THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW GIFT OF CHARLES GOLDRING CiK'^affl'*. Lws, ■jfj-fu"f»s,«fc BANK ACT OF CALIFORNIA INCLUDING 1921 AMENDMENTS COMPILED BY Blyth. Witter &. Co. MERCHANTS EXCHANGE San Francisco NEW YORK LOS ANGELES SEATTLE s C45L COPTRIGHT 1921 BLYTH, WITTER &. COMPANY Merchants Exchange, San Francisco newyork-los angeles-seattle FOREWORD In submitting our revised edition of the Bank Act of California to embody the amendments adopted at the 1 92 1 Session of the Legislature, we have been guided by the same principles observed in the publication of the original edition two years ago, namely, to prepare a volume easy of refer- ence and convenient in form. Immediately following the amended sections, brief pub- lishers' notes indicate the effect of the amendment, thus ob- viating the necessity of comparing the present with the pre- vious reading. We acknowledge the valued assistance of the California Bankers' Association in providing a synopsis of the amend- ments, as well as the painstaking work of Robert C. Young, of the San Francisco Bar. Blyth, Witter & Co. July, 1921. TABLE OF CONTENTS ARTICLE I. General Provisions Sections 1- 58, inclusive ARTICLE II. Savings Banks Sections 60- 70, inclusive ARTICLE III. Commercial Banks Sections 80- 85, inclusive ARTICLE IV. Trust Companies Sections 90-107, inclusive ARTICLE V. State Banking Department Sections 120-147, inclusive APPENDIX Text of certain laws referred to in the Bank Act, and other banking lav^s Pages 177-212, inclusive COMPLETE CROSS INDEX See last pages Bank Act of California AN ACT TO DEFINE AND REGULATE THE BUSINESS OF BANKING The 'People of the State of California, Represented in Senate and cAssembly 1)0 €nact as Follows: ARTICLE I. GENERAL PROVISIONS. Section 1. This act shall be known as the "bank act," Act named "bank act. and shall be applicable to all corporations specified in the next section and to such other corporations as shall sub- ject themselves to special provisions and sections thereof, and to such other persons, associations, copartnerships or corporations who shall, by violating any of its provisions, become subject to the penalties provided therein. [Publishers note, re Section 1, as amended 1921: Amendment adds, to those to whom the act applies, "such other corpo- rations as shall subject themselves to special provisions and sections thereof."] Section 2. The word "bank" as used in this act shall "Bank- defined. be construed to mean any incorporated banking institu- tion which shall have been incorporated to conduct the business of receiving money on deposit, or transacting a trust business as herein defined. The soliciting, receiving what deemed com- , .. • ^ M. J 'i. mercial or savings or accepting or money or its equivalent on deposit as a bank business. regular business shall be deemed to be doing a commer- cial or savings bank business whether such deposit is made subject to check or is evidenced by a certificate of de- posit, a pass book, a note, a receipt or other writing; provided, that nothing herein shall apply to or include money or its equivalent left in escrow or left with an agent, pending investment in real estate or securities for § 2-5 BLYTH. WITTER & CO. or on account of his principal. It shall be unlawful for any corporation, partnership, firm or individual to engage Transacting banking _ ii.i. .1.1. =«» business otherwise in or transact a banking business within this state except than by means of • 1 i • 1 r banking corporation— by means of a Corporation duly organized for such pur- pose. Banks are divided into the following classes: (a) Savings banks; (b) Commercial banks; and (c) Trust companies. Method of organizing Section 3. Corporations may be organized by any banking corporations. | ^ , . 1 . ».L j.L number or natural persons, not less m any case trian triree, under the laws of this state to conduct, as provided in this act, and not otherwise, any one or more or all of the businesses mentioned in divisions (a), (b), and (c) of section two, of this act. "Savings bank" Section 4. The term "savings bank," when used in this act, means a bank organized for the purpose of ac- cumulating and loaning the funds of its members, stock- holders, and depositors, and which may loan and invest the funds thereof, receive deposits of money; loan, in- vest and collect the same with interest; and may repay depositors with or without interest, and having power to invest said funds in such property, securities and obliga- tions as may be prescribed by this act; and to declare and pay dividends on its general deposits, and a stipulated rate of interest on deposits made for a stated period or upon special terms. "Commercial bank" Section 5. The term "commercial bank," when used in this act, means any bank authorized by law to receive deposits of money, deal in commercial paper or to make loans thereon, and to lend money on real or personal property, and to discount bills, notes or other commercizJ paper, and to buy and sell, and advertise for purchase or sale, such securities as are permissible for investment by commercial banks, gold and silver bullion, or foreign Commercial bank coins or bills of exchange; provided, any commercial insurance company, bank located and doing business in any place the popula- 112] GENERAL PROVISIONS §5-7 tion of which does not exceed five thousand persons, as shown by the last preceding federal census, or any subse- quent census compiled and certified under any law of this state, may, under such rules and regulations as may be prescribed by the superintendent of banks, act as the agent for any fire, life, or other insurance company auth- orized by the authorities of the State of California to do business in this state, by soliciting and selling insurance and collecting premiums on policies issued by such com- pany; and may receive for services so rendered such fees or commissions as may be agreed upon between the said bank and the insurance company for which it may act as agent ; and may also act as the broker or agent for others fg^ate^^^nd'foan '^^^^ in making or procuring loans on real estate located within iJ^oker. one hundred miles of the place in which said bank may be located, receiving for such services a reasonable fee or commission; provided, however, that no such bank or^assu^Vs^uTh loana shall in any case guarantee either the principal or interest "^g^fJ^^JI* °^ of any such loans or assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal; and provided, further, that said bank shall not guarantee the truth of any statement made by an assured in filing his application for insurance, [Publishers' note, re Section 5, as amended 1921: This amendment authorizes a bank, in addition to acting as insurance agent, to "act as the broker or agent for others in making or procuring loans on real estate located within one hundred miles of the place in which said bank may be located, receiving for such services a reasonable fee or commission." The bank shall not in any case "guarantee the principal or interest of any such loans."] Section 6. The term "trust company," when used in Zl^^l'"""^"''^" this act, means any corporation which is incorporated under the laws of this state for the purpose of conducting the business of acting as executor, administrator, guardian of estates, assignee, receiver, depositary or trustee under appointment of any court or by authority of any law of this state, or as trustee for any purpose permitted by law. Section 7. No foreign corporation shall transact a p°g^g^"i3°t?3°[o"°°*" banking business in this state without first complying with |^*th?s'siate^""''''' all the requirements of the laws of this state relative to [13] § 7 BLYTH. WITTER & CO. banks as defined in this act, and without having assigned to its business in this state the amount of paid-up capital and surplus required by this act for the transaction of such business within this state. No foreign banking cor- poration shall transact business in this state until such corporation has made the assignment of capital required by this section and has received a certificate from the superintendent of banks; provided, that a foreign bank- Hereafter not to re- fng corporation shall not be permitted to accept deposits ceive deposits. «=> i^ x- r- r (Exception) of money in this state but may receive a certificate from the superintendent of banks to transact in this state only But may transact the business of buying or selling, paying or collecting bills business, of exchange, or of issuing letters of credit or of receiving money for transmission or transmitting the same by draft, check, cable or otherwise, or of making loans; and pro- vided, further, that those foreign banking corporations that now have power to do a banking business in this state and which now receive deposits of money shall be permitted to continue to accept money on deposit. Any foreign banking corporation transacting business in this state shall become subject to the supervision of the state superintendent of banks. Every foreign banking corpora- Subject to statue jJqj^^ including those which were on January second, nineteen hundred thirteen, transacting business in this state, which receives any deposits or transacts any other banking business or transacts its business in such a man- ner as might lead the public to believe that its business is that of a bank shall conduct all its business in accordance with the statutes governing incorporated banking institu- tions organized under the laws of this state. The capital bus^inei's1n^M^sfat'e° ^^ ^^y ^^^^ foreign banking corporation assigned to its **'^' ^sepa^aTe! ^usiness in this state and all funds and deposits of money received by any such corporation in this state or for or in connection with its business in this state and all accounts and transactions of said business transacted by any such foreign corporation in this state shall be kept separate and apart from the general business, assets and accounts [14] GENERAL PROVISIONS § 7 of such foreign corporation in the same manner as if the business of such foreign corporation conducted within this state was that of a separate and independent corpora- tion organized under the laws of this state for the pur- pose of doing a banking business and all of the pro- visions of this act affecting investments, loans of money, receiving deposits and conducting business in any respect provisions of Act , ,, , , , , 1 • 1 -i 1 • t affecting investments, shall be deemed to apply to such assigned capital, invest- deposits, etc., apply ■ , . f f 11' • tL to assigned capital. ments, loans, deposits, assets, runds and business in trie same manner as if such assigned capital, investments, loans, deposits, assets, funds and business were that of such separate and independent corporation; provided, that loans may be made by any such foreign corporation Loans made by for- . , '11 1 " eign corporations — based on its entire paid-up capital and surplus in case their basis. such foreign corporation shall have assigned to its busi- ness in this state a paid-up capital and surplus as above provided equal to tw^enty per centum of the deposit lia- bility of such branch agency or office to residents of this state. Such funds and investments or loans thereof shall be appropriated solely to the security and payment of such deposits, and shall not be mingled with the investments of the capital stock or other money or property belong- ing to such corporation or be liable for the debts or obli- gations thereof. All income received from the invest- income from invest- ., iri 1 nient of funds — how ment of such funds over and above such funds as may be applied. paid to depositors as interest or shall be carried to the surplus fund, as provided in section twenty-one of this act, shall accrue as profits to the corporation and may be transferred to its general funds. No such foreign corpora- Further prerequisites I I . , . . 1 . .1 to doing business — tion shall transact any banking business in this state until Filing appointment . . rii°^ Supt. as attorney, it has executed and filed with the superintendent of banks etc. a written instrument appointing such superintendent or his successor in office, its true and lawful attorney, upon whom all process issued by authority of or under any law of this state may be served, with the same effect as if such corporation was formed under the laws of this state and had been lawfully served with process therein. Such [151 § 7 BLYTH, WITTER & CO. service upon such attorney shall be deemed personal service on such corporation. The superintendent of banks shall forthwith forward by mail, postage prepaid, a copy of every process served upon him under the provisions of this section, addressed to the manager or agent of such corporation, at its principal place of business in this state. For each copy of process, the superintendent of banks shall collect the sum of two dollars, which shall be paid by the plaintiff or moving party at the time of the serv- ice, to be recovered by him as a part of his taxable costs Foreign corporation [{ ^g succeed in the suit or proceeding. No foreign cor- net to have any trust r o e> company powers, or poratiou shall have or exercise in this state the power to powers specified m ^ Sec. 6, except in this receive deposits of trust moneys, securities or other per- State may exercise •. ^ x- powers permitted to sonal property from any person or corporation or any of foreign corporations by Sec. 90, and act the powcrs Specified in section six of this act, nor have or as executor or trus- ..-—.,. tee under will, maintain an ofnce in this state for the transaction of, or transact, directly or indirectly, any such or similar busi- ness, except that a trust company incorporated in another state may have or exercise in this state such powers as are permitted to foreign corporations by the provisions of section ninety of this act and may be appointed and may accept appointment and may act in this state as execu- tor of or trustee under the last will and testament of any deceased person, upon giving the bond required in such cases of individuals unless waived by the last will and testament making such appointment and by taking and subscribing an oath for faithful performance of such trust by the president, vice president, secretary, mianager or trust officer of said corporation; provided, that such superintendent of banks, for the time being, shall be attorney of such foreign corporation qualifying or act- ing in this state as such executor or trustee, upon whom process against such foreign corporation may be served in any action or legal proceeding against such executor or trustee affecting or relating to the estate or prop- erty represented or held by such executor or trustee, or any act or default of such foreign corporation in [161 GENERAL PROVISIONS § 7 reference to such estate or property, and it shall be the duty of such foreign corporation so qualifying or _,. , -~ (■ ., -tJif ForeigTi corporation acting to hie in the orhce or said superintendent or so acting to file copy , , r •. .• 1 !• • !.• C m\. of articles, etc., banks a copy or its articles or incorporation, or or the and appointment of , . 1 .. .• r J 1 -i. Supt. as attorney, etc. statute chartering such corporation, certined by its secretary under its corporate seal, together with the post-office address of its home office, and a duly executed appointment of said superintendent of banks as its at- torney to accept service of process as above provided, and said superintendent of banks, when any such process is served upon him, shall at once mail the papers so served to the home office of such corporation; and provided, tion °ha'v1ng^Tn°state further, that no foreign corporation which may have or |:r90,'etZ' to'^ ^'^ exercise in this state such powers as are permitted to for- ^ffiee*or°soYicH busi- eign corporations by the provisions of section ninety of "rustee.*"'^''"^"'^ °' this act or having authority to act as executor of or trustee under the last will and testament of any deceased person shall establish or maintain, directly or indirectly, any branch office or agency in this state, or shall in any way solicit, directly or indirectly, any business as executor or Penalty for violation. trustee therein, and that for any violation of this proviso, the court having jurisdiction of such executor or trustee in said proceeding may in its discretion, revoke the right of such foreign corporation thereafter to act as executor or trustee therein; provided, that nothing in this act shall limit or affect the right of any foreign corporation doing a banking business in this state, to lend within this state, moneys of such corporation which do not form a part of the moneys, deposits or assets of such corporation as- signed or belonging to its business in this state. This section shall not be construed to prohibit foreign Foreign banking _ corporations not main- banking corporations, which do not maintain an office in taining office here ° ^ _ not prohibited from this state for the transaction of business, from making making mortgage loans, etc. loans in this state secured by mortgages on real property, nor from accepting assignments of mortgages covering real property situated in this state, nor from making loans [171 § 7-9 BLYTH. WITTER & CO. through correspondents which are engaged in the busi- ness of banking in this state under the laws of this state. R&quirements im- Section 8. Everv Corporation, at the time it appHes for posed upon every corporation applying a certificate of authority to do a banking business, must for certificate of _ _ _ authority to do a file w^ith the Superintendent of banks a certified copy of banking business. its articles of incorporation, or of the statute chartering such corporation, a certified copy of its by-law^s, and also a certified copy of all instruments amending or alter- ing such articles of incorporation or charter or by-laws. Thereafter a certified copy of each amendment or certifi- cate designed to increase or decrease the capital stock, to change the number of directors, to amend the articles of incorporation, to change the principal place of business, or the name of such corporation, or to effect any other organic change shall likew^ise be so filed before such in- strument takes effect. Each certification required by the provisions of this section other than that of by-laws must be by the secretary of state. Branch Banks. Section 9. No bank in this state, or any officer or Prerequisites for _ i z-r opening, director thereof, shall hereafter open or keep an office other than its principal place of business, without first having obtained the written approval of the superintend- ent of banks to the opening of such branch office, which written approval may be given or withheld in his discre- tion, and shall not be given by him until he has ascer- tained to his satisfaction that the public convenience and advantage will be promoted by the opening of such Capital required— branch office; provided, that no bank or any officer or director thereof, shall open or maintain any such branch office unless the capital of such bank, actually paid in, in cash, shall exceed the amount required by this act by the sum of twenty-five thousand dollars for each branch office opened and maintained in the place where its prin- cipal business is transacted; and provided, that for each "7l"'Z^Z%i^c'^ branch office opened or maintained by any bank, other of business, ^.j^^^ ^ ^^^^j^ transacting only the business described in [18] Generally. For each branch other than trust GENERAL PROVISIONS §9 section six of this act, in any place in this state other than the place where the principal business of such bank is transacted, the capital of such bank, actually paid in, in cash, shall exceed the amount required by this act in the sum required by this act for every bank hereafter organ- ized in the place where each branch office is to be opened or maintained, exclusive of the capital required for a trust department; and, provided also, that for each For branch opened branch office opened or maintained by any corporation of mo" tgagr-fnslfr- which has power to transact only such business as is de- *"'^® company, scribed in section six of this act or in section four hundred fifty-three x of the Civil Code, in any place in this state other than the place where the principal business of such corporation is transacted, the capital of such corporation, actually paid in, in cash, shall exceed the amount re- quired by this act in the sum of twenty-five thousand dol- lars; and provided, further, that no branch office may be discontinued without the previous written approval of the superintendent of banks. Every bank, before it opens a branch office, shall ob- certificate required tain the certificate of authority of the superintendent of '"' "^'""'"^ ''"°^^- banks for the opening of each of said branch offices. The applicant shall pay for such certificate a fee of fifty dol- lars; provided, however, that, in order to encourage sav- Bank may arrange ing among the children of the schools of this state, a bank ings'^in IchooU. may, with the written consent of and under regulations approved by the superintendent of banks and, in case of public schools, by the board of education or board of school trustees of the city or district in which the school is situated, arrange for the collection of savings from the school children by the principal or teachers of such schools or by collectors. The principal, teacher or per- son authorized by the bank to make collections from the school children shall be deemed to be the agent of the bank and the bank shall be liable to the pupil for all de- posits made with such principal, teacher or other person, the same as if the deposits were made by the pupil [19] §9-11 BLYTH, WITTER & CO. directly with the bank. Every bank and every such officer or director violating the provisions of this section shall Penalty for^vioiation forfeit to the people of the state the sum of one hundred dollars for every day during which any branch office hereafter opened shall be maintained without such writ- ten approval. Directors. Section 1 0. No person shall be eligible for election as director of a bank having a capital stock unless he is a stockholder of the bank, owning, in his own right, shares thereof of the par value of at least five hundred dollars; Director after eiec- and cvcry pcrson elcctcd to be director who, after such tion ceasing to own, . in ii .i. 'if or pledging, qualify- election, shall ceasc to be the owner in his own right or ing stock, to notify , ., ... ., iiii i Supt., etc. the amount or such stock aforesaid, or shall hypothecate or in any way pledge such stock as security for any loan or debt shall immediately notify the superintendent of banks in writing of such sale or hypothecation and such director may be removed from the office of director by Executor or adminis- the Superintendent of banks; provided, however, that any trator when eligible as director, executor or executrix, administrator or administratrix holding shares of a bank of the par value of five hundred dollars, in his or her representative capacity shall be eligible for election as a director thereof. If a bank be organized without capital stock, no person shall be eli- gible as a director thereof unless be is both a member and a depositor of such bank. Directors' Meetings Scction 1 1 . The board of directors of a bank organized once a month, under the laws of this state must hold a meeting in its banking premises at least once a month. Each such oeth of directors, director, when appointed or elected, shall take an oath that he will, as far as the duty devolves on him, diligently and honestly administer the affairs of such bank, and will not knowingly violate or willfully permit to be violated any of the provisions of law applicable to such bank, and that he is the owner in good faith and in his own right of shares of stock of the par value required by section ten of this act, subscribed by him or standing in his name on the books [20] GENERAL PROVISIONS § 11-12 of the bank, and that the same to an amount equal to the par value of at least five hundred dollars, are not hypoth- ecated or in any way pledged as security for any loan or debt. Such oath shall be subscribed by the director making it, certified by the officer before whom it is taken, and immediately transmitted to the superintendent of banks and filed and preserved in his office; provided, the managers or agents residing in this state, of a foreign corporation transacting any banking business in this state, Oath required of ^ & ^ rill Resident Managers shall take an oath that they will, as far as the duty de- or Agents. volves on them, diligently and honestly administer the affairs of such bank, and will not knowingly violate or wilfully permit to be violated any of the provisions of law applicable to such bank. Such oath shall be sub- scribed by the managers or agents taking it, certified by the officer before whom it is taken, and immediately transmitted to the superintendent of banks and filed and preserved in his office. Section 1 2. No person, firm, company, copartnership p"atro'n%?c.!^n'o't or corporation, either domestic or foreign, not subject to ^"gVon^of supr'^and the supervision of the superintendent of banks, and not ^ct^hlirnot ad" required, by the provisions of this act, to report to him, vertise acceptance of ^ ' •' '^ ^ money or savings, or and which has not received a certificate to do a banking do acts inducing be- " lief that place or business from the superintendent of banks, shall adver- °f i',t.,\' eompany.""^ tise that he or it is receiving or accepting money or sav- ings, and issuing notes or certificates of deposit therefor, or shall make use of any office sign, at the place where such business is transacted, having thereon any artificial or corporate name, or other words indicating that such place or office is the place or office of a bank or trust company, that deposits are received there or payments made on check, or any other form of banking business f J^^^^^Vor wo^rds"" transacted, nor shall any such person or persons, firm, officr^s"iha^t ofVank company, copartnership or corporation, domestic or for- °tc/"^ company, eign, make use of or circulate any letterheads, billheads, blank notes, blank receipts, certificates or circulars, or any [211 §12 BLYTH. WITTER & CO. written or printed, or partly written and partly printed, paper, w^hatever, having thereon any artificial or cor- porate name or other word or words indicating that such business is the business of a bank, savings bank or trust company; nor shall any such person, firm, company, copartnership or corporation, or any agent of a foreign corporation not having an established place of business in this state, solicit or receive deposits or transact business in the way or manner of a bank, savings bank or trust company, or in such a way or manner as to lead the pub- lic to believe that its business is that of a bank, savings bank or trust company. Nor shall any person, firm, company, copartnership or corporation, domestic or foreign, not subject to the supervision of the superintendent of banks, and not required by the provisions of this act to report to him, and which has not received from the superintendent of banks a certificate to do a banking business, hereafter transact business under any name or title which contains the word "bank," or "banker," or "banking," or "sav- ings bank," or "savings" or "trust" or "trustee" or "trust Section shall not ap- Company"; provided, that this section shall not apply to ply to name of exist- . , 1_ -IJ' J 1 • i.* ing Bidg. & Loan the Corporate name or any buildmg and loan association now or heretofore doing business in this state; and pro- Nature of business vided, further, that any such association having in its Assn^must^be shown Corporate name words not clearly indicating the nature "advertisfng! of its business shall, on all signs, letterheads and advertis- ing matter, state "This is a building and loan association" or words to that effect; and provided, further, that any building and loan association may borrow money, issue investment certificates or evidences of indebtedness, stat- ing the rate of interest and terms and conditions of repay- ment, and do such other business as may be authorized by the laws of the state relating to building and loan as- Uo Bidg. & Loan sociations; and provided, further, that no such associa- Assn. shall hold itself out as savings bank, tion shall advertise or hold itself out to the public as a savings bank. Any person, firm, company, copartner- ship or corporation, domestic or foreign, violating any [22] GENERAL PROVISIONS § 12- 12a provision of this section shall forfeit to the state one hundred dollars a day for every day or part thereof during which such violation continues. Upon action brought by the superintendent of banks the court may issue an injunction restraining any such person, firm, com- pany, copartnership or corporation from further using such words in violation of the provisions of this section or from further transacting business in such a way or manner as to lead the public to believe that its business is that of a bank, savings bank or trust company during the pendency of such action and for all time and may make such other order or decree as equity and justice may require. Section 12a. Every person, firm, company, copart- Every person, firm ■' ^ 1 ^ » corporation, etc., do- nership or corporation, domestic or foreign, advertising mestic or foreign— that he or it is receiving or accepting money or savings, and issuing notes or certificates of deposit therefor, or Advertising transac- . . • 1 !_ • £ ^^°° °^ banking, advertising that he or it is transacting the business or a savings bank or ... . . £ trust company bust- bank, savings bank or trust company, or making use or ness, in any form, any office sign at the place where such business is trans- acted, having thereon any artificial or corporate name, or Must have proper = -^ capital paid in and Other words indicating that such place or office is the set aside and have received certificate place or office of a bank, or trust company, or that de- from supt. posits are received there or payments made on check, or that interest is paid on deposits, or that certificates of deposit, either with or without interest are being issued, or that any other form of banking business is transacted, and every person, firm, company, copartnership or cor- poration, domestic or foreign, making use of or circulat- ing any letterheads, billheads, blank notes, blank receipts, certificates or circulars, or any written or printed, or partly written and partly printed, paper, whatever, hav- ing thereon any artificial or corporate name, or adver- tising that such business is the business of a bank, savings bank or trust company, must have the proper capital stock paid in and set aside for the purpose of transacting Penalty. such business, and must have received from the superin- [23] § 12a BLYTH. WITTER & CO. tendent of banks, as provided for in this act, a certificate to do a banking business. Any person, firm, company, co- partnership or corporation, domestic or foreign, violating any provision of this section shall forfeit to the state one hundred dollars a day for every day or part thereof dur- ing which such violation continues. Upon action brought by the superintendent of banks the court may issue an injunction restraining any such person, firm, company, copartnership or corporation from further violating any provision of this section, and may make such further Every person, firm, order or decree as equity and justice may require. Every corporation, etc., ~i j i j ~i j transacting any busi- person, firm, Company, copartnership or corporation must do so under doing any of the things or transacting any of the business defined in this section, must transact such business ac- cording to the provisions of the bank act, and the super- intendent of banks or his deputy or examiners shall have authority to examine the accounts, books and papers of every such person, firm, company, copartnership or cor- poration, domestic or foreign, in order to ascertain whether such person, firm, company, copartnership or corporation has violated or is violating any provisions of Section not applicable this section ; provided, that this section shall not apply to to corporate name of existing Bidg. & the Corporate name of any building and loan association Loan Assn. now or heretofore doing business in this state; and pro- vided, further, that any such association having in its corporate name words not clearly indicating the nature of its business shall, on all signs, letterheads and adver- tising matter, state: "This is a building and loan associa- Any Bidg. & Loan tJQn" or words to that effect; and provided, further, that Assn. may borrow ^ money, etc. ^ny building and loan association may borrow money, issue investment certificates or evidences of indebtedness, stating the rate of interest and terms and conditions of repayment, and do such other business as may be author- ized by the laws of the state relating to building and No Bidg. & Loan loan associations; and provided, further, that no such Assn. shall hold itself out as a savings bans, association shall advertise or hold itself out to the public as a savings bank. [241 GENERAL PROVISIONS § 12b- 1 2c Section 1 2b. Nothing in this act shall be construed or JJfi'tion chTrifrer' held to apply to any corporation organized under the laws ?,Vst'compa'nyTo u°t of any other state which is authorized by its charter or corporate title. articles of incorporation to transact the business of life insurance and also to be known as and to transact busi- ness as a trust company and which shall have complied with the laws of the state affecting the transaction in this state of the business of life insurance by a foreign cor- poration and which shall have heretofore engaged in such business of life insurance in this state, in such man- ner as to forbid or prevent its making use of its corporate title in its life insurance business in this state in any such way and to any such extent as it might have made use of the same if this act had not been passed. Section I 2c. Any corporation organized under the f^nr^uh uw. laws of any country or state other than this state which l[^:^'l:ZlZV" has complied with all of the laws of this state pertaining ^taLTfficeft°o lend to foreign corporations and is not engaged in the business ^'^^^tcf °' ''" of banking or receiving money on deposit in this state may lend money or buy and sell bonds in this state, and for that purpose, may maintain offices in this state, and sue and be sued in this state under its proper corporate name, notwithstanding any prohibitions contained in this act as to the use of any words in the name, signs or adver- tising matter of corporations not under the supervision of the superintendent of banks; provided, that nothing in f;/J^^„^^*^„'k'rnVo^ this act shall be construed to prohibit any representative *;^"/jfi^'=°Td'?r"om"°' of any foreign banking corporation from maintaining an ^^^^^';*^^^i,°f ^' '"^^ office in this state as the office of a representative and not the place of business of a bank or trust company, nor to prohibit such representative from making use of any office sign at the place where such representative's office is maintained having thereon words indicating that such office is the place of business of a representative of a for- Such representative ^ . 1 1 r I L ^^^ "^® foreign eisn bank or trust company; and provided, further, that banks printed mat- ° ... ff tsr in transacting anv reoresentative of a foreign bank maintaining an office business as repre- rif-l_l' sentative. within this state may make use of such foreign bank s [25] § i2c-13 BLYTH. WITTER & CO. letterheads, circulars and other printed matter in the transaction of business as such representative; and pro- vided, further, every representative of any foreign bank or trust company before opening an office as a repre- such representative sentative shall havc received a license from the superin- must first obtain ■, r t t i • ' £C license from Supt. tendent of banks to open such representative s oriice. to open office. _, , ,. , . , •■. . i Such license may be issued upon application to the super- intendent of banks and the payment of an annual license fee of fifty dollars and may be refused or revoked by the superintendent of banks at his discretion. R^^steaLsMp and Scction I 3. No person, firm or corporation, except and express com- ^^nks and duly incorporated and qualified railroad, panies to handle j r i foreign exchange, steamship and express companies, or general travel and tourist copartnerships and corporations that are in actual international operation, shall engage in this state in the aequirements for business of receiving money for the purpose of transmit- corporations so o ./ * * engaged, ^j^^g ^^^le Same, or the equivalent thereof, to foreign coun- tries. Every such company shall, within thirty days after the date this section goes into effect, and thereafter on or before the first day of January and the first day of July in each year file with the superintendent of banks a certificate specifying each place in this state where such company maintains its own office where money is or will be received for transmission to foreign countries, and the person or persons in such office authorized to receive money for such purpose; and shall, also within thirty days after this act goes into effect file with the superintendent of banks a certificate specifying the name and business address of every person, not regularly employed by it in its own office, who is authorized to receive money for the purpose of transmitting the same, or the equivalent thereof, to foreign countries; and each person specified in such certificates shall be the designated agent of the company making the certificate for all purposes con- nected with or incident to the receipt and transmission of money or its equivalent to foreign countries. [261 GENERAL PROVISIONS § 13 Whenever any such agent who is not regularly em- ployed by any such company in its own office is replaced, or an additional agent, who is not so employed by any such company, is authorized to receive money for the purpose of transmitting same, or the equivalent thereof as aforesaid, notice of such fact and of the name of the per- son replacing the original agent, or the name of such ad- ditional agent, shall be certified forthwith to the superin- tendent of banks; and such person shall thenceforth be the designated agent of such company aforesaid until notice of the termination of such agency is filed with the superintendent of banks. The deposit hereinafter re- quired shall be in addition to and not in lieu of the pri- mary liability of any such company for the acts of its designated agents. At the time of filing the certificate first herein required, fe?u?reVforTrtns. and before any agent of any such company is authorized ^orSn counS*° to transact any business hereunder, the company filing such certificate shall deposit with the treasurer of state, upon authorization of the superintendent of banks in the manner provided by section ninety-six of this act, the sum of fifty thousand dollars in lawful money of the United States, or in the securities specified in section ninety-six of this act; in case such deposit is in securities, the com- pany making the same shall have the privilege of with- drawal, substitution and collection of interest provided in said section; or in lieu thereof such company shall execute and deliver to the superintendent of banks, who shall deposit it with the treasurer of state, a bond or other surety acceptable to the superintendent of banks in the sum of fifty thousand dollars to cover money received by any and all its agents in this state for the purpose of trans- mission to foreign countries; such bond or other surety to be conditioned upon the faithful holding and transmis- sion of money, or the equivalent thereof, which shall be delivered to or deposited with any such agent for trans- mission to a foreign country, for the benefit of such per- [27] § 13 BLYTH, WITTER & CO. sons as shall deliver to or deposit money with any such agent of such company for such purpose. Such bond shall be executed by such company with a corporate surety company, acceptable to the superintendent of banks, as surety. Such moneys or securities deposited with the treasurer of state and the money which in case of default shall be paid on such bond or other surety shall constitute a trust fund for the benefit of such persons as shall deliver to or deposit with any such designated agent of such company money for transmission to foreign on"such bond^or Countries as aforesaid; suit to recover on any such bond surety-how brought. ^^ other Surety may be brought by or upon the relation of any party aggrieved, in a court of competent jurisdic- tion of any county in which such company has an agent; and service of summons on any agent of such company How moneys for- shall be Sufficient. All moneys received for transmission warded and receipted for. to a foreign country by a railroad, steamship or express company shall be forwarded to the person to whom the same is directed to be transmitted within ten days after the receipt thereof. The receipt given by any such com- pany by its agent or agents, for deposits of money re- ceived for transmission to a foreign country shall be on a form or forms certified copies of which have first been filed with the superintendent of banks; in case of use by any such company of a form or forms for this purpose certified copies of which have not been filed with the superintendent of banks, whether the use of such receipts is authorized or not, shall not relieve such company of its liability for the acts of such agent hereunder and such Penalty, company shall be subject to a penalty of fifty dollars for every such violation. Inspection of Everv agent of any such company not regularly em- Agent by Supt. J i= 11111 . • J ployed in its own office shall be subject to mspection and examination by the superintendent of banks in order to ascertain that such business is being lawfully conducted, and that all moneys received are properly accounted for; for which purpose the superintendent of banks may also [281 GENERAL PROVISIONS § 13 prescribe the manner and form of keeping the books and accounts of such agent. Whenever the superintendent of banks upon his own determination makes an examination of any such agent transacting or about to transact business under the provi- sions of this section, the expenses thereof shall be paid by the company represented by such agent. Every railroad, steamship and express company trans- Annual Report by •' r r r J such companies. acting business in this state under this section shall an- nually, on or before the fifteenth day of March, file with the superintendent of banks its duly verified report, in the form prescribed by the superintendent of banks, showing in such detail as may be required by him, its business and transactions during the preceding calendar year relative to the receipts and transmission of money to foreign countries. The superintendent of banks shall Penalty for faiiuro 111. 1 ''''' ™*^® report. have the power to revoke the authority to transact such business in this state of any railroad, steamship or express company which fails to make and file such annual report as herein provided. Every railroad, steamship or express company trans- Annual fee payable acting business in this state under this section shall pay to the superintendent of banks on or before the first day of July in each year a fee of two hundred fifty dollars. This section shall not apply to the receipt of money for Teiegrraph companies excepted. immediate transmission by telegraph by the duly author- ized agent of any duly incorporated telegraph company, at any regularly established office of such company. Whoever, not being an authorized officer or employee Penalty for unauthor- ized soliciting or of a bank, or the duly designated agent for that purpose receiving money for transmission, of a railroad, steamship or express company, holds him- self out as authorized to receive, or solicits, or receives money for the purpose of transmitting the same, or the equivalent thereof, to foreign countries, shall, upon con- viction, be fined not more than five thousand dollars oi [29] § 13-15 BLYTH. WITTER & CO. imprisoned in the penitentiary not more than ten years, or both. [Publishers' note, re Section 13, as amended 1921: The purpose of this very material amendment is the regulation and control of dealings in foreign exchange. Only hanks, duly incorporated, and qualified rail- road, steamship and express companies, general travel and tourist copartnerships and corporations may receive money for transmission to foreign countries. The amendment does not affect banks directly, but prescribes the method for trans- acting this business by railroad, steamship and express companies. They must assign to the business in this State capital of not less than the amount required for a bank in the largest place where such company has an office or agency. They must also file a list of agents with the superintendent of banks, and deposit $50,- 000 in money or in securities or put up a bond in that amount. The superintendent of banks may prescribe the method of keeping books and accounts, and shall examine the agents and companies doing this business. Such companies shall make an annual report to the superintendent and pay a fee of $250 a year.] Advertisement of Section 1 4. No bank, or officer thereof, shall advertise capital. in any manner, or publish any statement of the capital authorized or subscribed, unless it or he advertise and publish in connection therewith, the amount of capital actually paid up. No bank shall publish a statement of Joint advertising jjg j-esources or liabilities in connection with those of any condition of two banks, other bank, unless such statement shall show the resources and liabilities of each bank separately; nor shall surplus and undivided profits be advertised as an aggregate. All deposits, un- Section 15. All amounts of money heretofore or here- claimed or not with- drawn for 20 years, after deposited with any bank to the credit of depositors to be deposited with State Treasurer, who have not made a deposit on said account or with- after judgment, as provided by law. drawn any part thereof or the interest and which shall have remained unclaimed for more than twenty years after the date of such deposit, or withdrawal of any part or principal or interest, and where neither the depositor or any claimant has filed any notice with such bank show- ing his or her present residence, shall, with the increase and proceeds thereof, be deposited with the state treas- urer after judgment in the manner provided in the Code Court procedure to o^ ^ivil Procedure. At the time of issuing the summons taLing°such judg- '^ ^^^ action provided for in section 1273 of the Code of ment against bank Qiy{\ Procedure, the clerk shall also issue a notice signed ana ail claimants. by him, giving the title and number of said action, and referring to the complaint therein, and directed to all persons, other than those named as defendants therein, [30] GENERAL PROVISIONS claiming any interest in any deposit mentioned in said complaint, and requiring them to appear within sixty days after the first publication of such summons, and show cause, if any they have, why the moneys involved in said action should not be deposited with the state treasurer as in said section provided, and notifying them that if they do not so appear and show cause, the state will apply to the court for the relief demanded in the complaint. A copy of said notice shall be attached to and published with the copy of said summons required to be published by said section, and at the end of the copy of such notice so published there shall be a state- ment of the date of the first publication of said summons and notice. Any person interested may appear in said Any person inter- j . . I . ested may become action and become a party thereto. Upon the completion pai'.y to action. of the publication of the summons and notice, and the service of the summons on the defendant bank, or banks, as in said section 12 73 of the Code of Civil Procedure provided, the court shall have full and complete jurisdic- tion over the state, and the said deposits and of the per- son of every one having or claiming any interest in the said deposits, or any of them, and shall have full and complete jurisdiction to hear and determine the issues therein, and render the appropriate judgment thereon. The president or managing officer of every bank must, f;;;'^';";/^'^^^ " within fifteen days after the first day of January of every ^womTa^^ment'"" year, return to the superintendent of banks and to the f orth'"n sectio^" ^* state controller a sworn statement showing the names of depositors known to be dead, or who have not made fur- ther deposits, or withdrawn any moneys during the pre- ceding twenty years. Such statement shall show in detail the following matters, viz. : First — The name and last known place of residence or postoffice address of the person making such deposit; Second — The amount and date of such deposit and [31] § 15 BLYTH. WITTER & CO. whether the same are in moneys or securities, and if the latter, the nature of the same; Third — ^The interest due on such deposit, if any, and the amount thereof; Fourth — The sum total of such deposit, together with the interest added thereto due from such bank on account of such deposit or deposits and the interest thereon to such depositor, but nothing contained herein shall require any corporation or person renting lock boxes or safes in vaults for storage purposes to open or report concerning Aforesaid reports property stored therein. Such reports itemized as afore- shall be sworn to. "^ '^ •' i • i j said shall be signed by the person making the same and shall be sworn to before a person competent to adminis- ter oaths as a full, complete and truthful statement of each of the items therein contained. Bank must return The president or managing officer of every bank must, biennial statement . ^ . r c i r ir i CT C of depositors de- withm hiteen days arter the rirst day or January or every ceased or not making ,, , , ,ii •^Itt'Ll or withdrawing de- odd numbered year, return to the supermtendent or banks posits during preced- . . i • il f j -i. ing 10 years, a sworn Statement showmg the names or depositors known to be dead, or who have not made further de- posits, or withdrawn any moneys during the preceding What such state- ten years. Such statements shall show the amount of ments shall show. , ii .'i.i i f*i the account, the depositor s last known place or residence or post-office address, and the fact of death, if known to such president or managing officer. Such president or Notice of deposits to managing officer must give notice of these deposits in one or more newspapers published in or nearest to the town or city where such bank has its principal place of busi- ness, at least once a week for four consecutive weeks, the cost of such publication to be paid pro rata out of such unclaimed deposits. The superintendent of banks must incorporate in his subsequent report such returns made to him as provided in this section. If any president or man- aging officer of any bank neglects or refuses to make the sworn statements required by this section such bank shall forfeit to the State of California the sum of one hundred [32] Penalties. GENERAL PROVISIONS § I 5- 15a dollars a day for each day such default shall continue. Any president or managing officer of any bank who vio- ^^*® °^ receipt of •' deposits transferred lates any of the provisions of this section shall forfeit to ^""^ another bank, etc. the State of California the sum of one hundred dollars a day for each and every day such violation shall continue. For the purposes of this section all deposits received by any bank under the provisions of section thirty-one, sec- tion thirty-one a or section thirty-one b of this act shall be deemed to have been deposited with such bank at the time the deposit was made with the bank from which the deposit was transferred; provided, that any bank which shall make any deposit with the state treasurer in con- Bank making deposit formity with the provisions of this section shall not there- under section msT'^*' after be liable to any person for the same and any action which may be brought by any person against any bank for moneys so deposited with the state treasurer shall be defended by the attorney general without cost to such bank. thereafter liable. [Publishers' note, re Section 15, as amended 1921: This section is the same as the old Section 15 with the exception that the amended section omits the provision that "this section does not apply to any de- posit by or in the name of a person known to the president or managing offiicer to be living." A copy of Section 1273, Code of Civil Procedure, which section is referred to in the above section, is set forth in the Appendix at the end of this Act.] Sec. 15a. When any deposit shall be made by or in Deposits by or in . _ name of minor. the name of any minor, the same shall be held for the ex- clusive right and benefit of such minor, and free from the control or lien of all other persons, except creditors, and shall be paid, together with the dividends thereon, to the person in whose name the deposit shall have been made, and the receipt or acquittance of such minor shall be a valid and sufficient release and discharge to such savings bank for such deposit or any part thereof. When any deposit shall be made by any person in Deposits by one in - , . , • 1- I trust for another wnen trust ror another, and no other or further notice of the trust not in writing. existence and terms of a legal and valid trust shall have been given in writing to such savings bank, in the event of the death of the trustee, the deposit or any part thereof, [331 15a- 16 BLYTH, WITTER & CO. together with the dividends thereon, may be paid to the person for whom the deposit was made. Joint deposits^ with y^},en a deposit shall be made by any person in the survivorship, j^a^es of such depositor and another person and in form to be paid to either or the survivor of them, such deposit and any additions thereto made by either of such persons after the making thereof, shall become the property of such persons as joint tenants, and the same together with all dividends thereon shall be held for the exclusive use of such persons and may be paid to either during the life- time of both or to the survivor after the death of one of them, and such payment and the receipt or acquittance of the one to whom such payment is made shall be a valid and sufficient release and discharge to such savings bank for all payments made on account of such deposit prior to the receipt by such savings bank of notice in writing not to pay such deposit in accordance with the terms thereof. The making of the deposit in such form shall, in the absence of fraud or undue influence, be conclusive evidence, in any action or proceeding to w^hich either such savings bank or the surviving depositor is a party, of the intention of both depositors to vest title to such deposit and the additions thereto in such survivor. [Publishers' note, re Section 15a, as amended 1921: This new section authorizes (1) deposits by or in the name of a minor; (2) deposits by any person in trust for another with authorization that the deposit may, upon the death of the trustee, be paid to the person for whom the deposit was so made, unless the bank have written notice of the existence and terms of a legal trust; and (3) joint deposits with the right of survivorship.] (Section 16. Repealed 1919.) [Publishers' note, re Section 16, repealed 1919. The first paragraph of Section 16 was simply declarative of the right of Sav- ings Banks to indulge a joint deposit with right of survivorship. It was not deemed necessary to retain that part of the section. (See Crowley vs. Union Savings Bank and Trust Co., 30 Cal., App. 144, and McCarty vs. Holland, 30 Cal,, App. 495.) The second and last paragraphs of Section 16 of the Bank Act and Section 1454 of the Code of Civil Procedure were substantially the same, Both related to a privilege granted to certain surviving heirs of a deceased depositor in a bank to withdraw from that bank any sum not greater than $1,000 if that sum is the aggregate of all moneys deposited in banks of this State by the deceased deposi- tor. There was pending before the Legislature at the 1919 Session an amend- ment to said Section 1454 to permit, under similar conditions, the additional right of receiving personal property on deposit or in safe deposit boxes in an amount not to exceed $500. In order not to provoke a conflict as between that Section and Section 16 of the Bank Act, Section 16 was repealed. The amendment to [34] GENERAL PROVISIONS § 16-19 Section 1454, however, failed of passage in 1919. A similar eifort to have such statute enacted by the Legislature of 1921 was likewise unsuccessful. The sub- ject is therefore governed by Section 1454 in its existing rorm. For a copy of said Section, see Appendix.] Section 1 7. Every bank shall keep posted in its office, f -,^ ^,t"s?bi1 to in a conspicuous place, accessible to the public generally, ^o'^^g^'anVthei^^hlre' a notice signed by the president or secretary, showing: holdings. 1 . The names of the directors of such bank. 2. The number and the par value of the shares of stock held by each director. The entries on such book and such notice shall be made Entries on such book and notice to and posted within twenty-four hours after any transfer be posted within 24 f . • 1 • 1 hours after stock of stock, and shall be prima facie evidence against each transfer. director of the number of shares of stock held by each. [Publishers' note, re Section 17, as amended 1921: This amendment eliminates the requirement, in the old section, that the bank shall keep a book containing a record of stockholders and the number of shares held by each, in a conspicuous place in its office.] (Section 18. Repealed 1913.) Section 1 9. The aggregate of paid-up capital together percentage of paid- , , . -Ill 1 up capital and surplus With the surplus, of every commercial bank, must equal to deposits of the following percentages of its deposit liabilities: (a) Ten per centum of any amount up to and includ- ing two million dollars. (b) Seven and one-half per centum of any amount in excess of two million dollars up to and including five million dollars. (c) Five per centum of any amount in excess of five million dollars. The aggregate of paid-up capital together with the sur- percentage of paid-up f f . Ill- 'i.!!.! Ji.U capital and surplus of plus or every savings bank having a capital stock, ana tne savings bank having r ^ r • ii'.^l_t '1.1 capital stock, and reserve fund or every savings bank without a capital reserve fund of stock, must equal the following percentages of its deposit capitaf-stock. liabilities: (d) Ten per centum of any amount up to and includ- ing one million dollars. [35] § 19-20 BLYTH. WITTER & CO. (e) Seven and one-half per centum of any amount in excess of one million dollars up to and including three million dollars. (f) Five per centum of any amount in excess of three million dollars up to and including ten million dollars. (g) Two and one-half per centum of any amount in excess of ten million dollars up to and including twenty- five million dollars. (h) One per centum of any amount in excess of twenty-five million dollars. Restriction on in- The deposits shall HOt be increased if such proportion crease of deposits. r ■ i -ii i flil*.. of paid-up capital and surplus or reserve rund to deposit liabilities is not maintained, and in no event shall said paid-up capital be less than the minimum paid-up capital provided by this act; provided, that such deposit liabilities Deposit liabilities shall be exclusive of United States and postal savings de- to be exclusive of » c governmental de- posits and deposits of the State of California and of any county and municipality in the State of California which are secured as required by law. [Publishers' note, re. Section 19, as amended 1921: This amendment provides that the aggregate of paid-up capital, together with the surplus, of every commercial bank, instead of being equal to ten per cent, of its deposit liabilities, as was previously the case, must equal the percentages specified in subdivisions (a), (b) and (c) of the section; and in the case of sav- ings banks such paid-up capital and surplus must equal the percentages designated in subdivisions (d), (e), (f), (g) and Ch).] Commercial bank to Section 20. Every commercial bank shall maintain maintain total reserves , . . ^ • l • c against aggregate total rescrves agamst its aggregate deposits, exclusive or deposits as specified. United States and postal savings deposits and deposits of the State of California and of any county and municipality in the State of California, which are secured as required by law, as follows: 1 . Eighteen per centum of such deposits if such bank has its principal place of business in a city having a popu- lation of one hundred thousand or over. 2. Fifteen per centum of such deposits, if such bank is located in a city having a population of fifty thousand or over and less than one hundred thousand. [361 GENERAL PROVISIONS § 20 3, Twelve per centum of such deposits if such bank is located elsewhere in the State. At least one-half of the total reserves shall be main- ^"^^.^^^^f^^^Hnd col- tained as reserves on hand and shall consist of gold bul- Btituted. lion or any form of money or currency authorized by the laws of the United States, and the remainder of the total reserves required by the provisions of this section shall be maintained as reserves on deposit or as reserves on hand; such reserves on hand to consist of gold bullion or any form of money or currency authorized by the laws of the United States; provided, however, that all or any ah or part of re- 11 -^ J r* 1 1 11 serves may be de- part of the reserves may be deposited, subject to call, posited with Federal with a federal reserve bank in the district in which such bank is located. If any bank shall have become a member of a federal ^g^^^^f FeS^RT™' reserve bank, it shall comply with the reserve require- serve Bank to comply ' ^ •' with requirements of ments of the federal reserve act and its amendments, and Federal Heserve Act. its compliance therewith shall be in lieu of, and shall relieve such bank from compliance with, the provisions of this section. If any bank shall not maintain the total reserves re- Penalties for not , maintaining total quired the superintendent of banks may impose a penalty reserves required. upon it, based upon the length of time such encroachment upon its total reserves amounting to one per centum or more of its aggregate deposits shall continue, at the fol- lowing rates: 1 . At the rate of six per centum per annum upon any such encroachment not exceeding two per centum of such deposits. 2. At the rate of eight per centum per annum upon any additional encroachment in excess of two and not exceeding three per centum of such deposits. 3. At the rate of ten per centum per annum upon any additional encroachment in excess of three and not ex- ceeding four per centum of such deposits. [371 §20 BLYTH, WITTER & CO. 4. At the rate of twelve per centum per annum upon any additional encroachment in excess of four per cen- tum of such deposits. Designation by Supt. f^g Superintendent of banks shall, in his discretion, of depositary for "^ reserves on deposit, upon the nomination of any bank, designate a depositary or depositaries for the reserves on deposit of such bank provided for by this act. Except as otherwise provided in this section, such depositary shall be a bank or na- tional banking association located in this state. Every Total-reserve reguire- . i-ii • ••11 £U* ments for reserve reserve depositary, which has its principal place or busi- depositary. . .,.., |. . . ■> i-L-i-i. ness in a judicial township or m a city located in this state in which the population is less than fifty thousand, shall have at all times as its total reserves an amount equal to the total reserves required by the provisions of this sec- tion for every bank which has its principal place of busi- ness in a city having a population of fifty thousand or Requirements of bank over and less than One hundred thousand. But no bank or Natl. Banking i j • Assn. to be desig- or national banking association shall hereafter be desig- nated as reserve de- i • l ll positary. nated as a depositary of any such reserves unless it shall have a combined capital and surplus of not less than the following amounts: 1 . Two hundred fifty thousand dollars, if located in a city which has a population of three hundred thousand or over; 2. Two hundred thousand dollars, if located in a city which has a population of one hundred thousand or over and less than three hundred thousand; 3. One hundred fifty thousand dollars, if located in a city which has a population of fifty thousand or over and less than one hundred thousand; 4. One hundred thousand dollars, if located elsewhere in the state. Such deposiury may Such depositary may also be a banking corporation also be banking cor- ^ j j poration with capital .^^jjjj ^ capital and surplus of one million dollars or more, and surplus as '^ ^ specified. Jocated in any city in the United States. [381 GENERAL PROVISIONS § 20 If the total reserves of any bank shall be less than the Effect of impairment '' 11 • °^ total reserves. amount required by this section, such bank shall not in- crease its liabilities by making any new loans or dis- counts, otherwise than by discounting bills of exchange on sight, or by paying any dividends from profits until the full amount of its total reserves has been restored. The superintendent of banks may notify any bank whose ^^f„„^t^i*^^7rom"" ^°' total reserves shall be below the amount herein required, ^^^^-'^H ^HlZllll^^ to restore such total reserves; and, if it shall fail for thirty solvent. days thereafter to restore such total reserves, such bank shall be deemed insolvent and may be proceeded against ^^tTsec-^w.*""^^^ under the provisions of this act; provided, that all deposits of money herein permitted or required shall comply with the provisions of section forty-three of this act. The term, "reserves on hand," when used in this act, ^Rg^'g^^vrs"^ hand." means the reserves against deposits kept, pursuant to the provisions of this act, in the vault of any bank or in any safety deposit box in any other bank in this state, said box to be under the exclusive control of the depositing bank. The term, "reserves on deposit," when used in this "Reserves on de- posit. act, means the reserves against deposits maintained by any bank pursuant to this act in reserve depositaries, or in a federal reserve bank in the district in which such bank is located and not in excess of the amount author- ized by this act. The term, "total reserves," when used in this act, 'Total reserves." means the aggregate of reserves on hand and reserves on deposit maintained pursuant to the provisions of this act. The term, "reserve depositary," when used in this act, "Reserve depositary.- means a bank, trust company or banking corporation des- ignated by the superintendent of banks on the nomination of the depositing bank as a depositary for reserves on deposit. [39] § 2 1 BLYTH, WITTER 6c CO. Directors of bank Section 2 1 . The directors of any bank having a capi- having capital stock may declare and ^q\ gtock may, at Certain times, and in such manner as its pay dividends, as •' t • i i i • specified, by-laws prescribe, declare and pay dividends to deposi- tors and stockholders of so much of the profits of the bank, and of the interest arising from the capital, sur- plus and deposits, as may be appropriated for that pur- pose under its by-laws or under its agreements with de- positors, but every such bank shall, before the declara- tion of any such dividend, carry at least one-tenth part of the net profits of the stockholders for the preceding half year, or for such period as is covered by the divi- dend, to its surplus, until such surplus shall amount to twenty-five per centum of its paid-up capital stock. The Surplus convertible "whole Or any part of such surplus, if held as the exclusive into paid-in capital in which event sur- property of the Stockholders, may at any time be con- plus to be restored. »^ ^ ■' verted into paid in capital, in which event such surplus shall be restored in the manner above provided until it amounts to twenty-five per centum of the aggregate paid- Loses sustained in up capital stock. Subject to the provisions of section excess of undivided x- r- j profits may be nineteen of this act, any losses sustained by any such bank charged to and paid from surplus, Jn excess of its Undivided profits may be charged to and etc. paid from its surplus, in which event such surplus shall be restored in the manner above provided, to the amount required by law; provided, however, that any bank which has invested any portion of its surplus in its bank prem- ises, furniture and fixtures, vaults, or safe deposit vaults, and boxes necessary or proper to carry on its banking business shall not be permitted to charge any loss to that portion of its surplus so invested. A larger surplus may be created and nothing herein contained shall be con- priority of security strued as prohibitory thereof. The capital and assets of over stockholders. iii -.ii •■. J..1 any such bank are a security to depositors and stock- holders, depositors having the priority of security over stockholders. Preference to depos- Section 2 1 a. No bank, banker, or bank officer, shall itor or creditor pro- hibited, except as give perference to any depositor or creditor except as otherwise author- iii -iiL ized; otherwise authorized by law; provided, that any commer- [40] GENERAL PROVISIONS §21j cial bank or commercial department of a departmental bank, is authorized and empowered for temporary pur- providedcommer- poses, to borrow money, or to borrow money and pledge ^^^ mTn^e^and''"' or hypothecate as collateral security therefor, its assets fn'a^ount and upo^n not exceeding fifty per centum in excess of the amount '^•""litions specified. borrowed, but only to the extent and upon terms and con- ditions as follows: ( 1 ) Any amount up to, but not exceeding the amount Not exceeding cap- ^ ' -' "^ ^ ital and surplus; of its capital and surplus, without consent of the superin- provisos as to ei- ^ "^ cess loans. tendent of banks; provided, however, that any amount borrowed, except as otherwise provided in this section, in excess of the amount of its capital and surplus, at such time actually paid in and remaining undiminished by losses or otherwise, must first be approved in writing by the superintendent of banks; provided, also, that no ex- cess loan made to any such bank shall be invalid or illegal as to the lender, even though made without the consent of the superintendent of banks; provided, also, that the rediscounting with or without guarantee or endorsement with a federal reserve bank, of notes, drafts, bills of ex- change and loans secured by obligations of the United States, is hereby authorized and shall not be limited by Rediscounting, notes, •' loans, etc., with the terms of this act, and shall not be considered as bor- Federal Reserve bank not borrowed rowed money within the meaning of this section. money. (2) Any amount of California, state, county, city, f"^]''^ """^eys or \ ^ -^ . r funds of State and city and county funds, or any other public money, in its subdivisions. the manner it is or may be authorized by law to borrow and receive such public money on deposit without the approval of the superintendent of banks. (3) Any amount of the United States moneys and tt. s. moneys and V ' •' postal savings and postal savings moneys of the United States, and receive P|fj^//u^s.^ laws'"' such moneys on deposit, and pledge or hypothecate such of its securities and upon such terms as may be required by the laws of the United States or the rules and regula- tions of the secretary of the treasury of the United States, without the approval of the superintendent of banks. [41] §2 la -2 2 BLYTH. WITTER & CO. ^"r°H/»°J^ ?;>,!; (4) Any amount, in addition to the amounts author- bonds and other \ ^ ^ » u. s. obligations, j^ed to be borrowed in this section, for the purpose of buying from the United States, United States bonds, United States treasury certificates, or notes or obligations of the United States. Rediscounting with (5) To rediscount with and sell to a federal reserve Federal Reserve banknotes, etc., as bank any and all such notes, drafts, bills of exchange, specified. acceptances and any other securities, with no other re- strictions, and as fully, and to the same extent as this privilege is given to national bank members under the terms of the federal reserve act, or by regulations of the federal reserve board made pursuant thereto. [Publishers' note, re Section 21a, as amended 1921: The above is a re-enactment, unchanged, of the introductory paragraph: and subdivisions (1), (2), (3), (4) and (5) of Section 21a as amended in 1919, and omits subdivisions (6), (7) and (8) of the 1919 amendment, which are, however, re-enacted in the next, new section, as 21b.] Partial payments Section 21b. ( 1 ) No bank shall make partial pay- upon deposit. ments upon any certificate of deposit. 90-day overdraft (2) In no case shall an overdraft of more than ninety days' standing be allowed as an asset of any bank. Debt due commercial (3) Any debt due to any commercial bank, on which bank, when bad . debt, interest is past due and unpaid for the period of one year, unless the same is well secured, and is in process of col- lection, shall be considered a bad debt and shall be charged off to the profit and loss account at the expira- tion of that time. [Publishers' note, re Section 21b, re-enacting, 1921, as a separate section, un- changed, the last three subdivisions of Section 21a, as amended in 1919. See publishers' note to Section 21a, above.] authorizeTma^'com" Section 22. Any corporation authorized by its articles bine business of of incorporation so to do, may combine the business of commercial and sav- '' ings banks and trust a commercial bank and savings bank and trust company, company, etc. ^ r j i or any one or more or all of them; provided, that no cor- poration authorized to transact a trust business and which is also organized to engage in the business of title insur- ance, shall engage in or combine the business of a com- mercial bank or savings bank. [421 GENERAL PROVISIONS §^ Section 23. When a bank desires to do a departmental business, it shall first obtain the consent of the superin- do7nTdepar'tm°ntal tendent of banks, and in its application therefor, file a t'^^inesss. statement making a segregation of its capital and surplus for each department. Such capital and surplus, when so apportioned and approved by the superintendent of banks, shall be considered and treated as the separate capital and surplus of such department as if each depart- ment was a separate bank. Thereafter a bank may, from time to time, with the previous consent and approval of the superintendent of banks and subject to the pro- Apportionment and (■ ^. . . £ . 1 • 1. I segregation of capi- visions or section nineteen or this act, change any segre- tai and surplus of gation and apportionment of capital and surplus previ- ously made and make a new segregation and apportion- ment of its capital and surplus. Every bank hereafter organized doing a departmental business shall have paid fe^^^i^emTnu!^^ '^°'^ up, in cash, capital stock as follows: (a) In any locality in which the population does not exceed five thousand persons, not less than twenty-five thousand dollars if it transacts both a commercial and savings business, or not less than one hundred twenty-five where population not thousand dollars if it transacts both a commercial and trust business, or not less than one hundred twenty-five thousand dollars if it transacts both a savings and trust business and not less than one hundred twenty-five thou- sand dollars if it transacts a commercial, savings and trust business. (b) In any city in which the population is more than ^^il^i"! P°?^i^*^°'' 5,000 to 25,000. five thousand persons, but does not exceed twenty-five thousand persons, not less than fifty thousand dollars if it transacts both a commercial and savings business, or not less than one hundred fifty thousand dollars if it transacts both a commercial and trust business, or not less than one hundred fifty thousand dollars if it transacts both a savings and trust business, and not less than one hundred fifty thousand dollars if it transacts a commercial, sav- ings and trust business. [43] § 23 BLYTH, WITTER & CO. S'o^o to° loo^ooo! (*^) ^" ^^y ^^'y ^^ which the population is more than twenty-five thousand persons but does not exceed one hundred thousand persons, not less than one hundred thousand dollars, if it transacts both a commercial and savings business, or not less than two hundred thousand dollars if it transacts both a commercial and trust busi- ness, or not less than two hundred thousand dollars if it transacts both a savings and trust business, and not less than two hundred thousand dollars if it transacts a com- mercial, savings and trust business. 100 ooVto^20o*ooo ^^^ ^^ ^"y ^'*-y ^" which the population is more than one hundred thousand persons but does not exceed two hundred thousand persons, not less than two hundred thousand dollars, if it transacts both a commercial and savings business, or not less than four hundred thousand dollars if it transacts both a commercial and trust busi- ness, or not less than four hundred thousand dollars if it transacts both a savings and trust business, and not less than four hundred thousand dollars if it transacts a com- mercial, savings and trust business. ^xceeds^20Moo (^) ^^ ^"X ^^^Y ^^ which the population exceeds two hundred thousand persons, not less than three hundred thousand dollars if it transacts both a commercial and savings business, or not less than five hundred thousand dollars if it transacts both a commercial and trust busi- ness, or not less than five hundred thousand dollars if it transacts both a savings and trust business, and not less than five hundred thousand dollars if it transacts a com- mercial, savings and trust business. ti\ff nofa^ppUcaWe The foregoing classification shall not apply to any ** bank^inciuded by bank already in existence which has received from the annexation in larger superintendent of banks a Certificate to do a banking business; nor to any bank the location of which shall have been included by annexation or consolidation within the limits of a city of a class requiring a larger capitaliza- tion, but no bank thus excepted shall be permitted to [44] GENERAL PROVISIONS § 23 establish any new branch office as provided in section nine of this act or to remove its place of business from the original limits of the city or township wherein it was located prior to such annexation or consolidation until it shall have the capital required of banks in such city not within said exception. Such excepted banks may not in any case decrease their capital stock but may increase the same in the manner provided by law to an amount either greater or less than that required of banks in such city not within said exception. The capital stock referred to herein shall be increased from time to time and to the same extent as provided for in section nineteen of this act. Nothing herein contained shall prevent the superin- supt. may grant =• "^ _ license to bank hero- tendent of banks in the exercise of his discretion from after organized in lo- cality included oy granting his license to any bank hereafter organized in a annexation, etc., as 1111 • specified. locality which has been included by annexation or con- solidation within the limits of a city requiring a larger cap- italization with a capital stock paid up in cash equal to that which would have been required for said locality if it had not been included by annexation or consolidation within the limits of a city requiring a larger capitalization; ^^h\"t''"g°3"^bUsh provided, that no bank so licensed shall be permitted to branch office. establish any branch office as provided in section nine of this act or to remove its place of business from the orig- inal limits of the city or township which has been included by annexation or consolidation within the limits of a city requiring a larger capitalization until it shall have the cap- ital required of banks in such city requiring said larger capitalization. For the purposes of this act, the population shown and Population, for pur- *^ poses of Act — now determined by the last preceding federal census, or any determined. subsequent census compiled and certified under any law of this state, shall be deemed to be the population of any city in which any such bank is to be organized. If the principal place of business of any bank so organized is located outside of the corporate limits of any city, then [451 § 23-24a BLYTH. WITTER & CO. the population of that portion of the judicial township in which said bank is to have its principal place of business, which is not included within the boundaries of any municipal corporation, as such population is shown and determined by such federal or subsequent official census, shall be the basis for classification under the provisions of this act. [Publishers' note, re Section 23, as amended 1921: This amendment consists in the insertion of a paragrapn preceding the last paragraph, providing that the superintendent, in his discretion, may grant a license to a bank hereafter organized in a locality which has been included by annexation or consolidation, within the limits of a city requiring a larger cap- italization, with a capital stock equal to that which would have been required if the locality had not been annexed or consolidated; but no such bank shall have a right to establish a branch office or to remove its place of business from the ori- ginal limits of the city or township which has been included by annexation or consolidation, until it shall have the capital required of banks in the city re- quiring a larger capitalization.] Section 24. Every bank, before it commences to do business or before it opens a new department and com- Bank before com- mencing business or opening new depart- ment shall obtain , . . -i i j . certificate of supt., mences to transact business in or under sucri new depart- etc. ment, shall obtain the certificate of the superintendent of banks for the opening of each of the departments speci- fied. Each certificate herein provided for shall be given when the superintendent shall, by the examination re- quired by this act, have satisfied himself that the proper amount of cash has been paid in as capital and the pro- visions of this act complied with. The applicant shall pay for the certificate for each department a fee of fifty dollars. Supt. to adopt Section 24a. The superintendent of banks shall adopt an official seal. Every paper executed by him as such superintendent of banks in pursuance of any authority Effect as evidence conferred on him by law, and sealed with his seal of of papers executed •' j j by Supt. office, shall be received in evidence, and may be recorded in the proper recording offices in the same manner and v/ith the same effect as a deed regularly acknowledged. Fees chargeable by Whenever it is proper to furnish a copy of any paper Supt. for copies, etc. . .- , filed in the state banking department and to certity such paper, except where such copy or certification is made for the benefit of a corporation to which this act is applicable, [461 GENERAL PROVISIONS § 24a-26 the superintendent of banks may charge ten cents per folio for each such copy, and for affixing his official seal on such copy and certifying the same, one dollar. [Publishers' note, re Section 24a, new, enacted 1921 : This section provides that the superintendent shall adopt an official seal, and the papers executed by him in pursuance of authority conferred by law and sealed with the seal of his office, shall be received in evidence and may be recorded as a deed regularly acknowledged. The superintendent is authorized to make a charge of 10 cents a folio for copies of any paper filed in the State Banking Department, and a fee of $1.00 for certifying the same, except where the copy or certification Is made for the bene- fit of a corporation to which this Act is applicable.] Section 25. Every bank shall maintain for each de- Bank to maintain partment total reserves equal in amount to that required total reserve^!' ^ by this act for the respective business conducted, and shall keep separate and distinct the total reserves of any department from that of any other department; and all deposits made with other banks, whether temporary or Deposits by depart- 1 . , ,, , i- , . , ment with other otherw^ise, shall be assets of the respective departments banks— how treated. by which they were made, and shall be so carried on the books of such other banks, and shall be repaid only upon the order of the department to whose credit they stand. No department shall receive deposits from any other de- partment of the same corporation ; except that a trust department, in proper cases, may make deposits of trust or any other funds under its control with the savings de- partment or the commercial department, of the same cor- poration; provided, however, that any bank having de- partments shall have the right to sell and transfer any bonds, securities or loans from one department to another upon receipt of the actual value thereof, if such bonds, securities or loans are, under the provisions of this act, s^o°ifa'nd\ranTf7rred a legal investment for the department purchasing the tr^oTher.^^^'*""^"* same. [Publishers' note, re Section 25, as amended 1921: This section previously authorized a trust department to make deposit of trust or other funds with the savings department, and, upon authorization of a proper court, with the commercial department. The amendment permits the trust de- partment to make deposits with the commercial department without authorization of court.] Section 26. Every bank having different departments Each department to hill lir r II keep separate books all keep separate books or account ror each depart- and be governed by ment of its business, and shall be governed as to all de- posits, reserves, investments and transactions relating to [47] provisions of Act. § 26-28 BLYTH, WITTER & CO. each department by the provisions of this act specifically provided for the respective kind of business. It shall keep all investments relating to the savings department entirely separate and apart from the invest- ments of its other department or departments. Every bank shall conduct the business of all its depart- ments in one building, or in adjoining buildings; pro- vided, that any departmental bank, having a trust depart- ment, may conduct, with the previous written consent of the superintendent of banks, the business of its trust de- Trust department partment in a building separate from its principal place may be conducted ^ = » in separate building. qJ busincss in the same city in which its principal place of business is located. Mingling of cash, Every bank shall keep entirely separate and apart in securities, etc., •' ill forbidden, g^^h department the cash, securities and property belong- ing to such department, and shall not mingle the cash, securities and property of one department with that of another. [Publishers' note, re Section 26, as amended 1921: This amendment permits the trust department of a departmental bank, with the previous written consent of the superintendent, to be conducted in a separate building in the same city, instead of in one building or in adjoining buildings, as previously provided.] Moneys and assets Section 2 7. All money and assets belonging to each of each department •ii'Ll J held for repayment department, whether on hand or with other banks, and etc' the investments made, shall be held solely for the repay- ment of the depositors and other claimants of each such department, as herein provided, until all depositors and other claimants of each such department shall have been paid, and the overplus then remaining shall be applied to any other liabilities of such bank. Every bank must on Section 28. Every bank in this state must, on its prin- signs, advertising, -^ , . . etc., specify its cipal place of business and on all communications to de- business — "savings," ^ i r • i 1^ ai U J "trust" or "commer- positors, and on each of its branch ornces, use the word "savings" if it conducts a savings business, and the word "trust" if it conducts a trust business, and the word "commercial" if it conducts a commercial business. Every vertising refuirfmLt bank which maintains a branch office must on all win- dow signs and in advertising, and on letterheads and [48] GENERAL PROVISIONS § 28-29 other stationery on which the business of said branch office is transacted, use in letters and type, equal in prominence to that used in its corporate name, the word "branch" and the name of the place where its principal business is located ; provided, that any such bank may on all window signs and in advertising, and on letter heads and other stationery of such branch offices as are located in the city where the principal place of business of such bank is located, use in letters and type, equal in prominence to that used in its corporate name, the word "branch" or the word "office," and the designation by street and num- ber of the place where its principal business is located. [Publishers' note, re Section 28, as amended 1921; This section, previous to its amendment as above, provided that the words "savings," "trust" and "commercial," if the respective businesses are trans- acted, must appear on all the bank's window signs, and in advertising and on letterheads and other stationery on which its business is transacted. The amendment provides that these words must be carried on the bank's principal place of business, and on all communications to depositors, and on each of its branch offices. The amendment adds an additional paragraph providing that the word "office," with the designation by street and number of the principal place of business, may be carried on all window signs and in advertising and on letter- heads and other stationery of such branch offices as are located in the city where the principal place of business of the bank is located.] Section 29. Every corporation heretofore created Bank without capx- J ^ . tal stock may convert under the laws of this state, doing a banking business into stock company. therein, and which has no capital stock, may elect to have a capital stock, and may issue certificates of stock therefor, in the same manner as corporations formed under the provisions of Part IV, Title I, Chapter I, Article I, of the Civil Code, relating to the formation of corpora- tions; provided, that no such corporation shall use or convert any moneys or funds theretofore belonging to it, or under its control, into capital stock; but such funds or moneys must be held and managed only for the purposes and in the manner for which they were created. Before Prerequisites to such conversion. such change is made, a majority of the members of such corporation present at a meeting called for the purpose of considering the proposition whether it is best to have a capital stock, its amount, and the number of shares into which it shall be divided, must vote in favor of having [49] §29-31 BLYTH. WITTER & CO. a capital stock, fix the amount thereof, and the number of shares into which it shall be divided. Notice of the time and place of holding such meeting, and its object, must be given by the president of such corporation by mailing notice of such meeting to each member of such corporation at his last known post-office address at least ten days prior to the day fixed for such meeting, and by publication in some newspaper printed and published in the county, or city and county, in which the principal place of business of the corporation is situated, at least Certified copy of once a Week for three successive weeks prior to the hold- proceedings, etc., . ,, . . ,, ,. ri. to be filed with Sec- mg OF the meeting. A copy or the proceedings or this retary of State and ...■,■,, < county clerk, meeting, givmg the number of persons present, the votes taken, the notice calling the meeting, the proof of its publication, the amount of capital actually subscribed, and by whom, all duly certified by the president and secretary of the corporation, must be filed in the office of the secretary of state and clerk of the county where the Effect of proceed- articles of incorporation are filed. Thereafter such cor- ings. ^ poration is possessed of all the rights and powers, and is subject to all the obligations, restrictions, and limita- tions, as if it had been originally created with a capital stock. Safe deposit de- Section 30. Any bank may conduct a safe deposit department, but shall not invest more than one-tenth of its capital and surplus in such safe deposit department. Business of bank Section 3 1 . Any bank may sell the whole of its or of department may be sold to business or the whole of the business of any of its de- other bank. partments to any other bank which may purchase such business after obtaining the consent of the stockholders of the selling and of the purchasing banks holding of record at least two-thirds of the issued capital stock of each of such corporations; such consent to be expressed either in w^riting executed and acknowledged by such stockholders and attached to the instrument of sale, or to a copy thereof, or by vote at a stockholders' meeting of [50] GENERAL PROVISIONS §_3j each of such banks called for that purpose. The selling f„tf4^e"mrtTf and purchasing banks must for such purposes enter into gpicXd* pr"ovUioiui. an agreement of sale and purchase, which agreement shall contain all the terms and conditions connected with such sale and purchase. Such agreement shall contain proper provision for the payment of liabilities of the selling bank or of the department sold, and the assump- tion by the purchasing bank of all fiduciary and trust obli- gations of the selling bank or department sold, and in these particulars shall be subject to the approval of the superintendent of banks; and shall not be valid until such approval is obtained. Such agreement may contain pro- visions for the transfer of all deposits to the purchasing bank, subject, however, to the right of every depositor of the selling bank to withdraw his deposit in full on de- mand after such transfer, irrespective of the terms under which it was deposited with the selling bank; and such agreement may also contain provisions for the transfer of all court and private trusts to the purchasing bank, sub- ject, however, to the right of trustors and beneficiaries, after such transfer, to nominate another and succeeding trustee of the trusts so transferred. The rights of cred- itors of the selling bank shall not in any manner be impaired by any such sale, nor shall any liability or obligation for the payment of any money due or to be- come due, or any claim or demand, in any manner, or for any cause existing against such selling bank or against purchasing bank 11,11 r ^ • 1J succeeds to rights any stockholder thereof, be in any manner released or and obligations of impaired, and all the rights, obligations and relations of all the parties, creditors, depositors, trustors and bene- ficiaries of trusts shall remain unimpaired by the sale, but such bank to which the other shall sell all its business or all the business of any of its departments, shall succeed to all such relations, obligations, trusts and liabilities and i^*^°^'i^|"'"'" """'" be held liable to pay and discharge all such debts and lia- bilities and to perform all such trusts of the selling bank in the same manner as if such bank to which the other had [511 § 3 I BLYTH. WITTER & CO. sold had itself incurred the obligation or liability or as- sumed the relation of trust, and the stockholders of the respective corporations so entering into such agreement shall continue subject to all the liabilities, claims and de- mands existing against them as such at or before such sale. Immediately after the execution of such agreement of Notice of sale to be g-^jg g^j^j purchase notice thereof shall be published for at published. ^ '^ least four successive weeks in a newspaper in each of the counties of the state in which either of such banks shall have its principal place of business; provided, however, that no action can be brought against such selling bank or any of its stockholders on account of any deposits, obligations, trusts or liabilities so transferred after the ex- piration of one year from the last day of publication Limitation of actions, herein required ; and provided, further, that such selling bank shall maintain for a period of one year after the last day of publication herein required such an amount, if any, of capital or capital and surplus as the superintend- ent of banks, in the exercise of his discretion, may deem necessary. An affidavit showing such publication shall be filed in the office of the superintendent of banks within ten days after the last publication thereof. The affairs of such selling bank, or selling department of a bank, shall re- main subject to the provisions of this act. Effect °gf^^PP''°J^i^}'y Upon the approval by the superintendent of banks of an agreement of sale and purchase and the transfer of the business of a trust department or of a bank having a trust department the purchasing bank shall, ipso facto and by operation of law and without further transfer, substitution, act or deed, and in all courts and places, be deemed and held to have succeeded and shall become subrogated and shall succeed to all rights, obligations, properties, assets, investments, deposits, demands, contracts, agreements, court and private trusts and other relations to any person, creditor, depositor, trustor, principal or beneficiary of any [52] GENERAL PROVISIONS § 3 I -3 I a court or private trust, obligations and liabilities of every nature, and shall execute and perform all such court and private trusts in the same manner as though it had itself originally assumed the relation or trust or incurred the obligation or liability. [Publishers' note, re Section 31, as amended 1921: This amendment adds, at the close of the next to the last paragraph, the fol- lowing sentence: "And provided, further, that such selling bank shall maintain for a period of one year after the last day of publication herein required such an amount, if any, of capital or capital and surplus as the superintendent of banks, in the exercise of his discretion, may deem necessary,"] Section 3 I a. Any bank incorporated under the laws state banks may ... i. I . I 11 consolidate, upon or this state may consolidate with one or more banks approval of Supt. incorporated under the laws of this state, its capital stockholders as I . 1-11 specified. stock, properties, trusts, claims, demands, contracts, agreements, obligations, debts, liabilities and assets of every kind and description, upon such terms and in such manner as may be agreed upon by their respective boards of directors, a copy of which agreement must be filed in the office of the superintendent of banks; provided, that such agreement shall be subject to the approval of the superintendent of banks and shall not be valid until such approval be obtained; provided, further, that no such consolidation shall take effect until such agreement shall have been ratified and confirmed in writing by the stock- holders of the respective banks holding of record at least two-thirds of the issued capital stock of their respective banks, or such agreement may be submitted to the stock- holders of each of such corporations at a meeting thereof to be called upon notice specifying the time, place and object thereof, addressed to each stockholder at his last known post-office address and deposited in the post- office, postage prepaid, at least two weeks prior to the date fixed for said meeting, and published for at least two successive weeks, prior to the date of said meeting, in a newspaper in each of the counties of the state in which any of such banks shall have its principal place of business, and if such agreement shall be approved at each of such meetings of the respective stockholders 153] §3 la BLYTH. WITTER & CO. separately by the vote or ballot of the stockholders own- ing at least two-thirds of the stock of each such bank, the same shall be the agreement of such banks. In case of such consolidation "articles of incorporation and con- solidation" must be prepared, setting forth: Contents of articles: pjj.s|. — jj^g name of the new corporation; consolidation. ^ ' Second — The purpose for which it is formed; Third — The place where its principal business is to be transacted ; Fourth — The term for which it is to exist, which shall not exceed fifty years; Fifth — The number of its directors (which shall not be less than three) and the names and residences of the persons appointed to act as such until their successors are elected and qualified; Sixth — The amount of its capital stock and the num- ber of shares into which it is divided; Seventh — The amount of stock actually subscribed, and by whom; Eighth — The names of the constituent corporations. Articles to be exe- Said articles of incorporation and consolidation must cuted as specified, ^ be signed and countersigned by the president and secre- tary of each constituent corporation and sealed w^ith their corporate seals. There must be annexed thereto the approval of the superintendent of banks and memo- randa of the ratification and confirmation thereof by the stockholders of each constituent corporation, which must be respectively signed and acknow^ledged by stockholders representing at least two-thirds of the capital stock of their respective corporations. Articies-with^whom When completed as aforesaid said articles must be filed in the office of the secretary of state and a copy of the articles of incorporation and consolidation, certified by the secretary of state, must be filed in the office of the county clerk of the county in which is located the prin- [54] GENERAL PROVISIONS §31-a cipal place of business of the new corporation. The sec- retary of state must issue over the great seal of the state a certificate that the articles of incorporation and consoli- dation containing the required statement of facts have been filed in his office. A duplicate of the certificate here- inbefore provided for must be filed by the secretary of state in his office and copies thereof duly certified by the secretary of state shall have the same force and effect in evidence as the original. A copy of the articles of incorporation and consolida- tion, certified by said secretary of state, must be filed in the office of the superintendent of banks, and also in the office of the county clerk of each county in which a prin- cipal place of business of either or any of the constituent corporations was situated at the time said corporation was incorporated. When the superintendent of banks Effect of Supt. issu- • 1 1 f 1 ^"^ certificate, issues the certificate of authorization provided for by section one hundred twenty-eight of this act the new or consolidated corporation shall be a body politic and corporate by the name stated in the certificate, and for the term of fifty years, unless it is, in the articles of in- corporation and consolidation, otherwise stated and thereupon each constituent corporation named in the articles of incorporation and consolidation must be deemed and held to have become extinct in all courts and places, and said new corporation must be deemed and held in all courts and places to have succeeded to all their several capital stocks, properties, trusts, claims, de- mands, contracts, agreements, assets, choses and rights in action of every kind and description, both at law and in equity, and to be entitled to possess, enjoy, and en- force the same and every thereof, as fully and completely as either and every of its constituents might have done had no consolidation taken place. Said consolidated or new corporation must also, in all courts and places, be deemed and held to have become subrogated to its sev- eral constituents and each thereof, in respect to all their [55] §31a BLYTH. WITTER & CO. contracts and agreements with other parties, and all their debts, obligations, and liabilities, of every kind and nature, to any persons, corporations, or bodies politic, whomsoever, or whatsoever, and said new corporation must sue and be sued in its own name in any and every case in which any or either of its constituents might have sued or might have been sued at law or in equity had no such consolidation been made. Nothing in this section contained shall be construed to impair the obligation of any contract to which any of such constituents were par- ties at the date of such consolidation. All such contracts may be enforced by action or suit, as the case may be, against the consolidated corporation, and satisfaction ob- tained out of the property which, at the date of the con- solidation, belonged to the constituent which was a party to the contract in action or suit, as well as out of any other property belonging to the consolidated corporation, and the stockholders of each constituent corporation so enter- ing into such agreement shall continue subject to all the liabilities, claims and demands existing against them at or before such consolidation to the same extent as if the Eight of new cor- same had not been made. The right of said new cor- poration to effect organic changes, poration to increase or decrease its capital stock, to change the number of its directors, to amend its articles of incorporation, to change its principal place of business, or its name, or to effect any other organic change shall be governed by the general corporation laws of this state and by the bank act, and the procedure to effect any such change shall be that defined by the general corpora- tion laws and the bank act. supt. to transmit to y^g superintendent of banks shall transmit to the sec- Secy. of State dup- '^ Ucate of certificate, retary of State a duplicate of the certificate of authoriza- tion hereinbefore referred to and the secretary of state shall file the same in his office. The superintendent of [561 GENERAL PROVISIONS §3Ia-31b banks shall also file a duplicate of such certificate in his own office. [Publishers note, re Section 31a, as amended 1921: The only change from the old section is in the first part of para^aph "Eighth," as to the order of filing, in the public offices, of articles of incorpora- tion and consolidation.] Section 31b. ( 1 ) Any two or more banks, respectively Merger of two or ^ ' -^ _ more banks authorized. empowered by their articles of incorporation, and author- ized by the provisions of the bank act to do the business of a commercial bank and savings bank and trust com- pany, or any one or more or all of them, are hereby authorized to merge one or more of such banks into an- other of them, as hereinafter provided. (2) The respective boards of directors of such banks ^^"'b^;^^^^^";''^'"^* may by a majority vote of all of the members of each merging banks. board, at a meeting duly called and held, make or author- ize to be made between such banks a written agreement in duplicate for the merger of such banks. Such agree- ment shall specify each bank to be merged and the bank which is to receive into itself the merging bank or banks, and it shall prescribe the terms and conditions of the merger and the mode of carrying it into effect. Such agreement may provide for such and any matters to ef- fect and accomplish such merger, not inconsistent with the provisions of the bank act or the other laws of this state. Such agreement and sworn copies of the proceedings f-fr^^^^-^t'"* of the meetings of the respective boards of directors at ^"^^^l-J^^f ' *° ^« ^^^ which the making of such agreement was authorized, shall be submitted in duplicate to the superintendent of banks for his approval and shall not be valid until such approval is obtained. Said merger shall not take effect unless and until such M;/if/^,Yfiefand'c7n. merger agreement shall have been ratified and confirmed ^'^^,^,|'fi^ef^°"'"'' in writing by the stockholders of the respective banks holding of record at least two-thirds of the issued capital stock of their respective banks, or such merger agreement [57] § 31b BLYTH. WITTER & CO. MERGER OF TWO may be submitted to the stockholders of each of such OR MORE BANKS —Continued, banks at either a regular or special meeting thereof, to be duly called in the manner provided in the by-laws of such respective banks, or if no manner for calling such meeting is therein provided, then in the manner prescribed by law; and if such agreement shall be approved at each of such meetings by the affirmative vote of stockholders owning at least two-thirds in amount of all of the issued and outstanding shares of stock of their respective banks, it shall thereupon become binding upon such banks. dlTcumentstob^S (^) After such merger agreement shall have become "^"^o^f^counry, after binding upon the respective banks who are parties thereto, Te'.fome^SS ^^ herein provided, one of the duplicates thereof with a copy of the superintendent of banks' written approval and a sworn copy of the proceedings of the meetings at which such agreement was finally approved, made by the secretaries thereof respectively, shall be filed in the office of the superintendent of banks, and the other duplicate of such agreement shall be filed in the office of the clerk of the county in which is located the principal place of busi- ness of the bank into which the other corporation or cor- porations are to be merged. eff^cUvrupon^S (4) Upon filing the duplicates of such merger agree- of papers as specified. ^^^^^ together with copies of its approval by the superin- tendent of banks, the merger agreement shall take effect according to all of its terms and the merger shall there- upon take place as provided in the agreement without fur- ther or other act, transfer or substitution. Upon the tak- Merged banks then j^g effect of the merger agreement, the merged corpora- te surrender licenses. => ^ > =3 i- tion or corporations shall surrender their licenses to do a banking business for cancellation by the superintendent of banks. Efifect^of merger upon (5) Upon the merger of any corporation or corpora- and relations of tions into another, as provided in this section : merged bank. (a) Its corporate existence shall be merged into that of such other corporation, and all and singular its rights, [58] GENERAL PROVISIONS §3lb privileges and franchises, and its right, title and interest upon^right^^^^^ in and to all property, real, personal or mixed, and of merged ^^^" chooses in action, and every right, privilege, interest or BANKS-continued. asset of conceivable value or benefit then existing or which would thereafter inure to it under an unmerged existence shall be deemed fully and finally, and without any right of reversion, interruption, impairment or limitation of title, right or privilege, transferred to and vested in the corporation into which it shall have been merged, with- out further act or deed, and such last mentioned corpora- tion shall have, hold, possess, enjoy and enforce the same in its own right, as fully as the same was possessed, enjoyed and held by the merged corporation from which it was, by operation of the provisions of this section, transferred. (b) Its rights, obligations, properties, assets, invest- ments, deposits, demands, contracts, agreements, court and private trusts, as defined in the bank act, and other relations to any person, creditor, depositor, trustee, prin- cipal or beneficiary of any court or private trust, shall re- main unimpaired and without change or alteration in any respect, and the corporation into which it shall have been merged shall, by such merger, ipso facto and by opera- tion of law, without further transfer, substitution, act or deed, and in all courts and places be deemed and held to have, and shall become subrogated and shall succeed, to all such rights, obligations, properties, assets, investments, deposits, demands, contracts, agreements, court and pri- vate trusts, and other relations to any person, creditor, depositor, trustee, principal or beneficiary of any court or private trust, obligations and liabilities, of every kind or nature, and shall execute and perform all such court and private trusts in the same manner as though it had itself originally assumed the relation or trust or incurred the ob- ligation or liability; the corporation into which it shall have been merged shall succeed to and be entitled to take and execute and receive the appointment to all executor- [59] §31b BLYTH. WITTER & CO. EFFECT^OF MERGER gj^jpg trusteeships, guardianships, and other fiduciary RELATIONS^ ETC^ capacities in which the merged corporation may be then BANKS— Continued, qj. thereafter named in wills theretofore or thereafter pro- bated, or in any other instruments; and the liabilities and obligations of such merged corporation to the depositors, beneficiaries, principals and other creditors existing for any cause whatever shall not be impaired by such merger; nor shall any obligation or liability of any stockholder in any corporation which is a party to such merger be af- fected by any such merger, but such obligations and liabil- ities shall continue as fully and to the same extent as existed before such merger. (c) Any action pending or other judicial proceedings to which any corporation that shall be so merged is a party, shall not be deemed to have abated or to have dis- continued by reason of the merger, but may be prose- cuted to final judgment, order or other decree in the name of the merged corporation, in the same manner as if the merger had not been made, or such merging corporation may be substituted as a party to such action or proceed- ing, and any judgment, order or decree may be rendered for or against it that might have been rendered for or against such merged corporation, if the merger had not occurred. in^'merled^blnks'may ^^^ ^^^ Corporation into which the other corporation be required in ex- qj. corporations shall have been merged, as herein pro- change for certificates ^ o ' r- of stock of merging vided, may require the return of the original certificate or certificates held by each stockholder in such other cor- poration or corporations, and may issue in lieu thereof new certificates for such number of its own shares as such stockholder may be entitled to receive under the merger agreement. (7) In the event that, either Effect of faUure of (a) Any stockholder of any such merged corporation stockholder °^ t -i^ r .■> <• -i- • i r i merged bank to return shall tail or refuse. Within ninety days arter such merger shall take effect, to return the original certificate or certi- [60] GENERAL PROVISIONS §3 lb ficates held by such stockholder in such merging corpora- ure^of stx)CK^^ tion or corporations and to accept in lieu thereof a new bank^to°return^° certificate or certificates for such number of the shares of co^i^u^d^^^^^ the merging corporation as such stockholder may be en- titled to receive under the merger agreement; or, (b) Any stockholder or shareholder shall vote against or not in favor of such agreement of merger, at the meet- ing where such merger is approved, or shall dissent in w^riting and file such written dissent with the secretary of the merged corporation within thirty days after such Sr^igLnsV"'" merger agreement shall have been ratified in writing by S^I^res'Ied"'^ the holders of record of not less than two-thirds of the issued and outstanding stock of such corporation or cor- porations, as hereinbefore provided, and shall, within thirty days after such stockholders' meeting or after the date of such stockholders' ratification, as the case may be, make written demand for payment for his shares of stock; In either of the events hereinabove mentioned, the merging corporation shall buy, and such stockholder shall sell to it, all such stock held by such stockholder, and, if such stockholder be a borrower from said corporation, said merging corporation shall demand liquidation of his ^^°Zlrnob!tJc^hMer indebtedness and the cancellation of his shares. If such ^n under face value, purchase of any of such bank's obligations or assets for Exception, "^ *=* a less sum than shall appear upon the face of any such obligations or assets to be the value thereof except with the previous consent of all the directors of said bank, such consent to be evidenced by a resolution adopted by said directors. A certified copy of said resolution shall immediately be transmitted to the superintendent of Penalty, banks. Evcry person violating any provision of this section, shall for each offense forfeit to the people of the state, twice the face value of any such obligations or assets so purchased. Section 42. No officer, director, agent or other em- ployee of any bank, shall directly or indirectly, for his own personal benefit, purchase, or be interested in the Penalty, purchase of any of the assets of said bank for a less sum than the current market value thereof. Every person violating any provision of this section, shall for each offense, forfeit to the people of the state, twice the nomi- nal amount of any such assets so purchased. No bank to deposit Section 43. No bank shall deposit any of its funds funds m other bank ^ •' except Federal Ra- in any Other bank, except a federal reserve bank, unless serve bank, unless ^ ' tr as specified, such Other bank has been nominated as a depositary for 166] GENERAL PROVISIONS § 43-47 its funds by the vote of a majority of the directors or trustees of the bank making the deposit, and such other bank has been designated by the superintendent of banks as such depositary. The superintendent of banks may in his discretion re- voke such a designation. Section 44. No bank shall hereafter make a loan Limitation and re- dii If 111T1 i> 1 strictions upon loan by the stock, or another bank, ir by making such secured by stock of loan the total stock of such other bank held by such loan- ing bank as collateral will exceed in the aggregate twenty- five per centum of the capital stock of such other bank; provided, that no loan upon the capital stock of any bank shall be made unless such bank has been in existence at least two years and has earned and paid a dividend upon its capital stock; and provided, further, that no bank may loan more than five per centum of its assets upon the capital stock of any corporation whatsoever as collateral security. Section 45. Interest unpaid, although due or accrued. Unpaid interest not 11 . 11111 1 • 1 1 1 . deemed profits pre- on debts owmg to any bank, shall not be included in vious to dividend. calculation of its profits previous to a dividend; nor shall any bank, except with the previous written consent of the superintendent of banks, enter or at any time carry on its No valuation of as- books any of its assets at a valuation exceeding its actual without consent cost to such bank. Section 46. No commercial bank shall invest or loan no bank to loan or .M n .r«. .• t_j invest more than 6% more than iive per centum or its assets in any one bond of assets in any one issue, except bonds of the United States, of the State of governmental bonds, California, of the counties, cities and counties, cities or ^^ ^'^^^^ school districts of this state, or bonds of any irrigation district such as are legal for investment by savings banks. No commercial bank. Section 47. No commercial bank shall, except for the sale of property fi.,|..i ||. Ill owned to make loan facilitating the sale or property owned by the on real estate, un- bi 1 1 ^1 -tflii 1 less first lien and ank, make any loan on the security or real estate, unless for specified period ... r . 1- 1 • -.1 and per centum of It is a hrst lien and is either value. [67] §47-48 BLYTH. WITTER & CO. ( 1 ) Made for a period of time not exceeding six months and upon security worth at least fifteen per centum more than the amount loaned; or (2) Made for a period of time exceeding six months and not exceeding ten years and does not exceed sixty per centum of the market value of the real estate taken as security. Subsequent mort- No Commercial bank shall loan in the aggregate more eases and deeds of i i . ^ trust, than thirty-five per centum of its assets on real estate loans of the character specified in subdivision two of this section. These provisions, however, shall not prevent any bank from taking another and immediately subse- quent mortgage or deed of trust thereon when it already holds a first mortgage or deed of trust on such real estate, nor from accepting a second lien on real estate to secure the repayment of a debt previously contracted in good faith; nor shall it prevent subsequent liens of any kind from being taken to secure the pa3mnent of a debt previously contracted in good faith when, in the judg- ment of the directors of such bank, such subsequent liens are necessary further to secure the pajnnent of any debts and save such bank from loss. National bank other Section 48. Any national bank, in this state, other than Federal Reserve bank receiving State than a federal reserve bank, receiving the deposits of any bank deposits, must, at request of supt., bank Organized and conducting business under this act, submit to examina- *=" ° tion. must, at the request of the superintendent of banks, sub- mit to an examination by him, or his duly appointed ex- aminers, should the superintendent of banks in his dis- cretion deem it necessary or desirable that such examina- tion be made; and the expense of such examination shall EflFect of refuiai. be paid by such depositary bank; and if any such bank shall refuse to permit such examination to be made by, or under the direction of, the superintendent of banks, then the superintendent of banks shall notify in writing every bank depositing its funds with such bank, to with- [68] GENERAL PROVISIONS § 48-48a draw its deposits therefrom, and all such banks shall comply with such order. Section 48a. Any national banking association, whose Nati. Banking Ass'n with principal place principal place or business is in this state, is hereby of business in state, . r • - . • 11 authorized to act in authorized to act in fiduciary capacities in all respects as fiduciary capacitie», • 1 1 1 1 r 1 T-w 1 o o "^^ provided by Fed. provided by the acts or congress, approved December Li, Reserve Act. 1913, and amendments thereof, commonly known as the federal reserve act, and all acts herein provided to be performed by the state treasurer, the superintendent of banks or other public officials for or in respect of trust companies, shall be performed for such national bank- ing association equally with trust companies. Every Every such Ass'n, *» ^ •' ^ authorized in Sec, such national banking association which shall be author- ^^y act in fiduciary '^ capacities. ized to exercise said fiduciary powers, and which has qualified by making the deposit of securities required by the law of this state, may act, or may be appointed by any court to act in any such capacity in like manner as an individual. Every such association shall be permitted to Such association may , ,, . . I I use "Trust" in use the word trust m its corporate name and to adver- corporate name. tise its authority to act in fiduciary capacities, anything to the contrary in this act notwithstanding. The superintendent of banks shall inspect and examine Supt. shall examine the books, records and assets of the trust department of of trust dept. of each such Ass n. each national banking association which conducts a trust department in this state to the same extent that the said superintendent of banks exercises visitorial supervision over trust companies organized and existing under the laws of this state. The charge by the state banking department for all services rendered to any national banking association by the superintendent of banks, in accordance with the pro- visions of this section, shall be paid by the national bank- ing association requiring such services. Such charge for S^S re°n^dered i°y' services shall be determined by the superintendent of ^tate Banking Dept. banks, and shall be no higher than the charge for a [69] § 48a-50 BLYTH, WITTER & CO. similar service to trust companies organized under the laws of this state. The cost of all regular and ordinary service shall be calculated upon the amount of the securities deposited by each such national bank with the treasurer of the state for the due execution and faithful performance of its court and private trusts at the same ratio as is applied to the capital and surplus of trust companies organized under the laws of this state in determining the cost to them for such services. The cost of all special and extraordinary services shall be the same as that provided for in section one hundred twenty-four of this act. [Publishers' note, re Section 48a, as amended 1921: The amendment is at the end of the first paragraph of the old section, con- sisting of a provision added which permits a national banking association resident in this State and which has assumed trust functions, to use the word "trust" in its corporate name.] Holding out as sav- Section 49. It shall not be lawful for any commer- ings bank by com- "^ merciai bank, etc., ^ial bank, individual, trust company, association, firm, unlawful. stock company, copartnership or corporation, to adver- tise or put forth a sign as a savings bank, or either directly or indirectly or in any way to solicit or receive deposits or to transact business in the way or manner of a savings bank, or to advertise that he or it is receiving or accepting savings, or in any way which might lead the public to believe that such deposits are received or in- vested under the same conditions or in the same manner as deposits in savings banks, except in the case of sav- ings banks or banks having savings departments, subject Penalty, to the provisions of this act. Any commercial bank, in- dividual, trust company, association, firm, stock com- pany, copartnership or corporation, violating any pro- vision of this section shall forfeit to this state one hundred dollars a day for every day during which such violation continues. Every bank or branch Section 50. Every bank shall post in a conspicuous to post last certin- j ir •. cate from Supt. place in its banking room or branch office the last cer- [70] GENERAL PROVISIONS § 50-52 tificate obtained from the superintendent of banks under the provisions of either section nine or one hundred twenty-seven of this act. Section 5 1 . Any court having appointed and having Court may. under . 1- .• £ I . . ,. (onditions Bpc- ified, jurisdiction or any executor, administrator, guardian, as- authorize executor. 1 . , ,. administrator, ruard- signee, receiver, depositary or trustee, upon the apphca- ian, receiver, .• £1 . !••.. 1- • trustee, etc., to de- tion or such executor, administrator, guardian, assignee, posit money in state receiver, depositary or trustee, or upon the appHcation of any person having an interest in the estate adminis- tered upon by such officer or trustee, after notice to other parties in interest as the court may direct, and after a hearing upon such application, may authorize such officer or trustee to deposit any money then in his hands as such officer or trustee or which may thereafter come into his hands, and until the further order of the court, in any bank organized under the laws of the State of California; and upon such deposit being made, the officer or trustee so depositing the same shall thereafter and while such moneys remain on deposit in such bank, be relieved and discharged from all liability and responsibility therefor, and the bond required of such officer or trustee given upon his appointment shall be thereupon by said court reduced to such an amount as the court may deem reason- able; such deposit shall be repaid only upon the orders Such deposit payable only on court order. of said court, and shall be a preferred claim against such bank and be paid in full before any other depositor of such bank shall have been paid. Section 52. Whenever a check drawn on any bank Certified check must r I 1 I 1 ^^ immediately is certified by any officer or employee of such bank, the charged. amount thereof shall be immediately charged against the account of the person, firm or corporation drawing the same. It shall be unlawful for any officer or employee of any bank to certify any check drawn upon such bank unless the person, firm or corporation drawing the check has on deposit with the bank at the time such check is certi- [71] §52-54 BLYTH, WITTER & CO. fied, an amount of money subject to the payment of such check, equal to the amount specified in such check. pSee^v^iatingSe'^: ^^^ officer OF employee of any bank who shall wil- guuty of felony, {^^\\y violate the provisions of this section, or shall resort to any device, or receive any fictitious obligations, directly or indirectly, in order to evade the provisions hereof, or who shall certify checks before the amount thereof shall have been regularly entered to the credit of the drawer, shall be guilty of a felony. Par value of capital Section 53. The Capital stock of any bank having a stock $100 and paid . , i i ii i i r i i i i i up value to be on Capital stocK shall have a par value or one hundred dol- lars per share, and the paid-up value shall be endorsed upon the face of each certificate issued, which paid-up value shall be the same on all certificates issued. No Proviso as to non- bank shall have preferred stock ; provided, how^ever, that compliance prior to , , , . , , t i i o i r r m i Jan. 1, 1915. no bank whose capital stock, on January I, \y\D, railed to comply w^ith any of the requirements of this section, shall be compelled to change its capital stock in compli- ance herewith. Real estate acquired Section 54. All real estate purchased by any bank at by bank and not necessary in its busi- sales Under pledges, mortgages or deeds of trust for its ness, must be sold t,^« exchanged, as speci- benefit for money loaned and such as may be conveyed to it by borrowers in satisfaction and discharge of loans made thereon and all other real estate owned or held by it, which is not necessary for carrying on its business, must be sold or exchanged for other real estate by such bank within five years after title thereto shall have vested in it by purchase or otherwise; provided, however, that no exchange of such real estate for other real estate shall be made unless and until written consent thereto shall first be given by the superintendent of banks; and pro- vided, further, that any real estate so taken in exchange may be held for such period of time as the superintendent Parcels not sold or of banks may fix but not to exceed five years. Parcels exchanged within r ^ i ii i j'i.L' -J said time purchas- ot such real estate not sold or exchanged withm said able by any person; .. i i i i i.' iL procedure outlined, time may be purchased by any person wanting the same 172] GENERAL PROVISIONS § 54 upon the conditions and proceedings following: The intending purchaser may file a petition in the superior court in and for the county wherein said real estate or any portion thereof is situated; upon the filing of such petition a citation shall be issued out of said court directed to the bank owning such real estate requiring such bank to show cause on a day certain which shall be not earlier than ten days after the service of such citation, why com- missioners should not be appointed by said court for the purpose of appraising the value of the real estate de- scribed in the petition and of selling the same at public auction under the provisions of this section. If there shall be any liens or encumbrances of record against such real estate the person or persons holding such liens or encumbrances shall likewise be cited and the court shall in its final decree distribute the proceeds of such sale, if a sale thereof shall be made, according to the equities of the parties. If it shall appear at the hearing Court to appoint " *^ commissioners to of such petition that the real estate therein sought to be ^g^^Yeiut^heid^y purchased is held by such bank in violation of the pro- tank in violation of visions of this section or of the constitution of this state, the court shall appoint three commissioners to appraise the value thereof and sell the same at public auction at the county seat of the county wherein said real estate or any part thereof is located. Notice of which said sale f;°J;«'^'^" governing shall be given to the bank owning said real estate and to any other persons interested therein as shown by the records of such county at least ten days before the date of such sale and shall be published once a week for three successive weeks in some newspaper published in the county where such real estate or any part thereof may be located, or if no newspaper shall be published in such county then in a newspaper published in some neighbor- ing county. Such notice shall state the time and place of such sale and shall describe the real estate to be sold with common certainty and state the value thereof as fixed by the appraisement of such commissioners and state [731 §54-55 BLYTH, WITTER & CO. that no bid less than such appraised value will be re- ceived therefor. No sale shall be made for an amount less than the appraised value of such real estate fixed by If no bid equals said commissioners, and in the event that no bid is re- appraised value, proceedings not ceived at such Sale at least equal to said appraised value renewable within , . ■, . one year, of Said real estate no intending purchaser can institute the proceedings provided for in this section within one year thereafter. In case of any sale made under the provisions of this section and of the refusal of any bank owning such real estate or of any lienholder or encum- brancer to execute the conveyances or releases necessary or proper to vest the title of such bank, lienholder or en- cumbrancer in the purchaser thereof the court shall have power in such proceedings to direct said commissioners to execute such deeds, conveyances or releases upon the payment to them of the purchase price therefor. The ^Hmi"d and born^ f^^s of such Commissioners and cost of sale shall be fixed by the court, upon making such appointment, but the entire expense thereof shall not exceed one hundred dol- lars. The cost of any such proceedings shall be borne by the intending purchaser if no sale shall be made, but if a sale shall be made the costs of such proceedings shall be borne by the purchaser of the property and the person who filed the petition and advanced the costs of such proceedings shall be reimbursed in case he shall not be- come such purchaser. All sales hereunder shall be re- turned to the court having jurisdiction of the matter in the same manner as in the case of sales, by commissioners, ^wH?e doSank °^ ^^^^ estate on foreclosure of mortgages. Nothing in realty not affected this section Contained shall be deemed to affect the by Sec. power of the superintendent of banks to require the writing down of the value of real estate held by any bank, at any time, when such writing down shall be proper. Receiving deposits, Section 55. Receiving deposits, issuing certificates of etc.. not creation of . • i i i i ii r i debt within mean- deposit, checks and bills of exchange, and the like, in the ing of Civil Code. . , . r i i transaction or the ordinary business of a bank, must not [741 GENERAL PROVISIONS § 55-56 be construed to be the creation of debt within the mean- ing of the phrase "create debt" in section three hundred nine of the Civil Code, nor of indebtedness within the meaning of the phrase "the capital stock can not be diminished to an amount less than the indebtedness of the corporation" in section three hundred fifty-nine of the Civil Code, except that no bank shall reduce its capital f/dSi>°of"apitai stock to an amount less than is required by this act to be **°'=''- maintained by such bank, or less than any indebtedness of such bank other than such deposits. The terms "real estate," or "real property," or "per- "Real estate," ,, 1 . 1 . 1 11 1_ V "real property, sonal property, when used m this act shall have the "personal property," ^ ^ •' — how defined. meaning defined in, and shall be construed m accordance with the provisions of Title I of Part I of division second of the Civil Code. Section 56. Any bank is hereby authorized and em- fj^J^^^'^^^^^"- powered to become a member of a federal reserve bank, ll^]^^ Reserve Nothing in this act shall prohibit any such bank from becoming a member of a federal reserve bank, in the manner provided in the federal reserve act, nor from investing any part of its capital or surplus or reserve fund J^^^^^^'paH tf Ta^p^ in the capital stock of such federal reserve bank, in ac- *3:i,-/J'„^rin°cVpUai cordance with the terms and provisions of such federal ^jj°^^^^^°^^ ^f^^"^^, reserve act; provided, that such investment shall in no specified. case exceed the minimum amount required to join or as- sociate itself with or maintain membership in such federal reserve bank; provided, also, that such investment may be carried in either the commercial, savings, or trust department, or may be apportioned to any two or all three of such departments of any departmental state bank member. Any bank joining or associating itself with such federal f^J,l^'^t,Xlie reserve bank shall have and exercise all powers, not in |^-^,,-f:;^:'^ "p°- conflict with the laws of this state, which are conferred upon any member bank in any such federal reserve bank, [75] § 56-56a BLYTH, WITTER & CO. by the provisions of the federal reserve act and the regu- lations of the federal reserve board. Such member bank and its directors, officers and stockholders shall continue to be subject, however, to all liabilities and duties im- posed upon them by the bank act and by any other law of this state. jtcrto'fede''rai'ex; "^"^ ^^"^ which shall have become a member of a aminations. federal reserve bank shall be subject to the examina- tions required under the terms of the federal reserve act, and the superintendent of banks may, in his discretion, Supt. may accept accept such examination in lieu of the examination re- such examination in -i lii_ •• r.i- iii. lieu of one under quired Under the provisions or this act, and he, his agents fed'erai'ba^^infor" ^ri<^ employees, may furnish to the federal reserve board, ma ion, jj^^ federal reserve bank, or to examiners duly appointed by the federal reserve board or the federal reserve bank, copies of all examinations made, and may disclose to such federal reserve board, federal reserve bank, or ex- aminer, any information with reference to the condition of affairs of state bank members. ^°^ ''ve^t int^Natt Section 56a. Nothing in this act shall prevent or pro- undw f'ede'^ai or ^^^^^ ^^^ ^^^^ ^^°^ Converting into a national banking state law. association under the provisions of section five thousand one hundred fifty-four of the United States revised stat- utes, or section eight of the federal reserve act, or any oM'cen"rtX\"nch °*^^^ federal or state law; provided, however, that in the offices, event of the application for conversion of a state bank into a national banking association the superintendent of banks may in his discretion revoke any or all licenses for branch offices granted within two years immediately pre- ceding said application for conversion of any state bank into a national banking association. Condition for con- No savings bank and no departmental bank having a version by State , ^ ° blnk Sr in"^ °' ^^^^'^^^ department, organized and existing under the ings department, laws of the State of California, shall convert into a na- tional banking association except upon the following con- ditions: [76] GENERAL PROVISIONS § 56c 1, Coincident with its application to the comptroller of the currency, any such savings or departmental bank shall file with the superintendent of banks formal notice of intention to convert into a national banking associa- tion. 2. Prior to conversion, any such savings or depart- mental bank shall place in the hands of the superintend- ent of banks, (a) A constructive notice for newspaper advertise- ment, directed to its savings depositors, of the fact of conversion ; (b) Actual notice addressed to each and every sav- ings depositor, at his or her last known address, enclosed in stamped and addressed envelopes ready for mailing, this notice to be as follows: "You are hereby notified that the undersigned, for- merly the , now the , has converted from a banking corporation existing under the laws of California into a national banking association; and has therefore ceased to be under the jurisdiction and direc- tion of the California state banking department and the ^^°^ T m"' with bank act of California, and is now under the jurisdiction ^f"?^^ TuthorfzaUon and control of the federal reserve act and the national |^°^„\","^°'^" ^'"'^ act." No other matter may be enclosed with this notice unless by permission of the superintendent of banks. 3. Upon conversion said bank shall file with the sup- erintendent of banks a copy of its authorization as a national banking association, certified by the comptroller of the currency; and shall surrender to the superintend- ent of banks its license as a state banking corporation. 4. Immediately following the conversion of a state immediately foi- •' lowing convsrsion, bank, the superintendent of banks shall cause the pub- supt. shall publish ' ^ . . / \ f °°tice of fact of lication of the notice provided in subdivision (a) or conversion, as specified. paragraph two of this section; same to be at least once a week for four successive weeks in a newspaper of gen- [771 § 56a-56b BLYTH, WITTER & CO. eral circulation, printed and published in every town where said bank transacts its business and if there be no such paper in any such town or towns, then in the county where such bank transacts its business, and the superin- tendent of banks shall cause to be mailed the notices provided in subdivision (b) of paragraph two of this section. The advertisement shall be at the expense of the converting bank, prepaid to the department. [Publishers' note, re Section 56a, as amended 1921: This amendment adds, in the first paragraph, a proviso permitting the super- intendent, in his discretion, upon application for conversion of a state bank into a national banking association, to revoke any and all licenses for branch ofB.ces granted within two years immediately preceding such application.] Bank^organized under Section 56b. Any banking corporation organized un- become State bank, der the laws of the United States and doing business in this state may become an incorporated bank of this state with all the powers and subject to all the obligations and duties of banks organized under the provisions of this act, provided such banking corporation has authority by virtue of any law of the United States, to dissolve its organiza- tion as a national banking corporation. A national bank- ing corporation desiring to become such an incorporated bank of this state shall proceed in the following manner: Procedure for legal It shall take such action, in the manner prescribed or dissolution of such national banking authorized by the laws of the United States, as shall make corporation and creation of State its dissolution as a national banking corporation effective banking corporation, . at a future date certain. A majority of its directors shall thereafter and before the time when its dissolution becomes effective, subscribe and acknowledge in duplicate upon the authority in writ- ing of the owners of at least two-thirds of its capital stock, the articles of incorporation required by section two hun- dred ninety of the Civil Code of California, and attach thereto copies of the said written authority of stockhold- ers and the resolution fixing the date at which its dissolu- tion as a national banking association shall become ef- fective, executed in the same manner as said articles of incorporation. [78] GENERAL PROVISIONS § 56b It shall thereupon take such action, in the manner pre- scribed or authorized by the laws of the State of Califor- nia, as shall create a corporation for the purposes set forth in the said articles of incorporation. It shall thereafter and before the time when its disso- lution becomes effective, make application to the super- intendent of banks for his certificate of authorization to transact business as is prescribed in sections one hundred twenty-seven and one hundred twenty-eight of this act. If the superintendent of banks shall issue his certificate when corporate existence begins. of authorization to transact business, its corporate exist- ence as a state bank shall begin as soon as its dissolution as a national banking corporation becomes effective. But such bank shall transact no business as a state bank other than that relating to its organization until it shall have re- ceived the said certificate of authorization of the superin- tendent of banks. At the time when the corporate existence of said state property of dissolved ■ , , . ,,1 f 1 1- 1 J ..• 1 banking association, bank begms all the property or the dissolved national by act of law, vests in 1 11 . 1-11 f 1 J S***^ bank. banking association shall immediately by act ot law and without any conveyance or transfer be vested in and be- come the property of such state bank. The directors of Directors of dissolved '^ . 1 . corporation to be the dissolved corporation at the time of such dissolution directors of bank created hereunder, shall be the directors of the bank created in pursuance ^."^*„'^„f|*r^°t°"g^ ^^^'=" hereof until the first annual election of directors there- thereafter. after, and shall have power to take all necessary measures to perfect its organization, and to adopt such regulations concerning its business and management as may be proper and not inconsistent with law. [Publishers' note, re Section 56b, new, enacted 1921: This new section provides the procedure by which a national banking associ- ation may become an incorporated state bank. The national bank shall arst take such action as is necessary to make its dissolution effective at a future date cer- tain. Thereafter the directors shall execute articles of incorporation and secure the certiacate from the superintendent authorizing it to carry on a banking busi- ness. If the superintendent issues his certiacate of authorization, its corporate existence as a state bank shall begin as soon as its dissolution as a national bank becomes effective, and all the property of the national bank becomes by act of law vested in the state bank,] [791 § 57-57a BLYTH. WITTER & CO. Lien of tax assess- Scction 57. Whenever in this act it b required that ment or bond levied i i /• i« 1 or issued by State Joans or investments shall be secured by a first lien on real or subdivision there- . of, if same or in- estate, the lien or any t8«, assessment or bond levied or stallment thereof not ' ^ • j i_ delinquent, not issued by this State or by any county, city and county, deemed prior en- ^ .... i i i« ^ • . i i.' J* cumbrance as re- City, town, municipality, school district, reclemiation dis- gards requirement .... ... i i»i»i of first-lien real- trict, irrigation district or any other political or govern- . ^^^j^ subdivision of this state (not including bonds given pursuant to any law authorizing the same by any person or corporation in lieu of payment of any tax or assessment levied against any particular real property) and the lien of any assessment levied to pay such bonds shall not be deemed to be a prior encumbremce or lien on such real property unless an installment or call of such tax, assessment or bond shall be due and delinquent; Bonds given pursu- ^^^ g^y fconds given pursuant to any law authorizing the ant to law, by any ^ = «- . ' . e person or corpora- same bv any persou or corporation in lieu of payment of tion, in lieu of pay- j j f *r ^ 'ii ment of tax or as- g^nv tax or assessment levied against any particular real sessment upon real •' ... f property, and lien nfopertv and any lien given to secure the payment of securing payment *- r j .7 . • e of assessments or assessments or subscriptions to meet the requirements or subscriptions in re- , ... respect to u. s. irriga- gj^y j^^ of thg United States m respect to any irrigation tion project in this ^ e> • i • l_*L L State, which may be project of the United States in this state which may be levied, under law of • i i • • V. s— when not levied, made or received by any corporation or associa- deemed prior en- ... ii* j* t. £ cumbrance or lien, tiou formed to Carry out the objects and requirements or any such law of the United States shall not be deemed to be a prior encumbrance or lien on such real property if the lien given to secure such assessments and subscrip- tions taken with the loan or investment so secured shall eunount to not more than sixty per centum of the meurket value of the land securing the same. Priority of liens. Section 5 7a. Whenever in this act it is required that loans or investments shall be secured by a first lien on real estate, any lien given to secure the payment of assess- ments or subscriptions to meet the requirements of any law of the United States in respect to any irrigation pro- ject of the United States which may be levied, made or received by any corporation or association formed to carry out the objects and requirements of any such law [801 GENERAL PROVISIONS § 57a-58 of the United States, or the lien of any tax, assessment or bond levied, or issued by any state in the United States other than the State of California or by any county, city and county, city, tow^n, municipality, school district or any other political or governmental subdivision of such state and the lien of any assessment levied to pay such bonds shall be deemed to be a prior encumbrance or lien on such real property; provided, however, that with the pre- g°"^®^* "/ vious written consent of the superintendent of banks any sary to obtain. bank may make loans or investments upon the security of real property so encumbered if the total of all such liens taken with the loan or investment so secured shall amount to not more than fifty per cent of the market value of the real property securing the same; and pro- vided, further, that the superintendent of banks shall grant no such permission in the event that the payment of any installment or call of any such tax, assessment or bond or other governmental lien is due and delinquent. [Publishers' note, re Section 57a, 1921: This new section provides that whenever in this Act it is required that loans or investments should be secured by a lien on real estate, the lien of any tax assessment or bond levied or issued by any State other than the State of California or by any county or other governmental subdivision of such State, and the lien of any assessment levied to pay such bonds, shall be deemed to be a prior incumbrance or lien; provided, however, that with the previous written consent of the super- intendent, loans or investments may be made upon the security of property so in- cumbered, if the total of such liens, taken with the loan or investment so secured, shall amount to not more than fifty per cent, of the marke* value. The superintendent shall grrant no such permission if the payment of any in- stallment or call for any such tax assessment or bond is due and delinquent.] Section 58. Any bank possessing a capital and sur- f^l^^l^^^oZl^l^ore plus of one million dollars or more may file application ^^^^g'^^^.TJ ^e^^^it. with the superintendent of banks for permission to exer- cise, upon such conditions and under such regulations as he may prescribe, either or both of the following powers: First — To establish branches in foreign countries or in 1st. To establish foreign branches, and dependencies or insular possessions of the United States act as fiscal agents ^ of U. a. for the furtherance of the foreign commerce of this state and of the United States and to act if required to do so as fiscal agents of the United States. [8!] § 58 BLYTH. WITTER & CO. 2nd. To invest not Sccond — To invest an amount not exceeding in the exceeding specified percentages of paid-in aggregate ten per centum of its paid-in capital stock and surplus in stock of surplus in the stock of one or more banks or corporations state or T7. S. banks '^ engaged in foreign chartered or incorporated under the laws of the State of banking; or in facili- tating foreign exporta- California, or of the United States, or of any state thereof, tion from V. S. or its ' ./ » dependencies, etc. and principally engaged in international or foreign bank- ing or banking in a dependency or insular possession of the United States either directly or through the agency, ownership or control of local institutions in foreign coun- tries, or in such dependencies or insular possessions. Any bank, without regard to the amount of its capital and surplus, may file application with the superintendent of banks for permission, upon such conditions and under such regulations as may be prescribed by said superin- tendent of banks, to invest an amount not exceeding in the aggregate five per centum of its paid-in capital and surplus in the stock of one or more corporations char- tered or incorporated under the laws of the United States or of any state thereof, and, regardless of its location, principally engaged in such phases of international or for- eign financial operations as may be necessary to facilitate the export of goods, wares or merchandise from the United States or any of its dependencies or insular possessions to any foreign country; provided, how^ever, that in no event shall the total investments, authorized by this section by any bank exceed ten per centum of its paid-in capital and surplus; provided, also, that such investments may be car- ried in either the commercial, savings or trust department, or may be apportioned to any two or all three of such departments of any departmental state bank. Such application shall specify the name and capital of the bank filing it, the powers applied for and the place or places where the banking or financial operations pro- Supt. may approve posed are to be carried on. The superintendent of banks or reject application i n i • ^ 1_ 1* i.* in whole or part, shall have power to approve or to reject such appncation in whole or in part if for any reason the granting of such application is deemed inexpedient, and shall also have [821 GENERAL PROVISIONS § 58 power from time to time to increase or decrease the num- ber of places where such banking operations may be car- ried on. Every bank operating foreign branches shall be re- ., f-i-r • -L !•• t. Information re con- quired to rurnish inrormation concernmg the condition or dition of foreign ,,, I .i cil J branches, etc., to be such branches to the superintendent or banks upon de- furnished Supt. on mand, and every bank investing in the capital stock of banks or corporations hereinbefore described in this sec- tion, shall be required to furnish information concerning the condition of such banks or corporations to the super- intendent of banks upon demand, and the superintendent of banks may order special examinations of the said branches, banks or corporations at such time or times as he may deem best. The cost of such special examina- tions shall be paid by said branches, banks or corpora- tions. Before any bank shall be permitted to purchase stock in any such corporation the said corporation shall enter into an agreement or undertaking with the superin- tendent of banks to restrict its operations or conduct its business in such manner or under such limitations and restrictions as the said superintendent of banks may pre- scribe for the place or places wherein such business is to be conducted. If at any time the superintendent of banks if regulations of •' Supt. not compuea shall ascertain that the regulations prescribed by him are ^^ith. he may insti- ^ '^ 11. ^"*® investigation, not being complied with, said superintendent of banks is hereby authorized and shall have power to institute an investigation of the matter and to send for persons and papers, subpoena witnesses and administer oaths in order to satisfy himself as to the actual nature of the transac- tions referred to. Should such investigation result in es- tablishing the failure of the corporation in question, or of the bank or banks which may be stockholders therein, to comply with the regulations laid down by the said super- intendent of banks, such banks may be required to dis- pose of stockholdings in the said corporation upon thirty days* notice, and in the event of their noncompliance [831 § 60 BLYTH, WITTER & CO. Such bank to con- with such Order the superintendent of banks may institute duct accounts of , . r c r • f i • each foreign branch proceedings lor lorteiture or license. independently. i i i i 11 i 1 r 1 hvery such bank shall conduct the accounts or each foreign branch independently of the accounts of other foreign branches established by it and of its home office, and shall at the end of each fiscal period transfer to its general ledger the profit or loss accruing to each branch as a separate item. [Publishers' note, re Section 58, as amended 1921: This amendment provides that banks which establish branches in foreign coun- tries or dependencies for the furtherance of foreign commence may act, if required to do so, as fiscal agents of the United States. Previous to this amendment, banks might invest in the capital stock of Cali- fornia corporations principally engaged in international ct foreign banking. The amendment adds corporations incorporated under the laws of the United States or of any State. Previously, also only banks having a capital of a million or more dollars might establish such branches or invest in such corporations. The amendment permits any bank, without regard to the amount of its capital and surplus, with the per- mission of the superintendent, to invest not exceeding in the aggregate five per cent of its paid-in capital and surplus, in the stock of one or more corporations char- . t6red or incorporated under the laws of the United States or of any State thereof, and regardless of its location, principally engaged in such phases of international or foreign finance operations as may be necessary to facilitate the export of goods, wares or merchandise from the United States or any of its dependencies or insular possessions to any foreign country. The total investments authorized by this section shall not exceed ten per centum of the bank's paid-in capital and sur- plus. Such investments may be carried in either the commercial, savings or trust department, or may be apportioned to any two or all three of such departments.] ARTICLE II. SAVINGS BANKS. Capital required of Section 60. Evcry savings bank hereafter organized savings banks. ... must have paid up in cash a capital stock not less than ^"^"s^ooo— $25 000^ ^^^ Twenty-five thousand dollars if its principal place of business is located in any locality the population of which does not exceed five thousand persons; If 5,000 to 25,000 (b) Fifty thousand dollars if its principal place of population— $50,000. .. . ... business is located in any city the population of which is more than five thousand persons, but does not exceed twenty-five thousand persons; If 25,000 to 100 000 (^) One hundred thousand dollars if its principal population — $100,000. ^ ' r r place of business is located in any city the population of which is more than twenty-five thousand persons but does not exceed one hundred thousand persons; If 100,000 to 200,000 /J\ -r L J 1 iU J J 11 •£ 'i • • 1 population— $200,000. (d) 1 WO hundred thousand dollars it its principal place of business is located in any city the population of [841 SAVINGS BANKS § 60 which IS more than one hundred thousand persons but bonds which aee , 1 1 1 1 I , LEGAL INVEST- does not exceed two hundred thousand persons; ments— Continued. (e) Three hundred thousand dollars if its principal if ™°'"e than 200.000 , r 1 • -1 1 • .1 , population — $300,000. place or business is located in any city the population of which is more than two hundred thousand persons. Excepting that any savings bank organized w^ithout Reserve fund of sav- , I , !• 1 r 1 '"^■'^ Dank without capital stock must have a reserve fund or at least one capital stock. million dollars. Until the capital stock or reserve fund hereinbefore No certificate to be 11111 11 • 1 • 1 • 1 r ^^sued until such required shall be actually paid in, the superintendent or capital stock or re- ,,,,,. . , ._ -111. serve fund is paid in. banks shall reruse to issue the certihcate required by this act. The foregoing classification shall not apply to any classification not to savings bank already in existence w^hich has received bank^. its certificate to do a banking business from the superin- tendent of banks; nor to any bank the location of which shall have been included by annexation or consolidation within the limits of a city of a class requiring a larger capitalization, but no bank thus excepted shall be per- mitted to establish any new branch office as provided in section nine of this act or to remove its place of business from the original limits of the city or township wherein it was located prior to such annexation or consolidation until it shall have the capital required of banks in such city not within said exception. Such excepted banks may Excepted banks may . . 1 .1. '.iilli • not decrease but may not m any case decrease their capital stock but may in- increase capital crease the same in the manner provided by law to an amount either greater or less than that required of banks in such city not within said exception; provided, that nothing herein shall be construed to affect the provisions Nothing herein af- _ fects provisions of of section nineteen of this act relative to the proportion Sec. 19 or of sec. 28 of Act. of capital and surplus to deposits or of section twenty- three of this act relative to the capital stock required of banks doing a departmental business. The provisions of section twenty-three of this act, as to Bank hereafter or- gani?ed in locality population, shall apply to any bank organized under the included by annexa- tion in city requir- provisions of this section ; provided, however, that nothing in& larger capitaliza- tion — paid-up capital herein contained shall prevent the superintendent of required. [85] §61 BLYTH. WITTER & CO. ^°^LEG^^iKVEsl^ banks in the exercise of his discretion from granting his MENTS— Continued, license to any bank hereafter organized in a locality which has been included by annexation or consolidation within the limits of a city requiring a larger capitalization with a capital stock paid up in cash equal to that which would have been required for said locality if it had not been in- cluded by annexation or consolidation within the limits of a city requiring a larger capitalization; provided, that no bank so licensed shall be permitted to establish any branch office as provided in section nine of this act or to remove its place of business from the original limits of the city or township which has been included by annexation or consolidation within the limits of a city requiring a larger capitalization until it shall have the capital required of banks in such city requiring said larger capitalization. [Publishers' note, re Section 60, as amended 1921; This amendment adds the same provision that was added to Section 23, viz. : fhat the superintendent, in his discretion, may grant a license to a bank there- after organized in a locality which has been included by annexation or consolida- tion within the limits of a city requiring a larger capitalization, with the capital that would have been required if it had not been so included,] Section 6 1 . Any savings bank may purchase, hold or sell real or personal property, as follows: Property which ], Jhe lot and building in which the business of the savings bank may ^ purchase, hold and bank is Carried on ; furniture and fixtures, vaults and safe convey. deposit vaults and boxes and other personal property such as may be necessary or proper to carry on its bank- ing business; such lot and building, furniture and fixtures, vaults and safe deposit vaults and boxes shall not, in the aggregate, be carried on the books of such bank as an asset to an amount exceeding its paid-up capital and sur- plus; and hereafter, the authority of a two-thirds vote of niture, fixtures,' etc., all of the directors shall be necessary to authorize the directors necessary purchase of such lot and building, or the construction of for purchase or 11 Ml- construction. SUch building. Property mortgaged, 2. Such as may have been mortgaged, pledged or pledged or conveyed . . as security for conveyed to it in trust for its benefit in good faith, for loans. money loaned in pursuance of the regular business of the corporation. [861 SAVINGS BANKS § 6 I 3. Such as may have been purchased at any sales bonds which are under pledge, mortgage or deed of trust made for its ments— Continued. benefit for money so loaned and such as may be con- TrsaieTunderSo. veyed to it by borrowers in satisfaction and discharge of '^"^^ei^s^, etc. loans made thereon. 4. Gold or silver bullion, and United States mint cer- Bullion, mint _ ^ -11 certificates. tmcates of ascertained value. 5. Bonds and other securities of the following classes : Bonds and other securities, viz. : (a) Bonds or interest-bearing notes or obligations of Bonds or interest- .- ^ ^. bearing notes or the United States, or those for which the faith and credit obligations of v. s., of the United States are pledged for the payment of principal and interest; (b) Bonds of the State of California, or those for Bonds of this state , . or its subdivisions, which the faith and credit of the State of California are pledged for the payment of principal and interest, or those of any county, city and county, city or school db- trict of this state; (c) Bonds or stocks or notes of any state in the United States, other than the State of Czdifornia, that has not, within twenty-five years previous to making such invest- ment by such bank, defaulted in the pajrment of any part of either principal or interest, or those of any county, city f;^^^3't\°tti;u?s., and county, city or town, or school district, in any state °[,;^„^7„;°""i*y,„y of the United States other than the State of California, is- l"/f^f^-f;'^l°^^-.^- sued under authority of any law of such state, which 1^^°^"^^^^"^^^^°^'/^^ county, city and county, city or town, or school district, had, as shown by the federal or state census next preced- ing such investment, a population of more than twenty thousand inhabitants; provided, however, that the entire bonded indebtedness of such county, city and county, city or town, or school district, including such issue of bonds or stocks or notes, does not exceed fifteen per centum of the value of the taxable property therein as shown by its last equalized assessment roll; and provided, further, that such county, city and county, city or town, or school district, or the state in which it is located has not defaulted in pay- ment of any part of either principal or interest due upon [87] § 6 I BLYTH. WITTER & CO. BONDS WHICH ARE anv legeJlv authorized bond or stock or note issue within LEGAL INVEST- r !• i • MENTS— Continued, twenty-five ycars next precedmg such investment; Bonds of any dis- (J) Bonds of 2iny distrlct organized under the laws trict organized under ^ ' •' ° laws of State ap- of ^^ State of California which are required to be and proved by commis- ^ sion under State law. ^^^ investigated and approved by a commission now or here2ifter authorized by a law of this state to conduct such investigation and give such approval and by author- ity of which approval said bonds are decleured to be legal investments for savings bemks; Notes or bonds ( e ) Notes or bonds secured by mortgage or deed of secured by mortgage ^ ^ " , at deed of trust, trust, pajmient of which is guaranteed by a policy of mort- payment guaranteed . .... by mortgage insur- geigc msuTance, and mortgage participation certificates, ance and mortgage . . , . . , participation certs, issued by a mortgeige uisurance compeuiy m accordance with the provisions of chapter eight of title two of part four of division first of the Civil Code. Bonds, securities 6. Bonds and othcr securities of the following classes; purchasable after cer- 'iii 111 •• tification by Supt. provided, that such bonds or securities sheJl first have under §61a, viz. : •/• 1 1 1 • been certified by the supenntendent of bemks after an investigation eis provided for imder section sixty-one a of this act; Bonds etc., of, or (a) Bonds or intcrest-bearing notes or obligations of pledged by any ^ ' 00 foreign country, etc. any foreign country or government, or those for which the faith and credit of any foreign country are pledged for the payment of principal and interest; Bonds of irrigation (b) Bonds of any district orgsmized under the laws of district outside of . . . California approved any State in the United States other than the State of CaJi- by Commission, , ,...,, .,. 11. within debt limita- tomia for the purpose of irrigating lands within such dis- trict, which are required to be emd are investigated and approved by a commission now or hereafter authorized by a law of said state to conduct such investigation and give such approved ; provided, that the entire indebtedness of such district, including the bonds under consideration, and all prior liens, within the meeming of section fifty- seven a of this act, do not exceed fifty per centum of the aggregate market value of the lands within said district, and of the irrigation system owned or to be acquired by said district with the proceeds of said bonds; [88] SAVINGS BANKS § 6 I (c) Bonds of any district organized under the laws of ???ds which are the State of California not otherwise provided for in this ments— continued. .. Bonds of any Cali- SeCtlOnj fornia district, not otherwise provided (d) (1) Bonds of zmy railroad corporation, as the forinSec. same is defined in the "public utilities act," incorporated under the laws of any state in the United States and oper- ^"""^^ °^ *°y "'^*'i- ,.-,_, road corporation," as. atmg exclusively in the United States; provided, that said leaned in "public ,,,,,, . utilities act." oper- corporation shall have had net earnings for either its fiscal **'"s in u. s., with , , specified net earnings. year or twelve consecutive months in the fourteen months next preceding application for certification of said bonds under the provisions of section sixty-one a of this act, amounting to at least one and one-heJf times the interest on all bonded indebtedness outstanding at the time of said certification, and on all additionsJ bonds then pro- posed to be issued; or, (2) Bonds of any railroad corporation, the payment so^n'^g ^^ '^^ ^ ^ of which is guaranteed, both as to principal and interest, oHMch °is g^lran"* by a railroad corporation, whose bonds are a legal invest- t^ed by r. a. cm- "^ "^ ' ^ poration, etc. ment for savings banks in this state. (e) (1) Bonds of any other public utility corporation, IJ^jj^oWn g^^^^^ as the same is defined in the "public utilities act," incor- P"^'i^ "*'|.'ty '=°j- , *^ ' poration, defined and porated under the laws of any state in the United States operating as above. and operating exclusively in the United States; provided, that said corporation shsdl have had net earnings for either its fiscal year or twelve consecutive months in the fourteen months next preceding application for certifica- tion of said bonds under the provisions of section sixty- one a of this act, amounting to at least one and one-hedf times the interest on all bonded indebtedness outstanding at the time of said certification, and on edl additional bonds then proposed to be issued ; or, (2) Bonds of any similar public utility corporation, firiar*pubHc°utiiifj the payment of which is guaranteed, both as to principal corporation. and interest, by a public utility corporation other than a railroad corporation, whose bonds are a legal investment for savings bemks in this state. [89] §61 BLYTH, WITTER & CO. BONDS WHICH ARE [^ determinuis: the income of any railroad or other pub- LEGAL INVEST- ^"^ ^ ii- iiii_« MENTS— Continued. j|j. utility Corporation mentioned herein, there shall be in- income of above cor- cJmJed the income of any corporation or corporations out porations — how i»i« determined, ^f which it shall have been formed through consohdabon or merger, 2uid of any corporation the entire business and income-producing property of which the corporation b- suing such bonds has wholly acquired. Nature of security ^jj bonds issued by a railroad or other public utility required for R. R. ^ j j f or other public utility corporation Riust be securcd by a mortgage or deed or company bonds: trust which at the time of said certification is: either Closed first mortgage j^ j^ closed first mortgage or deed of trust; or, or deed of trust, or 53 sa First mortgage or jj^ \ fiYst mortgage or deed of trust containing pro- deed of trust with ^ ^ ^ rri_LJ «.'l Testrictions on issuing visions restricting the issuance of further bonds until further bonds ; or =^ r • i • i_ 11 L such time as the income of said corporation shall have been at least sufficient, during the twelve months next preceding the bsuance of amy additional bonds, to meet the earning requirements heretofore specified in either paragraph (d) or (e) of subdivision 6 of this section ap- plicable to such corporation arfter including the additional bonds then proposed to be issued; or, Refunding mtge. or HI. A refunding mortgage or deed of trust providing Tiding for retirement for the retirement of all prior lien mortgage debts of said prior len^'^^ge^ corporation, gmd restricting the issuance of further bonds until such time as the income of said corporation shall have been at least sufficient, during the twelve months next preceding the issuance of any additional bonds, to meet the earning requirements of such corporation after including the additional bonds then proposed to be is- sued ; or. Underlying or di- IV. An Underlying or divisional closed mortgage or TrTeed of trust prfp- dccd of trust of property which forms a part of the oper- erty forming part of , * i .• .l_ • 'J _ the operating system ating system of the Corporation then owning said prop- of owning corpora- ^^^^ j^ ^j^^ ^^^^ ^j ^^^^^ sccured by an Underlying or divisional closed mortgage or deed of trust, the net in- come required by this section shall be based exclusively upon the income, maintenance charges, operating ex- 1901 SAVINGS BANKS § 6 I penses, taxes, and mortgage indebtedness of or against ^°^^? ^^Ul^ ^^^ the property covered by such underlying or divisional ments— Continued, closed mortgage or deed of trust, or, if such income, maintenance charges or operating expenses can not be definitely ascertained, on the proper proportionate share of such property in the general income, maintenance charges, operating expenses, and teixes of the corpora- tion then owning such property and on the mortgage in- debtedness of or against the property covered by such underlying or divisional closed mortgage or deed of trust. (f ) Notes or bonds secured by first mortgage or deed cured by tirst mort- of trust or other first lien upon real estate, improved or or oti°e'r ist uen ^^ unimproved; provided, that the entire note or bond issue shall not exceed sixty per centum of the market value of such real estate, or such real estate with improvements, taken as security; and provided, further, in case the said note or bond issue is created for a building loan on real estate, that at no time shall the entire outstanding note or bond issue exceed sixty per centum of the market value of the real estate and the actual cost of the improvements thereon taken as security; and provided, also, in case said \ real estate is located outside of thb state, that the provi- "^ sions of this pauragraph shall be subject to the limitations i^^^\ and modifications contained in section fifty-seven a of this act; and provided, also, that no such notes or bonds shall be disqualified as investments for savings bauiks for the reason that the payment thereof is guaranteed by a policy of mortgage insurance. In determining the market value of any real estate where real estate =• •' etc., consists of oil under the provisions of the preceding psuragraph where "mberian'd""he °' such real estate, improved or unimproved, consists of oil 'a'"^ 1^ °'i mineral ' "^ •^ ' or timber not in- or other mineral or timber land, the value represented by eluded in fixing ' market value. such oil or other mineral or timber shall not be included in fixing such market value. Nothing herein contained shall prevent savings banks from making loams secured Redwood timber may *^ ^ .11^^ included in fixing by mortgage or deed of trust upon lands wherein redwood market value. timber is included in fixing the market veJue thereof. [91] / § 6 1 BLYTH, WITTER & CO. BONDS wHic^ARE ^^y bank, however, may, without such certification by MENTS— Continued. j}jg superintendent of banks, purcheise any note or bond When bank may, q,. iggue of notes or bonds provided for in said paragraph without certification *^ « ^ . by supt., purchase (f ) of subdivision six of this section, whenever such pur- notes or bonds under ^ ' par. (f) subd. six of chase constitutes the entire amount of notes or bonds this Sec. executed by the makers thereof and secured by the seune real estate; provided, that no savings bank shall hold any such notes or bonds unless such holding constitutes the entire bsue thereof at any time outstanding; and provided, also, that nothing in this paragraph sheJl be construed to permit savings banks to invest in notes or certificates evi- dencing psurticipation in any mortgage on real estate un- less by law specifically authorized, or in or on any form of obligation secured by any undivided interest in real estate designed to distribute the obligation so secured. Collateral trust bonds (g) Collateral tTust bonds or notes when secured by or notes secured by — , either : Deposit of notes or ( 1 ) Deposit of notes or bonds authorized for invest- i°nve^stment by Sec, ment by this sectiou of a market value at least fifteen per speci e n^ar^e ^^^^^^^^ j^^ excess of the par value of the collateral trust bonds or notes issued; or. Deposit of notes or / o ) DeDosit of notes or bonds authorized for invest- bonds so authorized \ / r ... i_«J by this Sec, and jnent bv this section and other securities of a combined other securities, of -^ , . combined market market value at least twenty per centum m excess or the value and of par , _ value, as specified, par value of the collateral trust bonds or notes issued ; provided, that the par value of said collateral trust bonds or notes shall in no case exceed the market value of that portion of the security represented by notes or bonds authorized for investment by this section. R. R. eguipment /j^\ Railroad equipment trust certificates or obligations trust certificates, \-/ ^ ^ ^ i.ii issued or guaranteed, jggued or ffuarguiteed by a corporation to which a loan or and with lien o •' priority, as specified, j^ans for the construction, acquisition, purchase or lease of railroad equipment has or have been made with the approval of the Interstate Commerce Commission; pro- vided, that the entire issue shall not exceed sixty per centum of the cost of such equipment and shall mature serially not later than fifteen years from date of bsue; [921 SAVINGS BANKS §^ provided, further, that said certificates or obligations must ^° legal^invest-^ be secured by or be evidence of a prior lien upon or reser- ments— continued. vation of title to such equipment, or by an assignment of or prior interest in the rent or purchase notes given for the hiring or purchasing of said equipment. (i) Acceptances issued by a discount, acceptance or in- ^^^diL'o'u^t'aS vestment corporation formed under the Federal statute ZpolliZ^Tdlr'' commonly known as the "Edge Act" or under the "In- [^de^'^i ^°^ ^t^te vestment Companies Act" of New York, or by a corpora- tion of identical character and capacity, organized under the laws of any state of the United States. The legality of investments heretofore lawfully made ^rtfilwf Jrwht pursuant to the provisions of this section, or of any law "^^^^'^^^l^^^^^^^ of thb state as it existed on and subsequent to July 1, 1909, shall not be affected by any amendments to this section or thb act; nor shall any such amendments re- quire the changing of investments once lawfully made under this act. Anv bonds authorized by this section as a legal invest- Bonds authorized by •' . 1 r ^'^'^' *^ investment — ment for savings banks may be carried on the books of how carried on books ^ "^ 1 1 • °^ bank, etc. said bank at their investment value, based on their mar- ket value at the time they were originally bought, unless the superintendent of banks shall require any or all of the bonds which may thereafter have a market value less than the original investment value to be written down to such new market value which shall be done gradually if practicable and in such manner as he may determine; or he may, by a plan of amortization to be determined by him, require such gradual extinction of premium as will bring such bonds to par at maturity. When it shall be necessary to prevent loss to any sav- Bonds of intrastate ,R. R. corp'n not ings bank on an obligation owned or on a debt previously conforming to see— ^ , .11 • •• ■^vhen purchasable. contracted in good faith, it may, with the previous writ- ten consent of the superintendent of banks, purchase or acquire bonds of any railroad corporation incorporated under the laws of the state of California and operated exclusively therein, notwithstamding such bonds do not [931 § 61 BLYTH. WITTER & CO. BONDS WHICH AKE conf orm to the requirements in this section contained ; MENTs— Continued, provided, any bonds so purchased or acquired must be sold for the best price obtainable by any bank within five years after such purchase or acquisition. Classes of bonds is- m. • i i i ii i r. i l sued by "public No savings bank shall hereafter purchase or loan savings bank^may moncy upon any bond, note or other evidence of indebt- invest, etc. gjj^ggg^ issued by any "public utility," subject to the jur- isdiction, regulation or control of the railroad commission of this state under the provisions of the "public utilities act," approved December 23, 1911, and acts amendatory thereof or supplemental thereto, unless each such bond, note or other evidence of indebtedness was either : (a) Issued prior to the taking effect of the "public utilities act"; or, (b) Issued under authority of the railroad commission, in accordance with the provisions of said act; or, (c) A note issued for a period not exceeding twelve months, in accordance with the provisions of subdivision (b) of section fifty-two of said act. [Publishers' note, re Section 61, as amended 1921: This section has been materially reshaped and revised. Any savings bank may purchase, hold or sell real or personal property as follows: 1, 2 and 3 as heretofore; 4. Gold or silver bullion and United States mint certificates of ascertained value; 5. (a), (b), (c) and (d). Bonds or interest-bearing notes or obligations of the United States, of the State of California, of any county, city and county, city or school district of this State; bonds or stocks or notes of any State in the United States other than Cali- fornia, or those of any county, city and county, city or town or school district of any State other than California, having a popula- tion of more than 20,000 inhabitants; provided the entire bonded indebtedness thereof does not exceed fifteen per centum of the value of the taxable property therein, and that payment of any partp ^ of principal or interest has not been defaulted within five years next preceding such investment, and bonds of any district organ- ized under the laws of California which are investigated and ap- proved by an authorized commission, by authority of which ap- proval the bonds are declared to be legal investments for savings banks. The purchase of bonds of the foregoing kinds m.ay be made without consent of the superintendent. [94] SAVINGS BANKS § 6! 6. (a), (b), (c), (d), (e), (f), (g), (h) and (i) cover bonds BONDS T^^. by any corporation issumg any such bonds or securities will remain in force, and any other facts or conditions bearing upon the value or sufficiency of such bonds. The On questions concern- Superintendent of banks may accept and act upon the ing securities, Supt. .... - , may act on legal opinions and appraiscmcnts of any attorneys, engineers, opinions and ap- , I'l praisements present- or appraisers which may be presented by such person or ed by applicant. . corporation, so applying, and the reports of any of the executive officers of the corporation issuing such bonds or securities, on any question of fact concerning or affect- ing such bonds or securities, the security thereof, the fran- chise conditions herein mentioned, or the financial condi- tion of the corporation issuing the same. In lieu of or in addition to such opinions, appraisements and reports, the Supt. may select at- Superintendent of banks may, if he deems proper, have torneys, appraisers ii i i i ><< i i . and accountants, at any or all such matters passed upon and certified to him expense of applicant. , . , *• i « by attorneys, engineers, appraisers or accountants of his own selection at the expense of the applicant. If the If Supt. finds bonds superintendent of banks shall find from such investiga- or securities conform .iiii •• i .i* to Sec. 61, he shall tion that the bonds or securities so presented come within so certify; otherwise ten e iii • e e » t certificate refused, and fuliy conform to all the requirements of any of said paragraphs of subdivision six of section sixty-one of this act, and is satisfied from such investigation as to such franchise conditions, he shall so certify unless for any reason he shall be of the opinion that such bonds are not [96] SAVINGS BANKS § 6 Is a safe or proper investment for savings banks, and in ^°^^^ invest -*^^ such event or if such bonds shall fail to meet the require- ments— continued. ments of this act such certificate must be refused. The ^. ^ Supt. may investigate Superintendent of Banks also shall have power to inves- and certify as to •^ ^ _ , sufficiency of bonds tififate and ascertain the status and sufficiency as mvest- specified in pars, (a), ments for savmgs banks of any bonds or notes or obliga- of sub. six, sec. ei. tions specified in paragraphs (a), (b), (c), (h) and (i) of subdivision six of section sixty-one of this act. If upon such investigation it shall be determined in the opinion of the superintendent of banks that any bonds or notes or obligations specified in paragraphs (a), (b), (c), (h) and (i) of subdivision six of section sixty-one of this act constitute a proper investment for savings beuiks he shall so certify. Any certificate issued by the superintendent of banks ^"p*'^'"*^ revoke under authority of the provisions of this section may be revoked at any time in his discretion. Any certificate issued in relation to notes or bonds of a railroad or other public utility corporation shall expire not later than three fg^^^lflf^^t"" °^ months after the end of the then current fiscal year of the corporation issuing such notes or bonds. Any such certificate expiring may be renewed or ex- Expiring certificate tended by the superintendent of banks without appli- '^^"^^^ cation therefor from such corporation or other interested parties if he shall be satisfied that the notes or bonds re- ferred to in said certificate are in conformity with the then requirements of section sixty-one of this act. The actual expense of investigating any issue of bonds Expense of investi- 1 1 11 1 • J l_ ..L gating issues, by or securities so presented shall be paid by the person, whom paid. district or corporation presenting the same for investiga- tion, and the superintendent of banks, before making such investigation, may require a cash deposit of such amount as he may deem necessary to cover such expense, ofaciai Ust of __ rt-'ii'r securities. The superintendent of banks shall keep an official list of all bonds and securities certified by him. state not to be liable No provision of this act, and no act or deed, done or for payment of. or to •^ ' ^ guarantee regularity performed under or in connection therewith, and no find- of securities certified *^ by Supt. [97] § 6Ia-62 BLYTH, WITTER & CO. BONDS WHICH ARE uig made or certificate issued under any provkion thereof, HENTs^onSd: shall be held or construed to obligate the State of Califor- nia to pay, or be liable for the payment of, or to gfuaran- tee in any manner whatsoever, the regularity or the veJid- ity of the issuance of emy stock or bond certificate, or bond, note, or other evidence of indebtedness certified under any provbion of this act, by the superintendent of banks. Advertising bonds as It shall not be lawfuI for any individual, firm, associa- laviUrbank— when tion, bank, trust company, stock compemy, copartnership unlawful. ^^ corporation to advertise by newspaper or circular or in any other manner that any securities are legal investments for savings bemks in this state unless such securities are at the time of said advertisement legzJ investments for sav- ings banks in this state, or to use any advertisement which might lead the public to believe that any securities con- form to the requirements of law relating to investments by savings banks unless such advertisement shjdl have been approved in writing by the superintendent of banks prior to publishing, circulating or otherwise issuing the same. Any individual, firm, zissociation, bank, trust company, stock company, copartnership or corporation who shall advertise any securities in violation of the provisions of this paragraph shzJl be guilty of a misdemeanor and shall Penalty, be punishable by a fine not exceeding one thousand dol- lars or by imprbonment in a county jail not exceeding one year or by both such fine and imprbonment. [Publishers' note, re Section 61a, as amended 1921: No changes are made in the language of the section as it stood prior to the amendment, except the changes of the letters and numbers referring to the previous section. The provisions previ- ously appearing in Section 61 relieving the State from liability to pay or to guarantee the validity of any stocks, bonds, etc., and prohibiting advertising that securities conform to the law relating to investments by savings banks, unless they have been certified, have been transferred to Section 61a.] Dealing in real or Section 62. No savings bank shall, directly or indi- an"contrictinrof rectly, deal or trade in real or personal property in any ^^^*" other case or for any other purpose than is authorized [98] SAVINGS BANKS § 62 by this act, and shall not contract any debt or liability for any purpose whatever other than for deposits, except as in this section provided. Savings banks may pay regular depositors, when re- Savings banks may ° .^ I- .^ o I- Qjj request pay de- quested by them, by draft upon deposits to their credit positors by draft, ^ .* » i ^jjj charge exchange with their banks, and charge current rate of exchange therefor. for such drafts. No savings bank shall borrow money, or pledge or savings bank not to hypothecate any of its securities, except to meet the im- to melt'demanda'oV mediate demands of its own depositors, and then only in depositors. pursuance of a resolution adopted by a vote of a majority of its board of directors, duly entered upon their min- utes, wherein shall be recorded the ayes and nays upon each vote; also with the written approval of the super- intendent of banks, and he shall have the authority to fix the amount to be borrowed, the amount and char- acter of the securities to be pledged or hypothecated, and the term and rate of interest thereon; provided, that , , f f e c • • Savings banks may, any savmgs bank may, for the purpose or perrorming its to extent of capital - . 1 . . I . L • 1 l. ^""^ surplus or re- runctions and transacting its business as authorized by serve, rediscount this act, rediscount, with or without guarantee or endorse- Federal Reserve ment, with the federal reserve bank, its acceptances, notes or any other securities, available for rediscount with a federal reserve bank, in any amount up to but not exceeding its capital and surplus or reserve without con- sent of the superintendent of banks, and shall not be considered as borrowed money within the meaning of this section; provided, also, that savings banks may, in , . , I I 1 • I • Savings bank may the manner authorized by law, and without the previous borrow and receive on deposit public moneys, approval of the superintendent of banks, borrow the federal and state as specified. public moneys of the United States, the State of Cali- fornia, the counties, cities and counties, and towns of said State of California and receive such public moneys on deposit; provided, also, that savings banks may, in the manner authorized by law, and without the previous approval of the superintendent of banks, borrow postal savings moneys of the United States, and receive such [991 § 62-63 BLYTH, WITTER & CO. postal savings moneys on deposit; and provided, fur- ther, savings bemks may borrow any amount, in addition May borrow any ad- to the amounts authorized to be borrowed in this section, purchase from V. s. f or the purpose of buying from the United States, United or IT. S. bonds and oii11¥t»io •/' other federal securi- btates Donds, United otates treasury certincates, or notes ties, in manner ii«-^i« specified, or obugations of the United States, but only in pursu- ance of a resolution of a majority of its board of direc- tors, duly entered upon their minutes, and without the previous approval of the superintendent of banks, but the fact of such transaction shall forthwith be reported Excess ioa°^*® sav- jjj writing to the Superintendent of banks. No excess loan made to any savings bank with or without pledge of assets shall be invalid or illegal as to the lender. Section 63. Savings banks may issue general certifi- cates of deposit, which are transferable, as in other cases, by indorsement and delivery; may issue, when requested by the depositor, special certificates, acknowledging the deposit by the person therein named of a specified sum Savings bank may r i i .i. ^irri issue certificates gen- ot money, and expressly providmg on the race or such deposits on conditions Certificate that the sum so deposited and therein named may be transferred only on the books of the bank; pay- ment thereafter made by the bank to the depositor named in such certificate, or to his assignee named upon the books of the bank, or in case of death, to the legal rep- resentative of such person, of the sum for which such special certificate was issued, shall discharge the bank from all further liability on account of the money so paid. ^'^%'su*iubject to ^^^ *^"^® certificates of deposit, issued by a savings oTh^rdepositsretc! t>ank, shall be subject to the same limitations and condi- tions as applied to other deposits, and notice thereof shall be given by the words "Subject to conditions of agreement with depositors" printed on the face of the certificate issued. [1001 SAVINGS BANKS § 64-65 Section 64. Each savings bank must prescribe by its Sayings bank to pre- 1 ^ scribe by its by-laws by-laws, or by contract with its depositors, the time and °^ py contract, time •' and conditions of re- conditions on which repayment is to be made to deposi- payment to depositor. tors, except as in this act otherwise provided. In all cases the by-laws or contracts shall provide that notice of at least thirty days may, at the option of any such bank, be required to be given of intention to withdraw any deposit or part thereof, but whenever there is any call by depositors for repayment of a greater amount than the bank may have disposable for that purpose, the directors or officers thereof must not make any new loan or investment of the funds of the depositors or of earn- ings thereof until such excess of call has ceased. The directors of any such bank having no capital stock shall, before the declaration of any dividend, carry at least one-tenth part of the net profits of such bank, for the Savings bank without capital stock shall preceding half year, or for the period covered by said ^^^ry at least one- j.-ii . c 1 c 1 • 1 tenth profits to dividend, to its reserve fund. Subject to the provisions reserve. of section nineteen of this act, any losses sustained by any such bank may be charged to and paid out of its reserve fund. A larger reserve fund may be created and nothing herein contained shall be construed as prohibi- tory thereof. The assets of any such bank are a security to its depositors. Any such bank organized without cap- ital stock, may provide by its by-laws for the disposal of any amount in its reserve fund in excess of the amount required by section nineteen of this act and may also provide for final disposal upon the dissolution of the bank of its reserve fund or the balance thereof remain- ing after payment of any losses of such bank. Section 65. No loan shall be made, for himself or as savings bank shaU agent or partner of another, directly or indirectly, to any rector or officer, or d. /Y- r -111 111 upon his endorse- irector or othcer or any savings bank by such bank, or ment, etc., except .1 1 . . . f I rr loan may be made on the endorsement, surety or guaranty or any such ofn- to corporation in cer or director, except that loans may be made to any ^cer holds minority corporation in which any director or officer of such sav- ^ "'^ ' ings bank may own or hold a minority number of shares [101] § 65 BLYTH. WITTER & CO. of stock, upon authorization of or confirmation within thirty days after making such loan, by a majority of all the directors of such bank and the affirmative vote of all direc- tors of such bank present at the meeting authorizing or Interested director confirming such loan; provided, however, that such loan not to act on such _ ^ '^ loan, shall in all other respects conform to and comply with all other provisions of this act. Such interested director or of- ^°*bank tcTan^the"* ficer shall not vote or participate in any manner in the ac- tion of the board on such loan; provided, also that by and w^ith the consent of the superintendent of banks previ- ously obtained in writing, all directors may vote upon such a loan made by one bank to another bank where the entire capital stock of one is owned by or held in trust for the stockholders of the other bank and where all or a ma- jority of the board of directors of each of said banks is composed of the same persons. Such authorization or con- Facts concerning firmation shall be entered upon the records or minutes of such loan to be re- • • i i 'T'i r r i • 11 1 ported to Supt. such savmgs bank. 1 he ract or making such loan, the names of the directors authorizing or confirming such loan, the corporate name of the borrower, the name of each director or officer of such bank who is a member, stockholder, officer or director of the corporation, to which such loan is made, the amount of stock held by him in such borrowing corporations, the amount of such loan, the rate of interest thereon, the time w^hen the loan will become due, the amount, character and value of security given therefor and the fact of final payment, when made, shall be forthwith reported in writing by the cashier or secretary of such savings bank to the superintendent of banks; provided, that any loan made to any corporation of which any director, officer, agent or employee of such savings bank owns not more than five per cent of the paid-in capital of such borrowing corporation nor any loan made to any corporation of which any two or more Iioans to corporations •,. zt* . i c T_ • where stock owned, directors, ofhcers, agents or employees or such savmgs etc., by directors, , , , ^ c L • l • officers, agents, or bank own not more than twenty per cent or the paid-m employees — when not • i r i i • • ill l to be reported, capital of such borrowmg corporation, shall not be re- [1021 SAVINGS BANKS § 65 ported to the superintendent of banks. No loan may be made to any corporation a majority of the stock of which is owned or controlled by any one or more of the direc- tors or officers, or officers and directors, of such savings supt°to°?oan re bank collectively, except with the previous consent of the i"'""^- superintendent of banks. A loan may be made to any agent or employee, other savings bank may , — . ,. r -111 L loan to agent or than an officer or director, of any savmgs bank by such employee. bank upon authorization or confirmation of a majority of all the directors of such savings bank and an affirmative vote of all directors of such savings bank present at the meeting authorizing or confirming such loan; provided, however, that such loan shall in all respects conform to and comply with all other provisions of this act. Such authorization or confirmation shall be entered upon the records or minutes of such savings bank. The fact of Facts concerning ... such loan to be re- making such loan, the names of the directors authorizmg ported to supt. such loan, the name of the borrower, the nature of his em- ployment, the amount of such loan, the rate of interest thereon, the time when the loan will become due, the amount, character and value of the security given there- for, and the fact of final payment, when made, shall be forthwith reported in writing by the cashier or secretary ^^^^^^ ,„ ^^^^^^tions of such savings bank to the superintendent of banks; pro- v^here stock owned, ° • r 1 • 1_ ® ' ^ directors or vided, that any loan made to any corporation of which officers, agents or •^ r 1 • employees — when not any director, officer, agent or employee of such savings to be reported. bank owns not more than five per cent of the paid-in capital of such borrowing corporation nor any loan made to any corporation of which any two or more directors, officers, agents or employees of such savings bank own not more than twenty per cent of the paid-in capital of such borrowing corporation, shall not be reported to the superintendent of banks. Any officer or director of any ^^"''^ "^ savings bank who knowingly procures a loan from such savings bank contrary to the provisions of this section shall be guilty of a felony. In case of the neglect or fail- Penalties. ure of the secretary or cashier of any such bank to report [103] § 65 BLYTH, WITTER & CO. to the superintendent of banks, as herein provided, any of the facts so required to be reported, or in case of the neglect or failure of the secretary or cashier of any such bank to report to the superintendent of banks any loan made contrary to the provisions of this section, the bank shall be liable therefor and shall forfeit to the people of the State of California twenty-five dollars per day for each day, or part thereof, during which such neglect or failure continues. Loans to banks and This section shall not apply to any loan made to a religious corpora- i.> .• ii .1 il- tjons. religious corporation, club, or other membership corpor- ation of w^hich one or more directors, officers, agents or employees of such savings bank may be members or officers, but in which they have no financial interest. Loans permitted to Loans may be made to any director, other than an director other than /-r !• 1 • i- 1 ^ officer, or to agent ofticer, directly or indirectly, or to any agent or employee savings bank, on of a savings bank on the security of United States bonds, security of U. S. y r . , /-> ./- . ^ . 1 bonds or other United otates treasury certihcates, or interest-bearing as specified, notes, or obligations of the United States, or those for which the faith and credit of the United States are pledged for repayment of principal or interest, or those issued under authority of the United States, notwithstand- ing anything in this section contained, and such loans may be made in the usual manner of making loans in which no director of such bank is interested. [Publishers' note, re Section 65, as amended 1921: The following are the amendments: 1. Loans may be made by a savings bank to any corporation in which any director or officer thereof may own or hold a minority number of shares, upon confirmation within thirty days after mak- ing such loan by a majority of all the directors, and the affirma- tive vote of all directors present at the meeting authorizing or con- firming such loan. 2. A loan made to a corporation, of which any director, offi- cer, agent or employee owns not more than five per cent of the paid-in capital of the borrowing corporation, and a loan made to any corporation of which any two or more directors, officers, agents or employees of the savings bank own not more than twenty per cent, of the paid-in capital of the borrowing corporation, shadl not be reported to the superintendent.] no4i SAVINGS BANKS § 66-67 Section 66. No savings bank shall hereafter make any loans to any person, firm, copartnership or corporation Savines banks not , io make loans to to an amount exceeding fifty per centum of the actual any person, ^tc, . , . , , , , fill -1 exceeding SOf^t paid- paid-up capital stock and surplus or such bank, or in the up capital and case of a bank organized without capital stock, to an amount exceeding fifty per centum of the reserve fund of such bank; provided, however, that any savings bank having a paid-up capital and surplus of less than fifty Exceptions to thousand dollars, but not less than twenty-five thousand dollars, may make any such loan on real estate security to an amount not exceeding twenty-five thousand dol- lars; and provided, further, that any savings bank having a paid-up capital and surplus of less than twenty-five thousand dollars may make any such loan on real estate security to an amount not exceeding its paid-up capital and surplus, if each such loan in all other respects con- forms to the provisions of this act. The renewal or ex- Renewal or extension of loan — when not tension of any loan heretofore legally made by any sav- 'loan hereafter made. ings bank shall not be construed to be a "loan hereafter made" within the meaning of the provisions of this sec- tion. The legality of investments heretofore lawfully made pursuant to the provisions of this act as it existed on and subsequent to July 1, 1909, shall not be affected by the provisions of this section. For the purposes of Endorser deemed 1 • • 1 1 11 1 1 1 borrower. this section an endorser or guarantor shall be deemed to be a borrow^er. Section 67. 1. No savings bank shall loan money savings bank loans— T , •. r 1 1 1 their security and except on adequate security or real or personal property, period. and no such loan shall be made for a period longer than ten years. No such loan shall be made on unsecured notes; provided, that a savings bank may discount or purchase bankers' acceptances of the kind and character savings bank may , .. i/ • • • /• and (b) subd. six, paragraphs (a) and (b) or subdivision six of secbon Sec. 61. . /• 1 • I '/-111 sixty-one or this act when certified as legal mvestments for savings banks in this state, unless such notes or bonds shall have a market value at least fifteen per centum in excess of the amount loaned thereon; or, (f) On personal property unless such personal prop- erty shall have a market value at least fifty per centum in excess of the aunount loaned thereon; or. On other bonds or on (g) On Other bonds, or On capital stock of any cor- capital stock of cor- *^ ' p-ration. Restriction poration, unless such bouds or stock shall have a market on loan on bank stock. "^ ' value at least fifty per centum in excess of the amount loemed thereon; provided, however, that no loan shall be made upon the capital stock of any bank unless such bank has been in existence at least two years and has earned and paid a dividend on its capitaJ stock. Savings banks not to 4. No savings bank shall make any loan on security of loan on real estate, ^ i • i r i' i • except it be first lien, real estate, unlcss it be a first hen, and in no event to and not exceeding . . r i i i r i 60% of market excecd Sixty per centum of the market value or any real value. Exception. , . , , r r -i' estate taken as security except for the purpose or facilitat- ing the sale of property owned by such savings bank or except under the conditions specified in section fifty- seven a of this act; provided, that a second lien may be accepted to secure the repayment of a debt previously con- [1101 On personal property. SAVINGS BANKS § 67 tracted in good faith; and provided, also, that any savings casei permitting 2nd ,1,.,. f. iir 1 liens and loaci not bank holding a hrst mortgage or deed or trust on real es- exceeding 90'; efface , . 1 I 1 I I I value of flnt lien, tate may take or purchase and hold or loan upon another roai estate mortgage, and 90", of 60'/, of and immediately subsequent mortgage or deed of trust market value of realty permitted. thereon, but all such loans shall not exceed in the aggre- gate sixty per centum of the market value of the real es- tate securing the same; provided, further, that a savings bank may loan not to exceed ninety per centum of the face value of a mortgage which constitutes a first lien upon real estate, but in no event shall any such loan ex- ceed ninety per centum of sixty per centum of the market value of the real estate covered by said mortgage or deed of trust. 5. No savings bank shall loan to any one borrower capitai-stock loans — restrictions upon, on the security of the capital stock of any corporation an amount exceeding ten per centum of the capital stock and surplus of such savings bank; provided, that all loans on the capital stock of any one corporation shall not exceed in the aggregate twenty-five per centum of the capital stock and surplus of such savings bank. 6. No savings bank shall purchase, invest or loan its investment of any . . capital, surplus or capital, surplus or the money of its depositors, or any deposits in mining shares forbidden. part of either, in mining shares or stock and any presi- violation hereof *^ ° felony. dent or managing officer who knowingly consents to a violation of any provision of this paragraph shall be guilty of a felony. [Publishers' note, re Section 67, as amended 1921: The following are the amendments of this section: To Section 67-1 is added the proviso that a savings bank may discount or purchase a participation certificate in a bill, as well as purchase a bill, as before the amendment. In 1(d) (3), the amount of bankers' or trade acceptances, drafts and bills of exchange which a savings bank may acquire from any one acceptor, shall not exceed at any time in the aggre- gate more than ten per cent, of its paid-up capital stock and sur- plus or reserve, unless the savings bank is secured either by at- [111] § 67-68 BLYTH. WITTER & CO. tached documents or by some other actual security growing out of the same transaction as the acceptance. Note proviso, also lim- itation on combined total of acceptances. In 67-2 the only changes are the reference numbers to corre- spond to the changes in Section 61. 67-3 (a) is amended to conform to the new lettering and num- bering of Section 61. The references in the old section to (a), (aa), (b), (c) and (d) of subdivision three of Section 61 are changed to (a), (b), (c) and (d) of subdivision five of Section 61, and (e) of subdivision three is changed to (c) of subdivision six of said section. 67-3 (b) is changed by adding notes or obligations, and by changing references to correspond to the lettering in amended Sec- tion 61; (f), (g), (i) and (e) of subdivision three of Section 61 are changed to (d), (e) (g), (h) and (i) of subdivision six, Sec- tion 61. 67-3 (c) has added equipment trust certificates. 67-3 (d). (h) of subdivision three becomes (f) of subdivision six. Section 61. There is added to this paragraph the words, "or on securities issued by a mortgage insurance company pursuant to the provisions of chapter eight of title two of part four of division one of the Civil Code." 67-3 (e) now provides that no savings bank shall loan "on notes or bonds of the character specified in paragraphs (a) and (b) of subdivision six of Section 61 of this act, when certified as legal investments for savings banks in this State unless such notes or bonds shall have a market value at least fifteen percentum in excess of the amount loaned thereon." 67-3 (f) and (g) of the amended section are the same as (e) and (f) in the old section. Numbers 4, 5 and 6 of the new section are the same as in the old section.] Amount and char- Section 68. Every savings bank or savings depart- acter of total re- riiiii ii* •• i serves of savings ment oi a bank shall at all times maintain total reserves T)ank or savings bank • i r f i department, equivalent to tive per centum or the aggregate amount of its deposits, exclusive of United States, postal savings bank, state, county and municipal, and other public money deposits, which are secured as is required by law; at least two and one-half per centum of such deposits May be maintained shall be maintained as reserves on hand, which shall con- as reserves on hand, . riiiii- r f or as reserves on de- sist OF gold bullion, or any lorm ot money or currency depositary, authorized by the laws of the United States, and two and one-half per centum of such deposits may be main- tained as reserves on hand, which shall consist of bonds, or interest bearing obligations of the United States, of gold bullion, or any form of money or currency author- ized by the laws of the United States or may be main- [112] SAVINGS BANKS § 68 required to reserves on tained as reserves on deposit subject to call with any reserve depositary provided for in sections twenty and forty-three of this act; provided, however, that all or any part of the reserves may be deposited, subject to call, with a federal reserve bank in the district in which such bank is located; provided, also, that no savings savings bank or bank or savings department shall be required to main- ^^i^tl'in tain reserves on hand in excess of four hundred thousand Jloo'^ooV^^'en' dollars, and when such reserves on hand reach that JeaXthaTamount amount, the balance of total reserves necessary to make ^urre^maki^ngup up the five per centum may be kept as reserves on de- ^ ^^^*" posit, subject to call, with any reserve depositary pro- vided for in sections twenty and forty-three of this act. If any savings bank shall have become a member of a Reserves required of bank becoming federal reserve bank, it shall comply with the reserve re- i"ember of Federal Reserve bank. quirements of the federal reserve act and its amendments, and its compliance therewith shall be in lieu of, and shall relieve such savings bank or savings department of a de- partmental bank from compliance with the provisions of this section. If any savings bank shall fail to maintain its total re- serves in the manner authorized by this section, it shall be subject to the penalty provided for in section twenty Penalty. of this act for commercial banks. No new loan shall be made during any deficiency in No new loan while total reserves de- the total reserves. Deposits with any commercial bank, ficient. or commercial department of a bank, on open account, as provided in this section, shall be permitted and shall not be construed as loans. Not more than five per centum Consent of supt. required for savings of the deposits of any savings bank shall be deposited tanks deposits of more than 5<^:'c with any one bank, except with the consent of the super- with any one bank 1 r 1 1 -111 -11 °^ ^^'' ^'*^ '^°™' mtendent or banks; provided, that any savmgs bank, may merciai banks. deposit with any one bank not more than twenty-five thousand dollars without the permission of the superin- tendent of banks. Not more than fifteen per centum of the deposits of any savings bank shall be deposited [113] Proviso. § 68-69 BLYTH, WITTER & CO. with all commercial banks, except with the consent of the superintendent of banks. No savings bank or savings department shall receive deposits of other banks other No savings bank or than savings deposits and such deposits shall not be dept. to receive other than savings treated Or Considered as a part of the reserves on de- deposits of other banks; same shall posit of such depositing bank; provided, however, that not be treated as -iiii part of reserves on the sum SO deposited shall not exceed thirty per centum ing bank. Limita- of the paid-in Capital and surplus of the depositing bank, tion upon sum so ^ r r r i • i • • t deposited, nor morc than hrteen per centum or the paid-in capital and surplus of the depositary bank. [Publishers' note, re Section 68, as amended 1921: This section has been amended to provide: (1) That a savings bank that becomes a member of a Federal Reserve Bank shall comply with the reserve requirements of the Federal Reserve Act in lieu of reserve requiremnts of the State Act. Its reserve would then be three per cent, instead of five as previously, all with the Federal Reserve Bank. (2) That any savings bank may deposit with any one bank not more than $25,- 000 without permission of the superintendent of banks, even though this sum ex- ceeds five per centum of the bank's deposits.] Public administrator Section 68J/2. Where a decedent, at the time of his may allow deposit 1 1 1 1 r 1 ... .11 of decedent to remain or her death, left moneys on deposit w^ith a savings bank, in savings bank .,„,,,,, , ,. 1 . . 1 in where deposited, and it shall be lawtul lor any public administrator, who shall may deposit estate , 1 1 • • r 1 11 1 moneys therein, become the administrator of the estate, to allow such deposit to remain in said savings bank, and also, it shall be lawful for him to deposit therein to the account of said decedent, any and all moneys of said estate not required for the current expenses of administration. Effect of such de- Such deposit, whether made by the decedent or a public posit. "^ '^ administrator, shall relieve the public administrator from depositing the same with the county treasurer. Moneys so deposited, whether by the decedent or by a public Method o^^'^th- administrator, may be drawn upon demand without notice, upon the order of said administrator, counter- signed by a judge of a superior court, when required for the purpose of administration or otherwise. colSfm^o'Act! Section 69. Every savings bank, and the business of every savings department of every other bank, must be conducted under and in accordance with the provisions of this act. [114] COMMERCIAL BANKS § 70-80 Section 70. Every savings bank shall have power to BavinKn bank may ,. i>ir c \ • J receive as df-positary, receive as depositary, or as bailee tor sate keeping and etc., Liberty bonds storage, Liberty bonds or other bonds or securities issued by the United States government for wair purposes or otherwise. ARTICLE 111. COMMERCIAL BANKS. Section 80. No commercial bank shall make any commercial banks IT .1 • !• ,1 .^ C not to loan in oans, directly or indirectly, to any person, nrm, co- amount eiceeding 1. .. . ..L-u'ij following percent- partnership or corporation, in an amount which, includ- ages of capital ing therein any extension of credit to such person, firm, *° »"'?"■• copartnership or corporation, by means of letters of credit, or by acceptance of drafts for, or the discount or purchase of the notes, bills of exchange or other obliga- tions of, such person, firm, copartnership or corporation, shall exceed the following percentage of its capital and surplus: 1 . Ten per centum without security, except where io% without 1 • 1 1 1 1 • 1 security. such capital stock and surplus is not more than twenty- (Note exceptions) five thousand dollars, in which event an amount not to exceed twenty per centum of such capital stock and sur- plus may be loaned without security, and where such capital stock and surplus is greater than twenty-five thous- and dollars and does not exceed fifty thousand dollars, a sum not exceeding five thousand dollars may be loaned without security. Nothing herein shall prohibit any com- fe*c'^^7or*pVot*°^ mercial bank from taking or receiving any kind, char- ^'^^^^^t^^g^.J^J^' acter or amount of security whatsoever, either real or personal, for the protection of any loan made under the provisions of this subdivision, but no such loan or any part thereof shall be considered or construed as a secured loan unless the whole thereof is loaned upon security cons^ered secured worth at least fifteen per centum more than the amount of such loan; or, [115] §80 BLYTH, WITTER & CO. (In addition to 2. Fifteen per centum, in addition to the amount that amt. loaned under _ _ r i i • • • subd. 1) 16% upon niav be loaned under the provisions or subdivision one security worth at "^ • i i r f least 15% more than of this section, upon Security worth at least hrteen per loan secured. r i i J (Note provisos) centum more than the amount or such loan so secured ; provided, the total amount which can be loaned under subdivisions one and two hereof can not exceed twenty- five per centum in all ; provided, however, that a separate note or notes shall be taken for the unsecured loans and a separate note or notes shall be taken for the secured loans, and the secured and unsecured loans shall not be combined in any way within one note, or notes; or, ex^erdinVioan'ie^ ^' Twcnty-five per centum upon security worth at cured by at least jg^^gj. fifteen per centum more than the amount of its 10%. loans so secured; or, 40%, if loan on 4 Forty per centum, provided such loans are upon commercial paper •' *^ "■ owned by negotiator, commercial or business paper actually owned by the endorsed without limitation, person negotiating the same to such bank, and are en- Note provisos: ^ 00 dorsed by such person without limitation; provided, how- ever, that in addition to the amounts permitted to be —re combination loaned by subdivisions one, two or three of this section, loans under subd. . . r t ^ 1 4 and subd. 1, 2, or 8. an amount may be loaned on the securities fixed by sub- division four of this section, which taken with the amounts so permitted by said subdivisions one, two or three will —restrictions of Sec. ^ot exceed forty per centum ; provided, also that the re- Bot applicable to 1 1 -ii r drafts, etc., with strictions under this section shall not apply to bills or B/I.8 attached, etc. exchange or drafts, with bills of lading attached, drawn in good faith against actual existing values. drffts.\"*^aHsS ^^y Commercial bank may accept drafts or bills of ex- m import ^or export, change drawn upon it having not more than six months' shipments, gjgi^t. j-q ^n, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods; or which grow out of transactions involving the domestic shipment of goods provided shipping docu- ments conveying or securing title are attached at the time of acceptance; or which are secured at the time of accept- ance by a warehouse receipt or other such document con- [116] COMMERCIAL BANKS § 80 veying or securing title covering readily marketable staples. No commercial bank shall accept, whether in a um'lted'to slecified foreign or domestic transaction, for any one person, com- SpTn'impa'red St pany, firm, or corporation to an amount equal at any time **^ ""* surplus. in the aggregate to more than ten per centum of its paid- up and unimpaired capital and surplus, unless the bank is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance; and no commercial bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its paid-up and unimpaired capital and surplus; provided, however, that the superintendent ^^P*;^Treg?;utYon. of banks, under such general regulations as he may pre- ^^,'^°J'^; ^to° m% scribe, which shall apply to all commercial banks alike re- l^^'^^^^;"^ *'"* gardless of the amount of capital and surplus, may author- ize any commercial bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per centum of its paid-up and unimpaired capital and sur- plus; provided, further, that the aggregate of acceptances growing out of domestic transactions shall in no event f °eTni"t to'exc^ed exceed fifty per centum of such capital and surplus. ^"^'=- Any commercial bank may accept drafts or bills of ex- fj^^^ Siaf ts'dra^n change drawn upon it having not more than three months' ^„^/°;?jfo3e''o7doUar sight to run, exclusive of days of grace, drawn under regu- exchange, etc. lations to be prescribed by the superintendent of banks by banks or bankers in foreign countries or dependencies or insular possessions of the United States for the purpose of furnishing dollar exchange as required by the usages of trade in the respective countries, dependencies, or insular possessions; provided, however, that no commercial bank shall accept such drafts or bills of exchange referred to in this paragraph for any one bank to any amount ex- Limit in amount of ,. ■ 1 . . t £ 1.U — „: J ,,^ such drafts, etc., ceedmg m the aggregate ten per centum or tne paia-up ^^nk may accept for 1 . .1 .11 1 £ iL *.* K U any one bank unless and unimpaired capital and surplus or the accepting oanK ^^^^^ ^jtie documentg unless the draft or bill of exchange is accompanied by " security. documents conveying or securing title or by some other General limitation . I upon amount of adequate security; provided, further, that no commercial acceptances. [1171 § 80 BLYTH, WITTER & CO. bank shall accept such drafts or bills in an amount exceed- ing at any time the aggregate of one-half of its paid-up and unimpaired capital and surplus. No limitatiens in None of the limitations or restrictions contained in the apply trioans^"etc.! prcvious subdivisions of this section shall apply to loans, bonds^'^or other XT. s. discounts or Other extensions of credit secured by Liberty ' bonds or by other bonds or securities bsued by the United States government, if the market value of such Liberty bonds or other securities exceeds by ten per centum the eunount of any such loan, discount or other extension of credit. Loans by commercial Loans which are made upon security available for bank on security for , . • i i i i • • l savings-bank loans, loans m a savmgs bank may be made in a commercial deemed secured , , , ..... . I loans under Sec. bank upon the Same margin or security as is permitted to savings banks anything in this section to the contrary notwithstanding, and all such loans shall be deemed to be secured loans within the meaning of this section. Total liabilities of In Computing the total liabilities of any person to a merciai bank,— how Commercial bank there shall be included all liabilities to the bank of any copartnership or unincorporated associa- tion of which he is a member, and any loans made for his benefit or for the benefit of such copartnership or un- incorporated association; of any firm, copartnership or unincorporated association to a commercial bank there shall be included all liabilities of its individual members and all loans made for the benefit of such copartnership or unincorporated association or any member thereof; and of any corporation to a commercial bank there shall be included all loans made for the benefit of the cor- poration. [Publishers note, re Section 80, as amended 1921: This section has been amended as follows: In subdivision three the clause in the old act beginning "Pro- vided, however, * * * ^" jj^s been omitted. Subdivision four has been amended in that part of it applying to acceptances. The new provision is identical w^ith the provisions of the Federal Reserve Act authorizing national banks to accept, [118] COMMERCIAL BANKS § 80-82 save the substitution of the "superintendent of banks" for the "Fed- eral Reserve Board." Hereafter State banks in California will be able to accept on equal terms with national banks.] Section 8 1 . No loan shall be made by any commer- Loans upon corporate .,11 I . . ( securities where pay- cial bank upon the securities or one or more corpora- ment undertaken, I fi'i- 11 -Li severally, by two or tions, the payment or which is undertaken, in whole or more persons, firms, II 1 ' • 1 1 . |. or corporations, — in part, severally, but not jointly, by two or more indi- when forbidden. viduals, firms, or corporations: (a) If the borrowers or underwriters be obligated absolutely or contingently to purchase the securities, or any of them, collateral to such loan, unless the bor- rowers or underwrriters shall have paid on account of the purchase of such securities an amount in cash, or its equivalent, equal to at least twenty-five per centum of the several amounts for which they remain obligated in completing the purchase of such securities; (b) If the commercial bank making such loan be liable, directly or indirectly, or contingently, for the re- payment of such loan or any part thereof; (c) If its term, including any renewal thereof by agree- ment, express or implied, exceed the period of one year; (d) Or to an amount under any circumstances in ex- cess of twenty-five per centum of the capital and surplus of the commercial bank making such loan. Section 82. Every commercial bank hereafter organ- Paid-up capital ized must have paid up in cash a capital stock of not less than, (a) Twenty-five thousand dollars if its principal place population not over i- 1 . .1 1 • 1 T. .^1 1 I.- £ 5.000 — 825,000. of business is located in any locality the population or which does not exceed five thousand persons; (b) Fifty thousand dollars if its principal place of 5. coo to 25,000 ^ ' ■^ ^ population — ?50,000. business is located in any city the population of which is more than five thousand persons but does not exceed twenty-five thousand persons; [1191 § 82 BLYTH. WITTER & CO. 25,000 to 100,000 (c) One hundred thousand dollars if its principal population— $100,000. ^ ^ ^ _ . place of business is located in any city the population of which is more than twenty-five thousand persons but does not exceed one hundred thousand persons; 100,000 to 200,000 (d) Two hundred thousand dollars if its principal population— $200,000 , r i • • i i • • i i • r place or business is located m any city the population or which is more than one hundred thousand persons but does not exceed two hundred thousand persons; Population exceeding (e) Three hundred thousand dollars if its principal 200.000 — $300,000. , . , . . . place of business is located in any city the population of which is more than two hundred thousand persons. ^Tion^not retrospec- ^^^ foregoing classification shall not apply to any *r\'!°Jv!^^^\'^^'''^ commercial bank already in existence which has received to banks incluaea •' by annexat^ion^ etc., jjg certificate to do a banking business from the superin- tendent of banks; nor to any bank the location of which shall have been included by annexation or consolidation within the limits of a city of a class requiring a larger bank may°o^pen new Capitalization, but no bank thus excepted shall be per- fro'^m°pre-annIx™tton niitted to establish any new branch office as provided in have capltai'^requiied section nine of this act or to remove its place of business of unexcepted banks, f^.^^ ^^^ original limits of the city or township wherein it was located prior to such annexation or consolidation until it shall have the capital required of banks in such city not within said exception. Such excepted banks may not in any case decrease their capital stock but may Decrease and increase increase the same in the manner provided by law to an of capital stock of amount either greater or less than that required of banks excepted banks. ° ^ in such city not within said exception; provided, that nothing herein shall be construed to affect the provisions of section nineteen of this act relative to the proportion Provisions of Sec. of capital and surplus to deposits or of section twenty- is re proportion of, ri- i- i •! l -ir capital and surplus three of this act relative to the capital stock required or to deposits, etc., i i i . i i i • -n • • e not affected by Sec. banks doing a departmental business. 1 he provisions or Population provisions section twenty-three of this act, as to population, shall applicable to banks i . -i i • j j j.l_ • • £ iL • organized under Sec. ripply to any bank organized under the provisions or this section; provided, however, that nothing herein contained [120] COMMERCIAL BANKS § 82-83 shall prevent the superintendent of banks in the exercise Bank hereafter organized in locality or his discretion from granting his license to any bank included, by annexa- 1 r • 1 • 1 1- 1-11 1 -111 tion in city requiring herearter organized in a locality which has been included larger capitalisation , . 1- 1 • • 1 • L 1- • c • —paid-up capital by annexation or consolidation within the limits or a city required requiring a larger capitalization w^ith a capital stock paid up in cash equal to that which would have been required for said locality if it had not been included by annex- ation or consolidation within the limits of a city requiring a larger capitalization; provided, that no bank so licensed shall be permitted to establish any branch office as pro- vided in section nine of this act or to remove its place of Capital of such bank, opening new branch business from the original limits of the city or township or removing from pre- . annexation location. which has been included by annexation or consolidation within the limits of a city requiring a larger capitalization until it shall have the capital required of banks in such city requiring said larger capitalization. [Publishers' note, re Section 82, as amended 1921: This section has been amended by the addition of a paragraph identical in pur- port to the amendment to Section 23, relative to bank included by annexation in city requiring larger capitalization, etc.] Section 83. No loan shall be made for himself or as Provisions governing loans, credit, to asent or partner of another, directly or indirectly, to any officers, directors, or- 111 1 agents, etc., of bank; officer of any commercial bank by such bank or on the or on endorsement of 1 /-r" same, to firms, cor- endorsement, surety, or guaranty of any such officer; porations, etc., with , which they are provided, that a loan may be made to a corporation of connected. which any officer of a commercial bank, proposing to make such loan, is a minority stockholder, director, offi- cer, agent or employee. Loans to any director, agent or employee other than an officer, or to any firm, copartner- ship or corporation of which any director, agent or em- ployee other than an officer is a member, stockholder, director, officer, agent or other employee, or to any person, firm, copartnership or corporation on the en- dorsement, surety, or guaranty of any such director other than an officer, agent or other employee, can be made by any commercial bank; and provided, further, that a loan may be made or a line of credit may be given to any member of an advisory board or body of a commer- [121] § 83 BLYTH. WITTER & CO. cial bank, not otherwise an officer of such bank, or a loan may be made to any firm, copartnership or corporation of which any member of such advisory board or body is a member, stockholder, director, officer, agent or other employee, or to any person, firm, copartnership, or cor- poration on the endorsement, surety, or guaranty of any such member of such advisory board or body upon such conditions as are herein fixed for a loan, directly or in- directly, or a line of credit and the report thereof to any director of such bank. Loans herein authorized can be made only on authorization of or confirmation within thirty days after making such loan, by a majority of all the directors of such bank and the affirmative vote of all directors of such bank present at the meeting authorizing or confirming such loan. Such interested rprovisions governing director shall not vote or participate in any manner in above loans. (Cont'd.) the action of the board on such loan; provided, that by and with the consent of the superintendent of banks pre- viously obtained in writing, all directors may vote upon such a loan made by one bank to another bank where the entire capital stock of one is owned by or held in trust for the stockholders of the other bank and where all or a majority of the board of directors of each of said banks are composed of the same persons. The board of directors of any such bank may fix the total amount of credit that may at any one time during the twelve months next succeeding be given to any director, agent, or other employee, other than an officer, or to any firm, copartnership, or corporation in which any director, agent, or other employee other than an officer is a mem- ber, stockholder, director, officer, agent or other em- ployee or to any corporation of which any officer of a commercial bank, proposing to fix such total amount of credit, is a minority stockholder, director, officer, agent or employee, and any or all loans made within or up to the total amount of such authorized credit may at any time during said twelve months be renewed from time [122] COMMERCIAL BANKS § 83 to time, in whole or in part, by the officers of the bank without any further vote or action on the part of the board of directors. Each such authorization shall be entered upon the records or minutes of said bank. No director shall vote or participate in any manner in such action of the board fixing the total amount of credit that may at any one time be given to himself or to any firm, copartnership or corporation in which he is a member, stockholder, director, officer, agent or other employee. The fact of making such loan, the name of the director Facts concerning ^ such loans to be re- authorizing such loan, the name of the director, agent or ported to supt. employee, obtaining such loan, or the name of the firm, copartnership or corporation in which such director, agent or employee is interested, or the name of the cor- poration, of which any officer of a commercial bank is a minority stockholder, director, officer, agent or employee, obtaining such loan, the amount of such loan, the rate of interest thereon, the time when the loan will become due, the amount, character and value of security given therefor, if any, and the fact of final payment when made shall forthwith be reported in writing by the cashier or secretary of such bank to the superintendent of banks; provided, that any loan made to any corporation of which tionsf in which'^bank dff . 1 f 1. directors, officers, irector, orhcer, agent or employee or such commer- etc.. are interested— .,,, ^ r £1_'J* when not to be cial bank owns not more than hve per cent or the paid-in reported. capital of such borrowing corporation nor any loan made to any corporation which any two or more directors, offi- cers, agents or employees of such commercial bank own not more than twenty per cent of the paid-in capital of such borrow^ing corporation shall not be reported to the superintendent of banks. In case a loan is made to a corporation there shall be reported in the same man- ner the name of each director and officer of such bank who is a member, stockholder, director, officer or em- ployee of such borrowing corporation and the amount of stock held by him in such borrowing corporation. [123] §83 BLYTH, WITTER &c CO. Provisions of Sec. /^\\ t^g provisions of this scction relating to reports as to reports apply ^ . r i- i n i l to granting of credit, ghall apply to the granting or credit and all loans made under any credit given and payments made thereon shall also be reported immediately after the same is Report to be made made. In case of a loan made without the previous of loan without pre- r l • L vious authorization, authorization of the directors, the fact of making such loan shall forthwith be reported and the action of the board of directors, in confirming or refusing to confirm such loan within thirty days thereafter, and the fact of final payment when made shall be reported in the same manner as herein required for loans made under previous Procuring loan con- authorization. Any officer, director, agent, or employee trary to section, i i i i i • i 1 felony, of a Commercial bank, who knowingly procures a loan from such commercial bank contrary to the provisions of Penalty for failure this section, shall be guilty of a felony. In case of the to report. /..,/• i ^ • t U neglect or failure of the secretary or cashier ot any such bank to report to the superintendent of banks, as herein provided, any of the facts so required to be reported, or in case of the neglect or failure of the secretary or cashier of any such bank to report to the superintendent of banks any loan made contrary to the provisions of this section, the bank shall be liable therefor and shall forfeit to the people of the state of California twenty-five dollars per day for each day, or part thereof, during which such neglect or failure continues. Loans to religious jj^j section shall not apply to any loan made to a corporations, etc.,— *- r ^ ^^ ""^'pilc'^MeTereto: religious Corporation, club, or other membership cor- poration of which one or more directors, officers, agents or employees of such commercial bank may be members or officers but in which they have no financial interest. Loans to corporation, j^Jq Joan may be made to any corporation, a majority where majority •' "^ i,y1°rtct''oTs"'etc!,'of oi the stock of which is owned or controlled by any one bank-restricted. ^^ more of the directors or officers, or directors and offi- cers of such commercial bank collectively, except with the previous consent of the superintendent of banks. [124] TRUST COMPANIES § 83-90 Loans may be made to any director, other than an Loan may be made to director (not officer, directly or indirectly, or to any agent or em- officer) or agent or ' ' ^ . ., employee of comm'l ployee of a commercial bank, on the security of United tank, on security of ■^ -^ ^ . . U. S. bonds or ob- States bonds, United States treasury certificates, or in- ligations. terest-bearing notes, or obligations of the United States, or those for which the faith and credit of the United States are pledger! for repayment of principal or in- terest, or those issued under authority of the United States, notwithstanding anything in this section con- tained, and such loans may be made in the usual man- ner of making loans in which no director of such bank is interested. [Publishers' note, re Section 83, as amended 1921: This section has been amended by adding a proviso that any loan made to any corporation, of which any director, officer, agent, or employee of a commercial bank owns not more than five per centum of the paid-in capital of the borrowing corpo- ration, and any loan made to any corporation of which any two or more directors, officers, agents or employees of such commercial bank own not more than twenty percentum of the paid-in capital of such borrowing corporation, shall not be re- ported to the superintendent of banks.] Section 84. No commercial bank shall invest an Limited investment , . . .1 • 1 J 1 • 1.U permitted in bank amount exceedmg its paid-up capital and surplus in the premises. lot and building in which the business of the bank is car- ried on, furniture and fixtures, vaults and safe deposit vaults and boxes necessary or proper to carry on its banking business; and hereafter the authority of a two- thirds vote of all the directors shall be necessary to authorize the purchase of such lot and building or the construction of such building. Section 85. The superintendent of banks shall have supt. may limit de- ,.., criiLi. UJ posits with other power to limit the amount or runds that may be de- commercial bank. posited by any commercial bank with any other com- mercial bank. ARTICLE IV. TRUST COMPANIES. Section 90. Any corporation which has been or shall what constitutes « .... trust company. be incorporated under the laws of this state, which is authorized by its articles of incorporation to act as exe- [125] § 90 BLYTH. WITTER & CO. cutor, administrator, guardian of estates, assignee, re- ceiver, depositary or trustee, under appointment of any court or by authority of any law of this state, or as trustee for any purpose permitted by law, which has its principal place of business in a city in which the popula- tion does not exceed one hundred thousand persons and As to trust company which has a Capital of not less than one hundred thousand in city of population in n . , . . i . l .1 1 1 »ot over 100,000 \pith dollars actually paid in, in cash, assigned to or available paid-in capital - , r 1 . • 1 • • 1. not less than for the purpose or conducting business in any such $100,000 assigned . ..i- r l_ . -i,!.!!. to trust business. Capacity, or trust business or any character permitted by law, and which has made with the state treasurer the deposit of money or securities of the character and in the amount required by the terms of section ninety-six of this act, and which has received from the superintend- ent of banks the certificate of authority required by the terms of section one hundred twenty-seven of this act, to transact such business, and any corporation which has been or shall be incorporated under the laws^ of this state, which is authorized by its articles of incorporation to act as executor, administrator, guardian of estates, as- signee, receiver, depositary or trustee, under appointment of any court or by authority of any law of this state, or As to trust company as trustee for any purpose permitted by law, which has in city of population r -i • • •• l^'LL exceeding 100,000 its principal placc of business m a city m which the popu- with paid-in capital 1111 1 ll_'L of at least $200,000 lation excecds one hundred thousand persons and which assigned to trust . 1 r 1 1 i i ^1 1 J 11 business, has a capital of at least two hundred thousand dollars actually paid in, in cash, assigned to or available for the purpose of conducting business in any such capacity, or trust business of any character permitted by law, and which has made with the state treasurer the deposit of money or securities of the character and in the amount required by the terms of section ninety-six of this act, and which has received from the superintendent of banks the certificate of authority required by the terms of sec- tion one hundred twenty-seven of this act, to transact such business, may act, or may be appointed by any court to act, in any such capacity in like manner as an [126] TRUST COMPANIES § 90 individual and when so qualified shall be known as a trust company. Any such trust company may, as pro- fr°J^t " ^""^^"^^ °° vided in this act, accept or receive any deposit of money or personal property authorized, directed or permitted to be made with any such corporation by any court or law of this state, and may accept and execute any trust pro- vided for in this act, or permitted by any law of this state, to be taken, accepted or executed by an individual. Any such trust company, if located in a city the popula- Trust company in •' sr J ^ •' pjty of population tion of which does not exceed one hundred thousand per- not over 100,000 to apportion capital and sons must segregate that portion of its capital and surplus ^^;pj^^\^^'^'®^^^**f assigned to or available for its trust business and must p^'-^^ate and court apportion and set aside at least fifty thousand dollars of such paid-up capital as security for the faithful perform- ance and execution of all private trusts accepted by it and must also apportion and set aside at least fifty thousand dollars of such paid-up capital as security for the faithful performance and execution of all court trusts accepted by it and whenever such trust company shall, under the provision of sections ninety-six and ninety- ^;°^;;'„Vd'e"r1ecs. eight of this act, be required to make the first additional ^Lra'^ddftiWde- deposit of securities with the state treasurer, such trust ^Tth sute'Treafurer, company must also apportion and set aside an additional ^^tZai amounts of' fifty thousand dollars of paid-up capital as security for Pe^i^;^^/^-" the faithful performance and execution of all private l;7r;;t trusts"*' trusts accepted by it and must also apportion and set aside an additional fifty thousand dollars of paid-up capital as security for the faithful performance and exe- cution of all court trusts accepted by it, and any such trust company, if located in a city, the population of guch trust company. ,., , iiitl_ J i.if located in city of which exceeds one hundred thousand persons, must population exceeding: , . r . '11 1 -J 100,000 must segre- segregate that portion of its capital and surplus assigned gate capital and .,,,-, I . 1 . . • surplus assigned to to or available for its trust business and must apportion trust business, and and set aside at least one hundred thousand dollars of jioo.ooo thereof as such paid-up capital as security for the faithful perform- mance of its private ance and execution of all private trusts accepted by it and must also apportion and set aside an additional fifty [127] §90 BLYTH. WITTER & CO. Amounts of capital thousand dollars of paid-up capital as security for the or capital and surplus _ r ii • so apportioned to be faithful performance and execution of all private trusts treated as separate i - i i • i • i capital or capital accepted by it and must also apportion and set aside an and surplus of each _ iz-r i iiii r -i •! class of business, etc. additional fifty thousand dollars of paid-up capital as security for the faithful performance and execution of all court trusts accepted by it, and any such trust company, if located in a city, the population of which exceeds one hundred thousand persons, must segregate that portion of its capital and surplus assigned to or available for its trust business and must apportion and set aside at least one hundred thousand dollars of such paid-up capital as se- curity for the faithful performance and execution of all private trusts accepted by it and must also apportion and set aside at least one hundred thousand dollars of such paid-up capital as security for the faithful performance and execution of all court trusts accepted by it; provided, that no such trust company shall at any time be required to apportion and set aside any portion of its surplus as security for the faithful performance and execution of such private trusts, nor shall it be prohibited from so doing; and provided, further, that the respective amounts of capital or capital and surplus so apportioned and set aside shall be treated in all respects as the separate capital or capital and surplus of each respective kind or class of business, as though the same were conducted by separate and distinct corporations, and each shall be kept, held, used and disposed of wholly for the exclusive benefit, pro- tection and security of the respective classes of trust busi- ness to which the same were respectively so apportioned Where executor, ad- and set aside. In all cases in which it is required that an ministrator, etc., to qualify by taking executor, administrator, guardian of estates, assignee, re- oath, etc., or where , afladavit required, ceiver, depositary or trustee shall qualify by taking and same may be taken or '^'-•'"-*' v^v-^^ j -, ^ dent"etc^.1 8^^ Subscribing an oath, or in which an affidavit is required, it fanure°ofiru^st^com! s^all be a Sufficient qualification by such corporation if """TelaiTuUe" such oath be taken and subscribed or such affidavit be made by the president, vice-president, secretary, manager, trust officer or assistant trust officer, and such officer shall [128] TRUST COMPANIES § 90 be liable for the failure of such trust company to perform any of the duties required by law to be performed by an individual acting in the capacity and subject to like pen- alties; provided, any such appointment as guardian shall guaSrapSues to apply to the estate only, and not to the person. *^® "****" °^^^- Any trust company upon becoming a member of a Trust company be- I . I I , coming member of federal reserve bank is authorized and empowered : Federal Reserve bank may continue To continue to administer, execute, enjoy and exercise etc*;Tn"flduciary all court and private trusts as defined in the bank act, etc. ; also 7o take! powers, rights, privileges, and other fiduciary relations, new court and ^private 11" 't 1_ *. *-!_ M.' C trusts, etc., subject appointments and business it may have at the time or to requirements and becoming such trust company member, and also to take, i'^Act.'""' '"P""* execute and administer all new court and private trusts as defined in said bank act, including the right to the appointment of all fiduciary capacities in which it may be named in wills theretofore and thereafter executed and probated, and other appointments, powers, priv- ileges and business, of every kind and nature, as may be then or thereafter permitted to, but subject to the same requirements and limitations as may be imposed upon any corporation under all of the provisions of the bank act. To hold, administer, execute, and in all respects gen- c-enerai powers of . . , trust company. erally handle, manage and dispose of, without charge, restriction, limitation or impairment of any nature, all of its investments, rights, interests, titles to property, con- tractual, legal and other rights, obligations or liabilities, of every kind or nature, court and private trusts as de- fined in the bank act, and other powers which it may be then permitted to exercise by law. A foreifirn corporation may be authorized to act in this Powers of foreign =* ^ "^ cornoration acting state as trustee for the following purposes : « state as trustee. (1) To deliver bonds, and receive payment therefor. (2) To deliver permanent bonds in exchange for temporary bonds of the ssune issue. II291 § 90-92 BLYTH, WITTER & CO. (3) To deliver refunding bonds in exchange for those of a prior issue or issues. (4) To register bonds, or to exchange registered bonds for coupon bonds, or coupon bonds for registered bonds. (5) To pay interest on such bonds, and to take up and cancel coupons representing such interest payments. (6) To redeem and cancel bonds when called for re- demption, or to pay and cancel bonds when due. (7) The certification of registered bonds for the pur- pose of exchanging registered bonds for coupon bonds. (8) To act as trustee under any mortgage, deed of trust, or other instrument securing notes or bonds issued by any corporation. [Publishers' note, re Section 90, as amended 1921: This section is amended only in minor particulars, so as to eliminate the present responsibility resting upon the attorney for a trust company, for the activ- ities of such company. The amendment is regarded as vital in its consequences, as involving possibly the subrogation of responsibility of a trust company to one of its officers.] Section 9 1 . Any court having jurisdiction of any Court may authorize , . . i . . . j trustee or other executor, aaministrator, guardian, assignee, receiver, de- flduciary to deposit , , . . , . trust fund with trust positary or trustee, upon the application or any such company, subject to i i • • f court order, omcer or trustec, or upon the application or any person having an interest in the estate or property administered by such officer or trustee, after such notice to the other parties in interest as the court may direct, and after a hearing upon such application, may authorize such officer or trustee to deposit any moneys then in his hands, or which may come into his hands thereafter, until the fur- ther order of said court, with any such trust company, and upon deposit of such money, and its receipt and ac- ceptance by such trust company, the said officer or trustee shall be discharged from further care or responsibility therefor. Such deposit shall be paid out only upon the order of said court. Public administrator Section 92. Any public administrator may deposit may deposit estate '' funcs noT required ^^y qj. ^H moncys of any cstatc upon which he is ad- for current expenses •' with such trust ministering, not required for the current expenses of such company. ^ [130] TRUST COMPANIES § 92-93 administration, with any such trust company authorized to transact business in the county, or city and county in ^°"''* f^7 ?"*'=* ■^ -^ ■' such aaministrator which he is acting as such administrator. Any court hav- *°. ™*J^* ^^p"*'* "^ ■' wltn truat company. ing jurisdiction of an estate being administered by a pub- He administrator, may direct such administrator to deposit all or any part of the moneys of said estate w^ith any such trust company. Such deposit shall relieve the public ad- ministrator from depositing w^ith the county treasurer the moneys so deposited with such trust company. Moneys so deposited by a public administrator may be drawn, How such deposit may be withdrawn. upon the order of such administrator, countersigned by a judge of the superior court, when required for the pur- poses of administration, or otherwise. [Publishers' note, re Section 92 as amended 1921: Amendment, for the clause, in line four of this section «f the old act referring to a trust company "having its principal place of business in the county or city and county" substitutes the phrase "authorized to transact business in the county or city and county."] Section 93. Any court having jurisdiction of any court may order - ■ . . . , 1 fiduciaries to de- estate m process or administration, or any other proceed- posit trust funds, ,. . , . 1 1_ • etc., with trust ing, may, on application or any person interested therein, company. or the person who has been selected by said court, or a judge thereof as executor, administrator, guardian, as- signee, receiver, depositary or trustee, after such notice to the parties in interest as the court shall direct, or with- out notice if all parties in interest consent thereto, and a hearing on such application, order any executor, adminis- trator, guardian, assignee, receiver, depositary or trustee so selected or appointed, whether such person has duly qualified or not to deposit with any such trust company, for safe-keeping, such portion or all of the personal assets . Effect of such of said estate as the court shall deem proper, and upon deposit. such deposit being made, the court shall by an order of record reduce the bond to be given or theretofore given by such officer or trustee, so as to cover only the estate remaining in the hands of said officer or trustee; and the property so deposited shall thereupon be held by such trust company, under the order and direction of said court. [131] § 94-96 BLYTH. WITTER & CO. Trust company not Scction 94. Such trust Company shall not be required renuire o^v^ ^^ give any bond or security in case of any appointment or deposit of moneys or other personal assets hereinbe- fore provided for, except as provided in this act, but shall Trust company re- be responsible f or all investments which shall be made by sponsible for invest- .^ ^j ^^^ ^^j^ ^j^j^j^ ^^^ ^^ entrusted to it for invest- ment by such court, and shall be liable to the same ex- tent as an individual, and as hereinafter provided. Trust company to Section 95. Such trust company shall pay interest pay interest^on trust ^^^^ ^jj moneys SO deposited with it at such rate as may be agreed upon at the time of its acceptance of any such deposit, or as shall be provided by the order of court and agreed to by such trust company. Trust company, in Section 96. Any such trust company, if its principal *^'^''not^e°xc''ee'ding place of business is situated in a city the population of deposits with stlte which does not exceed one hundred thousand persons, Treasurer to secure , • . . • ^ ». J :». ^k^ll performance of its before acccptmg any such appomtment or deposit, snau "'^ *' deposit with the state treasurer, as herein provided, at least fifty thousand dollars as security for the faithful performance and execution of all court trusts accepted by it, and shall also deposit with the state treasurer at least fifty thousand dollars as security for the faithful performance and execution of all private trusts accepted As to making first by it; and whenever any such trust company shall under *"'undM s^? 98." the provisions of section ninety-eight of this act be re- quired to make the first additional deposit of securities with the state treasurer such trust company must also deposit with the state treasurer an additional fifty thou- sand dollars as security for the faithful performance and execution of all private trusts accepted by it; and any ^y*orp"puS'ion t*""8t company if its principal place of business is situated To^mlkf deJo°sUs ^^ a city the population of which exceeds one hundred "^'to fecure^perfo"™- thousand persons, before accepting any such appoint- ance of its trusts, ^^e^t or deposit, shall deposit with the state treasurer, as herein provided, at least one hundred thousand dollars, as security for the faithful performance and execution of [1321 TRUST COMPANIES § 96 all court trusts accepted by it, and shall also deposit with the state treasurer at least one hundred thousand dollars as security for the faithful performance and execution of all private trusts accepted by it. Any such deposit Pcposit to consist of may be made either in lawful money of the United States, classes of securities: or in securities of either or any of the following classes: (a) Bonds issued by the United States or by this state (a) Bonds issued by , . , . l_ 1 J* !„• 1. ^' ^' °^ ^y state, or or by any county, city and county, city or school district specified subdivisions of this state, or bonds of any irrigation district such as are legsd for investment by savings banks; (b) Bonds for the payment of which the faith and (b) Bonds for pay- 111 nient of which credit credit of the United States or of this state are pledged ; of u. s. or of state is pledged. (c) Notes or bonds secured by mortgage or deed of (c) Notes or bonds ,, /»i» • ij J M.' secured by mortgage trust constituting a first lien on improved and productive on improved cai. real estate in the State of California; such improved real estate being worth at least double the amount of such lien; (d) Notes or bonds secured by mortgage or deed of (d) Notes or bonds trust, payment of which is gueu-anteed by a policy of o^dled of t"ust,^*^* mortgage insurance, and mortgage participation certifi- gul^n°ee°d Z ^'^ cates, issued by a mortgage insurance company in accord- ^^^'^' ance with the provisions of Chapter VIII of Title II of Part IV of division first of the Civil Code; provided, that such notes or bonds shall constitute, and such mort- gage participation certificates shall evidence the owner- ship of, or participation in, notes or bonds which con- stitute, a first lien on improved and productive read estate in the State of California, such improved real estate being worth at least double the amount of such lien. Such money or securities shall be first approved by the such money or •' 1 • • 1 1 securities to be superintendent of banks and, upon his written order, de- first approved by <• 1 • Swpt. posited with the state treasurer for the respective pur- poses herein specified, and said treasurer shall give his receipt therefor, and thereafter, subject to the provisions [1331 § 96-97 BLYTH, WITTER & CO. state Treasurer to of this act, shall hold such deposits of moncy or securities lately, for°i>en6*w of Separately, each for the sole benefit of the beneficiaries '"***' * "■ of the class of trust business, for the security and protec- tion of which the same was deposited, and said treasurer shall fi^ve his receipt therefor and the state shall be re- sponsible for the custody and safe return of any money Securities may, with Sale and transfer, and to the disposal of the proceeds sai^Transfer^etc!? by Said State treasurer, only on the order of a court of Vrder. Competent jurisdiction and for the benefit respectively of the beneficiaries of that class of trust business for the security and protection of which the same were deposited. ■WTien trust com- SectioH 97. Any such trust company, having a capital pany having capital i i i i i i ii and surplus of and surplus ot two hundred thousand dollars or more $200,000 or more apportioned as apportioned and set aside as security for the faithful security for perform- ance of court trusts performance and execution of all court trusts accepted may oe permitted *^ ^ gage"it8 bnsTnwi ^^ '*^' ^^ provided in this act, and which is wholly or in TreMurer,*as^part P^^' invested in the lot and building in which its business eposi . jg carried on, may be permitted by the superintendent of banks to mortgage such lot and building to the state treasurer for such sum, up to its full market value, as the superintendent of banks may determine, and such mort- gage may be deposited with said treasurer, and when so deposited it shall be included in the amount of securities herein required to be deposited with said treasurer as security for the faithful performance of all such court trusts. [134] TRUST COMPANIES § 98 Section 98. Whenever any trust company, the prin- Trust company in city of population cipal place of business of which Is located in a city the not exceeding 100,000 •^ *^ receiving: from court population of which does not exceed one hundred thou- trusts trust funds, '^ *^ ^ 1 1 • *° notify Supt. and sand persons, receives from court trusts accepted by it, to deposit addi- ^ !• /- 1 tional security with trust funds, as herein defined, to the amount of five hun- state Treasurer, to ' . . .- . . . be held for benefit dred thousand dollars, it shall forthwith notify in writing of the beneficiaries. the superintendent of banks of such fact, and within thirty days thereafter shall deposit with the state treasurer additional money or securities of the character mentioned and defined in section ninety-six of this act, approved as therein provided, in the amount of fifty thousand dollars; and whenever any trust company receives from court trusts such funds to the amount of one million dollars it shall further notify in writing the superintendent of banks of such fact and within thirty days thereafter shall de- posit with the state treasurer additional money or securi- ties of the character mentioned and defined in section ninety-six of thb act, approved as therein provided, in the amount of fifty thousand dollars; and for each addi- tional five hundred thousand dollars of such trust funds thereafter received by any trust company from court trusts a similar notification in writing shall forthwith be given to the superintendent of banks, and a further de- posit in the amount of twenty-five thousand dollaurs of such money or securities, or of securities provided for in section ninety-seven of this act likewise approved, shsdl be made, within thirty days thereafter, by such trust company with said state treasurer, until five hundred thousand dollars of such securities have been so de- posited. The treasurer shall give his receipt for any money or securities so deposited and each and sJl of such deposits of money or securities, shall be held by said state treasurer for the sole benefit of the beneficiaries of the class of business for the security and protection of which same were deposited. The state shall be responsible for Q^^^^ ^^ ^^ respon- the custody and safe return of any money or securities so deposits.""*' deposited with said state treasurer. The term "trust [135] § 98 BLYTH, WITTER & CO. "Trust funds" funds" when used in this section shall be deemed to mean and shall mean personal property and cash, whether re- ceived with the original trust property or as rent, income or proceeds thereof, or otherwise, in connection with the trust, and shall not be deemed to include and shall not Trust company fail- include real property. Any trust company failing to com- sec. to forfeit $100 ply with the provisious of this section shall forfeit to the State of California one hundred dollars a day for each day during which such failure or default shall continue. Upon making a request in writing to the superintendent of banks, any such trust company shall be entitled to Trust company withdraw from the state treasurer, from time to time, a may withdraw from State Treasurer sufSicient amount of such securities so that at all times the securities in ex- cess of requirements amount of such sccurities so deposited shall conform to the requirements of this act, and so that at no time shzul such trust company be required to have on deposit with the state treasurer an amount of securities in excess of the requirements of this act. Upon receiving such re- quest in writing, and satisfactory proof of the facts war- ranting such withdrawal, it shall be the duty of the sup- erintendent of banks to forthwith deliver to the state treasurer a written order directing the withdrawal of said securities so as to conform with the provisions of this section, and it shall be the duty of the state treasurer to Validity of acts or Comply with such Written order. The validity or legality crrprnyTot a'ffectel of any act or proceeding done or taken by any such ^^ "of trust^comp^ny trust Company, relating to or in connection with the ad- Act, etc. ministration of any such trusts, shall not be affected or impaired by the neglect or failure of such trust company, or of any officer or employee thereof, to comply with any of the provisions of this act, but all such acts and proceedings done or taken prior to the revocation of its certificate of authority to do such business by the super- intendent of banks, under the provisions of this act, or the revocation by any court or judge thereof of the ap- pointment, order or decree theretofore entered in such 1136] TRUST COMPANIES §98-101 trust matter shall be as valid and effective for all pur- poses as if any such neglect or failure had not occurred. Section 99. When any part of the securities so de- Requirements when . f. 1_ J P*''* °^ deposit con- posited with the state treasurer consists or notes or bonds gists of notes, bonds ,,- -LnL "■■ participation secured by mortgage or deed or trust, it shall be accom- certificates secured . 11 . f • 1 • .-c i 1. 1.1- by mortgage, etc. panied by a registrar of titles certihcates as to the con- dition of the title if the notes or bonds are secured by mortgages covering property which has been brought under the operation of the land title law, commonly called the Torrens title law, or a policy of mortgage in- surance, or a complete abstract of title or an unlimited certificate of title or a policy of title insurance prepared or issued by a person, company or corporation desig- nated or approved by the superintendent of banks and authorized by law or otherwise found by the superin- tendent of banks to be competent to issue such evidence Abstracts of title ana insurance of title, which shall be examined and approved by or policies to be ex- ' amined and approved under the direction of said superintendent of banks. The by supt. fees for an examination of such evidence of title by council to be paid by the trust company making the de- posit shall not exceed twenty dollars for each title ex- Fees. amined, and the fee for each appraiser not exceeding two, shall not exceed five dollars for each mortgage or deed of trust. (Section 100. Repealed 1913.) Section 101. For the purposes of this act, all trusts classification of , trusts. permitted to be accepted or executed by any such trust company, under any provision of this act are hereby clas- sified and defined as either: (a) Court trusts; or (b) Private trusts. A court trust is one in which any such trust company "Court trust" , I £ . defined. acts under appointment, order or decree ot any court, as executor, administrator, guardian, assignee, receiver, depositary or trustee, or in which it receives on deposit [137] §101 BLYTH, WITTER & CO. from a public administrator, under any provision of this act, or from any executor, administrator, guardian, as- signee, receiver, depositary or trustee, under any order or decree of any court, money or property. "Private trust" Any Other trust is a private trust; provided, that the defined, . . r i • i creator or any private trust or which a trust company shall be made, or at any time come to be, the trustee, How private trust may, at the time of the creation of such trust or the may be subjected . /■ i • ^ ^ ^ 1_ • • • to provisions of Creator or any such private trust, or his successors in in- to court trust's! terest, and the beneficiaries thereof may, at any time, by their joint consent, direct that such trust shall be subject to and entitled to the benefit of all of the provisions of this act relating to court trusts and thereafter such trust shall for all the purposes of this act be deemed to be a court trust and wherever in this act the words "court trust" are used they shall be deemed to include private trusts which are subject to supervision except in so far as any of the provisions of this act relating to court trusts may, by their nature, be inapplicable to such private trust. Such direction shall be in writing addressed to the trustee and a copy thereof, certified by the trustee, de- livered to the superintendent of banks. Inspection and super- jj^ ^ase such direction shall be made after the accept- vision by Supt. covers court trusts, ance of the trust, the trustee shall have the right to resign also private trusts when subjected to as such and a new trustee shall be appointed as provided Act. in the trust instrument or by law. The inspection and supervision of the superintendent of banks shall extend only to court trusts as herein defined and to private trusts subjected to the provisions of this act relating to court trusts as above provided; except, that the superintendent of banks, his attorneys, examiners or other assistants may, in the examination of the bank, inspect and inquire into any private trust or trusts administered by such bank. Private trusts, ex- Private trusts, except as in this section provided, shall cept as in Sec. pro- i i . i • • • • £ 1. vi^ed, not subject to not be subject to the inspection or supervision or the supervision of Supt. 11381 TRUST COMPANIES § 101-10 2 superintendent of banks, his attorneys, examiners or other assistants. In making the reports to the superintendent of banks Jjj^'^^ti^"™''' required by this act, every trust company shall, in addi- f "g'^^^figd" inTorma- tion to the other facts to be reported by it, furnish only tru"stran°d'private* a list and brief description of the court trusts and private trusts subject to ^ supervision. trusts, which are subject to supervision, held by it, the source of appointment thereto, the authority by which the appointment or deposit was made, and the amount of real or personal property held by such trust company by virtue thereof. Nothing in this act contained shall make it unlawful for whon person or cor- ^ _ _ . . poration. not a trust any person or corporation not subject to the supervision company, may hold •^ .11. money in escrow or of the superintendent of banks to engage in the business act as trustee. of receiving and holding in escrow money or its equiva- lent pending investment in real estate or securities for or on account of his or its principal, or of acting as trustee under deeds of trust given solely for the purpose of securing obligations for the repayment of money, other than corporation bonds. [Publishers' note, re Section 101, as amended 1921: Section 101 has been amended with respect to private trusts, providing that the superintendent of banks, his attorneys, examiners and other assistants, may, in the examination of the bank, inquire into any private trust or trusts administered by such bank,] Section 102. Any corporation which desires to with- ynon corporation ■' ^ aesiring to aiscon- draw from and discontinue doing a trust business shall continue trust busi- ness, snowing furnish to the superintendent of banks satisfactory evi- ^jj „\^i[|^t-^^^and dence of its release and discharge from all the obligations trusts, supt. shall " 1 evoke certinoate and trusts hereinbefore provided for, and thereupon the of authority to do trust business, etc. superintendent of banks shall revoke his certificate of authority to do a trust business theretofore issued to such corporation, and the state treasurer shall return to said corporation all the securities deposited by such corpora- tion and shall cancel any mortgage made by such cor- poration to said state treasurer as a part of such securities, and thereafter such corporation shall not be permitted to use and shall not use the word "trust" in its corporate name or in connection with its business. [139] § 103-106 BLYTH, WITTER & CO. Private trusts Scctioii 103. Any trust Company exercising the pow- ers and performing the duties provided for in this act, shall, except as herein otherwise provided, keep inviolate all communications and writings made to or by said trustee touching the existence, condition, management and administration of any private trust confided to it; and no creditor or stockholder of any such trust company shall be entitled to disclosure or knowledge of any such Who entitled to communication or writing ; provided, however, that the now e ^®^°^^^^'^' president, vice-president, manager, trust officer, secretary or regularly employed attorney of any such trust com- pany shall be entitled to knowledge of any such com- munication or writing; and provided further, that in any suit or proceeding touching the existence, condition, man- agement or administration of any such trust, the court wherein the same is pending may require disclosure of any such communication or writing. (Section 104. Repealed 1913.) ^°'Tarsurp°usand Scction 105. Evcry trust company shall, except as trust finds ^^y trust otherwise provided by law, invest its capital and surplus and any trust funds received by it in connection with its trust business, in accordance with the laws relative to the investment or loan of funds deposited with savings banks, unless a specific agreement to the contrary b made be- tween the trust company and the party creating the trust, or unless it is otherwise ordered by the court, in connec- tion with any court trust. ^'do^drrrtme^nt*! Section 1 06. Any such trust company desiring to do, business also, must or doing, a Commercial banking business or a savings have capital specified ^ /^ ° by Sec. 23. bank business, or both, in addition to its trust business shall have actually paid up, in cash, the amount of capital provided in section twenty-three of this act. tituTn^ii^a'^cf com^ ^^^ ^^^^^ insurance company authorized by its articles pany authorized_to^do ^f incorporation to do, or doing a trust business, in addi- tion to its title insurance business, shall comply w^ith all [140] TRUST COMPANIES § 106-107 the requirements of any law governing trust companies, and shall have a capital stock actually paid in, in cash, of not less than two hundred thousand dollars, and in ad- dition thereto, the capital stock required by law for doing a title insurance business. Such capital for each such de- partment or class of business shall be increased from time to time in the same manner and to the same extent as though each such department or class of business was conducted by a separate bank, trust company or title JiUe^nTJ^anrjc^om- insurance company, instead of as separate departments m^enui^bufinefs^to If 1 • A M. M. J i.*».l_ comply with depart- asses of busmess. Any trust company and any title cental provisions insurance company doing a departmental business as " c , e c. above provided shall comply with the provisions of this act governing each of such departments and with the provisions of any law governing each such class of busi- ness as to its deposits, reserve, surplus, investments and loans. Section 107. Any corporation doing a departmental ^°pP°[^,\'°t^f°'°*^ business as a title insurance company and as a trust com- ^^|'"^^ ^and 'iw pany, shall, as to its trust department, be subject to the Co.— Provisions r J ' ' » governing. supervision and inspection of the superintendent of banks, and as to its trust department must make all re- ports to the superintendent of banks required to be made by trust companies by the provisions of this act, and as to its trust department such corporation shall also be subject to, and shall have the benefit of all other pro- visions and requirements of this act applicable to trust companies, and shall also be subject to and shall have the benefit of all of the banking laws and rules and regu- ^^ g"t°/tg7/„*kin"* lations of the banking department of this state applicable [^l^^^^oTp'rati^on. to trust companies. The proportionate part of the state ***=• banking fund provided for by section one hundred and twenty-three of this act, that shall be payable by such corporation, shall be based on the amount of capital and surplus of such corporation apportioned to its trust de- partment. [Mil § 120-121 BLYTH, WITTER & CO. ARTICLE V. STATE BANKING DEPARTMENT. state Banking De- Section 120. There is hereby Created a State banking partment created. Superintendent's appointment, tenure, " . , rill 1.I- saiary, oath and be the Superintendent thereor, and be known as the sup- Superintendent's department. The chief officer of such department shall lointment, tenure, , riii .1 bond. erintendent of banks. He shall be appointed by the governor, and shall hold office at the pleasure of the governor. He shall not, either directly or indirectly, be interested in any commercial bank, savings bank or trust company, or as an individual banker. He shall receive an annual salary of ten thousand dollars, to be paid monthly out of the state treasury on a warrant of the controller. He shall, within fifteen days from the time of notice of his appointment, take and subscribe to the constitutional oath of office, and file the same in the office of the secretary of state, and execute to the people of the state a bond in the penal sum of fifty thousand dollars, with corporate surety or two or more sureties to be ap- proved by the governor of the state, conditioned for the faithful discharge of the duties of his office. Superintendent to Section 121. The Superintendent of banks shall em- employ assistants: 1 r 1 1 L • J Their qualification, ploy a chief deputy, attorney and such examiners and duties and compensa- , , 1 1 • 1 ■ tion. other assistants as he may need to discharge in a proper manner the duties imposed upon him by law, none of which examiners or assistants or attorney shall be in- terested in any bank in this state as director, stockholder, officer or employee, and they shall perform such duties as he shall assign to them. He shall fix the compensa- tion of the chief deputy, attorney, examiners and other assistants, which compensation shall be paid monthly on his certificate and on the warrant of the controller out of tioTof SefTeputy." the State treasury. The chief deputy shall within fifteen days from the time of his appointment take and subscribe to the constitutional oath of office and file the same in 142- STATE BANKING DEPARTMENT § 121-123 the office of the secretary of state. No person shall be appointed a chief deputy who has not had at least three years' active banking experience, either as an executive officer or employee of some bank in this state. In case During absence or fl I . I .]. • \ rr inability of Buper- the absence or inability to act, or vacancy in the ortice intendent, chief fl .1 c 1 I r I • • deputy to act, upon the superintendent or banks tor thirty consecutive giving bond. days, the chief deputy shall execute to the people of the state a bond in the penal sum of fifty thousand dollars, with corporate surety or two sureties to be approved by the controller and treasurer of the state, conditioned for the faithful discharge of the duties of the superintendent while such deputy acts as superintendent, and upon filing such bond such deputy shall have all the power and duties of superintendent of banks, until the inability of the superintendent shall be removed, or until a new sup- erintendent of banks shall have been appointed by the governor. No superintendent of banks, chief deputy, Superintendent, or bank examiner, shall be or shall become indebted, examiner not to be ... . T 1 . 1 1 1 obligated to any directly or indirectly, either as borrower, endorser, bank. surety, or guarantor, to any bank under his supervision or subject to his examination. Section 122. The superintendent of banks shall have Offices of SupeHn- . . ■. ff. . , . foT— • 1 tendent in San Fran- his principal office in the city of San Francisco, and may cisco and los Angeles. also have suitable rooms in the city of Los Angeles, wherein to conduct the business of the state banking department. The superintendent shall, from time to time, obtain the necessary furniture, stationery, fuel, lights, and other proper conveniences for the transaction of such business; the expense of which shall be paid out of the state treasury on the certificate of the superin- tendent and the warrant of the controller. Section 123. A fund is hereby created to be known state banking fund I !!• fl 1 f'lfjUUL created, out of which as the state banking fund, and out or said rund shall be expenses of banking ., ,, , . -i. II 1 Jt department to be paid all the expenses incurred in and about the conduct paid. of the business of the banking department, including the salary of the superintendent, chief deputy, attorney, ex- [143] §123 BLYTH, WITTER & CO. Each bank to pay amincTS and Other assistants, traveling expenses, furnish- *°"ratiVharrof ing of rooms and rent. Each bank shall pay annually its ' share of one hundred and ten thousand dollars, to be de- termined by the proportion which the capital and surplus which shall include all reserve and contingent funds, of any incorporated bank or the surplus, reserve and con- tingent funds of any bank organized without a capital stock bear to the capital, surplus, reserve and contingent funds in the aggregate of all such banks receiving cer- tificates of authorization from the superintendent of banks, as shown by the last report of such bank to the supt. may, at dis- superintendent of banks; provided, that the superintend- cretion, collect less r i i • r ^ J'tL sum, if same suffi- eut of banks may, in any hscal year and in trie exercise cient to pay ex- ii r i i l l 1- penses. of his discretion, collect from each bank a less sum to be determined by the proportion established in this section, if such less sum be sufficient to pay all the expenses in- curred in and about the conduct of the business of the banking department, including the salary of the super- intendent, chief deputy, attorney, examiners and other assistants, traveling expenses, furnishing of rooms and Control and disposi- rent. All moncys collected or received by the superin- ing fundi tendent of banks, under and by virtue of the provisions of this act, shall be by him delivered to the treasurer of the state, who shall deposit the same to the credit of said banking fund, and the unexpended balance of all moneys heretofore paid into the state treasury by any of the bank commissioners or the superintendent of banks, shall be Supt. may retain retained and become a part of said fund ; provided, how- be^u Jed as revolving ever, that the superintendent shall have authority to re- fund for Dept., etc. ..i. . iii- iiil_ L tain in his possession and under his control the sum or two thousand dollars to be used by him as a revolving fund for the benefit of the state banking department until the end of the fiscal year, at which time he shall make Penalty for non-pay- full Settlement with the treasurer of the state. If any """Vata^oTexpense: such bank shall fail to pay such charges as are herein [144] STATE BANKING DEPARTMENT § 123-124 required, the superintendent shall forthwith cancel the certificate of said bank. Section 124. Every bank and the trust department Every bank, and f . I . , . , . trust dept. of title or every title insurance company doing a trust business, insurance company • III |. ,. . .. . I f doing trust business, shall be subject to the inspection or the superintendent or to be subject to in- banks. The superintendent of banks, the chief deputy, or some competent person or persons to be appointed by supt. or other ex- , ■ 1 f 1 I II • aminers as specified, the superintendent or banks, to be known as examiners, to examine every bank I II ... I . Ill I At least once a year. shall visit and examine every bank at least once each fiscal year. On every such examination inquiries shall what such examin*- be made by him as to the condition and resources of the bank, the mode of conducting and managing its affairs, the action of its directors, the investment and dis- position of its funds, the safety and prudence of its man- agement, the security afforded to those by whom its en- gagements are held and whether the requirements of its articles of incorporation and the law have been complied with in the administration of its affairs, and as to such other matters as the superintendent may prescribe. Whenever, in the judgment of the superintendent of supt. may make . .. ^. extra examinations banks, the condition of any bank renders it necessary or for which bank shall , . . I pay as specified. expedient to make an extra examination or to devote any extraordinary attention to its aflFairs the superintendent of banks shall have authority to make any and all neces- sary extra examinations and to devote any necessary extra attention to the conduct of its affairs; and such bank shall pay for all such extra services rendered by the superintendent of banks at a price to be fixed by the superintendent of banks but not to exceed twenty dollars per day for the examination of the principal office of such bank and twenty dollars a day for the examination of each branch office of each bank. The superintendent of gupt. may examine bi 1 11 1 L i • j._ l~~ California agency anks shall also have power to examine, or cause to be ^^ foreign bank. examined, every agency located in this state of any for- eign bank or banking corporation, for the purpose of ascertaining whether it has complied with the laws of this state, and for such other purposes and as to such [145] § 124-126 BLYTH. WITTER & CO. other matters as the superintendent may prescribe. The On examination superintendent, chief deputy, and every such examiner Supt. may administer . n . i ■, . . oath and compel at- shall have the power to administer an oath to any person tendance of wit- . . . . . . . c nesses. whose testimony he may require on the examination or any bank, or on the examination of any agency of any foreign bank or banking corporation, and to compel ap- pearance and attendance of any such person for the pur- Examiner to report posc of any such examination. When a bank shall have doubtful securities to Supt. been examined by any examiner, and he finds securities therein which are, in his judgment, of doubtful value, he shall report the same to the superintendent of banks, who thereupon shall be authorized to employ appraisers at the expense of such bank to appraise said securities, at a compensation to be fixed by the superintendent of Supt. shall provide banks. The Superintendent of banks shall, whenever auditor, at bank s expense, when hank required to do SO by any bank, provide an auditor to make an audit of the affairs of such bank. The com- pensation for making such audit shall be paid by the Supt. not to examine bank direct to the person making the audit. Nothing private trust or title » = ^ insurance business, herein shall be deemed to authorize or require the sup- of corporation doinir ^ ■^ trust business, erintendent of banks to inspect or supervise the private trust business or title insurance business of any corpora- tion doing a trust business. Oath of examiners. Section 125. Every examiner appointed by the sup- erintendent of banks shall, before entering upon the dis- charge of his duties, take the constitutional oath of office and cause the same to be filed in the office of the secre- No examiner to be tary of State. No such examiner shall be appointed appointed receiver 01 bank ex^ammi^d receiver of any bank whose books, papers and affairs he shall have examined pursuant to his appointment. Neglect of chief Section 126. If the chief deputy or any examiner deputy or examiner to report known un- shall have knowledge of the insolvency or unsafe condi- safe conditions "^ made felony. jJqj^ qJ ^^y ]-,ank mentioned in this act, and that it is unsafe or inexpedient to permit said bank to continue business, and shall neglect to forthwith report such fact [146] STATE BANKING DEPARTMENT § 126-127 in writing over his signature to the superintendent of banks, he shall be guilty of a felony. Section 1 2 7. When any number of persons desire to written consent of organize a corporation to conduct any one or more or all tollgrntlingT^^ of the businesses mentioned in divisions (a), (b), and ^^^^' (c) of section two of this act or to circulate stock sub- scription lists for any such proposed corporation the previous written consent of the superintendent of banks to such proposed organization must be obtained. No B^nk must have a bank shall transact any business in this state without the boflr^/transacUng'''* written approval of the superintendent of banks, and ^""°«"- without his written certificate stating that it has complied with the provisions of this act, and all the requirements of law, and that it is authorized to transact, within this state, the business specified therein ; which certificate may when certiecato be withheld by the superintendent of banks whenever he by Sup^'t. has reason to believe that the bank is being formed for any other than the legitimate objects contemplated by this act, or whenever he has reason to believe that the public convenience and advantage will not be promoted by the opening of such bank, or whenever he has reason to believe that the corporate name assumed by such bank resembles, so closely as to be likely to cause confusion, the name of any other bank previously formed under the fs'suod'bcforeU" ^^ laws of this state. Before issuing such certificate the pUance'with°requ^©- • , 1 t f 1 1 L 11 • ments as to capital supermtendent or banks shall examme, or cause an ex- and surplus. amination to be made, in order to ascertain whether the requisite capital of such bank has been paid up in cash or the requisite reserve or surplus fund has been accumu- lated. The superintendent of banks shall not authorize such bank to commence business until it appears from such examination, or other evidence satisfactory to him, that the requisite capital has been, in good faith, subscribed and paid in, in cash, or that the requisite surplus or re- serve fund has been accumulated or paid in, in cash, and [1471 § 127-130 BLYTH, WITTER & CO. Fees payable. Until Said bank shall have paid a fee of fifty dollars for each department to be operated by said bank. [Publishers' note, re Section 127: See Appendix, Sec. 1278 C. C. P.] When articles filed anIaSp?rcrtio1mat Section 128. When the certified copy of articles of '^To w^^lrt^in fl^rss incorporation of any bank shall have been filed with the "^stSoiderTttc! secretary of state, and application made for the issuance of a certificate to do business as a bank, the superintend- ent of banks, provided he has not withheld granting his certificate for any of the reasons set forth in section one hundred tw^enty-seven hereof, shall ascertain, from the best sources of information at his command, whether the character and general fitness of the persons named as stockholders are such as to command the confidence of the community in which such bank is proposed to be located, and, if so satisfied, he shall within sixty days after such application has been made to him, issue, under his hand and official seal, the certificate of authoriza- tion required by this act. The superintendent of banks shall file a duplicate of such certificate in his own office. Departmental bank Section 129. Every bank doing a departmental busi- must make and pub- . ciir L lish separate finan- ness shall render to the superintendent of banks for each cial reports of each department, department conducted by it, a separate report showing in detail as required by section one hundred thirty of this act, the actual financial condition of such department and shall at the time of furnishing said report separately publish the statement for each department as provided in section one hundred thirty-two of this act. Verified reports to Section I 30. Every bank, organized under the laws whtn^ver required of this State, shall, whenever required by the superintend- by superintendent. rii 1 .• ••• it-- 'CJ ent of banks, make a report in writing to mm, venried by the oath of its president and its secretary or cashier. What such reports or two principal officers. Such report shall show the must show. *^ actual financial condition of the bank making the report, at the close of any past day designated by the superin- tendent, and shall specify the following: [148] STATE BANKING DEPARTMENT § 130 1 . The amount of its capital stock and the number of ^'* ""'^ ''"'' ■■*" ■^ ports mult inow — shares into which it is divided. cont'd. 2. The names of the directors and the number of shares of stock held by each. 3. The total amount of capital actually paid in, in cash, and the total amount of surplus, reserve and any other funds. 4. The total amount due the depositors. 5. The total amount and character of any other lia- bilities it may have. 6. The amount at which the lot and building occupied by the bank for the transaction of its regular business stands debited on its books; also the market value of all other real estate held, whether acquired in settlement of loans or otherwise, the original cost to the bank, the date when acquired, the amount at which it stands debited on the bank books, in what counties situated, and in what name the title is vested, if not in the name of the bank itself. 7. The amount loaned on real estate, specif3dng the amount secured on real estate in each county separately; also specifying the name of the person in whose name the property is held in trust or as security, in case it is held in any name other than that of the bank and the instru- ment creating the security does not itself disclose the name of the bank. 8. The amount invested in bonds, designating the name and amount of each particular kind. 9. The amount loaned on stocks and bonds, desig- nating each particular class and the amount thereof. 1 0. The amount of money loaned on other securities, with a particular designation of each class and the amount loaned on each. [149] §130 BLYTH, WITTER & CO. What such bank | ] jj^g amount and kind of money on hand or de- reports must •' show (Cont'd, posited in any other bank or place, with the name of the place where deposited and the amount in each place. 1 2. Any other property held, or any amount of money loaned, deposited, invested or placed, not otherwise herein enumerated, and the place w^here situate and the value of said property, and the amount so loaned, de- posited or placed. 1 3. The date on which examination of the bank was last made by its board of directors and the date on which report of such examination was filed, as required by section one hundred thirty-nine of this act. 1 4. The outstanding and unpaid amounts of any loans made by the bank, w^hich under the provisions of either section sixty-five or eighty-three of this act are required to be reported to the superintendent of banks. 15. Any overdrafts and any loans, investments, acts or omissions violative of or not in conformity with any provision of this act which may be specifically called for. California branch of Every foreign Corporation transacting the business of de°/vM^fied"reportTo banking in this state shall make the report herein re- "^ ' quired as far as such report may relate to the affairs of such corporation in this state, and every foreign corpora- tion must particularly render the report required by sub- divisions three, four, five, six, seven, eight, nine, ten, eleven, twelve, thirteen, fourteen, and fifteen of this sec- tion. Such report shall be made in writing and verified by the oath of one of its duly authorized officers or managers residing in this state. The oaths of the officers and the statements above required shall state that they and each of them have a personal knowledge of the mat- ters therein contained, and that they believe every alle- gation, statement, matter, and thing therein contained is true. Any wilful false statement in the premises shall be perjury and shall be punished as such. [150] STATE BANKING DEPARTMENT § I 30a- 132 Section 1 30a. In addition to the information obtained ^""*\'"r ""!!*" Dank to furnish from the report required by the provisions of section one *tionai report. hundred thirty of this act, the superintendent of banks shall also have the power to require any bank to furnish a special report in writing, verified as required by section one hundred thirty of this act, whenever in his judgment such special report is necessary to inform him fully of the actual financial condition and affairs of such bank. Any mjliu/rcport'**' wilful false statement in the premises shall be perjury and «•» ^"i'- to any and all banks, trust companies, associations and individuals, holding or in possession of any assets of such bank. No bank, trust company, association or indi- vidual knowing of such taking possession by the superin- tendent of banks, or notified as aforesaid, shall have a lien or charge for any payment, advance or clearance thereafter made, or liability thereafter incurred against any of the assets of the bank of whose property and busi- ness the superintendent of banks shall have taken posses- sion as aforesaid. Such bank may, w^ith the consent of Bank may resume , . , business with consent the superintendent of banks, resume business upon such of Supt. conditions as may be approved by him. Upon taking possession of the property and business of any such bank [155] §136 BLYTH, WITTER & CO. the superintendent of banks shall have authority to collect moneys due to such bank and do such other acts as are necessary to conserve its assets and business, and shall proceed to liquidate the affairs thereof as hereinafter provided. The superintendent of banks shall collect all debts due and claims belonging to it, and upon the order of the superior court may sell or compound any bad or By order of court, doubtful debts. If a purchaser for any bad or doubtful Supt. may sell bad or i i . i i • • i i i i doubtful debts, or debts Can not be obtained and it appears improbable that sue thereon; may i i i i i i r • sell bank's real recovery thcreon can be aad and that the costs or actions erty and enforce to cnforce Collection of the same would probably be lost, stockholders' lia- i- i • i i i biiity. the court may direct that suits thereon need not be brought. On like order he may sell any real or personal property of such bank on such terms as the court shall direct: and may, if necessary to pay the debts of such bank, enforce the constitutional individual liability of stockholders by action to be brought within three years after the date of his taking possession of the afiFairs of such bank. The superintendent of banks shall determine the necessity of such action and the amount necessary to recover from the stockholders to fully pay all liabilities of such bank. Such action may be in equity and against all stockholders upon whom service of process in the State of California can be had, and the court may therein deter- mine and provide for any equities as between the stock- holders including the proportions of each stockholder to any surplus of money or assets that may remain after the payment of all liabilities and the expenses of liquidation. The superintendent of banks may also maintain an action against any stockholder residing out of the state or upon whom service of process can not be had within the state, in any court of the United States or of any state or coun- try. Any judgment so obtained by the superintendent of banks against such or any of such stockholders which is of doubtful value may be compromised and compounded by the superintendent of banks on such terms and condi- tions as the superior court may direct or authorize. The [1561 STATE BANKING DEPARTMENT § 136 superintendent of banks shall file a notice of pendency supt. shall flie with f. • • .1 . 1 • cr f iL 1 county recorder notice action in the county recorder s omce or the county of pendency of such where such action is brought. At any time prior to the *'^*'°°' trial of any such action, any creditor may serve upon the _ , .. •' ■' J f Creditor may in in- superintendent of banks and file with the court wherein dividual capacity *^ maintain artion such action is pending, notice that he elects to maintain against stockholders. an action against the stockholders or any of them, in his individual capacity and thereupon the amount sued for in such action shall be reduced accordingly and such creditor shall not be entitled to share in the proceeds re- sulting from such action brought by the superintendent of banks. For the purpose of executing and performing any of the powers and duties hereby conferred upon him, supt. may in name the superintendent of banks may, in the name of the de- or in hi's'own name linquent bank or in his own name, prosecute and defend suUs^, etc. .^execute" any and all suits and other legal proceedings and may, in neces3lry'to"effectu- the name of the delinquent bank or in his own name as or^comprom^ise^by .. . 1 ij JJI- Jll order of court, etc. trustee execute, acknowledge and dehver any and all deeds, assignments, releases and other instruments neces- sary and proper to effectuate any sale of real or personal property or sale or compromise or compound authorized by order of the court as herein provided; and any deed or other instrument, executed pursuant to the authority hereby given, shall be valid and effectual for all pur- poses, as though the same had been executed by the officers of the delinquent bank by authority of its board of directors. In case any of the real property so sold is located in a county other than the county in which the application to the court for leave to sell the same is made, the superintendent of banks shall cause a certified copy of the order authorizing or ratifying such sale to be filed in the office of the recorder of the county in which the said real property is located. The superintendent of banks may, under his hand and official seal, appoint one or more special deputy superintendents of banks, as agent or agents, with the powers specified in the certi- ficate of appointment hereinafter mentioned, to assist [1571 §136 BLYTH, WITTER & CO. him in the duty of liquidation and distribution, the certi- ficate of appointment to be filed in the office of the super- intendent of banks, and a certified copy in the office of the clerk of the county in which the principal office of such bank is located. Supt. may delegate The Superintendent of banks may from time to time, duties to deputy. by a certificate of appointment under his hand and offi- cial seal, specifying the powers conferred, authorize a special deputy superintendent to perform such duties connected with such liquidation and distribution as the superintendent of banks may deem proper. Such certi- ficate of appointment shall be filed in the office of the superintendent of banks and a certified copy in the office of the clerk of the county in which the principal office Supt. may employ of such bank is located. The superintendent of banks counsel and expert , , i i i . assistance necessary may employ such counsel and procure sucri expert as- in liquidation. • i t • j • sistance and advice as may be necessary m the liquidation and distribution of the assets of such bank, and for that purpose may retain such of the officers or employees of such bank as he may deem necessary. The superintend- ent of banks shall require from a special deputy super- intendent and from such assistants such security for the faithful discharge of their duties as he may deem proper. ^°o"c?edfto^r?to The Superintendent of banks shall cause notice to be ^aTalnst'btn'k' g^vcn by advertisement, in such newspapers as he may direct, weekly for three consecutive months, calling on all persons who may have claims against such bank to present the same to the superintendent of banks, and make legal proof thereof at a place and within a time, not earlier than the last day of publication, to be therein specified. The superintendent of banks shall mail a similar notice to all persons whose names appear as creditors upon the books of the bank. If the superin- tendent of banks doubts the justice and validity of any claim, he may reject the same, and serve notice of such rejection upon the claimant, either by mail or personally. [158] STATE BANKING DEPARTMENT § 136 An affidavit of the service of such notice, which shall be prima facie evidence thereof shall be filed with the super- intendent of banks. Any action upon a claim so rejected Action upon rejected claim — when must must be brought within six months after such service, be brought. Claims presented after the expiration of the time fixed in the notice to creditors shall be entitled to share in the distribution only to the extent of the assets in the hands of the superintendent of banks equitably applicable thereto. Upon taking possession of the property and Supt. to make and f 111 • 1 f 1 1 1 11 *'^ inventory of assets or any bank, the superintendent or banks shall assets. make an inventory of the assets of such bank in dupli- cate, one to be filed in the office of the superintendent of banks, and one with the papers in said proceeding in the office of the clerk of the county in which the principal office of such bank is located; upon the expiration of the Supt. to file with ^ '^ county clerk list of time fixed for the presentation of claims the superin- claims presented, "^ specifying claims tendent of banks shall make in duplicate a full and com- rejected, plete list of the claims presented, including and specify- ing such claims as have been rejected by him, one to be filed in the office of the superintendent of banks, and one with the papers in said proceeding in the office of the clerk of the county in which the principal office of such bank is located. Thereafter he shall make and file in Supplemental lists of claims. said offices as above provided at least fifteen days be- fore each application to the court for leave to declare a dividend a supplemental list of the claims presented since the last preceding list was filed, including and specifying such claims as have been rejected by him, and in any event he shall make and file as above provided such a list at least once every six months after the filing of the original list, as long as he shall remain in possession of the property and business of any such bank. Such in- ventory and list of claims shall be open at all reason- able times to inspection. The compensation of the special Compensation of special deputies and deputy superintendents, counsel and other employees other employees and _ _ 1 !• • all expenses of sup- and assistants, and all expenses of supervision and liqui- ervision— how to bo fixed, paid and re- dation, shall be fixed by the superintendent of banks and ported. [159] §136 BLYTH, WITTER & CO. shall upon the certificate of the superintendent of banks be paid out of the funds of such bank in the hands of the su- perintendent of banks. All such expenses must be reported by the superintendent of banks to the superior court of the county where the principal place of business of such bank is located and settled by such court upon notice to such Moneys collected— bank. The moneys collected by the superintendent of how deposited, banks shall be from time to time deposited in one or more state banks of deposit, savings banks or trust com- panies, and, in case of the suspension or insolvency of Such deposits jihe depositary, such deposit shall be preferred before all preferred. r ^ other deposits. At any time after the expiration of the date fixed for the presentation of claims the superior court may by order authorize the superintendent of banks to declare out of the funds remaining in his hands after the payment of expenses one or more dividends, Declaration of ^^^ after the expiration of one year from the first pub- dividends— how |jj,gtjQj^ qJ notice to creditors he may declare a final divi- dend, such dividends to be paid to such persons, and in such amounts, and upon such notice, as may be directed by the superior court of the county in which the princi- es°teKrty t^o^cialms" pal office of such bank is located. Objections to any supt. to^be heard claim not rejected by the superintendent of banks may and disposed of by ,, . llf!T £U court or referee, be made by any party interested by tiling a copy or such objections with the superintendent of banks, who shall present the same to the superior court at the time of the next application to declare a dividend. The court to which such application is made shall thereupon dispose of said objections or may order a reference for that pur- pose, and should the objections to any claim be sustained by the court or by the referee, such claim shall not be Court to make pro- allowed by the superintendent of banks until the claim- vision for unproved or unclaimed ^^^ shall have established his claim by the judgment of deposits. "^ .^ ^ a court of competent jurisdiction. The court must make proper provision for unproved or unclaimed deposits. [160] STATE BANKING DEPARTMENT § 136 Should any bank at the time the superintendent of bailors of property ^ in delinquent bank banks takes possession of its property and business, have 1° ^® notified by Supt. to remove in its possession, as bailee for safekeeping and storage, P''°perty- any jewelry, plate, money, specie, bullion, stocks, bonds, securities, valuable papers or other valuable personal property or should it have rented any vaults, safes or safe deposit boxes or any portion thereof for the storage of property of any kind, the superintendent of banks may at any time thereafter cause to be mailed to the per- son claiming to be or appearing upon its books to be the owner of such property, or the person in whose name the safe, vault or box stands, a notice in writing in a securely closed, postpaid registered, letter directed to such person at his post-office address as recorded upon its books, notifying such person to remove, within a period fixed by said notice and not less than sixty days from the date thereof, all such personal property and upon the date fixed by said notice, the contract, if any, between such person and bank for the storage of said property or for the use of the said safe, vault or box shall cease and de- termine, and the amount of the unearned rent or charges, if any, paid by such person shall become a debt of the bank to said person. If the property be not removed k such property not within the time fixed by the notice, the superintendent of fi^^bj notke" s^t. banks may make such disposition of said property as the to dispose of same •' ^ *^ *^ •' as court may direct. superior court, upon application thereto, shall direct. And the superintendent of banks may cause any safe, sunt, may cause any 1. 1 . 1 1 • 1 • • .1 safe, vault or box to vault or box to be opened in his presence or in the pres- be opened and its ence of one of the special deputy superintendents of banks, and of a notary public not an officer or in the employ of the bank or of the superintendent of banks, and the contents thereof, if any, to be sealed up by such notary public in a package upon which such notary public shall distinctly mark the name and address of the person in whose name such safe, vault or box stands upon the books of the bank and shall attach thereto a list and II6I1 contents disposed of. §136 BLYTH. WITTER & CO. description of the property therein; and the package so sealed and addressed, together with the list and descrip- tion, may be kept by the superintendent of banks in one of the general safes or boxes of the bank until delivered to the person whose name it bears, or until otherwise dis- Bank deeming itself posed of as directed by the court. Whenever any such ag^ieved may en- ^ join proceedings bank of whose property and business the superintendent within ten days r «- ^ . i i • l £ after Supt. takes of banks has taken possession as aforesaid, deems itseir possession. , • i . i aggrieved thereby, it may, at any time within ten days after such taking possession, apply to the superior court in the county in which the principal office of such bank is located to enjoin further proceedings; and ?aid court, after citing the superintendent of banks to show cause why further proceedings should not be enjoined, and ^^"nd^ judgment bearing the allegations and proofs of the parties and de- entered therein, termiuing the facts may, upon the merits, dismiss such application or enjoin the superintendent of banks from further proceedings, and direct him to surrender such Provisions concern- business and property to such bank. An appeal as above ing appeal from r ir ^ ri-j £i judgment, provided shall operate as a stay or the judgment or the superior court, and no bond need be given if the appeal be taken by the superintendent of banks; but if the appeal be taken by such bank, a bond shall be given, as required by section nine hundred forty-three of the Code After payment of of Civil Procedure. Whenever the superintendent of allowed claims, etc., ,,,,, , .1 11 i-. j Supt. to call meet- banks shall have paid to each and every depositor and ing of stockholders riiii i- !• U to determine whether creditor of such bank whose Claim or claims as sucn Supt. shall continue , . 1111 i Jl JJ liquidation or agent creditor or depositor shall have been duly proved and purpose, allowed, the full amount of such claims, and shall have made proper provision for unclaimed and unpaid de- posits or dividends, and shall have paid all the expenses of the liquidation, the superintendent of banks shall call a meeting of the stockholders of such bank giving notice thereof for thirty days in one or more newspapers pub- lished in the county where the principal office of such Manner of voting bank is locatcd. At such meeting the stockholders shall at such meeting. _ r 1 1 1 11 i determine whether the superintendent of banks shall be [162] STATE BANKING DEPARTMENT § 136 continued as liquidator and shall wind up the affairs of such bank, or whether an agent or agents shall be elected for that purpose, and in so determining the said stock- holders shall vote by ballot, in person or by proxy, each share of stock entitling the holder to one vote, and the majority of the stock shall be necessary to a determina- tion. In case it is determined to continue the liquidation Dissolution. under the superintendent of banks, he shall complete the liquidation of the affairs of such bank, and after paying the expenses thereof, shall distribute the proceeds among the stockholders in proportion to the several holdings of stock in such manner and upon such notice as may be directed by the superior court. In case it is determined to appoint an agent or agents to liquidate, the stock- holders shall thereupon select such agent or agents by ballot, a majority of the stock present and voting, in person or by proxy, being necessary to a choice. Such supt. shall transfer .11 assets to a^ent, who agent or agents shall execute and file with the super- s^aii execute bond. intendent of banks a bond to the people of the state in such amount, with such sureties and in such form as shall be approved by the superintendent of banks, con- ditioned for the faithful performance of all the duties of his or their trust, and thereupon the superintendent of banks shall transfer and deliver to such agent or agents all the undivided and uncollected or other assets of such bank then remaining in his hands; and upon such transfer and delivery, the said superintendent of banks shall be discharged from any and all further liability to such bank and its creditors. Such agent or agents shall tnTJLinTc^K convert the assets coming into his or their possession into du'trtbutrpropeAy^ cash, and shall account for and make distribution of the property of said bank as is herein provided in the case of distribution by the superintendent of banks, except that the expenses thereof shall be subject to the direction and control of a court of record of competent jurisdiction. [163] § I36-136a BLYTH. WITTER & CO. In case of the death, removal or refusal to act of any such agent or agents, the stockholders, on the same notice, to be given by the superintendent of banks upon proof of such death, removal or refusal to act being filed with him, and by the same vote hereinbefore provided, may elect a successor, who shall have the same powers and be subject to the same liabilities and duties as the agent Disposition of diri- originally elected. Dividends and unclaimed deposits dends and nnclaimed .. •I'li l£L • t. J m. C deposits remaining remaining unpEud m the hands or the superintenaent or after order of final banks for six months after the order for final distribution shall be by him deposited with the state treasurer in the same manner and subject to the same disposition as pro- vided for in section one thousand two hundred thirty- four of the Code of Civil Procedure. The superintend- ent of banks may pay over the moneys so held by him to the persons respectively entitled thereto upon being furnished satisfactory evidence of their right to the same. In cases of doubt or conflicting claims he may require an order of the superior court authorizing and directing the payment thereof. [Publishers' note: See Chapter 496, Siatutes of 1917, in Appendix.] Bank ceasing busi- Section 136a. Any bank which has ceased to do a ness shall immedi- i i i i i ateiy liquidate, banking business whether through voluntary action on its part or through expiration of its corporate existence, shall immediately liquidate its affairs and any unclaimed de- posits or dividends shall be paid into the state treasury in the manner and for the purposes provided in section one hundred thirty-six of this act within six months after the date such bank ceased to conduct a banking business. If liquidation un- ^^^ jj^ ^^gg j}^g Superintendent of banks shall have rea- safely conductea * Supt. may take pos- g^jj jq conclude that the liquidation of such bank is not session and liquidate. ^ being safely or expeditiously conducted, he may take possession of the property of such bank and liquidate its affairs in the same manner as provided in section one ^a*B^i1.v*ed by intfr- hundred thirty-six of this act. Whenever any bank of mIy°lppiy^for"^i whose property the superintendent of banks has taken junction, possession as aforesaid, deems itself aggrieved thereby, [164] STATE BANKING DEPARTMENT § 1 36a- 1 37 it may within the time and in like manner and effect as provided in section one hundred thirty-six of this act apply to the superior court to enjoin further proceedings. Section 136b. In any action or proceeding brought Jurisdiction vested 1 •. fi- !• ..1..'° superior court of under any provision or this act, exclusive original juris- county where prin- di 11 1 1 • 1 • r 1 cipal place of iction shall be vested in the superior court of the county business of bank is in which is located the principal place of business of the bank affected thereby, and all proceedings relating to the same matter, under any provision of this act, including proceedings for liquidation of the affairs of any such bank, shall be filed with and treated as a part of the record in such original proceedings, and all papers relat- ing to any such action or proceeding, including the copy of certificate of appointment of any special deputy and the inventories required to be filed in the matter of any such liquidation, shall be filed with and made a part of the record of such original proceeding, without the pay- ment of any additional fees therefor, and in any such action no damage may be awarded, but the action other- wise shall be tried and determined according to the pro- visions of the Code of Civil Procedure. Section 137. 1 . Any bank shall have the right, on Voluntary dissoiu- ... .. 1111 1 1 ^^<"^ may be had application or the stockholders or members to apply to under provisions of , . - , ...... Code of Civil Pro- the superior court or the county wherein its principal cedure. place of business is situated, to dissolve said bank in the manner provided for in title six, part three of the Code of Civil Procedure. 2. At the expiration of four months after the settle- payment to county f J r 1 r 1 ' t LI treasurer of specified ment or the hnal account or the receiver or any bank funds by receiver appointed prior to July 1, 1909, any dividends due de- juiyi, i909. positors, or other creditors, or stockholders of such bank and remaining unpaid or uncalled for and in the hands of such receiver may be paid by him into the treasury of the county in which such bank is situated which money shall be held in the treasury of said county, and at the same time it shall be the duty of such receiver to furnish to the [165] § 13 7-136 BLYTH. WITTER & CO. county treasury of said county a list of names of all de- positors or other persons to whom such money belongs or who are entitled thereto and thereupon such receiver shall be entitled to his discharge. Said funds to be paid 3. The moneys referred to in subdivision two of this out on court order, i ii i • i i i r i section shall be paid out on the order or the court ap- pointing such receiver. When such funds 4. All moneys paid under subdivision two of this sec- escheat to State. . 11 ir -i-r r ^ • •!• tion, uncalled for withm hve years arter bemg paid in, shall by operation of law, and without action had, escheat to the state. All moneys held by any county treasurer under subdivision two of this section, when such moneys have escheated to the state as hereinbefore provided, shall be paid by the county treasurer into the state treas- ury, and thereafter only be drawn out in such manner as may be provided for by law for the estates of de- ceased persons escheated to this state. Investment of such 5. The state board of control must invest such moneys funds. iiijfj- in the same manner that the state school land fund is invested as provided by law. But any claimant shall be entitled to recover as herein provided only the principal so paid into the state treasury. Penalty for bank Section 1 38. If any bank shall fail to make any re- failing to make .111 • • r • L J J report as required port required by the provisions or section one hunared by Sec. 130 or Sec. , ^ iiii- r ^ • -L- 130a— to forfeit thirty or one hundred thirty a or this act, withm ten $100 per day, etc. . iri i- 1 r days from the day designated for the making thereof by the superintendent of banks, or to include therein any matter required by the provisions of either of said sections, it shall forfeit to the people of the state the sum of one hundred dollars for each day that any such report shall be so delayed or withheld by the failure or neglect of such bank. In event of such In the cvcnt of the failure of any such bank to make make examination any such report required from it, the superintendent of at bank's expense, ,, .1.1. . . i-i ±x. banks may, in his discretion, immediately cause the [166] STATE BANKING DEPARTMENT § 138-139 books, papers and affairs of such bank to be examined at the expense of such bank. Section 1 39. It shall be the duty of the board of direc- Director* to exunine £ , , • f II bank affairs, loans, tors or every bank to examine fully, or to cause a com- discounts, etc. mittee of at least three of its members, none of whom shall be an officer of the bank, to examine fully into the books, papers and affairs of the bank of which they are directors, and particularly into the loans and discounts thereof, with a special view to ascertaining the value and security thereof, and of the collateral security, if any given, in connection therewith, and into such other mat- ters as the superintendent of banks may require; such examination to be made at least once a year, but no such subsequent yearly examinations shall be made within three months of the next preceding examination. Such Directors may em- ^, 1 11 1 1 1 P'°y assistance in directors shall have power to employ such assistance in making examination. making such examinations as they may deem necessary. Within thirty days after the completion of such exami- Swom report of di- ... f 111 rectors to be made nation, a report in writing thereof, sworn to by the direc- and filed with records of bank. tors making the same, shall be made by the board of directors of such bank, and placed on file with the records of said bank, and shall be subject to examina- tion by the superintendent of banks. Such report shall particularly contain a statement of what such report shall contain. the assets and liabilities of the bank examined, as shown by its books, together with any deductions from the assets, or additions to liabilities, w^hich such directors or committee, after such examination, may determine to make. It shall also contain a statement, in detail, of loans, if any, which in their opinion are worthless or doubtful, together with their reasons for so regarding them; also a statement of loans made on collateral se- curity, which in their opinion are insufficiently secured, giving in each case the amount of the loan, the name and market value of the collateral, if it has any market value, and if not, a statement of that fact, and its actual value ri671 §139 BLYTH, WITTER & CO. as nearly as possible. Such report shall also contain a statement of overdrafts, of the names and amounts of such as they consider worthless or doubtful, and a full statement of such other matters as affect the solvency and soundness of the bank. If directors fail to If the directors of such bank shall fail to make such make such examina- tion or report, Supt. examination or fail to cause it to be made, or shall fail may make extra ex- amination at bank's to file such report of such examination in the manner and expense. within the time specified, the superintendent of banks shall have authority to make or cause to be made an extra examination of such bank, at the expense of such bank. Whenever the board of directors of any bank may de- termine by resolution, duly entered in its minutes, that a special examination shall be made or caused to be made by the superintendent of banks in lieu of the examina- tion herein required to be made by the board of direc- tors of such bank, a certified copy of such resolution shall be transmitted to the superintendent of banks, whereupon it shall be the duty of the superintendent of banks to make or cause to be made a special examina- tion of the affairs of such bank in lieu of the examina- tion of such bank by the board of directors thereof. Such special examination shall be made at such time as the superintendent of banks may determine but in any event such examination shall be made within sixty days after the receipt by the superintendent of banks of the resolu- tion hereinbefore referred to. The cost of making such examination shall be a charge against the bank for which such examination is made. Upon the completion of such examination the superin- tendent of banks shall cause a report thereof in writing to be prepared and delivered to the board of directors of such bank at such time as may be fixed by the super- intendent of banks, but not later than thirty days after the completion of such examination. [1681 STATE BANKING DEPARTMENT § 139-140 The superintendent of banks may accept in lieu of the when examination ^ _ . • 1 1 r by Federal Reserve directors' examination herein provided for any year any Bank of San Fran- exammation, made, during such year, by the ^ederal Ke- serve Bank of San Francisco, of any bank which is a mem- ber of the Federal Reserve Bank of San Francisco. [Publishers' note, re Section 139, as amended 1921: This section has been amended by adding the following: "The superintendent of banks may accept in lieu of the directors' examination herein provided, for any year, any examination made during such year by the Federal Reserve Bank of San Francisco of any bank which is a member of the Federal Reserve Bank."] Section 1 40. The superintendent of banks shall report supt. shall make I ir/-virl L annual report to during the month or October or each year, to the gov- Governor. ernor, for submission to the next ensuing session of the legislature: 1 . A summary of the state and condition of every Such annual report •^ 1 . 1 shall contain: bank required to report to him, and from which reports have been received the preceding year, with an abstract of the whole amount of capital returned by them, the sunimary of general ^ conditions; whole amount of their debts and liabilities, and the total amount of means and resources, specifying the amount of specie held by them at the time of the last report to him, and such other information in relation to such banks as, in his judgment, may be useful. 2. A statement of all banks authorized by him to do statement of new .11. J banks; business during the previous year, with their names and locations and dates of incorporation, and particularly designating such as have commenced business during the year. 3. A statement of the banks whose business has been statement of dosed banks; closed during the year. 4. Any amendments to the banking law, which, in his Desirable amend- ments to Bank Act; judgment, may be desirable. 5. The names and compensation of all persons em- Name* and compen- f . . J sation of employees; ployed by him, and the whole amount or the receipts and expenses of the department during the year. 1169] § 140-141 BLYTH, WITTER & CO. Data concerning 6. The namcs of banlcs placed in his hands in process iqui a ion. ^^ liquidation, and the amount of dividends paid thereon. Number of copies of Such report, and the usual number of copies for the report printed. ,11.1 iiii • 1 i- !• use of the legislature, shall be prmted and in readmess for distribution by the state printer, and one thousand copies shall be printed for the use of the department, the expense of which shall be charged among the gen- eral expenses of the department. Weekly bulletin to Section 141. 1 . The Superintendent of banks shall be publicly posted in i/y-i -ill- IL Supt.'s office, keep m his ornce, in a place accessible to the general pub- lic, a bulletin board upon which he shall cause to be posted at noon on Friday of each week a detailed state- ment, signed by him or, in case of his absence from San Francisco or inability to act, by the deputy superintend- ent in charge, giving the following items of general in- contents of bulletin: formation with regard to the work of the department since the preceding statement: Applications filed, (a) The name of every bank that has filed in the banking department an application for authorization to commence business, its location and the date of filing such application. New banks author- (]-,) 'Yhe name and location of every bank authorized ized. ^ ' . by the superintendent of banks to commence business, its capital, surplus, and the date of authorization. Certificates refused. (c) The name of cvery bank to which a certificate of authorization has been refused by the superintendent of banks, and the date of notice of refusal. New employees, etc. (d) The name and residence of every person ap- pointed by the superintendent of banks as a deputy, ex- aminer or employee in the banking department, the title of the office to which appointed, the compensation paid, and the date of appointment. [1701 STATE BANKING DEPARTMENT § 1 4 I- 1 44 (e) The date on which a call for a report by banks Data concerning was issued by the superintendent of banks, and the day *" ' ■^«P°'^t'' designated as the day with reference to which such re- port should be made. (f) The name and location of every bank whose concerning banks creditors or depositors have been paid in full by the paid'lndVhose "* • .i.ril 1 .• ri 1 itockholders have supenntendent ot banks and a meetmg or whose stock- called meeting, etc. holders shall have been called, together with date of notice of meeting and date of meeting. (g) The name and location of every bank subject to Banks liquidated the banking law whose affairs and business shall have ^ "^"' * '"*" been finally liquidated, or in course of liquidation. (h) The name and location of every bank which has proposed changes in applied for approval of a change of name, and the name °'™* proposed. 2. Every such bulletin, after having been posted as Bulletins after being aforesaid for one week, shall be placed on a file for such oX^e.** *° ^' ^"^^ '° statements, to be kept in the office of the superintendent of banks. All such statements shall be public documents, and at all reasonable times shall be open to public in- spection during usual banking hours. Section 1 42. None of the records of the state banking Records of state I LIIII 11 11-1 Banking Dept. not department siiail be deemed to be public documents nor deemed pubUc docu- hii fi ii i. -fi ments, or open to all any or such records be open to the mspection or the public inspection. public. Every official report made by the superintend- ent of banks and every report duly verified of an ex- supt.s reports, etc., ■^ -^ •' to be prima facie amination made, shall be prima facie evidence of the «'' permitted. in any corporation where such purchase shall be necessary to prevent a loss upon a debt previously contracted m good faith; and stock so purchased or acquired in cor- porations organized under this act shall within six months from such purchase be sold or disposed of at public or private sale unless the time to so dispose of same is ex- [195] BLYTH. WITTER & CO. tended by the superintendent of banks as provided by section thirty-seven of the "bank act" of California. Carrying on No Corporation organized under this act shall carry on part of business r.i. 'iTi-ic .. L in TJ. s. any part or its business in the United otates except such as, in the judgment of the superintendent of banks, shall be incidental to its international or foreign business; and provided, further, that except such as is incidental and preliminary to its organization no such corporation shall exercise any of the powers conferred by this act until it has been duly authorized by the superintendent of banks to commence business as a corporation organized under the Civil Code of California and the provisions of this act. Engaging in No Corporation organized under this act shall engage Commerce — ^ ^. . .f. restrictions Jn Commerce or trade in commodities except as speciri- upon. til 1 1 • 1 cally provided in this section, nor shall it either directly or indirectly control or fix or attempt to control or fix the price of any such commodities. The license of any cor- poration violating this provision shall be subject to for- feiture in the manner hereinafter provided in this act. It shall be unlawful for any director, officer, agent, or em- ployee of any such corporation to use or to conspire to use the credit, the fimds, or the power of the corpora- tion to fix or control the price of any such commodities, and any such person violating this provision shall be lia- ble to a fine of not less than one thousand dollars and not exceeding five thousand dollars or imprisonment not less than one year and not exceeding five years, or both, in the discretion of the court. Capital stock No corporation shall be organized under the provisions of this act with a capital stock of less than two million dollars, one-quarter of which must be paid in before the corporation may be authorized to begin business, and the remainder of the capital stock of such corporation shall be paid in installments of at least ten per centum of the whole amount to which the corporation shall be limited [1961 FOREIGN BANKING CORPORATIONS as frequently as one installment at the end of each suc- ceeding two months from the time of the commencement of its business operations until the whole of the capital stock shall be paid in. The right of every corporation ^'k^"* t° increaie or decrease capital organized under the provisions of this act to increase or Btock— how decrease its capital stock, to change the number of its directors, to amend its articles of incorporation, to change its principal place of business, or its name, to extend its corporate existence, or to effect any other organic change shall be governed by the general corporation laws of this state and by the "bank act," and the procedure to effect any such change shall be that defined by the general cor- poration laws and the "bank act." Any bank may invest t°nh*^8to\k^ in the stock of any corporation organized under the pro- "[ganTe'd Wunder. visions of this act, but the aggregate amount of stock held in all corporations engaged in business of the kind de- scribed in this act and in section fifty-eight of the "bank act" of California as amended shall not exceed ten per centum of the subscribing bank's capital and surplus. A majority of the shares of the capital stock of any Majority stock ' •' ' o'.vn3rsnip must be such corporation shall at all times be held and owned by ^°^u s. citizens, citizens of the United States, by corporations the con- trolling interest in which is owned by citizens of the United States, chartered under the laws of the United States or of a state of the United States, or by firms or companies, the controlling interest in which is owned by citizens of the United States, Whenever it shall appear to the superintendent of ^P°fi,7J,'Vaw o[ banks that any corporation organized under the provi- f^*'/p„^^"3P^^„'^f sions of this act has violated the provisions of its articles ^^'7;;^*^ "l,\"-i,"„*" of incorporation or any law of this state, or is conduct- etc ing its business in an unsafe or unauthorized manner, or if the capital of any such corporation is impaired, or if any such corporation shall refuse to submit its books, papers and concerns to the inspection of any examiner of the state banking department of California or if any officer thereof shall refuse to be examined upon oath [197] BLYTH. WITTER & CO. touching the concerns of any such corporation or if any such corporation shall suspend payment of its obligations, or if from any examination or report provided for by this act the superintendent of banks shall have reason to con- clude that such corporation is in an unsound or unsafe condition to transact the business for which it is organ- ized, or that it is unsafe and inexpedient for it to continue business, or if any such corporation shall neglect or refuse to observe any order of the superintendent of banks spe- cified in sections one hundred thirty-three or one hundred thirty-four of the "bank act" of California, the superin- tendent of banks may forthwith take possession of the property and business of such corporation and retain such possession until such corporation shall resume business, or its affairs be finally liquidated as provided by law for the liquidation of banks. Deposit of corporate No Corporation organized under the provisions of this funds with other _ r • r l • 1 L J corporations, act shall deposit any or its funds w^ith any other moneyed corporation unless such other corporation has been nomi- nated and designated as such depositary as provided by section forty-three of the "bank act" of California; pro- vided, however, that this limitation shall not apply to the deposit of funds by such corporation with another mon- eyed corporation, which owns all or a majority of the capital stock of such corporation. ForeigTi banking JSJq corporation provided hereunder shall be the holder corporation holding "^ its own shares— ^f ^^y shares of its own capital stock unless such stock restrictions upon. -' "^ shall have been taken to prevent loss upon a debt pre- viously contracted in good faith, and stock so acquired shall, within six months from the time of its acquisition, be sold or disposed of at public or private sale; nor shall it, either directly or indirectly, make any discount to any person for the purpose of enabling him to pay for or hold shares of its stock either subscribed for or purchased by Penalty, him. Any corporation organized under the provisions of [198] FOREIGN BANKING CORPORATIONS this act making any such discount shall forfeit to the people of the state twice the amount of such discount. No corporation organized under the provisions of this Corporate book* and records — methodi of act shall by any system of accounting or any device of keeping. bookkeeping, directly or indirectly enter any of its assets upon its books in the name of any other individual, part- nership, unincorporated association or corporation, or un- der any title or designation that is not truly descriptive thereof. Every corporation organized hereunder shall conform its methods of keeping its books and records to such or- ders in respect thereto as shall have been made and pro- mulgated by the superintendent of banks. Any corpora- tion organized hereunder that refuses or neglects to obey such order shall be subject to a penalty of one hundred dollars for each day it so refuses or neglects. Each official communication directed by the superin- Official communica- . , tions to Superintend- tendent of banks to a corporation organized under the ent of Banks- provisions of this act or to any officer thereof, relating to an examination or investigation conducted by the state banking department or containing suggestions or recom- mendations as to the conduct of the business of such cor- poration, shall be submitted, by the officer receiving it, to the board of directors at the next meeting of such board, and duly noted in the minutes of the meetings of such board. On or before the first day of February in each year, Annual report by ... corporation to each corporation organized under the provisions of this superintendent. act and every foreign corporation licensed by the super- intendent of banks to transact the business of such a cor- poration in this state, shall make a written report to the superintendent of banks which shall contain a statement of its condition on the morning of the first day of Jan- uary in said year and shall be in the form and contain the matters prescribed by the superintendent of banks. The superintendent of banks may, however, in his discretion, [199] BLYTH. WITTER & CO. Special reports. ANNUAL REPORT accept from a corporation organized hereunder, which BY CORPORATION , , , . f . TO SUPERINTEND- has branches in a foreign country or countries, a report ENT— Continued. . . -^ • f containing a statement of its condition as of a date not later than the first day of January and not earlier than the first day of November in the preceding year. Every such report shall be verified by the oaths of the two prin- cipal officers in charge of the affairs of such corporation organized under the provisions of this act or foreign cor- poration at the time of such verification, which shall state that the report is true and correct in all respects to the best of the knowledge and belief of the persons verifying it, and that the usual business of such corporation or for- eign corporation has been transacted at the location re- quired by this act and not elsewhere. Every such corporation organized hereunder and for- eign corporation shall also make such other special re- ports to the superintendent of banks as he may from time to time require, which shall be in such form and filed at such date as may be prescribed by the superintendent of banks and shall, if required by him, be verified in such manner as he may prescribe. ^^^akU'^rt^^oft— ^^ ^^^ such Corporation organized hereunder or foreign penalty for. corporation shall fail to make any report required by this act on or before the day designated for the making thereof, or shall fail to include therein any matter required by the superintendent of banks, it shall forfeit to the people of the state the sum of one hundred dollars for every day that such report shall be delayed or withheld, and for every day that it shall fail to report any such omitted matter, unless the time therefor shall have been extended by the superintendent of banks. Annual stockholders' Evcry Corporation organized under the provisions of this act shall hold a meeting of its stockholders annually upon a date fixed in its by-laws, such meeting to be held List of stockholders at its main office in this state. Every such corporation to be kept, iiii . • rr i i -i shall keep at its main office books containing the names of all stockholders thereof, and the names and addresses of [200] FOREIGN BANKING CORPORATIONS the members of its board of directors, together with copies of all reports made by it to the superintendent of banks. Every such corporation shall make reports to the Heports required by Superintendent. superintendent of banks at such times and in such form as he may require; and shall be subject to examination once a year and at such other times as may be deemed neces- sary by the superintendent of banks by examiners ap- Examinations by , Superintendent. pointed by him, the cost of such examinations to be fixed by the superintendent of banks and to be paid by the cor- poration examined. The directors of any corporation organized under the Dividend declara- tions — when and how provisions of this act may, semiannually, declare a divi- made. dend of so much of the net profits of the corporation as they shall judge expedient; but each corporation shall, before the declaration of a dividend, carry one-tenth of its net profits of the preceding half year to its surplus fund until the same shall amount to twenty per centum of its capital stock. No officer, director, clerk or other employee of any Discount or loan by oififer, director corporation organized under the provisions of this act, or employee— restric- 1 . I tions upon. and no person in any way interested or concerned m the management of its affairs, shall as individuals discount, or directly or indirectly, make any loan upon any note or other evidence of debt, which he shall know to have been offered for discount to such corporation, and to have been refused. Every person violating the provisions of Penalty. this subdivision, shall, for each offense, forfeit to the people of the state twice the amount of the loan which he shall have made. No officer, director, clerk or other employee of any ^""^"^ ^-^ -'"^"^ ^" poration to ofScer. >r or employ tions upon. corporation organized under the provisions of this act ^^^l^' employee shall borrow, directly or indirectly, from such corporation any sum of money without the written approval of a ma- jority of the board of directors thereof filed in the office of such corporation or embodied in a resolution adopted by a majority vote of such board exclusive of the director [201] BLYTH, WITTER & CO. Loan to a corporation to whom the loan is made. If an officer, director, clerk or in which such officer, , , - . -ill director or employee other employee OF any such corporation shall own or con- trol a majority of the stock of any other corporation a loan to that corporation shall be considered as a loan to such officer, director, clerk or other employee. Every person violating this provision shall, for each offense, for- feit to the people of the state twice the amount which he shall have borrowed. Embez7iement or Every officer, director, clerk, employee, or agent of any corporat? assets "and Corporation organized under this act who embezzles, ab- officerl "ir°ectorrand stracts, or wilfully misapplies any of the moneys, funds, 6I*iplOV66S rCCSiVSrS i * • * •! l*"!!! C and others— how Credits, securitics, evidence or indebtedness or assets or punishable. ^^^ character of such corporation; or who, without au- thority from the directors, issues or puts forth any certi- ficate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, debenture, draft, bill of exchange, mortgage, judgment, or decree; or who makes any false entry in any book, report, or statement of such corporation with intent, in either case, to injure or defraud such corporation or any other com- pany, body politic or corporate, or any individual person, or to deceive any officer of such corporation, the superin- tendent of banks, or any agent or examiner appointed to examine the affairs of any such corporation; and every receiver of any such corporation and every clerk or em- ployee of such receiver who shall embezzle, abstract, or wilfully misapply or wrongfully convert to his own use any moneys, funds, credits, or assets of any character which may come into his possession or under his control in the execution of his trust or the performance of the duties of his employment; and every such receiver or clerk or employee of such receiver who shall, with intent to injure or defraud any person, body politic or corpo- rate, or to deceive or mislead the superintendent of banks or any agent or examiner appointed to examine the af- fairs of such receiver, shall make any false entry in any book, report, or record of any matter connected with the [202] FOREIGN BANKING CORPORATIONS duties of such receiver; and every person who with hke intent aids or abets any officer, director, clerk, employee, or agent of any corporation organized under this act, or receiver or clerk or employee of such receiver as afore- said in any violation of this act, shall upon conviction thereof be imprisoned for not less than two years nor more than ten years, and may also be fined not more than five thousand dollars, in the discretion of the court. Whoever being connected in any capacity with any Representation ai to .... . state liability for corporation organized under this section represents m any payment of bonds, 1 1 o r r^ ^•r ••i-iir I ^'^"^ ■ — ^°'*' punish- way that the btate of Calirornia is liable tor the payment able. of any bond or other obligation, or the interest thereon, issued or incurred by any corporation organized here- under, or that the State of California incurs any liability in respect of any act or omission of the corporation, shall be punished by a fine of not more than ten thousand dol- lars and by imprisonment for not more than five years. No person shall act in this state as the representative Acting as corporata . . • 1_ 1_ • J representative in of any foreign corporation in transacting the business de- state— prerequisites. scribed in this act as the business of a corporation organ- ized hereunder unless such corporation shall have com- plied with the provisions of this act relating to such cor- porations. Every foreign corporation before being licensed by the f^.f^^^^^^.l^Jtr- superintendent of banks to transact in this state the busi- poraticns hereunder. ness of a corporation defined and organized hereunder, or any part thereof, shall subscribe and acknowledge and submit to the superintendent of banks at his office, an application certificate in duplicate, which shall specifically state: 1 . The name of such foreign corporation. 2. The place where its business is to be transacted in statements to be ^. » »»v- j^» contained therein. this state. 3. The amount of its capital stock actually paid in cash and the amount subscribed for and unpaid. [203] BLYTH, WITTER & CO. 4. A complete and detailed statement of its financial condition as of a date within sixty days prior to the date of such application certificate. Copy of charter and ^j fj^g time such application certificate is first sub- by-laws required, mitted to the superintendent of banks, such corporation shall also submit a duly authenticated copy of its charter. Prerequisites to qj. articles of incorporation and its by-laws. transaction of busi- ^ •' °^ corporation* here^ No forcign Corporation shall transact in this state the business defined in this act or any part thereof, unless such corporation shall have 1 . Been authorized by its charter to carry on such busi- ness and shall have complied with the laws of the state or country under which it is incorporated ; 2. Made the deposit with the state treasurer of the State of California hereinafter in this section required; 3. Designated the superintendent of banks, by an in- strument in writing duly executed, its true and lawful at- torney upon whom all process in any action or proceed- ing by any resident of the state against it may be served with the same effect as if it were a domestic corporation and had been lawfully served with process within the State ; 4. Received a license duly issued to it by the superin- tendent of banks. When the superintendent of banks shall have issued a license to any such foreign corporation, it may engage in the business of a corporation of the kind authorized by this act at the location specified in such license. Deposit with State Evcry such foreign corporation, before receiving a Treasurer before _ ... 1111 ••!_ issuing license to license to transact business in this state, shall deposit vtrith business, the State treasurer of the State of California upon authori- zation of the superintendent of banks in trust as security for the depositors with and creditors of such corporation in this state, lawful money of the United States or securi- ties of the kind and character described in section ninety- 12041 FOREIGN BANKING CORPORATIONS six of the "bank act" of California, of the value of one hundred thousand dollars. Such foreign corporation so long as it shall continue solvent and comply with the laws of this state, may be permitted by the superintendent of banks to collect the interest on the securities so deposited and from time to time to exchange such securities for others, as provided by section ninety-six of the "bank act" of California, and may examine and compare such securities, as provided by section ninety-six of the "bank act" of California. Such foreign corporation shall pay License fee of for such license a fee of two hundred fifty dollars. Every foreign corporation, duly licensed by the super- corporation liceued , I rii -I* LI* ^° transact business mtendent or banks to transact m this state the business in state to cie writ- I . I 1 r 1 1 .1 • J ,. ,.1 £ ten designation of hereinabove dehned and authorized, or any part thereor, agent, etc. shall within thirty days after the date of such license, sub- mit to the superintendent of banks a statement verified by two of its principal officers, which shall contain the full name and business address of every individual, partner- ship or unincorporated association, who is acting or whom it proposes to have act as its agent or representative in this state. Whenever any such corporation shall engage any person to act for it in this state and the name and address of such person is not contained in such verified statement submitted to the superintendent of banks, such foreign corporation shall forthwith submit to the superin- tendent of banks an amended statement verified in the same manner as the original. A violation of this provi- Penalty for violation. sion shall subject such foreign corporation to a forfeiture of one thousand dollars for each offense. Whenever the superintendent of banks shall have re- Revocation of license — effect of. voked this license of any such foreign corporation and shall have taken the action to make such revocation ef- fective, all the rights and privileges of such foreign cor- poration to transact business in this state shall forthwith cease and determine. [205] leneralLaws BLYTH, WITTER & CO. Chapter 496, Statutes 1917. General Laws, Chapter 496, Statutes 1917, relating to the liquida- tion of banks, — referred to in note to Sec. 136 of Bank Act. Liquidation of An act relating to the liquidation of banks by the superintendent *■ of banks; empowering him to levy assessments against the members and stockholders of any bank in process of liqui- dation by him to an amount which he may determine to be necessary to promptly pay the creditors of such bank in full; to enforce such assessments by suit and empowering the superior court to determine the equities of the members and stockholders of any such bank to any surplus w^hich may remain after the payment of the creditors of such bank in full and to award and distribute the same accordingly. (Approved May 17,1917. In effect July 27, 1917.) The people of the State of California do enact as follows: Supt, taking posses- Section I. Whenever the superintendent of banks sion of bank bust- ini r i • fill- l ness in liquidation, shali hereaiter take possession or the business and prop- to determine as to c i i i • i • • ^i • , .. c tl_ assessment of stock- erty of any bank doing business m this state ror the pur- ers, e °'^j°.^^y pose of liquidating its affairs, as provided by law, he may at any time during the process of such liquidation determine whether it shall be necessary to assess the members or stockholders of such bank in order to promptly pay the claims of the creditors of such bank in full and he shall make such assessments as he may deter- mine to be necessary for that purpose. Determination to Section 2. Such determination shall be evidenced by make assessment evidenced by filing a complaint or petition against all of the members and court petition. stockholders of such bank filed by the superintendent of banks in the superior court of the county where the prin- cipal place of business of such bank is or was located at the time of the taking of such possession. First assessment Section 3. If such assessment, first made, shall prove Supt' mly"makl'^fur- inadequate to pay all of the creditors of such bank in full ther assessments. . . ■, rii ir.i the superintendent or banks may make further assess- [206] APPENDIX General La maintain action to enforce assess- ment in other state or country. ment or assessments by filing supplemental complaints or petitions in the same proceeding. Section 4. In any such proceeding such assessment Collection and . application of pro- shall be enforced and collected and the proceeds thereof ceeds of assess- 1 1 • J l_ ments. shall be added to the funds of such bank and applied by the superintendent of banks for the payment of just claims against the same. Section 5. If after the payment of all just claims Disposition of sur- ..... plus after payment against such bank and the cost of liquidation any sur- of claims, etc. plus shall remain said court shall determine the equities of the respective members and stockholders of such bank thereto and direct the payment thereof by the superin- tendent of banks accordingly. Section 6. The superintendent of banks shall have g^pt. has power to power to maintain an action in any other state or coun- try to enforce and collect such assessments against any of such members or stockholders and the proceeds thereof shall become a part of the fund and be subject to the same disposition as if collected in the proceedings provided for in this act. Section 7. This act shall not affect any action or pro- Act not to affect ,. .. 11 I -.itrLl • proceeding- instituted ceeding instituted by the superintendent ot banks prior p^ior to enactment. to its enactment. Section 8. If any section, subsection, sentence, clause or phrase of this act is for any reason held to be un- constitutional, such decision shall not affect the validity of the remaining portion of this act. The legislature hereby declares that it would have passed this act, and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more other sections, subsections, sentences, clauses or phrases be declared unconstitutional or its operation or applica- tion is or may be limited or controlled by any constitu- tional provision. [207; Public Deposits BLYTH, WITTER & CO. General Laws, Statutes of 1907, as amended by Statutes of 1921: Deposits o^puWic ..^j^ ^^^ ^Q provide for and regulate the deposit of county and municipal moneys in banks and banking corpora- tions, limiting the amount of public moneys that may be deposited therein, and providing a penalty for the illegal deposit and use thereof," approved March 23, 1907, Statutes of 1907, Chapter 522 as amended by act approved June 3, 1921, Statutes of 1921, Chap- ter 785. —may be made by Section 1 . All moneys belonging to any county or legal custodian, in state or national municipality Within the state, may be deposited by any banks in State. r ^ - • • f \ • ill officer of such county or municipality having the legal custody of such county or municipal funds in any state or national bank or banks in this state; provided, that such bank or banks in which such moneys are deposited shall furnish as security for such deposits, bonds of the United States, or of this state, or of any county, city and county, city or school district within this state, or of any irrigation, or county water works district organized under the laws of this state and which bonds are legal for invest- ments by savings banks in this state, approved by the officer making the deposit and the district attorney for Security therefor to the county or the attorney for the municipality to which be furnished by depositary banks, tj^g deposit bclongs. The market value of the bonds fur- nished as security, shall be at least ten per cent in excess of the amount of the deposit secured thereby; but the amount of the deposit shall in no case exceed the face value of the bonds furnished as security therefor; and provided, that such bank or banks shall pay a reasonable Interest payable on j-gte of interest, not Icss than two per cent per annum on daily balances. the daily balance therein deposited; provided, further, that the treasurer of any such county or municipality may, by and with the consent of the board of supervisors or board of trustees or other governing body of any such [2081 APPENDIX Public Deposits county or municipality and under such conditions as they ^mad^e^outl^idroT may fix, deposit moneys in any bank or banks outside of ^***^- this state, necessary for the payment of the principal or interest of bonds at the place or places at which the same are payable. (As amended, 1921.) Section 2. The rate of interest shall be fixed annually ferest^|,„'*d\Vosits- as herein provided in the month of January of each year t°i,'^;„'^fi^''"d^"'* ^^ on all deposits to be made for such year; provided, that the rate of interest for the year ending December 31st, 1907, may be fixed as herein provided within ninety days after this act goes into effect. The rate of interest shall be fixed in the case of counties, by the treasurer, auditor, and chairman of the board of supervisors, and in the case of municipalities by the treasurer, auditor (or clerk in municipalities having no auditor) and chairman of the council or other governing body of such municipality. Said rate of interest shall be a reasonable rate and not less fg^^go^.^a^^^^jg''^^^ than two per cent per annum on the daily balances de- "nifo^n. posited; and the rate of interest so established for each year as herein provided, shall be the uniform rate of in- terest required from all banks receiving deposits from the county or municipality, for that year. Interest on all moneys deposited as herein provided Payment of interest 1 • • !• J on deposits — how for shall belong to the county or municipality represented and when made. by the officer making such deposit and shall be paid quar- terly into the general fund of such county or municipality except where the law otherwise directs. Section 3. It shall be the duty of the officer making officer making de- . f 111* 1-111 • posits to receive and the deposit, to receive from the bank in which the deposit flie receipts. is made, a receipt or receipts in duplicate showing the date and amount of deposit and rate of interest to be paid thereon, one copy of which said officer shall keep on file in his office and he shall file one copy with the auditor of the county or auditor of the municipality (or clerk in municipalities having no auditor) as the case may be. [209] Public Deposits BLYTH, WITTER & CO. Public record re- Scction 4. Evcrv treasurer shall keep a record in his quired of such ae- "" *^ posits and of banks office which shall be oocn to public inspection, showing applying therefor. r r- r- > o at all times the amount of money on deposit and all banks in which the same is deposited, and dates of deposit. Also a record of all banks making application for the deposit of the public funds. Total amount of Scction 5. The total amount of public moneys on de- public deposits — ^ -^ limitations upon, posit in any bank, inclusive of all moneys belonging to the state or to any county or municipality within this state, shall not at any one time exceed the paid up capital stock and surplus of such depositary bank or banks. No officer shall have on deposit at any one time more than ten per cent of the public moneys under his control and avail- able for deposit in any bank while there are other quali- ^couniy o?Sc^ fi^d banks requesting such deposits; provided, that no pahty. treasurer of a county or municipality, shall be required to deposit public moneys in any bank outside of the county or miunicipality owning the money. (As amended 1921.) Bank receipts for de- Section 6. The receipt issued by any bank for depos- posits to be counted ^ •' •" as cash, jj-s made therein, together with the bonds held as security therefor, shall be held by the treasurer making the deposit and be recognized and counted as cash to the amount re- cited in the receipt by the officers required by law to count the same. Deposits, with in- Section 7. Deposits, with interest thereon, shall be terest, subject to withdrawal, subject to withdrawal on demand of the treasurer making the same, or his successors in office, and any bank receiv- ing the deposit of public moneys, may at any time return the same to the public officer making such deposit, to- gether with interest to date of return, and it shall be the duty of the public officer upon receiving the return of such deposit, to immediately return to such bank all bonds held as security for the deposit returned. When any officer withdraws his deposit he shall return, on de- mand of the bank, such bonds as were held as security for the deposit or portion thereof withdrawn. 12101 APPENDIX Public Deposits Section 8. Should any bank fail to pay any public Bank failing to pay deposits on demand, moneys held on deposit as herein provided, the officer bonds held as security ■^ ... ™*y "* sold. making such deposit may, after ten days' written notice to such bank, proceed to sell at public or private sale, such of the bonds held by him as security as he may see fit; provided, however, that he shall sell no bonds for less than their face value except at public sale after ten days' printed notice in some newspaper of general circulation published in the county where the sale is to take place. The proceeds of such sale, after paying all expenses, shall be credited to the account of the bank which deposited the bonds as collateral. Any bank failing to make pay- ment, may, at any time before the sale of the bonds is completed, stop such sale by repaying all the moneys de- posited with it, together with any expense that may have been incurred by the officer making such deposit, as the result of such failure. Should the proceeds of any such sale fail to fully repay any deposit, the balance remaining unpaid may be collected in an action of law in the name of the officer making the deposit. Section 9. Public officials shall not be responsible for Responsibility of . , . public officials for any loss of public moneys resulting from the deposit loss of deposits, etc. thereof when made in accordance with the provisions of this act. It shall be the duty of the officer making the deposit to safely keep all evidence of indebtedness issued by banks for deposits made therein, and bonds deposited for security and such public officer shall be responsible for such evidence of indebtedness, and for bonds held as security therefor, together with the interest thereon and the proceeds of any sale of such bonds; and the city, city, county, etc., .... f 1*1 ' 1 etL Lll responsible to bank county or municipality for which said oincer acts, shall for return of be responsible to such bank for the safe return of the securities furnished by it to such officer. Section 1 0. The expenses of transportation of moneys Expensec of trans- porting deposit to or from the state, county or municipal treasuries to moneys. such depositaries shall be borne by such depositaries. [2111 Public Deposits BLYTH. WITTER & CO. Making profit from, Section 1 1 . The making of profit out of county, city, or unlawful use of, => r -j ^ public moneys, towTi or Other public moneys, or using the same for any purpose not authorized by law by any officer having pos- session or control thereof, shall be a felony. Any viola- tion of the provisions of this act by a bank or a banking corporation, shall be punishable by a fine not exceeding Penalty for vioUt^ion ^^^ hundred dollars for each offense and the officers of such bank or banking corporation and officer receiving such deposit shall be guilty of a felony. Nothing herein to Section 12. Nothing in this act contained shall prevent prevent investment . . ,. -ii • .i • . . t i or disposition of pub- any county or municipality within this state rrom buying lie moneys as now , , i • • .^- '^ provided by law. Donds Or Otherwise investing its money in any manner now provided by law and nothing therein contained as to the disposition of interest on public moneys deposited shall apply to any money received or held by any county or municipality wherein any law provides for the payment of interest or profit thereon, into any particular fund. Conflicting acts Section 1 3. All acts or parts of acts in conflict with repealed. this act are hereby repealed. Section 1 4. This act shall take effect immediately. [212] BANK ACT OF CALIFORNIA INDEX Section Acceptances, bankers', purchasable by savings banks 67 Eligible for savings banks 61, 67 Commercial bank limitations 80 Issued under Edge Act, legal for savings banks 61 Of corporations formed under "Investment Companies Act" 61 Savings bank limitations 61, 67 To furnish dollar exchange 80 Accounts of departments to be kept separate 26 Act, applicability of - I Applicable to certain corporations I Applicable to violators of provisions of 1, 145 Effective when 1 47 Repeals all acts in conflict 146 Action, against bank for escheated deposits 1 5 Against merging corporations 31b Against selling bank, limitation of period for 3 I Against superintendent of banks 134, 136, 142 Brought under bank act, jurisdiction in 136b For sale of real estate, v^^hen 54 May be maintained by superintendent of banks to dissolve bank 135a Report of examination prima facie evidence 142 To recover penalties by attorney general 144 Adjustment of investments made prior to this act 145 Administrator, deposits of money with trust company 9 1 Deposits of personal property with trust company 95 Deposits with banks 51 Eligible as directors 10 Trust company may act as; oath required 90 Administrator, Public, deposits with trust company 92 Advertising as bank, restrictions on 12, 12a As savings bank _ 49 As trust company, by national banks 48a As trust company, restrictions on 12, 12a Commercial bank must use word "commercial" _ 28 Savings bank must use word "savings" 28 Trust company must use the word "trust" 28 Advertisement, building and loan association may not advertise as savings bank 12 For deposits, prohibited when 12 Of banks, regulated 28 Of bonds and securities limited 61a [213] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued ADVERTISEMENT— Continnei ^^''^l^o Of branch offices, regulated 28 Of capital must show amount paid up '^ Of conversion, state bank into national bank 56a Of resources and liabilities with those of other banks prohibited unless separately shown ' ^ Of a sale of banking business ^ ' Of unauthorized banking prohibited '2, 12a Penalty for false, in re bonds 61a Savings shall not be advertised by whom 49 Surplus must show separate from undivided profits 14 Advisory Board, loan to member by commercial bank 83 Affidavit of publication notice of sale - 3' Reports of trust companies '0' Reports of banks 130, I 30a Agency of foreign bank may be examined by superintendent 124 Agent commercial bank, as -* Liability for fraud or omission of duty 38 Of foreign bank must take oath ' ' Of savings bank, not officer or director may borrow 65 Of commercial bank, loan to 83 Overdraft of, prohibited 39 Person collecting school savings deemed agent of banks 9 Purchase of assets or obligations of bank by 41, 42 Restrictions on purchase of assets or obligations of bank 41, 42 Special deputy superintendent of banks in liquidating bank 136 Superintendent of banks accepts process for foreign bank 7 When commercial bank may act for insurance company 5 Agents, loans to "5, 83 Agreement of consolidation must be filed 31a Of consolidation must have approval of superintendent 31a Of merger filed with superintendent 31b Of merger must be approved by superintendent 31b Of purchase and sale 31 Amendment corporate changes, certificate filed with superintendent 8 Of articles of incorporation, see Sec. 362 and 290a, Civil Code, Appendix. Of articles of incorporation must be filed with superintendent 8 Of by-laws filed with superintendent 8 To articles or by-laws not effective until filed with superintendent 8 Amortization of bonds by savings banks 61 Of bonds may be determined by superintendent 61 Annexation of city, effect on banks and branch offices 23, 60, 82 Annual Report of superintendent of banks to contain what 140 Copies printed for distribution 140 [214] INDEX BANK ACT OF CALIFORNIA — Continued Section Appeal to Court from order of superintendent of banks 134, 136 From seizure of bank property 134, 136 Application for license to transact banking business 127, 128 For branch office license 9 Stockholders may petition for dissolution 137 To establish foreign branch 58 To organize banking corporation 127 Appointment of appraisers In certification of bonds 61a Of attorney, chief deputy examiners and assistants by superintendent 121 Of special deputy superintendent of banks 136 Of superintendent of banks 120 Apportionment commercial bank capital and surplus 82 Departmental bank capital and surplus 23 Savings bank capital and surplus 60 Of capital and surplus, permission for 23 Of capital and surplus to court trust business 90 Of capital and surplus to private trust business 90 Appraisement of securities 61a, 99, 124 Of securities assigned to treasurer by trust companies 99 Appraisers, fee for examinations incidental to trust deposits 99 May be appointed in examination of bank's securities 124 Approval of superintendent of banks of purchase and sale agreement 3 I Of superintendent of banks of consolidation agreement 31a By superintendent of banks of merger agreement 31b Articles of Incorporation affected by bank act 8, 145 Amendments must be filed v^rith superintendent 8 Certified by secretary of state 8 Filed v/ith superintendent of banks 8 May provide for departmental banking 22 Of consolidated bank 31a Of trust company 90 Violation of, by banks, duty of superintendent 134, 1 35a, 136 Assessment against banks for state banking fund 123 As prior lien on real estate 57, 57a Capital stock impaired 133 Effect if bank fails to pay 123 Governmental, effect as lien on real estate 57, 5 7a Assessment of Stock, stockholders must be notified 133 Refusal of stockholder to pay, effect 133 Assets, commercial bank may pledge for borrowed money to what extent 21a May not be carried in excess of actual cost 45 Of banks, relation of loans thereto 44 Of each department held for its depositors 27 [215] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued ASSETS — Continued. Section Of each department to be kept separately 26 Overdrafts limited to ninety days 21a Purchase of by officers, directors, agents, employees 41,42 Relation of commercial bank bond investments to 36, 46 Relation to bond investments of commercial bank 36, 46 Savings bank may pledge for borrowed money but governed by superin- tendent 62 Shall not be mingled writh trust funds 32 Shall not be pledged to give preference 2 la Assignee, deposits of money with trust company 91 Deposits of personal property with trust company 93 Deposits with banks 51 Trust company may act as; oath required 90 Assistants of state banking department appointed 121 Attorney, designation of superintendent of banks by foreign corporations 7 For state banking department 121 May be employed in liquidating bank 136 Attorney General, actions brought by, to recover penalties 144 Duties relative to escheated deposits 15 Audit of bank's affairs may be made by superintendent 124 Auditor appointed by superintendent to audit bank 124 Authorization certificate for branch office 9 Certificate for commercial bank 127, 128 Certificate for foreign bank 7 Certificate to representative of foreign bank or trust company 12c Certificate for savings bank 127, 128 Certificate for trust company 127, 128 Bad Debts, sale or compounding of bad or doubtful debts 136 What are 21b Bailee, savings banks may act as, for United States securities 70 Banks, advertising as, restrictions on 12, 12a Advertising as savings bank 49 Advertising capital of 14 Applicability of act to 145 Application to do business 127, 128 Articles of incorporation 8, 128 Assessed for state banking fund 123 Banking corporation, how organized 3, 127, 128 Bond investments, savings 61 Bond investments, commercial 36, 46 Borrowing money 2 la, 62 [216] INDEX BANK ACT OF CALIFORNIA — Continued Section BANKS — Continued. eg Branch for foreign business Branch office Called report Conducting safe deposit department Capital impaired Capital stock Ceasing business, must take what action I^oa Classified as to capital by population Classified as commercial, savings and trust Commercial, purposes of Conducting business in unsound manner '^^' '-'-'a Connection with, by superintendent of banks prohibited 120 Consolidation of Conversion into national banks ^ Defined Departmental, separate books to be kept Departmental, shall make reports separately '29 Departmental, shall publish statements separately '29 Deposit with, does not create debt within certain meaning 55 Dissolution of, by process of law I 35a Dissolved, funds of Depositary of trust funds Distribution of funds of insolvent '^^ Escheat of unclaimed deposits ' ■* Examination of, by court '-'" Examination of, by directors 139 Examination annually ^* Examination of, when failing to report '^o Examiner, failure to report insolvent condition 126 Examiner, must file oath '2^ Examiner, shall not act as receiver, when '25 Expiration of corporate existence lioa Extra examination, expanse of '^^ Failure to make report, penalty '38 Federal reserve, exempt from examination ^O Fines, may be compromised before action instituted 144 Foreign, inspection of '•^^ Foreign, see Foreign Banking Corporations, Forfeitures, how recovered ' 44 Forfeitures, may be compromised before action instituted 144 Funds, when deposited with other banks 43, 68, 85 Impairment of capital 133, 136 In liquidation, names posted '4' [217] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued 3ANKS— Continued. Section Insolvent when fails to restore reserves 30 Insolvent condition of, failure to report 126 Inspection of by superintendent of banks 124 In unsafe condition 1 36 Investments, changed to conform to act 145 Investments in own stock prohibited 34 License to foreign corporation 7 Limited time to repair capital 133 Limited time to report 138 Limited to investment in safe deposit 30, 37 Liquidation of, by superintendent of banks 136 Loans on own stock prohibited 34 Loan on stock of other bank 44 May acquire stock in safe deposit corporation, when 37 May acquire stock in stock company, when 37 May apply to court to dissolve 137 May be cited to show cause 134 May be closed by superintendent of banks 136 May conduct safe deposit department 30 May be consolidated, how Sec. 3 la May engage in foreign banking, how 58 May join federal reserve bank 56 May not acquire corporate stock; exceptions 37 May purchase real estate, when 61, 84, 105 May purchase safe deposit corporation stock 37 May purchase trust company stock 37 May resume business, when 136 May sell business 31 Meaning of word 2 Member federal reserve bank subject to state law 56 Merger of 3 lb Must carry assets at actual cost 45 Must have certificate of superintendent of banks 24 Must liquidate, when 1 36a Must sell or exchange other real estate, when 54 Mutual, may have capital stock 29 Must post license 50 Name, change of, see Sec. 1278, Code of Civil Procedure, Appendix. Name not to be similar to that of other bank 127 Must sell stock acquired 37 National, examination of 48 National examination of trust department 48a National bank may become state bank 56b [218] INDEX BANK ACT OF CALIFORNIA — Continued BANKS— Continued. ®®°i*4? New, information of, to be posted '^' ... 43 Nomination of depositary f Not to purchase unless permitted by superintendent, note, bond or con- tract in which officer, director, employee or controlling stockholder interested Notice when converting into national banks 5oa Obligations or assets of, when purchased by officers, directors and em- ployees - 4 1 . 42 Organization of, previous consent of superintendent required 127 Penalties imposed, how recovered '44 Penalties pecuniary, may be compromised before action instituted 144 Publication of report of '^2 Publication of unclaimed deposits '5 Purchase of ^ ' Refusal to observe order of superintendent of banks 136 Refusal to submit books 135a, 136 Remittance for state banking fund '23 Report of, to superintendent of banks 130 Sale of 3 I Savings, purposes of 4 Signs must show business conducted ■^O Special report may be required I 30a Stationery must show business conducted 28 Stock, minimum par value, except 53 Suspending payment of obligations 135a Trust company, purposes of 6 Use of term restricted 12 Violation of articles of incorporation 134, 135a, 136 Voluntary liquidation 1 36a, 1 37 When unsafe to continue business 135a Without capital stock 29 Bank Acceptances, by commercial bank 80 By savings bank 67 Savings bank limited •^ 67 Commercial bank limited 80 Bank Act, amendment to desired by superintendent of banks 140 Applicability of 1,145 Applicable to certain corporations 1 Applicable to violators of provisions of 1, 145 Effective wrhen ■ 47 Jurisdiction in actions brought under 136b Repeals all acts in conflict 146 Report of superintendent as to desirable amendments 140 [219] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued BANK ACT— Continued. ^^i*i°^ Relation to prior investments '43 Title Banking, by foreign corporations i Defined 2 Corporation to conduct organized by not less than three natural persons.. 3 May be conducted only by corporation 2 Restricted to certain corporations '3 Bank Premises, all departments to be conducted in same or adjoining building; exception trust department 26 Investment in, by commercial banks 84 Investment in, by savings banks 61 Investment in, by trust company "05 Trust company may mortgage to state treasurer, when 97 Bills of Elxchange, commercial banks may buy or discount 80 Commercial banks may accept, when 80 Eligible for savings banks 0/ Not construed to create debt, within certain meaning 55 Bills Payable, see Borrowed Money. Bond of special deputy superintendent of banks 136 Of chief deputy superintendent of banks 121 Of superintendent of banks 120 Trujit company not required to give 94 Bonds, advertising legality of for savings banks 61a Amortization of 61 Certified, official list to be kept 61a Commercial banks limited in investing 36, 46 Corporate, foreign corporation may act as trustee 90 Cost of investigation of 61a Eligible for deposit by trust company with treasurer 96 Foreign corporation may buy and sell bonds 12c Irrigation district, investment in by savings bank 61 Legal investments of savings banks 61 Of foreign government may be certified for savings banks 61 Of state, available for investment by savings banks 61 Penalty for illegal advertisement of 61a Power of superintendent of banks to investigate 61a Public utility 61 Railroad 61 Savings banks limited in investing in 67 United States, loan on by commercial bank 80, 83 Savings banks may acquire for debt 61 Transfer of, betv^reen departments 25 United States savings banks may loan on 67 [220] INDEX BANK ACT OF CALIFORNIA — Continued Section Books, audit of, by request 124 Must show actual cost of assets 45 Of departments to be kept separate 26 Refusal of bank to submit 135a, 136 Borrowed Money, by commercial bank to purchase U. S. securities 21a By savings bank to purchase U. S. securities 62 By savings bank must be approved by superintendent 62 Commercial bank may pledge assets, to what extent 21a Elxcess loan to savings bank not invalid as to lender 62 Limitations on, commercial 2 la Limitation on savings 62 Rediscounts by commercial bank 21a Rediscounts by savings bank permitted 62 Savings bank must report to superintendent 62 State, county, city or other funds, see Public Deposit Acts, Appendix. Superintendent of banks may extend limit to commercial bank 21a United States or postal money by commercial bank 21a United States or postal money by savings bank 62 Borrower, endorser or guarantor, deemed to be 66 Branch Offices, advertising of 28 Approval of superintendent of banks 9 Capital necessary to establish 9 Capital necessary to establish foreign 58 Certificate necessary to open 9 Elffect of consolidation of cities on 23, 60, 82 Fee for certificate to open 9 Foreign branch, hov^ established 58 May not be discontinued without consent of superintendent 9 Of foreign corporations 7 Penalty for maintaining without certificate 9 Regulations governing advertising and stationery 28 Removal of 23 Report of foreign branches 58 Right to establish, in foreign country or dependency or possession of United States 58 Signs of, must show what 28 Window signs and stationery must show, what 28 Broker, v^hen commercial bank may act as 5 Building and Loan Association, activities permitted 12, 12a Advertising, how restricted 12, 12a May accept savings for which certificate or shares must be issued 12, 12a Savings bank, not to advertise as 12, 12a [221] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued Section Bulletin, information to general public I 4 1 To be filed as public document 141 To be posted by superintendent of banks I 4 1 Business, see Bank — Banking. By-Laws, amendments must be filed with superintendent 8 Must be filed with superintendent of banks 8 Of savings banks must prescribe rules governing savings deposits 64 California Bonds, legal for savings banks 61 Called Report, of bank, publication of 132 Penalty for failure to render 138 Publication of statement I 32 Required how often 131 Time limited for bank to render 138 To coincide with call of comptroller of currency, when. 1 3 1 To contain what 130, 130a Capital, advertised or published, how 14 Amount necessary to establish foreign branch 58 Apportioned between departments 23 As security for performance of trusts 90 Assigned by foreign corporation 7 Commercial bank, governed by population 82 Commercial bank, relation to deposit liability 19 Departmental bank 23 Impairment of I 33, 1 36 Increase or decrease of authorized capital, see Sees. 359 and 290a, Civil Code, Appendix, and Sec. 8, Bank Act. Invested in bank premises, furniture and fixtures and safe deposit vaults 61, 84, 105 Maintained by selling bank 31 May be increased by conversion of surplus 21 May be reapportioned betv^reen departments 23 May be paid up before issuance of certificate 127 Necessary to open branch office 9 Not required against public deposits or postal savings when secured 19 Of commercial bank, relation to deposits 19 Of foreign corporation to be separate 7 Of savings bank, governed by population 60 Of savings bank, in what invested 61 Of savings bank, relation to deposits 19 Of savings bank, relation to deposit liability 19 Of title insurance company transacting trust business 106 Of trust company, how invested 105 Of trust company required 90 [222] INDEX BANK ACT OF CALIFORNIA— Continued CAPITAL — Continued. Section Permission to segregate for department 23 Reapportionment to departments 23- Relation to payment for state banking fund 123 Relation of surplus to 21 Security to depositors and stockholders 2 \ Trust company, how invested 105 Capital and Surplus, relation to acceptances by savings bank 67 Relation to deposit liabilities 19 Relation to loans by commercial bank 80 Relation to loans by savings bank 67 Capital Stock, assessed when 133 As collateral, limited 44 Banks shall not invest in their own 34 Banks shall not loan on their own 34 Certificates of 53 Certificate of increase or decrease filed with superintendent of banks 8 Diminution of 55 May be sold for assessment 133 Of corporations engaged in foreign banking, banks may purchase, when.. 58 Of safe deposit corporation, investment in 37 Of trust company, investment in 37 Par value must be one hundred dollars, exception 53 Reduction of, restricted 55 Sale of, when acquired by bank 37 When not to be decreased 23 Census, as basis for classification 23 Certificate, mortgage participation, legality for savings banks 61 Mortgage participation, when available for deposit by trust company with treasurer 96, 99 Necessary before transaction of business 24 Necessary for new department 24 Of superintendent of banks in consolidation 3 la Of superintendent of banks to be posted in banking room 50 Fee required 24 To open branch office 9 Certificate of Deposit, bank cannot make partial payments on 21a Does not create debt within certain meaning 55 Savings bank may issue 63 Certification of Bonds, certificate may be revoked 61a Certificate of railroad or other utility bonds expires, when 61a Does not obligate state 61a Powers and duties of superintendent 61a Renewal within discretion of superintendent 61a [223] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA— Continued Section Certified Checks, issuance unlawful, when 52 Must be immediately charged ^ 52 Checks, certified, must be charged immediately 52 Certified, when unlawful 52 Chief Deputy, appointed 1 2 1 Duties in event of disability of superintendent or vacancy of his office 1 2 1 Failure to report insolvent condition of bank 126 Oath of office; time limit of filing 121 Qualifications 1 2 1 Citation, issued by court on sale of real estate owned by bank 54 Issued to bank by superintendent 134 City, assessment, effect as first lien 57, 57a Bonds as investments for savings banks 61 Bonds of city in this state eligible for deposit by trust company Avith treasurer 96 Annexation or consolidation, effect on banks and branch offices 23, 60, 82 Deposits, see Public Deposit Act, Appendix. Claims against bank in liquidation 136 Classification, as applied to banks previously organized 23, 60, 82 Of banks 2 Of cities, governed by federzd census 23, 60, 82 Of cities with reference to capital 23, 60, 82 Of cities with reference to population 23, 60, 82 Of trusts — court and private 101 Clerk, overdraft prohibited 39 Club, loans to, exemptions in favor of 65, 83 Collateral, savings bank collateral 67 Collateral Trust Bonds, when legal for savings banks 61 Commercial Bank, acceptances to furnish dollar exchange 80 Accepting drafts or bills of exchange 80 Advertising, how regulated 28, 49 Agent for fire, life or other insurance company 5 Bond investments limited 36, 46 Borrowed money 2 la Broker in making or procuring real estate loans 5 Capital and surplus to deposits 1 9 Capital with reference to population 82 Defined 5 Deposits with other coninvercial bank may be limited by superintendent.. 85 Depositaries 68 Directors of, loans to 83 Employees of, loans to 83 Insurance company, agent of 5 [224] INDEX BANK ACT OF CALIFORNIA— Continued COMMERCIAL BANK— Continued. Section Investment in bank premises 84 Investments in bonds 36, 46 Interest unpaid for one year, effect 21b Limitations on acceptances 80 Limitations on loans 80, 8 1 Loans on U. S. securities unlimited; margin necessary 80 Loans to affiliated bank 83 Loans to directors and employees 83 Loans to directors, agents or employees on U. S. securities permitted without report 83 Loans to members of advisory board 83 Loans to one borrower limited 80 Loans to officers prohibited 83 May accept drafts or bills of exchange 80 May borrow state, county, city or other public money 21a See also Public Deposit Acts, Appendix. May borrow U. S. or postal money 21a May pledge assets to what extent 2 la Not to advertise for savings 49 Not to conduct savings business 49 Officer may not borrow 83 Overdraft may not be carried more than ninety days 21b Powers of 5 Prohibited loan must be reported if made 83 Purposes of 5 Ratio of capital and surplus to deposits 19 Real estate loans restricted 80 Real estate loan to be first lien 47 Rediscount with federal reserve bank 21 Reserves required 20 Restrictions on brokerage and insurance agency 5 Selling real estate may take subordinate lien 47 Shall not guarantee insurance premium 5 Unsecured loaning limit 80 Commercial Paper, commercial banks may buy or discount limitations 80 Loans on, by commercial banks limited 80 Savings bank investments Commission, to officer, director, agent, teller, clerk, employee prohibited 39 Consolidation Agreement, approval of 31a Recitals of 3 la Consolidation of Banks 3 la Consolidation of Cities, effect on banks and branch o£fices 23, 60, 82 [225] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued Section Contract, purchase of, if directors, officer, employee or controlling stockholder interested, requires consent of superintendent 35 Conversion of national bank into state bank 56b Of state bank into national bank 56a Notice to savings depositors 56a Branch office licenses that may be revoked 56a Certificate of comptroller to be filed with superintendent 56a Corporate Existence, if expires bank to liquidate 136a May be extended — see Civil Code. Of consolidating bank 31a Of merging banks 31b Corporate Changes, certificates of filed with superintendent of banks 8 Corporations, club, exemptions in favor of loaning to 65, 83 Doing title insurance and trust business 107 Loans to by comm,erciaI bank if officers interested 83 Loans to by savings bank if officers or directors interested 65 Membership, exemptions in favor of loaning 65, 83 Mortgage insurance, securities of, as deposit by trust company with treasurer — 96, 99 Mutual, may elect to have capital stock 29 Powers and privileges abridged by this act 145 Prohibited loans to must be reported 65, 83 Religious exemption in favor of loan to 65, 83 Stock as investment for banks limited 37 Stock of as collateral, limited 44, 67 To conduct banking or trust business organized by not less than three natural persons 2 Transmitting money to foreign countries I 3 Use of words "bank,** "banking,** etc., restricted 12 Use of word "savings** restricted 12, 12a, 49 Corporations, Foreign, see Foreign Banking Corporations and Foreign Trust Company. Costs, in liquidation of bank 136 In sale of real estate by court 54 Counsel, compensation, liquidating delinquent banks 136 County, assessment, effect as first lien 57, 57a Bonds, as investment for savings banks 61 Bonds eligible for deposit by trust company with treasurer 96 Deposits, see Public Deposit Acts, Appendix. Court, appeal to from order of superintendent 134, 136 Appeal to from seizure of bank property 134, 136 Authorizing deposit with bank by executor, trustee, etc 5 I Authorizing deposit of money with trust company 9 1 [2261 INDEX BANK ACT OF CALIFORNIA — Continued COURT— Continued. ^®'=*^°° Authorizing deposit of personal property with trust company yi Jurisdiction in sale of real estate held by bank 54 May require knowledge of private trusts '03 Court Trusts, capital as security for performance of 90 Defined ' ^ ' Secured separately by deposit with treasurer 96 When deemed to include private trust 101 Creditors, preference shall not be given - 21a Rights in consolidation of banks 3 la Rights in liquidation of bank '^" Rights in merger of banks 3 lb Rights when banking business sold 3 I Debt, deposit with bank does not create debt within certain meaning 55 Savings banks shall not contract, except 62 When to be charged off ~ 21b Deceased Depositor, amount due to must be reported 1 5 When deposits escheat ' ^ Decedent, deposits of ^^'/i Definition, Of bank Of commercial bank ■* Of commercial paper eligible for savings banks 67 Of "reserve depositary" 20 Of "reserves on deposit" 2U Of "reserves on hand" ^0 Of savings bank ^ Of "total reserves" 20 Of trust company " Department, capital to be apportioned to 23 Certificate for new department necessary 24 Purchase of business of 3 I Safe deposit 30 Sale of business of 3 I Separate administration of ^^ Shall not deposit with other department; exception 25 Departmental Bank, application to conduct 23 Assets of each department held for its depositors 27 Assets to be kept separate 2o Books of account to be kept separate 26 Business of all departments to be conducted in same building 25 Cash, securities and property of departments not to be mingled 25 Classified as to capital by population 23 Conversion into national bank 56a Departments to be in same or adjoining building; exception 26 [227] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued DEPARTMENTAL BAITK— Continued. Section Investments, books and accounts of each department to be separately kept 25 New department must receive certificate 24 Publish statements of departments separately 129 Reapportionment of capital and surplus 23 Reserves required - 25 Sale or transfer of assets between departments 25 Separate reports of each department 129 Transfer of deposit between departments 25 Transfer of loans between departments 25 Trust department may be conducted in separate building with consent of superintendent 25 Department, prerequisites to opening 24 Depositary, amount savings bank may deposit with 68 Commercial bank reserves 20 Designation by superintendent of banks 43 Federal reserve bank may act as 43 Federal reserve bank need not be designated by superintendent of banks 43 National bank acting as 48 Savings bank as bailee for United States bonds 70 Savings bank reserves 68 S^^^ Trust company may act as; oath required 90 Depositors, deceased or unknown I 5 Have priority of security in capital and assets 2 I May \«thdraw when bank's business sold 5 I Money of, invested in stock of bank 34 Of savings bank converted into national bank, notice to 56a Payment of on dissolution 136 Repayment of by department 27 Preference to prohibited 2 la Repayment to by savings banks 64 Rights, when bank sold 3 1 Savings, may be paid by draft 62 Savings bank may require notice of withdrawal 64 Unknown ' 5 Deposits, additional with treasurer by trust company 98 Advertising for, prohibited when 12 By administrator 5 1 By assignee 5 1 By executor 5 1 By guardian 5 1 By order of court 5 1 By public administrator with trust company 92 12281 INDEX BANK ACT OF CALIFORNIA — Continued DEPOSITS— Continued. Section By receiver 5 I By trust department with commercial or saving department 25 By trustees 5 I Capital and surplus, relation to 19 Certificate of, savings bank may issue 63 Departmental, to be kept separate 25, 26, 27 Escheat, when ' 5 From one department with another 25 Interest on, paid by trust company 95 In trust for another may be paid to beneficiary if trustee dies, when I 5a Joint - -- I 5a Must not be increased, when '9 Notice of withdrawal of 64 Of commercial bank with another commercial bank may be limited 85 Of estate funds with trust company 92 Of foreign corporation to be separate 7 Of or for niinor may be paid to him 15c Of other banks with savings banks 68 Of public moneys with savings bank 62 Of savings bank, relation to acceptances 67 Of savings bank, relation to loans 67 Of savings banks with other banks 68 Of trust companies with state treasurer to be increased, when 98 Of trust companies with state treasurer 96 Of trust company with treasurer securities may be exchanged 96 Of trust company securities with treasurer documents and appraisal 99 Of trust department with savings department 25 Of trust funds with trust company 91 Percentage of deposited with one bank 68-20 Preferred claim, when 5 I Ratio of capital and surplus to 19 Reserves required against commercial 20 Reserves required against savings - 68 Savings, repayment of 64 Soliciting or receiving deemed banking business 2 Transfer of, when bank sells business 3 I Unclaimed, law governing I 5 Unclaimed, when bank suspends business 136a When bank does not create debt within certain meaning 55 With federal reserve bank by state bank 20-68 With national bank by state bank _ 48 With other banks to be assets of department by which made 25 With treasurer may be withdrawn by trust company 98 With trust company, responsibility for 94 [229] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued Section Deputy Superintendent, see Chief Deputy. Designation of depositary 20-43 Director, administrator eligible as 10 Annual examination of bank necessary 139 Bank without capital, director must be member and depositor 10 Certificate of change of number filed with superintendent of banks 8 Commercial banks, loans to 83 Commission to, prohibited 39 Declaration of dividends by 2 I Eligibility of ' Elxamination of bank by board or committee 139 ELxecutor eligible as ' " Executor or administrator holding stock in representative capacity eligible 10 Increase or decrease. See sees. 361 and 290a Civil Code Appendix. Increase or decrease of " Liability for fraud or omission of duty 38 May be removed, when ' May require examination by superintendent in lieu of theirs 139 May sell stock for assessment '33 Monthly meeting must be held ' ' Names to be posted in bank ' ' Oath required - ' ' Overdraft of, prohibited 39 Prohibited loans to, must be reported 65-83 Purchase of assets or obligations of bank, by 41-42 Qualifications of 10-11 Report of examination to contain, what 159 Sale of note, bond or contract to bank 35 ' Savings bank, may not borrow "5 Savings bank, shall not be endorsers 65 Savings bank may borrow on United States securities 65 Sells or hypothecates qualifying stock — must notify superintendent 1 Shall levy assessment, when '33 Discounts, banks of ^ Commercial bank may ^ Savings bank capacity 67 Dissolution, causes for '^" Involuntary ' 3o Bank may apply to dissolve '■'' Of national bank to enter state system 56b Voluntary, proceedings ' 3 7 [230] INDEX BANK ACT OF CALIFORNIA — Continued Section District Bonds, those eligible for deposit by trust company with treasurer 96 Those legal for savings banks 61 Dividends, accrued but unpaid interest not calculated 45 Banks in liquidation ' ^" Directors may declare, under what conditions 21 Escheat to state, when *^' Escheated to state, invested how 137 Increase of surplus when dividend paid ■^ ' In receivers* hands, how disposed of >J' Of suspended banks ' 3°* Paid out on court order '3' Trust company may receive on securities deposited with treasurer 96 Drafts, acceptances of, by commercial bank 80 Savings depositors may be paid by "•^ Earnings, disposition of ^' Edge Act Acceptances, legal for savings banks 61 Employees, commission to, prohibited •'' Liability for fraud or omission of duty 38 Of commercial bank, may borrow 83 Of savings bank, may borrow 65 Of state banking department '21 Overdraft of, prohibited 39 Purchase of assets or obligations of bank 4I,4Z Sale of note, bond or contract to bank 35 Entries, penalty for false 30 Endorser, deemed to be borrower, when 66 Equipment Certificates, of railroads, when legal for savings banks 61 Escheat, of deposits, duty of attorney general in action 15 Of deposits, duty of county clerk, in action 15 Escrow, transacting by individuals or corporations not prohibited 2, 101 Evidence, of joint deposit '5a Of seal of superintendent of banks 24a Examination, by directors annually '39 By federal reserve bank may be accepted in lieu of directors' examina- tion '39 Causes for dissolution ' 34, I JO Expense of bank, when 58, 138, 139 Federal reserve bank exempted 48 Of banks, before issuance of certificate - 127 Of banks, upon failure to report 138 Of foreign branch offices 58 Of national banks 48 Of organization documents by superintendent of banks 8, 127 [231] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued EXAMINATION— Continued. Section Of securities for deposit by trust company with treasurer 96, 97, 98, 99 Of state bank members of federal reserve bank 56 Of trust department of national bank 48a Report of, by superintendent of banks, prima facie evidence 142 Special, per diem charged 124 Special by superintendent at request of directors 139 Examiners, appointed ' 2 I Failure to report insolvent condition 126 May administer oath I 24 Oath of, miust be filed, v^here 125 Of state banking department 121 Shall not be appointed receiver, v^rhen 125 Elxecutor, deposits of money with trust company 91 Deposits of personal property with trust company 93 Deposits with banks 5 1 Eligible as director 10 Foreign corporation may act, when / Trust company may act as; oath required 90 Expenses of state banking department 122, 123 Elxpress Company, transmitting money to foreign countries 13 Federal Reserve Bank, commercial bank rediscounts with 21a Depositary without designation 43 Elxamination by may be accepted in lieu of directors' examination 139 Elxempt from examination 48 Investment in stock of by state bank 56 May act as depositary 20, 43, 68 Reserves may be deposited v^rith 20, 68 Rediscount with by savings banks 62 State banks may join 56 State members subject to state laws 56 Trust company member may continue to act as trust company 90 Regulations of, on bankers* acceptances 67 Fee, for accepting process for foreign bank 7 For appraisal of trust company securities deposited with treasurer 99 For branch office license 9 For certificate to transact banking business 24 For certificate to representative of foreign corporation 12c For examination of documents accompanying company deposit with treas- urer 99 For filing proceedings in liquidation 136b For investigating bonds for certification 61a For services rendered trust department of national bank 48a For special examination 124 [232] INDEX BANK ACT OF CALIFORNIA — Continued FEE— Continued. . . Section Payable by railroad, steamship or express company transmitting money to foreign countries '^ Fines, recovery of and compromise '^^ First Lien, on property situated in another state 5 7a On real estate, effect of certain assessments 57 See Lien. Foreign Banking, branch office for 5o Investment in bank transacting 58 Regulations 5o Foreign Banking Corporations, acceptances of deposits in California prohibited 7 Agency in this state subject to examination 124 Assignment of capital to local business 7 Banking functions limited Certificate of superintendent necessary to transaction of business per- mitted 7 Loans based on entire capital, v^rhen 7 Local business kept separate from general business 7 May loan money in California 7, 12c Not prohibited from loaning on real estate in this state 7 Not prohibited from loaning through local correspondents 7 Not to transact trust business in California 7 Power of attorney to superintendent of banks , 7 Representative may maintain office i2c Service of process on 7 Those having power to accept deposits not affected 7 Foreign Branch, capital required 58 Established, how 58 Examination of 58 Foreign Corporation not transacting banking in this state may buy and sell bonds 12c Foreign Countries, bonds of investment in by savings bank 61 Transmission of money to 13 Foreign Government Bonds, savings bank may invest if certified 61 Foreign Life Insurance Company transacting business in this state 12, 13 Foreign Trust Company, may act as executor or trustee under will 7 Powers permitted 7, 90 Qualification as executor or trustee 7 Forfeitures, unlawfully opening branch office 9 Recovery and compromise — Funds, of commercial bank deposited with other commercial bank may be limited 85 Paid into county treasury by receiver, when 137 Paid out on court order 137 [233] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued FUNDS— Continued. ^^':*i|'° State banking fund When escheated to state, invested, how '37 Furniture and Fixtures, commercial bank investment "4 For offices of state banking department '22 Savings bank investment "* Trust company investment governed by savings bank law 105 Government Bonds, eligible for deposit by trust company with treasurer 96 Legal for savings banks "* Government Lien, effect as first lien 57, 57a Governor, annual report of superintendent of banks to be made to 140 Superintendent of banks appointed by 120 Guarantor, deemed to be borrower "" Guardian, deposits of money with trust company 91 Deposits of personal property with trust company 93 CI Deposits with banks Guardian of Estates, trust company may act as; oath required 90 Hypothecation of assets for borrowed money 21a Of stock by director, must notify superintendent and may be removed.... 10 Impairment of capital stock '33, 136 Incorporation, see Articles of Incorporation. Injunction, restraining action of superintendent 134, 136 Restraining use of unauthorized words or terms 12 Insolvency, bank deemed insolvent when fails to restore reserves 20 Duties of superintendent '3o Inspection, see Examination. Insurance, commercial bank acting as agent J Commercial bank not to guarantee premium 5 Premium not to be guaranteed by commercial bank as agent 5 Interest, payable by trust company on deposits 95 Past due one year, debt considered bad 21b Trust company may receive on securities, deposited with treasurer 96 Unpaid not to be included in calculating profits 45 International Banking, investment in 58 Inventory of claims against banks in liquidation 136 Investigation of bonds submitted for certification 61a Investment Certificates, building and loan associations m^y issue 12, 12a Investments, bank shall not invest in own stock 34 Bond, by savings banks "^ By commercial bank in bonds limited 36, 46 By commercial bank in premises, furniture and vaults 84 By savings bank 61, 67 By savings bank after July 1, 1909, status of 61,66 By savings bank in premises, furniture and vaults 61 [234] INDEX __=___ BANK ACT OF CALIFORNIA — Continued INVESTMENT&— Continued. ^®'^i*xc Charged to conform to act, how *^^ In acceptances of "Edge Act" corporations 61 In collateral trust bonds — by savings banks 61 In corporate stock prohibited, exception 37 In stock of trust company in same county permitted 37 In stock of bank transacting international banking 58 In stock of safe deposit company in same city permitted 3 1 Of each department to be kept separately 26 Of trust company governed by savings bank limitations 103 Real property by savings banks 61 "Investment Companies Act," acceptances of corporation formed under 61 Irrigation Assessments, effect as first lien 57, 57a Irrigation District, bonds when eligible for deposit by trust company with treasurer •'" Bonds when legal for savings banks 61 Joint Deposits ' ^^ Judgment dissolving bank, superintendent of banks may procure 135a Jurisdiction in actions brought under bank act I3Da Legal Investments, savings banks 61 Letters of Credit, investment of commercial bank 80 Liability, deposit ' For making false statement or entry 38 Of directors, officers or employees for fraud or omission of duty 38 Of stockholders, cannot be waived 40 Incurred by purchasing bank 3 I Total of one borrower, how computed 80 Liberty Bonds, savings bank may receive as bailee 70 License, branch office; fee " Discretionary with superintendent 9, 1 2c, 127 Fee for certificate to transact banking business 24 Foreign branch -'8 Surrendered upon conversion into national bank 5oa To representative of foreign corporation 12c To transact banking business "27 To trust companies "27 Lien, commercial bank loan on realty must be first lien; exception 47 Savings bank loan on realty must be first lien; exception 67 Governmental, effect of 57, 57a Limitation of period for action against selling bank 31 On deposit liability 19 On deposit of savings banks in any one bank 68 On holding real estate 54 [235] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued Section Limitations on acquiring stock in safe deposit company or trust company 37 On borrowed money, commercial 21a On borrowed money, savings 68 On commercial bank loans 47, 80 On deposit of banks in a savings bank 68 On investment in premises, etc., commercial 84 On investment in premises, etc., savings 61 On investment in safe deposit department 30 On loans secured by corporate stock 44, 67 On loan secured by property situate in another state 57a On real estate loans by commercial bank 47 On savings bank loans 66, 67 Other real estate held five years 54 Limit, on trust companies* loans 105 Liquidation, banks in, claims against 136 Banks in, names to be posted 141 Compensation of counsel in '36 Costs in ' 36 Filing of proceedings in 136b Of banks by superintendent of banks 136 Proceedings, notice to banks 136 Superintendent of banks may take possession of property I 36a Voluntary I 36a, 137 When corporate existence expires 136a Loans, bank stock as security 44 Bank shall not loan on its stock - 34 By banks to affiliated banks 65, 83 By commercial banks on United States Government securities 80, 83 By commercial banks, to directors, agents and employees 83 By commercial bank to officers prohibited 83 By commercial bank prohibited when reserves deficient 20 By commercial bank on real estate 47 By commercial bank secured and unsecured limits 80 By commercial bank to corporations if officers or directors interested 83 By foreign corporations 7 By savings bank to corporations if officers or directors interested 65 By savings bank to officers or directors prohibited 65 By savings bank to director not an officer on U. S. security permitted.... 65 By savings banks prohibited, when reserves deficient 68 By savings banks, renewal of 66 By savings banks on bonds 67 By savings bank on assigned mortgage 67 By savings bank on real estate 67 [236] INDEX ___^=_^=.=_ BANK ACT OF CALIFORNIA— Continued LOANS-Continued. Section By savings bank on corporate stock "' Commercial bank limitations 46, 47, 80, 81, 83 Limitations when underlying property encumbered by governmental liens 5 7, 5 7a Not to be made by savings bank if depositors* demands unpaid 64 On corporation or bank stock, limited 44, o7 On first lien on real estate, effect of certain assessmicnts 57, 57a On mining stock by savings bank prohibited 67 Permitted in savings bank, may be made by commercial bank 80 Prohibited, must be reported 65, 83 Real estate 47, 57. 57a, 67 Restrictions on loans to corporation by savings bank if officers or direc- tors interested "-* Savings bank limitations 57, 66, 67 To officers prohibited in commercial bank 83 To officers or directors prohibited in savings banks 65 To agent or employee, not officer or director by savings bank permitted 65 To clubs, religious or membership corporations, application of law 65, 83 To members of advisory board not officer by commercial bank permitted 83 Trust company, how governed '05, 106 Location, change of principal place of business o See Sec. 321a, Civil Code. Effect on capital requirements, commercial bank 82 Effect on capital requirements, departmental bank 23 Effect on capital requirements, savings banks 60 Effect on capital requirements, trust company 90 Governing capacity of commercial bank as insurance agent 5 Of branch office " Losses, may be charged to surplus, when 21 May not be charged to surplus invested in premises or fixtures, etc 2 1 Reserve fund may be charged with 64 Manager of foreign bank, oath required 1 I Market Value, bonds and stocks are collateral on basis of 67 Oil, mineral, timber land 61 Redwood timber land 61 Meeting of directors once a month I ' Of members of mutual bank to capitalize 29 Of stockholders, consolidation 3 la Of stockholders, merger 313 Of stockholders, purchase and sale 3 1 Of stockholders, superintendent of banks may call 135 Member, director of bank without capital stock must be 10 [237] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued Section Members of bank may make application to dissolve 137 Of mutual bank may elect to capitalize 29 Membership Corporations, loans to, exemptions in favor of 65, 83 Shares may be issued by building and loan association 12, 1 2a Merger of Banks, agreem,ent filed, where 31b Agreement to be approved by superintendent 31b Corporate existence of merging banks, effect on 3 I Effect on pending legal actions 3 lb Procedure 3 1 b Stockholder dissenting, rights and liabilities 3 1 Stockholders must ratify 3 lb Mineral Land, fixing market value of 61 Mining Stock, prohibited as collateral or investment for savings bank 67 Minor, deposit by or in name of ' ^^ Trust company may be guardian of estate "" Trust company ineligible as guardian of person 90 Mint Certificates, may be purchased by savings bank 61 Mortgage, assigned mortgage as security, margin necessary 67 Loan on - 47. 57. 57a. 67 Sale to bank by director, officer, employee or controlling stockholder.... 35 Trust company may mortgage premises to treasurer as trust security, u 97 when " When eligible for deposit by trust company with treasurer 96 Mortgage Insurance, guaranteeing notes, legality for savings banks 61 Policy to accompany participation certificates deposited by trust com- pany with treasurer "y Policy, when eligible for deposit by trust company with treasurer 96 Mortgage Participation Certificates, investment by savings banks 61 When eligible for deposit by trust company with treasurer 96 Municipal assessment, effect of, on first lien 57, 5 7a Municipal Deposits, in savings banks 62 Reserve against, not required 20, 68 When secured, bank not required to maintain capital against 19 See Municipal Deposit Act, Appendix. Mutual Bank, may capitalize 29 Regulations ^"' "^ Reserve fund "^ Name, restrictions on use '2, 1 2a, 12b, 12c, 12/ Change of, see Sec. 1278, Code of Civil Procedure. National Banks, conversion into state bank 5ob Conversion of state bank into 5oa Depositaries for state bank ^8 Examination of as depositary 48 [238] INDEX BANK ACT OF CALIFORNIA — Continued NATIONAL BANK— Continued. Section Examination of trust department 4oa Fiduciary capacity ^"* May act as trust company 48^ May incorporate as state banks 56b Operating as trust companies ^"^ State bank may become national bank '. 56a Trust department; must deposit securities with treasurer 48a Trust department subject to examination by superintendent 48a Trust functions of ^"^ With fiduciary powers may use word "trust" 48a Newspaper, publication of purchase and sale notice 3 1 Notice, of assessment on stock '^3 Of claims against bank '36 Of consolidation ^ '^ Of conversion of savings bank into national bank, how given 56a Of pendency of action against stockholder in re liquidation 136 Of sale of banking business to be published 3 I Of unclaimed deposits ' 5 Of withdrawal may be required by savings bank 64 Posted in bank as to names and holdings of directors 1 7 To present claims in liquidation 136 To savings depositors of conversion 56a Oath, chief deputy superintendent must subscribe and file 121 Director must subscribe and file with superintendent 1 I Examiner must subscribe 125 Manager or agent of foreign bank doing business in this state must sub- scribe and file ' ' May be administered by superintendent, chief deputy or examiners 124 Of superintendent; time limit on filing 120 Refusal of officer to be sworn; result 135a, 136 Officers, commission to, prohibited 39 Liability for fraud or omission of duty 38 Of commercial bank may not borrow 83 Of com,mercial bank shall not be endorsers 83 Of commercial bank interested in corporation borrowing 83 Of savings bank interested in corporation borrowing 65 Of savings bank may not borrow 65 Of savings bank shall not be endorsers 65 Overdraft prohibited 39 Prohibited loans to must be reported 65, 83 Of trust company entitled to knowledge of private trusts 1 03 Purchasing assets or obligations of bank 41, 42 [239] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued OFFICERS— Continued. ^^f ^"T Refusal to be examined on oath; result \iOa, 130 Selling note, bond or contract to bank >5 Of state banking department in San Francisco and Los Angeles 122 Official Reports of superintendent of banks, prima facie evidence 142 See Called Reports; examination. Oil Land, fixing market value of 61 Order, refusal of bank to observe '36 To shov^r cause, issued by superintendent of banks 134 Organization of bank, examination of documents 127 Of bank 127,128 Overdraft of ninety days not an asset 21b Prohibited to officer, director, agent, teller, clerk, employee of bank 39 Partial Payments on certificate of deposit prohibited 21b Participation Certificates, mortgage, legality of, for savings bank 61 Mortgage, when eligible for deposit by trust company with treasurer 96 Par Value of capital stock one hundred dollars; exception 53 Payment, bank suspending cause for dissolution I 35a, 136 Of expenses of banking department '23 Savings bank may demand notice on deposits 64 Savings bank may pay depositors by draft 62 Penalty, for failure to maintain reserves 20 For prohibited loans, commercial bank "3 For prohibited loans, savings bank 65 For unauthorized banking or use of certain terms 12 Recovered or compromised '^^ To be paid into state banking fund 144 Unauthorized advertising of bonds 61a Unauthorized conduct of branch office 9 Violation of bank act '» '^^ Personal Property collateral for commercial bank 80 Collateral for savings banks 67 Petition, see Application. Place of Business, see Location. Pledge, directors may not pledge qualifying stock 10 Population, governing capacity of commercial bank as insurance agent 5 Governing capacity of commercial bank as broker 5 Governs capital requirements of bank 23, 60, 82 Governs capital requirements of trust company or trust department 90 Relation to capital of commercial bank 82 Relation to capital of departmental banks 23 Relation to capital of savings bank 60 Governing ratio of reserve required of commercial bank 20 See Location. [240] INDEX BANK ACT OF CALIFORNIA— Continued Section Postal Savings, commercial banks may borrow 21a Deposited in savings banks 62 Deposits, reserve against not required 50, 68 Deposits when secured, banks not required to maintain capital against 19 Savings bank nxay borrow 62 Powers, building and loan associations, restrictions on 12, 12a Commercial bank 5 Foreign corporations 7, 90 Savings banks 4 Trust companies 6, 90 Preference, depositors have priority over stockholders 2 I Deposits by order of court are preferred claims 5 I To any depositor or creditor prohibited 2 1 Preferred Claims, deposits by order of court are 5 I Preferred Creditors, bank shall not have except as authorized by act 21a Preferred Stock, bank not to issue 53 President, returning and publishing statement of unclaimed deposits I 5 Verification of called and special reports 130, 130a See Officers. Principal Office, see Location and Bank Prerriises. Private Trusts, confidential nature of 103 Defined I 1 May be designated as court trust; result 101 Not subject to supervision of superintendent unless designated court trust, except 101 Officers entitled to knowledge of 103 Secured separately by deposit with treasurer 96 Trustee shall not disclose, what 103 When subject to supervision 101 Proceedings, in dissolution of bank 136, 137 In liquidation, filing of 136a Consolidation of banks 3 la Merger of banks 31b Purchase and sale of banks 3 1 To enjoin superintendent of banks 134, 136 When capital of bank is impaired 133 Process, service on foreign corporations transacting business in this state 7 Profit and Loss, certain debts must be charged to 21b Profits, uncollected interest not to be included 45 Public, bank shall post names and holdings of directors 1 7 Records of state banking department not public 142 Superintendent to post bulletin of information 141 Public Administrator, deposits with any bank 5 1 [241] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued PUBLIC ADMINISTRATOR— Continued. Section Deposits with trust company 92 May leave deposits of deceased with savings bank 68!/2 Public Deposits, excluded in calculating reserves 20, 68 Governed by Public Deposits Acts, Appendix. Public Moneys, commercial banks may borrow 21a Deposited in savings banks o2 Public Utilities Act, effect on loans and investments by savings banks 61 Public Utility Bonds, when legal for savings banks 61 Publication, by building and loan association 12, 12a Depositors, list of unknown and deceased 1 5 Of false statement, penalty for 38 Of notice of claims against bank 136 Of notice of consolidation 3 1a Of notice of conversion savings bank into national bank 56a Of notice intention mutual bank to capitalize 29 Of notice of purchase and sale 3 1 Of notice of sale of stock for assessment 133 Of notice of sale by court of real estate held by bank 54 Of notice of sale of business 3 1 Of resources and liabilities with those of other bank prohibited 1 4 Of statement of condition coincides with called report 132 Of summons in escheat proceedings 15 Of surplus must be separate from undivided profits 14 Unclaimed deposits ' 5 See Advertising. Purchase by bank of another, procedure 3 1 By bank of contract note or bond in which officer, director or stockholder interested ^^ By officer, director, agent or employee of bank's assets or obligations 41, 42 Of business of bank or department 3 I Purposes, see Powers. Railroads, equipment trust certificates of 61 Railroad Bonds, when legal for savings banks 61 When may be acquired for debt by savings bank 61 Acquired for debt must be sold, when 61 Railroad Company transmitting money to foreign countries 13 Ratio, capital and surplus to deposit liabilities '" Reserves to deposits, savings 6o Reserves to deposits, commercial 20 Real Estate, effect of certain governmental liens 57, 5 7a Loans on, by commercial bank ^' Loans on, by savings bank ^' May be held five years 54 [242] INDEX BANK ACT OF CALIFORNIA — Continued REAL ESTATE— Continued. Section Oil, mineral or timber land, market value of 61 Redwood timber land as security for savings banks 61 Sale by court if held five years 54 Real Estate Bonds, when legal for savings banks 61 Reapportionment of capital and surplus, permission of superintendent 23 Receiver, deposits of money with trust company 91 Deposits of personal property with trust company 93 Deposits with banks 5 1 Examiner shall not act as, when 125 Funds of, held in county treasury, when 137 Funds of, escheat to state, when 137 Trust company may act as; oath required 90 Reclamation District, assessed by, effect as first lien 5 7, 57a Records of banking department not open to inspection 142 Of banking department not public docum.ents 142 Rediscounts with federal reserve not borrowed money 21a, 62 Redwood Timber Land, security for savings banks 61 Release, payment of joint deposit 15a Religious Corporation, loans to, exemptions in favor of 65, 83 Report, annual, of superintendent of banks to governor 140 By savings bank of money borrowed to purchase United States securities 62 Loans to members of advisory board 83 Loans to directors and employees of commercial bank 83 Loans to agents or employees of savings bank 65 Loans to corporations in which officers or directors are interested 65, 83 Of loans to copartnerships in which directors, agents or employees are interested 83 Of loans to corporations in which officers, directors or employees are in- terested 65, 83 Of examination by directors 139 Prohibited loans must be reported if made 65, 83 Of unclaimed deposits 1 5 Official, of superintendent of banks, prima facie evidence 142 Special, to superintendent of banks 130a Trust comipany must report, what 101 See Called Report. Reports of Condition, of bank 129, 130, 130a, 131, 132 Of department 1 29 Of foreign corporations 130 Penalty for failure to make 138 Publication of 1 32 [243] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA — Continued REPOKTS OF CONDITION OF BANK— Continued. Section Special 130a What to contain 130 When called 131 Resegregation of capital or surplus 23 Reserves, commercial bank required 20 Deficient, effect on loans 68, 20 Depositaries nominated and designated 20 Depositaries, what bank eligible 20 Deposits of savings bank with a savings bank not part of reserves of de- positing bank 68 Effect if commercial bank enters federal reserve 20 Effect if savings bank enters federal reserve 68 May be deposited in federal reserve bank 20, 68 Of each department to be separately maintained 25 Penalty for failure to maintain 20 Population governs reserves of commercial bank 20 Public deposits excluded in calculating 20, 68 Reserves on deposit defined 20 Reserve depositary defined 20 Savings bank required 68 Total reserves defined 20 Trust funds not to be carried as 32 Reserve Depositary 20, 43, 68 See Reserves and Depositary. Reserve Fund of mutual bank 60, 64 Resources, advertising to be separate from those of other bank 14 Revolving Fund, superintendent of banks may retain 123 Safe Deposit Company, bank may acquire stock of one 37 Safe Deposit Department, investment in limited 30 Bank may conduct 30 Safe Deposit Vaults, investment in by commercial banks 84 Investment in by savings banks 61 Safe Keeping, savings banks may receive United States bonds for 70 Salary of employees of state banking department 121 Of superintendent of banks 120 Sale of Banking Business, procedure 3 I Depositors' right to withdraw 3 1 Does not impair creditors* rights 3 1 Sale of real estate held five years 54 By bank of assets or obligations to officer, directors, agents or em|ployees..4 1 , 42 By officer, director, agent or controlling stockholder of contract, note or bond to bank 35 [244] INDEX BANK ACT OF CALIFORNIA — Continued Section Savings, commercial bank prohibited from advertising for or soliciting 49 Of school children " Restriction on advertising '2. I2a, 49 Savings Banks, acceptances of "Edge Act" corporations 61 Acceptances that are legaJ 61, 67 Advertising, hov/ regulated 2" Agents of, loans to "^ Amortization of bonds by 61 Amount of deposits of which may be kept with one bank 68 Assigned mortgage as security "' Bailee for keeping liberty bonds '0 Bankers' acceptances that may be discounted or purchased., 67 Bonds legal for investment 61 Borrowed money "^ By-laws must prescribe rules for savings deposits 64 Capital, ratio to deposit liability '9 Capital of, relation to loans to one person or firm 66 Capital with reference to population 60 Certificate of deposit may be issued by 63 Contracts with depositors 64 Commercial bank may not act or advertise as 49 Commercial paper, investment in 67 Conversion into national bank; necessary notice 56a Corporation loans, directors or officers interested 65 Dealing in real or personal property 62 Defined 4 Depositary for keeping liberty bonds 70 Depositors entitled to notice of conversion into national bank 56a Deposition may be paid by draft 62 Deposits of decedent 68'/2 Deposits of other banks 6o Deposits with other banks 68 Director may not borrow 65 Discounting or purchasing bills by 67 Employees or agents may borrow funds 65 Foreign government bonds may be certified 61 Furniture and fixtures, investment in 61 Gold and silver bullion, investment in by 61 Government bonds legal 61 Investments lawfully made after July 1, 1909, to 66 Investments permitted 61 Investment in bank premises 61 Investments in mining stock 67 [245] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued SAVINGS BANKS — Continued. Section Loan may not be made while reserves deficient 68 Loaning capacity limited oo. 67 Loans on bonds and stocks, limitations 67 Loans on real property .- 67 Loans to affiliated bank 65 Loans to directors and officers prohibited 65 Loans to directors, agents, or employees on United States securities per- mitted without report 65 Loan to one borrower restricted 66 Maturity, ten years longest permitted 67 May borrow money, to purchase United States securities 62 May borrow postal savings 62 May borrow public money 62 May receive United States bonds on deposit as bailee 70 May rediscount with federal reserve bank, what 62 May not receive deposit, of commercial bank 68 Mining stock, loan on or investment in prohibited Must conform to bank act 69 Must use the word "savings" 28 Mutual reserve fund of, must be increased when 64 Mutual reserve fund, required 60 Not to make loans if depositors' demands unpaid 64 Notes legal for investment 61 Notice of withdrawal of deposits 64 Officer may not borrow 65 Participating interest in certain bills may be acquired 67 Personal property held by 61 Premises, investment in 61 Prohibited loan must be reported if made 65 Purchase of bankers* acceptances 67 Purposes of 4 Ratio of capital and surplus to deposits 19 Real property held 61 Real estate loan to be first lien 67 Receiving deposits of public moneys 62 Rediscounting with federal reserve bank 62 Relation to capital of loans of 67 Renewal of loans 66 Repayment of depositors set by by-laws 64 Reserves may be on call with federal reserve bank 68 Reserves required 68 Rules for savings deposits in by-laws 64 Safe deposit vaults, investment in 61 [246] • INDEX BANK ACT OF CALIFORNIA — Continued SAVINGS BANKS— Continued. Section Security eligible for loans "' Security, margin necessary o' Selling real estate may take subordinate lien 67 Shall not contract debt, except 62 Without capital stock reserve fund must equal, what 19 Total acceptances and bills that may be held 67 Use of term restricted '^> 1 ^a. 4" Without capital stock, relation of reserve fund to deposits 19 Savings Department, see Savings Banks. Savings Deposits, advertising for, prohibited when 12, 12a Soliciting by others prohibited '2, 12a Soliciting by commercial bank prohibited 49 School District, assessment by, effect as first lien 57, 57a Bonds of, available for deposit by trust company 96 School Savings, consent of superintendent necessary to accept 9 Persons collecting deemed agent of bank 9 Regulations concerning 9 Seal of Superintendent of Banks, when affixed, charge for 24a Secretary of State must issue certificate regarding consolidation 31a Shall certify documents when " Securities, additional deposit of, by trust company with treasurer 98 Advertisement of limited, when 61 Certified, official list to be kept 61a Cost of investigation of 61a Deposited by trust company, with treasurer 96, 97, 98, 99 Segregation of capital and surplus, permission for 23 Signs of banks must show what 28 Of branch offices must show what 28 Special deputy superintendent of banks 136 Special Report of banks, superintendent of banks may require I 30a State, assessment by, effect as first lien 57, 57a Responsible for securities deposited by trust company 16 State of California, bonds legal for savings banks 61 Governmental subdivisions, bonds legal for savings banks 61 State deposits, see Public Deposit Acts, Appendix. State Banking Department, assistants 121 Attorney ' 2 1 Banks must report to '30 Bulletin to be filed as public document 141 Chief deputy, failure to report insolvent condition 126 Chief deputy, qualification of 121 Created 120 Examiner, failure to report insolvent condition 126 [247] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA— Continued STATE BANKING DEPARTMENT— Continued. Section Examiner of, must file oath 125 Examiner of, shall not act as receiver when 125 Examiners 1 2 i Fund of \ 23 Information to be posted in office 141 Offices in San Francisco and Los Angeles 122 Officials of, cannot borro'w from state banks 121 Records of non-public documents 142 Revolving fund of 123 Special report to 130a State Banking Fund, amount of 123 Banks shall be assessed for 123 Creation of 123 Elxpenses chargeable to 1 23 Method of assessing banks 123 How maintained 1 23 Salaries paid out of 123 Sums recovered paid into 144 State Treasurer, deposit with, by trust company 90 Deposit with, by trust department of national bank 48a Exchange of securities deposited with 96 Return of trust company securities by 98, 102 Stationery must indicate type of business conducted 28 Statute of Limitations on sale of bank or department 3 1 Steamship Company transmitting money to foreign countries 13 Stock, assessment on, when levied 133 As collateral, limited 44, 67 Bank prohibited from purchasing, exceptions 37 Director must hold qualifying stock in bank 10 Investment by bank in own stock 34 Preferred, prohibited, except 53 Sale of as incident to merger 31b Sale of on failure to pay assessment 133 Subscription lists 1 2 7 Transfer of directors' holdings, notice of I 7 See Capital Stock. Stockholders, action against 1 36 Character of 1 28 Consent to consolidation 31a Consent to merger 31b Consent to purchase and sale 3 1 Consolidation rights and liabilities 31a Controlling sale of note, bond or contract to bank 35 [248] INDEX __^ BANK ACT OF CALIFORNIA — Continued STOCKHOLDERS— Continued. ^^\*'l°U Dissent in writing to merger ^'" Fitness of, investigation '^" Liability of cannot be waived 40 May elect receivers, when '^^ May make application to dissolve '3' Meeting of, may be called by superintendent of banks 135 Merger; rights and liabilities 31b Must be notified of assessment '33 Refusal to pay assessment '33 Sale of business, rights and liabilities 3 1 Subscription, circulation of lists to be approved by superintendent 127 Superintendent of Banks, action by, to procure judgment of dissolution 135a Affidavit of publication of sale and purchase, filing with 3 1 Annual report to governor '40 Appointment of ' ^" Approval for opening branch offices 9 Approval of agreement of consolidation 3 la Approval of merger agreement 31b Approval of purchase and sale 3 I Attorney for foreign corporations ' Authority to liquidate bank '36 Authorized deposit of trust company securities 96, 98 Bond required ' 2" Bulletin to be posted in office of '41 Certificate of, to be posted 50 Certificate of bonds for savings banks 61, 61a Chief deputy of ' 2 ' Consent necessary to do departmental business 23 Consent of, necessary to organize banking corporation 127 Consent of to purchase of trust company stock 37 Consent of to purchase safe deposit corporation stock 37 Copies of papers filed with 24a Corporation changes, certificate of, filed with 8 Designation of depositary 20, 43 Discretion in permitting loans on property encumbered by governmental liens 5 7a Duties on closing bank i3o Duties when bank violates law 134, 135a, 136 Duties when capital of bank impaired 133, 135a, 136 Employment of counsel by 136 Foreign corporations subject to supervision 7 Inspection of court trusts 101 Inspection of private trusts 101 [249] BLYTH. WITTER & CO. BANK ACT OF CALIFORNIA — Continued StTPEEINTENDENT OF BANKS — Continued. Section Issuance of order to show cause, when 134 Investigation of bonds by 61a Issuance of license by 127, 128 Licensing of branch office discretionary 9 License of 127, 128 Liquidation by 1 36 May appoint special deputies 136 May authorize acceptance of drafts and bill of exchange by commercial banks 80 May call meeting of stockholders 135 May compromise pecuniary penalties or forfeitures imposed 144 May enforce stockholders' liability 136 May examine national banks, when 48 May examine trust department of national bank 48a May limit deposit by commercial banks with commercial banks 85 May make extra examinations 124 May require special report 130a May renew certification of bonds without application, when 61a May retain revolving fund 123 May revoke designation of depositary 43 May take possession of unsound bank 136 Must make special examination by order of directors 139 Not to be interested in bank 120 Oath of office 120 Offices in San Francisco and Los Angeles 122 Official reports prima facie evidence 142 Official seal of 134 Powers of ' 24 Power to examine foreign corporations 124 Receives copy of national charter upon conversion 56a Regulation of deposits of commercial bank funds 85 Reports of banks to 130 Report to governor 140 Revolving fund I 23 Revokes license of withdrawing trust company 102 Salary 120 Seal of, as evidence 24a Seal of, charge for affixing 24a Seal of, may be recorded 24a Shall give notice of liquidation proceedings 136 Shall provide auditor, when 124 5pecial examination by '39 [250] INDEX BANK ACT OF CALIFORNIA — Continued SUPERINTENDENT OF BANKS — Continued. Section Supervision of foreign banking corporations 7 Supervision of trusts '0' To determine amount of capital to be maintained by selling bank 3 I Surplus and undivided profits not to be advertised as an aggregate 14 Increased to twenty-five per cent of capital 2 1 Invested in bank premises, etc., not available to charge losses 2 1 Maintained by selling bank 3 I Maximum necessary to maintain 2 1 May be converted into capital 2 1 One-tenth of net profits to be added before dividend 21 Paying losses from 21 Re-apportionment between departments 23 Requirements of addition to 2 1 Taxes, effect on first lien on real estate 57, 57a Teller, overdraft prohibited 39 Timber Land, fixing market value 61 Redwood, loans on, by savings banks 61 Title of act I Title Insurance Company, shall not conduct commercial or savings bank 22, 37 Transacting trust business shall have separate trust capital 106 Trust department, application of law 107 Trust department subject to supervision 107 Total Reserves defined 20 Town, assessment by, effect on first lien 57, 57a Trade Acceptances, when eligible for savings banks 67 Transmitters of Money to Foreign Countries, annual report of 13 Bond or surety of 13 Certificate filed with superintendent of banks 13 Deposit with state treasurer 13 Elxpress companies acting as 13 Fee paid yearly I 3 Filing of annual report 13 Penalty for unauthorized operation 13 Power of, when revoked I 3 Railroad companies acting as 1 3 Replacement of agents, notice of 1 3 Regulations for transmission of m,oney by 13 Steamship companies acting as 13 Subject to inspection by superintendent of banks 13 Travel and tourist copartnerships acting as 13 Trust deposit in trust for another 1 5a Use of word by national bailks 48a Use of word by trust companies 28 [251] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA— Continued Section Trust Company, additional deposits with treasurer, when necessary 98 Administrators may deposit money with 91 Administrators may deposit personal assets with 93 Advertising, how regulated 28 Advertising as savings bank 49 Articles of incorporation 90 As member of federal reserve bank 90 Bank may acquire stock of one 37 Capital apportioned between court and private trusts 90 Capital requirements 90 Court trusts r. 96, 1 1 Court trust securities deposit 96, 98 Defined 6, 90 Deposit of estate funds with 92 Deposits of public administrator with 92 Deposit of trust funds with 91 Deposits with by court order 93 Deposits with state treasurer 90, 96, 97, 98, 99 Division of trusts accepted by I I Doing departmental business I 06 Doing title insurance business 22 Entering federal reserve bank may continue to administer and take trusts 90 Exchange of securities deposited by, to be authorized 96 Foreign, may act in certain capacities 7, 90 Foreign, may have representative in this state, when 12c Guardian of estate only, not person 90 Interest paid by, on deposits 95 Interest or dividends on securities deposited 96 Investments governed by savings bank limitations 105 Investment of trust funds 94 Knowledge of private trusts confidential 103 License of, when surrendered 102 Liquidation of 1 36 May act as executor 6, 90 May mortgage premises to state treasurer, when 97 May resign as trustee under private trust, when I I National banks operating as 48a Oath, how made, if required 90 Operating title insurance business 106, 107 Powers of 6 Prerequisites before acting as 90 Private trusts 96, 1 I Private trusts, confidential, except 101, 103 [252] INDEX _^_ BANK ACT OF CALIFORNIA — Continued TKUST COMPANY— Continued. Section Private trust securities deposit 96, 98 Private trust shall be deemed to be court trust, when 101 Public administrator may deposit with 92 Purchase by bank of stock of 37 Purpose of " Qualifications necessary 90 Revocation of certificate shall not affect trusts 98 Release of when withdrawing '02 Reports of ' I Responsibility for trust funds 94 Sale of, purchasing company subrogated 3 I Securities deposited may be exchanged 96 Securities deposited with treasurer to be accompanied by, what 99 State treasurer, initial deposit necessary 90 Trust funds, meaning of term 98 Trusts classified ' I Use of term restricted 12, 12a, 12b When national banks may act as 48a Withdrawing from trust business 102 Trust Department, may be maintained in separate building 26 May deposit with savings or commercial departments 25 Of national bank subject to inspection 48a Operated by title insurance company 106, 107 Trust funds received by 32 Trust Funds, deposits of 25 Interest on, as provided by court 95 Investments, how regulated 1 05 Meaning of term 98 Preference of 5 I Shall not be counted as reserve 32 Shall not be mingled with other assets 32 Trustee, deposits of money with trust company 91 Deposits of personal property with banks 93 Deposit of trust funds by 5 I Deposits with banks 51 Foreign corporations permitted to act as, when 7, 90 Individuals and corporations not prohibited from acting as such under deed of trust securing repayment of money 101 Trust company may act as; oath required 90 Trusts classified; court and private 101 Transfer of as incident to purchase and sale 3 1 [253] BLYTH, WITTER & CO. BANK ACT OF CALIFORNIA— Continued Section Unclaimed Deposits, escheat of 15 Publication of 1 5 Report of 1 5 Undivided Profits, one-tenth to be carried to surplus before dividend 2 I United States, assessment by, effect as first lien 57, 57a Bonds of available for deposit with state treasurer 96 Bonds legal for savings bank 61 Bonds of, as security for directors' loans 65, 83 Postal savings may be borrov^ed 62 Unknown Depositors, list of and report 15 Vacancy in office of superintendent of banks, duties of chief deputy 121 Voluntary liquidation of banks 136a, 137 Window Signs, must indicate type of business conducted 28 Withdrawal of savings deposits, conditions of 64 Of securities by trust company from treasurer's office 96, 102 [254] UC SOUTHERN REGIONAL LIBRARY FACILITY AA 000 784 769 2