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1887, provides that it shall be lawful for any savings bank to invest the moneys deposited therein only as follows, namely;' then follows a detailed statement of the securities in which said moneys may be invested.

"This section, it will be observed, apparently refers only to 'moneys deposited,' and does not in terms and by name refer to surplus moneys of savings banks, and the solution of the question will depend on whether we so interpret this section as to include or exclude such surplus moneys.

"Section 261, as amended by chapter 569 of the Laws of 1886, makes it the duty of the trustees of any savings bank, as soon as practicable, to invest 'the moneys deposited with them' in the securities named in the last preceding section, except that, for the purpose of meeting current payments and expnses in excess of receipts, there may be an available fund of not exceeding ten per cent. of the whole amount deposited with such corporation, and the same may be kept on hand or on deposit in any bank or banking institution in the State of New York, organized under the laws of the State of New York.

"Section 263 provides that the only cases in which it shall be lawful for such corporation to purchase, hold or convey real estate are, first to buy a plot whereon is erected or may be erected a building or buildings located for the convenient transaction of its business, and from portions of which, not required for its own use, a revenue may be derived, the cost of such building and lot, however, in no case to exceed fifty per cent. of the net surplus of such corporation; second, such as shall have been purchased by it at sales upon foreclosure of mortgages owned by such corporation or upon judgments or decrees obtained for debts due to it, or in settlements effected to secure such debt.

"Section 264 provides that it shall not be lawful for the trustees of any savings bank to loan the moneys deposited with them, or any part thereof, upon notes, bills of exchange, drafts or any other personal securities whatever, and in all cases of loans upon real estate, a sufficient bond secured by a mortgage thereon shall be required of the borrower....

"I think the Banking Act contemplates that all the moneys, except the available funds authorized by section 261, should be kept invested in proper securities, and the act expressly prohibits the trustees from dealing in personal property or real estate, or personal securities, notes or bills, etc.; and the provision in section 286, making it a misdemeanor to invest in securities not named in the act, does not confine such investments to money deposited but appears to apply to all moneys in the keeping of the institution, and inasmuch as section 289 declares that the act shall be construed favorably, for every beneficial purpose therein contained, I am of the opinion that it should be so construed that section 260, designating the kinds of securities in which the money may be invested, should apply to all funds and money of, or in charge of, the institution, whether it be surplus or deposits, except as provided in section 261."

18. In October, 1886, the superintendent of the banking department requested an opinion from the attorney-general as to the power of the banking department and of the trustees of savings banks in this State to allow, in case of loans upon real estate, in the place of the ordinary searches from the county clerks' and registers' offices of the counties in which the real estate is situated, the searches and abstracts of title furnished by corporations known as title guaranty companies, and also as to the propriety of using such searches, if the power existed.

In the opinion of the attorney-general filed in the banking department, that officer states in effect that such matters must be left with the trustees of the bank, subject to the directions and regulations of the superintendent of the banking department.

"I will only add that a high degree of care and caution should be required in regard to the title and the liens upon real estate upon which the funds of depositors in savings banks are loaned. In every case where the contracts or obligations of title guaranty companies are taken in lieu of official searches, too, much care cannot be taken in regard to the responsibility of the corporation making the contract. . . . If the contracts of these corporations are substituted at all in the place of the official searches of public officers who have the custody of the records of title and of liens, they should be clear, comprehensive, absolute and unconditional. The legal effect of numerous and complicated conditions inserted in a contract in the nature and form of an insurance policy cannot always be determined by the trustees of savings banks at the time of making the loan. They are liable to be misunderstood by the directors, to become inoperative by a failure to observe the conditions, and after the lapse of many years, to impair the contract as a protection and indemnity to depositors."

19. In a supplemental opinion filed in the banking department May 19, 1887, the attorney-general declares his opinion to be that "if the trustees engage competent lawyers to search and examine titles upon which the funds of the banks are loaned, they would not be chargeable with negligence, whether such counsel were engaged directly or through the medium of the guaranty company.

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'The insurance of the title is, in my opinion, immaterial to the question. The banks would not be justified in depending upon such insurance without having the titles examined."

20. The attorney-general gave an opinion, dated September 24, 1892, relating to the question whether savings banks in this State can invest their deposits in bonds secured by a first mortgage, executed to a trustee, where the savings bank takes and becomes the owner of such bond. He was also asked whether savings banks can legally invest their deposits in such bonds where the bank takes all the bonds issued under such first mortgage.

He states in reply that he understands the inquiry relates to bonds issued by a corporation secured by a first mortgage upon its real estate, executed to a trustee named as mortgagee. He then says:

"If the mortgage, by its terms, cannot pass by assignment with the bonds, but must be foreclosed through the intervention of a trustee in case of default, in the payment of principal or interest, then, in my opinion, the bonds and mortgage referred to are not such as are included in the class of bonds and mortgages specified in the above act.

"The bonds there mentioned are those given for the payment of money secured by mortgage upon real estate, executed directly to the obligee named in the bond. "That the title to the mortgage as well as the bond should be vested in the savings bank making the investment, securing to it the ownership and control of the same, with the right to foreclose in case of failure to pay, without the intervention of a trustee.

"In the case of a corporate bond secured by a mortgage upon corporate rights and franchises, or in case of bonds executed to and held by a trust company, or

other trustees as security for the hondholders, savings banks, in case of investment in such bonds, would not be the holders of the mortgage, or have any direct control over it. In case of default in the payment of the bonds, or compliance with its conditions as to interest or insurance, the savings banks so investing would be obliged to seek their remedies through the intervention of trustees to whom the mortgage had been executed.

"The uniform construction by the banking department and this office has been to the effect above indicated, and I am disinclined to depart therefrom; it is certainly safer to hold as stated; that loans on bonds and mortgages which savings banks may make are those in which the mortgages as well as the bonds are made or assigned to, and held and controlled by the savings bank."

21. The attorney-general gave an opinion, dated September 24, 1892, relating to the bonds of the State of Alabama as a legal investment for savings banks. He says: "I am unable to say whether there are now any bonds or obligations outstanding against that State, the principal or interest of which has been defaulted by the State. If the said sum of $9,249,000 includes the entire legal indebtedness of the State and there has been no default in the payment of the interest thereon, during the last ten years, and no default in the payment of the principal, I know of no reason why savings banks in this State may not invest in the securities; but as it is almost impossible for this department to be in possession of all the material facts relating to the financial condition of the several States in the Union, and this department not being in possession of the facts relating to the actual financial condition of the State of Alabama, I would recommend that, before any savings bank invests its funds in such securities, that they obtain from the Alabama State officials the facts relating thereto."

22. The attorney-general in an opinion dated November 12, 1895, interpreting subdivision 5 of section 116 of the Banking Law as amended by chapter 440 of the Laws of 1893, held that “when the indebtedness of any of said cities, decreased by its water debt or sinking fund, exceeds seven per cent. ' of its valuation for taxation purposes,' then the bonds or stocks of said city are no longer available as investments for the savings banks of New York. In other words, in determining the indebtedness of any such city, it should have credit for the amount of its sinking fund.

"Again concerning the effect to be given to 'tax certificates' upon the indebtedness of a city.

"Without a reference to the peculiar provisions of the statute authorizing the issue of such form of obligation, we are unable to frame an intelligent reply. If the tax certificate were to be issued as a general obligation of the city, it no doubt should be added to the sum of municipal indebtedness. If, on the contrary, such certificate should be issued against the proceeds of certain assessments or uncollected taxes, a particular fund, such certificate should not constitute a general obligation of the corporation. Indebtedness of a general character, if any there might be, would not accrue until the certificates were issued, and of course these would, as before stated, be entirely dependent for their validity and effectuality upon the particular terms in which the legislative will was expressed.

23. As to bonds of Missouri-Pacific Railway Co. on which dividends had recently been made payable in stock, held, that such an investment, legal when

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made, should be changed when the conditions of security change, and the superintendent may order such change. Opinion Atty.-Gen., January 15, 1908.

24. As to whether bonds secured by the Northern Division mortgage of the Eastern Railway Company of Minnesota which had been absorbed by the Great Northern Railway are a legal investment for savings banks in view of the fact that the corporation issuing the bonds did not own 500 miles of trackage for five years before the investment, held, that the five years' period in above section did not apply to the ownership of trackage, and that the investment was legal if the 500 miles of trackage was owned at the time of the investment. Opinion Atty.-Gen., April 10, 1909.

25. A savings bank may invest in what is technically a second mortgage, where it holds the first mortgage, as the word "unencumbered " means that there is no lien prior to that of the bank. Opinion Atty-Gen., June 11, 1909.

26. An agreement by a savings bank to sell certain of its securities at a fixed price to a national bank, and to deposit the proceeds with the buyer which will, on demand of the seller, resell all or any of said securities, and upon demand of the buyer the savings bank (seller) will buy back the same securities, the original purchasing bank to pay interest to the savings bank for the deposit; the resulting purpose being that the national bank may gain additional circulation from the U. S. Treasurer by reason of said securities being placed in the U. S. treasury; held, to be actually a loan by the savings bank of its securities and illegal. Opinion Atty.-Gen., June 7, 1909.

27. September 7, 1906, the attorney-general replied to an inquiry as to the construction to be placed upon section 146 of the Banking Law in regard to the investment of moneys deposited therein, and the income therefrom. He stated:

"Subdivision 6 of the section above referred to requires that such investments shall be in bonds and mortgages on unincumbered real property situate in this State to the extent of sixty per cent. of the value thereof. Not more than sixtyfive per centum of the whole amount of deposits shall be so loaned and invested. "I think a fair construction of that section would be that the deposits and the income derived therefrom, which of course would be the accumulated surplus, must be treated as a whole, and sixty-five per cent. thereof and no more, may be invested as provided by subdivision 6 above referred to."

§ 147. Limitation as to real property. Every such corporation may purchase, hold or convey real property only as follows:

1. A plot whereon is erected or may be erected a building or buildings requisite for the convenient transaction of its business, and from portions of which not required for its own use a revenue may be derived. The cost of such building or buildings and lot shall in no case exceed twenty-five per centum of the net surplus of the corporation, except by written permission of the superintendent of banks. The estimate of the cost of said building and lot, and the plans of the building to be erected, shall first be submitted to the superintendent of banks for his approval, before the purchase of the lot is made or before the erection of the building is commenced.

2. Such as shall have been purchased by it at sales upon the foreclosure of mortgages owned by it, or on judgments or decrees obtained or rendered for debts due to it, or in settlements effected to secure such debts. All such real property shall be sold by such corporation within five years after the title to the same shall be vested in it, unless, upon application by the board of trustees, the superintendent shall extend the time within which such sale shall be made.

Every such corporation may, with the approval in writing and under the seal of the superintendent of banks, change its location within the limits of any city or town wherein it may be established. In effecting such change of location such corporation owning a banking-house and lot, may purchase such additional plot under the provisions of subdivision one of this section as the corporation may require; and such banking-house and lot previously owned and occupied shall be sold as provided in this subdivision concerning real property acquired in satisfaction of debts.

(Former section 117; R. S., 1569; L. 1882, ch. 409, § 263; L. 1894, ch. 178.) 1. A loan was made by the B. S. Savings Bank to three persons of $20,000, $15,000 and $15,000 respectively, upon a promissory note by each for the amount he received, with collateral security of promissory notes of an Illinois corporation, which notes were secured by trust deeds of such corporation upon unimproved vacant lots in that State, not worth over $10,000, and where one of the trustees of the bank at the time of the loan was a large stockholder in such foreign corporation, and the loans were intended to be and were in fact loans to the corporation, such facts being known to the trustees of the bank, or could with reasonable diligence have been learned by them, and where the loans were intended to be to said trustee, and were made because of his interest in the corporation, and the loans were in fact loans upon the security of the lots. Held, that under the laws of this State affecting savings banks, such transaction is unauthorized and illegal. Paine, Receiver, v. Barnum et al., 59 How. Pr. 303.

2. Where a savings bank loaned money on certain notes, which notes were taken up by giving a second note for the amount; held, the bank could recover on such subsequent notes, and that the statute should not be made to work an evil to the savings when in fact it was intended for its benefit. Rome Savings Bank v. King et al., 102 N. Y. 331, 6 N. E. 682.

3. An opinion by the attorney-general was filed in the banking department September 26, 1879, in which that officer holds as follows:

'In my opinion, a savings bank can only purchase and hold real estate (other than such as may be bought in at foreclosure sales) necessary for a banking building. The statute declares that it shall be lawful for any such corporation to purchase, hold or convey real estate only as follows: 1st. A plot whereon is erected, or may be erected, a building or buildings requisite for the convenient transaction of its business, and from portions of which, not required for its own use, a revenue may be derived.' § 29 (263).

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