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The Commissioners of Statutory Revision, in carrying out their plan for the complete revision and consolidation of the general laws of this State, submitted a draft for new banking law to the Legislature of 1891, adding several new provisions, and omitting others which were deemed unnecessary, or which more properly belonged to other laws and were so transferred. The bill was passed by the Assembly, but owing to the dead-lock in the Senate, failed to reach the Governor, and accordingly was again presented to the Legislature of 1892, with such changes and modifications, as further consideration had shown to be desirable. As thus submitted, it became a law on May, 18, 1892.
The new law contains the provisions relating to banks, and individual bankers, savings banks, trust companies, building and mutual loan associations, mortgage, loan and investment corporations and safe deposit companies. Its first article contains the provisions generally applicable to all corporations, under the supervision of the banking department, and then has separate articles devoted to the laws specially relating to each class of corporations.
The principal changes effected by the new law are as follows:
I. RESTRICTIONS.-Certain restrictions and limitations imposed by sections 179 to 188 of chapter 409 of the laws of 1882, which have have been held as not
applicable to banks, etc., organized under the general banking law of 1838, but to the other monied corporations referred to in the act of 1882, are now made applicable to all corporations under the supervision of the superintendent of banks.
II. BANKING DEPARTMENT.— The jurisdiction of the banking department is extended to all monied corporations excepting insurance corporations, and its powers are increased.
III. CHANGES RELATING TO BANKS.
1. Loans.-Loans to any person, company, corporation, or firm, or upon paper upon which any such person, company, corporation, or firm may be liable, are limited to one-fifth part of the capital stock actually paid in, and surplus.
2. Lawful money reserve.- Banks of discount and deposit, having their principal places of business in the cities of New York or Brooklyn are required to have at all times on hand at least fifteen per cent of their aggregate amounts of deposits, and all other banks, ten per cent. This per cent. This provision is less stringent than the requirement of the National Banking Law, yet it is thought to be fully sufficient to provide such a reserve as safe and conservative banking seems to demand.
3. Liability of stockholders.- Under the interpretations of the former laws, there was practically liability. Only stockholders of banking corporations issuing circulating notės, were ratably responsible for the debts of the corporation according to their shares of stock. This liability has now been extended to the stockholders of all banks, and is the same as the liability of stockholders of national banks. The stockholders are also subject to the liability
imposed by the stock corporation law, but this liability ceases when the capital stock has all been paid in, and a certificate of such payment filed as required.
4. Election of directors. The provisions referring to the conduct of elections have been transferred to the stock corporation law. Directors are required to own at least one thousand dollars in value of its stock in banks having a capital of fifty thousand dollars or over, and at least five hundred dollars worth, in banks having a capital of less than that amount. All vacancies in the office of director shall be filled by election of the stockholders, but vacancies not exceeding onethird of the whole number of the board may be filled by election by the directors then in office. Each director is required to take an oath when elected, promising to discharge his duties faithfully and stating that he owns the number of shares of stock required and that the same is not pledged or hypothecated.
5. Publication of unclaimed dividends and deposits.— All unclaimed dividends and deposits amounting to fifty dollars or over and which have remained unclaimed for five years are required to be published in an official paper of Albany at least once a week for six successive weeks.
IV. SAVINGS BANKS.
1. Trustees.- No person shall hereafter be elected a trustee who is not a resident of the State and removal from the State by a trustee after his election or appointment, vacates his office.
2. Compensation of officers.- Trustees appointed as a committee to examine the vouchers and assets, or to investigate and report on investments in bonds and mortgages may receive such compensation as a majority of the trustees may deem just and reasonable.
3. Surety bonds.- Bonds to guarantee the fidelity of the officers and clerks may be accepted from approved surety companies, and the premiums may be paid by the bank, and will be allowed as a necessary disbursement.
4. Investments.- The classes of of securities in which savings banks may invest have been enlarged to include all the. District of Columbia bonds and all the warrants* of the city of Buffalo. It was proposed to include the include the bonds of certain cities in specified states but this was omitted in view of other pending legislation covering the same ground, which, however, failed to become a law.
V. TRUST COMPANIES.
1. Capital. The capital stock of any such corporation must be at least five hundred thousand dollars, provided, however, that a corporation with a capital of not less than two hundred thousand dollars may be organized in any city containing more than one hundred thousand inhabitants and less than two hundred and fifty thousand inhabitants, and a corporation may be organized with a capital of not less than one hundred and fifty thousand dollars in any city containing more than twenty-five thousand inhabitants and less than one hundred thousand inhabitants, and with a capital of at least one hundred thousand dollars in a city the population of which does not exceed twentyfive thousand, the number of inhabitants in each case to be ascertained by the last federal or state enumeration.
VI. TRANSFERS.- All provisions applicable to corporations in general or to stock corporations in general,
*Chapter 706 of the Laws of 1892, relating to Buffalo warrants, was signed so late that it has been printed on page 237.