A37-322-2000-L STATE BANKING LAWS OF TEXAS AMENDMENTS OF 1920 AND 1921 rVEWT* 8? SLUT"} J U L % (y ^ . ED. HALL Commissioner of Insurance and Banking AUSTIN, TEXAS Von Boeckmann-Jones Co.. Printers 1922 33^. / T 3 f'“i- b> 1 ? - '---l ^'VERSfTV pf JLLIRBIS LIBR4Ry J UL 2 6 192 ’> BANKS AND BANKING— APPLICANTS FOR CHARTERS OF STATE BANKS TO PAY EXPENSES OF CERTAIN INVESTIGATION. (Passed by the Third Called Session of the Thirty-sixth Legislature.) H. B. No. 159] Chapter 48. Be it enacted by the Legislature of the State of Texas: Section 1. When application is made for the organization of a State bank, the applicants shall be required to pay to the Commis- sioner of Insurance and Banking of the State all actual necessary expenses incurred by the Department of Insurance and Banking in making an investigation of such application not to exceed fifty dollars. Sec. 2. The fact that there is no law upon the statute books author- izing the collection of fees covering expenses of such investigations and that numerous applications for charters are being filed, creates an emergency and an imperative public necessity that the Constitutional rule requiring that bills be read on three several days be suspended, and the same is hereby suspended, and that this Act take effect from and after its passage, and it is so enacted. Effective ninety days after adjournment, September 16, 1920. WO cd C3 BANKS AND BANKING— REGULATING AMOUNT OF DE- POSITS TO BE KEPT ON HAND. (Passed by the Third Called Session of the Thirty-sixth Legislature.) H. B. No. 147] Chapter 41. Be it enacted by the Legislature of the State of Texas: Section 1. That Section 3 of the Act entitled “An Act further regulating banks and bank and trust companies incorporated under the laws of Texas by granting authority to such corporations to become members of Federal Reserve Banks,” etc., passed at the Second Called Session of the Thirty-third Legislature and approved October 19, 1914, be so amended as hereafter to read as follows : Section 3. Every banking corporation chartered under the laws of this State with a capital stock of less than twenty-five thousand dollars and which does not become a member of a Federal Reserve Bank under the laws of the United States, shall at all times have an amount of cash on hand and cash due from other banks equal to at least twenty per cent of the aggregate amount of its demand deposits; and every bank, not located in a central reserve city, having a capital stock of twenty-five thousand dollars or more, and which do not become mem- bers of a Federal Reserve Bank under the laws of the United States, shall at all times have an amount of cash on hand and cash due from other banks, equal to at least fifteen per cent of the aggregate amount of its demand deposits. Whenever the reserve of any bank as here- inbefore required shall fall below the amount specified above for its 4 - class, then such bank shall not make any new loans or discounts until it shall by collection restore its lawful reserve. Such reserve fund, or any part thereof, together with the current receipts may be kept on hand or on deposit payable on demand in any bank or banking asso- ciation of the State of Texas, or any bank, banking association or trust company regularly chartered and operating under the laws of any State or under the laws of the United States, approved by the Commissioner of Insurance and Banking, and having a paid up capital stock of fifty thousand dollars or more, but the deposit in any one bank or trust company shall not exceed twenty per cent of the total deposits, capital and surplus of the bank making the deposit. Sec. 2. The fact that large sums of money are being held in the vaults of the State banks of Texas, depriving the public of the use of same, creates an emergency and an imperative public necessity that the Constitutional rule requiring that bills be read on three several days be suspended, and the same is hereby suspended, and that this Act take effect from and after its passage, and it is so enacted. Effective June 17, 1920. STATE BANK EXAMINERS— AMENDING ACT PROVIDING FOR THE APPOINTMENT, DISCHARGE AND REMOVAL OF. (Passed by the Regular Session of the Thirty-seventh Legislature.) H. B. No. 245.] Chapter 65. Be it enacted by the Legislature of the State of Texas: Section 1. That Article 521, Chapter 6, Title 14, Revised Civil Statutes of the State of Texas, 1911, and Section 5, Chapter 205, General Laws of Texas, passed by the Thirty-fifth Legislature at the Regular Session thereof, approved by the Governor of Texas, April 9, 1917, be amended, and that this amendatory Act shall be Article 521 of the Civil Statutes of the State of Texas, so as to hereafter read as follows: Article 521. The Commissioner of Insurance and Banking, from time to time, shall appoint such number of State Bank examiners as may be necessary to make the examination of banking corporations required and allowed by law, which number shall at no time exceed the ratio of one examiner for each forty banking corporations then subject to examination under the laws of this State; and the Com- missioner of Insurance and Banking may also designate any one of said State bank examiners as a general liquidating agent, with his office in the banking department, for the purpose of liquidating any one or all State banks in the process of liquidation and for the purpose of conducting such liquidation under the direction of the said Com- missioner. The salary of each of said State bank examiners and of the general liquidating agent shall be for their first year of employment in the Department at the rate of Two Thousand Four Hundred ($2,400.00) Dollars per year, and such salary shall be increased by the sum of Two Hundred ($200.00) Dollars per year for each year of con- tinuous service in the Department until the maximum salary of Three Thousand Six Hundred ($3,600.00) Dollars shall be reached, and in addition to the salaries above specified, they shall receive all necessary traveling expenses, and it is provided that bank examiners and liquidat- ing agent now in the employ of such Department shall have the period of past continuous employment counted in determining their rate of pay; said State bank examiners and the general liquidating agent may be discharged and removed by the Commissioner of Insurance and Banking. The entire salary of the general liquidating agent may be assessed by the Commissioner of Insurance and Banking against any bank or banks in liquidation, in amounts proportionate to the salary and time required by the general liquidating agent in such liquidation, and may be collected and paid into the State Treasury as fees. Sec. 2. The salaries provided in this Act shall not become effective until September 1, 1921. Sec. 3. The importance of the above legislation and the necessity existing therefor in the interest of the State banks of this State, creates an emergency and an imperative public necessity demanding that the rule requiring bills to be read upon three several days be suspended, and such rule is so suspended and this Act take effect from and after its passage, and it is so enacted. Effective September 1, 1921. BANKS— DEPOSITORY FOR PUBLIC FUNDS; AUTHORIZING THE SELECTION OF SPECIAL DEPOSITORY WHEN BANK SUSPENDS BUSINESS. (Passed by the Regular Session of the Thirty-seventh Legislature.) S. B. No. 296.] Chapter 27. Be it enacted by the Legislature of the State of Texas: Section 1 . When any bank, which is a county, city or district depository, of public funds under the laws of this State, suspends business or is taken charge of by the Comptroller of the Currency or the Commissioner of Insurance and Banking, as the case may be, the lawful county, city or district authorities, authorized to select the depository in the first instance, shall have the discretion and authority to select by contract a special depository for the public funds in such suspended bank. Such special depository shall assume the payment of the amount of public funds due by the suspended bank on the date of its suspension, including interest to that date, and shall pay the same to the lawfully designated public authority in accordance with the contract entered into by such special depository. The contract shall be for the performance of the agreement entered into between the proper public authorities designated above and the special depos- itory, and shall require the payment of the deposit in such installments as may be agreed upon, the last of which shall be paid not exceeding three years from the date of the contract; the installments, or the amount due, may be evidenced in the discretion of the contracting — 6 — parties by negotiable certificates of deposit or cashier’s checks, payable at specified dates, if made a part of the contract; the performance of the contract and the payment of funds described therein shall be secured by bond, or by several bonds in case of installments, to be given by the special depository with the same character of sureties as is required by regular depository bonds. The contracts and bonds of special depositories shall be approved by the authority authorized by law to approve contracts and bonds of regularly selected depositories. The rate of interest which funds placed in a special depository hereunder shall bear shall be fixed by the contract, or such funds may, in the discretion of the contracting parties, be non-interest bearing. Sec. 2. If any State Funds are in the county depository which has failed, the amount thereof shall be ascertained by the State Comp- troller, who shall be authorized in his discretion to enter into a contract for the custody and payment of the same, with the special depository selected by the county authorities in the same manner that the county authorities are herein authorized so to do, and to take and approve contracts and bonds therefor; providing, however, that State funds thus placed in such special depository shall bear the average rate of interest received by the State on State funds placed with the regularly selected state depositories. Sec. 3. Nothing in this Act shall require the State, County, city or district authorities to select any special depository as is herein permitted, but they may proceed by their lawful remedies against the failed bank, if, in their discretion, it is best for the public interest so to do. Sec. 4. The importance of this legislation and the crowded condi- tion of the calendar creates an emergency, and an imperative public necessity which requires that the constitutional rule requiring bills to be read on three several days be suspended, and said rule is hereby suspended, and that this Act take effect and be in force from and after its passage, and it is so enacted. Approved March 12, 1921. Effective March 12, 1921. STATE BANKING CORPORATIONS— REGULATING THE IN- CREASE OF CAPITAL STOCK OF. (Passed by the Regular Session of the Thirty-Seventh Legislature.) H. B. No. 291.] Chapter 54. Be it enacted by the Legislature of the State of Texas: Section 1 . That Article 564, Chapter 6, Title 14, Revised Civil Statutes of the State of Texas, 1911, be amended so as to hereafter read as follows: Article 564. If, from the sworn statement of the average daily deposits of any state bank or banking corporation, organized under or subject to the general banking laws of this State, for the year ending on the first day of November, 1920, or of any subsequent year, filed with the Commissioner of Insurance and Banking, as provided in this — 7 — Title, it shall appear that such average daily deposits for such year amounting to more than five times the capital stock and surplus of such bank on November 1st, of such year, if the capital stock of such bank is not more than ten thousand dollars, ($10,000.00), or more than six times such capital stock and surplus, if the capital stock is more than ten thousand dollars, ($10,000.00), and less than twenty thousand dollars, ($20,000.00), or seven times the capital stock and surplus, if the capital stock is twenty thousand dollars, ($20,000.00), or more and less than forty thousand dollars ($40,000.00), or eight times such capital stock and surplus, if the capital stock is forty thousand dollars, ($40,000.00), or more and less than seventy-five thousand dollars, ($75,000.00), or nine times such capital stock and surplus, if the Capital stock is seventy-five thousand dollars, ($75,000.00), or more and less than one hundred thousand dollars, ($100,000.00), or ten times such capital stock and surplus, if the capital stock is one hundred thousand dollars, ($100,000.00), or more; then, in any such case, it shall be the duty of the State Banking Board to require that such state bank shall, within sixty days thereafter, increase its capital by twenty-five per cent, thereof; provided, that the State Banking Board may relieve, or refuse to relieve, any such bank from such order on showing to said board of conditions applying to and relating to the increase of the average daily deposits in such bank, which said board may find to justify such relief or not to justify such relief; and it shall be the duty of the Commissioner of Insurance and Banking to immediately furnish such state bank or banking corporation with a certified copy of the order making such requirement, as well as any order granting or re- fusing to grant relief from such requirement; and upon receipt of the order making such requirement, the directors of such state bank or banking corporation shall, within the time required, cause such in- crease to be made in the capital stock; and if the same is not done within such time, it shall be unlawful for such bank to thereafter re- ceive any deposits at any time when its total demand and time deposits and saving accounts shall in the aggregate amount to more than the limitation placed upon deposits. Sec. 2. It shall hereafter be unlawful for any director, officer or employee of any State bank or banking corporation, organized under or subject to the general banking laws of this State, or any person for any such bank or banking corporation, to receive any deposits at any time after such bank or banking corporation has failed or refused, within the time required, to comply with any order or requirement of the State Banking Board, pursuant the provisions of Section 1 of this Act, when its total demand and time deposits and savings accounts shall in the aggregate amount to more than the limitations placed upon deposits by Section 1 of this Act; and such acceptance of deposits by any director, officer, or employee of any such bank or banking corporation or by any persons therefor, shall be deemed a misdemeanor and punishable upon conviction by a fine of not less than one hundred dollars ($100.00), nor more than five hundred dollars ($500.00), or by imprisonment in the county jail for not less than thirty days, nor more than ninety days, or by both such fine and imprisonment; and each acceptance or receipt of a deposit in violation hereof shall consti- tute a separate offense. Sec. 3. The fact that there are a number of banks in Texas now — 8 — whose bank deposits were in 1919 abnormally increased, and the further fact that it is absolutely necessary in the interest of such banks that this law be enacted, creates an emergency and an imperative public necessity, requiring that the constitutional rule which provides that bills shall be read on three separate days be suspended, and the same is hereby suspended, and this Act shall take effect and be in force, from and after its passage, and it is so enacted. Effective April 2, 1921. AMENDING ACT RELATING TO THE AMOUNT TO BE PAID BY ANY BANK OR TRUST COMPANY INTO THE DEPOSITORS’ GUARANTY FUND. (Passed by the First Called Session of the Thirty-seventh Legislature.) S. B. No. 82.] Chapter 33. Be it enacted by the Legislature of the State of Texas: Section 1. That article 448, Chapter 5, Title 14, of the Revised Civil Statutes of the State of Texas, 1911, be amended so as to here- after read as follows: Article 448. For the purpose of creating a Depositors’ Guaranty Fund any such bank or trust company which shall elect to secure its deposits under the Depositors’ Guaranty Fund provided for in this chapter, if its application is approved by said Board as prescribed by Article 451, shall pay to said Banking Board on January 1, 1910, one per cent of its daily average deposits for the preceding year ending November 1, 1909, not including United States, State or other public funds, if otherwise secured. Annually after the first payment to said fund, each bank and trust company subject to the provisions of the guaranty fund plan of this chapter, shall pay to said Board one-fourth of one per cent of its daily average deposits for the year ending November 1st, of the preceding year, as above defined, which amount shall be added to said guaranty fund; provided, that when the amount available in said guaranty fund shall reach the sum of five million dollars, the Commissioner of Insurance and Banking shall notify all banks and trust companies subject to the provisions of this chapter, at least thirty days before the next annual payment, of that fact and there- after the banks and trust companies participating shall not pay any further amount into said fund until said fund shall be depleted. In the event of the depletion of said fund from any cause so that it falls below five million dollars or below the amount of the guaranty fund on January 1st preceding, or in the event of necessity to meet an emerg- ency at any time, said Banking Board shall have authority to require the payment for the current year of two per cent of such daily average deposits, or such part thereof as may be necessary to restore said fund to the maximum above named, or to its amount as of January first preceding, or to meet the emergency; but no bank or trust company coming under the provisions of this chapter shall ever be required to pay more than two per cent of its daily average deposits for any one year; provided, further, that the first payment herein provided for by — 9 — any bank which shall hereafter elect to secure its deposits under the Depositors’ Guaranty Fund shall be made by said bank to said Banking Board without reference to said maximum amount in said Depositors’ Guaranty Fund. Sec. 2. The importance of the above legislation and the necessity existing therefor in the interest of the State banks of this State, creates an emergency and an imperative public necessity demanding that the rule requiring bills to be read upon three several days be suspended, and such rule is so suspended and this Act takes effect from and after its passage, and it is so enacted. Effective November 15, 1921. APPROPRIATION FOR THE SUPPORT OF THE STATE GOV- ERNMENT FOR THE TWO YEARS BEGINNING SEP- TEMBER 1, 1921, AND ENDING AUGUST 31, 1923. (Passed by the First Called Session of the Thirty-seventh Legislature.) S. B. No. 61.] Chapter 53. Be it enacted by the Legislature of the State of Texas: The following rules shall be observed by all employees in rendering their expense accounts to the head of the department wherein they are employed before an expense account shall be paid from appro- priations herein made for “traveling expenses” for employees: 1. There must be a concise statement of the duties performed and the points from which, and to which, the employee travels, the hour of arrival at and departure from the designated post of duty and all other towns visited and the object of such visit and the specific expenses incurred shall be clearly shown. 2. The name of hotel, restaurant, boarding or rooming house at which meals and lodging are procured shall be given in every case. 3. Fees as tips to waiters on dining cars or at hotels or restaurants shall not be approved. 4. A receipt for each item of expense in excess of $1.00 shall be attached to accounts rendered to department. 5. The use of railroad scrip books and other forms of transportation provided at the expense of the State for the heads of all State depart- ments and institutions and their employees, except passes authorized by law, are hereby prohibited and hereafter all railroad and other transportation shall be paid in cash and properly listed in expenses accounts rendered. The tax exemption certificates shall be used in all cases where the State is exempt from the payment of Government tax under Federal provision. The State Comptroller shall be governed accordingly in the issuance of warrants covering payment for rail- road scrip books and other forms of transportation. Effective September 2, 1921. UBWHKtTf OF M-WOSS U ^ - v Jlil % 6 1922 B8- *-'*8-700 LAWS AND AMENDMENTS TO LAWS PERTAINING «UB my 0FmE W29 TO BANKS Passed by the WTY O f ^UNQIS Forty-fourth Legislature of the State of Texas Regular Session, 1935 AUTHORITY OF BANKING CORPORATIONS TO MAKE LOANS ON REAL ESTATE EXPANDED. (S. B. No. 92) . Chapter 6. AN ACT to amend Article 392, Revised Civil Statutes of 1925, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 392 of the Revised Civil Statutes of 1925 be and the same is hereby amended so as to hereafter read as follows : “Article 392. Powers of Corporation. — Banking corporations shall be authorized to conduct the business of receiving money on deposit, allowing interest thereon, and of buying and selling exchange, gold and silver coins of all kinds; of lending money upon real estate and personal property and upon collateral and personal securities at a rate of interest not exceeding that allowed by law ; and of buying, selling and discounting negotiable and non-negotiable commercial paper of all kinds. No such bank shall lend more than fifty per cent of its securities upon real estate, nor make a loan on real estate to an amount greater than half the reasonable cash value thereof; provided that the restrictions as to the amount a bank may invest in securities upon real estate and as to the value of such real estate as com- pared to the security of the loan shall not apply to loans secured by real estate in Texas which are insured under the provisions of Title II of the National Housing Act, enacted by Congress of the United States and approved by the President, June 27, 1934.” Sec. 2. The fact that Congress of the United States has enacted a law entitled the “National Housing Act” to relieve unemployment by encouraging the improvement in housing standards and conditions and to provide a system of mutual mortgage insurance and for other purposes in the construction 2 Laws and Amendments Pertaining to Banks. of new Itmmes and in the refinancing of mortgages on real estate in the United States, and the further fact that there are certain restrictions under the laws of the State of Texas which prohibit a full enjoyment of the provisions of the National Housing Act # by Texas, creates an emergency and an imperative public neces- sity demanding that the constitutional rule requiring bills to be read on three several days in each House be, and the same is hereby suspended, and that this Act take effect from and after its passage, and it is so enacted. AUTHORITY OF SAVINGS BANKS TO INVEST FUNDS BROADENED SO AS TO AID NATIONAL HOUSING ACT. (S. B. No. 95) Chapter 9. AN ACT to amend Article 416, Revised Civil Statutes of 1925, as amended Acts 1929, 41st Legislature, First Called Session, Page 48, Chapter 17, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 416, Revised Civil Statutes of 1925, as amended by the Acts 1929, Forty-first Legislature, First Called Session, Page 48, Chapter 17, be and the same is hereby amended so as to hereafter read as follows: “Article 416. Investment of Savings. — Such corporation shall invest not more than eighty-five per cent of the total amount of its savings deposits in any of the following classes of securi- ties, and not otherwise: 1. In bonds or interest bearing notes or obligations of the United States, or of those for which the faith of the United States is pledged for the payment of principal and interest; 2. In bonds, interest bearing notes, or other obligations issued under due authority of law, in payment for permanent improve- ments made, bearing a fixed rate of interest, and payable within a definite number of years, or over a series of years, of any city, county, town or school district, or other subdivision of this State, now organized, or which may hereafter be organized, and which is now or may hereafter be authorized to issue bonds under the Constitution and laws of this State, which has not defaulted in the payment of any part of either principal or interest thereof within five years previous to making such investments ; 3. In bonds of this State, or of any State in the Union, that has not, within the last five years previous to making such invest- ment, defaulted in the payment of any part of either principal or interest thereof ; 4. In First Mortgage bonds of any steam or electric railroad, or other public utility corporation, domiciled in this or any other State of the Union, the annual net earnings of which steam or electric railroad, or public utility corporation, equaled during Laws and Amendments Pertaining to Banks. 3 the last five years twice the annual interest charges on the entire funded indebtedness of such steam or electric railroad or public utility corporation. Provided that not more than twenty-five per cent of said savings deposits may be invested in the securi- ties mentioned in this subdivision; 5. In bonds or notes secured by first mortgage, first deed of trust or other first lien, on improved real estate in Texas, pro- vided the aggregate of such bonds or notes outstanding and secured by coordinate lien against said property shall not exceed fifty per cent of the value of said real estate and the improve- ments thereon, exclusive of mineral leases or other mineral estate, such bonds or notes to run for a term of not longer than ten years, and to be always accompanied by a complete abstract of title to the property mortgaged, and an attorney’s certificate approving the title or a title insurance policy in some company incorporated under the laws of Texas guaranteeing the title and guaranteeing that said bonds or notes retain a first lien on the land mortgaged ; and in addition thereto in assignable certificates issued by any city, town or village for street paving, the pay- ments of which are secured by first liens, fixed or executed on the abutting properties in accordance with law, and made the personal obligations of the abutting property owners; provided that the restrictions contained in this section shall not apply to loans secured by real estate in Texas which are insured under the provisions of Title II of the National Housing Act enacted by Congress of the United States, and approved by the President on June 27, 1934. 6. In bankers acceptances as defined by the Federal Reserve Act or in collateral loans, which loans are collateraled and secured by marketable stocks or bonds, the market value of which shall be at all times equal to one hundred twenty-five per cent of the amount of the loan, such collateral loans always having a maturity of not longer than six months from the date of purchase thereof. Provided that not more than twenty-five per cent of such savings deposits may be invested in the class of securities mentioned in this subdivision; It shall be the duty of the Directors of such corporation as soon as practicable, to invest the moneys and funds of such savings accounts, by purchase or otherwise, in the securities hereinabove described. Such directors, from time to time, shall sell and invest the proceeds of such investments, and for the purpose of meeting current demands and expenses in excess of the receipts, any of the securities may be sold or pledged.” Sec. 2. The fact that Congress of the United States has enacted a law entitled the “National Housing Act” to relieve unemployment by encouraging the improvement in housing standards and conditions and to provide a system of mutual mortgage insurance and for other purposes in the construction of new homes and in the refinancing of mortgages on real estate in the United States, and the further fact that there are certain 4 Laws and Amendments Pertaining to Banks. restrictions under the laws of the State of Texas which prohibit a full enjoyment of the provisions of the National Housing Act by Texas, creates an emergency and an imperative public neces- sity demanding that the constitutional rule requiring bills to be read on three several days in each House be, and the same is hereby suspended, and that this Act take effect from and after its passage, and it is so enacted. INVESTMENT OF FUNDS IN DEBENTURES OR MORT- GAGES ISSUED UNDER THE TERMS OF NATIONAL HOUSING ACT MAY BE MADE BY FIDUCIARIES, GUARDIANS, TRUSTEES, BANKS AND BUILD- ING AND LOAN ASSOCIATIONS. (S. B. No. 99) Chapter 12. AN ACT to amend Acts of 1933, General Laws, 43rd Legislature, Regular Session, Chapter 160, page 406; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Acts of 1933, General Laws, Forty -third Legislature, Regular Session, Chapter 160, page 406, be and the same is hereby amended so that the same shall hereafter read as follows : “That hereafter, all mortgages, bonds, debentures, notes, collateral trust certificates, and other such evidences of indebt- edness, issued or that may hereafter be issued under the terms and provisions of the National Housing Act, approved by the President of the United States on June 27, 1934, or by any lawful agency created thereunder, all mortgages, bonds, debentures, notes, collateral trust certificates, or other such evidences of indebtedness, which have been or which may hereafter be issued by the Federal Home Loan Bank Board, or the Home Owners' Loan Corporation or by any Federal savings and loan association, or by the Reconstruction Finance Corporation, or by the Federal Farm Loan Board, or by any Federal Land Bank, or by any National Mortgage Association, or by any entity, corporation or agency, which has been or which may be created by or author- ized by an act, which has been enacted or which may hereafter be enacted by the Congress of the United States, or by any amendment thereto, which has for its purpose the relief of, refinancing of or assistance to owners of mortgaged or encum- bered homes, farms, and other real estate, and the improvement or financing or the making of loans on any real property, shall hereafter be lawful investments for all fiduciary and trust funds in this State, and may be accepted as security for all public deposits where deposits of bonds or mortgages are authorized by law to be accepted. Such mortgages, bonds, debentures, notes, collateral trust certificates, and other such evidences of indebt- edness, shall be lawful investments for all funds which may be Laws and Amendments Pertaining to Banks. 5 lawfully invested by guardians, administrators, trustees, and receivers, for building and loan associations, saving departments of banks, incorporated under the laws of Texas, for banks, sav- ings banks and trust companies, chartered under the laws of Texas, and for all insurance companies of every kind and char- acter, chartered or transacting business under the laws of Texas, where investments are required or permitted by the laws of this State; providing further that where such mortgages, bonds, debentures, notes, collateral trust certificates, and other such evidences of indebtedness are issued against and secured by promissory notes, or other obligations, the payment of which is secured, in whole or in part, by mortgage, deed or trust, or other valid first lien upon real estate situated in Texas, or where such mortgages, bonds, debentures, notes, collateral trust cer- tificates, or other such evidences of indebtedness are acquired, directly or indirectly, in exchange for or in substitution of notes, or other obligations, secured by mortgage, deed of trust, or other valid first lien upon real estate situated in Texas, then such mortgages, bonds, debentures, notes, collateral trust certificates, or other such evidences of indebtedness, so issued and so secured, or so acquired, shall be regarded for investment purposes by insurance companies as “Texas Securities/' within the meaning of the laws of Texas governing such investments. “The provisions of this Act shall be cumulative of all other provisions of the Civil Statutes of the State of Texas, affecting the investment of funds or monies by fiduciaries, guardians, administrators, trustees and receivers, building and loan asso- ciations, savings departments of banks, incorporated and doing business under the laws of Texas, commercial banks, savings banks and trust companies, chartered and doing business under the laws of Texas, insurance companies of any kind and char- acter chartered and transacting business under the laws of Texas, and all corporate creatures, organized and doing business under the laws of Texas. “It is hereby declared to be the legislative intent to enact a separate provision of this Act independent of all other provi- sions, and the fact that any phrase, sentence, or clause of this Act shall be declared unconstitutional, shall in no event affect the validity of any of the provisions hereof.” Sec. 2. The fact that the Congress of the United States has enacted a law entitled the “National Housing Act” to relieve unemployment by encouraging home renovation and moderniza- tion, and construction of new homes and to relieve distressed home owners threatened with foreclosure by providing facilities for refinancing of mortgages under liberal terms, and the fact that the investment laws and the provisions of the Texas Security Act do not provide for the investment of funds in debentures or mortgages issued under the terms of the National Housing Act, creates an emergency and an imperative public necessity demanding that the constitutional rule requiring bills to be read 6 . Laws and Amendments Pertaining to Banks. on three several days in each House be and the same is hereby suspended, and that this Act take effect from and after its passage, and it is so enacted. CERTAIN FEDERAL SECURITIES MADE LAWFUL INVEST- MENTS FOR CERTAIN CORPORATIONS AND FIDUCIARY FUNDS. (H. B. No. 135) Chapter 31. AN ACT re-enacting Section 1, of Senate Bill No. 561 passed at the Regular Session of the 43rd Legislature of the State of Texas, known as Chapter 160, pages 406 to 407, which provides all evidences of indebtedness issued or to be issued by any agency now created or to hereafter be created by an act or acts of Congress of the United States in connection with legislation for the relief of owners of mortgaged or encumbered real estate, shall be lawful investments for all fiduciary and trust funds, and may be accepted as security for all public de- posits where deposits of bonds or mortgages are authorized by law to be accepted; declaring such evidences of indebtedness to be lawful investments for all funds which may be lawfully invested by guardians, administrators, trustees and receivers, for building and loan associa- tions, savings departments of State banks, for banks, savings banks and trust companies chartered under the laws of Texas; for all in- surance companies chartered or transacting business under the laws of Texas, where investments are required or permitted, and providing that where such evidences of indebtedness are secured, in whole or in part, by mortgage, deed of trust or other valid lien upon real estate situated in this State, or where the same may have been acquired directly or indirectly, in exchange for, or substitution of notes, mort- gages, deeds of trust, or other valid liens upon real estate in this State, then such evidences' of indebtedness shall be regarded, for investment purposes by insurance companies, as Texas securities; and amending said Section 1, of Senate Bill No. 561, Chapter 160 of the laws passed at the Regular Session of the Forty-third Legislature, by adding thereto a new Section to be known as Section 1-a, authorizing Building and Loan Associations that may now or hereafter own bonds or securities mentioned in said Act to exchange same with their share- holders for their stock in the association upon terms and conditions agreed upon, with each shareholder and the directors of the association and under the supervision of the Banking Commissioner after notice has been given to all shareholders; providing that after notice has been given such bonds shall be ratably apportioned to each shareholder as his interest appears on the books of such association; allowing shareholders thirty (30) days in which to notify the Association of his desire to make such exchange; providing no exchange shall be made until the terms, and price of stocks and bonds shall have been published and notice setting out the terms of exchange shall have been mailed to each stockholder, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Section 1 of S. B. No. 561, passed at the Regular Session of the Forty-third Legislature of the State of Texas, known as Chapter 160, pages 406 to 407, of the General Laws of the Forty-third Legislature be and the same is hereby amended by adding thereto Section 1-a, said amended Section 1 with Section 1-a added, to hereafter read as follows: Laws and Amendments Pertaining to Banks. 7 “Section 1. That, hereafter, all bonds, debentures, notes, collateral trust certificates, and other such evidences of indebt- edness, which have been, or which may be issued by Federal Home Loan Bank Board, or Home Owners' Loan Corporation, or by any Federal Savings and Loan Association, or by the Reconstruction Finance Corporation, or by the Federal Farm Loan Board, or by any Federal Land Bank, or by any entity, cor- poration or agency which has been or which may be created by or authorized by any Act which has been enacted, or which may hereafter be enacted, by the Congress of the United States, or by any amendment thereto, which has for its purpose the relief of, refinancing of, or assistance to owners of mortgaged, or en- cumbered homes, farms and other real estate, shall hereafter be lawful investments for all fiduciary and trust funds in this State, and may be accepted as security for all public deposits, where deposits of bonds or mortgages are authorized by law to be accepted. Such bonds, debentures, collateral trust certifi- cates, notes and other such evidences of indebtedness shall be lawful investments for all funds which may be lawfully invested by guardians, administrators, trustees and receivers, for building and loan associations, savings departments of banks incorporated under the laws of Texas for banks, savings banks and trust com- panies chartered under the laws of Texas, and for all insurance companies, of every kind and character, chartered or transacting business under the laws of Texas, where investments are required or permitted by the laws of this State; provided, further, that where such bonds, debentures, notes, collateral trust certifirates and other such evidences of indebtedness are issued against and secured by promisory notes, or other obligations, the payment of which is secured, in whole or in part, by mortgage, deed of trust, or other valid lien upon real estate situated in this State, or where such bonds, debentures, collateral trust certificates, notes, or other such evidences of indebtedness, are acquired, di- rectly or indirectly, in exchange for, or in substitution of notes or other obligations secured by mortgage, deed of trust, or other valid lien upon real estate situated in this State, then such bonds, debentures, collateral trust certificates, notes, or other such evi- dence of indebtedness, so issued and so secured, or so acquired, shall be regarded for investment purposes by insurance com- panies as “Texas securities" within the meaning of the laws of this State governing such investments. “Sec. 1-a: That hereafter any building and loan association holding bonds of the Home Owners' Loan Corporation may from time to time exchange same with its shareholders for their stock in the association on such terms and conditions as may be agreed upon between the Board of Directors of such association and each shareholder, and under the supervision of and with the approval of the Banking Commissioner, after mailing to each shareholder notice and permitting all to have the same fair opportunity of exchange. Providing that when notice is sent 8 Laws and Amendments Pertaining to Banks. to stockholders under the terms hereof that no exchange can . be made until all stockholders who want to make such exchange have been notified ; providing further that when all stockholders who want to make such exchange have given notice to the build- ing and loan association of their desire to make such exchange as each stockholder’s interest may appear on the corporate books of said building and loan association. Thirty (30) days shall be deemed sufficient time for a stockholder to express his wishes on this matter. Provided, no such exchange of stock for bonds shall ever be made unless, except, and until, the terms of ex- change, including the price of stocks and bonds shall have been published, and notice setting out the terms of exchange, shall have been mailed to each stockholder.” Sec. 2. The fact that building and loan associations, under the Act amended hereby, have acquired bonds of the Home Owners’ Loan Corporation to the extent of millions of dollars and that the dumping of such bonds on the open market would tend to materially lower their market value, and the further fact that these associations could exchange such bonds to their share- holders for stock and thereby benefit the shareholders and pre- vent the placing on the market at any time large amounts of such bonds, create an emergency and an imperative public neces- sity demanding that the Constitutional Rule which requires all bills to be read on three several days in each House, be sus- pended, and the same is hereby suspended, and this Act shall be in force and take effect from and after its passage, and it is so enacted. AUTHORIZING BANKING INSTITUTIONS TO ISSUE AND SELL CAPITAL NOTES OR DEBENTURES (S. B. No. 485) Chapter 173. AN ACT authorizing banking institutions to issue and sell capital notes or de- bentures; subordinating same to other claims; defining the term “capital” as used in the Banking Laws relating to solvency of state hanks to embrace the amount of capital notes and debentures out- standing; providing that the capital stock of a banking institution shall be deemed unimpaired when the amount of said capital notes or debentures as represented by cash or sound assets exceeds any impairment as found by the State Banking Commissioner; requiring any existing deficiency in capital to be paid in cash before retiring said capital notes or debentures and providing for assessment to meet deficiencies in the redemption fund for capital notes and debentures; exempting them from any obligations of such institutions and from any assessments to restore impairment of their capital; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. With the approval of the Banking Commissioner any banking institution may, at any time, through action of its Board of Directors and without requiring any action of its stock- holders, issue and sell its capital notes or debentures. Such Laws and Amendments Pertaining to Banks. 9 capital notes or debentures shall be subordinate and subject to the claims of depositors and may be subordinated and subjected to the claims of other creditors. The term “capital” as used in the laws of this state relating to solvency of state banking institutions shall be construed to embrace the amount of outstanding capital notes and debentures legally issued by any banking institution and sold by it to the Reconstruction Finance Corporation or any other corporation or individual. The capital stock of any such banking institution may be deemed to be unimpaired when the amount of such cap- ital notes and debentures as represented by cash or sound assets exceeds the impairment as found by the State Banking Commis- sioner. Before any such capital notes or debentures are retired or paid by the bank any existing deficiency of its capital (dis- regarding the notes or debentures to be retired) must be paid in cash, to the end that the sound capital assets shall at least equal the capital stock of the bank. Provided, in the event the net profits are not sufficient to meet the interest and retirement fund on the debentures, the Banking Commissioner shall have authority to require the bank’s stockholders to pay into the bank in cash an amount sufficient to meet the deficiencies. Such capital notes or debentures shall in no case be subject to any assessment. The holders of such capital notes or de- bentures shall not be held individually responsible as such holders for any debts, contracts, or engagements of such insti- tution, and shall not be held liable for assessments to restore impairments in the capital of such institution. Sec. 2. All laws or parts of laws in conflict herewith are hereby repealed. Sec. 3. The fact that it is desirable to make immediately available to banking institutions in this state the benefits offered by the Federal Government and its agencies to such banks and their depositors, creates an emergency and an imperative public necessity that the Constitutional Rule requiring bills to be read on three several days in each House be suspended, and the same is hereby suspended, and that this Act take effect and be in force from and after its passage, and it is so enacted. EXEMPTING BANKING INSTITUTIONS FROM FURNISH- ING SECURITY FOR ANY DEPOSITS TO CERTAIN EXTENT. (H. B. No. 928) Chapter 180. an act to exempt banking institutions' from furnishing security for any deposits to the extent such deposits are insured under Section 12B of the Federal Reserve Act, as amended; repealing all laws in conflict here- with, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. Notwithstanding any provision of law of this 10 Laws and Amendments Pertaining to Banks. state or of any political subdivision thereof requiring security for deposits in the form of collateral, surety bond or in any other form, security for such deposits shall not be required to the extent said deposits are insured under the provision of Section 12B of the Federal Reserve Act, as amended, or any amend- ments thereto. Sec. 2. All laws or parts of laws in conflict herewith are hereby repealed. Sec. 3. The fact that it is desirable to make immediately available to banking institutions in this state the benefits offered by the Federal Government and its agencies to such banks and their depositors, creates an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each House be suspended, and the same is hereby suspended and that this Act take effect and be in force from and after its passage, and it is so enacted. AUTHORIZING CERTAIN BANKING INSTITUTIONS TO TAKE ADVANTAGE OF LOANS, CONTRACTS, GRANTS, MADE AVAILABLE BY FEDERAL BANKING ACT CREATING FEDERAL DEPOSIT INSURANCE. (S. B. No. 486) Chapter 183. to authorize any bank, trust company, bank and trust company, banking association, stock savings bank or mutual saving bank now or here- after organized under the laws of this State, or the conservator, re- ceiver or liquidator thereof, with the consent and approval of the Banking Commissioner, to enter into such contracts, incur such obli- gations and generally to do such acts as may be appropriate or necessary to take advantage of any and all memberships, loans sub- scriptions, contracts, grants, rights or privileges which may, at any time, be available or inure to said banking institutions or their de- positors or stockholders, or their conservators, liquidators, or receivers, by virtue of any Act or Resolution of the Congress of the United States to aid, regulate or safeguard banking institutions and deposi- tors, including the ^ct creating the Federal Deposit Insurance Cor- poration; to empower any such banking institution to subscribe to and acquire any stock or debentures or bonds or othen types of securities of said corporation gkid to comply with its' regulations and require- ments; to authorize the appointment of the Federal Deposit Insurance Corporation as receiver or liquidator of any such insured closed bank- ing institution, and to authorize said corporation to do any and all things appropriate in ^he sale or acquirement of the assets of such institutions and in the liquidation of same; to authorize receivers and liquidators and the Stale Banking Commissioner to borrow money for the benefit of closed b^nks and to pledge its assets to secure same; to provide for the subrogation of said corporation to the rights against said closed institutions of all insured depositors, whose deposits have been paid, or for the payment of which funds have been made avail- able; to recognize right of said corporation to make examinations of and to require reports from such institution; to provide for disclosure by said Banking Commissioner to said corporation of the condition and Laws and Amendments Pertaining to Banks. 11 affairs of such insured institution and access to information regarding same; to provide for the vesting of title in said corporation of assets of such closed institution and the right for the corporation, as receiver or liquidator; to provide for the enforcement of the individual lia- bility of stockholders and directors thereof; repealing all laws or parts of laws in conflict herewith; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. The term “banking institution/’ as used in this Act shall be construed to mean any bank, trust company, bank and trust company, stock savings bank or mutual savings bank, which is now or may hereafter be organized under the laws of this State. Sec. 2. Any banking institution now or hereafter organized under the laws of this State is hereby empowered, on the au- thority of its board of directors, or a majority thereof, by and with the consent and approval of the State Banking Commis- sioner, to enter into such contracts, incur such obligations and generally to do and perform any and all such acts and things whatsoever as may be necessary or appropriate in order to take advantage of any and all memberships, loans, subscriptions, con- tracts, grants, rights, or privileges, which may at any time be available or inure to banking institutions or to their depositors, creditors, stockholders, conservators, receivers or liquidators, by virtue of those provisions of Section 8 of the Federal “Banking Act of 1933” (Sec. 12B of the Federal Reserve Act, as amended,) which establish the Federal Deposit Insurance Corporation and provided for the insurance of deposits, or of any other provisions of that or any other Act or resolution of Congress to aid, reg- ulate or safeguard banking institutions and their depositors, including any amendments of the same or any substitutions therefor; also, to subscribe for and acquire any stock, deben- tures, bonds or other types of securities of the Federal Deposit Insurance Corporation and to comply with the lawful regulations and requirements from time to time issued or made by such corporation. Sec. 3. The Federal Deposit Insurance Corporation created by Section 8 of the Federal “Banking Act of 1933” (Section 12B of the Federal Reserve Act, as amended) is hereby authorized and empowered to be and act without bond as receiver or liqui- dator of any banking institution, the deposits in which are to any extent insured by said corporation, and which shall have been closed on account of inability to meet the demands of its depositors. The appropriate state authority, having the right to appoint a receiver or liquidator of a banking institution, may in the event of such closing, tender to said corporation the appoint- ment as receiver or liquidator of such banking institution, and if the corporation accepts said appointment, the corporation shall have and possess all powers and privileges provided by the laws of this state with respect to a receiver or liquidator respectively of a banking institution, its depositors and other creditors, and 12 Laws and Amendments Pertaining to Banks. be subject to all the duties of such receiver or liquidator, except insofar as such powers, priviliges or duties are in conflict with the provisions of subsection (1) of Section 8 of said “Banking Act of 1933. ,, Sec. 4. Whenever any banking institution shall have been closed as aforesaid, and said Federal Deposit Insurance Corpo- ration shall pay or make available for payment the insured de- posit liabilities of such closed institution, the corporation, whether or not it shall have become receiver or liquidator of such closed banking institution, as herein provided, shall be sub- rogated to all rights against such closed banking institution of the owners of such deposits in the same manner and to the same extent as subrogation of the corporation is provided for in sub- section (1) of Section 12B of the said Federal Reserve Act, as amended (being Section 8 of the said “Banking Act of 1933”) in the case of the closing of a national bank : Provided, that the rights of depositors and other creditors of such closed institu- tion shall be determined in accordance with the applicable pro- visions of the laws of this State. Sec. 5. The Banking Commissioner may furnish to said cor- poration, or to any official or examiner thereof, a copy or copies of any or all examinations made of any such banking institu- tions and of any or all reports made by same, and shall give access to and disclose to said corporation or any official or ex- aminer thereof any and all information possessed by the office of said Banking Commissioner with reference to the conditions or affairs of any such insured institution. Nothing in this Section shall be construed to limit the duty of any banking institution in this State, deposits in which are to any extent insured under the provisions of Section 8 of the “Banking Act of 1933” (Section 12B of the Federal Reserve Act, as amended) or of any amendment of or substitution for the same, to comply with the provisions of said Act, its amendments or substitutions, or the requirements of said corporation relative to examinations and reports, nor to limit the powers of the Banking Commissioner with reference to examinations and reports under existing law. Sec. 6. With respect to any banking institution, which is now or may hereafter be closed on account of inability to meet the demands of its depositors or by action of the Banking Com- missioner or of a couit or by action of its directors or in the event of its insolvency or suspension, the Banking Commissioner and/or the receiver or liquidator of such institution with the permission of said Banking Commissioner may borrow from said corporation or any other source and furnish any part or all of the assets of said institution as security for a loan from same; provided, that where said corporation is acting as such receiver or liquidator, the order of a court of record of compe- tent jurisdiction shall be first obtained approving such loan. Said Banking Commissioner upon the order of a court of record Laws and Amendments Pertaining to Banks. IB of competent jurisdiction, and upon a like order and with the permission of said Banking Commissioner, the receiver or liqui- dator of any such institution may sell to said corporation any part or all of the assets of such institution. The provisions of this Section shall not be construed to limit the power of any banking institution, the Banking Commis- sioner, or receivers or liquidators to pledge or sell assets in ac-' cordance with any existing law. Sec. 7. Upon the acceptance of the appointment of receiver or liquidator aforesaid by said corporation, the possession of and title to all assets, business and property of such banking insti- tution of every kind and nature shall pass to and vest in said corporation and without the execution of any instruments of conveyance, assignment, transfer or endorsement. Sec. 8. Among its other powers, said corporation, in the per- formance of its powers and duties as such receiver or liquidator, shall have the right and power to enforce the individual lia- bility of the stockholders, and directors of any such banking institution, after assessment therefor by the Banking Commis- sioner, and after assignment to the corporation of the right thereto. Sec. 9. The validity of any provision or part of this Act shall not be dependent upon any other provision or part thereof. If any provision or part thereof should for any reason be held un- constitutional or invalid such decision shall not affect the validity of any of the remaining provisions or parts of this Act. Sec. 10. All laws or parts of laws in conflict herewith are hereby repealed. Sec. 11. The fact that it is desirable to make immediately available to banking institutions in this State the benefits offered by the Federal Government and its agencies to such banks and their depositors, creates an emergency and an im- perative public necessity that the Constitutional Rule requiring bills to be read on three several days in each House be suspended, and the same is hereby suspended, and that this Act take effect and be in force from and after its passage, and it is so enacted. RELATING TO INVENTORY OF ASSETS AND CLAIMS OF INSOLVENT BANKS. (H. B. No. 530) Chapter 265. an act to amend Article 460, Title 16, of the Revised Civil Statutes of the State of Texas, Revision of 1925, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 460, Title 16, of the Revised Civil Statutes of the State of Texas, Revision of 1925, be and the same is hereby amended so as hereafter to read as follows: 14 Laws and Amendments Pertaining to Banks. “Article 460. Inventory of Assets and Claims. The Com- missioner shall make an inventory of the assets of such insol- vent bank, and upon the expiration of the time fixed for the presentation of claims, shall make a list of all claims presented, specifying such claims as have been rejected by him. Such in- ventory and list shall be made in duplicate, and one copy of each shall be filed with the County Clerk of the County in which such bank was located ; the other copies to be filed in the office of the Commissioner and all said copies shall be open to inspec- tion.” Sec. 2. The fact that part of Article 460 of the Revised Civil Statutes relates to the Depositor’s Guaranty Fund, which fund has been abolished by the Acts of 1927, Page 18, and the neces- sity for making the law clear, create an emergency, and an im- perative public necessity requiring that the Constitutional Rule requiring bills to be read on three several days be suspended, and the same is hereby suspended, and that this Act take effect and be in force from and after its passage, and it is so enacted. LAWS AND AMENDMENTS TO LAWS PERTAINING TO BANKS Passed by the Forty-fifth Legislature of the State of Texas to and Including July 15, 1937 PROPOSED AMENDMENT TO CONSTITUTION, ARTICLE 16, SECTION 16. S. J. R. No. 9. A JOINT RESOLUTION proposing an amendment to Section 16, Article XVI, of the Constitution of Texas; providing that the Legislature shall authorize the incorpora- tion of banking bodies and provide for the supervision and regulation of same; providing for all of the capital stock to be subscribed and paid for before charter issued; restricting foreign corporations from doing banking business; restricting corporate business to one place. Be it resolved by the Legislature of the State of Texas : Section 1. That Section 16, Article XVI, of the Constitution of Texas, be amended so as to hereafter read as follows : “Section 16. The Legislature shall by general laws, authorize the incorporation of corporate bodies with banking and dis- counting privileges, and shall provide for a system of State supervision, regulation and control of such bodies which will adequately protect and secure the depositors and creditors thereof. “No such corporate body shall be chartered until all of the authorized capital stock has been subscribed and paid for in full in cash. Such body corporate shall not be authorized to engage in business at more than one place which shall be desig- nated in its charter. “No foreign corporation, other than the national banks of the United States shall be permitted to exercise banking or discount- ing privileges in this State.” Sec. 2. The foregoing amendment to the Constitution shall be submitted to a vote of the qualified electors of this State at an election to be held throughout the State on the fourth Monday in August, 1937. At this election all voters favoring the pro- posed amendment shall write, or have printed, on their ballots the following words: “For the amendment of Section 16 to Article XVI of the Constitution of the State of Texas, providing for the amount of the liability of stockholders in State banks.” 16 Laws and Amendments Pertaining to Banks. Those voters opposing said amendment shall write, or have printed, on their ballots the following words: “Against the amendment of Section 16 of Article XVI of the Constitution of the State of Texas, providing for the amount of the liability of stock-holders in State banks.” Sec. 3. The Governor of the State of Texas is hereby directed to issue the necessary proclamation for such election, and to have same published as required by the Constitution and the amendments thereto. Sec. 4. The sum of Five Thousand Dollars ($5,000.00), or so much thereof as may be necessary, is hereby appropriated out of any funds of the State of Texas, not otherwise appropriated, to pay the expenses of such election. REPORTS TO BANKING COMMISSIONER. S. B. No. 46. AN ACT amending Article 2484, Revised Civil Statutes of 1925, as amended by Act of 1929, 41st Legislature, Second Called Session, Chapter 85, page 168, Section 1, requiring certain reports to be made to the Banking Commissioner, and prescribing the time for filing such re- ports, the fees therefor; prescribing penalty for failure to file; ex- empting such Associations' from all franchise or other license tax; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 2484, Revised Civil Statutes of 1925, as amended by Act of 1929, Forty-first Legislature, Second Called Session, Chapter 85, page 168, Section 1, be and the same is hereby amended so as to hereafter read as follows: “Art. 2484, Report to Commissioner. “Within twenty (20) days after the last business day of December of each year, every such Association shall make to the Banking Commissioner a report in such form as he may prescribe, signed by the President, Treasurer and a majority of the Supervisory Committee who shall certify and make oath that said report is correct according to their best knowledge and belief. Said credit union shall pay to the Banking Commis- sioner at the time of the filing of this report the sum of Five ($5.00) Dollars as a filing fee. “Any such Association that shall neglect to make the said re- port within the time herein prescribed shall forfeit to the State Five ($5.00) Dollars for each day during which said neglect shall continue. All such Associations shall be exempt from all franchise or other license tax.” Sec. 2. The importance of relieving such Associations from the burdensome requirement of the franchise tax which is required of private corporations organized for profit, and the Laws and Amendments Pertaining to Banks. 17 need of conserving, as far as possible, the funds of such Asso- ciations for the use and benefit of the members thereof, creates an emergency and imperative public necessity that the Consti- tutional Rule requiring bills to be read on three several days be suspended, and this Act shall take effect and be in force from and after its passage, and it is so enacted. Approved April 8, 1937. Effective April 8, 1937. BANK DEPOSIT INSURANCE COMPANY. S. B. No. 106. AN ACT repealing House Bill No. 51, Chapter 9, passed by the 43rd Legislature, at its First Called Session, creating the Bank Deposit Insurance Com- pany; authorizing the liquidation of the affairs of the Bank Deposit Insurance Company; providing a method and a jurisdiction for such liquidation; providing for the right of objection upon the part of any person aggrieved and authorizing a hearing thereon; providing for appeal and writ of error; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That House Bill No. 51, Chapter 9, creating the Bank Deposit Insurance Company, passed by the Forty-third Legislature are (at) its First Called Session, effective ninety (90) days after adjournment be, and the same is repealed. Sec. 2. After the effective date of this Act, the affairs of the Bank Deposit Insurance Company shall be liquidated by the Banking Commissioner of Texas, its debts shall be paid and its remaining assets shall be distributed to those persons lawfully entitled thereto, in accordance with the terms and provisions of said House Bill No. 51, as nearly as may be practicable, aided by the principles and usages of equity when necessary. A com- plete statement of the plan of such liquidation shall be filed by the Banking Commissioner with a District Court of Travis County, accompanied by the recommendation or prayer of the Commissioner. Upon the approval of such plan by the Court, if in session, or the Judge thereof, if in vacation, such approval to be entered in the minutes of the Court, notice of such order shall be pub- lished by the Clerk of such Court in such manner and for such time as the Court or Judge thereof may order, naming a time when the Court will hear objections thereto. Any person ag- grieved by such proposed plan may object thereto in writing, filed within the time allowed by the order of the Court or Judge, and the issue or issues made by such person or persons shall be heard and determined by the Court as an ordinary civil cause, and an appeal or writ of error from the judgment rendered thereon shall lie as in other civil cases. 18 Laws and Amendments Pertaining to Banks. Sec. 3. Any appeal in such proceeding, when perfected, shall operate as a stay of execution of the judgment and no disburse- ment of the funds of such company shall be made by the Commissioner until the cause shall have been finally disposed of. Provided all necessary fees, expenses and costs incurred by the Commissioner in the proceeding may be paid by him from such funds at any time, upon the order of the Court or Judge thereof. Sec. 4. The fact that the Bank Deposit Insurance Company is not functioning satisfactorily and is not serving the purposes for which it was intended, due for the most part to the superior facilities of the Federal Deposit Insurance Corporation Act of the Congress, and the further fact that a continued operation of such company would serve no useful purpose and would cause an unnecessary and burdensome expense to those banks partici- pating therein, create an emergency and an imperative public necessity that the Constitutional Rule requiring bills to be read on three several days be suspended, and the same is hereby sus- pended, and that this Act take effect from and after its passage, and it is so enacted. Approved April 23, 1937. Effective April 23, 1937. BANKING INSTITUTIONS. S. B. No. 245. AN act to amend Article 492 of Chapter 8, Title 16, of the Revised Civil Stat- utes of Texas, 1925, with respect to State control of hanking institu- tions; providing that corporations organized under such title are declared to be governmental instrumentalities of the State; repealing all laws in conflict; declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 492, of Chapter 8, Title 16 of the Revised Civil Statutes of Texas, 1925, be amended to read as follows : “Article 492. “All corporations created under this title are hereby declared to be charged with the public use, and shall be under State con- trol and be subject to such legislation as the Legislature may enact for the government and regulation of such banking insti- tutions in this State. Such corporation shall be deemed to be instrumentalities and agencies of the State Government and shall be charged with the duty, when lawfully designated thereto, to act as depositories for the public funds of this State, and of any County, Municipality, City, Town or Village or of any polit- ical subdivision within the State, in accordance with the laws of this State governing depositories of public funds now existing Laws and Amendments Pertaining to Banks. 19 or hereafter to exist; and such corporations shall be further charged with the duty to act as fiscal agent for the State, or any County, City, Town or Village, or any subdivision within this State upon request so to do and upon reasonable compensation therefor. The rights, privileges and powers conferred by the terms of this title to corporations taking advantage thereof or incorporating hereunder are to be held subject to the right of the Legislature, to amend, alter or reform the same. Every cor- poration operating a banking business in Texas under a charter authorized by this State prior to the adoption of the Constitution of 1876, shall be subject to all the provisions of this title.” Sec. 2. All laws and parts of laws in conflict herewith are hereby repealed. Sec. 3. The facts that the present laws are indefinite and uncertain as to whether or not banking institutions organized under the laws of this State are agencies and instrumentalities of the State Government, and the fact that national associations have been held to be instrumentalities and agencies of the United States Government, and the further fact that such constructions and interpretations of statutes should operate without discrim- ination against corporations engaged in the banking business, create an emergency and an imperative public necessity that the Constitutional Rule requiring bills to be read on three sev- eral days be suspended, and the same is suspended, and this Act shall take effect from and after its passage, and it is so enacted. Approved April 26, 1937. Effective April 26, 1937. SAVINGS BANKS— INVESTMENTS. H. B. No. 493. AN ACT to amend Article 416, Revised Civil Statutes of Texas of 19 25, as amended by Acts, 1935, 44th Legislature,; Pa,ge 26, Chapter 9, Section 1, and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 416, Revised Civil Statutes of Texas of 1925, as amended by Acts, 1935, Forty-fourth Legislature, Page 26, Chapter 9, Section 1, be and the same is hereby amended so as to hereafter read as follows : “Article 416. Investment of Savings. “Such corporation shall invest not more than eighty-five (85) per cent of the total amount of its savings deposits in any of the following classes of securities, and not otherwise: 1. In bonds or interest bearing notes or obligations of the United States, or of those for which the faith of the United States is pledged for the payment of principal and interest: 20 Laws and Amendments Pertaining to Banks. “2. In bonds, interest bearing notes, or other obligations issued under due authority of law, in payment for permanent improvements made, bearing a fixed rate of interest, and payable within a definite number of years, or over a series of years, of any city, county, town, or school district, or other subdivision of this State, now organized, or which may hereafter be organized, and which is now or may hereafter be authorized to issue bonds under the Constitution and laws of this State, which has not defaulted in the payment of any part of either principal or inter- est thereof within five (5) years previous to making such investments ; “3. In the bonds of this State, or of any State in the Union, that has not, within the last five (5) years previous to making such investment, defaulted in the payment of any part of either principal or interest thereof. “4. In first mortgage bonds of any steam or electric railroad, or other public utility corporation, domiciled in this or any other State of the Union, the annual net earnings of which steam or electric railroad, or public utility corporation, equaled during the last five (5) years twice the annual interest charges on the entire funded indebtedness of such system or electric railroad or public utility corporation. Provided that not more than twenty-five (25) per cent of said savings deposits may be in- vested in the securities mentioned in this subdivision; “5. In bonds or notes secured by first mortgage, first deed of trust, or other first lien on improved real estate in Texas, provided the aggregate of such bonds or notes outstanding and secured by coordinate lien against said property shall not ex- ceed fifty (50) per cent of the value of said real estate and the improvements thereon, exclusive of mineral leases or other min- eral estate, such bonds or notes to run for a term of not longer than ten (10) years, and to be always accompanied by a com- plete abstract of title to the property mortgaged, and an attor- ney’s certificate approving the title or a title insurance policy in some company incorporated under the laws of Texas guaran- teeing the title and guaranteeing that said bonds or notes retain a first lien on the land mortgaged; and in addition thereto in assignable certificates issued by any city, town, or village for street paving, the payments of which are secured by first liens, fixed or executed on the abutting properties in accordance with law, and made the personal obligations of the abutting property owners; provided that the restrictions contained in this Section shall not apply to loans insured by the Federal Housing Admin- istrator ; “6. In bankers acceptances as defined by the Federal Reserve Act or in collateral loans, which loans are collateraled and se- cured by marketable stocks or bonds, the market value of which shall be at all time equal to one hundred and twenty-five (125) per cent of the amount of the loan, such collateral loans always having a maturity of not longer than six months from the date Laws and Amendments Pertaining to Banks. 21 of the purchase thereof. Provided that not more than twenty- five (25) per cent of such savings deposits may be invested in the class of securities mentioned in this Subdivision; “7. In notes or bonds secured by mortgage or trust deed in- sured by the Federal Housing Administrator. “It shall be the duty of the Directors of such corporation as soon as practicable, to invest the moneys and funds of such sav- ings accounts, by purchase or otherwise, in the securities here- inabove described. Such Directors, from time to time, shall sell and invest the proceeds of such investments, and for the pur- pose of meeting current demands and expenses in excess of the receipts, any of the securities may be sold or pledged/’ Sec. 2. The fact that this Amendment is needed so that the loans insured by the Federal Housing Administrator may be available to the public affected thereby creates an emergency and an imperative public necessity that the Rule requiring bills be read on three separate days in each House and the Constitu- tional Rule prohibiting the passage of a bill during the first sixty (60) days of a Session be suspended, and said Rules are hereby suspended, and that this Act become effective immediately from and after its passage, and it is so enacted. Approved April 26, 1937. Effective April 26, 1937. STATE BANKS— DOUBLE LIABILITY OF STOCKHOLDERS. S. B. No, 158. an act amending Article 535, Revised Civil Statutes, Texas, 1925, providing shares transferable only on corporation’s books; imposing a duty on officers to transfer; repealing Article 455, Revised Civil Statutes, Texas, 1925; amending Article 380, Revised Civil Statutes, Texas, 1925; providing investigation of articles of association; providing a determination of the public necessity of business in community where sought to be established; providing determination of capital being commensurate with law and location; providing determination of good faith of applicants; providing for Act to be prospective in effect; providing that stockholders in banking corporations which have ceased operation as such be governed by law existing at time of closing; providing that this Act shall become a law and be effective only if, as and when Senate Joint Resolution No. 9, 45th Legislature, shall have been adopted as an amendment to the Constitution of Texas; providing a savings clause; declaring the policy, and declaring an emergency. PREAMBLE WHEREAS, By virtue of Senate Joint Resolution No. 9, of the Forty-fifth Legislature, there is to be submitted to the qualified voters of Texas an amendment to the Constitution of Texas for the purpose of determining whether or not the double liability 22 Laws and Amendments Pertaining to Banks. imposed upon the personal liability of stockholders in State banks to a sum equal to the par value of their stock shall be eliminated; and WHEREAS, In the event of the adoption of said proposed amendment and said double liability is eliminated, it is essential that the laws of the State of Texas be in conformity therewith ; and WHEREAS, The Legislature has heretofore enacted certain statutes, to-wit, Articles 535, 455, and 380, Revised Civil Stat- utes, Texas, 1925, imposing double liability on stockholders in banks, savings banks, and bank and trust companies; and WHEREAS, In the event of the adoption of said proposed amendment the action of the qualified electors of this State would in effect be nullified by existing statutes; and WHEREAS, The proposed constitutional amendment will be acted upon by the people of Texas at a time when the Legisla- ture of the State of Texas is not in session; and in order to avoid the tremendous expense incident to the convening of a Special Session of the Legislature, and to avoid the necessity of the Governor re-convening a Special Session of the Legislature, in the event of the adoption of said proposed amendment, and to make sure that the statutes will not conflict with the ex- pressed will of the electors upon the adoption of said proposed amendment, it is declared to be the intent of the Legislature that the hereinafter bill be in full force and effect upon the adoption of said proposed amendment and effective only in such event. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 535, Revised Civil Statutes, Texas, 1925, be amended so as to hereinafter read as follows : “Shares of stock in any bank, savings bank or bank and trust company organized under the laws of the State of Texas shall be transferable only on the books of the corporation, and it shall be the duty of the officers of the corporation to make such transfer upon the books at the request of the transferer or transferee.” Sec. 2. That Article 455, Revised Civil Statutes, Texas, 1925, is hereby repealed and nullified. Sec. 3. That Article 380, Revised Civil Statutes, Texas, 1925, be amended so as to hereinafter read as follows: “The Board shall carefully examine the articles of association and said Board shall inform itself as to the public necessity of the business of the community in which it is sought to estab- lish the same, and to determine whether its capital is com- mensurate with the requirements of law, and the location of the business, and that the applicants are acting in good faith.” Sec. 4. This Act of amendments of Articles 535 and 380 and of repeal of Article 455 insofar as they affect the liability of shareholders in corporations having banking or discount privi- leges, shall be entirely prospective in effect and shall not apply Laws and Amendments Pertaining to Banks. 2 to any such corporate body as may have ceased to transact its regular corporate business prior to the effective date hereof, but as to such corporation the rights of its creditors and the liability of its shareholders are saved from this Act, and shall be governed by the law as it existed at the time of such closing. Sec. 5. This Act shall take effect and become a law if and when Senate Joint Resolution No. 9 of the Forty-fifth Legisla- ture shall have been adopted as an amendment to the Constitu- tion of Texas. Sec. 6. If any sentence, phrase, paragraph, or section of this Act shall be invalid, then such invalid portion shall not in any way affect the remainder of this Act, and it is hereby declared as the legislative intent that the remainder of this Act would have been passed by the Legislature, notwithstanding the in- validity of such sentence, phrase, paragraph, or section. Sec. 7. The fact that the Congress of the United States has seen fit to repeal the double liability imposed upon stockholders in national banking associations, effective July 1, 1937 ; the fact that state, as well as national banking institutions, are eligible for membership in the Federal Depositors Insurance Corpora- tion; the fact that ninety-five (95%) per cent of the depositors in State banks are so insured ; the fact that the resources of the Reconstruction Finance Corporation have been made available to State, as well as national banking institutions; the fact that a liability is imposed upon stockholders in ordinary private cor- porations, in national banks and in State banking institutions in many other states, tends to discourge investments in the stock of State banking institutions, imposes an undue hardship and burden upon the stockholders thereof, and creates an im- perative public necessity that the Constitutional Rule requiring bills to be read on three several days, be suspended, and said Rule is so suspended, and this Act shall take effect and be in force from and after the time provided for in Section 5 hereof, and it is so enacted. Approved April 29, 1937. Effective as shown in Section 5. BANKING CORPORATIONS— POWERS H. B. No. 489. AN ACT to amend Article 392, Revised Civil Statutes of Texas, of 1925, as amended by Acts', 1935, 44th Legislature, Page 21, Chapter 6, Section 1; and declaring an emergency. Be it enacted by the Legislature of the State of Texas : Section 1. That Article 392, Revised Civil Statutes of Texas, of 1925, as amended by Acts 1935, Forty-fourth Legislature, P?4 Laws and Amendments Pertaining to Banks. Page 21, Chapter 6, Section 1, be and the same is hereby amended so as to hereafter read as follows : “Article 392. Powers of Corporation. “Banking Corporations shall be authorized to conduct the busi-' ness of receiving money on deposit, allowing interest thereon, and of buying and selling exchange, gold and silver coins of all kinds ; of lending money upon real estate and personal property and upon collateral and personal securities at a rate of interest not exceeding that allowed by law ; of buying and selling certifi- cates, securities, and shares insured by the Federal Savings and Loan Insurance Corporation ; and of buying, selling and discount- ing negotiable and non-negotiable commercial paper of all kinds. No such bank shall lend more than fifty (50) per cent of its securities upon real estate, nor make a loan on real estate to an amount greater than half the reasonable cash value thereof; provided that the restrictions as to the amount a bank may in- vest in securities upon real estate and as to the value of such real estate as compared to the security of the loan shall not apply to mortgage loans which are insured by the Federal Hous- ing Administrator.” Sec. 2. The fact that this amendment is needed so that the loans insured by the Federal Housing Administrator may be available to the public affected thereby creates an emergency and an imperative public necessity that the Rule requiring bills to be read on three separate days in each House and the Con- stitutional Rule prohibiting the passage of a bill during the first sixty (60) days of a session be suspended, and that this Act become effective immediately from and after its passage, and it is so enacted. Approved June 9, 1937. Effective 90 days after May 22, 1937, date of adjournment- RV J r»! 9 1938 OF ILLINOIS