Chap. 173.—An ACT to amend and re-enact Section 71, as amended, of an act

| entitled “An act to revise, collate and codify into one act the general statutes
of the Commonwealth relating to banks and banking, which act shall constitute
and be designated and cited as the Virginia banking act and to repeal all acts
and parts of acts inconsistent therewith, and to provide penalties for the viola-
tions thereof.”, approved March 27, 1928, as amended and added to, said section
relating to the powers of trust companies; regulations and restrictions.

. [S B 179]
Approved March 10, 1942 :

1. Be it enacted by the General Assembly of Virginia, That section
seventy-one of an act entitled “An act to revise, collate and codify into
one act the general laws of the Commonwealth relating to banks and
banking, which act shall constitute and be designated and cited as the
Virginia banking act and to repeal all acts and parts of acts inconsistent
therewith, and to provide penalties for the violations thereof.”, approved
March twenty-seventh, nineteen hundred and twenty-eight, as heretofore
amended and added to, be amended and re-enacted so as to read as
follows: |

Section 71. Powers of Trust Companies; Regulations and Re-
strictions.—All banks, which are authorized to do a trust business, and
all trust companies heretofore and hereafter chartered, shall have the
powers, and be subject to the regulations and restrictions conferred or
imposed upon companies authorized to do a general banking business in
this State, and shall in addition thereto have the following rights, powers
and privileges and shall be subject to the following regulations and re-
strictions: :

(a) To act as agent for any person, corporation, municipality or
State for the collection or disbursement of interest, or income or principal
of securities. :

(b) To act as the fiscal or transfer agent of any State, municipality,
body politic or corporate, and in such capacity to receive and disburse
money; to transfer, register and countersign certificates of stock, bonds
or other evidences of indebtedness, and to act as agent of any corporation,
foreign or domestic, for any lawful purpose.

(c) To act as trustee under any mortgage or bond issued by any
individual, municipality, body politic or corporate, and accept and execute
any other municipal or corporate trust not inconsistent with the laws of
this State.

(d) To accept trusts from and execute trusts for married women,
in respect to their separate property, and to be their agent in the man-
cH. 173] ACTS OF ASSEMBLY | 227

agement of such property, or to transact any business in relation thereto.

(e) To act as guardian, receiver or trustee of the estate of any
minor and as depository of any money paid into court, whether for the
benefit of any minor or other person, corporation or party.

(f{) To take, accept and execute any and all such lawful trusts,
duties and powers in regard to the holding and management and disposi-
tion of any estate, real and personal, and the rents and profits thereof, or
the sale or lease thereof, as may be granted or confided to it by any
court of record, judge or clerk, or by any person, corporation, munici-
pality or other authority, and it shall be accountable to all parties in in-
terest for the faithful discharge of every such trust, duty or power which
it may so accept. :

(g) To take, accept and execute any and all such trusts and powers
of whatever nature and descriptions as may be conferred upon or en-
trusted or committed to it by any person or persons, or any body politic
or corporate, or by other authority, by grant, assignment, transfer, devise,
bequest or otherwise, which may be entrusted or committed or transferred
to it or vested in it by order of any court of record, judge or clerk, and
to receive and hold any property or estate, real or personal, which may
be the subject of any such trust. .

(h) To act as executor under the last will and testament or admin-
istrator of the estate of any deceased person; or as guardian of any
infant; or as committee of the estate of any insane person, idiot or ha-
bitual drunkard, or trustee or committee for any convict in the peniten-
tiary, under appointment of any court of record, judge or clerk thereof,
having jurisdiction of the estate of such deceased person, infant, insane
person, idiot, habitual drunkard or convict.

(}) No bank or trust company of this State, with a minimum un-
impaired capital stock of fifty thousand dollars or more, shall be required
by any officer or court of this State to give security upon appointment to
or acceptance of any office of trust which it may, by law, be authorized
to execute; provided, however, that no bank or trust company shall
qualify on an estate having a value in excess of its combined unimpaired
capital and surplus without giving bond for such excess. ,

(k) In all cases where any bank or trust company in this State
shall be appointed to act as trustee, executor or administrator of any
estate or guardian for any infant, or in any other fiduciary capacity, it
shall be lawful for the president, vice-president, cashier, treasurer, secre-
tary, or any other officer of such trust company to take and subscribe for
such corporation any and all oaths required to be taken or subscribed by
such executor, administrator, trustee, guardian, or other fiduciary. |

(1) Nothing in this section shall ever be construed as authorizing
the creation of a trust not lawful as between individuals nor to prohibit
the deposit of funds by court and fiduciaries in banks of deposit and dis-
count and savings banks. -

(m) Every State bank which obtains permission from the State
Corporation Commission to do a trust business, and every trust company
permitted to do commercial banking, shall establish a separate trust
department. Such department shall be established before such bank or
trust company undertakes to act in any fiduciary capacity and shall be
placed under the management of an officer or officers whose duties shall
be prescribed by the board of directors of the bank or trust company or
by either an amendment to the by-laws of the bank or trust company or
by a resolution duly entered in the minutes of the board of directors.

(n) Funds received or held in the trust department of a bank or
trust company awaiting investment or distribution shall be invested or
distributed as soon as practicable and shall not be held uninvested by such
bank or trust company any longer than is reasonably necessary.

Funds received or held in the trust department of a bank or trust
company awaiting investment or distribution shall not be used by the
bank or trust company in the conduct of its business, through deposit in
its commercial or savings department to the credit of its trust department,
or otherwise, unless the bank or trust company first delivers to the trust
department, as collateral security therefor securities of any of the fol-
lowing classes:

(1) Bonds, notes, or certificates of indebtedness of the United
States; or

(2) Other readily marketable securities of the classes in which
fiduciaries are authorized or permitted to invest trust funds, as set forth
in s&ction fifty-four hundred and thirty-one of the Code of Virginia; or

(3) Other readily marketable bonds, notes, and/or debentures,
commonly known as investment securities, meeting the following require-
ments :

(a) That the issue be of a sufficiently large total to make market-
ability possible ;

(b) Such a public distribution of the securities must have been
provided for or made in a manner to protect or insure the marketability
of the issue; |

(c) That the trust agreement under which the security is issued
provides for a trustee independent of the obligor, which trustee must
be a bank or trust company.

The securities so deposited as collateral shall be owned by the bank
or trust company and shall at all times be at least equal in market value
to the amount of trust funds so used in the conduct of the business of the
bank or trust company, less such amount thereof as shall be insured by
the Federal Deposit Insurance Corporation under existing or future
Federal law. |

In the event of the failure or liquidation of such bank or trust com-
pany the owners of the funds held in trust for investment shall have a
lien on the bonds or other securities so set apart in addition to their claim
against the estate of the banks.

(o) The securities and investments held in each trust shall be kept
separate and distinct from the securities owned by the bank and separate
and distinct one from another. Trust securities and investments shall be
placed in the joint custody of two or more officers or other employees
designated by the board of directors of the bank or trust company, and
the said joint custody shall be interpreted to mean that neither of such
officers shall have access alone at any time to such securities and invest-
ments, and all such officers and employees shall be bonded.

(p) Where the instrument creating the trust does not specify the
character or class of investments to be made, and does not expressly
invest in the bank, its officers or its directors a discretion in the matter of
investments, funds held in trust shall be invested in any securities in
which corporate or individual fiduciaries may lawfully invest.

(r) No trust company or bank doing a trust business shall buy any
property for a trust from itself, or a department or branch thereof, or
from an affiliate or subsidiary corporation, or from an officer or employee
of such trust company or bank. Any such purchase shall be voidable at
the election of any beneficiary or successor trustee. But a trust company
or bank as trustee of one trust may buy from itself as trustee of another
trust bonds and negotiable notes directly secured by a first lien on im-
proved real estate which at the time of purchase satisfy the requirements
of section fifty-four hundred and thirty-one of the Code of Virginia.

(s) A sale of any trust property by a trust company or bank doing
a trust business to itself, or a department or branch of such trust company
or bank, or to an affiliate or subsidiary corporation, or to an officer or
employee of such trust company or bank shall be a breach of trust and
voidable at the election of any beneficiary or successor trustee. But a trust
company or bank as trustee of one trust may sell to itself as trustee of
another trust bonds and negotiable notes directly secured by a first lien
on improved real estate which at the time of sale satisfy the require-
ments of section fifty-four hundred and thirty-one of the Code of Vir-
ginia. , ,

(t) Any trust company or any bank doing a trust business, failing
to comply with the provisions imposed by subsections (m), (n), (0) and
(r), of this section or any one or more of them, may be suspended or
prohibited, or suspended and prohibited from doing a trust business by
the State Corporation Commission.