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possible. Provision is made for the conversion of building and loan companies into trust companies. The provisions of the general incorporation act are made applicable to trust companies, so far as not inconsistent with this act.

(Council substitute for Council bill No. 10, February 28, 1903; Laws of 1903, chapters 52, 54 and 115; Laws of 1905, chapters 78 and 106; Laws of 1907, chapters 4, 66, 103.)

NEW YORK.

Thirteen or more persons may incorporate a trust company. An organization certificate must be filed with the Superintendent of Banks, who is charged with the duty of satisfying himself of the need of the proposed corporation and of the advisability of its incorporation. Capital required, at least $100,000 in towns or cities whose population does not exceed 25,000; at least $150,000 in cities of from 25,000 to 100,000 inhabitants; at least $200,000 in cities of from 100,000 to 250,000; and at least $500,000 in larger cities.

Powers specified:68 To act as fiscal or transfer agent or registrar; to act as agent for corporations, foreign or domestic; to receive deposits of trust moneys, securities and other personal property from persons or corporations; to loan money on real or personal securities; to hold real estate necessary for the transaction of business, and such as is acquired in the satisfaction or partial satisfaction of debts due to the company; to act as trustee under any mortgage or bond, "and accept and execute any other municipal or corporate trust not inconsistent with the laws of this State"; to execute trusts for married women with respect to their separate property, to act as agent in the management of same; to act under the appointment of court as guardian, receiver or trustee of the estate of any minor; to act as depositary of moneys paid into court; to exercise such legal trusts in regard to the management of property, real or personal, as may be confided to it by courts, persons, corporations, municipalities or other authority; to execute trusts and powers of every description received from any source; to purchase, invest in and sell stocks, bills of exchange, bonds and mortgages and other securities; to give its bonds or obligations for moneys or securities for moneys borrowed or received on deposit or for investment; to act as executor, trustee under will, administrator, and committee of the estates of lunatics, idiots, persons of unsound mind and habitual drunkards; to do a banking business. No such corporation may make any contract or accept or execute any trust which it would not be lawful for any individual to make, accept or execute. No loan exceeding in amount one-tenth of the capital stock shall be made by any such corporation, directly or indirectly, to any director or officer thereof, and such loans must have the consent of a majority of the directors. Foreign trust companies are forbidden to do

68 The powers of New York trust companies are printed in full in Chapter IV.

a trust company business in New York, and any person or corporation acting as agent for same is guilty of a misdemeanor. A trust company may have branches in the city in which its business is transacted, but not elsewhere: but written approval of the Superintendent of Banking must be obtained for the opening of a branch, and the capital of the company must exceed the capital required by law by the sum of $100,000 for each branch office maintained. Courts are authorized to appoint trust companies as administrators, guardians, trustees, etc. Moneys brought into court on orders or judgments may be deposited in properly designated and bonded trust companies. Before engaging in business such companies are required to deposit with the Superintendent of Banks securities equal in value to ten per centum of the paid-up capital stock, and not less in amount than $100,000 in cities of 500,000 population or more, not less than $50,000 in cities of from 100,000 to 500,000 population, not less than $30,000 in cities of from 25,000 to 100,000 population, and not less than $20,000 in smaller places. These securities must consist of public bonds or stocks of the United States, or of this State, or of any of its political subdivisions; they must be registered in the name of the Superintendent officially, as held in trust as security for the depositors with and the creditors of such corporation. Beyond this deposit, no security shall be required of trust companies for or in respect to any trust, or when appointed executor, administrator, guardian, trustee, receiver, committee or depositary; except that courts or officers making such appointments may, upon proper application, require such security as they deem proper. Such courts or officers may make further orders regarding such trusts, and may require the corporation to render such accounts as might be required of a natural person acting in like capacity. The capital of such a company shall be invested in bonds and mortgages on unincumbered real property in this State to the extent of 60 per centum of the value therof, or in the stocks or bonds of this State or of the United States, or of any county or city of this State duly authorized by law to be issued. The stocks or bonds must not be valued on the books or in reports at a higher value than that determined by amortization, so as to bring them to par at maturity. Moneys received in trust may be invested, in the company's discretion, in the same classes of securities as the capital, or in the stocks or bonds of any State of the United States, or in such real or personal securities as it may deem proper. No such corporation shall hold stock in any private corporation to an amount in excess of ten per centum of its capital, surplus and undivided profits; nor shall it own stock of another monied corporation (except of a safe deposit company immediately connected with and adjacent to it.) to an amount exceeding, in par value, ten per centum of the outstanding capital of such other monied corporation. On all sums of money not less than $100 which shall be collected and received by such corporation acting in trust capacities, interest must be allowed at not less than two per centum per annum. The affairs of

such corporations shall be managed by a board of directors of such number, not less than thirteen nor more than thirty, as shall from time to time be prescribed in its by-laws. Not less than one-third of such board of directors, and in no case less than seven, shall constitute a quorum. Each director must own and continue to own unpledged, at least ten shares of stock. Directors must take oath for the faithful performance of their duties. They must be divided into three classes, so that the terms of office of one-third of the members shall expire each year, each member then being elected for a term of three years. The directors must meet once a month. They must designate an officer or officers whose duty it shall be to submit to each director at each regular meeting, or to an executive committee of at least five members of the board a written statement of all purchases and sales of securities, and of every discount and loan of $1000 or more made since the last meeting of the board, with description of collateral, together with other information. A verified copy of this statement must be filed with the records. Specially chartered trust companies are subject to the provisions of the general law so far as not inconsistent with the special laws relating to them.

Trust companies, in common with other financial institutions, are required to render reports to the Superintendent of Banks, upon his call, at least once every three months, such reports to contain such particulars as the Superintendent may prescribe. Summaries of such reports must be published in a local newspaper. Trust companies are subject to the supervision and inspection of the Superintendent of Banks, who must examine them at least twice a year or oftener at his discretion. If unsafe conditions are revealed, he must notify the Attorney-General, and may take possession of the company until the termination of the action instituted by the Attorney-General. Special examinations by order of the supreme court may be made on application of creditors or shareholders whose debts or shares amount to $1,000. All official communications from the State Banking Department must be submitted to the Directors at their next meeting after receipt of same.

In April and October of each year the Directors are required to examine the company or cause a committee of at least three of their number to do so. The examination is to concern particularly the loans and discounts, and the statute specifies what it must cover. Within ten days after completion, a written report of the examination must be made to the directors, which must be placed on file in the company's records, and a duplicate of the report must be filed with the Banking Department.

Such a corporation is prohibited from making loans to one person, company, corporation or firm to an amount exceeding ten per centum of its paid capital and surplus: provided, however, that a trust company having its principal place of business in a borough in any city which borough had at the last census a population of 1,800,000 or over (i. e., the borough of Manhattan in New York city) may loan to one interest

not exceeding 25 per centum, and a trust company located elsewhere in the State may loan to one interest not exceeding 40 per centum of its paid capital and surplus, upon security worth at least 15 per centum more than the amount of the loans; or, it may loan 10 per centum as first provided, and may loan a further sum, which shall not exceed 15 per centum if the trust company is located in the borough of Manhattan, or which shall not exceed 30 per centum if located elsewhere, upon securities worth at least 15 per centuin more than the amount of such loan so secured; or it may make bona fide discounts for, or purchase business paper from one interest, to an amount which shall not exceed 25 per centum of the company's paid capital and surplus if the company is located in the borough of Manhattan, or to an amount not exceeding 40 per centum if the company is located elsewhere; provided further, that the total liability of any one interest shall not exceed 25 per centum of the paid capital and surplus of the trust company if it is located in the borough of Manhattan, or 40 per centum if it is located elsewhere. Loans "upon the securities of one or more corporations the payment of which is undertaken in whole or in part severally, but not jointly, by two or more individuals, firms or corporations" (i. e., “Underwriting Loans") may not be made under any circumstances to an amount exceeding 25 per centum of the capital and surplus of the trust company making such loan; and such loans are absolutely prohibited (a) if the borrower or underwriters be obligated absolutely or contingently to purchase the securities collateral to such loan, unless they have paid at least 25 per centum of the amounts for which they remain obligated; or (b) if the trust company making the loan is liable directly or contingently for the repayment of any part of the loan; or (c), if its term, including renewal, by agreement, express or implied, exceeds the period of one year. Real estate mortgage loans may not be made on property already encumbered, if the prior liens exceed ten per centum of the capital and surplus of the company, or if the sum of all the mortgages thereon will exceed two-thirds of the appraised value of the property. Mortgages and assignments thereof must be immediately recorded. The limit of direct or indirect aggregate loans upon real estate security is 15 per centum of the company's assets if the company is located in Manhattan borough, or 25 per centum if the company is located elsewhere. No trust company nor its officers nor agents may purchase paper at less than its face value, nor may officers or agents make loans that have been refused by the company. Deposits may not be made in other monied corporations unless same have been designated as depositaries by majority vote of the directors. Directors, officers and clerks are forbidden to borrow of the company, directly or indirectly, without approval of a majority of the board of directors. Such corporations may not make loans on their own stock; nor may they purchase same. unless to prevent loss upon a debt previously contracted in good faith; in which case the stock must be disposed of within six months. Loans upon the stock of another monied

corporation are limited to ten per centum of the capital of such other monied corporation.

Each trust company having a capital of $250,000 or upward, and having its principal place of business within a town adjoining a city, containing over 800,000 or less than 1,000,000 inhabitants, may add to its powers that of a safe deposit business and of a title insurance business. The same privilege is extended to stock companies haying capital of $500,000 or upward, and located in counties containing from 300,000 to 600,000 inhabitants. The safe deposit business may be undertaken by trust companies having a capital of $200,000 or upward and situated in a county containing from 65,000 to 300,000 inhabitants, or in a county containing from 50,000 to 75,000 inhabitants. Trust companies may merge with title and credit guaranty corporations, acquiring their powers.

Every trust company having its principal place of business in the borough of Manhattan, New York city, must maintain a reserve of 15 per centum of its aggregate deposits less trust funds and time deposits not payable within thirty days, and less the deposits secured by New York State bonds. All of this reserve must be in cash. Trust companies in other boroughs of New York city must maintain reserves of 15 per centum, of which two-thirds must be in cash. Trust companies elsewhere in the State must keep reserves of ten per centum, of which one-half must be in cash. That part of the reserve not kept in cash may be on demand deposit with any bank or trust company in the State having at least $200,000 capital or $300,000 capital and surplus, and approved by the Superintendent of Banks. (These reserve requirements went into full effect on February 1, 1909.)

Directors who vote to make illegal loans to directors; directors, officers or employes who make deposits with other corporations for the consideration, express or implied, of a loan, or who make agreements that the holder of a certificate of deposit may receive payment of same in advance of maturity; officers or employes who intentionally conceal from the directors any loans or discounts or purchases or sales of securities made between meetings of directors, or who knowingly fail to report same; are guilty of misdemeanors.

Before declaring a dividend, trust companies must transfer one-tenth of their net earnings to surplus until the latter equals twenty per centum of the capital.

Minors may control their deposits in trust companies and other financial institutions. Deposits made by one person in trust for another may be paid to the latter upon the death of the former. The money in a joint account, in whole or in part, may be paid to either party during the life-time of both or to the survivor after the death of one of them. No official oath shall be required from a trust company which has been appointed executor, administrator, guardian, trustee, receiver or

committee.

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