California, if an individual or if incorporated and organized at any place without this state. En. Stats. 1905, 158.

WITHDRAWAL OF DEPOSIT UPON CEASING TO DO BUSINESS.

Sec. 635e, Pol. C. Every corporation, company, association, copartnership or individual that has made a deposit with the treasurer of the State of California in conformity with and under the provisions of this act, may, upon ceasing to do business within the state, maintain an action against the treasurer of the State of California to withdraw its deposit. It shall be the duty of the attorney general to defend such action, and if upon judgment being rendered therein it shall be found that said corporation, company or association has no liabilities within the state, the treasurer of the State of California shall return to said corporation, company or association, or to its order, the cash or securities deposited by it under the provisions of this act, but all expenses of such suit shall in any event be paid by such corporation, company or association. En. Stats. 1905, 158.

RIGHT TO SUBSTITUTE SECURITIES FOR CASH DEPOSIT.

Sec. 635f, Pol. C. Every corporation, company, association, copartnership or individual depositing cash securities with the treasurer of the State of California, in conformity with the provisions of this act, shall have the right to substitute securities in equal value for cash deposited, or other securities of like value for those on deposit upon securing the approval of the treasurer of the State of California, to said exchange, and the treasurer is hereby authorized to permit such exchange of cash for securities, or securities for other securities, or securities for cash deposited by such corporation, company or association if in his judgment such securities are equal in value to the amount of cash provided by law to be deposited. Every corporation, company or association so making a deposit in compliance with or under the provisions of this act may collect and use any dividend, interest or profits arising on or from any securities deposited with the treasurer of the State of California, provided such security is not thereby depreciated in value. En. Stats. 1905, 159.

AMOUNT OF MONEY TO BE LOANED OUT OF RESERVE FUND; COLLATERAL MAY BE DEPOSITED.

Sec. 635g, Pol. C. No corporation, company, association, copartnership or individual doing business within this state as an investment company as hereinbefore defined shall hereafter lend to holders of bonds, debentures or certificates of investment, out of its reserve fund, any amount greater than the proportionate share of such bond, debenture or certificate of investment in said reserve, and whenever such loan is made it shall be evidenced by the note of the borrower and secured by a deposit as collateral security, of the bond, debenture or certificate of investment on which the same is made. Any collateral so taken may be deposited with the treasurer of the State of California as a part of the deposit hereinbefore required, and it may be computed as making so much of said required deposit as the proportionate share of such bonds, debentures or certificates of investment so deposited as the entire reserve fund amounts to, not exceeding however the amount loaned. En. Stats. 1905, 159.

RESERVE FUND.

Sec. 635h, Pol. C. Every corporation, company, association, copartnership or individual doing business within this state as an investment company as hereinbefore defined shall apportion not less than forty per cent of every partial payment or installment received from the sale of any bond or bonds, debenture or debentures, certificate or certificates of investment as a reserve fund; said reserve may be invested from time to time within the discretion of the board of directors or governing body of such corporation, company, association, copartnership or individual. En. Stats. 1905, 160.

DUTY OF ATTORNEY GENERAL.

Sec. 635i, Pol. C. The attorney general of the State of California shall, at any time that he may deem proper, or at any time upon the complaint of any holder of any bond or bonds, debenture or debentures, certificate or certificates of investment by whatever name they be known or designated, make any ex

amination of the affairs of any corporation, company or association doing business within this state as an investment company as herein defined, and inquire into the investments of the reserve fund of such corporation, company or association and if upon such examination it shall be ascertained that any corporation, company or association so doing business has not assets to equal in value the total amount of reserve as in the last section required with interest thereon at three and a half per cent per annum compounded annually from the time of the sale of such bonds, debentures or certificates of investment, he shall commence an action in the name of the people of the State of California to restrain and enjoin said corporation from doing business and unless said reserve is made to equal the amount required before judgment is rendered in said action, judgment shall be rendered restraining and enjoining said corporation. company or association from doing business within this state, and he shall in his discretion institute proceedings against such company, corporation, association, copartnership or individual to have it declared bankrupt. En. Stats. 1905, 160.

VIOLATION OF THE PROVISIONS OF THIS ACT; PENALTY.

Sec. 635j, Pol. C. Every officer, agent or representative of any corporation, company or association doing business within this state as an investment company as hereinbefore defined, who shall place or sell any bond or bonds, debenture or debentures, or certificate, or certificates of investment of any company that has not complied with the provisions of this act shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars, and not more than five hundred dollars, for each offense, or by imprisonment in the county jail for not less than thirty days, nor more than six months, or by both such fine and imprisonment. En. Stats. 1905, 160.

NOT TO DO BUSINESS UNTIL DEPOSIT IS MADE.

Sec. 635k, Pol. C. No person, firm, corporation, company, copartnership or individual shall issue, sell or dispose of any species of bond or bonds, debenture or debentures, certificate or

certificates of investment on the partial payment or installment plan whereby the holder or holders of such bond or bonds, debenture or debentures, or certificate or certificates of investment are or may become entitled to claim and receive from such person, firm, company, association or copartnership a return either at a definite or indefinite time in cash, or in merchandise, or in property, for the payment of installments so paid, and wherein or whereby the holder may be subject to a fine or penalty or forfeiture for nonpayment of such partial payments or installments, without having complied with the provisions of this act and first made the deposit required by section 2 of this act. En. Stats. 1905, 161.

APPLICATION.

Sec. 6351, Pol. C. All provisions of this act providing for the making of said deposits, the exchange of securities and the penalties for selling said bonds, debentures or certificates shall apply to all persons, corporations, associations, firms or copartnerships engaged in the business of investment companies as herein defined. En. Stats. 1905, 161.

SHARES OF STOCK OF CORPORATIONS-TAXATION.

Section Cited.

Sec. 3608, Pol. C.

Bank of California v. San Francisco, 142 Cal. 282, 284, 285, 286, 100 Am. St. Rep. 130, 75 Pac. 832.

Additional Annotation.

Taxation of State.-Shares of stock possess no intrinsic value over and above the actual value of the property of the corporation which they stand for and represent. The assessment and taxation of such shares and also of corporate property would be double taxation. (Bank of California v. San Francisco, 142 Cal. 284, 100 Am. St. Rep. 130, 75 Pac. 832.)

DEFINITION OF TERMS AND WORDS.

Sec. 3617, Pol. C. Whenever the terms mentioned in this section are employed in this act, they are employed in the senses hereafter affixed to them:

Supp. Corporation Laws-9

First-The term "property" includes moneys, credits, bonds (except of railroad or quasi-public corporations), stocks, dues, franchises, and all other matters and things, real, personal, and mixed, capable of private ownership.

Sixth-The term "credits" means those solvent debts, not secured by mortgage or trust deed, owing to the person, firm, corporation, or association assessed. The term "debt" means those unsecured liabilities owing by the person, firm, corporation, or association assessed to bona fide residents of this state, or firms, associations or corporations doing business therein; but credits, claims, debts, and demands due, owing or accruing for or on account of money deposited with savings and loan corporations, shall, for the purpose of taxation, be deemed and treated as an interest in the property of such corporation, and shall not be assessed to the creditor or owner thereof. En. March 12, 1872. Amd. 1873-74, 143; 1875-76, 58; 1877-78, 64; 1880, 5; 1881, 56; 1889, 203; 1895, 306; 1905, 192.

Legislative History.

The first and sixth subdivisions of the section, not changed by the amendment of 1905.

Section Cited.

Bank of California v. San Francisco, 142 Cal. 290, 100 Am. St. Rep. 130, 75 Pac. 832, McFarland, J., dissenting opinion, and Beatty, C. J., dissenting opinion; Bakersfield etc. Co. v. Kern Co., 144 Cal 153, 77 Pac. 892; Bank of Woodland v. Pierce, 144 Cal. 437, 77 Pac. 1012.

Additional Annotation.

Taxation of Mining Claim.-Possessory right to mining claim is properly assessed as real estate under this section. (Bakersfield etc. Co. v. Kern Co., 144 Cal. 153, 77 Pac. 892.)

Taxation of Mortgage or Deed of Trust.-Subdivision 3 of this section properly restricts the terms " '''mortgage,' 'deed of trust,' 'contract,' or other obligation by which a debt is secured" to such as are secured by pledge of land. (Bank of Woodland v. Pierce, 144

Cal. 437, 77 Pac. 1012.)

FRANCHISES, TAXATION OF.

Sec. 3628, Pol. C.