Chap. 850.—An ACT to provide ne organization of state banks of circu-
ation.

Approved March 8, 1894.

1. Be it enacted by the general assembly of Virginia, That associa-
tions for carrying on the business of banking under this title may
be formed by any number of natural persons—not less in any case
than five. They shall enter into articles of association, which shall
specify in general terms the object for which the association is
formed, and may contain any other provisions, not inconsistent with
law, which the association may see fit to adopt for the regulation of
its business and the conduct of its affairs. These articles shall be
signed by the persons uniting to form the association, and a copy of
them shall be forwarded to the secretary of the commonwealth, to
be filed and preserved in his office.

2. The persons uniting to form such an association shall, under
their hands, make an organization certificate, which shall specifically
state:

First. The name assumed by such association, which name shall
be subject to the approval of the secretary of the commonwealth.

Second. The place where its operations of discount and deposit
are to be carried on, designating the village, town or city and county
in which said bank is to be located.

Third. The amount of capital stock and the number of shares into
which the same is to be divided.

Fourth. The names and places of residence of the shareholders,
and the number of shares held by each of them.

Fifth. The fact that the certificate is made to enable such persons
to avail themselves of the authority to organize a state bank under
this act.

3. The organization certificate shall be acknowledged before a
judge of some court of record, notary publio or justice of the peace,
and shall be, together with the acknowledgment thereof, transmitted
to the secretary of the commonwealth, who shall record and carefully
preserve the same in his office.

4. Upon duly making and filing articles of association and an organi-
zation certificate, the association shall become, as from the date of
the execution of its organization certificate, a body corporate, an
as such and in the name designated in the organization certificate, 3
shall have power—

First. To adopt and use a corporate seal.

Second. To have succession for the period of twenty years fror
its organization, unless it is sooner dissolved according to the prc
visions of its articles of association, or by the act of its share
holders owning two-thirds of its stock, or unless its franchise be
comes forfeited by some violation of law.

Third. To make contracts.

Fourth. To sue and be sued, complain and defend, in any court o
law and equity, as fully as natural persons.

Fifth. To elect or appoint directors, and, by its board of directors
to appoint a president, vice-president, cashier and other officers, de
fine their duties, require bonds of them and fix the penalty thereof
dismiss such officers, or any of them, at pleasure, and appoint other
to fill their places.

Sixth. To prescribe, by its board of directors, by-laws not incon
sistent with law, regulating the manner in which its stock shall b
transferred, its directors elected or appointed, its officers appointed
its property transferred, its general business conducted and th
privileges granted to it by law exercised and enjoyed.

Seventh. To exercise, by its board of directors or duly authorizex
officers or agents, subject to law, all such incidental powers as shal
be necessary to carry on the business of banking by discounting anc
negotiating promissory notes, drafts, bills of exchange and othe:
evidences of debt; by receiving deposits; by buying and selling ex
change, coin and bullion; by loaning money on personal or rea
estate security, and by obtaining, issuing and circulating notes, ac.
cording to the provisions of this act.

But no association shall transact any business, except such as is
incidental and necessarily preliminary to its organization, until i
has been authorized by the secretary of the commonwealth to com.
mence the business of banking.

5. A state banking association may purchase, hold and convey
real estate for the following purposes, and for no other:

First. Such as shall be necessary for its immediate accommodation
in the transaction of its business.

Second. Such as shall be mortgaged to it in good faith by way of
security for debts.

Third. Such as shall be conveyed to it in satisfaction of debts con-
tracted in the course of its dealings.

Fourth. Such as itshall purchase at sale under judgments, decrees,
mortgages or deeds of trust held by the association, or shal! pur-
chase to secure debts due to it; but no such association shall hold
the possession of any real estate under mortgage or deed of trust, or
the title and possession of any real estate purchased to secure any
debts due to it for a longer period than five years; and no such asso-
ciation shall loan on any real estate more than one-fourth of its as-
sessed value, nor for a longer period than ninety days.
6. No association shall be organized under this act in any village
or town with a less capital than ten thousand dollars, nor in any city
with a less capital than fifty thousand dollars.

7. The capital stock of each association shall be divided into
shares of one hundred dollars each, and be deemed personal property,
and transferable on the books of the association in such manner as
may be prescribed in the by-laws or articles of association. Every
person becoming a shareholder by such transfer shall, in proportion
to his shares, succeed to all the rights and liabilities of the prior
holder of such shares, and no changes shall be made in the articles
of association by which the rights, remedies or security of the exist-
ing creditors of the association shall be impaired.

8. At least fifty per centum of the capital stock of every associa-
tion shall be paid in before it shall be authorized to commence busi-
ness; and the remainder of the capital stock of such association
shall be paid in instalments of at least ten per centum each on the
whole amount of the capital, as frequently as one instalment at the
end of each succeeding month from the time it shall be authorized
by the secretary of the commonwealth to commence business, and
the payment of each instalment shall be certified to the secretary of
of the commonwealth, under oath, by the president or cashier of the
association.

9. Whenever any shareholder or his assignee fails to pay any in-
stalment on the stock when the came is required by the preceding
section to be paid, the directors of such association may sell the
stock of such delinquent shareholder at public auction, having given
three weeks’ previous notice thereof in a newspaper published and of
general circulation in the city or county where the association 18
located, or, if no newspaper is published in said city or county, then
in a newspaper published nearest thereto, to any person who will pay
the highest price therefor, to be not less than the amount due thereon,
with the expenses of advertisement and sale, and the excess, if any,
shall be paid to the delinquent shareholder. If no bidder can be
found who will pay for such stock the amount due thereon to the
association and the cost of advertisement and sale, the amount pre-
viously paid shall be forfeited to the association, and such stock
shall be sold, as the directors may order, within six months from the
time of such forfeiture; and, if not sold, it shall be canceled and
deducted from the capital stock of the association. If any such can-
cellation and reduction shall reduce the capital of the association
below the minimum of capital required by law, the capital stock
shall, within thirty days from the date of such cancellation, be in-
creased to the required amount; in default of which a receiver may
be appointed, as provided by section thirty-five of this act, to close
up the business of the association.

10. Any association formed under this act may, by its articles of
association, provide for an increase of its capital from time to time,
as may be deemed expedient, subject to the limitations of this act.
But the maximum of such increase to be provided in the articles of
association shall be determined by the secretary of the common-
wealth, and no jincreasp,of capital shall be valid until the whole
amount of such increase is paid in, and notice thereof has been
transmitted to the secretary of the commonwealth, and his certifi-
cate obtained specifying the amount of such increase of capital
stock, with his approval thereof, and that it has been duly paid in
as part of the capital of such association.

11. Any association formed under this act may, by the vote of
shareholders owning two-thirds of its capital stock, reduce its capi-
tal to any sum not below the amount required by this act to author-
ize the formation of associations; but no reduction shall be allowed
which will reduce the capital of the association below the amount
required for its outstanding circulation, nor shall any such reduction
be made until the amount of the proposed reduction has been re-
ported to the secretary of the commonwealth and his approval
thereof obtained.

12. In all elections of directors, and in deciding all questions at
meetings of shareholders, each shareholder shall be entitled to one
vote on each share of stock held by him. Shareholders may vote
by proxies duly authorized in writing, but no officer, clerk, teller or
book-keeper of such association shall act as proxy; and no share-
holder whose liability is past due and unpaid shall be allowed to
vote.

13. The affairs of each association shall be managed by not less
than five directors, who shall be elected by the shareholders at a
meeting to be held at any time before the association is authorized
by the secretary of the commonwealth to commence the business of
banking, and afterwards at meetings to be held on such day in
January of each year as is specified therefor in the articles of asso-
ciation. The directors shall hold office for one year, and until their
successors are elected and qualified.

14. Every director must, during his whole term of service, be a
citizen of Virginia and the owner of at least ten shares of the capi-
tal stock of the association, in his own right, of which he is a
director. Any director who ceases to be the owner of ten shares of
the stock, or who becomes in any other manner disqualified, shall
thereby vacate his place.

15. Each director, when appointed or elected, shall take an oath
that he will, so far as the duty devolves on him, diligently and hon-
estly administer the affairs of such association, and will not know-
ingly violate or willingly permit to be violated any of the provisions
of this act, and that he is the owner, in good faith and in his own
right, of the number of shares of stock required by this act, sub-
scribed him, or standing in his name on the books of the associa-
tion, and that the same is not hypothecated or in any way pledged
as security for any loan or debt. Such oath, subscribed by the di-
rector making it and certified by the officer before whom it is taken,
shall be immediately transmitted to the secretary of the common-
wealth, and shall be filed and preserved in his office.

16. Any vacancy in the board shall be filled by appointment by
the remaining directors, and any director so apointed shall hold his
place until the next election.
17. If from any cause an election of directors is not made at the
time appointed, the association shall not for that cause be dissolved,
but an election may be held on any subsequent day, thirty days’
notice thereof in all cases having been given in a newspaper pub-
lished in the city, town or county in which the association is lo-
cated; and if no newspaper is published in such city, town or
county, such notice shall be published in a newspaper published
nearest thereto. If the articles of association do not fix the day
on which the election shall be held, or if no election is held on the
day fixed, the day for the election shall be designated by the board
of directors in their by-laws or otherwise; or, if the directors fail
to fix the day, shareholders, representing two-thirds of the capital
stock, may do Bo.

18. One of the directors, to be chosen by the board of directors,
shall be president of the board.

19. The shareholders of every state banking association shall be
held individually responsible, equally and ratably, and not one for
another, for all contracts, debts and engagements of such associa-
tion to the extent of the amount of their stock therein, at the par
value thereof, in addition to the amount invested in such shares.

20. Persons holding stock as executors, administrators, guardians
or trustees, shall not be personally subject to any liabilities as stock-
holders; but the estates and funds in their hands shall be liable in
like manner, and to the same extent, as the testator, intestate, ward
or person interested in such trust funds would be, if living and com-
petent to act, and hold the stock in his own name.

21. Every association, after having complied with the provisions
of this act preliminary to the commencement of the banking busi-
ness, and before it shall be authorized to commence banking busi-
ness under this act, shall transfer and deliver to the treasurer of
Virginia any Virginia bonds issued under the act approved February
twentieth, eighteen hundred and ninety-two, to the amount of the
capital stock of said association. Such bonds shall be received by
the treasurer of Virginia upon deposit, and shall be by him kept in
his office nntil they shall otherwise be disposed of in pursuance of
the provisions of this act.

22. The deposit of bonds made by each association shall be in-
creased as its capital may be increased, or may be reduced as its
capital stock may be reduced. And any association that may desire
to reduce its capital stock or to close up its business and dissolve its
organization may take up its bonds upon returning to the secretary
of the commonwealth its circulating notes issued on the faith of
said bonds.

23. All transfers of Virginia bonds made by any association under
the provisions of this act shall be made to the treasurer of Virginia,
in trust for the association, with a memorandum written or printed
on each bond, and signed by the cashier or some other officer of the
association making the deposit. A receipt shall be given to the
association by the treasurer of Virginia, stating that the bond is
held in trust for the association, on whose behalf the transfer is
made, and as security for the redemption and payment of any circu-
lating notes that may have been or may be delivered to such asso-
ciation. No assignment or transfer of any such bond by the trea-
surer of Virginia shall be deemed valid unless countersigned by the
secretary of the commonwealth.

24. The bonds transferred to and deposited with the treasurer of
Virginia for the security of its circulating notes shall be held exclu-
sively for that purpose until such notes are redeemed or taken in
and canceled and delivered to the treasurer of Virginia, who shall
cause the same to be destroyed in the presence of the governor and
attorney-general of Virginia. The treasurer of Virginia shall give
to any such association power of attorney to receive and appropriate
to its own use the interest on the bonds which it has so transferred
to the treasurer, but such power of attorney shall become inope-
rative whenever such association fails to redeem its circulating
notes.

25. Whenever a certificate is transmitted to the secretary of the
commonwealth, certifying that the whole amount of capital stock
has been paid in, and that Virginia bonds issued under the act ap-
proved February twentieth, eighteen hundred and ninety-two, has
been deposited with the treasurer of Virginia equal to the amount of
said capital stock, the secretary of the commonwealth shall examine
into the condition of such association, ascertain especially the
amount of money paid in on account of its capital, the name and
place of residence of each of its directors, and the amount of capital
stock of which each is owner in good faith, and generally whether
such association has complied with all the provisions of this act to
entitle it to engage in the business of banking, and shall cause to
be made and attested by the oaths of a majority of the directors and
by the president or cashier of the association a statement of all the
facts necessary to enable the secretary of the commonwealth to de-
termine whether the association is lawfully entitled to commence the
business of banking.

26. If upon careful examination of the facts so reported, and of
any other facts which may come to the knowledge of the secretary
of the commonwealth, it appears that such association is lawfully
entitled to commence the business of banking, the secretary of the
commonwealth shal! give to such association a certificate, under his
hand and official seal, that such association has complied with all
the provisions required to be complied with before commencing the
business of banking, and that such association is authorized to com-
mence such business. But the secretary of the commonwealth may
withhold from an association hiscertificate authorizing the commence-
ment of business whenever he has reason to suppose that the share-
holders have formed the same for any other than the legitimate ob-
jects contemplated by this act.

27. The association shall cause the certificates issued under the
preceding section to be published for thirty days next after the issu-
ing thereof, in some newspaper printed in the city or county where
the assqciation is located; or if no newspaper is published in such
city or county, then in the newspaper published nearest thereto.
28. Upon the deposit of Virginia bonds and complying with
other provisions, as prescribed in this act, the association making
the same shall be entitled to receive from the treasurer of Virginie
circulating notes of different denominations, in blank, registerec
and countersigned, as hereinafter provided, equal in amount to sev.
enty-five per centum of the par value of the Virginia bonds sc
transferred and delivered.

29. In order to furnish suitable notes for circulation, the treasure!
of Virginia shall cause plates and dies to be engraved, in the beat
manner, to guard against counterfeiting and fraudulent alterations
and shall have printed therefrom and numbered such quantity of
circulating notes, in blank, of the denominations of five dollars, ten
dollars, twenty dollars, fifty dollars and one hundred dollars, as may
be required to supply the associations entitled to receive the same.
Such notes shall express on their face that they are secured by Vir-
ginia bonds deposited with the treasurer of Virginia, by the written
or engraved signatures of the treasurer of Virginia and secretary of
the commonwealth, and by the imprint of the seal of the treasury,
and shall also express upon their face the promise of the association
receiving the same to pay on demand, attested by the signatures of
the president or vice-president and cashier; and shall bear such
devices and such other statements and shall be in such form as the
governor of Virginia shall by regulation direct.

30. The plates and special dies to be procured by the treasurer
for the printing of such circulating notes shall remain under his
control and direction, and the expenses necessarily incurred in exe-
cuting the laws respecting the procuring of such notes, plates and
dies shall be borne by each association for whose benefit the same are
procured.

31. The treasurer shall cause to be examined each year the plates,
dies and other material from which the said circulating notes are
printed, and file in his office annually a correct list of the same.
Such material as shall have been used in printing the notes of the asso-
ciations which are in liquidation, or have closed business, shall be
destroyed, under such regulations as shall be prescribed by the gov-
ernor.

32. The treasurer of Virginia shall determine the number of the
notes of the denominations of five dollars, ten dollars, twenty dollars,
fifty dollars and one hundred dollars, which shall be issued to each
association, the aggregate of the notes to be equal to whole amount
to which said association is entitled.

33. All ciroulating notes issued under the authority of this act
shall be redeemable in lawful currency of the United States, on de-
mand, at the place of business of the association issuing the same,
during banking hours.

34. After any association receiving circulating notes under this
act has caused its promise to pay such notes on demand to be
signed by the president or vice-president and cashier thereof, in such
manner as to make them obligatory promissory notes, payable on
demand at its place of business, such association may issue and cir-
culate the same as money.
35. All laws of this state relating to banks of discount and deposit.
and not inconsistent with the provisions of this act, shall be appli-
cable to the banks created under this act.

386. All banks organized under the provisions of this act shal]
always have on hand, as a reserve fund and to protect its circulation,
at least twenty-five per centum of its circulation in gold, silver,
United States treasury or national bank’ notes, and whenever from
its reports it appears that any bank has less than such reserve, or
from complaint of any person in interest such fact, or any other
fact rendering it proper, appears, the attorney-general of Virginia
shall apply to the circuit of the county or corporation in which such
bank may be located for a receiver, who shall take charge of its as-
sets and administer same, and all proceedings shall be the same,
mutatis mutandis, as those under United States statutes relating to
insolvent banks organized under the laws of the United States.

37. This act shall be in force when the statute of the United States
imposing a tax of ten per centum on the circulation of state banks
is repealed. .