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It has been argued that the case of Leather Manufacturers National Bank v. Treat, 128 Fed. Rep. 262, is in point, but the court expressly recognized in that case the fact that the term "surplus," as used in the nomenclature of banks, does not include undivided profits. On page 264 the court said:

Undivided profits do not become a part of this fund until they have been assigned to it by some formal act of the institution; and it is for the directors and not for the taxing officers of the government to determine when this should be done.

The decision was to the effect that the capital, for purposes of taxation and within the meaning of the statute, was all the money employed by the institution for banking purposes. On this ground it was held that the undivided profits were capital, and consequently taxable. It is in no sense a decision that the word "surplus" includes the undivided profits. Indeed, the court expressly gives its opinion to the contrary.

In the Massachusetts statute the term used is "surplus account," which evidently indicates a fund set aside under a particular account.

It seems to me clear that a trust company, subject to the provisions of section 34, above quoted, cannot lawfully loan money to a single individual in excess of one-fifth of its surplus account and paid-up capital, excluding the profit and loss account.

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To the
Insurance

Commissioner.
1906

November 5.

A fire insurance company may not add to its policy a slip or rider, containing an agreement that, in consideration of the payment of an additional premium, the policy shall include loss or damage by fire caused by an explosion upon the insured premises, payment in case of loss to be at the value of the property before such explosion, since the effect of such policy is to provide insurance against loss from explosion.

You ask my opinion as to whether a fire insurance company may attach to the standard form of policy a rider which reads as follows:

In consideration of an additional premium equal to ten per centum of the amount of premium otherwise due on this policy, it is understood

and agreed, in the event of any explosion on the premises covered, fire ensuing, this company shall pay the loss on the property hereby insured and injured by fire at the value thereof before the explosion, provided, that if there is other concurrent insurance upon the insured property damaged this company shall be liable only for such proportion of the loss or damage as the amount hereby insured bears to the whole amount of insurance thereon, whether such other insurance contains a similar clause or not.

The question is, "Can a fire insurance company insure against loss or damage by explosion when a fire does ensue?" This question, in a slightly different form, was answered in the negative by a former Attorney-General (see 1 Op. Atty.-Gen. 431), and that unquestionably is the law. The rider above quoted, however, attempts to evade this prohibition by purporting to insure loss on property "injured by fire."

Inasmuch as payment in case of loss is to be made at the value of the property "before the explosion," the policy, in effect, insures against the loss arising both from the explosion and from the fire; and from the fact that an additional premium is charged, it is evidently intended to cover loss caused solely by explosion. Such a rider cannot lawfully be issued by a fire insurance company.

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CITY AND TOWN DEBTS - REFUNDING OR RENEWAL. Under the provisions of R. L., c. 27, § 18, that cities and towns may renew or refund any debts in securities payable within the period fixed by section 11 of such chapter, a note issued by a town to renew or refund a debt incurred for schoolhouse construction, and payable within the required period of twenty years from the date of the original issue, is a valid obligation of such town.

Treasurer

and Receiver

General.

You ask my opinion as to the renewal or refunding of a note To the issued by the town of Walpole on Nov. 2, 1896, for ten years, in payment of a debt incurred for schoolhouse construction, which it was voted to renew for a period not exceeding ten years on March 5, 1906.

Section 11 of chapter 27 of the Revised Laws provides that debts incurred in building schoolhouses and other public buildings, and in procuring land therefor, shall be payable

1906 November 19.

within twenty years. Section 18 of the same chapter provides that:

Cities and towns may pay, or provide for the payment of, any debts at earlier periods than is required in this chapter; or may renew or refund the same in securities payable within the required period.

It has been objected that renewal of this note would not be consistent with the provisions of section 12, which provides that eight per cent. shall be raised annually by taxation to pay the principal of notes payable at a period not exceeding ten years, but I think that section refers to "all other debts mentioned in section eight," and that the provision in section 12, line 3, "in

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all other cases may establish a sinking fund," applies to a debt like this, which may run twenty years.

Under the law as it stands, it is my opinion that a note issued to renew or refund a debt, which renewal is payable within the required period of twenty years, is a valid obligation.

To the Board of Registration in Pharmacy. 1906

November 30.

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VIOLATION OF PHARMACY LAW PLEA OF NOLO CONTEN-
CONVICTION AND FINE.

DERE

A plea of nolo contendere, followed by a fine imposed by the court, is a conviction within the meaning of R. L., c. 76, § 17, providing that the Board of Registration in Pharmacy may suspend the license of a registered pharmacist only "for a cause punishable by law," and "after his conviction by a court of competent jurisdiction."

You ask my opinion as to whether a plea of nolo contendere, followed by a fine and payment thereof, constitutes a conviction that would justify the Board of Registration in Pharmacy, under section 17 of chapter 76 of the Revised Laws, in suspending a certificate of registration of the party complained of. R. L., c. 76, § 17, reads as follows:

If the full board sitting at such hearing finds the person guilty, the board may suspend the effect of the certificate of his registration as a pharmacist for such term as the board fixes, but the license or certificate of registration of a registered pharmacist shall not be suspended for a cause punishable by law until after his conviction by a court of competent jurisdiction.

A record showing a conviction on such a plea is not admissible in another proceeding to show that the defendant was guilty. It is the intention of the statute to give a pharmacist charged with a crime the right to a trial in a court having jurisdiction of his offense; but if his guilt be there established, so that the court may impose sentence according to its powers, then it is sufficiently established for the Board of Registration in Pharmacy to act upon their finding and to impose a penalty. Munkley v. Hoyt, 179 Mass. 108. In no way is the judgment of the Board upon the question of the guilt of the party to be affected by the proceedings in another court, as the purpose of the statute is to give the Board power to hold an independent hearing; but while the record is not admissible in another proceeding, there is no doubt that a sentence imposed after a plea of nolo contendere amounts to a conviction in the case in which the plea is entered. White v. Creamer, 175 Mass. 567. That being so, it is my opinion, from the facts stated, that a conviction has been had by a court of competent jurisdiction.

STATE OFFICERS OR BOARDS-"DAY'S WORK"-CONTRACT-
MATERIALS OR SUPPLIES.

A State officer, board or commission must, under the provisions of St. 1906, c. 517,
insert in every contract made by such officer, board or commission in behalf
of the Commonwealth, excluding contracts for the purchase of materials or
supplies, a clause requiring that no laborer, workman or mechanic employed
under such contract shall be required to work more than eight hours in any
one calendar day, whether or not such contract is to be executed within the
Commonwealth.

The words "materials or supplies" should be construed to include articles to be used in the creation of a mechanical structure, and upon which no work is to be performed under the contract.

River Basin

1906

Replying to your letter of the 28th, in which the Charles To the Charles River Basin Commission requests my opinion as to whether Commission. the commission "must put into every contract for supplies December 12. made in Massachusetts, and even though of standard character, such as nails or iron pipe, the following provision: 'No laborer, workman or mechanic in the employ of the contractor, sub-contractor or other person doing or contracting to do the

whole or any part of the work contemplated by this contract, shall be required to work more than eight hours in any one calendar day;"" and second, as to "whether the provision above quoted must go into every contract for supplies, where the supplies are furnished by a manufacturer whose plant is located outside of the Commonwealth." Section 2 of chapter 517 of the Acts of 1906 provides as follows:

Every contract, excluding contracts for the purchase of material or supplies, to which the Commonwealth, or of any county therein, ... is a party which may involve the employment of laborers, workmen or mechanics shall contain a stipulation that no laborer, workman or mechanic in the employ of the contractor, sub-contractor or other person doing or contracting to do the whole or a part of the work contemplated by the contract shall be required to work more than eight hours in any one calendar day.

Section 3 provides:

This act shall apply to all laborers, workmen or mechanics engaged upon any works which are or are intended to be the property of the Commonwealth. . . .

Such provision should therefore be inserted in every contract except contracts for the purchase of materials and supplies, whether the plant of the manufacturer with whom such contract is made is located in the Commonwealth or elsewhere. I think the Legislature intended the words "material or supplies" to include articles which are intended to be used in the creation of a mechanical structure and upon which no work is to be done under the contract. Nails and iron pipe would, in my opinion, be material or supplies within the meaning of the

statute.

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