"
The question at once arises, what are the net profits from which
dividends may be declared, and do they include the surplus fund? It is
held that the net profits are the earnings left on hand after charging
off expenses, taxes and losses, if any, and carrying to surplus fund the
amount required by the law, and that the surplus fund is not to be
considered as net profits available for dividends, for, if it were, the
Directors of a bank could at any time divide the surplus among the
shareholders. It would only be necessary to go through the form of
carrying one-tenth of the net profits to surplus, whereupon, if the
surplus be net profits available for the purpose of a dividend, the
amount so carried can be withdrawn and paid away at once, thereby
defeating the obvious purpose of the law in requiring a portion of each
six month's earnings to be carried to the surplus fund, that purpose
being to provide that a surplus fund equal to twenty per cent, of the
bank's capital shall be accumulated.
The law is to be so construed as to give effect to all its parts, and
any construction that does not do so is manifestly unsound.
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