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to enforce the stockholders' liability is at an end. (Wells v. Black, 117 Cal. 157, 59 Am. St. Rep. 162, 48 Pac. 1090.)

The unconstitutional exemption of stockholders of savings banks from liability under the act of 1862 was an independent provision, and did not affect or annul the provision declaring a preference in favor of nonstockholding creditors in the distribution of the assets. (Murphy v. Pacific Bank, 110 Cal. 334, 51 Pac. 317.)

Rights of Depositors and Stockholders.— When depositors in a savings bank pay in their deposits on account of an unconditional subscription to the capital stock of the bank, such depositors becomo stockholders and are not entitled to share in the bank's dividends as depositors. (Dallemand v. Odd Fellows' Sav. Bank, 74 Cal. 598, 16 Pac. 497.)

The fact that the act of 1853 for the incorporating of savings banks did not postpone the claims of stockholding depositors, as was provided in the subsequent act of 1862, does not render the latter act unconstitutional, and its general and uniforme operation is not affected because it authorizes corporation to adopt or reject the provision for such postponement. (Murphy v. Pacific Bank, 119 Cal. 334, 51 Pac. 317.)

NO DIVIDENDS EXCEPT FROM SURPLUS PROFITS-TO CON.

TRACT NO LIABILITY, EXCEPT FOR DEPOSITS. Sec. 573, C. C. The directors of savings and loan corporations may, at such times and in such manner as the by-laws prescribe, declare and pay dividends of so much of the profits of the corporation, and of the interest arising from the capital stock and deposits, as may be appropriated for that purpose under the by-laws or under their agreements with depositors. The directors must not contract any debt or liability against the corporation for any purpose whatever, except for deposits. The capital stock and the assets of the corporation are a security to depositors and stockholders, depositors having the priority of security over the stockholders, but the by-laws may provide that the same security shall extend to deposits made hy stockholders. En. March 21, 1872.

Act prohibiting dividing or withdrawing of capital stock: See post, Statutes at Large, title “Banks and Banking."

Legislative History.

Sections 10 and 22 of the savings and loan act of 1862, page 199, as amended 1870, page 130, are the basis of this section. (Murphy v. Pacific Bank, 119 Cal. 343, 51 Pac. 317.)

Section Cited.

Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; City of Los Angeles v. Loan etc. Co., 109 Ca 401, 42 Pac. 149; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090; Murphy v. Pacific Bank, 119 Cal. 343, 51 Pac, 317.

Annotation.

Dividends from Profits.—Savings bank corporation organized under act of April 11, 1862, from which this section comes, is not authorized to appropriate and pay, as a dividend to its stockholders and depositors on the profits arising in its business, any portion of the interest upon its loans or investments that may have accrued or matured, but which have not actually been collected and received in money, notwithstanding such interest is amply secured and certain to be eventually paid. (People ex rel. v. San Francisco Sav. Union, 72 Cal. 199, 13 Pac. 198.)

Provision for the payment of surplus profits to stockholders may be made by by-laws. (Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090.)

That the directors may agree with depositors as to interest is clear under this section. (Los Angeles v. Loan etc. Co., 109 Cal. 401, 42 Pac. 149.)

PROPERTY WHICH MAY BE OWNED BY CORPORATIONS-RE

STRICTIONS IN PURCHASES AS PROVIDED ABOVE. Sec. 574, C. C. Savings and loan corporations may purchase, hold and convey real and personal property as follows:

1. The lot and building in which the business of the corporation is carried on, the cost of which must not exceed one hundred thousand dollars; except, on a vote of two-thirds of the stockholders the corporation may increase the sum to an amount not exceeding two hundred and fifty thousand dollars;

2. Such as may have been mortgaged, pledged or conveyed to it in trust, for its benefit in good faith, for money loaned in pursuance of the regular business of the corporation;

3. Such as may have been purchased at sales under pledges, mortgages or deeds of trust made for its benefit, for money so leaned, and such as may be conveyed to it by borrowers in satisfaction and discharge of loans made thereon;

4. No such corporation must purchase, hold or convey real estate in any other case or for any other purpose; and all real estate described in subdivision three of this section must be sold by the corporation within ten years after the title thereto is vested in it by purchase or otherwise;

5. No such corporation must purchase, own, or sell personal property, except such as may be requisite for its immediate accommodation for the convenient transaction of its business, mortgages on real estate, bonds, securities or evidence of indebtedness, public or private, gold and silver bullion and United States mint certificates of ascertained value and evidences of debt issued by the United States;

6. No such corporation must purchase, hold or convey bonds, securities or evidences of indebtedness, public or private, ex

bonds of the United States, of the state of California, and of the counties, cities, or cities and counties, or towns, or school districts of the state of California, or bonds of railroad or street railroad corporations owning property and having their principal place of business in the state of California, unless such corporation has a capital stock or reserve fund paid in of not less than one hundred thousand dollars. En. March 21, 1872. Amd. 1873-74, 273; 1900-01, 659.

Legislative History.

Section 13 of the savings and loan act of 1862, page 199, as amended in 1864, page 158, and 1865-66, page 626, is the basis of this section.

The section as amended in 1873-74 had “five' instead of "ten” in subdivision 4, and had 'three hundred thousand" instead of “one hundred thousand" in subdivision 6, and had not the provisions as to the purchase of school district and street railroad bonds.

The original section did not have the last clause of the third subdivision, commencing with the words and such as may be conveyed to it.” In the last subdivision after “fund” it had the words "or both capital stock and reserved fund,” otherwise it is the same as the amended section of 1873-74.

Section Cited.

Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; City of Los Angeles v. Loan etc. Co., 109 Cal. 401, 42 Pac. 149; Savings Bank v. Barrett, 126 Cal. 416, 58 Pac. 914; People ex rel. v. Stockton etc. Soc., 133 Cal. 611, 85 Am. St. Rep. 225, 65 Pac. 1078; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090; Winchester v. Howard, 136 Cal. 442.

Corporation Laws-27

Annotation.

Construction of Section.-Subdivision 6 of this section should be read in connection with 571 of the Civil Code, which it qualifies. (Winchester v. Howard, 136 Cal. 442, 89 Am. St. Rep. 153, 64 Pac. 692, 69 Pac. 77.)

Subdivision 5 construed with subdivision 4 of section 354 of the Civil Code gives the implied power to purchase mortgages on real estate. (Savings Bank v. Barrett, 126 Cal. 413, 58 Pac. 914.)

Holding Real Estate.— This section is a legislative construction of section 9 of article XII of the Constitution, and the provision of the Constitution that a corporation shall not hold certain classes of real estate longer than five years contemplates that such property held shall be sold within the five years. (People ex rel. v. Stockton etc. Society, 133 Cal. 611, 85 Am. St. Rep. 225, 65 Pac. 1078.)

If the corporation does not sell lands which it cannot hold more than five years, penalties may be provided by the legislature for its failure to do so; or, possibly, somre judicial procedure might be invoked to compel a sale of the land or a forfeiture of its franchise. (People ex rel. v. Stockton etc. Society, 133 Cal. 611, 85 Am. St. Rep. 225, 65 Pac. 1078.)

An action cannot be maintained to escheat to the state lands held by a savings and loan corporation, on the ground that more than five years have elapsed since it acquired the lands by purchase, under deeds of trust for money loaned, and that it has not sold them. (People ex rel. v. Stockton etc. Society, 133 Cal. 611, 85 Am. St. Rep. 225, 65 Pac. 1078.)

Purchase of Personal Property Mortgages, etc.—The question whether the purchase of a particular note and mortgage by a savings and loan corporation was “such as the purpose of the corporation required” is to be determined by its board of directors, and is not open to investigation at the instance of the mortgagor. (Savings Bank v. Barrett, 126 Cal. 413, 58 Pac. 914.)

Under subdivision 4 of section 354, Civil Code, construed with subdivision 5 of this section, savings and loan corporations have the implied power to purchase mortgages on real estate and the obligations secured thereby. (Savings Bank v. Barrett, 126 Cal. 413, 58 Pac. 914.)

A mortgage to a savings bank, executed in consideration of the surrender and return to the mortgagor of a prior note and mortgage executed to a third party, and purchased by the bank, which the bank as owner could enforce against the mortgagor, is supported by a sufficient consideration. (Savings Bank v. Barrett, 126 Cal. 413, 58 Pac. 914.)

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MARRIED WOMEN AND MINORS MAY OWN STOCK IN THEIR

OWN RIGHT. Sec. 575, C. C. Married women and minors may, in their own right, make and draw deposits and draw dividends, and give valid receipts therefor. En. March 21, 1872.

Legislative History.

Sections 14 and 15 of the savings and loan act of 1862, page 199, as amended 1864, page 158, and 1870, page 132, are the bases of this section.

Section Cited.

Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090; Rowe v. Hibernia S. & L. Soc., 134 Cal. 405, 66 Pac. 569.

Annotation.

Construction of Section.—This section simply provides that married women and minors might do certain things in their own right which ordinarily they would be disqualified from doing, but it does not even imply a repeal of section 164 of the Civil Code, concerning the community property of husband and wife. (Rowe v. Hibernia S. & L. Soc., 134 Cal. 403, 66 Pac. 569.)

MAY ISSUE TRANSFERABLE CERTIFICATES OF DEPOSIT

SPECIAL CERTIFICATES. Sec. 576, C. C. Savings and loan corporations may issue general certificates of deposit, which are transferable, as in other cases, by indorsement and delivery; may issue, when requested by the depositor, special certificates, acknowledging the deposit by the person therein named of a specified sum of money, and expressly providing on the face of such certificate that the sum so deposited and therein named may be transferred only or the books of the corporation; payment thereafter made by the corporation to the depositor named in such certificate, or to his assignee named upon the books of the corporation, or, in case of death, to the legal representative of such person, of the sum for which such special certificate was issued, discharges the corporation from all further liability on account of the money so paid. En. March 21, 1872.

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