the treasurer is hereby authorized to permit such exchange of cash for securities, or securities for other securities, or securities for cash deposited by such corporation, company or association if in his judgment such securities are equal in value to the amount of cash provided by law to be deposited. Every corporation, company or association so making a deposit in compliance with or under the provisions of this act may collect and use any dividend, interest or profits arising on or from any securities deposited with the treasurer of the state of California, provided such security is not thereby depreciated in value. [New section added March 18, 1905; Stats. 1905, p. 159.]

See note to § 635a.

Amount of money to be loaned out of reserve fund. Collateral may be deposited with treasurer.

§ 635g. No corporation, company, association, copartnership or individual doing business within this state as an investment company as herein before defined shall hereafter lend to holders of bonds, debentures or certificates of investment, out of its reserve fund, any amount greater than the proportionate share of such bond, debenture or certificate of investment in said reserve, and whenever such loan is made it shall be evidenced by the note of the borrower and secured by a deposit as collateral security, of the bond, debenture or certificate of investment on which the same is made. Any collateral so taken may be deposited with the treasurer of the state of California as a part of the deposit herein before required and it may be computed as making so much of said required deposit as the proportionate share of such bonds, debentures or certificates of investment so deposited as the entire reserve fund amounts to, not exceeding, however, the amount loaned. [New section approved March 18, 1905; Stats. 1905, p. 159.]

See note to § 635a.

Reserve fund.

§ 635h. Every corporation, company, association, copartnership or individual doing business within this state as an investment company as herein before defined shall apportion not less than forty per cent of every partial payment or installment received from the sale of any bond or bonds, debenture or debentures, certificate or certificates of investment as a reserve fund; said reserve may be invested from time to time within the discretion of the board of directors or governing body of such corporation, company, association, copartnership or individ ual. [New section approved March 18, 1905; Stats. 1905, p. 160.] See note to § 635a.

Duty of attorney general.

§ 6351. The attorney general of the state of California shall, at any time that he may deem proper, or at any time upon the complaint of any holder of any bond or bonds, debenture or debentures certificate or certificates of investment by whatever name they may be known or desig

nated, make any examination of the affairs of any corporation, company or association doing business within this state as an investment company as herein defined, and inquire into the investments of the reserve fund of such corporation, company, or association and if upon such examination it shall be ascertained that any corporation, company or association so doing business has not assets to equal in value the total amount of reserve as in the last section required with interest thereon at three and a half per cent per annum compounded annually from the time of the sale of such bonds, debentures or certificates of investment, he shall commence an action in the name of the people of the state of California to restrain and enjoin said corporation from doing business and unless said reserve is made to equal the amount required before judgment is rendered in said action, judgment shall be rendered restraining and enjoining said corporation, company or association from doing business within this state, and he shall in his discretion institute proceedings against such company, corporation, association, copartnership or individual to have it declared bankrupt. [New section approved March 18, 1905; Stats. 1905, p. 160.]

See note to § 635a.

Violation of the provisions of this act.

Penalty.

§ 635j. Every officer, agent or representative of any corporation, company or association doing business within this state as an investment company as hereinbefore defined, who shall place or sell any bond or bonds, debenture or debentures, or certificate, or certificates of investment of any company that has not complied with the provisions of this act shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not less than one hundred dollars, and not more than five hundred dollars, for each offense, or by imprisonment in the county jail for not less than thirty days, nor more than six months, or by both such fine and imprisonment. [New section approved March 18, 1905; Stats. 1905, p. 160.]

See note to § 635a.

Not to do business until deposit is made.

§ 635k. No person, firm, corporation, company, copartnership or individual shall issue, sell or dispose of any species of bond or bonds, debenture or debentures, certificate or certificates of investment on the partial payment or installment plan whereby the holder or holders of such bond or bonds, debenture or debentures, or certificate or certificates of investment are or may become entitled to claim and receive from such person, firm, company, association, or copartnership a return, either at a definite or indefinite time in cash, or in merchandise, or in property, for the payment of installments so paid, and wherein or whereby the holder may be subject to a fine or penalty or forfeiture for nonpayment of such partial payments or installments, without having complied with the provisions of this act and first made the deposit required by

section 2 of this act. [New section approved March 18, 1905; Stats. 1905, p. 161.]

See note to § 635a.

Application.

§ 6351. All provisions of this act providing for the making of said deposits, the exchange of securities and the penalties for selling said bonds, debentures or certificates shall apply to all persons, corporations, associations, firms or copartnerships engaged in the business of investment companies as herein defined. [New section approved March 18,

1905; Stats. 1905, p. 161.]

See note to § 635a.

Article XVIII, Chapter III, Title I, Part III.

The old article XVIII consisting of §§ 654-685 was repealed and a new article XVIII consisting of §§ 654-691, was enacted in its place as follows:

Board of control. Bond. Secretary and clerks.

§ 654. A state board of control is hereby created to consist of three members who shall be appointed by the governor and hold office at his pleasure. The governor shall designate the chairman of such board and shall fill vacancies occurring from any cause in the membership thereof. The members of such board shall not engage in any private business requiring their personal attention between the hours of nine o'clock A. M. and five o'clock P. M. of each day excepting holidays during their term of office. Before entering upon the discharge of his duties each member of said board shall execute an official bond to the state of California in the penal sum of twenty-five thousand dollars, conditioned on the faithful discharge of his duty according to law and shall take the oath of office as prescribed by this code for state officers. The members of such board shall be executive officers and each shall be authorized to administer oaths. The board shall appoint a secretary, three clerks and two stenographers. Such appointees shall be civil executive officers. The board may also appoint a messenger. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Salaries.

§ 655. The members of the state board of control shall each receive a salary of four thousand dollars per annum, which shall be paid at the same time and in the same manner as the salaries of state officers are paid. The secretary shall receive a salary of twenty-four hundred dollars per annum, the clerks a salary of eighteen hundred dollars per annum each, the two stenographers fifteen hundred dollars per annum each, and the messenger nine hundred dollars per annum. The salaries of all such appointees shall be paid at the same time and in the same manner as the salaries of state officers. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Sessions of board.

§ 656. The said board shall be in session during office hours whenever a majority of the members thereof are present at its offices in the state capitol and may meet at other places in the state at such time as a majority of the board may determine. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Record of proceedings.

§ 657. The board must keep a record of all its proceedings and any member may cause his dissent to the action of the majority upon any matter to be entered upon such record. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Vice-chairman. Rules.

§ 658. The board or a majority thereof, may elect one of its members vice-chairman, and such officer shall have and exercise all the authority of the chairman in the absence of the latter. The board may also establish rules and regulations not inconsistent with law for its government. All such rules and regulations must be recorded in the minutes of the board. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Chairman may issue subpoenas. Depositions.

§ 659. The chairman may issue subpoenas and compel the attendance of witnesses before the board or any member thereof, in the same manner that any court in this state may; and whenever the testimony of any witness upon any matter pending before it is material, the chairman must cause the attendance of the witness before such board, or a member thereof, to testify concerning such matter, and the board may make a reasonable allowance therefor not exceeding the fees of witnesses in civil cases, which must be paid out of the appropriation for the contingent expenses of the board, but in no instance can an allowance be made in favor of a witness who appears in behalf of a claimant.

Each member of the board may take depositions to be used before it. [New section approved April 3, 1911; Stats. 1911, p. 591.]

Examining books of state institutions.

§ 660. It shall be the duty of one or more members of the board as may be designated by the board, or as requested by the governor, to examine and expert, or cause to be examined and experted, the books of the different state prisons, reformatories, state hospitals and other institutions, commissions, bureaus and officers of the state, at least once in each year, and as often as may be deemed necessary. The officers of said prisons, reformatories, hospitals and other institutions, boards, commissions and bureaus and the several officers of the state, must permit such examination and experting and must upon demand produce without unnecessary delay all books, contracts and papers in their respective offices, and must furnish upon demand the information touching

books, papers and contracts and other matters pertaining to their respective offices. [New section approved April 3, 1911; Stats. 1911, p. 592.]

Visiting state institutions.

§ 661. It shall be the duty of one or more members of the board as may be designated by such board or as may be requested by the governor to visit from time to time every public institution maintained in whole, or in part, by state appropriations to ascertain the conditions of the same, and their wants and requirements, and also to visit public buildings in course of construction to ascertain if all the provisions of law in relation to such construction and of the contracts therefor are being faithfully executed. [New section approved April 3, 1911; Stats. 1911, p. 592.]

Reports of examinations.

Claims against state.

§ 662. The board upon completion of such examination must make a report in duplicate thereon and file one with the governor, and one in the office of such board. [New section approved April 3, 1911; Stats. 1911, p. 592.]

Claims against state. § 663. Every claim against the state for which an appropriation has been made or for which a state fund is available, must be presented to the board for its scrutiny before being paid. The board may for cause postpone action upon a claim for not exceeding one month. [New section approved April 3, 1911; Stats. 1911, p. 592.]

Personal claim against state. Majority to allow claim.

§ 664. Any person having a claim against the state for which an appropriation has been made, may present the same to the board in the form of an account or petition and the secretary of the board must date, number and file such claim. The board must allow or reject the same within thirty days.

The concurrence of two members of the board shall be required to approve and allow any claim against the state in whole or in part. [New section approved April 3, 1911; Stats. 1911, p. 592.]

Approved claims to controller.

§ 665. If the board approve such claim the members approving the same must over their signatures indorse thereon the following: "Approved for the sum of .... dollars," and the secretary shall immedi. ately transmit the same to the office of the state controller for his action thereon and if such action is favorable, he shall draw his warrant for the amount so approved in favor of the claimant or his assigns; provided, that the controller if he objects thereto for any reason may return the same to the secretary of said board and said claim shall not again be presented to the controller except with the unanimous approval of the board. [New section approved April 3, 1911; Stats. 1911, p. 592.]