EARNEST - t» - EARNEST R. ECKLEY. C0UN8EL0R-AT-LAW, 48WAU.8T., NEW YORK. Cornell University Library The original of this bool< is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31 92402279481 6 EARNEST R. LCKLEY. COUNSELOR-AT-LAW, 43 WALL ST., NEW YORK. BANKING LAW OF NEW^ YORK Chapter 2 of the Consolidated Laws AND Chapter 10 of 1909 INCLUDING ALL AMENDMENTS OF 1913 AND WITH NOTES, ANNOTATIONS AND REFERENCES AMASA J. PARKER, Jr. Albany, N. Y. THE BANKS LAW PUBLISHING COMPANY ' 23 PARK PLACE NEW YORK, N. Y. 1913 EARNEST ECKLL'. ■ coudstLor . "• _^v7. t}nf65' COPYKIQHT, 1908, BY THE BANliS LAW PUBLISHING CO. COPTBIQHT, 1B09, BY THE BANKS LAW PUBLISHING CO. COPYBIOHT, 1910, THE BANKS LAW PUBLISHING CO. COB,YHIGHT, 1911, BY THE BANKS LAW PUBLISHING CO. COPYBIGHT, 1912, BY THE BANKS LAW PUBLISHING CO. COPYEIGHT, 1913 BY THE BANKS LAW PUBLISHING CO. Lm^Z BANKING LAW CHAPTER 10 of 1909. AN ACT in relation to banks, individual bankers and corporations under the supervision of the banking department, constituting chapter two of the consolidated laws. Approved by the Governor February 17, 1909. Passed, three-fifths being present. The People of the State of New Yorh, represented in Senate and Assemhly, do enact as follows: CHAPTER 2 OF THE COISTSOLIDATED LAWS. Banking Law. Article 1. Short title; definitions (§§ 1, 2). 2. General provisions (§§ 3-45). 3. Banks (§§ 60-120). 4. Savings banks (§§ 130-164). 5. Trust companies (§§ 180-199). 6. Savings and loan associations (§§ 210-245). 7. Building and lot associations (§§ 260-267). 8. Mortgage, loan and investment corporations (§§ 280-288). 9. Safe deposit companies (§§ 300-305). 10. Personal loan associations (§§ 310-314). 11. Credit unions (§§ 330-358). 12. Laws repealed; when to take effect (§§ 330, 331). AETICLE 1. Short Title; Definitions. Section 1. Short title. 2. Definitions. §1. Short title. This chapter shall be known as the " Banking Law," and shall be applicable to all corporations and individuals specified in the next section. 2 The Banking Law. § 2. § 2. Definitions. Banh. — The term " bank," when used in this chapter means any monied corporation authorized by law to issue bills, notes or other ■ evidences of debt for circulation as money, to receive deposits of money and commercial paper and to make loans thereon, to dis- count bills, notes or other commercial paper, and to buy and sell gold and silver bullion, foreign coins or bills of exchange. Individual Banker. — The term, " individual banker," when used in this chapter, means a person who has complied with the requirements of law, and is authorized by the banking department to engage in the business of banking, and is subject to the banking law and the supervision of the superintendent of banks. Savings Bank. — The term "savings bank," when used in this chapter, means a corporation, authorized by the laws of this state, only to receive money on deposit and pay such rates of interest thereon, and to invest the same in such securities and obligations, as may be prescribed by law. Trust Company. — The term, " trust company," when used in this chapter, means any domestic corporation formed for the pur- pose of taking, accepting and executing such trusts as may be law- fully committed to it, acting as trustee in the cases prescribed by law, receiving deposits of moneys and other personal property, and issuing its obligations therefor, and loaning money on real or personal securities. Savings and Loan Association. — The term, " savings and loan association," when used in this chapter, means a corporation formed for the purpose of encouraging industry, frugality, home- building and the saving of money by its members, the accumula- tion of savings, the loaning of such accumulations to its members, and the repayment to each member of his savings when they have accumulated to a certain sum, or at any time when he shall desire the same, or the association shall desire to repay the same. Building and Lot Association. — The term " building and lot association," when used in this chapter, means any association or corporation organized for the purpose of accumulating a fund for § 2. Shoet Title; Definitions. 3 the purchase of real property, to pay off incumbrances thereon, to aid its members, in acquiring a building lot or lots, and making improvements thereon in the manner and form specified in the certificate of incorporation, or for all or any of such purposes. Mortgage, Loan, or Investment Corporation.- — The term, " mort- gage, loan or investment corporation," when used in this chapter, means any corporation other than an insurance corporation formed under the laws of this state or of any other state, and doing business in this state for the purpose of selling, offering for sale, or negotiating bonds or notes secured by deed of trust or mortgages on real property or choses in action, owned, issued, negotiated or guaranteed by it, or for the purpose of receiving any money or property, either from its own members or from other persons, and entering into any contract, engagement or undertaking with them for the withdrawal of such money or property at any time with any increase thereof, or for the payment to them or to any person of any sum of money at any time, either fixed or uncertain ; and when applied to any foreign corporation doing business in this state shall include any association, co-partnership, joint-stock com- pany, individuals or firms organized or existing under the laws of any other state or country, and engaged within this state in any such business. Safe Deposit Company. — The term, " safe deposit company," when used in this chapter, means every domestic corporation formed for the purpose of taking and receiving as bailee for safe- keeping and storage, jewelry, plate, money, specie, bullion, stocks, bonds, securities and valuable paners of any kind, and other valua- ble personal property, on deposit, and guaranteeing their safety upon such terms and for such compensation as may be agreed upon by the company and the respective bailors thereof, and to rent vaults and safes and other receptacles for the purpose of such safe- keeping and storage. Personal Loan Association. — The term " personal loan associa- tion," when used in this chapter, means any association or corpora- tion organized under chapter three hundred and twenty-six of the laws of eighteen hundred and ninety-five, as amended by chapter seven hundred and six of the laws of eighteen hundred and ninety- 4 The Banking Law. § 2. five, chapter two hundred and six of the laws of eighteen hundred and ninety-six, chaipter seventy-eight of the laws of nineteen hundred and two and chapter three hundred and thirty-three of the laws of nineteen hundred and five, or under article ten of this chapter, for the purpose of aiding persons deemed in need of pecuniary assistance hy loans not exceeding two hundred dollars of money at interest upon pledges or mortgage of personal property^ in the manner provided in said laws and said article. Stockholder. — The term " stockholder," when used in this chap- ter, shall apply not only to such persons as appear by the hooks of the corporation to be stockholders, but also to every owner of stock, legal or equitable, although the same may be on such books in the name of another person, but not to a person who may hold the stock as collateral for security for the payment of a debt. Credit Unions. — The term " credit unions " when used in this chapter means any corporation organized under article eleven of this chapter for the double purpose of promoting thrift among its members and of making loans to its members at reasonable rates, with or without security. Source.— L. 1892, ch. 689, § 52, pt., as am'd by K 1897, ch. 441. Amended by L. 1910, ch. 126, and L. 1913, ch. 582. In effect Jlay 17, 1913. Note. — ^The purpose of the amendment by ch. 582 of 1913 was to define credit unions. " Individual " bankers are those subject to the supervision of the super- intendent of banks, and " private " bankers are those who are not subject. Perkins v. Smith, 41 Hun, 47; aff'd 116 N. Y. 141. BANKER. — An " Individual " banker is one who has received authority from the banking department to engage in business subject to its inspection and supervision, and " private " banker is one engaged in banking without having secured any special privileges or authority from the state. Hall v. Baker, 66 App. Div. 131. A bank other than a savings bank is bound to know the signatures of its depositors in the absence of an agreement to the contrary. Newman v. State Bank, 68 Misc. 316. Gka^eeat. Provisions. . 5 AETICLE 2. Gekeeal Peovisioks. Section 3. The banking department; superintendent. 4. Official seal of superintendent of banks. 5. Deputies, clerks and examiners of the banking department. 5a. Retirement of deputies, clerks and examiners. 6. Rooms and furniture. 7. Expenses, how defrayed. 8. Powers of superintendent. 9. Examination of securities deposited. 10. Unclaimed balances. 11. Examiners. 12. Examination and certificate as to payment of capital. 13. Affidavit to be made before commencing business. 14. Beposit of bonds or mortgages with superintendent. 15. Exchange of securities. 16. Publication of report of examiners. 17. Impairment of capital. 18. Causes for dissolution. 19. Proceedings against and liquidation of delinquent corporations and individual bankers. 20. Examination by order of court. 21. Reports. 22. Penalties for failure to report. 23. Books, papers and affairs to be examined. 24. Publication of reports. 25. Annual report of superintendent. 26. Reports presumptive evidence. 27. Restrictions. 28. Calculation of profits. 29. Losses in excess of profits. 30. Publication of unclaimed dividends and deposits. 31. Change of location. 32. Approval and certificate of superintendent upon incorporation. 33. Permission and certificate of superintendent in case of foreign corporations. 33a. License to certain foreign banking corporations. 33b. Application for license and condition to be complied with. 34. Appointment of superintendent as attorney for service of process. 35. Appointment of receiver. 36. Merger. 37. Submission of merger agreement to stockholders. 38. Rights of dissenting stockholders. 39. Effect of merger. 40. Rights of creditors and others having relations with merged corporations, 41. Communications from banking department. 6 The Banking Law. §§ 3, 4. Section 42. Meetings of directors or trustees and reports thereto. 43. Official acts of superintendent and details of department busi- ness to he made public. 44. Banks designated as depositaries of court funds to furnish security and pay interest. 45. Banks designated as depositaries of court funds to keep books of account. § 3. The banking department; superintendent. There shall continue to be a banking department charged with the execution of the laws relating to the corporations and indi- viduals to which this chapter is applicable. The chief officer of such department shall continue to be the superintendent thereof, to be known as the superintendent of banks, who shall be appointed by the governor, by and with the advice and consent of the senate, and shall hold his office for the term of three years. He shall not either directly or indirectly be interested in .any such corporation, or as an individual banker. He shall receive an annual salary of seven thousand dollars, to be paid monthly in the first instance out of the treasury on the warrant of the comptroller. He shall, within fifteen days from the time of notice of his appointment, take and subscribe the constitutional oath of ofiice and file the same in the office of the secretary of state, and execute to the people of the state a bond in the penalty of fifty thousand dollars, with two or more sureties to be approved by the comp- troller and treasurer of the state, conditioned for the faithful discharge of the duties of his office. Source. — Former § 3, as ara'd by L. 1897, ch. 134. § 4. Official seal of superintendent of banks. The secretary of state shall provide the superintendent of banks with an official seal. Every paper executed by him as such super- intendent in pursuance of any authority conferred on him by law, and sealed with his seal of office, shall be received in evidence, and may be recorded in the proper recording offices in the same manner and with the same effect as a deed regularly acknowledged or proven. Source. — ^ Former § 4. See § 933, Code Civ. Pro., providing that copies of records in a public office of this state under seal are presumptive evidence in certain cases. §§ 5, 5-a. Genkeal Peovisions. 7 § 5. Deputy, clerks, and examiners of the bank department. The superintendent of banks shall employ from time to time such clerks and examiners as he may need to discharge in a proper manner the duties imposed upon him by law. They shall perform such duties as he shall assign to them. He shall fix their compen- sation, which shall be paid monthly on his certificate and upon the warrant of the comptroller in the first instance out of the treasury. He may appoint a first, a second and a third deputy, each of whom shall within fifteen days from the time of notice of his appoinir ment take and subscribe the constitutional oath of office, and file the same in the office of the secretary of state. In case of a vacancy in the office of superintendent, or in his absence or inability to act, for thirty successive days, none of his deputies shall thereafter act as superintendent, until the first deputy, or if there be a vacancy in the office of first deputy, or he be absent or unable to act, the second deputy or, if there be a vacancy in the office of second deputy, or he be absent or unable to act, the third deputy, shall have executed to the people of the state a bond in the penalty of fifty thousand dollars, with two sureties to be approved by the comptroller and treasurer of the state, conditioned for the faithful discharge of the duties of the office of superintendent while such deputy acts as such superintendent. Source.— Former § 5, as am'd by L. 1902, ch. 54, and L. 1908, oh. 57. See § 300, Penal Law, making it a felony for the superintendent of banks to countersign bills in excess of amount of I the securities deposited with him. SPECIAL EXAMESfEK. — The compensation of a special examiner is paid by the bank which is examined upon the certificate of the superintendent of banks. The refusal of the superintendent to act should be reviewed by cer- tiorari and not by mandamus; the examiner's right to demand compensation begins when he has completed his work. People ex rel. Best v. Preston, 62 Hun, 185; aff'd 131 N. Y. 644. § 5-a. Retirement of deputies, clerks and examiners. The superintendent may, in his discretion, retire any deputy, clerk or examiner who shall have served in the department for a period of twenty years and who shall have become physically or mentally incapacitated for the further performance of the duties of his position. A person retired from service pursuant to this sec- tion shall be paid out of the funds appropriated to the banking department an annual sum, in equal monthly instalments, equal 8 The Banking Law. §§ 6, 7. to one-half of the average amount of his annual or per diem salary for the period of two fiscal years preceding the time of such retirement. Added by L. 1912, chap. 212. § 6. Rooms and furniture. The trustees or other officers having by law the custody of the public buildings at the state capital, shall assign to the superin- tendent suitable rooms therein for conducting the business of the banking department. The superintendent shall, from time to time, furnish the neces- sary furniture, stationery, fuel, lights and other proper conve- niences for the transaction, of such business, the expenses of which shall be paid on the certificate of the superintendent and the war- rant of the comptroller in the first instance out of the treasury. Source. — Former § 6. § 7. Expenses; how defrayed. All the expenses incurred in and about the conduct of the busi- ness of the department, including the salary of the superintendent and clerks, shall be charged to and paid by the corporations and individuals required to report to the superintendent under the provisions of this chapter in such proportions as the superin- tendent shall deem just and reasonable. The expenses incurred and services performed on account of any such corporation or individual or on account of any foreign corpo- ration or its agency shall be charged to and paid by Hxe corpo- ration, individual or agency for whom they were incurred or per- formed. If any corporation, individual or agency shall not, after due notice, pay any such charges the superintendent may apply the proceeds of the sale of or the dividends on any stock or the interest on any bonds and mortgages in his hands deposited by such corpo- ration or individual to the payment of such charges, with interest, at the rate of six per centum. The moneys so applied, and all moneys received by him in payment of such charges, shall be de- posited and paid by him into the treasury of the state, to reim- burse all sums advanced from the treasury for such expenses, except moneys received from any corporation or individual banker for expenses incurred or services performed on account of any such corporation or individual which moneys shall be applied by the superintendent in payment of such expenses and a verified account § 8. General Peovisions. 9 thereof included in his annual report. If any such corporation or individual or any foreign cx>rporatian or its agency shall fail to pay such charges as herein required, and there are no stocks, bonds, or mortgages in the department, the dividends or interest on which can be applied in payment thereof, the superintendent shall report to the attorney-general the failure of any such corporation or indiv- idual or any such foreign corporation or its agency to pay such charges, and the attorney-general shall thereupon bring an action in the name of the people for the recovery of such charges. Source. — Former § 7, as am'd by L. 1901, eh. 472. The claim of the state for reimbursement of expenses incurred, as pro- vided in § 7 does not constitute a preferred claim. Attorney-General Rep., April 4, 1911. § 8. Powers of superintendent. Every corporation and individual banker specified in section two of this chapter shall be subject to the insriection and super- vision of the superintendent of banks. He shall, either personally or by some competent person or persons to be appointed by him, to be known as examiners, visit and examine every bank, trust oom- pany and individual banker at least twice in each year and every other corporation specified in section two of this chapter at least once in each year. He shall have power in like manner to examine every individual banker and every corporation specified in section two at any time prior to its dissolution, whenever, in his judgment, its condition and management is or has been such as to render an examination of its affairs necessary and expedient. On every such examina- tion, inquiry shall be made as to the condition and resources of the corporation, the mode of conducting and managing its affairs, the action of its directors, the investment of its funds, the safety and prudence of its management, the security afforded to those by whom its engagements are held, and whether the requirements of its charter and of law have been complied with in the administra- tion of its affairs ; and as to such other matters as the superintend- ent may prescribe. The superintendent and every such examiner shall have power to administer an oath to any person whose testi- mony may be required on the examination of any corporation or 10 The Basking Law. § 8. individual banker specified in section two of this chapter, or on the examination of any agency of any foreign hank or banking corporation as hereinafter provided, and to compel the appearance and attendance of any such person for the purpose of any such examination. Such examination may be made and such inquiry instituted or continued in the discretion of the superintendent of banks after he has taken possession of the property and business of any such corporation or individual banker under the provisions of section nineteen of this chapter until such corporation or indi- vidual banker shall resume business or the affairs of such corpo- ration or individual banker shall be finally liquidated as therein provided. He shall also have power to examine or cause to be ex- amined in like manner every agency located in this state of any foreign bank or banking corporation for the purpose of ascer- taining whether it has violated any law of the state, and for such other purposes and as to such other matters as the superintendent may prescribe. If the examination shall be made by the super- intendent, or hy one or more of the regular clerks in the de- partment, no charge shall be made ex!cept for necessary traveling and other actual expenses. The result of such examination of a savings bank shall be certified by the examiners, or one of them, upon the records of the corporation examined. Whenever it shall appear to the superintendent of banks that any corporation or individual banker to which this chapter is applicable does not keep its books and accounts in such manner as to enable him to readily ascertain the true condition of such bank, he shall have power to require the officers of such corpora- tion or individual banker, or any of them, to open and keep such books or accounts as he may, in his discretion, determine and pre- scribe for the purpose of keeping accurate and convenient records of the transactions and accounts of such corporation or individual banker. Any such corporation or individual banker that refuses or neglects to open and keep any such books or accounts as may he prescribed by the superintendent of banks shall be subject to a penalty of one hundred dollars for each day it neglects or fails to open and keep such prescribed books and aceoimts. The super- intendent, may, in his discretion, maintain an action in his name of office against any such corporation or individual banker for § 8. General Provisions. 11 the recovery of any penalty incurred by such corporation or in- dividual banker or any lawful assessment imposed upon such cor- poration or individual banker. Source.— Former § 8, as am'd by L. 1901, ch. 253, and L. 1905, ch. 394, Amended by L. 1812, ch. 104, and L. 1913, eh. 482. In effect May 8, 1913. Note. — The purpose of the amendment by dhap. 482 of 1913 was to compel corporations and individual bankers to which this chapter is applicable to keep their accounts and books .so that the examiners can ascertain the true condition of affairs. This section applies not only to banks which are transacting business, but also to banks of which the Superintendent has taken possession by reason of delinquencies; though the Superintendent. has taken possession of an incor- porated bank so that it is not transacting business, he may issue a subpoena requiring the president of the baJik to appear and give evidence during the examination of its affairs. Matter of Union Bank No. 2, 147 App.. Div. 593. The theory of §§ 8 and 19 of tlie Banking Law is that the Superintendent shall not take possession of a bank for purposes of liquidation, until after he has made an examination from which it appears that the conditions war- rant the exercise of the power; from a reading of the statute it is quite clear that the Legislature intended to confer on Jiim the general duties and func- tions whioh had been previously exercised by receivers, but the statute gives him no power to take possession for the purpose of conducting a quasi judicial investigation for the purpose of determining whether a bank was complying with the law. Matter of Union Bank, 204 N. Y. 313. In the exercise of the power vested in the Superintendent of Banks by § 8 of the Banking Law to investigate the affairs of a bank, he or an examiner under him may put its officers and employees under oath to the end that infor- mation thus obtained shall have the sanction of sworn testimony; and the provisions of said section apply to a bank temporarily closed by said super- intendent for his official inspection. Matter of Union Bank, 73 Misc. 404. ASSIGNMENT. — The powers of the superintendent of banks toward build- ing and loan associations are not limited or interfered with by an assignment for the benefit of creditors. Attorney-General Rep., 1901, page 265. NAME. — A corporation organized under Art. V, desiring to change its name, is subject to the provisions of § 2411 of the Code of CSvil Procedure (now I 60, Gen. Corp. Law), requia-ing the consent of the superintendent of banks, and the new name must contain the words " Co-opera4;ive Savings and Loan Association." Attorney-General Rep., 1902, page 186. REPORTS. — The superintendent of banks should call the attention of bank examiners to the provisions of § 200 to the written reports of banks, and he should by proper blanks apprise banks and individual bankers of their responsibility under said section. Attorney-General Rep., 1906, page 510. EXAMINER. — The superintendent of banks has power to appoint an exam- iner of corporations and individual bankers specified in § 2, when in his judg- ment necessary, and pay them from fund appropriated for examiners. Attorney-General Rep., 1903, page 234. 12 The Banking Law. §§9, 10. § 9. Examination of securities deposited. The president or cashier of every such corporation, and every individual banker, shall once or more during each fiscal year, and at such time or times during ordinary business hours as he may select, examine and compare all securities deposited by such cor- poration or banker in the office of the superintendent with the books of the department, and, if found correct, execute to the superintendent a receipt stating the different kinds of such securi- ties and the amounts thereof, and that they are in the custody and possession of the superintendent at the date of the receipt. Any individual banker unable to make such examination in person may, by written appointment, authorize an agent to make the same in his behalf, whose receipt shall have the same force and effect as if executed by the banker in person. If any such corporation or individual banker shall refuse or neglect to make such examination during any fiscal year, the comptroller, secretary of state and superintendent shall appoint some suitable and discreet person as agent for such corporation or individual banker, who shall make si:ch examination, and if the securities so held by the superintendent shall be found to agree with the books of the department, such agent shall execute the receipt before mentioned, and it shall be of like force and effect as if executed by the president or cashier of any such corporation, or by any such individual banker, or by an agent appointed by him. Such corporation or individual banker shall pay on de- mand to the person so appointed and making such examination and executing such receipt, such compensation for his services and expenses in making such examination as the superintendent shall certify to be just and reasonable. Source. — Former § 9. § 10. Unclaimed balances. The superintendent shall pay into the treasury of the state all balances of money remaining in his hands unclaimed for six yejijs from the date of the deposit with him, to be applied to the current expenses of the banking department, except the moneys required by this chapter to be kept on deposit with' him and the moneys deposited with him by receivers of insolvent savings banks. Source. — Former § 10. §§ 11-13. General Provisions. 13 § 11. Examiners. Every examiner appointed by the superintendent shall, before entering upon the duties of his appointment, take and file in the office of the clerk of the county where he resides, the constitutional oath of office. And when commissioned by the superintendent he shall forthwith examine fully into the books, papers and affairs of tlie corporation or individual banker specified in his commission, and report on oath to the superintendent the result of such exami- nation. ISTo such examiner shall be appointed receiver of any corporation or individual banker whose books, papers and affairs lie shall have examined pursuant to such appointment. Source. — Former § 11. See § 5 ante, as to compensation of examiners. SPECIAL EXAMINER. — The compensation of a special examiner is paid by the bank which is examined upon the certificate of the superintendent of banks. The refusal of the superintendent to act should be reviewed by cer- tiorari and not by mandamus; the sxaminer's right to demand compensation begins when he has completed >i!. work. People ex rel. Best v. Preston, 62 Hun, 185; aflf'd 131 N. Y. 644. § 12. Examination and certificate as to payment of capital. When any such corporation or individual banker shall have filed with the superintendent the requisite certificate prior to com- mencing business under the laws of this state, and shall have made the deposit, if any, required by law, the superintendent shall, be- fore such corporation or individual banker shall be authorized to commence business, examine or cause an examination to be made in order to ascertain whether the requisite capital of such corpora- tion or banker has been paid in, in cash. The superintendent shall not authorize such corporation or individual banker to com- mence business unless it appears to his satisfaction from such examination or other evidence satisfactory to him that the requi- site capital has been in good faith subscribed and paid in cash. Source. — Former § 12. § 13. Affidavit to be made before commencing business. No such corporation shall commence its corporate business until its president and cashier or treasurer or secretary, or its two prin- 14 The Banking Law, , § 14. cipal officers, by whatever name known, shall have made and sub- scribed an affidavit stating that the whole of its capital stock, or such portion thereof as by law shall be required to be paid or secured before the commencement of its operations, has been actu- ally paid or secured to be paid, according to law. Such affidavit may be made before any officer authorized to administer oaths in the county where the corporation has its principal place of busi- ness, and shall be filed in the clerk's office of such coimty. Every such corporation shall cease to be a corporation if the affidavit above required shall not be made and filed within one year from the time its charter shall be granted. Source. — Former § 13. See § 101, Gen. Corp. Law. Action by attorney-general to dissolve bankin corporation for failure to discharge its notes, or where it has become insolvent. DISSOLUTION. — The attorney-general may bring an action to dissolve corporation that has never exercised its powers or franchises. People v. Milk Exchange, 133 N. Y. 565. A company, incorporated under a special charter, which has never done any business and does not comply with §§13 and 197 of the Banking Law has forfeited its charter, and no judicial proceedings to determine such for- feiture are necessary. Attorney-General Rep., June 8, 1910. §14. Deposit of bonds or mortgages with superintendent. Every corporation, except banks, savings banks and domesr tic corporations specified in articles six and eight of this chapter, engaged in receiving deposits of money in trust in this state, and required to make a report of its affairs to the superintendent of banks, shall, before engaging in such business, transfer and assign to the superintendent registered public stocks or bonds of the United States or of this state, or of any city, county, town, village or free school district in this state, authorized by the legislature to be issued, to the amount in value, and to be at all times so maintained by the corporation, of ten per centum on its paid up capital stock, but not less in any case than one hundred thousand dollars in ' cities the population of which exceeds five hundred thousand in- habitants and not less than fifty thousand, dollars in cities contain- ing more than one hundred thousand inhabitants and less than five himdred thousand inhabitants, and not less than thirty thou- sand dollars in cities containing more than twenty-five thousand § 14. General Provisions. 15 inhabitants and less than one hundred thousand inhabitants, and not less than twenty thousand dollars in cities or towns of less than twenty-five thousand inhabitants, the number of inhab- itants in each city or town to be ascertained by the last federal census or state enumeration. Such stocks must, be registered in the name of the superintendent oifieially as held in trust under and pursuant to this chapter, and the same shall be held by the super- intendent in trust, as security for the depositors with and the cred- itors of such corporation, and subject to sale and transfer, and V) the disposal of the proceeds thereof by the superintendent, only on the order of a court of competent jurisdiction. Until the order of such court, authorizing such sale or transfer or other disposition thereof, the superintendent shall pay over to such corporation the interest which may be received on such securities, should any cor- poration, at any time, have deposited with the superintendent more than the amount hereby required, the excess may be refunded. With the approval of the superintendent, such a deposit may be made by the corporation, either wholly or in part, in bonds or mortgages satisfactory to the superintendent, on improved unin- cumbered productive real property in this state worth at least sev- enty-five per centum more than the amount loaned thereon. In the case of any foreign corporation, including savings and loan associations organized or incorporated in any state or country outside of this state, as defined in section two of this chapter doing business in this state, it shall deposit with the superintendent in trust as security for the depositors with and creditors of said corporation in this state one hundred thousand dollars in securities enumerated in this section. If liny foreign corporation doing business in this state shall refuse or neglect to make the deposit herein required with the superintendent, the fact shall be reported by the superin- tendent to the attorney-general, who shall forthwith take such pro- ceedings as may be necessary to enjoin and restrain such corpora- tion from transacting any business in this state, and the court to which such application shall be made shall be authorized to make such order or decree, and to issue such process in the premises to enforce compliance by the corporation with the provisions of this 16 TSE Banking Law. ' § 15- chapter or to restrain the transaction of business by it in this state as it may deem proper. Source.— Former § 14, as am'd by L. 1893, ch. 315, and L. 1896, ch. 452. Amended by L. 1910, Ch. 126. See § 76, post. Deposit of banks and individual bankers with superintendent. RECEIVER.— Where a receiver is appointed under § 35 of the Bajiking Law on the ground that the funds deposited were insufficient to pay the creditors and shareholders residing in this state, such shareholders and cred- itors residing within this state are the sole beneficiaries of the funds deposited under § 14. People v. Granite State Pro. Assn., 41 App. Div. 257; aflf'd 161 N. y., 492. § 15. Exchange of securities. The securities deposited by any corporation pursuant to the pro- visions of this chapter with the superintendent of banks in trust for any purpose, may be exchanged from time to time for other securities receivable as provided in this chapter; and so long as the corporation so depositing shall continue solvent and comply with the laws of the state, it may be permitted by the superintend- ent to collect the interest or dividends on such deposits, and from time to time to withdraw amy of such securities on depositing with the superintendent other like securities, the par and market value of which shall be equal to the par and^ market value of those vdthdrawn. When any such deposit consists of bonds and mortgages, the president or authorized agent of the corporation depositing the same shall annex to every such mortgage his affidavit that the mort- gage was made and taken in good faith for money loaned by the corporation which he represents, to the amount therein named, and that no part thereof has been since paid or returned ; or if any part, has been paid, the amount unpaid, and that he has reason to believe and does believe that the premises thereby mortgaged are worth at least seventy-five per centum more than the amount of the mortgage thereon; and the superintendent shall prescribe such regulations for ascertaining the title and value of the real property mortgaged as he may deem necessary. Source. — Former § 15. MORTGAGES. — Only mortgages to the corporation depositing tihem and taken in exxjhange for money loaned may be accepted under § 15. Attorney- General Rep., Oct. 19, 1909. §§ 16, 17. Geneeal Provisions. 17 § 16. Publication of report of examiners. Whenever the superintendent shall deem it proper, a copy of any reiport made by any examiner shall be published in the state paper and in at least one daily newspaper in the city of New York, and in one newspaper published in the county where the principal place of business of such corporation or individual is located. Source. — Former § 16. § 17. Impairment of capital and supervision. Whenever the superintendent shall have reason to believe that the capital stock of any corporation or individual banker, to which this chapter is applicable, is reduced by impairment or otherwise below the amount required by law, or by its certificate or articles of association, he may require such corporation or individual banker to make good the deficiency within sixty days after the date of such requisition. He may examine or cause to be examined any Buch corporation to ascertain the amount of such impairment or reduction of capital, and whether the deficiency has been made good as required by him. The directors of every such corporation upon which such requisition shall have been made shall immedi- ately give notice of such requisition to each stockholder of the corporation, and of the amount of the 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 place of resi- dence, or served personally upon him. If any stockholder shall refuse or neglect to pay the assessment specified in such notice within sixty days from the date thereof, the directors of such cor- poration shall have the right to sell to the highest bidder at public auction the stock of such stockholder, after giving previous notice of such sale for two weeks in a newspaper of general circulation published in the county where the principal ofiice of such corpora- tion is located ; or such stock may be sold at private sale, and with- out such published notice, provided, however, that before making a private sale thereof an offer in writing to purchase such stock shall first be obtained, and a copy thereof served upon the owner of record of the stock sought to be sold either personally or by mail- ing a copy of such offer to such owner at his place of residence or 18 TirE Banking Law. § 3 7. the address furnished by him to the corporation; 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 service of such offer, the said directors may accept such offer and sell such stock to the person or persons making such offer, or to any other person or persons, making a larger offer than the amount named in the offer submitted to such stockholder; but such stock shall in no event be sold for a smaller sum than the valuation put on it by the superintendent in his determination and certificate, which valua- tion shall not be less than the amount of the assessment called for and the necessary costs of sale. Out of the avails of the stock sold the directors shall pay the necessary costs of sale, and the amount of the assessment called for thereon. The balance, if any, shall be paid to the person or persons whose stock has been thus sold. A sale of stock as herein provided shall effect an absolute cancella- tion of the outstanding certificate or certificates evidencing the stock 90 sold, aiid shall make the same null and void, and a new certificate or new certificates shall be issued to the purchaser or purchasers of said stock. If it shall appear to the superintendent that any such corporation or individual banker has violated its charter or any law binding upon it, he may by an order under his hand and official seal addressed to such corporation or individual banker direct the discontinuance of such violation, or, if it shall appear to the superintendent that any such corporation or indi- vidual banker is conducting business in an unsafe or unauthorized manner, he may in like manner direct the discontinuance of such unsafe and unauthorized practices. Such order shall require such corporation or individual banker to show cause before the superin- tendent at a time and place to be fixed by him, why said order should not be observed. Source.— Former § 17, as am'd by L. 1905, ch. 649; L. 1907, oh. 552, and L. 1908, ch. 143. The purpose of the amendment of tMs section by ch. 143 of 1908 wag to give the superintendent supervision ovdr banks and individual bankers, and authorizing him to direct them to show cause why illegal or unsafe practices should be not discontinued. Under the present section as amended, the law contemplates the sale of stock for the amount of assessments and costs without any further payment; the statute clearly indicates that the purchaser may obtain the stock upon § 18. Gea'eeai. Provisions. 19 payment of these sums without paying the par value to the corporation; after the sale has been made, the avails shall he used, iirst, to pay the cost of the sale, and second the amount of the assessment, and upon the payment being made the outstanding certiiicate becomes null and void and the new certificate shall be issued to the purchaser of the stock. A.ttomey-General Rep., Dee. 16, 1910. INSOLVENCY. — Insolvency of a state bank is not inferable from the mere appointment of a temporary receiver. Sickles v. Herold, 149 N. Y. 332; mod'y 15 Misc. 116. DISSOLUTION. — An action for involuntary dissolution instituted by the attorney-general in the name of the people under the Banking Law takes priority over a special proceeding previously brought for voluntary dissolution. Murray Hill Bank, 153 N. Y. 199; afl'g 14 App. Div. 318. VALUATION. — The word " valuation," as used in this section, is such amount as, in the good judgment of the superintendent of banks, represents value of stocks at the time of making the certificate. Attorney-General Rep., 1901, page 158. TRUST COMPANIES. — Trust companies, whether incorporated by special act or under the general law, are governed by the provisions of §§ 17, 18, 19. Attorney-General Rep., May 25, 1910. § 18. Causes for dissolution. If tlie capital of any oorporatiom to -wliicli this chapter is appli- cable shall be impaired, or if any such corporation shall refuse tc 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 corporation, or if it shall vio- late its charter, or any law of the state, or if such corporation shall suspend payment of its obligations, or if such corporation shall conduct its business in an unsafe or unauthorized manner, or if from any examination or report provided for by this chapter the superintendent shall conclude that such corporation is in an un- sound or unsafe condition to transact the business for which it is organized, or that it is unsafe and inexpedient for it to continue business, and the superintendent shall communicate the facts to the attorney-general, an action to procure a judgment dissolving such corporation may be maintained. Source. — Former § 17a. The purpose of the amendment of this section by ch. 143 of 1908 was to amplify § 1785 of the Code of Civil Procedure (now § 101, Gen. Corp. Law), as to the causes for the dissolution of banking corporations. 20 The Banking Law. § 19. TRUST COMPANIES.— Trust companies, wihether incorporated by Special act or under the general law, are subject to the provisions of §§ 17, 18, 19. Attorney-General Rep., May 25, 1910. § 19. Proceedings against and liquidation of delinquent car- porations and individual bankers. Whenever it shall appear to the superintendent that any corpora- tion or individual banker to vsrhich this chapter is applicable has violated its charter or any law of the state, or is conducting its business in an unsafe or unauthorized manner, or if the capital of any such corporation or individual banker is impaired, or if any auch corporation or individual banker 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 touch- ing the concerns of any such corporation or individual banker, or if any such corporation or individual banker shall suspend payment of its obligations, or if from any examination or report provided for by this chapter the superintendent shall have reason to con- clude that such corporation or individual banker is in an unsound or unsafe condition to transact the business for which it is organ- ized, or that it is unsafe and inexpedient for it to continue busi- ness, or if any such corporation or individual banker shall neglect or refuse to observe an order of the superintendent specified in section seventeen of this chapter, the superintendent may forthwith take possession of the property and business of such corporation or individual banker, and retain such possession until such corpora- tion or individual banker shall resume business, or its affairs be finally liquidated as herein provided. On taking possession of the property and business of any such corporation or individual banker the superintendent shall forthwith give notice of such fact to any and all banks, trust companies, associations and individuals, hold- ing or in possession of any assets of such corporation or individual banker. No bank, trust company, association or individual know- ing of such taking possession by the superintendent, 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 corporation or individual banker of whose property and business the superintendent shall have taken posses- § 19. General Pkovisions. 21 sion as aforesaid. Such corporation or individual banker may, with the consent of the superintendent, resume business upon such conditions as may be approved by him. Upon taking possession of the property and business of such corporation or individual banker the superintendent is authorized to collect moneys due to such cor- poration or individual banker, and do such other acts as are neces- sary to conserve its assets and business, and shall proceed to liqui- date the affairs thereof as hereinafter provided. The superintend- ent shall collect all debts due and claims belonging to it, and upon the order of the supreme court may sell or compound all bad or doubtful debts, and on like order may sell all the real and personal property of such corporation or individual banker on such terms as the court shall direct; and may, if necessary to pay the debts of | such corporation, enforce the individiial liability of the stockhold- | ers. For the purpose of executing and performing any of the powers and duties hereby conferred upon him, the superintendent may, in the name of the delinquent corporation or individual banker, prosecute and defend any and all suits and other legal pro^ ceediugs and may, in the name of the delinquent corporation or individual banker, execute, acknowledge and deliver any and all deeds, assignments, releases and other instruments necessary and proper to effectuate any sale of real or personal property or sale or compromise or compound authorized by 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 corporation by authority of its board of directors, or by the individual banker personally. 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 shall cause a certified copy of the order author- izing or ratifying such sale to be filed in the office of the clerk of the county in which the said real property is located. The superintendent may, under his hand and official seal, appoint one or more special deputy superintendents of banks, as agent or agents, to assist him in the duty of liquidation and dis- tribution, the certificate of appointment to be filed in the office of the superintendent, and a certified copy in the office of the clerk 22 The Banking Law. § 19. of the county in which the principal office of such corporation or individual banker was located. The superintendent may from time to time authorize a special deputy superintendent to perform such duties connected with such liquidation and disitribution as the superintendent may deem proper. The superintendent may employ such counsel and procure such expert assistance and advice as may be necessary in the liquidation and distribution of the assets of such corporation or individual banker, and may retain such of the officers or employees of such corporation or individual banker as he may deem necessary. The superintendent shall require from a special deputy superintendent and from such assistants such security for the faithful discharge of their duties as he may deem proper. The superintendent shall cause notice to be given by advertisement, in such newspapers as he may direct, weekly for three consecutive months, calling on all persons who may have claims against such corporation or individual banker to present the same to the superintendent, and make legal proof t.V.r>reof at a place and within a time, not earlier than the last day of publication, to be therein specified. The superintend- ent shall mail a similar notice to all persons whose names appear as creditors upon the books of the corporation or individual banker. If the superintendent 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 superintendent. An action upon a claim so rejected must be b"rought within six months after such service. Claims presented after the expiration of the time fixed in the notice to creditors shall be entitled to share in the distributio " only to the extent of the assets in the hands of the superint;«.dent equitably applicable thereto. Upon taking possession of the t rop- erty and assets of such corporation or individtial banker the super- intendent shall make an inventory of the assets of such corporation or individual banker in duplicate, one to be filed in the office of the superintendent, and one in the office of the clerk of the county in which the principal office of such corporation or individual banker was located ; upon the expiration of the time fixed for the presentation of claims the superintendent shall make in duplicate § 19. Geneeal Pkovisions. 23 a full and complete list of the claims presented, including and specifying such claims as have been rejected by him, one to be filed in the office of the superintendent, and one in the office of the clerk of the county in which the principal office of such corpora- tion or individual banker was located. Thereafter he shall make and file in said offices at least fifteen days before 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, includ- ing and specifying such claims as have been rejected by him, and in any event he shall make and file such a list at least once every six months after the filing of the original list, a,s long as he shall remain in possession of the property and business of any such cor- poration or individual banker. Such inventory and list of claims shall be open at all reasonable times to insipection. The compensation of the special deputy superintendents, counsel and other employees and assistants, and all expenses of supervision and liquidation, shall be fixed by the superintendent subject to the approval of the supreme court in the judicial district in which the principal office of such corporation or individual banker is located on notice to such corporation or individual banker, and shall upon the certificate of the superintendent be paid out of the f\mds of such corporation or individual banker in the hands of the superintendent. The moneys collected by the superintendent shall be from time to time deposited in one or more state banks of deposit, savings banks or trust companies, and, in case of the suspension or insolvency of the depositary, such deposits shall be preferred before all other deposits. At any time after the expira- tion of the date fixed for the presentation of claims the supreme court may by order authorize the superintendent to declare out of the funds remaining in his hands after the payment of expenses one or more dividends, and after the expiration of one year from the first publication of notice to creditors he may declare a final dividend, such dividends to be paid to such persons, and in such amounts, and upon such notice, as may be directed by the supreme court in the judicial district in which the prin- cipal office of such corporation or individual banker is located. 24 The Banking Law. § 19. Objections to any claim not rejected by the superintendent may be made by any party interested by filing a copy of such objections with the superintendent, who shall present the same to the supreme court at the time of the next application to declare a dividend. The court to which sueli application in made shall thereupon dis- pose of said objections or may order a reference for that purpose, and should the objections to any claim be sustained by the court or by the referee, such claim shall not be allowed by the superintend- ent until the claimant shall have established his claim by the judg- ment of a court of competent jurisdiction. The court may make proper provision for unproved or unclaimed deposits. Should any corporation or individual banker, at the ^ime the superintendent takes possession of its property and business, have in its possession, as bailee for safe-keeping and storage, any jewelry, plat-e, money, specie, bullion, stocks, bonds, securities, valuable papers or other valuable personal property or shoHild it have rented any vaults, safes or safe deposit boxes or any portion thereof for the storage of property of any kind, the superintendent may at any time there- after cause to be mailed to the person 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 eeeurely closed, post-paid 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, be- tween such person and the corporation or individual banker for the storage of said property or for the use of the said safe, vault or box shall cease and determine, and tbe amount of the, unearned rent or charges, if any, paid by such person shall become a debt of the corporation or individual banker to said person. If the property be not removed within the time fixed by the notice, the superintendent may make such disposition of said property as the supreme court, upon application thereto, shall direct. And the superintendent may cause any safe, vault or box to be opened § 19. General Peovisions. 25 in his presence or in the presence of one of the special deputy superintendents of bants, and of a notary public not an officer or in the employ of the corporation or individual banker, 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 corporation or individual banker, and shall attach thereto a list and description of the property therein; and the package so sealed and addressed, together with the list and de- scription, may be kept by the superintendent in one of the general safes or boxes of the corporation or individual banker until de- livered to the person whose name it bears, or until otherwise dis- posed of as directed by the court. Whenever any such corpora- tion or individual banker, of whose property and business the superintendent has taken possession as aforesaid, deems itself aggrieved thereby, it may, at any time mthin ten days after such taking possession, apply to the supreme court in the judicial dis- trict in which the principal office of such corporation or individual banker is located to enjoin further proceedings; and said court, after citing the superintendent to show cause why further proceed- ings should not be enjoined, and hearing the allegations and proofs of the parties and determining the facts may, upon the merits, dismiss such application or enjoin the superintendent from fur- ther proceedings, and direct him to surrender such business and property to such corporation or individual banker. Whenever the superintendent shall have paid to each and every depositor and creditor of such corporation (not including stockholders), whose claim or claims as such creditor or depositor shall have been duly proved and allowed, the full amount of such claims, and shall have made proper provision for unclaimed and unpaid deposits or dividends, and shall have paid all the expenses of the liquida- tion, the superintendent shall call a meeting of the stockholders of such corporation by giving notice thereof for thirty days in one or more newspapers published in the county where the prin- cipal office of such corporation was located. At such meeting the 26 The Banking Law. § 19. stockholders shall detrT-mine whether the superintendent shall be continued as liquidator and shall wind up the affairs of such cor- poration, or whether an agent or agents shall be elected for that purpose, and in so determining the said stockholders 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 determination. In case it is determined to continue the liqui- dation under the superintendent, he shall complete the liquidation of the affairs of such corporation, 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 supreme 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 agent or agents shall execute and file with the superintendent a bond to the people of the state in such amount, with such sureties and in such form as shall be approved by the superintendent, conditioned for the faithful per- formance of all the duties of his or their trust, and thereupon the superintendent shall transfer and deliver to such agent or agents all the undivided and uncollected or other assets of such corpora- tion then remaining in his hands; and upon such transfer and delivery, the said superintendent shall be discharged from any and all further liability to such corporation or individual banker and its or his creditors. Such agent or agents shall convert the assets coming into his or their possession into cash, and shall account for and make distribution of the property of said corporation as is herein provided in the case of distribution by the superintendent, 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 superintend- ent 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 originally elected. Divi- § 19. GrENEEAL PkOVISIONS. 27 dends and unclaimed deposits remaining unpaid in the hands of the superintendent for six months after the order for final distribu- tion shall be by him deposited in one or more state banks of deposit, savings banks or trust companies, to the credit of the superintendent of banks in his name of office, in trust for the several depositors with and creditors of the liquidated corporation from which they were received entitled thereto. The superintend- ent shall report to the legislature annually in his report the names of corporations so taken possession of and liquidated and the sums of unclaimed and unpaid deposits or dividends with respect to each of them respectively. The superintendent 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 re- quire an order of the supreme court authorizing and directing the payment thereof. He may apply the interest earned by the moneys so held by him towards def'raying the expenses in the payment and distribution of such unclaimed deposits or dividends to the deposit- ors and creditors entitled to receive the same, and he shall include, in his aimual report to the legislature, a statement of the amount of interest earned by such unclaimed dividends. Source.— Former § 18, as am'd by L. 1908, ch. 143. Amended by L. 1910, ch. 452. The purpose of the amendment of this section by ch. 143 of 1908 was to place in the hands of the superintendent of banks the same power with reference to the poBBession of liquidation of delinquent corporations as is given to the comptroller of the currency with relation to national banks. See §§ 100 et seq., Gen. Corp. Law. Proceedings against insolvent corpo- rations. BOND AND MORTGAaE.— Where an action by the Superintendent of Banks under section 19 of the Banking Law to enforce a bond and mortgage given to a delinquent trust company is brought in the name of the Superin- tendent instead of " in the name of the delinquent corporation,'' as required by the statute, the siHumons and complaint may be amended so as to correct the title of the action. Van Tuyl v. New York Real Estate Security Co., 153 App. Div., 409. DISSOLUTION. — An action for involuntary dissolution instituted by the attorney-general in the name of the people under the Banking Law takes priority over a special proceeding previously brought for voluntary dissolu- tion. Murray Hill Bank, 153 N. Y. 199; aff'g 14 App. Div. 318. Section 19 of the Banking Law is applicable to the dissolution of a savings and loan association; a receivership will be continued where it appears that 28 The Banking Law. § 19. there was mismanagement on the part of the officers of the association. People V. Republic Savings and Loan Assn., 53 App. Div. 384; 65 N. Y. Supp. 1036. Although the State Superintendeet takes charge of a bank under § 19, the corporation does not lose title to its assets, nor are they vested in the State Superintendent; he is merely u, custodian and liquidator, the corporation is not extinguished, and an action upon a promissory note may be brought in the name of the corporation. Lafayette Trust Co. v. Higginbotham, 136 App. Div. 747. The theory of §§ 8 and 19 of the Banking Law is that the Superintendent shall not take possession of a bank for purposes of liquidation, until after !he has made an examination from which it appears that the conditions war- rant the exercise of the power; from a, reading of the statute it is quite clear that the Legislature intended to confer on him the general duties and func- tions which had been previously exercised by receivers, but the statute gives him no power to take possession for the purpose of conducting a quasi judicial investigation for the purpose of determining whether a bank was complying with the law. Matter of Union Bank, 204 N. Y. 313. In an action by the -State Superintendent of Banks to enforce the liability of the stockholders of a trust company under § 19 of the Banking Law, the complaint should allege the facts which render it necessary to enforce the stockholders' liability; the Superintendent may not maintain an action against a single stockholder to enforce the liability imposed by the statute and the State Constitution, and the only permissible form of action is a suit in equity, to which all the stockholders are parties, and in which the rights and equities of all creditors and stockholders can be ascertained; this was the law prior to the enactment of § 19 in its present form, and that section was not designed to provide a new method of propedure in this regard. Cheney v. iSeharmann, 145 App. Div. 456. When the Superintendent of Banks deems it necessary and proper in order to conserve the assets of a bank, wfhich has been taken in charge by him under § 10 of the Banking Law, that some of the funds of the bank be expended for that purpose, he may do so without an application' to the Supreme Court, and is not liable for loss of assets occasioned by such action, unless he fails to honestly exercise his best judgment and discretion. Attor- ney-Gen'l Rep., Feb. 2, 1912. Members of a loan association are not stockholders within the • meaning of § 19, and the superintendent of banks should liquidate their claims after the ordinary creditors have been paid. Attorney-General Rep., June 28, 1910. INDIVIDUAL ACTION. — Under section 19 of the Banking Law, the Super- intendent of Banks, if necessary to pay the debts and liabilities of a trust company, has authority to institute an action in his individual capacity to enforce the liability impo-sed upon the stockholders by section 196 of the Banking Law, unhampered by any of the limitations contained in the Stock Corporation Law or the fact that the charter of the company has not been dissolved by judgment of the court. Van Tuyl v. Scharmann, 208 N. Y., 53. § 20. General Peovisions. 29 JUDGMENTS. — Although section 19 does not expressly provide that judg- ments obtained and docketed after the Superintendent takes possession shall not become liens, that fact is implied, and a sale may be made free from such judgments. Northern. Bank of New York v. Drury, 152 App. Div., 64. STATE'S PRIORITY.— The Superintendent of Banks is authorized to take possession of insolvent banks and distribute their assets, and in case of con- flicting claims to apply to the Supreme Court for its determination. Such an application is a special proceeding. The state by virtue of section 35 of the Constitution of 1777, now article 1, section 16, has succeeded to the right which the king had at common law to a preference in payment of debts due from an insolvent and is entitled to a preference in payment over other deposi- tors and creditors not having a prior specific lien. Matter of Oarnegie TriLst Company, 206 N. Y., 390. TRUST COMiPANIES. — Trust companies, wlether incorporated under a special act or the general law, are governed by the provisions of §§ 17, 18, 19. ^.ttomey-General Rep., May 25, 1910. § 20. Examination by order of court. The creditors and shareholders of any such corporation whose debts or shares shall amount to one thousand dollars may make application to the supreme court by a verified petition setting forth facts showing that an examination of the affairs of the corporation should be made, and the court may thereupon, in its discretion, order such an examination to be made by a referee for the purposu of ascertaining the safety of the investments and the prudence of the management of the corporation. The result of every such examination, together with the opinion of the referee thereon,*shall be published in such manner as the court shall direct. The court shall make such order in respect to the expenses of the examination and publication as it may deem proper. Source. — Former § 19. Under the general Banking Act of 1838 the visitorial power contained in this section was conferred on the chancellor, and he was authorized to super- vise an examination of a bank, and publish the result of such examination. Matter of Parmly v. The Tenth Ward Bank, 3 Edwards' Chan. Rep. 395. DISSOLUTION. — The attorney-general must bring an action to dissolve a co-operative banking corporation on receiving a report from the superintendent of banks, and a relator in such an action is not necessary; a corporation cannot, by scaling down the amount due its shareholders, make good a deficit in its assets caused by an over-estimate of the value of its property. People v. Mercantile Co-operative Bank, 53 App. Div. 295; 65 N. Y. Supp. 766. iO The Banking Law. § 21. § 21. Reports. Every corporation and individual banker subject to the pro- asions of tbis chapter shall make written report to the superin- endent of banks as required in this section. The superintendent if banks shall prescribe the contents and form of such report, and uch report shall be in the form and shall contain the matters that le shall prescribe and shall contain in addition the matters herein pecifically required. The superintendent shall, at least once in svery three months designate some day therein in respect to vhich every bank, trust company and individual banker shall nake such report, and shall serve a notice designating such day. 5uch notice shall be served upon each individual banker by lelivering the same to him or by depositing the same in the post- iflBce enclosed in .a post-paid wrapper directed to him at his place >f business; such notice shall be served upon each bank and trust iompany by delivering the same at its place of business to some )fficer or clerk therein or by depositing the same in the post- )ffice enclosed in a post-paid wrapper directed to it at its place of )usiness. Within the ten days immediately following the day of he service of such notice, every bank, trust company and indi- ddual banker shall make such report. Every such report made )y a corporation shall be verified by the oaths of the two prin- iipal officers in charge of its affairs at the time of such verifica- ion. Every such report made by an individual banker shall be 'verified by his oath. The verification of such report shall be to he effect that the same is true and correct in all respects to the )est of the knowledge and belief of the persons verifying it, and hat the usual business of such corporation or pejson has been ransacted at the location required by this chapter and not else- vhere. Every such report of ' a bank, trust company or indi- 'idual banker shall state the amount of deposits the payment of vhich, in case of insolvency, is preferred by law or otherwise over >ther deposits. Every savings bank and safe deposit company on )r before the first day of February in each year shall make such I report which shall contain a statement of its condition on the norning of the first day of January, in the said .year, and on or jefore the first day of August in each year shall make such a ■eport which shall contain a statement of its condition on the § 21. General Provisions. 31 morning of the first day of July in the said year. Every such report of a savings bank shall state the amount loaned upon bond and mortgage and shall contain a list of all bonds and mortgages upon which money has been loaned that have not been previously reported, v?hich list shall show the location of the mortgaged premises. It shall also contain a list of all bonds and mortgages previously reported that since they were so reported have been paid wholly or in part or have been foreclosed and the amounts of such payments and the proceeds of such foreclosures. It shall also state the original cost, date of purchase, date of maturity, stated rate of interest, par value and estimated investment value of all stock or bond investments, designating each particular kind of stock or bond; the amount loaned upon the pledge of securities, with a statement of the securities held as collateral for such loans; the amount invested in real estate, giving the cost of the same, the amount of cash on hand, and on deposit in banks or trust com- panies and the amount deposited in each. The estimate of invest- ment value of stock and bond investments shall be made by each savings bank in the manner prescribed by the superintendent of banks, provided that no stock or bond shall be estimated at a higher price or value than its investment value by amortization as pro- vided in section one hundred and fifty-three of this chapter; or, if the interest upon said security has been in default for more than thirty days prior to the date of such report, or if said security shall cease to be a legal investment for savings banks, at a higher value than the market valiie thereof. Such report shall also state all the liabilities of such savings cor- poration, the amount due to depositors, which shall include any dividend to be credited to them for the six months ending on the day, as to which such report is made and all other debts and claims against such corporation which are or may be a charge upon its assets. Such report shall also state the amount deposited and the amount withdrawn during the twelve months imme- diately preceding; the whole amount of interest or profits received or earned and the amount of dividends credited to depositors, together with the amount of each semi-annual credit of interest, and the amount of interest that may have been credited at other than semi-annual periods, the number of accounts opened or 32 The Banking Law. § 21. reopened, the number closed during the said twelve months, and the number of open accounts at the end of the year, and such otiier information as may be required by the superintendent. Every savings and loan association, and every mortgage, loan or investment corporation, shall make such report on or before the first day of February in each year, which shall contain a statement of its condition on the first day of January in the said /ear. The superintendent may for good cause shown, extend the time for making any such report not exceeding thirty days. Source.— Former § 20, aa am'd by L. 1898, dh. 333; L. 1905, oh. 297; L. 1908, ch. 123. Amended by L. 1910, chap. 126, and L. 1911, chap. 707. The purpose of the amendmert of this section by chap. 707 of 1911 was to remedy certain ambiguities of expressions and make the provisions of the statute more clear and definite. Previously, the office of the district attor- ney of the county of New York had found considerable difficulty in obtain- ing indictments for perjury and procuring prosecution of officers verifying false or defective reports. In all reports to the banking department, all the assets of corporations under its supervision should be reported at a fair valuation. Any concealment of assets as well as any concealment of liabilities renders a report untrue. RWing of Superintendent. • VERIFICATION. The treasurer of a savings bank is the proper officer to verify the report. People v. Ostrander, 64 Hun, 335. Where an assistant treasurer of a savings bank assumes to be the proper person to verify a report, and had verified such report, he cannot claim that he was not a " proper officer " and incompetent to take the oath. People v. Trumbour, 64 Hun, 346; 19 N. Y. Supp. 331. REPORT. — A bank can be required to give a true statement of its condi- tion as to its loans, and a mere statement of the totals is insufficient. People T. Vail, 57 Hun, 82. Section 22 prescribes the penalties of failure to report, and in addition to this the officers of a bank are liable to any one injured by misrepresentations made in the report. Morse v. Switz, 19 How. 275. It is the duty of the superintendent of banks to require corporations and bankers who make reports pursuant to the Banking Law, to use the words " preferred deposits," and the superintendent in his publication of the sum- mary of these reports should group preferred deposits under the head of "preferred deposits." Attorney-General Rep., 1905, page 431. An individual banlier stands in the same position as a, banking association. Miner v. Village of Fredonia, 27 N. Y. 155. § 22. General Provisions. 33 § 22. Penalties for failure to report. If any bank or trust company or individual banker shall fail to make such report within ten days from the day designated for the making thereof, or to include therein any matter required by the superintendent, or if any savings bank shall fail to make such report within the time required by this chapter, or to include therein any matter required by the superintendent, every such de- linquent bank, banker, savings bank or trust company shall forfeit to the people of the state the sum of one hundred dollars for every day that such report shall be delayed or withheld, and for every day that it shall fail to report any such omitted matter. Every other corporation subject to the provisions of this chapter which shall fail to make such report within the time herein required, or to include uierein any matter required by the superintendent to be stated, shall forfeit to the people the sum of ten dollars for every day for which such report shall be delayed or withheld, and for every day that any such omitted matter may remain unreported. The moneys forfeited by this section, when recovered, shall be paid into the state treasury to be used to defray the miscellaneous expenses of the department. If any corporation or individual banker shall fail to make two successive reports as herein required, every such corporation shall forfeit its charter, and every such individual banker shall forfeit his privilege as such banker; and every such corporation or indi- vidual banker may be proceeded against and the affairs of such corporation closed, and such individual banker be restrained from continuance in business, in the same manner as an insolvent cor- poration or individual banker may be proceeded against. In case of the failure of any corporation or individual banker to make any report required of him by law, the superintendent shall immedi- ately cause the books, papers and affairs of such corporation or banker to be examined as directed by section eight of this chapter. Source.— Former § 21, as am'd by L. 1905, oh. 297. REPORT. — Section 22 prescribes the penalties of failure to report, and in addition to this the officers of a bank are liable to any one injured by mis- representations made in the report. Morse v. Switz, 19 How. 275. " Commercial business paper actually owned by the person negotiating same," is paper actually issued in due course of business and duly endorsed 34 The Banking Law. § 23. by the person who negotiated itj mere accomodation paper or a note placed in the hands of the note broker for sale, upon the advancement by the note broker of the difference between the face value of the notes and the agreed commission are not " commercial or business paper actually owned by the person negotiating tne same." Attorney-General Kep., Feb., 1911. § 23. Books, papers and affairs to be examined. It shall be the duty of the board of directors of every bank and trust company in the months of April and October in each year to examine or to cause a committee of at least three of its members to examine, fully into the books, papers and affairs of the bank or trust company of which they are directors, into the loans and dis- counts thereof, and particularly into the loans or discounts made directly or indirectly to officers or directors thereof, or for the benefit of such officers or directors, or for the benefit of other cor- porations of which such officers and directors are also officers or directors, or in which they have a beneficial interest as share- holders, creditors, or otherwise, with the special view of ascertain- ing the value and security thereof, and of the collateral security, if any, given in connection therewith, and into such other matters as the superintendent of banks may require. Such directors shall have power to employ such assistance in making such examination as they may deem necessary. On or before the fifteenth day of the month suceeding such examination, a report in writing thereof sworn to by the directors making the same, shall be made to the board of directors of such bank or trust company, be placed on file in said bank or trust company, and a duplicate thereof filed in the banking department. Such report shall particularly contain a statement of the assets and liabilities of the bank or trust com- pany examined, as shown by the books of the bank or trust com- pany together with such deductions from the assets, and the addi- tion of such liabilities, direct, indirect, contingent or otherwise as such directors or committee, after such examination, may find necessary in order to determine the true condition of the bank or trust company. It shall also contain a statement showing in de- tail every liability to such bank or trust company, direct, indirect, contingent, or otherwise, of every officer or director thereof and of every corporation of which any such officer or director is also an offiicer or director, or in which corporation any such officer or § 24. General Provisions. 35 director is beneficially interested as a shareholder, creditor, or otherwise. 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 security which in their opinion are insufficiently secure, 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 pos- sible. Such report shall also contain a statement of over-drafts, 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 institution. If the directors of any bank or trust company shall fail to make, or cause to be made, and file such report of examination in the manner, and within the time, specified, such bank or trust company shall forfeit to the people of the state one hundred dollars for every day such report shall be delayed, which penalty may be recovered through an action brought by the attorney-general against such bank or trust company, in the name of the people of the state of New York. The moneys for- feited by this section, when recovered, shall be paid into the state treasury, to be used to defray the expenses of the banking department. Source.— Former § 21, as am'd by L. 1906. ch. 481. Amended by L. 1913, ch. 451. Note. — The purpose of the amendment by ch. 451 of 1913 was to compel the directors to make a special investigation of dummy loans and to report in detail all loans to directors or officers or to corporations with which said directors or oiHeers are connected; it also requires the report to be on the fifteenth day of the month succeeding such examination. § 24. Publication of reports. Within thirty days after any report required by section twenty- one of this chapter shall be made, the superintendent shall, with the exception of the reports made by savings banks, publish a summary statement thereof in a paper at Albany in which notices by state ofiicers are required by law to be published, arranging the reports of individual bankers in a separate class, and specify- ing the name and place of business of each, and the names and residences of the general partners respectively. Such summary 36 The Banking Law. § 25. statement shall contain the items of capital, circulation, if any, and deposits, specie, and cash items, public securities and private securities and such other matters as may be necessary to inform the public as to the financial condition and solvency of any such corporation or banker, or which the superintendent may deem proper to include therein. The separate report required by said section of each corporation and individual banker shall be pub- lished by such corporation or individual banker in at least one newspaper of the place where its principal place of business is located, if there be one; if not, then in the newspaper published nearest where such corporation or banker is located. Source.— Former | 22, as a,in'd by L. 1905, eh. 297. REPORTS. — It is the duty of the superintendent of banks to require cor- porations and bankers who make reports pursuant to the Banking Law to use the words "preferred deposits," and the superintendent in his publication of the summary of these reports should group preferred deposits under the head of " preferred deposits.'' Attorney-General Rep., 1905, page 431. § 25. Annual report of superintendent. The superintendent shall report annually to the legislature, at the commencement of its first session : 1. A summary of the state and condition of every corporation and individual banker required to report to him and from which reports have been received the preceding year, at the several dates to which such reports refer, with an abstract of the whole amount of capital returned by them, the whole amount of their debts and liabilities, specifying particularly the amount of circulating notes outstanding, if any, and the total amount of meajis and resources, specifying the amount of specie held by them at the times of their several returns, and such other information in relation to such corporations and bankers as, in his judgment, may be useful. Such corporations shall be divided into classes so as to correspond with the designations thereof in section two of this chapter. 2. A statement of all banks and individual banlters and other corporations and individuals authorized by him to do business dur- ing the previous year, with their names and locations and dates of incorporation, and particularly designating such as have com- menced business during the year. § 26. General Peovisions. 3Y 3. A statement of tlie banks and individual bankers whose busi- ness has been closed during the year, with the amount of their circulation redeemed and the rate per centum of such redemption, and the amount outstanding. 4. Any amendments to this chapter, which, in his judgment, may be desirable. 5. The names and compensation of the clerks employed by him, and the whole amount of the expenses of the department during the year, and the amount, if any, for which the treasury shall be in advance. Such report shall be made by or before the last day of the year, and the usual number of copies for the use of the legislature shall be printed and in readiness for distribution by the printer em- ployed to print legislative documents, and one thousand copies shall be printed for the use of the department, the expense of which shall be charged to the general expenses of the department. Such report may be divided into parts, and the part or parts con- taining the reports of corporations other than banks may be made on or before the fifteenth day of March in each year. Source.— Former § 23, as am'd by L. 1907, oh. 408. Section 25, subd. 5, of the Banking Law, providing for loana on security of the stock of a ibank, relates to security taken and held upon which the bank obtains a lien, which it may enforce in the event of a default by the debtor, and the section is not applicable, where a. bank merely discounts the notes of a stockholder without taking his stock as security; under § 51 of the Stock Corporation Law, a bank may refuse to transfer the stock of one of its stock- holders until the debt of the stockholder to the bank is paid. Strahmann Vj Yorkville Bank, 148 App. Div. 8. § 26. Reports presumptive evidence. Every official report made by the superintendent to the attorney- general, and every report duly verified of any examination made, shall be presumptive evidence of the facts therein stated in all motions in any action or proceeding for the appointment of a temporary receiver of any corporation to which such report relates. Source. — Former § 24. TAXES. — A county does not receive any percentage of taxes paid on account of assessments against banks. Attorney- General Rep., 1902, page 157. 38 The Bakkinq Law. § 27. § 27. Restrictions. 1. No bank or trust company shall make any loans to any per- son, company, corporation or firm, to an amount exceeding the one-tenth part of its capital stock, actually paid in, and surplus ; provided, however, that a bank or trust company having its prin- cipal place of business in a borough in any city of the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over may loan to any person, company, corporation or firm, a sum not ex- ceeding twenty-five per centum of its capital stock actually paid in and surplus and a bank or trust company having its principal place of. business elsewhere in the state forty per centum of its capital stock actually paid in and surplus upon security worth at least fifteen per centum more than the amount of the loans ; or it may loan ten per centum of such capital and surplus as first above provided, and a bank or trust company having its principal place of business in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over may loan a further sum not exceeding fifteen per centum of such capital and surplus and a bank or trust company having its principal place of business elsewhere in the state may loan thirty per centum of such capital and surplus upon security worth at least fifteen per centum more than the amount of such loan so secured; and provided further, that a bank or trust company may buy from, or discount for, any person, company, corporation or firm, or loan upon, bills of exchange drawn in good faith against actually exist- ing values, or commercial or business paper actually owned by the person negotiating the same, a sum not exceeding twenty-five per centum of its capital stock actually paid in and surplus if its prin- cipal place of business is located in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over and not exceeding forty per centum of its capital stock actually paid in and surplus if its principal place of business is located elsewhere in the state ; provided further, however, that with the exception of the liability of the United States, of this state, § 27. General Pbovisions. 39 or of any county or incorporated city of this state the total liability of any person, company, corporation or firm to a bank or trust company shall not exceed twenty-five per centum of the actually paid in capital stock and surplus of any such bank or trust com- pany having its principal place of business in a borough in any city in the state vehich borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over and shall not exceed forty per centum of the actually paid in capital stock and surplus of any such bank or trust company having its principal place of business elsewhere in the state. 2. ISTo loan shall be made by any bank or trust company upon the securities of one or more corporations the payment of which is undertaken in whole or in part severally, but not jointly, by two or more individuals, firms 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 borrowers 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 in completing, the purchase of such securities ; (b) if the bank or trust company making such loan be liable directly, indirectly or contingently, for the repayment of such loan or any part, thereof ; (c) if its term including any renewal thereof, by agreement, express or implied, exceed the period of one year; (d) or to an amount, under any circumstances, in excess of twenty-five per centum of the capital and surplus of the bank or trust company making such loan. 3. 'No corporation to which this chapter is applicable except a savings and loan association shall hereafter make a loan, directly or indirectly, upon the security of real estate upon which there is a prior mortgage, lien or incumbrance, if the amount unpaid upon such prior mortgage, lien or incumbrance, or th-» aggregate amount unpaid upon all prior mortgages, liens 40 The Banking Law. § 27. and incumbrances exceeds ten per centum of the capital and surplus of such corporation, or if the amount so secured, including all prior mortgages, liens and incumbrances shall exceed two- thirds of the appraised value of such real estate as found by a committee of the directors or trustees of such corporation; but this provision shall not prevent the acceptance of any such real estate securities to secure the payment of a debt previously con- tracted in good faith. Every mortgage and every assignment of a mortgage taken or held by such corporation shall immediately be recorded in the office of the clerk of the county in which the real estate described in the mortgage is located. After the first day of JSTovember, nineteen hundred and eight, no loan shall be made, directly or indirectly, upon real estate security by a bank having its principal place of business in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over, if its total direct and indirect loans upon real estate se- curity exceed, or by the making of such loan will exceed, fifteen per centum in the aggregate of the total assets of such bank, or by a bank having its principal place of business in a village of not over fifteen hundred inhabitants, according to such census, in which there is no savings bank, if its total loans upon real estate security exceed, or by the making of such loan will exceed, forty per centum in the aggregate of total assets, or by a bank having its principal place of business elsewhere in the state if its total direct and indirect loans upon real estate security exceed, or by the making of such loan will exceed twenty-five per centum in the aggregate of its total assets. 4. No corporation to which this chapter is applicable, except a mortgage, loan or investment corporation, nor any of its directors, oQicers, agents or servants shall, directly or indi- rectly, purchase or be interested in the purchase of any promissory note or other evidence of debt issued by it for a less sum than shall appear on the face thereof to be due. Every person violating the provisions of this subdivision shall forfeit to the people of the state three times the nominal amount of the note or other evidence of debt so purchased. § 27. General Provision's. 41 5. No corporation to which this chapter is applicable shall deposit any of its funds with any other monied corporation unless such other monied corporation has been designated as a depositary for its funds by vote of a majority of the directors or trustees of the corporation making the deposit, exclusive of any director or trustee who is an oiEcer, director or trustee of the depos'.tary so designated. 6. No president, director, cashier, clerk or agent of any corpora- tion to which this chapter is applicable, and no person in any way interested or concerned in the management of its affairs, shall as individuals discount, or directly or indirectly, make any loan upon any note or other evidence of debt, which he shall know to have been offered for discount to such corporation, and to have been refused. Every person violating the provisions of this subdivision, shall, for each offense, forfeit to the people of the state twice the amount of the loan which he shall have made. 7. No officer, director, clerk or agent of any corporation to which this chapter is applicable shall borrow, directly or indirectly, from the corporation with which he is connected any sum of money without the consent and approval of a majority of the board of directors thereof. If an officer, director, clerk or agent of any corporation to which this chapter is applicable shall own or control a majority of the stock of any other corporation a loan to that corporation shall be considered for the purpose of this subdivision as a loan to such officer, director, clerk or agent. Every person violating this provision shall, for each offense, forfeit to the people of the state twice the amount which he shall have borrowed. 8. No corporation to which this chapter is applicable except a savings and loan association, shall make any loan or discount on the security of the shares of its own capital stock nor be the pur- chaser or holder of any such shares unless such security or pur- chase shall be necessary to prevent loss upon a debt previously con- tracted in good faith; and stock so purchased or acquired shall, within six months from the time of its purchase, be sold or dis- posed of at public or private sale ; nor shall any such corporation. 42 The Banking Law. § 27. either directly or indirectly, loan any money or property to any person for the purpose of enabling him to pay for or hold shares of its stock either subscribed for or purchased by him. Any cor- poration violating either of the provisions of this subdivision shall forfeit to the people of the state twice the amount of such loan. 9i No corporation to which this chapter is applicable shall here- after make a loan, secured by the stock of another monied cor- poration, if by the making of such loan the total stock of such other monied corporation held by it as collateral will exceed in the aggregate ten per centum of the capital stock of such other monied corporation. 10. The directors of any bank may semi-annually or quarterly declare a dividend of so much of the net profits of the corporation of which they are directors as they shall judge expedient, but each such corporation shall, before the declaration of a dividend, carry one-tenth part of its net profits earned since its last pre- ceding dividend to its surplus fund until the same shall amount to twenty per centum of its capital. Any surplus fund already accumulated by any such corporation may be counted as part of said twenty per centum. Each corporation shall report to the superintendent of banks within teh days after declaring a dividend the amount of such dividend, and the amount of net earnings in excess of such dividend, and the amount carried to the surplus fund. Such report shall be attested by the oath of the president or cashier of the corporation. If the directors of any such cor- poration shall knowingly violate, or knowingly permit any of the officers, agents or servants of the corporation to violate any of the provisions of this subdivision, all the rights, privileges and fran- chises of the corporation shall thereby be forfeited. Such viola- tion shall, however, be determined and adjudged by the supreme court of the state in a suit brought for that purpose by the superin- tendent of banks in his own name before the corporation shall be declared dissolved. 11. No savings bank hereafter incorporated shall do business or be located in the same room or in any room communicating with any bank, or national banking association. § 27. General PEOvisioisrs. 43 Sources.— Former § 25, as am'd by, L. 1893, oh. 696; L. 1895, ch. 929; L. 1896, Oh. 452; L. 1905, eh. 456; L. 1906, ch. 572; L. 1908, ch. 169; L. 1909, ch. 240; L. 1909, ch. 402 and 410. Amended by L. 1910, chap. 126; L. 1911, chap. 585, and L. 1913, chap. 670. In effect May 23, 1913. The purpose of the amendment of this section by chap. 585 of 1911 was to make the provisions of subd. 7 applicable to officers of all corporations sub- ject to the provisions of the banking law; it had been ascertained that the law was evaded by the making of a loan to a corporation practically con- trolled by the director or officer. Note. — The purpose of the amendment of subd. 8 by chap. 670 of 1913 was to prevent a virtual reduction in the amount of capital stock through loans to sharelholdcrs who have originally paid in the capital in cash. — Ed. See I 42, General Construction Law, ch. 27 of 1909, providing that the term " county clerk " shall include " register " in each county in which there is a register. See § 290, Penal law, as to making larger loans than permitted by this sertion. See § 290, Penal Law, providing that loans made in violation of this section not invalid. See § 2i91, Penal Law, as to sale or hypothecation of bank notes by officers. See § 292, Penal Law, as to officer of bank putting excessive number of these notes in circulation. See § 293, Penal Law, as to illegal indorsement or guaranty by officer of banking associations. See § 294, Penal Law, as to bank officer overdrawing ihis account, or re- ceiving commissions from persons procuring loans at the bank. See §§ 295 et seq.. Penal Law, as to illegal acts of bank officers. LOANS. — A banking corporation may bring an action against the president for making loans in violation of the statute where the president was negligent in determining the value of the collateral. Seventeenth Ward Bank v. Smith, 51 App. Div. 259; 64 N. Y. Supp. 888. Under § 27, where loans are made to one person or corporation exceeding twenty per cent, of the capital stock paid in, and its surplus, the excess must be secured by collateral. Attorney-General Rep., 1900, page 167. Under the limitation of subdivision 3 of this section, a bank cannot loan upon the note of an individual, secured by collateral, which consists of bonds of a real estate company, issued by a trustee, to whom said company pledged leaseholders, real estate, stocks and other bonds. Attorney-Gen'l Rep., August 19, 1911. DISCOUNTS. — Under paragraph 1, commercial or business paper actually owned by the person negotiating the same may lawfully be discounted, even though bearing an accommodation indorsement, to the extent of one-half the bank's paid-in capital stock and surplus; accommodation paper, with such indorsement, may lawfully be discounted only to the extent of one-fifth of the bank's paid-in capital stock and surplus. Attorney-General Rep., 1904, page 220. 44 The Bankikg Law. § 28. It would seem that a trust company may purchase or discount the promis- sory note of any person for any person save the maker. Attorney-General Eep., Mov. 15, 1910. CONTRACT.— A contract prohibited by statute is void. Henry v. Salina Bank, 1 N. Y. 87. Banking associations organized under the general law are moneyed corpora- tions and as such are within the statute. This provision of law should be strictly construed. Gillette v. Moody, 3 N. Y. 475. RECEIVER. — Where loans are made to directors in excess of the amount permitted by the statute a court of equity should grant an injunction and appoint a receiver to wind up the affairs of the corporation. Commissioners v. Bank of Buffalo, 6 Page, 497. DIVIDENDS. — Dividends improperly declared may be recovered by creditors, and not by a receiver for the benefit of the stockholders of the bank. Butter- worth V. O'Brien, 39 Barb. 192. § 28. Calculation of profits. Interest unpaid, although due or accrued on debts owing to the corporation or banker, shall not be included in the circulation of its profits previous to a dividend, unless such interest be accrued upon loans secured by collaterals as provided for by section twenty-seven of this chapter. The surplus profits from which alono a dividend can be made, shall be ascertained by charging in the account of profit and loss and deducting from the actual profits : 1. All expenses paid or incurred, both ordinary and extraordi- nary, attending the manag'ement of its affairs and the transaction of its business. 2. The interest paid, or then due and accrued, on debts owing by it. 3. All losses sustained by it. In the computation of such losses, all debts owing to it, shall be included which shall have remained due. without prosecution, and upon which no interest shall have been paid for more than one year, or on which judgment shall have bffin recovered that shall have remained for more than two years unsatisfied, and on which no interest shall have been paid during that period. Source.— Former § 26, as am'd by L. 1893, oh. 696. See § 664, Penal Law, making it a misdemeanor for the directors to make a dividend except from surplus profits. DIVIDENDS.— The actual surplus profits should be divided among the stockholders from time to time and the directors may be compelled to take § 29. General Peovisions. 45 such action; the directors, however, are personally liable for dividing all the surplus leaving nothing for capital, if subsequently the company becomes insolvent. Scott v. Eagle Fire Insurance Company, 7 Page, 199. Surplus profits from which a dividend may be declared consists of the excess of property of a corporation above the amount limited by the charter; stock dividends are not within the class referred to in this section. Williams V. Western Union Tel. Co., 93 N. Y. 162. When an incorporated company becomes insolvent because its surplus have been paid as dividends, such surplus funds, and also the capital must be applied to satisfy the debts to the exclusion of any prior claim of stockholders; directors should reserve at all times sufficient funds in addition to the capital stock to meet probable losses. Scott v. Eagle Fire Co., 7 Page, 198. Dividends declared are illegal where a bank has no surplus profits; the ques- tion as to whether notes were taken by a bank to recover defaulted debts is a question of fact for the jury. Dykman v. Keeney, 34 App. Div. 45. DIVIDENDS. — A shareholder has no right to profits until a dividend is declared; the declaration of a dividend is within the discretionary powers of the directors which will not be controlled by the courts. Beveridge v. N. Y. E. R. Co., 112 N. Y. 1. LAW OF PLACE. — Where a woman is the owner of stock of a bank of a state other than that in which she and her husband are domiciled, the effect of payment of dividends of her stock to the husband is to be determined by the law of the place where the bank is located. Graham v. First Nat. Bank, 84 N. Y. 393. § 29. Losses in excess of profits. All losses sustained by any corporation or banker subject to this chapter, in excess of its undivided profits then realized and pos- sessed, shall be charged as a reduction of its capital stock, and no dividend shall thereafter be made on its shares of stock imtil the deficit of capital so created shall be made good, either by the re- covery of the moneys charged as lost or from the subsequently accruing profits of the corporation. Source. — Former § 27. CAPITAL. — All losses sustained by a corporation or banker, subject to the Banking Law, in excess of the individual profits then realized and possessed, must be charged as a reduction of the capital. Attorney-General Rep., 1895, page 191. DIVIDENDS. — When an incorporated company becomes insolvent because its surplus has been paid as dividends, such surplus funds, and also the capital must be applied to satisfy the debts to the exclusion of any prior claim of stockholders; directors should reserve at all times sufficient funds in addition to the capital stock to meet probable losses. Scott v. Eagle Fire Co., 7 Page, 198. 46 The Bankhstg Law. § 30. § 30. Publication of unclaimed dividends and deposits. Every bank and individual banker doing business under any law of tlie state shall annually, on or before September first, cause to be publisbed for six successive weeks in one newspaper of the county in which such bank or individual banker is located, and in a paper at Albany in which notices by state officers are required by law to be published, a true and accurate statement, verified by the oath of the cashier, treasurer or president, of all deposits made with such bank or individual banker, and of all dividends and in- terest declared upon any of the stock, bonds or other evidences of indebtedness of such bank or banker, which at the date of such statement shall amount to fifty dollars or over and have remained unclaimed by any person or persons authorized to receive the same for five years then next preceding. The expenses of such adver- tising shall be deducted from the sums unclaimed in proportion to the amount of each respectively. Such statement shall set forth the date of the deposit, its amount, the name and residence, if known, of the person making it, the name of the person in whose favor and the time when the dividend may have been declared, or interest accrued, its amount, and upon what number of shares, and on what amount of stock, bonds or other evidences of indebtedness, of any such bank or banker, it was declared or accrued. Every savings bank or institution for savings now existing or which hereafter may be organized under and by virtue of any law of this state, shall on or before the first day of June in each year, make a report in writing to the superintendent of banks, verified by the oath of the two principal officers of the in- ptitution, concerning such accoimts of depositors of amounts of five dollars or more> as have been dormant for twenty-two years and upwardsj from the first day of May preceding; that is, accounts which have not been increased or diminished by deposits or with- drawals, exclusive of interest credits. The accounts of depositors whose pass-books have been presented at the bank for the entry of interest earned, within the period of twenty-two years, shall not be deemed dormant accounts within the meaning of this chapter. The first report of each savings bank, made in compliance with the provisions of this section, shall accurately state the full names § 30. Geneeal Peovisions. 47 of all depositors whicli the books of the savings bank sKow to have five dollars or more to their credit respectively, whose accounts have been dormant for twenty-two years or upwards ; such report shall also state the date on which the original deposit was made, the last known place of residence of the depositor, his or her occupation, date of birth, nationality, parents' name if known, and the date when the savings bank discontinued the crediting of interest on each account, together with any additional data which may aid in determining the ownership of such dormant account. All subsequent reports in addition to dor- mant accounts not previously reported, shall contain a list of such previously reported accounts as have either been paid, or be- come active accotmts since the last report, through partial pay- ments, or the presentation of pass-books for the entry of the inter- est due on the account. It is expressly provided, however, that the sums to the credit of such dormant accounts are not required to be stated in the reports provided for by this section. Any corporation or banker failing to make any report or state- ment required by this section shall forfeit to the people of the state the sum of one hundred dollars per day for every day such report or statement shall be so delayed or withheld, which, when collected, shall be paid into the treasury of the state and applied to the ex- penses of the banking department; but the superintendent may; for sufficient cause, extend the time for making such report or statement not exceeding thirty days. The superintendent shall keep in his office an index of the names of the persons appearing from such reports or statements to be en- titled to any such dividends, interest or deposit, and whenever any inquiry shall be made to him concerning the same, he may require the applicant to furnish evidence of his right thereto ; and if satis- fied that such applicant or his principal has a lawful claim to any part of such dividends, interest or deposits, he shall indicate to the person making such application by which of the savings banks such dividends, interest or deposits are held. Source. — Former § 28. iSee § 164 post, deposits of savings banks in hands of receiver and unclaimed to be deposited with superintendent of banks. 48 The Banking Law. § 31. ACCOUNTS.— The superintendent of banks should compel banks and bankers to comply strictly with the requirement of this section as to the pub- lication of accounts. Attorney-General Eep., 1906, page 510. § 31. Change of location. Any corporation or banker to which this chapter is applicable may make application to the superintendent of banks for leave to change its place of business to another place in the same or another county. If the proposed place is within the limits of the town, village or city in which the business is carried on, siich change may be made upon the written approval of the superintendent; if beyond such limits, notice of intention to make such application, signed by the two principal ofScers of the corporation or individual banker, shall be published once a week for two weeks in a news- paper published in the city of Albany, and in a newspaper pub- lished in the county in which such place of business is located, to be designated by the superintendent of banks. The application shall state the reasons for such proposed change, and be signed by a majority of the board of directors of the corporation, and except in the case of corporations enumerated in article six of this chapter, be accompanied by the written assent thereto of stock- holders owning at least two-thirds in amount of the stock of the corporation, or by the banker. If the superintendent shall be satisfied that there is no reasonable objection to such change of location, he shall make a certificate authorizing such change which shall be filed in the office of the superintendent, and a certified copy thereof with the clerk of the county in which the place of business of the corporation or banker is located, and with the clerk of the county to which its place of business is changed, if in another county, and published once in each week for two successive weeks in the newspapers in which the notice of application was published. When the requirements of this section shall have been fully complied with, the corporation or banker may, upon or after the day specified in the certificate, re- move its property and effects to the location designated in the certificate, and thereafter its sole business location shall be the location so specified ; and it shall have all the rights and powers in such new loca+ion to which it was entitled at its former location ; §§ 32, 33. General Peo visions. 49 but no STicla change of location shall in any manner lessen or impair any liability of the corporation or banker incurred or existing at the time such change was made. Source.^ Former § 29, as amended by L. 1895, ch. 39. See § 239 post. Every application required by tMa section must be signed by a majority of the directors and accompanied by tihe written assent of at least two-thirds in amount of the stoclcholders. Attorney-General E,ep., January 15, 1909. § 32. Approval and certificate of superintendent upon incor- poration. ISTo corporation to which this chapter is applicable shall be in- corporated hereunder, or transact any business in this state other than such as relates to its formation, without the written approval of the superintendent of banks and without his written certificate stating that it has complied with the provisions of this chapter and with all the requirements of law, and that it is authorized to trans- act within this state the business specified therein, and that such business can be safely intrusted to it; which certificate shall be recorded in the office of the superintendent in a book to be kept by him for that purpose and a certifiad copy thereof filed in the office of the clerk of the county where the corporation is to have its principal business office. Source. — Former § 30. See 5 6, General Corporation Law, ch. 687 of 1892, no bank, etc., to be organ- ized with word " bank," etc., in name unless formed under Banking Law. CERTIFIOATE. — The superintendent of banks has discretion to refuse a certificate of authorization for a state bank of discount. Attorney-General Rep., 1904, page 403. Tne superintendent of banks should use his discretion in declining to issue an authorization certificate permitting the organization of a mortgage loan and investment company under Article VIII, and he may refuse it on the ground that the corporation would do a second mortgage business. Attorney- General Kep., October 28, 1910. § 33. Permission and certificate of superintendent in case of foreign corporations. No foreign corporation incorporated for the purpose of carrying on the business specified in articles six and eight of this chapter shall transact business in this statei without the written 50 The Banking Law. § 33-a. pennission of the superintendent of banks and a written certificate from him stating that such corporation has complied with all of the provisions of this chapter applicable to it and with all the requirements of law, and that it is authorized to transact the busi- ness within this state specified therein and that such business may be safely intrusted to it. Such permission and certificate shall continue in force only for the period of one year from the date thereof, but may be renewed by the superintendent from time to time for a like period if satisfied that the corporation has complied with all of the provisions of this chapter and with the require- ments of law and that such business can be safely intrusted to it. Source. — Former § 31. § 33na. License to certain foreign banlcing corporations. ITo foreign banking corporation other than a national bank shall transact in this state the business of buying, 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 sterling or other loans, or transact any part of such business, or shall maintain in this state any agency for carrying on such business or any part thereof, (a) unless said corporation shall have been author- ized by its charter to carry on such business and shall comply with the laws of the state or country under which it is incorporated; (b) unless the actual value of the assets of said corporation shall be at least two hundred and fifty thousand dollars in excess of its liabilities; (c) unless said corporation shall comply with all of the provisions of this chapter and the requirements of law applicable to it, and (d) shall receive from the superintendent of banks & license authorizing it to transact within this state the business hereinbefore specified. This section shall not be construed to prohibit foreign banking corporations which do not maintain an office in this state for the transaction of business from making loans in this state secured by mortgages on real property, nor from accepting assignments of mortgages covering real property situated in this state. Added by L. 1911, chap. 772. Amended by L. 1913, ohap. 484. In effect May 14, 1913. § 33-b. General Peovisions. 51 Note. — The purpose of the amencbnent by chap. 484 of 1913 waS' to make it possible that a savings bank just across the Connecticut line, or a trust pom- pany located over the Pennsylvania line, can legally make a loan upon real estate located vfithin this state without first obtaining a license from the Superintendent of Banks. — Ed. A banli situated in another State may not make loans upon real estate located in this State, unless licensed by the Superintendient of Banks. Attor- ney-Creneral Rep., 1912, page 495. Section 33a, as added by cJiapter 722 of 1911, restricting the transaction of business by foreign banking corporations within this State, applies to foreign trust companies as well as to other foreign banking corporations recognized as such by the Banking Law, except national banks. Attorney-General Kep., 1912, page 530. § 33-b. Application for license and conditions to be com- plied with. Before receiving sucli license the applicant therefor shall file with the superintendent of banks an exemplified copy of its charter and by-laws, or the equivalent thereof, and a statement, under oath, by one of the duly authorized officers of said corpora- tion, specifying with such details as the superintendent of banks shall require its assets and liabilities and showing compliance by it with the laws of the state or country of its incorporation. The applicant shall furnish such further proof as to the nature and character of its business and its solvency as the superintendent of banks shall deem proper. If he shall be satisfied that the said corporation may be safely permitted to conduct the business aforesaid within this state, or through any agency which shall be specified, he shall issue a license authorizing the applicant to carry on the aforesaid business at the place designated in the appli- cation and to be specified in the license certificate. For such license the licensee shall pay a fee of two hundred and fifty dollars. Such license shall not be transferred or assigned and shall not authorize the transaction of business at any place other than that prescribed in the license certificate except with the written approval of the superintendent of banks. TTpon the receipt of such license certificate the licensee shall cause the same to be at all times conspicuously displayed in its place of business. The said license shall continue in force from year to year, on the payment of an annual fee of two hundred and fifty 52 The Backing Law. § 34. dollars and compliance with all of the provisions of this chapter and of the requirements of law applicable to such licensee. The license issued shall at any time be revocable by the superin- tendent of banks for cause shown, and in ease of such revocation the license certificate shall be surrendere'd to the superintendent of banks within twenty-four hours after written notice of such revocation. Every licensee shall, at such time and in such form as the superintendent of banks shall direct, make to him a writ- ten report, under the oath of one of its ofiioers or managers residing in this slate, showing the amount of its assets and liabili- ties and containing such other matters as the superintendent of banks shall prescribe. Such report shall 'be accessible to the public at all reasonable times. Failure to make such report shall be subject to the penalties prescribed by section twenty-two of this chapter, and any false statement contained in such report or ■ in any other sworn statement made to the superintendent of banks in pursuance hereof shall constitute perjury. The books and assets of every licensee hereunder shall be subject to the inspection, supervision and examination of the superintendent of banks, and the officers and managers of such licensee may be required to appear and attend and to testify under oath for the purpose of any such examination as provided by section eight hereof. Nothing herein contained shall be deemed to modify the prohibition of section one hundred and eight of this chapter. Added by L. 1911, chap. 772. § 34. Appointment of superintendent as attorney for service of process. Wo foreign corporation, company or association, to which this chapter is applicable, shall transact any business in this state until it has executed and filed with the superintendent of banks a written instrument appointing such superintendent its true and lav^ful attorney, upon whom all process in any action or proceed- ing by any resident of the state against it may be served with the same effect as if it existed in this state and had been la^vfuUy served with process therein. Service in favor of a resident of this state upon such attorney shall be deemed a personal service upon such corporation, company or association. The superintendent § 35. General Peovisions. 53 of banks shall f ortkwith forward a copy of every process served upon him under the provisions of this section by mail, postage prepaid, and directed to the secretary of such corporation, company or asso- ciation at its last known post-office address. For each copy of pro- cess the superintendent shall collect the sum of two dollars which shall be paid by the plaintiff or moving party at the time of such service to be recovered by him as a part of his taxable disburse- ments if he succeeds in the suit or proceeding* The term process in this section includes any writ, summons, petition or order whereby any suit, action or proceeding shall be commenced by a resident of the state. Source. — Former § 32. § 35. Appointment of receiver. If it is made to appear upon application of any creditor or share- holder of any such corporation, company or association, residing in this state that the funds on deposit with the superintendent of banks are insufficient to pay in full the creditors and shareholders residing in this state, or that it is insolvent, or has suspended business, or that insolvency or bankruptcy proceedings have been taken against it either voluntarily or involuntarily, the supreme court may, upon due notice to the attorney-general, and upon such notice to the corporation, company or association as the court shall prescribe, appoint a receiver of such funds, and pending such application, the court or any judge thereof may enjoin the com- mencement or prosecution of any other action or proceeding against such corporation, company or association. Upon the qualification of such receiver, the superintendent of banks shall pay over to him the funds remaining in his hands less any charges which he may have against the same, and the receiver shall distribute such funds among the creditors and shareholders of the corporation, company or association residing in this state in the manner prescribed by law for the payment of creditors in the case of voluntary dissolu- tion of a corporation. Source. — Former § 33. RECEIVER. — As soon as an order appointing a receiver is entered the property of the corporation vests in him and in the constructive possession of the court, although the property may not actually be in the possession of the 54 The Bankikg Law. § 36. said receiver. Matter of Schuyler Tow Boat Co., 64 Hun, 384; aff'd 136 N. Y. 169. PAHTIES. — Although a receiver of a corporation is appointed yet the corporation may join in the litigation afifecting its indebtedness but is bound by adjudication. De Valle v. Navarro, 21 Abb. N. C. 136. KECEIVER.— Where a receiver is appointed under § 33 of the Banking Law, on the ground that the funds deposited were insufficient to pay the creditors and shareholders residing in this state, such shareholders and creditors residing within this state are the sole beneficiaries of the funds deposited under § 14. People V. Granite State Pro. Ass'n, 41 App. Div. 257; afif'd 161 N. Y. 492. § 36. Merger. Any two or more corporations, other than savings banks organ- ized under any one article of this chapter, or organized under the laws of this state for the purposes, or either of them, mentioned in any one article of this chapter, are hereby authorized to merge one or more of said corporations into another in the manner following : The respective boards of directors of such corporations may enter into and make an agreement, under their respective corporate seals, for the merger of one or more of said corporations into another of them, prescribing the terms and conditions thereof and the mode of carrying the same into effect, which agreement shall be subject to the approval of the superintendent of banks, and may provide that such corporation upon and after such merger shall have the name of any one of the corporations merged, to be specified in said agreement, and may name the persons, not less than thirteen nor more than twenty-four, who shall constitute the board of directors of such corporation after its merger, or may provide for a meeting of stockholders within sixty days after the merger to elect a board of directors with such temporary provision for conducting the affairs of the corporation meanwhile as shall be agreed upon ; and said directors so named or elected, after qualifying shall divide themselves into classes in manner and with effect as provided in section one hundred and ninety-five of this chapter, and may adopt new by-laws for said corporation. Source. — Former § 34, as am'd by L. 1900, oh. 199. MERGER. — The legislature provides for the consolidation of business cor- porations, and the merger of one bank or trust company into another. Attorney- General Rep., 1903, page 246. § 37. General Peovisions. 55 Where banking corporations are merged as provided by § 36 et seq. of the Banking Law, stock owned by the merged corporation transferred by the merger to the merging corporation, is taxable as provided in section 270 of the Tax Law. Attorney -Cteneral Rep., 1913, page 21. § 37. Submission of merger agreement to stockholders. Such agreement shall be submitted to the stockholders, of each of such corporations at a meeting thereof to be called upon notice of at least two weeks, 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, and pub- lished for at least two successive weeks in one of the newspapers in each of the counties of the state in whioh either of such corpora- tions shall have its principal place of business, and if such agree- ment shall be approved at each of such meetings of the respective stockholders separately by the vote or ballot of the stockholders owmng at least two-thirds of the stock, the same shall be the agree- ment of such corporations. A sworn copy of the proceedings of such meetings, made by the secretaries thereof, respectively, shall be presumptive evidence of the holding and action of such meet- ings. Such agreement and verified copy of proceedings of such meetings shall be made in duplicate and filed in the office of the superintendent of banks and in the office of the clerk of the county in which the principal place of business of the corporation into which such corporation or corporations shall be merged is located, and thereupon si:ich corporations shall be merged as speci- fied in such agreement, and the corporation into which the other or others are merged, shall thereafter have the new name, if any, specified in such agreement pursuant to the provisions of section thirty-six of this chapter, and the provisions of such agreement shall be carried into effect as therein provided; and it shall be lawful for said corporation into whioh the others shall have been merged to require the return of the original certificate of stock held by each stockholder in each or either of the" companies, and in lieu thereof to issue new certificates -for such number of shares of its own stock as under the agreement of merger the said stockholder may be entitled to receive. Source.— Former § 35, as am'd by L. 1900, oh. 199. '56 The BANKiiirG Law. § 38. Notice of the submission of a merger agreement of two trust companies should be published in a daily newspaper on the twelve secular days of two successive weeks. AttorneyjGen'l Kep., February 9, 1912. § 38. Rights of dissenting stockholders. If any stockholder not voting in favor of such agreement of merger shall, at such meeting or within twenty days thereafter, object to such merger and demand payment for his stock, or, in the case of savings and loan associaitioms, if such stockholder be a borrower, liquidation of his indebtedness and cancellation of his stock, such stockholder, if the merger takes effect at any time thereafter may, at any time within sixty days after such merger, apply to the supreme court at any special term thereof, held in the district in which the county is situated in which such corporation into which the other or others may be merged may have its principal place of business, upon at least eight days notioe to sa^ corporation, for the appointment of three persons to appraise the value of his stock, or the amount of said indebtedness, if any, and the court shall appoint such ap- praisers and designate the time and place of their first meeting, with such directions in regard to their proceedings as shall be deemed proper, and also direct the time and manner in which payment of such stock to such stockholder or liquidation of such indebtedness by him and cancellation of his stock shall be made. The court may fill any vacancies in the board of appraisers occur- ring by refusal or neglect to hold such office. The appraisers shall meet at the time and place designated and after being duly sworn shall honestly and faithfully discharge their duties and estimate and certify the value of such stock, and the amount of such indebt- edness, if any, at the time of such decision, and deliver one copy to such corporation and another to such stockholder if demanded; the charges and expenses of the appraisers shall be paid by the corporation. When the corporation shall have paid the appraised value of such stock, or if such stockholder be a borrower as afore- said when he shall have paid the amount of his indebtedness as fixed by such appraisal, as directed by the court, said stock shall be canceled and such stockholder shall cease to be a member of said corporation or have any interest in such stock and in the oor- § 39. GrENEEAL PROVISIONS. 57 porate property, and such stock may be held and disposed of by the corporation for its own benefit; and if such stockholder be a borrower as aforesaid proper instruments of acquittance shall be duly executed and delivered to him by the corporation and there- upon he shall be discharged from all further liability to the corporation. Source. — Former § 36. Amended iby L. 1910, ch. 126. APPRAISAL. — Under this section, the proceedings for appraisal must be instituted by the actual owner of the stock, and not by the record owner of stock which in reality belongs to another. Matter of Rogers, 102 App. Div. 466. There is no provision of law permitting the revival of the corporate exist- ance of a bank whose corporate existence has expired. Attorney-General Rep., Jan. 7, 1911. § 39. Effect of merger. Upon the merger of any corporation in the manner herein pro- vided all and singular the rights, franchises and interests of the said corporation so merged in and to every species of property, real, personal and mixed, and things in action thereunto belonging shall be deemed to be transferred to and vested' in such corporation into which it has been merged, without any other deed or transfer, and said last named corporation shall hold and enjoy the same and all rights of property, franchises and interests in the same manner and to the same extent as if the said corporation so merged should have continued to retain the title and transact the business of such corporation ; and the title and real estate acquired by the said cor- poration so merged shall not be deemed to revert by means of such merger or anything relating thereto. Source. — Former § 37. MEEiGER. — Where a merger is effected as provided in § 39, a formal assign- ment of a guaranty of one bank is not necessary. Bank of Long Island v. Young, 101 App. Div. 88. Where one trust company was merged with the second under the provision of section 39, the latter company is entitled to be appointed executor of the estate whose testator named the first company as executor in a will madie before the first company was mierged with the second. Matter of Bergdorf, 206 N. Y., 309. 58 ^ The Banking Law. §§ 40,41. § 40. Rights of creditors and others having relations with merged corporations. The rights of creditors of any corporation that shall be so merged shall not in any manner be impaired by any such merger, nor shall any liability or obligation for the payment of any money due or to become due, or any claim or demand, in any manner, or for any cause existing against such corporation, or against any stocliholder Miereof, be in any manner released or impaired, and all the rights, obligations and relations of all the parties, creditors, depositors, trustees and beneficiaries of trusts shall remain unim- paired by the merger, but such corporation into which the other or others shall be merged shall succeed to all such relations, obli- gations, trusts and liabilities and be held liable to pay and dis- charge all such debts and liabilities, and to perform all such trusts of the merged corporation in tlie same manner as if such corpo- ration into which the other shall become merged had itself incurred the obligation or liability or assumed the relation of trust, and the stockholders of the respective corporations so entering into such agreement shall continue subject to all the liabilities, claims and demands existing against them as such at or before such merger, and no suit, action, or other proceeding then pending before any court or tribunal in which any corporation that may be merged is a party shall be deemed to have abated or discontinued by reason of any feuch merger, but the same may be prosecuted to final judg- ment in the same manner as if the said corporation had not entered into the said agreement, or the said last named corporation may be substituted in the place of any corporation so merged as aforesaid, by order of the court in which such action, siiit or pro- ceeding may be pending. Source.— Former § 38, as am'd by L. 1900, oh. 199. MERGER. — The legislature provides for the consolidation of business cor- porations, and the merger of one bank or trust company into another. Attorney-General Rep., 1903, page 246. § 41. Communications from banl(ing department. Each official communication directed by the banking depart- ment to a bank, savings bank, or trust company, pertaining to an § 42. General Provisions. 59 investigation or examination conducted by the department, or to the affairs of such bank, savings bank or trust company, or contain- ing suggestions or recommendations as to the conduct of the busi- ness thereof, shall be submitted, by the officer receiving it, to the board of directors or trustees of such bank, savings bank or trust company, at the next meeting of such board. Source.— Former § 39. § 42. Meetings of directors or trustees and reports thereto. The directors or trustees of every corporation to which this chapter is applicable shall hold a regular meeting once in each month. They shall by resolution duly recorded in the minutes of the proceedings of such corporation designate an officer or officers whose duty it shall be to prepare and submit to each director or trustee at each regular meeting of the board, or to an executive committee of not less than five members of such board, a written statement of all purchases and sales of securities, and of every dis- count, loan, or other advance including overdrafts exclusive of discounts, loans or advances including overdrafts of less than one thousand dollars, made since the last regular meeting of the board, describing the collateral to such indebtedness as of the date of the meeting at which such statement is submitted. Such statement shall also contain a list giving the aggregate of loans, discounts and advances including overdrafts to each individual, firm, corporation or association, whose liability to such corporation has been increased one thousand dollars or more since the last regu- lar meeting of the board, together with a description of the col- lateral to such indebtedness held by such corj)oration at the date of the meeting at which such statement is submitted. A copy of such statement, together with a list of the directors present at such meetiiig, verified by the affidavit of the 'officer or offi- cers charged with the duty of preparing and submitting such statement shall be filed with the records of the corporation within one day after such meeting, and be presumptive evidence of the matters therein stated. Source. — Former § 39a, as added by L. 1908, oh. 155. Amended by L. 1911, chap. 708. 60 The Banking Law. § 43. The purpose of the amendment of this section by chap. 708 of 1911, was to prevent advances to certain ofiBcers, which could not be strictly defined as discounts or loans, and to prevent such officers and individuals from? over- drawing their accounts to an amount which should have been reported to the board of directors or trustees. Section 42, providing that the directors may by resolution require the detail information of the banlc's business to be given to the executive committee composed of at least five members of the board leads necessarily to the infer- ence that the directors who are not members of the executive committee are not to be charged with knowledge of the detail management, which need only be reported to the executive committee. Kavanaugh v. Gould, 147 App. Div. 281. § 43. Official acts of superintendent and details of depart- ment business to be made p;jblic. 1. The superintendent of banks shall keep in his office, in a place accessible to the general public, a bulletin board upon which he shall cause to be posted at noon on Friday of each week a detailed statement, signed by hiin or, in case of his absence from Albany or inability to act, by the deputy superintendent in charge, giving the following items of general information with regaid to the work of the department since the preceding statement; (a) The name of every corporation that has filed in the bank- ing department a certificate of incorporation or organization, its location and the date of filing of such certificate. (b) The name and location of every corporation or individual banker authorized by the superintendent of banks to commence business, its capital, surplus and the date of authorization. (c) The name of every proposed corporation to which a certifi- cate of authorization has been refused by the superintendent of banks, and the date of notice of refusal. (d) The n^fme of every corporation that has applied to the superintendent of banks for permission to open a branch office, the date of such application and the location of the proposed branch. (e) The name of every corporation that has been authorized by the superintendent of banks to open a branch office, the date of approval and the location of such branch office. § 43. General Pkovisions. 61 (f) The name and location of every corporation designated by the superintendent of banks as a depositary for the lawful money reserve of banks or trust companies, its capital, surplus and the date of designation. (g) The name and residence of every person appointed by the superintendent of banks as a deputy, examiner or employe© in the banking department, the title of the office to -which appointed, the compensation paid and the date of appointment. (h) The date oa whidi a call for a quarterly report by banks or trust companies was issued by the superintendent of banks and the day designated as the day with reference to which such re- port should be made. (i) The name and location of every corporation or individual banker of whose property and business the superintendent of banks shall have taken possession and the date of taking pos- session, and the name and residence of every person appointed by the superintendent as a special deputy superintendent of banks. (j) The name and location of every corporation or individual banker which shall have been authorized by the superintendent of banks to resume business, and the date of resumption. (k) The name and location of every corporation whose credit- ors or depositors have been paid in full by the superintendent of banks and a meeting of whose stockholders shall have been called, together with date of notice of meeting and date of meeting. (1) The name and location of every corporation subject, to the banking law whose affairs and business shall have been finally liquidated and the corporation dissolved. (m) The name and location of every corporation which has ap- plied for approval of a change of name, and the name proposed. 2. Every such statement, after having been posted as afore- said for one week, shall be placed on a file for such 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 inspection. Source. — Former § 391b. 62 The Banking Law. §§ 44, 45. The purpose of the amendment of this section by ch. 158 of 1908 was to give publicity to the acts of the superintendent of banks, by requiring the posting in his office of the matters stated in the statute. § 44. Banks designated as depositaries of court funds to furnish security and pay interest. The depositaries designated by the comptroller to receive funds or moneys paid into court, shall pay a fair rate of interest, and before receiving any such deposit shall give to the people of the state an undertaking, in such form as the attorney-general shall prescribe, such undertaking to be approved by the county judge of the county in which such savings bank, bank, trust company, bank association or banker shall be located, and by the comp- troller of the state, and filed in the office of the comptroller, and such undertaking shall be secured by deposit of bonds as pro- vided by section eight of the state finance law. Source. — Code CivU Procedure, § 746, pt. For remainder of section, see Code CSvil Procedure, § 746. Amended by L. 1911, chap. 709. § 45. Banks designated as depositaries of court funds to keep books of account. Every bank or trust company holding any funds or money paid into court shall keep a book or books in which it shall make an exact account thereof. Such book or books shall state the name of the court, the title of the case, the date of receipt, from whom received, the amount of money, if any, and a description of the securities or other property received, if any, and each addition of interest; also the date and description of each order for payment and the dates and amounts of payments thereunder and to whom paid ; also an account of each change of investment, if any. Source. — Code Civil Procedure, § 752, pt. For remainder of section, see Code Civil Procedure, § 752. Banks. 63 AKTIGLE 3. Banks Section 60. Incorporation. 61. Previous notice of intention to be given. 62. When superintendent shall iile certificate. 63. Examinajtion by and certificate of superintendent. 64. Amended certificate of incorporation. 65. Certificate of individual banker. , 66. General powers. 67. Lawful money reserve. 68. Payment of capital stock. 69. Annual meeting and election of directors. 70. Oath of directors. 71. Individual liability of stockholders. 72. Limitation of liability of stockholders. 73. Powers of president and vice-president. 74. Rate of interest. 75. Interest permitted on advances on collateral security. 76. Deposit of banlcs and individual bankers with superintendent. 77. Prohibition against sale of business by individual banker. 78. Change from state to national bank. 79. When deemed to have surrendered its charter. 80. Keduotion of capital stock in suoh cases. 81. Certificate of change. 82. National bank may become state bank. 83. Circulating notes; plates. 84. Circulating notes of individual banker. 85. Wlhen bank may receive interest or dividends upon securities deposited. 86. Rediemption agencies. 87. Destruction of bank notes. 88. Destruction of plates and counterfeit notes. 89. Exchange of mutilated notes. 90. Redemption in notes of other banks. 91. Protest of notes and' proceedings thereon. 92. Appointment of agent by new corporation. 93. Revocation of appointment. 94. Distribution of funds of insolvent banks. 95. Distribution of residue. 96. Publication of notices. 97. Redemption of notes held by banks and individual bankers. 98. Banks closing business. 99. Proceedings on closing bank. 100. Proportionate amount of securities to be returned when notes are destroyed. 101. Deposit of cash for redemption of notes. 64 The Bankikg Law. § 60. Section 102. Circulation of foreign, bank notes prohibited. 103. Notes not receivable at par not to be paid out. 104. Bills or notes must be payable on demand. 105. When bills of exchange to be without grace.' 106. Transfers of securities by superintendent to be countersigned by treasurer. 107. Unauthorized banking prohibited. 108. Reatnetions as to foreign corporations. 109. Restrictions as to banks and their officers. 110. Bills payable otherwdse than in money prohibited. 111. Certain bills declared to be promissory notes. 112. Use of sign indicating bank by unauthorized peisons prohibited. 113. Lost bank certificate; application to court for order requiring payment. 114. Petition; service of. 115. Bank to furnish information. 116. Notice; order, and publishing. 117. Contents of notice. 118. Application for final order. 119. Order; filing, and service; refusal to pay. 120. Bond dischajged; bank released. § 60. Incorporation. rive or more persons may form a corporation to be known as a bank. Suck persons shall make, acknowledge and file in the office of the clerk of the county where such bank is to be established and in the office of the superintendent of banks, a certificate in dupli- cate, which shall state : 1. The name by which such bank is to be known. 2. The particular city, town or village where its operations of discount and deposit are to be carried on. 3. The amount of its capital stock, which shall not be less than twenty-five thousand dollars in any village, incorporated or unin- corporated whose population does not exceed two thousand, and not less than fifty thousand dollars in any city, village or town whose population exceeds two thousand but does not exceed thirty thousand, and not less than one hundred thousand dollars else- where, the population in each case to be ascertained or determined by the last federal or state enumeration ; and the number of shares into which such capital stock shall be divided. § 60. Banks. 65 4. The names and places of residence of the stockholders and the Tiiimber of shares held by each. 5. The dates at which such corporation shall commence and terminate. 6. The number of directors of the bank, which shall not be Icjss than five, and the names of the stocldiolders who shall be directors for the first year of its incorporation. A duplicate of such certifi- cate when filed shall be recorded by the comity clerk in the books kept for the record of certificates of incorporation, and a duplicate by the superintendent of banks in a book to be kept by him for that purpose. Such certificate may provide for an increase of the capital stock and of the number of persons forming the corpo- ration, from time to time, as the stockholders may deem proper, and for the manner in which the stock of the corporation may be transferred, and for the number of directors necessary to constitute a quorum, and for the time when the annual election of directors «hall be held. Source.— Former § 40, as am'd by L. 1893, cli. 408, and L. 1908, ch. 125. See I 12 ante, capital stock to be paid in cash. See § 32 ante, approval of superintendent upon incorporation. See § 68 post, capital stock to be paid before bank commences business. See i 69 post, annual meeting and election of directors. See § 4, General Corporation Law, ch. 28 of 1909, two-thirds of incorporators must be residents of the United States, etc. See § 6, General Corporation Law, oh. 28 of 1909, no bank, etc., to be organ- ized with word " bank," etc., in name unless formed under Banking Law. See § 36, General Corporation Law, oh. 28 of 1909, that no officer, etc., of a corporation formed under the Banking Law to act as proxy at a, meeting of such corporation. See § 37, General Corporation Law, ch. 28 of 1909, extensions of corporate existence. See § 25, Stock Corporation Law, ch. 61 of 1909, election of directors of a- corporation. See § 183, Tax Law, ch. 62 of 1909, banks exempt from tax on capital stock. See § 190, Tax Law, dh, 62 of 1909, purchase of state bonds; credit to be given. TERMINATION. — The certificate of incorporation of a bank must state definitely a date at which such corporation shall terminate. Attorney- General Kep., 1902, page 173. CERTIFICATE. — The superintendent of banks cannot exercise his discre- tion in granting a certificate of authorization to persons desirous of organizing C6 The Banking Law. § 61. a bank provided they complied with all the requirements of the Banking Law. Attorney-General Rep., 1889, page 374. The organization certificate should contain the same names and not one, more or less, than the notice of intention which must be published And served as prescribed by § 61. Attorney-General Kep., April 22, 1909. Wlhere proof of publication of notice to organize a bank contains five names as proposed incorporators, and the organization certificate, duly received, was signed by them and four others, the proceedings do not satisfy §§ 60, 61, and tlhe certificate should not be filed. Attorney-General Rep., April 22, 1910. PREFERRED STOCHf.— The original certificate of a state bank cannot provide for the issuing of preferred stock. Attorney-General Rep., 1902, page 257. TRANSFER.— The right of transfer is unconditional, except as expressly limited by the articles of incorporation. Cole v. Ryan, 52 Barb. 168. ACTIONS. — An association may sue or be sued in its corporate name or in the name of its president as president of such corporation. Delafleld v. Kinney, 24 Wendell, 345. The prosecution of a suit by an individual banker in a name importing a corporate character under which he carried on business is a merely formal error which may be amended. Bank of Havana v. Magee, 20 N. Y. 355. INCORPORATION. — Proof of incorporation is sufficient if it is proved that the articles were recorded in the county clerk's office. Leonardsville Bank v. Willard, 25 N. Y. 574. The certificate of incorporation may provide transfer of stock shall not be made if a stockholder's debts to the bank are unpaid. Arnold v. Suffolk Bank, 27 Barb. 424. STOCK. — The transfer of the shares of stock of a bank is not to be made except as prescribed in its articles of incorporation. Leggett v. Bank of Sing Sing, 24 N. Y. 283. Stock may be impressed by the charter with the indebtedness of the holder to the association. Mohawk Nat. Bank v. Schenectady Bank, 78 Hun, 90; aff'd 151 N. Y. 665. BY-LAWS. — A purchaser of shares pf a bank takes the same subject to all conditions and stipulations contained in the articles of association and by-laws. Gibbs v. Long Island Bank, 83 Hun, 92; aff'd 151 N. Y. 657. Unless specially provided in the statute or by-laws, an original subscriber to stock can transfer the same and his liability ceases and that of the transferee commences. Rochester K. F. Land Co. v. Raymond, 158 N. Y. 576. § 61. Previous notice of intention to be given. Before filing such organization certificate, a notice of intention to organize such bank shall be published at least once a week for four weeks in a newspaper to be designated by the superintendent § 62. Banks. G7 of banks published in the city or town where such bank is pro- posed to be located. Such notice shall specify the names of the proposed corporators, the name of the proposed corporation and its location as set forth in such organization certificate. If any bank or banks are organized and doing business in such city or town a copy of such notice shall also be sent to each bank so organ- ized and doing business at least fifteen days before the filing of the organization certificate. Souice. — Former § 41. The purpose of the amendment of tMs section by oh. 125 of 1908 was to require the giving of notice of intention to organize before the organization of bank such as is now required in the case of trust companies. See § 7, General Corporation Law, ch. 28 of 1909, amended and supple- mental certificates on incorporation. The organization certificate should contain the same names and not one, more or less, than the notice of intention which must be published and served as prescribed by § 61. Attorney-General Rep., April 22, 1909. § 62. When superintendent shall file certificate. Upon the receipt of any such organization certificate at the office of the superintendent, if it shall not be in form and sub- stance, or duly and properly acknowledged, as required by this article, or shall not be accompanied by evidence satisfactory to the superintendent of the publication and service in good faith accord- ing to the intent and purpose of this chapter of the notice required by this article, the superintendent shall refuse to file such certifi- cate until it shall be amended to conform to the provisions of this article. If such certificate is in due form and duly executed according to the provisions of this article, and is accompanied by evidence satisfactory to the superintendent of the proper publica- tion and service in good faith of such notice, he shall forthwith indorse the same over his official signature, " filed for examina- tion," with the date of such indorsement. Source. — Former § 42. The purpose of the amendment of this section by ch. 125 of 1908 was to give to the superintendent of banks discretion as to whether a bank shall be organ- ized ani authorized to do business. 68 The Banking Law. §§ 63, 64. § 63. Examination by and certificate of superintendent. When such certificate shall have been filed, the superintendent shall ascertain from the best sources of information at his com- mand whether the character and general fitness of the persons named as stockholders in the certificate are such as to command the confidence of the community in which such bank is proposed to be located, and whether the public convenience and advantage will be promoted by its establishment. If so satisfied, he shall, within sixty days after such certificate has been filed by him for examination, issue under his hand and official seal the cer- tificate of authorization required by this chapter. The superin- tendent shall transmit such certificate of authorization to the county clerk of such county, who shall file the same and attach it to the organization certificate previously filed by him and record both certificates in the book of records of incorporation j the superintendent shall also file a duplicate of such certificate in his own office. If the superintendent shall noit be satisfied that the establishment of the bank as proposed in any organization certificate filed by him is expedient and desirable, he shall, within sixty days after the filing of such certificate by him, give notice to the county clerk of such county that he refuses to issue a cer- tificate of authorization for such bank, which notice shall be forth- with filed by the county clerk with the organization certi^cate. Source. — Former § 43. The purpose of the amendment of this section by eh. 125 of 1908 was to give to the superintendent of banks discretion as to whether a bank shall be organ- ized and authorized to do business. DEPOSITOR. — The relation of banker and depositor is that of debtor and creditor, the deposit becoming the money of the bank and the bank the debtor of the depositor; the bank is in no sense a trustee, and the rule as to reasonable care in ascertaining the identity of the person who draws the deposit has no application; the bank is bound absolutely to pay or discharge the liability like any other obligation. Fricano v. Columbia Nat. Bank, 118 App. Div. 567. § 64. Amended certificate of incorporation. Whenever any bank shall, by virtue of the provisions of its cer- tificate of incorporation or other lawful authority, make any change in any of the matters required to be stated in such certifi- cate, such change shall not be of any force or validity until a cer- §§ 65, 66. Banks. 69 tificate thereof, executed by its president and cashier under its corporate seal, shall have been filed and recorded in the same manner as the certificate of incorporation is by law required to be filed and recorded. Source. — Former § 44. § 65. Certificate of individual banker. Every individual banljer shall file in tlie office of the superin- tendent of banks a certificate stating the town, city or village in which he resides. 'No individual banker shall transact business undei' the provisions of this chapter in any other place than the one thus designated, except in case of a change of his residence, and a notice thereof forthwith filed in such office. Every person who neglects to comply with any requirement of this section shall, for each neglect, forfeit one thousand dollars to the people of the state. Every notice of change of residence so filed shall be pub- lished by the superintendent in the state paper, and in such other newspaper's and for such period of time as he may direct, not ex- ceeding three months, and the expense of such publication shall be paid to the superintendent by the individual banker to whom the notice relates. Source. — Former § 45. See § 2 ante, definition of " individual banker." ^ BANKERS. — " Individual " bankers are those subject to the supervision of the superintendent of banks, and " private " bankers are those who are not subject. Perkins v. Smith, 41 Hun, ; aff'd 116 N. Y. 141. The term " individual " banker applies only to one who has availed himself of the Banking Laws of this state, and has become empowered to do a banking business. People v. Doty, 80 N. Y. 225. An " individual " banker carrying on business under the general law is. not a corporation. Codd v. Rathbone, 19 N. Y. 37. LIABILITY. — The dissolution of a partnership with an individual banker does not relieve the retiring partner from liabilities for subsequent deposits made, without notice of the dissolution, by one who had been before a depositor. Howell v. Adams, 68 N. Y. 314. § 66. General powers. In addition to the powers conferred by the general and stock corporation laws every bank shall have power: 1. To exercise by its board of directors, or duly authorized offi- cers or agents, subject to law, all such incidental powers as shall 70 The Bankijn'g Law. § 66. be necessary to carry on the business of banking; by discoimting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt ; by receiving deposits ; by buying and sell- ing exchange, coin and bullion; by loaning money on personal security i and by obtaining, issuing and circulating notes according to the provisions of this chapter. 2. To take and become the owner of any stocks or bonds or in- terest-bearing obligations of the United States, or of the state of New York, or of any city, county, town or village of this state, the interest on which is not in arrears. 3. To purchase, take, hold and own the stock of any safe deposit company organized and existing under the laws of the state of ISTew York, and conducting or carrying on business on premises owned or leased by the bank purchasing, taking, holding or owning such stock, provided the written approval of the superin- tendent of banks to such purchasing, taking, holding or owning is first obtained. A copy of said approval, when issued, shall be filed in the office of the superintendent of banks, and may be given or withheld by the superintendent of banks in his discretion. Such written approval when issued, provided the purchasing, ' taking, holding or owning of the stock of the safe deposit company has been duly authorized by the directors of the bank, shall con- stitute sufficient authority for the bank thereafter to hold and own the shares of stock of the safe deposit company in the number and amount specified in the said written approval. 4. To purchase, hold and convey real property for the follow- ing purposes: a. Such as shall be necessary for its immediate accommodation in the convenient transaction of its business. b. Such as shall be mortgaged to it in good faith, by way of security for loans made by, or moneys due to, such corporation. c. Such as shall be conveyed to it in satisfaction of debts pre viously contracted in the course of its dealings. d. Such as it shall purchase at sales under jtidgments, decrees or mortgages held by it. § 66. Baxks. 71 No such corporation shall purchase, hold or convey real property in any other case or for any other purpose, and all conveyances of real property shall be made to it directly and by name. All such corporations and all individual bankers shall be banks of discount and deposit as well as of circulation, and the usual business of banking of such corporations or individual bankers shall be transacted at the place where such corporations or indi- vidual banliers shall be located, agreeably to the location specified in the certificates required by law to be made by them respectively, and filed in the oifice of the superintendent of banks, and not else- where, except as otherwise provided in this chapter in relation to the redemption of circulating notes by agents. Source. — Former § 46. Amended by L. 1912, oh. Iftl. See § 27 ante. Restriction on loans made by banks and trust companies See § 11, General Corporation Law, ch. 28 of 1909. General powers of corporations. See § 10, General Corporation Law, cb. 28 of 1909. Corporation not to possess any powers not given by law, or necessary to the exercise of the powers so given. See § 14, General Corporation I^aw, ch. 28 of 1909. Acquisition of real property without the state. iS«e § 18, Stock Corporation Law, ch. 61 of 1909. Alteration of business of a corporation. See § 290, Penal Law. Misconduct of directors of a banking corporation. iSee § 297, Penal Law. Misconduct of directors of moneyed corporations. See § 398, Penal Law. Misconduct by banks and bankers. See § 300, Penal Law. Misconduct by officers of banking corporation. The purchase of a promissory note for a sum less than its face is a dis- count. Atlantic State Bank v. Savery, 82 N. Y. 291. SERVICE. — A notice required by law to be given to a moneyed corporation is well served by being communicated to its chief financial officer. Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550. Cash required by an oflScer of a bank as a private person does not bind the bank. Merohanto' Nat. Bank v. Clark, 64 Hun, 175; 19 N. Y. Supp. 136. LOAN.; — The cashier of a, bank has implied authority to borrow money to secure the loans by pledge of its property or funds; and, as against third persons the assumption of suoh authority by the cashier will conclude the bank. Coates v. Donnell, 94 N. Y. 168. MORTGAGE. — A mortgage executed to an officer of a bank to secure an in- debtedness to the bank in pursuance of a previous arrangement between the bank and the mortgagor is a valid security. Lawrenceville Cement Co. v. Parker, 39 N. Y. St. Rep. 864; affd 133 N. Y. 622. T2 The Banking Law. § 66. NOTICE. — Notice to an agent of a bank intrusted with the management of its business is notice to the corporation in such transactions as are con- ducted by such agent, whether the knowledge of the agent was acquired in the course of the particular dealing or on some prior occasion. Cragie v. Hadley, 99 N. Y. 131. RESPONSIBILITY.— Where a duty is imposed upon a cashier he cannot be held responsible for neglect of duty in not consultine other officers of the bank, whom by the by-laws he is required to consult in making discounts where said officers hold no meetings, and the officers absent themselves from the performance of their duties. Second Nat. Bank v. Burt, 93 N. Y. 233. CARE. — A bank is chargeable with the exercise of a high degree of care in the keeping of bonds or securities received as collateral. Ouderkirk v. C. N. Bank, 119 N. Y. 263. SALE. — The financial officer of a bank is not disqualified from purchasing for his own benefit property pledged to it for » debt provided he sees that the sale is for a price sufficient to discharge the lien; the general manager of a bank may make arrangement to secure himself and others who have become sureties for moneys deposited. Smith v. Lansing, 22 N. Y. 520. A bank cannot buy and sell stocks; the officers cannot make the bank liable by signing a contract to buy stock, but they are liable for any money used in payment for such stocks. Austin v. Daniels, 4 Denio, 299. The officers of a bank have the power to carry on business only as speci- fied in their charter and cannot purchase stocks to sell at a profit. State of Ohio V. Leavitt, 7 N. Y. 328. DEPOSITS. — A bank has authority to receive from depositors current bank notes 01 bills of other banks at a discount. People v. Metropolitan Bank, 7 How. Pr, Rep. 144. DISCOUNT.^ The provisions of the National Banking Act limiting the rate of interest to be taken by banks apply as well to discount of business paper as of accommodation paper; a, national bank which had discounted busi- ness paper at an unlawful rate was held liable to the penalties imposed by the statutes, although the state law fixes no limit to the rate which natural persons may take for the discounts of paper. Johnson v. Nat. Bank, 74 N. Y. 329. A bank can only discount paper at the place of its location, and a note elsewhere discounted would be void, though a note so discounted to pay a debt due from a third party is valid. Potter v. Bank of Ithaca, 7 Hill, 530. STOCK. — A bank has no power to subscribe for the stock of a railroad corporation, and cannot enforce against any one an executory contract which it is not authorized by its charter to make. The Nassau Bank v. Jones, 95 N. Y. 115. The Banking Law as interpreted by various attorneys-general of the state prohibits a, state bank of deposit and discount from investing in the stock of private corporations. Ruling of Superintendent BORROWING MONEY. — Banks have capacity to borrow money as inci- dental to the banking business, and to the powers expressly granted. Curtis v. Leavitt, 15 N. Y. 9. § 67. Banks. 73 CERTIFICATE OF DEPOSIT.— A certificate of deposit does not require the signature of the president or vice-president in addition to that of the cashier in order to bind a bank. Barnes v. Ontario Bank, 19 N. Y. 152. MORTGAGE. — A bank may take a mortgage to secure anticipated liabilities as well as those existing at the time, but the legislature may impose such restriction in its charter. A national bank ia prohibited from taking a mort- gage on real estate except for prior debts. Crocker v. Whitney, 71 N. Y. 161. SPECIAL DEPOSITS. — The power to receive special deposits is incidental to the business of banking; the term " special deposits " includes money securities and other valuables delivered to banks to be SDeeifieally kept and redelivered; it is not confined to securities held by the banks as collateral to loans; when such deposits are received gratuitously or otherwise, banks are liable for their loss by gross negligence. Pattison v. Syracuse Nat. Bank; 80 N. Y. 82. PAYMENTS. — A bank may only pay out the funds of a depositor in the usual course of business and in conformity to his directions; it is not entitled to charge to him any payments, except those made at the time when, to the person to whom, and for the amount authorized by him, and where a check properly drawn by the customer has been subsequently altered in a material point without his consent, even if done so skillfully as to defy detection on examination, the bank is responsible for an omission to discover the original terms and condition thereof. Crawford v. West Side Bank, 100 N. Y. 50. CHECK. — An ordinary check is neither a legal or equitable assignment of any part of the sum standing to the credit of the depositor and confers no rights upon the payee as against the bank; the check is an order which may be countermanded by the drawee at any time before cashed; deposits re- ceived by a bank belong to its general funds, and the relation of debtor and creditor arises between the bank and the depositor. O'Connor v. Mechanics' Bank, 124 N. Y. 324. AUTHORITY. — Payment of a debt due to a bank upon the demand of an coflScer thereof, whom he finds employed in its business without knowledge that the officer's authority is limited, is payment to the bank. East River Nat. Bank v. Gove, 57 N. Y. 597. The president of a bank cannot make an agreement that a note need not be paid when due. First Nat. Bank v. Tisdale, 84 N. Y. 655. POST-DATED CHECK.— The acceptance of a post-dated check will not bind the bank. Post v. Bank of Albion, 57 N. Y. 126. § 67. Lawful money reserve. Every bank or individual banker shall at all times have on hand in lawful money of the United States, gold certificates, silver cer- tificates, or notes or bills issued by any lawfully organized na- tional banking association an amount equal to at least twenty-five per centum of the aggregate amount of its deposits, exclusive of T4 The Banking Law. § 67. time deposits not payable within thirty days, represented by cer- tificates showing the amount jjf the deposit, the date of issue and the date when due, and, also, exclusive of deposits which are secured by outstanding unmatured bonds or other obligation issued by the state of New York, or secured by outstand- ing unmatured bonds, corporate ^ stock, revenue bonds, assess- ment bonds or other .dbligations issued by the city of New York, and exclusive also of an amount equal to the market value, but not exceeding the par value, of any such bonds or other obligations of the state of New York or of the city of New York owned and held by such bank or indi- vidual banker, or held by a public department, a Dublic officer or officers of this state, or of any other state, or of the United States, in trust for such bank or individual banker, if its principal place of business is located in any borough in any city of the state which borough according to the last preceding state or United States census had a population of one million eight hundred thou- sand or over; and an amount equal to at least twenty per osntum of the aggregate amount of its deposits, exclusive of time deposits not payable within thirty days, represented by certificates show- ing the amount of the deposit, the date of issue and the date when due, and, also exclusive of deposits which are secured by outstand- ing unmatured bonds or other obligations issued by the state of New York, or secured by outstanding unmatured bonds, corpo- rate stock, revenue bonds, assessment bonds or other obligations issued by the city of New York, and exclusive also of an amount equal to the market value, but not exceeding the par value, of any such bonds or other obligation of the state of New York or of the city of New York owned and held by such bank or indi- vidual banker, or held by a public department, a public officer or officers of this state, or of any other state, or of the United States, in trust for such bank or individual banker, if its principal place of business is located in any borough, which borough accord- ing to the last preceding state or United States census hajd a popu- lation of one million or over, and less than one million eight hun- dred thousand ; and an amount equal to at least fifteen per centum of the aggregate amount of its deposits, exclusive of time deposits § 67. Banks. T.5 not payable within thirty days, represented by certificates showing the amount of the deposit, the date of issue and the date when due, and, also, exclusive of deposits which are secured by out- standing unmatured bonds or other obligations issued by the state of New York, or secured by outstanding unmatured bonds, cor- porate stock, revenue bonds, assessment bonds or other obligations issued by the city of New Y"ork, and exclusive also of an amount equal to the market value, but not exceeding the par value, of any such bonds or other obligations of the state of New York or of the city of New York owned and held by such bank or indi- vidual banker, or held by a public department, a public officer or officers of this state, or of any other state, or of the United States, in trust for such bank or individual banker, if its prin- cipal place of business is located elsewhere in the state. The amount thus to be kept on hand shall be called its lawful money reserve. Two-fifths of such lawful money reserve of any bank or individual banker located in .any borough in any edty in the state which borough according to the last preceding state or United States census had a population of eighteen hundred thousand or over, one-half of such lawful money reserve of any bank or individual banker located in any borough in any city of the state which borough according to the last preceding state or United States census had a population of less than eighteen hundred thou- sand and which bank or individual banker does not maintain a branch office in any borough having a population according to the last preceding state or United States census of eighteen hundred thousand or over, and three-fifths of the lawful money reserve of any bank or individual banker located elsewhere in the state may consist of moneys on deposit subject to call with any bank or trust company in this state having a capital of at least two hundred thousand dollars, or a capital of at least one hundred and fifty thousand dollars and a surplus of at least one hundred and fifty thousand dollars, and approved by the superintendent of banks, as a depositary of lawful money reserve. If the lawful money reserve of any bank or individual banker shall be less than the amount required by this section, such bank or banker shall not increase its liabilities by making any new loans or discount other- 76 The Banking Law. §§ 68, 69. wise than by discounting bills of exchange payable on sight, or making any dividends from profits until the full amount of its lawful money reserve has been restored. The superintendent of banks may notify any bank or individual banker whose lawful money reserve shall be below the amount herein required to make good such reserve; and if it shall fail for thirty days thereafter to make good such reserve, such bank or individual banker shall be deemed insolvent and may be proceeded against as an insolvent monied corporation. Source.— Former § 47, as am'd by L. 1908, ch. 151, and L. 1909, oh. 223. Amended by L. 1910, chap. 399, and L. 1911, chap. 200. DEPOSITARY.— The superintendent of banks is empowered to designate and approve a national bank within this state as a depositary of the lawful money reserve of state banks and trust companies; the word "bank," as used in § 44, has referenc° to any bank whether state or national. Attorney-General Rep., 1906, page 503. § 68. Payment of capital stock. All of the capital stock of every banlc shall be paid in beforo it shall commence business. Source.— Former § 49, as am'd by L. 1895, ch. 929, and L. 1908, ch. 151. § 69. Annual meeting and election of directors. Every bank shall hold an annual meeting for the election of directors on the second Tuesday in January or within ten days thereafter. Notice of such meeting shall be given as required by the stock corporation law. No person shall be eligible to election as director of a bank having a capital of fifty thousand dollars or over unless he is a stockholder of the corporation owning in his own right an amount equal to at least one thousand dollars in value, nor of a bank having a capital of less than fifty thousand dollars, unless he is a stockholder in his own right in an amount equal to at least five hundred dollars; and every person elected to be a director who, after such election shall hypothecate, pledge or cease to be the owner in his own right of the amount of stock aforesaid, shall cease to be a director of the corporation, and his office shall be vacant. The directors shall hold office for one year and until their successors are elected and have qualified. i 69. , Banks. 77 Each director must be a citizen of the United States, and at least three-fourths of the directors must be residents of this state at the time of their election and during their continuance in office. All vacancies in the office of director shall be filled by election by the stockholders; but vacancies not exceeding one-third of the whole number of the board may be filled by the directors "then in office, and the directors so elected may hold their offices until filled by the stockholders at a special or annual meeting. A bank, at any annual meeting for the election of directors, pro- vided notice thereof be given in the notice of the annual meet- ing, may, by a majority of all the votes of the stockholders of wch bank, fix or change by resolution the number of directors, to not less than five nor more than a certain number to be named in said resolution, which number, when so fixed, shall be the law- ful number of directors of such bank until again changed. Certi- fied copies of all resolutions fixing or changing the number of directors under this section shall be immediately filed in the bank- ing department. One of the directors, to be chosen by the board, shall be the president of the board ; and if the number of directors necessary to constitute a quorum is not prescribed in the certificate of incorporation or in the by-laws, and no provision is made therein for determining the same, the directors may fix such num- ber, which shall not be less than five, with the same effect as if such number was prescribed in the certificate of incorj)oration. "Whenever the articles of association of any bank organized pri ,r to the first day of January, eighteen hundred and ninety-two, or the certificate of incorporation of any bank organized after that ■date, shall prescribe a difi^erent qualification for directors than such as are prescribed in this section, the qualification of such ■directors may be changed so as to comply with the provisi-ons of this section in the manner prescribed for a change of the number of directors under section twenty-six of the stock corporation law. Source.— Former § 50, as ojn'd by L. 1900, clis. 89 and 240; L. 1902, eh. 145, and. L. 1908, eh, 119. See §§ 26-31, General Corporation Law, ch. 28 of 1909. Mode of electing directors, and their qualifications. See §§ 25-30, Stock Oorporation Law, ch. 61 of 1909. Directors, change of number of; liability of. 'i'S The Banking Law. § 70. See § 290, P«nal Law. Misconduct of directors of banking corporations. See § 297, Penal Law. Misconduct by directors of moneyed corporations. See § 668, Penal Law. Miscondiict at corporate elections. The board of directors or trustees of a corporation subject to the Banking Law must, under opinions of various attorneys-general, be fixed and definite. The number can be changed only upon compliance with the provisions of tie statute. Ruling of Superintendent. DIRECTOR. — The intention of the statute is that every director of a bank shall be the owner of unincumbered stock, and when such stock is hypothe- cated the ofiice of the director shall be vacant. Attorney-General Rep., 1896, page 203. Where notice of meeting of stockiholders for tihe election of directors is not given as required by § 25 of the Stock Corporation Law, but a meeting is held on actual notice to all, and directors are elected, the defect may be cured by a waiver of the notice as per § 42 of the General Corporation Law. Attorney-General Rep., Feb. 2, 1910. FRAUD. — Directors are chargeable with notice of fraud when they permit the president to exercise unusual power and virtually abduct their power, and the president commits fraudulent acts in respect to third persons. State Nat. Bank v. Nat. Park Bank, 32 Hun, 105. QUORUM. — A quorum must be a majority of the board of directors. Craig Medicine Co. v. Merchants' Bank, 59 Hun, 56. LIABILITY. — A director becomes personally liable to one making a deposit if he represents to the public that the bank is solvent at the time of the deposit, and the director knows it is insolvent. Cassidy v. Uhlman, 27 App. Div. 80; 54 N. Y. Supp. 255; rev'd 163 N. Y. 380. LOAN. — Directors of a bank may authorize a loan to the president. Reynolds v. Bank of Mt. Vernon, 6 App. Div. 62; 30 N. Y. Supp. 623; aff'd 158 N. Y. 740. POWERS. — All powers conferred upon a corporation must be exercised by its directors, who are by law constituted as the agency for that purpose. Beveridge v. N. Y. E. L. Co., 112 N. Y. 1. § TO. Oath of directors. Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently eai honestly administer the affairs of such corporation, and will uot knowingly violate, or willingly permit to be violated, any oi the provisions of law -applicable to such corporation, aud that he io the owner in good faith and in his own right, of the number of shares of stock required by this chapter, subscribed by him or standing in his name on the books of the corporation, and that the same is not hypothecated, or in any way pledged as security § Yl. Banks. 79 for any loan or debt and, in case of re-election or reappointment, that such stock was not hypothecated, or in any way pledged as security for any loan or debt during his previous term. Such oath shall be subscribed by the director making it, and certified by the olEcer before whom it is taken, and shall be immediately transmitted to the superintendent of banks, and filed and pre- served in his office. Source.— Former § 51, as am'd by L. 1908, ch. 119. The purpose of the amendment of this section by oh. 119 of 1908 was to require a director of a bank to hold his qualificatioil stock unhypothecated. § 71. Individual liability of stockholders. Except as prescribed in the stock corporation law, the stock- holders of every such corporation shall be individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such corporation, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares. In case any such corpora- tion shall have been or shall be dissolved by final order or judg- ment of a court having jurisdiction, and a permanent receiver '■■r receivers of the said corporation shall have been or shall be ."p- pointed all actions or proceedings to enforce the liability o± stock- holders under this section shall be taken and prosecuted oi.ly in the name and in behalf of such receiver or receivers, unless such receiver or receivers shall refuse to take such action or proceeding upon proper request in that behalf made by any creditor, and in that event such action or proceeding may be taken by any creditor of the corporation. Source. — Former § 52, as am'd by L. 1897, ch. 441. This section was formerly § 52, except the last sentence, which contained the definition of word " stockholder " which was transferred to § 2, ante. See Art. VIII, § 7, N. Y. Const. Liability stockholders of banks. See § 56, Stock Corporation Law, ch. 61 of 1909. Liability of stockholders for capital stock not fully paid. See § 59, Stock Corporation Law, ch. 61 of 1909. Limitation of stockholder's liability. See § 100 et seq., General Corporation Law, ch. 28 of 1909. Actions to en- force the individual liability of officers. LIABILITY.— Article VIII, § 7. Subjecting stockholders of banks to per- sonal liability applies as well to banking corporations existing in 1846, when 80 The Banking Law. § 71. the constitutional provision was enacted as to those created afterward. Matter of Oliver Lee's Co. Bank, 21 N. Y. 9. The provision of the Constitution (Art. VIII, § 7) imposing individual responsibility upon stockholders embraces banks specially chartered subject to the safety fund law. Matter of Reciprocity Bank, 22 N. Y. 9. The liability imposed by this section cannot be extended by implication. Lowry v. Inman, 46 N. Y. 119. This section must be strictly construed. Chase v. Lord, 77 N. Y. 1. STOCK, LIABILITY.— The enforcement of a statutory liability against a resident stockholder for debts of an insolvent foreign corporation does not rest upon the theory that the laws of the foreign state are in force in this state;, but upon the contractual obligation he assumes to meet the liability afBxeJ by the statute to the ownership of stock. Howarth v. Angle, 162 N. Y. 179; afif'g 39 App. Div. 151. TRANSFER.— Where a stockholder whose stock has not been fully paid in, in good faith maJces an absolute and valid transfer of his stock to another, he is not liable for calls made after the transfer. Billings v. Robinson, 94 N. Y. 415. The transfer to the bank itself does not exonerate a stockholder; the pur- chaser must be one who succeeds to a personal liability distinct from any addition to that of the bank. Matter of Reciprocity Bank, 22 N. Y. 9. A stockholder may be relieved from liability if the ownership of the stock changes, even though the stock is not transferred on the books of the bank. Cutting V. Damerel, 88 N. Y. 410. The transferee is liable, although no formal certificate has been issued to him, where an actual transfer of ownership has taken place. Ishman v. Buckingham, 49 N. Y. 216. LIABILITY. — The Banking Law of 1892 had no retroactive effect, and could not impose upon stockholders a personal liability which did not exist when the debt was contracted; while the legislature could not alter the liability of stockholders of banks of issue fixed by the Constitution, it might alter the liability of stockholders in all other banks. Barnes v. Arnold, 23 Misc. 197. Section 71, in so far as it seeks to increase the liability of stockholders who, at the time said act took effect, were stockholders of a state bank then and theretofore existing, is constitutional under the provisions of the United States Constitution prohibiting legislation impairing the obligation of con- tracts; the extension of the lia/bility of stockholders by said § 71 is not prohibited by Art. VIII, §§ 1 to 8, inclusive, of the Constitution of New York; deposits made in the Merchants' Bank of Lockport in the ordinary course of business, or upon certificates of deposit made by their terms pay- able upon the return of such certificates properly indorsed without obligations for whdoh the stockholders of such bank were liable under said § 71, as limited by § 56 of the Stock Corporation Law. Barnes v. Arnold, 169 N. Y. 611; aff'g 45 App. Div. 314. § 71. Banks. St The liability of a stockholder of a banking corporation is subject and limited by the conditions fixed as to the liability of stockholders described by § 56 of the Stock Corporation Law. Hirschfield v. Boop, 145 N. Y. 84. A stockholder does not relieve himself from liability by the transfer of his stock if the bank was insolvent at the time of such transfer. Persons v. Gardner, 113 App. Div. 597; 98 N. Y. Supp. 807. Section 71 imposes upon all stockholders of state banks, whether issuing notes or not, and whether incorporated before or after the section took effect, a liability for the debts of the bank proportionate to the par value of their shares in addition to the amount invested therein except where, as provided by the Stock Corporation Law, the stock is held as collateral or in a repre- sentative capacity, or the debt of the bank is not payable within two years after it was contracted. Hagmayer v. Alten, 36 Misc. 59. STOCKHOLDER'. — Where stock in a corporation is transferred by one acting as agent for an owner, and the assignee receives u, certificate and appears as a stockholder on the books of the corporation, he is, as between himself and the creditors of the corporation, a stockholder. Wakefield v. Fargo, 90 N. Y. 213. Both the record holder of the shares of a state bank and the actual owner to whom the shares have been transferred are liable to creditors for the full value of the shares; even though it be conceded that the record holder occupy the relation of surety to the actual owner as principal, the surety was not discharged owing to the fact that the receiver of the bank having instituted action against both the surety and the principal who also held forty-nine other shares, for the valuable consideration paid by the latter gave him a receipt providing that the same should be applied by the receiver in full settlement of judgment which might be obtained against them and reserving the right to discontinue the action as to him and the right to prosecute the other parties to the action, if in fact another judgment was entered against the principal. Wheeler v. Werner, 140 App. Div., 695. In an action against stockholders of a, banking association to charge them with liability for the debt of their bank, a judgment against the bank for the alleged debt is not evidence of the genuineness or validity thereof; nor is this rule changed by the provision of section 55 of the Stock Corporation Law that the amount recoverable against stockholders in such case shall be the amount of the execution issued against the corporation upon the judg- ment against it; such a judgment binds the assets and property of the cor- poration, but does not bind the stockholders; the stockholders are not con- cluded by the denial of a motion made by the bank to open the judgment against it; stockholders of a banking corporation are only liable for such debts, contracts and engagements as have been made in the ordinary course of its business and are not ultra vires. Assets Realization Co. v. Howard, 70 Misc., 651. The liability of stockholders of a safe deposit company for its debts under •section 303 of the Banking Law is joint and several and is different from that of stockholders of banks and trust companies under sections 71 and 196 of said Banking Law, such stockholders being equally and ratably liable. The liability of stockholders of a safe deposit company created by said section 82 The BANKiis-Cr Law. § 71. 303 is' secondary to that of the corporation itself. Hosier Safe Co. v. Guardian Trust Co., 153 App. Div., 117. INSOLVENCY — A director upon discovery that a bank is hopelessly insol- vent is bound to initiate measures to close the bank, and if he fails to do 80, he is personally liable for damages to a depositor who thereafter makes deposits without knowledge of the insolvency of the bank. Casaidy v. Uhl- mann, 170 N. Y. 505. BOOKS. — The right of stockholders to inspect the books of a corporation existed at common law and the statutes relative to such right have only amplified the right; the common law right to inspect is discretionary with the court, while the statutory right is mandatory; the statute of New York authorizing stockholders to inspect the books applies to a national bank located in the state. People ex rel. Lorge v. Consolidated Nat. Bank, 105 App. Div. 409; 94 N. Y. Supp. 173. Creditors of a bank who do not join in a, stockholder's action are entitled at any time before the final distribution of the fund to claim the benefits of the decree upon payment of their share of the expenses of the suit. Matter of Ziegler, 98 App. Div. 117; 90 N. Y. Supp. 681. ACTION. — The plaintiff in a representative action brought, before the amendment of 1897 to § 71, may continue, compromise or discontinue action at pleasure, until a creditor similarly situated has procured an order to be made a party to the action. Hirs'hfield v. Fitzgerald, 157 N. Y. 166. If the time of the payment of a, debt is extended by the taking of a prom- issory note which is sued within one year from the date of its maturity, but more than one year after the debt became due, the claim of the creditor against a stockholder is lost and they cannot be charged with the payment of the debt. Hardman v. Sage, 124 N. Y. 25. LIABILITY. — The Banking Law of 1892 was not retroactive, and could not impose upon stockholders a personal liability, which did not exist when the debt was contracted; while the legislature could not alter the liability of stockholders of banks of issue fixed by the Constitution, it might alter lia- bility of stockholders in all other banks. Barnes v. Arnold, 23 Misc. 197. The liability is limited to the amount of stock with interest from the time of the commencement of the action. Handy v. Draper, 89 N. Y. 344. The amendment of this section by ch. 441 of 1897 was not retroactive; an executor of a deceased stockholder is not relieved from liability in his respective capacity, by a judicial settlement of his accounts as executor where it appears that the shares owned by his decedent continued to remain upon the books of the bank; the liability is limited to the par value of the stock and cannot be extended by allowing interest thereon from the time of the commencement of the action. Mahoney v. Bernhard, 45 App. Div. 499; 63 N. Y. Supp. 642; aff'd 169 N. Y. 589. TRANSFER. — A transfer of stock valid as between parties, but not con- summated in the form required by the statute, by entry upon the book of registry of stockholders, does not divest the transferrer as a stockholder to the creditors of the corporation. Shellington v. Rowland, 53 N. Y. 371. §§ 72,73. Banks. 83 § 72. Limitation of liability of stookholders. No person who has in good faith, and without any intent to evade his liability as a stockholder, transferred his stock on the books of the corporation when solvent to any resident of this state of full age previous to any default in the payment of any debt or liability of the corporation, shall be subject to any personal lia- bility on account of the nonpayment of such debt or liability of the corporation, but the transferee of any stock so transferred previous to such default shall be liable for any such debt or lia- bility of the corporation to the extent of such stock in the same manner as if he had been the owner at the time the corporation contracted such debt or liability. Source. — Former § 53. Both the record holder of the shares of a state bank and the actual owner to whom the shares have been transferred are liable to creditors for the full value of the shares; even though it be conceded that the record holder occupy the relation of surety to the actual owner as principal, the surety was not discharged owing to the fact that the receiver of the bank having instituted action against both the surety and the principal who also held forty-nme other shares, for the valuable consideration paid by the latter gave him a receipt providing that the same should be applied by the receiver in full settlement of judgment which might be obtained against them and reserving the right to discontinue the action as to him and the right to prosecute the other parties to the action, if in ftct another judgment was entered against the principal. Wheeler v. Werner, 140 App. Div., 695. § 73. Powers of president and vice-president. All contracts made by any such corporation, and all notes and bills by it issued and put in circulation as money, shall be signed by the president or vice-president and cashier thereof. Source. — Former § 54. See § 63, ante. General powers of banks. See § 69, ante. Annual election of directors. CASHIER. — The cashier of a bank is bound to exercise reasonable skill, and ordinary care and diligence, and if he fails in such skill, or omits such care and diligence, he is liable for damage. Commercial Bank v. Ten Eyck, 48 N. Y. 305. CERTIFICATE OF DEPOSIT. — A certificate of deposit does not require the signature of the president or vice-president in addition to that of the cashier in order to bind a bank organized under the general law. Barnes v. Ontario Bank, 19 N. Y. 152. 84 The Banking Law. § 74. SEAL. — An instrument in writing may constitute a valid contract, although not under the corporate seal. Leinkauf v. Caiman, 110 N. Y. 50. AUTHORITY. — A cashier of a bank has, as incident to his office, implied authority to borrow money for it and, in the absence of any statutory restraint, to secure the loan by pledge of its property or funds; and, as against third persons, the assumption of such authority by the cashier will conclude the bank. Coates v. Donnell, 94 N. Y. 168. ATTORNEY. — The cashier of a bank may employ an attorney to collect any claim without any resolution of the board of directors, although the board had appointed an attorney to attend to Its legal affairs. Root t. Olcott, 42 Hun, 536. PRESIDENT'S AUTHORITY.— The president of a bank may make an agreement that the maker or indorser of paper will not be required to pay, but he cannot bind the bank when his act is in his individual interest, and is adverse to the bank. Bank of Le Roy v. Purdy, 100 App. Div. 64; 91 N. Y. Supp. 310. PLEDGE. — Although a cashier ».nd president may dispose of the negoti- able securities of the bank, yet they have not the power to pledge its assets for the payment of an antecedent debt. State of Tennessee v. Davis, 50 How. Pr. Rep. 447. CASHIER. — The authority of a cashier to execute a compromise agree- ment, or to enter into such an agreement is to be presumed. Chemical Nat. Bank v. Kohner, 85 N. Y". 189. LIABILITY. — Where the duty is imposed upon the cashier of a bank carrying on its business, he cannot be held responsible for a neglect of duty in not consulting other officers of the bank or committees, whom by the by-laws he is required to consult in making discounts, where said committees hold no meetings and the officers systematically absent themselves from the performance of their duties. Second Nat. Bank v. Burt, 93 N. Y. 233. INDIVIDUAL BANKER. — An individual banker carrying on a business under the General Banking Law, is not a corporation. Codd v. Rathbone, 19 N. Y. 37. ACTION. — The prosecution of a suit by an individual banker, in a name importing a corporate character, under which he carried on business, is a merely formal error amendable in the courts of original jurisdiction and to be disregarded in this court. Bank of Havana v. Magee et al. NOTICE. — When notice or information is received by the president of a corporation in his official capacity, the corporation is presumed to have received it. Merchants' Nat. Bank v. Clark, 64 Hun, 175. § 74. Rate of interest. Every bank and private and individual banker doing business in tbis state may take, receive, reserve and charge on every loan and discount made, or upon any note, bill of exchange or other I 74. Banks. 83 ©vidence of debt, interest at the rate of six per centum per annum ; and such interest may be talcen in advance, reckoning the days for which the note, bill or evidence of debt has to run. The knowingly taking, receiving, reserving or charging a greater rate of interest shall be held and adjudged a forfeiture of the en- tire interest which the note, bill of exchange or other evi- dence of debt carries vsrith it, or which has been agreed to be paid thereon. If a greater rate of interest has been paid, the person paying the same or his legal representatives may recover twice the amount of the interest thus paid from the bank or private or individual banker taking or receiving the same, if such action is brought within two years from the time the excess of interest is taken. The purchase, dis- count or sale of a bona fide bill of exchange, note or other evi- dence of debt payable at another place than the place of such pur- chase, discount or sale at not more than the current rate of ex- change for sight draft, or a reasonable charge for the collection of the same, in addition to the interest, shall not be considered as taking or receiving a greater rate of interest than six per centum per annum. The true intent and meaning of thi^ section is to place and continue banks and private and individual bankers on an equality in the particulars herein referred to with the national banks organized under the act of congress entitled "An act to provide a national currency secured by pledges of United States bonds, and to provide for the circulation and redemption thereof," approved June the third, eighteen hundred and sixty-four. Source.^ Former § 65, as am'd by L. 1900, eh. 310. See § 75, post. Permitting compensation for making advances on bills of lading, etc., of $500, and upwards. See § 1376, Penal Law. Taking security for usurious loans. EXCESSIVE INTEREST.— Sections 74 and 314 of the Banking Law are to be construed as superseding, within their limits, the more general provisions of the General Business Law and the provisions of section 74, as to the taking of excessive interest, relate solely to the enforcement of civil rights and remedies. People v. Young, 153 App. Div., 5i67. SEPARATE CAUSE OF ACTION.— Every violatioh of section 74 gives a separate cause of action and several such causes of action may properly be united in thfe same complaint. Mackey v. Royal Bank of New York, 78 Misc., 145. 86 The Banking Law. § 75. TWICE THE INTEREST.— The plaintiff, in an action against a private banker to recover a penalty for a violation of section 74, is entitled to recover twice the amount of all the usurious interest he paid within the two years next preceding the commencement of the action; a complaint s'hould not be dismissed, which, as one cause of action, alleges twenty-one separate and distinct violations. Mackcy v. Royal Bank, 75 Misc., 630. UNTINCORPORATED ASSOCIATION. — An unincorporated association whose sole business is that of loaning money upon assignments of wages, is not a banker, and the individual members of such an association are not protected from prosecution under § 314 of the Banking Law, by section 74 of said law, and the provisions of the General Business Law, sections 376, 382, are not available in beihalf of a person prosecuted imder said section 314. People v. Young, 207 N. Y., 522. § 75. Interest permitted on advances on collateral security. Upon advances of money repayable on demand to an amount not less than five thousand dollars made upon warehouse receipts, bills of lading, certificates of stock, certificates of deposit, bills of exchange, bonds or other negotiable instruments, pledged as col- lateral security for such repayment, any bank or individual banker may receive or contract to receive and collect as compensation for making such advances any sum to be agreed upon in writing by the parties to' such transaction. Source. — Former § 56. S'^e § 75, post. Rate of interest on loans on warehouse receipts See § 153, post. Rate of interest in savings banks. See R. S., Pt. 2, ch. 4, title 3, §§ 1-10 as to interest and usury. See ch. 430 of 1837, §§ 3-5. Act to prevent usury. See ch. 172 of 1850, §§ 1, 2. Corporation not to interpose defense of usury. USURY. — The retention of a fixed amount under the name of exchange, , may constitute usury. Perkins v. Smith, 41 Hun, 47; aff'd 116 N. Y. 449. Statutes, state or national, upon the subject of banking, and usury, col- lated. Parkins v. Smith, 116 N. Y. 441. In order to permit recovery for charging more than the legal rate of inter- est it is not necessary that the payment of interest be made in money. Nash V. White's Bank of Buffalo, 68 N. Y. 396. The effect of the Banking Act, ch. 567 of 1880, was to repeal the penalties imposed by the amendment of ch. 163 of 1870 upon banks taking illegal interest. Nash v. White's Bank of Buflalo, 140 N. Y. 243. RECOVJilRY. — A bank receiving more than the legal interest only forfeits the interest, and may recover the principal loan. Farmers' Bank v. Hall, 15 Abb. Pr. Rep., N. S., 276. The intention of the legislature was to place state and national banks on an equality, and the section of the act of Congress having been interpreted §§ 76, Y7. Banks. 87 differently by the United States Supreme Court than by the Court of Appeals, the decision in Farmers' Bank v. Hale, 59 N. Y. 53, is overruled. Hlnter- mister v. First Nat. Bank, 64 N. Y. 212. § 76. Deposit of banks and individual bankers with superin- tendent. Every bank or individual banker heretofore or hereafter au^ thorized to do business, not having given notice of intention to close the business of banking, shall, before commencing or con- tinuing such business, have and keep on deposit in the banking department in addition to the deposit required to secure circulat- ing notes, stocks of this state or of the United States bearing in- terest, to the amount of one thousand dollars, which shall be held by the superintendent of banks as a pledge of good faith, and guaranty of compliance with the banking laws of the state on the part of such bank or individual banker. The proceeds of sucb stock or the interest thereon, or so much thereof as may be neces- sary, may be applied by the superintendent to the payment of any penalty incurred by, or the assessment imposed upon, the bank or individual banker, for whom such deposit is held. The super- intendent may, in his discretion, maintain an action in his name of office against any bank or individual banker for the recovery of any penalty incurred by, or lawful assessment imposed upon such bank or individual banker. Whenever any bank or individual banker is required by law to make a deposit of securities with the superintendent of banks in trust for such bank or individual banker, such deposit shall con- sist of interest bearing stock of the state of New York, or of the United States. Source. — Former § 57. See § 14, ante. Deposit of bonds or mortgages with superintendent. DEPOSIT. — The deposit of an individual banker should be returned when the purposes for which it was made have ceased to exist, and penalty has been incurred or assessment imposed. Attorney-General Rep., 1889, page 316. § 77. Prohibition against sale of business by individual banker. ISTo individual banker having circulating notes obtained under the laws of this state, shall sell or transfer the business of bank- 88 The Ban^king Law. § 78. ing, upon the securities deposited by him, to any person or per- sons; and until such business shall be closed, by the return of the circulating notes issued, and the delivery of the securities de- posited, the same shall be conducted only in the name of the individual banker by whom the securities were deposited ; and he shall continue individually liable for the payment of all circulat- ing notes delivered to him. But any such individual banker may bequeath his business of banking upon the securities deposited by him to any person or persons, and such business may be con- tinued after his death by his legatee or heir at law. Souice. — Former § 58. § 78. Change from state to national bank. Any bank may become a. corporation for the purpose of carry- ing on the business of banking within this state pursuant to tht provisions of the act of congress, " to provide a national currency secured by a pledge of United States stocks, and to provide for the circulation and redemption thereof," approved June 3, 1864, and of title fifty-two of the Eevised Statutes of the United States, whenever stockholders owning two-thirds of the stock of such bank shall have voted to become such corporation, or have executed a written consent authorizing its directors to make the certificate required therefor by the laws of the United States, or whenever a majority of the directors of such bank having been authorized in their discretion to make the change, shall, by a vote of such majority, decide to become such corporation; and the cashier of such bank shall publish notice thereof for thirty days in such newspaper as the directors may select, and send a like printed notice by mail or otherwise to all non-voting or dissenting stock- holders, and notify the superintendent of banks of this state that such bank has decided to become a corporation under the laws of tke United States. Source. — Former § 59. NATIONAL BANK. — A trust company organized under the general law of this state may be converted into a national bank under § 5154 of the National Banking Law, providing such trust company is not acting as execu- tor and does not hold trust fund. Attorney-General Rep., 1906, page 521. § 79. Banks. 89 C HAN GE. — The change of a state bank to a national is but a continuance of the same body under a different jurisdiction. City Nat. Bank v. Phelps, 97 N. Y. 44. § 79. When deemed to have surrendered its charter. I Any such bank which shall become a corporation for carrying on the business of banking under the laws of the United States shall cease to be a corporation under the laws of this state, except that for the term of three years thereafter, its corporate existence shall be deemed to continue for tlie purpose of prosecuting and de- fending suits by and against it, and of enabling it to close its con- cerns, and to dispose of and' convey its property. The members of the board of directors last in office, when such corporation shall have become a corporation under the laws of th United States, shall continue to be the board of directors of the new corporation, with power to take all necessary measures to carry out and perfect such organization by signing the articles of association and the organization certificate, and adopting such regulations as may be just and proper and not inconsistent with the acts of congress in relation thereto. Such change from a state to a national bank corporation shall not release any such bank from its obligations to pay and discharge all the liabilities created by law or incurred by it before becoming a, national bank corporation, or any tax imposed by the laws of this state up to the date of its becoming such national bank cor- poration, in proportion to the time which has elapsed since the next preceding payment therefor. Source. — Former § 60. NOTES.— National banks are liable for notes issued by them when organ- ized as state banks. Attorney-General Eep., 1893, page 90. DEBT. — A debt due a state banjc passes to a national bank, when the first is reorganized as a national bank. State Nat. Bank v. Phelps, 86 N. Y. 484. SERVICE. — Where a state bank surrenders its charter and is changed into a national bank, service of a summons on the cashier during the period during which it may do business as a national bank will be set aside. Hay- den V. Bank of Syracuse, 15 N. Y. Supp. 48. LIABILITY. — A national bank is bound to pay all currency bank bills of its predecessor. Clagett v. Metropolitan Nat. Bank, 56 Hun, 578. 90 The Banking Law. §§ 80, 81. § 80. Reduction of capital stock in sucti cases. The directors of such new corporation may reduce the capital stock of the bank to its par value by dividing the surplus among its stockholders, or may retain such portion of such surplus as they may deem necessary ; and in ease of an increase of the capital stock under the provisions of the acts of congress, may charge the shares of such increased capital stock with a like amount, to place the whole of such capital stock on an equality; and may award such new stock, or such proportion or fractional parts thereof, to such persons as they shall determine are entitled thereto, and as are provided in their articles of association and in the acts of con- gress ; but new directors may be chosen at such time and in the manner provided in the articles of association and the acts of congress. Source. — Former § 61. CAPITAL. — When a national bank reduces its capital, each shareholder is entitled to a return of his proportional amount and the bank cannot retain the funds as surplus; haying refused to permit shares thus retired to be transferred on its books, the bank is liable for the value of the shares to the stockholders. Seeley v. Nat. Exchange Bank, 4 Abb. N. C. 61. § 81. Certificate of change. When any such bank has decided to become a corporation under the laws of the United States, the directors shall immediately thereafter execute and transmit to the comptrolleo" of the currency the proper certificate and other instruments for its conversion into a national bank corporation under the laws of the United States. When any such bank shall have become authorized to commence the business of banking under the laws of the United States, all the property of such bank shall immediately, by act of law, and without any conveyance or transfer, be vested in and become the property of the national bank corporation, into which such bank shall have been converted; and it shall be entitled, on returning the bills of such bank to the banking department of this state, to receive the stocks pledged to secure the redemption of the same, in the same manner as the bank issuing the same is now entitled by law; and shall be subjected to the same rules as state banks § 82. Banks. 91 in respect to the final redemption of the circulating notes of such banks so converted into national bank corporations. The plates and dies of any such bank, in the banking depart- ment of this state, shall be forthwith so obliterated as to prevent all future use of the same. Source. — Former § 62. See § 301, Penal Law. Using dies and plates of extinct state bank, a misdemeanor. § 82. National bank may become state bank. Whenever any banking corporation organized and doing busi- ness under the .laws of the United States shall under the provisions of any act of congress, be authorized to dissolve its organization as such national bank corporation, and shall have taken the action required to effect such dissolution, a majority of the directors of such dissolved corporation may, upon the authority in writing of the owners of two-thirds of its capital stock, execute the certificate of incorporation required by section sixty of this chapter. Upon the execution and proof or acknowledgment of such cer- tificate, which shall also set forth the authority in writing of the stockholders as required by this section, and upon filing a copy thereof in the office of the superintendent of banks, with proof that the original is duly recorded in the office of the clerk of the county where any office of such corporation shall be located, such corporation shall be held and regarded as an incorporated bank under and in pursuance of the laws of this state, and shall be entitled to all the privileges and be subject to all the liabilities of banks so incorporated; and thereupon all the property of the dissolved national bank corporation shall immediately by act of law and without any conveyance or transfer be vested in and become the property of such state bank. The directors of the dissolved cor- poration at the time of such dissolution, shall be the directors of the bank created in pursuance hereof until the first annual election of directors thereafter, and shall have power to take all necessary measures to perfect its organization, and to adopt such regulations concerning its business and management as may be proper and just and not inconsistent with law. Source.— • Former § 63. 92 . The Banking Law. § 83. § 83. Circulating notes; plates. Any bank or individual banker may deposit with and transfer to the superintendent of banks an;^ interest-bearing stocks or bonds of the United States or of the state of iTew York, or of any county or incorporated city of this state authorized to be issued by the legislature, or bonds and mortgages on improved, unincumbered real property of the state of iNew York worth seventy-five per centum more than the amount thereon loaned ; but no such stock or bonds shall be received by the superintendent at a rate above their par value or above their current market value. The superintendent may -thereupon issue to such bank circulating notes in the simili- tude of bank notes in blank, engraved and printed in the best manner to guard against counterfeiting, in denominations of one, two, five, ten, twenty, fifty, one hundred, five hundred and one thousand dollars, which shall be countersigned, numbered and registered in proper books to be provided and kept for that pur- pose in the ofiice of the superintendent, under his direction, by such person as he shall appoint for that purpose, so tiiat each denomination of such circulating notes shall bear the uniform signature of such register, or one of such registers. Such notes shall also have stamped on their face the words " secured by the pledge of public stocks." The aggregate amount of notes thus issued to any bank or indi- vidual banker shall not exceed ninety per centum of the market value, nor ninety per centum of the par value, of the stock, bonds ■ or other securities so deposited with or transferred to the super- intendent by such bank or banker. Such bank or banker, having executed and signed such circulating notes in the manner required by law to make them obligatory promissory notes payable on de- mand, if of a denomination less than one thousand dollars, at the place of business within this state of such bank or banker, if of a denomination of one thousand dollars, payable at such place of business or at any redemption agency of such bank or banker, may loan and circulate the same as money according to the ordinary course of banking business as regulated by the laws and usages of this state. The securities so deposited with and transferred to the superintendent shall be held by him as security for such § 84. Banks. 93 circulating notes and exclusively for their redemption and until the same are paid. The plates, dies and materials procured by the superintendent for printing and making such circulating notes shall remain in his custody and under his direction. Source. — Former § 64. See Art. VII, § 6, N. Y. Const. Legislature shall provide for registry and raeeurity of bank bills. NOTES. — Promissory notes payable on time and with interest, given by a banking association upon a purchase of state stocks are void, whether in the hands of the holder or of an accommodation endorser. Bank Comniis- sioners v. The St. Lawrence Bank, 7 N. Y. 513. SUPEEINTENDENT.— The superintendent of banks cannot make any assignment of interest or dividends except as expressly provided in thia section. Mitchell v. Cook, 7 N. Y. 538. The superintendent has power to foreclose a mortgage assigned to hira by a bank to secure the redemption of its notes, on default being made in the payment of the mortgage. Flagg v. Munger, 9 N. Y. 483. PARTNERSHIP. — The dissolution of a partnership with an individual banker does not relieve the retiring partner from liability for subsequent deposits made, without notice of the dissolution, by one who had been before a depositor. Howell v. Adams, 68 N. Y. 314. REDEMPTION.— Art. VIII, § 6, N. Y. Const, is not self -executing so that the refusal of a bank to redeem its bills in specie authorizes the superin- tendent to sell the securities deposited with him; until the legislature requires the redemption of bank bills in specie, an offer to pay in treasury notes made legal tender by act of Congress is sufficient. Metropolitan Bank v. Van Dyck, 27 N. Y. 400. PAYMENT. — In order to authorize the bank commissioners to proceed it is not suflScient that its circulating notes should have been once presented to its agent for payment; but such notes must either be left at the agency for twenty days, or must be presented a second time for payment at or after the expiration of the twenty days. Bank Commissioners v. The James Bank, 9 Paige, 457. § 84. Circulating notes of individual banker. The circulating notes delivered to an individual banker shall express only the individual liability of the banker and shall be signed by him only and not by any attorney or agent. Any banker or person acting as his attorney or agent who shall violate any provision of this section shall forfeit to the people of the stat« one hundred dollars for each offense, to be collected and paid into the treasury to defray the general expenses of the banking department. 94 The Banking Law. § 85. The superintendent shall not issue circulating notes to any indi- vidual banker designating such individual as a bank unless as an addition to his own proper name. If such individual shall have partners in the business of banking at the time of commencing the same, such fact shall be shown by the words " and company/' to be added to his own proper name, upon every note issued to him or them from the banking department. If it shall appear, by the return of any individual banker or by the report of any person designated by the superintendent of banks that any other person is interested with such individual banker directly or indirectly in the securities deposited by him for the purpose of obtaining circulating notes, or in the business of circulating such notes, or in the benefits or advantages thereof, the superintendent shall withhold all interest and dividends on the securities deposited with him, by such banker, and all cir- culating notes from such banker, until he shall have filed in the banking department a certificate, signed and acknowledged by every person so returned or reported as interested in such secur- ities, stating that such person is interested with such individual banlfer in the circulating notes obtained or to be obtained by him, and in the benefits and advantages of circulating the same. Such certificate shall be evidence that the person signing and acknowl- edging the same is a general partner with such banlcer in the business of banking, and as such is liable with him individually for all the debts and obligations created or made by such individ- ual banker in his business. Source. — -Former § 65. § 85. When bank may receive interest or dividends upon securities deposited. The superintendent may give to any bank or individual banker depositing and transferring securities to him pursuant to this chapter, a power of attorney to receive the interest or dividends thereon, and such bank or banker may thereupon receive and apply such interest or dividends to its or his own use. Such power may be revoked if such bank or banker fails to redeem the circulating notes so issued, or if, in the opinion of the superintendent, the § 86. BA^'KS. 95 principal of suoli securities shall become an insufficient security for the redemption of the circulating notes issued ; and the super- intendent may in his discretion, upon the application of any such bank or banker, change or transfer any securities deposited by it or him for other securities of the kinds hereinbefore specified, or he may retransfer such securities or any part thereof to the bank or banker depositing the same upon receiving and canceling a pro- portional amount of the circulating notes delivered by him to such bank or banker, and in such manner that the circulating notes remaining outstanding shall always be secured in full. If the securities so deposited for the redemption of circulating notes .shall, in the opinion of the superintendent, become insuffi- cient for that purpose, he may receive the dividends on all such securities and deposit the same in some safe bank in the city of Albany in his name in trust for the bank or banker to whom the same may belong, on such terms and at such rate of interest as the superintendent may deem most conducive to the interest of any such bank or banker, and to be withdra'wn and paid over whenever in the opinion of the superintendent the securities of such bank or banker shall be sufficient to warrant it. If it shall appear from any examination made by or at the instance of the superintendent that any bank or individual banker is in an unsound or unsafe condition to do business, or that the business of banking is not prosecuted by it or him at the place where such circulating notes are dated and purport to be issued, or is not transacted in the manner prescribed by law, the super- intendent shall withhold and refuse to issue and deliver any reg- istered notes to such bank or banlcer, and shall retain the interest on all securities held in trust for such bank or banker until such time as he shall be satisfied that such bank or banker^is in a sound or safe condition to do banking business, and that the business of banking is transacted by it or him at the place where such cir- culating notes are dated and purport to be issued. Source. — Former § 66. § S6. Redemption agencies. Every bank or individual banker issuing circulating notes, ex- cept those whose place of business is in the city of ISTew York, 96 The Banking Law. § 87. Albany, or Troy, not already having made such an appoinfr ment, shall forthwith appoint in writing an agent who shall keep an oiEce in the city of ^STew York, Albany or Troy, for the redemption of all circulating notes issued by it or him 'which shall be presented to such agent for payment or redemption ; and such appointment shall be delivered to the superintendent forth- with and filed in his office. Any bank or individual banker or other person may be such agent. If any such bank or banker shall omit to appoint such agent forthwith, the superintendent shall appoint such agent for such bank or banker and file such appointment in his office. The superintendent shall, immediately after such appointment and filing thereof in his office, publish during such time as he may deem proper, a list of such agents in the state paper and in at least two daily newspapers in the city of 'New York. If the agent of any bank or banker shall neglect or refuse tc redeem its notes on demand, such bank or banker shall pay to the person making such demand, interest on such notes at the rate of twenty per centum per annum. If such redemption and payment of interest is not made at such office within twenty days from the time when first demanded, such bank or individual banker may be proceeded against by the superintendent of banks in the same manner and with the like eifect as though insolvent; and such bank or banker shall not issue or put in circulation any bills or notes; and the superintendent shall also proceed in the manner directed in section ninety-one of this chapter. Every bank and individual banker outside of the cities of New York, Albany, and Troy shall redeem and pay on demand all circulating notes issued by it or him presented for redemption or payment at the office of its or his such agent in the city of New York, Albany or Troy, at a rate of discount not exceeding one-quarter of one per centum. Source. — Former § 67. § 87. Destruction of bank notes. When any circulating notes of any bank or individual banker shall be returned to the superintendent for destruction, the same shall be burned by or under the direction of tlie superintendent, §§ 88,89. Banks. 97 and such bani; or individual banker shall procure the attendance of an agent to witness the counting and destruction of such cir- culating notes at the department and sign a certificate thereof. If such' bank or banker shall refuse or neglect to appoint or pro- cure the attendance of such agent within ten days after the re^ ceipt of the bills at the department, the superintendent shall se- lect and appoint some indifferent person, who shall, as the agent of such bank or individual banker, witness and certify the count- ing and destruction of such notes, and such bank or individual banlter shall forthwith pay on demand to the person so appointed, witnessing and certifying, such compensation therefor as the superintendent shall certify to be just and reasonable. Source. — Former § 68. § 88. Destruction of plates and counterfeit notes. The superintendent shall destroy, or cause to be destroyed, all bank-note plates in his custody of banks or individual bankers becoming insolvent, or which have given notice of closing their business, and any impressions made therefrom on hand. Here- after when any bank or individual banker shall become insolvent or discontinue the business of banking, the superintendi;nt shall destroy, or cause to be destroyed, all plates and impressions be- longing to such bank or individual banker, and include in his next annual report a statement of the plates so destroyed. Every public officer into whose hands shall come any counterf. it bank- note plate or other devic for coimterfeiting bank note, or any counterfeit or spurious bank notes, immediately after using them when necessary in evidence against the parties implicated, shall surrender the same to the superintendent, to be destroyed under his supervision, and he shall destroy all such plates, devices or notes thus surrendered to him in the same manner as in case of banks whose charters have expired, or which have become insolv- ent, and report the same to the legislature in his annual report. Source.— Former § 69. § 89. Exchange of mutilated notes. The superintendent shall receive mutilated circulating notes issued by him and deliver in lieu thereof other circulating notes to the same amount. 98 The Banking Law. § 90. Every person who shall mutilate, cut, deface, disfigure or per- forate with holes, or shall unite or cement together, or to any other thing, any bank bill, draft, note or other evidence of debt issued by a bank, or shall cause or procure the same to be done with intent to Wder such bank bill, draft, note or other evidence of debt unfit to be reissued by such bank, shall forfeit fifty dollars to the corporation injured thereby. Source. — Former § 70. § 90. Redemption in notes of other banks. When an action shall be brought against any bank or individual banker for the recovery of the amount due on any circulating notes registered in the superintendent's office, the payment of which shall have been demanded at the banking-house or other place of business of the defendant, if it shall appear on the trial or other- wise, to the court in which such suit is brought, that at the time such demand of payment was made, the defendant offered in pay- ment the circulating notes issued by any other bank or banker which were at the time at par in the city of 'New York, Albany or Troy, or a draft on any bank or banker in either of such cities, for the amount of the circulating notes so presented, with an affi- davit, if required, that such draft is available to its full amount, to insure the immediate payment thereof on presentation, or in case any action shall be commenced upon such notes before the expiration of fifteen days from the time of the first demand thereof; and if such bank or banker shall be ready and prepared to redeem such notes in the lawful money of the United States at the ordinary place of business of such bank or banker, at the ex- piration of fifteen days from the time of the first demand thereof, with interest, then in either ease the plaintiff in such action shall not recover any costs, fees or disbursements whatever against the defendant, and shall be entitled to recover no more than six per centum interest in lieu of all damages for the non-payment of such circulating notes. No interest shall be recovered upon such notes in any action unless the plaintiff or holder thereof shall have again presented , the same for payment at the ordinary place of business of the defendant on or after the fifteenth day after such first demand and before the twentieth day, and the defendant shall § 91. Banks. 99 have neglected or refused to pay the same with interest to that time. If such bank or banker at the time of the first presentation of such notes shall have offered to pay current bank notes or drafts, or both, or either, in the manner above provided, and shall, at the time of such second presentation, pay or tender the amount of such notes in the lawful money of the United States at its oj-dinary place of business, then such bank or banker shall not be deemed to have suspended or refused specie payment or payment of its circulating notes, within the meaning of any statutes authorizing proceedings for the dissolution of such bank, or to restrain or enjoin such bank or banker from the transaction of its business, nor shall such bank or banker in such case be liable to any other or greater damages for the non-payment of such notes than above provided, notwithstanding any contrary provision in the charter of such bank or of any other statute. Source. — Former § 71. § 91. Protest of notes and proceedings thereon. If the maker of any circulating notes countersigned and regis- tered as herein provided, shall at any time hereafter on lawful demand during the usual hours of business, between the hours of ten and three o'clock at the place where such notes are payable, fail or refuse to redeem such notes in the lawful money of the United States, the holder thereof making such demand, may cause the same to be protested in one package for non-payment by a notary public under his seal of office in the usual manner, unless the president, cashier or teller of the bank shall offer to waive demand and notice of the protest, and shall, in pursuance of such offer, make, sign and deliver to the party making such demand, an admission in writing, stating the time of the demand, the amount demanded and the facts of the non-payment thereof. The superintendent on receiving and filing in his office such admission or protest, together with such notes, shall forthwith give notice in writing to the maker thereof to pay the same, and if such maker shall omit to do so for fifteen days after such notice, the super- intendent shall immediately, unless satisfied that there is a good and legal defense to the payment of such notes, give notice in the 100 The Banking Law. § 91. state paper that all the circulating notes issued by such bank or banker will be redeemed out of the trust funds in his hands for that purpose; and the superintendent sball apply sucb funds to the payment pro rata of all circulating notes put in circulation by such bank or banker pursuant to the provisions of this chapter, and adopt such measures for the payment of such notes as will, in his opinion, most effectually prevent loss to the holders thereof. If payment of such notes is not made for a period of ten days after the first publication of such notice, the superintendent shaJl sell at public auction the securities so pledged, or any of them, and out of the proceeds of such sale pay and cancel such notes, but the state shall not be deemed as under any pledge for the payment of such notes beyond the proper application of ihe proceeds of such securities for their redemption. Damages for non-payment of any such notes in lieu of interest at the rate of six per centum per annum from the time of refusal of payment, shall be paid by the bank or bauker refusing to pay such notes on demand. This section shall not apply to cases where circulating notes reg- istered in the superintendent's office shall be presented for pay- ment to an agent of ajiy incorporated bank or individual banker appointed according to the provisions of this chapter relating to the redemption of bank notes, nor to any bank or individual banker for whom there shall not be at the time an agent duly appointed, as prescribed in this chapter ; nor to any bank or individual banker whose place of business is in the city of JSTew York, Albany or Troy. All fees for protesting any such notes shall be paid by the per- son procuring the services to be performed and the bank or banker issuing such notes shall be liable for the same, but no part of the securities deposited by such bank or banker shall be applied to the payment of such fees. Source. — Former § 72. See Art. VIII, § 5, N. Y. Const. Legislature has no power to pass any law Buspendiag specie payments. EEDEMPTION.— Art. VIII, § 6, N. Y. Const, is not self-executing so that the refusul of a bank to redeem its bills in specie authorizes the superin- tendent to sell the securities deposited with him; until the legislature requires §§ 92,93. Banks. the redemption of bank bills in specie, an offer to pay in treasury notes ■ legal tender by act of Congress is suflScient. Metropolitan Bank v. Van Dyck, 27 N. y. 400. MORTGAGE. — The superintendent has power to foreclose a mortgage assigned to him by a bank to secure the redemption of its notes, on default being made in the payment of the mortgage. Flagg v. Hunger, 9 N. Y. 483. I 02. Appointtnent of agent by new corporation. Every bank and individual banker vpho sball hereafter com- mence business under the laws of this state shall upon first re- ceiving circulating notes from the superintendent, appoint an agent for the purpose of redemption, and be subject in all respects to the provisions of this chapter in relation thereto; and this superintendent shall not deliver any circulating notes to such bank or banker .until such appointment is made and filed in his office, which shall be immediately published by the superintendent in the manner hereinbefore provided. Source. — Former § 73. § 93. Revocation of appointment. Appointments of agents for the purpose of redemption may be revoked and new appointments of agents may be made from time to time by delivering such revocation of appointment to the super- intendent, who shall cause the same to be published as hereinbe- fore provided. _ Several banlcs may appoint a common agent. Any number of banks and individual bankers may by agreement associate for raising a joint fund to be placed in the hands of their common agent for the redemption of their circulating notes in the city of ISTew York or Albany, and also the circulating notes of other banks and individual bankers in such manner and imder such regulations as may be agreed upon, and employ such agents and clerks as they may deem necessary to carry on the business of the common agency. No such agency shall redeem or purchase any circulating notes at a discount of more than one-half of one per centum nor relieve or discharge any such bank or banker from any duty or liability required or imposed by this chapter, nor shall any bank or individual banker purchase, buy in or take up, directly or indirectly, its or his ' circulating notes at an amouat 102 The Banking Law. §§ 94, 95. less than what purports to be due thereon at any other place or in any other manner than is directed in or by this chapter. Source. — Former § 74. § 94. Distribution of funds of insolvent banks. The superintendent shall make a final distribution of the funds in his hands arising from the sale of securities deposited with him by banks and individual bankers, which have failed or may here- after fail to redeem their circulating notes. At the expiration of six years after the first sale made by the superintendent of such securities, he shall issue a final notice to the holders of the cir- culating notes issued by such bank or banker requiring the presen- tation thereof within six months after the date of the notice, and any of such notes which shall not be presented within the time thus specified shall cease to be a charge or claim upon the ftmds of such bank or banker remaining in the hands of the superintendent. Any such notes which shall be presented within the period above limited shall be received and paid by the superintendent at the same rate which shall have been paid on like notes previously pre- sented, and if all the notes of any bank or individual banker so presented shall have been redeemed at their par value, he shall pay to such bank or banker, the residue of such funds remaining in his hands belonging thereto. If such notes shall not have been redeemed at par, then the holder shall be entitled to a certificate showing the balance, if any, due thereon. Source. — Former § 75. See Art. VI^Ij § 8, N. Y. Const. Billholders of an insolvent bank entitled to preference. Where the superintendent of banks closes a, bank and takes possession of its assets, the relation which all its depositors bear to the fund is then fixed and determined. A depositor having money on deposit in such a bank, whose checks, already drawn, are afterward paid through the clearing house, is not entitled to be paid any dividend in the course of the administration of the assets of the bank until the other depositors have received as large a per- centage of their respective deposits as he has received of his deposit by the payment of such checks. People v. Bank of Statgn Island, 70 Misc., 633. § 95. Distribution of residue. At the expiration of the notice required by the preceding sec- tion, the superintendent shall ascertain the amount of the residue §§ 96,97. Eaxks. 103 of the fund remaining in his hands belonging to the creditors of such bank or banker and after deducting therefrom the expenses justly chargeable thereon, he shall make a pro rata distribution of the residue upon the outstanding certificates given for the bal- ance due to the holders of the circulating notes of such bank or individual banker, which shall have been redeemed in part, and he shall issue a notice to the holders of such certificates stating the rate or amount payable thereon, and requiring them to present the same within six months after the date of such notice. Any certificate not presented within that time shall cease to be a charge or claim upon the residuary fund in the hands of the superin- tendent. After making the final distribution herein directed, if any portion of such fund shall remain unclaimed, it shall be de- posited in the treasury and applied toward paying the ordinary expenses of the banking department. Source. — Former § 76. § 96. Publication of notices. The notices required to be given by this chapter to the creditors of an insolvent bank or banker shall be published at least six weeks in one or more newspapers which the superintendent shall deem best calculated to inform such creditors, and the cost of such pub- lication shall be defrayed out of the fund to which such notice ' shall refer. Source. — Former § 77. § 97. Redemption of notes lield by banl certain sections of the Penal and iBanking Laws prohibiting the unauthorized use of terms indicating a bank, granted to persons who were engaged in the banking business prior to certain dates, are not transferable. Attorney-General Jlep., 1912, page 255. The exemption to those doing business prior to May 23d, 1885, under the statute, is a personal privilege and does not pass to another by purchase nor survive death. Attorney-General Rep., 1912, page 491. See § 302, Penal Law. Private banker unlawfully using sign and letter-head. See § 302, Penal Law. Private banker illegally using a banking sign is guilty of a misdemeanor. BANKING. — Persons or corporations not subject to the supervision of the superintendent of banks have no right to use a circular stating that they conduct " the business of a bank," or " a general banking business." Attor- ney-General Rep., 1901, page 219. "BANKERS."— § 112 of the Banking Law was not intended to forbid the words " Bankers," " Banking OflEice " upon the signs and letter-heads of private bankers. Attorney-General Rep., 1899, page 381. § 113. Lost banl< certificate; application to court for order requiring payment. Where a deposit of money has been made in any bank doing business in the state and a certificate of deposit has been issued 118 The Banking Law. § 114. therefor, and such certificate has been lost or destroyed, the person to whom it was issued, his or her executors or administrators, or in case of assignment the assignee thereof or his or her executor or administrator, may apply to the supreme court of this state at a special term thereof appointed to be held in the judicial district where said bank is situated, by petition, duly verified by the peti- tioner, in the same manner as a complaint in a civil action in the supreme court is verified, for an order requiring the payment of the money due on such certificate, or if a bond or undertaking has been given to secure the payment of such a certificate and the same has been paid to the person to whom it was issued, his or her executors, administrators or assigns, the obligors thereon, or any one of them, or the executors, administrators or assigns of such obligors, or the persons or conporation executing such bond or undertaking, or any one of them, may apply to said court on petition verified in the same said manner for an order declaring such certificate null and void and for the release, discharge and satisfaction of any such bond or undertaking and of the obligors thereon. Source.— L. 1899, ch, 451, § 1, as am'd by L. 1901, oh. 171, § 1. § 114. Petition; service of. Such petition shall set forth the date of such certificate, the amount for which it was issued, the name of the bank issuing it, and the place where said bank is located, the name of the person to whom it was issued, and if assigned, the name of the assignee, and if a bond or undertaking has been given to procure the pay- ment of such certificate and the release, discharge and satisfaction thereof is sought, said petition in addition shall also state the date of the same, the time when, by whom and to whom given and the names of the obligors thereon. A copy of such petition shall be served on said bank in the same manner as a summons in the supreme court is served on a cornora- tion, at least eight days before the time specified therein for a hearing before the court, and if the release, discharge and satisfac- tion of a bond or undertaking given to procure the payment of such a certificate is sought, then such petition shall be also served at the same time and in the same manner on the obligors thereof and the 5§ 115,116. Banks. 119 persons giving the same, their executors, administrators or assigns, other than the party making said petition. Source.— L. 1899, ch. 451, §§ 2, 3, as am'd by L. 1901, ch. 171, §§ 2, 3. § 116. Bank to furnish information. The bank issuing such certificate shall, upon application of the person who made the deposit, or his executors, administrators or assigns, furnish to such applicant the date and number of the certificate and the amount for which it was issued, and shall upon like arpplication furnish to any obligor, on any bond or under- taking given to procure the payment of such certificate, or his executors, administrators or assigns, like information. Source.— L. 1899, ch. 451, § 4, as am'd by L. 1901, oh. 171, § 4. § 116. Notice; order, and publishing. Upon due proof of the service of such petition on said bank, the court, if it shall be satisfied that the facts set forth in the petition are true, may make an order to the effect that a notice shall be published in two papers to be designated by the judge holding such term of court, and to be entitled " In the matter of the application of (naming the petitioner) to require the bank of (naming the bank) to pay over money deposited in said bank by (naming the depositor)" or in case a bond or undertaking has been given to procure the payment of such a certificate and it is sought to obtain an order from the court declaring such certificate null and void and the release, discharge and satisfaction of such bond and undertaking, then such petition is to be entitled " In the matter of the application of (naming the petitioner) to obtain an order declaring a certificate of deposit issued by the (naming the bank) null and void and the release, discharge and satisfaction of the bond (or the undertaking, as the case may be) given to said bank by (naming the party giving such bond) to secure the payment of such certificate." Such notice shall be published once in each week in each of such papers for thirteen consecutive weeks. Source.— L. 1899, ch. 451, §§ 5, 6. Section 5 as am'd by L. 1901, ch. 171, S 5, and L. 1901, ch. 503, § 1. 120 The Banking Law. §§117,118. § 117. Contents of notice. Such notice shall also contain the name of the bank issuing such certificate, the date of the certificate, the number, the amount for which it was issued ; and in case it is sought to have any bond or undertaking given to secure the payment of such certificate, re- leased, discharged and satisfied, said notice shall give the date thereof, the names of the parties by whom and to whom given and the obligors thereon; and said notice shall also provide that any person having such certificate in his or her possession, or under his or her control, shaU produce the same within a time named in said notice, and present the same to the bank issuing the same, and upon default thereof shall forfeit all right or claim thereto, or to the money due thereon. Such notice shall also provide that at the expiration of the time of publication, an application will be made to the said court for an order declaring said certificate null and void ; and directing the payment of the money so deposited in and held by said bank to the petitioner if the same shall not have been previously paid, and if a bond or undertaking shall have been given to secure from such bank the payment of such certificate and its release, discharge and satisfaction is sought, in addition to having said certificate declared null and void, then .said notice shall also state that said application will also be made at said time to said court to have such order declare such bond oi undertaking released, discharged and satisfied and the obligors relieved therefrom. Source.— L. 1899, oh. 451, | 7, as am'd by L. 1901, eh. 171, § 6. § 118. Application for final order. At the expiration of the time of the publication of such notice, the petitioner may apply to said courts, after giving said bank and each party to said bond or imdertaking, his executors, adminis- trators or assigns, other than the petitioner, at least eight days' personal notice of such second application for a final order declar- ing such certificate null and void, and directing said bank to pay over the money so deposited to the petitioner if the same shall not have been previously paid, and if such bond or undertaking has been given to such bank to procure the payment of sudi certificate, and its release, discharge and satisfaction is sought, such notice §§ 119, 120. Banks. 121 of such second application shall give notice of an application for a final order declaring such certificate null and void and also for the release, discharge and satisfaction of such bond or under- taking and the discharge of the sureties therefrom. And if it appears on said application for said final order that the provisions of this article have been complied with the court shall grant the same. Source.— L. 1899, oh. 451, § 8, as am'd by L. 1901, ch. 171, § 7. § 119. Order; filing, and service; refusal to pay. Such final order shall contain a recital of the first order and shall be filed and entered in the clerk's office of the county in which said bank is situated and upon the production of a certified copy of said second order to said bank, it shall pay to such petitioner the amount due on said certificate of deposit if the samo shall not have been previously paid. After the service upon said bank of a certified copy of the said second order, if said bank shall refuse or neglect to pay over the money due on said certificate, it may be recovered of said bank in the same manner as if such certificate had not been lost or destroyed. Source.— L. 1899, eh. 451, S§ 9, 10. Section 9 as am'd by L. 1901, ch. 171, ! 8. § 120. Bond discharged; bank released. No claim thereafter made by any person having such certificate in his or her possession, shall be available against such bank, and the bank shall forever thereafter be fully and entirely relieved of any liability by reason of its having issued such certificate or for the money due thereon. After the granting of any such order declaring any such certificate null and void, and any bond or undertaking given to any bank to secure the payment of such a certificate, released, discharged and satisfied, no claim made on any such bond or undertaking shall be available or be enforced against any party or corporation giving such bond or any obligor thereon but each such person and corporation shall be fully and entirely relieved from all liability on such bond or undertaking. Source.— L. 1899, clj. 451, § 11, as am'd by L. 1901, oh. 171, § 9. 122 The Banking Law. § 130. AETICLE 4. Savings Banks. Section 130. Incorporajtion. 131. Notioe of intention to organize. 132. Filing of certificate by superintendent. 133. Exa,mination by superintendent. 134. Certificate of authorization. 135. Wlhen persons named in certificate become a corporation; powers. 136. Must begin business within one year. 137. Trustees and their powers. 138. By-laws. 139. Meeting of trustees; quorum. 140. Vacancies. ]40-a. Removals. 141. Security may be required from employees and salaries fixed. 142. Dividends, compensation and loans to trustees prohibited. 143. Repayment of deposits; regulations; limitations. 144. Deposits of minors, and trust deposits, and deposits in the names of more than one person. 145. Wife witness against husband; claimants may be interpleaded. 146. In what securities deposits may be invested. 147. Limitation as to real property. 148. Available fund for current expenses; how loaned. 149. Temporary deposits. 150. Personal security prohibited; loans on ibond and mortgage. 151. Mortgaged property to be insured. 152. Restrictions on methods of doing business. 153. Rate of interest; extra dividends. 154. Per centum of surplus, how determined. 155. Compensatdon of oiBcers. 156. No other report or inspection required. 157. Examination of vouchers and assets by trustees. 158. Expenses to be paid. 159. Certain debts from insolvent banks and trust companies pre= ferred. 160. Advertisements of unauthorized savings banks prohibited. 161. Charters to be conformed to this chapter. 162. Savings bank voluntarily closed. 163. When dissolution effected. 164. Deposit of unclaimed moneys. § 130. Incorporation. Thirteen or more persons, two-thirds of whom shall be residents of the county where the proposed bank shall be located, may be- come a savings bank by executing under their hands and seals and § 131. Savings Banks. 123 acknowledging a certificate in duplicate, on© duplicate to be filed in the office of the clerk of such county, and the other in the office of the superintendent of banks within sixty days after its acknowledgment, which shall set forth: 1. The name by which the corporation shall be known. 2. The place where its business is to be transacted, designating the particular city, village or town, and, if in a city, the ward therein. 3. The name, residence, and, if in a city, the street and number, occupation and post-office address, of each member of the corpo- ration. 4. A declaration that each member of the corporation will accept the responsibilities and faithfully discharge the duties of a trustee in such corporation when authorized according to the provisions of law. Source.— Former § 100. See Art. VIII, { 4, N. Y. Const. Uniform chartera of savings banks. See 5 4, General Corporation Law, oi. 28 of 1909. Qualifications of incor- porators. See § 5, General Corporation Law, ch. 28 of 1909. Mling certificates of incorporation. See § 4, subd. 14, Tax Law, ch. 62 of 1909. Deposits of savings bank due depositors exempt from taxation. See § 183, Tax Law, ch. 62 of 1909. Savings banks exempt from tax on capital stock. See § 189, Tax Law, ch. 62 of 1909. Franchise tax on savings banks. See § 190, Tax Law, ch. 62 of 1909. Purchase of state bonds; credit to be given. § 131. Notice of intention to organize. A notice of intention to organize such savings bank shall be published at least once a week for four weeks previous to filing such certificate in at least one newspaper of the largest circulation published in the city, village or town where such savings bank is proposed to be located, or, if there is no news-naper published therein, then in some newspaper published in the county; if none in the county, in an adjoining county; which notice shall specify the names of the proposed corporators, the name of the proposed savings bank, and the location of the same as set forth in the certificate; and if there is any savings bank organized and doing 124 The Banking Law. §§ 132, 133. business in such county, a copy of such notice shall also he sent to every such savings hank so organized and doing business, at least fifteen days before the filing of such certificate. Source. — ^Former § 101. § 132. Filing of certificate by superintendent. If such certificate shall not be in form and substance as required by this article and not duly and properly acknowledged, or not accompanied by evidence satisfactory to the superintendent of the publication and service in good faith according to the intent and purpose of this article of the notice required by the preceding section, the superintendent shall refuse to file such certificate until it shall be amended to conform to the provisions of this article. If such certificate is in due form and duly execiited according to the provisions of this article and is accompanied by evidence satis- factory to the superintendent of the proper publication and service in good faith of such notice, he shall forthwith indorse the same over his ofiicial signature " filed for examination," with the date of such indorsement. Source. — Former § 102. § 133. Examination by superintendent. The superintendent shall thereupon ascertain from the best sources of information at his command : 1. Whether greater convenience of access to a savings bank will be afforded to any considerable number of depositors by opening a savings bank in the place designated in the certificate. 2. Whether the density of the population in the neighborhood designated for such savings bank, and in the surrounding country, affords a reasonable promise of adequate support to the enterprise. 3. Whether the responsibility, character and general fitness for the discharge of the duties appertaining to such a trust of the persons named in the certificate, are such as to command the confi- dence of the community in which such savings bank is proposed to be located. Source. — Former § 103. §§ 134, 135. Savings Banks. 125 § 134. Certificate of authorization. If the superintendent shall be satisfied from his own knowledge or from information gained concerning the several matters speci- fied in the last section, that the organization of the savings bank as proposed in such certificate will be a public benefit, he shall, within sixty days after the same has been filed by him for exam- ination, issue under his hand and ofiicial seal the certificate of authorization required by this chapter to the persons named in such certificate, or to a portion of them, together with such other persons as a majority of those named in such certificate shall in writing approve, which shall authorize the persons named therein to open an office for the deposit of savings as designated in the certificate, subject to the provisions of this chapter. No person shall be named in such certificate of authorization, who shall not have made and duly acknowledged the declaration prescribed in subdivision four of section one hundred and thirty of this chapter. The superintendent shall transmit such certificate of authoriza- tion to the county clerk of the county in which the savings bank is to be located, who shall file the same and attach it to the certifi- cate of incorporation previously filed by him and record both certificates in the book of record of incorporations ; and the super- intendent shall also file a duplicate of such certificate in his own office. If the superintendent shall not be satisfied that the establishment of a savings bank as proposed in any certificate filed by him is expedient and desirable, he shall, within sixty days after the filing thereof, give notice to the county clerk of the county in which such savings bank is proposed to be located, that he refuses to issue a certificate of authorization for such savings bank, which notice shall forthwith be filed by the county clerk with the certificate of incorporation of such savings bank. Source. — Former § 104. § 135. When persons named in certificate become a corpo- ration; powers. Upon the filing of any certificate of authorization of a savings bank as hereinbefore provided, the persons named therein, and 126 The Banking Law. § 136. their successors, shall thereupon become and be a corporation, and be vested with all the powers and charged with all the liabilities conferred and imposed by law upon savings banks; and in addi- tion to the powers conferred by the general corporation law, every such corporation shall have power to receive on deposit any sum of money that^may be offered for that purpose by any person, or by any corporation or society, and to invest the same, and to declare, credit and pay dividends thereon, and further, to transact the business of a savings bank as hereinafter provided and not other- wise. ISTo such corporation shall receive deposits until it shall have transmitted to the superintendent of banks the name, resi- dence and post-office address of each of the officers of such savings bank. Source. — Former § 105. See § 11, General Corporation Law, oh. 28 of 1909. General powers of corporations. See §§ 13, 14, General Corporation Law, oh. 28 of 1909. Acquisition •of real property. LIABILITY. — Liability of officers of a savings bank for deposit of money made by the savings bank in a national bank, and embezzled by an officer of the bank. FishkiU Savings Inst. v. Bostwick, 92 N. Y. 564. SPECULATION. — Speculative contracts entered into for the sale or pur- chase of stock or other property by a savings bank at the stock board or ■elsewhere subject to gain or loss, unless authorized by its charter are ultra vires. Jemison v. C. S. Bank, 122 N. Y. 135. POWERS. — The object and effect of this act was to prescribe a sole and complete rule for the existence of savings banks, and the exercise of their powers. Van Dyck v. McQuade, 86 N. Y. 38. § 136. Must begin business within one year. Every such corporation which shall not organize and commence business within one year after the certificate of authorization has been filed, shall forfeit its rights and privileges as a corporation under this chapter. The superintendent of banks may, for satis- factory cause to him shown, by an order under his hand and official seal, extend the term within which such organization may be effected and such business commenced, for not more than one year. Such order shall be transmitted to the county clerk of the county in which such savings bank is to be located, who shall file § 137. SAvmes Banks. 127 the same, together with its certificate of incorporation and certifi- cate of authorization. Source.— Former § 106. § 137. Trustees and their powers. There shall be a hoard of not less than thirteen trustees of evferv such corporation, who shall have the entire management and co' - trol of all its affairs, and who shall elect from their number, or otherwise, a president and two vice-presidents, and such other officers as they may deem fit. The persons named in the certifi- cate of authorization shall be the first trustees. A vacancy in the board shall be filled by the board, as soon as practicable, at a reg- ular meeting after the vacancy occurs. Each trustee, whether named in the certificate of authorization or elected to fill a va- cancy, shall, when such certificate of authorization has been issued or when notified of such election, take an oath that he will, so far as it devolves on him, diligently and honestly administer the affairs of such corporation, and will not knowingly violate, or willingly permit to be violated any of the provisions of law appli- cable to such corporation. Such oath shall be subscribed by the trustee making it and certified by the officer before whom it is taken, and shall be immediately transmitted to the superintendent of banks and filed and preserved in his office. Every trustee of every such corporation who has not heretofore taken and filed the oath hereinbefore required shall, prior to the first day of July, nineteen hundred and thirteen, take and subscribe such oath. Such oath, duly certified by the officer before whom the same is taken, shall, before the first day of July, nineteen hundred and thirteen, be transmitted to the superintendent of banks and filed and preserved in his office. Prior to the first day of March in each year, every trustee of every such corporation shall subscribe a declaration to the effect that he is, at the date thereof, a trustee of such corporation, and that he has not resigned, become ineligible, or in any other manner vacated his offi'ce as such trustee. Such declaration shall be acknowledged in like manner as a deed to be entitled to record and 128 The Banking Law. § 137. shall be transmitted to the superintendent of banks and filed in his office prior to the tenth day of March in each year. No person who is not a resident of this state or against whom a judgment for any sum of money shall have been recovered or shall hereafter be recovered and remain unsatisfied of record, or un- secured upon appeal, for a period of more than three months, or who hereafter takes the benefit of any law of bankruptcy or in- solvency, or who makes a general assignment for the benefit of creditors, shall be a trustee of any savings bank, and the office of any such trustee is hereby vacated; except that a resident of a state which adjoins the city of ISTew York may be a trustee of a savings bank in such city, provided that not more than one-fifth of the trustees of any savings bank shall be nonresidents of the state of New York. It shall be lawful for the board of trustees of every such corporation by a resolution to be incorporated in its by-laws, a copy of which shall also be filed with the superintendent of banks, to reduce the number of trustees named in the original charter of such corporation to a number not less than the mini- mum named in this article. Such reduction shall . be effected gradually by the occurrence of vacancies by death, resignation, or forfeiture, until the number is reduced to thirteen, or to such greater number as shall be designated in the aforesaid resolution; or the number of trustees may be increased to any number desig- nated in a resolution for that purpose, where reasons therefor are shown to the satisfaction of the superintendent and his consent in writing is obtained thereto. It shall not be lawful for a majority of the board of trustees of any savings bank to belong to the board of directors of any one bank or national banking association. When any trustee of a savings bank shall, by becoming a di- rector of a bank or national banking association, cause a majority of the trustees of such savings bank to be directors of any one bank or national banking association, his term of office as trustee of the savings bank shall thereupon end. Any savings bank knowingly violating this provision shall forfeit all its rights, priv- ileges and franchises. Such violation shall be determined in the same manner as a violation of subdivision six of section twenty- seven of article two of this chapter. % 138. Savings Banks. 129 Source.— Former § 107 as am'd by L. 1895, oh. 415; L. 1895, ch. 929; L. 1896, ch. 453, and L. 1908, ch. 153. Amended by L. 1912, chap. 237, and L. 1913, chap. 113. The purpose of the amendment of this section by oh. 153 of 1908 was to require trustees of the savings banks elected after incorporation to take and file oath of ofSce. Note. — The purpose of the amendment by chap. 113 of 1913 was to require trustees of savings banks to take and file an oath of office with the Superin- tendent of Banks; also to require a trustee of such corporation to file annually with the Superintendent a statement to the eflfect that he is at the date thereof a trustee, that 'he has not resigned and is not ineligible. — Ed. See § 294, Penal Law. Officer of savings bank not to receive commissions or gratuities. See § 295, Penal Law. Receiving deposits in insolvent savings bank. See § 296, Penal Law. Unlawful investments by officers of savings banks. See §§ 297, 298, Penal Law. Misconduct by directors of moneyed corporations. PRESUMPTION. — A transaction entered upon the books of a savings bank is presumed to have been done with the knowledge and assent of the trus- tees, who are responsible for the acts of the officers whom they place and retain in position. Paine v. Mead, 59 How. Pr. 318. LIABILITY. — The relation between a savings bank and its trustees is that of principal and agent, and that between the trustees and depositors is similar to that of trustee and cestui que trust; if such trustees transcend the limits placed on their powers, and cause damage' to the bank, and the depositors, they are liable; they are bound to exercise care and prudence in the execution of their trust. Hun v. Gary, 82 N. Y. 65. § 138. By-laws. The board of trustees of any such corporation may from time to time make such by-laws, rules and regulations, not inconsistent with law, as they may think proper for the election of officers, for prescribing their respective powers and duties and the manner of discharging the same, for the appointment and duties of com- mittees, and generally for transacting, managing and directing the affairs of the corporation ; and a copy of the same shall be transmitted to the superintendent of banks, who shall also be noti- fied of any amendment or change therein. Source. — ^Former § 108. See § 11, General Corporation Law, ch. 28 of 1909. Power of corporations to make by-laws. 130 The Banking Law. §§ 139, 140. See § 34, General Corporation Law, ch. 28 of 1909. Quorum of directors- and powers of majority. BY-LAW. — A by-law may be good in part, and void for the rest. Rogers V. Jones, 1 Wendell, 237. § 139. Meeting of trustees; quorum. Eegular meetings of the board of trustees shall be held as often as once a month for the purpose of receiving the reports of their officers and committees, and for the transaction of other business. A quorum at any regular or special or adjourned meeting shall consist of not less than seven, of whom the president shall be one, except when prevented from attending by sickness or other un- avoidable detention, when he may be represented in forming a quorum by the vice-president, who in case of his absence for like cause, may be represented by the second vice-president; but less than a quorum shall have power to adjourn from time to time or until the next regular meeting. Source. — Former § 109. § 140. Vacancies. Whenever a trustee of any savings bank shall become a trustee, officer, clerk or employee of any other savings bank, or when he shall borrow directly or indirectly, any of the funds of the savings bank in which he is trustee, or become a surety or guarantor for any money borrowed of or any loan made by such sayings bank, or when he shall fail to attend the regular meetings of the board, or perform any of the duties devolved upon him as such trustee, for six successive months, without having been previously excused by the board for such failure, or when he shall fail to take and file the oath or declaration required by section one hundred and thirty-seven of this chapter, the office of such trustee shall there- upon immediately become vacant; but the trustee vacating his offilce by failure to attend meetings, or to discharge his duties, or to take and file the oath or declaration required by section one hundred and thirty-seven of this chapter, may, in the discretion of the board, be eligible to re-election. Source. — Former § 110. Amended by L. 1913, chap. 113. §§ 140-a, 141. Savings Banks. 131 Note. — The purpose of the amendment by chap. 113 of 1913 was to punish an offender under the amendment of § 137 by chap. 113 of L. 1913, by declar- ing his position vacant. — Ed. The trustee of a savings bank has such an interest in a loan to a church, in which he is also a, trustee, that he forfeits his olRoe as trustee of the sav- ings bank if he makes such loan. Attorney-General Rep., 1912, page 318. § 140-a. Removals. Whenever the conduct and habits of a trustee of any savings bank are, in the, judgment of three-fourths of the trus- tees of such savings bank, of such a character as to be injurious to such savings bank, or he has been, in the judgment of three-fourths of the trustees of such savings bank, guilty of acts that are detrimental or hostile to the interests of such savings bank, he may be removed from office, at any regular meeting of the trustees of such savings bank, by the affirmative vote of three- fourths of the total number of trustees thereof, provided, however, that a vsritten copy of the charges made against such trustee shall have been served upon him personally at least two weeks before such meeting, that the vote of such trustees by ayes and nays shall be entered in the record of the minutes of such meeting, and that such removal shall receive the written approval of the superin- tendent of banks, which may be given or withheld, in his discre- tion, which approval, if given, shall be attached to the minutes of such meeting and form a part of the record. When the written approval of the superintendent of banks has been received and attached to such record, the office of such trustee shall be vacant, and the trustees of such savings bank may proceed to fill the vacancy resulting from such removal. Added by L. 1913, chap. 94. § 141. Security may be required from employees and sal- aries fixed. The trustees of any such corporation shall have power to require from the officers, clerks and agents of the corporation such security for their fidelity and the faithful performance of their duties as they shall deem necessary, and to fix the salaries of such officers and agents subject to the provisions of this chapter. 132 The Banking Law. § 142. Such security may be accepted from any company authorized to furnish fidelity bonds, doing business under authority of the New York insurance department, which may be approved by the. superintendent of banks and the premiums paid therefor may be paid by and shall be allowed to said corporation as a necessary disbursement. Source. — Former § 111. § 142. Dividends, compensation and loans to trustees pro- hibited. No trustee of any such corporation shall have any interest, di- rect or indirect, in the gains or profits thereof, nor as such, directly or indirectly, receive any pay or emolument for his services, ex- cept as hereinafter provided ; and no trustee or officer of any sueb corporation shall directly or indirectly, for himself or as an agent or partner of others, borrow any of its funds or deposits, or in any manner use the same except to make such current and necessary payments as are authorized by the board of trustees; nor shall any trustee or officer of any such corporation become an indorser or surety, or become in any manner an obligor, for moneys loaned by or borrowed of such corporation. Source. — Former § 112. See § 297, Penal Law. Misconduct by directors of moneyed corporations. ULTRA VIRES. — Where a savings bank purchases from a trustee of such bank, bonds and mortgages owned by him, made by one person upon unpro- ductive property of uncertain value, not worth twice the value of the mort- gages, such transaction is ultra vires. Paine v. Irwin, 59 How. Pr. 316. TRUSTEE. — One who borrows from a savings bank a large sum of money upon real estate security is not eligible as trustee of said savings bank. Attorney-General Rep. 1905, page 441. STATEMENT. — ^It is not necessary to prepare a copy of the statement for each director; the same statement may be submitted to the respective directors in turn. Attorney-General Rep., April 15, 1909. CONVERSION. — A trustee cannot take checks upon the bank signed by the secretary, and use them in individual speculation; such conduct amounts to conversion. Knapp v. Roche, 62 N. Y. 614. LIABILITY. — The liability of a trustee of a savings bank for an illegal investment is released by the payment of the loss by a subsequent trustee. Hun V. Van Dyck, 26 Hun, 567; aflF'd 92 N. Y. 660. Trustees of a savings bank may be required to make up a deficiency. Best V. Thiel, 79 N. Y. 15. § 143. Savings Bani-:s. ' 133 The relation between a savings bank and its trustees is that of principal and agent, and that between the trustees and depositors is similar to that of trustee and cestui que trust; if such trustees transcend the limits placed on their powers, and cause damage to the bank, and the depositors, they are liable; they are bound to exercise care and prudence in the execution of their trust. Hun v. Gary, 82 N. Y. 65. § 143. Repayment of deposits; regulations; limitation. The sums deposited with any savings bank, together with any dividends or interest credited thereto, shall be repaid to such depos- itors respectively, or to their legal representatives, after demand, in such manner and at such times, and after such previous notice, and under such regulations, as the board of trustees shall prescribe. Such regulations shall be posted in a conspicuous place in the room Avhere the business of the corporation shall be transacted, and shall be printed in the pass-books or other evidences of deposit furnished by it, and shall be evidence between the corporation and the depositors holding the same, of the terms upon which the deposits therein acknowledged are made. Every such corpora- tion may limit the aggregate amount which any one person or society may deposit to such sum as it may deem expedient to receive, and may, in its discretion, refuse to receive a deposit, and may also at any time return all or any part of any deposit. The aggregate amount of deposits to the credit of any individual at any time shall not exceed three thousand dollars, exclusive of deposits arising from judicial sales or trust funds or interest ; and to the credit of any society or corporation at any time, shall not exceed five thousand dollars, exclusive of accrued interest, unless such deposit was made prior to May lY, 1875, or pursuant to an order of a court of record. Source. — Former § 113. Pavings banks are not authorized to prefer deposits of postal savings banks or of court funds through a pledge of collateral securities, guaranteeing the payment of the deposits and they may not guarantee a lixed interest on such deposits. Attorney-General Rep., 1912, page 50O. The amount of deposits in a savings bank to the credit of any individual must not exceed three thousand dollars, and in computing this amoimt there must be included all accounts placed to the credit of the depositor, including those in which he is jointly interested. Attorney-General Rep., 1912, page 555. Deposits made by an individual in the form of a trust for another in a savings bank, where, as a result, any one individual may withdraw a sum 134 The Banking Law. § 143. exceeding three thousand dollars, exclusive of interest, are prohibited by the Banking Law. Attorney-General Rep., 1913, page 35. NOTICE. — A bank must be given prompt notice of loss in order to render it liable for payment to person presenting a pass-book which was lost. Kelly V. Emigrant Ind. Savings Bank, 2 Daly, 227. NEGLIGENCE. — A bank is liable for payments made to the wrong per- son, although made in good faith where it appears that the officers were charged with negligence. Kummel v. Germania Savings Bank, 127 N. Y. 488. Although a savings bank prescribes rules for its protection in the payment of its deposits, yet it must exercise ordinary care upon the part of the officers in making a payment to the wrong person. Appleby v. Erie County Savings Bank, 62 N. Y. 12. Where an individual makes a deposit in the name of another, an intention to create a trust is established and the retention of the pass-book by the individual and his withdrawal of a portion of the deposit within a year are not sufficient to establish a contrary intention. Williams v. Bklyn. Sav. Bank, 51 App. Div. 332; 64 N. Y. Supp. 102. ASSET. — A deposit in a savings bank made by a decedent is an " asset " within the meaning of the Inheritance Tax Law, and should not be transferred to the personal representative without notice to the Comptroller or County Treasurer. Attorney-General Rep. 1892, page 302. DEPOSITORS. — Upon insolvency of a savings bank, the depositors stand as other creditors having no greater, but equal rights. People v. Mechanics and Traders' Sav. Inst., 92 N. Y. 7. It is a violation of this section if a deposit be made of $3,000 to the credit of a man and another deposit of the same amount to the credit of his wife, both accounts being payable to either of the survivor. Attorney-General Rep., Oct. 10, 1910. INTEREST.— Interest on the excess of the limit of $3,000 prescribed by the statute is not recoverable. Taylor v. Empire State Sav. Bank, 66 Hun, 538. RULES. — A bank is authorized to pay upon presentation of the pass-book without an order from the depositor where a pass-book contains a rule that payments made to the person producing a pass-book shall be deemed good. Schoenwald v. Metropolitan Savings Bank, 57 N. Y. 418. Although the rules of the bank provide for payment to persons producing the pass-book, yet, it is bound to exercise, in making payment, reasonable care and diligence. Wall v. Emigrant Ind. Savings Bank, 64 Hun, 249. IDENTITY. — A bank is liable unless the teller makes proper inquiry as to the identity of the person presenting the book. Geitelsohn v. Citizens Sav. Bank, 20 Misc. 84. PAYMENT. — Payment by a savings bank to a person not entitled to receive it, although he may have possession of the pass-book, will not dis- charge the bank if circumstances were brought, to the knowledge of vhe bank officers calculated to excite suspicion. Gearns v. B. S. Bank, 135 N. Y. 557. § 144. Savings Bakxs. 135 A payment to the administrator of a deceased depositor is good as against the beneficiary named in the pass-book, but who does not give the bank notice of his interest. Boone v. Catizens' Sav. Bank, 84 N. Y. 83. Payments made to a person who is not the legal representative of i deceased depositor, are at the risk of the bank. Farmer v. Manhattan Sav- ings Inst., 60 Hun, 462. Payments to a person producing the pass-book of a depositor are proper where the person producing the book answers the test questions, and the depositor knew of the rule of the bank permitting payments to persons pro- ducing the pass-book. Hales v. Seamen's Bank, 28 App. Div. 407. It is proper for the bank to make payments to the husband of a depositor after several payments have been made to him by her direction. Wilcox v. Onondaga County Sav. Bank, 40 Hun, 297. PASS-BOOK. — Possession by a stranger of the pass-book of a depositor constitutes no evidence of a right to draw money thereon; such stranger must show some special contract with the depositor authorizing such a mode of payment. Smith v. Bklyn. Savings Bank, 101 N. Y. 58. FORGED DRAFT.— A bank is liable for the amount of money withdrawn upon a forged draft by one who had purloined the bank-book from the depositor's possession, if such bank could have prevented the fraud by the exercise of ordinary care. Tobin v. Manhattan Savings Bank, o Misc. 110. A bank other than a savings bank is bound to know the signatures of its depositors in the absence of an agi-eement to the contrary. Newman v. State Bank, 68 Misc., 143. BOOK. — A regulation of a savings bank, requiring the production of the depositor's book before he should be entitled to receive any payment, ia reasonable; but proof of the loss of the book will excuse the non-production, and entitle the depositor to his money. Warhus v. Bowery Savings Bank, 21 N. Y. 543. RULES. — In the absence of any rules assented to by its customers a savings bank is to be governed by the same legal principles which apply to other moneyed institutions, and where there are prescribed rules to which a depositor has assented, they are an agreement between the bank and the depositors. Allen v. Williamsburgh Savings Bank, 69 N. Y. 314. BY-LAW. — A depositor assenting to the by-laws of a savings bank is bound by them, and may be compelled to furnish security before getting a duplicate pass-book. Mitchell v. Home Savings Bank, 38 Hun, 255. FORGED DRAFT. — A bank is relieved for payment made on a forged order if it be shown that the bank exercised proper care. People v. Third Ave. Savings Bank, 98 N. Y. 661. A bank negligent in making payment on a, forged order on a savings bank is liable therefor. Hagar v. Buffalo Savings Bank, 10 Misc. 455. § 144. Deposits of minors, and trust deposits and deposits in the names of more than one person. When any deposit shall be made by or in the name of any minor, the same shall be held for the exclusive right and benefit of such 136 The Banking Law. § 144. depositor, and free from the control or lien of all other persons, except creditors, and shall be paid, together with the dividends and interest thereon to the person in whose name the deposit shall have been made, and the receipt or acquittance of such minor shall be a valid and sufficient release and discharge for such deposit or any part thereof to the corporation. When any deposit shall be made by any person in trast for another, and no other or further notice of the existence and terms of a legal and valid trust shall have been given in writing to the bank, in the event of the death of the trustee, the same, or any part thereof, together with the divi- dends or interest thereon, may be paid to the person for whom the deposit was made. When a deposit shall be made by any person in the names of such depositor and another person and in form to be paid to either or the survivor of them such deposit thereupon and any additions thereto made by either of such persons upon the making thereof, shall become the property of such persons as joint tenants and the same together with all interest thereon shall be held for the exclusive use of the persons so named and may be paid to either during the lifetime of both or to the survivor after the death of one of them, and such payment and the receipt or acquittance of the one to whom such payment is made shall be a valid and sufficient release and discharge to said bank for all payments made on account of such deposit prior to the receipt by said bank of notice in writing not to pay such deposit in accordance with the terms thereof. Source.— 'Former § 114 as am'd by L. 1907, ch. 347. The amounts of deposits in a savings bank to the credit of any individua/1 must not exceed three thousand dollars and in computing this amount there must be included all accounts placed to the credit of the depositor, including those in which lie is jointly interested. Attorney-General Rep., 1912, page 555. See i 820, Code Civ. Pro. Interpleader in certain cases by order of the court. See § 2712, Code Civ. Pro. Savings bank accounts are to be deemed assets and go to the executors. See § 296, Penal Law. Unlawful investment by officers of a savings bank, a misdemeanor. DRAFT. — The provisions of this section as to interpleader do not apply to an action brought against a bank by the drawee of a draft upon it, pre- sumably upon the theory that the bank is liable before acceptance, fo^r the § 144. Savings Basks. ]37 reason that the bank is under no obligation to pay as the draft is not an assignment of the fund. Master v. Bowery Savings Bank, 31 Misc. 178. PARTIES. — Where the administrator of a deceased depositor brings an action against a savings bank on the theory that the deposit was not made in trust for another, the bank is not entitled under this section to have the legal representatives of the beneficiary made parties to the defendant. Washington v. Seamen's Bank, 29 Mise. 492. INTERPLEADER. — Affidavit on a motion for an order of interpleader should state that a person other than the depositor suing claimed the fund; that these persons were not in collusion with the bank; that the bank was ignorant of the grounds and merits of the respective claims. Mars v. Albany Savings Bank, 64 Hun, 424. It is not necessary to obtain an order in interpleader to show the nature of the action, or that the bank cannot decide between the clainiants. Mahro V, Greenwich Savings Bank, 16 Misc. 537. DEFENSE. — An illegal loan on a note of individuals does not work a forfeiture of the money loaned, and is not a defense in an action to recover the amount loaned. Rome Savings Bank v. Krug, 102 N. Y. 331. LOANS. — A claim that a loan was made in violation of statutes prohibit- ing savings banks from making loans on notes cannot be sustained where the loan was made on the security of a bond and mortgage as well as upon the notes. Auburn Savings Bank v. Brinkerhoff, 44 Hun, 142. DEPOSITS. — A savings bank may deposit in one bank in one account a portion of its "available fund " authorized by § 148, and also -a portion of its accumulated assets awaiting investment, as a " temporary deposit " authorized by § 149, notwithstanding the fact that the aggregate of the deposit exceeds the amount of its " available fund " which is authorized by § 148. Chenango Valley Savings Bank <•. Dunn, 40 App. Div. 552. CESTUI QUE TRUST.— Where a deposit is made in the name of the depositor as trustee for another, the money becomes the property of cestui que trust. Scott v. Harbeck, 49 Hun, 292. CIRCUMSTANCES. — Contemporaneous facts and circumstances, constitut- ing res gestae may be shown to prove that the real motive of the depositor was not to create a trust. Mabie v. Bailey, 95 N. Y. 206. Attending facts to the actions of the depositor may be shown in order to prove that the deposit was intended as in trust for another. Willis v. Smyth, 91 N. Y. 297. Where a deposit is made in a savings bank in the name of the depositor as trustee, the depositor thereby constitutes himself a trustee and the fund is thereby transferred to him as trustee. Schluter v. Bowery Savings Bank, 117 N. Y. 125. DEPOSIT IN TRUST. — A savings bank deposit in trust, not intended to give the cestui que trust, and interest therein, remains the property of th« depositor. Matter of Mueller, 50 App. Div. 67. BENEFICIARY. — A beneficiary may recover a pass-book from the admin- istrator of a deceased trustee. Harrison v. Totten, 53 App. Div. 178. 138 The Banking Law. § 145. REVOCATION. — If the trust be once established it is irrevocable in the absence of any reservation of power of revocation. Decker v. Union Dime Savings Institution, 15 App. Div. 553. PAYMENT. — A bank is protected in making a payment to the legal renre- sentative of a dead beneficiary. Bishop v. Seamen's Bank, 33 App. Div. 181. TRUST.— A deposit made by John WTiite for Elizabeth White, his wife, may be paid to the wife's executor. Fowler v. Bowery Sav. Bank. 113 N. Y. 450. A trust will not be implied from the mere deposit of an account in a sav- ings bank in the name of another. Beaver v. Beaver, 117 N. Y. 421. If a deposit is made in a wife's name it becomes her property whether the deposit were her funds or that of her husband. McGraw v. Tatham, 84 N. Y. 677. SURVIVOEI. — An account with a, husband or wife, or the survivor, goes to the surviving wife, and delivery of the book to her is unnecessary. McEl- roy v. Albany Savings Bank, 8 App. Div. 46. JOINT TENANTS. — ^That two parties went ix3 a savings bank and deposited money belonging tn the second in an account under the form M. or S. " pay- able to either and to the survivor," they held as joint tenants and the survivor is entitled to the whole; this is true although the deposit was not made when section 144 of the Banking Law was in force. Bonnette v. Molloy, 153 App: Div., 73. § 145. Wife witness against husband; claimants may be interpleaded. In all actions in any court in this state against any savings bank by a husband to recover for moneys deposited by his wife in her own name, or as her own money, the wife may be examined and testify as a witness in like manner as if she were an unmarried woman. In all actions against any savings bank to recover for moneys on deposit therewith, if there be any person or persons, not parties to the action, who claim the same fund, the court in which the action is pending, may, on the petition of such savings bank, and upon eight days' notice to the plaintiff and such claimants, make an order amending the proceedings in the action by making such claimants parties defendant thereto ; and the court shall thereupon proceed to determine the rights and interests of the several parties to the action in and to such funds. The funds on deposit which are the subject of the action may remain with such savings bank upon the same interest as other § 146. Savings Banks. 139 deposits of like amount to the credit of the action, until final judg- ment therein, and the same shall be paid by such savings bank in accordance with the order of the court; or the deposit in contro- versy may be paid into the court to aAvait the final determination of the action ; and when so paid into court the corporation shall be stricken out as a party to any such action, and its liability for such deposit shall cease. The costs in the actions referred to in this section shall in all cases be in the discretion of the court, and may be charged upon the fund affected by the action. The statutes limiting the time within which actions shall be commenced shall have no application to actions brought by depositors, their representatives or assigns against savings banks for deposits made therein. Source. — Former § 115. § 146. In what securities deposits may he invested. The trustees of any savings banks may invest the moneys deposited therein and the income derived therefrom only as> follows : 1. In the stocks or bonds or interest-bearing notes or obligations of the United States, or those for which the faith of the United States is pledged to provide for the payment of the interest and principal, including the bonds of the District of Columbia. 2. In the stocks or bonds or interest-bearing obligations of thi= state, issued pursuant to the authority of any law of the state. 3. In the stocks or bonds or interest-bearing obligations of any state of the United States, which has not within ten years previous to making such investment by such corporation defaulted in the payment of any part of either principal or interest of any debt authorized by the legislature of any such state to be contracted; and in the bonds or interest-bearing obligations of any state of the United States, issued in pursuance of the authority of the legislature of such state, which have, prior to May twenty-ninth, eighteen htmdred and ninety-five, been issued for the funding or settlement of any previous obligation of such state theretofore in default, and on which said funding or settlement obligation there 140 Thb Banking Law. § 146. has been no default in the payment of either principal or interest since the issuance of such funding or settlement obligation, and provided the interest on such funding or settlement obligation has been paid regularly for a period of not less than t«n years next preceding such investment; and in the stocks, bonds or interest- bearing obligations of any state of the United States, issued in pursuance of the authority of the constitution or the legislature of such state, to refund at or before maturity or within ninety days after maturity any of the bonds or obligations of such state which at their maturity or at the date of their payment, if paid before maturity, were legal investments for savings banks under the provisions of this subdivision, on which refunding obligation there has been no default in the payment of either principal or interest since the issuance thereof. 4. In the stocks or bonds of any city, county, tovm or village, school district bonds and union free school district bonds issued for school purposes, poor district bonds, or in the interest-bearing obligations of any city, county, town or village of this state, issued pursuant to the authority of any law of the state for the payment of which the faith and credit of the municipality issuing them are pledged. 5. In the stocks or bonds of any incorporated city situated in one of the states of the United States which was admitted to state- hood prior to January first, eighteen hundred and ninety-six, and which, since January first, eighteen hundred and sixty-one, has not repudiated or defaulted in the payment of any part of the principal or interest of any debt authorized by the legislature of any such state to be contracted, provided said city has a popula- tion, as shown by the federal census next preceding said invest- ment, of not less than forty-five thousand inhabitants, and was incorporated as a city at least twenty-five years prior to the making of said investment, and has not, since January first, eighteen hun- dred and seventy-eight, defaulted for more than ninety days in the payment of any part either of principal or interest of any bond, note or other evidence of indebtedness, or effected any com- promise of any kind with the holders thereof. But if. after such default on the part of any such state or city, the debt or security, ' § 146. Savings Banks. 141 in the payment of the principal or interest of which such default occurred, has been fully paid, refunded or compromised by the issue of new securities, then the date of the first failure to pay principal or interest, when due, upon such debt or security, shall be taken to be the date of such default, within the provisions of this subdivision, and subsequent failures to pay instalments of principal or interest upon such debt or security, prior to the refunding or final payment of the same, shall not be held to con- tinue said default or to fix the time thereof, within the meaning of this subdivision, at a date later than the date of said first failure in payment. If at any time the indebtedness of any such city, together with the indebtedness of any district, or other municipal corporation or subdivision except a county, which is wholly or in part included within the bounds or limits of said city, less its water debt and sinking fund, shall exceed seven per centum of the valuation of said city for purposes of taxation, its bonds and stocks shall thereafter, and until such indebtedness shall be reduced to seven per centum of the valuation for the purposes of taxation, cease to be an authorized investment for the moneys of savings banks, but the superintendent of banks may, in his discretion, require any savings bank to sell such bonds or stocks of said city, as may have been purchased prior to said increase of debt. 6. In bonds and mortgages on unincumbered real property situ- ated in this state, to the extent of sixty per centum of the value thereof. ISTot more than sixty-five per centum of the whole amount of deposits shall be so loaned or invested. If the loan is on unimproved and unproductive real property, the amount loaned thereon shall not be more than forty per centum of its actual value. Xo investment in any bonds and mortgages shall be made by any savings bank except upon the report of a committee of its trustees charged with the duty of investigating the same, who shall ■ certify to the value of the premises mortgaged or to be inortgaged, according to their best judgment, and such report shall be filed and preserved among the records of the corporation. Also in the following securities : (a) The first mortgage bonds of any railroad corporation of this state, the principal part of whose railroad is located within 142 The Banking Law. § 146. this state or of any railroad corporation of this or any other state or states connecting with and controlled and operated as part of the system of any such railroad corporation of this state and of which connecting railroad at least a majority of its capital stock is owned by such a railroad corporation of this state, or in the mortgage bonds of any such railroad corporation of an issue to retire all prior mortgage debt of such railroad companies respect- ively; provided that at no time within five years next preceding the date of any such investment such railroad corporation of this state or such connecting railroad corporation respectively shall have failed regularly and punctually to pay the matured principal and interest of all its mortgage indebtedness and in addition thereto regularly and punctually to have paid in dividends to its stock- holders during each of said five years an amount at least equal to four per centum upon all its outst-anding capital stock; and pro- vided, further, that at the date of every such dividend the outstand- ing capital stock of such, railroad corporation, or such connecting railroad company respectively, shall have been equal to at least one- third of the total mortgage indebtedness of such railroad corpora- tions respectively, including all bonds issued or to be issued imder any mortgage securing any bonds in which such investment shall be made. (b) The mortgage bonds of the following railroad corporations: The Chicago and Northwestern Railroad Company. Chicago, Turlington and Quincy Railroad Company. Michigan Central Railroad Company. Illinois Central Railroad Company. Penn- sylvania 'Railroad Company. Delaware and Hudson Company. Delaware, Lackawanna and Western Railroad Company. New York, New Haven and Hartford Railroad Company. Boston and Maine Railroad Company. Maine Central Railroad Company; the Chicago and Alton Railroad Company ; Morris and Essex Railroad Company. Central Railroad of New Jersey. United New Jersey Railroad and Canal Company, also in the mortgage bonds of railroad companies whose lines are leased or operated or controlled by any railroad company specified in this paragraph if said bonds be guaranteed both as to principal and interest by the railroad company to which said lines are leased or by which they I 146. Savings Banks. 143 are operated or controlled. Provided that at the time of making investments authorized by this paragraph the said railroad corpora- tion issuing such bonds shall have earned and paid regular divi- dends of not less than four per centum per annum in cash on all their issues of capital stock for the ten years next preceding such investment and provided the capital stock of any said railroad cor- poration shall equal or exceed in amount one-third of the par value of all its bonded indebtedness ; and further provided that all bonds authorized for investment by this paragraph shall be secured by a mortgage which is a first mortgage on either the whole or some part of the railroad and railroad property of the company issuing such bonds, or that such bonds shall be mortgage bonds of an issue to retire all prior mortgage debts of such railroad company ; provided, further, that the mortgage which secures the bonds authorized by this paragraph is dated, executed and recorded prior to January first, nineteen hundred and five. (c) The mortgage bonds of t^e Chicago, Milwaukee and Saint Paul Eailway Company, and the Chicago, Rock Island and Pacific Eailway Company, so long as they shall continue to earn and pay at least four per centum dividends per annum on their outstanding capital stock, and provided their capital stock shall equal or exceed in amount one-third of the par value of all their bonded indebtedness, and further provided that all bonds of either of said companies hereby authorized for investment shall be secured by a mortgage which is a first mortgage on either the whole or some part of the railroad or railroad property actually in the possession of and operated by said company, or that such bonds shall be mortgage bonds of an issue to retire all prior debts of said railroad company; provided further, that the mortgage which secures the bonds authorized by this paragi-aph is dated, executed and recorded prior to January first, nineteen hundred and five. (d) The first mortgage bonds of the Fonda, Johnstown and Gloversville Railroad Company, or in the mortgage bonds of ^aid railroad company of an issue to retire all prior mortgage debts of said railroad company, and provided the capital stock of said rail- road company shall equal or exceed in amount one-third of the par 144 The Banking Law. § 146. value of all its bonded indebtedness ; and, provided, also that such railroad be of standard gauge of four feet, eight and one-half inches, and in the mortgage bonds of the Buffalo Creek Railroad Company of an issue to retire all prior mortgage debts of said rail- road company; provided that the bonds authorized by this pa.*- graph are secured by a mortgage dated, executed and recorded prior to January first, nineteen hundred and five. (e) The mortgage bonds of any railroad corporation incorpo- rated under the lav?s of any of the United States, which actually owns in fee not less than five hundred miles of standard gauge rail- way exclusive of sidings, vdthin the United States, provided that at no time within five years next preceding the date of any such investment such railroad corporation shall have failed regularly and punctually to pay tbe matured principal and interest of all its mortgage indebtedness and in addition thereto regularly and punctually to have paid in dividends to its stockholders during each of said five years an amount at least equal to four per centum upon all its outstanding capital stock; and provided further that during said five years the gross earnings in each year from the operations of said company, including therein the gross earnings of all railroads leased and operated or controlled and operated by said company, and also including in said earnings tiie amount received directly or indirectly by said company from the sale of coal from mines owned or controlled by it, shall not have been less in amount than five times the amount necessary to pay the interest payable during that year upon its entire outstanding indebtedness, and the rentals for said year of all leased lines, and further pro- vided that all bonds authorized for investment by this paragraph shall be secured by a mortgage which is at the time of making said investment or was at the date of the execution of said mort- gage (1) a first mortgage upon not less than seventy-five per centum of the railway owned in fee by the company issuing said bonds exclusive of sidings at the date of said mortgage or (2) a refunding mortgage issued to retire all prior lien mortgage debt9 of said company outstanding at the time of said investment and csovering at least seventy-five per centum of the railway owned in fee by said company at the date of said mortgage. But no one of § 146. Savings Banks. 145 the bonds so secured shall be a legal investment in case the niort- gage securing the same shall authorize a total issue of bonds ■which together with all outstanding prior debts of said company, after deducting therefrom in case of a refunding mortgage, the bonds reserved under the provisions of said mortgage to retire prior debts at maturity, shall exceed three times the outstanding capital stock of said company at the time of making said investment. And no mortgage is to be regarded as a refunding mortgage, under the provisions of this paragraph, unless the bonds which it secures mature at a later date than any bond which it is given to refund, nor unless it covers a mileage at least twenty-five per centum greater than is covered by any one of the prior mortgages so to be refunded. (f ) Any railway mortgage bonds which would be a legal invest- ment under the provisions of paragraph (e) of this subdivision, ex- cept for the fact that the railroad corporation issuing said bonds actually owns in fee less than five hundred miles of road, provided that during five years next preceding the date of any such invest- ment the gross earnings in each year from the operations of said corporation, including the gross earnings of all lines leased and operated or controlled and operated by it, shall not have been less than ten million dollars. (g) The mortgage bonds of a railroad corporation described in the foregoing paragraph (e) or (f) or the mortgage bond of a railroad owned by such corporation, assumed or guaranteed by it by endorsement on said bonds, provided said bonds are prior to and are to be refunded by a general mortgage of said corporation the bonds secured by which are made a legal investment under the provisions of said paragraph (e) or (f) ; and provided, further, that said general mortgage covers all the real property upon which the mortgage securing said underlying bonds is a lien. (h) Any railway mortgage bonds which would be a legal invest- ment under the provisions of paragraph (e) or (g) of this subdi- vision, except for the fact that the railroad corporation issuing said bonds actually owns in fee less than five hundred miles of road, provided the payment of principal and interest of said bonds is 146 The Banking Law. § 146. guaranteed by endorsement thereon by, or provided said bonds have been assumed by a corporation whose first mortgage is, or refunding mortgage bonds are a legal investment under the pro- visions of paragraph (e) or (f ) of this subdivision. But no one of the bonds so guaranteed or assumed shall be a legal investment in case the mortgage securing the same shall authorize a total issue of bonds which, together with all the outstanding prior debts of the corporation making said guarantee or so assuming said bonds, including therein the authorized amount of all previously guaran- teed or assumed bond issues, shall exceed three times the capital stock of said corporation, at the time of making said investment (i) The first mortgage bonds of a railroad the entire capital stock of which, except shares necessary to qualify directors, is owned by, and which is operated by a railroad whose last issued refunding bonds are a legal investment under the provisions of paragraph (a), (e), or (f) of this subdivision, provided the pay- ment of principal and interest of said bonds is guaranteed by in- dorsement thereon by the company so owning and operating said road, and further provided the mortgage securing said bonds does not authorize an issue of more than twenty thousand dollars in bonds for each mile of road covered thereby. But no one of the bonds so guaranteed shall be a legal investment in case the mort- gage securing the same shall authorize a total issue of bonds which together with all the outstanding prior debts of the company mak- ing said guarantee, including therein the authorized amount of aU previously guaranteed bond issues, shall exceed three times the capital stock of said company, at the time of making said invest-' ment. Bonds which have been or shall become legal investments for savings banks under any of the provisions of this section shall not be rendered illegal as investments, though the property upon which they are secured has been or shall be conveyed to another corporation, and though the railroad corporation which issued or assumed said bond has been or shall be consolidated with another railroad corporation, if the consolidated or purchasing corporation shall assume the payment of said bonds and shall continue to pay regularly interest or dividend or both upon the securities issued against, in exchange for or to acquire the stock of the company § 146. Savings Banks. 147 consolidated or the property purchased or upon securities subse- quently issued in exchange or substitution therefor, to an amount at least equal to four per centum per annum upon the capital stock outstanding at the time of such consolidation or purchase of said corporation which has issued or assumed said bonds. Not more than twenty-five per centum of the assets of an-^ sav- ings bank shall be loaned or invested in railroads bonds, and not more than ten per centum of the assets of any savings bank shall be invested in the bonds of any one railroad corporation described in paragraph (a) of this subdivision, and not more than five per centum of such assets in the bonds of any other railroad corpora- tion. In detennining the amount of the assets of any savings bank under the provisions of this subdivision its securities shall be esti- mated in the manner prescribed for determining the per centum of surplus by section one hundred and fifty-four of this chapter. Street railroad corporations shall not be considered railroad cor- porations within the meaning of this subdivision. 7. In real property subject to the provisions of section one hun- dred and forty-seven. Source.— Former § 116 as am'd by L. 1893, ch. 440; L. 1895, oh. 813; L. 1896, Oh. 454; L. 1897, ch. 386; L. 1898, eh. 236; L. 1899, ch. 386; L.1900, ch. 42; L. 1902, ch. 440 and oh. 598; L. 1903, ch. 328 and oh. 640; L. 1905, ch. 401 and L. 1906, oh. 581. Amended by L. 1912, chap. 100, and L. 1913, chap. 416. Note. — The purpose of the amendment of subd. 3 by adding, " and in the stocks, bonds issuance thereof," by ohap. 416 of 1913 was to legalize as investments for the savings banks of the State the bonds of the State of Tennessee which it proposes to issue in substitution of bonds which mature July 1, 1913.— Ed. The word " valuation " as used in subd. 5 includes personal property as well as real estate. Attorney- General Rep., Feb. 15, 1911. The bonds of the State of Louisiana are not legal investments for the sav- ings banks of this State. Attorney-General Eep., 1912, page 346. The bonds of the City of Dallas, Texas, are legal investments for savings banks as the debts incurred by the Stat© from 1861 to 1869 are not debts as were authorized by tihe legislature and a. repudiation of the State debt within the meaning of § 146. Attorney-General Rep., 1912, page 442. The refunding bonds of the State of Tennessee issued pursuant to an act of the General Assembly of said State approved by the Governor thereof, February 21, 1913, are legal investments for savings banks. Attorney-General Rep., 1913, page 158. 148 The Banking Law. § 147. The improv«ment bonds of the City of Portland, Ore., issued pursuant to section 383-A of the Charter of said city are so far as the proviS'ions of sec- tion 146 of the Banking Law are concerned' legal investments for the Savings Banks of this State. Attorney-General Rep., May, 1913. DEPOSITS. — The word '' deposits " includes the amounts standing upon the books of the bank to the credit of depositors. Attorney-General Rep. 1903, page 358. MORTGAGE. — The words " bonds and mortgages " employed In § 146 do not refer to bonds of a benevolent order issued by trustees to whom a mort- gage was given by said benevolent order. Attorney-General Rep. 1902, page 246. BONDS. — The bonds of the Manhattan Elevated Railway Company are legal investments. Attorney-Oeneral Rep. 1899, page 183. The bonds of the Board of Commissioners of the Port of New Orleans are not legal investments for savings banks of this State. Attorney-General Rep., August 10, 1911. Tie bonds of the city of Omaha, Neb., are not legal investments for savings banks in the State of New York. Attorney-General Rep., August 19, 1911. LOAN. — A lease for twenty years with a renewal clause, of real estate, is not a bar preventing a savings bank from loaning its money upon such real estate. Attorney-General Rep. 1896, page 171. The trustees of savings bank may loan the available funds of a- savings bank, or any part thereof, upon the pledge of first mortgage bonds of rail- roads mentioned and described in § 146, subd. 6, but not in excess of 20 per cent of the cash market value of such first mortgage bonds so pledged. Attorney-General Rep., April 11, 1911. It is not proper for the trustees of a savings bank to retain bonds which are past due or enter into an agreement by which the time of payment would be extended. Attorney-General Rep., March 6, 1911. NORTHERN DIV. MORT. EASTERN RY. CO. OF MINN.— The requirement of the statute is complied with if at the time of the investment the railway ovms' not less than five hundred miles of standard gauge railways, exclusive of sidings. Attorney-General Rep. April 10, 1909. UNINCUMBERED. — " Unincumbered real property " comprehends property upon which the bank itself bolds a first mortgage, wiiidi is the only incum- brance, within the meaning of tlhe section. Attorney-General Rep., June 11, 1909. § 147. Limitation as to real property. - Every such corporation may purchase, hold or convey real prop- erty only as follows : 1. A plot whereon is erected or may be erected a building or buildings requisite for the convenient transaction of its business, and from portions of which not required for its own use a revenue may be derived. The cost of such building or buildings and lot shall in no ease exceed twenty-five per centum of the net surplus of § 148. Savings Banks. 149 the corporation, except by written permission of the superintendent of banks. The estimate of the cost of said building and lot, and the plans of the building to be erected shall first be submitted to the superintendent of banks for his approval, before the purchase of the lot is made or before the erection of the building is com- menced. 2. Such as shall have been purchased by it at sales upon the foreclosure of mortgages owned by it, or on judgments or decrees obtained or rendered for debts due to it, or in settlements effected to secure such debts. All such real property shall be sold by such corporation within five years after the title to the same shall be vested in it, unless, upon application by the board of trustees, the superintendent shall extend the time within which such sale shall be made. Every such corporation may, with the approval in writing arid under the seal of the superintendent of banks, change its location within the limits of any city or town wherein it may be established. In affecting such change of location such corporation owning s banking house and lot, may purchase such additional plot under the provisions of subdivision one of this section as the corporation may require; and such banking house and lot previously owned and occupied shall be sold as provided in this subdivision concern- ing real property acquired in satisfaction of debts. Source.— Former § 117 as am'd by L. 1894, ch. 178. REAL ESTATE. — The superintendent may in his discretion approve the action of directors of a savings bank in purchasing a lot upon which to erect a building. Attorney-General Rep. 1896, page 193. § lis. Available fund for current expenses; how loaned. The trustees of every such corporation shall as soon as practi- cable invest the moneys deposited with them in the securities au- thorized by this article; but for the purpose of meeting current payments and expenses in excess of the receipts, there may be kept an available fund not exceeding ten per centum of the whole amount of deposits with such corporation, on hand or deposit in any bank in this state organized under any law of this state or of the United States, or with any trust company incorporated by any 150 The Banking Law. § 149. law of the state ; but the stun so deposited in any one bank or trust company shall not exceed twenty-five per centum of the paid up capital and surplus of any such bank or company; or such avail- able fund, or any part thereof, may be loaned upon pledge of the securities or any of them named in subdivisions one, two, three, four and five of section one hundred and forty-six, or upon the first mortgage bonds, or any of them, of the railroads mentioned and described in subdivision six of said preceding section but one, but not in excess of ninety per centum of the cash market value of such securities so pledged. Should any of the securities so held in pledge depreciate in value, after making any loan thereon, the trustees shall require the immediate payment of such loan or of a part thereof, or additional security therefor, so that the amount \loaned shall at no time exceed ninety per centum of the market value of the securities pledged for the same. Soul:ce.— Former § 118 as am'd by L. 1901, eh. 406. LOAN SECtnUTIES. — The directors of a savings bank are vmder no cir- cumstances authorized to loan the securities, or any of them in which the funds of the bank are invested, no matter how good the security may be which is offered or given for such loan. Attorney-General Rep. 1906, page 516. TIhe limitation upon deposits has no application to loans made under this section. Attorney-General Rep., Oct. 19, 1909. PREFERENCE.— Sections 118 and 130 of the Banking Law permitting savings banks to keep a fund on deposit in state or national banks and pro- viding that in case of insolveitcy a savings bank shall have a. preference is not in conflict with the National Banking Law, § 5242, prohibiting transfers by a national bank after an act of insolvency. E. S. Bank v. Davis, 142 N. Y. 590. § 149. Temporary deposits. Every such corporation may also deposit temporarily in the banks or trust companies specified in section one hundred and forty-eight the excess of current daily receipts over the payments, until such time as the same can be judiciously invested in the securities re- quired by this article. Whenever it shall appear to the superin- tendent of banks that the trustees of any such corporation are violating the spirit and intent of this provision by keeping perma- nently uninvested all or an undue proportion of the moneys re- ceived by them, he shall report the facts to the attorney-general. § 150. Savings Banks. 151 who shall proceed against such corporatioa in the manner provided in section one hundred and twenty-seven of chapter six hundred and eighty-nine of the laws of eighteen hundred and ninety-two. Source.— Former § 119. DEPOSITS. — A aavinga bank may deposit in one bank in one account a portion of its '" available fund " authorized by § 148, and also a portion of ite accumulated assets awaiting investment, as a " temporary deposit " authorized by § 149, notwithstanding the fact that the aggregate ot the deposit exceeds the amount of " available fund " which is authorized by § 148. Chenango Valley Sa,vings Bank v. Dunn, 40 App. Div. 532. This section does not offer another form of investment, but it gives per- mission to keep on deposit a certain sum where it may be drawn by check, Paine v. Barnum, 59 How. Pr. Eep. 303. INTEREST. — Although a savings bank secures an agreement to pay interest from the bank with which it makes a, deposit, yet that does not convert the deposit into an unauthorized loan. Erie County Savings Bank y. Coit, 104 N. Y. 532. § 150. Personal security prohibited; loans on bond and mortgage. The trustees of any savings bank shall not loan the moneys de- posited with them or any part thereof, upon notes, bills of ex- change, drafts or any other personal securities whatever. In" all cases of loans upon real property, a sufficient bond secured by a mortgage thereon, shall be required of the borrower, and all ex- penses of searches, examinations and certificates of title, and of drawing, perfecting and recording papers, shall be paid by the borrower. Source.— Former § 120 as am'd by L. 1S98, ch. 556. MORTGAGE TAX.— The mortgage tax imposed by chapter 532 of 1906 is a tax imposed upon the amount of money secured by a mortgage and the trustees of a savings bank are clearly justified in paying such tax and not imposing it upon the owner of the tee of the land covered by the mortgage. Attorney-General Rep. 1906, page 504. MORTGAGE. — A loan on a bond and mortgage is not invalidated under this section, even though notes were taken in addition. Auburn Savings Bank v. Brinkerhoff, 44 Hun, 142. LOAN. — Although a loan is not authorized by this section, yet it may be recovered, as the illegal acts of the officers of the bank do not work the forfeiture of the money loaned. Rome Savings Bank v. Krug, 102 N. Y. 331. The illegal action of directors in investing its funds does not work a for- feiture of the money loaned which may be recovered, although the security is void. Pratt v. Short. 79 N Y, 437. 152 The Banking Law.. §§ 151, 152. The purchase by a savings hank of commercial paper is not loaning the moneys deposited with it " upon notes, hills of exchange, drafts, or any other personal security whatever " within the meaning of § 150. Citizens Savings Bank v. Couse, 68 Misc. 153. § 151. Mortgaged property to be insured. Whenever buildings are included in the valuation of any laal property upon whicih a loan shall be made by any such corporation, they .shall be insured by the mortgagor in such company or com- panies as the directors shall direct, and the policy of insurance shall be duly assigned, or the loss made payable as its interest may appear, to such corporation; and any such corporation may renew such policy of insurance in the same or any other company or com- panies as they may elect, from year to year, or for a longer or shorter term, in case the mortgagor shall neglect to do so, and may charge the amount paid to the mortgagor. AU the necessary charges and expenses paid by such corporation for such renewal or renewals shall be paid by the mortgagor to the corporation, and shall be a lien upon the property mortgaged, recoverable with interest from the time of payment as part of the moneys secured to be paid by the mortgage. Source. — ^Former § 121. § 152. Restrictions on metliods of doing business. No savings banks shall directly or indirectly deal or trade in real property in any other case or for any other purpose than is authorized by this article, or deal or trade in any goods, wares, merchandise or commodities whatever, except as authorized by this article, and except such personal property as may be neces- sary in the transaction of its business ; nor shall any savings bank or any officer thereof in his regular attendance upon the business of the bank, in any manner buy or seU exchange, or gold or silver, or collect or protest promissory notes or time bills of exchange; but savings banks may sell gold or silver received in payment of interest or principal of obligations owned by them, or from de- positors in the regular course of business, and may pay regular de- positors when requested by them by draft upon deposits to the credit of the bank in the city of 'New York, and charge current § 153. Savings Banks. 153 rates of exchange for such drafts. No savings bank shall borrow money or pledge or hypothecate any of its securities, except with the written approval of the superintendent of banks and in pur- suance of a resolution adopted by vote of a majority of its board of trustees, duly entered upon their minutes, whereon shall be recorded the ayes and nays upon each vote. No savings bank shall make or issue any certificate of deposit payable either on demand or at a fixed day, or pay any interest except regular quar-r terly or semi-annual dividends upon any deposits or balances, -y pay any interest or deposit, or portion of a deposit, or any check drawn upon itself by a depositor unless the pass-book of the de- positor be produced, and the proper entry be made therein at the time of the transaction. The board of trustees may, by thcii by-laws, provide for making payments in cases of loss of pass-bcok, or other exceptional cases where the pass-book can not be produced without loss or serious inconvenience to depositors, the right to make such payments to cease when so directed by the superintend- ent of banks, upon his being satisfied that such right is being im- properly exercised by any savings bank; but payments may be made upon the judgment or order of a court or the power of attorney of a depositor. Source.— Former § 122 as am'd by L. 1908, eh. 154. The purpose of the amendment of this section by ch. 154 of 1908 was to pro- hibit savings banks from pledging their securities except upon the written approval of the superintendent. Savings banks are not authorized to prefer deposits of postal savings banks or of court funds through a pledge of collateral securities guaranteeing the payment of the deposits and they may not guarantee a fixed interest on such deposits. Attorney-Gi-eneral Rep., 1912, page 500. PASS-BOOK. — The provision that no savings bank may make any payment except upon the production of the pass-book is not conclusive in an action to recover a deposit. Kenney v. Harlem Savings Bank, 61 Misc. 144. DEI/TVERY. — It is not illegal to sell stock " seller sixty," or in other words delivery at any time within sixty days. Sistare v. Best, 88 N. Y. 527. § 153. Rate of interest; extra dividends. The trustees of every such corporation shall regulate the rate of interest or dividends not to exceed five per centum per annum upon the deposits therewith, in such manner that depositors shall 154 The Banking Law. § 153. receive as nearly as may be, all the profits of such corporation, after deducting necessary expenses and providing in a manner approved by the superintendent of banks, for the amortization or gradual extinction of premiums or discounts on all securities owned by such corporation so as to bring them to par at maturity, and reserving such amounts as the trustees may deem expedient as a surplus fund for the security of the depositors, which to the amount of fifteen per centum of its deposits, the trustees of any such corporation may gradually accumulate and hold, to meet ar.; contingency or loss in its business from the depreciation of 113 securities or otherwise. The trustees may classify their deposit- ors according to the character, amount and duration of their deal- ings with the corporation, and regulate the interest or dividends allowed in such manner that each depositor shall receive the same ratable portion of interest or dividends as all others of his class. The trustees of any such corporation shall not declare or allow interest on any deposit for a longer period than the same has been deposited, except that deposits made not later than the tenth busi- ness day of the month, commencing any semi-annual interest period, or the third business day of any month, or withdraw!? upon one of the last three business days of the month, ending any quarterly or semi-annual interest period, may have interest de- clared upon them for the whole of the period or month when so deposited or withdrawn. No dividends or interest shall be de- clared, credited or paid, except by the authority of a vote of the board of trustees duly entered upon their minutes, whereon shall be recorded the ayes and nays upon each vote ; but accounts closed between dividend periods may be credited with interest at the rate of the last dividend, computing from the last dividend period to the date when closed, if the by-laws so provide. AVhenever any interest or dividend shall be declared and credited in excess of the interest or profits earned and appearing to the credit 01 the corporation, after making, the deduction for expenses and amor- tization aforesaid, the trustees voting for such dividend shall be jointly and severally liable to the corporation for the amount of such excess so declared and credited. The trustees of any such corporation whose surplus amounts to fifteen per centum of its § 154. Savings Banks. 155 deposits, at least once in three years, shall divide equitably the accumulation beyond such authorized surplus as an extra dividend to depositors, in excess of the regular dividends authorized. A notice posted conspicuously in a bank of a change in the rate of interest shall be equivalent to a personal notice. Source. — Former § 122 as am'd by L. 1908, ch. 124. The purpose of the a,mendment of this section by ch. 124 of ltK)8 was to compel savings banks to amortize premiums on securities held by them in estimating their rate of interest or extra dividends. Savings banks are not authorized to prefer deposits of postal savings banks or of court funds through a, pledge of collateral securities guaranteeing the payment of the deposits and they may not gxiarantee a fixed interest on such deposits. Attorney -General Rep., 1912, page 500. See § 297, Penal Law. Trustee declaring illegal dividend guilty of misdemeanor. TRUSTEE. — If a trustee votes for a dividend less than the whole amount of interest or profits earned, without any deduction therefrom for expenses, although the earnings have not been actually received, he does not, in the ibsence of fraud overstep his statutory duty. Van Dyck v. McQuade, 86 NT. Y. 38. INTEREST. — A depositor cannot recover dividends or interest on the excess of $3,000 deposited to his credit. Taylor v. Empire State Sav. Bank, 66 Hun, 538. " The tenth business day " should include a Saturday which is a half holiday. Attorney-General Rep., June 20, 1911. § 154. Per centum of surplus, how determined. In determining the per centum of surplus held by any savings bank its interest-bearing stocks and bonds shall not be estimated .above their par value or above their market value if below par. Its bonds and mortgages on which there are no arrears of interest for a longer period than six months shall be estimated at their face, and its real property at not above cost. The superintendent of banks shall determine the valuation of such stocks or bonds, or bonds and mortgages, as are in arrears of interest for six months or more, and of all other investments not herein enumer- ated, from the best information he can obtain, and he may change the valuation thereof from time to time as he may obtain other and further information. Source. — Former § 124. 156 The Banking Law. §§ :^ 55-157. § 155. Compensation of officers. The trustees of any such corporation acting as officers of the same, -whose duties require and receive their regular and faithful at- tendance at the institution, and the trustees appointed as a com- mittee to examine the vouchers and assets pursuant to section one hundred and fifty-seven of this chapter, or to perform the duties required by subdivision six of section one hundred and forty-six of this chapter, may receive such compensation as in the opinion of a majority of the board of trustees shall be just and reasonable; but such majority shall be exclusive of any trustee to whom such compensation shall be voted. Trustees, as such, shall not be paid for their attendance at meetings of the board. Source. — Former § 125. DAMAGES. — The relation between trustees and depositors is that of trustee and cestui que trust; the former are liable for damages caused by their negligence and misconduct. Hun v. Gary, 59 How. Pr. 441. TRUSTEE. — A savings bank has no right to pay the actual and neces- sary expenses incurred by trustees attending the meetings of the board of trustees. Attorney-General Eep. 1905, page 444. A savings bank has no right to appoint one of its trustees to a6t as secretary of the meetings of trustees and to receive compensation therefor. Attorney-General Rep., June 8, 1910. § 156. No other report or inspection required. No such corporation shall hereafter be required to make any annual or other report to the legislature or to the mayor or com- monalty of any city, nor to the board of supervisors of any county, nor to any other officer or authority except as provided in this chapter; nor shall it be subject to the inspection or supervision of any local officer or board, nor to any interference from any such officer or board, in any manner appertaining to its business* or dealings. Source. — Former § 126. As § 156 of the Banking Law gives a, trust company power to act' as the fiscal agent of any corporation and to buy and sell stocks and bonds, it follows that it has the right to advertise fpr sale the bonds of a corporation whose fiscal agent it is and to prepare a, prospectus for such bonds. Kavanaugh v. Gould. 147 App. Div. 281. § 157. Examination of voucliers and assets by trustees. The trustees of every savings bank, by a committee of not less than three of their number, on or before the first days of January §§ 158, 159. Savings Banks. 157 and July in each year, shall thoroughly examine the books, vouch- ers and assets of such savings bank, and its affairs generally. The statement or schedule of assets and liabilities reported to the superintendent of banks for the first of January and July in each year shall be based upon such examination, and shall be verified by the oath of a majority of the trustees making it ; and the trus- tees of any savings bank may require such examination at such other times as they shall prescribe. The trustees shall, as often as once in each six months during each year, cause to be taken an accurate balance of their depositors' ledgers, and in their semi- annual report to the superintendent they shall state the fact that such balance has been taken, and the discrepancies, if any, existing betv^een the amount due depositors, as shown by such balance, and the amount so due as shovni by the general ledger. Source.— Former § 128. § 158. Expenses to be paid. For the purpose of defraying the expenses incurred in the per- formance by the superintendent of the duties imposed upon him with respect to savings banks, other than the examinations thereof, each such corporation shall annually pay five dollars into the treasury of the state, and the residue of such expenses to be ap- portioned among them by the superintendent shall be paid into the treasury of the state by savings banks whose deposits exceed one hundred thousand dollars, in proportion to the amount of as- sets severally held and reported by them. If any savings bank shall, after due notice, refuse or neglect for thirty days to pay it's allotted share of such charges, the superintendent shall report the fact to the attorney-general, who may maintain an action in the name of the people against such corporation for the recovery of such charges, and the same, when recovered, shall be paid into the treasury of the state. Source. — Former § 129. ■§ 159. Certain debts from insolvent banl i^'t as such, when authorized by the 164 The Banking Law. § 180. provisions of this chapter. Such certificate shall within sixty days after its acknowledgment be filed, one duplicate in the office of the county clerk of the county wherein such trust company is proposed to be located, and one duplicate in the office of the superintendent of banks of the state. The capital stock of any such corporation must be at least five hundred thousand dollars; provided, how- ever, that a corporation with a capital of not less than two hun- dred thousand dollars may be organized in any city containing more than one hundred thousand inhabitants and less than two hundred and fifty thousand inhabitants, and a corporation may be organized with a capital of not less than one hundred and fifty thousand dollars in any city containing more than twenty- five thousand inhabitants and less than one hundred thousand inhabitants, and with a capital of at least one hundred thousand dollars in a city or town the population of which does not exceed twenty-five thousand, the number of inhabitants in each case to be ascertained or determined by the last federal or state enumeration. Source.— Former § 150 as am'd iby L. 1893, eli. 314. See § 4, General Corporation Law, eh. 28 of 1909. Qualifiea.tion3 of incorporators. See § 23, General Corporation Law, ch. 28 of 1909. Qualiiioationg of members as voters. See § 26 et seg., General Corporation Law. Proxies, elections, etc. See § 50, Stock Corporation Law, ch. 61 of 1909. Issue and transfer of capital stock. See § 53 et seg., Stock Corporation Law, ch. 61 of 1909. Subscription and issue of capital stock. See § 61, Stock Corporation Law, eh. 61 of 1909. Preferred and common stock. See § 183, Tax Law, eh. 62 of 1909. Trust companies exempt from tax on capital stock. See § 188, Tax Law, oh. 62 of 1909. Franchise tax on trust companies. See § 60 et seg., General Corporation Law. Change of name of trust company. See § 660, Penal Law. Fraud in organization of trust companies. ' See § 662. Penal Law. Fraudulent issue of stock of trust companies. See § 661, Penal Law. Frauds in procuring organization of trust companies. See § 668, Penal Law. Misconduct at corporate elections of trust companies. BRANCH OFFICE.— A trust company organized under the Banking Law lias the right to open a branch office; a trust company organized under a special act may open a branch office if the special act does not prohibit such action. Attorney-General Rep., 1901, page 222. §§ 181, 183. Trust Companies. 165 § 181. Previous notice of intention to be given. Before filing the organization certificate, a notice of intention to organize such trust company shall he published at least once a ■week for four -weeks in a newspaper to he designated by the super- intendent of hanks published in the city or town where such trust company is proposed to be located. Such notice shall specify the names of the proposed corporators, the name of the proposed cor- poration and the location of the same as set forth in such organiza- tion certificate. If there is any trust company or trust companies organized and doing business in such city, a copy of such notice shall also be sent to each at least fifteen days before the filing of the organization certificate. Source. — Former § 151 as" am'd by L. 18{>3, ch. 313. § 182. When superintendent shall file certificate. Upon the receipt of any such organization certificate at the ofiice of the superintendent, if it shall not be in form and sub- stance, or duly and properly acknowledged, as required by this article, or shall not be accompanied by evidence satisfactory to the superintendent of the publication and service in good faith ac- cording to the intent and purpose of this chapter of the notice required by this article, the superintendent shall refuse to file such certificate, until it shall be amended to conform to the provisions of this article. If such certificate is in due form and duly executed according to the provisions of this article, and is accompanied by evidence satisfactory to the superintendent of the proper publication and service in good faith of such notice, he shall forthwith indorse the same over his official signature, " filed for examination," with the date of such indorsement. Source. — Former § 152. SUPERINTENDENT.— The discretion of the superintendent upon an appli- cation for leave to organize a trust company is confined' to two questions; as to the general fitness of the proposed incorporators; and as to whether the public convenience and advantage would be promoted. Attorney-General Rep., 1900, page 216. § 183. Examination by and certificate of superintendent. When such certificate shall have been filed, the superintendent shall ascertain from the best sources of information at his com- 166 The Banking Law. § 183. maud whether the general fitness for the discharge of the duties appertaining to such a trust of the persons named in the certificate is such as to command the confidence of the community in which such trust company is proposed to be located, and whether the public convenience and advantage would be promoted by such es- tablishment. If so satisfied, he shall, within sixty days after such certificate has been filed by him for examination, issue under his hand and official seal the certificate of authorization required by this chapter to the persons named in such certificate, or to a por- tion of them, together with such other persons as a majority of those named in such organization certificate shall by writing ap- prove, which certificate, so issued by him, shall authorize the per- sons named therein to become a trust company as designated in the organization certificate, subject to the provisions of this chapter; but no person shall be named in such certificate of authorization who shall not have duly made and acknowledged the declaration prescribed in subdivision six of section one hundred and eighty. The superintendent shall transmit such certificate of authorization to the county clerk of such county, who shall file the same and at- tach it to the organization certificate previously filed by him, and record both certificates in the book of records of incorporation, and the superintendent shall also file a duplicate of such certificate in his own office. If the superintendent shall not be satisfied that the establish- ment of a trust company as proposed in any organization certifi- cate filed by him is expedient and desirable, he shall, within sixty days after the filing of such certificate by him, give notice to the county clerk of such county that he refuses to issue a certificate of authorization for such trust company, which notice shall be forthwith filed by the county clerk with the organization certificate. Source. — Former § 153. DIRECTOKS. — The superintendent of banks, in regard to the increase of the number of directors of a trust company, should ascertain whether the proposed directors are fit for the discharge of the duties pertaining to the trust, and his consent should be based on such facts. Attorney-General Rep. 1906, page 497. BRANCH. — The superintendent of banks should authorize a bank to open a branch when he is satisfied that the bank is solvent and in such financial condition that it can meet the obligations of new depositors and customers. Attorney-General Eep. 1905, page 427. §§ 184, 186. Teust Companies. 167 § 184. Capital must be paid in cash. The superintendent of banks shall, before issuing a certif.cate of authorization to any such corporation, examine, or cau*^. an examination to be made, in order to ascertain whether the requisite capital of such corporation has been paid in in cash; and if it ap- pears from such examination that such capital has not been fully paid in in cash, a certificate of authorization shall not be granted ; and no such corporation shall commence business until such cer- tificate of authorization has been granted. Source. — ^Bbrmer § 154. § 185. List of stocl majority of the directors. Wo such corporation shall receive funds and moneys paid or brought into court, except it be designated by the comptroller of the state of JSTew York a depositary thereof. No such corporation shall transact its ordinary business by branch office in any city not named in its certificate of inco]> poration or charter as the place where its business is to be transacted except that a trust company having a combined capital and surplus of at least two million dollars may open and maintain a branch office or branch offices in one or more places located without the state of New York either in the United States of America or in foreign countries. No trust company shall open a branch office within or without the state of New York with- out first having obtained the written approval of the superintend- ent of banks to the opening of such branch office, which written 170 The Banking Law. § 186. approval may be given or withheld in his discretion, and shall not be given by him until he has ascertained to his satisfaction that the public convenience and advantage will be promoted by the opening of such branch office within the state or that the con- venience and advantage of citizens of this state would be pro- moted by opening of such branch oifices without the state either in the United States of America or in foreign countries; and, provided further, that no trust company in this state, or any officer or director thereof, shall open or maintain a branch office, unless the capital of such trust company actually paid in cash shall exceed the amount required by the law under which it was incorporated by the sum of one hundred thousand dollars for each branch office so opened or maintained. Every trust company and every such officer or director opening a branch office without such written approval shall forfeit to the people of the state the sum of one thousand dollars for every week during which any branch office shall be maintained without such written approval. No foreign corporation shall have or exer- cise in this state the power to receive deposits of trust moneys, securities and other personal property from any person or cor- poration or any of the powers specified in subdivisions one, four- five, six, seven, eight, ten and eleven of this section, nor have or maintain an office in this state for the transaction of, or trans- act directly or indirectly, any such or similar business. Except that a trust company incorporated in another state may be ap- pointed and may accept appointment and may act as executor of or trustee under the last will and testament of any deceased person provided that similar corporations of this state are per- mitted to act as such executors or trustees in the state where such foreign corporation was organized, and provided that the super- intendent of banks, for the time being, shall be the attorney of such foreign corporation qualifying or acting as such executor or trustee, upon whom process against such corporation may be served in any action or other legal proceeding against such ex- ecutor or trustee affecting or relating to the estate represented or held by such executor or trustee, or the acts or defaults of such corporation in reference to such estate, and it shall be the duty of any such foreign corporation so qualifying or acting to file in § 186. Tetjst Companies. 171 the office of said superintendent of banks a copy of its charter, 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 attorney to accept service of process as above provided, and said superintend- ent of banks, when any such process is served upon him, shall at once mail the paper so served to the home office of such corpora- tionj and provided further, that no foreign corporation having authority to act as executor of or trustee under the last will and testament of .any deceased person shall establish or maintain, di- rectly or indirectly, any branch office or agency- in this state, or shall in any way sohcit, directly or indirectly, any business as executor or trustee therein, and that for any violation of this proviso, the suT>erintendent of banks may, in his discretion, revoke the right of such foreign corporation thereafter to act as executor or trustee in this state. Except also that the validity of any mort- gage heretofore given by a foreign corporation to a trust company doing business within the foreign domicile of such mortgagor, to secure the payment of an issue of bonds, shall not be affected by any of the provisions of this section, and such mortgage shall be enforceable in accordance with the laws of this state against any property covered thereby within the state of New York. Source.— IVjrmer § 156 as am'd by L. 1893, ch. 696; L. 1901, ch. 660; L. 1904, oh. 492; L. 1905, ch. 414; L. 1906, ch. 601; L. 1908, oh. 184 and 194. Subd. 11, amended iby L. 1911, chap. 687, and by L. 1913, chap. 317. Note. — The purpose of the amendment by chap. 317 of 1913 was to reduce the capital and surplus wJiich a trust company must have to maintain a branch without the State from five to tvJo million dollars and to validate mortgages heretofore given by foreign corporations to trust companies within their own domicle upon real estate located within the State of New York. — ^Ed. Section 2 provides that the provisions of this act shall not be construed to affect or diminish any right or power now lawfully exercised or possessed by any foreign corporation. A corporation organized in the Business Corporations iLaw is not authorized to engage in the business of transferring or registering certificates of stock of other companies. Attorney-General Rep., 1912, page 187. The term " capital " as used in the Banking Law is much narrower than " resources " and its investment is controlled exclusively by § 193 of the Banking Law rather than by § 186, but § 193 does not permit a trust com- pany to invest part of its capital in a banking house to be used as a place of business. Attorney-General Rep., 1912, page 289. 172 The Banking Law. § 186. iSeetion 33a as added by chapter 722 of 1911, restricting the transaction of business of foreign banking corporations within this State, applies to foreign trust companies as well as to other f-oreign banking corporations recognized as such by the Barking Law, except national banks. Attorney-General Rep., 1912, page 530. See § 11, General Corporation Law, oh. 28 of 1909. General powers of corporations. See § 13, General Corporation Law. Acquisition of additional real prop- erty. LOAN. — Loans to co-partnerships of which a, director of a trust company is a, member are governed by the provisions of subdivision 11 of this section. Attorney- General Rep. 1906, page 408. See § 187 post. Additional powers ot trust companies in counties of over 300,000 and less than 600,000 inhabitants. BRANCH. — As to trust companies formed under the banking law, the meaning of the statute is there shall be no branch except in the city named in the certificate of incorporation, and that there shall be no branch without the approval of the superintendent, which approval shall not be given except for the public convenience and except the trust company's stock actually paid in shall exceed by $100,000 the amount required by law; trust companies having separate charters are subject to the provision of § 186. Attorney- General Rep., July 27, 1910. Money borrowed of another financial institution cannot be reported as a deposit, but must be reported as borrowed money or " bills payable." Ruling of Superintendent. Under an opinion of the attorney-general, it has been held that bonds constituting a part of the capital investment of a trust company cannot be loaned or hypothecated, but must remain in the possession of the company. Ruling of Superintendent. TRANSFERS. — The right to transfer certificates of stocks, bonds and other evidences of indebtedness may be lawfully exercised only by a corpo- ration formed under the provisions of the Banking Law. Attorney-General Rep. 1904, page 364. Under an opinion of the attorney-general, it is held that a loan to a firm or copartnership of which a director of a trust company is a member must be limited to ten per centum of the capital of the trust company making the loan. Loans to a director, including any such firm or copartnership liabil- ities, cannot exceed ten per centum of the capital of such trust company. Ruling of Superintendent. POWERS. — The United States and Mexican Trust Company has no right to exercise witjiin this state the powers specified in section 156, subds. 3 and 9. Attorney-General Rep. 1905, page 422. REFERENCE. — A trust company may lawfully receive moneys 'from a depositor for the purposes of investment and issue its obligations therefor in the form of a certificate of investment — when such moneys are invested by the trust company as agent for a depositor, in the purchase of notek § 18Y. Teust Companies. 173 accompanied by warehouse receipts, etc., discounted by it, the title to the same being taken by the trust company and held in trust for the investor, no unlawful preference between depositors is created. Attorney-General Rep., 1902, page 232. ABYERTISING. — { 131 prohibiting a corporation from advertising as a savings bank does not prevent a trust company from advertising for deposits. People V. Binghamton Trust Company, 139 N. Y. 185. LOANS. — A trust company may only make loans on bonds or collaterals and such securities as the statute authorizes. Davis Sewing Machine Com- pany V. Best, 30 Hun, 638. Section 186 forbids loaning more than one-tenth of tihe capital stock of a trust company to a firm of which one of its directors is a partner, when tIhe transaction consists of an advancement upon commercial paper endorsed with recourse by said firm, but, otherwise, if the advancement is made upon the sole credit of the maker endorsed by tIhe payee without recourse. Attor- ney-General Eep., June 11, 1909. GUARANTY. — The right of guaranty is beyond the power of a trust com- pany, and a person accepting a guaranty from such company is put on inquiry as to the authority of the president or vice-president to execute any such instrument. Gouse v. The Commonwealth Trust Company, 55 Misc. 110. There is no provisdon of the Banking Law which permits a trust company to guarantee mortgages given by a third person or given by the trust _ company as trustee for such third person; a trust company under certain circumstances might guarantee mortgages as incident to the exercise of the other powers which are conferred upon them. Attorney-General Rep. March 13, 1909. FLEXIBILITY. — Tlie Banking Lav^ .should be construed so as to permit flexibility and where the Legislature commanded that loans exceeding in the . aggregate one-tenth of its capital stock should not be made by any trust company to any director, " directly or indirectly," it did not intend to limit the prohibition to a director borrowing in his own name simply and not as a member of a firm. People v. Knapp, 206 N. Y., 373. § 187. Additional powers of certain trust companies. Each, trust company organized under this chapter, and having it.s principal place of business within a county containing less than six hundred thousand and over three hundred thousand inhabit- ants, as appears by the last state or federal enumeration of its inhabitants, and having a capital of five hundred thousand dollars or upwards, and each trust company organized under this chap- ter, and having its principal place of business within a county containing less than three hundred thousand and over sixty-five thousand inhlabitants, as appears by the last state or federal enumeration of its inhabitants, and having a capital of two hun- dred thousand dollars or upwards, and each trust company organ- 174 The Banking Law. § 187. ized under this ckapter and having its principal place of business within a county containing less than sixty-five thousand and over fifty thousand inhabitants as appears by the last state or federal enumeration and having a capital of one hundred thousand dol- lars, or upwards, may possess and exercise, in addition to the other powers conferred upon it by this chapter, the power, upon terms and conditions to be prescribed by its by-laws, to receive upon deposit for safe keeping bonds, mortgages, jewelry, plate, stocks, securities and valuable papers of any kind, and other personal property, for hire, and to let out receptacles for safe deposit of personal property, and each trust company of the class first above specified may also for hire examine titles to real estate, procure and furnish information in relation thereto, and guarantee or insure the title to real estate to persons interested in such real estate or in mortgages thereon against loss by reason of defective title or of other incumbrances upon such real estate; and any trust company specified in this section may be appointed guardian, trustee or administrator, with or without will annexed, on the . application or consent of any person acting as such or entitled to such appointment and in the place and stead of such person; or such trust company may be joined with any person so acting or entitled to such appointment; but such appointments shall be made upon such notice, as is required by law, to the persons inter- ested in the estate or fund and on the consent of such of the prin- cipal legatees or other persons interested in the estate or fund as the court, surrogate or judge making the appointment shall deem proper. No appointment hereunder shall be deemed to increase the number of persons entitled to full compensation beyond the number so entitled under the terms of the will or deed creating a trust or appointing a guardian or authorized by law. Whenever a person is joined with such trust company in any appointment as guardian, trustee or administrator with or without the will annexed, his appointment may be under such limitation of powers and upon such terms and conditions as to deposit of assets by such person with such trust company or otherwise, and upon such reduced bond or security to be given by him as the court, surrogate or judge making the appointment shall prescribe. Source.— L. 1893, ch. 337, § 1, as am'd by L. 1898, oh. 73, i 1; L. 1901, ch. 443, § 1, and L. 1902, ch, 360, § 1. §§ 188, 189. Trust Companies. 175 § 188. Additional powers, dependent on location. Each trust company orgaioized -under this chapter, and having its principal place of business -within a town adjoining a city, containing over eight hundred thousand and less than one million inhabitants, according to the last state census, and having a capital of two hundred and fifty thousand dollars, or upwards, may possess and exercise in addition to the other powers conferred upon it by this chapter, the power upon terms and conditions to be prescribed by its by-laws, to receive upon deposit for safe keep- ing, bonds, mortgages, jewelry, plate, stocks and valuable property of every kind for hire, and also for hire, to examine titles to real estate, to procure and furnish information in relation thereto, and to guarantee or insure the title to real estate to persons interested in such real estate or in mortgages thereon, against loss by reason of defective title or of other incumbrances of or upon such real estate. Source.— L. 1896, ch. 851, § 1. § 189. May be administrator, guardian or trustee. When any trust company is appointed executor in any last will or testament, the court or officer authorized to grant letters testamentary in this state shall, upon the proper application, grant letters testamentary thereon to such corporation. When appli- cation is made to any court or officer having authority to grant letters of administration with the will annexed, upon the estate of any deceased person, and there is no person entitled to such letters who is qualified, competent, willing and able to accept such administration, such court or officer may, at the request of any party interested in the estate, grant such letters of administration with the will annexed, to any such corporation. Any court or officer having authority to grant letters of guardianship of any infant may, upon the same application as is required by law for the appointment of a guardian of such infant, appoint any such corporation as guardian of the estate of such infant. Any court having jurisdiction to appoint a trustee, guardian, receiver or committee of the estate of a lunatic, idiot or habitual drunkard or to make any fiduciary appointment, may appoint any such 176 The Banking Law. § 190. corporation, to be such trustee, guardian, receiver or committee, or to act in any other fiduciary capacity. All moneys brought into court by order or judgment of any court of record may be de- posited -with any such corporation, that has been designated by the comptroller of the state of 'New York, as provided by the code of civil procedure. Source.— Former § 157 as am'd by J-. 1900, ch. 552, and L. 1908, ch. 184. Tlhe purpose of the sunendment of this section by ch. 184 of 1908 was to regulate the deposit of moneys brought into court by order or judgment. See § 240, County Law, and § 4, State Finance law. Comptroller of New York to supervise court funds. 6ee § 44, ante. Comptroller to designate banks of deposit. PREFERENCE. — Funds deposited in a State Trust Company designated by the State Comptroller and under the provisions of the Bankruptcy Law are entitled to a preference over general creditors and are moneys " brought into court" within the meaning of' the Banking Law. Morris v. Carnegie Trust Co., 154 App. Div., 596. § 190. No security required; trust fund debts preferred. ISTo bond or other security, except as hereinafter provided, shall be required from any such corporation for or in respect to any trust, nor when appointed executor, administrator, guardian, trus- tee, receiver, committee or depositary. All investments of money received by any such corporation and by any trust company char- tered by special act, prior to May eighteenth, eighteen hundred ninety-two, in either of such characters, shall be at its sole risk, and for all losses of such money the capital stock, property and effects of the corporation shall be absolutely liable, unless the in- vestments are such as the courts recognize as proper when made by an individual acting as trustee, executor, administrator, guardian, receiver, committee or depositary, or such as are per- mitted in and by the instrument or words creating or defining the trust. If dissolved by the legislature or the court, or other- wise, the debts due from the corporation as such executor, admin- istrator, guardian, trustee, committee or depositary shall have the preference. The court or officer making such appointment may, upon proper application, require any corporation which shall have been so appointed to give such security as to the court or officer shall seem proper, or upon failure of such corporation to give se- §§ 191, 192. Trust Companies. 177 curity as required, may remove suoh corporation from and revoke such appointment. Such court or officer may make orders re- specting such trusts and require the corporation to render all acr counts whidi such court or officer might lawfully require if such executor, administrator, guardian, trustee, receiver, committee or depositary were a natural person. Whenever any such corpora- tion shall be designated by the comptroller of the state of New York as a depositary for funds and moneys paid into court, before receiving any such deposit, it shall give to the people of the state a bond in the form and manner, as provided by section forty-four of this chapter. Source.— Former § 158 as am'd by L 1893, ch ©96; L. 1898, cli 98; L. 1908, oh. 184 and L. 1909, oh. 240. The purpose of the amendment of this section by ch. 184 of 1908 was to require a bond from a trust company receiving deposits paid into court. PREFERENCE. — Funds deposited! in la. State Trust Company designated by the State 'Comptroller and under the provisions of the Bankruptcy Law are entitled to a preference over general creditors and are moneys " broug'ht into court " within the meaning of the Banking Law. Morris v. Carnegie Trust Co., L54 App. Div., 596. § 191. Official oath not required. Upon the appointment of such corporation as executor, admin- istrator, guardian, trustee, receiver or committee, as provided by this chapter, no official oath shall be required from such corpora- tion or trust company. Source. — Former § 15Sb. § 192. Deposits of minors and trust deposits. "When any deposit shall be made by or in the name of any minor the same shall be held for the exclusive right and benefit of such depositor, and free from the control or lien of all other persons, except creditors, and shall be paid, together with the dividends and interest thereon to the person in whose name the deposit shall have been made, and the receipt or acquittance of such minor shall be a valid and sufficient release and discharge for such deposit or any part thereof to the corporation. "When any deposit shall be made by any person in trust for another, and no other or further notice of the existence and terms of a legal and valid trust shall 178 The Banking Law. § 193. have been given in writing to such trust company in the event of the death of the trustee, the same, or any part thereof, together with the dividends or interest thereon, may be paid to the person for whom the deposit was made. Source. — ^Former § 158a. § 193. Investments of capital, surplus, undivided profits and deposits. The capital of every such corporation shall be invested in bonds and mortgages or unincumbered real property in this state not exceeding sixty per centum of the value thereof, or in the stocks or bonds of this state, or of the United States, or of any comity or incorporated city of this state duly authorized by law to be issued. Stocks or bonds constituting a part of the lawful investment of capital of any such corporation shall not be valued upon its books or entered in its reports to the superintendent of banks at a higher price or value than their investment value as determined by amor- tization, after providing in a manner approved by the superintend- ent of banks for the gradual extinction of premiums or discounts on all such securities so as to bring them to par at maturity. The moneys received by any such corporation in trust may be invested in its discretion in the securities of the kind in which its capital is required to be invested, or in the st6cks or bonds of any state of the United States, or in such real or personal securities as it may deem proper. No such corporation shall hold stock in any private corporation to an amount in excess of ten per centum of the capital, surplus and undivided profits of the corporation hold- ing such stock; nor shall any such corporation hold or own stock of another monied corporation the par value of which is in excess of ten per centum of the total amount of the stock of such other monied corporation issued and outstanding, provided, however, that this limitation shall not apply to the ownership of capital stock of a safe deposit company the vaults of which are connected with or adjacent to an office of such trust company. Any trust company which on the thirteenth day of April, nineteen hundred ajid eight, held stock in another moneyed corporation in excess of ten per centum of the total amount of the stock of such othar § 194. Trust Companies. 179 moneyied corporation issued and outatanding shall sell or dispose of the excess so held on or before April thirteenth, nineteen hundred and eleven. Source. — Former S 159 as am'd by L. 1903, oh. 160; L. 1304, ch. 479; L. 1908, cb. 121, and L. 1909, dh. 294. The laat amendatory act provided: § 2. This act shall take effect imme- diately, except that a trust company which now holds stock in another monied corporation in excess of ten per centum of the total amount of the stock of such other monied corporation issued and outstanding shall have one year from the passage of this act within which to sell or dispose of the excess so held. / The purpose of the amendment of this section by ch. 121 of 1908 was to regulate the valuation of stock or bonds constituting the capital of a trust company and the amount of stock of another moneyed corporation to be held by such trust company. The provisions of this section are mandatory to the effect that no higher value shall be given to stocks or bonds than their authorized value. Attor- ney-General Rep., April 28, 1910. A trust company does not have to include, in figuring its lawful money reserve, deposits, equal in amount to bonds of the State of New York or of the city of New York, in wbich its capital is invested, including such bonds on deposit with the Superintendent. Attorney-General Rep., August 19, 1911. The term " capital " as used in the Banking Law is much narrower than " re'Sources " and its investment is controlled exclus.ively by § 193 of the Banking Law rather than by § 186, but § 193 does not permit a trust com- pany to invest part of its capital in a banking house to be used as a place of business. Attorney-General Rep., 1912, page 289. INVESTMENT. — The statute prohibits a trust company from investing in the stock of any private corporation on amount of money in excess of ten per cent, of its own capital. Attorney-General Kep., 1903, page 410. A trust company may not hypothecate securities representing its capital investment for lany purpose and it should at all times retain physical posses- sion thereof. Attorney-General Rep. December 21, 1907. FORGED INDORSEMENT.— The payment of a check on a forged indorse- ment iB at the peril of the bank in the absence of an estoppel, or the negli- gence of the depositor. Kearny v. Metropolitan Trust Company, 110 App. Div. 236; 97 N. Y. Supp. 274; aff'd 186 N. Y. 611. § 194. Interest and accumulations. On all sums of money not less than one hundred dollars which shall be collected and received by such corporation acting as exec- utor, administrator, guardian, trustee, receiver or committee under the appointment of any court or officer, or in any fiduciary ca- pacity under such appointment, or as a depositary of moneys paid 180 The Banking Law. § 195. into court, interest shall be allowed by suoh corporation at not leas tban the rate of two per centum per annum until the moneys so re- ceived shall be duly expended or distributed. If such interest moneys, or any part thereof, shall not annually be expended or distributed pursuant to the terms or provisions of the trust under which such moneys are held, the amount thereof not so expended or distributed shall be accumulated by such corporation for the benefit of the parties interested in such trust fund, and shall be added to the principal to constitute a new principal, upon which interest shall thereafter be computed. Source. — ^Former § 160. § 195. Directors. The affairs of every such corporation shall be managed and its corporate powers exercised by a board of directors of such number, not less than thirteen nor more than thirty, as shall from time to time be prescribed in its by-laws. The number of directors nec- essary to form a quorum for the transaction of business may be fixed by the organization certificate, or the by-laws; such quorum shall not be less than one-third of such number of directors, and in no case less then seven. 'No person can be a director who is not the holder of at least ten shares of the capital stock of the cor- poration ; and every person elected to be a director, who after such election shall hypothecate, pledge or cease to be the owner in his own right of the amount of stock aforesaid, shall cease to be a director of the corporation, and his office shall be vacant. The persons named in the organization certificate, or such of them re- spectively, as shall become holders of at least ten shares of such stock, shall constitute the first board of directors, and may add to their number not exceeding the limit of thirty, and shall sever- ally continue in office until others are elected to fill their respective places. Within six months from the time when such corporation shall commence business, the first board of directors shall classify themselves by lot into three classes, as nearly equal as may be. The term of office of the first class shall expire on the third Wednesday of January next following such classification; the term of office of the second class shall expire one year thereafter; and the term of office of the third class shall expire two years § 195. Teust Companies. 181 thereafter. At or before the expiration of the term of the first class, and annually thereafter, a number of directors shall be elected equal to the number of directors whose term will then ex- pire who shall hold their offices for three years or until their suc- cessors are elected. Such election shall be held at the office of the corporation and at such tipie and upon such public notice not less than ten days, by advertisement in at least one newspaper ap- proved by the superintendent of banks published in the city where such corporation is located, as shall be prescribed in the by-laws. In case of failure to elect any director on the day named, the directors whose terms of office do not that year expire, may pro- ceed to elect a number of directors equal to the number in the class whose term that year expires, or such number as may have failed of re-election. The persons so elected, together with the directors whose terms of office shall not that year expire, shall constitute the board of directors until another election shall be held accord- ing to law. Vacancies occurring in the intervals of election shall be filled by the board. Each director when appointed or elected shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such cor- poration and will not knowingly violate, or willingly permit to be violated, any of the provisions of law applicable to such cor- poration, and that he is the owner in good faith and in his own right, of the number of shares of stock required by this section, subscribed by him or standing in his name on the books of the corporation, and that the same is not hypothecated or in any way pledged as security for any loan or debt and, in case of re-election or reappointment, that such stock was not hypothecated, or in any way pledged as security for any loan or debt during his previous term. Such oath shall be subscribed by the director making it, and certified by the officer before whom it is taken, and shall be immediately transmitted to the superintendent of banks and filed and preserved in his office. Source.— Former § 161 as am'd by L. 1896, eh. 452; L. 1901, eh. 510; L. 1904, ch. 607 and L. 1908, ch. 120. The purpose of the amendment of this section by ch. 120 of 1908 was to prevent a director of a trust company from pledging the stock of such trust company with which he qualified as director. 182 The Banking Law. . § 196. See § 26 et seq., General Corporation Law, ch. 28 of 1909. Proxies and election of directors. ' See § 28, General Corporation Law, ch. 28 of 1909. Effect of failure to elect directors. See § 34, General Corporation Law. Quorum of directors and powers of majority. See § 35, General Corporation Law, eh. 28 of 1909. Directors to act is trustees in case of dissolution. See § 30, Stock Corporation Law, ch. 61 of 1909. Directors to appoint officers of corporation. See § 668, Penal Law. Misconduct at corporate elections. A person, not a citizen of the United States, is eligible to act as a director in a trust company, providing, at least, one director of said. company is a citizen of this State. Attorney-General Rep., January 17, 1912. § 196. Liability of stocly cih. 10 of 1909, were reincor- porated in former Art. VI, §§ 210-245. Oh. 556 of 1887 was incorporated in former Art. VT, -wihicli by eh. 705 of 1894 was consolidated with Art. V, and became Art. "VT, which is superseded by this statute, cb. 126 of 1910. In the absence of the consent of all stocklioWers, matured and withdrawing siareholders cannot receive real estate in lieu of cash in liquidation of the amount due. Attorney General Rep., January 8, 1912. CEUTIFIOATES. — An association formed under tihe provisions of this article cannot issue certificates baviag a fixed period for maturity. O'Malley V. People's Building Assn., 92 Hun, 572. § 230. Exemption from execution; from taxation; from usury. Shares held by members and all the accumulations thereon shall be exempt from sale on execution and proceedings supplementary thereto to the amount of six hundred dollars ; and the shareholders of any such association shall not be individually liable for the payment of its debts. The association itself shall be deemed an institution for savings, and together -with all aocumulationa therein shall not be taxable under any law which shall exempt savings banks or institutions for savings from taxation ; nor shall any law passed hereafter, taxing corporations in any form, or the shares thereof, or the accumulations therein, be deemed to include associations doing business in pursuance of the provisions of this article, unless they are specifically named in such law. The shares of savings and loan associations, being hereby regarded as a system for saving, shall not be subject to the stock transfer tax either when issued by the association or transferred from one member to another, l^o shareholder shall claim to be exempt from making the payment of dues, interest, premium, and fines provided in the by-laws, upon the ground that by reason of losses or otherwise the required payments have continued longer than was originally anticipated; nor shall the payment of any charges authorized by the by-laws be deemed usurious. Amended by L. 1910, oh. 126. 214 The Banking Law. §§ 231, 233. § 231. Debts from banking corporations preferred. AH the property of any baak or trust company which shall become insolvent shall, after providing for the payment of its cir- culating notes, be applied by the trustees, assignees or receivers thereof in the first place to the payment in full of any sum or sums of money deposited therewith by any savings and loan asso- ciation ratably and proportionately but not to an amount exceed- ing that authorized to be so deposited by the provisions of this chapter, and in accordance with any other preference provided for in this chapter. Amended by L. 1910, oh. 126. § 232. Acts repealed. Chapter one hundred and twenty-two of the laws of eighteen hundred and fifty-one, chapter five hundred and sixty-four of the laws of eighteen hundred and seventy-five, chapter ninety-six of the laws of eighteen hundred and seventy-eight, and chapter five hiindred and fifty-six of the laws of eighteen hundred and eighly- seven, article five of chapter six hundred and eighty-nine of the laws of eighteen hundred and ninety-two, and article six of chap- ter six hundred and eighty-nine of the laws of eighteen hundred and ninety-two as origially enacted, are hereby repealed, except as to the corporate existence of associations organized under either of said acts, and every association organized tmder the provisioiM of either of said statutes shall be subject to the provisions of this chapter as herein provided, in like manner as corporations which are incorporated hereunder. Amended by L. 1910, oh. 126. § 233. Charters conformed to this article; obligations and rights unimpaired. The powers, rights, duties, privileges ^and obligations of every association organized under either of the acts enumerated in section two hundred and thirty-two of this chapter or doing § 234. Savings and Loan Associations. 215 business under either of said acts at the time this taikes effect, shall be governed, controlled, construed, extended, limited and determined, by the provisions of this chapter, to the same extent and effect as if said association had been organized or incorporated under or pursuant to the provisions hereof, and the articles of association, certificate of incorporation, by-lavs or rules of every such, association heretofore made or existingj are hereby modified, altered and amended to conform to the provisions of this chapter, and the same are declared void where such articles of association, certificate of incorporation, by-laws or rules are inconsistent with the provisions of this chapter; except that the obligations of any existing association, whether between such association and its shareholders or any one of them, or any other person- or persons, or any valid contract between the shareholders of any such asso- ciation, existing at the time this act takes effect, shall not be in any wise impaired by the provisions of this act; and with such exceptions every such savings and loan association shall possess the powers, rights, duties and privileges, and be subject to the obligations, restrictions and liabilities conferred and imposed by this chapter, notwithstanding anything to the contrary in its arti- cles of association, certificate of incorporation, by-laws or rules. All obligations to any such association heretofore contracted shall be enforceable by it and in its name, and demands, claims and rights of action against any such association may be enforced against it as fully and completely as they might have been en- forced heretofore. Amended by L. 1910, ch. 126. § 234. Voluntary liquidation. If the shareholders of any solvent savings and loan association shall deem it necessary or expedient to dose the business of such corporation, they may, by the affirmative vote of not less than two- 216 The Banking Law^ § 235. thirds of the -whole number of skareholders, owning at least two- thirds of the aociunulations of the association, at a meeting called for that purpose either by the board of directors or by ten per centum of the whole number of shareholders, of which meeting all the shareholders shall have at least ten days' notice by mail, postage prepaid, declare by resolution their determination to close such business, and to pay all creditors, distribute the funds according to law, and surrender the corporate franchise. The vote on such resolution shall be taken by ayes and nays and the resolution and the vote thereon shall be recorded in the minutes of the corporation. A copy of the record of such proceedings certified by the president and secretary of the corporation shall be filed in the banking department. Amended by L. 19iq, ch. 126. § 235. Disposition of assets. In such case, the shareholders may, by a similar vote, authorize its board of directors, or appoint a special liquidating committee, to sell and transfer its assets and securities and all other property, subject, however, to the approval of the superintendent of banks. If such sale and transfer be made to another corporation doing business in pursuance of the provisions of this article, all the rights, powers, privil^es and obligations shall be transmitted to such cor- poration unimpaired; and if to a corporation incorporated under any other article of this chapter, or any other statute, or to any individual, all accounts shall be stated. The directors shall there^ upon give notice to all the creditors and shareholders of the adop- tion of such resolution, by publication thereof in a newspaper or newspapers most likely to give the same proper publicity, and by written or printed notice personally served upon or m'ailed to eveiy creditor and shareholder of such savings and loan association at his last known residence, postage prepaid. Amended by L. 1910, ch. 126. §§ 236, 238. Savings and Loan Associations. 21Y § 236. Dissolution effected. Whenever the directors of amy such savings and loan association shall have paid all creditors and shareholders who claim the moneys which are respecftively due to them, they shall make a tran- script or statement from the books of the corporation of the names of all creditors and shareholders who do not claim or have not received the balance of their credit or the moneys due to them, and of the moneys due to them respectively, and shall file such tran- script in the banking department, and pay over and transfer ^all such unclaimed and unpaid credits, deposits, and moneys to the super- intendent of banks. The directors shall then report their proceed- ings duly verified to the supreme court, and upon such report and the petition of the directors and upon notice to the attorney-general and the superintendent of banks, and such other notice as the court may deem necessary, the court shall adjudge the franchise sur- rendered and the existence of the corporation terminated. Amended by L. 1910, oh. 126. § 23Y. Construction of term " by-laws." Wherever the word " by-laws " is used in this article, it shall be construed to refer to and include the provisions of all articles of association, certificates of incorporation, by-laws and rules of all corporations organized under any of the repealed acts enumerated in section two hundred and thirty-two of this chapter. Amended by L. 1910, ch. 126. § 238. Construction of term "savings and loan asso- ciation." The term " savings and loan associations," shall include every corporation, company or association doing business in this state and having for a part of its title or name the words " building association," " building and loan association," " build- ing and mutual loan association," " savings and loan association," " savings association," " co-operative loan association," or " co- operative bank," and every corporation, company or association 218 The Banking- Law. §§ 239, 240. whose shares are wholly or in part payable by a cumulative fund in regular or periodical instalmembs, or which is doing business in the form and of a character similar to that authorized by this article organized or incorporated in this state or in any state or country outside of this state. Source.— L. 1892, ch, 689, § 2 pt. Amended by L. 1910, oh. 126. § 239. Construction of reference to laws of eighteen hun- dred ninety-two. Wherever reference is made prior to May thirty-first, eighteen hundred and ninety-eight, in any of the statutes of the state of New York to article five or six and to articles five and six of chapter six hundred and eighty-nine of the laws of eighteen hun- dred and ninety-two the said reference shall be construed to mean and refer to article six of this chapter. Source.— L. 1894, ch, 705, § 1. The Banking Law as originally passed, ch. 689 of 1892, contained Art. V, Building and Mutual Loan Corporations, §§ 170-175, and Art. VI, Co-oper- ative Loan Associations, §§ 180-191. The original law was ch. 122 of 1851; this was amended by ch. 564 of 1876 and eh. 96 of 1878, and was re-enacted into the original Art. V, §§ 170-175. Ch. 556 of 1887 provided for the formation of co-operative savings and loan associations, §§ 180-191. These articles were consolidated by (Jh. 705 of 1894 into the Art. V, former Banlcing Law, Oo-opeirative Savings and Loan Associations, §§ 170-195b, now Art. 6, herein. § 240. When association may be dissolved. In either of the following cases, any association incorporated under chapter one hundred and twenty-two, laws of eighteen hun- dred and fifty-one, entitled "An act for the incorporation of build- ing, mutual loan and accumulating fund associations," and the acts amendatory thereof, may be dissolved, or the court may de- clare and adjudge that it has been dissolved, or that its corporate § 241 Savings and Loan Associations. 219 existence has termin'ated, and the assets of such corporation may- be distributed among those entitled thereto: 1. Whenever the time of the existence of such association, as specified in its certificate of incorporation, has expired; 2. Whenever all the shares of such association shall be re- deemed by advances thereon, or whenever the owners of unre- deemed shares shall be paid the ultimate value thereon, as pro- vided in the articles of association; 3. Whenever it shall appear to the satisfaction of the court that the association has ceased to do business, and that the pur- poses of its existence, as contemplated by the said act and by its certificate of incorporation, have been accomplished; 4. In any of the cases specified in section one hundred and one of the general corporation law, where no officer, director, agent or other person can be found upon whom service of process in behalf of the corporation is authorized by law. Source.— L. 1906, eh. 600, § 1. § 241. Petition for dissolution. In either of the cases specified in section two hundred and forty a petition may be presented to the supreme court in the district where the real property of such association, or any part of said property, is or was situated, or where the place of business of such association is or was located. Such petition may be pre- sented by any officer, director or trustee, member, shareholder or creditor of such association or by the executor, administrator or assigns of any such officer, shareholder, member or creditor, or by any other person or corporation who has or may have an interest in obtaining the relief prayed for in such petition, or who may have an interest in procuring from some one authorized to represent said corporation some conveyance or other instru- ment to perfect title, or to remedy an apparent defect in title to real property which, or some interest in which, may at some time have been or might be claimed to have been owned by said asso- 220 The Banking Law. §§ 242, 243. ciation. Such petition shall be verified and shall set forth the name of the association and the place where its certificate of incorporation is filed ; the nature of the interes.t of the petitioner in the association or in the application ; under which of the cases specified in section two hundred and forty of this chapter the applications falls ; and a concise statement of the condition of the affairs of such association, to the best of the petitioner's knowledge, information and belief, together with any other facts that may be deemed appropriate. Source.— L. 1906, eh. 600, § 2. § 242. Proceedings on presentation of petition. Upon the presentation of such petition the court must make an order, returnable in not less than twenty-one days, requiring such association, its officers, directors or trustees, members, share- holders and creditors, and all other persons having any interest in such association or in its assets, to show cause why the relief provided for in section two hundred and forty of this chapter should not be granted ; such order shall be published once a week for three successive weeks in a newspaper specified in the order, published in the county wherein the order is entered, or where the certificate of incorporation of such association is filed, and such publication shall be deemed to constitute sufficient service of the order and of notice of the application upon all persons and classes of persons designated in the order. But the court may direct such different or other service thereof as it may deem proper. A copy of such petition and of the order to show cause granted thereon shall be served upon the attorney-general and the superin- tendent of banks of the state of New York, at least eight days before the return day thereof. Source.— L. 1906, oh. 600, § 3. § 243. Hearing and order for dissolution; appointment of trustee. At the time and place specified in the order, or to which the hearing is adjourned, the court, or the referee, if the court should § 244. Savings and Loan Associations. 221 direct a reference, must hear all persons opposing the prayer of the petition, hear the allegations and proofs of the parties, and determine the facts. If the court shall be satisfied that the asso- ciation has already been dissolved, or that its legal existence has terminated, it shall make an order so declaring and adjudging. If it shall find that the association though legally in existence, ought to be dissolved, it shall make an order dissolving it, and upon the entry of such order the association is dissolved. In either case it shall appoint a. trustee or trustees for the purpose of settling its affairs, collecting and paying any outstanding debts, and dividing among the persons entitled thereto the money or other property remaining after payment of debts and necessary expenses. Such trustee or trustees shall have the same powers and duties as trustees under section thirty-five of the general corporation law, and shall give security as the court may direct for the faithful performance of his or their duties. The trustee or trustees so appointed may, from time to time, sell, at public or private sale, all or any of the property and assets, including claims of any kind, which belonged to the association when it was dissolved or ceased to exist, and may execute all conveyances or instruments requisite to perfect the title of the purchaser. Source.— L. 1906, ch. 600, § 4. § 244. Report and compensation of trustee. Such trustee or trustees shall be subject to the control of the court in the same manner as a receiver appointed in a proceeding for the voluntary dissolution of a corporation, and when he or they shall have completed the liquidation, shall render an account of his or their proceedings, and the net proceeds in his or their hands shall be distributed or paid into court as shall be deter- mined and directed by the court. The trustee or trustees shall thereupon be entitled to be discharged from further liability. The provisions of section three hundred and three of the general cor- poration law shall apply to the proceedings hereby provided. Such 222 The Banking Law. § 245. trustee or trustees shall be entitled to the same compensation as receivers are entitled to under section thirty-tliTee hundred and twenty of the code of civil procedure. Source.— L. 1906, ch, 600, § 5. § 245. Limitation and construction of article. Nothing in this article shall be so construed as to repeal or limit th« application of the provisions of the code of civil procedure, the general corporation law or of other statutes providing for the voluntary or involuntary dissolution of corporations by action or special proceeding. Source.— L. 1906, oh. 600, § 6. § 260. Building and Lot Associations. 223 ARTICLE 7. Building and Lot Assooiations. Section 260. IncotrpoTation. 261. Powers. 262. Borrowing money. 263. Dividends. 264. Monthly payments. 265. Iflaibility of stookho'lders and directors. 266. Exemption of shares from sale a-nd execution. 267. Reports. § 260. Incorporation. Five or more persons may become a corporation for the purpose of accumulating a fund for the purchase of real property, to pay off incumbrances thereon, to aid its members in acquiring a build- ing lot or lots, and making improvements thereon in a manner and form specified in the certificate of incorporation, or for all or any of such purposes, by making, acknowledging and filing a certificate of incorporation sotting forth : 1. The name of the corporation. 2. The location of its principal business office. 3. When its regular meetings shall be held and how special meetings may be called. 4. "What shall be a quorum to transact business at its meetings. 5. How members shall be admitted, and their qualifications. 6. What officers, directors or attorneys of the corporation there shall be and how and when chosen. 7. The duties of such officers, directors or attorneys, and how re- moved or suspended from office. 8. The names of the persons who shall be such officers and directors for its first year and until others are chosen or appointed in their places. 9. The amount of each share and how ascertained. 10. The monthly or weekly dues per share. 224 The Banking Law. § 260. 11. The fees to be paid on the transfer of shares. 12. The penalty for nonpayment of dues or fees, or other viola- tions of the provisions of the certificate. 13. The qualification of voters at its meetings and the mode of voting. 14. The manner of dividing land and selecting or allotting the lots. 15. The manner of altering or amending the certificate or incor- poration. 16. Such other provisions not inconsistent v/ith law as shall be necessary for the convenient and effective transaction of its business. Such certificate must be approved by the superintendent of banks and filed in the office of the clerk of the county in which such cor- poration shall have its principal business office, and a certified copy thereof shall be filed in the office of the superintendent of banks. Thereupon the persons who have subscribed such certificate and such other persons as shall become members of the corporation and their successors shall be a corporation by the name specified in such certificate. Source. — Former § 196. See § 4, General Corporation Law, ch. 687 of 1892. Qualifications of incorporators. See § 7, General Corporation Law, ch. 687 of 1892. Amended and supple- mental certificates of incorporation. See § 20, General Corporation Law, ch. 687 of 1892. Qualifications of fltockholders as voters. See § 21 et seq., General Corporation Law, ch. 68T of 1892", Proxies, election of directors, ets. See i 32, General Corporation Law, ch. 687 of 1892. Extension of corporate «xistence. See § 660, Penal Law. Fraud in the organization of corporation. See § 662, Penal Law. Fraudulent issue of stock. See § ©61, Penal Law. Frauds in procuring organization of corporation. See § 668, Penal Law. Misconduct at corporate elections. §§ 261, 263. Building and Lot Associations. 225 § 261. Powers. The directors of every such corporation may call in and demand from the memhers and stockholders thereof all sums of money by them subscribed, at such times and in such payments or install- ments as the certificate of incorporation shall prescribej under the penalty of forfeiting the shares of stock subscribed for and all previous payments made thereon, if payment shall not be made by the member or stockholder within sixty days after a personal demand made or notice requiring such payment shall have been published for six successive weeks in the newspaper nearest to the principal place of business of the corporation. But no corporation organized under this article shall purchase or deal in or take security upon real estate situate more than fifty miles from its principal office for the transaction of its business, and no such corporation shall make deductions from stock payments for run- ning expenses. Source. — Former § 19'6a. Wee § 34, General 'Corporation Law, eh. 28 of 1909. Quorum of directorg and powers of majority. See § 35, General Corporation Law, cih. 28 of 1909. Directors as trustees in case of dissolution. § 262. Borrowing money. Every such corporation shall have power to borrow money for temporary purposes not inconsistent with the objects of its organi- zation, but no such loan shall have a longer duration than three years, nor shall its indebtedness for money so borrowed exceed at any one time one-fourth of the aggregate amount of its shares and parts of shares and the income thereof actually paid in and received. Source. — Former § 196b. § 263. Dividends. Dividends declared from the earnings of the corporation shall be payable in such manner as may be provided in the certificate of incorporation. Source. — Former § 196o. 226 The Banking Law. §§ 264,265. § 264. Monthly payments. No holder of shares shall be exempt from making the monthly or other stated payments provided in the certificate of incorpo- ration on the ground that by reason of losses or otherwise, the cor- poration has continued longer than was originally anticipated, whereby the payments made on such shares have amounted to more than the amount originally intended, with legal interest thereon. The imposition of fines for nonpayment of dues or fees or for other violation of the certificate of incorporation, or the making of any monthly payment required by the certificate of incorporation, shall not be deemed a violation of the provisions of any statute against usury. Source. — Former § 196(1. § 265. Liability of stockholders and directors. A stockholder of such corporation shall be liable to the creditors for the amount unpaid on the stock held or subscribed for by him. The directors or other officers of every such corporation shall be personally liable for any fraudulent use, disposition or investment of any moneys or property belonging to it, or for any loss which shall be incurred by any investment other than such as are men- tioned in and authorized by this article, made by any such directors or officers, but no director or other officer shall be so liable unless he authorized, sanctioned approved of or made such fraudulent use, disposition or investment. Source.— Former § 196e and L. 1872, oh. 820. See §§ 28, 29, Stock Corporation Law, eh. 61 of 1909. Liability of directors. 'See §§56, 57, Stock Corponation Law, eh. 61 of 1909. liaoility of stock- holders. iSee § 664 et seq., Penal Law. Liability of directors and officers tor mis- conduct. See § 297, Penal Law. Misconduct of directors of monied corporations. See § 664, Penal Law. Misconduct of officers and directors of stock cor- porations. See § 665, Penal Law. Misconduct of officers and employees. §§ 266,267. Building and Lot Associations. 227 § 266. Exemption of shares from sale and execution. The shares held by the members and stockholders of every such corporation shall be exempt from sale on execution for debt to an extent not exceeding six hundred dollars in such shares at their par value. Shares held by members of associations incorporated un- der the provisions of laws of eighteen hundred and seventy-two, chapter eight hundred and twenty, together with any amounts of deposits or assessments made on account thereofj shall be exempt from attachment or sale on execution for debt, to an extent not exceeding one thousand dollars, in such shares, deposits or assess- ments at their par value; provided, the person holding such shares is not the owner of a homestead. Source.— Former § 196f § 267. Reports. On the first day of January of each year every such corporation shall make a written report to the superintendent of banks, in such form and containing such matters as he shall prescribe. Such reports shall give the condition of such corporation at the close of business on the thirty-first day of December in each year ; and such corporation shall also make reports to the superintendent of banks whenever required by him and as of the day designated by him. Source. — Former § 196g. See § 12, ante. Dxamination and certificate as to payment of capital. See § lo, ante. A£5dayit to be made before commencing businesa. See § 14, ante. Deposit of bonds or mortgages with superintendent of banks. See § 21, ante. Reports to superintendent of insurance. See § 22, ante. Penalties for failure to report to superintendent. See 5 24, ante. Publication of reports made to superintendent. 228 The Banking Law. § 280. AETTCLE 8. Mortgage^ Loan and Investment Coepoeations. Section 280. Incorporation. 281. Deposit required; authorization certificate, 282. General powers. 283. License. 284. Verified statement to be furnished. 285. Issue of license 286. Unlicensed companies prohibited. 287. Revocation of license. 288. Designation of superintendent as attorney. § 280. Incorporation. Five or more persons may become a mortgage, loan or invest- ment corporation by making, acknowledging and filing in the ojffice of the clerk of the county where such corporation is to he established, and in the office of the superintendent of banks, a certificate in duplicate which shall state : 1. The name by which such corporation is to be known. 2. The particular city, town or village where its operations are to be carried on. 3. The amount of its capital stock, which shall in no case be less than one hundred thousand dollars. 4. The names and places of residence of its stockholders, and the number of shares held by each. 5. The dats at which said corporation shall commence and terminate. 6. The number of directors, whicb shall not be less than five, and the namea of the stoekholdera who shall be directors for the first year of its incorporation, accompanied with a declaration that each incorporator will accept the responsibilities and faithfully discharge the duties of a director therein, if elected to act as such. A duplicate of such certificate when filed sihall be recorded by the county clerk in the books kept for the record of certificates of incorporation, and a duplicate by the superintendent of banks in a book to be kept by him for that purpose. Such certificate may §§ 281, 282. MoETGAGE, Loan, Istvestjient Coepoeations. 229 provide for the increase of capital stock and of the number of per- sons forming the corporation, and for such other changes not con- trary to law, as may be thought proper. Source. — ^Former § 197. A corporation formed under the Business Corporations Law is prohibited from engaging in the business of issuing collateral trust income bonds secured by real property, the title of which is in the trustee but a corporation organ- ized under the Banking Law may exercise such powers. Attorney-General Rep., 1912, page 188. LOAN COMPANY. — Real estate companies organized under the Business Corporationa Law have no right to exercise powers of a mortgage loan or investment corporation. Attorney-General Rep., 1906, page 513. The superintendent of banks should use his discretion in declining to issue an authorization certificate permitting the organization of a mortgage loan and investment company under article VIII, and he may refuse it on the ground that the corporation would do a second mortgage business. Attorney- General Rep., Oct. 28, 1910. A company organized and incorporated under the business corporation law and not under article VIII shall not be permitted to do a mortgage loan and investment business. Attorney-General Rep., Oct. 3, 1910. A corporation organized under the general or stock corporation law may exercise the powers of a mortgage loan and investment company organized under article VIII. Attorney-General Rep., Oct. 28, 1910. § 281. Deposit required; authorization certificate. Upon it appearing satisfactorily to the superintendent of banks that the capital stock of said corporation has been paid in cash and that it has otherwise complied with law and upon his receiving a deposit to the amount of one thousand dollars to be held by him aa a pledge of good faith and a guaranty of compliance with this chapter on the part of such corporation, to be in such securities and assigned in the same manner as specified in section seventy-six of this chapter in reference to deposits to be made by banks and individual bankers, he shall issue his authorization certificate as provided in section thirty-two of this chapter. Source. — Former § 198. § 282. General powers. In addition to the powers conferred by the general and stock corporation laws, a corporation organized as provided in the two 230 The Bankiitg Law. § 282. preceding sections shall have power to sell, offer for sale or negotiate bonds or notes secured by deed of trust or mortgages on real property situated in this state or outside of this state, or choses in action owned, issued, negotiated or guaranteed by it, and may receive money or property either from its own stockholders or other persons in installments or otherwise, and may enter into any con- tract, engagement or undertaking with such persons for the with- drawal of such money or property, at any time, with any increase thereof, or for the payment to them or to any person of any sum of money at any time, either fixed or uncertain, excepting that said corporation can not do a general deposit business without comply- ing with the provisions of section fourteen of this chapter. In case any corporation organized under the provisions of this article which does not do a general deposit business shall issue choses in action or other evidences of indebtedness, and shall receive payments therefor in uniform monthly or weekly install- ments and any such chose in action or other evidence of indebt- edness shall be assigned to such corporation as collateral security for the payment of a loan from it, interest may be deducted on such loans in advance at the rate of six per centum per annum. The installments so paid to the corporation may or may not bear interest. The receiving of such installment payments without the allowance of interest thereon, or the allowance of interest thereon at less than six per centum per annum, shall not be usurious. No such loan shall be for a larger amount than five thousand dollars, nor shall any one person owe any such corpora- tion upon such loans more than five thousand dollars for principal at any one time. Wo such loan shall be made for a longer period than one year from the date thereof. Source. — Former § 199. Amended by L. 1913, chap. 628. In effect May 23, 1913. Note. — The purpose of the amendment by chap. 628 of 1913, which adds the last paragraph, was to legalize the Morris plan of industrial savings and loans. — Ed. See-§ 11, General Corporatioti Law, oh. 38 of 1909. General powers of corporation. See §§ 13, 14, General Corporation Law, oh. 28 of 1909. Acquisition of additional property and of property without the state. §§ 283, 284. Mortgage^ Loan^ Investment Coepoeations. 231 See § 32, Stock Corporation Law, eh. 61 of 1909. Extension of corporate busincBS. See §§ 16, 17, Stock Corporation law, ch. 61 of 1909. The sale of franchise and property. See § 50 e* seq., Stock Corporation Law, di. 61 of 1909. Issue and trans- fer of stock and rights of stockholders. A corporation, organized under the Business Corporation Law, is prohibited from engaging in issuing collateral trust income bonds secured by real prop- erty, the title of which is in a trustee under a trust agreement, as such powers may be exercised only by a corporation formed under the provisions of the Banking Law. — ^Attorney-General Eep., April 5, 1912. § 283. License. The STiperintendent of banks may issue a license under his hand and official seal, in accordance with the provisions of this article, authorizing mortgage companies organized under the laws of any other state to transact business within the limits of this state ; and the supervisory power granted by this article shall apply to all associations, copartnerships, individuals, joint-stock companies, firms or corporations organized under the laws of any other state, who sell, offer for sale or negotiate bonds or notes, secured by deed of trust, or mortgage of real property or bonds, or obligations pay- able in installments, or capital stock, or choses in action, owned, issued, negotiated or guaranteed by them; and to all associations, Kopartnerships, joint-stock companies or corporations as provided in sections two hundred and eighty, two hundred and eighty-one and two hundred and eighty-two of this chapter, and the provisions of article two of this chapter shall apply to such. Source.— Former § 200 as am'd by L. 1896, ch. 452. SUPERVISION. — All parties engaged in the business of buying and selling municipal securities, except individuals or firms doing a loan and investment business under the laws of this state, are subject to the supervision of the banking department. Attorney-General Rep., 1893, page 292. A company, issuing its bonds upon the payment of a definite sum of money, sells bonds or dhoses of action within the meaning of § 283. Attorney- General Eep., April 14, 1910. § 284. Verified statement to be furnished. The companies, associations, and others described in the pre- ceding sections shall annually make and furnish to the superinten- dent of banks a true and verified statement of their financial 232 The Banking Law. § 284. conditions in detail on blanks furmished by bim for tbat purpose, which shall show : 1. The amount of capital actually paid in cash. 2. The amount of capital subscribed. 3. The undivided profits or earnings on hand. 4. The total liabilities itemized in such form as may be indi- cated in the blanks^. 5. The total amount of moneys loaned, invested or guaranteed. 6. The number and amount of all mortgages in arrears of interest for a period exceeding six months prior to the date of the report. 7. The number and amount of mortgages foreclosed during the past year. 8. The present cash value of all real property held or owned through foreclosure, and such other and further information con- cerning their business aifairs and methods as the superintendent shall require. The statement shall be signed by the officers of the association, company or corporation or other person making the same, and in such form as the superintendent shall prescribe. The superin- tendent may, in his discretion, require a like report, either wholly or in part, as to such particulars as he may prescribe, to be made and submitted to him at any time and within such period as he may designate. No license shall be issued unless the superintend- ent, either personally or by some competent person or persons ap- pointed by him, has visited and examined thoroughly into the condition, business methods and affairs generally of any company, association, corporation, copartnership or individual proposed to be licensed by him; and he may make such examination as often thereafter asi he deems necessary, and such examination shall be made at least once in each year. The superintendent and every examiner appointed hy him shall have the power to administer an oath to any person whose testimony may be required in any such examination; and all books and papers which may be deemed §§ 285, 286. Mortgage^ Loan, Investment Coepoeations. 233 necessary to be examined hj the superintendent or the examiner shall be produced when demanded in writing by him. On every such examination inquiry shall be made as to the condition and re- sources generally of the company, corporation, association, co- partnership or individual examined, the mode of conducting and managing its affairs, the actions of its directors or trustees, the investment of its funds, the safety and prudence of its manage- ment, the security afforded to those by whom its engagements are held, and whether the requirements of its charter and of law have been complied with in the administration of its affairs. Source. — Former § 201 as am'd by L. 1896, eh. 452. Words " organized under the laws of any other State," inserted to carry out the intention which appears by §§ 283, 286, 288, Banking Law. § 285. Issue of license. If it shall appear to the satisfaction of the superintendent from such examination made, and the statement or report submitte " by any such corporation, company, copartnership, firm, association or individual, organized imder the laws of any other state, pursuant to the requirements of the preceding section, that its affairs are being conducted in a safe and lawful manner, he may isoue to such company, corporation, copartnership, firm or association, a license under his hand and seal, permitting it to transact business in this state for the term of one year from the date thereof. Source.— Former § 202 as am'd by L. 1896, ch. 452. § 286. Unlicensed companies prohibited. JS o person, association, corporation, company or copartnership, shall act in this state as the agent or representative of any com- pany, corporation or others described in section two hundred and eighty^hree of this chapter, unless the same has been duly licensed by the superintendent of banks as hereinbefore provided. Every such company, corporation, or others, described in section two hun- dred and eighty-three of this chapter, organized under the laws of any other state, shall within thirtv days after being authorized to transact business in this state, file in the office of the superintend- 234 The Banking Law'. § 287. ent of banks, a certificate stating the name and business address of every person, association, corporation, company, firm or others, who act or propose to act in this state as its agent or representative, and in case of any change in such representative, an amended cer- tificate shall be forthwith filed as herein provided. Whoever shall offend against the provisions of this section shall forfeit to the people of the state the sum of one thousand dollars for every offense. Source.— Former § 203 as am'd by L. 1896, ch. 452. See § 663, Penal Law. Action for foreign corporations ni>t authorized to do business in this state. A company selling bonds or clhosea in action Ihas no right to maintain an agent or Representative within this State without being licensed by the Superintendent of Banl^s. Attorney-General Rep., April 14, 1910. § 287. Revocation of license. If it shall appear to the superintendent from an examination made of, or report submitted by any licensee organized under the laws of any other state under the provisions of this article, or from sufficient information otherwise obtained, that such licensee is conducting its business and affairs in an unsafe or unauthorized manner, he shall, by an order under his hand and official seal, ad- dressed to such licensee, direct it to discontinue such unsafe or illegal practices, and to conform to the requirements of its charter and of law, and to provide for the safety and security of its trans- actions. If such licensee shall neglect or refuse to make any re- ports as herein specified, or to comply with such order, or if it shall appear to the superintendent that it is unsafe or inexpedient for any such licensee to continue the transaction of business, he shall forthwith revoke the license granted to any such licensee, and serve a copy of the order of revocation on the company, association, cor- poration, copartnership or individual whose license is revoked, at its principal office for the transaction of business in this state, and also upon each agent or representative thereof within the state, specified in the certificate provided for in section two hundred and eighty-six of this chapter, by depositing the same in the postoffice directed to such licensee at such principal place of business, and to § 288. HOETGAGEj LOAN^ INVESTMENT OoEPOEATIONS. 235 each of such agents at his place of business ; and the superintendent may, in his discretion, publish such order, with such other facta as he may deem proper, for six successive days in the state paper published in the city of Albany. Source.— Former § 204 as am'd by L. 1896, oh. 452. § 288. Designation of superintendent as attorney. Every corporation, company, firm, association or individual, organized under the laws of any other state, thus licensed, shall, before transacting any business within this state, by an insti-ument in writing duly executed, appoint the superintendent of banks its true and lawful attorney upon whom all process in any action or proceeding by any resident of the state against it may be served with the same effect as if it were a domestic corporation and had been lawfully served with process in the state. A certificate of such appointment, duly certified and authenticated, shall be filed in the office of the superintendent of banks, and copies certified by him or his deputy shall be sufficient evidence thereof. Service in favor of a resident of tliis state upon such attorney shall be deemed a personal service upon such licensee. Whenever lawful process against such licensee shall be served upon th e superintend- ent of banks, he shall forthwith forward a copy of the process served upon him by mail, prepaid, and directed to the president or secretary of the corporation or association at its last-named post-office address. For each copy of process, the superintendent shall collect the sum of two dollars, which shall be paid by the plaintiff or moving party at the time of such service, to be recov- ered by him as jpart of his taxable disbursements if he sucxjeeds in his suit or proceeding. The term, process, when used in this section, includes any writ, summons, petition or order, whereby any suit, action or proceeding shall be commenced by a resident of this state. Source.-— Former § 205 as am'd by L. 1896, ch. 4.52. 236 The Bankia-g Lam-. § 300. ARTICLE 9. Safe Deposit Companies. Section 300. Incorporation. 301. Directors. 302. Officers and by-laws. 303. Liability of stockholder.s. 304. Remedy for non-payment of rent for safe. 305. Lien of safe deposit companies on packages left for safe keeping or storage In vaults for which receipts are issued. § 300. Incorporation. Five or more persons may become a corporation for the purpose of taking and receiving upon deposit as bailee for safe keeping and storage, jewelry, plate, money, specie, bullion, stocks, bonds, securities and valuable papers of any kind, and other valuable per- gonal property, and guaranteeing their safety upon such terms and for such compensation as may be agreed upon by it and the re- spective bailors thereof ; and to let out vaults, safes and other receptacles for the uses and purposes of such corporation, by mak- ing, acknowledging, and filing in the office of the clerk of the county in which its principal place of business is to be located, and a duplicate thereof in the office of the superintendent of banks, a certificate stating its corporate name, the business for which formed, the amount of its capital stock, which shall not exceed one million nor be less than one hundred thousand dollars, except in cities or villages of less than one hundred thousand inhabitants, in which the capital shall not be less than ten thousand dollars, the number of shares of which its stock shall consist, the term of'its existence not to exceed fifty years, the number of directors who shall manage its concerns for the first year and their names, resi- dences, occupation and post-office addresses, and the name of the place in which its operations are to be carried on ; such certificate must be approved before filing by the superintendent of banks. No such corporation shall commence or transact business until the whole amount of its capital stock shall have been paid in; nor make any loan or advance on any property left with it for storage § 301. Safe Deposit CoiiPANiES. 237 or safekeeping. Any such corporation having a capital of one hundred thousand dollars or more, paid in cash, may open and maintain one or more branch offices in the place named in its cer- tificate of incorporation, provided, however, that the vfritten ap- proval of the superintendent of banks must be obtained for each branch so opened and maintained, which written approval may be given or withheld in his discretion. Every safe deposit company shall forfeit to the people of the state the sum of one thousand dollars for every week during which any branch office shall be maintained without such written approval. Source. — ^Fcrmer § 210 as am'd by L. 1908, ch. 122. The purpose of the amendment of this section hy Oh. 122 of 1908 was to permit safe deposit companies to open branch offices upon the written approva] of the superintendent. See § 4. General Corporation Law, oh. 28 of 1909. Qualifioations of incor- porators. See § 6, General Corporation Law, eh. 28 of 1909. Similar names for corporations not to be used. See § 23, General Corporation Law. Qualifioations of stoclcholders as voters. See § 26 et seq., General Oorporation Law, ch. 28 of 1909. Proxies, elec- tions, etc. See § 50, Stock Corporation Law, ch. 61 of 1909. Issue of capital stock and transfer thereof. See § 53, Stock Oorporation Law, oh. 61 of 1909. Subscription to capital stock. See § 62 et seq., Stock Corporation Law, oh. 61 of 1909. Increase or reduc- tion of capital stock. A company to build a fire proof building in which old papers and docu- ments may be stored which will not receive upon deposit for safe keeping or storage " jewelry, plate, money, specie, etc.," may be formed under provisions of § 300. Attorney-General Rep., June 3, 1910. EXECUTION. — An execution may be issued and levied against property in the vaults of a safe deposit company. United States v. Graff, 67 Barb. 304. LOANS. — A safe deposit company has no power to loan money on personal security and to discount notes and other commercial paper. Pratt v. Eaton, 79 N. Y. 449. § 301. Directors. The aiiairs of every such corporation shall be managed by not less than five nor more than thirteen directors, who shall be stock- 238 The Banking Law. § 302. holders and a majority of wlioin shall be citizens of this state, and who shall, except for the first year, be annually elected by the stock- holders at such time and place as shall be prescribed in the by-laws of the corporation. Notice of the time and place of holding such election shall be published not less than ten days previous thereto in a newspaper in the town or city in which the operations of such corporation shall be carried on, and the election shall be made by such of the stockholders as shall attend for that purpose either in- person or by proxy. Source. — Former § 211. See § 23, General Corporation Law, ch. 38 of 1909. Qualifications of mem- bers as voters. See § 34, General Corporation Law, dh. 28 of 1909- Quorum of directors and powers of majority. ■See § 26, 'Stock Corporation Law, ch. 61 of 1909. Number of directors may be changed. See § 27, Stook Corporation Law, ch. 61 of 1909. When act of directors void. See § 28, Stock Corporation Law, ch 61 of 1909. Liability of directors for making unauthorized dividends. See § 664, Penal Law. Misconduct of directors of stock corporations. See § 664, Penal Law. Misconduct of officers and direotoiB. See § 668, Penal Law. Misconduct at corporate elections. § 302. Officers and by-laws. There shall be a president of the corporation to be designated from the directors, and such subordinate officers as the corporation by its by-laws may designate, who may be elected or appointed, and required to give such security for the faithful performance of the duties of their offices as the corporation by its by-laws may require. The directors may make such by-laws as they shall deem proper for the management, disposition of the stock, property and business affairs of the corporation, not inconsistent with law, and prescribing the duties of the officers and persons employed by it, the manner of the appointment and election of all officers, and for §§ 303, 304. Safe Deposit Companies. 239 carrying on all kinds of business within the objects and purposes of the corporation. Source. — ^Former § 212. See § 11, General Corporation Law, ch. 687 of 1892. Every corporation has power to make by-laws. See § 27, Stock Corporation Law, ch. 688 of 1892. Election of officers. See § 684, Penal Law. Misconduct of officers and ddnectors of stock cor- porations. See § 665, Penal Law. Misconduct of officers and employees. § 303. Liability of stocldioiders. The stockholders of every such corporation shall be jointly and severally liable for all debts that may be due and owing by it to an amount equal to the par value of their stock in such corporation over and above such stock, to be recovered of the stockholders who were such when the debt was contracted or the loss or damage sus- tained, or of any subsequent stockholder. Any stockholder who may have paid any demand against such corporation, either volun- tarily or by compulsion, shall have a right to resort to the rest of the stockholders who are liable to contribution; and the dissolution of the corporation shall not release or affect the liability of any stockholder incurred before dissolution. Source.— Former § 213. See § 71, ante. Individual liability of stockholders. LIABILITY.— Under i 71 of the Banking Law as to the liability of stock- holders of banking corporations the provisions of §§ 56 and 57 of tihe Stock Corporation Law in relation to the liability of stockholders in corporations are to be considered as incorporated and applicable. Hirehfeld v. Boop, 145 N. Y. 84. STOCKHOLDER'S LIABILITY.— The liability of stockholders of a safe deposit company for its debts under section 303 of the Banking Law is joint and several and is different from that of stockholders of banks and trust companies under sections 71 and 196 of said Banking Law, such stockholders being equally and ratably liable. The liability of stockholders of a safe deposit company created by said section 303 is secondary to that of the corporation itself. Hosier Safe Co. v. Guardian Trust Co., 153 App. Div., 117. § 304. Remedy for non-payment of rent for safe. 1. If the amount due for the rental of any safe or box in the vaults of any such corporation shall not have been paid for two 240 The Banking Law. § 304. years, it may, at the expiration thereof, cause to be sent to the person in whose name such safe or box stands on its books a notice in writing in a securely closed post-paid registered letter, directed to such person at his post-oiSce address as recorded upon the books of the corporation, notifying such person that if the amount then due for the rental of such safe or box is not paid within thirty days from the date of such notice, the corporation will then cause such safe or box to be opened in the presence of its president or secretary or treasurer, and of a notary public not an officer or in the employ of the corporation, and the con- tents thereof, if any, will be inventoried and sealed by such notary public and be placed in one of the general safes or boxes of the corporation, at the expense of such person, which shall not exceed the original rental of the safe so opened, and for a period of not less than two years from the time such safe or box be opened, unless sooner removed by the owner thereof. 2. Upon the expiration of thirty days from the date of mailine; such notice as aforesaid, and the failure of the person in whose name such safe or box stands on the books of the corporation to pay the amount due for the rental thereof up to the date of such notice, the corporation may in the presence of a notary public and of its president or secretary or treasurer, cause such safe or box to be opened, and the contents thereof, if any, to be removed, inventoried and sealed up by such notary public in a package, upon which such notary public shall distinctly mark the name of the person in whose name such safe or box stood on the books of the corporation, and the date of the removal of same from such safe or box, and when such package has been so marked for identi- fication by such notary public, it shall, in the presence of the presi- dent or secretary or treasurer of the corporation, be placed by such notary public in one of the general safes or boxes of the corpora- tion, and thereafter the same shall remain in such general safe or box for a period not less than two years, unless sooner removed by the owner thereof, and such notary public shall thereupon. § 304. Safe Deposit Companies. 241 file with sucli corporation a certificate under seal, whicli shall fully set out the date of the opening of such safe or box, the name of the person in whose name such safe or box stood and a list of the contents, if any. 3. A copy of such certificate shall within ten days thereafter be sent to the person in whose name such safe or box so opened, shall have stood on the books of such corporation, together with a notice that such contents will be kept, at the expense of such person, in a general safe or box in the vaults of such corpora' tion, for a period not less than two years, which copy certificate shall be mailed to such person at his last known post-ofiice ad- dress, in a securely closed post-paid registered wrapper. At any time after the mailing of such certificate and notice, and before the expiration of two years, such person may require the delivery of the contents of such safe as shown by said certificate, upon the payment of all rentals due at the time of the opening of such safe or box, and the cost of opening such box, the fees of the notary public for issuing his certificate thereon, and the payment of all further charges accruing during the period such contents shall remain in the general safe or box of such corporation. 4. After the expiration of two years from the time of mailing the certificate herein provided for, to the person in whose name such safe or box shall have stood at the time of the opening thereof, the said corporation shall cause to be mailed in a se- curely closed postpaid wrapper, registered and addressed to such person at his last known post-ofiice address, a notice stating that two years have elapsed since the opening of the safe or box and the mailing of the certificate thereof, and that the said corpora- tion will sell all the property or articles of value set out in said certificate, at a time and suitable place to be stated in such notice, not less than thirty days after the time of mailing such notice, and stating the amount which shall then be due for rental up to the time of opening such safe, the cost of opening thereof, and the further cost of safekeeping of all such contents for the period since the opening of said safe or box, and unless such person shall pay on or before the day mentioned all said sums, and all the charges accruing to the time of payment, including advertising. 342 The Banking- Law. § 304. the said corporation shall sell all the property or articles of valile set out in said certificate, at public auction, at the time and pla^je stated in said notice, and a notice of the time' alid place of sudh sale shall be published once within ten days pri6r to such. sale, in a newspaper, published in a place where such sale is held. 5. From the proceeds of such sale, the said corporation shall satisfy and deduct thereout all its said charges as stated in said notice, together with any further charges that shall have accrued since the mailing thereof, together with all reasonable charges of said notice, advertising, and of the said sale. The balance, if any, of such proceeds shall be deposited by the said corpbrsttion, within thirty days after the receipt of the same, with the treasurer or chamberlain of the city, if any, or if none, with the county treasurer of the county within which such sale was held. There shall be filed with such deposit a certificate of the said corporatioi, stating the name and last known place of residence of the owner of the property sold, the articles sold, the price obtained therefor, that the notice in subdivision four, herein required, was duly mailed and the receipt of the post-office attached thereto, and showing the advertising of such sale as herein required. The offi- cer with whom such balance is deposited shall credit the same to the owner of the property, and pay the same to such owner, his >issignee, or legal representative, on demand and satisfactory evidence of identify. If such balance remains in the possession of such officer for a period of ten years, unclaimed by the person legally entitled thereto, it shall be transferred to the general funds of the city or county, and be applied and used as all other moneys belonging to such city or county. 6. Whenever the contents of any such safe or box, so opened as hereinbefore provided, shall consist either wholly or in part, of documents or letters or other papers of a private nature, such documents, letters or papers shall not be sold, but shall be re- tained by such corporation for a period of ten years from the time of the opening of the said box, and unless sooner claimed by the owner thereof, may after the expiration of such period, be by such corporation destroyed in the presence of an officer of such § 305. Safe Deposit Companies. 243 corporation and a notary public not an officer or in the employ of tlie corporation. 7. The preceding provisions hereof do not preclude any other remedy by action or otherwise now existing for the enforcement of the claims of such corporation against the person in whose name such safe or box stood, nor bar the right of such corporation to recover so much of the debt due it as shall not be paid by the proceeds of the sale of the property. Source. — Former § 214. Amended by L. 1911, chap. 371. Parties may contract for the loaning of a safe-deposit box under specific terms and conditions under which the box may be opened and under con- ditions other than those prescribed by § 304. Attorney-General Rep., Feb. 24, 1911. § 305. Lien of safe deposit companies on paclcages left for safe-keeping or storage in vaults, for which receipts are issued. Whenever any corporation referred to in this article shall take and receive upon deposit, as bailee, for safe keeping and storage, jewelry, plate, money, specie, bullion or other valuable personal property, and shall issue a receipt therefor, such corporation shall as to such property be deemed a warehouseman, and all existing statutes and laws affecting warehousemen, shall apply to such deposits, and such corporation shall have a lien on such deposits or the proceeds thereof in the same manner and with the same effect, and the same shall be enforced in the same manner, as now provided by law with reference to " warehousemen." Added by L. 1911, chap. 382. 244 The Banking Law. § 310. ARTICLE 10. Peesoital Loan Associations. Section 310. Organizajtion; how effected. 311. Superviaion; bond and reports required; exaanmations ; expenses; proceedings for violation of law. 312. Powers; rate of interest or discount. 313. Dividends limited. 314. Prohibitions. § 310. Organization; how effected. In. lany county of this state containing or which is contained in an incorporated city, any five or more persons may organize and become a corporation, for the purpose of aiding such persons as shall be deemed in need of pecuniary assistance, by loans of money at interest, not exceeding two hundred dollars to any one person, upon a pledge or mortgage of personal property, by making, sign- ing, acknowledging and filing a certificate, in the form prescribed by the business corporations law. The capital stock of any such corporation shall be not less than ten thousand dollars, and no such corporation shall commence its corporate business until its president and treasurer or secretary or its two principal officers by whatever name Imown, shall have made and subscribed an affi- davit stating that the whole of its capital stock has been actually paid in cash according to law. Such affidavit shall be made before any officer authorized to administer oaths in the county where the ciorporation has its principal place of business, which shall be filed in the clerk's office of such county, and a certified copy thereof filed in the office of the superintendent of banks. Before transacting any business the said corporation shall execute and file a bond in an amount equal to one-tenth of its capital stock, but not less than the sum of five thousand dollars, with the super- intendent of banks, to be approved by him for the faithful observ- ance of all general provisions of law regulating business corpora- tions within the state of ISTew York, and of the provisions of this article. Said bond shall be executed by a domestic or foreign § 310. Peesoxal Loan Assopiatioxs. 245 oorporation authorized by the superintendent of insurance to transact within the state the business of surety insurance as surety. At the time of filing such bond such corporation shall also file with the superintendent of banks a certified copy of its certificate of incorporation. Upon the filing of such certified copy of the certificate of incorporation and of the bond hereinbefore provided for, the superintendent of banks shall ascertain from the best sources of information at his command whether the character, responsibility ajid general fitness of the persons named as stock- holders in the certificate are such as to command the confidence of the community in which such oorporation is to transact busi- ness and to warrant the conclusion that such business will be honestly transacted in accordance with the intent and purpose of this article, and shall also cause an examination to be made in order to ascertain whether the requisite capital has been paid in cash. If so satisfied, and if the bond filed on behalf of such coi> poration shall be approved by him, he shall issue to the corpora- tion a license to transact business under this article, which license shall terminate on the thirty-first day of March of the following calendar year. If the superintendent of banks shall not be satis>- fied that the character, responsibility and general fitness of the persons named as stockholders in the certificate are such as to command the confidence of the community in which such oorpora- tion is to transact business and to warrant the conclusion that such business will be honestly transacted in accordance with the intent and purpose of this article, or if the capital shall not be paid in cash, or the bond shall not be approved by the superin- tendent of banks, he shall, within sixty days after the filing of such bond and certified copy of certificate of incorporation, give notice to the secretary of state and to the county clerk of the county in which the place of business of such corporation is located that he refuses to issue a license to such corporation which 246 The Banking Law. § 311. notice shall be forthwith filed by those officers with the certificate of incorporation. H« shall also send a copy of such notice by mail, postage prepaid, to each incorporator named in the certifi- cate of incorporation. Source.— L. 1895, oh. 326, § 1, as amended by L. 1895, (?h. 706, § 1; L. 1896, eh. 206, § 1; L. 1902, oh. 78, § 1; L. 1905, oh. 333, § 1. (Amended by L. 1910, eh. 127. The superintendent of banks has no power to issue a license to sny cor- poration coming within the provisions of article X, unless such corporation has a capital of at least $10,000, and if any such corporation organized prior to the passage of chap. 127 of 1910, had a capital of less than $10,000, it should be increased to the required amount. Attorney-General Rep., Nov. 29, 1910. § 311. Supervision; bond and reports required; examina- tions; expenses; proceedings for violation of law. Said bond shall be renewed and refiled annually, in January of each year. No license shall hereafter be issued to any such corporation unless it has an unimpaired capital of at least ten thousand dollars. If the superintendent of banks is satisfied that the business of such corporation has been honestly transacted in accordance with the intent and purpose of this article and if the bond filed shall be approved by him, a new license shall be issued by him on or before the first day of March. If not so satisfied, or if the bond filed shall not be approved by him, he shall give notice to the secretary of state and to the county clerk of the county in which the place of business of such corporation is located that he refuses to issue a new license to such corporation, which notice shall be forthwith filed by those officers with the certificate of incorporation. He shall also send a copy of such notice by mail, postage prepaid, to such corporation at the address given in its last annual report and the corporation shall, within thirty days after the date of such refusal, cease doing busi- ness and proceedings for a dissolution shall be instituted by the attorney-general at the request of said superintendent Every such corporation shall also in January of each year make a report for the previous calendar year to the superin- § 311. Peesonal Loan Associations. 247 tendent of banks, giving such information as lie shall require, which report shall be verified by the oath of the president or sec- retary; and it shall make such other and further reports, under the like oath, as the said superintendent shall demand at any time. The superinitendent of banks shall cause every such cor- poration to be examined at least once in each year, and may cause it to be examined as often as he deems it necessary ; and the examiners appointed by him shall be given free access to all books, papers, securities and other sources of iitformation in respect to the said corporation; for -which examination a reasonable charge shall be imposed by the superintendent and paid by the said cor- poration within twenty days after notice of the charge shall have been mailed to the corporation at the last address given by it. If any such corporation shall knowingly violate any of the provisions or restrictions of this article, the said bond shall be forfeited and shall be collected by suit by the superintendent of banks, in the name of the people of the state, which suit shall be conducted by the attorney-general; and a reward of two hundred and fifty dollars shall be paid by the state to the person first giving informa- tion and furnishing legal proof of such violation. Oorporationa organized under the provisions of this article shall be subject to the supervision of the superintendent of banks ; and the general provisions relative to the supervision of moneyed corporations contained in article two of this chapter shall be applicable to them in so far as they are not inconsistent with the provisions of this article. All expenses incurred by the superintendent of banks in preparing and furnishing suitable blanks, stationery and forms, in preparing and keeping suitable records, for clerical service, and such other expenses as may be incident to such supervision, shall be paid by said corporations in such proportions as the superin- tendent may deem just and reasonable. The expenses incurred and services performed on account of any such corporation shall be charged to and paid by the corporation for whom they were incurred or performed. All moneys received by the superintend- ent in payment of such charges shall be deposited and paid by him into the treasury of the state to reimburse all sums advanced from the treasury for such expenses. If any sudh corporation ■shall fail to pay such charges as herein required, including charges 348 The Banking Law. § 311. for examination, the superintendent shall report to the attorney- general the failure of any such corporation to pay such charges, and the attorney-general shall thereupon bring an action in the name of the people for the recovery of such charges. All such charges, including the charges made for examination, shall be a preferred claim against the assets of any such corporation upon its dissolution, or upon its making a general assignment for the benefit of creditors. If it shall appear to the superintendent of banks, from any examination or report, that the capital stock of any such corporation is impaired ; or that it has violated its char- ter or any law of this state; or is conducting its business in an oppressive or unauthorized manner; or is by payment of excessive salaries, excessive rents or any other means, attempting to evade the provisions of this article relative to a reduction in the rate of interest which such a corporation may legally charge, he may, by an order m'ade over his hand .and oiSeial seal, direct any such corporation to make good such impairment of capital ; or to discon- tinue the illegal, oppressive or unauthorized methods and practices mentioned in said order; or to discontinue the payment of the excessive salaries, rents or other expenses, by means of which an attempt to evade the provisions of this article is apparent. If any such corporation shall not comply with such order within twenty days after the same shall have been mailed to the last address filed by such corporation in the banking department, the superintendent shall communicate the facts to the attorney-general, who shall thereupon commence an action for the dissolution of the corporation ; and the corporation shall upon proof of failure to com- ply with such order be dissolved and a permanent receiver therefor appointed. Source.— L. 1895, ch. 326, § 2, as am'd by L. 1902, dh, 78, § 2. lAmended by L. 1910, ch. 127. The superintendent of banks has no power to issue a license to any cor- poration coming within the provisions of article X unless such corporation has a capital of at least $10,000, and if any such corporation organized prior to the passage of chap. 127 of 1910, had a capital of less than $10,000, it should be increased to the required amount. Attorney-General Rep., Nov. 29, 1910. § 312. Personal Loan Associations. 249 § 312. Powers; rate of interest and charges. Every such corporation shall have the general powers of a busi- ness corporation, as provided hj Iww, and shall be subject to all the duties, obligations and restrictions of a business corporation, so far as applicable thereto, and shall have the following additional powers: It shall be entitled to act as pawnbroker within such county, and shall be subject to and entitled to all the benefits and provisions of the laws of the state, and of all ordinances of the city in which it is located, concerning pawnbrokers; except that it shall not be required to obtain a license or file any bond other than that provided for in section three hundred and ten of this chapter, and except that as such pawnbroker it shall not make any loan greater than two hundred dollars to any one person, nor shall any one person owe any such corporation as pawnbroker more than tw^o hundred dollars for principal at any one time, nor shall any such corporation charge as such pawnbroker a greater rate of interest than three per centum a month which interest, however, shall not be charged or collected in advance. And it may lend money to such persons, within such county, as shall be deemed by it in need of pecuniary assistance, and may take as security for the payment of any such loan a mortgage of any personal property without the actual delivery to it of the property mortgaged, to- gether with other lawful securities. It shall be entitled to charge and receive upon each loan made by it without the actual delivery to it of the property mortgaged, interest at a rate not exceeding two per centum per month^ which interest, however, shall not be charged or coUeoted in advance. It may also charge for the first examination of the property mortgaged, and for drawing and filing the necessary papers, and for all other expenses, a sum not exceed- ing two dollars if a loan of more than fifty dollars sihall actually be made, and a sum n.»t exceeding one dollar if a loan of fifty dol- lars, or less, shall actually be made ; but no further charge for ex- amination of the property, or for drawing or filing papers, or for any services or expenses, or upon any pretext whatsoever, except upon the foreclosure of the security, beyond the said charge for 250 The Banking Law. § 313. interest or discount, shall be made upon any renewal or extension of the loan, or any transfer or change of the loan, within one year from the date of the original loan, nor oftener than onoe in each period of twelve months thereafter, nor shall it make any charge whatever for the ©xam.ination of property upon which a loan is not made nor shall any charge be made by amy such corporation, its attorneys or agents, in connection., with the collection of debts due it, except upon the foreclosure of the security or upon the entry of judgment. No loan greater than two hundred dollars shall be made under the authority of this section, nor shall any yne person owe any such corporation upon loans made under authority of this section more than two hundred dollars for prin- cipal at one time. No such corporation shall charge any borrower any interest or commission in excess of the rate of six per centum per annum, except as hereinbefore authorized. Every such cor- poration shall cause to be delivered to every borrower at the time of making a loan a copy of this section printed in the English language. Source.— L. 1895, cK 326, § 3, as am'd by L. 1902, eh. 78, § 2. Amended by L. 1910, eh. 127. MORTGAGE IJOAlSrS. — Section 312, aU;thorizing corporations organized under article 10 of that law to charge and receive, on mortgage loans made by them, interest at 2% per month, and also for the examination of the property a.nd all expenses incident to the loan, a sum not exceeding two dollars if the loan exceeds fifty dollars and but one dollar if the loan is for fifty dollars or less, taken in connection with § 314, forbids a lender to exact any other charge in his own behalf or of any one else. London Realty Co. v. Riordan, 207 N. Y., 264. § 313. Dividends limited. ISTo such corporation shall, in any year, declare or pay dividends on its capital stock amounting to more than ten per centum. The superintendent of banks upon ascertaining that any such corpora- tion has, during the previous calendar year, made a net profit amounting to more than ten per centum on its capital, shall have authority, after ten days' notice to the corporation, to make an order reducing the rates of interest, discount and charges wMcih such corporation may lawfully charge or receive upon loans, to § 314. Personal Loan Associations. 251 such sums as will, in his judgment, produce a net return of ten per centum on its capital stock. Any order made under this sec- tion shall take effect at such time, not less than one month after it is made, as the order shall name, and shall remain in force until revoked. Except in the city of ISTew York, no such corporation shall make any loan secured by mortgage upon personal property located in any other county than that in which its principal busi- ness oiSce is located, nor take security upon property located in any other county, and no such corporation located in the city of New York shall make a loan secured by mortgage upon personal prop- erty which is not located in that city. Source.— L. 1895, ch. 326, § 4, aa am'd by L. 1902, ch. 78, § 2. Amended by L. 1910, ch. 127. § 314. Prohibitions. In any such county no person or corporation, other than cor- porations organized pursuant to this article, shall, directly or indi- rectly, charge or receive any interest, discount or consideration greater than the legal rate of interest upon the loan, use or for- bearance of money, goods or things in action less than two hundred dollars in amount or value, or upon the loan, use or sale of per- sonal credit in any wise, where there is taken for such loan, use or sale of personal credit any security upon any household furni- ture, apparatus or appliances, sewing machine, plate or silver-ware in actual use, tools or implements of trade, wearing apparel or jewelry. The foregoing prohibition shall apply to any person who, as security for any such loan, use or forbearance of money, or for any such loan, use or sale of personal credit as aforesaid, makes a pretended purchase of property from any person and per- mits the owner or pledgor to retain the possession thereof, or who, by any device or pretense of charging for his services or otherwise, seeks to obtain a larger compensation in any case hereinbefore provided for. Any person, and the several officers of any cor- poration, who shall violate the foregoing prohibition, shall be guilty of a misdemeanor, and upon proof of such fact the debt shall be discharged and the security shall be void. But this sec- tion shall not apply to licensed pawnbrokers, making loans upon 252 The Banking Law. § 314. the actual and permanent deposit of personal property as security; nor shall this section affect in any way the validity or legality of any loan of money or credit exceeding two hundred dollaj-;; in amount. Source.— L. 1895, ch. 326, § 5, aa am'd by L. 1902, ch. 78, § 2. EXCESSIVE INTEREST.— Sections 74 and 314 of the .Banking Law are to be construed as superseding, within .their limits, the more general pro- visions of the General Business Law and the provisions of section 74, as to the taking of excessive interest, relate solely to the enforcement of civil rights and remedies. People v. Young, 153 App. Div., 567. MORTGAGE LOANS. — Section 314, authorizing corporations organized under article 10 of that law to charge and receive, on mortgage loans made by them, interest at 2 % per month, and also for the examination of the prop- erty and all expenses incident to the loan, a sum not exceeding two dollars if the loan exceeds fifty dollars and but one dollar if the loan is for fifty dol- lars or less, taken in connection with § 312, forbids a, lender to exact any other charge in his own behalf or on behalf of any one else. London Realty Co. V. Riordan, 207 N. Y., 264. UNINCORPORATED ASSOCIATION.— An unincorporated association whose sole business is that of loaning money upon assignments of wages, is not a banker, andi the individual members of such an association are not pro- tected from prosecution under § 314 of the Banking Law, by section 74 of said law and the previsions of the General Business Law, sections 376, 382, are not available in behalf of a, person prosecuted under said section 314. People V. Young, 207 N. Y,, 522. USURY. — One who makes a, loan of money less than $200 for more than the legal rate of interest is guilty of a violation of section 314, although no security is taken; where the usurious loan is on personal credit, security must be given in order to constitute a misdemeanor. The amendment to sec- tion 2400 of the Penal Law by chapter 661 of 1904 did not repeal by impli- cation section 314 of the Banking Law; said section 2400 of the Penal Law and section 314 of the Banking lurs after notice in writing to the holder that such license has been revoked. In case of the revocation of such license the money and securities and the bond, if there be one, received from the licensee, shall continue to be held by the comptroller, until otherwise directed by the order or judgment of a court of com- petent jurisdiction. . § 27. Penalties for conducting business without license, et cetera. Any person or partnership carrying on the business specified in section twenty-five of this article without having obtained from the compitroUer a license therefor, or who shall carry on such business after the revocation of a license to carry on such busi- ness, or who, without such license shall, on any sign, letterhead, advertisement or publication of any kind use the word " banking " 304 Geneeal Statutes. § 28. or " banker " or any equivalent term, in any language, in connec- tion with any business whatsoever, or who shall fail to display the license certificate as provided in section twenty-five hereof, or who shall fail to keep books of account or to naake the reports as herein provided, or any person or partnership not having a license who shall advertise or publish in any manner whatsoever, either orally or in, writing, any statement intended to convey or actually conveying the idea or impression that such licensee is in any way under the supervision of this state or of any officer thereof, or that this state or any officer thereof has passed in any way whatsoever upon the responsibility, solvency or qualifications of such licensee td engage in such businesis, or that this state or any officer thereof has examined any accounts of said licensee or has in any way certified th-at such licensee is in any way a fit person to carry on such business, shall be guilty of a misdemeanor. Amended by L. 1911, chap. 393. The Private Banking Law as amended by chap. 393 of 1911, except as pro- vided in § 29-d (post), prohibit all unlicensed individuals or partnerships using the words " banlcing," etc., and the prohibition extends to those engaged solely in the business of discounting negotiable paper. Attorney-General Rep., 1911, page 618. This section applies to private bankers as distinguished from individual baulcers. Attorney-General Eep., April 14, 1910. The publication of a statement by bankers, intended only to convey the impression that they are reliable bankers and have complied with the private Banking Law, is not a violation of this section. AttorneynGeneral Rep., Nov. 21, 1910. An advertisement by an Italian, under list of brokers, as " Notary Public," " passage tickets,'' is prohibited by this section. Attorney-General Rep., March 8, 1911. § 28. Perjury. Any person who in any application for a license presented to the comptroller, or in any report made under this article, or on any examination or inquiry pursuant to section twenty-nine-e hereof, shall swear falsely as to the nature or value of his assets, or the amount of his liabilities or in any other particular, and any person who in any affi'davit made under section twenty-nine-d of this article shall swear falsely as to any fact therein stated, is guilty of perjury. Amended by L. 1911, chap. 393. §§ 29, 30. General Statutes. 305 § 29. Penalty for failure to make reports. Any person, or partnership wlio shall fail to make any report re- quired by this article within the time specified for the same, shall forfeit to the people of the state of New York the sum of one hun- dred dollars for every day that such report shall be delayed or withheld. The money forfeited under this section shall be re- coYered in an action brought in the name of the people of the state, and with all moneys received as fees for the issuance of the licenses provided for herein shaU be paid into the state treasury to the credit of the general fund. § 29-a. Discharge and renewal of bonds, substitution of securities, et cetera. The surety in a bond given pursuant to this article may give notice to the comptroller in writing requesting to be released from responsibility on account of any future breach of the con- dition of the bond, and that the principal in the bond be required to give a new surety, and thereupon the comptroller shall give notice in writing directed to the principal upon said bond at the place designated by him for the transaction of business requiring him within ten days from a day therein specified to file a new bond in the form required therein with a new surety, approved by the comptroller, or money or securities in lieu thereof, and upon the filing of such new bond or such money or securities in lieu thereof within the time specified, but not before, the surety upon the old bond shall be discharged from liability upon the bond given by it for any subsequent act or default of the principal. Whenever money or securities are deposited with the comptroller pursuant to this article, he may in his discretion permit the sub- stitution of securities for money, or of money for securities, in whole or in part, or of money or securities for any bond, or of a bond for money or securities deposited (other than the money or securities which the licensee is required by section twenty-five hereof to keep at all times on deposit with the comptroller), or the withdrawal of securities deposited and the substitution of others of equal value in their place, and if the total value of securi- ties become substantially impaired he shall require the deposit 306 Geneeal Statutes. § 29-b. of money or additional securities sufficient to cover the impair- ment in value. In the event of the failure of such principal to file a new bond or such money or securities in lieu thereof, or to deposit money or additional securities to cover anv impairment of value of securities theretofore deposited, within the time speci- fied, the comptroller shall forthwith revoke the license of such principal. In the event that the licensee shall at any time dis- continue the business license or with respect to which a bond shall have been filed or money or securities shall have been deposited pursuant to this article, the comptroller on the order or judgment of a court of competent jurisdiction may cancel the bond filed by the licensee ,and return to the licensee all moneys and securities deposited. Amended by L. 1911, chap. 393. The ComptroDer 'has authority to cancel a bond filed under the Private Banking Act of 1907-8, and substitute a new bond in place thereof in accord- ance with § 29-a. Attorney-General Eep., 1913, page 78. The Comptroller has not power to consent to the cancellation of the license issued to a. private banker and the transfer of the securities deposited to a person who has purchased t)he business of the banker. Attorifey-General Kep., 1912, page 13. The Comptroller has no authority to transfer a license already issued to a private banker from such individual to a copartnerS'hip made up of the licensee and another. Attorney-General Hep., 1912, page 570. When a licensee desires to retire from business he should obtain an order of the court. Attorney-General Kep., July 26, 1910. § 29-b. Burden of proof in actions against licensee. In an action against a licensee to recover money deposited with such licensee for transmission, the burden of proving the transmis- sion to and receipt of the money by the person to whom such money is directed to be paid shall be upon the licensee to whom such money was delivered for transmission. Proof by a properly au- thenticated affidavit of such licensee or his duly authorized agent, showing the transmission of such money to the person to whom the same was to be transmitted, or to the correspondent of the licence to whom such money may have been transmitted for payment to the person to whom suoh money was to be paid, together with a prop- erly authenticated receipt signed by the consignee of such money. §§ 29-c, 29-d. Genbeal Statutes. 307 or in lieu of suck receipt a properly authenticated affidavit of the agent of the licensee showing the fact of payment, shall be deemed sufficient evidence to shift the burden of proof to the plaintiff. § 29-c. Time within which money is to be transmitted. All moneys received for transmission to a foreign country by any licensee shall be forwarded to the person to whom the same ia directed to be transmitted within five days after the receipt thereof, and every person who shall fail to so forward the same, within the time specified, shall be guilty of a misdemeanor. § 29-d. Exceptions. The foregoing provisions shall not apply (1) to any corporation or " individual banker " authorized to do business under the pixn visions of the banking law, nor to any association organized under the national banking act; nor (2) to any hotel-keeper who shall receive money for safe-keeping from a guest; nor (3) to any express company having contracts with railroad companies for the operation of an express service upon the lines of such railroad companies nor to any telegraph company receiving money for transmission; nor (4) to any individual or partnership receiving money on deposit for safe-keeping or for transmission to others, or for any other purpose, where the average amount of each sum received on deposit, or for transmission, by such individual or partnership in the ordinary course of business, during the fiscal year preceding the date of the affidavit hereinafter specified, shall not be less than five hundred dollars, proof of which fact by afii- davit to the satisfaction of the comptroller shall be made by the individual or a member of the partnership seeking exemption hereunder, whenever thereunto requested by the comptroller; nor (5) to any individual or partnership who would otherwise be required to comply with section twenty-five of this article who shall file with the comptroller a bond in the sum of one hundred thousand dollars, approved by the comptroller as to form a suf- ficiency, for the purpose and conditioned as in said section pre- scribed, where the business is conducted in a city having a popu- 308 G-ENEEAL Statutes. § 29-e. lation of one million or over and if conducted elsewhere in tlie state such bond shall be in the sum of fifty thousand dollars; or in lieu thereof money or securities approved by the comptroller of the same amount. The provisions of section twenty-nine-a shall be applicable to such bond, or deposit of money or securities. Amendea by L. 1911, chap. 393. Subd. 3. Where the stockholders of an " express company," organized for the sole purpose of taking advantage of subdivision 3, apply to the Comp- troller for a license to engage in business as private bankers, he may, as a condition precedent to granting sudh license, require proof of the dissolution of the corporation. Attorney-General Rep., 1911, page 626. Subd. 4. The Comptroller may, on the filing with him of a bond, pursuant to subd. 5, surrender and deliver up to tfhe licensee the bonds and securities previously deposited; provided, 'however, that no bond shall be released from any act or default of the principal prior to the surrender thereof; such bond can only be released from subsequent defaults. Attorney-General Rep., 1911, page 610. The provisions of subd. 4 ^f this section make it incumbent on the claim- ants to the exemption to satisfy the Comptroller and until the Comptroller is satisfied, it is unlawful for those parties without a license to engage in the private banking business; and if, after engaging in business under this subdivision, the Comptroller signifies his dissatisfaction with the evidence, the right of the parties to continue such business ceases. The Comptroller cannot compel such parties to submit their books as evidence they are ep- titled to the exemption. Attorney-General Rep., 1912, page 359. An agent of an express company who was appointed for the sole purpose of transmitting the fund of said company need not procure a, license. Attorney- General Rep., July 20, 1910. The Comptroller may within his discretion require that any bond presented under exception five should be executed by the applicant and a surety com- pany. Attorney-General Rep., July 26, 1910. § 29-e. Examination by comptroller; penalty for interference therewith; proceedings by attorney-general. 1. Whenever the comptroller shall deem it expedient, he may, either personally or by one of his deputies, or by examiners appointed by him, examine every applicant for a license or any licensee hereunder with respect to the nature and value of his assets, the manner in which the same are invested, the amount and character of his liabilities, and the conditions under which his business is conducted. For the purposes of such examination the comptroller, his deputies and examiners, shall have free access to the vaults, safes, books, papers and securities of such applicant § 29-f. Geneeal Statutes. 309 or licensee, and shall be permitted to examine the same and to make inventories, statements of accounts and transcripts from snch books and papers. The person making such examination may summon said applicant or licensee, and any other witnesses who may be deemed necessary and examine them under oath with respect to the matters aforesaid, and for that purpose may administer oaths. It shall be the duty of the person conducting such examination to file the testimony taken, together with such inventories, statements of account and transcripts, in the office of the comptroller. 2. Any person who shall willfully fail or refuse to appear and testify when so required, or who shall interfere with or obstruct such examination, or prevent access to the aforesaid vaults, safes, books, papers and securities, or fail to comply with any require- ment of the person making such examination, is guilty of a misdemeanor. 3. Whenever it shall appear that any licensee hereunder is in- solvent or that the condition of the business conducted by him is such as to render its continuance hazardous, or that such licensee has failed to comply with any of the provisions hereof, the comp- troller shall report the facts to the attorney-general, who shall thereupon institute an action in the supreme court to wind up the business so licensed and to restrain the licensee from conducting the same, and in such action the court may appoint a temporary receiver to enforce the bond given under section twenty-five hereof, to take possession of the property and effects of the licensee, to convert them into money, and to hold the same sub- ject to the direction of the court. Amended by L. 1911, chap. 393. § 29-f. Additional penal provision. Any licensee who shall violate any of the provisions of this article the violation of which has not hereinbefore been expressly made a misdemeanor, or a felony, shall be guilty of a misdemeanor. 310 GrENEBAL Statutes. § 29-g, § 29-g. Bureau of licenses. The comptroller shall establish a license bureau for the purpose of complying with the provisions of this article. § 2. Article ten of sucih chapter is hereby repealed, but said repeal shall not affect any right already existing or accrued, or any liability incurred prior to the passage of this act. § 3. This act shall take effect September first, nineteen hun- dred and ten. GENERAL CORPORATION LAW. CHAPTER 28 of 1909. Chaptee 23 of the Consolidated Laws. Abticle 1. Short title; classification; definition (§§ 1-3). 2. General provisions (§§ 4-44). 3. Change of name (§§ 60-65). 4. Sale of corporate real property (§§ 70-76). 5. Judicial supervision of corporation and of the oflBcers and mem- bers thereof (§§ 90-92). 6. Action for sequestration, action for dissolution and action to enforce individual lia-bility of officers and members of corporation (§§ 100-115). 7. Action to annul corporation (§§ 130-136). I 8. Action to dissolve moneyed corporation (§§ 150-161). 9. Proceedings for voluntary dissolution of corporation (§§ 170- 10. Dissolution of stock corporation without judicial proceeding* (§§ 220, 221). ; I 10a. Provisions applicable to temporary and permanent receivers of corporations (§§ 226, 227). 11. Powers, duties and liabilities of receivers of corporation (§§ 230-278). 12. Provisiona applicable to two or more of th« foregoing proceed- ings or actions (§§ 300-316). 13. Alteration and repeal of charter of corporation (§§ 320, 321). 14. Laws repealed; construction; when to take effect (§§ 330-332). ARTICLE 1. Short Title ; Classification ; Definitions. Sbction 1. Short title. 2. Classification of corporations. 3. Definitions. ^' Gknekal Coepoeatiojst Law. ARTICLE 2. General Provisions. ISErTiON 4. Qualifications of incorporators. 5. Filing and recording eertifica.tes of incorporation. 6. Corporate names. 7. Amended and supplemental certificates. 8. Lost or destroyed certificates. 9. Certificate and other papers as evidence; evidence of ecnsolidi- tion. 10. Limitation of powers; provisions of certificate. 11. Grant of general powers. 12. Enlargement of limitations upon the amount of the property of non-stook corporafions. 13. Acquisition of additional real property. 14. Acquisition of property without the state. 15. Certificate of authority of a foreign corporation. 16. Proof to be filed before granting certificate. 17. Reincorporation of foreign moneyed corporations. 18. Papers to be filed upon reincorporation. 19. When reincorporation effective and eflfect thereof. 20. Acquisition of real property in this state by certain foreign corporations. 21. Acquisition by foreign corporation of real property in this state. 22. Prohibition of banking powers. 23. Qualificajtion of members ag voters. 24. Cumulative voting. 25. Voting trust agreements. 26. Proxies. 27. Challenges. 28. Effect of failure to elect directors. 29. Mode of calling special election of directors. 30. Mode of conducting special election of directors. 31. Qualifioation of voters and canvass of votes at special election. 32. Powers of supreme court respecting elections. 33. Stay of proceedings in actions eollusively brought. 34. Quorum of directors and powers of majority. 35. Directors as trustees in case of dissolution. 36. Forfeiture for non-user. 37. Extension of corporate existence. 38. Kevival of corporate existence. 39. Approval of certificates of extension or revival; when required. 40. Extension when stock is owned by another oorpoiation. 41. Effect of extension. 42. When notice of lapse of time unnecessary. 43. As to acts of directors. 44. Political contributions prohibited; penalty. Geneeal Cokpokation Law. §§ 1, 2, 3. § 1. Short title. This chapter shall be known as the " General Corporation. Law." § 2. Classification of corporations. A corporation shall be either, 1. A municipal corporation, 2. A stock corporation, or 3. A non-stock corporation. A stock corporation shall be either 1. A moneyed corporation, 2. A railroad or other transportation corporation, or 3. A business corporation. A non-stock corporation shall be either, 1. A religious corporation, 2. A membership corporation, or 3. Any corporation other than a stock corporation. A reference in a general law to a class of corporations described in accordance with this classification shall include all oorporatiooia theretofore formed belonging to such class. § 3. Definitions. 1. A " municipal corporation " includes a county, town, school district, village and city and any other territorial division of the state established by law with powers of local government. 2. A " stock corporation " is a corporation having a capital stock divided into shares, and which is authorized by law to dis- tribute to the holders thereof dividends or shares of the surplus profits of the corporation. 'A corporation is not a stock corpora- tion because of having issued certificates called certificates of stock, but which are in fact merely certificates of membership, and which is not authorized by law to distribute to its members any divi- dends or share of profits arising from the operations of the corporation. 3. The term " non-stock corporation " includes every corpora- tion other than a stock corporation. § 8. General Corporation Law. 4. A " moneyed corporation " is a corporation formed under or subject to the banking or the insurance law. 5. A " domestic corporation " is a corporation incorporated by or under the laws of the state or colony of New York. Every cor- poration which is not a domestic corporation is a foreign corpo- ration, except as provided by the code of civil procedure for the purpose of construing such code. 6. The term " directors," when used in relation to corporations, shall include trustees or other persons, by whatever name known, duly appointed or designated to manage the affairs of the corporation. 7. The term " certificate of incorporation " shall include ar^ tides of association or any other written instruments required by law to be filed, to effect the incorporation of a corporation, includ- ing a certified copy of an original certificate of incorporation filed for such purpose in pursuance of law. 8. The term " member of a corporation " shall include every person having a right to vote at a meeting of the corporation for the election of directors, other than a person having a right to vote only upon a proxy. 9. The term " ofBoe of a corporation " means its principal office within the state, or principal place of business within the state if it has no principal office therein. 10. The term " business of a corporation," when used with ref- erence to a non-stoek corporation, includes the operations for \he conduct of which it is incorporated. 11. The term " corporate law " or " laws," when used in any law forming a part of the consolidation of the general lav^ of the state of which this chapter is a part, means the general staAutes of this state relating to corporations included in such consolidation. §§ 4, 6. General Coeporation Law. § 4. Qualifications of incorporators. A certificate of incorporation must be executed by natural per- sons, who must be of full age, and at least two-thirds of them must be citizens of the United States and one of them a resident of this state. This section shall not apply to a corporation formed by the reincorporation or consolidation of existing corporations, or to the reorganization of a corporation upon the sale of the property and franchises of a previously existing corporation or otherwise. § 5. Filing and recording certificates of incorporation. 1. Every certificate of incorporation and every amended or supplemental certificate, and every certificate which alters the provisions of any certificate of incorporation or any amended or supplemental certificate hereafter ex- ecuted, shall be in the English language, and except as otherwise provided by law, shall be filed in the office of the secretary of state, and shall be by him duly recorded and in- dexed in books specially provided therefor, and a certified copy of such certificate or amended or supplemental certificate with a certificate of the secretary of state of such filing and record, or a duplicate original of such certificate or amended or supplemental certificate shall be filed and similarly recorded and indexed in the office of the clerk of the county in which the office of the corporation is to be located, or, if it be a non-stock corporation, and such county be not determined upon at the time of executing the certificate of incorporation, in such county clerk's office as the judge approving the certificate shall direct. iN'othing herein con- tained, however, shall be deemed to prohibit a corporation from having and using a corporate name or title in a language other than the English language if the same be in English letters or characters. All taxes required by law to be paid before or upon incorporation and the fees for filing and recording such certificate must be paid before filing. Iso corporation shall exercise any cor- porate powers or privileges until such taxes and fees have been paid. 2. Whenever under any law now or heretofore in force the cer- tificate of incorporation of any corporation other than a stock cor- poration was or is required to be filed in more than one public office, a certified copy of such certificate so filed in any one of such public offices may be filed in such other office with the like Geneeal Cobpoeaxion Law. § 6. effect as if the original had been duly filed therein, provided, how- ever, that no rights accrued prior to the filing of such copy shall be impaired or affected thereby, provided also, that such filing of a copy shall not cause a duplication or similarity of corporate names in violation of the next sujsceeding section. Amended by L. 1913, chap. 479. § 6. Corporate names. 1. No certificate of incorporation of a proposed corporation having the same name as a corporation authorized to do business under the laws of this state, or a name so nearly resembling it as to be calculated to deceive, shall be filed or recorded in any office for the purpose of effecting its incorporation, or of authorizing it to do business in this state ; nor shall any corporation except a religious, charitable or benevolent corporation be authorized to do business in this state unless its name has such word or words, abbreviation, affix or prefix, therein or thereto, as will clearly in- dicate that it is a corporation as distinguished from a natural person, firm or copartnership; or unless such corporation uses with its corporate name, in this state, such an affix or prefix. A corporation formed by the reincorporation^ reorganization or consolidation of other corporations or upon the sale of the property or franchises of a corporation, or a corporation acquir- ing or becoming possessed of all the estate, property, rights, privileges and franchises of any other corporation or corporations by merger, may have the same name as the corporation or one of the corporations to whose franchises it has succeeded. No corporation shall be hereafter organized under the laws of this state, with the word " trust," " banic," '' banking," " insurance," " assurance," " indemnity," " guarantee," " guaranty," " title," " casualty," " surety," " fidelity," " savings," " investment," " loan " or " benefit " as part of its name, except a corporation formed under the banking law or the insurance law. 2. 'No corporation, society or association, whether now existing or hereafter organized under or by virtue of the laws of this state, shall ever employ the words " Lucretia Mott " to designate, de- scribe or name any hospital, infirmary or dispensary, or any part thereof, or any similar institution. Amended by L. 1911, chap. 0:18; L. 1912, chap. 2, and L. 1913, chap. 24. §§ 7, 8, 9. Genekai. Coin'ORATiON Law. § 7. Amended and supplemental certificates. If in the original or amended certificate of incorporation of any corporation, or if in a supplemental certificate of any corporation any informality exist, or if any sucli certificate contain any matter not authorized by law to be stated therein, or if the proof or acknowledgment thereof shall be defective, the corporators or di- rectors of the corporation may make and file an amended certificate correcting such informality or defect or striking out such unau- thorized matter; and the certificate amended shall be deemed to be amended accordingly as of the date such amended certificate was filed, and upon the filing of such an amended certificate of incor- poration, the corporation shall then for all purposes be deemed to be a corporation from the time of filing the original certificate. The supreme court may, upon due cause shown, and proof made, and upon notice to the attorney-general, and to such other persons as the court may direct, and upon such terms and con- ditions as it may impose, amend any certificate of incorporation which fails to express the true object and purpose of the cor- poration, so as to truly set forth such object and purpose. When an amended or supplemental certificate is filed, an entry shall be made upon the margin of the index and record of the original certificate of 'the date and place of record of- every such amended certificate. The amendment of a certificate under this section shall be with- out prejudice to any pending action or proceeding, or to any rights previously accrued. § 8. Lost or destroyed certificates. If either of the certificates of incorporation shall be lost or de- stroyed after filing, a certified copy of the other certificate may be filed in the place of the one so lost or destroyed and as of the date of its original filing, and such certified copy shall have the same force and effect as the original certificate liad when filed. § 9. Certificate and other papers as evidfince; evidence of consolidation. 1. The certificate of incorporation of icny corporation duly filed shall be presumptive evidence of its incorporation, and any Geneeai. Coepoeatioh^ Law. § 9. amended certificate or other paper duly filed or recorded relating to the incorporation of any corporation or its existence or manage- ment, and containing facts required or authorized by law to be stated therein, shall be presumptive evidence of the existence of such facts. 2. "Whenever, by the laws of any other state or territory, or the dominion of Canada, a copy of the certificate of organization or incorporation or any other certificate, certified or exemplified by any officer or officers in such state or territory or dominion, is or shall be prima facie evidence of the due formation, creation, existence, organization or capacity of any corporation or joint- stock company, created, organized or located in such state, terri- tory or dominion, or claiming so to be, such certificate or cer- tificates, duly exemplified, or a duly exemplified copy thereof, shall be received in all actions and proceedings in this state, in or before all courts and officers, with the same force and efFect in all respects as prima facie evidence as aforesaid, as in such other state, territory or dominion. 3. Where two or more corporations have been or shall here- after be consolidated and merged into a new corporation, a cer- tificate of the secretary of state under his official seal concisely stating the names of the respective corporations consolidated, the dates of the filing of the certificates respectively of the incorpora- tion of such corporations in his office, the object for which they were formed, including the nature and locality of their business as set forth in their respective incorporation papers on file in his office, the date of the filing of the consolidation agreement and other proceedings in his office, the name of the new corporation formed by such consolidation and merger, the term of its corporate existence, the place where its principal office is situated and the amount of its capital stock, shall be presumptive and prima facie evidence in all actions and special proceedings for all purposes of the incorporation of the corporations so consolidated, the incor- poration of the new corporation by such consolidation and merger from the date of filing of said consolidation agreement and pro- ceedings, and of the other facts so certified by him. §§ 10, 11. General Coepoeation Law. ', § 10. Limitation of powers; provisions of certificate. 1. No corporation shall possess or exercise any corporate powers not given by law, or not necessary to the exercise of the powers so given. 2. The certificate of incorporation of any corporation may con- tain any provision for the regulation of the business and the con- duct of the affairs of the corporation, and any limitation upon its powers, or upon the powers of its directors and stockholders, which does not exempt them from the performance of any obligation or the performance of any duty imposed by law. §11. Grant of general powers. Every corporation as such has power, though not specified in the law under which it is incorporated : 1. To have succession for the period specified in its certificate of incorporation or by law, and perpetually when no period is specified. 2. To have a common seal, and alter the same at pleasure. 3. To acquire by grant, gift, purchase, devise or bequest, to hold and to dispose of such property as the purposes of the cor- poration shall require, subject to such limitations as may be pre- scribed by law. 4. To appoint such officers and agents as its business shall require, and to fix their compensation, and 5. To make by-laws, not inconsistent with any existing .law, for the management of its property, the regulation of its affairs, and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meetings of the stock- holders in order to constitute a quorum, unless otherwise pro- vided by law. By-laws duly adopted at a meeting of the mem- bers of the corporation shall control the action of its directors. ISTo by-law adopted by the board of directors regulating the elec- tion of directors or officers shall be valid unless published for at least once a week for two successive weeks in a newspaper in the county where the election is to be held, and at least thirty days before such election. Subdivisions four and five of this section shall not apply to municipal corporations. Geneeal Cokpoeation Law. §§ 12, 13, 14. § 12. Enlargement of limitations upon the amount of the property of non-stock corporations. If any general or special law heretofore passed, or any certifi- cate of incorporation, shall limit the amount of property a corpo- ration other than a stock corporation may take or hold, such corporation may take and hold property of the value of ten million dollars or less, or the yearly income derived from which shall be one million dollars or less, notwithstanding any such limitations. In computing the value of such property, no in- crease in value arising otherwise than from improvements made thereon shall be taken into account. Amended by L. 1909, chap. 276, and L. 1911, chap. 581. § 13. Acquisition of additional real property. When any corporation, except a life insurance corporation, shall have sold or conveyed any part of its real property, the supreme court may. notwithstanding any restriction of a general or special law, authorize it to purchase and hold from time to time other real property, upon satisfactory proof that the value of the property so purchased does not exceed the value of the property so sold and. conveyed within the three years next preceding the application. § 14. Acquisition of property without the state. Any domestic corpora;tion transacting business in other states or foreign countries may acquire and dispose of such property as shall be requisite for such corporation in the convenient trans- action of its business. Any domestic corporation establishing or maintaining a charitable, philanthropic or educational institution within this state may also carry on its work and establish or main- tain one or more branches of such institution or an additional institution or additional institutions in any other state, the Dis- trict of Columbia or in any part of the territories or dependencies of the United States of America or in any foreign country and for either of said purposes may take by devise or bequest, hold, pur- chase, mortgage, sell and convey or otherwise dispose of such real and personal property without this state as may be requisite there- for. But nothing in this section contained shall be construed as §§ 15, 16. Geneeal Cobpobation Law. exempting from taxation property to any additional amount than is now allowed to such corporation under existing laws. § 15. Certificate of autiiority of a foreign corporation. No foreign stock corporation other than a moneyed corporation, shall do business in this state without having first procured from the secretary of state a certificate that it has complied with all the requirements of law to authorize it to do business in this state, and that the business of the corporation to be carried on in this state is such as may be lawfully carried on by a corpora- tion incorporated under the laws of this state for such or similar business, or if more than one kind of business, by two or more corporations so incorporated for such kinds of business respect- ively. The secretary of state shall deliver such certificate to every such corporation so complying with the requirements of law. No foreign stock corporation doing business in this state shall maintain any action in this state upon any contract made by it in this state, unless prior to the making of such contract it shall have procured such certificate. This prohibition shall also apply to any assignee of such foreign stock corporation and to any person claiming under such assignee or such foreign stock corporation or under either of them. No certificate of authority shall be granted to any foreign corporation having the same name as an existing domestic corporation, or a name so nearly resembling it as to be calculated to deceive, nor to any foreign corporation, other than a moneyed or insurance corpora- tion, with the word " trust," " bank," " banking," " insurance," " assurance," " indemnity," " guarantee," " guaranty," " sav- ings," " investment," " loan " or " benefit," as a part of its name. § 1 6. Proof to be filed before granting certificate. Before granting such certificate the secretary of state shall re- quire every such foreign corporation to file in his office a sworn copy in the English language of its charter or certificate of in- corporation and a statement under its corporate seal, and the sig- nature of its president, vice-president or other acting head, particu- larly setting forth the business or objects of the corporation which it is engaged in carrying on or which it proposes to carry on within General Cokpoeation Law. § 17. the state, and a place within the state which is to be its principal place of business, and designating a person upon whom process against the corporation may be served within the state. The person so designated must have an office or place of business at the, place where such corporation is to have its principal place of business within the state and such designation must specify such office or place of business of the said person so designated, and if it ia within a city the street and street number if any, or other suitable designation of the particular locality. Such designation shall be accompanied with the written consent of the person designated and shall continue in force until revoked by an instrument in writing designating in like manner some other person upon whom process against the corporation may be served in this state or until the fil- ing in the same office of a written revocation of said consent executed by the person so designated. If the peirson so designated dies or removes from the place where the corporation has its prin- cipal place of business within the state, or files such revocation of his consent, and the corporation does not within thirty days after such .death or removal or revocation of consent designate in like manner another pereon upon whom process against it may be served within the state, the secretary of state may revoke the authority of the corporation to do business within the state, and process against the corporation in an action upon any liability incurred within this state before such revocation, may, after such death or removal, or revocation of consent, and before another designation is made, be served upon the secretary of state. At the time of such service the plaintiff shall pay to the secretary of state two dollars, to be included in his taxable costs and disbursements, and the secretary of state shall forthwith mail a copy of such notice to such corpora- tion if its address, or the address of any officer thereof, is known to him. The secretary of state may require the execution of any such designation, revocation or consent, to be authenticated as he deems proper and he may refuse to file it without such authentication. § 17. Reincorporation of foreign moneyed corporations. Any moneyed corporation duly organized by or under the laws of any state of the United States, and having an office or doing § 18. General Coepoeatio.\ Law. business in this state, may file, if a banking corporation or authorized to make loans upon pledges or deposits, in the office of the superintendent of banks, and if an insurance corporation in the office of the superintendent of insurance, the documents de- scribed in section eighteen of this chapter, and such documents shall be recorded as original certificates of incorporation are re- quired by law to be recorded. The fees for filing and recording such documents, together with the tax, if any, required by law to be paid before the incorporation of a domestic company of the same class, must be paid before filing. § 1 8. Papers to be filed upon reincorporation. The documents to be filed by any such corporation shall include, 1. A copy of its charter, certificate of incorporation, or other document constituting it a body corporate, with such amend- ments, if any, as are desired by the corporation or are required by the laws of New York, authenticated as an original certificate of incorporation is required to be authenticated ; 2. A declaration of its desire to become a corporation Of this state and of its submission to the laws of this state, duly executed by the authority of the body in which its corporate powers are vested. 3. A certificate of the superintendent of that department in which these papers are filed that the charter, certificate of incor- poration or other constituent document, with its proposed amend- ments, if any, as filed, is in all respects consistent with the laws of this state relating to domestic corporations of the same olasa; that the corporation applicant has complied with all conditiona imposed by its laws upon domestic corporations of the same claaa beginning business in this state, with the exception of any pro- visions concerning the residence of a majority of the corporators, trustees, or directors of such corporation ; that its name is not the same with the name of any domestic corporation, nor likely to be confounded with any such name, and that it has paid all fees and taxes due from it to the state, including the tax, if any, imposed by this state upon the Original incorporation of a company of the same class. ' General Coepoeation Law. §§ 19, 20, 21. § 19. When reincorporation effected and effect thereof. From the date of filing these documents the corporation shall become and be a corporation of this state, and shall be subject to all the laws of this state applicable to corporations of the same class ; but its existence and powers as such corporation shall termi- nate if it shall fail at any time for one month to maintain an ofiice within the state at which an authorized officer or agent shall be present at all reasonable business hours, prepared to exhibit the books of the company to the proper authorities of this state and to receive service of process ; or if it shall fail within two years to terminate its corporate existence derived from any other state, by surrender of its charter or by dissolution. § 20. Acquisition of real property in this state by certain foreign corporations. Any foreign corporation doing business in this state and created under the laws of the United States, or of any state or territory thereof, or of any foreign state or nation which borders the United States of America and which by its laws confers similar privileges on corporations created by the laws of the state of New York, may acquire and hold such real property in this state as may be necessary for its corporate purposes in the transaction of its business in this state, and convey the same by deed or otherwise in the same manner as a domestic corporation. Amended by chap. 68 of 1910. § 21. Acquisition by foreign corporation of real property in this state. Any foreign corporation may purchase at a sale upon the fore- closure of any mortgage held by it, or, upon any judgment or de- cree for debts due it, or, upon any settlement to secure such debts, any real property ^^-ithin this state covered by or subject to sudi mortgage, judgment, decree or settlement, and may take by de- vise any real property situated within this state and hold the same for not exceeding five years from the date of such purchase, or from the time when the right to the possession thereof vests in such devisee, and convey it by deed or> otherwise in the same manner as a domestic corporation. §§ 22, 23. General Coepokation Law. § 22. Prohibition of banlcing powers. No corporation, domestic or foreign, other than a corporation formed under or subject to the banking laws of this state or of the United States, except as permitted by, such laws, 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 opera- tion of an express service upon the lines of such railroad com- panies, or a transatlantic steamship company, or a telegraph company, or a corporation incorporated prior to the year eighteen hundred and fifty, to promote the welfare of emigrants, possess the power of receiving money for transmission or of transmitting the same, by draft, traveler's check, money order or otherwise. Amended by L. Idll, chap. 771. § 23. Qualification of members as voters. Unless otherwise provided in the certificate of incorporation, every stockholder of record of a stock corporation shall be entitled at every meeting of the corporation to one vote for every share of stock standing in his name on the books of the corporation ; and at every meeting of a non-stock corporation, every member, unless disqualified by the by-laws, shall be entitled to one vot«. The stock- holders of a stock corporation, by a by-law adopted by a vote at any annual meeting, or at any special meeting duly called for such purpose, may prescribe a period, not exceeding forty days prior to meetings of the stockholders, during which no transfer of stock on the books of the corporation may be made. Except in cases of express trust, or in which other provision shall have been made by written agreement between the parties, the record holder of stock which shall be held by him as security, or which shall actually belong to another, upon demand therefor and payment of neces- sary expenses thereof, shall issue to such pledgor or to such actual owner of such stock, a proxy to vote thereon. IsTo member of a corporation shall sell his vote or issue a proxy to vote to any person for any sum of money or any thing of value. The books and papers containing the record of membership of the corpora- Geneeal Cokpobation Law. §§ 24, 25. tion shall be produced at any meeting of its members upon the request of any member. If the right to vote at any such meeting shall be challenged, the inspectors of election, or other persons presiding thereat, shall require such books, if they can be had, to be produced as evidence of the right of the person challenged to vote at such meeting, and all persons who may appear from such books to be members of the corporation may vote at such meeting in person or by proxy, subject to the provisions of this diapter. § 24. Cumulative voting. The certificate of incorporation of any stock corporation may provide that at all elections of directors of such corporation, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit, which right, when exercised, shall be termed cumulative voting. The stockholders of a corporation heretofore formed, who, by the provisions of laws existing on April thirtieth, eighteen hundred and ninety-one, were entitled to the exercise of such right, may hereafter exercise such right according to the provision of this section. § 25. Voting trust agreements. A stockholder may, by agreement in writing, transfer his stock to any person or persons for the purpose of vesting in him or them the right to vote thereon for a time not exceeding five years upon terms and conditions stated, pursuant to which such person or persons shall act ; every other stockholder, upon his request there- for, may, by a like agreement in writing, also transfer his stock to the same person or persons and thereupon may participate in the terms, conditions and privileges of such agreement; the certifi- cates of stock so transferred shall be surrendered and canceled and certificates therefor issued to such transferee or transferees in which it shall appear that they are issued pursuant to such agreement and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation that fact shall also be noted and thereupon he or they may vote upon the stock so transferred during the time in such agreement speci- fied; a duplicate of every such; agreement shall be filed in the office of the corporation where its principal business is transacted §S 20, 27. General Corporation Law. and be open to the inspection of any stockholder, daily, during business hours. § 26. Proxies. Every member of a corporation, except a religious corporation, entitled to vote at any meeting thereof may so vote by proxy. ^ 1^0 officer, clerk, teller or bookkeeper of a corporation formed under or subject to the banking law shall act as proxy for any stockholder at any meeting of any such corporation. Every proxy must be executed in writing by the member him- self, or by his duly authorized attorney. No proxy hereafter made shall be valid after the expiration of eleven months from the date :>f its execution unless the member executing it shall have speci- fied therein the length of time it is to continue in force, which shall be for some limited period. Every proxy shall be revocable at the pleasure of the person executing it ; but a corporation having no capital stock may prescribe in its by-laws the persons who may act as proxies for members, and the length of time for which proxies may be executed. § 27. Challenges. Every member of a corporation offering to vote at any election or meeting of the corporation shall, if required by an inspector of election or other officer presiding at such election or meeting, or by any other member present, take and subscribe the following oath : "I do solemnly swear that in voting at this election I have not, either directly, indirectly or impliedly received any promise or any sum of money or any thing of value to influence the giving of my vote or votes at this meeting or as a consideration therefor." Any person offering to vote as proxy for any other person shall present his proxy and, if so required, take and subscribe the fol- lowing oath ; " I do solemnly swear that I have not, either directly^ indirectly or impliedly, given any promise or any sum of money or any thing of value to induce the giving of a proxy to me to vote at this election, or received any promise or any sum of money or any thing of value to influence the giving of my vote at this meeting, or as a consideration therefor." The inspectors or per- sons presiding at the election may administer sucih oath, and all such oaths and proxies shall be filed in the office of the corporation. General Cokpoeation' Law. §§ 28, 29, 30. § 28. Effect of failure to elect directors. If the directors shall not be elected on the day designated in Qxe by-laws, or by law, the corporation shall not for that reason be (Ua- Bolved; but every director shiall continue to hold his office and discharge his duties until his successor has been elected. § 29. Mode of calling special election of directors. If the election has not been held on the day so designated, the directors shall forthwith call a meeting of the members of the cor- poration for the purpose of electing directors, of which meeting notice shall be given in the same manner as of the annual meeting for the election of directors. If such meeting shall not be so called within one month, or, if held, shall result in a failure to elect directors, any member of the corporation may call a meeting for the purpose of electing directors by publishing a notice of the time and place of holding such meeting at least once in each week for two successive weeks immediately preceding the election, in a newspaper published in the county where the election is to be held and in such other man- ner as may be prescribed in the by-laws for the publication of notice of the annual meeting, and by serving upon each member, either personally or by mail, directed to him at his last known post-office address, a copy of such notice at least two weeks before the meeting. § 30. Mode of conducting special election of directors. Such meeting shall be held at the office of the corporation, or if it has none, at the place in this state where its principal business has been transacted, or if access to such office or place is denied or can not be had, at some other place in the city, village or town where such office or place is or was located. At such meeting the members attending shall constitute a quo- rum. They may elect inspectors of election and directors and adopt by-laws providing for future annual meetings and election of directors, if the corporation has no such by-laws, and transact any other business which may be transacted at an annual meeting of the members of the corporation. §§ 31, 32, 33. Genkral Coepokation Law. § 31 . Qualification of voters and canvass of votes at special election. In the absence at such meeting of the books of the corporation showing who are members thereof, each person, before voting, shall present his sworn statement setting forth that he is a member of the corporation ; and if a stock corporation, the number of shares of stock owned by him and standing in his name on tbe books of the corporation, and, if known to him, the whole number of shares of stock of the corporation outstanding. On filing sucb statement, he may vote as a member of the corporation ; and if a stock corpo- ration, he may vote on the shares of stock appearing in such state- ment to be owned by him and standing in his name on the books of the corporation. The inspectors shall return and file such statements, with a certificate of the result of the election, verified by them, in the office of the clerk of the county in which such election is held, and the persons so elected shall be the directors of tbe corporation. § 32. Powers of supreme court respecting elections. The supreme court shall, upon the application of any person or corporation aggrieved by or complaining of any election of any corporation or any proceeding, act or matter touching the same, upon notice thereof to the adverse party, or to those to be affected thereby, forthwith and in a summary way hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and establish, the election or order a new election, or make such order and give such relief as right and justice may require. § 33. Stay of proceedings in actions collusively brought. If an action is brought against a corporation by the procure- ment or default of its directors, or any of them, to enforce any olaim or obligation declared void by law, or to which the cor- poration has a valid defense, and such action is in the interest or for the benefit of any director, and the corporation has by his ocmnivanoe made default in such, ajction, or consented to the valid- ity of such claim or obligation, any member of the corporation General Coepoeation Law. §§. 34, 35, may apply to the supreme court, upon affidavit, setting forth the facts, for a stay of proceedings in such action, and on proof of the facts in such further manner and upon such notice as the court may direct, it may stay such proceedings or set aside and vacate the same, or grant such other relief as may seem proper, and which will not injuriously affect an inuocemt party, who, without notice of such wrongdoing and for a valuable consideration, has acquired rights under such proceedings. § 34. Quorum of directors and powers of majority. The affairs of every corporation shall be managed by its board of directors, at least one of whom shall be a resident of this state. Unless otherwise provided a majority of the board of directors of a corporation at a meeting duly assembled shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. The members of a corporation may in by-laws fix the number of directors necessary to constitute a quorum at a number less than a majority of the board, but at least equal to one-third of its number. Subject to the by-laws, if any, adopted by members of a corporation, the directors may make necessary by-laws of the corporation. § 35. Directors as trustees in case of dissolution. Upon the dissolution of any corporation, its directors, unless other persons shall be appointed by the legislature, or by some court of competent jurisdiction, shall be the trustees of its cred- itors, stockholders or members, and shall have full power to settle its affairs, collect and pay outstanding debts, and divide among the persons entitled thereto the money and other property remain- ing after payment of debts and necesssary expenses. Such trustees shall have authority to sue for and recover the debts and property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders or members, to the extent of its property and effects that shall come into their hands. §§ 36, 37. Genekal Coepoeatioi^ Law. § 36. Forfeiture for non-user. If any corporation, except a railroad, turnpike, plank-road or bridge corporation, shall not organize and commence the transac- tion of its business or undertake the discharge of its corporate duties -ivithln two years from the date of its incorporation, its corporate powers shall cease. § 37. Extension of corporate existence. Any domestic corporation at any time before ' the expiration thereof, may extend the term of its existence beyond the time specified in its original certificate of incorporation, or by law, or in any certificate of extension of corporate existence, by the consent of the stockholders owning two-thirds in amount of its capital stock, or if not a stock corporation, by the consent of two-thirds of its members, which consent shall be given either in writing or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation ; and a certificate under the seal of the corporation that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed and acknowledged by the president or a vice-president, and by the secretary or an assistant secretary of the corporation, and if a corporation formed under or subject to the banking law shall be filed in the office of the superintendent of banks, if an insurance corporation, in the office of the superintendent of insurance, and otherwise in the office of the secretary of state, and shall by such officer be duly recorded and indexed in a book specially provided therefor, and a certified copy of such certificate, with a certificate of such officer of such filing and record, or a duplicate original of such certificate, shall be filed and similarly recorded and in- dexed in the office of the clerk of the county wherein the corpora- tion has its principal place of business, and shall be noted in the margin of the record of the original certificates of such corporation, if any, in such offices, and thereafter the term of the existence of such corporation shall be extended as designated in such certificate. The certificate of incorporation of any corporation whose dura- tion is limited by such certificate or by law, may require that the General Coepoeation Law. §§ 38, 39. consent of the stockholders owning a greater percentage than two- thirds of the stock, if a stock corporation, or of more than two- thirds of the members, if a non-stock corporation, shall be requisite to effect an extension of corporate existence as authorized by this section. Amended by L. 1913, ch. 306. § 38. Revival of corporate existence. If the term of existence of any domestic corporation shall have expired and it shall be made satisfactorily to appear to the supreme court that such corporation was legally organized pursuant to any law of this state, and that it shall have issued its bonds payable at a date beyond the date fixed in its charter or certificate of incorpora- tion for the expiration of its corporate existence, and such bonds shall be unmatured and unpaid, or, if a bank, incorporated under a general law of this state, that shall have issued any other obliga- tions or shall have incurred any other indebtedness which at the date of the application shall be unsatisfied or unpaid, the supreme court may, upon the application of any person interested and upon such notice to such other parties as the court may require, by order, authorize the filing and recording of a certificate re- viving the existence of such corporation, upon such conditions and with such limitations as such order shall specify, and ex- tending such corporate existence for a term not exceedirg the term for which it was originally incorporated. Upon filing and recording such certificate in the same manner as certificates of extension of corporate existence duly issued before the expira- tion of the existence of a domestic corporation are authorized by law to be filed and recorded, such corporate existence shall be revived and extended in pursuance of the terms of such order, but such revival and extension shall not affect any litigation com- menced after such expiration and pending at the time of such revival. Amended by L. 1911, chap. 63. § 39. Approval of certificates of extension or revival; wticn required. In the case of a corporation formed under or subject to the bank- ing law, no certificate of extension or revival shall be filed or re- §§ 40, 41, 42. General Cokpokation Law. corded unless it shall have indorsed thereon the written approval of the superintendent of banks; or, if an insurance corporation, unless it shall have indorsed thereon the written approval of the superintendent of insurance ; and, if a turnpike or bridge corpora- tion, it shall not be filed unless it shall have indorsed thereon or annexed thereto a certified copy of a resolution of the board of supervisors of each county in which such turnpike or bridge ia located, approving of and authorizing such extension. § 40. Extension wnen stocK is owned by another cor- poration. If all the stock of a corporation other than a corporation formed under or stibject to the banking law, or an insurance corporation, or a turnpike, plank-road or bridge corporation shall be lawfully owned by another stock corporation entitled by law to take a surrender and merger thereof, the corporate existence of such corporation whose stock is so owned may be extended at any time for the term of the corporate existence of the possessor corpo- ration, by filing in the office or offices in which the original certifi- cate or certificates of incorporation of the first-mentioned corpora- tion were filed a certificate of such extension executed by its president and secretary and by such corporation owning all the shares of its capital stock. § 41 . Effect of extension. Every corporation extending its corporate existence under this chapter or under any general law of the state shall thereafter be subject to the provisions of this chapter and of such general law, notwithstanding any special provisions in its charter, and shall thereafter be deemed to be incorporated under the general laws of the state relating to the incorporation of a corporation for the purpose of carrying on the business in which it is engaged, and shall be subject to the provisions of such law. § 42. When notice of lapse of time unnecessary. Whenever under the provisions of any of the corporate laws a corporation is authorized to take any action after notice to its members or after the lapse of a prescribed period of time, such General Coepoeation Law. §§ 43, 44. action may be taken without notice and without the lapse of any period of time, if such action be authorized or approved, and such requirements be waived in writing by every member of such cor- poration, or by his attorney thereunto authorized. § 43. As to acts of directors. Whenever, under the provisions of any of the corporate laws, a corporation is authorized to take any action by the agreement or action of its directors, managers or trustees, such agreement or action may be taken by such directors, regularly convened as a board, and acting by a majority of a quorum, except when other- wise expressly required by law or the by-laws of the corporation and any such agreement shall be executed in behalf of the corpora- tion by such officers as shall be designated by the board of directors, managers or trustees. At any meeting at which every member of the board of directors shall be present, though held without noticej any business may be transacted which might have been transacted if the meeting had been duly called. Except when otherwise re- quired by law or the by-laws of the corporation, special meetings of the members of the corporation may be called in the same man- ner as the annual meeting thereof. § 44. Political contributions prohibited; penalty. No corporation or joint-stock association doing business in this state, except a corporation or association organized or main- tained for political purposes only, shall directly or indirectly pay or use or offer, consent or agree to pay or use any money or prop- erty for or in aid of any political party, committee or organization, or for, or in aid of, any corporation, joint-stock or other associa- tion organized or maintained for political purposes, or for, or in aid of, any candidate for political office or for nomination for such office, or for any political purpose whatever, or for the reimbursement or indemnification of any person for moneys or property so used. Any officer, director, stockholder, attorney or agent of any corporation or joint-stock association which violates any of the provisions of this section, who participates in, aids, abets or advises or consents to any such violation, and any person § 60. General Coepoeation Law. who solicits or knowingly receives any money or property in violation of this section, shall be guilty of a misdemeaaxor and punishable by imprisonment in a penitentiary or county jail for not more than one year and a fine of not more than one thousand dollars. No person shall be excused from attending and testifying, or producing any books, papers or other docu- ments before any court or magistrate, upon any investigation, proceeding or trial, for a violation of any of the provisions of this section, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or to subject him to a penalty or for- feiture; but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal investigation or proceeding. AETICLE 3. Chattge of Name. Section 60. Petition by corporation to change name. 01. Contents of petition. 62. Notice of presentation of petition. 63. Order authorizing change. 64. When change to take effect. 65. Substitution of new name in pending action or proceeding. § 60. Petition by corporation to change name. A petition to assume another corporate name may be made by a domestic corporation, whether incorporated by a general or special law, to the supreme court at a special term thereof, held in the judicial district in which its principal business office sball be situated, or, if it be other than a stock corporation, at a special term held in the judicial district in which its certificate of incor- poration is filed or recorded, or in which its principal property is situated, or in which its principal operations are or theretofore have been conducted. If it be a banking, insurance or railroad corporation, the petition must be authorized by a resolution of the directors of the corporation, and approved if a banking corpora- General Corporation Law. §§ 61, 62. tion, by the superintendent of banks ; if an insurance corporation by the superintendent of insurance, and if a railroad corporation, by the public service commission. The petition to change the name of any other corporation must have annexed thereto a certificate of the secretary of state, that the name which such corporation proposes to assume is not the name of any other domestic cor- poration or a name which he deems so nearly resembling it, as to be calculated to deceive. Amended by chap. 296 of 1910. § 61. Contents of petition. The petition must be in writing, signed by the petitioner and verified in like manner as a pleading in a court of record, and must specify the grounds of the application, its present name, and the name it proposes to assume, which must not be the name of any other corporation, or a name so nearly resembling it as to be calculated to deceive ; and if it be a railroad corporation, a corpo- ration having banking powders or the power to make loans upon pledges or deposits, or to make insurar.ces, that the petition has been duly authorized by a resolution of the directors of the corpo- ration and approved by the proper officer. § 62. Notice of presentation of petition. If the petition be made by a corporation located elsewhere than in the city and county of New York, notice of the presentation thereof shall be published once in each week for three successive weeks in a newspaper of every county in which such corporation shall have a business office, or if it has no business office, of tiie county in which its principal corporate property is situated, or in which its operations are or theretofore have been principally con- ducted, which newspaper, if it be a banking corporation, shall be designated by the superintendent of banks, if an insurance corpora- tion, by the superintendent of insurance, or of a railroad cor- poration, by the public service commission. In the city and county of New York such notice shall be published once in each iveek for three successive weeks in two daily newspapers published in such county. If the petition be made by a domestic corpora- § 63. General Coepoeation Law. tion organized under or subject to the religious or membership corporations law the court may dispense with the publication of the notice of the presentation of such petition or require notice of such presentation to be given to such person and in such man- ner as the court thinks proper. A copy of the petition and notice of motion shall be filed with the secretary of state, and the proposed name shall thereupon be reserved for said corporation until three weeks after the date of such motion, and until three weeks after the date of any adjourn- ment of such motion if notice of such adjournment shall be filed with the secretary of state, and no certificate of incorporation of a proposed corporation, having the same name as the name pro- posed in such petition, or a name so nearly resembling it as to be calculated to deceive, shsJl be filed in any office for the purpose of effecting its incorporation, and no corporation formed without the state of New York having the same name or a name so nearly resembling it as to be calculated to deceive shall be given authority to do business in this state. Amended by chap. 296 of 1910. § 63. Order authorizing change. If the court to which the petition is presented is satisfied thereby, or by the affidavit and certificate presented therewith, that the peti- tion is true, and that there is no reasonable objection to the change of name proposed and that the petition has been duly authorized and that notice of the presentation of the petition, if required by law, has been made, the court shall make an order authorizing the petitioner to assume the name proposed on a day specified therein, not less than thirty days after the entry of the order. The order shiall be directed to be entered and the papers on which it was granted to be filed within ten days thereafter in the office of the clerk of the county in which its certificate of incorporation, if any, shall be filed, or if there be none filed, in which its principal office shall be located, or if it has no business office in the county in which its principal property is situated, or in which its operations are or theretofore have been principally conducted, or in the office of the clerk of the county in which the special term granting the order is General Coepoeation Law. § 64. held; and that a certified copy of such order shall, within ten days after the entry thereof, be filed in the office of the seoretairy of state; and also, if it be a banking corporation, in the office of the superintendent of banks, or if it be an insurance corporation, in the office of the superintendent of insurance, or if it be a rail- road corporation, in the offices of the public service commissions. Such order shall also direct the publication, within ten days after the entry thereof of a copy thereof, in a designated newspaper, in the county in which the order is directed to be entered, once in each week for four successive weeks. The court may dispense with the publication of a copy of such order and require notice to be given to such persons and in such manner as it thinks proper if the petition be made by a domestic corporation organized under or subject to the religious or membership corporations law. Amended by chap. 296 of 1910. § 64. When change to take effect. If the order shall be fully complied with, and within forty days after the making of the order, an affidavit of the publication thesreof shall be filed and recorded in the office in which the order is en- tered, and in each office in which certified copies thereof are re- quired to be filed, if any, the petitioner shall, on and after the day specified for that purpose in the order, be known by the name which is thereby authorized to be assumed, and by no other name, No proceedings had prior to April fourth, eighteen hundred and ninety-four, imder sections two thousand four hundred and four- teen and two thousand four hundred and fifteen of the code of civil procedure for the change of the name of a corporation, shall be invalid by reason of the non-filing of an affidavit of the publication of the order changing such name within twenty days from the date thereof. And no proceedings heretofore had under the provisions of article three, chapter twenty-three, consolidated laws, for the change of the name of a corporation, shall be invalid by reason of the non-filing and recording of such affidavit of the publication of the order changing such name within forty days from the making of such order. Amended by L. 1913, chap. 721. In effect May 24, 1913. §§ 65, 70, 71. General Coepoeation Law. § 65. Substitution of new name in pending action or pro- ceeding. An action or special proceeding, civil or criminal, commenced by or against a corporation ■whose name is so changed shall not abate, nor shall any relief, recovery or other proceeding therein be pre- vented, impeded or impaired in consequence of such change of name. The plaintiflE in the action or the party instituting the special proceeding, or the people, as the case requires, may at any time, obtain an order amending any of the papers or proceedings therein, by the substitution of the n&w name, without costs and without prejudice to the action or proceeding. AETICLE 4. Sale of Coepoeate Real Peopeety. Section 70. Application of this article. 71. Petition. 72. Hearing on application. 73. Order to sell, mortgage or lease. ; 74. Insolvent corporation. 75. Service of notices. 76. Practice in cases not herein provided for. § 70. Application of this article. ^Vhenever any corporation is required by law to make applica- tion to the court for leave to mortgage, leaise or sell its real estate, the proceeding therefor shall be had pursuant to the provisions of this article. § 71. Petition. The proceeding shall be instituted by the presentation to the supreme court of the district or the county court of the county where the real property, or some part of it, is situated, by the corporation applicant, of a petition setting forth the following facts : 1. The name of the corporation and of its directors, trustees or managers, and of its principal officers, and their places of residence. G-ENEEAL GOEPOEATIOF Law. § 72. 2. The business of the corporation or the object or purpose of its incorporation and a reference to the statute under which it was incorporated. 3. A description of the real property to be sold, mortgaged or leased, by metes and bounds, with reasonable certainty. 4. That the interests of the corporation will be promoted by the sale, mortgage or lease, of the real property specified, and a con- cise statement of the reasons therefor. 5. That such sale, mortgage or lease has been authorized, by a vote of at least two-thirds of the directors, trustees or managers of the corporation at a meeting thereof, duly called and held, and a copy of the resolution granting such authority. 6. The market value of the remaining real property of the cor- poration and the cash value of its personal assets, and the total amount of its debts and liabilities, and how secured, if at all. 7. The application proposed to be made of the moneys realized from such sale, mortgage or lease. 8. Where the consent of the shareholders, stockholders or mem- bers of the corporation is required by law to be first obtained, a statement that such consent has been given, and a copy of the con- sent, or a certified transcript of the record of the meeting at which it was given, shall be annexed to the petition. 9. A demand for leave to mortgage, lease or sell the real estate described. The petition shall be verified in the same manner as a verified pleading in an action in a court of record. § 72. Hearing on application. Upon presentation of the petition, the court may immediately proceed to hear the application, or it may, in its discretion, direct that notice of the application shall be given to any person inter- ested therein, as a member, stockholder, ofiicer or creditor of the corporation or otherwise, in which case the application shall be heard at the time and place specified in such notice, and the court may in an;-' case appoint a referee to take the proofs and report the same to the court, with his opinion thereon. Any person, whose §§ 73, 74, 75, 76. General Coepoeation Law. interests may be affected by the proceeding, may appear upon the hearing and show cause why the application should not be granted. § 73. Order to sell, mortgage or lease. Upon the hearing of the application, if it shall appear, to the satisfaction of the court, that the interests of the corporation will be promoted thereby, an order may be granted authorizing it to sell, mortgage or lease the real property described in the petition, or any part thereof, for such sum, and upon such terms as the court may prescribe, and directing what disposition shall be made of the proceeds of such sale, mortgage or lease. § 74. Insolvent corporation. If the corporation is insolvent, or its property and assets are insufficient to fully liquidate its debts and liabilities, the applica- tion shall not be granted, unless all the creditors of the corporation have been served with a notice of the time and place at which the application will be heard. § 75. Service of notices. Service of notices, provided for in this article, may be made either personally or, in case of absence, by leaving the same at the place of residence of the person to be served, with some person of mature age and discretion, at least eight days before the hearing of the application, or by mailing the same, duly enveloped and addressed and postage paid, at least sixteen days before such hearing. § 76. Practice in cases not herein provided for. In all applications made under this article, where the mode or manner of conducting any or all of the proceedings thereon is not expressly provided for, the court before whom such application may be pending, shall have the power to make all the necessary orders and give the proper directions to carry into effect the object and intent of this article, or of any act authorizing the sale of cor- porate real property, and the practice in such cases shall conform, as near as may be, to the ordinary practice in such court. Gehteeal Coepoeatiojst Law. § 90. AETICLE 5. Judicial Supeevision of Coepoeation and of the Officees AND MeMBEES ThEEEOF. Section 90. Action against officers of corporation for misconduct. 91. Who may bring such an action. 91-a. Actions against officers by corporation, or receiver or trustee. 92. Visitatorial power over corporation not affected by this article. § 90. Action against officers of corporation for misconduct. An action, maj be maintained against one or more trustees, directors, managers, or other officers of a corporation, to procure a judgment for the following purposes, or so much thereof as the case requires: 1. Compelling the defendants to account for their official con- duct, including any neglect of or failure to perform their duties, in the management and disposition of the funds and property, committed to their charge. 2. Compelling them to pay to the corporation, which they rep- resent, or to its creditors, any money, and the value of any prop- erty, which they have acquired to themselves, or transferred to others, or lost, or wasted, by or through any neglect of or failure to perform or by other violation of their duties. 3. Suspending a defendant from exercising his office, where it appears that he has abused his trust. ■4. Removing a defendant from his office, upon proof or con- dction of misconduct, and directing a new election to be held by the body or board duly authorized to hold the same, in order to supply the vacancy created by the removal; or, where there is no such body or board, or where all the members thereof are removed, directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies. 5. Setting aside an alienation of property, made by one or more trustees, directors, managers or other officers of a corporation, contrary to a provision of law, or for a purpose foreign to the lawful business and objects of the corporation, where the alienee knew the purpose of the alienation. §§ 91, 91-a. G-EITEBAL COEPOEATION Law. 6. Eestraining and preventing such an alienation, where it i8 threatened, or where there is good reason to apprehend that it will he made. Y. The court must, upon the application of either party, make an order directing the trial by a jury of the issue of neglect or failure of defendants to perform their duties; and for that pur- pose the questions to be tried must be prepared and settled as pre- scribed in section nine hundred and seventy of the code of civil procedure. As to any litigation pending prior to September one, nineteen hundred and seven, the provisions of this section as they existed prior to that date shall apply. § 91. Who may bring such an aciion. An action may be brought, as prescribed in the last section, by the attorney-general in behalf of the people of the state, or, except where the action is brought for the purpose specified in subdivision third or fourth of that section, by a creditor of the corporation, or by a trustee, director, manager, or other officer of the corporation, having a general superintendence of its concerns. § 91. Actions against officers by corporation, or receiver or trustee. The supreme court shall also have and exercise jurisdic- tion in equity, at the suit of a corporation, or of a receiver, or trustee in bankruptcy thereof, to compel one or more trustees, directors, managers or other officers of the corporation to account for injury to or losses of the funds, assets or property of the cor- poration, caused by or through any neglect or failure of the de- fendants to perform, or for violation of, their duties. The court must, upon the application of either party, make an order direct- ing the trial by jury of the issue of negligence, and for that pur- pose the questions to be tried must be prepared and settled as prescribed in section nine hundred and seventy of the code of civil procedure. Added by L. 1913, chap. 633. GrENEEAL CoEPOBATION LaW. ' §§ 103,104. § 103. Temporary injunction in action authorized by tliis article. In an action, brought as ' prescribed in this article, the court may, upon proof of the facts authorizing the action to be main- tained, grant an injunction order, restraining the corporation, and its trustees, directors, managers and otber officers, from collecting or receiving any debt or demand, and from paying out, or in any way transferring or delivering, to any person, any money, property, or effects of the corporation, during the pendency of the action; except by express permission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, man- agers and other officers, from exercising any of its corporate rights, privileges, or franchises, during the pendency of the action ; except by express permission of the court. The provisions of title second of chapter seventh of the code of civil procedure, relating to the granting, vacating or modifying of an injunction order, apply to an injunction order, granted as prescribed in this section; except that it can be granted only by the court. § 104. Temporary receiver. In such an action, the court may also, at any stage thereof, ap- point one or more receivers of the property of the corporation, A receiver, so appointed, before final judgment is a temporary receiver, until final judgment is entered. A temporary receiver has power to collect and receive the debts, demands, and other property of the corporation; to preserve the property, and the proceeds of the debts and demands collected; to sell or otherwise dispose of the property as directed by the court; to collect, receive and preserve the proceeds thereof; and to maintain any action or special proceeding, for either of those purposes. He must qualify as prescribed by law for the qualification of a permanent receiver. Unless additional powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section, and those which are incidental to the exercise thereof. 105, 106, 107. General CosroEAxioN Law. 105. Additional powers and duties of temporary receiver. L temporary receiver, appointed as prescribed in. the last section, in all respects, subject to the control of the court. In addition the powers conferred upon him, by the provisions of the last ion, the court may, by the order or interlocutory judgment lointing him, or by an order subsequently made in the action, jy the final judgment, confer upon him the powers and author- and subject him to the duties and liabilities, of a permanent jiver, or so much thereof as it thinks proper; except that he 11 not make any distribution among the creditors or stockholders, ore final judgment, unless he is specially directed so to do by court. 106. Permanent receiver. L receiver appointed by or pursuant to a final judgment in the on, or a temporary receiver who is continued by the final judg- it, is a permanent receiver, and has all the powers and authority ferred, and is subject to all the duties and liabilities imposed n a receiver in article eleven of this chapter, n'd by L. 1909, ch. 240. 107. Additional duties and liabilities of permanent siver. L permanent receiver shall keep an account of all moneys re- ed by him, and on the first days of January, April, July and ober, in each and every year make and file a written statement, fied by his oath that such statement is correct and true, show- the amount of money received by such receiver, his agents or ■rneys, the amount he has a right to retain and the items for ch he claims to retain the same, and the distributive share due L person interested therein. He shall pay sudi distributive •e to the person or persons entitled thereto, on demand, at any 5 after such statement. Such account, statement, and all the cs and papers of the corporation in the hands of such receiver, 1 at all reasonable times be open for the inspection of all per- having an interest therein. And in case of neglect or refusal omply with either of the above requirements, or any duty im- Geisteeal Coepoeation Law. §§ 108, 110. posed upon him, the supreme court, at either an appellate division or special term, shall, on the aipplioation of the party aggrieved, unless such neglect or refusal shall be satisfactorily explained to the court, forthwith remove such receiver, and appoint some suit- able person as receiver in his place. Such removal shall not vitiate or annul any legal proceedings had by such; receiver; but such proceedings shall be continued by such successor as if no removal had been made. Such receiver shall also be liable to pay to the party interested, interest at the rate of ten per centum per annum on all moneys due to such party and retained by him more than one day after such demand made as aforesaid. § 108. Application for appointment of receiver. Applications made by the attorney-general for the appointment of a receiver of a corporation shall be made in the judicial district in which the action in which the appointment is sought is triable. § 109. Officers and stoclcliolders may be made parties in action brought by creditor. Where the action is brought by a creditor of a corporation, and the stockholders, directors, trustees, or other officers, or any of them, are made liable by law, in any event or contingency, for the payment of his debt, the persons, so made liable, may be made parties defendant, by the original or by a supplemental complaint ; and their liability may be declared and enforced by the judgment in the action. § 110. Separate action may be brought against officers and stocl(holders. Where the stockholders, directors, trustees, or other officers of a corporation, who are made liable, in any event or contingency, for the payment of a debt, are not made parties defendant, as pre- scribed in the last section, the plaintiff in the action may maintain a separate action against them, to procure a judgment, declaring, apportioning and enforcing their liability. §§ 111, 114. General Coepoeation Law. §111. Proceedings in such actions. In an action brought as prescribed in either of the last two sec- tions, the court must, when it is necessary, cause an account to be taken of the property and of the debts of the corporation, and thereupon, the defendant's liability must be apportioned accord- ingly; but, if it affirmatively appears, that the corporaition is in- solvent, and has no property to satisfy its creditors, the court may, ■without taking such an account, ascertain and determine the amount of each defendant's liability, and enforce the same accordingly. § 112. Distribution of property of corporation by judgment in actions under this article. A final judgment in an action, brought against a oorporation, as prescribed in this article, either separately or in conjunction with its stockholders, directors, trustees, or other officers, must provide for a just and fair distribution of the property of the oorporation, and of the proceeds thereof, among its fair and honest creditors, in the order and in the proportions prescribed by law, in, case of the voluntary dissolution of a corporation. § 113. Recovery of stock subscriptions. Where the stockholders of the corporation are parties to the action, if the property of the corporation is not suffi.oient to dis- charge its debts, the interlocutory or final judgment, as the case requires, must adjudge that each stoclcholder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation. § 114. Liability of directors and stocl ter of a corporation formed under or subject to the banking or insurance law, and shall be satisfied that it is unsafe and inexpedi- ent for such corporation to continue doing business, the supreme court may, on his application, in a case provided by law, appoint a receiver thereof, and may on suob appointment grant an injunction restraining such corporation from carrying on its business until the further order of the court. The court may, in its discretion, . dispense with notice of the application. § 151. Order to show cause why injunction and receiver should not be permanent. The court, on granting an order without notice, either for tbe appointment of a receiver or for an injuniotion, or for both forms of relief, as herein provided, shall make an order that the corporation so proceeded against show cause at a term of the court to be held not more than thirty days thereafter, why such receiver and General Cobpoeation Law. § 152- injunction should not be permanent. Such order shall be served not less than eight days before the date upon which the hearing thereon is to be had. Unless the court otherwise directs, the receiver appointed in the first instance shall be permanent re- ceiver of such corporation, and the injunction shall be continued during the pendency of the litigation. Such receiver shall, unless otherwise ordered by the court, continue to act as such up to and after final judgment, and until the affairs of the corporation shall be finally settled and its property distributed by him according to law. The bond to be given by the receiver on his appointment shall be fixed at such sum .and so conditioned that it shall con- tinue in force and effect until the final discharge of such receiver, including any liability which may be incurred by said receiver by virtue of his appointment as such in the final judgment, in case he shall be so named therein. § 152. Inventory and appraisal by receiver. It shall be the duty of the receiver to take an inventory and make an appraisal of the assets and property of the corporation. In case the corporation is subject to the banking law, two disinterested appraisers shall be appointed by the superintendent of banks to aid in this duty, and in case the corporation is subject to the insurance law, such appraisers shall be appointed by the superin- tendent of insurance. Ten days' notice of such inventory and appraisal shall be given to the corporation and such inventory and appraisal shall be completed and filed with the clerk of the su- preme court in the county in which the trial is to be had, within ninety days after the appointment of such receiver, and a certified copy thereof in the office of the attorney-general, and in the office of the superintendent of banks, or in the office of the superin- tendent of insurance, as the case may be, unless for good cause shown the officer appointing such appraisers shall, in writing, extend the time for the completion thereof. Such appraisers shall receive as compensation a reasonable sum, not exceeding fifteen dollars per day and actual and necessary expenses, to be paid by the receiver upon the approval of the officer by whom they were named. The receiver shall be chargeable with the amount of such §§ 153-155. Genekal Corpoeation Law. inventory and shall be relieved tterefrom to the same extent and upon the same grounds as in the like case of an executor. § 1 53. Conversion of assets into cash by receiver. The receiver shall proceed, immediately upon his appointment, to convert the assets of the corporation into cash. § 1 54. Employment of counsel by receiver. It shall not be lav?ful for any receiver to pay to any attorney or counsel any costs, fees or allowance until the amount thereof shall have been stated to the special term, as expenses incurred by such receiver and shall have been approved by that court by an order duly entered. Any such order shall be the subject of review by the appellate division and the court of appeals on appeal thereto taken by any party. The receiver may employ not to exceed one counsel unless the employmenit of additional counsel shall be authorized by the supreme court after notice to the attorney-general of an application therefor. . § 155. Notice to creditors by receiver. 1. Within thirty days after a receiver qualifies he shall cause to be published once a week for twelve weeks in a newspaper pub- lished at the principal place of business of the corporation, a notice to all creditors of the corporation to present their claims to such receiver at his place of business within fifteen days after the last publication of such order. He shall also mail a copy of such notice to all the creditors of the corporation known to him or as shown on the books of the company, at their last known place of residence. 2. The receiver of any title guaranty company heretofore or hereafter appointed, which company is authorized by law to issue policies of insurance or agreements of indemnity or guar- anty, and which corporation has issued and outstanding at the time of the appointment of the receiver, policies of insurance or agreements of indemnity or guaranty, exceeding two thousand in number, shall not be required to mail to the holders or owners of said policies of insurance or of said agreements, the notice Geneeai. Ooepoeation Law. § 150. required by law to be given to creditors of an insolvent moneyed corporation ; but such receiver labtall cause a notioe to be published twice a week, for four successive weeks, in two newspapors pub- lished in the county where said corporation has its principal place of business ; which said notice shall require all creditors and owners and holders of outstanding policies of insurance or agreements of indemnity or guaranty, to exhibit and prove their claim, within sixty days; and, in default of so doing, shall be precluded from all benefit of the judgment and from amy and all distribution which may be made thereunder, except that the creditor or holder or owner of any policy or agreement of indemnity or guaranty, who shall exhibit or prove his claim, with an affidavit that he had no notice or knowledge thereof, in time to comply with the pro- visions hereof, at any time before an order is made directing a fina.1 settlement and distribution of assets of such oorparatian, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of such corporation then remaining undistributed may be applied, as if his claim had been exhibited and proved within the time limited by such notioe. This subdivision shall apply to receivers of m.oneyed corporaifcions. Am'd by L. 1909, oh. 240. § 156. Allowance, rejection and adjustment of claims by receiver. The receiver shall have the same power and authority with ref- erence to the allowance or rejection of claims as is given to execu- tors, and no reference shall be had to pass upon claims except such as may be disputed by such receiver. In case any claim, shall be disputed, the receiver shall immediately upon the expiration of the time for the presentation of claims, upon notice to the par- ties whose claims have been rejected, apply to the court for the appointment, of a referee to hear and determine as to the allowance thereof. Claims allowed by the receiver shall be subject to objeo- tion upon the final settlement and their validity may be determined as the validity of claims against estates are determined upon final settlement by a surrogate. §§ 157, 158. General CokporatiojS" Law. § 157. Final settlement and distribution by receiver. The receiver may apply for a final seittlemeiit of his acooimts and an order for distribution at any time after the expiration of six months, and shall so apply within eighteen months after qualifying as such. The attorney-general or any creditor, or party interested, may apply for an order that the recedver show cause why an accounting and distribution should not be had at any time after the expiration of one year af'ter the receiver qualifies; and it shall be the duty of the attorney-general, after the expiration of eighteen months from the time ;fche receiver enters upon his duties, in case he has not applied for a final settlement of his accounts, to apply for such an order on notice to such receiver; In case of such application by a party other than the receiver, the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or authorized to file any account, except as herein provided, except by special order of the court. §158. Notice of account and accounting by receiver. 1. The receiver shall file his account, together with a statement of the items and amounts claimed by his counsel, up to that dajte with the court and a duplicate thereof, together with the vouchers, with the attorney-general, at least thirty days before the time fixed for his final settlement and aocoimting, and the atJtomey-general shall serve upon the attorney for the receiver any objections he may have to the accounrt;, or to the statement as to the items and amounts claimed by counsel for compensation, appearing in such account on or before such hearing. The reoeivcT shall also within ten days after the filing of the accoumt, mail to each creditor of the corporation a notice of the time and place of the filing of his account, and a notice of the time and place of the presentation of the account to the court Unless objection is made to the items of the account by a creditor or on behalf of the attorney- general, no referee shall be appointed to pass thereon, but the same shall be examined and settled by the court. In case objection is made a referee may be appointed to take the testimony and report the same to the court. Genekal Coepoeatioh^ Law. § 159. 2. Prior to the final settlement of accounts of a receiver of any moneyed corporation, kaving in. force, at the time of Ms appointment, outstanding policies of insurance or agreements of indemnity or guaranty, exceeding two thousand in number, said receiver shall give notice to all of the creditors and to the owners or holders of said policies of insurance or agreements of indemnity or guaranty, issued or entered into by such insolvent corpoo-ation, by publication of a notice published at least twice a week, for three successive weeks, immediately preceding the making of an application for a final settlement of his accounts and' for an order for the distribution of the assets in his hands. Said notice shall state the fact that an application for a final settlement of his ac- counts and for an. order for the distribution of the assets in hand will be made, and shall also state the time and place, when and where the application will be made. Upon the hearing of such application and motion, the court shall, unless objection is made to the items of the account by a creditor or by a holder or owner of a policy of insurance or agreement of indemnity or guaranty, or on behalf of the attorney-general, examine and settle the said aoooumts, and make an order for the settlement, adjustment and distribution of the assets in the hands of the receiver. Where objection is made to the items of account, the court may refer the same to a referee to examine and pass thereon. Tihis subdivision shall apply to receivers of all moneyed corporations heretofore or hereafter appointed. Am'd by L. 1909, ch. 240. §159, Proceedings upon accounting. Upon any accounting by the receiver, after the expiration of the time for creditors to present claims, the court shall direct the receiver to immediately convert the entire assets of the corporation in his hands into cash, in case any of the assets have not been so converted, unless good and sufficient cause to the contrary shall appear to the satisfaction of the court, such as to authorize an order granting the receiver additional time for that purpose, and upon any such accounting the court shall direct the receiver to distribute the assets of the corporation in his hands to the persons entitled §§ 160, 161. General Coepoeatiott Law. thereto, except so much thereof as may be necessary to be retained for the purpose of administering the trust and making payment upon contested claims, and upon such claims as may thereafter be presented and entitled to be paid. Whenever the attorney-general shall apply for an order to show cause why an accounting should not be had by a receiver by reason of his failure to so account ■within twelve months after his appointment, and shall deem it ad- visable to designate counsel to act on his behjalf, the court may, upon the accounting, make a reasonable allowance by way of counsel fee to ooimsel so designated. § 160. Claims barred after distribution of assets by receiver. Upon the granting of the application and the making of the order of distribution, as provided in subdivision two of section one hundred and fifty-eight of this article, and the distribution of the assets in the hands of the receiver, in the manner directed by the order of the court, all claims of the creditors or of holders or owners of policies of insurance or agreements of indemnity or guaranty, against such receiver, shall be barred. This section shall apply to receivers of all moneyed corporations. Am'd by L. 1909, ch. 240. §161. Application of article. Except as provided in sections one hundred and fifty-five, one hundred and fifty-eight, subdivision two, and one hundred and sixty of this article, this article shall apply to a^l actions for the appointment of receivers of moneyed corporations brought by the attorney-general, and to all receivers of such corporations hereto- fore or hereafter appointed, and to the settlement and adjustment of their accounts and distribution of assets in their hands, and all proceedings with reference thereto hereafter to be taken, and shall supersede and repeal all provisions of law inconsistent herewith, so far as the same relate to actions for the sequestration, annul- ment or dissolution of moneyed corporations. As to all other corporations and as to matters not affected by this article, pro- visions of law heretofore existing shall remain in full force and effect. General Coepoeation Law. § 170. AETICLE 9. Proceedings foe Voluntaey Dissolittion of Coepoeation. Section 170. Petition for voluntary dissolution of corporation. 171. Directors or trustees may be required to petition. 172. Petition when directors or trustees do not agree. 173. Corporations excepted from two preceding sections. 174. Contents of petition. 176. Affidavit to be annexed to petition. 176. Presentation of petition. 177. Corporations without stockholders. 178. Action by court upon petition for dissolution. 179. Publication of order to show cause why corporation should not be dissolved. 180. Service of order to show cause. 181. Entering and filing order and papers. 182. Temporary receiver. 183. Application for appointment of receiver. 184. Injunction. 185. Referee. 186. Hearing. 187. Decision. 188. Use of original papers on hearing. 189. Amending papers. 190. Final orders. 191. Permanent receiver. 192. Appointment of director, trustee or other officer or stock- holder as receiver. 193. Certain sales, transfers and judgments void. 194. Omission, defect or default of receiver. 195. Exception of certain corporations. § 170. Petition for voluntary dissolution of corporation. If a majority of the directors, trustees, or other officers, having the management of tjie concerns of a corporation created by or under the laws of the state, discover that the stock, effects, and other property thereof are not sufficient to pay all just demands, for which it is liable, or to afford a reasonable security to those who may deal with it ; or if, for any reason, they deem it beneficial to the interests of the stockholders that the corporation should be dissolved, they may present a petition to the supreme court praying for a final order dissolving the corporation, as prescribed in this article. §§ 171-174. Generax Coepoeation Law. §171. Directors or trustees may be required to petition. It shall be the duty of a majority of the directors or trustees of every oorporation created by or under the laws of this state to pre- sent a petition as prescribed in the last section whenever directed BO to do by a majority in interest of its stockholders. § 172. Petition when directors or trustees do not agree. If a corporation, created tmder a general statute of the state for the formation of corporations or under any special act or charter has an even number of trustees or directors who are equally divided respecting the management of its affairs, or if the stock of such oorporation is equally divided into not more than two inde- pendent ownerships or interests, or if the entire stock of the cor- poration is, at that time, owned by the trustees or directors who are even in number or equally divided representing the manage- ment of its affairs, or if the stock is so divided, that one-half thereof is owned or controlled by persons favoring the course of part of the trustees or directors and one-half thereof is owned by persons favoring the course of the other trustees or directors, the trustees or directors or the stockholders or one or more of them may present a petition as prescribed in section one hundred and seventy of this chapter. § 173. Corporations excepted from two preceding sections. Sections one hundred and seventy-one and one hundred and sev- enty-two of this chapter do not apply to a savings bank, a trust company, a safe deposit company, or a oorporation formed to rent safes in burglar and fire-proof vaults, or for the construction or operation of a railroad, or for aiding in the construction thereof, or for carrying on the business of banking or insurance, or intended to derive a profit from the loan or use of money. § 174. Contents of petition. The petition must show that the case is one of those specified in sections one hundred and seventy and one hundred and seventy- two of this chapter, and must state the reasons, which induce the petitioner or petitioners to desire the dissolution of the corporation. General Coepoeation Law. § 175. A schedule must be annexed to the petition, containing the follow- ing niiatters, as far as the petitioner or petitioners know, or have the means of knowing the same : 1. A full and true axjcount of all the creditors of the corpora- tion, and of all unsatisfied engagements, entered into by, and subsisting against, the corporation. 2. A statement of the name and place of residence of each creditor, and of each person with whom such an engagement was made, and to whom it is to be performed, if known ; or, if either ia not known, a statement of that fact. 3. A statement of the sum owing to each creditor, or other per- son specified in the last subdivision, and the nature of each debt, demand, or other engagement. 4. A statement of the true cause and consideration of the in- debtedness to each creditor. 5. A full, just, and true inventory of all the property of the corporation, and of all the books, vouchers, and securities, relating thereto. 6. A statement of each incumbrance upon the property of the corporation, by judgment, mortgage, pledge, or otherwise. 7. A full, just, and true account of the capital stock of the corporation, specifying the name of each stockholder; his residence, if it is known, or if it is not known, stating that fact; the number of shares belonging to him; the amount paid in upon his shares; and the amount still due thereupon. Am'd by L. 1909, ch. 240. § 175. Affidavit to be annexed to petition. An affidavit, made by each of the petitioners, to the effect that the matters of fact, stated in the petition and the schedule, are just and true, so far as the affiant knows or has the means of knowing the same, must be annexed to the petition and schedule. §176. Presentation of petition. The papers must be presented at a special term of the supreme court, held within the judicial district, embracing the county wherein the principal office of the corporation is located. |§ 177-180. General Coepoeatioit Law. § 177. Corporations without stockholders. In the case of corporations affected by the provisions of thi« article and not having stockholders, it shall be sufficient for the purposes of this article to notify, name and refer to the " mem- bers " of such corporations, instead of " stocldaolders," as herein provided. § 178. Action by court upon petition for dissolution. In a case specified in sections one hundred and seventy-one and one hundred and seventy-two of this chapter the court may, in its discretion, entertain or dismiss the application. Where it enter- tains the application, or where the cause is one of those specified in section one hundred and seventy of this chapter, the court must make an order, requiring all persons interested in the corporation to show cause before it, or before a referee designated in the order, at a time and place therein specified, not less than six weeks after the granting of the order, why the corporation should not be dissolved. Am'd by L. 1909, ch. 240. § 179. Publication of order to show cause why corporation should not be dissolved. A copy of the order must be publisbed, as prescribed therein, at least once in each of the three weeks immediately preceding the time fixed therein for showing cause, in one or more newspapers, specified in the order, published in the city or county wherein the order is entered. § 180. Service of order to show cause. A copy of the order must also be served upon each of the persons, ■specified in the schedule as a creditor or stockholder of the corpora- tion, or as a person to whom an engagement of the corporation is to be performed, other than a person whose residence is stated to be unknown, or to be without the United States. The service must be made either personally, at least ten days before the time ap- pointed for the hearing; or by depositing a copy of the order, at least twenty days before the time so appointed, in the post-office. General Ooepoeation Law. §§ 181-184. inclosed in a postpaid wrapper, addressed to the person to be served, at his residence, as stated in the schedule. § 181. Entering and filing order and papers. The order must be entered, and the papers must be filed, within ten days after the order is made, with the clerk of the county where the principal office of the corporation is located. § 1 82. Temporary receiver. If it shall be made to appear to the satisfaction of the court that the corporation is insolvent, the court may at any stage of the proceedings before the final order, on motion of the petitioners on notice to the attorney-general, or on motion of the attorney- general on notice to the corporation, appoint a temporary receiver of the property of the corporation, which receiver shall have all the powers and be subject to all the duties that are defined as belonging to temporary receivers appointed in an aiction, in section one hun- dred and four of this chapter. The court may also, in its discre- tion, at any stage in the proceeding after the appointment of a temporary receiver, upon like motion and notice, confer upon such temporary receiver the powers and authority, and subject him to the duties and liabilities of a permanent receiver, or as much thereof as it thinks proper, except that he shall not make any final distribution among the creditors and stockholders, before final order in the proceedings, unless he is specially directed so to do by the court. ' § 183. Application for appointment of receiver. Every application made for the appointment of a receiver of a corporation other than applications made by the attorney-general on behalf of the people of the state, shall be made at a special term of the supreme court held in and for the judicial district in which the principal business office of the corporation is located. § 184. Injunction. If a temporary receiver be appointed, the court may, in its dis- cretion, on like motion and notice, with or without security, at any stage of the proceeding before the final order, grant an injunction, §§ 185-189. Genbeal Coepoeation Law. restraining the creditors of tke corporation, from beginning any action against the said corporation for the recovery of a sum of money, or from taking any further proceedings in such an action theretofore commenced. Such injuction shall have the same effect and be subject to the same provisions of law as if each •creditor upon whom it is served was named therein. § 185. Referee. If a referee was not desigUjated in the order to show cause, the ■court may, in its discretion, appoint a referee when or after the order is returnable. § 186. Hearing. At the time and place specified in the order, or ait the time and place to which the hearing is adjourned, the court, or the referee, must hear the allegations and proofs of the parties, and determine the facts. § 187. Decision. The decision of the court, or the report of the referee, must be in writing, and must be made and filed with all convenient speed. It must contain a statement of the effects, credits, and other prop- •erty, and of the debts and other engagements, of the corporation, and of all other matters, pertaining to its affairs. § 188. Use of original papers on hearing. The court or the referee is entitled to use, upon the hearing, the original petition, p-nd the schedules annexed thereto; and the clerk must transmit them accordingly, upon the written order of the judge, or of the referee. In that case, they must be returned with the decision or report. § 189. Amending papers. The court may, at any stage of the proceedings before final order, on the application of the petitioners, or a majority of them, or on the application of the temporary receiver, grant an order amending the schedules annexed to the original petition, by the insertion of additional items, or by making the statements or Geneeal Coepoeatioh- Law. §§ 190-192. inventory fuller and in greater detail than as originally filed, -with the like effect as though said petition and schedules had been orig- inally presented and filed as amended. § 190. Final order. Where the hearing is before a referee, a motion for a final order must be mad© to the court, upon notice to each person who has made himself a party to the proceedings, by filing with the clerk, before the close of the hearing, a notice of his appearance, in per- son or by attorney, specifying a posl^office within the state, where such a notice may be served. The notice may be served as pre- scribed in the code of civil procedure for the service of a paper upon an attorney in an action. Where the hearing was before the court, a motion for a final order may be made immediately, or at such a time and upon such a notice, as the court prescribes. § 191. Permanent receiver. Upon an application for a final order, if it appear to the court in a case specified in section one hundred and seventy of this chap- ter that the corporation is insolvent, or, in a case specified either in that section, or in section one hundred and seventy-one and one hundred and seventy-two of this chapter, that for any reason a dissolution of the corporation will be beneficial to the interests of the stockholders and not injurious to the public interests, the court must make a final order dissolving the corporation, and appointing one or more receivers of its property. But in the case of a solvent corporation, the court may, if there is no objection by creditors, dispense with a receiver and provide in the final order for the dis- tribution of the assets. Upon the entry of the order the corpora- tion is dissolyed. A receiver appointed under this section shall have all the powers, duties and liabilities of receivers under article eleven of this chapter. Am'd by L. 1909, eh. 240. § 192. Appointment of director, trustee or other officer or stoclclioider as receiver. The court may, in its discretion, appoint a director, trustee, or other oificer, or a stockholder of the corporation, a receiver of its property. §§ 193-195. General Ooepokation Law. § 193. Certain sales, transfers and judgments void. A sale, assignment, mortgage, conveyajice, or other transfer, of any property of a corporation, made after tlie filing of a petition as prescribed in this article, in payment of, or as security for, an existing or prior debt, or for any other consideration; or a judg- ment thereafter rendered against the corporation by confession, or upon the acceptance of an offer, is absolutely void, as against the receiver appointed in the special proceeding, and as against the creditors of the corporation. § 194. Omission, defect or default of receiver. In a proceeding for the voluntary dissolution of a corporation, the court may, in the furtherance of justice, upon notice to the attorney-general, and the attorney-general not objecting, and upon such further notice to creditors or others interested as the court shall direct, which notice may be made by mail upon all persons and corporations not residing or existing within the state, relieve a receiver from any omission, defect or default, in any proceed- ing or act required by law to be taken or done, or in the giving of any notice required by law to be given, and the court may upon like notice, confirm any act of a receiver, and any decision, report, order or judgment made in such proceeding. § 195. Exception of certain corporations. This article does not apply to an incorporated library society, to a religious corporation, or to a select school or academy, incor- porated by the regents of the university or by the legislature, or to a municipal or other political corporation. Geweeal OoEPOEATioTiT Law. §§ 220, 221. AETICLE 10. Dissolution of Stock Coepoeation' without Judicial Peoceedings. Section 220. Dissolution of stock corporation before beginning business. 221. Diseolution of stock corporation before expiration of time ^ limit. § 220. Dissolution of stock corporation before beginning business. The incorporators named in any certificate of incorporation filed for the purpose of creating a domestic stock corporation, other than a moneyed or transportation corporation, may, before the payment of any part of the capital, and before beginning busi- ness, surrender all corporate rights and franchises, by signing, verifying and filing in the office of the secretary of state and the clerk of the county where the certificate of incorporation is filed, a certificate setting forth the names of the incorporators, that no part of the capital has been paid, that there are no liabilities, that such business has not been begun, and surrendering all rights and franchises ; and proof of the facts set forth in such certificate to the satisfaction of the secretary of state; and thereupon the said cor- poration shall be dissolved, and its corporate existence and power shall cease. In case any incorporator of such a corporation shall be deceased, then the aforesaid certificate may be made by the surviving incorporators providing two years shall have elapsed since the date of its incorporation, but in such case the certificate shall set forth the fact that one or more of said incorporators is deceased. § 221. Dissolution of stock corporation before expiration of time limit. Any stock corporation, except a moneyed or a railroad corpora- tion, may be dissolved before the expiration o£ the time limited in its certificate of incorporation or in its charter as follows : 1. The board of directors of any sudh corporation may at a meeting called for that uurpose, upon at least three days' notice § 221. General OoEPORATioif Law. to each director, by a vote of a majority of the whole board, adopt a resolution that it is in their opinion advisable to dissolve such corporation forthwith, and thereupon shall call a meeting of the Btockholders for the purpose of voting upon a proposition that sucli corporation be forthwith dissolved. Such meeting of the stock- holders shall be held not less than thirty nor more than sixty days after the adoption of such resolution, and the notice of the time and place of such meeting so called by, the directors shall be published in one or more newspapers published and cir- culating in the county wherein such corporation has its principal office, at least once a week for three weeks successively next pre- ceding the time appointed for holding such meeting, and on or before the day of thte first publication of such notice, a copy thereof shall be served personally on each stockholder, or mailed to him at his last known post-office address. Such meeting shall be held in the city, tovm or village in which, the last preceding annual meeting of the corporation was held, and said meeting may, on the day so appointed, by the consent of a majority in interest of the stockholders present, be adjourned from time to time, and notice of such adjournment shall be published in the newspapers in which the notice of the meeting is published. If at any such meeting the holders of two-thirds in amount of tbe stock of the corporation, then outstanding, shall, in person or by attorney, consent that such dissolution shall take place and signify such consent, in writing, then such corporation shall file such consent, attested by its secretary or treasurer, and its president or vice-president, together with the powers of attorney signed by such stockholders executing such consent by attorney, with a statement of the names and residences of the then existing board of directors of said corporation, and the names and residences of its officers duly verified by the secretary or treasurer or president of said corporation, in the office of the secretary of state. 2. The secretary of state shall thereupon issue to such corpora- tion, in duplicate, a certificate of the filing of such' papers and that it appears therefrom that such corporation has complied with this section in order to be dissolved, and one of such duplicate certificates shall be filed by such corporation in the office of the General Coeporation Law. § 221. clerk of the county in ■which such corporation has its principal office ; and thereupon such corporation shall be dissolved and shall cease to carry on business, except for the purpose of adjusting and winding up its business. The board of directors shall cause a copy of such certificate to be published at least once a week for two weeks in one or more newspapers published and circulating in the county in which the principal office of such corporation is located, and at the expiration of such publication, the said cor- poration by its board of directors shall proceed to adjust and wind up its business and affairs with power to carry out its con- tracts and to sell its assets at public or private sale, and to apply the same in discharge of debts and obligations of such corpora- tion, and, after paying and adequately providing for the payment of such debts and obligations, to distribute the balance of assets among the 'stockholders of said corporation, according to their respective rights and interests. 3. Said corporation shall nevertheless continue in existence for the purpose of paying, satisfying and discharging any existing debts or obligations, collecting and distributing its assets and doing all other acts required in order to adjust and wind up its business and affairs, and may sue and be sued for the purpose of enforcing such debts or obligations, until its business and affair* are fully adjusted and wound up. 4. After paying or adequately providing for the debts and obligations of the corporation the directors may, with the written consent of tbe holders of two-thirds in amount of the capital stock, sell the remaining assets or any part thereof to a corporation organized under the laws of this or any other state, and engaged in a business of the same general character, and take in payment therefor the stock or bonds or both of such corporation and dis- tribute them among the stockholders, in lieu of money, in pro- portion to their interest therein, but no such sale shall be valid as against any stockholder, who, within sixty days after the mail- ing of notice to him of such sale, shall apply to the supreme court in the manner provided by section seventeen of the stock corporation law, for an appraisal of the value oi' his interest §§ 225, 226. General Coepoeation Law. in the assets so sold ; unless within thirty days after such appraisal the stockholders consenting to such sale, or some of them, shall pay to such objecting stockholder or deposit for his account, in the manner directed by the court, the amount of such appraisal and upon such payment or deposit the interest of such objecting stock- holder shall vest in the person, or persons making such payment or deposit. AKTICLE 10-a. Peovisioits Applicable to Tempoeaet and Permanent Ebceivees op Coepoeations. Section 225. Seenirity. 226. Removal or new bond. 227. Notice to sureties upon accounting. § 225. Security. A receiver, appointed in an action or special proceeding, mast, before entering upon his duties, execute and file with the proper clerk, a bond to the people, with at least two sufficient sureties, in a penalty fixed by the court, judge, or referee, making the appoint- ment, conditioned for the faithful discharge of his duties as re- ceiver ; and the execution of any such bond by any fidelity or surety company authorized by the laws of this state to transact business, shall be equivalent to the execution of said bond by two sureties. But this section does not apply to a case where special provision is made by law for the security to be given by a receiver or for increasing the same. Added by L. 1909, ch. 240. § 226. Removal or new bond. The court, or, where the order was made out of court, the judge making the order, by or pursuant to which the receiver was ap- pointed, or his successor in office, may, at any time, remove the receiver, or direct him to give a new bond, with new sureties, with the like condition specified in the last section. But this section Geisteeal Ooepoeation Law. § 22Y. does not apply to a case where special provision is made by law for the security to be given by a receiver, or for increasing the same, or for removing a receiver. Added by L. 1909, ch. 240. § 227. Notice to sureties upon accounting. A receiver who, having executed and filed a bond as provided for in section two hundred and twenty-five or section two himdred and twenty-six of this chapter, before presenting his accounts as receiver, must give notice to the surety or sureties on his official bond, of his intention to present his accounts, not less than eight days before the day set for the hearing on said accounting. The same notice must be given to such surety or sureties where the accounting is ordered on the petition of a person or persons other than the receiver, and in no case shall the receiver's accounts be passed, settled or allowed, unless the said notice provided for in this section shall have first been given to the surety or sureties on the of&cial bond of such receiver. Added by L. 1909, ch. 240. AETICLE 11. Powers, Duties aito Liabilities of Receivees of Coepobation. Section 230. Application of this article. 231. Receiver trustee of property. 232. Receiver's title to property. 233. Trai^sfer of assets of corporation to receiver. 234. Security of receiver. 235. Authority of single receiver. 236. Authority where there is more than one receiver. 237. Surviving receivers. 238. Oath of receiver. 239. General powers of receivers. 240. Power of receiver to institute proceedings to recover assets. 241. Power of receiver in the settlement of controversies. 242. Power of receiver to employ counsel. 243. Power of receiver to hold real property. 244. Power of receiver to recover stock subscriptions. 245. Duty of receiver to convert assets into money. 246. Duty of receiver as to private sales. 247. Duty of receiver to keep accounts. §§ 230, 231. General Coepoeation Law. 243. Duty of receiver to serve copy of report upon attorney-general and superintendent of banks. 249. Buty of certain receivers to make reports. 250. Duty of receivers to give notice to creditors. 251. Delivery of property and payment of debts to receiver after notice. 252. Penalty for concealing property from receiver. 253. Duty of receiver to oail creditors' meeting. 254. Proceedings at creditors' meeting. 255. Deduction of disbursements and commissions by receiver. 256. Refunding consideration of subsisting contracts. 267. Retention of funds for subsisting contraots and pending suits. 258. Payment of debts not due. 259. Allowance of set-offs. 260. Penalties reeovered by receiver. 261. Order of payment by receiver. 262. Failxire to file claim before first dividend. 263. Second dividend by receiver. 264. Surplus to stockholders. 265. Disposition of moneys retained iby receiver for suits. 266. Duty of receiver as to unclaimed dividend. 267. Effect of failure to file claim before second dividend. 268. Final accounting by receiver. 269. Notice of final accounting. 270. Hearing on final accounting. 271. Reference of final lacoount. 272. Further accounting. 273. Removal of receiver. 274. Vacancy. 275. Renunciation by receiver. 276. Control of receiver by court. 277. Commissions and expenses of receiver in volxmtary dissolution. 278. Commissions and expenses of receiver except in voluntary dissolution. ' § 230. Application of this article. Unless otherwise provided the provisions of this article shall apply only to permanent receivers appointed pursuant to section one hundred and six or section one hundred and ninety-one of this chapter. § 231. Receiver trustee of property. Permanent receivers shall be trustees of the property for the benefit of the creditors of the corporation 'and of its stockholders. General Coepoeation Law. §§ 232-236. § 232. Receiver's title to property. Sucli receivers shall, from the time of their having filed the security required by law, be vested with all the property, real or personal, vested or contingent of the corporation. Am'd by L. 1909, ch. 240, and L. 1913, ch. 766. § 233. Transfer of assets of corporation to receiver. In all cases where receivers have been or shall be appointed for any corporation of this state other than an insurance company on application by the attorney-general, all property, real and personal, and all securities of every kind and nature belonging to such cor- poration, no matter where located or by whom held, shall be trans- ferred to, vested in and held by such receiver ; provided, however, that such transfer shall only be made when directed by an order of the supreme court, due notice of the application for such order having been made on the attorney-general and the oustodian of lihe funds, securities or property. § 234. Security of receiver. Before entering upon the duties of their appointment, such receivers shall give such security to the people of the state, and in Buch penalty, as the court shall direct, conditioned for the faithful discharge of the duties of their appointment, and for the due accounting for all moneys received by them. § 235. Authority of single receiver. When one receiver only, shall be appointed, all the provisions herein contained, in reference to several receivers shall apply to him. § 236. Authority where there is more than one receiver. When there are more receivers than one appointed, the debts and property of the corporation may be collected and received by any one of them; and when there are more than two receivers ap- pointed, every power and authority conferred on the receivers may be exercised by any two of them. §§ 237-239. Geneeal Coepoeation Law. § 237. Surviving receivers. The survivor or survivors of any receivers shall have all the powers and rights given to receivers. All property in the hands of any receiver at the time of his death, removal or incapacity, shall be delivered to the remaining receiver or receivers, if there be any; or to the successor of the one so dying, removed or inca- pacitated ; who may demand and sue for the same. § 238. Oath of receiver. Before proceeding to the discharge of any of their duties, all such receivers shall take and subscribe an oath, that they will well and truly execute the trust by their appointment reposed in them, according to' the best of their skill and understanding ; which oath shall be filed with the officer or court, that appointed them. § 239. General powers of receivers. The said receivers shall have power: 1. To sue in their own names or otherwise, and recover all the property, debts and things in action, belonging or due or to become due to such corporation, whether accruing or maturing before or after the dissolution thereof and whether vested or con- tingent at the time of such dissolution,' in the same manner and with the like effect as such corporation might or could have done if no receivers had been appointed ; and no set-off shall be allowed in any such suit, for any debt, unless it was owing to such creditor by such corporation before the appointment of the re- ceiver of such corporation, or unless it shall have been duly con- tracted by such receiver subsequent to his appointment; not- withstanding the notice to creditors the receivers may sue for and recover any property or effects of the corporation and any debts due to it, at any time, before the day appointed for the delivery or payment thereof; 2. To take into their hands, all the property of such corpora- tion, whether attached, or delivered to them, or afterwards dis- covered ; and all books, vouchers and securities relating to the same; ; Genebal Coepoeation Law. § 239. 3. In the case of a non-resident, absconding or concealed debtor, to demand and receive of every sheriff who shall have attached any of the property of such debtor, or who shall have in his hands, any moneys arising from the sale of such property, all such prop- erty and moneys, on paying him his reasonable costs and charges, for attaching and keeping the same, to be allowed by the court having jurisdiction; 4. From time to time, to sell at public auction, all the prop- erty, real and personal, vested in them, which shall come to their hands, after giving at least fourteen days' public notice of the time and place of sale, and also publishing the same for two weeks in a newspaper, printed in the county, where the sale shall be made, if there be one ; 5. To allow such credit on the sale of real property by them, as they shall deem reasonable, subject to the provisions of this article for not more than three-fourths of the purchase money; which credit shall be secured by a bond of the purchaser, and a mortgage on the property sold; 6. On such sales, to execute the necessary conveyances and bills of sale. 7. To redeem all mortgages and conditional contracts and all pledges of personal property, and to satisfy any judgments, which may be an incumbrance on any property so sold by them ; or to sell such property subject to such mortgages, contracts, pledges or judgments ; 8. To settle all matters and accounts between such corporation and its debtors, or creditors, and to examine any person touching such matters and accounts, on oath, to be administered by either of them ; 9. Under the order of the court appointing them, to compound with any person indebted to such corporation and thereupon to discharge all demands against such person. Amended by L. 1913, chap. 766. § 240. Gbneeal Coeporation Law. § 240. Power of receiver to institute proceedings to recover assets. Whenever any receiver of a domestic corporation, or of the prop- erty within this state of any foreign corporation, shall have been appointed and qualified, as provided in articles five, six, seven, nine, eleven or twelve of this chapter either before, upon, or after final judgment or order in the action or special proceeding in which such appointment was made, and shall, by his ovm verified petition, affidavit or other competent proof, show to the supreme court, at a special term thereof, held within the judicial district wherein such appointment was made, that he has good reason to believe that any officer, stockholder, agent or employee of such corporation, or any other person whomsoever, has embezzled or concealed, or withholds or has in his possession or under his control, or has wrongfully disposed of, any property of such corporation which of right ought to be surrendered to the receiver thereof; or that any person can testify conoeming the embezzlement, concealment, withholding, possession, control or wrongful disposition of any such property, the court shall make an order, with or without notice, commanding such person or persons to appear at a time and place to be designated in the order, before the court or before a referee named by the court for that purpose, and to submit to an examination concerning such embezzlement, concealment, with- holding, possession, control or wrongful disposition of such prop- erty; and at the time of making such order or at any time there- after, the court may, in its discretion, enjoin and restrain the person or persons so ordered to appear and be examined from in any manner disposing of any property of such corporation which may be in the possession or under the control of the person so or- dered to be examined, until the further order of the court in rela- tion thereto. No person so ordered to appear and be examined shall be excused from answering any question on the ground that his answer might tend to convict him of a criminal offense; but his testimony taken upon such examination shall not be used against him in any criminal action or proceeding. Any person so ordered to appear and be examined shall be entitled to the same fees and mileage, to be paid at the time of General Coepoeation Law. § 241. serving the order, as are allowed by law to witnesses sutpoenaed to attend and testify in an action in the supreme court, and shall be subject to the same penalties upon failure to appear and tes- tify in obedience to such an order as are provided by law in the case of witnesses who fail to obey a subpoena to appear and testify in an action. Any person appearing for examination in obedience to such order shall be sworn by the court or referee to tell the truth, and shall be entitled to be represented on such examination by counsel, and may be cross-examined, or may make any voluntary statement in his own behalf concerning the subject of his examination which may seem to him desirable or pertinent thereto. The court before which such examination is taken, as well as the referee, if one be appointed for that purpose, shall have power to adjourn such examination from time to time, and may rule upon any question or objection arising in the course of such exami- nation, to the same extent that might be done if the person so examined were testifying as a witness in the trial of an action. When the examination of any person under such order shall be concluded, the testimony shall be signed and sworn to by the person so examined, and shall be filed in the office of the clerk of the county where the action is pending, or was tried, in which the receiver was appointed; and if from such testimony it shall appear to the satisfaction of the couxt that an.y person so exam- ined is vsTongfuUy concealing or withholding, or has in his posses- sion or under his control, any property which of right belongs to such receiver, the court may make an order commanding the per- son so examined forthwith to deliver the same to such receiver, who shall hold the same subject to ,the further order of the court in relation thereto; and otherwise, the court may, at the con- clusion of any such examination, make such final order in the premises as the interests of justice require. § 241 . Power of receiver in the settlement of controversies. If any controversy shall arise between the receivers and any other person, in the settlement of any demands against such cor- poration, or of debts due to such corporation the same may be § 241. General Corporation Law. referred to one or more indifferent persons, vho may be agreed upon by the receivers and the party, with whom such controversy shall exist, by a writing to that effect, signed by them. If such referee or referees be not selected by agreement, then the receivers or the other party to the controversy, provided no action at law is pending arising out of any such debts or demands, may serve a notice of their intention to apply to any judge of the supreme court at chambers, residing in the same district with said receivers, for the appointment of one or more referees, specifying the time and place when such application will be made, which notice shall be served at least ten days before the time so therein specified. On the day so specified, upon due proof of the service of such notice, the judge before whom the application is made may, in his discretion, proceed to select one or more referees, the same in all respects as they are now selected according to the rules and practice of the supreme court. When any witness to such controversy shall reside out of the county where the said receivers resided at the time of their appointment, the referee or referees appointed to hear said con- troversy shall have power to issue a commission or commissions in like manner as justices of the peace are now authorized to issue the same, and the testimony so taken shall be returned to said referee or referees in the same manner, and be read before them on a hearing, in like manner as testimony taken on commission before justices of the peace. The officer before whom they shall be selected, shall certify such selection in writing. Such certificate, or the written agreement of the parties, shall be filed by the receivers in the office of a clerk of the supreme court, and an order shall thereupon be entered by such clerk in vacation or in term, appointing the persons so selected to determine the controversy. Such referees shall have the same powers, and be subject to the like duties and obligations, and shall receive the same compensa- tion, as referees appointed by the supreme court, in personal actions pending therein. The report of the referees shall be filed in the same office where the order for their appointment was entered, and shall be con- clusive on the rights of the parties, if not set aside by the court General Cobpoeation Law. §§ 242, 243. § 242. Power of receiver to employ counsel. If the receiver of a corporation employs counsel lie shall within three months after he has qualified as receiver enter into a written contract fixing the compensation of such counsel at not exceeding a certain amount or a certain percentage of the sums received and disbursed by him, which contract must be approved by the supreme court; on at least eight days' notice to the attorney-general. A payment by such receiver to his counsel ou account of services shall only be made, pursuant to an order of the court, on notice to the attorney -general and subject to review on the final accounting. A contract with counsel shall not be made for a longer period than eighteen months, but may be renewed from time to time for periods of not more than one year, if approved by the supreme court on at least eight days' notice to the attorney-general. In case of the intervention of any policy-holder or depositor, by per- mission of the court, such policy-holder or depositor shall defray the legal expenses thereof, and no allowance shall be made for costs or fees to any attorney of such policy-holder or depositor. It shall be unlawful for receivers of an insurance, banking or railroad corporation, or trust company to pay to any attorney or counsel any costs, fees or allowances until the amounts thereof shall have been stated to the special term as provided in section two hundred and forty-nine of this chapter, as expenses incurred, and shall have been approved by that court, by an order of the court duly entered; and any such order shall be the subject of review by the appellate division and the court of appeals on an appeal taken therefrom by any party aggrieved thereby. § 243. Power of receiver to hold real property. A receiver, appointed by or pursuant to an order or a judgment, in an action in the supreme court or a county court, or in a special proceeding for the voluntary dissolution of a corporation, may take and hold real property, upon such trusts and for such pur- poses as the court directs, subject to the direction of the court, from time to time, respecting the disposition thereof. §§ 244-248. General CoKPonA-^ioN Law. § 244. Power of receiver to recover stock subscriptions. If there shall be any sum remaining due upon any share of stock subscribed in such corporation, the receiver shall immediately proceed to recover the same, unless the person so indebted shall be wjiolly insolvent; and for that purpose may commence and pros- ecute any action or proceeding for the recovery of such sum, vsrith- out the consent of any creditors of such corporation. § 245. Duty of receiver to convert assets into money. The receivers shall, as speedily as possible, convert the prop- erty, real and personal, of the corporation into money. § 246. Duty of receiver as to private sales. A receiver duly appointed in this state by and pursuant to a judgment in an action, or by and pursuant to an order in a special proceeding, may, upon application to the court by which such judgment was rendered, or such order was made, and upon notice to such parties as may be entitled to notice of applications made in such action or special proceeding, be authorized by the said court to sell or convey the property, whether real or personal, of the Corporation of which he is the receiver, at private sale, upon such terms and conditions as the court may direct § 247. Duty of receiver to keep accounts. They shall keep a regular account of all moneys received by them as receivers; to which, every creditor, or other person inter- ested therein, shall be at liberty, at all reasonable times, to have recourse. § 248. Duty of receiver to serve copy of report upon attor- ney-general and superintendent of banks. All receivers of insolvent corporations who are required by law to make and file reports of their proceedings shall at the time of making and filing such reports, serve- a copy thereof upon the attorney-general of this state, and receivers of such corporations as report to, and are under the supervision of, the banking depart- ment shall on the first day of January and July of each year, GEiiTEBAL Corporation Law. §§ 249, 250. during the continuance of their respective trusts, file with the superintendent of banks a report, verified by oath, in such form as the superintendent may prescribe, showing the condition of their respective trusts. In case any receiver of an insolvent corpo- ration shall neglect to make and file a report of his proceedings for thirty days after the time he is required by law to make and file such report, or shall neglect for the same length of time to serve a copy thereof on the attorney-general, as required by this section the attorney-general may make a motion in the supreme court for an order to compel the mating and filing and serving a copy on him of such report, or for the removal of such receiver from his office. § 249. Duty of certain receivers to make reports. It shall be the duty of every receiver of an insurance, banking or railroad corporation, or trust company, to present every six months to the special term of the supreme court, held in the judi- cial district wherein the place of trial or venue of the action or special proceeding in which he was appointed may then be, on the first day of its first sitting, after the expiration of such six months, and to file a copy of the same, if a receiver of a bank or trust com- pany, with the superintendent of banks ; if a receiver of an insur- ance company, with the superintendent of insurance; and in each case with the attorney-general, an account exhibiting in detail the receipts of his trust, and the expenses paid and incurred therein during the preceding six months. Of the intention to present such accountj^ as aforesaid, the attorney-general, and also the surety or sureties on the official bond of such receiver, shall be given eight days' notice in writing; and the attorney-general shall examine the books and accounts of such receiver at least once every twelve months. § 250. Duty of receivers to give notice to creditors. The receivers immediately upon their appointment, shall give notice thereof which shall be published for three weeks in a news- paper printed in the county where the principal place of con- ducting the business of such corporation shall have been situated ; and therein shall require, §§ 251-253. Geneeal Coepoeation Law. 1. All persons indebted to such corporaiion, by a day and at a place therein to be specified, to render an acoount of all debts and sums of money owing by them respectively, to such receivers and to pay the same. 2. All persons having in their possession any property or effects of such corporation to deliver the same to the said receivers by the day so appointed. 3. All the creditors of such corporation to deliver their respec- tive accounts and demands to the receivers or one of them, by a day to be therein specified, not less than forty days from the first publication of such notice. 4. All persons holding any open or susbsisting contract of such corporation, to present the same in writing and in detail to such receivers, at the time and place in such notice specified. § 251. Delivery of property and payment of debts to re- ceiver after notice. After the first publication of the notice of the appointment of receivers, every person having possession of any property belong- ing to such corporation, and every person indebted to such corpo- ration, shall account and answer for the amount of such debt and for the value of such property to the said receivers. § 252. Penalty for concealing property from receiver. Every person indebted to such corporation, or having the posses- sion or custody of any property or thing in action, belonging to it, who shall conceal the same, and not deliver a just and true account of such indebtedness, or not deliver such property or thing in action, to the receivers, or one of them, by the day for that purpose appointed, shall forfeit double the amount of such debt, or double the value of such property so concealed; which penalties may be recovered by the receivers. § 253. Duty of receiver to call creditors' meeting. They shall call a general meeting of the creditors of such cor- poration, within four months from the time of their appointment by a notice to be published in the same manner, as herein- GrBNEKAL CoEPOEATioiir Law. §§ 254-257. before directed respecting the publication of the notice of their appointment; in which notice, they shall specify the place and time of such meeting, which time shall not be more than three months, nor less than two months after the first publication of such notice. Every such notice shall be published at least once in each week, until the time of such meeting. § 254. Proceedings at creditors' meeting. At such meeting, or other adjourned meeting thereafter, all accounts and demands for and against such corporation, and all its open and subsisting contracts, shall be ascertained and adjusted as far as may be, and the amount of moneys in the hands of the receivers declared. § 255. Deduction of disbursements and commissions by receiver. Out of the moneys in their hands the receivers may first deduct aU the necessary disbursements made by them in the discharge of their duty and such commissions as may be allowed by law. § 256. Refunding consideration of subsisting contracts. If there shall be any open and subsisting engagements or con- tracts of such corporation, which are in the nature of insurances or contingent engagements of any kind, the receivers may, with the consent of the party holding such engagement, cancel and discharge the same, by refunding to such party the premitmi or consideration paid thereon by such corporation, or so much thereof as shall be in the same proportion to the time which shall remain of any risk assumed by such engagement, as the whole premium bore to the whole term of such risk; and upon such amount being paid by such receivers to the person holding or being the legal owner of such engagement, it shall be deemed canceled and dis- charged as against such receivers. § 257. Retention of funds for subsisting contracts and pending suits. The receivers shall retain out of the moneys in their hands, a Btifficient amount to pay the sums, which they are hereinbefore §§ 258 261. General Coepokation Law. authorized to pay, for the purpose of canceling and discharging finy open or subsisting engagements. If any suit be pending against the corporation or against the receivers, for any demand, the receivers may retain the proportion which would belong to such demand if established, and the necessary costs and proceed- ings, in their hands, to be applied according to the event of such suit, or to be distributed in a second or other dividend. § 258. Payment of debts not due. Every person to whom a corporation shall be indebted on a valuable consideration, for any sum of money not due at the time of such distribution, but payable afterwards, shall receive his proportion with other creditors, after deducting a rebate of legal interest upon the sum distributed, for the time unexpired of such credit § 259. Allowance of set-offs. Where mutual credit has been given by any corporation, and any other person, or mutual debts have subsisted between such cor- poration and any other person, the receivers may set off such credits or debts, and pay the proportion or receive the balance due. But no set-off shall be allowed of any claim or debt, which would not have been entitled to a dividend, as hereinbefore directed. ~No set-off shall be allowed by such receivers, of any claim or debt, which shall have been purchased by, or transferred to, the person claiming its allowance, which could not have been set off by him, in a suit brought by such receivers. § 260. Penalties recovered by receiver. All penalties which shall be recovered by any receivers, pursuant to the provisions of this article, shall be deemed a part of the property of the corporation, and shall be distributed as such among its creditors. § 261. Order of payment by receiver. The receivers shall distribute the residue of the moneys in their hands, among all those who shall have exhibited their claims as creditors, and whose debts shall have been ascertained, as follows : Geneeal Coepoeation Law. §§ 262, 263. 1. All debts due by such corporation to the United States, and all debts entitled to a preference under the laws of the United States. 2. All debts that may be owing by the corporation as guardian, executor, administrator or trustee; and if there be not sufficient to pay all debts of the character above specified, then a distribution shall be made among them, in proportion to their amounts respectively. 3. Judgments actually obtained against such corporation, to the extent of the value of the real estate on which they shall respectively be liens. 4. All other creditors of such corporation, in proportion to their respective demands, without giving any preference to debts due on specialties. § 262. Failure to file claim before first dividend. Every creditor who shall have neglected to exhibit his demand before the first dividend, and who shall deliver his account to the receivers before the second dividend, shall receive the sum he would have been entitled to on the first dividend, before any distribution be made to the other creditors. § 263. Second dividend by receiver. If the whole of the property of such corporation be not dis- tributed on the first dividend, the receivers shall, within one year thereafter, make a second dividend of all the moneys in their hands, among the creditors entitled thereto; of which, and that the same will be a final dividend, three weeks' notice shall be inserted once in each week in a newspaper printed in the county where the principal place of business of such corporation was situated. Such second dividend shall be made in all respects in the same manner as herein prescribed in relation to the first dividend, and no other shall be made thereafter among the creditors of such cor- poration, except to the creditors having suits against it, or against the receivers, pending at the time of such second dividend, and §§ 264-267. Geweeal Ooepoeation Law, except of the moneys which may be retained to pay such credit-ors, as herein provided. § 264. Surplus to stockhofders. If after the second dividend is made, there shall remain any surplus in the hands of the receivers, they shall distribute the same among the stockholders of such corporation, in proportion to the respective amounts paid in by them, severally, on their shares of stock. § 265. Disposition of moneys retained by receiver for suits. When any suit pending at the time of the second dividend shall be terminated, they shall apply the moneys retained in their hands for that purpose, to the payment of the amount recovered, and their necessary charges and expenses; and if nothing shall have been recovered, they shall distribute such moneys, after deducting their expenses and costs, among the creditors and stock- holders of the corporation, in the same manner as herein directed in respect to a second dividend. § 266. Duty of receiver as to unclaimed dividend. If any dividend that shall have been declared, shall remain un- claimed by the person entitled thereto for one year after the same was declared, the receivers shall consider it as relinquished, and shall distribute it, on any subsequent dividend, among the other creditors. § 267. Effect of failure to file claim before second dividend. After such second dividend shall have been made, the receivers shall not be answerable to any creditor of such corporation, or to any person having claims against such corporation, by virtue of any open or subsisting engagement, unless the demands of such creditor shall have been exhibitedj and the engagements upon which such claijns are founded, shall have been presented to the said receivers, in detail and in writing, before or at the time specified by them in their notice of a second dividend. Geneeal Cobpokation Law. §§ 268-270. § 268. Final accounting by receiver. A receiver shall apply witbin on* year after qualifying as such for a final settlement of his accounts and an order for distribution, or shall apply to the court upon notice to the attorney-general for an extension of time, setting forth the reasons why he is unable to close his accounts, which order may be granted in the discretion of the court. The attorney-general or any cred- itor, or any party interested, may apply for an order that the receiver show cause why an accounting and distribution shall not be had at any time after the expiration of one year after the receiver qualifies; and it shall be the duty of the attorney- general after the expiration of eighteen months from the time the receiver enters upon his duties, in case he has not applied for a final settlement of his accounts, to apply for such an order on notice to such receiver. In case of such application by a party other than the receiver the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or authorized to file any account, except as herein provided, except by special order of the court § 269. Notice of final accounting. Previous to rendering sudi account the receivers shall insert a notice of their intention to present the same, once in each week, for three weeks, in a newspaper, of the county in which notices of dividends are herein required to be inserted, specifying the time and place at which such account will be rendered. Said receivers shall also give notice to the sureties on their official bonds, as pro- vided in section two hundred and twenty-seven of this chapter. Am'd by L. 1909, eh. 240. § 270. Hearing on final accounting. Upon the coming in of such report, the court shall hear the alle- gations of all concerned therein, and shall allow or disallow such account, and decree the same to be final and conclusive upon all the creditors of such corporation, upon all persons who have claims §§ 271-275; G-ENEEAL COEPOEATIOiV LaW. against it, upon any open or subsisting engagement, and upon all the stockholders of such corporation. § 271. Reference of final account. The referee to whom such account shall be referred, shall hear and examine the proofs, vouchers and documents offered for or against such account, and shall report thereon fully to the court § 272. Further accounting. Such receivers shall also account from time to time in the same manner, and with the like effect, for all moneys which shall come to their hands after the rendering of such account, and for all moneys which shall have been retained by them for any of the purposes hereinbefore specified, and shall pay into court all unclaimed dividends. § 273. Removal of receiver. Such receivers may be removed by the court. § 274. Vacancy. Any vacancy created by removal, death or otherwise, may be supplied by the court. § 275. Renunciation by receiver. Any receiver who shall be desirous of renouncing the trust vested in him, may apply to the court from whom his appointment was received, for an order to all persons interested, to show cause why such renunciation should not be accepted. Such application shall be accompanied by a full, true and just account of all the transactions of such receiver, and particularly of the property, moneys and effects received by him; of all pay- ments made, whether to creditors or otherwise ; and of the remain- ing effects and property of the corporation, in respect to which lie was appointed receiver, within his knowledge, and the situation of the same. General Coepoeation Law. § 276. To such account shall be annexed the affidavit of the receiver, that the said account is in all respects just and true, according to the best of his knowledge and belief; which affidavit shall be subscribed and sworn to, before the court, to whom the application is made, and shall be certified by the clerk of the court. Such court, shall thereupon grant an order, directing notice to be given to all persons interested in the property of the cor- poration, in respect to which such receiver was appointed, to show cause on a day or at a term and at a place therein to be specified, why he should not be permitted to renounce his appointment. Such notice shall be published, once in each week, for six weeks successively in such newspapers, as such court shall direct. On the day appointed for such hearing, and on such other days as shall from time to time be appointed, if it shall appear that notice was duly published, the court shall proceed to hear the proofs and allegations of the parties. If it shall appear that the proceedings of such receiver, in relation to his trust, have been fair and honest, and particularly in the collection of the property and debts vested in him; and if such court be satisfied that for any reason it is inexpedient for such receiver to continue in the execution of the duties of his appointment, and that such duties can be exeoited by another receiver, without injury to the property of the corporation, or to the creditors; and if no good cause to the contrary appear, such court shall grant an order, allowing such receiver to renounce his appointment. Upon such order being granted, such receiver shall be dis- charged from the trust reposed in him, and his power and au- thority shall thereupon cease; but he shall, notwithstanding, re- main subject to any liability he may have incurred, at any time previous to the granting of such order, in the management of his trust. The expense of all proceedings in effecting such renunciation shall be paid by the receiver making the application. § 276. Control of receiver by court. The receivers shall be subject to the control of the court and may be compelled to account at any time. §§ 277, 278. General Corporation Law. § 277. Commissions and expenses of receiver In voluntary dissolution. A receiver appointed pursuant to article nine is entitled, in addition to his necessary expenses, to commissions upon the sums received and disbursed by him as the court by which or the judge by whom he is appoin'ted allows, as follows: On the first twenty thousand dollars not exceeding five per centum ; on the next eighty thousand dollars, not exceeding two and one-half per centum ; and on the remainder, not exceeding one per centum; but in case the commissions of a receiver so computed shall not amount to one hundred dollars, said court or judge may in his or its discretion allow said receiver such a sum not exceeding one hundred dollars for his commissions as shall be commensurate with the. services rendered by said receiver. § 278. Commissions and expenses of receiver except in voluntary dissolution. A receiver of a corporation, except a receiver appointed in pro- ceedings for its voluntary dissolution, is entitled, in addition to his necessary expenses, to such commissions, not exceeding two and one-half per centum upon the sums received and disbursed by him, as the court by which or the judge by whom he is appointed allows, but except upon a final accounting such a receiver shall not receive on account of his services for any one year a greater amount than twelve thousand dollars, nor for any period less than a year more than at that rate. Upon final accounting, the court may make an additional allowance to such receiver, not exceeding two and one-half per centum upon the sums received and disbursed by him, if the court is satisfied that he has performed services that fairly entitle him to such additional allowance. Where more than on© receiver shall be appointed, the compereation herein provided shall be divided between said receivers. General Coepoeation Law. § 300. AKTICLE 12. Peovisions Applicable to Two ob Moee of the Fobbgohsto Peoceedings oe Actions. Sbction 300. Application of preceding articles to eertaiu corporationa. 301. Officers and agents may be compelled to testify in certain actions. 302. Injunction staying actions by creditors in certain actions. 303. Creditors of corporation may be brought in to prove their claims in certain actions. 304. When attorney-general must bring certain actions. 305. Requisites of injunction against corporations in certain oases. 306. Appointment of receivers of property of corporations. 307. Judicial suspension or removal of officer of corporation. 308. Application of the last three sections. 309. Misnomer not available in action against stockholder. 310. Appraisal of property of insolvent corporation. 311. Application by attorney-general for removal of receiver and to facilitate closing affairs of receivership. 312. Service of papers upon attorney-general. 313. Designation of depositories of funds in order appointing receiver. 314. Application to the court in certain actions and proceedings. 315. County wherein action may be brought by attorney-general on behalf of the people. 316. Preferences in actions *of proceedings by or against receivers. § 300. Application of preceding articles to certain corporations. Articles fifth, sixth or seventh of this chapter do not apply to a religious corporation ; or to. a municipal or other political corpo- ration, created by the constitution, or by or under the laws of this state; or to any corporation which the regents of the university have power to dissolve, except upon the application of the regents, or of the trustees of such a corporation ; and in aid of its liquida- tion under such dissolution. • So in original. §§ 301-303. General Corpoeation Law. § 301. Officers and agents may be compelled to testify In certain actions. In an action, brought as prescribed in article fifth, sixth or seventh, a stockholder, officer, alienee, or agent of a corporation, is not excused from answering a question, relating to the manage- ment of the corporation, or the transfer or disposition of its prop- erty, on the ground that his answer may expose the corporation to a forfeiture of any of its corporate rights, or will tend to convict him of a criminal offense, or to subject him to a penalty or for- feiture. But his testimony shall not be used, as evidence against him, in a criminal action or special proceeding. § 302. Injunction staying actions by creditors in certain actions. In such an action, the court may, in its discretion, on the appli- cation of either party, at any stage of the action, before or after final judgment, and with or without security, grant an injunction order, restraining the creditors of the corporation from bringing actions against the defendants, or any of them, for the recovery of a sum of money, or from taking any further proceedings in such actions, theretofore commenced. Such an injunction has the same effect, and, except as otherwise expressly prescribed in this section, is subject to the same provisions of law, as if each creditor, upon whom it is served, was named therein, and was a party to the action in which it is granted. § 303. Creditors of corporation may be brought in to prove their claims in certain actions. In such an action, the court may, at any stage of the action, before or after final judgment, make an order requiring all the creditors of the corporation to exhibit and prove their claims, and thereby make themselves parties to the action, in such a manner, and in such a reasonable time, not less than six months from the first publication of notice of the order as the court directs; and that the creditors, who make default in so doing, shall be pre- General Coepoeation Law. §§ 304, 305. eluded from all benefit of the judgment, and from any distribu- tion which may be made thereunder, except as hereinafter pro- vided. Notice of the order must be given by publication, in such newspapers, and for such a length of time, as the court directs. Ifotwithstanding such order any such creditor who shall exhibit and prove his claim in the manner directed thereby, with proof, by affidavit or otherwise, that he has had no notice or knowledge thereof in time to comply therewith, any time before an order is made directing a final distribution of the assets of such corporation, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of such cor- poration then remaining undistributed may render possible, as if his claim had been exhibited and proved within the time limited by such order. § 304. When attorney-general must bring certain actions. Where the attorney-general has good reason to believe, that an action can be maintained in behalf of the people of the state, as prescribed in articles fifth, sixth or seventh of the chapter, except section one hundred and thirty of this chapter, he must bring an action accordingly, or apply to a competent court for leave to bring an action, as the case requires ; if, in his opinion, the public interests require that an action should be brought. In a case where the action can be brought only by the attorney-general in behalf of the people, if a creditor, stockholder, director, or trustee of the corporation, applies to the attorney-general for that purpose, and furnishes the security required by law, the attorney-general must bring the action, or apply for leave to bring it, if he has good reason to believe, that it can be maintained. Where such an application is made section nineteen hundred and eighty-six of the code of civil procedure applies thereto, and to the action brought in pursuance thereof. § 305. Requisites of injunction against corporations in cer- tain cases. An injunction order, suspending the general and ordinary busi- aess of a corporation, or suspending from office, or restraining § 306. General Coepoeation Law. from the performance of his duties, a trustee, director, or other officer thereof, can be granted only by the court, upon notice of the application therefor, to the proper officer of the corporation, or to the trustee, director, or other officer enjoined. If such an injunction order is made, otherwise than as prescribed in this section, it is void. § 306. Appointment of receivers of property of corporations. A receiver of the property of a corporation can be appointed only by the court, and in one of the following cases : 1. An action, brought as prescribed in articles fifth, sixth or seventh of this chapter. 2. An action brought for the foreclosure of a mortgage upon the property, of which the receiver is appointed, where the mort- gage debt, or the interest thereupon, has remained unpaid, at least thirty days after it was payable, and after payment thereof was duly demanded of the proper officer of the corporation and where either the income of the property is specifically mortgaged, or the property itself is probably insufficient to pay the mortgage debt. 3. An action brought by the attorney-general, or by a stock- holder, to preserve the assets of a corporation, having no officer empowered to hold the same. 4. A special proceeding for the voluntary dissolution of a corporation. 5. Upon the application of the regents of the university, in aid of the liquidation of a corporation whose dissolution they con- template or have decreedj or upon the application of the trustees of such a corporation, with notice to the regents. Where the receiver is appointed in an action, otherwise than by or pursuant to a final judgment, notice of the application for his appointment must be given to the proper officer of the corporation. Geneeal Coepoeation Law. §§ 307-310. § 307. Judicial suspension or removal of officer of corporation. A trustee, director, or other officer of a corporation shall not be euBpended or removed from office, by a court or judge, otherwise than by the final judgment of a competent court, in an action brought by the attorney-general, as prescribed in section ninety of this chapter. § 308. Application of the last three sections. The last three sections apply to an action or specif proceeding against a corporation created by or under tiie laws of the state, or a trustee, director, or other officer thereof ; or against a corporation created by or under the laws of another state, government, or country, or a trustee, director, or other officer thereof, where the corporation does business within the state, or has, within the state, a business agency or a fiscal agency, or an agency for the transfer of its stock. § 309. Misnomer not availat)le in action against stock- holder. Where an action, authorized by a law of the state, is brought against one or more persons, as stockholders of a corporation, an objection to any of the proceedings can not be taken, by a person properly made a defendant in the action on the ground that the plaintiff has joined with him, as a defendant in the action, a person, whose name appears on the stock-books of the corporation, afl a stockholder thereof, by the name so appearing; but who i» misnamed, or dead, or is not liable for any cause. In such a case, the court may, at any time before final judgment, upon motion of either party, amend the pleadings and other papers, without preju- dice to the previous proceedings, by substituting the true nam© of the person intended, or by striking out the name of the person who is dead, or not liable, and, in a proper case, inserting the name of his representative or successor. § 310. Appraisal of property of insolvent corporation. Whenever by reason of the provisions of any law of this state it shall become necessary to appraise in whole or in part the §§ 311, 312. General Cokpoeation Law. property of any corporation in the hands of a receiver or other- wise, the persons whose duty it shall be to make such appraisal shall value the real estate at its full and true value, taking into consideration actual sales of neighboring real estate similarly situated during the year immediately preceding the date of such appraisal, if any; and they shall value all such property, stocks, bonds or securities as are customarily bought or sold in open markets in the city of New York or elsewhere, for the day on which such appraisal or report may be required, by ascertaining the range of the market and the average of prices as thus found, running through a reasonable period of time. § 311. Application by attorney-general for removal of re- ceiver and to facilitate closing affairs of receivership. The attorney-general may, at any time he deems that the inter- eats of the stockholders, creditors, policy-holders, depositors or other beneficiaries interested in the proper and speedy distribution of the assets of any insolvent corporation will be subserved thereby, make a motion in the supreme court at a special term thereof, in any judicial district : 1. For an order removing the receiver of any insolvent corpo ration and appointing a receiver thereof in his stead, or, 2. To compel him to account, or, 3. For such other and additional order or orders as to him may seem proper to facilitate the closing up of the affairs of such receivership, and An y appeal from any order made upon any motion under this section shall be to the appellate division of the department in whicb such motion is made. § 312. Service of papers upon attorney-general. A copy of all motions and all motion papers, and a copy of any other application to the court, together with a copy of the order or judgment to be proposed thereon to the court, in every action or proceeding for the dissolution of a corporation or a distribution of its assets, shall, in all case"?, be served on the attorney-general. Geneeal Coepoeation Law. §§ 313-315. in the same maimer as provided by law for the service of papers on attorneys who have appeared in actions, whether the applica- tions but for this section would be ex parte or upon notice, and no order or judgment granted shall vary in any material respect from the relief specified in such copy, order or judgment, unless the attorney-general shall appear on the return day and shall have been heard in relation thereto; and any order or judgment granted in any action or proceeding aforesaid, without such service of such papers upon the attorney-general, shall be void, and no receiver of any such corporation shall pay to any person any money directed to be paid by any order or judgment made in any such action or proceeding, until the expiration of eight days after a certified copy of such order or judgment shall have been served as aforesaid upon the attorney-general. § 313. Designation of depositories of funds in order ap- pointing receiver. All orders appointing receivers of corporations shall designate therein one or more places of deposit, wherein all funds of the corporation not needed for immediate disbursement shall be deposited and no deposits or investments of such trust funds shall be made elsewhere, except upon the order of the court upon due notice given to the attorney-general. § 314. Application to the court in certain actions and pro- ceedings. All applications to the court shall be made in the judicial district where the principal office of the corporation against which pro- ceedings are taJien is located, excepting such applications as are made in actions brought by the attorney-general on behalf of the people of the state, and all such applications shall be made in the judicial district in which the action is triable. § 315. County wherein action may be brought by attorney- general on behalf of the people. An action or proceeding brought by the attorney-general on •behalf of the people of the state against any corporation for the §§ 316-321. General Coepoeation Law. purpose of procuring its dissolution, the appointment of a receiver, or the sequestration of its property, may be brought in any county of the state, to be designated by the attorney-general. § 316. Preferences in actions or proceedings by or against receivers. AH actions or other legal proceedings and appeals therefrom or therein brought by or against a receiver of any of the insolvent corporations referred to in this chapter, shall have a preference upon the calendars of all courts next in order to actions or proceed- ings brought by the people of the state of New York. AKTICLE 13. Alteeation and Repeal of Chartee of CoEPOEATiorr. Section 320. Alteration and repeal of charter. 321. Conflicting corporate laws. § 320. Alteration and repeal of charter. The charter of every corporation shall be subject to alteration, suspension and repeal, in the discretion of the legislature. §321. Conflicting corporate laws. If in any corporate law there is or shall be any provision in con- flict with any provisions of this chapter or of the stock corporation law, the provisions so conflicting shall prevail, and the provision of this chapter or of the stock corporation law with which it con- flicts shall not apply in such a case. If in any such law there is or shall be a provision relating to a matter embraced in this chap- ter or in the stock corporation law, but not in conflict with it, such provision in such other law shall be deemed to be in addition to the provision in this chapter or in the stock corporation law relating to the same subject-matter, and both provisions shall, in such case, be applicable. General Corpoeation Law. §§ 330-332. AKTICLE 14. Laws Repealed; Consteuotion ; When to Take Effect. Section 330. Laws repealed. 331. Construction. 332. When to take effect. § 330. Laws repealed. Of the la^vs enumerated in the schedule hereto annexed, that portion specified in the last column is hereby repealed. § 331. Construction. Nothing in this chapter shall be construed to impair any right or liability which any existing corporation, its officers, directors, stockholders or creditors may have or be subject to or which any subject to on the date when this chapter tates effect, by virtue of any special act of the legislature creating such corporation or creating or defining any such right or liability, unless sucb special act is repealed by this chapter or the other general laws herein- before mentioned. § 332. When to take effect. This chapter shall take effect immediately. STOCK CORPORATION LAW. CHAPTER 6i of 1903. ChaPTEE 59 OF THE CONSOLIDATED LaWS. Abticle 1. Short title (§1). 2. General provisions (§§ 5-18). 3. Directors aiid officers (§§ 25-35). 4. Stock and stockholders (§§ 50-70). 5. Laws repealed; when to take effect (§§ 80, 81). AETICLE 1. Short Title, Section 1. Short title. § 1. Short title. This chapter shall be known as the " Stock Corporation law." ARTICLE 2. General Provisions. Section 5. Application of article. 6. Power to borrow money and mortgage property. 7. Validating corporate mortgages. 8. Power to guarajitee bonds of other corporations. 9. 'Reorganization upon sale of corporate property. 10. Contents of plan or agreement. 11. Sale of property; possession of receiver and suits against him. 12. Municipalities may assent to plan of readjustment. 13. Change of place of business. 14. Combinations prohibited. 15. Merger. 16. Voluntary sale of franchise and property. 17. Rights of non-consenting stockholders on voluntary sale of franchise and property. 18. Alterations or extension of business. 19. Issuance of sihares of stock without nominal or par value. ■ 20. Commencement of business; authorized debts. 21. Taxation. 22. Increase or reduction of sihares or capital. 23. Amount of capital stock and of shares within meaning of other laws. • So in original. Stock Cobpobation Law. §§ 5, 6. § 5. Application of article. This article except sections eight, fifteen, sixteen, seventeen and eighteen thereof, shall not apply to moneyed corporations. § 6. Power to borrow money and mortgage property. In addition to the powers conferred by the general corporation law, every stock corporation shall have the power to borrow money and contract debts, when necessary for the transaction of its busi- ness, or for the exercise of its corporate rights, privileges or fran- chises, or for any other lawful purpose of its incorporation; and it may issue and dispose of its obligations for any amount so borroAved, and may mortgage its property and franchises to secure the payment of such obligations, or of any debt contracted for said purposes. Every such mortgage, except purchase-money mort- gages^nd mortgages authorized by contracts made prior to May &i^t, eighteen hundred and ninety-one, shall be consented to by the holders of not less than two-thirds of the capital stock of the corpo- ration, which consent shall be given either in writing or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation; and a certificate under the seal of the corpo- ration that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be ^subscribed and acknowledged by the president or a vice- president and by the secretary or an assistant secretary, of the corporation, and shall be filed and recorded in the office of the clerk or register of the county wherein the corporation has its principal place of business. When authorized by like consent, the directors under such regulations as they may adopt, may confer on the holder of any debt or obligation, whether secured or unsecured, evidenced by bonds of the corporation, the right to convert the principal thereof, after two and not more than twelve yetfrs from the date of such bonds, into stock of the corporation; and if the capital stock shall not be sufficient to meet the conversion when made, the directors shall from time to time, authorize an increase of capital stock sufficient for that purpose by causing to be filed in the office of the secretary of state, and a duplicate § 7. Stock Coepoeation Law. thereof in the office of the clerk of the county where the principal place of business of the corporation shall be located, a certificate under the seal of the corporation, subscribed and acknowledged by the president and secretary of the corporation setting forth, 1. A copy of such mortgage ; or resolution of directors author- izing the issue of such bonds ; 2. That the holders of not less than two-thirds of the capital stock of the corporation duly consented to the execution of such mortgage or resolution of directors authorizing the issue of such bonds by such corporation; 3. A copy of the resolution of the directors of the corporation authorizing the increase of the capital stock of the corporation necessary for the purpose of such conversion; 4. The amount of capital theretofore authorized, the propor- tion thereof actually issued and the amount of the increased capital stock. If the corporation be a railroad corporation the certificate shall have indorsed thereon the approval of the public service commis- sion having jurisdiction thereof. When the certificate herein provided for has been filed, the capital stock of such corporation shall be increased to the amount specified in such certificate. § 7. Validating corporate mortgages. Whenever any mortgage affecting property or franchises within this state heretofore or hereafter executed by authority of the board of directors in behalf of any stock corporation, domestic or foreign, of any description, recites or represents in substance or effect that the execution of such mortgage has been duly consented to, or authorized by stocldiolderSj such recital or representation in any such mortgage, after nublic record thereof within this state, shall be presumptive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stock- holders as required by any provision of law. After any such mortgage heretofore or hereafter shall have been publicly recorded for more tliRU one year in one or more of the counties of this state containing the mortgaged premises or any part thereof, and the corporation shall have received value for bonds actually issued Stock Coepoeation' La-w. § 7. under and secured by such mortgage, and interest shall have been paid on any of such bonds according to the terms 1;hereof, such recital or representation of such mortgage so recorded shall be conclusive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stockholders as required by any provision of lavsr, and its validity shall not be impaired by reason of any defect or insufficiency of consent or authority of stockholders or in filing or recording such consent or authority, and such mortgage shall be valid and binding upon the corporation, and those claiming under it, as security for all valid bonds issued or to be issued thereunder, imless such mortgage shall be adjudged invalid in an action begun as hereinafter, in this seo- tion, provided. Notwithstanding the foregoing provisions of this section, the invalidity of any such mortgage heretofore recorded because of insufficiency of consent by stockholders may be adjudged in any action for such purpose begun before the first day of April, nineteen hundred and two, and the invalidity of any suck mortgage hereafter recorded, because of insufficiency of consent by stockholders, may be adjudged in any action for such purpose begun, within one year after the earliest record of such mortgage in any county in this state, provided in pither ease that such action shall have been so begun by or in behalf of the corporation by direction of the board of directors acting in their own discretion, or upon the written request of the holders of not less than one- third of the capital stock of the corporation; and in any such action so begun by or in behalf of the corporation, the recitals or representations of the mortgage shall be presumptive evidence only as first above provided. Whenever hereafter, in compliance with any law of this state, the officers of any corporation shall have made and filed and recorded a certificate that the execution of a mortgage hereafter made by the corporation has been duly con- sented to by stockholders, such certificate shall be conclusive evidence as to the truth thereof, in favor of any and all persons who in good faith shall receive or purchase, for value, any bond or obligation purporting to be secured by such mortgage, at any time when said certificate shall remain of record and uncanceled. ilTothing in this section contained shall affect any right or any §§ 8, 9. Stock Coepoeatiow Law. remedy in respect of any such right of any creditor accrued before this enactment nor shall it dispense with the necessity of obtaining the consent of the public service commission having jurisdiction thereof to any mortgage by a railroad corporation. § 8. Power to guarantee bonds of other corporations. Any stock corporation may, in pursuance of a unanimous vote of its stockholders voting at a special meeting called for that pur- pose by notice in writing signed by a majority of the directors of such corporation stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corporation, personally or by mail at his last-known post-office address at least sixty days prior to such meeting, guarantee the bonds of any other domestic corporation engaged in the same general line of business; and any stock cor- poration owning the entire capital stock of any other domestic stock corporation engaged in the same general line of business may in pursuance of a two-thirds vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation, stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corpora- tion personally, or by mail, at his last-known post-office' address, at least sixty days prior to such meeting, guarantee the bonds of siich other corporation. § 9. Reorganization upon sale of corporate property and franchises. When the property and franchises of any domestic stock cor- poration shall be sold by virtue of a mortgage or deed of trust, duly executed by it, or pursuant to the judgment or decree of a court of competent jurisdiction, or by virtue of any execution issued thereon, and the purchaser, his assignee or grantee shall have acquired title to the same in the manner prescribed by law, he may associate with him any number of persons, not less than the number required by law for an incorporation for similar pur- poses at least tvro-thirds of whom shall be citizens of the United Stock CoKPOBA.Tioi!r Law. § 9. States and one shall be a resident of this state, and they may become a corporation and take and possess the property and franchises thus sold, and which were at the time of the sale possessed by the corporation whose property shall have been so sold, upon making and acknowledging and filing in the offioe3 where certificates of incorporation are required by law to be filed, a certificate in which they shall describe by name and reference to the law under which it was organized, the corporation whose property and franchises they have acquired, and the court by whose authority the sale had been made, with the date of the judgment or decree authorizing or directing the same, and a brief description of the property sold, arid also the following par- ticulars : 1. The name of the new corporation intended to be formed by the filing of such certificate; and the place where its principal office is to be located. 2. The maximum amount of its capital stock and the number of shares into which it is to be divided, specifying the classes thereof, whether common or preferred, and the amount of and rights pertaining to each class. 3. The number of directors, not less nor more than the number required by law for the old corporation, who shall manage the affairs of the new corporation, and the names and post-office addresses of the directors for the first year. They may insert in such certificate any provisions relating to the new corporation, or its management, contained in any plan or agreement which may have been entered into as provided in section ten of this diapter. Such corporation shall be vested with, and be entitled to exercise and enjoy, all the rights, privileges and franchises, which at the time of such sale belonged to, or were vested in the corporation last owning the property sold, or its receiver, and shall be subject to all the provisions, duties and liabilities imposed by law on that corporation. Any proceedings heretofore taken in substantial compliance with this section as hereby amended, and any and all incorporations based thereon are hereby ratified and ■confirmed. § 9. Stock Coepoeation Law. § 10. Contents of plan of agreement. At or previous to the sale the purchasers thereat, or the persona for whom the purchase is to be made, may enter into a plan or asnreement, for or in anticipation of the readjustment of the respec- tive interests therein of any creditors, mortgagees, stockholders, or any of them, of the corporation owning such property and fran- chises at the tim« of sale, and of holders of claims for materials, supplies and equipment furnished, and for injuries and damages sustained, in and about the operation, maintenance or construc- tion of any or all the property formerly owned or leased to said corporation, and for the representation of such interests in the bonds or stock of the new corporation to be formed, and may therein regulate voting by the holders of the preferred and common stock at any meeting of the stockholders, and may pro- vide for, and regulate voting by the holders, and owners of any or all of the bonds of the corporation, foreclosed, or of the bonds issued or to be issued by the new corporation; and such right of voting by bondholders shall be exercised in such manner, for such period, and upon such conditions, as shall be therein described. Such plan or agreement must not be inconsistent with the laws of the state and shall be binding upon the corporation, until changed as therein provided, or as otherwise provided by law. The new corporation when duly organized, pursuant to such plan or agree- ment and to the provisions of law, may issue its bonds and stock in conformity with the provisions of such plan or agreement, and may at any time within six months after its organization, com- pronaase, settle or assume the payment of any debt, claim or liability of the former corporation or any claims for materials, supplies and equipment furnished, or any claims for injuries and damages sustained, in and about the operation, maintenance or construction of any or all the property formerly owned or leased to said corporation, upon such terms as may be lawfully approved by a majority of the agents or trustees intrusted with the carrying out of the plan or agreement of reorganization, and may establish preferences in favor of any portion of its capital stock and may divide its stock into classes; but the capital stock of the new corporation shall not exceed in the aggregate the maxi- mum amount of stock mentioned in the certificate of incorporation. Amended by L. 1911, chap. 858. Stock Coepoeation Law. §§ Hj 12. §11. Sale of property; possession of receiver and suits against him. Tte supreme court may direct a sale of the whole of the prop- erty, rights and franchises covered by the mortgage or mortgages, or deeds of trust foreclosed at any one time and place to be named in the judgment or order, either in case of the non-payment of interest only, or of both the principal and interest due and unpaid and secured by any such mortgage or mortgages or deeds of trust. Neither the sale nor the formation of the new corporation shall interfere with the authority or possession of any receiver of such property and franchises, but he shall remain liable to be removed or discharged at such time as the court may deem proper. No suit or proceeding shall be commenced against such receiver imless founded on wilful misconduct or fraud in his trust after the expiration of sixty days from the time of his discharge ; but after the expiration of sixty days the new corporation shall be liable in any action that may be commenced against it, and founded on any act or omission of such receiver for which he may not be sued, and to the fiame extent as the receiver, but for this section would be or remain liable, or to the same extent that the new corporation would be had it done or omitted the acts complained of. § 12. IVIunicipalities may assent to plan of readjustment. The commissioners, corporate authorities or proper officers of any city, town or village, who may hold stock in any corporation, the property and franchises whereof shall be liable to be sold, may assent to any plan or agreement of reorganization which lawfully provides for the formation of a new corporation, and the issue of stock therein to the proper authorities or officers of such cities, towns or villages in exchange for the stock of the old or former corporation by them respectively held. And such commissioners, corporate authorities or other proper officers may assign, transfer or surrender the stock so held by them in the manner required by such plan, and accept in lieu thereof the stock issued by such new corporation in conformity therewith. §§ 13, 14. Stock Coepoeation Law. §13. Change of place of business. Any stock corporation now existing or hereafter organized under the laws of this state, except moneyed corporations, may at any time change its principal office and place of business from the city, town or county named in its certificate of incorporation, or to which it may have been changed under the provisions of this sec- tion, to any other city, town or county in this state, in which it may desire to actually transact and carry on its regular business from day to day, provided that such change has been authorized, either by unanimous consent of the stocldiolders expressed in writ- ing and duly acknowledged and filed in the office of the secretary of state, or by a vote of the stockholders of said corporation at a special meeting of stockholders called for that purpose. When such change shall be authorized by the stockholders as herein pro- vided, the president and secretary and a majority of the directors of such corporation shall sign a certificate stating the name of said corporation, the city, town and county where its prinoipaJ office and. place of business was originally located, and to which it may have been subsequently changed, and the city, town and Kounty to which it is desired to change its said principal office and place of business, and that it is the purpose of said corpora- tion to actually transact and carry on its regular business from day to day at such place, and that such change has been author- ized as herein provided, and the names of the directors of said corporation and their respective places of residence, which certifi- cate shall be verified by the oaths of all the persons signing the same, and when so signed and verified, shall be filed in the office of the secretary of state and a duplicate thereof in the office of the clerk of the county from which said principal office and place of business is about to be removed or changed, and another in the office of the clerk of the county to which said removal or change is to be _ made, and thereupon the principal office and place of business of such corporation shall be changed as stated in said certificate. § 14. Combinations prohibited. ISTo domestic stock corporation and no foreign corporation doing business in this state shall combine with any other corporation or Stock Ooepoeation Law. §§ 15, 16. person, for the creation of a monopoly or the unlawful restraint of trade or for the prevention of competition in any necessary of life. § 15. Merger. Any domestic stock corporation and any foreign stock corpora- tion authorized to do business in this state lawfully owning all the stock of any other stock corporation organized for, or engaged in business similar or incidental to that of the possessor corporation may file in the office of the secretary of state, under its common seal, a certificate of such ownership, and of the resolution of its board of directors to merge such other corporation, and thereupon it shall acquire and become, and be possessed of all the estate, property, rights, privileges and franchises of such other corpora- tion, and they shall vest in and be held and enjoyed by it as fully and entirely and without change or diminution as the same were before held and enjoyed by such other corporation, and be man- aged and controlled by the board of directors of such possessor corporation, and in its name, but without prejudice to any liabil- ities of such other corporation or the rights of any creditors thereof. Any bridge corporation may be merged under this sec- tion with any railroad corporation which shall have acquired the right by contract to run its cars over the bridge of such bridge corporation. § 16. Voluntary sale of franchise and property. A stock corporation, except a railroad corporation and except as otherwise provided by law, with the consent of two-thirds of its stock, may sell and convey its property, rights, privileges and fran- chises, or any interest therein or any part thereof to a domestic corporation, engaged in a business of the same general character, or which might be included in the certificate of incorpoj^ation of a corporation organizing under any general law of this state for a business of the same general character, ^nd a domestic corporation the principal business of which is carried on in, and the principal tangible property of which is located within a state adjoining the state of New York, may with the consent of the holders of ninety- § lY. Stock Ooepoeation Law. five per centum of its capital stock, sell and convey its property situate withoiit the state of New York, not including its franchises, to a corporation organized under the laws of such adjoining state, and such sale and conveyance shall, in case of a sale to a domestic corporation, vest the rights, property and franchises thereby trans- ferred, and in case of a sale to a foreign corporation the property sold, in the corporation to which they are conveyed for the term of its corporate existence, subject to the provisions and restrictions applicable to the corporation conveying them. Before such sale or conveyance shall be made such consent shall be obtained at a meeting of the stockholders called upon like notice as that required for an annual meeting. § 17. Rights of non-consenting stockholders on voluntary sale of franchise and property. If any stockholder not voting in favor of such proposed sale or conveyance shall at such meeting, or within twenty days thereafter, object to such sale, and demand payment for his stock, he may, within sixty days after such meeting, apply to the supreme court at any special term thereof held in the district in which the principal place of business of such corporation is situated, upon eight days' notice to the corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers, and designate the time and place of their proceedings as shall be deemed proper, and also direct the manner in which payment for such stock shall be made to such stockholders. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent, and deliver one copy to such corporation, and another to such stockholder, if demanded; the charges and expenses of the appraisers shall be paid by the corporation. When the corporation shall have paid the amount of such appraisal, as directed by the court, such stock- holders shall cease to have any interest in such stock and in the corporate property of such corporation and such stock may be held or disposed of by such corporation. Stock Coepoeation Law. §§ 18, 19. § 18. Alterations or extension of business. Any stock corporation heretofore or hereafter organized under any general or special law of this state may alter -its certificate of incorporation so as to include therein any purposes, powers or provisions which at the time of such alteration may apply to cor- porations engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organized under any general law of this state for a business of the same general character, by filing in the manner provided for the original certificate of incorporation an amended certificate, executed by the president and secretary, stating the alteration proposed, and that the same has been duly authorized by a vote of a majority of the. directors and also by a vote of stock- holders representing at least three-fifths of the capital stock, at a meeting of the stockholders called for the purpose in the man- ner provided in section sixty-three of this chapter, and a copy of the proceedings of such meeting, verified by the affidavit of one of the directors present thereat, shall be filed with such amended certificate. § 19. Issuance of shares of stock without nominal or par value. Upon the formation or the reorganization of any stock corpora- tion, other than a moneyed corporation, and other than a corpora- tion under the jurisdiction of any public service commission, the certificate of incorporation may provide for the issuance of the shares of stock of such corporation, other than ■ preferred stock having a preference as to principal, without any nominal or par value by stating in such certificate: (1) The number of shares that may' be issued by the corpora- tion, and if any of such shares be preferred stock, the preferences thereof. If such preferred stock or any part thereof shall have a preference as to principal, the certificate shall state the amount of such preferred stock having such preference, the particular character of such preferences, and the amount of each share § 19. Stock Ooeporation Law. thereof, whicli shall be five dollars or some multiple of five dollars, but not more than one hundred dollars. (2) The amount of capital with which the corporation will carry on business, which amount shall be not less than the amount of preferred stodc (if any) authorized to be issued with a prefer- ence as to principal, and in addition thereto a sum equivalent to five dollars or to some multiple of five dollars for every share au- thorized to 'be issued other than such preferred stock; but in no event shall the amount of such capital be less than five hundred dollars. Such statements in the certificate shall' be in lieu of any state- ments prescribed by the laiw under which the corporation shall have been formed or reorganized as to the amount or the maxi- mum amount of its capital stock or the number of shares into which the same shall be divided, or of the amount or the par value of such shares. Each share of such stock without nominal or par value shall be equal to every other share of such stock, subject to the prefer- ences given to the preferred stock if any authorized to be issued. Every certificate for such shares without nominal or par value shall have plainly written or printed upon its face the number of such shares which it represents and the number of such shares which the corporation is authorized to issue, and no such certifi- cate shall express any nominal or par value of such shares. The certificates for preferred shares having a preference as to princi- pal shall state briefly the amount which the holders of each of such preferred shares shall be entitled to receive on account of principal from the surplus assets of the corporation in preference to the holders of other shares, and shall state briefly any other rights or preferences given to the holders of such shares. Such corporation may issue and may sell its authorized shares, from time to time, for such consideration as may be prescribed in the certificate of incorporation, or as from time to time may be fixed by the board of directors pursuant to authority conferred in Stock Coeporation Law. § 20. such certificate, or if such certificate shall not so provide, then by the consent of the holders of two-thirds of each class of shares then outstanding given at a meeting called for that purpose in such manner as shall be presicribed by the by-laws. Any and all shares issued as permitted by this section shall be deemed fully paid and non-assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereof. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 20. Commencement of business; authorized debts. No corporation formed pursuant to section nineteen hereof shall begin to carry on business or shall incur any debts until the amount of capital stated in its certificate of incorporation shall have been fully paid in money, or in property taken at its actual value. In case the amount of capital stated in its certifijcate of incorpora- tion shall be increased as herein provided, such corporation shall not increase the amount of its indebtedness then existing until it shall have received in money or property the amount of such in- crease of its stated caipital. The directors of the corporation as- senting to the creation of any deibt in violation of this section shall be liable jointly and severally for such debt; but no action shall be brought under the foregoing provision of this section un- less within one year after the debt shall have been incurred the creditor shall have served upon the director written notice of in- tention to hold him personally liable for such debt! Any direc- tor who, because of any such liability under this section, shall pay any debt of the corporation, shall be subrogated to all rights of the creditor in respect thereof against the corporation and its property and also shall be entitled to contribution from all other directors of the corporation similarly liable for the same debt and the personal representative of any such director who shall have died before making such contribution. No such corporation shall declare any dividend which shall re- duce the amount of its capital belovs^ the amount stated in the cer- § 21. Stock Coepoeation Law. tificate as the amount of capital -vvitli whicli the corporation will carry on business. In case any such dividend shall be declared, the directors in whose administration the same shall have been declared, except those who may have caused their dissent there- from to be entered upon the minutes of such directors at the time or who were not present when such action was taken, shall be liaible jointly and severally to such corporation and to the cred- itors thereof to the full amount of any loss sustained by such corporation or by its creditors respectively by reason of such dividend. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 21. Taxation. The organization tax payable under section one hundred and eighty of the tax law by any corporation issuing such shares without designated monetary value shall be at the rate of five cents on each, such share which the corporation is authorized to issue, and a like tax upon any subsequent increase thereof. The tax payable under section two hundred and seventy of the tax law in respect of any sale or. agreement of sale or any memorandum of sale or delivery or transfers of shares or certificates of any share without designated monetary value hereafter issued by any such corporation issuing such shares shall be at the rate of two cents for each and every share of such stock so transferred. The franchise tax upon any corporation issuing such shares of stock payable under section one hundred and eighty-two of the tax law shall be determined by the amount of the gross assets of such corporation employed in any business within this state, less such proportion of its liabilities as shall represent the ratio of its gross assets einployed in any business within this state to its entire gross assets wherever employed in business, and the rate of such franchise tax shall be fixed in the manner provided in said section one hundred and eighty-two of the tax law. For this purpose the rate of dividends shall be computed by dividing the total Stock Corpobation Law. § 22. amount of dividends whicli have been paid during the year by the amount of assets of the corporation upon the first day of such year. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 22. Increase or reduction of shares or capital. Any corporation formed or reorganized pursuant to section nine- teen may amend its certificate of incorporation so as to increase or to reduce the number of shares -which it may issue, or so as to in- crease or to reduce the amount of its stated capital, by filing, in the manner provided for the original certificate of incorporation, a certificate of amendment under seal executed by its president or a vice-president and by its secretary or its treasurer, stating the amendment proposed and that the same has been duly authorized by a vote of a majority of the directors and also by the vote of the holders of at least three-fifths of the outstanding shares of each class issued by the corporation, at a meeting of the stock- holders called for the purpose in the manner provided in section sixty-three hereof, and by filing "with such certificate of amend- ment a copy of the proceedings of such meeting, made, signed, verified and acknowledged by the president or a vice-president and by the secretary or the treasurer of the corporation; but an amendment cannot be made under this section unless as so amended the certificate of incorporation could lawfully have been filed under section nineteen of this chapter. In case of a reduc- tion of the amount of capital of a corporation, a certificate setting forth the whole amount of the ascertained debts and liabilities of the corporation shall be made, signed, verified and acknowledged by the president or a vice-president and by the secretary or t£e treasurer of the corporation and shall be filed with the certificate of amendment ; and such certificate of amendment shall have en- dorsed thereon the approval of the comptroller to the effect that as so stated the reduced amount of capital is sufficient for the proper purposes of the corporation and is in excess of its ascer- tained debts and liabilities. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 23. Stock Cobpobation Law. § 23. Amount of capital stock and of shares within mean- ing of other laws. ; For the purpose of any rule of law or of any statutory pro- vision (other than the foregoing sections nineteen, twenty, twenty-one and twenty-two) relating to the amount of the capital stock of a corporation or the amount or par value of its shares, the aggregate amount of the capital stock of any such corporation formed pursuant to section nineteen hereof shall be deemed to b© the aggregate amount specified in the certificate or amended cer- tificate of incorporation or of reorganization as the amount of capital with which the corporation vsdll carry on business ; the amount or the par value of each share of preferred stock having a preference asJ;o principal shall be deemed to be the amount thereof so specified in such certificate or such amended certificate ; and the amount or the par value of each other share shall be deemed to be an aliquot part of the aggregate capital so specified in such certificate or in such amended certificate in excess of the specified amount (if any) of the preferred stock therein authorized to be issued with a preference as to principal. Added by L. 1912 chap. 351 (in effect April 15, 1912). Stock Coepobation Law, §§ 25, 26. ARTICLE 3. DiEECTOES AWD OfFICEES. Section 25. Directors. 26. Change of number of directors. 27. When acts of directors void. 28. Liability of directors for making unauthorized dividends. 29. Liability of directors for loans to stockholders. 30. Officers. 31. Inspectors and their oath. 32. Books to be kept. 33. Stock books of foreign corporations. 34. Annual report to secretary of state. 35. Liability of officers for false certificates, reports or public noitices. § 25. Directors. The directors of every stock corporation shall be chosen at the time and place fixed by the by-laws of the corporation by a plural- ity of the votes at such election. Each director shall be a stock- holder unless otherwise provided in the certificate, or in a by-law adopted by a stockholders' meeting. Vacancies in the board of directors shall be filled in the manner prescribed in the by-laws. Notice of the time and place of holding any election of directors shall be given by publication thereof, at least once in each week for two successive weeks immediately preceding such election, in a newspaper published in the county where such election is to be held, and in such other manner as may be prescribed in the by-laws. Policyholders of an insurance corporation shall be eligible to election as directors, whether or not they be stockholders. At least one-fourth in number of the directors of every stock corpora- tion shall be elected annually. § 26. Change of number of directors. The number of directors of any stock corporation may be increased or reduced, but not below the minimum number pre- scribed by law, when the stockholders owning a majority of the § 26. Stock Coepoeatiow Law. stock of the corporation shall so determine, at a meeting to be held at the usual place of meeting of the directors, on two weeks' notice in writing to each stockholder of record. Such notice shall be served personally or by mail, directed to each stockholder at his last known post-office address. Proof of the service of such notice shall be filed in the office of the corporation at or before the time of such meeting. The proceedings of such meeting shall be entered in the minutes of the corporation and a transcript thereof verified by the president and secretary of the meeting shall be filed in the offices where the original certificates of incorporation were filed. Such increase or reduction may also be effected by unani- mous consent without a meeting, in -which case there shall be filed in the offices herein specified the unanimous consent of the stock- holders in writing, signed by them, or their duly authorized proxies, but no such consent shall be valid unless there is annexed thereto an affidavit of the custodian of the stock book of such cor- poration stating that the persons who have signed such consent, either in person or by proxy, are the holders of record of the entire capital stock of said corporation issued and outstanding. If a corporation formed under or subject to the banking law, the consent of the superintendent of banks, and if an insurance cor- poration, the consent of the superintendent of insurance,' shall be first obtained to such increase or reduction of the number of directors. This section shall apply to any stock corporation whether organized under a general or special law, and the num- ber of directors may be increased as hereby provided notwithstand- ing the m^iximum number of directors now prescribed by law. If the number of directors be increased, the additional directors authorized by such increase shall be elected by the votes of a majority of the directors in office at the time of the increase. If the original or an amended certificate of incorporation of the corporation shall provide that the directors shall be divided into two or more classes, whose terms of office shall respectively expire at different times, the additional directors shall be divided among such classes as nearly as practicable in proportion to the respective numbers of directors constituting each class prior to such Increase. Amended by L. 1909, chap. 421. Stock Cobpoeatiow Law. §§ 2Y, 28. § 27. When acts of directors void. When the directors of any corporation for the first year of its corporate existence shall hold over and continue to be directors after the first year, because of their neglect or refusal to adopt the by-laws required to enable the stockholders to hold the annual election for directors, all their acts and proceedings while so hold- ing over, done for and in the name of the corporation, designed to charge upon it any liability or obligation for. the services of any such director, or any officer, or attorney or counsel appointed by them, and every such liability or obligation shall be held to be fraudulent and void. § 28. Liability of directors for mal(ing unauthorized dividends. The directors of a, stock corporation shall not make dividends, except from the surplus profits arising from the business of such corporation, nor divide, withdraw or in any way pay to the stock- holders or any of them, any part of the capital of such corporation, or reduce its capital stock, except as authorized by law. In case of any violation of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large upon the minutes of such directors at the time, or were not present when the same happened, shall jointly and severally be liable to such corporation and to the creditors thereof to the full amount of any loss sustained by such corporation or its creditors respectively by reason of such withdrawal, division or reduction. But this section shall not prevent a division and dis- tribution of the assets of any such corporation remaining after the payment of all its debts and liabilities upon the dissolution of such corporation or the expiration of its charter; nor shall it prevent a corporation from accepting shares of its capital stock in complete or partial settlement of a debt owing to the corporation, which by the board of directors shall be deemed to be bad or doubtful. §§ 29, 30, 31. Stock Coepoeation Law. § 29. Liability of directors for loans to stockholders. No loan of moneys shall be made by any stock corporatian, except a moneyed corporation, or by any officer thereof out of its funds to any stockholder therein, nor shall any such corporation or officer discount any note or other evidence of debt, or receive the same in payment of any instalment or any part thereof due or to become due on any stock in such corporation, or receive or dis- count any note, or other evidence of debt, to enable any stock- holder to withdraw any part of the money paid in by him on his stock. In case of the violation of any provision of this section, the officers or directors making such loan, or assenting thereto, or receiving or discounting such notes or other evidences of debt, shall, jointly and severally, be personally liable to the extent of such loan and interest, for all the debts of the corporation con- tracted before the repayment of the sum loaned, and to the full amount of the notes or other evidences of debt so received or discounted, with interest from the time such liability accrued. § 30. Officers. The directors of a stock corporation may appoint from their number a president, and may appoint a secretary, treasurer, and other officers, agents and employees, who shall respectively have such powers and perform such duties in the management of the property and affairs of the corporation, subject to the control of the directors, as may be prescribed by them or in the by-laws. The directors may require any such officer, agent or employee to give security for the faithful performance of his duties, and may remove him at pleasure. The policyholders of an insurance cor- poration shall be eligible to election or appointment as its officers. § 31. Inspectors and their oath. The inspectors of election of every stock corporation shall be appointed in the manner prescribed in the by-laws, but the inspec- tors of the first election of directors and of all previous meetings of the stockholders shall be appointed by the board of directors named in the certificate of incorporation. No director or officer of a moneyed corporation shall be eligible to election or appoint- Stock Coepoeation Law. § 32. ment as inspector. Each inspector shall be entitled to a reason- able compensation for his services, to be paid by the corporation, and if any inspector shall refuse to serve, or neglect to attend at the election, or his office become vacant, the meeting may appoint an inspector in his place unless the by-laws otherwise provide. The inspectors appointed to act at any meeting of the stockholders shall, before entering upon the discharge of their duties, be sworn to faithfully execute the duties of inspector at such meeting with strict impartiality, and according to the best of their ability, and the oath so taken shall be subscribed by them, and immediately filed in the office of the clerk of the county in which such election or meeting shall be held, with a certificate of the result of the vote taken thereat § 32. Books to be kept. Every stock corporation shall keep at its office correct books of account of all its business and transactions, and a book to be known as the stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. The stock book of every such corporation shall be open daily, during at least three business hours, for the inspection of its stockholders and judgment creditors, who may make extracts therefrom. ISTo transfer of stock shall be valid as against the corporation, its stockholders and creditors for any purpose except to render the transferee liable for the debts of the corporation to the extent provided for in this chapter, until it shall have been entered in such book as required by this section, by an entry showing from and to whom trans- ferred. The stock book of every such corporation and the books of account of every bank shall be presumptive evidence of the facts therein so stated in favor of the plaintiff, in any action or proceed- ing against such corporation or any of its officers, directors or stockholders. Every corporation that shall neglect or refuse to keep or cause to be kept such books, or to keep any book open for inspection as herein required, shall forfeit to the people the sum of §§ 33, 34. Stock Coepoeation Law. fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such corporation shall wilfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exhibit the same, or to allow them to be in- spected and extracts taken therefrom as provided in this section, the corporation and such officer or agent shall each forfeit and pay to the party injured a penalty of fifty doUars for every such neglect or refusal, and all damages resulting to him therefrom. § 33. Stock books of foreign corporations. Every foreign stock corporation having an office for the transac- tion of business in this state, except moneyed and railroad corpo- rations, shall keep therein a book to be known as a stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively _became the owners thereof, and the amount paid thereon. Such stock book shall be open daily, during business hours, for the inspection of its stockholders and judgment creditors, and any officer of the state authorized by law to investigate the affairs of any such corporation. If any such foreign stock corporation has in this state a transfer agent, whether such agent shall be a corporation or a natural person, such stock book may be deposited in the office of such agent and shall be open to inspection at all times during the usual hours of transacting business, to any stockholder, judgment creditor or officer of the state authorized by law to investigate the affairs of such corporation. Tor any refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of two hundred and fifty dollars to be recovered by the person to whom such refusal was made. § 34. Annual report to secretary of state. Every domestic stock corporation and every foreign stock cor- poration doing business within this state, except moneyed and railroad corporations, shall annually, during the month of Janu- ary, or, if doing business without the United States, before the first day of May, may make a report as of the first day of Janu- ary, which will state: Stock Coepoeation Law. § 35. 1. The amount of its capital stock, and the proportion actually issued. 2. The amount of its debts or an amount which they do not exceed. 3. The amount of its assets or an amount which its assets at least equal. 4. The names and addresses of all the directors and officers of the company, and in the case of a foreign corporation, the name also of the person designated in the manner prescribed by the code of civil procedure, as a person upon whom process against the corporation may be served within this state. Such report shall be made by the president or a vice-president or the treasurer or a secretary of the corporation and shall be filed in the office of the secretary of state. If such report be not so made and filed, any such officer who shall thereafter neglect -or refuse to make and to file such report, within ten days after written request so to do shall have been made by a creditor or by a stockholder of the corporation, shall forfeit to the people the sum of fifty dollars for every day he shall so neglect or refuse. § 35. Liability of officers for false certificates, reports or public notices. If any certificate or report made or public notice given by the officers or directors of a stock corporation shall be false in any material representation, the officers and directors signing the same shall jointly and severally be personally liable to any person who Jias become a creditor or stockholder of the corporation upon the faith of any such certificate, report, notice or any material repre- sentation therein to the amount of the debt contracted upon the faith thereof if not paid when due, or the damage sustained by any purchaser of or subscriber to its stock upon the faith thereof. The liability imposed by this section shall exist in all cases where the contents of any such certificate, report or notice or of any material representation therein shall have been communicated •either directly or indirectly to the person so becoming a creditor or stockholder and be became such creditor or stockholder upon -the faith thereof. No action can be maintained for a cans© of §§ 50, 51. Stock Coepoeation Law. action created by this section unless brought witbin two years from the time the certificate, report or public notice shall have been made or given by the officers or directors of such corporation. AETICLE 4. Stock and Stockholdees. Skotiow 50. Issue and transfers of stock. 51. Transfers of stock by stockholder indebted to corporation. 52. Purchase of stock of other corporations. 53. Subscriptions to stock. 54. Time of payment of subscriptions to stock. 55. Consideration for issue of stock and bo^ds. 56. Liabilities of stockholders. 57. liabilities of stockholders to laborers, servants or employees. 58. Non-liability in certain cases. 59. Limitation of stockholder's liability. 60. Partly paid stock. 61. Preferred and common stock. 62. Increase or reduction of capital stock. 63. Notice of meeting to increase or reduce capital stock. 64. Conduct of such meeting; certificate of increase or reduction. 65. Change in par value Of shares. 66. Prohibited transfers to officers or stockholders. certificate of stock. 67. Application to court to order issue of new in place of lost 68. Order of court upon such application. 69. Financial statement to stockholders. 70. liabilities of ofiicers, directors and stockholders of foreien cor- porations. § 50. Issue and transfers of stock. The stock of every stock corporation shall be represented by certificates prepared by the directors and signed by the president or vice-president and secretary or treasurer and sealed with the seal of the corporation, and shall be transferable in» the manner prescribed in this chapter and in the by-laws. ISTo share shall be transferable until all previous calls thereon shall have been fully paid in. § 51. Transfers of stock by stockholder indebted to corporation. If a stockholder shall be indebted to the corporation, the direc- tors may refuse to consent to a transfer of his stock until such Stock Coepoeation Law. §§ 52, 53. indebtedness is paid, provided a csopy of this section is written or printed upon the certificate of stock. § 52. Purchase of stock of other corporations. Any stock corporation, domestic or foreign, now existing or hereafter organized, except moneyed corporations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations if author^ ized so to do by a provision in the certificate of incorporation of such stock corporation, or in any certificate amendatory thereof or supplementary thereto, filed in pursuance of law, or if the cor- poration whose stock is so purchased, acquired, held or disposed of, is engaged in a business similar to that of such stock corpora- tion, or engaged in the manufacture, use or sale of the property, or in the construction or operation of works necessary or useful in the business of such stock corporation, or in which or in con- nection with which the manufactured articles, product or prop- erty of such stock corporation are or may be used, or is a corporation with which such stock corporation is or may be author- ized to consolidate. "When any such corporation shall be a stock- holder in any other corporation, as herein provided, its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stockholders therein and the corporation holding such stock shall possess and exercise in respect thereof, all the rights, powers and privileges of individual owners or holders of such stock. § 53. Subscriptions to stoclc. If the whole capital stock shall not have been subscribed at the time of filing the certificate of incorporation, the directors named in the certificate may open books of subscription to fill up the capital stock in such places and after giving such notices as they may deem expedient, and may continue to receive subscriptions until the whole capital stock is subscribed. At the time of sub- scribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount sub- scribed by him in cash, and no such subscription shall be received or taken, without such payment §§ 54, 55. Stock Coepokation Law. § 54. Time of payment of subscriptions to stock. Subscriptions to the capital stock of a corporation shall be paid at such times and in such instalments as the board of directors may by resolution require. If default shall be made in the payment of any instalment as required by such resolution, the board may declare the stock and all previous payments thereon forfeited for the use of the corporation, after the expiration of sixty days from the service on the defaulting stockholder, per- sonally, or by mail directed to him at his last-known post-office address, of a written notice requiring him to make payment within sixty days from the service of the notice at a place specified therein, and stating that, in case of failure to do so, his stock and all previous payments thereon will be forfeited for the use of the corporation. Such stock, if forfeited, may be reissued or subscriptions there- for may be received as in the ease of stock not issued or subscribed for. If not sold for its par value or subscribed for within six months after such forfeiture, it shall be canceled and deducted from the amount of the capital stock. If by such cancellation, the amount of the capital stock is reduced below the minimum required by law, the capital stock shall be increased to the required amount within three months thereafter or an action may be brought or proceedings instituted to close up the business of the corporation as in the case of an insolvent corporation. If a re- ceiver of the assets of the corporation has been appointed, ail unpaid subscriptions to the stock shall be paid at such times and in such instalments as the receiver or the court may direct. § 55. Consideration for issue of stock and bonds. ISTo corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corporation. Any corporation may pur- chase any property authorized by its certificate of incorporation, or necessary for the use and lawful purposes of such corporation, and may issue stock to the amount of the value thereof in pay- ment therefor, and the stock so issued shall be full paid stock and not liable to any further call, neither shall the holder thereof Stock Coepoeation Law. §§ 56, 57. be liable for any further payment under any of the provisions of this chapter; and in the absence of fraud in the transaction the judgment of the directors as to the value of the property pur- chased shall be conclusive ; and in all statements and reports of the corporation, by law required to be published or filed, this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported as issued for property purchased. § 56. Liabilities of stocl for dissolution of certain associations 243 General Index. (References are to sections.) Pass-Book: savings bank, payments without 152 Payment: of notes on close of business 98 lost bank certificate 113, 114 savings and loan association, matured shares