Chap. 14.—An ACT to amend and re-enact Section 48 of Chapter 507 of the Acts
of Assembly of 1928, approved March 27, 1928, and known as the Virginia
Banking Act, as heretofore amended, relating to the limit of liability of bor-
rowers to banks. [S B 23]

Approved February, 18, 1946

Be it enacted by the General Assembly of Virginia:

1. That section forty-eight of chapter five hundred seven of the
Acts of Assembly of nineteen hundred twenty-eight, approved March
wenty-seventh, nineteen hundred twenty-eight, and known as the Vir-
yinia Banking Act, as heretofore amended, be amended and re-enacted, as
follows :

Section 48. Limit of liability of borrowers——(a) The total liabili-
ties of any person, partnership or corporation to any bank, including the
liabilities of the co-partnership, and the liabilities of the several members
thereof, except special partners, shall at no time exceed fifteen per centum
of the capital and permanent surplus of such bank. Provided, that such
imitation of fifteen per centum shall be subject to the following ex-
ceptions :
(1) Obligations in the form of drafts or bills of exchange drawn
in good faith against actually existing values shall not be subject under
this section to any limitation based upon such capital and surplus.

(2) Obligations arising out of the discount of commercial or busi-
ness paper actually owned by the person, co-partnership, association, or
corporation negotiating the same shall not be subject under this section
to any limitation based upon such capital and surplus.

(3) Obligations drawn in good faith against actually existing values
and secured by goods or commodities in process of shipment shall not be
subject under this section to any limitation based upon such capital and
surplus.

P (4) Obligations as indorser or guarantor of notes, other than com-
mercial or business paper excepted under (two) hereof, having a ma-
turity of not more than six months, and owned by the person, corpora-
tion, association, or co-partnership indorsing and negotiating the same,
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.

(5) Obligations in the form of banker’s acceptances of other banks
of the kind described in section thirteen of the Federal Reserve Act shal
not be subject under this section to any limitation based upon such capital
and surplus.

(6) Obligations of any person, co-partnership, association or cor-
poration, in the form of notes or drafts secured by shipping documents,
warehouse receipts or other such documents transferring or securing
title covering readily marketable non-perishable staples when such prop-
erty 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
obligation 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 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 hundred and twenty 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 thirty-
five 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 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 additional obligation is not at any time less than
one hundred thirty 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-five 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 thirty-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 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
forty per centum of the face amount of such additional obligation, but this
exception shall not apply to obligations of any one person, co-partnership,
association or corporation arising from the same transactions and/or
secured upon the identical staples for more than ten months.

(7) Obligations of any person, co-partnership, association, or cor-
poration in the form of notes or drafts secured by shipping documents or
instruments transferring or securing title covering livestock or giving a
lien on livestock when the market value of the livestock securing the
obligation is not at any time less than one hundred and fifteen per centum
of the face amount of the notes covered by such documents shall be sub-
ject under this section to a limitation of fifteen per centum of such capital
surplus in addition to such fifteen per centum of such capital and surplus.

(8) Obligations of the United States, obligations of the State of
Virginia and of its political subdivisions, including sanitary districts,
obligations issued undeg authority of the Federal Farm Loan Act, as
amended, or issued by the Federal Home Loan Banks or the Home
Owners’ Loan Corporation, first mortgage real estate loans, which are
insured by the Federal Housing Administration, obligations guaranteed
as to principal and interest by the United States, loans in which Recon-
struction Finance Corporation, a Federal Reserve Bank, or either of
them, has definitely agreed or committed itself to participate, to the ex-
tent of such participation, and loans which the Federal Commodity Credit
Corporation has definitely agreed to purchase, direct obligations of and
obligations guaranteed by the Export-Import Bank and loans guaranteed
by the War Department, the Navy Department or the Maritime Com-
mission, pursuant to Regulation V of the Federal Reserve Board, shall
not be subject to any limitations based upon such capital and surplus.

(9) Obligations of any person, co-partnership, association, or cor-
poration in the form of notes secured by not less than a like amount of
bonds or notes of the United States, or bonds of the State of Virginia,
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 surlus.

(b) All loans permitted hereunder in excess of fifteen per centum
of the capital and permanent surplus of any bank shall be approved by a
majority of the board of directors, or by a majority of the executive
committee of said board, by resolution which shall be recorded in the
minutes of said board or committee, and signed by the directors present
and consenting thereto.

(c) The validity of loans previously made in accordance with the
provisions of this section prior to the amendment shall not be affected by
this amendment, and such loans may from time to time be renewed,
provided such loans shall be reduced or collected in full, as the case may
be, as soon as reasonably possible, so as to conform to the provisions of
this section.