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accumulated dues, together with the earnings and profits of the corporation, and shall in no case excced two million dollars, except as to corporations now existing. It shall be divided into shares of matured or par value of one hundred dollars, or two hundred dollars each, as shall be provided in the articles of incorporation and fixed by the bylaws. Certificates of stock shall be issued to each stockholder on the first payment of dues by him. The shares shall be issued in yearly, half-yearly, or quarterly series, except in corporations now existing, in such amounts in cach series, and at such times, as shall be determined by the board of directors. No share of a prior series shall be issued after the issuing of shares in a new series. Shares which have not been pledged as a security for the repayments of a loan shall be called free shares. Shares that have been so pledged shall be called pledged shares. All stock matured and surrendered or cancelled in any series shall become the property of the corporation, and may be issued in any subsequent series. Payment of dues on shares of stock in each series shall cominence from the time that shares began to be issued in such series. Any such corporation shall have power by its bylaws to impose and collect a fine from each stockholder not exceeding ten per cent of the defaulted amount, for every neglect or refusal to make his payments of dues, or premium, or interest, when due, and to impose and collect a like fine successively on every regular payday during such default. Every such corporation hereafter formed shall also have power to charge an entrance fee upon each share of stock issued, not exceeding ten cents on each share, and may also charge a transfer fee not exceeding ten cents on each share, all of which shall be paid into the treasury and accounted for as all other funds of the association; Provided, that building and loan associations heretofore incorporated may continue to charge and dispose of such entrance and transfer fees as are prescribed by the bylaws of such corporation. Payment of dues or interest may be made in advance, but no association shall allow interest on such advance payments at a greater rate than six per cent per annum, nor for a longer period than one year.

SEC. 635, (added by chapter 174, acts of 1891). The directors may, at their discretion, under the regulations prescribed in their bylaws, retire the free shares of any series of stock, at any time after four years from the date of their issue, by enforcing the withdrawal of the same; but whenever there shall remain in any series, at the expiration of five years after the date of its issue, an excess above one hundred free shares of the par value of two hundred dollars each, or two hundred free shares of the par value of one hundred dollars each, then it shall be the duty of the directors to retire annually twenty-five per centum of such excess existing at said expiration of five years after the date of its issue, so that no more than one hundred free shares shall remain in such series at the expiration of nine years from the date of its issue; Provided, that no more than one-half of the monthly receipts be used for that purpose; and thereafter the directors may, in their discretion, retire such other free shares as they consider to the best interest of the association to retire; Provided, that whenever, under the provisions of this section, the withdrawal of shares is to be enforced, the shares to be retired shall be determined by lot, drawn from 11 free shares in the series, as shall be regulated by the bylaws, and the holders thereof shall be paid the amount actually paid in, and the full amount of earnings at the date of last apportionment of profits.

SEC. 636, (added by chapter 174, acts of 1891). When the stock in any series shall have reached its matured value, payment of dues thereon shall cease, and all of the stockholders in such series who have borrowed from the association shall be entitled to have their securities returned to them, and a satisfaction of the mortgages made by them to the association; and the holders of free shares of stock in such series shall be paid out of the funds of the association the matured value thereof, with such rate of interest as shall be determined by the bylaws, from the time the board of directors shall declare such share to have matured until paid; but at no time shall more than one-third of the receipts of the association be applicable to the payment

of matured shares, without the consent of the board of directors. The order of the payment of the matured shares shall be determined by the bylaws.

SEC. 637, (added by chapter 174, acts of 1891). The moneys in the hands of the treasurer, and such sums as may be borrowed by the corporation for the purpose, shall be loaned out in open meeting to the member who shall bid the highest premium, or may be loaned at such premium as may be fixed, from time to time, by the board of directors; and the premium may be deducted from the amount of the loan, or such proportion may be deducted as the bylaws shall provide, and in that case the balance of said premium shall be payable in such instalments as the bylaws shall determine; Provided, however, that where the premium is payable in instalments, the number of instalments into which the same is divided shall be uniformly applicable to all loans made by the corporation, and shall be payable at the times and in the manner as provided in the bylaws; And provided further, that in no case shall the amount loaned exceed the matured value of the shares pledged to secure the loan. SEC. 638, (added by chapter 174, acts of 1891). The rate of interest on all loans may be fixed by the bylaws, but in case the bylaws fail to fix the rate, then it shall be fixed from time to time by the board of directors. For every loan made, a note or obligation secured by a first mortgage upon unencumbered real estate shall be given, accompanied by a transfer and pledge to the association of the shares borrowed upon, as collateral security for the repayment of the loan; or, in lieu of the mortgage, there may be pledged and transferred to the association for the payment of the loan free shares, the withdrawal value of which, under the bylaws, at the time of such borrowing, shall exceed the amount borrowed and interest thereon for six months. At the discretion of the board of directors, a borrower may repay a loan, and all arrears of interest and fines thereon, at any time, upon the surrender of the shares pledged for the loan.

SEC. 639, (added by chapter 174, acts of 1891). Whenever any member shall be six months in arrears in the payment of his dues upon free shares, the secretary shall give him notice thereof, in writing, and a statement of his arrearages, by mailing the same to him at the last post office address given by him to the association, and if he shall not pay the same within two months thereafter, the board of directors may, at their option, declare his shares forfeited; and at the time of such forfeiture the withdrawal value thereof shall be determined and stated, and the defaulting member shall be entitled to withdraw the same without interest, upon such notice as shall be required of a withdrawing shareholder. Whenever a borrowing member shall be six months in arrears in the payment of his ducs, or interest, or premium, the whole loan shall become due, at the option of the board of directors; and they may proceed to enforce collection upon the securities held by the association. The withdrawal value, at the time of the commencement of the action, of all shares pledged as collateral security for the loan, shall be applied to the payment of the loan, and said shares, from that time, shall be deemed surrendered to the association. SEC. 640, (added by chapter 174, acts of 1891). Any such association may purchase at any sale, public or private, any real estate upon which it may have a mortgage, judgment, lien, or other incumbrance, or in which it may have an interest; and may sell, convey, lease, or mortgage the same at pleasure to any person or per

sons.

SEC. 641, (added by chapter 174, acts of 1891). Any association organized in pursuance of the provisions of this act may borrow money for the purpose of making loans or paying withdrawals.

SEC. 642, (added by chapter 174, acts of 1891). Profits and losses shall be apportioned at least annually, and shall be apportioned to all the shares in each series outstanding at the time of such apportionment, according to the actual value of such shares as distinguished from their withdrawal value.

SEC. 643, (added by chapter 174, acts of 1891). Any person of full age and sound

and subscribing to the bylaws, and annexing to his signature his post office address. A minor may hold shares in the name of the parent, guardian, or next friend as trustee. The shares of stock in any such corporation held by any person, to the value of one thousand dollars, shall be exempt from execution.

SEC. 644, (added by chapter 174, acts of 1891). Every association organized under the provisions of this act, and every other association doing a like business, shall annually make a full report, in writing, of the affairs and condition of such corporation, within thirty days after its annual meeting, to the bank commissioners of this state. Such report shall be verified by the oath of the officers making the same, and a copy of the same shall be delivered to every stockholder, from the office of the corporation, who may call for such report. Every association shall make any further reports which the said commissioners may require, and in such form and as to such matters relating to the condition and conducting of the business of the association as such commissioners may designate; and said bank commissioners may at any time examine into the affairs of any and every of said associations. Any wilful false swearing in making and verifying said reports shall be deemed perjury. Any such association which shall fail to furnish the bank commissioners any such report required, within thirty days after demand, shall forfeit the sum of ten dollars per day for every day such report shall be delayed or withheld; which may be recovered in an action brought by the attorney general in the name of the people of this state; and all moneys so recovered shall be paid to the treasurer of the state, who shall pay the same into the "bank commissioners' fund". The state bank commissioners shall annually publish a full report of the condition of all associations formed under the provisions of this title, and every other association doing a like business in this state, in the same manner as they are now required to do in reference to savings banks.

SEC. 645, (added by chapter 174, acts of 1891). No mutual building and loan association, or company, association, or corporation, organized under the laws of any other state or territory, to carry on a business of a like character to that authorized by this title, shall be allowed to do business, or to sell their stock in this state, without first having deposited with the state controller, or secretary of state, the sum of fifty thousand dollars in money, or United States or municipal bonds of this state, or in mortgages upon real estate located within this state, as a guarantee fund for the protection and indemnity of residents of the state of California, with whom such companies, associations, or corporations shall do business; the fund so deposited to be paid by the custodian thereof to the residents of California only, and not then until proof of claim by final judgment has been filed with the custodian of said fund against such foreign company, association, or corporation. Any of the securities so deposited may be withdrawn at any time upon others, herein provided for, of like amount, being substituted in lieu thereof. Any person or persons who shall be found in this state as agent, or in any other capacity, representing such foreign company, association, or corporation, which has not complied with the provisions of this section, shall be deemed guilty of a misdemeanor, and upon conviction shall be punished by a fine not exceeding one thousand dollars, or by imprisonment in the county jail not exceeding twelve months, or by both such fine and imprisonment.

SEC. 646, (added by chapter 174, acts of 1891). Any building and loan association, now existing and heretofore incorporated, desiring to continue its existence under the provisions of this title, may do so if the holders of a majority of the stock, at their regular annual meeting, or at a special meeting of the stockholders called for that purpose, shall so elect. The notice of the meeting, whether regular or special, shall state as one of the objects of the meeting, to vote on the question whether the corporation shall continue its existence under the provisions of this title; and the notice of meeting shall be published as required by section three hundred and one; and, in addition thereto, a similar notice shall be mailed to each stockholder at his post office address. Within thirty days after the holders of a

majority of the stock at any such meeting have voted to continue the existence of the corporation under the provisions of this title, the secretary of the corporation shall, under oath, make and subscribe, as such secretary, a certificate, in writing, stating the calling of such meeting, the fact that the holders of a majority of the stock voted to continue the existence of the corporation under this title, which shall be filed in the office of the county clerk in which its original articles of incorporation have been filed, and shall file in the office of the secretary of state a certified copy thereof, according to the provisions of section two hundred and ninety-six; and the secretary of state shall issue his usual certificate, as provided in said section. Thereupon, such corporation shall be subject to all the provisions of this title, as though originally incorporated under the provisions hereof, except that no change in its name or amount of capital stock shall be made; but the name shall be the same as contained in the original articles.

SEC. 647, (added by chapter 174, acts of 1891). All corporations doing the busi ness of building and loan associations in this state shall be subject to the provisions of this title relating to the bank commissioners.

SEC. 648, (added by chapter 174, acts of 1891). The name "building and loan association," as used in this act, shall include all corporations, societies, or organizations, or associations doing a savings and loan or investment business on the building society plan, viz.: loaning its funds to its members or its shareholders, and whether issuing certificates of stock which mature at a time fixed in advance or not. SEC. 6484, (added by chapter 174, acts of 1891). The provisions of an act entitled "An act imposing a tax on the issue of certificates of stock corporations,” approved April first, eighteen hundred and seventy-eight, shall not be deemed and held to be applicable to any certificates issued to and transferred by the members or stockholders of any association organized under or governed by this act.

STATUTES OF 1893.

CHAPTER 188.

SECTION 1. All building and loan associations heretofore or hereafter incorporated under the laws of this state, or any other state or territory, or those of any foreign country, and doing business in this state, shall be subject to the examination and supervision of a board of commissioners of loan associations, which board shall consist of two commissioners, each of whom shall be an expert of accounts, and shall be appointed by the governor, within thirty days after the passage of this act, to hold office for the period of four years, and until their successors are appointed and qualified.

SEC. 2. The commissioners shall each receive a salary of two thousand four hundred dollars per annum and necessary travelling expenses, not to exceed for the two commissioners the sum of five hundred dollars per annum, to be audited by the state controller, and to be paid in the same manner as the salaries of other state officers. SEC. 3. The commissioners shall have their office in San Francisco, which office shall be kept open for business every day and during such hours as are commonly observed by the banks of that city as banking hours. They shall procure rooms for their office at a monthly rental not to exceed forty dollars. They many also provide fnel, printing, stationery, and other necessary conveniences connected with their office, not to exceed an aggregate cost of three hundred dollars per annum. All expenses authorized in this section shall be audited and paid in the same manner as the salary of the commissioners.

SEC. 4. The commissioners, before entering upon the duties of their office, must each execute an official bond in the sum of five thousand dollars, and take the oath of office, all as prescribed by the Political Code for state officers in general.

SEC. 5. The duties of the commissioners of loan associations shall be to furnish to

association within this state a license authorizing them to transact the business of a building and loan association for one year from the date of said license; to receive and place on file in their office the semi-annual reports required to be made by building and loan associations by this act; to supply each association with blank forms and such statements as the commissioners may require; to be made on or before the first day of October of each year, a tabulated report to the governor of this state, showing the condition of all institutions examined by them, with such recommendations as they may deem proper, accompanied by a detailed statement, verified by oath, of all moneys received and expended by them since their last report.

state.

SEC. 6. The commissioners shall visit, once in every year, and as much oftener as they may deem expedient, every building and loan association doing business in this At such visits they shall have free access to the vaults, books, and papers, and shall thoroughly inspect and examine all the affairs of each of said corporations, and make such inquiries as may be necessary to ascertain its condition and ability to fulfil all its engagements, and whether it has complied with the provisions of law governing such associations; they shall preserve in a permanent form a full record of their proceedings, including a statement of the condition of each of said corporations, which shall be open to the inspection of the public during their office hours.

SEC. 7. To facilitate the examinations of the commissioners, as specified in the foregoing section, every association shall keep a book of records, written in ink, showing the values of the real estate security held in connection with each loan, and signed in each case by the appraiser, or officer, or committee of the association making such estimate value.

SEC. 8. Either of the commissioners may summon all trustees, officers, or agents of any such corporation, and such other witnesses as he thinks proper, in relation to the affairs, transactions, aud condition of the corporation, and for that purpose may administer oaths; and whoever refuses, without justifiable cause, to appear and testify, when thereto required, or obstructs a commissioner in the discharge of his duty, shall be punished by a fine not exceeding one thousand dollars, or imprisonment not exceeding one year, or by both such fine and imprisonment.

SEC. 9. If the commissioners, upon examination of any corporation under their supervision, they find that such corporation has been violating the provisions of law governing such associations, or is conducting its business in an unsafe manner, such as to render its further proceeding hazardous to the public, or to those having funds in its custody, they shall notify the attorney general of such facts, and the attorney general, in his discretion, may apply to the judge of the superior court of the county in which such corporation is doing business, to issue an injunction restraining such corporation, in whole or in part, from further proceeding with its business until a hearing can be had. Such judge may, in such application, issue such injunction, and, after a full hearing, may dissolve or modify it, or make it perpetual, and may make such orders and decrees, according to the course of proceedings in equity, to restrain or prohibit the further prosecution of the business of the corporation, as may be needful in the premises; and may appoint one or more receivers to take possession of its property and effects, subject to such directions as may from time to time be prescribed by the court.

SEC. 10. And if either of the commissioners, having knowledge of the insolvent condition, or any violation of law, or unsafe practice of any association under their supervision, such as renders, in their opinion, the conduct of its business hazardous to its shareholders or depositors, and shall fail to report the same in writing to the attorney general, as required by this act, then such commissioner, on conviction thereof, shall be punished by a fine of not less than five thousand dollars nor more than ten thousand dollars, or by imprisonment in the county jail not less than one year nor more than two years, or by both such fine and imprisonment; and his office shall be declared vacant by the governor, and a successor appointed to fill his unexpired term.

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