further provided that no person shall be eligible to the office of director of the State bank who is not a director of the national bank. For reply to your inquiry I would say that the General Banking Law of this State contains no provision that would prohibit the stockholders in a national bank from organizing a State bank upon compliance with the provisions of the General Banking Law. Neither is there in that law any provision expressly prohibiting the stockholders in a State bank from entering into an agreement in substantially the form indicated above. The agreement is not between the national bank and the State bank, but is between the stockholders in those banks. As between the State bank and the State, any agreement of this character between the stockholders of the bank would be wholly ineffectual to prevent the State from exercising a supervisory control over the affairs of the bank, or enforcing the liability of the stockholders, in accordance with the provisions of the General Banking Law. It is true that there are cases holding that agreements between stockholders in corporations imposing a permanent restraint upon the alienation of their shares of stock are invalid, but under the terms of this agreement a stockholder may transfer his shares of stock in the State bank provided he also transfers his shares of stock in the national bank. It does not seem that there is in that case such a restraint upon the alienation of the shares as would render the agreement invalid. Upon due consideration of the matter I am of opinion that, so far as the State is concerned, the plan outlined for the organization of a State bank is, in its general features, valid under the General Banking Law of the State. I express no opinion, however, upon the validity of the details of any particular plan for such organization, leaving those questions to be determined when it is sought to organize a State bank upon this plan and the details of the proposed plan of organization are before me. Respectfully yours, BANK EXAMINERS PUBLIC OFFICERS. June 30, 1909. Hon. Henry M. Zimmermann, Commissioner of Banking Department, Capitol, Lansing: Dear Sir-I am in receipt of your letter of June 17th in which you submit the amendment to Section 38 of the Banking Law relative to the salaries of examiners, and request the opinion of this department as to whether the examiners who have already been employed by the Banking Department for three years will be entitled to the increase in their salaries when the amendment becomes operative. In reply thereto will say that Section 3 of Article XVI of the revised constitution provides, in part: creased, nor shall the salary of any public officer be decreased, after election or appointment." In determining the question submitted it is important to ascertain first whether a bank examiner is a public officer within the meaning of this section of the revised constitution. Mechem defines a public office to be: The right, authority and duty, created and conferred by law, by which for a given period, either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some portion of the sovereign functions of the government, to be exercised by him for the benefit of the public." (Mechem on Public Officers, Sec. 1.) And he points out two essentials: First, The delegation of sovereign functions; Second, Powers created and conferred by law. (Sec. 4 & 5.) In section 9 he states: "Any man is a public officer who hath any duty concerning the public, and he is not the less a public officer where his authority is confined to narrow limits; for it is the duty of his office and the nature of that duty which make him an officer, and not the extent of his authority." Section 38 of the Banking Law provides for the appointment of bank examiners, fixes their salaries and requires them to file a bond of ten thousand dollars. Section 39 authorizes the examiners to examine banks and to examine the officers, agents, clerks, customers or depositors upon oath, and makes false swearing before such examiner perjury. Section 40 requires the examiner to take an oath to keep secret all facts and information obtained in the course of his examinations. Section 41 authorizes the commissioner to ask for the appointment of a receiver in case of a refusal of a bank to submit to an examination by an examiner. True, the statute, in Section 38, states that the commissioner shall "employ from time to time such examiners," but the fact that the appointment of a bank examiner is designated as an employment does not change the nature of the duties prescribed by law. Clearly, the statute in question delegates sovereign functions to the examiner and the powers are created and conferred by law, the two essentials to the creation of an office as pointed out by Prof. Mechem. See also the language of Justice Cooley in: Throop v. Langdon, 40 Mich. 673, 682. The amendment to Section 38 submitted by you reads as follows: "Salaries of the examiners shall be the sum of seventeen hundred dollars per annum during the first year of their employment as such, and shall be increased one hundred dollars each year of such employment until the full sum of two thousand dollars is reached, which sum shall be their annual salary thereafter." A bank examiner being a public officer as we have heretofore shown, the constitutional provision above quoted would apply. The language of the constitution is plain that the salaries "shall not be increased, nor shall the salary of any public officer be decreased, after election or appointment." There are cases holding, as in the case of bank examiners, where the tenure of the office is at the pleasure of the appointing power, that a constitutional provision, that the compensation shall not be increased or diminished during the term for which the officer is elected or appointed, does not apply to officers who have no fixed term. But an examination of these cases shows that the decisions turn upon the proposition that the constitutional provision could not apply to an officer who had no fixed term. The language of our constitutional provision makes no reference to the term, but prohibits the increase or the decrease of the salary after election or appointment. I am therefore of the opinion that the amendment to Section 38 of the Banking Law, made by Senate Enrolled Act 42, is void in so far as it provides for an increase of the salaries of bank examiners now in the employ of the department, or who may be in its employ when the amendment takes effect. In this connection I call your attention to the fact that the provisions of the statute cannot be evaded by an examiner resigning before the taking effect of the amendment and accepting an appointment after the amendment is in force. See 29 Cyc. 1428, Green v. Hudson Co., 44 N. J. L. 388. Very respectfully yours, CAPITAL STOCK REQUIREMENTS OF BANKS AFFECTED BY EXTENSION OF COR PORATE LIMITS. Nov. 12, 1909. Hon. Henry M. Zimmermann, Commissioner of Banking, Capitol, Lansing: Dear Sir-Replying to your letter of the 19th ult., in which you request our opinion as to whether the ... Bank which was located in the village of .... recently annexed to the city of ...... may increase its capital stock from twenty thousand dollars to fifty thousand dollars, will say that we held, in an opinion to you under date of May 9, 1909, that this bank could not be deprived of its right to do business under its original incorporation with a capital stock of twenty thousand dollars, by the fact of annexation of the village of .... ... that the bank was lawfully incorporated with a capital of twenty thou sand dollars to do business in .; that the annexation of placed the bank in the city of. .without its consent, and that it could not be thus deprived of its right to do business under its original incorporation. .... Now, however, this bank proposes, by its own voluntary act, to increase its capital stock, thus, in a measure, effecting a re-organization. The whole aim and purpose of the statute, Section 1 of the General Banking Law is to provide a minimum capital for banks graded according to the population of the city or village in which they are situated. In order to prevent a reduction of the capital below the minimum, it is provided in Section 10 that "no reduction shall be made to a less amount than is required in Section 1 for capital." To permit this bank to substantially reorganize by increasing its capital, without increasing its capital stock to at least the minimum amount required for the city of...... would, in my judgment, do violence to the intent of the legis lature, as expressed in Sections 1 and 10 of the Banking Law, to which I have referred. The bank is now a corporation of the city of........ The law relating to the amount of capital stock in........ is different than in.... While I do not think the bank could be deprived of its rights to continue during the period of its corporate existence, with a capital of twenty thousand dollars, by the annexation, I am constrained to hold that in taking advantage of the statute relative to the increase of capital stock, it must be governed by the provision of the statute applicable to the city of ......, and must, therefore, if it increases its capital at all, increase it to at least the minimum amount required for cities having a population of over one hundred and ten thousand inhabitants, as prescribed by Section 1 of the Banking Law. Very truly yours, CONSTITUENT CORPORATIONS ENTITLED TO TWENTY PER CENT LOAN LIMIT. January 20, 1910. Hon. Henry M. Zimmermann, Commissioner of Banking, Capitol, Lansing: Dear Sir-We are in receipt of your letters of the 14th instant in which you ask: "In this State, where a corporation is in operation and control of other corporations by having acquired a majority of the stock of such corporations what would be the limitation of credit lines which might be ex tended these corporations, both parent and subsidiary, by our State banks, under the Banking Law, exclusive of real estate or other collateral loans authorized by statute?" Section 6141 C. L. 1897 as amended, being Section 52 of the Banking "The total liabilities to any bank of any person or of any company, corporation or firm for moneys advanced, including in the liabilities of the company or firm, the liabilities of the several members thereof, except special partners, shall at no time exceed one-tenth part of the amount of the capital and surplus of such bank, but the discount of bills. · of exchange drawn in good faith against actually existing values and the discount of commercial or business paper actually owned by the person negotiating the same shall not be considered as money borrowed: * * Provided, however, That by a two-thirds vote of directors, the liabilities to any bank of any person or company or corporation or firm may be increased to a sum not exceeding one-fifth of the capital and surplus of bank: # * * It will be noted that in the case of a company or firm the line of credit includes the liabilities of the company or firm and the several members thereof, except special partners, while no such restriction appears in the case of the corporation. Corporations are recognized by law as distinct legal entities regardless of the ownership of the stock. While we appreciate the fact that the effect of extending a 20 per cent line of credit to each corporation might in some cases be equivalent in its effect to extending a 40 per cent line of credit to one corporation, yet we are satisfied that the statute does not authorize interference by the banking commissioner when the 20 per cent line to each corporation is not exceeded. The situation is one that might properly be brought to the attention of the legislature. Very respectfully yours, DIRECTORS' NOTES, IN LIEU OF ASSESSMENT NOT PERMISSIBLE. March 16, 1910. Hon. Henry M. Zimmermann, Commissioner of the Banking Department, Lansing, Michigan: Dear Sir-I am in receipt of your communication of the 14th ultimo, requesting my opinion on the following proposition: "If in case of the impairment of the capital of one of our State banks, in lieu of an assessment, a promissory note were given by the directors to the bank, pledging their personal responsibility to its payment, but with the expectation that the stockholders will authorize its retirement from the earnings of the bank, could the makers of the note in case of the earnings of the bank failing to satisfy it avoid payment on the ground of no consideration?" Replying thereto would say that section 6135 of the Compiled Laws, being section 46 of the act providing for the incorporation of banks in this State, in part, reads as follows: "The stockholders of every bank shall be individually liable, equally and ratably, and not one for another, for the benefit of the depositors in said bank to the amount of their stock at the par value thereof, in addi |