next following such classification; the term of office of the second class shall expire one year thereafter; and the term of office of the third class shall expire two years thereafter. At or before the expiration of the term of the first class, and annually thereafter, a number of directors shall be elected equal to the number of directors whose term will then expire, who shall hold their offices for three years or until their successors are elected.

"Such election shall be held at the office of the corporation and at such time and upon such public notice, not less than ten days, by advertisement in at least one newspaper, approved by the Superintendent of Banks, published in the city where such corporation is located, as shall be prescribed in the bylaws."

In case of failure to elect any director on the day named, the directors whose terms of office do not that year expire, may proceed to elect a number of directors equal to the number in the class whose term that year expires, or such number as may have failed of re-election. The persons so elected, together with the directors whose terms of office shall not that year expire, shall constitute the Board of Directors until another election shall be held according to law. Vacancies occurring in the intervals of elections shall be filled by the Board.

"If default shall be made in the payment of any debt or liability contracted by any such corporation, the stockholders thereof shall be individually responsible, equally and ratably, for the then existing debts of the corporation, but no stockholder shall be liable for the debts of the corporation to an amount exceeding the par value of the respective shares of stock by him held in such corporation at the time of such default.

"For all losses of money which the capital stock shall not be sufficient to satisfy, the directors shall be responsible in the same manner and to the same extent that directors are now responsible in law or equity.

"Every trust company incorporated by a special law shall possess the powers of trust companies incorporated under the

general law, and shall be subject to such provisions thereof as are not inconsistent with the special laws relating to such specially chartered company."

The consolidation or merger of trust companies is provided for by an act which went into effect April 23, 1895. See page 102 State Banks.

It is true that while trust companies are compelled by law, as stated in Section 160, to pay interest on all sums in their hands held in certain capacities, yet the rate of interest is lower than that paid by savings banks, although the money on deposit in the trust company is subject to immediate withdrawal, whereas a savings bank may require, according to its constitution and by-laws and the regulations printed in its pass-books, a notice of sixty days.

The sources of income are much more diversified than in the case of banks. Drawing a large part of their revenue from acting in the different fiduciary capacities for which they are created, and for which services they charge a commission, and being less restricted as to the character, nature, and time of their loans, they can make many which the banks cannot. A very large portion of its loans are upon, or secured by, real estate. In fact, loans upon real estate in the cities are effected, almost exclusively, through savings banks, trust and life insurance companies.

Probably the largest source of income of trust companies of New York is acting as the financial agent of corporations.

CHAPTER VIII.

Safe Deposit Companies-Building and Mutual Loan Associations-Cooperative Loan Associations-Mortgage and Debenture Companies.

Safe Deposit Companies.

THESE Companies may be aptly called the "warehouses of finance," occupying the same relation to it that storage warehouses do to commerce.

Article VII. of the State banking laws, which provides for the organization of these companies, states that they may be incorporated by five or more persons for the purpose of taking and receiving upon deposit as bailee for safe keeping and storage jewelry, plate, money, specie, bullion, stocks, bonds, securities, and valuable papers of any kind, and other valuable personal property, and guaranteeing their safety upon such terms and for such compensation as may be agreed upon by it and the respective bailors (depositors) thereof; and to let out vaults, safes, and other receptacles for the uses and purposes of such corporations, by making and filing with the County Clerk of the County, where the same may be located, and the Superintendent of Banking, a certificate similar to that required of other corporations organized under the banking law.

The law provides that its capital shall not be more than $1,000,000 nor less than $100,000, except in cities or villages of less than 100,000 inhabitants, where the same shall not be less than $10,000; the term of its corporate existence shall not exceed fifty years; it shall not com

mence or transact business, not make any loans or advances on any property left with it for storage or safe keeping, until the whole amount of its capital stock has been paid in; and until its certificate has been approved by the Superintendent of Banks and duly filed, as in the case of other banking corporations.

Its affairs shall be managed by not less than five or more than thirteen directors, who shall be stockholders, and a majority of whom shall be citizens of this State, which directors shall, after the first year, be annually elected at the time and place prescribed by its laws, notice of which shall be published ten days before the election in a newspaper in the place where its business is conducted.

The directors may make such by-laws make such by-laws as they shall deem proper for the management, disposition of the stocks, property, and business affairs of the corporation; prescribing the duties of officers and employees, the manner of the appointment and election of all officers, and for carrying on all kinds of business within the objects and purposes of the corporation.

There shall be a President, to be selected from among the directors, and such subordinate officers as the by-laws may designate, who may be appointed or elected. The Board may require of the officers and employees of the company such security or bonds for the faithful performance of their duties as it may deem necessary.

The stockholders shall be jointly and severally liable for all debts due and owing by the corporation to an amount equal to the par value of their stock therein over and above such stock, to be recovered of the stockholders who are such when the debt is contracted or the loss or damage sustained, or of any subsequent stockholder. Any stockholder who may have paid any demand against such corporation either voluntarily or by compulsion shall have a right to resort to the rest of the stockholders who

are liable to contribution; and the dissolution of the corporation shall not release or affect the liability of any stockholder which may have been incurred before dissolution.

If the rent due for any safe or box shall remain unpaid for three years, the company may cause to be sent to the person in whose name the safe or box stands, a written notice in a registered letter, directed to him at the address recorded on its books, notifying him that if the rent due is not paid within sixty days, then it will cause the said safe or box to be opened in the presence of its president, secretary, or treasurer, and a notary public not in its employ, and the contents thereof to be taken therefrom, to be sealed by the notary in a package upon which he shall distinctly mark the name and address of the person in whose name the same may stand upon the books of the company, and the estimated value thereof, and the package so sealed and addressed, when marked for identification by the notary, will be placed by him in one of the general safes or boxes of the corporation. Upon the expiration of sixty days from the date of mailing such notice, if such rent is not then paid, the company may itself proceed and direct the notary to act as above, after doing which his proceedings shall be fully set out by him in his own handwriting and under his official seal in a book to be kept by the corporation for that purpose.

The capital of these companies, when merely used as a place for the storage of valuables, is not so much a matter of importance as the character of the precautions taken to avoid allowing any one not entitled having access to the boxes or safes, the kind of identification required, the fact that its walls are fire- and burglar-proof, as none of these companies have sufficient capital to make good the loss of valuables which the loss of the contents of one safe might entail.

Each box or safe holder is furnished by the company