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certain fixed rate in the future, if profits justify them, is proper, but a contract to do so would be ultra vires. Opinion Atty.-Gen., May 28, 1909.

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§ 154. Per centum of surplus, how determined. In determining the per centum of surplus held by any savings bank its interest-paying stocks and bonds shall not be estimated above their par value or above their market value if below par. Its bonds and mortgages on which there are no arrears of interest for a longer period than six months shall be estimated at their face, and its real property at not above cost. The superintendent of banks shall determine the valuation of such stocks or bonds, or bonds and mortgages, as are in arrears of interest for six months or more, and of all other investments not herein enumerated, from the best information he can obtain, and he may change the valuation thereof from time to time as he may obtain other and further information.

(Former section 124; R. S., 1571; L. 1882, ch. 409, § 268.)

§ 155. Compensation of officers. The trustees of any such corporation acting as officers of the same, whose duties require and receive their regular and faithful attendance at the institution, and the trustees appointed as a committee to examine the vouchers and assets pursuant to section one hundred and fifty-seven of this chapter, or to perform the duties required by subdivision six of section one hundred and forty-six of this chapter, may receive such compensation as in the opinion of a majority of the board of trustees shall be just and reasonable; but such majority shall be exclusive of any trustee to whom such compensation shall be voted. Trustees, as such, shall

not be paid for their attendance at meetings of the board.

(Former section 125; R. S., 1571; L. 1882, ch. 409, § 269.)

1. "The relation existing between the corporation and its trustees is mainly that of principal and agent, and the relation between the trustees and depositors is similar to that of trustee and cestui que trust.

"The trustees are bound to observe the limits placed upon their powers in the charter, and if they transcend such limits and cause damage they incur liability. If they act fraudulently or do a wilful wrong, they may be held for all the damage they may cause the bank or its depositors. But if they act in good faith within the limits of powers conferred, using proper prudence and diligence, they are not responsible for mere mistakes or errors of judgment.

"When one deposits money in a savings bank, or takes stock in a corporation, thus divesting himself of the immediate control of his property, he expects, and has the right to expect, that the trustees or directors, who are chosen to take his

place in the management and control of his property, will exercise ordinary care and prudence in the trust committed to them—the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs. When one voluntarily takes the position of trustee or director of a corporation, good faith, exact justice and public policy unite in requiring of him such degree of care and prudence, and it is a gross breach of duty, crassa negligentia, not to bestow them."

(Authorities cited.) "As I understand this language, I cannot assent to it as properly defining, to any extent, the nature of a director's responsibility. Like a mandatary, to whom he has been likened, he is bound not only to exercise proper care and diligence, but ordinary skill and judgment. As he is bound to exercise ordinary skill and judgment, he cannot set up that he did not possess them. When damage is caused by his want of judgment, he cannot excuse himself by alleging his gross ignorance. One who voluntarily takes the position of director or trustee and invites confidence in that relation, undertakes with those whom he represents, or for whom he acts, that he possesses at least ordinary knowledge and skill, and that he will bring them to bear in the discharge of his duties. Such is the rule applicable to public officers, to professional men and to mechanics; and such is the rule which must be applicable to every person who undertakes to act for another in a situation or employment requiring skill and knowledge, and it matters not that the service is to be rendered gratuitously. . .

"The trustees may be treated as agents of the bank, and for any misfeasance or nonfeasance causing damage to the bank, they were responsible to it upon the same principle that any agent is for like cause responsible to his principal." EARL, J., in Hun, Receiver, v. Cary et al., 59 How. Pr. 441 (aff'g same case, id. 462).

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2. The majority" as here contemplated is a majority of the full board of trustees exclusive of those to whom compensation is proposed to be paid. A majority of actual trustees is not sufficient if vacancies exist.

Opinion of attorney-general filed in the banking department October 2, 1884.

§ 156. No other report or inspection required. No such corporation shall hereafter be required to make any annual or other report to the legislature or to the mayor or commonalty of any city, nor to the board of supervisors of any county, nor to any other officer or authority except as provided in this chapter; nor shall it be subject to the inspection or supervision of any local officer or board, nor to any interference from any such officer or board, in any manner appertaining to its business or dealings.

(Former section 126; R. S., 1572; L. 1882, ch. 409, § 275.)

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§ 157. Examination of vouchers and assets by trustees. tees of every savings bank, by a committee of not less than three of their number, on or before the first days of January and July in each year, shall thoroughly examine the books, vouchers and assets of such

savings bank, and its affairs generally. The statement or schedule of assets and liabilities reported to the superintendent of banks for the first of January and July in each year shall be based upon such examination, and shall be verified by the oath of a majority of the trustees making it; and the trustees of any savings bank may require such examination at such other times as they shall prescribe. The trustees shall, as often as once in each six months during each year, cause to be taken an accurate balance of their depositors' ledgers, and in their semi-annual report to the superintendent they shall state the fact that such balance has been taken, and the discrepancies, if any, existing between the amount due depositors, as shown by such. balance, and the amount so due as shown by the general ledger. (Former section 128; R. S., 1573; L. 1882, ch. 409, § 279.)

8 158. Expenses to be paid. For the purpose of defraying the expenses incurred in the performance by the superintendent of the duties imposed upon him with respect to savings banks, other than the examinations thereof, each such corporation shall annually pay five dollars into the treasury of the state, and the residue of such expenses to be apportioned among them by the superintendent shall be paid into the treasury of the state by savings banks whose deposits exceed one hundred thousand dollars, in proportion to the amount of assets severally held and reported by them. If any savings bank shall, after due notice, refuse or neglect for thirty days to pay its *alloted share of such charges, the superintendent shall report the fact to the attorney-general, who may maintain an action in the name of the people against such corporation for the recovery of such charges, and the same, when recovered, shall be paid into the treasury of the state.

(Former section 129; R. S., 1574; L. 1882, ch. 409, § 281.)

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159. Certain debts from insolvent banks and trust companies preferred. All the property of any bank or trust company which shall become insolvent shall after providing for the payment of its circulating notes, if it has any, to be applied by the trustees, assignees or receivers thereof in the first place, to the payment in full of any sum

* So in original.

or sums of money deposited therewith by any savings bank and by any co-operative savings and loan association ratably and proportionately but not to an amount exceeding that authorized to be so deposited by the provisions of this chapter, and subject to any other preference provided for in the charter of any such trust company.

(Former section 130; R. S., 1574; L. 1882, ch. 409, § 282; L. 1904, ch. 693.) 1. This section only applies to deposits made in the ordinary course of business, and subject to the draft of the depositors. Loans on time, or payable on call, are not within the meaning of this provision. Loan cannot be changed into a deposit, because loan was illegal. Rosenback v. Manufacturers and Traders' Bank, 69 N. Y. 358; aff'g 10 Hun, 148.

2. Troy Savings Bank made an agreement with Merchants and Mechanics' Bank, to deposit with it one-quarter of all moneys received during coming three years; other three-quarters to be deposited in three other banks named, the deposits in the four banks to be kept as nearly equal as possible. The four banks agreed to pay checks of savings bank at sight, allow four per cent. interest, and not pay interest on any deposits of less than $1,000, from any person or corporation, and at the end of three years they were to account and settle balance of principal and interest. Held, the savings bank was entitled to its preference as against Receiver M. and M. Bank. That even if it was admitted that deposit was greater than statute allowed, that that was a question for the State, and though it might thereby in action by State have forfeited its charter, that the M. and M. Bank was not thereby relieved from paying its debts. Matter of Patterson, Receiver, etc., 18 Hun, 223-224; aff'd 78 N. Y. 608.

3. This section of act applies as well to deposits made prior to, as to those made subsequent to the act. Upton v. N. Y. & E. Bank, 13 Hun, 269.

4. This section preferring savings banks deposits in insolvent banks, is void as to national banks, with respect to such preference, and contravenes § 5236 U. S. R. S. [U. S. Comp. Stat. 1901, p. 3508], N. B. A. (post), which requires ratable dividends. Davis v. Elmira Savings Bank, 161 U. S. 290, 40 L. ed. 703, 16 Sup. Ct. Rep. 502, reversing s. c. 142 N. Y. 593.

§ 160. Advertisements of unauthorized savings banks prohibited. — No bank, banking association, individual banker, firm, association, corporation, person or persons shall make use of the word "savings " in their banking business, or advertise or put forth any advertising literature, or sign as a savings bank, or in any way solicit or receive deposits as a savings bank, other than a savings bank or a co-operative savings and loan association organized under the laws of the state of New York. It shall, however, be lawful for the principal or superintendent of any public school or schools in the state of New York or for any person designated for that purpose by the board of education or other school authority under which such school shall be to collect once a week, or from time to time, small amounts of savings

from the pupils of said school, the same to be deposited by said principal or superintendent or designated person on the day of collection in some savings bank in the state or, in villages and cities in which there is no regularly established savings bank, in any savings and loan association, trust company, state or national bank, located in the state and having an interest department. These moneys shall be placed to the credit of the respective pupils from whom the money shall be collected, or if the amount collected at any one time shall be deemed insufficient for the opening of individual accounts, in the names of said principal or superintendent or designated person, in trust, and to be by him eventually transferred to the credit of the respective pupils to whom the same belongs. In the meantime, said principal or superintendent or designated person shall furnish to the bank a list giving the names, signatures, addresses, ages, places of birth, parents' names and such other data concerning the respective pupils as the savings bank may require, and it shall be lawful to use the words "system of school savings banks" or "school savings banks" in circulars, reports and other printed or written matter used in connection with the purposes of this section. Any bank, banking association, individual banker, firm, association, corporation, person or persons violating this provision shall forfeit to the people of the state for every offense the sum of one hundred dollars for every day such offense shall be continued; provided however, that upon the subsequent establishment of a saving bank, the deposit of such moneys, or the continuance of deposits, in any savings and loan association, trust company, state or national bank, previously used as a depository of school savings shall not be deemed a violation of the provisions of this act.

(Former section 131; R. S., 1574; as amended by L. 1882, ch. 409, § 283; L. 1904, ch. 568, § 1; L. 1905, ch. 564, § 1; L. 1909, ch. 497. In effect May 27, 1909.) See General Corporation Law, §§ 6, 15.

See Penal Law, §§ 302, 666.

1. The term “individual banker" applies only to one who has availed himself of the banking statutes of this State, and has become empowered to do banking thereunder. It does not apply to a private banker, who exercises in his business no more than the rights and privileges common to all. Action was for penalty. (Doty & Warner did a regular banking business, under the name of "The Farmers' Bank of Batavia," except that they issued no circulating bills. They were not organized under any law of this State. They had a sign up: "L. Doty's Savings Bank.") The term "individual banker" is used throughout the

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