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such corporation must loan money, except on adequate security on real or personal property, and such loan must not be for a longer period than ten years.

Amended March 15, 1901; stats. 1901, p. 295.

64 Cal. 123; 97 Cal. 222; 126 Cal. 415; 136 Cal. 442. Banking corporations not to take the name of friendly associations: Code Civ. Proc. § 1276.

Created only under general laws: Constitution of California, art. XII, § 5.

Capital stock, and rights and privileges thereof.

§ 572. When savings and loan corporations have a capital stock specified in their articles of incorporation, certificates of the ownership of shares may be issued; and the rights and privileges to be accorded to, and the obligations to be imposed upon, such capital stock, as distinct from those of depositors, must be fixed and defined, either in the articles of incorporation or in the by-laws.

Enacted March 21, 1872.

64 Cal. 123; 109 Cal. 401; 117 Cal. 160.

No dividends, except from surplus profits-To contract no liability, except for deposits.

§ 573. The directors of savings and loan corporations may, at such times and in such manner as the by-laws prescribe, declare and pay dividends of so much of the profits of the corporation, and of the interest arising from the capital stock and deposits, as may be appropriated for that purpose under the by-laws or under their agreements with depositors. The directors must not contract any debt or liability against the corporation for any purpose whatever, except for deposits. The capital stock and the assets of the corporation are a security to depositors and stockholders, depositors having the priority of security over the stockholders, but the by-laws may provide that the same security shall extend to deposits made by stockholders.

Enacted March 21, 1872.

64 Cal. 123; 109 Cal. 401; 117 Cal. 160; 119 Cal. 343.

Property which may be owned by corporations, and how disposed of Restrictions in purchases as provided above.

§ 574. Savings and loan corporations may purchase, hold and convey real and personal property as follows:

1. The lot and building in which the business of the corporation is carried on, the cost of which must not exceed one hundred thousand dollars; except, on a vote of two thirds of the stockholders the corporation may increase the sum to an amount not exceeding two hundred and fifty thousand dollars;

2. Such as may have been mortgaged, pledged or conveyed to it in trust, for its benefit in good faith, for money loaned in pursuance of the regular business of the corporation;

3. Such as may have been purchased at sales under pledges, mortgages, or deeds of trust made for its benefit, for money so loaned, and such as may be conveyed to it by borrowers in satisfaction and discharge of loans made thereon;

4. No such corporation must purchase, hold or convey real estate in any other case or for any other purpose; and all real estate described in subdivision three of this section must be sold by the corporation within ten years after the title thereto is vested in it by purchase or otherwise;

5. No such corporation must purchase, own, or sell personal property, except such as may be requisite for its immediate accommodation for the convenient transaction of its business, mortgages on real estate, bonds, securities or evidences of indebtedness, public or private, gold and silver bullion and United States mint certificates of ascertained value and evidences of debt issued by the United States;

6. No such corporation must purchase, hold or convey bonds, securities or evidences of indebtedness, public or private, except bonds of the United States, of the State of California, and of the counties, cities, or cities and counties, or towns, or school districts of the State of California, or bonds of railroad or street railroad corporations owning property and having their principal place of business in the State of California, unless such corporation has a capital stock or reserve fund paid in of not less than one hundred thousand dollars.

Amended March 23, 1901; stats. 1901, p. 659.

64 Cal. 123; 109 Cal. 401; 117 Cal. 160; 126 Cal. 416; 133 Cal. 613; 136 Cal. 442; 149 Cal. 124; 3 Cal. App. 710.

Married women and minors may own stock in their own right. § 575. Married women and minors may, in their own right, make and draw deposits and draw dividends, and give valid receipts therefor.

Enacted March 21, 1872.

64 Cal. 123; 117 Cal. 160; 134 Cal. 405.

May issue transferable certificates of deposit-Special certificates.

§ 576. Savings and loan corporations may issue general certificates of deposit, which are transferable, as in other cases. by indorsement and delivery; may issue, when requested by the depositor, special certificates, acknowledging the deposit by the person therein named of a specified sum of money, and expressly providing on the face of such certificate that the sum SO deposited and therein named may be transferred only on the books of the corporation; payment thereafter made by the corporation to the depositor named in such certificate, or to his assignee named upon the books of the corporation, or, in case of death, to the legal representative of such person, of the sum for which such special certificate was issued, discharges the corporation from all further liability on account of the money so paid.

Enacted March 21, 1872.

64 Cal. 123; 109 Cal. 403; 117 Cal. 160; 119 Cal. 341; 136 Cal. 512.

Receiving deposits when insolvent: Pen. C. § 562.

To provide reserve fund for the payment of losses.

§ 577. Savings and loan corporations may prescribe by their by-laws the time and conditions on which repayment is to be made to depositors; but whenever there is any call by depositors for repayment of a greater amount than the corporation may have disposable for that purpose, the directors or officers thereof must not make any new loans or investments of the funds of the depositors, or of the earnings thereof, until such excess of call has ceased. The directors of any such corporation having no capital stock must retain, on each dividend day, at least five per cent of the net profits of the corporation, to constitute a reserve fund, which must be invested in the same manner as other funds of the corporation, and must be used toward paying any losses which the corporation may sustain in pursuing its lawful business. The corporation may provide by its by-laws for the disposal of any excess in the reserve fund over one hundred thousand dollars, and the final disposal, upon the dissolution of the corporation, of the reserve fund, or of the remainder thereof, after payment of losses.

Enacted March 21, 1872.

57 Cal. 602; 64 Cal. 123; 109 Cal. 401; 117 Cal. 160.

Prohibition on director and officer, and what vacates office.

$ 578. No director or officer of any savings and loan corporation must, directly or indirectly, for himself or as the partner or agent of others, borrow any of the deposits or other funds of such corporation, nor must he become an indorser or surety for loans to others, nor in any manner be an obligor for moneys borrowed of or loaned by such corporation. The office of any director or officer who acts in contravention of the provisions of this section immediately thereupon becomes vacant. Enacted March 21, 1872.

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64 Cal. 123; 104 Cal. 476; 117 Cal. 160; 124 Cal. 291;
130 Cal. 257; 136 Cal. 442.

Fraudulent appropriation of property: Pen. C. § 506.
Penalty for overdrawing account: Pen. C. § 561.

Definition of phrase "create debts."

§ 579. Receiving deposits, issuing certificates of deposit, checks, and bills of exchange, and the like, in the transaction of the business of savings and loan corporations, must not be construed to be the creation of debts within the meaning of the phrase "create debts," in section three hundred and nine. Enacted March 21, 1872.

57 Cal. 602; 64 Cal. 123; 117 Cal. 160.

Capital stock required. [Repealed.]

§ 580. Capital stock required. [Repealed March 18, 1907; stats. 1907, p. 576.]

Amount of money to be loaned on real estate, limited.

§ 581. No savings bank shall lend to exceed sixty per cent of the market value of any piece of real estate to be taken as security, except for the purpose of facilitating the sale of property owned by the corporation. And it shall be unlawful for any savings and loan society, or savings bank, to purchase, invest, or loan its capital, or the money of its depositors, or any part of either, in mining shares or stocks. Any president or managing officer who knowingly consents to a violation of the above provision shall be deemed guilty of a felony. Enacted March 21, 1903; stats. 1903, p. 352.

Persons not incorporated must show true names, etc.

§ 582. Every person or number of persons not being incorporated, engaged in the business of banking, or publicly receiving money on deposit, must conduct such business under a name

which shows the true names of all persons engaged therein, unless such person or persons have complied with the provisions of article VII of chapter II of title X of part IV of division third of said Civil Code. Every person violating any of the provisions of this section is guilty of a misdemeanor, and is punishable by imprisonment in the county jail for not less than ninety days nor more than six months, or by fine of not less than one hundred dollars nor more than five hundred dollars, or by both such fine and imprisonment.

Enacted March 21, 1903; stats. 1903, p. 352.

Banking corporation not to take the name of friendly associations: See Code Civ. Proc.§ 1276.

Dividends, how and when declared.

§ 583. The directors of any savings bank, bank, or banking corporation having a capital stock, may semi-annually declare a dividend of so much of the net profits of the stockholders as they shall judge expedient; but every such corporation shall, before the declaration of such dividend, carry at least one tenth (1-10) part of the net profits of the stockholders for the preceding half year to its surplus or reserve fund until the same shall amount to twenty-five per centum of its paid-up capital stock. But the whole or any part of such surplus or reserve fund, if held as the exclusive property of stockholders, may at any time be converted into paid-up capital stock, in which event such surplus or reserve fund shall be restored in manner as above provided until it amounts to twenty-five per centum of the aggregate paid-up capital stock. A larger surplus or reserve fund may be created and nothing herein contained shall be construed as prohibitory thereof.

Enacted March 21, 1903; stats. 1903, p. 353.

Capital stock required to be advertised.

§ 583a. No banker, nor officer of any bank or corporation doing a banking business, shall advertise in any manner, or publish any statement of the capital stock authorized or subscribed, unless he advertise and publish in connection therewith, the amount of capital actually paid up. Any officer, or the officers of any bank or corporation doing a banking business, advertising in any manner, or publishing, a statement of the capital stock of such bank or banking corporation, authorized

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