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Section Cited.

Underhill v. Santa Barbara etc. Co., 93 Cal. 309, 28 Pac. 1049; McNamara v. Oakland etc. Assn., 131 Cal. 341, 63 Pac. 670.

Annotation.

Contracting Indebtedness.-The fact that notes and mortgages are executed by a corporation for indebtedness beyond the subscribed capital stock of the corporation does not render such notes and mortgages void. Section 309 of this code, when read in connection with sections 354 and 640, does not make them void. (Underhill v. Santa Barbara etc. Co., 93 Cal. 309, 28 Pac. 1049.)

This section authorizes the borrowing of money to carry out the objects of the corporation. (McNamara v. Oakland etc. Assn., 131 Cal. 341, 63 Pac. 670.)

BORROWING MONEY.

Sec. 641, C. C. Any association organized in pursuance of the provisions of this act may borrow money for the purpose of making loans or paying withdrawals. En. March 21, 1872. Rep. 1891, 252. En. Stats. 1891, 255.

Legislative History.

See sec. 639, supra. The old section 641 is as follows: "Any such corporation may purchase real estate and erect buildings for its members and make loans to its members for the purpose of aiding them in acquiring and improving real estate. Such loan must in all cases be secured on such real estate."'

Section Cited.

McNamara v. Oakland etc. Co., 131 Cal. 341, 63 Pac. 670.

Annotation.

Making Loans.-Loans of borrowed money may be made for the purpose of aiding them to acquire and improve real estate. (McNamara v. Oakland etc. Assn., 131 Cal. 341, 63 Pac. 670.)

PROFITS AND LOSSES.

Sec. 642, C. C. Profits and losses shall be apportioned at least annually, and shall be apportioned to all the shares in each series outstanding at the time of such apportionment, according to the actual value of such shares as distinguished from their withdrawal value. En. March 21, 1872. Rep. 1891, 252. En. Stats. 1891, 255.

Legislative History.

See sec. 639, supra. The old section 642 is as follows: "Such corporation may insure, in some life insurance company incorporated under the laws of this state, the lives of its members and debtors. in case of the death of a debtor or member so insured, the amount recovered on the policy must be applied to extinguish the indebtedness, including the premium paid, and the residue, if any, must be paid to the legal representatives of the decedent.''

Section Cited.

McNamara v. Oakland etc. Co., 131 Cal. 342, 63 Pac. 670.

MEMBERSHIP.

Sec. 643, C. C. Any person of full age and sound mind may become a member of the association by taking one or more shares therein, and subscribing to the by-laws, and annexing to his signature his postoffice address. A minor may hold shares in the name of the parent, guardian, or next friend as trustee. The shares of stock in any such corporation held by any person, to the value of one thousand dollars, shall be exempt from execution. En. March 21, 1872. Rep. 1891, 252. En. Stats. 1891, 256.

Legislative History.

See sec. 639, supra. The old section 643 is as follows: "Any such corporation may purchase, hold, and convey real estate, as follows:

"1. The lot and building in which the business of the corporation is carried on, the cost of which must not exceed twenty thousand dollars;

2. Such as may, from time to time, be necessary to supply the wants of its members, the cost of which, held unallotted to the members thereof at any one time, must not exceed the sum of one hundred thousand dollars;

"3. Such as shall have been mortgaged, pledged, or conveyed to it in trust, to secure money loaned, or to secure the purchase price thereof in pursuance of the regular business of the corporation."

Section Cited.

McNamara v. Oakland etc. Co., 131 Cal. 342, 63 Pac. 670.

ANNUAL REPORT.

Sec. 644, C. C. Every association organized under the provisions of this act, and every other association doing a like business, shall annually make a full report, in writing, of the affairs and condition of such corporation, within thirty days after its annual meeting, to the bank commissioners of this state. Such report shall be verified by the oath of the officers making the same, and a copy of the same shall be delivered to every stockholder, from the office of the corporation, who may call for such report. Every association shall make any further reports which the said commissioners may require, and in such form and as to such matters relating to the condition and conducting of the business of the association as such commissioners may designate; and said bank commissioners may at any time examine into the affairs of any and every of said associations. Any willful false swearing in making and verifying said reports shall be deemed perjury. Any such association which shall fail to furnish the bank commissioners any such report required, within thirty days after demand, shall forfeit the sum of ten dollars per day for every day such report shall be delayed or withheld; which may be recovered in an action brought by the attorney general in the name of the people of this state; and all moneys so recovered shall be paid to the treasurer of the state, who shall pay the same into the "bank commissioners' fund." The state bank commissioners shall annually publish a full report of the condition of all associations formed under the provisions of this title, and every other association doing a like business in this state, in the same manner as they are now required to do in reference to savings banks. En. March 21, 1872. Rep. 1891, 252. En. Stats. 1891, 256.

Legislative History.

See sec. 639, supra. The old section 644 is as follows: "The bylaws of such corporations must specify the amount of the periodical subscriptions or payments to be made by each member, the time and manner in which such payments are to be made; the fines and forfeiture for default; the time and manner of election of directors and other officers, and their terms of office; the manner in which the real Corporation Laws -30

estate may be distributed, allotted, or sold to its members; the terms and conditions upon which loans may be made to its members and by them repaid to the corporation; the manner in which a person may become and cease to be a member; the conditions on which members may withdraw from the corporation, and the provisions for the pay. ment to withdrawing members of the sums of money due to them arising from subscriptions or payments, and the proportion of the profits such withdrawing members may receive on withdrawal.”

Section 1 of the act of 1891, page 256, amending this section, provided that this section should apply to all such associations whether organized before or after the passage of the act.

Section Cited.

McNamara v. Oakland etc. Co., 131 Cal. 342, 63 Pac. 670.

Annotation.

By-laws Under Act of 1872.-Held, under original section, that it required the corporation to outline and define its scheme in its bylaws. (McNamara v. Oakland etc. Co., 131 Cal. 342, 63 Pac. 670.)

FOREIGN CORPORATIONS, DEPOSIT BY.

Sec. 645, C. C. No mutual building and loan association, or company, association, or corporation organized under the laws of any other state or territory, to carry on a business of a like character to that authorized by this title shall be allowed to do business or to sell their stock in this state without first having deposited with the state controller or Secretary of State the sum of fifty thousand dollars in money, or United States or municipal bonds of this state, or in mortgages upon real estate located within this state, as a guaranty fund for the protection and indemnity of residents of the state of California with whom such companies, associations, or corporations shall do business; the fund so deposited to be paid by the custodian thereof to the residents of California only, and not then until proof of claim by final judgment has been filed with the custodian of said fund against such foreign company, association, or corporation. Any of the securities so deposited may be withdrawn at any time upon others, herein provided for, of like amount being substituted in lieu thereof. Any person or persons who shall be found in this state as agent, or in any other capacity, representing such foreign company,

association, or corporation which has not complied with the provisions of this section shall be deemed guilty of a misdemeanor, and upon conviction shall be punished by a fine not exceeding one thousand dollars or by imprisonment in the county jail not exceeding twelve months, or by both such fine and imprisonment. En. March 21, 1872. Rep. 1891, 252. En. Stats. 1891, 256.

Legislative History.

See sec. 639, supra. The old section 645 is as follows: "The secretary of any corporation must, once in each year during the existence of the corporation, prepare a full and explicit statement of the financial affairs thereof, comprising a balance sheet, statements of receipts and expenditures, profit and loss, and assets and liabilities, which must be audited and verified by two competent persons (not directors), elected by the general body of shareholders, and be countersigned by the president and secretary. A copy of such statement must be printed and circulated among the members, and appear immediately after the annual meeting of the corporation daily at least one week, or weekly at least four weeks, in one or more newspapers published at the place of the principal business of the corporation."

Section Cited.

McNamara v. Oakland etc. Co., 131 Cal. 342, 63 Pac. 670.

ELECTING TO CONTINUE BUSINESS.

Sec. 646, C. C. Any building and loan association, now existing and heretofore incorporated, desiring to continue its. existence under the provisions of this title, may do so if the holders of a majority of the stock, at their regular annual meeting, or at a special meeting of the stockholders called for that purpose, shall so elect. The notice of the meeting, whether regular or special, shall state as one of the objects of the meeting to vote on the question whether the corporation shall continue its existence under the provisions of this title; and the notice of meeting shall be published as required by section three hundred and one; and, in addition thereto a similar notice shall be mailed to each stockholder at his post office address. Within thirty days after the holders of a majority of the stock at any such meeting have voted to continue the existence of

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