CHAPTER 27

An Act to amend and reenact § 6-76, as amended, of the Code of Virginia,
relating to limit of hability of a borrower to a bank. fH 61}

Approved February 17, 1960

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 capita:
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 fully guaranteed or insured by a State or by
a State authority for the payment of the obligation of which the faith
and credit of the State is pledged, 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 Smal] Business Administration or a federal
reserve bank has definitely agreed or committed itself to participate, to
the extent of such participation, 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 guar-
anteed by a federal guaranteeing agency, pursuant to the Defense Pro-
duction 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
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
instruments transferring or securing title covering livestock or giving a
lien on livestock when the market value of the livestock securing the obli-
gations 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 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 cov-
ering 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 limi-
tation 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 additional obligation is not at any time less than
one hundred and twenty-five per centum of the face amount of such addi-
tional 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 hun-
dred and thirty 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 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 additional obligation, but this
exception shall not apply to obligations of any one person, partnership,
association or corporation arising from the same transactions and secured
upon the identical staples for more than ten months.

ll 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.