Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1899-07-29
STRICT LAW FOR BANKS.
Attorney General +. NJ, Bishop Answers -four
Questions.
Evasion- OF State Ranking Lhw-Lim-
IL OF Loanir ! Bonds are Not Com
sIdered as Cash on Hand.

The law FOR banks has been laid
down by Attorney General Bishop.
Bank Examiner II. n. Anderson sub
mltted to him Ave questions. to which
answers were given as follows:
ILLEGAL LoAN1NG.
The first question was In substance;
A bank has loaned TO an unincorpo-
rated mercantile company $4,000. the
same being the full limit the law al
lows. Then It has loaned TO employees
OF said mercantile company other sums
agErogating 10000. The money no bor-
rowcd by the company and employees
agErcEating 5000. has been duly cred
tied by said mercantile company on Us
books. A security for the entire loan
the bank holds suudry notes OF farm
ers. executed to the said mercantile
company. showing that It il the mer-
camille company which has really bor-
rowed the whole Of this $4,000. II this
an evasion OF the banking law of the
State. and n so. what II the remedy?
The attorney general IL OF tho opln-
ion that this Is clearly violation Of
"''AAHA gov AhNNANNh HAhAAANNH anu WV
remedy is for the secretary Of state.
through the attorney general. to op-
ply to the district court FOR the app
pointment ~ a receiver 10 take charge
OF and wind up the business OF the
bank.
DIRECTOR IS AN OFFICER.
Tho second question states that the
same bank strcnuOusly makes the
claim that n director Of any state bank
In the State Of Utah. II not an ofilccr.
and that therefore his liability to such
bank cannot be limited 20 a $4,000
loan, as an officer Is. and asks " a
director ~ bank Incorporated under
the laws Of the state II an officer there
Of
The answer Is that he H.
$4,000 THE LIMIT.
The third question says; This bank
has loaned $4,000 to one Individual
since the Revised Statutes went into
erect $4,000 being the legal limit, In
the following manner. Fifteen thou
sand dollars was loaned direct on one
note To the person borrowing, then this
bank made out another note for $4,000.
OF the same date payable TO sister
bank, and got the same borrower to
sign II. The sister bank. by lts presi-
dent, Immediately Endorsed the note,
WITHOUT recourse over To thta Duuk,
which then paid out the money TO the
maker thereof. The directors OF the
country bank knew absolutely nothing
OF the transaction. Is such loan un-
lawful. as being violation NJ the law7
The answer N that any bank. trans
acting business In this way knowingly
and wilfully n amenable In the same
way pointed out In the answer 10 the
firat question.
IN RELATION TO bonds.
The fourth question In. The presi-
dent OF this bank refuses To keep on
hand the lawful 10 per cent IN cash on
hand and balances due the corporation
from good solvent banks" He makes
the claim that the State bank examiner
should cunatrue the law very broadly
and include government bonds, which
can be, ana always have been. cnsho1
except In two instances. Am permit
ted to oonstrue the law as he specially
Wlshcs2
The attorney general says that moth.
ing but cash on hand and balances due
from solvent banks are available funds.
Government bonds are not.
The NTH question says that the bnnk
makes loans on mining stock, WHOM its
bylaws prohibit this. The attorney
general holds that the state authorities
have no jurisdiction In the matter of
bylaws 10 long as they do not conflict
with the articles OF Incorporation or Inc
general laws OF the State,