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As to security for gas to be consumed, see Kerr's Cyc. C. C.
§ 630, note.

§630a. WHEN CORPORATIONS MAT REFUSE TO SUP-
PLT ELECTRIC CURRENT FOR LIGHT. No corporation is
required to construct lines for the supply of electric current
for light where serious obstacles exist, nor shall such corpo-
ration be I'equired to supply such current from a direct wire
at a distance too remote from the generating station, to insure
a sufficient supply; nor is such corporation required to supply
electric current for light from a primary wire carrying cur-
rent of high voltage, unless the applicant deposit, in advance,
a sum of money sufficient to pay the actual costs of such con-
struction and for the appliances required to supply electric
current with safety at the proper voltage.

History: Enacted March 21, 1905, Stats, and Amdts. 1905,
p. 593; see introductory note to this title.

§ 631. RIGHT TO ENTER BUILDINGS FOR INSPECTION.

Any owner, manager or superintendent of gas or electric light
works, or agent of such owner, manager, or superintendent,
exhibiting written authority, signed by such owner, manager

427



§ 632 CIVIL CODE. [Div.I.Pt.IV.

or superintendent, or any agent of a gas or electric light cor-
poration exhibiting written authority signed by the president
or secretary thereof for such purpose, may enter any building
or premises lighted with gas or electricity supplied by such
owner or corporation, to inspect the gas meters or electric
meters therein to ascertain the quantity of gas or electricity
supplied or consumed. Every owner or occupant of such
building who hinders or prevents such entry or inspection
must pay to the owner or corporation the sum of fifty dollars
as liquidated damages.

History: Enacted March 21, 1905, Stats, and Amdts. 1905,
p. 593; see introductory note to this title.

As to constitutionality of above section, see Kerr's Cyc. C. C.
§ 631, note.

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

§ 632. RIGHT TO SHIT OFF SUPPLY OF GAS OR ELEC-
TRICITY. All gas or electric light corporations may shut off
the supply of gas or electricity from any person who neglects
or refuses to pay for the gas or electricity supplied, or the
rent of any meter, pipes, wires, fittings or appliances, pro-
vided by the corporation, as required by his contract; and
for the purpose of shutting off the gas or electricity in such
case any employee of the corporation may enter the building
or premises of such person, between the hours of eight o'clock
in the forenoon and six o'clock in the afternoon, of any day
and remove therefrom any property of the corporation used in
supplying gas or electricity.

History: Enacted March 21, 1905, Stats, and Amdts.- 1905,
p. 594; see introductory note to this title.

See Kerr's Cyc. C. C. for 13 pars, annotation.

132 C. 209, 212, 64 P. 258, 54 L. 769 (cited); 141 C. 699, 706
(referred to with other sections), 708 (construed and applied),
75 P. 329.

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



428



Tit. XVI.] BUILDING AND LOAN — POWERS. § 633

TITLE XVI.

BUILDING AND LOAN ASSOCIATIONS.

[Title XVI, of Part IV, of Division I, of the Civil Code of the
state of California, and each and every part and section thereof,
is liereby repealed, and a new title XVI is hereby enacted and
substituted to take the place thereof in said code, to read as
follows:]

§ 633. Formation, powers, and organization.
§ 634. Capital stock. [Dues, shares, etc.]
§ 635. Retiring' free shares.
§ 636. Maturity of stock.
§ 637. Loans — Prohibitions — Penalties.
§ 638. Interest- — Securities — Repayment of loans.
§ 638a. Witlidrawal or surrender of stock, notice [repealed].
§ 639. Arrears in payments — Defaults — Forfeitures.
§ 640. Purchase of real estate.
§ 641. Profits and losses.
§ 642. Withdrawals.
§ 643. Membership.

§ 644. State supervision and control.
§ 645. Annual report.

§ 646. Foreign corporations— Deposit by.
§ 647. Investment in and loans upon bonds.
§ 648. Building and loan association. Definition of term.
§ 648%. Taxation of. Act taxing stocks not applicable [repealed].
§ 648a. Building and loan association. Formation with or with-
out guarantee.

§633. FORMATION, POWERS, AXD ORGANIZATION.

Building and loan associations as hereinafter in this title
defined, shall have power to receive money and accumulate
funds to be loaned, and to loan the same to their shareholders,
investors and others; to permit shareholders and investors to
withdraw part or all of their payments, investments or stock
deposits, and to prescribe the terms and conditions of such
withdrawal; to cancel shares of stock, the payments on which
have been withdrawn; to receive deposits of money and to
execute certificates therefor, which must specify the date,
amount, rate of interest, and when the principal and interest

429



§ 633 CIVIL CODE. [Div.I,Pt.IV.

are payable, and also the withdrawal value thereof at the end
of each year; to borrow money for the purpose of making
loans and of paying withdrawals and maturities; and shall
have such further powers as may be specifically set forth
under this title.

[Wliut articles of incorporation must state.] Every such
corporation hereafter formed, in setting forth the purposes
for which it is formed, shall state, in its articles of incorpora-
tion, that it is formed to encourage industry, frugality, home
building, and savings among its shareholders and members;
the accumulation of savings; the loaning to its shareholders
and members of the moneys or funds so accumulated, with
the profits and earnings thereon, and the repayment to each,
of his savings and profits, whenever they have accumulated
to the full par value of the shares, or at any time when he
shall desire the same or when the corporation shall desire to
repay the same, as may be provided in the by-laws; and shall
also state that it is formed for all the purposes specified in
this title.

History: Original section enacted March 31, 1891, Stats, and
Amdts. 189], pp. 252-253; see introductory note to this title;
former section repealed and present enacted March 23, 1907,
Stats, and Amdts. 1907, p. 923, Kerr's Stats, and Amdts. 1906-7,
p. 416. In effect after July 1, 1907. Repealing clause post
§ 648.

See Kerr's Cyc. C. C. for 8 pars, annotation.

Former section. — 136 C. 525, 69 P. 225 (referred to).

As to estoppel generally to deny corporate existence, see
Kerr's Cyc. C. C. § 285 and note.

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

As to provisions of Stats. 1893, see Hen. G. L., tit. Building
and Loan Associations.

Commissioners of Building and Loan Associations — Powers
and duties of. — See Hen. G. L., Tit. Building and Loan Asso-
ciations.

BUIIiDING AND L,OAN ASSOCIATIONS — GENERALLY.

As to province of statute of 1893. — See Hen. G. L. tit. Building
and Loan Association,

As a co-partnership. — See 1 W. & P. 901.
As a savings institution. — See 1 TV. & P. 901.
Borrowing members, withdrawal of. — See 35 L. 296.

430



Tit. XVI.] BUILDING AND LOAN— GENERALLY. § 633

Building and loan stock, what is. — See 1 W. & P. 901.

Commissioners of Building and Loan Association. — Powers and
duties. — See Hen. G. L. tit. Building and Loan Association.

Conflict of laws as to usury in contracts of. — See 62 L. 64.

Constitutionality of statute exempting from usury laws. —
See 2 A. C. 996.

Contracts of, whether and when usurious.^See 83 A. D. 612.

Definition of building and loan association. — See Kerr's Cyc.
C. C. § 648 and note; 1 W. & P. 899.

Fines — As to generally, see 35 L. 215-224.

Same — Amount and reasonableness of. — See 35 L. 217.

Same — Cumulative and successive. — See 35 L. 219.

Same — Fines and interest on. — See 35 L. 220.

Same — Nature and validity o-f. — See 35 L. 215.

Fixed premiums or fixed minimums of premiums in building
and loan association. — See 35 L. 244.

History, objects and powers of, and membership and its
rights and obligations. — See 69 A. D. 158.

Insolvency of, effect of upon the riglits and liabilities of
members. — See 61 A. S. 24.

Liability of advanced member of building and loan associa-
tion to assessments for losses. — See 29 L. 177.

Loans — How far usurious. — See 18 L. 129.

Membership in, what constitutes. — See 1 A. C. 796.

Mode of settlement with borrowing members upon premature
dissolution. — See 4 A. C. 1080; 10 A. C. 391.

Power — To borrow money. — See 11 L. 847.

Same — To issue negotiable paper. — See 43 L. 419.

Priorities in payment of withdrawals. — See 35 L. 294.

Receivers for, when may be appointed. — See 72 A. S. 47.

Recovery of usury voluntarily paid. — See 1 A. C. 421.

Right to apply payments made on stock upon mortgage given
for a loan by the same member. — See 29 L. 120.

Savings and loan corporations. — See Kerr's Cyc. C. C. §§ 571-
580 and notes.

Status of present contracts. — See post § 648.

Termination of liability by withdrawal. — See 35 L. 300.

Usury — Conflict of laws as to in contracts of. — See 62 L. 64.

Same- — Constitutionality of statutes exempting from. — See 2
A. C. 996.

Same^ — How far loans are usurious. — See 18 L. 129.

Same — Law governing contracts of. — See 1 A. C. 241.

Same — Recovery of voluntarily paid. — See 1 A. C. 421.

Waiver by, of by-laws specifying person to whom and time
and place at which dues are to be paid. — See 3 A. C. 731.

Withdrawal — As to generally. — See 35 L. 289-296.

431



§ 634 CIVIL CODE. [Div.I.Pt.IV.

Same — Right to, from. — See 8 A. C. 835.

Same — When association is insolvent or being wound up. — See
35 L. 298.

§634. CAPITAL STOCK. [DUES, SHARES, ETC.] The
capital stock of every such corporation shall be divided into
shares 'of the matured or par value of one hundred or two
hundred dollars each, as provided by the articles of incorpora-
tion, and shall be paid in by the stockholders in the manner
provided by the by-laws. All such payments shall be called
dues. The shares shall be issued in such amounts and at such
times as the board of directors shall determine, and certificates
of stock shall be issued to each shareholder on the first pay-
ment of dues by him. Shares pledged as security for the
repayment of a loan shall be called pledged shares, and all
others, free shares. All stock matured and surrendered or
canceled, shall become the property of the corporation and
may be re-issued. The capital stock shall consist of the accu-
mulated dues together with the apportioned profits of the cor-
poration.

[Finos.] Any such corporation shall have power, by its
by-laws, to impose and collect a fine from each stockholder,
not exceeding five per cent of the defaulted amount, for every
neglect or refusal to make his payment when payable. Such
fines shall not be cumulative.

[Foes.] Every such corporation shall also have power, by
its by-laws, to charge an entrance or withdrawal fee, for each
share of stock it may issue, not exceeding one dollar on each
share, and also to charge a transfer fee, not exceeding ten
cents on each share, all of which fees shall be accounted for
by the corporation like other funds of the association. No
other fee, charge or deduction shall ever be made, or per-
mitted to be made against any shareholder, or against any
of his shares hereafter issued, or the dues paid in thereon
for the purpose of creating a fund to be used in the payment
of current or running expenses.

[Forms of stock.] The capital stock may be issued in any
or all of the following forms: instalment stock, paid-up stock,
and guarantee stock.

432



I



Tit XVI.] STOCK— INSTALLMENT, PAID UP. § 634

Instalment stock shall be stock on which the member or
holder must pay to the corporation on each share held by him,
dues in such amounts and at such times as the by-laws may
provide and on which the payment of dues must continue on
each share until, with the profits allotted thereto, it reaches
its matured value or is withdrawn or canceled. Such stock
may be issued in series, and when so issued, payment of dues
on shares in each series shall commence with the issue of
shares in such series. No share of a prior series shall be
issued after the issue of shares of a new series, except by
way of transfer.

Paid-up stock shall be stock for and upon which the owner
shall have paid to the corporation, the full par value thereof
in cash at the time of subscription therefor, and upon which
he shall be entitled either to full participation in the net
profits of the corporation, or to an agreed rate of interest or
dividend to be specified in the stock certificate, but not to
exceed six per cent per annum. All such stock shall be
issued under such regulations as may be provided in the by-
. laws and fully set forth in each certificate.

Guarantee stock shall be stock, provided by the by-laws, to
be set apart and sold as a fixed, permanent or guarantee capi-
tal. When any such stock has been once so set apart, sold
and issued, it shall thereafter remain as a fixed, permanent
and guarantee capital, and shall be subject to all the condi-
tions and liabilities attaching to the paid-in capital stock of
other classes of corporations. Such guarantee stock shall pro-
tect and guarantee all other stockholders and creditors
against any loss, and when once paid it must be kept unim-
paired.

[Directors from holders of guarantee stock, when.] Corpo-
rations specified in this title, issuing guarantee stock, may
provide in their by-laws that a- majority of the board of
directors shall be selected from the holders of such stock.

History: Original section enacted Marcli 21, 1891, Stats, and
Amdts. 1891, pp. 253-254; see introductory note to this title;
former section repealed and present enacted March 23, 1907,

433



§§ 635, 636 CIVIL CODE. [Div.I,Pt.IV.

Stats, and Amdts. 1907, p. 924, Kerr's Stats, and Amdts. 1906-7,
p. 417. In effect after July 1, 1907. Repealing clause post § 648.

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

Former section. — 136 C. 525, 69 P. 225 (referred to); 143 C.
253, 258, 76 P. 1034 (what charge is not an "entrance fee").

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

Status- of present contracts, see post §648.

§635. RETIRING FREE SHARES. The directors may in
their discretion, under the regulations prescribed by the by-
laws, retire any free shares of stock, other than those of the
guarantee stock, by enforcing the withdrawal thereof, but
whenever the withdrawal of any shares is to be enforced, the
holders thereof must be paid the amount actually paid in, and
the full amount of earnings at the date of retirement; pro-
vided that shares of instalment stock shall not be forced out
until after they shall have become four years old.

History: Original section enacted March 31, 1891, Stats, and
Amdts. 1891, p. 254; see introductory note to this title; amended
by Code Commission, Act March 16, 1901, Stats, and Amdts.
1900-1, p. 386, held unconstitutional, see history, § 4 ante; former
section repealed and present enacted March 23, 1907, Stats,
and Amdts. 1907, p. 925, Kerr's Stats, and Amdts. 1906-7, p. 418.
In effect after July 1, 1907. Repealing clause post § 648.

Former .section. — 136 C. 525, 69 P. 225 (referred to in general
way in connection with other sections).

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

Status of present contracts, see post § 648.

§ 636. MATURITY OF STOCK. When any stock shall have
reached its matured value, payment of dues thereon shall
cease. Borrowing stockholders whose loans are fully paid
shall have their securities released and returned to them.
Holders of free shares of stock shall be paid the matured
value thereof out of the funds of the corporation, with inter-
est at such rate as the by-laws shall provide, from the time
the board of directors shall declare such shares to have been
matured, until paid; but at no time shall more than one-half

434



Tit. XVI.] LOANS, ETC. — PENALTIES. § 637

of the receipts of the corporation be applicable to the pay-
ment of matured shares without the consent of said board.
The order of the payment of matured shares, if not otherwise
determined by the by-laws, shall be in the numerical order
of issuance.

History: Original section enacted March 31, 1891, Stats, and
Amdts. 1891, p. 254; see introductory note to this title; former
section repealed and present enacted March 23, 1907, Stats, and
Amdts. 1907, p. 925, Kerr's Stats, and Amdts. 1906-7, p. 418. In
effect after July 1, 1907. Repealing- clause post § 648.

See Kerr's Cyc. C. C. for 9 pars, annotation.

Former section. — 136 C. 525, 526, 69 P. 225 (referred to).

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

As to power to make, repeal, and amend by-laws, see Kerr's
Cj'c. C. C. §§ 301, 303, 304 and notes.

Status of present contracts, see post § 648.

§ 637. LOANS— PROHIBITIONS— PENALTIES. Loans may
be made on such terms and conditions as may be prescribed
by the board of directors or the by-laws. Loans may be made
for a definite time on the instalment plan. The number of
instalments in which a loan with agreed interest is to be
repaid, must be stated in the note or obligation evidencing
the loan, and when the payments have been made in accord-
ance with the contract, the borrower shall receive a release
of the security given by him.

[Unlawful borrowings.] It shall be unlawful for any
director or officer of any corporation governed by this title,
directly or indirectly, for himself, or as a partner or agent
for others, to borrow any of the funds of such corporation,
and any officer or director violating the provisions of this
section shall be guilty of a felony. Any officer or director of
any such corporation who consents on behalf of such corpora-
tion to make a loan to any officer or director of such corpora-
tion shall be guilty of a felony, and shall also be personally
liable to the corporation for the full amount thereof.

[Unlawful to loan on own guarantee stock.] It shall be
unlawful for any building and loan association to loan any

435



§ 638 CIVIL CODE. [Div.I.Pt.IV.

of its funds upon any of its own guarantee stock as security.
Any officer or director of an association who shall make any
such loan for and on behalf of any such association shall be
personally liable to the corporation for the full amount
thereof, and shall also be deemed guilty of a felony.

[Unlawful to invest in or loan funds on mines.] It shall be
unlawful for any such corporation to invest any of its funds
in, or loan any of its funds upon, any mining shares or min-
ing stocks or the stocks or bonds of any corporation, except
as in this title provided. Every officer or director who, on
behalf of any such corporation shall make any such invest-
ment or loan, or who shall consent thereto, shall be person-
ally liable to the corporation for the whole amount expended
by the corporation in such investment or upon such loan,
and shall also be deemed guilty of a felony.

HLstory: Orig-inal section enacted March 31, 1891, Stats, and
Amdts. 1891, pp. 254-255; see introductory note to this title;
former section repealed and present enacted March 23, 1907,
Stats, and Amdts. 1907, p. 926, Kerr's Stats, and Amdts. 1906-7,
p. 418. In effect after .July 1, 1907. Repealing clause post § 648.

See Kerr's Cyc. C. C. for 10 pars, annotation.

PoniuT sectiou. — 136 C. 525, 526, 69 P. 225 (construed and
held not applicable).

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

Status of present contracts, see post § 648.

§ 638. INTEREST — SECURITIES — REPAYMENT OF
LOANS. The board of directors may fix from time to time
the rate of interest on loans. For every loan made, a note or
obligation, secured by a first mortgage or deed of trust upon
unencumbered real estate, shall be given, accompanied by a
pledge to the association of shares of stock, as collateral
security for the repayment of the loan, the matured value of
which shall equal the amount of the loan, except that there
need be no such pledge in loans made to others than mem-
bers; or, in lieu of a mortgage or deed of trust, there may be
pledged to the association, for the payment of the loan, free
shares, but any such loan must not exceed ninety per cent

436



Tit. XVI.] ARREARS, ETC. — ^FORFEITURE. §§ 638a, 639

of the withdrawal value of such shares under the by-laws, at
the time of such borrowing.

[Repaynient.] At the discretion of the board of directors,
a borrower may repay, at any time, the loan with all interest
and arrears thereon, upon the surrender of the shares pledged
to secure the loan.

HLstory: Original section enacted March 31, 1891, Stats, and
Amdts. 1891, p. 255; amended February 25, 1897, Stats, and
Amdts. 1897, p. 30; March 11, 1901, Stats, and Amdts. 1900-1, p.
268; see introductory note to this title; former section repealed
and present enacted March 23, 1907, Stats, and Amdts. 1907, p.
926, Kerr's Stats, and Amdts. 1906-7, p. 419. In effect after July
1, 1907. Repealing- clause post § 648.

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

Former »$eotioii. — 136 C. 525, 69 P. 225 (referred to).

As to illegality of usurious rate of interest, see 34 L. 201;
35 L. 244.

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

Interest — General provisions as to. — See Kerr's Cyc. C. C.
§§ 1914-1920 and notes.

Usurious rate of interest. — See 4 Encyc. L. 1071-1074.

Status of present contracts, see post § 648.

§638.1. WITHDRAWAL OK SURRENDER OF STOCK,
NOTICE (repealed).

History: Original section enacted March 22, 1905, Stats,
and Amdts. 1905, p. 753; repealed March 23, 1907, Stats, and
Amdts. 1907, p. 923. In effect July 1, 1907.

§639. ARREARS IN PAYMENT— DEFAULTS— FORFEIT-
URES. Whenever any non-borrowing member shall be six
months in arrears in the payment of his dues upon free
shares, the secretary may give him notice thereof in writing,
and a statement of his arrearages, by mailing the same to
him at his last post-office address given by him to the associa-
tion; and if he shall not pay all arrearages within two months
thereafter, the board of directors may, at their option, declare
his shares forfeited, and at the time of such forfeiture, the
withdrawal value thereof shall be determined and stated,
and the defaulting member shall be entitled to withdraw the

437



§ 640 CIVIL CODE. [Div.I,Pt.IV.

same without interest, upon such notice as shall be required
of a withdrawing shareholder. Whenever a borrower shall
be three months in arrears in the payment of his dues or
interest or loan instalments, the whole loan shall become due
at the option of the board of directors, and they may proceed
to enforce collection upon the securities held by the associa-
tion. The withdrawal value, at the time of exercising such
option, of all shares pledged as collateral security, shall be
applied to the payment of the loan, and said shares from that
time shall be deemed surrendei'ed to the association and
canceled.

Hi-story: Original section enacted March 31, 1891, Stats, and
Amdts. 1891, p. 255; see introductory note to this title; former
section repealed and present enacted March 23, 1907, Stats, and
Amdts. 1907, p. 927, Kerr's Stats, and Amdts. 1906-7, p. 419. In
effect after July 1, 1907. Repealing clause post § 648.

See Kerr's Cyc. C. C. for 13 pars, annotation.

Former section. — 93 C. 300, 306, 28 P. 1049, 1050 (referred to);
116 C. 410, 414, 48 P. 375 (construed); 131 C. 336, 341, 63 P. 670
(referring to §639, as it stood originally); 136 C. 525, 526, 69
P. 225 (referred to).

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

Status of present contracts, see post § 648.

§ 640. PURCHASE OF REAL ESTATE. Any such associa-
tion may purchase at any sale, public or private, any real
estate upon which it may have a mortgage, judgment, lien, or
other encumbrance, or in which it may have an interest, and
may sell, convey, lease, or mortgage the same at pleasure to
any person or persons.

Hliiitory: Original section enacted March 31, 1891, Stats, and
Anidts. 1891, p. 255; see introductory note to this title; former



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