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THE LIBRARY 

OF 

THE UNIVERSITY 

OF CALIFORNIA 



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http://www.archive.org/details/bankactofcaliforOOcalirich 



BANK ACT OF CALIFORNIA 



INCLUDING 1919 AMENDMENTS 




COMPILED BY 

BLYTH, WITTER & COMPANY 

GOVERNMENT, MUNICIPAL AND CORPORATION BONDS 
MERCHANTS EXCHANGE 

San Francisco 



NEW YORK 



LOS ANGELES 



SEATTLE 






Copyright 1919 

BLYTH, WITTER &. CO. 

GOVERNMENT, MUNICIPAL St CORPORATION 

BONDS 

Merchants Exchange, San Francisco 

new york - los angeles - seattle 



-g 



i/K'CrtOI 'I I HifiARY 



FOREWORD 



In compiling the Bank Act of California, 
including amendments of 1919, we have tried 
to prepare a volume easy of reference and con- 
venient in form. 

Legislative provisions referred to in the Act 
will be found in the Appendix. 

Notes based substantially on an analysis 
by the Superintendent of Banks of the 1919 
Amendments are generally included under 
those sections amended wholly or in part. 

For valued assistance in compiling this vol- 
ume we are indebted to various officials of 
the State Banking Department and of the Cali- 
fornia Bankers Association. 



BLYTH WITTER & CO. 



August, 1919. 



TABLE OF CONTENTS 



ARTICLE I. 

General Provisions Sections I- 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 
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 andoAssembly 
1)0 Snact as Follows: 



ARTICLE I. 

GENERAL PROVISIONS. 

Section 1 . This act shall be known as the "bank act/* f;*J,?*°^«d "^*^^ 
and shall be applicable to all corporations specified in the 
next section and to such other persons, associations, co- 
partnerships or corporations who shall, by violating any 
of its provisions, become subject to the penalties provided 
therein. 

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- 
or accepting of money or its equivalent on deposit as a J'anTbishiesT'^*^' 
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 

or on account of his principal. It shall be unlawful for Transacting banking 

I . r. . 1. . I I , business otherwise 

any corporation, partnership, hrm or mdividual to engage than by means of 
in or transact a banking business within this state except un?a\SuL°^^*"^* ^°° 



§2-5 BLYTH. WITTER & CO. 

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. ^ .^ o j j 

number of natural persons, not less in any case than three, 
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 tank'' Section 4. The term "savings bank," when used in 

defined. 

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 

defined. 

in this act, means any bank authorized by law to receive 
deposits of money, deed in commercial paper or to make 
loans thereon, and to lend money on real or personal 
property, and to discount bills, notes or other commercial 
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 

acting as agent for i i i • i • • i i i 

insurance company, bank iocated and domg business m any place the popula- 
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 

[121 



GENE RAL PROVISIONS § 5-7 

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 ; provided, however, that no such bank shall in any Bank not to assume 

I . .or guarantee pay- 

case assume or guarantee the payment or any premium ment of 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). 

[Note by Publishers, re Section 6, amended 1919: The phrases and pro- 
visos enclosed in brackets interpolated by the publishers represent new matter 
added by amendment in 1919. 

This amendment of Section 5 is desigrned to enlarge the definition of com- 
mercial banking to include a capacity by commercial banks in cities of a popu- 
lation not grreater than 5,000 persons to act as the agent for any fire, life, or 
other insurance company authorized by the authorities of the State of California 
to do business in this State. Such agency shall be regulated by rules to be 
prescribed by the Superintendent of Banks. The section is amended in this fash- 
ion to permit commercial banks in the State system to compete upon an equality 
with National Banks in the same locality. The amendment is of identical 
phrasing with an amendment to Section 13 of the Federal Reserve Act, approved 
September 7, 1916. Contingent liabilities involved in such agency are removed 
absolutely. For regrulations governing banks desiring to establish such agency, 
see state Banking Department's Bulletin No. 1 in Appendix.] 

Section 6. The term "trust company," when used in "Trust company" 

1 . .,.,.. 1 defined. 

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 Foreign Corporations. 

ii.,. .1. .1 r !• •! Prerequisites to 

banking business m this state without hrst complying with transacting business 

111. rii ri' !• ^° *^^^ State. 

all the requirements or the laws or this state relative to 
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 

[13] 



§ 7 BLYTH. WITTER & CO. 

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 

Hereafter not to re- Superintendent of banks; provided, that a foreign bank- 
^'^^Exception) ^^g Corporation shall not be permitted to accept deposits 
of money in this state but may receive a certificate from 
But may transact the superintendent of banks to transact in this state only 
* ^ bSU^s. the business of buying or selling, paying or collecting bills 
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 
Subject to state superintendent of banks. Every foreign banking corpora- 
tion, 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- 

Capitai assigned to tions Organized under the laws of this state. The capital 

business in this State, <• ir*ii> .• • i.«. 

etc., to be kept oi any such loreigu banking corporation assigned to its 
separa e. ]-j^5j^ggg jj^ ^j^jg 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 
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- 

[141 



GENERAL PROVISIONS § 7 



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 

,,, , I I . , .|. affecting investments, 

shall be deemed to apply to such assigned capital, invest- deposits, etc., apply 

, , . r 1 11' • ^1 ''^'^ assigned capital. 

ments, loans, deposits, assets, runds and business m the 
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- 

, I . . , -i '11 1 • ®^^° 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 twenty 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- 

-I-, ,| ^ r 1 1 ment of funds — how 

ment or such runds over and above such runds 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 

1 II 1 1 • 1 • • 1 • •! *° doing business — 

tion shall transact any banking business m this state until Filing appointment 

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 

service upon such attorney shall be deemed personal 

service on such corporation. The superintendent of banks 

shall forthwith forw^ard by mail, postage prepaid, a copy 

[15] 



§_7 BLYTH. WITTER & CO. 

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 if he succeed in the suit or proceeding. No foreign cor- 

not to have any trust • i ii i_ . . i . -, 

company powers, or poration shall have or exercise m this state the power to 

powers specified in . | . . . . . 

Sec. 6, except in this receive deposits or trust moneys, securities or other per- 

State may exercise i . f • e 

powers permitted to sonal property rrom any person or corporation or any or 

foreign corporations .1 -r t ' .••ri- 1 

by Sec. 90, and act the powers specihed in section six or this act, nor have or 
tee under will" maintain an office 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 griving 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, manager 
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 
so^SiSroXcopy ^^eference to such estate or property, and it shall be 
and aproinfmenfof tHe duty of such foreign Corporation so qualifying or 
supt. as attorney, ^^^j^^ ^^ ^j^ j^ ^y^^ ^f^^^ ^f ^^^jj Superintendent of 

[161 



GENERAL PROVISIONS §_7 

banks a copy of its articles of incorporation, or of the 
statute chartering such corporation, certified 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, No foreign corpora- 

r 1 1 r • • 1 • 1 1 *io" having in State 

rurther, that no roreign corporation which may have or powers permitted by 

.1 • ^ . , '.. J . r Sec. 90, etc., to 

exercise m this state such powers as are permitted to ror- maintain branch 

. . r . 1 • • £ J.* • M. C office or solicit busi- 

eign corporations by the provisions or section ninety or ness as executor or 
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 
banking corporations, which do not maintain an office in tSng^officVherr"" 
this state for the transaction of business, from making makrg^SorJgage"' 
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 
through correspondents which are engaged in the busi- 
ness of banking in this state under the laws of this state. 

[Note by Publishers, re Section 7, amended 1917: 

This section, as amended, deals with the conditions under which foreign 
banks may engage in business in this State. Under the law as it stood prior to 

[171 



§ 8 BLYTH. WITTER & CO. 

1917, foreign banks, if permitted to come into the State at all, came with 
every privilegre extended to domestic corporations. Experience in other States 
and in this State led to the conclusion that the proper and most effective means 
of extending the activities and the service to be rendered by foreigrn banks that 
might hereafter come into California, is to make it easier for them to come in. 
It seems paradoxical to say that it is easier for foreign banks to come in when 
we deprive them of one of the privileges that they would have if they had come 
in under conditions existing prior to the above amendment. The fact remains, 
however, that no foreign bank which desires to come here to promote foreign 
trade and to widen its own activities, comes because of the inducement that it 
may be permitted to receive deposits in this State. We have in this State six 
foreign banks; three of these are receiving deposits and three are not receiving 
deposits. Those that are not receiving deposits have imposed upon themselves 
the condition that they shall not receive deposits in this State. The amendment 
therefore does not deprive any bank which had been receiving deposits in this 
State prior to the amendment from continuing to do so, but banks before or after 
the amendment not receiving deposits in this State are not permitted to receive 
deposits. The constitution of this State provides that no foreign corporation shall 
come into this State and enjoy the privilege of doing business in this State on 
more favorable terms than may be extended to a domestic corporation. While 
the power to receive deposits is not in one aspect more favorable terms for a 
foreign corporation, it is in reality such because of the fact that the same element 
of security and of protection and of supervision that the people of this State have 
when they deposit their moneys in domestic institutions can not be extended to 
those deposits when they are placed in foreign institutions. Fortunately, the 
foreigrn institutions that are now receiving deposits in this State are of the 
highest class, but there could be no such well established confidence with refer- 
ence to all foreigm banks which might desire to come into this State; when a 
foreign bank, therefore, desires to enter California and insists upon the privilege 
of receiving deposits, it is necessary to refuse such bank a license. Under 
authority of the amendment it will be easier for foreign banks to enter because 
the doors of the State can be thrown open and we can welcome any foreign bank 
to come here and offer its service in assisting in the extension of foreign trade, 
the only purpose for which a foreign bank should be permitted to do business in 
this State. 

FOREIGN TRUST COMPANIES. 

And along the same line of our desire to extend to foreign banks facility of 
coming in here, we have taken out another important limitation that was in Sec- 
tion 7, in reference to foreign trust companies. Foreign trust companies were not 
permitted to come in here and undertake the execution of any trust unless the 
laws of their State, in which their principal place of business is located, also 
permitted trust companies of California to perform a like service in their State. 

By the above amendment, that limitation was taken out and foreign trust 
companies are permitted to come in for any purpose, excepting for certain limita- 
tions which, if removed, would interfere with the protections that are thrown 
around our own trust companies.] 

Requirements im- Section 8. Evcrv Corporation, at the time it applies for 

posed Upon every r i • i i i • i • 

corporation applying a Certificate oi authority to do a banking business, must 
authority to do a file with the Superintendent of banks a certified copy of 

banking business. ..,/.. . - , . . 

its articles or incorporation, or or the statute chartering 
such corporation, a certified copy of its by-laws, 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 likewise be so filed before such in- 

[18] 



GENERAL PROVISIONS § 8-9 

- 

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. 

[Note by Publishers, re Section 8, amended 1919: 

This section remedies a conflict -which existed between this section and Sec- 
tion 290a of the Civil Code. The last-named section was amended in 1917 so as 
to eliminate the requirement of the affidavit of the organizers of a banking cor- 
poration with reference to the paid-in capital thereof, but Section 8 continued 
to demand this requirement; and the elimination of this feature of Section 8 
is the only purpose of the amendment. 

See Appendix for extract from Section 290a, Civil Code.] 

Section 9. No bank in this state, or any officer or Branch Banks, 
director thereof, shall hereafter open or keep an office Prerequisites for 
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 
branch office; provided, that no bank or any officer or capital required- 
director thereof, shall open or maintain any such branch ®®^®'*^^y- 
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 For each branch 

1 1 re 1 •••11 11 .1 other than trust 

branch otiice opened or maintained by any bank, other company branch out- 
than a bank transacting only the business described in ofbuS^s? ^^^^ 
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 

■x \ cc 1 • • 1 1 .by trust company 

branch oihce opened or maintained by any corporation ormortgage- 
which has power to transact only such business as is de- 
scribed in section six of this act or in section four hundred 

[19] 



-insur- 
ance company, etc. 



§^ BLYTH. WITTER & CO. 

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. 

Certificate required Every bank, before it opens a branch office, shall ob- 

for opening branch. "^ ^ '^ ' 

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- 

fofc?UeSion"S*av- ^^^®' provided, however, that, in order to encourage sav- 
ings in schools, ing among the children of the schools of this state, a bank 
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 

Penalty for violation directly with the bank. Every bank and every such officer 
or director violating the provisions of this section shall 
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. 

[Note by Publishers, re Section 9, amended 1917: 

BBANCH BANES: Under the law as it stood previous to this amendment of 
1917, a branch office could be opened with a capital of but $25,000 in excess of 
the amount otherwise required for the conduct of the business of the bank in the 
locality where the principal business of the bank was located. The amendment 
of 1917 requires that where a bank opens a branch office 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 re- 
quired by the act in the sum required by the act for every bank organized after 

[20] 



BLYTH, WITTER & CO. § 10-11 



said amendment in the place where each branch office is to he opened. For 
instance, a hank not having a trust department and having its principal place of 
business in San Francisco, is required to have $300,000 capital. Such an institu- 
tion under authority of the law without this amendment might have opened a 
branch office in Los Angeles with an additional $25,000, while a new bank in 
Los Angeles would have to have $300,000 capital, the same as in San Francisco. 
This amendment requires that the San Francisco bank must have a capital of not 
less than $600,000, to open a branch office in Los Angeles. 

An additional change made by this amendment, is that no branch, once it is 
opened, shall be closed without the approval of the Superintendent of Banks. 
The purpose of that is, of course, to prevent a bank from opening a branch in 
some place to control business and then subsequently closing the branch and trans- 
ferring the business of its depositors to some other place, leaving the community 
without any banking facilities.] 

Section 1 0. No person shall be eligible for election as Directors. 
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; 
and every person elected to be director who, after such Director after eiec- 

,. Ill 11 -I- - 1 e *^°° ceasing to own, 

election, shall cease to be the owner in his own right or or pledging, quaiify- 

the amount of such stock aforesaid, or shall hypothecate supt., etc. 

or in any w^ay 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 

the superintendent of banks; provided, however, that any Executor or adminis- 

, . . I . . . trator when eligible 

executor or executrix, administrator or administratrix as director. 
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. 

Section 1 1 . The board of directors of a bank organized Directors' Meeting* 
under the laws or this state must hold a meeting in its once a month. 
banking premises at least once a month. Each such 
director, when appointed or elected, shall take an oath oath of directors, 
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, 

[211 



§ 11-12 BLYTH. WITTER & CO. 

subscribed by him or standing in his name on the books 
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 
Oafh reetuired of managers or agents residing in this state, of a foreign 

Resident Managers . . i i • i • . i . 

or Agents, corporation transacting any banking business m this state, 
shall take an oath that they will, as far as the duty de- 
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. 

^^^ti^n *'^' *not Section 12. No person, firm, company, copartnership 
subject to super- or Corporation, either domestic or foreign, not subject to 

vision of Supt., and ^ ^ rii 

unauthorized under the supervision of the Superintendent of banks, and not 

Act— shall not ad- • i i i . . r , . 

vertise acceptance of required, by the provisions of this act, to report to him, 

money or savings, or , , . , , . . _ i i i . 

do acts inducing be- and which has not received a certificate to do a banking 
office is that of bank business from the superintendent of banks, shall adver- 

or trust company, .11 . . . . 

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 
Shall not use station- made on check, or any other form of banking business 

ery, name or words . . 1 1 ii 1 r 

indicating place or transacted, nor shall any such person or persons, hrm, 

or Sust%ompany, Company, Copartnership or corporation, domestic or for- 

***'' eign, make use of or circulate any letterheads, billheads, 

blank notes, blank receipts, certificates or circulars, or any 

[22] 



GENERAL PROVISIONS §_I2 

written or printed, or partly written and partly printed, 
paper, whatever, having thereon any artificial or cor- 
porate name or other w^ord 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 w^ay 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 
company"; provided, that this section shall not apply to Section shall not ap- 

.1 r 1 •! T 11 • • ply *<* name of exist- 

the corporate name or any buildmg and loan association ing Bidg. & Loan 
now or heretofore doing business in this state; and pro- 
vided, further, that any such association having in its Nature of business 
corporate name words not clearly indicating the nature Assn. must be shown, 
of its business shall, on all signs, letterheads and advertis- advertising. 
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- 
sociations; and provided, further, that no such associa- No Bidg. & Loan 

1111 . iii.ir 1 11- Assn. shall hold itself 

tion shall advertise or hold itselr out to the public as a out as savings bank, 
savings bank. Any person, firm, company, copartner- 
ship or corporation, domestic or foreign, violating any 

[23] 



§ i2-12a BLYTH, WITTER & CO. 

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. 

Every person, firm, Section 1 2a. Every person, firm, company, copart- 

corporation, etc., do- _ . r- ./ » i- 

mestic or foreign— nership or corporation, domestic or foreign, advertising 

that he or it is receiving or accepting money or savings, 

Advertising transac- and issuing notes or Certificates of deposit therefor, or 

savings bank or advertising that he or it is transacting the business of a 

trust company busi- i i • i i . . i . r 

ness, in any form, bank, savmgs bank or trust company, or making use or 
any office sign at the place where such business is trans- 
Must have proper acted, having thereon any artificial or corporate name, or 

capital paid in and . i-t-i ii rr - ^ 

set aside and have Other words indicating that such place or office is the 
fromsupt. place or office of a bank, or trust company, or that de- 
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 
Penalty, stock paid in and set aside for the purpose of transacting 
such business, and must have received from the superin- 

[24] 



GENERAL PROVISIONS § 12a 

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 
order or decree as equity and justice may require. Every Every person, firm, 

r ^ 1 • ^« corporation, etc., 

person, iirm, company, copartnership or corporation transacting any busi- 

!• f.1.1* ,_ ,• f.ii* ness defined in Sec. 

doing any or the things or transacting any or the business must do so under 
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 
this section ; provided, that this section shall not apply to Section not appUcaWe 

I r 1 •! !• 11 • • to corporate name of 

the corporate name or any building and loan association existing Bidg. & 

I f 1 • 1 • • 1 • 1 Loan Assn. 

now or heretofore doing business m 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- 
tion" or words to that effect; and provided, further, that Any Bidg. & Loan 

. . Assn. may borrow 

any building and loan association may borrow^ money, money, etc, 
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 
loan associations; and provided, further, that no such No Bidg. & Loan 

iiii . iii>ir 1 11* -^ssn. shall hold itself 

association shall advertise or hold itselr out to the public out as savings bank. 
as a savings bank. 

125] 



§ I2b-I2c BLYTH, WITTER & CO. 

^'SrVtton SSered Section 1 2b. Nothing in this act shall be construed or 
tll'/L^l"J^^+«t^n ^^^^ to apply to any corporation organized under the laws 

XFUSX coinpjiiiy xo uso 

corporate title, of any Other state which is authorized by its charter or 
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. 

Foreign corporatwn Section 1 2c. Any Corporation organized under the 
of California not en- laws of any country or state other than this state which 

gaged in banking , , 

may maintain has compHed With all of the laws of this state pertaining 

state offices to lend r • . , . . . 

money, buy or sell to foreign corporations and IS not engaged in the business 

bonds, etc. rii» •• « ..i. 

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 
Representative of the Superintendent of banks; provided, that nothing in 
trust company not this act shall be construed to prohibit any representative 

prohibited from f r-ii* .• r ♦.•• 

maintaining as such OF any toreign banking corporation rrom maintaining an 
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 .ii i •iirii 

may use foreign eign bank or trust company; and provided, hirther, that 

tank's printed mat- . r r • i i ... ^r 

ter in transacting any representative or a roreign bank maintaining an omce 
sentativei within this state may make use of such foreign bank's 

[26] 



GENERAL PROVISIONS § 12c-13 

letterheads, circulars and other printed matter in the 
transaction of business as such representative; and pro- 
vided, further, every representative of any foreign bank Such representative 

must first obtain 

or trust company before opening an office as a repre- license from supt. 

1 11 1 • 1 !• f I . *o open office. 

sentative shall have received a license rrom the superin- 
tendent of banks to open such representative's office. 
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. 

[Note by Publishers, re Section 12c, amended 1917: 

This amendment allows a representative of a foreign bank to open an office 
in this State for the purpose of distributing information and assisting in a general 
■way in the conduct of the banking business. Under the law as it stood, it was 
impossible for a foreign bank to open an office in this State at all, unless it 
qualified by assigning the required capital and receiving a certificate from this 
State. It was concluded that this was an unnecessary restriction and that repre- 
sentatives of foreign banks might properly open offices to assist in the distribu- 
tion of knowledge and gathering of information that is very helpful not only to 
themselves but to the banks of this State, and this amendment extended that 
privilege.] 

Section 1 3. No corporation, domestic or foreign, other Power of express 

, • f 1 1 1 . Ill company to handle 

than a corporation rormed under or subject to the bank- exchange, etc. 
ing laws of this state or of the United States, except as 
permitted by such laws, or other than an express com- 
pany as hereinafter defined in this section, shall by any 
implication or construction be deemed to possess the 
power of carrying on the business of discounting bills, 
notes or other evidences of debt, of receiving deposits, of 
buying and selling bills of exchange, or of issuing bills, 
notes or other evidences of debt for circulation as money, 
or of engaging in any other form of banking; nor shall 
any such corporation, except an express company having 
contracts with railroad companies for the operation of an 
express service upon the lines of such railroad companies, 
or a transatlantic steamship company, or a transpacific 
steamship company, or a telegraph company, or a tele- 
phone company, possess the power of receiving money 
for transmission or of transmitting the same, by draft, 
traveler's check, money order or otherwise. 

[Note by Publishers, re Section 18, amended in 1917. 

The purpose of this amendment was to simplify the expression of the section 
and better to control the activities of express companies and telephone and tele- 

[27] 



§ 14-15 BLYTH. WITTER & CO. 



graph companies in the matter of handling exchange. The Bank Act formerly 
contained a strict prohibition against the exercise of this banking function except 
by banks. In 1915 the law was amended that transportation and express com- 
panies might receive a certificate under certain circumstances, but that also was 
found not quite to meet the case. The State Banking Department believe that 
this amendment makes it better and easier for such corporations to perform their 
service and at the same time not encroach upon the proper field of banking.] 

Advertisement of Section 1 4. No bank, or officer thereof, shall advertise 

capital. . 

m 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 

Joint advertising actually paid up. No bank shall publish a statement of 

condition of two 

banks, its resources or liabilities in connection with those of any 
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 r i . i i • i i ii 

provided by law. drawn any part thereor 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 of Civil Procedure. At the time of issuing the summons 

be followed in ob- . , . • i i r • • i o "7 o r i /-> i f 

taining such judg- m the action provided ror m section \ ll i or the Code or 
and all claimants. Civil Procedure, the clerk shall also issue a notice signed 
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, 
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 

[281 



GENERAL PROVISIONS %_\5 

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 miay appear in said Any person inter- 

, I I T T 1 1 • ested may become 

action and become a party thereto. Upon the completion par^^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 1273 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, President or manag- 
within fifteen days after the first day of January of every must annually return 

.^1 . J rii 1 1 sworn statement 

year, return to the superintendent or banks and to the showing matters set 
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 
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 

[291 



§ 15 BLYTH, WITTER & CO. 



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- 
* 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. 

bfeSar^tatemSt ^^^ president or managing officer of every bank must, 
of depositors de- within fifteen days after the first day of January of every 

ceased or not making iiii ^ ^f ^ j 

or withdrawing de- odd numbered year, return to the superintendent of banks 

posits during preced- 
ing 10 years, a sworn statement showing the names of 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. i i • ♦ i 

the account, the depositor s last known place of 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 

be published. ^ ^ o r 

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 
Section not appiic- unclaimed deposits. This section does not apply to any 

able to deposit 1)7 or , . , , . , . . , 

in name of person deposit made by or m the name or a person known to the 

known to officer to . , • rr i t • t-i 

be living, president or managing omcer to be living. 1 he superin- 
tendent of banks must incorporate in his subsequent re- 
port such returns made to him as provided in this sec- 
Penaities. tion. If any president or managing 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 dollars a day for each 
day such default shall continue. Any president or manag- 
ing officer of any bank who violates any of the provisions 
of this section shall forfeit to the State of California the 
Date of receipt of sum of One hundred dollars a day for each and every 

deposits transferred i i«i.» in i» T" ^^ t 

from another bank, day such Violation shall continue, r or the purposes or 

[30] 



GENERAL PROVISIONS § 15-17 

this section all deposits received by any bank under the 
provisions of section thirty-one or section thirty-one-a 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 w^as transferred; provided, Bank making deposit 
that any bank which shall make any deposit with the state under section not 
treasurer in conformity with the provisions of this section 
shall not thereafter 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 w^ith the state 
treasurer shall be defended by the attorney general with- 
out cost to such bank. 

[Note by Publishers, re Section 15, as amended 1915: 

A copy of Section 1273, Code of Civil Procedure, which section is referred to 
in the aboTe section is set forth in Appendix at the end of this Act.] 

(Section 16. Repealed 1919.) 

[Note by Publishers, re Section 16, repealed 1919: 

The first paragraph of Sec. 16 is simply declarative of the right of Savings 
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., 80 Cal., App. 144, and McCarty vs. Holland, 80 Cal., App. 
495.) 

The second and last paragrraphs 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 just closed an 
amendment to said Section 1454 to permit, under similar conditions, the addi- 
tional 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 Section 1454, however, failed of passage, and the subject is 
therefore governed by Section 1454 in its existing form. For a copy of said 
Section, see Appendix.] 

Section 17. Every bank now in existence or here- Banks shall keep ac- 

*^ cessible list of stock- 

after organized shall keep in its offices, in a place access- toiders and their 

^ . r holdings. 

ible to the stockholders, depositors, and creditors thereof, 

and for their use, a book containing a list of stockholders 

in such corporation, and the number of shares of stock 

held by each ; and every such bank shall keep posted in Bank shall post in 

its office, in a conspicuous place, accessible to the public public a list of di- 

II . . Ill * 1 rectors and their 

generally, a notice signed by the president or secretary, shareholdings. 
showing : 

1 . The names of the directors of such bank. 

2. The number and the par value of the shares of 
I stock held by each director. 

[31] 



§ 17-19 BLYTH. WITTER & CO. 

Entries on such The entries on such book and such notice shall be made 

book and notice to 

^^hoursiftlr^stock ^^^ posted withiu twenty-four hours after any transfer 
transfer, of stock, and shall be prima facie evidence against each 
director and stockholder of the number of shares of 
stock held by each. 

(Section 18. Repealed 1913.) 

Percentage of paid- Section 1 9. The aggregate of paid-up capital together 

up capital and sur- .11 ir 'iii 1 

plus to deposits. With the surplus, or every commercial bank, must equal 

ten per centum of its deposit liabilities. The aggregate 

Percentage of paid- of paid-up capital and surplus of every savings bank 

prusof^savingsbank having a Capital stock, and the reserve fund of every 

an^d^e^s^rv^funTof savings bank without a capital stock, must equal the fol- 

^^ouTcap^tafsTocki lowing 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 up to and including fifteen million dollars. 

(d) Two and one-half per centum of any amount in 
excess of fifteen million dollars up to and including forty 
million dollars. 

(e) One per centum of any amount in excess of forty 
million dollars. 

Restriction on in- The deposits shall not be increased if such proportion 

eposi s. ^^ paid-up capital and surplus or reserve fund 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 ,,,, , r r r • 1 e> i l • J 

to be exclusive of shall be exclusive or United otates and postal savings de- 
posits, posits and deposits of the State of California and of any 

[321 



GENERAL PROVISIONS § 19-20 

county and municipality in the State of California which 
are secured as required by law. 

[Note by Publishers, re Section 19, amended 1919: 

This amendment releases deposits of the United States 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 from the aggregate of deposit liability 
against which capital must be maintained in the commercial and savings banks of 
this State. The fact that these public deposits are secured makes it unnecessary 
to require a double security by adding to the collateral pledged by the bank for 
the deposits an increase in capital of the bank. The purpose of the amendment 
is to relieve State banks, without in any sense lessening their responsibility in 
capital, from a burden which the national laws do not require from National 
banking associations.] 

Section 20. Every commercial bank shall maintain Commercial bank to 

. . 1 • 1 • f maintain total re- 

total reserves against its aggregate deposits, exclusive or serves against ag- 
United States and postal savings deposits and deposits of specified. 
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. 

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- Total reserves; how 

/-lilt maintained and con- 
tained as reserves on hand and shall consist of gold bul- stituted. 

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- 
part of the reserves may be deposited, subject to call, posItedTith Federal 
with a federal reserve bank in the district in which such 
bank is located. 

[331 



§20 BLYTH. WITTER & CO. 

Bank becoming mem- jf g^jjv bank shall have becomc a member of a federal 

ber of Federal Re- i i . i „ i . i i 

serve Bank to com- reserve bank, it shall comply with the reserve require- 

ply with require- r i r i i i • i i 

ments of Federal ments of the federal reserve act and its amendments, and 
its compliance therewith shall be in lieu of, and shall 
relieve such bank from compliance with, the provisions of 
this section. 

Penalties for not Jf ^nv bank shall not maintain the total reserves re- 

maintaining total 

reserves required, quired the superintendent of banks may impose a penalty 
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. 

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. The Superintendent of banks shall, in his discretion, 
reserve?'on deposit! upou 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 require- reserve depositary, which has its principal place of busi- 

T^''*'deposXy! ness in a judicial township or in 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 

1341 



GENERAL PROVISIONS § 20 



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 
over and less than one hundred thousand. But no bank Requirements of bank 

or Natl, banking 

or national banking association shall hereafter be desig- Assn. to be desig- 

nated as reserve do- 
nated as a depositary of any such reserves unless it shall positary. 

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 depositary may also be a banking corporation such depositary may 

. .11. 1 11 also be banking cor- 

with a capital and surplus or one million dollars or more, poration with capital 
located in any city in the United States. specified. 

If the total reserves of any bank shall be less than the Effect of impairment 

. 1 1 1 1 11 . of 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 Bank failing, after so- 
total reserves shall be below the amount herein required, Supt., to restore total 
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 Deposits to comply 
under the provisions of this act; provided, that all deposits ^^ 

[351 



§20 



BLYTH. WITTER & CO. 



Definitions— 
'Reserves on hand," 



'Seserves on de- 
posit." 



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, 
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 
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. 

"Total reserves." The term, "total reserves," when used in this act, 
means the aggregate of reserves on hand and reserves on 
deposit maintained pursuant to the provisions of this act. 

•Reserve depositary." The term, "reserve depositary," when used in this act, 
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. 

[Note by Publishers, re Section 20, amended in 1917 and 1919: 

By the 1919 amendment Section 20 was made the first of a series of amend- 
ments intended to bring the banks of the State system into relationship estab- 
lished by membership in Federal Reserve Banks with the Federal system, but 
without in any way invading or impairing the scheme of reserves as fixed by 
the Bank Act of California. The other sections of said series of amendments 
providing for the entrance of State banks into the Federal Reserve system as 
member banks, are Sections 56 and 68. For the scope and purpose of these 
last two sections, reference is made to the same and to the notes thereto in this 
edition. 

The 1919 amendment of Section 20 assumes two forms: First, it permits the 
carrying of reserves on hand in any money or currency authorized by the laws of 
the United States; and. Second, permits any bank in the State to carry any or all 
of its reserves, either those on hand or those on deposit, in a Federal Reserve 
bank. The primary consideration is to permit such banks of the State system as 
become members of the Federal Reserve Bank to carry reserves established by the 
Federal Reserve Board for all member banks of the system, in lieu of the reserves 
demanded by the Bank Act of California. The 1919 amendment enables any bank 
under the jurisdiction of the laws of California, whether a member of the Federal 
Reserve Bank or not, to contribute its gold to the Federal Reserve banks without 
a violation of our State law, and the change also gives full freedom to all of the 
banks in the State to avail themselves of the privilege of entering the Federal 
Reserve system as State member banks. 

The 1917 amendment amended the section in one rather important matter, 
namely, to permit banks to have part or all of their reserves on hand, which 
heretofore had to be held in their own vaults; for instance, in safe deposit vaults. 



[361 



GENERAL PROVISIONS §^ 

These reserves must be kept under the actual control of the banks owning them 
and be accessible only to themselves; the purpose being, of course, to save the 
small bank in an isolated town from the hazard of burglary, a danger that has 
caused a good deal of concern in the smaller places. The 1917 amendment enables 
the smaller banks to have their reserves in the larger centers, thus affording 
ample protection.] 

Section 2 1 . The directors of any bank having a capi- Directors of bank 

^1^1 ..«.• !• i_ 'm. having capital stock 

tai stock may, at certain times, and in such manner as its may declare and pay 
by-laws prescribe, declare and pay dividends to deposi- fiedl ^" *' ** '^^^'^ 
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 w^ith 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 
whole or any part of such surplus, if held as the exclusive surplus convertible 
property of the stockholders, may at any time be con- in*whfch eSent^suJl' 
verted into paid in capital, in which event such surplus p^^^ to be restored. 
shall be restored in the manner above provided until it 
amounts to twenty-five per centum of the aggregate paid- 
up capital stock. Subject to the provisions of section Losses sustained in 

nineteen of this act, any losses sustained by any such bank profits may^br^^*^ 
in excess of its undivided profits may be charged to and paid^/rom surplus, 
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- 
strued as prohibitory thereof. The capital and assets of Depositors have 

III . I . I I priority of security 

any such bank are a security to depositors and stock- over stockholders. 
holders, depositors having the priority of security over 
stockholders. 

[37] 



§21a BLYTH, WITTER & CO. 

Preference to depos- Section 21a. No bank, banker, or bank officer, shall 

itor or creditor pro- ' ' ' 

hibited, except as give pcrference to any depositor or creditor except as 
^®*5 otherwise authorized by law; provided, that any commer- 
cial bank or commercial department of a departmental 
Provided, commer- bank, is authorized and empowered for temporary pur- 

cial bank may bor- ^ r ^ r 

row money and poses, to borrow money, or to borrow money and pledge 
in amount and upon ©r hypothecate as Collateral security therefor, its assets 

conditions specified. > r 

not exceeding fifty per centum in excess of the amount 
borrowed, but only to the extent and upon terms and con- 
ditions as follows: 

Not exceeding cap- ( ] ) Any amount up to, but not exceeding the amount 

ital and surplus; . . . 

provisos as to ex- of its Capital and surplus, without consent of the superin- 

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 
Rediscounting:, notes, of the Superintendent of banks ; provided, also, that the 

loans, etc., with _. . . « .1 ■• 

Federal Reserve rediscountmg With or without guarantee or endorsement 
money, 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 
the terms of this act, and shall not be considered as bor- 
rowed money within the meaning of this section. 

Public moneys or (2) Any amount of California, state, county, city, 

funds of state and ., --i 1 ii- , 

its subdivisions, city and county funds, or any other public money, in 
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. 

TT. s. moneys and (3) Any amount of the United States moneys and 

postal savings and ^' riiT'io 

pledge of securities, postal savings moneys of the United States, and receive 

under 17. S. laws. ^ ,. iii 1 1 1 

such moneys on deposit, and pledge or hypothecate such 
of its securities and upon such terms as may be required 

[38] 



GENERAL PROVISIONS §21a 

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. 

(4) Any amount, in addition to the amounts author- Buying from u. s. 

, bonds and other 

ized to be borrowed m this section, for the purpose or u. s. obligations. 
buying from the United States, United States bonds, 
United States treasury certificates, or notes or obligations 
of the United States. 

(5) To rediscount with and sell to a federal reserve Rediscounting with 
bank any and all such notes, drafts, bills of exchange, banknotes, etc., as 
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. 

(6) No bank shall make partial payments upon any Partial payments 

^. r . r 1 '^ upon deposit. 

certificate or deposit. 

(7) In no case shall an overdraft of more than ninety 90-day overdraft 
days' standing be allowed as an asset of any bank. 

(8) Any debt due to any commercial bank, on which Debt due commercial 
interest is past due and unpaid for the period of one year, debt.' 

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. 

[Note by Publishers, re Section 21a, amended 1913: 

The purpose of this amendment is to establish the limitations within which 
commercial banks in the State system may borrow money. It is Intended to re- 
strict this capacity so as to prevent inflation, unwise and unwarranted broadening 
of activities, and the dangers Involved in operating on borrowed money. The 
amendment maintains all of those restrictions, but enlarges the privilege of com- 
mercial banks, to rediscount with a Federal Reserve bank such notes, drafts, bills 
of exchange and loans to the same extent as is granted by the National law to 
National bank members of the Federal system. The amendment was deemed 
necessary to place banks in the State system on a parity of privilege with their 
competing National bank members. The change is demanded in order that the 
state banks may meet the obligations of commerce upon a parity with commer- 
cial banks organized under the laws of the Federal government. 

There is permitted also the privilege to any State commercial 
bank to borrow any amount for the purpose of buying from the 
United States, United States bonds. United States Treasury Certifi- 
cates, or notes or obligations of the United States. This is to 

[39] 



§ 22-23 BLYTH. WITTER & CO. 

permit our State Banks to play their proper part in the financing 
of national obligations.] 

Corporation so Section 22. Any corporation authorized by its articles 

authorized may com- . . , i-^ii* r 

bine business of of incorporation SO to do, may combine the business or 

commercial and sav- • i i i i • 11 1 . . 

ings banks and trust a Commercial bank and savings bank and trust company, 
company, e c. ^^ ^^^ ^^^ ^^ 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. 

Prerequisites to Section 23. When a bank desires to do a departmental 

doing departmental . .in/- ^ • ^ c ^ 

business, busmess, it shall nrst obtain the consent or the superin- 
tendent of banks, and in its application therefor, file a 
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 

Apportionment and the superintendent of banks and subject to the pro- 
segregation of capi- .. f. . r^i* ^1 
tai and surplus of visions OF section nineteen or this act, change any segre- 

• gation and apportionment of capital and surplus previ- 
ously made and make a new segregation and apportion- 
Paid-up capital stock ment of its Capital and surplus. Every bank hereafter 

. Qj^gg^j^j^ed doing a departmental business shall have paid 
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 
Where population not thousand dollars if it transacts both a commercial and 
' ' savings business, or not less than one hundred twenty-five 
thousand dollars if it transacts both a commercial and 
trust business, or not less than one hundred twenty-five 
thousaid 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. 

[40] 



GENERAL PROVISIONS §^ 

(b) In any city in which the population is more than where population 

^ . !; 11 r ^'^^^ *** 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. 

(c) In any city in which the population is more than where population 

r 1 ^ 11 1 25,000 to 100,000. 

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- 
miercial, savings and trust business. 

(d) In any city in which the population is more than where population 

,,,,, 11 1 100,000 to 200,000. 

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. 

(e) In any city in which the population exceeds two where population 
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 

[411 



§23 BLYTH. WITTER & CO. 

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. 

Foregoing ciassiflca- The foregoing classification shall not apply to any 

tion not applicable 'i ■,■,■, . . I'li • -i c i 

to existing bank, or 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 
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. 

Population, for pur- por the purposes of this act, the population shown and 

poses of Act — how 

determined, determined by the last preceding federal census, or any 
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 
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, 

[42] 



GENERAL PROVISIONS § 24-25 

shall be the basis for classification under the provisions of 
this act. 

Section 24. Every bank, before it commences to do Bank before com- 

•^ mencmg business or 

business or before it opens a new department and com- opening new depart- 
ment shall obtain 
mences to transact business in or under such new depart- certificate of Supt., 

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. 

Section 25. Every bank shall maintain for each de- Bank to maintain 

- . . 1 • 1 separate, specified 

partment total reserves equal m amount to that required total reserves. 

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 

otherwise, shall be assets of the respective departments 

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- Deposits by depart- 

- , . I ment with other 

partment or the same corporation; except that a trust banks— how treated. 
department, in proper cases, may make deposits of trust 
or any other funds under its control with the savings de- 
partment of the same corporation and may, upon order, 
previously obtained, of any court having jurisdiction of 
any trust or fund, make deposits of moneys belonging 
thereto with the commercial department of the same cor- 
poration; provided, however, that any bank having de- Bonds, etc., maybe 

__ i»t 11 1 i» ^°^^ ^^^ transferred 

partments shall have the right to sell and transfer any from one department 
bonds, securities or loans from one department to another 
upon receipt of the actual value thereof, if such bonds, 

[43] 



§ 26-28 BLYTH. WITTER & CO. 

securities or loans are, under the provisions of this act, 
a legal investment for the department purchasing the 
same. 

^eevnfv^r^STooll Section 26. Every bank having different departments 
"p^rovis^olfof aS shall keep separate books of account for each depart- 
ment of its business, and shall be governed as to all de- 
posits, reserves, investments and transactions relating to 
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, and shall 
Mingling of cash, keep entirely separate and apart in each department the 

securities, etc., for- *^ 

bidden, cash, securities and property belonging to such depart- 
ment, and shall not mingle the cash, securities and prop- 
erty of one department with that of another. 

Moneys and assets Section 2 7. All money and assets belonging to each 

of each department •' • i i i i i 

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 all its 

signs, advertising, •' ^ ^ 

etc., specify its window signs and in advertising, and on letterheads and 

business — "savings, *=* 

"trust" or "commer- other Stationery on which its business is transacted, use 

the word "savings" if it conducts a savings business, or 

the word "trust" if it conducts a trust business, and the 

word "commercial" if it conducts a commercial business. 

Branch bank re- Every bank which maintains a branch office, must on all 

quirements. "^ 

window signs and in advertising, and on letterheads and 
other stationery on which the business of said branch 

[44] 



GENERAL PROVISIONS § 28-29 

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. 

[Note by Publishers, re Section 28: 

The purpose of this section, amended in 1917, dealing with the matter of how 
branch offices shall present their relationship to the public, is that there shall be 
no possible confusion as to the identity of a branch office as such, or suppression 
of the fact that it is a branch and not a principal place of business.] 

Section 29. Every corporation heretofore created Bank without capi- 

. 11. !• **^ stock may convert 

under the laws or 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 
mioneys 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 

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 

once a week for three successive weeks prior to the hold- procSdings^^tlf., 

ing of the meeting. A copy of the proceedings of this reta^^if^Tlte f nd 

meeting, giving the number of persons present, the votes co»»*y clerk. 

[451 



§29-31 BLYTH. WITTER & CO. 

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- 
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. 

^*^' Apartment 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. 

fAti:pa/tment ^ection 31. Any bank may sell the whole of its 
'"^othe/bank. t>usiness or the whole of the business of any of its de- 
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 writing 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 
£to\^ ™emen°*of ®^^^ °^ ^"^^ banks Called for that purpose. The selling 
sale containing and purchasing banks must for such purposes enter into 

specified provisions. *- o «- r- 

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 in this par- 
ticular shall be subject to the approval of the superin- 
tendent of banks; and shall not be valid until such ap- 
proval 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- 

[46] 



GENERAL PROVISIONS §31 

mand after such transfer, irrespective of the terms under 
which it was deposited with the selling bank. The rights 
of creditors 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 
any stockholder thereof, be in any manner released or 
impaired, and all the rights, obligations and relations of 
all the parties, creditors, depositors, trustees and bene- 
ficiaries of trusts shall remain unimpaired by the sale, but 
such bank to which the other shall sell all its business or purchasing bank 
all the business of any of its departments, shall succeeed Ind^obUgatioS of 
to all such relations, obligations, trusts and liabilities and . *® ^°^ 
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 
sold had itself incurred the obligation or liability or as- 
sumed the relation of trust, and the stockholders of the stockholders remain 
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 
sale and purchase notice thereof shall be published for at Nofice of sale to be 
least four successive weeks in a newspaper in each of the ^" 
counties of the state in w^hich either of such banks shall 
have its principal place of business; provided, however, 
that no action can be brought against such selling bank Limitation of actions. 
or any of its stockholders on account of any deposits so 
transferred after the expiration of one year from the last 
day of publication herein required. 

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. 

[471 



§3!a BLYTH, WITTER & CO. 

c^ontudatefu^on Section 31a. Any bank incorporated under the laws 
and ra^tmc^atiKf ^^ *^^^ ^*^*^ "^^^ consoHdate with one or more banks 
stockholders M incorporated under the laws of this state, its capital 
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 
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 article! : Pirst — ^The name of the new corporation; 

consolidation. 

Second — ^The purpose for which it is formed; 

[481 



GENERAL PROVISIONS §31) 

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. 

Said articles of incorporation and consolidation must Articles to be exe- 

,.,, 'Ill • 1 1 cuted as specified. 

be signed and countersigned by the president and secre- 
tary of each constituent corporation and sealed with 
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 acknowledged by stockholders 
representing at least two-thirds of the capital stock of 
their respective corporations. When completed as afore- 
said said articles must be filed in the office of the county 
clerk of the county in which is located the principal place 
of business of the new corporation, and a copy of the 
articles of incorporation and consolidation certified by 
such county clerk must be filed in the oflfice of the secre- 
tary of state, who must issue, over the great seal of the 
state, a certificate that a copy of the articles of in- 
corporation and consolidation containing the required 
statement of facts has been filed in his office. The secre- 
tary of state must file in his office a duplicate of the 
certificate hereinbefore provided for and copies thereof, 

[491 



Articles with whom 
to be filed. 



§31a BLYTH. WITTER & CO. 

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 consolidation, 
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 any county in which were 
filed the original articles of incorporation of either of the 
Effect of Supt. issu- constituent corporations. When the superintendent of 
' banks 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 
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 

1501 



GENERAL PROVISIONS §3!a 

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 
same had not been made. The right of said new cor- „. .^ ^ 

^ Kignt of new cor- 

poration to increase or decrease its capital stock, to poration to eflfect 

. . organic changes. 

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. 

The superintendent of banks shall transmit to the sec- Supt. to transmit to 
retary of state a duplicate of the certificate of authoriza- uSe of certificate. 
tion hereinbefore referred to and the secretary of state 
shall file the same in his office. The superintendent of 
banks shall also file a duplicate of such certificate in his 
own office. 

[Note by Publishers, re Section 31a, amended in 1917, dealing with the 
creation of corporations through merging: 

Under the provisions of the Act as they previously stood, there was an interim 
between the time of completion of the organization and the time at which the 
merged corporation might receive its certificate from the Superintendent of 
Banks. Under the general law governing corporations, a corporation is formed, 
completely equipped to perform its service, in the oflce of the Secretary of State; 
but a merged banking corporation, being composed of two or more constituent 
corporations, could not effectively be completed at that point, because upon 
merger the two constituent corporations disappear, and the new corporation 
can not receive a certificate from the Superintendent of Banks until the new 
corporation is completed. This amendment makes it plain that the organiza- 
tion of the new corporation is not complete until the certified articles of 
incorporation are filed with the Superintendent of Banks and his certificate issued, 
so that there shall be no interim between the forming of the new and the expir- 
ing of an old corporation.] 

[511 



§ 32-36 BLYTH. WITTER & CO. 

^'SiJt fiid" wfth Section 32. Any bank receiving trust funds in accord- 
other assets, ance with the provisions of this act relating to trust com- 
panies must not mingle such trust funds with the other 
assets of the corporation, except as otherwise provided 
in section twenty-five of this act, and such funds shall not 
be carried or counted as any part of the total reserves 
Violation of pro- provided for in this act. The officers of any bank who 

▼ision, felony. | , , 

knowmgly violate or consent to the violation of this pro- 
vision shall be guilty of a felony. 

(Section 33. Repealed 1913.) 

^*i^v^ or f "nd u"*^ Section 34. No bank shall purchase or invest its capi- 

inieS'to^^revent *^^ ^^ surplus or money of its depositors, or any part of 

loss on debt, either, in shares of its own capital stock; nor loan its 

capital or surplus or money of its depositors, or any part 

of either, on shares of its own capital stock, unless such 

purchase or loan shall be necessary to prevent loss to 

such bank on debts previously contracted in good faith. 

Penalty. Every person or corporation violating any provision of 

this section shall forfeit to the people of the state twice 

the nominal amount of such stock. 

puSSe'of ""au'* Section 35. No bank shall purchase any contract aris- 
note or bond by ui- Jng from the sale of real estate or any note or bond in 

terested officers, etc. ^ "^ 

which contract, or note, or bond any director, officer, 
employee, or controlling stockholder of such bank is 
personally or financially interested, directly or indirectly, 
for his own account, for himself, or as the partner or 
agent of others, without the previous consent in writing 
of the superintendent of banks. 

commercial bank Section 36. No Commercial bank receiving deposits 

receiving deposits i ii i .1 11 

not to purchase bond of moncy shall puTchase or agree to purchase any bond 

issue in excess of . . i. r> i> • 

5% of assets, except issuc ui cxccss of tive per centum of its assets, except 

' bonds of the United States, of the State of 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. 

[52] 



GENERAL PROVISIONS §^7 

Section 37. No bank shall, except as otherwise pro- SfiYn?o°An^^^^ 
vided in this act, purchase or invest its capital or surplus ^" capital stock of 

■^ * * any corporation* 

or money of its depositors, or any part of either, in the 
capital stock of any corporation unless the purchase or 
acquisition of such capital stock shall be necessary to pre- 
vent loss to the bank on an obligation owned or on a 
debt previously contracted in good faith. Any capital Capital stock so 
stock so purchased or acquired shall be sold by such 
bank within six months thereafter if it can be sold for 
the amount of the claim of such bank against it; and all 
capital stock thus purchased or acquired must be sold for 
the best price obtainable by said bank within three years 
after such purchase or acquisition unless the superintend- 
ent of banks shall extend the time of its sale for a period 
not to exceed two years. 

Any bank, with the previous written consent of the Bank after consent of 
superintendent of banks, may purchase or otherwise ac- capitai™tock'?"^e 
quire and hold the whole or any part of the capital stock co^mpany? "" 
of not more than one trust company organized and exist- 
ing under the laws of this state, and doing business in the 
same city in which the principal place of business of such 
bank is located; provided, however, that not more than Limitation on such 
an amount equal to twenty-five per centum of the capital ^"" ***' 
and surplus of any such bank may be at any one time 
invested in the capital stock of such trust company or 
such other corporation; and provided, further, that no 
such trust company shall engage in or combine the busi- 
ness of a commercial bank or a savings bank or a title 
insurance company. 

Any bank, with the previous written consent of the Bank, with consent 
superintendent of banks, may purchase or otherwise chase, etc, stock of 

tiii^i II .. p .A -L 1 one safe-deposit cor- 

acquire and hold, the whole or any part or the capital poration in same city, 
stock of not more than one corporation authorized and 
empowered to conduct a safe deposit business, which 
such corporation is organized and existing under the laws 
of this state and doing business in the same city in which 

[531 



§ 37-38 BLYTH. WITTER & CO. 

the principal place of business of such bank is located; 
Limitatwnjn^s^h provided, however, that not more than an amount equal 
to ten per centum of the capital and surplus of any such 
bank may be at any one time invested in the capital stock 
of such safe deposit corporation. 

[Note by Publishers, re Section 37, amended 1919: 

This amendment affects Section 37 in two vital relationships: First, the 
amendment permits any bank, with the previous written consent of the Superin- 
tendent of Banks, to purchase or otherwise acquire and hold the whole or any part 
of the capital stock of not more than one trust company organized and existing 
under the laws of this State, if that purchase shall not exceed 25 per cent, of 
the capital and surplus of any such bank, and also permits any bank, with the previ- 
ous consent of the Superintendent of Banks, to purchase the whole or any part of 
the capital stock of not more than one corporation authorized and empowered to 
conduct a safe deposit business. The first change is intended to permit a strength- 
ening of the trust companies in this State and also to indulge smaller banks in a 
desire to participate in the profits of those companies; and the second is an inci- 
dent necessary and familiar in the conduct of the banking business, but which 
may not be within the reach of the smaller capitalized institutions. Care is 
taken, however, to prevent any commercial or savings bank from engaging in a 
title insurance company business. The amendment is a desirable one because 
of its concentration of banking energy and for the permission granted to smaller 
institutions to participate in the prosperity which follows the operations of larger 
corporations. ] 

Director, agent, etc., Section 38. A director, officer, agent or employee of 

of bank making or 

concurring in false any bank who, 
entry or report, or in 

omitting to make ly - i • i • if r 

full and true entries, rirst — Knowingly receives or possesses himselr or any 

etc., guilty of felony. - . i • i • r • i 

of Its property otherwise than in payment for a just de- 
mand, and with intent to defraud, omits to make or to 
cause or direct to be made a full and true entry thereof 
in its books and accounts; or. 

Second — Concurs in omitting to make any material 
entry thereof; or. 

Third — Knowingly concurs in making or publishing 
any written report, exhibit or statement of its affairs or 
pecuniary condition containing any material statement 
which is false; or, 

Fourth — Having the custody or control of its books, 
wilfully refuses or neglects to make any proper entry in 
the books of such corporation as required by law, or to 
exhibit or allow the same to be inspected and extracts 
to be taken therefrom by the superintendent of banks, 
his chief deputy or any of his examiners, shall be guilty 
of a felony. 

[54] 



GENERAL PROVISIONS §39-41 

Section 39. Any officer, director, agent, teller, clerk Bank director or em- 
ployee overdrawing 
or employee or any bank who either, accounts or receiving 

commissions on loan 

First — Knowingly overdraws his account with such 
bank, and thereby obtains the money, notes or funds of 
any such bank; or 

Second — Asks or receives or consents or agrees to 
receive any commission, emolument, gratuity or reward, 
or any money, property or thing of value, for his own 
personal benefit, or of personal advantage, for procur- 
ing or endeavoring to procure for any person, firm or 
corporation any loan from, or the purchase or discount 
of any paper, note, draft, check or bill of exchange, by 
such bank, or for permitting any person, firm or cor- 
poration to overdraw^ any account with such bank, is 
guilty of a felony. 

Section 40. No bank mentioned in this act shall make Contract of bank to 

. . Ill waive stockholder's 

any contract with any or its depositors whereby the liability, void. 
stockholders' liability provided for by the constitution of 
this state is in any manner waived, and if any such con- 
tract shall be so made, such contract shall be void. 

Section 41. No officer, director, agent, or other em- Noj)ank officer, di- 

"^ ^ ^ rector, employee, 

ployee of any bank shall directly or indirectly, for his etc., to purchase or 

*^ *' •' *' "^ ^ be interested in pur- 

own personal benefit, purchase, or be interested in the chase of bank's ob- 

riii»ii-' f ligations or assets 

purchase or any or such bank s obligations or assets ror under face value. 

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 

banks. Every person violating any provision of this Penalty. 

section, shall for each offense forfeit to the people of the 

state, twice the face value of any such obligations or 

assets so purchased. 

[Note by Publishers, re Section 41, amended 1917: 

Under the law as it stood previous to 1917, even though a bank asset might 
not be worth, and might well be known not to be worth, more than 50 per cent. 

[55] 



§ 42-44 BLYTH, WITTER & CO. 

of, or less than, its value appearing: on its face, nevertheless it could not be 
transferred to or purchased by anybody interested as a stockholder, for less than 
its full worth. The amendment has made such a transaction possible, upon obtain- 
ing consent of the directors as indicated.] 

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 
purchase of any of the assets of said bank for a less sum 
Penalty, ^.j^^^j^ ^.j^^ 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. 

^unds'in othelr^bank Section 43. No bank shall deposit any of its funds 
except Federal Re- in any Other bank, except a federal reserve bank, unless 

serve bank, unless "^ » *- , * « 

as specified, such Other bank has been nominated as a depositary for 
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. 

[Note by Publishers, re Section 43, amended 1919: 

The only change in the section as it stood previous to the amendment is the 
insertion of the phrase, "excepting a federal reserve bank." This amendment is 
a minor one, designed simply to except a Federal Reserve bank from the neces- 
sity of being either nominated or designated by the Superintendent of Banks as 
a reserve depositary for funds of any bank in the State system. It is assumed 
that the Federal Reserve bank of the district in which any of the banks of 
California may be located does not require such a designation as is demanded 
for other banking institutions.] 

Limitation and re- Section 44. No bank shall hereafter make a loan 

strictions upon loan 

secured^by^stock^of secured by the stock of another bank, if by making such 
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. 

[56] 



GENERAL PROVISIONS §45-47 

Section 45. Interest unpaid, although due or accrued, YeemlVprofitfp?^- 
on debts owing to any bank, shall not be included in ^^°"« *° dividend. 
calculation of its profits previous to a dividend; nor shall 
any bank, except with the previous written consent of the ^^ valuation of as- 

•^ *^ ^ ^ ^ sets above cost 

superintendent of banks, enter or at any time carry on its ^^*g °".* consent of 
books any of its assets at a valuation exceeding its actual 
cost to such bank. 

[Publisher's Note: This section as it now stands was amended in 1917, by 
the addition, after the first clause, ending with the word "dividend" of the clause 
forbidding book valuation of assets exceeding actual cost, without consent of the 
Superintendent of Banks. Under the law as it stood prior to 1917, the writing 
up of any of the assets of a bank was legally impossible. Sometimes it occurs 
that there is a very material increase in the value of certain assets, and some- 
times it is desirable, and it should be permitted, that assets be written up; but 
it is not desirable, of course, that that could be done under any and all circum- 
stances. This amendment was designed to permit such writing up whenever it is 
advisable that it should be done, and of course, will prohibit the process when it 
should not be allowed.] 

Section 46. No commercial bank shall invest or loan ?^o bank to loan or 

invest more than 5% 

more than five per centum of its assets in any one bond of assets in any one 

• bond issue, except 

issue, except bonds of the United States, of the State of governmental bonds, 

'*^ ... ... ^^ specified. 

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. 

Section 4 7. No commercial bank shall, except for the ^^ commercial bank, 

*^ except to facilitate 

purpose of facilitating the sale of property owned by the l^^^l ^q°^^^qIq 
bank, make any loan on the security of real estate, unless o^ real estate, un- 

less first lien and 

it is a first lien and is either for specified period 

and per centum of 

( 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. 

No commercial bank shall loan in the aggregate more 
than thirty-five per centum of its assets on real estate 
loans of the character specified in subdivision two of this gages^and dSds of 
section. These provisions, however, shall not prevent *'^"^*' 
any bank from taking another and immediately subse- 

[57] 



§ 47-48a BLYTH. WITTER & CO. 

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 payment 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 payment 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, •ii ^ • t 

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 
be paid by such depositary bank; and if any such bank 
Effect of refusal, 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- 
draw its deposits therefrom, and all such banks shall 
comply with such order. 

Natl. Banking Ass'n Section 48a. Any national banking association, whose 

"With principal place "^ ** 

of business in State, principal place of business is in this state, is hereby 

authorized to act m '^ *^ *^ 

fiduciary capacities, authonzed to act in fiduciary capacities in all respects as 

as provided by Fed. ^ t r^ i o o 

Reserve Act. provided by the acts of congress, approved December 2 3, 
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- 
authSizefi^Sec"', '^^ association equally with trust companies. .Every 
may act in^flduganr guch national banking association which shall be author- 

[58] 



GENERAL PROVISIONS § 48^ 



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. The superintendent of banks shall inspect Supt. shall examine 

_. .- f. . books, assets, etc., 

and examme the books, records and assets or the trust of trust dept. of 

- .. *iii« •• 1*1^ ^&<^^ <3uch Ass'n. 

department or 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 charges and cost for 
services shall be determined by the superintendent of stale^Banking^Dept. 
banks, and shall be no higher than the charge for a 
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. 

[Note by Publishers, re Section 48a, a new section: 

This is an enabling section putting into legal operation in California the pro- 
visions of the Phelan Act recently enacted by the Congress of the "United States, 
which gives to National banking associations the right to conduct a trust depart- 
ment in connection with their commercial banking business. The federal law 
places upon the State in which the National association desires to function in 
that regard the burden of making operative the provisions of the national statute. 
Hence the provisions of the above Section 48a, that the Superintendent of Banks 
shall have authority to perform for National associations which are authorized to 

[59] 



§ 49-51 BLYTH, WITTER & CO. 



conduct a trust department in this State such service as is required by the Bank 
Act in the case of a State trust company; the expense of this service to be 
determined by the Superintendent of Banks and to be paid by the National asso- 
ciation receiving such service. 

Outline of necessary procedure for any National Bank formed in this State 

contemplating the establishment of a trust department, under the terms of this 

Section is given in a letter written by the State Banking Department and con- 
tained in the Appendix of this volume. 

^iigsV^Sy com: Section 49. It shall not be lawful for any commer- 
merciai bank.^c., ^^^^ bank, individual, trust company, association, firm, 
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. 

^""t^posMast certiS Section 50. Every bank shall post in a conspicuous 
cate from Supt. place in its banking room or branch office the last cer- 
tificate obtained from the superintendent of banks under 
the provisions of either section nine or one hundred 
twenty-seven of this act. 

Court may, under Section 5 1 . Any court having appointed and having 

conditions specined, 

authorize executor, jurisdiction of any executor, administrator, guardian, as- 

administrator, guard- . . ■. . i i* 

ian, receiver, signee, receiver, depositary or trustee, upon the applica- 

trustee, etc., to de- . r i i • • t 

posit money in State tion OF such executor, administrator, guardian, assignee, 
receiver, depositary or trustee, or upon the application 
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 

[601 



GENERAL PROVISIONS §51-53 

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 onf^o^n^JJ,u*t^JJJeJ* 
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 

•^ be 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- 
fied, an amount of money subject to the payment of such 
check, equal to the amount specified in such check. 

Any officer or employee of any bank who shall wil- Bank officer or em- 

r 11 . , 1 . . r 1 . • 1 11 ployee violating Sec. 

fully violate the provisions or this section, or snail resort guilty of felony. 

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. 

Section 53. The capital stock of any bank having a stock $ioo and paid 
capital stock shall have a par value of one hundred dol- cerScSe." 

[61] 



§ 53-54 BLYTH. WITTER & CO. 



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 
bank shall have preferred stock; provided, however, that 
comjSScTpr°iorTo" '"^ ^^^^ ^^^^^ Capital stock, on January 1, 1915, failed 
Jan. 1, 1915. to comply with any of the requirements of this section, 
shall be compelled to change its capital stock in compli- 
ance herewith. 

^"^bylanVaS'no? ^ection 54. All real estate purchased by any bank at 
S! m7st be*sofd or ^^^^^ Under pledges, mortgages or deeds of trust for its 
exchanged, as sp^e^c^ 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 theretb 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 . . i . i • . i 

said time purchas- OF such real estate not sold or exchanged withm said 

able by any person; . . i i i • i 

procedure outlined, time may be purchased by any person wanting the same 
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 

[62] 



GENERAL PROVISIONS § 54 



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 

.... . I . I , commissioners to 

of such petition that the real estate therein sought to be appraise and sell 
purchased is held by such bank in violation of the pro- bank 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 Procedure 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 
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 
said commissioners, and in the event that no bid is re- if no bid equals 

1 111 1 •! •!! appraised value, 

ceived at such sale at least equal to said appraised value proceedings not 
of said real estate no intending purchaser can institute one year. 
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- 

[631 



§ 54-55 BLYTH, WITTER & CO. 

cumbrancer in the purchaser thereof the court shall have 
power m such proceedings to direct said commissioners 
to execute such deeds, conveyances or releases upon the 
payment to them of the purchase price therefor. The 
Foes and costs; how fees of such Commissioners and cost of sale shall be fixed 

limited and borne. 

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, 
Power of Supt. to of real estate on foreclosure of mortgages. Nothing in 
realty not affected this Section Contained shall be deemed to affect the 
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. 

[Note by Publishers, re Section 54, amended 1917: 

"Under this section, as it formerly stood, banks were not permitted to exchange 
real estate. They were authorized, of course, to sell any real estate of which they 
might have become possessed, but were not allowed, even where it might appear 
decidedly advantageous to do so, to transfer any real estate and receive in lieu 
thereof other real estate. This amendment makes such exchange of real estate 
possible.] 

Receiving deposits, Section 55. Receiving deposits, issuing certificates of 

etc., not creation of _ ii-nr i ii_l*1**.l_ 

debt within mean- deposit, checks and bills of exchange, and the like, m the 

ing of Civil Code. . ,, .. ,. rii m. t. 

transaction or the ordinary business or a bank, must not 
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 
Restriction on re- Civil Code, cxcept that no bank shall reduce its capital 
stock, stock to an amount less than is required by this act to be 

[641 



GENERAL PROVISIONS § 55-56 

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- ']Reai estate," 
sonal property,*' when used in this act shall have the "personal property," 
meaning defined in, and shall be construed in accordance 
with the provisions of Title I of Part I of division second 
of the Civil Code. 

Section 5 6. Any bank is hereby authorized and em- Any bank may be- 

, . 1 r /• 1 1 11 ''°™® member of 

powered to become a member or a rederal reserve bank. Federal Reserve 

bank. 

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 Member bank may 
in the capital stock of such federal reserve bank, in ac- tai, surplus, or re- 
cordance with the terms and provisions of such federal stock of Federal 

• 111 , . 1 11 • Reserve bank, as 

reserve act; provided, that such mvestment shall m 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 con£crwith"state 
reserve bank shall have and exercise all powers, not in mrmb^r ba^!^ "'*'° 
conflict with the laws of this state, which are conferred 
upon any member bank in any such federal reserve bank, 
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. 

Any bank which shall have become a member of a jecrto^fedwai^rx- 
federal reserve bank shall be subject to the examina- a^^i^ations. 

165] 



§ 56-56a BLYTH. WITTER & CO. 



such^SkShTatTon in ^^^^^ required under the terms of the federal reserve act, 
Actfma^/fur^nlSfto ^"^ *^® Superintendent of banks may, in his discretion, 
federal bank infor- accept such examination in lieu of the examination re- 
quired under the provisions of this act, and he, his agents 
and employees, may furnish to the federal reserve board, 
the 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. 

[Note by Publishers, re Section 56, amended 1919: 

Section 56 as amended makes more explicit the statement of conditions under 
which banks in the State system may enter the Federal system as members of a 
Federal Reserve bank. Such State banks remain, as now, fully within the gov- 
ernment of state law, but they are permitted to contribute the capital required 
for membership in the Federal Reserve Bank, from any of their three depart- 
ments, commercial, savings or trust. The Superintendent of Ranks is by the 
amendment permitted to supply to the Federal Reserve Board of the Federal Re- 
serve Bank, or members appointed by either, copies of all examinations made by 
the Superintendent of Banks, and he may disclose to the authorities named any 
information with reference to the condition of affairs of State-bank members. 
He may also accept the examination required by the terms of the Federal Re- 
serve bank in lieu of the examination required under the provisions of the Bank 
Act. 

Section 56, it will be noted, is one of a series of sections amended at the 
1919 Session of the Legislature, which have in view the bringing about of a 
closer relationship between our State banks and the banks of the Federal system. 
The other sections of the series are Sections 20 and 68. (See also in this connec- 
tion Section 67, providing that a State-member bank may exercise the principal 
privilege accorded to a member of a Federal Reserve bank — namely, the privilege 
of rediscount.) As regards the provisions of these sections, reference is made 
thereto and to the notes accompanying the same. 

Briefly, the series of amendments referred to provide for the entrance of 
state banks into the Federal Reserve system as member banks, though still 
within the jurisdiction and control of the State banking Department, for the 
exercise of all rights and privileges enjoyed by member banks in the Federal 
Reserve system, and for the general acceptance of the Federal Reserve system 
and its practical application as expressed in the form of securities in which a 
member bank may invest. 

It has been the recent policy of the California State Banking Department to 
establish cordial working relations between that Department and the Federal 
Reserve Bank, on the one hand, and the National Bank authorities on the other 
hand, to the end that there may be cordial co-operation, and that the information 
of each shall be common to all. In carrying out this policy, the Department has 
met cordial response from both sources, and an additional element of safety has 
thus been created for the situation.] 

Any bank may con- Section 56a. Nothing in this act shall prevent or pro- 
vert into Natl. ■, i r • • '111* 

Banking Ass'n, hibit any bank from converting into a national banking 

under federal or "^ ,. f«ri J 

state law. association under the provisions or section five thousand 
one hundred fifty-four of the United States revised stat- 
utes, or section eight of the federal reserve act, or any 
other federal or state law; provided, however, that no 



166] 



GENERAL PROVISIONS §_56| 

savings bank and no departmental bank having a savings 
department, organized and existing under the laws of the 
State of California, shall convert into a national banking 
association except upon the following conditions: 

1. Coincident with its application to the comptroller vSn^by'statt"* 
of the currency, any such savings or departmental bank Jank lavST'^sav- 
shall file with the superintendent of banks formal notice ^"^^rs department, 
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 
bank act of California, and is now under the jurisdiction 
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- upon conversioir 
erintendent of banks a copy of its authorization as a Suipt. certified copy 

.|ii. .. .rill 11 of its authorization 

national banking association, certified by the comptroller and surrender state 
of the currency; and shall surrender to the superintend- 
ent of banks its license as a state banking corporation. 

[67] 



§ 56a-57 



BLYTH. WITTER & CO. 



Immediately foi- 4^ Immediately following the conversion of a state 

lowm? conversion, "^ *=* 

^"notice*if fict'of ^^^^* *^® superintendent of banks shall cause the pub- 
oonversion, as speci- lication of the noticc provided in subdivision (a) of 
paragraph two of this section; same to be at least once 
a week for four successive weeks in a newspaper of gen- 
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. 

[Note by Publisher to Section 5Sa, a new section enacted in 1919: This sec- 
tion provides for one of the important chansres in the Bank Act. It is introduced 
to insure the rigrht of every bank in the State system to convert into a National 
association if it so desires but such conversion in the case of a savings bank or of 
a departmental bank having a savings department can be accomplished only 
under such conditions as will advise every depositor in the savings bank or in 
the bank having a savings department of the character of the change which takes 
place by conversion. This section provides that, coincident with the application 
of a State bank to convert, notice of such intention shall be given to the Super- 
intendent of Banks. Before such conversion is effected such savings bank or 
departmental bank having a savings department shall place in the hands of the 
Superintendent of Banks a constructive notice, for newspaper publication, directed 
to its savings depositors, of the fact of conversion, and, (an actual notice,) ad- 
dressed to each and every stockholder at his or her last known address, enclosed in 
stamped and addressed envelope ready for mailing, a written notice which advises 
said depositor that the bank has ceased to be under the jurisdiction and direction 
•f the California State Banking Department and is now under the jurisdiction and 
control of the Federal Reserve Act and the National Bank Act. Both of these 
notices are to be made effective after the conversion; one by publication and the 
other by mailing by the Superintendent of Banks. Such a provision is made pos- 
sible by an amendment to Section 5154 of the Kevised Statutes of the TJnited 
States, which in its new expression becomes Section 8 of the Federal Reserve 
Act, and provides that the conversion of a State bank into a National association 
•hall not be in contravention of the State law. Prior to this amendment to the 
Federal statute, any State bank, without any authority whatever from the State 
government, could convert, and its savings deposits would be carried by operation 
of law into a National association. Section 56a in effect gives to every savings 
depositor in the State system the right of determining whether or not he shall 
remain as a depositor under State jurisdiction or become a depositor under 
national law.] 



Lien of tax assess- 
ment or bond levied 
or issued by State 
or subdivision there- 
of, if same or in- 
stallment thereof not 
delinquent, not 
deemed prior en- 
cumbrance as re- 
gards requirement 
of first-lien real- 
estate security. 



Section 57. Whenever in this act it is required that 
loans or investments shall be secured by a first lien on real 
estate, the lien of any tax, assessment or bond levied or 
issued by thb state or by any county, city and county, 
city, town, municipality, school district, reclamation dis- 
trict, irrigation district or any other political or govern- 
mental subdivision of this state (not including bonds 
given pursuant to any law authorizing the same by any 



[68] 



GENERAL PROVISIONS § 57-5g 

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 encumbrance or lien 
on such real property unless an installment or call of 
such tax, assessment or bond shall be due and delinquent; 
and any bonds given pursuant to any law authorizing the anttofaw,\7*any' 
same by any person or corporation in lieu of payment of ffonl'LTieu^/paV- 
any tax or assessment levied against any particular real ZlsLlit^on ^e^ 
property and any Uen given to secure the payment of L"S paylen? 
assessments or subscriptions to meet the requirements of JiC^ptToM^inie- 
any law of the United States in respect to any irrigation Jfon pr^ojyctVS*' 
project of the United States in this state which may be fe^^^ed.'^ndfr uwo^ 
levied, made or received by any corporation or associa- Y^emld^riOT Tn- 
tion formed to carry out the objects and requirements of cumbrance or uen. 
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 
amount to not more than sixty per centum of the market 
value of the land securing the same. 

Section 58. Any bank possessing a capital and sur- fi*^o^oooopmore 
plus of one million dollars or more may file application capital and surpiu* 

*^ .^ «- 1- mj^y apply to Supt. 

with the superintendent of banks for permission to exer- to exercise powers 

*^ ^ ^ ^ as follows: 

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 }• To establish 

° foreign branohes, 

dependencies or insular possessions of the United States and/or 
for the furtherance of the foreign commerce of this state 
and of the United States. 

Second— To invest an amount not exceeding in the Jj J'°^7*J*,jJp^^^^^^^^ 
aggregate ten per centum of its paid-in capital stock and uw enga|ed^S*i. 
surplus in the stock of one or more banks or corporations eign*bMAlU' as'' 
chartered or incorporated under the laws of the State of ■pecifi®^- 
California, and principally engaged in international or 
foreign banking or banking in a dependency or insular 

[69] 



?58 BLYTH. WITTER & CO. 

possession of the United States either directly or through 
the agency, ownership or control of local institutions in 
foreign countries, or in such dependencies or insular pos- 
sessions. 

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 operations proposed are to 
or^SecraJpiSatiln he Carried on. The superintendent of banks shall have 
in whole or part, p^^gy ^^ approve or to reject such application in 
whole or in part if for any reason the granting of such 
application is deemed inexpedient, and shall also have 
power from time to time to increase or decrease the 
number of places where such banking operations may be 
carried on. 

^°ditSS*'of 7orS*^ Every bank operating foreign branches shall be re- 
*faraished^*su t° on ^^i^^®^ ^^ fumish information concerning the condition of 
demand, g^^h branches to the superintendent of banks upon de- 
miand, and every bank investing in the capital stock of 
banks or corporations described under subparagraph two 
of the first paragraph of this section shall be required to 
furnish information concerning the condition of such 
banks or corporations to the superintendent 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 examinations shall be 
paid by said branches, banks or corporations. 

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 
Sup^t.'nS^comJiird ^® conducted. If at any time the superintendent of banks 
Tit^'ivSigaSoni ^^^^^ ascertain that the regulations by him are not being 

[70] 



GENERAL PROVISIONS §^ 

complied with, said superintendent of banks shall be 
authorized and shall have power to institute an investiga- 
tion 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 transactions 
referred to. Should such investigation result in establish- 
ing 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 
with such order the superintendent of banks may institute 
proceedings for forfeiture of license. 

Every such bank shall conduct the accounts of each Such bank to con- 
duct accounts of 
foreign branch independently of the accounts of other each foreign branch 

e ' 1 1 ii«iii« if'i rf independently. 

foreign branches established by it and or 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. 

[Note by Publishers to Section 58, a new section enacted in 1919: 

Of the two principal problems that pressed for consideration in the redrafting 
of the Bank Act, one was the problem of the Federal Reserve bank as it applied 
to the State banks of California. The other problem was the financial relations 
of the California banks with the world at large, and especially as they apply to 
American commercial expansion in the Orient and South America. 

Section 58, a new section, is, we believe, the first comprehensive handling of 
this situation. Briefly, it provides that any California bank with a capital and 
surplus of $1,000,000 or more may establish foreign branches or branches in the 
dependencies or insular possessions of the United States for the furtherance of 
the foreign commerce of this State and of the United States. Further , it may 
invest an amount not exceeding in the aggregate 10 per cent, of its paid-in 
capital and surplus in the stock of one of more banks or corporations chartered 
or incorporated under the laws of the State of California, principally engaged in 
the international or foreign banking business in a dependency or insular posses- 
sion of the United States. Every bank operating foreign branches within the 
limitations of this amendment is required to furnish information concerning the 
condition of such branches to the Superintendent of Banks upon demand, and shall 
be subject to the examination and jurisdiction of the State Banking Department. 

The general purpose and effect of this new section are apparent: It permits 
commercially organized corporations to have branches in any part of the world. 
It will permit such corporations to own stock in foreign banks and it will grant 
to them a privilege in foreign and domestic exchange that would be utterly be- 
yond their reach without the introduction of this enabling statute.] 



[71] 



§ 60 BLYTH. WITTER & CO. 



ARTICLE II. 
SAVINGS BANKS. 

^"^^Uringshl^a. Scction 60. Evcry savings bank hereafter organized 
must have paid up in cash a capital stock not less than 

^°^ M*ooi?25,ooo! (^) 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; 

po^iaCJjsX" (b) Fifty thousand dollars if its principal place of 
business is located in any city the population of which is 
more than five thousand persons, but does not exceed 
twenty-five thousand persons; 

p."«u«'r5i'(S!m M One hundred thousand dollars if its principal 
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; 

^j^iZ^Zm. (d) Two hundred thousand dollars if its principal 
place of business is located in any city the population of 
which is more than one hundred thousand persons but 
does not exceed two hundred thousand persons; 

If more than 200 000 (g) Three hundred thousand dollars if its principal 

population — $300,000. ^ ^ ^ ^ ^ ^ r f 

place of business is located in any city the population of 
which is more than two hundred thousand persons. 

^?n*JIbankVithJut Excepting that any savings bank organized without 
capital »tock. ^^pj^^l gt^j^,!^ j^yg^ j^g^^g a reserve fund of at least one 

million dollars. 

No certificate to be Until the Capital stock or reserve fund hereinbefore 

issued until such *^ 

capital stock or re- required shall be actually paid in, the superintendent of 

■erve fund is paid in. ^ •''^ iii* 

banks shall refuse to issue the certificate required by this 
Classification not to act. The forcgoing classification shall not apply to any 
hanks, savings bank already in existence which has received 
its certificate to do a banking business from the superin- 
tendent of banks; nor to any bank the location of which 

[721 



SAVINGS BANKS §60-6! 

shall have been included by annexation or consolidation Je^al Svem-^^^ 
within the limits of a city of a class requiring a larger ^^^kts. 
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 
not in any case decrease their capital stock but may in- 
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- 
of section nineteen of this act relative to the proportion sec 19 or of Sec. 
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 population, shall 
apply to any bank organized under the provisions of this 
section. 

Section 61. Any savings bank may purchase, hold f^^i^^\^^^^ 
and convey real or personal property as follows: purchase, hold and 

1 . The lot and building in which the business of the ^^^^^ premises, fur. 

^ mture, fixtures, etc., 

bank is carried on; furniture and fixtures, vaults and safe two-thirds vote of 

directors necessary 

deposit vaults and boxes necessary or proper to carry on f" purchase or 
its banking 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 surplus; and hereafter, the authority of a 
two-thirds vote of all of the directors shall be necessary 
to authorize the purchase of such lot and building, or the 
construction of such building. 

2. Such as may have been mortgaged, pledged or Property mortgaged, 

, .. f-i r ' if-ir pledged or conveyed 

conveyed to it m trust ror its benefit in good faith, for as security for 

loans. 

[73] 



§61 BLYTH. WITTER & CO. 



^°^LEGAL ^i^EsS ^^^^y loaned in pursuance of the regular business of the 
MENTS — Continued. Corporation. 

3. Such as may have been purchased at any sales 
Property purchased under pledge, mortgage or deed of trust made for its 

at sales under pledge, i r r i i i i 

mortgage, etc. beneht tor money so loaned and such as may be con- 
veyed to it by borrowers in satisfaction and discharge of 
loans made thereon. 

erty^sIvlngsbTnk No savings bank shall purchase, own, or sell personal 
may purchase^ own property, except such as may be requisite for its imme- 
diate accommodation for the convenient transaction of 
its business, notes or bonds secured by trust deeds or 
mortgages on real estate, bonds, securities or evidences 
of indebtedness, public or private, gold or silver bullion 
and United States mint certificates of ascertained value, 
and evidences of debt issued by the United States. 
^?e*s,^e?c^ slv' ngs ^o saviDgs bank shal! purchase, own, hold or convey 
banks rkay^purchase. foonds, secuTities or evidences of indebtedness, public or 
private, except as follows: 

Kelvin notis^orob- ^^^ Bonds or interest-bearutig notes or obligations of 
ligations of V. s., the United States, or those for which the faith and credit 

etc. ^ ' 

of the United States are pledged for the pajrment of 
principal and interest, or those issued under authority 
of the United States; 

Bonds, etc., of Eng- (^a) Bonds or interest-bearing notes or obligations of 



land, France, Can- 
i, etc., when ap- 
proved by Supt. 



ada, etc., when ap. England or the United Kingdom of Great Britain and 
Ireland, or France, or the Dominion of Canada, or those 
for which the faith and credit of any one or more of said 
countries are pledged for the payment of principal and 
interest; or bonds or interest-bearing notes or obligations 
of any other foreign country or government, which bonds 
or interest-bearing notes or obligations shall have first 
been approved by the superintendent of bauiks in writing; 

[Publishers' Note 1, Section 61, amended 1919: 
The above clause "(aa)" was added in 1919.] 

Bonds of this State ([,) Bouds of this state, or those for which the faith 

or its subdivisions. ^ ' ' ^ ^ 

and credit of the State of California are pledged for the 

174] 



SAVINGS BANKS §61 



payment of principal and interest, or those of any county, bonds which are 
city and county, city or school district of this state; ments— continued. 

(c) Bonds or stocks or notes of any state in the United 

States that has not, within five years previous to making Bonds, stocks, etc., 

^ of any State in U. a. 

such investment by such bank, defaulted m the payment or any county, city 

, , . , - and county, city or 

of any part of either principal or interest, or those of any town, in any foreign 

^ ^ . . *i_ state of IT. S., of 

county, city and county, city or town, m any state of the more than 20,000 

- , t n f ^ fr ' » 1 population, with 

United States other than the State of California, issued honded indebtedness 

. i«i,, i_»i a. within specified limit, 

under authority of any law or such state, which county, which bonds, etc., 

_ , 111 i»irj "^slvq not defaulted, 

City and county, city or town, had, as shown by the red- etc. 
eral or state census next preceding 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, 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 the state in which it b located has not de- 
faulted in pa3rment of any part of either principal or 
interest due upon any legally authorized bond or stock 
or note issue within five years next preceding such invest- 
ment; 

(d) Bonds of any district organized under the laws Bonds of any dis- 
of the State of California which are required to be and laws of state ap- 

... - , 11 • • proved by commis- 

are mvestigated and approved by a commission now or sion under state law. 
hereafter 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 declared to be legal 
investments for savings banks; 

(e) Bonds of any district organized under the laws Bonds of any dis- 

. - _ t> r^ i-r • I • -iir* ^^^^^ not otherwise 

or the State of Cauifomia not otherwise provided for in provided for in sec, 

- , . _ _ of any mutual 

this section ; or those of any mutual water company or- water company, etc., 
ganized under the laws of this state and operating wholly 
within this state; provided, that all bonds specified in 
this paragraph shall first be certified by the superintend- 

[75] 



§61 BLYTH. WITTER & CO. 

BONDS WHICH ARE eiit of banks after an investigation in manner and form 

LEGAL INVEST- . .iii-i .... ..,. 

MENTs--contmued. as IS provided for by section sixty-one-a of this act; and 
provided, further, that no bonds of any mutual water 
company shall be certified by the superintendent of 

Bonds specified in ,, .«««i., i 

this par. to be first banks unless the company issumg said bonds shall have 

certified by Supt., - , . »• r • j r n 

after investigation, been m coutmuous Operation for a period of five years 
' next preceding the application for said certificate and 
shall have served not less than seventy-five per centum 
of the lands entitled to service by said mutual water 
company for a period of not less than three years next 
preceding the application for said certificate; 

Bonds of intrastate (f) (1) Bonds of any railroad corporation incorpor- 

railroad corporation ^ t rt e ^^ ff 

conforming to speci- ated Under the laws of the State of Cahf omia and oper- 

fied requirements. . i«ii. •»¥•! •■ 

atmg exclusively therem; provided, said corporation has 
had net earnings for the period herein fixed amounting 
to at least one and one-fourth times the interest on all 
its outstanding mortgage indebtedness; or, 

[Publishers' Note 2. Section 61, amended 1919: 

The phrase "the period herein fixed" is defiued in the second paragraph fol- 
lowing paragraph "(k)" of this section.] 

Bonds of R. R. (2) Bonds of any railroad corporation incorporated 

corporation under •iwt.i«» 

law of any State in Under the laws of any state m the United States, operat- 

XT. S., with mileage , i*»«ii.ii» i« ■ 

and net earnings as mg at Icast five hundred mues of standard gauge track 
exclusive of sidings; provided, said corporation has had 
net earnings for the period herein fixed amounting to at 
least one and one-half times the interest on all its out- 
standing mortgage indebtedness; or, 

Bonds of any R. R. ( 3 ) Bonds of any railroad corporation, the payment of 

corporation payment ^ *' "^ ,1 

of which guaranteed which has been guaranteed, both as to principal and 

by R. R. corporation, . % •% % • ... 

meeting specified re- interest, by a rauroad corporation meetmg the require- 

ouirements as to net 

earnings, ments of either subdivbion (1) or (2) of paragraph (f) 
of this section; provided, that such guaranteeing corpora- 
tion has had for the period herein fixed net earnings 
amounting to at least one and one-half times the interest 
on all its outstanding mortgage indebtedness and, in ad- 
dition thereto, sufficient, taken with the earnings of all 
corporations whose bonds it has guaranteed, to qualify 

[761 



SAVINGS BANKS §61 



as investments for savings banks, as in this section pro- I^IH ^ve'S?-^^^ 
vided, all such guaranteed bonds; provided, that the MENTs-contmued. 
excess of income of any corporation whose bonds have 
been so guaranteed, over the amount required by this 
section for such corporation, shall not apply to or be in- 
cluded in determining the income so required; (provided, 
further, that the guarantee of such bonds hereafter guar- 
anteed must establbh a lien upon all the operating prop- 
erties of the guaranteeing corporation, which lien must 
take precedence over any subsequent issues of mortgage 
obligations by said guaranteeing corporation). 

[Publishers' Note 3, Section 61, amended 1919: 

The last proviso, enclosed in brackets, at the end of subdivision "(8)" of 
paragraph "(f)" was added in 1919.] 

In determining the income of any corporation specified Sfntnlerermtttion 
in paragraph (f) of subdivision three of this section, there "f inco*"®- 
shall be included the income of any corporation or cor- 
porations out of which it shall have been formed through 
consolidation or merger, and of any corporation or cor- 
porations, the entire business and income producing 
property of which the corporation issuing such bonds has 
wholly acquired. 

All bonds authorized for investment by paragraph (f ) fe*,S:d1orbo?i^ 
of subdivision three of thw section must be secured by a ^?f ;j'"„Mi?[ T'* 
mortgage or deed of trust which is, at the time of msJdng 
such investment, either 

I. A closed first mortgage or deed of trust; or, closed first mortgage 

** ° ' ' or deed of trust, or 

II. A first mortgage or deed of trust containing pro- First mortgage or 

.. .-.• !• i'j'ivi •■■ ^®®^ °^ trust with 

visions restrictmg th^ issuance of further bonds until restrictions on issu- 

1 .. .1 • i. • I .. 1 11 1 ing further bonds, as 

such time as the mcome of said corporation shall have specified; or 
been at least sufficient, during the twelve months next 
preceding the issuance of any additional bonds, to meet 
the earning requirements specified in the respective sub- 
divisions of this paragraph applicable to such corpora- 
tion after including the additional bonds then proposed 
to be issued; or, 

[771 



§61 BLYTH. WITTER & CO. 

^"""JlG^'SfvEl? MI- A refunding mortgage or deed of trust providing 
MENTS-continued. f^^ the retirement of all prior lien mortgage debts of said 
corporation, and restricting the issuance of further bonds 
Refunding mtge. or "^^'^ ^"^^ *™® ^^ the income of Said corporation shall 
vidSiprSien; ^^ve been at least sufficient, during the twelve months 
debts^atd'rl^L'tfng "^e^* preceding the issuance of any additional bonds, to 
bonX'^stpecified^ "*®®' ^^ earning requirements specified in the respective 
°^ subdivisions of this paragraph applicable to such corpor- 
ation after including the additional bonds then proposed 
to be issued; or, 

visionTciS'mtS. 'V* ^ Underlying or divisional closed mortgage or 
"rtr?o?minrpan°?f ^®®^ ^^ ^^^^ ^^ property which forms a part of the oper- 
*^o^f?orp^orrfio^n then **'"S system of the corporation then owning said prop- 
owning said property, erty. In the case of bonds secured 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- 
penses, taxes, and mortgage indebtedness of or against 
the property covered by such underlying or divisional 
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 taxes 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; 
provided, however, that if the payment of the bonds 
secured by such underlying or divisional closed mortgage 
or deed of trust shall be guaranteed or assumed by 
the corporation then owning the property securing the 
same, such bonds shall be legal investments for savings 
banks, if the net income of such corporation from all 
sources shall equal the amount herein required, notwith- 
standing any insufficiency of the income derived from 
the property covered by such underljring or divisional 

[78] 



SAVINGS BANKS %6^ 

closed mortgage or deed of trust to meet the require- legal Svest-^^^ 
ments of this section. MENis-contmued. 

No savings bank shall purchase the bonds of any rail- f^asf of^raiirTad"'^" 
road corporation deriving less than twenty per centum ^o^^^* 
of its gross receipts from passenger revenues. 

The term, ''railroad corporation," when used in para- i-onM^efine?^*"^* 
graph (f) of subdivision three of this section, shall have 
the meaning defined in the ''public utilities act." 

(g) Bonds of any street railroad corporation; or of Bonds of any street 

!• 1 1 railroad corporation, 

any gas; water; pipe line; light; power; light and power; etc., or other "puwic 

T. , >f f > & > f > •& r ' utility" of this State 

gas, light and power; electricsu; telephone; telegraph; or meeting designated 

_ requirements: — 

telephone and telegraph corporation or or any other 
"public utility" incorporated under the laws of the State 
of California; and 

(1) Operating exclusively in the State of California, operating exclusively 

"< ^ '^ o -f 'in state, with net 

provided said corporation has had, for the period herein earnings, as specmed; 
fixed, net earnings amounting to one and one-half times 
the interest on all its outstanding mortgage indebtedness; 
or, 

(2) Operating its property in part within the State of P^.f/L^uTwith 
California, provided said corporation has had, for each specified earnings; 
of its two fiscal years next preceding such investment, 

net earnings amounting to one and one-half times the 
interest on all its outstanding mortgage indebtedness; or, 

(3) The payment of which is guaranteed, both as to The payment. of 

, ii.-i" • which is guaranteed 

principal and mterest, by a public utility corporation by puhUc utility 

1 . r>i !¥••• /ix meeting specified re- 

meetmg the requirements of either subdivision (1) or quirements and 

.. . -Ill 1 establishing lien as 

(2) of paragraph (g) of this section, provided that such indicated. 
guaranteeing corporation has had for the period required 
in the respective subdivisions of this paragraph relating 
thereto, net earnings amounting to at least one and one- 
half times the interest on all of said g^uaranteeing cor- 
poration's outstanding mortgage indebtedness, and, in 
addition thereto, sufficient, taken with the earnings of 

[79] 



§_6j BLYTH, WITTER & CO. 

^°^LEG^ n^EsS **^ corporations whose bonds it has guaranteed, to qua!- 
MENTS— Continued, jfy j^j investments for savings banks, as in this section 
provided, all such guaranteed bonds; provided, that the 
excess of income of any corporation whose bonds have 
been so guaranteed, over the amount required by this 
section for such corporation, shall not apply to or be in- 
cluded in determining the income so required; (provided, 
further, that the guarantee of such bonds hereafter guar- 
anteed must establish a lien upon all the operating prop- 
erties of the guaranteeing corporation which lien must 
take precedence over any subsequent issues of mortgage 
obligations by said guaranteeing corporation). 

[Publishers' Note 4, Section 61, amended 1919: 

The last proviso, enclosed in brackets, at the end of the above subdivision 
"(3)", was added in 1919.] 

corporltSn-^w^haUn^ ^ determining the income of any corporation specified 
eluded, {n paragraph (g) of subdivision three of this section, 
there shall be included the income of any corporation or 
corporations out of which it shall have been formed 
through consolidation or merger, and of any corporation 
the entire business and income producing property of 
which the corporation issuing such bonds has wholly 
acquired. 

All bonds author- All bonds authorized for investment by paragraph (g) 

ized by par.(g) must ^ ^ ^ j r a r \of 

be secured by mtge. Qf subdivision three of this section must be secured by a 

or deed of trust ^ ^ ^ "[ 

which is, mortgage or deed of trust which is at the time of making 

either — . , , 

such investment; either 
"''"deefolt'S; Z ^ A closed fost mortgage or deed of trust; or, 

First mtge. or deed n, A. first mortgage or deed of trust containing pro- 
of trust with restric- ,, ..T, f f m t i mi 

tions on issuing fur- visions restrictmg the issuance of further bonds until such 

iher bonds, as speci- 
fied; or 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 earn- 
ing requirements specified in the respective subdivisions 
of this paragraph applicable to such corporation after in- 
cluding the additional bonds then proposed to be issued; 
or, 

[80] 



SAVINGS BANKS §61 

III. A refunding mortgage or deed of trust providing ^onds whwh are 
for the retirement of all prior lien mortgage debts of said ments— continued. 
corporation and restricting the issuance of further bonds 

until such time as the income of said corporation shall Rgf^n^ij, ^^ ^ 
have been at least sufficient, during the twelve months feed of trust provid- 

' ^ ing for retirement of 

next preceding the issuance of any additional bonds, to prior-iien, mtge. 

, debts and restricting: 

meet the earning requirements of such corporation after ^^^^^^"^l^^l eel?" 
including the additional bonds then proposed to be 
issued; or, 

IV. An underlying or divisional closed mortgage or underlying or di- 
deed of trust of property which forms a part of the oper- or deed of trust of 
ating system of the corporation then owning said prop- part of the operating 
erty. In the case of bonds secured by an underlying or di- then owning said 
visional closed mortgage or deed of trust, the net income Se^re^'uSme^nts, 
required by this section shall be based exclusively upon *^ ^^*" 

the income, maintenance charges, operating expenses, 
taxes and mortgage indebtedness of or against the prop- 
erty covered by such underlying or divbional closed 
mortgage or deed of trust or, if such income, maintenance 
charges or operating expenses can not be definitely ascer- 
tained, on the proper proportionate share of such prop- 
erty in the general income, maintenance charges, operat- 
ing expenses and taxes of the corporation then owning 
such property and on the mortgage indebtedness of or 
against the property covered by such underlying or divi- 
sional closed mortgage or deed of trust; provided, how- 
ever, that if the payment of the bonds secured by such 
underlying or divisional closed mortgage or deed of trust 
shall be guarainteed or assumed by the corporation then 
owning the property securing the same, such bonds shall 
be legal investments for savings banks, if the net income 
of such corporation from all sources shall equal the 
amount herein required, notwithstanding any insufficiency 
of the income derived from the property covered by 
such underlying or divisional closed mortgage or deed 
of trust to meet the requirements of this section. 

181] 



§61 BLYTH, WITTER & CO. 

^°^?Jjy?^T^X^J^J^ The terms, "street railroad corporation," "pipe line 
MENTS— Continued, corporation," "gas corporation," "electrical corpora- 
tion," "telephone corporation," "telegraph corporation," 
"Street railroad "water Corporation," and "public utility," when used 
^'"'S'rmrd^efiied! ™ paragraph (g) of subdivision three of this section, shall 
have the meaning defined in the "public utilities act," 

curS**? ^flr^srmort- ^^^ Notes or bonds secured by first mortgage or deed 
gage or deed of trust ©f trust or othcr first lien upon real estate, improved or 

or other 1st lien on "^ 

real estate, etc., with unimproved ; provided, that the entire note or bond issue 

specmed limitations. 

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. 

et?,*con"st8^of*ou !» determining the market value of any real estate 

'^'^ t*mi)^er"iandrthe "^der the provisious of paragraph (h), subdivision three 

InciudeVhTfixfng ^^ ^^ sectiou, where such real estate, improved or un- 

market value, improved, consists of oil or other mineral or timber land, 

the value represented by such oil or other mineral or 

timber shall not be included in fixing such market value. 

Redwood timber may Nothing herein contained shall prevent savings banks 

be included in fixing j j £ i. i. 

market value, from making loans secured by mortgage or deed or trust 
upon lands wherein redwood timber is included in fixing 
the market value thereof. 

Collateral trust bonds ({) Collateral trust bouds or notes when secured by 

or notes secured by — ^ ' 

either: 

Deposit of bonds (J) Deposit of bouds authoHzed for investment by 

authorized for in- ^ ' *^ 

vestment by Sec, of ^{^ section of a market value at least fifteen per centum 

specified market i j 

value; yj excess of the par value of the collateral trust bonds or 

Deposit of bonds so ^ "^ 

authorized by this noteS isSUed ; Or, 

Sec, and other se- ' 

market value and of (2) Deposit of bonds authorized for investment by 
fled, this section and other securities of a combined market 

[821 



SAVINGS BANKS §^ 

value at least twenty per centum in excess of the par value bonds which are 

-_ ,, ,,, . ,.,1 I-EGAL INVEST- 

or the collateral trust bonds or notes issued; provided, hents— Continued. 
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 bonds authorized for in- 
vestment by this section. 

(3) Deposit of any notes or bonds authorized for in- Deposit of any notes 

. ^i.i» .• 1.1 •• f or bonds authorized 

vestment by this section and other securities or a com- for investment by 
bined market value of at least thirty per centum in ex- ties'of a combined 
cess of the par value of the collateral trust bonds or notes specified^* "^' *^ 
issued; provided, that the psir value of such collateral 
trust bonds or notes issued 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; provided, further, that the collateral pledged 
consist of bonds authorized for investment by this sec- 
tion of the market value of at least seventy-five per 
centum of the par value of such collateral trust bonds or 
notes issued. 

(j) Bonds legal for investment by savings banks in Bonds legal for sav- 
the states of New York or Massachusetts; provided, how- in n. y. or Mass., 
ever, that as to bonds of the character specified in para- ^^^^^'*' 
graph (c) of subdivision three of this section, such bonds 
shall also conform to the requirements of such paragraph. 

(k) Notes or bonds secured by mortga£fe or deed of ifotes or bonds se- 

•'=•** cured by mtge. or 

trust, payment of which is guaranteed by a policy of ^«®^ "^^ *^"«*' P*y- 

. ^ .... ™®°* guaranteed by 

mortgage msurance, and mortgage participation certi- mortgage insurance 

^ "^ *^ and mortgage par- 

ficates, issued by a mortgage insurance company in ac- ticipation certs. 
cordance with the provisions of chapter eight of title two 
of part four of division first of the Civil Code. 

"Net earnings" as used in this section shall be deemed "Net earnings" de- 

1 . . . fined. 

to mean the amount remaining after deducting from the 
gross earnings all taxes, maintenance charges and oper- 
ating expenses except depreciation charges, sinking fund 
charges and interest on indebtedness. 

[831 



561 BLYTH. WITTER & CO. 

BONDS WHICH ARE Uiiless herein otherwise expressly provided the period 

LEGAL INVEST- - , . , ^. ,. t it m. • >» £ 

MENTS-^continued. for which any corporation must have net earnings suf- 
ficient to qualify its bonds as an investment for savings 
banks under this section shall be either the fiscal year of 
corporation must such corporation next preceding the investment therein 
etc., under Sec. by any savings bank or twelve consecutive months in the 
fourteen months next preceding such investment. 

Ho notes, tonds, or ^o notes, bonds, or other securities shall be deemed 

other securities ^' ' , r-i 

deemed to conform fo come Within or conform to the requirements of either 

to requirements of /.v* ,,. .. 

paragraphs (f), (g), of paragraphs (f), (g), (h), or (i) of subdivision three 
3 of Sec, unless as of this section, unless such notes, bonds or other securi- 
ties shall, in the manner provided in this act, have been 
certified by the superintendent of banks to come within 
and fully conform to the requirements of one or the other 
of said paragraphs; provided, however, that any bank 
may, without such certification by the superintendent of 
banks, purchase any note or bond or issue of notes or 
bonds provided for in said paragraph (h), whenever such 
purchase constitutes the entire amount of notes or bonds 
executed by the makers thereof and secured by the same 
real estate; (provided, also, that no savings bank shall 
hold any such notes or bonds unless such holding consti- 
tutes the entire issue thereof at any time outstanding; and 
provided, also, that nothing in this paragraph shall be 
construed to permit savings banks to invest in notes or 
certificates evidencing participation in any mortgage on 
real estate unless in this act specifically authorized or in 
or on any form of obligation secured by any undivided 
interest in real estate designed to distribute the obliga- 
tion so secured). 

[Publishers* Note 5, Section 61, amended 1919: 
The last two provisos of the above paragraph, enclosed in 
brackets, beginning, respectively, "provided also" "and provided 
also" were added in 1919. 

The purpose sought to be covered by said provisos is to pro- 
tect savings banks in investments in notes or bonds secured by 
real estate, where the entire issue is purchased by a single bank; 
but it prevents any savings banks from purchasing any part of 
such an issue unless the whole issue has been certified by the 

[84] 



SAVINGS BANKS §_6I 

Superintendent of Banks as provided in Section 61a of the Act. ??.«??, Srv^°^ ^^^ 
The amendment also prohibits investment by savings banks in ments— Continued. 
notes secured by undivided interests in real estate, unless such issue 
of notes is first certified by the Superintendent of Banks.] 

The legality of investments heretofore lawfully made Legality of invest- 
pursuant to the provisions of this section, or of any law "ade! ioTlffeTt'ed' 
of this state as it existed on and subsequent to July 1, changed^by Im^nd- 
1909, shall not be affected by any amendments to this "'^"*'' 
section or this act; nor shall any such amendments re- 
quire the changing of investments once lawfully made 
under this act. 

Any bonds authorized by this section as a legal invest- Bond authorized by 

_ 'ii 1 • ■» iiir ^®<^' *8 investment — 

ment for savmgs bsinks may be carried on the books of how carried on booka 
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 
ings bank on an obligation owned or on a debt previously 
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, notwithstanding such bonds do not 
conform to the requirements in this section contained; 
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). 

[Publishers' Note 6, Section 61, amended 1919: 

The above paragraph, enclosed in brackets, was added in 1919.] 

No savings bank shall hereafter purchase or loan classes of bonds is- 

,, , . , . . sued by "public 

money upon any bond, note or other evidence of mdebt- utility," in which 

savings bank may 
invest, etc. 

[65] 



R. B. corp'n not 
conforming to Sec, 
when purchasable— 



§ 61 BLYTH. WITTER & CO. 

^°^Ig™?nvIsS edness, issued by any "public utility," subject to the jur- 
MENTS— Continued, 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. 

fo^r*p*ay^enVo//oftS ^® provisiou of this act, and no act or deed, done or 
^arantee regularity performed Under or in connection therewith, and no find- 

of securities certified "^ ' 

b7 Supt. ing made or certificate issued under any provision thereof, 
shall be held or construed to obligate the state of Cali- 
fornia to pay, or be liable for the pajrment of, or to 
guarantee in any manner whatsoever, the regularity or 
the validity of the issuance of any stock or bond certifi- 
cate, or bond, note, or other evidence of indebtedness 
certified under any provision of this act, by the superin- 
tendent of banks. 

Advertising bonds as It shall uot be lawful for any individual, firm, associa- 

legal investment for ^ j i i 

savings banks— un- tion, bank, trust compauy, stock company, copartner- 

lawful unless under ,' ' , , mr ^ w k- ^ 

conditions specified. gJup or Corporation to advertise by newspaper or circu- 
lar or in any other manner that any securities are legal 
investments for savings banks in this state or to use any 
advertisement which might lead the public to believe 
that any securities conform to the requirements of law 
relating to investments by savings banks unless such 
securities are such as are specified in paragraphs (a), 
(aa), (b), (c), (d), (e), (j), or (k) of subdivision three 
of this section or shall, in the manner provided in this 
act, have been certified by the superintendent of banks to 

[86] 



SAVINGS BANKS § 6l-61a 

come within and fully conform to the requirements of one ^egal invest ^^^ 
or the other of paragraphs (f), (g), (h), or (i) of sub- ments— continued. 
division three of this section or unless such advertise- 
ment shall have been approved in writing by the superin- 
tendent of banks prior to publishing, circulating or other- 
wise issuing the same. Any individual, firm, association, Penalty. 
bank, trust company, stock company, copartnership or 
corporation who shall advertise any securities in viola- 
tion of the provisions of this paragraph shall be guilty of 
a misdemeanor and shall be punishable by a fine not ex- 
ceeding one thousand dollars or by imprisonment in a 
county jail not exceeding one year or by both such fine 
and imprisonment. 

[Publishers' General Note to Section 61, amended 1919: 
The specific amendments or changes in this section have been 
pointed out at the points where they occur, in the body of the 
section. Speaking generally, it may be said that this section is 
the governing section of the Bank Act as regards savings bank 
investments. It is one of the most critically established laws in 
any State of the Union, and the changes that have been made are 
designed to fortify, in such particulars as suggest the necessity, 
the regulations governing the investment by savings banks in the 
securities designated by Section 61. By the amendments, it will 
be observed, banks are given the further privilege to invest in 
bonds or interest-bearing notes or obligations of England or the 
United Kingdom of Great Britain and Ireland or France or the 
Dominion of Canada or those for which the faith and credit of 
any one or more of said countries are pledged for the payment of 
principal and interest, and also bonds or interest-bearing notes or 
obligations of any other foreign country or government which 
shall first have been approved by the Superintendent of Banks 
in writing. 

The law governing investments by savings banks in notes or 
bonds secured by real estate is also strengthened to prevent any 
of the changes which may follow locality optimism or the specu- 
lative indulgence of real estate promoters.] 

Section 61a. The superintendent of banks shall have supt. may investigate 

securities presented 

power, when any issue of bonds or securities is presented and ascertain if they 

^ ^ ^ , conform to Act. 

to hmi for that purpose, to investigate and ascertain 
whether such bonds or securities come within and fully 
conform to all the requirements of paragraphs (f), (g), 
(h), or (i) of subdivision three of section sixty-one of 
this act, or of either of said paragraphs. He may also 
investigate and ascertain for what period of time, and 

[87] 



§61a BLYTH. WITTER & CO. 

^°^LEGAL K^E?^ upoH what conditions, any franchise granted to or held 

MENTs— Continued, jjy ^ny corporation issuing 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 

°?nrsecu?rtie''s!°supt.' Superintendent of banks may accept and act upon the 
?*i^ion*s Md^lp- OP"**^'*^ and appraisements of any attorneys, engineers, 

praisements Present- q^ appraisers which may be presented by such person or 
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 

supt. may select at- addition to such opiuious, appraisements and reports, the 

torneys, appraisers , r i i •<• i i 

and accountants, at supenntendent of banks may, if he deems proper, have 

expense of applicant. n i i i »n i i • 

any or all such matters passed upon and certified to him 

by attorneys, engineers, appraisers or accountants of hb 

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 .,,-, .. - .■• 

to Sec. 61, he shall tion that the bouds or securities so presented come withm 

so certify; otherwise irii r 11 i • f r'l 

certificate refused, and fully conform to all the requirements of any of said 
paragraphs of subdivision three 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 
a safe or proper investment for savings banks, and in 
such event or if such bonds shall fail to meet the require- 
ments of this act such certificate must be refused. The 
^"^andTerSris^to Superintendent of banks also shall have power to inves- 

sufficiency of honds tiorate and ascertain the status and sufficiency as invest- 

specified xn par. (e), * , , 

of subd. 3, Sec. 61. ments for savings banks of any bonds specified m para- 
graph (e) of subdivision three 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 bond 
specified in said paragraph (e) of subdivision three of 
section sixty-one of this act constitutes a proper invest- 
ment for savings banks he shall so certify. 

[88] 



SAVINGS BANKS § 6la-62 

Any certificate issued by the superintendent of banks Jeg^l Svest-^^^ 
under authority of the provisions of this section may be ments— Continued. 
revoked at any time in his discretion. Any certificate 
issued in relation to notes or bonds specified in para- g^p^ ^^y ^^^^^^^ 
graphs (f), (g) or (i) of subdivision three of section certificate. 
sixty-one of this act shall expire not later than three 
months after the end of the then current fiscal year of 
the corporation issuing such notes or bonds. 

Any such certificate so expiring may be renewed or Expiring certificate 

, , , . , . * renewable. \ 

extended by the supermtendent 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 '11 1 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. 
The superintendent of banks shall keep an official list of official ust of 

• • . securities. 

all bonds and securities certified by him. 

[Publishers* Note, re Section 61a, amended 1919: 

In this section, providing for the certification of savings bank 
investments by the Superintendent of Banks, the amendment con- 
sists of an added paragraph to give to the Superintendent of Banks 
power to extend or renew his certificate of eligibility of bonds of 
savings banks without requiring an application from any corpora- 
tion issuing the bonds or of any person interested in them. This 
change is required because of the fact that as soon as the bonds 
are certified and have become investments in savings banks, the 
issuing corporation loses all interest in the bond by operation of 
law and ceases to be eligible. The amendment is intended to pro- 
tect the savings bank in the continued holding of such bonds.] 

Section 62. No savings bank shall, directly or indi- Dealing in real or 

personal property, 

rectly, deal or trade in real or personal property in any and contracting of 

debt. 

other case or for any other purpose than is authorized 
by this act, and shall not contract any debt or liability for 

[891 



§62 BLYTH. WITTER & CO. 

any purpose whatever other than for deposits, except as 
in this section provided. 

savingrs banks may Savings banks may pay regular depositors, when re- 

on request pay de- i i i i i r i • i • t 

positors by draft, quested by them, by drart upon deposits to their credit 

and charge exchange .,,.,, 11 r 1 

therefor, with their banks, and charge current rate or exchange 
for such drafts. 

Savings bank not to No savings bank shall borrow money, or pledge or 

borrow money ex- ^ ^ , 

cept to meet demands hypothecate any of its securities, except to meet the im- 

of depositors. ,. , i r • i • i 1 i • 

mediate demands or its own depositors, and then only m 
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, 
Savings banks may, and the term and rate of interest thereon ; provided, that 

to extent of capital • 1 1 r 1 r f • • 

and surplus or re- any savmgs bank may, for the purpose or performing its 

serve, rediscount . . . ■, . 1 • i i 

eligible assets with functions and transacting its business as authorized by 

Federal Reserve , . - . • 1 • 1 i 

bank, this act, rediscount, w^ith or without guarantee or endorse- 
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 
Savings bank may this section ; provided, also, that savings banks may, in 

borrow and receive on i.iii i-i 1 

deposit public moneys, the manner authorized by law, and without the previous 
specified, approval of the superintendent of banks, borrow the 
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 

[901 



SAVINGS BANKS § 62-63 



ad- 

for 



postal savings moneys on deposit; and provided, fur- J^tfonai^SI^unrf 
ther, savings banks may borrow any amount, in addition l^^'^^l^ ^^^ Yid^ 
to the amounts authorized to be borrowed in this section, Jf^^.^if ^\'Jief '"" 
for the purpose of buying from the United States, United specified. 
States bonds. United States treasury certificates, or notes 
or obligations 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 
in writing to the superintendent of banks. No excess Excess loan to sav- 
loan made to any savings bank with or without pledge ^^^ 
of assets shall be invalid or illegal as to the lender. 

[Publishers' Note, re Section 62, amended 1919: 

This section, which governs, restricts and guards the borrowing by savings 
banks, is liberalized to permit savings banks, to the extent of their capital and 
surplus, to rediscount such assets as they may possess with a Federal Reserve 
bank, such assets necessarily to be eligible for such rediscount; and also to bor- 
row in any amount for the purpose of buying from the United States, United 
States bonds, United States treasury certificates, or notes or obligations of the 
United States. The first named amendment is designed to make absolutely liquid 
the secondary reserve of the savings bank, and the second offers a suggestion of 
assistance to the federal government without impairing the character of the 
savings bank,] 

Section 63. Savings banks may issue general certifi- £;^°^,^,,^ffi",^^^^^^^^ 
cates of deposit, which are transferable, as in other cases, erai and special, of 

*^ deposits on conditions 

by indorsement and delivery; may issue, when requested specified. 
by the depositor, special certificates, acknowledging the 
deposit by the person therein named of a specified sum 
of money, and expressly providing on the face of such 
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. 

A ij . ,r r \ •• 11 • Time certificates of 

All time certificates or deposit, issued by a savings deposit subject to 
bank, shall be subject to the same limitations and condi- other deposits, etc. 

[911 



§ 63-65 BLYTH. WITTER & CO. 

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. 

scSS'^y^ftf by-iJws Section 64. Each savings bank must prescribe by its 
and^cUdmo^s^'o/'^e! by-laws, or by contract with its depositors, the time and 
payment to depositor, conditions on which repayment is to be made to deposi- 
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 
^^'capitaVstock'^shSi directors or officers thereof must not make any new loan 
^'^"tentii ^^roflts^to ^^ investment of the funds of the depositors or of earn- 
reserve. 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 
preceding half year, or for the period covered by said 
dividend, to its reserve fund. Subject to the provisions 
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. 

not\oin\ranfS Scction 65. No loan shall be made, for himself or as 
rector or officer, or ^gent or partner of another, directly or indirecdy, to any 

[921 



SAVINGS BANKS M5 

director or officer of any savings bank by such bank, or ^?nt,^itc!!'tx"ept 
on the endorsement, surety or guaranty of any such offi- Jo^coSoration in* 
cer or director, except that loans may be made to any ^^er hoiS*mi^ority 
corporation in which any director or officer of such sav- ^^^^^' 
ings bank may own or hold a minority number of shares 
of stock, upon authorization of a majority of all the 
directors of such savings bank and the affirmative vote 
of all directors of such savings bank present at the meet- 
ing authorizing such loan; provided, however, that such 
loan shall in all other respects conform to and comply 
with all other provisions of this act. Such interested interested director 
director or officer shall not vote or participate in any man- loan. 
ner in the action of the board on such loan; provided, 
also, that by and with the consent of the superintendent on loan by one 
of banks previously obtained in writing, all directors may Sfr"cto°rs*may*vot" 
vote upon such a loan made by one bank to another bank gjecified?**'^^ 
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. Such author- 
ization shall be entered upon the records or minutes of 
such savings bank. The fact of making such loan, the Facts concerning 

- I - . I . . I I . such loan to be re- 

names or the directors authorizmg such loan, the cor- ported to Supt. 

porate 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 borrow- 
ing corporation, 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 
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. No Loan to corporation 

where majority of 

loan may be made to any corporation, a majority of the its stock owned, 

•^ ^ IT * ^ etc., by one or more 

stock of which is owned or controlled by any one or more Jf"^^^' " officers 
of the directors or officers of such savings bank, except 
with the previous consent of the superintendent of banks. 

[93] 



§ 65 BLYTH. WITTER & CO. 

^^iafto ag^en"? « ^ ^^^^ "^^^ ^® "^^^« ^^ ^^^^ ^g^nt OF employee, other 
employee, tj^an an officer or director, of any savings bank by such 
bank upon authorization of a majority of all the direc- 
tors of such savings bank and an affirmative vote of all 
directors of such savings bank present at the meeting 
authorizing such loan; provided, however, that such loan 
shall in all respects conform to and comply with all other 
provisions of this act. Such authorization shall be en- 
tered upon the records or minutes of such savings bank. 

su^rSan^'tobT^e! The fact of making such loan, the names of the directors 
ported to supt. £^^jtl^Qj.i2ing such loan, the name of the borrower, the 
nature of his employment, the amount of such loan, the 
rate of interest thereon, the time when the loan will be- 
come due, the amount, character and value of the secur- 
ity given therefor, and the fact of final payment, when 
made, shall be forthwith reported in writing by the cash- 
ier or secretary of such savings bank 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 
Violations of ^^ ^ felony. In case of the neglect or failure of the sec- 
section, retary or cashier of any such bank to report to the super- 
intendent 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 
Penalties. 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 ^[^{3 section shall not apply to any loan made to a 

religious corpora- m. m. ^ 

tions. religious corporation, club, or other membership corpor- 
ation of which 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. 

[94] 



SAVINGS BANKS § 65-66 

Loans may be made to any director, other than an Jfrectofother than 
officer, directly or indirectly, or to any agent or employee ofem'io'^eeofa"* 
of a savings bank on the security of United States bonds, H^^f^ ^^^^' °^ 
United States treasury certificates, or interest-bearing ^^^^ ^^,9^^^F 

-' ' ^ TT. S. obligations 

notes, or obligations of the United States, or those for as specified. 
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, amended 1919: 

The amendment to this section, which establishes the limits upon any rela- 
tionship as between the bank, its officers, directors, agents or employees, pro- 
vides that by and with the consent of the Superintendent of Banks, previously 
obtained in writing, all directors may vote upon a loan made by one bank to 
another bank where the entire capital stock of one is owned by or is 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. This amend- 
ment is designed to obviate unnecessary obstacles which the section in itself and 
without need raised, as against certain transactions which may be of benefit to 
both of the banks concerned. 

Another amendment to the section also makes it possible for 
a bank to loan to any director, other than an officer, directly or 
indirectly, and to an agent or employee of a savings bank, upon 
the security of United States bonds, United States Treasury Cer- 
tificates, or interest-bearing 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. Borrowing by officers, di- 
rectors, agents, or employees in savings banks is strictly restricted 
and very carefully supervised, but the liberalization of the section 
in no way creates an injurious influence in the bank, as the 
security for the loan is beyond question of the first value.] 

Section 66. No savings bank shall hereafter make any Savings banks not 

° •'to make loans to 

loans to any person, firm, copartnership or corporation *"y person, etc., 

•''^ ' exceeding 80% paid- 

to an amount exceeding fifty per centum of the actual «p capital and 

surplus. 

paid-up capital stock and surplus of such bank, or in the 
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 

[95] 



§ 66-67 BLYTH. WITTER & CO. 

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- 
^^°o7iJa°nhereaft« forms to the provisions of this act. The renewal or ex- 
^^^'liSi hereafter tension of any loan heretofore legally made by any sav- 
made." jj^gg ba^k 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 
Endorser deemed ^y the orovisious of this sectiou. For the purposes of 

borrower. ... , 111111 

this section an endorser or guarantor shall be deemed to 
be a borrower. 

No savings bank Section 67. 1. No savings bank shall loan money 

shall loan except on " 

adequate security, except on adequate security of real or personal property, 

for limited period. ^ ^ iniir -iii 

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 

Savings bank may purchase bankers* or trade acceptances, notes, drafts and 

discount or purchase "^ - . , 

bankers' or trade biUs of exchange of the kind and character and maturities 

acceptances, notes, ^ ..iii. i» • t rii 

etc, eligible for re- defined and made eligible for rediscount with a federal 

discount with Fed. •11111 1 

Reserve bank, and reserve bank; provided, also, that the same are accepted 

complying with ■■ • 1 i«/» • 1 11 

specified require- or endorsed without qualification by a bank or trust 
company, which bank or trust company has a paid-in 
capital of at least one million dollars; and provided, also, 
that a savings bank may discount or purchase a bill which 
must comply with the following requirements: 

Bill issued by (a) It must be a bill issued by a solvent individual or 

solvent individual, ^ , , , _ 

firm or corporation firm or corporatiou engaged m mercantile or manurac- 

in mercantile or .-. •ivT'in 1 1 

mfg. business in turmg busmess m the Umted States that makes statements 

TJ. S., making state- . , , • 1 1 ,.'£. J j. 1_ 

ments of condition ^f {^ condition duly ascertained and certined to by a 

certified by public " , _ 1 . . . 

accountant, public accouutaut. Copy of such a certified statement 
shall be on file in the office of the savings bank discount- 
ing or purchasing such bill in a file maintained for such 
purpose. Said statement shall have been issued within 

[96] 



SAVINGS BANKS §_67 

the preceding fourteen months and shall be the latest 
bsued by said individual or firm or corporation. Said f/sucrstaTement* 
statement shall consist of a balance sheet showing quick 
assets, slow assets, permanent or fixed assets, current lia- 
bilities and accounts, short term loans, long term loans, 
capital and surplus. Accompanying said balance sheet 
shall be a copy of a statement from the borrower or pub- 
lic accountant concerning the following: 

( 1 ) The nature of the business. 

(2) All contingent liabilities such as endorsements or 
guarantees. 

(3) Particulars respecting any mortgage debts and 
whether there Is any lien on current assets. 

(4) The maximum and minimum liabilities of the in- 
dividual, firm or corporation during the twelve months 
previous to the date of audit. 

(b) It must be issued by an individual, firm or cor- S^^^edby individual, 
poration whose net worth is not less than two times the ^'"^ ^^^ corporation 

■^ ^ ^ ^ meeting specified 

amount of its outstanding liabilities, including any con- reguirements as to 
tmgent liabilities arising from the rediscount of bills re- ^^^s. 
ceivable or other accommodation endorsements, nor less 
than three hundred thousand dollars. The quick assets 
of said individual, firm or corporation, consisting of mer- 
chandise, finished, raw, and in the process of manufacture, 
accounts receivable, bills receivable, bonds or obligations 
of the government of the United States at the then market 
value of said bonds or obligations and cash, shall not be 
less than two times its outstanding quick liabilities includ- 
ing any contingent liabilities arising from the rediscount 
of bills receivable or other accommodation endorsements, 
as shown by said statement. 

(c) It must have a maturity of not more than six maturity Tnot 

months more than 6 months. 

1971 



§67 BLYTH, WITTER & CO. 

Bill must have (J) It Hiust have aTiscn out of actual Commercial trans- 

arisen out of actual ^ ' 

commercial transac- actions; that is, bc a bill which has been issued or drawn 

tions, etc. ' ' 

for industrial or commercial purposes or the proceeds of 
which have been or are to be used for such purposes. 

Bills not eligible; ^o bill shall be eligible for discount or purchase by a 
savings bank, the proceeds of which have been used or 
are to be used for any of the following purposes : 

(1) For speculative ( 1 ) For investments of a merely speculative character 

investments, etc. , , 

whether made m goods or otherwise. 

(2) For dealing in (2) Must not have been issued for carrying or trading 

stocks, bonds or, ii» i» •• 

other investment m stocKS, bonds or Other mvestment securities, except 

securities, except «■,-, i>ivT«io i 

u. s. bonds; must not bonds of the govemment of the United States, and must 

cover investments. _ , 

not cover merely mvestments. 

(3) Must not be bill (3) Must not be a bill of any individual, firm or cor- 
having under pledge poration which has Under pledge or hypothecation any of 

any personal ., , , 

assets, its personal assets. 

Bill defined. j^^ ^^^d "bill," when used in this section, shall be 
construed to include notes, drafts, or bills of exchange, 
and the word "goods" shall be construed to include 
goods, wares or merchandise. 

Savings bank pur- Any savings bank purchasing or discounting such paper 
Lg^^fh^paper shall shall have in a file maintained for the purpose, letters 

have file showing r^iij i. .m j.i_* 

credit of parties from banks and merchants or mercantile reports bearmg 
iTnd^/d^iscount. upon the credit and standing of the person, firm, copart- 
nership or corporation whose paper is under discount. 

Combined total No savings bank shall at any time acquire or hold, di- 

amount held by bank i.f i«». i i»i 

of bankers' and trade rectly or mdufcctly, by discount or purchase, a combmed 

bills of exchange total amount of bankers' and trade acceptances, drafts 

ter defined by Sec, and bills of exchange and bills of the character defined 

shall not be greater ,,..,, .« .. ..i . i 

than 20% of bank's and limited by this section, greater than twenty per cen- 
^^°" " tum of the deposits of such bank, nor shall any savings 



Amount of bills of 

character defined by 

Sec. shall not be 



bank at any time acquire or hold, directly or indirectly, 
by discount or purchase, an amount of bills, of the char- 
Tf\Tnk^s'Uoiitt acter defined and limited by this section, greater than 

198] 



SAVINGS BANKS §67 

twelve and one-half per centum of the deposits of such 
bank. No savings bank shall at any time acquire or hold, Ke\*c^ptances, 
directly or indirectly, by discount or purchase, any such ^change*fr^(?m\n^ 
bankers' or trade acceptances, drafts and bills of exchange °JJ tZtld'l^^ft 
from any one acceptor in an amount which shall exceed capital and surplus 

, or reserve of bank. 

five per centum of the capital and surplus or reserve of 
such savings bank nor shall any savings bank at any time 
acquire or hold, directly or indirectly, by discount or pur- 
chase, any such bills of any one person, firm, copartner- 
ship or corporation in an amount which shall exceed five 
per centum of the capital and surplus or reserve of such 
savings bank. 

2. No savings bank shall invest or loan an amount No savings bank 

. .t fr. , t> • I'l .« shall invest or loan 

greater than hfty per centum of its actual paid-up capital more than specified 

J, ill* i>.ii percentages of its 

and surplus on any one note or bond issue of the class paid-up capital and 
specified in paragraph (h), or on the securities issued by assets, on bond is- 

. * i> .1 « • Bues or securities 

any one mortgage msurance company of the class speci- of specified classes. 

fied in paragraph (k) of subdivision three of section sixty- of°the u^s. afd^oTthe 

one of this act, nor more than five per centum of its assets 

on any one bond issue of any other class, except bonds of 

the United States, or interest-bearing notes or obligations 

of the United States, or bonds of the State of California, 

bonds for which the faith and credit of the United States 

or of the State of California are pledged, or bonds of 

any county, city and county, city or school district in this 

state, or bonds of any irrigation district such as are legal 

for investment by savings banks. 

3. No savings bank shall loan money: San^nfy?"''**' 

(a) On bonds of the character specified in paragraphs 
(a), (aa), (b), (c) and (d) of subdivision three of sec- pn bonds, and on 

bonds and notes, of 

tion sixty-one of this act, or on bonds of the character tiie character and 

•^ ' requisites specified 

specified in paragraph (e) of subdivision three of section ^ap^hs^n se".*6i 
sixty-one of this act the principal and interest of which J^t^" same hl^vr"" 
are to be paid in whole or in part by taxes levied upon Z^^J'^:ZlL^,, 
the property in the district bsuing such bonds, unless such kaneVthe^on. 

[99] 



state or designated 
subdivisions thereof, 
excepted. 



§67 BLYTH. WITTER & CO. 

bonds shall have a market value at least ten per centum 
in excess of the amount loaned thereon; or, 

(b) On bonds of the character specified in paragraphs 
(f), and (g) or on bonds or notes of the character spe- 
cified in paragraph (i) of subdivision three of section 
sixty-one of this act, when eligible as investments for sav- 
ings banks pursuant to said section, or on bonds of the 
character specified in paragraph (e) of subdivision three 
of section sixty-one of this act other than those specified 
in the preceding paragraph of this section, unless such 
bonds or notes shall have a market value at least fifteen 
per centum in excess of the amount loaned thereon; or, 

investments, y! (c) On bonds legal for investment by savings banks 
markJJ^vaiue il% "* *^® ****®« ^^ ^^^ York or Massachusetts, unless such 
above amt^joaned bonds shall havc a market value at least fifteen per 
centum in excess of the amount loaned thereon; or, 

on^'se^ct'ftfe's^ofc^ar! (^) ^ "^*«« ^^ ^^^^^ ^^ *« character Specified in 
acter specified in paragraph (h) of subdivision three of section sixty-one 

desigmated para- ^ ' ^ '' 

graphs of subd. 8 of of this act when certified as legal investments for savings 
fied or eligible for banks Under the provisions of section sixty-one-a or on 

savings-bank invest- ••rii •• 

ment, unless market securities of the character specified m paragraph (k) of 

value at least 10% % t* • * i t> » i . ,» »% ^ , . , 

above amt. loaned, subdivision three of said secbon eligible for mvestment by 
savings banks, unless such bonds, notes or securities shall 
have a market value at least ten per centum in excess of 
the amount loaned thereon; or. 

On personal property, (e) On personal property unless such personal prop- 

unless same has ini t \ « *-^ rr 

market value at erty shall have a market value at least fifty per centum 

least 50% above amt. , * i « i • 

loaned, m excess of the amount loaned thereon; or. 
On other bonds, or on (f) On Other bonds, or on capital stock of any cor- 

capital stock of cor- , _ iii .iiiii i a. 

poration, unless same poration, unless such bonds or stock shall nave a market 

at^ieas^soVo Ibovt value at least fifty per centum in excess of the amount 

Btriction on loan on loaned thereon ; provided, however, that no loan shall 

bank stock. ^^ n^de 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 capital stock. 

[100] 



SAVINGS BANKS §_67 

4. No savings bank shall make any loan on security of ^*jSe!oan*on Jeai**" 
real estate, except it be a first lien, and in no event to S^*ffi',«;^rt'exce:d. 
exceed sixty per centum of the market value of any real j^^e^'^Ex^cSticm* 
estate taken as security except for the purpose of facilitat- 
ing the sale of property owned by such savings bank; 

provided, that a second lien may be accepted to secure Provisos, permitting 
the repayment of a debt previously contracted in good JS'under specified 
faith; and provided, also, that any savings bank holding lo^ns io?ex*ceeding 
a first mortgage or deed of trust on real estate may take of fest^-Uen! Je^i^ 
or purchase and hold or loan upon another and immedi- an*d*60%*'of ^market 
ately subsequent mortgage or deed of trust thereon, but mortgaged.*"^ 
all such loans shall not exceed in the aggregate sixty per 
centum of the market value of the real estate 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 exceed 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 

to any one borrower 

on the security of the capital stock of any corporation an not to exceed 10%^ 

and total loans oit 

amount exceedmg ten per centum or the capital stock stock of any oae 

, r 1 • 11 -111 11 1 corporation not ttf 

and surplus or such savmgs bank; provided, that all loans exceed 25%, of 

, • 1 1 r -in bank's capital and 

on the capital stock or any one corporation shall not surplus. 
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 Savings bank not to 

11 1 f • 1 • purchase, invest or 

capital, surplus or the money or its depositors, or any loan any capital, 

!■ . I . . . I I , . surplus or deposits 

part or either, m mining shares or stock and any presi- in mining shares. 

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, amended 1919: 

This is one of the most important amendments to the Bank 
Act. California was the first of the American States to permit 
its savings banks to invest a certain proportion of their assets in 
liquid form, namely, in bankers' acceptances and commercial 
paper of a grade that is considered by leading financial experts 

[1011 



Violation a felony. 



§ 67-68 BLYTH> WITTER & CO. 

and bankers of the United States to be such that it is practically 
equal to cash. The amendment which made possible this invest- 
ment was adopted in 1917 and restricted the savings banks to a 
limit of 10 per cent, of their deposits in these liquid investments. 
Five per cent, of this limit was to be in bankers' acceptances and 
the other five per cent, in commercial paper. With the advent of 
the Federal Reserve system and its mobilization of reserves which 
are intended to protect the banks in the system from panics and 
from general financial distress, the need of a greater liquid in- 
vestment, which becomes an actual secondary reserve, was ap- 
parent, and the amendment increases this percentage of invest- 
ments, liquid assets, to 20 per cent, of the deposit liability. All 
of this 20 per cent, may be invested in bankers' acceptances which 
bear a low rate of interest; but no more than 12^ per cent, may 
be invested in commercial paper. The character of this commer- 
cial paper has the endorsement of the Federal Reserve system 
itself, and is introduced in our system in order to give to the 
banks opportunity to avail themselves of the actual mobilization 
of their reserves in the Federal Reserve system and its mobiliza- 
tion of assets by banks in California. The leading authorities in 
the financial world consider that such a modification of the sec- 
tion is of vital moment in protecting savings banks from danger, 
if not from disaster. Three of the conservative and powerful 
states of the Union, New York, Connecticut and Massachusetts, 
have followed the lead of California in this direction. 

Section 67 is also amended to harmonize its provisions with 
the changes contemplated in the annendment to Section 61 of the 
Bank Act relating to loaning and investment by savings banks.] 

Amount and char- Scctioii 68. Evcrv savings bank or savings depart- 

acter of total re- r i i i n ii ° . . , 

serves of savings mcnt of a bank shall at all times maintain total reserves 

bank or savings bank i r r t 

department, equivalent to five 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, 

or as reserves on de- sist of gold bulHon, or any form of money or currency 

posit with reserve i.ti ii fiTT«io J 

depositary, as speci- 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- 
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 

[102] 



SAVINGS BANKS §^ 

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 

,1 . I . .1111 •!. • dept. not required to 

bank or savings department shall be required to mam- maintain reserves on 

. . 1 -I. c e 1 11.1 1 hand in excess of 

tain reserves on hand in excess or rour hundred thousand $400,ooo. when 

III II I II itii_ same reach that 

dollars, and when such reserves on hand reach that amt., balance of the 
amount, the balance of total reserves necessary to make reserves on deposit, 
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 bank shall have become a member of a federal Amount and charac- 
ter of reserves re- 
reserve bank, it shall at all times maintain the reserves quired of bank be- 

f . I . I coming member of 

required by the rederal reserve act ror time deposits, and Federal Reserve 
in addition thereto shall be required to maintain a re- 
serve of at least two per centum of its aggregate deposits, 
exclusive of United States, postal savings, state, county 
and municipal, and other public money deposits, which 
are secured as is required by law, which two per centum 
shall consist of gold bullion, or any form of money or 
currency authorized by the laws of the United States. 

If any savings bank shall fail to maintain its total re- Penalty. 
serves in the manner authorized by this section, it shall 
be subject to the penalty provided for in section twenty 
of this act for commercial banks. 

No new loan shall be made during any deficiency in No new loan while 
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. 

fii . c • 111 11 11 •! i^equired for savings 

the deposits or any savings bank shall be deposited banks deposits of 

. I II '11 f 1 more than 5% 

With any one bank, except with the consent or the super- with any one bank 
intendent of banks. Not more than fifteen per centum mercial banks.°™ 
of the deposits of any savings bank shall be deposited 
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 

[103] 



§ 68-70 BLYTH, WITTER & CO. 

^° dTptl^to^'Sive *^^^ savings deposits and such deposits shall not be 
other than savings treated or considered as a part of the reserves on de- 

deposits of other *^ 

^n"t^ be Tr?ate?*as P*^^^^ ^^ ^^*^^ depositing bank, provided, the sum so de- 
part of reserves on posited shall not exceed thirty per centum of the paid-in 

deposit of deposit- 
ing bank. Limita- capital and surplus of the depositing bank nor more than 

tion upon sum so 

deposited, fifteen per centum of the paid-in capital and surplus of 
the depositary bank. 

^"Si;\1rowde^^^^^^^^^ Section 68 K2. Where a decedent, at the time of his 
of decedent^to^r^emam ^j. j^g^ death, left moueys on deposit with a savings bank, 
"^mly d?p*lSif tstale ^* ^^^^^ ^^ lawful for any public administrator, who shall 
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^^d^e. Such deposit, whether made by the decedent or a public 
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^mth- 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. 

[Publishers' Note, re Section 68, amended 1919: 

In this section, relating to the reserves •which must be maintained by savings 
banks, the changes made by the amendment are those made necessary to permit 
the full admission of banks in the State of California into the Federal Reserve 
system. All savings banks may place their reserves, or any part of their re- 
serves, in a Federal Reserve bank in the district in which the savings bank is 
located, and member banks, while not being permitted to carry reserves de- 
manded by the Federal Reserve bank in lieu of those required by the State Bank 
Act, must carry those required by the Federal system, and, in addition thereto, 
two per cent, of their deposit liability, on hand.] 

coSoSi^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. 

Savings bank may Scctioii 70. Evcry savuigs bank shall have power to 

receive as depositary, ^ ss 

etc., Liberty bonds receivc as depositary, or as bailee for safe keeping and 

or other u. S. bonds. «- .» # 

storage, Liberty bonds or other bonds or securities issued 

[1041 



COMMERCIAL BANKS § 80 

by the United States government for war purposes or 
otherwise. 

[Publishers' Note» re Section 70, a new section added in 1919: 
The enormous acquisition of Liberty Bonds by the public has 
created a real situation as to their safe-keeping, and steps are 
being taken in every state to afford some protection as against 
theft and loss. This new section allows every savings bank in the 
State to take such bonds on deposit or as bailee for safe-keeping, 
and to arrange with the owner for the collection and crediting 
of the interest due on them, and to provide for their payment or 
return to their proper owners.] 



ARTICLE III. 

COMMERCIAL BANKS. 

Section 80. No commercial bank shall make any Commercial banks 
loans, directly or mdirectly, to any person, firm, co- borrowers in amount 

I . . . 1 • 1 • 1 1 which, (including 

partnership or corporation, m an amount which, mclud- extensions of credit 

I . . !• T 1 r as specified), shall 

mg therein any extension or credit to such person, hrm, exceed following 

I . . I - , - percentages of 

copartnership or corporation, by means or letters or capital and surplus: 
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 (D 19% without 
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^euritTfortrot"! 
mercial bank from taking or receiving any kind, char- ii" ttk^'subd?^ 
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 

[1051 



§80 BLYTH. WITTER & CO. 

^"be^con" WeSsV- ^^^^ unless the whole thereof is loaned upon security 
cured loan, unless worth at Icast fifteen per centum more than the amount 

upon security at least *^ 

15% more than amt. of SUch loan 1 Or. 
of loan. 

(2) (In addition to 2. Fifteen per centum, in addition to the amount that 

amt. loaned under .. rii... 

subd. 1) 15% upon may be loaned under the provisions or subdivision one 

security worth at . . . , . i i r r 

least 15% more than of this section, upon Security worth at least tirteen per 

loan secured. . . r i i i 

(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, 

(8) 25% upon se- 3, Twenty-five per centum upon security worth at 

curity exceeding ^ r tr 

loan secured at least least fifteen per centum more than the amount of its 

(Note proviso) loans SO secured ; provided, however, that when secured 

loans to this amount or any amount in excess of fifteen 

per centum are made, then no unsecured loans shall be 

permitted in addition to such secured loans; or, 

*°^" merc?a?papS; 4. Forty per centum, provided such loans are upon 

""^"endwsed^w^thoui Commercial or business paper actually owned by the 
(Note'provisos) P^^son negotiating the same to such bank, and are en- 
dorsed by such person without limitation ; provided, how- 
ever, that in addition to the amounts permitted to be 
l^ans u'Sdir^sub? lo^ued by subdivisious one, two or three of this section, 

4 and subd. 1, 2, or 3. ^n amouut 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 

~"no?appiioabi?to ^°* exceed forty per centum; provided, also that the re- 
B/L?lttached,Ttc^ strictious Under this section shall not apply to bills of 
exchange or drafts, with bills of lading attached, drawn 
in good faith against actual existing values; provided, 
further, that any commercial bank, having first obtained 
in writing the consent of the superintendent of banks 
so to do and under such conditions and regulations as 

[106] 



COMMERCIAL BANKS §^ 

may be prescribed by him. may accept drafts or bills of ^Z.^.Toi'liZur 
exchange drawn upon it running for a period of not Sin a-^ months?^*' 
longer than six months, but no commercial bank shall amt*^and tif Sabers 
accept such drafts or bills of exchange in an amount n^/g^^^t J®* ^"^^" 
greater at any time in the outstanding aggregate than one- 
half of its capital and surplus; but such acceptance or 
acceptances must be drawn by a person, firm, copartner- 
ship or corporation engaged in agricultural, industrial or 
commercial business directly connected with the produc- 
tion, manufacture, purchase, sale or consignment of the 
goods involved in the transaction in which the accept- 
ance originated ; provided, however, that no such accept- —re limit in amount 

f. of acceptances to 

ance or acceptances to any one person, iirm, copartner- any one person, firm, 
ship or corporation shall exceed ten per centum of the 
capital and surplus of such bank. 

None of the limitations or restrictions contained in the ^® limitations in 

previous suods. 

previous subdivisions of this section shall apply to loans, ^pp^y to loans, etc., 

*^^ ^ ,, secured by Liberty 

discounts or other extensions of credit secured by Liberty ^o^^s, or other v. s. 

bonds, etc, 

bonds or by other bonds or securities issued by the 
United States government, if the market value of such 
Liberty bonds or other securities exceeds by ten per 
centum the amount of any such loan, discount or other 
extension of credit. 

Loans which are made upon security available for Loans by commercial 

. • 1 1 1 1 • • 1 ^^^^ ^^ security for 

loans m a savmgs bank may be made in a commercial savings-bank loans, 

. . . . p . , . , deemed secured 

bank upon the same margin or security as is permitted loans under see. 
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. 

In computing the total liabilities of any person to a Total liabilities of 

any person to com- 

commercial bank there shall be included all liabilities to merciai bank,— tow 
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 

[1071 



§80-81 BLYTH. WITTER & CO. 

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, amended 1919: 
This section is the governing section for loans made by com- 
mercial banks. The only change in the section is to permit loans 
to any director, other than an officer, directly or indirectly, or to 
any agent or employee of a commercial bank, on the security of 
United States bonds. United States Treasury Certificates, or in- 
terest-bearing 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 and interest or those issued under author- 
ity of the United States. The amendment was made upon the 
theory that the security offered by the interest-bearing obligations 
of the United States offers no hazard to the banks accepting 
them.] 

Loans upon corporate Section 81. No loan shall be made by any commer- 

securities, payment 

of which undertaken, cial bank upon the Securities of one or more corpora- 

severally, by two or . r i . i • i i .11 

more persons, firms, tions, the payment or which IS undertaken, m whole or 

or corporations, — . ii i • • 1 i • i« 

forbidden, if made in part, Severally, but not jointly, by two or more mdi- 

under conditions . i 1 r 

specified, viduals, hrms, 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 underwriters 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 iri 
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. 

[1081 



COMMERCIAL BANKS § 82 

Section 82. Every commercial bank hereafter organ- fe^„i"e^men?s**^ 
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 

ri. .1 1- 11. 1 V.r 5,000— $25,000. 

or busmess is located m any locality the population or 
which does not exceed five thousand persons; 

(b) Fifty thousand dollars if its principal place of 5,000 to 25,000 
business is located in any city the population of which ^°^" * ^°" 

is more than five thousand persons but does not exceed 
twenty-five thousand persons; 

(c) One hundred thousand dollars if its principal 25,000 to 100,000 

1 r 1 ' -1 1. .1 r.r population— $100,000. 

place or business is located m any city the population or 
which is more than twenty-five thousand persons but 
does not exceed one hundred thousand persons; 

(d) Two hundred thousand dollars if its principal 100,000 to 200,000 

1 fi' .1 1. .1 1. r population — $200,000. 

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; 

(e) Three hundred thousand dollars if its principal ?f?"h*^°I? ®*<'«®^^'^8r 

, 200,000— $300,000. 

place of business is located in any city the population of 
which is more than two hundred thousand persons. 

The foregoing classification shall not apply to any Foregoing ciassifica- 

• 1111 !• . 1*11 •! ^^°^ ^^^ retrospec- 

commercial bank already in existence which has received tive nor applicable 

.f. 1 1 1 . 1 • r 1 . *o banks included 

Its certificate to do a banking business rrom the superin- by annexation, etc., 
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- But no excepted 

J ll'l 1 ^ rr -ii' ^^^^ "lay open new 

mitted to establish any new branch ofnce as provided m branch, nor remove 

r 1 . , f r t • place of business 

section nine or this act or to remove its place or business from pre-annexation 

r .1 ..11.. ft . 1. 1 . location until it 

rrom the original limits or the city or township wherein have capital required 

.. lii'. 1 .• I'l- of unexcepted banks. 

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 

[109] 



§ 82-83 BLYTH. WITTER & CO. 

Decrease and ^J^^J**® may not in any case decrease their capital stock but may 

excepted banks, 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; provided, that 

nothing herein shall be construed to affect the provisions 

Provisions of Sec. of scction nineteen of this act relative to the proportion 

19 re proportion of i i i i • r • 

capital and surplus of Capital and surplus to dcposits or or section twenty- 

not affected by Sec! three of this act relative to the capital stock required of 

Population provisions banks doing a departmental business. The provisions of 

applicable to banks . , r i . i • i ii 

organized under Sec. section twenty-three or this act, as to population, snail 
apply to any bank organized under the provisions of this 
section. 

comm'i bank not to Section 83. No loan shall be made for himself or as 

loan to or on endorse- . . ^ . . • t i 

ment of an officer— agent or partner or another, directly or indirectly, to any 

but may loan to cor- •iiii iii i_ 

poration of which officer of any commercial bank by such bank or on the 

officer is minority , e \ eti 

■tockhoider, director, endorsement, surety, or guaranty or any such orncer; 

etc. ; and to director .iiii i i ._• t 

other than officer, or provided, that a loan may be made to a corporation or 
of which such'direo- which any officer of a commercial bank, proposing to 
and loan and extend make such loan, is a minority stockholder, director, offi- 

credit to member, . i t . J • *. j. 

not officer, of ad- cer, agent or employee. Loans to any director, agent or 

comS bink, or employee other than an officer, or to any firm, copartner- 

TiSth whi^h such ship or corporation of which any director, agent or em- 

memberis connected, pj^y^g ^^^i^^ ^^^ ^n 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- 
cial bank, not otherwise an officer of such bank, or a loan 
Conditions govern- ^^y ^g 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 

[1101 



COMMERCIAL BANKS § 83 

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 Conditions govern- 
of all the directors of such bank and the affirmative vote (Cont'd.) 
of all directors of such bank present at the meeting 
authorizing or confirming such loan. Such interested 
director shall not vote or participate in any manner in 
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 mionths be renewed from time 
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, 

[III] 



§83 BLYTH. WITTER & CO. 

copartnership or corporation in which he is a member, 

stockholder, director, officer, agent or other employee. 

Facts concerning The fact of making such loan, the name of the director 

such loans to be re- , . . , , , tit 

ported to Supt. authorizmg such loan, the name or the director, agent or 
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. 
In case a loan is made to a corporation there shall be re- 
ported in the same manner the name of each director 
and officer of such bank who is a member, stockholder, 
director, officer or employee of such borrowing corpora- 
tion and the amount of stock held by him in such borrow- 
Provisions of Sec. ing corporation. All the provisions of this section relating 

as to reports apply . in 

to granting of credit, to reports shall 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 

Report to be made is made. In case of a loan made without the previous 

of loan without pre- ... riT ir ri- i 

Tious authorizatio«. authorization OF the directors, the tact or 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, , •iiiii*i i 

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. o ^ " ^ 

neglect or failure of the secretary or cashier of any such 
bank to report to the superintendent of banks, as herein 

[112] 



COMMERCIAL BANKS § 83-84 

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. 

This section shall not apply to any loan made to a Loans to religious 

corporations, etc., 

religious corporation, club, or other membership cor- when section not ap- 

plicable thereto. 

poration or which one or more directors, omcers, agents 
or employees of such commercial bank may be members 
or officers but in which they have no financial interest. 

No loan may be made to any corporation, a majority Loans to corporation, 

•^ J t- ■> J J where majority 

of the stock of which is owned or controlled by any one stock owned, etc., 

by directors, etc., of 

or more of the directors or officers of such commercial bank— restricted, 
bank, except with the previous consent, of the superin- 
tendent of banks. 

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 

' "* •" .^ s» employee of comm'l 

ployee of a commercial bank, on the security of United u*°^'i,°o°dr"/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 pledged 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, amended 1919: 

The amendment of this section occurs in the last paragraph, and is identical 
in phrasing with one of the amendments made to Section 65 of the Bank Act; 
the application here is to commercial banks, while that of Section 65 is to savings 
banks. The amendment removes the limitation made upon loans granted to 
directors, agents or employees of a commercial bank on the security of certain 
obligations of, or issued under the authority of, the "United States, as specified in 
the last paragraph of the section.] 

Section 84. No commercial bank shall invest an Limited investment 

, permitted in bank 

amount exceeding its paid-up capital and surplus m the premises. 

[1131 



§ 84-90 BLYTH. WITTER & CO. 

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. 

Supt may limit de- Section 85. The superintendent of banks shall have 

posits with other i.«i rrii ii 

commercial bank power to limit the amount or runds that may be de- 
posited by any commercial bank with any other com- 
mercial bank. 

ARTICLE IV. 

TRUST COMPANIES. 

What constitutes a Section 90. 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 exe- 
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 
pia^eTf^busiiSn dollars actually paid in, in cash, assigned to or available 
norover^oofooo and for the purpose of conducting business in any such 
^"'^"notTe^ss^than Capacity, or trust business of any character permitted by 
tJw°bus'SeTs^ 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 

[1141 



TRUST COMPANIES §_90 

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 trustee for any purpose permitted by law, which has As to trust company 

. . 1 I £1 • • •*. • I.* U 4.U having principal 

its prmcipal place or business m a city in which the popu- place of business in 
lation exceeds one hundred thousand persons and which exceeding 100,000 and 
has a capital of at least two hundred thousand dollars aUea^tTawrooo 
actually paid in, in cash, assigned to or available for the busSss. ** 
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 
individual and when so qualified shall be known as a 
trust company. Any such trust company may, as pro- Powers conferred on 
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 

. i' .y » ^ f f ^.^y ^^ population 

tion of which does not exceed one hundred thousand per- not over 100,000 to 

. segregate and appor- 

sons must segregate that portion of its capital and surplus tion capital and 

. , . J surplus as security 

assigned to or available for its trust business and must for performance of 

rr 1 J J 11 £ private and court 

apportion and set aside at least hrty thousand dollars or trusts, respectively, 
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, 

[115] 



I 84-90 BLYTH, WITTER & CO. 

When such trust under the provision of sections ninety-six and ninety- 
company under Sees. * ^ j 

86 and 98 makes eight of this act, be required to make the first additional 

first additional de- ° > t 

.xJ'«l".*'L^®°"'^^*^®^ deposit of securities with the state treasurer, such trust 

with State Treasurer, "^ 

it must set aside ad- company must also apportion and set aside an additional 

ditional amounts of *^ . 

paid-up capital, as fifty thousand dollars of paid-up capital as security for 

specified, as addi- , - . , ^ , . , . r n . 

tionai security for the raithrul performance and execution or all private 

performance of i i • i i . i 

private and court 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 
Any such trust com- trust company, if located in a city, the population of 

pany, if located m i i i i i 

city of population which excecds One hundred thousand persons, must 

exceeding 100,000, . ^ . • i i . i 

must segrregate that segregate that portion or its capital and surplus assigned 

portion of capital •! i i r • i • i 

and surplus assigned to or available lor its trust business and must apportion 

to its trust business, . ., . iiii iin r 

and must apportion and Set aside at least one hundred thousand dollars or 
thereof as security such paid-up Capital as Security for the faithful perform- 

for the performance , • r i • i ii • i 

of its private trusts, ance and execution or such private trusts, nor shall it be 

prohibited from so doing; and provided, further, that the 

Amounts of capital respective amounts of capital or capital and surplus so 

or capital and surplus . , - •iini i-ii 

so apportioned to be apportioned and set aside shall be treated m all respects 

treated as separate . , , • i i i r i 

capital or capital as the Separate capital or capital and surplus or each 

and surplus of each . i-i i e ^ • .i i.i 

respective class of respective Kind or class or 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, protection and security of the 

respective classes of trust business to which the same 

Where executor, ad- were respectively so apportioned and set aside. In all 

ministrator, etc., to ...i.. -ii !•• 

qualify by taking cases m which it IS required that an executor, admmis- 

oath, etc., or where i. r • • i • 

affidavit required, it trator, guardian or estates, assignee, receiver, depositary 

shall be sufficient if in iti i« i i m* 

same be taken or or trustec, shall qualify by taking and subscribing an 
dent, etc. ; such ofi- oath, or in which an affidavit is required, it shall be a 
faihu-e'^of tri*t com- Sufficient qualification by such corporation if such oath be 
duties required by taken and subscribed or such affidavit be made by the 
president, vice president, secretary, manager, trust offi- 
cer, assistant trust officer or regularly employed attorney 
thereof, and such officer or employee shall be liable for 
the failure of such trust company to perform any of the 

[1161 



TRUST COMPANIES §_90 

duties required by law to be performed by an individual 
acting in like capacity and subject to like penalties; pro- 
vided, any such appointment as guardian shall apply 
to the estate only, and not to the person. 

Any trust company upon becoming a member of a Trust company be- 

--, ii- I'll 1 coming member of 

federal reserve bank is authorized and empowered: Federal Reserve 

bank authorized to 
ry, . •, . . . , . continue to adminis- 

lo continue to administer, execute, enjoy and exercise ter, execute and en- 
all court and private trusts as defined in the bank act, rights, privileges, 

. I ^ . .| 1 .^i r 1 • 1 ^' etc. ; also to take, 

powers, rights, privileges, and other hduciary relations, execute, etc., all 

. ^ . 1 i • •. r M. aA. M.' £ new court and private 

appointments and business it may have at the tune or trusts as defined in 

1 . ^^ X. ±. !_ Jlj.il Act, and other pow- 

becoming such trust company member, and also to take, ers, etc., subject to 

. 1 J ' ' M. 11 i.J'j.j.1. requirements and 

execute and administer all new court and private trusts limitations imposed 
as defined in said bank act, including the right to the under*Act!°'^^°'^**^°° 
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- 
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 foreign corporation may be authorized to act in this 
state as trustee for the following purposes: 



Foreign corporation 
authorized to deliver 
bonds and receive 
payment or bonds in 
exchange ; to regis- 
ter, redeem and 
cancel bonds ; to pay 
/o\Trji» .!«• 1 f interest on coupon 

yZ) to deliver permanent bonds m exchange for bonds and cancel 

interest coupons, and 



(1) To deliver bonds, and receive pasrment therefor. 



temporary bonds of the same issue. 

[1171 



§90-91 BLYTH. WITTER & CO. 

inder mort"l*r (^) '^^ dclivcr refunding bonds in exchange for those 
deed of trust, etc., ^f j^ prior issue or issues. 

securing notes or »^ 

bonds issued by any 



corporation, 

specified. 



(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 pasrments. 

(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, amended 1919: 

This amendment, contained in the three paragraphs preceding the final para- 
graphs relating to foreign corporations acting as trustees, seeks to preserve the 
continuity of the trust relationships established by existing trust companies when 
they enter the Federal Reserve system. The amendment is one of precaution, and 
by common consent is considered to be necessary.] 

Court may authorize Section 91. Any court having jurisdiction of any 

trustee or other , . . i . . . j 

fiduciary to deposit executor, administrator, guardian, assignee, receiver, ae- 

trust fund with trust . i t . • r i_ 

company, subject to positary or trustee, upon the application or any such 
officer or trustee, or upon the application of 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. 

[1181 



TRUST COMPANIES § 92-93 

Section 92. Any public administrator may deposit may'ipoStstate*'' 
any or all moneys of any estate upon which he is ad- for cur?en/e2"?nses 
ministering, not required for the current expenses of such ^^*^ ^^^^ *^"^* 
administration, with any such trust company having its 
principal place of business in the county, or city and 
county in which he is acting as such administrator. Any Court may direct 

....... , ,. such administrator 

court havmg jurisdiction or an estate being administered to make deposit 

, ...... .. i-i.. with such trust 

by a public administrator, may direct such administrator company. 
to deposit all or any part of the moneys of said estate with 
any such trust company. Such deposit shall relieve the 
public administrator from depositing with the county 
treasurer the moneys so deposited with such trust com- 
pany. Moneys so deposited by a public administrator 
may be drawn, upon the order of such administrator, How such deposit 

1 I . I f I . , may be withdrawn. 

countersigned by a judge or the superior court, when re- 
quired for the purposes of administration, or otherwise. 

Section 93. Any court having jurisdiction of any court may, under 

(.■,... , , specified conditions, 

estate m process or administration, or any other proceed- order executor, ad- 

,. . - . 11. ministrator, guard- 

ing, may, on application or any person interested therein, ian, trustee, etc., to 

I 111 111 '1 deposit trust funds, 

or the person who has been selected by said court, or a etc., with any such 

I I i. •, . . , . trust company, 

judge thereor 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 
of said estate as the court shall deem proper, and upon Effect of such 
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. 

[119] 



§ 94-96 BLYTH. WITTER & CO. 

^Te* iS^toyve Section 94. Such trust company shall not be required 
bond. tQ 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 for all investments which shall be made by 

sponsible for invest- . f ■, f i t - ^ i i ' c ' 

ments. it ot the runds which may be entrusted to it tor 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 . , . i . | 

deposits, upon all 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 ^nd 
agreed to by such trust company. 

Trust company, if Section 96. Any such trust company, if its principal 

principal place of r i . . . i . • i i . r 

business in city of pjace ot busmess IS Situated m a city the population or 

population not ex- i i i i i 

ceeding 100,000, be- which docs not excccd oue hundred thousand persons, 

fore accepting ap- , , i . i ii 

pointment, etc., to bctore accepting any such appointment or deposit, shall 

make specified de- . . • i i 

posits with State deposit With the State treasurer, as herein provided, at 
performance of its least fifty thousand dollars as security for the faithful 

court trusts and . i • r ii i 

private trusts, pertormance and execution or 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 
* ^under Sec^sV 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 
Trust company, if trust company if its principal place of business is situated 

principal place of. ,, ., ri'i i ill 

business in city of m a City the population or which exceeds one hundred 

population exceeding , , i r i* i_ 'a. 

100,000, to make thousand persons, berore accepting any such appomt- 

with sTa\e^Trel^su^rer ment or deposit, shall deposit with the state treasurer, as 

ance of its court herein provided, at least one hundred thousand dollars, 

private ^^ security for the faithful performance and execution of 

[120] 



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 Deposit to consist of 

may be made either in lawful money of the United States, Sassi^f s^ecuTiSfs: 

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 

^ ' ^ '' ^ "^ ^ , IT. S. or by 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 legal for investment by savings banks; 

(b) Bonds for the payment of which the faith and ^\>„f ^Jh^ ^crJ^it 
credit of the United States or of this state are pledged; ?s^;dgJd.°^^***^ 

(c) Notes or bonds secured by mortgage or deed of ^^^J^dby morTglge 
trust constituting a first lien on improved and productive rg^ir^^^c^^ ^*^* 
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 

, , secured by mortgage 

trust, payment of which is guaranteed by a policy of or deed of trust, 

, . . • »f, payment of which 

mortgage msurance, and mortgage participation certin- guaranteed by 

, , , _ mortgage-insurance 

cates, issued by a mortgage msurance company m accord- policy and mortgage- 

• I I • • e ^-11 « Tttt e »x" 1 »» * participation certi- 

ance with the provisions or Chapter VllI or title 11 or ficate issued pursuant 
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 real estate 
in the State of California, such improved real estate being 
worth at least double the amount of such lien. 

Such money or securities shaU be first approved by the fe" tiT^ rb^first 
superintendent of banks and, upon his wTitten order, de- ^^^^^''^^ ^^ supt. 
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 

[1211 



§ 96-97 BLYTH, WITTER & CO. 

state Treasurer to qJ jhis act, shall hold such dcDosits of moncv or securities 

hold deposits sepa- ' ^ •' 

rateiy, for benefit of separately, each for the sole benefit of the beneficiaries 

beneficiaries, etc., r ^/ 

and State to be re- of the class of trust business, for the security and protec- 

aponsible for deposits. ^ ^ ' ^ •' ^ "^ 

tion of which the same was deposited, and said treasurer 
shall give his receipt therefor and the state shall be re- 
sponsible for the custody and safe return of any money 
Securities may, with or securities SO deposited. Said securities or money so 
be wiSdraw/w ei- deposited may with the approval of the superintendent 
changed. ^£ bauks, be withdrawn or exchanged from time to time 
for other like securities, or lawful money, receivable as 
Trust company to re- af oresaid, and so long as the trust company so deposit- 
dividInds*o^rs^ecS?^ Mg Said money or securities shall continue solvent, it shzJl 
ties deposited. ^^^^ ^^ ^j^j^^ ^^^ ^^^ ^^ permitted by the state treas- 
urer to receive the interest and dividends on any securities 
so deposited. Said securities and money shall be subject 
Said securities and to Sale and trsuisfer, and to the disposal of the proceeds 
sSrand^wsfer! by Said State treasurer, only on the order of a court of 
«re^ds,'?niy*in^cS Competent jurisdiction and for the benefit respectively 
order, etc. ^£ ^^ beueficiaries of that class of trust business for the 
security and protection of which the same were deposited. 

[Publishers' Note, re Section 96: 

This section remains unchanged. With reference to the "Notes or bonds 
secured by mortgage or deed of trust payment of which is gruarantecd by a policy 
of mortgage insurance, and mortgage participation certificates, issued by 
a mortgage insurance company" in accordance with specified provisions of the 
Civil Code, see Appendix for provisions of the Civil Code referred to.] 

Trust company hav- SectioH 9 7. Any such trust CGmpany, having a capital 
plus of $200,000 or and surplus of two hundred thousand dollars or more 

more apportioned as . _ .. . if«iri 

security for perform- apportioned and Set aside as security ror the raithrul 

ance of court trusts . i • r ii i 

:and wholly or in part performance and execution or all court trusts accepted 

invested in its busi- ,. •ii-i* ii-i* iii 

ness premises, may by it, as provided m this act, and which IS w^holly or in 
Supt. to mortgage part invested in the lot and building in which its business 

same to State Treas- . ., i -..ii.! • ^ ^ . e 

urer, as part of de- IS camcd on, may DC permitted by the superintendent or 
' 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 

[1221 



TRUST COMPANIES %_9S 

security for the faithful performance of all such court 
trusts. 

Section 98. Whenever any trust company, the prin- when trust company 

"^ ^ ., whose principal 

cipal place of business of which is located in a city the place of business is 

, -^ in city of population 

population of which does not exceed one hundred thou- not exceeding 100,000 

, - , receives from court 

sand persons, receives from court trusts accepted by it, ^^u^^s ^^^st 

, 4./-1 funds, in amounts 

trust funds, as herem denned, to the amount of five hun- as specified, respec- 

i«i 11 11 •■iii>i«i *r » •• tively, such company 

dred thousand dollars, it shall forthwith notify m vnritmg in each case to 

1 . 1 i>ii r !<• i»t» notify Supt. and 

the supermtendent of banks of such fact, and withm thereafter to deposit 

_, _ _ - 1111 • •It additional security 

thirty days thereafter shall deposit with the state treasurer with state Treasurer, 

--,,_ ••i»ii • to be held for the 

additional money or securities of the character mentioned sole benefit of the 

____, , . •i»t. 1 beneficiaries, as 

and defined m section nmety-six of this act, approved as specified. 
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 this 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 dollars of 
such money or securities, or of securities provided for in 
section ninety-seven of this act likewise approved, shall 
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 all 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 

[123] 



§98 BLYTH, WITTER & CO. 

^stbie*for\uci?de- ^^^^^ wcrc deposited. The state shall be responsible for 
posits, the custody and safe return of any money or securities so 
deposited with said state treasurer. The term '* trust 
"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- 
ing to comply with .- - . . /.. . 1 11 r i. . 1 

Sec. to forfeit to ply with the provisious of this section shall forfeit to the 

state $100 a day. *^ "^ , , 

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 en- withdraw from the state treasurer, from time to time, a 
from state Treasurer Sufficient amount of such securities so that at all times the 

amount of securities . r t •■• i '^ i i_ ii * m. 

in excess of require- amount of such securities SO deposited shall conform to 
men s c . ^j^^ requirements of this act, and so that at no time shall 
such trust company be required to have on deposit with 
the state treasurer an amount of securities in excess of 
the requirements of thb 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 

proceedings by trust - t i . i i L 

company in adminis- ot any act or proceeding done or taken by any such 

tration of trusts not i • . • . • 'j.! j.L J 

affected or impaired trust Company, relating to or in connection with the ad- 
of°rusTcompany or ministration of any such trusts, shall not be affected or 
^compirwith^^Act! 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 

[1241 



TRUST COMPANIES §98-101 

the revocation by any court or judge thereof of the ap- 
pointment, order or decree theretofore entered in such 
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- when part of de- 
posit consists of 

posited with the state treasurer consists of notes or bonds notes, bonds or par- 
ticipation certifl- 

secured by mortgage or deed of trust, it shall be accom- cates secured by 

. , , _ , mortgage, etc., same 

panied by a registrar of titles certificates as to the con- *<> ^e accompanied 

T • r I • 1 • r 1 11 1 1 ^y policy of mort- 

dition or the title ir the notes or bonds are secured by eage insurance, or 

abstract of title, 

mortgages covermg property which has been brought etc. 
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 and poii- 
of title, which shall be examined and approved by or and approved under 

111.. r«i • 1 riiT-i direction of Supt. 

under the direction or said superintendent or banks. 1 he 
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 ciassiflcation of 
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" 

. 1 1 r defined. 

acts under appointment, order or decree or any court, 

[1251 



§ 101 BLYTH, WITTER & CO. 

as executor, administrator, guardian, assignee, receiver, 
depositary or trustee, or in which it receives on deposit 
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 trusv' ^^y Other trust is a private trust; provided, that the 

creator of any private trust of which a trust company 

Private trust may be shall be made, or at any time come to be, the trustee, 

subjected to pro- i • r i • r i i 

visions of Bank Act may, at the time or the creation or such trust or the 

relating to court . . . . . . . 

trusts— by the per- Creator OF any such private trust, or his successors m in- 

Bons, and under the i i i r • • i r • i 

conditions, specified terest, and the benehcianes thereor 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. 

In case such direction shall be made after the accept- 
ance of the trust, the trustee shall have the right to resign 
as such and a new trustee shall be appointed as provided 
Inspection and super- in the trust instrument or by law. The inspection and 
covers court trusts, supervision of the superintendent of banks shall extend 

also private trusts i • i r i i • 

when subjected to only to court trusts as herein denned and to private trusts 
subjected to the provisions of this act relating to court 
trusts as above provided. 

Private trusts, ex- Private trusts, except as in this section provided, shall 

cept as m Sec. pro- » *r 

vided, not subject to not be subject to the inspection or supervision of the 

supervision of Supt. 

superintendent of banks, his attorneys, examiners or other 
assistants. 

[1261 



TRUST COMPANIES § 101-103 

In making the reports to the superintendent of banks ^akhi^'^rToSto" 
required by this act, every trust company shall, in addi- f"e^c\'fi*^hiforma 
tion to the other facts to be reported by it, furnish only tion as to its court 

'^ •' "^ trusts and private 

a list and brief description of the court trusts and private trusts subject to 

1-1 1 . . . 1111.1 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 when person or cor- 

. . poration, not a trust 

any person or corporation not subject to the supervision company, may hold 

-I . , fii 'ii' money in escrow or 

or the superintendent or banks to engage m 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. 

Section 1 02. Any corporation which desires to with- JhiSi^'desfres^to" 
draw from and discontinue doing a trust business shall discontinue trust 

" business, furnishinsr 

furnish to the superintendent of banks satisfactory evi- evidence of release 

* "^ and discharge from 

dence of its release and discharge from all the obligations f^^ obligations and 

*=» ° trusts, Supt. shall 

and trusts hereinbefore provided for, and thereupon the revoke certificate 

^ ^ oi authority to do 

superintendent of banks shall revoke his certificate of t^^^t business and 

state Treasurer 

authority to do a trust business theretofore issued to such ^\^^^ return deposits, 

etc. 

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. 

Section 103. Any trust company exercising the pow- fonfidentiTi'*" ***"" 
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 

[127] 



§ 103-106 BLYTH. WITTER & CO. 

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 

knowledge of writ- • i • • i rf 

ings, etc. 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.) 

^°'?ai?surp°iusand Scctioii 105. Evcry trust Company shall, except as 
trust funds by trust otherwise provided by law, invest its capital and surplus 

company. ^ t «- «- 

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 is 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. 

^7o depStStli Section 1 06. Any such trust company desiring to do, 

have^capitai^lpecTfie^d °^ doing, a Commercial banking business or a savings 

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. 

Title insurance com- Any title insurance company authorized by its articles 

pany authorized to ^ 

do, or doing, trust of incorporation to do, or doing a trust business, in addi- 

busmess, shall com- ^ T . , . . 

ply with specified tion to its title insurance business, shall comply with all 

requirements. 

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 

1128] 



TRUST COMPANIES § 106-107 

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 
insurance company, instead of as separate departments 
or classes of business. Any trust company and any title Trust company and 

. . . IT- title insurance com- 

msurance company domg a departmental busmess as pany doing depart- 

- •11 •• ri- "^sntal business to 

above provided shall comply with the provisions or this comply with depart- 

mental provisions 

act governing each of such departments and with the of Act, etc. 
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 Further provisions 

•^ or affecting last-men- 

business as a title insurance company and as a trust com- tioned company. 
pany, shall, as to its trust department, be subject to the 
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- 
lations of the banking department of this state applicable Proportionate part 

,_,. . ^ . of State banking 

to trust companies. Ihe proportionate part or the state fund payable by 
banking fund provided for by section one hundred and etc. 
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. 



[129] 



§120-121 BLYTH. WITTER & CO. 



ARTICLE V. 
STATE BANKING DEPARTMENT. 
state Banking De- Section 120. There is hereby Created a State banking 

partment created. i • c rr 

Superintendent's department. The chief officer or such department shall 

appointment, tenure, • i i r i i i i 

salary, oath and be the supenntendent thereor, and be known as the sup- 
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- 
Th^ir°quaiiflca*ioni ploy a chief deputy, attorney and such examiners and 

duties and compensa- ^^.j^gj. 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 

tio°nof X'efTeputT 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 

[1301 



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 
of the absence or inability to act, or vacancy in the office intendent, chief 
of the superintendent of banks for 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 
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 Superin- 

*^ tendent in San Fran- 

his principal office in the city of San Francisco, and may «"«<> *°^ ^o» 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 

1 11* fi 1 f'lfiini created, out of which 

as the state banking rund, and out or said rund shall be expenses of banking 

.iiii . i. 11 1 1 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- 

[131] 



§123 BLYTH. WITTER & CO. 



annuaUySshare of amincrs and Other assistants, traveling expenses, furnish- 
afcorSrjpta'i ^^^ ^^ ^^^^^^ and rent. Each bank shall pay annually its 
and surplus, 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 

sum, if same suffi- ent of banks may, in any fiscal year and in the exercise 

cient to pay ex- i* ^ ^ 

penses. q{ J^jg 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 moneys collected or received by the superin- 

tion of State bank- c i i i ii« 

ingfund. tendent or banks, under and by virtue or 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- 

control of $2,000, to . , . , i ii i i . 

be used as revolving ever, that the superintendent shall have authority to re- 
fund for benefit of . . . i i i • 

Dept., etc. tain m his possession and under his control the sum of 

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 

rata of expense, such bank shall fail to pay such charges as are herein 

[132] 



J 



STATE BANKING DEPARTMENT § 123-124 

required, the superintendent shall forthwith cancel the 
certificate of said bank. 

[Publishers' Note, re Section 123, amended 1919: 

This amendment increases the appropriation required for the conduct of the 
State Banking Department to $110,000 a year, or as much less as may be neces- 
sary properly to administer the banks through the agencies of supervision and 
visitation, and also permits an increase in the revolving fund which is directly 
under authority of the Superintendent of Banks from $500 to $2000, The con- 
sensus of opinion of both the bankers and the State Banking Department is that 
the amendments are necessary for a proper government of the banks. The banks 
of this state have expanded enormously within the last few years in assets and 
liabilities, and the duties involved in their supervision have become very much 
greater than they were when the original fund was established.] 

Section 124. Every bank and the trust department Every bank, and 

f. • 1 . 1 . 1 . trust dept. of title 

or every title insurance company doing a trust business, insurance company 

iiii |. i. . /•! . 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- 

I • 1 f 1 1 11 • aminers as specified, 

the superintendent or banks, to be known as examiners, to examine every bank 

III.., . 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 examina- 

I 111- 1 T . 1 r ^^''^ shall cover. 

be made by him as to the condition and resources or 
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 or any bank renders it necessary or for which bank shall 

I . I . . I pay $20 per day for 

expedient to make an extra examination or to devote any each bank and each 
extraordinary attention to its affairs 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 

[1331 



§ 124-125 BLYTH. WITTER & CO. 

Supt. may examine gach branch officc of each bank. The superintendent of 

California agency of 

foreign bank, banks shall also havc power to examine, or cause to be 
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 
other matters as the superintendent may prescribe. The 
On examination superintendent, chief deputy, and every such examiner 

Bupt. may administer i n i .1 ^ i • • ^ ^.1. ^ 

oath and compel at- shall have the power to admmister an oath to any person 

tendance of wit- 1 . . • 1 • .1 • i.* r 

s. whose testimony he may require on the examination ot 



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 pose of any such examination. When a bank shall have 

doubtful securities . >ii • iiri 

to Supt. been examined by any examiner, and he iinds 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 bank 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 ,.,„,, , 1 . .1 

insurance business, herein shall be deemed to authorize or require the sup- 

of corporation doing ■• r 1 1 • • i_ • 

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. 

[Publishers' Note, re Section 124, amended 1919: 

This amendment provides, in substance, that whenever the Superintendent of 
Banks may deem that a bank requires extraordinary or extra attention and ex- 
amination, he may have authority to charge at the rate of $20 per day for such 
examination for the main oflce and each branch of the institution. He was pre- 
viously restricted to a charge of $20 a day in an extraordinary examination of a 
bank, irrespective of the number of its branch offices. The extension of branch 
offices has made the amendment necessary,] 

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 

[134] 



STATE BANKING DEPARTMENT § 125-127 

and cause the same to be filed in the office of the secre- 
tary of state. No such examiner shall be appointed No examiner to be 

1 rr • 1 appointed receiver 

receiver or any bank whose books, papers and airairs he of bank examined 

by bim. 

shall have examined pursuant to his appointment. 

Section 126. If the chief deputy or any examiner Neglect of chief 

1111 1 11 r.1'1 f T deputy or examiner 

shall have knowledge or the msolvency or unsare condi- to report known na- 
tion of any bank mentioned in this act, and that it is made^'feiony"^ 
unsafe or inexpedient to permit said bank to continue 
business, and shall neglect to forthwith report such fact 
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 

Supt. prerequisite 

organize a corporation to conduct any one or more or all *« organizing a 
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 Bank must have a 

11111 1. .1. .1 1 certificate from Supt. 

bank shall transact any busmess m this state without the before transacting 

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, w^ithin this 

state, the business specified therein ; which certificate may certificate may be 

be withheld by the superintendent of banks whenever he Tnder ^certain condi- 

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 ^ ,., , , , ^ 

•^ .1 . r Certificate not to be 

laws of this state. Before issuing such certificate the issued before ex- 
amination and com- 
superintendent of banks shall examine, or cause an ex- piiance with require- 

.... ments as to capital 

amination to be made, in order to ascertain whether the and surplus. 

II35] 



§ 127-129 BLYTH, WITTER & CO. 

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 
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: 

This section remains unchanged. See Appendix, for copy of Section 1278, 
Code of Civil Procedure, providing, in effect, that a banking corporation desiring 
to change its corporate name shall file in court a certificate of the Superintendent 
of Banks that the name desired does not too closely resemble that of any other 
bank.] 

Sse^'cyJ^'ofStlte Section 128. When the certified copy of articles of 
and application made incorporation of any bank shall have been filed with the 

for certificate, Supt. * *^ 

to ascertain fitness secretary of State, and application made for the issuance 

of persons named as -^ '^ '^ 

stockholders, etc. 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 twenty-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- r i i r L 

lish separate flnan- j^^gs 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 

[1361 



STATE BANKING DEPARTMENT § 130 

publish the statement for each department as provided 
in section one hundred thirty-two of this act. 

Section 130. Every bank, organized under the laws Verified reports to 

f I • fill -111 . 1 ^® °^^^® ^y ^^^^ 

or this state, shall, whenever required by the superintend- whenever required 

f I I I . . . , . . r 1 I'y Superintendent. 

ent or banks, make a report m writing to him, verihed 
by the oath of its president and its secretary or cashier, 
or two principal officers. Such report shall show the what such reports 

fill !• ™^^* 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: 

1 . The amount of its capital stock and the number of 
shares into which it is divided. 

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, specifying 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 

[137] 



§ 130 BLYTH. WITTER & CO. 

^rts mSt'sW- ^^ ^^y name other than that of the bank and the instru- 
cont'd. 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. 

1 1 . The amount and kind of money on hand or de- 
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 where 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, which 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. 

Calif ornia branch of Every foreign corporation transacting the business of 

foreign bank to ren- ^ ^ ^ 

der verified report to banking in this State shall make the report herein re- 

Supt. 

quired as far as such report may relate to the affairs of 

[138] 



STATE BANKING DEPARTMENT § 130-132 

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. 

Section 1 30a. In addition to the information obtained supt. may require 

any bank to furnish 

from the report required by the provisions of section one additional verified 

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 wiifui false state- 

" ment m report 

wilful false statement in the premises shall be perjury and deejned perjury. 
shall be punished as such. 

Section 131. The superintendent of banks shall call Supt. to call for 
for the reports specified by section one hundred thirty of three times a year. 
this act at least three times each year. The "past day 
designated by the superintendent" of banks under the 
provisions of section one hundred thirty of this act shall 
for at least three times be the day designated by the 
comptroller of currency of the United States for reports 
of national banking associations. 

[Publishers' Note, re Section 131, amended 1919: 

This amendment is designed particularly to make coincident at least three 
of the called reports demanded by the Superintendent of Banks with the called 
reports demanded by the Comptroller of the Currency. It is intended to give 
wider, more critical and more intimate information, from the point of view of 
both State and National supervision.] Bank shall publish 

Oi* \ 1'% Ai-il-i* t C. •!-• 1- J. condensed statement 

oection \dI. At the time or rurnishing such report of financial condi- 
to the superintendent of banks, every bank shall also ishing a w report. 

[139] 



§ 132-133 BLYTH. WITTER & CO. 

publish a condensed statement of its financial condition, 
at least once, in some newspaper of general circulation, 
published in the city or town where its principal place 
of business is located, and, if no paper is published in 
such town, then in some newspaper of general circulation 
in the county where its principal place of business is 
What published located. Such published statement shall show the total 

statement shall show. . . . 

amount oi loans, the total amount of overdrafts, the 
total amount invested in bonds and other securities, the 
total amount due from banks, the total amount of checks 
and other cash items, the total amount of cash on hand, 
capital paid in, surplus funds; undivided profits, less ex- 
penses and taxes paid; due to other banks and bankers, 
due to trust companies and savings banks; individual de- 
posits subject to checks; demand certificates of deposit; 
time deposits; certified checks; cashier's checks outstand- 
ing; and such other items as will show the actual financial 
condition of the bank making the report. 

iSpa^mfnt oftp^^^^ Section 1 33. Whenever it shall appear from the report 
*Snk\o make good' ^^ ^^^^ ^^^^' ^^ t^® Superintendent of banks shall have 
the deficiency wuhm reason to believe that the capital of any bank is impaired 
or reduced below the amount required by law, it shall 
be the duty of the superintendent of banks and he shall 
have the power to examine said bank and ascertain the 
facts, and in case he finds such impairment or reduction 
of capital, he shall require such bank to make good the 
deficiency so appearing within sixty days after the date of 
^ievy a" efsment to ^^^^ requisition. The directors of every such bank, upon 
repair deficiency. y^J^ich such requisition shall have been made, shall levy an 
assessment upon the stock thereof to repair such defi- 
ciency, and shall cause notice of such requisition to be 
stock assessments to given to cach Stockholder of the bank and of the amount 

make good impaired *=» 

capital. Qjf jj^g assessment which he must pay for the purpose of 
making good such deficiency, by a written or printed 
notice mailed to such stockholder at his last known ad- 
dress or served personally upon him. If any stockholder 

[140] 



STATE BANKING DEPARTMENT § 133 

shall refuse or neglect to pay the assessment specified in f/g'^'n^dToiirct^nY' 
such notice within thirty days from the date of mailing or ^JoS!"'^''* °° ^'""'^ 
serving such notice as aforesaid, the directors of such 
bank shall have the right to sell to the highest bidder at ^g^.'l^'.^^.Sck af 
public auction the stock of such stockholder, after giving P"vate sale. 
a previous notice of such sale for ten days in a newspaper 
of general circulation published in the county where the 
principal place of business of such bank is located, and 
a copy of such notice of sale shall also be served on the 
owner of such stock by being served personally on him or 
by mailing to his last known address ten days before the 
day fixed for such sale; or such stock may be sold at 
private sale and without such public notice; provided, 
however, that before making such private sale thereof 
an offer in writing shall first be obtained and a copy 
thereof served upon the owner oT record of the stock Method of making 
sought to be sold, either personally or by mailing a copy 
of such offer to his last known address, and if, after 
service of such offer, such owner shall still refuse or 
neglect to pay such assessment within two weeks from 
the time of the service of such offer, the said directors 
may accept such offer and sell such stock to the person 
making such offer, or to any other person or persons mak- 
ing a larger offer than the amount named in the offer 
submitted to the stockholder; but such stock shall in no 
event be sold for a smaller sum than the valuation put 
on it by the superintendent of banks in his determination 
and requisition as to said assessment, nor for less than 
the amount of said assessment so called for and the ex- 
pense of sale. Out of the avails of the stock so sold, the Application of pro- 
ceeds of sale. 

directors shall pay the amount of assessment levied 
thereon, and the necessary costs of sale, and the balance, 
if any, shall be paid to the person or persons whose stock 
has thus been sold. A sale of stock as herein provided Effect of sale, upon 

- .. _. _ 11 • r 1 T stock sold. 

shall effect an absolute cancellation of the outstanding 
certificate or certificates evidencing the stock so sold, 

[141] 



§ 134-135 BLYTH, WITTER & CO. 

and shall make the same null and void, and a new certi- 
ficate shall be issued by the bank to the purchaser thereof. 

baiA to'dScontinue Section 1 34. If it shall appear to the superintendent of 
articili°« state°iVw! ^anks that any bank has violated or failed to comply with 
®*°* the provisions of its articles of incorporation, or any law 
of this state> he may, by an order under his hand and 
official seal, which seal must be adopted by him, addressed 
to such bank, direct such bank to discontinue such viola- 
tion and to comply with the law; or, if it shall appear 
to the superintendent of banks that such bank is conduct- 
ing business in an unsafe or injurious manner, he may, 
in like manner direct the discontinuance of any such un- 
Such order shall re- safe or injurious practices. Such order shall require such 

quire banks to show . . iri -i rii 

cause why order shall bank to show causc, beiore the superintendent or banks, 

not be made final. . .. iriii* i 'ii 

at a time and place to be fixed by him, why said order 
should not be observed. If upon such hearing it shall ap- 
pear to the superintendent of banks that such bank is 
conducting business in an unsafe or injurious manner, or 
is violating or failing to comply with the provisions of its 
articles of incorporation, or any law of this state, then 
the superintendent of banks shall make such order final, 
and such bank shall immediately comply with such 
order made by the superintendent of banks. Such bank 
If such order is made shall have ten days after any such order is made final 

final, bank has 10 . , . , . , . . . 

days to secure in- m which suit may be Commenced to restrain enrorcement 

* of such order, and unless such action be so commenced 

and enforcement of said order be enjoined within ten 

days, by the court in which such suit is brought, then such 

bank shall comply with such order. 

Supt. may call meet- Section 135. Whenever the superintendent of banks 

ing of stockholders ^ ^ *^ 

of bank, shall deem it expedient he may call a meeting of the 
stockholders of any bank organized under the laws of 
this state, by a personal notice of such meeting for fifteen 
days previous thereto. All necessary expense incurred in 
the serving of such notice shall be borne by the bank 
whose stockholders are required to convene. 

1142] 



STATE BANKING DEPARTMENT § 135a-136 

Section 1 35a. If the capital of any bank shall be im- involuntary dissoiu- 
paired, or if any bank shall refuse to submit its books, 
papers and concerns to the inspection of any examiner, 
or if any officer thereof shall refuse to be examined upon 
oath touching the concerns of such bank, or if such bank diSeXnk^^^^^^^ 
shall violate the provisions of its articles of incorporation, r™fu^l"/to*submir 
or any law of this state, or if such bank shall suspend pay- tUiatSgTaw of ""^ 
ment of its obligations, or if such bank shall conduct its ^***®' ®**'' 
business in an unsafe or unauthorized manner, or if from 
any examination or report provided for by this act the 
superintendent of banks shall conclude that such bank is 
in an unsound or unsafe condition to transact the business 
for which it is organized, or that it is unsafe and inex- 
pedient for it to continue business, an action to procure a 
judgment dissolving such corporation may be maintained 
by the superintendent of banks. 

Section 1 36. Whenever it shall appear to the superin- S"p*- ""ay *ake pos- 

111 .111 . . session of business 

tendent or banks that any bank has violated the provisions a^^ property of such 

• 1 r • • 1 «• 1 . bank until it resumes 

or its articles or incorporation or any law of this state, or i)usiness or its affairs 

... . be finally liquidated. 

IS conducting its business m an unsafe or unauthorized 
manner, or if the capital of any bank is impaired, or if 
any bank shall refuse to submit its books, papers and con- 
cerns to the inspection of any examiner, or if any officer 
thereof shall refuse to be examined upon oath touching 
the concerns of any such bank or if any bank shall sus- 
pend payment of its obligations, or if from any examina- 
tion or report provided for by this act the superintendent 
of banks shall have reason to conclude that such bank 
is in an unsound or unsafe condition to transact the busi- 
ness for which it is organized, or that it is unsafe and in- 
expedient for it to continue business, or if any bank shall 
neglect or refuse to observe any order of the superintend- 
ent of banks specified in sections one hundrd thirty-three 
or one hundred thirty-four of this act, the superintendent 
of banks may forthwith take possession of the property 
and business of such bank and retain such possession until 

[1431 



§ 136 BLYTH. WITTER & CO. 

such bank shall resume business, or its affairs be finally 
Procedure to be foi- liquidated as herein provided. On taking possession of 
conserving asssts the property and business of any such bank the superin- 
f airs of such bank, tendent of banks shall forthwith give notice of such fact 
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- 
Bank may resume sion as af oresaid. Such bank may, with the consent of 

business with consent . • i r i i i • i 

of Supt. the superintendent or banks, resume business upon such 
conditions as may be approved by him. Upon taking 
possession of the property and business of any such bank 
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 
doubtful debts. If a purchaser for any bad or doubtful 
debts can not be obtained and it appears improbable that 
recovery thereon can be had and that the costs of actions 
to enforce collection of the same would probably be lost, 
the court may direct that suits thereon need not be 
By order of court, brought. On like Order he may sell any real or personal 

Supt. may sell bad or riii i i 111 

doubtful debts, or property OF such bank on such terms as the court shall 

sue or refrain from ,. , .- iiiri 

suing thereon; may direct: and may, 11 iieccssary to pay the debts of such 

property of such bank, enf orcc the constitutional individual liability of 

stockholders' lia- stockholders by action to be brought within three years 

after the date of his taking possession of the affairs of 

such bank. The superintendent of banks shall determine 

the necessity of such action and the amount necessary to 

[144] 



STATE BANKING DEPARTMENT § 136 

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 Supt. shall file with 

county recorder notice 

superintendent of banks shall file a notice of pendency ^^ pendency of such 

of action in the county recorder's office of the county 

where such action is brought. At any time prior to the Creditor may in in- 

. t r 1 . ■■ . 1 dividual capacity 

trial or any such action, any creditor may serve upon the maintain action 

. . i.fii in •!! 1 • against stockholders. 

superintendent or banks and hie with the court wherein 
such action is pending, notice that he elects to maintain 
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 ^f ^ejin "Jen°t btnk 
any of the powers and duties hereby conferred upon him, or in his own name 

* prosecute and defend 

the superintendent of banks may, in the name of the de- s"^*^' ®*^" execute 

all instruments 

linquent bank or in his own name, prosecute and defend necessary to effectu- 
ate sale of real or 
any and all suits and other legal proceedings and may, in personal property or 

"^ compromise hy order 

the name of the delinquent bank or in his own name as ^^ court, etc. 
trustee execute, acknowledge and deliver any and all 
deeds, assignments, releases and other instruments neces- 
sary and proper to effectuate any sale of real or personal 

1145] 



§ 136 BLYTH. WITTER & CO. 

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 
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. 

^"dutiSTo d^i*uty! ^^® superintendent of banks may from time to time, 
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 

such counsel and ex- i i i i i 

pert assistance as may employ such counsel and procure such expert as- 

may be necessary in • i i • • i • 

liquidation, sistance and advice as may be necessary in the liquidation 
and distribution of the assets of such bank, and for that 
purpose may retain such of the officers or employees of 

[1461 



STATE BANKING DEPARTMENT § 136 

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. 
The superintendent of banks shall cause notice to be Supt. to publish 

... . I , and mail notice to 

given by advertisement, m such newspapers as he may creditors to present 

,. iiri • 1 11* and prove claims 

direct, weekly ror three consecutive months, calhng on against bank. 
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. 
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 by 

claimant. 

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 

- Ill • i riiii ^® inventory of 

assets ot any bank, the superintendent of 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 
oflfice of such bank is located; upon the expiration of the Supt. to «e 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- "J8c*ed. 
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 

[147] 



§ 136 BLYTH. WITTER & CO. 

with the papers in said proceeding in the office of the 
clerk of the county in which the principal office of such 
Supplemental lists bank is located. Thereafter he shall make and file in 
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- 
Compensation of able times to inspection. The compensation of the special 

special deputies and 

other employees and deputy Superintendents, counsel and other employees 

all expenses of sup- ^ in r • • i i* • 

ervision— how to he and assistants, and all expenses of supervision and liqui- 

fixed, paid and re-, iniriii 

ported, dation, shall be fixed by the superintendent of banks and 
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 

^^'^"how'dlSter t>ank. The moneys collected by the superintendent of 
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 
Suchdep^o«tsgiv^^^ the depositary, such deposit shall be preferred before all 
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 pa3anent of expenses one or more dividends, 
and after the expiration of one year from the first pub- 

Dociaration of par- Hcation of notice to Creditors he may declare a final divi- 

tial and final divi- 
dends— how made, dend, such dividends to be paid to such persons, and in 

such amounts, and upon such notice, as may be directed 

[148] 



STATE BANKING DEPARTMENT § 136 

by the superior court of the county in which the princi- 
pal office of such bank is located. Objections to any objections by inter- 

. . - rii ested party to claiitu 

claim not rejected by the superintendent of banks may not rejected by 

. 1 1 ri- f 1 Supt. to be heard 

be made by any party mterested by iilmg a copy or such and disposed of by 
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 
allowed by the superintendent of banks until the claim- 
ant shall have established his claim by the judgment of Court to make proper 

provision for un- 

a court of competent jurisdiction. The court must make proved or unclaimed 
proper provision for unproved or unclaimed deposits. 

Should any bank at the time the superintendent of Bailors of property 

in delinquent bank 

banks takes possession of its property and business, have to ^e notified by 

Supt. to remove 

in its possession, as bailee for safekeeping and storage, property. 
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, 

[1491 



§ 136 BLYTH. WITTER & CO. 

if any, paid by such person shall become a debt of the 
If such property not bank to Said person. If the property be not removed 

removed within time .i.i.riii • i 

fixed by notice, Supt. withm the time hxed by the notice, the superintendent or 

to dispose of same . . ii...f.i i 

as court may direct, banks may make such disposition or said property as the 

superior court, upon application thereto, shall direct. 

Supt. may cause any And the superintendent of banks may cause any safe, 

safe, vault or box to . . . i - i . .1 

be opened and its vault or box to be Opened m his presence or in the pres- 

contents disposed of . ^ ^ .11 .■• 

as specified, ence oi One or the special deputy superintendents or 
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 
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 
join proceedings bank of whosc property and business the superintendent 
after Supt. takes of banks has taken possession as aforesaid, deems itself 

possession. • 1 1 1 • • • 1 • 1 

aggrieved thereby, it may, at any time withm 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 said court, 
after citing the superintendent of banks to show cause 
why further proceedings should not be enjoined, and 
Hearing to be had hearing the allegations and proofs of the parties and de- 

and judgment to be ^ " •^ 

entered therein, termining 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 i- x- ^ » • 

judgment, provided shall operate as a stay of the judgment of the 
superior court, and no bond need be given if the appeal 
be taken by the superintendent of banks; but if the 

[150] 



STATE BANKING DEPARTMENT § 136 

appeal be taken by such bank, a bond shall be given, as 
required by section nine hundred forty-three of the Code 
of Civil Procedure. Whenever the superintendent of fi"wedTiSs,''etc., 
banks shall have paid to each and every depositor and fn^VstoJkhSder's 
creditor of such bank whose claim or claims as such supt!*shTifcort^nie*' 
creditor or depositor shall have been duly proved and Kected^f or Sa?* 
allowed, the full amount of such claims, and shall have p^'pose- 
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 
bank is located. At such meeting the stockholders shall Manner of voting at 
determine whether the superintendent of banks shall be 
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 

assets to agent, who 

agent or agents shall execute and file with the super- shall execute bond. 
intendent of banks a bond to the people of the state in 
such amount, with such sureties and in such form as 

[151] 



§ 136 BLYTH. WITTER & CO. 

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 
Agent to convert such bank and its creditors. Such agent or agents shall 

such assets into cash . . i . • • . i • . i_ • • • ^ 

and account for and convert the assets coming into his or their possession into 
IS n u e proper y. ^,g^gj^^ ^^^^ 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. 
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 divi- originally elected. Dividends and unclaimed deposits 

dends and unclaimed 

deposits remaining remaining Unpaid in the hands of the superintendent of 

unpaid six months v» * 

after order of final banks for six months after the order for final distribution 

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 to Section 136: This section remains unchanged. In con- 
nection with the general subject of liquidation of Banks, see, in addition to the 
following sections, the extract in the Appendix at the end of this Act, Chapter 
496, Statutes 1917, General Laws.] 

[152] 



STATE BANKING DEPARTMENT § 1 3 6a- 1 3 6b 



Section 1 36a. Any bank which has ceased to do a JeTs^raufmme'S: 
banking business whether through voluntary action on its **«^y liquidate. 
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, 
and in case the superintendent of banks shall have rea- if liquidation un- 
son to conclude that the liquidation of such bank is not supt. may take pos- 

i. ft T.^'1 i.iL ^1 session and liquidate. 

bemg sarely 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 

hundred thirty-six of this act. Whenever any bank of Bank deeming itself 

whose property the superintendent of banks has taken vention of Supt. 

C 'J J •* 1£ • J j-U U may apply for in- 

possession as aroresaid, deems itselr aggrieved thereby, junction. 
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 

■t .. r 1 • i« ..|..in superior court of 

under any provision or this act, exclusive original juris- county where prin- 
diction 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. 

[153] 



§ 137 BLYTH. WITTER & CO. 

Voluntary dissoiu- Scction 137. 1. Any bank shall have the right, on 

tion may be had '' *» ' 

under provisions of application of the stockholders or members to apply to 

Code of Civil Pro- . irtr j 

cedure. the superior court of the county wherein its principal 
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. 

Payment to county 2. At the expiration of four months after the settle- 

treasurer of specified 

funds by receiver ment of the final account of the receiver of any bank 

appointed prior to 

July 1,1909. appointed prior to July 1, 1909, any dividends due de- 
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 
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^ yj^g moneys referred to in subdivision two of this 

out on court order. "^ 

section shall be paid out on the order of the court ap- 
pointing such receiver. 

When such funds 4. All moneys paid under subdivision two of this sec- 
escheat to State. .!./• 

tion, uncalled for within five years after being 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, Xhe State board of control must invest such moneys 
in the same manner that the state school land fund is 
invested as provided by law. But any claimant shall be 

[1541 



STATE BANKING DEPARTMENT § 138-139 

entitled to recover as her.ein provided only the principal 
so paid into the state treasury. 

Section 1 38. If any bank shall fail to make any re- Penalty for bank 

111 . . c ' 111 failing to make 

port required by the provisions or section one hundred report as required 

1. 1111* ri- •!• l^y Sec. 130 or Sec. 

thirty or one hundred thirty a or this act, within ten isoa— to forfeit 
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 the event of the failure of any such bank to make Jn f^ent of suck 

•^ failure Supt. may 

any such report required from it, the superintendent of make examination 

, , , at bank's expense. 

banks may, in his discretion, immediately cause the 
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- Jinklffairs.Toani"* 
tors of 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- 

ploy 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- feTtors"o^b^mldi" 
nation, a report in writing thereof, sworn to by the direc- ''^\f^^^^ "^"^ "''°'^* 
tors making the same, shall be made by the board of 

[1551 



? 139 BLYTH. WITTER & CO. 

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. 

What such report Such report shall particularly contain a statement of 

shall contain. m. ^ 

the assets and liabilities of the bank examined, as shown 
by its books, together with any deductions from the 
assets, or additions to liabilities, which 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 
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. 

Ji*«!'i°Il/^?n*.° If the directors of such bank shall fail to make such 

make such examina- 

t!.*it*'^JtrJ^;.!"f^ examination or fail to cause it to be made, or shall fail 

may make extra ex- 
amination at bank's ^.^ £jg g^^j^ 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, 

[156] 



STATE BANKING DEPARTMENT § 140 

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. 

Section 1 40. The superintendent of banks shall report Supt. shall mak» 
during the month of October of 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 
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 
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. 



conditions ; 



2. A statement of all banks authorized by him to do 
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. 

[157] 



statement of new 
banks : 



§ 140-141 BLYTH. WITTER & CO. 

statement o^^^io^ed ^ ^ statement of the banks whose business has been 
closed during the year. 

Desirable amend- 4. Any amendments to the banking law, which, in his 

ments to Bank Act ; . , i i i i 

judgment, may be desirable. 

sSrnJf'empTo'eeT; 5. The names and compensation of all persons em- 
ployed by him, and the whole amount of the receipts and 
expenses of the department during the year. 

bank^ln^iruidaSSf ^* ^^® names of banks placed in his hands in process 
of liquidation, and the amount of dividends paid thereon. 

NumbM of^cop^s^of Such report, and the usual number of copies for the 
use of the legislature, shall be printed and in readiness 
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. 

b,TuSyS?stSin Section 141. 1. The superintendent of banks shall 
Supt.'s office, keep in his office, 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: 

(a) The name of every bank that has filed in the 
Applications filled, b^^king department an application for authorization to 
commence business, its location and the date of filing 
such application. 

New banks author- (\y) J^e name and location of every bank authorized 

ized. ^ ' 

by the superintendent of banks to commence business, 
its capital, surplus, and the date of authorization. 

[1581 



STATE BANKING DEPARTMENT ^ § 141-142 

(c) The name of every bank to which a certificate of Certificates refused. 
authorization has been refused by the superintendent of 

banks, and the date of notice of refusal. 

(d) The name and residence of every person ap- New employees, etc. 
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. 

(e) The date on which a call for a report by banks Data concerning 
was issued by the superintendent of banks, and the day 
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 

" whose creditors are 

creditors or depositors have been paid in full by the paid and whose 

•' stockholders have 

superintendent of banks and a meeting of whose stock- mailed 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 

or liquidating. 

the banking law w^hose 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 office. 
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 
department shall be deemed to be public documents nor deemed puhUc" docu- 

iii f ■* ii 1. • f m ments, or open to 

shall any or such records be open to the mspection or the public inspection. 
public. Every official report made by the superintend- 

[159] 



§ 142-145 BLYTH. WITTER & CO. 

^"^VLTTmafaci; ^^^ ^^ ^^^^^ ^^^ ^vcry report duly verified of an ex- 
evidence in court, amination made, shall be prima facie evidence of the 
facts therein stated, for all purposes in any action or pro- 
ceedings wherein the superintendent of banks is a party. 

[Publishers' Note, re Section 142, amended 1919: 

This amendment, providing that none of the records of the State Banking 
Department shall be deemed to be public documents, or be open to the inspection 
of the public, affords a protection that has become very necessary, because of the 
endeavors of ill-advised or evilly-disposed persons to obtain information from the 
State Banking Department as to the condition of banks. The relationship between 
the Department and the banks is essentially a confidential one, and all the records 
should be confidential records. The amendment, of course, in no way restricts or 
attempts to limit the right of the courts to exercise such control over the banks 
in evidentiary matters as they now possess.] 

(Section 143. Repealed 1913.) 
Penalties and for- Section 1 44. Whenever by the terms of this act a 

feitures imposed by "^ 

Act— how recovered, penalty or forfeiture is imposed, the same shall be recov- 
ered in an action brought at the request of the super- 
intendent of banks by the attorney general, in the name 
of the people of the state, and the sum recovered shall 
be paid into the state banking fund and used in pay- 
ment of claims against the said fund. Any fine or pe- 

When fine or penalty cuniary penalty, which may be incurred by any bank on 

may be compromised ^ | . •• . f, . . r i • 

with supt. account or the violation or any provision or this act, may 
be compromised and a less amount than that prescribed 
by this act accepted by the superintendent of banks at 
any time prior to the institution of action to recover the 
same. 

o^fTrpoVfSoSdolni Section 145. The powers, privileges, duties and re- 

business unde^iaws stnctions Conferred and imposed upon any corporation 

^Yc.?to^;o^nfo"rmto °^ individual existing and doing busines under the laws 

^^^' of this state are hereby abridged, enlarged or modified 

as each particular case may require to conform to the 

provisions of this act, notwithstanding anything to the 

Act applies equally ^o^t^^^y ^^ t^®*'* respective articles of incorporation or 
to all corporations charters. All the provisions of this act shall apply with 

now or hereafter do- ^ r-r- ^ 

^'^S^hiJstit^eTn'iess ^^^^^ force and effect to all corporations which are now 
excepted herein, and doing or which may hereafter do a banking business in 

to other persons, €> ./ t» 

^Act and'sube*c*t to *^^^ State, except wherc express exception or exemption 
its penalties, may be made herein, and to such other persons, associa- 

[160] 



changed and written 
off to conform to 
Act, etc. 



STATE BANKING DEPARTMENT § 145-147 

tions, copartnerships or corporations who shall, by violat- 
ing any of its provisions, become subject to the penalties 
provided herein. The legality of investments heretofore Legality of prior 

- .•.!. .1.4* •! bank investments or 

made, or title to property heretofore acquired or con- title not affected by 
veyed through transactions heretofore had by any bank ing investments made 

.. .. ri*i> 1 !• P"or to July 1, 1909, 

pursuant to any provision of law m force when such m- to be gradually 
vestments were made or transactions had, shall not be 
affected by the provisions of this act, exdtept that any 
such investments made prior to July 1, 190d, when not 
complying with the provisions hereof, shall be changed 
to conform hereto; but such change shall be made grad- 
ually and in such manner as to prevent loss or embar- 
rassment in the business of such bank, or unnecessary 
loss or injury to the borrowers on such security; pro- 
vided, that the legality of any 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. 

Section 1 46. All acts, or parts of acts, in conflict with 
this act are hereby repealed. 

Section 147. This act shall take effect July first, 1909. etc., repealed. 



[161] 



Statutes of 1909: 
Chapter 76, Approved March 1. In effect July 1, 1909. 

Amended by Statutes of 1911: 

Chapter 1 1 , Approved Feb. 6. In efFect Feb. 6, 1911. 

Chapter 488, Approved Apr. 21. In effect June 20, 1911. 

Chapter 494, Approved Apr. 2 1 . Ineffect June 20, 1911. 

Chapter 495, Approved Apr. 21. In effect June 20, 1911. 

Amended by Statutes of 1911 (Special Session): 

Chapter 2, Approved Dec. 18. In effect Feb. 16,1912. 
Chapter 24, Approved Dec. 24. In effect Feb. 22,1912. 

Amended by Statutes of 1913: 

Chapter 104, Approved May 6. In effect Aug. 10, 19 13. 
Chapter 1 92, Approved May 31. In effect Aug. 10, 1913. 

Amended by Statutes of 1915: 

Chapter 1 40, Approved Apr. 28. In effect Aug. 7, 1915. 

Chapter 608, Approved June 3. In effect Aug. 7, 1915. 

Chapter 6 1 1, Approved June 3. In effect Aug. 7, 1915. 

Chapter 6 1 2, Approved June 3. In effect Aug. 7, 1915. 

Amended by Statutes of 1917: 

Chapter 500, Approved May 1 7. In effect July 27, 1917. 
Chapter 501, Approved May 17. In effect July 27,1917. 
Chapter 504, Approved May 17. In effect July 27, 1917. 

Amended by Statutes of 1919: 

Chapter 1 40, Approved May 3. In effect July 22, 1919. 
Chapter 337, Approved May 15. In effect July 22,1919. 



[163] 



INDEX TO APPENDIX 



ExtracU from Section 290a of the Civil Code. 

Elxtracts from Section 290a of the Civil Code, relating 

(a) Affidavit mentioned in Sec. 6 of Bank Act; 

(b) Approval of Superintendent of Banks to certificate of 
incorporation of banking company, referred to in Sec. 
127 of the Bank Act. 

Section 1273 of the Code of Civil Procedure. 

Section 1273 of the Code of Civil Procedure, referred to in Sec. 
1 5 of the Bank Act — relating to procedure by which un- 
claimed deposits escheat to the State. 

Section 1454 of the Code of Civil Procedure 

Section 1454 of the Code of Civil Procedure, granting to certain 
surviving heirs of a deceased depositor the privilege of with- 
drawing a sum not greater than $1,000 if that sum is ag- 
gregate of all decedent's deposits — said section being re- 
ferred to in the note to Sec. 1 6 repealed 1919. 

Section 1278 of the Code of Civil Procedure. 

Section 1278 of the Code of Civil Procedure, relating to change 
of name of a banking corporation, — referred to in Sec. 127 
of the Bank Act. 

Portions of the "Public Utilities Act." 

Elxtracts from Section 2 of Public Utilities Act of California, as 
amended 1919, containing definitions referred to in Section 
61 of the Bank Act (under paragraphs (f) (3) IV, (g) and 
(k) of subdivision 3 of said Section 61). 

Extracts from Chapter VIII of Title II of Part IV of Division First 
of the Civil Code. 

Elxtracts from Chapter Vlll of Title 11 of Part IV of Division First 
of the Civil Code, referred to in Sections 61, 96 and 99 of 
the Bank Act, relating to mortgage insurance and mortgage- 
participation certificates. 

Penal Code Sections 561, 561a, 561b, 561c, 56 Id and 563a 
and 563b. 

Penal Code Sections 561, 561a, 561b, 561c, 561d and 563a and 
563b, relating to frauds in the management of banks. 

General Laws, 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. 

"Bulletin No. 1," referred to in note to Section 5, stating regula- 
tions governing banks desiring to establish insurance agency, 
as provided in Section 5 of the Bank Act. 

Letter from State Banking Department referred to in note to Sec- 
tion 48a stating requirements imposed on Banks desiring to 
assume trust-company functions under Section 48a of Bank 
Act. 

[1651 



? 290a BLYTH, WITTER & CO. 



APPENDIX 



Elxtracts from Section 290a of the Civil Code. 
Elxtracts from Section 290a of the Civil Code, relating to — 

(a) Affidavit mentioned in Sec. 8 of Bank Act; 

(b) Approval of Superintendent of Banks to certificate of 
incorporation of banking company, referred to in Sec. 
127 of the Bank Act. 

Before corporation Section 290a. Before any corporation, authorized in 

authorized to con- 
duct business as its articles of incorporation to conduct the business of 

executor, trustee, 

etc., or engage in acting as executor, administrator, guardian of estates, 

business of banking, 

etc., may file with assignee, receiver, depositary, or trustee under appoint- 

Secy. of state copy / i i • r i r i- 

of articles of incor- ment OF any court or by authority or any law or this state, 

poration, etc., cer- 
tificate of approval or as trustce for any purpose permitted by law, or to en- 

of Supt. to be .11. f 1 1 • r • • i 

attached, gage m the business or banking, or or receiving the money 
of others on deposit, may file with the secretary of state 
a certified copy of its articles of incorporation, or of a 
certificate of extension of its term of existence, or of a 
certificate increasing or decreasing the number of its 
directors, or of a certificate increasing or decreasing its 
capital stock, or of its amended articles of incorporation, 
or of its articles of incorporation and consolidation, there 
must be attached thereto the certificate of approval of 
the superintendent of banks; provided, that this section 
This section not ap- shall not apply to any corporation authorized to engage 

plicable to corpora- .11. r .. iiii« 

tion authorized to m the busmess Of rcceivmg and holding in escrow money 

engage in business . .|. ■,. . . ^. 1.^.. 

of holding escrows, or its equivalent, pending investment m real estate or 

or acting as trustee •.•r .r*. ••! 

under deeds of trust Securities tor or on account or its principal, or to act as 

°' "mSSyrlt^c. trustee under deeds of trust given solely for the purpose 

of securing obligations for the repayment of money other 

than corporation bonds, nor shall such corporations be 

subject to the supervision of the superintendent of banks. 

[166] 



APPENDIX § 1273 

Section 1273 of the Code of Civil Procedure. 

Section 1273 of the Code of Civil Procedure, referred to in Sec. 
1 5 of the Bank Act — relating to procedure by which un- 
claimed deposits escheat to the State. 

1273. All amounts of money heretofore or hereafter Bank deposits not 
deposited with any bank to the credit of depositors who for more than 20 
have not made a deposit on said account or withdrawn den"' oT depositor 
any part thereof or the interest and which shall have re- Sed with°ba'^, 
mained unclaimed for more than twenty years after the ®^^^®** *° ^***®* 
date of such deposit, or withdrawal of any part of prin- 
cipal or interest, and where neither the depositor or any 
claimant has filed any notice with such bank showing his 
or her present residence, shall, with the increase and 
proceeds thereof, escheat to the state. Whenever the Attorney General to 

,,,, i.f If 11 • 1 commence action 

attorney general shall be mrormed or such deposits, he against depositary 

, , . . • . I i. I bank and depositors 

shall commence an action or actions in the name or the to obtain judgment 
State of California, in the superior court for the county of state. 
Sacramento, in w^hich shall be joined as parties the bank 
or banks in w^hich the moneys are deposited and the 
names of all such depositors. All or any number of de- 
positors or banks may be included in one action. Service 
of process in such action or actions shall be made by de- 
livery of a copy of the complaint and summons to the 
president, cashier or managing officer of each defendant 
bank, and by publication of a copy of such summons in 
a newspaper of general circulation published in said 
county for a period of four weeks. Upon the trial the 
court must hear all parties who have appeared therein 
and if it be determined that the moneys deposited in any 
defendant bank or banks are unclaimed as hereinabove 
stated, then the court must render judgment in favor of 
the state declaring that said moneys have escheated to 
the state and commanding said bank or banks to forth- 
with deposit all such moneys with the state treasurer, to 
be received, invested, accounted for and paid out in the 
same manner and by the same officers as is provided in 
the case of other escheated property, 

[167] 



§ 1454 BLYTH. WITTER & CO. 

Section 1454 of the Code of Civil Procedure 

Section 1454 of the Code of Civil Procedure, granting to certain 
surviving heirs of a deceased depositor the privilege of with- 
drawing a sum not greater than $1,000 if that sum is ag- 
gregate of all decedent's deposits — said section being re- 
ferred to in the note to Sec. 1 6 repealed 1919. 

heiJfofXJe'Ised ^^® surviving husband or wife or the guardian of the 
depositor may, with- estate of any insane or incompetent husband or wife, of 

out administration, *' ^ 

collect of bank, de- any deceased person, or if no husband or wife is Hving, 

posits of decedent 

not exceeding $1000. then the children, or the guardian of the estates of any 
minor or insane or incompetent children of said deceased, 
or, if no children are living, then the father or mother or 
guardian of the estate of any insane or incompetent 
father or mother of such decedent, and if neither the 
father nor mother is living, then the brothers and sisters 
or the guardian of the estates of any minor or insane or 
incompetent brothers and sisters of such decedent, may, 
without procuring letters of administration, collect of any 
bank any sum which said deceased may have left on de- 
posit in such bank at the time of his or her death; pro- 
vided, such deposits shall not exceed the sum of one 
thousand dollars. 

Bank upon receiving Any bank, upon receiving an affidavit stating that said 

affidavit stating • • i i i i rr • i • • i 

certain specified depositor IS dead, and that aihant is the surviving hus- 

f acts, may pay such ., .- . tti r • 

deposits, band or wire or the guardian or the estate or an insane 
or incompetent surviving husband or wife, as the case 
may be, of said decedent, or stating that decedent left 
no husband or wife, and that affiant is the child, or that 
affiants are the children, or the guardians of the estates 
of the minor, insane or incompetent children, as the case 
may be, of said decedent, or stating that decedent left 
neither husband, wife nor children, and that affiant is the 
father or mother, or the guardian of the estate of the in- 
sane or incompetent father or mother, as the case may be, 
of said decedent, or stating that the decedent left neither 
husband, wife, children, father nor mother, and that 
affiants are the brothers and sisters, or the guardians of 
the estates of the minor, insane or incompetent brothers 

[168] 



APPENDIX § 1454 

and sisters, as the case may be, of said decedent, and that ^?^® amount left 

^ by decedent in any 

the whole amount that said decedent left on deposit in and all tanks of 

state not to exceed 

any and all banks of deposit in this state, does not exceed ?iooo- 
the sum of one thousand dollars, may pay to said affiant 
or affiants any deposit of said decedent, if the same does 
not exceed the sum of one thousand dollars, and the re- 
ceipt of such affiant or affiants is sufficient acquittance 
therefor. 



[1691 



§ 1278 BLYTH. WITTER & CO. 

Sec. 1278, Code of Civil Procedure 

Section 1278 of the Code of Civil Procedure, relating to change 
of name of a banking corporation, referred to in Sec. 127 
of the Bank Act. 

Said Section 1278 appears in Title IX of Part III of the Code of 
Civil Procedure. This Title embraces Sections 1275-1279 of said 
Code, and covers the subject, "Of Change of Names." 

Said Title IX, after providing that applications for change of 
name must be heard and determined in the Superior Court, and 
prescribing various steps to be taken in the institution and prose- 
cution of an application of this kind, goes on in Section 1278 to 
provide as follows: 

Proceedings at hear- Section 1278. Such application must be heard at such 

mg in court on ^^ 

application for time as the court may appoint, and objections may be 

change of name of ./ r-*- » j j 

corporation, filed by any person who can, in such objections, show to 
the court good reason against such change of name. On 
the hearing, the court may examine on oath any of the 
petitioners, remonstrants, or other persons, touching the 
application, and may make an order changing the name, 
or dismissing the application, as to the court may seem 
right and proper; provided, that if the applicant for a 
change of name be a corporation, such applicant shall 
file in court at the time of hearing the application, the 
certificate of the secretary of state that the name desired 
to be used by the applicant, is not the corporate name 
of any corporation existing at said time, and that said 
name does not so closely resemble the name of any such 
Banking corporation existing Corporation as will tend to deceive ; provided, 

must file in court f ■. iti i- r i t i 

certificate of Supt. further, that ir the applicant ror a change or name be a 
desired to be used banking Corporation, such applicant shall file in court at 

to nam?of^existing the time of hearing the application, the certificate of the 
superintendent of banks that the name desired to be used 
by the applicant does not resemble so closely as to be 
likely to cause confusion, the name of any other bank 
previously formed under the laws of this state. 



[170] 



APPENDIX Public Utilities Act 

PUBLIC UTILITIES ACT. 

Extracts from Section 2 of Public Utilities Act of California, as 
amended 1919, containing definitions referred to in Section 
61 of the Bank Act (under paragraphs (f) (3) IV, (g) and 
(k) of subdivision 3 of said Section 61). 

(g) The term "street railroad," when used in this Definitions, in Public 

, , ., Ill 11 utilities Act, of the 

act, includes every railway, and each and every branch or terms: "street 
extension thereof, by whatsoever power operated, being 
mainly upon, along, above or below any street, avenue, 
road, highway, bridge or public place w^ithin any city 
and county or city or town, together with all real estate, 
fixtures and personal property of every kind used in con- 
nection therewith, owned, controlled, operated or man- 
aged for public use in the transportation of persons or 
property; but the term "street railroad," when used in 
this act, shall not include a railway constituting or used 
as a part of a commercial or interurban railway. 

(h) The term "street railroad corporation," when "Street railroad 

1.1. '11 • corporation." 

used m this act, includes every corporation or person, 
their lessees, trustees, receivers or trustees appointed by 
any court whatsoever, owning, controlling, operating or 
managing any street railroad for compensation within 
this State. 

(i) The term "railroad," when used in this act, in- "Railroad." 
eludes every commercial, interurban and other railway 
other than a street railroad, and each and every branch 
or extension thereof, by whatsoever power operated, 
together with all tracks, bridges, trestles, rights of way, 
subways, tunnels, stations, depots, union depots, ferries, 
yards, grounds, terminals, terminal facilities, structures 
and equipment, and all other real estate, fixtures and 
personal property of every kind used in connection there- 
with, owned, controlled, operated or managed for pub- 
lic use in the transportation of persons or property. 

(j) The term "railroad corporation," when used i^^ co^*oia°tlon " 
this act, includes every corporation or person, their 
lessees, trustees, receivers or trustees appointed by any 

[1711 



corporation. 



Public Utilities Act BLYTH. WITTER & CO. 

court whatsoever, owning, controlling, operating or man- 
aging any railroad for compensation within this State. 

(k) The term "express corporation," when used in 
this act, includes every corporation or person, their 
lessees, trustees, receivers or trustees appointed by any 
court whatsoever, engaged in or transacting the business 
of transporting any freight, merchandise or other prop- 
erty for compensation on the line of any common carrier 
or stage or auto stage line within this State. 

"Common carrier." (1) The term "common carrier," w^hen used in this 
act, includes every railroad corporation; street railroad 
corporation; express corporation; dispatch, sleeping car, 
dining car, drawing room car, freight, freight line, re- 
frigerator, oil, stock, fruit, car loaning, car renting, car 
loading and every other car corporation or person, their 
lessees, trustees, receivers or trustees appointed by any 
court whatsoever, operating for compensation within 
this State; and every corporation or person, their lessees, 
trustees, receivers or trustees appointed by any court 
v/hatsoever, owning, controlling, operating or managing 
any vessel engaged in the transportation of persons or 
property for compensation between points upon the in- 
land waters of this State or regularly engaged in the 
transportation of persons or property for compensation 
upon the high seas, on regular routes between points 
within this State. The term "inland waters" as used in 
this subsection includes all navigable waters within the 
State of California other than the high seas. 

"Pipeline." (m) The term "pipe line," when used in this act, in- 
cludes all real estate, fixtures and personal property, 
owned, controlled, operated or managed in connection 
with or to facilitate the transmission, storage, distribution 
or delivery of crude oil or other fluid substances except 
water through pipe lines. 

"Pipe line corpora- (n) The term "pipe line corporation," when used in 

tion." . . • 1 1 • 1 • 1 

this act, mcludes every corporation or person, their les- 

[1721 



APPENDIX Public Utilities Act 

sees, trustees, receivers or trustees appointed by any 
court whatsoever, owning, controlling, operating or man- 
aging any pipe line for compensation within this State. 

(o) The term "gas plant," when used in this act, "Gas plant." 
includes all real estate, fixtures and personal property, 
owned, controlled, operated or managed in connection 
with or to facilitate the production, generation, trans- 
mission, delivery or furnishing of gas (natural or manu- 
factured) for light, heat or power. 

(p) The term "gas corporation,** when used in this "Gas corporation." 
act, includes every corporation or person, their lessees, 
trustees, receivers or trustees appointed by any court 
whatsoever, owning, controlling, operating or managing 
any gas plant for compensation within this State, except 
where gas is made or produced on and distributed by 
the maker or producer through private property alone 
solely for his own use or the use of his tenants and not 
for sale to others. 

(q) The term "electric plant," when used in this act, "Electric plant" 
includes all real estate, fixtures and personal property 
owned, controlled, operated or managed in connection 
with or to facilitate the production, generation, trans- 
mission, delivery or furnishing of electricity for light, 
heat or power, and all conduits, ducts or other devices, 
materials, apparatus or property for containing, holding 
or carrying conductors used or to be used for the trans- 
mission of electricity for light, heat or power. 

(r) The term "electrical corporation,** when used in "Electrical cor- 

1 . •11 . 1.1 poration." 

this act, mcludes every corporation or person, their les- 
sees, trustees, receivers or trustees appointed by any 
court whatsoever, owning, controlling, operating or man- 
aging any electric plant for compensation within this 
State, except where electricity is generated on or dis- 
tributed by the producer through private property alone 
solely for his own use or the use of his tenants and not 
for sale to others. 

[1731 



Public Utilities Act BLYTH. WITTER & CO. 

"Telephone line." (3) ^he term "telephone line," when used in this act, 
includes all conduits, ducts, poles, wires, cables, instru- 
ments and appliances, and all other real estate, fixtures 
and personal property owned, controlled, operated or 
managed in connection with or to facilitate communica- 
tion by telephone, whether such communication is had 
with or without the use of transmission wires. 

"Telephone corpora- (t) The term "telephone corporation," when used in 
this act, includes every corporation or person, their les- 
sees, trustees, receivers or trustees appointed by any 
court whatsoever, owning, controlling, operating or 
managing any telephone line for compensation within 
this State. 
"Telegraph line." (y) j^e term "telegraph line," when used in this 
act, includes all conduits, ducts, poles, wires, cables, in- 
struments and appliances, and all other real estate, fix- 
tures and personal property owned, controlled, operat- 
ed or managed in connection with or to facilitate com- 
munication by telegraph, whether such communication 
is had with or without the use of transmission wrires. 

"Telegraph corpora- (y) ^he term "telegraph corporation," when used in 
this act, includes every corporation or person, their les- 
sees, trustees, receivers or trustees appointed by any 
court whatsoever, owning, controlling, operating or man- 
aging any telegraph line for compensation within this 
State. 

"Water system." (w) The term "water system," when used in this act, 
includes all reservoirs, tunnels, shafts, dams, dikes, head- 
gates, pipes, flumes, canals, structures and appliances, 
and all other real estate, fixtures and personal property, 
owned, controlled, operated or managed in connection 
with or to facilitate the diversion, development, storage, 
supply, distribution, sale, furnishing, carriage, apportion- 
ment or measurement of water for power, irrigation, 
reclamation or mianufacturing, or for municipal, domestic 
or other beneficial use. 

[174] 



APPENDIX 



Public Utilities Act 



(x) The term "water corporation,*' when used in this ^JWater corpora- 
act, includes every corporation or person, their lessees, 
trustees, receivers or trustees appointed by any court 
whatsoever, owning, controlling, operating or managing 
any water system for compensation within this State. 

(y) The term "vessel," when used in this act, includes "Vessel." 
every species of water craft, by whatsoever power oper- 
ated, w^hich is owned, controlled, operated or managed 
for public use in the transportation of persons or prop- 
erty, except rowboats, sailing boats and barges under 
twenty tons dead weight carrying capacity, and vessels 
propelled by steam, gas, fluid naphtha, electricity, or 
other motive power under the burden of five tons net 
register. 

(z) The term "wharfinger," when used in this act, "Wharfinger." 
includes every corporation or person, their lessees, trus- 
tees, receivers or trustees, appointed by any court what- 
soever, owning, controlling, operating or managing any 
dock, wharf or structure used by vessels in connection 
with or to facilitate the receipt or discharge of freight 
or passengers for compensation within this State. 

(aa) The term "warehouseman," when used in this "Warehouseman." 
act, includes every corporation or persons, their lessees, 
trustees, receivers or trustees appointed by any court 
whatsoever, owning, controlling, operating or managing 
any building or structure in which property is regularly 
stored for compensation within this State, in connection 
with or to facilitate the transportation of property by a 
common carrier or vessel, or the loading or unloading 
of the same, other than a dock, wharf or structure, owned, 
operated, controlled or managed by a wharfinger. 



(dd) The term "public utility," when used in this act, "Public utility." 
includes every common carrier, pipe line corporation, 
gas corporation, electrical corporation, telephone cor- 

[1751 



Public Utilities Act BLYTH. WITTER & CO. 

"Pu^)licutiW^-pQy£^^.iQJJ^ telegraph corporation, water corporation, 
wharfinger, warehouseman and heat corporation, where 
the service is performed for or the commodity dehvered 
to the pubHc or any portion thereof. The term "public 
or any portion thereof," as herein used means the public 
generally, or any limited portion of the public including 
a person, private corporation, municipality or other 
political subdivision of the State, for which the service 
is performed or to which the commodity is delivered, and 
whenever any common carrier, pipe line corporation, 
gas corporation, electrical corporation, telephone corpor- 
ation, telegraph corporation, water corporation, wharf- 
inger, warehouseman or heat corporation performs a 
service or delivers a commodity to the public or any por- 
tion thereof for which any compensation or payment 
whatsoever is received, such common carrier, pipe line 
corporation, gas corporation, electrical corporation, 
telephone corporation, telegraph corporation, water 
corporation, wharfinger, warehouseman or heat corpora- 
tion is hereby declared to be a public utility subject to the 
jurisdiction, control and regulation of the commission and 
the provisions of this act. Furthermore, when any per- 
son or corporation performs any service or delivers any 
commodity to any person or persons, private corpora- 
tion or corporations, municipality or other political sub- 
division of the State, which in turn either directly or in- 
directly, mediately or immediately, perform such service 
or deliver such commodity to or for the public or some 
portion thereof, such person or persons, private corpora- 
tion or corporations and each thereof is hereby declared 
to be a public utility and to be subject to the jurisdiction, 
control and regulation of the commission and to the 
provisions of this act. 



[176] 



APPENDIX Mortgage Insurance 

MORTGAGE INSURANCE. 

Extracts from Chapter VIII of Title II of Part IV of "Mortgage insur- 
Division First of the Civil Code of California as revised 
and amended; Approved June 12, 1915. 

Referred to in paragraph (k) of Subdivision 3 of Sec- 
tion 61, also in Subdivision (d) of Sec. 96, and in Sec. 
99 of the Bank Act. 

CHAPTER VIII. 

MORTGAGE INSURANCE. 

Sec. 453aa. Mortgage insurance companies subject to insurance 
laws and the authority of insurance commis- 
sioner. 

453bb. Mortgage insurance company defined. The term 
"security" as used in this chapter defined. Policy 
of mortgage insurance defined. Mortgage par- 
ticipation certificate defined. Entire mortgage 
guaranty defined. 

453cc. Requisite capital stock of mortgage insurance com- 
pany; certificate of authority required. Kind 
and amount of securities that may be guaran- 
teed. Policies of mortgage insurance do not 
constitute "debts" or "indebtedness" of issuing 
company. Can not invest in, hold or own capi- 
tal stock of another corporation, except as pro- 
vided herein. 

453dd. Must accumulate a surplus. Restriction on making 
of dividends. 

453ee. Investments permitted. 

453ff. Mortgage participation certificates and guaranteed 
securities made legal investments for trust 
funds, insurance companies and others. 

453gg. Quarterly reports to insurance commissioner. 

453aa. Every mortgage insurance company shall be Mortgage insurance 

,. 1111 I'liii • e companies subject 

subject to and shall comply with all the requirements or to insurance laws 

,, fi« 1 I'll • "^^ authority of 

the laws or this state made applicable to insurance com- insurance commis- 
panies generally and the rules and regulations of the in- 
surance department of this state, excepting in so far as 
said laws, rules or regulations may be inconsistent with 
the other provisions in this chapter contained; and the 
insurance commissioner shall have the same power and 
authority over such company that he may exercise in 

[1771 . 



Mortgage Insurance BLYTH, WITTER & CO. 

relation to other insurance companies, including the right 
to examine and inspect the financial condition and affairs 
of such company relating to the business of such com- 
pany, and to compel compliance with the provisions of 
law governing any such company. 

Definitions: "Mort- 453bb. The term "mortgage insurance Company" shall 

gage insurance _ . . . r 

company." include every association, corporation, firm or person 
w^ho shall engage as a business in making and issuing 
policies of mortgage insurance. 

"Security." The term "security" wherever used in this chapter, 
without a different meaning being specified or made ap- 
parent, shall be construed to refer to and include within 
its meaning a note or notes, or bond or bonds, together 
with the mortgage or deed of trust securing the same 
which evidence a debt secured by a first lien on a market- 
able title in fee to real estate, or to real estate with im- 
provements thereon. 

g^*e\nsurai?ce.*' Any contract made and issued by a mortgage insurance 
company which purports to guarantee or insure against 
loss on, or to guarantee the payment of, within a specified 
time, the whole, or any part, of the principal, interest or 
other sums agreed to be paid under the terms of any 
security, or other sums secured under the terms of any 
security, shall be deemed, and is hereby designated, a 
"policy of mortgage insurance." 

'^"tion^ertSSite " ^ poHcy of mortgage insurance which evidences the 
ownership by the insured of an undivided or other par- 
tial share or interest, or the right to participate to a speci- 
fied extent, in a security, or in a group consisting of sev- 
eral securities, and purports to guarantee the payment of 
such securities, or the payment of such undivided or 
other partial share or interest therein, or the amount of 
such participation, may be referred to as, and is hereby 
designated, a "mortgage participation certificate." 

"Entirejnortgage ^ policy of mortgage insurance, other than a mort- 

[178] 



APPENDIX Mortgage Insurance 

gage participation certificate, which covers and refers to 
the entire indebtedness evidenced by a security, may be 
referred to as, and is hereby designated, an "entire mort- 
gage guaranty." 



453ff. Mortgage participation certificates, also securi- Mortgage participa- 

II 1- ' c • • 1 *io^ certificates, and 

ties guaranteed by policies or mortgage insurance issued certificates guaran- 

in conformity with the provisions of this chapter shall be mortgage insurance, 

legal investments for all trust funds held by any executor, fof*trisrfuSs\nd 

administrator, guardian, trustee or other person holding trust companies, 

trust funds, also for the funds of insurance companies, 

banks, banking institutions and trust companies, and shall 

be accepted by the State of California, its officers and 

officials, as securities comprising any part of any fund or 

deposit required by law to be made with the State of 

California, or any officer or official thereof, by any trust 

company or insurance company doing business in the 

State of California, and all premiums required to be paid 

according to the terms of any such mortgage participation 

certificate, or other policy of mortgage insurance, may 

be charged to or paid out of the income from the note or 

notes or bond or bonds covered thereby; provided, that Foregoing provisions 

the roregomg provisions or this section, in so far as they *<> such certificates 

■^ as comply with 

refer to mortgage participation certificates, shall apply specified require- 
only to such mortgage participation certificates as evi- 
dence the ownership of shares or interests in, or participa- 
tion in, securities which shall have been assigned to a 
trust company organized and doing business under the 
laws of and within this state and shall be held by such 
trust company for the common and equal benefit of the 
holders of all mortgage participation certificates issued 
or to be issued evidencing the ownership of shares or in- 
terests in, or participation in, any particular security or 
group of securities so assigned and such trust, and the 
administration thereof, shall at all times be and hereby is 
expressly made subject to the inspection, supervision and 

[179] 



Mortgage Insurance BLYTH, WITTER & CO. 

control of the superintendent of banks as fully and com- 
pletely as if the same constituted a court trust under the 
Each certificate provisions of the Bank Act; provided also, that each 

mnst have there- . . , 

with certificates and such mortgage participation certificate must bear the 
specified. Certificate of such trust company to the effect that the 
aggregate amount of mortgage participation certificates 
then outstanding, including both the one being certified 
and all others based on the same security or group of 
securities, does not exceed the amount of the unpaid 
principal of the debt or debts evidenced by such particu- 
lar security or group of securities; provided also, that 
each security so assigned shall be accompanied by a copy 
of the appraisement and of the certificate of the directors 
filed or to be filed w^ith the insurance commissioner as 
required by the provisions of this chapter; provided also. 
Copy of appraise- that a copy of each such appraisement and accompany- 

ment, certificate, . . *- ^ 

etc., to be trans- ing Certificate of the directors shall be promptly, upon 

mitted to Supt. . r i i • • i i 

the assignment or each such security, transmitted to the 
superintendent of banks, and that each such copy of ap- 
praisement so transmitted shall bear an endorsement or 
certificate executed by the trust company to which each 
such security is so assigned reciting and setting forth the 
amount of the unpaid principal named in the security 
which covers the property described in such appraise- 
rirst-iien require- ment; provided also, that if any such mortgage participa- 

ments, as to certifi- . . ^ . . , ■. i • • r 

cates covered by this tion certihcates, or securities guaranteed by policies or 

chapter, if used as , . •, . e '.^ •..^ ^i 

part of fund or de- mortgage insurance issued in conformity with the provi- 

posit with trust-oom- . r i . i i • . • • • 

pany, with State sions of this chapter, are used as securities comprising any 
Treasurer. ^^^^ ^£ ^^^ fund or deposit required by law to be made 
with the state treasurer by a trust company, the securities 
so guaranteed or the ownership of, or participation in, 
which is evidenced by such participation certificates must 
constitute a first lien on improved and productive real es- 
tate in the State of California, such improved real estate 
being worth at least double the amount of such lien; and 
also that the real estate and improvements which are cov- 
ered by the lien of any security so guaranteed or the own- 

[180] 



APPENDIX Mortgage Insurance 

ership of, or participation in, which is evidenced by mort- 
gage participation certificates which are so used shall be 
reappraised at least once every tw^o years and in the 
manner in this chapter provided for appraisements, and 
a copy of each such reappraisement shall be filed with 
the trust company to which such security shall have been 
assigned and the original of each such reappraisement 
bearing the endorsement or certificate of such trust com- 
pany as to the amount of the unpaid principal named in 
such security shall be filed with the superintendent of Legality of prior 
banks; provided, further, that the legality or validity of were valid wiien 

- .... issued, not impaired 

entire mortgage guaranties and mortgage participitation by this chapter, 
certificates heretofore issued which fully conform to and 
comply with the law in force at date of issuance shall not 
be affected or impaired by the provisions of this chapter 
and such entire mortgage guaranties and mortgage par- 
ticipation certificates shall continue to be legal invest- 
ments and recognized for all purposes to the extent and 
in the manner provided by the law in force at date of 
such issuance. 

A mortgage insurance company which issues mort- f^cw*4*iig' on which 
gage participation certificates in accordance with the Jates^baMd-^o^** 
provisions of this section may at any time and from time *^°"* govemin«r. 
to time substitute for any security or securities comprising 
or constituting a part or parts of a group of securities, the 
ownership of, or participation in, which is evidenced in 
whole or in part by any such participation certificates, 
other securities similarly guaranteed by it and withdraw 
from the trust company the security or securities for 
which such substitution shall be made; provided, how- 
ever, that at all times the amount of the unpaid principal 
of the debts evidenced by the particular group of securi- 
ties held by such trust company and affected by any such 
substitution shall not be less than the aggregate amount 
of the participation certificates theretofore issued then 
outstanding and evidencing the ownership of undivided 
or other partial shares or interests, or participation, in 

[181] 



Mortgage Insurance BLYTH. WITTER & CO. 

Substitution in guch group of Securities; and provided further, that the 

securities on which o ^ » x- 

participation certifi- right of Substitution hereinbefore provided and the exer- 

cates based— condi- ~ *^ 

tions governing— cise thereof shall not alter or affect the status of such 

Continued, ... .^ 

participation certificates as legal investments for trust 
funds, insurance companies, banks, banking institutions 
and trust companies as hereinbefore provided, or as 
securities acceptable by the State of California, its officers 
and officials, as comprising or constituting any fund or 
deposit, or any part thereof, required by law to be made 
with the State of California, or any officer or official 
thereof, by any trust company or insurance company 
doing business in the State of California. 



[1821 



APPENDIX Penal Code 

PENAL CODE. 

RELATING TO FRAUDS LN THE MANAGEMENT 
OF BANKS. 

Penal Code Sections 561, 561a, 561b, 561c, 56 Id and 563a 
and 563b. 

Section 561. An officer, director, agent, teller, clerk Bank officer, direc- 

- , I I . 1 tor, etc., over- 

or employee or any bank, who, either drawing or permit- 

ting overdraft, or 

1. Knowingly overdraws his account with such bank "on\^n'i^rocS"''" 
and thereby obtains the money, notes or funds of any K'etc?:'iuty'''' 
such bank; or ''^'''''^ 

2. Asks for, receives, or consents or agrees to receive, 
any commission, emolument, gratuity or reward, or any 
promise of any commission, emolument, gratuity or re- 
ward, or any money, property or thing of value or of 
personal advantage for procuring or endeavoring to pro- 
cure for any person, firm or corporation, any loan from, 
or the purchase or discount of any paper, note, draft, 
check or bill of exchange by any such bank, or for per- 
mitting any person, firm or corporation to withdraw any 
account with such bank, is guilty of a felony. 

Section 561a. Any officer, director, trustee, employee Misappropriation, 

.... - - . etc., by bank direc- 

or agent or any bank m this state, who abstracts or wil- tor, employee, etc. 

""-felony. 

fully misapplies any of the money, funds or property of 
such bank, or wilfully misapplies its credit, is guilty of a 
felony. Nothing in this section shall be deemed or con- 
strued to repeal, amend or impair any existing provision 
of law prescribing a punishment for any such offense. 

Section 561b. Every director of a bank in this state Fraudulent insol- 
vency of bank — 
Vrho : participation 

therein, by director 

1. In case of the fraudulent insolvency of such bank, 
shall have participated in such fraud; or 

2. Wilfully does any act as such director which is 
expressly forbidden by law or wilfully omits to perform 
any duty imposed upon him as such director by law, is 
guilty of a misdemeanor. 

[183] 



Penal Code BLYTH. WITTER & CO. 

The insolvency of a bank is deemed fraudulent unless 
its affairs appear upon investigation to have been admin- 
istered clearly, legally and with the same care and dili- 
gence that agents receiving a compensation for their ser- 
vices are bound, by law, to observe. 

Guaranty or en- Section 5 6 1 c. An officer or agent of any bank in this 

dorsement, for bank, 

by officer or agent, state, who makes or delivers any guaranty or endorse- 

misdemeanori 

ment on behalf of such bank, w^hereby it may become 
liable upon any of its discounted notes, bills or obliga- 
tions, in a sum beyond the amount of loans and dis- 
counts which such bank may legally make, is guilty of a 
misdemeanor. 

Director concurring Section 5 6 1 d. A director of a bank, organized under 

in vote for illegal 

bank loan or dis- the laws of this State, who concurs in any vote or act of 
count; or 

the directors of such corporation, or any of them, by 

which it is intended to make a loan or discount to any 

director of such corporation, or upon paper upon which 

any such director is liable or responsible to an amount 

exceeding the amount allowed by the statutes; or 

Director, officer, Any director, trustee, officer or employee of any such 

employee making 

or attempting illegal bank who makes or maintains, or attempts to make or 
funds; or maintain, a deposit of such bank's funds with any other 
corporation on condition, or with the understanding, ex- 
press or implied, that the corporation receiving such de- 
posit make a loan or advance, directly or indirectly, to 
any director, trustee, officer or employee of the corpora- 
tion so making or maintaining or attempting to make or 
maintain such deposit; or 

Officer or employee ^^y officcr or employee of any such bank who inlen- 

concealing discounts ^ t- ^ ^ j 

of bank loans, or tionally conceals from the directors or trustees of such 

purchase or sale of ^ ^ 

bank securities be- bank any discounts or loans made by it between the 

tween meetings, or " ^ *., iri» 

failing to report regular meetmgs or its board of directors or trustees, or 

same when so re- ,, iir* •• 

quired by law— the puTchase of any securities or the sale of its securities 

meaner, during the same period, or knowingly fails to report to 

the board of directors or trustees when required to do so 

[184] 



APPENDIX Penal Code 

by law, all discounts or loans made by it and all securi- 
ties purchased or sold by it between the regular meet- 
ings of its board of directors or trustees, is guilty of a 
misdemeanor. 

Nothing in this section shall render any loan made by 
the directors of any bank, in violation thereof, invalid. 

Section 563a. Any officer, director, trustee, employee officer, director, 
or agent of any bank organized under the laws of this making false entry 

- _ ... or omitting to make 

state, who makes a false or untrue entry m any book or required entry, 

. , - . _. . guilty of felony. 

any report, tag or statement, or the busmess, aitairs or 
condition, in whole or in part, of such corporation, with 
intent to deceive any officer, director or trustee thereof, 
or any agent or examiner, private or official, employed 
or lawfully appointed to examine into its condition or 
into any of its affairs, or any public officer, office or 
board to which such bank is required by law to report, 
or which has authority by law to examine into its affairs, 
or into any of its a^Fairs, or who, with like intent, wil- 
fully omits to make a new entry of any matter particu- 
larly pertaining to the business, property, affairs, assets 
or accounts of such bank in any book, report, statement, 
or tag of such bank made, written or kept, or required 
to be made, written or kept by him or under his direc- 
tion, is guilty of a felony. 

Section 563b. Any person who wilfully and know- Making or circuiat- 

11.1 . 1 1 ing untrue, deroga- 

mgly makes, circulates or transmits to another or others tory statement as 

, , - . to financial condition 

any statement or rumor, written, printed or by word or of tank, misdemeanor. 
mouth, which is untrue in facts and is directly or by in- 
ference derogatory to the financial condition or affects 
the solvency or financial standing of any bank, doing 
business in this state, or who knowingly counsels, aids, 
procures or induces another to start, transmit or circu- 
late any such statement or rumor, is guilty of a misde- 
meanor punishable by a fine of not more than one thou- 
sand dollars or by imprisonment for not more than one 
year, or both. 

[185] 



General Laws BLYTH, WITTER & CO. 



GENERAL LAWS. 
Chapter 496, Statutes 1917. 

Liquidation of General Laws, Chapter 496, Statutes 1917, relating to the liquida- 
banks. jj^j^ ^f banks, — referred to in note to Sec. 136 of Bank Act. 

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 empow^ering the 
superior court to determine the equities of the members and 
stockholders of any such bank to any surplus which may 
remain after the payment of the creditors of such bank in 
full and to award and distribute the same accordingly. 

(Approved May 1 7. 1 9 1 7. In effect July 27, 1917.) 
The people of the State of California do enact as follows: 

Supt., taking posses- Section 1. Whenever the superintendent of banks 

sion of bank busi- .... . , r i i • 

ness in liquidation, shall hereafter take possession of the business and prop- 
to determine as to 

assessment of stock- erty of any bank doing business in this state for the pur- 

nolders, etc., to pay ,.. ^. •iiii 

claims, 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 
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 

proving inadequate, . , ii r i t f i i i • r n 

Supt. may make fur- inadequate to pay all or the creditors or such bank m rull 

ther assessments. . . , r i i i r i 

the superintendent or banks may make rurther assess- 



APPENDIX General Laws 

ment or assessments by filing supplemental complaints 
or petitions in the same proceeding. 

Section 4. In any such proceeding such assessment ^°^\®g*t'ion*of 
shall be enforced and collected and the proceeds thereof ^eeds of assess- 

tnentSt 

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 Supt. has power to 

. maintain action to 

power to mamtain an action m any other state or coun- enforce assess- 

. 1111 • ment in other state 

try to enforce and collect such assessments against any or country. 
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 

._,. . , rii • proceeding instituted 

ceeding instituted by the superintendent or banks prior prior 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. 



Bulletin BLYTH. WITTER & CO. 

BULLETIN No. 1. 

"Bulletin No. 1," referred to in note to Section 5, stating regula- 
tions governing banks desiring to establish insurance agency, 
as provided in Section 5 of the Bank Act. 

Regulations goverm- Gentlemen : 

ing banks desiring 

to establish insur- 1 am pleased to advisc you that an amendment to 

ance agency under . riii i«iiiT 

Sec. 6 of Bank Act— section five of the bank act which I offered for enact- 
ment has been passed by the legislature, signed by Gov- 
ernor Stephens, and is operative as of this date. 

Under authority of this change in the law, banks lo- 
cated and doing business in any place, the population 
of which does not exceed five thousand persons, may act 
as agents for a fire, life or other insurance company. 

My purpose in suggesting this new function of state 
banks in small communities was to permit the indulgence 
of an activity which will be of public convenience and 
advantage and which will place those banks that consti- 
tute the smaller units in the state system upon a com- 
petitive equality with similar institutions controlled by 
national regulation. 

In this connection, I recall federal legislation which 
gives to national associations the privilege now granted 
to state banks, and I am gratified to announce the ac- 
complishment in this regard of a policy of establishing 
state institutions upon a parity with those of national 
organization in securing profitable and safe exercise of 
their desire to meet the demands of their contributory 
communities. 

In what follows, please observe and strictly adhere to 
the various locality and corporate requirements neces- 
sary to engage in the agencies designated. 

A bank operating under the authority of state laws 
and desiring to avail itself of the provisions of the "bank 
act" as amended and operative as of date July 22, 1919, 
relative to acting as agent for an insurance company, 
must be located in a place the population of which does 

[1881 



APPENDIX Bulletin 

not exceed five thousand, as shown by the last preceding l^g^lnks^deSInr 
decennial census or any subsequent official census. to establish insur- 

•^ ^ ance agency under 

The insurance company for which the bank acts as f!c'ontinu^d?^ ^^'^ 
agent must have been authorized by the Insurance Com- 
missioner of California to do business in this state. 

The activities of the bank as such agent must be re- 
stricted to the soliciting and selling of insurance and the 
collection of premiums on policies issued by the insurance 
company. 

The bank may receive for services so rendered such 
lawful fees or commissions as may be agreed upon be- 
tween the bank and the insurance company for which it 
may act as agent. 

The bank is prohibited from assuming or guarantee- 
ing the payment of any premium on insurance policies 
issued, through its agency, by its principal. 

The bank is prohibited from guaranteeing the truth 
of any statement made by an assured in filing his appli- 
cation for insurance. 

The powers conferred are to be exercised under such 
regulations as may be prescribed by the Superintendent 
of Banks. 

In pursuance of the foregoing amendment the follow- 
ing regulations are hereby prescribed for banks which 
may undertake to act as agents for insurance companies: 

1. Each contract of agency must be formally ac- 
cepted by the board of directors of the agent bank by a 
resolution spread upon the minutes in the following form: 

**Be it resolved that the contract of agency entered into 
on , 19 , between the 

insurance company and the 

bank of , by , 

president (or vice president) and , 

cashier, or secretary, a copy of which is on file in this 
bank, is hereby ratified and approved." 

[189] 



Bulletin BLYTH, WITTER & CO. 

^?gt*Sc?£sS 2. A certified copy of such resolution, attested by the 
a^yl^encySe; President or vice president and by the cashier, or sec- 
sec. 5 of B^^^k^Act. retary, and by a majority of the directors of the bank, 
must be forwarded to this office. 

3. There should be on file in the bank, available for 
inspection by examiners of this department, the follow- 
ing documents: 

(a) An authoritative statement showing the popula- 
tion of the town according to the last preceding decennial 
census or any subsequent official census. 

(b) A proper certificate from the Insurance Commis- 
sioner of California showing as to each insurance com- 
pany for which the bank is acting as agent that such com- 
pany has received authority from the said Insurance Com- 
missioner to transact business in this state. 

(c) A proper certificate or other writing of each in- 
surance company for which the bank acts authorizing the 
bank to act as its agent, setting forth that the bank does 
not guarantee the payment of any premium on insurance 
policies issued through its agency by its principal, and 
stating that the bank is not to be held responsible for 
the truth of any statement made by an assured in filing 
his application for insurance. 

(d) Copies of all reports made by the agent bank to 
each insurance company which it represents. 

4. The bank will be required to keep a record as to 
each company for which it acts as agent showing: 

(a) For fire insurance: The amount of each policy, 
the rate and premium, date of commencement, term, and 
date of expiration, as well as a description of property 
insured, with name of assured, and to whom loss is pay- 
able. 

(b) As to life insurance: Amount and date of pol- 
icy, with premium, and a statement as to under what 
form the insurance is written, giving also name of as- 
sured and beneficiary. 

[190] 



APPENDIX Bulletin 

(c) As to any and all other forms of insurance: The ^g^inks^deSrSJ"' 
fullest possible particulars as to amounts, dates, rates, *nce*agencVundM 
premiums, and what is insured by the policy, and of col- ?!c„ntinu^5°^ ^*'* 
lection of all premiums collected for account of the com- 
pany, refunds made, the proportion of premium credited 
to the profits of the bank under its agreement with the 
company, the proportion due the company, the amounts 
and dates of all remittances made to the insurance com- 
pany on account of premiums collected, and the balance, 
if any, due from the bank to the insurance company. 

5. The bank will be required to carry on its general 
ledger an account which will, at all times, show the 
amount due to insurance companies for which it is act- 
ing as agent, on account of premiums collected but not 
remitted, and this liability must be shown in reports of 
condition and in the published statements of the bank 
under the heading "Other liabilities — on account of in- 
surance premiums collected and not remitted," unless 
specifically provided for in the report. 

6. The bank should also keep such records as may be 
required by each insurance company in the manner and 
under the forms prescribed by the various companies; all 
of which should be available for inspection by the exam- 
iner on request. 

7. The agent bank must not assume any responsibility 
or liability for either the adjustment, settlement, or pay- 
ment of losses under any policy issued by or through its 
agency. 

8. The records of all profits derived from the insur- 
ance agency should be carried in a separate account on 
the books of the bank, and the records should be so kept 
as to enable the examiner readily to trace to the source 
all items of profit derived in this connection. 

Yours very truly, 

CHARLES F. STERN. 

Superintendent of Banks. 

[191] 



Letter BLYTH. WITTER & CO. 

PROCEDURE IN ASSUMING TRUST-COMPANY FUNCTIONS. 

Form of letter from State Banking Department referred to in note 
to Section 48a stating requirements imposed on Banks de- 
siring to assume trust-company functions under Section 48a 
of Bank Act. 

Requirements im- In Connection with your desire to assume trust com- 
posed on Banks .. . .. .. ii-i« 

assuming trust pany lunctions m association with your banking busi- 

f unctions under 'ii •.!. .t . .1 i 

Sec. 48a, Bank Act ness, we w^ish herewith to outhne to you the procedure 
necessary for you to observe as incident to our duty of 
visitation and supervision of your trust company func- 
tions. As you are aware, the legislature of California 
adopted at its recent session enabling acts to permit this 
department to authorize for deposit with the State Treas- 
urer of California such securities as are required by the 
national act which permits you to undertake a trust com- 
pany business. These enabling statutes of California 
will be operative as of date July 22, 1919, and on and 
after that date we shall be glad to entertain from you 
any application for the authorization of securities which 
is necessary under both state and national law. If we 
may be of any service to you in expediting your assump- 
tion legally of trust company powers, we shall be very 
glad to have you command us. 

Incident to any application that you may make to this 
department for the authorization of a deposit of secur- 
ities with the State Treasurer of California, we will thank 
you to submit to us the following: 

( 1 ) A duly certified copy of a resolution of your 
board of directors determining upon the conduct 
of a trust company business and authorizing the 
steps required by law to be taken to the accom- 
plishment of that end. We shall require a copy 
of this resolution certified by the secretary of 
your bank and under your corporate seal. 

(2) A duly certified copy of permission of the Fed- 
eral Reserve Board granting you authority to en- 
gage in a trust company business. 

[192] 



APPENDIX Letter 

(3) You must segregate and assign to the State pog'*e'Jon'^|°*ki™" 
Treasurer of the State of California securities in assumin| trust func- 

tions under Sec. 48a, 

conformity with section 96 of the bank act in the Bank Act— continued. 
sum of $ 1 00,000 for the faithful performance and 
due execution of your private trust business, and 
$100,000 for the faithful performance and due 
execution of your court trust business. Care 
should be taken that the securities chosen shall be 
of the character established by section 96 of the 
bank act. In presenting these securities, please 
accompany them with the following: 

(a) A resolution of the board of directors segregat- 
ing, depositing and assigning the designated se- 
curities to the State Treasurer of California for 
the purposes indicated, setting forth a description 
of the securities in detail and authorizing and di- 
recting the officers of the corporation to execute 
the necessary assignments. 

(b) An assignment of the securities as above indicated 
executed by the officers of the corporation. 

(c) In the case of mortgages secured by real estate, 
it should be borne in mind that the amount of 
the mortgage can not exceed 50% of the fair 
market value of the property and that the prop- 
erty must be productive and income bearing. We 
shall require the following documents concerning 
such a mortgage: 

1. The mortgage showing recordation. 

2. The notes secured by such mortgage. 

3. An abstract of title or a policy of title insur- 
ance showing that the mortgage and the notes 
secured thereby are a first lien upon the prop- 
erty in question. 

4. An appraisal of the property covered by the 
mortgage or deed of trust made by two dis- 

[1931 



Letter BLYTH. WITTER & CO. 

^"posedTBanks" interested appraisers not affiliated with the 

Ss'irTecX b^^k' «^"ing forth the fair market value of 

— CoShiued! *^® property, indicating the value of the real 

estate and of the improvements separately, 
and indicating also that the property is pro- 
ductive and income bearing. 

5. Policies of fire insurance covering the im- 
provements, if any, upon the property under 
the lien of the mortgage or deed of trust. 

(d) If any of the securities offered for deposit with 
the State Treasurer of California are bonds, these 
bonds should be accompanied by an authorita- 
tive opinion running to their character and 
legality. 

If all of the documents and securities are in form, we 
will so advise the State Treasurer of California by issuing 
our authorization to him to accept such securities on de- 
posit for purposes indicated. We will then, upon the 
acceptance by the State Treasurer of California, inform 
you of your complete qualification as far as is required 
by the law of this state. 

We desire that all of the above described documents 
in connection with this deposit of securities by you, ex- 
cept the policies of fire insurance, should they be a part 
of your deposit, should be submitted to this department 
in duplicate, one to be forwarded to the State Treasurer 
with the deposit, and the other to be retained in this 
department for our record. In bringing forward cer- 
tificates of title, if such are used, the certificate should 
show the assignment to the State Treasurer of California, 
If you deposit bonds, we will thank you to send them di- 
rectly to the Treasurer of California to be held by him 
for your credit until he receives from this department the 
authorization to accept them on deposit as is required 
by law. 

11941 



APPENDIX Letter 



For your information, we are enclosing you the fol- po^g'^d^on^Banks™ 

lowing: - assuming trust 

^ * ' functions under 

Sec. 48a, Bank Act 

( 1 ) Form of resolution to be adopted by your board —Continued. 
of directors authorizing certain of your officers to 
assign certain certificates for the faithful perform- 
ance and due execution of your court trust busi- 
ness and for the faithful performance and due 
execution of your private trust business. 

(2) Form of assignment of the securities which your 
board of directors shall authorize to be placed on 
deposit with the State Treasurer. 

If there be any other question incidental to your pur- 
pose to install a trust department, we shall be glad to be 
at your command for its consideration. 

Yours very truly, 

CHARLES F. STERN, 

Superintendent of Banks. 



[195] 



BANK ACT OF CALIFORNIA. 
INDEX 



Section 

Acceptances, bankers', when eligible for savings banks 67 

By commercial banks, how limited 80 

Relation to loans in commercial banks 80 

Trade, when eligible for savings banks 67 

Act, applicable to certain corporations 1 

Applicable to violators of provisions of 1, 145 

Bank, repeals all acts in conflict 146 

Effective when _ 1 47 

Title of 1 

Action, against bank for escheated deposits 15 

Against superintendent of banks 134, 136, 142 

Brought under bank act, jurisdiction in 136b 

For sale of real estate, when 54 

May be maintained by superintendent of banks to dissolve bank 135a 

Reports are prima facie evidence in, when 142 

To recover penalties by attorney general 144 

Adjustment of investments made prior to this act 145 

Administrator, deposits by 5 I 

May deposit with trust company 91,92,93 

Trust company may act as 90 

Trust company, oath required 90 

Advertisement, building and loan associations not to advertise as savings 

bank 12 

Capital, must show amount paid up 14 

For deposits, prohibited when 12 

Liabilities must show^ separate 14 

Of banks, how regulated 28 

Of branch offices, how regulated 28 

Of conversion, state bank into national bank 56a 

Of merger 3 la 

Of notes, bonds or securities, limited when 61 

Of sale of bank 3 1 

Of unauthorized banking prohibited 12a 

Of unauthorized trust company prohibited 12a 

Resources must show separate 14 

Savings, shall not be advertised by whom 49 

Surplus must show separate 14 

Undivided profits must show separate 14 

Advisory board, loan to member of 83 



[197] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 

Affidavit, reports of banks 130, 130a 

Reports of trust companies 101 

Agent, liability for fraud 38 

Of commercial bank, loan to 83 

Of foreign bank, must take oath 1 1 

Of savings bank, may borrow funds 65 

Overdraft of, prohibited 39 

Prohibited loans to, must be reported 65, 83 

Purchase of assets or obligations of bank, by 41, 42 

Restriction on purchase of assets or obligations of bank by 41, 42 

Sale of note, bond or contract to bank by 35 

Special deputy superintendent of banks in liquidating bank 136 

Superintendent of banks for service in foreign bank 7 

When commercial bank may act for insurance company 5 

Agreement of consolidation must be filed 31a 

Of consolidation must have approval 31a 

Sale and purchase 3 1 

Amendment of articles of incorporation must be filed 8 

Of articles of incorporation, see Sec. 290a, Civil Code. 

Amortization of bonds by savings banks 61 

Annexation, as affecting powers of banks and branch offices 23, 60, 82 

Annual Report, copies for distribution 140 

Of superintendent of banks to contain what 140 

Appeal from order of superintendent of banks 134, 136 

From seizure of bank property 134, 136 

Applications to do banking business, investigation of 127, 128 

To establish foreign branch office 58 

Appointment of appraisers 61a, 99, 124 

Of special deputy superintendent of banks 136 

Of superintendent of banks 120 

Apportionment of capital and surplus to court trust business 90 

Of capital and surplus to departments 23, 60, 90 

Of capital and surplus to private trust business 90 

Appraisal of property mortgaged to state treasurer by trust company 99 

Of securities -61a, 99, 124 

Appraisers, appointment of 61a, 99, 124 

Articles of Incorporation, amendments must be filed 8 

As affected by bank act 8, 145 

May provide for departmental banking 22 

Must be certified by secretary of state 8 

Must be filed with superintendent of banks 8 

Not effective until filed 8 

Of trust company 90 



[198] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

ARTICLES OF INCORPORATION— Continued Section 

On consolidation or merger 31a 

Violation of, by banks 134, 135a, 136 

When filed by banks 128 

Assessment, effect on first lien on real estate 57 

Failure of bank to pay 123 

Of banks, how calculated 123 

Of banks, for state banking fund 123 

Refusal of stockholder to pay 133 

Stockholders must be notified 133 

When capital stock impaired 133 

Assets, commercial bank may pledge for "borrowed money" to what extent.. 21a 

How may be reached in merger 31a 

Invested in bonds 36, 46 

May not be carried in excess of actual cost, except 45 

Of banks, relation of loans thereto 44 

Of departments held for depositors 27 

Of departments may be transferred, when 25 

Of departments to be kept separate _ 26 

Overdrafts limited to ninety days 21a 

Purchased by directors, officers and employees 41,42 

Relation of to investments 36, 46 

Relation of, to loans by savings banks 67 

Sale and purchase 31 

Shall not be mingled with trust funds 32 

Shall not be pledged to give preference 21a 

Assignee, deposits by 51, 91, 93 

Assistants of state banking department 121 

Attorney, designation of superintendent of banks by foreign corporations 7 

May be employed in liquidating 136 

Of state banking department 121 

Attorney General, actions brought by, to recover penalties 1 44 

Duty in action for escheated deposits 15 

Auditor, superintendent of banks shall provide 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 1 2c 

Certificate for savings bank 127, 128 

Certificate for trust company 127, 128 

Of consolidation 3 la 

Of loans to directors, members of advisory boards, agents and employees 

in commercial banks 83 



[199] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

AUTHORIZATION — Continued Section 

Refusal of by superintendent of banks 128 

Refusal of by superintendent of banks for branch office 9 

Bad Debts, compounding of 136 

What are 2 la 

Bailee, savings bank may act as, for United States bonds 70 

Balance, sale of stock for assessment 133 

Unclaimed deposits 1 5 

Bank, annual report of superintendent of banks 140 

Application to do business 127, 128 

Articles of incorporation must be filed 128 

As a borrower 21a 

As member of federal reserve bank, subject to state laws 56 

Assessed for state banking fund 123 

Banking corporation, how organized 3 

Bond investment limited 36, 46 

Branch office 9 

Capital impaired 133 

Ceasing business, must take what action 136a 

Classified as to capital by population 23 

Commercial, purposes of 5 

Conducting business in unsound manner 134, 135a 

Connection with, by superintendent of banks prohibited 120 

Considered insolvent, when 20 

Definition of 2 

Departmental, separate books to be kept 26 

Departmental, shall make reports separately 129 

Departmental, shall publish statements separately 129 

Deposit with, does not create debt, when 55 

Dissolution of, by process of law 1 35a 

Dissolved, funds of 137 

Distribution of funds of insolvent 136 

Escheat of unclaimed deposits 15 

Elxamination of, before issuance of certificate 127 

Examination of, by court 136 

Examination of, by directors 139 

Examination of, once a year 124 

Examination of, when failing to report 138 

Elxaminer, failure to report insolvent condition 126 

Examiner, must file oath 125 

Elxaminer, shall not act as receiver, when 125 

Expiration of corporate existence 136a 

Extra examination, expense of 124 

Failure to make report, penalty 138 



[200] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

BANS — Continued Section 

Failure to pay assessment 123 

Federal reserve, exempt from examination 48 

Fines, may be compromised before action instituted 144 

Foreign, inspection of 124 

Foreign, see Corporations, Foreign. 

Forfeitures, how recovered 144 

Forfeitures, may be compromised before action instituted 1 44 

Funds, when deposited with other banks 43, 68, 85 

Impairment of capital 133, 136 

In liquidation, names posted 141 

Insolvent condition of, failure to report 126 

Inspection of, by superintendent of banks 124 

In unsafe condition 136 

Investment in bonds limited 36, 46 

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 

May acquire stock in safe deposit corporation, w^hen 37 

May acquire stock in trust company, when 37 

May apply to court to dissolve 137 

May be cited to show cause 134 

May conduct safe deposit department 30 

May consolidate, how 31a 

May engage in foreign banking, how 58 

May go into voluntary liquidation 136a, 137 

May join federal reserve bank 56 

May purchase real estate, when 61,84, 105 

May resume business, when 136 

Must carry assets at actual cost, w^hen 45 

Must have certificate of superintendent of banks 24 

Must liquidate, when 136a 

Must not purchase real estate contract, note or bond, when 35 

Must report loans made to directors, etc 83 

Must sell or exchange other real estate, when 54 

Mutual, may have capital stock 29 

Name, change of, see Sec. 1278, Code of Civil Procedure. 

Names of, not to be similar 127 

National, examination of 48 



12011 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

BANE — Continued Section 

New, information of, to be posted 141 

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 144 

Penalties pecuniary, may be compromised before action instituted 144 

Publication of report of 132 

Publication of unclaimed deposits 1 5 

Purchase of 3 1 

Refusal to observe order of superintendent of banks 136 

Refusal to submit books 135a, 136 

Report of, to superintendent of banks 130 

Rights of creditors in merger 31a 

Sale of 31 

Savings, purposes of 4 

Shall not own stock of corporations, except 37 

Shall not transact business w^ithout certificate 127 

Signs must show business conducted 28 

Stationery must show business conducted 28 

Stock, as collateral, limited 44 

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 

When unsafe to continue business - 135a 

Bank Acceptances, how limited 67, 80 

Bank Act, annual report of superintendent of banks, as to 140 

Applicable to all violators of provisions of 1, 145 

Effective when 147 

In relation to prior investments 145 

Jurisdiction in actions brought under 136b 

Repeals all acts in conflict 146 

Short title of 1 

What applicable to 1, M5 

Banking Business, conducted in unsafe manner 134, 135a 

Certificate to be posted 50 

Banking, defined 2 

Departmental 22 

Regulation of 7,9, 12, 12a, 13,90 

Unlawful unless duly authorized 2 

When advertised must have certificate - 1 2a 

Banking Corporations, see Corporations, Banking. 



[202] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

Section 
Banking Department, see State Banking Department. 

Bank Premises, departments to be in same or adjoining buildings 26 

Investment in, by commercial banks 84 

Investment in, by savings banks 61 

Investment in, by trust company 105 

Trust company may mortgage to state treasurer, when 97 

Bills of Exchange, commercial bank may accept, when 80 

Commercial banks may buy or discount 80 

Not construed to create debt, when 55 

Relation to loans in commercial bank 80 

When eligible for savings banks 67 

Bond of deputy superintendent of banks 121 

Of special deputy superintendent of banks 136 

Of superintendent of banks 120 

Bonds, advertisement of, limited, when 61 

Available for deposit by trust company 96 

Certified, official list to be kept 61a 

Commercial banks limited in investing in 36, 46 

Corporate, foreign corporation may act as trustee 90 

Cost of investigation of 61a 

For deposits by court order, not required 94 

Foreign corporations may buy and sell, when 12c 

Guaranteed by mortgage insurance as investments, when 61, 105, 106 

Guaranteed by mortgage insurance, available for deposit by trust com- 
panies, when 96, 99 

Legal as investment for savings banks 61 

Must be certified, when 61, 61a 

Penalty for illegal advertisements of 61 

Power of superintendent of banks to investigate 61a 

Savings banks limited in investing in 67 

Savings banks may acquire for debt 61 

Savings banks may loan on 67 

United States, loans on by commercial banks 65, 80, 83 

Books, audit of, by request 124 

Examination of, by directors 139 

Inspection of, by superintendent of banks 38 

Must show actual cost of assets, when 45 

Of departments to be kept separate 26 

Refusal of bank to submit 135a, 136 

Borrowed Money, by commercial banks to purchase United States securities.... 21a 

By savings banks must be approved, when 62 

Commercial banks may pledge assets for, to what extent 21a 

Elxcess loan to savings bank not invalid as to lender 62 



[203] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

BORROWED MONEY— Continued . . Section 

Limit on amount borrowed 21a 

Rediscounts by savings banks excepted, when 62 

Savinsrs bank may borrow any amount to purchase United States securi- 
ties 62 

Savings bank must report, when 62 

Superintendent of banks may extend limit 21a 

Borrower, endorser and guarantor, deemed to be 66 

Branch Office, capital required 9 

Capital required to establish foreign branch 58 

Certificate necessary to open 9 

Effect of consolidation of cities on 23, 60, 82 

Permission to establish foreign branch, how obtained 58 

Regulations governing advertising and stationery 28 

Right to establish, in foreign country, a dependency or possession of 

United States 58 

Shall not be permitted to close, when 9 

Shall not be permitted to open, when 23 

Signs of, must show what 28 

Building and Loan Association, advertising, how restricted 12, 12a 

Bulletin, information to general public 141 

To be filed as public document 141 

To be posted by superintendent of banks 141 

Business, authorization to commence 9, 127 

Ceased by trust company 1 02 

Closing of 137 

Examination of 1 24 

Merger of 31a 

Reports of 130, 1 30a 

Sale of 31 

Winding up affairs of 136 

By-Laws, amendments must be filed 8 

Must be filed with superintendent of banks 8 

Not effective until filed 8 

Of savings banks must prescribe what 64 

Call for reports from banks, how often 131 

Called Report, failure of bank to make, penalty 138 

From bank, how often 131 

Of bank, publication of 132 

Time limited for bank to make 138 

To coincide with call of coniptroller of currency, when 1 3 1 

To contain what 130, 130a 

Capital, advertising of, must show what 1 4 

Apportioned to departments 23, 60, 90 



[204] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

CAPITAL — Continued Section 

Assigned by foreign corporation 7 

Impairment of 1 33, 1 36 

Increase or decrease of 8, 23 

Increase or decrease of, see Sec. 290a, Civil Code. 

Invested in bank premises, furniture and fixtures and safe deposit 

vaults 6 1 , 84, 1 05 

May be increase by surplus 2 I 

Must be paid up before issuance of certificate 127 

Necessary to open branch office 9, 58 

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, in what invested 61 

Of savings bank, relation to deposits 19 

Of trust company, how invested 105 

Of trust company, in what invested 105 

Paid up and surplus must equal what 19 

Reapportionment to departments 23 

Relation of surplus to 2 1 

Restriction as to loans 66, 80 

Capital Stock, as collateral, limited 44 

Assessed when 133 

Banks shall not invest in their own 34 

Banks shall not loan on their own 34 

Commercial bank, amount required 82 

Directors of domestic bank must hold 10 

May be sold for assessment 133 

Mutual banks may issue, how 29 

Of corporations engaged in foreign banking, banks may purchase, when.. 58 

Of safe deposit corporation, when may be invested in 37 

Of title insurance company doing trust business 1 06 

Of trust company, when may be invested in 37 

Reduction of 5 5 

Required according to classification 23, 60, 82 

Required by trust company 90 

Requirements pertaining to 53 

Savings bank, amount required 60 

Certificate, mortgage participation, legality of for savings banks 6 1 

Mortgage participation, when available for deposit by trust company 96, 99 

Necessary before transaction of business 24 

Necessary for new department 24 

Of deposit, not construed to create debt, when 55 

Of deposit, savings bank may issue 63 



[205] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

CERTIFICATE — Continued Section 

Of special deputy superintendent of banks to be filed 136 

Of superintendent of banks, filing 31a, 128 

Of superintendent of banks, in merger 31a 

Of superintendent of banks, shall be issued, when 1 28 

Of superintendent of banks to be posted 50 

Of superintendent of banks to be withheld, when 7, 9, 12c, 127 

Of superintendent of banks, to state what 127 

Of trust company, when revoked 98 

Requisite fee 24 

Revoked, when trust business ceases 102 

To open branch office 9 

Certificate of Deposit, bank can not make partial payments on 21a 

Certification of bonds by superintendent of banks 61, 61a 

Of public utility bonds, expiration of 61a 

Of superintendent of banks, not to obligate the state 61 

Certified Checks, issuance unlawful, w^hen 52 

Must be immediately charged 52 

Checks, certified, must be charged 52 

Certified, when unlaw^ful 52 

Chief Deputy, failure to report insolvent condition of bank 126 

Citation, issued by superintendent of banks 134 

City, assessment by, effect on first lien 57 

Bonds of, available for deposit by trust company 96 

Legality of bonds of 61 

Claims against bank in liquidation 136 

Objection to, liquidation 136 

Classification, as applied to banks previously organized 23, 60 

Of banks 2 

Of cities, governed by federal census 23, 60 

Of cities in relation to capital and surplus 23, 60, 82 

Of trusts 1 1 

Club, loans to, exemptions in favor of 65, 83 

Collateral, commercial bank may pledge assets to what extent 21a 

Directors to receive report on 139 

Collateral Trust, bonds, when legal for savings banks 61,61a 

Commercial Bank, advertising, how regulated 28 

Bond investments limited 36, 46 

Capital and surplus, their relation to deposits 19 

Capital required 82 

Classified as to capital by population 23 

Definition of 5 

Deposit with another commercial bank, regulated 85 

How organized to conduct 3 



[2061 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

COMMERCIAL BANK— Continued Section 

Investment in bank premises 84 

Loans of, limited 80, 81 

Loans on securities of United States Government, how may be made 80 

Loans to affiliated bank 83 

Loans to corporations 80, 83 

Loans to director, agent or employee on United States securities per- 
mitted 83 

Loans to directors and employees 83 

Loans to members of advisory board 83 

Loans to officers prohibited 83 

May accept drafts or bills of exchange, when 80 

May act as agent for fire, life or other insurance company, when 5 

May borrow money to w^hat extent 21a 

May pledge assets to what extent 21a 

May rediscount with federal reserve bank 21a 

May be duly authorized 2 

Overdrafts limited to ninety days as assets 21a 

Overdue interest, how limited 21a 

Purposes of 5 

Real estate loans restricted 47 

Reserve required 20 

Shall not assume or guarantee insurance premium 5 

Commercial paper, commercial banks may buy or discount 80 

Loans on, by commercial banks, how governed 80 

Savings bank may discount or purchase, when 67 

Commission to officers, directors and employees prohibited 39 

Condition, must be published 132 

Consolidation, approval of stockholders 31a 

Approval of superintendent of banks required 31a 

Articles of incorporation and consolidation 31a 

How assets of merged banks may be reached 31a 

Liability of banks in 31a 

Of banks 31a 

Of cities, effect on branch offices 23, 60, 82 

Rights of creditors in 31a 

Construction, all preceding or conflicting acts repealed 146 

Create debt 5 5 

Contract, real estate, not to be purchased by bank, when 35 

With officers, directors or employees 41,42 

With savings depositor 64 

Conversion of state bank into national banking association 56a 

Notice to depositor of savings bank 56a 

Corporate Elxistence, obligations of bank after expiration 136a 



[207] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 

Corporations, club, exemptions in favor of loaning 65, 83 

Consolidated 3 1 a 

Doing title insurance and trust business 107 

For banking, how organized 3 

Loans of, when officers, directors or employees of bank interested 65, 83 

May deal in exchange or letters of credit, when 13 

Membership, exemptions in favor of loaning 65, 83 

Mortgage insurance, securities of, as deposit by trust company 96, 99 

Mutual, may issue capital stock 29 

Powers and privileges must conform to act 145 

Prohibited loans to, must be reported 65, 83 

Religious, exemptions in favor of loaning 65, 83 

Sale and purchase 3 1 

Shall not use word "savings" when 12, 12a, 12c, 49 

Shall not use word "trust" when 12, 12a, 12b, 12c, 102 

Stock of, as collateral, limited 44, 67 

Stock of, banks shall not own 37 

Corporations, Banking, may do departmental business, when 22 

Must file certain papers 8 

Organization of 127 

Corporations, Foreign, acceptance of deposits prohibited 7 

As fiscal agents 90 

Banking functions limited 7 

Loans based on total capitalization, when 7 

May act as executor, when 7 

May act as trustee in this state for what purpose 7, 90 

May buy and sell bonds, when 12c 

May lend certain moneys not assigned to this state 7 

May lend money in this state 7, 12c 

Must execute power of attorney to superintendent of banks 7 

Powers permitted to foreign trust companies 7, 90 

Representative of, may maintain office, when 12c 

Service of papers 7 

Service of process 7 

Shall report to state banking department 130 

Subject to state laws 7 

Costs, in liquidation 136 

In sale of certain real estate 54 

Counsel, compensation, liquidating delinquent banks 136 

County, assessment by, effect on first lien 57 

Bonds of, available for deposit by trust company 96 

Legality of bonds of 61 

County Clerk, articles of incorporation and consolidation must be filed with.... 31a 



[208] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

Section 

County Deposits in savings banks 62 

Reserve against, not required 20, 68 

When secured, bank not required to maintain capital against 19 

Court may authorize deposit with trust company 9 1 

May order deposit with trust company 93 

May require knowledge of private trusts 103 

Court Trust, definition of 101 

To be separately secured 96 

When deemed to include private trust 101 

Create Debt, meaning of, restricted 55 

Creditors, rights of, against banks sold 3 1 

Rights of, against merged bank 31a 

Rights of, in liquidation 136 

Debt, savings banks shall not contract, except 62 

Deceased Depositors, amount due to, must be reported 1 5 

When moneys due to, escheat 1 5 

Deeds of Trust, legal for deposit by trust companies 96 

Definition of bank 2 

Of commercial bank 5 

Of commercial paper eligible for savings banks 67 

Of "electrical corporation" 61 

Of "gas corporation" 61 

Of "net earnings" 61 

Of "pipe line corporation" 61 

Of "public utility" 61 

Of "railroad corporation" 61 

Of "reserve depositary" 20 

Of "reserves on deposit" 20 

Of "reserves on hand" 20 

Of savings bank 4 

Of "street railroad corporation" 61 

Of "telegraph corporation" 61 

Of "telephone corporation" 61 

Of "total reserves" 20 

Of trust company 6 

Of "water corporation" 61 

Departmental Bank, application for permission to conduct 23 

Apportionment of capital and surplus 23, 60, 90 

Assets to be held for depositors, how 27 

Assets to be kept separate 26 

Books of account to be kept separate 26 

Classified as to capital by population 23 

Conducted by trust company 106 



[209] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

DEPARTMENTAL BANK— Continued Section 

Conversion into national bank 56a 

Corporation may transact business of 22 

Departments to be in same or adjoining building 26 

Deposits, conditions of repayment 27 

Investments, how held 27 

May transfer assets, when 25 

New department must have certificate 24 

Reapportionment of capital and surplus 23 

Relation of departments 26 

Shall make separate reports of departments 129 

Shall publish statements of departments separately 129 

Statement of segregation of capital and surplus 23 

Total reserves required 25 

Departmental Business, by title insurance companies 107 

Deposit, by administrator 5 1 

By assignee 5 I 

By executor 5 1 

By guardian 5 I 

By order of court 5 I 

By receiver 5 1 

By trust department with commercial department of same corporation.... 25 

By trust department with savings department of same corporation 25 

By trustees 51 

Certificate of, savings bank may issue 63 

In federal reserve bank, by state bank 48 

In national bank, by state bank 48 

Of postal savings in savings banks 62 

Of trust companies with state treasurer to be increased when 98 

Of trust companies with state treasurer to consist of what 96 

Trust companies may mortgage premises to state treasurer, when 97 

Depositary, designation by superintendent of banks 43 

Federal reserve bank, for state bank ^ 48 

Federal reserve bank may act as 43 

Federal reserve bank need not be designated by superintendent of banks 43 

National bank acting as 48 

Reserve, how nominated and designated 20 

Savings bank as bailee for United States bonds 70 

Depositor, contract with, in savings bank 64 

Deceased 1 5 

Of savings bank converted into national bank, notice to 56a 

Repayment to, by savings banks 64 

Savings, may be paid by draft 62 

Unknown 1 5 



[210] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

Section 

Deposits, additional to be made by trust company, when 98 

Advertising for, prohibited when 12 

By trust department with other departments of same bank 25 

Escheat of I 5 

Must not be increased, when 19 

Not construed to create debt, when 55 

Of a commercial bank with another commercial bank, regulated 85 

Of banks 1 43 

Of foreign corporation to be separate 7 

Of other banks with savings banks 68 

Of savings banks with other banks 68 

Of trust company, may be withdrawn from state treasury 98 

Of trust company, securities may be exchanged 96 

Of trust company securities, documents and appraisal 99 

Reserve required for 20,68, 105 

Savings, advertised 49 

Savings bank, in what invested 61, 67 

Savings bank, repayment of 64 

State, county, municipal and postal, in savings banks 62 

Trust company, in what invested 105, 106 

Unclaimed 1 5 

Unclaimed, w^hen bank suspends business 136a 

When preferred 5 1, 62 

When public deposits and postal savings may be excluded from aggregate 19 

With other banks by departments 25 

With trust company, authorized by court 91 

With trust company, by administrator 91,92,93 

With trust company, by court order 93 

Deputy of superintendent of banks, qualifications of 121 

Of superintendent of banks, salary 121 

Of superintendent of banks, shall execute bond, when 121 

Designation of depositary 20, 43 

Directors, committee of, examination of bank by .'. 139 

Eligibility of 1 

Examination of bank by 139 

Increase or decrease of 8 

Increase or decrease of, see Sec. 290a, Civil Code. 

In merger — 31a 

Liability for fraud 38 

List of, to be posted 1 7 

May authorize loans to directors, agents or employees 83 

May be removed when 10 

May declare dividend, when 21 



[211] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

DIRECTORS — Continued Section 

May demand special examination of bank 139 

May employ assistance in examinations 139 

May sell note, bond or contract to bank, when 35 

May sell stock for assessment 133 

Must hold monthly meetings I 1 

Oath of 1 1 

Of commercial bank, loans to 83 

Of savings bank, in relation to corporation loans 65 

Of savings bank, loans to prohibited 65 

Of savings bank may borrow on United States securities 65 

Of savings bank, shall not be endorsers 65 

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, 1 I 

Restriction on purchase of obligations or assets of bank, by 41, 42 

Shall levy assessment, when 133 

Shall not receive commission 39 

Discount, banks of 5 

Of bills of exchange, amount of 80 

Of commercial or business paper, amount of 67, 80 

Relation to loans in commercial banks 80 

Dissolution, banks shall have right to make application for 137 

Causes for 1 36 

Proceedings in 136, 137 

District Bonds, legal for investment by savings banks, when 61, 61a 

Dividends, accrued but unpaid interest not calculated 45 

Directors may declare, under what conditions 21 

Escheat to state, when 137 

From banks in liquidation 136 

In receiver's hands, how disposed of 137 

Of savings banks, how restricted 64 

Of suspended banks 136a 

Paid out on court order 137 

Trust company may receive, on securities deposited 96 

When escheated to state, invested how 137 

Dominion of Canada, bonds and notes of, as investments for savings banks.... 61 

Draft, savings depositors may be paid by 62 

Commercial bank may accept 80 

Earnings, disposition of 2 1 

Electrical Corporation, definition of 61 

Eligibility of directors 10 

Employees, liability for fraud 38 



[2121 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

EMPLOYEES — Continued Section 

May sell note, bond or contract to bank, when 35 

Of commercial bank, loans to 83 

Of savings banks, may borrow funds 65 

Of state banking department 121 

Overdraft of, prohibited , 39 

Prohibited loans to, must be reported 65, 83 

Purchase of assets or obligations of bank, by 41, 42 

Restrictions on purchase of obligations or assets of bank, by 41, 42 

Shall not receive commission 39 

Endorser, deemed to be borrower, when 66 

England, bonds and notes of, as investments for savings banks 61 

Entries, penalties for false 38 

Escheat of deposits, duty of attorney general in action 15' 

Of deposits, duty of county clerk, in action 15 

Escrow-Holder, not subject to supervision of superintendent of banks acting 

as trustee, when lOt 

Elxamination, at expense of bank, when 58, 138, 139 

By examiners of federal reserve bank, when 56 

Causes for dissolution 134, 136 

Federal reserve bank exempted 48 

Of bank by committee of directors 139 

Of banks, before issuance of certificate 127 

Of banks by directors 139 

Of banks, special 124, 139 

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 

Of securities for deposit by trust companies 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- 

Elxaminer, failure to report insolvency 126« 

May administer oath 124 

Must take constitutional oath 125 

Oath of, must be filed, where 125 

Of state banking department 121 

Shall not be appointed receiver, when 125 

Executor, deposits by 51, 91, 93 

Foreign corporation may act when 7 

Trust company may act as 6, 90 

Trust company, oath required 90 



[213] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 

Elxistence, corporate, obligations after expiration of 136a 

Elxpense of state banking department 48a, 122, 123, 124 

Express Company has power to receive money for transmission 1 3 

Federal Farm Loan bonds legal for investment by savings banks 61 

Federal Reserve Bank, exempted from examination 48 

May act as depositary 20, 43, 68 

Need not be designated as depositary 43 

State banks may join 56 

State members may apportion their investment in stock of 56 

State members subject to state laws 56 

Trust company member may continue to act 90 

Federal Reserve Board, regulations of, on bankers' acceptances 67 

Fee for appraisal of trust company securities 99 

For branch office 9 

For certificate for representative of foreign corporation 12c 

For certificate to do banking business 9, 24 

For examination of documents accompanying trust company securities.. 99 

For filing proceedings in liquidation , 136b 

For investigating bonds 61a 

For services rendered trust department of national bank 48a 

For serving process on foreign corporation 7 

For special examination 124 

Filing of certificate of superintendent of banks 128 

Of directors* examinations 139 

Of documents preliminary to organization.. 8, 127 

Of list of unclaimed deposits 15 

Of proceedings in liquidation 136b 

Fine, bank, may be compromised before action instituted 144 

First Lien on real estate, effect of certain assessments 57 

Fiscal Agent, foreign corporation as 90 

Foreign Banking, investment in bank 58 

Regulations concerning 58 

Right to establish branch for 58 

Foreign Banks, inspection of 124 

Foreign Branch, capital required 58 

Examination of 58 

Right to establish 58 

Foreign Corporations, see Corporations, Foreign. 

Foreign Government Bonds, savings banks may invest in, what 61 

Forfeitures, causes for dissolution 134, 136 

Of bank, pecuniary, how may be compromised 144 

Of bank, recovered how 144 



[214] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

FORFEITURES — Continued Section 

Unauthorized banking prohibited 12, 12a, 49 

Unlawfully opening branch office 9 

France, bonds and notes of, as investments for savings banks 61 

Funds, of commercial bank with another commercial bank, regulated 85 

Of receiver, escheat to state, when 137 

Of state banking department 123 

Paid into county treasury by receiver, when 137 

Paid out on court order 137 

When escheated to state, invested how 137 

Furniture and Fixtures for offices of state banking department 122 

Investment in, by commercial banks 84 

Investment in, by savings banks 61 

Investment in, by trust companies 1 05 

Gas Corporation, definition of 61 

Government bonds available for deposit by trust company 96 

Legality of bonds of 61 

Governmental Lien, not prior incumbrance, when 57 

Governor, annual report of superintendent of banks to be made to 140 

Superintendent of banks appointed by 120 

Gratuities to officers prohibited 39 

Guaranteed Policy on mortgage insurance, legality of, for savings banks 61 

Guarantor deemed to be borrower 66 

Guardian, deposits by 51, 91, 93 

Trust company may be, for estate 90 

Trust Company, oath required 90 

Hypothecation of assets 21a 

Impairment of capital stock 133, 136 

Incorporation, see Articles of Incorporation. 

Information accessible to general public 141 

Bulletin posted in office of superintendent of banks 1 4 1 

For public 1 7 

On file for stockholders 1 7 

Injunction against superintendent of banks 134, 136 

Restraining use of words or terms 12 

Insolvent bank, duties of superintendent of banks 136 

Bank, failure to report 126 

Upon failure to restore reserve 20 

Inspection of all banks once a year 124 

Special when necessary 124 

Insurance, premiums shall not be assumed or guaranteed by bank 5 

When commercial bank may act as agent 5 



[215] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 

Interest, accrued but unpaid, not profits, when 45 

On deposits of trust funds 95 

Overdue one year, debt considered bad 21a 

Trust company may receive, on securities deposited 96 

Inventory, liquidation of delinquent banks 136 

Investigation of bonds and securities by superintendent of banks 61a 

Of bonds and securities, cost of 61a 

Of fitness of stockholders 128 

Investment Certificates, building and loan associations may issue 12a 

Investments, bank shall not invest in own stock 34 

By savings banks after July 1, 1909, legality of 66 

Changed to conform to act, how 145 

In bonds by commercial bank limited 36, 46 

In stock of bank engaged in foreign or international banking 58 

In stock of corporations, prohibited, except 37 

In stock of trust company or safe deposit company 37 

Of departments held for depositors 27 

Of each department must be separate 26 

Of trust funds, how regulated 105 

Trust company, how governed 106 

Irrigation District, assessment by, effect on first lien 57 

Bonds of, available for deposit by trust company 96 

Bonds of, legality of 36,46, 61, 96 

Judgment dissolving bank, superintendent of banks may procure 135a 

Jurisdiction in actions brought under bank act 136b 

Law, banking, effective when 147 

Governing banks joining federal reserve bank 56 

Legality of bonds or notes for savings banks 61 

Of investments prior to this act 145 

Letters of Credit, relation to loans in commercial bank 80 

Liabilities, advertising to be separate 14 

Shall not be increased, when 20 

Total of one borrower, how computed 80 

Liability for making false statement 38 

Of directors, officers or employees for fraud 38 

Of stockholders, can not be waived 40 

Liberty Bonds, savings bank may receive as bailee 70 

License, forfeiture of 7, 12c, 58, 98, 134,136 

Surrendered upon conversion 56a 

To banks 127 

To begin business, fee for 24 

To foreign corporations 7 

To open branch offices 9, 58 

[216] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

LICENSE — Continued Section 

To representative of foreign corporations, when 12c 

To trust companies 127 

When may be refused or withheld 7,9, 12c, 127 

Lien, governmental not prior, when 57 

Life Insurance Companies, use of word "trust" by foreign 12b 

Limit, "borrowed money," amount of 21a 

Of amount of real estate loans 47,57,67, 105 

Of deposit liabilities 19 

Of deposit of banks in a savings bank 68 

Of deposit of commercial bank with another commercial bank, regulated 85 

Of deposit of savings banks in any one bank 68 

Of investment in commercial paper by savings banks 67 

Of investment in safe deposit department 30 

Of loans by commercial banks 46, 47, 80 

Of loans by savings banks 66, 67 

Of loans by trust companies 105 

Of loans on bank or corporation stock 44, 67 

Of purchase of bonds by commercial banks 36, 46 

Of time for holding real estate 54 

On deferred payment of interest 21a 

Superintendent of banks may extend, on money borrowed 21a 

Liquidation, banks in, claims against 136 

Banks in, names to be posted 141 

Compensation of counsel in 136 

Costs in 1 36 

Filing of proceedings in 136b 

Of banks by superintendent of banks 136 

Of banks, voluntary 136a, 137 

Proceedings, notice to banks 136 

Voluntary, superintendent of banks may take possession 136a 

When corporate existence expires 136a 

Loans, bank shall not loan on own stock 34 

By banks to affiliated banks 65, 83 

By commercial banks, how limited 46,47,80,81 

By commercial banks on United States Government securities 80, 83 

By comniercial banks, to directors, agents and employees 83 

By commercial banks, to officers prohibited 83 

By foreign corporations 7 

By savings banks, how limited 57, 66, 67 

By savings banks prohibited, when 68 

By savings banks, renewal of 66 

By savings banks to directors on security of United States obligations 

permitted 65 



[217] 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

LOANS — Continued Section 

By savings banks, to directors or officers prohibited 65 

On corporation or bank stock, limited 44, 67 

On first lien on real estate, efiFect of certain assessments 57 

Prohibited, must be reported 65, 83 

Real estate 47, 57 

Savings bank, e£Fect of public utilities act 61 

Shall not be increased, when 20 

To clubs, religious or membership corporations, application of law 83 

To corporations, directors or oflFicers interested 65, 83 

To directors, agents or employees 65, 83 

To members of advisory board 83 

Trust company, how governed 105, 106 

When savings banks must not make new 64 

Location, governing capacity of commercial bank as insurance agent 5 

Powers as affected by consolidation of cities 23, 60, 82 

Powers of banks dependent upon 23, 60, 82 

Powers of trust companies dependent upon 23, 90 

Requirements w^hen principal place of business changed 8 

Losses, may be charged to surplus, when 2 1 

Reserve fund may be charged with 64 

Shall be written off, when 21a 

Manager, of foreign bank must take oath 1 1 

Market Value of oil, mineral or timber land, how determined 6 1 

Of redwood timber land, for loans 6 1 

Meeting of directors once a month I 1 

Of members of mutual bank to capitalize 29 

Of stockholders, superintendent of banks may call 135 

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 

Merger, see Consolidation. 

Mining Stock, loans on, by savings banks, prohibited 67 

Mineral Land, fixing market value of 61 

Minor, trust company guardian of estate only 90 

Mortgage, deposited by trust company with state treasurer 97 

Of trust company deposited, title and appraisement 99 

Restriction as to loans on 47, 57, 67 

Sale to banks by officers, etc., permitted when 35 

Mortgage Insurance, guaranteed policy of, legality of, for savings banks 6 1 

Policy to accompany participation certificates deposited by trust com- 
pany 99 

Mortgage Participation Certificates available for deposit by trust company, 

when 96,99 



[218] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

MORTGAGE PARTICIPATION CERTIFICATES— Continued Section 

Legality of for savings banks 61 

Municipal Assessment, effect of, on first lien 57 

Municipal Deposits in savings banks 62 

Reserve against, not required 20, 68 

When secured, bank not required to maintain capital against 1 9 

Mutual Bank, how reserve fund shall be increased 64 

May have capital stock, when 29 

Payment of losses out of reserve fund, when 64 

Relation of reserve fund to deposits 64 

Mutual Water Company, bonds of, legal investments, when 61, 61a 

Name, change of, see Sec. 1278, Code of Civil Procedure. 

Restrictions on 12, 12a, 12b, 12c, 49, 127 

National Bank, conversion of state bank into 56a 

Examination of as depositary 48 

Examination of trust department 48a 

May act in fiduciary capacity 48a 

Net Elarnings, definition of 61 

Notes, advertisement of, limited when 61 

Guaranteed by mortgage insurance as investments, when 61, 105, 106 

Guaranteed by mortgage insurance, available for deposit by trust com- 
panies 96, 99 

Legal for savings banks, when 61 

Notice, of assessment on stock 133 

Of conversion of savings bank into national bank, how given 56a 

Of liquidation to all banks 136 

Required by savings banks from depositors 64 

Oath of bank examiner 125 

Of directors 1 1 

Of managers or agents of foreign bank 1 1 

Of office of superintendent of banks 120 

Refusal of officers to be sworn, penalty for 135a, 136 

Who may administer 124 

Officer, liability for fraud 38 

May sell note, bond or contract to bank, when 35 

Of bank, loans to prohibited 65,83, 105 

Of commercial bank in relation to corporation loans 83 

Of commercial bank shall not be endorser 83 

Of savings bank, in relation to corporation loans 65 

Of savings bank, shall not be endorser 65 

Of trust company entitled to knowledge of private trusts 1 03 

Overdraft by, prohibited 39 

Prohibited loans to, must be reported 65, 83 

Purchase of assets or obligations of bank, by 41, 42 



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BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

OFFICEB — Continued Section 

Refusal to be examined on oath 135a, 136 

Restriction on purchase of obligations or assets of bank, by 41, 42 

Shall not receive commission 39 

Offices of state banking department 122 

Official Reports of superintendent of banks, prima facie evidence 142 

Oil Land, fixing market value of 6 1 

Order, refusal of bank to observe 136 

To show cause, issued by superintendent of banks 134 

Organization of bank, examination of documents 8, 127 

Of bank, previous consent of superintendent required 127 

Of banking corporation, papers to be filed 8 

Of trust companies 90 

Overdraft, limited to ninety days as asset 21a 

Prohibited to officers, employees, etc 39 

Participation Certificates, mortgage, legality of, for savings banks 6 1 

Mortgage, when available for deposit by trust company 96, 99 

Par Value of capital stock, minimum, except 53 

Payment of expenses of banking department. 123, 124 

Suspended by bank, cause for dissolution 135a, 136 

Payment of Deposits by savings banks, notice required, when 64 

Penalties for encroachment on reserves 20 

For illegal advertisement of bonds 61 

Pecuniary, may be compromised before action instituted 1 44 

Recoverable how 1 44 

To be paid into state banking fund 144 

Violators of bank act subject to 1, 145 

Per Diem charged for special examinations 124 

Personal Property, savings banks may loan on 67 

Petition of stockholders for dissolution 137 

Pipe Line Corporation, definition of 61 

Place of Business, see Location. 

Pledged, stock of directors of domestic bank must not be 1 1 

Policy, Guaranteed, of mortgage insurance, legality of for savings banks 6 1 

Political Lien, not prior incumbrance, when 57 

Population governing capacity of commercial bank as insurance agent 5 

Governing ratio of reserve required 20 

In relation to capital, governed by federal census 23 

See Location. 

Postal Savings, commercial banks may borrow 21a 

Deposited in savings banks 62 

Deposits, reserve against not required 20, 68 

Deposits when secured, banks not required to maintain capital against.... 19 
Powers, building and loan associations, restrictions on 12, 12a 



[220] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

POWERS — Continued Section 

Of banks 2, 4, 5, 6 

Or commercial banks 5 

Of savings banks 4 

Of trust companies 6 

Preferred Claims, deposits by order of court are 5 I 

Deposit of banks in liquidation by superintendent of banks 136 

Deposits of postal savings are 62 

Deposits of public moneys are 62 

Preferred Creditors, bank shall not pledge assets, except 21a 

Preferred Stock, unlawful for banks, except 53 

President, loans to prohibited 65,83, 105 

Publication of unclaimed deposits 15 

Verification of reports 130, I 30a 

Principal Office 26 

Prior Incumbrance, political or governmental not such, vyrhen 57 

Private Trust, definition of 10! 

Not subject to inspection of superintendent of banks, except 1 1 

Officers entitled to knowledge of 103 

Shall be deemed to be court trust, when 1 1 

Subject to supervision, when 101 

To be separately secured 96 

Trustee shall not disclose, what 103 

Proceedings, in dissolution J 136, 137 

In liquidation, filing of 136b 

Reports are prima facie evidence, when 142 

To enjoin superintendent of banks 134, 136 

When banks are merged 31a 

When bank sells assets 3 1 

When capital of bank is impaired 133 

When reserve falls below required amount 20 

Process, service on foreign corporations 7 

Profit and Loss, certain debts charged off to, when 21a 

Profits, accrued but uncollected, interest not to be included in 45 

Public, information for 17, 141 

Records of state banking department not open to 1 42 

Public Administrator, deposits of, with trust company 92 

May deposit with any bank, when 5 1 

May deposit with savings bank, when 68|/2 

Publication, deceased depositors, list of 15 

Of false statement, penalty for 38 

Of notice by county clerk in escheat proceedings 15 

Of notice of agreement of sale and purchase 3 1 

Of notice of assessment of stock 133 



[221] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

PUBLICATION— Continued Section 

Of notice of conversion, savings bank into national bank 56a 

Of notice of liquidation 136 

Of notice of mutual bank to capitalize 29 

Of notice of sale, affidavit to be filed 3 1 

Of report to superintendent of banks 132 

Of sale of real estate by court 54 

Unknown depositors, list of 15 

Public Deposits, reserve against, not required 20, 68 

When secured, bank not required to maintain capital against I 9 

Public Moneys, commercial banks may borrow 21a 

Deposited in savings banks 62 

Public Utilities Act, effect on loans and investments by savings banks 61 

Public Utility, bonds of, when legal for savings banks 61, 61a 

Definition of 6 1 

Purchase of assets or obligations of banks by officers, directors, etc 41, 42 

Of banks 3 1 

Of departments of banks 3 I 

Of obligations or assets of bank by directors, etc 41, 42 

Purposes of commercial banks 5 

Of savings banks 4 

Of title insurance and trust company restricted 22 

Of trust company 6 

Railroad, bonds of, when legal for savings banks 61, 61a 

Railroad Corporation, definition of 61 

Ratio of capital and surplus to deposit liabilities 19 

Of reserve to deposit liabilities 20, 68, 105, 106 

Real Estate, bonds legal for investment by savings banks, when 61, 61a 

Consisting of oil, mineral or timber land, how valued 6 1 

Contract not to be bought by bank, when 35 

Held longer than five years, proceedings for sale or exchange of 54 

Loans on, by commercial bank 47 

Loans on, by savings bank ; 67 

Loans on, by trust company 105, 106 

Loans on, effect of governmental liens 57 

Mortgaged as deposit by trust company 96 

Redwood timber land, as security for loans 61 

When second mortgages on, permitted 47, 67, 80 

Reapportionment of capital and surplus to departments 23 

Receiver appointed prior to July 1, 1909 137 

Bank examiner shall not act, when 125 

Deposits by 5 1 

Funds of, escheat to state when 137 

Funds of, held in county treasury, when 137 



[222] 



INDEX 



BANK ACT OF CALIFORNIA— -Continued 

RECEIVEE — Continued Section 

Trust company, oath required 90 

Reclamation District, assessment by, effect on first lien 57 

Records of state banking department not public documents 142 

Rediscounts, commercial banks with federal reserve bank 21a 

Not considered borrowed money, when 21a, 62 

Regulations governing foreign branch office 58 

Religious Corporation, loans to, exemptions in favor of 65, 83 

Report, annual, of superintendent of banks to governor 140 

By savings bank of money borrow^ed to purchase United States securities 62 

Failure of bank to make, penalty 138 

Loans to agents or employees of savings bank 65 

Loans to directors and employees of commercial bank 83 

Loans to members of advisory board 83 

Of banks, called for, how often 131 

Of banks, publication of 132 

Of banks shall contain what 130 

Of bank, time to make, limited 138 

Of banks to state banking department 130 

Of examination by directors 139 

Of loans to copartnerships in which directors, agents or employees are 

interested 83 

Of loans to corporations in which officers, directors or employees are 

interested 65, 83 

Of prohibited loans, must be made 65, 83 

Of unclaimed deposits 1 5 

Official, of superintendent of banks, prima facie evidence 1 42 

Special, to superintendent of banks 130a 

Trust company must report, what 98, 101 

Weekly bulletin by superintendent of banks 1 4 1 

Reserve for departmental bank 20, 25, 68, 106 

How shall be restored .^ 20 

May be deposited in federal reserve bank 20, 68 

Not to be carried against public deposits 20, 68 

Of commercial banks, relation to deposits 20 

Of departments to be kept separate 25 

Of savings banks 68 

Of savings banks, relation to deposits 19 

Penalty for encroachment on, in commercial banks 20 

Percentage may be kept in eastern cities, w^hen 20 

Ratio required governed by population ' 20 

Required for commercial banks 20 

Required, state members of federal reserve bank 20, 68 

Trust company, how governed 106 



[223] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

BESERVE FOR DEPARTMENTAL BANK— Continued Section 

Trust funds not to be carried as 32 

Reserve Depositary, how nominated and designated 20 

What banks may act as 20, 43, 68 

Reserve Fund, mutual savings banks, amount required 60 

Of mutual savings bank, may be used how 64 

Resources, advertising to be separate 14 

Revolving Fund, superintendent of banks may retain 123 

Rulings on commercial paper by superintendent of banks 80 

Safe Deposit Corporation, banks may acquire stock in, when 37 

Safe Deposit Department, any bank may conduct 30 

Investment in, by commercial bank 84 

Investment in, by savings bank 61 

Investment in, by trust company 105 

Safe Keeping, savings banks may receive United States bonds for 70 

Safety Deposits, in insolvent bank 136 

Salary of employees of state banking department 121 

Of superintendent of banks 120 

Sale of banks or departments 3 1 

Or exchange of real estate held longer than five years 54 

Savings of school children 9 

Shall not be advertised by whom 12, 12a, 49 

Savings Bank advertising, how regulated 28 

Bonds and notes, when legal for investment 61 

Borrowed money, approval of 62 

By-laws must prescribe what 64 

Capital and surplus, their relation to deposits 19 

Capital stock required 60 

Classified as to capital by population 23 

Contracts with depositors 64 

Conversion into national bank 56a 

Corporation loans, directors or officers interested 65 

County deposits in 62 

Definition of 4 

Department, reserve required 68 

Depositors entitled to notice of conversion into national bank 56a 

Depositors may be paid by drafts 62 

Deposits of other banks, with 68 

Employees or agents may borrow funds 65 

Foreign government bonds, investment in 61 

How organized to conduct 3 

Investment in bank premises 61 

Investments, effect of public utilities act 61 

Investments, legality of 61, 66 



[224] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 
SAVINGS BANK— Continued Section 

Loans, effect of public utilities act 61 

Loans must be secured, how 67 

Loans of, limited 66 

Loans to affiliated bank 65 

Loans to directors, agents or employees on United States securities per- 
mitted 65 

Loans to directors and officers prohibited 65 

May borrow money to purchase United States securities 62 

May borrow postal savings 62 

May borrow public money 62 

May issue certificates of deposit 63 

May purchase or discount bankers' acceptances, w^hen 67 

May purchase or discount commercial paper, when 67 

May receive United States bonds on deposit as bailee 70 

May rediscount with federal reserve bank, what 62 

Municipal deposits in 62 

Must be conducted, how 69 

Must be duly organized 2 

Must not make new loans, when 64 

Mutual, reserve fund of, must be increased when 64 

Mutual, reserve fund, when required 60 

Only, to receive savings deposits 49 

Organized without capital stock 60 

Purposes of 4 

Real property may be purchased or held , 61 

Reserve may be deposited on call with federal reserve bank 68 

Reserve required 68 

Securities hypothecated, approval of 62 

Shall not contract debt, except 62 

Use of term restricted 12, 12a, 49 

Without capital stock reserve fund must equal what 19 

Savings Department investments to be separate 26 

Savings Deposits, advertising for, prohibited when 12, 12a 

School District, assessment by, effect on first lien 57 

Bonds of, available for deposit by trust company 96 

Legality of bonds of 61 

School Savings, how deposited 9 

Regulations concerning 9 

Seal of superintendent of banks 134 

Second Mortgage, when bank may loan on 47, 67 

Secretary of State, see Sec. 290a of Civil Code. 

Must issue certificate regarding consolidation 31a 

Shall certify documents when 8 



[225] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 

Securities, additional deposit of, by trust company 98 

Advertisement of, limited, when 61 

Certified, official list to be kept 61a 

Cost of investigation of 61a 

Deposited by trust company, examination of 96, 97, 98, 99 

Exchange of, by trust companies.. 96 

Held by banks, must conform to act 145 

Hypothecated by savings bank 62 

Power of superintendent of banks to investigate 61a 

United States, as collateral 65, 80, 83 

Withdrawal of, by trust companies 98 

Security percentage, for savings bank loans 67 

Service of papers on foreign corporations 7 

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 130a 

State, assessment by, effect on first lien 57 

Law of, violated by banks 134, 135a, 136 

Legality of bonds of 61 

Shall be responsible for securities deposited by trust company 96 

State Banking Department, assistants 121 

Attorney 1 2 1 

Banks must report to 130 

Bulletin to be filed as public document 141 

Chief deputy, failure to report insolvent condition 126 

Chief Deputy, qualifications of 121 

Created 120 

Examiner, failure to report insolvent condition 126 

Examiner of, must file oath 125 

Examiner of, shall not act as receiver when 125 

Examiners 1 2 1 

Fund of 123 

Information to be posted in office 141 

Officials of, cannot borrow from state banks 121 

Provision for offices 122 

Records of not public documents 142 

Special report to 130a 

State Banking Fund, amount of 123 

Banks shall be assessed for 123 

Method of assessing banks 123 

Salaries paid out of 123 

State Deposits in savings banks 62 



[2261 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

STATE DEPOSITS — Continued Section 

Reserve against, not required 20, 68 

When secured, bank not required to maintain capital against 19 

Statement of all banks, to be submitted to governor 140 

State of CaHfornia, bonds of, available for deposit by trust companies 96 

State Treasurer, deposit with, by trust company 90 

Deposit with, by trust department of national bank 48a 

May accept mortgage on trust company premises, when 97 

To receive deposits of trust company securities 96 

Stationery, of banks, must show what 28 

Statute of Limitations on sale of bank or department 3 1 

Stock, as collateral, limited 44, 67 

Impairment of I 33, I 36 

Investment in, prohibited 37 

Number of shares held by directors to be posted I 7 

Par value, minimum, except 53 

Preferred, prohibited, except 53 

Subscription lists of bank subject to previous consent of superintendent 

of banks 1 27 

Stockholders controlling, may sell note, bond or contract to bank, when 35 

Fitness of, investigation of 128 

Information for 1 7 

Liability of, can not be w^aived 40 

Liability of, in sale 3 1 

May elect receiver, when 136 

May make application to dissolve 137 

Meeting of, may be called by superintendent of banks 135 

Must be notified of assessment 133 

Must confirm consolidation 31a 

Names of, to be on file I 7 

Refusal to pay assessment 133 

Stockholders' Meeting, superintendent of banks may call 135 

Street Railroad Corporation, definition of 61 

Subscription Lists, for organization stock of bank, must be approved 127 

Summons, service on foreign corporation 7 

Superintendent of Banks, action by, to procure judgment of dissolution 135a 

Annual report to governor 140 

Appointment of 120 

Approval of capital and surplus apportioned 23 

Approval to close branch office 9 

Approval to open branch office 9 

Approval to transact banking business 127 

Authority to liquidate bank 136 

Bond required 1 20 



[227] 



BLYTH, WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

SUPERINTENDENT OF BANKS— Continued Section 

Bulletin to be posted in office of 14] 

Certificate of 9, 127, 128 

Certificate of, to be posted 50 

Consent necessary to do departmental business 23 

Consent of, necessary to organize banking corporation 127 

Copy of corporate papers to be filed with 8 

Designation of depositary 20, 43 

Duties relating to conversion, state bank into national bank 56a 

Foreign corporations subject to supervision 7 

Holds ofiFice at pleasure of governor 120 

Issuance of order to show cause, when 134 

Liquidation by 1 36 

May appoint special deputies 136 

May authorize acceptance of drafts and bills of exchange by commercial 

' banks •. 80 

May authorize additional deposits by trust company 98 

May authorize deposits by trust company 96 

May authorize exchange of trust company securities 96 

May authorize withdrawal of trust company deposits, when 98 

May call meeting of stockholders 135 

May compromise pecuniary penalties or forfeiture 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 other 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 

Oath of office 120 

Official reports prima facie evidence 142 

Official seal of 134 

Powers of 1 24 

Power to examine foreign corporations 124 

Power to investigate bonds and securities 61a 

Previous consent to circulate stock lists for bank 127 

Reports of banks to 130 

Report to, by banks, how often 131 

Report to, by bank, to be published 132 

Salary 120 

[228] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

SUPERINTENDENT OF BANKS— Continued Section 

Shall be appointed attorney of foreign corporations, when 7 

Shall direct discontinuance of unsound practices 134 

Shall employ chief deputy, attorney, examiners and other assistants 121 

Shall give notice of liquidation proceedings 136 

Shall not be connected with banks 120 

Shall not inspect private trusts, except 101 

Shall provide auditor, when 124 

Shall require banks to repair capital, when 133 

To regulate foreign banking 58 

Trust company must report, what 98 

Superior Court, as to conflicting claims, liquidation of banks 136 

Winding up affairs of bank 136 

Surplus, advertising of, shall be separate 14 

Apportioned to departments 23, 60, 90 

Maximum necessary to maintain 21 

May be converted into capital 2 I 

Of savings bank, in what invested 61 

Of trust company, in what invested 105 

One-tenth of net profits to be added before dividend 2 1 

Reapportionment to departments 23 

When may be used to pay losses 2 1 

Taxes, effect on first lien on real estate 57 

Telegraph Company, has power to receive money for transmission 13 

Telegraph Corporation, definition of 6 I 

Telephone Company, has power to receive money for transmission 13 

Telephone Corporation, definition of 61 

Timber Land, fixing market value 61 

Redwood, loans on, by savings banks 61 

Title of act 1 

To accompany mortgage deposited by trust company 99 

Torrens, when may be accepted 99 

Title Insurance Company, doing trust business 106, 107 

Shall not conduct commercial or savings bank 22, 37 

Trust department, application of law 107 

Trust department, assessment for state banking department 107 

Trust department, must report to superintendent of banks 107 

Trust department, subject to supervision 107 

Torrens Title, when may be accepted 99 

Total Reserves, definition of 20 

Trust funds not to be carried as any part of 32 

Town, assessment by, effect on first lien 57 

Trade acceptances, when eligible for savings banks 67 



[2291 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

Section 
Transatlantic Steamship Company, has power to receive money for transmis- 
sion 1 3 

Transfer of assets and liabilities by bank 3 1 

Transpacific Steamship Company, has power to receive money for transmission 1 3 

Trust Company, additional deposits by, to be authorized 98 

Additional deposit with state treasurer, when 93 

Additional powers dependent upon location 90 

Additional powers of certain companies 106, 107 

Additional report required 101 

Advertising, how regulated 28 

Affidavit to be made before commencing business 90 

Appointment as trustee, bond not required except 94 

Articles of incorporation 90 

Banks may acquire stock in, when 37 

Becoming member of federal reserve bank 90 

Capital required 90 

Causes for dissolution 134, 136 

Certain documents to accompany mortgage deposited with state 99 

Court trusts 96, 1 1 

Definition of 6 

Departmental business 1 06 

Deposits by, to be authorized 96 

Deposits w^ith, authorized by court 91 

Deposits with, by court order 93 

Deposits with, how secured 98 

Deposits with state treasurer 96, 97, 98, 99 

Exchange of securities deposited by, to be authorized 96 

Foreign, may act as trustee in this state for what purposes 7, 90 

Foreign, may buy and sell bonds in this state... 12c 

Foreign, may have representative in this state, when 12c 

How organized to conduct 3 

Interest or dividends on securities deposited 96 

Investment of trust funds 94 

Knowledge of private trusts confidential 103 

Liquidation of 136 

May act as executor 6, 90 

May mortgage premises to state treasurer, when 97 

May resign as trustee under private trust, when 101 

May withdraw securities from state treasurer, when 98 

Must be duly organized 2 

Must not be foreign corporation, except 7, 90 

Notification of increase in trusts to be made 98 

Oath as executor required 90 



[230] 



INDEX 



BANK ACT OF CALIFORNIA— Continued 

TRUST COMPANY— Continued Section 

Powers of 6 

Private trusts 96, I 1 

Private trusts, confidential, except 101, 103 

Private trust shall be deemed to be court trust, when 101 

Provisions for ceasing business 102 

Purpose of 6 

Qualifications 90 

Reserve of 1 06 

Restriction on investments 105, 106 

Revocation of certificate shall not affect trusts 98 

Securities deposited may be exchanged 96 

Securities deposited w^ith treasurer to be accompanied by what 99 

Shall pay interest on deposits 95 

Trust funds, meaning of term 98 

Trusts classified 1 1 

Use of term restricted 12, 12a, 12b 

When national banks may act as 48a 

Trust Department, affairs shall be separate 90 

May deposit with commercial department of same corporation, when 25 

May deposit with savings department of same corporation 25 

Of national bank subject to trust company regulations 48a 

Of national bank subject to inspection 48a 

Operated by Title Insurance Company 106, 107 

Trustee, deposits by 51 

Foreign corporations permitted to act as, when 7, 90 

When acting as escrow holder 101 

Trust Funds, deposits of 25 

Interest on, as provided by court 95 

Investments, how regulated 105 

Meaning of term 98 

Shall not be counted as reserve 32 

Shall not be mingled 32 

Trusts, how classified 101 

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 1 

Shall not be combined w^ith surplus in advertising 14 

United States, assessment by, effect on first lien 57 

Bonds accepted by savings banks as bailee 70 

Bonds available for deposit by trust company 96 

Deposits, reserve against not required 20, 68 

Deposits when secured, banks not required to maintain capital against.... 19 



[231 



BLYTH. WITTER & CO. 



BANK ACT OF CALIFORNIA— Continued 

UNITED STATES — Continued Section 

Legality of bonds of 61 

Moneys, banks may borrow 21a, 62 

Securities, loans on by commercial banks 65, 80, 83 

Unknown Depositors 1 5 

Unsafe Practices, penalty for 134, 136 

Vacancy in office of superintendent of banks, how filled 121 

Violation of act, penalty for, may be compromised 144 

Of any law of state 134, 1 35a, 136 

Of bank act by others than banking corporations 1, 145 

Voluntary Liquidation of banks 136a, 137 

Warning to discontinue violation of law ^ 134 

Water Corporation, definition of 61 

Withdraw^al of savings deposits, conditions of 64 

Of securities by trust company 96, 102 



[232] 



PRESS OF John Kitchen Jr. Co., san francisco