CHAPTER 23

An Act to amend and reenact § 6-76 of the Code of Virginia, relating
to the limit of liability of borrowers. ME 791

Approved February 12, 1952

Be it enacted by the General Assembly of Virginia:

That § 6-76 of the Code of Virginia be amended and reenacted as
follows:

§ 6-76. Limit of liability of borrowers. * —The total liabilities of
any person, partnership, association or corporation to any bank, including
in the case of a partnership the liabilities of the partnership and of the
several members thereof except * limited partners, shall at no time exceed
fifteen per centum of the capital and permanent surplus of such bank. But
such limitation of fifteen per centum shall be subject to the exceptions
hereinafter stated.

(a) The following types of obligations shall not be subject under
this section to any limitation based upon such capital and surplus:

(1) Obligations in the form of drafts or bills of exchange drawn in
good faith against actually existing values;

(2) Obligations arising out of the discount of commercial or business
paper actually owned by the person, partnership, association, or corpora-
tion negotiating the same;

(3) Obligations drawn in good faith against actually existing values
and secured by goods or commodities in process of shipment;

(4) Obligations in the form of banker’s acceptances of other banks
of the kind described in section thirteen of the Federal Reserve Act; _

(5) Obligations of the United States, obligations of the State of Vir-
ginia and of its political subdivisions, including sanitary or public facili-
ties districts, obligations issued under authority of the Federal Farm Loan
Act, as amended, or issued by the Federal Home Loan Banks, * first
mortgage real estate loans which are insured by the Federal Housing Ad-
ministrator, obligations guaranteed as to principal and interest by the
United States, loans in which the Reconstruction Finance Corporation or
a Federal Reserve Bank has definitely agreed or committed itself to par-
ticipate, to the extent of such participation, loans which the Federal Com-
modity Credit Corporation has definitely agreed to purchase, direct obli-
gations of and obligations guaranteed by the Export-Import Bank and
loans guaranteed by * a Federal guaranteeing agency, pursuant to the De-
fense Production Act of 1950.

(b) The following types of obligations shall be subject under this
section to a limitation of * fifteen per centum of such capital and surplus
in addition to the fifteen per centum of capital and surplus hereinabove
established as a general limitation:
(1) Obligations as endorser or guarantor of notes, other than com-
mercial or business paper excepted under paragraph (a) (2) hereof * hav-
ing a maturity of not more than six months, and owned by the person,
partnership, association or corporation endorsing and negotiating the
same.

_ (2) Obligations of any person, partnership, association or corpora-
tion in the form of notes or drafts secured by shipping documents or in-
struments transferring or securing title covering livestock or giving &
lien on livestock when the market value of the livestock securing the
obligations is not at any time less than one hundred and fifteen per centum
of * the amount by which the obligations exceed fifteen per centum of such
capital and surplus. |

_ (8) Obligations of any person, partnership, association or corpora-
tion in the form of notes secured by * bonds or notes of the United States,
or bonds of the State of Virginia, when the face value of the bonds or
notes securing the obligations is at least equal to the amount by which the
obligations exceed fifteen per centum of such capital and surplus.

(c) Obligations of any person, partnership, association or corpora-
tion, in the form of notes or drafts secured by shipping documents, ware-
house receipts or other such documents transferring or securing title
covering readily marketable nonperishable staples when such property is
fully covered by insurance, if it is customary to insure such staples, shall
be subject under this section to a limitation of fifteen per centum of such
capital and surplus in addition to such fifteen per centum of such capital
and surplus when the market value of such staples securing such obliga-
tion is not at any time less than one hundred and fifteen per centum of the
face amount of such obligation, and to an additional increase of limitation
of five per centum of such capital and surplus in addition to such thirty per
centum of such capital and surplus when the market value of such staples
securing such additional obligation is not at any time less than one hun-
dred and twenty per centum of the face amount of such additional obliga-
tion, and to a further additional increase of limitation of five per centum of
such capital and surplus in addition to such thirty-five per centum of such

ital and surplus when the market value of such staples securing such
additional obligation is not at any time less than one hundred and twenty-
five per centum of the face amount of such additional obligation, and to a
further additional increase of limitation of five per centum of such capital
and surplus in addition to such forty * per centum of such capital
and surplus when the market value of such staples securing such addition-
al obligation is not at any time less than one hundred and thirty per cen-
tum of the face amount of such additional obligation, and to a further
additional increase of limitation of five per centum of such capital and
surplus in addition to such forty-five per centum of such capital and sur-
plus when the market value of such staples securing such additional obli-
gation is not at any time less than one hundred and thirty-five per centum
of the face amount of such additional obligation, and to a further addition-
al increase of limitation of five per centum of such capital and surplus in
addition to such fifty * per centum of such capital and surplus when
the market value of such staples securing such additional obligation is not
at any time less than one hundred and forty per centum of the face amount
of such additional obligation, but this exception shall not apply to obliga-
tions of any one person, partnership, association or corporation arising
from the same transactions-* and secured upon the identical staples for
more than ten months.

All loans permitted hereunder in excess of fifteen per centum of the
capital and permanent surplus of any bank shall be approved by a ma-
jority of the board of directors, or by a majority of the executive commit-
tee of * said board, by resolution which shall be recorded in the minutes of
said * board or committee. * /