Therefore a
construction which would render inoperative the requirement for the
accumulation of a surplus fund cannot be correct, and the net profits
available for dividends must be determined by the amount of earnings on
hand other than the surplus fund when that fund does not exceed a sum
equal to one-tenth of the earnings of the bank since its organization.
Having shown what the net profits available for dividends are, the only
other question that can arise is: Can losses and bad debts be charged to
the surplus fund and the other earnings used for paying dividends, or
must all losses and bad debts be first charged against earnings other
than the surplus fund, so far as such earnings will admit of it, and the
surplus, or a portion of it, used only when other earnings shall be
exhausted?
This question is virtually answered above, for if the object of the law
in requiring the creation of a surplus fund may not be defeated by one
means it may not by another; if it may not be defeated by paying away
the amounts carried to surplus in dividends, neither may it be by
charging losses to the surplus and at the same time using the other
earnings for dividends.
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