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222, 32 P. 3 (section expressly authorizes what); 126 C.
413, 415, 58 P. 914 (distinction between "loan" and "invest");
136 C. 432, 442, 89 A. S. 153, 64 P. 692, 69 P. 77 (loans must be on
adequate security).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.



§ 572. CAPITAL STOCK, AND RIGHTS AND PRIVILEGES
THEREOF. When savings and loan corporations have a
capital stock specified in their articles of incorporation, cer-
tificates of the ownership of shares may be issued; and the
rights and privileges to be accorded to, and the obligations
to be imposed upon, such capital stock, as distinct from
those of depositors, must be fixed and defined, either in the
articles of incorporation or jn the by-laws.

History: Enacted March 21, 1872, founded upon § 17 Act
April 11, 1862, Stats. 1862, p. 203.

See Kerr's Cyc. C. C. for 6 pars, annotation.

64 C. 117, 123, 28 P. 110, 112 (referred to); 109 C. 396, 401, 42 P.
149 (construed and applied); 117 C. 157, 160, 162, 59 A. S. 162
48 P. 1090, 37 L. 619 (referred to in discussion).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

§ 573. NO DIVIDENDS, EXCEPT FROM SURPLUS PROF-
ITS. TO CONTRACT NO LIABILITY, EXCEPT FOR DEPOS-
ITS. The directors of savings and loan corporations may,
at such times and in such manner as the by-laws prescribe,
declare and pay dividends of so much of the profits of the
corporation, and of the interest arising from the capital stock
and deposits, as may be appropriated for that purpose under
the by-laws or under their agreements with depositors.

The directors must not contract any debt or liability against
the corporation for any purpose whatever, except for depos-
its. The capital stock and the assets of the corporation are a
security to depositors and stockholders, depositors having
the priority of security over the stockholders, but the by-laws

378



Tit. X.] PROPERTY MAY OWN AND HOLD. § 574

may provide that the same security shall extend to deposits
made by stockholders.

History: Enacted March 21, 1872, founded upon § 10, Act
April 11, 1862, Stats. 1862, p. 201, as amended Act March 4,
1870, Stats. 1869-70, p. 130.

See Kerr's Cyc. C. C. for 9 pars, annotation.
64 C. 117, 123, 28 P. 110, 112 (referred to with other sections);
109 C. 396, 401, 42 P. 149 (construed and applied); 117 C. 157,
160, 59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to with other
sections); 119 C. 334, 343, 51 P. 317 (construed).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

§ 574. PROPERTY >VHICH MAY BE 0>Y>ED BY CORPO-
RATION. WHAT MAY NOT HOLD, ETC. Savings and loan
corporations may purchase, hold and convey real and personal
property as follows:

1. The lot and building iu which the business of the corpo-
ration is carried on, the cost of which must not exceed one'
hundred thousand dollars; except, on a vote of two-thirds of
the stockholders the corporation may increase the sum to an
amount not exceeding two hundred and fifty thousand dol-
lars ;

2. Such as may have been mortgaged, pledged or conveyed
to it in trust, for its benefit in good faith, for money loaned
in pursuance of the regular business of the corporation;

3. Such as may have been purchased at sales under pledges,
mortgages or deeds of trust made for its benefit, for money
so loaned, and such as may be conveyed to it by borrowers
in satisfaction and discharge of loans made thereon;

4. No such corporation must purchase, hold or convey real
estate in any other case or for any other purpose; and all
real estate described in subdivision three of this section must
be sold by the corporation within ten years after the title
thereto is vested in it by purchase or otherwise;

5. No such corporation must purchase, oivn, or sell per-
sonal property, except such as may be requisite for its imme-
diate accommodation for the convenient transaction of its
business, mortgages on real estate, bonds, securities or evi-

379



§ 575 CIVIL CODE. [Div.I.Pt.IV.

dences of indebtedness, public or private, gold and silver
bullion and United States mint certificates of ascertained
value and evidences of debt issued by the United States;

6. No such corporation must purchase, hold or convey
bonds, securities or evidences of indebtedness, public or pri-
vate, except bonds of the United States, of the state of Cali-
fornia, and of the counties, cities, or cities and counties, or
towns, or school districts of the state of California, or bonds
of railroad or street-railroad corporations owning property
and having their principal place of business in the state of
California, unless such corporation has a capital stock or
reserve fund paid in of not less than one hundred thousand
dollars.

History: Enacted March 21, 1872, founded upon § 13 Act
April n, 1862, Stats. 1862, p. 202, as amended by Act March
12, 1864, Stats. 1863-4, p. 158, and by Act March 31, 1866, Stats.
1865-6, p. 626; amended March 30, 1874, Code Amdts. 1873-4, p.
.273; amended by Code Commission, Act March 16, 1901, Stats.
and Amdts. 1900-1, p. 375, held unconstitutional, see history,
§ 4 ante; amended March 23, 1901, Stats, and Amdts. 1900-1,
p. 659. In force March 23, 1901.

See Kerr's Cyc. C. C. for 5 pars, annotation.

64 C. 117, 123, 28 P. 110, 112 (referred to with other sections);
109 C. 396, 401, 42 P. 149 (referred to with other sections); 117
C. 157, 160, 59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to with
other sections); 126 C. 413, 416, 417, 58 P. 914 (subds. 4, 5 con-
strued and applied); 133 C. 611, 613, 85 A. S. 225, 65 P. 1078
(subds. 3, 4 construed); 136 C. 432, 442, 89 A. S. 153, 64 P. 692,
69 P. 77 (subd. 6 construed with §571); 149 C. 122, 124, 84 P.
835 (subd. 4 of section applied); 3 C. A. 706, 710, 86 P. 991
(referred to).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

§575. MAERIED WOMEN AND MINORS MAY OWN
STOCK IN THEIR OWN RIGHT. Married women and min-
ors may, in their own right, make and draw deposits and
draw dividends, and give valid receipts therefor.

History: Enacted March 21, 1872, founded upon §§ 14, 15 Act
April 11, 1862, Stats. 1862, p. 202, as amended Act March 12,
1864, Stats. 1863-4, p. 160, and amendatory Act March 4, 1870,
Stats. 1869-70, p. 132.

380



Tit. X.] CERTIFICATES — RESERVE. §§576,577

See Kerr's Cyc. C. C. for 2 pars, annotation.

64 C. 117, 123, 28 P. 110, 112 (referred to with other sections);
117 C. 157, 16.0, 59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to
with other sections); 134 C. 403, 405, 66 P. 569 (construed and
applied).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

Separate property of wife in deposits. — See Kerr's Cyc. C.
C. § 164 and note pars. 18-20.

§ 576. MAY ISSUE TRA^fSFERABLE CERTIFICATES OF
DEPOSIT. SPECIAL CERTIFICATES. Savings and loan
corporations may issue general certificates of deposit, which
are transferable, as in other cases, by indorsement and deliv-
ery; may issue, when requested by the depositor, special
certificates, acknowledging the deposit by the person therein
named of a specified sum of money, and expressly providing
on the face of such certificate that the sum so deposited and
therein named may be transferred only on the books of the
corporation; payment thereafter made by the corporation to
the depositor named in such certificate, or to his assignee
named upon the books of the corporation, or, in case of
death, to the legal representative of such person, of the sum
for which such special certificate was issued, discharges the
corporation from all further liability on account of the
moneys so paid.

History: Enacted March 21, 1872, founded upon § 1 Act
March 28, 1868, Stats. 1867-8, p. 459.

See Kerr's Cyc. C. C. for 3 pars, annotation.

64 C. 117, 123, 28 P. 110, 112 (referred to with other sections);
109 C. 396, 403, 42 P. 149 (construed and applied); 117 C. 157, 160,
59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to with other sec-
tions); 119 C. 334, 341, 51 P. 317 (construed and applied);
136 C. 510, 512, 69 P. 257 (referred to).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

§577. TO PROVIDE RESERVE FUND FOR THE PAT-
MEKT OF LOSSES. Savings and loau corporations may pre-
scribe by their by-laws the time and conditions on which
repayment is to be made to depositors; but whenever there

381



§ 578 CIVIL CODE. [Div.I.Pt.IV.

is any call by depositors for repayment of a greater amount
than the corporation may have disposable for that purpose,
the directors or officers thereof must not make any new
loans or investments of the funds of the depositors, or of the
earnings thereof, until such excess of call has ceased.

[Corporations without capital — Keserve fund.] The direc-
tors of any such corporation having no capital stock must
retain, on each dividend day, at least five per cent of the net
profits of the corporation, to constitute a reserve fund, which
must be invested in the same manner as other funds of the
corporation, and must be used toward paying any losses which
the corporation may sustain in pursuing its lawful business.

[Excess of reserve fund — Disposition on dissolution.] The
corporation may provide by its by-laws for the disposal of
any excess in the reserve fund over one hundred thousand
dollars, and the final disposal, upon the dissolution of the
corporation, of the reserve fund, or of the remainder thereof,
after payment of losses.

History: Enacted March 21, 1872, founded upon § 11 Act
April 11, 1862, Stats. 1862, p. 201; Acts March 31 and April 4,
1870, Stats. 1869-70, pp. 523, 822.

See Kerr's Cyc. C. C. for 2 pars, annotation.

57 C. 594, 602 (applied); 64 C. 117, 123, 28 P. 110 (referred to
with other sections); 109 C. 396, 401, 42 P. 149 (referred to with
other sections).

As to many miscellaneous matters as to corporations gen-
erally,- see note § 283, ante.

Deposits and net profits — Trust funds. — See Kerr's Cyc. C. C.
§ 573 and note.

§ 578. PROHIBITION ON DIRECTOR AND OFFICER, AND

WHAT VACATES OFFICE. No director or officer of any
savings and loan corporation must, directly or indirectly, for
himself or as the partner or agent of others, borrow any
of the deposits or other funds of such corporation, nor must
he become an indorser or surety for loans to others, nor in
any manner be an obligor for moneys borrowed of or loaned
by such corporation. The office of any director or officer

382



I



' Tit. X.] "CREATE DEBTS," DEFINITION OF. §§ 579^ 58O

who acts in contravention of the provisions of this section
immediately thereupon becomes vacant.

History: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 3 pars, annotation.

64 C. 117, 123, 28 P. 110, 112 (referred to with other sections);
104 C. 473, 476, 480, 38 P. 102 (construed and applied); 117 C. 157,
160, 59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to with other
sections); 124 C. 282, 291. 71 A. S. 58, 57 P. 84, 85 (construed and
applied); 130 C. 245, 257, 62 P. 466, 467, 600 (referred to with
other sections); 136 C. 432, 442, 89 A. S. 153, 64 P. 692, 69 P.
77 (applied).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.



§579. DEFINITION OF PHRASE "CREATE DEBTS."

Receiving deposits, issuing certificates of deposit, checlts, and
bills of exchange and the like, in the transaction of the busi-
ness of savings and loan corporations, must not be construed
to be the creation of debts within the meaning of the phrase
"create debts," in section 309.

HLstory: Enacted March 21, 1872.

57 C. 594, 602 (referred to with other sections); 64 C. 117, 123,
28 P. 110, 112 (referred to with other sections); 117 C. 157,
160, 59 A. S. 162, 48 P. 1090, 37 L. 619 (referred to with other
sections); 17 Nev. 146, 30 P. 703, 705 (there is no such statute
in Nevada. In that state the relation of debtor and creditor
does exist between general depositors and banks).

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.



§ 580. BANKS, AMOUNT OF CAPITAL STOCK REQUIRED

(repealed).

History: Original section enacted by Code Commission, Act
March 16, 1901, Stats, and Amdts. 1900-1, p. 376, held unconsti-
tutional, see history, § 4 ante; an entirely different provision
with sectional number enacted March 5, 1903, Stats, and Amdts.
1903, p. 87; re-enacted almost verbatim March 20, 1905, Stats,
and Amdts. 1905, p. 507; repealed March 18, 1907, Stats, and
Amdts. 1907, p. 576, Kerr's Stats, and Amdts. 1906-7, p. 415.

383



§§ 581-583 CIVIL CODE. [Div.I.Pt.IV.

§ 581. RESTRICTIONS ON SAVINGS BANKS. No savings
bank shall lend to exceed sixty per cent of the market value
of any piece of real estate to be taken as security, except
for the purpose of facilitating the sale of property owned
by the corporation. And it shall be unlawful for any sav-
ings and loan society, or savings bank, to purchase, invest,
or loan its capital, or the money of its depositors, or any
part of either, in mining shares or stocks. Any president
or managing officer who knowingly consents to a violation
of the above provision shall be deemed guilty of a felony.

History: Enacted Marcli 21, 1903, Stats, and Amdts. 1903,
p. 352. In force March 21, 1903.

§ 582. TRUE NAMES OF PERSONS ENGAGED IN BANK-
ING BUSINESS MUST BE SHOWN. Every person or num-
ber of persons not being incorporated, engaged in the busi-
ness of banking, or publicly receiving money on deposit must
conduct such business under a name which shows the true
names of all persons engaged therein, unless such person
or persons have complied with the provisions of article seven
of chapter two of title ten of part four of division third of
said Civil Code.

[Penalty for violatioii.] Every person violating any of the
provisions of this section is guilty of a misdemeanor, and
is punishable by imprisonment in the county jail for not
less than ninety days nor more than six months, or by fine
of not less than one hundred dollars nor more than five
hundred dollars, or by both such fine and imprisonment.

HLstory: Enacted March 21, 1903, Stats, and Amdts. 1903, pp.
352-353. In force March 21, 1903.

§ 583. DIVIDENDS. SURPLUS FUNDS. The directors of
any savings bank, bank, or banking corporation having a
capital stock, may semi-annually declare a dividend of so
much of the net profits of the stockholders as they shall judge
expedient; but every such corporation shall, before the
declaration of such dividend, carry at least one-tenth (1-10)
part of the net profits of the stockholders for the preceding

384



Tit. X.] PAID IN CAPITAL— REPORT. §§ 583a, 583b

half year to its surplus or reserve fund until the same shall
amount to twenty-five per centum of its paid-up capital stock.
But the whole or any part of such surplus or reserve fund,
if held as the exclusive property of stockholders, may at
any time be converted into paid-up capital stock, in which
event such surplus or reserve fund shall be restored in man-
ner as above provided until it amounts to twenty-five per
centum of the aggregate paid-up capital stock. A larger
surplus or reserve fund may be created, and nothing herein
contained shall be construed as prohibitory thereof.

History: Enacted March 21, 1903, Stats, and Amdts. 1903, p.
353. In effect March 21, 1903.

134 C. 603, 605, 65 P. 321, 66 P. 860 (miscited for § 853).
As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

§583a. CAPITAL ACTUALLY PAID UP MUST BE PUB-
LISHED. No banker, nor officer of any bank or corporation
doing a banking business, shall advertise in any manner, or
publish any statement of the capital stock authorized or
subscribed, unless he advertise and publish in connection
therewith, the amount of capital actually paid up. Any officer,
or the officers of any bank or corporation doing a banking
business, advertising in any manner, or publishing, a state-
ment of the capital stock of such bank or banking corpora-
tion, authorized or subscribed, without the statement in con-
nection therewith of the stock actually paid up, shall be
guilty of a misdemeanor.

History: Enacted March 21, 1903, Stats, and Amdts. 1903, p.
353. In effect March 21, 1903.

§ 5S3b. BIENNIAL REPORT TO BANK COMMISSIONERS

OF UNCLAIMED DEPOSITS. The president of every savings
bank, savings and loan society, and every other bank, deposi-
tory, society, or institution in which deposits of money are
made, whether any interest or dividend is paid, or agreed
to be paid, thereon or not, must, within fifteen days after
the first day of January of every odd-numbered year, return
Kerr's C. C. — 13 385



§ 583b CIVIL CODE. [Div.I,Pt.IV.

to the board of bank commissioners a sworn statement show-
ing the amount placed to his credit, the last known place of
residence or post-office address, and the fact of death, if
known to such president, of every depositor who has not
made a deposit therein or withdrawn therefrom any part
of his deposit, or any part of the interest or dividends
thereon, for a period of more than ten years next preceding.
Such president must give notice of these deposits in one
or more newspapers published in or nearest the town, city,
or city and county where such bank, society, or other insti-
tution is situated or has its principal place of business, at
least once a week for four successive weeks, the cost of
such publication to be paid pro rata out of such unclaimed
deposits. This section does not apply to any deposit made
by or in the name of a person known to the president to
be living, or which, with the accumulation thereon is less
than fifty dollars. The board of bank commissioners must
incorporate in their subsequent report each return made to
them as provided in this section. Any president of any of
the institutions mentioned in this section who neglects or
refuses to make the sworn statement required thereby is
guilty of a misdemeanor.

History: Enacted March 21, 1905, Stats, and Amdts. 1905, pp.
580-581. The act contains two repealing sections as follows:
§2. The act entitled "An act to compel savings hanks to pub-
lish a sworn statement of all unclaimed deposits," approved
March 23, 1893, is hereby repealed. § 3. The act entitled "An
act to compel all depositories of money and commercial banks
to publish a sworn statement of all unclaimed deposits," ap-
proved February 25, 1897, is hereby repealed.

See Kerr's Cyc. C. C. for 3 pars, annotation.
Bank Commissioners. — See Hen. G. L. p. 65, and note p. 72.
As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.



386



Tit. XI.]- MINING COMPANIES— AGENCIES. § 586

TITLE XI.
MINING CORPORATIONS.

[The original Title XI, embracing' §§ 584-587, repealed March
21, 1905, and a new Title XI substituted therefor, embracing §§
586-590, Stats, and Amdts. 1905, pp. 584-587, and is substantially
the codification of Act 1880 (Stats. 1880, p. 134), as amended by
Act 1897 (Stats, and Amdts. 1897, p. 38), and amendments pro-
posed by Code Commission, Act March 16, 1901 (Stats, and
Amdts. 1900-1, p. 377), held unconstitutional, see history, § 4
ante.]

§ 586. Transfer agencies. [May establish in other states.]

§ 587. Stock issued at transfer agencies. [Surrender of cer -
tificate.]

§ 587a. Consolidation of mining corporations. [Written consent
of stockholders.]

§ 588. Books and balance-sheet to be kept by secretary. Stock-
holders' right to inspect.

§ 589. Right of stockholder to visit mine with expert. [Duty
of superintendent.]

§ 590. Liability of president and directors. [Refusal to per-
mit examination; damages.]

§586. TRANSFER AGENCIES. [MAY ESTABLISH IN
OTHER STATES.] Any corporation organized in tliis state
for tlie purpose of mining or carrying on mining operations
in or without this state, may establish and maintain agencies
in other states of the United States, for the transfer and
issuing of their stock; and a transfer or issue of the same
at any such transfer agency, in accordance witli the provi-
sions of its by-laws, is valid and binding as fully and
effectually for all purposes as if made upon the books of
such corporation at its principal office within this state. The
agencies must be governed by the by-laws and the directors
of the corporation.

History: Enacted March 21, 1905, Stats, and Amdts. 1905,
pp. 584-585; see introductory note to this title.

See Kerr's Cyc. C. C. for 2 pars, annotation.
142 C. 391, 392, 75 P. 1086 (referred to with other sections).

387



§§ 587, 587a CIVIL CODE. [Div.I.Pt.IV.

As to locating mining claims, tunnel riglits, mill sites, etc.,
see post §§ 1426-1426S.

As to many niiscellaneous matters of corporations generally,
see note § 283, ante.

§ 587. STOCK ISSUED AT TRANSFER AGENCIES. [SUR-
RENDER OF CERTIFICATE.] All stock of any such corpora-
tion, Issued at a transfer agency, must be signed by the
president and secretary of the corporation, and countersigned
at the time of its issue by the agent having charge of the
transfer agency. No stock must be issued at a transfer
agency unless the certificate of stock, in lieu of which the
same is issued, is at the time surrendered for cancelation.

HLstory: Enacted March 21, 1905, Stats, and Anulls. lltos, p.
585; see introductory note to this title.

See Kerr's Cyc. C. C. for 3 pars, annotation.

As to many miscellaneous matters as to corporations gen-
erally, see note § 283, ante.

Consolidation of railroad corporations. — See Kerr's Cyc. C. C.
§ 473 and note.

§587a. CONSOLIDATION OF MINING CORPORATIONS.
[WRITTEN CONSENT OF STOCKHOLDERS.] It is lawful
for two or more corporations formed, or that may hereafter
be formed, under the laws of this state, for mining pur-
poses, which own or possess mining claims or lands adjoin-
ing each other, or lying in the same vicinity, to consolidate
their capital stock, debts, property, assets, and franchises,
in such manner and upon such terms as may be agreed
upon by the respective boards of directors or trustees of
such corporations so desiring to consolidate their interests;
but

No such consolidation must take place without the written
consent of the stockholders representing two-thirds of the
capital stock of each corporation, and no such consolidation
can, in any way, relieve such corporations, or the stock-
holders thereof, from any and all just liabilities; and in case
of such consolidation.

Due notice of the same must be given, by advertising, for

388



Tit. XL] BOOKS AND BALANCE-SHEETS. § 588

one month, in at least one newspaper in the county where
the said mining property is situated, if there is one pub-
lished therein, and also in one newspaper published in the
county where the principal place of business of any of said
corporation is.

[Certificate of consolidation — Filed, where.] And when the
consolidation is completed, a certificate thereof, containing
the manner and terms of such consolidation, must be filed
in the office of the county clerk of the county in which the
original certificate of incorporation of each of said corpora-
tions is filed, and a copy thereof must be filed in the office
of the secretary of state.

[Same] — To be signed by boards — Calling meeting of
stockholders — Notice.] Such certificate must be signed by a
majority of each board of trustees or directors of the origi-
nal corporations, and it is their duty to call, within thirty
days after the filing of such certificate, a meeting of the
stockholders of all of said corporations so consolidated, to
elect a board of trustees or directors for the consolidated
corporation, for the year thence next ensuing; and to cause
notice of the time and place fixed for such meeting to be
mailed to each stockholder of each of such corporations at
his last known place of residence or business at least ten
days before the time fixed for such meeting. The said cer-
tificate must also contain all the requirements prescribed by
section two hundred and ninety.

Bistory: Enacted March 21, 1905, Stats, and Amdts. 1905, p.
585; see introductory note to this title.

§588. BOOKS AND BALANCE-SHEET TO BE KEPT BY
SECRETARY. STOCKHOLDERS' RIGHT TO INSPECT. It

is the duty of the secretary of every corporation formed for
the purpose of mining, or conducting mining in California,
whether such corporation be formed and organized under
the laws of the state of California or of any other state,



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