Chap. 102.—An ACT to revise, collate and codify into one act the general statutes
of the Commonwealth relating to building and loan associations, which act
shall constitute and be designated and cited as the Virginia building and loan
association act, and to repeal all Code sections and all acts and parts of acts
inconsistent therewith, and to provide penalties for violations thereof. [S B 58]

Approved March 5, 1932

Whereas, it 1s expedient to revise, collate and codify into one act
the general statutes of the Commonwealth relating to building and
loan associations ; now, therefore, |

1. Beit enacted by the general assembly of Virginia, in the man-
ner following, that is to say:

CONTENTS

Section 1. Meaning of “building and loan,” “building and loan
association” or “building association” in this act; “mutual building
and loan association” defined.

Section 2. Building and loan associations coming uuder the pro-
visions of this act.

Section 3. Who shall not do the business of a building and loan
association in Virginia.
‘Section 4. Unlawful use of the term “building and loan,” “build
ing and loan association,” or “building association.”

Section 5. Members, et cetera, of company carrying on busines:
of building and loan association without authority of law; how pun
ished.

Section 6. Building and loan associations; how incorporated
powers; by what laws governed; branches; shares; dues; interest
premiums and fines.

Section 7. Reserve or rediscount banks or similar organizations
authority to participate in.

Section 8. Minimum requirements for new building and loat
associations ; authority required to commence business.

Section 9. Directors and their number; must be shareholders
shares required to qualify; election and term of office.

Section 10. By-laws and articles of government.

Section 11. Bonds of officers and employees.

Section 12. Membership; liability, capital defined; shares, how
paid for; commissions ; membership fees.

Section 13. Rules governing withdrawals; relationship of share
holder to association.

Section 14. Shares issued in trust for another; to a minor; pay
ment ; trust funds; who may invest in shares.

Section 15. Proportion of loans and investments to be on real es
tate; license revoked for failure to maintain minimum.

Section 16. Shares issued in the names of more than one person

Section 17. Supervision by State corporation commission; exam
ination by commissioner of insurance and banking; assessment of fee:
to cover costs; financial statements to be furnished the State corpora
tion commission.

Section 18. Association to make financial statements; fine fo:
failure to make statements.

Section 19. False statements by officers or agents; penalty.

Section 19-a. What associations exempt from certain provision:
of this act; statements required.

Section 20. Building and loan associations may elect and chang
trustees in deeds of trust; how many trustees may act.

Section 21. Reserve fund required for protection against losses
undivided profits ; investment of reserve and undivided profits.

Section 22. Reduction of liability to members or shareholders.

Section 23. Voluntary liquidation and settlement ; receiver.

Section 23-a. Consolidation or merger of two or more building
and loan associations; elimination of doubtful assets; reduction ot
capital stock.

Section 24. Making or circulating derogatory statements affecting
building and loan associations ; how punished.

Section 25. Constitutionality of this act.

Section 26. Short title.

Section 27. Repeal.
Section 1. Meaning of “building and loan,” “building and loan
association” or “building association” in this act; mutual building
and loan association defined —The term “building and loan,” “building
and loan association” or “building association” as used in this act
shall apply to and include every corporation organized for the purpose
primarily of enabling its members or shareholders by payments in
periodical installments or principal sums to acquire real estate, make
improvements thereon, and to remove incumbrances therefrom; and
for the accumulation of savings to be returned to members or share-
holders who do not obtain advances for such purposes, when the sav-
ings of such members amount to a certain sum per share. Any such
building and loan association may operate under the permanent plan,
or the serial plan or the optional payment plan, or under a plan com-
bining features of these plans, as its charter, constitution or by-laws
shall provide. ,

All building and loan associations which are organized and op-
erated exclusively for the mutual benefit of their shareholders or
members, and which derive their capital primarily from payments on
shares made to them by their shareholders or members, and/or from
the sale of its bonds or evidences of indebtedness, and which make
loans primarily only to their shareholders or members and in amounts
not exceeding the par value of shares pledged therewith, and which
derive their income primarily from the interest and premiums on the
loans made by them to their shareholders or members, secured to be
paid by recorded liens upon real estate, and/or on loans made on
their own shares, and whose shareholders of each class of stock re-
spectively participate on substantially the same basis in the earnings
of the association, shall, for all purposes under the laws of Virginia,
be deemed to be mutual building and loan associations doing business
on a purely mutual plan.

Section 2. Building and loan associations coming under the
provisions of this act—The provisions of this act shall apply to and
govern all chartered building and loan associations organized under
any law of this State, and to all building and loan associations of
other States that shall attempt. to engage in business in this State.

The powers, privileges, duties and restrictions conferred and im-
posed upon any building and loan association existing and doing busi-
ness under the laws of this State on the effective date of this act are
hereby abridged, enlarged or modified, as each particular case may
require, to conform to the provisions of this act. Nothing in this act,
however, shall be construed to effect the legality of any investment
heretofore made or transaction heretofore had, under authority of any
provisions of law in force when such investments were -made or
transactions had.

Section 3. Who shall not do the business of a building and loan
association; foreign corporations prohibited—No person, co-part-
nership or corporation, except corporations duly chartered and al-
ready conducting the business of building and loan associations, un-
der authority of the laws of this State, or which shall hereafter be
incorporated under the laws of this State, shall engage in the business
of what are commonly known as building and loan associations in this
State; except that nothing in this act shall prevent any person or co-
partnership or corporation from lending money on real estate or per-
sonal security or collateral, or from guaranteeing the payment of
bonds, notes, bills and other obligations, or from purchasing or sell-
ing stocks and bonds. No building and loan association shall be in-
corporated in this State with authority to conduct its business outside
of this State, nor shall any building and loan association incorporated
under the laws of any other State be authorized to do business in this
State.

Section 4, Unlawful use of the term “building and loan,” “build-
ing and loan association” or “building association.”—No person, co-
partnership or corporation not lawfully engaged in the business of a
building and loan association in this State under the provisions of this
act, shall make use of any office sign having thereon any artificial or
corporate name or other words indicating that any such place or office
is the place or office of a building and loan association; nor shall
any such person, co-partnership or corporation make use of or cir-
culate any letterheads, billheads, blank notes, blank receipts, cer-
tificates, circulars or any written or printed paper whatever, having
thereon any artificial or corporate name or word or words indicating
that the business of such person, co-partnership or corporation is the
business of a building and loan association. Any person or persons
violating the provisions of this section, either individually or as an
interested party in any co-partnership or corporation, shall be guilty
of a misdemeanor. The State corporation commission shall have au-
thority to examine the accounts, books and papers of any person, co-
partnership or corporation, who it has reason to suspect is doing
the business of a building and loan association within the intent of this
act, in order to ascertain whether such person, co-partnership or cor-
poration has violated, or is violating any provisions of this act, and
the refusal to submit such accounts, books and papers shall be prima
facie evidence of such violation.

The use of the above terms in the name of any corporation or in
connection with any other business shall not be prohibited where the
context or remaining words show clearly and definitely that the cor-
poration or business is not a building and loan association and is not
doing business in the manner of what are commonly known as build-
ing and loan associations.

Every building and loan association hereafter incorporated under
the laws of the State of Virginia shall have as a part of its corporate
name or title the words “building and loan,” or “building association,”
which shall not be used disjunctively, but no association need have as
a part of its corporate name the words “corporation” or “incorpor-
ated.”

Section 5. Members, et cetera, of a company carrying on busi-
ness of building and loan association without authority of laws;
how punished.—Every person, association or company who shall
knowingly do the business of a building and loan association, without
authority of law, and their officers and agents therein, may be con-
fined in jail not less than thirty days nor more than six months, and
fined not less than one hundred nor more than five hundred dollars,
either or both.

Section 6. Building and loan association; how incorporated ;
by what laws governed; branches, shares; dues, interest premiums
and fines——Any number of persons, not less than five, may hereafter
form a building and loan association for the purpose of encouraging
industry, frugality, saving and home ownership among its members,
upon being incorporated as provided in chapter one hundred and
forty-eight of the Code of Virginia, nineteen hundred and nineteen.
Building and loan associations formed under said chapter, or hereto-
fore chartered or incorporated under said chapter, or by general or
special act, shall have the right to lend to their shareholders or to
other persons the money accumulated from time to time, and the right
to purchase land or erect houses, and to sell, convey, lease or mortgage
the same at their pleasure to their shareholders or others for the
benefit of their shareholders. Such associations may acquire, hold,
convey, and incumber all or any property, real or personal, acquired
by them in the due course of business; and may also secure the pay-
ment of loans and the performance of the conditions upon which loans
are made, and the payment of the purchase money for any property
sold by taking personal security, or by mortgage or deed of trust
upon real or personal property and by a transfer and pledge of its
shares. Such associations shall have the power to establish and
maintain by their officers and agents, branch offices for the trans-
action of their business at such places as may be desirable; but no
building and loan association shall establish more than one office nor
maintain branches other than those already established, except with
the approval of the State corporation commission, previously had in
writing. |

It shall be lawful for every such association to fix by its by-laws
the premiums or bonus at which it will dispose of the money in its
treasury to its shareholders, and award or lend to any member or
shareholder the par value of any shares standing in his name, less
such premium or bonus, and the mode of making the disposal, loan
or award shall be fixed by the by-laws, and to charge and receive
said premium in advance, or in installments, or in default of applica-
tion for said money by shareholders, it shall be lawful for such com-
panies or associations to lend money to other persons on such terms as
may be agreed upon, and in such manner as may be fixed by the by-
laws; provided, that where the company lends its funds, taking as se-
curity any order or assignment of the wages of the debtor, tangible
personal property, or any security except real estate or the shares of
stock or other evidences of indebtedness of the said association, upon
which there has been actually paid a sum equal to or greater than the
amount of said loan, the laws of this State and the ordinances of the
cities and towns thereof, in reference to the conduct of the business 01
lending money and the rates to be charged therefor, shall apply tc
building and loan associations as to other persons or corporations.

Every building and loan association doing business in this State
shall be authorized to issue as many series or classes and kinds of
shares and at such stated periods as may be provided for in its char-
ter and by-laws.

Unpledged shares may be issued to be paid for in a single lumg
sum (these being of the class of shares usually designated as fully
paid, paid up or prepaid shares), or by installment payments upon
one or more plans of installments. These shares, either or both, may
be issued to participate in the earnings of the association upon the
same basis as the pledged shares; or, if desired, the fully paid, paid up
or prepaid shares, and the installment shares, either or both, or classes
of either or both, may be issued to bear a limited rate or rates of
earnings or dividends, but such limited rate shall not exceed the legal
interest rate of this State; and the issue of such shares shall not, by
reason of the different dividend rates, disqualify the association as a
mutual association doing business on a purely mutual plan. From
and after the passage of this act, all prepaid stock, issued by any
building and loan association now incorporated or hereafter to be in-
corporated, shall be issued only by issuing to the subscriber, in the
manner and form prescribed by this act, a numbered certificate of
stock. Each such certificate of stock shall have the corporate title of
the association printed thereon and shall also bear the date of issue,
the name of the person, or persons, firm or corporation in whose
name the stock is issued, the number of shares and the par value
thereof. Upon the withdrawal of such prepaid stock, the certificate
shall be surrendered by the holder thereof to the association, and shall
be preserved indefinitely ; and to have the transfer thereof made on
the books of the association to a purchaser, the said certificate of
stock duly assigned shall likewise be surrendered to the association
and preserved indefinitely, the same as hereinbefore provided in case
of withdrawal. ,

A borrower from such association may repay the loan at any time;
but in case of the repayment thereof before the maturity of the loan
the borrower shall pay an amount for the privilege as may have been
agreed upon or is provided for in the by-laws; and there shall be re-
funded to such borrower, in case the premium shall have been de-
ducted in advance, such proportion of the premium bid as the by-laws
may determine.

Every association may levy, assess and collect from its sharehold-
ers dues or payments upon every share of its stock, the amount, time,
and manner of payment of the same to be fixed by the by-laws, and
the said stock may be paid off and retired as the by-laws shall direct,
and may levy, assess, and collect from members to whoin loans have
yeen made interest upon the par value or the shares redeemed, and
nay levy, assess, and collect fines for the non-payment of dues or for
failure to comply with or perform any other obligation to the associa-
ion. The amount of the respective fines shall be fixed by the by-laws,
ind they may be imposed under regulations to be made by the by-laws.

The provisions of chapter one hundred and forty-seven, of the
Code of Virginia, nineteen hundred and nineteen, and of all amend-
ments thereto, shall apply to all building and loan associations incor-
porated under the laws of Virginia, in all cases where not inconsistent
with the provisions of this act.

Section 7. Reserve or rediscount banks or similar organizations ;
authority to participate in—Any building and loan association,
whether purely mutual as herein defined or not, shall have the right
upon the approval of two-thirds of its board of directors to subscribe
to stock and fully participate in any reserve or rediscount banks or
organizations created, organized and operating under or pursuant to
any act of Congress or of this State now in force or that may be here-
after enacted, provided consent thereto be first obtained in writing
from the State corporation commission.

Section 8. Minimum requirements for new building and loan
associations; authority required to commence business.—Before any
building and loan association shall begin business, it shall obtain from
the State corporation commission a certificate of authority authorizing
it to do so; and prior to the issuance of such certificate, the State cor-
poration commission through its commissioner of insurance and bank-
ing, or one of his assistants, shall ascertain that all of the provisions
of law have been complied with, that the required amount of capital
stock has actually been subscribed, that a sum equal to at least five
per centum of the minimum authorized capital stock has been actually
paid in to the treasury of the association in cash, that regulations gov-
erning directors of the association have been complied with, that, in
his opinion, there is public need for building and loan facilities or ad-
ditional such facilities, as the case may be, in the community where
the building and loan association is proposed to be, that the officers
and directors of the proposed association are of satisfactory moral fit-
ness, financial responsibility and business ability, and that other cir-
cumstances deemed pertinent are satisfactory. The State corporation
commission shall not issue its certificate of authority to do business to
any building and loan association where there is no public necessity
for the facilities of such association; where it has reason to believe
that the corporation is formed for any other than legitimate building
and loan business, or that the moral fitness, financial responsibility or
business qualification of the persons named as officers and directors
are not such as to command the confidence of the community in which
the said building and loan association is proposed to be located.

Section 9. Directors and their number; directors must be share-
holders; shares required to qualify——The affairs of every building
and loan association doing business in this State shall be managed by
a board of directors to consist of not less than five persons. The ma-
jority of directors shall be citizens of this State. Every director of a
building and loan association shall be the owner in his own natne, and
have in his personal possession or control, shares of stock in the build-
ing and loan association of which he is a director and for which has
been paid into the treasury of such association not less than one hun-
dred dollars, and which shares must be unpledged and unemcumbered
at the time of his becoming a director and during the whole of his term
as such. The office of any director violating the provisions of this
section shall immediately become vacant, and the remaining directors
may proceed forthwith to fill such vacancy. The directors shall be
elected at the annual meeting of the shareholders, subject to the char-
ter, constitution and by-laws, and all directors shall hold office for the
term prescribed in the certificate of incorporation, constitution or by-
laws, and shall remain in office until their successors are elected and
qualified.

Section 10. By-laws and articles of government.—Every building
and loan association doing business in this State shall adopt by-laws
for its government and the management of its business not inconsis-
tent with the laws of Virginia, and every such association shall file a
copy of such by-laws, and any amendment thereto, as the same may be
made from time to time, with the State corporation commission.

Section 11. Bonds of officers and employees.—The board of di-
rectors shall require bonds from all of the active officials and em-
ployees of the building and loan association, and shall annually ex-
amine all such bonds, pass on the sufficiency of all such bonds and
may require new or additional bonds at any time, provided that in lieu
thereof a blanket bond with corporate surety covering all active offi-
cers and employees of such association may be executed upon ap-
proval of the board of directors.

Section 12. Membership ; liability ; capital defined; shares, how
paid for; commissions ; membership fees——The members of a building
and loan association shall be only those persons who have subscribed
for its shares or to whom its shares have been issued or transferred in
accordance with the provisions of its by-laws; provided that unless
prohibited by the by-laws, corporations may become shareholders and
members in the same manner as natural persons. Membership shall
continue until such shares have been matured and paid, withdrawn,
transferred, retired or forfeited. The payments made to any such
association upon installment shares issued by it shall be called “dues,”
“payments” or “share payments.” The capital of every building and
loan association shall consist of the accumulated payments actually
made upon the shares and the dividends credited thereto, either indi-
vidually or by series. For any losses which the capital shall not be
sufficient to satisfy, the members of such corporation shall not be re-
sponsible, beyond the amounts paid in by them on their shares and the
shares shall not be subject to further assessment.

It shall be unlawful for any building and loan association to
charge an entrance, initiation or membership fee, or to make any
charges as a condition precedent to becoming a member or shareholder
of such association, which is in excess of one per centum of the par
value of the share or shares of stock subscribed for or issued, or
which is in any case more than one dollar a share. Unless the entire
amount of such excess shall be passed to the surplus or reserve fund
of said association and no part of said excess shall be used to pay com-
missions on sale of new stock or promotion expenses of any kind.
Where such fee is charged, it shall be paid in cash at the time of the
subscription, and a written receipt, therefor, shall be given to the sub-
scriber, and all such fees so paid shall be credited to the general profit
account of the association. Any building and loan association violat-
ing the provisions of this paragraph of this section shall be liable to a
fine of not less than one hundred dollars nor more than one thousand
dollars. ,

Section 13. Rules governing withdrawals, relationship of share-
holder to association—Every building and loan association shall have
the right to establish rules governing withdrawals of shares of every
kind, or the payment of matured shares, and may from time to time
fix the period of notice required to be given for withdrawal, and in
emergency the notice period may be extended by the directors. The
relation existing between the association and its shareholders, as to all
the shares subscribed to, shall except as otherwise herein provided be
such as usually exist between a corporation and its shareholders ; and
in event of emergency preventing the payment of withdrawals of
shares in the usual course, the shareholder, as to such shares, shall
not be privileged to claim and establish a debtor-creditor relation in
lieu of the usual privileges and responsibilities of a shareholder.

Section 14. Shares issued in trust for another; to a minor; pay-
ment; trust funds; who may invest in shares——-Whenever any shares
in any such association shall have heretofore been issued or shall here-
after be issued to any person in trust for another, and no other or fur-
ther notice of the existence and terms of the trust shall have been
created by act of the trustee alone and, in the event of the death of the
trustee, the amount due on said shares, or any part thereof, together
with the profits, earnings or interest thereon, shall be the sole property
of the person for whose benefit the shares were issued, and may be
paid to such person if of the age of eighteen years and upwards, or to
the guardian of such person if under the age of eighteen years, and
any amount due on shares held by a minor may in like manner be paid
to such minor if of the age of eighteen years.

An administrator, executor, guardian or trustee, or other fiduciary
may in’such capacity acquire and hold shares in any building and
loan association of this State, and shall have the same rights and be
subject to the same obligations and limitations as other shareholders
and the shares shall be withdrawable by them, and the shares, bonds
and certificates of indebtedness of associations operating under the
provisions of this act shall be a legal form of investment for the funds
of administrators, executors, guardians or trustees or other fiduciaries
Any Virginia corporation may invest in shares in any Virginia build:
ing and loan association. |

Section 15. Proportion of loans and investments to be on rea
estate, license revoked for failure to maintain minimum.—No corpora-
tion shall be permitted to do business in this State as a building and
loan association unless at least two-thirds of the amount of its loans
and investments, not including loans made upon credits on its own
shares, are secured by recorded liens upon real estate of dignity prio1
to any other recorded lien or liens except taxes, and if at any time it
shall appear from the report made by said association, or it be other-
wise made to appear, that such proportion of its loans are not so se-
cured, the State corporation commission shall make a rule upon such
association to show cause why its license to do business in this State
shall not be revoked, and if it shall appear at the hearing that the pro-
visions of this section have been violated, the State corporation com-
mission shall revoke the license of such association to do business in
this State unless, within such reasonable time as the said commission
may prescribe, the provisions of this section be complied with; and
upon a second finding by said commission that such association has
again violated the provisions of this section, its license to do business
in this State may be absolutely revoked, and not thereafter renewed.

Section 16. Shares issued in the names of more than one person.—
When shares shall have been issued in the names of two or more per-
sons, payable to either, or payable to either or the survivor, either of
said named persons, whether the other be living or not, may withdraw
from such association and receive the amount payable on withdrawal in
the same manner and on the same terms allowed by law or the by-laws
in case of any other shareholder, and the receipt of or acceptance by the
person so paid shall be a valid and sufficient release and discharge of
the association for any payment so made. |

Section 17. Supervision by State corporation commission; exami-
nation by commissioner of insurance and banking; assessment of
fees to cover cost; financial statements to be furnished the State cor-
poration commission.—The State corporation commission shall have
supervision over all building and loan associations doing any business
in this State, whether incorporated under the laws of this State or
not. The commissioner of insurance and banking shall, not less than
twice in each and every year, and at such other times as in his discre-
tion he may deem necessary, examine or cause to be examined each
and every building and loan association doing business in this State,
whether incorporated under the laws of this State or not. For the
purpose of defraying expenses of such supervision and examination
the State corporation commission shall, on the first day of July of
each and every year, assess against every building and loan association
doing business in this State, fees not in excess of the fees assessed
against incorporated State banks under the provisions of section forty-
one hundred and twenty-two of the Code of Virginia, as amended by
an act approved March twenty-fifth, nineteen hundred and twenty. All
building and loan associations doing business in this State shall tur-
nish the State corporation commission at such times as it shall re-
quire, statements of their financial condition on forms supplied by the
commissioner of insurance and banking.

In making such examinations as are required under the provisions
of this section, the officers, directors and employees of such building
and loan association shall, upon the demand of the person or officers
designated to make such examination, give to the examiner full access
to all money, books, papers, notes, bills and other evidences of debt of
said association and shall also disclose fully and truly all indebtedness
and liability thereof, and shall furnish said commissioner with all in-
formation which he may deem necessary to a full investigation into
the affairs of such association; and the said commissioner shall have
the right to examine under oath any and all of the directors, officers,
clerks and employees of such association touching any matter or thing
connected with the operation of such association, and for that purpose
shall have authority to administer oaths to the persons examined, and
shall, in addition, have the right to require the building and loan asso-
ciation to furnish to him a mathematical calculation or chart showing
in detail the plan of the operation or investment carried on, for the
purpose of determining whether the same is financially and mathe-
matically sound, and the contracts or obligations issued or assumed
are possible of fulfillment.

If, upon the examination of any such building and loan association,
the State corporation commission shall ascertain that the laws of this
State are not being fully observed or that any irregularities are being
practiced, or that the capital stock of such association has been im-
paired or is in danger of being impaired, or that the interests of the
public are not being properly protected the State corporation commis-
sion may close the doors of such building and loan association and
apply to the proper court for the appointment of a receiver to wind
up the affairs of such association, provided that the capital stock shall
not be deemed impaired, or in danger of being impaired within the
terms of this act unless the same has been reduced by an amount equal
to at least fifteen per centum of the credits to its members or share-
holders.

Section 18. Associations to make financial statements; fine for
failure to make statements.—It shall be the duty of every building and
loan association doing business in this State to make the statements
required by the preceding section to the State corporation commission,
upon request, general or special, and for a failure so to do for a period
of thirty days after such request, said association shall be fined not
less than one hundred nor more than one thousand dollars by the State
corporation commission, unless, in answer to a rule for that purpose,
good cause be shown against it.

Section 19. False statements by officers or agents; penalty—Any
officers or agent of a building and loan association who shall know-
ingly make a false statement of the condition of the said associatior
to the State corporation commission shall, upon conviction thereof
be fined not less than one hundred nor more than one thousand dollars,
or confined in the penitentiary not less than one or more than ten
years, or be made to suffer both such fine and imprisonment.

Section 19-a. What associations exempt from certain provisions
of this act; statements required—The provisions of sections eleven,
seventeen, eighteen and nineteen of this act shall not apply to any
building and loan association which does not in any one year after this
act goes into effect accept from persons, other than its own officers
and directors, more than twenty thousand dollars in payments for
stock ; provided, that payments made on stock subscribed at the time
of making a loan, by the borrower, for the purpose of maturing said
stock for the repayment of such loan, shall not be counted in making
up such total of twenty thousand dollars.

Every building and loan association doing business in this State
shall, on the thirtieth day of June of each year after this act goes into
effect, make to the State corporation commission, on forms to be fur-
nished by the State corporation commission, a statement, sworn to by
its secretary, showing the total amount received by it during the pre-
ceding year in payment for shares of stock (other than for the retire-
ment of loans as set forth above). If from such statement it shall ap-
pear that during such preceding year any building and loan associa-
tion has received in payment for shares more than twenty thousand
dollars from persons other than its officers and directors and for such
repayment of loans, then all of the provisions of sections eleven, seven-
teen, eighteen and nineteen of this act shall apply to such association
for the succeeding year in which such excess of twenty thousand dol-
lars was received, as set forth above.

Section 20. Building and loan associations may elect and change
trustees in deeds of trust; how many trustees may act.—Any building
and loan association, the conduct of whose business requires a trustee
or trustees, shall have the right to elect such trustee or trustees at
such time and for such term of office as may be prescribed by the
charter and by-laws, and to continue to elect such trustee or trustees
as the term of office successively expire during the existence of such
association ; and all the rights, titles, duties and obligations which may
be imposed upon any such trustee or trustees by reason of holding
such office or may come to him or them by or through any deed or
other instrument of writing, or otherwise howsoever, shall, at the ex-
piration of said term of office, pass to the successor or successors in
office, and all the rights of such association required to be exercised
by or through such trustee or trustees, whether it be the sale of pro-
perty or some other act or acts, shall be done, enforced and carried
out by the trustee or trustees in office at the time when such rights
are exercised by the said association. All sales or conveyances here-
tofore or hereafter made by a trustee or trustees appointed in the
manner designated above shall be as valid and binding as though the
sale or sales, conveyance or conveyances had been made by the trustee
or trustees named in the deed or deeds of trust.
In the absence of one or more of the trustees in office, a majority
of the trustees shall have authority to conduct sales and make the
conveyances in pursuance thereof, with the same force and authority
as though all the trustees had conducted same, and where there are
two trustees either one of them may so act. |

Section 21. Reserve fund required for protection against losses ;
undivided profits; investments of reserve and undivided profits—
All building and loan associations, as defined under the laws of Vir-
ginia, are hereby required to set aside, for protection against losses,
a reserve fund of not less than three per centum, and not more than
ten per centum, of their total resources ; and for the purpose of build-
ing up and maintaining said reserve, the said association shall set
aside, annually or semi-annually, a sum equal to not less than two
per centum, nor more than ten per centum, of the annual net earnings
of the associations for every year that the reserve carried is less than
the minimum reserve herein provided.

It shall be lawful for a building and loan association, in addition
to the contingent reserve fund, herein provided for, to hold in its fund
of undivided profits such sum as the board of directors may, from
time to time, deem necessary or wise; provided, however, that such
undivided profits of any association hereafter accumulated, after de-
ducting the funds accumulating for the current dividends at the usual
rate shall at no time exceed six per centum of the total resources of
the commission, but this proviso shall not apply to any association
whose maximum authorized capital stock does not exceed fifty thous-
and dollars. The board of directors is authorized and empowered to
invest all reserve funds and undivided profit funds in the same man-
ner and in the same class of securities as is provided in this act for
all other funds of such association.

Except as otherwise herein provided, every building and loan as-
sociation shall have the right to invest a sum not to exceed four
times the aggregate of its reserve and undivided profits accounts in
bonds or securities of the United States, the State of Virginia, and of
the political subdivisions of the State of Virginia.

Section 22. Reduction of liability to members or shareholders.—
Whenever the losses of any building and loan association, resulting
from depreciation in value of its securities or otherwise, exceed its
contingent reserve fund, undivided profits and current earnings, so
that the estimated value of its assets is less than the total amount due
its members or shareholders, the State corporation commission, upon
petition of such building and loan association, may order a reduction
of its liability to its members or shareholders in such manner as to
distribute the loss equitably among such members or shareholders.

Section 23. Voluntary liquidation and settlement; receiver—Any
building and loan association organized under the laws of this State
and doing business within this State, may, if the holders of two-thirds
of the voting shares in force, provided the two-thirds represents at
least fifty-one per centum of the capital paid in to the said association,
deem it advisable, go into liquidation, and for the purpose of so doing
may, at any regular or called meeting of the shareholders, adopt a
resolution declaring that such association intends to go into liquida-
tion and discontinue business‘as a building and loan association. A
copy of such resolution duly certified by the president and secretary
of such association under the seal thereof, shall be transmitted to
the State corporation commission within ten days after the passage
thereof, together with a fee of one dollar for the filing of the same;
and thereupon the State corporation commission shall issue its cer-
tificate reciting that such resolution has been filed, and that such asso-
ciation is in liquidation. After the filing of such notice, it shall not
be lawful for such association to issue stock, or to loan or advance its
money to members or to any other person or persons, or to receive
any further dues on unpledged stock, but all of the income and re-
ceipts of such association, in excess of the actual expense of managing
the same, shall be applied, first, to pay off the indebtedness and, sec-
ond, to redeem stock of such association, the same to be paid pro rata.
The board of directors of such association in liquidation may adopt
such rules and make such orders as shall be just and equitable for
the sale and disposition of all property held by such association, the
assessment to meet the losses, if any, and for the division of the profits
of such association. Proceedings for the appointment of a receiver
of a building and loan association shall not be entertained by any
court except on the written recommendation of the State corporation
commission.

Section 23-a. Consolidation or merger of two or more building
and loan associations; elimination of doubtful assets; reduction of
capital stock.—It shall be lawful for two or more building and loan
associations to consolidate or merge subject to the approval of the
State corporation commission, according to the provisions of section
thirty-eight hundred and twenty-two of the Code of Virginia, and
when so consolidating or merging they shall have the right to elimi-
nate from their assets any such as are considered worthless or of
doubtful value. When so eliminated from the admitted assets, a suf-
ficient amount may be deducted from the undivided profits and sur-
plus of either or both of the associations so consolidating or merging
to make good such losses; and when the undivided profits and sur-
plus are insufficient, an amount sufficient may be eliminated from the
capital stock and/or payments on shares, and when so deducted from
the shares of a borrowing member his payments made on shares, to
that extent, shall not be regarded as payments or curtails on his loan
obligations to such association. When the capital stock or shares are
so reduced, such deduction shall be ratably effective on all shares of
capital stock in force at the time of such consolidation or merger.

Section 24. Making or circulating derogatory statements affecting
building and loan associations ; how punished.—Whoever, directly or
indirectly, wilfully and knowingly makes or transmits, to another, or
circulates, or counsels, aids, procures or induces another to make, trans-
mit or circulate, any false or untrue statement, rumor or suggestion de-
rogatory to the financial condition, solvency or financial standing of
any building and loan association doing business in this State, or who
shall knowingly counsel, aid, procure or induce another to make,
transmit or circulate, any false or untrue statement, rumor or sugges-
tion derogatory to the financial condition, or with respect to the earn-
ings or management of the business of any building and loan asso-
ciation doing business in this State, shall be guilty of a misdemeanor,
and upon conviction thereof, shall be sentenced to pay a fine of not
more than one thousand dollars, or to be confined in jail not more
than one year, or both. :

Section 25. Constitutionality of this act—If any section, clause,
sentence, paragraph, or other part of this act, shall for any reason
be adjudged by any court of competent jurisdiction to be invalid, such
judgment shall not affect, impair, or invalidate the remainder of this
act, or any part thereof, but shall be confined in its operation to the
part thereof directly involved in the controversy in which such judg-
ment shall be rendered. It being hereby declared that the general as-
sembly would have enacted the remainder of this act without such
part adjudged to be invalid.

Any section, clause, or other part of this act, so declared to be
invalid, shall not be considered as having been stricken out from any
other portion or portions of this act wherein cross references thereto
are made, but shall be taken and construed as having been actually
written in full into such other portion or portions from which cross
references are made.

Section 26. Short title—This act may be cited as the Virginia
building and loan association act.

Section 27. Repeal.—Section forty-one hundred and fifty-four, as
amended and re-enacted by an act approved March sixteenth, nine-
teen hundred and twenty; and section forty-one hundred and fifty-
five, as amended and re-enacted by an act approved March tenth,
nineteen hundred and twenty-eight; and sections forty-one hundred
and fifty-six, forty-one hundred and fifty-seven, forty-one hundred
and fifty-eight, forty-one hundred and fifty-nine, forty-one hundred
and sixty, forty-one hundred and sixty-one, forty-one hundred and
sixty-two, forty-one hundred and sixty-three as amended and re-en-
acted by an act approved March twelfth, nineteen hundred and twen-
ty-six, forty-one hundred and sixty-four, forty-one hundred and sixty-
five, forty-one hundred and sixty-six, and forty-one hundred and
sixty-seven of the Code of Virginia; and all other acts and parts of
acts inconsistent with the provisions of this act, are hereby repealed,
but such repeal shall not have the effect of reviving any act which may
have been heretofore repealed by any act repealed hereby.