Secured bills; accepting bank must remain secured. - The ten per cent limit upon the amount of acceptances which any member bank might make for one person, firm, company, or corporation, does not apply if "the bank is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance." If documents, which were attached at the time of acceptance, are surrendered and no other security growing out of the same transaction is substituted, the ten per cent. limit will apply. The accepting bank must remain secured in the same manner prescribed during the life of the acceptance in order to be exempt from the ten per cent. limit.

What constitutes actual security - The only doubtful question is as to what constitutes some other actual security growing out of the same transaction as the acceptance. The ten per cent. limit does not apply where the acceptor holds (1) shipping documents, (2) warehouse receipts, or

(3) Trust receipts which do not enable the borrower to obtain the goods for his own use.

The ten per cent. limit does apply where the bank holds merely the ordinary trust receipt which gives it only a lien on the goods in the hands of the purchaser or on their proceeds.

Trust Receipts As Actual Security

If an acceptance is secured by shipping documents which are surrendered by the acceptor for a trust receipt which permits the purchaser of the goods to retain control of the goods, the accepting bank cannot be said to be secured by some other actual security. A trust receipt, however, which does not permit the purchaser to procure control of the goods, may properly be said to be actual security.

Effect and relation of United States Revised Statutes. Section 5200 to the ten per cent. limit; its application. - A member bank may legally purchase its own acceptance, but such a transaction is equivalent to a loan or advance to the customer for whom the acceptance is made and the liability of such customer becomes subject to the limitations of Section 5200, Revised Statutes. The limitation imposed by Section 5200 of the Revised Statutes on the amount of money which may be borrowed by any individual from a member bank does not apply to acceptances of said bank.

Acceptances in addition to loans; exception. - Where a national bank has already loaned ten per cent. of its capital and surplus to a certain company, it may, while the loan is still outstanding, obligate itself as acceptor of a draft drawn by the same company. If, however, a member bank purchases its own acceptance, it must treat the transaction as a loan and not as an acceptance, and can not in that case lend to, and accept for, the same firm in an aggregate amount in excess of ten per cent. prescribed by Section 5200 of the Revised Statutes.

When Drawer Fails To Provide Funds To Meet Acceptance

The ten per cent. limit imposed by Section 5200 of the Revised Statutes is not intended to apply to the mere acceptance of a bill of exchange, but the provision of the section would apply to the indebtedness arising between the drawer of the bill and the accepting bank in case the drawer fails to furnish funds with which to meet the acceptance at maturity.