Chap. 346.—An ACT to amend and re-enact sections 1164, 1168, 1169 and
1170 and 1171 of the Code of Virginia, and to add independent sections
thereto, so as to provide for the examination of banks and other similar
institutions in this State, and to make certain general provisions and
for the conduct of the business of banking, and to provide penalties for
the violation of the provisions hereof.

Approved March 17, 1910.

1. Be it enacted by the general assembly of Virginia, That sections
eleven hundred and sixty-four, eleven hundred and sixty-eight, eleven
hundrd and sixty-nine and eleven hundred and seventy and eleven hun-
dred and seventy-one of the Code of Virginia be amended and re-enacted,
and that independent sections eleven hundred and sixty-nine-a and eleven
hundred and sixty-nine-b be enacted so as to read as follows:

§1164. Limit of liability of borrowers; no loan to be made on stock
until paid for.—The total liabilities of any person, partnership or corpo-
ration to any bank for money borrowed, including liabilities of the co-
partnership, the liabilities of the several members thereof, except special
partners, shall at no time exceed twenty-five per centum of the capital
and permanent surplus of such bank, unless the same shall be authorized
by a resolution of the board of directors, approved by a majority of said
board, which resolution shall be recorded in the minutes thereof, and
signed by the directors present and consenting thereto; but the discount-
ing of bills of exchange, foreign and domestic, drawn in good faith against
actual existing values by persons negotiating the same and the discount-
ing of commercial or business paper, actually owned by the person ne-
gotiating the same, shall not be considered as money borrowed.

No loan shall be made by a bank or banking institution to a stock-
holder therein on the security of his shares of stock in such bank or
banking institution until such shares are fully paid for in cash.

§1168. Surplus funds; dividends.—There shall be no dividend or
profits of a higher rate than six per centum per annum on the capital
stock paid in until the bank shall have a surplus or contingent fund aris-
ing from the profits of at least ten per centum of its capital, nor shall any
dividend or profit be made by which such fund is reduced below the said
ten per centum. .

$1169. Statements to be rendered to the State corporation commissior:
and published ; State corporation commission to furnish forms; when to
cause examination of bank.—Every joint stock company, and every bank
and banking institution (including savings banks, saving societies, and
savings institutions) now chartered, or that may hereafter be chartcred,
under the laws of the State of Virginia, and doing a banking business
therein, shall make to the State corporation commission statements of
its financial condition at such times identically as the national banks
organized under the laws of the United State are required to make their
statements to the controller of the currency; and also publish such state-
ments in condensed form, as published by the said national banks in some
newspaper printed in the county, city or town where such banking busi-
ness is carried on, or where the principal office of the said company,
bank, banking institution, savings bank, savings society, or savings in-
stitution is located; and if there be no such paper published in such
county, city or town, then a newspaper published in the county, city or
564 ACTS OF ASSEMBLY.

town nearest thereto. The statement shall be made in accordance with
forms prescribed by the State corporation commission, certified under
oath by the president or cashier of the bank, and attested by at least
three of its directors. It shall be the duty of the State corporation com-
mission to call upon such companies, banks, banking institutions, savings
banks, saving societies, and savings institutions chartered under the laws
of Virginia for the statements hereinbefore mentioned, and at the time
prescribed, and to have prepared such forms as may be necessary to carry
out the provisions of this section. Whenever calls for statements are
made by the State corporation commission, it shall forward to each
company, bank, banking institution, savings bank, savings society, or
savings institution heretofore or hereafter incorporated under the laws
of this State, and doing business therein, two blank forms, one of which,
after being properly filled out and certified as hereinbefore required, shall
be returned by the State corporation commission within fifteen days next
succeeding the date of such call, and the other, filled out in like manner,
shall be filed in such bank, banking institution, savings bank, savings
society or savings institution.

The State corporation commission shal], not less than once in each
and every year, and at such other times as they may deem necessary,
cause to be examined each and every bank, banking institution, savings
bank, savings society, or savings institution in this State, chartered
under the laws of Virginia, and shall cause to be examined every such
institution, whether organized under the laws of the United States gov-
ernment or not, which has heretofore been, or may hereafter be, desig-
nated as a State depository. Said State corporation commission shall
also, upon written application made to them by the board of directors
or by the stockholders representing two-fifths of the amount of the
capital stock of any such bank, banking institution, savings bank, savings
society, or savings institution, doing business in this State, or whenever,
in the judgment of the corporation commission it may be necessary to
do so for the protection of the public or persons depositing or dealing
with such joint stock company, bank, banking institution, savings bank,
savings society, or savings institution, cause to be made a special exami-
nation into its condition. All expenses incident to such special exami-
nation shall be borne by the bank or institution so examined. In making
such examinations as are required by this chapter, the directors, officers
and employees of such joint stock company, bank, banking institution,
savings bank, savings society, or savings institution, shall, upon the de-
mand of the person or officer so designated to make such examination,
give to such examiner full access to all of the money, books, papers, notes,
bills and other evidences of debt due said institution, and shall also dis-
close fully and truly all indebtedness and liability thereof, and shall
furnish him with all information which he may deem necessary to a full
investigation into the affairs of said institution, and said examiner shall
have the right to examine under oath any and all of the directors, officers,
clerks and emplovees of such institution touching any matter or things,
pertaining to said examination, and for that purpose shall have authority
to administer such oaths to them. No previous notice of any examina-
tion shall be given to such institution or any of its directors, officers or
employces.
If upon such examination the corporation commission shall ascertain
that the banking laws of this State are not being fully observed, or that
any irregularities are being practiced, or that its capital has been or is in
danger of being impaired, it shall give immediate notice thereof to the
officers and directors of such institution and demand that the same shall
be promptly corrected, and upon their failure to do so within a reason-
able time, not exceeding thirty days after such notice, may apply for the
appointment of a receiver to take charge of the business affairs and assets
of said institution and to wind up its affairs as hereinafter provided;
and if upon such examination it shall appear to the said State corpora-
tion commission that any such joint stock company, bank, banking insti-
tution, savings bank, savings society or savings institution which is
designated as a State depository, is insolvent or unable to meet its obliga-
tions and the legal demands upon it in the ordinary course of its busi-
ness, the said corporation commission shall forthwith notify the auditor
of public accounts and the treasurer of the Commonwealth, who shall
discontinue further deposit therein of State funds and take such action
as may be necessary to protect the deposits of the State therein; and in
any case the said State corporation commission may, and it shall be its
duty whenever in its judgment it is necessary for the protection of the
interests of the State or of the depositors and creditors of any joint
stock company, bank, banking institution, savings bank, savings society,
or savings institution doing a banking business in this State, to apply
to any court in this Commonwealth, having jurisdiction to avpoint re-
ceivers of corporations, for the appointment of a receiver to take charge
of the business affairs and assets and to wind up the affairs and business
of any such joint stock company, bank, banking institution, savings
bank, savings society, or savings institution so failing to comply with
the requirements of the said State corporation commission as hereinbe-
fore provided, or so found upon examination to be insolvent or unable to
meet its obligations and the legal demands upon it in the ordinary course
and conduct of its business, as aforesaid.

§1169a. Appointment of examiners and assistants.—The State corpe-
ration commission, for the purpose of carrying out the provisions of this
chapter, may appoint one chief examiner, at a salary of not more than
three thousand dollars per year, one assistant, and such clerks, steno-
graphers and other assistants as in its judgment may be necessary for the
discharge of the several duties imposed upon it by this chapter: provided,
that the persons appointed for the examination of banks and other insti-
tutions shall be citizens of this State, experienced and skilled in the
science of bookkeeping, and shall have had at least five years’ service
in some bank, and may fix the salaries of all such examiners, clerks,
stenographers and other assistants: provided, that such salaries shall not
be in excess of that paid to similar employees in the other State depart-
ments. All such examiners and clerks, before entering upon the duties
of their offices, shall take the necessary oath before the State corporation
commission as prescribed by the Constitution of this State, and such
examiners shall give bond in the penalty of five thousand dollars, with
surety, in some good solvent bonding company, to be approved by the
State corporation commission, conditioned for the faithful performance
566 ACTS OF ASSEMBLY.

of their duties, and the premiums on such bonds shall be paid out of the
fund created by this act.

§1169b. Fees for examination—Every such bank, banking institu-
tion, savings bank, savings society, or saving institution shall pay for
each annual examination provided by section one thousand and sixty-
nine of the Code of Virginia fees as follows: For the examination of
banks having a capital and surplus fund and undivided profits as shown
by statement of financial condition made to State corporation commission
next preceding June first of each year of one hundred thousand dollars
or less, a fee of thirty-five dollars; for banks having total resources of
more than one hundred thousand dollars and not over two hundred thou-
sand dollars, a fee of fifty dollars; for banks having total] resources of
over two hundred thousand dollars and not more than three hundred
thousand dollars, a fee of sixty dollars; for banks having total resources
of more than three hundred thousand dollars and not more than four
hundred thousand dollars, a fee of eighty dollars; for banks having total
resources of more than four hundred thousand dollars and not exceeding
five hundred thousand dollars, a fee of one hundred dollars; for banks
having total resources of more than five hundred thousand dollars,
a fee of one hundred and fifty-five dollars, and for every bank hav-
ing one or more branches, shall be assessed fifteen dollars for each
branch in addition to the foregoing fees, and in case the examina-
tion of any branch should require more than one day, the parent bank
shall be assessed and pay at the rate of ten dollars for each addi-
tional day required for the examination of such branch: provided, that
the maximum fee for any one branch shall be thirty-five dollars, which
amount shall be assessed against each such bank by the State corpora-
tion commission on the first day of July of each and every vear, and
shall be paid into the State treasury to the credit of “banking fund—
State corporation commission,” on or before the thirty-first day of July
following, to be used in carrying out the provisions of this act. All fees
so assessed shall be a lien on the assets of the bank, and if not paid
within thirty days from date of said notice may be recovered in any court
of the county or city in which such bank or institution is located having
original jurisdiction of civil cases, on motion of and in the name of the
State corporation commission. It shall be the duty of the attorney for
the Commonwealth of such county or city to represent said State corpo-
ration commission in such motion. |

It shall be the duty of the State corporation commission to mail the
assessment to each bank on or before July first of each year and certify
a copy to the auditor of public accounts, and it shall be the duty of the
auditor of public accounts to furnish the State corporation commission
promptly with a list of the banks which fail to pay the assessments on or
before July thirty-first. .

All payments from the fund herein provided shall be upon the said
banking fund, upon the order of the State corporation commission, at-
tested by its clerk, nor shall there be any charge upon other funds of the
State.

$1170. Penalty for violating certain provisions of the banking laws.
Any such joint stock company, bank, banking institution, savings bank.
savings socicty or savings institution failing to comply with the provisions
of the preceding section, one thousand and sixty-nine, for a period
longer than thirty days, after being called upon by the State corporation
commission for such statement, or to do such other act as is therein pro-
vided, shall be fined not less than one hundred nor more than one thou-
sand dollars, and the State corporation commission shall give notice of
such default in a newspaper published as provided in said section; any
officer of any such joint stock company, bank, banking institution, sav-
ings bank, savings institution or savings society who shall refuse to give
any examiner the information or refuse to be sworn as required by said
section, shall be fined not less than twenty-five nor more than one hun-
dred dollars for such offense, and any such officer who knowingly makes
a false statement of the condition of any such bank or institution shall be
deemed guilty of a felony, and upon conviction shall be fined not less than
one hundred nor more than five thousand dollars, and be imprisoned in
the penitentiary not less than one nor more than ten years.

All records, reports and information concerning any bank other than
those required by law to be public shall be open only to such officers and
employees of the State as may have occasion and authority to inspect
them in the performance of their duties, and to any officer or duly
authorized agent of such bank, and the imparting of such information by
any employee or officer of the State may be sufficient cause for his re-
moval from the position he occupies under the State government.

§1170a. Certified checks.—Whenever a check drawn certified to be
good by any officer of such bank, the amount thereof shall be imme-
diately charged against the account of the drawer.

81170b. Checks of drunken persons.—It shall be lawful for any bank
to refuse to pay any check, draft or order drawn upon it when the officers
of such bank have reason to believe that the person signing or endorsing
the instrument is so under the influence of liquor, or any drug, as to make
it reasonably doubtful whether such person is or was at the time of
signing or endorsing such check, draft or order capable of transacting
business, and no action by any person whatsoever shall be had against
such bank or its officers for refusing to pay such check.

§1170c. Deposits of deceased persons and persons under disabili-
ties.—It shall be lawful for any bank to transfer any balance on deposit
to the credit of any deceased person (after two weeks shall have clapsed
from the date of his death), or of any person under disabilities, to the
personal representative, guardian, curator or committee of such person
upon a letter of qualification as such personal representative, guardian,
curator or committee, issued by any court of competent jurisdiction of
this State, and such Ictter shall be sufficient authority for such transfer.
and such bank making such transfer shall no longer be liable for such
deposit to any person whomsoever. The presentation of a duly certified
letter of qualification as personal representative, guardian, curator 01
committee shall be conclusive proof of the jurisdiction of the cour
issuing same. When the balance in any bank to the credit of a deceasec
person, and upon whose estate there shall have been no qualification, shal
not exceed one hundred dollars, it shall be lawful for such bank, afte
sixty days from the death of said person, to pay said balance to his nex!
of kin, whose receipt therefor shall be a full discharge and acquittance
to such bank from liability to all persons whomsoever on account 0.
such deposit. The death of a drawer of a check shall not, as to checks
presented for payment before notice of the death of the drawer thereof
is received by the bank or banker upon which such check was drawn,
operate as a revocation of the authority of such bank or banker to pay
the same. Such bank or banker shall retain for a period of two weeks
after notice of the death of a depositor any moneys then standing upon
its or his books to the credit of such depositor, and after paying there-
out in the order of their presentment any checks which may be presented
within said period of two weeks shall, upon demand, pay the residue to
the persons entitled thereto in the manner prescribed by law. This sec-
tion shall not apply to negotiable instruments other than checks payable
at a bank or banker’s.

§1170d. Deposits of minors.—Whenever any deposit shall be made
in any bank by or in the name of any infant or minor the same shall be
held for exclusive right and benefit of such minor free from the control
of all persons whomsoever, except creditors, and shall be paid with in-
terest, if any be due thereon, to the person in whose name the deposit
shall have been made, and the check, order or receipt of such infant or
minor shall be a good and sufficient release and discharge for such de-
posit to the bank.

§1170e. Banks coming under the provisions of this act—The pro-
visions of this act shall apply to and govern all chartered banks, includ-
ing banks of deposit and discount, savings institutions, savings societies
and trust companies, and any other corporations authorized to receive
deposits or to do any branch of the banking business other than that of
banks organized under the banking laws of the United States, which last
mentioned banks are, however, expressly included within the provisions
of this act touching the course and conduct of the business of banking
and in so far generally as this State has the right to enact legislation in
regard to such banks. The powers, privileges, duties and restrictions
conferred and imposed upon any bank existing and doing business under
the laws of this State are hereby abridged, enlarged or modified as each
particular ease may require to conform to the provisions of this act.
Nothing in this act, however, shall be construed to change or affect any
privilege or privileges granted by charter to any bank incorporated before
the passage of this act, nor to affect the legality of any investment here-
tofore made or of transactions heretofore had pursuant to any provisions
of law in force when such investments were made or transactions had.

The word “bank,” wherever it shall appear in this act, shall include
banks of deposit and discount, savings banks, savings societies, savings
institutions and trust companies now chartered, or which may hereafter
be chartered, and any other corporation now chartered to receive deposits
or to do any kind of a banking business, as though each and every such
institution was fully and accurately set out and mentioned.

§1170f. Who shall do a banking business.—No person, copartnership
or corporation, except those corporations duly chartered and already con-
ducting the business of banking under authority of the law of this State
or of the United States, or which shall hereafter be incorporated under
the provisions of this act, or authorized to do business under the banking
laws of the United States, shall engage in the business of banking in this
State after the first day of July, nineteen hundred and ten, except that
ACTS OF ASSEMBLY. 569

nothing in this act shall prevent any person or copartnership or corpora-
tion from lending money on real estate and personal security or col-
lateral, or from guaranteeing the payment of bonds, notes, bills and other
obligations, or from purchasing or selling all stocks and bonds. But this
clause shall not apply to or affect any private banker or firm of private
bankers who shall have been engaged in business on the first day of Jan-
uary, nineteen hundred and ten. No bank shall be incorporated in this
State with authority to do a banking business outside of this State.

§1170g. Unlawful use of the term “bank,” “banker”? or “banking.”
No person, copartnership or corporation not lawfully engaged in the
business of banking in this State and subject to the supervision of the
State corporation commission by the provisions of this act or authorized
to transact a banking business under the laws of the United States shall
make use of any office sign, having thereon any artificial or corporate
name or other words indicating that any place or office is the place or
office of a bank, savings bank, trust company, bank or place of banking,
nor shall any person, copartnership or corporation make use of or circu-
late any letterheads, billheads, blank notes, blank receipts, certificates,
circulars or any written or printed paper whatever, having thereon any
artificial or corporate name or word or words indicating that such busi-
ness is the business of a bank, savings bank, trust company or banker or @
place of banking; nor shall any person, copartnership or corporation use
the word “bank,” “savings bank,” “banking,” “banker,” or “trust” or
the plural of any such word or words in any business, or in connection
with any other business than that of the business of banking as defined
under this act. Any person or persons violating the provisions of this or
the preceding section, either individually or as an interested party, in any
copartnership or corporation, shall be guilty of a misdemeanor, and on
conviction thereof shall be punished by a fine of not less than one hun-
dred dollars nor more than one thousand dollars, or by imprisonment in
jail not more than six months, or by both fine and imprisonment. The
State corporation commission shal] have authority to examine the ac-
counts, books and papers of any person, copartnership or corporation
whom it has reason to suspect is doing a banking business within the
intent of this act, in order to ascertain whether such person, copartner-
ship, or corporation has violated, or is violating, any provision of this act,.
and the refusal to submit such accounts, books and papers shall be prima.
facie evidence of such violation: provided, that nothing in this act shall
apply to any private banker, or firm of bankers, who shall have been
engaged in business on the first day of January, nineteen hundred and
ten.

§1170h. Acts repealed.—All acts and parts of acts in conflict with the
provisions of this act are hereby repealed. a

§1171. Any officer or employee of any bank, banking institution, sav-
ings bank, savings society, or savings institution who shall take and re-
ceive money from any depositor with the actual knowledge that the said
bank, banking institution, savings bank, savings society, or savings insti-
tution is, at the time insolvent, shall be guilty of embezzlement, and shall
be punished by a fine double the amount so received, or be confined in Jail
not less than fifteen days nor more than one year, or be confined in the
penitentiary not less than one nor more than three years, in the discretion
570 ACTS OF ASSEMBLY.

of the jury, for each offense. Any officer of any bank, banking institu-
tion, savings bank, savings society or savings institution who shall permit
money to be received from a depositor with the actual knowledge that
the said bank, banking institution, savings bank, savings society or sav-
ings institution is, at the time, insolvent, shall be guilty of embezzlement,
and shall be punished by a fine double the amount so received, or be con-
fined in jail not less than fifteen days nor more than one year, or be con-
fined in the penitentiary not less than one nor more than three years, in
the discretion of the jury, for each offense. On the trial of any indict-
ment under this section it shall be the duty of any such bank, banking
institution, savings bank, savings society, or savings institution, their
agents or officers, to produce in court, on demand of the attorney for the
Commonwealth, all books and papers of such bank, banking institution,
savings bank, savings society, or savings institution, to be read as evi-
dence on the trial of such indictment: provided, that in determining the
question of the solvency of any such bank, banking institution, savings
bank, savings society, or savings institution the capital stock thereof
shall not be considered as a liability due by it.