"At the next meeting of the board of commissioners of paroled prisoners, held at such prison after the issuing of a warrant for the retaking of any paroled prisoner, said board shall be notified thereof. If said prisoner shall have been returned to said prison he shall be given an opportunity to appear before said board, and the said board may declare said prisoner to be delinquent, and he shall * be thereafter imprisoned in said prison for a period equal to the unexpired maximum term of sentence of such prisoner at the time such delinquency is declared, unless sooner released on parole or absolutely discharged by the board of commissioners of paroled prisoners." It follows from a reading of these two sections that if a prisoner is sentenced for from one to seven years he must serve the full seven years, less any time allowed him for good behavior, unless sooner paroled or pardoned. If he should be paroled his maximum sentence continues to run while out on parole until the board of commissioners of paroled prisoners, pursuant to the provisions of sections 9876 and 9877 of said statutes, declares such prisoner to be delinquent, and after he is declared delinquent by the board he must thereafter be imprisoned for a period equal to the unexpired maximum term of sentence, counting time from the date. when he was declared delinquent by the board, unless he should again be paroled and be pardoned. This construction I think is not in conflict with that given you in my letter of January 26, 1909, construing the length of time a prisoner must serve who has been paroled by the circuit court pursuant to the provisions of the act of 1907, and who has broken his parole and his suspended sentence has been revoked by the court, for the reason that sections 9876 and 9877 of the statutes quoted do not apply to prisoners whose sentences are revoked by such courts. I enclose my letter of January 26th. TRUST COMPANIES-ISSUANCE OF FIRST MORTGAGE TRUST BONDS. Hon. John C. Billheimer, Auditor of State: February 8, 1909. Dear Sir I acknowledge receipt of your inquiry of January 30, in which you say: "Has a trust company organized under our law providing for the organization of loan, trust and safe deposit companies, the power to issue first mortgage trust bonds like the one enclosed? "I have failed to find authority for the same in the law. Would not such issue be a preference of creditors?" The material provisions of the bond referred to read as follows: "For Value Received, the Citizens Savings Deposit Company promises to pay to the bearer, or to the registered holder hereof, Five Hundred Dollars ($500.00) at the office of the obligor, in the City of Indianapolis, Indiana, on the first day of June in the year 1911, with interest at the rate of five per cent. per annum, payable semi-annually, on the first days of June and December in each year, at its office, either to the registered holder thereof, or in case coupons be hereto annexed, upon presentation and surrender of such coupons as they severally fall due, and in case default be made in such payment of interest and continued for a period of thirty days, the principal of this bond shall then become due. "This is one of a series of bonds of like denomination, all of like tenor and effect, amounting in the aggregate to $25,000.00. "To secure the payment of each bond, together with interest thereon, there are deposited with the safety deposit company named on the back hereof, notes or bonds secured by first mortgage on improved real estate to an amount not less than the par value of the bonds of this series. Said notes or bonds so deposited are subject only to the control of the trust company named on the back hereof, as trustee for the holders of the bonds of this series, according to the terms of an agreement between the obligor and the trustee, of even date hereof. This bond shall not become obligatory until authenticated by certificates endorsed hereon, duly signed by said safety deposit company and said trustee, and thereupon title thereto shall pass by delivery or by transfer on the books of the Citizens Savings Deposit Company. "After registration of ownership by the said company the coupons shall remain negotiable, but no transfer of this bond, except on the books of the company, shall be valid unless the last transfer be to the bearer, which shall restore transferability by delivery, and it shall continue subject to successive registrations and transfers, to bearer, as aforesaid, at the option of each holder; but the holder may, at any time, at his option, surrender the annexed coupons to the company, to be cancelled, and thereafter it shall not be transferable to bearer, but the interest shall be paid to the registered holder. "The Citizens Savings Deposit Company will loan the holder hereof at any time ninety-five per cent. of the face value of this bond for a rate of interest not to exceed one per cent. per annum, plus the rate it bears, and will accept this bond as collateral security for said loan." Sections 4942-4962, inclusive, Burns' R. S. 1908, provide for the incorporation of loan and trust companies, and define their powers and duties. Under the above mentioned sections of the statute the following powers are expressly granted to such companies: To hold real estate and personal property necessary for the convenient transaction of their business, and to make and deliver, receive and accept deeds, conveyances, mortgages, leases, contracts and writings obligatory; to loan money and funds and to secure the same by mortgage; to sell and assign such mortgages and other securities, and to convert them into cash or other securities; to hold any real estate or personal property upon trusts created in accordance with the laws of Indiana or the United States; to accept from and execute trusts for and on behalf of married women in respect to their separate property; to act as agent for corporations, public and private, or individuals in issuing, registering or countersigning bonds, stocks, etc., or to receive or pay out money in redemption thereof; to become surety for guardians, executors, administrators, trustees, etc.; to take, accept and hold on deposit or for safe keeping moneys, stocks or other securities or personal property; to act as trustee, assignee, receiver, administrator, executor, guardian; to act as agent and attorney in fact for any public or private person in the management and control of real estate or personal property, the collection of rent and payment of taxes, etc.; to invest money received by it in trust in certain securities. From the enumeration of the powers of such companies it is apparent that no express grant has been made to them to borrow money and issue bonds therefor, unless the right to take, accept and hold money on deposits can be so construed. By section 4962 Burns' R. S. 1908 every trust company which accepts savings deposits is required to hold the same under the same regulations as to repayment as are prescribed by law for the repayment of deposits in savings banks. Section 3364 Burns' R. S. 1908 provides that deposits in savings banks shall be repaid to each depositor when required by him, but at such times and under such regulations as the board of trustees may prescribe, and that in order to prevent loss to the depositor by sale of securities below their par value it shall be lawful for the trustees to require notice of such withdrawal ranging from one week to ninety days, owing to the amount of the deposit. The word "deposit" as used in the third subdivision of section 4953 Burns' R. S. 1908 means an ordinary deposit like one in bank, commonly called a general, in contradistinction to a special, deposit. The identical money is not to be restored, but only its equivalent, when demanded, and the bank or trust company becomes the debtor of the depositor. Am. & Eng. Enc. Law, Vol. 9, p. 282; note and authorities there cited. The distinction between a loan and a deposit is thus well stated in a Pennsylvania case: "Was this transaction with the Bank of America a deposit of the money or was it a loan or investment of it? A deposit is where a sum of money is left with a banker for safe keeping, subject to order, and payable, not in the specific money deposited, but in an equal sum. It may or may not bear interest, according to the agreement. While the relation between the depositor and his banker is that of debtor or creditor simply, the transaction cannot in any proper sense be regarded as a loan, unless the money is left, not for safe keeping, but for a fixed period at interest, in which case the transaction assumes all the characteristics of a loan.' Estate of Law, 14 L. R. A. 103, 106; State v. McFetridge, 20 L. R. A. 223, 236, 237. That the bond in question is not a deposit within the meaning of our statute, as construed in the light of the authorities, but is a loan, clearly appears from the following provisions of said bond: (1) It is payable not on demand or after the notice which such trust companies are authorized to require, not exceeding ninety days, but three years from date. (2) Unlike a deposit, the bond itself is negotiable or transferable by delivery, when the last transfer has been made to the bearer, without any entry on the books of the company or notice to such company of said transfer. The coupons are negotiable. (3) The holder of the bond is entitled to demand at any time a loan equal to 95% of the face value of the bond at a rate of interest not to exceed 1% per annum, plus the rate the bond bears (which is 5%), and the company binds itself to accept the bond as collateral security. (4) A general deposit is secured by the assets of the bank or trust company, including the stockholders' liability. This bond is not only thus secured, but also by a deposit of collateral consisting of first mortgage real estate notes and bonds. I am therefore of the opinion that this bond can not in any sense be regarded as a deposit within the meaning of this act, but that it is a loan, and as such is not directly authorized by the trust company law. There remains for consideration the question as to whether a trust company is impliedly authorized to borrow money in this manner. It is well settled in this State that a corporation possesses only such powers as are expressly given by law, and such implied powers as are necessary to enable it to exercise the powers expressly given. State Board of Agriculture v. Citizens' St. Ry. Co., 47 Franklin Nat'l Bank et al. v. Whitehead et al., 149 Ind. "Loan, trust and safe deposit companies have only such powers as are conferred upon them either expressly or impliedly. They must act strictly within the scope of the powers conferred on them by the statute under which they are incorporated, and in the manner prescribed thereby. If there is any uncertainty as to the powers conferred the statute must be construed in favor of the public. The enumeration of powers implies the exclusion of those not enumerated, unless the latter are necessary to the accomplishment and exercise of the powers expressly granted." (Am. & Eng. Enc. Law, Vol. 19, p. 478, sub. "Powers.") |