CHAPTER 74
An Act to amend and reenact § 6-76, as amended, of the Code of Virginia,
relating to limit of liability of a borrower to a bank. CH 106]

Approved February 21, 1958

Be it enacted by the General Assembly of Virginia:

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

§ 6-76. 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
Virginia and of its political subdivisions, including sanitary or public
facilities 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
Administrator, obligations guaranteed as to principal and interest by the
United States, loans in which the Reconstruction Finance Corporation or
the Small Business Administration or a federal reserve bank has definitely
agreed or committed itself to participate, to the extent of such participa-
tion, 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 a federal guaranteeing
agency, pursuant to the Defense Production Act of 1950, or bonds and
notes of the Federal National Mortgage Association or obligations of
Federal Land Banks, Federal Intermediate Credit Banks, or Banks for
Cooperatives issued pursuant to Acts of Congress.

(6) Obligations of any person, partnership, association or corpora-
tion, secured by not less than a like amount of bonds or notes or other
evidences of indebtedness of the United States or of the State of Virginia
that will become due and payable within eighteen months after the date
of the obligation.

(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 estab-
lished 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 having
a maturity of not more than six months, and owned by the person, part-
nership, 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 instru-
ments transferring or securing title covering livestock or giving a 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.

(3) Obligations of any person, partnership, association or corporation
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 obli-
gations exceed fifteen per centum of such capital and surplus.

(c) Obligations of any person, partnership, association or corporation,
in the form of notes or drafts secured by shipping documents, warehcuse
receipts or other such documents transferring or securing title covering
readily marketable nonperishable staples when such property is fully cov-
ered by insurance, if it is customary to insure such staples, shall be subject
under this sectivn 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 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 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 addi-
tional 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 and thirty per centum
of the face amount of such additional obligation, and to a further addi-
tional 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 hundred and 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 and forty per centum of the face amount of such addi-
tional obligation, but this exception shall not apply to obligations of any
one person, partnership, association or corporation arising from the same
emeneniens 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 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.