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of this Act, create an emergency and an imperative public necessity requiring the suspension of the Constitutional rule requiring the reading of bills on three several days in each House, and said rule is hereby suspended and this Act shall take effect from and after its passage, and it is so enacted.

Approved May 10, 1909.

Takes effect ninety days after adjournment.

STATE BANKS-PROVIDING FOR GUARANTY OF DEPOSITS. S. B. No. 4.]

CHAPTER 15.

An Act to provide for the regulation and supervision of banking corporations: providing for the securing of depositors of such corporations; providing for a depositors guaranty fund, and fixing the terms by which banks and trust companies may avail their depositors of the benefits of said fund; providing for a bond for securing depositors, and providing that all banking corporations created under Chapter 10, Acts of First Called Session of the 29th Legislature, shall avail their depositors of protection provided for by this Act, either by the depositors guaranty fund or by bond at their option; providing that all National banks transacting business in this State may, at their option, voluntarily avail their depositors of the protection afforded by this Act; providing that banks incorporated by special Act of the Legisla ture of the State of Texas may voluntarily, on certain conditions, protect their depositors under this Act; providing that private banks may voluntarily avail their depositors of the protection by bond provided by this Act; amending Sections 39, 50, 56 and 44, Chapter 10, of the Acts of the First Called Session of the 29th Legislature of the State of Texas; prescribing additional regulations and safeguards for the protection of depositors and for savings departments; prescribing the powers and duties of the Commissioner of Insurance and Banking; creating a State Banking Board and prescribing its powers and duties; providing for penalties for the violation of this Act, and declaring an emergency.

Be it enacted by the Legislature of the State of Texas:

SECTION 1. Each and every corporation which may hereafter be incorporated under the laws of this State with banking and discounting privileges, and each banking and trust company in this State heretofore incorporated, or that may hereafter be incorporated under the provisions of Chapter 10 of the Acts of the First Called Session of the Twentyninth Legislature of the State of Texas, and known as the State Banking Law, shall, at its option, protect its depositors in the manner hereinafter prescribed, either by availing itself of the depositors guaranty fund hereinafter provided for, or by the depositors bond security system here inafter set forth.

SEC. 2. A State Banking Board is hereby created, which board shall be composed of the Attorney General, Commissioner of Insurance and Banking and the Treasurer of this State. Said board shall have the control and management of the depositors guaranty fund hereinafter provided for, and shall have the power to adopt all necessary rules and regulations in harmony with this Act for the management of said fund. Said board shall have the general supervision and control of the depositors bond security system herein provided for, and shall have the power

of the regulation, control and supervision of all State banking corporations and trust companies as hereinafter provided in this Act.

SEC. 3. Each and every bank and trust company mentioned in Section 1 of this Act shall have the right and privilege, at its option, to secure its depositors by the manner, method and under the terms, provisions and regulations as set forth in this Act for the depositors guaranty fund or the bond security system; provided, that all such banks and trust companies shall secure their deposits by one of said plans on January 1st, 1910; provided further, that such option shall be exercised on or before October 1st, 1909, and provided that such option shall be exercised by the holders of the majority of the stock, and the president or cashier of such bank shall notify the Commissioner of Insurance and Banking by registered mail of such action.

SEC. 4. Any such bank or trust company which shall elect to secure its deposits under the depositors guaranty fund provided for by this Act, shall pay to said banking board, providing its application is approved by said board as hereinafter prescribed in Section 7 of this Act, on January 1, 1910, one per cent of its daily average deposits, for the preceding year ending November 1, 1909, not including United States, State of other public funds, if otherwise secured, for the purpose of creating a depositors guaranty fund. Annually after the first payment to said fund, each bank and trust company subject to the provisions of the guaranty fund plan of this Act, shall pay to said board one-fourth of one per cent of its daily average deposits for the year ending November 1 of the preceding year, as above defined, which amount shall be added to said guaranty fund; provided that when the amount available in said guaranty fund shall reach the sum of two million dollars the Bank Commissioner shall notify all banks and trust companies subject to this Act, at least thirty days before the next annual payment, and thereafter the banks and trust companies participating shall not pay any further amount into said fund until said fund be depleted. In the event of the depletion of said fund from any cause so that it falls below two million dollars, or below the amount of the guaranty fund on January 1, preceding, or in the event of necessity to meet an emergency at any time, said board shall have authority to require the payment for the current year of two per cent of such average deposits, or such part thereof as may be necessary to restore said fund to the maximum above named, or to its amount as of January 1, preceding, or to meet the emergency, but no bank or trust company coming under the provisions of this Act shall ever be required to pay more than two per cent of said average daily deposits for any one year; providing further that first payment herein provided for shall be made to said board without reference to said maximum sum.

SEC. 5. The fund provided for herein shall be paid to the State Banking Board as follows:

Twenty-five per cent of each payment required of each such bank or banking and trust company shall be paid to said board in cash and shall be by it deposited for safe keeping only with the State Treasurer as bailee for the State Banking Board, and shall be paid out by the State Treasurer on warrants drawn by the order of said board and said fund

shall never be diverted from the purpose specified in this Act nor shall it ever be considered State funds. The remaining seventy-five per cent of each payment required shall be paid by each such bank or banking. and trust company crediting the State Banking Board with such amount as a demand deposit subject to check upon the order of said board. It shall be the duty of said board to keep at all times twenty-five per cent of the amount of said fund deposited with the State Treasurer in cash as provided herein.

SEC. 6. State bank and trust companies organized less than one year prior to the taking effect of this law or hereafter organized, on approval of their applications as provided for in Section 7 of this Act, shall pay into said guaranty fund three per cent of the amount of their capital stock and surplus, which amount shall constitute a credit fund, subject to adjustment on the basis of their deposits as provided for other banks now existing, at the end of one year; provided, however, that said payment shall not be required of banks and trust companies formed by the reorganization or consolidation of banks that have previously complied with the terms of this Act.

SEC. 7. The State Banking Board shall admit to the benefits and protection of this Act only such banks and trust companies as in their opinion are solvent and properly officered and conducted, and shall prescribe the form of application and statement which shall be made by each and every bank and trust company and which shall be sworn to by two of the chief officers of the bank, blank copies of which application and statement shall be mailed to each State bank and trust company in this State at least ten days before this Act requires the initial payment, and which shall be filled out, signed and sworn to and returned promptly to said board, and such copies shall be mailed to any other bank within this State on request. Should said board decline the application of any bank and trust company, it shall state the ground of such declination to such institution and whether the objection can be removed, and the condition thereof.

SEC. S. Any National bank in this State may voluntarily avail its depositors of the protection of the depositors guaranty fund, upon the same terms, payments, conditions and in the same manner as herein provided for State banks; provided, that in the event National banks should be required by Federal enactment to pay assessments to any bank guaranty fund of the Federal government and thereby the deposits in National banks in this State should be guaranteed by virtue of Federal laws, that the National banks having availed themselves of the benefits of this Act may withdraw therefrom and have returned to them the unused portion of all assessments levied upon and paid by said banks.

SEC. 9. Whenever any State bank or trust company shall become insolvent and shall voluntarily, or by law, or in any manner as provided in Chapter 10, Acts of the First Called Session of the Twenty-ninth Legislature, come into the hands of the Commissioner of Insurance and Banking, he may proceed to wind up its affairs, either through a receiver or through some competent person, who shall give bond as may be required by the board, payable to the board for the faithful performance of all duties imposed upon him. Said bond may be recovered upon

for the benefit of said guaranty fund, or any party at interest. On taking possession of the property and business of any such State bank, the commissioner shall forthwith give notice of such fact to any and all banks, trust companies, associations and individuals holding or in possession of any assets of any such State bank.

No bank, trust company, association or individual knowing of such taking possession by the commissioner, or notified as aforesaid, shall have a lien or charge for any payment, advance of clearance thereafter made, or liability thereafter incurred against any of the assets of the State bank of whose property and business the commissioner shall have taken possession as aforesaid. Such State bank may, with the consent of the State Banking Board, resume business upon such condition as may be approved by it, which permission shall be evidenced by a written statement to that effect from the commissioner. Upon taking possession of the property and business of such State bank, the commissioner is authorized to collect moneys due to such corporation, and do such other acts as are necessary to conserve its assets and business, and shall proceed to liquidate the affairs thereof as herein provided. The commissioner shall collect all debts due and claims belonging to such State bank, and upon the order of the district court, if in session, or the judge thereof if in vacation, of the county in which it was located and transacting business, may sell or compound all bad or doubtful debts, and on like order may sell the real or personal property of such State bank on such terms as the court shall direct; and may, if necessary to pay the debts of such State bank, enforce the individual liability of the stockholders. The commissioner may, under his hand and official seal, appoint one or more special agents to assist him in the duty of liquidation and distribution, the certificate of appointment to be filed in the office of the commissioner and a certified copy in the office of the clerk of the county court in which such State bank was located and transacted business. The commissioner may, from time to time, authorize a special agent to perform such duties connected with such liquidation and distribution as the said commissioner may deem proper. The commissioner may employ such counsel and procure such expert assistance as may be necessary in the liquidation and distribuiton of the assets of such State bank and may retain such of the officers or employes of such State bank as he may deem necessary. The commissioner shall require from a special agent and from such assistants such security for the faithful discharge of their duties as he may deem proper. The commissioner shall cause notice to be given by advertisement in such nevspapers as he may direct, weekly, for three consecutive months, calling on all persons who may have claims against such State bank to present the same to the commissioner and make legal proof thereof at a place and within a time not earlier than the last day of publication to be therein specified, which notice shall contain a statement, in larger type than that in which the body of such notice is printed, specifically stating that all such claims of guaranteed depositors must be presented and legal proof thereof made at the place designated within forty-five days. after the date which the property and business of such State bank was taken possession of by the commissioner, and that all claims of guaran

teed depositors presented after expiration of forty-five days shall not be entitled to payment of any portion thereof out of the depositors guaranty fund. The commissioner shall mail a similar notice to all persons whose names appear as creditors upon the books of the State bank. If the commissioner doubts the justice and validity of any claim he may reject the same and serve notice of such rejection upon the claimants, either by mail or by written notice personally served. An affidavit of the service of such notice, which shall be prima facie evidence thereof, shall be filed with the commissioner. The action upon the claim so rejected must be brought within six months after such service. Claims presented after the expiration of the time fixed in the notice to the creditors shall be entitled to share in the distribution only to, the extent of the assets in the hands of the commissioner equitably applicable thereto. Upon taking possession of the property and assets of such State bank, the commissioner shall make an inventory of the assets of such bank in duplicate, one to be filed in the office of the commissioner and one in the office of the clerk of the county court in which such State bank was located and transacting business; upon the expiration of the time fixed for the presentation of claims the commissioner shall make a full and complete list of the claims presented, including and specifying such claims as have been rejected by him, and showing fully all claims and amounts paid to guaranteed depositors out of the depositors guaranty fund, and the amount to which said fund is entitled by reason of its subrogation to the rights of such guaranteed depositors so paid, and all amounts held by him on account of claims of guaranteed depositors, which have been rejected or are in dispute, one to be filed in the office of the clerk of the county court of the county in which such State bank was located and transacted business. Such inventory and list of claims shall be open at all reasonable times to inspection. All compensation of special agents, counsel and other employes and assistants, and all expenses of supervision and liquidation shall be fixed by the commissioner, subject to the approval of the district court, if in session, or the judge thereof, if in vacation, of the district in which such State bank was located and transacting business, on notice to such State bank; provided that the compensation of such special agents shall always be the same as is provided by law for State bank examiners, and shall, upon the certificate of the commissioner, be paid out of the fund of such State banks in the hands of the commissioner. The moneys collected by the commissioner shall be from time to time deposited in one or more State banks, and, in case of the suspension or insolvency of the depository, such deposits shall be preferred before all other deposits. At any time after the expiration of the date fixed for the presentation of claims, the commissioner may, out of the funds remaining in his hands after the payment of expenses, declare one or more dividends, and. after the expiration of one year from the first publication of a notice to creditors, he may declare a final dividend, such dividends to be paid to such person and in such manner and upon such notice as may be directed by the district court, if in session, or the judge thereof, if in vacation, of the district in which such State bank was located and transacted business. In the declaration and payment of all such dividends the depositors

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