The record-union., 1899-03-21
DECIDES AGAINST THE BANK
JUDGMENT IN ANOTHER UNION
b. AND L. CASE.
Farmers and Mechanics Bank
Must Return Securities and
Moneys Collected.

Moneys Collected.
Judge Buckles of Solano yesterday
fled in the superior Court of this county
his decision in the case of L. w. = Neli,
Receiver for the Union Building ana
Loan Association against the Farmers
and Mechanics Bank. The issues IN
volved are similar to those in the case
against the National Bank of ID. ..
Mills & Co., recently decided. Follow
ing is
THE DECISION:
This is similar case to one recently
decided in this Court where the Re-
ceiver, O'Neil, is plaintiff and the Ma
tional Bank of d. o. Mills is defendant,
with this exception, that in that case
the Mills Bank was Treasurer of the
Union Building and Loan Association,
while in this b. U. Steinman was
President at the same time of the Union
Building and Loan Association and OF
the Farmers and Mechanics Bank,
and e. K. Alsip was, at the same time
Secretary and virtually the manager Oh
the Union Building and Loan Associa-
ton and a Director in the defendant
bank
The following is the bylaw governing
the maturing of stock:
Bylaw 15=When it is ascertained
that there is sufficient capital in the
treasury, valuing the securities at
their actual cash value, a meeting of
the stockholders shall be convened, and
a distribution of the money in the
treasury shall be made, and the holder
of each share shall receive the sum of
two hundred dollars therefor, or its
securities to that amount"
=, The question is that the securities
We're not valued at their actual cash
value. While it is said in O'Neil VS..
the Mills Bank that the Board did not
value the securities at their cash value,
but at what they had cost the associa-
ton, a more careful examination of the
evidence shows the board made 10
effort to value the securities at all, but
the Secretary furnished a list showing
the cost of each with delinquencies
added. 1t may be said, however, that
as the board adopted these amounts,
it thereby valued its securities; but as
was shown it did not value them at
their actual cash value. The evidence
shows that these values were very
value, and that it required this excess
i've high valuation to make it appear
that ''the capital in the treasury was
sufficient to pay off the sixth series. Not
having valued it's securities at their ac-
tual cash value the board had no power
to borrow money The Union Building
and Loan Association could not bor-
row money except for the legitimate
ofi H.,
in force upon this subject, and govern
ing said association, was Section 64O,
Civil Code, which reads as follows:
Any such corporation may borrow
money for the purpose of carrying out
its objects, and may give as security
therefor its shares, or mortgage upon
its real estate"
The object of the association is to
accumulate the funds of its members
and stockholders, until each share is
worth $500, and then pay to the share
holders 500 for each share held. OF
course there were other objects, but
this is the ultimate one and the object
for which the money was gotten from
the defendant bank.
~ Neither had it any power whatever
under Section 640 to pledge it's securi-
ties. 1t is true there is a section of
the bylaw which permits the aesocia-
ton to borrow money with or without
security. But the statute seems to reg
ulate the giving of security-that is the
association can give no other security
except Its shares and mortgage on its
real estate
1t is claimed by the plaintiff that the
directors were never authorized by any
motion or resolution to borrow the $40
600 or any sum of the defendant. The
minutes of the February =, 1896, meet
ing, at which it was determined to bor-
row money with which to pay off the
sixth series, show the following:
Moved by Director Jones and Sec
onded by Director Butler that the
President and Secretary be authorized
to execute notes to the National Bank
of D. @. Mills for such sums as shall be
necessary to pay off the sixth series;
carried"
Director Jones, who is a very intelii-
gent and clear-headed gentleman, and
who seems to have a fair recollection
OF what was done, says his motion as
originally made was as follows:
That the President and Secretary be
authorized TO borrow from the Farmers
and Mechanics Bank and D. o. Mills
Bank, on proper security, to pay off the
holders of the sixth series, at 6 pei
cent, and that Steinman objected &c
that and asked to have it read ID. o
Mills Bank, and it was suggested by
another director that it read any
bank and that the final motion was
that the President and Secretary be au-
thorized to borrow from d. o. Mills
bank, or any bank, money necessary
to pay off the sixth series, on proper
security, at g per cent"
This is not disputed in any material
matter. except as may appear from this
minutes above quoted. The statement
of Director Jones as to what was de-
termined, that is to borrow from any
bank, seems to be- the authority or
which the President and Secretary die
act, for they borrowed money of the
y. O. Mills Bank and the defendant
The question of authorization to borrow
by action of the board was presented
at the trial, and the testimony of the
real action of the board, and not re-
corded on the minutes, was received