to by a m ajority
of th e directors and filed in the office of th e secretary of state, setting
forth th e am ount of stock subscribed for am ount paid in cash and
in property, am ount paid on each share of stock which is n ot paid
for in full, names and address of subscribers w ith num ber of shares
subscribed for, statem ent th a t th e directors are officers have been
duly elected and by-laws adopted, nam es and addresses of directors,
th e location of the principal office in th e S tate w ith the nam e of the
agent in charge.
There m ust be a t least three directors: vacancies in directors m ay
be filled by rem aining directors.
No stock can be issued until it has been paid for in full. Receipts
for partial paym ents of stock m ay be issued by the treasurer. Cer
tificates for fractional shares cannot be issued. T he corporation
has a lien on capital stock owned by any person for debts due to
capital stock w ith the approval of stockholders owning three-fourths
of its entire outstanding capital stock, given a t a m eeting called for
th a t purpose.
Stockholders’ m eetings m ust be held in th is S tate.
Similar corporations m ay consolidate.
A corporation m ay be wound up by voluntary agreem ent of all
stockholders, signed and acknowledged, directors acting as trustees
to wind u p th e business.
Receiver m ay be appointed on application of stockholders own
ing one-tenth of th e stock, in case of fraud, m ism anagem ent, or if
assets are in danger of waste by attachm ent, or when corporation
has abandoned its business.
Annual statem ents m ust be filed In the office of the secretary of
state and a certified copy thereof in the town clerk’s office, either
on or before the 15th day of F ebruary or August, giving the nam es
and addresses of the officers and directors, am ount of outstanding
stock n o t paid for in full with th e am ount due thereon, the location
of the principal office in this State with the nam e of the agent in charge
on whom process m ay be served. For failure to file annual statem ent
the corporation m ay forfeit $25 to the State.
Stock of no par value m ay be issued.
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C o sts. For case before justice of the peace, actual cash costs
not less th an $5; before city court from $10 to $50, according to
am ount involved: before court of common pleas or superior court,
not less th an $25; before suprem e court of errors, n o t less th an $50.
A ttorney’s fees not included. A ttorney justified in asking deposit
of $15 for case in justice’s court and $50 in any oth er court before
bringing suit. (See Insurance Companies, Injunctions, etc.)
D ays of G race. (See N otes and Bills of Exchange.)
D eeds. (See Conveyances.)
D e p o sitio n s. M ay be taken in a civil action by a judge or clerk
of any court, justice of the peace, notary public, or commissioner
of the superior court, when witness lives out of the State, or more
than tw enty miles from place of trial, is over sixty years of age and
unable to" atten d the trial, is going to sea, or out of th e S tate, or by
age and infirm ity is unable to travel to court, or is confined in jail.
Reasonable notice m ust be given to adverse p arty. D eponents m ust
be cautioned to speak the whole tru th , and carefully examined.
T hey m ust subscribe their depositions and m ake oath before the
authority taking the sam e who shall a tte s t the sam e and certify
th a t th e adverse p arty or his agent was present (if so), or th a t he
was notified, and shall also certify the reason of taking such depo
sition, seal it up, direct it to the court where it is to be used, and
deliever it, if desired, to the p arty a t whose request it was taken.
Depositions m ay be taken in any other S tate or country by a notary
public, commissioner appointed by the governor of th is State, or by
any m agistrate having power to adm inister oaths, and they m ay
also be taken before a foreign m inister, secretary of legation, consul,
or vice-consul, appointed by the U nited States, if taken o ut of the
United States. A judge of the superior, common pleas, or district
court can issue a “ com m ission” to take the deposition of a person
residing o ut of this State, to be used in a cause pending before such
court. The superior court, upon petition, m ay allow depositions to
be taken to perpetuate testim ony concerning th a t which m ay there
after be the subject of a suit. The person taking depositions may
compel attendance of witnesses by subpoena and capias. v
D e sc e n t a n d D is tr ib u tio n of P ro p e rty i n I n t e s t a t e E s ta te s .
(As to th e share of a surviving husband or wife, see the title Husband
and Wife.) A fter the share of th e surviving husband or wife, the
residue of the real or personal estate is distributed in equal propor
tions among the children and th e legal representatives of any of
them who m ay be dead (children who have received estate by advance
m ent of the intestate in his lifetim e being charged with th e sam e in
the distribution). If there be no children or legal representatives
thereof, such residue shall be distributed to the parent or parents,
then equally to th e brothers and sisters of the intestate of the whole
blood, and those who legally represent them ; and if there be no
such kindred, then equally to the brothers and sisters Of the half
blood and those who legally represent them ; and if none, then equally
to th e next of kin in equal degree, kindred of the whole blood to
take in preference to kindred of the half blood, in equal degree, and
no representatives to be adm itted among collaterals after th e repre
sentatives of brothers and sisters.
D ow er. (See H usband and Wife.)
E vidence. (See Courts, Insurance Com pany, Corporations.)
E x e c u tio n s. Issue on final judgm ent, and are returnable within
sixty days. No execution issued in an action founded on contract
m erely can be levied on th e body of the debtor except for breach
of promise of m arriage, misconduct or neglect in office or profess
slonal em ploym ent, or breach of tru st and cases where th e original
attach m en t is against the body. Any judgm ent debtor, an execution
against whom shall have been returned unsatiflsed in whole or in
part, m ay be exam ined on oath touching his property and m eans of
paying such judgm ent, and m ay be com m itted for contem pt. (See
Exemptions.)
F o re ig n A tta c h m e n ts . Goods concealed In th e hands of agents
or debts due th e defendant are reached by foreign attach m en t which
takes the place of garnishm ent. N o assignm ent of fu tu re earnings
will prevent their attachm ent when earned unless m ade to secure
a bona fide debt, due a t th e date of such assignm ent, th e am ount
of which shall be stated therein as nearly as possible, nor unless
the term for which th ey are assigned shall be definitely lim ited in
the assignm ent, nor unless recorded before such attach m en t in the
town clerk’s office in the town where the assignor resides, or if he
resides w ithout th e S tate, in th e town where th e em ployer resides, and
a copy left w ith th e employer. (See also Exemptions.)
F o re ig n C o rp o ra tio n s . E very foreign corporation, except Insur
ance and surety companies and building and loan associations and
Investm ent com panies (a corporation which has power to or does
sell or negotiate its own choses in action or sell, guarantee, or negotiate
the choses in action of other persons or corporations as investm ents),
shall, before transacting business in this S tate, file in th e office of
the secretary of the S tate a certified copy of its charter or certificate
of incorporation, together w ith a statem ent, signed and sworn to
by its president, treasurer, and a m ajority of its directors, show
ing th e am ount of its authorized capital stock and th e am ount thereof
which has been paid in, and, if any p a rt of such paym ent has been
made otherwise th an in cash, such statem ent shall se t forth the
particulars thereof. Sec. 83.—E very foreign corporation with an
office or place of business in this S tate, except insurance companies,
surety companies, and building and loan associations, shall, before
doing business in this State, appoint in writing th e secterary of the
S tate and his successors In office to be its attorney, upon whom
all process in any action or proceeding against it m ay be served;
and in such writing such corpor'ation shall agree th a t any process
against it which is served on such secretary shall be of th e same
legal force and validity as if served on th e corporation, and th at
such appointm ent shall continue in force as long as any liability
rem ains outstanding against th e corporation in th is State. Such
w ritten appointm ent shall be acknowledged before some officer
authorized to take acknowledgments of deeds and shall be filed in
the office of said secretary, and copies certified by him shall be suffi
cient evidence of such appointm ent and agreem ent. Service upon
said attorney shall be sufficient service upon the principal, and may
be m ade by leaving a duly attested copy of th e process w ith the
secretary of th e S tate or at. his office. E verv foreign corporation
doing business in this S tate shall, within th irty days after an increase
or reduction of its capital stock file in th e office of th e secretary
of the S tate a certificate substantially like th a t required of domestic
corporations organized under the like conditions. T he president and
treasurer of every foreign corporation doing business in this State
wbicn is not required by law to m ake other annual returns in this
S tate, shall, annually, on or before th e fifteenth day of F ebruary or
August, m ake, sign, and swear to and file in th e office of th e secretary
of the State a certificate sim ilar to th e certificate required of domes
tic corporations (See Corporations), except th a t such certificate
need not give the nam e of the agent or person in charge of its principal
office upon whom process against th e corporation m ay be sensed.
The secretary shall thereupon record such certificate in a book kept
by him for th a t purpose and shall furnish a certified copy to be re
corded in the office or th e town clerk of the town in th is State m
which such corporation has its principal office or place of business
and said town clerk shall record th e sam e in a book k ep t by Ij®
for th a t purpose. On the thirtieth day of M arch and September
the town clerks of the several towns shall report to th e secretary
of th e S tate th e nam es of all corporations whose annual reports have
been filed for record during the preceding six m onths, in accordance
with the provisions of this section, and the secretary shall report
to the attorney-general every six m onths the nam es of all corporations
B A N K IN G A N D C O M M E R C IA L LA W S— C O N N E C T IC U T
which have failed to comply with th e provisions of this section, and
the attorney-general shall collect ail forfeitures due under this sec
tion. E very corporation whose officers shall fail to comply with
the requirem ents of this section shall» forfeit to the S tate $100 for
each failure. The attorney-general m ay rem it this fine.
F o re ig n J u d g m e n ts . N ot conclusive on question of Jurisdiction.
A foreign judgm ent when used by way of defence, is as conclusive
to every intent, as those of our own courts. In an action on a judg
m ent rendered in another State, evidence on the p art of the defend
ant th a t he had no legal notice of the suit and did not appear, is
admissible, although th e record of the judgm ent stated th a t the
defendant appeared by his attorney. Where the foreign court
has a peculiar and exclusive jurisdiction, its decree is binding upon
the judgm ent of any other court, into which the same subject comes
immediately into controversy. A judgm ent rendered by a court
in one S tate has no efficacy when it is sought to be enforced in Con
necticut, unless such court had jurisdiction of the person against
whom it is rendered, acquired either by service upon him of the
process in th e suit, or actual notice to him of the suit, or a t least by
nis having appeared in it, and thus subm itting to the jurisdiction
of the court. Jurisdiction presum ed to have been properly exercised.
If court once had jurisdiction. Notice presumed of resum ption of
jurisdiction if required by practice of foreign court. A judgm ent
recovered in a sister S tate is a bar to the further prosecution of an
action pending a t th e tim e in this S tate between the same parties
on the same cause of action. I t m akes no difference th a t the judg
ment of the sister S tate has been appealed from, and th a t the appeal
is still pending, where by the laws or th a t State, such appeal operates
only as a proceeding in error, and dops not supersede the judgm ent.
Only such pleas are pleadable to a foreign judgm ent, as are pleadable
when rendered.
F ra u d . All fraudulent conveyances, suits, judgm ents, executions,
or contracts, m ade or contrived w ith intent to avoid any debt or
duty belonging to others, shall, notw ithstanding any pretended con
sideration therefor, be void against those persons only, their heirs,
executors, adm inistrators, or assigns, to whom such debt or d u ty
belongs.
G a r n is h m e n t. (See Foreign A ttachm ents.)
G u a r a n ty C o m p a n ie s . (See S urety Companies.)
H o lid ay s. T he legal holidays are: Sundays: Ja n u ary 1 (New
Year’s D ay); F ebruary 1 2 (Lincoln’s birthday): F ebruary 22 (W ash
ington’s birth d ay ); M ay 30 (M em orial D ay): Ju ly 4 (Independence
D ay ); first M onday in Septem ber CLabor D a y ); October 12 (Columbus
Day); Novem ber 1 1 (Armistice D ay); Thanksgiving D ay; Decem
ber 25 (Christm as D ay). T he Governor m ay declare a “ Bank
Holiday” or whenever any of such days shall occur upon Sunday,
the M onday next following such day, and any day appointed or recom
mended by th e governor of th is sta te or th e president of th e United
States as a day of thanksgiving, fasting or religious observance, shall
each be a legal holiday.
H u s b a n d a n d W ife. In all m arriages contracted after April 19,
1877, neither husband nor wife acquires by force of the m arriage
any right to or interest in any property held by the other before
the m arriage or acquired after th e m arriage, except as to the share
of the survivor in th e property of th e other as hereinafter stated.
Wife m arried subsequent to April 19, 1877, m ay hold and convey
real estate separate from her husband. Separate earnings of the
wife are her sole property. On th e d eath of the husband or wife
the survivor shall be entitled to th e use for life of one-third in value
of all th e property, real or personal, owned by the other a t the tim e
of his or h er decease, after the paym ent of all debts and charges
allowed against th e estate. T he right to such third can not be defeated
by will. Where th ere is no will th e survivor shall take such th ird
absolutely, and if th ere are no children, shall take ail of the estate
of the decedent absolutely to the extent of $ 2 ,000 , and one-half
absolutely of th e rem ainder of said estate, and if there are no children
of the decedent or representatives of childreii, and no parent, the
survivor shall take all of the estate absolutely.
I n ju n c tio n s . Any judge of any court of equitable jurisdiction
may, on m otion, g ran t and enforce w rits of injunction, which shall
be of force until th e sittin g of such court and its further order therein,
unless sooner dissolved. Superior court judge m ay dissolve tem
porary injunction granted by other court. I t shall be th e d u ty of the
court to continue said injunction u ntil a final decision be rendered in
the suprem e court of errors.
In so lv en cy . Suspended, owing to U nited States B ankruptcy Act.
I n te r e s t. Legal rate, in absence of express agreem ent, 6 per cent;
no more th a n 6 per cent can be recovered in either case after deb t
becomes payable. Express agreem ents in which 12 per cent is
charged are valid and any person m aking a greater charge is liable to
fine and im prisonm ent. T here is no lim it to the interest charge
which can be m ade by any N ational Bank or any Bank or T ru st
Company, incorporated under the laws of this State nor is there any
limit to th e interest charge on a bona fide mortgage of real property
exceeding th e sum of five hundred dollars. Special law for pawn
brokers. Loan companies licensed by Bank Commissioner m ay
loan not more th a n $300.00 and m ay charge not to exceed 36 per
cent per annum on th a t p a rt of th e unpaid principal balance of any
loan not in excess of $100.00, and not to exceed 24 per cent, per annum
on any rem ainder of such unpaid principal balance.'
Jurisdiction. (See Courts.)
L ien s. (M echanics’ Liens.) Any person having a claim for
materials furnished or services rendered, exceeding the sum of $ 1 0 .00 ,
in the construction, erection, and repair of any building, or in the
removal of a building, m ay have a lien on such building, and the
land on which th e same m ay stand, and said premises m ay be fore
closed, in the same m anner as if held by mortgage. No one other
than the original contractor, or a sub-contractor under a w ritten
contract, assented to in writing by owner, shall be entitled to claim
a lien unless, after startin g and not later th an 60 days after ceasing
to furnish labor or m aterials, he gives w ritten notice to the owner
of his intention to claim and such lien. A certificate, subscribed and
sworn to, describing th e premises, the am ount claimed as a lien
thereon, and th e d ate of the commencement of the claim, m ust be
mdged with th e town clerk of the town in which such premises are
situated, w ithin 60 days after th e person perform ing such services or
mmishing such m aterials has ceased so to do. M echanics’ liens m ay
be dissolved on substitution of bond. Such lien continues only 2 years
after it is perfected unless foreclosure is commenced. Vessels can be
subjected to a lien for moneys due for work or m aterials furnished in
their construction, by recording claim in town clerk’s office within
10 days after job is done. Persons keeping anim als under contract
with owner have lien for their contract charge. M echanics’ liens, on
claims for m aterials furnished or services rendered, under any contract
with or approved by a railroad corporation owning or m anaging the
railroad, are enforceable. T he lien, however m ust be lodged w ith the
Secretary of State. By Public Acts 1925, there is no priority among
Mechanics’ lienors, unless some other incum brance intervenes, in
which case prior liens take precedence of incum brance on pro ra ta
basis as between themselves. Liens after the incum brance yield to
Jhe incumbrance and as between themselves none has priority. The
Mechanics’ lien a ttach subject to apportionm ent only to the am ount
which owner agreed to pay under the contract.
L im ita tio n s to S u its . Open accounts and contracts not under
8ki ’ s*x y®a rs: contracts under seal and prom issory notes not negoti
able, seventeen years. Usual exceptions in favor of m arried women
minors, lunatics, and those im prisoned. The tim e during which
the party against whom there m ay be such cause of action shall be
without the S tate shall be excluded from the com putation. Title
to real estate by adverse possession m ay be gained in fifteen years
m ere is no lim itation against judgm ents b ut th e common law pre
sumption of paym ent after tw enty years exists.
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1967
L im ite d P a r tn e r s h ip s . Such partnerships (except banking and
Insurance) shall consist of one or more partners, jointly and severally
responsible, as in ordinary cases, to be called general partners: and
one or more partners, furnishing capital to the partnership stock,
whose liability shall not extend beyond the capital so furnished by
them , to pe palled special partners. Such partnerships shall be
conducted under a com pany nam e, in which the name of one or more
of the general partners shall appear; and if any special p artn er’s
name snail be used in said com pany nam e, he shall be held liable
as a general partner. No such partnership shall be deem ed to be
formed until the persons form ing it shall m ake, and severally sign
and acknowledge before any officer authorized to take the acknowl
edgment of deeds, a certificate stating th e com pany nam e and names
and residences of all the partners designating which are general
and which are special partners, and which of the general partn ers
are authorized to transact the partnership business and sign the
firm name, and also the am ount of capital furnished by each special
partner and the tim e a t which the partnership, is to commence and
term inate; nor until such certificate, and also a certificate of the
am ount actually paid in by each special partner, signed and sworn
to by such of th e general partners as are authorized to transact the
partnership business, shall be filed and recorded in the office of the
town clerk of the town where the principal business of the p art
nership is to be carried on; and a copy of such certificate shall be
prim a facie evidence of the m atters therein contained; and the p art
nership shall be responsible only for the acts of the general partners
designated as specially authorized as aforesaid; and copies of said
certificates shall, in like m anner, be filed in every town where suèh
partnership m ay have a place of business. T erm s of such partnership
m ust be published for six weeks in newspaper published in county
where business is to be carried on. Any such partnership m ay be
renewed by filing a t any tim e before its expiration, w ith th e town
clerk, a sworn certificate of th e general partners, setting forth the
tim e for which said renewal is made, whether the special capital
has been reduced or im paired since the last certificate filed by said
partnership, and if so, to w hat am ount, and by publishing not less
than once a week for two weeks in a newspaper published in county,
the tim e a t which the said renewed partnership is to commence and
term inate, signed by the partners thereto, and specifying which are
general and which are special partners. If the requirem ents con
cerning original certificate are not complied with, or false certificate
be made, all special partners shall be liable as general partners. All
advancem ents to thé capital stock by the special partners shall
be in cash and no p art of the capital furnished by them shall be w ith
drawn, either in th e shape of dividends, profits or otherwise, a t any
tim e while such partnership continues; except th a t any special p art
ner m ay lawfully be paid from the assets of such partnership, each
year during th e continuance thereof, a sum n ot exceeding 10 per
centum upon th e cash contributed by him to th e capital stock; pro
vided th a t such paym ent shall only be m ade o ut of the net profits
actually earned by such partnerships during the year for which such
paym ent is m ade. No special partner shall under any circum
stances be considered a creditor, or allowed to claim as a creditor.
No special partner shall be joined as a p arty in any action by or
against such partnership unless liable as a general partner
M a rrie d W o m e n . (See H usband and Wife.)
M o rtg ag es of real estate are executed, acknowledged, and recorded
In the sam e m anner as deeds, and are foreclosed by strict foreclosure
or by a decree of sale. C hattel m ortgages to be good against third
parties, where th e m ortgagor retains possession, m ust be executed,
acknowledged, and recorded as m ortgages of land, and can only be
made of the following described personal property—w ith or w ithout
the real estate in which the sam e is situated or used—nam ely: m a
chinery, engines, or im plem ents situated and used in any m anu
facturing or mechanical establishm ent; m achinery, engines, im ple
ments, cases, types, cuts, or plates situated and used in any p rin t
ing, publishing, or engraving establishm ent; household furniture in a
dwelling house used by the owner therein in housekeeping; hay and
tobacco in th e leaf in any building. Piano, organ, melodeon, and
any musical instrum ent used by an orchestra or band. Brick burned
or unburned, in any kiln or brickyard. Hotel keepers m ay m ort
gage the furniture, fixtures, and other personal chattels contained
and used in the hotels occupied by them or employed in connection
therew ith. A ny one engaged in farm ing, oyster growing, etc., m ay
m ortgage to production credit associations or governm ental agencies
live-stock, farm m achinery or equipm ent an d crops, or oysters an d
oyster planting or digging equipm ent and vessels used in oyster
business. C h a ttel m ortgages are foreclosed by sale under order
of court. In all ch attel m ortgages there m ust be a particular descrip
tion of each article o f personal property. Judgm ent for deficiency
after sale, perm itted.
N e g o tia b le I n s t r u m e n t s A ct. A dopted. (See com plete tex t
following “ D igest of Banking and Commercial Laws.)
N o ta rie s P u b lic hold office for five years from first day of Feb
ruary of year in which commissioned, unless commission is sooner
revoked by governor. M ay exercise their function a t any place in
S tate. M ay take acknowledgments, adm inister oath, take deposition,
subpoena witnesses to give deposition. The authority and official
acts of any notary m ay be certified to by th e clerk of th e superior
court of th e county in which he resides, except in New London County,
where the certification is m ade by th e clerk of th e court of common
pleas.
P ow ers of A tto rn e y . W here a deed Is executed by a power of
attorney it is recorded with the deed. Powers of atto rn ey to convey
real estate m ust be executed and acknowledged in the m anner required
for the execution and acknowledgm ent of the conveyance itself.
P riv a te B a n k s. (See end of S tate Banks and T ru st Companies.)
P ro b a te L aw . (See Adm inistration of E states, Appeals, Assign
m ents and Insolvency, Collateral Inheritance Tax, Courts, Descent
and D istribution of P roperty, H usband and Wife, and Wills.)
P ro te s t. (See N otes and Bills of Exchange.)
R eco rd s. W arranty, m ortgage, quitclaim deeds m ust be recorded
In office of town clerk in tow n where land lies, also assignm ents of
m ortgage, conditional bills of sale, chattel mortgages, assignments
of future earnings. Certificate of trade-m ark to be filed for record
in office of secretary of S tate. Certificate of unsatisfied judgm ent
to be filed for record in tow n clerk’s office. (See Conveyances, Insur
ance Companies, Lim ited Partnerships, Judgm ents, etc.)
R e d e m p tio n . (See M ortgages.)
R eplevy. Replevin lies for goods wrongfully detained, In which
the plaintiff has a general or special property with right to im m ediate
possession.
S ale of R e ta il B u s in e ss . Any person (including a person having
an interest in a barber shop, dental parlor, restau ran t, shoe shining,
shoe repair or h a t cleaning business), who m akes it his business to buy
commodities and sell th e sam e in sm all quantities for th e purpose of
m aking a profit and desiring to sell the whole or a large p a rt of his stock
in trade, m ust file a notice of such intention in th e tow n clerk’s office
not less th an fourteen, nor more th an th irty days prior to such sale.
S ales. Uniform Sales Act passed in 1907.
S av in g s B a n k s. (See B anks S tate and T ru st Companies.)
S ervice. Service of a w rit of summons in case of a resident is
m ade by reading it and the com plaint accom panying it in the defend
a n t’s hearing, or by leaving an atteste d copy in the defendant’s hands
or a t his usual place of abode; in case of a non-resident, the several
courts, other th an courts of probate, and the judges, clerks, and
assistant clerks thereof, or any county commissioner, in term tim e
or In vacation, m ay, except where it Is otherwise specially provided
by law, m ake such orders as m ay be deem ed reasonable, in regard
to the notice which shall be given of the institution or pendency
of all complaints, writs of error and appeal, from probate, which
m ay be brought to or pending in any court, when the adverse p arty,
or any person so interested therein, th a t they ought to be m ade
parties thereto, reside o ut of the S tate, or when the nam es or resi-
B A N K IN G A N D C O M M E R C IA L L A W S— D E L A W A R E
1968
deuces of any such persons in Interest are unknown to th e p arty
instituting th e proceeding; and such notice having been given and
proved shall be deemed sufficient service and notice.
S u re ty C o m p a n ie s. Any corporation with a paid-up capital of
n ot less th an $250,000, incorporated and organized for th e purpose of
transacting business as surety on obligations for persons or corpora
tions, on complying w ith certain requirem ents of law m ay be accepted
as surety upon th e bond of any person or corporation required by
th e laws of th is S tate to execute a bond. E very foreign corporation
before transacting any business in this S tate am ust deposit w ith the
insurance commissioner a copy of its ch arter or articles of association,
an a sworn statem ent of the condition of its business. T he insurance
commissioner m ay thereafter issue to such com pany a license to do
business in th is S tate. Such com pany m ust appoint th e insurance
commissioner its agent on whom process m ay be served. Such com
pany m ust file annually on or before M arch 1st, w ith the insurance
commissioner a statem ent of the capital of such com pany and its
Investm ents and risks. An annual license is granted if annual sta te
m ent be satisfactory. Local agents m ust procure certificates of
au th o rity to act as agent from the insurance commissioner. The
insurance commissioner m ay also a t any tim e examine the affairs
of any surety com pany doing business in the S tate. A reserve fund
m ust be m aintained equal to 50 per cent of the gross am ount of
prem iums received on business in force. No such com pany can
incur on behalf of any one person or corporation a liability for an
am ount larger th an one-tenth of its paid-up capital stock and sur
plus w ithout giving collateral security.
T axes, L and m ay be sold for delinquent taxes after due adver
tising, only so much being sold as is necessary to pay taxes and costs.
Owner has one year in which to redeem, by paying the purchase
money, w ith 12 per cent interest. Bonds, notes, or other choses
in action, except bonds and notes secured by m ortgage on real estate
situ ated in th is S tate, m ay be exem pted from all local taxation by
paying to th e S tate a tax of 2 per cent on the face am ount thereof
for five years, or a t the option of the holder thereof for a greater or
less num ber o f years a t a proportionate rate. Inheritance taxes are
levied on all property within Connecticut possessed by any resident
of Connecticut a t the tim e of his decease, and all tangible property
within Connecticut possessed by a non-resident a t the tim e of his
d eath which passed by gift, to take effect a t death or by will to any
person, corporation, voluntary association or society, with exemp
tions In favor of charities and on certain particular kinds of property.
B ates of th e taxes are 2 p er cent of the value of all property in excess
of $ 10,000 passing to any parent, grandparent, husband, wife, lineal
descendant, adopted child, adoptive parent and lineal descendant of
any adopted child, up to $25,000 with graded increases; 3 per cent
on p roperty passing to th e husband or wife of any child of such deced an t to any stepchild, brother or sister of the full or half blood and
to an y descendant of such brother or sister in excess of $3,000 up
to and including $25,000, w ith graded increases; 6 per cent of the
value of all property in excess of $500 passing to any persons other
th an those above m entioned up to,and including $25,000 with graded
increases. Only one exem ption is allowed for each class.
T ra n s fe r o f C o rp o ra tio n S to c k s. (See Corporations.)
T r u s t C o m p a n ie s . (See S tate Banks and T ru st Companies.)
W a reh o u se R e c e ip ts. Uniform W arehouse Receipts Act passed
1907. Uniform T ru st Receipts A ct passed in 1937.
W ills. All persons of th e age of eighteen years, and of sound
mind, m ay dispose of their estate (real or personal) by will. No
devise, except for public and charitable uses, or for th e case of ceme
teries or graves, shall be m ade to any persons b ut such as are a t the
tim e of th e death of th e testa to r in being, or to their im m ediate issue
or descendants. Wills m ust be In writing, subscribed by th e testato r,
and attested by three witnesses, each of them subscribing in his pres
ence, b u t th ey will be effectual here if executed according to th e laws
of th e S tate or country where executed. I f after th e m aking of a will,
th e testa to r Bhall m arry or a child shall be born to th e testa to r or a
m inor child shall be legally adopted by him, and no provision is m ade
in such will for such contingency, such m arriage, birth or adoption
o f a m inor shild shall operate as a revocation ot such will. No will
or codicil shall be revoked in any other m anner except by burning,
canceling, tearing or obliterating it by the testa to r or by some person
in his presence by his direction or by a later will or codicil. A devise
of bequest to a subscribing witness or to th e husband or wife of a sub
scribing witness, is void unless th e will is otherwise legally attested,
or unless th e devisee or legatee be an heir to th e testa to r. Wills are
proved and estates settled in th e probate court in th e district where
th e deceased resided. Wills of nonresidents owning property in this
S tate m ay be proved by filing exemplified copies thereof in district
where property is located. Such course should always be taken in
order to pass good title to real estate.
W o rk m e n ’s C o m p e n s a tio n A ct. Passed in 1913.
S Y N O P S IS O F
THE LAW S OF DELAWARE
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised b y
C a leb
M .
A ttorney
D elaware.
W e ig h t ,
at
Law, Georgetown,
A c k n o w le d g m e n ts , In Delaware, m ay be m ade in th e Superior
C ourt, before th e Chancellor, or any judge or n otary public or before
tw o justices of th e peace for th e sam e county, or before th e judge
of th e m unicipal court or th e M ayor of W ilm ington. Elsewhere
in th e U nited States, before any Federal Judge or judge in any
court of record of any sta te or m ayor or chief officer of any city or
borough, w ith official seal attached; or before th e clerk or other officer
of said courts, or before any Commissioner of Deeds, or any notary
public. In foreign countries, before any consul or representative of
th e U nited States, a t his official residence, or any Commissioner of
Deeds.
In 1939, all deed records prior to Jan u ary 1, 1939, were validated
by s ta tu te where signed and sealed by th e grantor, although the
acknowledgm ent m ight be defective.
A c tio n s . Actions a t law and suits in equity are, in general, accord
ing to th e common law. T he distinctions betw een case and trespass,
an d covenant and debt are abolished. A simplified procedure is
followed in suits on instrum ents in writing for th e paym ent of
money, book accounts, judgm ents and m ortgages, wherein th e plaintiff
files an affidavit of dem and; judgm ent is entered by default unless an
affidavit of defense is filed.
A ffid av its, in Delaware, m ay be m ade before th e Chancellor, any
judge, justices of th e peace, or notary public. In legal proceedings
in D elaware, where an affidavit of a non-resident is required, i t m ay
be m ade before any person authorized to ta ke acknowledgments.
A lien s. AH real and personal property situate in th is sta te m ay be
taken, acquired, held apd disposed of by an alien in th e sam e m anner
as by a citizen of th e S tate of Delaware.
All conveyances to or from an alien a t any tim e m ade, are validated,
ratified an d confirmed.
A tta c h m e n ts . All corporations doing business in th e S tate are
liable to attachm ent, except banks, saving institutions, and loan
associations. Insurance com panies are only so liable for m oneys due
on th e happening of risks provided in th e policy.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A u c tio n s . Auctioneers m u st be licensed, except honorably dis
charged soldiers and sailors of th e Civil, Spanish and. W orld W ar and
disabled soldiers and sailors who have served in th e M ilitary an d N aval
forces of th e U nited States and who have been honorably discharged
from said services and are residents of th e S tate of Delaware.
Fee is $10.00 for residents and for non-residents an additional
$100.00 for each C ounty wherein th ey a c t as auctioneer.
B a n k s. All banks are under th e supervision of th e S tate Bank
Commissioner, and subject to exam ination by him annually or oftener.
Federal Reserve members m ay be exem pted by him from exam ination.
H e also has control of sm all loan companies. Banks m ay only be
created by special act of th e Legislature, and no corporation created
under th e general corporation law m ay be deemed to have banking
powers. B anking powers m ay be exercised only by a duly chartered
and authorized corporation. New banks m ust have a certificate from
th e S tate B ank Commissioner th a t th ey are duly authorized to do
business. A certificate m ust also be had to open a branch office in
th e sta te . M erger of banks is prohibited unless approved by th e
Commissioner. In case of im pairm ent of capital, th e Commissioner
m ust give a sixty-day warning, and if th e deficiency is n o t corrected
in th a t tim e, he assum es control of th e business or has a Receiver
appointed. Four reports a year of financial condition m ust be sent to
th e Commissioner. S trict lim itations are p u t on cash reserves, loans,
investm ents, equipm ent and pledging of assets. D irectors m ust b s
shareholders. N o double liability in th is sta te .
t
Use of th e word “ T ru s t” as a p a rt of a corporate nam e is pro
hibited. T here is only one sta te bank, chartered in 1807. M inors
are recognized as a d u lts in banking. Passing w orthless checks is a
crime, if th e m aker knew a t th e tim e th e check was passed th a t he
did n o t have sufficient funds on deposit to m eet th e check. Ten
days’ notice to th e m aker m u st be given before crim inal proceedings
are in stitu ted . T he B ank Commissioner has jurisdiction over th e
business of receiving deposits or paym ents on income contracts,
an n u ity contracts or certificates, or an n u ity bonds. Registration
and a certificate of au th o rity are required, b u t th is does n o t apply to
sellers of m erchandise on installm ents, insurance companies, building
and loan associations, banks or tru s t companies or su rety companies
authorized to do business in th e sta te . Com panies engaged in m ak
ing sm all loans are under rigid control by sta tu te an d th e B ank Com
missioner.
T he Federal D eposit Insurance Corporation is b y s ta tu te sub
rogated to th e rights of th e depositors in closed banks an d tru s t com
panies, in like m anner as if assigned. T axation is assessed on th e tru e
value of shares of stock. In savings banks or societies, where there
is no capital stock, taxes are assessed on th e average of deposits held
during th e preceding year. Such taxes are a lien on th e p ro p erty of
such savings banks or societies.
B ro k e rs m ust be licensed. An unlicensed broker cannot collect
commissions and is guilty of a m isdemeanor.
B u ild in g a n d L o a n A sso c ia tio n s are under th e jurisdiction of the
S tate Bank Commissioner. T he am ount of fines is lim ited to 5 per
cent per m onth for six m onths and 14 per cent per m onth thereafter.
A fter six m onths arrearage, a shareholder m ay be forced to w ithdraw.
All fees, etc., in any one association m ust be uniform . Funds m ay not
be invested in corporate stocks. An association m ay issue bonds or
certificates of indebtedness up to 30 per cent of dues paid in, a t n o t over
6 per cent per annum . N o more th a n 50 per cent paid in dues m ay be
loaned on real estate security on other th a n first liens. T he business
m ust be licensed annually, and after Ju ly 1, 1931, it is a m isdemeanor
to solicit sales of shares on commission. An annual statem en t of
business is required, and a list of accounts and standing thereof m ay be
dem anded. F ailure to m aintain standards will expose associations to
su it by th e A ttorney General and assum ption of its business b y the
B ank Commissioner.
Such associations are exem pt from th e attach m en t laws. No
lim itation is placed on th e lien of judgm ents on th e bonds for loans.
Loans m ay be m ade w ith their own capital stock for security. P artial
paym ents of th eir m ortgages do n ot have to be recorded. I f funds
are in excess of requirem ents, th ey m ay be loaned to outsiders for not
over 6 per cent. Foreign associations m ust deposit sufficient securities
w ith th e S tate T reasurer which, with th e assets in th e sta te , will be
equal to th e indebtedness to shareholders in th e state.
C h a tt e l M o rtg a g e s . A bona fide m ortgage of personal property
duly signed and sealed and acknowledged is a valid lien on th e property
for five years, if recorded w ithin 10 days of th e date of acknowledg
m ent. I t m ay be foreclosed in equity or by sci. fa. if defaulted for
60 days. Affidavit of bona fldes m ust accom pany th e m ortgage. I t
is unlaw ful for th e m ortgagor to rem ove th e goods from th e county
w ithout consent of th e m ortgagee.
C o n tr a c ts are joint and several, unless otherwise expressed.
Bonds, specialties and notes in writing, payable to order or assigns,
are freely assignable; suits thereon are brought by th e real p arty in
Interest. Assignments of bonds and specialties m ust be under seal
and before one credible witness. A sealed agreem ent has its common
law significance. A sale of goods m ust be accom panied by paym ent
or security for paym ent, or delivery; if such goods subsequently come
into th e vendor’s possession, th ey are liable to th e dem ands of his
creditors. No action shall be brought whereby to charge an y person
upon any agreem ent m ade upon consideration of m arriage, or sale of
lands, or any agreem ent not to be perform ed within one year, or any
prom ise to answer for th e debt, default or miscarriage of another, of
any sum over $25, unless reduced to w riting or m em orandum signed
by th e p a rty to be charged or his agent. N or shall any action be
brought w hereby to charge th e personal representatives or heirs of any
deceased person upon agreem ent to m ake a will of real or personal
property, or to give a legacy or m ake a devise, unless such agreem ent,
& m ade after M ay 1, 1933, shall be reduced to writing, or some memo
randum or note thereof be signed by th e decedent, or his agent author
ized in writing. Goods sold and delivered and other m atters properly
chargeable in an account are excepted. In such cases th e oath of the
plaintiff together with a book regularly kept, is recognized as evidence.
Bulk sales are presum ed fraudulent against creditors unless inventoried
five days before sale and full inform ation is given by th e purchaser to
all creditors of the seller; failure to com ply is also a misdemeanor.
Sales by personal representatives or public officers are excepted.
C o rp o ra tio n s . N o t less th a n three persons m ay form a corpora
tion for any business except banking, m unicipal governm ent or
charitable, penal, reform atory or educational institutions. T he cer
tificate of incorporation m ust set forth th e nam e; principal place of
business in th e sta te ; n atu re and purposes of th e business; types and
am ount of stock authorized, m inim um of capitalization being $ 1 ,0 00 ;
nam e and residence of incorporators; term of existence, which m ay be
perpetual; extent of liability of stockholders. Corporations have the
power to have succession in its corporate nam e, to sue and be sued, to
have a corporate seal, to hold real and personal property, to appoint
officers and agents, to m ake by-laws, to dissolve according to law, to
conduct business anywhere, and to exercise all th e powers and privi
leges insofar as m ay be necessary for th e transaction of business. I t
m ay not issue currency, receive deposits of money, or b u y and sell for
eign money as a business. Corporations m ay hold an d transfer their
own shares, b u t cannot vote them . T he certificate m ay be am ended.
Dividends are payable from annual n et profits or n et assets beyond
capital. A t least three directors are required; th e president m ust be
one. O ther officers are elected by th e board. Stock m ay be paid for
by cash, labor done, or real or personal property. N o-par stock is
recognized, as are proxies, not over three years old, and voting tru sts.
M eetings m ay be held outside th e state, if so provided by th e by-laws.
Shares of stock are intangible personalty. Fees are based on the
num ber of shares of stock authorized or gross assets whichever is th e
lesser; m in im u m , $ io . T axes are likewise so based; m inim um , $5,
m axim um , $25.000. An annual rep o rt is required. C h arters are
B A N K IN G A N D C O M M E R C IA L L A W S— D E L A W A R E
voided b y proclam ation if taxes are n ot paid for tw o years in succes
sion; although action m ay be brought by th e A ttorney G eneral for
such taxes, an d he m ay also have a receiver appointed for th e cor
poration.
Foreign corporations, except Insurance companies, m ust register
with th e Secretary of S tate in order to do business in D elaware, show
ing its charter, an authorized agent in th e sta te for service of process,
an d a statem en t of its assets and liabilities, w ith a fee of $10. Excep
tions: M ail order or sim ilar business, one th a t m erely employs sales
m en to solicit orders, one installing m achinery sold outside th e sta te
requiring technical skill, an d those engaged in wholly in terstate
business.
C o u r ts . Suprem e C ourt: regular term a t Dover th ird Tuesday
in Ju ne an d Ja n u ary ; adjourned term is held first T uesday after th e
fourth M onday in October; special sessions are had a t th e call of th e
Chancellor a t Dover when deemed expedient by a m ajority of the
members.
C ourt of C hancery, Orphans C ourt: New C astle C ounty a t W il
m ington, fourth M onday in M arch and second M onday in Septem ber.
K ent C ounty a t Dover, th ird M ondays in M arch and Septem ber and
second M ondays in Ju n e and December. Sussex C ounty in George
tow n, second M onday in M arch and first M ondays in June, Septem
ber an d December.
Superior C ourt an d C ourt of General Sessions: New C astle C ounty
a t W ilm ington, first M onday in January, M arch, M ay, and Novem ber
an d th ird M onday in Septem ber (for crim inal cases only). K ent
C ounty a t Dover, first M onday in Ju ly and th ird M ondays in F ebru
ary, April and October. Sussex C ounty a t Georgetown, first M ondays
in F ebruary, April an d October and last M onday in June.
C ourt of Oyer an d Terminer meets on call of Judges.
T he Superior C ourt has general jurisdiction in all civil cases, b u t if
su it is brought for less th a n $50, costs can not be recovered. The
C ourt of Common Pleas, for New C astle C ounty, has contract juris
diction u p to $1,000. C ourt of Common Pleas for Newcastle C ounty
now has a lim ited crim inal jurisdiction. T he C ourt of Common Pleas
of K en t C ounty, created in 1931, has both contract and to rt juris
diction u p to $ 1 ,000 , and a lim ited crim inal jurisdiction; appeals are
to th e Superior C o u rt of K ent C ounty. T he jurisdiction of the
Justices of th e Peace is lim ited to $500, exclusive of interest and costs.
C u rte s y . T he conveyance or devise of a m arried woman will not
divest th e husband’s right to curtesy in her real estate. I f a wife dies
In testate leaving a husband and issue, he is entitled to a life estate in
half of her realty. If she dies w ithout issue, he is entitled to a life
éstate in all of her realty.
D e a th , P re s u m p tio n of, arises after seven years, as a t common
law.
D e c e d e n ts E s ta te s . L etters of adm inistration are granted to
( 1 ) a person entitled to residue of personal property, or (2 ) a creditor,
or (3) to any suitable person. Executors or adm inistrators m ust give
bond In double th e estim ated value of th e personal property. The
order of paym ent of claims is ( 1 ) funeral expenses, (2 ) medical serv
ices during last illness, (3) household and farm servants wages, not
over one year, (4) ren t, not over one year, (5) judgm ents, (6 ) m ort
gages, recognizances, and other obligations of record, (7) sealed obliga
tions, (8 ) contracts under hand for paym ent of money or delivery of
goods, and (9) other dem ands. I f real estate is sold upon order of th e
Orphans C ourt to pay debts, all liens thereon become of equal grade
and m ust be paid from th e purchase money before other debts. Banks
are authorized to p ay over personal deposits of decedents not exceeding
$75, not less th a n 15 days after death to th e wife, husband, children,
father, m other, sister or brother (preference in order named) w ithout
requiring letters of adm inistration; such paym ent is a full release for
th e am ount so paid. The widow of any decedent shall be entitled,
during th e year of adm inistration, to cash up to $500.00 which shall
tak e priority over all unsecured debts and claims, expenses, legacies,
an d taxes, b u t such paym ent shall n ot affect any rights under the
husband's will, or th e intestacy laws. A debtor, in order to recover
from an estate, m u st m ake affidavit of non-paym ent of the debt by th e
decedent. One year is allowed for th e settlem ent of estates, b u t an
inventory is required within six m onths from granting of letters. E s
cheat is recognized. N on-residents, banks and tru s t com panies of
D elaware or elsewhere (if perm itted by their charters) m ay act as
executor or adm inistrator, b u t a foreign bank m ay only act to th e ex
te n t th a t a Delaware bank m ay a c t in th e place of incorporation of
such foreign bank. General claim s should be presented within six
m onths. L etters g ranted in another sta te are sufficient authority for a
personal representative to act in Delaware.
D eed s. W arran ty deeds are custom ary. T he words “ grant ” and
“ bargain and se ll” im ply a special w arranty against th e grantor and
his heirs, and all claiming under him , in th e absence of an express pro
vision otherwise. Deeds m ust be under seal and either acknowledged
or proved by a subscribing w itness in open court to be acknowledged
A deed of a corporation m ust be executed by th e president or a vicepresident, duly authorized by resolution of th e board of directors, or
by th e legally constituted attorney of th e corporation; th e seal of the
corporation, attested b y th e secretary, 'must be affixed.
I f a deed is n o t recorded w ithin 15 days from th e sealing and deliv
ery, it does n o t avail against a subsequent creditor, m ortgagee, or
purchaser for a valuable consideration. A deed to tw o or m ore
persons creates a tenancy in common, unless to husband an d wife,
when it creates a tenancy by th e entireties.
D e p o sitio n s m ay be by w ritten interrogatories or orally; they are
tak en before a Commissioner nam ed by th e applicant, by agreem ent,
or by th e C ourt. W ith th e interrogatories m ust be filed a list of wit
nesses, who alone m ay be examined. If oral, all questions and answers
m ust be w ritten down by th e Commissioner or his duly qualified
stenographer.
,
.
, I „
Depositions m ay be taken to p erpetuate tesitm ony of aged, infirm
or going witnesses, b u t m ay be used in evidence only in case those
examined are únanle tó a tten d th e trial. In cases of boundary dis
putes, such testim ony m ay be preserved by order of the chancellor.
Registers an d justices of th e peace m ay tak e depositions of those
beyond th e reach of process or of those who are sick.
D e s c e n t a n d D is tr ib u tio n . R e a l e s ta te descends in fee unless
otherwise provided, to ( 1 ) children in equal shares and lawful issue
Of deceased children b y representation, (2 ) father and m other, as
ten an ts by th e entireties, unless divorced, in which case as ten an ts
In common; if one only survives, th en in fee. (3) (a) brothers and
sisters of whole blood and law ful issue by representation, (b) brothers
and sisters of half blood and lawful issue by representation. In either
case brothers an d sisters of blood of ancestor from whom intestate
acquired land by devise or descent shall be preferred. (4) N ext
of kin, or law ful issue, w ith preference to those claiming through th e
nearest common ancestor. (5) C urtesy and dower are saved (see
those titles). (6 ) I f no kin or heir of Intestate, then to his or her
spouse in fee.
P e rs o n a l E s ta te (1) children and lawful issue surviving deceased
children, (2 ) fath er and m other in equal shares, or all to survivor,
(3 ) brothers and sisters of whole blood and lawful issue surviving,
(4 ) brothers an d sisters of th e half blood and lawful issue surviving,
(5 ) next of kin in equal degrees, and lawful issue of such as are deceased.
Provided, (1) if in testate is m arried person w ithout issue, spouse takes
entire estate, and (2 ) if w ith children, spouse takes one-third and
children tak e tw o-thirds.
D uly adopted children are recognized as of th e whole blood. Ad
vancem ents to children of real or personal property are deem ed to
be in lieu of th eir share pro tan to , b u t do n ot affect dower. Descent
from an illegitim ate child is first to its m other, and after th a t to her
heirs. An illegitim ate child shares w ith legitim ate children or their
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1969
issue In property descending from th e m other. A child legitim ated
by either m arriage before b irth or m arriage after acknowledgm ent
of p atern ity takes as though legitim ate. A child acknowledged w ith
o ut m arriage cannot inherit from its father.
D ow er. A widow is entitled to a life estate in an undivided th ird
of all real estate held b y her husband, free from lien or other alienation
unless relinquished by her. I f th e husband dies in testate, th e widow
becomes te n a n t in dower of one half, an d if he dies w ithout issue,
th en all of his real estate. Dower m ay be alienated b y antenu p tu al
contract. A widow has th e election of taking dower or devise. Dower
is barred by th e widow’s having lived in adultery w ithout her husband's
connivance or reconciliation. Dower m ay be barred by th e wife a
deed, or upon sale of th e lands by th e executor or adm inistrator to *
pay debts of th e decedent.
E x e c u tio n s . An execution becomes a lien on personalty when deliv
ered to th e sheriff, and binds all goods actually levied upon within
60 days. P riority of w rits is based on th e tim e of delivery. A sale
cannot be had for 30 days after levy, unless goods are perishable.
T he lien is valid for 3 years as against subsequent execution on th e
sam e goods. Executions issued by justices of th e peace m ust be levied
on in 30 days and th e lien continues for tw o years. Goods are liable
to one y ear’s ren t in preference to execution. T here is no redem ption
of property sold on execution. A sta y of six m onths is granted to
defendant from judgm ent for w ant of an affidavit of defense, when
security is posted. Before justices of th e peace, six m onths sta y m ay
be obtained by pleading freehold and nine m onths by posting security.
E x e m p tio n s . Fam ily Bible, school books, fam ily library, fam ily
pictures, seat or pew in church, lot in burial ground, all wearing apparel
of debtor or his fam ily, and, in addition tools or fixtures necessary
to carry on a trade, value not exceeding $75 in New C astle and Sussex
counties and $50 in K ent county. Sewing machines owned and used
by seamstresses and p riv ate families are exem pt, and pianos and
organs which are rented are not liable to distress if th e owner has
notified th e landlord of his title. T he above exem ptions apply to
distress for rent as well as to ordinary executions. T here is a fu rth er
exemption to head of families of personal property of $200 in New
C astle county and of $150 of household goods in K ent county; b u t
this does not include goods bought to be sold in th e regular transaction
of business by th e debtor. T here is no such exemption in Sussex
county. T his la tte r exem ption will not avail against a Judgm ent for
work and labor held b y an employee—60 per cent of all wages exem pt
in K ent and Sussex counties. In New C astle county, 90 per cent
of all wages are exem pt from attachm ent, and balance, n o t over
$50, m ay be taken for board and lodging. N o exemptions, are
recognized on a sale for taxes. Any husband and wife m ay m ake a
joint waiver of exemption.
F ra u d s , S t a t u t e of, see C ontracts.
F r a u d u l e n t S ale of S e c u ritie s . Jurisdiction has been conferred
on th e Chancellor to enjoin th e fraudulent sale or exchange of securities
in th e S tate, upon th e verified petition of th e A ttorney General.
H o lid a y s. T he legal holidays a re : S undays; Ja n u ary 1 (New Y ear’s
D ay); F ebruary 12 (Lincoln’s birthday); F ebruary 22 (W ashington’s
birthday); Good F riday; M ay 30 (M emorial D ay); Ju ly 4 (Inde
pendence D a y ); first M onday in Septem ber (Labor D a y ); October 12
(Columbus D ay); Novem ber 11 (Armistice D ay); General Election
D ay as it biennially occurs; Thanksgiving D ay; December 25 (Christ
m as D ay). S aturday in th e C ity of W ilm ington only shall be known
as S aturday Bank H oliday, b u t any business done in a B ank on
S aturday is not illegal because it is S aturday B ank H oliday. W hen a.
holiday falls on Sunday, th e M onday following is a legal holiday.
H o m e s te a d . T here is no hom estead law in Delaware.
In s o lv e n t L aw s exist and m ay be applied in th e absence of equiva
lent provisions in th e Federal B ankruptcy Act. T hey are seldom
resorted to. T here is no provision for a general discharge.
I n s u r a n c e . T he insurance law was codified in 1931. T he Insur
ance Commissioner has com plete supervision of all insurance companies,
agents and brokers, including th e collection of taxes. A certificate of
authority to do business is required of all companies; it m ay be
revoked for insolvency, fraudulent operation, insufficient assets,
failure to com ply w ith laws, or financial instability. A foreign or
alien com pany m ust file copies of its charter, by-laws, policy forms,
authorization to do business in its home state, and an appointm ent of
th e Commissioner as agent upon whom process m ay be served. An
annual statem ent of financial condition is required. T he resident
agent m ust countersign all policies. A dom estic com pany cannot do
business elsewhere w ithout a certificate of auth o rity . Political con
tributions, defam ation of rival companies, m isrepresentations as to
policies and rebates are prohibited. Real estate holdings and invest
m ents are strictly lim ited by sta tu te . N o person m ay insure th e life
or health of another w ithout his consent, except a wife for her hus
band, an employer for his employees collectively, or heads of educa
tional institutions for health of students. Any m inor fifteen years of
age or m ore m ay validly contract for insurance on his or her person as
though he or she were of full age. Insurance agents and brokers m ust
be licensed to do business.
T he Insurance Commissioner likewise has jurisdiction over dom estic
and foreign surety and guaranty companies and title insurance
companies.
I n t e r e s t . T he legal ra te is 6 per cent. N o debtor shall be required
to p ay more th a n th e legal rate, b u t m ay deduct any excess from th e
am ount of th e debt. I f already paid, th e debtor m ay recover th e
excess paid over th e legal ra te in an action if brought w ithin one year
from d ate of paym ent. Properly registered “sm all loan” companies,
firms or individuals or sta te banks or tru s t companies, which need
n ot be registered, m ay charge 6 per cent on am ounts up to $500 w ith
an additional investigation fee of n o t m ore th a n 2 per cent.
J u d g m e n ts are a lien from th e d a te of signing or entry, or, if on a
Jury trial, from th e date of th e verdict. I f th e am ount is n o t deter
mined, it is a lien from date of entry only if am ount is ascertained and
entered before th e first day of th e next term ; otherwise, th e lien com
mences on d ate of en try of am ount. N o judgm ents are entered by
confession in New C astle C ounty, in spite of a s ta tu te perm itting it.
Satisfaction m ust be entered in 60 days. I f a testa tu m fl. fa. is issued,
th e P rothonotary m ust notify other counties w ithin th irty days.
F ailure to m ark record creates liability to dam age su it, and rule to
show cause thereon m ay be served by publication.
A foreign judgm ent will found an action in debt in D elaware. If
th e plaintiff files an affidavit of dem and, w ith a certified copy of th e
judgm ent, judgm ent m ay be had a t th e first term for w ant of an
affidavit of defense, although appearance m ay have been entered.
T he only defenses recognized go to th e jurisdiction of th e court render
ing th e foreign judgm ent.
L im ita tio n s . Action for mesne profits m ust be begun 6 m onths
after ejectm ent or m andate of affirmance if appeal is taken. Recovery
is allowed for 3 years next preceding th e ejectm ent.
One year: Actions for personal injuries, forfeiture on a penal
sta tu te , forcible entry, and any su it where prior su it failed for w ant of
service or reversal on appeal.
Two years: Forcible detainer.
T hree years: G uardian’s bond, recognizance in Orphans C ourt,
official bond, waste, and all personal actions. M u tu al running
accounts do n ot accrue while open and current.
Six years: Sheriff’s official recognizance, testam entary bond, bills,
notes and acknowledgm ents of debt signed by th e debtor.
Seven*years: After expiration of term of office of E scheator on his
bond.
T w enty years: Real estate titles. Only te n years is allowed after
rem oval of disability.
1970
BANKING A ND COMMERCIAL LAWS—DISTRICT OF COLUMBIA
Infancy, coverture or m ental incom petency will bar th e running
of th e sta tu te . If th e defendant is absent from th e sta te when the
action accrues, th e lim itation runs from th e entry into th e state.
Absence after accrual bars running of th e sta tu te u ntil return.
Appeals from an interlocutory decree in equity m ust be presented
a t th e first day of th e next term of the Supreme C ourt; from a final
decree, six m onths from signing th e decree; taking exceptions to
account of executor or adm inistrator 3 m onths after notice th a t
account is filed with th e register, guardian account 3 years, partition
3 m onths. In other cases, rules of court apply.
M a rrie d W o m e n m ay freely alienate all property and contract
as though unm arried. A m arried woman m ay not affect her husband’s
right of curtesy, unless he has abandoned her w ithout ju st cause. She
m ay sue an d be sued. A husband is liable on his wife’s m ortgage
bond only if he joins in executing it.
M e c h a n ic s L ie n s. T he contractor has a lien on buildings and
lan d for money due for construction or repairs; his claim m ust be
filed w ithin th irty days after ninety days have elapsed from th e com
pletion of th e work. All other claims m ust be filed within th e ninetyd ay period. Proceedings are by sci. fa., and judgm ent m ay be had
for failure to file an affidavit of defense. E xecution is by levari facias.
M o rtg a g e s are executed like deeds, usually accom panied by bond.
Foreclosure m ust be by intervention by th e proper court. P riority
of m ortgages is based on th e date of recording. Lien of purchase
money m ortgage is superior to all other liens on th e property, if
recorded w ithin five days from date of sale. Satisfaction m ust be
entered on th e record w ithin sixty days from paym ent; failure to do
so will render th e m ortgagee liable to court action and for damages.
One witness is required on an assignm ent. Release of p a rt of lands
does n o t affect th e balance, b u t it m ust be under seal and recorded
w ithin sixty days.
N e g o tia b le I n s t r u m e n t s . Uniform N egotiable Instrum ents Act
adopted Ja n u ary 1, 1912. (See com plete text following “ D igest of
Banking an d Comm ercial Laws.” )
P a r tn e r s h ip s , associations and persons using trad e nam es m ust
register th em w ith prothonotary, together with th e full nam es of each
and every person comprising such firm. Jurisdiction of dissolution
of partnerships is in th e C ourt of Chancery. Lim ited partnerships
m ay be formed for any business b u t banking and insurance. A record
of m em bers and their liability m ust be filed w ith th e Recorder of every
county in which th e firm does business.
P r o te s t is required on foreign bills, otherwise optional. (N. I. L .,
§118.)
S ales. See C ontracts.
T a x L ie n s. Taxes are a prim ary lien on all real estate for two
years from Ju ly first of year imposed. I f land is sold by order of th e
Orphans C ourt th e lien transfers to funds in th e hands of th e officer
so selling, and continues as a lien on th e land for balance due. Taxes
in New C astle county are a prim ary lien now for ten years.
T ra d e M a rk s m ay be registered w ith th e Secretary of S tate, as
m ay be labels or forms of advertisem ent, by filing two copies thereof
with him. T he rem edy for infringem ent is by bill for injunction.
T here is also a crim inal penalty for unauthorized use.
T ru s te e s . T ru st companies incorporated under th e laws of Dela
ware and having their principal place of business there m ay be
appointed to any office of tru st w ithout giving surety on their bond
for faithful perform ance. A liability growing o ut of a tru st estate
is a first lien on th e com pany’s real estate. N ational banks located
In th e sta te are accorded th e sam e powers, and security on their bonds
m ay n o t be required, in th e discretion of th e appointing authority.
T rustees m ust file a ju st and tru e account a t least every tw o years
w ith th e Register in Chancery.
T r u s t I n v e s tm e n ts m ay be any of th e following: (a) Those
specified by tru st deed, (b) Bonds of th e U nited States, or any
S tate; of an y county, school district or incorporated city or tow n of
D elaware; of any city in U nited States of over 100,000 population,
If n et deb t is not over 10 per cent of assessed valuation of taxable
property; first m ortgage bonds on real estate located in Delaware with
o u t prior encum brance, and not exceeding 60 per cent of the value of
th e land when invested; bonds of railroads whose earnings for five years
average one and one-half tim es th e fixed charges; bonds of transporta
tion or public service companies whose earnings for five years average
two tim es th e fixed charges; bonds of industrial companies whose earn
ings for five years average three tim es th e fixed charges; equipm ent
tru st obligations, covering not over 80 per cent of th e cost, which
m ature in 15 years payable in installm ents beginning not later th an
three years from d ate of issue; bonds of railroad or transportation
companies guaranteed by a corporation whose bonds satisfy require
m ents above; and securities of any kind approved by th e court
having jurisdiction.
Unsecured obligations of Industrial corporations of an y S tate in
cluding finding companies, m aturing n ot more th a n fifteen years from
d ate of purchase; obligation cannot be convertable into stock or carry
th e creation of m ortgage deb t m aturing after one year and provided
fu rth er:
1,. Assets of corporations shall be $100,000,000.
2 . T o tal secured d eb t of corporation n o t greater th a n 1 0 % of
to ta l unsecured debt of corporation.
A B ank or T ru st Com pany m ay establish a com m on fund for the
investm ent of tru s t funds.
Responsibility for due care in selection still rests upon fiduciaries.
Other property m ay be taken and held while prudent, b u t m ay not
be purchased. Investm ents legal under prior laws m ay be retained,
b u t when sold, th e proceeds m ust be applied in accordance with the
above.
U n ifo rm A cts adopted are: Aeronautics, Bills of Lading, Condi
tional Sales, Federal Tax Liens, F raudulent Conveyances, N egotiable
Instrum ents, N on-Support; W arehouse Receipts, Sales Act.
W ills. Any person of th e age of tw enty-one or upw ard, of sound
m ind, m ay m ake a will, I t m ust be in w riting and signed by the
testa to r or some person subscribing th e te s ta to r’s nam e in his presence
and by his express direction. I t m ust be attested and subscribed by
tw o or more credible witnesses. N uncupative wills are accorded a
lim ited recognition.
P ro b ate proceedings' are held before th e Register of Wills of the
county in which th e decedent Was a resident. Appeals are usually to
th e Superior C ourt, although exceptions to accounts of executors are
heard by th e Orphans C ourt. P robate of foreign wills is authorized
when th ere is filed w ith th e Register of th e county where th e property
Is located, a certified copy of th e probate, proceedings from th e place
of th e te sta to r’s domicile; such wills are recognized as to personal
property although they m ay not conform to local requirem ents.
Devise w ithout lim itation passes a fee. After-acquired land passes
by will. A will is revocable by cancellation, a writing executed by
th e testa to r in testam en tary form, by im plication. A fter-born children
tak e th eir in testate share of th e estate, in th e absence of provision to
th e contrary. M arriage after th e execution of a will by a husband
entitles his widow to her in testate share, which m ust be contributed
ratab ly by all the beneficiaries. Posthum ous children born alive are
considered as after-born children. A devise or legacy to a child, lineal
descendant, brother, sister, nephew or niece does not lapse on Jjis or her
decease prior to th a t of th e testa to r, b u t passes to their surviving issue.
A legacy is not satisfaction of a debt, unless a contrary intent clearly
appears.
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S Y N O P S IS O F
T H E LA W S OF
T H E D IS T R IC T O F C O LU M B IA
RELA TING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by H e w e s P b e t t y m a n A w a l t & S m id d y , A ttorneys a t Law,
822 C onnecticut Ave., W ashington, D. C.
A c k n o w le d g m e n ts. T he deed of a corporation shall be executed
by having the seal of the corporation attached and being signed with
the nam e of the corporation, by its president or other officer, and shall
be acknowledged as the deed of the corporation by an attorney
appointed for th a t purpose, by a power of attorney embodied in the
deed or by one separate therefrom , under the corporate seal, to be
annexed to and recorded w ith the deed.
A c k n o w le d g m e n t of D eeds. W hen any deed or contract under
seal relating to land is to be acknowledged out of th e D istrict of
Columbia, b ut within the U nited S tates, the acknowledgm ent m ay
be m ade before any judge of a court of record and of law, or an y
chancellor of a S tate, an y judge or justice of th e suprem e, d istrict, or
territorial courts of the United States, or any justice of the peace o r
n o tary public; Provided th a t the certificate of acknowledgment
aforesaid, m ade by any officer of a S tate or T erritory, not having a
seal, shall be accompanied by a certificate of the register, clerk, or
other public officer th a t the officer taking said acknowledgm ent was
in fact th e officer he professed to be. Deeds m ade in a foreign coun
try m ay be acknowledged before any judge or notary public, or before
an y secretary of legation or consular officer or acting consular officer
of the United States as such consular officer is described in section 1674
of the revised sta tu tes of the U nited States, and when th e acknowl
edgm ent is m ade before any other officer other th an a secretary of
legation or consular officer or acting consular officer of th e U nited
States, the official character of th e person taking the acknowledgm ent
shall be certified in the m anner prescribed as to deeds o u t of th e D is
tric t of Colum bia b u t within the U nited States. No deeds of con
veyance of either real or personal estate by individuals shall be exe
cuted or acknowledged by attorney.
A c tio n s. U nder th e Federal Rules of C ivil Procedure th ere is one
form of action known as “civil action,” which is commenced b y th e
filing of a com plaint. In su its a t law in M unicipal C ourt, involving
$ 10 0 0 or less, th e old form s of action obtain, except as modified by
sta tu te .
A d m in is tr a tio n . T he probate court, a special term of the
D istrict C ourt of th e U nited S tates for th e D istrict of Columbia,
has exclusive jurisdiction of th e settlem ent of estates. A w ritten
petition stating th e facts in th e case m ust be filed w ith th e register of
wills. T his p etition is acted upon by a justice of th e D istrict C ourt of
th e U nited S tates for th e D istrict of Colum bia, who sits daily. All
executors and adm inistrators and guardians are required to give
bond w ith security to be approved by th e court. T he testa to r
m ay waive th e giving of bond, b ut the court always requires a bond
sufficient to cover th e debts and legacies of the deceased not to exceed
double th e value of th e personal estate. By act of Congress, certain
tru st companies incorporated thereunder m ay act as executor or ad
m inistrator w ithout bond, and corporations having power under their
charters m ay act as sureties in all cases where individuals can. Credi
tors m ay be barred in thirteen m onths provided the required notice
Is properly published. P robate court m ay order sale of real estate to
pay debts, in case personal assets are insufficient. Assets of non-resi
dents in D istrict of Columbia are subject to claim s of local creditors
for one year after death.
A ffidavits. Affidavits for use in th e D istrict of Colum bia should
be taken before a justice of the peace, notary public, judge of any
court of record, or a U nited S tates commissioner. If taken before a
justice of th e peace, a certificate of his official autho rity from a clerk
of a court of record should be attached.
A lien s. Alien individuals and corporations m ay acquire and hold
personal p roperty and lots or parcels of land in th e D istrict of Columbia.
A p p eals. Appeals lie from final orders and certain interlocutory
orders of th e D istrict C ourt of th e U nited States for th e D istrict of
Colum bia d irect to th e U nited S tates C ourt of Appeals for th e D istrict
of Colum bia. T here is no rig h t of appeal from th e M unicipal C ourt
b u t w rits of error m ay issue to th a t co u rt from th e U nited S tates C ourt
of A ppeals for th e D istrict of Colum bia to review judgm ents on ques
tions of law. Appeals to th e Suprem e C ourt of th e U nited States are
governed by s ta tu te s a n d rules pertaining to appeals from th e federal
courts generally.
A rre st. T here Is no im prisonm ent for d eb t in th e D istrict of
Columbia. T he court has th e power to imprison for non-paym ent of
alim ony in divorce cases, and for contem pt of court.
A tta c h m e n ts . In any action a t law in th e D istrict C ourt of the
U nited S tates for th e D istrict of Colum bia or th e M unicipal C ourt for
the recovery of specific personal property, or a debt, or damages for
the breach of a contract, express or implied, if the plaintiff, his agent
or attorney, either a t th e commencement of the action or pending the
same, shall file an affidavit showing th e grounds of his claim and setting
forth th a t th e plaintiff has a ju st right to recover w hat is claimed
in his declaration, and where the action is to recover specific personal
property stating the nature and, according to affiant’s belief, th e value
of said property and the probable am ount of damages to wnich the
plaintiff is entitled for the detention thereof, and where th e action is
to recover a debt stating the am ount thereof, and where th e action is
to recover damages for the breach of a contract setting out, specif
ically and in detail, the breach complained of and the actual damage
resulting therefrom , and also stating either, first, th a t th e defendant
is a foreign corporation or is not a resident of the D istrict, or has
been absent therefrom for a t least six m onths; or, second, th a t the
defendant evades the service of ordinary process by concealing him
self or tem porarily withdrawing himself from the D istrict; or, third,
th a t he has removed or is about to remove some or all of his property
from the D istrict, so as to defeat ju st dem ands against him ; or,
fourth, th a t he has assigned, conveyed, disposed of, or secreted, or
is about to assign, convey, dispose of, or secrete his property with
intent to hinder, delay, or defraud his creditors; or, fifth, th a t the
defendant fraudulently contracted the debt or incurred the obligation
respecting which the action is brought, the clerk shall issue a writ
of attachm ent and garnishm ent, to be levied upon so much of the
lands, tenem ents, goods, chattels, and credits of th e defendant as
m ay be necessary to satisfy the claim of th e plaintiff : Provided, T hat
the plaintiff shall first file in the clerk’s office a bond, executed by
himself or his agent, w ith security to be approved by th e clerk, in
twice the am ount of his claim, conditioned to m ake good to the
defendant all costs and damages which he m ay sustain by reason of
the wrongful suing out of the attachm ent.
A ttachm ent m ay be had upon accounts in th e nam es of tw o or
m ore persons held b y an y bank, tru s t com pany or an y other corpora
tion or person.
(See E xecution).
B a n k s . All banking in stitu tio n s are under supervision of the
C om ptroller of th e Currency. N o banking business m ay be done
in th e D istrict except by corporations previously organized and
doing such business or organized in accord w ith th e incorporation
laws of th e D istrict of Colum bia or U nited States. Non-member
banks of th e Federal Reserve System are required to m aintain ré
servés on th e sam e basis as national banks doing business In the
BANKING AND COMMERCIAL LAWS—DISTRICT OF COLUMBIA
D istrict. L iquidation of a n y banking business is provided for by a
tw o-thirds vote of shareholders. M any other sections of th e national
banking laws are extended to ap p ly to all banks. Crim inal laws ap
plicable to m em ber banks of th e Federal Reserve System áre also in
force. Bank or tr u s t com pany is n o t liable for refusal to pay check
or other dem and in stru m en t presented more th an one year after
d a te of check or instrum ent, unless expressly instructed by drawer
or m aker to p ay th e same. L iability of bank or tru s t com pany for
non-paym ent, through m istake or error and w ithout malice, of a check
or o ther negotiable in strum ent which should have been paid, is lim ited
to actu al dam age shown by reason of such non-paym ent.
B ills a n d N o tes. Uniform N egotiable Instrum ents Act, w ith some
modification, in force, adopted Ja n u ary 12, 1899.
C h a tte l M o rtg ag es. N o bill of sale or m ortgage or deed of tru st
to secure a d eb t of an y personal chattels whereof the vendor, m ort
gagor. or donor shall rem ain in possession, is valid and effectual to
pass th e title therein, except as between the parties to such instru
m ent and as to other persons having actual notice of it, unless the
same be executed and acknowledged and within ten days from the
d ate of such acknowledgm ent recorded in the same m anner as deeds
of real estate; and as to th ird persons not having notice of it, such
instrum ent shall be operative only from the tim e within said ten
days when it is delivered to th e recorder of deeds to be recorded.
C o lla te ra ls. T he holder of the note as collateral security for debt
stands upon th e same footing as the purchaser and m ay m aintain suit
thereon for his own benefit. T he collateral pledged m ay be sold in
accordance with th e term s of the collateral note which usually pro
vides th a t th e collateral m ay be sold upon non-paym ent of the prin
cipal of th e note, eith er a t public or private sale, and in such cases the
purchaser a t any such sale obtains a valid title to the collateral sold.
C o n d itio n a l S ales. Unlawful to sell, convey, conceal or rem ove
from th e D istrict, w ith in ten t to defraud, property possessed under
w ritten conditional sales contract, before conditions are fulfilled,
w ithout consent of vendor. N o conditional sale of chattels, where
purchase price exceeds $ 10 0 , is valid as against th ird parties w ithout
notice, unless reduced to writing, signed, acknowledged and recorded.
C o n tr a c ts . E v ery contract and obligation entered into by two
or more persons, w hether p artners or merely joint contractors, whether
under seal or not, w ritten or verbal, and whether expressed to be
joint and several or not, is for the purposes of suit deem ed joint and
.several. On th e d eath of one or more of such persons, his or their
executors, adm inistrators, or heirs are bound by said contract in the
same m anner and to th e sam e extent as if the same were expressed
to be jo int and several. In actions ex'contractu against alleged joint
debtors it is n ot necessary for the plaintiff to prove their joint lia
bility in order to m aintain his action, b ut he is entitled to recover,
as in actions ex delicto, against such of the defendants as shall be
shown by th e evidence to be jointly indebted to him, or against one
only, if he alone is shown to be indebted to him, and judgm ent will
be rendered as if th e others had n ot been joined in the suit. Any of
several joint debtors, when th eir deb t is overdue, m ay m ake a separate
composition or compromise w ith their creditors.
Common Law S ta tu te of frauds in force.
C o rp o ra tio n s . Any three or more persons m ay form a company
for the purpose of carrying on any enterprise or business which m ay be
lawfully conducted by an individual, excepting banks of circulation
or discount, railroads and such o ther enterprise or business as is other
wise provided for. Such corporations m ay have a perpetual existence.
No such com pany is authorized to transact business until 10 per cent
of th e capital stock shall have been actually paid in, either in money
or property a t its actual value; and th e recorder of deeds, before
filing any certificate of incorporation, m ust be satisfied th a t the entire
capital stock has been subscribed for in good faith. All of the stock
holders of such com pany are severally and individually liable to the
creditors of th e com pany in which th ey are stockholders for th e unpaid
i am ount due upon th e shares of said stock held by them respectively,
for all debts and contracts m ade by such company, until th e whole
am ount of capital stock fixed and lim ited by such company shall have
been paid in, and a certificate thereof shall have been m ade and
recorded. E v ery such com pany m ust annually, except insurance
companies, within tw enty days from th e first of January, m ake a
report, which shall be duly published and which report shall sta te the
am ount of capital and th e proportion actually paid and the am ount of
existing debts. Foreign corporations doing business in the D istrict
of Columbia are subject to service of process on their agents or on
the persons conducting their business, or by leaving copy thereof a t
the principal place of business of such com pany, or a t th e residence
of its agent. The affairs of the corporation shall be m anaged by not
less th an three nor more th an fifteen trustees, a m ajority of whom
must be residents of th e D istrict, to be annually elected, except for
the first year, by th e stockholders, a t such tim e and place as m ay be
provided b y th e by-laws. T he fee of th e recorder for filing certifi
cates of Incorporation where capital stock is authorized is a m inim um
of $50.00 on th e first $100,000. of capital stock, fifty cents on each
additional $ 1 ,000 ., plus $ 1.0 0 for first tw o hundred words in certificate
and tw en ty cents for each additional one hundred words or fraction
thereof.
C o u rts . T he D istrict C ourt of th e U nited S tates for th e D istrict
of Colum bia has jurisdiction generally in m atters sounding in law
and eq u ity . 1 M unicipal C o u rt has jurisdiction in contract and to r t
cases involving $1,000. or less. T rial C ourts are in session continu
ously throu g h o u t th e year, except th e D istrict C ourt which, usually,
during Ju ly , A ugust and Septem ber hears only uncontested m atters
and crim inal cases. U pon sufficient affidavit filed in suits on c o n tr a c t 1
in M unicipal C ourt, ju dgm ent m ay be granted in tw enty days, exclu
sive of Sundays an d legal holidays, unless th e defendant file an affi
davit sufficient to co nstitute a valid defense.
D ays o f G ra c e abolished.
D eeds. The following form of deed is now all th a t is required in
the D istrict of Columbia to convey a fee simple title to real estate:
This deed, m ade th is . •... day o f............ in th e y e a r. . . . . by m e ,. . . .
° f ............ witnesseth: T h at in consideration of (here insert con
sideration), 1 . th e sa id
do grant unto (here insert grantee’s
name), o f............ all th a t (here describe th e property)
Witness m y hand and seal.
................................(Seal.)
A deed to be effective as to th ird persons w ithout notice, m u st be
acknowledged and recorded w ith th e recorder of deeds and takes
effect from th e tim e of recording. No deed m ay be recorded w ithout
acknowledgment. A scroll is considered a sufficient seal.
D e p o sitio n s. Depositions of an y p a rty or person m ay be taken,
without leave of court, upon oral exam ination or w ritten interroga
tories a t an y tim e after jurisdiction of th e defendant or property in
volved is obtained an d after answer is served, either for purpose of
discovery or for use as evidence in th e action or for both purposes.
Leave of C o u rt m u st be obtained to ta k e a deposition before answer
is served. T he deposition m ay be taken before any judge of any
c°n rt of th e U nited States, U nited S tates Commissioner, any clerk of
a district court, or an y chancellor, justice, or judge of a Suprem e or
Superior C ourt, m ayor or chief m agistrate of a city, judge of a county
c° u rt or co u rt of com m on pleas of any S tate, or any n otary public,
J10* being of counsel or atto rn ey to any- of th e parties, nor interested
in th e event of th e cause. T he Federal Rules of Civil Procedure
govern.
, Descent and Distribution, (a) Real E state. Lands of inte®tate descend first to child or children equally. Children of a deceased
child tak e (equally) th e share of th eir im m ediate ancestor. I f there
he no child or descendant of a child, th e estate descends equally to th e
rather and m other of th e intestate, or th e whole to th e sole surviving
Parent. I f th ere be no fath er or m other, the brothers and sisters of
the in testate ta k e equally, and th e descendants of a deceased brother
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Federal Reserve Bank of St. Louis
1971
or sister share equally in th e share of such brother or sister. I f th ere
be no brother, or sister or a descendant of a brother or sister, th e
whole goes to th e widow or widower of th e intestate. I f there be no
widow or widower, one half goes to th e paternal, and th e other h alf
to th e m aternal kindred of th e in te sta te 1 in th e following order:
To th e grandfather and grandm other equally, or th e entire half to th e
surviving grandparent. I f none, th en to th e uncles and a u n ts of th e
intestate equally or to th e descendants of an y deceased uncle or au n t.
I f none, then to th e great-grandfathers and great-grandm others, in
th e sam e m anner prescribed for grandfathet and grandm other. I f
none, then to th e brothers an d sisters of th e grandfathers and grand
m others or th eir descendants equally. And so on, in o ther cases,
w ithout end, passing to th e nearest lineal ancestors and th e descend
a n ts of such ancestors. I f th eir be no paternal kindred, th e whole
goes to th e m aternal kindred; and if their be no m aternal kindred, th e
whole goes to th e paternal kindred. I f their be neither patern al nor
m aternal kindred, th e whole goes to th e kindred of th e husband or
wife of th e in testate in like m anner as to th e kindred of th e intestate,
and if th e intestate has had m ore th a n one spouse, all deceased before
th e intestate, th e estate shall be equally divided am ong th e kindred
of th e several spouses in equal degree equality. T here is no distinc
tion between kindred of th e whole blood an d kindred of th e h alf
blood.
P e rs o n a l E s ta te . Surplus of personal estate of an intestate, after
paying debts and expenses of adm inistration, is to be distributed as
follows; If the intestate leave a widow or surviving husband and no
child, parent, grandchild, brother, or sister, or the child of a brother
or sister of the said intestate, th e said widow or surviving husband shall
be entitled to the whole. I f there be a widow or surviving husband
and a child or children, or a descendant or descendants from a child,
the widow or surviving husband shall have one th ird only. I f there
be a widow or surviving husband and no child or descendants of the
intestate, b u t the said in testate shall leave a father or m other, or
brother or sister, or child of a brother or sister, the widow or surviving
husband shall have one half. T he surplus, exclusive of th e widow’s
or surviving husband’s share, or th e whole surplus (if there be no
widow or surviving husband), shall go as follows: I f there be children
and no o ther descendants, th e surplus shall be divided equally among
them . I f th ere be a child or children and a child or children of a
deceased child, th e child or children of such deceased child shall tak e
such shares as his, her, or their deceased parent would, if living, be
entitled to, and every other descendant or descendants in existence
a t th e d eath of th e intestate shall sta n d in th e place of his, her, or
their deceased ancestor. If there be no child, or descendant, th e whole
shall go to th e fath er and m other in equal shares, or to th e survivor
of them . I f there be a brother or sister, or child or descendant or
a b rother or sister, an d no child, descendant, or fath er or m other
of the intestate, the said brother, sister, or child or descendant of a
brother or sister shall have the whole. E very brother and sister of
the intestate shall be entitled to an equal share, and the child or
children, or descendants of a brother or sister of the intestate, shall
stand in the place of their deceased parents respectively. After
children, descendants, father, m other, brothers, and sisters of the
deceased and their descendants, all collateral relations in equal degree
shall take, and no representation am ong such collaterals shall be
allowed. I f th ere be no collaterals, th e grandfathers and grand
m others, or such of them as survive, shall tak e alike. If any person
entitled to distribution shall die before th e sam e shall be m ade, his
or her share shall go to his or her representatives. Posthum ous
children of in te sta te shall tak e in th e sam e m anner as if th ey had
been bom before th e decease of th e intestate, b u t no other posthum ous
relation shall be considered as entitled to distribution in his or her
own right. In th e distribution o f personal estate there shall be no
distinction betw een th e whole and half blood.
D ow er. A wife is entitled to dower in all real estate owned by
th e husband during coverture, w hether -or n o t owned by him a t th e
tim e of his death, including equitable as well as legal estates. The
wife m ay relinquish dower by joining in deed With husband or by
separate deed.
E v id e n ce. In all trials th e testim ony of witnesses is tak en orally
unless otherwise provided by th e Federal Rules of Civil Procedure.
All evidence is adm itted which is adm issable under th e sta tu te s of
th e U nited States; or under th e rules of evidence applied in courts
of th e U nited States on th e hearing of suits in equity. An official
record m ay be evidenced b y an official publication thereof or by
a copy atte ste d b y th e officer having th e legal custody of th e record,
or by his deputy, and accom panied w ith a certificate th a t such officer
has th e custody; or by a certificate of th e one having custody under
th e seal of th e office or court where th e record m ay be m ade.
E x e c u tio n s. Executions m ay be levied upon all goods, chattels and
credits of th e debtor n o t exem pt, and upon gold and silver coin, bank
notes or other money, bills, checks, prom issory notes or bonds, or
certificates of stock in corporations owned by said debtor, and upon
money owned by him in the hands of the m arshal or of the constable
charged w ith th e execution of such w rit, and also upon all legal lease
hold and freehold estates of the debtor in land. Executions on judg
m ents before justices of the peace m ay be superseded, according to
the am ount of th e judgm ent, upon good and sufficient security being
entered by a person who m ay a t the tim e be the owner of sufficient
real property located in th e D istrict, above all liabilities and exemp
tions, to secure the debt, costs and interests from one to six m onths,
but there can be no stay of execution for wages of servants or common
laborers, nor upon any judgm ent for less than $5.
E x e m p tio n s . (Actual residents.) In addition to wearing ap
parel, etc., th ere are exem pt from execution or attachm ent household
furniture to th e value of $300, im plem ents of debtor’s trad e or business
to th e value of $20 0 , stock for carrying on business to am ount of $200 ,
one horse, harness and cart, wagon or dray, and earnings of m arried
m en or heads of families, n ot to exceed $ 10 0 per m onth for tw o months.
Exem ptions are only allowed where th e p a rty claiming such is th e
head of a fam ily or householder residing in th e D istrict. Also exem pt
are a n o tary ’s seal an d his official docum ents, m oney or benefits to be
paid by a fratern al beneficial association and m oney recovered by
fam ily of deceased as dam ages on wrongful death.
F o re ig n J u d g e m e n ts . Actions m ay be in stitu ted in th e D istrict
C ourt of th e U nited S tates for th e D istrict of Colum bia on any judg
m ent of a court of record in any other jurisdiction. T he com plaint
in any such case m ust, be accom panied by a tran scrip t of th e record
of such judgm ent w ith th e attesta tio n of th e clerk of th e cou rt and
a certificate of th e judge, chief justice and presiding m agistrate th a t
th e attestatio n is in due form . Action m ay n o t be brought if barred
in foreign jurisdiction.
G a r n is h m e n t. A fter judgm ent, th e w rit of garnishm ent m ay
issue against specific p roperty or credits in th e hands of th e garnishee
and on th e retu rn of th e w rit, if there be p roperty or credits, th e judg
m ent or condem nation follows. W rit m ay issue against property or
credits in joint account. T he w rit of garnishm ent can n ot be issued
against th e U nited S tates or th e D istrict of Columbia.
H o lid ay s. T he legal holidays are: Sundays; Ja n u ary 1 (New
Y ear’s D ay); F ebruary 22 (W ashington’s birthday); M ay 30 (Memo
rial D a y ); July 4 (Independence D a y ); first M onday in Septem ber
(Labor D ay ); N ovem ber 1 1 (Armistice D ay); Thanksgiving D ay;
December 25 (Christm as D a y ); and day of th e inauguration of th e
President, in every fo u rth year. E very S aturday is a legal half
holiday after twelve o’clock noon and notes falling due on th a t day
are n ot payable u n til M onday, except dem and notes which m ay, a t
th e option of th e holder, be presented for paym ent in th e forenoon.
H u s b a n d a n d W ife. T he wife’s pro p erty is exem pt from execu
tion for th e husband’s debts. T he husband m ay convey direct to his
wife. T he wife m ay use all of her p roperty of every description as
fully as if she were unm arried, and m ay dispose of th e sam e by deed,
1972
BANKING A ND COMMERCIAL LAWS—FLORIDA
etc., as fully as if she were unm arried. She also has power to trad e
an d to sue an d he sued, b u t no m arried wom an under th e age of
tw enty-one years can m ake a valid deed or conveyance. On th e
d eath of a m arried wom an th e husband is entitled to an estate by
curtesy in her fee sim ple p roperty of which she dies intestate, if a child
be born capable of inheriting. T he husband is n o t liable for th e
deb ts of his wife contracted before m arriage. A husband, who wil
fully neglects to provide for wife, or m inor child under sixteen years,
in d estitu te circum stances, m ay be adjudged guilty of a m isdemeanor,
an d m ay be fined, or im prisoned, b y th e court having jurisdiction.
I n te r e s t. The legal rate of interest In the D istrict of Colum bia Is
6 p er cent, and in any su it where th e contract is tain ted w ith usury the
plaintiff forfeits the whole of th e interest so contracted to be received,
and where usurious interest has been paid it can be recovered pro
vided action for such recovery be brought within one year. In an
action on a contract for the paym ent of a higher rate of interest than
is lawful in th e D istrict, m ade or to be perform ed in any sta te or
territo ry of th e U nited States where such contract rate of interest
is lawful, th e judgm ent for th e plaintiff shall include such contract
interest to th e date of th e judgm ent and interest thereafter a t the
ra te of 6 per centum per annum u n til paid. B y w ritten contract this
ra te m ay be increased to 8 per cent.
J u d g m e n ts . E very judgm ent is good and enforceable by an execu
tion issued thereon for a period of twelve years from the date when an
execution m ight first have been issued thereon or from the date of the
la st revival thereof by m otion to revive. Judgm ents of th e M unicipal
C o u rt are good for six years, b u t are n o t liens on real estate .until
recorded in th e D istrict C ourt of th e U nited S tates for th e D istrict of
Colum bia.
.
*
, _
.
.
J u r is d ic tio n . (See Actions, Adm inistrations, Appeals, C ourts and
M unicipal Court.)
L im ita tio n s . Fifteen years for recovery of lands, tenem ents or
hereditam ents; executor’s or adm inistrator’s bond, five years; instru
m ents under seal, twelve y ears; simple contracts and recovery of per
sonal p ro p erty and dam ages for in ju ry to or for its unlaw ful detention,
th ree years; sta tu to ry p en alty or forfeiture, libel, slander, assault,
b attery , m ayhem , wounding, malicious prosecution, false arrest or
im prisonm ent, one year,; all other actions th ree years. U sual excep
tions in favor of persons under disability. Acknowledgment to revive
action on d eb t m u st be in w riting. P a r t paym ent will tak e debt o u t
of sta tu te . Actions m ay n o t be m aintained against D istrict for un
liquidated dam ages unless w ritten notice of tim e, cause, place is given
w ithin six m onths of damage.
M a rrie d W o m en . (See H usband and Wife.)
M o rtg ag es. M ortgages are alm ost entirely supplanted by deeds
of tru st, requiring no court proceedings to foreclose. Acknowledged,
recorded an d effective in sam e m anner as absolute deeds. T rustee
holds qualified fee sim ple title. Joining th e wife is necessary to bar
dower.
M u n c ip a l C o u r t. T he M unicipal C ourt of th e D istrict of Colum
bia is a co u rt of record. I t has exclusive jurisdiction in all civil cases
in which th e claimed value of personal property, debt or dam ages ex
clusive of in terest and costs, does n ot exceed $1,000. E quitable
defenses m ay be interposed. W hen th e value in controversy shall
exceed $ 2 0 , and in all actions for th e recovery of th e possession of
real property, either p a rty m ay dem and a ju ry trial. Judgm ent
rendered by th e M unicipal C ourt rem ain in force for six (6 ) years and
no longer, unless docketed w ith th e clerk of th e D istrict C ourt of the
U nited S tates for th e D istrict of Columbia, when it rem ains in force
for twelve ( 1 2 ) years. N o judgm ent shall be a lien upon real property
u n til so docketed.
P a r tn e r s h ip s . Lim ited partnerships for the transaction of any
m ercantile, mechanical, or m anufacturing business within the D istrict
m ay be form ed by any two or more persons, b u t th e num ber of special
p artners is lim ited to six. The special partners are n ot liable for
the debts of the partnership beyond the fund contributed by them
to th e capital. A certificate setting forth the firm nam e; general
nature of th e business to be conducted; nam es of all th e general
and special partners interested therein, distinguishing which are
general and which are special, and their respective places of resi
dence; th e am ount of capital contributed by each special partner
to th e common stock; and the period a t which the partnership is
to commence and term inate, m u st be filed w ith th e clerk of th e D istrict
C o u rt of th e U nited S tates for th e D istrict of Colum bia after having
been acknowledged in th e m anner prescribed for deeds. P artnership
term s m u st be published in tw o newspapers.
P r o te s t. M ay be m ade by a notary public under his hand and
seal; or by any respectable resident of the place where the bill is
dishonored, in the presence of two or more credible witnesses. W here
a foreign bill, appearing on its face to be such, is dishonored by nonacceptance, it m ust be duly protested for sam e; and where such a
bill which has not previously been dishonored by non-acceptance,
is dishonored by non-paym ent, it m ust be duly protested for same.
If it is not protested the draw er and indorsers are discharged. Where
a bill does n ot so appear to be a foreign bill, protest thereof in case
of dishonor is unnecessary. T he protest m ust be annexea to th e bill
or contain a copy thereof and m ust sta te the (1 ) tim e and place
for presentm ent; (2 ) the fact th a t presentm ent was m ade and the
m anner thereof; (3) the cause or reason for protesting; (4) the dem and
m ade an d th e answer given, if any, or th e fact th a t th e drawee or
acceptor cannot be found.
B e co rd s. The exemplification of the record under the hand of the
keeper of th e sam e, and the seal of the office or court where such
record m ay be m ade, is good and sufficient evidence to prove any
record m ade or entered in any of the S tates or T erritories of the U nited
S tates: and the certificate of the p arty purporting to be the keeper
of such record, accom panied by such seal, is prim a facie evidence
of th a t fact. A copy of the record of any deed or other instrum ent
in writing not of a testam entary character, where th e laws of the
S tate, T erritory, or country where th e sam e m ay be recorded require
such record, and which has been recorded agreeably to such laws,
and th e copy of any will which said laws require to be adm itted
to probate and record, by judicial decree, and of the decree of the
court adm itting the sam e to probate and record, under the hand
of th e clerk or other keeper of such record and the seal of the court
or office in which the record has been m ade, is prim a facie evidence
to prove th e existence and contents of such deed, will, or other instru
m ent in writing, and th a t it was executed as it purports to have been.
See Evidence.
S ales. Uniform Sales Act in force, effective Ju ly 1, 1937, does not
relate to conditional sales.
T ax es. T he ra te fixed annually by Congress, on real an d tangible
personal p ro perty is, a t present, 1.75 per centum of th e assessed value
of such pro p erty. Assessments are based on th e fair cash value, and
new assessm ents are m ade annually by a B oard of Assessors. These
taxes are payable, one-half in Septem ber and one-half in M arch of
each year, w ith a penalty of one per centum per m onth for default.
Beal estate taxes become liens on real property on th e date placed on
th e records, Ju ly 1st.
Incom e ta x rates for individuals domiciled m th e D istrict are:
1% on th e first $5,000. of taxable income, 114% on th e next $5,000.,
2% on th e next $5,000., 2 J4 % on th e next $5,000. and 3% on all in
excess of $20,000. Corporations, w hether dom estic or foreign, are
required to p ay 5% on taxable income derived from D istrict of Colum
bia sources. Taxable income is arrived a t by exemptions, exclusions
an d deductions substantially th e sam e as in th e federal income tax
law. R etu rns and paym ent of one-half of th e tax m u st be m ade
on April 15 of each year, or, if th e re tu rn is m ade on th e basis of a
fiscal year, th e re tu rn and paym ent of one-half of th e ta x m ust be
m ade on th e 15th day of th e fo u rth m onth following th e close 9 ! th e
fiscal year. T he rem aining one-half of th e ta x m u st be paid on
October 15, or, if th e re tu rn is m ade on th e basis of a fiscal year, on
th e 15th d ay of th e te n th m onth after th e close of th e fiscal year. ■,>
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Federal Reserve Bank of St. Louis
Inheritance taxes are levied on all transfers of p rop erty , or interest
therein, having its taxable situ s in th e D istrict of Columbia,_made o r
intended to ta k e effect in possession or enjoym ent after th e death
of th e decedent, or m ade in contem plation of death. B ates are
g raduated on th e basis of th e relationship of th e beneficiary to th e
decedent. In addition thereto, an E sta te T ax is im posed equal to
80% of th e federal ta x im posed under th e 1926 A ct and m u st be paid
w ithin seventeen m onths after th e d eath of th e decedent. W here
th e gross value of th e estate exceeds $ 1 ,000 . th e personal representa
tiv e m u st file a re tu rn w ithin fifteen m onths from th e d ate of death
of th e decedent, and pay th e ta x w ithin eighteen m onths from th e
d ate of death. I f th ere be no personal representative, each beneficiary of p roperty in excess of $ 1 , 000 . in value, m u st file a retu rn w ithin
six m onths from th e d a te of death of th e decedent and p ay th e tax
w ithin nine m onths from th e d ate of death. A copy of th e federal
estate ta x re tu rn m u st be filed w ith th e D istrict Assessor within
sixteen m onths after th e d eath of th e decedent.
T r u s t C om panies^ T ru st companies can be organized under th e
general provisions of th e Code on th a t subject. M u st be twenty-five
or m ore incorporators, all citizens of th e U nited States. Y isitonal
powers exercised by com ptroller of currency sim ilar to such powers
exercised w ith respect to national banks. N o tr u s t com pany can be
incorporated w ith less capital stock th a n $ 1 ,0 0 0 ,0 0 0 .
-A ? ,,,?
storage business w ith a capitalization of n ot less th an $ 1 ,200 ,000 .
Foreign companies desiring to operate in th e D istrict m u st first com
ply w ith th e provisions for th e governm ent of tr u s t companies under
th e law s of th is D istrict.
w in«. A» wills and testam ents m ust be in writing and signed by
the testa to r, or by some o ther person in his presence and by his express
directions, and shall be atteste d and subscribed in th e presence of
the said testa to r by a t least two credible witnesses. N o will, testa
m ent, or codicil is effectual for any purpose w hatever unless the
person m aking the sam e be, if a male, of th e full age of twenty-one
years, and if a female, of the full age of eighteen years, and be a t
the tim e of executing or acknowledging it, of sound and disposing
mind and capable of executing a valid deed or contract. Any will
executed after January 17, 1887, and before January 1, 1902, devising
real estate, from which it shall appear th a t it was th e intention of
the testa to r to devise property acquired after the execution thereof
shall be deemed, taken and held to operate as a valid devise or all
such p roperty; and any w ill executed after Jan u ary 1, 1902, m u ch
shall by words of general im port devise all of th e estate or all of th e
real estate of th e te s ta to r shall be deemed, taken and held to operate
as a valid devise of an y real estate acquired, by said te sta to r after th e
execution thereof, unless an in ten tio n shall appear to th e contrary.
W here a devisee or legatee dies before th e testa to r, leaving issue, such
issue stands in th e place of th e deceased devisee ^ r legatee unless a
contrary intention appear from th e will.
Devises and bequests to attestin g witnesses are void.
(See A dm inistration.)
S Y N O P S IS O F
T H E L A W S O F F L O R ID A
R ELA TIN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by W il l ia m s & W il l i a m s ,
A ttorneys a t Law, Professional Bldg., Sarasota, Fla.
A c c o u n ts . Open accounts are barred In three years.
A c k n o w le d g m e n ts m ust in every instance be under official seal.
If m ade in th e S tate of Florida, m ay be m ade before any judge, justice
of the peace, clerk or deputy clerk of a court of record, or notary public;
or if m ade o ut of the S tate, and within the U nited States, before a
U nited States Commissioner of Deeds appointed by th e governor of
iihia sta te , or before a judge or clerk of any court of th e United States
or of any sta te , territo ry or district, having a seal, or before a notary
public or justice of the peace of such sta te , territo ry or district, having
an official seal, and the certificate of acknowledgm ent or proof shall
be under th e seal of the court or officer as the case m ay be. If made
out of the U nited States, before any commissioner of deeds appointed
by th e governor of the S tate to reside in such country, or an y notary
public of such foreign country, or before any m inister charge d affaires,
consul-general, consul, vice-consul, commercial agent, or vice-com
mercial agent of the U nited States appointed to reside in such country.
Conveyances of dower and powers of attorney for th e execution of
deeds to real estate m ust be executed in like m anner as conveyances of
real estate. A wife’s acknowledgm ent m ust be tak en separate and
ap art from her husband. Officers m ust certify th a t th e grantors are
known to him . T he following Is the usual form adopted, viz:
S tate of Florida,
1
C ounty o f . ........................... J
Before the subscriber p erso n ally ap p ea red .. . . . . . . . . . . . . . . . . . .and
h!s wife................... known to me to be the individuals described in
and who executed the foregoing instrum ent who acknowledged th a t
they executed the sam e for the uses and purposes therein expressed
and the sa id ........................ . ................................... wife of th e s a i d .. . . . .
........................... being by me further and privily exam ined separate
and ap art from her said husband, acknowledged and declared th at
she executed the sam e freely and voluntarily, and w ithout fear, appre
hension, compulsion, or constraint of, or from h t r said husband, and
for the purpose of renouncing and relinquishing all her right, of w hat
soever kind, in and to said property.
Given under m y hand and seal official th is ...............d ay o f................
19
N o tary Public.
M y commission expires.........................................................(See notaries.)
A ctio n s. Suits shall be begun only in the county (or if less than
$100 in justice district) where the defendant resides, or where the
cause of action accrued, or where the property in litigation is. if
brought in any county where defendant does not reside, th e plaintiff,
or some person in his behalf, shall file w ith th e praecipe or bill in chan
cery, an affidavit th a t the su it is brought in good faith and w ith no
intention to annoy the defendant. This la tte r provision does not
apply to suits against non-residents. W here there are jom t defendants
suit m ay be brought in any court (or justice district) where any one or
the defendants resides, or where the cause of action accrued or where
the property in litigation is. Corporations (domestic) can only he
sued In a county where they keep an office. Foreign corporations may
be sued in any county where they have an agent, or where th e cause
of action accrued or where th e property in litigation is.
A d m in is tr a tio n of E s ta te s . U pon th e d eath of a person intestate
or having m ade a will b u t appointing no executor, th e county judge
appoints an adm inistrator, preferring first the next of k in ; b u t if none
such apply, then, upon notice given by publication, any creditor or
suitable person. N o m inor can be appointed. If no o n e applies ior
letters of adm inistration w ithin th irty days after death, th e probate
court m ust order th e sheriff to act. T he adm inistrator appointed Dy
the court m ust give bond in am ount to be fixed by th e probate judge,
respect being had to the value of the estate. The sheriff when acting
as adm inistrator is liable upon his official bond. Claims against an
BANKING A N D COMMERCIAL LAWS—FLORIDA
estate are b arred after one year from date of notice given by adm inis
tra to r to present same. Claims are required to be filed in th e office
of th e C ounty Judge. T he com pensation of th e adm inistrator is
determ ined b y th e court and, in addition to com pensation for his
ordinary duties, n o t to exceed 6 per cent of m oney received for sales
m ade of personal and real property. A dm inistrators m ust m ake
annual settlem ents before th e first day of June each year or forfeit
Commissions. T he C ircuit C ourt is empowered to authorize adm in
istrato r or executor to carry on deceased's trad e or business for a
reasonable tim e.
A dm inistration of estates shall not be necessary where there is a
sole heir and th e estate is not indebted, or where th e estate is not
indebted and th ere are several heirs to m ake division of th e property
am icably among them selves, or where there is no p roperty except
th e exem pt hom estead or exem pt personal property, or where there
is money in th e bank less th a n $ 1 ,000 .00 , or where collections are to
be m ade th a t will n ot cause th e aggregate am ount of personal property
to exceed $ 1 ,000.00 (instead of th e above you m ay m erely sta te th a t
under certain conditions adm inistration of estates is unnecessary).
A ffid av its m ay be m ade before any judge, clerk of th e circuit and
suprem e courts, justice of th e peace, or notary public.
A lien s. No distinction betw een any citizens, except th a t th ey are
not allowed to vote.
A p p eals. A ppellate proceedings for th e common law side are by
writ of error, except where certiorari or prohibition lie, which m ust be
sued o u t w ithin six m onths from th e d a te of th e judgm ent. T he
record m ust be filed in ap pellate court on or before th e retu rn day of
th e w rit, under p enalty of dismissal. Questions of fact can only be
taken u p by bill of exceptions, which m ust be presented w ithin th e
term of th e court unless by special order th e tim e is extended. Appeals
in chancery m ay be tak en w ithin six m onths and th e law governing
writs of error as far as it relates to filing of transcripts of records and
proceedings thereon an d filing assignm ent of errors, th e d u ty of
appellate court in giving judgm ent, in causing execution of its decrees
and quashing w rits of error, are applicable to appeals in chancery.
N otice of appeal in chancery m ust be filed w ith clerk and recorded in
m inutes. T his gives appellate court jurisdiction.
A s s ig n m e n ts a n d In so lv e n c y . Assignments by insolvents are
provided for by law. Preferences are not allowed. All property,
except th a t which is exem pt, m ust be surrendered to th e assignee.
Assignee gives bond and winds up estate.
A tta c h m e n t process m ay issue upon affidavit m ade, setting forth
th a t am ount is actually due; th a t plaintiff has reason to believe defend
a n t will fraudulently p a rt w ith his property before judgm ent can be
recovered or is actually removing his property, or is about to remove
It o u t of th e S tate, or resides beyond th e lim its thereof, or is actually
removing or abo u t to remove o ut of the S tate, or absconds or conceals
himself or is secreting property or fradulently disposing of sam e, or
actually removing, or is about to remove, beyond the judicial circuit
in which he, she, or th ey reside. A ttachm ent m ay also issue for a debt
uot due, upon affidavit stating th a t the debt is actually existing, and
th a t th e defendant is actually removing his property beyond the
limits of th e S tate, or is fraudulently disposing of his property for
the purpose of avoiding th e paym ent of his ju st debts or dem ands, or
is fraudulently secreting his property for such purposes. T he m aking
of th e affidavit causes all debts to m ature for the purpose of th e suit.
Plaintiff m ust give bond, w ith two sureties in a t least double th e debt
or sum dem anded. One surety is sufficient if th a t surety Is a surety
company authorized to do business in the sta te of Florida. Service
of notice of th e su it m ay be either personal or by publication where
attachm ent is levied and property is not retaken by defendant. No
arrest allowed in civil actions. W rits of garnishm ent m ay be issued
both before and after judgm ent. If issued before judgm ent plaintiff,
his agent or atto rn ey m ust m ake affidavit th a t the debt for which the
plaintiff sues is ju st, due and unpaid; th a t the garnishm ent applied
for is not sued o u t to injure either the defendant or the garnishee;
th at he does not believe th a t defendant will have in his possession
after execution shall be issued visible property in this sta te and in
the county in which su it is pending upon which a levy can be m ade
sufficient to satisfy th e am ount of plaintiff's claim, stating the am ount,
and, except in cases in which plaintiff has had an attachm ent or
obtained his final judgm ent, he, his agent or attorney, m ust enter into
bond payable to defendant in double the am ount of the debt, condi
tioned to pay all costs and dam ages which defendant m ay sustain in
consequence of plaintiff’s im properly suing out the writ.
B a n k s. Corporations for carrying on th e business of banking m ay
be formed by an y num ber of persons not less th a n five, w ith a board
of directors consisting of not less th an five nor more th an tw enty-five.
No banking com pany shall be organized with a capital of less th an
$50,000, except th a t banks w ith a capital of not less th a n $25,000
may, with th e approval of th e com ptroller, be organized in any city
or tow n containing n ot more th a n 3,000 inhabitants. T he capital
stock shall be divided into shares of $100 each. Stockholders of
every banking, savings and tru st com pany, shall be held individually
responsible equally an d rateably and not for one another for all
contracts, debts and engagements of such com pany to th e extent of
the am ount of their stock therein a t th e par value thereof in addition
to th e am ount invested in such shares. Persons holding stock as
executors, adm inistrators, guardians, or trustees are not personally
subject to any liability as stockholders; b u t th e estates and funds
in their hands are liable to th e sam e extent as a testato r, intestate,
ward or person interested in tru s t funds would be if living and com
petent to hold th e stock in his own nam e. Banking corporations are
formed as other corporations and cannot begin business until author
ized by th e com ptroller. Directors m ust be citizens of th e U nited
States and a t least three-fifths of th e directors m ust have resided in
the S tate of Florida for a t least ope year preceding their election as
director and every director m ust own in his own right a t least ten
■hares of stock. E very banking firm, banking com pany or tru s t
company or liquidating agency, except national banks, shall be ex
amined a t least twice in each year by examiners appointed by th e
State Com ptroller, an d shall furnish financial reports whenever called
upon by th e S tate Com ptroller. T he com ptroller on becoming satis
fied of th e insolvency of all banking corporations in the S tate except
national banks, or th a t th e affairs of any such bank are in an unsound
condition or th reaten ed w ith insolvency because of illegal or unsafe
investments, or th a t it is violating any of th e laws of th e S tate relative
to banking corporations, m ay in his discretion apply to th e proper
court and have a liquidator tak e charge of th e assets and affairs of
such banking corporation. Such liquidator is under th e direct control
of the com ptroller an d m ay be rem oved by th e com ptroller. No new
private banks p erm itted after June 4, 1915. Banks and T ru st Com
panies m ay issue preferred stock b u t it cannot affect liability of com
mon stock.
Stockholders of banks , savings and tru s t companies, m em bers of th e
Federal Deposit Insurance C orporation, or whose unim paired surplus
equals its capital stock, not subject to assessment.
Com ptroller m ay perm it D eposit Insurance Corporation to act as
Liquidator of an y closed bank having m em bership therein, w ithout
bond.
Banks and tr u s t com panies m ay refuse paym ent of check or other
demand in stru m en t presented more th a n one year after date.
Foreign tru s t com panies and banks n ot authorized to do business
in the sta te prohibited from exercising tru s t powers in th e state.
Bills of L a d in g . Bills of lading are evidence against th e carrier of
the direction by which freights are to be received, carried, and delivered
■—collector or holder of commercial paper, attached to a bill of lading
not a w arrantor of th e q u an tity or quality of the goods represented
thereby, except by express contract in writing, and the officers, agents,
ana employes of th e carrier are required to comply w ith th e term s of
the bill or lading under penalty of crim inal prosecution.
B lue S ky L aw . “ On 7-1-31 th e Uniform Sale of Securities Act went
into effect an d is adm inistered by th e Florida Securities Commission."
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1973
C h a tte l M o rtg a g e s a n d D eeds of T r u s t. All conveyances in
tended to secure th e paym ent of money are mortgages. C hattel
mortgages m ust be recorded or the Droperty delivered to mortgagee
to m ake them effectual against bona fide creditors and purchasers for
value. Injunction will be granted against the rem oval of m ortgaged
personalty from th e S tate; can only be foreclosed by bill in chancery
unless under $ 100 , and upon personal property, when a common law
action m ay be brought in justice of the peace court, and m ortgage filed
With precipe. The form and effect of tru s t deeds have not been dis
turbed by s ta tu te . I t is a crim inal offence to m ortgage personal prop
erty more th an once w ithout th e consent of first lienor.
C o lla te ra l S e c u rity . I t is a m isdem eanor to sell, pledge, loan, or
in any way dispose of collateral security w ithout th e consent of pledgor.
A w ritten agreem ent m ay be m ade a t th e tim e of m aking th e pledge
for th e sale of th e collateral in such m anner and upon such term s as
the parties m ay desire, b u t notice m ust be given to pledgor ten days
prior to sale.
C o n d itio n a l S ales C o n tr a c t. C onditional sales contracts are
valid in Florida as such and m ay be either oral or in w riting. No
requirem ent as to recordation u ntil th e elapse of tw o years from
date of delivery of th e property. Invalid after tw o years against
purchasers or creditors tinless recorded. F or purpose of recordation
contract should be signed, sealed, witnessed and acknowledged before
a N otary Public.
, ,
C o n tr a c ts . S t a t u t e of F r a u d s . In order to bind an adm in
istrator personally, or any one for th e d e b t or default of another, or
one upon an agreem ent m ade in consideration of m arriage; or upon
contracts for th e sale oflands,tenem ents,or hereditam ents or any uncer
tain interest therein or for any lease thereof for a period longer th an
one year; or upon an agreem ent n ot to be perform ed w ithin one year,
there m ust be an agreem ent, note, or m em orandum thereof in writing
signed by the p arty to be charged, or some one lawfully authorized
by him. C ontracts for the sale of personal property m ust be in writing
or the property m ust be delivered or earnest money paid. News
papers and periodicals m ust either be subscribed for or ordered in
writing.
i
C o n v e y an ces. (See Acknowledgments.) All conveyances of real
estate, or any in terest therein for a term of years of more th a n two
years, m ust be by deed in writing, signed, sealed and delivered in the
presence of a t least two subscribing witnesses; and in order to be
effectual against subsequent grantees or incum brances, m ust be
recorded. T he wife’s separate estate can be conveyed only by the
joint deed of herself and husband, and confirmed by her acknowledg
m ent, taken separate and a p a rt from her husband. Words of lim ita
tion unnecessary. H usband m ay convey direct to wife.
C o rp o ra tio n s m ay be organized for an y law ful business und er th e
General C orporation Law of 1925, except banking, tru st, safety
deposit, building and loan, insurance, m utual fire insurance, surety,
express, railroad and canal, telegraph and telephone, cooperative,
fraternal, benefit, sta te fairs, and cem etery companies and corporations
not for benefit, which are organized under special acts. In general
corporations, stockholders a re liable only for am ount unpaid upon
subscription. C harter fee, payable to th e Secretary of S tate, is $2.00
for every $1,000, of capital stock up to $125,000; $0.50 per $1,000, on
each additional $1,000, up to $1,000,000; $0.25 per $1,000 on each
additional $ 1,0 0 0 u p to $ 2 ,000 ,0 0 0 ; and $0 .1 0 for each $ 1,0 00 in excess
of $2,000,000. C orporations m ay have stock of no p ar value, and
upon such stock th e fee is $0.20 a share up to 1,250 shares; $0.05 a
share in excess of 1,250 to 10,000 shares; $0.0025 a share in excess of
10,000 to 20 ,0 00 shares; and $ 0 .0 0 1 a share in excess of 20,000 shares.
M inim um fee $10.00. All corporations required to file annual report
and pay annual tax on capital stock as follows: C apital stock au th o r
ized not exceeding $10,000, $10.00; exceeding $10,000 to $25,000,
$25.00; exceeding $25,000 to $50,000, $50.00; exceeding $50,000 to
$100.000. $75.00: exceeding $100.000 to $200.000. $100.00: exceeding
$200,000 to $500,000, $200.00; exceeding $500,000 to $1,000,000,
$500.00; exceeding $1,000,000 to $2,000,000, $750.00; exceeding
$2,000,000, $1,000.00. C orporations m ay p ay annual tax of $1,000.00
and avoid filing report. Designation of resident agent for service of
process required of dom estic and foreign corporations doing business
m th e state.
Two or m ore corporations m ay m erge into one b y agreem ent of
a m ajority of th e directors of all.
C orporations dissolved for non-paym ent of tax m ay rein state by
paym ent of three years’ capital stock ta x and filing of certificate.
C o sts. N on-resident plaintiff required to give $100 bond to secure
costs. The defendant m ay have su it dism issed if bond is not given.
C o u rts . C ircuit courts have original jurisdiction in all equity cases
and all cases a t law not cognizable by inferior courts. C ounty C ourts,
in such counties as have C ounty C ourts, have jurisdiction of am ounts
not exceeding $500.00. C ounty Judge’s C ourts have jurisdiction of
probate m atters and, in counties where there are no Civil C ourts of
Record, have civil jurisdiction up to $100.00. Justices of th e Peace
have civil jurisdiction u p to $100.00. In counties having a population
of more th a n 100,000 Civil C ourts of Record are organized, w ith
jurisdiction from $100.00 to $5,000.00.
C re d ito rs ’ B ills m ay be brought before claim Is reduced to Judg
m ent, b u t suit a t law m ust be first brought and judgm ent m ust be
obtained before decree can be rendered:
D ays of G ra c e are abolished.
D ep o sitio n s m ay be taken upon commission when witness resides
out of the county, or is bound for sea, or is about to go o ut of the
S tate to rem ain until after, the trial of the cause, or is very aged or
infirm; or when oath is m ade th a t a m aterial p a rt of the case or defense
depends upon th e testim ony of such witness. The tim e for the suing
out of the commission, th e nam es of the witnesses, and the nam e of
one commissioner m ust be given to opposite side a reasonable tim e
before commission is issued. P rinted instructions for th e guidance of
commissioners usually accom pany commission. Fees or not less th an
$ 5 a witness are to be taxed as costs by th e clerk and paid by losing
^ D e s c e n t a n d D is tr ib u tio n o f P ro p e rty . Section 24: O R D E R
OF SUCCESSION— T he real and personal property of an in testate
shall descend and be distributed as follows: 1 . T o th e surviving
spouse and lineal descendants, th e surviving spouse taking th e sam e as
if he or she were one of th e children. 2. If th ere be no lineal descend
an ts to th e surviving spouse. 3. If there be no surviving spouse to
the lineal descedants. 4. And, if there be none of th e foregoing, to
th e father and m other equally, or to th e survivor of them . 5. And,
if there be none of th e foregoing, to th e brothers and sisters and th e
descendants of deceased brothers and sisters. 6 . And. if there be
none of th e foregoing, th e estate shall be divided into moieties, one of
which shall go to th e p aternal and th e other to th e m aternal kindred in
the following course: (a) To th e grandfather an d grandm other
equally or to th e survivor of them , (b) If there be no grandfather or
grandm other, to th e uncles and au n ts and th e descendants of such of
them as m ay be deceased, (c) I f there be no grandparent, uncle or
aunt, or their descendants, to th e great grandfathers and th e great
grandm others equally, or to th e survivor of them , (d) I f there be
no great grandfather or greatgrandm other, th en to th e brothers and
sisters of th e grandfather and grandm other on th e sam e side and to th e
descendants of such of them as m ay be deceased, (e) And so in
other cases w ithout end passing to the next lineal ancestors or ancestor,
and for w ant of them , to the descendants of such ancestors. 7. And
where the estate is hereinbefore directed to go by moieties to th e p a
ternal and th e m aternal kindred, if there should be no such kindred on
th e one p art, th e whole shall go to th e other p a r t; and if th e re be no
kindred either on th e one p a rt or th e other th e whole estate shall go to
th e kindred of the deceased spouse of th e intestate in like course as if
such deceased spouse had survived th e in te sta t and then died entitled
to th e estate.
_
HALF-BLOOD. Half-bloods inherit only one-half.
IL L E G IT IM A T E S , inherit and tran sm it through m other’s side as
if legitim ate, and also through fath er’s side when recognized by father.
1974
BANKING A ND COMMERCIAL LAWS—FLORIDA
A dopted children inherit th e sam e as children of blood and also
inherit from own parents, b u t such blood parents shall n ot inherit from
such adopted children. Aliens have sam e right as citizens. T here
are no entailed estates nor right of survivorship.
D ow er. Deceased m ay not by will cu t off his wife’s right to dower,
b u t she shall be entitled to tak e dower consisting of one-third of all his
real and personal property by electing to do so within prescribed period
o f tim e, w ithout regard to num ber of children. T he hom estead shall
n ot be included in th e property subject to dower, b u t shall descend as
provided by law. In addition to dower th e widow of an intestate shall
be entitled to retain necessary clothing, household goods, utensils and
provisions necessary for fam ily use, upon petition to th e C ounty Judge.
E v id en ce. W itnesses not disqualified by reason of Interest. In
civil cases, husband and wife m ay testify for or against each other.
In suits by or against lunatics or personal representatives, heirs-atlaw, next of kin, assignee, legatee, devisee, or survivor of a person
deceased, no evidence of a transaction or com m unication between
such lunatic or deceased person and the opposing p arty or those under
whom he claims, can be given by the opposing party, unless such evi
dence is first offered in behalf of such lunatic representatives legatees ,
devises, etc. No person is excused from testifying or producing
docum ents in trials for bribery, burglary, larceny, gambling, or illegal
sale of liquors, on ground th a t it m ay tend to convict him of crime
b u t no such person shall thereafter be prosecuted or subjected to any
penalty on account of anything concerning which he m ay so testify
or produce evidence.
E x e m p tio n s to every head of a fam ily residing in th e S tate hom e
stead of 160 acres of land, and im provem ents, if in th e country; onehalf acre of ground, if in an Incorporated city or town, together with
S1 .0 0 0 w orth of personal property. T he exem ptions in a city or town
shall not extend to more im provem ents or buildings than the residence
an d business house of the owner. No property is exem pt from sale
for taxes or assessments, or for obligations contracted for its purchase,
or th e erection or repair of im provem ents thereon, or for house, field,
or other labor perform ed thereon. Wages and salary of head of a
fam ily residing in th e S tate is exem pt from garnishm ent.
F o re ig n C o rp o ra tio n s . Commercial corporations can do business
In this S tate without restriction upon complying with requirem ents
as to foreign corporation, provided its nam e is not the sam e or so
nearly sim ilar to any dom estic corporation as to cause confusion.
(See Service of Process.)
.
Subject to sam e charter fees and annual taxes except th a t it is based
only on capital actually used in Florida.
F o re ig n J u d g m e n ts . Judgm ents obtained in th e several courts
of th e S tate, m ay be recorded in any county and have sam e force and
effect as if originally obtained therein. Judgm ents obtained in other
States or countries, m erely evidence, and have to be sued upon to be
m ade effective as judgm ents.
F r a u d . (See Lim itations of Actions.) Obtaining money or prop
erty under false pretense or by falsely personating another, are punish
able crim inally.
G u a r d ia n s . G uardian or curator m ay be appointed for physically
or m entally incapacitated, by reason of age, epilepsy, drugs, alcohol,
or other reason m aking them incapable.
G uardians m ay invest w ard’s funds only in certain specified secur
ities. (Chap. 17949, Acts of 1937.)
G u a r a n ty C o m p a n ie s . G uaranty Companies are perm itted to
become surety upon bonds for all purposes after complying w ith certain
sta tu to ry requirem ents.
H o lid ay s. T he legal holidays are: Sundays; Jan u ary 1 (New
Y ear’s D ay); Ja n u ary 19 (Robert E . Lee’s birthday); F ebruary 22
(W ashington’s b irth d a y ); and in cities or tow ns where carnival asso
ciations are organized for th e purpose of celebrating th e same, th e day
in each year known as Shrove Tuesday; Good F riday; April 26 (Con
federate M em orial D ay); Ju n e 3 (Jefferson D avis b irthday); July 4
(Independence D ay); first M onday in Septem ber (Labor D ay);
October 12 (Colum bus D a y ); Farm ers D ay (second F riday in
October): general election day; N ovem ber 11 (Armistice D ay);
T hanksgiving D ay; December 25 (Christm as Day).
H u s b a n d a n d W ife. T he husband has full control of wife’s prop
erty and is n ot chargeable by the wife with th e rents and profits, b ut
he cannot charge for his services. M u st be joined w ith wife in sales
of her property. Hom estead can only be alienated by their joint
deed. E states by entireties as a t common law. H usband not liable
for wife’s an tenuptial debts. H as no interest in her separate earnings.
H as action for negligence causing her death; wife’s property not
generally liable for husband’s debts. Wife m ay sue with respect to
separate estate w ithout husband joining. In fan t wife m ay join
husband in sale of real estate.
In so lv en cy . S tatutes suspended by national bankruptcy law.
I n s u r a n c e C o m p a n ie s . Foreign and domestic, are placed, by
sta tu te, under control of State treasurer. T hey m ust annually file
a statem en t w ith, and obtain from the S tate treasurer, a certificate
before being authorized to do business. Certificate m ay be revoked
if com pany refuses to pay judgm ents which have been legally obtained
against it.
I n te r e s t. E ight per cent Is allowed on judgm ents and contracts
where in terest is payable b ut no ra te is specified. C ontract for more
th an 10 p er cent is usurious, and all interest forfeited.
J u d g m e n ts of a court of record are a lien for tw enty years upon
real estate of debtor within the county where rendered, and m ay be
extended to other counties by recording certified transcript of judg
m ent in any county where a lien is sought. Judgm ents of justice of the
peace m ay be m ade a lien upon real estate by recording in the office
of clerk of circuit court.
L ie n s. In order to secure a lien by Us pendens, a statem ent m ust
be filed w ith the clerk of the circuit court, and recorded by him in a
book kep t fo r th a t purpose, setting forth the nam es of the parties- and
th e n ature oi the relief sought, and th e description of the property
upon which it is desired to obtain a lien. S tatutory liens are given to
laborers and m aterial-m en. P roperty for which m aterials are fur
nished upon which labor has been done, is liable to persons not in
p rivity w ith owner to th e extent of th e unpaid balance of d eb t due
to contractor. Owner personally liable in like am ount. S tatutory
Hens upon real estate, in order to be available as against subsequent
purchasers or lienors w ithout notice, m ust be recorded, and suit
m ust be brought within twelve m onths after th e furnishing of the
m aterial, or the perform ance of the labor. Liens upon personal
■property exist only while possession is retained by lienor.
L im ita tio n s of A ctio n s. Civil actions can only be commenced
within th e following periods after the cause of action shall have
accrued, to w it: Actions on Florida judgm ents, actions on con
tracts or obligations in w riting and under seal tw enty (20 ) years;
actions for th e recovery of real property, actions on judgm ents of
courts of th e U nited States or any other sta te or territory seven (7)
years. On contracts in writing not under seal, five (5) years. On
all actions n ot herein and specifically m entioned, four (4) years.
Trespass to realty, action upon liability created by sta tu te other
th an a penalty of forfeiture, taking, detaining or injury to chattels,
for relief on the ground of fraud, upon contract n ot founded upon
instrum ent of writing, including an action open account for goods,
wares and m erchandise, three (3) years. Actions for libel, slander,
assault, b attery, false im prisonm ent, or an action by another than the
S tate upon a sta tu te for a penalty or forfeiture two (2) years. Actions
for wrongful d eath of a «mild, actions against railroad companies for
killing cattle, and any action by the S tate for a sta tu to ry penalty or
forfeiture, one (1 ) year.
M a rrie d W o m e n retain th eir property, real or personal, owned a t
m arriage or acquired thereafter by gift, devise, descent, or purchase,
and it is not liable for husband’s debts except by her w ritten consent,
executed according to law regulating conveyances of m arried women.
Husband m ust join in all sales, transfers, and conveyances of the wife s
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property except when he has been adjudged insane for more th a n a year,
w ife m ay Sue concerning her real estate w ithout joining her husband
with her in th e suit. Widow entitled to tak e dower consisting of oneth ird of all deceased’s real and personal property by electing to do so
within prescribed period of tim e, w ithout regard to num ber of children.
I f there are no children she will inherit all th e property, real and per
sonal. W ife by petition to proper court m ay be decreed a free-dealer
and as such sue and be sued. (See also dow er).
M in o rs. Both sexes a tta in th eir legal m ajority a t th e age of 21
years. M inors who deposit in savings banks m ay control, transfer
or withdraw the money so deposited. All other contracts m ade by
them are voidable, except for necessaries. M arriage removes dis
ability of non-age of m ale m inor. M inors over 18 m ay have dis
abilities rem oved by petition in chancery.
M o rtg a g e s of real estate m ust be executed and proved or acknowl
edged in the sam e m anner as deeds, and they, likewise assignments
thereof, to be effectual against creditors or bona fide purchasers,
m ust be recorded. Are foreclosed by bill in equity, in th e circuit
court. C hattel m ortgages m ust be recorded unless property is
delivered to mortgagee and rem ains in his possession; becomes subject
to debts of m ortgagee if left in his possession more th an two years
without the m ortgage being recorded.
N o ta rie s. Both m en and women over twenty-one years m ay be
appointed notaries public. T hey m ust renew commissions every four
years. M ay adm inister oaths, take acknowledgments and perform
marriage ceremony. $500 bond is required to be given. Certificate
m ust show date of expiration of commission.
N e g o tia b le I n s t r u m e n t s . T he Uniform Negotiable In strum ent
Act adopted. (See com plete tex t following “ Digest of B anking and
Commercial Laws.” )
P a r tn e r s h ip , L im ite d , a n d S p ecial. None. N o uniform acts
adopted. Common law rules apply.
P ow ers of A tto rn e y . Any contract or conveyance m ay be made
by power of attorney. A conveyance of a m arried woman's real estate
by power of attorney in order to be valid the power of attorney m ust
be acknowledged by her separate and a p art from her husband, and the
acknowledgm ent m ust sta te th a t she executes it freely and voluntarily,
w ithout compulsion, fear, apprehension, or constraint of or from her
husband. T he husband m ust join either in the deed or powers of
attorney. Powers of atto rn ey for the conveyance of real estate m ust
be recorded.
P ro b a te L aw . (See Adm inistration of E states.) The county
Judge has original jurisdiction of all m atters relating to the adm inistra
tion of estates of decedents.
P r o te s t. (See N otes and Bills of Exchange.)
R e co rd s. Records of deeds and m ortgages are kep t in the office of
the clerks of the several circuit courts, and the original m ust be recorded
in the county w ithin which the property lies. Wills are required
to be recorded with the several county judges and m ay be probated
In any county in which the deceased left property, if he dies o ut of the
S tate. If death takes place within the S tate, then in th e county in
which he has had residence, house, or o ther place of abode a t th e time
of his death, and if he had none such, then in the county wherein he
died.
R e d e m p tio n . None, excepting tax sales.
S eal. A scrawl or scroll, printed or w ritten, affixed as a seal to any
w ritten Instrum ent, is effectual.
Service of P ro c e ss. O ut of circuit court, m ade by the sheriff or
his deputy. O ut of county judge’s or justice of peace courts, m ay be
m ade by sheriff or constable. Service in civil actions m ay be made
either upon the person of th e defendant, or by leaving a copy a t his
residence w ith some person over fifteen years of age. Process against
a dom estic or foreign corporation m ay be served upon any officer or
business agent of said corporation residing in Florida. D om estic and
Foreign corporations are required to file w ith Secretary of S tate a
certificate designating an office for service of process, which office m ust
contain a sign with nam e of corporation and agent and m ust be kept
open and agent m ust be present from ten A. M . to twelve noon each
day except Sundays and Holidays. In lieu of such agent corporation
m ay designate Clerk of C ircuit C ourt. Failure to comply w ith act
authorizes service by publication once each week for four weeks and
carries p enalty of one dollar per d ay up to Two H undred F ifty Dollars.
Service against dissolved corporations can be had by publication.
S u its . Actions a t law are commenced by filing a precipe w ith the
clerk. Personal service is required except in suits by attachm ent and
garnishm ent. W rits are returnable on the next rule day, provided
ten days intervene; if not, th en on the rule day in th e next succeeding
m onth. If no appearance of defendant, default is entered forthwith.
D efault m ay be entered for w ant of plea or other pleading on rule day.
next after appearance day.
T axes, Taxes are not due and payable until the first day of Novem
ber, and if n ot paid by first day of the following April property m ay be
sold. Owner has two years within which to redeem . Taxes are •
lien from the first day of the year of the assessm ent, and have the force
and effect of a judgm ent upon which execution m ay issue.
T e s tim o n y . (See Depositions.)
T ra n s fe r of S to c k . Stock is transferable in th e m anner prescribed
in the by-laws. No stock can be transferred until, after all previous
assessments thereon have been fully paid. The transferee succeeds
to all the rights and liabilities of the prior holder.
W a re h o u s e R e c e ip ts. Uniform W arehouse Receipts Act adopted,
and effective after July 31st, 1917.
W ills. W h o M a y M a k e a W il l. E very person, m ale or female
m arried or single, who is a t least eighteen years of age and who is of
sound m ind m ay m ake a will. No o ther person m ay m ake a will.
P r o p e r t y W h ic h M a y B e D e v is e d . Any property, real or personal,
held by any title, legal or equitable, with or w ithout actu al seizin, may
be devised or bequeathed b y will; provided, however, th a t whenever a
person who is head of a fam ily, residing in this S tate and having a
hom estead therein, shall die and leave either a widow or lineal descend
a n ts or both surviving him, th e hom estead shall not be th e subject of
devise, b u t shall descend as otherwise provided in th is Act for the
descent of hom esteads.
,
R e q u i s it e s o f N u n c u p a ti v e W il ls . N o nuncupative will shall be
good which is not proved by th e oaths of three witnesses present a t the
m aking thereof, nor unless it be proved by th e said witnesses th a t the
te sta to r a t th e tim e of pronouncing th e sam e did desire th e persons
present, or some of them to bear w itness th a t such was his will, or to
th a t effect, nor unless such nuncupative will was m ade in th e tim e of the
last sickness of the deceased. Personal property only shall be subject
to disposition by nuncupative wills.
E x e c u tio n o f W il ls . E very will, other th a n a nuncupative will,
m u st be in w riting and m ust be executed as follows: I t m ust be signed
a t th e end thereof by the testa to r himself, or some person in his presence
and by his direction m ust subscribe th e nam e of th e testa to r thereto.
T he testa to r, in th e presence of a t least two attestin g witnesses
present a t th e sam e tim e, m ust sign his will or cause his nam e to be
signed as aforesaid or acknowledged his signature thereto.
No will executed by a non-resident of Florida, is valid as a will p
this sta te unless it is executed in accordance w ith th e laws of th is state
in force a t th e tim e of its execution, except th a t a will valid under the
laws of the sta te or country in which th e testa to r is domiciled a t the
tim e of his death is valid in th is sta te , so far as th e same relates to
personal property.
,
A codicil shall be executed with th e sam e form alities as a will.
Revocation m ay be by fraud, subsequent inconsistent will, codicil,
or by te sta to r’s act. N either subsequent m arriage nor subsequent
m arriage and birth of issue shall revoke a will.
BANKING AND COMMERCIAL LAWS—GEORGIA
S Y N O P S IS O F
T H E L A W S O F G E O R G IA
R E L A T IN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by M a.c D ou ga .l d , T r o u t m a n & A r k w r ig h t , A ttorneys a t
Law, 1607 W illiam-Oliver Bldg., A tlanta. (See card in A ttorney List.)
A c k n o w le d g m e n ts. '(See Deeds.)
A ctio n s. Ail distinction between suits a t law and in equity Is
abolished. E quitable relief can be had in superior courts of law.
A d m in is tr a tio n o f E sta te s . L etters of adm inistration issue Is
the line of preference, first to the husband or wife, second to the next
of kin, relations by consanguinity are preferred to those by affinity.
If there are several of th e next of kin in the same degree, preference
is given to th a t one selected in writing by those most interested in
the estate. If no preference is expressed the ordinary exercises
his discretion. If no application is m ade by next of kin a creditor
m ay be appointed, and if no application is m ade the ordinary will
vest th e adm inistration in a county adm inistrator, an officer authorized
by sta tu te for th a t purpose. A dm inistrators m ust give bond in double
the value of the estate. O ut of the estate of each deceased person,
th e first charge, and before paym ent of funeral expenses, is a y ear’s
support for th e fam ily, to be laid off by commissioners according to the
condition and standing of the fam ily. Foreign adm inistrators m ay act
in this S tate on giving bond to th e ordinary where they qualify The
bondsmen m ust be residents of this State.A citizen of any other S tate
m ay act as executor of th e will of a deceased citizen of this S tate when
he has th e sam e interest and will give th e same bond as in th e case of
foreign adm inistrators. A dm inistrators of other States m ay sue in
this S tate by filing in th e office of the clerk of the court, to which suit
Is brought, a properly authenticated copy of their letters of adm inis
tration.
A ffidavits. Pleas and defenses in the courts of this S tate which
are required to be under oath, m ay be m ade before any official of
the S tate or county where the oath is m ade, who is authorized by
the laws of such S tate or county to adm inister oaths. P rim a Facie
the official attesta tio n of the officer is evidence th a t he was author
ized to act. Any non-resident seeking equitable relief, when called
on to verify proceedings, should be sworn before a commissioner of
this State, or a judge of a court of record where the o ath is m ade,
with th e attesta tio n of the clerk of such court th a t the signature of
the judge is genuine, and th a t the court over which he presides is a
court of record.
A lien s. The subjects of governm ents a t peace w ith th e U nited
States and th is S tate are entitled to the rights of citizens of other
States, resident here, in so far as they accord to them the privilege
of purchasing, holding, and conveying real estate.
A ppeals. (See Courts.)
A r b itra tio n . U nder the law of Georgia disputes and controversies
relating to rights, or property, m ay be subm itted to arbitration.
A ssig n m e n ts. Assignments for th e benefit of creditors are per
m itted.
A tta c h m e n ts . A sum m ary process of attachm ent will lie In
the following cases: 1. W here the debtor resides out of th e S tate.
2. W here he is actually removing, or about to remove, w ithout the
limits of th e county. 3. W hen he absconds. 4. When he resists
a legal arrest. 5. W here he is attem pting to remove his property
beyond the lim its of this State. 6 . Where he has disposed of, or
threatens to conceal, his property, liable for the paym ent of his debts,
or shall m ake a fradulent lien thereon to avoid paying his debts.
A ttachm ent will lie to recover the purchase money of an article sold
when the debtor is still in the possession of the property. A ttach
ments m ay issue upon affidavit by th e plaintiff, his agent or attorney,
who m ust sw ear th a t one of the sta te of facts exists which authorize
an attachm ent, and also as to the am ount o f the claim. Bond and
security, in double the am ount sworn to, m ust accompany the affidavit
and th e officers require personal security. Non-resident corporations
are liable to attachm ents, and one non-resident m ay attach the
property of another non-resident in this S tate, except for wages
earned w ithout the State.
B a n k s a n d T r u s t C o m p a n ie s .
Kinds of Banks perm itted: B anks and T ru st Companies.
P riv ate banks or p riv ate bankers, n ot w ithin definition of A Banks,
given rig h t to pay checks draw n on it or them when presented b y
any bank, banker, tru s t co. or agent thereof, and to charge an exchange
charge of not m ore th a n
of 1 % of th e aggregate am ount of th e
check or checks paid.
C a p i t a l S to c k a n d S u r p l u s R e q u ir e d : M inim um capital stock in cities
of 6,000 population or less, $25,000.00; over 6,000 population, $50,000;
all tru st companies, $50.000. No increase in capital stock which would
reduce surplus below 2 0 % of capital stock.
R e s e r v e s : Cash in hand, including am ount due by banks and bankers,
shall not be reduced below 15% of dem and deposits.
I n c o r p o r a to r s : M inim um num ber is five.
O fficers a n d D ir e c to r s : Board of directors to consist of not less th an
three or more th an twenty-five of stockholders of two or more shares.
Directors to examine affairs semi-annually.
S u p e r v is i n g A u th o r i ty : Superintendent of banks.
E x a m in a ti o n s a n d R e p o r ts : Semi-annual examinations by Super
intendent of Banks. R eports four each year and oftener if required
by Superintendent of Banks, on forms prescribed by latter, verified
by president or cashier and certified by a t least two directors.
L o a n L i m i ta t i o n s : Individuals—m axim um is 20 % of capital and
unimpaired surplus, and if more th an 1 0 %, m ust be am ply secured
and approved by directors. All loans to officers, directors and
employees m ust be am ply secured and approved by directors.
S to c k h o ld e r s L i a b i l i t y : U npaid stock subscription and am ount
equal to face value of shares.
B r a n c h B a n k in g . B ranch banks established prior to 1920 are
perm itted, b u t not perm itted after th a t date.
B ills of L a d in g . A bona fide assignee of a bill of lading of goods
will.be protected in his title against th e seller’s right of stoppage in
transit.
C o lla te ra ls. T he holder of a note as collateral security for a debt
stands upon the sam e footing as th e purchaser. P roperty left in
pledge or pawn m ay be sold a t public sale to the highest bidder, upon
thirty days’ notice.
C o rp o ra tio n s. Pow er to create corporations in this S tate is vested
In the general assem bly and th e superior courts. Said courts m ay
grant charters to all corporations except banking, insurance, canal,
navigation, express, and telegraph companies and railroads. The
Secretary of S tate m ay grant charters for the corporations above
enum erated in m anner prescribed by law in th e particular case. A
charter for a private corporation is obtained by a petition to the
superior court, setting forth the object, particular business, corporation
name, capital, place of business, tim e for which incorporation is desired,
not exceeding thirty-five years. The petition and order granting th e
same constitute th e charter. T hereafter m ust be advertised in news
paper of general circulation in C ounty of principal of corporation,
once a week for four consecutive weeks. In such corporations th e
liabilities of th e stockholder is m easured by th e am ount of unpaid
stock subscription due by him. T he liability of Bank Stockholders
exists only to th e extent of th e balance rem aining unpaid on his or her
shares of stock. The paym ent of 10 per cent of th e capital stock is
necessary before commencing business. General powers of corpora
tions are conferred on all corporations organized in this state. _ All
corporations organized under th e laws of th e S tate or doing business
therein are required to register w ith th e Secretary of S tate and pay a
graded license fee, w ith a m inim um of $10, m axim um $1000. Volun
tary dissolution of a corporation m ay be granted by the Superior C ourt
upon petition filed by th e Corporation if authorized by tw o-thirds of
capital stock. L ost stock certificates m ust be established by petition
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to Superior C ourt. C orporations organized under charter granted
by act of Legislature, or by Secretary of State, m ay a t any tim e
renew or extend its charter for an additional 30 years, by filing w ith
th e Secretary of S tate a petition signed in corporation’s name, sta tin g
nam e of corporation, when incorporated, date of original incorporation
and all am endm ents— ; and paying fee of $100 to Secretary of S tate
and filing affidavit from editor th a t applicant has deposited w ith
newspaper th e cost of publishing four insertions of said applicant
for renewal.
C o sts. A deposit of $10 is required in courts of record from
non-resident plaintiffs before th e filing of suits and a deposit of $6 in
all divorce cases except in certain counties it is $ 1 0 .00 .
C o u rts . T he term , jurisdiction, etc., of th e several courts of th e
S tate are as follows: JU S T IC E COURTS hold m onthly sessions and
have civil jurisdiction up to $100. In crim inal m atters they are
only com m itting courts. COU RTS OF O R D IN A R Y hold th eir
sessions m onthly and have jurisdiction over wills, adm inistration of
estates, and of the conduct of adm inistrators, executors and guardians.
COU NTY COURTS have m onthly and quarterly sessions. T heir
jurisdiction is limited to controversies n o t exceeding $300. C IT Y
COU RTS hold four sessions per annum . T he jurisdiction of city
courts is unlim ited except in m atters of divorce, titles to land and
adm inistration of equitable relief. T he Civil C ourt of F ulton C ounty
replaces the Justices C ourts. Its jurisdictional lim it is $2500. I t
holds one term each m onth. SU P E R IO R COURTS have ju ris
diction of all suits and controversies and have exclusive jurisdiction
in equity powers, divorce cases, and suits involving titles to land, and
on th e crim inal side exclusive jurisdiction of all cases involving life
or im prisonm ent in th e penitentiary.
D eeds. Deeds to real estate in Georgia m ust be In writing, and
should be executed in th e presence of two witnesses, one of whom shall
be an officer authorized for th a t purpose. T hey should be recorded
in th e office of the clerk of th e superior court of the county where the
land lies, and all deeds, m ortgages and other liens, should be recorded
Im mediately to be available against third parties and innocent pur
chasers. To authorize the record of a deed to realty, it m ust be a t
tested by or acknowledged before, if executed out of this S tate, a
commissioner of deeds for th e S tate of Georgia, n o tary p u b lic , clerk
of a court of record, or a consul, or vice-consul of the U nited States
(the certificates of these officers under their seals being evidence of
the fact). When th e deed is executed out of this S tate before a
notary public, the attesta tio n should be under his hand and official
seal. In case of acknowledgment it is b etter, as a m atter of precaution,
always to have two witnesses, besides the officer who takes the acknowl
edgm ent. If executed in this S tate, it m ust be attested by a judge of
a court of record of this S tate, or a justice of the peace, or notary
public, or clerk of the superior court, in the county in which the three
last m entioned officers respectively Hold their appointm ent, or if subse
quent to its execution the deed is acknowledged in the presence of
either of the named officers, th a t fact, certified on the deed by such
officer, shall entitle it to be recorded. (Act of 1893.) Deeds to secure
loans are in more common use than mortgages because they have
been held to pass the absolute title and protect against y ear’s support
and dower, the equity of redem ption rem aining in the m aker, can not
be levied upon until the debt secured by the deed has been paid
off. Under the law of Georgia these deeds can not be foreclosed as
mortgages, the notes they are given to secure m ust be sued to judg
m ent, the land m ust be re-conveyed to the grantor, and then levied
on, b ut the lien of the judgm ent relates back to th e date of the con
veyance. In the Federal courts, however, foreclosure can be m ade
in equity as in the case of ordinary m ortgages. Usury will, however,
void such a conveyance, only as to the interest paid on such debt.
D ep o sitio n s. T estim ony is taken in this S tate by w ritten inter
rogatories where the witness is a female, or where the witness does
not reside in the county where the suit is pending, or by reason of disa
bility is unable to atten d court. In all counties within this S tate,
depositions m ay be taken upon five days’ notice to the other p arty of
the tim e and place a t which the witness is to be examined. This latter
process cannot be used for taking testim ony outside of the S tate.
Depositions m ay be taken within or w ithout the state, w ithout com
mission. before a notary public or any officer authorized to issue
attachm ents. If w ithin th e sta te or if taken without the state, before
any officer of the sta te or county where taken, authorized by laws of
Georgia to a tte s t deeds or take acknowledgments, upon 10 days’
notice to opposite party. In taking answers to interrogatories,
which m ust be authorized by a commission issued for such purpose
by the court here, two commissioners m ust act. Commissioners m ust
be disinterested and not related to either party, or connected with
the case; attorneys of the parties are incom petent. None of the parties
to the case, nor their agents or attorneys, can be present when the
commission is executed. The witness can only w rite his answer in
the presence of the Commissioners. I t is usual, and the b etter practice,
for one of the commissioners to write the answers of the witness as
they are given. Depositions m ay be w ritten with the typew riter,
and commissioners m ay adjourn th eir sittings from day to day. The
following instructions for taking testim ony are im portant: Instruc
tions for taking answers to interrogatories: 1 . Insert the commis
sioners’ nam es in the commission; any two respectable citizens will
do. 2. S tate th e case as you find it. T hen comes th e caption, th us:
(Here insert the county and S tate
State o f............................
County o f............................ ss. where the commission is executed.)
By virtue of a commission from th e ................... court o f....................
county, we have caused th e person in said commission nam ed to come
before us, who being duly sworn true answers to m ake to certain
interrogatories thereto annexed, deposeth and answereth as follows:
(Here insert answers of the witnesses to each interrogatory in order
3. L et the witness sign the answers; then say: “ Answered, sworn to ,
and subscribed before us, t h i s .. . .day o f................... 1 9 . . . . ” T hen
sign your own names, adding the words “ Commissioner (L. S.) ” after
each name. 4. Seal all up together, using two wafers, each com
missioner writing his nam e with “ Com m issioner” across a wafer or
seal. 5. S tate the case on the package, and address it to the clerk
of the court issuing the commission. 6 . If it is to go by mail, get
the postm aster to receipt on the package. “ Received from one of
the commissioners (giving his name) the within interrogatories, to be
forwarded by due course of m ail,” nam ing his post-office. Testim ony
thus taken m ust be sent by mail, or by some person specially au th o r
ized by the commissioner to carry it to the court.
D escen t a n d D is tr ib u tio n o f P ro p e rty . T he husband is th e
sole heir to his in testate wife, unless she leave children^ and in th a t
event the husband and children shall inherit per capita, b u t the
descendants of children shall take per stirpe. I f a m an die without
children, or the descendants of children, leaving a wife, the wife is
his sole heir. If there are children, or those representing deceased
children, the wife shall take a child’s part, unless the shares exceed
five in num ber, in which case the wife shall have one-fifth p a rt of the
estate. If the wife elects to take her dower, she has no further interest
in the estate. Children stand in the first degree to the intestate, and
inherit equally. Posthum ous children stand upon the sam e footing
with other children.- Lineal descendants of children stand in the
place of their deceased parents, and take per stirpe, and not per
capita. B rothers and sisters stand in the second degree and inherit
if th ere be no widow or children, or representatives of children. The
half-blood on the paternal side inherit equally with the whole blood.
T he father, if living, inherits equally with brothers and sisters, and
stands in the sam e degree. If th ere be no father, and the m other
is alive, she shall inherit in th e sam e m anner as the father would.
Real estate descends direct to th e heirs, and personal estate to th e
adm inistrator. B ut real estate is subject to adm inistration for the
purpose of paying debts, and if necessary, for distribution.
D ow er. In this S tate th e wife is entitled to an estate for life in onethird of all lands of which the husband dies seized or possessed a t th e
tim e of his death, or to which th e husband obtained title in rig h t of
1976
BANKING AND COMMERCIAL LAWS— IDAHO
bis wife, T here is no necessity for renunciation of dower in this S tate,
and a m arried woman, on th a t question, need not join w ith her hus
band in conveying land, except in cases where, before 1866, he obtained
real estate belonging to his wife, by virtue of th e m arital relation.
E xe cu tio n s. M u st follow the judgment or decree from which they
issue. Th e y are good for seven years and may be renewed for a like
period by entry nulla bona.
E x e m p tio n s a n d H o m e s te a d s. U nder the constitution and laws
o f Georgia, each head of a fam ily or guardian, or trustee of a fam ily
of m inor children, or of an aged or infirm person, or a person having
care and su pport of dependent females or any age, who is n ot the
head of a family, shall have exem ption of realty, or personalty, or
both, to th e aggregate of $1600. T he debtor shall have power to waive
or renounce, in writing, his rig h t to the benefit of exem ption above
stated , except as to wearing apparel and not exceeding $300 worth
of household and kitchen furniture, and provisions. T he hom estead
or exem ption m ay be sold by the debtor and his wife, if any, w ith the
sanction of th e judge of the superior court of the county where the
d eb to r resides, or the land is situated. The proceeds to be re-invested
upon th e same uses. A general waiver in writing, of the hom estead,
or exem ption, is good.
T he hom estead of each resident of th e s ta te actually occupied by
owner as a residence shall be exem pt from all taxes for sta te , county,
an d school purposes, to value of $2 ,000 , if said applicant file his
w ritten application an d schedule w ith C ounty T ax Receiver on or
before April 1st of year in which exem ption from ta x is sought.
F o re ig n C o rp o ra tio n s . All corporations, except those chartered
and organized under the laws of tnis State, are held to be foreign
corporations. Such corporations are recognized by com ity only;
th ey are subject to attachm ent, b u t have all th e rights of replevy and
defense. T hey cannot exercise any corporate powers or privileges
which by th e constitution and laws of Georgia are denied to domestic
corporations or the exercise of which would be contrary to th e public
policy of this State. T here is otherwise no restriction upon foreign
corporations except in the case of insurance companies and building
an a loan associations, which are required to m ake deposits. All cor
porations are subject to license fees for doing business and all are liable
for taxes on property owned or held in th e State* (See Corporations.)
F ra u d . Contracts, awards, m arriages, judgm ents, sales, and wills
are void when th ey are brought about and procured by fraud. Prom
issory notes when procured by fraud are void in the hands of th e holder,
who so procures them . The sta tu te of frauds, as of force in Georgia,
requires th e following obligations to be in writing, signed by the party,
or his authorized agent, to be binding: 1. A prom ise by an executor,
adm inistrator, guardian, or trustee, to answ er in dam ages out of his
own estate. 2. A promise to answer for the debt, default, or mis
carriage of another. 3. An agreem ent m ade upon consideration of
marriage, except m arriage articles as otherwise provided. 4. Any
contract for th e sale of lands, or any interest in or concerning them .
5. Any agreem ent th a t is not to be performed in a year. 6 . A
promise to revive a debt barred by s ta tu te of lim itations or bankruptcy.
7. Any contract for the sale of goods, wares, a n d m erchandise.
In existence or not in esse, to the am ount of $50 or more, except the
buyer shall accept p a rt of the goods sold and actually receive the sam e
or give som ething in earnest to bind the bargain or in p a rt paym ent.
8 . An acceptance of a bill of exchange.
G a r n is h m e n ts . T his process m ay be invoked in any case, b u t wa
ges or salaries are not subject until a fter judgm ent has been rendered.
G arnishm ent m ay be dissolved by giving bond and a th ird p arty m ay
claim a fund held up under garnishm ent and m ay release th e fund by
giving bond. Any person m ay claim exem ption from garnishm ent as
to wages to the extent of $1.25 per day and one-half of the rem ainder.
H o lid ay s. T he legal holidays are: Sundays; Ja n u ary 1 (New
Y ear’s D ay); Ja n u ary 19 (Robert E . Lee’s birthday); F ebruary 22
(W ashington’s b irthday); April 26 (Confederate M em orial D ay);
Ju n e 3 (Jefferson D avis’ birthday); July 4 (Independence D ay): first
M onday in Septem ber (Labor D ay); October 12 (Columbus D ay);
Novem ber 11 (Armistice D ay); Thanksgiving D ay; and December 25
(Christm as Day).
I n t e r e s t . T he legal rate of interest in Georgia is 7 per cent, b u t
8 per cent is legal when contracted for in writing. B u t 1 } 4 % per
m onth m ay be charged under Small Loan Act up to $300. P arties
charging usu ry forfeit th e excess if usury is set up. U sury has no
present penalty in Georgia, except forfeiture of all interest paid upon
th e debt.
J u d g m e n ts create liens from th eir rendition upon the real or per
sonal p roperty of the defendant; all judgm ents a t the sam e term rank
equally, and property sold by a debtor after judgm ent is obtained
against him is only discharged from th e lien of such judgm ent, if real
estate, after four years’ possession by th e vendee, and in cases of per
sonal property, after two years’. Judgm ents, w hether in the U nited
States court, or in any S tate court, obtained in any other county than
th a t in which the defendant resides have no lien on th e property of
the defendant in any o ther county, unless the execution thereon is
recorded in the county of th e defendant’s residence. Unless such
execution is recorded as so required w ithin th irty days, its lien will
only d ate from th e tim e of record. (See Actions.)
J u r is d ic tio n . (See T itle Courts.)
L ic en se. N o license is required of commercial travelers. Itin e ran t
trad ers m ust pay license fees.
L ie n s. U nder th e laws of Georgia mechanics, m aterial-m en, m a
chinists, employes of steam boats, millwrights, builders of gold m ine
m achines, stone-cutters, and m arble works laborers have special liens
on property im proved or worked on. Landlords have a general lien
which takes effect from the levy of distress and a special lien on crops
for re n t of land on which th ey are raised. Common law liens of Inn
keepers, factors, pawnees, carriers, attorneys and others are recog
nized. Vendor’s lien on land has been abolished. Attorneys have a
special lien on papers in their hands and on p roperty recovered in suits
brought by them or successfully defended by them .
L im ita tio n s . Suits on open accounts are barred after four years,
on prom issory notes and bills after six years, on instrum ents under
seal after tw enty years, on suits for personal injury after two years.
Seven years' adverse possession of real estate under color of title, and
tw enty years’ adverse possession w ithout color of title, will bar the
claims of all persons not laboring under disability. Infants have seven
years to assert their rights, after becoming tw enty-one years of age.
T his S tate does n ot require th a t notes or contracts under seal be
witnessed, so th a t a note or contract under seal w hether witnessed
or n o t carries th e tw enty-year s ta tu te of lim itation provision.
M a rrie d W o m e n . T he wife m ay contract and sue and be sued In
her own nam e in respect to her separate estate as a femme sole, except
th a t she can not bind her separate estate by suretyship for any one,
and any prom ise to pay her husband’s debt is void. She cannot
sell to h er husband or trustee for any purpose, except b y order of the
superior court. A wife or her heirs m ay sue and recover from any
person m oney or p roperty used by her husband to pay his debt where
th e creditor takes w ith notice. All th e property of the wife a t the
tim e of m arriage, and all she m ay acquire by gift, inheritance, or p u r
chase, shall v est in and belong to her, and shall n ot be liable for. the
d ebt, default, or contract of her husband. T he wife w ith her children,
if any, is en titled to tw elve m onths’ support o ut of the estate of her
deceased husband. T he husband is bound to support and m aintain
th e wife, and his consent is presum ed to her agency in the purchase of
necessaries. T he wife’s separate property is not liable for debts con
tracted by h er as agent of her husband in the ordinary support of her
self and children, b u t by special contract in h er own capacity, and
not as agent for her husband, she could bind her separate estate, for
th a t purpose. A m arried woman can dispose of her property by will.
M o rtg a g e s . M ortgages are only security for debts. T hey m ay
em brace property in the m ortgagor’s possession, or to which he has
a rig h t of possession. T hey m ay cover a stock in bulk, b u t changing
In specifics, and after acquiring property. N o particular form is
necessary, b u t it m ust be cleared th a t th e instrum ent indicates a lien.
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Federal Reserve Bank of St. Louis
describes th e property and specifies th e d eb t it secures. M ortgages
on land are n o t good against dower, and a wife cannot waive her
dower as against this lien. M ortgages m ust be executed and attested
in th e sam e m anner as deeds, except th a t in m ortgages on personal
property, only th e official witness is necessary. M ortgages w ith power
of sale are valid in Georgia. Hom estead and exem ption m ay be
waived in th e mortgage. All m ortgages on personal p roperty m ust
be recorded in th e county where the m ortgagor resides a n a th e prop
erty is located. M ortgages on land m ust be recorded in th e county
where th e land is situated.
N e g o tia b le I n s t r u m e n t s . Uniform Negotiable In stru m en ts Act
(see com plete tex t following “ Digest of Banking an d Commercial
L aw s” ). Adopted A ugust 18, 1924, w ith certain changes, i.e., m ay
be m ade payable in cotton or other articles of value, om its provision
authorizing confession of judgm ent if not paid a t m atu rity , where
instrum ent payable a t bank it shall n ot be equivalent to an order
to th e bank to pay sam e for account of principal debtor. A contract
to pay atto rn ey ’s fees cannot be enforced unless th e debtor when
served ten days before su it is filed w ith a w ritten notice of intention
to sue w ith am ount and term of court to which su it will be brought,
shall fail to pay such debt before retu rn day. A w aiver of hom estead
in a prom issory note is a bar to such a claim as -against th e collection
of such note. Prom issory notes and contracts containing reservation
of title to personal property m ust be executed before a n o tary public,
justice of th e peace, or clerk of a court of record, and m u st be recorded
as m ortgages to hold such property as against th ird p arties or innocent
purchasers. Any d raft, bill of exchange or check, draw n upon an
institution or person with which th e draw er has not sufficient funds
on deposit to m eet th e same, subjects th e draw er to crim inal liability.
N o ta rie s. Commercial notaries, male or female, are appointed
for four years by the superior courts, and for th e sta te a t large by the
S tate Librarian. T hey m ust have seals and are authorized to attest
deeds and mortgages, and m ake protest of commercial paper.
P r o b a te L aw . (See Adm inistration or E states. Deeds an d M o rt
gages.)
P r o te s ts , (See Bills of Lading and Prom issory Notes.)
R e c o rd s. (See Deeds and M ortgages.)
R e d e m p tio n . T here is no redem ption in this S tate under judicial
sales except in case of sale of property under tax execution where
parties m ay redeem in twelve m onths if improved land and wild land
w ithin tw o years. Unless after 12 m onths from d ate of sale notice is
given th e defendant in execution of purchaser’s intention to foreclose
redem ption real estate m ay be redeem ed any tim e thereafter. (Not
applicable to redem ption of wild land.)
R eplevy. All property seized under attachm ent, distress, or other
similar process, m ay be replevied. P roperty seized under process
and claimed by th e th ird p arty m ay be delivered over- upon bond and
security for its forthcom ing to answer final judgm ent of decree.
R e v isio n . (See Courts.)
S ales. Sales m ay be m ade to pay debts, b ut any sale of stocks of
goods in bulk is deemed fraudulent unless the seller delivers to the
buyer a list of all creditors and th e am ount due each. I t shall th en be
the d u ty of the buyer to notify th e creditors of his purchase. This
notice m ust be mailed five days before completion of th e purchase
T axes. Taxes are a lien upon all the property of th e debtor, real
or personal, and its lien is preferred as stated in section herein relating
to distribution of th e estates. Sales of property for taxes are con
ducted in the sam e m anner as other judicial sales. One year in which
to redeem is allowed. All taxes and liens for taxes accrued against
property, an equity of redem ption in which is em braced in a y ear’s
support duly se t ap art, shall be thereby divested, th e sam e as if the
entire title were included in such year’s support.
W ills. All persons of full age and sound and disposing memory.
Including m arried women, m ay m ake wills, and dispose of th eir estates.
Wills m ust be executed in the presence of three witnesses, all of whom
shall be present, m ust be called by the testa to r as witnesses, and must
sign, and shall certify th a t th ey signed, in the presence of the testator,
and in the presence of each other. . Wills m ust be in writing, except
nuncupative wills. Wills of citizens of other States, where executed
according to the laws of th e S tate, and probated in solemn form in
such S tate, which dispose of real or personal property in Georgia, may
be adm itted to probate in this State, when an exemplified copy of
the will is presented. Wills are probated in the court of ordinary
In the county where the testator resides a t the date of his death. All
wills executed out of this State by citizens of this S tate to dispose
of property in Georgia m ust be executed according to our law. A
foreign will, executed according to the law of Georgia, will constitute
a m unim ent of title to real property w ithout being probated m this
S tate, when recorded on th e record of deeds in the county where the
land lies, together w ith an exemplification of record adm itting it to
probate in another State, certified according to the Act of Congress.
Uniform Stock T ransfer Act adopted M arch 24, 1939.
S Y N O P S IS O F
T H E L A W S O F ID A H O
R E L A T IN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by C h a s . H . D a r l in g , A ttorney a t Law, Boise.
(See card in A ttorney List.)
A c k n o w le d g m e n ts . All conveyances and o th er instrum ents
required to be acknowledged in this S tate m ust be acknowledged, if
w ithin th e S tate, before a judge or clerk of a court of record, or the
Secretary of S tate, as county recorder, a notary public, or a justice
of th e peace. T he authority of a justice or clerk of th e Supreme
C ourt, or N otary Public, or th e Secretary of S tate, to tak e acknowl
edgments extends to any place within th e state, and of th e remaining
officers authorized to tak e acknowledgments to th e city, county or
district for which said officer was elected or appointed. If w ithout the
S tate, b u t w ithin the U nited States, th ey m ust be acknowledged before
any such officer, or a commissioner of deeds for th is S tate, or before
any officer authorized by the laws of this S tate or T errito ry to take
such acknowledgment. If w ithout th e U nited States, th ey m ust be
acknowledged before a m inister or charge d ’affairs of the United
States, resident and accredited in the country where th e acknowledg
m ent is taken, before a consul or vice-consul, a judge of a court of
record, a duly appointed commissioner, or a notary public. The
certificate of acknowledgment, if m ade before a justice of th e peace,
when used in any county other th an th a t in which he resides, must
be accompanied by a certificate, under the hand and seal of th e recorder
of the county in which the justice resides, setting forth th a t such
justice, a t the tim e of taking such acknowledgm ent, was authorized
to take the sam e, and th a t th e recorder is acquainted with his hand
writing, and believes th a t the signature is genuine. Proof of the
execution of an instrum ent m ay be m ade though it has n ot been
acknowledged. Form of m arried woman’s acknowledgment the
sam e as th a t of a single person. T he forms of certificates of acknowl
edgm ent by trustees, executors, adm inistrators, guardians, sheriffs,
receivers, and other officials, and of partnerships, and of th e state, and
of any county or subdivision, are prescribed by Idaho Code Annotated,
Secs. 54-710 to 54-714, Inc. (See Conveyances.)
A ctio n s. T here is b u t one form of civil action In this State. An
action is commenced within the m eaning of the sta tu te when the
com plaint is filed w ith th e clerk. E very action m ust be prosecuted
in th e nam e of the real p arty in interest.
BANKING AND COMMERCIAL LAWS— IDAHO
A ffidavits are used only to verify pleadings, to prove service of
sum m ons, notice, or o th er paper, to obtain provisional rem edy.
A liens. Anti-Alien bill prohibits aliens not eligible to citizenship
an d corporations, a m ajority of whose m embers are such aliens, from
acquiring or holding real estate except to the extent and for the pur
poses prescribed by existing treaties between their countries and the
U nited States, b u t perm its such aliens to lease lands for n ot more
th a n five years for agricultural purposes. Also prohibits such aliens
from acting as guardian or trustee for any real estate and provides
th a t lands hereafter conveyed to such aliens shall escheat to th e State.
(I. C. A., Sec. 23-102, et. seq.)
A r b itra tio n . Persons capable of contracting m ay subm it to
arbitration any controversy which m ight be the subject of a civil
action between them , except a question of title to real property in
fee or for life.
A s s ig n m e n t f o r B e n efit of C re d ito rs . No assignm ent for benefit
of creditors shall be valid unless m ade to a bona-fide resident of this
sta te or to a corporation duly authorized to do business in this sta te .
(I. C. A. Sec. 66-201.)
A tta c h m e n ts . A ttachm ents m ay be had in actions on judgm ents
or contracts express or implied where defendant is a non-resident or
th e deb t is unsecured. Plaintiff a t th e tim e of issuing th e summons
or any tim e afterw ards m ay obtain th e attachm ent upon filing affi
d av it and undertaking and notice of attachm ent m u st be published.
B a n k C o lle c tio n C ode. Effective M ay 5, 1931. Given directly
following laws.
B a n k s a n d B a n k in g . T itle 25 of Idaho Code A nnotated, as
Amended, entitled “ B ank A ct,” governs the form ation, regulation and
adm inistration of banks.
I t is unlawful to engage in banking or tru st business except by
m eans of a corporation duly organized for such purpose, except th a t
an y individual, copartnership or unincorporated association actually
transacting banking or tru s t business as defined in th e Act, on th e
effective d ate thereof, M ay 5, 1925, m ay continue in such business
a t th e places where th ey are then located, subject to th e provisions
of th e Act.
B ank Act does not apply to national banks. Supervising authority
is th e D epartm ent of Finance of State. Banks are divided into th e
following classes: Savings Banks, Commercial Banks, T ru st Com
panies. Corporations m ay be organized by any num ber of n atu ral
persons—n o t less th an five in any case—under th e G eneral C orporation
Laws of th e S tate an d as provided in th e Bank Act. Officers and
D irectors are as provided by th e General C orporation Laws of th e
S tate. C apital Stock required varies in proportion to th e population
of th e com m unity, from $25,000 to $100,000. Articles of Incorpora
tion m u st be prepared under th e General Corporation Laws and m ust
be approved by th e D epartm ent of Finance before filing. No bank
shall tran sact any business, except such as is incidental to its organi
zation, w ithout th e w ritten approval of th e Commissioner of Finance
and his Certificate statin g th a t it has complied with th e provisions of
th e B ank Act and all requirem ents of law. T he entire C apital, plus
10% for Surplus, in cash, or property approved by th e Commissioner
of Finance, m u st be paid in before commencing business. As a pre
requisite to obtaining th e perm it from th e D epartm ent of Finance,
Bank m u st file (1) Certified Copy of Articles, (2) Proof th a t entire
C apital, p lus 10% Surplus, is paid in, (3) Nam es and addresses of its
Officers and Directors, (4) N am es and addresses of all Subscribers to
its C ap ital Stock and am ount subscribed by each, (5) Financial S tate
m ent of each an d every Subscriber, showing th e property he owns,
not exem pt from execution, which m u st be a t least three tim es th e
am ount of subscriber’s subscription, (6 ) Oath of each Director,
(7) Affidavit of D irectors th a t corporation has com plied w ith all
provisions precedent to doing business.
E very b ank n ot a m em ber of th e Federal Reserve System shall, a t
all tim es, have on h and as a Reserve an am ount equal to a t least 15%
of its aggregate deposits, in cash, in its vaults or held on deposit,
subject to check, w ith other banks, which shall have been approved
by th e Commissioner of Finance. 33 M % of Reserve m ay consist of
U. S'. Bonds n o t hypothecated. Any bank becoming a m em ber of
Federal Reserve System shall com ply w ith requirem ents of Federal
Reserve Act.
Commissioner of Finance is required to examine S tate B anks twice
each year an d whenever he shall deem it necessary. Fees for exami
nation are required to be paid by th e bank. E very bank is required
to m ake n ot less th a n th ree reports to D epartm ent each calendar year
a t th e tim es reports are called for from N ational Banks. D epartm ent
of Finance prescribes forms for reports. Commissioner of Finance m ay
omit exam ination of any bank and accept in lieu thereof findings of
the exam ination m ade by any agency of the U nited S tates authorized
and required by laws of th e U nited S tates to m ake such exam ination.
T o tal liabilities of an y one person to any bank shall not a t any one
tim e exceed 20% of th e aggregate paid in C apital and Surplus. In
debtedness of an Officer wbol s actively engaged in m anaging of bank,
or an Employee, shall n ot exceed 5% of paid up C apital and Surplus.
No loan to Officer or Em ployee shall be m ade w ithout being approved
by m ajority of Board of Directors, and every such loan shall be acted
upon in absence of applicant. Combined indebtedness of Directors,
Officers and Employees shall not exceed 40% of paid up C apital and
Surplus. N o Officer or Em ployee m ay borrow except on good col
lateral or other am ple security. Loads to Officials of D epartm ent of
Finance are prohibited.
Banks m ay m ake real estate loans secured by first liens, represented
by mortgages or deeds of tru st, upon real estate including im proved
farm lands, business an d residential properties, and m ay purchase
obligations so secured, when entire am ount of such obligation is sold
to bank. A m ount of any loan on real estate shall not exceed 50% of
appraised value of real estate, and no loan shall be m ade for a longer
term th an five years except th a t loans m ay be m ade in an am ount
not to exceed 60% of appraised value of real estate for term n ot longer
than 10 years if loan is secured by am ortized m ortgage or deed of tru s t
upon term s by which instalm ent paym ents shall am ortize 40% or
more of principal of loan w ithin not more th an 10 years, and these
lim itations do n o t prevent renewal or extension of loans which are
insured under act of Congress relating to Federal Housing Adminis
tration. N o b ank shall m ake real estate loans in aggregate in excess
of the am ount of th e capital stock of the bank paid in and unim paired
plus unim paired surplus fund or in excess of 60% of am ount of its
time and saving deposit—whichever is greater. Loans m a d e " to
finance construction of residential or farm buildings and having
m aturities of n o t to exceed six m onths, w hether or not secured by
mortgage on real estate, shall n ot be considered as real estate loans
but shall be classed as ordinary commercial loans provided no bank
shall invest in or be liable on any such loans in aggregate am ount in
excess of 50% of actually paid-in and unim paired capital. Loans
made to established .industrial or commercial businesses which are
in whole or in p a rt discounted or purchased or loaned against by
Federal Reserve Bank under act of Congress of June 19, 1934, or for
any p a rt of which a com m itm ent shall have been m ade by Federal
Reserve B ank or in th e m aking of which a Federal Reserve Bank
participates under th e provisions of said act of Congress, are not sub
ject to th e above restrictions or lim itations upon loans secured by real
estate.
Banks m ay invest th eir funds and money in their custody eligible
for investm ent in notes or bonds secured by m ortgage or deed of tru st
insured or debentures issued by Federal Housing A dm inistrator and
in securities of N ational M ortgage Associations, and in bonds or other
obligations issued b y a housing a u th o rity p u rsu an t to th e Housing
Authorities Law of th is sta te or issued by any public housing a uthority
or agency in th e U nited S tates when such bonds or obligations are
secured by a pledge of annual contributions to be paid by th e U nited
States Governm ent or any agency thereof. No bank shall accept
as collateral or m ake loan on, or purchase any of its own C apital
otock or Shares of any other bank, except Stock of Federal Reserve
Banks, unless such security or purchase shall be necessary to prevent
loss upon deb t previously contracted in good faith, and Stock so
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1977
purchased or acquired shall, within six m onths from date of acquire
m ent, be sold or disposed of a t public or private sale.
Banks and tru s t companies m ay act as executors or adm inistrators
and are n o t required to give bond, except when appointm ent is m ade
under will requiring bond.
Excess or double liability of stockholders is prohibited b y Section 17
of Article 11 of th e S tate C onstitution.
B ranch banks m ay be operated w ith approval of Commissioner of
Finance, provided th a t any corporation operating branch banks shall
have paid in C apital Stock of n ot less th a n $100,000 and Surplus of
n ot less th an 10% of C apital Stock. N o corporation shall establish
branch banking offices unless its paid-in C apital Stock shall, in th e
aggregate, am ount to a t least $25,000 for each of its banking offices
and, after M arch 19, 1935, no corporation shall establish new branch
banks unless it has, paid in, an unim paired C apital Stock in am ount
n ot less th a n M inim um C apital Stock required by Subsections (C)
and (D) of Section 36 of T itle 12 of U nited S tates Code as Amended
by Section 23 of A ct of Congress approved Ju n e 16, 1933, for N ational
Banking Associations.
B ranch banking offices shall not be established in any city or town
in which is located a sta te or national bank regularly transacting
banking business, unless corporation establishing such branch shall
take over existing bank or obtain consent of all banks there located.
N o u n it bank shall be acquired for th e purpose of establishing a
branch bank u n til said u n it bank shall have been in operation as a
u nit for a period of five years.
B ills of L a d in g . Uniform act recom m ended by th e American
Bar Association.
B lu e S ky L aw . Idaho has a blue sky law governing corporations,
unincorporated associations and partnerships, dom estic or foreign,
dealing in stocks, bonds, and other securities, excepting U nited States
bonds. S tate or municipal securities in Idaho, and Idaho real estate
mortgages. T his law requires the filing of various statem ents,
accounts and o ther papers, and m akes it unlawful to do business in
the S tate w ithout compliance. Securities issued or guaranteed by
the U nited States, or any territo ry or possession thereof, or by any
state, or by any foreign governm ent w ith which th e U nited S tates
is m aintaining diplom atic relations, securities issued by cooperative
associations organized under th e laws of Idaho, securities issued or
guaranteed by public service utilities, securities appearing in lists on
New Y ork Curb, New York, Boston, San Francisco and Chicago
Stock Exchanges, or other recognized exchanges which have been
approved by th e Commissioner of Finance, securities issued by or
representing interest in, or a direct obligation of, a bank, tru s t com
pany, or savings institution, or issued by a federal land bank or joint
land bank or national farm loan association, or by any com pany
created and acting as an intrum entality of th e governm ent o f th e
U nited States, any security other th an common stock'outstan d in g in
the hands of th e public for a period of not less th an five years, upon
which there has been no default in th e paym ent of principal, interest
or dividends for a continuous im m ediately preceding period of five
years, securities evidencing indebtedness under any contract m ade
pursuant to th e provisions of any sta tu te of any S tate of th e United
States providing for th e sale of personal property under conditional
sales contracts, and conditional sales contracts and prom issory notes
In th e ordinary course of business, are exem pt from th e operation of
the Blue Sky Law. T he provisions of th e Blue Sky Law do n ot
apply to persons or corporations engaged in actual mining operations,
developing m ining property w ithin th e S tate, except th a t mining
corporations m ust m ake an annual report. T he provisions of th e
Act do not apply to any judicial sale, or to a sale by a pledgeholder,
a bona fide sale by an owner who is not th e issuer or underw riter of
a security who sells th e sam e for his own account, nor to transfers or
exchanges by one corporation to another corporation i n th e course
of a merger, nor to th e bona fide sale of m em bership certificates by
established enterprises actually engaged in business in this S tate where
no com nensation. fees or commissions are paid. A dm inistration of
Blue Sky Law by D ept, of Finance. Appeal is allowed from ruling of
Commissioner of F inance to D istrict C ourt, Ada C ounty. (I. C. A.,
Sec. 25-1601 et seq.) (
C o lla te ra ls. No sta tu to ry regulation.
C o lle c tio n s. Uniform Bank Collection Code as recommended by
American Bankers Association, see com plete text, back of laws.
C o m m u n ity P ro p e rty . All property acquired after m arriage
other th an by gift, bequest, devise, or descent, is com m unity property.
The personal earnings of the wife and the income from her separate
property are com m unity property unless she is living a p a rt from her
husband.
C o n tr a c ts . A w ritten instrum ent is presum ptive evidence/ of a
consideration.
C o n v ey an ces. Real estate is conveyed by instrum ent in writing,
subscribed by the p arty or his authorized agent in writing. The
com m unity property can be conveyed or incumbered only by husband
and wife joining in th e execution and acknowledgm ent of the in stru
m ent. During the continuance of the m arriage the wife has the
m anagem ent, control, and absolute power of disposition of her separate
property, and m ay bargain, sell, and convey her real and personal
property, and m ay enter into any contract w ith reference to th e same,
m the same m anner and to th e same extent an d w ith like effect as a
m arried m an m ay in relation to his real and personal property.
Separate property of wife not liable for debts of her husband, wife is
not liable as surety unless the obligation is for her benefit or benefit
of her separate property. An instrum ent purporting to g ran t real
property to take effect upon condition precedent, does n o t pass the
estate upon the perform ance of the condition. Such instrum ent is
merely an executory contract. (See Acknowledgments.)
C o rp o ra tio n s . P riv ate corporations m ay be form ed by th ree or
more natural persons of full age, a t least tw o-thirds of whom are
citizens of th e U nited States. Such corporations are form ed by
executing articles of incorporation signed in triplicate by each of
th e incorporators and acknowledged by a t least three of them before
an officer authorized to tak e acknowledgments, and in addition to
stating th e nam e of th e corporation, shall sta te in th e English language:
I. Its purpose. 2. Its duration. 3. Location and post-office address
of its registered office in this state. 4. T otal authorized num ber of
par value shares and their aggregate par value, and if any of its
shares have no par value, th e authorized num ber of such shares.
5. D escription of th e classes of shares, if shares are to be classified,
and a statem ent of th e num ber of shares in each class and th e relative
rights, voting power, preferences and restrictions granted to or imposed
upon th e shares of each class. 6 . T he nam e and post-office address
of each of th e incorporators and a statem ent of th e num ber of shares
subscribed by each, which shall not be less th a n one, and th e class of
shares for which each subscribes., T riplicate originals of th e articles
of incorporation shall be delivered to tn e Secretary of State, and if
he finds th a t they conform to law he shall p u t an endorsem ent «of his
approval on each set and when all taxes, fees and, charges have been
paid as required by law, he shall file one of such sets in his office and
record the same and shall issue and record a certificate of incorpora
tion. One of the sets of articles of incorporation shall then be filed
for record in th e office of th e C ounty Recorder of th e C ounty in which
th e registered office of th e corporation is situated, and th e other shall
be retained by th e corporation. T he articles m ay provide for th e
election of one-third of its directors annually. R ailroad, wagon road,
telegraph and telephone corporations m ust sta te also in their articles:
1. T he kind of road, telegraph or telephone line intended to be con
structed. 2. T he estim ated length of th e road or line. 3. T hey m ay
provide in their articles th e num ber of directors which shall constitute
a quorum for th e transaction of business, th e decision of th e m ajority
of such quorum to be a valid act. 4. W hether meetings of th e board
shall be held w ithin or w ithout th e State. 5. W hether stockholders
shall be individually liable for debts of corporation. Railroad corpo
rations m ust have subscribed, before filing articles, $ 1,0 0 0 per mile;
wagon road corporations, $300 per mile; telegraph corporations, $100
per mile, and th e articles m ust be verified by affidavit of president.
1978
BANKING A ND COMMERCIAL LAWS— IDAHO
■ecretary, or treasurer nam ed in articles, th a t such stock has been
subscribed. All corporations, except insurance, non-production min
ing companies, co-operative telephone and irrigation companies, m ust
pay between July 1 and Septem ber 1 of each year, a license fee based
on th e am ount of authorized capital stock, varying from $ 10 to
$150; a failure to m ake paym ent by Septem ber 1 entails a penalty
of $10, and a failure to m ake paym ent by Novem ber 30 entails a
loss of charter for dom estic corporations and a loss of th e right to do
business w ithin th e S tate for foreign corporations. Between July 1
and Septem ber 1, all corporations m ust m ake an annual report.
Corporations m ay be reinstated by paying all license taxes th a t have
accrued and a penalty of $ 10 for each year , they have failed to file
their annual statem ent or failed to pay their annual license fee
(I. C. A., T itle 29, Chap. 1), styled th e “ business Corporation
A ct,” follows very closely th e Uniform Business C orporation Act
d rafted by th e N ational Conference of Commissioners on Uniform
Laws.
C o rp o ra tio n , F o re ig n . Foreign corporations desiring to do busi
ness in this State, m ay have all th e rights and privileges of like domes
tic corporations, by filing w ith th e secretary of state, a certified copy
of th e articles of incorporation, and in th e office of the county recorder
of th e county where th e principal place of business of such corporation
Is to be conducted, a copy of their articles of incorporation duly certified
by th e secretary of sta te of this S tate, and the designation of some per
son residing in th e county in which such principal place of business is
to be located upon whom process issued by au th o rity of or under any
law of this S tate m ay be served. T he original designation of agent
m ust be filed w ith th e secretary of sta te and a copy certified by the
secretary of sta te m ust be filed in the office of th e C ounty Recorder
in which its principal place of business is located in this State.
F o r
eign corporation m ay surrender its right to do business within S tate
of Idaho by filing w ith Secretary of S tate certificate th a t it surrenders
its au th o rity to tran sact in tra state business in the state, th a t it con
sents th a t process against it upon any liability incurrred prior to
filing th e certificate of w ithdraw al m ay be served upon Secretary of
S tate, and post office address to which Secretary of S tate m ay m ail copy
of any process against such corporation th a t m ay be served upon him.
Surrender of a uthority to tran sact business in this sta te does n ot affect
any action pending a t tim e of such withdrawal, and retirem ent from
transacting business in th e sta te w ithout filing certificate of w ith
draw al does n ot revoke appointm ent of agent upon whom process
m ay be served w ithin th e sta te . A ny foreign corporation th a t has
voluntarily surrendered its right to do business in this state, or whose
license has been forfeited for failure to pay its annual license tax or
otherwise com ply w ith th e laws of th e sta te .relating to foreign cor
porations, before i t is again perm itted to resum e doing business in
th e state, shall reinstate w ith th e Secretary of S tate by paying all
th e fees and .annual license taxes which have accrued during th e
tim e th e charter was forfeited, or shall requalify under th e sta tu te s
of th e sta te and pay th e fees and annual license ta x fixed by s ta tu te
for Corporations n o t previously qualified to do business in th e state.
C o u rts . Term s and Jurisdiction. The judge of the district court
of each of the judicial districts of the State m ust annually fix tbe
tim e for holding the district court in the several counties of his dis
trict; and he m ay hold such special term s as he deems proper and
necessary. D istrict courts have original jurisdiction in all civil cases.
P robate courts are held in each county continuously, and have juris
diction up to $500, in civil cases and concurrent jurisdiction w ith
ju stice’s courts in all crim inal cases. Justices’ civil jurisdiction, $300.
C u rte s y does n ot exist.
D ays of G race abolished by sta tu te .
D e p o sitio n s m ay be taken before any judge, Justice of the peace,
no tary public, or commissioner appointed by th e C ourt, upon notice
served upon th e opposite p arty , stating the court, action, tim e, and
place, and before whom th e sam e will be taken, or they m ay be taken
upon commission issued by th e judge w ith interrogatories attached.
Depositions shall not be taken before any person or th e kin of any
person, interested in the action.
D escen t a n d D is tr ib u tio n of I n t e s t a t e E s ta te s . I f a person
dies intestate, surviving spouse takes all the com m unity property,
both real and personal.
On death in testate separate property, both real and personal,
descends as follows: I f decedent leaves spouse and one child, each
entitled to one-half of decedent’s separate property; If more than
one child, surviving spouse gets one-third and rem ainder goes in
equal shares to children of decedent and to the lawful issue of any
deceased child by right of representation, b u t if no children of decedent
living a t his death, rem ainder goes to all of his lineal descendants,
and if they are in same degree equally, otherwise according to right
of representation; if decedent leaves no surviving spouse b u t leaves
issue, the whole estate goes to such issue or their descendants if
deceased; if decedent leaves no issue, one-half goes to surviving
spouse and other half to decedent’s father and m other in equal shares,
or if either be dead, the whole goes to th e other; if no issue nor hus
band or wife, estate goes to father and m other: if neither issue, hus
band. wife, father nor m other, in equal shares to brothers and sisters
of decedent and to their children by right of representation: if spouse
survives decedent and there are neither issue, fath er nor m other,
whole 'estate goes to such spouse; if decedent leaves neither issue,
husband, wife, father, m other, brother, nor sister, estate goes to next
of kin in equal degree, com puted according to rules of civil law; if
decedent leaves no heirs, property escheats to S tate. W hen any
estate is devised or bequeathed to any child or other relative of the
testa to r and th e devisee or legatee dies before th e testator, leaving
lineal descendants, such descendants tak e th e estate so given by the
will in th e sam e m anner as th e devisee or legatee would have done
had he survived th e testator.
D ow er does not exist. (See C urtesy and Com m unity property).
E m p lo y ers a n d E m p lo y es. All persons employing m echanics or
laborers in working mines, erecting or repairing buildings, construct
ing canals, railroads, etc., m ust m ake, record, and publish a sta te
m ent, under oath, setting forth th e following: T he nam e of the
owner of th e premises where work is being done or upon which it is
intended to begin w ork; th e nam e of the person or com pany engaged
in or who contem plates engaging in work upon such premises; the
conditions under which such person or corporation is prosecuting
the work as agent, owner, etc., th e principal office of the owner ana
the agent in this State; th e tim e and place where paym ent of laborers
and mechanics will be m ade. A copy of the statem en t m ust be
posted a t the place where work is prosecuted.
E m p lo y e r’s L ia b ility L aw . (See W orkm en's Compensation.)
E x e c u tio n s issue a t any tim e within five years after judgm ent.
T he only stay is by appeal, w ith supersedeas bond. One year allowed
for redem ption from execution and foreclosure sale.
E x e m p tio n s . Hom estead, not exceeding $5,000, by head of
fam ily an d $ 1000.00 by any other person, if declaration of home
stead is d u ly acknowledged and recorded; office furniture and library,
$2 Q0 ; necessary household and kitchen furniture n ot exceeding
in value $300, and provisions for fam ily for six m onths; certain farm
anim als, etc., w ith food for six m onths; and w ater right of 160 inches,
when actu ally used in irrigation; also crops growing or grown on
fifty acres of land, leased, owned or possessed by person cultivating
th e sam e; tools or im plem ents of mechanic necessary for his trad e
of th e value of $500; m otor vehicles n ot exceeding $200 in value; all
instrum ents of surgeons, etc., also all professional libraries; m iner’s
dwelling of value $500, and his pipes, cars, etc., of th e value of $200;
pack anim als and equipm ents, n ot exceeding $250; team , wagon, etc.,
of d raym an; 75 per cent of th e personal earnings of a debtor w ithin
th irty days preceding levy, where earnings are necessary for use of
fam ily, residing in this S tate; th e shares held by m em bers of a Building
an d Loan, Association to th e value of $1,000; provided, such person
has no hom estead; all benefits arising out of life insurance, represented
by an annual prem ium of $250; all property of fire companies. All tb e
above property m ay be sold under foreclosure of m ortgage, whicb
Includes sam e or execution issued on judgm ent for purchase price.
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G a r n is h m e n t. Any personal property or credits in th e hands of
another, belonging to th e defendant, is subject to garnishm ent, as
are debts owing to him from another if due.
G u a r a n ty , T itle a n d T r u s t C o. M ay furnish abstracts, act as
surety, trustee, fiscal agent. Paid up capital of $25,000 required.
C apital deemed security for th e perform ance of their duties.
H o lid a y s. T he legal holidays are: Sundays; Ja n u ary 1 (New Y ear’s
D ay); F ebruary 22 (W ashington’s b irth d a y );’ M ay 30 (Memorial
D ay); June 15 (Pioneer D ay); Ju ly 4 (Independence D ay); first
M onday in Septem ber (Labor D ay); October 1 2 (Columbus D ay);
general election day; Novem ber 1 1 (Armistice D ay); Thanksgiving
D ay; and December 25 (Christm as D ay); every day on which an
election is held throughout th e state, every day appointed by tbe
President or by the Governor of th e sta te for a public fast, than k s
giving or holiday.
H u s b a n d a n d W ife. All the property of the wife owned by her
before m arriage, and th a t acquired afterw ards by gift, bequest, or
descent- or th a t which she shall acauire with the proceeds of her
separate property, shall rem ain her sole and separate property, to
the sam e extent and with th e sam e effect as the p roperty of a busband sim ilarly acquired. T he wife has th e m anagem ent, control, and
absolute power or disposition of her separate property, to th e same
extent and w ith like effect as a m arried m an m ay have in relation
to his real and personal property. T he separate property of tbe
wife is n ot liable for the debts of her husband, b u t is liable for her
own debts contracted before or after m arriage. T here is no estate
by courtesy or in dower. M arriage settlem ents are provided for,
and when properly executed and recorded m ay vary th e statu te
governing the relations of husband and wife concerning property
rights. M inors m ay execute valid m arriage settlem ents
I n t e r e s t . W here there is no express contract in writing fixing a
definite rate of interest, th e ra te is 6 per cent per annum . Parties
m ay agree in writing for interest a t a rate n ot to exceed 8 per cent per
annum . Judgm ents bear interest a t th e ra te of 6 per cent per annum .
Com pound interest allowed if aggregate does n ot exceed 8 per cent
on principal.
J u d g m e n ts are liens on all real estate of debtor w ithin the county,
from tim e of docketing, and m ay be extended to other counties by
filing transcript in recorder’s office. Lien continues five years.
Justice’s court judgm ents become liens when certified and recorded.
M ay be revived by issuing execution w ithin lim itation. T ranscript
of judgm ent of U. S. C ourt m ust be filed w ith Clerk of D istrict Court
In any county in th e S tate in order to m ake it a lien on real property.
L ie n s. M e c h a n ic s ’. E very person perform ing labor upon or fur
nishing m aterials used in the construction or repair of any mining
claim, building, or other im provem ent, has a lien tbereon. Farm
laborers have lien upon th e crop and products thereof, upon wbich
they bestow labor. All liens m ust be se t forth by a statem en t in
writing, showing the am ount due, the facts connected with th e m atter,
th a t there are no credits due on th e claim, or offsets against the
same; which statem en t m ust be verified by the claim ant, and recorded
in the office of the county recorder, if on claim of original contractor,
within ninety days, if on claim of o ther persons, within sixty days
from the tim e of the com pletion of the structure the completion of the
labor, or the furnishing of the m aterials. Lien m ust be enforced by
suit within six m onths, unless credit is given, expires a t all events
in tw o years.
L im ita tio n fo r S tilts . Judgm ents six years; w ritten contracts
or for real property, five years; contracts or obligations n o t founded
on writing including open accounts, four years; trespass, trover
replevin and fraud, three years; personal injuries, two years; other
relief, four years. Revivor: by acknowledgment of debt in writing
or p a rt paym ent of principal or interest. Action against a director or
a shareholder of a corporation for illegal dividend m ust be brought
within tw o years from th e date of paym ent. T he five year lim itation
prescribed for action on w ritten contract does n ot apply to actions in
th e nam e of or for th e benefit of th e sta te and shall n o t be asserted or
interposed as defense to any action in th e nam e of or for benefit of
th e s ta te although lim itation m ay have been fully operative as a de
fense prior to th e adoption of am endm ent. (C hapter 244, 1939
Session Laws.)
M a rrie d W o m en . All property, real or personal, acquired before
m arriage and acquired after m arriage, by gift, bequest, devise, or
descent, Is th e wife’s separate property; all other property acquired
after m arriage, common property; wife m ust record inventory of
separate personal property. No estate as te n a n t by courtesy allowed
the husband nor dower to th e wife.
M in e s a n d M in in g . (Principal regulations under U nited States
Statutes.) Quartz locations m ay be 1,500 feet long and 300 feet on
each side of the middle of lode. M onum ents m ust be established at
all exterior angles of claim. Claim should be tied to some natural
or perm anent m onum ent. Copy of location notice m ust be posted
a t discovery within three days after discovery. N otice of location
m ust be recorded within ninety days after location; w ithin sixty days
ten-foot shaft m ust be sunk or its equivalent. Location notice must
contain nam e of locator, nam e of claim, date of discovery, dimensions,
distance from some perm anent, natural, or artificial object; name of
mining district, county, and state. Placer locations m ade in same
m anner as au artz locations, except th a t within fifteen days after
making location, locator m ust excavate not less th an 100 cubic feet
for purpose of prospecting claim, and m ust record notice of location
within th irty days after m aking location. Official p aten t survey of
lode or placer claim by U. 8 . M ineral Surveyor is labor performed
upon, an for th e benefit of, said claim. S tate L and B oard m ay lease
m ineral rights in sta te lands and m ineral deposits which m ay belong
to sta te by reason of being situated between bigh-water m arks of
navigable rivers. N otice of application to lease lands belonging to
sta te situated between high-w ater m arks of navigable rivers m ust be
published before lease can be m ade.
M o rtg ag es. A real estate m ortgage m ust be acknowledged and
certified, and recorded in like m anner as conveyances and deeds
of real Dronerty, and is foreclosed by action in the district court.
Deficiency judgm ent cannot be had for an am ount greater th an differ
ence between indebtedness, plus costs of foreclosure and reasonable
value of th e m ortgaged property. C h attel m ortgages m ust be
acknowledged as real estate m ortgages and sworn to by th e mortgagor
th a t th e sam e is m ade in good faith w ithout any design to hinder,
delay, or defraud creditors. M ust be filed and a m inute record made
by recorder, unless m ortgagee has possession. Survives as long as
the debt. M ortgages are discharged by a satisfaction duly executed
and recorded, or by entry on m argin of th e record, witnessed by
recorder.
N e g o tia b le I n s t r u m e n t s . Uniform Negotiable Instrum ents Act
adopted. (See com plete tex t of th e law following “ Digest of Banking
and Commercial Laws.” ) N egotiable instrum ents are governed
by the rules of the Uniform Negotiable In stru m en t Law, as recom
m ended by th e American B ar Association.
N o ta rie s, when requested, to dem and acceptance an d paym ent
of foreign, domestic, and inland bills of exchange or promissory
notes and protest th e same for non-acceptance and non-paym ent;
exercise such o ther powers and duties as by th e law o f nations and
commercial usage, or by the laws of any other T erritory, State, govern
m ent, Or country m ay be perform ed by notaries. A ttach acknowl
edgments or proof of. powers of attorney; mortgages, deeds, grants,
transfers, ana other instrum ents of writing executed by any person.
Give certificate of such proof or acknowledgment, to ta k e depositions,
affidavits, and adm inister oaths and affirmations in all m atters Incident
to duties of th e office. To keep a record of all official acts; when
requested, and upon paym ent of his fees therefore, to m ake and give
a certified copy of any record in his office; to provide and keep an
official seal, on which m ust be engraved his nam e, the words “ N otary
Public,” and “ S tate of Idaho. To authenticate with his official
seal all official acts. T he commission is good throughout th e State.
BANKING AND COMMERCIAL LAWS— ILLINOIS
P o w er o f A tto rn e y . Powers of a tto rn ey for grants of real estate
and to execute a m ortgage m ust be in writing, subscribed, acknowl
edged o r proved, certified and recorded as other instrum ents affecting
real property. Powers of attorney which have been recorded m ust
be revoked by revocation in writing, acknowledged, proved, certified,
and recorded th e sam e as original power.
P ro b a te L aw . P robate courts have jurisdiction to open and
receive proof of wills and adm it them to proof; to grant letters te sta
m entary and guardianship and revoke same: appoint appraisers of
estates, compel executors, etc,, to render accounts; order sale of prop
erty of estates and m inors; order paym ent of debts due from estates,
order and regulate distribution of property or estates; compel a tte n d
ance of witnesses and production of all instrum ents pertaining to
estates and property of minors, and m ake such orders as m ay be neces
sary to exercise all powers conferred. Proceedings of this court are
construed th e sam e as courts of general jurisdiction and like force given
to its records.
P r o te s t. (See Notaries.)
R eco rd s. All deeds, mortgages, real and chattel, and instrum ents
affecting th e title to lands m ust be recorded. Inventory of the
separate personal estate of a m arried woman when recorded, becomes
prim a facie evidence th a t the property therein enum erated is her
separate property. In case of levy of attachm ent upon real estate, a
copy of the writ, with a copy of the notice of levy attached thereto,
m ust be filed in th e office of th e county recorder.
R e d e m p tio n . P roperty m ay be redeemed within one year after
sale, on paying purchaser am ount paid on sale and 6 % interest addi
tional. P roperty m ay be redeem ed by successive redem ptioners
within sixty days from last redem ption, and w ithin one year from
sale, by paying an additional 6 % interest. In cases of tax sales, the
owner m ay redeem in three years.
R e p le v in . Action of, m ust be brought within three years from tim e
It accrues. Plaintiff m ay sue for th e possession w ithout claiming
im m ediate possession, or he m ay claim im m ediate possession a t tim e of
commencing sh it or afterw ard. Affidavit showing th a t plaintiff is the
owner, th e detention, th e unlawfulness of the detention, etc-, and bond
with sureties required to obtain im m ediate oossession. D efendant
m ay execute undertaking, w ith approved sureties, for th e retention of
the property, and th a t it will be forthcoming, subject to th e order of
the court in which th e action is pending, and thereupon retain th e pos
session of the property involved.
S ales. Uniform sales A ct recom m ended by American B ar Asso
ciation.
S eals. The distinctions between sealed and unsealed instrum ents
are abolished. W ritten contracts presum ptive evidence of con
sideration.
T ax es. All property m ust be assessed with reference to Its value
a t twelve o’clock noon on the second M onday of Ja n u ary of each
year a t its full cash value, and the owner or other claim ant of th e
property shall have th e sam e listed for taxation, and such taxes are
a lien from and after th a t date. Personal property coming into
S tate after second M onday in Jan u ary subject to assessm ent with
reference to its full cash value as to th e d ate it comes into S tate for
such proportion of full value as is represented by th a t p a rt of. the
year subsequent to its d a te of entry. If taxes are n ot paid by the
fourth M onday in December they become delinquent, b u t half of th e
taxes m ay be paid before said date and th e remaining half before the
fourth M onday in Ju n e w ithout delinquency. A penalty of 2 per
cent is added on all delinquent taxes. Delinquency entries are m ade
as of th e first M onday in Ja n u ary in th e succeeding year by th e tax
collector and have th e force and effect of a sale to the county. T hey
bear in terest a t th e rate of 10 percent per annum from d ate and are
not assignable. Redem ption m ay be m ade within three years from
th e d ate of such entry. N otice of expiration of redem ption period
m ust be given by tax collector n ot less th an three, nor more th a n five
m onths before such expiration in order to entitle county to deed.
Special provisions are m ade for redem ption from taxes for years 1932
to 1935, inclusive. (See 1937 and 1939 Session Laws.) Special
provisions are m ade for redem ption from taxes for years 1928 to 1934,
inclusive. (See 1935 an d 1937 Session Laws.)
T r u s t C o m p a n ie s . (See G uaranty Companies.)
W a re h o u se R e c e ip ts. The Uniform Warehouse R eceipts Act,
recommended by th e American Bar Association.
W ills. Every person over th e age of eighteen years, and of sound
mind, m ay m ake a will. E very will, other than a nuncupative will,
must be in writing, and every will o ther th an an olographic and a
nuncupative will, m ust be executed by th e testator subscribing thereto
or some person by his direction, which m ust be done in the presence
of two attestin g witnesses, each of whom m ust sign his nam e and
state th a t the testa to r requested him to witness the testa to r's signa
ture. and the testa to r m ust also declare in the presence of th e w it
nesses th a t such is his last will and testam ent. One-half of com
m unity property m ay be disposed of by will to th e surviving spouse,
his, her, or their children, th e grand-children or parents of either
spouse, or one or more of such persons, b ut not to exceed one-fourth
to a parent or parents of either spouse, unless limited to an estate for
life or less, and an y p a rt of th e decedent’s share of the com m unity
property in excess of th e unencum bered appraised value of $25,000
may be disposed of as th e testato r sees fit.
. W o rk m e n ’s C o m p e n s a tio n A ct. T he W orkm en’s Compensa
tion Act of this sta te is based upon th e A ct recommended by th e
N ational Conference of Commissioners on Uniform S tate Law.
(I. C. A. T itle 43 C hapters 9-19 Inc.) The law provides Com pensa
tion for a workm an for personal in ju ry by accident arising o ut of
and in th e course of his em ploym ent. Com pensation is provided for
certain occupational diseases.
S Y N O P S IS O F
T H E L A W S O F IL L IN O IS
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
A ck n ow led g m e n ts. Of deeds of real estate and other instrum ents,
may be taken before th e following officers: W ithin this State before
a m aster in chancery, notary public, U nited States commissioner,
county clerk, justice of the peace, any court of record having a seal
or any judge, justice, clerk, or deputy clerk thereof. W hen taken
before a no tary public or U nited S tates commissioner, the sam e Shall
be atteste d by his official seal; when taken before a court or th e clerk
thereof, or a d ep u ty clerk thereof, the sam e shall be attested by the
seal of such court; and when taken before a justice of the peace there
®bail be added th e certificate of th e county clerk under his seal of
pince th a t th e person taking such acknowledgm ent or proof was a
justice of th e peace in said county a t th e tim e of taking the same. I f
"bei justice of th e peace reside in th e county where the lands m entioned
m th e in strum ent was situated, no such certificate shall be required.'
W ithout this S tate, and within th e U nited States, its territories, de
pendencies, or th e D istrict of Columbia, before a justice of th e peace,
notary public, m aster in chancery, U nited S tates commissioner, com
missioner to tak e acknowledgm ents of deeds, m ayor of a city, clerk of
a county, or before an y judge, justice, clerk or deputy clerk of the
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1979
suprem e, circuit, or district court of th e U nited:States, or before an y
judge, justice, clerk or d ep u ty clerk, prothonotary, surrogate, or
registrar of th e suprem e, circuit, superior, district, county, common
pleas, probate, orphans or surrogate court of any of th e States, T erri
tories, or dependencies of th e U nited States. In any dependency of
the United States, such acknowledgm ent or proof m ay also be tak en
or m ade before any commissioned officer in th e m ilitary service of th e
U nited States. W hen such acknowledgm ent or proof is m ade before
a n otary public, U nited States commissioner, or commissioner of deeds,
it m ust be certified under his seal of office. If taken before a m ayor of
a city, it m ust be certified under th e seal of th e city; if before a clerk,
dep u ty clerk, prothonotary, registrar, or surrogate, under th e seal of
his court; if before a justice of th e peace or a m aster in chancery, there
m ust be added a certificate of th e proper clerk under the seal of his
office setting forth th a t such person before whom such proof or ac
knowledgm ent was m ade was a justice of th e peace or m aster in
chancery a t th e tim e of taking such acknowledgm ent or proof. An
acknowledgm ent or proof of execution m ay be m ade in conform ity w ith
th e laws of th e S tate, T erritory, dependency, or district where it is
m ade. W ithout th e U nited S tates, before any court of any republic,
dominion, state, kingdom , empire, colony, territo ry , or dependency
having a seal, or before any judge, justice, or clerk thereof, or before
any m ayor or chief officer of any city or tow n having a seal, or before a
notary public or commissioner of deeds, or any am bassador, m inister or
secretary of legation, or consul of th e U nited States, or vice-consul,
dep u ty consul, com m ercial agent, or consular agent of th e United
States. In any foreign republic, dominion, sta te , kingdom, empire,
colony, territo ry or dependency atteste d by his official seal or before
any officer authorized by th e laws of th e place where such acknowledg
m ent or proof is m ade to tak e acknowledgm ents of conveyances of
real estate or to adm inister oaths in proof of th e execution of convey
ances of real estate. Such acknowledgments to be atteste d by th e
official seal, if any, of such court or officer, and in case such acknowledg
m ent or proof is taken or m ade before a court or officer having no
official seal, a certificate shall be added by some am bassador, m inister,
secretary of legation, consul, vice consul, dep u ty consul, commercial
agent or consular agent of th e U nited States residing in such republic,
dominion, state, kingdom , empire; colony, territory, or dependency
under his official seal, showing th a t such court or officer was duly
elected, appointed or created and acting a t th e tim e such acknowledg
m ent or proof was m ade.
No judge or other officer shall tak e th e acknowledgm ent of an y
person to any deed or instrum ent of writing, as aforesaid, unless th e
person offering to m ake such acknowledgm ent shall be personally
known to him to be th e real person who and in whose nam e such ac
knowledgm ent is proposed to be m ade, or shall be proved to be such
by a credible witness, and the judge or officer taking such acknowledg
m ent shall, in his certificate thereof, sta te th a t such person was person
ally known to him to be the person whose nam e is subscribed to suchdeed or writing, as having executed th e same, or th a t he was proved to
be such by a credible witness (naming him ), and on taking proof of any
deed or instrum ent of writing, by th e testim ony of any subscribing
witnesses, th e judge or officer shall ascertain th a t th e person who
Offers to prove th e sam e is a subscribing witness, either from his own
knowledge, or from th e testim ony of a credible witness; and if it shall
appear from th e testim ony of such subscribing witness th a t th e person
whose nam e appears subscribed to such deed or writing is th e real
person who executed th e same, and th a t th e witness subscribed his
nam e as such, in his presence and a t his request, th e judge or officer
shall g rant a certificate, sta tin g th a t the person testifying as sub
scribing witness was personally known to him to be th e person whose
nam e appears subscribed to such deed, as a witness of the execution
thereof, or th a t he was proved to be such by a credible witness (naming
him), and sta tin g th e proof m ade by him;, and where any grantor or
person executing such deed or writing, and th e subscribing witnesses,
are deceased or cannot be had, th e judge or officer, as aforesaid, m ay
take proof of th e handw riting of such deceased p a rty and subscribing
witness or witnesses (if a n y ); and th e exam ination of a com petent and
credible witness, who shall sta te on oath or affirm ation th a t he person
ally knew th e person whose handw riting he is called to prove, and
well knew his signature (stating his m eans of knowledge), and th a t
he believes th e nam e of such person subscribed to such deed or writing,
as p a rty or witness (as th e case m ay be), was thereto subscribed by
such person; and when th e handw riting of th e grantor or person
executing such deed or writing, and of one subscribing witness (if
any there be), shall have been proved, as aforesaid, or by proof of
signature of grantor where th ere is no subscribing witness, th e judge
or officer shall g ran t a certificate thereof sta tin g th e proof aforesaid.
T he acknowledgm ent of a conveyance b y a m arried woman m ay be
m ade and certified as if she were single. An acknowledgm ent tak en
by any one interested in th e conveyance is void. *
A c tio n s. T he Civil P ractice Act of 1933 abolishes th e Common law
forms of action and simplifies pleading; provides for uniform procedure
In law and equity by, in m ost cases, m aking th e equity rules applicable
to both types of proceeding.
A d m in is tr a tio n of D e c e d e n ts ’ E s ta te . L etters testam en tary
issue to executor nam ed in will, if he be a resident. I f there be no
will, or no executor nam ed, or th e executor is disqualified, or refuses
to act, th e following persons are entitled to preference in th e order
given in obtaining th e issuance of letters of adm inistration; Sur
viving spouse, children, parents, brother or sister, grandchildren,
next of kin, public adm inistrator or creditors. I f a person files a
petition and another is entitled to preference, petitioner shall give
tw enty (20) days notice to said person. A non-resident, an incompe
te n t, a m inor and persons convicted of infam ous crimes are n o t
qualified to act as adm inistrator. W hen no letters are issued in
th is sta te upon th e estate of a non-resident decedent, a foreign execu
to r or adm inistrator, w ithin th e U nited States, m ay sue in th is sta te
in any case in which a resident executor or adm inistrator m ay sue.
All claims except expense of adm inistration and widow’s or child’s
aw ard, not filed within nine m onths from th e issuance of letters,
are barred as to all property inventoried and share only in newly
inventoried property. Claim s are divided into classes (1 ) funeral
expenses and costs of adm inistration; (2 ) widow’s or child’s aw ard;
(3) D ebts due th e U nited S tates G overnm ent; (4) m oney due em
ployees of decedent if n o t m ore th an $400.00 for services rendered
w ithin four m onths prior to decedent’s death; (5) money or p roperty
held in tr u s t which is n ot identifiable; (6 ) debts due to th e S tate of
Illinois and an y C ounty, Township, C ity, Town, Village or School
D istrict located within th e S tate of Illinois; (7) all other debts or
dem ands. W ithin sixty (60) days after th e issuance of letters
th e representative m ust file an inventory of th e estate, and within
sixty (60) days a fter th e expiration of nine m onths after th e issuance
of letters or w ithin such fu rth er tim e as th e court m ay allow, th e
representative shall, file his account.. Claim s are to be paid by th e
representative a t expiration of nine m onths after issuance of letters
in th e order of classification as above.
R enunciation of will m ust be filed w ithin ten (10) m onths after
th e admission of th e will to probate or such extended tim e as shall
be granted by th e C ourt w ithin said ten (10) m onth period.
Surviving spouse is barred of dower unless he files an election to
take dower w ithin ten ( 1 0 ) m onths of death, if no letters of adm inis
tratio n are issued w ithin th a t period; or w ithin teh ( 1 0 ) m onths of
letters if issued w ithin ten ( 1 0 ) m onths of death or if a will is filed
for probate then w ithin ten ( 10 ) m onths after th e adm ission of th e
will to probate; or w ithin th e tim e as extended by th e C ourt.
A ffidavits. W ithin th is S tate oaths and affirmations m ay be
adm inistered by any judge, justice of the peace, m aster in chancery,
clerk of a court, police m agistrate, or notary public, in their respective
jurisdictions. W ithout th e S tate the o ath or affirmation m ay be
adm inistered by any officer authorized by the laws of the particular
S tate, and if such officer has a seal, bis certificate under his official
seal is received as prim e facie evidence of his authority.
1980
BANKING A N D COMMERCIAL LAWS—ILLINOIS
A lien s. T he present law w ent into effect Ju ly 1, 1897. (Amended
in 1935.) I t does n ot affect th e rights of aliens as to personal property,
who still tak e th e sam e as citizens. I ts provisions are subject to
treaties m ade by th e U nited States w ith foreign countries. All aliens,
subject to certain restrictions m entioned in th e act, m ay acquire and
for a lim ited tim e hold real estate situ ated in this S tate by deed,
devise, or descent, and m ay transfer, devise or encum ber it.
A s sig n m e n ts. T he operation of the Illinois Act relating to
voluntary assignm ents for the benefit of creditors has been suspended
by th e national bankruptcy law.
A tta c h m e n ts . A creditor, resident or non-resident, whose claim is
due, m ay bring attach m en t in a court of record if th e am ount exceeds
$ 2 0 , and in justice court for any am ount n ot exceeding $20 0 , on any of
th e following grounds: 1. W here th e debtor is a non-resident of this
S tate. 2 . W here th e debtor conceals himself, or stands in defiance of an
officer so th a t process can n ot he served upon him. 3. W here th e
debtor has departed from th is S tate w ith th e intention of having
his effects rem oved from th is State. 4. W here th e debtor is about
to dep art ftom this S tate w ith th e intention of having his effects
rem oved from this S tate. 5. W here th e debtor is about to rem ove
his p roperty from this S tate to th e injury of such creditor. 6 . W here
th e debtor has, w ithin tw o years preceding th e filing of th e affidavit
required, fraudulently conveyed or assigned his effects, or a p a rt
thereof, so as to hinder or delay his creditors. 7. W here th e debtor
has w ithin tw o years prior to th e filing of such affidavit fraudulently
concealed or disposed of his p roperty so as to hinder or delay his
creditors. 8 . W here th e debtor is about fraudulently to conceal,
assign, or otherwise dispose of his property or effects so as to hinder
or delay his creditors. 9. W here th e d eb t sued for was fraudulently
contracted on th e p a rt of th e debtor, provided th e statem ents of the
debtor, his agents or attorney, which constitute the fraud, shall have
been reduced to writing, and his signature attached thereto by him
self, agent, or attorney. T he creditor m ust give bond in double the
am o u n t of th e claim. Real estate or personal property m ay be
attach ed or funds garnished. T he property or funds m ay be released
by th e d eb to r giving a forthcom ing bond, or entering into a recog
nizance in court to pay th e judgm ent.
B a n k s a n d B a n k in g . Under th e sta te constitution stockholders
have a double stock liability, and every bank m ust m ake, under oath,
and publish each q u arter a full and accurate statem ent of its affairs.
An A ct to revise th e law in relation to banks and banking was
passed and approved June 23, 1919, and ratified by referendum a t
th e election of N ovem ber 2, 1920. Banks m ay be formed under the
sta tu te for th e purpose of discount and deposit, buying and selling
exchange, an d doing a general banking business, except the issuing
of bills to circulate as m oney; m ay loan on both personal and r e d
estate security, and m ay accept and execute trusts. An association
of persons, as hereinafter set forth m ay organize a bank by filing a
statem en t w ith the Auditor. T he m inim um num ber of persons In
such associations is fixed according to populations as follows:
P opulations
No. of Persons
10.000 or less__ .................................................. 5
10.000 to 25,000..................................
10
25.000 to 50,000...................................................15
50.000 to 100,000................................................ 20
Over 100.000........................................................25
All such persons m ust be residents of place where Dank is to be
established and in places exceeding 100,000 population, 20 persons of
th e association m ust reside within 3 miles of th e proposed location
of th e bank.
Accompanying the application m ust be a statem ent m ade before
some officer authorized to acknowledge deeds giving th e net financial
w orth of each of th e members of such associations together w ith a t
least three references as to personal character of each individual
nam ed therein. W hereupon th e A uditor issues a perm it to organize.
T he shares shall be not less th a n $10 nor more th an $100 each. After
th e perm it to organize is issued and th e stock fully subscribed, th e
stockholders m eet, fix th e num ber of directors and elect th e directors
who shall m anage th e corporation for one year, or u n til th eir successors
are elected. At th e election of directors, stockholders have th e right of
cum ulative voting. T he directors elect one of th eir num ber P resident,
appoint th e necessary Officers and employes, fix their salaries and m ake
by-laws. Bach director shall file w ith th e S tate A uditor an affidavit
th a t he will faithfully perform th e duties of his office in accordance
w ith law; th a t he is th e owner in his own right, of ten shares of the
stock of th e b ank of th e par value of $ 1,0 0 0 all told, free from incum
brance. T he directors m ust cause suitable books to be k ep t and file
w ith th e A uditor a list of stockholders and a copy of any other records
th e A uditor m ay require. Unless another day is fixed by th e by-laws
of th e Association, th e Stockholders shall m eet th e first M onday in
Jan u ary an d elect directors. Vacancies are filled b y vote of twoth ird s of th e directors. Bach director m ust own shares of th e stock
o f th e bank of th e p ar value of n o t less th a n $ 100 0 , and file a certificate
or certificates thereof w ith th e Cashier, to be held during his term as
director. A quorum of th e directors m ust m eet once each m onth.
Any officer, director or em ploye who shall m ake a false statem ent to
any official authorized to exam ine th e affairs of th e bank, upon con
viction shall be punished by im prisonm ent of n ot less th a n one or m ore
th a n te n years. W hen th e S tate A uditor is satisfied on exam ination
th a t th e bank has been duly organized and its stock fully paid, he
issues a certificate th a t th e bank is authorized to commence business,
which certificate m u st be filed w ith th e Recorder of Deeds of th e
county in which th e bank is to carry on its business.
The double liability of stockholders applies to all debts contracted
while th ey hold stock in th e bank and is n ot released by an assignm ent
of th e stock. The P resident o r C ashier m ust, within th irty days after
organization file w ith th e Recorder of Deeds, a complete list of stock
holders and their holdings and record thereafter a certificate of all
transfers within ten days after such transfers. A statem ent of the
resources and liabilities of th e bank m ust be filed w ith th e S tate Auditor
when required by him . T he A uditor m ust call for such report a t least
once each three m onths. T his report m ust be published in a news
paper of th e city or town where th e bank is located.
T he S tate A uditor shall appoint a suitable person, n ot connected
w ith th e bank, to m ake a thorough exam ination of the affairs of each
bank once a year, and report th e sam e to th e Auditor. A bank m ay
hold only such real estate as m ay be necessary for a banking house or
such- as m ay be acquired in th e collection of debts. Real estate
acquired for debts m ust be disposed of w ithin five years. N o bank
m ay establish branches. T he to tal liability for m oney borrowed of
an y person, corporation or firm (including th e m embers of th e firm)
to any banking association shall a t no tim e exceed 15 per cent of the
capital and surplus (not including undivided profits) of such bank
and shall in no event exceed 30 per cent of th e capital stock actually
paid in. Provided, however, th a t money borrowed within th e m ean
ing of th e Act shall not include (1) th e discount of bills of exchange
draw n in good faith against actually existing values; (2 ) the discount
of commercial or business paper actually owned by th e person negoti
ating th e same; (3) the purchase of, or loaning money in exchange for,
evidences of indebtedness which shall be secured by m ortgage or tru st
deed upon productive real estate, the value of which, exclusive of
buildings, as ascertained by th e oath of two disinterested appraisers,
is double th e am ount of th e principal debt secured; b u t in no event
shall th e liabilities of any such person, corporation or firm to such bank
exceed th e am ount of its capital stock and unim paired surplus or 25
per cent of its deposits. D irectors are m ade personally liable for any
violations of th is provision to the extent of th e loss occasioned thereby
to th e bank, its stockholders or an y other party. N o loan shall be m ade
to th e President, Vice-President or an y em ploye of th e bank or to cor
porations or firms controlled by them , or in th e m anagem ent of which
an y of th em are actively engaged, u n til th e loan shall have been
approved by th e B oard of Directors.
T he m inim um am ounts provided for th e capital stock of banks
are as follows. In cities, tow ns and villages th a t have n ot exceeding
te n thousand inhabitants. $50,000; between ten thousand and fifty
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Federal Reserve Bank of St. Louis
thousand, $100,000; over fifty thousand, $200,000. U pon im pairm ent
of th e capital stock th e A uditor m ay require assessm ents of stock
holders or a reduction of th e capital. I f he shall deem th e b ank is being
conducted in an unsafe, fraudulent or illegal m anner, he m ay, for th e
purpose of reorganization, or liquidation through receivership tak e
possession and control of such bank. Such receiver m ay upon order of
C ircuit C ourt borrow m oney and issue evidences of indebtedness
therefor and m ay receive th e paym ent of such loan by pledge of assets
of such bank, for th e purpose or facilitating liquidation, protecting or
preserving th e assets.
Creditors m ay enforce stockholders liability by a bill in equity in
th e n atu re of a creditor’s bill. T here are provisions for consolidation,
change of nam e and voluntary dissolution. All banking associations
heretofore organized by general or special Act, are m ade subject to
all th e provisions of this Act.
A fter Ja n u ary 1, 1921, no natural person or natural persons, firm
or partnership shall transact the business of banking or th e business
of receiving money upon deposit, or shall use th e word “ B ank” or
“ B a n k er" in connection w ith said business; provided, th a t nothing
herein contained shall be construed to prohibit banks incorporated
under th e laws of th is S tate or of the U nited States from appointing
natural persons as agents to receive deposits of savings in an d through
the public schools. Any person violating th e Act is guilty o f a mis
dem eanor and is subject to a fine not exceeding $ 1 ,000 , or im prison
m ent in the penitentiary for one year. A banker is liable to fine and
Imprisonment if he receives a deposit after he knows th e bank has
become insolvent and thereby the depositor suffers loss.
One drawing and delivering a check, draft, or order on a bank w ith
in ten t to defraud, and knowing a t the tim e th a t he had n o t sufficient
funds in or credit w ith th e bank to pay th e check, d raft or order in
full is guilty of a misdem eanor and is subject to a fine of $ 1,0 0 0 or
im prisonm ent for one year, or both. (See Negotiable Instrum ents.)
B ills of L a d in g . T he Uniform Bills of Lading Law is in force in
Illinois.
B lu e S ky L aw w ent into effect Ju n e 10, 1919. governing the
sale of stocks of corporations. Securities are divided into six classes.
C ertain securities can be sold only after a full statem en t in regard
thereto has been filed w ith th e Secretary of S tate and a perm it issued
T he law is stringent. Copies of the law and forms for use thereunder
can be obtained by writing to the office of the Secretary of S tate.
Springfield, 111 T he a c t is entitled “ T he Illinois Securities Law.”
C h a tte l M o rtgages^ N o m ortgage, tru st deed, or o th er convey
ance of personal property having the effect of a m ortgage or lien, is
valid against third persons, unless possession be delivered to, and
rem ain w ith th e grantee; or the instrum ent provides for th e possession
of th e property to rem ain w ith the grantor, and th e instrum ent is
acknowledged and recorded. Such instrum ent shall be acknowledged
before any officer authorized by law to ta k e acknowledgm ents of deeds.
After acknowledgment and w ithin ten days after its execution the
Instrum ent m ust be filed for record w ith the recorder of th e county
in which the m ortgagor resides when the instrum ent is executed,
or, in case of a non-resident of the S tate, then in th e county where
the property is situated. The m ortgage is a valid lien u n til ninety
days after the m aturity offthe entire debt or obligation, not exceeding
three years from the filing of the m ortgage, and m ay be renewed for
one year by affidavit which m ust also be filed for record. A note
secured by chattel m ortgage m ust sta te on its face th a t it is so secured,
otherwise th e m ortgage is void. A m ortgage m ay be released on the
m argin of th e record, or by a release deed. H usband and wife m ust
join in C h attel M ortgages on household furniture. A ch attel m ort
gage m ay be filed w ith th e recorder of deeds, and it is a valid m ortgage
though n ot recorded.
C o m m e rc ia l P a p e r . (See N egotiable Instrum ents.)
C o n s ig n m e n ts . Agreements to sell on consignment are valid.
I f a commission m erchant, or p arty selling on commission, converts
the property consigned, or after dem and fails to account for th e pro
ceeds, he is subject to fine and im prisonm ent, and liable for double
the value of th e property so convertedC o n v e y an ces. (See Deeds.)
C o rp o ra tio n s . Corporations, except for charitable, educational,
penal, and reform atory purposes, m ay be organized only under gen
eral laws. (Const, a rt. XL, 1.) In all elections of directors every
Stockholder has the right to vote, in person or by proxy, for th e num ber
of shares of stock owned by him, or m ay cum ulate his votes. (Const,
a rt. X I, 3.)
C orporations m ay be created under th e act for any lawful purpose,
or except for banking, insurance, th e operation of railroads: and m ay
be organized also for th e purpose of acquiring and m aintaining a uni
form local transportation system comprising several m eans of transpor
tatio n in cities of 500,000 or more.
Corporations under th e a c t have th e following rights, powers, and
privileges: (1 ) succession: (2 ) to sue and be sued in its corporate
nam e; (3) corporate seal; (4) To hold, owp and deal in an d w ith, any
real or personal property or any interest therein, situ ated in or out of
th e S tate, which m ay be appropriate to enable it to accomplish any or
all of its purposes. (5) to sell and convey, m ortgage, pledge, lease as
lessor, and otherwise dispose of all or any p a rt of its property an d assets.
(6 ) to acquire and to own real property, im proved and unimproved,
and to lend money to its employees, tor certain purposes.; (7) to pur
chase or otherwise acquire, hold, own and otherwise use, deal in, and
with, shares or other interests in, or obligations of, other dom estic or
foreign corporations, associations, partnerships or individuals; (8 ) to
m ake contracts and to incur liabilities which m ay be appropriate to
accomplish its purposes; to borrow money w ithout regard to th e usury
law of th e S tate; to issue its notes, bonds and other obligations; and to
secure any of its obligations by m ortgage, pledge, or deed of tru s t of all
or any of its property, franchises and income; (9) to invest its surplus
funds from tim e to tim e and to lend money for its corporate purposes,
and to tak e and hold real and personal property as security for the
paym ent of funds so invested or loaned; (10 ) to conduct its business,
carry on its operations and have offices w ithin and w ithout th is State
and to exercise in any other state, territory, district or possession of
th e U nited States, or in any foreign country th e powers granted by
th is Act.
.
T he defense of u ltra vires is abolished as between th e Corporation
and any person not a stockholder. I f a proceeding shall be brought by
a stockholder against th e corporation to injoin it from continuing an
unauthorized Act or th e transaction or continuation of unauthorized
business. I f th e unauthorized Acts or th e business sought to be
enjoined are being transacted p u rsu an t to any con tract to which the
corporation is a party, th e court m ay, if all of th e parties to th e con
tra c t are parties to th e proceeding, and if it deems th e sam e to be
equitable, se t aside and enjoin the perform ance of such contract, and
in So doing shall allow to th e corporation or th e other parties, as the
case m ay be, com pensation for th e loss or dam age sustained by either
of them which m ay result from th e action of th e co u rt in settin g aside
and enjoining th e perform ance of such contract, b u t anticipated
profits to be derived from th e perform ance of th e contract shall not be
aw arded b y th e court as a loss or dam age sustained; (1 1 ) to elect or
appoint officers and agents of th e corporation, an d to define their
duties and fix their com pensations: (1 2 ) to m ake and alter by-laws, not
inconsistent w ith its Articles of incorporation or w ith th e laws of this
S tate, for th e adm inistration and regulation of th e affairs of the
corporation; (13) in tim e of w ar to tran sact any lawful business in
aid of th e U nited States in th e prosecution of war, to make, donations
to associations and organizations aiding in w ar activities, and to
lend m oney to th e S tate or Federal G overnm ent for w ar purposes;
(14) to cease doing business and to surrender its charter; (15) to have
and exercise all th e powers necessary or convenient to carry into
effect th e purpose for which such corporation is formed.
T he board of directors m ust consist of a t least th ree persons. The
directors exercise th e corporate powers of th e corporation. T hey may
hold m eetings and tran sact business outside of th is S tate. T hey meet
officers, adopt by-laws, and m ay appoint an executive com m ittee. The
BANKING A ND COMMERCIAL LAWS— ILLINOIS
nam e of a corporation m ust indicate th a t it is a corporation. I f th e
nam e of a person or copartnership is used, it m ust be followed by th e
word ‘ corporation,” “ com pany, “incorporated,” “lim ited,” or their
abbreviations. T he Secretary of S tate m ust be k ep t inform ed of any
change of address of such office or place of business.
Each C orporation shall m aintain a registered office which m ay be
b u t need n o t be th e sam e as its place ot business and a registered
agent whose place of business shall be th e sam e as th e registered office.
Such registered agent shall be th e agent to receive service of process.
In default of such appointm ent then th e Secretary of S tate shall be
irrevocably appointed as such agent for such corporation.
N o Certificate of Stock shall be issued for any share un til such share
Is fully paid. E v ery certificate representing shares issued b y a corpora
tion which is authorized to issue shares of more th a n one class, shall
sta te upon th e face or back thereof, th e rights of th e shares of each
class authorized to be issued. All stockholders’ m eetings m ay be held
within or w ithout this State. Directors are elected a t th e regular
annual m eeting of th e stockholders. N o stock can be voted which shall
have been transferred after th e record d ate for closing th e stock tran s
fer books. No proxy is good after eleven m onths unless otherwise pro
vided in th e proxy.
Stockholders are liable to creditors of th e corporation, only to th e
am ount unpaid on th e shares held by them .
Corporation report between January 15 and last day of F ebruary
each year to secretary of sta te .
D ecree in fo re c lo s u re . (See M ortgages.)
F o re ig n C o rp o ra tio n s . E ach foreign corporation organized for
profit (except banking, insurance, building and loan, and surety com
panies), shall before it transacts any business or m aintains an office in
this S tate, procure a certificate of au th o rity therefor from th e Secretary
of S tate. N o foreign corporation shall engage or continue in any kind
of business in th is S tate, th e transaction or which by dom estic corpora
tions is n o t perm itted by th e laws of this S tate. Each licensed foreign
corporation shall keep on file in th e office of th e Secretary of S tate a
copy of its charter an d all am endm ents thereto. Foreign corporations
are required to m aintain a registered office and m aintain registered
agent an d m ake th e sam e reports as a dom estic corporation. N o foreign
Corporation can m aintain an action a t law or in equity u n til a certifi
cate of au th o rity is obtained.
F ees a n d T ax es. To th e Secretary of S tate on filing a certificate
of incorporation one-tw entieth of 1 per cent upon th e am ount of
the entire consideration received for issued shares of capital stock, b u t
in no event less th an $10. A foreign corporation, other th a n an insur
ance com pany or building and loan com pany, upon obtaining a certifi
cate to do business in Illinois pays th e sam e fees upon th e am ount of
its capital stock represented by business transacted and tangible pro
perty in Illinois as sim ilar dom estic corporations pay upon incorpora
tion. A dom estic corporation or a foreign corporation licensed to do
business in Illinois (except insurance companies), and which are re
quired to m ake annual reports, m ust pay to th e Secretary of S tate an
annual license fee or franchise tax am ounting to 1-2 0 of 1 % proportion
of th e am ount received for its issued capital stock represented by busi
ness tran sacted and property located in this S tate, b u t in no event
shall any such license fee or franchise tax be less th an $ 10 for any one
year. T he franchise tax is payable on Ju ly 1 for th e succeeding twelve
months. I f a corporation fails to m ake an annual report w ithin th e
time required, th e Secretary of S tate assesses a franchise ta x on th e
best available inform ation, adding a penalty of 10 per cent on th e
amount of such assessm ent. Corporations are taxed on their tangible
property, real and personal, w ithin th e S tate, and also upon th e fair
cash value of their capital stock, including franchises, over and above
the assessed value of their tangible property. Shares of stock of
domestic corporations, whose tangible property or capital stock Is
taxed, are not subject to taxation in th e hands of owners.
A corporation organized for the purpose of accepting and executing
trusts m ay be appointed assignee or trustee by deed, and executor,
guardian, or tru stee by will, and any court m ay appoint such com
pany receiver, assignee, guardian, conservator, executor, adm inis
trator, or other trustee, provided such appointm ent apply to the
estate only and n o t to th e person. Such corporation is not generally
required to give bond for the perform ance of a trust, b ut it is required
to deposit w ith th e A uditor of Public Accounts $200,000 (in case th e
value of th e personal p ro p erty b y th e annual report exceeds 10 tim es
the deposit of th e bonds th en in th e cities of 100,000 or m ore the
deposit shall be increased to $500,000, and in cities of 100,000 or
less th e deposit shall be increased to $125,000) in bonds of th e U nited
States, or in m unicipal bonds of this S tate, or real estate m ortgages,
and to m ake a statem ent, and file reports w ith th e A uditor annually.
There are special acts also as to th e organization of corporations
not for pecuniary profit, religious corporations,- loan associations
co-operative associations for profit, insurance, etc. C orporations’
foreign or domestic, under certain restrictions m ay do a surety business \
C o u rts. Supreme court (seven Judges); four appellate courts
(interm ediate court of appeals, w ith certain exceptions final up to
$1,500, th ree judges each); circuit courts (in Cook C ounty also
superior court of equal jurisdiction); crim inal courts; county courts
(which also exercise p robate jurisdiction in counties having less th an
70,000); probate courts (except where abolished by s ta tu te where th e
county has less th a n 85,000 population) (and in counties having
over 85,000 unless established by sta tu te where th ey have over
70,000 populatio n ); m unicipal courts (Chicago has a m unicipal court
with a chief justice and thirty-six associate judges and special practice);
and justice courts.
Days of G ra c e are abolished. (See Negotiable Instrum ents.)
Deeds conveying land should be signed, sealed, and acknowledged
hy grantor. Scroll seal isi ufficient. N o subscribing witnesses are
required. S tatu to ry forms of w arranty and quit claim deeds and
mortgages are provided. The words employed are (X) conveys and
warrants, (2) conveys and quit claims, (3) m ortgages and w arrants.
No deed releases th e right of hom estead unless it contains a clause
substantially as follows; “ H ereby releasing and waiving all rights
under and by virtue ot the hom estead exemption laws of the S tate
of Illinois,” In which case the certificate of acknowledgment should
contain th e clause, “ including th e release and waiver of th e right
of hom estead.” To release dower the husband or wife m ust join in
the conveyance, except in the case of a m ortgage for purchase money;
otherwise th e husband and wife m ay convey as unm arried. Deeds
and other instrum ents affecting real estate should be recorded in the
county where th e real estate is situated; until so recorded they are
void as to creditors an d subsequent purchasers w ithout notice. (See
Land Registration.)
Depositions. In chancery cases if the witness resides in the
county, depositions m ay be taken on five days’ notice; otherwise on
ten days’ notice and one day in addition for every fifty miles. At
■aw, on like ten days’ notice, where the witness resides in another
county or is abo u t to depart from th e state. W here the witness
resides out of the county or sta te , the deposition m ay be taken before
a notary public or commissioner on a commission issued on ten days
notice, either on w ritten or oral interrogatories. I f a witness sub
poenaed to give his deposition before a n otary public or other officer
nnaer commission issued by a court of th is S tate, or of any other S tate
country, declines to appear or testify he m ay be cited before the
jpcuit court of th e county where he resides an d be compelled to appear,
testify, and produce docum ents.
an ?escen * a n ^ D is tr ib u tio n . P roperty in this S tate, both real
P®rsona-l. of residents and nonresident proprietors in th is S tate
intestate, or whose estates or any p a rt thereof shall be deemed
.„ n taken as in testate estate, after all ju st debts and claims against
“ ta te are fully paid, shall descend to and be distributed in
manner following, to w it: X. To his or her children and th eir descendphfui H b9»W Parfcs’ th e descendants of th e deceased child or grandtho taking th e share of their deceased parents in equal p arts am ong
*nem. 2 . W hen th ere is no child of th e intestate, nor descendant of
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1981
such child, and no widow or surviving husband, th en to th e parents,
brothers and sisters of th e deceased and their descendants, in equal
p arts am ong them , allowing to each of th e parents, if living, a child’s
p a rt or to th e survivor of them if one be dead, a double portion; and
if there is no parent living, th en to th e brothers and sisters of th e
Intestate, and their descendants. 3a. W hen there is a widow or
surviving husband and also parents, brothers and sisters of th e
deceased and their descendants b u t no child or children, or descend
ants of a child or children of the Intestate, then (after th e paym ent
of all ju st debts) one-half of th e real estate and th e whole of th e
personal estate shall descend to such widow or surviving husband as
an absolute estate forever and th e other half of th e real estate shall
descend to th e parents, brothers and sisters of th e deceased and their
descendants in equal p arts am ong them , allowing to each of th e
parents, if living, a child’s p a rt or to th e survivor of them , if one be
dead a double p o rtio n ; and if there is no parent living, th en to th e
toothers and sisters of th e in testate and their descendants. (See
Dower.) 3b. W hen there is a widow or surviving husband an d no
child or children or descendants of a child or children of th e intestate
and no parents, brothers or sisters of th e deceased and their descend
ants, th en after th e paym ent of all ju st debts, th e entire estate, real and
personal, shall descend to th e surviving widow or husband outright.
4. W hen there is a widow or a surviving husband an d also a child or
children or descendants of such child or children of th e intestate, th e
widow or surviving husband shall receive as his or her absolute personal
estate, one-third of all th e personal estate of the in testate; and he or
she shall also receive as his or her absolute estate, in lieu of dower
therein, one-third of each parcel of real estate of which th e Intestate
died seized and in which such widow or surviving husband shall waive
bis or her right of dower. 5. I f there is no child of th e in testate or
descendant of such child, and no parent, brother or sister, or descend
a n t of such paren t, brother or sister, and no widow or surviving
husband, then such estate shall descend In equal p arts to th e next
of kin to th e intestate in equal degree (com puting by th e rules of Civil
Law), and there shall be no representation am ong collaterals, except
w ith th e descendants of brothers and sisters of th e intestate; and
in no case shall there be any distinction between th e kindred of th e
whole and th e half blood. 6 . I f any in testate leaves a widow or sur
viving husband and no kindred, his or her estate shall descend to such
widow or surviving husband. 7. I f th e in testate leaves no kindred,
and no widow or husband, his or her estate shall escheat to and vest
in th e county in which said real or personal estate, or th e greater
portion thereof, is situated. (See Dower and Curtesy.)
D ow er. A surviving husband has dower (I. e., life Interest In a
third p a rt of all lands whereof deceased was seized of an estate of
Inheritance during marriage) the same as a widow. E quitable estates,
and land contracted for before death, are subject to dower. I f dower
Is waived, surviving husband or wife takes one third of th e real estate
and personal estate absolutely. Dower m ay be barred by jointure
assented to; by devise, unless widow or surviving husband renounces
benefit of devise w ithin one year from d ate of letters of adm inistration;
by divorce as to the p a rty in fault; and by abandonm ent coupled with
adultery. T here is no dower in land as against a purchase-m oney lien
The husband or wife m ay renounce any devise under the will of the
other and take if there be children, one third of the real estate, and
one-third of personal estate, or, if n 0 children, one-half of all real
and personal estate absolutely.
E x e c u tio n s. (See Judgm ents and Executions.)
E x e c u to rs a n d A d m in is tr a to rs . (See Adm inistration.)
E x e m p tio n s . T here is a hom estead exemption to the extent of
$1000. I t m ay be extinguished by conveyance joined in by husband
and wife properly acknowledged. (See Deeds.) T he following
personal property is exem pt; l a The necessary wearing apparel,
Bibles, school books, and fam ily pictures. 2 . One hundred dollars
worth of other property, to be selected by th e debtor, and in addition,
when the debtor is the head of a fam ily and resides w ith the sam e.
$300 worth of o ther property, to be selected by th e debtor. Exem p
tions can not be claim ed out of partnership property. The wages
of an employee being the head of a fam ily and residing w ith th e same
are exem pt from garnishm ent to th e am ount of $20 per week.
F ra u d s , S t a t u t e o f. T he following contracts should be In w riting:
1. A promise of an executor or adm inistrator to answer any deb t or
damages o ut of his own estate. 2. A promise to answer for. the debt,
default, or m iscaTiage of another. 3. An agreem ent m ade in con
sideration of m arriage. 4. An agreem ent n ot to be perform ed within
one year. 6 . Any contract for the sale of lands, or any interest
therein for a longer term th an one year. 8 . Express tru sts relating
to real estate. ■■a contract to sell or a sale of any goods or cnoses
in action of th e value of five hundred dollars or upwards is n o t enforcible by action, unless th e buyer accepts p a rt of th e goods or choses
In action so contracted to be sold or sold, and actually receives the
same, or gives som ething in earnest to bind th e contract, or in p a rt
paym ent, or unless some note or m em orandum in w riting of the
contract or sale be signed by the p arty to be charged or his agent in
th a t behalf. T he act applies to sales for future delivery and to goods
to be obtained or m anufactured by th e seller, b u t n ot to sales of goods
to be m anufactured on special order if they be n ot suitable for sale
to others in the usual course of business.”
G a r n is h m e n t. The funds or property of a debtor In the possession
of a third p arty m ay be garnished in an attachm ent suit, or in a separate
proceeding after judgm ent has been obtained against th e principal
debtor.(See A ttachm ents.) .W ages up to $20.00 a week are exempt
from garnishm ent.
H o lid ay s. T he legal holidays are: Sundays; Ja n u ary X (New Y ear’s
D ay); F ebruary X2 (Lincoln’s birthday); F ebruary 2 2 (W ashington’s
birthday); M ay 30 (M emorial D ay); Ju ly 4 (Independence D ay);
first M onday in Septem ber (Labor D ay); October 12 (Colum bus D ay);
Thanksgiving D ay; T uesdays next after first M ondays in Novem ber in
even years (election days); N ovem ber 1 1 (Armistice D ay); Decem
ber 25 (Christm as D a y ); also every S aturday from 12 o’clock noon
to 1 2 o’clpck m idnight (in cities of 200,000 or more population).
W here holidays fall on Sunday, th e day following.
H u s b a n d a n d W ife. (See M arried Women.)
I n s u r a n c e . Agents are required to have license. W rite director
of T rade and Commerce, Springfield, 111. Insurance companies are
bonded to state.
I n te r e s t. E xtrem e contract rate, 7 per cent, except as to corpora
tions, no lim it as to corporations; legal rate, 5 per cent. In terest is
allowed a t the legal rate on moneys after they become due on any bond,
bill, promissory note, or other instrum ent in w riting; on m oney loaned
or advanced for th e use of another; on money due on th e settlem ent
of an account, from th e date of ascertaining th e balance; on money
received to th e use of another, and retained w ithout th e owner’s
knowledge; and on m oney w ithheld, by an unreasonable and vexa
tious delay of paym ent. Judgm ents or decrees draw interest a t 5 per
cent. P enalty for contracting for more th an 7 per cent is th e loss of
the entire interest, and only th e principal sum can be recovered. A
w ritten contract, wherever payable m ade, in th is S tate between
citizens of this S tate and of a foreign S tate (or secured by a mortgage
on lands in this State) is controlled by th e law of this S tate as to the
rate of interest, and the penalty for usury. U sury m ust be specially
pleaded. In all com putations of tim e, and of interest and discounts,
a m onth is considered to m ean a calendar m onth, and a year twelve
calendar m onths, and a day the th irtie th p a rt of a m onth. A foreign
corporation is subject to th e same penalties for usury as a citizen of
this S tate. Justice of Peace has jurisdictionin all claims under $500.
T he interest ra te does n o t apply to th e loan business where $300 and
less is involved upon which 3% per m onth m ay be charged. This
requires an annual license fee of $200 in counties of 500,000 and $100
in counties less th a n 500.000.
J u d g m e n ts a n d E x e c u tio n s. A judgm ent of a court of record
w ith county jurisdiction is a lien on real estate situ ated in th e county
where th e judgm ent is rendered, for seven years from its date, and
1982
BANKING A ND COMMERCIAL LAWS— ILLINOIS
to become a lien on land registered under Torrens System m ust be
filed w ith registrar of titles. If an execution is n o t issued on a judg
m ent within one year th e judgm ent ceases to be a lien. A transcript
of a judgm ent in another county m ay be filed and thereupon becomes
a lien upon real estate of the defendant in th e county where filed,
and execution m ay issue thereunder. An execution becomes a lien
on personal property from th e tim e it is delivered to the officer to
be executed. All goods and chattels, including and m oney stock
in a corporation, m ay be levied on. Personal property m ay be sold
under execution on ten days’ notice. A forthcom ing bond m ay be
given by th e defendant to th e officer. A th ird p a rty claiming the
p roperty levied on m ay have a tria l as to th e rig h t of property in
th e county ycourt. Judgm ents m ay be confessed by a debtor or his
authorized attorney w ithout process in term tim e or vacation. Land
R egistration Torrens System in use in Cook County. (See M ortgage
Foreclosure.) Lien of judgm ent m ay be revived after expiration of
seven years by scire facias, b u t n ot after tw enty years.
L ie n s. A landlord has a lien for rent upon crops growing on the
demised premises. Hotel, inn, and boarding-house keepers have a
lien upon baggage and other valuables of guests. Stable-keepers have
a lien upon horses, carriages, and harness for the keeping thereof.
Garage keepers are entitled to liens on automobiles, parts and acces
sories, for keeping, repairing, m aterials furnished thereto, and the
expenses bestowed thereon a t the request of the owner, or the person
having th e possession thereof. Agisters and persons keeping, yarding,
and.feeding domestic anim als have a lien therefor. All persons furnish
ing supplies, or doing work for any railroad organized under the laws
of this State, necessary for the construction, m aintenance, operation,
or repair of the road, have a lien therefor on all the property of the
company, which is good as against mortgages and other liens acquired
after th e commencement of the delivery of supplies, or the doing of
th e work. A ttorneys have liens on all dem ands, claims, and causes of
action of their clients, after the service of notice upon the adverse
p arty. C ontractors and sub-contractors, including architects, super
intendents, timekeepers, etc., have liens on any real estate, interest
therein, or im provements thereon, for all kinds of labor and services
performed, and m aterials furnished for the erection of any building,
or the im provem ent of any real estate, or thing connected therewith.
A person furnishing m aterial, apparatus, fixtures, m achinery or labor
to a contractor for a public im provem ent, has a lien upon the money,
bonds or w arrants due or to become due under such contract: Pro
vided, th e claim ant serves upon the m unicipality a notice of his claim
before paym ent be m ade to such contractor; b ut the lien attaches only
to th e portions of the money, bonds, or w arrants against which no
voucher or other evidence of indebtedness has been issued and delivered
to th e contractor.
L im ita tio n s . In personal actions as follows: Libel and slander,
one year; actions for dam ages for injury to persons, two years (where
death results, one year after d e a th ); for false im prisonm ent, malicious
prosecution, for a sta tu to ry penalty, for abduction,- seduction, or
criminal conversation, two years; actions on unw ritten contracts,
express or implied, on awards of arbitration, to recover dam ages for
injury to property real or personal, to recover possession of personal
property, or dam ages for th e detention or conversion thereof, and
all civil actions not otherwise provided for, five years; actions on
bonds, promissory notes, bills of exchange, w ritten leases, w ritten
contracts, or other evidences of indebtedness in writing, ten years;
b u t any paym ent or new promise to pay in writing renews the right of
action on such instrum ent for ten years from the tim e of such paym ent
or promise. A dom estic judgm ent of a court of record, tw enty years;
of a foreign court of record, five years. W hen a cause of action has
arisen in a sta te or territory o ut of this state, or in a foreign country,
and, b y th e laws thereof, an action thereon cannot be m aintained
b y reason of th e lapse of tim e, an action thereon shall n ot be m ain
tained in this state. This applies only where both debtor and
creditor are non-residents of this sta te when th e cause of action
accrues, an d does n ot govern an indem nity contract where th e in
dem nitors were residents of Michigan and th e other parties in Illinois.
I f a person liable to an action fraudulently conceals th e cause of such
action from the knowledge of th e person entitled thereto, the action
m ay be commenced a t any tim e w ithin five years a fter th e person
entitled to bring th e sam e discovers th a t he has such cause of action,
and n o t afterw ards.
L im ite d P a r tn e r s h ip . T here are sta tu to ry provisions as to the
form ation of lim ited partnerships, b u t such partnerships are not
common in Illinois.
M a rrie d W o m en . A m arried woman m ay sue, be sued, or defend,
as if she were unm arried. W hen the husband deserts, the wife may
prosecute or defend in his nam e. The husband has the sam e right
upon th e desertion of the wife. T he husband is not liable for the
wife’s to rts except in cases where he would be jointly responsible
if the m arriage did not exist. The husband or wife is not liable for
th e debts of the other incurred before m arriage, or for the separate
debts of each after m arriage, except th a t the husband and wife are
jointly and severally liable for the expenses of the family and the
education of their children. T he wife m ay contract as if unm arried,
She m ay receive and use her own earnings free from th e interference
of th e husband or his creditors. N either the husband nor the wife can
recover com pensation for any labor performed or services rendered for
th e other. She m ay own in her own right real and personal property
obtained by descent, gift, or purchase, and m anage, sell and convey it
to th e same extent th a t the husband can property belonging to him;
b u t no transfer of personal property between the husband and wife
living together is good as against th ird persons, unless acknowledged
and recorded as chattel mortgages are required to be. A m arried
woman who w ithout her fault lives a p art from her husband m ay m ain
tain an action for reasonable support and m aintenance. The wife
m ay insure her husband’s life. She m ay become surety for th e hus
band. She m ay execute a will, if over eighteen years of age, a t which
age she attain s m ajority.
M o rtg a g e s. Beal estate mortgages should be executed and ac
knowledged the same as deeds. The wife m ust join to bar dower,
except In m ortgages for purchase-money. T rust deeds are often
preferred to mortgages because of th e facility in the transfer of the
security and. in case of non-resident creditors, in obtaining a release,
the trustee generally being a resident. Real estate mortgages m ay
be released upon the record or by release deed. M ortgages and
tru st deeds m ust be foreclosed by scire facias or by regular foreclosure
suit in a court of chancery. In extrem e cases, where the mortgaged
property is clearly of less value th an the debt secured and the m ort
gagor is insolvent, there m ay be a strict foreclosure which cuts off the
right of redem ption, in which case the mortgagee takes the property
in discharge of the debt. In other cases, after decree of foreclosure,
th e officer designated to execute the decree delivers a certificate of
sale to th e purchaser and files a copy thereof for record. The debtor
m ay redeem within twelve m onths. Judgm ent creditor m ay redeem
after twelve m onths, b u t within fifteen m onths; a t the end of which
tim e th e purchaser is entitled to a deed. Corporations m ay waive
right of redem ption by provision in any m ortgage or tru s t deed Waive
right of redem ption. The holder in due course of a note secured by a
m ortgage or tru s t deed on real estate in Illinois stands in no better
position, so far as th e enforcement of his security is concerned, th an
th e payee or original holder; b u t this doctrine does n ot apply to cor
po rate bonds payable to bearer.
N e g o tia b le I n s t r u m e n t s . T he Uniform N egotiable Instrum ents
Act (see com plete text following “ Digest of Banking and Commercial
L aw s”) is in force in Illinois, with the following modifications: 1 .
All Prom issory Notes, Bonds, Due Bills, and other instrum ents in
writing, whereby one promises or agrees, to pay any sum of money
or articles of personal property, or any sum of money in personal
property, or acknowledges any sum of money or article of personal
property to be due, are negotiable. E xcept as to Prom issory Notes
payable in money due diligence m ust be used by the holder against
the m aker, if he be a resident and solvent, by suit a t first term of
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C ourt after m aturity, in order to hold th e endorser. 2 . Accommoda
tion paper m ay be issued after m aturity, if such was th e intention of
the accommodating party. 3. The addition of words of assignment
or guaranty to a blank indorsem ent does n ot aflect th e signature as
an indorsem ent unless otherwise expressly stated. 4. T he defenses of
fraud and circum vention in th e execution of negotiable paper, or th a t
the consideration arose o ut of a gambling transaction prohibited by
sections 130, 131, and 136 of our Crim inal Code, m ay be asserted as
against a holder in due course. 5. The fact th a t a depositor makes
his note payable a t a bank does n o t authorize the bank to pay it out
of his funds on deposit. 6 . An alteration of an instrum ent voids it
only when i t is m aterial or fraudulent, and m ade by th e holder. 7. A
prom ise in w riting to accept a bill m ade either before or after it is
draw n is deemed an actual acceptance as to th e person receiving the
bill on th e faith thereof. 8 . Section 137 of th e Uniform Negotiable
Instrum ents Law, providing th a t th e destruction by th e drawee of a
bill of exchange left w ith him for acceptance, or his refusal to retu rn
th e sam e w ithin tw enty-four hours after delivery to him or w ithin such
fu rth er period as the holder m ight allow, should be deemed an accept
ance of the bill, is om itted from th e Illinois act.
Except as otherwise provided by agreem ent and except as to sub
sequent holders of a negotiable instrum ent payable to bearer or
indorsed specially or in blank, where an item is deposited or received
for collection, th e bank of deposit shall be agent of th e depositor for
its collection and each subsequent collecting bank shall be sub-agent
of th e depositor b u t shall be authorized to follow th e instructions of
its im m ediate forwarding bank and any credit given by any such agent
or sub-agent bank therefor shall be revocable until such tim e as the
proceeds are received in actual money or an unconditional credit given
on th e books of another bank, which such agent has requested or
accepted. W here any such bank allows any revocable credit for an
item to be withdrawn, such agency relation shall nevertheless con
tinue except th e bank shall have all th e rights of an owner thereof
against prior and subsequent parties to th e extent of th e am ount
w ithdrawn.
A credit given by a bank for an item drawn on or payable a t such
bank shall be provisional, subject to revocation a t or before th e end of
th e day on which the item is deposited in th e event th e item is found
not payable for any reason. Whenever a credit is given for an item
deposited after banking hours such right of revocation m ay b e exer
cised during th e following business day.
An indorsem ent of an item by th e payee or other depositor “ for
deposit” shall be deemed a restrictive indorsem ent and indicate th at
th e indorsee bank is an agent for collection an d not owner of th e item
An indorsem ent “ pay any bank or banker” or having equivalent
words shall be deemed a restrictive indorsem ent and shall indicate the
creation of an agency relation in any subsequent bank to whom the
paper is forwarded unless coupled w ith th e words indicating th e crea
tion of a trustee relationship; and such indorsem ent or other restric
tive indorsem ent w hether creating an agency or tru stee relationship
shall constitute a guaranty by th e indorser to all subsequent holders
and to th e drawee or payor o f th e genuineness of and the au th o rity to
m ake prior indorsem ents and also to save th e drawee or payor harm
less in th e event any prior endorsement appearing thereon is defective
or irregular in any respect unless such indorsem ent is coupled with
appropriate words disclaiming such liability as guarantor.
W here a deposited item is payable to bearer or indorsed by the
depositor in blank or by special indorsem ent, th e fact th a t such item
is so payable or indorsed shall not change the relation of agent of the
bank of deposit to the depositor, b u t subsequent holders shall have
th e right to rely on th e presum ption th a t th e bank of deposit is the
owher of th e item . T he indorsem ent of an item by th e bank of deposit
or by any subsequent holder in blank or by special indorsem ent or its
delivery when payable to bearer shall carry the presum ption th a t the
indorsee or transferee is owner provided there is nothing upon the
face of th e paper or in any prior indorsem ent to indicate an agency
or tru stee relation of any prior party. B ut where an item is deposited
or is received for collection indorsed specially or in blank, th e bank
m ay convert such an indorsem ent into a restrictive indorsem ent by
writing over th e signature of th e indorser th e words “ for d ep o sit” or
“ for collection,” or other restrictive words to negative th e presumption
th a t such bank of deposit or indorsee bank is ow ner; and in th e case of
an item deposited or received for collection payable to bearer, may
negative such presum ption by indorsing thereon th e words “received
for deposit ” or “received for collection” or words of like im port.
I t shall be th e d u ty of th e initial or any subsequent agent collecting
bank to exercise ordinary care in th e collection of an item and when
such d u ty is performed such agent bank shall not be responsible if for
any cause paym ent is not received in money or an unconditional credit
given on th e books of another bank, which such agent bank has
requested or accepted. An initial or subsequent agent collecting bank
shall be liable for its own lack of exercise of ordinary care b u t shall
not be liable for th e neglect, m isconduct, m istakes or defaults of any
other agent bank or of th e drawee or payor bank.
W here an item is received on deposit or by a subsequent agent
bank for collection, payable in another town or city, it shall be deemed
th e exercise of ordinary care to forward such item by mail, n ot later
th a n th e business day next following its receipt either (l) direct to
th e drawee or payor in th e event such drawee or payor is a bank or .
(2 ) to another bank collecting agent according to th e usual banking
custom , either located in the town or city where th e item is payable
or in another town or city.
W here an item is received on deposit or by a subsequent agent
bank for collection, payable by or a t another bank in th e same town
or city in which such agent bank is located, it shall be deem ed the
exercise of ordinary care to present th e item for paym ent a t any
tim e not later th an th e next business day following th e day on which
the item is received either (l) a t the counter of th e drawee or payor
by agent or messenger or (2 ) through th e local clearing house under the
regular established procedure, or according to th e usual banking cus
tom where th e collecting or payor bank is located in an outlying district.
T he designation of th e above m ethods shall not exclude an y other
m ethod of forwarding or presentm ent which under existing rules of
law would constitute ordinary care.
W here th e item is received by m ail by a solvent drawee or payor
bank, it shall be deemed paid when th e am ount is finally charged to
th e account of th e m aker or drawer.
W here an agent bank forwards an item for collection, it shall not
be responsible for its loss or destruction in tra n sit or. when in the
possession of others, for its inability to repossess itself thereof, pro
vided there has been no lack of ordinary care on its part.
W here ordinary care is exercised, any agent collecting bank may
receive in paym ent of an item w ithout becoming responsible as debtor
therefor, w hether presented by m ail, through th e clearing house or over
th e counter of the drawee or payor, in lieu of money, either (a) the
check or d raft of th e drawee or payor upon another bank or (b) the
check or d raft of any other bank upon any bank other th an th e drawee
or payor of th e item or (c) such m ethod of settlem ent as m ay be cus
tom ary in a local clearing house or between clearing banks or other
wise: Provided th a t whenever such agent collecting bank shall request
or accept in paym ent an unconditional credit which has been given to
it on th e books of th e drawee or payor or on th e books of any other
bank, such agent collecting bank shall become debtor for such item
and shall be responsible therefor as if th e proceeds were actually
received by it in money.
W here ordinary care is exercised, any agent collecting bank may
receive from any subsequent bank in th e chain of collection in remit
tance for an item which has been paid, in lieu of money, th e check or
d raft of th e rem itting bank upon any bank other th an itself or the
drawee or payor of th e item or such other m ethod of settlem ent as
m ay be custom ary; provided th a t whenever such agent collecting
bank shall request or accept an unconditional credit which has been
given to it on th e books of th e rem itting bank or on th e books of any
other bank, such agent collecting bank shall become debtor for sucn
item and shall be responsible therefor as if th e proceeds were actually
received by it in money.
BANKING AND COMMERCIAL LAWS— INDIANA
W here an item is duly presented by m ail to th é drawee or payor,
w hether or not th e sam e has been charged to th e account of th e m aker
or drawer thereof or returned to such m aker or drawer, th e agent
collecting bank so presenting m ay, a t its election, exercised with
reasonable diligence, tre a t such item s as dishonored by non-paym ent
and recourse m ay be had upon prior parties thereto in an y of the
following cases:
(1) W here th e check or d raft of th e drawee or payor bank upon
another bank received in paym ent therefor shall n ot be paid in due
course;
(2 ) W here th e drawee or payor bank shall w ithout request or
au th o rity tender as paym ent its own check or d raft upon itself or
other instrum ent upon which it is prim arily liable;
(3) W here th e drawee or payor bank shall give an unrequested or
unauthorized credit therefor on its books or th e books of another
bank; or
(4) Where th e drawee or payor shall retain such item w ithout
rem itting therefor on th e day of receipt or on th e day of m atu rity if
payable otherwise th an on dem and and received by it prior to or on
such day of m atu rity .
Provided, however, th a t In any case where th e drawee or payor
bank shall retu rn any such item unpaid not later th an th e day of
receipt or of m atu rity as aforesaid in th e exercise of its right to m ake
paym ent only a t its own counter, such item cannot be treated as
dishonored by non-paym ent and th e delay caused thereby shall not
relieve prior parties from liability.
Provided fu rth er th a t no agent collecting bank shall be liable to
th e owner of an item where, in th e exercise of ordinary care in th e
interest of such owner, it m akes or does not m ake th e election above
provided or takes such steps as it m ay deem necessary in cases (2 ).
(3) and (4) above.
In case of th e dishonor of an item duly presented by m ail as pro
vided for in th e next preceding section, notice of dishonor of such
item to prior parties shall be sufficient if given w ith reasonable dili
gence after such dishonor; and fu rth er in th e event of failure to obtain
th e retu rn of any such item notice of dishonor m ay be given upon a
copy or w ritten particulars thereof, and delay in giving notice of dis
honor caused by an attem p t with reasonable diligence to obtain return
of such item shall be excused.
1. W hen th e drawee or payor, or any other agent collecting bank
shall fail or be closed for business by th e Auditor of Public Accounts
in th e case of banks incorporated under th e laws of this S tate, or the
Com ptroller of th e Currency in th e case of banks incorporated under 1
th e Federal laws, or by action of th e board of directors or by other
proper legal action, after an item shall be mailed or otherwise entrusted
to it for collection or paym ent b u t before th e actual collection or pay
m ent thereof, it shall be th e d u ty of th e receiver or other official in
charge of its assets to return such item , if sam e is in his possession, to
the forwarding or presenting bank w ith reasonable diligence.
2. E xcept in cases where an item or item s is treated as dishonored
by non-paym ent as provided in section 1 1 % when a drawee or payor
bank has presented to it for paym ent an item or item s draw n upon
or payable by or a t such bank and a t th e tim e has on deposit to the
credit of th e m aker or drawer an am ount equal to such item or item s
and çuch drawee or payor shall fail or close for business as above,
after having charged such item or item s to th e account of th e m aker
or drawer thereof or otherwise discharged his liability thereon b u t
without such item or item s having been paid or settled for by th e
drawee or payor either in money or by an unconditional credit given
on its books or on th e books of any other bank, which has been requested
or accepted so as to co nstitute such drawee or payor or other bank
debtor therefor, th e assets of such drawee or payor shall be impressed
with a tru st in favor of th e owner or owners of such item or item s for
the am ount thereof, or for th e balance payable upon a num ber of item s
which have been exchanged, and such owner or owners shall be
entitled to a preferred claim upon such assets, irrespective of whether
the fund representing such item or item s can be traced and identified
as p a rt of such assets or has been interm ingled w ith or converted
into other assets of such failed bank.
•
3. W here an agent collecting bank other th an th e drawee or payor
shall fail or be closed for business as above, after having received in
any form th e proceeds of an item or item s entrusted to I t for collec
tion, b u t w ithout such item or item s having been paid or rem itted for
by it either in money or by an unconditional credit given on its books
or on th e books of an y other bank which has been requested or accepted
so as to co nstitute such failed collecting or other bank debtor therefor,
the assets of such agent collecting bank which has failed or been
closed for business as above shall be impressed with a tru st in favor
of the owner or owners of such item or item s for the am ount of such
proceeds and such owner or owners shall be entitled to a preferred
claim upon such assets, irrespective of w hether the fund representing
such item or item s can be traced and identified as p art of such assets
or has been interm ingled w ith or converted into other assets of such
failed bank.
In any case n ot provided for in this Act th e rules of law and equity,
including th e law m erchant and those rules of law and equity relat
ing to tru sts, agency, negotiable instrum ents and banking, shall
continue to apply.
P a r tn e rs h ip . T he Uniform Partnership Act and the Uniform
Limited P artnership Act are in force in Illinois.
P ro b a te L aw . (See Adm inistration of E states.)
R e c o rd in g A cts. In counties having a population of less than
60,000, th e clerk of th e circuit court is ex officio the recorder. In
other counties a “ recorder of d eed s” is elected. As to w hat instru
ments m ust be recorded, see respective titles.
R e p le v in . T he action lies for personal property wrongfully de
tained. T he action m ay be brought in any county where the property
is, or where any of th e defendants reside or m ay be found, th e venue
provisions applicable to other civil cases shall apply to actions in
replevin; and in addition an action in replevin m ay be brought in
any county in which th e goods or chattels or any p a rt of them are.
Before th e execution of th e writ, th e plaintiff, or some one in his behalf,
must give th e officer a bond w ith sufficient security (a real estate
owner of th e county is generally required) in double the value of the
property defendant m ay execute bond for double value of property
conditioned on defense of suit and retain possession of property.
S ales. T he Uniform Sales A ct has been adopted in Illinois. Sales
or securities are by consent of Illinois Securities Commission and are
classified. (See Blue Sky Law.)
Sales In B u lk . Sales of th e m ajor p a rt or all of a stock in trade,
chattels or fixtures n o t in th e ordinary course of business, are fraudu
lent and void as to creditors unless th e buyer obtains from the seller
an affiaavit giving a list of his creditors w ith addresses and am ounts
aue each, and th e buyer, five days before paym ent, gives notice to
each creditor personally or by mail of the contem plated purchase.
, T r u s t E s ta te s . Subject to rules of Chancery disbursem ents to
be approved by court.
• T ii18* R eceipts.
in Illinois.
The uniform trust receipts act has been adopted
W areh o u se R e c e ip ts. T he U niform W arehouse Receipts Law
Is in force in Illinois.
W ills. E very male over tw enty-one, and female over eighteen,
is com petent to m ake a will. I t m ust be signed by the testa to r or
oy some person in his presence and by his direction, and attested in
S r P,je8ence a t his request by a t least two witnesses. T he witnesses
k . u k® disinterested. A devise to a witness is void unless th e will
ceotherw ise duly atteste d by two witnesses exclusive of such person,
where the subscribing witnesses are dead, secondary evidence of the
55
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1983
execution is admissible. T he will is proved, after notice to heirs and
legatees, in the county (or probate) court, and m ay be contested, in
chancery, within one year after its probate. Wills or authenticated
copies, affecting estate within this State, duly proved outside of this
State, in accordance with the law of the S tate where executed, accom
panied w ith a certificate of the proper officer of th a t fact, m ay be
recorded here. Wills executed and published out of this S tate m ay
be adm itted to probate in any county in this State where th e testato r
had lands or personal property upon like proof as if executed and pub
lished here, w hether or not the will has been first probated in another
state or county. T he Uniform Foreign P robate Act is in force in
Illinois. All originals wills; after being filed, m ust rem ain in th e office
of the county (or probate) court. Children m ay be disinherited.
S Y N O P S IS O F
T H E L A W S O F IN D IA N A
RELA TING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by L u t h e r M . S w y g e r t ,
6330 Hohm an Ave., Ham m ond, Ind.
A c k n o w le d g m e n ts. All conveyances of real estate, except leases
for less than three years, m ust be in writing, and acknowledged and
recorded a t once, or they will not bind third Darties. W ithin the
S tate acknowledgm ents m ay be taken before a judge or clerk o f the
court of record, justice of the peace, auditor, recorder, n otary public,
member of the general assembly, or m ayor of a city, and in other
states and territories before the like officers, or a commissioner of
deeds for Indiana. In any foreign country, before a diplom atic or
consular officer of the U nited States. If such acknowledgm ent or
proof is in some other th an the English language, or is not attested
by such official seal, it m ust be accompanied by the certificate of an
officer of the United States, to the effect th a t it is duly executed accord
ing to the laws of such foreign country, and th a t th e officer has legal
authority to certify to the proof or acknowledgm ent and the m eaning
of his certificate, if m ade in a foreign language. Wife m ust join in
deeds and m ortgages of husband’s lands in order to carry her in
choate one-third interest In husband’s lands. N o separate acknowl
edgm ent of wife necessary in order to convey her inchoate interest
in husband's lands, although she m ust acknowledge. The certifying
officer should sta te the d ate when his commission expires.
A c tio n s. T he distinction between actions a t law and suits In
equity, and th e forms of each, are abolished. T here is b u t one form
of action for th e enforcem ent of private rights and redress of p rivate
wrongs, denom inated by th e Code a civil action. E very action m ust
be prosecuted in th e nam e of th e real p a rty in interest, except in suits
by an executor, adm inistrator, guardian of an idiot or lunatic, trustee
of an express tru st, or person expressly authorized by sta tu te, who
needs n ot join w ith them th e person for whom th e action is prosecuted.
All parties in interest m ust be joined as plaintiffs or defendants;
and when a com plete determ ination of th e controversy can not be
had w ithout th e presence of other parties, who have not been m ade
plaintiffs or defendants, th e court m ust cause them to be joined.
C o m m e n c e m e n t.
A civil action is commenced by filing in th e
office of th e clerk a com plaint and causing sum m ons to issue thereon;
and th e action is deemed commenced from th e tim e of issuing th e
summons, or, if publication be m ade, from th e tim e of th e first pub
lication.
J o i n d e r o f C a u s e s . T he plaintiff m ay unite several causes of
action in th e sam e com plaint, b ut th ey m ust fall within th e term of
th e sta tu te, and causes of actions so joined m ust affect all th e parties
to the action, m ust not require different places of trial and m ust be
separately sta te d and num bered.
S e v e r a n c e . W here causes of action are im properly joined th e
court is required by s ta tu te to cause as m any separate actions to be
docketed as there are causes im properly joined.
C o n s o lid a tio n .
T he courts have inherent power to consolidate
causes before them in th e absence of sta tu te , when necessary to th e
ends of justice and to avoid a m ultiplicity of suits.
J o i n t D e b to r s .
In an action against defendants jointly indebted
on contract, plaintiff m ay proceed against such defendant or de
fendants a s 'a r e served. A judgm ent m ay be enforced against joint
property of all and th e separate property of those served. W here
judgm ent is recovered against one or m ore persons jointly liable on
contract, b u t judgm ent is rendered against only p a rt of th e persona
jointly liable for th e reason th a t others were not sum m oned or did
not appear, plaintiff m ay proceed against those not sum m oned and
not appearing, in th e sam e m anner as if they were alone liable, b u t
the com plaint m ust allege th e facts aforesaid.
S u r v iv a l. All causes of action survival d eath of person entitled' or
liable to such action except action for personal injuries and for promises
to m arry.
A d m in is tr a tio n of E s ta te s . Except where special sta tu te s
provide otherwise w ith respect to a p articular county the C ircuit
C ourt has exclusive probate jurisdiction. In cases of intestacy letters
are granted in following order; 1 . Widow or widower. 2. N ext of kin.
3. Largest resident creditor. L etters of adm inistration shall be
granted in th e county: 1 . W here intestate was in h ab itan t a t tim e of
death. 2. W here, not, being in h ab itan t of th e S tate he leaves assets.
W here an intestate, not being an inhabitant, shall die o ut of th e S tate,
leaving assets in several counties, letters m ay be granted in an y one
of the counties in which such assets m ay be a t tim e of death, and
th e adm inistration first lawfully granted shall extend to all of th e
estate. Preference is given to foreign executor of a decedent not
an in h ab itan t of State, if, before letters are granted in th is S tate
it appears th a t proper letters have been granted in another state,
except there be resident creditors, legatees and heirs entitled to dis
tribution, who are inhabitants of th e State. N o action shall be
brought against an estate for any claim against th e decedent; b u t
the holder thereof, w hether the claim be due or not, shall file a suc
cinct and definite statem ent thereof in th e office of th e clerk of the
court, setting forth all credits to which th e estate is entitled, and
accompanied by th e affidavits of th e claim ant, his agent, or attorney,
th a t the claim is ju st and wholly unpaid. I f claim be secured b y a
lien, the lien shall be particularly set forth. T he claim m ust be filed
w ithin six m onths from th e notice of th e adm inistrator’s appointm ent,
or claim ant m ust pay costs; and if n ot filed a t least th irty days
before the final settlem ent of the estate, it shall be barred, except
th a t heirs, devisees and distributees shall be liable to the extent of
the property received by them , to any unpaid creditor who six m onths
prior to the final settlem ent was insane, an infant, or o ut of th e
S tate,—suit to be brought within one year of rem oval of disability,
and if upon claim of non-resident creditor, w ithin tw o years of the
settlem ent of the estate.
A ffidavits m ay be taken before any officer qualified to take acknowl
edgm ents (see above). D ate of expiration of officer’s commission
m ust be certified by th e officer himself.
A llens. Resident aliens who have declared their intention to
become citizens, m ay acquire, hold, and enjoy real estate, and m ay
convey, devise, m ortgage, or otherwise encum ber th e same, in like
m anner and with the sam e effect as citizens of this S tate. Aliens,
whether resident or not, m ay own real estate not exceeding 320 acres
lands in excess of th a t am ount they m ust convey w ithin five years or
suffer escheat as to such excess.
1984
BANKING AND COMMERCIAL LAWS—INDIANA
A s sig n m e n ts a n d In so lv e n c y . Any debtor m ay m ake a general
assignm ent of all property In tru st for benefit of all bona fide creditors
This tru st is adm inistered under th e direction of the county court.
D ividends are allowed on all claims allowed by th e trustee or court.
D ebtor is n o t discharged from his liabilities.
A tta c h m e n t m ay issue against th e property of a non-resident or
foreign corporation, and against any who m ay have disposed of, or be
about to dispose of, property, to cheat, hinder or delay creditors, or
against a debtor who conceals him self so th a t sum m ons can n o t be
served upon him or where th e debtor is secretly leaving th e state.
An affidavit is required, and a bond to p ay dam ages if th e proceed
ings be wrongful or oppressive. Creditors who file under th e original
attach m en t, before final judgm ent, are required to furnish a like
affidavit an d bond, and all share pro ra ta in th e proceeds of th e
attach ed property. T he wages of a resident householder, n ot exceed
ing one m onth a t any one tim e, are exem pt so long as debtor rem ains
in such em ploym ent. I t is a m isdem eanor to send claims o ut of
th e S tate to be collected by attachm ent, or garnishm ent, when creditor,
debtor, and person owing for earnings intended to be reached are ali
w ithin th e jurisdiction of th e court of th is S tate. T he collection of
claims so sen t m ay be enjoined.
B a n k C ollection. C ode. Given directly following laws. Adopted
Ju ly 1, 1929, Acts 1929 Ch. 164.
' B a n k s a n d B a n k in g . All financial institutions are controlled by
th e “ Ind ian a Financial Institutions A ct.” (1933, c. 40, as am ended
by Acts 1935, C. 5.) T he D epartm ent of Financial Institutions
has all powers form erly possessed by th e banking departm ent and
is vested w ith control over organization, supervision, regulation,
exam ination and liquidation of all financial institutions, which term
includes every bank, tru s t com pany, building and loan association,
credit union, ru ral loan and savings association, guaranty loan and
savings association, m ortgage guarantee com pany and credit union.
N o bank, tru s t com pany, building and loan association, savings
bank or credit union m ay be organized unless, after investigation and
public hearing, th e D epartm ent approves its articles and th e establish
m ent of such institution in th e city or town where it is proposed to be
established.
Any existing private bank, bank of discount and deposit, tru s t com
pany, loan and tru s t and safe deposit company, building and loan asso
ciation or ru ral or guaranty loan and savings institution m ay reorganize
under th e Financial Institutions Act, with approval of tw o-thirds of
th e outstanding shares and of th e D epartm ent.
O r g a n iz a tio n . Ten or more persons, a m ajority of whom are citi
zens of Indiana, m ay organize a bank or tru s t com pany. Articles of
incorporation m ust set forth nam e, purpose, period of existence, ad
dresses of principal officers, am ount of capital stock, par value of shares,
paid-in capital w ith which business will begin, and nam es and addresses
of directors an d incorporators. N am e m ust include words to indicate
power as b ank or tru s t com pany, and m ay not include words indicating
powers n o t possessed. Articles m ust be approved by D epartm ent and
filed w ith Secretary of State.
Bank or tru s t com pany may- n ot begin business u n til: (a) Articles
approved by Secretary of S tate have been filed in recorder’s office of
th e county of location; (b) am ount of capital stock prescribed has been
aid in ; and (c) affidavit of m ajority of directors, stating th a t capital
as been paid in. is filed w ith recorder.
M i n i m u m C a p i t a l R e q u ir e m e n ts of bank or tru st com pany are:
$25,000 in cities o r tow ns of less th an 3,000 inhabitants; $50,000 in
cities of 3,000 or more and less th an 6,000 inhabitants; $100,000 in
cities of 6,000 or more and less th an 75,000 inhabitants; $200,000 in
cities of 75.000 or more inhabitants.
' A m e n d m e n t o f A r t ic l e s . Articles of incorporation of bank or
tru s t com pany m ay be am ended from tim e to tim e and capital stock
increased or decreased.
R e s e r v e . B ank or tru s t com pany m ust m aintain reserve balance
equal to 12 ¡ 4 % of dem and deposits and 3% of tim e deposits.
S to c k . Shares of a bank or tru s t com pany m ust be of $100 p ar
value and m ay have only such preem ptive rights as are stated in the
articles. Bank or tru s t com pany m ay n ot purchase its own stock,
except when sam e is taken on a previous debt, in which case it m ust be
resold.
G e n e r a l P o w e r s . E very bank or tr u s t com pany has power to:
Act as fiscal or transfer agent; discount and sell negotiable or nonnegotiable instrum ents; purchase and sell securities w ithout recourse; pur
chase, hold and convey real estate; act as commissioner, guardian,
trustee, receiver, executor or adm inistrator; accept property m anage
m ent; receive deposits for safekeeping and in escrow; become a m ember
of Federal Reserve System and Federal Deposit Insurance C orporation
to m ake loans under th e provisions of th e N ational Housing Act.
L o a n s a n d D i s c o u n t s . T he obligation of any person to any bank
m ay n o t exceed 10% of th e sound capital except as follows: No
lim itation is placed on d rafts or bills of exchange draw n in good
faith against actually existing values, obligations arising o ut of
discounts on paper actually owned by person negotiating, obliga
tions draw n against existing values and secured by goods in process
of shipm ent, or ta x anticipation w arrants or loans to N ational or
Indiana S tate Banks. A 15% lim itation applies to obligations
as indorser of notes other th a n commercial paper of n ot m ore th an
six m onths owned by person indorsing, obligations of any person
in form of notes or d rafts secured by shipping docum ents or ware
house receipts covering readily m arketable non-perishable staples
or live stock when m arket of such staples or live stock is n ot less th an
115% of such obligation or obligations secured by bonds or notes of
U nited States, obligations seem ed by loans under provisions of Agri
cu ltu ral A djustm ent A ct of 1938 if Com m odity C redit C orporation
is under obligation to redeem same. Obligations in form of bankers’
acceptances, having n o t more th a n six m onths sight to ran , if th e
accepting b ank is secured by some adequate security are subject to a
90% lim itation. The to ta l loans to all directors or companies in which
directors are interested m ay n ot exceed 15% of unim paired capital and
surplus and violation of th e sam e is a felony.
Loans on real estate are lim ited to th a t w ithin fifty miles of th e
bank, and m u st be secured by a first lien except for taxes and special
assessments; th e am ount of th e loan shall n o t exceed 60% of th e ap
praised value and th e term of th e loan shall n o t extend beyond 16 %
years. I f loan is in excess of 50% of appraised value or for m ore th a n
5 years a sem i-annual reduction of n ot less th a n 3% of th e principal
m u st be required by contract. T he aggregate of such loans together
With loans on which th eib an k is liable as guarantor shall n o t exceed
35 per cent of its deposits^ortin'excess of its to ta l sound capital, which
ever is greater.
T r u s t D e p a r t m e n t . E very bank or tru st com pany exercising fidu
ciary powers m ust m aintain a tru s t departm ent, keeping separate
books of account and m aintaining all tru s t securities segregated from
other property of th e bank. All tru s t m oney not directed to be spe
cifically invested m ay be invested in: (a) Obligations of th e United
S tates; (b) obligations of m unicipalities or taxing districts of Indiana;
(c) bonds, notes or m ortgages w ith m aturities of five years or less
seem ed by first liens on fee sim ple of real estate in Indiana w orth not
less th a n twice th e to ta l obligation secured; (d) bonds issued by
a u th o rity of Federal F arm Loan Act or Federal Hom e Loan B ank Act,
or Hom e Owners Loan Act or obligations of N ational Housing Act.
No profit, other th a n interest a t legal ra te on a loan, m ay be received
by any b ank or tr u s t com pany directly or indirectly out of th e sale
or purchase to or from any estate. All money not invested in accord
ance w ith th e A ct is a t th e risk of th e bank or tru s t com pany except
tru s t funds. M oney aw aiting investm ent or distribution m ay be k ep t
on deposit provided sufficient book entries show tru e ownership of such
m oney in both bank and tru s t departm ents, b u t no m oney in excess of
$1,000 m ay be held uninvested for longer th a n six m onths unless the
tru s t provides otherwise. On liquidation of an y bank or tru s t com
pany, all persons beneficially entitled to receive property or proceeds
held b y it in tru s t have preference and priority in all th e assets over
general creditors for all uninvested funds, to th e extent th a t such m oney
is commingled w ith general assets ahd is n o t duly accounted for.
E
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
E x a m in a ti o n s a n d R e p o r t s . All financial institutions are subject
to exam ination w ithout notice and th e D epartm ent m ay require sub
mission and publication of as m any statem ents of condition as are
deemed necessary in any year.
C o n s o lid a tio n o r D i s p o s i t i o n o f A s s e t s . Two or more banks or
tru st companies m ay consolidate if consolidation is approved by a
m ajority of th e outstanding shares and by th e D epartm ent. Any
bank or tru s t com pany m ay sell, lease, exchange or otherwise dispose
of all its assets if such disposal is approved by tw o-thirds of th e out
standing shares and by th e D epartm ent. In either event dissenting
stockholders are entitled to receive th e value of their shares.
V o l u n t a r y D i s s o lu t io n of a b ank or tru s t com pany m ust have
approval of a m ajority of th e directors and of the D epartm ent. In
such case, th e directors, w ith approval of the D epartm ent, appoint a
liquidating agent, who winds up th e affairs of th e corporation under
supervision of the D epartm ent.
I n s o lv e n c y o r S u s p e n s i o n . I f any financial institution is insol
vent, or in im m inent danger of insolvency, or fails or suspends opera
tion, th e officers of such institution m ust notify th e D epartm ent. T he
D epartm ent m ay take charge of th e business of any financial institu tio n ,
except a sm all loan com pany, when such institution : (a) H as violated
its articles, law of S tate or regulation of D epartm ent; (b) is conduct
ing its business in unauthorized or unsafe m anner; (c) is in unsound
or unsafe condition ; (d) cannot w ith safety continue business; (e) has
an im pairm ent of capital; (f) has suspended paym ent of obligations;
(g) has failed for th irty days to com ply w ith order of D epartm ent
essential to preserve solvency; (h) has refused to subm it its records
to D epartm ent: (i) has refused to be examined under oath regarding
its affairs; or (j) is Insolvent or in Im m inent danger of insolvency.
W hen possession of th e D epartm ent has once attach ed for an y of
th e foregoing reasons it does n ot term inate u ntil liquidation unless: (a)
T he D epartm ent approves resum ption of business on conditions ap
proved by it or w ith restricted deposits after consent by 75% of th e
unsecured creditors and depositors or tw o-thirds of stockholders; or
(b) such institution, b y proceedings in stitu ted w ithin five days after
th e D epartm ent takes possession, enjoins such possession; or (c) th e
institution has undertaken voluntary liquidation.
W hen th e D epartm ent takes charge of any such in stitu tio n it m ust
liquidate and distribute th e assets of such institution. T he circuit,
superior or probate court of the county to which th e D epartm ent m ust
m ake application has certain powers with reference to liquidation, al
lowance of claim s and priorities, etc. T he D epartm ent is vested w ith
power to affirm or disaffirm leases an d to enforce th e shareholders’
liability. After liquidation proceedings are com plete, th e D epartm ent
m ust file articles of dissolution of th e institution.
I n s t i t u t i o n s O th e r T h a n B a n k s o r T r u s t C o m p a n i e s . The Financial
Institutions Act contains detailed provisions w ith respect to th e form a
tion, m anagem ent, etc., of various financial institutions other th an
banks and tru s t com panies, such as building and loan associations,
credit unions, etc.
F o r e ig n C o r p o r a tio n s .
A bank, tr u s t com pany, or building and
loan association organized under the laws of any other state, before
transacting business in this state, m ust procure a certificate of adm is
sion from th e D epartm ent and th e Secretary of S tate. Before such
certificate of adm ission is granted, such corporation m u st deposit
$100,000 in money or bonds of th e U nited S tates or of an y s ta te of th e
U nited S tates or of any m unicipal corporation of Ind ian a to th e satis
faction of th e D epartm ent, w ith th e D epartm ent, or in lieu theredf, file
a w ritten contract or bond executed by a responsible su rety com pany to
th e approval of th e D epartm ent, by th e term s of which such su rety
com pany agrees th a t on notice by registered m ail from th e D epart
m ent, it will pay indebtedness to citizens of Indiana u p to $100,000.
Such foreign corporation m ust also file w ith th e D epartm ent a w ritten
instrum ent agreeing th a t sum m ons m ay issue against i t from an y
county in th e sta te by service on th e D irector of th e D ep artm en t.
N o foreign corporation m ay be adm itted for the purpose of. tra n s
acting any kind of business in this sta te which a dom estic corporation
is not perm itted by th e laws of th e sta te to transact, nor m ay an y such
corporation hold any real estate in this state, except such as m ay be
necessary for th e proper carrying on of its legitim ate business.
N o foreign corporation adm itted to do business in th is sta te may
have a nam e which a dom estic corporation w ith like powers could n o t
have.
T he application subm itted to th e D epartm ent and th e Secretary of
S tate m ust contain a copy of th e articles of incorporation, and m u st
sta te the nam e, principal place of business, sta te s in which it is ad
m itted or qualified to do business, character of business, authorized
capital stock and am ount thereof outstanding, am ount of tangible
p roperty and estim ated to ta l of tangible property to be employed d ur
ing current fiscal year an d succeeding year, nam es of directors and
officers and resident agent of corporation. T he application m u st be
approved or disapproved by th e D epartm ent in like m anner as in th e
case of dom estic banks and tru s t companies. In case o f approval, th e
application is filed by th e Secretary of S tate and a certificate of adm is
sion issued. W ithin te n days after admission of th e corporation,
th ere m ust be filed w ith county recorder of county wherein principal
office is to be located, a duplicate certificate of admission.
I f any foreign corporation transacts business in this state, after it
has received, b u t before it has recorded its certificate of admission, the
officers and directors participating therein are severally liable for the
debts of th e corporation arising o ut of such business. T he D epart
m ent has power a t any tim e to interrogate th e corporation in m atters
pertaining to its business.
Application for w ithdraw al from th e sta te by any corporation m ust
be filed w ith and approved b y th e D epartm ent.
T he certificate of adm ission or any foreign corporation m ay be
revoked a t any tim e by th e D epartm ent or by the Secretary of State
w ith approval of th e D epartm ent: (a) On failure of officer or director
to answer interrogatories of D epartm ent; (b) on failure to file reports;
(c) - on failure to m aintain a resident agent; (d) on failure to keep
authenticated copies of instrum ents am ending charter of corporation
on file w ith Secretary of S tate; (e) on failure to file certificate of ad
mission or am endm ents thereof w ith county recorder; (f) if corpora
tion has n ot transacted business in sta te for a year and has no tangible
property in th e sta te ; (g) on failure to pay fees required: (h) for
w illful m isrepresentation of m aterial m atters in application, affidavits,
or other papers.
Foreign corporations entitled to tran sact business in th e sta te when
th e F inancial In stitutions Act became effective are subject to th e limi
tations of th e act.
C orporation failing to m aintain an agent for service of process m ay
be served by issuing sum m ons to the D irector of the D epartm ent.
Foreign corporation transacting business w ithout procuring a certi
ficate of admission m ay n ot m aintain any suit or action in any courtsof th e sta te and such corporation is subject to a penalty n ot exceeding
$10,000 to be recovered in a su it brought by th e A ttorney General.
T axes on bank shares, surplus, undivided profits and deposits andon building and loan associations, see Taxation.
F id u c ia rie s . “ F iduciary” includes a trustee under an y trust,,
expressed, implied, resulting or constructive, executor, adm inistrator,,
guardian, conservator, curator, receiver, tru stee in bankruptcy,
assignee for th e benefit of creditors, partner, agent, officer of a cor
poration, public or private, public officer, or any other person actingin a fiduciary capacity for any person, tru s t or estate.
“ P erson” includes a corporation, partnership, or other association,
or tw o or more persons having a joint or common interest.
“ P rincipal” includes any person to whom a fiduciary as such owes
an obligation.
I f a fiduciary in whose nam e are registered any shares of stock,
bonds or other securities of any corporation, public or private, or
com pany or other association, or of any tru st, transfers th e same,
such corporation or com pany or other association, or any of them anagers of th e tru st, or its or their transfer agent, is not bound to*
B A N K IN G A N D C O M M E R C IA L L A W S— IN D IA N A
inquire whether th e fiduciary is com m itting a oreacn of his obligation
as fiduciary in m aking th e transfer, or to see to th e perform ance of
the fiduciary obligation, and is liable for registering such transfer
only where registration of th e transfer is m ade w ith actual knowledge
th a t th e fiduciary is com m itting a breach of his obligation as fiduciary
In m aking th e transfer, or w ith knowledge of such facts th a t the
action in registering th e transfer am ounts to bad faith.
I f an y negotiable instrum ent payable or endorsed to a fiduciary a t
such is endorsed by th e fiduciary, or if any negotiable instrum ent
payable or endorsed to his principal is endorsed by a fiduciary em
powered to endorse such instrum ent on behalf of his principal, the
endorsee is n o t bound to inquire w hether the fiduciary is com m itting
a breach or his obligation as fiduciary in endorsing or delivering the
instrum ent, an d is not chargeable w ith notice th a t the fiduciary is
com m itting a breach of his obligation as fiduciary unless he takes the
instrum ent w ith actual knowledge of such breach or w ith knowledge
of such facts th a t his action in taking th e instrum ent am ounts to bad
faith. If, however, such instrum ent is transferred by the fiduciary
in paym ent of or as security for a personal debt of the fiduciary to the
actual knowledge of th e creditor, or is transferred in any transaction
known by th e transferee to be for th e personal benefit of th e fiduciary,
the creditor or other transferee is liable to the principal if th e fiduciary
in fact commits a breach of his obligation as fiduciary in transferring
the instrum ent
If a check or other bill of exchange is drawn by a fiduciary as such,
or
fhe nam e of his principal by a fiduciary empowered to draw
such instrum ent in th e nam e o f the principal, the payee is not bound
to inquire w hether th e fiduciary is com m itting a breach of his obliga
tion in drawing or delivering th e instrum ent, and is not chargeable
with notice th a t th e fiduciary is com m itting a breach of his obligation
unless he takes th e instrum ent w ith actual knowledge of such breach
or with knowledge of such facts th a t his action in taking th e instru
ment am ounts to bad faith. If, however, such instrum ent is payable
to a personal creditor of the fiduciary and delivered to th e creditor
In paym ent of or as security for a personal debt of the fiduciary, to
the actual knowledge of th e creditor, or is drawn and delivered in
kpy transaction known by the payee to be for th e personal benefit of
the fiduciary, th e creditor or other payee is liable to th e principal if
the fiduciary in fact commits a breach of his obligation in drawing or
delivering th e instrum ent
If a check or other bill of exchange Is drawn by a fiduciary as such,
or in th e nam e of his principal by a fiduciary empowered to draw
such Instrum ent in th e nam e of his principal, payable to th e fiduciary
personally, or payable to a third person and by him transferred to
the fiduciary, and is th ereafter transferred by the fiduciary, w hether
In paym ent of a personal debt of the fiduciary or otherwise, the
transferee is n ot bound to Inquire whether th e fiduciary is com m itting
a breach of his obligation in transferring the instrum ent, an d is not
chargeable w ith notice th a t the fiduciary is com m itting a breach of
his obligation, unless he takes th e instrum ent with actual knowledge
of such breach or with knowledge of such facts th a t his action in
taking th e instrum ent am ounts to bad faith.
If a deposit is m ade in a bank to the credit of a fiduciary as such,
the bank is authorized to pay th e am ount of the deposit or any p a rt
thereof upon th e check of the fiduciary, signed w ith th e nam e in which
such deposit is entered, w ithout being liable to th e principal, unless
the bank pays th e check w ith th e actual knowledge th a t th e fiduciary
is com m itting a breach of his obligation in drawing th e check or with
knowledge of such facts th a t its action in paying the check am ounts
to bad faith. If, however, such check is payable to th e drawee bank
and is delivered to it in paym ent of or as security for a personal debt
of the fiduciary to it, th e bank is liable to the principal if th e fiduciary
In fact commits a breach of his obligation in drawing or delivering
the check.
If a check is draw n upon th e account of his principal in a hanir by
a fiduciary who is empowered to draw checks upon his principal’s
account, th e bank is authorized to pay such check w ithout being
liable to th e principal, unless th e bank pays th e check w ith ¡actual
knowledge th a t th e fiduciary is com m itting a breach of his obligation
In drawmg such check, or w ith knowledge of such facts th a t its action
in paying th e check am ounts to bad faith. If, however, such a check
is payable to th e drawee bank and is delivered to it in paym ent of or
as security for a personal debt of th e fiduciary to it, the b an k is liable
to the principal if th e fiduciary in fact commits a breach of his obliga
tion in drawing or delivering the check.
If a fiduciary m akes a deposit in a bank to his personal credit of
checks drawn by him upon an account in his own nam e as fiduciary,
or of checks payable to him as fiduciary, or of checks draw n by him
upon an account in th e nam e of his principal If he is empowered to
draw checks thereon, or of checks payable to his principal and en
dorsed by him, if he is empowered to endorse such checks, or if he
otherwise m akes a deposit of funds held by him as fiduciary, the
bank receiving such deposit is n ot bound to Inquire w hether the
fiduciary is com m itting thereby a breach of his obligation; and the
bank is authorized to pay th e am ount of the deposit or any p a rt there
of uP°.n th e personal check of th e fiduciary w ithout being liable to
the principal, unless th e bank receives th e deposit or pays th e check
with actual knowledge th a t th e fiduciary is com m itting a breach of
his obligation in m aking such deposit or in drawing such check, or
with knowledge of such facts th a t Its action in receiving th e deposit
°r Paying th e check am ounts to bad faith.
When a deposit is m ade in a bank in th e nam e of tw o or more
persons as trustees an d a check is drawn upon the tru st account by
any trustee or trustees authorized by the other trustee or trustees to
draw checks upon th e tru st account, neither the payee nor other
holder nor th e bank is bound to inquire whether it is a breach of tru st
to authorize such tru stee or trustees to draw checks upon th e tru st
account, and is not liable unless th e circumstances be such th a t the
action of th e payee or other holder or the bank am ounts to bad faith.
In any case n o t provided for in this act, the rules of law and equity.
Including th e law m erchant and those rules of law and equity relating
to trusts, agency, negotiable instrum ents and banking, shall continue
to apply. (Acts Feb. 23, 1927, effective M ay 16, 1927, Uniform
Fiduciaries Act.)
Bills o f E x ch an g e a n d P ro m is so ry N o tes. N o grace is allowed,
‘¿images for p rotest on bills upon any person a t any place o u t of
this State, b u t within th e U nited States, 6 per cent on bills drawn
upon any person a t an y place w ithout th e United States, 10 per cent.
i.he Uniform Negotiable In stru m en t Law has been in force in Indiana
since 1913. In stru m en ts calling for th e paym ent of money containing
a cognovit feature are void. I t is a misdemeanor, punishable by
nne or im prisonm ent to possess a cognovit note. (See Negotiable
Instrum ents.)
C o g n o vit N o t e s .
T he execution, indorsem ent and procurem ent of
such notes, an d th e tak ing of judgm ent thereon otherwise th an by
action of court upon a hearing after personal service upon th e debtor,
are prohibited. (Act M arch 10. 1927, effective M ay 16, 1927).
S ky L aw (Enacted 1937). T he A ct known as th e Indiana
securities Law was effective M ay 6 , 1937. Provides for a Securities
commission. T he Secretary of S tate shall constitute th e Securities
commission w ith plenary power to adm inister th e Act.
. , security" shall include any note, stock, treasury stock, bond.
H^?enÎ ure’ OTiffence of indebtedness, certificate of interest or parraapation, certificate of in terest in a profit-sharing agreem ent, certifi
ai®
in terest in an oil, gas, or m ining lease, collateral tr u s t cersrncate, pre-organization certificate, pre-organization subscription,
M e re s t in a tr u s t or pretended tru st, any transferable share,
investment contract, or beneficial interest in or title to p roperty or
Plan S’ mcome contracts, contracts for sale of securities on installm ent
.Person’’ shall include a natural person, a corporation created
r™Qer * .e, laws of th is sta te or any other state, country, sovereignty,
r ; ®ub(ffvisi°n thereof, a partnership, an association, a joint stock
company, a tru st, and an y unincorporated organization.
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1985
“ Sale” shall include every disposition or attem p t to dispose of a
security or interest in a security for value.
“ D ealer” shall include every person other th an an agent, who In
this sta te engages either for all or p a rt of his tim e directly or through
an agent in the business of selling any securities. The word “dealer”
shaH not include a person having no place of business in th is state,
who sells or offers to sell securities exclusively to a prom oter or dealer
actually engaged in buying and selling securities nor to banks and
tru s t companies.
Issuer” shall m ean and include every person who proposes to issue,
has issued, or shall hereafter issue any securities. Any natural person
who acts as a prom oter for and on behalt of a corporation to be formed
shall be deemed to be an issuer.
“A gent” shall include every natural person, other th an a dealer,
employed or appointed or authorized by a dealer or issuer to sell
securities in any m anner in th is state.
“ F ra u d ” and / ‘frau d u len t” include any m isrepresentations of a
relevant fact which are intentional or due to gross negligence; an y
promise as to fu tu re not m ade in good faith; intentional failure to
disclose a m aterial fact.
This Act shall not apply to the following classes of securities:
(a) Any securities issued or guaranteed by th e U nited States or
any tendtory or insular possession thereof, or by the D istrict of ColumD ia or by any sta te or political subdivision thereof» having th e power
of taxation or assessm ent; or by any public instrum entality of a S tate
or by any person acting as an instrum entality e f U. S., or an y security
issued or guaranteed by any N ational, or S tate, or Federal ¡Reserve
Bank.
(b) Any securities issued or guaranteed either as to principal.
Interest or dividend by a corporation owning or operating a railroad
or any other public service u tility : Provided, th a t such corporation
Is subject to regulation or supervision as to the issue of its own
securities by a public commission of th e U. S. or D om inion of Canada.
(c) Any securities issued by a c o rp o ra tio n organized under th e
law s of th is sta te exclusively for educational, benevolent, fratern al
charitable, or reform atory purposes, and n o t for pecuniary profit.
(d) Securities appearing in any list of securities dealt in on th e N . Y.
Stock Exchange, th e N . Y. C urb Exchange or th e Chicago Stock
Exchange.
(e) Negotiable prom issory notes or commercial paper.
(f) Any security except common stock which has been issued and
In hands of public w ithout default for a t least five years.
The Act does not apply to th e sale of any securities a t any judicial,
executor s, adm inistrator’s, guardian’s, or conservator’s sale, or a t
the distribution by a corporation of capital stock, to its stockholders
as a stock dividend.
The transfer or exchange by one corporation to another of th eir
own securities in connection w ith a consolidation or merger of such
corporations.
No securities except those exem pted shall be sold or resold w ithin
tm s sta te unless an d u n til such securities shall have been registered b y
notification or by qualification.
Securities entitled to registration by notification shall be registered
by the filing by any registered dealer interested in th e sale thereof in
the office of the Commission of a w ritten statem ent containing th e
following:
Nam e of issuer and nam e of sta te under which it is organized.
Brief description of the securities including th e am ount of th e issue.
Amount of securities to be offered in the state.
Brief statem ent of the facts which show th a t th e securities fall
within one of the notification classes.
The price a t which th e securities are to be offered for sale and
num erous other specific regulations.
The filing of such statem ent in th e office of th e Commission and th e
paym ent of the fee shall constitute registration of such security, and
such security when so registered m ay be sold in th is state by an y
registered dealer.
Applicants for registration shall pay to th e Commission a fee of
one-twentieth of one per cent of the aggregate p ar value of the securi
ties to be sold in th is state, b u t in no case shall such fee be less th a n
$25.00 nor more th a n $150.00.
All securities required by th is Act to be registered before being sold
In this state, and n ot entitled to registration by notification, shall
be registered only by qualification, as follows:
Applications shall be in writing and sworn to upon prescribed form s.
The applicant shall pay to th e Commission a fee of one-twentieth
of one per cent of the aggregate par value of th e securities to be sold,
b u t in no case shall such fee be less th a n $25.00.
Upon application for registration by qualification, w hether m ade
by an issuer or registered dealer, where th e issuer is n ot dom iciled
In th is state, there shall be filed w ith such application th e irrevocable
w ritten consent of th e issuer th a t suits and actions growing o ut of
the violation of any provision or provisions of this Act m ay be com
menced against it in th e proper court, said consent agreeing th a t
such service of process upon th e commission shall be tak en as valid
and binding as if due service had been m ade.
The Commission m ay revoke th e registration of any securities upon
cause, and the Commission shall have access to and m ay compel th e
production of all th e books and papers of such issuer.
N o dealer or agent shall engage in th e business of selling securities
u n til he has been registered. Provided th a t p artners of a partnership
and officers of a corporation registered as a dealer shall n ot be required
to register as agents.
The fees shall be $75.00 In th e case of dealers and $5.00 in th e case
of agents.
Registration m ay be refused such applicant or registrant upon
cause.
N othing in th is Act shall be construed to relieve corporation from
making reports now or hereafter required by law to be m ade to th e
Secretary of S tate Or any other sta te officer, or paying the fees now or
hereafter to be paid by corporations.
This Act shah n o t be construed to repeal any law now in force regu
lating the organization of corporations or the admission of any foreign
corporations.
An appeal m ay be taken by any person interested from any final
order of the Commission to the M arion Circuit C ourt by serving-upon
the Commission w ithin tw enty days from the entry of such order a
w ritten notice of such appeal, and executing a bond in the penal sum
of $500.00.
The Act approved July 26, 1920, and am ended M arch 9 , 1921,
provides various penalties for violation of th e various sections ranging
from a fine of $500 to a fine of $2,000 or im prisoned up to 5 years.
C h a tte l M o rtg a g e s . T he lien of a ch attel m ortgage th a t has been
filed is superior to o ther form s of liens, allows for sale of m ortgaged
property if funds applied in paym ent of debt. Invalid after 3 years
unless extended. Rem oval of p roperty from county does n ot extin
guish lien. (For new a c t see C h attel M ortgage Act of 1935, c 147.)
For certain restrictions on th e lending of m oney on m ortgage of house
hold goods, see sta tu tes. Conveyances as security b y w ay of T ru st
Receipt are regulated by th e Uniform T ru st Receipts Act (Acts 1935
c. 206). C onditional Sales are regulated by th e Uniform Conditional
Sale Act (Acts 1935, c, 182) and by th e Uniform R etail Installm en t
Sale A ct (Acts 1935, c. 231).
C on v ey an ces. All conveyances, m ortgages or leases for m ore th an
three years shall be recorded and take priority according to tim e of
filing as against good faith purchaser, lessee or m ortgagee. Lands in
this S tate m ay be taken, held, conveyed, devised, or passed by
descent, by or from an y citizen of the U nited States; or by or from
any alien (see Aliens), w ith some provided exceptions as to descent
or devise, Lands which m ay have come by descent or purchase to
the wife of an alien, m ay be held, conveyed, devised and passed by
descent by and from her, notw ithstanding th e fact of her residence
with her husband-in ¿'foreign sta te or country.
1986
B A N K IN G A N D C O M M E R C IA L LA W S— I N D IA N A
E xcept bona-flae leases for a term n ot exceeding three years, con
veyance of lands, or of any interest therein, niust be by deed, sub
scribed, and acknowledged by th e grantor or by his attorney in fact.
T he jo int deed of a husband and wife is sufficient to pass th e lands
of th e wife. Except in cases of mortgages, conveyances in trust,
conveyances to husband and wife, and cases of estates vested in
executors o r trustees, as such, and so held by them in joint tenancy,
all conveyances and devises of lands, or of any interest therein, m ade
to two or more persons, shall be construed to create estates in com
mon, and not in joint tenancy, unless it shall be expressed therein
th a t th e grantees or devisees shall hold the same in joint tenancy
and to th e survivor of them , or it shall m anifestly appear from tenor
of instrum ent, th a t it was intended to create an estate in joint tenancy.
A deed or release or quit-claim shall pass all the estate which the
grantor could convey by a deed of bargain and sale. If it be the
intention of the grantor to convey any lesser estate it m ust be so
expressed in the deed. Liability on lineal and collateral warranties
Is expressly abolished; a covenant or agreem ent of any person leaves
heirs and devisees answerable thereon only to the extent of property
descended or devised to them . Any conveyance of land worded—
“ A. B. conveys and w arrants to O. D . (here describe the premises)
for the sum of (here insert the consideration),” or “ A. B. quit-claims
to C. D. (here describe the premises) for th e sum of (here insert the
consideration),”—the sam e being dated, and duly signed and acknowl
edged by the grantor,—shall, in the one case, be a conveyance in fee
simple to th e grantee, his heirs and assigns, with covenant from the
grantor for himself and his heirs and personal representatives th a t
he is lawfully seized of the premises, has good right to convey the
same, and guarantees the quiet possession thereof, th a t the same are
free from ail incumbrances, and th a t he will w arrant and defend the
title of the sam e against all lawful claims; and shall, in the other
case, be deemed to be a good and sufficient conveyance in quit-claim
to th e grantee, his heirs and assigns. Any m ortgage of lands worded
— “ A. B. mortgages and w arrants to O. D . (here describe the premises)
to secure th e repaym ent of (here recite the sum for which the mortgage
Is granted or the note or other evidences of debt, or a description
thereof, sought to be secured, also the date of the repaym ent”—the
same being dated and duly signed and acknowledged by th e grantor
—is a sufficient m ortgage to the grantee,) his heirs, assigns, executors
and adm inistrators, with w arranty from the grantor and his legal
representatives of title perfect and unincum bered in the grantor.
'When a deed purports to convey absolutely any estate in lands, b ut
Is m ade, or intended to be m ade, defeasible by force of a deed of
defeasance, bond or other instrum ent for th a t purpose, th e original
conveyance shall not thereby be defeated or affected as against any
person other th an th e m aker of th e defeasance, or his heirs or devisees,
or persons having actual notice thereof, unless the instrum ent of
defeasance shall have been recorded, according to law, within ninety
days after the date of said deed. E very conveyance or mortgage of
lands, or of any interest therein, and every lease for more th an three
years, shall be deemed fraudulent and void as against any subsequent
purchaser, leasee or mortgagee in good faith and for a valuable con
sideration. unless recorded in the recorder’s office of the county where
such lands rare situated. (See Acknowledgments. M arried Women.)
W hen either the husband or wife is of unsound mind the p arty
with th e sound mind can either join in the guardian's deed or make
his separate deed and the effect would be the same as a joint deed of
husband and wife both of whom are of sound mind.
C o lle c tio n s . Uniform Bank Collection Code as recommended by
American B ankers Association, see com plete text back of Laws.
C o r p o r a tio n s . T hree or m ore persons m ay form a corporation for
an y lawful purpose by filing articles of association with the Secretary
of S tate and the Recorder of th e C ounty. Special charters are neces
sary for banks, building and loan associations, insurance, security,
railroad, telegraph, telephone, turn-pike com pany, etc. The liability
of stockholders varies. In banking corporations th e stockholder is
responsible not only for his original subscription, b ut for an am ount
equal thereto. In all other corporations he is liable for th e subscription
price of his stock.
A corporation act was passed by th e legislature in 1929, which gives
great liberality. A corporation m ay change its powers, increase or
decrease its capital stock, change th e par value of any class or classes
of shares of its capital stock w ith par value, change the num ber of its
outstanding shares of any class of stock into different num bers of
shares of said class, increase its B oard of D irectors, fill vacancies therein,
hold its meetings w ithin or w ithout th e state, transfer its stock free
of taxes an d m ust report b u t once each year to th e Secretary of S tate.
T his report is m erely a formal one giving am ounts of stock outstanding,
list of officers, etc. T he corporation is assessed for local taxes upon the
value of its holdings w ithin th e S tate of Indiana and only upon such
holdings.
Foreign corporations, or their agents, before entering upon th e
duties of their agency in this S tate shall deposit in th e C lerk’s office of
th e C ounty where th ey propose doing business th e power of attorney
and appointm ent under which they act. T hey shall also file with the
Secretary of S tate an application to do business in the S tate of Indiana,
nam ing a resident agent therein. Foreign C orporations m ust p ay a
fee of $ 10 if proportion of its stock represented in Indiana is less th an
1,000 shares and one cent a share if in excess of $1,000. T hey also
agree th a t th e secretary is authorized to accept service of process in
an y su it against them .
C o u r ts a n d J u r is d ic tio n . C ircuit C ourts in all counties, original
general jurisdiction in all civil causes, original general jurisdiction in
all crim inal causes, except in th e counties of Lake and M arion in
which there are crim inal courts, probate jurisdiction in m ost counties,
pro b ate exclusive and concurrent jurisdiction in civil m atters, also
ap pellate jurisdiction in appeals from Justices of Peace, M ayors of
cities and Board of C ounty Commissioners. Superior C ourts are
established in m any counties w ith original concurrent jurisdiction
w ith th e circuit courts in all causes except slander and libel, crim inal
causes, probate m atters and concurrent appellate jurisdiction w ith
circuit courts. Justices of th e Peace in all townships, jurisdiction
in civil actions for $ 200.00 or less, in th e township, also jurisdic
tion in p e tty crim inal causes. P a rty m ay confess judgm ent in
Ju stice’s court for $300.00. In actions on w ritten obligations for
m oney of more th an one p a rty Justice has jurisdiction in township
where either p a rty resides and m ay issue process to any county in
th e sta te for other parties. Supreme C ourt is highest appellate
court and has no original jurisdiction except in a few specified cases.
Appellate C ourt has final appellate jurisdiction in m any cases, no
original jurisdiction. In some specified classes of cases defeated
p a rty m ay have cause transferred to Supreme C ourt. Both Supreme
a n d Appellate C ourts sit only in Indianapolis. M unicipal C ourt,
.M arion C ounty (Indianapolis), four judges. Original jurisdiction
concurrent with Superior and C ircuit C ourts in all civil cases founded
on co n tract or to rt in which debt or dam age or value of property
sought to be rem oved does not exceed $500. Jurisdiction irrespective
o f value of property in possessory actions between landlord and
ten an t. Crim inal jurisdiction as is now vested in city courts in cities
o f first class. Jurisdiction in cases involving violation of ordinances
o f cities an d tow ns or other m unicipalities.
C ourts of record within their respective jurisdictions shall have
power to declare rights, status,, and other legal relations w hether or
n o t fu rth er relief is or could be claimed.
Any person interested under a deed, will, w ritten contract or other
writings constituting a contract, or whose rights, sta tu s or other legal
relations are affected by a sta tu te, municipal ordinance, contract or
franchise, m ay have determ ined any question of construction or
validity arising under th e instrum ent, sta tu te, ordinance, contract, or
franchise and obtain a declaration of rights, sta tu s or other legal
relations thereunder.
A contract m ay be construed either before or after th ere has been
a breach thereof.
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Any person interested as or through an executor, adm inistrator,
trustee, guardian or other fiduciary, creditor, devisee, legatee, heir,
next of kin, or cestui que tru st, in th e adm inistration of a tru st, or of
the estate of a decedent,' infant, lunatic, or insolvent, m ay have a
declaration of rights or legal relations in respect thereto.
T h e court m ay refuse to render or enter a declaratory judgm ent or
decree where such judgm ent or decree, if rendered or entered, would
not term inate the uncertainty or controversy giving rise to th e pro
ceeding.
All orders, judgm ents and decrees under this act m ay be reviewed
as other orders, judgm ents and decrees. (Act M arch 5, 1927, in effect
M ay 16, 1927).
D ays of G race are no longer recognized.
D e p o sitio n s. Depositions m ay be taken anywhere in th e United
States w ithout a commission, before any judge, justice of the peace
notary public, m ayor, or recorder of a city, clerk of a court of record,
or commissioner appointed by the court to take depositions. P er
son taking deposition m ust not be of kin to either p arty or interested
in the action. When taken outside of the U nited States th ey shall
be taken pursuant to an order of the court, under a commission, with
such reasonable notice of the tim e and place of taking th e sam e u
the court shall require, and they shall be certified and returned by
the commissioner in such m anner as th e court shall direct. Notice
of the taking of the deposition should be served upon th e adverse
p arty or his attorney, specifying th e cause, the court or tribunal of
trial, th e tim e and place of taking, and th e nam es of the witnesses.
Reasonable tim e shall be allowed for th e attorney so served to com
m unicate with the client, and for travel to the place of taking, exclud
ing th e day of service, of the taking and intervening Sundays. The deonent shall be first sworn according to law. H e shall then be examined
y the p arty producing him, and then by the adverse party, and then by
the officer, if he see cause. The deposition shall be w ritten down by the
officer, by the deponent, or by some disinterested person, in the presence
and under the direction o f the officer, and after th e same has been
carefully read shall be subscribed by deponent. The following facte
shall be stated in a certificate to be annexed by the officer: 1 . T hat
the deponent was sworn according to law. 2. By whom the depo
sition was w ritten, and if w ritten by deponent or some disinterested
person, th a t it was w ritten in the presence and under th e direction of
the officer. 3. W hether the adverse p a rty atten d ed . 4. The tim e
and place of taking, and the officer shall sign and a tte st the certificate,
and seal the same, if he have a seal of office. If he have no seal, his
certificate shall be authenticated by the certificate and seal of the
clerk or prothonotary or any court of record of th e county In which
certificate shall be authenticated by the certificate and seal of the
clerk or prothonotary of any court of record of th e county in which
the officer exercises the duties of his office. T he officer taking the
deposition shall seal the sam e in a sufficient envelope and himself,
post, or express, or deliver the same to the clerk, of th e court in which
the action is pending, endorsing on the envelope the nam es of the
parties and of the court and of the witnesses whose depositions are
enclosed. Adjournm ents m ay be had from day to day after the
deposition has been begun, and for longer periods, upon w ritten con
sent of the parties, which w ritten consent m ust be attached to the
deposition. Adjournm ents should be noted a t th e place in the
deposition when they occur. A narrative form m ay be used. A
witness identifying a w ritten instrum ent should attach it to his
deposition, m aking it a p a rt of his answer.
D escen t. The real and personal property of an y Intestate shall
descend to bis or her children equally; and posthum ous children
Inherit equally with those bom before the death of the ancestor.
Children of deceased children take the share which would have
descended to th e father or m other; and grandchildren, and more
rem ote descendants, and other relatives, lineal and collateral, inherit
by the same rule, excepting th a t if the heirs are all grandchildren
they inherit equally. W here there are no heirs as aforesaid, onehalf of the estate goes to the father and m other as joint tenants, or
to the survivor, and the other half to the brothers and sisters, and
to the descendants of such as are dead, as tenan ts in common. If
there be neither father nor m other, th e brothers and sisters, and
the other descendants, take th e estate as tenan ts in common; or.
per contra, the father and m other as joint ten an ts of th e survivor.
Kindred of the half-blood inherit equally w ith those of the wholeblood in property purchased by th e ancestor; otherwise, as to property
acquired by gift, devise, or descent. Illegitim ate children inherit
from the m other same as if th ey were legitim ate, and vice versa.
Tenancy by the curtesy a n a dower are abolished, an a widows take
one-third of th e real estate in fee simple, unless th e property is worth
over $ 1 0 ,000 , in which case, as against creditors, she takes one-fourth
only; and where the real estate is w orth over $2 0 ,000 , one-fifth only
as against creditors, b u t as against other heirs she takes one-third
In fee simple, regardless of value, except where there is b u t one
child, in which case each inherits one-half. A second or subsequent
wife, however, takes only a life estate in her husband's lands, if there
be a child or children by a previous m arriage, and none by such
widow. O ther special provisions of the sta tu te are too extensive to
set out. T he estate of a person dying in testate w ithout kindred
capable of inheriting will escheat to the S tate for th e support of the
common schools.
D ow er. (See M arried Women.)
E x e c u tio n s m ay issue a t any tim e within ten years after judg
m ent and are returnable in 180 days. From a court of record may
Issue to any county in th e State. Are a lien on personal property
within the county from the tim e they are placed in bands of officer.
The liens upon personal property attach In the order In which the
officer receives them . W hen levy is upon real estate the dates of
the judgm ent control the right to participate in the proceeds, and
they m ust be applied according to their priority. Personal property
taken in execution m ay be left with execution defendant by the
giving to the officer of a delivery bond w ith sufficient surety; debtor
may, by giving sufficient freehold sureties, have a stay of execution
on any sum exceeding $100, for six m onths. Where the sum is less
than $ 10 0 , the stay Is not so long, varying With am ount of judgment.
Lands sold under execution m ay be redeem ed within one year by
the owner, m ortgagee or person having a lien thereon, the owner
retaining possession during the redem ption year and being liable for
reasonable rents and profits in case of failure to redeem.
E x e m p tio n s . Personal property up to $600 and real property up
t o $700, nor in any event more th a n $1000 in both personal and real
p roperty is exem pt in suits on contract where debtor is a resident
householder. Resident householder is entitled to exemption as
well when in tra n sit w ith his fam ily and property as when perma
nently settled. T he debtor m ust file a schedule of all of his property,
and select th e property claimed, which is then appraised. Contract
waiving exem ption is void. Pension m oney in tra n sit to pensioner
is exem pt, b u t when received by him and invested in o th er property
is no more so th an any other property. One m on th 's wages also
exem pt if the debtor is still employed. N o exem ption of mechanics
liens or purchase-m oney liens.
F r a u d . Assignments, in writing or otherwise, of any property
made or suffered with intent to hinder, or defraud are void as to tne
persons defrauded. The question of fraudulent in ten t is a question
of fact.
Frauds— S tatu te of. T he following contracts, if enforceable in court,
m ust be in writing and signed by th e p arty to be charged: 1 .
charge an executor or adm inistrator, upon any special promise, to
answer dam ages out of his own estate. 2. To charge any person,
upon any special promise, to answer for the debt, default, or mis
carriage of another. 3. To charge any person, upon any agreement
or promise, m ade in consideration of m arriage. 4. Upon any con
tra c t for th e sale of land (except loan not exceeding th e term or three
years). 5. Upon any agreem ent not to be performed within one
year from th e m aking thereof. 6 , Sale of goods exceeding $500 in
value, unless p a rt paym ent or p a rt delivery be m ade. 7. upon
B A N K IN G A N D C O M M E R C IA L L A W S— I N D IA N A
any representation m ade concerning the character, conduct, credit
ability, trad e or dealings of any other person.
G a r n is h m e n t. If a t th e tim e an order of attach m en t issues, or a t
any tim e before or afterw ards, th e plaintiff, or other person in his
behalf, shall file w ith th e clerk an affidavit th a t he has good reason to
believe th a t any person nam ed has property of the defendant in his
possession or under his control, which th e sheriff cannot a tta c h by
virtue of such order; or th a t he is indebted to th e defendant, or has
control or agency o f an y money, property, credits or effects; or th a t
defendant has any shares or interest in th e stock of any association or
corporation, th e clerk shall issue a summons to such person, corpora
tion, or association, to appear and answer as garnishee in th e action.
From th e service of sum m ons th e garnishee is accountable to plaintiff
for th e money, property, etc., in his hands, or due to defendant. If
th e sum m ons issues before attachm ent, th e affidavit m ust show some
one of th e causes authorizing attachm ent. The garnishee is required
to furnish th e sheriff, within five days after service, a certificate of
the property, etc., of defendant in his hands or, due to him, to be
returned with th e summons. I f he fails or refuses th e court m ay
require him to appear and be examined under oath, or proceed against
him on default to judgm ent. I f it appear by affidavit th a t a garnishee
is about to abscond before judgm ent can Be had, an order of arrest
m ay issue and he be held to special bail. R eturn of " N o property
found” on an order of attachm ent does not affect th e proceedings
against th e garnishee. H e m ay, before judgm ent against th e de
fendant, by delivery of all th e defendant’s property in his possession
to th e sheriff, or paym ent of all m oney due him to th e sheriff, or into
court, discharge himself from th e suit without costs, and from all
liability to th e defendant or th e money or property so paid or de
livered, n o t exceeding th e plaintiff’s claim.
Clerks of th e circuit courts, sheriffs, justices of th e peace, constables
and all other officers who m ay collect money by virtue of their office,
executors, adm inistrators, guardians, and trustees, are subject to
garnishm ent as other persons.
T he wages of all householders in th e employ of any person or
corporation are exem pt from garnishm ent and proceedings supple
m ental to execution, in th e hands of th e employer, so long as th e
employee rem ains in such em ploym ent, not exceeding twenty-five
dollars a t any one tim e, and th e employee is allowed no other exemption
as against garnishm ent. (Burns’ Ann. S. 1933, §3-505.) Applies to
householders in other jurisdictions. Resident householders still have
six hundred dollars exemption. (Pomeroy v. Beach, 143 Ind. 511.)
S e e a ls o 15, 47, 50, 71, 114.
. H o lid ay s. T he legal holidays are: Sundays; Jan u ary 1 (New Y ear’s
D ay); F ebruary 12 (Lincoln’s birthday); February 22 (W ashington’s
birthday); M ay 30 (M emorial D ay); Ju ly 4 (Independence D ay);
first M onday in Septem ber (Labor D ay); October 12 (Columbus
D ay ); Novem ber 1 1 (Armistice D a y ); Thanksgiving D ay; December 25
(Christm as D ay); and any election day. w hen any holiday (other
than Sunday) comes on Sunday th e M onday next succeeding shall
be th e legal holiday; S aturday afternoon is a legal half-holiday in
all cities over 35,000 in population. However, banks m ay a t their
option open an y legal holiday.
H u s b a n d a n d W ife. (See M arried Women.)
I n h e r ita n c e T ax . (See Taxes.)
I n te r e s t. The legal rate is 6 per cent, b ut interest m ay be taken
in advance. No agreem ent to pay a higher rate is valid unless the
same be in writing, and in such case it is not lawful to contract for
more th an 8 per cent. W hen a greater rate is contracted for. the
contract is void as to all interest in excess of 6 per cent, is usurious
and illegal, and the excess m ay be recouped by the debtor whenever
it has been reserved or paid before the bringing of the suit. In terest
on judgm ents runs from the date of the verdict or finding, a t the
rate specified in th e original contract, not exceeding 8 per cent, and
If no contract ha« been m ade 6 per cent is allowed.
J u d g m e n ts of courts of record are a lien upon all real estate of
defendant within th e county for ten years. Judgm ent m ay be
obtained a t th e first term of the court, after process has been served
on debtor ten days prior to th e first day thereof. Judgm ent in justice
court becomes a lien on real estate of judgm ent defendant t rom tim e
of filing a transcript in office of the clerk of circuit court. A certified
copy of any judgm ent rendered by the D istrict C ourt of the United
States for district of Indiana m ay be filed with the county clerk.
L ien s. Liens are granted by sta tu te to attorneys; to persons
holding claims against w atercraft on account of supplies furnished or
work done; also for dem ands for dam ages arising out of freight con
tracts, or for willfulness or negligence of the master,) owner, or agent,
or out of any contract relating to transportation, and for injuries to
persons or property; also to employes of any corporation as against
any of its corporate property or earnings for labor done; also to
keepers of livery stables and all persons engaged in feeding stock, for
the feed and care bestowed upon th e sam e, also to blacksm iths; also to
contractors, sub-contractors, mechanics, journeym en, laborers, and ali
persons perform ing labor or furnishing m aterial or m achinery for
erecting, laboring, repairing or rem oving any house, mill, m anufactory
or other building, bridge, reservoir, system of water-works, or other
structure, known as a mechanic’s lien; also to bailees and tradesm en
for their valid and reasonable charges in th e construction, repair,
or alteration of any article of value; also to the bailee or keeper of
personal property for any feed or care bestowed by him upon such
property; special lien for storage or repair of m otor vehicles; also to
forwarding and commission m erchants on goods which m ay have
remained in store for one year or more.* also to all persons, firms
and corporations engaged in the business of storing, warehousing and
forwarding, goods rem aining in possession of such person, firm or
corporation for more th an six m onths m ay be sold a t public auction
to pay am ount of lien; also to landlords upon crops. Persons storing,
nirnishing supplies or repairing a m otor vehicle or garage owners
have lien on m otor vehicle which can be foreclosed w ithin one year
from failure of owner to pay charges. Judgm ents rendered in any
county in th e S tate are a lien upon the real estate situated in such
county for a period of ten years from the rendition thereof, and judg
ments rendered in th e federal courts are a lien upon any real estate
In the State for the same period. Provision is made by sta tu te, how
ever, for th e filing in th e county where the real estate is situated of a
transcript of any judgm ent rendered in the U nited S tates courts.
The office of the clerk of the circuit court in each county contains a
public record known as the lis pendens record, in which notice: of the
filing of com plaints to enforce liens are required to be recorded, and
also in cases where real estate is seized by attachm ent or execution.
Unless so recorded th e bringing suits does n ot operate as a constructive
notice.
L im ita tio n s to S u its . Actions for injury to person and character,
and for sta tu to ry penalty or forfeiture, two years; against public
officers relating to th eir official duties, and on public im provement
assessments, five years; open accounts and contracts not in writing,
ror use, rents and profits of real estate, injuries to and detention of
property, recovery of personal property and relief against frauds, six
years; upon prom issory notes, bills of exchange and other w ritten
contracts for paym ent of money, ten years; actions not limited by
statute, fifteen years; other w ritten contracts, judgm ents of courts of
and real actions, tw enty years. Persons under a legal dis
ability m ay sue 2 years after disability removed. Revivor: p a rt pay
ment or new prom ise in writing. E xcept in favor of sureties, th e
8 »/r e ° f lim itations does n ot ru n against th e State.
. M a rried W o m en control th eir real and personal property. The
nusband .is liable for th e wife’s debts contracted before m arriage to
jue extent of th e personal property he m ay receive from her, and no
rorther, and her lands are liable for such indebtedness. A m arried
woman m ay devise her separate estate; m ay sell and transfer her separPersonal p ro p erty ; carry on any business, labor, or service, and
earnings accruing therefrom ; enter into any contract in
regard to her separate personal estate business, labor, or service, and
aer separate estate, real and personal, be liable therefor, the sam e as a
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1987
femme sole; and her husband is n ot liable for such dents, nor for
indebtedness created by the wife for im provement of her separate
real estate. She can m ake leases of real estate for term s of three
years or less, and execute mortgages to secure purchase money, w ith
out husband joining. She is bound by covenants of title in convey
ances of her separate real estate. H er deed conveying her real estate,
her husband not joining. Is absolutely void. She m ay sue as a femme
sole for any dam age to her person or character. She is bound in
like -manner as principal on her official bond. Disability as to surety
ship has been abolished, therefore, in making loans to m arried women
It is hot necessary for her to m ake an affidavit th a t the money used
is for her own benefit. She is entitled to hold as exem pt from execu
tion in any suit on contract personal property to th e am ount of $600
and real property to th e am ount of $700. A widow takes one-third
of her deceased husband’s real estate in fee, and free from all dem ands
of creditors, where th e estate does not exceed $ 1 0 ,0 0 0 ; one-fourth,
if under $20,000, and one-fifth, if above th a t am ount. She also
takes a child’s interest in th e personalty where th e num ber of children
does n o t exceed two, and where th ere are m ore th an two, her interest
shall n o t be less th an one-third of th e whole of personalty after
paym ent of debts, and in all cases takes $500 w ithout accounting,
and m ay occupy the dwelling of forty acres of her husband’s land for
a year, rent free. B ut the one-third of her real estate which the
widow takes in fee, can not. upon her m arrying again, be effectively
conveyed or m ortgaged by her, if there be a m inor child or children, or
their descendants, alive by th e previous m arriage. Real estate which
husband and wife hold b.v title m ade to them as husband and wife,
is held as an estate by entirety; it cannot be taken for th e debt of
either; is not subject to the lien of a judgm ent against either, except
in case of the death of either or upon divorce granted, when th e estate
is destroyed ahd becomes subject to levy and sale; and a m ortgage
thereof by them both for a deb t of the husband has no legal validity.
M o rtg a g e s. (See Conveyances.)
N e g o tia b le I n s t r u m e n t s . Uniform N egotiable Instrum en ts Act
adopted 1913. (See com plete tex t of th e law following “ Digest of
Banking and Commercial Laws.” )
P ow er of A tto rn e y m ust be executed and acknowledged, and (If
for the conveyance of real estate, or to affect real estate) recorded, in
the same m anner th a t deeds are m ade.
P ro b a te L aw . (See A dm inistration of E states.)
P ro te s t. T he statu to ry dam ages on such protest are 5 pér cent
on the principal of a bill of exchange, if drawn or negotiated within
this State, upon any person, a t any place out of this State, b ut within
the U nited States, and 10 per cent if upon any person, a t any place
without the U nited States.
R e p le v in . When any personal property is wrongfully taken or
unlawfully detained, or, if taken on execution or attachm ent. Is
claimed by a third party, the owner or claim ant m ay bring an action
for possession thereof. H e m ay claim im m ediate delivery upon
affidavit therefor, whereupon th e sheriff takes possession of the
property, and if delivery bond is given on behalf of the defendant
within tw enty-four hours, the property is returned to him, otherwise
the plaintiff m ay give bond and take the property: failing to do so
It Is returned to the defendant. T he plaintiff has tw enty-four hours
in which to file bond. Justices of the peace have jurisdiction in
replevin suits involving property worth $200 or less. Procedure is
same before justice of the peace, except th a t th e plaintiff m ust file
bond in all such cases. Replevin m ay also be had w ithout bond, by
allowing defendant to retain possession of property pending suit.
S ales. Uniform Sales A ct adopted by A cts of 1929.
S u its . (See Actions.)
T ax es. T he general ta x law of Indiana was revised and codified
by th e acts of 1919, p. 198. Personal property is listed for taxation
between th e first day of M arch and th e 15th d ay of M ay of each year,
with reference to the q u an tity held or owned on th e first day of M arch
in th e year for which th e property is required to be listed; R ealty is
listed and assessed by th e tow nship assessor. Assessment lists of
personal property are filed with th e tow nship assessor. From th e
assessment of th e township assessor, an appeal m ay be taken to th e
county assessor and th e county board of review. An appeal lies from
th e county board to th e S tate T ax Board. T hereafter illegal taxes
will be enjoined by th e courts in accordance w ith th e usual rules of law.
V a l u a t io n .
All property m ust be assessed and valued for taxation
purposes a t th e tru e cash value thereof. (64-103).
L ie n s .
Taxes attach as a lien on real estate on M arch 1 each year.
T he lien is perpetual and is not divested by any sale or transfer. The
first half of taxes becomes delinquent if not paid on th e first M onday
in M ay of th e succeeding year, an d th e second half on th e first M onday
of N ovem ber following. (64-2001, 2008).
.S a le s . I f not paid by th e first M onday of F ebruary following, th e
property, or so much thereof as m ay be necessary, will be sold for th e
paym ent of taxes and penalty. Sales of real estate for taxes are m ade
on th e second M onday in F ebruary, annually. ((64-2201, 2 2 1 1 ).
R e d e m p ti o n .
T he property m ay be redeem ed w ithin 6 m onths
by paym ent of th e am ount bid a t th e sale, with 10 per cent pen alty ;
if redeem ed after 6 m onths and within 1 2 m onths, th e pen alty is
15 per cent; after 12 m onths and w ithin 2 years, 25 per cent; a t th e
expiration of which tim e th e purchaser is entitled to a deed, and no
redem ption m ay thereafter be m ade. B u t infants and insane persons
m ay redeem within 2 years after rem oval of their disability. A tax
deed m ay be set aside if any substantial provision of th e law has not
been complied with, a n d ' redem ptions are generally favored by th e
courts, even a fter a deed has issued. <64-2301, 2314).
I n t a n g ib l e s .
Intangible personal property is taxed by m eans of a
stam p tax (Acts 1933. c. 81, as Amended Acts 1935, c. 294).
E x e m p ti o n s .
T he property of th e Ü. S. and of this state, and th e
property of any county, city, tow n or tow nship is exem pt from tax a
tion. G enerally, and under certain conditions, th e following property
is exem pt from taxation: property used for educational, literary ,
scientific, religious, fraternal, benevolent, or charitable purposes,
b attle grounds, and other historic sites and public libraries. Cem e
teries incorporated under th e law of th is sta te , n ot for pecuniary
profit, and certain funds for th e care and m aintenance of cem eteries,
are exem pt. M em bers of th e sta te m ilitia and every soldier and
sailor in th e service of th e U. S. are exem pt from paying poll or road ta x .
All bonds and other evidences of indebtedness hereafter issued by
or in th e nam e of any m unicipality or other political or civil su b
division of this sta te , or by or in th e nam e of any taxing district in
this state, for th e purpose of paying th e cost of im provem ent or
m aintenance of streets, highways, etc., and other im provem ents of
public benefit, an d which bonds, or other evidence of indebtedness are
payable from special assessm ents or special taxes, are exem pt from
taxation. (64-201).
V
I n c o m e T a x . A ta x is imposed, on th e gross income of all residents
of Indiana or persons domiciled here and on all income arising from a
business conducted on p roperty located in Indiana (Acts 1937, c. 117),
I n h e r ita n c e T a x .
(1931, c. 75.) T ax is imposed subject to con
ditions and lim itations, on all transfers in tru s t or otherwise of th e
following p roperty or interests therein or income therefrom : W hen
transfer is from a resident of sta te , real property situ ated in sta te , all
tangible personal property except such as has an actual situs w ithout
sta te and all intangible personal property wherever situ ated ; when
transfer is from a nonresident, all real and personal property w ithin
jurisdiction of state.
T he following transfers are taxable: By will; by s ta tu te regulating
descent; m ade in contem plation of d eath of transferor, if m ade within
tw o years, it is presum ed to be in contem plation of death, in absence
of contrary showing, m ade by gift or grant to tak e effect in pos
session or enjoym ent after d eath of transferor; m ade in paym ent of
debt created by antenuptial agreem ent by its term s payable-by will
or contract a t or after death. I f transfer is for a valuable considera
tion: except love and affection, no tax is imposed on th e value up to th e
money value of th e consideration received b y th e transferor, b u t th e
B A N K IN G A N D C O M M E R C IA L L A W S— IO W A
1988
excess is taxed. W here property is held in Joint nam es of tw o or
more persons as joint ten an ts or otherwise, except real estate held
by entireties, or is deposited in banks, etc., in joint nam es and p ay
able to survivor or survivors, exercise of rig h t of survivor or sur
vivors is a taxable transfer; except such as m ay have belonged origi
nally to survivor or survivors and never have belonged to decedent.
Proceeds of insurance on decedent’s life, payable to his estate, are
taxed; b u t insurance payable to some other person and n ot a p a rt of
decedent’s estate is n ot taxed. A transfer by deed of tru s t (before or
after enactm ent of statu te) wherein tru sto r reserved to him self any
income or interest, or reserved powers of revocation, alteration or
am endm ent, on exercise of which property would revest in him , is
taxable on his d eath to extent of value of property subject to such
powers and as to which such powers have n ot been exercised. P rop
e rty transferred to executors or trustees in lieu of commissions, allow
ances or fees, is taxable on excess over commissions, etc., which would
be payable in absence of any such transfer.
B ates of tax and exemptions vary according to relationship of
beneficiary and am ount of transfer, as follows:
C lass A. H usband, wife, lineal ancestor or descendant, legally
adopted child and child to whom transferor stood in acknowledged
relationship of parent and child for n ot less th a n ten years prior to
transfer.
E X E M P T IO N S
W i f e . . . . .....................................................................
C hild under 18 years of a g e ....................................
O ther m em bers of C lass..........................................
$15,000
5,000
2,000
RA TES
per cent n o t exceeding........................................ $25,000
2 per c e n t............................................... ................ ... 25,000 to $50,000
3 per c e n t............................................... ................... 50,000 to 200,000
300,000
4 per c e n t................................................................... 200,000 to
5 per c e n t................................................................... 300,000 to 500,000
700,000
6 per c e n t............... ................................................... 500,000 to
. 700
700,000
7 per c e n t...............................
“ to 1 ,000,000
1 ,000,000 to 1,500,000
8 per c e n t.................................................................... 1,000
10 per c e n t....................................................................Over
Over
of a brother or sister.
C lass B . Brother, sister, or a descent
a wife or widow of a son, or th e husband of a daughter,
Exem ption. $500.
1
RATES
5 per cent n o t exceeding
8 per c e n t.........................
1 0 per c e n t.........................
1 2 per c e n t. . . . . . ___
15 per c e n t.............. ..........
C la ss C. All others.
Exem ption. $100.
7 per
per
per
15 per
2 0 per
10
12
RA TES
cent n ot exceeding.......................
c e n t..................................................
c e n t..................................................
c e n t..................................................
c e n t.................. ...............................
$100,000
100.000 to $ 200,000
200.000 to 500,000
500.000 to 1,000,000
Over
$100,000
100.000 to $ 200,000
200.000 to 500,000
500.000 to 1,000,000
Over
R ates on previous page stated apply to entire transfer in excess of
exemption.
Following transfers are entirely exem pt: To TJ, S., any sta te or
territo ry or political subdivision thereof, or any corporation, in
stitu tio n , association or tr u s t form ed for charitable, educational or
religious purposes, provided property is to be used exclusively for
such purposes in Indiana.
T ax is, imposed on full, fair cash value of property, subject to
exem ptions above sta te d in case of transfers by will or intestate laws.
T ax is payable a t tim e of, transfer and is a lien against th e land.
Trustees, executors or adm inistrators of estates are personally liable
for th e tax.
T ax is determ ined by any court having probate jurisdiction, on
appraisem ent by county assessor, or by inheritance ta x appraiser in
counties of 400,000 or m ore population. Provision is m ade for notice
of appraisem ent, hearing upon report and rehearing to persons in
terested or S tate B oard of T ax Commissioners. T he B oard m ay move
for a rehearing w ithin 2 years after entry of delivery by th e court If
th e y believe appraisem ent was fraudulently, collusively, or erroneously
m ade.
T ax on resident decedent’s estate is payable to treasurer of county
where court having jurisdiction is situated. I f paid w ithin 1 year
a fte r accrual, deduction of 5 per cent is allowed; if n ot paid w ithin 18
m onths, interest a t 1 0 per cent from d ate of accrual is assessed.
D eterm ination of ta x on taxable transfers from nonresidents is
under exclusive jurisdiction of T ax Commissioners. Appeal from
appraisem ent lies to M arion county circuit court. T ax is payable to
S tate B oard of T ax Commissioners» Taxes erroneously assessed m ay
b e refunded on order of T ax Commissioners. Person or institution
p erm itting stock or personal p roperty or securities to be transferred
w ith o u t consent of T ax Commissioners is liable for th e ta x an d subject
to ponalty of n o t m ore th a n $ 1,0 0 0 in addition.
In case of contingent or expectant estate where taxes are not
presently payable, T ax Commissioners and A ttorney General m ay
enter into agreem ent w ith trustees, executors or adm inistrators to
com pound taxes and grant discharges therefor. I f agreem ent cannot
be reached, tax is held in abeyance and trustees, executors or adm in
istrato rs m ust give bond for prom pt paym ent.
S tate B oard of T ax Commissioners is charged w ith enforcem ent of
th e act and will provide form s required.
W ills. N o will except a nuncupative will shall affect any estate
unless it be in writing, signed by the testa to r or by someone in his
presence, w ith his consent, and subscribed in his presence, by two or
more com petent witnesses in th e presence of each other. A will m ade
before m arriage becomes void on m arriage of testator. N o nun
cupative will shall be valid when m ore th a n the value of $ 10 0 .0 0 is
bequeathed, nor unless it is m ade in th e last sickness of the testato r,
an d th e subject thereof be reduced to writing within fifteen days after
it shall have been declared and proved by tw o com petent witnesses
‘who shall have heard the testator, in effect, request some of those
present to bear Witness thereto; and no such nuncupative will shall be
proved after six m onths from the death of the testato r, nor until his
widow an d heirs shall have reasonable notice of th e tim e and place of
proving th e sam e. Any soldier or sailor in actual service m ay dispose
of his personal estate, in his actual possession, and his wages, by a
nuncupative will. Any person m ay contest the validity of any will
or resist th e probate thereof a t any tim e w ithin one year after the will
has been offered for probate, b u t an; infant, an insane person or one
Who has been absent from th e sta te m ust contest of resist w ithin
3 years. U pon th e death of any testa to r any person interested in any
p a r t of th e estate specified in th e will m ay have th e will probated. A
will in w riting shall be proven by one or m ore of th e subscribing w it
nesses, or, if th ey be dead, o ut o f th e sta te , or have become incom
p eten t from an y cause since attestin g th e will, th en by proof of the
handw riting of th e testa to r or of th e subscribing witnesses thereto.
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S Y N O P S IS O F
T H E L A W S O F IO W A
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by
A. F b i c k , A ttorney a t Law, W ilson Building,
Rockwell C ity, Iowa
A c c o u n ts . In all instances where any sum of m oney is claimed
on an account, th e sam e m ust be item ized.
I f su it is b rought on
such an account th e item s thereof should be consecutively num bered
and th e account m ust be sworn to. Such a sworn statem en t of
account together w ith a petition which has been likewise sworn to,
constitutes a prim a facie case enabling th e creditor to tak e judgm ent
thereon in th e event th e debtor is unable to disprove th e item s.
A c k n o w le d g m e n ts . All instrum ents affecting real estate, includ
ing mortgages, deeds of tru st, powers of attorney relating thereto^
and leases for more th an one year, m ust be acknowledged or the
execution thereof proved and the instrum ents m ust be recorded In
the proper office, in order to affect th ird parties. T he sam e is also
true as to bills of sale of personal property. Conditional sales contracts
or leases m ust be signed by both vendor and vendee, or lessor and lessee
and acknowledged by one of them , and m ust be filed th e same as
chattel m ortgages (see C hattel M ortgages). Articles of incorporation
m ust also be acknowledged and recorded. Form s of acknowledgments
are prescribed by sta tu te, and m ust be substantially as follows:
1. In th e case of n atu ral persons acting in their own right:
S tate of. ....... .......... ........ \ gg>
C ounty o f . ................. . . /
On this d a y ...........o f............A. D. 1 9 .., before m e ,............................
(Insert title of acknowledging officer)................. . personally appeared
...............to m e known to be th e p erso n . . nam ed in an d who executed
th e foregoing instrum ent, and acknowledged t h a t . . . . . . . . executed the
sam e a s .............voluntary act and deed.
N otary Public in an d for said County
2. In th e case of n atu ral persons acting by attorn ey :
S tate o f . ................... .. \ gg
C ounty o f . ........... g g . . . / S
On th is ...........day o f ............. A. D. 1 9 .., before m e .............................
(Insert title of acknowledging officer)............ personally ap p eared . . . .
to me known to be th e person who executed th e foregoing instrum ent
in behalf o f..............................and acknowledged th a t he executed the
sam e as th e voluntary act and deed of sa id ........................................
N otary Public in an d for said County
3. In th e case of corporations or joint stock associations:
S tate o f .............................1 gs>
C ounty o f .........................J
On th is ...........day o f ............A. D ., 1 9 ... before me. a . . . . ( I n s e r t
title of acknowledging officer)............ in and for said county, person
ally a p p e a re d .............. ..
to me personally known, who being
by me duly (sworn or affirmed) did say th a t he i s . . . . . . (Insert title
of executing officer)...........of said (Corporation or association). . . . . .
th a t (the seal affixed to said instrum ent is th e seal of said) or (no
seal has been procured by th e said) (corporation or association) and
th a t said instrum ent was signed and sealed on behalf of th e said
(corporation or association) by a u th o rity of its board of (directors or
trustees) and th e s a id ........................................ acknowledged th e execu
tion of said instrum ent to be th e voluntary a ct and deed of said
(corporation or association) by it voluntarily executed.
Sta n ley
N o tary public in and for said County
(In all cases add signature and title of th e officer tak in g th e ac
knowledgm ent, and strike from between th e parentheses th e word or
clause n ot used, as th e case m ay be.)
A c tio n s . T he common law form s of pleading are not used,
although th e common law form s th e basis of procedure. Pleading,
practice, an d procedure are sta tu to ry , and accord, in th e main,
w ith w hat is known as th e reform ed, or code procedure.
A d m in is tr a tio n of E s ta te s . W hen an executor is n o t appointed
by will adm inistration shall be granted to any suitable person or
persons on th e request and application of: 1 . T he surviving spouse.
2. T he next of kin. 3. Creditors. 4. Any other person showing good
grounds therefor.
, , ^
»
To each of th e above classes in succession, a period of 20 days,
commencing w ith th e burial of th e deceased, is allowed within which
to apply for adm inistration.
A special adm inistrator m ay be appointed to preserve property lx
for any reason general adm inistration cannot be im m ediately granted.
A dm inistration shall n o t be originally granted after five years
from th e d eath of th e decedent, or from th e tim e his d eath was known,
in case he died o u t of th e sta te of Iowa; except, however, when personal
property belonging to th e estate of th e decedent is discovered after
th e expiration of said five years, adm inistration m ay be granted tor
th e purpose only of m aking proper disposition thereof.
Claim s against th e estate of a deceased person are payable in tne
following order: 1. Charges of th e last sickness an d funeral of tne
deceased. 2. Any allowance m ade by th e court for th e maintenance
of th e widow and m inor children. 3. D ebts entitled to preference under
th e laws of th e U. 8 . 4. Public ra te and taxes. 5. Claims filed
w ithin 6 m onths after th e first publication or posting of th e notice
given by th e executors or adm inistrators of their appointm ent, in
this class, claims for labor perform ed w ithin th e next preceding 9U
days of th e d eath of decedent are preferred. 6 . All other debts.
7. Legacies and th e distributive shares, if any.
Ail claims of th e sixth of th e above classes n o t filed and allowea,
o r if filed and notice thereof n ot served w ithin 1 2 m onths from tne
giving of th e notice of appointm ent are barred, except as to actions
against decedent pending in th e district or suprem e court a t th e time
of his death or unless peculiar circum stances entitle th e claim ant to
equitable relief.
A ffidavits. Affidavits m ay be tak en before an y person author
ized to adm inister oaths in th e sta te w here taken. Those taken out
of th e sta te before an y judge or clerk of a court of record, or before
a n o tary public, or a commissioner appointed by th e governor oi
this sta te to tak e acknowledgm ent of deeds in th e sta te where sucn
affidavit is taken, are of th e sam e credibility as if tak en w ithin tne
state. Affidavits m ay be tak en w ithin th e sta te for any lawiui
purpose, of one unwilling to voluntarily m ake an affidavit, oy turns
a petition w ith an officer authorized to adm inister oaths, who may
cause th e person to come before him and m ake affidavit. i ms
proceeding is sta tu to ry and m ust conform strictly to th e statu tes oi
Iowa.
Affidavits for proving accounts and form : S tate o f . . . . . . • • • • • .ss, I . . . . . . . . . .being first duly sworn, on oath
C ounty o f...........
depose and say th a t I am (a m em ber of th e firm of. ■■■■■
th a t said firm is) the owner of the account hereto attached, m arkea
exhibit A, and m ade a p a rt hereof, th a t the sam e is core'
particulars and th a t the articles nam ed therein were sold and aellve
to s a id ............. .a t th e prices and tim es therein nam ed and agreed
upon, and th a t said articles were reasonably
tacai
and th a t th e said account is due and unpaid. T h at t h e r e ^ no legal
set off or credit to th e sam e or any p a rt thereof e x c e p t a s herein stated.
Subscribed an d sworn to before me, by the sa id ................... i n i s . . . day. etc.
B A N K IN G A N D C O M M E R C IA L LAW S— IOW A
A llen s. N on-resident aliens or corporations incorporated under
the laws of an y foreign country or corporations organized in this
country, one-half of th e stock of which is owned or controlled by non
resident aliens are prohibited from acquiring title to or holding any
real estate in Iowa, b u t th e non-resident alien widow, heirs, or devisees
of an alien or naturalized citizen m ay hold th e sam e for tw enty years,
and if n o t Sold within th a t tim e, escheats to the S tate. Aliens m ay
acquire property of an y kind w ithin a city or tow n or lands not exceed
ing 320 acres or stock in any corporation for pecuniary profit and m ay
alienate or devise th e same, b u t this law does not affect personal
property. A lien holder m ay acquire title to the property em braced
in such lien b u t real estate so acquired m ust be sold within ten years
after title is perfected in an alien, otherwise it will escheat to th e
S tate.
A rre s t. N o person can be im prisoned for d eb t on either mesne
or final process, unless in case of fraud« D ebtors, however, m ay be
ordered to appear before a court of record wherein a judgm ent has
been rendered, and if th e debtor is about to leave th e S tate, or conceal
himself, he m ay be arrested and compelled to give bond to appear
before th e court for exam ination, and in th e m eantim e, n ot dispose
of his property. (See Supplem entary Proceedings.)
A s sig n m e n ts a n d In so lv e n c y . General assignm ents not valid
unless for benefit of all creditors, when assent of creditors is presum ed.
T he deb to r m ust annex to th e instrum ent of assignm ent a sworn
inventory and list of creditors; and such instrum ent m ust be acknowl
edged and all of th e papers recorded like a deed of real estate. The
assignm ent vests in th e assignee title to all property of the debtor.
Assignee m ust give bonds, prepare a verified inventory and valuation,
and notify creditors by mail to file claims within three m onths.
All claims n o t filed within three m onths after notice published or
within such extended tim e as th e court grants, n ot exceeding nine
m onths, including claims n o t y et due, can n ot be paid u ntil all claims
filed w ithin said tim e are paid. An assignm ent does n ot discharge
th e debtor from his debts and liabilities, b u t only entitles creditors
to share equally in his estate. All claims filed m ust be item ized
and sworn to.
A tta c h m e n ts . An attachm ent, auxiliary to th e ordinary pro
ceedings, m ay be sued o u t a t th e comm encem ent or during th e progress
of th e proceeding if th e petition is sworn to and sta te s one or m ore of
th e following grounds:
1. T h a t th e defendant is a foreign corporation or acting as such.
2. T h a t he is a nonresident of th e state.
3. T h a t he is ab o u t to rem ove his property o u t of th e s ta te w ith
o u t leaving sufficient rem aining for th e paym ent of his debts.
4. T h a t he has disposed of his property, in whole or in p a rt, w ith
in ten t to defraud his creditors.
5. T h a t th e defendant is ab o u t to dispose of his p ro p erty w ith
in te n t to defraud his creditors.
6 . T h a t he has absconded, so th a t th e ordinary process cannot
be served upon him.
7. T h a t he is ab o u t to rem ove perm anently o u t of th e county,
and has p ro p erty therein n o t exem pt from execution, an d th a t he
refuses to pay or secure th e plaintiff.
8 . T h a t he is ab o u t to rem ove perm anently o u t of th e sta te , and
refuses to p ay or secure th e d eb t due th e plaintiff.
9. T h a t he is ab o u t to rem ove his pro p erty or a p a r t thereof
o ut of th e co unty w ith in ten t to defraud his creditors.
10. T h a t he is ab o u t to convert his pro p erty or a p a r t thereof
into m oney for th e purpose of placing i t beyond th e reach of his
creditors.
11. T h a t he has p ro p erty or rights in action which he conceals.
12. T h a t th e deb t is d ue for p roperty obtained under false pretenses.
P ro p erty of debtor m ay be attached for debt not yet due if his
petition sta te s one or m ore of following grounds: 1. T h a t defendant
is ab o u t to dispose of his property w ith in ten t to defraud his creditors.
2. T h a t he is ab o u t to rem ove or has rem oved from th e sta te , and
refuses to secure th e paym ent of th e debt when it falls due, and which
removal or contem plated rem oval was n ot known to th e plaintiff a t
th e tim e th e d eb t was contracted. 3. T h a t th e defendant has dis
posed of his property in whole or in p a rt w ith intent to defraud his
creditors. 4. T h a t th e debt was incurred for property obtained under
false pretences.
Special attach m en ts are perm itted in certain cases.
On all above cases th e plaintiff m ust file a bond in a penalty a t
least double th e value of th e pro p erty sought to be attach ed except in
landlord’s attach m en ts on re n t accounts, and in any case where
only real p ro p erty is sought to be attached th e bond shall be in an
am ount fixed by th e co u rt or clerk, usually considerably less.
B a n k s a n d B a n k in g . Savings banks and tru s t com panies m ay be
formed by not less th an five persons of lawful age, a m ajority of whom
shall be citizens of th e sta te . T he m inim um paid up capital depends
upon th e population of th e city wherein th e bank is located.
A t least three-fourths of th e directors m ust -be citizens of this sta te
and all m ust be shareholders.
No banking in stitu tio n organized under th e laws of this sta te shall
declare or pay an y dividend until it has first established a surplus of
a t least tw en ty per cent of its capital except dividends required to be
paid on Class “A ” preferred stock held by R . F. C.
Bank d rafts are preferred claims against th e assets of th e S tate,
Savings Bank or T ru st Com panies issuing them . (Does not apply
to priv ate banks.)
S tate banks, savings banks, and tru s t companies have a prior lien
on th eir debtors’ shares of stock for all obligations to th e bank subject,
however, to loans against th e stock which th e bank has acknowledged
by w ritten notice.
S tate an d savings banks and tru s t companies have power when so
authorized by th eir articles of incorporation, to act as assignee or
trustee by deed an d guardian, executor, or tru stee by will or to be
appointed receiver, assignee, guardian, adm inistrator or other trustee
by an y court of record in th is s ta te :
N ational banks m ay exercise th e sam e powers when so authorized
by any law of th e U nited States.
Any sta te , savings bank or tru s t com pany, m ay become a m em ber
of th e Federal Reserve System.
I t is unlawful for an y officer or employee of any bank or tru st
company to offer for sale or prom ote th e sale of any stock, real estate,
life insurance, fire insurance, bonds or other securities, unless the
sale of th e sam e shall have been sanctioned and approved by the
Board of D irectors an d such approval entered of record. I t is a
misdemeanor for any officer or employee to violate th e above.
The president an d cashier of every savings bank and every sta te
bank shall cause to be k ep t a t all tim es, a full and correct list of the
names an d residences of th e officers, directors, exam ining com m ittee
and all th e stockholders of th e bank. T his list shall also show th e
number of shares held by each. Such lists shall be subject to the
inspection of all th e stockholders and creditors of th e bank during
business hours of every day in which business m ay be legally tran s
acted. T he president an d cashier shall verify by oath a cof>y of th e
list and send th e sam e to th e S uperintendent of Banking w ithin ten
days after each annual m eeting. And th e Superintendent m ay, if
he desires, require th e president or cashier to furnish him w ith financial
statem ents of th e stockholders.
In th e event an y sta te bank, savings bank or tru s t com pany holding
a charter to tran sact business w ithin th e sta te fails to tran sact business
or perform th e duties imposed on it by th e banking law, such charter
may be cancelled on proper hearing by th e D istrict C ourt.
No person shall be eligible as a director of any savings or sta te
bank or tru s t com pany unless such person owns shares of stock in
th at bank as follows:
(a) In banks whose capital is less th a n $30,000 he m ust hold a t
least $200 worth of stock a t p ar value.
(b) In banks having a capital of $30,000 or m ore he m ust hold and
own a t least $500 worth of stock a t par value.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1989
No sta te bank, savings bank or tru s t com pany shall pay Interest
on savings accounts or certificates of deposit or any other tim e deposit
a t a ra te greater th a n 4 per cent per annum payable sem i-annually.
No interest in any event shall be paid upon such tim e deposits for
any period less th a n three m onths.
If, however, th ere are.any savings accounts or tim e deposits bearing
interest a t a ra te greater th a n 4 per cent th e sam e shall be considered
borrowed m oney and shall be so reported to th e superintendent of
banking.
Before any director of a sta te bank, savings bank, or tru s t com pany
acts as such, he m ust ta k e an oath th a t he will diligently, faithfully,
and im partially perform th e d u tie s imposed upon him by law. T h at
he will not violate nor perm it to be violated an y of th e banking law,
and th a t he is a bona fide holder in his own right of th e num ber of
shares required to be owned by him, an d th a t th e sam e have n o t been
hypothecated.
T he B oard of D irectors m ust hold a t least one m eeting each calendar
m onth. T he S tate Superintendent of Banking m ay require, if in his
opinion it would prom ote th e banking industry to do so, th a t un
secured loans in am ounts exceeding $500, shall n ot be m ade except
where th e borrower subm its a financial statem ent.
No executive officer of an y bank or tru s t com pany shall use directly
or indirectly any m oney of th e bank in excess of 10 per cent of th e
capital and surplus. N or shall th e to ta l am ount loaned to all executive
officers of th e bank exceed 25 per cent of th e com bined capital and
surplus. No such loans can be m ade unless th e sam e shall first be
approved in w riting by a m ajority of th e board of directors, exclusive
of th e p a rty borrowing.
I f any bank officer certifies a check in excess of th e balance on
deposit or issues a certificate of deposit when th e full am ount has
not been deposited, he is guilty of a m isdem eanor. N o officer of any
bank shall have power to pledge or hypothecate any obligations owned
by th e bank unless authorized to do so by a resolution of th e board
of directors. Any pledging or hypothecation w ithout such au th o rity
is void and th e p a rty guilty is liable for im prisonm ent up to tw enty
years.
All officers and employees of any bank having th e care or custody
of any funds or securities of th e bank m ust furnish a bond subject to
th e approval of th e board of directors.
Any person knowingly issuing a false financial statem ent to a bank
w ith in ten t to defraud respecting his financial condition, shall be guilty
of a misdem eanor.
W hoever maliciously or w ith in ten t to deceive, m akes or circulates
any false report concerning any bank which tends to im pute an
unsound financial condition of th e bank or cause a general w ithdraw al
of deposits, shall be guilty of a felony and subject to fine an d im
prisonm ent.
Banks m ay w ith approval of S uperintendent of Banking establish
offices in their own county or in counties contiguous to th e one in
which th e b ank is located only for th e purpose of receiving, depositing,
paying checks, and perform ing other clerical and routine duties in
connection therew ith.
T he superintendent of banking upon application of th e officers or
directors of any s ta te bank, savings bank, or tru s t com pany, or p rivate
bank doing banking business and consent of th e executive council, or
th e governor or lieutenant governor, shall have power to tak e over th e
m anagem ent of any such bank for a period n ot exceeding tw o years
unless special consent to operate for a longer period is given by the
executive Council.
T he rem edies a t law or in equity of any creditor or stockholder
against any such bank or tr u s t com pany are suspended and th e s ta tu te
of lim itations tolled during th e period m anaged by th e superintendent
of banking. T he governing board of an y county, city, town, tow nship,
or school district, in its discretion m ay enter into depositors’ agreem ents
of unsecured and unpreferred claims for th e reorganization, re-opening,
or consolidation of th e bank.
T he banking dep artm en t, w ith th e approval of th e governor m ay
designate w hat th e officers, directors, and stockholders should be re
quired to pay if th e bank is reorganized.
Preferred stock issued by any bank or tru s t com pany in this sta te
shall be included in determ ining w hether such banking institution has
complied w ith th e m inim um capital requirem ents provided by law for
banking institutions.
Banks as depositories of public funds m u st p ay assessm ents thereon
to th e country treasu rer of th e county in which such depository is
located on or before th e 1 0 th of each m onth, and on or before th e
20 th of each m onth county treasurers shall rem it th e am ount of
such assessm ents to th e sta te treasurer to be placed by him in th e
s ta te sinking fund for public deposits. T he assessm ent periods
commence on Ju ly 1st and Ja n u ary 1st of each year and th e ra te of
assessm ent for each such period is fixed by th e sta te treasurer w ith
approval of th e Executive Council. T he ra te of assessm ent shall
n ot be less th a n one-half of one per cent per annum on ninety per cent
of collected daily balances nor more th a n two and one-half per cent.
W hen th e am ount in th e sta te sinking fund has reached $500,000.00,
above accrued and contingent liabilities, no assessm ents shall be
paid u n til said sinking fund has been reduced to less th a n $250,000.00.
S tate banks, savings banks and tr u s t companies m ay m ake loans
pursuant to T itles I and I I of th e N ational Housing Act or am end
m ents thereto, and invest in m ortgages insured and in debentures
issued by th e F. H. A. and invest in capital stock and securities of
national housing associations or sim ilar credit institutions.
Any banking institution is empowered on th e authority of its board
of directors or m ajority thereof, w ith th e approval of th e Superin
tendent of Banking, to enter into contracts, incur obligations and
perform any other acts necessary to tak e advantage of membership
in th e F. D. I. C. T he F. D. I. C. is authorized to m ake exam ination
of banking institutions incorporated under th e laws of the S tate of Iowa,
T he taxable value of shares of stock in a State bank, savings b ank or
tru s t com pany shall be of th e assessed value and shall be taxed as
m oneys and credits. S urplus and undivided profits after deduction
of real estate, is; also taxable as moneys and credits.
B ills of E x c h a n g e . T he uniform negotiable instrum ents law is in
effect in Iowa.
B lu e S ky L aw . A com plete system of law for th e regulation of
th e sale of securities known as th e “ Iowa Securities L aw ” is now In
force. This act applies to sales and purchases w ithin th e S tate of
Iowa of stocks, bonds, notes, debentures an d practically all other
evidences of indebtedness. A copy of th is law in pam phlet form as
well as all necessary blanks, etc., m ay be obtained free on application
to th e Secretary of S tate.
C h a tte l M o rtg a g e s. N o sale or m ortgage or personal property,
where the vendor or m ortgagor retains actual possession, is valid
against existing creditors or subsequent purchasers w ithout notice,
unless a w ritten instrum ent conveying same, be executed acknowledged
like conveyances of real estate, and such instrum ents, or a duplicate
thereof duly recorded, or filed and deposited w ith the recorder of the
county where th e property shall then be situated or if thè m ortgagor
be a resident of the state, then of th e county where th e holder of the
property resides. No encum brance of personal property which m ay
be exem pt from execution by the head of a fam ily if a resident of the
S tate shall be of any validity unless th e sam e be by w ritten instru
m ent and unless th e husband and wife concur in and sign th e same
joint instrum ent.
C o lla te ra l S e c u ritie s . T here are special sta tu to ry provisions
concerning the pledging of corporate stock, as security ; and also
upon th e subject of sales of collaterals by action in court and judicial
sale. Otherwise the subject is governed by the common law.
1990
B A N K IN G A N D C O M M E R C IA L L A W S— IOW A
C o n d itio n a l S ales. No sale, contract, or lease wherein th e
transfer of title or ownership of personal property is m ade to depend
upon any condition, shall be valid against any creditor or purchaser
of th e vendee or lessee in actual possession, obtained in pursuance
thereof, w ithout notice, unless the sam e be in writing, executed
by th e vendor and vendee, or by the lessor and lessee, acknowledged
by th e vendor or vendee, or by the lessor or lessee, and recorded or
filed and deposited the sam e as chattel mortages.
C o n v e y an ces. No particular form is necessary for conveyances
or m ortgages. T he nam e of the parties, the description of the property,
th e consideration, the date, signature, and acknowledgment. Is all
th a t is necessary; as between the parties they are valid w ithout
being recorded. T he wife m ust join w ith her husband in conveyances,
and a conveyance of th e hom estead is of no validity unless husband
and wife concur in and sign th e sam e joint instrum ent- A corporation
executes conveyances under its corporate seal, except where the
corporation has not adopted a seal. Such conveyances m ust be signed
in th e nam e of the corporation by the officers authorized so to do,
by th e Articles of Incorporation, or By-Laws, or by resolution duly
entered of record in the m inutes o f th e corporation, and duly acknowl
edged by such officers, as the act of th e corporation.
T he legislature has by s ta tu te approved th e following forms:
1. Quit claim deed.
F or th e consideration of $ ..............1 hereby q uit claim t o ................ .
all m y interest in th e following described tra c t of real estate: (De
scribing it.)
2. For a D eed conveying fee sim ple w ithout w arranty:
For th e consideration of $ .................I hereby convey t o .......................
th e following tra c t of real estate (Describing it.)
3. For a Deed conveying fee sim ple w ith full w arranty: add to
num ber 2 th e following:
And I w arran t th e title against all persons whomsoever.
4. F or a M ortgage; ad d to num ber 2 th e following: T o be void
upon condition th a t I pay, etc.
Of course, th e above instrum ents m ust be signed by th e grantor,
an d if he is m arried his wife m ust also sign to convey her dower
Interest. I f it Is desired th a t any of th e above instrum ents be recorded,
th en th e sam e m ust be acknowledged.
C o rp o ra tio n s . P riv ate corporations, sole or aggregate, m ay be
form ed for any lawful purpose. B ut there are special statu to ry
provisions which m ust be complied w ith for the organization and
governm ent of insurance, banking, loan and tru st, building and loan,
an d railway corporations. In all cases, the articles of incorporation
m u st be acknowledged and recorded, in the m anner provided by
law, and approved by th e secretary of state. W ith a few exceptions,
an Incorporation fee of $25. plus SI ror each thousand dollars of
capital in excess of $ 10,000 m ust be paid, upon the organization
or renewal of a private corporation. T he general term of the life
of a priv ate corporation is tw enty years, renewable for a like term .
Railroads, savings banks, and a few others m ay last fifty years,
also renewable.
. Foreign corporations m ust obtain a perm it to do business in the
state. The sta tu te provides in detail w hat the application shall
contain, and m ust pay to th e Secretary of the State a fee of $25 upon
$ 10.00 0 or less of m oney and property of th e com pany actually within
th e S tate, and $1.00 for each $1,000 of such money or property within
th e State in excess of $10,000. No foreign stock corporation doing
business in th is state shall m aintain any action in th is state upon
any contract m ade by it in th is state, unless prior to th e making of
such contract it shall have procured such perm it. T his prohibition
shall also apply to any assignee of such foreign stock corporation and
to an y person claiming under such assignee of such corporation or
under either of them .
T he Articles of Incorporation m ay prescribe an y figure as th e par
value of each share of stock, or th e stock m ay be issued, “ W ithout
P ar Value.”
C o u rts . T erm s and Jurisdiction. T he district court has jurisdic
tion of all actions, civil and equitable, and has crim inal and probate
jurisdiction. Superior courts m ay be established by the vote of
th e people in any city of 4,000 inhabitants. I t has jurisdiction to
try all violations of city ordinances, and the same crim inal jurisdiction
as justice of th e peace courts. I t has jurisdiction to try and determ ine
civil and crim inal appeals and civil writs of error from justices of
th e peace, situated in the township where the court is located. Has
th e sam e jurisdiction as the district court to try all suits in law and
equity, except g rant divorces, alimony, and separate m aintenance,
and it has no probate jurisdiction. T ranscripts from superior and
justice's courts m ust be filed in district court to create a lien on real
estate, and are then enforced as judgm ents of the district court;
justice's jurisdiction, $100, or, by w ritten consent of parties, $300.
T he suprem e court has only appellate jurisdiction and holds sessions
a t Des Moines, January to M ay, from M ay to Septem ber (less vaca
tion), and from Septem ber to December.
M unicipal C ourt m ay be established by th e vote of people in cities
of 5,000 inhabitants. I t has jurisdiction to try all violations of city
ordinances, an d th e sam e crim inal jurisdiction as Justice of the Peace
court, an d exercise th e jurisdiction conferred on the D istrict C ourt
for th e trial of m isdemeanors. I t has concurrent jurisdiction with
th e D istrict court in all civil m atters involving $1,000 or less, b u t has
no Jurisdiction to g rant divorces, alim qny or separate m aintenance,
an d has no probate jurisdiction. T ranscripts m ust be filed in D istrict
C ourt to create a lien, and appeals are taken direct to the Supreme
C ourt.
D ays o f G ra c e . E very negotiable instrum ent is payable a t the
tim e fixed therein w ithout grace.
D e p o sitio n s m ay be taken within the S tate, on notice, and within
or w ithout th e S tate, on commission or agreem ent of parties issued
after notice by th e clerk of th e proper court. W hen to be taken on
commission, defendant m ay elect, in writing, duly served, to cross
examine orally; thereupon plaintiff m ay also elect in writing to exam
ine orally. Exceptions m ust be filed w ithin three (3) days, after the
filing of th e deposition, b u t objections m ay nevertheless be m ade a t
th e tria l for com petency, m ateriality, and relevancy.
D e sc e n t a n d D is tr ib u tio n of P ro p e rty . Subject to rights of
dower and other charges thereon, and burdens imposed during the
lifetim e of th e decedent, and in the absence of a valid will, the estate
of one deceased shall descend in equal shares to his children. The
heirs of any deceased child shall inherit in sam e m anner as though
such child had outlived his parents. If the intestate leave no issue
th e whole of the estate to th e extent of $7,500 after paym ent of debts
an d adm inistration expense, and one-half of the estate in excess of
said $7,500 goes to the surviving spouse and the other half to the
parents. If no surviving spouse, the whole thereof shall go to his
paren ts o r th e survivor of them ; and so on through ascending an
cestors and their issue. If both parents be dead. Personal property
n o t necessary to pay debts is distributed to the same persons, and in
th e sam e proportions as though it were real estate.
D o w er. T he surviving spouse is entitled to one-third in value of
all th e legal and equitable estates in real property possessed by the
deceased spouse a t any tim e during th e m arriage, which have not been
sold on execution or any other judicial sale, and to which such survivor
has m ade no relinquishm ent of right. A spouse, heir or devisee
feloniously taking or procuring th e taking of the life of the other
spouse, or decedent, cannot have dower or inherit power or take under
th e will of th e decedent. (See Lim itations.)
E m p lo y e rs L ia b ility . Em ployers liability and workm en's com
pensation is governed by sta tu te.
E x e c u tio n s m ay be stayed, according to their am ount, for ninety
days or six m onths, w ith a few specified exceptions. The issuance of
execution m ay be prevented by filing an appeal bond. Otherwise
execution m ay issue im m ediately after rendition of judgm ent. A
sta y of execution waives right of appeal. The judgm ent is a lien on
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realty w ithin th e county where rendered, or by transcript, it m ay be
m ade a lien in any other country. Executions become liens on per
sonal property only from th e tim e of th e levy and seizure. Beal
estate is sold on execution subject to redem ption w ithin one year,
except in appealed cases, or where the interest is a leasehold of two years
or less. Creditors having liens, m ay redeem from th e sale after six
m onths and before nine m onths from date of sale. Personal property
is sold w ithout redem ption.
E x e m p tio n s . T he head of a fam ily is entitled to a hom estead of
forty acres or less of farm land or half an acre or less in a city or town.
W hen a debtor absconds and leaves his fam ily, such property as is
exem pt to him shall be exem pt in th e hands of his wife and children
or either of them . T he sta tu te provides for num erous exemptions of
personalty to th e head of th e family including: 1 . T he proper tools.
Instrum ents or books of th e debtor, if a farm er, m echanic, surveyor,
clergym an, lawyer, physician, teacher, or professor, except th a t no
m otor vehicle shall be held exem pt from any order, judgm ent or
decree for dam ages occasioned by th e use of said m otor vehicle upon
a public highway of this sta te . None of th e above articles are exempt
for th e purchase price thereof. 2. All money received by a person
as pension money w hether deposited loaned or invested by him. 3.
Earnings for his personal services a t any tim e w ithin 90 days next
preceding th e levy. 4. Any com pensation due or m ay become due
under th e W orkm en’s Com pensation Act.
A policy of insurance on th e life of an individual, in th e absence of an
agreem ent or assignm ent to th e contrary shall inure to th e separate use
of th e husband or wife and children of th e said individual independently
of all his creditors. T he proceeds of an endowm ent policy payable to
th e assured on attaining a certain age shall be exem pt from liability
for any of his debts. Any benefit or indem nity paid under an accident
policy shall be exem pt to th e assured, or in case of his d eath to th e hus
band or wife and children of th e assured, from his debts. T he avails of
all policies of life or accident insurance payable to th e surviving widow
shall be exem pt from liability for all debts of such beneficiary contracted
prior to th e death of th e assured, b u t th e am ount thus exem pted shall
not exceed $5,000.00.
T here are sta tu to ry provisions concerning th e creation of liens on
exem pt real or personal p roperty and th e assignm ent of exem pt wages.
T here is no exem ption to debtor under a decree for th e support of
minors. N or is there any exem ption for th e paym ent of alimony
unless the p arty in whose favor th e decree was rendered remarries.
F r a u d . In actions for fraud, heretofore solely cognizable in a court
Of chancery, the cause of action shall not be deem ed to have accrued
until the fraud complained of shall have been discovered by the party
aggrieved by the exercise of due diligence. In actions brought by a
judgm ent creditor to set aside a fraudulent conveyance of property
from one spouse to the other and to subject said property to execution,
either husband or wife m ay be compelled to testify against the other.
Gross fraud is punishable by fine or im prisonm ent.
G a r n is h m e n ts . (See A ttachm ents.)
H u s b a n d a n d W ife. (See M arried Women.)
H o lid ay s. The legal holidays a re : S undays; Ja n u ary 1 (New Year’s
D ay); F ebruary 12 (Lincoln’s birthday); F ebruary 22 (W ashington’s
birthday); M ay 30 (M emorial D ay); Ju ly 4 (Independence Day);
first M onday in Septem ber (Labor Day) ¡general election d ay ; Novem
ber 1 1 (Armistice D ay); Thanksgiving D ay; December 25 (Christmas
D ay). For all purposes relating to th e presentation for paym ent
or acceptance, and for th e protesting and giving notice of th e dis
honor of bills of exchange, drafts, bank checks, orders and promissory
notes, an y bank or m ercantile paper falling due on an y of th e above
nam ed days, shall be considered as falling due on th e succeeding busi
ness day.
I n t e r e s t . By w ritten contract, maximum legal rate, 7 per cent.
Judgm ents draw 5 per cent, or such rate as is fixed by the contract
on which the judgm ent or decree is rendered, not exceeding 7 per
cent per annum . Open accounts draw 5 per cent after six months
from date of last item ; money loaned, money due. money due on
settlem ent of accounts, bear interest a t 5 per cent per annum . Con
tra c t for more than 7 per cent forfeits all interest and costs.
J u d g m e n ts in th e d istrict and superior courts m ay be obtained
a t first term a fter su it commenced, if undefended. Causes shall be
triab le a t th e first term after legal and tim ely service has been made.
Judgm ents of the district court are liens on real estate owned by
the debtor a t the tim e of rendition, if the lands lie in any other
county, from the tim e of filing therein an attested copy of th e judg
m ent. Lien also covers all lands which defendant m ay acquire
within ten years from date of judgm ent, or upon which a levy is
m ade after ten or before tw enty years from the date of the judgment,
b u t this lien dates only from the tim e of the levy. Judgm ents of
superior courts and justice of peace courts become liens on real estate
by filing transcript in district court within county where obtained,
and become liens in other counties in the sam e m anner as if rendered
in the district court.
A judgm ent in an action for th e foreclosure of a real estate mortgage
or deed of tru s t or in any action on a claim for rent or judgm ent as
signed by th e receiver of th e closed bank, or rendered upon credits
assigned by th e receiver of th e closed bank, when the assignee is not
a tru stee for th e depositors or creditors of th e bank cannot be enforced
nor execution issued thereon and no force or validity is given thereto
except for th e purpose of set off or counterclaim after th e expiration
of a period of two years from th e entry thereof unless a voluntary
w ritten stipulation of th e parties continuing it in force for a longer
period is filed in th e case.
L ie n s. These are m ainly created by sta tu te and are enforceable
in equity. In a few cases, and under peculiar circum stances, equitable
liens on real estate are established and enforced in equity.
L im ita tio n s . Actions, according to their subject m atter, have
various periods of lim itation, fixed by sta tu te, extending from three
m onths to ten years after th e cause of action accrued. Actions upon
judgm ents rendered in courts of record have a lim itation of twenty
years. There are special lim itations barring action for interest in
real estate based on defective trustees, guardians, adm inistrators,
executors and sheriffs deeds; also as to other defects in th e title to
real estate.
M a rrie d W o m en m ay own in their own right, real and personal
property, and m ay manage, sell, convey, and devise the same by
will. N either husband nor wife is liable for th e separate debts or
liabilities of the other incurred before or after marriage, nor are the
wages, earnings, or property of either liable for th e separate debts of
th e other. C ontracts m ay be m ade by a wife, liabilities incurred, and
enforced by or against her, as if unm arried. Both husband and
wife are liable for the reasonable and necessary expenses of the family,
and the education of the children.
M o rtg a g e s. M ortgages m ust be subscribed and acknowledged by
th e parties creating th e lien and recording th e sam e as deeds. The
wife should join in the instrum ent, except m ortgages for purchase
money, and m ortgages upon non-exem pt personal property. When.a
m ortgage is paid off, satisfaction thereof m ust be m ade on th e margin
of th e record, or by a satisfaction piece, acknowledged and. recorded.
I f no such satisfaction is entered w ithin 30 days after request in writing,
th e m ortgagee forfeits $25.00= T he m ortgagor has one year in which
to redeem real estate after execution sale.
T he owner is entitled to possession and exclusive right to redeem
during th is period and th e court in its discretion m ay appoint a re
ceiver. T he income shall be paid to th e Clerk of th e D istrict Court
to be applied in the following order: 1. Cost of Receivership;
P aym ent of taxes due and to become due during receivership: 3. io
pay th e insurance on buildings on th e prem ises or such other benefits
to th e real estate as m ay be ordered by th e court; 4. T he balance
shall be paid and distributed as determ ined by th e court. (See execu
tions, chattel m ortgages, lim itations.)
B A N K IN G A N D C O M M E R C IA L L A W S— K A N S A S
N e g o tia b le I n s t r u m e n t s . Uniform N egotiable Instrum ents Act
adopted April 12, 1902.
N o n -re s id e n ts . Action m ay be brought against non-residents to
enforce liens on an y property within th e sta te ; to enforce any debt
against a non-resident where action is aided by attachm ent on prop
erty found w ithin th e S tate. Personal judgm ent cannot in any case
be rendered against defendants, n o t appearing, unless personal
service is had on such defendants within the S tate. Non-residents
m ay n o t sell a t auction as auctioneers unless reciprocal legislation
exists in th e sta te of th eir residence.
N o ta rie s. These officers are appointed and commissioned by the
governor, upon filing a bond and paving the fee required by law.
T hey have power to adm inister oaths, take depositions, and the
usual power of such officers concerning presentation, dem and, protest,
and notice o f protest of negotiable commercial paper, only w ithin the
county in which commissioned.
All notarial commissions expire Ju ly 4, 1939 and are renewable for
three year periods commencing w ith th a t date.
P a r tn e r s h ip s , L im ite d a n d S p ecial. Lim ited and special p a rt
nerships are perm itted, b u t not favored; The statu tes on this subject
m ust be strictly complied with. A certificate showing prescribed
details and particulars of the partnership m ust be signed, acknowl
edged, and filed in th e office of the C ounty Recorder of the county in
which th e principal place of business is situated, to be there recorded
and sim ilarly recorded in each county where such partnership has a
place of business. T here m ust be an affidavit th a t the am ount sta te d
in th e certificate has been actually contributed by each separate partner.
Publication should be m ade of th e certificate and affidavit for six
weeks in two newspapers in each senatorial district in which th e
partnership is to tran sact business.
P o w ers o f A tto rn e y . A power of atto rn ey to convey, or in any
m anner affect real estate, m ust be acknowledged and recorded. A
revocation of such power m ust be acknowledged and recorded in the
game office wherein th e original power of attorney is recorded.
R eceiv ers. A receiver m ay be appointed on th e petition of either
p arty to a civil action or proceeding wherein he shows th a t he has a
probable right to or interest in any property which is th e subject of
the controversy an d th a t such property is in danger of being lost or
m aterially injured or im paired. W hen th e property of any person,
partnership, com pany or corporation has been placed in th e hands or
a receiver for distribution, after th e paym ent of all costs, th e following
claims shall be entitled to priority of paym ent. 1. Taxes or other
debts entitled to preference under th e laws of th e U. S. 2 . D ebts
due or taxes assessed and levied for th e benefit of the state, county,or other _m unicipal corporations in th e state. 3. D ebts owing to
employees for labor perform ed w ithin th e 90 days next preceding th e
transfer of such property.
R e co rd s. All instrum ents conveying or creating liens upon the
real or personal property and all conditional sales m ust, after having
been signed and acknowledged, be recorded in the office of the recorder
of deeds in th e proper county or counties where the property conveyed
is situ ated . M ortgages and conditional sales of personal p roperty
executed by residents of th e sta te of Iowa m ust be recorded in th e
county where th e m aker resides. Unless so recorded, such instru
m ents are invalid as to a bona fide purchaser or encum brancer.
R e d e m p tio n . Redem ption from a sheriff’s sale of real estate,
whether sold under a general or special execution, m ay be m ade by
the debtor during a period of one year and by a creditor who has a lien
on th e p roperty sold, any tim e after six m onths and within nine m onths
from d ate of sale by paying to the clerk of th e court the am ount pro
vided by sta tu te, being generally, th e am ount of the purchaser’s, bid.
with in terest a t th e sam e ra te th a t the judgm ent bears. W ithin the
time nam ed creditors m ay redeem from each other. A fter nine
m onths, and w ithin one year from the date of sale the owner of the
real estate sold has th e exclusive right to redeem from such sale, and
in so doing, th e debtor m ust pay off the claims of judgm ent creditors,
who have m ade redem ptions as herein above sta te d in addition to th e
am ount originally bid.
R e p le v in . In actions for the recovery of personal property, the
petition m ust be verified; and if plaintiff desires im m ediate delivery
of th e property, he shall execute a bond for double the value of the
property sought to be recovered. The defendant m ay stay all pro
ceedings and retain th e property by executing a bond to the plaintiff
with sureties to be approved by the clerk.
S ales. T his S tate has a uniform sales law.
S ales o f G oo d s in B u lk . The sale, transfer or assignment in bulk
of any p a rt of th e whole or a stock of m erchandise and fixtures per
taining thereto otherwise th an in the ordinary course Of trade and
in the regular prosecution of business, is void as against the creditors
of seller: 1 . unless a t least seven days before the sale a detailed
inventory is made, and 2 . unless the purchaser dem ands and receives
from th e seller a w ritten list of nam es and addresses of the creditors
of the seller, with the full am ount of indebtedness due or owing to
each and certified by the seller under oath to be a full, accurate and
complete list of his creditors and of his indebtedness, and 3. unless
the purchaser shall a t least seven days before taking possession or
paying the purchase price, notify personally or by registered mail
every creditor whose nam e and address are stated in said list or to
which he has knowledge, of the proposed sale and of the price, term s
and conditions thereof. .
The bulk sales law does n ot apply to sales by executors, adm ini
strators, receivers, trustees in bankruptcy, or any public officer under
judicial sale. A purchaser n o t complying with these provisions be
comes a receiver and accountable to the creditors for all m erchandise
and fixtures coming into his possession by virtue of the purchase.
S e c u rity fp r C o sts. N onresident and corporation plaintiffs m ay,
on motion of defendant, be required to file a bond with sureties to be
approved for security of costs either in Justice C ourt, M unicipal
Court, or D istrict C ourt.
S t a t u t e of F ra u d s . No evidence except in w riting and signed
by the p arty to be charged or by his authorized agent, is com petent
relative to th e following contracts: 1. In relation to sale of personal
property, when no p a rt of the property is delivered and no pa rt of
the price is paid. 2. In consideration of m arriage. 3. W herein
one promises to answer for the debt, default or m iscarriage of another.
Including promises by executors to pay the d eb t of decedent from their
own estate. 4. For the creation or transfer of any interest in lands,
except leases for a term not exceeding one year. 5. Those not to
be performed within one year from the m aking thereof.
S tock s a n d B o n d s. The sale of stocks and bonds is governed by
what is term ed a “ Blue Sky Law.”
S u p p le m e n ta r y P ro c e e d in g s. W hen an execution has been
returned unsatisfied, plaintiff m ay have an order for the appearance
and exam ination of th e judgm ent debtor; or such order m ay be
obtained after execution has issued upon proof by plaintiff's affidavit
or other proof th a t debtor has property which he unjustly refuses to
apply to th e satisfaction of the judgm ent. I f any property be found
by such exam ination it m ay be levied upon; if in the hands of others
the court m ay require its delivery to satisfy the judgm ent, and
appoint a receiver of debtors property, forbid the sale thereof and
order E quitable interests in realty to be sold.
T axes. P roperty shall be taxed each year, and personal property
shall be listed and assessed each year in th e nam e of th e owner thereof
on th e first day of Jan u ary.
Real estate assessed every four years. N ext assessm ent in 1941.
All p ro p erty is assessed a t its actu al value and taxed a t actual
value. All road taxes a n d 'o n e -h a lf of th e other taxes levied are
Payable w ith o u t in terest or penalty before April 1st. T he balance
is payable before October 1st. D elinquent taxes bear interest a t
the rate of M of 1 per cent per m onth.
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R eal estate taxes are liens thereon and personal property taxes are
liens upon th e owner’s real estate except th e hom estead and m ay be
continued as liens from year to year by com pliance with th e sta tu te .
T axes upon stocks of goods or m erchandise, fixtures and fu rn itu re in'
hotels, restaurants, rooming houses, billiard halls, moving picture
shows and theatres are a lien thereon which continues when sold in
bulk and th e purchaser is personally liable therefor. T hey are also a
lien upon buildings assessed separate from th e real estate.
Taxes assessed on personalty in this sta te owned by a non-resident is
a lien thereon. Personal property m ay be levied on and sold for taxes
by a distress and sale. Real e state is sold for unpaid taxes a fter notice
by publication on th e first M onday of D ecem ber of each year subject
to redem ption in three years except when sale is m ade under so called
tax scavenger or public bidder law when less period of redem ption
exists from the date of sale by paym ent to th e county auditor th e
am ount for which the sam e was sold and 4 per cent of such am ount
added as a penalty, w ith 6 per cent per annum on th e whole am ount
thus m ade from th e day of sale, and th e am ount of all taxes unpaid
and delinquent the first day of April, th e interest and costs paid by
th e purchaser, or his assignee for any subsequent year or years with
a sim ilar penalty added as before on the am ount of th e paym ent and
each subsequent year, and 6 per cent per annum on th e whole of such
am ount from the day of paym ent.
T r u s t C o m p a n ie s . D om estic tru st companies are organized under
and governed by the general corporation laws of the State. Foreign
tru st companies doing business in this S tate are governed and con
trolled by the general sta tu te s concerning and relating to foreign
corporations doing business in Iowa. (See Corporations.)
T r u s t D eeds. T hey m ust be executed and foreclosed, and consid
ered as m ortgages. T h at is, the power of sale on notice is abolished,
and they m ust be foreclosed by equitable action.
W a re h o u se R e c e ip ts. Any person, firm, or corporation desiring
to issue elevator or warehouse certificates (or receipts) m ust file a
w ritten declaration with the recorder of deeds in the county where
his or its elevator or warehouse is situated, setting forth the particu
lars required by sta tu te, which declaration m ust be recorded by the
recorder of deeds. T hereafter he or it m ay issue certificates for
commodities actually in such elevator or warehouse, b ut the certifi
cates m ust conform to the sta tu to ry provisions. A register of
certificates issued m ust be kept by the parties issuing them . A
violation of these provisions, issuing double certificates for th e same
property, or selling or encumbering property included in any ware
house receipt, is m ade a criminal offense. T here is also a crim inal
sta tu te against issuing false warehouse receipts or certificates.
W ills. Any person of full age and sound mind m ay dispose of
his property By will, subject to the rights of hom estead and exemp
tion created by law and the distributive share in his estate given
by law to the surviving spouse, except sufficient to pay his debts
and expenses of adm inistration. Also if a testa to r has spouse, child,
grandchild or p aren t living he cannot give more th an 25 per cent of
his property to a corporation organized for charitable purposes.
Wills, to be valid, m ust be w ritten, witnessed by two com petent wit
nesses, signed by th e testato r, or by some person in his presence and
by his express direction. Subscribing witnesses can derive no benefit
from a will, unless there be tw o com petent witnesses besides them .
Wills executed outside of Iowa, in accordance w ith th e laws of th e
S tate where executed or of the te s ta to r’s domicile, if in writing and
subscribed by th e testa to r are valid in Iowa. I f probated in any
other sta te or country th ey shall be ad m itted to probate in this
S tate on th e production of a copy of such will, and of th e original
record of probate thereof, au thenticated by th e attesta tio n of th e
clerk of the court in which such probation was m ade or of the probate
judge, under seal, if th ey have one. All wills m ust be probated
before th ey can be effectual.
S Y N O P S IS O F
T H E L A W S O F K A N SA S
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by D oran, Kline, Cosgrove. J effrey & R ussell,
N ational Bank of Topeka Bldg.. Topeka, K ans.
(See card in A ttorneys List.)
A c k n o w le d g m e n ts . (See Deeds.)
A c tio n s. Civil actions are conducted as required by a code of
procedure. Security for costs m ust be given or resident plaintiffs
m ay deposit $15 in lieu of bond for cost. N onresident plaintiffs
m ay be required to give bond for costs.
A d m in is tr a tio n o f E s ta te s . P robate courts in each county
have jurisdiction of estates. Dem ands against th e estate are divided
into th e following Classes: F irst, reasonable and necessary funeral
expenses. Second, reasonable sum s for necessary expenses of last
sickness of decedent including wages of servants and for th e appro
priate and necessary costs of adm inistration. Third, judgm ents
rendered against th e decedent in his lifetim e, b u t if such judgm ents
be liens on real estate of decedent and th e estate insolvent such
judgm ents as are liens upon real estate shall be paid w ithout reference
to classification except th a t th e dem ands of th e first and second
classes shall have precedence of judgm ent. F ourth, all other dem ands
d u ly proved, provided th a t debts having preference by laws of th e
U nited S tates and dem ands having preference by laws of th is s ta te
shall be paid according to such preference.
T he executor m ay a t th e expiration of nine m onths proceed to pay
th e debts and other item s due from th e estate according to th eir
classification if said executor does n o t have notice of dem ands against
th e estate of decedent which will authorize him to represent it in
solvent. E very executor and adm inistrator shall have one year from
th e date of his appointm ent for th e settlem ent of th e estate. Dem ands
of creditors against th e estate m ust be m ade w ithin nine m onths
from th e d a te of th e first published notice of th e appointm en t of
said executor or adm inistrator and dem ands n o t th u s exhibited shall
be forever barred. Dem ands payable a t a f u tu re d ay m ay be allowed
a t th e present value thereof or th e court m ay order the executbr
or adm inistrator to retain sufficient funds to satisfy th e sam e upon
m a tu rity ; or th e heirs, devisees, or legatees m ay be perm itted to
give bond to a creditor for th e paym ent of his dem ands according
to th e term s thereof.
Upon th e filing for record in th e p robate court of th e proper county
of an authenticated copy of his letters or other record of a u th o rity
an d a certificate th a t th e sam e are in force, a fiduciary appointed b y
a co u rt of com petent jurisdiction in another s ta te or country m ay
assign, extend, release; satisfy, or foreclose any m ortgage, judgm ent,
or lien, or collect any debts secured thereby belonging to th e estate
represented by him. T he sale, lease or m ortgage of any real estate
acquired on execution or judicial sale by a foreign representative
shall be m ade pu rsu an t to sta tu te .
N o Bank or other corporation unless organized u nder th e laws of
an d has its principal place of business in th is s ta te or is a national
b ank located in th is s ta te shall be appointed or authorized directly
or indirectly to act as a fiduciary in this sta te except in ancillary pro
ceedings. In cases of dom iciliary adm inistration, letters te sta
m en tary or of adm inistration shall in no case Be granted to a non
resident of th is state.
1992
B A N K I N G A N D C O M M E R C IA L L A W S— K A N S A S
A ffid av its. Affidavits m ay be m ade In or o ut of th e S tate by the
sam e a u th o rity and w ith like authentication, as depositions.
A llen s. Aliens m ay hold real estate. Bights of in testate alien
forfeited to sta te if alien citizen of a foreign country which has no
tre a ty relations w ith th e U nited S tates affecting th e rights of an alien
to hold property in th is country and such alien has no relatives or
next of kin who are citizens of th e U nited States.
A r b itra tio n s . Persons having controversies m ay subm it them to
the arb itratio n of any person or persons m utually agreed upon and
m ay m ake such submission a rule of /m y court of record in th e S tate.
T he parties m ay en ter into arbitration bonds conditioned for the
faithful perform ance of the aw ard. Award to be filed in court agreed
on and judgm ent entered as on a verdict of jury. P arties m ay have
process, orders, and execution as in civil cases.
A rre s t. Upon th e plaintiff filing a bond in double am ount of his
claim, a defendant m ay be arrested in a civil action upon filing an
affidavit w ith th e clerk of th e court th a t he has assigned, rem oved or
begun to rem ove his property o ut of th e jurisdiction of th e court with
in ten t to defraud his creditors; or has begun to convert his property
into cash, for th e purpose of placing it beyond th e reach of his creditors;
or has p roperty which he fraudulently conceals; or fraudulently con
tracted th e debt.
A s s ig n m e n t (V o lu n ta ry ) fo r C re d ito rs a n d In so lv e n c y . Such
assignm ents m ay be m ade for benefit of all creditors and should be
acknowledged and recorded in th e sam e m anner as real estate convey
ances. Assignee in tru s t m ust file inventory w ithin th irty days in
office of clerk of district court of county in which assignor resides
and give bond in double am ount of appraised value of estate assigned.
Only discharges debtor to am ount of paym ents m ade.
A tta c h m e n t. A t or after the com m encement of an action an
attach m en t m ay be had by plaintiff. T he affidavit of th e plaintiff,
his agent, or atto rn ey m ust be filed, stating th e nature of the claim
th a t it is just, th e am ount affiant believes ought to be recovered,
an d th e existence of some one or more of th e following grounds: 1 .
T h at defendant is a foreign corporation or a non-resident of the S tate
(but in this case for no other claim th an a dem and arising upon con
tract, judgm ent, or decree, unless th e cause of action arose wholly
w ithin th e lim its of th e State). 2. T h at the defendant absconded
with th e intention to defraud his creditors. 3. T h at the defendant
has left th e county of his residence to avoid a service of summons.
4. T h at he so concealed him self th a t summons can not be served
upon him . 5. T h a t he is about to remove his property or a p art
thereof o ut of th e jurisdiction of the court w ith the intent to defraud
his creditors. 6 . T h a t he is about to convert his property or a
p art thereof into money for the purpose of placing it beyond the
reach of his creditors. 6 . H e has property or rights in action which
he conceals. 8 . H as assigned, removed, or disposed of, or is about
to dispose of his property, or a p a rt thereof, w ith the in ten t to defraud,
hinder, or delay his creditors. 9. Or fraudulently contracted or
incurred th e debt on which the suit is brought. 10. Or th a t the
suit is brought for dam ages'from the commission of some felony or
misdem eanor. 11. Or th a t the debtor has failed to pay for any
article or thing delivered for which by contract he was bound to pay
upon delivery. A bond in double th e am ount of plaintiff's claim is
required except where by th e attach m en t affidavit defendant is shown
to be a non-resident of th e S tate.
B a n k s a n d B a n k in g . T here is no constitutional provision relating
to banks, except banks of issue. Other banks are organized under a
general act. The C harter, in addition to th e requirem ents of th e
law relating to corporations, shall contain th e nam es and places of
residence o f th e stockholders and th e am ount of stock subscribed by
each, an d m ay contain such other provisions, not inconsistent w ith
law, as th e stockholders m ay deem proper, and shall be subscribed by
a t least five of the stockholders of th e proposed bank who are residents
of th e S tate of Kansas. Board of D irectors not less th a n five nor
more .th an twenty-five in num ber, a m ajority of whom shall be resi
d ents'of th e county or adjoining counties to th a t in which th e bank is
located. T he word “ S ta te ” shall be included in th e title. The full
am ount of th e capital stock m ust be subscribed before th e charter is
filed. The b ank shall transact no business, except the election of
officers, th e taking and approving of their official bonds, and the
receipts of paym ents on account of subscriptions to its capital stock,
u n til it has been authorized by the bank commissioner to commence
business. C apital stock shall be subscribed in full before charter is
filed. T he capital stock shall be not less th a n $20,000 in unincor
porated towns and in cities of th e th ird class; not iess th a n $30,000 in
cities of second class; not less th an $50,000 in cities of th e first class
w ith $100,000 required in cities of m ore th a n 75,000 population.
M anaging officers of banks m u st qualify by ownership of stock of p ar
value of a t least $500.00. No bank shall employ its m oney directly or
indirectly in trad e or commerce by buying and selling goods, chattels,
wares and m erchandise, and shall not invest in th e stock of any bank
or corporation except federal land banks, and banks m ay become m em
bers of a federal reserve bank m ay do anything necessary to appro
p riate, acquire and m aintain insurance of its deposits in accordance
w ith th e provision of any federal law and its am endm ents authorizing
th e insurance of bank deposits and m ay pay all assessments levied
for such insurance. T he Federal Deposit Insurance Corporation,
created b y Sec. 12B of th e Federal Reserve Act, as am ended, is
authorized an d empowered to act w ithout bond as receivor or liqui
d ato r of an y banking institution, th e deposits in which are to any
extent insured by said corporation and which shall have been closed
on account of inability to m eet th e dem ands of its depositors. No
b ank m ay . . . m ake any loans on th e security of th e shares of its
own capital, nor be th e purchaser or holder of any such shares, except to
prevent loss upon a debt previously contracted in good faith, nor loan
m ore th an 5 per cent of capital and surplus to any officer, agents, or
employees of bank. All such property coming into th e posession of th e
b an k in the collection of debts shall not be considered assets after the
expiration of six m onths. Banks m ust m aintain a reserve consisting
of 15 per cent of am ount of its dem and deposits and 5 per cent of
am ount of its tim e deposits. One-half of said reserve shall be in cash
or balances in correspondent banks as prim ary reserve; other half
m av be in certain bonds as secondary reserve. B anks m ay borrow
m oney for tem porary purposes if n ot in excess of 100 per cent of paidup capital and 50 per cent of surplus. Banks in liquidation or in
charge of a receiver m ay borrow in excess of said percentages as bank
commissioner should perm it. All banks m ay hold, purchase and con
vey real estate for: (a) Building and furniture necessary in transaction
of business: (b) Satisfaction of debts; (c) P urchase under judgm ent
or m ortgage foreclosure. Real estate acquired under (b) and (c)
m ay be held five years, b u t m ust be sold a t public or private sale
within th irty days thereafter, unless B ank Commissioner grants
extension for n o t to exceed four years. Officers are personally liable for
paying overdrafts. N o t m ore th a n 15 per cent of th e capital stock
an d surplus can be loaned to any one person, com pany or corporation.
Penalties are provided for false statem ents and for receiving deposits
when th e bank is in a failing condition. P riv ate banks are subject to
th e provisions of th e law. Since 1929 all banks m ust be incorporated.
T he B ank Commissioner or dep u ty m ust m ake exam ination of each
bank a t least twice each year. Four reports per annum are required
and th e commissioner m ay call for others. H as a u th o rity to examine
any co-partnership, association or corporation located in or organized
under th e laws of K ansas or any other sta te , holding as m uch as
25 Der cent of an y capital stock of any banking or tr u s t com pany doing
business in Kansas. I f paid up capital n ot less th a n $100,000 m ay
exercise fiduciary powers. Application shall be m ade to Bank Com
missioner and special perm it secured. Bank shall segregate assets so
held and keep separate books therefor. Bank shall n ot use such funds
in conduct of b an k ’s business w ithout first setting aside in T ru st D e
p artm en t U. S. bonds or other securities approved by the Bank Com
missioner. Shareholders are additionally liable for a sum equal to th e
p ar value of stock owned and no more provided such liability shall not
app ly with respect to shares issued by any bank after M arch 24, 1937.
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Federal Reserve Bank of St. Louis
Respecting shares issued prior to M arch 24,1937 ,oanks m ay term inate
such additional liability by causing notice of prospective term ination
to be published according to sta tu te. Banks m ay now issue pre
ferred stock of one or more classes w ith rig h t of cum ulative dividend
n ot exceeding six per cent and with assent of seventy-five per cent of
the stock and approval of th e bank commissioner, said stock carrying
no liability for debts of bank or an y assessm ent. I f th e B ank Com
missioner finds a bank insolvent or violating any banking law, he
shall take charge and m ay appoint a special dep u ty to handle affairs
of th e bank for a period of n ot longer th a n six m onths, a t which tim e
Commissioner m u st appoint receiver, who serves u n d er orders of
D istrict C ourt. Claim s of creditors m u st be filed w ith receiver
within one year from appointm ent.
N ational banks by vote of seventy-five per cent of stock and after
exam ination by Bank Commissioner and approval of com ptroller of
currency m ay become s ta te banks.
D eputies for insolvent banks m ay, subject to approval of bank
commissioner, borrow m oney and pledge assets. Receivers in charge
of bank and creditors m ay reorganize th e bank if approved by 80
per cent of depositors, general creditors and B ank Commissioner.
- C redit unions are subject to exclusive supervision of th e bank
commissioner, and m ust file reports on form s provided by commis
sioner.
B ills of E x c h a n g e . (See N otes and Bills of Exchange.)
B ills o f L a d in g . These are governed by th e common law.
B u lk S ale. “ T he sale or disposal of any p a rt or th e whole of a
stock of m erchandise or the fixtures pertaining thereto, otherwise
than in the ordinary course of his trade or business, shall be void as
against th e creditors of th e seller, unless the purchaser receives from
the seller a list of th e nam es and addresses of th e creditors of the
seller certified by the seller under oath to be a complete and accurate
list of his creditors and unless the purchaser shall, a t least seven days
before taking possession of th e property, or before paying therefor,
notify in person or by registered mail, every creditor whose name
and address is stated in said list, or of whom he has knowledge, of
the proposed sale.”
In lieu of notice, seller m ay give to purchaser a bond conditioned
upon th e paym ent of debts due creditors of th e seller and upon which
creditors m ay sue in an am ount equal to present value of th e property
transferred and signed by a t least two resident sureties; th e bond to
be approved by and filed with th e clerk of th e district court of the
county where th e property is sold is located before purchaser takes
posesssion or pays.
C h a tte l M o rtg a g e s . A m ortgage of personal property, where the
property is n ot im m ediately delivered to th e m ortgagee who retains
actual and continuous possession thereof, is void as against creditors
of th e m ortgagor and as against subsequent purchasers and mortgages
in good faith, unless th e m ortgage, or a copy thereof is filed in th e office
of the register of deeds in the county where th e property is situated,
and if th e m ortgagor is a resident of th e state, th en also in th e county of
which he is a t th e tim e a resident. A m ortgage so filed is Invalid
as against creditors or subsequent purchasers in good faith after
tw o years unless w ithin th irty days next preceding th e expiration
of such two years and each tw o years thereafter th e m ortgagee, his
agent or attorney, m akes an affidavit exhibiting the in terest of the
mortgagee in the property and showing th e balance unpaid on the
debt, and files the same in the sam e m anner as th e m ortgage. In
case of default th e m ortgagee m ay sell in the m anner provided in the
chattel mortgage.
A m ortgage of exem pt personal property is Invalid unless executed
Jointly by husband and wife where th a t relation exists unless it be
given for th e purchase price of the m ortgaged chattel.
Livestock pasturing lien, duly recorded, has p riority over o ther liens.
C o lla te ra ls . G overned by the common law on Bailm ents and
Pledge.
C o n d itio n a l S ales. C onditional contracts, by which th e owner
ship rem ains in the p a rty proposing to sell until th e purchase price
is paid, are treated as chattel m ortgages and m ust be filed in the
office of the register of deeds in th e sam e m anner as such chattel
m ortgages b u t rem ain in force w ithout th e renewal affidavit required
in chattel m ortgages.
C o n tr a c ts . All contracts which, by th e common law, are joint
only, shall be construed to be joint and several. The use of private
seals in w ritten contracts (except seals of corporation) is abolished,
and in suits upon w ritten contracts, as to the perform ance of con
ditions precedent, it is sufficient after setting out th e contract to
allege generally th a t plaintiff has fully perform ed th e contract.
C o n v e y an ces. (See Deeds.)
C o rp o ra tio n s . C hapter 152 of th e 1939 Session Laws of the
S tate of K ansas largely revises th e K ansas C orporation Law. Cor
porations are form ed under a general s ta tu te requiring three or more
incorporators. Incorporation is effected by filing in th e office of the
Secretary of S tate articles of incorporation signed an d acknowledged
by each incorporator; recording a certified copy of th e articles with
th e R egister of D eeds for th e county where th e registered office of
th e corporation in th e s ta te is located, and paym ent of a $25.00
application fee, capitalization fee and filing and recording fees. The
capitalization fee is one-tenth of one per cent of th e authorized capital
stock upon th e first $ 10 0 ,000 .0 0 ; one-tw entieth of one per cent on
all in excess of $100,000.00.Duratioh of corporate existence is limited
to n o t to exceed fifty years. E very corporation m u st m aintain a
registered office in th e s ta te an d a resident agent who m ay be either
an individual or a corporation residing in or located in th e state.
N o corporation shall commence active business u n til its corporate
existence has been established in th e m anner outlined above and
th e am ount of capital w ith which it will begin business as stated in
th e articles of incorporation fully paid in; and an affidavit filed in the
office of th e Register of Deeds of th è county where th e registered
office of th e corporation is located; and an affidavit signed by the
T reasurer Stating th e am ount of capital which th e articles of incor
poration recite will be paid in before comm encem ent of business
has been fully paid. T he nam e adopted m u st indicate th e nature
pf th e business and shall be followed by th e word “ Incorporated
or th e abbreviation “In c.” except banks and corporations not for
profit. T he articles of incorporation m u st s ta te th e nam e of the
corporation, th e location of its registered office, th e nam e of its resi
dent agent, th e nam e and address of th e registered agent, th e nature
of th e business to be carried on, th e to ta l num ber of shares of stock
which th e corporation shall have au th o rity to issue, th e par value
of each share, or a sta te m e n t th a t all such shares are to be without
p ar value if th e corporation is to issue only one class of stock. If
th e corporation is to be authorized to issue m ore th a n one class of
stock th e articles should also set forth th e to ta l num ber of snares
of all classes which th e corporation shall have a u th o rity to issue,
th e num ber of shares of each class th a t are to have a p ar value and
th e p ar value of each share of each class or th e num ber of shares
th a t are to be w ithout p a r value; and a statem en t of all preferences,
rights and lim itations w ith respect to an y class or classes of stock.
T he articles shall also contain a g ran t of a u th o rity to th e board or
directors to fix by resolution an y such powers, preferences, lim ita
tions or qualifications on classes of stock, and shall set forth the
m inim um am ount of capital w ith which th e corporation will com
mence business, which shall n o t be less th a n $ 1 ,000 .00 , th e names
and places of residence of each incorporator, th e d uration of the
corporate existence and th e num ber of directors. Num erous other
provisions in th e articles of incorporation are permissible b u t not
required. By-laws m ay be am ended in accordance w ith provisions
of th e articles of incorporation or b y th e board of directors subject
to am endm ent, alteration or repeal by m ajority vote of th e stock
holders, An annual statem en t shall be m ade by_ each corporation
for profit except banking and insurance corporations and building
B A N K IN G A N D C O M M E R C IA L L A W S— K A N S A S
and loan associations on or before M arch 31st of each year on form s
furnished b y th e Secretary of S tate showing a com plete detailed
statem en t of th e conditions of th e corporation. F ailure to file this
rep o rt w ithin nin ety days from th a t tim e works a forfeiture of incor
poration an d works a penalty for each day th e report is delayed.
Dividends m ay be declared from n et profits or n et assets in excess
of capital as com puted in accordance w ith provisions of th e sta tu te .
C orporations m ay borrow m oney and m ay pledge p roperty and
income therefor; cannot engage in agricultural, dairying or horti
cultural business or learned professions.
C orporations (except banks, insurance, building and loan companies
and those n o t organized for profit) m ust pay an annual franchise tax
on paid-up capital as follows: N o t over $10,000, $10; over $10,000;
and n o t over $25,000, $25; over $25,000 and not over $50,000, $50;
over $50,000 an d n o t over $100,000, $100; over $100,000 and n ot over
$250,000, $125; over $250,000 and n ot over $500,000, $250; over
$500,000 an d n o t over $1,000,000, $500; over $1,000,000 and not
over $2,000,000, $1,000; over $2,000,000 and n ot over $3,000,000,
$1,500; over $3,000,000 and n o t over $5,000,000, $2,000; over
$5,000,000, $2,500.
C o sts. In th e D istrict C ourt a bond for costs or a cash am ount
of fifteen dollars in lieu thereof m ust be deposited by resident plaintiffs.
N on-resident plaintiffs m ay be required by order of court to give
additional security for costs. In Justice C ourts cost deposits m ay be
$3.00 to $5.00, depending on custom of Justice. In C ity C ourts cost
deposits are custom arily $5.00., nonresident plaintiffs, $3.00 residents.
C o u r ts . T erm s and Jurisdiction. D istrict courts, holding tw o to
three term s a year in every county, have general original jurisdiction
In law and equity. Regular term s of th e probate court are held in
each county on th e first M onday in each m onth and special or adjourned
term s m ay be held as business m ay require. Justice’s jurisdiction in
civil actions for th e recovery of money, $300; to recover specific
personal property not valued in excess. $300. The suprem e court is
th e court of last resort. C ity courts w ith jurisdiction in civil actions
for am ounts n o t in excess of from $300 to $1,000 are established in
the following cities: A rkansas C ity, Atchison, Coffeyville, K ansas
City, Leavenworth, T opeka, and Wichita. Procedure corresponds
to th a t of justice courts.
D ay s o f G ra c e . Abolished.
D eed s. N o particu lar form s of conveyances are required. As
a rule th e form used in other S tates is sufficient. As between
the parties conveyances are valid w ithout being recorded. Deeds
m ay be valid as against attaching creditors without being recorded.
The wife should join w ith her husband in the conveyance, and any
conveyance o r m ortgage of the hom estead w ithout her uniting in th e
same is absolutely void. I f th e wife has never resided in the S tate
her signature is not necessary. G rantors need not attach any seal
or scroll to th eir signatures, and no witnesses are necessary unless
grantors are unable to w rite. Corporations convey by deed, sealed
with th e corporate seal and signed by president, vice-president, pre
siding m em ber, or trustee. T he acknowledgment m ust be before a
judge or clerk of th e d istrict court having a seal, a justice of th e
peace, notary public, county clerk, register of deeds, m ayor or clerk
of an incorporated city. E very notary public shall add to his official
signature th e d ate of th e expiration of his Commission as n o tary
public. In cases where th e acknowledgm ent is m ade out of th e
State it m ust be m ade before a court of record, a clerk, or other
officer having th e seal thereof, a commissioner of deeds for Kansas.
Justice of th e peace or n otary public, or before any consul of th e
United S tates resident in any foreign country or port. D eeds and
mortgages m ust be recorded in the office of th e register of deeds of
the county in which th e land is situated, or th ey will be void as to
subsequent grantees in good faith w ithout notice.
D eeds o f T r u s t in th e nature of m ortgages are not used so far as
sale b y th e tru stee is concerned. (See T rusts, etc.) J
D e p o sitio n s. Depositions are taken upon notice to the opposite
party. C ourts are also authorized to appoint commissioners to take
depositions. T he depositions m ay be taken before any person author
ized to tak e acknowledgments. E ach witness m ust sign his own
deposition. T he notice m ust be attached to the depositions and
inclosed with them . Depositions should be taken on the date nam ed
and some portion on each successive day or the officer before whom
the depositions are tak en should note continuances of adjournm ents
from day to day. Sundays and national holidays not being regarded.
If taken by interrogatories and cross-interrogatories, under agreem ent
or otherwise, each interrogatory and cross-interrogatory m ust be
put to each witness and answered so far as he can answer it, and th e
answer w ritten down. If th e depositions are taken before th e m ayor,
notary public, or commissioner appointed as aforesaid, they m ust
be certified under his official seal. If before any officer n ot possessing
a seal, a certificate m ust be annexed, under the seal of the county, or
the great seal of th e S tate, th a t th e officer by whom the depositions
were taken was, a t th e tim e of taking the sam e, such officer as he
represents him self to be in his certifictae. T his should be attached
to the certificate of the officer (not possessing a seal) who took the
depositions.
D e s c e n t a n d D is tr ib u tio n . T he hom estead is th e absolute
property of th e widow an d children—one-half in value to th e widow,
the other half to th e children, when both survive. The hom estead
shall n o t be subject to forced p artitio n unless th e surviving spouse
remarries nor u n til all th e children arrive a t th e age of m ajority.
When a resident of th e sta te dies te sta te or in testate th e surviving
spouse shall be allowed for th e benefit of such spouse and th e de
cedent’s m inor children during th e period of th eir m inority from th e
personal p ro p erty of which th e decedent was possessed or to which
he was entitled a t th e tim e of d eath th e following: One, wearing
apparel, fam ily library, pictures, musical instrum ents, furniture and
household goods, utensils and im plem ents used in th e home, one
automobile an d provisions and fuel on hand necessary for th e sup
port of th e spouse an d m inor children for one year; Two, other per
sonal p ro p erty n o t exceeding an appraised value of $750.00. Onehalf of all real estate owned b y husband during coverture, and n ot
conveyed by husband an d wife, nor sold a t judicial sale, and not
necessary to p ay debts goes to th e wife in fee sim ple: except of land
?°ld by husband whose wife never before such conveyance resided
m *ne S tate. Rem aining real estate goes to th e surviving children,
and living issue of prior deceased children, children taking per stirpes,
m equal shares, or, if none, th e whole estate goes to th e widow. For
want of wife or child or living issue of deceased child the whole estate
goes to th e parents. T he rules applicable to widow of deceased
husband apply to husband of deceased wife. Illegitim ate children
inherit from th e m other, and also from th e father, if his recognition
has been general an d notorious, or in w riting. W hen a child would
mherit from either parent, such p aren t will inherit from th e child,
personal p ro p erty descends in th e sam e w ay as real estate except
exempt household fu rn iture is sole property of surviving spouse.
Property descending by law or will is subject to an inheritance tax,
wSEMMz in percentage according to relationship and am ount. Special
statute provides for adm inistration and distribution of estate of
Persons dying w ithout known heir or will. (C hapter 168, Laws. 1835).
b utJorn*' Dower is abolished by law. (See Descent and D istrlE x ecu tio n s m ay be ordered as soon as judgm ent Is obtained if stay
?hS ’i.0*' been granted or supersedeas given. Executions running to
the sheriff of the county where the levy is to be m ade, m ay be levied
hh property in an y county of the S tate and Issue only out of court
where judgm ent obtained except where ab stract or transcript of justice
Judgment filed in district court of same county as th a t of the justice
®°ur®> execution will issue on said judgm ent only out of said district
bm r t' There is no stay of execution in the district court except by
hiP «rife“ eas bond which m ay be given on appeal. In justice’s courts,
oy filing bond, stays of execution are granted as follows. On any
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1993
judgm ent for $20 and under, th irty days; over $20 and under $50,
sixty days; over $50 and not exceeding $100, ninety days; over $100,
one hundred and tw enty days. Real estate is only subject to execu
tion issued out of district court of county wherein judgm ent rendered
or abstract or transcript from justice of th e peace filed. Executions
are liens On personal property only from tim é of levy. Real estate
sold on execution or order of sale, giving the debtor eighteen m onths
in which to redeem . T he debtor is entitled to possession of the
property and rents and profits, during th e period provided for redem p
tion, except in case of w aste. Receiver m ay be appointed to prevent
waste and m ay use so m uch of rents and profits as are necessary to
repair waste and pay costs of receivership. Surplus if any to be paid
to judgm ent, debtor free from th e lien of an y judgm ent.
E x e m p tio n s . H om estead of 160 acres of farm ing land, or of one
acre w ithin an incorporated town or city, with buildings thereon,
appurtenant to th e use of th e property as a hom estead, unlim ited in
value. T o the head of a fam ily th e following articles ef personal
property: All books, pictures, musical instrum ents, pews in churches,
burial lots; wearing apparel of debtor and fam ily; beds and bedding,
cooking utensils, stoves and appendages necessary for use of family;
sewing m achine and all other household furniture n ot exceeding $500;
tw o cows, 10 0 chickens or other dom estic fowl, ten hogs, one horse
or m ule; yoke of oxen or in lieu thereof span of horses or mules;
tw enty sheep; food necessary for support of stock hereinbefore m en
tioned; also one Wagon, tw o plows, one drag and other farm ing utensils
not exceeding $300; all provisions and fuel necessary for sup p o rt of
fam ily for one year; necessary tools and im plem ents of mechanic,
m iner or other person used an d k ep t for carrying on trad e or business,
and in addition thereto stock in trad e riot exceeding $400; 'library,
im plem ents and office furniture of professional m an. Also pefsonál
earnings of th e debtor earned during three m onths preceding th e
garnishm ent or attachm ent, and three m onths’ pension m oney, where
such earnings or pension m oney is necessary for th e support of th e
d ebtor’s fam ily, b u t 10 per cent of such earnings m ay be required to
be paid in and applied on th e judgm ent.
F o re ig n C o rp o ra tio n s . A foreign corporation seeking to do
business in this S tate m u st m ake application to th e S tate C harter
Board showing a copy of its charter, or articles of incorporation, th e
place where th e principal office is located, place where th e principal
office in this S tate is to be located, n atu re and character of th e
business to be conducted in this state, nam es and addresses of officers,
trustees or directors, statem ent of assets and liabilities subscribed and
sworn to by president and secretary of th e corporation, w ritten con
sent th a t actions m ay be commenced against it in courts of th is state,
and paying to th e S tate T reasurer th e sam e fees upon th e am ount
of capital invested or used in th is sta te as a dom estic corporation.
A registered office m ust be m aintained in th e S tate w ith a resident
agent who m ay be an individual or a corporation.
W hen it receives a certificate authorizing it to do business, it is then
subjected to substantially th e sam e provisions, and judicial control
as a dom estic corporation. Annual statem ents m ust be filed on or
before M arch 31st, giving condition on th e 31st of December preceding.
I f a foreign corporation fails to file w ith th e secretary of sta te th e sta te
m ent required by law within ninety days after th e tim e provided for
Its right to do business in th e S tate is thereby forfeited. A penalty
is imposed of $100 and in addition $5.00 for each day this rep o rt is
delayed. Foreign corporations m ust pay an annual franchise tax on
th a t portion of their capital represented by its property and business in
K ansas on th e sam e basis as dom estic corporations. F ailure of foreign
corporations who transact business in Kansas, other th an interstate
commerce to comply w ith th is law renders them subject to ouster and
receivership proceedings on th e p a rt of th e S tate b u t does not now
affect th e right of such foreign corporation to sue in th e courts
of th is State. A foreign corporation transacting business in Kansas
w ith a m ajority of its property located in K ansas m u st have two
directors residents of the S tate.
F r a u d . (See A ttachm ents, Arrest, and Assignments.)
G a r n is h m e n t. A t or a fte r th e tim e of beginning an action to
recover dam ages founded upon contract, judgm ent or decree, or after
th e issuance of an execution and before it is retu rn ed , if th e plaintiff
cause to be filed w ith th e clerk an affidavit stating th e am ount of his
claim over and above all offsets, th a t he believes th a t some person,
nam ing him, indebted to , or has property in his possession or under his
control belonging to th e defendants, and th a t sueh defendant has no
p roperty liable to execution sufficient to satisfy his debt, arid th a t th e
indebtedness or property so held is not by law exem pt from seizure or
sale upon execution, th e clerk shall issue a garnishm ent summons. In
justice courts th e affidavit differs from th a t acquired in district court
actions only in th a t affiant states th a t plaintiff is in danger of losing his
claim, in lieu of th e allegations th a t th e defendant has not property
sub j ect to execution sufficient to satisfy th e debt. In th e district courts
bond in double am ount claim ed is required on garnishm ents before
judgm ent, except where defendant is a non-resident or when garnish
m ent is issued on a judgm ent rendered in an y court. N o bond re
quired in justice courts. D efendant m ay a t or after com plaint is filed
and before judgm ent, release garnishm ent by entering into undertaking
with sufficient su rety to th e effect th a t th ey will pay on dem and any
judgm ent rendered against defendant. T he bond shall be n ot less th an
double am ount of plaintiff’s claim .
N o garnishm ent shall be issued against salary or wages of any
persons dropped from public emergency relief work by obtaining
regular em ploym ent until after th e expiration of 60 days from the
tim e of his leaving such relief work.
G u a r a n t y C o m p a n ie s . (See T ru st Companies.)
H o lid a y s. The legal holidays are: Sundays; Ja n u ary 1 (New Y ear’s
D ay); F ebruary 12 (Lincoln’s birthday); F ebruary 22 (W ashington’s
b irth d a y ); M ay 30 (Memorial D a y ); Ju ly 4 (Independence D a y );
first M onday in Septem ber (Labor D a y ); October 12 (Columbus D ay)
(but does not affect commercial paper); N ovem ber 1 1 (Armistice
D ay); Thanksgiving; and December 25 (Christm as D ay). I f any
of these days fall on Sunday th e next secular or business day is a legal
holiday. Legal or business proceedings had on a holiday, except
Sundays, are valid.
H u s b a n d a n d W ife. (See M arried Women.)
I n ju n c tio n s . Injunctions m ay be granted by a district court or
by the judge thereof a t the beginning of an action or afterw ards, in
his discretion. A bond m ust be given to protect the defendant
against any loss in case th e injunction is wrongfully obtained. In
the absence of the judge from the county the probate judge m ay
grant tem porary injunctions.
In so lv e n c y . (See Assignments.)
i n t e r e s t . Legal rate, 6 per cent, b u t 10 per cent m ay be agreed
upon. Excess of 10 per cent is forfeited, and in addition thereto there
shall be deducted from th e am ount due for principal,:-with lawful
interest, an am ount equal to the interest contracted for in excess of
10 per cent. The legal interest originally contracted for continues
u ntil the debt is paid, and no additional interest can be charged by
way of penalty for default except from date of default. A purchaser of
a negotiable note in due course takes th e note free of th e usurious tain t.
J u d g m e n ts . Judgm ents of courts of record are liens on th e real
estate of the debtor within th e county from the first day of th e term
a t which the judgm ent was rendered; b u t judgm ents by confession
and judgm ents rendered a t the sam e term during which the action
was commenced are liens only from the day on which th e judgm ent
was rendered. Judgm ents lose their priority over subsequent judg
m ents unless execution is issued and levied within one year after
judgm ent. A certified copy of th e judgm ent appearing of record in
the district court m ay De filed In the office or th e clerk of the district
court of any other county a n a the judgm ent will then be a lien, on
real estate in th a t county. A bstracts or transcripts of justice court
judgm ents m ay be filed in the district court or th e sam e county,
are liens on real estate iri such county from th e date of filing, after
which executions issue only o ut of said district court on such judgments^
1994
B A N K IN G A N D C O M M E R C IA L L A W S— K A N S A S
J u r is d ic tio n . (See C ourts.)
L eases. In farm leases, burdensom e provisions are unlawful and
unenforceable, b u t a fair and reasonable ren t is valid and m ay be
secured by liens on to ta l crops grown on th e leased land and on live
stock raised on share or lease and on receipts from pastu re received
b y ten an t.
,
L ic en se. Agents of insurance companies are required to take out
licenses from th e superintendent of insurance. Cities are authorized
to en act license ordinances and certain classes of business are required
to ta k e o u t a license. T ransportation of m otor fuels over highways
m ust be licensed. T he owner of a m otor vehicle, traile r or sem i
traile r m u st have th e sam e registered and obtain a certificate of title
therefor.
. Persons seeking perm ission to practice th e healing a rt m ust be
licensed, an d are required to tak e an exam ination for license. No
persons, individuals, firms, co-partnerships, corporations and asso
ciations shall engage in th e sale of any cereal m alt beverage, w hether
for wholesale or retail, w ithout having first secured a license. Any
dealer prom oting com m unity sale of livestock m ust be properly
licensed. O perators and chauffeurs who drive m otor vehicles upon a
highway m u st be licensed, excepting ( 1 ) persons operating a vehicle
in th e service of th e arm y, navy, or m arine corps of the U nited S tates;
(2 ) persons driving farm m achinery tem porarily moved on to high
way; (3) non-resident, 16 years of age, who has in possession a valid
op erato r’s license issued in his home sta te ; (4) non-resident over
18 years of age who has a valid operator’s license issued in his home
sta te ; (5) non-resident, 18 years of age, whose home sta te does n ot
require license, m ay operate for a period of n o t m ore th a n 90 days,
an y calendar year, if operating duly registered vehicle.
L ie n s. Mechanics, m aterial-m en, and laborers, both original con
tracto rs, and sub-contractors, and laborers of sub-contractors are
entitled to obtain liens upon real estate for labor performed or m aterial
furnished In th e erection or repair of any building. Sworn statem ents
item ized as fully as practicable as to the am ount of the claim, for
w hat and when it was rendered and by whom, giving nam es of con
tracto r and owner and description of property and date of last m aterial
furnished, m ust be filed in the office of the clerk of the court. Original
contractor’s lien claim m ust be filed within 4 m onths from date of
la st m aterials, or labor furnished and others entitled to lien within
sixty days after last m aterials or labor furnished. Lien claim ants
o th er th an original contractors, m ust give im m ediate notice of filing
of lien claim to owner or person in possession of the premises, where
th a t m ay be done, otherwise m ust post notice on th e premises.
Action to foreclose lien m ust be begun w ithin one year a fte r filing claim
Livery-stable keepers, forwarding m erchants and common carriers have
liens. ! (See Judgm ents.) A ttorneys have lien on papers and funds in
h and for general balance of com pensation and have lien on monevs
in hands clients adversary due client in any m atter, action or proceed
ing, in which th e attorney was employed for services therein from the
tim e of service on th e adverse p a rty , in th e m anner of a summons, of
w ritten notice of the lien.
Blacksm ith, horseshoer, wagon m aker, keeper of garage or any
other person shall have lien on any goods, chattels, horses, wagons,
autom obiles, etc. for value of labor and m aterial used thereon as long
as said property rem ains in his possession. Such person m ay retain
lien by filing statem ent thereof under oath in office of Register of
Deeds within th irty days after parting with possession. Such liens
hold priority over prior recorded chattel m ortgages. Threshers
shall have lien on grain threshed and sam e m ust be filed within fifteen
days from com pleting threshing and has priority over prior chattel
m ortgages. Action m ust be brought w ithin ninety days after filing
of thresher’s lien or sam e will be deem ed to have been abandoned.
Liens sim ilar to ordinary mechanics lien are given by sta tu te for
m aterials and labor furnished on oil leases in th eir developm ent,
and are foreclosed in like m anner. Any rent due for farm ing land
shall be a lien on crops growing or m ade on th e premises.
A ny person renting pasture lands under contract with owner for
th e purpose of pasturing cattle, horses, sheep or other livestock shall
have a first and prior lien upon all such livestock to secure th e pay
m ent of said lien and said lien shall be preferred to th a t of any prior
ch attel m ortgage if said lien is recorded in th e county where such
livestock is pastured before such livestock is removed.
T he operator of a hospital is given a lien upon all causes of action
accruing to a p atien t therein or to th e legal representative of such
p atien t for th e reasonable charges for hospital care necessitated by
th e injuries giving rise to such causes of action.
L im ita tio n s of S u its . An action for the recovery of real property,
■old on execution or by executors, adm inistrators, or guardians,
brought by th e execution debtor, or th e heirs, ward, or guardians,
within five years after the deed is recorded. O ther actions for
recovery of real property, w ithin fifteen years, except' recovery of prop
erty sold for taxes or actions for forcible entry and detention or forcible
detention which m ust be brought in tw o years. On official bonds
and contracts in writing, five years. C ontracts not in writing, three
years. Trespass, detinue, replevin, injuries not arising on contract,
and relief on th e ground of fraud, two years. Action for libel, slander,
malicious transaction, or false im prisonm ent upon a suit for penalty
or forfeiture, one year. Action for any other relief n ot before
provided for, five years. In any case founded on contract, p a rt
paym ent, or an express w ritten acknowledgement or prom ise, renews
th e contract. T he sta tu te runs from th e date of such renewal. Con
tractu al lim itations differing from the sta tu te s are void.
M a rrie d W o m en . T he real and personal property owned by a
woman a t th e tim e of her m arriage, and any property which comes
to her by descent, devise, or bequest, or gift of any person except her
husband, rem ains her sole and separate property notw ithstanding her
marriage, and is not subject to th e disposal of her husband or liable
for his debts. M arried women m ay sell and convey their real and
personal property and enter into any contract w ith regard to the
same in th e sam e m anner and to the same extent as a m arried m an
m ay in relation to his property. She m ay sue and be sued in the
same m anner as if she were single. She m ay carry on any trad e or
business, perform labor or services for her separate account, and her
earnings or proceeds from labor, trade, or business remain her separate
property, and m ay be used and invested by her in her own nam e.
H er husband is not liable for her debts incurred in her separate busi
ness undertakings by virtue of the m arriage relation. She m ay also
contract w ith her husband w ith the sam e effect as though th e m arried
relation between them did not exist.
M in e s a n d M in in g . T he law provides for the appointm ent of a
mine inspector w ith authority to require m ine owners to provide
certain facilities for the health and safety of persons employed and
compel proper ventilation, regulate excavations, air courses, etc.
T his law is quite elaborate and violations of the safety provisions of
the act— resulting in injury to employees, usually results in liability
even where th e Kansas W orkm en’s Com pensation Act does not
apply, on th e p a rt of the m ine operator to the employees because of
the positive d u ty resting on the operator to comply w ith such sta tu to ry
provisions.
M o rtg a g e s . A m ortgage of real estate, to be valid as against
subsequent bona-fide purchasers Without notice, m ust be duly ac
knowledged and recorded in the office of the register of deeds of the
county where the land is situated. M ortgages m ay be valid as against
attaching creditors w ithout recording. M ortgages m ay be discharged
on m argin of record by m ortgagee or attorney or assignee by duly
acknowledged power of atto rn ey or assignm ent in presence of register,
or by satisfaction entered on the instrum ent when copied on the
m argin by th e register; or by an independent release duly acknowledged
an d recorded. Wife m ust join in all m ortgages except those for
purchase money, except in cases where she has never been a resident
of th e S tate. M ortgages are foreclosed by suit only. By an act
of th e Legislature which took effect M ay 18, 1893. real estate sold
u n d er foreclosure of m ortgage is subject to eighteen m onths
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
period of redem ption. Period of redem ption m ay be extended as th e
court m ay fix, b u t n ot beyond Ja n u ary 15, 1937, and provided m ort
gagor pays ren tal ordered by court. Corporation m ortgagor m ay
am ee for a shorter period of redem ption or m ay wholly waive it.
I r th e m ortgage foreclosed is on abandoned property or n o t occupied
in good faith and th e court so finds, six m onths only is allowed for
redem ption. T his act does n ot apply to m ortgages executed prior
to th e date th e act took effect, w h en a m ortgage is assigned th e
assignm ent should be acknowledged and recorded. (For Form s,
see D eeds: see Executions.)
(For M ortgages on C hattels, see C hattel M ortgages: see Execu
tions.)
N e g o tia b le I n s t r u m e n t s . T he Uniform Negotiable Instrum ents
Act adopted. (See com plete tex t of this law following “ D igest of
B anking and Comm ercial L aw s.”)
N o ta rie s. N otaries are appointed by the G overnor and serve for
four years. T hey give bond in the sum of $1,000 and are required
to affix the date of the expiration of their commission to all certifi
cates.
N o tes a n d B ills of E x ch an g e. Uniform N egotiable In stru m en t
Act took effect Ju n e 8 , 1905.
P a r tn e r s h ip s . Lim ited or special partnerships m ay be formed
for any legal purpose except banking or insurance. Such partnerships
m ay consist of one or more persons who are general partners, and
one or more who contribute a specific am ount of capital and shall
be called special partners. T he special partners are n ot liable for the
debts of the partnership beyond the am ount contributed by them
respectively b u t the nam es of the special partners m ust not be used
in connection w ith the business- Such a partnership is formed by
executing a certificate stating th e nam e, the nature of th e business,
the nam es of the general and special partners, and th eir place of
residence, and the am ount of capital contributed by each special
partner, and the perioa when the partnership is to commence and
term inate. T he certificate m ust be acknowledged, filed and recorded
in th e office of the county clerk in county of principal place of business
and copies in clerk’s office of all other counties where partnership
m aintains a place of business.
P o w er of A tto r n e y . (See Deeds.)
P ro b a te L aw . (See Adm inistration.)
P r o te s t. (See N otes and Bills.)
R a ilro a d s . E very railroad organized or doing business in the
S tate has th e power to tran sp o rt persons, property an d m ail by high
way, air or w ater.
R e co rd s. (See Deeds.)
R e d e m p tio n . (See M ortgages.)
R e p le v in . The plaintiff in an action to recover th e possession of
specific personal property m ay claim the im m ediate delivery of the
sam e by filing affidavit and giving bond double the sworn value of
the property. P roperty replevined m ust be held by th e officer taking
It tw enty-four hours, during which tim e the p arty from whom the
property is taken m ay give bond to the plaintiff for not less than
double the am ount of the value thereof conditioned for th e return
of the same or its value in case it shall be adjudged the plaintiff is
entitled thereto, and thereupon m ay have the property returned to
him.
S e c u ritie s . No securities n ot exem pt can be sold w ithin the
S tate unless such securities have been registered by notification and
those by qualification are classified under th e sta tu te . Registration
by notification is secured b y , filing in the office of th e Corporation
Commission a statem ent w ith respect to such securities contain
ing th e following: N am e and location of issuer, location of issuer’s
principal place of business, and principal office in th is state, if any;
brief description of the security including am ount of th e issue; the
am ount of securities to be offered in this sta te ; price a t which securities
are to be offered for sale; ra te of commission to be paid; a brief state
m ent of facts which shows th e security falls w ithin one of th e classes
in th e K ansas law. Financial statem ent of issuer as of current
date; income statem ent of issuer for th a t fiscal period; copy of the
security. R egistration by qualification is required of those securities
n ot entitled to registration by notification, and is secured by filing
w ith th e C orporation Commission a copy of th e security to be sold,
a statem ent of assets and liabilities of th e issuer including th e total
am ount of such securities and any interest or lien authorized or
issued by such person or com pany; th e nam e of th e fiscal agent or
broker w ith a statem ent of the financial standing of such agent;
a statem ent showing gross and n et earnings of issuer; a statem ent
of inform ation relative to th e character of security and earning
power of issuer; a statem ent showing plan of business; charter and
by-laws if issued by a corporation or articles of association if issued
by partnership; a statem ent showing price a t which security is pro
posed to be sold including am ount for commission, location of issuer’s
principal business office and office in th is sta te (see N ote “ A ”),
and all other m a tte r as m ay be required by th e Corporation Com
mission. T he Corporation Commission, after investigation, and
exam ination m ay g rant or deny perm it to sell securities registered with
it, or cancel previously granted perm its. T he Commission m ay order
an appraisal of all assets of any business issuing securities for sale in
th e sta te , said appraisal to be m ade by th ree appraisers appointed by
th e Commission. All books of account of persons and corporations
w ithin th e Act are subject to exam ination by th e C orporation Com
mission. Sem i-annual statem ent of financial condition m ust be filed
w ith th e Commission. R egistration is required of all brokers doing
business in th is sta te and any such broker m ust file in th e office of the
Corporation Commission a bond in th e sum of n o t less th an $5,000.
Agents and salesmen m u st also be registered and p ay a fee of $10.00.
B roker’s registration fee is $100. General accounts and books of
brokers subject to exam ination and au d it by C orporation Commission.
N O T E “ A ”— Copy of th e security to be sold, am ount and par
value of securities or num ber of no p ar shares to be offered in th e state.
S ervice. All service of process is m ade by the sheriff or by con
stables, or by some one specially authorized in any particular case,
and m ust be issued in the nam e of the sta te w ith the seal of the officer
issuing th e same affixed.
S u its . (See Actions.)
T ax es. All taxes are due on th e first day of N ovem ber of each
year, and if half of th e sam e are n ot paid on or before th e 20 th day
of December, a ten p er cent p er annum interest charge on said first half
is added, and if not paid by June 20. all unpaid taxes draw interest at
ten per cent. If half of th e taxes are paid by December 20, payment
of tb e rem aining half m ay be deferred u n til June 20 of th e succeeding
year w ithout penalty. P aym ent of taxes in full on or before December
20 entitles payer to 2 p er cent discount on last half of taxes. "When the
tax upon real estate is delinquent it is sold for taxes on th e first Tuesday
in Septem ber following. A fter sold it bears interest a t th e rate of 10
per cent per annum and th e sam e rate upon subsequent taxes paid and
indorsed on the tax certificate. Real estate m ay be redeemed from
taxes a t any tim e before M arch 1, 1939, w ithout penalty, b u t interest
charge of 6 % per annum , commencing Septem ber 1, 1937, and must
be paid upon redem ption. T he tax lien attaches to real estate on
Novem ber 1, in th e year in which th e tax is levied. A fter land is sold
for taxes, it m ay be redeem ed w ithin four years from date of sale.
T he interest of a m inor m ay be redeem ed a t any tim e w ithin one year
after he a ttain s bis m ajority, and idiots and insane persons m ay re
deem within five years after th e sale.
N o tax certificate issued for delinquent taxes for which no taxdeed shall have been taken o ut shall be a lien en such real estate after
th e expiration of five years from th e date of sale, providing th a t when
ever any extension of the tim e for redem ption is seem ed by statute,
th e lien of th e tax certificate shall be extended for a like period.
T he sta te imposes an inheritance tax and income tax.
_
T he sta te imposed th e “ K ansas Retailers Sales Tax, effective
Ju n e 1 , 1937. D irect sales tax, payable by th e purchaser, m ust De
collected by th e -person m aking a sale and reports are required to De
B A N K IN G A N D C O M M E R C IA L L A W S— K E N T U C K Y
m ade to tn e S tate Tax Commission. T he ta x directs those engaged
in th e business of selling tangible personal property a t retail to charge
and collect a tax a t th e rate of (a) 2 % from th e gross receipts received
from th e sale of tangible personal p roperty a t retail; (b) 2 % on gross
receipts from telephone and telegraph services excepting in terstate
telephone or telegraph services; (c) 2 % upon gross receipts from sale
or furnishing of gas, w ater, electricity and heat; (d) 2 % upon gross
receipts from sale of m eals or drinks; (e) 2 % upon gross receipts from
sale of admissions to place of am usem ent, excepting fairs, educational,
religious and charitable activities. Purchaser of business is required
to w ithhold sufficient am ount of purchase price to pay taxes until
seller produces receipt therefor.
A registration fee of 25 cents on each $100 of the principal debt
secured by real estate m ortgage m ust be paid to- the Register of
Deeds when such mortgage is filed for record and thereafter such
real estate m ortage an d th e note which it secures is not subject to
taxation.
T r u s t Companies. T rust companies m ay be organized w ith a
capital of not less th an $ 100,000 and issue preferred stock of different
classes carrying no liability or assessm ent and m ay receive moneys in
tru s t and execute any tru s t com m itted to them , either by any person or
by order of any court, and m ay execute or guarantee any bond required
by law to be given in any proceeding in court, and act as agent for
the investm ent of money, and for the purpose of issuing, registering,
transferring or countersigning certificates of stock, bonds or other
evidences of debt, act as guardian and guarantee the fidelity and per
formance of d u ty of persons holding public offices or private trusts,
and certify and guarantee title to real estate and sell all kinds of
negotiable paper, and receive deposits from banks and other tru st
com panies or public officers and w ith approval of banking board tru st,
com pany m ay receive deposits subject to check. T hey are required to
keep on hand 25 per cent of deposits subject to check and 10 per cent
of tim e deposits, in th e sam e m anner as s ta te banks. Each director
m ust be a stockholder in th e sum of not less th an $1,000. T ru st com
panies are under th e supervision of, and subject to, exam ination by the
bank commissioner, and th e provisions of th e banking law relating to
im pairm ent of capital, insolvency and shareholders’ liability, and th e
d u ty of th e bank commissioner in such cases. T rust com panies m ay
own and hold real estate fo r: (a) Suitable building for transaction of
business; (b) T h at which is acquired through collection of debts,
“ b u t th e real estate so owned shall not exceed 50 per cent of the
capital of th e com pany for a longer period th an six m onths. W henever
th e value of real estate so owned shall exceed 50 per cent of th e capital
of th e com pany. It- m ust be reduced to th e proper lim it within five
years” unless Bank Commissioner grants an extension which cannot
be for m ore th a n two years.
T r u s ts a n d P o w ers. All tru sts concerning lands m ust be created
In writing except such as arise by im plication of law.
Warehouse Receipts. Practically the Uniform “ Warehouse
Receipts Act.”
Wills. Any person of full age and sound mind and m emory, hav
ing an interest In real or personal property, m ay give and devise the
same to any person by last will and testam ent lawfully executed,
subject, nevertheless, to the rights of creditors and the estate given
a spouse by sta tu te. Wills m ust be in writing, signed a t the end by
the testato r, or another in his presence and by his express direction,
and subscribed in his presence and a t his request by two or more
com petent witnesses who saw him subscribe or heard him acknowledge
It. W ills executed w ithout the S tate in th e m anner prescribed by the
law either of th e place where executed or of the testator's domicile or
of the S tate of Kansas are declared legally executed. Compliance with
these requirem ents should appear in th e witnessing clause. A will
executed, proved, and allowed in another S tate, in the court of
original probate, according to th e laws of th a t S tate, m ay, relative
to p ro p erty in this S tate, be adm itted to record in the probate court
of the co unty in which such property is situated, by producing an
authenticated copy of th e will and order of probate adm itting it to
probate by th e proper court of the county and State of which
deceased died a re sid e n t,, after due publication of notice thereof.
Every will, when ad m itted to probate, shall he filed in the office of
the p robate co u rt and recorded. N o will shall be effectual to pass
real or personal p ro p erty unless it shall have been duly adm itted to
probate.
S Y N O P S IS O F
T H E LA W S OF KENTUCKY
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by Woodward, D awson & H obson, A ttorneys a t Law,
1805-26 K entucky Hom e Life Bldg., Louisville, Ky.
(See C ard in A ttorneys’ List)
Acknowledgments. Deeds executed w ithin th e S tate m ay be
acknowledged before th e clerk of th e proper county court or a notary
public, or m ay be acknowledged before and proven by two subscrib
ing witnesses. Deeds executed w ithout th e S tate and within the
United States m ust be acknowledged before th e clerk of a court or
his deputy, no tary public, m ayor of a city, secretary of state, com
missioner of deeds, or judge of a court, or before a justice of the
peace; if executed w ithout th e U nited S tates m ust be acknowledged
before a foreign m inister, consul or secretary of legation of the U nited
States, or th e secretary of foreign affairs, or notary public of the
nation in which th e acknowledgm ent was m ade or judge or clerk of
a superior court of th e nation where th e deed shall be executed,
attested in either case by th e officer’s seal of office. W hen the acknowl
edgment is taken, th e officer m ay sim ply certify th a t the deed was
acknowledged before him, and when i t was done. All deeds m u st
show a source of g ran to r’s title
A ctio n s. Actions are commenced by filing petition and causing
summons or warning order to be issued. An action in the circuit
court requires a deposit of $5.50 to cover probable cost and tax.
A d m in is tr a tio n o f E s ta te s . An adm inistrator m ust be a resident
of the sta te prior to appointm ent. An executor should be a resident
or intend to become a resident im m ediately upon appointm ent. E ither
may be rem oved if he moves from th e state. Inventories of th e
estate m ust be filed within three m onths of qualification and settle
ment w ithin tw o years and as often thereafter as th e court requires.
,, A ffidavits. An affidavit m ay be read to verify a pleading; to prove
tne service of a summons, notice, or other process in an action; to
obtain a provisional rem edy, an exam ination of a witness, a stay of
proceedings or a warning order or upon a m otion. An affidavit m ay
be made: 1 . In this S tate, before a judge of a court, or a justice of the
Peace, examiner, n o tary public, clerk of a court, or m aster-commissionor. 2 . O ut of this S tate, before a commissioner appointed by th e
governor of this S tate; or before any other person empowered by a
commission directed to him by consent of th e parties or by order of
the court, or before a judge of a court, a justice of th e peace, a m ayor
or a city, or n o tary public.
Appeals. Appeals m ay be taken from m agistrate’s court to
quarterly court regardless of th e am ount involved: from the quarterly
court to th e circuit court when th e am ount, exclusive of interest and
costs, exceeds Twenty-five Dollars; from county court to th e circuit
court When th e am ount, exclusive of interest and costs, exceeds
xwenty-five Dollars; from th e circuit court to th e court of Appeals
m all cases in which th e title to land or the rig h t to enforce a sta tu
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Federal Reserve Bank of St. Louis
1995
to ry lien is involved and in all cases where th e am ount in controversy,
exclusive of interest and costs, am ounts to $500 or more, as a m a tte r
of right, b u t when th e am ount in controversy exceeds $200 and is
less th an $500, th e granting of th e appeal is optional w ith th e court
of appeals.
A s s ig n m e n ts a n d In so lv e n c y . A deed of Assignm ent for th e
benefit of creditors vests in the assignee th e title to all of th e assignor’s
property except such as is exem pt by law. E very voluntary assign
m ent m ade by a debtor to any person In tru s t for his creditors shall
be for th e benefit of all the creditors in proportion to their respective
claims.
A tta c h m e n ts . The w rit m ay issue against a defendant who is a
foreign corporation or non-resident of the S tate; or has been absent
from the State four m onths: or has left the S tate w ith in ten t to
defraud creditors; or has left his county to avoid service ot sum m ons;
or so conceals himself th a t summons cannot be served; or is abo u t to
remove, or has removed his property or m aterial p a rt out of the
S tate not leaving enough to satisfy claim of plaintiff or defendant’s
creditors; or has disposed or is about to dispose of his property, with
fraudulent intent to cheat, hinder or delay creditors. Also in action
for money due upon contract judgm ent or aw ard, if defendant have
no property in State subject to execution, or n ot enough to satisfy
plaintiff and collection will be endangered by delay in obtaining judg
m ent and return of nulla bona. Also in action for personal property
ordered to be delivered to plaintiff which or p a rt thereof has been
disposed of, removed, or concealed, so th a t order of delivery can not
be executed. Affidavit as prescribed by civil code and bond required,
except no bond or affidavit required in action upon nulla bona retu rn .
B a n k C o lle c tio n C ode. Effective June 18, 1930. Given directly
following Laws.
B a n k s. Five or m ore persons m ay incorporate a bank. T he
m inim um capital requirem ent is $25,000 in cities of 7,500 or less;
n o t less th an $50,000 in cities in excess of 7,500 b u t less th an 25,000;
n o t less th a n $100,000 in cities in excess of 25,000 b u t less th a n 100,000;
n o t less th an $ 200,000 in cities whose population exceeds 10 0 ,0 0 0 ; and
if such banks engage in business of tru s t com pany or title insurance
com pany, th e am ount of capital shall be a t least double. W hen
m inim um capital stock is paid in full, and in addition thereto a surplus
of 20 per cent of the m inim um capital shall be paid and in th e custody
of th e directors th e bank m ay do business. N o dividends m ay be
paid to stockholders u ntil there is a surplus fund equal to 10 per cent
of th e capital Stock. I f any officer or director of a bank shall receive
or assent to th e receiving of deposits after knowledge of th e b an k ’s
insolvency, such officer or director shall be individually responsible
for such deposits and be guilty of felony. All banks and tru s t com
panies are under supervision of th e D irector of th e Division of Bank
ing which is under th e supervision of th e D epartm ent of Business
Regulation. This departm ent m u st m ake periodical exam inations
and reports of all banks and tru s t companies, th e fees for such exami
nations to be paid by the institution examined. No bank m ay p erm it
any person to become indebted to it in a sum exceeding 20 per cent
of the capital actually paid in and actual surplus unless secured
by good collateral or m ortgage on property, th e cash value of which
above all other encum brances exceeds such indebtedness. I f bor
row er is a director of officer of th e bank he m ay n ot become indebted
to it in excess of 10 per cent of its paid up capital stock w ithout
first securing th e excess b y a m ortgage or pledge of p roperty double
in value th e am ount of such excess. In no event m ay th e indebtedness
of any person exceed 30% of th e b an k ’s paid up capital and actu al
surplus. Stockholders in banks, tru s t companies, an d combined banks
and tru s t companies are liable individually for all contracts and
liabilities of such corporation, equally and ratab ly , and n ot one for th e
other, to th e extent of the p ar value of their stock, in addition to th e
am ount of such stock and a transfer of stock does n ot release liability
provided th e action to enforce such liability shall be commenced within
tw o years from th e tim e of th e transfer. T his liability term inated
on Ju ly 1 , 1937, as to such banks as published notice thereof.
T he uniform bank collection code has been adopted.
Any bank or tru s t com pany, or combined bank and tr u s t com pany,
heretofore or hereafter organized under the laws of th is Common
wealth. m ay issue non-assessable preferred capital stock; of one or
m ore classes, to which the double liability shall n ot apply. Such
preferred capital stock m ay be considered as p a r t of th e m inim um
“capital stock”, and in th e case of existing corporations shall be
issued in th e m anner now provided for increasing capital stock.
T he holders of such preferred capital stock shall be entitled to receive
such cum ulative dividends a t a ra te n o t exceeding 6 per cen t per
annum and shall have such voting and conversion rights, and such
control of m anagem ent, and such preference over th e holders of
common stock in th e event of liquidation, as m ay be provided in
th e original or am ended articles of incorporation under which said
stock is issued. N o issue of preferred stock shall be valid u n til th e
p ar value of all stock so issued shall be paid in.
Any bank or tru s t com pany or com bined bank and tr u s t com pany,
organized under th e laws of this Com m onwealth, m ay subscribe for
and own stock of th e Federal Reserve Bank within th e Federal reserve
district where such bank is located and m ay tak e any steps necessary
to become a m em ber of such Federal Reserve Bank.
Any bank or tru s t com pany organized under th e laws of this Com
m onwealth is hereby em powered upon au th o rity of a m ajo rity of
its board of directors to do anything necessary to acquire insurance
of its deposits in th e Federal D eposit Insurance Corporation, estab
lished pu rsu an t to Section 12 B of th e Federal Reserve act, as am ended,
and to acquire stock or securities of such corporation, and to enter
into and tak e advantage of all contracts, rights and privileges which
m ay a t any tim e be available to said bank or tr u s t com pany pursu
a n t to said Federal Act.
N o B ank shall perm it any one person to become indebted to it,
either as principal or surety, in excess 2 0 % of its capital and surplus
unless good collateral pledged. I f borrower is director or officer, th e
lim itation is 10% of paid up capital stock. In no event shall th e in
debtedness of an y one person exceed 30% of capital and surplus:
B lu e S ky L aw . K entucky’s Blue Sky Law is a com prehensive
regulation of th e sale of corporate securities. Before transacting
business in K entucky, investm ent companies m ust file a detailed
statem ent of their organization and financial condition w ith th e
D irector of th e D ivision of Securities who has th e power to investi
gate, approve or disapprove any such business proposed. N on
residents m u st appoint th e Banking Commissioner as agent for service
of process. Dealers and salesmen m ust obtain licenses from th e
D irector of th e Division of Securities.
C h a tte l M o rtg a g e s a n d D eeds of T r u s t. M ortgages, deeds of
tru st, conditional sales contracts m ust be-recorded to be valid against
a purchaser for a valuable consideration w ithout notice or against
creditors. I t is a penal offense for any person to sell or rem ove from
th e s ta te any personal property on which th ere is a recorded m ortgâge
w ith th e in ten t to prevent th e foreclosure of th e m ortgage. To be
valid, an assignm ent of any c h attel m ortgage m ust be filed or recorded
in th e sam e m anner as th e original m ortgage.
C h e c k s. Any person who w ith in ten t to defraud shall m ake or
draw or u tte r or deliver any check, d raft, or order for th e paym ent
of m oney upon any bank or depository, knowing a t th e tim e of such
m aking, drawing, uttering, or delivery th a t th e m aker or draw er has
not sufficient funds in or credit w ith such b ank or other depository
for th e paym ent of such check, d ra ft or order in full upon its presenta
tion; or who after having m ade, u ttered or delivered any check, d raft,
or other order for th e paym ent of m oney upon any bank or other
depository shall w ithdraw or cause to be w ithdraw n, th e m oney or
any p a rt thereof to th e credit of th e m aker of such draft, check or
other order for th e paym ent of m oney w ithout leaving w ith such
bank or other depository a sum sufficient to cover such check, draft,
or other order for th e paym ent of money, shall be guilty of a mis
dem eanor, if th e am ount of such check, d raft or order be under
T w enty Dollars, and if th e am ount of such check, d raft or order be
for T w enty D ollars or over, he shall be guilty of a felony. T he
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B A N K IN G A N D C O M M E R C IA L L A W S— K E N T U C K Y
m aking, drawing, u tterin g or delivering of such check, d raft, or order
as aforesaid, shall be strong prim a facie evidence of in ten t to defraud.
C o lle c tio n s . Uniform Bank Collection Code as recom m ended by
American B ankers Association, see com plete tex t back of Laws.
C o n tr a c ts . A seal or scroll is in no case necessary to give effect
to a deed or other, writing. All unsealed writings stand upon the
same footing w ith sealed writings, having the same force and effect,
an d th e sam e actions m ay be founded upon them . T he S tate or
county seal, or the seal of a court, corporation,, or notary to any
writing has not, however, been dispensed with.
C o n v e y a n c e s. (See Acknowledgments.)
C o rp o ra tio n s . Form ed, under the general laws for transaction of
any lawful business. Special regulations prescribed for foreign cor
porations doing business in the S tate, and for banking, building a,nd
loan, tru st, insurance, and railroad companies. Cum ulative voting
for th e election of directors prescribed. Stockholders in guaranty
companies, investm ent companies and insurance companies are
liable equally and ratably, and not one for the other, for all con
tracts and liabilities of corporation, to extent of th e am ount of their
stock a t p ar value in addition to am ount of such stock; b u t per
sons holding stock, as fiduciaries, are not personally liable, b u t estates
in their hands are in sam e m anner and to sam e extent as other stock
holders, and no transfer of stock operates as a release, of any such
liability, existing a t tim e of transfer, provided action to enforce
th e liability be commenced w ithin two years from tim e to th e transfer.
For liability of stockholders in banks and tru s t companies, see Banks,
supra. Articles acknowledged and recorded like deeds in county in
which principal place of business is situated, and a copy thereof filed
and recorded in th e office of th e secretary of S tate. A fter such filing
and recording, and paym ent to S tate of license ta x of one-tenth of 1 per
cent on its capital stock, corporation is deemed organized; b u t, before
transacting business other th an w ith its own stockholders, a t least 50
per cent of stock m ust in good faith be subscribed, payable a t such
tim es as board of directors m ay require.
’
T he issue of no p ar value stock is perm itted w here provided for in
th e articles and such stock is deemed fully paid when consideration
determ ined on by board of directors is paid. B u t for purposes of cor
poration license or franchise taxes value is fixed a t $ 10 0 .00 .
All foreign corporations, except insurance com panies which are now,
or hereafter shall be, authorized to do business in this state, m ust file
certified copies of their articles of incorporation and am endm ents
thereto in Office of Sec. of S tate and p ay a filing fee of $25.00 plus 25c
for each 100 words for recording same. Such corporation m ust on or
before Ju ly 1, 1941, an d annually thereafter file a statem ent of exist
ence w ith th e Sec. of S tate form as prescribed by him , and p ay a fee
of $ 1 .00 .
Agt. for serving process m u st be verified before Ju ly 1, 1941.
Fee, $1.00.
.
, ,
C o u r ts . General civil and crim inal jurisdiction is vested in cir
cuit courts which hold term s in each county as provided by sta tu te .
C r e d its , A person who shall knowingly in person or through any
agency m ake any false statem ent in w riting w ith in ten t it shall be relied
upon, respecting his financial condition, or m eans or ability to pay,
for th e purpose of procuring delivery of personal property, th e pay
m ent of cash, the m aking of a loan or credit, or extension of credit,
and procures upon faith thereof either or any of th e things or benefits
m entioned, shall be guilty of a felony and upon conviction, shall
be confined in the penitentiary n ot less th an one nor more th an five
years.
D ays of G ra c e . (See N otes and Bills of Exchange.)
D e p o s itio n s . Depositions m ay be taken in this sta te before an
examiner appointed by a Judge of a circuit court, a Judge or Clerk of
th e court, Ju stice of th e Peace or N o tary Public. Depositions m ay
be tak en o u t of th is s ta te before a Commissioner appointed by Gov
ernor of th is sta te , or any other person empowered by a commission
issued to him by consent of th e parties or order of court; or before
a Judge of a court, a Justice of th e Peace, M ayor of th e city or N o tary
Public.
I f deposition is tak en on interrogatories, neither p a rty is
allowed to be present, either in person or by counsel. T he officer’s
certificate m u st s ta te when and where th e deposition was taken, th a t
th e w itness was duly sworn before giving i t and th a t i t was w ritten and
subscribed b y him in officer’s presence, or was w ritten by officer in
presence of w itness and read to an d subscribed by witness in presence
of officer, an d th e parties present in person or by attorney.
D e s c e n t a n d D is tr ib u tio n of P ro p e rty . T he real estate of a
person dying in testate shall descend in parcenary to his kindred, male
or fem ale, in th e following order, viz.: (1 ) To his children and
th eir descendants; if none, then (2 ) to his fath er and m other equally
if bo th be living; if either .be dead, th e whole estate descends to the
one living; if both be dead, then (3) to his brothers and sisters and
their descendants; if none, th en (4) one m oiety of the estate shall
pass to th e paternal and the other to the m aternal kindred, in the
following order: (5) to th e grandfather and grandm other, or which
ever m ay be living; if both are dead, then (6 ) to uncles and aunts
an d their descendants: if none, then (7) to great grandfather and
great grandm other, and so on in o ther cases w ithout end, passing
to th e nearest lineal ancestors and their descendants. (8 ) I f there
is no kindred to one of th e parents, the whole shall go to the kindred
of th e other. I f there is neither paternal nor m aternal kindred, the
whole shall go to th e husband or wife of th e intestate, or if he or
she be dead, then to his or her kindred as if he or she had survived
the in testate and died entitled to the estate. W hen any or all of a
class first entitled to take are dead, leaving descendants such descend
an ts shall tak e per stirpes, th a t is to say, by representation, the shares
of their respective deceased parents. Collaterals of th e half blood
shall inherit only half as m uch as those of the whole blood. In m aking
title by descent, i t shall be no bar to a p arty th a t any ancestor,
through whom he derives his descent from the in testate, is or has
been an alien. B astard can inherit in the descending line only from
th e m other and her kindred, and can transm it inheritance in the
descending line only to th e m other and her kindred.
D o w er. (See H usband and Wife.)
E s c h e a ts . L and held b y a corporation for more th an 5 years,
which is n o t proper and necessary to carrying on its legitim ate business
becomes subject to escheat. L and held by a non-resident alien for
more th an 8 years becomes subject to escheat.
D em and B ank depositsfare deem edfabandoned if no com m unication
received thereto for 10 years. N on-dem and deposits, 25 years.
E x e c u tio n s m ay issue upon judgm ent any tim e until collection of
It is barred by lim itation, b u t no execution shall issue on any judg
m ent, unless ordered by the court, until after ten days from rendition.
Execution constitutes lien on property of debtor from tim e it reaches
hands of proper officer. Provided th a t such lien shall be void as to a
purchaser for value w ithout notice unless and until notice of such exe
cution shall be filed in th e office of the C ounty Clerk. Execution m ay
be replevied for three m onths, any tim e before sale under same, by
defendant giving to th e officer an obligation (replevin bond) payable to
plaintiff, w ith good security for the am ount thereof, in terest and costs.
A judgm ent to enforce a lien cannot be replevied. No replevy allowed
upon judgm ent against any collecting officer, atto rn ey a t law, or
agent, for a delinquency or default in executing or fulfilling duties
of his office or place, or for failing to pay over money collected by
him in such capacity, nor against a principal by his surety, nor upon
a d eb t due by obligation having the force of a judgm ent, nor upon
judgm ent for specific property, or for th e property or its value. If
land sold does n ot bring tw o-thirds of appraiser’s valuation, defend
a n t an d his representatives have right to redeem within a year from
th e day of sale, by paying purchaser or his representatives original
purchase money and ten per centum per annum interest. L and in
which the execution defendant has a legal or equitable title or a con
tingent rem ainder, a defeasible fee, m ay be tak en and sold under
execution.
,
E x e m p tio n s . T he following property of persons w ith a family
resident in this Com m onwealth, shall be exem pt from execution.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
attachm ent, distress, or fee bill, nam ely; Two work beasts, or one
work beast and one yoke of oxen; two plows and gear; one wagon
and set of gear, or cart or d ray ; two axes, three hoes, one spade, one
shovel; two cows and calves; beds, bedding and furniture sufficient
for fam ily use; one loom and spinning .wheel and pair of cards; all
the spun yarn and m anufactured cloth m anufactured by th e family
necessary for fam ily use; carpeting for all fam ily rooms In use; one
table; all books n ot to exceed seventy-five dollars in value; two
saddles and their appendages: two bridles; six chairs; or so many
as shall n ot exceed ten dollars in value; one cradle; pou ltry on hand
n ot to exceed one hundred dollars in value; ten head of sheep, n ot to
exceed twenty-five dollars in value; all wearing apparel; sufficient pro
visions, including breadstuff and anim al food to sustain th e fam ily for
one year; provender suitable for live stock, if there be an y such stock,
n o t to exceed seventy dollars in value; and if such provender be n ot on
hand, such other property as shall n ot exceed such sum in value; all
washing apparatus, n o t to exceed seventy-five dollars in value; one
sewing machine, and all fam ily p o rtraits and pictures; one cooking
stove and appendages, and other cooking utensils n o t to exceed in
value twenty-five dollars; ninety per centum of th e salary, wages, or
income earned by labor, of every person earning a salary, wages, or
income of seventy-five dollars or less per m onth, provided th a t the
lien created by service of garnishm ent, execution, or attach m en t, shall
only affect ten per centum of such salary, wages, or income, earned at
th e tim e of service of process; of th e salary, wages, or income earned
by labor, of every person earning a salary, wages or income in excess
of seventy-five dollars per m onth, sixty-seven and one-half dollars per
m onth an d no more shall be exem pt.
Tools of a mechanic, not exceeding one hundred dollars in value
libraries of m inisters of the Gospel, professional libraries of lawyer*
professional libraries and instrum ents of physicians and surgeons, not
to exceed in value five hundred dollars. In addition to personal
property there is for actual bona fide housekeepers w ith a family
resident in this Commonwealth a hom estead exem ption of so much
land including th e dwelling house and appurtenances owned by
debtor as shall not exceed in value one thousand dollars. This
does n ot extend to a m ortgage on or purchase m oney due for th e land
or for debts or liability existing prior to th e purchase of th e land, or
of the erection of th e im provem ents thereon.
Personal property or money on hand or in bank to th e am ount of
$750.00 shall be exem pt from distribution and sale and shall be set
a p art by the appraisers of the estate of an intestate to his widow and
infant children, o r ,if no widow, to his infant children or child surviving
him . T he appraisers shall sta te in their appraisem ent th e money or
th e articles and value of each set a p a rt by them to th e widow, or in
fants, separately to th e articles appraised for sale, b u t if th e widow be
present a t th e tim e of th e appraisem ent, or any one authorized by her in
writing, she m ay m ake her selection out of the property appraised to
th e am ount of said $750.00 and said appraisers shall so report. These
provisions also apply to cases where th e husband dies testate, and
th e widow renounces th e provisions of th e will in th e tim e prescribed
by law.
H o lid ay s. T he legal holidays are: Sundays; Jan u ary 1 (New
Y ear’s D ay); January 19 (R obert E. Lee’s birthday ); F ebruary 12
(Lincoln’s b irth d a y ); F ebruary 22 (W ashington’s b irth d a y ); M ay 30
(M emorial D a y ); June 3 (Confederate M em orial D a y ); Ju ly 4 (Inde
pendence D a y ); the first M onday in Septem ber (Labor D a y ); Octo
ber 12 (Columbus D a y ); Novem ber 11 (Armistice D a y ); Thanksgiving
D ay and all days appointed by P resident of th e U nited S tates or by
th e Governor of th is S tate as of days of fasting .and Thanksgiving;
and December 25 (Christm as D ay). All such legal holidays shall
be treated as Sunday. If an y of those days nam ed as holidays shall
occur on Sunday, th e next day thereafter shall be observed as a holiday.
H u s b a n d a n d W ife. M arriage gives to th e husband during
th e life of th e wife no interest in any of th e wife’s property. She
has full power to contract and to bind herself and her property,
except th a t she can n ot bind herself to answer for th e debt, default,
misdoing of another, except as to p roperty set a p a rt for th a t pur
pose by m ortgage. She m ay sell and dispose of personal property
as if unm arried, b u t m ay n ot sell or convey real estate unless her
husband unites in th e contract, or conveyance unless empowered
to do so by decree of court, in case of insanity, conviction of felony,
or abandonm ent by th e husband. A fter th e death of either husband
or wife th e survivor shall have a life estate in one-third of all the
realty of which th e decedent was seized in fee sim ple during the
coverture unless such right shall have been forfeited or relinquished.
Such survivor has also absolute title to one-half th e personality
of th e decedent left after th e paym ent of debts. Abandonment
and living in adultery by either p arty , or divorce works a forfeiture
of these rights.
I n te r e s t. The lawful rate of interest is 6 per centum per annum,
and contracts for a greater rate are void as to the excess of interest.
The C ourt of Appeals has refused repeatedly to allow attorneys fees
to be collected. U nder Sections 883 i-14, etc., a com pany engaged in
m aking loans of $300.00 or less m ay obtain a license from th e Director
of Division of Banking and legally charge 3 % % per m onth on the un
paid balance, on loans of less th a n $150.00, and 2 H % per m onth on un
paid balance on loans of more th a n $150.00 n o t exceeding $300.00.
J u d g m e n ts . A judgm ent does n ot constitute a lien on property
In this S tate. All judgm ents bear interest from th eir dates. Judg
m ent can be k ep t alive for 15 years additional by having execution
issued a t any tim e w ithin 15 years after date of judgm ent. (See
Executions and Lim itations.)
L im ita tio n s .
T he following are th e periods within which action*
m ust be brought, th e tim e commencing to run from th e accrual of
the cause of action. Fifteen y e a rs: Actions to recover real property;
actions upon judgm ents and w ritten contracts, except negotiable
instrum ents actually negotiated. Seven years; Actions by senior
patentees against junior patentees, who have held possession for seven
years. Five years: Actions upon m erchants’ accounts for goods sold;
actions upon verbal contracts; upon a liability created by statute;
actions for trespass to real or personal property or for damages for
withholding sam e; for th e specific recovery of personal property;
actions upon negotiable instrum ents, though as to th e makers of an
undiscounted note it is fifteen years and as to sureties seven years;
actions upon accounts between m erchants, and actions for relief from
fraud or m istake and all other actions n ot arising on contracts and. not
included in th e 1 and 2 year statutes. One year: Actions for injury
to person or character and for breach of prom ise of marriage.
M e rc h a n d is e i n B u lk . W hen any one who shall buy any stock
of goods in bulk or fixtures before he shall deliver to th e vendor the
purchase price or any prom issory note therefor shall obtain from the
vendor a verified w ritten statem ent of all th e creditors of the vendor
together w ith their addresses and th e am ount of indebtedness due
to each, also an accurate inventory of th e stock or fixtures to be
purchased and m aking it th e d u ty of th e vendor to furnish sucn
statem ent under oath. Upon receiving such a statem en t the pur
chaser shall notify, personally or b y registered m ail, each of tne
creditors of said vendor as appears on th e list, of th e proposed sale,
th e price to be paid therefor, th e conditions of th e sale an d a copy or
the statem ent furnished by th e vendor. T his notice shall be given
or sent a t least ten days before th e com pletion of th e sale. I f any sucn
purchaser fails to obtain a verified statem ent from th e vendor or to
give th e notice to th e creditors as above or to see th a t th e proceed»
of th e sale are prorated among creditors according to dignity of tnerr
claims th en such sale or transfer shall be fraudulent and void, ana
shall operate as a general assignm ent for th e benefit of th e creditors
of th e vendor and th e purchaser shall a t th e su it or option or tne
creditor be held liable to th e creditors for th e fair value of all property
so bought or sold, provided, however, such su it m u st be brougnt
w ithin four m onths.
.
N e g o tia b le I n s t r u m e n t s . T he Uniform N egotiable Instruments
Law was approved M arch 24, 1904. (See com plete tex t following
“ Digest of Banking an d Com m ercial Laws.”)
B A N K IN G A N D C O M M E R C IA L L A W S— L O U IS IA N A
N o tes a n d B ills o f E x c h a n g e . T he uniform negotiable instru
m ents law was approved M arch 24, 1904. Section 1 declares th a t an
Instrum ent to be negotiable m ust conform to the following require
m ents, (1) I t m ust be in w riting and signed by th e m aker or
drawer. (2 ) M ust contain an unconditional promise or order to
pay a sum certain in money. (3) M ust be payable on dem and, or
a t a fixed or determ inable future tim e. (4) M ust be payable to the
order of a specified person or to bearer. (5) W here the instrum ent
Is addressed to a drawee, he m ust be nam ed or otherwise indicated
therein w ith reasonable certainty. D ays of grace are abolished.
The signature of any p a rty m ay be m ade by an agent duly authorized
in w riting th u s differing from the uniform negotiable instrum ents
law as enacted elsewhere. E very negotiable instrum ent is payable
a t the tim e fixed therein; when th e day o f m atu rity falls upon Sunday,
or a holiday, th e instrum ent is payable on the next succeeding business
day. T he Negotiable Instrum ents Law has been am ended and
enlarged b y Acts of 1930 which should be consulted by those interested.
P o w ers o f A tto r n e y . Powers of atto rn ey to convey or release real
or personal pro p erty m ay be acknowledged, proved and recorded in the
proper office in the m anner prescribed for recording conveyances. If
th e conveyance m ade under a power is required by law to be recorded
or lodged for record to m ake the sam e valid against creditors and pu r
chasers. then th e power m ust be lodged or recorded in like m anner.
P ro te s t. W here any negotiable instrum ent has been dishonored
It m ay be p rotested for non-acceptance or non-paym ent as th e case
may be; b u t p rotest is not required, except in the case of foreign bills
of exchange. I t is th e safer practice to protest in au cases, because
In all cases notice of dishonor is necessary to charge parties secondarily
liable.
S a le s. On M arch 24,1928 the uniform sales a ct drawn by Professor
W illiston was enacted w ithout change from th e original as draw n by
Professor W illiston.
T ax es. S tate and C ounty taxes are due on M arch 1st annually
unless otherwise provided. Assessments are m ade by th e sta te and
counties as of Ju ly 1st in each year for taxes for the following year.
The Sheriff is collector of state, county and school district taxes.
M unicipalities select their own collector.
M unicipal taxes are due a t different dates as m ay be fixed b y the
municipal governm ent.
All taxes on real estate are a lien thereon from th e date of assessm ent.
T he sta te gasoline tax is 5 cents per gallon.
T he s ta te has an income and an inheritance tax.
U n c la im e d B a n k D e p o s its. E very bank organized under the
laws of K entucky or doing business under any law of K entucky, m ust
annually, in Jan u ary , publish in a t least tw o issues of a newspaper
published in th e C ounty in which th e bank is located, a statem ent
under oath of its Cashier, of all deposits m ade w ith it and of all the
dividends an d interest declared and payable by it which, a t th e date
of such statem en t shall have rem ained unclaim ed by any person
authorized to receive th e sam e for five years, giving th e tim e when,
and th e nam e of, th e person by whom th e deposit was m ade an d th e
name of th e person in whose favor th e dividend or interest was declared
and when an d from w hat source derived, (see escheat)
W ills. Any person of sound m ind and over tw enty-one years of
age m ay m ake a will. Wills m ust be in writing w ith the nam e of
the testa to r subscribed thereto either by himself or by some other
person in his presence and by his direction. If not wholly w ritten
by th e testa to r th e subscription m ust be m ade or the will acknowledged
by the testa to r in th e presence of two witnesses, who shall subscribe
their nam es in th e presence of th e testa to r. The will of a person
domiciled o ut of th is S tate is valid as to personalty, if executed accord
ing to th e law of th e domicile; b u t to be valid as to lands, it m ust be
executed as required by th e law of this S tate. T he county court
has exclusive original jurisdiction over the probate of wills. Holo
graphic wills are valid.
S Y N O P S IS O F
T H E L A W S O F L O U IS IA N A
RELA TIN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised b y M esses . Schwaez, Gusts , B aknett & Redmann
A ttorneys a t Law, C anal B ank Bldg., New Orleans.
(See C ard in A ttorneys’ List.)
A c c o u n ts. (See Acknowledgments.)
A c k n o w le d g m e n ts . T he uniform foreign (Act 154 of 1916), and
domestic (Act 226 of 1920) acknowledgm ent laws have been adopted.
Acknowledgments m ay be taken w ithin the state by a notary
public or by a recording officer.
Acknowledgments m ay be taken In the U nited States, outside of
the state, b y an y judge, justice of th e peace, notary, commissioner for
Louisiana, or by an y officer authorized to ta k e acknowledgments
where he acts.
Acknowledgments m ay be taken in foreign countries by any am
bassador, m inister, envoy or charge d ’affairs of th e U nited States, in
the country to which he is accredited, or before any officer of the
United States, a notary public, or a commissioner or other agent of
Louisiana authorized to tak e acknowledgments, if such officers have
an official seal, and are commissioned or accredited to act where the
acknowledgment is taken.
Any commissioned officer of th e arm y or navy of th e U nited States
Is authorized to take acknowledgments in any foreign country in which
he m ay be serving. (Act 192 of 1918.)
All acknowledgm ents taken w ithin the U nited States m ust be
witnessed by tw o witnesses over the age of fourteen years, who m ust
subscribe th e certificate of acknowledgment. I f th e p arty m aking
acknowledgment be blind, three witnesses are required. W itnesses
are not necessary when acknowledgments are taken outside of the
United States. The officer taking th e acknowledgm ent m ust n o t act
as a witness. While a female m ay act as a witness, th is is of doubtful
advisability.
The acknowledgment of a m arried woman m ay be taken as though
■he were single, separate exam ination being unnecessary.
No authentication is required of certificates of acknowledgments
taken in th e state, or taken in foreign countries, or taken in the United
States by notaries public, or commissioners for Louisiana, under their
official seals. Certificates of acknowledgm ents taken in th e United
States before other officers m ust be authenticated by a certificate of
a secretary of sta te as to th e capacity of th e officer.
Authentication for use out of the state may be by the secretary of
state, whose fee is one dollar, or by any clerk of a court of record,
civil district or federal court, whose fee is fifty cents.
A ctio n s. Commenced by petition setting forth cause of action,
articulated in num bered paragraphs, signed by plaintiff or his attorney
and duly sworn to. Plaintift m ust give resident security for costs or
hiake deposit to cover sam e If dem anded. (See Act 300 of 1914
regulating pleadings and practice as am ended by a ct 27 of 1926.)
After filing of petition, defendant is cited to appear ten days after re
ceipt of citation in D istrict C ourts and Justice of Peace courts outside
of city of New Orleans. One d ay additional for every ten miles his
residence is d istan t from court. D elay in no case to exceed fifteen days,
in city courts of New Orleans, defendant m ust appear three days after
rcceip t of citation. N either day of service nor day on which answer
musi x®
*s included in delay. I f defendant fails to appear, judge
ment by default is rendered against him . In district courts such judge
ment is confirmed two judical days after prelim inary entry of default,
in Justice of Peace courts judgm ent of default is confirmed the same
nay as th a t on which default is entered.
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A d m in is tr a tio n o f E s ta te s by executors, adm inistrators, or tu to rs
who are ex-officio adm inistrators—also by dative executors—where
there is no heir present or agent of heir, public adm inistrator takes
charge in New Orleans. A non-resident executor of a will m ust in all
cases give bond; a resident need n ot unless required b y creditors.
Adm inistrators and executors of other states m ust open succession of
deceased in the courts of this State, and be recognized as such here
before they can sue or be sued or transfer property in this S tate. Stock
in local corporations m ay be transferred by non-resident executors,
etc., w ithout the necessity of securing an order from the local court, b u t
no transfer can be m ade u ntil the inheritance tax is adjusted. No
debts can be paid by adm inistrator w ithout authorization of probate
court. T he adm inistrator or executor presents to the court an
account or tableau of distribution setting forth the paym ents and
disbursem ents he proposes to m ake. P arties interested are notified
by publication to show cause w ithin ten days why th e account so filed
should n ot be approved. Any p arty interested m ay oppose the
account by opposition in w riting a t any tim e within th e said ten days
In absence of opposition account is hom ologated upon production of
satisfactory evidence by adm inistrator or executor, and the funds
ordered distributed in accordance therew ith.
Claims against estates should be presented in w riting to th e adm in
istrato r or executor. Should he approve th e sam e in w riting, no
further action is required except to see th a t the claim is placed upon
his account when filed. Should he decline to recognize the claim,
creditor m ay file suit against succession representative and obtain a
judgm ent to be paid in ordinary course of adm inistration. I f there
Is no danger of prescription, creditor m ay aw ait filing o f account and
then oppose sam e if claim is n ot included.
A ffid av its. (See Acknowledgments.)
A liens. No alien who is ineligible to citizenship of th e U nited
States m ay hold land or any real right. Aliens m ay not vote.
A r b itra tio n . Agreem ents to subm it to arbitration recognized by
law. "L ouisiana A rbitration a c t” adopted A ct 262 of 1928. Arbi
trato rs m ust be sworn, otherwise decision is n ot binding. S tate board
of arbitration of labor troubles established. [Act 139 of 1894.]
A ssig n m e n ts a n d In so lv e n c y . S tate insolvent laws superseded
by N ational B ankruptcy act.
A tta c h m e n t. W rits of attach m en t issue on application of credi
tor, under o ath, when debtor about perm anently leaving sta te , w ithout
possibility in ordinary course of obtaining or executing judgm ent
previous to departure, or when such debtor has already left sta te
perm anently, when th e debtor resides o ut of th e sta te ; when he
conceals himself to avoid being cited; when he has m ortgaged, assigned
or disposed of, or is about to m ortgage, assign, or dispose of his prop
erty, rights, or credits, or some p a rt thereof, w ith in ten t to defraud
his creditors or give an unfair preference to some of them ; and when
he has converted, or is about to convert, his property into money
or evidences of d eb t with in ten t to place it beyond th e reach of his
creditors, o r, if debt n ot due. is about to remove his property out
of th e S tate. C reditor m ust furnish bond equal to th e am ount claimed
to be due. w ith a t least one solvent surety, residing w ithin th e ju ris
diction of th e court, conditioned for paym ent to any p a rty injured by
issuance of w rit of all dam ages sustained by him in case it is decided
th a t th e attach m en t was wrongfully obtained. (Act 119 of 1916).
Bond for $250 is sufficient if debtor resides outside of sta te b u t bond
m ay be increased to am ount of claim upon order of court a t dem and
of debtor. G arnishm ent m ay be had as an accessory either to a writ
of attachm ent or fieri facias A ttachm ent m ay now issue for an offense,
quasi offense or to rt if defendant is non-resident (Act 215 of 1920).
B a n k s . C a p i t a l S to c k a n d S u r p l u s R e q u ir e m e n ts . Savings banks
m ust have a capital stock of $30,000.00, all fully paid, in tow ns of
less th an 15,000 population; or $50,000.00 in tow ns of more th a n
15,000 population, and less th a n 30,000 population; or $100,000.00 in
towns of more th a n 30,000 population. Corporations carrying on
general banking business m ust have capital of $25,000.00 in tow ns of
less th a n 3,000 population; or $50,000.00 in tow ns of more th an 3,000
population and less th a n 30,000 population; or $100,000.00 in towns
of more th an 30,000 population. Surplus of all banks m ust be 50%
of th e capital stock.
R e s e r v e . A cash reserve of 20% of th e dem and deposits is required,
4% to be k ep t on th e premises or on deposit in th e Federal Reserve
B ank in cash. F or th e rem ainder of th e liabilities for dem and depos
its, an am ount equal thereto in discounted paper or bonds, stocks,
etc., should be m aintained as reserve.
I n c o r p o r a t o r s . N o t less th a n seven persons are required to form
a corporation for th e purpose of carrying on general banking business.
N ot less th a n five persons m ay form a savings or tru st bank.
D ir e c t o r s .
T here m ust be a board of directors of n ot less th a n five,
nor more th a n 30 m embers, th e m ajority of whom m ust be citizens
of Louisiana, owning a t least $100.00 of stock.
S u p e r v is i o n — - E x a m in a t io n a n d R e p o r t s . A S tate B ank Commis
sioner is appointed by th e Governor w ith th e consent of th e Senate,
who examines th e h an k s twice each year, and reports thereon to th e
Legislature a t th e com m encement of each session. I n addition all
banks m ust file sworn reports w ith Commissioner four tim es each year.
L o a n L i m i t a t i o n s . Loans cannot be m ade to one borrower for
more th a n 2 0 % of th e b an k ’s capital stock and declared surplus.
However, loans secured by good collateral m ay be m ade to one bor
rower for one-half of th e capital and declared surplus, and loans to
one borrower of an am ount n ot greater th a n th e capital and declared
surplus m ay be m ade when th e loan is secured b y th e pledge of obliga
tions of th e U. S. or of th e S tate of Louisiana. Loans to any em
ployees are prohibited.
K in d s o f B a n k s.
Com panies organized under th e banking laws
of this sta te consist of banks of deposit, discount, exchange and circu
lation, savings banks, safe deposit and tru s t banks.
B ra n c h . B a n k s . N o banking association or savings bank w ith
capital stock of less th a n $50,000 capital m ay locate or operate branch
offices. T he to ta l num ber of branch banks perm itted any one b ank is
determ ined according to a scale dependent upon the capital of th e bank.
S to c k h o ld e r ’s L i a b il it y r. N o stockholder is liable for more th a n th e
unpaid portion of th e original purchase price of his stock. A ct No. 180
of 1934 authorizes banks of th is S tate to contract for Federal D eposit
Insurance. The act further provides th a t upon assuming th e powers
of receiver or liquidator of a bank in th is State, th e Federal Deposit
Insurance Corporation shall have th e right and power to enforce the
individual liability, under th e laws of th is State, of each stockholder
of any such banking institution, when it ascertains th a t th e assets
thereof will be insufficient to pay its debts and liabilities.
C h a tte l M o rtg a g e s . As provided by A ct 198 of 1918, as am ended,
any kind of m ovable p roperty m ay be m ortgaged for debts, for money
loaned, fu tu re advances or to guarantee contractual obligations.
T he act of m ortgage m ay be passed before a N o tary Public an d *two
witnesses, or by p riv ate Act duly acknowledged by one of th e parties
th ereto or a witness before a, N o tary P ublic (If acknowledged by
witness no rig h t of executory process), and m ust be recored in P arish
where p roperty is situ ated and parish where m ortgagor resides in
order to affect th ird persons w ithout notice. C h a ttel so m ortgaged
cannot be transferred from one parish of th e S tate into another w ith
o ut w ritten consent of mortgagee. Inscription of ch attel m ortgage
m ust be renewed w ithin five years.
C o lla te ra ls m ust be delivered to be effectual. Act 9 of 1914
m akes it a felony for a custom er of bank to wrongfully dispose of
collateral security pledged to bank. Uniform Bills of Lading law
obtains. (Act 94 of 1912.)
C o n d itio n a l S ale. A ct 119 of 1918 m akes lawful a conditional
sale of tan k cars providing for retaking of car by conditional vendor
w ithout right of redem ption being given to vendee, all paym ents of
such d ate of retaking being forfeited. Act 111 of 1894 provides for
conditional sale of railw ay equipm ent. O ther conditional sales of
m ovable property are ineffective as between th e parties or innocent
th ird persons.
1998
B A N K I N G A N D C O M M E R C IA L L A W S— L O U IS IA N A
C o n v e y an ces. All agreem ents affecting real property m ust be
In writing, and transfers and m ortgages, etc., 'm ust be recorded in
th e place where th e property is situated to affect the rights of third
persons. Deeds are m ade under private signature or by act passed
before a notary public in th e presence of two witnesses. Both vendor
and vendee sign, though signature of vendee is not essential, as any
act of acceptance will answer. The notary in Parish of Orleans pre
serves th e originals of deeds passed before him and certified copies
given by him are received as evidence in the courts. E very notarial
deed should contain ( 1 ) date of act and place where it was passed. (2 )
nam es and surnam es and qualities of contracting parties, (3) descrip
tion of the property, etc., (4) price of transfer and term s and conditions.
(6 ) T he m arital statu s, of all parties m ust be given. M arried women
m ay now dispose of separate property w ithout authorization of husband
or court. T he husband acts alone in th e sale of comm u n ity property:
th e signature of the wife being unnecessary. E ither husband or wife*
if husband refuses to do so, m ay designate fam ily home by registration.
I f so designated, wife’s signature necessary to pass title.
C o rp o ra tio n s . Any num ber of persons, exceeding six, m ay form
them selves into corporations for literary, scientific, religious, and
charitable purposes; for works of public im provem ent, and generally
all works of public u tility and advantage; and any num ber of persons,
not less th an three, m ay form them selves into a corporation for the
purpose of carrying on mechanical, mining, or m anufacturing business,
except distilling or m anufacturing intoxicating liquors, w ith a capital
n ot less th an $5,000 or more th an $1,000,000. Any num ber of per
sons. n o t less th an three, m ay form them selves into a corporation on
complying with th e general corporation taws, ror the purpose of carry
ing on an y lawful business or enterprise n ot otherwise specially pro
vided for, except banking and insurance, hom estead and building
and loan associations. By act 250 of 1928 th e corporation law of
Louisiana has been largely revised, generally along the lines of the
uniform corporation law b u t w ith distinctive features. T he act is
effective as from Jan u ary 1st, 1929. T he legislature can not pass a
special act conferring corporate powers. Corporation com m itting a
trespass or dam age m ay be sued a t place where it occurred. [Act 130
of 1926.] (See Act 154 of 1902 for form ation of corporations for works
of public im provem ent.) Act 120 of 1902 provides for organization,
etc., of local and foreign building and loan or hom estead associations.
N o corporation can declare dividends out of its capital stock. Annual
m eetings of corporations m ay be held anywhere within or w ithout
th e sta te .
.
Foreign C orporations m ay be licensed and taxed by a mode differ
en t from th a t provided for home corporations. No dom estic or for
eign corporations shall do any business in this S tate w ithout having
one or more know n places of business and an authorized agent or
agents in th e S tate upon whom process m ay be served. All corpora
tions (except m ercantile corporations) domiciled out of the S tate and
doing business in th e S tate in default of filing w ith the secretary of
sta te a declaration of th e place of its locality or domicile together with
a resolution authorizing the appointm ent of an agent together with
a power of attorney appointing an agent in th e S tate upon whom
service of process m ay be m ade, m ay be sued upon any cause of action
In any parish where the right of action arises and such corporation
m ust show its principal place of business and the places of business
It proposes to have in Louisiana.
Foreign corporations m ust file in office of secretary of sta te a w ritten
declaration setting forth and containing the place or locality of its
domicile, th e places in the S tate where it is doing business, and the
nnmp of its agent or o ther officer in this S tate upon whom process m ay
be served. (Act 54 of 1904 am ended by Act 284 of 1908. Act 284
of 1908 am ended by Act 243 of 1912. See Act 194 of 1912.)
Act 107
of 1922 requires foreign corporations doing business in this sta te to
pay a tax of one-tw entieth of 1 per cent on the am ount of the capital
stock employed in th is state. Act to operate prospectively only.
Foreign Corporations are denied th e right to sue in the courts or this
sta te unless qualified to do business herein. (Act 27 of 3rd E x tra
Session of 1935.)
As to non trad in g corporations, see Act 259 of 1914.
A ct No. 16 of 1934 provides for th e cancellation of th e charter of
an y corporation failing to m ake any report or pay any tax as pro
vided by law. Act No. 18 of 1934, as am ended by Act No. 25 of the
F irst E x tra Session of 1934, provides for th e levying of a franchise
tax on corporations doing business in this sta te , and provides for
annual rep o rt by them . A cts Nos. 12 and 23 of th e T hird E x tra
Session or 1934 provide th a t dom estic and foreign corporations are
required to keep detailed books showing stock, ownership, transfers
of stock, assets, liabilities, and business transaction in Louisiana.
C o u rts . T erm s and Jurisdiction. In parishes other th an Orleans;
Justices' courts, concurrent w ith D istrict courts up to $100. 2.
D istrict courts, concurrent w ith justices’ courts, up to $100, exclusive
for all civil m atters over $ 10 0 , and in all probate m atters and appellate
jurisdiction in all civil m atters in justices’ courts. In Orleans parish,
1. C ity courts, exclusive up to $100. C oncurrent w ith Civil D istrict
court from $ 10 0 to $300. 2. Civil D istrict court, concurrent up to
$300, exclusive over $300. Justices and city courts open a t all times.
In parishes other th an Orleans, district courts shall hold continuous
sessions during ten m onths of th e year. In parish of Orleans, civil
district court sits during 9 and H m onths of the year, b ut shall rem ain
open on all legal days during th e whole year for granting interlocutory
orders, issuing writs, tria ls of rules to quash same, trying proceedings
institu ted or on appeal therein by a landlord for th e possession of
leased property, partition proceedings, and for sucn special probate
and insolvency business, as th e courts en banc m ay by rule determ ine.
On all am ounts up to $2,000 inclusive, and in suits for dam ages or
death caused by wrongful injury, an appeal m ay be taken to the
court of appeals, from th e city and district courts respectively, and
on all am ounts over $ 2 ,000 , except suits for dam ages or death caused
by wrongful injury, to th e sta te suprem e court. An appeal lies on
both law and facts. Appeals from the city courts shall be tried de
novo, except suits for am ounts between $100 and $300.
D ay s o f G ra c e . Abolished.
D e p o sitio n s. To take testim ony of witness residing o ut of parish
or S tate it is necessary to file m otion duly sworn to showing non-resi
dence and m ateriality of evidence. W ritten interrogatories are prepared and served on opposite p arty, or his counsel, who has three days
m which to cross. Commission then issues, directed to some proper
officer, w ith interrogatories and cross interrogatories annexed, who
m ust cause witness to appear before him to answer under oath the
direct and the cross interrogatories. H e should reduce answer to
writing, read same to witness and cause witness to sign sam e. The
officer th en prepares a process verbal of the whole, attaches it to the
, commission, interrogatories, etc., and should return sam e to the court
issuing th e commission within the tim e fixed therein for taking the
deposition. T he deposition of a fugitive f rom justice is not admissible
in evidence. (Also see Act 176 of 1910 and 98 of 1926.) T he uniform
foreign depositions act has been adopted (Act 34 of 1922).
An additional m ethod of taking depositions of witnesses residing out
o f th e parish, b u t in th e sta te , or residing o u t of th e sta te is provided
by A ct N o. 143 of 1934.
D e s c e n t. I f one dies leaving no descendants, b u t a father and
m other and a brother and sister, or descendants of these last, the
succession is divided into two equal parts, one goes to father and
m other, th e other to brothers and sisters or their descendants. If
either fath er or m other of deceased dies before him, the portion which
would have been inherited by such deceased parent goes to the.
brothers and sisters of th e deceased, or tn eir descendants. I f deceased
left neither descendants nor brothers nor sisters, nor descendants from
them nor father nor m other, b u t only other ascendants, they inherit
to th e exclusion of all collaterals. I f ascendants in paternal and
m aternal lines are all of th e same degree, the estate is divided into
tw o parts, one goes to ascendants on the paternal and th e o ther to
ascendants on the m aternal side. If there is in the nearest degree
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b u t one ascendant in th e two lines such ascendant excludes ail other
ascendants of a more rem ote degree- If one dies leaving no descen
dants, and his father and m other survive, his brothers and sisters,
or their descendants, take half of his estate. If the fath er or m other
only survive, brothers and sisters, of their descendants, tak e threefourths. If one dies leaving no descendants nor fath er nor m other,
his brothers and sisters, or their descendants, take all the estate.
T he p artition of th e half and th ree-quarters, or th e whole of th e suc
cession falling to brothers and sisters, as above set forth, is m ade in
equal portions, if they are of th e sam e m arriage; if they are of different
m arriages, th e succession is equally divided between th e paternal and
th e m aternal lines of th e deceased, th e Germ aine brothers and sisters
taking p a rt in th e tw o lines, th e paternal and m aternal brothers and
sisters each in th eir respective lines only; if th ere are brothers and sis
ters on one side only, th ey inherit th e whole succession to th e exclusion
of all other relations of th e other line. If deceased died w ithout de
scendants, leaving neither brothers nor sisters, nor descendants from
them , nor m other nor father, nor ascendants in th e paternal or ma
ternal lines, his succession passes to his other collateral relations, the
one nearest in degree excluding th e others. W hen th e deceased has
left neither lawful descendants nor lawful ascendants, nor collateral
relations, the law calls to his inheritance either th e surviving husband or
wife, or his or her natural children, or th e S tate. If n atu ral m other
left no lawful children or descendants, her n atu ral children, acknowl
edged by her, inherit to th e exclusion of her father and m other and
other ascendants or collaterals of lawful kindred. N atu ral children
inherit from their n atu ral father, who has acknowledged them , when he
has left no descendants nor ascendants, nor collateral relations, nor
surviving wife, and to the exclusion only of th e S tate. Donations
inter vivos or m ortis causa cannot exceed tw o-thirds of th e property
of th e disposer if he leaves a t his decease a legitim ate child, one-half
if he leaves two children, and one-third If he leaves three or more.
If he leaves no descendants b ut a m other or father or both, caDnot
exceed tw o-thirds. T he rem aining half, th ird or fourth, as th e case
m ay be is th e legitim e of th e child or children and father and for
m other. T ax: To descendants, etc., 2 per cent from $5,000 to
$20,000, 3 per cent above $20,000. To collaterals, 5 per cent on
$1,000 to $20,000, 7 per cent above $20,000. To strangers 6 per
cent from $500 to $5,000, 10 per cent above $5,000. Exem ptions:
$ 5,000 for direct descendant, ascendant, or surviving spouse, $ 1,000
to collaterals, $500 to strangers. Bequests to educational, religious
or charitable institutions located w ithin th e sta te are exempt.
R . C. C. 915 am ended to read, “ W hen either husband or wife shall
die, leaving neither a father nor m other nor descendants, and with
o ut having disposed by last will and testam ent of his or her share
of th e com m unity property, such undisposed of share shall be inherited
by th e surviving spouse in full ownership. I n th e event th e deceased
leave descendants his or her share in th e com m unity estate shall
be inherited by such descendants in th e m anner provided by law.
Should the deceased leave no descendants, b u t a father and mother,
or either, then th e share of the deceased In th e com m unity estate
shall be divided in tw o equal portions,, one of which shall go to the
father and m other or th e survivor of them , and th e other portion shall
go to th e surviving spouse.
N ote: T his article controls com m unity property ; for inheritance
of separate property by surviving spouse see above.
D ivorce. (See Separation from Bed and Board.)
D ow er. (See M arried Women.)
E m p lo y e rs L ia b ility A ct. T here is a general Em ployers Liability
Act in the S tate setting forth special com pensation for various injuries.
E x e c u tio n . P ropertv taken under a w rit of fieri facias m ust be
advertised and appraised, and can n ot be sold for less th an two-thirds
of the appraised value, until it has been re-advertised. Advertise
m ents or movables three tim es in ten days— of real estate once a
week for th irty days. I f tw o-thirds of appraised value is n ot bid,
property m ust be re-advertised for fifteen days, and sold on a credit
ror twelve m onths for w hatever it will bring. T here is no redemption
of property sold under execution or m ortgage. No stay of execution
is given except on appeal, and execution m ay issue a t any tim e after
the delay for appealing suspensively has expired. Act 113 or 1906
authorizes sheriffs and constables to p u t purchaser of seized property
in possession. On proper petition th e court can order an examination
a t a judgm ent debtor as to his assets and liabilities.
(Act 198 of 1924r)
E x e m p tio n s . To head of family, real estate if owned and occupied
as a residence, together with certain furniture, stock, implements,
provisions, etc., the property n ot to exceed $2 ,000 , m eans or property
of wife deducted from exem ption of husband. I f th e property exceeds
$2,000 in value, it m ay be sold. Beneficiary entitled to $2,000 of
proceeds. No registry required in parishes other th an Orleans.
Surviving spouse or m inor child or children m ay claim benefit of this
exemption. Widow or m inor children surviving, entitled to $1,000 out
of deceased hu sb an d ’s estate, if in necessitous circumstances, by pre
ference over all other debts except those secured by v en d o r’s privilege,
conventional m ortgage, and expenses Incurred in selling th e property.
Sheriff or constable cannot seize linen and clothes belonging to debtor
or his wife, nor his bed, bedding or bedstead, nor those of h is family,
nor his arm s and m ilitary accoutrem ents, nor th e tools and instru
m ents and books and sewing machines, necessary for th e exercise of
his or her calling, trad e or profession by which he or she m akes a living;
nor shall he, in any case, seize rights of personal servitude, of use
and habitation, of usufruct to th e estate of a m inor child,- nor the
income of dotal property, nor money due for salary of a Public Officer,
nor th e cooking stove and utensils of said stove, nor th e plates, dishes,
knives and forks, and spoons, nor th e dining table chairs, nor washtu b , nor sm oothing irons and ironing furnaces nor family portraits
belonging to debtor, nor m usical instrum ents played or practiced
on by any m em ber of th e fam ily, nor any poultry or fowls belonging
to debtor for family use. Also proceeds of life, health and accident
insurance exempt, except for debt secured by pledge of policy or rights
under policy. (Act 88 of 1916.)
In th e case of all other laborers, wage earners, artisans, mechanics,
engineers, firemen, carpenters, bricklayers, secretaries, bookkeepers,
clerks, employees on a commission basis, or employees of any nature
or kind whatever, w hether skilled or unskilled, 80% of th e wage,
salary, commission or other com pensation thereof cannot be seized
or garnisheed, b u t only 2 0 % of such com pensation shall b esubject
to such seizure or garnishm ent, and in no case shall th e seizure or
garnishm ent infringe upon a m inim um of $60 per m onth of sucn
salary, wage, commission or other com pensation, which said $60 per
m onth shall always be exem pt. (Act. 183 of 1932.)
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Act No. 2 of th e Second E x tra Session of 1934 provides for th e relier
of debtors who are unable to m eet their obligations for th e time
being, by petitioning to th e S tate B ank Commissioner who shall act
as th e D ebt M oratorium Commissioner, w ith th e power to suspend
all laws or p arts of laws relative to th e enforcement of public ana
private debts, after notice and hearing to th e creditors. Extended
by A ct 121 of 1938.
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F ra u d . F raud v itiates of contracts. See Act 114 of 1912. Mis
dem eanor to purchase goods, wares or m erchandise on credit and dis
pose of sam e w ith in ten t to defraud and so forth. Unlawful to sen
stock of goods, wares, m erchandise and fixtures in bulk o u t or usual
course of business w ithout complying w ith “ bulk Sales Law.
see
Act 270 of 1926.
.
..
t
G a r n is h m e n t. W ages earned out of this S tate and payable ou*
of this S tate, shall be exem pt from attach m en t or garnishm ent in an
cases where cause of action arose o ut of this S tate, and it shall oe jn
d u ty of garnishees in such cases to plead such exemptions unless ine
defendant is actually served w ith process. (Act 165 of 1904.) (.see
A ttachm ent and Exem ptions.)
.
,
H o lid a v s. T he legal holidays are: Sundays; Janu ary 1 (New Years
D ay): Ja n u ary 8 (B attle of New Orleans); Ja n u ary 19 (Robert it.
Lee D ay); F ebruary 22 (W ashington’s b irthday); Good Friday, May
30 (N ational M em orial D ay); Ju n e 3 (Confederate M em orial D ay;.
Ju ly 4 (Independence D ay); A ugust 30 (Huey Long s.B irth d ay ).
first M onday in Septem ber (Labor D ay); October 12 (Christopher o
B A N K IN G A N D C O M M E R C IA L L A W S— L O U IS IA N A
lum bus D a y ); N ovem ber 1 (All S aint's D a y ); N ovem ber 1 1 (Armistice
D a y ); Thanksgiving D a y ; Decem ber 25 (Christm as D a y ); Inauguration
D ay in th e C ity of B aton Rouge. A nd every S aturday from 12 o’clock
noon u n til 1 2 o ’clock m idnight, to be known as a half-holiday; and
in th e parishes of Orleans, St. B ernard, Jefferson, St. Charles and
St. John th e B ap tist and in all m unicipalities of the S tate of Louisiana
where th e governing au th o rity of th e sam e so declare by ordinance
duly adopted. M ardi G ras; and whenever January 1 , Ja n u ary 8 ,
F ebruary 2 2 , Ju n e 3, Ju ly 4, O ctober 1 2 , Novem ber 1 , N ovem ber 1 1
and December 25 fall on a Sunday, th e succeeding day shall be a legal
holiday; an d all prom issory notes, bills of exchange and commercial
paper m aturing on Sunday, a legal holiday, or legal half-holiday,
which, by law or commercial usage, are required to be protested for
non-paym ent, shall be deemed to be, and shall be, due and payable
on th e first day, not a Sunday or legal holiday or legal half-holiday,
succeeding th e d ay of its m a tu rity ; and in com puting th e delay
allowed for giving notice of non-acceptance or non-paym ent of bills
of exchange of prom issory notes or other commercial paper, th e days
of public rest or legal holidays or legal half-holidays, shall n ot be
counted; and if th e d ay or days next succeeding the protest for nonacceptance or non-paym ent shall be days of public rest of legal holi
days or legal half-holidays, th en th e day next following shall be
com puted as th e first day after protest. Provided, however, for th e
purpose of protecting or otherwise holding liable any p arty to any bill
of exchange, check or promissory note which shall not have been paid
before 1 2 o’clock noon on any half-holiday, a dem and or acceptance
or paym ent m ay be m ade, and notice of protest or dishonor thereof
m ay be given, on th e next succeeding secular or business day. P ro
vided fu rth er, th a t nothing in this A ct shall in any m anner effect th e
validity of th e paym ent, certification or acceptance of a check or other
negotiable in stru m en t, or any o ther transaction, by a bank in this
S tate because done or perform ed on any holiday or half-holiday, if
such paym ent, certification, acceptance or other transaction could
have been validly done or perform ed on an y other day. A ct 285 of
1940.
H u s b a n d a n d W ife. (See M arried Women.)
I n te r e s t. Legal rate is 5 per cent, b u t 8 per cent m ay be agreed
upon in writing. If higher th an 8 per cent is charged, it is reducible
to 8 per cent. I f paid, it m ay be sued for and recovered within two
years. 2 H % per m onth m ay be charged on loans of 8300.00 and under.
(Small Loan A ct as am ended by 108 of 1940.)
J u d g m e n ts recorded in the office of the parish recorder become
mortgages from date of record upon all real estate of the debtor, and
m ay be thus recorded in any parish where debtor owns real estate.
T hey are valid for ten years, when they m ust be renewed
L ie n s o r P riv ileg es. T he following have special privileges, viz.;
1. Lessor's privilege. 2. Privilege of the creditor on the thing
pledged. 3. Privilege of a depositor on the price of a thing deposited.
4. Privilege for expenses incurred in preserving thing. 5. Privilege
of th e vendor of m ovable effects so long as th ey are in the possession
of th e vendee. 6 . Privilege of th e innkepeer on th e effects of the
traveler. Privileges resting upon immovables are as follows, viz.:
1. The vendor on th e estate by him sold, for the paym ent of the
price or so m uch of it as is unpaid, w hether it was sold on or without
a credit. 2. Architects, undertakers, bricklayers, painters, m aster
builders, contractors, sub-contractors, journeym en, laborers, cartmen, and other workmen employed in constructing, rebuilding, or
repairing houses, buildings, or m aking o ther works. 3. Those who
have supplied tb e owner or other person employed by the owner,
his agent, or sub-contractor, w ith m aterials of any kind for the con
struction or repair of an edifice or other work, when such m aterials
have been used in the erection or repair of such houses or other works.
(Art. 3252.) Privilege on crops to be recorded (Act of 1890.) The
vendor of an agricultural product of the U nitea States has a five days’
privilege for unpaid purchase price in preference to all others. P rivi
lege granted employes in saw mills- etc. (Act 145 of 1888. am ended
by Act 52 of 1910 an d Act 23 of 1912.) Laborers have lien on oil and
gas wells, rigs and m achinery for wages. (Act 171 of 1928.) Widow
and children left in necessitous circum stances are entitled to an am ount
in husband’s or fath er’s succession sufficient to m ake $ 1,0 0 0 inclusive
of property already possessed by them . T his privilege primes all
others except vendor’s privilege, th a t for expenses of selling property
and conventional m ortgages, representing m oney actually loaned for
not less th a n one year a t n ot exceeding 6 per cent for Interest, dis
count and charges.
L im ita tio n o f A c tio n s. L im itation of actions, or prescription,
under th e law of Louisiana is a m anner of acquiring ownership of
property, or of discharging debts by the effect of tim e and under the
conditions regulated by law
Of th e prescription by which the ownership of property is acquired.
He who acquired an im movable in good faith and by a ju st title pre
scribes for it in ten years, provided he has had continuous and
uninterrupted possession during th a t tim e. This runs against minors
In tw enty two years from b irth and all others excepted by law. Act
161 of 1920.
The ownership of immovables is prescribed for by th irty years
without any need of title, and w ithout reference to good faith, pro
vided there has been continuous and uninterrupted possession as
owner during th is time.
If a person is possessed in good faith, and by a ju st title of a movable
during three years w ithout interruption he acquires the ownership
by prescription, unless th e thing was stolen or lost.
When th e possessor of any movable whatever has possessed It for
ten years w ithout interruption he shall acquire the ownership of it
w ithout being obliged to produce a title, or to prove th a t he did not
act in bad faith.
Prescription runs against all persons unless they are included in
some exception established by law.
Minors and persons under interdiction cannot be prescribed against
except in certain cases provided by law.
Husbands and wives cannot prescribe against each other.
Of the prescription which operates a release from debt. Various
actions are prescribed by one year. Among these m ay be m entioned
those of m asters and instructors for lessons wnich they give by the
month. Those of inn keepers, on account of lodging and board which
they furnish. Those of retailers of liquors. Those of workmen,
laborers and servants, for the payA ent of th eir wages, and actions
for injurious words, w hether verbal or w ritten. Those for damages
caused b y anim als, and all actions for dam ages or torts.
This prescription runs against minors and interdicted persons,
reserving, however, to them their recourse against their tutors and
curators.
Actions b y or against common carriers for collection or recovery
of freight charges or for loss of or dam age to freight are prescribed by
two years from d ate of shipm ent.
The following actions are prescribed by three years, to w it: F irst—
That for arrearages of rent charges, annuities and alimony, or for hire
of movables an d immovables. Second—T h at for paym ent of money
lent. T hird—T h a t for th e salaries of overseers, clerks, secretaries
and of teachers who give lessons by the year or quarter. Fourth—T h at
of physicians, surgeons and apothecaries for visits, operations and
medicines. F ifth—T h a t of parish recorders, sheriffs, clerks and
attorneys for their fees and em olum ents. Sixth—T h at on accounts
of m erchants. Seventh—T h at on all other accounts. E ighth—Tax
inscriptions. N in th — Licenses. T enth—Inheritance taxes as against
purchasers and th ird persons in good faith.
This prescription runs against minors and interdicted persons,
reserving to them , however, their recourse against their tu to rs and
curators.
Four years’ prescription applies to special action—as action of minor
against tu to r respecting acts of tutorship; of m inor for rescission of
Judgment; action of lesion.
Tfje following actions are prescribed by five years, to w it: Actions
on bills of exchange, notes payable to order or bearer, except bank
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notes. Those on all effects negotiable or transferable by endorsement
or delivery, and those on all prom issory notes negotiable or otherwise.
Inheritance taxes as against heirs in five years from opening of suc
cessions.
T his prescription runs against minors and Interdicted persons,
reserving to them , however, their recourse against their tu to rs and
curators.
Second—Actions for th e nullity or rescission of contracts, testa m e n t
or other acts.
T hird—Actions for the reduction of excessive donations.
F ourth—Actions for th e rescission of partitions.
Any and all inform alities of legal procedure connected w ith or
growing out of any sale a t public auction of real or personal property
m ade by any sheriff of th e parishes of this S tate, licensed auctioneer,
or other persons, authorized by an order of th e courts of this S tate,
to sell a t public auction, shall be prescribed against by those claiming
under such sale after th e lapse of tw o years from th e tim e of m aking
said sales, except where m inors or interdicted persons were part
owners a t th e tim e of m aking it, and in tb e event of such p art ownership
by said minors or interdicted persons, th e prescription thereon shall
accrue after five years from th e date of public adjudication thereof.
Act 231 of 1932.)
All personal actions, except those above énum éra ted, are prescribed
by ten years.
Actions for im movable property, or for an entire estate, as a suc
cession, are prescribed by th irty years.
L im ita tio n o n T o rt A c tio n s . All actions on to rts are prescribed
by one year.
L im ita tio n s to S u its .
Prescription —■Accounts stated and
acknowledged in writing are prescribed only by ten years. (Act of
1888.) Personal actions one year: action for to rts of all kinds; for
injury to or non-delivery of m erchandise shipped on vessels; for fees
of justice, notary, or constable; for innkeepers' accounts; for accounts
of retailers of liquors; for wages of laborers or sailors; for freight; and
for tuition by m onth. T hree years: Action for arrearages of rent
charges, or hire of m ovables or imm ovables or money lent; for salaries
of overseers, clerks, or tuition by q u arter or year; for fees of physicians
apothecaries, attorneys, sheriffs, clerks, and recorders; on open
accounts of m erchants, w hether wholesale or retail, and others. Four
years: Actions by m inors against their tutors, counting four years
from m ajority. Five years: Action on bills of exchange or prom is
sory notes, counting from m aturity, and for nullity of contracts or
wills; for recision of partitions; to set aside public and judicial sales
for inform alities. T en years: All other actions; the right to a usu
fruct or servitude, all judgm ents, w hether rendered within or w ithout
the State, b u t judgm ents m ay be revived before lapse of ten years,
and are then good for ten years from date of revival. Prescription of
ten and th irty years now runs against minors, interdicts and m arried
women (Act 161 of 1920). H usband and wife can not prescribe
against each other. Prom ise to pay or paym ent on account will
in terru p t prescription. Only w ritten prom ise to pay will revive
when prescription has accrued.
L im ite d P a r tn e r s h ip s . (See P artnership.)
M a rrie d W o m e n . Act 132 of 1926 and Act 283 of 1928 provide
th a t a m arried woman, w hether a resident of this sta te or not, shall be
com petent to contract debts, purchase, sell and m ortgage, and to bind
and obligate herself personally and w ith reference to her separate and
paraphernal property ; to appear in court and to sue and be sued ; to sell,
alienate or otherwise dispose of, and to m ortgage and pledge, or others
wise encum ber, her separate and paraphernal property for th e benefit of
herself, her husband or any other person, and to bind and obligate her
self personally or as surety for her husband or any other person; and
th a t such rights m ay be exercised w ithout th e necessity of obtaining th e
authority of her husband or th e judge; provided, however, th a t th e
rights granted by said act shall not apply to m arried women under
th e age of eighteen years or to m arried women who are interdicted,
nor shall anything therein contained be deemed or construed to affect
in any way th e statu tes of this sta te establishing and regulating th e
m atrim onial com m unity of acquets and gains and prescribing w hat
shall be deemed separate property of th e spouses. Revenues of all
separate property adm inistered by th e husband, and all property
acquired by either husband or wife after m arriage, except by donation
or inheritance constitute p a rt of com m unity, unless bought w ith th e
separate m eans of either and as a separate acquisition. Wife has no
dower in her husband’s real estate. T he wife can have no claim upon
th e property of th e husband to th e prejudice of th ird parties, unless
recorded. W here one of th e spouses is agent for th e other, he or she
m ay be witness for th e other in a m atter connected with th a t tran s
action. Act 157 of 1916 perm its b u t does n ot compel one spouse to
be a witness either for or against th e other in any civil proceeding.
A fter dissolution of m arriage by death or divorce th e survivor is
entitled to one-half of all p roperty rem aining after paym ent of debts,
acquired during m arriage, and in case of death, if th ere is issue,
th e usufruct of th e other half, unless th is half is disposed of by will
of deceased spouse. Wife cannot be a witness to husband ’s will.
(See “ Liens and Privileges.” )
M o n o p o lies o r T r u s ts are regulated and rights are given against
them similar to those existing under Federal Law. The sta te au th o r
ities m ay tak e action and th e individual m av recover threefold damages
sustained. See Acts Nos. 11 and 12, extra session 1915.
M o rtg a g e s can be foreclosed a t any tim e after m atu rity of the
debt, by instituting a regular suit and obtaining judgm ent thereon, or
If th e act Imports a confession of judgm ent in favor of th e holder, he
can apply to the court for an order directing the sheriff to seize and
sell the property. All m ortgages m ust be recorded before th ey can
have any effect as against th ird parties. T ru st deeds are n o t legal,
except as provided under “ T ru sts.” T here is no redem ption of prop
erty sold under m ortgage. All ta c it m ortgages have been abolished
since 1870. In m aking sales or giving a m ortgage upon his property,
it is not necessary for the husband to obtain th e signature of th e wife,
except as affecting th e hom estead and fam ily home. A m ortgage
resulting from recording a judgm ent cannot have th a t effect u n til
after adjournm ent of court. [Act 1888.] Lessee, sub-lessee or
assignee of lease or sub-lease m ay m ortgage his interest in such lease
or sub-lease, together w ith his interest in buildings, etc., upon leased
premises : provided, such m ortgage shall n ot affect, dim inish or destroy
lessor’s privilege. Leases and contracts to explore for oil, gas and
m inerals m ay be m ortgaged. [Act 232 of 1910.]
Act 118 of 1934 authorizes th e issuance of an order for executory
process when there is a variance between an act of m ortgage an d th e
note, or notes issued in connection therew ith, due to clerical error.
Act 1 2 1 of 1934 authorizes adm inistrators and executors to transfer
property, encum bered w ith m ortgages In excess of th e value of such
property, to th e holder of such m ortgage. A ct 159 of 1934 proNirides
for a general suspension on all foreclosures of m ortgages of real estate.
Act No. 199 of 1934 provides th a t m ortgages on ru ra l real estate shall
n o t cover or affect th e live stock and im plem ents and m achinery used
in th e farm ing thereof.
- N e g o tia b le I n s t r u m e n t s . Uniform N egotiable Instrum en ts Act
adopted Aug. 1, 1904, Act. No. 64 of 1904. (See com plete te x t follow
ing “ Digest of Banking and Commercial Laws.” ) Sec. 85 of th e
negotiable instrum ents act w as am ended by Act No. 89 of 1926,
abolishing days of grace and providing th a t when th e day of m atu rity
falls upon Saturday, Sunday, or a holiday, th e instrum ent is payable
on th e next succeeding business day which is n ot a Saturday. This
am endm ent fu rth er provides th a t instrum ents payable on dem and
m ay a t th e option of th e holder be presented for paym ent before
12 o’clock noon on S aturday, when th e entire day Is n ot a holiday,
however, said holder shall not be guilty of neglect for failure to present
on Saturday. Sec. 132 of th e negotiable instrum ents act was am ended
by A ct No. 189 of 1908, providing th a t th e acceptance of a bill m ust
be in writing.
2000
B A N K I N G A N D C O M M E R C IA L LAW S— M A I N E
P a r tn e r s h ip , L im ite d a n d S p ecial. Stipulations th a t one shall
participate in th e profits and shall n ot contribute to losses is void,
both as regards p artners and th ird persons. P artnerships are divided
as to th eir object into commercial and ordinary partnerships. Com
mercial partnerships are such as are form ed: 1. F or the purchase
of any personal property, and the sale thereof either in the same
sta te or changed by m anufacture. 2. F or buying or selling any
personal property' w hatever, as factors or brokers. 3. For carrying
personal property or passengers for hire, in ships, vessels, or in any
other vehicle of transportation. (Act 150 of 1932.) T here is also a
species of partnership which m ay be incorporated w ith either of th e
other kinds, called partnership in com m endam . I t is formed by con
tra c t, by which one person or partnership agrees to furnish another per
son or partnership a certain am ount, either in property or money, to be
employed by the person or partnership to whom it is furnished, in
his or th eir own nam e or firm, on condition of receiving a share in
th e profits, in the proportion determ ined by the contract, and of being
liable to losses and expenses to th e am ount furnished and no more.
P artn er in com m endam cannot bind other partners by his act. P a rt
nership in comm endam m ust be m ade in writing; m ust express am ount
furnished or agreed to be furnished; m ust sta te w hether it be received
in goods or money, e tc .; th e proportion of profits which p artn er is to
receive an d expenses and losses he is to bear; m ust be signed by
parties in presence of a t least one witness and recorded in full within
six days in m ortgage office. I f branch houses are established the con
tra c t m ust be recorded in parish where branches are located. If
p artn er in comm endam allow his nam e to be used, or if he take any
p a rt in th e business of th e partnership, he will be liable as a general
p artn er. Ordinary p artners are n ot bound in solido for debts of
partnership, and no one of them can bind his partners unless they
have given him power to do so; each is bound for his share of the debt
in proportion to the num ber of partners. Commercial partners are
each liable for th e entire debts of th e partnership.
P o w ers o f A tto r n e y . M ay be w ritten or oral. M ay be either
general for all affairs or special for one affair only. One conceived in
general term s confers only power of adm inistration; to sell, m ortgage
or do an y other a c t of-ownership, th e power m ust be express and
special.
P ro b a te L aw . T here Is no special probate court. D istrict courts
are vested w ith probate jurisdiction. Successions are opened upon
petition of interested persons in th e parish where the deceased resided.
If he had a domicile or fixed place of residence in th e sta te ; in th e parish
where he left his landed property, if he had neither domicile nor
place of residence in th e sta te ; or in th e parish in which it appears
from th e inventory that« his principal property was situated, if he
left property in several parishes; in th e parish where he died, if he
had no certain domicile nor any fixed nroperty. I f presum ptive heir
does n o t begin legal proceedings to settle succession within ten days
after d eath of “ de cuius,.” creditors m ay dem and th a t he state w hether
he accepts o r rejects succession, or if no heirs appear, th a t a curator
ad hoc be appointed to settle the estate. T he judge appoints an
adm inistrator when deceased leaves no will. A dm inistrators m ust
render annual accounts, and are allowed 2 M per cent on th e inven
to ry as commissions. A ttorneys a t law are appointed to represent
absent heirs. P roperties acquired during m arriage are presum ed to
be com m unity property, an d surviving spouse is owner of one-half.
When eith er husband or wife dies, leaving no ascendants or descend
ants, and w ithout having disposed by will of his or h er share in the
com m unity, such undisposed of share shall be inherited by th e surviving
spouse in full ownership. (See Successions).
P r o te s t.
(See N egotiable Instrum ents.)
S e p a r a tio n fro m B ed a n d B o a rd . M ay be claimed reciprocally
for: l . A dultery. 2. W hen spouse condem ned to infam ous pun
ishm ent. 3. H abitual intem perance, excesses, cruel treatm en t, or
outrages, when such renders living together insupportable. 4. Public
defam ation of one spouse by th e other. 5. A bandonm ent. 6 .
A ttem pt o f one spouse against life of other. 7. W hen one spouse
charged w ith infam ous offense actually flees from justice. Divorce
m ay now be obtained if both parties have lived separate for tw o years*,
A ct 430 Of 1938.
Judgm ent of Divorce “ a vinculo m atrim onii” can be obtained
Im mediately for first tw o causes. F or other causes it is necessary
first to obtain judgm ent of separation “ a m ensa e t thoro.” After
iudgm ent of separation from bed and board, if there has been no
reconciliation, p a rty in whose favor judgm ent is rendered can obtain
final divorce one year after finality of judgm ent of separation. P a rty
against whom judgm ent is rendered m ust w ait one year and sixty days
W hen m arriage is celebrated outside of s ta te parties cannot obtain
divorce in sta te on grounds occurring outside of sta te , except, as pro
vided b y O. C. A rt. 142, as am ended b y A ct N o. 1 of th e Second E x tra
Session of 1934, when th e wife shall have been domiciled in Louisiana
prior to th e m arriage.
T ax es. Taxes on real estate cannot be enforced until the expira
tion of th e y ear for which th ey are levied and after legal notices to
delinquents and advertisem ent. Lands sold for taxes are redeemable
within one year, by the owner, his agent, or heirs, or any creditor,
on paym ent of th e purchase m oney, w ith 20 per cent interest and
costs, an d all subsequent taxes paid. L ands sold for taxes due prior
to 1880 are n o t redeemable. S tate taxes are 5 M mills on actual value,
parish taxes n ot exceeding 4 mills. C ity of New Orleans taxes are
27H mills on 85 per cent of actual value, other m unicipal taxes not
to exceed 7 mills. D elinquent sta te taxes bear interest a t 2 per cent
a m onth, city taxes, 10 per cent a year. F or tem porary relief m easures
relating to current taxes, see A cts of L ouisiana of 1932.
Act N o. 21 of 1934, as am ended b y A ct N o. 2 of th e F irst E x tra
Session of 1934, and as am ended by Act No. 7 of th e Second E x tra
Session of 1934, provides for a sta te incom e ta x of 2% on th e first
$10,000, 4% on th e next $40,000, an d 6 % on any am ount in excess of
$50,000; allowing th e following exem ptions: $ 1,0 0 0 for a single person,
$2,500 in th e case of th e head of a fam ily or m arried person living
w ith husband or wife, and $400 for each additional dependent. The
act also provides for a tax of 4% upon th e n e t income of every cor
poration, in excess of $3,000.
T r u s ts . Act 81 of 1938.
period of te n years.
Allows T ru sts to be established for a
Wills. T h ere are four different kinds of wills, viz.: T he olo
graphic, nuncupative by public act, nuncupative b y private act, and
m ystic (or sealed) will. T he olographic will m ust be wholly w ritten,
d ated and signed by th e testa to r, and m ay be m ade within or w ith
out th e S tate. N uncupative will by public act is w ritten by a notary
in presence of th ree witnesses, over th e age of 16 years complete,
not insane, deaf, dum b or blind, residing in th e place where will
Is executed, or five witnesses n ot residents of the place, a t the dictation
of th e testa to r. N uncupative will by private a ct and m ystic wills
are subject to m any form alities which m ay be best obtained by refer
ence to Civil Code A rts, 1581-1587 both inclusive. All persons
of sound m ind over sixteen years of age m ay dispose of th eir property
by will. Wills executed w ithout the sta te given force and effect
provided sam e be in w riting and subscribed by testa to r and follows
form of place where executed, or of testa to r’s domicile. (See act 176
of 1912.)
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S Y N O P S IS O F
T H E L A W S O F M A IN E
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by P u l s i f e b & L u d d e n ,
68 M aine St., Lewiston, Me.
(See C ard in A ttorneys' List.)
A c k n o w le d g m e n ts. (See Deeds.)
A c tio n s. A t law begun by w rit, under common law practice, but
containing declaration. Suits in equity are begun by bill of com
plaint, filed with clerk of court and subpoena issued by him, or may
be inserted in w rit of attachm ent and served by copy of bill and writ
or sum m ons. On m otion non-resident plaintiffs required to give se
cu rity for costs. An affidavit in actions brought on an item ized ac
count, m ade before a N o tary Public having a seal m akes a prim a facie
case, if w ithout th e S tate a u th o rity of N o tary m ust be certified by
clerk of court of record.
A d m in is tr a tio n of E s ta te . (See E states of Deceased Persons.)
A ffidavits. Affidavits m ay be m ade before a notary public or
justice of the peace. In some court m atters authority of m agistrate
m ust be proved by certificate of clerk of a court of record.
A lien s. Aliens m ay hold and convey real estate and personal
property. Wills of aliens m ay be proved and allowed in this State.
Widow of a citizen of U nited States who was an alien when she married
him has right of descent in his estate (but see M arried W omen).
A s sig n m e n ts. Common law assignm ents for th e benefit of
creditors m ay be m ade, and after four m onths will be good against
bankruptcy proceedings. Assignments of wages m ust be recorded
in tow n clerk's office in tow n where assignor is em ployed. Invalid
unless employer has notice.
A tta c h m e n t. All property n ot exem pt attachable on m esne proc
ess as of course w ithout affidavit; security for costs by indorser of
writ only if creditor is non-resident; lien by attachm ents in th e order
in which th ey are m ade continue for th irty days after judgm ent
(extended where execution is delayed, appeal from taxation of costs
Is taken, or decision of law court certified down in vacation), within
which tim e levy m ay be m ade. Personal property m ay be appraised
and sold on mesne process to avoid expense, depreciation or loss,
on request of either p arty and proceeds held by officer in lieu of the
property, foreign attach m en t (garnishm ent), known as tru stee process,
attaches property by or debt due from trustee unless: 1 . D ue on
negotiable paper. 2. M oney collected on process by officer. 3.
In hands of public officer. 4. D ue bn contingency. 5. Trustee
liable to execution on sam e. 6 . T w enty dollars wages, for personal
labor of th e debtor, wife or minor child w ithin one m onth, and $10
exem pt in all cases. 7. In certain cases m oney due on life and
accident policies, and from fraternal beneficiary associations. (See
C reditors Bills.)
B a n k s . K inds perm itted: Savings Banks, T ru st Com panies and
Loan and Building Associations.
S a v in g s B a n k s .
M ay be organized and certificate of authority
issued by th e bank commissioner. N o capital stock an d operates
solely for th e benefit of depositors. U nder th e supervision and
exam ination of, and required to rep o rt to, th e bank commissioner.
M u st n ot p ay over 2 J^% dividends sem i-annually. M u st pay
one-half of 1 % of n e t earnings to reserve u n til it equals 5% . Sub
ject to varying loan lim itations.
T r u s t C o m p a n ie s . M ay be organized under th e general statutes
on approval of th e Sank commissioner. M u st rep o rt to and subject
to exam inations and supervisions by th e b ank commissioner. Capital
stock m ay be assessed to m eet deficits. D irectors and th e officers
personally responsible for loans illegally granted. M u st carry 10%
of annual n et earnings to surplus u n til i t am ounts to one-half of
capital stock. M ay have branches.
L o a n a n d B u i l d i n g A s s o c ia t io n s .
M ay be incorporated an d sub
ject to th e sam e supervision by th e bank commissioner as Savings
Banks. M ay issue perm anent shares or serial m aturing shares.
U nder th e general m anagem ent of a board of directors. Shares fully
paid for n o t subject to assessment.
C o lla te ra ls . (See M ortgages.)
C o n d itio n a l S ales, C o n s ig n m e n ts . N o agreem ent th a t personal
property bargained and delivered to another shall rem ain the property
of the seller until paid for, is valid unless in writing and signed by the
person to be bound. Such agreem ent, in w hatever form it m ay be,
Is not valid except as between original parties, unless recorded in the
office of the clerk or th e town in which th e purchaser resides at the
tim e of the purchase. Alls uch property w hether said agreements
are recorded, or not shall be subject to redem ption. This does not
apply to goods consigned for sale.
C o n v e y an ces. (See Deeds.)
C o rp o ra tio n s . T hree or more persons m ay form a corporation to
carry on any lawful business excepting banking, insurance, construct
ing and operating railroads, savings banks, tru st companies, or corporations intended to derive profits from th e loan or use of money,
and safe deposit companies, b u t corporations m ay be formed under
the general law for the construction and operation of railroads ourside
the S tate of M aine. Corporations for other purposes, excepting for
m unicipal purposes, and where th e objects of th e corporation can not
be attained w ithout special acts, are also form ed under general law s.
Organization becomes void unless corporation begins business within
two years. C orporation m ay capitalize to an unlim ited am ount and
m ay increase or decrease the am ount of their capital or the par value
of the shares. No portion of capital is required to be paid in; stock
m ay be issued for property or for services and in absence of fraud
the judgm ent of th e directors as to th e value of such property or
services Is conclusive, th e stock thereupon becoming fully paid.
Only original subscribers and takers of stock are liable on same to
extent of unpaid par value and then only for debts contracted during
their ownership of stock, and action to enforce such liability must he
commenced w ithin tw o years and can be m aintained only by a judgm ent creditor of the corporation who shall have begun proceedings
to obtain such judgm ent against the corporation during th e owner
ship of such stock or within one year after its transfer by such stock
holder is recorded on th e corporation books. D irectors must ds
stockholders or m em bers of another corporation which is a stockholder
If corporation fails for six m onths to elect directors, court m ay appoint.
C orporations m ust pay to the S tate upon organization, a fee as fol
lows: $ 1 0 for each $ 100,000 stock up to $ 1 ,000,000 sliding scale above.
O ther fees for organization are: attorney-general's fee $5; register
of deeds $5, secretary of sta te $5. T he annual franchise tax is as
follows: $ 5 provided authorized capital does n ot exceed $ 50 ,uuu,
exceeding $50,000 and u p to $20 0 ,000 , $ 1 0 ; exceeding $ 200,000
and up to $500,000, $50; exceeding $500,000 and u p to $LOOO,ouu,
$75; and th e fu rth er sum of $50 per $1,000,000 or an y p a rt thereor
in excess of $1,000,000. Corporations which have suspended busi
ness tem porarily and have been excused from filing^ retu rn s of amoun
of capital stock, etc., are n ot liable for franchise tax. Meetings
of stockholders m u st be held w ithin th e State. Clerk m ust be resi
dent and keep stockholders’ records in th e S tate. His recordsare
open to inspection by stockholders b u t n ot by m ere creditors, witn
th e exception of banking corporations no public reports are requireu
except one to th e secretary of s ta te showing nam es and residences
of officers and am ount of capital stock. D elivery of certificate o
stock to bona fide purchaser or pledgee for value together w ith w ritten
transfer of sam e or w ritten power of atto rn ey to sell, assign, auu
B A N K IN G A N D C O M M E R C IA L L A W S— M A IN E
transfer sam e, signed by owner of certificate, transfers title against
all parties. Foreign corporations have practically same rights as
domestic, b u t are required to file copy of charter w ith secretary of
state, also a copy of th e by-laws, and are also required under severe
penalties to file certificate showing among other things th e nam es
of officers,_am ount of capital stock authorized, am ount issued and
am ount paid i n ; also m ust file certificate showing any change in above
particulars. Such corporations m ust also appoint a resident of M aine,
having an office or a place of business in th e state, to be its attorney
on whom process m ay be served in any legal proceeding. Corporations
m ay dispose of their franchises or consolidate on m ajority vote of the
stockholders; m ay sue and be sued, and have generally th e powers of
individuals. Public service corporations are subject to a Public
U tilities Commission.
C re d ito rs ’ B ills. Bill in equity m ay be m aintained to reach
property of deb to r which cannot be reached by process a t law, and
is not exem pt from attachm ent; also property conveyed in fraud of
creditors and pro p erty secreted so th a t it is not repleviable.
D ay s o f G ra c e . (See Negotiable Instrum ents.)
D eeds. Any owner of real estate having right of entry m ay con
vey it by deed. No estate greater th a n tenancy-at-w ill can be created
except in writing. D eeds m ust be acknowledged by a grantor or
one of them or by an authorized agent, executing the same, before
a justice of th e peace, n o tary public having a seal, or woman qualified
to tak e acknowledgm ents; outside th e S tate, and in th e U nited States,
before a clerk of a court of record having a seal, notary public; or
commissioner of deeds for this S tate, and in a foreign country before
a notary public, or a consul or m inister of th e United States, b u t if
m agistrate acting outside of S tate has no official seal, his au th o rity and
th e genuineness of his signature m ust be authenticated by th e secre
tary of sta te or th e clerk of a court of record in county where he resides.
Unacknowledged deeds cannot be recorded. No special form of
acknowledgment required. Deeds m ust be recorded to be valid
against parties w ithout notice of the conveyance. Deeds m ust be
under seal, b u t witness is not required for validity although usual
to have one. Leases for m ore th a n tw o years should be acknowledged
and recorded to be effectual except betw een th e parties. T rusts
concerning real estate can be created only in writing, except those aris
ing by im plication of law.
D ep o sitio n s. Depositions m ay be taken by disinterested justice
of th e peace or no tary public; m ay be taken when deponent is unable
through age, infirm ity, or sickness to atten d a t place of tria l; when
deponent resides out of, or is absent from the S tate; when deponent
resides in town other th an th a t in which trial is to be held, etc. Depo
sitions so taken m ay be used in all civil suits or causes, petitions for
partition of land, libels for divorce, prosecutions for the m aintenance
of children, petitions for opinions in trial before courts of arbitrators,
referees and county commissioners, and in cases of contested senatorial
or representative elections. Depositions or affidavits m ay also be
taken in applications for pensions, bounty, or arrears of pay under
any law of th e U nited States. C ourts m ay issue commissions to
take depositions out of th e S tate, or th ey m ay be taken out of S tate
by a justice, notary, or other person empowered, b ut In the la tte r
case it is within th e discretion of the courts to adm it or reject them .
D e sc e n t a n d D is tr ib u tio n of P ro p e rty . (See E states of D e
ceased Persons.)
D ow er. Abolished by laws of 1895, chap. 157, taking effect as
to persons n ot th en p a rrie d . M ay 1, 1895; as to others, Jan. 1, 1897.
Wire or husband m ay bar the right by inheritance to one-third or
one-half, as th e case m ay be, of realty by joining in the o th er’s deed,
or by sole deed, or by ante-nuptial settlem ent, or by jointure. E ither
refusing to join in o th er’s conveyance (or if incapacitated with no
guardian In th is state, other being a non-resident) m ay be barred of
inheritance upon application to suprem e judicial court and decree
after hearing. (See E states of Deceased Persons.)
E s ta te s of D eceased P e rso n s . One year after notice of ap
pointm ent allowed creditors to present claims and suit m ust be
begun and service of process m ade w ithin tw enty m onths after such
notice of appointm ent. Allowance to widow and m inor children,
made by court from estate. N on-resident executor or adm inistrator
must appoint atto rn ey . Tim e of dem and or notice extended for absent
creditor if fu rth er assets, b u t prior paym ents not disturbed thereby.
No adm inistration granted after tw enty years. The real and personal
estate of a person deceased in testate (excepting wild lands conveyed by
him) being subject to th e paym ent of debts descends according to the
following rules: 1. I f he leaves a widow 1 and issue, one-third to
the widow. I f no issue, one-half to the widow. And if no kindred,
the whole to th e widow. And to th e widower shall descend th e same
shares in his wife’s real and personal estate. T here shall likewise
descend to th e widow, or widower, the same share in all such real
estate of which th e deceased was seized during coverture, and which
has not been barred, or released, as herein provided. In any event,
one-third shall descend to th e widow or widower free from th e pay
ments of debts. 2. T he rem ainder of which he dies seized, and If
no widower, or widow, th e whole, together w ith all wild lands shall
descend in equal shares to his children, and to th e lawful issue of a
deceased child by rig h t of representation. I f no child is living a t
the tim e of his death, to all his lineal descendants; equally, if all are
the same degree of kindred; if not, according to th e right of repre
sentation. 3. I f no such issue, it descends to his father and m other
in equal shares. 4. I f no such issue, or father, it descends one-half
to his m other. I f no such issue or m other, it descends one-half to
his father. In eith er case, th e rem ainder, or if no such issue, father
or m other, th e whole descends in equal shares to his brothers and
sisters, and when a b ro ther or sister has died, to his or her children
or grandchildren by right or representation. 5. I f no such issue,
father, b rother or sister, it descends to his m other. If no such issue,
mother, b rother or sister, it descends to his father. In either case,
to the exclusion of th e issue of deceased brothers and sisters. 6 . If
no such issue, father, m other, brother or sister, it descends to his next
of kin In equal degree; when th ey claim through different ancestors,
to those claiming through a nearer ancestor, in preference to those
claiming through an ancestor m ore rem ote. 7. W hen a minor dies
unmarried, leaving property inherited from either of his parents, it
descends to th e other children of th e sam e parent, and the issue of
those deceased; in equal shares if all are of th e sam e degree of kindred;
otherwise, according to the right of representation. 8 . I f the
Intestate leaves no widower, widow or kindred, it escheats to the
State. An illegitim ate child Is an heir of its parents who interm arry;
slso of its m other, also of its father, who adopts it or acknowledges
It before a m agistrate; and in any case where the child is treated as
an heir it inherits from th e lineal and collateral kindred of the parent,
and they from it. (See Wills.)
E x e m p tio n s f ro m A t ta c h m e n t a n d E x e c u tio n . Hom esteads,
not exceeding in value $500, when duly registered; debtor’s apparel,
necessary furniture for fam ily, not exceeding in value $2 0 0 ; bed and
bedding for each two persons; fam ily portraits, bibles, school books
In use; S tate sta tu tes; library, $150; regular pew; cook stove and
iron warming stoves; charcoal, twelve cords of wood, five tons an
thracite coal, fifty bushels bitum inous coal, $ 10 w orth of lum ber
wood, or bark; produce of farm s till harvested; barrel of flour, th irty
bushels of corn and grain, potatoes for fam ily, one-half acre of flax
and m anufactures therefrom for fam ily; tools of trade, and m aterials
snd stock, $50; sewing m achine, $100; pair working cattle, or pair
mules, or one or two horses, $300; hay to keep them ; harness for
t,orse an<3 mules. $2 0 ; horse sled or ox sled. $ 2 0 ; domestic fowl.
850; watch, $10; wedding ring, $10; tw o swine, one cow and one heifer,
lr no oxen, horse or m ule, tw o cows; ten sheep, their wool, their lam bs
until one year old; hay to keep them and cattle; plow, cart, truck or
Impress wagon, harrow, yoke w ith bows, ring and staple, two chains,
mowing m achine; fishing b o a t of two tons; debtor m ay elect if he has
“mre th an is exem pt. Life and accident policies are exem pt from
creditors, except an y excess of $150 per year prem ium paid w ithin
*wo years, except suits for necessaries. (See A ttachm ent.)
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F o re ig n J u d g m e n t. Action of debt lies on a foreign judgm ent
and recprd of it is prim a facie evidence of Indebtedness. Is conclusive
except for fraud when given by court having jurisdiction of parties
and subject m atter.
F r a u d ., Usual common law rules as to w hat constitutes fraud,
fraudulent representations, etc.; also sta tu to ry penalties for fraud,
cheats, etc. C ourt of equity has power to afford relief. S tatu to ry
provisions to prevent sale in bulk of p art or whole of stock of m er
chandise in fraud of creditors.
F ra u d s a n d P e r ju rie s . No action shall be m aintained upon any
contract to charge an executor or adm inistrator upon any special
promise tc answer dam ages out of his own state; n o r to charge
any person upon any special promise to answer for the debt, default,
or misdoings of another; nor to charge any person upon an agree
m ent m ade in consideration of m arriage nor to charge any person
upon any contract for the sale of lands, tenem ents, or hereditam ents,
or of any interest therein; nor to charge any person upon any agree
m ent th a t is not to be perform ed within one year from the making
thereof; nor to charge any person upon any contract to pay a deb t
after discharge therefrom under bankrupt laws of th e U nited States
or assignm ent or insolvent laws of this State; unless the promise,
contract, or agreem ent or some m em orandum thereof is in w riting
and signed by the p arty to be charged, or his agent. No action shall
be m aintained on a m in o rs contract unless ratified by him In w riting
after becoming tw enty-one years of age, except the contract be for
necessaries or real estate where he has received title and obtained
benefit. No contract for sale of goods, etc., of $30 or more in value
Is valid unless purchaser accepts or receives a portion of the goods
or gives something to bind th e bargain, or in p a rt paym ent thereof,
or some m em orandum is m ade and signed by p arty charged or his
agent. C ontracts whereby one becomes agent for sale of lands become
void in one year unless tim e for term ination definitely stated.
G a r n is h m e n t. (See A ttachm ent.)
H o lid a y s. T he legal holidays are: Sundays; Ja n u ary 1 (New
Y ear’s D ay); F ebruary 22 (W ashington’s b irthday); April 19 (P atri
ots) ; M ay 30 (M emorial D a y ); Ju ly 4 (Independence D a y ); th e first
M onday in Septem ber (Labor D ay); N ovem ber 1 1 (Armistice D ay);
Thanksgiving D ay; December 25 (Christm as D ay); and days of pub
lic fast or thanksgiving and Arbor D ay appointed by Governor and
Council.
H u s b a n d a n d W ife. Each m ay hold and deal w ith property
Individually, subject to right of descent in real estate. (See E states
of Deceased Persons.) H usband not liable for debts of wife con
tracted before m arriage, nor afterw ard in her own nam e, nor for her
torts. E quity C ourt has special jurisdiction of disputes between
husband and wife relating to property. After petition to and decree
by probate court either m ay convey real property as if sole, and other
Is barred of all rig h t by descent where deserted w ithout ju st cause
or If actually living a p art for ju st cause, and desertion or living ap art
has continued one year.
I n te r e s t. Six per cent or any other rate agreed upon in writing;
Judgments, same rate; accounts and debts not on tim e bear interest
from dem and. Special rate in tim e notes does not continue after
m aturity, unless so provided; nor after judgm ent in any case; no usury
laws. On loans for less th an $300- securea by m ortgage or pledge
Of personal property, th e rate shall n ot exceed 3 M per cent per m onth.
Loans negotiated in this sta te by agent of non-resident borrower w ith
intent to evade usury laws of sta te where borrower resides are voida
ble.
J u d g m e n ts . At law; by general order a t end of term on all cases
where verdict or default, unless stayed by proceedings for new trial,
or continued for judgm ent by plaintiff; In equity, only by decree
signed by justice. No lien except by virtue of attachm ent on mesne
process (q. v.) and where specially provided by law.
L ie n s. (Voluminous S tatu te Provisions, for M echanics, M aterial
Men, H otel and Boarding-House Keepers, Stable Keepers, Agister,
etc.).
L im ita tio n of A c tio n s. Six years; d eb t on unsealed contract or
liability (except judgm ents); actions upon judgm ents o ut of S tate of
court n ot of record; for arrears of ren t; of account, assum psit, or
case on contract or liability express or Implied; w aste; trespass qu.
cl. and d. b. a .; replevin; case, except slander and libel. Four years;
against sheriff. Two years: assault and battery, false im prisonm ent,
slander, libel and penalty. One year: escape, scire facias and on
recognizance. E ighteen m onths: stolen bonds and coupons, except
by owner. Twenty; years: witnessed notes, bank bills, specialties,
real action, o ther judgm ent and all o ther personal actions. Suit
begun when w rit was m ade. Incapacity of plaintiff, d eath of either
p arty before or w ithin th irty days after expiration of tim e, fraudu
lent concealm ent of action, absence from S tate when cause accrues
or residence out of the S tate and absence afterw ards, extends tim e.
Actions barred where both parties lived are barred here. New
promise m ust be in writing or p a rt paym ent m ust be m ade, to extend
tim e. Against executors and adm inistrators, tw enty m onths after
filing of affidavit of notice given of appointm ent of executor or adm in
istrator, unless fu rth er assets or claim n ot m atured. Against heirs
or devisees, one year after claim accrued; rem edy in equity, if not
prosecuted w ithin tim e lim ited and if w ithout culpable neglect.
L im ite d P a r tn e r s h ip . M ay consist of one or more general p a rt
ners and one or m ore special. Special shall contribute specific am ount
of capital or property a t cash value, and be n ot liable for debts beyond
th a t am ount. General p artners m ust transact the business.
M a rrie d W o m en have sam e rights and liabilities as to property
contracts and all suits as m en. Wife’s property not liable for her
husband’s debts, nor his liable for her prior debts, nor for others m ade
on her credit. She m ay sue and be sued as if sole. M ay not be
partner of husband and not liable for fam ily expense except by express
promise. (See Arrest, also Dower, also E states of Deceased Persons,
also H usband and W i f e .)
M o rtg a g e s. Of real estate executed and acknowledged as deeds
and m ust be recorded as to th ird parties; convey fee w ith condition
of defeasance. Foreclosed w ithout possession by serving or adver
tising notice, or 1# possession obtained peaceably, or by consent, or
by suit. Redem ption in one year from notice or possession; power
of sale m ortgages not authorized by sta tu te and n o t m uch used.
8 uprem eor Probate, courts m ay authorize a m ortgage by a person in
possession of an estate subject to a contingent rem ainder, executory
devise, or power of appointm ent, and such m ortgage is binding on all
parties. C hattel m ortgages unless and u ntil possession tak en and
retained by m ortgagee to be good against th ird parties m ust be
recorded in town clerk’s office where m ortgagor resides when m ortgage
is given; or, if any of mortgagees are nonresidents, th en in registry
of deeds in county where mortgagee resides, when m ortgage is given.
M ortgage on household furniture m ust s ta te am ount of loan, interest
rate, and cost of procuring loan. Agreements, w hether in form of
note, lease, conditional sale, etc., or otherwise, th a t chattels bargained
and delivered shall rem ain property of seller till paid for, m ust be in
writing and recorded as chattel m ortgages; such m ortgages and notes
foreclosed by sixty days’ notice to m ortgagor or assignee of record,
or, if out of S tate, by publication; redem ption in sixty days. Col
laterals pledged on notes, etc., or for the perform ance of anything,
after failure to pay or perform by the pledgor, m ay be sold by the
pledgee, he first giving w ritten notice to the pledgor of the proposed
sale, or if his residence is unknown, by publication of notice once a
week for three successive weeks in a new spaper in th e City or town
where the pledgee resides, recording said notice and affidavit of service
of same in the clerk’s office of city or town where th e pledgee resides,
and after the expiration of th e sixty days from th e tim e of said record
ing.
N e g o tia b le I n s t r u m e n t s . Uniform Negotiable Instrum en ts Act.
Public Laws 1917, Chap. 257. (See com plete tex t following “ Digest
of Banking and Comm ercial L aw s.” ) D ays of grace abolished.
2002
B A N K I N G A N D C O M M E R C IA L L A W S— M A R Y L A N D
F alling due on Sunday or b ank holiday payable an d presentable
for pay m en t on secular or business day next succeeding. I f holiday
falls on Sunday th en following M onday is deem ed b ank holiday.
On notes payable a t fixed place on dem and a t or after a tim e certain,
no recovery unless dem and proved th ere before suits usual dem and
an d notice to charge indorser; notarial p ro test proves it; W aiver
of dem and an d notice, acceptance of bill, d raft, or order m ust be
in w riting an d signed. Recovery from indorser w ithout suing m aker.
B a te of dam ages on protested bills of 100 or m ore payable in this
eountry, 1 to 9 per cent according to place. N egotiable paper pre
sum ed to be tak en in paym ent of deb t or liability for which it is
given, unless creditor would thus lose security he otherwise would
have had I f note reads “ I prom ise to p ay ” all signers are jointly and
severally liable.
P a r tn e r s h ip . Personal property of partnership, or interest of
partn er therein, exem pt from attach m en t on mesne process, or seizure
on execution for any individual liability or such partner; b u t is sta tu
to ry provision for reaching sam e a fter judgm ent. P artners in m ercan
tile enterprise m ust file sworn certificate w ith city or town clerk
where business to be carried on, showing nam es and residences of
partners, natu re of business and partnership nam e. (See Lim ited
Partnership.)
P o w ers o f A tto rn e y . Usual common law rules.
P ro b a te L aw . (See E states of Deceased Persons.)
P r o te s t. (See N egotiable Instrum ents.)
R e p le v in . Goods or chattels wrongfully taken or detained m ay
be replevied by owner or p arty entitled to possession. Beplevin bond
m ust be double th e value of property replevied. If dismissed w ith
out trial, su it m ay be brought on the bond, in which suit title m ay be
shown to m itigate damages.
T ax es m ay be collected by arrest, distress, or suit. On real estate
th ey are a lien; proceedings to enforce by sale begin upon non-pay
m en t for eight m onths; non-resident owners have tw o years from sale
to redeem b y paying tax, costs, and 8 per cent in terest from day of
sale; residents, tw o years w ith 8 per cent interest from day of sale
on whole sum of tax and costs. Collector m ay give notice to resident
after eight m onths after com m itm ent, and if n ot paid w ithin eighteen
m onths of filing th e notice, right of redem ption lost. L and on which
taxes are unpaid, sold on first M onday in F ebruary in year succeeding
th e year in which tax was assessed; sale is of sm allest fractional p a rt of
in terest to one who will pay taxes, interest, and costs therefor. S tate
ta x assessed by board of sta te assessors on gross receipts of railroads
an d express companies, and telegraph and telephone lines, collected by
suit. Corporations, other th a n those especially provided for, p ay a
franchise tax of $5.00 if authorized capital does not exceed $50,000.00;
of $10.00 if capital does not exceed $200,000.00; of $50.00, if capital
does n o t exceed $500,000.00; of $75.00, if capital does not exceed
$1.000,000.00; and th e fu rth er sum of $50.00 for each $1,000,000.00,
or fraction thereof, in excess of $1,000,000.00. Foreign corporations
pay annual license fee of $10. Inheritance tax ranging from 1 to 7
per cent, according to degree of relationship and am ount of bequest,
$500 exem pt in all cases, and $ 10,000 exem pt in case of certain near
relatives. Special exceptions and exemptions from assessment, and
special provisions for taxing personal property situated here b ut
owned o u t of th e S tate. Beal estate m ortgages exem pt. (See
Banks.)
W ages. W eekly paym ent required in m ost industries. (See
Assignments, A ttachm ent.)
W a re h o u se R e c e ip ts. H older deem ed tru e owner so far as to
give validity to contract for sale of m erchandise covered, or to protect
one acting on faith of such ownership; b u t one taking from agent as
security for antecedent debt gets no greater right th an agent. T itle
to property passed by endorsem ent, b u t not in blank, to purchaser
or pledgee in good faith. P roperty in warehouse m ay be attached
as th a t of person nam ed in receipt, or of last endorsee shown by books
o f warehouseman. Common law rules prevail generally.
W ills. Wills m ust be in writing signed by the testa to r, or a t his
request by some person in his presence, and subscribed in his presence
by three witnesses n ot beneficially interested, in presence of each other,
m ay be m ade b y any person of age and of sound m ind, and m ay dispose
of all property. Wills executed in another S tate or country according
to laws thereof, m ay be proved and allowed in this S tate in the county
where th e testa to r had his residence a t tim e of decease; if proved
w ithout this S tate (at his domicile), m ay be allowed in any county
here where he has property. Widow or widower m ay w ithin six
m onths waive provision in will of deceased husband or wife and claim
sam e share in property as would have had in case deceased died
intestate. (B ut see H usband and Wife.)
N uncupative will m ust be reduced to w riting within six days, or
proved by testim ony within six m onths, from tim e words spoken.
No letters in such till fourteen days after decease of testator. N ot
effectual to dispose of more th an $ 100.00 worth of property unless
proved by three witnesses who acted a t te sta to r’s request.
S Y N O P S IS O F
T H E L A W S O F M A RY LA N D
R E L A T IN G TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by B lades & Rosenfeld, A ttorneys a t Law.
1206-1207 Fidelity Building, Baltim ore.
(See C ard in A ttorneys’ List.)
I n g e n e ra l. F lack’s A nnotated Code—E dition of 1939 (two
volumes) em braces th e Public G eneral Laws of M aryland and, by an
A ct of th e General Assembly, has been legalized and m ade evidence
of th e law. Especial reference to sta tu te s in th e following, is, there
fore, unnecessary.
A c k n o w le d g m e n ts m ay be tak en w ithin th e U nited S tates before
any N o tary Public and are sufficient if atteste d m erely by th e signa
tu re an d notarial seal of th e N otary. N o estate of inheritance or
freehold, or any declaration or lim itation of use, or an y estate in
lan d above seven years, shall pass or ta k e effect unless th e deed con
veying th e sam e shall be executed, acknowledged by all grantors and
recorded, an d no deed of real or leasehold property shall be valid for
th e purpose of passing title unless acknowledged by all grantors and
recorded. Such deeds m ay be acknowledged by th e grantor or
grantors wherever th ey m ay happen to be a t th e tim e of execution
of th e instrum ent. I f acknowledged in th e county or city within
which th e land or any p a rt of it lies, th e acknowledgm ent m ay be
m ade before a n o tary public, a justice of th e peace for such city or
county, a judge of th e O rphans’ C ourt of such city or county, a judge
of th e C ircuit C ourt for th e county, or (if th e land lies wholly or p artly
in B altim ore C ity and th e acknowledgm ent is there m ade) before a
judge of th e Suprem e Bench of Baltim ore C ity. I f acknowledged
w ithin th e S tate, b u t o ut of th e county or city wherein th e real estate
or an y p a rt of it lies, th e acknowledgm ent m ay be m ade before a
n o tary public, any judge of th e C ircuit C ourt for th e circuit in which
th e g rantor m ay fie, or any judge of th e O rphans’ C ourt of th e county
in which th e grantor m ay be, any judge of th e Suprem e Bench of
Baltim ore C ity, an y judge of th e O rphans’ C ourt of said city, or
before an y justice of th e peace for th e county or city where th e grantor
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m ay be a t th e tim e of th e acknowledgm ent, th e official ch aracter of
sucn justice being certified to by th e clerk of th e C ircuit C ourt for th e
county or of th e Superior C ourt of B altim ore C ity (as th e case m ay
be) under th e clerk’s official seal. I f acknowledged w ithout this
S tate, b u t w ithin th e U nited States, th e acknowledgm ent m ay be
m ade before a N o tary Public, a judge of any C ourt of th e United
S tates, a judge of any court of any S tate or territo ry having a seal,
or before a commissioner of deeds for this S tate. If acknowledged
w ithout th e U nited States acknowledgm ent shall be m ade before an
am bassador, m inister, envoy or charge d ’affaires of th e U nited States,
in th e country to which he is accredited or before any one of th e follow
ing officers commissioned or accredited to act a t th e place where the
acknowledgm ent is taken, and having an official seal, viz.: any con
sular officer of th e U nited S tates; a notary public; or a commissioner
or other agent of th e S tate of M aryland having power to tak e acknowl
edgm ents to deeds. In all cases, th e official seal of th e officer or Court
taking th e sam e m ust be affixed to th e certificate of acknowledgment.
T here are no special provisions as to acknowledgm ents by married
women. Corporations acknowledge either by atto rn ey appointed for
th a t purpose In th e body of th e instrum ent itself, or by th e President
or Vice-president of th e C orporation, w ithout such appointm ent.
All conveyances acknowledged prior to Ju n e 1st. 1939, in which such
acknowledgement is defective are validated by chapter 44 of th e Acts
of 1939. (See Conveyances.)
A d m in is tr a tio n o f E s ta te s . T he O rphans’ C ourts of th e Counties
and th e O rphans’ C ourt of Baltim ore C ity are th e courts of probate.
W here decedent leaves a will, letters testam entary are com m itted to
th e executor or executors (male or fem ale)nam ed in th e will, if any are
nam ed. L etters testam entary or of adm inistration will not be granted
to any person under th e age of eighteen years or of unsound m ind, or
convicted of any infam ous crim e nor to any person not a citizen of the
U nited States. A non-resident of M aryland m ay be appointed as the
personal representative of a decedent resident of M aryland only when
th e S tate of his or her residence extends reciprocal privileges to resi
dents of M aryland. In granting letters of adm inistration where decedent
dies w ithout leaving a will, or leaving a will, does n o t nam e an executor
or executors, certain persons are preferred to others. T he order of pre
ference follows; 1. Surviving spouse, or child, or children (in discretion
of th e C ourt); 2. G randchild; 3. F ath er; 4. M other; 5. B rothers and Sis
ters; 6 . N ext of kin. W here one of a class of persons is entitled th e ap
pointm ent is in th e discretion of th e C ourt. Relations of th e wholeblood are preferred to those of th e half-blood in equal degree, and rela
tions of th e half-blood are preferred to those of th e whole-blood in a
rem oter degree. A single wom an is preferred to a m arried wom an in
equal degree. 7. I f there be no relations who qualify, letters of adminis
tratio n shall be granted to th e largest creditor applying for th e same.
8 . I f there shall be none of the first five groups above nam ed, or if these
be incapable or refuse to act, and if th e sixth and seventh groups neglect
to apply, th e appointm ent is in th e discretion of th e C ourt. Bond is re
quired w ith two sureties, or one of certain su rety corporations authorized
by th e law of M aryland to qualify upon such bonds. W hen testa to r re
quests in will th a t executor therein appointed be excused from giving
bond, th en bond shall be given only in such am ount as th e co u rt shall
consider sufficient to secure paym ent of debts of deceased. Six m onths’
notice to creditors m ust be given by publication in as m any news
papers as th e O rphans’ C ourt shall direct (usually one) before the
estate is distributed. Personal property of. th e decedent m u st be
appraised, an item ized inventory thereof filed in th e O rphans’ Court,
and distribution thereof m ade through th e O rphans’ C ourt. Ali
sales m ade by th e personal representative m u st be authorized and
ratified by th e O rphans’ C ourt which appointed him. T he personal
representative m ust w ithin tw elve m onths of his appointm ent file
in th e O rphans’ C ourt of his appointm ent a detailed account of
his adm inistration, and if such first account does not show th e estate
to be fully adm inistered, fu rth er accounts m ust be filed a t six-month
intervals until th e estate is fully adm inistered. Above provisions
also applicable to “ estates of persons absent and unheard of for
above seven years ” who after due proof are declared by th e Orphans’
C ourt to be “ judicially d e a d ” and letters testam entary or of admin
istration are granted on such estate as if th e absent person were
actually dead. T he rights of such absent person are protected by
requiring th e legatees or distributees to give bond conditioned to
repay sum s received by them w ith interest, if such absent person
should be in fact alive a t th e tim e distribution is m ade.
A ffidavits. (See Acknowledgments.) No particu lar form neces
sary, b u t whoever can tak e an acknowledgm ent can tak e an affidavit.
Affidavit of m ortgagee always required in a m ortgage as to th e bonafides of m ortgage consideration. (See M ortgages.)
A lien s. Aliens, not enemies, m ay ta k e and hold lands, tenements,
and hereditam ents acauired by purchase, or to which th ey would, if
citizens, be entitled by descent; and m ay sell, devise or dispose of the
same, or transm it th e sam e to their heirs, as fu lly and effectually, and
in th e same m anner, as if by birth, th ey were citizens of th is State.
A r b itr a tio n . Any cause in th e law courts or O rphans’ Courts
of this S tate (in their respective spheres) m ay, by rule of court and
by consent and agreem ent of th e parties thereto, be subm itted and
referred to th e aw ard and arbitram ent of any person or persons, and
th e C ourt m ay give judgm ent on th e aw ard of th e person or persons
to whom such submission and reference shall be m ade as of th e term
to which said aw ard shall be returned and aw ard execution thereon as
upon verdict, confession or non-suit. B y agreem ent, disputes between
employer and employee m ay be subm itted, for arb itratio n , to any
judge or justice of th e peace, or if th e parties so elect, to a group of
arbitrators appointed by such judge or Justice of th e peace, th e deter
m ination of such judge, justice of th e peace or of th e arbitrators
appointed by them to be filed as a judgm ent of th e court presided over
by th e judge or justice of th e peace to whom th e dispute was sub
m itted for arbitration. An agreem ent to arb itrate, as distinguished
from a case actually subm itted for arbitration, cannot be specifically
enforced.
A tta c h m e n ts for debt or for liquidated dam ages can be obtained
in all cases when th e defendant is a non-resident or has absconded,
affidavit being first m ade by th e plaintiff to th e correctness of his claim
and th e fact th a t th e defendant is a non-resident or has absconded.
T hey m ay be also obtained in connection w ith an original process when
th e creditor or some one in his behalf shall give bond in double the
am ount of th e debt, w ith sureties to be approved by th e clerk, and
m ake affidavit before th e clerk of th e C ourt where th e su it is brought
th a t th e defendant is bona fide indebted to th e plaintiff in th e sum
claimed, and th a t th e plaintiff knows or has good reason to believe that
th e debtor has absconded or is about to abscond from th e State, or
th a t th e defendant has assigned, disposed of, or concealed, or is about
to assign, dispose of, or conceal, his property, or some portion thereof,
w ith in ten t to defraud his creditors, or th a t th e defendant fraudu
lently contracted th e debt or incurred th e obligation; or th a t the
defendant has rem oved or is about to rem ove his property, or some
portion thereof, out of this S tate, w ith intent to defraud creditors
and th e attach m en t m ay be m aintained, although th e debt or obliga
tion upon which th e action is brought m ay not have m atured, but the
date of th e m atu rity of th e debt or obligation m ust be set forth in
th e affidavit. A claim ant m ay have th e attached property released
by filing a bond in double th e am ount of th e appraisem ent. Any
kind of property or credits belonging to th e defendant, in th e plaintiff »
own hands or in th e hands of any one else m ay be attach ed . There
Is a special provision for capital stock of a corporation. The certifi
cate itself m ust be seized. C redits not due m ay be attached, but
wages, hire or salary not due cannot .be attached, and $ 10 0 of wages,
hire, or salary due shall always be exem pt. Im prisonm ent for deht
is abolished. D efendant m ay be sued in th e city or county of hi*
residence or th a t of his place of business. In addition to attachment*
against non-residents or absconding debtors for debt (i. e., a liqui-j
d ated sum ) attach m en ts m ay be issued against such debtors in cases
arising from contracts when th e dam ages are unliquidated, and in
B A N K I N G A N D C O M M E R C IA L L A W S— M A R Y L A N D
actions for wrongs independent of contract, b u t in such cases no
attach m en ts can be issued u n til a declaration is filed setting o ut
specially and in detail th e breach of th e contract com plained of or th e
to rt actu ally com m itted, verified b y th e affidavit or th e plaintiff or
some one in his behalf, and u n tii a bond shall be filed sim ilar to th e
bond required in attach m en ts for fraud. All papers in attachm ent
proceedings can be am ended as in an y other actions a t law. I f neither
th e D efendant nor Garnishee appear condem nation m ay be had upon
filing bond to be in force for period of six m onths, accounting from th e
re tu rn of th e attach m ent.
B a n k C o lle c tio n C o de. Effective Ju n e 1, 1929. Follows directly
after Laws. *
>
B a n k s. Any num ber of persons, not less th an five, citizens of th e
U nited S tates an d a m ajority of them citizens of this S tate, m ay asso
ciate to establish a b ank upon th e term s and conditions and subject to
th e liabilities prescribed in A rticle Eleven of th e Code. T he capital
stock for an y b ank shall n ot be less th a n tw enty-five thousand dollars
($25,000.00) in cities, towns, or villages having up to fifteen tnousand
(15,000) inh ab itan ts, an d shall n ot be less th a n seventy-five thousand
dollars ($75,000.00) in cities, towns, or villages having m ore th an
fifteen thousand (15,000) and up to fifty thousand (50 000) inhabitants,
and shall n ot be less th a n one hundred thousand dollars ($ 10 0 ,000 .00 )
in cities, towns and villages having m ore th a n fifty thousand (50,000)
and u p to one hundred and fifty thousand (150,000) inhabitants,
and shall n o t be less th an five hundred thousand dollars ($500,000.00)
in an y city, town or village having m ore th a n one hundred and fifty
thousand in h ab itan ts (150,000); th e num ber of inhabitants in each
case to be ascertained or determ ined by th e last Federal or S tate
enum eration ; an d no b ank shall s ta rt business u n til all of th e capital
stock provided for in its charter and an additional sum equal to 2 0 %
thereof, as surplus shall have been paid for in full in m oney and no
paym ent shall be regarded as m ade by th e delivery of any note,
security or p ro p erty of any kind as a su b stitu te for money, except
as otherwise provided by law. Provided th a t the above shall n ot
apply to any person, co-partnership, incorporated ban k , or other
incorporated institu tio n engaged in th e banking business in this S tate
on April 21, 1933, except in such cases where said person, co-partner
ship, incorporated banks or other incorporated institution doing a
banking business shall th ereafter undertake to establish a branch or
branches outside of th e city, tow n or village in which th ey were
then located. In such a case th e foregoing provisions relative to
capital an d surplus shall be complied w ith, by adding to th e capital
and surplus of th e p aren t institution, th e am ount th a t would be
required if such branch or branches were separately incorporated.
And provided, fu rth er, th a t in estim ating such addition to th e capital
and surplus of th e p aren t institution, credit shall be given for th e
am ount th a t th e existing capital and surplus of such p aren t insti
tution exceeds th e am ount thereof required by law; and provided
further, th a t no branch shall be established by any bank, in th e
city, town, or village, where said bank is located, u n til said bank
conforms to th e requirem ents, as to th e m inim um am ount of capital
stock for banks in said city, tow n or village.
E very b an k (other th a n a savings b ank w ithout capital stock)
shall keep on hand a t all tim es a reserve of a t least 15 per cent of its
demand deposits an d of a t least 3 per cent of its tim e deposits.
These reserves m ay be k ep t as cash on hand, or on deposit in such
bank or banks, or tr u s t com pany or tr u s t companies of th e S tate of
M aryland, or elsewhere, of good standing, as th e board of directors
or executive com m ittee by resolution m ay direct; in addition to th e
above m ethods of keeping reserves, th e reserve of a t least 3 per cent
of tim e deposits m ay be k ep t in th e form of direct obligations of the
United S tates Governm ent, or th e S tate of M aryland. E very tr u s t
company shall keep on hand a t all tim es a reserve of a t least 15 per
cent of its dem and deposits (not including any deposits m ade b y th e
City of Baltim ore an d secured by th e counter deposits of Baltim ore
City stock). Of th is 15 per cent, 10 per cent shall be k ep t on deposit
in such b an k or banks, or tr u s t com pany or tr u s t companies of good
standing, either in th e S tate of M aryland o r elsewhere, as th e board
of directors or executive com m ittee m ay direct, and th e other 5
per cent m ay be k ep t in th e sam e m anner as th e 10 per cent, or in
the form of registered or coupon bonds or public stock of th e U nited
States, or th e S tate of M aryland, or of B altim ore C ity, or of th e
bonds of an y county or m unicipal corporation of this S tate which
shall be approved by th e B ank Commissioner. E very tru s t com pany
shall also keep on h and a t all tim es a reserve of a t least 3 per cent
of its tim e deposits; which reserve m ay be k ep t in th e sam e form as
time deposits of banks are required to be k ep t as set forth above.
Cash item s shall n o t be considered as a p a rt of th e reserve required
to be k ep t by either banks or tru s t companies, b u t cash actually on
hand held b y a tr u s t com pany shall be considered as a p a rt of th e
10 per cent reserve above m entioned.
No savings in stitu tio n or savings bank incorporated after 1910
could have any capital stock, b u t m u st be a m utual association.
Such “ association for carrying on th e business of savings banking m ay
be formed by any num ber of pèrsons, not less th an fifteen, citizens of
the United States, an d a m ajority of them citizens of this S tate, who
shall enter into articles of association which shall specify th e object for
which th e association is formed and shall sta te : The nam e by which
the savings institu tio n is to be known, th e village, town or city and
county where such in stitution is to be located, th e names and resi
dences of th e m em bers thereof, th e date on which it is proposed to
commence operations, th e num ber of directors proposed to m anage
the association’s affairs; which shall not be less th an five, who m ust
be members of th e association, and the nam es and residences of the
directors who shall serve th e first y ear.” T he articles of association
shall be presented to th e B ank Commissioner for exam ination. H e will
make an investigation an d will either approve or refuse the form ation
of th e savings institu tio n .
The banking laws of M aryland provide for th e appointm ent of a
Bank Commissioner w ith broad powers for the exam ination of all
banking in stitutions in th is S tate other th a n N ational Banks. W hen
ever capital is reduced by im pairm ent commissioner m ay require
Bank to m ake such deficiency good w ithin sixty days, and upon its
failure to do so m ay ta k e possession of p roperty and business of such
institution an d retain u n til affairs are finally liquidated, or u n til
a reorganization has tak en place which will fully protect depositors
and creditors. T his also applies where th e business is conducted in
an unsafe or unauthorized m anner. E very banking and tru st insti
tution shall have th e rig h t of perpetual succession u ntil forfeiture.
Lvery b ank and tru s t com pany shall m ake to th e B ank Commissioner,
got less th a n th ree reports during th e calendar year, a t such tim es as
tne Bank Commissioner shall require. A t least once a year th e b ank or
tru st com pany shall rep o rt to th e B ank Commissioner, on call by him ,
a list of its stockholders. T he B ank Commissioner shall have a rig h t
to call for special reports, whenever in his judgm ent th e sam e are
necessary.
Banks are perm itted to establish and operate branches w ithin th e
state after having first obtained th e approval of the Bank Commis™ e,r ' No b ank or tru s t com pany m ay have any affiliate or closely
a a* corporation, or own controlling stock in any other corporation.
. Stockholders of every bank and tru s t com pany were form erly held
responsible, equally and ratab ly , and not one for another,
i°r
contracts, debts and engagem ents of every such corporation,
JP the extent of th e am ount of their stock therein, a t the par value
“hereof, in addition to th e am ount invested in such stock. By an Act
qi” ,
Assembly of M aryland (C hapter 81, Acts of th e Regular
“^®lon of 1937) th is liability does n ot apply w ith respect to stock
hoiPoo y issued b y an y bank or tru s t com pany subsequent to N ovem HSsLj»’ 1936. Such responsibility, w ith respect to all outstanding
issued by an y b ank or tru s t com pany, shall cease three m onths
a« er such b ank or tr u s t com pany shall cause a notice of such pros
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2003
pective term ination of responsibility to be published in a newspaper
published in th e city, village or county in which th e bank or tru s t
com pany is located; provided th a t such bank or tru s t com pany shall
certify to th e B ank Commissioner th e fact of such publication. In
th e event of th e term ination of th e individual responsibility of stock
holders as above provided, such bank or tr u s t com pany is required to
transfer to surplus a t th e close of a fiscal period, either annually or
sem i-annually, n ot less th an 1 0 % of its n e t earnings, u n til such surplus
shall equal and thereafter continue to equal 1 0 0 % of its capital.
E very bank, savings institution and tru s t com pany is specially
granted th e power and authority, if th e action is approved by a vote
of a m ajority of its B oard of Directors, to become a m em ber of th e
Federal D eposit Insurance Corporation.
B lu e S ky L aw . N o prelim inary reports or qualifications are
required and only if it shall appear to th e A ttorney General of M ary
land th a t in th e issuance, sale, prom otion, negotiation, advertisem ent
of securities within th e S tate of M aryland, any person, partnership
or corporation, is employing or is about to employ any device, scheme
or artifice to defraud, or for obtaining m oney or property by m eans
of any false or fraudulent pretense, representation or promise, th e
said A ttorney General m ay require said person, partnership or cor
poration to file with him a statem ent in w riting under oath of all th e
facts concerning th e same. From th e action of th e A ttorney-G eneral,
there is an appeal to th e courts, w ith final resort to th e C ourt of Appeals.
T he Law also provides th a t any person, partnership or corporation
having been served with any order of th e A ttorney General, or having
knowledge of th e issuance of said order and while said order rem ains
in effect, either as originally issued or as modified who shall execute
or carry on any scheme or device against which said order has been
issued, or wilfully a ttem p ts to do so, shall be guilty of a m isdemeanor
and, upon conviction, shall be fined not more th an $ 10,00 0 or im pris
oned not m ore th an two years or be subject to both fine and im prison
m ent, in th e discretion of th e C ourt.
C o lle c tio n s . Uniform B ank Collection Code as recom m ended by
American B ankers Association, see com plete te x t back of Laws.
C o n tr a c ts . T he norm al condition of all persons is one in which
they are capable of m aking any contract. T he fourth and seventeenth
sections of th e S tatu te of F rauds are in force in M aryland. I t is no
longer necessary to show th a t th e consideration for a special promise
to answer for th e debt of another is in writing. A citizen can not
m ake a contract w ith an alien enem y during th e continuance of hos
tilities, b u t aliens, not enemies, m ay contract and hold real property
as fully as citizens. T he later cases decide contract of infants to be
voidable and not void; and th ey are capable of ratification by infants
on arrival a t age of tw enty-one. T he contracts of infants for neces
saries are binding upon them . T he contract of a lunatic is voidable
and n ot void. A m arried woman m ay engage in business, co ntract,
sue and be sued upon contracts an d to rts, as if unm arried. All
gam bling contracts are void.
C o n v e y an ces. N o estate in or title to any land lying w ithin th is
S tate, for any period above seven years shall pass or ta k e effect unless
th e deed conveying th e sam e shall be executed, acknowledged and
recorded. Such deed shall be signed and sealed by th e grantor, and
atteste d by a t least one witness. Unless th e contrary intention
appears, every deed is construed to pass th e whole estate of th e
grantor. Deeds of real estate should be recorded w ithin six m onths
from d ate in county, or in B altim ore C ity, where land lies. W here
there are two or more deeds conveying th e sam e lands, th e deed first
recorded shall be preferred if m ade bona fide and upon good and
valuable consideration A scroll w ith th e word “ se a l” therein by
way of a seal, is sufficient, as “ (signed) John Doe (Seal).” T he
Deed of a body corporate m ust be signed in th e corporate nam e by
th e P resident or a Vice President, and th e official C orporate seal
Impressed on the deed, th e seal to be atteste d by th e Secretary of th e
corporation.
C o rp o ra tio n s are organized under th e a u th o rity of Article 23 of
F lack ’s Code where m ost liberal provisions are m ade for general
incorporation, including such features as stock w ithout par value.
Issuance of stock for considerations other th a n cash, convertibility
of stock from one class to another class, cum ulative voting, stock fully
paid and non-assessable, convenient am endm ent and consolidation,
etc. E very dom estic corporation having capital stock, except rail
road corporations, building associations and co-operative associations,
shall before th e tim e of incorporation p ay for th e use of th e S tate a
bonus tax for its authorized capital stock a t th e following rates, to w it:
T w enty cents for every thousand dollars of its authorized capital
stock where such authorized capital stock am ounts to $ 1 ,000 ,000.00 or
less, b u t in no case less th an $2 0 .00 .
An additional bonus tax of $150.00 for every million dollars or
fractional p a rt thereof on am ount of stock in excess of $ 1 ,000 ,000.00
and not in excess of $5.000,000.00.
An additional bonus tax of $20.00 for every million dollars or frac
tional p a rt thereof in excess of $5,000,000.00.
For purposes of above provisions as to bonus tax, stock w ith o u t p ar
value shall be treated as if its par value were $ 100 .0 0 per share.
C orporations have perpetual succession, m ay carry on business any
where, m ay issue bonds and secure them by m ortgage of all p rop erty in
cluding franchises. A foreign corporation before doing business in this
S tate m ust pay a fee of $25.00 and file w ith the S tate T ax Commission of
M aryland: (1 ) An officially certified copy of its charter or certificate of
incorporation; (2 ) A nnually th erafter a report to be filed on or before
M arch 15th in every year subscribed and sworn to by its president or
treasurer (or a m ajority of its board of directors) and accom panied b y a
fee of $ 1.0 0 for filing such a rep o rt, showing (a) th e corporate nam e; (b)
th e nam es and addresses of its president, treasurer, secretary, and
m em bers of its board of directors; (c) its m ain office in this S tate and
its principal office in th e S tate of incorporation; (d) th e am ount of
authorized capital stock and th e am ount issued, and th e num ber and
par value of th e shares, and th e nam es and addresses of th e cor
poration’s shareholders in this S tate, and th e num ber of shares held
by each; and in such annual report shall be given such inform ation
as m ay be required by th e S tate T ax Commission in order to enable
it to determ ine th e am ount of capital employed in M aryland as of
Ja n u ary 1st of th e year for which such report is filed; (e) th e nam e
and address of its agent resident in th is S tate, service of process
upon whom shall bind th e corporation until th e appointm ent of a sub
stitu te is duly certified to th e S tate T ax Commission. E very officer
and every agent of such foreign corporation which fails to com ply
w ith th e above provisions, shall be subject to crim inal prosecution,
and while such failure to comply shall not affect th e validity of any
contract m ade with such non-complying corporation, no suit can be
m aintained in th e C ourts of th is S tate by such corporation until com
pliance w ith above provisions. B oth dom estic and foreign corpora
tions m ust pay to th e S tate an annual franchise tax, th e am ount of
which varies, if a dom estic corporation, w ith th e am ount of capital
stock of such corporation issued, outstanding an d /o r subscribed for,
and if a foreign corporation with th e ainount of capital employed by
it in this S tate as of the preceding first of January. T he franchise
tax is payable on or before th e first of August in each year. The
penalty for failure to pay the franchise tax, by th e dom estic corpora
tion, is forfeiture of its charter, and by th e foreign corporation is
forfeiture of th e right to do business in th e S tate.
N o corporation m ay interpose th e defense of usury in any action
a t law or in equity. T here is no period of lim itations in this S tate
on judgm ents against foreign corporations. M aryland corporations
m ay hold stockholders' m eetings outside of th is S tate under certain
conditions.
C o u r ts . T he C ircuit C ourts of th e counties have com m on law
jurisdiction in all cases involving m ore th a n $50.00, and in all cases
involving title to land; and equity jurisdiction in all cases involving
more th an $20.00. T he C ircuit C ourt of Baltim ore C ity and th e Cir
cuit C ourt No. 2 of B altim ore C ity have exclusive equity jurisdiction
in th e city. T he Superior C ourt of Baltim ore C ity, th e C ourt of
Common Pleas of B altim ore C ity, and th e Baltim ore C ity C ourt have
2004
B A N K I N G A N D C O M M E R C IA L L A W S— M A R Y L A N D
concurrent com m on law jurisdiction in B altim ore C ity in cases involv
ing more th an $100.00. All records pertaining to th e transfer of title
to land in Baltim ore C ity are in th e custody of th e Clerk of th e Superior
C ourt of Baltim ore C ity, and in th e counties, in th e custody of th e
clerks of th e various C ircuit C ourts of th e counties. All such records
are open to th e public. T he O rphans’ C ourt of. B altim ore C ity, and
th e O rphans’ C ourt of each county have exclusive probate jurisdiction.
In th e counties justices of th e peace have common law jurisdiction
to th e am ount of $100.00 (concurrently w ith th e C ircuit C ourts from
$50.00 to $100.00). In Baltim ore C ity th e People’s C ourt has juris
diction up to $100.00 and suits on sm all claims in Baltim ore C ity
are brought in this C ourt instead of before th e individual justices of
tb e peace.
D e p o s itio n s . W hen th e courts are satisfied, by affidavit or other
wise, th a t th ere are m aterial and com petent witnesses residing w ith
out th e S tate, th ey will direct th a t a commission be issued to take
th e testim ony of such witnesses. T he commissioners are selected by
th e court, and m ust qualify before some person authorized to adm in
ister an oath in th e sta te where th ey reside. T he depositions, duly
certified by th e commissioners, shall be adm itted as evidence a t th e
trial of th e cause, subject to th e sam e objections an d exceptions as
th e sam e testim ony would be if th e witness had been personally present
in court an d there examined. P arties have th e .right to be present
when th e testim ony is tak en under th e commission, and m ust receive
reasonable notice of th e tim e and place. Interrogatories and crossinterrogatories m ay be annexed to th e commission or th e witness m ay
be examined by counsel. T he testim ony of non-resident witnesses or
parties to a cause m ay also be taken before a commissioner, notary
public or ju stice of th e peace upon giving notice of n ot less th a n five
days to th e opposite p a rty of th e tim e an d place, when and where the
testim ony of such non-resident witnesses is proposed to be taken, and
th e nam e of th e commissioner, n o tary public or justice of th e peace
before whom th e sam e is proposed to be taken, together with th e nam es
of th e witnesses proposed to be examined. Depositions shall be signed
by th e witnesses, and signed and sealed by th e officer taking th e same
and retu rn ed to th e C ourt in which th e case is pending.
D e s c e n t a n d D is tr ib u tio n of P ro p e rty . As to descent, see
Code 1939, A rt. 46, an d as to distribution, Code 1939, A rt. 93. The
Buie in Shelley’s case has been abolished by Ch. 144, A cts 1912,
Code 1939, A rt. 93, sec. 348.
D o w er. T he common-law right of dower exists in M aryland, and
extends to equitable estates. B y a ct 1898, th e husband’s dower
was created; an estate of th e husband in his wife’s estates of inherit
ance, exactly equivalent to th e wife’s dower in her husband’s estate.
A devise or bequest of real or personal property to th e wife or husband
shall be construed to be in lieu of dower in lands or share of personal
estate, respectively, unless otherwise expressed in th e will. If the
widow or widower renounces form ally in writing, however, such pro
vision m ade for her or him by th e will w ithin six m onths after th e
g ran t of adm inistratiop .on th e estate of th e deceased husband or
Wife, th e dower right and th e share of personal property rem ain undis
turbed. “ T he surviving husband or widow shall be barred of his
or her rig h t of dower in real or personal estate, unless w ithin six m onths
after th e first g rant of letters testam entary, he or she shall file a
w ritten renunciation.” (See M arried Women.)
E x e c u tio n s m ay issue and judgm ents m ay be renewed or revived
b y scire facias a t an y tim e within tw elve years from date of judgm ent.
I n th e circuit courts for th e counties there is a sta y u n til th e first T hurs
d ay of th e term succeeding th e rendition of th e judgm ent, provided th e
ju dgm ent is obtained a t th e second term after th e defendant is sum
m oned. T here is no s ta y upon judgm ents rendered in th e courts of
B altim ore C ity or by justices of th e peace in th e city or counties, b u t
execution m ay issue forthw ith. T he defendant m ay sta y th e execution
b y superseding w ith sureties for six m onths. Copy of docket entries of
judgm ent when recorded in another county m akes th e judgm ent a
lien there.
E x e m p tio n s . N o hom estead law. W earing apparel, books and
tools (not kep t for sale) and $100 of money, land or goods, and $500
payable to th e debtor as life, health, or accident insurance are exem pt
from execution, except (1 ) on judgm ents for breach of prom ise to
m arry or seduction and (2) aggregate exem ptions n ot to exceed $500
and (3) not applicable to any b u t actual bona fide residents of this
S tate.
F o re ig n C o rp o ra tio n s . (See Corporations.)
F o re ig n J u d g m e n ts . Judgm ents of th e courts of other states
certified under the'A ct of Congress, are proper causes of action against
any person subject to th e process of th e courts of this State.
F rau d .. W hen any false representation is m ade by one to another
w ith th e in tent to defraud, and the defrauded p arty , thinking the
alleged fraud to be tru e, acts upon it, any contract thus m ade can
not be enforced. B ut if th e injured p a rty knows such representations
to be false it can n ot be said to have influenced his conduct. F or'
general doctrine in this S tate see M cAleer vs. Horsey 35 M d. 439.
Giving checks or d rafts w ithout provision for acceptance is prim a
facie evidence of in ten t to defraud, and is punishable as a crime
unless such provision is m ade w ithin ten days. E very person buying
m erchandise. in bulk shall dem and and receive from th e vendor a
w ritten statem ent under oath containing th e nam es and addresses
of all creditors w ith am ount of indebtedness a t least ten days before
the sale is consum m ated. T he vendee a t least ten days before con
sum m ating such sale shall notify all of said creditors either personally
or by registered m ail of such proposed purchase and is required to
see th a t th e purchase m oney is applied to th e paym ent of the vendors
debts shown on said statem ent. A sale or transfer of goods in bulk
w ithout such notice shall as to all subsisting creditors of the vendors
be void.
Special provisions of crim inal law apply to th e m aking of false
financial statem ents.
G a r n is h m e n ts . (See A ttachm ents.)
H o lid a y s. Saturdays after twelve o’clock noon (except in C aro
line, Howard and T albot C ounties); Sundays: Ja n u ary 1 (New Y ear’s
D ay); F eb ru ary 22 (W ashington’s b irth d ay ); M arch 25 (M aryland
D ay); Good F riday; M ay 30 (Decoration D ay); Ju ly 4 (Independ
ence Day) ; th e first M onday in Septem ber (Labor D ay) ; Septem ber
12 (Defenders’ D ay); October 12 (Colum bus D ay); Novem ber 11
(Armistice Day) ; December 25 (Christm as Day) ; all days of general
and congressional elections throughout th e State. W hen an y of
these days falls on Sunday th e ensuing M onday is a legal holiday.
All special days th a t m ay be appointed or recom m ended by the
Governor of th is S tate or the President of th e U nited States, as days
of thanksgiving or fasting and prayer, or other religious observance,
or for th e general cessation of business, shall also be regarded as legal
holidays. All bills, drafts, checks and notes presented for paym ent
or acceptance on these said days shall be deem ed to be presented for
acceptance or paym ent on th e secular or business days next suc
ceeding such holiday.
H u s b a n d a n d W ife.
(See Dower, and M arried Women.) In
this S tate th e husband Is not liable for wife’s ante-nuptial debts
or contracts. H usband is liable for necessaries of wife. H usband
has sam e in terest in wife’s estate as wife has in husband’s estate.
M arried women are expressly authorized to become partners and to
contract w ith husband. E ither can relinquish interest in other’s
real estate by joint or separate deed, or by agent or attorney properly
constituted. T he wife’s property is protected by th e C onstitution
from th e debts of the husband.
I n t e r e s t . T he legal rate of interest Is 6 per cent per annum . A
person proved guilty of usury forfeits th e excess over th e aggregate
of th e real sum lent and 6 % interest thereon. Judgm ents bear interest
from th e d ate of th e verdict. A corporation cannot plead usury.
Licensed loan brokers m ay charge 3 J-3% per m onth on Joans up to
$300.00
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J u d g m e n ts are liens for tw elve years from th e d ate of rendition
on any interest of th e defendant in real or leasehold property within
th e county where rendered. T hey can be transferred from one county
to another by sending a copy of th e docket entries to th e clerk for
record. T he lien commences from th e date of th e en try of th e docket
entries by th e clerk. Judgm ents are n ot liens on m ortgages or other
personal property u ntil execution has issued and th e w rit is in th e
hands of th e sheriff.
L ie n s. (See Judgm ents.) M echanics’ Liens. E v ery building
erected, repaired, rebuilt, or im proved to th e extent of one-fourth
of its value is subject to a lien for work done or m aterials furnished
for or about th e same, except th a t there are no liens for m aterials
furnished in B altim ore C ity. E very m achine, wharf, or bridge,
constructed or repaired is subject in like m anner as buildings are, to
a lien. All boats or vessels are subject to a lien for m aterials fur
nished or work done in building, repairing, or equipping th e same.
Garages are given lien for storage and accessories. T o secure the
lien and lay foundation for enforcing it, th e m aterial m an m ust within
six m onths after th e last work has been furnished, file a claim in the
circuit court for th e county, or in th e C ircuit C ourt for Baltim ore City,
as th e case m ay be. T he liens are enforced by scire facias or b y bill
in equity.
L im ita tio n s o f S u its . Accounts and notes are barred after three
years, sealed instrum ents after twelve years; judgm ents tw elve years
except against foreign corporations (no lim itations). A verbal promise
or acknowledgm ent will revive a debt barred by th e sta tu te .
M a rr ie d W o m e n . M arried women m ay hold an d dispose of their
property lawfully as if unm arried, b u t husband m ust join in convey
ances of real estate to release his dower interest. M arried women m ay
engage in business, contract, sue, and be sued upon contracts and for
to rts, as if unm arried. M arried wom an is alone liable for ante-nuptial
debts and contracts. H usband is still liable for necessaries. Where
husband or wife is adjudged a lunatic upon inquisition, and th e finding
rem ains in force, other spouse m ay convey after acquired property by
separate deed, as if unm arried. Surviving spouse is also allowed ahead
of creditors $75 if no m inor children, $150 if children. Surviving spouse
is entitled to (a) one-third of n e t personal estate if th ere are children or
one-half thereof if th ere are no children b u t a surviving parent, or
$2 ,000.00 and one-half of th e residue if there are neither children nor
parents b u t a b rother or sister or descendant of a b rother or sister
surviving, and (b) th e sam e share in n et real estate or a t option of
surviving spouse in lieu of share of real estate surviving spouse, either
husband or wife, m ay elect to tak e dower rights which are one-third
of real estate for life ahead of creditors unless dower rights have been
specifically waived or waived by joining in deeds. (See Husband
and Wife, and Dower).
M o rtg a g e s are executed, acknowledged, and recorded th e same as
deeds, and are not valid against creditors unless recorded within six
m onths after date. T here m ust be an affidavit m ade by th e mort
gagee or his agent a t an y tim e before recording, th a t th e consideration
is true and bona fide. If m ade by agent, he m ust, in addition, make
oath th a t he is th e agent of th e m ortgagee. A like affidavit is required
to chattel m ortgages, and absolute bills of sale, both of which m ust be
recorded w ithin tw en ty days. The lien of a m ortgage m ay be barred by
ceasing to p ay interest or any installm ent of th e principal for twenty
years. T hey m ay be foreclosed a t any time, a fter th e d eb t becomes
due and before th e lien is barred.
N e g o tia b le I n s t r u m e n t s . T he Uniform N egotiable Instrum ents
Act adopted. (See com plete tex t following “ D igest of Banking and
Com m ercial Laws.)
N o te s a n d B ills of E x c h a n g e . N egotiable instrum ents are
defined by A rticle 13 of F lack ’s 1939 Code, which repeals all laws,
inconsistent therew ith. Section 20 provides as follows: “An in
stru m en t to be negotiable m u st conform to th e following require
ments-: 1. I t m u st be in w riting and signed by th e m aker or drawer.
2. I t m ust contain an unconditional prom ise or order to p ay a sum
certain in money. 3. M u st be payable on dem and, or a t a fixed
or determ inable fu tu re tim e. 4. M u st be payable to order or to
bearer; and 5. W here th e in stru m en t is addressed to a drawee he
m u st be nam ed or otherwise indicated therein w ith reasonable cer
ta in ty .” I ts negotiability is n o t affected by a seal, or b y a provision
which authorizes th e sale of collateral securities in case th e instru
m ent be n o t paid a t m atu rity , or authorizes a confession of judg
m en t if th e instrum ent be n ot paid a t m atu rity ; or waives^ th e bene
fit of an y law intended for th e advantage or th e p ro tection of the
obligor; or gives th e holder an election to require som ething to be
done in lieu of paym ent of money. I t is n ot necessary th a t paper
should be m ade payable a t a bank or any fixed place. To charge
indorser, notice of non-paym ent and of pro test m ust a t once be given to
him. T he tim e of m a tu rity is regulated by A rt. 13 of th e Code as fol
lows : “ Section 104: T im e of M a tu rity . E very negotiable instrum ent is
payable a t th e tim e fixed therein w ithout grace. When th e day of
m atu rity falls upon Sunday, or a holiday, th e instrum ent is payable
on th e next succeeding business day. Instrum en ts falling due on
S aturday are to be presented for paym ent on th e next succeeding
business day, except th a t instrum ents payable on dem and m ay, a t the
option of the holder, be presented for paym ent before 1 2 o'clock noon,
on S aturday, when th a t entire day is n ot a holiday.” Legal holidays.
(See Holidays.) By act 1898, Ch. 198, it shall be lawful for banks
and bankers in th e city of B altim ore to close their doors for business
a t 12 o’clock noon, on each and every S aturday in th e year, and every
S aturday in th e year, after 12 o’clock noon, shall be a legal half
holiday, so far as regards th e presenting for paym ent or acceptance,
and the protesting and giving notice of th e dishonor, of bills of exchange
and other negotiable paper, and for t jiese purposes shall be considered
as the first day of th e week, or Sunday, and all negotiable paper shall
be deem ed to be presentable on th e secular day next succeeding.
P o w er o f A tto r n e y . E v ery power of atto rn ey authorizing an
agent or atto rn ey to sell and convey an y real estate, shall be attested
and acknowledged in th e sam e m anner as a deed, an d recorded prior
to or with th e deed executed in pursuance of such power of attorney.
A corporation shall have power to appoint an atto rn ey for th e same
purpose, under its corporate seal. Such power of atto rn ey shall be
deemed to be revoked when th e instrum ent containing th e revocation
Is recorded in th e office in which th e deed should properly be recorded.
P r o b a te L aw . (See A dm inistration of E states and Wills.)
P r o te s t is usually m ade by n otary public. N o tary m ust Keep
register of protests. A protest of n otary public is prim a facie evidence
of non-acceptance or non-paym ent, and of th e presentm ent of said
note for paym ent, or of said bill for acceptance or paym ent, a t the
tim e and in th e m anner sta te d in th e protest, and th e protest shall also
be prim a facie evidence th a t such notice has been sent or delivered in
th e m anner therein stated. (See N otes and Bills of Exchange.)
\ R e p le v in is a rem edy to recover specific goods an d chattels to the
possession of which th e plaintiff is entitled. Also th e proper remedy to
recover possession of goods distrained unlawfully. Bond m ust be given
to th e S tate of M aryland, and any p a rty having an interest in tne
property, m ay, upon breach of any covenant in' bond, m aintain an
action in th e nam e of th e S tate for his or her use.
S ales a n d N o tices. Acts 1910, Ch. 346, adopts th e Uniform
Sales Act. (Art. 83, secs. 19 to 96 incl.)
T ax es. T he county commissioners of th e several counties of the
S tate, and the M ayor and C ity Council of B altim ore C ity are directea
to levy a tax annually upon real and personal property situated within
th e S tate. The C ounty and/or C ity tax on Banks located and m
business anywhere in M aryland is uniform ly 1 frer cent of th e value oi
its capital stock. The property of religious, charitable, b e n e v o le n t ,
and educational institutions, and cem etery companies is exempt irpm
taxation. O n tim ely application exem ption m ay be had for manuiactu re r’s tools and m achinery in actual use from M unicipal taxation m
Baltim ore C ity and in some of the Counties. Collectors may sen
property to compel paym ent of overdue taxes, upon giving due nowte
of sale, and com plying with other requisites of sta tu te , and any person
interested in property m ay redeem w ithin tw elve calendar monies
B A N K IN G A N D C O M M E R C IA L L A W S— M A S S A C H U S E T T S
from d ate, an d in d efault of redem ption, title to property vests in
purchaser.
T r u s t C o m p a n ie s (See also B a n k s). Five or m ore persons
citizens of th e U nited States, and a m ajority of them citizens of this
State, m ay form a corporation to be know n as a tr u s t com pany. The
capital stock of such corporation m u st be a t least seven hundred
and fifty thousand dollars; provided, however, 'th a t a corporation
w ith a capital of n o t less th a n tw o hundred thousand dollars m ay be
organized in a city containing m ore th a n one hundred thousand and
less th a n tw o hundred fifty thousand inhabitants, and a corporation
m ay be organized w ith a capital of n ot less th a n one hundred and
fifty thousand dollars in a city containing m ore th a n tw enty-five
thousand in h ab itan ts and less th a n one hundred thousand inhabitants,
and w ith a capital of a t least one hundred thousand dollars in a city
or tow n th e population of which does n ot exceed twenty-five thousand
inhabitants, th e num ber of inhabitants in each case to be ascertained
or determ ined b y th e last Federal or S tate enum eration, an d no tru s t
com pany shall s ta rt business u n til all of th e capital stock provided
for in its charter and an additional sum equal to 2 0 % thereof as a
surplus, shall have been paid for in full in m oney and no paym ent
shall be regarded as m ade b y th e delivery of any note, security or
property of an y kind as a su b stitu te for money, except as otherwise
provided by law.
In th e event th a t an y tr u s t com pany hereafter establishes a branch
or branches outside of th e city, tow n or village in which it is now
located, it shall ad d for each branch established, to its paid-in-capital
the following sum s an d tw enty per cent (2 0 %) thereof as additional
surplus; th e sum of twenty-five thousand dollars in tow ns or villages
having less th a n fifteen thousand (15,000) inhabitants; seventy-five
thousand dollars in towns, villages or cities having more th an fifteen
thousand (15,000) and up to fifty thousand (50,000), inhabitants, and
not less th a n one hundred thousand dollars in towns or cities having
more th a n fifty thousand and less th an one hundred and fifty thou
sand inhab itan ts; and n ot less th a n five hundred thousand dollars in
cities having m ore th a n one hundred and fifty thousand; th e num ber
of in h ab itan ts in each case to be ascertained or determ ined by th e last
Federal or S tate enum erations; unless th e surplus and paid-in capital
of such tru s t com pany is already sufficient under the present conditions
of th e law to provide th e surplus and capital required by a tru s t Com
pany hereunder doing business in th e city, tow n or village in which
it m ay be located, and for branches in cities, towns or villages in which
it proposes to establish branches; provided, however, th a t no branch
shall hereafter be established by any tr u s t company, in th e city, town
or village where said tru s t com pany is now located and engaged in
business, u n til said tr u s t com pany conforms to th e requirem ents
herein provided as to th e m inim um am ount of surplus and capital
stock for a tru s t com pany in said city, tow n or village.
U n ifo rm S t a t e L aw s. Intended for adoption by all th e States
and adopted by M aryland: 1 . Aeronautics; 2. Air Licensing- 3 . Bank
Collection Code; 4. Bills of Lading; 5. Cold Storage; 6 . D eclaratory
Judgem ents; 7. E xtradition of Persons of Unsound M ind- 8 . Federal
Tax Lien R egistration; 9. Fiduciaries; 10. Flag; 11. Foreign Ack
nowledgments; 1 2 . Foreign Depositions; 13. Foreign E xecuted Wills14. F raudulent Conveyance; 15. In te rp a rty Agreem ent; 16. Judicial
Notice of Foreign Law; 17. Lim ited P artnership; 18. Negotiable
Instrum ents; 19. P artnership; 20. Proof of S tatutes; 21. Sales; 22.
Stock T ransfer; 23. W arehouse Receipts; 24. M achine G un Act-'
25. N arcotic D rugs; 26. V eterans’ G uardianship; 27. Crim inal E x tra
dition; 28. Fresh P u rsu it; 29. To secure th e A ttendance of W itnesses
from w ithout a S tate in Crim inal Proceedings; 30. P rincipal and
Income.
W ills of lan d or personal property, and an y codicil thereto, m u st
he in writing, signed b y th e testato r, or some one else for him, in his
presence, a t his request, and witnessed by two or more credible wit
nesses, as and for last will and testam ent of th e testator, in th e presence
of all th e witnesses thereto. N uncupative wills invalid except in
case of disposition of personal property by soldiers in actual m ilitary
service or m ariners a t sea. E very will or other testam entary instru
ment executed w ith o u t this S tate in th e mode prescribed b y law,
either of th e place where executed or of th e te sta to r’s domicile, or
according to th e form s required by th e law of this S tate shall be
deemed to be legally executed, and shall be of th e sam e force and effect
as if executed in th e mode prescribed by th e law of this S tate, pro
vided, said last will an d testam ent is in w riting and subscribed by
the testato r; and if th e testa to r was originally domiciled in M aryland,
although a t th e tim e of m aking th e will or a t th e tim e of his death
he m ay be domiciled elsewhere, th e said last will or testam entary
instrum ent so executed shall be adm itted to probate in any orphans’
court of th is S tate; and when so adm itted shall be governed by and
construed and interpreted according to th e law of M aryland, w ithout
regard to th e lex domicilii, unless th e testa to r shall expressly declare
a contrary intention in said will or testam en tary instrum ent. No
will, testam ent, codicil, or other testam entary paper shall be subject
to caveat or other objection to its validity after th e expiration of one
year from its probate. W hen a person is unheard of for above seven
S Y N O P S IS O F
T H E L A W S O F M A SSA CH U SETTS
RELA TING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised by V almorb O. Cote, A ttorney,
412-414 Kim bell Building,
N orth Adams, Mass.
(See C ard in A ttorney’s List)
A ccord a n d S a tis f a c tio n . An accord is an agreem ent whereby
one of th e parties undertakes to give or perform, and the other to
accept in satisfaction of a claim, liquidated or in dispute, and arising
either from contract or from to rt, som ething other th a n or different
rrom w hat he is or considers himself entitled to ; and a satisfaction is
the execution of such agreem ent.
Where th e claim is undisputed, and is settled only in p art, such
Part paym ent is w ithout consideration and th e balance can be collected,
ihls, however, can be rem edied by taking a release under seal which
Purports a consideration in full settlem ent of th e entire claim. In
order to tak e advantage of a suit pending in court because of accord
and satisfaction, it m ust be specially pleaded in th e defendant’s answer.
However, in case of a disputed claim, th e acceptance of a smaller
•um In lieu of th e entire claim is a valid consideration and therefore
*» a full release on th e entire claim.
Accounts. Ex p arte affidavit on claims and accounts is of no
I ! * ’ T h e y m ust be established by evidence produced in court
alter suit brought either by testim ony, deposition, or other m aterial
evidence.
Acknowledgm ents a n d Deeds. Acknowledgments m ay be m ade
in *°re any justice of th e peace, notary public or special commissioner
"he State; when th e acknowledgm ent is m ade by any person withthis State and w ithin any other state, territo ry or district of the
united States, it m ay be m ade before any officer of such state, te rri
f y or d istrict authorized by th e laws thereof to take the proof and
JhKhowledgment of deeds, and when so taken th ere shall be attached
:P tae certificate of acknowledgm ent a certificate of the secretary of
toe state or territo ry in which such officer resides, under the seal of the
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2005
sta te or territory, or a certificate of the clerk of a court of record of such
state, territory or district, in th e county in which such officer resides,
under seal of said court, certifying as to th e authority, of such officer
to take acknowledgments and as to th e genuineness of his signature.
In deeds where th ere is m ore th an one grantor, th e acknowledgm ent
of one of them is sufficient. Official taking acknowledgm ent on in
strum ents relating to real p roperty and to be recorded, m u st sta te
date of expiration of his commission before i t can be accepted for
recording.
N o separate acknowledgm ent of wife joining in a release of dower
necessary. Conveyances of land are m ade b y deed under seal executed
by th e grantor or atto rn ey having a u th o rity therefor. Original
power of atto rn ey to execute sealed instrum ent m ust be sealed; to
sign deed or instrum ent requiring acknowledgm ent power of a t
torney m u st also be acknowledged and recorded w ith th e deed or
instrum ent. A conveyance in fee, for life or a lease for a term ex
ceeding seven years, shall n o t be valid, except as against th e grantor
and persons having actual notice of it. unless recorded in th e county
registry district in which th e real estate is situated. Deeds should be
under seal. N o subscribing witness is. necessary. Release of dower,
hom estead and other interests m ust be explicitly sta te d in deed,
body of deed m ust sta te th a t p a rty releasing is th e wife or husband of
grantor, for identification as such, wife’s or husband’s joining in deed
m erely, being insufficient. H usband and wife m ay m ake convey
ances of real estate to each other except by w ay of m ortgage, as if
unm arried, b u t no such Conveyance shall have any effect, either in
passing title or otherwise, u n til th e deed describing th e property to be
transferred is duly acknowledged and recorded in th e registry of
deeds for th e district where th e land lies. Any interest in real estate
m ay be transferred by a person to him self jointly w ith another per
son or persons in th e sam e m anner in which it m ight be transferred
by him to another person, except a conveyance to him self an d his
wife as tenants by th e entirety. N o interest in land except an estate
a t will can be created except by instrum ent in w riting and acknowledged
or by operation of law.
A ctio n s. T here are three classes of actions: contract, to rt, and
replevin. Actions a t law are begun by w rits issued in blank form by
the clerks of the several courts. No declaration need be inserted in
the writ, except In cases of arre st on mesne process or of an a tta c h
m ent of a vessel. Suits in equity are begun by filing a bill of com plaint
with th e Clerk of th e Superior C ourt upon which a subpoena or order
of notice is issued by th e clerk of th e court, or b y original w rit as a t
law where no im m ediate relief by restraining or m andatory order or
injunction is sought. Actions begun by trustee process m u st be
brought in th e country or d istrict in Which th e tru stees or one of them
resides or has his usual place of business. (See T rustee Process, infra.)
A d m in is tr a tio n of E s ta te s . A dm inistration or probate is to be
taken out in county where deceased last resided. Executors or adm in
istrators are required to give a bond of about double th e value of the
personal estate. An executor will be exem pt from giving sureties if
testa to r so directs and all heirs-at-law and next-of kin assent to same.
An adm inistrator will be exem pt if all persons interested in this S tate
except creditors consent. In case a non-resident is appointed ex
ecutor or adm inistrator, he m ust appoint a resident agent. T here are
public adm inistrators in each county to whom adm inistration is
granted upon estates of persons who die in testate leaving property,
and not having any husband, widow, or heir in this S tate. Ancillary
adm inistration m ay be granted upon th e estate of a non-resident who
dies leaving property in this S tate. E very adm inistrator and executor
shall file an inventory w ithin three m onths. N otice of a debt, and
dem and for its paym ent should be given to an executor or adm inis
tra to r w ithin six m onths after his appointm ent and th e debt should
be paid after six m onths and w ithin one year of th e appointm ent.
No su it can be brought by a creditor against an executor or adm inis
tra to r w ithin six m onths after his giving bond, except on a claim n ot
affected by the insolvency of th e estate. No su it can be brought
against an executor or adm inistrator a fter one year from tim e of his
giving bond, unless hie has received new assets after the expiration of
th e one year, or unless fu rth er tim e is allowed by court, and in either
event, unless the estate is still open and th e executor or adm inistrator
has n ot been discharged. A creditor whose claim does n ot accrue
w ithin the one year m ay cause assets to be reserved to answer to his
claim. W hen th e estate is insufficient to pay all claims, th e executor
or adm inistrator shall represent th e estate insolvent and commissioner
will be appointed to receive proof of claims, or th e C ourt m ay receive
and act upon th e claims. Claims for funeral expenses, last sickness,
and charges of adm inistration, are priority claim s in insolvent estates.
E xecutors and adm inistrators shall render an account a t least once
a year.
A lien s have th e sam e rights and liabilities as citizens do, only
so, during th e continuance of peace between th e country of the alien
and our own country. W hen w ar exists betw een th e respective
nations, th e alien cannot sue but m ay be sued by a citizen of this
country. O rdinarily contract rights are suspended during th e oper
ation of war unless th e alien is within our territory, th en he m ay be
sued as above stated.
A rre s t. R ight of arrest exists irrespective of domicile of either
p arty . T he debtor m ay be arrested and imprisoned on execution
after th e sam e is obtained, if th e execution is not otherwise satisfied,
and th e debtor has property which he conceals and fails to surrender
to his creditors, and he fails to m ake a fair and full disclosure of his
property and his ability to pay money in reference to th e debt owed
by him, after th e creditor has cited him in th e D istrict C ourt where
Supplem entary Process is had, and after th e exam ination by the
creditor or his attorney it is found th a t he has money or property and
won’t pay, th en th e Judge m ay order weekly paym ents or place th e
debtor in jail for contem pt of court by reason of his failure to obey
th e court orders generally. If no assets are discovered th e debtor will
be discharged and th e proceedings dismissed. T he creditor may,
one year from date thereof, cite th e debtor into court once again and
examine him anew as to his assets, property, and ability to pay on the
debt.
A s sig n m e n ts for benefit, of creditors. A voluntary assignm ent to
trustees for benefit of creditors can not be avoided by creditors who
assent thereto, except by proceedings in bankruptcy begun within
four m onths or by proof of fraud* If there is property in excess of
the claims of creditors who have assented, the excess ip hands of the
trustee can be reached by trustee process. As a m atter of procedure
th e assignee usually w aits th e full four m onths from date of assign
m ent before m aking distribution am ongst assenting creditors.
W h e r e C l a im s A r e A s s i g n e d .
The assignee, a t com m on law, by
virtue of th e assignm ent could sue on th e contract, b u t only so in
th e nam e of his assignor where no w ritten assignm ent appeared.
B y S t a tu t e .
I f th e assignm ent is evidenced by a w ritten docu
m ent, th en by virtue of th e s ta tu te hereon, th e assignee has an election
of remedies, to wit, sue in his own nam e, or in th e nam e of his assignor,
on th e contract so assigned.
An assignm ent is considered a legal chose in action, and th e assignee
m ay prove a claim in bankruptcy in his own right and nam e, provided
th e assignm ent is m ade prior to th e institution of b ankruptcy proceed
ings, subject, however, to all defences and to all rights of counter-claim ,
recoupm ent, or set-off to which th e debtor would have been entitled
if th e action had been brought by th e assignor. T he assignee's
rights and liabilities are those of th e assignor purely, and it should be
rem em bered th a t th e assignee is not considered as a holder in due course
of trade, as a holder of a negotiable instruinent. T he assignee steps
into th e shoes of th e assignor and all personal defences available against
th e assignor are good as against th e assignee.
W h ere W a g es A r e A s s ig n e d .
By virtue of S tatu te, future wages
of a person m ay be assigned for a period of two years from th e date
of th e assignm ent only, and it shall be valid to all intents and pur
poses, if th e docum ent is form ally executed, th e consideration shown
in a p t words, rate of interest, signed by th e parties thereto, and a copy
delivered to th e assignor by th e assignee. T hree-fourths of the weekly
wages of th e assignor shall be exem pt from assignm ent and no assign-
2006
B A N K I N G A N D C O M M E R C IA L L A W S— M A SS A C H U S E T T S'
m ent »hall be valid which does not so sta te on Its face. N o such
assignm ent shall be valid when m ade by a m arried m an unless th e
w ritten consent of his wife is attached thereto. Assignment n ot valid
unless copy thereof is delivered to assignor by assignee a t th e date of
execution of sam e. A standard form of assignm ent m ay be found in
Chap. 154 of th e General Laws. Assignm ent m ust be in standard
form : N o t valid unless accepted in w riting b y th e em ployer of
assignor.
‘
F u tu r e E a r n e d W a g e s m ay be assigned for a period of only one
year, where th e assignm ent is given as security for a loan of money
less th a n $300 in am ount. T he employer m ust accept th e order of
th e assignm ent by a w riting attach ed to th e assignm ent and recorded.
I f th e assignor is m arried, th en it is necessary to a valid assignm ent
o f his wages th a t th e wife by w ritten consent agrees to th e assignm ent
an d such w ritten consent m ust be attach ed to th e assignm ent. Ten
dollars of th e assigned wages m ust be exem pt an d m ust be so sta te d on
th e face of th e assignm ent when recorded in order to be valid.
N o t i c e to T h i r d P e r s o n s o r C r e d ito r s W h e n .
U ntil th e assign*
m ent is placed on record a t th e C ity H all, m th e office of th e C ity
C lerk or Town Clerk, in th e place where th e assignor lives, or if he is
a non-resident of th e S tate, th en in th e city or tow n where he is em
ployed. to be effective against attaching creditors.
N o assignm ent of fu tu re earnings shall be valid against a trustee
process unless before service of th e w rit on th e alleged trustee, the
assignm ent has been duly placed on record where th e assignor resides
a t th e tim e of such record.
A tta c h m e n t. All real estate, goods, and chattels n ot exem pt,
m ay be taken in attach m en t on the original w rit and held as security
for judgm ent, except th a t lands and tenem ents can not be attached
in suits involving less then $20, exclusive of interest and costs. A t
tachm ents m ay be m ade in suits by or against non-residents as well
as in suits b y or against residents. A fter attach m en t of property of
a non-resident on an original w rit, if service cannot be m ade on
defendant, affidavit m u st be m ade of th a t fact to c o u rt; court then Issues
order of notice for service on non-resident by publication. N o bond
is required to m ake an attachm ent. E xcept th a t attaching officer m ay
require plaintiff to give him a bond to protect him in an attach m en t
of p ersonal.property. Shares of stock in corporations cannot be
attach ed except by bill in equity. A ttachm ent of shares of stock
is n o t valid against a bona fide transfer although n ot recorded in book
or corporation. D ebtor m ay dissolve attach m en t by furnishing bond
w ith sureties to pay judgm ent obtained or value of property attached
determ ined by appraisal. T his is so in all except cases of attachm ent
in cases in rem . D ebtor against whom judgm ent is rendered m ay be
subjected to sworn exam ination touching th is property under the
Supplem entary Process S tatute. An attach m en t is dissolved by
death of th e defendant if adm inistration is granted upon his estate
upon application m ade w ithin one year a fter his death. Levy m ust
be m ade on execution obtained by attach m en t on real estate within
30 days from d ate o f judgm ent. I f n o t levied upon w ithin th a t
tim e new seizure m ust be m ade on th e execution, interest seized to be
as of d ate of new seizure, subject to intervening encum brances or
attachm ents.
A ttach m en t of m otor vehicle registered in M assachusetts on
m esne process in contract action m u st be consented to by endorse
m en t on w rit, by justice of co u rt where action is commenced.
Keeper of attach ed personal p roperty can be appointed only by
perm ission of C ourt issuing w rit, perm ission to be endorsed on w rit.
I f seizure is m ade on an execution, officer m ay appo int keeper w ith
o u t perm ission of court, b u t costs of keeper discretionary w ith court
if p oint is raised.
B a n k s. The banking business is extensively regulated by sta tu te .
In general, savings banks, co-operative banks, tru s t companies, or
other corporations or persons doing banking business in M assachusetts
are subject to supervision of commissioner of banks. (General Laws,
ch. 167, ch. 168, ch. 169, ch. 170, ch. 172) and am ended by C hapter 349
of th e Acts and Resolves of th e Commonwealth year 1934. N o foreign
banking association or corporation shall tran sact business in M assachusetts u n til it has received certificate from board of bank incor
poration. For extensive provisions relative to Savings Banks, see
Gen. Laws, ch. 168, 1932 T . E d. and its num erous am endm ents
since 1932•
Savings banks m ay tak e m ortgages for tim e loans u p to 6 0 % of
value of real estate for periods of from 3 to 2 0 years, if quarterly pay
m ents on principal, am ounting annually to 2 % of th e original loan, are
required. Up to 7 0 % of value if quarterly principals are required to
3 % a n n u a lly of original loan, n o t to exceed $ 2 5 ,0 0 0 .
Emergency Law, passed M arch 24, 1939, m akes ineligible for sav
ings banks, and savings departm ents of other banks, bonds or other
securities of railroad companies which, as shown by its reports to th e
I. C. C. has failed to earn a n et income as defined by th e Commission
for 3 of th e 5 fiscal years next preceding d a te of investm ent.
T he tru s t com pany is the prevailing form of banking institution.
Fifteen or more persons associating by w ritten agreem ent m ay, upon
compliance w ith sta tu te, become a tru s t com pany. A greem ent of
association m ust set forth corporate nam e, purpose, city or town in
M assachusetts where business is to be transacted, am ount and classes
of its capital stock and num ber of shares into which it or any class is
to be divided. N otice of intention to form tr u s t com pany shall be
given to board of bank incorporation, and such notice m ust be p u b
lished. Unless th e board issues a certificate th a t public convenience
and advantage will be prom oted by establishm ent of such a tru st
com pany, no furth er Droceedings shall be had, b u t after one year the
application m ay be renewed. A fter th e first m eeting of th e sub
scribers th e clerk and m ajority of board of directors execute in dupli
cate articles setting forth copy of agreem ent of association, nam es of
subscribers and nam es and residences of officers, date of first meeting
and successive adjournm ents thereof, if any. "When th e whole capital
stock has been issued, a new list of th e stockholders, w ith th e name,
residence and post-office address of each, and th e num ber in each class
of shares held by each shall be filed w ith th e Board of Bank incorpora
tions, which list shall be verified by th e Clerk of th e Corporation. T he
articles are filed w ith th e secretary of state, w ith filing fee of one twen
tieth of 1 per cent of capital stock, and certificate of incorporation
issues. Before business can be commenced a certificate authorizing
such m u st be obtained from board of bank incorporation. (Gen.
Laws, ch. 172, section 11). A director of tr u s t com pany m ust hold
a t least capital stock of a par value in th e aggregate of not less th an
$ 1 ,000 , th e sam e to be unpledged, and m ajority of directors m ust be
citizens of and resident in M assachusetts. Except in sm aller m unic
ipalities capital stock of tru s t com pany m ust be n ot less th an $ 200 ,0 00 ;
shares par value of $100 each. E ntire capital stock m ust be paid in
in cash. T he former double liability of th e common stockholders of
tr u s t com panies has been elim inated. Commissioner of banks nas
extensive power to require retu rn s and to supervise and examine.
Savings d ep artm ents m ay be established, and are governed by laws
as stric tly was savings banks. T he kinds of business which m ay be
done are prescribed b y s ta tu te w ith considerable detail. By A ct of
1939, Ch. 244, requirem ents for establishm ent of tr u s t com pany
branches have been lightened. R equirem ents also lightened for bank
tak in g over a tr u s t com pany as a branch.
B anks m ay pay to a m inor funds deposited in his nam e, unless in
violation of w ritten agreem ent to which bank is a p arty.
Em ployees or officers of a bank are liable to fine or im prisonm ent
If th ey receive a deposit knowing th a t such bank is insolvent.
An Em ergency Law was also enacted and approved M ay 12, 1932,
Incorporating T he C entral C redit Union F und Inc. for th e purpose
of a relief m easure necessary for th e im m ediate preservation of th e
public convenience. By assisting such C redit Unions as become
m em bers thereof, when they are tem porarily in need of cash or hold
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investm ents which cannot be readily liquidated, b y m aking loans
to them or any or them , and it shall have th e rights an d powers and
be subject to th e duties and obligations hereinafter provided In
Sections 2 to 7 of th is act. Refer to C hapter 216 of th e Acts and
Resolves of M assachusetts 1932. By-laws of credit unions m ay under
certain conditions provide for release of endorser on d eath of borrower
in personal loans. Fund, Inc. m ay become m em ber an d invest in
shares of M ass. C redit Unions.
■ _ __ . „
An Em ergency Law was enacted and approved M arch 2, 1932,
creating T he Co-operative C entral Bank, m aking all T he C o-operative
Banks now established under th e laws of th e Com m onwealth and
subject to th e provisions of C hapter 170 of th e General Laws, member
banks thereof as provided in C hapter 45, Sections 1 to 11.
U ntil M arch, 1941, Co-operative banks m ay borrow from any
source for specific purpose of securing funds to m ake real estate loans.
E xpected to be extended a t 1941 m eeting of Legislature.
T he purpose of th e central bank was to prom ote th e elasticity and
flexibility of th e resources of th e co-operative banks of th e common
w ealth by centralizing their reserve funds; by Act of 1934 am ended
by A ct of 1938, C entral B ank establishes fund for insurance of shares
of m em ber cooperative banks.
T he deposits by th e m em ber banks, together w ith an y surplus
which m ay hereafter be accum ulated by th e central bank, shall
constitute its capital structure.
'
T he central bank shall be exem pt from all S tate an d local taxation,
except in respect to any real e sta te owned and, or used by it for its
corporate purposes.
„
. , _ . „ .
An Emergency Law was passed and approved M arch 2, 1932,
creating T he M utual Savings F und Inc. for th e purpose of pro
tecting deposits in Savings Banks, as provided in C hapter 44, Sec
tions 1 to 9 of th e 1932 Acts and Resolves of M assachusetts. The
enactm ent of th is law will enable th e C orporation to assist such
m em ber banks when they are tem porarily in need of cash or hold
investm ents which cannot readily be liquidated, by m aking loans to
them or any of them secured b y th e pledge of m ortgages or other
securities legally held by such m em ber banks. Any savings bank
hereafter established during said term under th e au th o rity of said
C hapter 168 shall upon its organization become a m em ber bank.
Banking corporations and M orris plan banks doing business under
special banking certificate granted by a u th o rity of Ch. 172A added
by A ct of 1935, are under supervision of commissioner of banks.
Such Haniring companies m u st fulfill requirem ents of special act as
to capital and as to population of place where business place is located;
law gives such banking com panies broad banking powers. Loans by
com m ercial d epartm ents of tr u s t com panies for term of more than
3 years, m ust provide for 2 % annual repaym ent of principal, to com
mence n o t less th a n 2 years after d a te of note.
B ills a n d N o te s. T he law of negotiable instrum ents Is governed
by the Negotiable Instrum ents Law, as am ended, where applicable;
in other cases by th e law m erchant. A person becoming a party
to a non-negotiable prom issiory note payable on tm e, by signature
In blank on the back thereof, is entitled to notice of non-paym ent
same as an indorser. A depositary of funds, subject to withdrawal by
check or dem and d raft m ay pay a check or dem and d raft drawn on
It by a depositor having funds on deposit to pay same, notwithstanding
his death, upon presentation w ithin ten days after its d ate. I f waiver
of dem and, presentm ent p ro test and dishonor is intended by endorser,
this m ust appear above his endorsem ent. Recent Suprem e Court
decision holds th a t if such w aiver by more th an one endorser, words
m ust appear and be repeated over th e signature of each endorser or
words above first endorsem ent m ust clearly sta te th a t each of th e en
dorsers so waives.
P ro test of bill, note or order duly certified by n o tary public under
his hand and official seal is prim a facie evidence of facts, stated in
such protest and of giving notice to draw er or indorser.
T here are various sta tu to ry provisions bearing upon th e validity
of th e notes of m unicipalities of this Com m onwealth. W here a nego
tiable instrum ent is not payable on dem and, presentm ent m ust be
made on the day it falls due. W here it is payable on dem and present
m ent m ust be m ade w ithin a reasonable tim e after its issue.
An accom m odation p arty to a negotiable Instrum ent is liable thereon
to a holder in due course notw ithstanding such holder a t th e tim e or
taking the instrum ent knew him to be only an accom m odation party.
W hen the day, or the last day, for th e perform ance of any act, includ
ing th e m aking of any paym ent or tender of paym ent, authorized or
required by sta tu te or by contract falls on Sunday or on a legal holi
day the act m ay be perform ed on th e next succeeding secular or busi
ness day, unless it is specifically authorized or required to be performed
on Sunday or on a legal holiday.
E very negotiable instrum ent is payable a t th e tim e fixed therein
w ithout grace, except th a t three days of grace shall be allowed upon a
d raft or bill of exchange m ade payable within M assachusetts a t sight
unless there is an express stipulation to the contrary. W here the day,
of m atu rity falls upon S aturday, Sunday, or a holiday, instrum ent is
payable on next succeeding business day which is n ot a Saturday.
Instrum ents payable on dem and m ay, a t option of holder, be presented
for paym ent before twelve o’clock noon on Saturday when th a t entire
day is n ot a holiday; provided however th a t no person receiving any
check, draft, bill of exchange or prom issory note payable on demand,
shall be charged w ith any neglect or omission of d u ty or incur any
liability, for not presenting for paym ent or acceptance or collection
such check, draft, bill of exchange, or promissory note on a Saturday;
provided also th a t th e sam e shall be duly presented for payment,
acceptance, or collection on th e next succeeding business day.
U nder certain circum stances the original nam ed payee of order
paper m ay be a holder in due course.
Law allows only tw o days for “m aking good” bad checks after
receipt of notice. Failure to p ay w ithin th a t tim e is prim a facie
evidence of in ten t to steal or defraud.
N o bank shall be liable to a depositor, or to th e draw er of a bill of
exchange upon the bank, for an am ount charged to or collected from
him on account of paym ent by such bank of a negotiable instrument
upon which the signature of any p a rty is forged, or which is made,
drawn, accepted or indorsed w ithout authority, or which is materially
altered or the am ount of which is raised; unless within one year arter
return of such negotiable instrum ent to such depositor or drawer,
he shall notify the bank in writing th a t, as the case m ay be. the instru
m ent was m ade, draw n accepted or indorsed w ithout authority, tna*
signature of a p arty to instrum ent is forged, or th a t instrum ent nas
been m aterially altered, or th a t th e am ount has been raised.
B ills of L a d in g . T he so-called Uniform Bills of Lading Act Is In
force, and has been held constitutional by the Supreme Judicial
C ourt. A bill in which it is stated th a t th e goods are consigned or
destined to a specified person is a non-negotiable or straight bill. A
bill in which it is stated th a t th e goods are consigned or destined to
the order of any person nam ed in such bill is a negotiable or order Din.
A non-negotiable bill cannot be negotiated, and indorsem ent of sucn
a bill gives transferee no additional right. A negotiable bill m a y ne
negotiated by Indorsement of person to whose order goods are deliv
erable by tenor of bill. Such indorsem ent m ay be Id blank or to »
specified person. I f indorsed to a specified person it m ay be nego
tiated again by the indorsem ent of such person in blank or to anotner
specified person. Subsequent negotiation m ay be m ade in like man
ner. A negotiable bill m ay be negotiated by any person in possession
of same, however such possession m ay have been acquired lr, oy
term s of the bill, th e carrier undertakes to deliver the goods to in»
order of such person, or if a t tim e of negotiation bill is In such rorm
th a t it m ay be negotiated by delivery. Indorsem ent of bill does no*
m ake Indorser liable for any failure on p a rt of carrier or previous in
dorsers of th e bill to fulfill their respective obligations. Any pr«*
vision in an order bill th a t it is non-negotiable shall be void.
B A N K I N G A N D C O M M E R C IA L L A W S— M A S S A C H U S E T T S
B ills o f 'S ale. A bill of sale of personal property intended for
security m ust be recorded, the recording provisions as to m ortgages of
personal property being applicable. See C hattel M ortgages. Ch. 255
of General Laws.
B lu e Sky Law . Acts of 1921, ch. 499. approved M ay 27, 1921,
entitled Prom otion and Sale of Securities. A ct does not apply to con
tracts valid and effective before act became effective. C ertain secur
ities are exem pted. Act defines a t length w hat is m eant by security
and sale. Persons dealing in securities within operation of act m ust
be registered and inform ation specified m ust be furnished Public
Utilities Commission. C ertain classes of sales and certain securities
are exem pted from operation of Act. A nnual license fee for broker,
$50, for salesman, $ 2 , Act does n ot lim it any sta tu to ry or common
law rig h t of an y person to sue civilly or right of sta te to punish for
violation of any law. Commission has power of inquiry, of sum m on
ing witnesses and of suspending certain sales. Act has im m unity
provisions. Violation of a c t punishable b y fine of not more th an
$5,000 or im prisonm ent n ot more th an tw o and one-half years or
both.
Scope of law extended by Acts 1924, ch. 487, which should be
consulted.
C h a tte l M o rtg a g e s. C hattel m ortgages m ust be recorded in the
records of the city of town where the m ortgagor resides when the
mortgage is m ade, and in the city in which he then transacts business,
every mortgage, m ust be recorded within fifteen days of the date,
until recorded the mortgage is not valid except between the parties
and record subsequent to tim é lim ited is void. If m ortgagor resides
in own city or town and m ortgaged personal property is located or
kept in another, record m ust also be m ade in city or town where prop
erty then is.
If record in two places is required, and m ortgage
is recorded in one place w ithin fifteen days, it m ay be recorded in
other place w ithin ten days afte r date of first record. The m ortgage
shall n o t be valid as against a person other th an the parties thereto
until so recorded.
A m ortgage of after-acquired property Is good as against an a tta c h
ing creditor where possession of th e after-acquired property is obtained
before attach m en t thereof is m ade and subsequently retained by the
mortgagee. A m ortgage is good, however, between th e parties,
thereto, although unrecorded and no actual or constructive delivery
of th e property takes place. M ortgage does not cover after-acquired
personal p roperty unless m ortgage has adequate provision, including
“after-acquired p ro p erty .”
A C h attel M ortgage m ay be foreclosed by notice delivered per
sonally or by publication, and notice w ith proof thereof m ust be
recorded where th e m ortgage was recorded. After sixty days, th e
foreclosure becomes com plete if th e condition is not performed.
C h attel M ortgages m ay be assigned. Assignment should be recorded.
Upon perform ance or th e conditions therein contained th e m ort
gagor is entitled to a release.
W here th e m ortgagor defaults, th en th e mortgagee m ay sell th e
goods a t public auction by giving notice, in accordance with th e tim e
as specified in th e mortgage, or advertising sale for three successive
weeks in a local newspaper in said C ity or Town. T he proceeds of
the sale are applied to repay all sum s secured by th e m ortgage and
all costs and expenses incurred by reason of the sale. T he surplus,
if any. shall be forthw ith paid to th e m ortgagor.
C o n d itio n a l S ales of personal property are valid in this Juris
diction and th e vendor m ay retain title for th e unpaid purchase price
therefor. I t is usually a w ritten form al docum ent. It need not be
recorded and will be good generally as against an attachm ent of th e
property in th e hands of th e conditional vendee, excépt by special
statute. Lien notes, an d conditional sales contracts providing th e
paym ents already m ade shall be forfeited or considered as ren tal of
property, are void in M assachusetts.
Where th e sale of personalty consists of household furniture, or
other household property, then if title still rem ains in tne vendor till
the last paym ent has been m ade, th e vendee m ust be given th irty
days notice in writing by th e vendor as to th e breach of condition of
sale before th e goods or furniture can be repossessed, and also attached
thereto by th e vendor to said w ritten notice m ust be an item ized
statem ent showing am ount due. I f fifty per cent of th e purchase
price has been paid on th e contract when th e vendee so requests,
the vendor m ust sell th e goods a t public auction and the proceeds
shall pay th e vendor his balance due, and any surplus over and above
this shall forthw ith be paid to th e vendee.
To be valid, copy of conditional sale contract of furniture or house
hold property m u st be delivered by vendor to conditional vendee a t
the tim e of th e sale.
. Acts of 1937, ch. 112 require recording of notice of conditional
sale of elevator ap p aratu s or m achinery for validity as against m ort
gagees, purchasers or grantees of real estate. This includes heating
apparatus or o ther ap p aratus which the vendor wishes to keep separate
from th e realty. Vendor m ust also (Acts 1937, ch. 245) record date
of final paym ent w ithin 90 days and a sworn statem ent of the account
and nam e of second owner of th e real estate.
Acts of 1937, ch. 315 require vendor of household furniture.
Jewelry, etc., on conditional sale, to em body all articles sold in a single
written contract. Requires such vendor to note all paym ents w ith
remaining balances, on th e note, contract or receipts. Requires all
finance charges to be inserted in advertisem ents offering conditional
sales. Penalty, fine $100 to $500. Effective August 16,1937.
C o n d itio n a l S ales C o n tr a c ts of personal p roperty simplified and
additional safeguarding of interests of vendors, see Ch. 509, A cts of
1939, too lengthy to be sum m arized. T his A ct m akes void certain
contracts which do n o t com ply w ith new law and fu rth er imposes
penalties for violation. C om petent counsel should be taken before
any such contracts are discounted or assigned. W hile law is sim pli
fied, it is m ade clear and in some respects m akes im portant changes
too num erous to be set o u t here. Consult counsel.
C o rp o ra tio n s. By special a c t of 1903, chapter 437, the law of
business corporations was revised and as am ended, and now codified
in General Laws, applies to all corporations organized in this common
wealth for the purpose of carrying on business w ithin the common
wealth for profit, except the following: Banks, savings banks, co
operative banks, tru s t companies, surety or indem nity companies,
safe deposit companies, insurance companies, railroad or street railway
companies, telegraph or telephone companies, gas or electric light,
heat or power companies, canal, aqueduct or w ater companies, ceme
tery, or crem atory companies, or any corporation which now have or
may hereafter have th e right to take or condemn land, or to exercise
franchise in public ways, provided th a t corporations, formed for
purpose of dealing in real estate shall sta te the term of the duration
of the corporation, such term n ot to exceed fifty years.
Tnree or m ore persons m ay associate together and form a corporation
for carrying on any lawful business not included in the above provisions
Such a corporation m ust have a capital of not less than $ 1 ,000 , if
having shares only w ith p ar value. Shares w ith par value m ust be
of par value of a t least $1.00. T here is no m axim um lim it. Business
corporations m ay create shares of stock w ith or w ithout par value,
and corporations w ith stock w ith p ar value m ay, by appropriate
proceedings, change such stock to stock w ithout p ar value. T he
stock m ay be divided into two or m ore classes w ith such preferences,
voting power restrictions and qualifications as m ay be fixed b y th e
agreement of association. U pon due organization of th e associ
ates and filing a copy of th e agreem ent of th e association and articles
of organization w ith th e commissioner of corporations and on
Payment of a fee of one-tw entieth of 1 per cent of to ta l am ount of
authorized capital stock w ith p ar value, and five cents per share
lor all authorized shares w ithout p ar value, b u t in no case less th a n
®50, a certificate of incorporation is issued by th e secretary of state,
l he capital stock m ay be issued for cash, property, tangible or in
tangible services or expenses, b u t n o t for notes. T he am ount of
capital stock m ay be increased from tim e to tim e. T he corporation
must have not less th an th ree directors, president, clerk and treasurer,
th e directors, treasurer, and clerk are elected by th e stockholders,
th e president is chosen by and from th e board of directors. T he clerk
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m ust be a resident of th e com m onwealth. M eetings of stockholders
m ust be held within the com m onwealth, b u t directors m ay m eet
within or w ithout the commonwealth. Voting by proxy is per
m itted, b u t no proxy d ated more th an six m onths before th e
meeting nam ed is valid. Any corporation m ay hold, purchase, con
vey m ortgage or lease such real or personal property as the purposes
of th e business m ay require. One stockholder holding 1/10 interest
can compel calling of special m eeting of stockholders of business
corporation. I f proper corporate officer refuses to call m eeting,
three or more stockholders holding in th e aggregate 1 - 1 0 th e interest
m ay apply to justice of th e peace to issue w arrant to one of appli
cants to call such a special or other legal m eeting.
Every such corporation is required to file an annual report of its
condition, and if its capital stock is over $ 10 0 ,000 , shares w ithout par
value being taken as of $ 10 0 in value, to file a w ritten statem ent
under oath by an auditor. I t is also required to m ake an annual
return to the tax commissioner.
E very foreign corporation which has a usual .place of business
here, or Is engaged here perm anently or tem porarily in th e construc
tion, erection, alteration or repair of a building, bridge, railroad, rail
way or structure of any kind, shall before doing business here appoint
the commissioner of corporations, its attorney for the service of proc
ess, such authority to continue as long as any liability rem ains out
standing against it in this commonwealth, and shall file with the
commissioner of corporations a copy of its charter, articles or certifi
cate of incorporation, by-laws, and a certificate setting forth its
name, location of principal office, nam es and addresses of its officers,
date of its annual meeting, am ount of its capital stock authorized and
issued, the num ber and p ar value of its shares, the am ount paid
thereon, and details o f any paym ent thereof not m ade In m oney.
Such corporations are required to file annual statem ents with th e
commissioner of corporations showing their condition. I f it falls to
file a copy of th e charter, by-laws, etc., as above, it cannot m aintain
any action started by it in any court in this S tate. T his has to be
pleaded by a Plea in A batem ent, or m ay be otherwise specifically
pleaded, in each action, by th e defendant, if he, or it wishes to set up
such a defense against the action or su it brought by such a corporation.
C o u r ts . Term s and Jurisdiction. T rial justices m ay severally
hold courts within the counties for which they are appointed, and
shall have original jurisdiction, exclusive of th e superior court, of all
actions, of contract, to rt, or replevin, where th e deb t or dam ages
dem anded or value of the property alleged to be detained does n ot
exceed S10 0 , and concurrent jurisdiction with the superior court of
such actions where such am ount exceeds $100 and is less th an $300.
D istrict courts m ay in their respective counties have original juris
diction, exclusive of th e Superior C ourt, of actions of contract, to rt
or replevin, in which th e debt or dam ages dem anded or th e value of
th e property alleged to be detained does n ot exceed $ 10 0 and have
original and concurrent jurisdiction with the Suprem e C ourt of actions
of contract, to rt replevin in which th e d eb t or dam ages dem anded or
th e value of th e property alleged to be detained is more th a n $ 10 0 .
T he form er lim itation upon th e jurisdiction of district court (of cases
under $3000) has been removed and th e district courts now have con
current jurisdiction w ith th e superior court over all actions of contract
or to rt, w ith no m axim um or lim itation in am ount. T he suprem e
judical court has original jurisdiction in equity m atters and m ay on
appeal hear all m atters of law determ ined by th e probate court, and
determ ine questions arising under wills. Superior court has juris
diction where th e am ount claim ed exceeds $20. M unicipal court of
th e C ity of Boston has jurisdiction concurrently w ith superior court
in th e county of Suffolk, in actions where th e debt does not exceed
$5,000 provided one or more of th e defendants resides or has his
usual place of business in th e county of Suffolk. T he L and C ourt has
exclusive original jurisdiction for registering titles to real estate under
th e Torrens system , and foreclosing tax and m unicipal lien titles under
sta tu to ry provisions. P robate C ourt decree as well as L and C ourt
can vest title in cases involving title to real estate owned b y deceased
person.
The P robate C ourts have jurisdiction over adm inistration of estates
of deceased persons, m atters of adoption, guardianship, conserva
torship, trusts under wills and w ritten instrum ents, petitions for
separate support, and of p artition of land, and divorce. T here Is a
P robate C ourt and Registry of P robate in each county. I t has juris
diction of insolvency cases under sta tu te. In L and Registration Cases,
L and C ourt m ay fix fees of guardian ad litem where m inors involved.
E quity jurisdiction is lodged in the Superior C ourt and In Supreme
Judicial Court. By sta tu te P robate C ourts have jurisdiction in equity
in certain special m atters connected w ith estates and petitions before
th e sam e court.
Small Claim s Procedure. General Laws of M assachusetts, C h a p
te r 218, Section 21, provides for a simple, inform al and inexpensive
procedure, for the determ ination, according to th e rules of substan tiv e
law, of claims in th e n atu re of contract or to rt, other th an slander
and libel, in which th e plaintiff does not claim as debt or dam ages
more th an $50. and for a review of judgm ents upon such claim s when
justice so requires. Small Claims C ourt m ay now defer paym ent or
order paym ent of judgm ent in installm ents and to enforce by contem pt
proceedings. T he procedure is n ot exclusive, b u t is alternativ e to
th e form al procedure for causes begun by w rit. T he m ethod of pro
cedure is very sim ple and does away w ith the requirem ent of attorneys
and enables the creditor to file his own papers in court a t a m inim um
cost. Service is m ade by registered le tte r sent o ut by th e Clerk of
th e D istrict C ourt. T he expense is about $1.25 for each claim.
D eath . Where a person is absent and unheard from for a period
of seven years, said person is presumed to be dead in legal theory.
The estate of such an absentee is administered and held by a receiver
appointed by the Probate Court of the county where he was last
domiciled.
D e p o sitio n s. Taking of such Is governed by sta tu te and rules of
courts. The commission issued to take depositions contains full
Instructions to m agistrate how to proceed.
D e s c e n t a n d D is tr ib u tio n o f P ro p e rty of D e c e d e n ts. After
deducting widow’s allowance and allowances for m inor children,
and paym ent of debts and expenses of adm inistration, the rem aining
personal and real estate 1s distributed as follows: If deceased leaves
no issue, surviving husband or widow shall take $5.000 and one-half
of rem aining real and personal property. T he real estate m ay be
sold to pay th e surviving spouse th e $5,000, if necessary. If deceased
leaves issue, surviving husband or widow shall take one-third of re
m aining real and personal property. If deceased leaves no kindred,
surviving husband or widow shall take whole of rem aining real and
personal property.
I •
A husband on death of wife shall hold for his life one-third of all
land owned by her a t any tim e during coverture, estate known as
tenancy by curtesy. Wife is entitled to low er a t common law. B u t
In th e event of testa te estates, in order to be entitled to such curtesy
or dower election and claim therefor m ust be filed in registry of probate
w ithin six m onths of approval of bond of executor or adm inistrator,
and such election is a waiver of th e interests on real property above
m entioned. P robate C ourt assigns dower or curtesy. R ights of
curtesy which exist on F ebruary 1, 1919, m ay be claimed as above
provided, b u t in such case husband shall tak e no other interest in real
or personal property of wife, and except as above preserved curtesy
a t common law is abolished.
Subject to all the above, the rest and residue of intestate property
Is distributed as follows: 1. In equal shares to children and issue of
any deceased child by right of representation; if there is no surviving
child, then to the other lineal descendants if all are in same degree of
kindred, otherwise by right of representation. 2. If intestate leaves
no issue, then in equal shares to fath er and m other. 3. If no issue
nor m other, then to father. 4. I f no issue or father, then to m other.
5. I f no issue, father or m other, then to brothers and sisters and to
Issue of deceased brothers or sisters by right of representation; if
no surviving brother or sister, then to Issue of such equally if all in
same degree of kindred to intestate, otherwise by rig h t of represen-
2008
B A N K IN G A N D C O M M E R C IA L L A W S— M A S S A C H U S E T T S
tation. 6 . I f be leaves no Issue, no father, m other, brother or sister
or issue of deceased brother or sister, then to n e st of kin in equal
degree, b u t if there are two or m ore collateral kindred in equal degree
claiming through different ancestors, those claiming through nearest
ancestor are preferred. I f intestate leaves no kindred, husband or
widow, estate escheats to commonwealth.
E x e c u tio n s can not issue until tw enty-four hours after judgm ent
rendered, and an original execution m ust be issued w ithin one year
after plaintiff is entitled to sue o ut th e sam e. Original executions in
all courts are returnable within tw enty years; when satisfied in full,
w ithin ten days of d a te of satisfaction of sam e in full.
E x e m p tio n s . H om estead, if recorded, to th e value of $4,000 is
exem pted. N ecessary wearing apparel of fam ily, certain specified
articles of household furniture, and $300 w orth in addition thereto,
library, $50; tools and im plem ents, $ 1 0 0 ; stock, $ 1 0 0 ; boats and
fishing tackle, etc., $ 1 0 0 ; one cow, six sheep, one swine, and tw o tons
o f hay, sewing m achine, pew in church, etc. M aterials and stock
designed an d necessary for carrying on his tra d e and intended to be
used or w rought therein, n o t exceeding $100 in value. Shares in
co-operative associations n ot exceeding $20 in value, funds of railroad
relief societies, assessm ent insurance benefits, uniform s, arm s, and
equipm ents of m ilitia officers.
F a c to r ’s A ct. A factor or o ther agent in tru sted w ith possession
of m erchandise or of bill of lading consigning m erchandise to him with
au th o rity to sell th e sam e shall be deem ed th e tru e owner of such
m erchandise, so far as to give validity to any bona fide contract of
sale m ade b y him. B ona fide consignees from shippers in lawful
possession have liens for advances or securities to shipper. Bona fide
pledges from consignees or factors are also protected.
F ra u d s , S t a t u t e of. N o action can be brought to charge an
executor or adm inistrator as such on a special promise, to charge any
person upon a special prom ise to answer for debt, default or m isdoing
of another, upon an agreem ent m ade on consideration of m arriage,
upon a co n tract for sale of any interest in land, upon an agreem ent not
to be perform ed w ithin a year, to charge a discharged debtor, unless th e
promise, contract or agreem ent or some m em orandum thereof is
signed by th e p a rty or by his authorized agent. N o agreem ent to
m ake a will, or to devise o r to give a legacy is binding unless in writing.
No contract of sale of personal property of $500 or over is actionable
unless th ere is p a rt paym ent, acceptance and receipt of p a rt of the
goods, or some m em orandum in writing signed by p arty to be charged
or his agent.
G ifts b e tw e e n H u s b a n d a n d W ife. G ifts of personal property
and conveyances of real estate, other th a n m ortgages, between husband
an d wife shall be valid to sam e extent as if th ey were sole.
G u a r d ia n s . P robate C ourt m ay now authorize investm ent of funds
of w ard in life insurance endowm ents or an n u ity contracts.
H o lid a y s. T he legal holidays are: Sundays; Ja n u ary 1 (New Y ear’s
D ay ); F eb ruary 22 (W ashington’s b irthday); April 19 (P a trio t’s
D ay ); M ay 30 (M em orial D ay); Ju ly 4 (Independence D ay); first
M onday in Septem ber (Labor D ay); October 1 2 (Colum bus D ay);
N ovem ber 11 (Armistice D ay); T hanksgiving D ay (Last T hursday in
N ovem ber in M assachusetts); December 25 (Christm as D ay); or th e
d ay following when an y of such dates (except L abor D ay) falls on
Sunday.
I n f a n t s . Age of m ajority, m ale and female, is tw enty-one. In fan t
Is liable for his to rts and on contracts for necessaries. H e m ay
repudiate or ratify all contracts after reaching m ajority. During
m inority, he m ay sue by next friend, often called prochain ami.
In so lv e n c y . Insolvency law suspended by N ational B ankruptcy
Act. A cts of B ankruptcy: (1) F raudulent conveyance in order to
hinder, delay, or defraud his creditors; (2) W here insolvent has tra n s
ferred his p roperty to one or m ore of his creditors with in ten t to prefer
him or th em ; (3) W here insolvent has suffered or perm itted a creditor
to obtain a preference through legal proceedings and not having dis
charged such preference a t least 5 days before sale or other disposition
of th e p roperty affected; (4) M ade general assingm ent for benefit of
creditors; (5) Being insolvent applied for a receiver or tru stee of his
property, or because of insolvency, a receiver or tru stee p u t in charge
of his p ro p e rty ; (6 ) A dm itted in w riting his inability to p ay his debts
and a willingness to be adjudged a b a n k ru p t; (7) W hile insolvent per
m itted attach m en t, lien, etc., on his property and has not vacated th e
sam e w ithin th irty days therefrom . (1927 an d 1928 am endm ents.)
I n t e r e s t . Legal ra te is 6 per cent. Loans of less th a n one th o u
sand dollars, interest shall n ot be charged exceeding eighteen per cent.
Sm all loan business ($300.00 or less) m axim um ra te 3% per m onth
on u npaid balances. N o t m ore th an seven per cent can be charged
on bonds issued by corporations. I t shall be lawful to pay, reserve,
co n tract for an y ra te of interest or of discount except as above.
J u d g m e n ts . A judgm ent or decree of a court of record of the
U nited States or of any sta te thereof shall be presum ed to be paid
and satisfied a t th e expiration of tw enty years after it was rendered.
L im ita tio n o f S u its . C ontract express or im plied and n ot under
seal and n o t otherwise lim ited, six years; real actions, those upon an
attested note, if suit is brought by original payee or his executor or
adm inistrator, and personal actions on contracts n ot lim ited, tw enty
years. Absence from th e S tate prevents th e running of the s ta tu te
of lim itations as to a defendant until he comes into the S tate. If
th e person entitled to bring an action is a m inor or is insane or im pris
oned when the right to bring such action first accrues, such action
m ay be commenced within th e tim e hereinbefore lim ited after th e
disability is rem oved. The sta tu te does not run against those residing
o u t of th e S tate, b u t if th e S tate in which debtor resides has a s ta tu te
of lim itations, sam e would ru n against th is d eb t as for an action on
said d eb t where th e debtor resides. See also A dm inistration of
E states.
M a rrie d W o m e n . T he real and personal estate of a m arried
woman, acquired a t any tim e, rem ains her sole and separate property,
n ot subject to the control of her husband, nor liable for his debts.
M arried women m ay carry on trad e or business, m ake contracts, sue
and be sued, in all m atters relating to th eir separate property, and
such contracts are not binding upon the husband. Wife carrying
on business on own account m ust record certificate w ith city or town
clerk; neglect to do this renders her property so employed liable for
husband's debts, and renders husband liable for her debts thus con
tracted .
M a rrie d W o m e n . A m arried woman is also liable jointly with
her husband for debts due to th e am ount of $ 10 0 in each particular
case for necessaries furnished w ith th e knowledge or consent to her
self an d her fam ily where she is possessed w ith property valued a t
$2.0 0 0 or more.
W ork an d labor perform ed by a m arried wom an for a th ird person
other th a n her husband and- children shall be deemed, in th e absence
of an y agreem ent in w riting to th e contrary, to be perform ed on her
sole an d separate account. She m ay pledge her husband's credit
for her sup p ort, b u t m ay also be personally liable for her purchases.
M e c h a n ic ’s L ie n s. Subject covered b y sta tu te . General Laws
Ch. 254.
M o rtg a g e s of B e a l E s ta te . Power of sale m ortgage Is univer
sally used. Foreclosure is regulated by sta tu te , requiring publication
once each week for three successive weeks in sam e newspaper published
in tow n or city where real estate is situated, first publication to be not
less th a n 21 days from d a te of Sale by Public Auction, and sale bars
redem ption. M ortgages m ay also be foreclosed by entry and peace
able possession for th ree years.
P ro b ate C ourt has jurisdiction in equity to issue injunction restrain
ing foreclosure if it w ill hinder proper adm inistration of an estate;
to issue on petition of executor, etc. of th e estate.
Upon paym ent or perform ance of condition, m ortgagee liable in
to r t for all dam ages caused by his neglect or refusal to discharge
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m ortgage w ithin seven days from date of request therefor. Gen.
Laws, C. 183, S. BB. U ntil December 31, 1941, new m ortgages may
be tak en by banks to include overdue interest, taxes etc.
N e g o tia b le I n s t r u m e n t s . T he Uniform N egotiable Instrum ents
Act adopted. (See com plete tex t following “ D igest ef Banking and
Com m ercial Law s.”)
B e a l E s ta te ; F r a u d u l e n t C o n v e y an ces are a ground for civil
arre st generally. An equitable action lies to recover property th at
has been so conveyed fraudulently. Special attach m en t on original
w rit or by order of court m ay be m ade of realty which has been
fraudulently conveyed by a debtor in fraud of his creditors.
A greem ent for sale of real estate m ust be acknowledged. Good for
ninety days only after deed delivery date unless su it brought mean
while to enforce agreem ent.
B e p le v in A c tio n s are th e form s of actions a t law by which a party
can obtain possession of specific goods or chattels unlawfully taken
or wrongfully detained from th e rightful owner or person who is
entitled to its possession. Before th e replevin w rit can be served,
a bond for double th e value of th e p roperty to be replevied m ust be
delivered to the officer before he will proceed to act under th e writ.
S ales o f P e rs o n a l P ro p e rty . Uniform Sales Act adopted in
1908, is now Gen. Laws ch. 106. T here is a Bills of Lading statute,
(Gen. Laws ch. 108), and Gen. Laws ch. 105 relates to warehouse
receipts. As to sales of $500 or over, see F rauds, S tatu te of. Sales
of m erchandise in bulk are fraudulent unless th e provisions of Gen.
Laws ch. 106, sec. 1, are complied w ith. Delivery of a bill of sale is not
constructive delivery of th e goods. D elivery of possession of goods
sold is essential as to th ird persons w ithout notice who purchase same
goods for value, or as to attaching creditors w ithout notice. Vendor’s
retention of possession after sale is prim a facie evidence of fraud.
As to conditional sales, see th a t topic supra.
S t a t u t e s . G eneral revision and consolidation of statu tes, effective
January 1, 1921 under title of G eneral Laws.
S to c k T ra n s fe r. T his subject is covered by Stock T ransfer Act
as codified in G eneral Laws.
S u its . Civil actions in general, except those concerning land (if
one of th e parties lives in the S tate), m ust be brought in the county
where one of them lives or has his usual place of business. But in
lower courts venue depends on residence or place of business of defen
dant. This is so in all cases except those cases involving damages
arising o ut of operation of a m otor vehicle on th e highways of Massa
chusetts; as to these, original jurisdiction of such cases is in District
C ourts, b u t either p a rty m ay rem ove to Superior C ourt. Where
all parties are non-resident, action m ay be brought in an y county.
A ttachm ent of p roperty owned by defendants residing o u t of State
m ay be m ade sufficient to give jurisdiction for a special judgment
in su it after notice published by order of court. Such notice to be
given w ithin one year from th e en try of th e suit. Persons comm orant in S tate m ay also be arrested on m ense process and held to
bail. This, however, can be done only upon special order of court
upon plaintiff’s application for arrest, on a civil debt. A non-resident
plaintiff is usually required to furnish indorser for costs. See also
Actions, supra.
Civil process cannot be served on th e L ord’s D ay, except such
process as m ay be served by publication, in which event same m ay be
puplished in a newspaper published on Lord’s Day.
T axes assessed upon land shall w ith all incidental charges and fees
be a lien thereon from Ja n u ary 1 s t, in th e year of assessment. Such
lien shall term inate a t the expiration of two years from October 1st
in said year, if th e estate has in th e m eantim e been alienated and the
instrum ent alienating th e sam e has been recorded, otherwise it shall
continue u n til a recorded alienation thereof; b u t if while such lien is
in force a ta x sale or taking has been m ade and th e deed or instrum ent
of taking has been duly recorded w ithin sixty days, b u t th e sale or
taking is invalid by reason of any error or irregularity in th e proceed
ings subsequent to th e assessment, th e lien shall continue for ninety
days after a release, notice or disclaimer, has been d uly recorded, or
for ninety days a fter th e sale or taking has been finally adjudged
invalid by a court of com petent jurisdiction. T here shall be no lien
for taxes reassessed if th e p roperty is alienated before th e reassess
m ent. Said taxes if unpaid for fourteen days after dem and therefor,
m ay, w ith said charges and fees, be levied b y sale or taking of the
real estate if th e lien thereon has n ot term inated. By recent Act, city or
tow n m ay acquire ta x title by m ere taking (this was enacted to relieve
heavy expense of ta x sales of sm all lots and land of little value).
T aking to be recorded a t Registry of Deeds, cost $1.00. Owner of
ta x title has benefit of all covenants running w ith th e land subject
to an d together w ith assessm ents and restrictions th en existing.
Owner of th e ta x title does n ot acquire absolute title u n til tax title
foreclosed in L and C ourt; petition to foreclosure can be brought two
years after sale or taking, n ot before.
M ortgagee m ay a t any tim e p ay overdue taxes an d have same
added to m ortgage debt. In terest on overdue taxes now 4% .
P etition for abatem ent of taxes m ust be filed w ith assessors not
later th a n O ctober 1 of year in which they are assessed
T he m atter of enforcing th e paym ent or collection of taxes is one
concerning which there is a considerable body of sta tu te law which
cannot be briefly sum m arized.
T ru s te e s . Investm ents. See Guardians, supra.
T ru s te e P ro c e ss. All personal actions except replevin, and actions
of to rt for malicious prosecution, slander, libel, or assault and battery
m ay be begun by trustee process and goods, effects, or credits of
defendant in hand of a th ird person m ay be attach ed and held to
satisfy final judgm ent. B u t certain actions w ith ad damnum of
m ore th a n $ 1 ,000 , can be comm enced b y tru stee process only upon
th e filing of bond w ith sureties to indem nify defendant for costs ana
dam ages b y reason of tru stee attach m en t, bond to be approved by a
justice of th e C ourt. Bond prem ium taxable as costs. This new
A ct should be consulted in cases where ad dam num over $ 1,000 in
tru stee process.
In tru stee process, if attach m en t of wages is desired, permission
endorsed in w riting on th e w rit m ust be obtained from a justice or
th e court where action commenced. See also Actions, supra.
W a r e h o u s e m a n a n d W a re h o u s e B e c e ip ts. The Warehouse
R ecipts A ct as codified into. Gen. Laws is in force. Chap. 105.
W ills. E very person of full age and sound m ind Including married
women m ay m ake a w ill. Will m ust be signed by testato r, or by some
person in his behalf, by his express direction, and be attested ana
subscribed by three or more com petent w itnesses in his presence, a
will executed in mode prescribed by th e law either of place wnere
will is executed or of place of te sta to r’s domicil, shall be deemea
legally executed and shall be of same force and effect as if executea
In mode prescribed by laws of M assachusetts provided will is in writing
and subscribed by testa to r. As to w aiver of provisions of will Dy
husband or wife, see D escent and D istribution, supra, also General
Laws ch. 190, section 15.
A will m ay be revoked in th e identical m anner in which the
requires a will to be revoked. Will m ay be revoked by destruction
such as burning, tearing, cancelling, or by obliterating it witn a
m anifest intention to revoke th e same, and i t m ay be_ revoked Dy a
form al w ritten instrum ent by a later will or b y a codicil.
Ordinarily m arriage operates by sta tu te as a revocation of a will
unless th e will was m ade in contem plation of th e coming marriage.
W itn e s se s . Any person, although a p arty , m ay testify
proceedings, except th a t neither husband nor wife m ay be compeue
B A N K IN G A N D C O M M E R C IA L L A W S— M IC H IG A N
to testify to p rivate conversations ■with each other, or be compelled to
testify in a crim inal proceeding against the other. The defendant in
a crim inal proceeding m ay testify, a t his own request and not other
wise, and once he takes the witness stand in a crim inal proceeding or
m atter, he waives all his privileges even where the desired testim ony
tends to incrim inate him, and the privilege not to give testim ony has
been waived.
T he neglect or deliberate refusal of a defendant to tak e th e stand
and testify in his own behalf shall n ot be a presum ption or be even
considered against him, and th e prosecution shall not com m ent to the
ju ry upon th e defendant’s failure to tak e th e stand.
However, where th e wife is necessary to explain certain acts, or
omissions in a crim inal m atter against her husband, if she refuses to
tak e th e stan d in his defence, th e district attorney is not barred from
com m enting to th e ju ry as to why she failed to testify for and behalf
of her husband.
T he com m unications of a client to his attorney as a legal adviser
are privileged and is a personal privilege belonging to th e client. The
attorney over th e objection of his client cannot tak e th e stand and
testify as to private conversations disclosed to him as an authority
on th e laws of th e Com m onwealth. However, if th e client takes the
stand- he m ay be interrogated as to w hat he told his law yer, pro
vided such evidence is otherwise admissible under the rules of evidence
generally.
S Y N O P S IS O F
T H E LAWS OF M ICH IG A N
RELATING TO
B A N K IN G A N D C O M M E R C IA L U S A G E S
Revised b y H e n r y W ttnsch an d E r n e s t W ttnsch , 706-710 Dim e
B ank Bldg. A ttorneys a t Law, D etroit, M ichigan.
(See C ard in A ttorneys’ List.)
A c k n o w le d g m e n ts of real estate Instrum ents m ay be before one
of th e following officers: 1 . W ithin this State: Any judge, clerk
or commissioner of an y court of record, notary public, justice of the
peace or m aster in chancery. The official should certify th a t “ On
this day before me personally ap p eared ..................... to me known
to be th e person or persons who executed the foregoing instrum ent
and acknowledged th a t he (or they) executed the same as his (or
their) free act and deed.” N o tary ’s certificate m ust show date of
expiration commission. Such instrum ents m ust have two subscribing
witnesses. 2 . In any other state, territory, or district of th e U nited
States: Same officials as described above or any officer authorized
by th e laws of such state, territory, or district, or before a com
missioner appointed by the G overnor or this State for th a t purpose.
Any such Instrum ent m ay be executed according to the laws of any
such other sta te or territory. I f officer has no seal, certificate of the
Clerk of th e county or district, or of the Secretary of S tate within
which taken shall be attached. 3. In any foreign country: notary
public, or m inister plenipotentiary, m inister extraordinary, m inister
resident, charge d ’affairs, or commissioner or consul of the United
States, appointed to reside therein. T be nam e of the officer m ust be
typed or p rin ted u n d er signature.
A d m in is tr a tio n o f E s ta te s : I n P r o b a te C o u r t of E a c h C o u n ty .
Claims are passed on by judge of p robate or referees. H earing on
same to be n o t less th a n tw o m onths nor m ore th an four m onths
after first publication of order for same. Order im m ediately on
approval bond. On application of creditor w ithin eighteen m onths
of tim e originally fixed, judge m ay allow one m onth additional, ah
claims barred if n o t dem anded w ithin tw o years after tim e set for
paym ent same. I f no proceedings, all claim s barred w ithin six years
of death.
A dm instration of estates is granted: F irst to widow or husband
or next of kin, or grantee of one of them , or such person as above
m ay request. I f above incom petent or neglect apply w ithin th irty
days, judge m ay appoint whom deems proper, or public adm inistrator,
but m ay n o t appoint creditor or one whose interest adverse to estate.
Creditors, however, m ay petition for appointm ent of some other
person. N on-resiaent adm inistrators an d executors appointed in
other states, territories, or foreign countries cannot sue as such in
this S tate w ithout procuring adm inistration in this S tate.
Afifidavits m ay be taken by any judge, m aster In chancery, clerk
of court, justice of th e peace, police m agistrate, notary public, or
circuit court commissioner. Any oath authorized, or required to be
made, w ithout th e S tate for use in judicial proceedings here, m ust be
authenticated by judge of a court having a seal, and the genuineness
of such judge’s signature, existence of the court, and th a t such judge
Is a m em ber thereof, certified oy the clerk of th e court under the seal
thereof. I f in any other sta te or territory, m ay be taken before a
commissioner appointed by th e governor of this State, or any notary
public or justice of th e peace authorized by the laws of any such state
or territo ry to adm inister oaths therein.
In actions a t law affidavits of am ount due on open and stated
accounts, attach ed to and served w ith process as commencement of
suit m ake a prim a facie case, unless denied by the defendant’s affidavit
filed and served w ith plea.
A liens. M ay inherit or purchase and hold and convey personal
and real estate.
A rrest. By w rit of capias In personal actions in to rt and in actions
for m oney collected by any public officer; also by w arrant allowed
by any justice of th e peace or judge of a court of record, under the
fraudulent deb to r’s act, when th e creditor has commenced su it or
obtained judgm ent and th e debtor has disposed of or concealed, or is
about to dispose of or conceal p roperty liable to execution or the
debt was frau d u len tly contracted.
A s sig n m e n ts for th e benefit of creditors are void unless m ade
without preferences; m ust comprise all of assignor’s property not
exempt from execution. T he circuit court in chancery has super
visory jurisdiction of such assignments.
A tta c h m e n ts . W rits m ay be issued from justice and circuit courts
on affidavit showing: debt due on express or implied contract, and
either th a t th e debtor has absconded or is about to abscond from
the State or has assigned or disposed of or is about to assign and
dispose of his property with in ten t to defraud his creditors; or is a
non-resident of th e state, or a foreign corporation. M ay issue from
the circuit court for d eb t not due b ut to become due, upon satis
factory showing to th e circuit judge, b u t in such cases judgm ent can
not be taken u n til deb t is due. M ay issue in actions of to rt against
non-residents in certain cases.
B a n k C o lle c tio n C ode. 1931. P ub. Act. 240, p. 414. Omits
519. Effective A ugust 27, 1931. Given directly following Laws.
B anks.
1:
Incorporation of:
B a n k s.
K in d s
of
B anks
P e r m itte d .
Commercial, Savings
industrial, T ru st Com panies; Safety and C ollateral Deposit Com
panies, C redit Unions, C ooperative Savings Associations, Building
and Loan Associations. Finance Companies, Sm all Loan Business,
lontm e, Bond, Certificate and Investm ent Companies.
. S u p e r v is i n g A u t h o r i t y is vested in th e B anking D epartm ent, the
nead of which is th e Commissioner.
Duties: A—Exam ine each bank annually, and as m any tim es
as requested by th e bank. B— In casé of an im pairm ent of th e
capital, levy a stock assessment. C—M ake an annual report to th e
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Federal Reserve Bank of St. Louis
2009
Governor of the financial sta tu s of active and closed banks. D— R e
ceive liquidation, incorporation, consolidation proceedings, etc.
E— W ith the A ttorney General apply for appointm ent of receivers,
O ffic e rs a n d D i r e c t o r s .
D irectors: N o t less th an five nor more th an
fifteen, elected by stockholders u ntil successors appointed. A ppoint
officers, prescribe by-laws, and exercize general banking business
through officers. M u st file oath w ith Commission and be bonded.
M ust be stockholders to extent of $1,000 p ar or m ore ($300.00 if
capital $25,000.00 or less). M u st m eet once a m onth, exam ine loans.
Appoint examining com m ittee to report to them once every six m onths
on condition of bank. Various new civil liabilities for excess loans, etc.
Officers: President, vice-presidents, cashier or treasurer, and other
officers. Also vice-presidents who are n ot ‘ members of th e board.
All officers m ust be bonded. T hey conduct th e general business.
I n c o r p o r a t o r s . Any num ber of persons, not less th a n five (5 ), m ay
associate to establish commercial and savings banks.
C a p i t a l S to c k a n d S u r p l u s .
T he am ount of capital stock is graded
and shall n ot be less th a n $25,000 to $500,000 according to th e popu
lation of th e city or village where located. Also graded w ith a m ini
m um depending on average m inim um deposits.
R e q u ir e m e n ts .
All capital m ust be paid in before commence busi
ness and surplus equal 20% capital. Before declare dividends m ust
carry 1 0 % n et profits for th e period to surplus u n til surplus equals
capital.
,
R e s e r v e s . M ust carry one of 1 2 % in certain legal reserve banks.
(M ay carry such proportion of 12 % in U. S. Bonds, or U. S. guaran
teed, as tim e and savings deposits are to to ta l deposits.) I f m em ber
Federal Reserve governed by Federal Reserve Act.
E x a m in a ti o n s a n d R e p o r t s . Banks m ust m ake three reports per,
annum and as m any special ones as requested to th e B anking D ep art
m ent, showing resources, assets and liabilities. Also m ust report
within te n days after declaration of a dividend, th e am ount of the
dividend, th e am ount carried to surplus, and th e net earnings.
T he Banking departm ent m ust examine one or more tim es per
annum th e cash bills, collaterals or securities, books of account,
condition and affairs of each bank under th e law, and also as m any
tim es as requested by th e bank.
L o a n L i m i t a t i o n . Loans to any one person not to exceed one-tenth
capital and surplus, b u t w ith tw o-thirds vote of directors m ay be
raised to one-fifth. N o loans to officers and employees w ithout th e
consent of th e directors. M ay n ot receive more th a n legal ra te of
interest in advance.
S to c k h o ld e r 's L i a b i l i t y . T here is no double liability on stockholders
whose stock was issued after Ju ly 21, 1933. As to all other stock
holders, liability is as follows: T hey are not liable to.depositors and
creditors who becam e such subsequent to Ju n e 4, 1935. T heir
liability to other depositors and creditors shall cease when such depos
itors or creditors consent thereto, expressly or im pliedly, and in any
event shall cease on Ju ly 1, 1937. unless such depositor or creditor
files his w ritten dissent w ith th e bank. I f capital im paired m ay levy
assessm ent on stock. N o personal liability, b u t shares m ay be sold to
satisfy th e levy if n o t paid.
F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a tio n . Federal D eposit Insurance
C orporation m ay be appointed receiver of closed banks wherein it
has insured deposits. Also m ay exam ine such banks, and requires
reports, having sim ilar powers to th e Commissioner of th e B anking
D epartm ent.
Banks are exem pt from furnishing security for any deposits to th e
extent such deposits are insured under th e Federal Reserve Act.
B lu e S ky L aw . M ichigan in 1923 passed an act, commonly known
as th e Blue Sky Law, regulating the selling of and dealing in stocks,
bonds and other securities w ith certain exceptions of corporations,
associations, partnerships and individuals, so as to prevent frau d in
such dealings and creating a Commission of three to adm inister the
provision of the law. U nder this law application m ust be m ade to
the M ichigan Securities Commission and the approval of th e Com
mission secured before such securities m ay be sold. C ertain penalties
are imposed under th e law for non-compliance w ith Its provision.
T he M ichigan Supreme C ourt has declared th e act to be C onstitutional
and valid.
C h a tte l M o rtg a g e s . C h a ttel m ortgages and bills of sale intended
as security, signed and delivered by m ortgagor to mortgagee, sufficient
between th e parties, b u t void as to creditor, subsequent purchasers
and encum brances in good faith w ithout notice, unless such m ort
gages and bills of sale or tru e copies thereof are filed in th e office of
th e register of deeds for th e county where th e m ortgagor resides, or
where th e goods are situated if m ortgagor is a non-resident of th e
S tate, and unless affidavit of m ortgagor, or some one for him, having
knowledge of th e facts, is annexed to th e m ortgage or bill of sale,
showing th e consideration is actual and adequate and in good faith.
W ithout such affidavit officers forbade to receive and file such
m ortgages; cease to be valid against creditors, subsequent purchasers
and encum brances in good faith on expiration of three years from filing
date unless renewed w ithin ninety days next preceding expiration by
affidavit of m ortgagee showing his interest, etc., filed and annexed
to m ortgage in said register office. I f m ortgage taken on an au to for
accessories, etc., m ust be filed w ith Secretary of State.
C o lla te ra ls. Stocks, bonds or other personal property pledged
as collateral security for paym ent of money or th e perform ance of
any obligation, upon default m ay be sold a t public (or private sale
If so authorized by the contract) to satisfy the debt; b u t before public
sale, ten days notice m ust be given and served on pledger or legal
representative personally or by m ail; such sale m ust be between
nine o’clock forenoon and sunset, a t a public place in the township,
city, or villagé where property is held.
C o lle c tio n s. Uniform Bank Collection Code as recommended by
American Bankers Association, see page 1902.
C o n d itio n a l S ales. M ichigan has adopted th e Uniform Sales
Act and such contracts are Construed in accordance w ith its term s.
If consignee or purchaser is authorized by th e contract to rèseli, th en
for a retention of title to be effective, the contract m ust be w ritten and
recorded as a ch attel m ortgage. .
C o n v e y an ces. Any person of full age or otherw ise capable m ay
convey by deed any interest in lands, w hether in actual possession
or not. All grants and devises of lands to two or more persons create
estates in common; no joint tenancy, unless expressly so declared,
except such as are m ade in tru st or to executors, and except such as
are m ade to husband and wife, who take as “ ten an ts by