ailable 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amount so carried can be withdrawn and paid away at once, thereby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. 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.

Moreover, section 5204 of the Revised Statutes of the United States
provides as follows: "If losses have at any time been sustained by any
such association, equal to or exceeding its undivided profits then on
hand, no dividend shall be made; and no dividend shall ever be made by
any association, while it continues its banking operations, to an amount
greater than its net profits then on hand, deducting therefrom its
losses and bad debts."

This language fixes the extent to which dividends may be made at the
amount of t