« PreviousContinue »
Section 1 of the act of 1867-68, page 459, supplemental to the savings and loan act of 1862, is the basis of this section.
Mitchell v. Beckman, 64 Cal, 123, 28 Pac. 110; Los Angeles v. Loan etc. Co., 109 Cal. 403, 42 Pac. 149; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090; Murphy v. Pacific Bank, 119 Cal. 341, 51 Pac. 317; Abbott v. Jack, 136 Cal. 512, 69 Pac. 257.
Method of Doing Business.-Savings banks are not restricted by statute or any principle of law to a particular method of business which must be pursued as between the bank and the depositor. This section does not confine tbe mode to pass-books, but admits of the issuance of general or special certificates of deposit, which are transferable by indorsement and delivery. (Los Angeles v. Loan etc. Co., 109 Cal. 403, 42 Pac. 149.)
The fact that a certificate of deposit was issued to a stockholder of a savings bank doing a commercial business does not determine the character of the business transacted by the bank. Such certificates are usual with commercial banks, and, under this section, may be issued by savings and loan corporations. (Murphy v. Pacific Bank, 119 Cal. 334, 51 Pac. 317.)
The power conferred upon savings banks to issue certificates of deposit by this section does not curtail the implied power of commercial banks to issue like certificates. (Abbott v. Jack, 136 Cal. 510, 69 Pac. 257.)
TO PROVIDE FOR RESERVE FUND FOR THE PAYMENT OF
LOSSES. Sec. 577, C. C. Savings and loan corporations may prescribe by their by-laws the time and conditions on which repayment is to be made to depositors; but whenever there is any call by depositors for repayment of a greater amount than the corporation may have disposable for that purpose, the directors or officers thereof must not make any new loans or investments cf the funds of the depositors, or of the earnings thereof, until such excess of call has ceased. The directors of any such corporation having no capital stock must retain; on each dividend day, at least five per cent of the net profits of the corporation, to constitute a reserve fund, which must be invested
in the same manner as other funds of the corporation, and must be used toward paying any losses which the corporation inay sustain in pursuing its lawful business. The corporation may provide by its by-laws for the disposal of any excess in the reserve fund over one hundred thousand dollars, and the final disposal, upon the dissolution of the corporation, of the reserve fund, or of the remainder thereof, after payment of losses. En. March 21, 1872.
Section 11 of the savings and loan act of 1862, as amended 1870, page 523, is the basis of this section.
Burke v. Badlam, 57 Cal. 602; Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; City of Los Angeles v. Loan etc. Co., 109 Cal. 401, 42 Pac. 149; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090.
Relation of Bank and Depositor.-In the case of savings banks, it has been declared that all moneys deposited with them shall be assessed to the bank, and not to the depositors. These moneys are held in trust by the bank for the depositors. Between such banks and the depositor the ordinary relation of debtor and creditor does Dot exist. (Burke v. Badlam, 57 Cal. 602.)
The provisions of this section requiring the formation of a reserve fund apply to that class of savings banks which possess no capital stock. (Los Angeles v. Loan etc. Co., 109 Cal. 401, 42 Pac. 149.)
PROHIBITION ON DIRECTOR AND OFFICER, AND WHAT
VACATES OFFICE. Sec. 578, C. C. No director or officer of any savings and loan corporation must, directly or indirectly, for himself or as the partner or agent of others, borrow any of the deposits or other funds of such corporation, nor must he become an indorser or surety for loans to others, nor in any manner be an obligor for moneys borrowed of or loaned by such corporation. The office of any director or officer who acts in contravention of the provisions of this section immediately thereupon becomes vacant. En. March 21, 1872.
Overdrawing of his account by officer, a misdemeanor: Pen. Code, sec. 561.
Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; Savings Bank v. Burns, 104 Cal. 476, 480, 38 Pac. 102; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090; Brittan v. Oakland Bank of Savings, 124 Cal. 291, 71 Am. St. Rep. 585, Pac. 84; State Loan etc. Co. v. Cochran, 130 Cal. 257, 62 Pac. 466, 600.
Construction of Section - Borrowing by Directors.— The obvious purpose of this section is to protect savings banks and their depositors. To deny, therefore, that, if the deposits or funds of the bank should be borrowed by any of its officers, directly or indirectly, no action could be maintained by the bank to recover such funds, would defeat the purpose of the section. (Savings Bank v. Burns, 104 Cal. 480, 38 Pac. 102. To same effect: Brittan v. Oakland Bank of Sar. ings, 124 Cal. 291, 71 Am. St. Rep. 58, 5 Pac. 84.)
The provisions of this section cannot be availed of to defeat a pledge made by a director for money borrowed from the bank, espe. cially after the transaction is executed. The violation of the provi. sion can only be availed of by the sovereign power. The bank may sue to recover the money loaned, and can hold the pledged stock, or its proceeds, in a suit for the recovery of the same, until the money lent on faith of the pledge is repaid. (Brittan v. Oakland Bank of Savings, 124 Cal. 282, 71 Am. $t. Rep. 58, 57 Pac. 84.)
Like trustees, directors must not deal with the subject of the trust for their own advantage or be interested adversely in any trust transaction, nor can they undertake another trust adverse in its nature to the interests of their beneficiary. For any violation of their trust they are liable. (Winchester v. Howard, 136 Cal. 442, 89 Am. St. Rep. 153, 64 Pac. 692, 69 Pac. 77.)
DEFINITION OF PHRASE "CREATE DEBTS.”
Sec. 579, C. c. Receiving deposits, issuing certificates of deposit, checks and bills of exchange, and the like, in the transaction of the business of savings and loan corporations, must not be construed to be the creation of debts within the meaning of the phrase "create debts,” in section 309. En. March 21, 1872.
See act of February 21, 1872, relative to corporations for the accumulation and investment of funds and savings, Statutes at Large, title “Banks and Banking.”
Burke v. Badlam, 57 Cal. 602; Mitchell v. Beckman, 64 Cal. 123, 28 Pac. 110; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 162, 48 Pac. 1090.
Creating Debts.- Between a savings bank and its depositors the relation of debtor and creditor does not exist. (Burke v. Badlam, 57 Cal. 602. To same effect: Los Angeles v. State Loan etc. Co., 109 (al. 396, 42 Pac. 149; Wells v. Black, 117 Cal. 160, 59 Am. St. Rep. 48, Pac. 1090.)
BANKS, AMOUNT OF CAPITAL STOCK REQUIRED.
Sec. 580, C. C. No savings bank, or bank, or banking corporation, shall be incorporated in this state and conduct such banking business in a city or town of five thousand inhabitants or under, with a capital stock of less than twenty-five thousand dollars, or in a city or town of over five thousand and not exceeding ten thousand inhabitants with a capital stock of less than fifty thousand dollars, or in a city or town of over ten thousand and not exceeding twenty-five thousand inhabitants with a capital stock of less than one hundred thousand dollars, or in a city or town of over twenty-five thousand inhabitants with a capital stock of less than two hundred thousand dollars. Before the Secretary of State issues to any corporation that proposes to do a banking business his certificate of the filing of the articles of incorporation, there must be filed in his office the affidavit of the persons named in said articles as the first directors of the corporation, that all the capital stock has been actually and in good faith subscribed, and at least fifty per centum thereof paid, in lawful money of the United States, to a person in such affidavit named, for the benefit of the corporation. The remainder of the capital stock must be paid in within two years after said banking corporation receives its certificate of incorporation, and if not so paid said banking corporation shall not be authorized to do business; provided, however, that the provisions of this section shall not apply to corporations now in existence. En. Stats. 1903, 87.
RESTRICTIONS ON SAVINGS BANKS.
Sec. 581, C. C. No savings bank shall lend to exceed sixty per cent of the market value of any piece of real estate to be taken as security, except for the purpose of facilitating the sale of property owned by the corporation. And it shall be unlawful for any savings and loan society, or savings bank, to purchase, invest, or loan its capital, or the money of its depositors, or any part of either, in mining shares or stock. Any president or managing officer who knowingly consents to a violation of the above provision shall be deemed guilty of a felony. En. Stats. 1903, 352. !
TRUE NAMES OF PERSONS ENGAGED IN BANKING MUST BE
SHOWN. Sec. 582, C. C. Every person or number of persons not being incorporated, engaged in the business of banking, or publicly receiving money on deposit must conduct such business under a name which shows the true names of all persons engaged therein, unless such person or persons have complied with the provisions of article VII of chapter II of title X of part IV of division third of said Civil Code. Every person violating any of the provisions of this section is guilty of a misdemeanor, and is punishable by imprisonment in the county jail for not less than ninety days nor more than six months, or by fine of not less than one hundred dollars nor more than five hundred dollars, or by both such fine and imprisonment. En. Stats. 1903, 352.
Sec. 583, C. C. The directors of any savings bank, bank, or banking corporation having a capital stock, may semi-annually declare a dividend of so much of the net profits of the stockholders as they shall judge expedient; but every such corporation shall, before the declaration of such dividend, carry at least one-tenth (1-10) part of the net profits of the stockholders for the preceding half year to its surplus or reserve fund until the same shall amount to twenty-five per centum