View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

ANNUAL REPORT
OF THE

COMPTROLLER OF THE CURRENCY
TO

THE

SECOND SESSION OF THE FIFTY-SIXTH CONGRESS
OF

THE

UNITED STATES.

DECEMBER 3, 1900.

IN TWO VOLUMES.
V O L U M E I.

WASHINGTON:
GOVERNMENT PRINTING OFFICE.




1900.




TREASURY DEPARTMENT,
Document No. 2205 A.

Vol. I

Comptroller of the Currency.

CONTENTS.
Page.
Condition of national banks
ix
Authorized capital of national banks and changes during the year
x
Summary of national-bank reports of condition
xi
Amendments recommended
xn
Expiration of charters of national banks
,
xin
Loans to directors and executive officers
xiv
Text of bill to better control and promote safety of national banks
xvn
Liability of directors, other officers, etc., of national banks
xix
Limitation of loans
xix
* Inequality of present law relative to loans
xxin
Number of loans outstanding November 12
xxiv
Number of excessive loans under section 5200 and under proposed amendment
xxiv
Provisions recommended relative to reserve
xxv
Fees for national-bank examinations
xxvn
International and intercolonial banks in Porto Rico, Hawaii, and the Philippines
xxvu
Currency act of March 14, 1900
xxix
Organization of national banks and operations under act of March 14
xxx
Number and capital of banks organized in each State since March 14
xxxi
Number and capital of banks organized, by States, during the year
xxxn
Earnings and dividends
XXXIII
Taxes and expenses
XXXIII
National-bank circulation and bonds
xxxiv
Circulation outstanding October 31, 1899, March 13 and October 31, 1900
xxxv
Bonds on deposit to secure circulation on above dates
,„ ,
xxxv
Insolvent national banks
xxxv
Insolvent national banks closed during the year
xxxvn
Insolvent national banks by decades
xxxvn
State banks
xxxvn
Principal items of resources and liabilities of all reporting banks
xxxix
Loan and trust companies and private banks
xxxix
Savings banks
XL
Interest paid to depositors in savings banks
XLI
Building and loan associations
XLII
School savings-bank system
XLII
Foreign savings banks
XLII
Banking power of the world
XLIII
Foreign banks of issue
XLIV
Correspondence relative to banks, banking, and currency in the Philippine Islands, Porto
Rico, and Hawaii
„
XLV




HI

IV

CONTENTS.

CONTENTS OF APPENDIX.
Page.
1

Digest of national-bank decisions
APPENDIX TABLES.

No. 1. Names and compensation of officers and clerks in the office of the Comptroller of the
Currency October 31,1900
251
No. 2. Expenses of the office of the Comptroller of the Currency for the year ended June 30,
1900
252
No. 3. Number of national banks organized, number now in operation, and the number passed
out of the system since February 25,1863
252
No. 4. Number and authorized capital of national banks organized and number and capital of
banks closed in each year ended October 31 since the establishment of the nationalbanking system, with the yearly increase or decrease
253
No. 5. Number of national banks organized, in liquidation, and in operation, with their capital, bonds on deposit, and circulation issued, redeemed, and outstanding on October 31,
1900
254
No. 6. Number of national banks organized, in voluntary liquidation, insolvent, and number
and capital of associations in active operation on January 1 of each year from 1864 to
1900
255
No. 7. Number of national banks organized, in voluntary liquidation, insolvent, and in operation in each State and Territory October 31,1900
256
No. 8. Number and capital of national banks organized in each State and Territory during the
year ended October 31,1900
256
No. 9. National banks organized during the year ended October 31,1900
257
No. 10. Applications approved for the organization of national banks and national banks
organized March 14 to October 31,1900
265
No. 11. Number and capital of national banks in each State extended under the act of July 12,
1882
266
No. 12. Number, capital, and circulation, by States, of national banks the corporate existence of
which was extended during the year ended October 31,1900
266
No. 13. National banks the corporate existence of which will expire during the year ending
October 31,1901, with the date of expiration, capital, U. S. bonds, and circulating notes. 267
No. 14. National banks closed to business, by voluntary liquidation and otherwise, during the
year ended October 31, 1900, with date of authority to commence business, date of
closing, capital and circulation issued, redeemed, and outstanding
269
No. 15. Authorized capital stock of national banks on thefirstday of each month from January
1,1876, to October 31,1900, bonds on deposit to secure circulation, circulation secured
by bonds, lawful money on deposit to redeem circulation, and national-bank notes
outstanding, including notes of national gold banks
271
No. 16. Profit on national-bank circulation, based on a deposit of $100,000 United States bonds .. 276
No. 17. Changes in capital, bonds, and circulation of national banks, by geographical divisions. 277
No. 18. Decrease or increase of national-bank circulation during each of the years ended October
31,1892 to 1900
282
No. 19. National-bank circulation issued, lawful money deposited to retire circulation, from
June 20, 1874, to October 31,1900, and the amount on deposit, by States, at the latter
date
283
No. 20. National-bank notes outstanding, lawful money on deposit to redeem circulation, bonds
on deposit to secure circulation, and public deposits on October 31,1900, with the
changes during the preceding year and the preceding month
284
No. 21. Quarterly increase or decrease in national-bank circulation from January 14, 1875, to
October 31,1900
285
No. 22. National-bank notes issued, redeemed, and outstanding, by denominations and amounts,
on October 31, 1864 to 1900, inclusive
287
No. 23. National gold bank notes issued, redeemed, and outstanding October 31,1900
290



CONTENTS.

V

Pag«*.
No. 24. National-bank notes issued during the year ended October 31,1900, and the total amount
issued, redeemed, and outstanding
290
No. 25. Additional circulation issued monthly on bonds for years ended October 31, from 1887 to
to 1900
290
No. 26. Number and denominations of national-bank notes issued and redeemed since the organization of the system, and the number outstanding October 31,1900
291
No. 27. Vault account of currency received and issued by this Bureau during the year
291
No. 28. National banks having no circulation outstanding
291
No. 29. Additional circulation issued and retired, by States/during the year ended October 31,
1900, and the total amount issued and retired since June 20, 1874
292
No. 30. National-bank notes received monthly for redemption during the year by the Comptroller and the redemption agency of the Treasury, together with the total amount
received since June 20,1874
293
No. 31. National-bank notes received at this Bureau and destroyed yearly since the establishment of the system
293
No. 32. Vault account of currency received and destroyed during the year
294
No. 33. Taxes assessed on circulation, deposits, and capital of national banks from 1864 to 1882.. 294
No. 34. Taxes assessed on national-bank circulation, cost of redemption, cost of plates, and
examiners' fees, 1883 to 1900
295
No. 35. Taxes collected on capital, deposits, and circulation of national banks to June 30,1900.. 295
No. 36. Taxes collected on circulation, deposits, and capital of banks, other than national, by
the Internal-Revenue Bureau, 1864 to 1882
295
No. 37. Taxes collected by the Internal-Revenue Bureau on capital and surplus of national
and other banks, act June 13, 1898
295
No. 38. Number of national and other banks and bankers in the United States, and amount of
tax paid on capital and surplus due on July 1, 1899, as shown by returns to the Commissioner of Internal Revenue during the year ended June 30,1900; average capital
and surplus of national banks based on reports of condition made during the fiscal year
ended June 30,1899, and estimated amount of taxes paid thereon; also the duty paid
on national-bank circulation in the year ended June 30,1900
296
No. 39. Capital, surplus, and taxes paid thereon to the Internal-Revenue Bureau, by State
banks, etc., 1900
298
No. 40. Specie and bank-note circulation of the United States from 1800 to 1859
301
No. 41. Coin and paper circulation of the United States, 1860 to 1900
302
No. 42. Currency and gold, 1862 to 1878
303
No. 43. United States bonds on deposit to secure circulating notes of national banks on June 30,
1865 to 1900, and amount owned and held by banks for other purposes, including those
deposited to secure public deposits
305
No. 44. United States bonds on deposit to secure circulating notes of national banks on October
31,1882 to 1900
306
No. 45. Interest-bearing bonded debt of the United States, 1865 to 1900
307
No. 46. United States bonds, monthly range of prices in New York, 1860 to October 31,1900
308
No. 47 Investment value of United States coupon bonds, 1889 to 1900
342
No. 48. Number of national banks in each State, etc., capital, bonds on deposit to secure circulation on September 5,1900, minimum amount of bonds required, and excess on deposit,
September 7,1899, and September 5,1900
343
No. 49. Number of national banks in each State, etc., with capital of $150,000 and under, 1899
and 1900
345
No. 50. Number of national banks in each State, etc., with capital exceeding $150,000, 1899 and
1900
346
No. 51. Comparative statement of the resources and liabilities of national banks, 1864 to 1900... 347
No. 52. Abstract of the resources and liabilities of national banks on September 5, 1900, in New
York, all central reserve cities, other reserve cities elsewhere, and the aggregate in
the United States
350




VI

CONTENTS.

Page.
No. 53. Highest and lowest points reached in the principal items of resources and liabilities of
national banks during the existence of the system
351
No. 54. Percentages of loans, United States bonds, and lawful money to the aggregate resources
of national banks, 1866, 1887 to 1900
351
No. 55. Classification of loans made by national banks in reserve cities, etc., in October, 1896 to
1900
352
No. 56. Classification of loans by national banks in New York City for the last six years
353
No. 57. Classification of loans and discounts in national banks in the reserve cities, etc., on September 5,1900
354
No. 58. Loans and discounts, capital, surplus, other undivided profits, and circulation of national
banks on September 5,1900
356
No. 59. Specie and circulation of national banks at date of each report from December, 1899, to
September 5, 1900
358
No. 60. Gold, silver, coin certificates, legal tenders, and currency certificates held by national
banks at date of each report since January 20, 1877
378
No. 61. Specie held by national banks in New York City at date of each report since February
28,1890
384
No. 62. Deposits and reserve of national banks on or about October 1, 1874 to 1900
386
No. 63. Lawful money reserve of national banks December 2,1899, to September 5,1900
388
No. 64. Deposits in national banks, reserve required and held December 2,1899, to September 5,
1900
408
No. 65. Net deposits of national banks, reserve required and held on three dates in 1895 to 1900.. 409
No. 6d. Lawful money reserve of national banks at date of each report since October 2,1894
412
No. 67. Abstract of reports of earnings and dividends of national banks from September 1,1899,
to September 1,1900
414
No. 68. Ratios to capital and to capital and surplus of the earnings and dividends of national
banks in each State, etc., from March 1, 1896, to September 1,1900
• 422
No. 69. Number of national banks, their capital, surplus, dividends, net earnings, etc., 1870 to
1900
426
No. 70. National banks in voluntary liquidation under the provisions of sections 5220 and 5221,
United States Revised Statutes
427
No. 71. National banks in liquidation under section 7, act July 12,1882, succeeded by associations with the same or different titles
447
No. 72. National banks in voluntary liquidation under the provisions of sections 5220 and 5221,
United States Revised Statutes, for the purpose of organizing new associations under
the same or different titles
449
No. 73. National banks in liquidation under section 7, act July 12,1882
452
No. 74. National banks in charge of receivers, dates of organization and failure, cause of
failure, dividends paid while solvent, circulation issued, redeemed, and outstanding,
1865 to 1900, inclusive
454
No. 75. Insolvent national banks, dates of failure and final liquidation, assets, collections, dividends paid, etc., 1865 to 1900
-. 474
No. 76. Capital, nominal assets at date of failure, and disposition of assets of insolvent national
banks the affairs of which have been closed, 1865 to 1900
502
No. 77. Capital, nominal assets, etc., of insolvent national banks, in each State, the affairs of
which have been finally closed
522
No. 78. Capital, surplus, and other liabilities of national banks which failed during the year
525
No. 79. National banks against the capital stock of which an additional assessment has been
levied, with amount of capital, and date and amount of assessment
525
No. 80. National banks in favor of the stockholders of which a rebate of assessment has been
made, with amount of assessment, and date and amount of rebate
526
No. 81. National-bank receiverships in an inactive condition
526
No. 82. National banks the affairs of which were closed during the year
527




CONTENTS.
No. 83. Dividends paid to creditors of insolvent national banks during the year
No. 84. Comparative statement of the transactions of the New York clearing house for the last
forty-seven years
No. 85. Comparative statement for two years of the transactions of the New York clearing house.
No. 86. Exchanges, balances, percentage of balances to exchanges, and percentage of funds used
in settlement of balances by the New York clearing house, 1892 to 1900, inclusive
No. 87. Transactions of the clearing houses of the United States, 1892 to 1900, inclusive
No. 88. Comparative statement of the exchanges of the clearing houses of the United States for
the years ended September 30, 1900 and 1899
No. 89. Clearing-house transactions of the assistant treasurer of the United States at New York
for the year ended September 30, 1900
No. 90. Monetary systems and stocks of money in the principal countries of the world, in 1900..
No. 91. Resources and liabilities of joint stock and private banks in the United Kingdom, etc.,
December, 1899, and June, 1900
No. 92. Abstract of reports of chartered banks of Canada
No. 93. Abstract of reports of banks in Australia
No. 94. Specie, circulation, etc., of principal foreign banks of issue
Abstract of reports of condition of State, savings, and private banks, and loan and trust companies
Depositors, deposits, and average deposit in savings banks in each State, 1899 and 1900
Growth of savings banks, as indicated by number of depositors and amount of deposits since
1820
Cash resources of national and other banks in June, 1900
Specie and other cash resources of State banks from 1873 to 1900
Dividends paid by State banks and loan and trust companies, 1900
Capital stock of banks, by classes, in each State in June, 1900
Population, and banking funds in the aggregate and per capita, in each State and geographical
division, 1900
Resources of banks, by classes, in each State and geographical division, 1900
Insolvent State banks, etc., for the year ended June 30,1900
Condition of loan and trust companies in the District of Columbia on September 5,1900
Resources and liabilities of the first Bank of the United States in January, 1809 and 1811
Resources and liabilities of the second Bank of the United States from 1817 to 1840
Principal items of resources and liabilities of Colonial and State banks, 1774 to 1833
Comparative statement of resources, etc., of State banks, 1834 to 1900
Aggregate resources and liabilities of national banks from October, 1863, to October, 1900
Abstract of reports of condition of national banking associations on December 2, 1899, February 13, April 26, June 29, and September 5, 1900
Summary of the condition of national banks in each State, Territory, and reserve city from
December 2, 1899, to September 5, 1900
Important items of resources and liabilities of national banks by States from 1863 to 1900
Index




VII
528
530
530
531
531
531
532
534
536
538
538
539
541
558
559
560
561
562
563
564
565
566
567
568
569
570
571
575
603
685
743
769

REPORT

THE COMPTROLLER OF THE CURRENCY.
TREASURY DEPARTMENT,
OFFICE OF THE COMPTROLLER OF THE CURRENCY,

Washington, December 5, 1900.
SIR: I submit herewith, in compliance with the requirements of
section 333 of the Revised Statutes of the United States, the thirtyeighth annual report of the operations of the Currency Bureau for the
year ended October 31, 1900.
CONDITION OF BANKS.

The resources and liabilities of the banks in active operation, as
shown by reports submitted during the past year, appear in detail in.
the following table:
ABSTRACT OF REPOETS OF CONDITION OF NATIONAL BANKS IN THE UNITED STATES
ON DECEMBER 2, 1899, AND FEBRUARY 13, APRIL 26, JUNE 29, AND SEPTEMBER 5,

1900.
Dec. 2—3,602
banks.

Feb. 13—3,604 April 26—3,631 June 29—3,732
banks.
banks.
banks.

Sept. 5—3,871
banks.

RESOURCES.

Loans and discounts.. $2,479,819,494.90 $2,481,57y,945.35
Overdrafts
33,681,370.97 23,503,096.37
U. S. bonds to secure
circulation
234,403,460.00 236,283,870.00
U. S. bonds to secure
U. S. deposits
81,265,940.00 111,515,980.00
U. S. bonds on hand..
17,717,840.00
15,456,700.00
Premiums on U. S.
bonds
17,375,215.21 19,891,938.95
Stocks, securities, etc. 325,490,163.55 330,623,075.34
Banking house, furniture, and fixtures...
79,446,858.81 79,520,503.18
Other real estate and
29,662,473.64 28,701,933.42
mortgages owned ..
Due from national
198,611,069.85 200,720,520.60
banks
Due from State banks
60,155,021.84
and bankers
54,057,565.96
Due from approved
reserve agents
345,556,047.73 375,117,371.13
Internal-revenue
Checks a n d o t h e r
cash items
Exchanges for clearing house
Bills of o t h e r national banks
Fractional currency,
nickels, and cents..

$2,566,034,990.40 $2,623,512,200.73 $2,686,759,642.57
19,064,580.79 20,724,992.72 23,130,598,65
265,340,570.00

282,424,040.00

294,890,130.00

112,251,540.00
19,677,390.00

107,348,780.00
17,019,180.00

102,811,380.00
11,047,870.00

12,587,612.86 10,875,434.89
337,094,245.91 356,883,695.53

9,951,815.46
367,255,545.79
81,209,233.26

79,517,387.53

80,223,848.70

27,682,919.21

27,180,350.84

26,002,369.21

200,099,719.04

215,078,918.26

220,673,982.42

58,484,523.94

62,882,655.18

64,972,431.52

404,956,529.08

412,781,260.09

450,714,269.48

1,345,914.68

1,425,146.42

1,470,910.83

21,432,440.94

22,517,303.00

16,170,099.21

21,136,118.30

19,749,086.17

90,514,921.48

186,011,991.55

147,354,817.86

159,189,425.34

124,517,116.87

17,522,237.00

19,736,286.00

24,846,436.00

25,078,170.00

25,416,666.00

1,013,122.40

1,226,162.29

1,219,635.40

1,230,421.28

1,241,387.03




REPOBT OF THE COMPTEOLLEE OF THE CURRENCY.
ABSTRACT OF REPORTS ON CONDITION OF NATIONAL BANKS IN THE UNITED STATES

ON DECEMBER 2, 1899, ETC.—Continued.
Dec. 2—3,602
banks.

Feb. 13—3,604 April 26—3,631 June 29—3,732
banks.
banks.
banks.

Sept. 5—3,871
banks.

RESOURCES—Cont'd.

Gold coin
Gold Treasury certificates
Gold clearing-house
certificates
Silver dollars
Silver Treasury certificates
Silver fractional coin.
Legal-tender notes ...
U. S. certificates of
deposit
Five-per-cent redemption fund
Due from Treasurer
US
Total.

8103,052,570.12 8104, 882.872. 15 $104, 624,498.81 $102, 834,447.55 $103,750,172.59
70,986,670.00

93, 611,360.

100, 989,330.00

101, 263,430.00

115,018,140.00

100,648,000.00
7,569,649.00

90, 887,000.
8, 798,952.

92, 070,000.00
9, 053,551.00

023,500.00
236,232.00

93,390,000.00
8,782,306.00

34, 132,389.
44, 049,035.00
44, 437,981.00
45,243,559.00
7, 264,654.46
7, 218,118.53
7, 265,251.
7,144,233.12
466,493.
139, 838,063.00 143, 756,522.00
101,675,795.00 122,
145,046,493.00
194,000.00
500,000.
>, 360,000.00
13,055,000.00
14,
2,085,000.00
306,422.
.,941,754.14
325,594.29
10,298,929.57
10,
14,244,066.61
5,036,250.32
595,729.
881,160.22
1,821,144.06
1,
1,620,093.71
4,475,343,923.55 4,674,910,713.09 4,811,956,048.64 4,944,165,623.87 5,048,138,499.29
26,356,766.00
6,211,721.48

LIABILITIES.
Capital stock paid i n . . 606,725,265.00 613,084,465.00 617,051,455.00 621. 536,461.45 630,299,030.72
Surplus fund
250,367,691.89 252,869,088.57 253,724,596.35 256! 249,448.51 261,874,067.84
Undivided profits,less
expenses a n d t a x e s . 113,958,857.25 111,003,876.32 130,032,604.44 135, 298,386.62 127.594,908.82
National-bank notes
outstanding
204,925,357.50 204,912,546.00 236,250,300.00 265, 303,018.00 283,948,631.50
State-bank notes outstanding
53,104.50
53,099.50
53,094.50
52,231.50
53,099.50
Due to other n a t i o n a l
502,595,827.29 536,997,249.32 556,301,830.69 572; 901,820.02 609.652,961.83
banks
Due to State b a n k s
293,721,662.94 318,875,604.55 242,366,367.87 227, , 647,423.64 243,805,378.88
a n d bankers
Due to trust comnanies a n d savings
banks
154,904,858.35 232,428,059.69 215,898,530.98
Due to approved re27,209,179.43
21,898, 434.31
29, 927,000.
serve agents
1,171,983.39
1,184,368.99
1,497, 651.23
1, 672,863,
Dividends u n p a i d
1,261,321.50
62
I n d i v i d u a l deposits . . 2,380,610,361.43 2,481,847,035.62 2,, 449,212, 656.69 2,458, 092,757. 2,508,248,557.53
87,596,246.77
— "
73,866,941.90 103,781,155.23 102,791, 876.41 92, 566,799. 3'
U. S. deposits
Deposits of U. S. dis6,221,742.17
5,484,822.76
5,674,842.76
6,305,110.90
bursing officers
6,158,557.45
Notes a n d bills redis6,000,740.00
239,300. 08
(
5,001,309.88
3,695,152.31
3,810, 654.27
counted
10,645,714.14
13,546,905.23
632,568.*
7,670,595.17
8,106, 208. 60
Bills payable
Liabilities other t h a n
27,311,510.34
27,918,593.79
28,278,612.17
33,374,701.24
22,627,712.30
those above
Total .

4,475,343,923.55 4,674,910,713.09 4,811,956,048. 64 4,944,165,623.87 5,048,138,499.29

The authorized capital of the 3,935 national banking associations
existing on October 31, 1900, was $632,502,395, a net increase since
October 31, 1899, of $23,974,350. Of the increase, $20,025,000 was
the capital of banks organized during the year, and $21,126,800 increase
of capital of previously existing associations. There was a reduction
of $12,474,950 by the voluntary liquidation of 44 associations. This
amount includes the capital stock of banks which have not yet deposited lawful money to retire their circulation and withdraw their bonds,
the accounts being still carried on the books of this office. The failure of five banks depleted the capital to the extent of $1,500,000, and
$2,692,500 was lost by the reduction during this period of the capital
of active banks. Of the 44 associations placed in voluntary liquidation, 16, with capital of $8,330,000, were liquidated for the purpose of
consolidating with other national banks; 9, with capital of $1,835,000,
for the consolidation of their business with State institutions, and 19,
with capital of $2,304,950, for the purpose of going out of business.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XI

A summary of the principal items of resources and liabilities of
reporting national banks is of interest as exhibiting changes which
have occurred since the issue of the Comptroller's report in 1899.
Referring to the loans and discounts and comparing the returns on
September 5, 1900, with those made on September 7, 1899, there is
shown to have been an increase of $170,008,391.46. At the date of the
December 2, 1899, statement, the loans aggregated $2,479,819,494.90,
followed by a gradual, increase during the year, until the maximum
was reached September 5, namely, $2,686,759,642.57.
As approximately 50 per cent of the loans and discounts of national
banks are held by associations located in the central reserve cities and
in Boston, Philadelphia, and Pittsburg, a statement with respect to
money rates at those points is of interest. During the first week in
September the rates on call loans in New York were l i to li per cent;
in Boston, 2 to 3; in Philadelphia, 3 to 3 | ; in Chicago, 4£ to 5; in
Pittsburg, 5, and in St. Louis, 5 to 7. The rates on time loans were
as follows: New York, 3 to 5; Boston, 3£ to 5; Philadelphia, 4 to 4i;
Pittsburg, 5; Chicago, 5 to 6, and St. Louis, 5 to 7 per cent. Rates
prevailing during the first week in September, 1899, were as follows:
Time loans, Boston, 4 to 5; Philadelphia and St. Louis, 4i to 5; Chicago, 4i to 5£; Pittsburg, 6 to 7. Call loans, Chicago and Philadelphia, 4; Boston, 4 to 4i; St. Louis, 4 to 5; Pittsburg, 6 to 7 per cent.
United States bonds on deposit to secure national-bank circulation
increased from $234,403,460 on December 2, 1899, to $294,890,130 on
September 5; Government bonds on deposit to secure public deposits
were at their lowest on December 2, $81,265,940; at the maximum on
April 26, namely, $112,251,540, and dropped to $102,811,380 on September 5; other United States bonds, owned by the banks, fell in
amount from $19,677,390 on April 26 to $11,047,870 on September 5.
The premium account on all United States bonds was reduced from a
maximum of $19,891,938.95 on February 13 to $9,951,815.46 on September 5, due principally to the substitution of new twos for bonds
surrendered.
Specie reached the maximum, $373,328,410.71, at date of the last
call, an increase since December 2 of over fifty-eight and one-half
millions. At date of the December, 1899, call, gold coin and certificates
amounted to $274,687,240.12; silver coin and certificates, $40,138,000.
On September 5 the holdings of gold had increased to $312,158,312.59,
and the silver to $61,170,098.12. Legal-tenders in bank, amounting
to $101,675,795 on December 2, increased with each report, the amount
on September 5 being $145,046,493. Of the $15,320,000 United States
note certificates outstanding on February 13, the national banks held
$14,500,000. On March 14, the date of the passage of the currency
bill, which contained the provisions repealing the authority to issue
these note certificates and to count them as lawful money reserve,
there was outstanding $15,045,000. The reports on April 26, June
29, and September 5 show a reduction in the amount of holdings of
these certificates by the banks from $6,360,000 on the earliest-named
date to $2,085,000 on September 5. ^
The total resources of the associations increased since September 7,
1899, in the sum of $397,783,365.85; on December 2 the resources aggregated $4,475,343,923.55, and increased during the year to $5,048,138,499.29 at the date of the last statement.
The banks' individual deposits represent over 50 per cent of their



XII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

entire liabilities, and amounted on September 5 to $2,508,248,557.53,
an increase from $2,380,610,361.43 on December 2, 1899.
United States deposits with the banks were at their minimum,
173,866,941.90, on December 2; at their maximum on February 13,
$103,781,155.23, and decreased to $87,596,246.77 on September 5.
With the increase of reporting banks from 3,602 on December 2 to
3,871 on September 5, there was an accompanying increase in capital
stock paid in from $606,725,265 to $630,299,030. The surplus has
fluctuated between $250,000,000, approximately, on December 2, and
$262,000,000, nearly, on September 5. The undivided-profit account
was at its lowest on February 13, namely, $111,003,876.32, and at the
maximum, $135,298,386.62, on June 29.
National-bank notes outstanding on December 2 and February 13
amounted to a trifle over $204,900,000. As a result of the passage of
the currency act, permitting the issue of circulation to the par value
of the bonds deposited, there was an increase of nearly $32,000,000
between February 13 and April 26. On September 5 the amount
reported outstanding was $283,948,631, an increase since September 7,
1899, of $83,603,064.
The law requires national banks located in the central reserve cities—
New York, Chicago, and St. Louis—to maintain a reserve on deposits
of 25 per cent, all of which is required to be lawful money, with the
exception of the amount with the Treasurer of the United States, in
the 5 per cent redemption fund. Banks located in other reserve cities
are required to maintain the same percentage of reserve, but one-half
may consist of funds on deposit with reserve agents in the central
reserve cities. Banks located elsewhere are required to hold 15 per
cent reserve, two-fifths of which must consist of cash in bank and the
three-fifths may consist of balances with approved correspondents.
By reference to the returns of September 5 it is seen that the liabilities on which the banks were required to maintain a reserve aggregated $3,280,985,590.84, the reserve required being $684,127,497.59,
and the reserve held $983,333,239.80, or 29.67 per cent. Of the
reserve held, $518,474,903.71 consisted of lawful money and the balance funds on deposit with reserve agents and in the 5 per cent
redemption fund. The average rate of reserve in central reserve city
banks exceeded the amount required by 2.53 per cent. The excess in
other reserve city banks was 6.93 per cent, the average excess for both
classes being 4.64 per cent. Banks located outside of the reserve cities
held an average reserve of 30.44 per cent, or more than double the
requirement. The average reserve of all banks was 29.67 per cent. The
composition of the reserve held is as follows: Specie, $373,328,410.71;
legal tenders, $145,046,493; funds with reserve agents, $450,714,269.48;
redemption fund with the Treasurer, $14,244,066.61.
AMENDMENTS RECOMMENDED.

Section 333 of the Eevised Statutes of the United States provides
that the Comptroller of the Currency, in his annual report to Congress,
shall suggest amendments to the banking laws by which the system
may be improved.
In complying with this provision of law, the Comptroller desires
first to call attention to section 1 of the act of July 12, 1882.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XIII

EXPIRATION OF CHARTERS OF NATIONAL BANKS AND EXTENSION OF
CORPORATE EXISTENCE.

Under the provisions of section 1 of the act of July 12, 1882, the
charters of 1,737 national banks have been extended for a term of
twenty years from the date of expiration of the period of succession
named in their original articles of association. The first of these
extended charters will expire on July 14, 1902, and others will follow.
The question is thus raised as to whether authority is conferred upon
the Comptroller by the above-mentioned section to extend the corporate existence of a bank for a second term of twenty years from the
date of expiration of the period of its first extension or whether under
present law an association is limited to one extension of twenty years
from the expiration of the period of succession named in the original
articles of association.
Section 1 of the act of July 12, 1882, under which such extensions
are granted, reads as follows:
"That any national banking association organized under the acts of
February twenty-fifth, eighteen hundred and sixty-three, June third,
eighteen hundred and sixty-four, and February fourteenth, eighteen
hundred and eighty, or under sections fifty-one hundred and thirtythree, fifty-one hundred and thirty-four, fifty-one hundred and thirtyfive, fifty-one hundred and thirty-six, and fifty-one hundred and
fifty-four of the Revised Statutes of the United States may, at any
time within the two years next previous to the date of the expiration
of its corporate existence under present law and with the approval of
the Comptroller of the Currency, to be granted as hereinafter provided, extend its period of succession by amending its articles of
association for a term of not more than twenty years from the expiration of the period of succession named in said articles of association,
and shall have succession for such extended period unless sooner dissolved by the act of the shareholders owning two-thirds of its stock,
or unless its franchise becomes forfeited b}^ some violation of law, or
unless hereafter modified or repealed."
While it will be observed that this act does not in express terms
limit extensions to one period of twenty years, the implication to that
effect is sufficiently clear to raise a doubt as to the Comptroller's
authority to grant the second extension.
In this view of the case, without additional legislation authorizing
a further extension, a bank desiring to continue in business under the
national system whose corporate existence has been once extended will
be compelled to go into liquidation at the expiration of the period of
its extension and reorganize as a new association.
This course will render necessary the complete winding up of the
affairs of the expiring bank, the retirement of its circulation, the withdrawal of its bonds, and the issuing of a new certificate of authority
by the Comptroller, with a distinctively new title and charter number,
as is at present the case with an entirely new organization. While
the reorganized association might continue to be in all respects the
same bank, with practically the same stockholders, directors, and officers, the legislation hereinafter recommended would render unnecessary these steps, which would be attended with inconvenience both to
the business public and the banks.
I therefore respectfully recommend an amendment of section 1 of




XIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.

the act of July 12, 1882, authorizing the Comptroller of the Currency
to extend for a further period of twenty years, under the conditions
and limitations imposed by said act, the charter of such expiring association as may desire to continue in the national banking system.
Such legislation, to be effective, should be enacted into law at the
earliest possible date to give associations desiring to avail themselves
of its provisions ample time for the preliminary action necessary to
an extension before their charters lapse.
As before stated, the corporate existence of 1,737 banks, with capital
aggregating $417,628,115, has been extended since the passage of the
act of July 12, 1882. During the year ended October 31, 1900, there
were 45 extensions, the capital involved being $6,942,000. A list of
the 74 associations whose corporate existence will terminate during
the coming year will be found in the appendix. The first bank to
reach the encl of its second term of corporate existence is The First
National Bank of Findlay, Ohio, the date of the termination being
July 14,1902. Between that date and the end of that }^ear 36 associations which have had their charters extended will expire by limitation,.
RESTRICTIONS UPON LOANS TO DIRECTORS AND EXECUTIVE
OF BANKS.

OFFICERS

During the past year the Comptroller has made an investigation into
the matter of loans of national banks to directors and officers, with a
view to gathering information bearing on a proposed amendment to
the national banking act placing additional restrictions upon such
loans. The records of this office indicate that large loans to directors
and executive officers of banks have been the cause of a large percentage of the failures of national banks in the country, and that the
restrictions of the present law are not sufficient to enable the Comptroller to properly check in some cases an undue tendency of those in
executive authority to misuse their powers for personal purposes.
It is the belief of the Comptroller that additional restrictions should
be placed upon the power of directors and executive officers of a
national bank to borrow the funds intrusted by the depositors and
stockholders of a bank to their management; and an investigation into
the extent to which such loans are made emphasizes the desirability of
such legislation.
In regard to the proportion of failures attributable to excessive
loans to officers, it appears that of the 370 national bank failures since
the organization of the system 5 were attributable exclusively to
excessive loans to officers and directors; 22 to excessive loans to officers and directors and depreciation of securities; 8 to excessive loans
to officers and directors and investments in real estate; 15 to excessive
loans to officers and directors, fraudulent management, and depreciation
of securities, and 12 to excessive loans to officers, directors, and others,
and fraudulent management. In other words, 62 failures, or practically 17 per cent of the total failures, were due to excessive accommodations to officers and directors and the other causes mentioned.
The large percentage of these failures attributed to improper loans
to directors and officers and the consideration of a proper provision of
law to protect the business community hereafter led to the investigation of all directors' loans now outstanding in the national banks of the
country, the results of which are given herewith.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XV

This investigation shows that on June 29, 1900, the date of the
Comptroller's call for a statement of condition from the national banks
of the country, there were 28,709 directors of national banks, of which
18,534 were directly or indirectly indebted to national banks under
their management. The aggregate sum owed by these 18,534 borrowing directors and 2,279 officers and employees who were not directors
was $202,287,441.
The total loans and discounts of the national banks of the country
at this time were $2,623,512,200. The liability of directors and
employees was, therefore, 7.71 per cent of this amount.
The capital stock of the national banks of the United States on this
date was $621,536,461. The direct and indirect liabilit}^ of directors,
officers, and employees of national banks, therefore, amounted to 32.55
per cent of this sum.
The stock owned in national banks by the 18,534 borrowing directors amounted to $114,759,300. The direct loans of officers and
directors amounted to $115,094,157 and their indirect liabilities to
$87,193,284.
In the New England States, Maine, New Hampshire, Vermont,
Massachusetts, Ehode Island, and Connecticut, in 563 national banks,
of $137,460,520 capital, the total number of directors on June 29,
1900, was 4,258, of which 2,668 were indebted directly or indirectly in
a sum aggregating* $31,897,830.
In the Eastern States, New York, New Jersey, Pennsylvania, Delaware, Maryland, and the District of Columbia, in 1,001 national banks
of $204,982,745 capital, the total number of directors on June 29,1900,
was 9,127, of which 6,270 were indebted directly or indirectly in a sum
aggregating $82,289,446.
In the Southern States, Virginia, West Virginia, North Carolina,
South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana,
Texas, Arkansas, Kentucky, and Tennessee, in 568 national banks of
$67,149,467 capital, the total number of directors on June 29, 1900,
was 4,256, of which 2,909 were indebted directly or indirectly in a
sum aggregating $23,436,304.
In the Middle States, Ohio, Indiana, Illinois, Michigan, Wisconsin,
Minnesota, Iowa, and Missouri, in 1,094 national banks of $161,698,927
capital, the total number of directors on June 29, 1900, was 7,698, of
which 4,928 were indebted directly or indirectly in a sum aggregating
$51,406,835.
In the Western States, North Dakota, South Dakota, Nebraska,
Kansas, Montana, Wyoming, Colorado, New Mexico, Oklahoma, and
Indian Territory, in 384 national banks of $30,931,552 capital, the total
number of directors on June 29, 1900, was 2,592, of which 1,333 were
indebted, directly or indirectly, in a sum aggregating $6,690,881.
In the Pacific States, Washington, Oregon, California, Idaho, Utah,
Nevada, Arizona, and Alaska, in 122 national banks of $19,313,250
capital, the total number of directors on June 29, 1900, was 778, of
which 426 were indebted, directly or indirectly, in a sum aggregating
$4,008,402.
While these tables do not necessarily indicate that national banking
officers and directors as a whole abuse their privileges, and many of
these directors' loans are among the safest owned by the creditor
banks, the Comptroller believes the tables show clearly the great
importance of a properly framed law placing additional restrictions



XVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

and safeguards around these loans, in which, the history of the bank
ing system teaches, is involved the greatest danger of the improper and
lax use of banking funds.
The necessity for some amendment to the national banking act
restricting loans by banks to their officers and employees has long
been recognized by this office, as is evidenced by the recommendations
on the subject of ray predecessors in their annual reports to Congress.
While the need for such legislation has been generally admitted, it has
been found difficult to determine precisely what restrictions should be
imposed, owing to the varying circumstances under which such loans
are granted.
Comptroller Lacey in his report for 1891 recommended that:
"The active officers of a bank be excluded from incurring liabilities
to the association with which they are connected, and that the direct
and indirect liabilities of a director be confined to 20 per cent of the
paid-up capital."
Comptroller Hepburn in his report for 1892 recommended:
"That the law be so amended as to prohibit officers or employees of
a bank from borrowing its funds in any manner, except upon application to and approval by the board of directors."
Comptroller Eckels in his report for 1893 recommended:
"That no executive officer of a bank or employee thereof be permitted to borrow funds of such bank in any manner, except upon application to and approval by the board of directors."
In formulating provisions of law restricting loans to executive officers and directors it is important not to make them so unreasonable
as to drive from such service the active, responsible, and honest business men of the country. The problem is to devise such restrictions
for the safety of the depositors as will discourage improper loaning
to directors while not injuring the depositors by discouraging to too
great an extent the assumption of the duties of bank directorship by
the active and responsible members of the business community.
Primarily, the law should have in view the safety of the depositors,
and it should be recognized that their safety is as much endangered
by the passage of a law which would drive good directors from the
service as by the existence of a law which does not sufficiently restrict
the opportunity of dishonest directors to abuse the powers of their
position.
It seems plain to the Comptroller that any law upon this subject
should make a distinction in the nature of the restrictions upon directors who are not officers which will not involve as much of a delay in
the making of loans to them as in the making of loans to the executive officers of a bank, since the latter have the greater opportunity
and latitude for improper methods in the use of trust funds.
The Comptroller gives herewith a copy of the bill introduced at
the last session of Congress by Hon. Marriott Brosius, chairman of
the Committee on Banking and Currency (H. R. 12043, Fifty-sixth
Congress, first session), which has had his careful consideration, and
the passage of which with some additions he earnestly recommends.
This bill has been drawn so as to insure a greater degree of safety in
loans to directors and officers with what is believed to be a minimum of
inconvenience to such officers consistent with the safety of such transactions. It properly recognizes the distinction in the relations of
directors to a bank and those sustained by executive officers.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XVII

It will be noted that the provision made by this bill for the fixing
of a line of credit for each director in advance reduces to a minimum
the inconvenience of the greater supervision proposed. After such a
line of credit has been fixed by the board of directors for an individual
director, he will be no more hampered within that limit under the proposed law than he is at present.
A BILL for the better control of and to promote the safety of national banks.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled. That no national
banking association shall make any loan to its president, its vicepresident, its cashier, or any of its clerks, tellers, bookkeepers, agents,
servants, or other persons in its employ until the proposition to make
such a loan, stating the amount, terms, and security offered therefor,
shall have been submitted in writing by the person desiring the same
to a meeting of the board of directors of such banking association, or
of the executive committee of such board, if any, and accepted and
approved by a majority of those present constituting a quorum, and
then not in excess of the amount allowed by law. At such meeting
the person making such application shall not be present. The said
acceptance and approval shall be made by a resolution, which resolution shall be voted upon by all present at such meeting answering to
their names as called, and a record of such vote shall be kept and state
separately the names of all persons voting in favor of such resolution,
and of all persons voting against the same, and how each of the persons voted. In case such proposition shall be submitted to the executive committee, the resolution and its vote thereon shall be read at
the next meeting of the board of directors and entered at length in
the minutes of such directors' meeting.
SEC. 2. That every president, vice-president, director, cashier, teller,
clerk, or agent of any such association who knowingly violates section one of this act, or who aids or abets any officer, clerk, or agent in
any such violation, shall be deemed guilty of a misdemeanor, and shall
be punished by a fine of not more than five thousand dollars, or by
imprisonment not more than five years, or by both.
SEC. 3. That the board of directors of any national banking association may at any regular meeting fix by resolution the limit of credit
which shall be extended to any director, and said action of the directors shall be determined by a yea and nay vote, and the names of those
voting for and against shall be entered of record in the books of the
association. Within the limit of this credit and in the discretion of
the executive officers of the association loans may be made to directors
without other action by the board. When, however, such limit of
credit has not been previously fixed by the action of the board, no loan
to a director shall be made unless approved by the board or the executive committee of the bank in the method provided herein for loans to
executive officers or in the following manner: An application for a
loan, not in excess of the amount allowed by law, to a director may be
submitted in writing by the director desiring the same to not less than
two additional directors, who shall signify in writing their approval
of the acceptance by the bank of said application. A loan to a director
may, in the discretion of the executive officer of the bank, be made in
accordance with such written application, accompanied by the writCUR
II
 1900, PT 1


XVIII

EEPOET OF THE COMPTEOLLEE OF THE CUEEENCY.

ten approval of two additional directors as aforesaid. At the time
such loan is made said application and approval shall be entered at
length in a record book of the bank and shall be read at the first meeting of the directors following the making of said loan. Any national
banking association making a loan to any director in violation of the
provisions of this section shall forfeit to the United States a sum equal
to double the amount of interest charged by said bank upon such loan,
the same to be collected by the Comptroller of the Currency and paid
into the Treasury of the United States.
SEC. 4. That each report of every national banking association made
to the Comptroller of the Currency in accordance with the provisions
of section fifty-two hundred and eleven of the Revised Statutes of the
United States shall exhibit in a schedule to be added thereto, under
such classifications and in such forms as the Comptroller of the Currency may direct, the amount of debts due or to become due to such
association from its president, vice-president, each of its directors, and
from its cashier and any of its clerks, tellers, bookkeepers, agents,
servants, or other persons in its employ, as principals, indorsers, sureties, guarantors, or otherwise, in a separate item from the other assets
of said bank, and shall also state separately the amount of all debts to
such association which are past due and remain unpaid by the aforesaid parties: Provided, That nothing contained in this act shall require,
or be deemed to require, or permit the publication of such schedule of
the debts due or to become due to such association from each of its
directors or officers or employees in any statement published in a newspaper as now required by law. No such association shall permit its
president, its vice-president, its cashier, or any of its clerks, tellers,
bookkeepers, agents, servants, or other persons in its employ to become
liable to it by reason of overdrawn account.
SEC. 5. That section fifty-two hundred of the Revised Statutes of
the United States be amended so as to read as follows:
" SEC. 5200. The total liabilities to any association of any person or
of any company, corporation, or firm for money borrowed, including
in the liabilities of a company or firm the liabilities of the several members thereof, shall at no time exceed one-tenth part of the amount of
the capital stock of such association actually paid in. But the discount of Mils of exchange drawn in good faith against actually existing
values, and the discount of commercial or business paper actually owned
by the person negotiating the same shall not be considered as money borrowed: [see note] Provided, That the restriction of this section as
to the amount of total liabilities to any association of any person, or of
any company, corporation, or firm for money borrowed shall not apply
where a loan in excess of one-tenth part of the capital stock shall be
less than two per centum of the total assets of said bank at the time of
making said loan. Said loan shall be at all times protected by collateral security equal to or greater in value than the excess in the amount
of said loan over one-tenth of the capital stock."
NOTE 1.—The provision of the bill printed in italics and which is a
part of section 5200, U. S. R. S., as it stands at present is omitted in
H. R. 12043, but in the judgment of the Comptroller should be allowed
to remain in its present form.
NOTE 2.—A penalty should be provided for infractions of this section, either personal in its nature or of double the amount of interest
charged on such loan, with a method prescribed for collection of such
penalty.



REPOET OF THE COMPTROLLER OF THE CURRENCY.

XIX

L I A B I L I T Y AS P A Y E R S , I N D O R S E R S , E T C . , O F N A T I O N A L - B A N K D I R E C T O R S , O F O F F I CERS A N D E M P L O Y E E S O T H E R T H A N D I R E C T O R S ; A G G R E G A T E L O A N S A N D D I S C O U N T S
AND
C A P I T A L S T O C K ; P E R C E N T A G E O F L I A B I L I T Y AS P A Y E R S A N D I N D O R S E R S , O F
DIRECTORS, OFFICERS, AND EMPLOYEES; TOTAL N U M B E R OF DIRECTORS; N U M B E R OF
B O R R O W I N G D I R E C T O R S , O F F I C E R S , ETC. ; N U M B E R O F S H A R E S O W N E D B Y B O R R O W I N G
DIRECTORS AND BY OTHER OFFICERS AND EMPLOYEES; TOTAL N U M B E R OF B A N K S '
S H A R E S , AT P A R O F $100, O N J U N E 29, 1900.

Liability as payers.

Liability as indorsers.

Number of
banks.

Directors.

New England States
Eastern States
Southern States
Middle States
Western States
Pacific States

563
1,001
568
1,094
384
122

$18,375,992
46,995,599
12,810,718
27,641,516
4,522,154
2,938,108

$242,172
610,825
234, 611
593,975
69,901
58,586

$13,521,838
35,293,847
10,625,586
23,765,319
2,168,727
1,070,294

$117,016
284,849
174,789
132,259
21,726
17,034

Total United States..

3,732

113,284,087

1,810,070

86,445,611

747,673

Geographical divisions.

Total
Total
Total
Total
Total
Total

Total liability of directors,
officers, and employees.

Geographical divisions.
As indorsers.

As payers.

Officers and
employees,
other than
directors.

Per
cent of
Per cent liaPer cent of lia- bility
of liaTotal loans bility as bility as as payindorsand
and dispayers ers of di- ersincounts of of directrectors,
banks.
ors, offi- officers, dorsers
of dicers, etc. etc.
rectors,
officers,
etc.

Total New England States
Total Eastern States
Total Southern States
Total Middle States
Total Western States
Total Pacific States

$18,618,164
47,606,424
13,045,329
28,235,491
4,592,055
2,996,694

$13,638,854 $407,260,965
35,578,696 1,151,623,418
10,800,375 205,903,624
23,897,578 687,882,472
2,190,453 112,969,070
1,087,328
57,872,650

Total United States.

115,094,157

87,193,284 2,623,512,200

Geographical divisions.

Per
cent of
liability as
Total cap- payers,
ital stock. of directors,
officers,
etc.

Officers and
employees,
other than
directors.

Directors.

Per
cent of
liability as
indorsers, of
directors,
officers,
etc.

Per
cent of
liability as
payers
and indorsers,
of directors,
officers,
etc.

Total
number of
directors.

4,258
9,127
4,256
7,698
2,592
778

Total New England States
Total Eastern States
Total Southern States
Total Middle States
Total Western States
Total Pacific States

$137,460,520
204,982,745
67,149,467
161,698,927
30,931,552
19,313,250

13.54
23.22
19.43
17.46
14.85
15.52

9.92
17.36
16.08
14.78
7.08
5.63

23.46
40.58
35.51
32.24
21.93
21.15

Total United States.

621,536,461

18.52

14.03

32.55

4.57
4.13
6.34
4.11
4.06
5.18

3.35
3.09
5.24
3.47
1.94
1.88

7.92
7.22
11.58
7.58
6.00
7.06

4.3

3.32

7.71

Number of
shares
Number owned
Num- of shares by borber of owned by rowing
borrow- borrow- officers,
ing di- ing dietc.,
rectors. rectors. other
than
directors.
2,668
6,270
2,909
4,928
1,333
426

110,182
368,302
161,807
376,178
94,970
36,154

130
319
520
828
387
95

28,709 i 18,534 1,147,593

2,279

G E N E R A L L I M I T A T I O N O F LOANS.

With the provisions of the national banking law as they are at present
the proposal to add restrictions upon a certain class of loans unavoidably
involves the discussion of the desirability of a change in the present
provisions restricting other loans of national banks. It is essential
that the Comptroller be given some practicable remedy to enforce
restrictive provisions and that the present provision should be so



XX

REPORT OF THE COMPTROLLER OF THE CURRENCY.

altered as to make its enforcement a matter of greater public advantage. The concurrent discussion of the present provision limiting
loans to a single individual to 10 per cent of the capital stock of a bank
and the proposed provision to limit and safeguard loans to directors
and officers, will serve to show them in their true relations and to indicate the great importance of a reformation of the national banking law
in this connection.
The provision of the present law limiting the amount which can be
loaned to any one individual or corporation in order to insure a general distribution of loans, and to prevent an improper concentration
of a bank's funds in the hands of a few borrowers, is as follows:
"SEC. 5200. The total liabilities of any association, of any person,
or of any company, corporation, or firm, for money borrowed, including in the liabilities of a company or firm the liabilities of the several
members thereof shall at no time exceed one-tenth part of the amount
of the capital stock of such association actually paid in. But the discount of bills of exchange drawn in good faith against actually existing values, and the discount of commercial or business paper actually
owned by the person negotiating the same shall not be considered as
money borrowed."
In my report for 1898 I discussed in detail the amendment Jbo this
section which seems essential, and I reincorporate here the text of that
discussion, having altered the accompanying tables and statistics to
conform with the latest reports received from the national banks of
the country.
u
Almost as if in admission of the fact that this provision is unscientific and ill adapted to carry into practical effect the great principles
of protection to depositors and shareholders, subserved by generally
distributed and safe loans, the present law provides no specific penalty
against individuals which the Comptroller can apply for violations of
this section in the making of excessive loans where such violations do
not affect the solvency of the bank nor justify the appointment of a
receiver."
A United States court, under the general provision of the law
providing for the forfeiture of the franchises of a bank for any violations of the banking act, might adjudicate the question of fact as to
such violation, but could apply no other remedy than forfeiture of
franchise.
Since the institution of the national banking system the violation of
this provision has been common, and the Comptroller, though allowing no known violation to escape his written protest, finds great
practical difficulty in his endeavors to enforce this requirement.
On June 29, 1900, the date of a call by the Comptroller for statement of condition of national banks, 1,575 banks of the 3,732 banks that
were active on that date, constituting nearly two-fifths of the entire
number of banks in the system, reported loans in excess of the limit
allowed by section 5200 of the Revised Statutes of the United States.
The principles underlying the present provision of the law are as
valuable to depositors and shareholders in their application to the
banks of larger communities as to the banks of smaller communities;
but the observance of this provision, while not interfering with the
current requirements of either of the banks or the public in smaller
communities, proves an almost insurmountable obstruction to the
business of our larger cities.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXI

The present need is for an amendment to this provision which,
while compelling, under penalty, the safe and proper distribution of
loans of larger banks, will enable them to loan more nearly the same
per cent of their total assets which the present provision allows to
small banks. In this way the officers of larger banks can supply the
proper needs of the larger communities without disregarding the law,
and the Comptroller can hold them under personal penalty to strict
observance of the amended law, which when disregarded would indicate improper distribution of loans, something which infractions of
the present provisions in the case of many banks do not necessarily
indicate.
The greater ratio borne by banking resources to banking capital in
the larger communities, as compared with a like ratio in smaller communities, is responsible for the defective and unequal working of the
present provision.
The average ratio of resources to the average capital of the 4A
national banks in the city of New York is as 17.5 is to 1; of the 16
national banks in Chicago as 14.2 is to 1; of the 6 national banks in
St. Louis as 8.2 is to 1; of the 266 national banks in other reserve
cities as 9 is to 1; while in the 3,400 country banks the ratio is but as
6.1 is to 1.
The law limiting loans to 10 per cent of the capital, when applied
to the 3,100 banks of the smaller communities of the country, as a
whole, would allow the loaning of 1.56 per cent of their total assets to
one individual. As compared with this, the banks of the city of New
York, on the average, could not loan over fifty-seven one-hundredths of
1 per cent of their total assets to any one individual; the banks of Chicago not over seventy one-hundredths per cent of their total assets;
the banks of St. Louis not over 1.21 per cent of their total assets; the
banks of other reserve cities not over 1.10 per cent of their total
assets.
In other words, the proportion of their assets which the country
banks of the United States can loan, in strict compliance with section
5200, to one individual, is forty-six one-hundredths of 1 per cent greater
than in 266 reserve cities, thirty-five one-hundredths of 1 per cent
greater than in St. Louis, over twice as great as in Chicago, and nearly
three times as great as in the city of New York.
This provision, as it stands at present, constitutes an incentive to the
making of loans the larger in proportion to the total assets of banks in
smaller communities, where, as a rule, large loans which are safe are
the most difficult to secure, while in the larger business centers of the
country, where commercial conditions create a certain demand both
from banks and borrowers for large and safe loans, its effect is the
reverse to such an extent as to be injurious.
A bank with smaller loans is not necessarily a bank with more distributed and safe loans. A bank with $100,000 capital and $100,000
deposits, the latter being loaned in the maximum amounts allowed by
the present provision (to wit, to 10 individuals at $10,000 each), has not
as well-distributed loans as a bank of $1,000,000 capital and $5,000,000
deposits, the latter loaned to 50 people at the maximum of $100,000
each. In the former case the loans are distributed among only 10 people and in the latter case among 50 people, and yet in each case there
is strict compliance with the 10 per cent restriction.



XXII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

One of the objects evidently designed to be subserved by the present
provision of the law was the protection of the capital of a bank, as
distinguished from other assets of the bank.
The framers of the section undoubtedly considered the capital of a
bank as a greater safeguard for the depositors against loss when not
over one-tenth part of it was loaned to a single individual or corporation without security. They recognized the fact, however, that when
outside security was had for loans the capital did not need for its protection the 10 per cent restriction, and they provided accordingly for
the exemption from the restriction of a certain class of secured loans,
as follows:
"But the discount of bills of exchange drawn in good faith against
actually existing values, and the discount of commercial or business
paper actually owned by the person negotiating the same, shall not be
considered as money borrowed."
In the modification of section 5200, which we will recommend, we
invoke the same principle of outside security for the protection of the
capital against loss upon loans exceeding the 10 per cent limit.
The size of a loan is of itself no indication of its strength or weakness. If the size of a loan is not such as to be an undue concentration
of the assets of a banking institution in the hands of one individual or
corporation, thus depriving its creditors and shareholders of the safety
of the law of average, it is not wise, either upon economic grounds or
upon grounds of public policy, to forbid it by law.
If, however, the size of a loan is such as to cause such undue concentration, its prevention is justifiable on both grounds.
Recognizing these truths, it is the easier to understand why in many
instances a strict compliance with this provision of the law (section
5200, Rev. Stat. U. S.) is consistent with all the needs of the current
business of a small community and a proper protection to both banks
and the public, yet in some larger communities it seriously interferes
with the business requirements of both the banks and the public, and
adds in no way to the safety of the depositor.
The limit of the amount of single loans to an arbitrary percentage
of either the capital or the sum of the capital and surplus of a bank
does not insure a general or proper distribution of loans in all cases.
Since, as stated before, the size of a loan is not, per se, related to its
safety, the more important proportion to consider when endeavoring
to regulate the distribution of loans by law is that of the amount of
the loan to the total assets, rather than that of the loan to the amount
of the capital.
Grounds of public policy suggest as advisable the largest liberty in
loans not inconsistent with the absolute safety of the depositor.
The habitual disregard of the present provision by the officers of so
many banks interferes with the proper supervision of the banks by
the Comptroller and tends to create indifference to the other restrictions of the national banking law.
The failure of the present law to provide the power to apply a penalty for the making of excessive loans sometimes embarrasses the
Comptroller in endeavoring to check tendencies toward recklessness
in loaning, which point to the ultimate ruin of a banking institution.
As before stated, the present provision, when properly altered,
should allow the banks of larger communities to have more nearly the
privilege of loaning a given per cent of their total assets to one indi


EEPOBT OF THE COMPTROLLEB OF THE CURRENCY.

XXIII

vidual, which now belongs, under a strict compliance with the present
provision, to the banks of the smaller communities. From this privilege they are now debarred by law.
The desired results can be obtained, in our judgment, by adding,
after the words, in section 5200, " shall at no time exceed one-tenth
part of the amount of capital stock of such association actually paid
in," the following words:
"Provided, That the restriction of this section as to the amount of
total liabilities to any association of any person, or of any company,
corporation, or firm, for money borrowed shall not apply where a loan
in excess of one-tenth part of the capital stock shall be less than 2 per
cent of the total assets of said bank at the time of making said loan.
Said loan shall be at all times protected by collateral security equal to
or greater in value than the excess in the amount of said loan over
one-tenth of the capital stock."*
A strict penalty enforceable by the Comptroller should then be provided for infractions of the amended section by the officers of banks
to enable the Comptroller to successfully enforce general and strict
compliance with its terms.
The suggested amendment will make section 5200 just and equitable
in its relation to all national banks and to all communities of our
country, large and small, which it is not at present.
It would not lessen the amount which the smaller banks can now
loan in compliance with the section as it stands at present. At the
same time it would not allow the larger banks to loan to any one individual or corporation more than 10 per cent of the capital, unless such
loan, in addition to being secured for the excess, would not amount to
a greater per cent of the total assets than is consistent with the safe
distribution of loans and the resultant protection to depositors,
Section 5200, thus amended, will not interfere, as at present, with
the right of the banks in the larger communities to meet the legitimate
requirements of business in these commercial centers. It will enable
the Comptroller, by its enforcement, to prevent any undue concentration of loans and conserve their general distribution.
Under the section thus amended the capital of a bank will be protected, inasmuch as no loan in excess of the 10 per cent limit can then
be made, except upon proper collateral security.
The penalty clause will enable the Comptroller not only to limit the
size, but to enforce the securing of excessive loans.
The following table shows the inequality of the present law in its
practical effects upon the banks of larger and smaller communities, so
far as the possible distribution of loans is concerned:
Banks in—

New York City
Chicago
St. Louis
All central reserve
cities
Other reserve cities..
Country banks
United States

Number
of banks Average reJune 29,
sources.
1900.

Maximum Ratio of Average maximum
average
Average loan, 10 per average re- loan to average
resources now
capital. cent of cap- sources to allowed by secaverage
capital.
tion 5200.
ital.

$24,188,833
16,458,878
15,651,533
66
266
3,400
3,732




$1,381,818
1,153,125
1,900,000

$138,181
115,312
190,000

21,503,817
5,068,585
640,197
1,324,803

1,373,485
561,821
103,092
166,542

137,348
56,182
10,309
16,654

17.5 to 1
14.2 to 1
8.2 to 1

5
T/<y of 1 per cent.
ffo of 1 percent.
1.21 per cent.

15.6
9.0
6.1
8.0

^ ofl pereent.
1.10 per cent.
1.56 per cent.
1.21 per cent.

to
to
to
to

1
1
1
1

XXIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.

For the purpose of ascertaining the general result of the suggested
amendment to section 5200, United States Revised Statutes, an examination has been made of the reports of condition of the national banks,
of date June 29, 1900. In the following table is set forth the number
of banks in reserve cities named on June 29, 1900, number of loans
in excess of the legal limit, loans which would be excessive if allowed
to the limit of 2 per cent of the total resources, and number of banks
in which loans equaling 10 per cent of their capital would be greater
than 2 per cent of total assets, the loaning power of which the proposed limit would not increase. The table shows similar information
relative to 100 banks selected at random from various sections of the
country and also the total number of separate loans and discounts of
such banks and of those located in the reserve cities on November 12,
1900:

Cities.

1

New York City...
Chicago
St. Louis
Total
T Boston.
9
Albany
8 Brooklyn
Philadelphia
F Pittsburg
>
fi Baltimore
7 Washington, D. C
8 Savannah
New Orleans
10 Louisville..
11 Houston .
1? Cincinnati
IS Cleveland
14 Columbus
15 Indianapolis
16 Detroit..
17 Milwaukee
IS Des Moines
19 St. Paul
.
?0 Minneapolis
*>1 Kansas City
.
99
St. Joseph..
93 Lincoln
9/J Omaha
?5 Denver
..
.
% San Francisco
97 Los Angeles
28 Portland, Oreg
Total
Total of all reserve cities.
Country
Total
9

3




Number of
banks in which
loans equaling
cent of
Number of 10 percapital
their
Total num- Number of loans in
Num- ber of loans excessive excess of
ber of outstand- loans under the pro- 2 per cent of total
posed
banks. ing Nov. 12, section
2 per cent assets, the loan1900.
5200.
ing power of
limit.
which the proposed limit
would not increase.
44
16
6

38,102
23 272
9,967

707
86
19

26
11
4

14
5
3

66

71,341

812

41

22

38
6
5
36
31
19
11
2
7
8
5
13
15
6
4
6
4
4
5
6
6
2
3
8
4
4
4
4

33 269
4,794
3,576
26,463
18,345
17,955
9,808
1,532
5,019
7,560
1,671
18,510
13,019
5,082
4,987
6,180
5,743
3,002
2,800
2,202
6,999

7
77
47
156
180
30
28
4
67
8
27
19
43
3
6
6
10
4
6
15
60
16
6
11
29
10
8
9

2
14
6
42
70
7
5
4
7
2
3
5
10
0
1
3
1
0
1
7
4
2
0
7
4
6
5
7

2
5
3
13
19
6
3
1
6
2
2
4
6
0
1
3
1
0
1
3
2
1
0
5
2
3
3
3

266

219,216

892

225

100

332
100

290,557
55,052

1,704
301

266
226

122
92

432

345,609

2,005

492

214

891

2,020
5,032
4,875
3,805
2,687
1,390

BEPOBT OF THE COMPTROLLER OF THE CURRENCY.
RECOMMENDATIONS

XXV

OF PROVISIONS REQUIRING THE STRENGTHENING
OF GENERAL CASH RESERVE.

The question of those laws which affect the right of one national
bank to consider as a cash resource a deposit in another national bank,
called its reserve agent, is one of great importance and involves the
most fundamental principles of safe banking. The extent to which
the reserve of one bank can safely be represented by what is practically a loan to another, bank, instead of by cash in its vaults, is a
proper subject for consideration at this time, in view of the financial
experiences through which this country has passed during the past
few years.
In times of financial crisis, such as 1893, when there are widespread
withdrawals in currency, not only in reserve cities, but throughout
the country, the reserve cities are subjected to a strain which endangers
the stability of the entire banking system.
The reserve banks, as a rule, recognizing the instability of bank
balances, must loan a large proportion of their money on call. To
secure sufficient call loans they must go to the speculative exchanges,
and the injurious results of that practice are easily understood.
It is only by loaning money on speculative securities that the banks
are enabled to pay the high rates of interest on bank-deposit balances
which form the attraction to the country banks for the deposit of so
much larger a portion of their funds in New York than is needed
for the clearance of exchange. During the summer of 1899 there
occurred a marked demonstration of the evil effects of this practice
upon the legitimate business of the country. At that time there was
a marked slackening in the demand for money in the interior of the
country, and the banks of that section found it difficult to safely loan
their funds. As a result, the interest paid by Eastern reserve agents
upon deposit balances attracted an immense surplus to New York and
other Eastern cities.
This redundancy of money in New York and the East and the ease
with which loans upon speculative collaterals were there obtained
immediately created a speculative movement in stocks, which was carried on with a constantly rising range of prices until the fall of last
year. At that time the crop movement in the West and the rising
rate of interest there led the banks of the interior to draw upon their
balances in New York and to order the shipment of large amounts of
currency as against these balances. It is to be noted that at the time
these demands took place the business of the country was in a prosperous condition, with a tendency toward an increase in general prices
and in the wages of labor. There was no lack of confidence in the
country and nothing which indicated panic conditions, and yet this
demand by the banks of the West for the shipment of currency on
deposit with reserve agents resulted in a panic upon the stock exchange
of New York, which instantly became a grave menace to the entire
business of the country.
In the abnormal demand for money created by this panic on the
Stock Exchange the ordinary credits to the legitimate business and
commercial enterprises of the country were necessarily curtailed by
the banks, and unquestionably great damage would have been done to
such interests had not the Secretary of the Treasury, seeing the possi


XXVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

bility of evil to the country at large, interfered to prevent a rapidly
increasing stringency in the money market.
It is to be remembered, of course, that the exchange business of the
interior banks will always necessitate large deposit balances in New
York and other reserve cities, and that at certain seasons of the year
abnormally large balances of idle funds may be attracted to different
parts of the country, following higher interest rates. But it is suggested that public policy demands that banks of the country should
not be allowed to deposit with other banks so large a portion of that
fund which in theory is regarded as sacredly devoted to the protection
of the interests of the depositors. They should be compelled to hold
a larger portion of this fund in cash in their vaults, so that it can
always be devoted to its proper use beyond peradventure.
In the panics of 1873 and 1893 and on other occasions the New York
banks for a considerable time refused to ship currency in response
to demands from banks in the interior, showing in the extreme test
of panic that the reserve which had been counted as cash by the banks
of the country was not, in fact, at all times available to enable them
to meet the demands of their depositors. While restrictions placed
upon the power of banks to count as banking reserve so large a proportion of mone}^ on deposit in reserve cities will not have the effect
of preventing speculative transactions in money centers, it will not
have a tendency to encourage them to so great an extent as does the
present law, at a risk at times to the best interests of legitimate business and at the cost of weakening the banking system as a whole by
creating too great a disproportion between the aggregate cash
resources and aggregate deposit liabilities.
It is to be remembered that so far as the ability of the banks to
serve the public is concerned it will not be impaired by smaller
balances in reserve cities. The banks of necessity must furnish
exchange, and will accordingly keep the balance with correspondents
necessary for such purpose. The permission given by the law to the
bank to count as a part of their cash reserve a balance with their
reserve agent is primarily for the purpose of convenience and profit
for the banks, and not for the convenience of the public in any of its
relations to the bank.
The Comptroller believes that under the present law regarding
reserve cities too great latitude is now given the banks in connection
with the use of the reserve, the primary object of which is the protection of the depositors of the banks, and he recommends that amendments to the laws be passed requiring that a larger proportion of the
reserve should be kept in cash in the vaults of the bank. Considering
the banking system as a whole, the present ability of banks to use
credits with reserve banks as a basis of loans creates too great an
extension of aggregate deposit credits as compared with aggregate
cash resources, which, in times of liquidation and financial panic,
increases the necessity upon the banks of demanding payment of loans
from the community and adds to the demoralization of business incident to such period. By increasing the restrictions upon the right of
banks to count deposits with reserve agents as cash, a firmer and safer
foundation will be built under the deposit credits of the country, and
it is the belief of the Comptroller that in times of liquidation the
greater strength of the banks will more than compensate them for



REPORT OF THE COMPTROLLER OP THE CURRENCY,

XXVII

the loss of the small amount of interest on a portion of their balances
which may be due to a change in the present law.
It is therefore recommended that section 5192 of the Revised
Statutes of the United States be amended so that under its provisions
but one-fifth instead of three-fifths of the reserve of 15 per cent
required by law to be kept by banks not reserve agents may consist of
balances due from reserve banks; and that section 5195 of the Revised
Statutes of the United States, which authorizes banks in smaller reserve
cities to keep one-half of their lawful money reserve in cash with central reserve cities, be repealed.
RECOMMENDATION AS TO FEES FOR NATIONAL-BANK EXAMINATIONS.

The Comptroller repeats the recommendation made by his predecessors, that the present law should be so amended as to provide fixed
salaries for bank examiners, to be paid from a fund collected from the
banks, to take the place of the fee system now in force. The amount
allowed an examiner for the examination of smaller banks is not sufficient to compensate him for the time necessary, in many cases, for an
extended examination. The present system encourages to too great
an extent superficiality in examinations, and interferes greatly with
the proper and wise apportionment of time of examiners among the
different banks.
INTERNATIONAL AND INTERCOLONIAL BANKS AND REPORTS AS TO BANKING SYSTEMS IN PORTO RICO, HAWAII, AND THE PHILIPPINES.

The rapid growth of business between the United States and its new
island territory and the increasing commerce of the country with South
America emphasizes the need of laws authorizing and regulating banks
for the transaction of international and intercolonial banking, to which,
in his last two annual reports, the Comptroller has already called
attention.
Under the necessities of trade such institutions are springing into
existence, and they are at present under little or no supervision in the
interest of the public. A law properly framed to regulate such banking can not be enacted too soon, both for the purpose of public protection and for assuring to institutions contemplating entering this
business a stable legal basis.
In connection with the detailed reasons for the passage of such legislation and a statement of its important relation to the business welfare
of our nation, which were outlined in the former reports of the Comptroller, special attention is called to the information as to the banking
systems of the Philippines, Porto Rico, and Hawaii, contained in the
appendix to this report. Through the action of Congress the national
banking act is now in force in Hawaii and Porto Rico, but no provision
has been made for the intercolonial banking essential to trade interests,
and for the supervision in the interest and protection of the public of
such native banking institutions as were in existence upon our accession to sovereignty of these islands.
Only one national banking institution has been incorporated under
present law for the purpose of transacting business in the islands, to
wit, The First National Bank of Hawaii, at Honolulu, H. I., with a
capital of $500,000.




XXVIII

REPORT OF THE COMPTROLLEE OF THE CURRENCY.

This whole subject is one of great and immediate concern and should
have the prompt attention of Congress.
For the purpose of securing such a statement of banking conditions
in our island possessions as would indicate the nature and scope of
the problem of a proper governmental supervision, the Comptroller
addressed the following letter to Hon. Elihu Root, Secretary of War,
and a similar letter to Hon. Charles H. Allen, governor of Porto Rico,
and Hon. Sanford B. Dole, governor of Hawaii:
TREASURY DEPARTMENT,
OFFICE OF THE COMPTROLLER OF THE CURRENCY,

Washington, I). C., August 10, 1900.
SIR: The national banking act makes it the duty of the Comptroller
of the Currency to make a statement in his annual report to Congress
as to the resources and liabilities of the banking systems of the United
States other than national, and it seems desirable that I incorporate,
if possible, in my next annual report information as to the existing
banking institutions of the Philippine Islands, including such financial
statements of their condition as it is possible to obtain from them. In
my last report to Congress I republished extracts from the report of
Mr. Edward W. Harden, special commissioner of the United States,
who was sent by the Treasury Department to make a report upon the
industrial and financial-condition of the Philippines.
Had I any appropriation available for the purpose I would not
hesitate to make an independent investigation, but as I have not, the
purpose of this letter is to ascertain whether or not it is possible for
you, legally and consistently with the interests of your own Department, to detail some one of your present force in the Philippines who
would be competent therefor, to obtain statements of the condition of
all the different banking institutions in the islands, and as complete a
statement as possible of the laws under which such institutions have
been incorporated or now exercise their power. It would be especially
desirable in this connection to have an exact statement relative to any
privileges of currency issues which are possessed by any of these
banks.
In view of the general interest manifested in financial conditions in
the Philippines and the large and general circulation of the reports
of the Comptroller of the Currency among the business men of the
country, it would seem appropriate that such information gathered by
your representatives be used therein. It is understood, of course,
that any matter furnished will be printed as originating from your
Department. If it is possible for you in any way to extend to this
office such service and courtesy, I should be greatly obliged.
Respectfully,
CHARLES Gr. DAWES, Comptroller.
Hon. ELIHU ROOT,

Secretary of War, Washington, D. O.
Through the courtesy of these officials and in response to this request
much information has been furnished, and is printed in the appendix.
The subject is one of such vast importance, presenting so many complex and new problems in finance and banking, both domestic and
intercolonial in nature, that, as preliminary to any step toward legislation by Congress, a commission should be established to investigate



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXIX

and study local conditions and to report upon the nature of the banking legislation best adapted for the interests of this country and her
new possessions.
The Comptroller earnestly renews his former recommendations to
this effect.
THE CURRENCY ACT OF MARCH 14, 1900.

The currency act approved March 14, 1900, entitled "An act to
define and fix the standard of value, to maintain the parity of all forms
of money issued or coined by the United States, to refund the public
debt, and for other purposes," contains several amendments to the
national-bank act, one of them being a measure which adds a greater
element of flexibility to national-bank currency. Section 9 of the act
of July 12,1882, provides " That any national banking association now
organized, or hereafter to be organized, desiring to withdraw its circulating notes, upon a deposit of lawful money with the Treasurer of
the United States * * * is authorized to deposit lawful money
and withdraw a proportionate amount of the bonds held as security for
its circulating notes in the order of such deposits; and no national
bank which makes any deposit of lawful money in order to withdraw
its circulating notes shall be entitled to receive any increase of its circulation for the period of six months from the time it made such deposit
of lawful money for the purpose aforesaid: Provided, That not more
than three millions of dollars of lawful money shall be deposited during any calendar month for this purpose."
The currency act repeals that portion of the foregoing section prohibiting any national bank, which makes a deposit of lawful money in
order to withdraw its circulating notes, from receiving any increase
of its circulation for the period of six months from the time of making
the deposit for that purpose. In other words, national-bank circulation may be increased or reduced as frequently and in such amounts
as may be desired, having regard to the $3,000,000 monthly reduction
limit and the bonds deposited. The act also entitles every national
bank to receive from the Comptroller of the Currency circulating
notes, in blank, to the par value of the bonds deposited, not exceeding, however, the paid-in capital stock, but restricts the issue of notes
of the denomination of $5 to one-third in amount of its total issues.
The act further provides for a reduction of the semiannual duty on
circulation of from one-half to one-fourth of 1 per cent on the average amount in circulation where secured by a deposit of consols of
1930, authorized to be issued in exchange for 5 per cents of 1904, 4
per cents of 1907, and 3 per cents of 1908. Notes secured by other
classes of bonds are still subject to the semiannual duty of one-half of
1 per cent.
The minimum amount of capital with which a national banking
association can be organized under the national-bank act is $50,000,
and then only in places the population of which does not exceed 6,000
inhabitants. By the act of March 14 it is provided that a bank with
not less than $25,000 capital may be organized in any place the population of which does not exceed 3,000 inhabitants.
Paragraph 6 of the currency act repeals section 5193 of the Revised
Statutes of the United States, which latter section authorized the Secretary of the Treasury to receive United States notes on deposit, without interest, from any national banking association, in sums of not



XXX

REPORT OF THE COMPTROLLER OF THE CURRENCY.

less than $10,000, and issue certificates therefor in such form as he may
prescribe, in denominations of not less than $5,000, and payable on
demand in United States notes at the place where deposits were made.
The certificates issued were authorized to be counted as part of the
lawful money reserve of the association to which issued, and accepted
in settlement of clearing-house balances at the places where the deposits therefor were made.
ORGANIZATION, ETC., OF NATIONAL BANKS AND OPERATION OF LAW OF

MARCH 14, 1900.

Immediately prior to the passage of the currency act there were in
operation in the country some 13,900 incorporated banks, banking
institutions, and private banks, of which 3,617 were national; 5,722
State banks and trust companies; 701 savings banks without capital
stock, and about 3,860 private banks and bankers. Eliminating the
mutual savings banks and trust companies, the principal business of
these classes of institutions being of a character incompatible with that
of commercial banks, there are remaining over 7,000 banks of discount
and deposit, including private banking concerns which might convert
or reorganize as national banks upon complying with the statutory
requirements.
In anticipation of and as a result of the passage of the currency law
passed March 14, 1900, approximately one thousand informal applications for authority to organize national banks have been filed with the
Comptroller of the Currency. Under office rulings, to meet with
approval, applications must indicate the title, location, and capital of
the proposed bank, contain the signatures of at least five prospective
shareholders, and bear satisfactory indorsement. Formal applications
to the number of 509 were approved between March 14 and October
31, of which 382 were for banks with capital of less than $50,000 and
127 with capital of $50,000 or more. Eighty of the applications were
from State banks proposed to be converted under the provisions of
section 5154 of the Revised Statutes of the United States; 173 from
State or private banks proposed to liquidate for the purpose of reorganization under the national banking law, and 255 from those contemplating primary organizations. Since October 31,1899, 383 banks
with authorized capital of $20,025,000 have been chartered, of which
348 were authorized to begin business between March 14 and October
31, 1900.
Of the 35 banks organized between October 31 and March 14,1900,
5, with total capital of $250,000, were conversions; 5, total capital
$300,000, reorganizations of State and private banks, and 25, with
capital of $2,000,000, primary organizations. Sixty-two of the banks
organized since March 14, with capital of $4,560,000, were conversions, of which 43 were with capital of less than $50,000, and 19 with
capital of $50,000 or over. One hundred and twenty-three, with capital aggregating $5,605,000, were reorganizations of State and private
banks, 89 of the number being with capital of less than $50,000, and
34 with capital of $50,000 or over. There were 163 banks of primary
organization capitalized in the sum of $7,310,000. Of the latter class
117 were with capital of less than $50,000, and 46 with capital of
$50,000 and over. Of the total number of banks organized since
March 14, 208, with capital aggregating $5,200,000, were banks with



EEPOET OF THE COMPTEOLLER OF THE CURRENCY.

XXXI

capital of $25,000 each; 41, with total capital of $1,375,000, banks with
capital of over $25,000 and less than $50,000; 62, with capital aggregating $3,100,000, banks with individual capital of $50,000, and 37,
total capital $7,800,000, banks having a capital of $50,000 or over. The
bonds deposited by organizations during this period amounted to
$5,348,200, or only about 30 per cent of the maximum which might
be deposited. In the following table is shown in detail the information herein referred to with respect to organizations during the period
beginning with March 14 and terminating on October 31, 1900.
NUMBER OF NATIONAL BANKS ORGANIZED FROM MARCH 14 TO OCTOBER 31,

Capital

i$25,000.

States.
No.

Amount.

Capital over
over $25,000 and
less than $50,000.

Amount.

Amount.

100,000

5
3
19
1
3

125,000
75,000
475,000
25,000
75,000

2
2
3

31

775,000

7

6
1
2
1

150 000
25,000
50,000
25,000

1

$25,000
25,000
50,000

$100,000

$60,000
60,000
107,000

No.

Amount.

$50,000

1

4

New York
New Jersey
Pennsylvania
Delaware
Maryland
Total
V' ' '
West Virginia
North Carolina
South Carolina
Georgia
"Plorida
Alabama




No.

1

1
1
2

Total United States

Capital
over
$50,000.

Capital
$50,000.

1

No.

Maine
New HamDshire
Connecticut
Total

Texas
Kentucky
Tennessee
Total
Ohio ..
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
Total
North Dakota
South Dakota
Nebraska
Kansas
Wyoming
Colorado
New Mexico
Oklahoma
Indian Territory
Total
Washington
California
Idaho
Hawaii
Total

1900.

50,000

1

100,000

1

50,000

10

500,000

4
1
5

560,000
100,000
1,400,000

1

50,000

2

170,000

227,000

12

600,000

12

2,230,000

30,000

2
3

100 000
150,000

1

100,000

1

50,000

1
2
1

60,000
550,000
200 000

1

30 000

400,000
75,000
50,000

8

248,000

2
1
7
2
1

100,000
50 000
350,000
100,000
50,000

3
2

235,000
1,745,000

31

775,000

10

308,000

19

950,000

10

2,890,000

11
8
17
2
3
14
23
2

275,000
200,000
425,000
50,000
75,000
350,000
575,000
50,000

3
1
4
1
1

95,000
45,000
145,000
35,000
30,000

700 000
100,000
350,000
80,000
500,000

195,000
35,000

200,000
150,000
50,000
50,000
200,000
100,000
150,000

3
1
3
1
2

6
1

4
3
1
1
4
2
3

80

2,000,000

17

580, 000

18

900,000

10

1,730,000

8
3
10
10
1

200,000
75,000
250,000
250,000
25,000

2
1

75,000
40,000

50,000
100,000
150,000

i

100,000

i

150,000

16
3
2

1
15
10

25,000
375,000
250,000

36,666

1
2
3

1
2

40,000
75,000

1
4

50,000
200,000

58

1,450,000

7

260,000

11

550,000

2

250,000

1
2
1

25,000
50,000
25,000

1

50,000

1

100,000

i

500,000

1

4
208

5,200,000

1

100,000
41

1,375,000

50,000

2

600,000

62

3,100,000

37

7,800,000

XXXII REPOET OF THE COMPTROLLER OF THE CURRENCY.

By reference to the following table it will be observed that the greatest increase in number and capital of banks organized during the year
ended October 31, 1900, occurred in the Middle States, in which 133
associations were formed with capital aggregating $5,860,000. In
the Western States 83 banks were organized, with aggregate capital
of $2,760,000; in the Southern States, 77 banks, capital $5,323,000;
Eastern States, 72 banks, capital $4,682,000; New England States, 10
banks, capital $600,000; Pacific States and Hawaii, 8 banks, capital
$800,000. Pennsylvania leads the States in point of number of organizations and capital, namely, 44 and $2,882,000, respectively; Texas is
second with 36 banks and $1,383,000 capital; Iowa is third with 32
banks, capital $920,000. Twenty-seven banks were organized in Illinois, with capital of $1,070,000; 25 in Ohio, with capital of $1,520,000;
in New York, 13 banks, capital $1,095,000; in Kentucky, 8 banks and
capital of $1,970,000.
N A T I O N A L B A N K S O R G A N I Z E D DURING Y E A R ENDED OCTOBER 31,

States.

No.

$25,000
175,000

Maine
New Hampshire .
Vermont
Massachusetts . . .
Rhode Island . . .
Connecticut

100,000

"366,'666"

Total New England States .

600,000

New York
New Jersey
Pennsylvania
Delaware
Maryland
District of Columbia.

1,095,000
385,000
2,882,000
25,000
295,000

Total Eastern States .
Virginia
West Virginia..
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Total Southern States
Ohio....
Indiana.

Capital.

4,682,000
300,000
305,000
50,000
85,000
650,000
230,000
150,000
50,000
1,383,000
4

1,970,000
150,000

| 77

5,323,000
1,520,000
495,000

States,

1900.

No.

Illinois....
Michigan..
Wisconsin.
Minnesota.
Iowa
Missouri
Total Middle States
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Indian Territory.
Total Western States
Washington.
Oregon
California . . .
Idaho
Utah
Nevada
Arizona
Alaska
Total Pacific States.
Hawaii
Total of United States.

Capital.
1,070,000
215,000
805,000
500,000
920,000
335,000

133

5,860,000
200,000
75,000
325,000
440,000
125,000
330,000
75,000
515,000
675,000
2,760,000

75,000
200,000
25,000

300,000
500,000
20,025,000

Some difficulty has attended the conversion and reorganization of
State banks, owing to the character of their assets. Under the national
banking law, associations can loan on personal security only, are prohibited from investing in real estate other than that necessary to the
conduct of the business of the bank, and restricted in the volume of
accommodations to any one person, company, corporation, orfirm,etc.,
to 10 per cent of the capital stock actually paid in, and the courts have
held that it is ultra vires of a national banking association to invest in
the stock of another corporation. It has, therefore, been necessary
to require State banks proposed to be converted and holding prohibited assets as indicated to make disposition thereof prior to receiving
official approval to begin business as a national banking association,




EEPOET OF THE COMPTROLLER OF THE CURRENCY. XXXIII

and to require a statement from directors of State and other banks to
be reorganized as national banking associations that none of such assets
will be transferred to the national bank.
EARNINGS AND DIVIDENDS.

The act of March 3, 1869, requires every national banking association to report, within ten days after the declaration of any dividend,
the amount of such dividend and the amount of net earnings in excess
of such dividend. The annual reports issued from this bureau have
contained abstracts of such reports and a compilation of the returns
for the years ended March 1, 1870, to March 1, 1900, will be found in
the appendix. It is shown that the average dividend paid during the
years ended March 1, 1870 to 1875, was approximately 10 per cent,
and the lowest, 6.7 per cent, was paid in 1897. The average rate from
1869 to 1900, inclusive, thirty-one years, is shown to have been 8.2.
During the year ended March 1, 1900, the gross earnings of the
reporting national banks aggregated $170,758,066. Of this amount
$30,509,516.93, or 17.86 per cent, was devoted to the charging off of
losses and premiums; $70,266,738.63, or 41.15 per cent, to expenses
and taxes, leaving net earnings of $69,981,810.44, or 40.98 per cent.
From the net earnings were declared dividends aggregating $47,433,357.30, or 7.86 per cent, on capital amounting to $603,396,550.
TAXES AND EXPENSES.

Section 54 of the old currency act provided for the taxation of circulating notes of national banks at the rate of one-half of 1 per cent
semiannually, and a tax at the rate of one-fourth of 1 per cent on
deposits, with the same rate on capital beyond the amount invested in
United States bonds. On March 3, 1883, the provision imposing taxation on capital and deposits was repealed. The revenue derived by
the Government from the taxes on capital and deposits during that
period was $7,855,887.74 and $60,940,067.16, respectively. The total
amount paid as semiannual duty on circulation up to June 30, 1899,
was $85,304,945.56, an aggregate from the three sources of $154,100,900.46. The war-revenue act of 1898 imposed a tax of one-fifth of 1
per cent on the capital and surplus of the bank, and the act of March
14,1900, reduced the semiannual duty on circulation, where secured by
consols of 1930, to one-fourth of 1 per cent.
The Commissioner of Internal Revenue collected from the tax on
capital and surplus of national banks $1,752,802 during the fiscal year
1899, and $1,730,251 during the year 1900. Tables compiled in the
Commissioner's office show the collections from the tax on capital and
surplus of all banks by collection districts, and the foregoing figures
are estimates based upon the average capital and surplus of national
banks during the years named. The duty paid on circulation during
the past year amounted to $1,881,922.73. This indicates the total
amount obtained by the Government from national banks during the
existence of the national banking system as $159,465,876.19. In addition to these taxes, the banks have paid on an average $1.31 per thousand annually for note redemptions since the establishment of the
national-bank redemption agency under the provisions of the act of
June 20 1874. There is no official record of the cost of redemptions
* CUR 1900, PT 1
in



XXXIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.

prior to the passage of that act. The banks are also assessed for
examiners' fees and cost of plates from which circulating notes are
printed. Prior to July 12, 1882, the cost of plates was paid from the
proceeds of the tax collected on circulation. Detailed statements of
these items appear in the appendix.
NATIONAL BANK CIRCULATION AND BONDS.

The original national-bank act limited the volume of national-bank
currency to $300,000,000, and that of July 12,1870, permitted the issue
of an additional $54,000,000. The act of July 14, 1875, repealed section 5177, United States Revised Statutes, limiting the aggregate volume, leaving, however, the provisions of section 5171 still in force.
This latter section authorized the issue of notes (90 per cent of the bond
deposit) in proportion to capital as follows: Banks with capital of
$500,000 or less, 90 per cent of the capital; capital of over $500,000
and not over $1,000,000, 80 per cent; capital over $1,000,000 and not
over $3,000,000, 75 per cent, and capital exceeding $3,000,000, 60 per
cent. This section was repealed by the act of July 12, 1882, which
latter act authorized the issue of notes to 90 per cent of the bonds on
deposit, regardless of capital, except that the deposit of bonds should
not exceed the aggregate capital paid in. There was no further change
in this feature of the law until 1900. Practically, the maximum circulation issuable was outstanding in the j-ears 1867 to 1870, inclusive.
The act of July 12, 1870, increasing the maximum circulation to
$354,000,000, resulted in an increase of twenty-two and one-half millions by October 31, 1871. In the next year there was a further
increase of sixteen and one-half millions, and on October 31,1874, the
amount outstanding increased to $348,785,906, which was within
about five and one-fourth millions of the legal limit. With authority
to issue circulation up to 90 per cent of the bond deposit, the latter not to
exceed the paid up capital, circulation outstanding rose to $362,889,134
on October 31,1882. This was the highest point ever reached during
the existence of the system, but was nearly $78,000,000 less than the
amount issuable, as the authorized capital of the banks on that date
was $489,741,635. The amount outstanding exceeded $360,000,000
only for the brief period between November 1, 1881 and May 1, 1882.
Subsequent to the latter date there was a gradual fall until the minimum, $167,927,574, was reached on July 1, 1891. Of this last-named
amount, $127,221,391 was secured by bonds and $40,706,183 by deposits with the Treasurer of the United States of lawful money on account
of liquidating and insolvent banks and those reducing circulation.
There was no material change in the circulation outstanding until the
fall of 1893, when it reached $209,311,993. On March 1, 1895, the
amount fell to $205,043,651, but steadily increased thereafter, and on
March 13, 1900, reached $253,993,821.
The issue of the additional 10 per cent to which existing banks
were entitled under the provisions of the currency act and the issue
to banks organized since March 14 resulted in an increase in total
amount of bank notes outstanding to $331,613,268 on October 31,1900.
As the authorized aggregate capital of national banks was$632,502,395,
their note issues were only about 52 per cent of the amount to which
they would be entitled upon the deposit of the requisite amount of bonds.
The amount, by denominations, of national-bank circulation out


REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXXV

standing on October 31, 1899, March 13 and October 31, 1900, is
shown in the following table:
(The issue of notes of the denominations of $1 and $2 was discontinued in 1879; of $1,000 in 1884; and of $500 in 1885.)
Oct. 31,1899. Mar. 13,1900. Oct. 31,1900.

Denominations.
.

--

.

,

Total
Circulation secured by lawful money
Circulation secured by bonds
.

$348,278
167,468
75,459,705
75,960,210
56,479,140
11,293,200
23,112,200
104,500
28,000
31,993

$348,275
167,466
79,310,710
79,378,160
58,770,660
11,784,150
24,103.400
27,000
32,409

$347,552
167,056
70,363,595
123,088,280
88,408,100
16,186,900
32,889,200
102,500
27,000
33 085

242,984,694

Ones .
Twos . . . .
Fives
Tens
Twenties
Fifties
One hundreds
Five hundreds
One thousands
Nonredeemed fractions

254,026,230

331,613,268

35,063,919
207,920, 775

38,004,155
216,022,075

32,784,203
298,829,065

104^000

The changes in amounts and classes of bonds on deposit to secure
circulation on dates named are shown in the appended table:
Class.

$49,825,160
i 128,822,050
18,242,750
14,665,600
| 20,907,600
!

$56,164,820
130,302,250
14,697,850
21,996,350
20,490,150

$7,756,580
13,544,100
7,503,350
1,293,000
1,019,950
270,006,600

i 232,463,160

Loan of 1908-1918, 3 per cent.
Funded loan of 1907^ 4 per cent
Loan of 1925, 4 per cent
Loan of 1904, 5 per cent
Funded loan of 1891, 2 per cent
Consols of 1930, 2 per cent
Total

Oct. 31,1899. Mar. 13,1900. Oct. 31,1900.

243,651,420

301,123,580

INSOLVENT NATIONAL BANKS.

A brief review of the results of administration of insolvent national
banks is herewith submitted.
The first failure in the national banking system was that of the First
National Bank of Attica, N. Y., with a capital of $50,000, which was
placed in the hands of a receiver April 14, 1865. Under his administration the creditors received $89,472, representing 63.57 per cent on
deposits amounting to $140,750.
From the year 1863 to the year 1873, inclusive, a period of ten
years, there were 34 national banks which closed their doors, representing in capital $8,211,100 and $18,915,571 of deposits. These banks
were placed in the hands of receivers, as provided by law, and the
records show as a result of collections of assets that $14,772,530, or an
average of 78.10 per cent, was paid to the creditors.
From the year 1873 to the year 1883, another decade, there were 55
failures of national banks, having an aggregate capital of $11,762,800
and deposits amounting to $24,676,244. The amount paid to creditors
was $19,204,181, or 77.82 per cent.
For the next period of ten years, from the close of the year 1883 to
1893, not including 1893, the year of the notable panic, there were 92
banks which failed, representing in capital $13,057,000 and $47,554,014
in deposits. The creditors of these banks received $35,911,392, or an
average of 75.52 per cent.



XXXVI EEPOET OF THE COMPTEOLLEE OF THE CUEEENCY.

For the year 1893, the " panic year," 69 banks closed their doors
and were placed in the hands of receivers, representing $11,520,000
of capital and $21,356,957 of deposits. The amount paid to creditors
was $15,944,243, or 74.65 per cent.
The total number of banks which suspended during the year 1893
was 155, with the capital stock of $29,725,000. Of this number, 86,
with a capital stock of $18,205,000, placed themselves in a solvent
condition and resumed business.
Taking into account the previous nine years, together with the year
1893, making the third decade, the number of insolvent national banks
was 161, representing in capital $24,577,000 and $68,910,971 in deposits. Of the latter amount, $51,855,635 was paid to creditors, being an
average of 75.25 per cent.
From the close of the year 1893 to October 31, 1900, inclusive, 143
insolvent national banks have been placed in the hands of receivers,
with a capital stock of $20,926,520 and deposits of $63,683,350. At
the latter date creditors had been paid $46,364,824, being an average
of 72.80 per cent.
From the date of the adoption of the national banking act to October 31, 1900, 393 banks have been placed in the hands of receivers.
Under the supervision of this office, which is charged with the liquidation of insolvent national banks, the number of receiverships has been
reduced from 393 to 113. The amount of capital represented in the
total number of failed banks from the year 1863 to November 1,1900,
is $65,477,420. The total amount of liabilities has been $176,186,136,
of which $132,197,170 has been paid, being an average of 75.03 per cent.
At the date of the last annual report of this Bureau the number of
national banks remaining in the hands of receivers was 135. At the
date of this report there remain under the supervision of this office 63
active receiverships and 50 in an inactive condition, being a total of
113. Since the beginning of the system the affairs of 280 insolvent
national banks have been finally closed. Included in this latter number are 17 banks which were restored to solvency and resumed business after their liabilities to creditors had been liquidated wholly or in
part through the agency of a receiver. The claims against the trusts
finally liquidated amounted to $78,924,698, on which dividends were
paid aggregating $58,640,483, or 74.30 per cent, and including offsets
and loans paid, 80.05 per cent. The collections from assets and assessments on shareholders amounted to $67,952,189 and $9,443,691,
respectively. It is found to have required, on an average, 8.81 per
cent of the total collections for receivers' salaries, legal and otherexpenses incident to liquidation. Of the banks finally closed 81 paid
claims in full, including interest dividends of 100 per cent or less; 19
paid claims in full only; 42 paid 75 + per cent, but less than 100 per
cent; 60 paid 50 + per cent, but less than 75 per cent; 59 paid less than
50 per cent, and 3 paid no dividends.
There have been finally liquidated during the past year 28 insolvent
national banks.
The following table shows the number of insolvent national banks
which were finally closed during the year ended October 31, 1900,
with their capital stock, liabilities, liabilities paid, and the percentage
of liabilities paid to total liabilities. The liabilities paid include those
that were retired by offset, or settled from the proceeds of collaterals



REPORT OF THE COMPTROLLER OF THE CURRENCY. XXXVII

held as security for claims, and also those upon which pro rata dividends have been paid:
Capital
stock.

Title and location of bank.

First National Bank, Arkansas City, Kans
First National Bank, Benton Harbor, Mich
Broadway National Bank Boston, Mass
Chemical National Bank, Chicago, 111
First National Bank, Clearfield Pa
Ninth National Bank, Dallas, Tex
Marine National Bank, Duluth, Minn
Kittitas Valley National Bank, Ellensburg, Wash
Merchants' National Bank, Great Falls, Mont
Northwestern National Bank, Great Falls, Mont
Indianapolis National Bank, Indianapolis, Ind
Columbia National Bank, Minneapolis, Minn
Mutual National Bank, New Orleans, La
North Platte National Bank, North Platte, Nebr
First National Bank, Olympia, Wash
National Bank of Paola, Kans
First National Bank, Palatka Fla
First National Bank, Sheffield, Ala
First National Bank, Spokane, WTash
Citizens' National Bank, Spokane, Wash
Citizens' National Bank, San Angelo, Tex
California National Bank, San Diego, Cal
Dakota National Bank, Sioux Falls, S. Dak
Columbia National Bank, Tacoma, Wash
Tacoma National Bank, Tacoma, Wash
Vincennes National Bank, Vincennes, Ind
First National Bank, Wellington, Kans
Sumner National Bank, Wellington, Kans

Per centage of
Liabilities. Liabilities liabilities
paid.
paid.
$4,850
107,540
2,233,467
1,864,962
163,181
239,965
246,758
144,009
238,667
977, 099
1,747,058
271,949
293,184
137,387
153,414
13,158
338,998
233,958
376,524
401,386
66,070
1,145,844
247, 696
258,138
307,667
246,568
71,247
84,685

$4,850
112,077
2,248,423
1,946,956
165,329
180,073
181,617
97,185
151,475
1,040,088
1,313,393
274,099
270,651
119,043
146,513
13,222
199,599
104,688
203,083
159,455
60,188
586,959
209,540
188,763
146,092
217,325
58,688
72,532

100.00
104.22
100.67
104.35
101.32
75.04
73.60
67.48
63.47
106.44
75.18
100. 71
92.31
86.65
95.50
100.49
58.88
44.74
53.94
39.72
91.10
51.22
84.60
73.12
47.48
88.14
82.37
85.65

5,375,000

Total

8100,000
50,000
200,000
1,000,000
100,000
300,000
200,000
50,000
100,000
250,000
300,000
200,000
200,000
75,000
100,000
50,000
150,000
100,000
250,000
150,000
100,000
500,000
50,000
350,000
200,000
100,000
50,000
100,000

12,615,429

10,471,906

83.00

From the following recapitulation of the results of the liquidation
of insolvent national banks by decades it will be seen that the percentage paid to creditors during the several periods has not materially
varied, the average being about 75 cents on the dollar:
Years.
1863 to 1873
1873 to 1883
1883 to 1893
1893 to 1900
Aggregate

Number of
banks.

Percentage to
creditors.

Capital.

Liabilities.

Liabilities
paid.

34
55
161
143

18.211,100
11,762,800
24,577,000
20,926,520

$18,915,571
24,676,244
68,910,971
63,683,350

$14,772,530
19,204,181
51,855,635
46,364,324

78.10
77.82
75.25
72.80

393

65,477,420

176,186,136

132,197,170

75.03

The decrease in the percentage for the period from 1893 to 1900 is
due to the fact that a number of the banks which failed during that
time are only partially liquidated, and have assets on hand which will,
when collected, materially augment the payment to creditors, and
will probably increase them to the average of 75.25 per cent paid
during the decade ended December 31, 1893.
STATE BANKS, ETC.

Under the provisions of section 2 of the war-revenue law of 1898,
imposing a tax of $50 on banks with capital of $25,000 or less and $2
on each additional $1,000 in excess of $25,000 (the surplus fund to be
included in estimating the amount of capital), the Commissioner of
Internal Revenue collected taxes from 13,325 banks and bankers dur


XXXVIII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ing the year ended June 30, 1900. Deducting from the number of
banks which are subject to this tax the national banking associations
in operation, there remain 9,692 incorporated and private banks, exclusive of savings banks without capital, which are exempted from this
duty.
By law it is the duty of the Comptroller to obtain and publish in
his annual report to Congress information respecting the condition
of banks, banking institutions, and savings banks organized under
authority of the States and Territories, the returns to be obtained
from State officials having supervision thereof or from such other
authentic sources as may be available. While provision is made by a
majority of the States of the Union for supervision of incorporated
banks and banking institutions, but few require reports from private
banks and bankers or exercise any supervision thereover. It has been
the custom of the Bureau for a number of years past to classify the
returns from banks and banking institutions as follows: State banks
(banks of discount and deposit), loan and trust companies, mutual savings institutions (those without capital stock), stock savings banks, and
private banks. From a careful examination of the records it would
appear that about 90 per cent of the banks of the first two classes submit reports either to State authorities or directly to this office. Of
the mutual savings banks all report through official sources, except
those located in the States of Delaware and Maryland. There seems
to exist a disinclination on the part of private banks and bankers to
furnish the Bureau information with respect to their condition, and as
a result only about 20 to 25 per cent respond favorably to requests
for statements. The total returns indicate, however, that banks
reporting represent practically 83 per cent of the banking capital of
the country.
A serious defect in the returns received from official sources is found
in the lack of uniformity in date of submission of statements to the
various State officers. This, however, has been remedied, to a large
extent, as a result of correspondence during the past two years
between this office and officers charged with the supervision of State
banks, the attention of the latter having been called to the desirability
of uniformity in date and character of returns. In a number of States
in which laws exist fixing exact dates upon which banks shall report,
the suggestion of the Comptroller of the desirability of an amendment
has met with courteous consideration and with assurances that efforts
will be made to obtain legislation which will enable State officials to
secure reports from banks subject to their supervision at discretionary
dates. The reports submitted in 1899 and 1900, with very few exceptions, are for the close of the fiscal year ended with June 30.
Returns from commercial banks classed as State banks are from
official sources except from those located in Delaware, South Carolina,
Alabama, Arkansas, Tennessee, Idaho, Nevada, and Oregon.
The resources of the reporting State banks (4,369) have increased
during the past year from $1,636,032,662 to $1,759,835,802. The capital of these banks amounts to $237,004,340, surplus and undivided
profits $129,855,738, individual deposits $1,266,735,282. Consolidating returns from all banks incorporated under State authority and
private banks, it is observed that reports have been received with
respect to the condition of 6,650 banks and bankers, with resources



REPOET OF THE OOMPTEOLLER OF THE CURRENCY.

XXXIX

aggregating $5,841,658,820. The combined capital amounts to $403,192,214, surplus and profits $490,654,957, deposits $4,780,893,692.
Uniting the returns from the banks hereinbefore referred to with
those of the 3,732 national banks reporting on the same date, it is
found that information with respect to 10,382 banks has been received.
The combined loans aggregate $5,657,687,020; United States bonds,
$535,129,251; other stocks, bonds, and investments, $1,963,252,230;
cash in bank, $749,939,932, of which latter amount $369,925,866 consists of gold and gold certificates, $72,368,746 silver coin and silver
certificates, $206,685,063 legal tenders and United States certificates of
deposit. The balance of the cash held includes specie and other cash
not classified, in State and private banks. The total capital reported is
seen to be $1,024,728,675; surplus and profits, $882,202,792; deposits,
$7,331,553,249. In the following table the principal items of resources
and liabilities of banks other than national, from 1895 to 1900, inclusive, are shown:
Items.

1895.

1896.

1897.

1898.

1899.

Loans
$2,417,468,494 $2,279,515,283 $2,231,013,262 $2,480,874,360
Bonds
I 1,375,026,025 1,210,827,389 1,248,150,146 1,304,890,322
Cash
227,743,303 169,198,601 193,094,029 194,913,450
Capital
422,052,618 400,831,399 380,090,778 370,073,788
Surplus and undivided profits.
370,397,003 362,602,702 382,436,990 399,706,497
Deposits
! 3,185,245,810 3,276,710,916 3,324,254,807 3,664,797,296
Resources
! 4,138,990,529 4,200,124,955 4,258,677,065 4,631,328,357

1900.

5,013,449,827
&, 659,940,
1,527,595,160 1,723,830,351
210,884,047 220,667,109
368,746,648 403,192,214
418,798,087 490,654,957
4,246,500,852 4,780,893,692
5,196,177,381 5,841,658,820

The consolidated statement of all reporting banks on or about June
30,1900, is given herewith:
3,732 national
banks.
Loans
United States bonds
Other bonds
Cash
Capital
Surplus and profits .
Deposits
Total resources

6,650 other
banks.

$2,644,237,193 83,013,449,827
417,667,435
117,461,816
356,883,695 1, 606,368,535
529,272,823
220,667,109
621,536,461
403,192,214
391,547,835
490,654,957
2,550,659,557 4,780,893,692
4,944,165,624 5,841,658,820

10,382 banks.
$5,657,687,020
535,129,251
1,963,252,230
749,939,932
1,024,728,675
882,202,792
7,331,553,249
10,785,824,444

LOAN AND TEUST COMPANIES AND PRIVATE BANKS.

Returns from official and unofficial sources have been received relative to the condition of 290 loan and trust companies, with resources
aggregating $1,330,160,343. The capital stock of these companies
aggregates $126,930,845, surplus and undivided profits $148,389,339,
and individual deposits $1,028,232,407. In 1899 reports were received
from but 260 loan and trust companies, with resources aggregating
$1,071,525,994 and deposits of $835,499,064. This indicates an increase
during the year of $258,634,349 in total resources and $192,733,343 in
deposits.
The number of private banks reporting is 989, as against 756 in
1899, and is the largest number submitting statements since 1895. The
resources of these banks aggregate $126,789,041, capital $19,364,735,
and individual deposits $96,206,049.



XL

REPORT OF THE COMPTROLLER OF THE CURRENCY.
SAVINGS BANKS.

In the appendix to this report will be found tables showing in detail
the resources and liabilities of mutual and stock savings banks and the
aggregate of both classes in each State, taken from returns obtained at
the date nearest to the close of the fiscal year ended June 30, 1900.
The returns show the condition of the 1,002 savings banks, of which
652 are mutuals, the latter being without capital stock and conducted
by trustees for the benefit of depositors. The stock savings banks
number 350. Both depositors and stockholders share in the profits of
institutions of the latter character. With the exception of 1 bank
located in West Virginia, 4 in Ohio, 5 in Indiana, and 1 in Wisconsin
the mutual savings institutions are to be found in the New England
and Eastern States. The aggregate resources of banks of this class
amount to $2,336,460,239, represented in the main by loans aggregating $1,167,785,000 and stocks, bonds, etc., to the amount of $1,202,471,000. The deposits aggregate $2,134,471,130, the number of depositors, 5,370,109, and the average deposit $397.40. The total resources
of the stock savings banks is shown to amount to $288,431,395; their
savings deposits aggregate $250,299,719; the number of depositors,
527,982, and the average deposit $474.07. A consolidated statement
gives the aggregate resources of both classes of banks as $2,624,873,634;
savings deposits, $2,384,770,849; number of depositors, 5,898,091. The
average deposit is shown to be $404.33. In the table appearing on page
559 is shown the growth of savings banks as indicated by the number
of depositors, volume of deposits, and average account. In this table
are included returns from a number of commercial banks located in
Illinois which maintain savings departments, in consequence of which
there is an apparent discrepancy between the table and the abstract of
the savings-bank reports before referred to in this report. Comparing
the number of depositors and amount of deposits as shown by the returns
in 1900 with those of 1899, there is seen to have been an increase in
depositors of 419,265, and in deposits of $219,180,931. The average
deposit has increased from $392.13 to $401.10. The table in which the
foregoing returns appear contains similar information with respect to
the savings banks in operation in the country in the years 1820, 1825,
1830,1835,184p, 1845 to 1900. Conditions in the financial world which
have resulted in a reduction of the rates of interest on loans and dis
counts have had their effect on the earning capacity of savings institutions, as indicated by the rates of interest allowed on depositors' accounts.
Within recent years the average rate paid by sayings banks exceeded
4 per cent, whereas from information contained in the following table
it is seen to be the exception when 4 per cent is paid and with a number
of banks the rate varies from a minimum of 2i to 3 per cent, although
it would appear that the average rate lies between 3 and 3i per cent.
The table referred to is as follows:




REPORT OF THE COMPTROLLER OF THE CURRENCY.

XLI

AVEBAGE RATE OF INTEREST PAID DEPOSITORS IN SAVINGS BANKS.
State.

State.

Maine a
New Hampshire a
Vermont: a
8 paid
3 paid
20 paid
2 paid
7 paid
Massachusetts: a
144 paid
,...
2 paid
38 paid
1 paid
Rhode Island a
Connecticut: b
74 paid
9paid
3 paid
2 paid
New York b
New Jersey b
Pennsylvania: c
7 paid
lpaid
1 paid
Delaware c
a Official.

Rate.
Per cent.

District of Columbia: c
3 paid
lpaid
Maryland b
North Carolina c, 4 paid
South Carolina: c
4 paid
4 paid
lpaid
Floridac
Louisiana c
Texas c
Tennessee: c
2 paid
4paid
lpaid
Ohio: c
lpaid
6 paid
Indiana: a
lpaid
lpaid
3 paid
Minnesota a
Utah c
& Official, 1899.

3
2f
d4
4
3
2.90
3
3
4
4
3

3
5
4
3+
4
c Unofficial.

The industry and thrift of those engaged in gainful occupations are
most forcefully illustrated in the volume of the savings deposited with
building and loan associations and savings banks of the country. In
the May, 1894, number of a bulletin issued from the Department of
Labor appeared the results of a very painstaking investigation of the
laws and rules governing, methods of operating, condition of, and
statistics relative to, building and loan associations in the United States,
as shown by statements made in 1893. At that time there were in
operation 5,838 associations, the shareholders numbering 1,745,725,
the amount of stock paid up and dues paid in aggregating $403,778,844,
and the total assets of the associations $528,852,885.
From the report of the secretary of the United States League of
Building and Loan Associations made at the annual meeting held at
Indianapolis in July last it appears that there are at present (1900) in
operation 5,485 building and loan associations with a membership
(shareholders) of 1,512,685 and total assets of $581,866,170. The table
following contains the details of the returns by States.
It is evident from the limited returns at command that the percentage of apparent profit derived by patrons of building and loan associations is greater than the rates of interest allowed to depositors in
savings banks.
Having reference to the returns received by this office relative to
savings banks, it is observed that the total number of depositors in
such institutions and shareholders in building and loan associations
aggregate approximately 7,619,768 and that they have an average
credit of slightly less than $398. From the preliminary returns
which give the population of the country, including Hawaii, as
76,259,220, it appears that one person in every ten is interested as a
shareholder in a building and loan association or as a depositor in a
savings bank.



XLII

EEPORT OF THE COMPTROLLER OF THE CURRENCY.

The table hereinbefore referred to with respect to building and loan
associations is as follows:
Number Total memof assoTotal assets.
ciations. bership.

States.
Pennsylvania
Ohio
Illinois
New Jersey
New York
Indiana
Massachusetts
California
Missouri
Michigan
Iowa
Connecticut
Wisconsin
Kansas
Nebraska. .
Maine
Tennessee
Minnesota
New Hampshire
North Dakota

1,174
773
599
335
299
424
125
151
191
72
79
15
52
46
60
32
26
46
17
7

281,456
287,477
100 000
99,160
89,409
109 043
68,349
37 780
38,000
32,775
23,000
12,773
13,450
12,000
13,813
8,155
4 795
7,500
4,950
1,000

$112,120,436
102,409,699
54 104 602
46,100,000
37,253,725
31 435 587
26,744,647
20 285 454
13,835,817
10,159,562
5,723,799
3,774,526
3,582,922
2,880,764
3,332,781
2,975,716
2 874,097
2,848,179
1,921,927
364,130

Other States

4,523
962

1,244,885
267,800

484,728,370
97,137,800

5,485

1,512,685

581,866,170

Total

The inauguration of the school savings bank system took place in
France in 1834. The system was adopted in the United States in 1885
in the school of Long Island City, New York, by School Commissioner J. H. Thiry. In a report issued by Mr. Thiry in March last,
the occasion of the fifteenth anniversary of the introduction of the
system in the United States, he states that the school bank system is
in operation in 97 cities of 15 States. The number of registered pupils
in these schools is 179,630, of whom 52,694 are depositors. From the
beginning of the system to January 1, 1900, there was deposited in
these banks a total of $806,015.97; amount withdrawn, $525,209.77,
leaving the balance due $280,806.20, an average of about $5.34. The
general extension of this system throughout the country would unquestionably result in an early inculcation, in the minds of the young, of
knowledge of practical business methods and of the value of habits of
economy.
No late official statistics are at command with respect to foreign
savings banks in all countries in which institutions of that character
exist. A recent article by Mr. C. A. Conant, a leading economist,
presents information with respect to savings institutions in the United
Kingdom and Russia for 1900; Italy for 1899; France, Belgium, and
Prussia for 1898, and Austria-Hungary for 1896. The amount of
deposits, number of depositors, and average deposit in savings institutions in those countries are set forth in the following table:
Country.

Deposits.

Depositors.

Prussia
United Kingdom
France
Austria-Hungary
Russia
Belgium
Italy

$1,255,000,000
916,836,845
825,000,000
650,000,000
320,000,000
116,0 z,486
394,000,000

8,049,599
a 9,648,165
9,964,678
2,948,261
3,172,858
1,519,251
5,212,110

8155.91
95.03
82.79
220.47
100.85
76.36
75.59

Total

4,476,859,331

40,514,922

110.41




a Dec. 31,1899.

REPORT OF THE COMPTROLLER OF THE CURRENCY.

XLIII

BANKING POWER OF THE WORLD.

In banking power the United States leads all nations. In his Dictionary of Statistics, edition of 1898, Mr. M. G. Mulhall states that the
banking power of the world in 1890 amounted to 3,197,000,000 pounds
sterling. The accompanying table contains in a condensed form this
statement of the aggregate banking power of the United Kingdom,
Europe (exclusive of the United Kingdom), Australia, Canada, Cape
Colony, Argentina, Uruguay, and the United States for 1890, in which
is also incorporated similar information with respect to the joint stock
and private banks and savings banks of the United Kingdom for 1900
(shown by reports published in the London Economist and in the Statistical Abstract of the United Kingdom), the banks of the United
States for the same year from reports made to this bureau, to the latter being appended an estimate of the banking power of nonreporting
banks.
The increase in the banking power of Europe (exclusive of the
United Kingdom) and other foreign countries mentioned is assumed
to have been in the same proportion as in the United Kingdom, namely,
28.8 per cent. This percentage of increase has been used in calculating the present banking power of the countries relative to which no
official data are at command. Including the estimate of the banking
power of nonreporting banks it is observed that there has been an
increase in the United States during the past decade from 1,030,000,000
to 2,578,000,000 pounds sterling, or 150.3 percent.
In estimating the banking power Mr. Mulhall includes capital,
reserve (surplus profits) issues, deposits and accounts current (individual and bank deposits). The table referred to is as follows:
Year.
Countries.

1890 (in millions).

United Kingdom
Europe, all other
Australia
Canada
Cape Colony
Argentina
Uruguay
United States

£910
1,037

Total

Increase.

1900 (in millions).

Per cent.

3,197

£1,172
1,336

28.8
220

a 2,203
6 375

1,030

150.3
67.9

a From reports to the Comptroller of the Currency.
b Estimated for nonreporting banks.

In the following table is exhibited in detail the composition of the
banking power of the United States for each class of banks as shown
by reports to this office at the close of the year ended June 30, 1900:
Banks.

Capital.

Surplus, etc. Deposits, etc. Circulation.

National banks
$621,536,461 $391,547,835 $3,621,541,835 $265,356,112
State banks
237,004,340 129,855,738 1,371,654,702
Loan and trust companies . . . 126,930,845 148,389,339 1,031,932,536
Private banks
19,364,735
97,720,936
5,611,125
Total
Savings banks
Grand total




Total.
$4,899,982,243
1,738,514,780
1,307,252,720
122,696,796

1,004,836,381
19,892,294

675,404,037
206,793,755

6,122,850,009
2,390,180,116

265,356,112

8,068,446,539
2,616,871,165

1,024,728,675

882,202,792

8,513,030,125

265,356,112

10,685,317,704

XLIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.
FOREIGN BANKS.

There will be found in the appendix of this report tables exhibiting
in detail the resources and liabilities of the joint stock and private
banks of the United Kingdom and colonial and foreign banks with
London offices, as shown by statements published in December, 1899,
and June, 1900, appearing in the London Economist. There also
appears a table taken from the July, 1900, number of the Bulletin de
Statistique relative to specie, circulation, deposits and accounts current, and rates of discount for the first quarter of 1900, of the principal European banks of issue. Summaries of the reports of condition
of the chartered banks of the Dominion of Canada, of date September
30, and the Australian banks, of date June 30, are also given.
In conclusion, it is with pleasure that the Comptroller commends
the associates of his office for the faithful and efficient service rendered
the Government by them. For the many extra hours of labor rendered necessary by the increasing work of the Bureau, which additional
time many of them have willingly devoted to the public service without additional compensation, they deserve a full measure of public
gratitude. In connection with the recognition of the work of the entire
corps of employees, the Comptroller desires to publicly commend the
services of Mr. T. P. Kane, Deputy Comptroller; Messrs. A. D.
Lynch and George T. May, in charge of the work connected with
insolvent banks; Messrs. G. S. Anthony, W. J. Fowler, W. W. Eldridge, E. E. Schreiner, and T. O. Ebaugh, in charge of divisions; Mr.
W. D. Swan, bond clerk; Mr. J. Y. Paige, chief clerk, and Mr. B. F.
Blye, secretary.
CHARLES G. DAWES,

Comptroller of the Currency,
To the SPEAKER OF THE HOUSE OF REPRESENTATIVES.




APPENDIX.
TREASURY DEPARTMENT,
OFFICE OF THE COMPTROLLER OF THE CURRENCY,

Washington, D. C, August 10, 1900.
SIR: The national banking act makes it the duty of the Comptroller
of the Currency to make a statement in his annual report to Congress
as to the resources and liabilities of the banking systems of the United
States other than national, and it seems desirable that I incorporate,
if possible, in my next annual report information as to the existing
banking institutions of the Philippine Islands, including such financial
statements of their condition as it is possible to obtain from them. In
my last report to Congress I republished extracts from the report of
Mr. Edward W. Harden, special commissioner of the United States,
who was sent by the Treasury Department to make a report upon the
industrial financial condition of the Philippines.
Had I any appropriation available for the purpose I would not hesitate to make an independent investigation, but as I have not, the purpose of this letter is to ascertain whether or not it is possible for you
legally and consistently with the interests of your own Department to
detail some one of your present force in the Philippines, who would
be competent therefor, to obtain statements of the condition of all the
different banking institutions in the islands, and as complete a statement as possible of the laws under which such institutions have been
incorporated or now exercise their power. It would be especially
desirable in this connection to have an exact statement relative to any
privileges of currency issue which are possessed by any of these banks.
In view of the general interest manifested in the financial conditions
in the Philippines and the large and general circulation of the reports
of the Comptroller of the Currency among the business men of the
country, it would seem appropriate that suoh information gathered by
your representatives be used therein. It is understood, of course,
that any matter furnished will be printed as originating from your
Department. If it is possible for you in any way to extend to this
office such service and courtesy, I should be greatly obliged.
Respectfully,
CHARLES G. DAWES,

Comptroller.
Hon. ELIHU ROOT,

Secretary of War, Washington, D. C
Complying with the above request, the following cablegram was sent
by Lieut. Col. C. R. Edwards, U. S. A., chief of the insular division




XLV

XLVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

of the War Department, to the military governor of the Philippine
Islands on August 17, 1900:
' ' MACARTHUR, Manila:
"Comptroller Currency desires detailed statement September 1,
showing condition three Manila banks and Monte de Piedad, with
collateral information regarding their business. Get all the information you can concerning laws and regulations with regard to currency
issues three banks. Forward complete statement of assets and liabilities, with comparison business 1898, 1899. Secretary of War directs
must have the information not later than November 1. Comptroller's
letter, Government regulations, with suggestions for future examination banks, will be forwarded immediately.
"EDWARDS."
UNITED STATES MILITARY GOVERNMENT OF THE
PHILIPPINE ARCHIPELAGO AND ISLAND OF GUAM,
OFFICE OF THE TREASURER,

Manila, P. Z, September 17, 1900.
SIR: In compliance with instructions of the 18th of August last,
copy of which is appended, marked " A , " I have the honor to make
the following report on the Hongkong and Shanghai Bank, and the
Chartered Bank, Manila, collateral information, and currency.
A copy of the cablegram and of the order of the military governor
was sent to each bank, with a request for the statements and information called for.
*

*

*

*

-H-

-X-

-fc

Both banks received authority to submit the statements, and on the
14th and 15th they were placed in my hands. These statements accompany and are marked "Exhibit B " (Hongkong) and "Exhibit C"
(Chartered).
*
*
*
*
* .
*
*
A great need exists for a bank or agency that will supply money in
sufficient quantities to satisfy the demand, and not have silver at a
fictitious value all the time.
Mexican dollars are higher here than anywhere else in the world,
uniformly about 3 per cent uhigher than in Hongkong. The banks
have permission to import clean Mexican dollars," which term is
misleading. Mexican dollars in Hongkong are of two values, but
the distinction is not between "clean" and '"marked" Mexicans, but
between '' clean Mexicans No. 1 and No. 2," and all other Mexicans, clean
or chipped No. 1. No. 2 are heavier in weight and fineness than those
of more recent coinage, and command in Hongkong 2 per cent higher
price. All Mexicans circulate here for the same, hence the light
weight are imported and the heavy are exported.
Bank statements for August 31,1900, show nearly two million Mexican dollars on the way to Manila.
The privilege accorded the banks of importing clean Mexican dollars has placed the supply of money for these islands in their hands,
and, as above mentioned, there has been a scarcity all the time and
Mexicans have had a value much above the bullion in them. The new
light-weight Mexican dollar, the Hongkong dollar, and the British
dollar all have about the same amount of silver and circulate for the
3ame in Hongkong. Only the first is allowed to enter Manila.



REPORT OF THE COMPTROLLER OF THE CURRENCY. XLVII

There is no legal standard of value here. The practical standard is
the fictitious and changing value of the Mexican and Spanish-Filipino
dollar, based not only on bullion value, but a limited and insufficient
supply.
There is need of a bank or agency that will accept United States
Government checks at their face value; the usefulness of those checks
is much impaired by being discounted, and they are especially useful for
transferring funds where transportation is so uncertain and unreliable
for transporting coin. Neither bank will accept Government checks
at face value.
UNITED STATES CURRENCY.

So long as the United States dollar was worth more than two Mexicans at the banks they were accepted freely at that rate by the trade,
but so soon, early in July, as the banks placed the rate at 1.98, trouble commenced. It became impracticable to accept United States
currency at the custom-house and for other dues, because the rate
might change from the time of receipt to the time of deposit in the
Treasury, and hopeless confusion would result.
(United States currency and Mexican currency are kept as separate deposits with the banks.)
The governor-general then ordered that the rate for receiving
United States currency and Mexican should be 1 to 2. This corrected
the difficulties above mentioned, but did not correct the trouble commercially. Merchants who had not objected to accepting United
States currency at 2 to 1 when it was worth more, decidedly objected
to accepting it at that rate when the bank rate fell below, and in small
purchases and with the natives it was becoming discredited entirely—
many only allowing 1.80 for it. They did not understand why, if it
could drop to 1.98, it could not drop lower still, even to 1 for 1.
The military governor then authorized the banks to receive for the
Treasury all United States currency offered at 2 for 1, and this has
maintained the rate at 2 for all domestic purposes, and has been
rapidly accumulating a United States currency balance at a cost of 2
Mexicans for 1 United States dollar.
Should the entire Mexican balance be converted into United States
currency at one operation, the charge would be 2.03 Mexicans for 1
United States dollar. This rate was given by both banks when their
buying rate was 1.98.
As soon as the military governor had made the arrangements with
the banks to accept all United States currency at the 2 for 1 rate, they
declined to supply the pay department, quartermaster's department,
and the subsistence department with United States currency for New
York telegraphic transfers, as had been done before; certainly for paying balances due in New York and London, etc., the placing of funds
in New York free of cost is advantageous and must be in demand.
The departments are, I understand, bringing out their money instead
of depending on the banks; in all probability the banks will soon be
very willing to pay out United States currency for N. Y. T. T. dollar
for dollar.
THE CURRENCY OF THE ISLANDS.

Normally the exports have exceeded the imports by about 20 per
cent, but in spite of that fact the islands grew poorer and poorer. The
cash capital was cut in two when the basis became silver in place of gold.




XLVIII REPORT OF THE COMPTROLLER OF THE CURRENCY.

The true yearly cash balance between the Philippines and the rest
of the world has been against the islands. The balance of trade being
more than offset by the earnings of foreign capital and brains, which
earnings mostly went abroad, and by exploitation of others, between
150 and 200 millions of foreign capital is invested in the Philippines
and earns at least 10 per cent, a large part of which earnings goes
abroad.
The carrying trade, both foreign and domestic, is almost entirely by
foreign capital. The Philippines exchange raw material, which foreign capital and brains gather, prepare for market, transport, and
exchange for finished products.
Since American possession the imports through the customs-house
have amounted to 31 millions Mexican. To this add 5 millions estimated imports that have been brought in on transports, making a
total of 36 millions. The exports have been 25 millions, a difference of
11 millions to be paid by the islands.
During the same period (exclusive of islands funds) 30 millions
United States currency, or 60 millions Mexican, has been disbursed by
United States disbursing officers. These funds consisted of $8,500,000
gold, $4,500,000 United States currency, and the balance, $17,000,000,
United States currency, or $34,000,000 Mexican, of checks, drafts, and
telegraphic transfers on New York and San Francisco.
The 11 millions balance of trade was paid out of this last item, leaving 23 millions. Out of this was paid interest on foreign capital due
abroad, funds sent home by United States soldiers and others, and
purchases of Mexican silver in San Francisco and transportation
expenses.
The $8,500,000 gold has practically all disappeared, at least 3 millions
gold having been exported to purchase Mexicans, and the remainder
has been smuggled out or is hoarded.
Of the $4,500,000 United States currency a part has been exported,
but the greater part is probably in the islands; in the banks, in the
hands of disbursing officers, and in limited circulation.
The excess of importation of Mexican silver over exportation is
about 13 millions; this added to the 30 millions currency in the islands
when the Americans came, and the 4 millions United States currency,
equivalent to 8 millions Mexican, gives as the volume of money in circulation at the present time 30,13, and 8 = 51 millions; of this amount
about 15 millions in Spanish-Filipino pesos, medio pesos, pesetas, and
media pesetas, and 2i millions Spanish-Filipino paper money.
There is a great scarcity of all kinds of money, but especially of
fractional currency, and a much larger amount of paper money could
be used to advantage.
There is no standard of value, although silver is the basis. The
amount of pure metal in the Mexican dollars differs, and the SpanishFilipino peso has 8 per cent less pure metal in it than the light-weight
Mexican dollar. All circulate here for more then their bullion value
and no distinction is made between them.
THE EFFECTS ON TRADE OF THE MEXICAN-DOLLAR CURRENCY.

Export trade,—When silver was falling in value the Mexican dollar
was a source of great profit to the capitalistic producer at the expense
of the laborer. With the gold proceeds from the sale of his produce



REPORT OF THE COMPTROLLER

OF THE CURRENCY.

XLIX

he bought Mexicans, with which he paid his laborers, and as silver fell
he bought more and more silver dollars for a given amount of gold,
but paid out the same number of silver dollars as before. Wages are
slow to respond to depreciation of money.
The cost of exchange of gold into silver falls on the products, and
hence on the islands. It is a useless additional expense which, like the
expense due to antiquated machinery and methods, falls on the producer, and like them should be eliminated. It is an unnecessary
"lock" in the stream of commerce.
Middlemen may profit by a silver currency, but neither the original
producer nor the final consumer.
Imports.—The consumer must pay for the exchange of gold into
silver, and, in addition, for a certain percentage added to the price by
merchants to insure them against the fluctuation of silver. They pay
in gold, and must cover themselves against loss by selling at a greater
price than the true exchange value of the two metals. It is an unnecessary expense and risk incurred in getting goods from the producer
to the consumer, which does not better the middleman and is paid for
by the consumer.
If silver is to be the basis of currency, a standard dollar must be
provided and supplied in ample quantity. Fractional currency must
be supplied and a sound paper money provided for. In other words, a
new currency must be issued.
If, however, United States currency is to be the currency of the
islands existing contracts need not be disturbed; the fifteen millions,
more or less, of insular currency can be given a fixed value, viz, one
United States dollar equivalent to two insular pesos, and Mexican and
other foreign silver can be received at its bullion value.
The present situation, a double currency, has nothing to recommend
it; the two currencies will not pull together.
Inclosed are letters received from leading merchants and business
men and from heads of departments in reply to inquiries for collateral
information on the banks and banking and the currency, as called for
in cablegram.
Respectfully submitted.
C. F. PARKER,

First Lieutenant, Second TJ. S. Artillery.
The SECRETARY OF THE MILITARY GOVERNOR IN THE PHILIPPINES.

[Copy of letter from Mr. D. Bruce-Webster, agent of the Chartered Bank of India, Australia, and
China, addressed to Lieut. Col. C. R. Edwards, Chief of the Division of Customs and Insular Affairs,
War Department]

Washington, D. <?., October %h 1900.

On the subject of the currency of the
Philippine Islands you asked me for a few notes.
You are aware that the Spanish-Philippine gold coins have passed
out of use during recent years, owing to their intrinsic value outgrowing that of the silver coins, as the commercial value of the latter
declined in sympathy with the price of silver bullion. The coins
chiefly met with now are:
(a) Spanish Filipino silver peso.
CUR 1900, PT 1
iv

DEAR COLONEL EDWARDS:



L

REPORT OF THE COMPTROLLER OF THE CURRENCY.

(b) Mexican dollar.
c) Filipino silver half dollar (debased).
d) Filipino silver peseta of 20/100 dollar (debased).
e) Filipino silver half peseta of 10/100 dollar (debased).
f) Filipino copper cuartos and centavos.
(a) This class of coin has been exported in some quantities for surreptitious introduction into Spain.
(b) The Mexican dollar passes freely in all commercial transactions
and is practically the present standard of value.
(<?, d, e) Spanish Filipino subsidiary silver coins, and although from
10 to 20 per cent debased, pass current freely as value for 50, 20, and
10 cents Mexican, respectively.
(f) The copper coins are to a large extent dilapidated pieces of
metal, on many of which it is difficult to discern any image or superscription, and although intended to represent cuartos and centavos a
customer has in most cases to accept the ruling of the Chinese or
Filipino small dealers as to which they really are. The following were
the relative fixed values, viz: 20 cuartos = 1 real (or 12^ cents); 8 reals,
or 100 centavos = $1, peso, or duro.
Many foreign copper coins of neighboring countries are found in
circulation, and the copper 1-cent coin of the United States is now
largely used in Manila, and although a much smaller piece of metal,
passes freely as 2 cents local money, supplying as it does a deficiency
of small change.
The gold coins of the United States, the currency notes of the
United States, and the United States silver dollars are all met with in
the occupied places, and have generally passed current in the cities
since the American occupation at the rate of two local dollars for one
dollar of the United States.
I am of the opinion that while the American gold standard might not
take long to be found suitable for trade purposes on a large scale in
Manila, it would have a very disturbing effect generally throughout
the islands, and be regarded as a hardship by the provincial and wageearning classes until the conditions of trade alter, so as to permit the
payment of an equal number of American dollars for the local dollars
now earned. The change would be violent, and the conditions are not
ripe for it.
The establishment of the American gold standard as the only legal
currency of the islands would doubtless facilitate the adjustment of
Government departmental accounts between Manila and Washington,
and afford American merchants an easy basis of calculation; but these
points do not appear to me essential or so difficult to overcome as to
warrant a disturbance of trade conditions in the islands.
The question of expediency is, I presume, not one that will materially influence the United States Government in making a premature
change in the whole nature of the currency.
Assuming that a change from the present mixed currency is desirable, viewed from all points of interest, and that it should take a form
similar to existing conditions, I am of opinion that the free coinage
of silver at the Manila mint into a distinctly Philippine peso of the
same intrinsic value as the Mexican dollar would least disturb trade
conditions. The British dollar coined at the Bombay mint from silver
imported for that purpose and the extent of all requirements has ful


REPORT OF THE COMPTROLLER OF THE CURRENCY.

LI

filled its purpose in keeping up a supply of currency for the colonies
of the Straits Settlements and Hongkong, rendered necessary by the
discontinuance of coining the Japanese silver yen and the growing
scarcity of Mexican dollars. It is also finding its way into parts of
China, filling the gaps caused by the disappearance of the yen and the
scarcity of Mexican dollars. These coins are accepted by the Chinese
for their known intrinsic value, knowing that only for its intrinsic
worth is money a measure of values.
A Philippine peso of equal value would have the advantage of finding a market in China when its merits became known, and would be
a medium of exchange for the adjustment of trade balances when a
plethora of currency existed in the islands.
It appears to be considered desirable in official circles that the currency of the United States should be maintained at a high valuation,
measured in the local currency of the islands, and this could be maintained by the facilities afforded for free coinage of the local peso
whenever any scarcity arose which tended to reduce the value of the
American coin so measured.
Hitherto the trade of the islands has shown an excess of exports
over imports, which has been adjusted by the introduction of Mexican
and coinage of Spanish Filipino currency. I surmise the balance of
trade will for some time be in favor of the Philippines, though perhaps in the earlier stages, after a state of peace, the introduction of
machinery, etc., will minimize this, but, assuming my inference will
be realized, there will be less occasion for the export of the currency
and a more probable need of the import of silver for coinage purposes.
The latter process will be a more reliable source of adjustment than
the existing uncertainty of promptly obtaining supplies of Mexican
dollars.
Should it be decided to issue a coin of slightly less intrinsic value
than the Mexican, the export of such coin would be less probable, its
value as a commercial commodity being less, unless the Government
adopt a fixed ratio between such coin and United States currency, a
point upon the wisdom of which I do not feel called upon to express
an opinion.
The conversion of the Japanese currency from a silver to a gold
basis is worthy of consideration, and it might be feasible to issue
Philippine gold peso coins of half the value of the United States gold
coins, of five, ten, and twenty dollars. Such coin would, however, be
even more liable to export for melting purposes than the Japanese yen,
while the balance of trade is so much more in favor of the Philippines
than is the case with Japan.
Assuming that an estimate of 35,000,000 pesos is sufficient for the
trade of the Philippines now and insufficient for a largely increased
trade in prospect, the question would arise whether the United States
Government would be willing to see its gold withdrawn to supply the
deficiency of gold pesos caused by export.
In conclusion, I would say that in my opinion—
(1) The present standard of value (the equivalent of the Mexican
dollar) should be maintained by a silver peso, which would leave prices
undisturbed.
(2) By adopting the American standard, values would require to be
adjusted and instead of prices being nominally halved they would
practically be doubled.



LII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

(3) The silver peso should bear the imprint of the Government's
authority, and so carry with it a good political influence. '' Render to
Csesar the things that are Caesar's," etc.
(4) The proposition of such a coin appears to admit of the least
opposition from trade interests in the Philippines and from political
interests in the United States.
(5) As a charge of 1 per cent for mintage is made by the Bombay
mint, it is conceivable that the mint at Manila would be to some fair
extent self-supporting if a similar charge were made.
Much has been said and written against the action of the banks in
Manila in converting the gold coin brought to it into local Philippine
currency. It has not been understood, seemingly, that the legal tender in the islands has not been changed by the transfer of ownership,
and that, so far as the banks are concerned and others interested
in large money transactions, the United States money can not legally
be tendered by them in settlement of accounts, and must therefore be
treated as bullion and be liable to fluctuating local prices as such. For
this reason it is an error of sentiment to think that the local price of
United States currency indicates or affects its popularity, measured in
sentiment, but merely its utility, measured in the local standard of
value, the peso. The banks have been accused of unduly depressing
the price by those who have not apparently been familiar with the
governing principles; and it has been said that this was done about the
time and in anticipation of pay day. Those who may have entertained
that view must have done so without due thought, and I may say that
during my experience no instance of such a thing occurred in the
Chartered Bank. It should be obvious, also, that as money takes time
to circulate the greater portion remains in circulation and reaches the
banks in an even flow in sympathy with the tide of circulation. These
matters are, I know, fully understood by you and by other officials in
high places here, but I think it not unadvisable to touch upon them as
I have done.
Very respectfully,
G. BRUCE-WEBSTER.
P. S.—The present currency scheme in British India has not proved
altogether a success (Rs. 15 = <£1), as, although it has kept exchange
fairly steady, the gold has not been in demand as a circulating medium
in the interior, and the circulation practically remains the silver rupee.
J. B.-W.
[Memorandum for the Secretary of War. Currency and exchange in the Philippines, by A. M.
Townsend, of the Hongkong and Shanghai Banking Corporation.]

NEW YORK, October 31,1900.

The established currency in the Philippines for ail mercantile and
financial business s when the United States took possession was the
Mexican silver dollar. Silver being the currency of Hongkong,
China, and the Straits Settlements, it is the natural currency of the
Philippines, and is acceptable to the natives and foreign firms established there.
Since the American occupation a large amount of American gold
dollars have been introduced into the islands, chiefly for army purposes, and I understand that the military authorities have recently




REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIII

suggested that the American gold dollar be adopted as the regular
currency of the islands. I presume the considerations leading to this
suggestion are desired for the simplification of Government accounts,
desire to avoid complications of a fluctuating exchange, and an idea
that recent rise in the value of the Mexican dollar (due to a corresponding rise in silver and possibly accentuated by a shortage in the
local supply) was occasioned by a conspiracy among the bankers.
Regarding the above, I would say that banking operations are conducted on small margins. Anyone can test this by trying to do similar business on their own account. The Hongkong and Shanghai Bank
has always endeavored to accommodate and facilitate the business of
the United States officials, and its exchange charges are not arbitrary,
but follow values. I do not think that the adoption of the United
States gold dollar would do away with a fluctuating exchange or the
influence of the condition of the local supply. The English sovereign
fluctuates in value in America and Australia according to the laws of
demand and supply and according to the cost of transportation. The
same would apply to the Philippines, and I do not think, for these
reasons, that the parity of exchange could be maintained. I therefore
do not believe that the adoption of the gold standard would accomplish
the object sought. On the other hand, I believe it would be directly
opposed to the native and commercial interests of the islands, which I
understand are the chief concern of the United States Government.
In support of this I would quote from Secretary Root's speech of the
24th of October, in which he mentions the following instructions as
having been given to the present Philippine civil commissioners:
" In all forms of government and administrative provisions which
they are authorized to prescribe the commission should bear in mind
that the government that they are establishing is designed not for our
satisfaction or for the expression of our theoretical views, but for the
happiness, peace, and prosperity of the Philippine people, and the
measures adopted should be made to conform to their customs, their
habits, and even their prejudices to the fullest extent consistent with
the accomplishment of the indispensable requisites of just and effective
government."
Among Eastern nations Japan has recently adopted a gold standard,
but it is to be noted that it is on the 50-cent basis, and the result of
the change is not altogether satisfactory, the question of keeping up
the supply of gold causing some anxiety. The halting attempt also
in British India to establish a gold currency has not proved a success,
silver continuing the money of the country. Mexico, on the other
hand, shows increased prosperity and wealth and attributes the same
to the advantages of the silver currency. The wealth of the country
depends more on its products than on its cash balances, and the best
method of any country paying its debts, either of commerce or those
due on state account, is by its exports.
The chief object to be sought, therefore, is the improvement and
development of trade, and this object, in my opinion, will be best
attained by not disturbing the existing system of currency. I have
no doubt but that the ideal currency of the whole world is gold, but
that can only be looked for when the present supply of gold is very
largely increased. To attempt to spread the use of gold over a larger
territory than the supply justifies would lead to financial disturbances,
distrust, and disaster.



LIV

REPORT OF THE COMPTROLLER OF. THE CURRENCY.

It was only the increase in the supply of gold from the Transvaal
and the Yukon that enabled the late increase in gold-using- territory to
be established.
In the above remarks I have endeavored to show that it is expedient and conducive to the commercial interests of the Philippines that
the currency should continue on a silver basis. I will now refer to the
method by which it might be so continued.
The Mexican dollar has been the coin chiefly used in the Philippines
and in China. It weighs 415 to 418 grains and is 898 to 900 fine, and
costs one-half of 1 per cent for coinage.
It was used because it was the cheapest available coin.
Of late years, owing to the increasing wealth of Mexico, the export
of Mexican dollars having decreased the supply for the Orient has been
uncertain and insufficient and there was always the objection that the
coins were badly and unevenly made. These considerations led to the
introduction of the British dollar of the same professed weight and
fineness as the Mexican, viz, 416 grains weight and 900 fine, coined at
the Bombay mint, at a cost of 1 per cent. Although this coin is at a disadvantage as compared with the Mexican dollar, by reason of its higher
cost, yet, being obtainable as required and of reliable make, it has
quickly made its way and is now the chief coin used in the Straits,
Hongkong, and the south of China. Of late it has circulated also in
the north of China.
This coin would be suitable also for use in the Philippines, as it
would go alongside of the Mexican dollar at par; but, as the islands
are under the American flag, it would seem more suitable that this
Government should coin a special dollar, of similar weight and fineness
as the Mexican and British dollar, obtainable as required for currency
in the Philippines. Such a coinage could, of course, in no wise affect
the question of the gold standard in the United States, and would seem
a legitimate way of supporting the silver industry of the country.
Many years ago an American trade dollar was coined with a view of
supplying the Orient with American silver, but a mistake was made in
making it weigh 420 grains, 1 per cent more than the Mexican dollar.
It therefore cost 1 per cent more, besides its higher cost in coinage,
whereas it would only pass in China at the same value as the Mexican
dollar. It was, therefore, a failure, except for the melting pot. What
remained of this coinage had to be redeemed by the United States at a
considerable loss to the Government.
If it had been made to weigh 416 grains it would have replaced the
Mexican dollar, made the coinage of the British dollar unnecessary,
and by this time become the coin of the Orient.
This emphasizes a point that I would make, viz, that all currency
matters are most important and require delicate handling, and it is
therefore most desirable that no changes should be made in the Philippine currency without such changes being fully considered and
approved by the Government at Washington.
Regarding the Government accounts, if a silver currency was continued, I would suggest that they could be simplified to a large extent
by having a rate of exchange fixed to cover such disbursements as the
pay of officials and soldiers, and many other such matters that could be
made the subject of special contract. The payee might be given the
option of drawing the money either in gold dollars in America or in
silver dollars at the rate named in the Philippines. But I do not suppose that
 such a plan would cover all Government transactions.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

LV

[Letter of Gen. A. E. Bates, Payrnaster-General, U. S.-A., addressed to the Secretary of War, relative to
currency in the Philippines.]
W A R DEPARTMENT, PAYMASTER-GENERAL'S O F F I C E ,

Washington, October 17, 1900.
The

SECRETARY OF WAR.

SIR: The currency in the Philippines, which has been the subject of
so much correspondence between the authorities in the islands and the
War Department, is still a potent agency of disturbance, and it seems
necessary to do something, if possible, to change the condition so as to
enable us to transact our governmental business with that possession
with more exactitude and less expense to the United States, and at
the same time relieve the officers, soldiers, and employees of the
Government from the losses they are now subjected to on account of
the fluctuating value of the currency in use there.
Colonel Edwards, of the insular division of the War Department,
has prepared a very careful resume of the history of our busines experience in that dependency since our occupation of the islands in 1898,
including the correspondence on the subject, which is submitted herewith, giving a detailed account of the difficulties encountered and the
suggestions of officers and civilians for their removal. None of these
suggestions have seemed to meet the exigencies of the occasion, and
after a careful review of the statements I have the honor to submit the
following for your consideration:
It is apparent that the difficulty is natural and one which must
necessarily arise when a general government whose business is transacted on a stable gold basis extends its sovereignty to and attempts to
transact business with a possession whose currency has no legal status
and where the commercial business is transacted on the basis of the
fluctuating value of the Mexican dollar. The conditions would be
difficult if the Philippines were supplied with a legal silver currency,
for in that case we would have to deal with the fluctuations of the
world's value of silver; but in addition to the fluctuation in the value
of the Mexican dollar, owing to the changes in value of silver, there
arises another and greater fluctuation from the fact that there is a
limited amount of this currency and the demand for it changes with
the conditions in those countries where it is the means of exchange in
all commercial transactions—that is to say, the Mexican dollar has an
intrinsic value varying with the price of silver in the great silver
marts of the world, London and New York, and a commercial value
governed by the law of supply and demand.
This is illustrated in our experience during the past two years in
the Philippines, where at one time a United States gold dollar was
worth $2.11 Mexican, and at another time the same dollar was worth
but $1.96 Mexican, a fluctuation of 15 cents, whereas the extreme limit
of fluctuation in the value of silver would not have changed the value
of the Mexican dollar more than $0,058. The result is confusion.
When the Government contracts for the purchase of a commodity not
delivered on the day of contract the price it must pay is uncertain,
and when it pays its Army or its employees in United States currency,
as it does, neither officer, soldier, nor workman knows what is the
purchasing power of his money until he has converted it into
" Mexicans."
There are two ways of overcoming this difficulty: First, the United
States might make the currency of this country the legal currency of



LVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

the archipelago, and require all business in which the Government is
a party to be transacted on such basis; second, it might go into the
market and buy as much Mexican money (dollars) as was necessary
and use them. This latter is the method employed by private parties
doing business in such a country. The objection to the first plan is
that it would inaugurate at once an entire change in the methods of
business, and by changing to a gold basis without time for preparation
would throw the business of the islands into a state of the greatest
confusion, cause great and unnecessary loss, with the consequent want
and distress among the natives, thus creating a corresponding antagonism to the United States. The second plan is objectionable mainly
on account of the great expense to the Government and the power it
gives the banks to manipulate the price of Mexicans to their own
advantage.
It would seem necessary, therefore, that we should adopt some
measure which would alleviate the present situation and which at the
same time would prepare the way for the final adoption of the currency
of the United States as the legal currency of the islands. Various
suggestions have been made by officers and bankers to remove the
difficulty, and some of the suggestions are worthy of great consideration.
Major McClure suggests that the chief paymaster be furnished with
half a million Mexican dollars, bought in the United States or in the
cheapest market where they are to be had, which he should be authorized to exchange with the Army or Government employees for gold
currency at the cost price of the dollar. This would act as a relief for
the people as long as the purchase price of the Mexican was less than
the local price in Manila; but should the United States Government
make such a purchase and, having this amount of Mexican silver on
hand in Manila, there should be such a depreciation of value in the
Mexicans that they could be bought cheaper in the local market,
neither officer, soldier, nor employee would buy his silver from the
paymaster, but from the banks where he could obtain it more advantageously, and ultimately the Government would be obliged to dispose
of it at the market rate, and sustain whatever loss might come from
the transaction.
General Otis and the treasurer of the public funds (Major Kilbourne,
U. S. A.) report that u an attempt to make the revenues (island revenues)
payable in gold would result in financial disturbance, with widespread
indignation and resistance, for the native would not comprehend any
argument in its favor, but would look upon it as an additional tyrannical act of the United States." General Otis also objects to requiring
the treasurer to convert his collections into their equivalent value in
gold and to keep his accounts in this manner, the present method being
to receive and pay out all money on the basis of the Mexican dollar.
He adds: "A change from this method of procedure would result in such
grave consequences that unless future and positive instructions to make
such a change are given by the War Department the course hitherto
pursued will be continued for the present at least."
According to the testimony of the prominent merchants, bankers,
and others before the Philippine Commissioners in 1899 the consensus
of opinion was that the currency of the islands would better remain
silver on the basis of the Mexican dollar. I would invite the attention of the honorable Secretary, in this connection, to the fact that these



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LVII

gentlemen were all more or less expert in the value of currency, and
in their dealings with the uneducated natives would have a greater
advantage for profit than they would have if their dealings were based
on a less fluctuating means of exchange, and the value of their evidence and opinions should be judged accordingly.
The consul at Manila, in answer to a letter addressed him by the
honorable Secretary of State, suggests "that by making a gold dollar
the equal of two Philippine dollars a steady rate of exchange would be
accomplished." Of this it need only be said that the history of the
attempt to use two metals at a ratio fixed by law in the United States
has proved that he is mistaken, and the rate of exchange will always
be fixed by the relative value of the metals and the state of trade.
In should be borne in mind that the difficulties in connection with the
confused state of the currency in the Philippines arise in adjusting and
auditing the accounts of the collecting and disbursing officers in the
islands by the Auditor in Washington, where all accounts are required
to be stated in terms of United States currency. The insular government has no difficulty as long as they receive and pay out the money
of the islands at its nominal value. There is no difficulty with the
departments of the Army as long as, like the Pay Department, they
confine their transactions exclusively to the United States currency.
The trouble arises when it is necessary to use money for the purchase
of supplies or the payment of native labor, and with the individuals
who receive their pay in gold and are obliged to convert it into the
currency of the country.
The banks, taking advantage of their position, will not open accounts
with customers on a gold basis, so that those who have received gold
from the United States and wish to deposit it in a bank are obliged to
accept a credit with the bank expressed in silver at the current rate of
the day, and in turn, if they desire to draw gold from the bank, they
are obliged to buy it back at the rate then current, thus making every
depositor in a bank a speculator in the value of Mexicans to the extent
of their deposit. In case the deposit is public money, such as a company fund or money belonging to a hospital, or any fund for which
an officer may be responsible and which he has no convenience for
guarding or safe-keeping, the officer becomes personally responsible
for the loss, if such there be, while the money is lying in the bank for
safe-keeping. Could a depositor, by depositing gold in the bank, be
able to draw gold out again, he could control his losses and confine
them to the amount he was obliged to use for current expenses, and
whatever balence remained to him at any time he could withdraw in
gold without loss.
The points brought to your attention, and for which a remedy is
asked of the War Department, are, first, the establishment of a regular and invariable rate of exchange between United States currency
and Philippine money or Mexican dollars, which will enable disbursing officers in the Philippines to exchange their gold for currency of
the country and pay it out, stating their accounts in terms of United
States currency, without loss to themselves or the Government; second, to issue such orders or take such action as will enable the servants of the Government to exchange the gold they receive in pay for
its full equivalent in the currency of the country.
In my judgment the first requirement can not be fulfilled. The rate
of exchange will be fixed by local conditions and natural laws which the



LVIII

EEPOET OF THE COMPTROLLER* OF THE CURRENCY.

Government must meet as a private individual would be obliged to dot
At the present time a rate of exchange is fixed arbitrarily by the
commanding-general at the rate of two Mexican dollars for $1 in gold,
but this is operative only by the consent of the banks and will not last
should the scarcity of Mexican dollars become such that the banks can
not afford to take them at the arbitrarily fixed value. Where Mexican
dollars are necessary for the proper transaction of Government business,
they must be bought at the market rate and the loss charged to Government account. If, by a combination, the banks of Manila raised
the price of Mexicans to such a point that it would be economy to do
so, we should send to Hongkong or Shanghai and make the purchase
there if they can be obtained enough cheaper to pay for the expense.
All Government and insular accounts should be kept on a gold basis,
as prescribed in general order published by the War Department,
April 10, 1899.
Money received from customs taxes, postal revenues, etc., should
be received as at present and the daily receipts converted into its
equivalent in gold, and at some time in the future, the date of which
should be announced a long time in advance, all payments to the island
government should be in United States currency or its equivalent at
the time of payment.
As soon as authority can be had from Congress, the mint in Manila
should be opened for the free coinage of silver and a Philippine currency coined on the basis of a Philippine dollar of the weight and
fineness of a Mexican dollar, with a subsidiary coinage of half dollars,
quarters, dimes, and 5-cent pieces, together with copper pieces of
pennies and half pennies. This subsidiary coinage should be debased
enough to prevent it from being melted or sent out of the country.
Our own mints should also be permitted to coin similar dollars for
export to the Orient—not legal tender. This Philippine currency
should not be given a legal-tender value, but be allowed to circulate on
its intrinsic value, and as such be receivable for customs taxes, etc., as
Mexicans are at present. This would remove the possibility of a speculative corner in the currency of the islands, make the currency of the
country uniform, gratify the pride of the natives, and tend to cultivate
among them a national spirit, and ultimately a feeling of gratitude
toward this country.
In regard to the second difficulty, I am unable to see how the Department can do anything to relieve what is undoubtedly often a hardship
on the army employed there. The civil employees should be paid in
Mexicans, which should be bought for the purpose until the new coinage can be obtained.
In an interview with a representative of the Chartered Bank of
India, Australia, apd China, I have been informed that they had made
arrangements to open gold accounts with officers on account of public
funds more than a year ago, and in fact had opened such an account
with Major Devol on account of some quartermaster funds which he
had in his possession. On this account the Major made one deposit
and in due time checked out the amount deposited and the account
was closed. The objection the bank makes to opening such accounts
with individuals and others is that they can not employ gold so
deposited in their business, but are obliged to store and hold it until
it is withdrawn by the parties depositing. Thus the bank is obliged



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIX

to run a separate branch at considerable expense and trouble from
which they can derive no profit.
After some conversation and explanation of the embarrassment to
officers, especially of being obliged to retain in their personal possession the money necessary for their current expenses, he concluded that
if the different departments in making purchases by contract would
follow the example of the Subsistence Department and require the bids
to be specified in terms of United States currency, that it might give
them an opportunity to use the gold accumulating from the private
deposits with their customers, the contractors, and justify them in opening such accounts. He promised to communicate at once with the
directors in London and try to perfect the arrangement for this muchneeded banking facility.
Whether this scheme succeeds or not, I think there is no doubt that
the purchasing officers there will be relieved of some of their embarrassment if they are directed to state in all their advertisements that
payment will be made in United States currency or by drafts on the
assistant treasurer in New York, or its equivalent in Mexican on the
date of delivery. I am informed by this same gentleman, Mr. Bruce
Webster, that the system of free exchange on New York, introduced
by the Paymaster-General in September, 1899, was a great relief to
the banks, greatly facilitating their business transactions with this
country. He expressed great surprise to learn that for the past three
months, during his absence from Manila, all receipts from this source
has ceased.
Very respectfully,
A. E. BATES,
Paymaster-General, U. S. A.

HEADQUARTERS DIVISION OF THE PHILIPPINES,
OFFICE OF THE CHIEF COMMISSARY,

Manila, P. L, August ££, 1900.
SIB: Replying to your communication of August 23, I have to say
that I have found it impossible to do any business with the banks of
this city, owing to the fact that they were unwilling to handle United
States currency or Treasury checks in any form without charging a
discount.
I am unable to furnish you the data asked for in questions 1 to
5, as the records of this office in my possession only extend back
to January, 1900, since which time, however, the answer to these
questions would be "None."
Respectfully,
C. A. WOODRUFF,

Col. and Asst. Commissary- General of Subsistence, U. S. A.,
Chief Commissary.
First Lieut. C. F. PARKER,
Second IT. S. Artillery, Treasurer Philippine Archipelago,
Manila, P. I.




LX

REPORT OF THE COMPTROLLER OF THE CURRENCY.
HEADQUARTERS DIVISION OF THE PHILIPPINES,
OFFICE OF THE CHIEF PAYMASTER,

Manila, P. I., September 6, 1900.
SIR:

I am not familiar with the business methods of the banks in Manila.
The money received from them is in exchange for credits cabled them
in New York. After receiving the money from them I cable the
Paymaster-General, asking that the amount be credited the Manila
Bank with their correspondent in New York, giving name of bank.
The amount is then placed and I notified. No charge for exchange has
been made. I have received no money from the banks since July 1.
Respectfully,
A. S. TOWAR,

Lieut. Col., Deputy Paymaster-General, TJ. S. A.,
Chief Paymaster.
First Lieut. C. F. PARKER,
Second TJ. S. Artillery, Treasurer Philippine Archipelago,
Manila, P. I.

Statement showing amount of money brought into the Division of the Philippines by the Pay
Department, United States Army, from the occupancy of the islands by the United States
to September 1, 1900.

Gold
Silver
Currency

$8,330,500.00
938, 065. 00
3,670,000. 00

Total

12,938,565.00

Statement showing amount of money received from the banks at Manila during the same
period in exchange for credits given by cable in New York.

Gold
Silver
Currency
Total

:

$1,130,520.00
435, 807.00
1,038,673.00
2,605,000.00

The average monthly disbursements since the army has been at its present strength
in the islands is $1,379,900.
Amounts received from individuals in exchange for drafts on the assistant treasurers United States, New York and San Francisco, from occupancy of islands to
June 30, 1900, $2,982,050.43.
Amount received from this source for months of July and August, 1900, can not
yet be stated, but is estimated at $223,000.
Amount disbursed since occupancy of the islands to July 1,1900, is $20,490,083.49.




EEPOET OF THE COMPTROLLER OF THE CURRENCY,

LXI

UNITED STATES CUSTOM-HOUSE,

Manila, P. I.
Importation of currency by Hongkong and Shanghai Bank and Chartered Bank from
* August 13, 1898, to August 21, 1900. Port of Manila, P. I.
[Items marked a are gold or United States currency (Mexican value).]
Hongkong and Shanghai Bank.
Date.
1898.
Aug. 28
Aug. 31
Sept. 15
Nov. 11
Nov. 19
Nov. 26
Dec. 6
Dec. 8
Dec. 21

1899.

Total for 1899...
Jan. 2
Jan. 2
Jan. 8
Jan. 8
Jan. 16
Jan. 22
Jan. 24
Feb 19
Feb. 27
Mar. 19
Mar. 26
Apr. 2
Apr. 2
Apr.2
Apr. 5
Apr. 6

Valuation
in Mexican
currency.
$99,900
100,000
100,000
100,000
246,000
50,000
176,000
250,000
250,000

Total for 1898 ..
Jan. 16
Feb.4
Feb. 25
Mar. 2
Mar. 2
Mar. 28
June 2
June 7
June 15
June 24
June 26
July 5
Julys
July 21
July 26
July 31
Aug. 7
Aug. 14
Aug.14
Aug.24
Aug. 24
Aug.28
Sept.l
Sept.8
Sept.8
Sept.8
Sept. 11
Sept. 14
Sept. 18
Sept. 22
Sept. 27
Sept. 30
Oct. 11
Oct.9
Oct. 16
Dec. 11
Dec. 12

Chartered Bank.

1900.




1,371,900
75,000
4,000
8,000
10,640
2,000
25,000
9,000
17,500
25,000
40,870
50,000
2,000
50,000
300,000
58,000
150,000
8,000
50,000
100,000
100,000
50,000
100,000
100,000
2,000
7,000
158,000
60,000
100,000
76,000
112,000
15,000
a100,000
35,000
136,000
131,000
7,000
27,000
2,301,010
33,000
40,000
50,000
42,000
450,000
a 12,114
14,000
4,000
59,000
1,100
75,000
a 17,000
15,760
33,000
650,100
6,600

Date.

Aug. 3 1 .
Sept. 19.
Oct. 8 . . .
Oct. 10..
Oct. 21...
Nov. 1 1 .
Nov. 19.
Nov. 26.
Dec. 6 . .
Dec. 8 . .

$300,000
100,000
167,000
225,000
50,000
50,000
219,000
250,000
168,000
77,000

Total for 1898.
Feb. 13.

1899.

Sept. 8 .
Oct. 11.
Oct. 31.
Nov. 13
Nov. 22
Dec. 8 .

1,606,000
217,500

200,000
50,000
200,000
197,000
300,000
91,000

Total for 1899
Jan. 5..
Feb. 13.
Mar. 6 ..
Apr. 6..
Apr. 23.
May 12.

Valuation
in Mexican
currency.

1900.

1,255,500
20,000
17,000
200,000
50,000
258,800
170,000

LXII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Importation of currency by Hongkong and Shangliai Bank and Chartered Bank from
August 13, 1898, to August 21, 1900. Port of Manila, P. I.—Continued.
[Items marked a are gold or United States currency (Mexican value).]
Honkong and Shanghai Bank.
Date.

Apr. 17..
Apr. 23 ..
Apr. 27 ..
May 7 . . .
May 10 ..
May 14..
May 22..
May 24..
June 1 ..
June 1 1 .
June 1 5 .
June 2 1 .
June 2 3 .
June 22 .
June 2 5 .
July2...
July 2 . . .
July 16..
July 19..
July 2 1 . .
July 27..
July 30..
Aug. 4 . . .
Aug. 21..

Chartered Bank.

Valuation
in Mexican
currency

1900.

$89,600
136,000
191,000
156,000
83,000
72,000
84,500
161,246
32,650
57,800
111, 000
175, 000
a 18,494
170,000
25,000
380
100,000
25,000
224,617
52,000
86,800
3,448
31,800
270,000

Date.

June 15
June 22
June 23
July 21
July25
Aug. 7
Aug. 13

Valuation
in Mexican
currency.

1900.
$189,500
40,000
119,500
204,000
138,500
295,500
91,950

Total for 1900.

3,860,009

Total.

1,794,750

Grand total

7,532,919

Grand total.

4,656,250

UNITED STATES CUSTOM-HOUSE, MANILA, P. I.
Exportation of currency by Hongkong and Shanghai Bank and, Chartered Bank, from
August 13, 1898, to August 21, 1900, Manila, P. I.
Hongkong and Shanghai Bank.
Date.

Valuation
in Mexican
currency.

Sept. 6 (silver bars)
Sept.6
Oct.l
Dec. 12

$275,000
a 100,000
a 360,000
216,000

1899.
Jan. 11
Jan. 28
Feb.8
Feb.8
Feb.17
Mar. 1
Mar.9
Mar.25
Apr. 24
May9
May 24
June 21
June24
July 1
July 24
July 24
Aug. 12
Aug. 31
Aug. 31 (United States silver)
Aug.31
Sept.2
Sept. 14
Sept. 23

112,000
50,000
a6,000
a 67,000
a 60,000
a 60,900
a61,200
a 142,800
a 268,400
22,000
a80,000
40,000
6,000
a 80,000
a160,000
a80,000
a 120,000
a 90,000
a 100,000
a 100,000
• 8,500
a220,000
12,000




Chartered bank.
Date.

Valuation
in Mexican
currency.

Sept. 2 8 .
Nov. 5 . .
Nov. 5 ..
Dec. 24..
1899.
Jan. 28
Feb. 4
Feb. 15 (United States silver).
Mar. 29
April 12 (United States silver)
Mayl
June 24.
June 24 (Government notes) .
Aug. 3
Nov. 20
Dec. 15
Dec. 29
May 15 (gold bars)

a$188,000
a460,000
18,000
a 710,250

I

a 200,000
a100,000
a120,000
a100,000
a 72,000
al50,000
a300,000
a284,000
a200,000
a 160,000
6,257
all, 000
a 5,000

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LXIII

Exportation of currency by Hongkong and Shanghai Bank and Chartered Bank, from
August IS, 1898, to August 21, 1900, Manila, P. /.—Continued.
[Items marked a are gold or United States currency (Mexican value).]
Hongkong and Shanghai Bank.
Date.

Nov. 4.
Nov. 9
Nov 12
Nov. 25. .
Dec 5
Dec 20

1899.

1900.

Jan. 29
Feb. 23
Mar 24
Mar. 16
Apr 9
July 30
July 20
July 23
Aug. 3
Total

Chartered Bank.

Valuation
in Mexican
currency.

Valuation
in Mexican
currency.

Date.

$200,000
100,000
100,000
150,000
200,000
200,000
a 10,000
a 6,000
24,000
a 4,000
12,000
a30,000
200,000
100,000
200,000
4,434,700

Total

$3,089,757

NOTE.—The foregoing report represents importations and exportations of gold, American silver,
local or Mexican currency, and silver bars stated in their respective values in Mexican currency—i. e.,
the classification is given in all cases where the importation consisted of other than Mexican or local
currency, but the valuation of such importations is stated in Mexican currency at the rate of 2 for 1.

Respectfully submitted.
W. F. SPURGIN,

Lieutenant-Colonel, Sixteenth U. S. Infantry,
Collector of Customs of the Islands and of the Chief Port.
UNITED STATES CUSTOM-HOUSE,

Manila, P. I, August 30, 1900.

UNITED STATES CUSTOM-HOUSE,

Manila, P. I, August 29, 1900.
Imports and exports, Manila, P. I., exclusive of gold and silver coin.
Imports.

Exports.

Value.

Value.

$5,380,603
17,456,126
7,993,591

$777,904
3,364,090
2,345,287

$5,165,356
9,701,145
10,320,302

$167,683
374,807
280,008

30,830,320

Year 1898, from August 20
Year 1899
Year 1900, to July 1

Duty.

6,487,281 25,186,803

822,498

Duty.

All amounts in United States currency.
Respectfully submitted.
W. F. SPURGIN,

Lieutenant- Colonel Sixteenth ZT. S. Infantry,
Collector of Customs of the Islands and of the Chief Port.




LXIV

EEPOET OF THE COMPTKOLLEK OF THE CUEEENCY.
[Copy of letter from Macleod & Co.]
MANILA,

September 10, 1900.

SIR: We regret that we have been unable to reply to your favor of
the 27th ultimo until now, and we hope that you will pardon our nonacknowledgment of your letter.
Our knowledge of currency questions is simply that of merchants,
and the banks operating here must have a much fuller knowledge than
we of what is the best medium for currency. We can only reply to
your queries in very general terms, as follows:
Mexican currency.—This would be as suitable as any other silver
currency, if the supply of Mexican dollars were not affected by the
balance of trade in Mexico. As things are, these dollars often cost
much more than their intrinsic value.
The gain or loss of exchange of Mexican dollars falls naturally on
the inhabitants, native or foreign, of the islands. While bankers and
traders may suffer at times from fluctuations in value, it may be taken
that the produce of the islands pays ultimately for all losses on currency manipulations.
For payment of exports and imports the Mexican dollar forms the
chief medium. It is the real currency of the islands, as the amount
of Spanish-Philippine dollars, etc., and American coin in circulation
forms a very small proportion of the specie required to finance the
trade of the country.
Needs of currency.—Our idea is that whatever tends to insure a
permanency of value of currency, as compared with that of gold-using
countries, will best suit the needs of the islands. We think that the
present arbitrarily appointed idea of standard—2 local dollars to 1
United States dollar—might be taken as a basis, least liable to cause
dislocation of interests here, and that a currency similar to that of
Japan might be established; that is, a dollar of a value of 50 cents
United States currency might be issued. It should preferably be in
Government paper, similar to greenbacks, backed by an ample gold
reserve in the Treasury. We should suggest that gold coin be issued
in the smallest possible quantities, so as to prevent speculation in specie, and that notes from $1 up take the place of coin. Smaller currency could, of course, be made up with any suitable metal, giving
preference to the form of subsidiary coin now in use.
Weight and fineness of coin.—The weight and fineness of the coins
now in use are well known. If a new silver dollar were introduced
here, we should suggest making it exactly equal in value to the British dollar in use in the neighboring colonies. This would put a stop
to local exchange difficulties, even while it left the question of gold
exchange more or less in the present state.
Balance of trade.—This is steadily in favor of the islands, but its
effect here hitherto has been neutralized by the continual remitting of
money to Spain and elsewhere. With a strong administration, and
with public confidence in investments here, it may be supposed that
the proceeds of the produce of the islands will remain and be invested
here; and even that money will begin to come here from abroad for
investment instead of the reverse operation taking place. However,
we think that the value of exports will always exceed that of imports,
and that the tendency will always be toward increased currency wants.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LXV

Given confidence of outsiders in Philippine investments, very large
sums will be required to finance the new enterprises which will start
throughout the islands.
We are, sir, your obedient servants,
MACLEOD &

Co.

First Lieut. C. F. PARKER,
Treasurer of the Philippine Archipelago, Manila.

[Copy of letter from Smith, Bell & Co.]

MANILA, September ^, 1900.

SIR: We have now the pleasure of replying to your letter of the
27th ultimo. The currency of the islands consists of Mexican dollar
and Spanish subsidiary coins, 50, 20, and 10 cent pieces, also copper
coins (4=5 cents). Exports are paid for in Mexican dollars, and as
the value of these varies according to the fluctuations of silver the
lower the price of silver the more dollars the producer receives for all
produce sold to gold-standard countries. If exchange with these
countries rises, the producer gets fewer dollars for his produce.
In the same way with imports from gold-standard countries, the
lower the exchange the more dollars the consumer has to pay for his
purchases.
There is always a large demand for small change, and for some time
past there has been a scarcity; in some cases a premium has been
obtainable for 20-cent pieces and copper coins.
There is no standard value of money, the value of the Mexican dollar fluctuating with the exchange, or, in other words, with the value
of silver in London and New York. The balance of trade at present
is in favor of exports, but we are unable to say how it is used.
We consider that it would be most injurious to these islands to establish a gold currency here, as has been suggested in some quarters, for
the reason that the agriculturist would then only receive half the
number of dollars for his produce, while the natural tendency would
be for wages to increase and cost of his requirements to rise, until
what was previously purchasable with a silver dollar would sooner
or later require a gold dollar; that is to say, he would receive half for
his produce and pay double for labor, etc.
There was a great outcry in the newspapers about the depreciation
of the American gold dollar when the price of silver advanced at the
beginning of this month. There was no depreciation at all, but fewer
Mexican dollars and cents were obtainable for a given amount of gold
owing to the rise in price of silver. Changing American gold for
Mexican silver is subject to the same fluctuations as changing American gold for beef, the fluctuations occurring according to the relative
abundance or scarcity of these articles.
We are, sir, your obedient servants,
SMITH, BELL &

Lieut. C. F. PARKER,
Treasurer of the Philippine Archipelago, Manila.
CUR 1900, PT 1



v

Co.

LXVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.
AGENCY OF THE CANADIAN BANK OF COMMERCE,

New York, September 5, 1900.
In answer to your recent request that the agent of the
Chartered Bank of India, Australia, and China, Manila, furnish you
with a statement of assets and liabilities on the 1st September last, the
London office of the Chartered Bank have asked us to inform you that
it is impossible for them to submit a statement of the assets and liabilities of the Manila agency alone, as owing to the character of their
business, with many branches spread out all through the East, such a
statement would be misleading, and the only manner in which an estimate of their position can be arrived at is from an inspection of their
annual balance sheet, and further by reviewing the statements of the
bank which have been submitted to the shareholders of the bank
annually over a course of years.
in this connection, therefore, we beg to inclose statements of their
accounts as issued to their shareholders for five years past, and in
addition forward a copy of their charter and deed of settlement.
The capital of the bank is nearly all held in London where the head
and general management is established, and we have pleasure in stating
that the institution enjoys in London and in the Far East the very highest standing and repute, their shares, the par value of which are £20
paid up, are now selling at £38, and the last dividend was at the rate
of 10 per cent per annum.
With the inclosed documents and above information before you, we
trust you will have no difficulty in satisfying yourself with regard to
the soundness and financial strength of the bank's position. Should
you, however, desire any additional facts or figures to aid you in arriving at this conclusion, we beg to tender our services in securing same
for your consideration.
Respectfully, yours,
Pro ALEX. LAIRD and WM. GRAY, Agents,
DEAR SIR:

ALEX. LAIRD.
The SECRETARY OF WAR,

Washington, I). C.

[Chartered Bank of India, Australia, and China. Head office: Hatton Court, Threadneedle street,
London. Incorporated by royal charter. Paid-up capital, in 40,000 shares of £20 each, £800,000.
Reserve fund, £525,000. Court of directors, 1900-1901: Edward Fleet Alford, esq.; William Christian,
esq,. Sir Henry S. Cunningham, K. C. I. E.; Sir Alfred De^t, K. C. M. G.; Henry Neville Gladstone,
esq.; J. Howard Gwyther, esq.; Emile Levita, esq.; Jasper Young, esq. Managers: Wm. A. Main,
Caleb Lewis.]
DIRECTORS' REPORT.
[Presented at the|forty-sixth ordinary general meeting, April 18, 1900.]

The directors have now to submit to the shareholders the balance
sheet and profit and loss account of the bank for the year ended
December 31 last.
These show a net profit, after providing for bad and doubtful debts,
of £128,285 11s. 5d., inclusive of £14,212 6s. 5d. brought forward from
the previous year. The interim dividend at the rate of 10 per cent
per annum paid in October last absorbed £10,000, and the amount now
available is therefore £88,285 11s. 5d., out of which the directors propose to pay a final dividend at the rate of 10 per cent per annum, mak


REPORT OF THE COMPTROLLER OF THE CURRENCY. LXVII

ing 10 per cent for the whole year; to add £25,000 to the reserve fund,
which will then stand at £525,000; to write off premises account
£10,000, and to carry forward the balance of £13,285 11s. 5d.
The directors announce with regret that Mr. A. P. Cameron has
resigned his directorship in consequence of his retirement from business.
It is proposed that Mr. E. F. Alford, late of Messrs. Jardine,
Matheson & Co., China, be elected a director.
Sir Alfred Dent, K. C. M. G., and Mr. Jasper Young, the directors
who now retire by rotation, present themselves for reelection.
The auditors, Mr. Maurice Nelson Girdlestone and Mr. Magnus
Mowat, again tender their services.
liabilities and

December 31, 1899.

£
s.d.
To capital paid up in full
800,000 0 0
To reserve fund
500,000 0 0
To notes in circulation
699,843 16 3
To current accounts
4,069,234 18 6
To fixed deposits
4,718,834 10 2
To bills payable:
Drafts on demand
and at short
sight on head
office
and
branches
£991,117 9 7
Drafts on London
and f o r e i g n
bankers
1,020,781 0 11
2,011,898 10 6
To loans payable against securities 1,632,500 0 0
To due to agents and correspondents
938 19 2
To balances between head office
and branches, including exchange adjustments
61,623 16 0
To sundry liabilities
82,392 6 1
To profit and loss
88,285 11 5
Liability on bills of exchange rediscounted: £2,719,022 5s. 9d.,
of which up to this date
£2,563,255 6s. 5d. have run off.

£
s. d.
1,714,262 13 6
733,040 4 8

By cash in hand and at bankers,
Bybullion
By Government and other securities
By security against note issue...
By bills of exchange
By bills discounted and loans...
By due by agents and correspondents
By sundry assets
By bank premises and furniture
at the head office and branches

1,129,481 14 3
285,950 0 0
6,316,489 3 11
4,055,212 7 2
261,941 17 5
23,285 0 11
145,889 6 3

The bank in terms of its
amended charter of October 29,
1897, has deposited with the
Hongkong and Straits governments, and with the Crown
agents for the colonies, securities to the value of £285,950 as
special reserve for its note issue.

14,665,552 8 1

14,665,552
Profit and loss account for the year ended December 31, 1899.

Cr.

Dr.

To interim dividend for the half
year to June 30 last, at the rate
of 10 per cent per annum
Balance proposed to be dealt with
as follows:
Dividend at the
rate of 10 per cent
per annum for the
half year to date. £40,000 0 0
Reserve fund
25,000 0 0
Bank premises
10,000 0 0
Profit and loss, new
account
13,285 11 5

s.d.
40,000 0 0

,8,285 11 5
128,285 11

By balance at December 31,1898.
By gross profits for the
year, after providing for bad and
doubtful debts.... £257,175 8 8
Deduct:
Expenses of management and general charges at
head office and
branches
143,102 3 8
Net profits for the year

£
s.d.
14,212 6 5

114,073 5 0
128,285 11 5

LONDON, March 31, 1900.

Examined and found correct, according to the books, vouchers, and securities at the head office,
and to the certified returns made from the several branches.




MAUKICE N. GIKDLESTONE,
MAGNUS MOWAT,

Auditors.

LXVIII REPORT OF THE COMPTROLLER OF THE CURRENCY.
BANCO ESPANOL FILIPINO.

The Banco Espanol Filipino owes its origin to the royal decree of
the 6th of April, 1828, which ordered the establishment of a public
bank in these islands with funds of the Caja de Comunidad de Indias
(A) and shares from "obras pias," from other establishments, and
private individuals for the encouragement of agriculture and art in
these domains.
The superior governor of these islands per official letter dated 15th
of January, 1829, replied that the board of tariffs had unanimously
agreed to all measures tending toward the creation of the bank until
public opinion should be therefor prepared.
Notwithstanding the expected orders of the Madrid Government, its
laudable purposes could not be carried into execution in view of the
limited extension of commerce in this city, which as yet did not feel
the necessity of such a powerful and efficacious element for its development; but as time passed circumstances changed, the country entered
into a period of activity and improvements, and in the year 1851 the
utility of such an establishment &s the one referred to was appreciated.
On the 11th of September, 1851, the provisional board for governing the Banco Espanol Filipino de Ysabel 2nd was installed by order of
the governor, and the captain-general of these islands, then the Marquis
of Solana, as protector of said bank, and the offices were provisionally
established at the '' Intendencia" building, commencing transactions
thereafter.
Per royal decree of July 17, 1852, the creation of said bank was
approved, some modifications being introduced in its articles of association which were definitely approved by royal decree of October 17,
1854.
According to the articles of incorporation, the capital of the bank
wTas constituted by the sum of $400,000 on 2,000 shares of $200 each;
extended to $600,000 afterwards, per royal decree of June 5, 1864; to
$1,500,000 per royal decree of March 22,1876, and finally to $3,000,000
by virtue of royal decree dated February 7, 1896.
The object of the bank is the discounting of drafts and promissory
notes, collections, receiving deposits in account current, admitting voluntary and judicial deposits, granting loans to private individuals on
different objects, and dealing with the Government by negotiating
drafts or remittances as may be convenient.
By decree of the superior governor of September 10,1857, the bank
was authorized to extend its business to grant loans on farms, and by
royal decree of January 7, 1858, it was also permitted to draw drafts,
grant loans on drafts deposited, but forbidding all other exchange
operations outside of the two foregoing classes. The authority solicited
for advances on ships and cargoes was refused. By decree of the
governor-general dated June 10,1875, it was declared that among the
jewelry stated in the articles of incorporation those containing precious stones were to be comprised.
The first issue of notes (bills) made by the bank in accordance with
its articles consisted of 9,500 bills, divided into four series, viz, 500 of
series A, on white paper, of $200 each; 2,000 of series B, on pink
paper, of $50 each; 2,000 of series C, on blue paper, of $25 each, and
5,000 of series D, on yellow paper, of $10 each. These bills were placed



REPORT OF THE COMPTROLLER OF THE CUKBENCY.

LXIX

in circulation by virtue of a proclamation issued by the superior governor on February 16, 1855.
Per decree of the Governor-General of December 5, 1877, the resolution of the board of directors of the bank to make a new issue of
bills, increasing the present one to the sum of $200,000, bills payable
to bearer, was approved.
The term granted for the privilege to the bank was for twenty-five
years, which has been renewed for a similar term by decree of the
Governor-General, dated June 10, 1875, and royal decree of February
7, 1896.
The management and administration of the bank is carried on under
the inspection of the protector, who is the Governor-General, and of
a royal delegate, who is appointed by the Government (of Madrid) by
the general meeting of the shareholders and by a board of directors.
The Governor-General, as protector, has the high inspection of the
bank and appoints the directors, secretary, and one of the accountants;
approves accounts, authorizes the increase or reduction of capital,
resolves doubts and controversies, and makes use of all the authority
he is invested with. (B.)
Finally, per royal decree of February 7, 1896, the bank was authorized to increase its capital to $3,000,000—to issue bills for treble the
amount of paid-up capital, which are to be of $5, $10, $25, $50, and
$200—to establish a branch or agency at Iloilo, and to modify its articles of incorporation in accordance with the terms contained in said
royal decree and'the provisions of the one dated August 16,1878. (C.)
MANUEL YRIARTE.
MANILA, August <27, 1900.

NOTES BY TRANSLATOR.

(A) "Fondos de comunidad."—This name was given formerly to the funds collected from personal taxes, known as " tribute," which consisted of an overcharge on
said tribute of \ real (6i cents Mexican) for native Indians, and onestizos sangleyes
(half-caste of native and Chinese), and 2 reals (25 cents) for Chinamen. Such funds
were kept apart from the general funds of the treasury for special purposes and were
applied for one-third cost of construction or repairs of casas reales (houses of governors of the provinces), for aiding expenses of asylums and hospitals, and also to
assist taxpayers suffering from public calamities, or when some of them were unable
to pay the tribute.
(B) Directors and members of the board are not appointed by the governor-general. They are elected by ballot by the general meeting of shareholders, three
being elected or balloted for each post and classed first, second, and third, and then
submitted to the governor-general, who, as a rule, appoints the first named in the
proposal. The governor-general has only the faculty to reject the names designated
by the shareholders, in which case new balloting must take place.
(C) The bank also issued notes of $100 on dark-green paper. When the first
issue of notes or bills was made by the bank the currency in the islands was under
the gold standard, and the bills were made out with the words '' Payable in gold or
silver," the latter metal being then at par with gold. But when our gold began to
be exported in 1875 the Banco Espanol Filipino stamped on the back of every bill
it could get hold of " Payable in silver only." Under what authority it is not
known.
According to the articles of incorporation, the governor-general should appoint
one inspector, forming part of the board of directors, and who should intervene in
all transactions carried on by the bank.



LXX

KEPORT OF THE COMPTROLLER OF THE CURRENCY.
Comparative statement for the years 1898, 1899, and 1900.
ASSETS.
1898.

1900.
$81,556.61
2,092,576.32

178,456.25
3,072,000.71

2,732,843.63
1,682,214.77
2,986,883.64

1,965,684.50
830,629.50
3,629,337.95

2,372,886.21
488,390.00
1,127,149.93
261,372.81
1,172,018.42
8,559.25

8,599,784.88

8,580,833.58

$1,500,000.00
750,000.00
1,682,214.77
157,092.04
1,595,251.11
223,384.06
2,608,400.00
1,809,610.00
8,696.10
165,769.79

$1,500,000.00
750,000.00
830,629.50
144,704.57
986,490.62

$1,500,000.00
750,000.00
488,390.00
857,371.58
2,194,050.95
28,135.56
2,700,750.00

10, 500,417.87

Total resources.

$81,105.06
3,017,370.77

10,500,417.87

Banking house and fixtures
Bills receivable, loans, bonds
Due on current accounts, secured by hemp or other
crops
Safety deposits
Cash on hand
Sundry accounts
Due from banks and bankers
General expenses

8,599,784.88

LIABILITIES.
Capital stock
Reserve fund
Safety deposits
Deposits (time)
Current accounts
Accepted checks
Notes in circulation
Notes in vault
Dividends unpaid
Profit and loss account.
Total.

2,077,895.00
2,177,390.00
123,176.10
9,499.09

26,448.10
35,687.39
8,580,833.58

MONTE DE PIEDAD Y CAJA DE AHORlfoS.

The Monte de Piedad y Caja de Ahorros (savings bank) of Manila
was created by superior decree dated March 17, 1880, under the protectorate and immediate control of his excellency the governor-general
of these islands, in his capacity of vice regal patron.
The direction and administration of said establishment (institution)
is under the charge of a council (board) composed of seventeen members and one secretary, to which are appointed the admiral commanding the navy, the civil governor of Manila, as representative of the
interests of this province, one representative of the supreme court,
another of the council of the administration, another from the university, one from the army and another from the navy, one from the
religious orders, another from the Obras Pias, one from the cathedral,
one from the mercantile community, one from the landlords, another
from the press, and a lawyer.
Said establishment is ruled by its own by-laws, approved by a royal
decree dated July 8, 1880.
The object of the Monte de Piedad is to loan money on gold and
silver jewelry and precious stones, and that of the Caja de Ahorros
(savings bank) is to receive small sums and such savings as are made
by the working people, allowing an annual interest of 4 per cent, and
applying such moneys to the pledging transactions of the Monte de
Piedad.
The transactions of this establishment commenced on August 2,
1882, with a capital of $33,957.67, advanced from the funds of the Obras
Pias in accordance with the decree of the governor-general on August
17,1880, as a sequel to the one of the same date creating said institution.
The Monte de Piedad made such rapid progress that twenty-nine
months after starting it was found necessary to obtain a loan of $15,000



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LXXI

from the funds of u Tempor alidades," which was granted by the archbishop. This trifling assistance, however, was not sufficient to meet
the increasing calls on the Monte de Piedad and on the suggestion of
the board the governor-general by decree of February 1,1883, ordered
that out of the funds which existed in the treasury as proceeds of the
subscription got up for the relief of sufferers of the earthquakes of
1863 an advance of $80,000 be made to the Monte de Piedad on condition that said amount would have to be refunded at once should the
Madrid Government disapprove this resolution.
So large was the business of the Monte de Piedad that notwithstanding the assistance afforded and the increasing receipts of the savings
bank (Caja de Ahorros) that the board found it necessary to petition
the Madrid Government for a grant of $100,000 as a deposit out of the
funds of "comunidad," and the governor-general, in order to remedy
the critical condition of the Monte, ordered $25,000 to be advanced in
the firm belief that the grant prayed for would be afforded; but having been refused by the home Government, per royal decree of
February 5, 1885, on the ground that the funds of comunidad had an
application from which they could not be disturbed according to provisions of the law, further ordered on April 6,1890, that said advance
of $25,000 was to be immediately refunded.
Application was then made to the Banco Espanol Filipino for a loan
of $20,000, which was granted on a small rate of interest.
Now, then, with funds amounting to $173,959.67 nothing short of a
flattering result could be expected. In the report and balance sheet
published at the end of 1885, it was stated that 21^668 loan transactions had been made on objects of gold, silver, and precious stones, to
a value of $315,455.50, and there were 18,473 redemptions, aggregating
$289,861, yielding a profit of $12,154.55 as interest obtained on that
year.
The Caja de Ahorros (savings bank) got deposits to the extent of
$18,931.24.
The prosperity of the establishment had increased so much that in
the report of the board on the 30th of June, 1887, there appeared the
sum of $34,000 as surplus of profits which was proposed to be used in
the construction of a building for the Monte.
In the balance sheet made up on the 15th of August, 1888, the assets
amounted to $374,396.62, which shows the flourishing condition of the
establishment.
In August, 1899, the amount of deposits at the Caja de Ahorros
amounted so prodigiously as to reach the sum of $214,082.23. On the
other hand, applications for loans did not equal the ingress, thus causing $96,000 to remain idle, which created a serious conflict, as interest
had to be paid on deposits.
Several measures were contemplated in order to avoid this conflict,
such as limiting the amount of deposits, turning over all surplus cash
into the Government caja (cash) deposits of the treasury, or to increase
the scope of business of the Monte de Piedad by granting advances
to planters, loaning on farms and real property, or buying Government
bonds.
The governor-general, under date of November 23, 1889, authorized
the inversion into the caja deposits of the treasury of the sum of
$78,000, while it was determined what should be done to forward the
interests of said beneficent institution.



LXXII EEPOET OF THE COMPTROLLER OF THE CURRENCY.

Since the foundation of this establishment three embezzlements have
been committed by the cashiers, the last one, which occurred last year,
being the most important. But notwithstanding such reverses, its
condition is at present very prosperous. The business is now carried
on within a building constructed out of its own funds, assisted by
public subscriptions.
The amounts for which the Monte was indebted to the Caja de
Comunidad and Banco Espanol Filipino have been fully paid up, the
outstanding liabilities being only $15,000 due to the Archbishop of
Manila and the $80,000 out of the earthquake fund advanced by the
Government.
With regard to the above latter item, a claim having been filed by
the sufferers on account of the earthquakes of 1863, a royal decree,
under date of December 3, 1892, was issued ordering that all sums
constituting the total of the subscription above referred to be gathered
and distributed to such sufferers whose names were published in the
Gaceta de Manila of April 7, 1870, for which purpose they were all
called to appear.
The intendente general de hacienda, in view of said royal decree,
and under date of June 28,1893, claimed for the refund of the $80,000
from the Monte de Piedad, but Archbishop Nozaleda, as president of
the board, refused to comply on the ground that according to the
governor-general's decree of January 1, 1883, the Monte de Piedad
would only be compelled to refund said amount in case the Madrid
Government did not approve the advance made thereof, and further
pretending that it was not facilitated by the local government as an
advance returnable, but as a real grant to the Monte de Piedad.
This refusal was reported to the colonial minister under date of
July 12, 1893, but no resolution was taken in the premises up to the
time when the Spanish sovereignty ceased.
Mention should be made of the fact that soon after the intendente
claimed the refund of $80,000 from the Monte the board transferred
what money it possessed in the Caja deposits to the Banco Espanol
Filipino immediately to avoid seizure.
By all the foregoing it is plainly proved that although the Monte
de Piedad commenced transactions with funds from the Obras Pias,
these never amounted to more than one-sixth of the total net capital,
and that its prosperity is due to private capital.
MANUEL YRIARTE.
MANILA,

August SI, 1900.

Statement showing condition of the Monte de Piedad y Caja de Ahorros, as of August 31,
1900.
ASSETS.

Cash on hand
Loans on jewelry
Furniture and fixtures
Banking house
Spanish-Filipino treasury bonds, series B
Bills receivable
Suspense account
General expenses paid
Due from Spanish-Filipino Bank
Bank stock, Spanish-Filipino Bank
Profit and loss account



$4, 874. 53
516,156. 00
2,234. 76
138, 721. 36
245,548. 00
124,275.00
96, 780.17
13,357.06
2,571. 06
10, 881. 00
20, 761.47
1,176,160.41

REPORT OF THE COMPTROLLER OF THE CURRENCY. LXXII1
LIABILITIES.

Capital
Loan of Archbishop and Spanish treasury
Due depositors of savings bank
Due borrowers on sales of unredeemed pledges
Employees' bonds
Coupons collected for owners
Current accounts with interest
Judicial deposits
Deposits without interest
Interest
Bills payable
Due borrowers on sales of bonds
Deposits made to bid at auction sales

$231,360.95
95,000.00
740,314.29
32,985.29
4, 232. 00
185. 40
32, 327. 09
2,614. 27
963.00
35,857. 45
225. 00
61.17
34.50

,

1,176,160.41

The following is a comparative statement for the years 1898 and
1899:
L898.
Number.

Loans
Renewals
Redemptions
Unredeemed pledges sold
Savings bank deposits received.
Savings bank deposits returned

27 000
12 219
26 806
10 146
1 823
5, 350

Amount.

1899.

Number. Amount.

$630, 353.00
316, 560.00
567, 430.00
17, 644.00
451, 397.75
1,279,825. 61

23,482
7,053
19,930
6,029
1,964
1,720

$551,902.00
189,249.00
451,735.00
51,099.40
704,054.65
480,866.82

[Letter from Mr. J. H. Hollander, treasurer of Porto Rico.]

OFFICE OF THE TREASURER OF PORTO RICO,

San Juan, August 1?', 1900,
SIR: Your communication of July 30, relative to the banking institutions of Porto Rico, addressed to the governor of Porto Rico, has
been referred by the acting governor to me for reply.
In view of the fact that the information desired is not on file in this
office, and does not, apparently, exist in any collected form, some little
time will be needed before proper reply can be given. I shall at once
institute the necessary inquiries and transmit the results as soon as
obtained.
I am informed by Mr. E. L. Arnold, of the American Colonial
Bank, of San Juan, Porto Rico, that the institution which he represents has an application on file in Washington for incorporation as a
national bank, and that as soon as favorable resolution thereon is taken
his institution will proceed to such incorporation. I should be very
glad to be advised of the facts in the case, if you are cognizant of
them.
Very respectfully,
J. H. HOLLANDER,
Treasurer.
Hon. CHARLES G. DAWES,

Comptroller of the Currency, Washington, J). C




LXXIV REPORT OF THE COMPTROLLER OF THE CURRENCY.
[Letter from Mr. J. H. Hollander, treasurer of Porto Rico.]
OFFICE OF THE TREASURER OF PORTO RICO,

San Juan, September 15, 1900.
SIR: I have the honor-to transmit herewith a statement in regard to
the banking institutions of Porto Rico, as requested in your communication of July 30. With the limited resources of my office it has not
been possible to make this statement as exhaustive and as precise as I
should have liked, but it has seemed that your purpose would be better
subserved by sending a brief statement at once rather than delaying
until such time as details could be secured.
Under another cover I am sending certain printed statutes and by-laws
which constitute a manner of documentary appendix to the statement
herewith transmitted.
I am about to make a flying trip north, and I shall hope to have the
privilege of presenting my compliments to you in Washington within
the next ten days.
Very respectfully,
J. H. HOLLANDER,
Treasurer.
Hon. CHARLES G. DAWES,

Comptroller of the Currency,
Treasury Department, Washington, D. C.

BANKING INSTITUTIONS OF PORTO RICO.

The banking institutions of Porto Rico, using the term in the
strict sense and not including such establishments as do a banking
business in connection with other activities, are:
I. The Bank of Porto Rico (lately The Banco Espanol de Puerto Rico), with the
principal house in San Juan and a branch in Mayaguez.
II. The Credito y Ahorro Ponceno, in Ponce.
III. The Banco Territorial y Agricola, in San Juan.
IV. The Banco Popular, in San Juan.
V. The American Colonial Bank, in San Juan.
I.—THE BANK OF PORTO RICO.

The Banco Espanol de Puerto Rico, founded by a royal decree of the
Spanish monarch under date of May 5, 1888, is located in San Juan,
with a branch in Mayaguez, which conforms in all respects to the
by-laws under which the main institution exists. It was constituted
with a capital of 1,500,000 pesos, which may, however, be increased by
action of the shareholders to 2,000,000 pesos. Since the passage of the
joint resolution of the United States Congress, June 6,1900, this capital, in pesos, has been replaced by its equivalent in United States currency at the established rate of exchange. The new capital is, thus,
$900,000, with right of increase to $1,200,000. By terms of the royal
decree the bank is established for a period of twenty-five years from
the time of concession, May 5,1888—that is, until July 14,1913. The
stock of the company, held principally by Spanish citizens, is inscribed
in the register of the bank in the name of its respective owners, and is
transferable by indorsement or by an}^ other means recognized by law,
except such part as constitutes the guaranty for office. This portion



REPOKT OF THE COMPTROLLER OF THE CURRENCY.

LXXV

must be in the name of the owner. The bank engages in discounting
bills of exchange, promissory notes, and other negotiable instruments.
It buys and sells drafts, receives deposits, and makes loans.
The royal decree for the establishment of the bank conceded tr it
the sole privilege of issuing notes in Porto Rico, payable on sight, and
authorized the issue of such notes to three times the amount of the
realized capital in such denominations as might be determined by the
board of governors. Since the change in currency to that of the
United States a new series of notes has been issued of denominations
not less than $1 nor more than $200. The notes now bear stamped on
their face "Moneda Americana." A reserve equal to one-third part
of the amount of notes in circulation, as well as of other liabilities of
the bank, must be kept on hand, in the vaults of the bank, in current
coin or in bars of gold and silver. The other two-thirds are in securities of preferred guaranty, sure collection, and for a period not exceeding one hundred and twent}^ days. No part of this metallic reserve is,
however, segregated or preserved exclusively for the redemption of
the notes.
The government and administration of the institution are vested in
a governor, deputy governor, council of government, and general
meeting. The post of governor—at present vacant—can, by terms of
the bank's charter, be filled only by a nominee of the government of
Porto Rico. The governor of the bank acts as a permanent inspector.
The earnings, when not in excess of 8 per cent of the capital, are
distributed in entirety among the shareholders. If they exceed the 8
per cent fixed the surplus is devoted one-half to the reserve fund and
the other one-half to the stockholders. Should the earnings in any
year fall below 8 per cent, the deficit may be made up from the reserve
fund. When the reserve fund reaches an amount equal to 15 per cent
of the capital, the entire profit is distributed to the shareholders.
The by-laws of the bank require that a weekly report showing the
balances of the bank should be made and published in the Official
Gazette of Porto Rico. The last published statement, bearing date
of May 19, 1900, was as follows:
ASSETS.

Porto Riean currency.

Accionistas
Caja
Cartera, hasta 120 dias
Creditos garantizados
Prestamos hipotecarios
Corresponsales
Imprestitos
Sucursal en Mayaguez
Efectos en garantia y deposito
Cuentas varias
Mobilario
Casa del Banco
Cambios
Cambios de monedas
Moneda Americana negociada

-

$750, 000. 00
1,453,481.60
749, 508. 32
164, 061. 91
179,896. 26
5, 841. 40
76,796.71
379, 689.15
251,435. 87
154, 639. 20
5,461.10
49, 000. 00
2, 026. 89
454, 797.45
399,928.27

Expenses of all kinds.

De instalacion
De impresion de billetas
Generates
Generates extraordinarios



-

34,956.16
16,068.57
8,880. 32
2,256.98
4,938, 726.16

LXXVI KEPORT OF THE COMPTROLLER OF THE CURRENCY.
LIABILITIES.

Capital
Fondo de reserve
Cuentas corrientes
Depositos en effectivo..
Dividendos
Billetes emitidos
Depositos en papel
Cuentas yarias
Negociacion de moneda Americana
Gananciasy perdidas.

$1,500,000.00
112,500.00
875,079.68
101,936.01
7,068.82
1,594,040.00
251,435. 87
61,936. 83
..
399,928. 27
34,800.68
4,938,726.16

THE CREDITO Y AHORRO PONCENO

The Credito y Ahorro Ponceno, located in Ponce, was established in
1895 under no special charter, but in conformity with the laws relating
to corporations and in accord with the requirements of the commercial
code. Its capital is 200,000 pesos, divided into 2,000 shares of 100
pesos each. Of this capital, 75 per cent is paid up and the remaining
25 per cent is subject to call by direction of the board of directors.
The bank is organized for a period of twenty-five years.
In addition to a general banking business, the Credito y Ahorro
Ponceno is also an institution for deposits, similar to a savings bank,
but without special provisions and subject to the control of the board
of directors. As the Spanish Bank of Porto Rico possessed, under its
charter, the sole privilege of issuing bank notes in the island, no bank
notes were issued by the bank. " Notes to bearer," however, were and
still are issued as follows:
Due July 1,1900

25,000

Due
Due
Due
Due

25,000
25, 000
25,000
25,000

Oct. 1,1900
July 1,1901..
July 1,1902
Oct. 1,1902

These notes are for 5, 10, 20, 50, 100, and 200 pesos and are subject
to an interest of one-half per cent, as per coupons attached to same, collectible every six months. There is no special guaranty for the notes
other than the general guaranty of the capital of the bank, and the
same applies to all the other liabilities.
The last statement of the bank was published in the Official
Gazette under date of June 30, 1900, and is as follows:
ASSETS.

Letras por negociar
La Caja
Valores a la vista
Corresponsales
Hipoticas a largo plazo
Accionistas
Mobilario
Cartera
;
Casa de la Sociedad
Emision de obligaciones
Creditos garantizados
Obligaciones por cobrar
Libretas y cheques
Emision de instalacion
Gastos generales
Asuntos judiciales



$825.00
503,545. 68
23,647.91
51,890.97
117,220.93
50,000.00
4,976.37
36,567.00
18,689.48
2,487.45
106,601.50
213,050.83
116.16
2,173.12
6,758.24
836.02
1,139,386.66

EEPOET OF THE COMPTROLLER OF THE CURRENCY. LXXVII
LIABILITIES.

Cheques intervendidos
Cuentas corrientes
Depositos voluntaries
Obligaciones porrpagar
Impositiones a plazo
Depositos en garantia
Fianzas
Depositos judiciales
Fondo de reserva
Imposiciones sobre libretas
Capital
Interests por liquidar.
Ganancias y peridas
Cambios

fijo

_

$1,000.00
641, 440. 46
17, 977.00
118, 695. 00
19,590. 58
18, 500. 00
4, 000. 00
90.00
10,478. 20
52,321.96
200,000. 00
29, 754. 80
18, 784.27
6, 754.39
1,139, 386. 66

THE BANCO TERRITORIAL Y AGRICOLA.

The Banco Territorial y Agricola was founded in 1894 in San Juan
and has a capital at present of 1,440,000 pesos. Its principal operations are among agriculturists. Loans are made at 9 per cent on
land, in amounts not exceeding 40 per cent of the expert valuation of
the land, in the form of cedulas or mortgage bonds bearing coupons
which pay 7 per cent interest. These mortgage bonds are redeemed at
par by periodical drawings.
The last dividend was declared on June 30, 1900, and was 6 per
cent. A statement of the condition of the bank on June 30, 1900, was
published in the Official Gazette of Porto Rico of August 26, 1900, as
follows:
ASSETS.

Caja
Banco Espanol de Puerto Rico
Corresponsales
Cedulas hipoticarios
Cedulas en comision
Credito garantizados
Documento por cobrar
Prestamos agricolas
Hipotecas A plazo corto
Hipotecas a plazo largo
Casa de banco
Immueblo
Cuentas deudoras
Valores en garantia
Acciones'en deposito
Accionistas 2° serie
Prima de emision
Acciones por emitir
Negociacion de cedulas
Mobilario
Gastos de instalacion
Gastos de emision de cedulas

$107,138.93
304. 48
63, 730.17
104, 044. 00
112, 371. 00
9, 998. 92
3, 012. 00
53, 034.12
40, 878. 02
1,167, 903. 00
54, 000. 00
10, 265.19
79, 710. 56
375, 929. 32
40, 200. 00
35,190. 00
64, 295. 34
1, 033,080. 00
171. 00
1, 901. 37
2,140. 88
5,231.23
3, 364,529.53
LIABILITIES.

Capital
Acreedores por valores
Depositastes de acciones
Desembolsas
Intereses por veneer
Cuentas corrientes




1,440,000.00
375,929. 32
40, 200. 00
10, 260.00
492,432. 31
188,448.86

LXXVIII REPORT OF THE COMPTROLLER OF THE CURRENCY.
Cedulas emitidas
Ce* dulas especiales emitidas
Depositos
Obligaciones por pagar
Dividendos activos
Intereses de cedulas cupones
Perdidas y ganancias

$680, 640.50
38,400.00
66,966.14
3, 615.00
4,308.45
1,555. 59
21, 773. 36
3, 364, 529.53
THE BANCO POPULAR.

The Banco Popular is a small savings bank in San Juan, founded in
1894 with a capital of 5,000 pesos, for a period of ten years, under an
administration of president, directors, and general meeting.
The shares of the bank are 250 in number, and the earnings of the
institution are distributed in h manner similar to that of the Bank of
Porto Rico, except that the reserve fund can reach, but never exceed,
20 per cent of the capital. The dividends are declared on December
31 of each year, although a provisional dividend is made on June 30.
The last statement of the bank's transactions was published in the
Official Gazette of Porto Rico, July 31, 1900, as follows:
ASSETS.

Caja
Cartera
Accioiies en
Mobilario
Gastos de instalacion
Gastos de generates
Intereses por liquidar

$631.43
57,585.83
480. 00
148.11
607. 33*
775. 20
555. 41

fianza

60, 783. 31
LIABILITIES.

Capital
Deposito de acciones en
Gastos a liquidar
Fondo de reserva
Dividendo activo
Intereses a pagar
Cuentas deudores
Imponentes
Intereses

fianza

30, 000. 00
480. 00
163.12
395. 58
146. 80
492. 24
1,060. 38
24, 758. 90
3,286.29
60, 783.31

THE AMEKICAN COLONIAL BANK.

The American Colonial Bank is a State bank, incorporated under
the laws of the State of West Virginia on April 4, 1899. It has an
authorized capital of $1,000,000, of which $400,000 is paid up. It is a
bonded depository for the custody of United States and Porto Rican
funds.
The capital stock is held principally in the United States, although
a sufficient number of shareholders are residents of San Juan to fill
offices necessary for the transaction of business in this place.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

LXXLX

The weekly statement of the bank for the week ended September
15, 1900, is hereto attached, viz:
ASSETS.

Muller,Schall&Co., bankers
Due from other banks
Government bonds
Premium on Government bonds
Stocks
Collateral loans
Loans and discounts
Real estate loans
Expense account
Tax account
Furniture and
Cash account
Foreign bills

,

fixtures

$42,847.58
48, 605. 55
250,000.00
11,250. 00
7, 667. 36
318, 799. 72
72,928. 05
154,163.96
6,288. 86
330. 75
-11, 683.55
276,499. 21
1,115.19
1,202,179. 78

LIABILITIES.

Capital stock
Profit and loss
Interest account.
Amount due depositors
Certified checks

$400,000.00
9,979.27
18,180. 31
773,260. 20
760. 00
1,202,179. 78

EXECUTIVE CHAMBER, TERRITORY OF HAWAII,

Honolulu, September 11±, 1900.

SIR: In response to your letter of August 11, for the status of the
banking institutions of these islands and the banking laws of the
country, I have asked Mr. S. M. Damon, late minister of finance and
the president of Bishop &> Co., bankers, for such a statement. I
inclose the letter, which I trust satisfactorily covers the ground. I
also inclose a copy of the Hawaiian banking act and the part of the
license law in regard to the licensing of banks.
Very respectfully,
SANFORD B. DOLE.
Mr. CHARLES G. DAWES,

Comptroller, Treasury Department, Washington.

BANKING HOUSE OF BISHOP & Co.,

Honolulu, August 31,1900.
In reply to your verbal inquiry with reference to the
condition of the banks in this Territory and the banking facilities, I
have the honor to make the following brief statement covering the
ground in a somewhat desultory manner, not knowing the precise
information which you desire to obtain.
There are in existence in the Territory two incorporated banks, two
private banks, two branches or agencies of banks having their home
offices in foreign countries.
At the same time, though not strictly speaking banks in the ordinary use of the term, there are a number of plantation agencies which
carry on a banking business in connection with island interests.
DEAR SIR:




LXXX

REPORT OF THE COMPTROLLER OF THE CURRENCY.

The first-mentioned banks, incorporated in this country, are:
Bank of Hawaii (established 1898), with branch in Hilo:
Capital
Deposits on July 1,1900
First American Bank (established 1899), with branch in Hilo:
Capital
Deposits

$400,000.00
875,048.47
500,000.00
943,623.13

PKIVATE BANKS.

Bishop & co. (established 1858):
Capital
Deposits
Claus Speckels & co. (established 1884):
Capital
Deposits

$800,000.00
2,046,132.38
500,000.00

The only foreign bank having a direct branch here is the Yokohama
Specie Bank of Japan. It deals at present exclusively in exchange,
and has confined itself up to the present time in dealing with Japanese
subjects. None of the banks in the country are banks of issue. The
currency in use at the present time is United States coin, silver being
legal tender only to the amount of $10.
A very serious issue has been raised in the Territory since the transfer
of the customs and post-offices to the General Government at Washington, by the monthly export to San Francisco of all the receipts from
these offices and the internal revenue in gold. This exportation of
gold coin from the Territory, imported here by the banks for the needs
of the business at a large expense, is depriving this country, separated
from the mainland, of its much needed circulating medium, and at the
rate at which the shipments have been made during the last few months
it will not take very long to bring on a stringency here, a stringency
which is already beginning to be felt.
I have the honor to be your obedient servant,
S. M. DAMON.

Governor SANFORD B. DOLE,
Territory of Hawaii.
Report of the condition of the four incorporated and private banks of the Territory of Hawaii
on June SO, 1900.
Resources.

Amount.

Loans on real estate
$78,075
Loans on collateral security other than
617,376
real estate
Loans and discounts, all other
2,111,439
159,070
Overdrafts
6,412
United States bonds
13,374
State, county, and municipal bonds...
69,400
Other stocks, bonds, and securities
224,582
Due from other banks and bankers
13,984
Real estate, furniture, and fixtures—
32,202
Checks and other cash items
Cash on hand, viz:
Gold coin
$811,684
Gold certificates, Hawaiian
7,873
Silvercoin
73,055
Hawaiian
government
notes
2,685
Cash not classified
314,293
Total cash on hand
All other resources
Total resources




Liabilities.

Amount.

Capital stock
Surplus fund
Other undivided profits (less expenses
and taxes paid)
Deposits subject to check. $2,715,904
Deposits, savings
55,270
Special deposit account,
Hawaiian postal savingsbank deposits, account
United States Government
325,000

81,240,973
20,000

Total deposits
Due to other banks and bankers
All other liabilities

105,821

3,096,174
320,124
12,789

1,209,590
260,377
4,795,881

Total liabilities.

4,795,881

APPENDIX.

CUR

1900,

PT




1—1

DIGEST OF NATIONAL BANK DECISIONS.

Page.
ABATEMENT
ACCOMMODATION FAPER
ACTIONS
AGENT OF SHAREHOLDERS

15
15
17
20

AprEAL
ASSESSMENT
ATTACHMENT
BONDS OF OFFICERS
BOOKS, INSPECTION OF
BRANCH BANKS
BROKER
CAPITAL STOCK
CASHIER
CERTIFICATE OF DEPOSIT
CERTIFICATION OF CHECKS
CHECKS
CIRCULATION
COLLATERAL SECURITIES
COLLECTIONS
CONSTITUTIONALITY
CONSTRUCTION OF LAW
CONVERSION
COSTS
CRIMINAL LAW
DEPOSITS
DEPUTY COMPTROLLER
DIRECTORS
DISTRICT ATTORNEY
DIVIDENDS
ESTOPPEL
EVIDENCE
EXECUTION
EXPIRATION
EXTENSION
FALSE ENTRIES
FORFEITURE OF CHARTER
FORGERIES
GUARANTY
INCREASE OF CAPITAL STOCK
INDICTMENT
INJUNCTION




*

INSOLVENT BANKS
INTEREST
JURISDICTION
LEASE
21 LIABILITY OF BANK
22
LIEN
38 LIMITATION OF ACTIONS
41 LIQUIDATION .'.
44
LOANS
45 MANDAMUS
45 MARRIED WOMEN
45 MORTGAGE
49
NEGOTIABLE PAPER
49 NOTARY PUBLIC
50 NOTICE
53 OATH OF DIRECTOR
58 OFFICERS
58 | OFFSET
62 ! PASS BOOK
70
PLACE OF BUSINESS
70
POST NOTES
71 POWERS OF BANK
72
PRACTICE
73
PREFERENCE
84 PREFERRED CLAIMS
90 PRESIDENT
90 REAL ESTATE
90 RECEIVER
90 REDUCTION OF CAPITAL STOCK . . .
91 REPORT OF CONDITION
95
RESIDENCE
99
RESTRAINING ACTS
100
SAVINGS BANKS
100 SHAREHOLDERS
100 SPECIAL DEPOSITS
103 TAXATION
103 TRANSFER OF STOCK
106 ULTRA VIRES
109 USURY
109
VICE-PRESIDENT
Ill
VOTING

2

112
119
121
131
132
136
138
138
139
143
143
143
145
153
153
157
157
170
176
176
176
176
179
181
188
193
193
195
201
201
202
202
202
202
206
210
230
236
239
249
249

TABLE OF CASES.
A.
Page.
Aberdeen, F i r s t National B a n k of, v.
A n d r e w s et al
71,178,194
Aberdeen, F i r s t National B a n k of, v. Chehalis County e t al
213,228
Adair, T a x Collector, v. Robinson et a l . . 216
Adams v. Daunis
125
Adams v. Mayor, etc., of Nashville
216
Adams v. Spokane D r u g Company
173
i E t n a National Bank v. T h e Fourth. National Bank
84
A g n e w v. United States
79
Alabama I r o n and Railway Company v.
Austin
99,130
Alabama National Bank v. Halsey
148
Albany, National A l b a n y Exchange Bank
of, v!Hills et al
224, 226
Albany City National B a n k v. Malier, Receiver, etc
224
Albany, Supervisors of, v. Stanley
70
Alberger v. National B a n k of Commerce..
185
A l b u q u e r q u e .National Bank v. Perea
210, 214
Aldrich et al., I n r e
224
Aldrich v. Chemical National Bank
136
Aldrich v. Campbell
37
Aldrich v. McClaine
37,138
Aldrich v. Skinner
37,138
Aldrich v. Yates
35
A Hen v. F i r s t N ational Bank of Xenia
140
Allentown, F i r s t National B a n k of, v.
Hoch
45,237
Allentown, F i r s t National B a n k of, v.
Rex
209
Allentown National Bank v. Trexler
151
Alves v. Henderson National Bank
241
American Exchange National Bank v.
Crooks
156
American Exchange National Bank v.
Dugan
356
American Exchange National Bank v.
Oregon P o t t e r y Company
169
American National B a n k v. Love
107
American National Bank v. National Wall
P a p e r Company
94
American National Bank v. Williams
95,121
American Surety Company v. Paul y
43
Anderson v. Alton National B a n k .
69
Anderson v. F i r s t National Bank
237
Anderson v. Gill
62
Anderson v. Kissam
159
Anderson v. Line
26
Anderson v. Pacific Bank
184
Anderson v. PhiladelphiaWarehouseCompany
28, 203
A n d r e w s v. Varrell
170
Anheuser-Busch Brewing Association v.
Clayton
65
Anniston National Bank v. School Committee of town of Durham
156
Armour P a c k i n g Company v. Davis
69
A r m s t r o n g v. American E x c h a n g e National Bank
113
A r m s t r o n g v. B a n k
116
A r m s t r o n g v. National B a n k of Boyertown
67
A r m s t r o n g s . Chemical National Bank . . .
60,
136,142,183
Armstrong v. Ettlesohn
201
Armstrong, I n re
63,115,183
A r m s t r o n g v. Second National B a n k of
Springfield
45,176,177
Armstrong v. Stanage
46,112,197
A r m s t r o n g v. T r a u t m a n et al
129
Armstrong v. W a r n e r
174
Armstrong v. Wood
46,197
A r n a u v. F i r s t National Bank
22




A r n o t v. Bingham
70
Aspinwall v. Butler
47,96
Atchison, E x c h a n g e National Bank of, v.
Washita Cattle Company
126
A t l a n t a National Bank v. Davis
68
Atlantic National Bank v. H a r r i s
72
Atlas National Bank v. Holm e t al
149
A tlas National Bank v. Savery
122
Auburn, National Bank of, v. Lewis
241
A u b u r n Savings Bank v. H a y e s
114,183
A u s t i n v. T h e Aldermen
222
A u t e n v. TJ. S. National Bank of New
York
167
B.
Babcock v. Wolf
180, 238
Bacon v. United States
83
Bain et al. v. P e t e r s
114
Bailey v. Mosher
157,165
B a i l e y s . Sawyer
24,28
Bailey v. Tillinghast
130, 205
Baker v. A u l t et al
112
Baker v. Beach e t al
33
Baker v. Old National Bank of Providence, .11.1., et al
34
Baker v. Reeves et al
34
Baker v. T e x a r k a n a National Bank et al.
21
Balbach et al. v. F r e l i n g h u y s e n . . . 65, 85,170,189
B a l c h s . Wilson
172
Baldwin v. Can
field
193
Baldwin v. State National Bank of Minneapolis
145
Ballinger National B a n k v. Bryan
144
Baltimore, Central National Bank of, v.
Connecticut Mutual Life Insurance Company
139
Baltimore, National E x c h a n g e Bank of,
v. P e t e r s et al
163
Baltimore, T h i r d National B a n k of, v.
Boyd
132,135
Ban go r, M e r c h a n t s ' National B a n k of, v.
Grlendon
95
Bank v. Armstrong
134,178,198,199
B a n k of Bethel v. Pahquioque Bank
17,
18,99,113,121,196
Bank v. Kennedy
195
Bank v. Lanier
136,140, 231, 236
B a n k v. Latimer
185
Bank v. M c l n t y r e
71
B a n k v. Z e n t .
209
B a n k of t h e Metropolis v. F i r s t National
Bank of J e r s e y City
154
Bank of Redemption v. Boston
210, 212, 214
Barbour v. National E x c h a n g e Bank
175
Barhorst et u x . v. A r m s t r o n g et al
112
Barnes v. Swift
129
Barnet v. Muncie National B a n k
239, 240
Bartlett v. Woodbine Savings Bank
156
B a s h a w s . U n i t e d States
90
Batchelor v. United States
74
Bates, I n re
185
Bates v. Paddock
59
Bates v. Salt Springs N a t i o n a l Bank
137
Bath Savings I n s t i t u t i o n v. Sagadahoc
National Bank
91,236
Bay or v. American T r u s t and Savings
Bank
116
Beal v. E s s e x Savings Bank
203
Beal v. National E x c h a n g e Bank of Dallas
67
Beal v. City of Somerville
189
Beard v. Independent District of Pella . .
193
Beardsley v. Webber
146
Beaver v. Beaver.
88
Becker's I n v e s t m e n t Agency v. Rea
140
Beckham v. Shackelford . . . . "
198

3

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
Bell v. Hanover National Bank
60
Bellville, People's Bank of, v. Manufact u r e r s ' National Bank of Chicago
107
Benton v. German-American National
Bank
154
Benton v. Holmes
170
Berney National Bank v. Guyon
185
Bickford v. F i r s t National B a n k of Chicago
51,53
Bird's Executors v. Cockrem
200
Birmingham National Bank v. Bradley
19,57,97,124
Birmingham National Bank v. Mayer . . .
115
Bissell v. T h e F i r s t National Bank of
Franklin
158
Blackmore-y. Guarantee Company of North
America et al
42
Blackmore v. Woodward et al
29
Blaine, F i r s t National Bank of, v. B l a k e . . 156,157
Blair v. F i r s t National Bank of Mansfield.
157
Blanchard v. Commercial Bank of Tacoma. 96,199
Bletz v. Columbia National Bank
122
Bloch v. Creditors
57
Board of County Commissioners of Rice
County v. Citizens' National B a n k of
Faribault
219
Board of Commissioners of Montgomery
County w.Elston
58,211
Bobs v. People's National B a n k
240
Boone County National Bank v. L a t i m e r .
184
Booth et al. v. Welles
190
Boston, Central National Bank of, v. Hazard et al
197
Boston, City of, v. Beal
198,217
Boston National Bank v. Jose
145
Boston National Bank v. City of Seattle..
217
Bos worth v. Jacksonville National B a n k .
134
Bowdell v. Farmers and Merchants' National B a n k of Baltimore
25, 202, 231
Bowden v. Johnson
24,96, 202, 231
Bowden v. Santos
231
Bowen v. Needles National B a n k . . . 17, 52,109,181
Bowman et al. v. Clark et al
66
Bowman v. F i r s t National Bank
191
Boyer v. Boyer
212, 214, 215
Boy kin v. Bank of Fay ette ville
68
Boynoll v. State
211
Brayden's Estate, I n re
48
Bradley v. The People
211
Brahan v. F i r s t National Bank
150
Branch v. The United States
69, 87
Branch v. United States National B a n k . .
87
Bressler v. Wayne County
225
Breyfogle et al. v. Walsh et al
Ill
Briggs v. Spaulding
161,165,196
Brinckerhoff v. Bostwick
17,123, 164
Britton v. Evansville National Bank
213
Brodrickv. Brown
29
Brooke v. Tradesmen's National Bank
55
Brown v. Carbonate B a n k of Leadville . . .
187
Brown v. Ellis
33, 38, 95
Brown v. Farmers and Merchants' National Bank
92,168
Brown v. Finn
202
Brown v. F i r s t National Bank
93,112
Brown v. French
94, 200, 227
Brown v. Marion National Bank
248
Brown v. Smith
130
Brown v. The Second National Bank of
Erie
245
Brown v. Tillinghast
49
Bruner v. F i r s t National Bank
119
Buchanan et al. v. Drovers' National Bank
of Chicago
240
Buchanan County, F i r s t National Bank
of, v. Deuel County
124,143
Buffalo County National Bank v. Gilcreat.
22
Buffalo, Farmers and Merchants' National
B a n k of, v. Rogers
180
Buffalo German I n s u r a n c e Company v.
Third National Bank
138
Buie v. Commissioners of Fayetteville
227
Bullard v. Bank
45,136,231
Bundy v. Cocke
31
Bundy v. J ackson
232
Bunt v. Rheum
Ill
Burbage v. American National Bank
156
forBurlington, Howard National Bank of, v.
FRASER
Loomis
145

Digitized


Page.
Burnham et al. v. F i r s t National Bank of
Leoti
122
Burrill v. President, Directors, etc., of t h e
N a h a n t Bank
164
Burroughs v. Tradesmen's National B a n k .
56
Burrows v. Niblack
179
Burrows v. State
55
B u r t v. Bailey
203
Burtnett, Administrator, v. The F i r s t
National Bank
85
Burton v. Burley
176
Buslmell v. Leland
33
Bushnell v. The Chautauqua County
National Bank
177
Butler, Receiver, v. Aspinwall
26
Butler et al. v. Cockrill
92,115,136
Butler v. Coleman
40,182
Butler v. Demm'on
40
Butler v. Eaton
22, 47,203
Butler v. Mixter
40
Butler v.Poole
18,25
Butler v. Whitney
40
C.
Cadiz, Bank of, v. Slemons
91
Cadle v. Baker
92
Cad le v. Tracy
121
Cady v. Case
56
Cake v. T h e F i r s t National bank of
.Lebanon
245
California Bank v. Kennedy
129,205
Camden, National State Bank of, v.
Pierce
215
Cameron v. F i r s t National Bank
141
Campbell v. F i r s t National Bank
169
Canfield v. T h e State National Bank of
Minneapolis
141
Carlisle, F i r s t National Bank of, v. Graham
135
Carthage, City of, v. F i r s t National Bank
of Carthage
216
Case v. Bank
18, 28, 232
Case v. Citizens' Bank of Louisiana . . 181,182, 233
Case, Receiver, v. Small
25,196,197
Case v. Terrell
123,195
Casey v. Adams
17
Casey v.Galli
22,23,28,71,72,92,95
Casey v. L a Societe de Credit Mobilier de
Paris
91,114,182,237
Castle v. Corn Exchange B a n k
57
Castles v. City of New Orleans
216
Cecil National Bank v. T h u r b e r
Ill
Central National Ban k v. P r a t t
239
Central National Bank v. Richland National Bank
39
Central National Bank v. Spratlen
135
Central National Bank v.United States 210, 213, 214
Centralia, F i r s t National Bank of, v. Marshall
139
Charleston v. People's National Bank
47, 210
Charlotte, F i r s t National Bank of, v. National Exchange Bank of Baltimore
176
Charnley v. Sibley et al
174
Chase National Bank v. F a u r o t
147, 244
Chattahoochee National Bank v. Schley . 206
Chattanooga, National Bank of, v. Mayor.
216
Chemical National Bank v. A r m s t r o n g 60,120,134
Chemical National Bank v. Bailey
114
Chemical National Bank v. City Bank
125
Chemical Bank v. City Bank of P o r t a g e . . 20,134
Chemical National Bank v. Hartford Deposit Company
114,131,199, 200
Chemung, National Bank of, v. Elmira
221
Chesapeake Bank v. The F i r s t National
Bank of Baltimore
70
Chetwood v. California National Bank . . .
21
Chetwood, Ex parte
20, 21
Chicago, F i r s t National Bank of, v. Corbin
128
Chicago, F i r s t National B a n k of, v. Reno
County Bank
62
Chicago' F i r s t National Bank of, v. Stein-

way e t a l
Gbicago, German National Bank of, v.
Eimball
Chicago, Merchants' National Bank of, et
al. v. Sabin et al
Chicago Railway Equipment Company v.
Merchants' Bank

126
225
100
153

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Chipman v. Ninth National Bank

Page.
88

Ckism v. F i r s t National Bank
56
Chrystie et al. v. Foster
168
Chubb v. Upton
48
Cincinnati, Hamilton and Dayton Railroad Company v. Metropolitan National
Bank
18
Cincinnati, Union National Bank of, v.
Miller, Treasurer of Hamilton County,
Ohio
126
Cincinnati Oyster and F i s h Company v.
National Lafayette Bank
52
Circleville, F i r s t National Bank of, v.
Bank of Monroe.
63
Citizens' Bank v. Houston
68
Citizens' National Bank v. Dowd
113,190
Citizens' National B a n k v. Wintler
147
City National Bank v. Paducah
211
City National Bank v. Phelps
71
City National Bank v. Thomas
107
Claasen, I n re
78
Claasen v. United States
78
Claffin v. Houseman
121
Clarion, F i r s t National Bank of, v. Brenneman's Executors
100
Clarion, Second National B a n k of, v. Morgan
239,244
Clarke National B a n k v. T h e Bank of
Albion
51,158
Clemmer v. Drovers' National Bank
86
Cleveland, Cincinnati, Chicago and St.
Louis Railway Company v. H a w k i n s et
al
'.
209
Cleveland, Brown &. Co. v. Shoeman
58
Cleveland, Commercial B a n k of, v. Simmons
125
Clews et al. v. Bardon et al
162
Clinton, Iowa, National Bank of, v. Dorsett Pipe and Paving Company
181
Cochecho National Bank v. Haskell
92-158
Cochran v. United States
101-202
Cockrill v. Abeles et al
166-195
Cockrill v. Butler et al
166
Cockrill v. Cooper et al
166
Coffey v. The National Bank of Missouri. 71-206
Coffin v. The United States
74, 75, 77, 110
Collins v. Chicago
210
Collins v. State
85
Colt v. Brown
171
Columbia National Bank v. Rice
93, 97,156
Columbia National Bank v. Western Iron
and Steel Company
19,148
Columbus, The F i r s t National Bank of,
plaintiff in error, v. Garlinghouse et a l .
246
Commercial Bank of Pennsylvania v.
Armstrong
65
Commercial National Bank v. A r m s t r o n g .
65, 67
Commercial National Bank v. Canniff
22
Commercial National Bank v. F i r s t National Bank
56
Commercial Bank, I n r e
86,184
Commercial National Bank v. K i n g
County
217
Commercial Nat. Bk. et al. v. Pirie et a l . .
108
Commercial National Bank v. City of
Seattle
217
Commissioners of Rice County v. Citizens'
National Bank of F a r i b a u l t
211
Commissioners of Silver Bow County v.
Davis
225
Commonwealth v. Bank of K e n t u c k y
217
Commonwealth v. Barry
"
74
Commonwealth v. Deposit Bank
217
Commonwealth v. F a r m e r s ' Bank
217
Commonwealth v. Fclton
73, 74,122
Commonwealth v. Manufacturers and Mechanics' Bank of Philadelphia
216
Commonwealth v. Merchants and Manufacturers' National Bank
218
Commonwealth v. Frankfort National
Bank
217
Commonwealth v. State National B a n k . . .
217
Commonwealth v. Tenney
73
Commonwealth Bank v. Clark
194
Commonwealth ex rel. Torrey v. K e t n e r . . 74-122
Concord, F i r s t National Bank of, v. Hawkins
36,94




Page.
Concordia, F i r s t National Bank of, v.
Rowley
Congdon & Co. v. Beard
Conklin v. The Second National Bank . . .
Connaway, Receiver, I n re
Connecticut River Banking Company
et al. v. Rock bridge Couni y
'.
Consolidation National Bank v. Fidelity
and Casualty Company of New York . .
Continental National Bank v. Eliot National Bank et al
Continental National Bank v. McGeoch..
Conway v. Halsey
Conzman v. F i r s t National Bank
Cooke v. The State National Bank of
Boston
Cook County National Bank v. United
States.... 1
Cooper Insurance Company v. H a w k i n s . .
Cooper v. Hill
Cooper v. Leather Manufacturers' Na
tional Bank
Corcoran v. Batchelder
Corn Exchange Bank v. Blye
Corn Exchange Bank v. Mechanics' National Ban k of Newark, N. J
County Commissioners v. Farmers and
Mechanics' National Bank of Frederick.
County of Lancasier v. Lancaster County
National Bank
Covington City National Bank v. Commercial Bank
Covington, Ky., F a r m e r s and Traders'
National Bank of, v. < Jreene et al
Covington, City of, v. First National Bank
Covington, City of, v. German National
Bank
'
Cox v. Beck et al
Cox v. Elraendorf
Cox v. Montague
Cox v. Robinson
Cragie et al. v. Hartley
Cragio v. Smith
'.
Crane v. Fourth Street National Bank
Creveling et al. v. Bloomsbury National
Ban k
Crocker v. F i r s t National B a n k of Chetopa
Crocker v. Marine National Bank of New
York
Crocker v. W h i t n e y
Crook v. F i r s t National Bank
Cruikshank v. F o u r t h National Bank
Cummings v. National Bank

243
158
45, 231
41
199
42
39
117,165
17,164
216
51
170,188
237
158
128
139
196
39
211, 225
224
155
96
217
217
248
205
31
178
188,191
66
69
54
240
125
194
19,87
126
214

D.
Daggs v. Phoenix National Bank
121
Dakota, National Bank of, v. Taylor
233
Dallas, National Exchange Bank of, v.
Beal
64
Danforth et al. v. National State Bank of
Elizabeth
240
Darby v. Berney National Bank
159
Davenport Bank v. Davenport
212
Davenport National Bank v. Mittelbuscher, Collector, et al
71
Davis v. Cook
122,202
Davis v. Elmira Savings Bank
184,185,187
Davis v. Essex Baptist Society
24, 202
Davis v. I n d u s t r i a l Manufacturing Company
171
Davis v. Knipp
174
Davis v. Randall
239
Davis, Receiver, v. Stevens
25, 202
Davis v. W a t k i n s
36
Davis v. Weed
23
Dearborn v. The Union National Bank of
Brunswick
59
Dearborn V.Washington Savings B a n k . .
86
Decatur, F i r s t National Bank of, v. Johnston
183
Decatur, F i r s t National Bank of, v. Priest
133
Decorah, F i r s t National Bank of, v. Holan
148
De Haven v. Kensington National B a n k . .
135
Delano v. Butler
23,47

REPORT OF THE COMPTROLLER OP THE CURRENCY.
Page.
Delaware, Lackawanna and Western Kailroad Company v. Oxford I r o n Company
136
Denton v. Baker
'. 200,201
Denver, American National Bank of, v.
National Benefit and Casualty Company
et al. (WiswalJ, iutervener)
198
Deposit Bank v. F r a n k l i n County
217
Des Moinea National B a n k v. H a r d i n g - . 144
D e W e e s e v . Smith
36
D i t t y v. Dominion National B a n k of Bristol, Va
119,135
Dorchester, F i r s t National Bank of, v.
Smith
244
Dorsey v. United States
83
Doty v. F i r s t National BaDk
235
Doud et al, v. National P a r k Bank
106
D o u g h e r t y s . Hoffstetter
146
Dow v. I r a s b u r g h National B a n k of Orleans
126
D o w e t a l . v . United States
80
D r a k e v. Rolio
171
Dresser v. T r a d e r s ' National Bank
237
Driesbach v. Nation ill Bank
240
Drovers' National Bank v. Blue
148
Dumond v. Merchants' National Bank
133
Dumont v. F r y
137
Duncan v. F i r s t National Bank of Mount
Pleasant
120
Durkee v. National Bank
90
Dutton v. Citizens 1 National Bank
219
Dutton v. F i r s t National Bank
219
Dygert v. Vermont Loan and T r u s t C o . . .
248
E.
E a n s v. Exchange Bank
71
Earle v. Con way
41
Earle v. Coyle
36
Earle, I n re
62
Earle v. Miller
176
Earle v. Pennsylvania
41
E a s t River National Bank v. Gove
133
E a s t e r n Townships Bank v. Vermont National Bank of St. Albans and Another.
141
Eaton v. Pacific National Bank
112
Eaton v. Union County National B a n k . . .
218
Eccles v. Drovers and Mechanics' National
Bank
200
Elder v. F i r s t National Bank of O t t a w a . .
140
Elkhart, F i r s t National Bank of, v. Armstrong
64
E l k h a r t National Bank of Elkhart, Ind.,
v. Northwestern Guaranty Loan Co. of
Minneapolis, Minn., et al
33,129
Ellis v. Little
196
Ellis v. F i r s t National Bank of Olney
240
El Paso National Bank v. F u c h s ...".. 134,175, 208
Elwood v. F i r s t National Bank
139
Emmerling v. F i r s t National Bank
239
Eno, I n re
122
Evansville B a n k v. Britton
215
Evansville, F i r s t National Bank of, v.
F o u r t h National Bank of Louisville
132,154
Evansville National Bank v. Metropolitan
National B a n k
232
E v a n s v. United States
109
Erisman v. Delaware County National
Bank..
'.
16
Exchange National Bank v. Clement
40
Exchange National Bank v. Johnson et al.
150
Exchange National Bank v. Wolverton . .
146
E x e t e r National Bank v. Orchard
244
F.
F a i r b a n k s v. Merchants' National Bank .
156
Fairhaven, National Bank of, v. The Phoen i x Warehousing Company
45,91, 202
Fallkill National Bank v. Sleight
144
F a r m e r s ' Bank v. Board of Councilmen of
City of Frankfort
217
F a r m e r s ' Bank v City of Henderson
217
F a r m e r s ' B a n k v. F r a n k l i n County
217
Farmers' National B a n k v. Backus
180
Farmers' National Bank v. Dearing
240
F a r m e r s ' National Bank v. Thomas
16




Farmers and Mechanics' Bank v. Baldwin
236
Farmers and Mechanics' Bank v. Dearing
70, 239
F a r m e r s and Mechanics' Bank v. Hoagland
242
Farmers and Merchants' National Bank
v. Novitch
151
Farmers and Merchants' National Bank
y. Smith
238
Farmers and Merchants' National Bank
v. Waco Electric Railway and L i g h t
Company
22, 40, 92,117,136,141, 147,199
Farmers and Traders' National Bank v.
Connor
238
F a r m e r s and Traders' National Bank v.
218
Hoffman
F a r m e r s and Traders' National Bank v.
107
Snodgrass
Fayette County, National B a n k of, v.
246
Dushane
Fidelity Safe Deposit and T r u s t Company
y. A r m s t r o n g
131
Fifth National Bank v. Armstrong, etc . .
64,67
Fifth National Bank v. Central National
Bank
56
Finn v. Brown
24,92
F i r s t National Bank v. Allen
104
F i r s t National Bank v. Anderson
72
F i r s t National Bank v. Armstrong
67
F i r s t National Bank v. Ayers
218, 219
F i r s t National Bank v. Bailey
218
F i r s t National Bank v. Bayliss
144
F i r s t National Bank v. Bonner
151
F i r s t National Bank v. Brodhecker
216
F i r s t National Bank v. California National
Bank
F i r s t National Bank v. Carter
145
F i r s t National Bank v. Cass County
22
149
F i r s t National Bank v. Cecil
'.
219
First National Bank v. Chehalis County.
146
F i r s t National Bank v. Chilson
F i r s t National Bank v. City National Bank 69, 217
First National Bankv. City of Covington.
230
F i r s t National Bank v. City of Richmond.
230
56,87
F i r s t National Bank v. Clark
98
F i r s t National Bank v. Cody
148
F i r s t National Bank v. Collins
F i r s t National Bank v. Commercial Na185
tional Bank
68
F i r s t National Bank v. Craig
172
F i r s t National Bank v. De Morse
F i r s t National B a n k v . District Township
97
of Doon (Iowa)
F i r s t National Bank v. Douglas C o u n t y . . 213,219
93 117
F i r s t National Bank-u. Dovetail Body and
Gear Company
.'
121
F i r s t National Bank v. Forest
239
F i r s t National Bank v. Garlinghouse
120
F i r s t National Bank v. Gruber
142
F i r s t National Bank v. G. V. B. Min. Co . .
194
F i r s t National Bank v. Haire
152
F i r s t National Bank v. Harris
98
F i r s t National Bank v. Hellyer
219
F i r s t National Bank v. Hershire
F i r s t National Bank v. H u g h e s
F i r s t National Bank v. Huntington Dis137
tilling Company
144
F i r s t National Bank v. Lambert
146
F i r s t National Bank v. L a u g h l i n .
156, 245
F i r s t National Bank v. Led better
137
F i r s t National Bank v. Lindenstruth
93
F i r s t National Bank v. L y n c h
61
F i r s t National Bank v. Mann
F i r s t National B a n k v. Mansfield Savings
Bank.
144
F i r s t National Bank v. Marshall
F i r s t National Bank v. Marshall and Ils93,144
ley Bank
97
F i r s t National Bank v. McKinney
244
F i r s t National Bank v. Mclnturff
F i r s t National Bank v. M e r c h a n t s ' Na55
tional Bank
56
F i r s t National Bank v. Miller
122, 240
F i r s t National Bank v. Morgan
236
F i r s t National Bank v. M u n z e s h e i m e r . . .

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
Page.
F i r s t National B a n k v. National Exchange
Gerner v. Thompson
18,103
Getman v. Second National Bank of OsBank
177,236
wego
F i r s t National B a n k v. Nelson
56
246
Gettysburg National Bank v. Chisolm
F i r s t National Bank v. N o r t h w e s t e r n Na146
Gibbons v. Anderson et al
tional B a n k
52,104
165
Gibbons v. Hecox
F i r s t N a t i o n a l B a n k v. P e a v e y
46
136
Gibbs v. Howard
F i r s t National B a n k v. Peltz
87
170
Gibson v. Peters, receiver
F i r s t National Bank v. Peterborough
211
90
Gilbert v. McNulta
F i r s t National B a n k v. Sanford ...".
184
201
Girault v. United States
F i r s t National B a n k v. Schmidt
61
81
Glenn v. Porter
F i r s t National B a n k v. City of Seattle
217
234
Gloversville, National Bank of, v. Wells..
F i r s t National B a n k v. Smith
148
180
Gold Mining Company v. Rocky Mountain
F i r s t National B a n k v. Stuetzer
152
National Bank
F i r s t National B a n k v. Still
43
139,140
Goldsbury v. Inhabitants of Warwick
F i r s t National Bank v. Stone
92
221
Goldthwaite v. National Bank
F i r s t National B a n k v. T u r n e r
245
172
Gordon v. Third National Bank of ChatF i r s t National B a n k v. Van Ness
149
tanooga
F i r s t National B a n k v. Weston
156
152
F i r s t National Bank v. W i l l s Creek Coal
Goshen National Bank v. State
132,154
Company
56
Grafton, First National Bank of, v. Bab
F i r s t National Bank v. Wood
16
bidge et al
155
F i r s t National B a n k v. Zeims
146
Graham v. National Bank of New Y o r k . .
193
F i s h e r v. Adams
199
Grant v. Spokane National Bank et al
197
F i s h e r v. Continental National Bank
115
Graves v. Corbin
128
F i s h e r v. Denver National B a n k
61
Graves v. The Lebanon National Bank . . .
41
F i s h e r v. K n i g h t
172
Graves v. United States
79
F i s h e r v. Simons
198
Gray v. Rollo
170
Fisher v. Tradesmen's National B a n k
115
Green v. Purceli National Bank
57
F i s h e r v. United States N a t i o n a l B a n k . . .
115
Green v. Wallkill National Bank
17,18
F i s h e r v. Yoder
123
Greenville, First National Bank of, v.
Flannegan et al. v. California National
j Sherburne
178
158 I Greer v. The Dalles National Bank
Bank et al
193
220 I Griffin v. Peters
F l i n t v. Board of Aldermen of Boston
186
188
F l i n t Road Cart Company v. Stephens
Grow v. Cockrill
141
Florence Railroad and I m p r o v e m e n t ComGrubert?. First National Bank of Clarion247
pany v. Chase National B a n k
15, 244 Gruetter v. Stuart
35
Flour City National B a n k v. Grover
146
Grundy County National Bank v. Rulison.
100
F l o u r City National B a n k v. Miller
244
Guelieii v. The National State Bank of
Foil's appeal
231
Burlington
62
Follett v. Tillinghast
129
Guernsey v. Black Diamond Coal and
F o r s t e r v. Second National Bank
19
Mining Company (Iowa)
119
F o r t Edward, National B a n k of, v. The
Guild v. First National Bank of DeadW a s h i n g t o n County National Bank
132
wood .
243
Fortier v. New Orleans National B a n k . 178,193,194
Gnntersville, Bank of, v. W e b b .
86
F o r t Scott, F i r s t National Bank of, v.
Guthriev. Reid
62, 246
165
Drake
F o : t Worth, City National B a n k of, v.
H.
Hunter
143
Hackettstown National Bank v. Ming . . . 93,112
F o r t W o r t h , City National Bank of, I n r e .
143
Hadden et al. v. Dooley et al
21,160
Foss V. F i r s t National B a n k of D e n v e r . . .
127
Hade v. McVay
122
Foster v. Chase et al
30
38,136
F o s t e r v. Lincoln et al
30, 32, 235 H a g a r v. Union National Bank
Hale v. W a l k e r
202
F o s t e r v. Rincker
06
Hallam v. Tillinghast
127
Foster v. Wilson
204
Hallowell National Bank v. Marston
151
F o u r t h Street National Bank v. T a r d l e y ,
Hiimbrightw. National Bank
247
receiver
188
H a m e n ) . F i r s t National Bank
98
Fowler v. Scully
194
Hammond v. H a s t i n g s
136
F o x v. Home Company
16
Hancock National Bank v. Ellis
204
F r a n k l i n County National Bank v. Beal..
66
Harrington v. F i r s t National Bank of
F r a n k l i n National B a n k v . Newcombe
61
Chittenango
157
F r a t e r v. Old National Bank
38
Harvey v. Allen
39
Frazer v. Seibern
211
Harvey v. Girard National Bank
69
Freeman Manufacturing Company v.
Harvey, Receiver, etc.. v. Lord
15
National Bank of Republic
Ill
Hatch"v Johnson Loan and T r u s t ComFreiberg v. Stoddart
66
pany...
152
Fr^linghuysen, Receiver, etc., v. Baldwin
H a t h a w a y v. F i r s t National Bank of Cametal.
200
bridge
181
Friberg v. Cox
57,119
Hnuerwas J. Goodloe
98
Friend, In re
68
Haugan v. Sunwol
160
Fridley v. Bowen
194
H a u p t m a n v. First National Bank
85
Furberi). Stephens
190
Havens v. National City Bank of Brooklyn
'
40
G.
H a w k i n s v. State Lo n and T r u s t Company
20
Gallot v. United States
80
Hayden v. Brown
91
Gardes v. United states
81
Hayden v. Chemical National Bank
118, 188
Garfield National Bank v. Kirchway
22
Ha.\ den v. Thompson
18, 90,!():?, 115
Gardner v. Dunn
147
Hayden v. W illiams
91, 99, 205
Garner v. Second National Bank
40
Hayes, Receiver, v. Beardsley
183
Garnett, FirstNationalBank of, v. Ayers.
218
Hayes v. Shoemaker
27, 231
Gatch v. Fitch
28, 182
Hay ward w. Kl'ot National Bank
93
Georgia National Bank v. Henderson
133
Hazard v. National Exchange Bank of
G< rmaii National Bank v. Leonard
98
Newpoit
232
German National Hank v. Louisville
Heath v. Second National Bank or LafayButchers' Hide and Tallow Company..
92
ette
1.
194
German National Bank v. Meadow croft-..
91
Heidelbach v. National P a r k Bank
56,173
Germania National Bank v. Case
127




8

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
Hendee v. Connecticut and Passumpsic
Railroad Company
123
Henderson v. Myers
18
Henderson v. O'Connor
67
Henderson, use of Second National Bank
of Titusville, v. Waid
246
Hennessy v. City of St. Paul et al
237
Hepburn v. Danville National Bank
199
Hepburn v. Kincannon
119
Hepburn v. School Directors
229
Herman, I n re
197
Hershire v. First National Bank
213
Hettinger v. Meyers
152
Hibernia National Bank, appeal of
203
Higgins et al. v. Citizens' National Bank
of Kansas City
244
Higgins v. Worthington
116
Hightstown, F i r s t National Bank of, v.
Christopher
153
Higley v. The First National Bank of
Beverly
245
Hill v. National Bank of Barre
243
Hill v. Exchange Bank
215
Himrod v. Baugh
170
Hindman v. First National Bank of Louisville et al
135,238
Hines v. Marmolejo
120
Hintermister v. First National B a n k . 239,240, 241
Hirsh v. Jones et al
17
Hiscock v. Lacy
123
Hitz v. Jenks
196
Hobart, receiver etc., v. Gould
25
Hobart, receiver, etc., v. Johnson
25
Hobbs v. Chemical National Bank (Ga.)..
20
Hobbs v. Western National Bank
164, 233
Hoke v. People
126
Holmes v. Boyd
193
Holt v. Thomas
29
Homer v. National Bank of Commerce
138,175
Hopkinsville, City Bank of, v. Blackmore.
191
Home v. Greene
58,211
Horton v. Mercer
204
Hot Springs Independent School District,
etc., v. First National Bank of Hot
Springs
123
tHougtiton v. Hubbell
205
Howe v. Barney et al
17,163
Howell v. The Village of Cassopolis
221
Hower v. Weiss Malting and Elevator
Company et al
Ill
Hubbell v. Houghton
33
Huffaker v. National Bank of Monticello.
91
Hughes v. Neal Loan and Banking Company
68
fiughitt v. Hayes
171
HuFings v. Hulings Lumber Company et al
55
Hulitt v. Bell et al
33
Hulitt,Inre
36
r
Humphreys v. Third National Bank of
Cincinnati, Ohio
99,181
Hungerford National Bank v. Van Nostrand
98
Hunt, appellant
49
Hunt, In re
176
H u n t v. Townsend
66
Hutchinson National Bank v. Crow
97,194
I.
Illinois Paper Company v. Northwestern
NationalBank
185
Illinois Trust and Savings Bank v. First
National Bank and another, receiver, etc
190
Imperial Roller Milling Company v. First
National Bank
170
Implement Company v. Stevenson
48
Importers and Traders' National Bank v.
Peters et al
67
Indian Head National Bank v. Clark
148
Indiana National Bank v. First National
Bank
104
Indianapolis, Meridian National Bank of,
v. First National Bank of Shelby ville. 52
Insurance Company v. Phinney
169
Irons et al. v. Manufacturers' National
Bank of Chicago et al
26,30,139,196,232
I s r a e l i . Gale
16




J.
Jackson v. Fidelity and Casualty Company
Jackson v. United States
Jacobus v. Monongahela National Bank of
Brownsville
Jefferson, National Bank of, v. Bruhn et al
Jefferson, N ational Bank of, v. Fare et a l .
Jenkins v. National Village Bank of Bowdoinham
Jewett v. United States
Jewett v. Whitcomb
Jewett et al. v. Yardley
Johnson v. Laflin
Johnson v. National Bank of Gloversville.
Johnstons. CharlottesvilleNational Bank
Johnston Fife Hat Company «;. National
Bank
Jones v. Rushyille National Bank
Jordan, administratrix, etc.,v.The National Shoe and Leather Bank of New York.

200
170
39
59,120
70,124
59
84
124
119
230,231
239,241
15
134
216
170, 236

K.
Kaiser et al. v. First National Bank of
Brandon
150
Kaiser v. United States National Bank
(Ga.)
20
Kansas City, Mo., Metropolitan National
Bank of, v. Campbell Commission Company
185
Kansas City, Merchants 1 National Bank
of, v. Lovitt
155
Kansas National Bank v. Quinton
179
Kansas Valley National Bank v. Rowell..
194
Kelleyv. Phoenix National Bank
69
Kelly, Mans & Co. v. Sioux National Bank
etal
128
Kelsey v. The National Bank of Crawford.
71
Kennedy?;. California Savings Bank et al.
178
Kennedy v. First National Bank
235
Kennedy v. Gibson.. 17,18, 22,23,28, 30,90,196,203
Kentucky, Bank of, v. Armstrong
217 .
Kentucky, Bank of, v. Board of Councilmen of City of Frankfort
217
Kentucky Flour Company's Assignee v.
Merchants' National Bank
175
Kerr v. Urie
33
Kesner v. World's Fair Hippodrome
204
Keyser v. Hitz
23, 90,143, 202
Kimball v. Dunn
100
King et al. v. Armstrong, receiver
29,173
Kingman, Citizens' National Bank of, v.
Berry et al
167,169
Kirkwood v. Exchange National B a n k . . .
154
Kirkwood v. First National Bank
154
Kissam v. Anderson
118
Klepper y.Cox
119
Kyle r. The Mayor, etc
219

Lacon, The First National Bank of, v.
Myers
49
La Dow v. First National Bank.
120
La Fayette, The National State Bank of,v.
Eingel
49
La Grande National Bank v. Blum
145
La Grande Butter T u b Company v.
National Bank of Commerce
185
Laing v. Burley
23
Lake Erie and Western Railroad Company y. Indianapolis National Bank
184
Lake National Bank v. Wolfeborough Savings B a n k e t al
126
Lamson v. Beard
157,158
Lanaux, La., Succession of
203
Lancaster County National Bank v. Boffenmyer
149
Lanham v. First National Bank
244
Laiitry V.Wallace
37,239
La Rose et al.v. Logansport National Bank
etal
42
Latimer v. Bard et al
47
Latimer v. Wood et al
15
Lawrence v, Greenup
91

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page. !
Lawrence v. Stearns
94,169
Lazear v. National Union Bank of Baltimore
236, 239, 240, 246
Leach u. Hale
177,206
Leather Manufacturers' National Bank v.
123
Cooper, j r
247
Lebanon National Bank v. Karmany
22
Lehman v. Rothbarth
210
Leoti, First National Bank of, v. Fisher..
122
Le Sassier v. Kennedy
30, 204
Lewis v. Switz
Lexington, Town Council of, v. Union
NationalBank
20
L ' H e r b e t t e v. Pittsfield National B a n k . . . 85,134
L i b b y v. Union National B a n k
193
Lilianthal, I n r e
40
Lilly v. T h e Board of Commissioners of
Cumberland County
58, 211
Lincoln National B a n k v. B u t l e r
151
L i n n C o u n t y N a t i o n a l B a n k v. Crawford .15,124,147
Lionberger v. Rouse
211
L i t t l e Rock, M e r c h a n t s ' National B a n k
of, v. United States
58,214,226
Lockwood v. T h e American National
Bank
72,157
Logan County National B a n k v. Townsend
70,122,177, 236, 237
Louisiana, Citizens' B a n k of, v. Board of
Assessors
214
Louisiana, Citizens' B a n k of, v. J a n i n
60
Louisville B a n k i n g Company v. City of
Louisville
217
Louisville, City of, v. B a n k of K e n t u c k y . .
217
Louisville, T h i r d National B a n k of, v.
230
Stone
Louisville, 4 Third National B a n k of, v.
135
Vicksburg Bank
Louisville T r u s t Co. v. K e n t u c k y National B a n k et al
248, 249
Lowell, P r e s c o t t National B a n k of v.
178
Benjamin F . Butler
74
Luberg v. Commonwealth
34
Lucas v. Coe
239
Lucas v. Government National B a n k
Lyndonville National B a n k v. Fletcher . . 93,105
177
Lyons v. Lyons National Bank
Lyons, F i r s t National B a n k of, v. Ocean
NationalBank
158,164M.
Madison, National Bank of, v. Davis
242, 245
Magruder v. Coltson
232
Maguire v. Board of Revenue and Road
Commissioners of Mobile County
229
Main, Assignee, v. Second National Bank
of Chicago
125
Manistee, Mich., F i r s t National Bank of,
et al. v. Marshall & Ilsley Bank of Milwaukee, W i s
94
Manufacturers' National B a n k v. Continental Bank e t al
67
M a n u f a c t u r e r s ' N a t i o n a l Bank, I n r e
113
M a p e s v. Scott
194,195
M a r b u r y v. F a r m e r s a n d Mechanics'
National Bank
59
M a r i n e National B a n k v. H u m p h r e y s
149
M a r k e t B a n k v. Pacific National B a n k . . .
182
M a r k e t a n d F u l t o n N a t i o n a l B a n k v.
Sargent
150
M a r s h a l l N a t i o n a l B a n k v. O'Neal
56
Massey v. F i s h e r
114,174,184
M a t h e w s v. Columbia N a t i o n a l B a n k of
Tacoma e t al
47
M a t t e s o n v. D e n t
38
M a t t h e w s v. T h e M a s s a c h u s e t t s National B a n k
158
M a t t h e w s v. S k i n k e r
194
M a y n a r d v. B a n k
72
Mayor v. F i r s t N a t i o n a l B a n k of Macon . .
213
M c A d e n v. Commissioners of Mecklenburg County
227
McBee v. P u r c e l l N a t i o n a l B a n k
88
McCann v. F i r s t N a t i o n a l B a n k of Jeffersonville
48
McCartney v. K^pp
140
McClellan v. Chipman
187




Page.
McConville v. G-ilinour
21
McCord v. California National B a n k
56
McCormick v. M a r k e t National B a n k . 71,131, 237
McCulloch v. M a r y l a n d
70
McDonald, Receiver, v. Chemical National B a n k
58
McDonald, Receiver, v. Williams
91, 205
McDonald v. State of N e b r a s k a
131,138
McDonald v. Thompson
37,138
M c F a r l i n v. F i r s t National B a n k
203
McGhee v. F i r s t National B a n k of T o b i a s .
244
McGhee v. I m p o r t e r s a n d T r a d e r s ' National B a n k
108
M c l v e r v. Robinson
212
McLoghlin v. National M o h a w k Valley
Bank
'. 97,121
M c K n i g h t v. United States
84
McMabon, I n re, v. Palmer
225
M c N u l t y v. W e s t Chicago P a r k C o m ' r s . . 99,193
McVeagh v. T h e City of Chicago e t al
220
Mead v. National B a n k of P a w l i n g
152
Meldrum v. Henderson
] 16
Memphis National B a n k v. Snead
16
Mendota, F i r s t National B a n k of, v.
Smith
221
Mercantile B a n k v. New York
210, 212
Mercantile National B a n k v. Shields
.
216
Mercer v. Dyer
173
M e r c h a n t s ' National B a n k v. A u l t
22
M e r c h a n t s ' National B a n k v. C a r h a r t
208
M e r c h a n t s ' National Bank v. Dem ere
59
M e r c h a n t s ' National B a n k v. G u i l m a r t i n .
208
M e r c h a n t s ' National B a n k v. Me A n u l t y .22,98,148
M e r c h a n t s ' National Bank v. M c G e e . . ' . . .
75
M e r c h a n t s ' National B a n k v. McNeir
97
M e r c h a n t s ' National Bank v. Mears
194
M e r c h a n t s ' National B a n k v. P e e t
22
M e r c h a n t s ' National B a n k v. Robinson . .
173
M e r c h a n t s ' National B a n k v. School Dist r i c t No. 8
89,121
M e r c h a n t s ' National Bank v. Sevier e t a l .
242
M e r c h a n t s ' National Bank v. Spates
19,148
M e r c h a n t s ' National Bank v. State National B a n k
50, 52,132,176,177
M e r c h a n t s ' National Bank v. T r a c y
153
M e r c h a n t s and F a r m e r s ' Bank v. A u s t i n .
67
M e r c h a n t s and M a n u f a c t u r e r s ' National
Bank v. Cummings
62
Merchants and M a n u f a c t u r e r s ' B a n k v.
Pennsylvania
229
M e r c h a n t s a n d P l a n t e r s ' National B a n k
v. T r u s t e e s of Masonic Hall
100, 200
Merrill v. National B a n k of J a c k s o n ville
22, 91, 94,116,130
Merrill v. Florida Land I m p r o v e m e n t
Company
114, 231
Metropolitan National Bank v. C l a g g e t t . . 72,123
Metropolitan T r u s t Company v. F a r m e r s
and M e r c h a n t s ' National Bank
40,
92,136,141,147,199
Meyers v. Valley National B a n k
231
Michigan I n s u r a n c e Bank v. Eldred
71
Midland National B a n k v. Schoen
149
Miller's estate
59
Miller v. F i r s t National B a n k
100
Miller v. Heilbron
224
Miller v. Howard e t al
165
Miller v. National B a n k of Lancaster
126
Miller v. W e s t e r n National B a n k
86
Milmo National B a n k v. Carter
93
Missouri River Telegraph Company v.
F i r s t National B a n k of Sioux City
122, 240
M i x v. T h e National B a n k of Bloomington
95
Mize v. Bates County National B a n k
203
Mobile, National Commercial B a n k of, v.
Mayor, etc., of Mobile
226
Mohrenstecher et al. v. W e s t e r v e l t
44
Monongahela N a t i o n a l B a n k v. O v e r h o l t .
247
Monmouth, F i r s t National B a n k of, v.
Brooks
133
Montagu et al. v. Pacific B a n k e t al
209
Montgomery, F i r s t National B a n k of, v.
Armstrong
64
Monticello B a n k v. Bostwick et al
105
Montpelier, F i r s t National Bank of, v.

Hubbardetal

125

10

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
Montpelier, F i r s t National B a n k of, v.
Sioux City Terminal Railroad and
Warehouse Company ( T r u s t Company
of North America, intervener)
143
Moore v. J o n e s
25, 202
Moore v. Mayor and Commissioners of
Fayetteville
227
Moores v. Citizens' National Bank of
Piqua
154
Morehouse v. Second National Bank of
Oswego
247
Moreland v. Brown
210
Morris v. Eufaula National Bank
134
Morrison v. Price
26
Mound City P a i n t and Color Company v.
Commercial National Bank
69
Mount Pleasant, F i r s t National Bank of,
v. Tinsman
120
Mount Sterling National Bank v. Green..
87
Movius, Receiver, etc., v. Lee et al
157,161
Multnomah County et al. v. Oregon National B a n k et al
184
M u r p h y v. F i r s t National Ban k
85
M u r r a y v. American Surety Company of
New York
116,124
M u r r a y v. Pauly
49
M u s t a r d v. Union National Bank
121
Myers v. Hettinger
130
N.
National
National
National
National
Boston
National
National
National
National
National
National
National
National
National
National
National
National
National
National

Bank v. Butler
182
Bank v. Carpenter
240
Bank v. Case
22, 23, 58, 202, 231, 232
B a n k of Red.mption v. City of
227
Bank v. Colby
40,113
Bank v. Commonwealth
187, 213, 228
Bank v. Danforth
248
Bank v. Drake
164
B a n k v. E a r l
178
Bank v. Graham
206
Bank v. Insurance Company
139
Bank v. Johnson
119, 239
Bank v. Kennedy
17
Bank v. Matthews
193,194
B a n k v. Taylor
150, 204
Bank v. United States
227
Bank v. Whitney
193,194
Bank of Commerce v. A t k i n s o n .
15,
167,178
National Bank of Commerce v. City of
Seattle
217
National Bank of Commerce v. Galland.. 97, 148
National Bank of Commonwealth v. Mechanics' National Bank
112,113
National Board of Marine Underwriters
v. National Bank of the Republic
104
National Commercial Bank v. McDonnell.
59, 92
National Commercial Bank v. Miller & Co.
50, 54
National Exchange Bank v. Peters et a l . .
113
National Exchange Bank v. Wilgus's
Executors
149
National Gold Bank and T r u s t Company
v. McDonald
55
National Loan and I n v e s t m e n t Co. v.
Rockland Co
158
National P a r k Bank v. Goddard
40
National P a r k Bank v. Gunst
17
National P a r k Bank v. Harmon
32
National Pemberton B a n k v. Porter
122
National Security Bank v. Butler
183
National Security Bank v. Edward F .
Cushman
156
National Security Bank v. Price, Receiver.
182
National State Bank v. Young
211
National Union Bank v. Earle
57
Nead v. Wall
30, 203
Nebraska National Bank v. Ferguson
151
Nebraska, State of, v. National Bank of
Orleans
89,142,179
Neill v. Rogers Bros. Produce Company . .
40
Nelson v. Burroughs
17
Nelson v. F i r s t National Bank of Killingly
61, 96,153,155
Newark Bank Company v. Newark
210,212
Newark, National State Bank of, v. BoyIan
241




Page.
Newark. North Ward National Bank of,
v. City of Newark
New begin v. Newton National Bank
Newberg, National B a n k of, respondent,
v. Daniel Smith
Newell v. National Bank of Somerset
New Orleans Canal and Banking Company v. City of New Orleans
New Orleans National Bank v. Raymond.
New Orleans, Germania National B a n k of,
v. Case
Newton National Bank v. Newbegin
New York, American Exchange National
Bank of, v. F i r s t National Bank of Spokane Falls et al
New York Breweries Company v. Higgins
New York, Chatham National Bank of,
v. Merchants' National Bank of West
Tirginia, appellant
New York, Chemical National Bank of,
v. A r m s t r o n g
New York Fidelity and Casualty Co. v.
Consolidated National Bank
New York, Germania Bank of, v. La Fol-

letteetal
New York, Market National Bank of, v.
Pacific National Bank of Boston

211
115
88
241
226
194
24
117
142
85
125
178
42

147
39

New York, Mayor of, etc., v. T e n t h National Bank
141
New York, Mercantile National Bank of
City of, v. Mayor, etc., of City of New
York and another
228
New York, Merchants' National Bank of
the City of, v. Samuel and another
57
New York, National Shoe and Leather
Bank of the City of, v. Mechanics' National Bank of Newark, N. J
39
New York, People's Bank of the City of,v.
Mechanics' National Bank of N e w a r k . .
39
New York, Security B a n k of, v. National
Bank of t h e Commonwealth
18
New York Security and T r u s t Company
et al. v. Lombard I n v e s t m e n t Company
of Kansas et al
61,106
New York, T h e Metropolitan National
Bank of, v. Lloyd
53
Niblack v. Cosier
50, 209
Nichols v. State
86
Nickerson v. Kiraball
223
Nicollet National Bank v. City Bank
236
Niles v. Shaw
.'
216
Noblesville, Citizens' State Bank of, v.
Hawkins
237
North Bennington, F i r s t National B a n k
of,-y. Town of Bennington
177
Northern Bank v. Bourbon County
217
Northern National Bank v. Maumee Rolling Mill Company
15
N o r t h River Bank, I n re
188
Northwestern National B a n k v. J . Thompson & Sons' Manufacturing Company..
61
Norton v. Derby National Bank
20
O.
Oates v. F i r s t National Bank of Montgomery
70.239
Ocean National B a n k v. Carll
123,196
O'Connor v. Brandt
175
O'Connor v. Witherby
30
Oddie et al. v. The National City B a n k of
53
New York
O'Hare v. Second National Bank of Titus139,140
ville.
Old National Bank v. German American
National Bank
67
Oldham v. Bank
152,175
Omaha, F i r s t National B a n k of, v. County
of Douglas
125, 219
107
Omaha National Bank v. W a l k e r et al
Onondaia County Savings Bank v. United
68
States
Ordw y v. Central National Bank
. 121, 122,139
193
Ornn v. Merchants' National Bank
70
Osborne v. Bank of the United States
158
Oswego, Second National Bank of, v. Burt.

REPORT OP THE COMPTROLLER OP THE CURRENCY.
Page.
Overholtv. National Bank of Mount Pleasant
Owensboro National Bank v. Owensboro..

240
230

P.
Pacific National B a n k v. Eaton
22,47,202, 203
Pacific National Bank v. Mixter
18, 38, 39
Palmer v. MeMahon
210, 215
Palmer v. National Bank of Allen town
177
Pape v. Capital Bank of Topeka
30
Parker v. Robinson
85
P a r k e r s b u r g National B a n k v. Als
P a r k Hotel Co. v. F o u r t h National Bank
16
of St. Louis
P a r k h u r s t v. F i r s t National Bank of
Clyde
_-„
244
Pattison v. Syracuse National Bank . . 176,177,206
P a u l y v. Coronado Beach Company
238
P a u l y v. O'Brien
'
146
Pauly v. State Loan and T r u s t Company.
32
Pauly v. Wilson
*..
61
Pearce and Miller Engineering Company
v. Brouer
61
Pearce v. Rice
108
Peck et aj. v. F i r s t National Bank
63
Pelton v. Commercial National Bank
211, 214
P e n n Bank v. F a r m e r s ' Deposit National
Bank
175
Pennsylvania, Commercial Bank of, v.
Armstrong
65
People ex rel. Williams v. Assessors of
Albany
222
People ex rel. Williams v. Weaver
212
People v. T h e Commissioners of Taxes
and Assessments
212
People ex rel. Tradesmens Natioual Bank
v. Commissioners of Taxes and Assessments
221
People v. T h e Commissioners
212
People v. Dolan
212
People v. Fonda
127
People v. Merchants' Bank
#.
68
People v. Remington
59
People v. St. Nicholas Bank
50,174
People's Bank v. National Bank
91,177
People's Bank and T r u s t Company v.
Tufts
175
People's National Bank v. Clayton
151
People's Savings Bank v. Hughes
160
Peterborough National Bank v. C h i l d s . . .
241
Peters v. Bain
186
P e t e r s v. Foster
200
Petition of P l a t t
125,197
P e t r i v. Commercial National Bank of
Chicago
127
Pettilon v. Noble
127
Phelps v. Beard
158
Philadelphia, City of, v. Aldrich
89
Philadelphia, City of, v. Eckels
89
Philadelphia, F o u r t h Street
National
Bank of, v. Yardley
192
Philadelphia National Bank v. Dowd
64
Philadelphia, Third National Bank o f > .
Miller
239, 240
Philler v. J e w e t t
173
Philler v. P a t t e r s o n
15, 61,178
Philler v. Yardley
174
Phillips v. Mercantile National Bank of
the City of New York
132
Phipps et al. v. H a r d i n g
152
Pickett v. M e r c h a n t s ' National Bank of
Memphis
241
Pickle v. People's National Bank
57
Pittsburg, Fifth National Bank of, v.
P i t t s b u r g and Castle Shannon Railroad
Company
127
P i t t s b u r g Locomotive and Car W o r k s v.
State National Bank of Keokuk
58
Pittsburg, Third National Bank of, v.
Mylin
127
P l a t t v. Adriance
72
P l a t t v. Beach
197
P l a t t v. Beebe
92,95
P l a t t v. Bentley
170
Plattsburg, F i r s t National Bank of, v.
Sowles et al
164




11

Page.
Pollard v. The State
70
P o r t e r v. United States
82
P o t t e r v. Beal et al
207
P o t t e r v. Traders' National Bank
144
Poughkeepsie, City National Bank of, v.
Phelps
72
Prescott v. H a u g h e y
165
Preston National Bank v. E nerson
98
Preston v. P r a t h e r
208
Price, Receiver, v. Abbott
197
Price, Receiver, v. Colson
197
Price, Receiver, v. Coleman et al
182
Price, Receiver of Venango National
Bank, v. Yates
25, 71,196
Price, Receiver, v. W h i t n e y
26
Prosserv. F i r s t National Bank of Buffalo.
204
Providence I n s t i t u t i o n for Savings and
Jewels v. City of Boston
222
P r y s e v. Farmers' Bank
160
P u g e t Sound National Bank v. City of
Seattle
217
P u t n a m Savings Bank v. Beal
189,207
P u t n a m v. United States
76,169
Q.
Q u an ah, Tex., City National Bank of, v.
Chemical National Bank of St. Louis,
Mo
Quin v. Earle

160
89

R.
Rand et al. v. Columbia National Bank of
Tacoma, Wash., et al
34,94
Randolph National Bank v. Hornblower..
52
Raynor v. Pacific National Bank
39
Resh v. F i r s t National Bank of Allentown .
Reynes v. Dumont
137
Reynolds v. Bank of Mt. Vernon
91
Reynolds v. Crawfordsville Bank
193,194
Rhoner v. National Bank of A l l e n t o w n . . .
39
Ricaud v. Tysen
20
Ricaud v. Wilmington Savings and T r u s t
Company et al
234
Rich v. State National Bank of L i n c o l n . . .
177
Richards v. Attleboro National B a n k . 100, 139, 236
Richards et al. v. Incorporated Town of
Rock Rapids
128
Richards v. Kountze
145
188
Richardson v. Continental National B a n k .
89
Richardson v. Denegre
Richardson v. Louisville B a n k i n g Company
99, 121,201
90
Richardson v. New Orleans Coffee Co
Richardson v. Nsw Orleans Debenture
Redemption Co
Richmond, F i r s t National Bank of, v.
Davis
Richmond, F i r s t National Bank of, v. City
212
of Richmond et al
Richmond, F i r s t National Bank of, v. Wilmington and Weldon Railway Company
Richmond v. I r o n s . . . 17, 24; 28,120,139,196, 203, 231
212, 222
Richmond, City of, v. Scott
144
Riddle v. Dow
Riddle v. F i r s t National Bank
49, 176, 195
145
Ridgely et al. v. F i r s t National Bank
Ridgely National Bank v. Patton & Ham53
ilton1.
97,156
Ripley National i a n k v. Latimer
Riverside Bank v. F i r s t National Bank of
Shenandoab
Roberts, Receiver, etc., v. Hill, Adminis181, 182
trator, etc
Robertson v. Buffalo County National
167
Bank
125
Robinson v. City of Wilmington et al
165
Robinson v. Hall et al
Robinson v. National Bank of Newbern . . 38,120
36, 72
Robinson v. Southern National Bank
Robinson v. Turrentino et al
Rochester, F i r s t National Bank of, v.
176
Harris

12

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.

Page.
S h u n k v. T h e F i r s t National B a n k of
17,236
Galion
239
155
Shute v. Pacific N a t i o n a l B a n k
171
Sickels v. Herold
174
55
Simmons v. Aldrich
219
120,241
Simmons v. United States
78
Simons e t al. v. F i s h e r
157
194
Sioux City, F i r s t National B a n k of, v.
Peavey
45,124,180
34
Sioux Valley State B a n k v. D r o v e r s ' Na46
tional B a n k
5o
221
Skiles v. H o u s t o n
171
98
Sleppy v. B a n k of Commerce e t al
50
113,217
Smith v. F i r s t National B a n k . . . 140,177 206,244
22
58, 211 Smith v. Sabin
170
Smith v. T h e E x c n a n g e B a n k of P i t t s burg
236,239
146
Smithson v. HubbeL et al
128
S.
Snohomish County v. Puget Sound Na
tional Bank
129
St. Albans, In re First National Bank of.
23 I Snyder v. Foster
235
St. L o u i s a n d S a n F r a n c i s c o R a i l w a y
| Snyder v. Mount Sterling National Bank.
245
C o m p a n y v. J o h n s t o n
65,114,189
Snyder's Sons Company v. Armstrong
172
St. L o u i s N a t i o n a l B a n k v. Allen e t a l . - - 126 Somerville, City of, v. Beal
66,189
St. Louis N a t i o n a l B a n k v. Bloch
57
Southwick v. The First National Bank of
St. Louis N a t i o n a l B a n k v. B r i n k m a n
127
Memphis
39
St. L o u i s N a t i o n a l B a n k v. P a p i n
211 i Sowles v. National Union Bank of SwanSt. Paul, M e r c h a n t s ' N a t i o n a l B a n k of, v.
|
ton
40,201
Hanson
150 I Sowles v. Witters et al
27,91,119,129
Safford v. F i r s t N a t i o n a l B a n k
33
Spafford v. The First National Bank of
S a l i s b u r y v. F i r s t N a t i o n a l B a n k
98,149
Tama City
143
San Diego C o u n t y v. California N a t i o n a l
Speckart et al. v. German National Bank
Bank
184,185,189
etal
130
San Diego, I n r e Certain Shareholders of
Spokane, City of, v. First National Bank..
191
t h e California N a t i o n a l B a n k of
28
Spokane County v. Clark
184
Sandy Hill, F i r s t N a t i o n a l B a n k of, v.
Spokane County v. First National Bank..
191
Faneher
220
Spokane, Exchange National Bank of, w.
San Francisco, N e v a d a B a n k of, v. PortBank of Little Rock
105
land National B a n k
133
Spring City, NationalBank of, v. National
Sanger v. Upton
48
Bankof Pottstown
136
Savary v. Savary
170 | Springfield, City of v. First National Bank
Sayles v. Cox
116
of Springfield . . .
225
Scammon v. Kimball
170
Spurr v. United States
81
Schierenberg v. Stephen s
113
Squires v. First National Bank
19,160
Schofield v. State National Bunk
239
Stafford National Bank v.Dover
211
Schofield v. Goodrich Bros. B a n k i n g Co . .
179
Stanley v. Board of Supervisors of the
School D i s t r i c t v. F i r s t National Bank . . .
85 !
County of Albany
126,226
Schraderv. M a n u f a c t u r e r s ' N a t i o n a l B a n k
Stantonv. Wilkeson
18,28,195
of Chicago
108 ; Stapylton v. Anderson et al
17
Schuyler National B a n k v. Bollong
241, 242
Stapylton v. Carmichael
17
Scofield v. S t a t e N a t i o n a l B a n k of LinStapylton v. Cie des Phosphates de France
188
coln
145 i Stapylton v. Stockton
195
Scott v. A r m s t r o n g
171,173,196 I Stapylton v. Teague
17
Scott v. L a t i m e r
205
Stapyltou v. Thaggard
230
Scott, Plaintiff i n E r r o r , v. N a t i o n a l Bank
State v. Bard well
86
of Chester Valley
135
State v. Carpenter
143
Scott e t al. v. Pequonnock National B a n k .
232
State v. Eifert
75
Scovill v. T h a y e r
48
State v. Fields
74
Seattle National B a n k v. City of S e a t t l e . .
217
State v. Gasting
58
Seattle, P u g e t Sound N a t i o n a l B a n k of, v.
State National Bank v. Flathers
194
K i n g County e t al
213
State v. The National Bank of Baltimore.
220
Second National B a n k v. D u n n
147
State, North Ward National Bank, pros.,
Second National B a n k v. H e w i t t
147
v. Newark
226
Second National Bank v. H u g h e s et al
44
State National Bank v. Newton National
Second National B a n k v. Sproat
61
Bank
160
Second National B a n k v. W e n t z e l
105
State of Nebraska v. First National Bank
142
Security N a t i o n a l B a n k v. National Brink
State v. Sattley
^
75
of t h e Commonwealth
17
State v. Smith*
75
Sedalia, School District of, v. D e W e e s e . 99,138,156
State v. Teahan
75
Seeber v. Commercial National B a n k of
State v. Toller
73-74
Ogden
107,160
State v. Wells
76
Seeley v. N e w Y o r k N a t i o n a l E x c h a n g e
Staunton v. Wilkeson
18
Bank
48
Stearns v. Lawrence
169
Seligraan v. Charlottesville National B a n k
15
Steckel v. F i r s t National Bank of AllenSelma, City N a t i o n a l B a n k of, v. B u r n s . . .
54
town
208
Selma, F i r s t National Bank of, v. Colby . .
15, 39 Stephens v. Bernays
71,123
Shafer v. F i r s t National Bank
241
Stephens v. Follett
27
Sharpe v. National B a n k of Birmingham .
59
Stephens v. Monongahela National B a n k . 103,240
Sheffield e t al., F i r s t National Bank of. v.
Stephens v. Overstolz
103,163
Tompkins..
132,154
Stephens v. Schuchmann
176
Shenandoah National B a n k 'v. Read . . I l l , 180,238
Stetson v. City of Bangor
70, 213, 219
Shinkle v. T h e F i r s t National Bank of
Stevens v. Catlin
152
Ripley
245
Stewart v. Armstrong
92,114
Shoemaker v. T h e National Mechanics'
Stewart v. National Union Bank of MaryBank
58,139
land
139,140
Short et al v. H e p b u r n
15,18,99,124
Stowe v. Yarwood
170
Showalter v. Cox
57
Strong v. Southworth et al
'
23,25

Rochester, First National Bank of, v.
Pierson
Rock Springs National Bank v. L u m a n . . .
Rockville, The National Bank of, v. The
Second National Bank of Lafayette
Rockwell v. Farmers' National Bank
Roebling Sons Company v. F i r s t National
Banketal
Rome, Merchants' i\ational Bank of, v.
Fouche
Rood v. Whorton
Root v. Erdelmeyer
Rose v. Winnsboro National Bank
Rosenblatt v. Johnston
Ruffin v. Board of Commissioners
Ruggles v. Killer
Rushtf. First National Bank, Kansas City.




REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
Stuart v. Hayden et al
29, 35,179,234
Studebaker v. Perry
38
Stufflebeam v. De Lashinutt
37,205
Sturdivantv. Memphis National Bank... 150,245
Sturgis National Bank v. Smyth
146
Sturgis, The First National Bank of, v.
Bennett et a l . . . . ,
167
Sumter County v. National Bank of
Gainesville
227
Sunman v. Gatch et al
182
Supervisors v. Stanley
215
Swope v. Leffingwell
193,194
Sykes v. Holloway et al
235

T.
Tabor v. Commercial National B a n k
22
Tacoma, Columbia National B a n k of, et
al. v. M a t t h e w s
48
Tacoma, Wash., N a t i o n a l B a n k of Commerce of, v. W a d e et al
129
Tacoma, W a s h i n g t o n National B a n k of,
^.Eckels
139,198
Talbot v. Silverbow County, Montana
210, 215
Talcott-o. F i r s t National Bank
176
Talmage v. T h i r d National Bank
122,137
Tapley v. M a r t i n
41, 95
Tappan v. M e r c h a n t s ' N a t i o n a l B a n k
215
Taylor v. H u t t o n
157,168
Taylor v. National Bank
48
Tecumseh, F i r s t National B a n k of, v.
Overman
241
Tecumseh National Bank v. Harmon
180
T e h a n v. F i r s t National Bank et al
123
Tennessee e t al., State of, v. B a n k of Commerce et al
214
T e r r y v. Birmingham National B a n k
59
T e x a r k a n a National B a n k v. Daniel
137
Thatcher v. W e s t R i v e r National Bank . .
96
T h a y e r v. Butler
22,47, 203
Third National B a n k v. Angell
150
Third National B a n k v. Blake
143,177
Third National Bank u. City of Louisville.
217
Third National B a n k v. Harrison et al . . .
154
Third National Bank v. H a s t i n g s
152
T h i r d National Bank, I n r e
197
Third National B a n k v. M e r c h a n t s ' National B a n k
104
T h i r d National B a n k v. Still water Gas
Company
88
Thomas v. City National Bank
157,177
Thomaa v. F a r m e r s ' B a n k of M a r y l a n d - . .
71, 72
Thomson v. Beal
50
Thompson National Bank v. Dow
144
Thompson v. German I n s u r a n c e Comp a n y et al
31,32
Thompson v. Pool
125, 200
Thompson v. St. Nicholas National B a n k . 50, 236
Thompson v. Sioux F a l l s National B a n k .
52
Thornton v. National E x c h a n g e Bank
59,194
T h u r b e r v. Miller
124
Ticonic National B a n k v. Bagley
180
Tiffany v. National B a n k of the State of
Missouri
119
Tillinghast v. Bailey e t al
48
Tillinghast v. C a r r
201
Timberlake et al. v. F i r s t National B a n k .
120
Titusville, A p p e a l of Second National
B a n k of
246, 247
Toledo, M e r c h a n t s ' National B a n k of, v.
Camming
222, 223
Torapkins County National Bank v. Bunnell and Eno I n v e s t m e n t Company
147
Tootle et al. v. F i r s t National B a n k of
P o r t Angeles
237
Tourtelot v. F i n k e
34
Tourtelot v. Stolteben
37, 99
Townsend v. Williams
86
Tradesmen's National B a n k v. B a n k of
Commerce
16,141
TradesmensNational Bank, People exrel.,
v. Commissioners of Taxes and Assessments
221
Trenholm, Comptroller, v. Commercial
National B a n k
103
T r e n t Title Company v. F o r t Dearborn
National Bank of Chicago
134




13

Page.
T r u s t e e s of F i r s t Presbyterian Church v.
National State B a n k
100,177
T u r n e r v. F i r s t National B a n k of Keokuketal
195
T u r n e r v. F i r s t National B a n k of Madison
194
T u r n e r v. Union National B a n k . . .
19
T u r n e r v. U t a h Title I n s u r a n c e and T r u s t
Company
19
T u r n e r v. Wells, Fargo & Co
19
T u t t l e v. Frelinghuysen
186
T w i n City Bank v. Nebeker
228
Tyson v. W e s t e r n National Bank of Baltimore
63

Ulrich v. Santa Rosa National Bank
19,22
Ulster County Savings I n s t i t u t i o n v.
F o u r t h National Bank
122
Underwood v. Metropolitan National
Bank
145
Union Gold Hill M i n i n g Company v.
Rocky Mountain National Bank
141
Union Mills F i r s t National B a n k v . Clark.
54
Union National B a n k v. City of Chicago..
229
Union National JSankt?. City of Cleveland.
137
Union National Bank v. G r a n t
151
Union National B a n k v. H e n r y D r e y f u s . .
175
Union National B a n k v. L., N . A . and C.
R. Company
240
Union National Bank v. Oceana County
Bank
53
Union Stock Y a r d s National Bank v.
Dunmond
133
Union Stock Y a r d s National Bank v.
Moore et al
88,181
Uniontown, F i r s t National Bank of, v.
Stauffer
242
United States v. Allen
101
United States v. Allis
75,102
United States v. American Exchange National Bank
68,104
United States v. Berry
83,103
United States, ex rel.l v. Barry
249
United States v. B e n n e t t
58
United States v. Booker
78, 84
United States v. Britton
73, 74,110
United States v. Cadwallader
74
United States v. Clinton National B a n k . .
105
United States v. Conant
74
United States v. Cooke County National
Bank
71
United States v. Crecelius
100
United States v. Curtis
n o , 153,157
United States v. Edgerton
Ill
United States v. E g e
101
United States v. E n o
109
United States v. F i s h
73, 74,100
United States v. Folsom
102
United States v. F r e n c h et al.
101,110
United States v. Graves
101, 201
United States v. Harper
73, 74,100,162
United States v. H u g h i t t
101
United States v. J e w e t t
102
United States v. K e n n e y
82
United States v. K n o x
23
United States v. Lee
77
United States, plaintiff iu error, v. M a n n . 45, 228
United States v. Means et al
157,163
United States v. Neale
161
United States v. National B a n k of Asheville et al
85
United States v. National Exchange
Bank
125
U n i t e d States v. N o r t h w a y
109
United States v. Patterson, Keeper, e t c . . .
79
United States v. P e t e r s
82
United States v. P o t t e r
78, Ml, 109,110
United States v. Stockgrowers' National
Bank of Pueblo
88
United States v. Taintor
73
United States v. Vorhees
71
United States v. W a r n e r
109
United States v. T o u t s e y
83
United States B u n g Manufacturing Comp a n y v. A r m s t r o n g
172

14

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
United States National Bank v. First NaWhite v. Knox
113
tional Bank of Little Rock et al
155,169 White etal. v. Iowa National Bank of Des
United States National Bank v. McNair.
146
Moines
21
Upton v. National Bank of South ReadWhitehall, F i r s t National Bank of, Respondent, v. James Lamb et al., Appelying
193
lants
247
u pton v. Tribilcock
48
Whitney v. Butler
231
Utica, F i r s t National Bank of, v. Waters
and another
224 Whitney v. The F i r s t National Bank of
Brattleboro
206
V.
Whitney et al. v. General Electric Com-,
Valparaiso, Ind., The Farmers' National
pany of New York et al
199
Bank of, v. Sutton Manufacturing ComWhitney National Bank v. Parker
213
pany
70 Whitney et al., Appellants, v. Ragsdale,
Treasurer
221
Van Allen v. The American National
19, 61
Bank
54,85 Whittaker v. Amwell National Bank
121
Van A l i e n s . The Assessors
210,211,215 Whittemore v. Amoskeag National Bank.
124
Van Antwerp v. Hulburd
113,125 Wichita National Bank et al. v. Smith
Van Campen, I n re
100 Wickham v. Hull
23,123
120,242
Vance v. Mottley
159 Wild, I n re
127
Van Leuven v. First National Bank
177 Wilder v. Union National Bank
Van Slyke v. State
211 Wiley v. The F i r s t National Bank of
Brattleboro
206
Veazie Bank a. Fenno
58,70,213,214,215
239
Veeder v.Mudgett
48 Wiley v. Starbuck
212
Venango National Bank v. Taylor
171,172 Williams, People ex rel., v. Weaver
Venner v. Cox
184 Williams v. American National Bank of
Arkansas City, Kans., et al
48
Vicksburg Bank v. Worrell
211
Viets v. The Union National Bank of Troy
54 Williams v. Board of Supervisors of the
County of Albany
225
Vilas National Bank v. Barnard
16
Williams v. City National Bank
164
Virginia, National Bank of, v. City of
57
Richmond et al
210 Williams v. Cox
212
Vose v. Philbrook
170 Williams v. Weaver
Williamsport National Bank v. K n a p p . . . 98,126
W.
Wilmington, F i r s t National Bank of, v.
Herbert, State Treasurer
229
Wachusett National Bank v. Sioux City
Wilson, Assignee, v. National Bank of
Stove Works
122
Holla
242
Wadsworth v. Duncan
19
37, 99
Wadsworth v. Hocking
19 Wilson v. Merchants' Loan & T r u s t Co ..
22,156
Wadsworth v. Laurie
19 Wilson v. Pauly
174
Wait v. Dowley
215 Wingate v. Orchard
116
Walker v. Miller
97 Winstandley v. Second National Bank . . .
Winter v. Baldwin
44
Walker et al. v. Windsor National Bank.
122
Winters v. Armstrong
46
Wallace v. Hood
35
122,
Wallace v. Stone
68 Winterset, National Bank of, v. Eyre et al.
170,197, 246
Warner v. Penoyer et al
166
195
Warren v. De W i t t County National Bank
194 Winton v. Little
18,123.161
Warren v. First National Bank
137 Witters v. Foster
Witters v. Sowles
23, 71,118,143,162,173, 207
Warren-Scharf Asphalt Pav. Co. v. ComWolverton v.
121
mercial National Bank
106 Wood, AppealExchange National B a n k . . .
of
48
Washington National Bank v. City of
Wood River Bank v. First National Bank
Seattle
217
of Omaha
55, 57, 63,134
Washington National Bank v. King
County
217 Woods v. People's National Bank of Pittsburg
145
Washington National Bank v. Pierce
156
216, 226
W a s s o n v . Bank
212 Woodward ?;. Ellsworth
Capital
Bank
175
Wasson v. Hawkins
190 Woolman v.National NationalCheeney
Worcester
Bank v.
194
Waterloo, First National Bank of, v. ElWorcester, Mass., First National Bank
more
194
of, v. Lock-Stitch Fence Company et al.
150
Waterloo Milling Company v. Kuenster..
68 W r i g h t v. First National Bank of GreensW a t k i n s v. National Bank of Lawrence ..
138
burg
240
Watson v. Sheafe
86 W r i g h t v. Merchants' National Bank
196
Waxahachie National Bank v. Vickery...
132 Wright v. Robinson et al
56
Weaver v. Kelley
130 Wylie v. Northampton National Bank
206,
Weber v. Spokane National Bank
140
207,209, 236
Weckler v. The First National Bank of
Hagerstown
45, 237 Wyman v. Citizens' National Bank of
Faribault
140
Welles v. Graves
103,163
Welles v. Larrabee
26
X.
Welles v. Stout
27
Xenip, First National Bank of, v. Stewart.
45,
Wellsburg, The F i r s t National Bank of,
58,158
v. Kimberlands
168
Y.
Wellston, First National Bank of, v. Armstrong
64,178
96,121
W e s t v. Bank of Rutland
59 Yakima National Bank v. Knipe
170,172
West Chicago P a r k Coin'rs v. McNulty.. 99,193 Yardley v. Clothier
Yardley v. Philler
192
West v. St. Paul National Bank
62
28,202
Western National Bank v. Armstrong 141,157,170 Yardley v. W ilgus
177
Western National Bank v. Wood
150 Yerkes v. National Bank of Port J e r v i s . .
71,178,194
Westervelt v. Mohrenstecher et al
160 Young v. Andrews et al
27
Weston v. Estey
135 Young v. McKay
Young v. Wempe et al
27,90
W e s t Side Bank v. Mechanics' National
Bank of Newark, N. J
39 Youngstown, First National Bank of, v.
Hughes et al
44, 213, 224
Wharry v. Hale
195
Wheeler v. Union National Bank of PittsZ.
burg
242
Wheeler v. Walton & Whann Company..
199 Zeigler v. First National Bank of AllenWheelock v. Kost
92, 202
town
88
Whitbeck v. Mercantile Bank
212, 215 Zimmerman v. Carpenter
34




REPORT OF THE COMPTROLLER OF THE CURRENCY.

15

ABATEMENT:

1. An action brought by the creditor of a national bank is abated by a decree
of a district or circuit court dissolving the corporation and forfeiting its
franchises. First National Bank of Selma v. Colby, 21 Wall., 609.
2. A creditor's bill was iiled against a national bank before the passage of the
act of Congress of June 30, 1876 (19 St. at L., 63), and a receiver was
appointed, who took possession of the property of the bank. An amended
bill was filed in the cause, after the passage of that act, to secure the
benefits of the act, to which all the stockholders were made parties.
Subsequently the Comptroller of the Currency appointed a receiver to
wind up the affairs of the bank, and this suit was brought by him against
one of the stockholders. Held, on demurrer to a plea in abatement, which
set forth these facts, that the defendant is entitled to judgment on the
ground that as the stockholders' liability can be completely enforced in
the suit in equity, the general rule applies that a debtor shall not be vexed
by two suits in the same jurisdiction for the same cause of action.
Harvey, Receiver, etc., v. Lord, 10 Fed. Rep., 236.
3. The pendency of a suit in a State court is not necessarily a bar to a suit in
a Federal court between the same parties, involving the same issues.
Short et al v. Hepburn, 75 Fed. Rep., 113.
4. In an action by a creditor of a corporation against a stockholder to enforce
his statutory liability, an affidavit for attachment stating that the action
is to enforce the stockholder's liability under the Constitution and statutes for payment of the debts of the corporation and that the claim
against defendant is his liability as such stockholder, sufficiently states
the "nature of plaintiff's claim." Rev. St., sec. 5522; Northern National
Bank v. Maumee Rolling Mill Co. (Com. PI.), 2 Ohio N. P., 260.
ACCOMMODATION PAPER:

1. A national banking association can not guarantee the paper of a customer
for his accommodation. Seligman v. Charlottesville National Bank, 3 Hughes,
647.
2. The accommodation paper of a national banking association is void in the
hands of one who takes it with knowledge of its character. Johnston v.
Charlottesville National Bank, 3 Hughes, 657.
3. A national bank can not become an accommodation indorser. National
Bank of Commerce v. Atkinson, 55 Fed. Rep., 465.
4. A private corporation can not defend an action on its accommodation note
on the ground of ultra vires, as against a bona fide holder. Florence
Railroad and Improvement Company v. Chase National Bank (Ala.), 17 So.,
720.
5. As against a holder for value, a maker of an accommodation note can defend
only on the ground of actual payment. Philler v. Patterson (Pa. Sup.), 32
A., 26.
6. A director and stockholder of a national bank gave an accommodation note
to the bank's president, on the latter's request and representation that
the note was to be put in the hands of his personal creditor as security,
and on condition that no money should be drawn on the note, and that
the note should not be put in the bank. Without the knowledge of the
maker, he being aged and infirm of sight, the note was made payable to
the bank and placed therein, and a certificate of deposit for the amount
thereof issued to the president, and by him deposited with his creditor,
who held the same until the bank's failure. Held, that the maker was liable
on the note to the bank's receiver. Linn County National Bank v, Crawford (C. C), 69 Fed. Rep., 532.
7. Complainants, on the request of a national bank needing funds, signed an
accommodation note for $10,000, payable to its order, with the understanding that it would discount the same and use the proceeds in its business.
The bank at the same time agreed to place to the credit of complainants
on its books an amount equal to the proceeds of the note, complainants
stipulating that they would not check against this credit except to pay
the note or to reimburse themselves for paying it. The credit was accordingly made, and the bank, after continuing business for some time, failed,
and complainants were compelled to pay the note. They thereafter recovered a judgment at law against the bank's receiver for the amount paid to
take up the note, and then sued in equity for the amount placed to their
credit according to the agreement. Held, that they are not entitled to two
judgments for the same debt and to dividends on both judgments until
one of them was satisfied, and that the bill must therefore be dismissed.
Latimer v. Wood et al., 73 Fed. Rep.,




1001.

16

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ACCOMMODATION PAPER—Continued.

8. When the payee of an accommodation check, given for a particular purpose,
deposits it in a bank in his own name and the bank makes advances and
extends credit on the faith of the deposit without notice of the trust, its
rights and equities are superior to the drawer of the check. Erisman v.
Delaware County National Bank, 1 Pa. Super. Ct., 144, 37 TV. N. C, 518.
9. In an action on a note, it appeared that plaintiff bank discounted P. & Co.'s
paper to the full extent consistent with its rules, and, in repl^ to an application for a further discount, suggested that the company get defendant
bank to discount the paper and allow plaintiff to rediscount it. The company made its note to defendant, who indorsed it, and sent it on to plaintiff,
with whom it had an account, and the proceeds were placed to defendant's
credit. Defendant placed the amount of the note to the credit of P. &, Co.,
by whom it was at once checked out. This specific amount credited to
defendant by plaintiff was not checked out by defendant, but checks in
various amounts, in ordinary course of business, were drawn against its
account, none of which apparently had any special reference to the amount
of the discount. Held, that defendant was not an accommodation indorser.
Fox v. Home Co. (Sup.), 35 N. Y. S., 896, distinguished. Tradesmen's National
Bank v. Bank of Commerce (Sup.), 39 N. I . S., 554.
10. Where a note was signed by accommodation makers, and made payable to
a bank, on the understanding that it was to be deposited in the bank to
secure a loan for the purchase of wheat for a mill, with the ultimate intention of paying off a mortgage on the mill, and such makers, without notice
to the bank of any restrictions on the disposition of the note, allowed the
mortgagor, for whose benefit it was made, to have possession and control
thereof, they can not complain that he effected an immediate payment of
the mortgage by procuring an indorsement to himself from the bank, and
then indorsing the note to the mortgagee. First National Bank v. Wood
(Tex. Civ. App.), 28 S. W., 384.
11. An answer which alleges that the note sued on was accommodation paper,
and was made and delivered on condition that defendants should not be
held liable thereon, provided there was delivered to plaintiff good business paper of the person accommodated, is insufficient, because it does not
allege that the agreement to replace such note with other paper was made
with plaintiff. Vilas National Bank v. Barnard, (Sup.), 28 N. Y. S., 922.
12. Defendant, for the accommodation of the maker, indorsed blank notes in the
following form: "
afterdate,
promise to pay to the order
of
, at the Farmers' National Bank, Adams, N. Y. Value received."
Held, that the delivery of the indorsed blanks did not authorize the holder to
fill them out so as to make them payable " on demand " instead of at a specified time after date, or to add the words "with interest. v Farmers*
National Bankv. Thomas (Sup.), 29 N. Y. S.{ 837.
13. An accommodation indorser on a note given in renewal of a note on which
he was also accommodation indorser, at its maturity, is not relieved of liability because of his insanity at time of signing it, the bank taking it in
renewal having no notice of his insanity, and he having been sane when
the prior note was executed. Memphis National Bank v. Sneed (Tenn. Sup.),
33 S. W., 716.
14. Accommodation paper is put into circulation for the purpose of giving credit
to the party for whose benefit it is intended, and, although he can not
maintain an action upon it against the accommodation maker or indorser,
a purchaser can do so, who acquires it while still current, and gives the
credit it was intended to promote, although with knowledge of its original
character. Israel v. Gale, 77 Fed. Hep., 532.
15. One who takes accommodation paper from the party for whose benefit it was
made an d gives him credit for the same on a precedent indebtedness, though
advancing no money, is a holder of such paper for value. Ib.
16. The general authority of the president of a business corporation to make
and discount its promissory notes gives him no power to make a note of
the corporation payable to his own order, and one who discounts such a
note can not recover thereon against the corporation without showing
special authority for its execution. Park Hotel Co. v. Fourth National
Bank of St. Louis, 86 Fed. Rep., 742.
17. To the general rule that the acts and contracts of a general agent within
the scope of his powers are presumed to be lawfully done and made, there
is an exception as universal and inflexible as the rule. It is that an act
done or a contract made with himself by an agent on behalf of his principal is presumed to be, and is notice of the fact that it is without the scope
of his general powers, and no one who has notice of its character may




REPORT OF THE COMPTROLLER OF THE CURRENCY.

17

ACCOMMODATION PAPER—Continued.

18.
19.
20.
21.

safely recover upon it without proof that the agent was expressly and
specially authorized by his principal to do the act or make the contract. Ib.
It is ultra vires of a corporation to make accommodation paper, or to guarantee the payment of the obligations of others. Ib.
A contract which a corporation has no power to make, it has no power to
ratify, and no power to estop itself from denying. Ib.
A national bank receiver can not recover upon notes made for the accommodation and sole benefit of the bank, without consideration. Stapylton
v. Teague; same v. Anderson et al.; same v. Carmichael, 85 Fed. Rep., 407.
Accommodation indorsements or acceptances by a national bank are ultra
vires, and void in the hands of holders with notice. BoivenY. Needles

ACTIONS.

National Bank, 87 Fed. Rep., 430.
See Jurisdiction.

1. A national banking association is a foreign corporation within the meaning
of a State statute requiring corporations created by the laws of any
other State or country to give security for costs before prosecuting a suit
in the courts of the State. National Park Bank v. Gunst, 1 Abb. N. C, 292.
2. As a national banking association can acquire no title to negotiable paper
purchased by it, it can maintain no action thereon in a State where the
person suing must be owner of the paper. First National Bank of Rochester
v. Pierson, 24 Minn., 140.
3. A stockholder in a national bank can not maintain an action at law against
the officers and directors thereof to recover damages for willful waste of
the assets whereby the value of his shares was decreased and he became
liable to an assessment thereon. His remedy must be sought in equity.
Hirsh v. Jones et al., 56 Fed. Rep., 137.
4. The provision of the banking law, section 5198, Rev. Stat., which requires
that actions brought against national banking associations in State courts
shall be brought in the county or city in which the association is located,
applies only to transitory actions. It was not intended to apply to actions
local in their character. Casey v. Adams, 102 U. S., 66.
5. Under section 57 of act of 1864, suits may be brought by, as well as against,
any association. Kennedy v. Gibson, 8 Wall., 498.
6. Actions local in their nature may be maintained in the proper State court in
a county or city other than that where it is established. Casey v. Adams,
102 U. S., 66.
7. A national bank may be sued in any State, county, or municipal court in
county or city where located. Bank of Bethel v. Pahquioque Bank, 14
Wall., 383.
8. Under the original act respecting national banks, and before the act of
June 30, 1876, a court of equity had jurisdiction of suit to prevent or
redress maladministration or fraud against creditors, in voluntary liquidation of such bank, whether contemplated or executed; and such suit
by one creditor must be for all. Richmond v. Irons, 121 U. S.f 27.
9. Suit may be brought against a national banking association though it is in
the hands of a receiver. Bank of Bethel v. Pahquioque Bank, 14 Wall., 383;
Security National Bank v. National Bank of the Commonwealth, 2 Hun, 287;
Green v. The Wallkill National Bank, 7 Hun, 63.
10. A shareholder of a national banking association can not maintain an action
against the directors to recover damages sustained for neglect and mismanagement of the affairs of the association whereby it became insolvent
and its stock was rendered worthless. Such an action can be brought
only by the corporation itself. Contvay v. Ilalsey, 15 Vroom, 462; Howe v.
Barney, 45 Fed. Rep., 668.
11. But where the receiver refuses to bring an action against negligent directors
to recover the amount which the shareholders have been compelled to
contribute to pay the debts of the association, an action against such
directors may be brought by a shareholder on behalf of himself and the
other shareholders. Nelson v. Burroughs, 9 Abb. N. C, 280.
12. And when the receiver is a director and one of the parties charged with
misconduct and against whom a remedy is sought, the action may be
brought by a shareholder on behalf of himself and the other shareholders.
BrinckerhoffY. Bostwick, 88 N. Y., 52.
13. A receiver may sue either in his own name or the name of the bank.
National Bank v. Kennedy, 17 Wall., 19.
14. Suits and proceedings under the act in which the United States or their
officers or agents are parties, whether commenced before or after the
CUR
2
 1900, PT 1


18

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ACTIONS.

See Jurisdiction—Continued.

appointment of a receiver, are to be conducted by the district attorney,
under the direction of the Solicitor of the Treasury. Bank of Bethel v.
Pahquioque Bank, 14 Wall., 383.
15. But section 380, Rev. St., is directory merely, and the employment of private
counsel by the receiver can not be made a ground of defense to a suit
brought by him. Ib.
16. Receivers may sue in the courts of the United States by virtue of the act,
without reference to the locality of their personal citizenship. Ib.
17. The provisions of the codes that every action must be brought in the name
of the real party in interest, except in the case of the trustee of an express
trust or of a person authorized by a statute to sue, does not apply to the
receiver of a national banking association suing in a Federal court held in
a State which has adopted the code procedure; for the right of the receiver
to sue is derived from the national banking law. Staunton v. Wilkeson, 8
Ben., 357.
18. Under section 1001, Rev. St., no bond for the prosecution of the suit, or to
answer in damages or costs, is required on writs of error or appeals issuing
from or brought to the Supreme Court of the United States by direction
of the Comptroller of the Currency in suits by or against insolvent national
banking associations or the receivers thereof. Pacific National Bank v.
Mixter, 114 U. S., 463.
19. The State statute of limitations applies to a suit brought by the receiver of
a national bank against a shareholder to recover an assessment upon his
stock to pay the debts of the bank. Butler v. Poole, 44 Fed. Rep., 586.
20. Whether a suit against a director for negligent performance of his duties,
as required by the statutes of the United States and the by-laws of the
association, will survive against the executor or administrator depends
upon State laws. Witters v. Foster, 26 Fed. Rep., 737.
21. Such action is not prescribed by the limitation of one year in Louisiana.
Case v. Bank, 100 U. $>, 446.
22. On a bill filed by receiver against stockholders under section 50, where bank
fails to pay its notes, action by Comptroller must precede institution of
suit by receiver, and be set forth therein. Kennedy v. Gibson, 8 Wall., 498.
23. Creditors of the bank are not proper parties to such bill. Ib.
24. A compromise of a suit by the receiver of a national bank and counsel for
the United States will not be opened after a delay of seven years, no
fraud being shown. Henderson v. Myers, 11 Phil., 616j 3 N. B. C, 759.
25. An action may be brought against a national bank, notwithstanding a
receiver of it has been appointed. Security Bank of New Yorkv. National
Bank of the Commonwealth, 4 Thompson $ Cook, 518; 1 N. B. C, 774; Green
v. The WallHll National Bank, 7 Hun, 63; 1 N. B. C, 786.
26. An action against the directors of a national bank under the provisions of
Rev. St., § 5239, can be maintained only by a receiver of the bank; and
an action by a private individual against such directors for damages
arising from the making of false reports or other violations of the national
banking act can only be maintained as an action at the common law in
the nature of an action of deceit. Gerner v. Thompson, 74 Fed. Rep., 125.
27. An action can not be maintained against a bank by the holder of a check for
refusal to pay it, unless the check has been accepted, although there stands
to the credit of the drawer on the books of the bank a sum more than
sufficient to meet the check. Cincinnati, H. fy D. R. Co. v. Metropolitan
National Bank (Ohio Sup.), 42 N. E., 700.
28. A bill by the receiver of an insolvent national bank against the shareholders
to recover dividends unlawfully paid out of the capital at times when the
bank had earned no net profits may be brought without an express order
from the Comptroller of the Currency. Hayden v. Thompson (C. C. A.),
71 F., 60.
29. Where both parties to an action claim title to land under legal proceedings,
those through which defendant derives title being alleged to be fraudulent,
it is reversible error to instruct the jury that upon the record evidence the
title is vested in the plaintiff, whereas in fact the defendant has the better
title unless it is defeated by fraud. Short et al. v. Hepburn, 75 Fed. Rep.,
113.
30. In an action involving the validity of a title claimed by defendants to have
been acquired under attachment and execution against one C , while
plaintiff charges that C. was a fictitious person and the deed to him and
the proceedings against him were parts of a scheme of his supposed grantor
to defraud his creditors, it is error to charge the jury either that if C.'s
whereabouts were unknown it would make his title to the property




REPORT OF THE COMPTROLLER OF THE CURRENCY.
ACTIONS.

31.

32.

33.

34.

35.
36.

37.

38.

39.

40.

4-1..

42.

See Jurisdiction—Continued-

19

immaterial or that the fact that C. was a fictitious person would entitle
the plaintiff to recover irrespective of the circumstances under which
defendant acquired his title. Ib.
In an action by a depositor in an insolvent bank against the stockholders
to recover the balance due him at the time of the suspension of the bank,
it is not necessary to join as defendants persons who signed the articles
of incorporation but have since transferred their stock, though such
transfer was not made in the manner provided by the articles of incorporation. Wadswortli v. Hocking, 61 III. App., 156; Same v. Duncan, Ib.;
Same v. Laurie, Ib.
Where a person holds stock in a banking association as trustee, he is a
proper party defendant, to the exclusion of his beneficiary, in an action
brought by a depositor against the stockholders to recover the balance
due him at the time of the suspension of the bank. Ib.
An instrument headed by the name of a bank and a list of its officers,
reciting that plaintiff had left a sum of money to be loaned for his use,
"payable not to exceed six months, on return of this memorandum," and
signed with the name of the person represented at the top of the paper
to be the cashier, the signature being followed by a scroll composed of
the letters "chr.," shows prima facie a cause of action against the bank
for a return of the money loaned. Squires v. First National Bank, 59 III.
App., 134.
An action ex contractu brought by an administrator to recover money
claimed to have been wrongfully paid to defendant by a bank constitutes
an election and ratification of the payment and precludes a subsequent
action against the bank on the same claim. Crook v. First National Bank
(Wis.), 52 N. W.,1131.
The assignment of a promissory note vests the legal title in the assignee and
renders him a proper party plaintiff in an action thereon. Forster v. Second
National Bank, 61 III. App., 272.
In an action to recover the amount paid to the payee and indorser of a check
alleged to have been fraudulently altered as to amount, where experienced
cashiers were allowed to testify as experts for defendant to the genuineness of the check, and chemical experts had testified for plaintiff' that
writing could be removed by the use of acids without any trace being left,
plaintiff' should have been allowed to cross-examine defendant's expert
witnesses as to their knowledge of the use and effect of acids in removing
ink. Birmingham National Bank v. Bradley (Ala.), 19 So., 791.
A complaint in an action on a note alleged its execution, and in a third
paragraph alleged that "no part of said sum has been paid, and the same
is wholly due; ; ' and the answer admitted the execution of the note, but
denied "each and every allegation in paragraph three." Held, that the
denial was bad, as a negative pregnant. Columbia National Bank v. Western
Iron $• Steel Co. ( Wash.), 44 P., 145.
In an action by the assignee of an invalid nonnegotiable instrument against
the assignor thereof, plaintiff' must show that the maker was insolvent
when the instrument was made or became due, or that he used diligence
to recover from the maker, and failed, or that suit against the maker
would have been of no avail. Merchants' National Bank v. Spates ( W. Va.),
23 S. E., 681.
In an action against the receiver of an insolvent corporation, the facts that
he represents the corporation and produces its books of account do not
prevent him from contradicting the entries therein, as he represents creditors also. Whittaker v. Amwell National Bank (N. J. Ch.), 29 A., 203.
In an action to recover on certificates of deposit alleged to have been
assigned plaintiff by deceased, where the complaint alleges and the assignment recites a consideration of $1,000, and the assignment is attacked as
fraudulent, testimony that deceased said she intended plaintiff to have all
her property when she died is incompetent. Turner v. Utah Title Insurance
4' Trust Co. (Utah), 37 P., 91; Same v. Wells, Fargo cf Co., Ib., 94; Samev.
Union National Bank, Ib., 95.
In an action to recover money deposited by plaintiff with defendant under
an agreement that it is to be paid to a third person on condition that the
latter deliver a deed to plaintiff within a certain time, such person is not
a necessary party. Ulrich v. Santa Rosa National Bank (Cal.), 37 P., 500.
By authority of the directors of a national bank in Chicago, which had
acquired some of its own stock, the individual note of its cashier, secured
by a pledge of that stock, was, through a broker in Portage, sold to a
bank there. The note not being paid at maturity, the Portage bank sued




20

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ACTIONS.

43.

44.

45.

46.

47.

48.

49.

50.

See Jurisdiction—Continued.

the Chicago bank in assumpsit, declaring specially on the note, which it
alleged was made by the bank in the cashier's name, and also setting
out the common counts. The bank set up that the purchase of its own
stock was illegal, and that money borrowed to pay a debt contracted
for that purpose was equally forbidden by Rev. Stat., section 5201. The
trial court was requested by the Chicago bank to rule several propositions of law, and declined to do so. Judgment was then entered for the
Portage bank. The supreme court of the State of Illinois held that the
Portage bank was entitled to recover under the common counts, and that
it was not necessary to consider whether the trial court had ruled correctly on the proposition of law submitted to it. Held, that that court,
in rendering such judgment, denied no title, right, privilege, or immunity specially set up or claimed under the laws of the United States, and
that the writ; of error must be dismissed. Chemical Bank v. City Bank of
Portage, 646 Fed. Bep., 160.
No action may be maintained against a national bank upon a contract made
by its cashier on its behalf to guarantee a contract between third persons
for delivery of building materials. Norton v. Derby National Bank, 61
N. H, 589; 60 Am. Bep., 334; 3 N. B. C, 568.
In an action by a receiver to recover an assessment on certain shares of a
national bank, defendant pleaded a prior judgment dismissing a bill
brought to charge her father's estate with the same assessment, to which
suit she was also a party. Held, that the causes of action were different,
that in the earlier suit being the alleged ownership of the shares by the
father at the date of the bank's failure and that in the latter the alleged
ownership by the daughter of the same shares at the same date; and that,
therefore, the former suit operated as an estoppel only as to the matters
actually litigated and determined. Bicaud v. Tysen, 78 Fed. Bep., 561.
Where the causes of action are different and the decree in a former suit
does not show on its face that the question involved in the present one
was directly and necessarily determined, evidence aliunde, consistent with
the record, may be received to show that it was actually determined. Ib.
An action by the receiver of an insolvent national bank, iu which it is
alleged that the defendant, to which negotiable paper was sent by the
bank for collection, appropriated the proceeds thereof and refused to pay
the same over on demand, is an action for the conversion of chattels, and
is governed by the limitation fixed by subdivision 3 of section 338 of the
California Code of Civil Procedure relating to actions for " taking, detaining, or injuring any goods or chattels." Hawkins v. State Loan fy Trust
Co., 79 Fed. Bep., 50.
Where a note executed solely for the accommodation of a bank was made
payable to the order of the bank's cashier and indorsed in blank, the mere
fact that the president of the bank negotiated the note for his personal
benefit to a third person, who knew his office, was not of itself notice to
the purchaser of the facts, or sufficient to put him on inquiry as to the
legality of the president's act. Kaiser v. United States National Bank( Ga.),
25 S. E., 620.
In an action by a bank upon a negotiable note payable to order, the title to
which, by appropriate endorsement, has become vested in the name of a
person as cashier, the declaration must show that such person is plaintiff's cashier, and that the ownership of the note sued upon is in plaintiff;
else it will be demurrable. Hobbs v. Chemical National Bank (Ga.), 25 S.
E., 348.
A stockholder of an insolvent national bank may bring a suit in a State
court, in behalf of the bank and himself, as a representative stockholder,
against the directors, to recover money alleged to have been lost through
their negligence and breach of trust, when the bank's officers, the receiver,
and the Comptroller of the Currency have all refused to bring such a
suit. Exparte Chetwood, 165 U. S., 443.
In an action by a national bank on railroad-aid bonds the United States
alone can complain that the bank was not authorized to hold such bonds.
Town Council of Lexington v. Union National Bank (Miss.), 22 So., 291.

AGENT OF SHAREHOLDERS:

1. The Federal courts have the same jurisdiction of suits by and against the
"agents" of national banks appointed under the national-banking acts
of Congress, when the " receivers" of an insolvent bank have been displaced by such "agents," as they have of suits by and against the
"receivers" of such banks, each being in the same sense officers of the




REPORT OF THE COMPTROLLER OF THE CURRENCY.

21

AGENT OF SHAREHOLDERS—Continued.

2.

3.

4.

5.

6.

United States, and each representing in precisely the same relation the
• bank in its corporate capacity; and this jurisdiction attaches without
regard to any diversity of citizenship of the parties or the amounts
involved. McConvillev. Gilmour et al.,36 Fed. Rep., 277.
When the receiver of an insolvent national bank has been displaced by an
"agent" appointed under the acts of Congress in that behalf, it is proper
practice to substitute, upon motion, the "agent 7 ' as the plaintiif on the
record in place of the "receiver" in a suit already commenced by the
latter. Ib.
That a receiver of an insolvent national bank has applied to the proper
circuit court for authority to sell assets, and that thereafter an agent i a s
been appointed, under 19 Stat., 63, as amended by 27 Stat., 345, to succeed
the receiver, gives that court no authority to enjoin a stockholder in the
bank from prosecuting actions in the State courts, in behalf of the bank,
against its directors, or against using the bank's name in writs of error
sued out from the United States Supreme Court to review the judgments
of the State supreme court in such actions. Exparte Chetwood, 165 U. S., 443.
A duly elected "agent," who is substituted under the act of June 3.0, 1876
(19 Stat., 63), as amended by the act of August 3, 1892 (27 Stat., 345), for
the receiver of an insolvent national bank, to complete the winding up of
its affairs, proceeds with like authority to that of the receiver, and is not
an officer of the circuit court, though he is required by the statute to
render an account to it of all his proceedings, expenditures, etc., and he
and his sureties are finally discharged by its order. Ib.
Where an action brought by a stockholder in a national bank, in behalf of
the corporation while in the hands of a receiver, has terminated, an agent
of the corporation elected to succeed the receiver as provided by law, and
charged with the duty of controlling and disposing of its assets and of
distributing the proceeds, is entitled to receive the proceeds of such
action, less a reasonable allowance to the plaintiff for his costs, disbursements, and attorney's fees. Chetivood v. California National Bank (Cal.),
45 P., 854.
27 Stat., 345, c. 360, § 3, authorizes the election of an agent by the stockholders of a national bank in the hands of a receiver when all indebtedness to outside creditors has been paid, and provides that such agent,
after giving bond, shall be vested with the control of the bank's affairs
by the comptroller and receiver, being accountable to the circuit or district court of the United States. Held, that such agent takes the place
of the receiver, and is at least a quasi public officer, the regularity and
validity of whose appointment can not be questioned in a collateral
proceeding. Ib.

APPEAL:

1. Under act March 3, 1891, § 11, a writ of error must be sued out within six
months in order to authorize a review by the circuit court of appeals.
White et al. v. Iowa National Bank of Des Moines, 71 Fed. Rep., 97.
2. Under the Louisiana Code of Practice providing (articles 364, 391) that third
persons may intervene in suits, either before or after issue, provided the
intervention do not retard the suit, but that persons so intervening must
be always ready to plead or exhibit their testimony, an appellate court
can not review the exercise of discretion by the trial court in refusing
an application by such an intervener, made after the commencement of
a trial, for a continuance, in order to enable the intervener to take steps
necessary to bring his intervention to an issue. It is not error to refuse
to admit evidence offered by such an intervener, when his intervention
has not been brought to an issue with the original parties. Baker v.
Texarkana National Bank et al., 74^ Fed. Rep., 598.
3. On an appeal from an order denying a motion to dissolve an injunction
pendente lite, restraining an execution sale of personal property, held,
that the court of appeals could not determine questions of law which
might depend upon undisclosed facts, or questions of fact upon ex parte
affidavits of the character of those presented in the record; and that, as
the questions arising were proper subjects for deliberate examination, the
order would be affirmed under the rule that, where a stay of proceedings
will not cause too great injury to defendants, it is proper to preserve the
existing state of things until the rights of the parties can be fully investigated. Sadden et al. v. Dooley et al., 74 Fed. Rep., 429.
4. Where an order refusing to dissolve an injunction pendente lite restraining
a sheriff from selling certain silks on execution was affirmed, but it
appeared to the court that a sale of the goods would be to the pecuniary




22

REPORT OF THE COMPTROLLER OP THE CURRENCY.

APPEAL—Continued.
advantage of both parties, held, that leave would be reserved to the court
below to modify its order so that by consent of the parties the silk might
be sold under the execution, after ample notice, and the proceeds placed
in the registry to await a final decision. Ib.
5. It is not indispensable that an exception to a ruling of the court on the trial
of an action should be brought before an appellate court by a bill of
exceptions if it fully appears upon the record proper. Wilson v. Pauly,
72 Fed. Hep., 129.
6. The only question presented being one of fact, as to which the evidence
is conflicting and apparently evenly balanced, the finding and judgment
of the district court should not be disturbed. Buffalo County National
Bank v. Gilcrest (Nebr.), 66 N. W., 850.
7. Where the bill of exceptions purporting to contain the evidence in a case is
not authenticated by the certificate of the clerk of the trial court it will
not be examined. First National Bank v. Cass County (Nebr.), 66 N. W., 300.
8. As each party may appeal from the same final judgment without making
separate cases of each appeal, the appellate court may consolidate into
one proceeding separate cases on appeal from the same judgment. Farmers
and Merchants' National Bank v. Waco Electric Eaihvay and Light Co. (Tex.
Sup.), 34 S. W., 737.
9. An order requiring an answer to be made more definite, so as to show what
is pleaded as defense and what as counterclaim, rests in discretion, and is
not appealable. Garfield National Bank v. Kirchway (City Ct. N. Y.), 37
N.Y.S.,1140.
10. Where the record fails to show that notice of appeal was given, the appeal
will be dismissed. Merchants' National Bank v. Ault ( Wash.), 44 P., 129.
11. A finding on conflicting evidence can not, on appeal, be disturbed. Lehman
v. Bothbarth (III. Sup.), 42 N. E., 777; Smith v. Sabin (Cal.), 43 P., 588; Merchants' National Bank v. McAnulty (Tex., Sup.), 33 S. W., 963.
12. A rehearing will not be granted for consideration of a question not raised on
the original hearing. Arnau v. First National Bank (Fla.), 18 So., 790.
13. Where, on appeal, the record does not contain the evidence, and findings of
fact were waived, it will be presumed that the allegations of the complaint
were proven, and that the affirmative allegations in the answer were not.
Ulrich v. Santa Bosa National Bank (Cal.), 37 P., 500.
14. An objection and exception to the introduction of certain evidence, for which
no ground was assigned, can not be considered on appeal. Tabor v. Commercial National Bank (C. C. A.), 62 F., 383.
15. On a trial by the court, where no request was made for a peremptory declaration that the evidence was insufficient to entitle plaintiff to judgment,
a general finding for plaintiff can not be reviewed on a single exception to
the finding and the judgment thereon. Ib.
it>. Where no question of law is presented by the record a certificate by the
appellate court that the case involves questions of law of such importance that they should be passed on by the supreme court does not present
any questions of law to be determined. Commercial National Bank v.
Canniff (III. Sup.), 37 N. E., 898.
17. In determining the questions at issue the supreme court can only look at
the record and not at the opinion of the appellate court. Ib.
18. Where in an action against a firm on a note signed by one partner the
court tries the case without a jury and found that such partner had no
authority to sign the note, but also found that the other partner afterwards ratified the signature, error in admitting evidence as to the former's authority to sign the note is immaterial. Merchants' National Bank
v. Feet ( Wash.), 37 P., 290.
19. An appeal taken to the circuit court of appeals from a decree of the circuit
court entered in accordance with the mandate of the former court upon
a previous appeal, will be dismissed, even though an appeal lie to the
supreme court from the decision of the circuit court of appeals. Merrill
v. National Bank of Jacksonville, 78 Fed. Rep., 208.
ASSESSMENT. See Insolvent banks; Receivers; Shareholders; Transfer of stock.
1. Where a national banking association is insolvent, order of Comptroller of
Currency declaring to what extent the individual liability of stockholders shall be enforced is conclusive. Kennedy v. Gibson, 8 Wall.; 498;
Casey v. Galli, 94 U. S., 673; National Bank v. Case, 99 U. £., 628.
2. Payments of assessments by stockholder in national bank on increased stock
can not be applied, in law or in equity, to discharge assessments by Comptroller in final liquidation of the bank. Pacific National Bank v. Eaton,
141 U. S.,227; Thayer v. Butler, Ib., 234; Butler v. Eaton, Ib., 240.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

23

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
3. The assessments made by the Comptroller upon the shareholders of an insolvent association bear interest from the date of the order. Casey v. Galli,
94 U. S., 673.
4. Where shareholders have assessed themselves to the amount of the par value
of the stock for the purpose of restoring impaired capital, the contributions made in pursuance of such assessment, though all used in paying
the debts of the association, will not so operate as to discharge the shareholders from their individual liability. Delano v. Butler, 118 U. S., 634.
5. Where a married woman is by the State law capable of holding stock in a
national bank in her own right, she is liable to an assessment upon her
shares, though the law of the State does not authorize married women
to bind themselves by contracts for the payment of money. The law
annexes her obligations by its own force; no act or capacity to act on her
part is required. Witters\. Sowles, 32 Fed. Rep., 767; 35 Fed. Bep., 640.
6. Married women who are permitted by the laws of the State in which they
reside to become shareholders in national banks are liable to assessments
under the national banking laws. In re First National Bank of St. Albans,
49 Fed. Bep., 120.
7. The coverture of a married woman who is a shareholder in a national bank
does not prevent the receiver of the bank from recovering judgment against
her for the amount of an assessment levied upon the shareholders equally
and ratably under the statute. Keyser v. Ilitz, 133, U. S., 138.
8. It is not essential in an action to enforce the individual liability of the shareholders of an insolvent national banking association to aver and prove
that the assessment was necessary, for the decision of the Comptroller on
this point is conclusive. Strong v. South-worth, 8 Ben., 331; Kennedy v. Gibson, 8 Wall., 498; Casey v. Galli, 94 U. S., 673.
9. And the fact that the title to the stock of a deceased shareholder vests in
his administrator does not relieve the estate from the burden of an assessment. Davis v. Weed, 44 Con., 569.
10. Nor will the fact that the administration is complete and all the assets have
been distributed defeat an action brought to recover the assessment. Ib.
11. The question whether there is a deficiency of assets, and when it is necessary to enforce the individual liability of shareholders, is for the Comptroller to determine; and his decision in this matter is final and conclusive. '
Kennedy v. Gibson, 8 Wall., 498; National Bankv. Case, 99 U. S., 628; Casey
v. Galli, 94 U. S., 673.
12. The amount contributed by each shareholder should bear the same proportion to the whole amount of the deficit as his own stock bears to the
whole amount of the capital stock at its par value. And the solvent
shareholders can not be made to contribute more than their proportion to
make good the deficiency caused by the insolvency of other shareholders.
United States v. Knox, 102 11. S., 422.
13. Where, to discharge liabilities of an insolvent bank, Comptroller assessed
against shareholders a sufficient per cent on par value of stock held by
each, some being insolvent, he can not provide for deficiency by new
assessment. Ib.
14. The estate of a deceased owner of national-bank stock is liable (Rev. St.,
sec. 5152) to an assessment levied against his executors in consequence of
the failure of the bank after his death. Wickham v. Hull et al., 60 Fed.
Bep., 326.
15. An action was brought against the executors of an estate to establish its
liability for an assessment on certain shares of national-bank stock.
The estate was at the time in possession of an Iowa probate court for
purposes of administration, for which reason the Federal court could not
enforce the liability, if adjudged to exist. Defendant setup the limitations contained in the Iowa statute (Code, sec. 2421) regulating the
settlement of estates. Held, That the Federal court would not pass upon
the question whether this provision debarred complainant from sharing
in the estate, for, as the claim established in the Federal court must be
presented for allowance in the probate proceedings, the better practice
was to remit the question to the probate court. Ib.
16. Where a national bank issues certificates of its shares to a subsequent
purchaser in lieu of the certificates of the prior owner, without observing its by-law in regard to a transfer on its books, so far as creditors of
the bank are concerned a party taking and holding such shares of stock
will be subject to the liabilities imposed by section 5151 of the national
banking law. Laing v. Burley, 101 III., 591; 3 N* B. C, 369.



24

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
17. One to whom stock has been transferred in pledge or as collateral security
for money loaned, and who appears on the books of the corporation as
the owner of the stock, is liable as a stockholder for the benefit of creditors. Where the owner, holder, or pledgee of stock transfers it out and
out for the purpose of escaping liability as a shareholder to one who is
unable to meet such liability, or when the transfer is colorable and not
absolute, the transfer is ineffective as to creditors, and the transferrer
will be still liable. Therefore, when the G. bank loaned money and took
as collateral therefor shares of stock in the C. bank, which were duly
transferred in the books of the C. bank, and afterwards the G. bank transferred these shares to one of its clerks with an understanding that he
should retransfer on request, and the C. bank was then in failing condition,
held, that the G. bank was liable to contribute as a stockholder to the
debts of the C. bank. Germania National Bank of New Orleans v. Case,
Receiver, 99 U. 8., 628; 2 N. B. C, 25.
18. A letter addressed to the receiver, and signed by the Comptroller of the
Currency, directing him to institute legal proceedings to enforce the individual liability of every stockholder, under the statute, is sufficient evidence that the Comptroller decided, before the suit, that it was necessary
to enforce the personal liability of the stockholders. Bowden v. Johnson,
107 U. 8., 251; 3 N. B. C, 55.
19. The liability of the stockholders bears interest from the date of said
letter. Ib.
20. Under the national banking act, the individual liability of the stockholder
survives as against the personal representatives of a deceased stockholder. Richmond v. Irons, 121 U. S., 27; 3 N. B. C, 211.
21. A stockholder sold certain stock several months before the insolvency of
the bank, but the transfer was not made on the books till the date of the
bank's failure. Held, that the stockholder incurred the statutory liability. Ib.
22. Fifty shares of the stock of a national bank were transferred to F. on the
books of the bank October 29. A certificate therefor was made out, but
not delivered to him. He knew nothing of the transfer, and did not
authorize it to be made. On October 30 he was appointed a director and
vice-president. On November 21 he was authorized to act as cashier. He
acted as vice-president and cashier from that day. On December 12 he
bought and paid for 20 other shares. On January 2 following, while the
bank was insolvent, a dividend on its stock was fraudently made, and
$1,750 therefor placed to the credit of F. on its books. He, learning on
that day of the transfer of the 50 shares, ordered D., the president of the
bank, who had directed the transfer of the 50 shares, to retransfer it, and
gave to D. his check to the order of D. individually for $1,250 of the
$1,750. The bank failed January 22. In a suit by the receiver of the
bank against F. to recover the amount of an assessment of 100 per cent
by the Comptroller of the Currency in enforcement of the individual liability of the shareholders, and to recover the $1,750, held, first, in view of
provisions of sections 5146, 5147, and 5210, Rev. St., it must be presumed
conclusively that F. knew from November 21 that the books showed he
held 50 shares; second, F. did not get rid of his liability for $1,250 by
giving to D. his check for that sum in favor of D. individually. Finn v.
Brown, 142 U. S.t 56.
23. In winding up an insolvent national bank, the Comptroller of the Currency
is vested with authority to determine when a deficiency of assets exists,
so that the individual liability of the stockholders may be enforced, and
no appeal lies from his decision. Bailey v. Sawyer, 1 N. B. C, 356; 4 Dill.,
463.
24. The liability of a stockholder of a national bank is several, and is fixed by
his taking stock in the corporatfon. Ib.
25. When an assessment upon the stockholders is ordered by the Comptroller, a
suit at law is the proper remedy to enforce it. Ib.
26. A trustee holding shares in a national bank can not avail himself of his
exemption from personal liability for debts of the bank unless his trusteeship appears on the books of the bank. Davis v. Essex Baptist Society, 44
Conn., 582; 2 N. B. C, 110.
27. With a bequest of money a religious society purchased, and held in its own
name, shares in a national bank. The society had other donations otherwise invested. Held, that the society was not a trustee, but an ordinary stockholder, and liable to assessment for debts of the insolvent
bank. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

25

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
28. One who procures a transfer to himself, on the books of a national bank, of
stock in such bank, becomes liable for the engagements of the bank as
prescribed in the national-bank act, although such stock was pledged to
him by the owner simply as security for a debt. Moore v. Jones, 3 Woods,
53; 2 N. B. C, 144.
29. One in whose name shares of the stock of a national bank stand on the bank
books is subject to the individual liability of a shareholder, although his
holding of the stock was originally as collateral security for a loan and
the loan has been repaid and the stock certificate surrendered with an
executed power of attorney for transfer. Bowdell v. Farmers and Merchants' National Bank of Baltimore, 14 Bankers' Magazine, 387; 2 N. B. C,
146.
30. The determination of the Comptroller as to the necessity of an assessment
on stockholders of an insolvent national bank for the payment oi debts
is conclusive, and in a suit to enforce such an assessment the necessity
need not be alleged. Strong, Receiver, v. Southivorth, 8 Ben., 331; 2
N. B. C, 172.
31. S. bought shares in a national bank and caused them to be transferred to
E., who was in his employ, S. remaining the real owner. Held, that S.
was liable as stockholder upon the failure of the bank. Davis, Receiver,
v. Stevens, 20 Alb. L. J., 490; 2 N. B. C, 158.
32. In an action by the receiver of a national bank to enforce the liability of a
shareholder, it appeared that the date of the defendant's subscription to
the stock was prior to May, 1866, when the receiver was appointed; that
the Comptroller of the Currency decided on the 28th of June> 1876, that
the enforcement of this liability to its full extent was necessary, and
instructed the receiver accordingly, and that this action was thereupon
brought. Held, that although such decision and order of the Comptroller
were necessary preliminaries to a suit against the shareholder, yet, having
been delayed without sufficient apparent reason for more than six years
from the date of the subscription, the statute of limitations was a bar to
the action, the State courts having decided that an act necessarily preliminary to the commencement of a suit upon a contract must be done
within six years, unless sufficient reason for the delay is shown. Price,
Receiver, v. Yates, 19 Alb. L. J., 295; 2 N. B. C., 204.
33. Actions by the receiver of a national bank against stockholders for assessments on the stock are subject to State statutes of limitations. Butler
v. Poole, 44 Fed. Rep., 586.
34. A court has no power, under sec. 5324, U. S. Rev. St., to order the receiver
of a national bank to compound debts which are not " bad or doubtful;"
and a composition under such an order of debts not "bad or doubtful,"
as the debt of a shareholder arising on his subscription to the stock, is
ineffectual. Price v. Yates, 19 Alb., L. J. 295.
35. A stockholder of an insolvent national bank, who happens also to be one of
its creditors, can not cancel or diminish the assessment to which the provisions of sec. 5151, Rev. St., make him liable by offsetting his individual
claim against it. Hobart, Receiver, etc., v. Gould, 8 Fed. Rep., 57.
36. Section 5151, Rev. St., among other things, provides that the »shareholders
of every national banking association shall be held individually responsible for all contracts, etc., to the extent of the amount of their stock
therein, at the par value thereof, in addition to the amount invested in
such snares. Held, that upon the insolvency of such a bank a shareholder who happens to be one of its creditors can not cancel or diminish
the assessment, to which the provisions of this section make him liable,
by offsetting his individual claim against it. Ib.
37. The liability which shareholders in national banks incur under section 12
of the act of 1864, which provides for a liability "to the extent of the
amount of their stock therein, at the par value thereof, in addition to
the amount invested in such shares," is that of principals, not of sureties.
Hobart, Receiver, etc., v. Johnson, 8 Fed. Rep., 493.
38. Such a liability is not one on a "promise to pay the debt, or answer for the
default or liability, of any other person/7 within the meaning of the proviso to section 5 of the Revised Statutes of New Jersey of 1874, p. 469. Ib.
39. On the principle'of estoppel, one can not take advantage of certain statutory provisions without incurring thereby the attendant liabilities. Ib.
40. Under sec. 5151, Rev. St., owners of stock in a national bank are liable for
its debts, and persons who hold themselves out or allow themselves to
be held out as owners of stock are also liable, whether they own stock
or not. Case, Receiver, v. Small et ah, 10 Fed. Rep., 722.



26

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
41. A married woman who owns stock in a national bank is not exempt on
account of her coverture from the liability imposed by the national currency acts upon all stockholders in such banks. Anderson v. Line, 14
Fed. Rep., 405.
42. After a national bank has become insolvent and has closed its doors for
business, its shareholders' liability to creditors is so far fixed that any
transfer of their shares must be held fraudulent and inoperative as
against the creditors of the bank. Irons et al. v. Manufacturers' National
Bank of Chicago et al, 17 Fed. Rep., 308.
43. The Pacific National Bank of Boston was organized in October, 1877. with
a capital of $250,000, with the right to increase it to $1,000,000. In
November, 1879, its capital was raised to $500,000; September 13, 1881, the
directors voted to increase the capital to $1,000,000. On November 18,
1881, the bank suspended. On December 13,1881, the directors voted that
as $38,700 of the increase of capital stock had not been paid in the capital be fixed at $961,300, and the Comptroller of the Currency was notified
to that effect, and he notified the bank, under Rev. St.-, sec. 5205, to pay
a deficiency on its capital stock by an assessment of 100 per cent. At
the annual meeting the assessment was voted, and on March 18,1882, with
consent of the Comptroller and the approval of the directors and the
examiner, the bank resumed business, and continued until May 20, 1882,
when it again suspended and was put in the hands of a receiver. Prior
to May 20, 1882, $742,800 of the voluntary assessment had been paid in.
Complainant was the owner of twenty-five shares of stock on September
13, 1881, and after the vote to increase the stock took twenty-five shares,
for which he paid $2,500 on October 1, 1881, and received a certificate.
He voted for the assessment at the annual meeting, and in February, 1882,
paid the assessment on the old and new stock, and subsequently sought
to enjoin the suit at law against him by the receiver to enforce his individual liability as a stockholder, under Rev. St., sec. 5151, on the ground
that the increase of capital was illegal and void, and that the voluntary
assessment, under Rev. St., sec. 5205, relieved the stockholders of individual liability. Held, that he was not entitled to relief, and the bill
should be dismissed. Morrison v. Price, Receivery 23 Fed. Rep., 217.
44. A discharge in bankruptcy releases a shareholder of a national bank from
his statutory individual liability to creditors of the bank where, at the
time of his discharge, the claims of such creditors were provable, not
merely contingent. Irons et al. v. Manufacturers' National Bank et al., 27
Fed. Rep., 591.
45. When bank stock was sold, but not transferred on the books of the bank,
and the bank afterwards failed, the executors of the person in whose
name the stock stood on the books were held liable for assessment,
although said stock had been paid for by a purchaser buying at the
request of the president of the bank, who gave him a cashier's check for
that purpose, placing the money so furnished to the credit of said purchaser on the books of the bank as a temporary loan, the intention being
ultimately to transfer said shares to a third party as part of a larger proposed investment in stock, for which funds had been placed in the hands
of the president of the bank. Price. Receiver, v. Whitney et al., 28 Fed.
Rep., 297.
46. Defendant subscribed for new stock in the reorganization of a bank, and
received a certificate on the basis of a total subscription of $500,000. The
actual increase was $461,300. Pie protested against the same, and refused
to vote on the stock, but retained his certificate until the bank went into
the hands of a receiver several months later. Held, that he was liable to
the receiver on his subscription, and it was too late to claim that the
increase as to him was invalid. Butler, Receiver, v. Aspinwall, 33 Fed.
Rep., 217.
47. A pledgee of shares of stock in a national bank, who does not appear by the
books of the bank or otherwise to be the owner, is not liable for an assessment upon the shares on the insolvency of the bank, under Rev. St., sec.
5151, rendering shareholders liable for the debts of the association to the
extent of the par value of their stock. Welles v. Larrabee et al., 36 Fed.
Rep., 866.
48. One to whom the shares are assigned in trust as security for a debt due a
third person, and following whose name on the stock book of the bank is
the word " trustee, " i s not liable for the assessment under section 5151,
and is also within the provision of section 5152, exempting from such
liability persons holding stock as trustees. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

27

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
49. In an action by the receiver of an insolvent national bank to recover of a
stockholder an assessment on his shares, the defendant alleged as a counterclaim that the Comptroller of the Currency had directed the bank to
restore the value of certain securities held by it which had been reported
worthless by an examiner; that certain of the stockholders, including
defendant, had raised a fund which was placed in the hands of trustees to
apply so much as might be from time to time required by the Comptroller
to retire such securities; that the fund was deposited with the bank with
full notice of the purpose to which it was to be applied; that a portion
had been used to retire the securities designated, and that when the bank
failed the balance of the fund came into the hands of the receiver, and
was now claimed by him as a part of the ordinary assets of the bank; that
a certain portion of this balance belonged to defendant, which amount he
asked to set off against plaintiff's demand. Reid, that a general demurrer
based on the ground that no set-off or counterclaim was available in such
an action would be overruled, as the claim could be set off if it was of
such a nature that the holder would be entitled to receive the full amount
before distribution by the receiver to general creditors. Welles v. Stout,
38 Fed. Rep., 807.
50. Where a shareholder of a national bank makes a bona fide sale of his stock
and goes with the purchaser to the bank, indorses the certificate, and
delivers it to the cashier of the bank with directions to make the transfer
on the books, he has done all that is incumbent upon him to discharge
his liability, and lie is not liable, though the cashier failed to make the
transfer, upon the subsequent suspension of the bank, for an assessment
made by the Comptroller of the Currency, under Rev. St., sec. 5151, to
pay the bank's debts. Hayes v. Shoemaker, 39 Fed. Rep., 319.
51. Defendant, for the purpose of helping a bank, of which complainant was a
stockholder, in a financial crisis, loaned it certain securities belonging to
complainant, and when complainant was informed of the fact she did not
object. She was assured by the bank's officers that if the bank was saved
the securities would be returned, and if it failed the avails would be
credited on her assessment as a stockholder. The bank failed, and the
securities were not returned. Held, that she was not entitled, as against
other creditors, to set off the value of the securities against her assessment, but was, as to such value, on the same footing as any other creditor. Soivles v. Witters et al., 39 fed. Rep., 403.
52. One who subscribes and pays for a specified number of shares of a " proposed increase" of the capital stock of a national bank, which increase
is in fact never issued, and to whom the bank officials transfer, instead,
old stock of the bank without his knowledge or consent, is not a "shareholder ;; within the meaning of Rev. St., sec. 5151, imposing individual
liability on the shareholders for the debts of national banks. Stephens
v. Follett et al., 43 Fed. Rep., 842.
53. The fact that the subscriber for the new shares received a dividend on the
old shares so transferred to him does not estop him from denying his
liability as a shareholder, where such dividend was received in the belief
that it was paid to him by virtue of his subscription to the new stock. Ib.
54. A person who becomes a stockholder in a national bank thereby submits
himself to the provisions of the national-bank act, and becomes liable to
be assessed to the extent of his statutory liability for all debts of the
bank existing while he holds his stock. Young v. Wempe et al., 46 Fed.
Rep., 354.
55. In an action by the receiver of a national bank to enforce an assessment
under Rev. St., sec. 5151, against one credited on the transfer books as a
stockholder, it appeared that nearly a year before the failure he had sold
his stock to a broker for an undisclosed principal; that he indorsed the
same, and requested the broker to inform the cashier of the transaction,
and to have the stock transferred; that the broker accordingly handed the
stock to the cashier, gave him the necessary information, and requested
him to make the transfer. This the cashier promised to do, but in fact the
transfer was never made. The certificate recited that it was transferable
on the books of the company "by indorsement hereon and surrender of
this certificate.'' Held, that in requesting the cashier to make the transfer the broker acted as the seller's agent, and that the latter did all that
was required of him as a prudent business man, and could not be held
liable as a stockholder. Young v. McKay, 50 Fed. Rep., 394.
56. A Federal court will not, even if it has the power under Rev. St., sec.
5234, grant an order authorizing a receiver of a national bank to coin


28

REPORT OF THE COMPTROLLER OP THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
pound the statutory liability of certain stockholders by accepting payment of a gross sum, less than is due, in satisfaction and discharge thereof,
although more money would thus be realized than by proceeding to collect
the same in the usual way, when it appears probable that such stockholders have fraudulently conveyed their property to avoid their legal
obligations as stockholders, or to shield themselves from injury and
exposure by litigation. In re Certain Shareholders of the California National
Bank of San Diego, 53 Fed. Rep., 38.
57. A person who is entered on the books of a national bank as the owner of
stock, but who is admitted to hold the stock in trust for the true owner,
is not liable as a stockholder for the debts of the bank, when the true
owner has been adjudged so liable, although nothing is realized upon the
execution of such judgment. Yardley v. Wilgus, 56 Fed. Rep., 965.
58. When the full personal liability of shareholders is to be enforced the action
must be at law. Kennedy v. Gibson, 8 Wall., 498; Casey v. Galli, 94 U. S., 673.
59. And it may be at law, though the assessment is not for the full value of the
shares; for, since the sum each shareholder must contribute is a certain
exact sum, there is no necessity for invoking the aid of a court of equity.
Bailey v. Sawyer, 4 Dill., 463; 1 N. B. C, 356.
60. But the suit may be in equity. Kennedy v. Gibson, 8 Wall., 498.
61. It is no objection to a bill against stockholders within the jurisdiction of
the court that other stockholders, not within such jurisdiction, are not
codefendants. Ib.; Case v. Bank, 100 U. S., 446.
62. But a pledgee of shares of stock in a national bank who, in good faith and
with no fraudulent intent, takes the security for his benefit in the name
of an irresponsible trustee for the avowed purpose of avoiding individual
liability as a shareholder, and who exercises none of the powers or rights
of a stockholder, incurs no liability as such to creditors of the bank in
case of its failure. Anderson, Receiver, v. Phila. Warehouse Company, 111
U. S., 479.
63. The individual liability of the shareholders of an insolvent association may
be enforced for the purpose of paying all of its liabilities, and not merely
for the purpose of paying its "debts," technically so called. Stanton v.
Wilkeson, 8 Ben., 357.
64. The individual liability of the stockholders must be restricted in its meaning
to such contracts, debts, and engagements of the association as have
been duly contracted in the ordinary course of its business. And, therefore, creditors of an association who make settlements after the association
is put into liquidation and receive from the president payment of their
claims in paper of the association, or of the individual notes of the
president himself, indorsed or guaranteed in the name of the association,
are not to be considered as creditors of the association entitled to subject
the stockholders to individual liability, for these are new contracts.
Richmond v. Irons, 121 U. S., 27.
65. The individual liability of the stockholders is enforceable only in behalf of
all the creditors, and any security given by a stockholder for his liability
in this respect should likewise be for the benefit of all the creditors.
Accordingly, a mortgage of all the individual property of a stockholder,
made after the bank has closed its doors, for the purpose of securing a
single depositor, is void as against a judgment obtained against such
stockholder in an action by the receiver to recover the amount of his
individual liability. Gatch v. Fitch, 34 Fed. Rep., 566.
66. Bill filed by receiver against transferrer and transferee to enforce such
liability will lie where it is for discovery as well as relief, as the transfer
would be good between the parties. Bowden v. Johnston, 107 U. S., 251.
67. A shareholder in a national bank, who is liable for its debts, is liable for
interest thereon to the extent of the bank's liability, and not in excess of
the maximum liability fixed by statute. Richmond v. Irons, 121 JJ. S., 27.
68. The creditors of < insolvent association must seek their remedy through
m
the Comptroller, in the mode prescribed by the statute; they can not
proceed directly in their own names against stockholders or the debtors
of the bank. Kennedy v. Gibson, 8 Wall., 498.
69. Each shareholder of a national banking association is individually liable
for its debts to the extent of the amount of his stock at its par value, in
addition to the amount invested in the shares held by him, and a receiver
appointed to wind up the affairs of such an association that has become
insolvent is authorized, under the direction of the Comptroller of the
Currency, to enforce the liability of its stockholders, and to collect from



REPORT OF THE COMPTROLLER OF THE CURRENCY.

29

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
each of them the necessary amount, up to the extent of his liability, for
the payment of the creditors. King et al. v. Armstrong, Receiver, 34 N. E.,
163; 50 Ohio St., 222.
70. Code N. C , sec. 1826, provides that no woman during coverture shall be
capable of making any contract to affect her real and personal estate without the written consent of her husband. Held, that a purchase of stock
by a married woman is not a l( contract" within the terms of the statute,
and that the wife is liable upon an assessment, although the stock was
purchased without the written consent of her husband. Robinson v. Turrentine et al., 59 Fed. Rep., 554.
71. One in whose name stock of an insolvent national bank stood paid an assessment thereon under a threat by the receiver to sue therefor, though he
claimed that he had sold the stock. More funds were collected than
were required to pay the creditors of the bank. Held, that such payment
could not be recovered as having been made under a mistaken belief by
the payor that the whole amount would be required to pay the creditors
of the bank. Holt v. Thomas (Cal.), 38 P., 891.
72. The F. National Bank suspended business for lack of funds, and was placed
in charge of a bank examiner, who required that $50,000 should be raised
and placed in the bank before it could resume business. The stockholders, including one B., the president, thereupon raised this sum, in amounts
equal to 50 per cent of their stock, and placed it in the bank. The examiner
caused entries to be made on the books indicating that this contribution
was a voluntary assessment, subject, after one year, to the liabilities of
the bank, and permitted the bank to resume. B., at a meeting of the
directors subsequently held, protested against these book entries, but
afterwards signed reports in which the $50,000 was included as surplus.
At the time of the advance the bank held two notes of B., and discounted
another note of his a few days before the expiration of a year from the
advance. Shortly after the expiration of the year the bank again suspended payment. Held, that the advance to the bank was a voluntary
assessment, and not a loan, and could not be set off by B. in an action
against him on the notes by the receiver of the bank. Brodericlc v. Brown,
69 Fed. Rep., 497.
73. M. bequeathed to his wife "for life or widowhood" 40 shares of stock in a
national bank, together with other personal property, providing that she
might use any of such personal property if necessary for her comfortable
support, and that, at her death or marriage whatever should remain of
such property should go in equal shares to his four children. The administrator with the will annexed of M.'s estate transferred the stock on the
books of the bank to M.'s widow. The bank having become insolvent,
and an assessment having been made by the Comptroller on the shareholders, for which a judgment was obtained against M.'s widow, which
remained unsatisfied, the receiver of the bank brought suit against M.'s
administrator to compel payment of the assessment out of M.'s general
estate. Held, that whether the widow took an absolute title to the stock
by virtue of her power of disposal, or a life iuterest with remainder to
the children, the beneficial ownership of the stock, in either case, had
passed from M.'s estate, and the estate could not be made liable for the
assessment. Held, further, that the administrator properly transferred
the stock to the widow, and was not required to hold the legal title
thereto, as administrator or trustee, during her life or widowhood, but
that such transfer made no difference to the liability of the estate of M.,
since the beneficial interest would in either case have been in the widow
and children. Blaclcmore v. Woodward et al., 71 Fed. Rep., 321.
74. The capital, the unpaid subscriptions to the capital stock, and the liability
of the holders of the paid-up stock to pay an additional amount equal to
the par value of their stock under section 5151, Rev. St., constitute a trust
estate sacredly pledged for the security of the creditors of a national banking association. The willful destruction or diminution of any part of this
trust estate or the diversion of the proceeds of any of it from the creditors
of the bank is a fraud upon these creditors, and subjects its perpetrator
to a suit by them or their legal representative for proper relief. Stuart v.
Hayden et al., 72 Fed. Rep., 402.
75. One who knowingly permits his name to be entered upon the stock books of
a national bank as the owner, individually, of stock therein, can not be
permitted, as against creditors or a receiver of the bank representing them,
to show that he was not the owner of the stock, and he is liable for an



30

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
assessment thereon, though he held the stock, in fact, as trustee for the
bank itself. Lewis v. Sivitz, 74 Fed. Rep., 381.
76. One C. was the holder of stock in the D. National Bank, and was also an
officer of the L. bank which held stock in the D. bank. In the latter
capacity he was informed of an urgent demand upon the L. bank to send
$5,000 by telegraph in aid of the D. bank. Within a week after this
demand L. transferred his stock in the D. bank, without consideration,
to his five children, one of whom was a married woman, and two minors.
Within five months thereafter the D. bank failed and an assessment was
made on the stockholders. Held, that the transfer must have been made
by L. in contemplation of the liability, and that both he and his transferees
• were liable for the assessment, the latter because the liability was cast
upon them by law when they became stockholders. Foster v. Lincoln et al.,
74 Fed. Rep., 382.
11. In an action by the receiver of a national bank to enforce the individual
liability of a stockholder, an allegation in the complaint that on a given
date the Comptroller, having ascertained and determined that the assets,
property, and credits of the bank were insufficient to pay its debts and
liabilities, and, as provided by the act of Congress, made an assessment
and requisition on the shareholders of the said bank of a given sum upon
each share held and owned by them, respectively, at the time of its default,
and directed the receiver to take all necessary steps to enforce the liability,
is sufficient. Kennedy v. Gibson, 8 Wall., 498, distinguished; Nead v. Wall
{C.C.), 70 F., 806.
78. One buying stock in a national bank in the names of his minor children
himself becomes liable to assessment as a shareholder, for minors are
incapable of assenting to become stockholders, so as to bind themselves
to the liabilities thereof. Foster v. Chase et al., 75 Fed. Rep., 797.
79. An executor who receives certificates of national-bank stock as part of the
assets of decedent's estate, and includes them in his inventory returned
to the probate court, is a shareholder, and liable as such for an assessment under Rev. St., § 5151, subject to the relief granted by section 5152.
Parker v. Robinson (C. C. A.) 71 F., 256.
80. The complaint, in an action by the receiver of an insolvent national bank
to enforce an assessment on the shareholders, made by the Comptroller of
the Currency, need not aver that there was a necessity therefor, or that
the Comptroller determined that there was such necessity, though the law
provides that the Comptroller may enforce the individual liability of the
stockholders, if necessary to pay the debts of the bank. It is enough that
the complaint alleges that the Comptroller made the assessment and
directed its enforcement. O'Connor v. Wiiherby (Cal.) 44 P., 227.
81. The allegation of the complaint, in an action for an assessment on shareholders in a bank, that "defendant, though demanded, has failed and
refused to pay said assessment, or any part thereof/' is a sufficient averment as against a general demurrer of nonpayment at the time action was
commenced. Ib.
82. In an action by the receiver of an insolvent national bank to enforce an
assessment on the shareholders, made by the Comptroller of the Currency,
the necessity of the Comptroller's making as large an assessment as that
in suit can not be litigated. Ib.
83. The bill contemplated by the second section of the act of June 30, 1876, to
enforce the individual liability of stockholders in a national banking
association that has gone into liquidation, need not purport expressly on
its face to be filed by the complainant on behalf of himself and all other
creditors, for the law would give it that effect and the court would so
treat it; but, if this was necessary, the bill might be amended in that
respect by leave of the court. Irons, ExJr, etc., and others v. Manufacturers' National Bank of Chicago and others, 17 Fed. Rep., 308.
84. The manifest intention of the national banking act is a distribution of its
assets in case a bank becomes insolvent equally among all the unsecured
creditors, and the diligence of a creditor who files a creditor's bill can
give him no greater rights than are given any other creditor to share in
the distribution of the assets, and a prayer in the bill that such creditor
be given priority over other creditors will not be granted. Ib.
85. Where the original bill filed before the passage of the act of June 30, 1876,
was amended after the passage of that act so as to make the individual
shareholders defendants, and subject them to liability, such bill will not
be considered on that account multifarious. Ib.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

31

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
86. The act of June 30, 1876, did not create any new liability on the part of the
stockholders, or provide for enforcing such liability against them under
circumstances where it could not have been enforced before that act was
passed. This act is not retroactive, and does not create rights which did
not exist prior to its passage as against existing stockholders, though it
may be construed as limiting the tribunal in which proceedings are to be
instituted for enforcing the stockholder's liability to a United States
court, instead of allowing creditors to resort to any competent tribunal
with equity power. Ib.
87. Entering an order that "the complainants confessing the pleas of bankruptcy of defendants, it is ordered that this case be stayed as to them,"
does not amount to a final decree, but simply confesses the facts set up
in the plea, leaving the court to adjudge the law upon such facts whenever the main cause is heard. Ib.
88. Where the original bill was filed February 3, 1875, before the passage of the
act of June 30, 1876, and a receiver was appointed February 26, 1875,
thereunder, and an amended bill, making the individual stockholders
defendants, was filed October 5, 1876, and after the tiling of the amended
bill certain of the defendants were adjudged bankrupts, their pleas of
bankruptcy will constitute a sufficient bar in their behalf. Ib.
89. Where it is admitted by the defendants that they were shareholders in a
national bank, but the number of shares respectively held by them is not
admitted, the names of the shareholders and the number of shares held
by each, as shown by the stock ledger and stubs of the stock certificates
and the dividend sheets of the bank on which they respectively drew the
last dividends, will be prima facie proof of the number of shares held,
and, unless rebutted, sufficient. Ib.
90. A bill to enforce against the separate estate of a married woman an assessment upon shares of national-bank stock is not open to the objection that
it does not allege that she had the capacity to become a stockholder,
whether she became such before or after marriage, where it alleges that
she was the owner of the shares, and where a statute of the State in which
the bank is located (Dig. St. Ark., 1874, sec. 4194) provides that a married
woman may transfer her property, carry on any business, and perform any
services on her separate account, and that her earnings shall be her separate property, and may be used or invested by her in her name. Bundy v.
Cocke, 128 U. S., 185; 3 N. B. C, 316.
91. The bill alleging that the married woman is possessed of property in her own
right sufficient to pay the assessment and praying for a decree of payment
therefrom, and the bill of revivor filed after her death against her husband
praying for relief out of the assets received by him as her legatee, devisee,
or executor, the case is one of equitable cognizance. Ib.
92. A suit by the receiver of an insolvent national bank to collect an assessment
by the Comptroller upon the stock from a stockholder who has made an
alleged fraudulent transfer of his shares is based upon the statutory liability of the stockholder, and not upon any injury growing out of the
fraudulent transfer; and therefore the statute of limitations begins to run
from the date the assessment becomes due, and not from the discovery of
the fraud. Thompson v. German Ins. Co. et al,f 77 Fed. Rep., 258.
93. On a bill by the receiver of an insolvent national bank to collect an assessment by the Comptroller on the stock from a former stockholder, on the
ground that, to escape liability, he had transferred his shares, within six
months of the failure of the bank, to one having no means, it appeared
that the transfer was made on the books of the bank, no concealment
thereof being attempted, and that the receiver made no inquiry as to the
nature of the transfer, and took no action against defendant until the
assessment had become barred. Held, that equity would not relieve against
the bar of the statute. Ib.
94. It is not necessary, in order to hold liable for an assessment upon the shareholders of an insolvent national bank one who has transferred his stock to
an irresponsible person, to show that the trausferrer had actual knowledge
of the insolvency of the bank at the time of the transfer, but it is sufficient
if he had good ground to apprehend its failure, and made the transfer with
intent to relieve himself from individual liability. Cox v. Montague, 78
Fed. Rep., 845.
95. Upon the trial of a suit brought by the receiver of an insolvent national
bank to collect an assessment from one who had transferred his stock, a
letter written by the defendant to a bank examiner, in reply to an inquiry
about the bank, in which defendant admits his transfer of his stock when




32

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
the bank was embarrassed, is not a privileged communication, though the
bank examiner's letter, to which it is a, reply, is marked " Confidential." Ib.
96. A corporation which receives shares of national-bank stock in pledge, with
power to use and sell, and which, in good faith, without suspicion of the
bank's insolvency, causes new certificates to be issued in the name of one
of its employees, merely because it is unwilling they should stand in the
name of the original owners, remains a mere pledgee, and i» not liable, as
a shareholder, to assessment on the stock. National Park Bank of City of
New York v. Harmon, 79 Fed. Rep., 891.
97. L., a stockholder in the D. national bank, transferred his stock shortly before
its failure to his married daughter and other minor children. It appeared
from the circumstances surrounding the transaction that L,, though perhaps not supposing the D. bank to be actually insolvent, was advised of
facts not generally known, which indicated such uncertainty as to its
ability to stand a run, which had apparently begun, as to make it safer for
him to dispose of his stock forthwith, and that the transfer was made with
the intent that, if all came out well, his children should have the stock,
while, if the bank met with disaster, he would not be obliged to throw
good money after bad. Held, that the transfer so made could not stand
against the creditors of the bank, and L was liable at the suit of its
receiver for an assessment on the stock. Foster v. Lincoln's Ex'r, 79 Fed.
Bep.f 170.
98. The circuit court has jurisdiction of an action to ascertain or fix the liability
upon shares of an insolvent national bank which are alleged to have been
transferred with a fraudulent intent to escape such liability when the
amount of the assessment exceeds $2,000 exclusive of interest and costs.
Thompson v. German Ins. Co. et ah, 76 Fed. Rep., 892.
99. The right of the receiver of an insolvent national bank to enforce the liability
of stockholders, though created by United States statute, may be barred
by the running of a State statute of limitations. Ib.
100. The bar of a statute of limitations will be enforced, when applicable, in
equity as well as at law. Ib.
101. The action of the Comptroller in making an assessment against the stockholders of an insolvent national bank creates a right of action against
the stockholders, but is not the institution of a suit to enforce it so as
to stop the running of limitation. The statute begins to run from the
date the assessment becomes due. Ib.
102. A creditor who receives from his debtor a transfer of shares in a national
bank as security for his debt, and who surrenders the certificates to the
bank, and takes out new ones in his own name, in which he is described
as pledgee, and holds them afterwards in good faith as such pledgee and
as collateral security for the payment of his debt, is not a shareholder
subject to the personal liability imposed upon shareholders by Revised
Statutes, section 5151. Pauly v. State Loan and Trust Company, 165
U. S., 606.
103. The previous cases relating to the liability of such shareholder examined
and held to establish:
(1) That the real owner of the shares of the capital stock of a national
banking association may, in every case, be treated as a shareholder within
the meaning of section 5151;
(2) That if the owner transfers his shares to another person as collateral security for a debt due to the latter from such owner, and if, by the
direction or with the knowledge of the pledgee, the shares are placed on
the books of the association in such way as to imply that the pledgee is
the real owner, then the pledgee may be treated as a shareholder within
the meaning of section 5151 of the Revised Statutes of the United States,
and therefore liable upon the basis prescribed by that section, for the
contracts, debts, and engagements of the association;
(3) That if the real owner of the shares transfers them to another person, or causes them to be placed on the books of the association in the
name of another person, with the intent simply to evade the responsibility
imposed by section 5151 on shareholders of national-banking associations,
such owner may be treated, for the purposes of that section, as a shareholder, and liable as therein prescribed;
(4) That if one receives shares of the stock of a national-banking association as collateral security to him for a debt due from the owner, with
power of attorney authorizing him to transfer the same on the books of the
association, and being unwilling to incur the responsibilities of a shareholder as prescribed by the statute, causes the shares to be transferred on



REPORT OF THE COMPTROLLER OF THE CURRENCY.

33

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
such books to another, under an agreement that they are to be held as
security for the debt due from the real owner to his creditor—the latter
acting in good faith and for the purpose only of securing the payment of
that debt without incurring the responsibility of a shareholder—he, the
creditor, will not, although the real owner may, be treated as a shareholder
within the meaning of section 5151; and
(5) That the pledgee of personal property occupies toward the pledgor
somewhat of a fiduciary relation, by virtue of which, he being a trustee
to sell, it becomes his duty to exercise his right of sale for the benefit of
the pledgor. Ib.
104. Where one residing in Maryland subscribes for stock of a national bank of
another State and then transfers it to his wife, also a resident of Maryland, she becomes owner thereof, and is subject to stockholders' liability,
under Revised Statutes, United States, $ 5152, without regard to the laws
of the other State relative to contract by married women. Kerr v. Urie
(Md.), 37 A., 789.
105. A person appearing on the books of a national bank to be absolute owner
of stock is subject to stockholders' liability, though holding it as
trustee. Ib.
106. It has been repeatedly settled by this court that the Comptroller of the
Currency has power to appoint a receiver of a defaulting or insolvent
national bank, and to call for a ratable assessment upon the stockholders
of such bank without a previous judicial ascertainment of the necessity
for such action; and the contention that there is presented in this case a
constitutional question not considered in the prior cases is an assumption
with no foundation in fact. Bushnell v. Leland, 164 U. S., 684.
107. As by Rev. St., U. S., sec. 5242, an attachment issued before final judgment
from a State court against a national bank is prohibited, such an attachment does not operate as notice to the absent defendant, so as to give the
court j urisdiction of the party or subject-matter. Safford v. First National
Bank (Ft.), 17 A., 748.
108. An assessment against the estate of an owner of national-bank stock, in the
hands of his executrix, is enforceable in the Federal courts, though proceedings for settlement of the estate are pending in the probate court of
Vermont. Brown v. Ellis, 86 Fed. Rep., 357.
109. The widow of a deceased stockholder of an insolvent national bank, who
by authority of the will undertook to settle the estate as executrix without judicial proceedings, but failed to transfer such stock to herself or
other person, can not, on the ground that the estate is fully settled, escape
liability as executrix for assessments on such stock to the extent of assets
of the estate under her control. Baker v. Beach et al., 85 Fed. Rep., 836.
110. To a bill by a creditor of a corporation averring its insolvency and demanding the appointment of a receiver, an accounting, and the enforcement of
the individual liability of the stockholders, the corporation is a necessary
party defendant. Elkhart National Bank of Elkhart, Ind., v. Northivestern
Guaranty Loan Company of Minneapolis, Minn., et al., 84 Fed. Rep., 76.
111. Where the jurisdiction of the Federal courts depends on the diverse citizenship of the parties, the Federal courts of the residence of stockholders of
an insolvent corporation, organized under the laws of another State*, have
no jurisdiction of a suit brought by a creditor of the corporation for an
accounting and a receivership, and to enforce the individual liability of
the stockholders, if the corporation has not voluntarily appeared in the
action. In such case the nonresident corporation can not be compelled to
appear. Smiths. Lyon, 10 Sup. Ct., 303, 133 U. S., 315, and Improvement
Co. v. Gibney, 16 Sup. Ct., 272, 160 U. S., 217, followed and applied. Ib.
112. In such a case the defendant stockholders who appear may set up this
defense by demurrer. Ib.
113. Defendant acquired stock of a national bank through his agents, in whose
names the shares were registered on the books of the bank, and so
appeared when the bank became insolvent. Defendant had all the time
held the certificates, so indorsed that he might have had the shares registered in his own name. Held, that the receiver can recover from defendant an assessment on said stock for the benefit of creditors, though he
might have proceeded against those in whose names the shares appeared
on the bank's stock register. Hubbell v. Houghton, 86 Fed. Rep., 547.
114. On notice from the Comptroller, under Rev. St., § 5205, that the bank's capital is impaird so as to require an assessment on the stockholders, such
assessment is to be made by the stockholders themselves, and an assessment by the directors is void. Hulitt v, Bell et al.f 85 Fed, Rep.f 98.

CUR 1900, PT 1
3


34

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
115. An assessment to restore impaired capital, under Rev. St., § 5205, is only
enforceable by subjecting the stock of persons refusing to pay, and no
action will lie against the stockholders personally. Ib.
116. When an executor refuses to recognize, as a claim against decedent's estate,
an assessment by the Comptroller of the Currency upon national-bank
stock belonging to the deceased, a Federal court will assume jurisdiction
of an action against the executor to determine the liability, although the
estate is in the course of administration in the probate court. Zimmerman
v. Carpenter, 84 Fed. Rep., 747.
117. The estate in the hands of an executrix at the date of the failure of a national
bank is liable for the assessment on stock belonging to the estate in the
same manner as if deceased was living (Rev. St., $ 5152); and the fact
that the time for filing claims against the estate has expired is no bar to
an action to fix such liability. Ib.
118. Where bank stock was transferred by an executrix to herself individually,
and she admits before suit is brought, and again in her answer, that the
transfer was without consideration, and is void, such admission does not
vacate the transfer, and a bill in equity will lie to determine the liability
of the estate on an assessment of the face value of the stock. Ib.
* 119. Where, at the hearing, the defendant raises the point that the claimant has
a plain, speedy, and adequate remedy at law, the court will not make a
decree if there is a plain defect of jurisdiction, but the bill will be construed more liberally than if the point had been raised by demurrer. Ib.
120. A stockholder in a national bank, with knowledge that the bank is in a failing condition, can not make a voluntary transfer of his stock to one financially irresponsible, and thereby escape liability for assessments. Baker v.
Beeves et al., 85 Fed. Rep., 837.
121. The owner, by assignment of stock in a national bank at the time of its failure, is liable for assessments thereon, though his assignor, who transferred
it knowing that the bank was in a failing condition, is also liable. Ib.
122. A pledgee of national-bank stock is not liable as a stockholder for assessments
except by estoppel. Baker v. Old National Bank of Providence, R. I., et al.,
86 Fed. Rep., 1006.
123. Where shares of an insolvent bank are registered on the books " P . A. Cranston, Cashier Old National Bank, Providence, R. I.," the latter bank, in a
suit by the receiver to hold it liable as a shareholder for assessments, is
not estopped by the registry from setting up the fact that it holds the stock
merely as a pledge. Ib.
124. And the cashier, individually, is not estopped from avoiding liability on the
same ground. Ib.
125. An executrix, who is also the sole devisee and legatee under a will, does not
acquire title to national-bank stock constituting part of the estate, so as
to prevent the estate from being liable to an assessment made by the Comptroller of the Currency, merely by the fact of having paid or secured all
the debts owing by decedent, the estate still remaining unsettled. Tourtelot v. Finke, 87 Fed. Rep., 840.
126. A trustee, though not appointed by a will or an order of a court or judge, is
not personally liable for assessments against stock of an insolvent national
bank owned by this cestui que trust, but standing in his name, where he
has been guilty of no fraud, concealment, or negligence. Lucus v. Coe, 86
Fed. Red., 972.
127. In fixing the liability for assessments against stock of an insolvent national
bank, the effort of the court should be to ascertain who is the actual owner,
and to hold him, releasing the apparent owner if he has done nothing to
deceive or mislead. Ib.
128. Where one subscribes for part of an increased issue of national-bank stock,
but actually receives original stock instead, and holds it for several years,
receiving dividends and paying assessments thereon, he will be liable,
upon failure of the bank, to assessment on such stock by the Comptroller
of the Currency. Rand et al. v. Columbia National Bank of Tacoma, Wash.,
etal., 87 Fed. Rep., 520.
129. A sale of all the shares of stock held by a shareholder in a national bank,
when such sale is made under the provisions of and for the purpose set
forth in section 5205 of the Revised Statutes of the United States, as
amended by the act of June 30, 1876, is void, unless at such sale the stock
brings a price equal in amount to the assessment placed thereon under the
provisions of that section. Merchants' National Bank of Rome v. Fouche3
Supreme Court of Georgia, July, 1898.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

35

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
130. One who holds shares of national-bank stock—the bank being at the time
insolvent—can not escape the individual liability imposed by the statute
by transferring his stock with intent to avoid that liability, knowing or
having reason to believe, at the time of the transfer on the books of the
bank, that it is insolvent or about to fail. Stuart v. Hay den, 169 U. S., 1;
Gruetter v. Stuart, ib.
131. A transfer with such intent and under such circumstances is a fraud upon
the creditors of the bank, and may be treated by the receiver as inoperative between the transferrer and himself, and the former held liable as
a shareholder without reference to the financial condition of the transferee. Ib.
132. The right of creditors of a national bank to look to the individual liability
of shareholders, to the extent indicated by the statute, for its contracts,
debts, and engagements, attaches when the bank becomes insolvent; and
the shareholder can not, by transferring his stock, compel creditors to
surrender this security as to him, and force the receiver and creditors to
look to the person to whom his stock has been transferred. Ib.
133. If the bank be solvent at the time of the transfer—that is, able to meet its
existing contracts, debts, and engagements—the motive with which the
transfer is made is immaterial, as a transfer under such circumstances
does not impair the security given to creditors; but if the bank, be
insolvent, the receiver may, without suing the transferee and litigating the
question of his liability, look to every shareholder who, knowing or having reason to know at the time that the bank was insolvent, got rid of
his stock in order to escape the individual liability to which the statute
subjected him. Ib.
134. Whether, the bank being in fact insolvent, the transferrer is liable to be
treated as a shareholder in respect of its existing contracts, debts, and
engagements, if he believed in good faith at the time of the transfer that
the bank was solvent—not decided; although he may be so treated, even
where acting in good faith, if the transfer is to one who is financially
irresponsible. Ib.
135. Where the circuit court and the circuit court of appeals agree as to what
facts are established by the evidence, this court will not take a different
view unless it clearly appears that the facts are otherwise. Ib.
136. A stockholder, by purchase in a national bank, can not defend against an
action by a receiver to recover an assessment on the ground that the
original capital stock of the bank was never paid in. Wallace v. Rood,
C. C, 89 Fed. Rep., 11.
137. One induced by the fraud of a national bank to purchase stock therein,
which the bank in reality owned, can not make an effectual tender of
recission which will support an action at law to recover the purchase
price after the bank has passed into the hands of a receiver. Ib.
138. In an action by the receiver of a natioual bank to enforce an assessment
against a stockholder, the latter can not maintain a cross petition to
recover the purchase price paid for his stock on the ground of the fraud
of the bank inducing his purchase. Ib.
139. The statutory inhibition against the purchase by a national bank of its
own stock does not render stock so purchased and held in the name of
a third person invalid after its sale to another for value. Ib.
140. One induced to purchase stock of a national bank by fraudulent representations, who retains it until a receiver is appointed, can only escape liability
for an assessment against stockholders by alleging and proving every fact
entitling him to be discharged from his contract as against the creditors
of the bank. Ib.
141. A right of action by the receiver of an insolvent national bank against a
stockholder to recover an assessment does not arise until the necessity for
the assessment has been determined and the assessment made by the
Comptroller; hence limitation runs against such an action only from that
time. Aldrich v. Yates, C. C, 95 Fed. Rep., 78.
142. The action of Comptroller of the Currency in making an assessment against
the stockholders of an insolvent national bank is conclusive as to the
necessity of such assessment, which can not be questioned collaterally. Ib.
143. The ultimate liability of a stockholder of an insolvent national bank, under
the statute, is for the full amount of the par value of his stock, if that
amount is required, and when the Comptroller makes an assessment for a
smaller amount he has power to make a second assessment, if the first
proves insufficient to pay the debt of the bank. Ib.



36

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolrent banks; Receivers, etc.—Continued.
144. A stockholder in a national bank whose stock was sold at auction and purchased by the cashier of the bank, t"o whom the certificate, with a dulyexecuted power of attorney to transfer indorsed thereon, was delivered by
the auctioneers with a request to transfer the stock. Held not liable for an
assessment made on the stock on the subsequent insolvency of the bank,
though no transfei was ever made of the stock on the books of the bank.
Earle v. Coyle, C. G\, 95 Fed. Rep., 99.
145. An assessment levied by the Comptroller of the Currency on a stockholder
of a national bank draws interest from the date such assessment is made
payable. Davit?8 Estate v. Watkins, 76 N. W., 575.
146. The investment by the First National Bank of Concord, N. H., of a part
of its surplus funds in the stock of the Indianapolis National Bank, of
Indianapolis, Ind., was an act which it had no power or authority in
law to do, and which is plainly against the meaning and policy of the
statutes of the United States and can not be countenanced; and the
Concord corporation is not liable to the receiver of the Indianapolis
corporation for an assessment upon the stock so purchased made under
an order of the Comptroller of the Currency to enforce the individual
liability of all stockholders tc the extent of the assessment. The doctrine of estoppel does not apply to this case. First National Bank of
Concord v. Hawkins, 174 U. S.t 364.
147. A pledgee of stock of a national bank, who sells it in accordance with
the terms of the pledge and becomes the purchaser, but never has it
transferred on the books of the bank, is not liable for an assessment
made under Rev. St., sec. 5151, on the bank's insolvency. Robinson v.
Southern National Bank of 2<ew York, 94 Fed. Rep., 964.
148. Shareholders in a national bank who, in good faith, paid an invalid assessment ou their stock, on the subsequent winding up of the affairs of the
bank by a receiver, and the payment of outside creditors, are entitled, as
against the other shareholders, to repayment of the amount so paid before
a general distribution of the remaining assets.—In re Hulitt (C.C.), 96
Fed. Rep., 785.
149. Title of C. to stock in a bank is devested, so as to relieve him of liability
for an assessment levied four years thereafter, on the bank becoming
insolvent, where he employed auctioneers to sell it, and put into their
hands his stock certificate, having indorsed thereon an assignment in
blank, and a power of attorney in blank to transfer the stock, duly executed by him, and they knocked down the stock to S., who was cashier of
the bank, and took the certificate to the banking house, and delivered it
to S., " a s cashier" of the bank, and requested him to transfer the shares
to the purchaser thereof; and this, notwithstanding a by-law of the oank
that " no officer * * * shall, without permission of the directors, hold
stock in the bank"—the inference from the payment of semiannual dividends to S. for the four years being that the bank had accepted him as a
stockholder. Earle v. Coyle, 97 Fed. Rep., 410.
150. The action of the Comptroller of the Currency in ordering an assessment upon
the stockholders of an insolvent national bank involves a determination
of the necessity for such assessment, which is quasi judicial, and is conclusive on the stockholders. De Weese v. Smith, 97 Fed. Rep., 309.
151. The liability of the stockholders of a national bank to an assessment on the
bank's insolvency is so far conditioned upon the sufficiency of the general
assets to pay its indebtedness that the receiver is only authorized to proceed against a stockholder after the Comptroller has determmsd the necessity of the assessment and the amount required; hence the statute of
limitations does not commence to run against an action to enforce the
stockholder's liability until such determination has been made. Ib.
152. The ordering of the making and enforcement of an assessment on the stockholders of an insolvent national bank by the Comptroller is a quasi judicial
act, which exhausts the power and jurisdiction conferred upon him by the
statute, and he is without authority to make a second assessment. Ib.
153. When the Comptroller of the Currency has directed the receiver ot an insolvent national bank to enforce the collection of an assessment against the
stockholders for an amount less than the par value of their stock, and the
receiver has recovered a judgment at law thereon against a stockholder,
which has been satisfied, he can not maintain a second action against such
stockholder to recover a further assessment. The cause of action to recover
an assessment is one upon the stockholder's contract, which can not be
split, and the first recovery is a bar to any subsequent action on the same
contract. Ib.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

37

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
154. The action of the Comptroller in ordering an assessment against the stockholders of an insolvent national bank is conclusive on the stockholders
of the necessity for such assessment which can not be questioned by them,
either at law or in equity. Aldrich v. Campbell (C. C. A.), 97 Fed. Rep., 663.
155. The Comptroller has power to order successive assessments against the stockholders of an insolvent national bank, ratably on all, where the aggregate
does not exceed the par value of the stock. Ib.
156. A stockholder of a national bank can not avoid liability for an assessment,
after the bank's insolvency, on the ground that his subscription was
induced by the fraud of the bank's officers, which would entitle him to a
rescission as between himself and the corporation, unless it is affirmatively
shown that there are no creditors who became such while he was a registered stockholder. Lantry v. Wallace (C. C. A.), 97 Fed. Rep., 865.
157. In an action by the receiver of a national bank against a stockholder to
recover an assessment, the defendant can not set up, by way of counterclaim, a claim for damages against ihe bank for fraudulent representations
made to induce his purchase of the stock. Ib.
158. The fact that a national bank purchased shares of its own stock ultra vires,
and thereafter sold, them to another, does not constitute any defense to
an action by a receiver of the bank, after insolvency, against the purchaser,
to recover an assessment. Ib.
159. A pledgee of stock of a national bank, with a power of attorney to have the
shares transferred on the books, so long as he holds the shares as security,
without intending to assume liability as a stockholder, can not be treated
as one and subjected to an assessment under Rev. St., §5151, on the insolvency of the bank, although he has caused the shares to be transferred to
a third person under an agreement that they are still to be held as security
for the debt. Wilson v. Merchants' Loan and Trust Co. of Chicago. III. (C. C),
98 Fed. Rep., 688.
160. A cause of action to recover an assessment from a stockholder of an insolvent
national bank does not accrue until the receiver is authorized by law to
bring suit therefor, which is not until the assessment has been ordered by
the Comptroller and the time fixed for its payment before it shall become
delinquent has expired. Aldrich v. Skinner (C. C), 98 Fed. Rep., 375.
161. No limit of time having been prescribed by the Federal statutes within which
an action must be brought to enforce an assessment against a stockholder
in an insolvent national hank, such an action is governed j\s to limitation
by the statute of the State where itis brought, by virtueofRe^. St., §721. Ib.
162. The liability of a stockholder in a national bank, who has made full payment
for his stock, to pay assessments for the benefit of the bank's creditors is
not contractual, but is a conditional liability, imposed by law as an incident to ownership of tlie stock. Ib.
163. Under the statutes of limitations of Washington an action against a stockholder of an insolvent national bank to recover an assessment must be
brought within two years. Ib.
164. Under the statute of limitations of Washington an action against a stockholder of an insolvent national bank to recover an assessment must be
brought within two years after such assessment has been made by the
Comptroller and has become delinquent. Aldrich v. McClaine (C. C), 98
Fed. Rep., 378.
165. A suit, either at law or in equity, brought in Nebraska by the receiver of a
national bank to recover an assessment against a stockholder, unless commenced within four years after the time fixed by the Comptroller for the
payment of such assessment, is barred by Code Civ. Proc. Neb., tit. 2, § 11,
which prescribes four years as the limitation for an action upon a contract
not in writing, express or implied, and for an action upon a liability
created by statute other than a forfeiture or penalty. McDonald v. Thompson, 101 Fed. Rep., 183.
166. A pledgee of national-bank stock can be held liable for an assessment thereon
only on the ground of estoppel, and the burden of showing such estoppel
rests upon the receiver suing to recover such assessment. Tourtelot v.
Stolteben (C. C), 101 Fed. Rep., 362.
167. A decree of a State court, rescinding for fraud a contract for the purchase of
stock in a national bank, may be pleaded in the answer of the purchaser,
in an action against him by the receiver of the bank to enforce an assessment on the stock, as conclusive on the question of fraud, where the
receiver was a party to the decree, although it does not constitute a bar
to the action. Stufflebeam v. De Lashmutt (C. C), 101 Fed. Rep., 367.



38

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
168. In an action by the receiver of a national bank to recover an assessment
from defendant as a stockholder, an answer setting up facts showing that
defendant's purchase of the stock was induced by fraud held not demurrable. Ib.
169. In exceptional cases, where there is no ground for an inference that credit
was extended to a national bank on the faith of the ownership of stock
by a defendant, he should be permitted to rescind his agreement of subscription, after insolvency of the bank, where it was induced by fraud, as
well when there are creditors as when there are none. There should be
no presumption of law to overcome the fact capable of proof in such a
case. Ib.
170. A pledgee can only be subjected to liability for an assessment on national-bank
stock where facts exist which estop him to show that he was not the owner.
Frater v. Old Nat. Bank (C. C. A.), 101 Fed, Rep., 391.
171. The purpose of the provisions of the national banking law relating to liability
of stockholders is that, in case of the insolvency of the bank, its shareholders shall be liable for its debts to the extent of the amount of their
stock, and the law is to be construed in view of such purpose. The Comptroller has power to order successive assessments, in the aggregate within
the limit of the stockholders' full liability; and this power can not be
affected, and the purpose of the law defeated, by the fact that a receiver,
in enforcing a first assessment, has sued at law rather than in equity, and
has recovered a judgment which has been satisfied. Studebaker v. Perry,
102 Fed. Rep., 947.
172. As a general rule, the legal owner of stock in a national banking association—
that is, the one in whose name stock stands on the books of the association—remains liable for an assessment so long as the. stock is allowed to
stand in his name on the books, and, consequently, although the registered
owner may have made a transfer to another person, unless it has been
accompanied by a transfer on the books of registry of the association,
such registered owner remains liable for contributions in case of the insolvency of the bank. The exceptions to this general rule, so far as established by decisions of this court, are: (1) That where a transfer has been
fraudulently or collusively made to avoid an obligation to pay assessments,
such transfer will be disregarded and the real owner be held liable; (2)
that where a transfer of stock is made and delivered to officers of a bank,
and such officials fail to make entry of it, those acts will operate a transfer
on the books and extinguish the liability, as stockholder, of the transferrer;
(3) where stock was transferred in pledge, aud the pledgee, for the purpose of protecting his contract, caused the stock to be put in his name as
pledgee, and a registry did not amount to a transfer to the pledgee as
owner. Matteson v. Dent, 176 U. S. Rep., 521.
173. An executrix is liable as such, under Rev. St. 5152, for assessment made by
the Comptroller on shares of e.tock in a national bank held by her and
issued to the estate of her testator in exchange for shares held by the
testator in his lifetime, and surrendered by her on a reduction of the
capital stock of the bank. Brown v. Ellis, 103 Fed. Rep., 834.
ATTACHMENT :

1. The stock of a shareholder indebted to it may be attached by the association and sold on execution. Hagar v. Union National Bank, 63 Me., 509.
2. No State court can issue an attachment against the funds of a national bank.
Although the provision forbidding attachments was evidently made to
secure equality among the general creditors in the division of the proceeds of the property in an insolvent bank, its operation is by no means
confined to cases of actual or contemplated insolvency, but the remedy
is taken away altogether and can not be used under any circumstances.
The effect of the provision in sec. 5242, Rev. St., is to write into all State
attachment laws an exception in favor of national banks, and all such
laws must be read as if they contained an exception in favor of national
banks. Pacific National Bankv. Mixter, 124 U. S., 721.
3. No attachment can issue from United States circuit court in an action
against a national bank before final judgment in the caus,e, and a bond
given on such attachment is illeg.-il. Ib.
4. An attachment can issue against a national bank from a State court. Robinson v. National Bank of Newbern, 58 How. Pr., 306; 2 N. B. C, 309.
5. The provision of the national banking act that attachments, injunctions,
etc., shall not be issued by State courts against national banks before
final judgment relates only to actions against banks where the action is



REPORT OF THE COMPTROLLER OF THE CURRENCY.

39

ATTACHMENT—Continued.

6.

7.

8.

9.
10.
11.
12.

13.

14.

15.

16.

17.
18.
19.
20.

brought, and not to cases where the action is against a nonresident corporation. Southwick v. The First National Bank of Memphis, 7 Him., 96;
IN. B. C, 789.
An attachment will not lie before final judgment against the property in
this State of a national bank situated and doing business in another State.
Bhoner v. National Bank of Allentown, Pa.; Palmer v. Same, 14 Hun., 126;
2 N. B. C, 331.
An attachment can not be issued from a State court against a national
bank before final judgment, whether such bank be located in this State
or not. Central National Bank v. Richland National Bank, 52 Howard, 136;
1 N. B. C., 801.
The provision of the national banking act prohibiting attachments in such
cases is not repealed by the act of Congress of July 12, 1883, providing
that the jurisdiction for suits thereafter brought against national banks
shall be the same as for suits against State banks, and repealing laws
inconsistent therewith. Bay nor v. Pacific National Bank, 93 N. Y., 371;
3 N. B. C, 624.
An unrecorded transfer of national-bank stock will take precedence of a
subsequent attachment in behalf of a creditor without notice. Continental National Bank v. Eliot National Bank et aL, 7 Fed. Rep., 369.
The loss of interest occasioned by an attachment wrongfully laid is clearly
an injury for which damages are recoverable against the wrongdoer.
Jacobus v. Monongahela National Bank of Brownsville, 35 Fed. Rep., 395.
Where shares of corporation stock are attached, the subsequently declared
dividends are as much bound by the attachments as the corpus of the
stock itself is. ID.
Counsel fees and other expenses (not taxable as costs) paid or incurred in
defending against an attachment wrongfully laid are not recoverable as
damages in an action upon a statutory recognizance given when the
attachment was issued, conditioned for the payment to the party aggrieved
of "such damages as the court may adjudge." Ib.
When a creditor attaches the property of an insolvent bank, he can not hold
such property against the claim of a receiver appointed after the attachment suit was commenced. Such creditor must share pro rata with all
others. First National Bank of Selma v. Colby, 21 Wall., 609; Harvey v. Allen,
16Blatch.,29.
Sureties on attachment bond against national bank who have received assets
of the bank to secure them from loss thereon, the obligation being illegal,
will be discharged in equity and be compelled to transfer their collateral
to the receiver of the bank. Pacific National Bankv. Mixter, 124 U. S.t 721.
An attachment from a State court may not issue against an insolvent
national bank of that State. National Shoe and Leather Bank of the City
of New York v. Mechanics' National Bank of Newark, N. J.; Corn Exchange
Bank v. Same; West Side Bank v. Same; 89 N. Y.,467; 3 N. B. C, 601.
An attachment issued against an insolvent national bank is invalid (U. S. R. S.,
sec. 5242), apd is not made valid by the subsequent acquisition by the
bank of fuf$&©x capital. Raynor v. Pacific National Bank, 93 N. Y., 371;
3 N. B. C./ljW.
Although the bank after the issuing of the attachment paid a large amount
of its debts in full, this does not estop it from questioning the validity of
the attachment. Jb.
A receiver of a national bank situated in another State, though not a party,
may move to vacate an attachment. People's Bank of the City of New
Yorkv. Mechanics7 National Bank of Newark, 62 How. Pr., 422; 3 N. B. C., 670.
In an action against a national bank of another State an attachment issued
against its property in this State will be vacated upon proof of its
insolvency. Ib.
The defendant, a national bank at Boston, Mass., on November 18, 1881,
closed its doors and was put in charge of a Government bank examiner,
and thus continued till March 14, 1882, when the Comptroller allowed it
to resume. It transacted business till May 22, 1882, when it was placed
in the hands of a receiver. An attachment was issued in this action
November 19, 1881, against defendant's property in this State. At that
time its assets would have paid its debts and liabilities exclusive of its
capital, but it had refused to pay various legal obligations then due.
Held, that defendant had committed acts of insolvency within U. S. Rev.
St., sec. 5242, and the attachment should be vacated. Market National Bank
of New York v. Pacific National Bank of Boston, 30 Hun., 50; 3 N. B. C, 672.




40

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ATTACHMENT—C on tinu ed.
21. Bank property attached by individual creditor after bank is insolvent can
not be sold to pay his demand against the claim of a receiver subsequently
appointed. National Bank v. Colby, 21 Wall., 609.
22. Where service is made on a national bank only by attachment and publication or service out of the State, the attachment, being prohibited by Rev.
St., sec. 5242, should be vacated and the service set aside. Garner v. Second National Bank (C. C), 66 F., 369.
23. A bank which discounted a draft to which, was attached, deliverable to its
order, a bill of lading of the goods against which the draft was drawn was
not required, on notice of nonacceptance of the draft, to charge the amount
thereof against the drawer's account, which was sufficient to pay the draft,
in order to enforce its lien on the property against an attaching creditor
of the drawer. Neill v. Rogers Bros. Produce Co. (W. Va.), 23 S. E., 702.
24. In an action by an attaching creditor against certain plaintiffs in an action
to replevy the attached property for the appointment of a receiver, L., who
claimed a lien by virtue of an attachment prior to plaintiff's, was not made
a party to the action, and after the appointment of the receiver he made a
motion to modify the order made therein, so far as it directed the sheriff
to deliver to the receiver the property held under his attachment. Held,
that L. might appeal from an order denying such motion. National Park
Bank v. Goddard (Sup.), 20 N Y. S.,499; In re Lilianthal, ib.
25. A receiver who simply holds property pending the determination of an
action to settle the ownership of the same has no interest in such action
and will not be allowed to intervene. National Park Bank v. Goddard
(Sup.), 20 N. Y. S., 526.
26. An attaching creditor of an insolvent corporation acquires no right superior to other creditors. Farmers and Merchants' National Bank v. Waco
Electric Railway and Light Co. (Tex. Civ. App.), 36 S. W., 131; Metropolitan
Trust Co. v Farmers and Merchants' National Bank, ib.
27. An attaching creditor of an insolvent corporation for which a receiver is
appointed after the attachment acquires no preference right or lien that
will deprive the court of the power to equitably apportion the earnings
of the property during the receivership to claims classed as operating
expenses. Ib.
28. An appearance, by counsel, of a nonresident attachment defendant, for the
sole purpose of moving a discharge of the levy and the dissolution of the
attachment, does not constitute a general appearance, and service must
be made by publication before default and judgment can be entered.
Exchange National Bank v. Clement (Ala.), 19 So., 814.
29. In an action against a nonresident commenced by attachment, unless the
levy is fictitious or merely colorable, the defendant can not, as a ground
for abating the action, dissolving the attachment, or vacating the levy,
traverse the ownership of the property attached, or deny having a
leviable interest therein. Ib.
30. A national bank holding funds belonging to a bankrupt estate as depositary of a bankrupt court can not be garnisheed in proceedings supplementary to execution. Havens v. National City Bank of Brooklyn, 6
Thompson $ Cook, 346; 1 N. B. C, 783.
31. Under U. S. Revised Statutes, section 5242, providing that no attachment
before final judgment shall be issued in any State court against a national
bank, and U. S. Revised Statutes, section 915, entitling the plaintiff in
actions in the Federal courts to similar remedies by attachment to those
provided by the laws of the State in which such courts are held, a Fed-

32.
33.
34.

35.

a national bank. Butler v. Coleman, Same v. Mixter, Same v. Whitney, Same
v. Demmon, 124 U. S., 721', 3 N. B. C, 291.
A bond given to release property from an illegal attachment is void. Ib.
The principal in a bond given in an attachment suit may maintain an action
in equity to have the bond declared void and the property held by the
sureties as indemnity returned. Ib.
The levy of an attachment on the shares of a national bank under the Vermont statutes (R. L., $§ 3261, 3262), which do not include national-bank
stock in their provisions, is of no effect against the defendant in attachment. Sowlesv. National Union Bank of Swanton, Vt., 82 Fed. Rep., 696,
It seems doubtful whether any attachment under State laws can operate as
a transfer of shares of national-bank stock, since such stock exists solely
under the laws of the United States, which provide for transfers, and
declare the effect thereof. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

41

ATTACHMENT—Continued.
36. A national bank was closed by order of the Comptroller of the Currency and
a receiver appointed. An assessment was made upon the holders of stock.
Overton and HofFer were among those who were assessed, and payment
not having been made, suit was brought against them. Service was made
upon H., but not upon O., who was very ill, and who died without service
having been made upon him. He left a will, under which J. P. O. was
duly appointed his executor. The executor was summoned into the suit by
a writ of scire facias. A motion was made to set aside the scire facias and
the attempted service thereof, which motion was granted. The executor
being substituted in the place of the deceased as defendant, the court
decided that it had acquired no jurisdiction over the deceased and could
acquire none over his executor. Thereupon the receiver applied to this
court for a writ of mandamus to the judges of the Circuit Court of the
United States for the ninth circuit, commanding them to take jurisdiction
and proceed against J. P. O. as executor of the last will and testament of
O., deceased, in the action brought by the receiver to recover the assessments. Held: (1) That mandamus was the proper remedy, and the rule
was made absolute; (2) that the action of the Circuit Court in setting
aside the scire facias was here for review; (3) that scire facias was the
proper mode for bringing in the executor, and under Rev. Stat., § 955, it
gave the court jurisdiction to render judgment against the estate of the
deceased party in the same manner as if the executor had voluntarily made

himself a party. In re Connaway, Receiver, 178 11. S. Rep., 421.
37. An attachment sued out against a bank as garnishee is not an attachment
against the bank or its property, nor a suit against it within the meaning
of section 5242 of the Revised Statutes. Earle v. Pennsylvania, 449.
38. When the Chestnut Street National Bank suspended and went into the hands
of a receiver, the entire control and administration of its assets were committed to the receiver and the Comptroller, subject, however, to any rights
or priority previously acquired by the plaintiff through the proceedings in
the suit against Long. Ib.
39. The State court had no authority to order execution in favor of the plaintiff
of any dividends upon the money on deposit in the bank to Long's credit
at the time the bank was served with the attachment, and direct the sale
of the shares of stock originally held by the bank as collateral security. Ib.
40. A receiver of a national bank may be notified, by service upon him of an
attachment issued from a State court, of the nature and extent of the
interest sought to be acquired by the plaintiff in the attachment in the
assets in his custody; but, for reasons stated in Earle v. Pennsylvania,
ante, 449, such an attachment can not create any lien upon specific assets
of the bank in the hands of the receiver, nor disturb his custody of those
assets, nor prevent him from paying to the Treasurer of the United States,
subject to the order of the Comptroller of the Currency, all moneys coming to his hands or realized by him as receiver from the sale of the property and assets of the bank. Earle v. Conway, 178 U. S. Rep., 456.

BONDS OF OFFICERS:

1. It is not necessary that national banking associations shall signify their approval of the official bonds of their officers by memoranda entered upon
the journals or minutes of the directors. The acceptance is to he presumed
from the retention of the bond, and from the fact that the officer is permitted to enter upon or continue in the discharge of his duties. Graves
v. The Lebanon National Bank, 10 Bush., 23.
2. Where the sureties of an officer can reasonably be presumed to have been
deceived by the statement of the condition of the bank published just
prior to the execution of the bond, and to have been led to think that
there was no deficit, whereas there had been a misapplication of a large
part of the funds by the officer whose bondsmen they became, which fact
would have been ascertained had the directors exercised ordinary diligence,
the sureties are discharged from their liability. Ib.
3. A surety on the bond of a cashier of a national bank is not discharged by
the fact that the cashier had, before the bond was given, committed
frauds upon the bank, if such frauds were unknown to the officers of the
bank, although they were guilty of gross negligence in not discovering
them. Tapley v. Martin, 116 Mass., 275; 1 N. B. C., 611.
4. The engagement of a surety is a direct original agreement with the obligee
that in the event, his principal fails he will perform the original obligation,
and whether it is entered into jointly with the principal or separately, the



42

REPORT OF THE COMPTROLLER OF THE CURRENCY.

BONDS OF OFFICERS—Continued.

5.

6.
7.

8.

9.

;

10.

11.
12.

13.

14.

15.

extent and character of the obligation are the same as to both, depending
only upon the form in which it is expressed. La Rose et ah v. The Logansport
National Bank et al., 102 Ind.f 332.
The contract of the obligors, whether entered into separately or jointly with
the principal, if by its terms it appears that the principal is separately
bound by an original, independent contract, to which the contract for
security is collateral, and the obligors agree therein that the priucipal
will pay or periorm according to his original engagement, and that they
will answer for his default in the event of failure, is a contract of
guaranty. Ib.
The contract of the sureties in the bond of a bank cashier, conditioned for
the faithful discharge of his duties by such cashier, is a contract of
guaranty. Ib.
A failure to give notice to guarantors of the default of their principal,
except in cases governed by commercial rules, is a matter of defense, and
resulting damages must concur with such failure in order to work a
discharge. Ib.
Where by a by-law of a bank its cashier is made responsible for the funds
and valuables of the bank, it can not be implied that his bond would not
become operative until all the other officers and employees were denied
access to such funds and valuables nor that he is responsible for losses
which may occur through the delinquencies of others. Ib.
The bond of a bank cashier, executed and approved two weeks after he
enters upon his duties, is upon sufficient consideration, and is operative,
at least, from the date of its approval. Ib.
The knowledge by an employer of the misconduct of an employee whose
conduct and fidelity have been guaranteed by another, which will, if concealed, release the guarantor, must relate to the service in which the employee is engaged, and must be something more than mere moral delinquency unconnected with the subject-matter or the guaranty. Ib.
A continuing contract, guaranteeing the h'delity of a bank cashier, may be
revoked by the guarantors without cause, upon proper notice, but the
right must be exercised reasonably. Ib.
A bond of suretyship for an employee, which is to " embrace and cover only
acts and defaults committed during its currency and within twelve months
next before the date of discovery of the act or default upon which such
claim is based," covers not only embezzlements made during the year
actually preceding their discovery, but also earlier embezzlements which
would have been discovered within a year but for the fact that during
the year preceding the actual discovery the employee had so falsified the
books as to prevent such discovery. Consolidation National Bank v. Fidelity and Casualty- Company of New York (C. C), 67 F., 874.
Plaintiff1, as receiver of a national bank, sued a former employee of the bank
and a guaranty company upon a bond of indemnity, against the fraudulent
acts of such employee, which contained a provision that it should be
essential to the validity of the bond that the employee's signature be subscribed thereto. The defendants pleaded non est factum. The bond
offered in evidence was not signed by the employee of the bank and there
was no evidence that it had been executed by the defendant company.
The court sustained defendants' plea, and dismissed the suit. Held, no
error. Blackmore v. Guarantee Company of North America et al.y 71 Fed.
Rep., 363.
A bank employee's bond, conditioned for the reimbursement of any loss
sustained by reason of fraud or dishonesty in connection with his duties,
provided that any claim under the bond should embrace and cover only
acts and defaults committed during its currency and within twelve months
next before the date of discovery of the act or default upon which such
claim was based. Held, that the bond did not cover a default committed
more than twelve months prior to its discovery, which would, however,
have been discovered within a year from its commission had not such discovery been prevented by the act of the employee in falsifying the books
during the year preceding the discovery. 67 Fed. Rep., 874, reversed.
Fidelity and Casualty Company of New York v. Consolidated National Bank,
71 Fed. Rep., 116.
The cashier of a bank, whose bond, with sureties, was conditioned that he
would " faithfully and honestly discharge his duties as cashier, and
account for all such moneys, funds, and valuables" as came into his hands,
cashed a draft, payable to his order, amply secured by bills of lading of
cotton, and duly forwarded the same, with the bills of lading, to a bank




REPORT OF THE COMPTROLLER OF THE CURRENCY.

43

BONDS OF OFFICERS—Continued.

16.

17.

18.

19.

20.

in another city for collection. The draft and bills of lading were lost in
the mail. The cashier's bookkeeper, whose duty it was to check the statements and accounts with other banks, reported the draft as credited on
their account with the bank to which they had been forwarded, and his
accounts balanced according to his report. The agent of the railroad company, without production of the bills of lading, and without the consent
of the cashier, delivered the cotton to the consignee. Meld, that the
cashier was not liable on his bond. First National Bank v. Still (Tex. Civ.
App.), 32 S. TV., 61.
The A. Surety Co. executed and delivered to the C. Bank a bond, insuring the
bank against loss by any act of fraud or dishonesty of its cashier in connection with the duties of that office, or the duties to which, in the bank's
service, he might be subsequently appointed, occurring during the continuance of the bond, and discovered within six months thereafter and
witbiu six months from the death, dismissal, or retirement of the cashier
from the service of the bank. The bond provided that the surety company
should be notified of "any act" of the cashier which might involve a loss
.for which the company would be responsible "as soon as practicable after
the occurrence of such act shall have come to the knowledge" of the bank,
and it required proofs of loss to be furnished to the surety company. The
bank suspended payment and passed into the hands of a receiver who
afterwards notitied the surety company of the discovery of dishonest acts
of the cashier, furnished proofs of loss, and brought suit against the surety
company on the bond. The evidence upon the trial as to the time when
the dishonest acts of the cashier were discovered being conflicting, held,
that the question whether the required notice was given with reasonable
promptness was for the jury. Held, further, that the terms of the bond
did not require notice to be given of suspicions of dishonest acts. American
Surety Company v. Pauly, 72Fed. fiep., 470; 170 U. S,, 134.
The bank having suspended business on November 12, 1891, but the cashier
having continued in the service of the receiver until March following,
when he resigned, held, that the services so rendered by him after November 12th were rendered to the bank none the less because its affairs were
controlled by a receiver, and the surety company was not absolved from
liability for acts discovered more than six months from November 12th,
but within six months frorn his resignation. Held, further, that a proof
of loss under the bond, which set forth with reasonable plainness, and in
a manner by which a person of ordinary intelligence could not be misled,
that certain sums of money had been taken from the bank by means of #
acts of the cashier, described in such proof, was sufficient, though it failed
to aver explicitly that a loss had been caused to the bank. Ib.
The "teller's book" of the bank, which had been kept by one G., who died
before the trial, was offered in evidence to show that on certain days no
money was received for certificates of deposit. Held, that in connection
with evidence of the course of business, by which, if received, such money
would be entered in the book, the evidence was competent, though not
conclusive. Ib.
For the purpose of showing the dealings with the bank of the president, who
was charged with having misappropriated the bank's money with the
cashier's aid, the president's ledger account was put in evidence, together
with the testimony of the bookkeeper who made the entries, and who
swore that they were correctly made from the original deposit slips and
checks furnished to him by the teller, who had died before the trial; that
it had been the teller s duty to verify all deposit slips, and to pay the
checks; and that all such slips and checks, when reaching the bookkeeper's hands, bore marks indicating that they had been verified or paid
by the teller. Held, that the account was competent, and sufficiently
proven. Held, further, that evidence of acts of fraud, and dishonesty by
the cashier, occurring before the date of the bond, and for which no claim
was made against the surety company, but which were similar to the acts
on which tne claim was based, was admissible to show that the acts on
which the claim was based were intentional, and not merely negligent, or
due to oversight. Ib.
Prior to the issue of the bond sued on, the cashier and president of the bank
had conspired to rob it, and had been engaged in fraudulent practices.
When application was made for the bond the surety company required a
certificate from the bank of the cashier's good character. Such certificate
was made by the president without, so far as appeared, any direct authority
from the board of directors, or any knowledge by them that such certifi-




44

REPORT OF THE COMPTROLLER OF THE CURRENCY.

BONDS OF OFFICERS—Continued.

21.
22.
23.

. 24.

25.
26.

27.

28.

cate was made or required. Held, that the president's knowledge of the
cashier's dishonesty was not to be imputed to the bank, so as to make it
responsible for the misrepresentations contained in such certificate. Ib.
When a case goes twice to an appellate court, questions decided upon the
first occasion will not be considered upon the second. Mohrenstecher et al.
v. Westervelt, 87 Fed. Rep., 157.
Error in denying a motion to compel the plaintiff to elect between causes of
action is cured by instructions eliminating all but one cause. Ib.
It is error to give instructions authorizing the jury, in determining whether
a transaction by which the cashier of a national bank obtained possession
of some of its funds was a misapplication thereof, to consider the fact that
his indebtedness to the bank exceeded 10 per cent of its capital. Ib.
Instructions that no devices for concealment, however elaborate, which a
bank cashier may adopt to conceal a transaction amounting to a misappropriation of its funds, can protect him, are erroneous, when there is no
evidence of any concealment whatever in respect to the transaction in
question. Ib.
The making of a loan exceeding 10 per cent of a national bank's capital, in
the absence of fraud, is not a breach of the cashier's bond. Ib.
To constitute a misapplication of the funds of a bank, it is necessary that
some portion thereof shall be withdrawn from its possession or control, or
that some conversion be made, so as to deprive the bank of the benefit
thereof. Mere renewal of notes already in the bank's possession does not,
of itself, constitute a misapplication of funds. Ib.
The cashier of a bank having made large purchases of real estate, one of
the sureties on his bond made inquiries of several officers of the bank,
actively engaged in its affairs, as to whether the cashier had borrowed
money of the bank in order to make such purchases, and was informed
that the purchases were for the benefit of the bank, that no liability
accrued therefrom to the cashier to the bank, and that the cashier's total
indebtedness to the bank was but a few hundred dollars. Held, that the
bank was estopped subsequently to deny these statements, when the
sureties had relied thereon, and the cashier had in the meantime become
insolvent. Ib.
In a suit upon a bank cashier's bond, one of the sureties thereon was not
allowed to testify to statements of bank officers in reference to the
cashier's dealingswith the bank, but the cashier himself was afterwards
permitted to testify to practically the same effect as the testimony offered.
Held, that the rejection was not harmless error, as the evidence could not
be considered merely cumulative, in view of attacks made upon the
cashier's credibility, and of his interest in misrepresenting his transactions, if illegal. Ib.

BOOKS, INSPECTION OF :

1. Code of Alabama, 1886, sec. 1677, which provides that stockholders of all
corporations have the right to have access to and inspection and examination of the books, records, and papers of the corporat on at all reasonable and proper times, applies to national banks located within the State;
and mandamus will lie against the officer having custody of the books to
enforce the right. Winter v. Baldwin 7 So., 734; 89 Ala., 483.
2. The rights of stockholders are not curtailed nor the statute in conflict with
U. S. Rev. St., which provide that national banks shall not be subject to
visitorial powers other than those authorized by Congress or vested in the
courts of justice. Ib.
3. The officers of a national bank can not be compelled to exhibit the books of
the bank to State officers for the purpose of furnishing a basis lor State
taxation of the deposits as against the depositors. First National Bank of
Youngstoivn v. Hughes et al.; /Second National Bank v. Same, 2 N. B. C, 176.
4. A national bank may be compelled to disclose the names of its depositors
and the amounts of their deposits under the compulsory process of a State
court, in order to ascertain whether any money deposited therein, subject
to taxation within the county, has not been duly returned for that purpose
by the owners. First National Bank of Youngstown v. Hughes and another,
6 Fed. Rep., 737.
5. A Federal court can not, in such case, stay the proceedings in the State court
by writ of injunction. Ib.
6. Under section 3177 of the Revised Statutes, U. S., authority is given to any
collector, deputy collector, or inspector of internal revenue to enter in the
daytime any building or place within his district where any articles or



B1P0ET OF THE COMPTROLLER OF THE CURRENCY.

45

BOOKS, INSPECTION OF—Continued.

objects subject to sucb taxation are made, produced, or kept, so far as it
may be necessary for the purpose of examining such objects or articles,
and the provision is that any owner of such building or place, or any person having the agency or superintendence of the same, who refuses to
admit such officer or suffer him to examine such articles or objects shall
for every such refusal forfeit rive hundred dollars. Held, that under this
provision paid bank checks, which were duly and sufficiently stamped at
the time they were made, signed, and issued, are not articles or objects
subject to taxation, and an officer of a bank where such checks are may
lawfully refuse to suffer the collector to examine such checks. United
States, plaintiff in error, v. Mann, 95 U. 8., 580; 1 N. B. C, 154.
BRANCH BANKS:

1. A national bank located in another State can not keep an office for discount
and deposit in New York, and can not maintain an action upon a note
discounted at such office. National Bank of Fair haven Y. ThePhamix Warehousing Co., 6 Bun., 71; 1 N. B. C, 784.
2. Under Rev. St., sec. 5190, providing that "the usual business of each national
banking association shall be transacted at an office or banking house
located in the place specified in its organization certificate/' a national
bank can not make a valid contract for the cashing of checks upon it at a
different place from that of its residence, through the agency of another
bank.

Armstrong v. Second National Bank of Springfield, 38 Fed. Eep., 883.

BROKER:

A national banking association is not authorized to act as a broker or agent
in the purchase of bonds and stocks. First National Bank of Allentown v.
Hooht 89 Penn. St., 324; Weckler v. The First National Bank of Hagerstoivn,
42 Md., 581.
CAPITAL STOCK.

See Shareholders; Transfer of stock.

1. A national bank can acquire an interest in its own stock only by purchase
to prevent a loss upon a debt previously contracted in good faith; and a
provision in certificates of stock in such bank that they shall not be transferred until all the liabilities of the stockholder to the bank are paid is
void and of no effect. Conklin v. The Second National Bank, 45 N. Y., 655;
1 N. B. C, 693.
2. Where a national bank made a loan upon the pledge of its own shares and
afterwards sold the shares to obtain payment of the loan which exceeded
the amount realized from the shares, held, that the owner of the shares
could not on the ground that the statute forbids a national bank to take
its own shares as security recover from the bank the amount realized upon
the sale of the shares. First National Bank of Xenia v. Stewart, 107 U. 8.,
676; 3 N. B. C, 96.
3. The articles of association and the by-laws of a national bank prohibited
the trarsfer of stock owned by any stockholder indebted to the bank
until such indebtedness should be satisfied. Held, That the prohibition
was invalid, under section 35 of the national banking act, and that the
bank could not thus acquire a lien on the sharers of the stockholders.
Bullard v. Bank, 18 Wall., 589; 1 N. B. C, 93.
4. The right of creditors to look to unpaid portions of the capital stock as a
fund for the payment of their claims is not created by State statutes, but
is derived from general principles of law. The enforcement of such right,
therefore, is not dependent upon remedies provided by State legislation;
and if it appear that the State has, by statute, provided legal remedies
for the enforcement of equitable rights, the creditor may, at his election,
when proceeding; in a Federal court, adopt the form of remedy appropriate in courts of equity, or may sue at law, under the statute. First
National Bank of Siovx City v. Peavey, 69 Fed. Rep., 455.
5. The question whether the right of a creditor to look to unpaid capital stock
is legal or equitable in its nature in any particular case, is to be determined, it seems, by the following principles: If a person has subscribed
for or purchased the stock under such circumstances that the corporation
itself, and through it its creditors, can call upon the stockholder for the
unpaid portions of the stock, then this claim is one at law based upon
the express or implied terms of the subscription or purchase. If, however, by the terms of the original subscription or purchase, no liability is
assumed to make any further payments to the corporation on this stock,
and it is agreed between the corporation and the stockholder that the



46

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
stock shall be considered as full paid, then a creditor's right to look to
unpaid portions of the stock is equitable, and can not be enforced by
action at law, unless so provided by statute. Ib.
6. The A. Co. was organized with a capital of $1,000,000, in 40,000 shares of $25
each, all of which were subscribed for by the eight incorporators of the
company. No cash was paid on the subscriptions, but property valued at
$220,000 was conveyed to the company in payment for the stock without
application to any specific shares. Immediately after the organization of
the company it was agreed by all the subscribers, at a stockholders' meeting, that 16^000 shares should be contributed by the subscribers to secure
working capital, and that such shares should be issued to trustees, who
were, authorized to sell the same as full paid, and nonassessable stock at
not less than $3 per share, two-fifths of the proceeds to be paid to the
incorporators and three-fifths into the treasury of the corporation. It did
not appear that enough of the stock so contributed was sold to equal'
$220,000 at par value; but defendant purchased from one W., who was
engaged on behalf of the company in selling the stock, 800 shares, in the
belief that they were owned by W., and were fully paid, as they were
stated on their face to be, having no knowledge or notice of the transactions leading to the sale of the stock or of the facts in regard to its^payment. Afterwards, the company having become insolvent, a receiver of
its property sued defendant for the amount of an assessment of $15 per
share on the subscriptions to the stock. Held, That the proceedings for
the sale of the stock, as full paid, must be construed as an appropriation,
by the shareholders and the corporation, of the unapplied credit of $220,000
to the 16,000 shares contributed for sale, or to such of them as should be
issued; and as it did not appear that enough of the stock was sold to
equal the $220,000, the stock purchased by defendant in the belief that it
was full paid must be treated as being so in fact, and accordingly the
defendant was not liable for the assessment. Rood v. Whorton, 74 Fed,
Eep., 118.
7. Where suit is brought in equity to enforce subscriptions to the capital stock
of a corporation as part of a trust fund for the benefit of the creditors of such
corporation, the bill must be so framed as to be for the benefit of all the
creditors who are entitled to the trust fund. First National Bank v. Peavey (C. C), 75 F., 154.
8. National banks have no authority to increase their capital stock except as
provided by Rev. St., sec. 5142, and act of Congress May 1, 1886; and
where an increase is attempted to be made without obtaining the consent of
two-thirds of the stock, the payment ia full of the amount of such increase
and the certificate and approval of the Comptroller of the Currency, as
required by those statutes, the proceedings are invalid, and preliminary
subscriptions to such increase can not be enforced. Winters v. Armstrong;
Armstrong v. Stanage; Same v. Wood, 87 Fed. Rep.y 508.
9. Such a subscription is impliedly conditioned on the subscription of the whole
amount of the proposed increase and on the compliance by the corporation
with all the requirements of the statute necessary to make the increase
stock valid, and in case of noncompliance with such requirements there
is a failure of consideration. Ib.
10. In an action by the receiver of a national bank to enforce subscriptions to
a proposed increase of its capital stock, an allegation that the bank, subsequent to defendants' subscriptions, and with their knowledge, represented to the public by means of circulars, letter heads, etc., that its
capital stock had been so increased and that defendants allowed their
names to remain "upon the list of those subscribing for and entitled to
such new or increase of stock," but without alleging that the public gave
credit to the bank on the faith that the defendants were part owners of
such increase of stock, or that they allowed themselves to be held out as
actual stockholders does not show that they are estopped to plead the
failure of the bank to comply with the statutory requirements in perfecting such increase. Ib.
11. The receiver stands in the shoes of the bank and can assert no rights
against the subscribers which the bank could not have asserted. Ib.
12. A subscriber who has made payments on his subscription to the proposed
increase, believing that the statutory requirements would be complied
with, is entitled to have the amount thereof allowed as a claim against
the assets of the bank in the receiver's hands. Ib.
13. Where one subscribes for shares in the increase of the capital of a national
banking association in a certain amount, such subscription being paid in




REPORT OF THE COMPTROLLER OF THE CURRENCY.

47

CAPITAL STOCK. See Shareholders j Transfer of stock—Continued.
full and the entry made on the stock book of the bank, he becomes a
shareholder, although no stock certificate is issued. Pacific National Bank
v. Eaton, 141 U. S., 227.
14. And the certificate of the Comptroller of the Currency approving the
amount of increase that has been paid in, which amount includes what
was paid by the dissenting subscriber, will be conclusive upon such
subscriber. Ib.
15. But if such subscriber has assented to or ratified the change he will be
held a shareholder. Delano v. Butler, 118 U. S., 634.
16. When the previous proceedings looking to an increase in the capital stock
of a national bank have been regular and all that are requisite, and a
stockholder subscribes to his proportionate part of the increase and pays
his subscription, the law does not attach to the subscription a condition
that it is to be void if the whole increase authorized be not subscribed,
although there may be cases in which equity would interfere to protect
him in case of a material deficiency. Aspinwall v. Butler, 133 U. S., 595.
17. The Comptroller of the Currency has power by law to assent to an increase
in the capital stock of a national bank less than that originally voted by
the directors, but equal to the amount actually subscribed and paid for
by the shareholders under that vote. Ib.
18. Where one subscribes for shares in an increase of capital stock of a national
bank and pays for the same, without waiting to see whether the whole
amount of the increase is taken, he is bound by such subscription and
payment, though the amount of the increase is afterwards reduced by
the bank and the Comptroller of the Currency. Butler v. Eaton, 141
U. S., 240.
19. The conditions imposed by Rev. St., sec. 5142, as to the validity of increase
of national-bank capital were intended to secure actual cash payment of
subscriptions and to prevent watering stock, not to invalidate bona fide
subscriptions actually made and paid. Aspinwall v. Butler, 133 U. S,9 595.
20. Stockholder in national bank who, with knowledge of its insolvent condition and of all material facts, subscribes for increased stock to same amount
as his original stock, and amount of proposed increase is afterwards
reduced, cau not question validity of proceedings for such increase to annul
such subscription and payment. Delano v. Butler, 118 V. S., 634; Pacific
National Bank v. Eaton, 141 ib., 227; Thayer v. Butler, ib., 234; Butler v.
Eaton, ib., 240.
21. There can be no increase of the capital of a national bank until the Comptroller of the Currency approves thereof and issues his certificate, as provided by section 13 of the act of Congress providing for the organization
of national banks. Charleston v. People's National Bank, 5 South Carolina,
103; IN. B. C, 898.
22. The stockholders of the C. National Bank voted to increase its capital
$300,000, and M. subscribed and paid for 23 shares of the proposed
increase. Only $150,000 of such proposed increase was ever paid for, and
the directors applied to the Comptroller of the Currency to approve the
increase to the amount of $150,000, which was refused. Afterwards the
stockholders voted an increase of $150,000, and applied for approval
thereof, which was refused ; but later the Comptroller, on his own motion,
on the eve of the bank's insolvency, approved this increase. M. sued the
bank and its receiver to recover the amount paid by him under his subscription to the first proposed increase. Held, That the Comptroller's
refusal to approve the first increase to the extent of $150,000 nullified the
vote for the increase and M/s subscription to the stock, leaving him in the
position of a creditor of the bank for the amount paid in, and the subsequent proceedings, he not having participated therein, could not reanimate his contract of subscription. Matthews v. Columbia National Bank
of Tacoma et al., 77 Fed. Bep., 372.
23. Under the national banking law (Rev. St., §5142) and the amendment of May
1,1886 (24 Stat., 18), the action of the Comptroller of the Currency in
approving of an increase in the capital of a national bank, and certifying
that the amount thereof has been paid in, is conclusive, and the validity
of the increase can not be assailed in a collateral proceeding such as an
action to enforce the liability of the stockholders. Latimer v. Bard et al.,
76 Fed. Bep., 536.
24. Where the capital of a national bank has been increased, and defendants
have received their additional stock, and for several years held themselves out as stockholders, they can not, when the bank becomes insolvent and they are assessed to pay its indebtedness, deny their liability



48

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
upon the ground that the increase of capital was fraudulent, and that
they could not have discovered the fraud with ordinary care. More
diligence was required of them, and they are estoppecj by their laches.
Upton v. Tribilcock, 91 U. S., 45, and Sanger v. Upton, ib., 64, followed. Ib.
25. The officers, in taking the necessary steps for such increase, act as the
agents of the stockholders, and such stockholders can not set Tip the
fraud of the officers concerning the increase to defeat the claims of
innocent creditors. Ib.
26. Under the United States statutes national banks have the abstract power
to increase their capital to such a limit as may be approved by the Comptroller of the Currency, and where stockholders have assented to an
increase they can not set up any defects or irregularities in the exercise
of the power as a defense in an action to enforce their liability. Chubb
v. Upton, 95 U. 8., 665; Feeder v. Mudgett, 95 N. Y., 295, followed. Scovill
v. Thayer, 105 U. S.f 143, and Implement Co. v. Stevenson, 13 C. C. A., 661,
66 Fed., 633, distinguished. Ib.
27. A national bank reducing its capital can not retain, as a surplus or for any
other purpose, any portion of the money which it received for retired
stock, and having refused to permit shares thus retired to be transferred
on its books, is liable for the value of the shares to the holder. Seeley v.
New York National Exchange Bank, 78 N. Y., 608; 4 Abb. New Cases, 61; 2
N. B. C, 340.
28. The capital of a national bank having become impaired by the nonpayment
of the interest on some paper among its assets to the amount of $71,000,
in order to avoid an assessment by the Comptroller the stockolders
reduced its capital stock and carried the bills and notes to the account of
suspended or " bad debts," which were not theieafter included as assets,
although retained in its custody. Some years afterwards the bank realized $75,000 from collaterals pledged for the security of that paper. In a
suit by a stockholder to recover his share of the amount realized proportioned to the amount of stock surrendered, held, that he could not
recover. McCann v. First National Bank of Jeffersonville, 112 Ind., 354;
3 N. B. C.,434.
29. Under Comp. Laws, sees. 3589, 4515, relating to the rescission of contracts
procured through fraud, one induced to purchase bank stock by fraudulent representations as to its value may rescind the purchase and recover
his notes given therefor against a holder of the notes having notice of the
fraud. Taylor v. National Bank (S. D.), 62 N. W., 99.
30. The State legislature may authorize the sale under execution of nationalbank stock. In re Braden's Estate, 30 A., 746; Appeal of Wood, ib.
31. A certificate of stock in a national bank, though in due form, may be shown
aliunde to have been issued to the apparent stockholder solely as collateral security for money loaned. Williams v. American National Bank of
Arkansas City, Kans., et al., 85 Fed. Rep., 376.
32. It is no defense to an action agaiiust a national bank for money had and
received that the collateral security it gave to plaintiff was issued without
authority of law. Ib.
33. The certificate of the Comptroller of the Currency, approving an increase of
the capital stock of a national bank, is conclusive of the existence of the
facts authorizing such certificate, and a subscriber to the stock can not
question its validity. Tillinghast v. Bailey et al., 86 Fed. Rep., 46.
34. Subscribers to a duly authorized increased issue of stock by a national bank,
who accept certificates therefor, vote the stock by proxy, and take dividends thereon, can not question the validity of such stock as against the
receiver after the bank has become insolvent. Ib.
35. The certificate of the Comptroller of the Currency that the capital stock of a
bank has been increased to a certain amount is conclusive of the sufficiency of the facts and the regularity of the proceedings requisite to an
increase, and can not be questioned in.any collateral proceeding. Columbia National Bank of Tacoma et al. v. Matthews, 85 Fed. Rep., 934.
36. One who subscribes to a proposed increase of stock with knowledge that the
stockholders had by a resolution authorized the officers, with the approval
of the Comptroller, to increase the capital stock in any multiple of $50,000
up to $300,000, as the subscriptions shall be paid in, is estopped from
questioning the regularity of the proceedings after the certificate of the
Comptroller to such an increase is obtained. Ib.
37. A stockholder who, by power of attorney, has authorized another to vote his
stock at any and all stockholders' meetings " in the same manner as I
should do were I tiiere personally present," is estopped by the vote of his




REPORT OF THE COMPTROLLER OF THE CURRENCY.

49

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
proxy as respects any irregularity in the proceedings or calls of the meeting, which he could have waived if personally present. 79 Fed. Hep., 558,
reversed. Ib.
38. The action of the Comptroller in issuing a certificate approving an increase
of the capital stock of a national bank is not subject to collateral attack,
and a suit by a subscriber to such stock against a receiver of the bank,
after its insolvency, for the recovery of his subscription, on the ground
that such increase was illegal and the Comptroller's certificate void, is
such an attack. Brown v. Tillinghast, C. C, 93 Fed. Rep., 326.
39. Under a resolution of the stockholders of a national bank proposing to
increase the capital stock from $200,000 to $500,000, and authorizing the
president and cashier whenever $50,000 should be subscribed and paid to
certify the same to the Comptroller, subscriptions to such increase, when
paid and approved by the Comptroller in the aniount of $50,000, or any
multiple thereof not exceeding $300,000, were valid and binding on the
subscribers. Ib.
40. Where a subscription to a part of an increase of the capital stock of a
national bank has become binding by the terms of the original resolution
authorizing the increase, the subscriber is not affected by the subsequent
action of the shareholders in limiting the aniount of such increase to a
part only of that originally authorized, when the increase to the amount
so limited has been approved by the Comptroller, and whether or not the
action so limiting the increase was legally taken can not render his
subscription illegal or revocable. Ib.
CASHIER.

See Officers.

CERTIFICATE OF DEPOSIT:

1. National-banking associations may issue certificates of deposits. Riddle v.
First National Bank, 27 Fed. Rep., 503.
2. Certificates of deposit in the ordinary form issued by a national bank to
depositors and payable to order are not post notes within the prohibition
of sec. 5183, Rev. St. Ib.
3. A certificate of deposit, payable to the order of the depositor on the return
of the certificate, is not due or suable until demand made and return of
the certificate. Ib.
4. Certain persons, directors of a savings and of a national bank, procured
money from the former on notes made by a third person to them for the
payment of stock of the national bank issued in the name of such third
person for their benefit. These persons were behind in their accounts
with the national bank, and the savings bank allowed them to overdraw
their accounts with it to a large amount, which was used in settling
their accounts with the national bank. Thereafter the savings bank
delivered the notes and the check to the national bank, which issued to
it a certificate of deposit for an amount covering the whole amount represented by them. Held, that this certificate of deposit was without
consideration and void, and any loss accruing to the savings bank by
virtue of the transactions was due to the fraud or incompetency of its
own officers. Murray v. Pauly, 56 Fed. Rep., 962.
5. A certificate of deposit is evidence of so high and satisfactory a character
as to the sum deposited that to escape its effect the maker must overcome
it by clear and satisfactory evidence. Where the testimony, aside from
the certificate, is balanced as to the amount deposited, the certificate will
turn the scale. The First Natio?ial Bank of Lacon v. Myers, 83 III., 507.
6. A certificate of deposit issued by a national bank, payable to the order of
the depositor on return of the certificate properly indorsed and understood between the bank and the depositor not to be payable until a future
day agreed upon, is not in violation of the national-banking act. Hunt,
Appellant, 141 Mass., 515; 3 N. B. C, 474.
7. Suit against a bank upon a stolen certificate of deposit given by the defendant to the plaintiff, reciting that he had deposited in said bank a certain
number of dollars, payable to his order in current funds on the return of
the certificate properly indorsed. Held, that the instrument should be
regarded as the promissory note of the bank, assignable under the statute,
but that it was not negotiable as an inland bill of exchange, being made
payable, not in money, but "in current funds."• The National State Bank
of Lafayette v. Ringel, 51 hid., 393.
8. Held, therefore, that the payee could recover on said stolen certificate with
out giving a bond to indemnify the bank against a subsequent claim
thereunder by another person. Ib.
 1900 PT 1
CUR
4
?


50

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CERTIFICATE OF DEPOSIT—Continued.

9. A person depositing money in a bank accepted from the cashier a certificate
of deposit which made no mention of interest, but with a verbal agreement that interest should be paid. The cashier at the same time indorsed
a memorandum of the rate of interest on the stub from which the certificate was taken. Held, that the stub should be read with the certicate as
evidence of the entire contract. Thomson v. Beal, 48 Fed. Rep., 614.
10. A bank, on receiving certain notes as a special deposit, issued a certificate
for the amount of the notes, made out a printed form, from which the
words "in current funds" were erased and the words "in certain notes'7
substituted. The certificate was marked "Special deposit." Having been
transferred, this certificate was sent by the holder to the bank for payment. The notes had not then been collected, and the cashier was directed
to return the certificate, but, as the signature was torn, he was instructed
to prepare and transmit a duplicate. In doing so he carelessly omitted to
change the printed form by erasing " i n current funds" and substituting
" i n certain notes." Held, that there was no ground for a claim that the
second certificate was given in payment of the first, but that it was only a
substitute for it, and that the receiver of the bank was only required to
surrender to the holder the notes constituting the special deposit, for
which the original was issued. Niblack v. Cosier, 74 Fed. Rep., 1000.
11. Knowledge by a member of a firm of the true consideration of a certificate
of deposit, which the firm discounted with a bank, and which had been
negligently altered in making out a duplicate, held, to be the knowledge
of the bank, where such member was also its cashier, and, as such, acted
as the sole representative of the bank in discounting the certificate. Ib.
12. The defendants unlawfully detained a certificate of deposit of the value of
$2,000 from the plaintiff. Held, that the plaintiff was entitled to recover
damages for such detention equal to legal interest on the value of the certificate from the date of the demand therefor and refusal to the recovery,
and this without any evidence that the plaintiff would have converted
said certificate into money and put it to use, other than his right to do so
and the defendants' illegal prevention of the exercise of such right. Sleppy
v. Bank of Commerce and others, 17 Fed. Rep., 712.
See Collections.

CERTIFICATION OF CHECKS.

1. A national banking association may "certify" a check. Merchant's National
Bank v. State National Bank, 10 Wall., 604.
2. The certification of a check by a bank is, in effect, merely an acceptance and
creates no trust in favor of the holder of the check and gives no lien on
any particular portion of the assets of the bank. People v. St. Nicholas
Bank, 28 N. Y. St., 427; 58 N. Y. St., 712.
3. A certified check has a distinctive character as a species of commercial paper,
the certification constituting a new contract between the holder and the
certifying bank. The funds of the drawer are, in legal contemplation,
withdrawn from his credit and appropriated to the payment of the check,
and the bank becomes the debtor of the holder as for money had and
received. National Commercial Bank v. Miller <f Co., 77 Ala., 168.
4. Where the defendant has a right of election, on account of a tort committed, either to sue for the tort, or, waiving the tort, to sue for money
had and received, the relation of debtor and creditor does not exist until
he elects to sue for the money; and his creditors can not defeat his election by garnishment against the wrongdoer. But this principle does not
apply where the garnishees, having received a check from the defendant,
• with authority to collect for deposit and use, have had the check certified by the bank on which it is drawn, before the service of the garnishment; being authorized to have it certified, and the relation of the
parties being thereby changed they are liable to the defendant for the
amount of the check as for money had and received, and that liability
may be reached by garnishment. Ib.
5. A broker received coupon railroad mortgage bonds to cover future margins
of a customer and pledged them to a bank as collateral security for any
indebtedness he might owe it. Afterwards the bank advanced money
and certified checks on the faith of these bonds, when broker did not have
money on deposit equal in amount to the checks. Held, under sec. 5208,
that although .the certifications were unlawful the checks certified were
good and valid obligations against the bank. Thompson v. St. Nicholas
National Bank, 146 U. S., 240.
6. In an action by a bona fide holder of a check drawn on defendant, a national
bank, and certified by its cashier: Held, that the defendant was liable,




REPORT OF THE COMPTROLLER OF THE CURRENCY.
CERTIFICATION OF CHECKS.

51

See Collections—Continued.

although the drawer had no funds in the bank when the check was
certified. Cooke v. The State National Bank of Boston, 52 N. Y., 96; 1
N. B. C, 698.
7. Where a postdated check is certified by the cashier of the bank on which
it is drawn to be "good," by indorsement thereon before the day of its
date, the instrument, upon its very face, communicates facts and information to persons receiving the same that the cashier, in making such
certification, was not acting within the known limits of his power, and
that he was clearly exceeding them. The Clarice National Bank v. The
Bank of Albion, impleaded, etc., 52 Barb., 592.
8. It appearing on the face of such paper that it was certified by the cashier
before its pax ment could have been legally demanded and before it could
be presumed that the drawer had made a deposit for its payment, this
is, in the law, full notice to a purchaser. Ib.
9. To enable a holder of such check to recover of the bank upon it, it must
appear that he became the owner and holder in good faitli for a full and
fair consideration in the usual course of business, and without notice of
the cashier's want of power to make the certification. He must have
parted with something of value upon the strength and in consideration of
the transfer of the paper. Ib.
10. If he parted with nothing before the check was dishonored, he stands in
privity with his immediate indorsers, and is affected by all that will affect
them. Ib.
11. Crediting the indorsers with the avails of the check on the books of the
holder is in no sense a paying over. The holder, upon receiving notice of
dishonor, has an undoubted right to erase such credit, and to restore it
only at the special instance of the indorsers from whom he received the
check. Ib.
12. The receipt of a certified check is not, of itself, payment. Such a check
does not cease to be commercial paper and become money. Certifying a
check to be "good" is nothing more than a promise by the bank upon
which it is drawn to pay it when presented, as in the case of the acceptance of the bill of exchange. If an accepted bill be protested for nonpayment, and the drawer duly notified thereof, he is bound to pay the bill,
with damages and costs. The same is the law with regard to a certified
check. Bickford v. First National Bank of Chicago, 42 III., 238.
13. As the acceptance of a bill of exchange does not discharge the drawer, so
neither should the acceptance of a check, manifested by the word "good7'
placed upon it by the bank, discharge the drawer. They rest on the same
principles. In this respect there is no difference between an uncertified
and a certified check: the dishonor of either must make the drawer
liable. Ib.
14. There is this difference, however, between a certified and an uncertified
check: In case of the former, the amount of the check is supposed to be
at once charged up against the drawer, and thus placed beyond his control, while the holder of an uncertified check may be anticipated by
another, who also holds a check on which he may draw the money. The
certificate is an unconditional promise on the part of the bank to pay the
check on demand. The object in certifying the check is to give it a currency value and to enable the holder to use it as money. Ib.
15. Although it be the fact that certified checks pass from hand to hand as cash,
still they are not cash or currency, in the legal sense of those terms, and
they do not lose, on that account, any of their characteristics as bills of
exchange, and therefore, when dishonored, the holder has a right to look
to the drawer for payment. Ib.
16. In this case a check was drawn and certified and deposited in a bank after
10 o'clock a. m. and before 3 o'clock p. m. on a certain day, where it
remained until the next morning, when it was taken, in the usual course
of business, to the bank on which it was drawn. The bank was closed
and continued so. The check was protested for nonpayment and due
notice given. This was sufficient diligence to hold the drawer. Ib.
17. The holder of a certified check has the right to hold the drawee and acceptor
as well as the drawer. So, where the acceptor has failed and made an
assignment, the holder waives none of his rights against the drawer by
giving notice to the assignee of the acceptor not to pay over any money to
the drawer out of assets which might come to his hands in that capacity. Ib.
18. A certificate of a bank that a check is good is equivalent to an acceptance;
it implies that a check is drawn upon sufficient funds in the hands of the
drawee; that they have been set apart for its satisfaction, and that they




52

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CERTIFICATION OF CHECKS.

19.

20.

21.

22.

23.

24.

25.
26.
27.

28.

29.

See Collections—Continued.

shall be so applied whenever the check is presented for payment. Merchants' National Bank v. State National Bank, 10 Wall., 604; 1 N. B. C, 47.
National banks have the power to certify checks, and this power may be
exercised by the cashier without special authorization. The directors
may limit his exercise of this power as they deem proper, but such limitation will not affect a person ignorant thereof who deals with the cashier
in relation to matters apparently within the scope of his power. Ib.
A bank, knowing that the county treasurer of the county had not sufficient
county funds in his hands to balance his official accounts, consented to
give him a fictitious credit in order to enable him to impose upon the
county commissioners, who were about to examine his accounts. They
accordingly gave him a " cashier's check " for $16,571.61, which he indorsed
and took to the eommissioners. They received it, but refused to discharge
him or his bondsmen, and placed the check and such funds as he had in
cash in a box and delivered them to his bondsmen. The latter deposited
the money and the check in another bank in the same place, which bank
brought suit against the bank which issued the check to recover upon it.
Held, 1, that the circumstances under which the check was issued were a
plain fraud upon the law, and also upon the county commissioners; 2, that
their receipt of it and turning it over to the sureties was a single act,
intended to assist the sureties in protecting themselves, and was inconsistent with the idea of releasing them from their obligations. Thompson
v. Sioux Falls National Bank, 150 U. S., 231.
Though the drawer of a check, before delivering it, has it certified, he will
not be relieved from liability thereon, the bank having failed before payment thereof, though presented in due season,. Randolph National Bank
v. Horn-blotter et al., 35 N. E., 850; 160 Mass., 401.
Where the drawer of a check, before delivering it to the payee, has it certified as good by the bank upon which it is drawn, and the payee presents
it in good season for payment, and gives due notice to the drawer of its
nonpayment, and the bank had failed at the time of presentment for payment, thedrawer will not be discharged from liability on the check. Cincinnati Ouster and Fish Co. v. National Lafayette Bank, 36 N. E., 833.
As a general rule the certification of a check in the hands of the payee, the
body of which is unaltered, releases the drawer from further liabilitj7 and
creates a direct liability from the bank to the payee, while as between,
the bank and the drawer it operates as a payment to that extent on his
account; and although prior to its being certified the check may be countermanded by the drawer, after its certification it has passed beyond his
control and he no longer has power to countermand its payment. Meridian
National Bank of Indianapolis v. First National Bank of Shelbyville, 34 N. E.,
608; 7 Ind. Ap., 322.
The indorsement of a check by the person to whom it was actually issued,
and by whom the drawer intended the money should be received, is an
effectual indorsement to pass title to the check to a bank cashing the
same; and the indorsement is not, as to such bank, invalidated by reason
of the payee acting under an assumed and fictitious name when he was
not impersonating any other individual. Ib.
A bank, cashing in good faith a check so drawn and indorsed, may collect
the amount thereof of the bank which has certified the same. Ib.
The acceptance or certification of a bank check does not warrant the signa
tures of the indorsers to be genuine. First National Bank v. Northwestern
National Bank (III.), 38 N. E., 739.
The certification by a bank of a note made payable at such bank, where the
maker keeps an account, is an absolute promise by the bank to pay such
note, not as the debt of another, but as its own obligation, entitling the
holder to suspend any remedy against the maker and relax steps to charge
an indorser, and can not be rescinded by the bank because made under a
misapprehension of fact as to the sufficiency of the maker's account to
meet the note. Riverside Bank v. First National Bank of Shenandoah, 74
Fed. Rep., 276.
The payment of a note by the bank at which it is made payable, although
made under misapprehension of the state of the maker's account with the
bank, concludes the bank as against the holder of the paper who has surrendered it, and the payment can not be recovered back of the holder. Ib.
A bank certifying a check without funds is not liable except to a bona fide
holder.

Bowen v. Needles National Bank, 87 Fed. Rep., 430.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

53

CHECKS. See Certification of checks; Collections—Continued.
1. A check is, substantially, an inland bill of exchange, and the rules applicable to such bills are alike applicable to checks. Bickford v. First
National Bank of Chicago, 42 III., 238.
2. The check of a depositor upon his banker, delivered to another for value,
transfers to that other the title to so much of the deposit as the check
calls for, which may again be transferred by delivery, and when presented
at the bank the banker becomes the holder of the money to the use of the
owner of the check, and is bound to account to him for that amount, provided the drawer has funds to that amount on deposit subject to his check
at the time it is presented. These checks are received and passed and
deposited with bankers as cash, subject, of course, to be made good if not
paid on presentation. This is the legal effect of an ordinary uncertified
check. Ib.
3. In order to fix the liability of the drawer of an inland bill of exchange or
check in case of nonpayment, the holder should present the bill or check
to the person or bank on which it is drawn, within business hours of the
day next succeeding the receipt of the paper, and give notice of the dishonor to the drawer, Ib.
4. In the case of a deposit of a check drawn upon itself, the bank becomes at
once the debtor of the depositor, and the title to the deposit passes to the
bank. Oddie et al. v. The National City Bank of New York, 45 N. Y.f 735.
5. Where a depositor draws his check on his banker, who has funds to an equal
or greater sum than his check, it operates to transfer the sum named to
the payee, who may sue for and recover the amount from the bank, and a
transfer of the check carries with it the title to the amount named in the
check to each successive holder. The Union National Bank v. The Oceana
County Bank, 80 III., 212.
6. After a check has passed into the hands of a bona fide holder it is not in the
power of the drawer to countermand the order of payment. Ib.
7. An instrument drawn by a depositor on a bank in the following form, after
giving the date and the name of the bank, "Pay to A. and 13., for account
of C. & Co., ten hundred and eighteen 23-100 dollars/' and signed by the
depositor, is a valid bank 7check, and will operate to transfer to the payees
an amount of the drawers funds on deposit equal to the sum named on its
face. The words "for account of C. & Co." do not change its character
as a check. A bill or note, without at all affecting its character as such,
may state the transaction out of which it arose or the consideration for
which it was given. The Bidgely National Bank v. Patton <$? Hamilton,
109 III., 479.
8. A bank check payable to attorneys on account of a debt due from the drawers
to the clients of the attorneys vests the legal title in the payee named as
trustees for the clients, and a suit thereon against the bank is properly
brought in the names of the payees. Ib.
9. A debtor gave his check on a bank for the amount of his indebtedness, payable to "the attorneys of the creditor, which the bank refused to pay, alleging an agreement of the debtor to apply his deposits on other indebtedness.
It was held that the bringing of an action by the creditor against his debtor
did not estop him from bringing an action on the check in the name of his
attorneys, the payees, against the bank. Ib.
10. M., who kept an account Avith the M. and M. Bank of Troy, deposited with
that bank a check given for value, drawn by defendant, payable to the
order of M., and indorsed by him in blank. Said bank credited the amount
of the check in M.'s bank pass book, which was returned to him, and on
the same day it mailed the check to plaintiff, its correspondent in New
York, and its creditor, to be credited on account, and it was so credited.
M. stopped payment of the check, and when plaintiff caused payment to
be demanded of the drawee it was refused. Notice of presentation and
protest was given to defendant, who subsequently paid the amount to M.
"In an action upon the check, heldt that upon the deposit the M. and M.
bank became the owner of the check, and as such could and did give a
perfect title to its transferee, and that plaintiff was entitled to recover.
The Metropolitan National Bank of New York v. Lloyd, 90 N. Y., 530.
11. The implied contract between a bank and its depositors is that it will pay
the deposits when and in such sums as are demanded, the depositor having the election to make the whole payable at ons time by demanding
the whole or in installments by demanding portions; and whenever a
demand is made by presentation of a genuine check in the hands of a person entitled to receive the amount thereof for a portion of the amount on



54

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS. ^Certification of checks; Collections—Continued.
deposit, and payment is refused, a cause of action immediately arises, and
the statute of limitations begins to run as against the installment so due
and payable. Viets v. The Union National Bank of Troy, 101 N. Y., 563.
12. While a check drawn by a depositor against a general bank account does not
operate as an assignment of so much of the account, it authorizes the
payee, or one to whom he has indorsed and delivered it, to make a demand,
and a refusal of the bank to pay on presentation gives the drawer a right
of action, in case he has funds in bank to meet the check, and the refusal
was without his authority. Ib.
13. It is not enough to make an equitable assignment of money on deposit in
bank that a check be drawn therefor; but where the money was deposited
as the money of the holder of the check, though in the drawer's name, and
that fact is communicated to the bank before any other right has accrued
to the fund, the same becomes in equity the property of the holder of the
check, and he may recover it from the bank. Van Allen v. The American
National Bank, 3 Lans., 517.
14. The holder of a check on a bank can not sue the bank for refusal to pay it
on presentation, though the drawer have sufficient on deposit to meet it.
Creveling et al. v. Bloomsbury National Bank, 46 N. J., 255.
15. The implied engagement on the part of a banker to pay the checks of his
depositor does not inure to the benefit of the holder of a check so as to
enable him to enforce payment thereon against the bank prior to acceptance, and in the absence of assent by the banker the giving of the check
does not operate as a transfer or assignment of the debt created by the
making of the deposit. First National Bank of Union Mills v. Clark, 134
N. ¥., 368.
16. Where it is shown to be out of a bank's course of business to receive for
collection checks drawn on it by its depositors, and a check on it drawn
by one of its depositors in favor of another is presented by the latter and
the amount thereof is credited on his pass book as a deposit, and the check
. is placed on the tile of paid and canceled checks, and afterwards the
amount of the check is also entered to his credit and charged against the
drawer on the books of the bank, these facts constitute a payment of the
check, and the amount of it can not be withheld by the bank on discovering that the check was an unauthorized overdraft and the drawer was
insolvent. City National Bank of Selma v. Burns, 68 Ala., 600.
17. A charge is erroneous and properly refused which affirms, as matter of law,
that if the drawer and payee of a check are customers of the bank on
which it is drawn the presentation of the check by the payee to the bank
and the noting or entry of it by the bank on his pass book as a deposit do
not operate as a payment of the check, and that if within a reasonable
time the bank ascertains that the check is an unauthorized overdraft and
offers to return it there is no liability to the depositor. Ib.
18. In such case no presumption arises that the bank received the check merely
for collection and in the capacity of agent for the holder; but a presumption of payment of the check does arise and the onus of overcoming that
presumption rests upon the bank, and it can only be removed by evidence
that such was not the intention, of the parties, derived from the course of
business with the depositor or from contemporaneous acts or declarations. Ib.
19. If a holder of a check, with full knowledge that the drawer is without funds
in the bank to meet it, and has no just reason to believe that the check
will be honored in the absence of funds, he is wanting in good faith if he
demands and receives payment, especially if it is known to him that the
drawer is insolvent and the bank is ignorant of the insolvency. Ib.
20. In such case, fraud being imputed to the holder of the check, knowledge of
the want of funds must be clearly traced to him. It can not be inferred
from the relations existing between him and the drawer, however intimate, unless connected with inculpatory facts or circumstances. Ib.
21. A check drawn and delivered to the person to whose order it is payable,
does not, without acceptance by the drawee, operate as an assignment of
the sum in his hands for which it is given. It maybe revoked by the
drawer at any time before acceptance, and is revoked by his death; and
there being no privity, expressed or implied, between the payee and the
drawee, the former can maintain no action on it against the latter.
National Commercial Bank v. Miller cf Co., 77 Ala., 168.
22. When a bank receives from a customer a check on another bank for the
special purpose of collection, the title does not pass by the special indorsement for that purpose, nor does the receiving bank owe the amount until




REPORT OF THE COMPTROLLER OF THE CURRENCY.

55

CHECKS. See Certification of checks; Collections—Continued.
the check is collected. But where the customer has a deposit account
with the bankers, on which he is accustomed to deposit checks payable to
himself, which are entered on his pass book, and to draw against such
deposits, an indorsement of the words "For deposit" on a check so deposited " is, in the absence of a different understanding, presumptive of more
than a mere .agency or authority to collect/' it is a request and direction
to deposit the sum to the credit of the customer, and gives to the bankers
authority, not only to collect, but to use the check in such manner as, in
their judgment and discretion, having reference to the conditions and
necessities of their business, may make it most available to their protection, and they may have it certified by the bank on which it is drawn. Ib.
23. When checks on another bank are handled by a depositor to the receiving
teller of a bank and are by the teller credited on the depositor's pass book,
they are only received for collection, and if not paid on presentation may
be returned and the credit in the pass book canceled. National Gold Bank
, and Trust Company v. McDonald, 51 Cat., 64.
24. If a customer of a bank hands the receiving teller a check drawn by another
person upon the same bank, and at the same time hands him his pass book,
and the teller receives the check and enters a credit for the amount in the
pass book, but no entry is made on the books of the bank, and nothing
else is said or done, and the drawer has no funds in the bank, the check
may be returned to the depositor and the credit in the pass book canceled.

n:

25. In such case a finding by the court that the check was received as a cash
deposit is erroueous. Ib.
26. The fact that the cashier of a bank upon which a check is drawn takes the
check and places it upon the "canceling fork" does not constitute such
an acceptance as will prevent him from declining to pay and returning
the same upon learning that the drawer has not sufficient funds, or if the
check is not in proper form. The National Bank of Eockville v. The Second
National Bank of Lafayette, 69 hid., 479.
27. Where the larceny of a bank check is charged, the question of its value is
for the jury, and it is error to instruct them that a check drawn on a bank
where the maker has funds sufficient to meet it is presumptively of some
value. Burrows v. State, 37 N. E., 271.
28. The act of Congress of March 3,1869 (Rev. St., sec. 5208), making it unlawful for national banks to certify checks unless the drawer has at the time
an amount of funds on deposit equal to the amount specified in the check,
does not invalidate an oral acceptance of a check, or promise to pay a
check, there being at the time sufficient funds of the drawer in possession
to meet it. First National Bank v. Merchants' National Bank, 7 W. Va., 544 ;
1 N. B. C, 915.
29. A check drawn on a national bank was presented for acceptance, whereupon
the bank promised to pay it as soon as it received information that a certain draft left with it tor collection was paid. The draft was paid and the
bank informed. Held, That the acceptance was good and binding on the
bank. Ib.
30. The refusal of the bank to pay a check upon presentation gives the drawer a
right of action in case he has funds in the bank to meet the check, and the
refusal to pay was without authority. Brooke v. Tradesmen's National
Bank, %2 N. ¥. St., 633; 68 Hun., 129.
31. The measure of damages will bfe the amount of actual loss the party has
sustained, which may fairly and reasonably be considered as naturally
arising from the breach of the contract, according to the usual course of
things. Ib.
32. The ordinary amount of damages in such case would be the amount of check,
interests and costs. Ib.
33. The immediate entering of a judgment against the drawer* and the seizure
of his business by the sheriff, in consequence of the failure of the baukto
pay the check, is not an injury for which the bank would be liable. Ib.
34. The term "protest," as applied to inland bills of exchange, includes only the
steps essential to charge the drawer and indorser. Wood River Bank v.
First National Bank of Omaha, 55 N. W., 239; 36 Neb., 744.
35. Bank checks in the country are regarded as inland bills of exchange, for the
purpose of presentment and demand and notice of dishonor, and do not
require a formal protest in order to charge the indorsers. Ib.
36. They are also due upon presentation and not entitled to days of grace. Ib.
37. A check operates as an equitable assignment pro tanto from the time it is
delivered, as between the
and
drawn and Rulings Lumber Company etdrawer S. E., the payee or holder.
Hulings v.
ah, 18
620; 38 W. Va., 351.


56

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS. -See Certification of checks; Collections—Continued.
38. A general assignment for the benefit of creditors does not defeat the check
holder, although the check be not presented to the bank for payment until
after such assignment. 1b.
39. In the absence of proof to the contrary, it will be presumed that the name
, of the payee appearing in a check was written in when the check was
signed. Fifth National Bank v. Central National Bank (Sup.), 31 N. Y.
S.9 541.
40. Evidence of a custom of passing checks payable to a person "or bearer"
by delivery only does not affect the operation of Code, sec. 1761, requiring such checks to be construed as payable to a person "or order.;; First
National Bank v. Nelson (Ala.), 16 So., 707.
41. Where a person deposits in bank money held by him in a fiduciary capacity,
mixing it with his own moneys, and afterwards draws checks against his
account, such checks will be applied first to the moneys belonging to the
drawer; and in such case the rule that checks will be applied to the
deposits in the order in which the deposits were made does not apply.
Heidelbach v. National Park Bank (Sup.), 83 N. Y. S., 794.
42. Where a bank, in consequence of an error, fails to pay a depositor's check
when presented, but discovers the error and pays the check live days
later, the depositor can recover only nominal damages against the bank.
Burroughs v. Tradesmen's National Bank (Sup.), 33 N. Y. S., 864.
43. A tender of bank checks payable in sixty and ninety days is not a tender of
payment. Cady v. Case ( Wash.), 39 P., 375.
44. A check, unless objected to, is a sufficient tender. Wright v. Robinson et al.,
32 N. Y.S.,463.
45. The crediting by a bank of the amount of a check to the account of a depositor indebted to it does not make the bank a bona fide holder for value of
the check. First National Bank v. Nelson (Ala.), 16 So., 707.
46. The indorser of an ordinary check is released from liability thereon where
the indorsee might have presented the check for payment within twentyfour hours, but sent the same by a circuitous route, so that it was not
presented until five days, when payment was refused. 55 N. W., 1064; 37
Nebr., 500, affirmed; First National Bank v. Miller (Nebr.), 62 N. W., 195.
47. The indorsement of a bank draft by the payee to the order of a fictitious
person in good faith, and believing him to be real, is not in law an
indorsement to bearer, such not being the intention of the indorser; and
the indorsement of the name of the fictitious indorsee by a third person
without authority is a forgery, and does not protect the bank in payment
of the draft. Chism v. First National Bank ( Venn. Sup.), 36 S. W.f 387.
48. A bank can not refuse to cash a check, although it knows that the check
was drawn in payment of a bet made in violation of a law on the result
of an election; and the fact that a check was so cashed is not ground on
which the drawer can recover the amount from the bank. McCord v. California National Bank (Cal.), 31 P., 51.
49. The giving of a check by a bank depositor for the full amount of the deposit
does not operate as an assignment to the holder of the check, so as to
enable him to enforce payment thereon against the bank prior to its
acceptance of the check. First National Bank v. Clark (N. Y. App.), 32
N F., 38.
50. Title to a check payable to H. B., intended for N. B., can not be obtained
under indorsement by H. B., made fraudulently, though the indorsee be
deceived and pay value. - Sioux Valley State Bank v. Drovers7 National Bank,
58 III. App., 395.
51. Where a bank discounts a draft in advance of its acceptance, it is not a bona
fide holder for value unless it has funds in its hands which it releases or
fails to withhold from the drawer because of the acceptance. First
National Bank v. Wills Creek Coal Co. (Mich.), 68 N. W., 232.
52. The holder of a check can not sue the bank on which it is drawn until such
check is accepted by the bank. Commercial National Bank v. First National
Bank (N. C), 24 S. F., 524.
53. A stipulation, stamped on the face of a check, that it will not be paid to a
certain company or its agents, is valid. Id.
54. A draft was drawn payable to the order of the drawer, and by it indorsed
specially to the defendant corporation, and by defendant indorsed in bank,
and cashed by the plaintiff bank for another corporation, whose indorsement was written above the indorsement of the defendant. Held, that the
position of the indorsements was not notice to plaintiffthat defendant was
an accommodation indorser. Marshall National Bank v. O'Neal (Tex. Civ.
App.), 34 S. W., 344.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

57

CHECKS. See Certification of checks; Collections—Continued.
55. Where the payee of a check deposited the same with a bank for collection,
and said bank sent it for collection to defendant, and defendant received
from the bank upon which the check was drawn a draft in payment
thereof, defendant is not liable to the payee for the conversion of said
draft, in the absence of a demand therefor, and neither a telegram sent
to defendant by the drawer of the check, instructing defendant to hold
the draft, nor an inquiry by the bank upon which the check was drawn
as to whether defendant could hold the draft, is a sufficient demand on
behalf of said payee. 26 N. Y. S., 1035 affirmed; Castle v. Corn Exch. Bank
(N. Y. App.), 42 N. E., 518.
56. The holders of a draft before maturity are not bound by the acts of indorsers
after the transfer. Block v. Creditors (La.), 16 So., 267; St. Louis National
Bank v. Block. Ib.
57. The payee of a forged check, who indorses it and receives full value therefor, guarantees its genuineness; and as to him, the indorsee is under no
obligation to discover that it is forged, and may recover back the money
so paid. Birmingham National Bank v. Bradley (Ala.), 15 So., 440.
58. Bank checks are due on presentation, and are not entitled to days of grace.
Wood liicer Bank v. First National Bank [Nebr.), 55 N. W., 239.
59. Where the indorsee of a draft accepts the drawee's check in payment,
instead of cash, and neglects to present it for payment or certification
until the.next day, and the check is dishonored in consequence of the
delay, and the draft has to be protested for nonpayment, the drawer can
not be held liable. Merchants1 National Bank of the City of New Yorkv.
Samuel et ah, 20 Fed. Eep., 664.
60. Plaintiff accepted in good faith a check in which the indorsement of the
payee's name was a forgery, and after indorsing the same delivered it to
defendant bank for collection. Defendant collected the check and paid
the money to plaintiff, but on subsequently discovering the forgery paid
back such amount to the bank on which the check was drawn without
notifying plaintiff of the forgery or that it had paid back the sum collected. Held, that any fund belonging to plaintiff subsequently coming
into possession of defendant could be legally applied to the reimbursement of the latter for the amount advanced on the check, plaintiff being
chargeable with notice'of the forgery. Green v. Purcell National Bank
(Indian Ter.), 37 S. W., 50.
61. A regular customer of a bank sent to it a check with an unrestricted indorsement, and directed it to be placed to his credit. The check was received
and credited and the customer so advised. On the day of receipt the bank
sent the check to its correspondent for collection, paid a chock drawn by
the customer from a part of the proceeds of the credit, and closed its doors
as insolvent. Held, that the check was not deposited for collection, but
as cash for immediate use. Williams v. Cox (Tenn. Sup.), 37 S. W., 282.
62. Where a bank accepts a check on another bank as cash, giving therefor a sum
of money, a certificate of deposit, and the balance in a credit to the account
of a third person, such transaction creates merely the relation of debtor
and creditor between the banl^ and its customer, and the latter can not,
on the insolvency of the bank, follow up the check, or its proceeds, as his
property. Friberg v. Cox (Tenn. Sup.), 37 S. W., 283.
63. Where a check drawn on another bank is deposited in an insolvent bank
withoiit any special instructions, and it is not placed, to the customer's
credit, and immediately thereafter the receiving bank fails, and the check
goes into the hands of the bank examiner and is afterwards collected, the
proceeds are the property of the customer, and not of the bank. Showalter v. Cox (Tenn. Sup.), 37 S. W., 286.
64. The holder of a check can not sue the bank on which it is drawn, unless it
has been accepted by the bank. Pickle v. People's National Bank (Pickle v.
Muse), 12 S. W.f 919; 88 Tenn., 380.
65. A Philadelphia bank, indebted to a New York bank for collections made,
sent its cashier's check on another New York bank, with which it had a
sufficient deposit for the amount, which check was duly paid through the
clearing house. Held, that the transaction constituted a complete appropriation of the fund to the creditor bank, and its ownership was not affected
by its restoring the money to the paying bank on its demand, made on the
same day, on learning of the suspension of the drawer of the check, in
accordance with the rules of the clearing house, for the protection of the
paying bank in case the payment should prove to have been illegal.—
Yational Union Bank v. Earle (C. C), 93 Fed. Bep,, 330.
Na



58

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS. See Certification of checks; Collections—Continued.
66. The several payments and remittances made to the Chemical Bank by the
Capital Bank before its insolvency were not made in contemplation of
insolvency, or with a view to prefer the Chemical Bank. These checks and
remittances were not casual, but were plainly made under a general agreement that remittances were to be made by mail, and that their proceeds
were not to be returned to the Capital Bank, but were to be credited to
its constantly overdrawn account; and when letters containing them were
deposited in the post-office, such mailing was a delivery to the Chemical
Bank, whose property therein was not destroyed or impaired by the insolvency of the Capital Bank, taking place after the mailing and before the
delivery of the letters containing the remittances.—McDonald, receiver, v.
Chemical National Bank, 174 U. S., 610.
CIRCULATION :

1. The circulating notes of a national banking association are valid, though
they do not bear the imprint of the seal of the Treasury. Such imprint
was intended to be simply evidence of the contract, and forms no part of
the contract itself. United States v. Bennett, 17 Blatch., 357.
2. The State can not tax the circulating notes of national banking associations.
Home v. Greene, 52 Miss., 452.
3 The State, until forbidden by Congress, has the power to tax national-bank
bills. Lilly v. The Board of Commissioners of Cumberland County, 69 N. C,
300.
4. The circulating notes of national banks, known as "national currency," are
not exempt from taxation by a State. Board of Commissioners of Montgomery County v. Elston, 32 Ind., 27; 1 N. B. C, 425.
5. The power of a State to tax the circulation of the national banks depends
upon whether such circulation is for the use of the United States Government or for private profit. Congress can protect the circulation of
these banks by forbidding the States to tax it. Until this is done th3
States have a right to tax it. lluffin v. Board of Commissioners, 69 N. C,
498; 1 N. B. C, 806.
6. The tax of 10 per cent imposed by the act of July 13, 1866 (14 Stat. at
Large, 146, sec. 9), on the circulation of State banks used for currency
and paid out by the national or State banks is not repugnant to the Constitution, either on the ground that the tax is a direct tax, which must
be apportioned among the several States, or that the act impairs franchises granted by the State. Veazie Bank v. Fenno, 8 Wall., 533; 1
N. B. C, 22.
7. Congress having undertaken, in the exercise of undisputed constitutional
power, to provide a currency for the whole country, may constitutionally
• secure the benefit of it to the people by appropriate legislation, and to
that eud may restrain by suitable enactments the circulation of any
notes not issued under its own authority. Ib.
8. The provision of section 3413 of the national-bank act, that "every national
banking association, State bank or banker, or association, shall pay a tax
of 10 per cent on the amount71of notes of any town, city, or municipal
corporation paid out by them is constitutional, even where its effect is
to tax an instrumentality of a State. Merchants' National Bank of Little
Bock v. United States, 101 U. S., 1; 2 N. B. C, 100.
9. The circulating notes of national banking associations are included in the
phrase %li United States currency" when used in a penal statute. State v.
Gasting, 23 La. Ann., 1609.
COLLATERAL SECURITIES:

1. A national banking association may take stock of a corporation as collateral
security for a loan. Shoemaker v. The National Mechanics' Bank, 2 Abb.
U. S., 416; 1 N. B. C, 169.
2. And it may take for such purpose the stock of another national banking
association. National Bank v. Case, 99 U. S., 628.
3. A national banking association may take a pledge of personal chattels as
security for a loan. Pittsburg Locomotive and Car Works v. State National
Bank of KeokHk, 2 Cent. L. J., 692; 1 N. B. C, 315.
4. A national banking association may take as collateral security for a loan a
warehouse receipt for merchandise. Cleveland, Brown ty Co. v. Shoeman,
40 Ohio St., 176.'
5. Where stockholder borrows money from bank and gives as security certificate of his shares of its stock, he is not entitled to recover when, on nonpayment of loan, the bank sold his stock and applied proceeds to his
credit. First National Bank of Xenia v. Stewart, 107 U, S., 676.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

59

COLLATERAL SECURITIES—Continued.

6. Credit r of insolvent bank has the right to prove and have dividends upon
his entire claim, irrespective of collateral security he may hold. People
v. Remington, 121 N. Y., 328.
7. A pledgee of stock in a private corporation holding the certificates as collateral security, and having had the transfer duly entered on the books
of the corporation, is liable to creditors as the owner thereof on the subsequent insolvency and dissolution of the corporation, and this liability
is governed by the law in force when their debts were created (Rev.
Code, 1867, sec. 1760), although it had been repealed or abrogated before
the stock was transferred to him. National Commercial Bank v. McDonnell,
92 Ala., 387.
8. It is the duty of a receiver, if a secured debt is so reduced by dividends that
the security will more than pay it, to redeem the security for the benefit of
his trust- West v. Bank of Rutland, 19 Vt., 403; Miller's Estate, 82; Penn.
St., 113; Bates v. Paddock, 7 W. Rep., 222.
9. A sale of shares of stock pledged as collateral security, without notice to
the pledgor, is not a conversion, when it appears that the stock was
knocked down to a nominal purchaser without his knowledge or consent,
and that the certificates, though changed into his name, were never delivered to him, but were retained by the pledgee until after a subsequent sale
pursuant to notice. Terry v. Birmingham National Bank, 93 Ala., 599.
10. For an unauthorized sale of stock pledged as collateral security amounting
to a conversion, the pledgor is entitled to recover, as damages, the market
value of the stock at the time of the sale, with interest to the day of the
trial; and the jury may, in their discretion, allow the highest market value
at any time between the sale and the trial. Ib.
11. This suit was brought to recover the value of certain bonds, which, it is
claimed, had been left at the bank as collateral security for money which
the bank might, from time to time, advance the plaintiff. The plaintiff
testified that on July 1, 1868, he went to the bank to obtain a loan upon
this security; that the bonds could not be found, but that he received the
money. The defendant requested the court to instruct the jury that " if
the bonds were not found by the bank when the note of July 1 was offered
and were not afterwards found, the jury are not authorized to find that
they were taken and held as collateral security for the note of July 1."
Held, that this instruction was properly refused. Dearborn v. The Union
National Bank of Brunswick, 61 Me., 369.
12. A bank is bound to take only ordinary care of United States bonds pledged
to it as collateral security for the payment of a note discounted by the
bank. Jenkins v. National Village Bank of Boivdoinham, 58 Me., 275.
13. A writing, executed by the cashier, acknowledging the receipts by the bank,
"to be returned to him on the payment of his note in four months, dated
May 9, 1866," is not a contract which increases the common-law liability
of the bank, even if the cashier had the authority to do so. Ib.
14. Securities taken by sureties for their indemnity inure to the benefit of the
creditor. Thornton v. National Exchange Bank, 71 Mo., 221; 3 N. B. C, 513.
15. Creditors holding collateral security are liable for negligence in realizing
thereon. National Bank of Jefferson v. Bruhn et al., 64 Tex., 571.
16. In an action by a pledgee upon the debt secured by the pledge he is not
required to account for nonnegotiable securities pledged to him by defendant, in the absence of any allegation or proof that he has lost or misappropriated them. Marberry v. Farmers and Mechanics' National Bank, 26
8. W.,215.
17. The cashier of a bank has no authority to assign collaterals belonging to
himself, which were given to secure a loan to another person for the
cashier's benefit. Merchants7 National Bank v. Demere, 19 S. E., 38.
18. One who borrows money from a bank for the cashier thereof, on collaterals
belonging to the cashier, is not entitled to credit for amount of such collaterals after they have been wrongfully withdrawn and converted by the
cashier. Ib.
19. When shares of stock in a private corporation are pledged as collateral
security for a debt, and default is made in the payment of the debt at
maturity, the pledgee may file a bill in equity to foreclose the pledge by a
sale under the order of the court, or he may exercise the implied power to
sell without resorting to judicial proceedings; but if he elects to pursue
the latter remedy, the sale must be at public auction, in the absence of a
special agreement, and reasonable notice must be given to the pledgor;
and if he sells privately, without notice, becoming himself the purchaser,
the relation between him and the pledgor is not thereby dissolved. Sharp
 v. National Bank of Birmingham, 87 Ala., 644.


60

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLATERAL SECURITIES—Continued.

20. If the pledgor, when notified of the irregular or unauthorized sale, accepts
its benefits, giving his note for the balance of his debt remaining unpaid,
this is presumptively a ratification of the sale, and he can not afterwards
impeach it; but if he acted in ignorance of the fact that the pledgee himself was the purchaser, and did not intend to make an absolute and unconditional ratification without regard to the facts attending the sale, he may
disaffirm it within a reasonable time after discovering that the pledgee
was the purchaser. Ib.
21. If a part owner of certificates of stock pledges them, with the consent of the
other owner, as collateral security for his own debt, and they are converted by the pledgee, the pledgor is entitled to recover as if he were the
sole owner, the pledgee being estopped from denying his absolute ownership. Ib.
22. Rev. St., sec. 5242, which declares all deposits, all transfers of deposits, and
all payments of money made by a national bank after an act of insolvency,
or in contemplation thereof, to be null and void, does not render illegal
the retention of a balance standing to the credit of an insolvent national
bank with a correspondent on the day of its failure which has been pledged
for the purpose of securing loans made by the correspondent to the insolvent bank. Bell v. Hanover National Bank, 57 Fed. Rep., 821.
23. Where a deposit with a correspondent has, long prior to the commission of
the act of insolvency by a national bank, been pledged as collateral to
secure the payment of loans made to the insolvent by its correspondent,
neither the subsequent insolvency of the bank, nor the appointment of the
receiver, destroys the lien of the correspondent, or its rights to dispose of
the pledge to satisfy the debt secured. Ib.
24. Creditors of an insolvent national bank can not be required, in proving their
claims, to allow credit for any collections made after the date of the declared
insolvency from collateral securities held by them. Chemical National Bank
v. Armstrong, 59 Fed. Rep., 372.
25. Rev. St. U. S., sec. 5242, which prohibits all transfers by any national banking
association made after the commission of an act of insolvency, or in contemplation thereof, with a view to the preference of one creditor over
another, is directed to a preference, not to the giving of security when a
debt is created; and if the transaction be free from fraud in fact, and is
intended merely to adequately protect a loan made at the time, the creditor
can retain property transferred to secure such loan until the debt is paid,
though the debtor is insolvent, and the creditor has reason at the time to
believe that to be the fact. Armstrong v. Chemical National Bank, 41 Fed.
Rep., 234.
26. The plaintiff, a judgment creditor of the defendant, had the steamboat Einta
seized. The defendant had pledged it to the Third National Bank of New
York, but remained in possession for his own account, and never completed
the pledge by an actual delivery to the pledgee. The act of pledge was
drawn up in the common-law form, and was intended to operate as a
chattel mortgage. It contains, as to the form of the act, the essentials of
an act of pledge. Citizens' Bank of Louisiana v. Janin {Third National Bank
of New York, Intervener), 15 So., 471, 46 La. Ann.
27. The Third National Bank, as pledgee, claimed the proceeds of the sale. The
property, when it was seized, was in the possession of the subtenant. It is
not proved that the plaintiff colluded with the defendant and thereby
gained an improper advantage. Pledge is not made perfect by the consent
of the parties. It requires absolute possession. The alleged pledgee never
was in possession during the tenure of the defendant. Ib.
28. It (the Third National) could not obtain possession through the agency of
the sublessee, who held possession for his lessor, the defendant. Ib.
29. A pledge can not be made perfect by the sublessee's delivery of possession
without the consent of his lessor. Ib.
30. The obligation of the lessor to account for the property, and whatever revenues were realized therefrom, binding between him and his creditor, the
Third National Bank—the property not having been delivered—did not
affect his other creditors, who could seize the property in his possession,
or in that of his sublessee, who held possession for his lessor. Ib.
31. In an action by a bank on a promissory note, it appeared that the defendant delivered as security the promissory note of S., to which was annexed
as collateral security a certificate of corporate stock in the name of S.;
that defendant, with the consent of S., agreed that the bank might sell
the stock and take in place of the note of S. the note of the purchaser,
secured by the same stock reissued in the name of the purchaser; and




REPORT OF THE COMPTROLLER OF THE CURRENCY.

61

COLLATERAL SECURITIES—Continued.

that the bank sold the stock and took in payment notes secured by the
stock, payable to itself, with which notes defendant had no connection,
and over which he had no control. Held, that as the bank had converted
the stock to its own use, defendant's note must be credited with the value
of the stock at the time of conversion. Pauly v. Wilson, 57 Fed. Rep., 548.
32. Plaintiif had in his possession collateral security for a debt due from a third
party, who also owed the defendant. Held, that an agreement by the
parties in interest that any sum received on such collateral security, in
addition to the indebtedness first secured thereby, should be applied on
the debt due from defendant operated as an equitable assignment to defendant of such surplus, if any there should be. Second National Bank v.
Sproat, 56 N. W., 254.
33. A clearing-house committee, created by the agreement of several banks,
which receives deposits from such banks of securities at a fixed ratio on
their capital stock, and issues certificates therefor to be used in paying
balances, becomes an owner, for value, of the securities. Philler v. Patterson (Pa. Sup.), 32 A., 26.
,
34. The fact that a transfer of a bill of lading to a bank as security was, after
its doors were closed for the day, for the purpose of deposit and check
does not affect its right as against the vendor who stops the goods in transit, though, before its doors are again opened, it learns of the insolvency
of the vendee. First National Bank v. Schmidt (Colo. App.), 40 P., 479.
35. As against the right of a vendor to stop goods in transitu, a bank to which
the vendee has transferred the bill of lading as security is a holder for
value, even though the transfer was for a preexisting debt, and not for a
loan made on the promise of such transfer. Ib.
36. Where the debt for which a note was pledged is paid pending an action on
the note by the pledgee, the latter may continue the action, subject to all
equitable defenses, holding the proceeds as trustee for the pledgor. First
National Bank v. Mann (Tenn.), 27 S. W., 1015.
37. The transferee of a note before maturity as collateral security for a loan
made in good faith is a bona fide holder to the extent of the loan. Pearce
$ Miller Engineering Company v. Brouer (City Ct. N. Y.), 31 N. Y. S., 195.
38. Wherfi the holder of an indorsed note has exchanged collateral, held to secure
such note, without the indorser's consent, the measure of the indorsees
damages is the difference between the value of the collateral originally
held and that for which it is exchanged, at the time of the exchange.
Nelson v. First National Bank of Killingly, 69 Fed. Rep., 798.
39. The fact that a creditor's claim is secured by mortgage or otherwise does
not affect his right to prove for the full amount of the claim, nor does the
fact that he has realized part thereof out of the collateral since the date of
the receivership; but in the latter case he is entitled to dividends only
until the balance of his debt is satisfied. New York Security and Trust Co.
et al. v. Lombard Inv. Co. of Kans. et al., 73 Fed. Rep., 537.
40. The acceptance by a payee, as collateral of the note of a third party secured
by mortgage payable after maturity of the original note, does not establish an extension of the time of payment of the original note to the date
when the collateral note becomes payable, in the absence of evidence of
an express agreement therefor. Fisher v. Denver National Bank (Colo.
Sup.), 45 P., 440.
41. One holding collaterals as security for a debt due at a certain time, and
authorized by his contract to sell on maturity of the debt, need not
demand payment before selling. Franklin National Bank v. Newcombe
{Sup.), 37 N. Y. S., 271.
42. One having collaterals as security for a note, which, by the terms of his contract he was at any time after maturity of the note at liberty to sell at
private or public sale, with or without notice, can not be held liable by
reason of selling them when the market was in poor condition, they having been sold two weeks after maturity of the note, at public sale, after
notice. Franklin National Bank v. Neivcombe (Sup.), 37 N. Y. S., 271.
43. A person having notes in his possession as collateral security for a debt is
bound, so far as the general owner of the notes is concerned, to use reasonable diligence to protect the security so held, and see that it is not
outlawed. Northwestern National Bank v. J. Thompson cf Sons Manufg Co.
(C. C. A.), 71 F., US.
44. Where a debtor assigns to different persons assets as collateral security for
their claims, after such claims are satisfied, from whatever source, if any
balance from such assets remain, they are bound to return such balance to
the debtor or to his representative. Whittaker v. Amwell, National Bank
(N.
 J. Ch.)} 29 A., 203.


62

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLATERAL SECURITIES—Continued.

45. The maker of a note held by plaintiff gave to one J., who was accommodation indorser thereof, a second note, indorsed by defendant, to secure J.
against loss by reason of his indorsement, and J. transferred the collateral
note to plaintiff. Held, that plaintiff could sue on the collateral note,
though J. had paid nothing on account of his liability as indorser, a
creditor being entitled to all collaterals given by the principal debtor to
his sureties. Merchants and Manufacturers' National Bank v. Cummings
(Sup.), 29N. Y. S., 782.
46. A judgment creditor realized the amount of his demand from collateral
security. The debtor notified him that the amount due was disputed, and
required him not to apply the collateral to its payment until the amount
was determined. The plaintiff, notwithstanding, applied the funds and
satisfied the judgment of record. Held, that the defendant was entitled
to have the entry of satisfaction struck off and be admitted to defend.
Guthrie v. Reid, 107 Venn. St., 251; 3 N. B. C, 751.
47. A court has no power to order or authorize the receiver of a national bank
to sell at private sale securities held by the bank as pledgee. In re Earle,
92 Fed, Hep., 22.

COLLECTIONS. See Checks; Certified checks.
1. Where the holder of a bill of exchange, payable at a distant place, deposits
it with a local bank for collection, he thereby assents to the course of
business of banks to collect through correspondents, and the correspondent ot the local bank to which the bill is forwarded becomes his agent
and is responsible to him directly for negligence in failing to present* the
bill for payment within the proper time. Guelich v. The National State
Bank of Burlington, 56 Iowa, 434.
2. The payee of a check deposited it for collection with bank A on the same
day it was made. The bank presented it for payment the next day shortly
before 11 o'clock, and the drawee's check on bank B, only a few blocks
distant, was taken in payment. The drawee became a bankrupt at 1
o'clock. Several checks given after this, one by the drawee on bank B,
were paid beiore 1 o'clock. Belore 3 o'clock bank A presented the check
in question for payment, which was refused; whereupon it immediately
went to the drawee, and, after recovering the original check, protested it.
Held, that the drawer of the check was not liable thereon. Anderson v.
Gill, 29 A., 527.
3. Where the payee of a check makes a demand on the drawee and receives
something other than cash in payment, he can not, by making a second
demand, though within the time allowed for presenting a check, undo the
first, and render the drawer liable on the bankruptcy of the drawee. Ib.
4. Two bills of exchange, belonging to the plaintiff at Chicago, were indorsed
for collection to a bank at Atchison, Kans., and by said Atchison bank to
a bank at Kansas City, Mo., and by the latter to defendant, a bank at
Hutchinson, Kans. Held, that they remain the property of plaintiff, all
the indorsements being restrictive. First National Bank of Chicago v.
Reno County Bank, 1 McCrary, 491.
5. An indorsement on a bill of exchange directing the drawee to pay to
another "on account of" the indorser, or "for collection/7 is a restrictive
indorsement, the effect of which is to restrict the further negotiability of
the bill and to give notice that the indorser does not thereby give title to
the bill or to its proceeds when collected. Ib.
6. Although there may be no privity between tbe owner of the bill and the
last indorsee, yet if the latter collects the bill he is bound to pay the proceeds to the owner, and the latter may recover in assumpsit on the ground
that the defendant has property in his possession which belongs to the
plaintiff and refuses to pay the same over. Ib.
7. A bank receiving an indorsed note before maturity for collection is required
to take the proper steps to fix the liability of the indorser. West v. St.
Paul National Bank, 56 N. W., 54; 54 Minn., 466.
8. In an action by the owner of the note for neglect of that duty, resulting in
the discharge of the indorser, the question of the solvency of the maker
is material as affecting the measure of damages. Ib.
9. Insolvency may be shown prima facie by proof of general reputation.
Proof of insolvency within a reasonable time after the maturity of the
note held admissible. Ib.
10. A bank receiving for collection, from a correspondent, checks drawn upon
it by a customer, with instructions to protest in case of nonpayment, is
required, in case payment is refused for want of funds, to give notice to



REPORT OF THE COMPTROLLER OF THE CURRENCY.

63

COLLECTIONS. See Checks; Certified checks—Continued.
the bank from which they were received not later than the next day after
dishonor; and when they are held for two days in order to enable the
drawer to provide funds for payment thereof a jury will be warranted in
finding that the bank intended to accept them and become liable thereon.
Wood River Bank v. First National Bank of Omaha, 55 N. W., 239.
11. The indorsement of a draft to a bank u for collection/' accompanied by a
credit of the amount to the indorsees account, does not transfer title to
the bank, and correspondent of the bank who collects draft for it is
responsible therefor to indorser. Tyson v. Western National Bank of Baltimore, 26 Atl. Rep., 520.
12. The Winters National Bank sent to the Fidelity Bank a note of $2,000 for
collection and indorsed "Pay Fidelity National Bank, Cincinnati, Ohio,
or order, for collection for account of the Winters National Bank, Dayton,
Ohio. J. C. Reber, cashier." The Fidelity Bank forwarded it to the Drovers
and Mechanics' Bank, which received payment thereof at maturity.
Before the Fidelity Bank received notice and remittance of the $2,000 it
became insolvent and went into the hands of a receiver, who took the
$2,000 and credited the Winters Bank therewith. Held, that the Fidelity
Bank did not own the note, and the Winters Bank was entitled to the
full $2,000 as against the Fidelity Bank's receiver. In re Armstrong, 33
Fed. Rep., 405.
13. Plaintiff sent to F bank a draft indorsed "For collection/' accompanied
with instructions to " collect and credit proceeds." F bank sent the
draft to the defendant and the latter collected it, received the proceeds,
and credited them to the F bank, in accordance with the usual course of
business between the F bank and the defendant, and notified the F bank
of the credit. The F bank suspended business before crediting plaintiff
with the proceeds, but; after they had been collected and after it had
received notice of the credit. After the suspension of the F bank the
receiver appointed ovei its affairs credited plaintiff with the proceeds of
the draft on the books of the bank. Held, that the indorsement "For
collection" was notice to the defendant of the qualified title to the F
bank, and defendant could not acquire any better title to the draft or the
proceeds than that of the F bank, and could not, as against the plaintiff,
apply the proceeds to an account owing the defendant from the F bank,
and that the defendant could only defeat an action brought to recover the
proceeds in its hands by showing that the draft or its proceeds belonged
to the F bank. First National Bank of Circleville v. Bank of Monroe, 33
Fed. Rep., 408.
14. Held, further, that the relation of principal and agent continue between the
plaintiff and the F bauk so long as the latter did not assume the relation
of primary debtor to the plaintiff for the proceeds of the draft; that the
plaintiff not having been credited with the proceeds by the F bank the
relation between them remained that of principal and agent, and not
debtor and creditor, and that the F bank, not having credited the plaintiff with the proceeds while it was .a going concern, could not, by doing
so subsequently, change the existing relation. Ib.
15. Reid, in an action brought by the plaintiff against the defendant to recover
the proceeds of the draft the defendant, not having remitted the proceeds
to the F bank, was liable to the plaintiff for the amount. Ib.
16. Plaintiffs sent to a certain bank a bill of exchange indorsed to said bank for
collection. At the time the bank received the bill of exchange it was
insolvent to the knowledge of the managing officer, and on that day, or
following morning, it failed. Prior to the failure it indorsed the bill of
exchange to defendant bank, which collected it and kept- the proceeds,
crediting the insolvent bank, which was indebted to it, with the amount
thereof. Held, that the first bank acquired no title because of its fraud
in not disclosing its insolvency, and defendant had no better title, as
plaintiffs' indorsement showed that the bank was merely plaintiffs7 agent
to collect the proceeds. Peck et al. v. First National Bank, 43 Fed. Rep., 356.
17. Plaintiff sent to defendant's bank paper indorsed " For collection and immediate return" to plaintiff, and the paper was collected and the proceeds
mingled with other moneys of the bank, instead of forwarded to plaintiff.
The bill contained an uncontroverted allegation that defendant's bank,
at all times subsequent to the collection and at the time of defendant's
appointment as receiver, had on hand cash to a greater amount than that
due plaintiff. The bill asked to have the balance due plaintiff paid in
full, on the ground that the bank by receiving the paper for collection
and immediate return became a trustee, and that either its entire property




64

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
or the money in its vaults became impressed with the trust. Held, that if
the mingling of the funds was a breach of trust it was a conversion, and
plaintiff became a simple contract creditor, with no preference at law.
Philadelphia National Bank v. Dowd, 38 Fed. Rep., 172.
18. It was immaterial whether or not the bank stood in a fiduciary capacity to
plaintiff, as the facts stated in the bill showed that the money collected
could not be traced into any specific investment or fund, but had been
indistinguishably mingled with the general assets. Ib.
19. By agreement and custom the Fidelity Bank received drafts from its correspondent bank at E, and credited them to it as cash, with the understanding that any draft which was unpaid should be charged back to the
correspondent. The latter forwarded drafts, which were credited to it
but were not collected before the Fidelity Bank failed. The drafts were
paid after the appointment of a receiver and the moneys actually came
into his hands. The drafts were indorsed payable to the Fidelity Bank
"for collection" for the bank at E. Reid, that as the drafts were, when
received, credited as cash to the bank at E, which had the right at once
to draw against them, the indorsement for collection did not affect the
result, and the bank had only the rights of a general creditor. First
National Bank of Elkhart v. Armstrong, 39 Fed. Rep., 231.
20. A draft sent to a bank specially indorsed for collection was paid by the
drawee by check, which the bank collected through the clearing house.
A memorandum was placed with the bank's cash, to indicate that the
proceeds of the draft was the property of the sender. The bank was
closed the next morning, and the receiver credited such proceeds to the
sender of the draft on the books of the bank. Held, that the fund was
not so mingled that it could not be traced and identified, and that the
sender could recover the same. First' National Bank of Montgomery v.
Armstrong, 36 Fed. Rep,, 59.
21. Checks and drafts sent from one bank to another were indorsed " for collection," and credited " subject to payment," according to the dealings
between the banks. Part of them weie paid to the receiver of the latter
bank after its failure, and the balance were credited to it by the payors.
Held, that the amount paid the receiver should be accounted for as a trust
fund, but the balance as a general debt. First National Bank of Wellston
v. Armstrong, 42 Fed. Rep., 193.
22. The claimant bank sent to the F bank a sight draft, drawn on a third party,
indorsed " p a y " F bank, or order, "for collection for" claimant bank.
It was the practice for the F bank in its dealings with claimant to credit
the latter on the day of receipt for all drafts, checks, etc., sent for collection that were payable at sight or on demand, and the balance thus created
was subject to bo drawn on; but if the paper was not paid it was charged
back to claimant. On receipt of the draft the F bank notified claimant
that it had been credited, "subject to payment;" but the credit was not
drawn against nor were advances made on the faith of it. Claimant
merely kept a memorandum of its transmission for collection. The F
bank sent the draft to its reserve agent, indorsed, for collection, and the
amount of it was counted as a part of the F bank's reserve fund, though
this fact was not known to claimant. Held, that the indorsement, being
restrictive, the F bank acquired no title to it, and that upon the insolvency of the F bank, before notification of the collection of the draft, the
claimant was entitled to the proceeds of it in the hands of the collecting
agent. Fifth National Bank v. Armstrong, Farmers' National Bank et al.,
Interpleaders, 40 Fed. Rep., 46.
23. A bank which had received a draft for collection sent to its correspondent
bank at the residence of the drawee, and the draft was paid to such correspondent. There were no mutual accounts between the two banks, but
it was the custom of the correspondent to remit the proceeds of collections
at stated periods. Held, that until this remittance was made, or the
principal bank had given the original owner of the draft credit for the
avails, the original owner of the draft, as the owner of the proceeds
thereof, was entitled to recover them from the correspondent bank.
National Exchange Bank of Dallas v. Beal, 50 Fed. Rep., 355.
24. Though the correspondent was the agent of the first bank, and payment to
it was to that extent a payment to the principal, yet until the proceeds
were actually remitted to such principal and mingled with its general
funds, or were so credited, the owner of the draft had the option to
decline to consider it his debtor and to claim the proceeds in the hands of
the agent. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

65

COLLECTIONS. See Checks; Certified checks—Continued.
25. Where the principal fails, and a receiver is appointed, he takes the proceeds
of the draft, when remitted to him, subject to the same right of reclamation by the owner that the latter had as against the agent. Ib.
26. Where, in such a case, there are mutual accounts between the two banks,
the right of the agent to set off the amount of the collection against the
principal's indebtedness to it can not be adjudicated in a suit in equity
between the owner of the draft and the principal without making such
agent a party. Ib.
27. Checks deposited in a bank by its customers for collection do not at once
become the property of the bank; the bank continues to be the agent of
the customer until the collection of the check, which remains, in the
meantime, the property of the depositor. Balbach et al. v. Frelinghuysen,
Receiver, etc., 15 Fed. Bep., 675.
28. The rule is different where such checks are deposited to make good an overdrawn account of the customer or when the amount deposited by check is
immediately drawn against. In that case the bank may hold the deposit
until the overdraft is made good from other sources. Ib.
29. The indorsement by the customer of a check, deposited for collection, is
only intended to put the paper in such shape that the bank may collect it,
and not to thereby pass the title to the bank. Ib.
30. The practice which has grown up among banks to credit deposits of checks
at once to the account of the depositor, and to allow him to draw against
them before the collection, is a mere gratuitous privilege, which does not
grow into a binding legal usage. Ib.
31. A, who for several years had kept an account with the Marine National
Bank of New York, on May 5, 1884, deposited a sight draft, dated that
day, and drawn by him on a corporation of Boston, Mass., which was
indebted to him in the amount of the draft. The bank was insolvent at
the time, but the draft was forwarded to its collection agent at Boston,
and paid May 7, after the bank had failed and closed its doors. On several previous occasions A had deposited similar drafts, and been credited
therewith as cash, and they were treated by him as cash deposits. On
the occasion in question the bank credited plaintiff with the draft as a
cash item. Held, that the draft was not the property of A when paid by
the drawee, and that he was not entitled to recover the amount thereof
from the receiver. St. Louis fy S. F. By. Co. v. Johnston, Beceiver, etc., 27
Fed. Bep., 243.
32. When a sight bill is credited by a bank to a customer as a cash item, with
the latter's assent, the transaction is equivalent to a discount of the bill
by the bank. Ib.
33. Where a check of a depositor is accepted by a correspondent bank in payment of a draft for collection, which charges the same to the drawee and
credits the drawer without separating the amount from its general fund,
it holds the money as agent for the drawer, who, after insolvency, becomes
a mere general creditor, notwithstanding the State constitution provides
that "depositors who have not stipulated for interest shall for such
deposits be entitled in case of insolvency to preference of payment over
all other creditors." Anheuser-Bush Brewing Association v. Clayton, 56 Fed.
Bep., 759.
34. A bank in Ohio contracted with a bank in Pennsylvania to collect for it at
par, at all points of Pennsylvania, and remit the 1st, 11th, and 21st of each
month. In executing this agreement the Pennsylvania bank stamped
upon the paper forwarded for collection, with a stamp prepared for it by
the Ohio bank, an indorsement " Pay t o " the Ohio bank, "or order, for
collection for" the Pennsylvania bank. The Ohio bank failed, having in
its hands or in the hands of other banks to which it had been sent for collection proceeds of paper sent it by the Pennsylvania bank for collection.
A receiver being appointed, the Pennsylvania bank brought this action
to recover such proceeds. Held, first, that the relation between the banks
as to uncollected paper was that of principal and agent, and that the mere
fact that the subagent of the Ohio bank had collected the money due on
such paper was not a commingling of those collections with the general
funds of the Ohio bank, and did not operate to relieve them from the
trust obligation created by the agency, or create any difficulty in specially
tracing them. Commercial Bank of Pennsylvania v. Armstrong, 148 U. S., 50.
35. Second, that if the Ohio bank was indebted to its subagent, and the collections when made were entered in their books as a credit to such indebtedness, they were thereby reduced to possession and passed into the general
funds of the Ohio bank. Ib.

CUR 1900, PT 1
5


66

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
36. Third, that by the terms of the agreement the relation of debtor and creditor was created when the collections were fully made, the funds being on
general deposit with the Ohio bank, with the right in that bank to their
use until the time of remittance should arrive. 1b.
37. A bank received two drafts indorsed to it for collection, on account of the
drawers, against two of its depositors. After acceptance by the latter the
bank charged to each depositor's account the amount of the draft accepted
by him. Before remitting to the drawers the bank assigned, having on
hand cash sufficient to pay such drafts. Held, that the drawers were not
entitled to a preference as to the funds on hand at the time the bank failed,
where the assignee holds nothing which he or such drawers can identify
with the drafts or trace as a payment of them. Freiberg v. Stoddard, 28
Ail. Rep., 1111.
38. A natioual bank collected a note for plaintiff by accepting a draft for the
amount on another party, which it forwarded to its correspondent for collection, and at the same time sent plaintiff a draft on the same correspondent as a remittance of the proceeds of his note. The correspondent
received the money on the draft, sent it for collection, but before plaintiff's draft was paid by the correspondent the bank failed. Held, that the
bank was only agent for plaintiff, and that tlie money derived from his
note was a trust fund, which did not become a part of the bank's assets.
Foster v. Rincker, 35 P., 470.
39. B forwarded to bank a draft for collection. On July 22, 1893, bank made
collection, and the same day forwarded its draft on New York. On July
26 bank failed, and a receiver was appointed. Draft was presented after
the failure and payment refused. B brought suit to secure a preference
in payment. Held, that when a draft is forwarded to a bank for collection,
in the absence of instructions to the contrary, it is with the understanding that upon collection the title to the proceeds shall vest in the collecting
bank, and that said bank shall remit to its correspondent the equivalent
of such proceeds by the system of exchanges established by the universal
custom among banks, and when this has been done no preference can arise.
Bowman et al. y. Clark et al., 38 P., 211.
40. Where one deposits a draft with a national bank and the bank sends it to an
agent for collection, who collects it, and the bank fails before receiving the
avails, having been insolvent at the time of the deposit, the depositor may
rescind the transaction for fraud and recover the avails from the agent.
Craigie v. Smith, 14 Abb. N. C, 409; 3 N. B. C, 679.
41. Plaintiff sent a draft to a bank for collection. The bank collected it and
then passed into the hands of a receiver without remitting. The bank
had previously made similar collections for plaintiff, the proceeds of which
were always remitted to him promptly and never credited to him as a
deposit. Held, that plaintiff was entitled to be paid the entire ^proceeds
of the draft out of the bank assets in the receiver's hands, since the bank
was his trustee and not his debtor. Hunt v. Townscnd, 26 S. TV., 310.
42. Under an agreement between plaintiff bank and the H. bank that the latter
should collect notes and checks forwarded it by plaintiff for a commission and remit daily, the relation of principal and agent as to any paper
ceased on collection, and the relation of creditor aud debtor as to cash
immediately arose. First National Bank of Richmond v. Davis, 19 S. E., 280.
43. On failure of the H. bank, it being shown that its cashier had no knowledge
of its insolvency till the failure, it is not chargeable as for a conversion of
funds of plaintiff which it has mingled with its own funds, siuce, in the
absence of such knowledge on the cashier's part, the contract, with its
necessary implication as to the disposition to be made of plaintiff's money
on collection, remained in force till the failure. Ib.
44. Where plaintiff and defendant banks for several years had acted as agents
for each other in the collection of checks, notes, and drafts, and where
plaintiff sent defendant a note "for collection and credit" which on
maturity was paid by a check and credit was immediately given on the
books, but defendant failed and the check passed into the hands of a
receiver. Held, that in view of the course of dealing the two banks stood
in the relation of debtor and creditor with respect to the amount of the
check, and it became part of the assets of the bank. Franklin County
National Bank v. Beal, 49 Fed. Rep., 606.
45. Whether the title to a check deposited with a bank passes to the bank before
collection, so as to immediately create the relation of debtor and creditor
between it and the depositor is a question of fact, depending upon the
circumstances and course of dealing in each particular case. City of Somerville v. Beal, 49 Fed. Rep., 790.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

67

COLLECTIONS. See Checks; Certified checks—Continued.
46. Where a bank, in accordance with its custom, credited checks deposited by
a customer at the close of each day's business, retaining the right to subsequently charge off the same if returned unpaid from the clearing house,
and the bank became insolvent on a succeeding day, title in the checks
passed to the bank, so as to create the relation of debtor and creditor. Ib.
47. Where a national bank collected all papers sent to it by complainant under
an arrangement which constituted the bank the agent of complainant,
the latter can recover, on the ground of a trust, from a receiver of the
bank such portion only of the proceeds of its paper sent to the bank as it
shows has passed into the receiver's hands, either in its original or some
substituted form. Commercial National Bank v. Armstrong, 39 Fed. Rep., 684.
48. Where checks and drafts sent from one bank to another indorsed "For collection" and credited " subject to payment," according to the dealings
between the banks, and part of them were paid to the receiver of the latter bank after its failure and the balance were credited to it by the payors,
the amount paid the receiver should be accounted for as a trust fund, but
the balance as a general debt. First National Bank v. Armstrong, 42 Fed.
Rep., 193.
49. Negotiable paper with restrictive indorsement credited by agent on date of
receipt "subject to payment," although account is subject to be drawn
upon, title is not transferred, and upon the insolvency of the agent before
receiving notice of the collection of the item, the owner is entitled to the
proceeds in the hands of the collecting agent. Fifth National Bank v. Armstrono, 40 Fed. Rep., 46.
50. The drawers of a draft deposited with a bank for collection, and by it forwarded to a correspondent bank, are entitled to the amount as against the
receiver of the forwarding bank, which was insolvent, and known to be
so by its officers when it received the draft, and suspended payment before
the proceeds were withdrawn from the collecting bank. Importers and
Traders' National Bank v. Peters et al, 123 N. Y., 272.
51. When a bank which has received a draft for collection sends it to another bank
for that purpose, and on being advised that the latter bank has collected the
draft credits the depositor and then becomes insolvent without having
received the money from the collecting bank, the depositor remains the
owner of the draft, and is entitled to its proceeds from the collecting bank
against the receiver and the creditors of the insolvent bank. Armstrong
v. National Bank of Boyertown, 11S. W., 411; Manufacturers' National Bank v.
Continental Bank et al., W N. TV., 193.
52. A bank which collects a draft sent to it by another bank for that purpose,
with directions to remit the proceeds to a third bank for the owner's
account, does not thereby become a trustee, so that the fund can be followed into the hands of a receiver, although it had become mixed with
the other cash of the bank before his appointment; especially when it
appears that the business was carried on, and money paid out, for several
days after the collection was probably made. Merchants and Farmers7
Bank v. Austin et al., 48 Fed. Rep., 25.
53. Where a bank sends paper to another bank for collection and credit on general account, the custom being to enter credit only when paper is collected, the relation being that of principal and agent until collection and
receipt of money by the second bank, and if latter sends to another
bank, which collects, but does not remit until latter bank has failed, the
former can recover the proceeds from the receiver thereof. Beal v.
National Exchange Bank of Dallas, 55 Fed. Rep., 894.
54. A bank which, upon a draft being deposited with it for collection, refuses
to accept it as a deposit, but advances a small amount to the payee on
her check, and charges her therewith on its books as an overdraft, and
sends it for collection to its correspondent, and, upon receiving notice of
its collection, credits the payee's account therewith, is the payee's agent;
and the proceeds constitute a trust fund, which the payee is entitled to
recover from the receiver. Henderson v. & Connor (Cal.), 39 P., 786.
55. Where a bank received a draft as agent for plaintiff, of which fact the
indorsement was a notice to other banks, it did not thereby become
indebted to plaintiff for the amount thereof till after collection and possession of the proceeds, either actually or by settlement with the parties;
and defendant bank, to which the draft had been sent by the first bank
for collection, could not escape liability to plaintiff by making payment
to the first bank, or giving the credit to it on the account between the
banks after the first bank had stopped payment. Old National Bank v.
German American National Bank, 15 S. Ct., 221.




68

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
56. A bank which has received a check for collection is not made liable to the
drawee for its amount by the fact that, upon protest of the check for nonpayment, it has accepted from the maker thereof a check upon another
bank, payable to the order of its cashier, the drawee of the first check
being absent from the city, which latter check is also protested for nonpayment. Citizens1 Bank v. Houston {Ey.), 32 S. W., 397.
57. Where a draft upon a nonresident drawee is deposited for collection with a
local bank, and by it transmitted to another bank for collection, according to custom, the local bank is not responsible for loss occasioned by the
default of the latter bank, since such latter bank is the agent of the
depositor. 58 III. App., 61, affirmed; Waterloo Milling Co. v. Kuenster {III.
Sup.), 4lN.E.,906.
58. Where a bank, on collecting drafts for another bank, transmits bank drafts
to such bank, which credits the depositor with the amount of such drafts,
and then collects only part of the drafts on account of the failure of the
other bank, it hasaright of action against the depositor for the deficit. Io.
59. Where a check properly indorsed was sent by due course of mail for collection to the bank on which it was drawn, the drawer having sufficient
funds on deposit to pay the check, and was returned unpaid through the
negligent mistake of an employee of the bank, it constituted a refusal to
pay. Atlanta National Bank v. Davis, Ga., 23 S. E., 190.
60. A bank which, as collecting agent of another bank, collects at the subtreasury a pension draft on which the payee's name has been forged after
her death, indorsing the draft as collecting agent, and remits the proceeds, without knowledge of the forgery, is not liable to the United >tates
for the amount so collected. Onondaga Co. Sav. Hankv. United States (C.
C. A.), 64 F., 703, distinguished; United States v. American Exchange National
Bank (D.C.),70 F., 232.
61. Where a mortgage is sent to a bank for collection, with direction to remit,
the relation of creditor and debtor is not established between the sendei
and the bank, where the latter fails to remit, and therefore, on the insolvency of the bank, a trust will be imposed on its assets in favor of the
sender as against general creditors of the bank. Wallace v. Stone {Mich.),
65 N. W., 113.
62. Where the owner of a check, which had been collected without her authority by a bank, accepted, with knowledge of the facts, part of the proceeds
of the collection, and a note for the balance of her claim arising out of the
transaction, she thereby ratified the collection, and the bank was, hence,
not liable to her, Hughes v. Neal Loan < Banking Co. {Ga.), 23 S. E., 823.
f
63. A bank holding a note for collection from one not a depositor, and which
receives payment thereof by charging to the account of a depositor having
sufficient to his credit to meet it, does not become thereby a debtor of the
owner of the note, but ho ds the amount of the collection in trust tor him;
such trust being impressed on all the funds of the bank, which may be
followed though they pass into the hands of a receiver. People v. Merchants' Bank {Sup.), 36 N. T. S., 989; In re Friend. Io.
64. Where a note was placed in a bank for collection, with instructions to collect when due and apply the proceeds to the depositor's paper, and a
person voluntarily selected by the bank to present the note at the place
named for payment and receive payment thereon collected the note, the
bank was liable for the proceeds to the owner. First National Bank v.
Craig {Kan. App.), 42 P., 830.
65. Where a bank in the State receives for collection a draft payable at another
bank within the State, but transmits the draft to a foreign bank in the
course of collection, which in turn transmits it to the bank at which it
is payable, the last-named bank is responsible for its negligence in collection only to the foreign bank. First National Bank v. Mansfield Savings
Bank, 10 Ohio Cir. Ci. R., 233.
66. Where a bank receives a draft for collection, and transmits it in the course
of business to another bank, the cashier of the latter bank has no implied
authority to agree to defend in behalf of his bank an action against the
first bank by the drawer of the draft for negligence in collection. Ib.
67. In an action by the drawer to recover the proceeds of a draft collected by
a bank the fact that the bank has credited such proceeds to the account
of another bank from which the draft was received is no defense where
the indorsement thereon showed that the sending bank held it for collection only, the money being subject to the order of the real owner,
unless actually paid over to the sending bank before notice of the revocation of its agency. Boykin v. Bank of Fayetteville {N. C), 24 S. E., 357.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

69

COLLECTIONS. See Checks; Certified checks—Continued.
68. That a check deposited with a bank for collection was unrestrictedly indorsed to the bank, and credit therefor given the depositor, does not pass
the title to the bank where, on nonpayment of the check, its amount was
to be charged up to the depositor so as to prevent its recovery by the
depositor from a receiver appointed for the bank. Armour Packing Co. v. .
Davis (N. C), 24 S. E., 365.
69. The owners of a draft on a bank indorsed it to the K. bank for collection,
and it was sent by the latter bank to the clearing house, in due course,
with other checks and drafts. The K. bank was closed before the balance
against it on the clearing-house settlement was adjusted, and thereupon
the clearing house called upon the drawee, also one of its members, to
pay to it the amount of the draft. Held, that the payment being to a
stranger to the draft, who had no interest in the proceeds nor authority
to act as agent for the owners, it was no defense to an action by the
owners againsi the drawee for the amount of the draft. Crane v. Fourth
St. National Bank (Pa. Sup.), 34 A., 296.
70. A bank which has a draft for collection will not be excused for negligence
in sending it direct to the drawee, instead of through a third person, if
it would have been collected had it been sent at the time it was sent to a
third person, though, had the bank delayed sending it as long as it might
have without negligence, it would not have reached its destination in time
to be collected. First National Bank v. City National Bank (Tex. Civ. Apj).),
34 S. W., 458.
71. A bank having a draft of $2,000 for collection will not be held liable for
negligence in sending it direct to the drawee bank, instead of through a
third person, where, at 1 o'clock on the day on which it reached its destination, the drawee bank reqnired $1,000 to insure its ability to meet local
checks which might be presented that day after the hour, and was furnished that amount by another bank for that purpose, to prevent a general
run on local banks. Ib.
72. A bank which receives checks to be transmitted to another place for collection without compensation fully discharges its duty by sending them in
due season to a solvent and competent correspondent, with proper instructions for their collection, and is not liable for any loss occasioned by the
negligence of such correspondent. Anderson v. Alton National Bank, 59 III.
App., 587.
73. When a bank indorses commercial paper "for collection" and forwards the
same to another bank for collection and remittance, the collecting bank,
though it acts only as agent for the remitting bank, and has no mutual
account with it, is not required to keep the moneys collected separate from
all other moneys in its possession, and to remit the identical money, nor is
the payer of such paper required to see that the identical money is remitted.
First National Bank of Richmond v. Wilmington and W. R. Co., 77 Fed. Rep.,
401.
74. Transfer of a note to a bank for collection gives it such ownership thereof that
it can sue the maker thereon. First National Bank v. Hughes (Cal.), 46 P.,
ft i 70.

75. That the correspondent has credited the account of the remitting bank with
the proceeds of the collection does not preclude the owner from recovering
such proceeds of tbe correspondent upon the insolvency of the remitting
bank. Branch v. United States National Bank (Neb.), 70 N. W., 34.
76. The owner of negotiable paper placed it with a Boston bank to be transmitted to its New York correspondent for collection for the account of the
owner, and the Boston bank so instructed the New York bank. Held, that
the New York bank became the agent of the owner of the paper and was
liable to him for negligence in making the collection. Kelley v. Phcrnix
National Bank (Sup.), 45 N. Y. S., 533.
77. Defendant bank received for collection a draft drawn on plaintiff, payable
at another bank where he had funds and had left instructions to meet it.
Defendant negligently failed to present the draft until the failure of the
bank at which it was payable, so that plaintiff became discharged from
liability thereon. Held, that plaintiff could not recover back the amount
of the draft paid by him to defendant with knowledge of the facts, although
he made the payment under protest and to save his credit. Harvey v.
Girard National Bank (Pa.), 13 A., 202.
78. Collecting commercial paper is part of the regular business of banking, and
a national bank will be liable for negligence in collecting a draft the same
as any other bank or agent. Mound City Paint and Color Co. v. Commercial
National Bank, 9 P., 709; 4 Utah, 353.



70

REPORT OF THE COMPTROLLER OF THE GURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
79. Where the owner of a note sends it to a bank for collection only, and the
maker's check is drawn on that bank for the amount thereof, and is delivered to it, and the note is thereupon canceled and surrendered, and
the check is charged to the account of the maker, which was good for the
amount, there is a collection of the amount from the general fund of
the bank and a special appropriation of that amount to the payment of the
note, and as between the owner of the note and the receiver of the bank
the title to the money dedicated to the payment of the note remains in
the owner. Arnot v. Bingham, 9 N. Y. S., 68; 55 Hun, 553.
CONSTITUTIONALITY :

1. Congress has the constitutional power to incorporate banks. McCulloch v.
Maryland, 4 Wheat., 316; Osbornev. Bank of the United States, 9 Wheat, 738.
2. Congress has power to clothe national banking associations, as to their contracts and dealings with the world, with any special immunities and privileges exempting them, in their trade and intercourse with others, from the
laws and remedies applicable in like cases to other citizens. The Chesapeake Bank v. The First National Bank of Baltimore, 40 Md., 269.
3. Thus, the provision of the banking law that no attachment, injunction, or
execution shall issue against a national banking association before linal
judgment in any suit, action, or proceeding in a State court is constitutional. Ib.
4. Congress having, in the exercise of undisputed constitutional powers, undertaken to provide a currency for the whole country, may secure the benefit
of it to the people by appropriate legislation. Veazie Bank v. Fenno, 8
Wall., 533.
5. Congress has the power to divest the United States courts of their jurisdiction of suits by or against national banking associations. National Bank
of Jefferson v. Fare et al.f 25 Fed. Bep., 209.
6. National banking associations, being instruments designed to aid the Government in the administration of a branch of the public service, can not
be controlled by the States, except 1 in so far as Congress may see proper
to permit. Farmers and Mechanics Bank v. Bearing, 91 U. S., 29.
7. A State law prohibiting the establishment of banking companies in the State
without the authority of the legislature was not intended to apply to banking corporations created by authority of Congress, since such corporations
may be legally established in the State without the consent of the legislature. Stetson v. City of Hangar, 56 Me., 274.
8. National banking corporations, organized under the acts of Congress providing for their creation, are agencies or instruments of the General Government, designed to aid in the administration of an important branch of
the public service, and are an appropriate constitutional means to that end.
Pollard v. The Stale ex rel. Zuber, 65 Ala., 628.
9. The national banking act is an enabling act for associations organized under
it, and one can not rightfully exercise any powers except those expressly
granted, or such incidental powers as are necessary to carry on the business for which it was established. Logan County National Bank v. Townsend,
139 U. 8., 67.
CONSTRUCTION OF LAW:

1. The Federal courts, when called upon to construe the general commercial
law of Indiana in respect to a question which is a new one in the Federal
courts, should give weight to the Indiana decisions, although they are not
absolutely bound thereby. The Farmers7 National Bank of Valparaiso, Ind.,
v. Sutton Manufacturing Company, 52 Fed. Bep., 191.
2. The intention of the legislature, clearly expressed in a constitutional enactment, should not be defeated by too rigid adherence to the letter of the
statute, or by technical rules of construction. Any construction nhould
be disregarded which leads to absurd consequences. Oates v. First National
Bank of Montgomery, 100 U. S., 239; 2 N. B. C.y 35.
3. The Federal courts are not bound by decisions of State courts upon questions
of general commercial law. Ib.
4. In a statute which contains invalid or unconstitutional provisions, that which
is unaffected by those provisions, or which can stand without them, must
remain. If the valid and invalid are capable of separation, only the latter
are to be disregarded. Supervisors of Albany v. Stanley, 12 Fed. Bep., 82.
5. Where the State and Federal courts have concurrent jurisdiction, a State
statute of limitation may be pleaded as effectively in a Federal court as
it could be in a State court; and in such cases the Federal courts will




REPORT OF THE COMPTROLLER OF THE CURRENCY.

71

CONSTRUCTION OF LAW—Continued.

6.

7.

8.
9.
10.

11.

12.

follow the decisions of the local State tribunals and will administer the
same justice which the State courts would administer, between the same
parties. Price, Receiver of Venango National Bank, v. Yates, 19 Alb. L. J.,
295; 2 N. B. C, 204.
Repeals by implication are not favored by the courts, and in the absence of
express words of repeal it is the duty of the court to give effect to a prior
statute, if it can be done, unless the repugnancy between the two is so
absolute and palpable as to be recognized at once. United States v. Cooke
Co. National Bank, 25 Int. Rev. Record, 266; 2 N. B. C, 128.
It is the peculiar province of the supreme court of the State to determine the
meaning of the statutes of such State, and with such determination courts
of the United States will hesitate to place upon a State statute any construction which will bring such statute in conflict with a statute of the
United States, and therefore render it void. Davenport National Bank v.
Mittlebuscher, Collector, et al., 15 Fed. Rep., 225.
The punctuation of a statute is not made to be relied on, and must be disregarded if it requires a construction which is repugnant to a sense of justice. United States v. Voorhees, 9 Fed. Rep., 143.
Where Congress has enacted a law covering a particular case, such law
must prevail in the Federal courts though it differs from the State law.
Stephens v. Bernays, 42 Fed. Rep., 488.
Among the assets of an insolvent national bank were three mortgages which
were sought to be impeached by the assignees of the mortgagor as having
been given in violation of the insolvency law of the State. Plaintiff,
receiver of the bank, claimed that the State law was inoperative upon the
assets of a national bank and was ineffectual to divest him of the title
acquired by the mortgages. Held, that the mortgages were governed by
the State law, and the bank took them with all the limitations imposed
by the laws of the State upon them Witters, Receiver, etc., v. Soivles et al.,
32 Fed. Rep,, 758.
As the Supreme Court of the United States has decided that it has authority
to reexamine the judgment of a State court as to the power of national
banks under the act of Congress, a State court should follow its decisions
on the question. First National Bank of Aberdeen v. Andrews et al.; Young
Y. Same, 34 P., 913; 7 Wash., 261.
By the provisions of Rev. Stat. U. S., § 5134, subd. 2, requiring an association
formed for the purpose of conducting a national bank to designate in its
organization certificate " t h e place where its operations of discount and
deposits are to be carried on/' the town or city is meant, and not the
office or building. 61 III. App., 33, affirmed; McCormick v. Market National
Bank (III. Sup.), 44 N. F., 381.

CONVERSION.

1. Where a State bank has been converted into a national banking association
it may enforce all contracts made with it while a State corporation.
City National Bank v. Phelps, 97 N. Y., 44.
2. And it is liable, after the conversion, for all the obligations of the old institution. Coffey v. The National Bank of Missouri, 46 Mo., 140; Kelsey v. The
National Bank of Crawford, 69 Penn. St., 426.
3. A national banking association, organized as the successor of a State bank,
may take and hold the assets of the bank whose place it takes, though
there was not in form a conversion from a State to a national corporation,
but the organization of a new corporation. Bank v. Mclntyre, 40 Ohio
St., 528.
4. And such association will be liable, to the depositors of the former bank.
Fans v. Exchange Bank, 79 Mo., 182.
5. A State law authorizing national banking associations which have been
converted from State banks to use the name of the original corporation
for the purpose of prosecuting and defending suits is not in conflict with
the national banking law, and therefore proceedings based upon a judgment obtained before the conversion may be instituted by such association
in its former corporate name. Thomas v. Farmers' Bank of Maryland, 46
Md., 43.
6. The conversion of a State bank into a national bank, with a change of name,
under the national-bank act does not affect its identity or its right to sue
upon liabilities incurred to it by its former name. Michigan Insurance
Bank v. Eldred, 143 U. S., 293.
7. No authority other than that conferred by act of Congress is necessary to
enable any State bank to become a national banking association. Casey
 v. Galli, 94 U. S., 673.


72

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CONVERSION—Continued.

8. When a State bank is converted into a national banking assciation all of
the directors at the time will continue to be directors of the association
until others are appointed or elected, though some of them may not have
joined in the execution of the articles of association and organization
certificate. Lockwood v. The American National Bank, 9 R. I., 308.
9. But even were the oath required, a majority of all who were directors at
the time of the conversion, and not merely a majority of those who take
the oath, are necessary to constitute a quorum. lb.
10. A national bank, changed from a State bank, may maintain an action on
a continuing guaranty for loans held by it before the change—for loans
both before and after the change. City National Bank of Poughkeepsie v.
Phelps, 97 N. Y., 44; 49 Am. Rep., 513; 3 N. B. C, 627.
11. A State bank paid its president money to reimburse him for money which
he falsely represented he had paid to its creditor. The State bank was
afterwards changed to a national bank, and the creditor recovered judgment against it for his debt. Held, that it could maintain an action against
the president for money had and received, although the State statute provided that the State bank should be continued a body corporate for three
years for the purpose of prosecuting and defending suits, closing its concerns, and conveying its property. Atlantic National Bank v. Harris, 118
Mass., 147; 2 N. B. C, 454.
12. The provisions in the Statute in New York of April 11, 1859 (Laws of 1859,
chap. 236), as to the redemption of circulating notes issued by a State
bank, and the release of the bank if the notes should not be presented
within six years, do not apply to a State bank converted into a national
bank under the act of March 9, 1865, and not " closing the business of
banking." Metropolitan National Bank v. Claggett, 141 U. S., 520.
13. The conversion of a State bank in New York into a national bank, under the
act of the legislature of that State of March 9, 1865 (N. Y. Laws of 1865,
chap. 97), did not destroy its identity or its corporate existence, nor discharge it as a national bank from its liability to holders of its outstanding
circulation, issued in accordance with State laws. Ib.
14. No authority from a State is necessary to enable a State bauk to become a
national bank. Casey v. Galli, 94 U. S., 673; 1 N. B. C, 142.
15. The conversion of a State bank into a national bank, under the act of Congress of June 3, 1864, did not work an annihilation or dissolution, but
only a change of the bank. Maynard v. Bank, 1 Brewster, 483.
16. Such change does not adeem a residuary legacy in certain shares of the bank,
limited upon a life estate in such shares, which is to become an absolute
one in case the bank should pay off or refund its stock by reason of the
expiration of its charter or from any other cause. The change is not
equivalent in law to a paying off in fact, and the residuary legatee is entitled
to the stock, on the death of the legatee, for life. 1b.
17. A State statute authorizing the State banking institutions to become bankiDg associations under the laws of the United States, aud providing for the
surrender and extinction of their State charter, and "that said bank, etc.,
may continue to use its corporate name for the purpose of protecting and
defending suits instituted by or against it, and of enabling it to close its
affairs, but not for the purpose of continuing under the laws of this State
its business," etc., is not in conflict with the national banking act.
Thomas v. Farmers7 Bank of Maryland,"46 Md., 43; 2 N. B. C, 248.
18. A national bank which, being authorized by the owner of notes in its possession to sell them to a third party, purchases them itself and converts
them to its own use, is liable to their owner for their value, as for a conversion, even though it was not within its power to sell them as the
owner's agent. First National Bank v. Anderson, 172 TJ. S., 573.
COSTS.

1. A receiver of a national bank, bringing suit against stockholders in a circuit
court in another jurisdiction, is not exempted by Rev. St., § 1001, from
being required by the court to give security for costs. Platt v. Adriance,
90 Fed. Hep., 772.
2. Under Rev. St., § 1001, as constructed in Bank v. Mixter, 5 Sup. Ct., 944,114
U. S., 463, no security need be given by a receiver of an insolvent national
bank on an appeal taken by direction of the Comptroller of the Currency.
Robinson v. Southern National Bank, 94 Fed. Rep,, 22.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

73

CRIMINAL LAW. See False entries; Indictment.
1. The willful misapplication of the moneys and funds of a national banking
association, made an offense by sec. 5209, Rev. St., must be for the use or
benefit of the party charged, or of some person or company other than the
association. United States v. Britton, 107 U. S., 655.
2. It is not necessary that the officer should personally misapply the funds of
the association. He will be guilty as a principal offender though he merely
procures or causes the misapplication. United States v. Fish, 24 Fed. Rep.,
585.
3. A loan in bad faith, with inteut to defraud the association, is a willful misapplication within the meaning of the statute. Ib.
4. It is no defense to a charge of embezzlement, abstraction, or misapplication
of the funds of a national banking association that the funds were used
with the knowledge and consent of the president and some of the directors.
The intent to defraud is to be conclusively presumed from the commission
of the offense. United States v. Taintor, 11 Blatch., 374.
5. If, with intent to defraud the association, an officer allows a firm in which
he is a member to overdraw its account, he will be guilty of misapplying
the funds of the association. In the matter of Van Campen, 2 Ben., 419.
6. Allowing the withdrawal of the deposit of one indebted to the association
can not be charged as a misapplication of the money of the association.
United States v. Britton, 108 U. S., 193.
7. It is not a willful misapplication of the moneys of the association within
the meaning of sec. 5209, Rev. St., for a president who is insolvent to procure the discounting by the association of his note nst well secured. Ib.
8. To constitute the offense of a willful misapplication of the moneys, funds,
or credits of the association within sec. 5209, Rev. St., it is not necessary
that the person charged with the offense should have been previously in
the actual possession of such moneys, funds, and credits under or by
virtue of any trust, duty, or employment committed to him. Nor is it
necessary to the commission of this offense that the officer making the
willful misapplication should derive any personal benefit therefrom.
When the funds or assets of the bank are unlawfully taken from its possession, and afterwards willfully misapplied by converting them to the
use of any person other than the bank, with intent to injure and defraud,
the offense as described in the statute is committed. United States v.
Harper, 33 Fed. Rep., 471.
9. This criminal act may be done directly and personally, or it may be done
indirectly through the agency of another. If the officer charged with it
has such control, direction, and power of management, by virtue of his
relation to the bauk, as to direct an application of its funds in such manner and under such circumstances as to constitute the offense of willful
misapplication, and actually makes such direction or causes such misapplication to be made, he is equally as guilty as if it was done by his own
hands. Ib.
10. The officers of a national banking association may be prosecuted under
State statutes for fraudulent conversion of the property of individuals
deposited with and in the custody of the association. Commonwealth v.
Tenney, 97 Mass., 50; State v. Tuller, 34 Conn., 280.
11. As the national banking law makes the embezzlement, abstraction, or willful misapplication of the funds of a national banking association merely
a misdemeanor, a person who procures such an offense to be committed
can not be punished under a State statute which provides that a person
who procures a felony to be committed may be indicted and convicted of
a substantive felony. Commonwealth v. Felton, 101 Mass., 204.
12. It is not a conspiracy against United States, under sec. 5540, Rev. St., nor
a willful misapplication of money of bank, under sec. 5209, for president
and director of bank to cause shares of its stock to be purchased with its
money and held on trust. United States v. Britton, 108 U. S., 192.
13. It is not a willful misapplication of bank money by the president, under
sec. 5209, for him to procure the discount by bank for his own benefit of
an unsecured note on which both maker and indorser are insolvent to his
knowledge Ib., 193.
14. Nor is president liable for a criminal violation of that section solely by reason
of permitting a depositor who is largely indebted to bank to withdraw his
deposits without first paying such indebtedness. Ib.
15. The procuring by two or more directors of the declaration of a dividend at
a time when there are no net profits to pay it is not a willful misappropriation of money of bank within sec. 5204, Rev. St. Ib., 199.



74

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
16. Where the president, charged as a trustee with the administration of the
funds of the bank in his hands, converts them to his own use without
authority for so doing, he embezzles and abstracts them within the
meaning of sec. 5209, Rev. St. In the matter of Van Campen, 2 Ben., 419.
17. To constitute the offense of willful abstraction by an officer, defined by the
statute, it is necessary that the money or funds of the association should
be withdrawn by the officer or by his direction: that such taking or withdrawing should be without the knowledge or consent of the bank, or of
its board of directors; that the money or funds so taken or withdrawn
should be converted to the officer's own use or for the benefit and
advantage of some person other than the association, and that this
should be done with intent to injure and defraud the association. Ib.;
United States v. Harper, 33 Fed. Hep., 471.
18. An officer of a national banking association can not be punished under State
laws for embezzling the funds of the association. Commonwealth ex rel.
Torrey v. Ketner, 92 Penn. St., 372; Commonwealth v. Felton, 101 Mass., 204.
19. But where the offense committed by an officer is properly a larceny of the
funds, and not an embezzlement, he may be indicted under a State law.
Commonwealth v. Barry, 116 Mass., 1.
20. The word "embezzle," as found in the United States Rev. St., is used to
describe a crime which a person has an opportunity to commit by reason
of some office or employment, and which may include some breach of confidence or trust. United States v. Conant, 9 Cent. L. J.t 129; 2 N. B. C.f 148.
21. Section 1025 of the Rev. St. provides: "No indictment * * * shall be
deemed insufficient * * * in a matter of form only." Held, that anything that forms a part of the description of the crime is not a " matter
of form." Ib.
22. Embezzlement, abstraction, and willful misapplication of the moneys, funds,
e t c , of a national bank, as described in Rev. St., sec. 5209, constitute
three separate crimes or offenses, which, under Rev. Stat., sec. 1024, may
be joined in one indictment, but must be stated in separate counts. United
States v. Cadwallader, 59 Fed. Rep., 677.
23. The exercise of official discretion in good faith, without fraud, for the advantage or the supposed advantage of the association, is not punishable; but
if official action be taken in bad faith, for personal advantage and with
fraudulent intent, it is punishable. United States v. Fish, 24 Fed. Rep., 585.
24. It is competent for a State by penal enactments to protect its citizens in their
dealings with national banking associations located within the State.
State v. Tidier, 34 Conn., 280.
25. And an officer may be punished under State laws for making false entries
in the books of the association with intent to defraud it. Luberg v. Commonwealth, 94 Fenn. St., 85.
26. Purchase of stock in violation of sec. 5201, Rev. St., made with intent to
defraud, and by officers named in sec. 5209, is not punishable under latter
section. United States v. Britton, 107 U. S., 655.
27. Rev. St., sec. 5209, relating to national banks, provides that officers or
agents thereof who willfully misapply any of its moneys, or who make
any false entry or reports with intent to injure or defraud it, or to deceive
any officer of a bank, or any agent appointed to examine its affairs, and
"every person" who, with like intent, aids or abets any officer or agent
in any violation of the section, shall be guilty, etc. Held, that persons
not officers or agents of a national bank may be aiders and abettors of the
president of the bank in violation of such statute. Coffin v. United States,
15 S. Ct.,394.
28. Acts eighteenth general assembly, chap. 153, sees. 1 and 2, making it a fel
ony for " any officer" of a bank to receive deposits with knowledge that
the bank is insolvent, apply to officers of national as well as other banks.
State v. Fields (Iowa), 62 N. W., 653.
29. Acts eighteenth general assembly, chap. 153, sees. 1 and 2, making it a felony for "any officer" of a bank to receive deposits with knowledge that
the bank is insolvent, are not void, in so far as they apply to national
bank officers, as an attempt to control and regulate the operations of
national banks. Ib.
30. An indictment under Rev. St., sec. 5209, for willfully misapplying the moneys, funds, and credits of a national bank of which defendant was president, as well as a director and agent, must supplement the allegation of
willful misapplication by allegations showing how the misapplication
was made, and that it was an unlawful one. Batchelor v. United States, 15
S. Ct.,446.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

75

CRIMINAL LAW. See False entries; Indictment—Continued.
31. If much the larger number of the jury are for conviction, a dissenting juror
should consider whether a doubt in his own mind is a reasonable one
which makes no impression upon the minds of others equally honest and
equally intelligent with himself, who have heard the same evidence with
an equal desire to arrive at the truth, and under the sanction of the same
oath. On the other hand, if a majority are for acquittal, the minority
ought to seriously ask themselves whether they may not reasonably, and
ought not to, doubt the correctness of a judgment which is not concurred
in by most of those with whom they are associated, and to distrust the
weight and sufficiency of that evidence which fails to carry conviction to
the minds of their fellows. United States v. Jllis, 73 Fed. Rep., 165.
32. An indictment under Rev. St., 1889, sec. 3581, charging a bank officer with
receiving a deposit knowing that the bank was insolvent, is not defective
because each count concludes with the words " did take, steal, and carry
away." State v. SattJey (Mo. Sup.), 33 S. W., 41.
33. Rev. St., 1889, § 3581, providing that any bank officer who shall receive or
assent to the reception of a deposit, or who shall create or assent to the
creation of any indebtedness by the bank, knowing that it is in a failing
condition, shall De guilty of larceny, and punished, etc., sufficiently prescribes the nature of the crime, as required by Const., art. 12, § 27. Ib.
34. The receiving of a deposit, and issuing of a certificate therefor, creates " an
indebtedness," within Rev. St., 1889, § 3581, making it a crime for any
bank officer to create or assent to the creation of any indebtedness by the
bank, knowing its insolvency, etc. Ib.
35. On the trial of a bank officer for receiving deposits knowing that the bank
was insolvent, evidence that depositors demanded their money, anji of the
refusal of the bank employees to pay them, is admissible, whether or not
defendant personally heard the demands, to show the failure of the bank
to meet its obligations in the ordinary course of business. Ib.
36. If a bank employee, by authority of his superior officer given before the
latter bad knowledge that the bank was insolvent, receives a deposit after
its insolvency, such officer, unless he revoked the authority after he
became aware of the condition of the bank, will be liable to prosecution
under Rev. St., 1889, § 3581, making it a crime for a bank officer to assent
to the receipt of a deposit knowing that the bank is in failing circumstances. Ib.
37. An instruction, in the language of the statute, that the failure of the bank
"is prima facie evidence of knowledge on the part of its cashier that the
same was in failing circumstances/' coupled with a statement that "prima
facie evidence is such that raises such a degree of probability in its favor
that it must prevail unless it be rebutted or the contrary proved," is not
erroneous. Ib.
38. Where an indictment under Rev. Stat., 1889, § 3581, contains a count for
receiving a deposit knowing that the bank is insolvent, and another count
for assenting to the creation of an indebtedness by the bank with such
knowledge, and the evidence shows but one transaction, which consisted
in receiving a deposit and issuing a certificate therefor, a general verdict
of guilty, without specifying on which count, is sufficient. Ib.
39. Two or more persons, partners as bankers, may jointly commit the crime of
receiving deposits with knowledge that they and the bank are insolvent.
State v. Smith (Minn.), 64 JV. W., 1022.
40. On trial of an indictment of a banker for receiving deposits when insolvent,
it was proper to charge that, though the deposit was received by defendant's son after defendant had instructed him to refuse deposits, if defendant, on learning that the deposit was so received, placed it among the
funds of the bank, he "knowingly accepted and received" it within the
statute. State v. Eifert (Ioiva), 65 N. W., 309.
41. Where there has been no administration on the estate of a deceased insolvent who had fraudulently conveyed his property in his lifetime, a simple
contract creditor is not debarred from filing a bill against the fraudulent
grantee to subject the property fraudulently conveyed to the satisfaction
of his claim. Merchants' National Bank v. McGee (Ala.), 19 So.f 356.
42. One who has an interest in a company for the benefit of which the president
of a national bank criminally misapplies its funds may be guilty as an
aider and abettor in such misapplication, although the president has no
interest in or relation to him or to said company, and although he has no
interest in the bank, or with the president thereof, of any kind. State v.
Teahan, 50 Conn., 92, distinguished; Coffin v. United States, 16 S. Ct., 943.



76

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
43. It is not necessary to the guilt of aiders and abettors who are not officers of
the bank that they should have a common purpose with the principal
to subserve joint interests with him by the misapplication of the bank's
funds. Ib.
44. Persons who have no official relation to a national bank may be indicted,
under Rev. Stat., § 5209, as aiders and abettors of some officer of the bank
in criminal misapplication of its funds, or in the making of false entries
in its books. Ib.
45. If a violation of the statute is committed by an officer of the bank and by
an outsider, the officer must be prosecuted as the principal, and the other
can only be prosecuted, under the terms of the statute, as an aider and
abettor. Ib.
46. An indictment charging the aiding and abetting of an officer of a national
bank in making false entries, etc., is not defective because it charges
the principal offender with having made the false entry with intent to
injure and defraud the bank, and also with intent to deceive agents
appointed to examine the bank's affairs, whereas it merely charges the
aider and abettor with an intent to deceive such agents; for it is immaterial that the principal offender may have had several intents, if both
principal and aider and abettor were actuated by the criminal intent to
deceive such agents. Ib.
47. An indictment for aiding and abetting one H., the president of a bank, in
the criminal misapplication of its funds, charged that, on a specified
date, the said H. misapplied a named surn, by causing the same to be
paid out on the checks of a company having no moneys in the bank. The
aiding and abetting clause charged that the accused did " on [specifying
the same date] aid and abet said H., as aforesaid, to wrongfully/' etc.,
misapply the moneys of the bank, "to wit," specifying an identical sum.
Held (overruling a contention that the words "said" and "as aforesaid"
did not refer to the same moneys previously charged to have been misapplied by the president), that the language sufficiently connected the
acts charged against the aider and abettor with the offense stated against
the principal. Ib.
48. An indictment for violating the national banking laws averred that the bank
in question had been "heretofore" created and organized under the laws
of the United States. Held, that even if it were assumed that the word
should have been "therefore" in order to make it certain that the bank
had been incorporated prior to the finding of the indictment, the result
was only an imperfect statement of what the law implies to be true after
verdict. Ib.
49. On the trial of persons charged with aiding and abetting the president of a
national bank in criminally misapplying its funds and making false entries
in its books, the court charged that if the jury were satisfied that the
president did knowingly and purposely make, or cause to be made, the
false entries as charged, they could not find the defendants guilty as aiders
and abettors, unless they were satisfied that defendants, "with like intent,
unlawfully and knowingly did or said something showing their consent
to, and participation in, the unlawful and criminal acts" of the said president, "and contributing to their execution." Held, that this language
was not open to the objection that the expression "unlawful and criminal
acts" mii»ht have been understood as relating to unlawful and criminal
acts of the president generally. Ib.
50. Under Rev. Stat., § 3581, making it a crime for any bank officer to "receive
or assent" to the reception of any deposit of money, knowing the bank to
be insolvent, a conviction can not be had on an indictment charging
merely that defendant "did receive" the deposit, on proof of an "assent"
to the reception of the deposit. State v. Wells (Mo. Sup.), 35 S. W.y 615.
51. An indictment against its president for defrauding a national bank, described
the bank as the "National Granite State Bank," "carrying on a national
banking business at the city of Exeter." The evidence showed that the
authorized name of the bank was the "National Granite State Bank of
Exeter." Held, that the variance was immaterial. Putnam v. United
States, 162 U. S., 687.
52. Conversations with a person took place in August, 1893. In December, 1893, he
testified to them before the grand jury which found the indictment m this
case. On the trial of this case his evidence before the grand jury was offered
to refresh his memory as to those conversations. Held, that that evidence
was not contemporaneous with the conversations, and would not support
a reasonable probability that the memory of the witness, if impaired at




REPORT OF THE COMPTROLLER OF THE CURRENCY.

77

CRIAIXAL LAW. See False entries; Indictment—Continued.
the time of the trial, was not equally so when his testimony was committed
to writing; and that the evidence was therefore inadmissible for the purpose offered. Ib.
53. On the trial of a national-bank president for defrauding a bank, a witness
for the Government was asked, on cross-examination, as to the amount of
stock held by the president. This being objected to, the question was
ruled out as not proper on cross examination, the Government "not having opened up affirmatively the ownership of the stock. ;; Held, that as
the order in which evidence shall be produced is within the discretion of
the trial court, and as the matter sought to be elicited on the crossexamination for the accused was not offered by him at any subsequent
stage of the trial, no prejudicial error was committed by the ruling. Ib.
54. When an offense against the provisions of Rev. Stat., section 5209, is begun
in one State and completed in another, the United States court in the latter
State has jurisdiction over the prosecution of the offender. Ib.
55. The proof of guilt in this case was sufficient to warrant the court in leaving
to the jury to decide the question of the guilt of the accused. Ib.
56. The sentence on both counts having been distinct as to each, the entire
amount of punishment imposed will be undergone, although the conviction
and sentence as to the second count are set aside. Ib.
57. Coffin v. United States, 156 U. S.,432, affirmed on the following points: (1)
That the offense of aiding or abetting an officer of a national bank in committing one or more of the offenses set forth in Rev. Stat., section 5202,
may be committed by persons who are not officers or agents of the bank,
and consequently it is not necessary to aver in an indictment against such
an aider or abettor that he was an officer of the bank or occupied any specitic relation to it when committing the offense; (2) that the plain and
unmistakable statement of the indictment in that case and this, as a
whole, is that the acts charged against Haughey were done by him as president of the bank, and that the aiding and abetting was also done by
assisting him in the official capacity in which alone it is charged he misapplied funds. Coffin v. United States, 162 U. 8., 664.
58. Instructions requested may be properly refused when fully covered by the
general charge of the court. Ib.
59. When the charge, as a whole, correctly conveys to the jury the rule by
which they are to determine, from all the evidence, the question of intent,
there is no error in refusing the request of the defendant to single out the
absence of one of the several possible motives for the commission of the
offense, and instruct the jury as to the weight to be given to this particular
fact independent of the other proof in the case. Ib.
60. The refusal to give, when requested, a correct legal proposition does not
constitute error, unless there be evidence rendering the legal theory
applicable to the case. Ib.
61. When it is impossible to determine whether there was evidence tending to
show a state of facts adequate to make a refused instruction pertinent,
and there is nothing else in the bill of exceptions to which the stated
principle could apply, there is no error in refusing it. Several other
exceptions are examined and held to be without merit. Ib.
62. A bank president, not acting in good faith, has no right to permit overdrafts
when he does not believe, and has no reasonable ground to believe, that
the moneys can be repaid; and, if coupled with such wrongful act, the
proof establishes that he intended by the transaction to injure and defraud
the bank, the wrongful act becomes a crime. Ib.
63. When the principal offender in the commission of the offense, made criminal
by Rev. Stat., section 5209, and the aider and abettor were both actuated
by the criminal intent specified in the wtatute, it is immaterial that the
principal offender should be further charged in the indictment with having
had other intents. Ib.
64. The first clause of section 5209 of the Revised Statutes provides for three
distinct offenses: First, embezzlement; second, abstraction; and, third,
willful misapplication of the moneys, funds, or credits of the bank by
any president, director, cashier, teller, clerk, or agent of any association
organized as a national banking association. United States v. Lee, 12 Fed.

Eep., 816.
65. It was the intention of Congress to make criminal the misapplication and
conversion of the funds of national banking associations without regard
to whether or not the party so misapplying received any of the funds or
other advantage, directly or indirectly. Ib.




78

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
66. If it appears that the funds of the banking association have been abstracted
or willfully misapplied by defendant, he is precluded from denying that it
was done with unlawful intent. Ib.
67. It is not a necessary ingredient of the offense of making a false entry in a
report under Rev. St., sec. 5209, that the report shall be one of those mentioned in sections 5211, 5212, or one which the bank is bound by law to
make. It is sufficient if the report is one made in the due course of busi-

68.

69.
70.

71.
72.
73.

74.
75.
76.

77.

78.
79.

ness. United States v. Potter, 56 Fed. Rep., 83, 97, disapproved; United States
v. Booker, 80 Fed. Rep., 376.
When it is made to appear to the court during the trial of a criminal case
that, either by reason of facts existing when the jurors were sworn, but
not then disclosed and known to the court, or by reason of outside influences brought to bear on the jury pending the trial, the jurors, or any of
them, are subject to such bias or prejudice as not to stand impartial
between the Government and the accused, the jury may be discharged and
the defendant put on trial by another jury; and the defendant is not
thereby twice put in jeopardy, within the meaning of the fifth amendment
to the Constitution of the United States. Simmons v. United States, 142
U. S., 148.
The judge presiding at a trial, civil or criminal, in any court of the United
States may express his opinion to the jury upon the questions of fact
which he submits to their determination. Ib.
An indictment on Rev. Stat., sec. 5209, is sufficient which avers that the
defendant was president of the national banking association; that by
virtue of his office he received and took into his possession certain bonds
(described), the property of the association, and that, with intent to
injure and defraud the association, he embezzled the bonds and converted
them to his own use. Claasen v. United States, 142[ U. S.t 140.
In a criminal case a general judgment upon an indictment containing several counts and a verdict of guilty on each count can not be reversed on
error if any count is good and is sufficient to support the judgment. Ib.
Upon writ of error no error in law can be reviewed which does not appear
upon the record, or by bill of exceptions made part of the record. Ib.
Under sec. 5 of the act of March 3,1801, entitled "An act to establish circuit courts of appeals, and to define and regulate in certain cases the
jurisdiction of the courts of the United States, and for other purposes,"
a writ of error may, even before July 1, 1891, issue from this court to a
circuit court in the case of a conviction of a crime under sec. 5209 of the
Revised Statutes where the conviction occurred May 28, 1890, but a
sentence of imprisonment in a penitentiary was imposed March 18, 1891.
In re Claasen, 140 U. S., 200.
A crime is " infamous " under that act where it is punishable by imprisonment in a State prison or penitentiary, whether the accused is or is not
sentenced or put to hard labor. Ib.
Such writ of error is a matter of right, and under sec. 999 of the Revised
Statutes the citation may be signed by a justice of this court as an
authority for the issuing of the writ under sec. 1004. Ib.
At the time of the conviction no writ of error from this conrt in the case was
provided for by statute, nor was any bill of exceptions, with a view to a
writ of error, provided for by statute or rule, and therefore a mandamus
will not lie to the judge who presided at the trial to compel him to settle
a bill of exceptions which was presented to him for settlement after the
sentence, nor can the minutes of the trial, as settled by the judge by consent, and signed by him, and printed and filed in July, 1890, and on which
a motion for a new trial was heard in October, 1890, be treated by this
court, on the return to the' writ of error, as a bill of exceptions properly
forming part of the record. Ib.
A criminal court in the southern district of New York, sitting as a circuit
court therein, under sec. 613 of the Revised Statutes, and composed of
the three judges named in that section, to hear a motion for a new trial
and an arrest of judgment in a criminal case previously tried by a jury
before one of them, is a legally constituted tribunal. Ib.
A justice of this court on allowing such writ and signing a citation had
authority also to grant a supersedeas and stay of execution. Ib.
Upon a plea of guilty to three indictments found under section 5209, Rev.
St., U. S., one for the misapplication of funds of a national bank by the
accused while cashier thereof, one for false entries to conceal such misapplication, and the third for making a false statement with intent to
deceive the examining officers, the district court pronounced sentence




REPORT OF THE COMPTROLLER OF THE CURRENCY.

79

CRIMINAL LAW. See False entries; Indictment—Continued.
upon the accused as follows: "That the prisoner be confined at hard
labor in the State prison of the State of New Jersey for the term of five
years upon each of the three indictments above named, said terms not to
run concurrently, and from and after the expiration of said terms until
the costs of this prosecution shall have been paid." Held, that the words
"said terms not to run concurrently" are uncertain and incapable of
application, and therefore void; and that the sentences commenced at
once and ran concurrently. United States v. Patterson, Keeper, etc., 29 Fed.
Rep., 775.
80. The judgment of the district and circuit courts of the United States in
criminal cases is final, and can not be reviewed by writ of error; but if a
jndgment, or any part thereof, is void, either because the court that renders it is not competent to do so for want of jurisdiction, or because it is
rendered under a law clearly unconstitutional, or because it is senseless
and without meaning, and can not be corrected, or for any other cause,
the party imprisoned by virtue of such judgment may be discharged on
habeas corpus. Ib.
81. On a habeas corpus the decision should be made upon the actual status of
the case at the time of the decision, and not according to the state of things
when the writ was allowed. When, at the time the writ of habeas corpus
for the discharge of a prisoner, under three sentences of five years, each
running concurrently, was allowed, the first term of five years had not
expired by lapse, although at least one of the sentences had been satisfied
by means of remissions for good conduct. Meld, that the five years having
entirely elapsed since the allowance of the writ, the question of the applicability of the remission for good conduct to all the sentences may be
waived, and the prisoner discharged. Ib.
82. When an officer of a national bank, indicted under Rev. St., § 5209, for
making false entries in the report of the condition of such bank in respect
to amounts of overdrafts and of loans and discounts, has testified that certain overdrafts, in respect to which the depositors had consulted the bank
officers and obtained permission to overdraw, were treated by ihe officers
and directors of the bank as temporary loans, and were reported by him
among loans, and not among overdrafts, in the belief that they might
properly be so reported, it is error to charge the jury that the defendant
was required by law to place, under the heading " Overdrafts " in the
report, all sums drawn out by depositors in excess of their deposits, and
that the transfer of any such sums to the heading "Loans and discounts"
was the making of a false entry, since such charge takes from the jury the
right to consider, upon the question of intent, the explanation given by
the defendant, while, if they believed such explanation, and that the
defendant acted in good faith, the entries were not false within the mean
ing of the statute. Mr. Justice Harlan dissenting. Graves v. United States,
165 U. S., 328.
83. Where a transaction by a national-bank officer with intent to defraud is
entered on a deposit slip, entry of the contents of such slip upon the books
of the bank by him, or by his direction, is making a " false entry " within
Rev. St., § 5209. Agnew v. United States, 165 U. S., 36.
84. On trial of the president of a bank for conversion of its funds, the cashier
who has testified as a witness for defendant may be asked, on crossexamination, whether be did not resign because of transactions of the
defendant similar to that charged in the indictment. Ib.
85. The evidence showed that defendant, president of a national bank, without
authority of the directors, purchased $20,000 bonds, of little value, at a
great discount, and had them placed in the assets of the bank, and to his
credit at face value, giving his written guaranty for the principal and
interest, which, by reason of his financial condition, was almost worthless.
Held, that it was not error to refuse to charge that, from the guaranty, the
jury might find that there was no intent to defraud the bank. Ib.
86. A charge to the effect that if defendant, a bank president, purchased bonds
which were worthless, or of but little value, placed them among the assets
of the bank at a greatly exaggerated value, and had such exaggerated value
placed to his own credit, these facts create a presumption of an intent to
defraud the bank, which "throws the burden of proof upon the defendant," and that evidence to overcome the presumption "must be sufficiently
strong to satisfy you beyond a reasonable doubt that there was no such
guilty intent," is not error, where the character of such evidence and the
nature of a reasonable doubt are sufficiently explained in other portions
of the charge. Ib.



80

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
87. A charge that if the defendant "either embezzled or willfully misapplied"
the funds or credits of the bank, "whereby, as a necessary, natural, or
legitimate consequence, its capital was reduced, or placed beyond the control of the directors, or its ability to meet its engagements or obligations,
or to continue its business, was lessened or destroyed, the intent to injure
or defraud the bank may be presumed," is correct. Ib.
88. It is not reversible error to refuse to charge that, if defendant used the proceeds of a check belonging to the bank, and which he had caused to be
placed to his credit, in the payment of a debt of the bank, the jury must
find that he did not fraudulently embezzle the amount, especially where
defendant's explanation of the transaction is satisfactory. Ib.
89. Evidence of the commercial rating of a president of a bank at the time of an
alleged conversion by him of its funds, by purchasing for the bank, without authority, and having placed to his credit, worthless bonds, which he
had guaranteed, and the testimony of the cashier of another bank as to
whether, at the time of transaction, he considered defendant's guaranty
for such an amount good, are irrelevant. Ib.
90. Under rule 11 of the circuit court of appeals (21 C. C. A., cxi, and 78 Fed. Rep.,
cxi), requiring the assignment of errors to quote the full substance of evidence alleged to have been erroneously admitted or rejected, and to set out
the part of the charge referred to totidem verbis, assignments that "the
court erred in permitting evidence as shown in bills of exceptions numbers
two and three," which errors can only be ascertained by a careful rending
of a voluminous record, and that "the court erred in its charge," etc.,
referring to marked lines and numbers in the written opinion for instructions erroneously given and refused, will not be considered. Gallot v.
United States, 87 Fep. Rep., 446.
91. The death of the principal before indictment is no obstacle to the prosecution and punishment of one charged with aiding and abetting an officer,
clerk, or agent of a national bank to abstract, misapply, or embezzle the
funds thereof, in violation of Rev. St., § 5209, which makes such offense a
misdemeanor. Ib.
92. A juror who says he has an impression or opinion as to guilt or innocence
of defendant, formed from newspapers and rumors, that it would require
evidence to remove it, but that it would yield to evidence, and, that he
can and will give the defendant a fair and impartial trial according to the
evidence that may be adduced before him, is competent. Ib.
93. Where an indictment contains many counts, all alike, except as to amounts
of money and dates of misapplication, it is sufficient to read one count in
full to the jury, explain the difference, and state the amount and date
charged in each of the other counts. Ib.
94. One indictment in thirty-six counts charged defendant with aiding in the
abstraction of thirty-six specified amounts of money, at thirty-six specified dates. Another indictment charged him with aiding in the misapplication of the same amounts, upon the same dates. The two were
tried together, and the jury returned a verdict of "guilty as,charged."
Held, that the verdict was definite, certain, responsive to the issues, and
not a double conviction, the sentence imposed by the court being imprisonment for a less term than the maximum under any one count. Ib.
95. An indictment under Rev. St., §. 5209, against officers of a national bank
and a depositor, charged willful misapplication of the funds of the bank,
with intent to injure and defraud the bank. On the trial it appeared that
the depositor made and deposited fictitious checks, which were credited
to his account. Held, that it was necessary to show that some portion of
the funds were withdrawn from the possession or control of the bank, or
a conversion in some form was made thereof, so that the bank would be
deprived of the benefit thereof. Dow et al. v. United States, 82 Fed. Rep., 904.
96. In such a case, a statement by the court to the jury that under a State statute
it is made a misdemeanor to draw a check on a bank where there are no
funds to meet it, tends to mislead the jury, and constitute error. Ib.
97. The mere fact of payment by the officers of a national bank of a check which
creates an overdraft does not necessarily constitute a fraudulent misapplication of the funds of the bank, Ib.
98. Under such an indictment, where the issues involve the intent with which
certain acts were done, th<; trial court is justified in giving a reasonably
wide latitude to the introduction of evidence tending to show the relations
of the parties, the mode in which the business was carried on, and the
knowledge which the officers had of the character of the operations carried,
on by the depositor. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

81

CRIMINAL LAW. See False entries; Indictment—Continued.
99. If, in an indictment under Rev. St., §5209, it is the purpose of the Government to charge the making of false entries in the books of the bank
because of the receiving and crediting of checks drawn thereon by
parties who had no funds there, the indictment should set forth a description of the checks, with an averment of the reasons why they were to be
deemed false or valueless. Ib.
100. If an overdraft is made and allowed under circumstances justifying it, or
even under circumstances making it a fraud upon the bank, the entry of
the transaction just as it occurred on the books of the bank is not a false
entry, under Rev. St., § 5209. Ib.
101. Where an indictment consists of numerous counts, the trial court may, in
the exercise of sound judicial discretion, require the Government to elect
certain counts upon which it will ask conviction; but where the counts
are all for transactions connected together, or of the same class, their
joinder is proper under Rev. St., § 1024, and the exercise of the court's discretion will not be disturbed, except in a clear case of improvidence or
abuse. Gardes v. United States; Girault v. Same, 87 Fed. Rep., 172.
102. Where, during the trial, a juror becomes disqualified, and the court adjudges
a mistrial, a plea of former jeopardy is not good on a second trial, even
though all parties were willing to proceed with eleven jurors. Ib.
103. Where defendants have been arraigned, and have waived reading of the
indictment, they may not subsequently complain if the whole indictment
is not read at the trial, but such parts of it are read and such explanations made of the other parts as may give the jury the clearest compreheusion of it. Ib.
104. Where the jury finds accused guilty upon all counts of an indictment,
"Guilty as charged," without specifying the counts, is a proper form,of
verdict. Ib.
105. Where the verdict is sustained by one good count in the indictment, it must
stand, even if all the other counts are bad. Ib.
106. Where, after mistrial, and before a new trial, amendments are made to
purely formal parts of certain counts of an indictment, and the defendants
are not rearraigned, even if the irregularity is material, it can affect only
the counts so amended, and the error is cured by arrest of judgment on
such counts. Ib.
107. Where the statute under which a prisoner is sentenced provides for imprisonment, but not at hard labor, the words " a t hard labor" should not be
inserted in the sentence, even if hard labor is a part of the discipline of
the prison at which the sentence is to be served. Ib.
108. In a prosecution against a national-bank president for unlawfully certifying
checks, it is not error to instruct the jury that the presumption is that he
had knowledge of the condition of the account upon which the checks
were drawn, where the same instruction cautions them that such presumption may be rebutted by evidence that the defendant did not in fact
have such knowledge. Spurr v. United States, 87 Fed. Rep., 701.
109. In order to convict a national-bank officer of wrongfully certifying checks,
it is not necessarj^ to show that he had actual knowledge that the account
against which the checks were drawn was not sufficient; it is enough if
he willfully refrained from investigation in order to avoid knowledge. Ib.
110. Upon the trial of the president of a national bank for certifying checks without funds evidence of speculations by the cashier with funds of the bank,
with defendant's knowledge, is admissible for its bearing upon the right
of tlie latter to rely upon the former's representations as to the state of the
customers' accounts. Ib.
111. The period of time within which collateral transactions offered to show
a guilty intent must have occurred is largely discretionary with the
court. Ib.
112. Upon the trial of a national-bank officer for official misconduct, evidence as
to the defendant's reputation for honesty and integrity should be limited
to such reputation down to the time of the failure of the bank. Ib.
113. In general, where no attempt has been made to impeach the defendant's testimony, he may not add to the weight of his evidence by evidence of his
general reputation for truthfulness. Ib.
114. A plea of former jeopardy set up certain prior proceedings had in the same
court under the same indictment. Counsel for the Government having
objected thereto, the court treated his objection as a demurrer to its sufficiency in law, and thereupon overruled the plea. The trial then went
on, without objection by defendant to the subsequent proceedings. Held,
that there was no error in thus proceeding with the cause without first

CUR 1900, PT 1
6


82

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
setting down the plea for trial, as the only question arising thereon was
one of law, which was finally disposed of by the former ruling. United
Stales v. Peters, 87 Fed. Bep., 985.
115. Rev. St., § 1025, forbidding the court to quash an indictment for defect of
form, makes it unnecessary, in criminal indictments, to repeat an averment contained in the first count, where subsequent counts refer back
to the first, and are thereby rendered sufficiently explicit in stating the
offense. Ib.
116. An indictment charged the making of false entries in the books of a
national bank for the purpose of showing that on a certain date a county
treasurer deposited $10,000 "special," which was drawn out again a few
days later. Evidence was offered by the Government to prove that no
such deposit was made, and the treasurer himsek* was called by it, and
testified that he had some recollection of having deposited a large sum
about the time in question. Thereupon his books were produced, and
after he had testified that he belived them to be correct he was permitted to testify as to the entries therein on the dates referred to. By
these entries it did not appear that $10,000 had been either deposited in
bank or drawn from the cash on hand. The treasurer, however, then
reiterated his former statement, and was even more positive that he had
made the deposit. Held, that, in view thereof, there was no prejudicial
error in admitting his testimony as to the book entries. Ib.
117. If money is left with a national bank in a sack, with the express understanding that it is not to be mingled with the bank's funds, but the
identical bills or coins are to be returned in the same condition, and
this is done to make a showing of money to a bank examiner, as it it were
the money of the bank, then the entry thereof on the books of the bank as
money deposited is a false entry. Ib.
118. If the jury be charged that a false entry on the books of a national bank
alone gives rise to the presumption, not only that the entry was made
with criminal intent, but also with knowledge of its falsity, but elsewhere in the charge it was said that a false entry must be known to be
false, and designed and intended to deceive, the charge is not erroneous.
Ib.
119. Where the court has several times stated to the jury that the indictment
charges the making of false entries in the books of the bank, with intent
to deceive the bank examiner, and the making of false reports, with intent
to deceive the Comptroller, it is not misleading to thereafter say that
defendant is guilty if he made such false entries and report "with the
intent mentioned in the statute," although the statute mentions several
other intents. Ib.
120. A depositor may knowingly overdraw his account, and be innocent of any
unlawful purpose; but if he does so for considerable amounts, without
the knowledge and consent of the proper officials, and with a fraudulent
intent that the moneys of the bank shall be applied to their payment by
the teller without the knowledge or consent of the proper officials, he is
guilty. United States v. Kenney, C. C, 90 Fed. Rep., 257.
121. An intent to injure or defraud a national bank, within the meaning of Rev.
St., § 5209, does not necessarily involve malice or ill will towards the bank.
It is sufficient that the unlawful intent is such as, if carried in to execution,
will necessarily or naturally injure or defraud the bank. Ib.
122. If, at the time defendant drew checks upon a national bank, he knew or
had reason to believe that they were to be fraudulently paid by the teller
out of the funds of the bank, and not from any funds to which defendant
could legitimately resort, he had a guilty intent; and it is immaterial
that he intended finally to recompense the bank, through successful operations in stocks or otherwise. Ib.
123. If there was a fraudulent understanding between defendant and the paying
teller that checks drawn by defendant in favor of a firm of stock brokers
were to be paid out of funds of the bank, when defendant had no funds
or only insufficient funds to his credit, and that such debts were not to be
charged in his account, but were to be fraudulently concealed until he
should make deposits sufficient to meet them, defendant had a guilty
intent to injure or defraud the bank. Ib.
124. An averment in an indictment under Rev. St., § 5209, for embezzlement by an
officer of a national bank, that the money embezzled was lawful legaltender money of the United States, is surplusage and need not be proved.
Porter v. United States, C. C, 91 Fed. Bep., 494.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

83

CRIMINAL LAW. See False entries; Indictment—-Continued.
125. In a prosecution of an officer for making false entries in the books of a
national bank and in the report made to the Comptroller, with intent to
deceive the bank's directors and any agent of the Comptroller, proof that
the entries made were false, and known to be so by defendant; that they
were made in the books, and afterwards carried into a report made by the
bank to the Comptroller, and were calculated to deceive the agent of the
Comptroller, raises a presumption that such was the intention in making them, though such presumption is not conclusive. United States v.
Toutsey, C. C, 91 Fed. Rep., 864.
126. To constitute embezzlement by an officer of funds of a national bank, within
the meaning of Rev. St., § 5209, with intent to defraud the bank, there
must be an unlawful conversion by the officer to his own use of funds intrusted to him, with intent to injure or defraud the bank, while abstraction or misapplication consists of the conversion, with a like intent, of
funds not especially intrusted to his care. Ib.
127. Under the provisions of Rev. St., $ 5209, making it a crime for an officer,
clerk, or agent of a national bank to make any false entry in any book,
report, or statement of the association, with intent to defraud or to deceive
any officer of the bank, or any agent appointed to examine the affairs of
the bank, an officer is chargeable for a false entry made by a clerk under
his direction, the same as though he had made it in person. Ib.
128. Where defendant, as cashier of a natioual bank, discounted certain notes,
credited the proceeds to the makers, procured the credit to be transferred
to himself, and with it paid certain other notes then held by the bank,
thus effecting a substitution of securities, the fact that he knew the
makers of the notes taken up to be solvent, and the makers of the new
notes to be insolvent, and the collateral security deposited therewith to
be insufficient in value to pay them, raises a presumption that he intended
by the transaction to injure«or defraud the bank, though such presumption is not conclusive. Ib.
129. Where an officer of a national bank is charged with several offenses, under
Rev. St., § 5209, in making at different times false entries in the books,
reports, or statements of the association, such offenses may be charged in
different counts of the same indictment, as provided in Rev. St., § 1024, as
"acts or transactions of the same class of crimes or offenses." United
States v. Berry (D. C ) , 96 Fed. Rep., 842.
130. A letter taken by some person from a box marked as containing private
papers of the president of a national bank, and given to officers of the
United States, is not, by reason of the manner in which it was obtained,
inadmissible in evidence on behalf of the Government in a prosecution of
the president for a violation of the national banking law. Bacon v. United States (C. C. A.), 97 Fed. Rep., 35.
131. Books of account of a national bank, in which the record of its daily business was kept, are admissible, without further proof, against an officer of
the bank on trial for making false returns of its condition. Ib.
132. Books of a national bank, obtained by the officers of the United States from
the receivers of a State bank, which succeeded such national bank, are not
inadmissible against an officer of such bank on trial for making false
reports, on the ground that they were obtained in violation of the constitutional provision against unreasonable searches and seizures. Ib.
133. Prior false reports held admissible on the question of intent, on the trial of
the president of a national bank for making a false report. Ib.
134. The admission of expert testimony as to the meaning of certain entries in a
report made by a national bank to the Comptroller against an officer of the
bank on trial for making a false report of its condition is not prejudicial
error, were it appears that such entries were correctly interpreted. Ib.
135. The fact that a depositor in a national bank has given the bank an "overdraft note," which has not in fact been discounted, does not warrant the
bank in reporting an overdraft by such depositor under the head of "loans
and discounts." Ih.
136. To constitute the offense of making a false report of the condition of a national
bank, within Kev. St., §5209, it is not necessary that such report, when made
by an officer of the bank to the Comptroller, should have been made in
response to a call or request of the Comptroller. Ib.
137. An indictment charging a defendant as an officer of a national bank with
having made a false statement in a report made to the Comptroller is not
required to set out such report in full, but is sufficient if it identifies the
report by its date and sets out the particular statement claimed to be
false. Dorsey v. United States (C. C. A.), 101 Fed. Rep., 746.



84

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
138. An issue as to the guilt of a defendant on a charge of making false entries in
a report made as an officer of a national bank held to be for the jury under
the evidence. Ib.
139. A special instruction requested by a defendant in a prosecution for violation
of the national banking law, and refused, held to have been covered by the
general charge. Ib.
140. Evidence held sufficient to support a conviction for unlawful abstraction of
money from a national bank by an officer. Ib.
141. In a prosecution of an officer of a national bank for making false entries in
its books, evidence held sufficient to show that certain notes shown to
have been owned by the bank and to have been rediscounted, but which
had become lost or destroyed, bore the bank's indorsement. Ib.
142. On the trial of a defendant charged with offenses against the national banking law while acting as an officer of a bank, evidence of other transactions,
not counted upon, but taking place at about the same time as those
charged, and showing that defendant acted in bad faith to wards the bank,
is admissible on the question of intent. Ib.
143. Where a defendant was charged in several counts with making false entries
in the books of a national bank, an instruction to find for defendant on
suf*h counts was properly refused where there was sufficient evidence to go
to the jury on any one of them. Ib.
144. An indictment of the president of a national bank for causing a false entry
to be made in the books of the bank held sufficient, in the absence of an
application for a bill of particulars, although it did not specify the manner in which the defendant "caused 77 the entry to be made. McKnight v.

United States, 98 Fed. Rep., 208.
145. Under an indictment based upon Rev. St., % 5209, charging an officer of
a national bank with having made false entries in its books with the
intent to deceive the officers and directors of the bank and any agent
appointed by the Comptroller to examine the affairs of the bank, and to
injure and defraud the association, it is sufficient to prove the wrongful
intent in either particular charged. Ib.
146. The president of a national bank can not be convicted, under Rev. St.,
§ 5209, of the crime of making false entries in reports made by such bank
to the Comptroller upon evidence that he signed and verified reports containing false entries, where it is also shown that such entries were not
made by him or by his direction. United States v. Booker, 98 Fed. Rep., 291.
147. Indictment charging one, as president, director, and agent of national bank,
with willfully misapplying its assets, is not bad for duplicity. Jetvett v.
United States (C. C. A.), 100 Fed. Rep., 832.
148. Indictment for misapplying assets of national bank held not bad, for want of
certainty, because it does not allege how funds were misapplied by
defendant. Ib.
149. Indictment for misapplying assets of national banking association need not
allege that association is carrying on a banking business. Ib.
150. Misapplication of assets of national bank by agent appointed to assist in
liquidation is an offense, within Rev. St., § 5209. Ib.
151. President of national bank, appointed as agent to assist in liquidation, is
liable to indictment for misapplication of assets as agent, under Rev. St.,
§ 5209, though he is also a trustee for creditors. Ib.
152. President of national bank, appointed to close its affairs in liquidation, is an
agent, within meaning of Rev. St., § 5209, punishing misapplication of
assets of national bank. Ib.
153. Under indictment for misapplying assets of national bank, under Rev. St.,
§ 5209, defendant may be convicted of misapplication of assets in his
actual possession. Ib.

DEPOSITS :

1. The relation of banker and depositor is that of debtor and creditor. Deposits
on general account belong to the bank and are part of its general fund.
The bank becomes a debtor to the depositor to the amount thereof, and the
debt can only be discharged by payment to the depositor or pursuant to
his order. The Mtna National Bank v. The Fourth National Bank, 46
N. F., 82.
2. The contract has none of the elements of a trust. For a breach on the part
of the bank of the obligation resulting from the relation between the
parties the depositor alone can sue. Ib.
3. General deposits in a commercial bank on account of the depositor, without
being complicated by any other transaction than that of the depositing



REPORT OF THE COMPTROLLER OF THE CURRENCY.

85

DEPOSITS—Continued.

4.

5.

6.

7.

8.
9.

10.

11.

12.

13.
14.

and withdrawing of the moneys, transfers the ownership of the money to
the bank; and the relationship with reference thereto, as between the
bank and the depositor, is simply that of debtor and creditor. Collins v.
State, 15 So., 214.
A deposit made in the usual course of business vests in the bank, and can
not be recovered by the depositor on the ground of fraud, though the
bank was insolvent and failed on the next day, and though the deposit was
made in reliance on representations of the president that the bank was
all right, unless the officers of the bank knew of its insolvency at the time
of the deposit. New York Breweries Co. v. Higgins, 29 N. Y. S., 416.
A trustee who deposits in a bank and causes to be credited to his private
account money of the trust fund without giving notice that it is not his
private property or making any special agreement in regard to it, thereby
converts it to his own use; so that the bank, in the absence of any notice
that it is not his private property, may apply it as such. School District
v. First National Bank, 102 Mass., 174.
Where an agent deposits in a bank, to his own account, the proceeds of property sold by him for his principal under instructions thus to keep it, a trust
is imposed upon the deposit in iavor of the principal, and his right thereto
is not affected by the fact that the agent at the same time deposits other
moneys belonging to himself; nor is it affected by the fact that the agent,
instead of depositing the identical moneys received by him on account of
his principal, substitutes other moneys therefor. Van Allen v. The American National Bank, 52 N. Y., 1.
Where an agent or trustee has deposited money belonging to his principal or
beneficiary in a bank to which he is himself indebted, and the bank, without his authority and in ignorance of the true ownership of the fund, has
applied it on the debt, the owner is not debarred from recovering it from
the bank if it can be identified. Burtnett, adm'r., v. The First National
Bank, 38 Mich., 630.
A bank is not chargeable with interest on sums deposited to the credit of
customers to be drawn against by check until payment be demanded, unless
upon special contract. Parkersburg National Bank v. Als., 5 W. Fa., 50.
Unlike checks, cash deposited by customers with the bank ceases to be the
property of the depositor, and becomes the property of the bank, creating
at once the relationship of debtor and creditor. Balback et al. v. Frelinghuysen, Receiver, etc., 15 Fed. Rep., 675.
Plaintiff made a certain payment to defendant bank, and received in exchange
a note signed by a firm composed of the officers of the bank, and the business of which was transacted in the bank's office. He subsequently gave
a check to his wife, which was also exchanged at the bank office for a similar note. Plaintiff and his wife could both read and write, and had transacted considerable business with the banks. Plaintiff retained the notes
for two years, and upon the failure of the firm began suit to re-form the
notes and change them into certificates of deposit of the bank on the ground
that he intended to deposit his money with the bank. Held, that plaintiff
was not entitled to a decree. Murphy v. First National Bank (loiva), 63
N. W., 702.
Where several deposits in bank have been made on the same account, and the
title to one of the deposits is disputed, checks drawn on the account will
be first applied to the deposits not in dispute. Hauptmann v. First National Bank {Sup.), 31 N. Y. S.,364.
Testimony that the cashier of a bank failed to enter deposits on its books is
not admissible as against the depositor to show that the deposits were
made with the cashier in his individual capacity. VHerbette v. Pittsfield
National Bank (Mass.), 38 N. E., 368.
An envelope, on which the sums paid into and drawn out of a bank by a
depositor are entered by the cashier, is admissible against the bank to show
the state of his account. Ib.
A national bank, not designated as a depository of public moneys, which
receives, under the permissive authority of law and the regulations of the
Post-Office Department, deposits of money made by postmasters in their
official capacity, thereby assumes a fiduciary relation to the Government,
and becomes a bailee of the Government, so as to become directly responsible to it for any moneys which it knowingly or negligently allows the
postmaster to withdraw by private check, or otherwise appropriate to his
own use; and where, after the removal of tlie postmaster, he deposits a
sum to make good a shortage in his balance, the bank can not apply it in
discharge of a debt due it from him personally. United States v. National

 Bank of Asheville et al., 73 Fed. Rep., 379.


86

REPORT OF THE COMPTROLLER OF THE CURRENCY.

DEPOSITS—Continued.

15. By reason of this trust relation, equity has jurisdiction of a bill by the Government to require an account and settlement of the moneys so deposited
with it; and this remedy is not affected by the fact of a cumulative
remedy at law against the postmaster on his official bond. Ib.
16. Where a bank knows that money deposited with it to the general credit of
a depositor is held in trust by such depositor, the bank has no right to
apply such deposit to the payment of a note due to it from the depositor;
57 111. App., 107, reversed. Clemmer v. Drovers' National Bank (III. Sup.),
41 N. E., 728.
17. An indictment under a statute declaring it an offense if an officer of a bank
shall receive a deposit, " knowing, or having good reason to believe, the
establishment to be insolvent," is not sufficient where it does not allege
the insolvency, but merely follows the words of the statute, as there
would be no offense if the bank was not insolvent, though the officer
believed it was. State v. Bardwell (Miss.), 18. So., 377.
18. Where one mails to a bank money and checks for deposit, but the bank
refuses to acknowledge receipt thereof, and persistently denies such
receipt, the relation of depositor and depositee is not created. Miller v.
Western National Bank (Pa. Sup.), 33 A., 684.
19. Where a bank positively and repeatedly denies one's right to make any claim
upon it in respect of currency and checks mailed by him to it for deposit,
the depositor need not make demand before bringing suit on account of
such deposit. Ib.
20. On trial on an indictment under Comp. St. 1895, §§ 637, 638, for receiving a
deposit in an insolvent bank, defendant offered to show that the deposit
was made by a customer whose account was at the time overdrawn in an
amount larger than the deposit. Held, that the evidence was admissible
as tending to show that the deposit was made and accepted as an application on the depositor's indebtedness to the bank. Nichols v. State (Neb.),
65 N. W., 774.
21. When a customer of a bank who has overdrawn his account makes a deposit,
the presumption is, in the absence of evidence, that the deposit was general,
and was made and received toward the payment of the overdratt. Ib.
22. A bank depositor, on rumors of its insolvency, went to withdraw his deposits,
but was informed by the vice-president and director that the bank was
perfectly solvent, and that "we have got all the money you want. You
need never have any fears of this bank as long as I am in it." Such depositor, relying on such representations, permitted his deposit to remain.
It was in fact insolvent when the representations were made. Held, that
such vice-president and director was personally liable to such depositor
for the money lost by the failure of the bank. Townsendv. Williams (N. C),
23 S. E., 461.
23. A person deposited money with a bank, taking from it a deposit slip in the
form used for general deposits. Upon such slips were the words, ''Security
for signing bond to be held by bank." Subsequently the depositor, in
order to change the security so the $700 would be available for one purpose and $800 for another, drew an ordinary check, which was marked
"Paid," and a certificate of deposit for $800 made out, to be held by the
surety, and $700 to secure other bondsmen. The first-named certificate
was afterwards paid by the bank. The depositor testified that the deposit
was a special one. Held, a general deposit and not a trust fund in the
hands of a receiver. Dearborn v. Washington Sav. Bank (Wash.) 42 P., 1107;
Watson v. Sheaf e, ib.
24. A deposit made in a bank at a time when the officers knew that it was
insolvent can not be recovered from the assignee unless it can be identified and traced into his hands. In re Commercial Bank (Ct. Insolv.) 2
Ohio N. P., 170.
25. In an action by a bank to recover money advanced on a draft, for goods sold,
deposited with it by the vendor, where it claims that the deposit was
made for collection, and the depositor that it was a sale, it is proper to
instruct that if it was a sale the bank could not recover, though there is
evidence that the vendee, after the deposit, paid part of the price for
which the draft was drawn directly to the vendor. Bank of Guntersville
v. Webb (Ala.), 19 So., 14.
26. An instruction that if an illiterate depositor, to whom a bank cashier fraudulently gave a deposit slip showing a deposit of a draft for collection instead
of as a discount, " within a reasonable time, and on his first opportunity,"
repudiates the transaction as shown by the slip, would make no difference,
is not objectionable as leaving to the jury the question of reasonable
 time. Ib.


REPORT OP THE COMPTROLLER OF THE CURRENCY.

87

DEPOSITS—Continued.

27. Where a bank cashier, in receiving from an illiterate person a draft sold to
the bank, fraudulently makes out his deposit slip for him so as to show a
deposit for collection, and the depositor subsequently, on discovering the
fraud, repudiates the transaction as a deposit lor collection, and, on an
issue as to whether the transaction was a purchase or a deposit for collection, the bank admits that the slip was a receipt for the draft, and the
depositor claims that is was one for the proceeds, it is proper to refuse to
instruct for the bank that the retention of the slip by the depositor after
repudiation, and using it as evidence of its demand against the bank, rendered it binding on him. Ib.
28. Where a bank cashier, in receiving from an illiterate person a draft sold to
the bank, fraudulently makes out his deposit slip for him so as to show a
deposit for collection, it is error to admit evidence that the bank required
the cashier to pay the draft on failure to collect it, on the issue as to
whether the bank was liable as purchaser or as receiver for collection
only. Ib.
29. On an issue as to whether the delivery of a draft to a bank was a purchase
or a deposit for collection, the depositor may testify to his illiteracy to
explain his accepting the deposit slip; and, having on cross-examination
given the name of the person who first informed him of its contents, he
may testify when and where the information was given. Ib.
30. One who draws a check on a bank in which he has sufficient funds for its
payment, not encumbered by an earlier lien in favor of the bank, may sue
such bank for damages on its refusal to pay the check to the drawee. Mt.
Sterling National Bank v. Green (Ky.), 35 S. W., 911.
31. A bank may properly refuse to honor the check of a depositor who is
indebted to it on a past-due note for an amount greater than the sum on
deposit. Ib.
32. The duty which a bank holding a note owes to an endorser thereon, to
appropriate a deposit in the bank to payment of the note, exists only
where the maker of the note, at its maturity, has a deposit sufficient to
pay it, and not previously appropriated to any other purpose, and does
not apply to a deposit made after the maturity of the note, or to a deposit
by a prior indorser, though he be in fact the principal debtor, and the
maker be an accommodation maker. First National Bankv. Peltz (Pa.
Sup.), 35 A., 218.
33. Decedent deposited bonds and coupons with a bank, and took a writing,
signed by the cashier, acknowledging their receipt, and that they were
"to be sold, and the proceeds placed to her credit." Held, that a delivery
of the receipt, with an indorsement thereon, signed by decedent, requesting the cashier to " l e t " plaintiff "have the amount of the within bill"
and with the intention to pass title thereto, constituted a valid gift of
the money due from the bank. Crook Y. First National Bank (Wis.), 52
N. W., 1131.
34. A deposit slip issued by a banker, acknowledging the receipt of the amount
of money therein named, is intended merely to furnish evidence, as
between the depositor and the bank, that on a given day there was deposited a given sum, and not that such sum remains on deposit, and hence
the delivery of a deposit slip to a third person by the depositor does not
operate as an assignment of the deposit. First National Bank v. Clark
(N. Y. App.), 32 N. E., 38.
35. A conversation between a bank depositor and a third person, to whom he
had delivered the deposit slip, and in whose favor he had drawn a check
for the amount, in which he stated that the deposit would not be available
for ten days, and that he wanted the check discounted immediately, which
was accordingly done, and the money paid him by such third person, does
not, as a matter of law, operate as an assignment of the deposit to such
third person; and a finding by the jury that it did not will not be disturbed on appeal. Ib.
36. Designating a national bank as a depository of public moneys does not constitute it an agent of the Government, or render the Government liable
for moneys lost bv a failure of such bank. Branch v. The United States, 1
N. B. C., 363.
37. Such bank does not become a custodian of public moneys deposited with it,
but it becomes a debtor to the United States the same as it does to other
depositors for individual deposits Ib.
38. Certain moneys coming into the possession of the clerk of a Federal court
pending a litigation were by him deposited in a national bank which
had been designated as a depository of public moneys. The bank failed.




88

REPORT OF THE COMPTROLLER OF THE CURRENCY.

DEPOSITS—Continued.

39.

40.

41.

42.

43.
44.

45.

46.
47.

48.

Held, that the United States were not liable for the money so deposited. Ib.
Defendant, who had money on deposit in a national bank, when demanding payment thereof, was induced by an officer of the bank to sign a promissory note, which was represented to him to be a receipt for the money.
He was unable to read English. Held, that he was not liable to the bauk
upon the note. Besh v. First National Bank of Allentown, 93 Penn. St., 397;
3N. B. C, 724.
Plaintiff, who was unable to read, deposited money in a national bank and
took a certificate of deposit therefor, which the officers of the bank represented was a certificate of the bank. It was, on its face, the certificate
of a private banking firm, composed of some of the officers of the bank.
Held, that the bank was liable for the amount of the deposit. Zeigler v.
First National Bank of Allentown, 93 Penn. St., 393; 39 Am. Bep., 758;
3 N. B. C, 721.
Where the officers of a bank, when they received a deposit which they
applied to the payment of a debt due from the depositor to the bank, knew
or had reason to believe that the deposit contained moneys belonging to
others, for whom the depositor was but the agent or factor, the persons
who were in equity the owners of the money were entitled to recover it
from the bank. Union Stock Yards National Bank v. Moore et al., 79 Fed.
Sep., 705.
A postmaster at Lewiston, Idaho, with intent to defraud the Government,
and without receiving any money, issued post-office orders upon the postmaster at Pueblo in favor of the Stoekgrowers' Bank. He mailed the
orders to the bank with a letter purporting to be written by one Wilson,
and directed the bank to draw the money and hold it subject to said Wilson's order. The bauk, without knowledge of the fraud, obtained the
money as directed, but in doing so acted as a principal without disclosing
their agency in the matter. The Lewiston postmaster, under the name of
Wilson, subsequently drew the greater part of the money from the bank,
and suit was afterwards brought against it by the United States to recover
the money so obtained on the order. Held, that the bank was liable.
United States v. Stockgrowers} National Bank of Pueblo, 30 Fed. Rep., 912.
Money deposited in a bank without stipulation as to place of payment is
payable to the depositor at the bank. McBee v. Purcell National Bank
(Indian Ter.), 37 S. W., 55.
Where, after the maturity of a promissory note held by a bank, and due
protest aud notice thereof, the maker makes a general deposit in the bank
of an amount sufficient to pay the note, this does not of itself, as between
the bank and an indorser, operate as a payment. In the absence of any
expressed agreement or directions it is optional with the bank whether or
not to apply the money in payment; it is under no legal obligation so to
do. The National Bank of Newburgh, respondent, v. Daniel Smith, appellant,
66 N. Y., 271.
The mere discounting of paper, and placing the amount thereof to the credit
of a depositor who already has a large balance to his credit, does not make
the bank a purchaser for value so as to protect it against infirmities in the
paper. Entering the amount of the discount to the credit of the depositor
simply creates the relation, between the bank and the depositor, of debtor
and creditor; and as long as that relation remains and the deposit is not
drawn out the bank has simply promised to pay the depositor, has parted
with no valae, and is not entitled to the protection of a bona fide holder
of paper. Ib.
A trust can not be implied from a mere deposit in a bank by one person of
his own money in the name of another. Beaver v. Beaver (N. Y.),22 N.
E., 940; 117 N. ¥., 421.
Although the relation between a bank and its depositor is that merely of
debtor and creditor, yet the fund does not change its character from the
fact that the money has been deposited in bank to the credit of the
depositor. If the money in his hands was impressed with a trust in favor
of another the deposit will remain subject to the same trust. Third
National Bank v. Stillivater Gas Co., 30 N. W., 440; 36 Minn., 75.
A firm made an assignment, parts of its assets consisting of a sum on deposit
in defendant bank. The assignee made demand for the deposit, which was
refused, and he brought suit. After the demand, but before suit, a note
against the assignors, held by the bank at the date of the assignmeut,
matured. Held, that it could not be set off in the suit by the assignee.
Chipman v. Ninth National Bank (Pa.), 13 A., 707.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

89

DEPOSITS—Continued.
49. Where a national bank receives State funds subject to check and to withdrawal on seven days' notice, giving security therefor, and agreeing to pay
interest on daily balances, the transaction is a deposit and not a loan.
State of Nebraska v. First National Bank of Orleans, 88 Fed. Rep., 947.
50. It is within the power of a national bank to give bond to secure State funds
deposited with it, and sureties on such bond are bound thereby. State of
Nebraska v. First Natianal Bank of Orleans. Ib.
51. Checks delivered to a bank by a depositor for collection and deposit at a
time when the bank was insolvent, as must have been known by its
officers, and which had not been collected when the bank closed its
doors, remain the property of the depositor, and may be recovered by
him from the receiver. Richardson v. Denegre, 93^ Fed. Rep., 572.
52. A fund deposited with a national bank, which it agreed to hold for the
special purpose of paying certain bonds of a school district, and which it
could not legally receive as an ordinary deposit or mingle with its own
funds, constituted a trust fund, recoverable by the district from its
receiver, though it was in fact mingled with the funds of the bank,
where a sufficient amount of cash remained on hand at the time the
bank suspended business and came into the hands of the receiver.
Merchants7 National Bank v. School Dist. No. 8, of Meagher County, Mont.,
94 Fed. Rep., 705.
53. Neither a bank nor its receiver can deny the receipt of money deposited
with the bank as a trust fund on the ground that no money was actually deposited, where it received and accepted credit for the amount
with a correspondent, and received the money thereon in due course of
business. Ib.
54. One who made a general deposit in a bank can not recover such deposit
from a receiver on the grounds that the bank was insolvent and known
to be so by its officers when the deposit was made, and that the fraud
authorized him to rescind the contract, unless the money deposited can
be identified in the hands of the receiver, or it appears that the funds
coming into his hands were increased by that amount. Quin v. Earle,
95 Fed. Rep., 728.
55. To constitute fraud on the part of a bank in receiving a deposit when insolvent, which will authorize the depositor to rescind the contract and recover
the deposit from a receiver subsequently appointed, the officers must have
known or believed the bank to be insolvent at the time the deposit was
received, and the fact that they knew it to be in an embarrassed condition
is insufficient to establish the fraud. Ib.
56. The title to checks and drafts deposited in a bank for credit to the depositor's
account remains in such depositor until they are collected, although the
amount thereof is at the time entered on his book as a credit. City of
Philadelphia v. Eckels {C. C), 98 Fed. Rep., 485.
57. The title to funds deposited in an insolvent national bank before banking
hours, where the bank was taken in charge by the examiner before the
time for opening arrived and was not thereafter opened for business, held
to have remained in the depositor, and the funds to be receivable by him
from the receiver. Ib.
•
58. Where a clearing house collected checks and drafts for an insolvent national
bank on the day it had been closed by the Comptroller, and from the proceeds paid the balances due from the bank, leaving a balance to its credit,
such balance must be presumed to include the proceeds of paper which
had been deposited in the bank, and the title to which still remained in
the depositors. City of Philadelphia v. Aldrich (C. C), 98 Fed. Rep., 487.
59. It is not essential to the right of a depositor to recover from the receiver of
an insolvent bank money deposited after it was known by its officers to be
insolvent that he should be able to trace the identical money, but it is sufficient if the money which came into the receiver's hands was increased hn
the amount of the deposit. Richardson v. New Orleans Debenture Redemption
Co. (C. C. A.), 102 Fed. Rep., 780.
60. When a bank receives a deposit after hopeless insolvency, the fraud avoids
the implied contract between the parties by which the relation of debtor
and creditor would ordinarily arise and prevents the money deposited from
becoming the property of the bank, and a trust is the equitable result. Ib.
61. Checks and drafts delivered by a depositor to a bank known by its officers to
be insolvent, for collection and credit, but not collected before the bank
closed its doors, remain the property of the depositor, and they or their
proceeds may be reclaimed from the receiver. Ib.




90

REPORT OF THE COMPTROLLER

OF THE

CURRENCY.

DEPOSITS—Continued.

62. Money deposited in a bank on the day it closed its doors, and when it was
known by its officers to be insolvent, remains the property of the depositor, and may be recovered by him from the receiver where it is shown that
it went to increase the sum which came into his hands. Richardson v. New
Orleans Coffee Co. (C. C. A.), 102 Fed. Rep., 785.
63. The right of a depositor to recover a deposit made on the day a bank closed
its doors was not affected by the sale by the bank to him on the same day
of drafts which were not paid, and for which he gave checks covering the
amount deposited. Ib.
64. A bank has the right to charge to the account of a general depositor the
amount of notes of such depositor held by it which are due, and such right
is not affected by the fact that the depositor is the receiver of a railroad,
and as such made the deposits, where he also executed the notes in the
same capacity. Durkee v. National Bank (C. C. A.), 102 Fed. Rep., 845.
DEPUTY COMPTROLLER:

1. A certificate signed by the Deputy Comptroller of the Currency as "Acting
Comptroller of the Currency" is a sufficient certificate by the Comptroller
of the Currency within the requirements of Rev. St., par. 5154. Keyser v.
Hitz, 133 V. S., 138.
2. The Deputy Comptroller of the Currency being authorized by law to act for
the Comptroller in certain contingencies, the courts will presume, in the
absence of any showing to the contrary, that the deputy, in acting for the
Comptroller in any particular instance, has acted lawfully. Young v.
Wemp et ah, 46 Fed. Rep., 354.
DIRECTORS : See Officers.
DISTRICT ATTORNEY:

1. For services performed by the district attorney in bringing a suit against a
national bank, and obtaining a forfeiture of its charter, he is not entitled
to more than $10, the fees prescribed by section 824, there being no other
law in the United States giving a compensation to a district attorney for
such services. Bashaw v. United States, 47 Fed. Rep., 40.
2. The 56th (now 153d) section of the act providing that suits under it in which
officers of the United States are parties shall be conducted by the district
attorney of the district is directory only. Kennedy v. Gibson, 8 Wall., 498.
3. District attorney can not recover compensation for services in conducting
suit arising out of the provisions of the national banking law in which the
United States or any of its agents or officers are parties. Gibson v. Peters,
Receiver, 150 U. S., 342.
4. The expenses of a receivership can not be held to include compensation of
district attorney for conducting a suit in which the receiver is party, and
he can not receive any compensation for services so rendered or offered to
be rendered. Ib.
DIVIDENDS :

1. Equity has jurisdiction of a suit by the receiver of an insolvent national
bank.against all its shareholders to recover dividends unlawfully paid to
them out of the capital at times when the bank had earned no net profits,
and was in fact insolvent, it being in effect a suit to execute a trust, to
undo a fraud, and to prevent a multiplicity of suits. Hayden v. Thompson
et al., 71 Fed. Rep., 60.
2. A bill by the receiver to recover the dividends illegally paid may be brought
without an express order from the Comptroller of the Currency. Ib.
3. It can not be urged as a defense to such suit that the remedies provided by
the national banking act are exclusive, the right to recover diverted trust
funds not bein«" dependent on statute. Ib.
4. The fact that some of the defendants participated in but one or two of the
sixteen dividends on which the suit was based, that others participated
in more, and others in all the dividends, does not render the bill multifarious. Ib.
5. The national courts, sitting in equity, act or refuse to act in analogy to the
statute of limitations of the States in which they are sitting. Ib.
6. A stockholder in an insolvent bank who receives a dividend from funds
properly belonging to the creditors holds it under an implied and not an
express trust in favor of the creditors, and hence limitations run in his
favor against an action to recover the dividend. Ib.
7. The rule that the time limited for beginning an action for fraud shall not
commence to run while defendant conceals it does not apply when the
concealment is by a third person. Ib.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

91

DIVIDENDS—Continued.

8. In the absence of fraud, the cause of action to recover the dividend wrongfully paid arose when the payment was made, and not upon the appointment of the receiver and the discovery that the other assets of the bank
were insufficient to pay its debts. Ib.
9. A bank has a right to accumulate a surplus before declaring dividends on
its stock. Reynolds v. Bank of Mt. Vernon (Sup.), 39 N. Y. S., 623.
10. Where complainant has a decree in equity that defendant pay her dividends
on stock held by her, and defendant has against complainant an unsatisfied judgment at law for an assessment on said stock, the court, on motion,
will order the amounts to be paid under the decree applied on the judgment, though the judgment was at a former term and complainant intends
to appeal therefrom. Sowles v. Witters et al., 40 Fed. Rep., 413.
11. Liquidation dividends of a national bank belong to the holder of the shares,
whether those shares be recorded upon the books of the bank or not, and
must be paid to the holder of such shares on demand. Bath Sav. Inst. v.
Sagadahoc National Bank, Me., 36 A., 996.
12. A receiver of an insolvent national bank may maintain a suit in equity in
any district against all the stockholders within the court's jurisdiction
to recover back unearned dividends received by them, and unlawfully
paid from the bank's capital when insolvent, on the ground that it is a
suit to follow trust funds. Hay den v. Brown, 94 Fed. Hep., 15.
13. A secured creditor of an insolvent national bank may prove and receive
dividends upon the face of his claim as it stood at the time of the declaration of insolvency, without crediting either his collaterals or collections
made therefrom after such declaration, subject always to the proviso that
dividends must cease when, from them and from collaterals realized, the
claim has been paid in full. Merrill v. National Bank, 173 TJ. S., 131.
14. The receiver of an insolvent national bank may recover from a stockholder
dividends declared and paid alter the bank became insolvent where necessary to meet the demands of creditors. JSayden v. Williams, 96 Fed.
Rep., 279.
15. The receiver of a national bank can not recover a dividend paid to a stockholder not at all out of profits, but entirely out of capital, when the
stockholder receiving such dividend acted in good faith, believing the
same to be paid out of profits, and when the bank, at the time such dividend was declared and paid, was not insolvent. McDonald, Receiver, v.
Williams, 174 U. S., 397.
16. The receiver of a national bank can not recover from a stockholder in an
action at law the sum received by him on a partial distribution of the
capital of the bank, made and received in good faith during voluntary
liquidation, when the bank was at the time solvent, and retained sufficient
assets to pay all its liabilities, although it subsequently became insolvent.
Lawrence v. Greenup (C. C. A.), 97 Fed. Rep., 906.

ESTOPPEL:

1. Where one sued by a national bank is accustomed to deal with it as such
and does so deal with it in respect to the matter in suit, he is estopped
from denying its incorporation. National Bank of Fairhaven v. The Phoenix
Warehousing Company, 6 Hun, 71.
2. A director is not, by reason of his position, estopped from setting up the
defense of usury in an action brought against him by the association.
Bank of Cadiz v. Slemons, 3d Ohio St., 142.
3. Where a national-banking associatian has entered into a contract which it is
not authorized to make, a party who has enjoyed the benefit of such contract can not question its validity. Casey v.La Societe de Credit Mobilier,
2 Woods, 77; German National Bank v. Meadowcroft, 95 III., 124.
4. Where officer of a bank guaranteed payment in name of bank and sold the
note, the bank by retention and enjoyment of the proceeds is estopped to
deny officer's act. People's Bank v. National Bank, 101 V. S., 181.
5. The organization of a national bank under the national-banking act may
be put in issue by a party who has not estopped himself. But a party who
has accepted as payee a promissory note payable at a banking institution
which the parties to the note style a national bank, and has sold and transferred the note to such banking institution, can not be allowed to raise
that issue by merely averring want of knowledge or information sufficient
to form a belief as to whether the institution is a body corporate, etc.
Huffaker v. National Bank of Monticello, 12 Bush, 287; 1 N. B. C, 504.

6. If upon inquiry by the surety, the cashier, knowing that he is a surety, inform
him that the note is paid, intending that he should rely upon his statement,



92

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ESTOPPEL—Continued.
and the surety does so, and in consequence changes his position by giving
up securities, or indorsing other notes for the principal, or the like, the
bank will be estopped to deny that such note is paid. Cochecho National
Bank v. Haskell et al., 51 N. H., 116.
7. A stockholder of a private corporation, when sued by its creditors, is estopped
from denying the legal existence of the corporation, or insisting that its
charter has been forfeited by noncompliance with statutory provisions for
which a forfeiture might be j udicially declared. National Commercial Bank
v. McDonnell, 92 Ala., 387.
8. When an officer of a bank loaned money for his individual benefit upon pretended collateral security of the bank. Held, that his bank was estopped
to deny the loan and is liable therefor, as the lender dealt with him solely
in his official capacity. Stewart v. Armstrong, 56 Fed. Rep., 167.
9. Vice-president of bank, also manager of a commercial house, substituted as
collateral notes to order of his house, and indorsed by them without consideration. Held, that, as against holders of collateral, the house was
estopped to deny that these notes were properly pledged as security for a
loan to his bank. Ib.
10. The estoppel upon bis bank exists only in favor of lender. Hence, his house
has no remedy against it for any liability enforced by the lender on account
of its indorsed notes so pledged. Ib.
11. A shareholder who has held himself out to the world as such is estopped to
deny that the association was legally incorporated. Casey v. Galli, 94
U. S., 673; Wheelock v. Kost, 77 III., 296.
12. A person who received dividends on shares of stock standing in his name
on the books of a national bank is estopped from denying his liability on
the ground that he returned the same by check to an officer of the bank.
He is presumed to be the owner of the stock when his name appears upon
the books of the bank, and the burden of proof is upon him to show that
he is not in fact the owner. Finn v. Brown, 142 U. S., 56.
13. A shareholder against whom suit is brought to recover the assessment made
upon him by the Comptroller will not be permitted to deny the existence
of the association, or that it was legally incorporated. Casey v. Galli, 94
U. S., 673.
14. In such suit stockholder is estopped to deny existence or validity of corporation. Ib.
15. The legality of the appointment of the receiver can not be questioned by
the debtors of the bank when sued by him. The bank may move to have
the appointment set aside, but the debtors can not. Cadle v. Baker, 20
Wall, 650; Plait v. Beebe, 57 N. Y., 339.
16. A corporation which received and used the proceeds of a discount of notes
by its president is estopped to deny his authority to discount the paper.
German National Bank v. Louisville Butchers1 Hide and Tallow Co. (Ky.),
29 S. W., 882.
17. Where the cashier, intrusted by its directors with its entire management,
has been accustomed in having paper rediscounted to guarantee its payment, the bank will be estopped from denying his authority to so guarantee it. First National Bank v. Stone {Mich.), 64 N. W., 487.
18. Where the president of a bank procures advancements to be made to a relative by the bank, promising to become liable therefor, and not to receive
payment of any part of the amount which such relative owes him individually until the bank was paid, he is estopped to claim the benefit of a priority given his debt in a mortgage executed by such relative over that due
the bank, and whatever benefit accrues to him under such mortgage is
subordinate to the claim of the bank. Brown v. Farmers and Merchants'
National Bank (Tex. Civ. App.), 31 S. W., 216.
19. A bank which causes property owned by it to be conveyed by a deed regular
in form to a worthless corporation, organized by its own directors, and
then loans such corporation money, takes its notes and discounts them
with strangers, by representing them as prime paper and on the strength
of such corporation's apparent ownership of such property, is thereafter
estopped, as against the holders of the notes, to assert that the conveyance
was ultra vires. Butler et al. v. Cockrill, 73 Fed. Bep.f 945.
20. The holder of part of the bonds of an insolvent corporation is not estopped
to set up the invalidity or want of consideration of other of the bonds not
in the hands of innocent holders. Farmers $' Merchants' National Bank v.
Waco Electric Railway tf Light Co. (Tex. Civ. App.), 36 S. W., 131; Metropolitan Trust Co. v. FarmersfyMerchants' National Bank, ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

93

ESTOPPEL—Continued.
21. In order to constitute a ratification of an unauthorized act, the act relied on
as such ratification must be performed with knowledge of the material
facts in the absence of circumstances creating an equitable estoppel.
Columbia National Bank v. Bice (Neb.), 67 N. W., 165.
22. The fact that the bank stamped the original note "Paid," instead of
" Renewed," in the belief that the forged signature of the surety on the
renewal note was genuine, does not estop it from enforcing its claim
against the surety on the original note, though the surety, seeing the
latter in the hands of the principal, believed it had been paid, and signed
other notes of the principal as surety to his damage. Lyndonville National
Bank v. Fletcher ( Ft.), 34 A., 38.
23. After a party has recovered judgment against a corporation, as such, and
obtained the appointment of a receiver therefor, he can not in the same
suit deny its corporate entity and seek to hold the stockholders thereof
liable as partners. First National Bank v. Dovetail Body fy Gear Co. (Ind.
Sup.),42 N.E.,924.
24. A bank which received a letter from another bank, asking in regard to the
character and financial standing of a certain person, without any intimation as to the making of a loan, is not estopped, as against a loan subsequently made by the inquiring bank, to claim a chattel mortgage lien on
the man's property, because, in its answer it merely stated the man's character and assets above his indebtedness, without stating that he was
indebted to it. First National Bank v. Marshal < Ilsley Bank (Mich.), 65
f
N. W., 604.
25. Statements of a mortgagor, made for the purpose of obtaining credit for a
corporation of which he was a member, that he had sold to it the mortgaged property, would not conclude the mortgagee, unless it had knowledge thereof at the time, and kept silent. Ib.
26. One who has demanded a certain amount as a balance due on a trade is not
estopped from suing for a greater amount, and may explain the demand.
First National Bank v. Lynch (Tex. Civ. App.), 25 S. W., 1042.
27. A partner who is made known by his fellow-partner to a third person, in
order to obtain credit, can not afterwards claim to be a dormant partner
as to such person, so as to relieve him from the necessity of giving notice
upon retiring from the partnership. Milmo National Bank v. Carter (Tex.
Civ. App.), 20 S. W., 836.
28. The fact that a party to a contract which is void as against public policy has
received the benefits therefrom does not estop him when sued thereon from
setting up such defense. Brown v. First National Bank (Ind. Sup.), 37
N. K.,158.
29. The maker of a note payable at Tuscaloosa Fence Factory is estopped in a
suit thereon by an innocent purchaser for value to deny the existence of
such a place. Brown v. Fir at National Bank (Ala.), 15 So., 435.
30. A wife, jointly with another person, signed a note to her husband's order, and
delivered it to him to have discounted, and with the proceeds pay a debt of
his. The husband applied to a bank official, who had notice that the note
was made without consideration, but did not have notice that the proceeds
were to be applied for the husband's benefit, and the official offered to discount it by a check to the wife's order, which the husband accepted, and
afterwards procured his wife to indorse and deliver to him, she knowing
that it was the proceeds of her note. Held, that the wife was estopped
from setting up against the bank that she was a mere surety on the note.
Hackettstown National Bank v. Ming. (N. J. Ch.), 27 A., 920.
31. H., being indebted to a national bank for a considerable sum, for which the
bank held certain corporate stock as collateral security, in writing authorized the president and directors of the bank to sell at their discretion all
the stock and apply the proceeds of the sale upon his indebtedness.
Thereafter, after giving H. ample notice of an intention to sell, the stock
was sold and transferred to three of the directors of the bank, at a price
above the market value, and the amount received from the sale applied
upon the indebtedness of H. H. received an itemized statement of the
proceeds of the sale and of its application upon his indebtedness, to all of
which he made no objection. Five years thereafter H. commenced an
action against the bank for the purpose of obtaining a decree redeeming
the stock, and for an accounting. Held, that the action could not be
maintained: First, because by his silence he was estopped; and second,
because of delay in bringing suit. Hay ward v. Eliot National Bank, 96
U. S., 611; 2 N. B. C, 1.




94

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ESTOPPEL—Continued.

32. A national bank purchased the stock of a dealer in wall paper at a sale under
an execution in its favor, and afterwards organized a corporation to take
and dispose of this stock, such corporation being managed by the officers
of the bank and controlled by it. In order to dispose of the stock with
advantage, new stock was purchased on credit, the bank, through its
cashier, informing the seller, upon inquiry, of the relation between the
bank and the corporation, and that the bank would see that the bills were
paid if the goods were sold. Held, that whether or not it was within
the powers of the bank to purchase new stock to help the sale of that
bought on execution sale, the bank, having received and appropriated the
proceeds of the goods purchased, was estopped to set up in a suit for the
price a want of power to make the purchase. American National Bank v.
National Wall Paper Co., 77 Fed. Rep., 85.
33. A national bank which returns its capital for taxation is not thereby estopped
from setting up that the same was not subject to taxation, and refusing
to pay the tax. Brown v. French, 80 Fed. Rep., 166.
34. The judgment in an action is conclusive in a subsequent action between the
same parties upon the same cause as to all questions which might have been
presented and determined in the first suit; but in a subsequent action
between the same parties upon a different cause it is conclusive only upon
such questions as were actually litigated and determined in the first suit.
Lawrence v. Stearns, 79 Fed. Rep., 878.
35. One who has been prosecuted to judgment upon a cause of action based on
the negligent act of another, who has been called in to defend and has
defended the suit, may sue such other party for indemnity, and rest his
case upon the former adjudication, it being shown that it was in consequence of such negligence that the former judgment passed. Ib.
36. The cashier of a bank does not act as its agent or representative in answering an inquiry addressed to him by another bank as to the business standing of a third person; and the bank is not bound or estopped by statements
so made by him, his act being one not relating to the business of his bank,
but simply one of customary courtesy rendered without consideration.
First National Bank of Manistee, Mich., et al., v. Marshall and Tlsley Bank of
Milwaukee, Wis., 83 Fed. Rep., 725.
37. The failure of the officers of a bank, in answering a general inquiry from
another bank as to the character and standing of a customer, to disclose
the fact that the customer was indebted to their bank, and that it held
liens on certain of his property, will not estop it to assert such liens as
against a mortgage subsequently taken by the inquiring bank, in the
absence of any fraudulent intent. Ib.
38. Subscribers to the capital stock of a national bank previously organized and
carrying on business, who accepted certificates of stock representing a
portion of the original capital stock, obtained by the bank in some manner from the former holders, are estopped, after the lapse of five years,
during which they retained the stock, received two dividends, and paid
one assessment thereon, to deny that they are stockholders, in a suit by
the receiver, on the bank's insolvency, to collect a further assessment, on
the ground that they supposed they were purchasing a part of an issue
of increased stock which the bank had voted to issue, but the issuance
of which had not then been authorized by the Comptroller. Rand v.
Columbia National Bank, 94 Fed. Rep., 349; Same v. TilUnghast, Ib,
39. Less than two years having elapsed from the payment of the first dividend
to the filing of this bill, and the other creditors of the bank not having
been harmed by the delay, no presumption of laches is raised, nor can an
estoppel properly be held to have arisen. Merrill v. National Bank, 173
U. S., 131.
40. The investment by the First National Bank of Concord, New Hampshire,
of a part of its surplus funds in the stock of the Indianapolis National
Bank, of Indianapolis, Ind., was an act which it had no power or
authority in law to do, and which is plainly against the meaning and
policy of the statutes of the United States and can not be countenanced;
and the Concord corporation is not liable to the receiver of the Indianapolis corporation for an assessment upon the stock so purchased,
made under an order of the Comptroller of the Currency to enforce the
individual liability of all stockholders to the extent of the assessment.
The doctrine of estoppel does not apply to this case. First National Bank
of Concord v. Hawkins, 174 TJ. S., 364.
41. Plaintiff sued the receiver of a national bank for money loaned the bank for
which bank stock had been given as collateral security. The receiver




REPORT OF THE COMPTROLLER OF THE CURRENCY.

95

ESTOPPEL—Continued.

42.

43.
44.
45.

46.

47.
48.

defended on the theory that the transaction was a purchase of the stock.
At the trial, plaintiff and another testified positively that plaintiff contracted for the loan with the bank cashier on the terms claimed by plaintiff.
The receiver's evidence showed that after his appointment he furnished
plaintiff, at her request, with a list of stockholders, in which her own
name appeared, and that she did not disclaim being a stockholder, and
did not begin suit for two years thereafter. Certain entries on the bank's
books showed plaintiff to be a stockholder, but she had not receipted for
the certificates she held on the bank's books, and it did not appear that
she knew of the entries. In the letters to the Comptroller and to defendant, written after the bank's insolvency, plaintiff, who was unexperienced
in business matters, referred to herself as a stockholder. Held, that the
evidence did not estop plaintiff from showing that she was not a stockholder, and that that issue was properly submitted to the jury. American
Nat. Bank v. Williams, 101 Fed. Rep., 943.
In an action by the receiver of a national bank to recover an assessment on
stock alleged to be held by the defendant as executrix, a copy of entries
in the stock book of the bank showing the issuance of a certificate of stock
to the estate of the defendant's testator, identified as a true copy by the
deposition of the former cashier, who testified with the book before him,
is admissible against the defendant to prove such entries. Brown v. Ellis,
103 Fed. Rep., 834.
As between the shareholders of a national banking association, the books
of the bank are public records, and the entries therein are admissible
against them as evidence of the facts they show. Ib.
The certificate of the Comptroller of the Currency, issued to a national
bank, approving a reduction of its capital stock, is in itself proof of such
reduction. Ib.
The original order of the Comptroller of the Currency levying an assessment
on the shares of a national bank, over his official signature and seal,
proves itself, and fixes the liability of the shareholders from its date, no
demand being necessary. Ib.
Depositions taken under a commission issued to "A. C. Strong/' a notary
public of a certain county, are not inadmissible because they were taken
and certified by "Alfred C. Strong," as a notary public of such county,
who is shown to be the same person. Ib.
Where depositions are taken for use in a Federal court under the provisions
of Rev. St., 863-865, upon a commission issued to a notary public, it is not
essential that he should attach his official seal to his certificate. Ib.
Where, in the taking of depositions for use in a Federal court under the provisions of Rev. St., 863-865, both parties were present by counsel, and the
testimony on both direct and cross examination was taken in shorthand
and reduced to writing by the stenographer in the presence of the magistrate, witnesses, and counsel, a failure to object to such proceedings, either
at the time of taking or when the depositions were offered in evidence, was
a waiver of the right to have them excluded because the testimony was not
reduced to writing by either the magistrate or the witnesses, as required
by section 864. Ib.

EVIDENCE :

1. The certificate of the Comptroller of the Currency that an association has
complied with all the provisions required to be complied with before commencing the business of banking is admissible in evidence upon a plea of
nul tiel corporation; and such certificate, together with proof that the association has been acting as a national banking association for a long time,
is amply sufficient evidence to establish, at least prima facie, the existence
of the corporation. Mix v. The National Bank of Bloomington, 91 III., 20;
Merchants' National Bank of Bang or v. Glendon, 120 Mass., 97.
2. The certificate of the Comptroller of the Currency duly made is sufficient
evidence of the appointment of the receiver in an action brought by him.
Platt v. Beebe, 57 N. Y., 339; 1 N. B. C, 725.
3. And in a suit against the association or its shareholders such certificate of
the Comptroller is conclusive as to the completeness of the organization.
Casey v. Galli, 94 U. S., 673.
4. Under the national banking act a copy of the certificate of organization of a
United States national bank, which is certified by the Comptroller of the
Currency and authenticated by his seal of office, is competent evidence in
a State court. Tapley v. Martin, 116 Mass., 275; 1 N. B. C, 611.
5. In an action by "The West River National Bank of Jamaica, Vermont," held,
that the certificate of the Comptroller of the Currency of the existence of a




96

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EVIDENCE—Continued.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

corporation under the name of " The West River National Bank of Jamaica,"
described as located in the town of Jamaica, Vermont, was admissible under
the general issue for the purpose of proving the plaintiff's corporate existence. Thatcher v. West River National Bank, 19 Mich., 196; 1 N. B. C, 622.
It is no objection to the admission in evidence of the certificate of the organization of a national bank that the notary before whom it was acknowledged
was one of the shareholders of the bank. The Comptroller's certificate of
compliance with the act of Congress removes any objection which might
otherwise have been made to the evidence on which he acted. ±b.
A certificate signed by the Deputy Comptroller of the Currency as "Acting
Comptroller of the Currency" is a sufficient certificate by the Comptroller
of the Currency within the requirements of Rev. St., sec. 5154. Aspinivall v.
Butler, 133 U.S., 595.
A letter from the Comptroller directing the receiver to institute suit, if not
objected to at the time, is sufficient evidence that the Comptroller has
decided that the enforcement of the individual liability of the shareholders
is necessary. Bowden v. Johnson, 107 U. S., 251.
In an action by a national bank plaintiff may prove that it is a corporation
de facto by parol evidence; that it is carrying on a general banking business as a national bank, authorized by the general laws of the United
States, under the name by which it has sued, the court taking judicial
notice of such laws. Yakima National Bank v. Knipe, 33 P., 834; 6
Wash., 348.
In accordance with the provisions of the Minnesota statute (Gen. St., 1878,
c. 26, §8; Gen. St., 1894, §2275) making the certificate of protest of a bill
or note of any notary public of that or another State evidence of the fact
therein certified, such a certificate is competent evidence in a Federal court
sitting in Minnesota of the presentment, demand, dishonor, or notice of
dishonor of a note drawn in Minnesota and payable and protested in Connecticut. Nelson v. First National Bank of Killingley, 69 Fed. Hep., 798.
A letter written in the ordinary course of business by a clerk in the office of
one sought to be charged as indorser of a note, acknowledging the receipt
of notice of the protest thereof, is competent evidence of the sending of
the notice. Ib.
Upon the question of the value of stock in a corporation which has been
placed in the hands of a receiver, under a statute of the State creating it,
in proceedings for its dissolution as insolvent, the opinions of competent
wituesses as to the value of the stock are admissible, as is also evidence of
the amount and value of the assets and liabilities of the corporation at different times between theappointment of a receiver and the sale of the assets
in accordance with the statutory requirements. Ib.
Upon the same question it is also admissible to prove the amounts realized
at the sales made of the property of the corporation by the receiver,
under the order of the court, in the regular course of the insolvency proceedings, though taking place at a time remote from that to which the
inquiry as to the value of the stock rela es. Ib.
A witness ought not to be permitted to give an opinion as to the value of an
article when it does not appear that he has acquired any correct information from which to form an opinion, or that he has formed any opinion
whatever. Ib.
When evidence which may have been irrelevant or otherwise open to an
objection seasonably taken has been admitted without objection, the witness being examined and cross-examined by the respective parties, it is
not error to deny a motion to strike out such evidence, made9 after its
tendency and effect have been disclosed. Farmers and Traders National
Bank of Covington, Ky., v. Greene etal., 74 Fed. Eep., 439.
When the books of a bank are offered in evidence by one party to a suit, the
other party is entitled to avail himself of any part of the evidence contained therein, such as the state of a particular account. Blanchard v.
Commercial Bank of Tacoma, 75 Fed. Rep., 249.
In an action to recover a sum alleged to have been loaned to a bank, the
receiver thereof claimed that the loan was to the president of the bank
personally. He also contended that the bank's books should not be considered as evidence that the loan was to the bank, because they were not
properly kept, and he offered to show by expert testimony what would
have been the proper method of entering the transaction if the loan had
been made to the bank. Held, that this evidence was properly excluded,
as it did not appear that there was any such ambiguity in the account as
to require expert evidence in relation thereto. Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

97

EVIDENCE—Continued.

18. Where a jury is waived and the court makes special and general findings,
an appellate court is not required to weigh the evidence and determine
the preponderance thereof, but will only consider whether the pleadings
and special findings are adequate to support the judgment. Walker v.
Miller, 8 C. C. A., 331; 59 Fed. Bep., 870, followed.
19. On an issue as to whether the deposits of plaintiff's testator in defendant
bank were interest bearing, evidence of the value of the use of money in
vicinity of the bank, and that testator received interest on similar deposits
in other banks, and that one bank offered him 5 per cent on any money that
he might deposit, is admissible in rebuttal of defendant's evidence that
the agreement between the parties, by which testator's account should be
interest bearing, was abrogated by a subsequent agreement that it should
not bear interest. Merwin, J., dissenting. McLoghlinv. National Mohawk
Valley Bank (Sup.), 20 N. Y. S., 171.
20. An instruction that a party alleging fraud must prove it by a preponderance
of the evidence, so clear that it leaves the mind well satisfied that the
charge is true, requires too high a degree of proof, since it is sufficient if
the jury believe a material fact in issue, from the evidence, even if the
proofs do not generate a belief which entirely satisfied the mind. Hutchinson National Bank v. Crow, 56 III. App., 558.
21. The certificate of organization of a national bank, issued by the Comptroller of the Currency, is competent evidence of the incorporation of the
bank.

National Bank of Commerce v. Galland ( Wash.), 45 P., 35.

22. Where the cashier of a bank, who assumed to be acting as such, applied to
another bank in the usual course of business to discount a note produced
by him, payable to himself, and regularly indorsed by him in both his
individual and official capacity, neither the fact that he appeared to be
the payee and first indorser and his bank the second indorser, nor that the
avails of the note were received by him personally, was conclusive evidence that the indorsement of his bank was unauthorized or for his own
accommodation, Merchants7 National Bank v. McNeir (Minn.), 53N. W.y 178.
23. In an action by a bona fide holder on bonds of a school district, purporting
to have been issued in satisfaction of a judgment against the district,
as authorized by acts 17th Gen. Assem., c. 132, the defense was that such
bonds had been fraudulently issued after the judgment had been already
satisfied by a prior issue of bonds. Held, that, after a showing that a
diligent search had been ineffectually made for the records of the district
authorizing the first issue of bonds, and after the then secretary of the
district identified one of such bonds as having been issued in payment of
the judgment in question, and had partly described the others, such bonds
purporting on their face to have been issued by the officers of the district,
and having been afterwards found to be valid obligations of the district
by a court of competent jurisdiction, were themselves properly admitted
in evidence. First National Bank v. District Tp. of Boon (Iowa), 53 N. W., 301.
24. Depositing in the post-office a letter properly addressed, with postage prepaid, is prima facie evidence that the sendee received it. Eipley National
Bank v. Latimer, 2 Mo. App. Bep'r, 967.
25. In an action to recover the amount paid to the payee and indorser of a check,
on the ground that the amount of the check had been raised, where experts had testified that writing could be removed by acids without leaving
any trace, and there was evidence that the name of the payee and amount
in the check in question had been altered, but none that the check had
been subjected to acids, experienced cashiers were properly allowed to
testify as to the genuineness of the check, though not shown to be experts
as to the effect of acids on writing. Birmingham National Bank v. Bradley
(Ala.), 19 So., 791.
26. On an issue whether a check had been raised in amount, it was error to
admit in evidence a check which bore evident signs of having been altered,
as a result of experiments with acids which had been made thereon, for
the purpose of showing that an alteration could not be made without
detection. ID.
27. The testimony on another trial of an officer of a corporation with relation to
previous corporate acts can not be proved as an admission binding upon
the corporation. Columbia National Bank v. Bice (Neb.), 67 N. W., 165.
28. Proof of false statements knowingly made by the purchaser of goods, whereby
he is shown to be possessed of a large amount of property over and above
his liabilities, is admissible under an allegation that, being insolvent, he
knowingly concealed his insolvency from the vendor. First National Bank
v. McKinney (Neb.), 66 N. W.} 280.

 1900, P T l
CUR


7

98

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EVIDENCE—Continued.

29. In an action on a note dated on Sunday the burden is on plaintiff to show
that it was in fact executed on a day which was not Sunday. Hauerwas v.
Goodloe {Ala.),13 So., 567.
30. In an action by a bank on a note dated on Sunday its " discount register"
is not admissible in evidence to show that the note in suit was a renewal
of a note which matured on Sunday, and that the renewal note was made
on a certain week day after its date and dated back to the date of the
maturity of the first note, according to the custom of the bank. Ib.
31. In an action by a bank on a note dated on Sunday it is not error to admit
evidence that the note is in the handwriting of the bank's cashier, and
that he was not in the employ of the bank until after the date of the note,
and that the note is a renewal note, and dates back. Ib.
32. Where defendant, in a suit by a mortgagee against the mortgagor for the
mortgaged property, claims payment of the debt the burden is on him of
proving such payment. First National Bank v. Hellyer {Kan.), 37 P., 130.
33. The testimony of a witness in another case may be proven by anyone who
heard it, and the reporter's notes are not the only or best evidence.
German Rational Bank v. Leonard {Neb.), 59 N. W., 107.
34. The testimony of a witness in an action to which he was not a party may be
proved in a subsequent action to which he is a party as an admission. Ib.
35. Parol evidence is admissible to show that the word " accounts," as used in
an assignment, for the purpose of security, of the "good and collectible
accounts" of the assignor, covered not only such accounts as showed an
unconditional liability on the part of the debtor at the date of the assignment, but also partially executed contracts and consignment contracts
which called for payment in the future and on conditions to be performed.
Preston National Bank v. Emerson {Mich.), 60 N. TV., 981.
36. As against bona fide purchasers of a note signed in blank on the back thereof
by a third person before delivery to the payee, parol evidence is not admissible to show that such person signed as accommodation indorser, and not
as joint maker, as presumed by law. Salisbury v. First National Bank
{Neb.), 56 N. W., 727.
37. In an action by one bank against another on a note, and for money loaned,
where defendant asserts that plaintiff bought the note, proof of the negotiations for the loan, and that defendant received its proceeds, is not incompetent as varying the written instrument. First National Bank v.
California National Bank (CaL), 35 P., 639.
38. Where the genuineness of the signatures of certain letters alleged to have
been written by plaintiff were in question, and she admitted her signature to a certificate of stock, it was not error to send the stock book to
the jury for a comparison of signatures. Rose v. Winnsboro National Bank
(S. C.), 19 S. E., 487.
39. An unsigned entry on a deed is inadmissible to show the time it was filed for
record. First National Bank v. Cody {Ga.), 19 S. E., 831.
40. Parol evidence is admissible to show that a note, though in the possession
of the payee, was delivered with the understanding that it would not be
binding upon the makers unless signed by other persons. Merchants7 National Bank v. McAnulty {Tex. Civ. App.), 31 S. W., 1091.
41. In an action for malicious prosecution of an attachment it is not error to
refuse to permit plaintiff to testify whether defendant had any motive in
procuring the issuance of the attachment other than an honest desire to
collect a debt, and to limit him to a statement of the facts. Hamer v.
First National Bank (Utah), 33 P., 941.
42. In an action by a national bank against a maker of a promissory note the
fact that the note is made payable at the plaintiff bank is not conclusive
evidence that such bank is a corporation. Hungerford National Bank v.
Van Nostrand, 106 Mass., 559; 1. N. B. C, 589.
43. Under the acts of Congress authorizing questions arising on a trial or hearing before two judges in the circuit court, and upon which they are
divided in opinion, to be certified to the Supreme Court of the United
States for decision, each question certified must be one of law and not of
fact, nor of mixed law and fact, and it must be a distinct point or proposition clearly stated, and not the whole case nor the question whether upon
the evidence the judgment should be for one party or for the other. Williamsport National Bank v. Knapp, 119 U. S., 357; 3 N. B. C, 184.
44. An indorser on certain notes made a compromise with the indorsee by which
he gave his notes for a part of the amount due, he to be released from liability on the original notes upon payment of the compromise notes at
maturity. Held, that evidence that money with which he made part pay-




REPORT OF THE COMPTROLLER OF THE CURRENCY.

99

EVIDENCE—C ontinued.

ment on the compromise notes was borrowed by him was not admissible on
an issue as to whether the indorsee) after accepting such payments, was
estopped to hold him liable on the original notes. Humphreys v. Third
National Bank of Cincinnati, 75 Fed. Eep., 852.
45. An indorsee of a note agreed to receive, in compromise of an indorsees liability thereon, secured notes for a less amount, the indorsee to have the
right, if the compromise notes were not paid when due, to sue the indorser
for the balance remaining due on the original notes, after applying thereon
the partial payments made on the compromise notes, and the proceeds of
the security given therefor. Held, that the indorsee did not, by receiving
part payments on the compromise notes after their maturity, waive
the right to sue the indorser on the original notes. 66 Fed. Eep., 872,
affirmed. Ib.
46. Nor did he waive his right to proceed on the original note by failing to
tender back the compromise notes or the security given therefor. Ib.
47. Where the facts do not appear on the face of the judgment, oral evidence is
admissible to show how credits thereon came to be allowed and what
they were allowed for. Ib.
48. Where it is not shown that a certain collection made by a receiver of an
insolvent national bank was forwarded by a correspondent of the bank,
nor included in the list of items sent, it is not sufficiently traced; and this
though the receiver testifies that the item was collected for the forwarding bank. Richardson v. Louisville Banking Co., 94 Fed. Eep., 442.
49. A bill by the receiver of the bank to set aside a preferential transfer of
notes, in violation of Rev. St. § 5242, is not sustained by proof that the
notes were put into the transferee's hands for payment by him, and that,
instead of paying them, he wrongfully kept them. Alabama Iron and
Eailway Co. v\ Austin, 94 Fed. Rep., 897.
50. Where an order dismissing a law case is pleaded in bar in an equity suit,
and no proof is offered except the order itself, defendant can not show the
nature of the law case by affidavit after trial. Ib.
51. In a suit between the receiver of a national bank and a stockholder, the books
of the bank are evidence to establish acts of the corporation and its financial condition at a particular time, though not as to dealings between the
corporation and the defendant. Hay den v. Williams, 96 Fed. Eep., 279.
52. In an action by the receiver of an insolvent national bank to recover an
assessment from defendant as a stockholder, where defendant held stock
in another bank as collateral, in lieu of which, on the consolidation of the
two banks, it had caused stock in the consolidated bank to be issued to a
third person, plaintiff was held to have the burden of proving that such
exchange was without the authority of the pledgor, so as to amount to a
conversion of the original collateral. Wilson v. Merchants' Loan $• Trust
Co. of Chicago, III. (C. C. A.), 98 Fed. Eep., 688.
53. In a suit by a park board to recover funds alleged to have been misappropriated by its treasurer, from a bank to which funds were paid, evidence
of the insolvency of the treasurer, and that such fact was known to the
bank, may be shown in support of the charge of misappropriation, although
not directly alleged. McNulta v. West Chicago Park Corners (C. C. A.), 99
Fed. Eep., 900; West Chicago Park Com'rs v. McNulta, Ib.
54. Allegations in a pleading by the receiver of a national bank against the
directors, charging them with negligence in permitting the cashier to
manage the affairs of the bank without supervision, are not admissible
against the successor of such receiver in an action against him by a third
party to establish a liability of the bank. School Dist. of City of Sedalia,
Mo., v. Be Weese (C. C), 100 Fed, Eep., 705.
55. Evidence held insufficient to create an estoppel which would prevent a
defendant, sued for an assessment as a stockholder of a national bank,
from showing that he was not in fact the owner of the stock. Tourtelot v.
Stolteben (C. C), 101 Fed. Eep., 362.
EXECUTION :

1. A judgment against a national bank in the hands of a receiver only establishes the validity of the claim; the plaintiff can have no execution on
such judgment, but must wait pro rata distribution. Bank of Bethel v.
Pahquioque Bank, 14 Wall., 383.
2. A sheriff in Texas has no power to levy upon or sell land lying outside his
county, and his deed, describing by metes and bounds land purporting to
have been levied on and sold, part of which lies outside his county, is void
as to such part. Short v. Hepburn, 15 Fed. Eep.} 113.




100

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EXECUTION—Continued.

3. The imperfect description of property in a notice of sheriff's sale under
execution will not necessarily vitiate the sale where the description is
sufficiently certain so that no one is deceived as to the identity of the
property sold. Grundy County National Bank v. Rulison, 61 III. App., 388.
4. Where judgment has been rendered in a State court against a national
bank, and upon the execution issuing thereon a return of nulla bona
has been made by the sheriff of the county where the bank is located, and
the bank has ceased to discharge its functions as a fiscal agent of the
United States, and is disposing of its assets which can not be reached by
levy and sale under the common-law execution among its stockholders,
thereby endangering the safety of those assets and the judgment debt of
the creditor, equity will relieve by the grant of injunction and the
appointment of a receiver. Merchants and Planters' National Bank v.
Trustees of Masonic Rail, 2 N. B. C, 220.
5. A bill by a judgment creditor for discovery, showing that when the execution
was returned unsatisfied, and when the bill was filed, there was property,
within the knowledge of the creditor, subject to levy on execution, fails
to show that the legal remedy has been exhausted, and is demurrable.
Merchants1 National Bank of Chicago et al. v. Sabin et al., 34 Fed. Rep., 492.
6. That a national bank for which no receiver has yet been appointed is in charge
of an examiner appointed by the Comptroller to investigate its affairs does
not exempt its tangible assets from execution upon final judgment. Kimball v. Dunn, 89 Fed. Bep., 782.
EXPIRATION OP CORPORATE EXISTENCE:

Under the act of Congress, July 12,1882, extending for the purpose of liquidation the franchises of such national banking associations as do not extend
the periods of their charters, and making applicable to them the statute
relating to liquidation of banking associations, such an association may
continue to elect officers and dire.ctors for the purpose of effecting liquidation. But after the expiration of the term of its charter the stock of
such an association is not transferable so as to give the transferee the
right to share in the election of directors, and such transferee, not being
a stockholder, is ineligible as a director under Rev. Stat., sec. 5145.
Richards v. Attleboro National Bank, 148 Mass., 187; 3 N. B. C, 495.
EXTENSION OF CORPORATE EXISTENCE :

1. The identity of a national bank is not affected by the extension of its term
of existence. Trustees of First Presbyterian Church v. National State Bank,
29 A., 320.
2. The committee provided for by the fifth section of act of Congress of July
12, 1882, to appraise the national-bank shares of shareholders who do not
assent to amendments to the articles of association may correct a mistake
made by them in their approval within thirty days therefrom. First
National Bank of Clarion v. Brenneman's Executors, 114 Penn. St., 315; 3
N. B. C, 755.
FALSE ENTRIES:

1. The only remedy for the making of a false return to the auditor, by the
cashier of a bank, of the resources and. liabilities of the bank, for the purposes of taxation, is afforded by revised statutes of Ohio, section 2679,
which provides that the auditor may examine the books of the bank, and
any officer or agent of it under oath, and make out the statement; and
any officer of the bank may be fined not exceeding $100 for failing to make
the statement, or for willfully making a false one. Miller v. First National
Bank, 21 N. E., 860.
2. Any entry on the books of the bank which is intentionally made to represent what is not true or what does not exist, with intent either to deceive
its officers or defraud the association, is a false entry within the meaning
of the statute. United States v. Harper, 33 Fed. Bep., 471.
3. It may be made personally or by direction. Ib.
4. The erasure of figures already written in the books of a national bank and
the substitution of other figures which falsify the state of the account constitute a ilfalse entry " within the meaning of sec. 5209, Rev. St., by which
it is declared to be a misdemeanor to make any " false entry in any book,
report, or statement of the association, with intent to injure or defraud,"
etc. United States v. Crecelius, 34 Fed. Rep., 30.
5. Where false entries are made by a clerk at the direction of the president, the
latter is a principal. In the matter of Van Campen, 2 Ben., 419; United
States v. Fish, 24 Fed. Rep., 585.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

101

FALSE ENTRIES—Continued.

6. A report of condition of a national bank, whether called for by the Comptroller of the Currency or not, which is a report in the usual form made by
an officer of the bank in his official capacity, if it contains a false entry
made with intent to deceive, is within Rev. St., sec. 5209, which declares
such false entries to be a misdemeanor. United States v. JSughitt, 45 Fed.
Bep., 47.
7. Where false entries were made by a bookkeeper in a statement requested by
a national-bank examiner, purporting to give the balance due to depositors, which statement it was the duty of the examiner to make and not
the bookkeeper, an indictment for making " false entries in a statement
of the association" will not be sustained. United States v. Ege, 49 Fed.
Bep., 852.
8. In an indictment of an officer of a national bank under sec. 5209, Rev. St.,
for making false entries in a report to the Comptroller of the Currency, it
is no defense that such entries were made by a clerk and verified by the
officer without actual knowledge of their truth, since it was his duty to
inform himself. United States v. Allen, 47 Fed. Bep., 696.
9. A " false entry " in a report by a national-bank officer or a director to Comptroller of the Currency within the meaning of sec. 5209 is not merely an
incorrect entry made through inadvertent negligence or mistake, but is an
entry known to the maker to be untrue and incorrect and by him intentionally entered while so knowing its false and untrue character. United
States v. Graves, 53 Fed. Bep., 634.
10. In determining whether a certain false entry, made by a national-bank officer in a report to the Comptroller, was made with intent to deceive or
defraud, etc., within the meaning of the statute, the jury are authorized
to infer the intent if the natural and legitimate result of such false entry
would be to deceive any other officer or officers of the bank or any agent
appointed to examine into its affairs. Ib.
11. In determining whether defendant made a " false entry " within the meaning of the statute when he included in such reports as " Loans and discounts " of the bank amounts which were being carried on the books of
the bank as "overdrafts," the jury will not consider whether other national
banks followed the same practice; but the jury, in determining whether
such entry, if a "false entry," was made with intent to deceive and
defraud, may consider whatever knowledge defendant is shown to have
had as to practice of any other national bank in this respect. Ib.
12. It is not necessary to complete the offense of making a " false entry" in a
report to the Comptroller of the Currency of the condition of a national
bank, with intent to deceive or defraud, that any person shall have been
in fact actually deceived or defrauded, for the making of such a "false
entry" with the intent to deceive or defraud is sufficient. Ib.
13. Under sec. 5209 of the national-bank act it is an indictable offense to make
a false entry in a report to the Comptroller of the Currency, or to aid and
abet the making of such an entry. United States v. French et al., 57 Fed.
Bep., 382.
14. It is not a "false entry" to enter under heading of " Loans and discounts"
items which, on books of the bank and for convenience of its officers, have
been temporarily withdrawn from that heading, and which are, from day
to day, carried on the books of the bank under heading of "Suspended
loans" while awaiting action of directors as to same being withdrawn
from character of loans and entered up as a loss on profit and loss account.
United States v. Graves, 53 Fed, Bep., 634.
15. The president and assistant cashier of a national bank are indictable as
principals, under Rev. St., sec. 5209, for making a false entry in a report,
although neither of them actually signed or attested the report. Cochran
v. United States, 15 S. Ct., 628.
16. The assistant cashier of a bank is indictable under Rev. St., sec. 5209, for
making a false entry in a report to the Comptroller, although he is not one
of the officers authorized by section 5211 to make such a report; for he may
be regarded as within the category of "clerk or agent," within the terms
of section 5209. Ib.
17. An indictment under Rev. St., sec. 5209, for making a false entry in a report
to the Comptroller need not allege that such report was made by the banking association, or that it was actually verified by the oath or affirmation
of the president or cashier, or attested by the directors, as required by
section 5211; but it is sufficient to aver that defendant made such false
entry "in a certain report of the condition of the First National Bank,
* * * made to the Comptroller of the Currency in accordance with the
 provisions" of Rev. St., sec. 5211. Ib.


102

REPORT OF THE COMPTROLLER OF THE CURRENCY.

FALSE ENTRIES—Continued.

18. The jury are warranted in finding that false entries were made with guilty
intent from the testimony of defendant that the said entries were made
under his direction, with the knowledge that they were not transactions
of the day on which they were entered in the books of the bank. United •
States v. Folsom, 38 P., 70.
19. The " false entry" in the books or reports of a bank, which is punishable
under Rev. St., sec. 5209, is an entry that is knowingly and intentionally
false when made. It is not the purpose of the statute to punish an officer
who, through honest mistake, makes an entry in the books or reports of
the bank which he believes to be true, when it is in fact false. United
States v. Allis, 73 Fed. Rep., 165.
20. If a president or cashier makes a false entry in a report of the condition of
the bank to the Comptroller of the Currency, the jury are authorized to
presume, from the false entry itself, in the absence of any explanation or
of any other testimony, that he knew it to be false. This presumption
results from the fact that it is the duty of the officer who verifies the
report to know the condition of the bank, and if the report is false there
is a prima facie presumption that he knew it. Ib.
21. A false entry, either in the books of the bank or in a report of its condition,
is punishable only when the jury find that it was made by the defendant,
or by his direction, with the intent either (1) to injure or defraud the bank,
or some other corporation, or some firm or person; or (2) to deceive some
officer of the bank; or (3) to deceive some agent appointed or thereafter
to be appointed to examine the affairs of the bank. If any one of these
intents is present the offense is complete. 16.
22. Where an entry in the books or in a report of the bank's condition is in fact
false, the jury are authorized to infer, from the false entry itself, an intent
of the defendant to injure or defraud the bank, or some other corporation
or individual, or to deceive some officer of the association, or an agent
appointed to examine into the condition of the bank, if such would be the
natural and probable consequence of the false entry. Ib.
23. A false entry made in the books or reports of a bank by a clerk, bookkeeper,
or other subordinate employee, by the command or direction of the president of the bank, is a false entry made by the president, and he is liable
to punishment for it if he gives the direction knowing the entry to be false,
or with the intent to defraud, deceive, etc. Ib
24. If a false entry in the books or reports is made with a criminal intent, it is
no defense that another false entry is also made, which offsets the former
entry with a like intent; but changes of this character are not as strong
evidence of an intent to injure or defraud the bank, or to deceive its
officers or examiners, as false entries which enable the officer making them
to withdraw the funds of the bank without consideration. Ib.
25. Every overdraft, whether made by previous arrangement or not, whether
secured or not, and whether drawing interest or not, is a loan, and is
required by the law and the rules prescribed by the Comptroller to be
listed and reported as an overdraft. It is, therefore, no defense to a charge
of false entries in respect to overdrafts that they had been arranged for or
secured, or that interest was to be paid upon them by agreement, if
such false entries were made with a criminal intent; but in determining
the intent the jury may consider the testimony of defendant that he considered the overdrafts as loans. Ib.
26. If the president of a bank makes or causes to be made false entries in its
books, or in reports to the Comptroller, with the intent to deceive or
defraud, etc., it is no defense that he struggled to save the bank from failure and to provide money to pay its depositors by sacrificing his own
property and borrowing money from others. 16.
27. Rev. St., § 5209, making embezzlement, abstraction, or willful misapplication
of the property of a national banking association by an officer or agent a
misdemeanor, applies to an agent in liquidation appointed by the stockholders. United States v. Jewett, 84 Fed. Rep., 142.
28. Averments in an indictment that the defendant was appointed agent in liquidation for a national banking association, and accepted that office, are not
inconsistent with further averments that he afterwards acted as president,
clerk, and director of the association. Ib.
29. An indictment against a defendant for the embezzlement and abstraction of
the property of a national banking association is not demurrable because
it charges the receipt of the property by him in different capacities, both
as an officer and as an agent of the association. Ib.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

103

FALSE ENTRIES—Continued.

30. An averment in an indictment against an officer and agent of a national banking association that the defendant "did steal, abstract, take, and carry
away" property of the association does not charge two offenses. Ib.
31. An allegation that defendant, an officer and agent of a national banking association, did secretly, in a manner and by particulars to the jurors unknown,
willfully, unlawfully, and fraudulently convert to his own use, and misapply, from said association to himself, certain funds, sufficiently charges
the offense of "willful misapplication" of property, under Rev. St.,
§5209. Ib.
32. Under Rev. St., §5209, prohibiting "e very * * * cashier* * * of any"
national bank from making "any false entry in any * * * report
* * * with intent to injure or defraud," etc., and prescribing a like
penalty for "every person who, with like intent, aids or abets any officer,"
etc., the intent is a material ingredient under each clause; and therefore an
indictment which, after duly charging the act and intent in respect to
the cashier, merely charges another person with aiding and abetting him
to make said false entries " in manner and form as aforesaid," is open to
demurrer. United States v. Berry et al.} 85 Fed Bep., 208.
FORFEITURE OF CHARTER:

1. Forfeiture of the privileges and powers of a national bank mast be determined by a suit brought by the Comptroller of the Currency and until
determined it may do business, and no person, by a conspiracy to evade
its regulations, may escape liability for borrowed money loaned by it upon
personal security in the manner authorized. Stephens v. Monongahela
National Bank, 88 Penn. St., 157; 32 Am. Bep., 438; 2 N. B. C, 398.
2. Under Rev. St., sec. 5239, providing that if the directors of a national bank
shall violate any of the provisions of the title relating to the organization and management of banks, the franchises of the bank shall be forfeited, such violation, however, to be determined by a proper court of the
United States in a suit therefor by the Comptroller, and that in case of
sucb violation every director participating therein shall be personally
liable for all damages which the bank, its shareholders, or any other person shall have sustained in consequence thereof, the Comptroller can not
authorize the receiver to bring suit, under sec. 5234, to enforce such personal liability, until it has been adjudged by a proper court that such
acts have been done as authorize a forfeiture of the charter. Welles v.
' Graves, 41 Fed. Bep., 459.
3. The forfeiture of the rights, privileges, and franchises of a bank authorized
by Rev. St., sec. 5239, for violation by its directors of the provisions of
the banking act, comes within sec. 1047, limiting suits for any penalty or
forfeiture accruing under the laws of the United States to five years. Ib.
4. The right to maintain an action under Rev. St., sec. 5239, to recover from
a bank director the damages sustained by his bank in consequence of
excessive loans made by him while serving in the capacity of director, is
not affected by the fact that the Comptroller has or has not procured a
forfeiture of the bank's charter. Stephens v. Overstolz, 43 Fed. Bep., 771.
5. In an information charging that " the banking association and the directors
thereof did knowingly permit," etc., the allegation that the association,
aside from the directors, permitted the doing of the alleged acts, tenders
an immaterial issue, and should be stricken out on motion. Trenholm,
Comptroller, v. Commercial National Bank, 38 Fed. Bep., 323.
6. As the section only refers to acts done by the directors, or by the executive
officers with the knowledge of the directors, an information, seeking a
forfeiture, which charges that the association did the act is insufficient.
Ib.
7. It seems that to maintain a suit by the receiver of a national bank to enforce
the liability of its directors, arising under the provisions of Rev. St.,
§ 5239, it must appear that a forfeiture of the charter of the bank has
been adjudged by a court of the United States, at the suit of the Comptroller of the Currency as provided in that section. Welles v. Graves, 41
Fed. Bep., 459, reaffirmed. Hay den v. Thompson, 17 C. C. A., 592; 71 Fed.
Bep., 60, distinguished. Stephens v. Overstolz, 43 Fed. Bep., 771, disapproved.
Gerner v. Thomson et al., 74 Fed, Bep.f 125.
FORGERIES :

1. A depositor owes a duty to the bank to make an examination of his pass book
and vouchers within a reasonable time; and if loss would result to the
bank from his failure to do so he can not recover for forged checks paid



104

REPORT OF THE COMPTROLLER OF THE CURRENCY.

FORGERIES—Continued.

by the bank and charged to his account. First National Bank v. Allen, 14
So., 335.
2. Where the examination is committed to a clerk or agent who has himself committed the forgeries, his concealment of such forgeries will not relieve the
depositor from the consequences of the failure to discover the fraud and
notify the bank. II.
3. But if the omission of the depositor to discharge such duty has resulted in no
injury to the bank, the depositor may recover. lo.
4. Where, however, forgeries by the same person are committed after the depositor is chargeable with knowledge of the fact, the failure of the depositor
to give the bank notice may estop him to dispute the genuineness of such
checks. 1b.
5. Plaintiff bank paid defendant bank money on a forged order, made payable
at plaintiff bank, bearing the general indorsement of the payee and of
defendant, the latter being "For collection." The person by whom the
order purported to be drawn was a customer of plaintiff, and had directed
it to pay orders drawn by him. The forgery was not discovered for four
weeks. Held, that an answer alleging that at the time of the payment
the payee had property from which the order could have been collected,
but that before the discovery of the forgery the payee had departed with
his property, was not sufficient to prevent recovery of the money paid
defendant, as it did not show how long the payee and the property remained
within reach, and therefore failed to show loss to defendant by unreasonable
delay of plaintiff in discovering the forgery and notifying defendant.
Indiana National Bank v. First National Bank, 36 N. E., 382.
6. In an action against a bank by a depositor to recover the amount of checks
drawn by plaintiff, but alleged to have been paid by defendant on indorsements of the payees' names forged by plaintiff's cashier, part of whose
duty was to fill in the body of checks for plaintiff to sign, pay bills, and
keep the accounts, it appeared that the money on the checks in question
had been obtained by plaintiff's cashier, but there was no evidence that
any payees had been named in them, the canceled checks having been
destroyed by the cashier. Held, that plaintiff could not recover, as it
would not be presumed that the cashier committed forgery in addition to
the embezzlement, when he could have avoided forgery by making the
checks payable to "cash" or "bearer," in which event deferdant would
not be liable. National Board of Marine Underwriters v. National Bank of
the Bepublic, 29 N. Y. 8., 698.
7. Defendant bank received a check drawn on plaintiff for collection. After
plaintiff had remitted to defendant, and defendant had paid the holder of
the check, it was discovered that the payee's name was forged. Held, that
delay of plaintiff in notifying defendant of the forgery did not relieve
defendant from liability, where the only evidence of injury from the delay
was that of defendant's cashier, who said: "If more seasonable notice had
been given the forger would have been arrested earlier, and more favorable
results might have arisen." Third National Bank v. Merchants' National
Bank, 27 N. Y. 8., 1070.
8. In an action by a bank which has paid to another bank a check drawn on
the former bank and transferred to the latter by a forged indorsement, it
is immaterial whether the signature of the drawer of the check is genuine,
since both parties are estopped to deny its genuineness. First National
Bank v. Northwestern National Bank (III.), 38 N. E., 739.
9. The defendant, as collecting agent of the Bellaire Bank of Ohio, collected
at the subtreasury, New York, a pension draft on which the payee's name
was forged after lier death. The defendant, in making the collection,
indorsed the draft as collecting agent of the Bellaire Bank, as appeared
by the terms of its indorsement, and on collection at once paid over the
money to the principal, without notice of the forgery, before this action
was commenced. Held, that the defendant was not liable. The case of
Onondaga Co. Sav. Bank, 12 C. C. A., 407; 64 Fed. Eep., 703, distinguished.
United States v. American Exchange National Bank, 70 Fed. Bep., 232.
10. Defendants, who were note brokers at Omaha, and who had done business
as such with the plaintiff bank in Iowa, sent to plaintiff by mail a list of
commercial paper offered for sale, including a note described as made by
seven persons jointly to the order of one B., and indorsed by B., and
another. The list sent plaintiff was headed by defendants' business card
as brokers, and it contained sundry items of information about the parties
to the note, purporting to be the result of inquiries as to their solvency
and standing, and indicating that the same were good. Plaintiff pur-




REPORT OF THE COMPTROLLER OF THE CURRENCY.

105

FORGERIES—Continued.

11.

12.

13.

14.

15.

16.

17.

18.

19.

chased the note, and, by defendants' directions, remitted the sum paid
therefor to a bank in Chicago. Defendants received from such sum only
their commission for selling the note, the balance being paid to B., for
whom they sold it. It afterwards proved that all the signatures on the
notes, except that of B., were forgeries, and that of B., although at the
time of the sale of the note, reported to be solvent, was in fact insolvent
and wholly worthless. Plaintiff sued defendants to recover the amount
paid for the note on an alleged warranty of genuineness. Held, that there
was nothing in the note or in the circumstances of the transaction between
plaintiff and defendants to justify an assumption that defendants had any
interest in or ownership of the note, but, on the contrary, that the plaintiff bank must have known that it was taking title as the indorsee of B.,
and that defendants were acting as brokers only, and, accordingly, that
defendants, having acted only as agents of a disclosed principal, could
not be held personally liable for the note. Monticello Bank v. BostivicJc et
al., 71 Fed. Rep., 641.
The forgery of the maker's name to a renewal note, delivered by the payee
to the holder of the original note, does not discharge the maker from liability on such original note, as the giving of a forged note in lieu of it
does not operate as payment. Second National Bank v. Wentzel (Pa. Sup.),
24. A.,1087.
In an action on a note by a bank against the indorser, who alleges his signature to be a forgery, evidence by the cashier and teller of the bank that
the indorser had admitted the genuineness of his signature on another
note, not in evidence, and that such other signature was precisely the
same as the signature to the note in suit, is not competent for the purpose
of estopping the indorser from denying such signature. Ib.
Testimony by the teller of the bank that the indorser had admitted his signature to a note for which the one in suit was given as a renewal is properly stricken out as irrelevant, where the teller subsequently acknowledges
that the indorsees admission related to another note, not connected with
the one in suit. Ib.
Evidence by defendant, on cross-examination, denying that he had received
the proceeds of other notes, not in suit, which had been indorsed by him,
and wliich had been negotiated by the maker, who also negotiated the one
in suit, can not be contradicted by plaintiff in rebuttal, since such crossexamination related to an irrelevant matter. Ib.
In an action against an indorser on a renewal note, who was released from
liability on the original note because it was not protested for nonpayment., it is error to charge that there may be a recovery if the indorsement
on the nrst note was genuine, notwithstanding the indorsement on the
renewal note was a forgery; but the jury having found for the indorser,
plaintiff can not complain of such instruction. Ib.
An admission by the indorser of a note as to the genuineness of his signature,
made to the holder after it had discounted the same, does not estop him
from denying the genuineness of the alleged indorsement on a renewal
note given by the maker, the indorser having been released from liability
on the original note by reason of its nonprotest for nonpayment. Ib.
A bank, which holds a note made by two persons as principal and surety, in
accepting, in good faith, at maturity, a renewal note to which the name
of the surety was forged by the principal, is not bound to know the handwriting of the surety, and is, hence, not guilty of negligence, entitling the
surety to a discharge from liability on the original note, in failing to compare the surety's signatures on the two notes, respectively, with reference
to ascertaining the genuineness of that on the renewal note. Lyndonville
National Bank v. Fletcher ( Vt.), 34 A., 38.
The right of the United States Government to recover money paid on a check
on the Treasury, under a forged indorsement, is conditioned on promptness in giving notice to the person to whom the check was paid. United
States v. Clinton National Bank,'28Fed. Rep., 357.
A bank clerk, whose duty it was to prepare exchange for the cashier's signature, so drew a draft for $25 to his own order that the amount could be
readily altered, and, after procuring the cashier's signature by pretending
that he wished to make a remittance of that amount, altered the draft so
that it presented the appearance of a genuine draft for $2,500, and thereafter indorsed it, and procured it to be discounted. Held, that the forgery
by the clerk, and not the negligence of the bank, was the proximate cause
of the loss, and the bank was not liable therefor. Exchange National Bank
of Spokane v. Bank of Little Rock, 58 Fed. Rep.f 140.




106

REPORT OF THE COMPTROLLER OF THE CURRENCY.

FORGERIES—Continued.

20. The bank was not liable on the ground that the forger was its confidential
employee, because in this transaction he acted as a purchaser and not as
an employee, and because the purchase of the draft was complete, and he
was the owner of it when the forgery was committed. Ib.
21. A bank held entitled to recover from a depositor the amount of a check forged
by an agent of such depositor, and indorsed and deposited by him under
a power of attorney authorizing such indorsement and deposit, which
check was credited to the depositor's account, and the amount drawn and
embezzled by the agent. Warren-Scharf Asphalt Pav. Co. v. Commercial Nat.
Bank, Fed. Bep., 181.
22. A bank is not guilty of negligence or of a violation of the usual rules and
customs of banking, by crediting at once as cash to the account of a depositor the amount of a check indorsed and delivered for deposit by the
authorized agent of the depositor; and permitting such amount to be subsequently drawn out by the agent prior to the collection of the check does
not constitute an overdraft. Ib.
GUARANTY:

1. A personal guaranty, given by stockholders and directors to another bank
in consideration of loans, discounts, or other advances to be made for the
repayment of any indebtness thus created, imposes a liability on the guarantors when acted upon by the guaranty, though no notice of the acceptance of the guaranty was given, for the contract shows a personal interest
of the guarantors in the advances constituting a consideration moving to
them. Doud et al. v. National Park Bank, 54 Fed. Bep., 846.
2. Receivers were appointed for an insolvent investment company, incorporated under the laws»of Missouri, whose liabilities consisted mainly of
guaranties, in various forms, indorsed on bonds, secured by real estate
mortgages, executed by borrowers to the company, and subsequently
sold and transferred by it to investors with the guaranties mentioned.
Held, that the rights of such investors were governed by the State statute relating to assignments for benefit of creditors, which provides that
the assignment shall be "for all the creditors of the assignor in proportion to their respective claims" (Rev. St. Mo. 1889, § 424); that, in the
distribution of the property of such company, all claims should be allowed
which, at the time of the appointment of the receivers, (1) furnished a
present cause of action against the guarantor, or (2) constituted direct
obligations on its part, whether due or to become due, or (3) which,
though not then matured, or not constituting direct obligations, thereafter matured or would mature, or become direct obligations, before any
order of distribution was made; and that all claims should be rejected (1)
which arose on guaranties of collection, as distinguished from guaranties
of payment, where no proceedings had been taken by the holder to collect
from the maker or from the mortgaged premises, or (2) which were not
matured, and in respect to which there had been no default of interest, or
(3) in which by agreement between the holder and maker, without the
assent of the guarantor, the time of payment of the principal obligation
had been extended. New York Security fy Trust Co. et al. v. Lombard Inv.
Co. of Kansas et al., 73 Fed. Bep., 537.
3. A claim against a guarantor of payment matures, so as to become a direct
obligation, not only on the date the guaranteed debt becomes due, but on
default in payment of interest or other preliminary obligation, when, by
the terms of the contract, such default is made to precipitate maturity of
the debt. Ib.
4. Receivers were appointed for an insolvent investment company, which had
sold and transferred obligations secured by mortgage, with guaranties of
payment thereof, but with a provision that, in case of default, it should
have two years within which to collect and pay over the amount of the
debt. Held, that claims arising on these guaranties were provable against
the receivers where default had occurred and the two years had expired,
whether these two events had occurred both before the appointment of
the receivers, or one before and one after such appointment, or both after
the appointment; and, further, that such claims were provable after
default, although the two years should not expire before the order of distribution. Ib.
5. A guaranty of collection of an obligation secured by mortgage which is
transferred by the guarantor is an undertaking to pay the debt on condition that the person to whom the guaranty is given shall diligently proceed against the principal debtor and the mortgage security, and, in
 default of such diligence, the guarantor is released. Ib*


REPORT OF THE COMPTROLLER OF THE CURRENCY.

107

GUARANTY—Continued.

6. An investment company selling and transferring an obligation secured by
mortgage agreed, by indorsement thereon, "first, to guarantee the payment of the coupons attached hereto at the maturity thereof; second, to
collect at its own expense, and to pay over the principal hereof at maturity, provided the same is paid by the maker; third, in event of default
being made by the maker, to collect at its own expense and to pay over
the principal hereof within two years from maturity of the same," with
interest at 6 per cent per annum. Held, that this was a guaranty, not of
collection merely, but of payment. Ib.
7. Payment of interest in advance on a note is not of itself evidence of an agreement for the extension of time of payment sufficient to release a surety
from liability. American National Bank v. Love, 62 Mo. App., 878.
8. Where one of several sureties, after all have signed, but before the debt has
been paid, obtained a mortgage from the principal as indemnity, it inures
to the benefit of his cosureties. Farmers Sf Traders' National Bank v. Snodgrass(Or.),45 P., 758.
9. Where one purchased negotiable paper from the president of a bank with a
guaranty of payment executed by him apparently in behalf of the bank,
on his representation that the paper belonged to the bank, and the transaction occurred in the banking house where the president was apparently
engaged in performing his duties as such, the bank was liable on the
guaranty. City National Bank v. Thomas (Neb.), 65 N. W., 895.
10. Where a promissory note is transferred, and the collection of it is guaranteed
by the payee in the following form, to wit: " This note is transferred, and
the collection of the same guaranteed to the holder hereof/' the makers
can make any defence to a suit commenced by an assignee that could
have been made to a suit if commenced by the payee, notwithstanding the
assignee may take the note before due and without knowledge of any
infirmity in the note. Omaha National Bank v. Walker et al., 5 Fed. Rep.3
399.
11. A contract by a national bank to indemnify one for loss incurred as surety
on an attachment bond is not void on the ground of public policy, the loss
having occurred, though the bond is not given for the benefit of the bank.
Seeber v. Commercial National Bank of Ogden, 77 Fed. Rep., 957.
12. The vice-president of a national bank, upon making a transfer for value of
certain notes belonging to the bank (the bank being the correspondent of
the transferee), executed this guarantj r : " In accordance with your telegram
I herewith hand you ten notes of $5,000 each." "We debit your account
$50,000." "This bank hereby guarantees the payment of the principal sum
and interest of said notes." This was done in behalf of the bank, and the
notes were also endorsed by the same individual as vice-president of the
bank. It was done with the knowledge and consent of the president and
cashier of the bank, but without authority of the directors, as a board, or
the majority of its members individually. Held, that the bank was liable on
the guaranty. People's Bank of Belleville v. Manufacturers' National Bank
of Chicago, 101 U. S., 181; 2 N B. C, 97.
13. F. owed H. & Co., on account, about $22,000. He settled this in part by a cash
payment and in part by a transfer of promissory notes payable to himself,
the payment of two of which, for $5,000 each, was guaranteed by him in
writing. H. & Co. transferred these notes to a bank as collateral to their
own note for about $13,000. They then became insolvent and assigned all
their estate to P., as assignee, for distribution among their creditors. The
bank sued F. on his guaranty. He set up in defence that his indebtedness to
H. & Co. grew out of dealings in options in grain and other commodities to
be settled on the basis of "differences," and that it was invalidated by the
statutes of Illinois, where the transactions took place. The court held that
he could not maintain the statutory defence as against a bona fide holder of
the guaranteed notes, and gave judgment against him. Execution on this
judgment being returned unsatisfied, a bill was filed on behalf of the bank
to obtain a discovery of his property and the appointment of a receiver, to
which F. and the maker of the notes, and R., with others, were made defendants. P., the assignee of H. & Co., was, on his own application, subsequently
made a defendant. An inj unction issued, restraining each of the defendants
from disposing of any notes in his possession due to F. Subsequently to
these proceedings F. assigned to R. the two notes which H. & Co. had transferred to the bank. P., as assignee of H. &Co., fileda cross bill in the equity
suit, showing that the judgment in favor of the bank was in excess of the
balance due the bank by H. & Co. R. filed an answer and a cross bill in
that suit, setting up his claim to the said notes, and maintaining that the
 judgment in favor of the bank was invalid, as being in conflict with the


108

REPORT OF THE COMPTROLLER OF THE CURRENCY.

GUARANTY—Continued.

statutes of Illinois. Held, (1) that the liability of F. upon the guaranty was,
as between the bank and him, fixed by the judgment in the action at law;
(2) tdat all the bank could equitably claim in this suit was the amount
actually due it from H. & Co., which was considerably less than the amount
of the face of the notes; (3) that the transfer and guaranty of the notes to
H. & Co. were void under the Illinois statutes, and passed no title to them
or their assignee; (4) that R. was the equitable owner of the notes, and was
entitled to receive them on payment to the bank of the amount of the indebtedness of H. & Co. to it; (5) that the assignment to R. having been made
in good faith and for a valuable consideration, he was a person interested in
the object to be attained by the proceedings within the intent of the statute.
When, by filing a replication to a plea in equity, issue is taken upon the plea,
the facts, if proven, will avail the defendant only so far as in law and equity
they ought to avail him. Pearce v. Bice, 142 U. S., 28.
14. A national bank went into voluntary liquidation in September, 1873.
Before that it had become liable to a State bank as guarantor on sundry
notes made by a third person, and which were discounted for it by the
State bank. In August, 1874, transactions took place between the maker
of the notes and the State bank and the person who acted as the president
of the national bank whereby the maker was released from further liability on the notes, but such acting president attempted to continue by
agreement the liability of the national bank as guarantor. In a suit
begun in October, 1876, a judgment on the guaranty was obtained in May,
1880,by the, State bank against the national bank. In a suit brought by
a creditor against the national bank and its stockholders to enforce their
statutory liability for its debts, the court, on an application made in June,
1887, enquired into the liability of the stockholders to have the claim of
the State bank enforced as against them in view of the transactions of
August, 1874, and disallowed that claim. Held, (1) it was proper to
reexamine the claim; (2) the judgment against the bank was not binding
on the stockholders, in the sense that it could not be reexamined; (3) the
guaranty of the bank was released as to the stockholders by the release
of the maker of the notes; (4) the rights of the stockholders could not be
affected by the acts of the president done after the bank had gone into
liquidation. Schrader v. Manufacturers7 National Bank of Chicago, 133
U, 8., Jan. 20, 1890, page 67.
15. A written promise and guaranty of the payment of a promissory note,
"with all legal or other expenses of or for collection," executed by the
indorser before the maturity of the note, covers reasonable attorney's
fees incurred in the collection of the debt. McGhee v. Importers and
Traders' National Bank, 93 Ala., 192.
16. When a promissory note is indorsed to A. B. with the word " cashier " added,
it is presumptively the property of the bank of which he is the cashier, as
shown by parol evidence, and the bank may sue on it without indorsement
by him and without making him a party. Ib.
17. The act of Congress authorizing the organization of national banks confers
upon them no authority, either in express terras or by implication, to
guarantee the payment of debts contracted by a third person, and solely
for his benefit; and acts of this nature, whether executed by the cashier
or the board of directors, are necessarily ultra vires. Commercial National
Bank et ah y. Pirie et al., 82 Fed. Rep., 799.
18. The presentation by a merchant seeking to purchase goods of a written
guaranty, by a national bank, of payment for any goods he may purchase,
even if it implies a representation that the bank is financially sound, is
not of itself a fraudulent representation, such as will justify a rescission,
since the seller is chargeable with knowledge that in law such a guaranty
by a national bank is ultra vires and void. Ib.
19. Whether goods are bought with a preconceived fraudulent intent not to pay
for them is a question for the jury if there is evidence tending to show
such an intent, but not of so conclusive a character as to convince all
reasonable minds that such must have been his purpose. Ib.
20. To vest a mortgagee of chattels with the rights of an innocent purchaser, a
preexisting debt alone is not sufficient, but, if any considerable sum of
money is paid at the time of the execution of the mortgage, and as part
of its consideration, then the mortgagee may be an innocent purchaser as
to the full amount of his loan. Ib.
21. An action for wrongful conversion against one who has sold goods in his
possession is not maintainable where defendant had a valid lien upon the
property; so that his refusal to surrender it upon demand was not a
tort. Id.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

109

GUARANTY—Continued.

22. An agreement by a national bant to guarantee the payment of a debt of a
third party solely for his benefit is ultra vires. Bowen v. Needles National
Bank, 87 Fed. Rep., 430.
23. A promise by a bank to pay any checks that may be drawn upon it by a certain person is not a certification of such checks, but a guaranty. Ib.
24. A national bank has no power to lend its credit to any person or corporation,
or to become guarantor of the obligations of another, except in the case of
the transfer of promissory notes discounted, which is in the ordinary course
of banking. Bowen v. Needles National Bank, 94 Fed. Bep., 925.
INCREASE OF CAPITAL STOCK.

See Capital stock.

INDICTMENT. See False entries.
1. An indictment under act of July 12, 77
1882, amending sec. 5208, making it a
misdemeanor to " certify any check drawn by a person not then having
on deposit sufficient money to meet same, need not allege delivery of check
by bank after certification. United States v. Potter, 56 Fed. Bep., 83.
2. When indictment alleges certification as accomplished, authentication will
not be presumed as an essential part thereof, and hence it is unnecessary to
allege absence of required credit or deposit at time of authentication. 11).
3. The indictment in charging, in the language of sec. 5208, that the drawer of
the check had not on deposit, at the time it was certified, "an amount of
money equal to that specified77 in the check is sufficient. Ib.
4. The indictment does not charge two offenses in the same count, because it
alleges therein that the check was certified " before the amount thereof
had been entered to the credit of the drawer on the books of the bank,"
and also at a time when the drawer did not "have on deposit an amount
of money equal to " the amount of the check. Ib.
5. An indictment against the president for " aiding and abetting" cashier in
certifying check under prohibition can not be sustained. Ib.
6. An indictment charging defendants with aiding and abetting a director in
a willful misapplication of the money of an association must state facts
to show that there has been such misapplication committed by the director.
United States v. Warner, 26 Fed. Bep., 616.
7. An indictment against the president of a national bank alleging that he
"unlawfully and willfully and with intent to injure and defraud the said
association for the use, benefit, and advantage of himself did misapply
certain of the money and funds of the association which he * * * then
and there, with the intent aforesaid, paid and caused to be paid 7 ' to certain persons named, was bad for failure to allege the fact that made such
payment unlawful or criminal. United States v. Fno, 56 Fed. Bep., 218.
8. It is not essential that such indictment should allege that the acts charged
were done without the knowledge and assent of the directors of the
association. Ib.
9. In indictment under Rev. St., sec. 5209, for willfully misapplying the funds
of a national bank, it is not necessary to charge that the funds had been
previously intrusted to defendant, since such act may be done by an
officer or agent of the association without his having previously received
the funds into his manual possession. United States v. Northway, 129
U. 8., 327.
10. In indictment charging president of a bank with aiding and abetting its
cashier in the misapplication of its funds, it is not necessary to aver that
he then and there knew that the person so aided and abetted was the
cashier. Ib.
11. A form of indictment which sufficiently describes and identifies the crime
of abstracting the funds of a national bank created by Rev. St., sec. 5209,
sufficiently states the character and capacity of the bank. Ib.
12. An indictment for willfully misapplying funds of a national bank (Rev.
St., sec. 5209), charging in general words fraudulent misapplication and
intent to defraud the bank, and describing specifically funds misapplied
and the manner of misapplication, need not negative every possible theory
consistent with the honest purpose in the disposition of the funds specified.
Evans v. United Staies, 14 S. Ct.y 934; ib., 939.
13. An indictment charging directors of a national banking association with
making false entries in a report of condition to the Comptroller of the
Currency can not be sustained under sec. 5209. United States v. Potter,
56 Fed. Bep., 83.
14. The use in an indictment, under sec. 5209, of the words "then and there/ 7
in alleging that the defendant was president or director of such bank



110

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INDICTMENT. See False entries—Continued.
and made alleged false entries, is not uncertain or repugnant merely
because in one place they may refer to the whole of a day and in another
to only one instant of the day. Ib.
15. The omission of the signs for dollars and cents in the recital of alleged false
entries in reports and misnomer of reports are immaterial where reports
are set out by their tenor in the indictment. Ib.
16. It is not necessary to allege specifically in such indictment that the reports
were transmitted to the Comptroller of the Currency or that they were
published. Ib.
17. Allegations that the false entries were made with intent to " injure and
defraud the said association and certain persons to the grand jurors
unknown" are sufficient. Ib.
18. An indictment against the president of a national bank, under sec. 5209, for
making false entries in the books of the bank, charging that it was done
" with intent to defraud said association and certain persons to the grand
jurors unknown/' is sufficient so far as concerns the allegations of intent.
United States v. Potter, 56 Fed. Rep., 97.
19. When indictment alleges that the false entries indicated that there was then
in the paying teller's department of the bank certain amount in gold,
legal tenders, and gold certificates, when in fact such amount was not
there, it is not necessary that it should further allege that such amount
was not then in other departments of the bank. Ib.
20. In addition to the entries themselves, the indictment need set out the context only when it so modifies the entries as to be in presumption of law a
part of them. Ib.
21. The fact that the note teller's and paying teller's books, in which the president is charged with making the false entries, are usually kept by those
officers without interference by the president does not invalidate indictment thereon. Ib.
22. Counts charging false entries by the president in reports of condition of the
bank, which allege that reports were made in conformity to the law, and
then set them out by their tenor, are bad for their failure to allege specifically that the reports were verified and attested by the cashier. Ib.
23. Where the entry whose tenor is set forth contains the words u See schedule/'
it is not a valid objection to the indictment that these words are not
explained. United States v. French et ah, 57 Fed Eep., 382.
24. It is sufficient if the indictment allege the substance of the reports in question without setting them out in full. Ib.
25. An allegation in an indictment under sec. 5209 that defendant "did make a
certain false entry in a certain report of the association" will not be construed to mean that the entry was made after the report was completed
and was, in fact, an alteration. Ib.
26. The preparation and completion of the report, the making of the false entry
therein, its verification, attestation, and delivery to the Comptroller may
- be considered as simultaneous, and there is no repugnance in failing to
allege that any or all of these things occurred in consecutive order. Ib.
27. Though the counts in an indictment under this section for aiding and abetting the cashier in making such false entries described defendant as
" being then and there a director" of the bank in question, it can not be
held that they charge him in aiding a nd abetting in his official capacity. Ib.
28. Counts in such indictment which charge defendants with procuring and
counseling the false entry before the facts are valid, for such acts are covered by the clause of the section extending the penalty to anyone who
" abets" an officer or agent in the acts prohibited. Ib.
29. Indictment against president for false entry on books, held sufficient in form
and averments. United States v. Britton, 107 U. #., 655.
30. Indictment against president for fraudulent purchase of stock of the bank
is bad if it fails to state for whose use purchase was made, or if it states
that it was for use of the bank, or if it does not aver that it was not made
to prevent loss on previous debt. Ib.
31. Indictment for perjury against officer for false statement under sec. 5211,
Rev. St, is bad if, prior to act of 1881, chapter 82, his oath verifying report
was taken before notary appointed by a State. United States v. Curtis, 107
U. S., 67 U
32. An indictment of persons for aiding and abetting a president of a national
bank in misapplying its funds and making false entries in its books, with
intent to defraud it, in violation of Rev. St., sec. 5209, need not specifically
set out the act or acts by which the aiding and abetting were consummated. Coffin v. United States, 15 S. Ct., 394.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

Ill

INDICTMENT. See False entries—Continued.
33. An indictment of H. and other persons for violation of Rev. St., sec. 5209,
averred that "said H., then and there heing president" of a certain
national bank, "by virtue of his said office as president, aforesaid/7
"misapplied the funds/' with intent to defraud, etc., and that such other
persons did unlawfully, feloniously, "knowingly/' and with intent to
defraud, aid and abet the "said H., as aforesaid/7 Held, that the indictment averred that the aiders and abettors knew that H. was president of
the bank at the time it is averred the acts were committed. Ib.
34. Such indictment charged that H. did misapply the moneys of the bank with
intent to convert a certain sum to the use of a specified company by
causing it to be paid out of the moneys of the bank on a check drawn on
the bank by such company, which check was then and there cashed and
paid out of the bank's funds, which sum, and no part thereof, was such
company entitled to withdraw from the bank, because it had no funds
therein, and that said company was then and there insolvent, as H. well
knew, whereby said sum became lost to the bank. Held, that the indictment averred the actual conversion of the sum misapplied. Ib.
35. Where an indictment under Rev. St., sec. 5209, against a president of a
national bank and others, for misapplying the funds of the bank, avers
that such funds were misapplied with intent to convert the same to the
use of a certain company, "and to other persons to the grand jury
unknown/ 7 the Government need not prove want of knowledge in the
grand jury as to such persons; and, in the absence of evidence on the
subject, the verity of the averment will be presumed. Ib.
36. No person, other than a witness undergoing examination and the Government attorney, can be present at the sessions of a grand jury; and an
indictment should be quashed where an expert witness remained in the
jury room while another witness was being examined and pat questions
to him. United States v. Edgerton, 80 Fed. Rep., 374.
37. An indictment should be quashed when it appears that defendant was compelled by subpoena to attend before the grand jury, and give material
testimony, without knowing that his own conduct was under investigation. Ib.
INJUNCTION :

1. Section 5242, Rev. St., providing that no injunctions shall issue from a
State court against a national bank before final j udgment, does not deprive
the Federal court of power to issue such injunction or to continue after
removal of the case an injunction previously granted by a State court.
Hower v. Weiss Malting and Elevator Co. et al., 55 Fed. Rep., 356.
2. State courts have no power to grant before final judgment an injunction
prohibiting a national bank from disposing of securities in its possession.
Freeman Manufacturing Company v. National Bank of Republic, 35 N. E., 865.
3. The provisions of the national-bank act, forbidding such injunctions, were
not repealed by St. U. S. 1882, c. 290, sec. 4, or St. U. S. 1887, c. 373, sec. 4, or
St. U. S. 1888, c. 866, sec. 4. Ib.
4. A bill which seeks to restrain the sale by a bank of property pledged as collateral security to a note discounted by it, on the ground that the president
of the bank secretly agreed that he would see to the payment of the note
without sale of the collateral, does not state a case for equitable relief,
since such agreement, being against the interest of the bank, should not be
enforced for the benefit of a party to it. Breyfogle et ah v. Walsh et al.,
71 Fed. Rep., 898.
5. A decree dismissing an injunction because wrongfully sued out is conclusive
as to the wrongful suing out when offered in evidence in an action for
damages against the surety on a bond, the undertaking of which is that
the principal will pay all damages which may be adjudged by reason of
the injunction, although the surety may not have been a party to the
injunction and there may have been no damages adjudged against the
principal. Bunt v. Rheum, 3 N. W., 667; 52 Iowa, 619, distinguished.
Shenandoah National Bank v. Read (Iowa), 53N. W., 96.
6. A prayer for injunction to preserve property from sale pending litigation
can not be made a ground of eqnity jurisdiction when the property had
been sold when the bill was filed, which fact complainants knew, or might
have known. Cecil National Bank v. Thurber (C. C. A.), 59 F., 913.
7. A bank recovered judgment at law by default on a note made by a wife to
the order of her husband, and subsequently the wife obtained an order
opening the judgment, with unrestricted leave to plead. She pleaded
that she occupied the position of surety on the note and was a married



112

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INJUNCTION—Continued.

woman, and also that it was a contract made with her husband and
therefore void at law. The bank then filed a bill in equity for an injunction against setting up these defenses at law. On the trial of the issues
thus raised the defense of suretyship was not sustained. Held, that the
bank was in effect compelled to come into equity by defendant pleading
that the contract was between husband and wife, and that, having established its case there on the merits, defendant should not be permitted to
litigate it again in the law courts. Hackettstoivn National Bank v. Ming
(N. J. Ch.), 27 A., 920.
8. When a valid judgment has been obtained in a State court against a national
bank and the lien thereof has attached to its property, before the appointment of a receiver, Rev. St., § 720, applies to prohibit the issue of an injunction by a Federal court, at the suit of the receiver, to restrain the enforcement of such judgment. Baker v. Ault et al., 78 Fed. Rep., 394.
9. A Federal court will enjoin a sale of the real estate of a national bank to
enforce payment of taxes illegally assessed against its capital stock, under
a law which would make the sale a cloud on its title, though the State law
gives an action at law to recover back taxes illegally exacted. Brown v.
French, 80 Fed. Rep., 166.

10. On injunction to restrain the enforcement of a judgment on a note against
the maker, it appeared that the payee, before maturity, transferred it to a
bank as collateral; that the maker, in ignorance of the fact, paid it to the
payee, without receiving the note, upon his representation that he had
forgotten to bring it. After maturity the bank, pursuant to an agreement
with a person who knew that it was up as collateral, obtained judgment
on it and assigned the judgment and all other collateral paper to him on
his paying the principal debt. Among the collaterals were notes, on
which this person was a surety for a greater amount than the principal
debt. Held, that equity required the bank to resort first to the other collaterals which it held, and this equity was not changed by reducing the
not© to judgment, and that the assignee got no greater rights than the
bank had, and therefore could not collect the judgment, whether the transaction be considered as a purchase by him or as a part payment of his own
obligation. Barhorst et ux. v. Armstrong et al., 42 Fed, Rep., 2,
INSOLVENT BANKS . See Preferred claimsj Receiver.
1. A return of nulla oona upon an execution issued against the property of a
national bank is proof of its insolvency. Wheelock v. Kost, 77 III., 296.
2. The creditors of an insolvent national banking association in the hands of a
receiver are entitled to interest on their claims during the 7
period of administration. National Bank of Commonwealth v. Mechanics National Bank, 94
U. S., 437; Whitt v. Knox, 111 U. S., 784.
3. A subscriber who has made payments on his subscription to the proposed
increase, believing that the statutory requirements would be complied
with, is entitled to have the amount thereof allowed as a claim against
the assets of the bank in the receiver's hands. Armstrong v. Stanage, 37
Fed. Rep., 568.
4. The directors of a national bank voted to increase the capital stock li to
$1,000,000," and that the stockholders "have the right to take new stock
at par to an equal amount to that then held by them." No subscription
books were opened, and the plaintiff did not subscribe for any of the
new stock, but paid the bank a sum equal to the amount of stock then
held by her, taking a receipt therefor " on account of subscription to new
stock." The new stock subscribed for and paid in did not amount to
enough to make the capital stock $1,000,000, and the directors then voted
that the capital stock be increased by the sum paid in. The Comptroller
of the Currency was notified that the capital stock of the bank had been
increased to that extent, and he issued a certificate authorizing the bank
to carry on business with that amount of capital stock. The amount paid
in, as above, was used by the bank in its general business, and lost
within a month after the certificate was issued, the bank having suspended. The plaintiff demanded back the amount paid in by her. Reid,
that she was entitled to recover it, with interest from the date of her
demand. Eaton v. Pacific National Bank, 144 Mass., 260; 3 N. B. C, 483.
5. A national bank determined to increase its capital stock from $300,000 to
$500,000. The new stock subscriptions amounted to only $130,060. The
bank advertised an increase to $430,060. This was never authorized by
vote of the stockholders, nor certified to or approved by the Comptroller
of the Currency. The plaintiff subscribed and paid $2,000 for so much of




REPORT OF THE COMPTROLLER OF THE CURRENCY.

113

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
the originally proposed increase. Held, that plaintiff did not become a
stockholder, and when the bank became insolvent was entitled to judgment
against the receiver for the amount so paid. Schierenberg v. Stephens, 32
Mo. App., 314; 3 N. B. C, 528.
6. Rev. St., sees. 5234 and 5239, prescribing the method of enforcing the liability
of the directors of national banks for violation of the banking law, are
exclusive of other remedies, and a creditor of an insolvent bank, for which
a receiver has been appointed, can not sue its directors for the purpose of
making them personally liable for the mismanagement of the bank.
National Exchange Banlc v. Peters et al.9 44 Fed. Hep., 13.
7. A national bank does not lose its corporate existence by mere default in paying its notes and the appointment of a receiver. Banlc of Bethel v. Pahquioque Bank, 14 Wall., 383.
8. Such associations may be sued, though a receiver has been appointed and
is administering its concerns. Ib.
9. A creditor of an insolvent national bank, who establishes his debt by suit
and judgment after refusal of Comptroller to allow it, is entitled to share
in dividends on debt and interest so established as of day of failure of
bank, not for subsequent interest. White v. Knox, 111 U. S., 784.
10. The personal property of an insolvent bank in hands of a receiver is exempt
from State taxation. Rosenblatt v. Johnston, 104 U. S., 462.
11. A creditor of a national bank is entitled to interest on the amount of his dividend from the time it was declared by a receiver of the bank until paid.
Armstrong v. American Exchange National Bank, 133 U. S., 433.
12. In estimating the dividends to be paid out of the assets of an insolvent
association, the value of the claims at the time when the insolvency is
declared is to be taken as the basis of distribution. White v. Knox, 111
U. S., 784.
13. A creditor will not have a lien upon the funds of the association because
checks given in settlement of balances were fraudulent and were given at
a time when the bank was hopelessly insolvent and its officers were contemplating flight. Citizens' National Bank v. Dowd, 35 Fed. Rep., 340.
14. A suit against a national bank to enforce the collection of a demand is abated
by a decree dissolving the corporation and forfeiting its rights and franchises. National Bank v. Colby, 21 Wall., 609; 1 N. B. C, 109.
15. The claims of depositors in a suspended national bank are, when proved to
the satisfaction of the Comptroller of the Currency, on the same footing
as if they were reduced to judgments. National Bank of Commonwealth v.
Mechanic's National Bank, 94 U. S., 437; 1 N. B. C, 133.
16. National banks are not subject to the bankrupt act, and bankruptcy courts
have no jurisdiction as against such associations. If insolvent, they can
be wound up only in the mode provided by the national banking act. In
re Manufacturers' National Bank, 5 Bissell, 499; 1 N. B. C, 192.
17. The plaintiff, a citizen of New York, claiming title by assignment to the
bonds deposited with the Treasurer of the United States to secure the circulation of a national bank, filed a bill setting forth that the Comptroller
of the Currency and the Treasurer refused to recognize his right to the
bonds or their proceeds; that the Comptroller had appointed one K., a
citizen of New York, receiver of the said bank, and intended to sell the
said bonds and to pay the proceeds, after redeeming the circulation of the
bank, to the general creditors of the bank, or to K. as such receiver, and
that K. claimed as such receiver an interest adverse to the plaintiff in said
bonds. The bill made the Comptroller, the Treasurer, and K. parties
defendant, and prayed a decree establishing the plaintiff's title and requir>
ing the Comptroller and the Treasurer to deliver to the plaintiff the surplus of the bonds after redeeming the notes of the bank, and annulling the
appointment of K. as receiver. K. demurred to the bill for lack of equity.
Held, that the demurrer must be sustained. Van Antwerp v. Hulburd, 8
Blatchford, 282; 1 N. B. C, 219.
18. Per Woodruff, J. (1) The plaintiff could not question the validity of K.'s
appointment as receiver; (2) that, as the court could not grant the relief
as to the Comptroller and Treasurer, it could not as to K.; (3; that, as
under the national banking act the proceeds of the bonds could never come
into the possession of K., he had no concern in the suit; (4) that the allegation that plaintiff was informed and believed that K. claimed an interest
in the bonds adverse to the plaintiff was not sufficient to sustain the bill. Ib.
19. Per Hall, J. The residuary interest of the bank in the bonds was a part of
the assets of the bank, to which K., as receiver, was entitled, unless the
plaintiff's claim thereto was good, and that therefore the bill presented a

CUR 1900, PT 1
8


114

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
question of property between plaintiff and K., but that, as plaintiff and
K. were residents of the same State, the circuit court had not jurisdiction. Ib.
20. Where a national bank is declared in default by the Comptroller of the Currency, and a receiver is appointed, and a sufficient fund is realized from
its assets to pay all claims against it and leave a surplus, the Comptroller
should allow interest on the claims during the period of administration
before appropriating the surplus to the stockholders of the bank. Chemical National Bank v. Bailey, 12 Blatchford, 480; 1 N. B. C, 260.
21. An action of assumpsit to recover such interest will not lie against the
Comptroller of the Currency or the receiver of the bank, but will lie
against the bank. Ib.
22. Where a bank has by reason of its own default been placed in the hands of
a receiver, a demand of payment by a depositor is no longer a necessary
condition precedent to a right of action for the deposit, and the deposit
bears interest from the time of such default. Ib.
23. The receiver of a national bank holds the same title to the assets of the
bank that the bank itself held; and he has no greater rights in enforcing
their recovery than the bank itself would have had. Casey v. La Socie'te
de Credit Mobilier de Paris, 2 Woods, 77; 1 N. B. C, 285.
24. Insolvent debtors of an insolvent national bank assign, giving preferences
in favor of the bank. Quaere, whether the debt preferred shall carry
interest. Held, that where there is nothing in the language of the assignment, or in the circumstances under which the debt was created, to negative the presumption that the debt should bear interest, and nothing in
the conduct of the receiver of the national bank to estop him from claiming interest, in such a case interest must be paid. Bain et al. v. Peters, 44
Fed. Bep., 807.
25. The question whether a savings bank should be paid in full by an insolvent
national bank, pursuant to the State law (Laws N. Y., 1882, chap. 409,
sec. 282; Bank v. Davis, 26 N. Y. Supp., 200; 73 Hun., 357), or pro rata, as
provided by the Rev. St., sees. 5236, 5242. Held, upon a motion to remand,
to be a controversy Cl arising under the laws of the United States."
Auburn Savings Bank v. Hayes, 61 Fed. Bep., 911.
26. The receipt by a bank of the proceeds of a fraudulent sale of stock belonging to it, and the subsequent appointment of a receiver, give its creditors
no such right in the proceeds as will prevent the purchaser from rescinding the sale and requiring restitution. Merrill v. Florida Land and
Improvement Co., 60 Fed. Bep., 17.
27. When a bank has become hopelessly insolvent, and its president knows that
it is so, it is a fraud to receive deposits of checks from an innocent depositor, ignorant of its condition, and he can reclaim them or their proceeds j
and the pleadings in this case are so framed as to give the plaintiff in error
the benefit of this principle. St. Louis and San Francisco Bailway Co. v.
Johnston, 133 U. S., 566.
28. Sureties on indebtedness of insolvent bank are not entitled to prove any
claim against it by reason of the enforcement of their liability as such.
Stewart y. Armstrong, 56 Fed. Bep., 167.
29. Where an indorser pays a note to a bank and takes a receipt containing an
order for a surrender of the note on return of the receipt, the relation
between the bank and the indorser is not that of debtor and creditor, but
is a fiduciary relation, entitling the indorser, on the bank becoming insolvent without applying the money on the note or procuring its surrender,
to have the assets in the hands of its receiver applied in payment thereof.
Massey v. Fisher, 62 Fed. Bep., 958.
30. The fact that the money was not marked, and by a mingling with other funds
of the bank lost its identity, does not affect the right to recovery in full,
if it can be traced to the vaults of the bank and it appears that a sum
equivalent to it remained continuously therein until removed by the
receiver. Ib.
31. The appointment of a receiver for an insolvent national bank under act of
Congress of June 30, 1876, sec. 1, which authorizes the Comptroller, when
satisfied of the insolvency of a banking association, to appoint a receiver
"who shall proceed to close up such association and enforce the personal
liability of the shareholders" does not dissolve the corporation. Chemical
National Bank v. Hartford Deposit Company {III. Sup.), 41 N. E., 225.
32. One induced to subscribe for certificates alleged to represent an increase of
the capital stock of a national bank at a time when no increase had been
authorized^ on false representations of the cashier as to the bank's condi-




REPORT OF THE COMPTROLLER OF THE CURRENCY.

115

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
tion, it being in fact insolvent at the time, is entitled to a judgment
against the bank and its receiver for the purchase money paid. Neivbegin
v. Newton National Bank (C. C. A.), 66 Fed. Eep., 701.
33. A contract between two national banks that the proceeds of paper, discounted by one for the other, should not be drawn on in advance of the
maturity of such paper, is not affected by the subsequent fraud of the
bank obtaining the discount in reporting such proceeds to the Comptroller
of the Currency as part of its cash reserve. Fisher v. Tradesmen's National
Bank (C. C. A.), 64 Fed. Eep., 706.
34. A contract by which one bank pledges any of its property in the hands of
another bank, as collateral to notes discounted fir and guaranteed by it,
authorizes the discounting bank to hold a deposit balance, standing to
the credit of the borrowing bank at the time of its insolvency, as collateral
to any liability, then or at maturity of the discounted notes, until the
amount of the lien has been ascertained. Fisher v. Continental National
Bank (C.C.A.), 64 Fed. Eep., 707.
35. A statement by the president of a bank, for the purpose of procuring from
another bank a discount of paper, that such former bank is in good condition, when in fact it is hopelessly insolvent in consequence of the president's own malversation, is a fraud, and entitles the discounting bank to
recover back the proceeds of the discount. Fisher v. United States National
Bank (C. C. A.), 64 Fed. Eep., 710.
36. The fact that an insolvent national bank has gone into voluntary liquidation does not absolve it from liability to be garnished. Birmingham
National Bank v. Mayer (Ala.), 16 So., 520.
37. Rev. Stat., sec. 5242, which invalidates all transfers of the notes, bonds, or
bills of exchange of a national bank after the commission of an act of
insolvency with a view to the preference of one creditor over another,
does not prohibit a bank which has in good faith accepted the draft of a
national bank the day before the latter's insolvency, and afterwards paid
the same, from applying the proceeds of collections made by it on paper in
its hands belonging to the insolvent bank to the payment of the draft,
since its lien on such collection runs from the date of the acceptance. In
re Armstrong, 41 Fed. Eep., 381.
38. Sections 5151 and 5239, Revised Statutes, exclude banking associations from
none of the remedies for the collection of debts, claims, and dues for the
bank or its creditors provided by the general rules and principles of law
and equity, but they impose upon shareholders and directors additional
liabilities and subject them to proper remedies for their enforcement.
Hayden v. Thompson, 67 Fed. Eep., 273".
39. In the State of Nebraska a suit to recover from an innocent shareholder of
an insolvent national bank an unearned dividend which he has received
in good faith without notice of any fact that would lead a reasonably
prudent man to learn that the dividend was not earned is barred in four
years from its receipt. Ib.
40. The fact that trustees holding lands in trust for a national bank formally
and regularly execute a deed thereof to a third party itself raises a presumption that the deed was made pursuant to a regular resolution of the
bank's board of directors, and the deed must be held sufficient to convey
the legal title where there is nothing to rebut the presumption. Butler
et al. v. Cockrill, 73 Fed. Eep., 945.
41. A bank for which certain mill property was held in trust caused the same to
be conveyed to a corporation, organized among its own officers and directors, with a view to loaning to such corporation money wherewith to
repair and operate the mills and make them salable. The bank directors
who subscribed for stock in the mill corporation had a secret agreement
with the bank that, after a sale of the property was effected, the proceeds
should be first applied to repay the amount of their subscriptions. The
money was loaned accordingly, the bank taking the mill company's notes,
and discounting them with innocent third parties. No sale was effected,
and the bank and mill company failed, and all their property went into
the hands of the bank's receiver. Thereafter the mill company gave to
such subscribers its own notes, secured by mortgage, for the amounts paid
on the stock, and the notes were then transferred to alleged innocent purchasers. Held, that these notes were without consideration, that this was
a futile attempt to divert the property of an insolvent corporation from
its creditors to its stockholders, and that the proceeds of the receiver's
sale of the mill property must be equally distributed among the holders
of the notes given by it to the bank for the borrowed money, the receiver




116

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
taking for the bank's creditors the proportion applicable to such of the
notes as were retained by the bank. Tb.
42. A depositor who receives an ordinary certificate of deposit, and whose
money is mingled with the other funds of a bank, is not entitled, on the
insolvency of the bank, to any preference over other creditors, even
though the banker promised him to keep his money separate from the
other funds. Bay or v. American Trust and Savings Bank {III. Sup.), 41
N. E., 622.
43. On the insolvency of a bank which has collected notes sent to it for collection, and failed to remit the proceeds, a trust will be imposed on the
assets of the bank in favor of the person sending them, as against the general creditors of the bank, if it is proven that the moneys collected were
deposited in the bank and commingled with other funds of the bank, or if
they went into property represented by the assets in the hands of the
assignee of the bank. Winstandley v. Second National Bank (Ind. App.),
41 N. E., 956.
44. The California " Bank commissioners' act" (St. 1877-78, p. 740, as amended
by St. 1886-87, p. 90) provides in section 11 that if the commissioners shall
find that any bank has violated its charter or law, or is conducting business in an unsafe manner, they shall require it to discontinue such practices; and in case of refusal, or whenever it shall appear to the commissioners unsafe for the bank to continue business, they shall notify the
attorney-general, who may commence suit to enjoin the transaction of business by such bank; and, upon the hearing of such suit, the court may
issue the injunction, and direct the commissioners to take such proceedings against the bank as may be decided on by its creditors. The section
also empowers the commissioners to supervise the affairs of banks in process of liquidation, limit the number of their officers and employees, and
requires reports to the commissioners by such banks. Held, that a court
in which proceedings are instituted by the attorney-general against a
bank pursuant to such statute has no jurisdiction to appoint a receiver of
the property of the bank in such proceedings, though the bank commissioners and the creditors of the bank consent, and though there are provisions in the Code of Civil Procedure authorizing the appointment of
receivers in other proceedings. Murray v, American Surety Co. of New York
(C. C. A.), 70 Fed. Rep., 341.
45. Where a plaintiff sent a note and mortgage to a bank with directions to col
lect the same and "forward draft" for the amount, less its collection fee
the money received by the bank in payment thereof was not impressed
with a trust in plaintiff's favor so as to entitle her to recover the whole
amount as a preferred claim from a receiver appointed for the bank after
the collection was made, though said bank was insolvent at the time it
received said note and mortgage, and though payment was made by the
mortgagor with a check drawn on the bank. Sayles v. Cox (Tenn.), 32
S. W.,626.
46. Where, between suspension by a bank and commencement of an action for
and resulting in its dissolution and appointment of a receiver, one liable
to it as indorser on notes takes assignments of deposit accounts, he may
offset them against his liability, in an action by the receiver, unless it be
shown that the bank was insolvent at the time of the assignment of the
accounts; and this is not shown by the recital in an agreed statement of
facts that, at the commencement of the action to dissolve, the bank " was
insolvent, having suspended its business" on a certain day. Biggins v.
Worthington (Sup.), 35 N. Y. 8., 815.
47. Where a check payable to two persons as Government officers is indorsed
by one of them for both, by indorsement showing their official character,
and deposited in a bank to be credited to his individual account, and
thereby becomes mingled with the funds of the bank, the fact that the
check was intrusted to them as officers can not be urged by the payees to
charge the proceeds as a trust fund in the hands of an assignee in insolvency of the bank, in an action to which the Government is not party,
and in which the authority of the depositing payee to act for his copayee
is not denied. Meldrum v. Henderson (Colo. App.)f 43 P., 148.
48. A creditor of an insolvent national bank is entitled to prove the whole
amount of the ((•laims against it held by him, without reference to the
collateral held to secure such claims. Armstrong v. Bank, 8 C. C. A., 155;
59 Fed. Rep., 372; 16 U. S. App., 465, followed. Merrill v. National Bank of
Jacksonville, 75 Fed. Bep., 148; 173 U. S. Rep., 131.



REPORT OF THE COMPTROLLER OF THE CURRENCY.
INSOLVENT BANKS.

117

See Preferred claims; Receiver—Continued.

49. It seems that an accounting of the assets which have come to the hands of
the receiver in an insolvent national bank can not be decreed in a suit to
which the Comptroller of the Currency is not a party. Ib.
50. In a suit against a receiver of an insolvent national bank to establish the
claim of a creditor and his right to a dividend, the decree should not
direct the payment of a dividend by the receiver, since the assets of such
bank are, under the statutes, entirely within the control and disposition
of the Comptroller of the Currency, but such decree should direct that
the claim of the creditor, as established, be certified to the Comptroller,
to be paid in due course of administration. Ib.
51. Where a railroad company is in the hands of a receiver, though at the
instance of the holders of a mortgage, the court has no power to appropriate the corpus of the property to the payment of claims for operating
expenses in preference to the prior mortgage debts, in the absence of a
statute, at the time the mortgage was executed, giving such claims a prior
lien on the corpus of the property. Farmers and Merchants' National Bank
v, Waco Electric Railway and Light Co. {Tex. Civ. App.)f36 S. W., 131; Metropolitan Trust Co. v. Farmers and Merchants7 National Bank, ib.
52. While the N. Bank was in embarrassed circumstances, plaintiff was induced,
by the fraudulent misrepresentations of its cashier, to subscribe, in May,
1890, for 62 shares of a proposed increase of its capital stock, and to pay
in a large sum of money therefor. In the following November the bank
failed, and the plaintiff, who lived at a distance, in another State,
receiving then his first intimation that anything was wrong, proceeded
to make inquiries, and, as a result, instituted proceedings before the
Comptroller of the Currency to have the stock standing in his name
declared void, and himself not a stockholder. These proceedings failing, he took steps in May, 1891, to have a bill filed to rescind his subscription. At the request, however, of parties who were trying to reorganize the bank, he consented to withdraw such suit, and surrender his
stock to be canceled, upon an express agreement that it should be without prejudice to his right to sue the bank for the fraud by which he had
been induced to subscribe and pay his money therefor Plaintiff did
not participate in the reoganization, and consistently maintained that
he was not a stockholder, and that the bank was liable to him for the
money paid. Upon the reorganization the creditors of the bank accepted
in settlement a payment in cash and certain certificates of indebtedness.
In November, 1891, plaintiff brought this action against the bank to
recover the money paid by him, as a deposit. In December, 1892, the
bank failed again. Held, that the occurrence of the insolvency of the
bank before the commencement of plaiutifFs action did not preclude
him from rescinding his subscription and recovering back the money
paid for his stock. Newton National Bank v. Newbegin (C. C. A.), 74 Fed.
Rep., 135.
53. In an action for an alleged balance, it appeared that defendants McG. and
W. illegally undertook to corner the lard market; that McG. was a partner in the firm through whom the transactions were carried on, but that
W. was not; that the deal ruined the firm, and that the receiver for it
undertook to effect a settlement; that defendants were personally liable
for a part of the indebtedness by their indorsements on the firm's notes,
and that at the receiver's solicitation they agreed to contribute a certain
sum each on consideration of a release from all creditors; that the receiver
thereupon submitted the firm's proposition to pay 50 per cent of the indebtedness, in full settlement of all unsecured claims, stating that the affairs
of the firm were in great confusion and that unless the compromise were
effected the matter would "only terminate after long, vexatious, and fruitless litigation ;" that all of the creditors accepted the payment and signed
a release in full. Held, that the transaction was a valid compromise.
(Winslow and Pinney, JJ., dissenting.) Continental National Bank v.
McGeoch (Wis.), 66 N W., 606.
54. Where, on the issue of a fraudulent preference of a creditor, the verdict and
findings cover all the material, controverted, and issuable facts, a party
can not urge, on appeal, certain transactions in evidence from which a
preference might have been found, where there was no request for the
trial court to submit them to the jury for determination. Ib.
55. Where a corporation borrowed money, and directed its officers to pay over
the same to another creditor, the authority of the officers to pay over said
money terminated by the appointment of a receiver for said corporation.
First National Bank v. Dovetail Body and Gear Company (Jnd. Sup.), 42
 JV. E., 924,


118

REPORT OF THE COMPTROLLER OF THE CURRENCY,

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
56. Remittances made by a national bank to its correspondents, in the ordinary
course of business, before the commission of any act of insolvency, are
not void under Rev. St., § 5242, though the bank is in fact insolvent at
the time, and is closed by the bank examiner before the remittances are
actually received by the correspondent banks. Hayden v. Chemical National
Bank, 80 Fed. Bep., 587; 174 U. S. Bep., 610.
57. The Third National Bank in New York was the correspondent of the Albion
bank, a country bank. W., during part of the time in which the transactions in controversy took place, was cashier, and during the remainder
was president of the Albion bank. During all the time W. practically
managed that bank, and his codirectors and other officers had little or no
oversight of its affairs. He was engaged in stock speculations on his
own account in New York, and drew from time to time for his own purposes in favor of K. & Co., his brokers, on the bank balance with the
Third National Bank. K. & Co. from time to time returned to that bank
sums to be credited to the Albion bank. The latter bank eventually
became insolvent, being ruined by fraudulent operations of W., who disappeared, and was put in the hands of a receiver, who brought suit
against K. & Co. to recover fche sums so paid to them by W. out of the
balance to the credit of the bank with the Third National. K. &. Co.
claimed to offset the return payments made by them to the Third
National, but the trial court ruled that they were not entitled to do it,
and no question in respect of them was submitted to the jury. Held, that
the defendants were entitled to have it submitted to the jury whether the
other directors and officers of the Albion bank might not in the exercise
of proper, and reasonable care have ascertained that these moneys had
been deposited to the credit of the Albion bank, and whether they would
or would not have accepted such deposits as the return of the moneys to
the bank. Kissam v. Anderson, 145 U. S., 435.
58. The time of commencement of judicial proceedings to avoid a statute bar may
be shown by parol. Witters, Beceiver, v. Sowles and others, assignees, 32Fed.
Bep., 765.
59. A case will not be reopened for the introduction of newly discovered evidence
where such evidence is merely cumulative and its sources were well known
to the parties at the first hearing. Ib.
60. Proceedings upon a decree will be stayed for the purpose of allowing.partiea
to take and file testimony newly discovered, when such testimony appears
to be material and its materiality was not so direct and apparent that the
failure to discover and produce it on the first hearing amounted to
laches. Ib.
61. Defendant was heavily indebted to the bank of which he was cashier, and
within four months of the filing of a petition by a creditor to have him
declared an insolvent (under Rev. Laws Vt., sec. 1870) transferred certain
securities to the bank with a view to preferring it over his other creditors.
Held, that knowledge on the part of defendant of his insolvency affected
the bank of which he was cashier with such knowledge and made the transfer of such securities void, under Rev. Laws Vt., sec. 1860, which provides
that a conveyance made by an insolvent, or one in contemplation of insolvency, within four months before the filing of a petition of insolvency by
or against him, with a view to giving a preference to certain of his creditors, the latter having knowledge of his insolvency, is void. Witters v.
Sowles and others, 32 Fed. Bep., 762.
62. Other securities were deposited by the cashier with his bank and an equal
amount of his own paper withdrawn. Held, that title to the securities
immediately vested in the bank, and, such deposit taking place more than
four months before the filing of the petition in insolvency, the transfer
did not come within the purview of the statute. Ib.
63. Defendant, being indebted to the bank of which he was cashier, transferred
to it on the books of another bank the stock which he held in the latter,
but did not deposit the certificates for such stock in his own bank and
take up his paper held by it until some time later. Held, that the title of
defendant's bank to the stock transferred dated from the deposit of the
certificates with it and not from the transfer on the books of the other
bank. Ib.
64. A national-bank examiner is not an officer or agent of the bank and has no
authority as such to act for the bank and can not bind it by any act done
in its behalf. Ib.
65. In an action against the ureceiver of a bank for dividends upon a debt for a
deposit in the name of S., trustee/' the mere general statement of S. that




REPORT OP THE COMPTROLLER OF THE CURRENCY.

119

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
the money deposited was his daughter's, in connection with evidence that
she owned property of which he had the management and from which the
fund deposited might have been derived, it not being shown that it was
derived therefrom, is not sufficient to enable the daughter to recover.
Sowles el al. v. Witters, 35 Fed. Rep., 463.
66. Where a bank, knowing its insolvency, receives from a customer as cash a
check on a foreign bank and sends the paper to its correspondent, who
credits the check to it as cash, and subsequently pays the proceeds thereof
to a receiver appointed for it in the meantime, it "is presumed, in an action
by the depositor against the receiver to recover the proceeds, that the
correspondent credited the check to the bank before its failure. Friberg
v. Cox (Tenn. Sup.), 37 S. W., 283.
67. The burden is on one who transferred a draft to a bank prior to its failure,
and who seeks to follow and reclaim the proceeds as against a receiver,
to show that they were not received and mingled with the other funds
of the bank before the failure; and, where they were placed to its credit
by a correspondent on the same day the receiver was appointed, in the
absence of further proof as to the exact time it will be presumed that
the credit was given before the receiver was appointed. Klepper v. Cox
(Tenn. Sup.), 37 S. W., 284.
68. Money received by a bank and entered to the depositor's general credit as
cash can not be reclaimed after the insolvency of the bank on the ground
that the bank officials had knowledge of the insolvency when they
received the deposit, there being no means of identifying and separating
it from the funds on hand when the receiver took charge. Bruner v. First
National Bank {Tenn. Sup.), 37 S. W., 286.
69. Where a bank, knowing its insolvency, receives a check, which it credits to
the depositor as cash, and then sends to a correspondent, who, after the
failure of said bank, but without notice thereof, credits the check to it
as cash, and subsequently pays over the proceeds to the receiver, the
depositor may recover such proceeds as a preferred claim. Ib.
70. The president of a bank, having embezzled funds of the bank on deposit
with its reserve agent, replaced such funds with money borrowed by him
on the bank ; s note without the director's knowledge, and such borrowed
money was thereafter drawn out to pay the bank's lawful debts. Held,
that the bank having received the benefit of the loan through its president, it was affected with his knowledge of the loan, and hence was liable
to the lender as for money had and received to its use. Ditty v. Dominion
National Bank of Bristol, Va. (C. C. A.), 75 Fed. Eep., 769.
71. The president of a bank has authority by virtue of his office to make a valid
assignment of a judgment in favor of the bank. Guernsey v. Black Diamond Coal and Mining Co. (Iowa), 68 N. W., 777.
72. Where a depositor in a bank obtains from it two drafts upon another bank,
paying therefor by checks against his deposit, the relation between the
bank and the depositor with respect to such drafts remains that of debtor
and creditor, and is not changed to a fiduciary relation, entitling the
depositor, upon the bank becoming insolvent before the drafts are paid, to
have the assets in the hands of its receiver applied by preference to the
payment of such drafts in full. Jewett et al. v. Yardley, 81 Fed. Rep., 920.
73. A stockholder in a national bank is liable to the receiver thereof on a note
given to the bank for capital stock. Hepburn v. Kincannon (Miss.), 21 So.,
569.
INTEREST : See Usury; Insolvent banks.
1. The provision in sec. 30 of the act of 1864, " that where, by the law of any
State, a different rate is limited for banks of issue organized under State
laws, the rate so limited shall be allowed for associations organized in
any such State under the act," is enabling, and not restrictive; and
therefore a national banking association in any State may stipulate for
as high a rate of interest as by the laws of such State a natural person
may, although State banks of issue are restricted to a less rate. Tiffany
v. National Bank of the State of Missouri, 18 Wall., 409.
2. Bank may take the rate of interest allowed by the State to natural persons
generally, and a higher rate where State banks of issue can take it. Ib.
3. But it is not to be inferred, from Tiffany v. National Bank of Missouri, that
whatever by the laws of the State is lawful for natural persons in acquiring title to negotiable paper by discount is lawful for national banks.
National bank v. Johnson, 104 U. 8., 27 U



120

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INTEREST. See Usury; Insolvent banks—Continued.
4. May charge rate of interest allowed to natural persons in the State or Territory where bank is located, but can not take more, even on discount of
paper for third party, without it being usury. Ib.
5. The interest which a national banking association may charge is limited to
the rate allowed to the banks of the State generally; and the fact that
a few of the State banks are specially authorized to take a higher rate is
not a warrant for a national banking association to do so. Duncan v.
First National Bank of Mount Pleasant, 11 Bank Mag., 787; 1 N. B. C,
360; First National Bank v. Gruber, 87 Penn, St., 468.
6. Where the State law does not limit the rate of interest which may be
charged on loans to corporations, a national banking association located
in that State can not charge more than 7 per cent interest on such leans.
In re Wild, 11 Blatch., 243.
7. Where by the statutes of the State parties are authorized to contract for any
rate of interest, national banking associations in that State may likewise
contract for any rate, and are not limited to 7 per cent. Hines v. Marmolejo, 60 Cal., 229.

8. Under Rev. St., sec. 5197, authorizing national banks to charge any rate of
interest allowed by the law of the State wherein such bank is organized,
and the statute fixing a legal rate of interest, a national bank in Colorado
may charge interest at any agreed rate. Rockwell v. Farmers' National
Bank, 36P.,

90S.

9. As act of 1873 (70 Ohio Laws, 178) repeals the statute fixing the rate of
interest for banks of issue, a national bank may charge interest at 8 per
cent under Rev. St., sec. 3181. La Bow v. First National Bank, 37 N. E., 11.
10. The decisions of the United States Supreme Court teach that the statute
referred to is to be liberally construed in favor of national banks, and
even when the language of the statute would restrict them to a less rate
of interest than is allowed to individuals the intendment of the law must
be presumed to have been otherwise. Tiffany v. National Bank of Missouri held that the intent of the law was to put national banks on an
equal footing with State banks; to allow the State banks to charge any
amount of interest and national banks only 8 per cent would violate that
intention; to say that national banks could only charge 7 per cent would
be to say that the State had prescribed no rate of interest. National Bank
of Jefferson v. Bruhn $ Williams, 64 Tex., 571.
11. Where drafts are from time to time deposited in a bank, some of them being
payable on demand and some on time, an agreement between the bank
and the depositor that credit shall be given for such drafts on the day
after their deposit, the depositor being charged the full legal rate for any
overdraft, does not constitute usury when such agreement is made in good
faith in order to save involved calculations. Timberlake et al. v. First
National Bank, 43 Fed. Hep., 231.
12. Charging a depositor, by agreement, at the end of each month, with interest
at the full legal rate on his overdraft, and adding such charge to the overdraft, does not constitute usury. Ib.
13. Under Code Miss., 1880, which only allows interest on the amount of money
actually lent, a national bank in that State can not deduct interest in
advance. Ib.
14. Under the national banking act, any national bank in Pennsylvania can
charge and take the same rate of interest as any State bank of issue is
authorized to charge. First National Bank of Mount Pleasant v. Tinstman,
36 Legal Intelligencer, 228; 2 N. B. C, 182.
15. Interest on dividends should not be allowed in favor of one who voluntarily
delayed presenting his claim until long after the dividends were declared,
although the delay was due to a mistaken belief that he had a right to
pay his claim in full from collaterals in his hands. Chemical National Bank
v. Armstrong, 59 Fed. Rep., 372.
16. The refusal of a creditor to accept the receiver's offer to allow part of a
claim without prejudice to a suit for allowance of the remainder, or to
the receiver's right to still further reduce the claim if the court should
hold such reduction proper bars the creditor's right to interest on subsequent dividends on the part offered to be allowed, although it is subsequently adjudged that the whole of his claim should have been allowed;
but he is entitled to interest on the dividends on the part rejected. Ib.
17. In case of book accounts in favor of depositors interest begins to run against
an association in liquidation from the date of the suspension of business.
Richmond v. Irons, 121 U. S., 27.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

121

INTEREST. See Usury; Insolvent banks—Continued.
18. There is an established rate of interest in Washington (10 per cent), and the
fact that by special contracts different rates may be collected does not
affect the question, and therefore a national bank may charge that rate.
Yakima National Bank v. Knipe, 33 P., 834; 6 Wash., 348.
19. The fact that there are several entries in the books of a bank and in the pass
book of a depositor of allowance of interest on his account is not sufficient to prove a contract by the bank to pay interest while the deposit
should remain, where it is proven that after the entries were made the
officers of the bank, on several occasions, told the depositor that it was
against their rules to pay interest, and that they would not pay it, and that
he apparently acquiesced. McLoghlin v. National Mohatvk Valley Bank,
189 N Y. St., 514; 34 N. E. 1095.
20. Rev. St. U. S., sec. 5197, authorizes national banks to take interest at the
rate allowed in the State where the bank is located, and, when no rate is
fixed by the laws of such State, they are authorized to take interest at a
rate not exceeding 7 per cent. Held, that since 1 Hill's Code, sec. 2796,
and Sess. Laws 1893, page 29, allow individuals and State banks to take
any rate of interest agreed to in writing by the parties to the contract,
national banks have the same privilege. Wolverton v. Exchange National
Bank ( Wash.), 39 P., 247.
21. A stockholder in a bank is not entitled to interest from the bank, either on
ordinary dividends declared or on money due him from a reduction of
capital stock, for a period during which the bank was prevented from
paying him the same by attachments of his stock in suits of other parties,
though the money thus belonging to him was during such time mingled
by the bank with its general assets, the bank being ready and willing to
pay over the same but for the attachments. Mustard v. Union National
Bank, 29 A., 977; 86 Me., 177.
22. An order directing payment of interest by the receiver of a national bank
from date of judicial demand is erroneous, as funds coming into the hands
of a receiver are turned over to the Comptroller, and could not earn
interest, and any payment of interest would necessarily be taken from
some other trust fund; and this particularly where the involved circumstances of the case made it impossible to pay over the amount without
investigation and an accounting. Richardson v. Louisville Banking Co.,
94 Fed. Rep., 442.
23. No interest is recoverable against the fund in the hands of the receiver of
an insolvent national bank on recovery in a suit to establish a claim
against the bank, made necessary solely by the disallowance of the claim
by the receiver. Merchants1 Nat. Bank v. School Dist. No. 8, of Meagher
County, Mont., 94 Fed. Rep., 705.
24. In a suit against the receiver of a national bank for money loaned the bank
while it was a going concern, it was error to permit plaintiff to recover
interest on the loan after the bank's suspension and the appointment of a
receiver, since debts of an insolvent bank must be liquidated by the
receiver as of the date when insolvency supervenes, and the amount of all
debts computed as of that day. American Nat. Bank v. Williams, 101 Fed.
Rep., 943.
25. In the provisions in Rev. Stat., § 5197, that when no rate of interest "is fixed
by the laws of the State or Territory, or district," in which a bank is situated it u may take, receive, reserve, or charge a rate not exceeding seven per
cent," the words "fixed by the laws" must be construed to mean " allowed
by the laws." Daggs v. Phoenix National Bank, 177 U. S. Rep., 549.
JURISDICTION : See Actions.

1. In an action against a national bank in a circuit court of the United States,
if all the parties are citizens of the district in which the bank is situated,
and the action does not come under sec. 5209 or sec. 5239, Rev. St., the
circuit court has no jurisdiction. Whitlemoi*ev. Amoskeag National Bank,
134 U. S., 527.
2. The Federal courts have jurisdiction of an action between a national bank
located in one State and a citizen of another State. First National Bank v.
Forest, 40 Fed. Rep., 705.
3. State courts have jurisdiction of suits by and against national banking
associations. Bank of Bethel v. Pahquioque Bank, 14 Wall., 383; Ordwayv.
Central National Bank, 47 Md., 217, and Claflin v. Houseman, 93 U. S., 130.
4. Where a national banking association is sued in a State court, the suit must
be brought in the city or county in which the bank is located. Cadle v.
Tracy, 11 Blatch., 101.




122

REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

5. But in a State where the holder may sue without respect to the ownership,
an association may bring suit upon paper so acquired. National Pemberton Bank v. Porter, 125 Mass., 333; Atlas National Bank v. Savery, 127
Mass., 75.
6. Tho words of restriction to the place where said association is situated apply
to the county and municipal courts, and not to the State courts. In the State
courts of general jurisdiction a national banking association can be sued
whenever an individual can be for the same cause. Talmage v. Third
National Bank, 27 Hun., 61.
7. A State court can entertain an action brought to recover of a national banking association the penalty for taking usury. Ordway v. The Central National Bank, 4.7 Md.,217; Hade v. McVay, 31 Ohio St.,231; Bletzx. Columbia
National Bank, 87 Penn. St., 87.
8. State courts have no jurisdiction of the case of an embezzlement of the funds
of the association by one of its officers. Commonwealth v. Felton, 101 Mass.,
204; Commonwealth ex rel. Torrey v. Ketner, 92, Penn. St., 372.
9. The defense of usury may^ be set up in action brought in a State court, National Bank of Winterset v. Eyre, 52 Iowa, 114.
10. A national banking association is, for jurisdictional purposes, a citizen of the
State in which it is located. Davis v. Cook, 9 Nev., 134.
11. The offense of making false entries in the books of a bank, for which an officer of the bank is liable to punishment under sec. 5209, Rev. St., since it is
not a crime of which the State courts have concurrent jurisdiction, under
sec. 5328, Rev. St., is exclusively cognizable by the Federal courts. In re
Eno, 54 Fed. Rep., 669.
12. Under the provisions of the act of August 13,1888, national banks are deemed
to be, for jurisdictional purposes, citizens of the State wherein they are
located, and they no longer possess the right of removal on the ground
that they are Federal corporations. Burnham et al. v. First National Bank
of Leoti, 53 Fed. Bep., 163.
13. An action for money against a national bank whose corporate existence is
admitted is not a suit arising under the laws of the United States.
Ulster County Savings Institution v. Fourth National Bank, 8 N. Y.t 162.
14. The provision that the Federal courts shall not have jurisdiction of an action
on a promissory note or other chose in action by an assignee thereof, unless
the action might have been maintained in such courts if no assignment
or transfer had been made (act August 13, 1888), does not apply to the
indorsement and transfer of the payee of notes which were made to him
merely that he might, as agent of the maker, raise money for it by negotiating them with third persons. Wachusett National Bank v. Sioux City
Stove Works, 56 Fed. Rep., 321.
15. A suit on the official bond of the cashier of a national bank, conditioned for
a faithful performance of the duties thereof, "according to law and the
by-laws" of the bank, involves a Federal question and is maintainable
in a Federal court irrespective of the citizenship of the parties. Walker
et al. v. Windsor National Bank, 56 Fed. Rep., 76.
16. In a suit which is properly brought in a Federal court, because it involves
a Federal question, the court has full jurisdiction of the defendant, who,
though a resident of another district, waives his personal privilege of
being sued in his district by voluntarily appearing. 1b.
17. The exemption of national banks from suits in State courts in other than
their own county or city, by act of February 18,1875 (18 St., 316, chap. 80),
was a persona] privilege which could be waived by appearing to such
suit and not claiming the immunity. First National Bank v. Morgan, 132
U. S., 141.
18. The provision in act of July 12,1882 (22 St., 163, chap. 290, sec. 4), respecting
suits by or against national banks, refers only to suits brought after the
passage of that act. Ib.
19. This court has jurisdiction to review a judgment in State courts involving
the question whether a national bank is exempted from liability to
account for bonds purchased by it on condition of selling back on demand.
Logan County National Bank v. Townsend, 139 U. S., 67.
20. When transaction of transfer of national-bank shares does not present a
case arising under national banking act, no Federal question is involved.
Le Sassier v. Kennedy, 123 U. S., 521.
21. State courts have no jurisdiction of actions to recover penalties imposed by
the national banking act. Missouri River Telegraph Company v. First
National Bank of Sioux City, 74 III., 217; 1 N. B. C, 401.
22. When a State bank acting under a statute of the State calls in its circula tion issued under State laws and becomes a national bank under the laws


REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

123

See Actions—Continued.

of the United States, and a judgment is recovered in a court of a State
against the national bank upon such outstanding circulation, the defense
of the State statute of limitations having been set up, a Federal que§tion
arises which may give this court jurisdiction in error. Metropolitan
National Bank v. Claggett, 141 U. 8., 520.
23. The act of Congress of July 12, 1882, repealing inconsistent acts and providing that the jurisdiction of suits in which a national bank should be
a party should be the same as if it were a State bank at the same place,
prevents the removal of a cause in which a national bank is a party from
a State to a Federal court on the mere ground that it is a national bank.
Leather Manufacturers1 National Bank v. Cooper, jr., 120 U. S., 778; 3
N. B. C, 208.
24. Under St. U. S.7 1888, chap. 866, sec. 4, providing that in actions against
national banks the Federal courts " shall not have jurisdiction other than
such as they would have in cases between individual citizens of the same
State," an action to compel the directors of a national bank to declare a
dividend may be maintained in a State court. Hiscock v. Lacy {Sup.), 30
N. Y. S., 860; 9 Misc. Rep., 578.
25. The object of this proviso was to deprive the United States courts of jurisdiction of suits by or against national banking associations in all cases
where banks organized under State laws could not likewise sue or be sued
in such courts. Ib.
26. But the proviso does not affect the right of the receiver of an insolvent association to sue in a Federal court. Hendee v. Connecticut and P. B. B. Co.,
26 Fed. Bep., 677.
27. Nor would the act of July 12, 1882, take from the circuit court jurisdiction
of a suit brought against a director for negligent performance of his duties ;
for, as such suits rest upon the requirements of the United States laws
and by-laws made pursuant thereto, it is a case arising under the laws of
the United States. Witters v. Foster, 28 Fed. Rep., 737.
28. An action between a receiver of an insolvent national bank and a depositor
does not present a Federal question under Rev. St., sec. 5242, avoiding
preferences to creditors of such an insolvent bank. Tehan v. First National
Bank et al., 39 Fed. Bep., 577.
29. A receiver of an insolvent national bank is an officer of the United States
within the meaning of sec. 563, Rev. St., which gives the district courts
jurisdiction of " all suits at common law brought by the United States, or
any officer thereof authorized by law to sue." Stephens v. Bernays, 41 Fed.
Bep., 401.
30. The United States district court has jurisdiction of an action at law brought
by the receiver of a national bank to recover an assessment made upon a
stockholder, and the action may be maintained in such event against the
executor of a deceased stockholder. Ib.
31. The State courts have jurisdiction of an action brought by a shareholder on
behalf of himself and other shareholders to recover of the directors of an
insolvent association damages for injuries resulting from their negligence
and misconduct. Brinckerhoffv. Bostwick, 88 N. Y.,52.
32. A State court has no power to make an order directing the receiver of a
national bank who has been appointed by the Comptroller of the Currency
to pay a judgment obtained against the bank before the receiver was
appointed. Ocean National Bank v. Carll, 7 Run., 237.
33. Neither the Comptroller nor the receiver, by putting in an appearance to a
suit, can subject the United States to the jurisdiction of a court. Case v.
Terrell, 11 Wall., 199.
34. The Federal courts have jurisdiction of suits by receivers of national banks
to collect the assets thereof without regard to the citizenship of the
plaintiff. Fisher v. Yoder, 53 Fed. Bep., 565.
35. A Federal court is not deprived of jurisdiction otherwise vested in it of a
suit against the executors of an estate by the fact that the estate is in the
possession of a State probate court for purposes of administration, and the
Federal court has jurisdiction to adjudge whether a liability exists, but
can not issue execution to enforce the same. Wickham v. Hull et al., 60 Fed.
Bep., 326.
36. A suit against the receiver of a national bank to compel him to pay out of the
funds in his hands as receiver moneys claimed by the complainant in a suit
arising under the laws of the United States, and can be removed into the
Federal court. Hot Springs Independent School District, etc., v. First National
Bank of Hot Springs, 61 Fed. Bep., 417.
37. The tenth subdivision of sec. 629, Rev. St., which confers upon the circuitcourt of the United States jurisdiction of all suits by or against any national

i24

REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

banking association established in the district for which the court is held,
has been repealed by the proviso to sec. 4 of the act of July 12, 1882.
National Bank of Jefferson v. Fare et al., 25 Fed. Bep., 200.
38. A Federal court has jurisdiction of an action brought by the receivers of an
inso]vent national bank in the name of the bank, to realize its assets, irre
spective of the citizenship of the parties. Linn County National Bank v.
Crawford (C. C), 69 F., 532.
39. A suit against a receiver appointed by a Federal court for a cause arising out
of his management of the property committed to his charge is one arising
under the laws of the United States and may be removed from a State to a
Federal court without regard to the citizenship of the parties or the nature
of the controversy. Jewett v. Whitcomb et al., 69 Fed. Bep., 418.
40. It seems that where a State statute creates a right in favor of creditors, and
provides a remedy for the enforcement thereof, this remedy, whether at
law or in equity, must be adopted by the Federal courts. If the State
statute does not create the right, but only redeclares a right existing in
the absence of statute, then the form of remedy in the Federal courts is
determined by principles which differentiate legal and equitable jurisdiction. First National Bank of Sioux City v. Peavy, 69 Fed. Bep., 455.
41. The California "bank commissioners' act" (St. 1877-78, p. 740, as amended by
St. 1886-87, p. 90) provides in section 11 that if the commissioners shall
find that any bank has violated its charter or law, or is conducting business in an unsafe manner, they shall require it to discontinue such practices; and in case of refusal, or whenever it shall appear to the
commissioners unsafe for the bank to continue business, they shall notify
the attorney-general, who may commence suit to enjoin the transaction of
business by such bank; and, upon the hearing of such suit, the court may
issue the injunction and direct the commissioners to take such proceedings
against the bank as may be decided on by its creditors. The section also
empowers the commissioners to supervise the affairs of banks in process
of liquidation, limit the number of their officers and employees, and
require reports to the commissioners by such banks. Held, that a court in
which proceedings are instituted by the attorney-general against a bank.
pursuant to such statute, has no jurisdiction to appoint a receiver of the
property of the bank in such proceedings, though the bank commissioners
and the creditors of the bank consent, and though there are provisions in
the Code of Civil Procedure authorizing the appointment of receivers in
other proceedings. Murray v. American Surety Co. of New York, 70 Fed.
Bep., 341.
42. The exercise by a court, in purely statutory proceedings, of a power not
authorized by the statute, is null and void, and may be collaterally
attacked. Ib.
43. The Federal courts have jurisdiction of actions brought by the receiver of an
insolvent national bank to realize its assets, irrespective of the citizenship
of the parties; and it is immaterial to such jurisdiction whether the
action is brought in the receiver's own name, as receiver, or by him in the
name of the bank. Linn County National Bank v. Crawford, 69 Fed. Bep., 532.
44. A suit brought in a State court can be removed to a Federal court on the
grouud of diverse citizenship only when the defendant is a nonresident of
the State in which it is brought. Thurber v. Miller, 14 C. C. A., 432, 67 Fed.
Bep., 371, followed. Wichita National Bank et al. v. Smith, 72 Fed. Rep., 568.
45. A national bank can not remove a suit upon the ground that it is a Federal
corporation. Ib.
46. A cause can not be removed upon the ground that it involves a Federal
question unless that fact appears from the plaintiff's complaint. Ib.
47. Where a judgment recovered in a State court against a county is assigned to
a citizen of another State, the assignee may sue thereon in the proper
Federal court, although the original judgment is still in force. The
assignee has a right to have judicially determined its right to enforce
payment of the indebtedness, and the action is not to be considered as
brought merely to vex defendant. First National Bank of Buchanan County
v. Deuel County, 74 Fed. Bep., 373.
48. The United States circuit court has jurisdiction of a suit brought by the
statutory receiver of a national bank, without reference to the citizenship
of the parties. Short et al. v. Hepburn, 75 Fed. Bep., 113.
49. It is within the discretion of the court to have the jury retire during arguments as to the admissibility of evidence. Birmingham National Bank v.
Bradley (Ala.), 19 So., 791.
50. The fact that the State supreme court, in affirming a judgment, decided
 against an immunity from liability expressly claimed under the laws of the


REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

51.
52.
53.

54.

55.

56.
57.

58.
59.

60.

61.
62.
63.

64.

65.

66.

125

See Actions—Continued.

United States, does not give jurisdiction to the Federal Supreme Court, if
such immunity was not claimed in the trial court. Chemical National Bank
v. City Bank, 16 S. Ct., 417.
A receiver of a national bank, appointed by the Comptroller of the Currency,
is an officer of the United States, and entitled to sue in the Federal courts,
by virtue of Rev. St., § 629. Thompson v. Pool (C. C), 70 F., 725.
The circuit court of appeals has no jurisdiction to review a judgment rendered before act March 3, 1891, creating that court, was passed. United
States v. National Exchange Bank (C. C. A.), 53 F., 9.
Held, that the plaintiff, a national bank, had the right to bring suit, in the
United States circuit court of the district where the bank was located,
upon two notes indorsed to it by the payee, who was also a citizen of the
State and resident of the district. Commercial Bank of Cleveland v. Simmons, 1 N. B. C, 294.
That a national bank does not sue by virtue of any right conferred by the
judiciary act, but by virtue of the right conferred upon it by the act of
1864, authorizing and creating it, and which constitutes its charter; that,
having no right to sue under the judiciary act, the limitation in the 11th
section as to suits on indorsed note* and choses in action does not apply.
Ib.
The circuit court has no jurisdiction of a suit by a private person to restrain,
interfere with, or control the Treasurer of the United States or the Comptroller of the Currency in the discharge of their duties in respect to bonds
deposited with the Treasurer to secure the redemption of circulating notes
of a national bank. The provisions of sections 56 and 57 of the nationalbanking act explained. Van Antwerp v. Hulburd, 7 Blatchford, 426.
State courts have jurisdiction of suits brought by national banks, it not
having been taken away by section 57 of the national-banking act. First
National Bank of Montpelier v. Hubbard and others, 49 Vermont, 1.
A national bank can not be sued in the Federal court outside of the district
where it is located. Service on the cashier when found within another
district does not give jurisdiction. Main, assignee, v. Second National
Bank of Chicago, 6 Bissell, 26.
National banks may, by reason of their character as such, sue in the Federal
courts. First National Bank of Omaha v. County of Douglas, 1N. B. C, 267.
A district court of the United States may order the receiver of a national
bank to compromise doubtful debts under section 50 of the national-.
banking act (13 Stat. at Large, 115), which authorizes receivers to compromise such debts " on the order of a court of record of competent jurisdiction." Petition of Platt, 1 Benedict, 534.
A banking association organized under act of Congress of 1864, chapter 106,
can be sued in a State court only in the city or county where it is located.
Crocker v. Marine National Bank of New York, 101 Massachusetts, 240; 1
N. B. C., 575.
National banks, like any other corporations, and the receivers of them, may
sue and be sued in the State courts of their domicile. Adams v. Daunis,
29 La. Ann., 315; 1 N. B. C, 510.
The receiver of a national bank, is amenable to the jurisdiction of a State
court in a parish other than that in which the bank was located and in
which he has his domicile. Ib.
In an action by a national bank of New York against a national bank of
West Virginia, held, that the defendant was not deprived of the right to
demand a removal of the cause from the State court to a Federal court.
National banks are "citizens" of the State in which they are organized
and located. Chatham National Bank of New York v. Merchants' National
Bank of West Virginia, appellant, 4 ThompsonfyCook, 196; 1 N. B. C, 769.
Defendant served a notice of appearance on December 15, but did not file a
petition for the removal of the cause from a State to the Federal court until
January 7, the petition stating that defendant then entered its appearance
and had not done so before. Held, SL valid compliance with the Federal
statute requiring the defendant " at the time of entering his appearance in
the State court" to file his petition. Ib.
Section 7 of the act creating the circuit court of appeals (26 Stat., 828) gives
no jurisdiction of an appeal from an interlocutory order dismissing a
restraining order and denying an injunction. Robinson v. City of Wilmington et al., 60 Fed. Bep., 469.
The act of July 12, 1882, to enable national banks to extend their corporate
existence, placed national and other banks, as to their right to sue in the
Federal courts, on the same footing, and consequently a national bank can




126

REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

not, in virtue of a mere corporate right, sue in such court. Union National
Bank of Cincinnati v. Miller, Treasurer of Hamilton County, Ohio, 15 Fed.
Bep., 703.
67. But national banks may, like other banks and citizens, sue in such courts,
whenever the subject-matter of litigation involves some element of Federal jurisdiction. Thus a suit by a national bank against a county treasurer to enjoin the collection of a personal tax upon its property, alleged
to be made in violation of the act of Congress permitting the State to tax
national banks, presents a case arising under a law of Congress, and is
therefore maintainable in a Federal court. Ib.
68. The power given the Federal courts to order the production of books and
papers (Rev. St., sec. 724) includes power to grant an inspection before
trial, with permission to make copies. Exchange National Bank of Atchison
v. Washita Cattle Co., 61 Fed. Bep., 190.
69. A national bank is not authorized to sue in any circuit court of the United
States without regard to citizenship. It is to be regarded, for the purpose of jurisdiction, as a citizen of the State in which it is established or
located. St. Louis National Bank v. Allen et al., 5 Fed. Bep., 551.
70. An action to enforce a right conferred by section 5219 of the Revised Statutes, regarding the taxation of property in the shares of national banking
associations, is a suit arising " under the laws of the United States"
within the meaning of the act of March 3, 1875. Stanley v. Board of Supervisors of Albany Co., 6 Fed. Bep., 561.
71. A suit by or against a corporation created by an act of Congress is a suit
arising under the laws of the United States within the meaning of section
2 of the removal act of 1875, and may be removed from a State court.
Gruikshank v. Fourth National Bank, 16 Fed. Bep., 888.
72. State courts have jurisdiction of suits against national banks to recover
money paid as usury. Dow v. Irasburgh National Bank of Orleans, 50 Vt.,
112; 28 Am. Bep., 493; 2 N. B. C.y 421.
73. To give this court jurisdiction on appeal from a State supreme court under
the national banking act, the "title, right, privilege, or immunity spe
cially set up or claimed" must be claimed by the plaintiff in error for him
self, and not for a third person in whose title he has no interest. Miller
v. National Bank of Lancaster, 106 U. S., 542; 3 N. B. C, 52.
74. Defendant, a bookkeeper in a national bank, without authority filled a draft
signed in blank by the assistant cashier, issued it, and* fraudulently
changed his book entries to cover the crime. Held, on an indictment for
forgery, that the crime was within the jurisdiction of the State courts.
Hoke v. People, 122 III., 511; 3 N. B. C, 372.
75. A State court has jurisdiction of an action on contract brought by a resident
of the State against a national bank located in another State, and except
as against a national bank which has committed or is contemplating an
act of insolvency. Bobinson v. National Bank of New Berne, 58 How. Pr.,
306; 2 N. B. C, 309.
76. An attachment can issue against a national bank from a State court. Ib.
77. In an action of debt on sec. 5198, U. S. Rev. Stat., to recover twice the
amount of interest, at the rate of 9 per cent, received by a national bank
in Pennsylvania, upon the discount of notes, where plaintiffs had judgment for $2,150.38, held, that this amount was insufficient to give jurisdiction to the Supreme Court of the United States. Williamsport National
Bank v. Knapp, 119 U. S., 357; 3 N. B. C., 184.
78. A Federal court has jurisdiction of a creditor's bill between citizens of different States, though based upon the judgment of a State court, and notwithstanding the existence of statutory legal remedies in the State courts.
First National Bank of Chicago v. Steinivay et al., 77 Fed. Bep., 661.
79. Under the provision in the judiciary act of 1887-88 that " t h e provisions of
this section" shall not affect the jurisdiction of the circuit courts in cases
for " winding up the affairs" of any national bank, the circuit courts have
at least concurrent jurisdiction (whether exclusive or not is not decided)
with the State courts in cases of that kind, without regard to the citizenship of the parties. Lake National Bank v. Wolfeborough Savings Bank et
al., 78 Fed. Bep., 517.
80. A State court appointed a receiver of a national bank, but he never obtained
possession of its property. The original complainant discontinued, and
the defendant filed a motion to dismiss, but no formal order of dismissal
was entered. Held, that the pendency of the suit in that condition was
no bar to a subsequent suit between the same parties in a Federal court
for the appointment of a receiver, etc, Ib.




REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

127

See Actions—Continued.

81. A national bank, sued in a State court, can not enforce the removal of the
cause to the Federal court on the ground that the latter has exclusive
jurisdiction. Pettiion v. Noble, 7 Biss., 449; # N. B. C, 120.
82. The district court of the United States has jurisdiction of a bill in equity
filed by a national bank. Fifth National Bank of Pittsburgh v. Pittsburgh
and Castle Shannon Railroad Company, 1 Fed. Rep, 190; 2 N. B. C, 190.
83. Stockholders have no standing in court to interfere for the protection of
their company until the board of directors of the company have neglected
or refusetl an application to take the proper steps to protect the interests
of the company. Ib.
84. The Federal courts have jurisdiction over all suits by and against national
banks, irrespective of subject-matter. Joining merely nominal or personal
parties has no effect either to confer or exclude the jurisdiction; but
trustees, executors, and the like are not formal parties within the meaning
of the rule where in fact interested in the litigation. Accordingly, where
two or three persons claiming a certain fund which was in the custody of
a national bank brought their bill in equity against the bank and a third
claimant, and the bank exhibited its cross-bill, praying that the parties
might interplead, held, to confer jurisdiction. Foss v. First National Bank
of Denver, 3 Fed. Rep., 185; 2 N. B. C, 104.
85. Banks organized under the acts of Congress as national banks are not entitled
by force of such acts to have anylsuit or proceeding in the State court
wherein they are parties defendant removed to the Federal court. Wilder
v. Union National Bank, 12 Chicago Legal News, 84; 2 N. B. C , 124.

86. To authorize a removal on the ground that the controversy involves a question
arising uuder Constitution and laws of the United States, it must fully
appear from all the record that a Federal question is presented. So, where,
in a petition for removal to the Federal court, the defendant states that
certain laws of the State of Illinois infringe upon or violate the tenth
section of Article Two of the Constitution of the United States, but fails
to state in what respect, or how the rights, either of the plaintiff or defendants, are affected by the operation of those laws, the record does not show
sufficiently that it is a case coming within the Federal jurisdiction. 1b.
87. If the record presents a Federal question that a right of action or defense
arises under the Constitution and laws of the United States, the citizenship of the parties has nothing to do with it. Ib.
88. National banks are not authorized to institute suits in the Federal courts out
of the districts where they are established when the amount in controversy
does not exceed $500. St. Louis National Bank v. Brinkman, 1 Fed. Rep.,
45; 2 N.B. C, 141.
89. State courts have no jurisdiction of the offense of embezzlement of the funds
of a national bank. People v. Fonda, 62 Mich., 401; 3 N. B. C, 501.
90. A Federal court has jurisdiction of a suit to enjoin State taxing officers from
enforcing collection of a tax upon shares of stock in a national bank where
the protection sought is based upon the ground that the State statute
under which such officers are proceeding in making their assessment is in
violation of the fourteenth amendment to the Constitution and of Rev.
St., §5219. Third National Bank of Pittsburg v. Mylin, Auditor-General et
al., 76 Fed. Rep. f 385.
91. A receiver of a national bank appointed by the Comptroller of the Currency,
when sued in a State court on a claim of less than $500 has no power to
remove the case to a Federal court. Hallam v. Tillinghast, 75 Fed. Rep., 849.
92. A national bank located in one State may bring suit against a citizen of another
State in the circuit court of the United States for the district wherein the
defendant resides by reason alone of diverse citizenship. Petri v. Commercial National Bank of Chicago, 142 U. S., 644.
93. This court has jurisdiction of an appeal from a decree of a circuit court requiring stockholders in an insolvent national bank to pay a given percentage
on their stock which the Comptroller of the Currency had ordered collected
and such further sums as may be necessary to pay the debts of the bank.
Germania National Bank v. Case, 131 U. 8., CXLIV App.
94. A bill in equity was filed in a State court by a creditor of a partnership to
reach its entire property. The prayer of the bill was that judgments confessed by the firm in favor of various defendants, some of whom were citizens of the same State with the plaintiff, might be set aside for fraud.
On the allegations of the bill there was but a single controversy as to all
of the defendants. One of the defendants, who was a citizen of a different State from the plaintiff, removed the entire cause into a circuit court
of the United States. After a final decree for the plaintiff, and on an ap-




128

REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

peal therefrom, this court held that the case was not removable under
section 2 of the act of March 3,1875,18 Stat., 470, and reversed the decree
and remanded the case to the circuit court with a direction to remand it
to the State court, the costs of this court to be paid by the petitioner for
removal. Graves v. Corbin; First National Bank of Chicago v. Corbin, 132
U.S., 571.
95. The E. Co., being indebted to the plaintiff, execnted to it three promissory
notes, and pledged certain chattels to secure their payment. Subsequently the E. Co. confessed judgment in a State court in favor of the S.
bank, then in the hands of a receiver. The receiver caused an execution
issued from the State court to be levied on the same chattels which had
been pledged to plaintiff. Plaintiff then filed a bill in equity in the State
court against the bank and its receiver, the E. Co., and the sheriff, to
restrain the sale of the chattels and determine the rights of the parties.
The receiver applied to remove this suit to the Federal court. Held, that
the subject-matter of the controversy, the pledged chattels, was within
the jurisdiction and control of the State court, and therefore beyond the
jurisdiction of the Federal court, either original or by removal. Kelly,
Maus < Co. v. Sioux City National Bank et al.,81 Fed. Rep., 3.
f
96. The Federal courts have no jurisdiction of a suit in equity against a nationalbank receiver, appointed by the Comptroller, unless the amount in controversy exceeds $2,000. Smithson v. Hubbell et al., 81 Fed. Rep., 593.
97. In a suit by a creditor of an insolvent national bank, in behalf of himself
and all other creditors, to enjoin the receiver and the Comptroller from
paying dividends on an alleged fraudulent claim which has been allowed
by them, the jurisdictional amount is to be determined solely by the
amount of complainant's own claim, and not by the aggregate of all the
claims of those whom he assumes to represent or by the amount of the
dividends, payment of which is sought to be enjoined. Ib.
98. Under section 4 of the act of Congress of July 12, 1882, a national bank can
not remove a suit against it from the State court upon the sole ground
that it is a corporation organized under a law of the United States, and
that therefore the suit is one arising under the laws of the United States.
Cooper v. Leather Manufacturers' National Bank, 29 Fed. Rep., 161.
99. When a complainant invokes the protection of a law of the United States
the Federal courts have jurisdiction when it is apparent that the case
depends upon a construction of that law. Richards et al. v. Incorporated
Town of Rock Rapids, 31 Fed. Rep., 505.
100. A party does not waive the right of removal by remaining in the State court
and contesting the case on the merits, if the State court, upon due application, wrongfully refused to order a removal of the cause. Ib.
101. The right of removal is not defeated or lost if the petition therefor is filed
in the State court after motion made, the decision of which does not affect
the merits of the controversy. Ib.
102. Section 5219, Rev. St., U. S., provides that shares in the national banks may
be subjected to the imposition of a State tax, but the same shall not be at
a greater rate than is assessed upon other moneyed capital in the hands of
individual citizens of such State. Under this section, before the assessment of the shares in a national bank can be held invalid, it must be
shown that there is in fact a higher burden of taxation imposed upon
money thus invested than is imposed upon other moneyed capital, and it
is insufficient to show merely that the State laws provide a different mode
or manner of taxing moneyed capital invested in savings banks or other
corporations. Ib.
103. Sections 818-820, Code, Iowa, providing for the taxation of the shares of
national banks, and chapter 60 of the Laws of 1874, providing for the organization of saving banks, and enacting that the shares of stock therein are
taxable, but that deposits are not, are not in contravention of section 5219,
Revised Statutes of the United States, there being no discrimination against
national banks or the capital therein invested. Ib.
104. The owners of shares in national banks are, under section 5219, Rev. St., U. S.,
entitled to the right of deduction given to taxpayers under section 814 of
the Code of Iowa, which provides that from the gross amount of money
and credits held by one liable to taxation may be deducted all debts due
and owing. Ib.
105. Act Con., March 3, 1887, sec. 4, declares that national banking associations
are, for the purpose of all actions by or against them, at law or in equity,
to be deemed citizens of the States in which they are respectively located,
bat " the provisions of this section shall not be held to affect the jurisdic


REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

129

See Actions—Continued.

tion of the courts of the United States in cases commenced by the United
States or by direction of any officer thereof, or cases for winding up the
affairs of any such bank/ 7 Held, that a receiver of a national bank may
still maintain a suit in the United States circuit court, without reference
to the citizenship of the parties or to the amount involved, to recover a
claim due the bank. Armstrong v. Trautman et al., 36 Fed. Hep., 275.
106. This court has jurisdiction to review a judgment of the highest court of a
State holding a national bank liable, under statute of the State, as a
shareholder in a State savings bank, when the answer sets up that the
stock of the savings bank was issued to it without authority of law, and
the motion for a new trial and the specifications of error, which were
the basis of appeal from the trial court to the supreme court of the State,
assert such want of power under the laws of the United States. California Bank v. Kennedy, 167 U. S., 362.
107. A suit to recover property acquired by the removing defendant, as receiver
of a national bank, by authority of the laws of the United States, arises
under the laws of the United States, within the meaning of the removal
act of 1888 (25 St., U. S., 434). Soivles v. Witters et al., 43 Fed. Rep., 700.
108. Said act provides that the petition for removal shall be filed at or before the
time the defendant is required to plead. A rule of the chancery court
provided that the subpoena should require defendant's appearance"on the
first day of a stated term, and that he should answer within forty days
from the return day or the day fixed for entering appearance. A subpoena
required the defendant to answer on the first day of the April term, but
the suit was not entered until the last day of court. The next stated
term began on the second Tuesday in September. Held, that a petition
for removal filed September 4 was in apt time. Ib.
109. The State courts have jurisdiction of an action brought against the officers
of a national bank to recover damages on account of alleged deceit practiced by such officers in making a false report of the" condition of the
bank. Barnes v. Swift (Super. Ct. Sin.), 3 Ohio N. P., 291.
110. The assets of an insolvent national bank are not brought under the control
or protection of the Federal courts by being taken into custody by a
receiver appointed by the Comptroller of the Currency, nor by their transfer from the receiver to an agent of the shareholders appointed pursuant
to the act of Congress to wind up the affairs of the bank. Snohomish
County v. Puget Sound National Bank (C. C), 81 Fed. Hep., 518.
111. Unless it voluntarily appears, a foreign corporation can not be made a party
defendant to a suit in a Federal court by one of its creditors, who seeks
the appointment of a receiver, an accounting, and to enforce the individual
liability of stockholders who are within the jurisdiction of the court.
Elkhart National Bank v. Northwestern Guaranty Loan Company et al., 87Fed.
Piep., 252.
112. The corporation and all its stockholders are necessary parties defendant to
a creditor's suit for the appointment of a receiver, an accounting, and to
enforce the personal liability of stockholders, and, if the corporation can
not be brought in, the suit must be dismissed. Ib.
113. A receiver of an insolvent national bank, appointed by the Comptroller of
the Currency, against whom an action is brought in a State court to
recover less than $2,000, has no right to remove the same to a Federal
court. Follett v. Tillinghast, 82 Fed. Rep., 241.
114. A suit by a national bank against its former managing officers to charge
them with losses sustained by reason of their having made loans to one
individual in excess of 10 per cent of the capital stock, and other loans
without personal security, in violation of the national banking statutes,
the right of recovery being claimed under Rev. St., § 5239, is one arising
under the laws of the United States. National Bank of Commerce of Taeoma,
Wash., v. Wade et al., 84 Fed. Rep., 10.
115. A national bank may maintain a suit-against its directors to enforce their
liability under Rev. St., § 5239, for losses resulting from a violation of
the statutory requirements in conducting the business of the bank. A
•suit by the Comptroller for dissolution of the association and an adjudication of such violations is not a condition precedent to the enforcement
of such liability. Ib.
116. A suit by a national bank.against its former officers and directors under
Rev. St., § 5239, to recover for losses resulting from their mismanagement
in violation of the provisions of the national banking law, is cognizable
in equity, where the transactions involved are complicated,'and the conCUR 1900, PT 1
9




130

REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

version of securities into money is required before the extent of the liability can be ascertained, and when, therefore, the remedy at law is not
complete or adequate. Ib.
117. The fact that a suit by the Comptroller for the forfeiture of the charter of a
national bank for violations of the banking statutes is barred by limitation does not operate to bar a suit by the bank against its officers and
directors, under Rev. St., § 5239, to charge them with losses resulting from
such violations., Ib.
118. The statute does not commence to run against a suit by a national bank
against its managing officers to enforce their liability under Rev. St., §
5239, for losses resulting from acts in violation of the national banking
law, until such officers have surrendered control of the bank to their
successors. Ib.
119. The rule that, in order to warrant the removal of a cause to the circuit court
on the ground that it arises under the laws of the United States, that fact
must be shown in the plaintiff s pleading, does not operate to prevent a
removal, where the original pleading alleges that defendant is a national
banking association, and where a receiver thereof, appointed by the Comptroller of the Currency is subsequently made a defendant and petitions
for removal. Speckart et al. v. German National Bank et al., 85 Fed. Rep., 12.
120. A receiver of an insolvent national bank is an officer of the United
States. Ib.
121. In a suit in a State court against an insolvent national bank and others,
charging a conspiracy to defraud, and seeking the recovery from the bank
of moneys alleged to have been thus obtained, a subsequently appointed
receiver of the bank is a proper party defendant. Ib.
122. It seems that in such a suit, in a State court, the receiver of the national
bank is not a necessary party. Ib.
123. Such an action falls within the description of "cases for winding up the
affairs" of a national bank, under section 4 of the judiciary act of 1875, as
amended in 1887 and 1888 (25 Stat., 433), which preserves in such cases the
jurisdiction of the Federal courts, and the receiver of the bank, intervening as 8iich, is entitled to have the cause removed. Ib.
124. It seems that a State court is a " court of competent jurisdiction" to adjudicate upon disputed claims against insolvent national banks. Ib.
125. The rule requiring that, where the ground for removing a cause to the
Federal court is diverse citizenship, that ground must exist not only at
the time of removal but also when the suit was commenced, has no application where a receiver of an insolvent national bank intervenes as such
and seeks the removal of a case which is under the head of " winding up
the affairs" of the bank. Ib.
126. Circuit courts have jurisdiction of actions by receivers of national banks
to collect assessments made by the Comptroller, without regard to the
amount involved. Brown v. Smith, 88 Fed. Rep., 565.
127. When the jurisdiction of a Federal court in an action by the receiver of a
national bank depends solely on the official character of the plaintiff as
such receiver, such jurisdiction is lost by a sale and transfer by the
plaintiff of all his interest in the subject-matter of the litigation. Weaver
v. Kelly, 92 Fed. Rep., 417.
128. A receiver for an insolvent national bank, appointed by the Comptroller of
the Currency, may sue in a Federal court, without regard to his citizenship or the amount in controversy. Myers v. Hettinger, 94 Fed. Rep., 370.
129. Equity has jurisdiction of a bill by a receiver of a national bank to set
aside a transfer of notes made by the bank to prefer a creditor. Alabama
Iron and Raihvay Co. v. Austin, 94 Fed. Hep., 897.
130. As the controversy in this case involved the question on what basis dividends
in insolvency should have been declared, and therein the enforcement
of the trust in accordance with law, this court has jurisdiction of it in
equity. Merrill v. National Bank, 173 U. S., 131.
131. The Comptroller's certificate authorizing an increase of the capital stock of
. a national bank is conclusive of the existence of all the facts necessary
to authorize such increase, in favor of the public and against the subscribers to such stock. Bailey v. Tillinglmst (C. C. A.), 99 Fed. Rep., 801.
132. The receiver of an insolvent national bank may maintain a suit in equity to
enforce an assessment against stockholders, where such assessment is less
than the full amount of their liability; and, where there is a common
question of law involved as to a number of the stockholders, they may be
joined as defendants. Ib.
133. Where the stockholders of a national bank authorized an increase of the
capital stock, a portion of the amount was subscribed for and paid in, and



REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

131

See Actions—Continued.

certificates issued to the subscribers, who retained and received dividends
thereon for three years, the action of the stockholders in then reducing
the amount of the proposed increase to the amount which had been so subscribed, and of the Comptroller in approving such increase, held valid,
although the bank was then insolvent, and the subscribers held bound as
stockholders. Ib.
134. An action against a receiver of a national bank in his official capacity is one
arising under the iaws of the United States, of which a Federal court has
jurisdiction. McDonald v. State of Nebraska, 101 Fed. Bep., 171.
LKASE:

1. Where, a national bank takes a lease for a long term, its insolvency and dissolution soon afterwards, and the appointment of a receiver who refuses
to take possession of the leased premises, do not entitle the lessor to
damages out of the assets, the rent having been paid for the time during
which the bank was in possession.* Fidelity Safe Deposit and Trust Co. v.
Armstrong, 35 Fed Rep., 567.
2. A national bank which, when a receiver is appointed for it, is in arrears for
rent under an existing lease may be afterwards sued for damages caused
by its failure to carry out the provisions of the lease. Chemical National
Bank v. Hartford Deposit Company (III.), 41 N. E., 225.
3. In a suit against a national bank in arrears for rent under an existing lease
at the time a receiver was appointed for it, for damages for failure to
carry out the lease, the receiver need not be made a party. Ib.
4. A claim for rent which was due nine days before the suspension of the bank
is an existing demand which is entitled to be proven up for participation
in the distribution of the assets. Chemical National Bank v. Hartford
Deposit Co., 16 S. Ct., 439.
5. In a suit against a national bank in arrears for rent under an existing lease
at the time a receiver was appointed for it, for damages for failure to
carry out the lease, the receiver need not be made a party. Chemical
National Bank v. Hartford Deposit Co. {III. Sup.), 41 N. E., 225.
6. The legal existence of a corporation is not cut short by its insolvency and
the consequent appointment of a receiver; and there is nothing in the
statutes relating to national banks which takes them out of the operation
of this general rule. Chemical National Bank v. Hartford Deposit Company,
161 U. S., 1.
7. After passing into the hands of a receiver appointed by the Comptroller of
the Currency under the provisions of the Revised Statutes, a national bank
remains liable, during the remainder of the term, for accrued and accruing
rent under a lease ot the premises occupied by it, although the receiver
may have abandoned and surrendered them; but if the lessor, in the exercise of a power conferred by the lease, reenters and relets the premises, the
liability of the bank after the reletting is limited to the rent then accrued
and unpaid and the diminution, if any, in the rent for the remainder of the
term after the relettiug. Ib.
8. By section 5136 of the Revised Statutes a contract of lease, at a large rent, of
an office to be occupied " a s a banking office, and for no other purpose,"
for the term of five years, determinable at the end of any year by either
party, executed by a national bank as lessee, after having duly filed its
articles of association and organization certificate with the Comptroller or
the Currency, but not having been authorized by him to commence the
business of banking, is void, can not be made good by estoppel, and will
not support an action against the bank to recover anything beyond the
value of what it has actually received and enjoyed. McCormickv. Market
Bank, 165 U.S., 538.
9. In an action against a national bank upon a contract, each party relied on
section 5136 of the Revised Statutes, by which a national bank, upon filing its articles of association and organization certificate with the Comptroller of7 the Currency, becomes a corporation, with power "<eo make
t
contracts' and other corporate powers, but is prohibited to transact
any business, except such as is incidental and necessarily preliminary to
its organization, until it has been authorized by the Comptroller of the
Currency to commence the business of banking." The defendant relied on
the prohibition. The plaintiff relied on the exception to the prohibition,
and also contended that, under the general power to make contracts, the
contract sued on was valid as between the parties, even if contrary to the
prohibition. Held, that a judgment for the defendant in the highest court
of the State might be reviewed by this court on writ of error. Ib.



132

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIABILITY OF BANK:

1. Where a national banking association has taken collaterals to secure a loan,
and, after the loan has been repaid, holds them to secure future advances,
it is not a gratuitous bailee; and it is responsible for the loss of such collaterals occasioned by its lack of ordinary care and diligence, though at
the time the bailor was not indebted to it. Third National Bank of Baltimore v. Boyd, 44 Md., 47.
2. A bank receiving a certificate of deposit for collection, and mailing it to the
drawer with a request for a remittance, is guilty of negligence. First
National Bank of Evansville v. Fourth National Bank of Louisville, 56 Fed.
Rep., 967.
3. A bank is charged with notice of letters duly mailed to it and received by
the general bookkeeper, whose duty it is to open and distribute mail
matter, although he conceals such letters to hide certain irregularities in
his office, and thereby prevents their coming into the hands of the other
bank officers. Ib.
4. The E. bank, on May 8,1888, mailed to the L. bank for collection a certificate
of deposit issued by P. & Co., which, the next day, negligently mailed it
to P. & Co. with request to remit. On June 1 the L. bank ^credited the
E. bank with the item in account current for May, and wrote'that nothing
had been heard from P. & Co. On June 22 the L. bank wrote that
repeated letters about the item had remained unanswered. The L. bank
now charged the E. bank with the item. No further correspondence
ensued. P. & Co. continued in good credit until after January 1, 1889,
when they failed. Held that the L. bank was not responsible for more
than nominal damages. Ib.
5. Where bank acquires title to real estate by conveyance from its president,
who held same under deed reciting full payment of purchase money, and
bank has no actual knowledge that purchase money was not in fact paid,
it is an innocent purchaser without notice, and is not chargeable with
constructive notice because of the knowledge of its president. First
National Bank of Sheffield et al. v. Tompkins, 57 Fed. Rep.;20.
6. If a cashier, without authority to buy coin in behalf of his bank, does so
buy it, and it goes into the funds of the bank, it is liable. Merchants7
National Bank v. State National Bank, 10 Wall., 604.
7. Where a bank issues a certificate of deposit, payable on its return properly
indorsed, it is liable thereon.to a bona fide holder to whom it was transferred seven years after its issue, notwithstanding a payment thereof to
the original holder. Such certificate is not dishonored until presented.
National Bank of Fort Edward v. The Washington County National Bank,
5 Hun., 605.
8. Where a cashier, in payment of his individual indebtedness, gives his creditor a cashier's draft drawn by himself on his bank's correspondent, and
the same is received in good faith by the creditor, with no knowledge or
notice that the draft is drawn fraudulently, and the same is paid by the
correspondent to the creditor, the bank can not recover from the creditor
the money so p;»id. Goshen National Bank v. State, 36 N. E., 316.
9. A bank is bound by the act of its cashier in drawing checks in its name,
though with the intent of embezzling the proceeds, and payment of the
checks by the drawee is binding on the bank. Phillips v. Mercantile
National Bank of the City of New York, 35 N. E., 982.
10. Checks drawn by the cashier of a bank, payable to fictitious persons, whose
names he indorses thereon, are in effect payable to the bearer, and the payment of such checks by the drawee is binding on the bank, as, in transmitting them made and indorsed, the bank is so far concluded by his
acts as to be estopped from denying their validity. Ib.
11 The fact that the payees in the checks, whose names were indorsed thereon
by the cashier, were customers of the bank does not vary the rule applicable to fictitious payees, where the cashier did not intend to deliver the
paper to the customers, as the fictitiousness of the maker's direction to pay
does not depend upon the identification of the name of the payee with
some existing person, but upon the intention underlying the act of the
maker in inserting the name. Ib.
12. A settlement of a claim against a bank made by a director who had been
specially delegated by the bank to take charge of the matter, and who
acted under the direct advice of the president of the bank, is binding on
the bank. Waxahachie National Bank v. Vickery, 26 S. W., 876.
13. Where one pays a debt due by him to a bank upon the demand of an officer
thereof, whom he finds employed in its business, to said officer, over its
counter, without .knowledge that the officer's authority is so limited that




REPORT OF THE COMPTROLLER OF THE CURRENCY. 133
LIABILITY OF BANK—Continued.

he is not authorized to receive the money, it is a payment to the bank, and
the latter is bound thereby. The East Biver National Bank x. Gove, 57
N. Y., 597.
14. When a bill of exchange, payable at
, was sent to a bank for collection,
and the bank, treating it as a bank check and not entitled to days of grace,
presented it for payment, and had it protested, etc., on the day of its
maturity, without days of grace, by means of which the indorser was discharged, and it was in evidence that the bank was notified by the indorser
at the time that he claimed the paper to have days of grace.- Held, that the
bank was liable to the person who deposited the paper for collection for
damages for its negligence in not presenting'the check, as required by
law, and causing notice of its nonpayment to be given to the indorser.
The Georgia National Bank v. Henderson, 46 Ga., 487.
15. A national bank, by its cashier, issued its certificate of deposit for money to
be paid on a note of the depositor or lent for his use. Held, that the bank
was liable thereon, although the cashier embezzled much more of the
bank's funds. First National Bank of Monmouih v. Brooks, 22 III. App.,
238; 3 N. B. C, 387.
16. Upon deposit in a city bank of funds for transmission to the credit of a
country bank, for the use of the depositor, the city bank becomes a trustee
of the depositor; and where the country bank, by reason of its failure
before the deposit was made, becomes unable to receive the deposit, the
city bank is liable to the depositor, in an action for money had and received,
for the amount of the deposit. Union Stock Yards National Bankv. Dumond
37 N. E., 863; Dumond v. Merchants1 National Bank, ib., 864.
17. The fact that the city bank deposited the money with another city bank,
which was the correspondent of the country bank, does not exempt the
former bank from such liability, where the depositor was unacquainted
with the custom of the banks in making such deposits, and did not consent thereto, Ib.
18. Nor will the city bank in which the money was finally deposited be liable
therefor, at the suit of the depositor, where the money was left with it
with instructions to credit it to the country bank generally, without any
intimation that it was to be credited to that bank as the money of the
depositor. Ib.
19. The First National Bank of Decatur having advanced a sum of money to the
owner of a lot of whisky, the latter employed the bank to ship the whisky
for him to New York to be sold, and out of the proceeds the bank was to
retain the money advanced and a reasonable commission for shipping and
selling. The whisky was shipped and sold accordingly, and the proceeds
received by the bank. Held, that the bank was liable to the owner of the
whisky for the money so received, and this independently of the question
whether national banks are, by their charters, authorized to sell produce
on commission. First National Bank of Decatur v. Priest, 50 III., 321.
20. A national bank is liable for fraudulent representations made by it through
its cashier to another bank as to the financial responsibility of a customer. Nevada Bank of San Francisco v. Portland National Bank, 59 Fed.
Bep., 338.
21. Representations by one bank to another that a certain business corporation
" i s prosperous," "well organized," "doing a large business," and are
"valued customers of ours;" that an investigation of its business and
responsibility had been made by the vice-president and cashier of the
bank, coupled with the transmission of an annual statement, which (as
alleged) is known to be false—are representations of fact, and not of
opinion, and are actionable if fraudulently made. Ib.
22. Fraudulent representations as to the financial responsibility of another for
the purpose of procuring him credit are actionable, though containing no
statement as to the amount of credit it is safe to extend. Ib.
23. False representations concerning the financial responsibility of another, made
for the purpose of procuring him credit, negligently and carelessly, without investigation, when investigation would disclose their falsity, imply a
fraudulent intent, and are actionable. Ib.
24. The signature of a bank cashier, with his official title appended, to a letter
bearing the bank's name at the head, is the signature of the bank, within
the meaning of a statute providing against liability for representations as
to the credit, skill, or character of another, unless there is a memorandum
thereof in writing, signed by the "party to be charged." Ib.
25. A bill ot exchange, drawn on defendant, was sent by plaintiff to a bank for
collection, and on presentation to defendant was accepted by its treasurer



134

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIABILITY OF BANK—Continued.

and redelivered to the l)ank. On the same day defendant's treasurer
learned that tho drawer of the bill had failed two days before. On the
next day defendant's treasurer applied to the bank's cashier for leave
to Revoke the acceptance and erase the indorsement, which the cashier
declined to do, and notice was thereupon given the bank to refuse payment of the bill. At the time of the acceptance the drawer had no funds
in defendant's hands, but was indebted to it. No fraud was shown on
plaintiff's part. Held, that the defendant was bound by its acceptance
Trent-Title Company v. Fort Dearborn National Bank of Chicago, 54 N. J., S3.
26. The general rule is that where a bank delivers a note or bill to a notary
public for demand, protest, and notice, it will not be liable for the default
of the latter. Wood River Bank v. First National Bank of Omaha, 55 N. W.,
239; 36 Neb., 744.
27. But where such bill remains in the bank to be protested for nonpayment by
the president and manager thereof, a notary public, and who, although
aware of the instructions to the contrary, delays noting for protest or
giving notice, in consequence of which the indorsers are discharged, such
notary will be held to be the agent of the bank and the latter will be
liable for his negligence. Ib.
28. Where a bank, on presenting a draft which it has for collection, receives a
check drawn on a bank in the same place, it is bound to present the
check on the same day, and, failing in this, is liable to the drawer thereof
for the loss occasioned thereby, the bank drawn on having suspended at
the end of the day. Morris v. Eufaula National Bank (Ala.), 18 So., 11.
29. Where money is deposited with the cashier of a bank under an agreement
that it shall be invested by the bank in bonds and stocks, the bank is
liable for the return of the money, no investment having been made,
though the agreement for its investment by the bank was ultra vires.
VHerbette v. Pittsfield National Bank (Mass.), 38 N. E., 368.
30. A bank obtained a loan from plaintiff, giving therefor the personal note of its
cashier. Held, that the bank was liable to plaintiff for the amount of the
loan, on account for money had and received. Chemical National Bank v.
City Bank (III. Sup.), 40^ N. E., 328.
31. A debt incurred by a national bank, for which it receives and retains the
consideration, is not void because incurred in violation of Rev. St. U. S.,
sec 5202, providing that no national bank shall be indebted or in any way
liable to an amount exceeding the amount of its capital stock paid in,
except on circulation, deposits, special funds, or declared dividends. Ib.
32. Drafts for part of a fund in the hands of a debtor of the drawer do not, without acceptance by the drawee, constitute an appropriation of part of such
fund, or an equitable assignment thereof. Bosworth v. Jacksonville National
Bank (C. C. A.), 64 F., 615.
33. A national bank whose vice-president borrows money in the name of another
bank and appropriates it to his own use, is not liable therefor unless he
was specially authorized to borrow the money, or his act was ratified.
8 C. C. A., 155; 59 F.,372, modified to accord with Bank v. Armstrong, 14
S. Ct. 572; 152 U. 8., 346; Chemical National Bank v. Armstrong, 65 Fed Bep.,
573.
34. Where the president of a banking corporation, having control and mangement of its business, entered into a conspiracy with a merchant whereby
the latter was to purchase of wholesale dealers a large amount of goods
on credit, on which the bank was to take a mortgage in an amount
largely in excess of a loan which was to be made the merchant, under
which it was to sell the goods, the proceeds of such sale to be given onethird to the bank and two-thirds to the merchant, leaving the creditors
unpaid; and in pursuance thereof, goods were bought of the value of
$10,000, on which the bank loaned $1,000, taking a mortgage for $9,960;
and before the bills for the goods became due the bank foreclosed the
mortgage and took possession thereunder, and sold the goods for $5,300,
whicn was divided according to the agreement—the bank was liable to
each of the defrauded creditors for the amount of goods so sold by each.
Johnston Fife Hat Co. v. National Bank (Okl.), 44 P., 192.
35. A bank is liable to a special depositor for the loss of his deposit through its
diversion by the bank's officers. El Paso National Bank v. Fuchs (Tex.
Civ. A pp.), 34 S. W., 203.
36. Mine owners indebted to a bank made their note, and executed a deed of
trust to the bank's cashier, to secure the indebtedness. The note was not
paid at maturity, and without the payment of any money to him or to the
bank and without authority, the cashier released the deed of trust, and



REPORT OF THE COMPTROLLER OF THE CURRENCY.

135

LIABILITY OF BANK—Continued.

37.

38.

39.

40.

41.

42.

43.
44.

45.

two other papers were executed between the parties. One was an absolute deed of the property to the cashier; the other, an agreement whereby
he was to work the mines till the indebtedness of the bank was paid from
the proceeds, and certain amounts paid to the grantors, after which he
was to become the absolute owner. Subsequently a creditor of the bank
attached the property as belonging to the bank. Held, that the bank
could not be held to have adopted the contract of its cashier, since it
must have done so in its entirety, and the agreement to operate the mines
would have been ultra vires. Weston v. Esty {Colo. Sup.), 45 P., 367.
An order to a bank to pay, to persons named, a specified sum, out of a special
fund, belonging to the drawer, in the hands of such bank, constitutes an
assignment of such fund to the persons named in the order, to the amount
specified, whether the bank accepts the order or not. Central National
Bank v. Spratlen {Colo. App.), 43 P., 1048.
The president of a bank, having embezzled funds of the bank on deposit
with its reserve agent, replaced such funds with money borrowed by
him on the bank's note, without the directors' knowledge, and such borrowed money was thereafter drawn out to pay the bank's lawful debts.
Held, that the bank, having received the benefit of the loan through its
president, it was effected with his knowledge of the loan, and hence was
liable to the lender as for money had and received to its use. Ditty v.
Dominion National Bank of Bristol, Va., 75 Fed. Rep., 769.
In an action against a national bank to recover bonds deposited with it for
safe-keeping, without compensation, and which the bank alleged were
stolen from its vaults, held, (1) that the bank was liable only for gross
negligence; (2) that its failure to give prompt notice of the robbery was
a question for the jury as bearing on the question of negligence; and (3)
that while the mere voluntary act of the cashier in receiving the funds
would not subject the bank to liability, yet if the deposit was known to
the directors and they acquiesced in its retention, a contract relation was
created by which the defendants would be held bound. First National
Bank of Carlisle v. Graham (79 Pennsylvania State, 106.) Affirmed 100
U. S., 699.
Whether or not a national bank has the power to take bonds, etc., on deposit
for safe-keeping, it is not liable for the loss of such property so taken without compensation, unless it has been guilty of gross negligence contributing to the loss. De Haven v. Kensington National Bank (81 Pennsylvania
State, 95).
In an action to recover of a bank the value of bonds deposited for safekeeping by plaintiff, and stolen by the teller of the bank, held, that the
bank, being a gratuitous bailee, was not liable, although an examination
of the teller's accounts after the theft proved them to have been falsely
kept, and showed that he had been abstracting funds for two years, and
although it was known to the president of the bank that he had dealt
once or twice in stocks. Mistaken confidence is not a ground of liability
in such cases. Scott, plaintiff in error, v. National Bank of Chester Valley
(72 Pennsylvania State, 471).
A national bank received from a customer bonds as collateral security for
a debt then existing and for future obligations. Afterwards, and alter
the customer had paid his indebtedness, the bonds were stolen from the
bank. Held, (1) that the bank was not a gratuitous bailee of such
bonds; (2) that it had power to take the bonds as security for existing
or future loans; (3) that it was liable if it failed to exercise ordinary
care and diligence in keeping the bonds; and (4) that the measure of
damage was the value of the bonds when stolen, and not when demand
of them was made. Third National Bank of Baltimore, appellant, v. Boyd,
44 Maryland, 47; 1 N. B. C, 545.
A bank is not liable for the default of a prudently chosen correspondent at
the acceptor's residence, to whom it sent a draft received for collection.
Third National Bank of Louisville v. Vicksdurg Bank, 61 Miss., 112.
A bank is liable for deceit where, through its board of directors, it causes
false statements to be made in regard to the financial condition of a customer, for the purpose of furthering its own interests, by increasing its
deposits or selling its collateral, and loss results to a third person from
such statements. Hindman v. First Nat. Bank(C. C. A.), 98 Fed. Rep.9562.
H., as vice-president of a Cincinnati bank, made application to a New York
bank for a loan of $300,000. The request was granted, and that amount
was placed to the credit of the Cincinnati bank upon the books of the
New York bank. Immediately thereafter H. fraudulently caused himself




136

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIABILITY OF BANK—Continued.

to be personally credited upon the books of his own bank with a like sum
of $300,000. ^The action of H. in negotiating the above loan with the
New York bank was unauthorized by the board of directors of the Cincinnati bank, but after the arrangement had been made that bank drew out
by check the money that had been placed to its credit by the New York
bank and used the same in discharging its valid obligations. Held, that
by so using the money obtained from the New York bank by H. in his
capacity of vice-president the Cincinnati bank became bound to account
for the same as for money had and received, and could not escape liability
to the New York bank upon the mere ground, supposing it to be true, that
it was not permitted by its charter to borrow money. The fraud perpetrated by H. upon his own bank in having himself personally credited
upon its books with the amount of the loan was a matter with which the
New York bank had no connection, and its right to recover could not be
affected thereby. The liability of the Cincinnati bank rested upon the
fact, and the implied obligation arising therefrom, that that bank used in
its business and for its benefit the money which the other bank placed to
its credit in consequence of the loan negotiated by H., who assumed to
represent it. There is nothing in the acts of Congress authorizing or permitting a national bank to appropriate and use the money or property of
others without incurring liability for so doing. This case and Western
National Bank v. Armstrong, 152 U. S., 346, distinguished. Aldrich v.
Chemical Nat. Bank, 176 U. S. Rep., 618.

LIEN. See Preferred claims.
1. An association has equitable lien upon dividends declared for any just debt
due to it from the shareholders. Hagar v. Union National Bank, 63 Me.,
509.
2. Bank can not acquire a lien on its own stock held by its debtors, even if its
by-laws are framed with that intention. Bullard v. Bank, 18 Wall., 589.
3. Loans by bank to stockholder do not give lien to bank on his stock. Ib.;
Bank v. Lanier, 11 Wall, 369.
4. A national bank organized under the law of 1864 can not, even by specific
provisions for the purpose in its articles of association and in its by-laws,
acquire a lien on its own stock held by its debtor. Delaware, Lackawanna
and Western Railroad Company v. Oxford Iron Company, 38 N. J. Eq.y 340;

3 N. B. C, 582.

. 5. When by general law a lien is given to a corporation upon the stock of a
stockholder in the corporation for any indebtedness owing by him to it,
that lien is valid and enforceable against all the world, and a sale of the
stockholder's stock to a person ignorant of the lien will not discharge it
and thus authorize the purchaser to demand and receive a transfer of it so
discharged. Hammond v. Hastings, 134 U. S., 401.
6. A banker's lien for the amount of the balance of its general account does
not exist when the securities have been deposited with the bank for a
special purpose or for the payment of a particular loan. Armstrong v.
Chemical National Bank, 41 Fed. Rep., 234.
7. A bank has a lien on a note deposited for collection by a debtor before
maturity of his own debt, remaining uncollected and unassigned in its
hands after his debt matures, for its payment. Gibbons Y. Hecox (Mich.),
63 N. W., 519.
8. There can be no vendor's lien in favor of a bank which causes lands held in
trust for it to be conveyed to a corporation for the purpose of giving such
corporation the appearance of ownership and the power and opportunity
" to deal with strangers as the owner, when in reality it takes the lands in
trust for the bank. There can be no vendor's lien when there is no actual
sale. Butler et al. v. Cockrill, 73 Fed. Rep., 945.
9. The lien of an attachment in execution takes effect at the time the writ is
served on the garnishee, and can not be subsequently defeated by an
assignment of the attached property to the garnishee, prior to service on
defendant. National Bank of Spring City v. National Bank of Pottstown
(Com. pi.), 11 Moiltg. Co. Law RepW, 64.
10. One claiming a lien on attached property, superior to the attachment
plaintiff, can not, in a 7cross bill, traverse the affidavit for attachment.
Farmers and Merchants National Bank v. Waco Electric Railway and Light
Co. (Tex. Civ.App.), 36 S. W., 131; Metropolitan Trust Co. v. Farmers and
Merchants' National Bank, Ib.
11. Where a creditor is entitled to a lien for debts represented by certain items.
on an open account, and is not entitled to a lien under other items, the




REPORT OF THE COMPTROLLER OF THE CURRENCY.

137

LIEN. See Preferred claims—Continued.
creditor may apply a payment made on the account generally to those
items under which no lien exists. Union National Bank v. City of Cleveland, 10 Ohio Cir. Ct. B., 222.
12. In a suit in equity to enforce a judgment lien against real estate of the
debtor the judgment is, as between the judgment creditor and other
judgment creditors of the debtor, conclusive of the justness and amount
of the debt, and can not be impeached except for fraud. First National
Bank v. Euntington Distilling Co. (W. Fa.), 23 S. E., 792.
13. Where a building contract makes a certificate from the county clerk that no
liens are unsatisfied of record an absolute condition of payment of any
money under the contract, and does not expressly limit the protection of
this provision to the owners of the building, such provision is also for the
benefit of persons entitled to mechanics7 liens, and an assignment of moneys
due under the contract will be subject to the satisfaction of any such liens
duly filed after such assignment, and before such certificate is obtained.
27 N. Y. S., 951, affirmed. Bates v. Salt Springs National Bank (Sup.), 34
N. Y. S., 598.
14. A contract between a corporation and its factor, whereby the corporation
appoints the factor its general selling agei\t and agrees to consign all its
products to him, does not give the latter a lien for advances on money duo
the corporation for goods sold and delivered by the corporation directly
to the purchaser, since possession is essential to a factor's lien. Warren
v. First National Bank (111. Sup.), 38 N. E., 122.
15. A vendor's lien expressly reserved in deed is not affected by failure to record
the deed or by its destruction after record. Texarkana National Bank v.
Daniel (Tex. Civ. App ), 31 S. W., 704.
. 16. A mortgage of a stock of goods, providing that all stock replaced after the
sale of any of the stock conveyed should be substituted therefor and be
liable for the debt, is ineffectual to create a lien on after-acquired goods.
First National Bank v. Lindenstruth (Md.), 28 A., 807.
17. Moller & Co., brokers and agents for Hunt, by an absolute power of attorney, having authority from her to pledge her stocks for a loan of $35,000,
contracted with defendant for the loan, giving their own note therefor,
secured by pledge of the stock. Defendant knew that the loan was for
Hunt, and was to be used to pay for a portion of the stocks, and that the
stocks belonged to her. Held, that defendant could not hold the same as
security for other loans made by it to M. & Co. Talmage v. Third National
Bank of the City of New York, 91 N. Y., 531; 3 N. B. C\, 603.
18. Plaintiff tendered before suit the $35,000 and interest, and on this being
refused, tendered $46,000. Held, not a conclusive admission that defendant
had a lien for the latter sum. Ib.
19. A national bank may be sued in the county where the plaintiff resides. 1b.
20. The controversy in this case involves the allowance, in favor of the trustee
in bankruptcy of S., of liens upon certain bonds, owned in fact by C. and
D., though ostensibly belonging to C. only, as pledged to secure, by express
agreement, the general balance of account of a New Orleans bank, of
which C. was president; and also, by implication from the usage of the
banking business in which S. was engaged, C.'s general balance. Reynes
v. Dumont; Dumont v. Fry, 130 U. S.,354.
21. The court is of the opinion upon the evidence that the bonds were pledged
to secure the remittance by the bank to S. of " exchange bought and paid
for"—that is, bills drawn against shipments and purchased by advances to
the shippers—and that they can not be held to make good a debit balance
of the bank created by the nonpayment of certain drafts drawn by it
directly on Europe and unaccompanied by documents. Ib.
22. A banker's lien rests upon the presumption of credit, extended in faith of
securities in possession or expectancy, and does not arise in reference to
securities in possession of a bank under circumstances, or where there is a
particular mode of dealing, inconsistent with such lien. Ib.
23. The pledge of these bonds to guarantee the remittance by the bank as before
stated, and the circumstances under which they were left in the possession
of S. and had been made use of by C , precludes the allowance of the
banker's lien claimed on behalf of S. as against the ultimate indebtedness
ofC. Ib.
24. The receipt by D. and the assignee of C. of the remaining bonds and money
realized from bonds or coupons, after the satisfaction of the amounts
decreed as liens by the circuit court, did not deprive D. and C.'s assignee
of the right of appeal. Ib.



138

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIEN. See Preferred claims—Continued.
25. Where the objection of want of jurisdiction in equity because of adequate
remedy at law is not made until the hearing on appeal, and the subjectmatter belongs to the class over which the court of equity has jurisdiction,
this court is not necessarily obliged to entertain such objection, even
though, if taken in limine, it might have been worthy of attention. Ib.
26. A contract lien of a national bank on shares of its capital stock to secure a
loan which it has made thereon is valid, since Revised Statutes, United
States, section 5201, forbidding national banks to loan on their capita
stock, provides no penalty for its violation, and only subjects the bank t >
<
proceedings by the United States to annul its charter. Buffalo German
Insurance Company v. Third National Bank (Sup.), 43 N. Y. S., 550.
21. A bank has no lien on the deposit of a customer for an indebtedness owing
to it by him, which has not matured, though he be insolvent. Homer v.
National Bank of Commerce (Mo. Sup.), 41 S. W., 790.
LIMITATION OF ACTIONS:

1. Under the statute of limitations of Washington, an action against a stockholder of an insolvent national bank to recover an assessment must be
brought within two years. (C C), Aldrich v. Skinner, 98 Fed. Rep., 345.
2. A cause of action to re6over an assessment from a stockholder of an insolvent
national bank does not accrue until the receiver is authorized by law to
bring suit therefor, which is not until the assessment has been ordered by
the Comptroller, and the time fixed for its payment, belore it shall become
delinquent has expired. Ib.
3. The liability of a stockholder in a national bank, who has made full payment
for his stock, to pay assessments for the benefit of the bank's creditors, is
not contractural but is a conditional liability, imposed by law as an incident
to ownership of the stock. Ib.
4. No limit of time having been prescribed by the Federal statutes within
which an action must be brought to enforce an assessment against a stockholder in an insolvent national bank, such an action is governed as to
limitation by the statute of the State where it is brought, by virtue of
Rev. St., p. 721. Ib.
5. Under the statute of limitations of Washington, an action against a stockholder of an insolvent national bank to recover an assessment must be
brought within two years after such assessment has been made by the
comptroller and has become delinquent. Aldrich v. McClaine (C. C), 98
Fed. Rep., 878.
6. Fraud or concealment which will prevent the running of limitation against
an action must be that of the defendant. School Dist. of City of Sedalia,
Mo., v. De Weese (C. C), 100 Fed. Rep., 705.
7. The cashier of a bank, as agent for a school district, resold bonds which he
had redeemed on behalf of the district, and converted the proceeds to his
own use, stating to the directors that he had been nnable to obtain such
bonds. The directors were also negligent in failing to make inquiry from
third persons, which would have disclosed the facts. Held, that limitation began to run against an action by the district to charge the bank
from the time of the conversion. Ib.
8. The surrender by a state treasurer of certificates of deposit issued by a
national bank to his predecessor in his official capacity, and the crediting
of the amount to his own account as treasurer, at a time when the bank
was in fact insolvent, can not affect the liability of the bank or its receiver
to the State for the amount actually deposited. McDonald v. State of Nebraska (C. C. A.), 101 Fed. Rep., 171,
9. Whether the receiver of a national bank can plead the statute of limitations
to an action on a claim against the bank which was not barred at the
time of his appointment, quaere. Ib.
10. An action in Nebraska by the receiver of a national bank to recover an
assessment against a stockholder is barred by the statute of limitations
of the State in four years from the time fixed by the Comptroller for the
payment of such assessment. McDonald v. Thompson (C. C.A.), 101 Fed.
Rep., 183.
LIQUIDATION :

1. A national bank may go into voluntary liquidation and be closed by a vote
of two-thirds of its shareholders, although contrary to the wishes and
against the interests of the remainder. Watkins v. National Bank of Lawrence, 32 P., 914.
2. A national bank which has gone into voluntary liquidation will continue to
exist as a body corporate for the purpose of suing and being sued until




REPORT OF THE COMPTROLLER OF THE CURRENCY.

139

LIQUIDATION—Continued.

3.

4.

5.
6.

7.
8.

9.

10.

11.

its affairs are completely settled. National Bank v. Insurance Company,
104 U. S., 54; Ordway v. Central National Bank, 47 Md., 217.
After an association goes into liquidation there is no authority on the part
of its officers to transact any business in its name so as to bind its shareholders, except that which is implied in the duty of liquidation, unless
such authority has been expressly conferred by the shareholders. Richmond v. Irons, 121 U. S., 27.
Where a bank has gone into voluntary liquidation and the Comptroller has
no power to appoint a receiver, a proper court, in a case where such action
is necessary to protect the interests of a creditor, will appoint a receiver
for it. Irons v. Manufacturers' National Bank, 6 Biss., 301.
The Comptroller may appoint a receiver for a bank that has voted to go into
voluntary liquidation. Washington National Bank of Tacoma v. Eckels, 57
Fed. Rep*, 870.
Where a national bank is insolvent and in process of voluntary liquidation,
and its affairs are being greatly mismanaged by its mauaging agents, to
the injury of its creditors and stockholders, and some of the creditors and
stockholders are being favored to the injury of others, a receiver may be
appointed in such a case, even where the bank only has been made a
defendant. Elwood v. First National Bank, 41 Kans., 475.
Without express authority from the shareholders in a national bank, its
officers, after the bank goes into liquidation, can only bind them by acts
implied by the duty of liquidation. 11.
Creditors of a national bank, who, after it suspends payment and goes into
voluntary liquidation, receive in settlement of their claims bills receivable, indorsed or guaranteed in the name of the bank by its president,
can not claim as creditors against the shareholders, as the original debt
is paid. Ib.
A national bank went into voluntary liquidation. All the stockholders but
one united in organizing a new national bank under a different name. He
knew that the greater part of the assets were sold to the new bank, and
he accepted dividends from nearly all such assets. Held, (1) that he had
no right to share in the earnings of the bank; (2) the old bank had no
good will to sell independent of the value of the unexpired lease of its
banking house. First National Bank of Centralia v. Marshall, 26 III. App.,
440; 3 N. B. C, 401.
A national bank in voluntary liquidation may still sue and be sued by its
name for the purpose of closing its business, and a creditor may maintain
a suit upon a disputed claim, although he has filed a bill under the act of
June 30, 1876, section 2, to enforce the individual liability of shareholders.
Central National Bank of Baltimore v. Connecticut Mutual Life Insurance
Company, 104 U. 8., 54; 3 N. B. C, 20.
Under the act of Congress of July 12, 1892, extending for the purpose of
liquidation the franchises of such national banking associations as do not
extend the periods of their charters, and making applicable to them the
statute relating to liquidation of banking associations, such an association may continue to elect officers and directors for the purpose of effecting liquidation. But after the expiration of the term of its charter the
stock of such an association is not transferable, so as to give the transferee
the right to share in the election of directors, and such transferee, not
being a stockholder, is ineligible as a director under Rev. St., sec. 5145.
Richards v. Attleboro National Bank, 148 Mass.} 187; 3 N. B. C, 495.

LOANS:

1. Section 5200, Rev. St., which provides that the total liabilities to any association or any person, etc., shall not exceed one-tenth part of the capital
stock paid in, was intended only for the guidance of the association, and,
though its franchises may be liable to forfeiture for violation of the law,
the association may recover of the borrower the full amount of the loan.
Gold Mining Company v. Rocky Mountain National Batik, 96 U. S., 640;
O'Hare v. Second National Bank of Titusville, 77 Penn. St., 96; Shoemaker v.
The National Mechanics7 Bank, 2 Abb., U. S., 416; Stewart v. National Union
Bank of Maryland, 2 Abb., U. £., 424.
2. The prohibition of Rev. St., sec. 5200, that the total liabilities of any national
bank to any person, company, corporation, or firm for money borrowed,
including in them " the liabilities of the several members thereof, shall at
no time exceed one-tenth part" of the capital stock actually paid in does
not prevent a bank from recovering of a person to whom it has lent a sum
greater than 10 per cent of its capital stock the excess of the loan over
 such limit. Corcoran v. Batchelder, 147 Mass., 541; 3 N. B. C, 491.


140

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LOANS—Continued.
3. A note is not illegal because at the time it was discounted by the association
the maker was indebted to the association in a sum equal to more than onetenth part of its capital. Of Hare v. Second National Bank of Titusville, 77
Penn. St., 96.
4. And a court of equity will not enjoin an association, at the instance of the
borrower, from transferring to innocent third persons notes and securities,
on the ground that the notes represent part of a loan made in excess of 10
per cent of the capital of the association. Elder v. First National Bank of
Ottawa, 12 Kans., 238.
5. Where a State bank makes a loan to one person of an amount in excess of
one-tenth part of its capital, and is afterwards converted into a national
bank, it may, after conversion, extend the time for payment of such loan
without violating sec. 5200, Rev. St. Allen v. The First National Bank of
Xenia, 23 Ohio St., 97.
6. Defendant sued by national bank for moneys it loaned him cau not set up as
bar that they exceed one-tenth of capital paid in. Gold Mining Co. v.
Bocky Mountain National Bank, 96 U. S., 640.
7. Placing by one bank of its funds on permanent deposit with another is a loan
within this enactment. Bank v. Lanier, 11 Wall., 369.
8. Rev. St., sec. 5200, providing that the amount for which any one individual
or firm shall be indebted to a national bank shall not exceed a certain
sum, when such a bank violates the provision by lending to one person an
amount in excess of the limit, such a person can not set up the violation of
the statute as a defense to his liability on the note. If a penalty is to be
enforced against the bank, it can be done only at the instance ofthe Government. A contract entered into by the bank in violation of this section
is not void. Wyman v. Citizens' National Bank of Faribault, 29 Fed. Rep., 734.
9. Rev. St., sec. 5202, providing that national banks shall not contract liabilities
in excess of their paid-up capital stock, except upon notes of circulation,
accounts for deposits, etc., does not intend that such items of liability
shall be excluded in determining whether the indebtedness of a bank
exceeds its paid-up capital stock at the time it incurs a liability as guarantor. Weber et al. v. Spokane National Bank, 50 Fed. Hep., 735.
10. Rev. St. U. S , sec. 5202, providing that no national bank shall be indebted
or in any way liable to an amount exceeding the amount of its capital
stock paid in, except on circulation, deposits, special funds, or declared
dividends, does not prohibit a national bank from incurring indebtedness
up to the amount of its paid-up capital, for any purpose within its powers,
though its circulation, deposits, special funds, and declared dividends
exceed the amount of its paid-up capital. Weber v. Spokane National Bank
(C. C. A.), 64 F, 208.
11. In an action against a national bank and its receiver on a promissory note,
defendants may avail themselves of the defense that the note was executed
in violation of Rev. St., sec. 5202, providing that national banks shall not
contract liabilities in excess of their paid-up capital stock. The note
being void as to bank, it is not estopped to set up the defense in question. Ib.
12. A business man accepting the note of a national bank is presumed to know
the financial condition of the bank, and that at the time of the execution
of the note it had already incurred indebtedness in excess of the limit prescribed by law. Ib.
13. Loans by a national bank to an individual or company in excess of onetenth of its paid-up capital are not void. The loan may be collected,
though the bank is exposed to forfeiture of its franchise and the officers
participating are declared personally liable. Stewart v. The National
Union Bank of Maryland, 2 Abb. U. S.y 424; 1 N. B. C, 175.
14. A mortgage given a bank could not be attacked by a third person on the
ground that it was ultra vires of the bank to take such security, or that
the loan made by the bank, which the mortgage secured, was more than
10 per cent of the bank's capital. Smith v. First National Bank (Nebr.),
63 N. W., 796.
15. The loaning by a national bank to an individual of more than the national
banking Jaw allows can not be taken advantage of either by the debtor
or another creditor of his. McCartney v. Kipp (Pa. Sup.)-, 33 A., 283.
16. Where, for a debt actually due him, a creditor held the note of a debtor,
which he discounted, indorsed, and delivered to a bank at a rate of discount greater than the rate of interest allowed by law, but no greater
than the rate provided for in the note, the transaction was not necessarily
a loan, in which the note was delivered as collateral. Becker's Investment
' Agency v. Eea {Minn.), 65 N. W., 928.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

141

LOANS—Continued.
17. A national bank, having joined with other persons in a partnership to
operate a mill, can not be prevented from recovering moneys loaned to the
firm on the ground that it had no power to become a partner in the mill.
23 S. W., 334, affirmed. Cameron v. First National Bank {Tex. Civ. App.),
34 S. W., 178.
18. Where a bank has received the proceeds of a discount, and used them, it can
not dispute its cashier's authority to apply for the discount. — Tradesmen's
National Bank v. Bank of Commerce {Sup.)} 39 N. Y. S.t 554.
19. The promoters of a railroad corporation on their individual credit borrowed
money of banks, which was used in constructing the road, and paid themselves by stock issued to them. They afterwards caused to be issued by
the company 200 bonds of $2,000 each, and turned over to such banks
$134,000 of the bonds in payment of the money borrowed, the banks
having knowledge of the facts. Held, that the banks acquired such bonds
without consideration. Farmers and Merchants' National Bank v. Waco
Electric Railway and Light Co. {Tex. Civ. App.), 36 S. W., 131; Metropolitan
Trust Co. v. Farmers and Merchants' National Bank, Ib.
20. A national bank loaned money and took stock in a corporation as collateral
security therefor. Held, that it had not exceeded its power. Canfield v.
The State National Bank of Minneapolis, 1 N. W. Rep., 173.
21. Loans to any person or company in excess of one-tenth part of the capital
stock of a national bank are not void, and in an action to recover such
loans the defendant can not interpose the defense that they were in violation of "the national bank act. Union Gold Hill Mining Co. v. Rocky
Mountain National Bank, 96 U. S., 640.
22. Where a national bank which is a depository of the funds of a municipality,
acting by its president, makes in absolute good faith, and in pursuance
of a custom of the banks of the city, advances not authorized by law to a
commission for building a court-house upon checks regularly drawn and
indorsed, and the legislature, by a subsequent act, authorizes the repayment of such advances, the bank can recover the full amount with interest,
although a part of the money so advanced was fraudulently misappropriated by certain of the city officials who were also directors in the bank.
Mayor, etc. t'of New York v. Tenth National Bank, 111 N. Y., 446; 3 N B. C, 655.
23. A., the president of defendant, a national bank in Vermont, applied to the
plaintiff, a banking corporation in Canada, for a loan for his railroad of
$50,000, which he had been unable to obtain from defendant. Plaintiff's
manager told him the money could not be loaned as an individual loan, as
its individual loans were too near the limit allowed by law, but that it
would deposit thatv amount with defendant if desired. A. assented, and
they agreed the deposit should draw interest at 6 per cent while it
remained, and that bonds should be deposited as security. Plaintiff drewr
two drafts for the amount on a Boston bank, delivered them to defendant
and received the collaterals, and entered the transaction on its books as a .
loan to defendant. Defendant indorsed the drafts, forwarded them to the
Boston bank, from which it received credit for them, and has always
retained their avails. About a year afterwards defendant failed and a
receiver was appointed, who rejected the claim of plaintiff when presented for payment, and defendant brought suit. Held, that the transaction was not a loan to A. individually, but to defendant; that plaintiff
was entitled to a judgment, to be paid by the Comptroller from the assets
ratably with other claims, and that the amount due should be adjusted
as of the time when the receiver was appointed, and so certified by the
receiver to the Comptroller, to be paid in due course of administration.
Eastern Township Bank v. Vermont National Bank of St. Albans and another,
n Fed. Rep., 186.
24. As a national bank has no authority to loan the money of other persons, it is
not liable for a loan made by its cashier for a depositor, even though the
loan was made as the result of a conspiracy with the president with intent
to defraud the depositor. Grow v.% Cockrill {Ark.), 39 S. W., 60.
25. The rule announced in Western National Bankv. Armstrong (14 Sup. Ct., 572;
152 U. S., 346), that the vice-president or cashier of a national bank has no
power to borrow money on its behalf unless specially authorized by the
directors, is not applicable in a case where a general and long-established
usage is shown between corresponding banks, prevailing in both cities
where the lending and borrowing banks were respectively situated, of
lending and borrowing through the executive officers of the banks, no
further authority being furnished or demanded, the presumption being
that such usage was known and acquiesced in by the directors of the bor


142

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LOANS—Continued.
rowing bank in the absence of notice to the contrary to its correspondents.
Armstrong v. Chemical National Bank of City of New York, 83 Fed. Bep.9o56.
26. The vice-president of a national bank was engaged in outside speculations,
to which the cashier and teller were privy, and in which funds of the
bank were used. All were directors. Two of the remaining six directors
were employees of the vice-president, whom he had qualified to act by
gifts of stock, and the remainder were selected by him for the purpose of
giving him full control and management of the bank, which he exercised,
borrowing money and pledging the securities of the bank therefor, and
using large amounts of its funds and securities in his speculations, to the
knowledge of a minority of the directors, and without inquiry or investigation on the part of any. Held, that such knowledge and conduct on the
part of the directors gave implied authority to the vice-president to borrow
money on behalf of the bank. Ib.
27. Where, by usage between two correspondent banks, one rendered a monthly
statement to the other, which returned a reconcilement sheet noting any
matter of difference, which was settled by correspondence, such a statement, showing a loan by the bank making it to the other, was notice of
such loan to the directors of the latter, and a failure to notice or object to
it was a ratification, though in fact the books of the borrowing bank
showed the transaction to have been a deposit to its credit by its vicepresident, and the amount was credited to his individual account and used
by him, the discrepancy having been overlooked by the bookkeepers who
checked the statement. In such case the negligence of the employees was
chargeable to the directors, whose agents they were. Ib.
28. If, for the purpose of enabling a bank to borrow without having its printed
statements show it as a borrower, another bank credits a sum to the borrower's account, and charges the same to a special account, and takes an
individual guaranty note from the borroAver's directors, amounts drawn
on the credit constitute a loan to the bank, and not to its directors.
American Exchange National Bank of New York v. First National Bank of
Spokane Falls et al., 82 Fed. Rep., 96.1.'
29. Upon the question whether a loan was made to the defendant bank itself,
and secured by a guaranty note of its directors individually, or was made
to the directors upon their own note, there was conflicting testimony as to
the original agreement, but it appeared that interest was charged to the
bank, and by ; t entered on its books under profit and loss; that the note
itself was a promise to repay loans made to the bank; that the bank's
cashier, in transmitting the note, referred to it as a guaranty; and that
the loan was credited to the bank, and drawn on by it in the ordinary
method and course. Held, that there was sufficient evidence of a loan to
the bank to warrant a submission to the jury. Ib.
30. On the question whether a loan was made to a bank or to its directors, the
private arrangements of the directors as to how tl^e transaction should
be entered on the bank's books would not be controlling as against the
lender. Ib.
31. A corporation may become liable upon contracts assumed to have been made
in its behalf by an unauthorized agent by appropriating and retaining,
with knowledge of the facts, the benefits of the contract. Ib.
32. The fact that the directors of a bank unite in making a guaranty note to
secure a loan to the bank previously arranged for by the cashier is'evidence
of ratification of the cashier's act. Ib.
33. If the directors of a bank have long pursued an established custom of holding meetings and transacting business at the bank during business hours
whenever a sufficient number were present, the custom would carry with
it a standing notice to each director and enable those present to proceed,
in the absence of a controlling by-law or statute. Ib.
34. A bank which discounts the notes of a corporation depositor and credits the
proceeds to its account is not bound, in order to protect the validity of thn
notes, to see that the money'when paid out on checks of the corporation,
drawn in the regular course of business, is properly applied to the uses of
the corporation. First National Bank of Hailey v. G. V. B. Kin. Company, 89
Fed Rep., 439.
35. Where a national bank receives State funds subject to check, and to withdrawal on seven days' notice, giving security therefor, and agreeing to pay
interest on daily balances, the transaction' is a deposit and not a loan.
State of Nebraska v. First National Bank of Orleans, 88 Fed. Rep., 947.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

143

MANDAMUS :

1. Mandamus is the proper remedy when a mandate of the U. S. Supreme
Court has been disregarded. In re City National Bank of Fort Worth, 153
U. S., 246.
2. Mandamus does not lie to compel the officers of a private corporation to
issue stock to a person entitled thereto. State v. Carpenter, 37 N. E.y 261.
3. When the officers of a corporation refuse, on demand, to issue a certificate
of stock to a person entitled thereto, the remedy is by action for damages,
or to enforce the issue and delivery of such certificate in equity, rather
than by mandamus. Ib.
4. If, as alleged, the assignee's only remedy is a mandamus to compel the levy
of a tax, then it has a right to obtain a judgment in the Federal court to
enable it to invoke the power of that court in the granting and enforcement of the mandamus proceeding. First National Bank of Buchanan
County v. Duel County, 74 Fed. Rep., 373.
5. Compliance with a mandate of this court which leaves nothing to the judgment or discretion of the court below may be enforced by mandamus.
City National Bank of Fort Worth v. Hunter, 152 U. S., 512.
6. This court can not entertain an appeal from a judgment executing its mandate if the value of the matter in dispute upon the appeal is less than
$5,000. Ib.
7. No appeal lies from a decree for costs. Ib.
MARRIED WOMEN:

1. A national banking association may take as security for a loan the indorsement of a married woman, charging her separate estate. Such security
is to be treated as personal security, within the meaning of the banking
law, and not as a mortgage. Third National Bank v. Blake, 73 N. F., 260.
2. A married woman in the District of Columbia may become a holder of stock
in a national banking association and assume all the liabilities of such a
shareholder, although the consideration may have proceeded wholly from
the husband. Keyser v. Hits., 133 U. S., 138.
3. In Vermont a married woman is competent to become a stockholder in a corporation and to contract to charge her separate property with the payment
of any liability which is implied from entering into that relation. Witters
v. Sowles, 38 Fed. Rep., 700.
MORTGAGE. See Real estate.

1. A national bank has a right to take a chattel mortgage for the purpose of
securing a previously contracted debt, and to enforce the same. Spafford
v. The First National Bank of Tama City, 37 Iowa, 181; 1 N B. C, 486.
2. The Iowa statute provides that corporations organized thereunder must, by
their articles of incorporation, fix a maximum of indebtedness, which
shall not exceed two-thirds of their capital stock; this provision not to
apply, however, where corporate bonds are issued and secured "by an
actual transfer of real estate securities/' which shall be a first lien on
unincumbered real estate, worth at least twice the amount loaned thereon.
(McClain's Code, § 1611.) Held, that the execution and delivery by the
corporation of a mortgage on its own real estate to secure bonds was a
transfer of real estate securities within the meaning of the statute.
First National Bank of Montpelierv. Sioux City Terminal Railroad and Warehouse Co. (Trust Co. of North America, Intervened, 69 Fed. Rep., 441.
3. A terminal and warehouse company executed a lease of its property for a
term of 100 years, and shortly afterwards mortgaged the same to secure
an issue of bonds. The lease and mortgage mutually referred to each
other, and the lease contained a provision, with an express covenant by
the lessee, for the payment to the trustee under the mortgage 5f so much
of the rental as was necessary to pay interest on the bonds and the costs
of the trusteeship. Held, that the two instruments were to be construed
in pari materia, and that consequently the lease was not a prior incumbrance to the mortgage, within the meaning of a statute requiring corporate bonds to be secured by mortgage upon unincumbered real estate.
McClairis Code, } 1611. Ib.
4. Upon a question as to whether property mortgaged by a corporation was
worth twice the amount of the bonds secured by the mortgage, as required
by statute, held, that where it appeared that the bonds were sold in open
market for from 90 to 95 cents on the dollar, in cash, it could not be held
that the security, at the time it was given, did not meet the statutory
requirement. Ib.



144

REPORT OF THE COMPTROLLER OF THE CURRENCY.

MORTGAGE. See Real estate—Continued.
5. The fact that a trust'deed to secure bonds was not in strict accordance, in
some particulars, with the resolution authorizing it, is not sufficient
ground for holding it invalid, where, subsequent to its execution, the
board of directors recognized its existence and validity by directing the
issuance of the amount of bonds which the deed was given to secure. Ib.
6. Where a corporation executed a lease for 100 years, and shortly afterwards
a mortgage of the same property, and the two instruments mutually
referred to each other, so as to be in pari materia, held, that there was no
ground for a contention that the estate created by the mortgage could not
take effect until the expiration of the lease, and that consequently the
mortgage was void, as creating a perpetuity. Ib.
7. Where the description of property covered by a mortgage is found to have
been inserted before the execution and delivery of the mortgage, and the
mortgage is otherwise complete, the defense can not be made to a foreclosure that certain collaterals, which were to have been embraced in the
mortgage, had been omitted in violation of the mortgagors' rights. Des
Moines National Bank v. Harding (Iowa), 53 N. W,, 99.
8. A landlord who is to receive as rent for a farm a share of the crop, to be
delivered by the tenant, has such an interest in the crop that he may,
before its division, make a valid mortgage thereon, which will attach to
his share as soon as segregated, and will take precedence of a garnishment of the tenant by a creditor of the landlord after the execution of the
mortgage. Riddle v. Dow (Iowa), 66 N. W., 1066; Thompson National Bank
v. Same. Ib.
9. A mortgagee of chattels who releases a part of the mortgaged property is
not thereby precluded from enforcing his mortgage upon the remainder
as against another creditor whose rights are in no way prejudiced by such
release. Ballinger National Bank v. Bryan ( Tex. Civ. App.), 34 S. W., 451.
10. A mortgage taken for the purpose of defrauding creditors of a mortgagor is
not merely voidable as to such creditors, but is void. First National Bank
v. Marshall (Kan. Sup.), 43 /\, 774.
11. Giving a chattel mortgage to secure an overdue note, the time of payment of
which is by the terms of the mortgage extended for thirty days, such
mortgage to remain after the overdue note is paid, as additional security
for the payment of several demand notes already secured by a real-estate
mortgage, does not postpone payment of. the demand notes for any definite
time, so as to discharge the sureties thereon. Fallkill National Bank v.
Sleight (Sup.), 37 N. Y. S., 155.
12. A mortgage given by a wife on her separate estate in settlement of a debt of
her husband is not binding on her, though she gave it under the impression that the creditor could, for some reason, subject the property to payment of the debt, and intended, in giving it, to effect a compromise of what
she regarded as a doubtful claim against her property. First National Bank
v. Bayliss (Ga.), 23 S.-F., 851.
13. A complaint, in an action to foreclose a mortgage held as collateral, against
the principal debtor and the mortgagor, which set out the mortgage note,
which had been assigned to plaintiff, and also the note of the principal
debtor, and demanded judgment against the mortgagor and the principal
debtor for a deficiency, was not demurrable, on the ground that it united
different causes of action. First National Bank v. Lambert (Minn.), 65
N. W.,451.
14. An objection as to indefiniteness of a chattel mortgage, sufficiently certain as
between the parties, can not be raised by one who had acquired no valid
lien on the property. First National Bank v. Marshall Sf Ilsley Bank (Mich.),
§5 N. W., 604. '
15. In an action between two parties claiming property under chattel mortgages
from different persons, the court properly refused to direct a verdict for
defendant on the ground that plaintiff's mortgage was not on file when,
defendant extended credit to its mortgagor, it appearing that plaintiff's
mortgagor was the owner of the property when plaintiff's mortgage was
given, and the evidence not being conclusive that defendant's mortgagor
ever succeeded to the rights in the property of plaintiff's mortgagor. Ib.
16. In replevin by a chattel mortgagee against a purchaser at an execution sale
of the mortgaged chattels, plaintiff's right to recover is not affected by the
fact that the mortgage was not filed as required by statute, where it appears
that the sale was made subject to the rights of the mortgagee. Potter v.
Traders' National Bank (Sup.), 23N. Y. S., 1079.
17. A creditor, on receiving a mortgage on his debtor's stock of goods, immediately went to the latter's store and told the clerks and others present that




REPORT OF THE COMPTROLLER OF THE CURRENCY.

145

MORTGAGE. See Real estate—Continued.
he had taken possession under the mortgage, putting one of the clerks in
charge, and he proceeded forthwith to the couuty seat to record the mortgage. Before the mortgage was recorded an attachment was levied on the
goods, though xhe officer making such levy was informed at the time that
the property was in plaintiff's possession under his mortgage. Held, that
plaintiff's mortgage was good as against the attachment, though the attaching creditor had no notice of the mortgage at the time the writ was issued.
First National Bank v. Carter ( Wash.), 33 P., 824.
18. An instrument which on its face purports to be a mortgage of personal property by a firm, but is invalid as such because not executed by all the members of the firm, as required by the Wyoming act of 1890, is not effective in
aoy way, either as conveying the entire interest of the firm in the partnership property or of the individual members who have signed it. Ridgely
et al. v. First National Bank, 75 Fed. Rep., 808.
19. Nor can the instrument be ratified by the partner whose name was omitted. Ib.
20. A purchaser from the mortgagor may attack a mortgage as void because not
properly executed. Ib.
21. A mortgage to a national bank is valid as to preexisting debts, but void as
to future loans. Woods v. People's National Bank of Pittsburgh, 83 Pennsylvania State, 57.
22. Notes secured by mortgages were assigned to a national bank and by it to
plaintiff. Held, in an action of foreclosure, that the mortgages were not
extinguished by the assignment to the bank, and were valid in the hands
of the plaintiff', he being a bona fide purchaser. Richards v. Kountze, 4
Nebraska, 200; 1 N. B. C, 652.
23. In the absence of evidence showing the purpose and object of the assignment
to the bank, it can not be presumed that it was for a debt created in
presenti in violation of the national banking act. Ib.
24. Semble, that the limitations of the national banking act apply to transactions in real property, independent of legitimate banking operations,
and not to mortgage securities. Ib.
25. A national bank may take a mortgage of real estate to secure an antecedent
indebtedness at the time of renewing and under an agreement for future
renewals of the notes evidencing the debt. Howard National Bank of
Burlington v. Loomis, 51 Ft., 349; 2 N. B. C, 424.
26. A national bank organized as successor to a State bank may maintain an
action to foreclose a mortgage of real estate executed to the State bank as
security for a note and assigned to it by the State bank on the formation
of the national bank. Scofield v. State National Bank of Lincoln, 9 Nebr.,
316; 31 Am. Rep., 412; 2 N. B. C, 280.
27. The transfer to a national bank, as security for a loan of stock of a corporation whose property is solely real estate, is not invalid within the national
banking act as a loan upon a mortgage security. Baldwin v. State National
Bank of Minneapolis, 1 N. W. Rep., 261; 2 N. B. C, 278.
28. M. gave to a bank a mortgage on land owned by him to secure paper which
the bank might discount. Among the paper so discounted was a note made
by J. which M. had discounted, and which J. paid to the bank. The note
had been given for a certificate of deposit which J. afterwards indorsed and
subsequently paid. J. claimed subrogation under the mortgage to the
rights of the bank as respected the certificate of deposit. Held, that the
claim could not be allowed; that the payment of the note to the bank by
J. discharged the mortgage, so far as it was a security for the note, and
that the certificate of deposit was not secured by the mortgage. Underwood
v. Metropolitan National Bank, 144 U. S., 669.
NEGOTIABLE PAPER:

1. Where the payee of a note, in extending time of payment to the maker
reserves his rights against the sureties, the latter are not discharged,
though they are not notified of the fact. Boston National Bank v. Jose
( Wash), 38 P., 1026.
2. The fact that a bank takes a note in place of one which has matured raises
no presumption that the note was taken in payment of the other, but the
question of payment is one of fact, depending on the intention of the
parties. Ib.
3. A bank by suing on a note taken by its cashier under a contract made by
him ratifies the contract in toto, though he was unauthorized to make it.
La Grande National Bank v. Blum (Or.), 41 P., 659.
4. A purchaser of several notes for value and before maturity, without notice
 of any set-offs, who pays one-half of their aggregate face value and gives
CUR
10
http://fraser.stlouisfed.org/ 1900, PT 1
Federal Reserve Bank of St. Louis

146

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPER—Continued.

the indorsee credit for the balance, subject to his check, holds all the
notes free from any right of set-off in favor of the maker, and the fact
that he may have recovered on part of the notes does not deprive him of
the character of a purchaser for value, so as to let in the right of set-off
as to theothers. United States National Bank v. McNair (N. C.),21 S. E., 389.
5. That an indorsee who rediscounts notes may have paid less than their face
value for them does not entitle the maker to any right of set-off to which
he would not otherwise be entitled. Ib.
6. Where a note was altered after delivery by -an agent of the payee, without
the maker's knowledge, by an interlineation of the words "with interest
at 6 per cent," which occupied only halt' a line and appeared to have been
interlined, no recovery could be had thereon by a subsequent holder for
value of either interest or principal alone. Gettysburg National Bank v.
Chisolm (Pa.), 32 Atl. Rep., 730.
7. After a note is barred by statute of limitations, the liability of a surety
thereon can not be revived by payments made, without his knowledge or
consent, by the maker. Dougherty v. Hoffstetter (Ind.), 40 N. E., 278.
8. The obligation imposed by a provision in a note for the payment of 10 per
cent attorney's fees is not affected by the fact that it was inserted for the
sole benefit of the payee and not with any purpose of paying the amount
to an attorney. Sturgis National Bank v. Smyth (Tex.), 30 S. W., 678.
9. The amount of attorney's fees stipulated in a note to be paid in case suit is
brought may be added to the amount of the judgment recovered on the
note, under Code Proc, sec. 803, expressly authorizing the allowance of
such fees. Exchange National Bank v. Wolverton ( Wash.), 39 P., 248.
10. Erasing from a note after delivery the words "agreeing to pay all expenses
incurred by suit or otherwise in attempting the collection of this note,
including reasonable attorney's fees," is a material alteration which renders the note void, since without such words the note is negotiable. First
National Bank v. Laughlin (N. D.), 61 N. W., 473.
11. Where a person induces another to sign a paper containing no writing and
which is to be used merely as a means of identifying the signer, who does
not intend to execute a note or contract of tiny kind, and then fills out the
blanks so as to make the paper a note, the note will be void even in the
hands of an innocent holder. First National Bank v. Zeims (Iowa), 61
N. W., 483.
12. The plaintiff received from defendants the following certificate: " B . has
deposited in this bank $8,000 (eight thousand dollars), payable to the order
of himself on the return of this certificate properly indorsed. Interest at
6 per cent, if left 12 months, for all future months. Interest to cease if not
renewed at end of one year from date. Held, that such a certificate of
deposit is a promissory note, payable on demand. Beardslen v. Webber
(Mich.), 62 N. W., 173.
13. Payment of money on a note at a bank where it is payable is not a payment
of the note if the note is not at the bank and is not produced. First National
Bank v. Chilson (Neb.), 63 N. W., 362.
14. The holder of a note does not have the burden of proving that he is a bona
fide purchaser unless it appears that the payee obtained it by fraud. Flour
City National Bank v. Grover (Sup.), 34 N. Y. £., 496.
15. In an action on a note, plaintiff averred that it had made a valid sale of
securities pledged for the note, and had credited the proceeds on the note,
and prayed a judgment for the amount of the note, less such credit.
Defendant pleaded that the alleged sale was unlawful, and that, as plaintiff had wrongfully appropriated the securities pledged, defendant was
entitled to a credit for their full value. Held, that defendant was not
bound to tender the amount due on his note, as a condition precedent to
making such defense. Rush v. First National Bank of Kansas City, 71 Fed.
Rep., 102.
16. The wrongful act complained of by the defendant's answer was so connected
with the transaction set forth by plaintiff as to constitute a valid counterclaim under Gen. St., Kan., 1889, par. 4178. Ib.
17. Where a person, at the solicitation of national-bank officers, gave his note
to the bank to take up the note of a stranger, for the purpose, as stated
by the officers, of getting the old note "out of the past-due notes," held,
that the maker of the new note was liable to the receiver of the bank, on
a renewal of the note, whether the transaction was a real one, or a mere
trick to make it appear to the Government and the creditors and stockholders that the bank had a valuable asset, which it in fact did not have.
Fauly v. O'Brien, 69 Fed. Rep., 460.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

147

NEGOTIABLE PAPER—Continued.

18. A stockholder and director in a national bank, being aged and infirm of
sight, was requested by the president of the bank to give him an accommodation note for $10,000. He replied that if the purpose was to draw
money on the note or put it in the bank he would not give it. The
president then stated that the note was merely to be put into the hands
of his personal creditor as security, and that no money would be needed.
A note was accordingly made, but, without the knowledge of the maker,
it was payable to the bank, and was, in fact, placed in the bank, and a
certificate of deposit for the amount issued to the president, and by him
deposited with his creditor, who held it as security until the bank failed.
Held, that the maker's stipulation that the note should not be used to
take money from the bank was apparently made for the bank's benefit,
and that, having given a valid accommodation note, he was liable thereon
to the receiver of the bank, although his wishes in regard to the manner
of its use had not been respected. Linn County National BanJCY. Crawford, 69 Fed. Hep., 532.
19. One L. made a note, and delivered it to the payee, upon an express agreement that it should be sold and discounted by the payee for cash, which
should be paid over to L. Instead of so doing, the payee diverted the
note, which passed through the hands of several parties, who had notice
of the diversion, and who severally indorsed the note. The last of these
parties, the D. Co., had the note discounted at its bank, which had no
notice of the diversion, and received and used the proceeds. The note
not being paid, the bank, at the request of the D. Co., sued the maker
and all the indorsers except the D. Co. Held, that the fact that the bank
had discounted the note solely in reliance on the credit of the D. Co., and
that it had omitted to sue that company, in reliance upon the company's
paying the note, if not collected from the maker or prior indorsers, though
it enabled the D. Co. to obtain an unfair advantage, was not a defense to
the action. Germania Bank of New York v. La Follette et al., 72 Fed.
Rep,, 145.
20. Where a note given a bank by one indebted to it was signed by the debtor's
sister on the bank's representation that a further loan would be made
the debtor, but no such loan was made, and the note was held merely as
collateral security, it was a defense that the note was diverted from the
purpose for which it was signed, and an inquiry could not be made as to
whether the use which was made of the note was more disadvantageous
than that stipulated would have been. Second National Bank v. Dunn (Pa.
Sup.), 25 A., SO; Gardner v. Same, Ib., 81 and 88.
21. Where the note of a corporation is negotiable in form, the affixing of the
corporate seal does not destroy its negotiability. 25 N. Y. S., 447,
affirmed. Chase National Bank v. Faurot (N. Y. App.), 44 N. E., 164.
22. Defendant indorsed a note payable to himself, and gave it to his agent, to be
delivered to one S., after the latter should have procured the execution of
a certain contract; but the agent gave S. the note before receiving the
contract, on S.'s promise that he would procure its execution that day. S.
failed to keep his promise, and sent the note to brokers, who sold it to
plaintiff before maturity. Held, that as the note had a legal inception
defendant could not avail himself of his agent's mistake and S.'s bad faith
as a defense against the bona fide holder. Ib.
23. The possession of a negotiable note payable to a corporation, and bearing
the indorsement of such corporation, regular in form, and signed by its
general manager, is prima facie sufficient to show that the officer so indorsing the note had authority 'to do so, and to entitle the holder thereof to
recover. Citizens7 National Bank v. Wintler ( Wash.), 45 P., 88.
24. Negotiable paper fraudulent at its inception is not invalidated in the hands
of one taking it for value before maturity, unless there be actual fraud
upon his part. Second National Bank v. Hewitt (N. J. Sup.), 34 A., 988.
25. The doctrine of lis pendens does not apply to a purchaser of negotiable bonds
for value before maturity. Farmers and Merchants'' National Bank v. Waco
Electric Railway and Light Co. {Tex. Civ. App.), 36 S. W., 131; Metropolitan
Trust Co. v. Farmers and Merchants' National Bank, ib.
26. Defendant corporation placed bonds issued by it in the hands of one G. as
its agent to sell to a third person, but instead of selling them G. pledged
the bonds to plaintiff as collateral security for a debt owing by him. The
bonds were negotiable in form, and plaintiff had no notice of the arrangement between defendant and G. Held, that plaintiff was a bona fide
holder. Tompkins County National Bank v. Bunnell <$- Eno Inv. Co. (Sup.),
40N.Y.S.}411.




148

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE

PAPER—Continued.

27. A mere credit given by a bank to its depositor for a note procured by fraud
does not constitute a purchase for value, in the absence of evidence that
the credit was ever drawn upon, or that the account of which'it became a
part was exhausted, before maturity of the note, or before notice of the
fraud. Drovers' National Bank v. Blue (Mich.), 67 N. W., 1105.
28. Where plaintiff, in an action on a note, undertook, but failed, to establish
that it purchased the note before maturity in good faith, proof of fraud
by the payee in procuring the note is a complete defense, unless plaintiff
shows a bona fide purchase. Ib.
29. The fact that a guaranty is written on the back of a note, above the signature of the payee, does not have the effect of preventing the signature
from operating as an indorsement, for the purpose of passing the legal
title to the note. National Bank of Commerce v. Gotland ( Wash.), 45 P., 35.
30. Where signatures of defendants were obtained either as makers or indorsers of certain notes for the supposed accommodation of certain persons to
whom they looked for indemnity, the fact that the notes were fraudulently obtained for the use of the cashier of a bank, who discounted them
with the bank's funds, and applied the proceeds to his own use, does not
render the bank chargeable with a knowledge of the fraud, and it is an
owner in good faith of the paper which it took for value and before
maturity. Indian Head National Bank v. Clark (Mass.), 43 N. E., 912.
31. Where the complaint in an action on a note alleged in the third paragraph
that no part of the same had been paid, a denial of "each and every
allegation in paragraph three/ 7 did not put in issue the question of payment. Columbia National Bank v. Western Iron and Steel Co. (Wash.), 44
P., 145.
32. A plea in an action on a note alleging that.it was a renewal of one originally executed in payment of a subscription to stock; that three certain
persons were interested in selling said stock; that one of said persons,
acting for himself and his associates, induced defendant to sign said note,
by representing that certain other persons had agreed to take a large
amount of said stock, that others had contracted to take a large quantity
of the product of the corporation, and that the property of the corporation was then marketable; but that said representations were wholly
false—imports liability on said three persons for said false representations,
and the averments thereof are sufficient to avoid the original note and all
mere renewals thereof, as between defendant and said persons and their
assigns.with notice. Alabama National Bank v. Halsey (Ala.), 19 So., 522.
33. An administrator is personally liable on a note, signed by him as such, the
proceeds of which were placed with the payee, a bank, and paid out on
checks drawn by him to pay, generally, bills and debts of the estate.
First National Bank v. Collins (Mont.) 43 P., 499.
34. The mere promise to pay, or the procuring of an extension of the time for
. paying, a note obtained by fraud to pay which the maker is under no legal
or moral obligation, does not, as a matter of law, constitute a ratification
of the note, in the absence of facts creating an estopped in pais. First
National Bank of Decor ah v. Holan (Minn.), 65 N. W.} 952.
35. An obligor in a note who pays a sum in excess of his pro rata share to the
obligee in consideration of his full discharge is entitled* to contribution
from each of his coobligors of their pro rata share of the excess so paid.
Merchants1 National Bank v. McAnulty (Tex. Sup.), 33 S. W., y63.
36. An assignee of an invalid nonnegotiable draft who relies on its invalidity
as excusing him from attempting bv suit to collect the money, must notify
his assignor of his reason for not suing, and offer to return the instrument
to him; and if he is guilty of negligence therein, to the assignor's damage,
he can not recover the consideration of the assignment. Merchants7 National
Bank v. Spates ( W. Va.), 23^ S. E., 681. •
37. One who assigns a nonnegotiable draft by indorsement and delivery thereof
impliedly warrants its validity, his right to assign, that it is a subsisting,
unpaid debt, and the solvency of the debtor.
Ib.
38. Want of authority in plaintiff national bank to purchase a negotiable note
can not be pleaded by the maker of the note in defense. First National
Bank v. Smith (S. D.), 65 N. W., 437.
39. Where, on an issue whether a transferee of notes in fraud of the owner's
creditors acquired the notes in good faith in due course of business, it
appeared that he was an intimate friend of the owner and well acquainted
with the latter's business affairs; that he knew that the payee did not
own the notes and that the use of his name was a mere pretense; that
as fast as payments were made on the notes he remitted them to the



REPORT OF THE COMPTROLLER OF THE CURRENCY.

149

NEGOTIABLE PAPER—Continued.

40.

41.

42.

43.
44.
45.
46.
47.

48.
49.
50.

51.

52.

53.

owner, and that a receipt therefor given him by the owner was signed
in the owner's name "for" the payee—a finding that he had no knowledge of the fraud was against the evidence. First National Bankv. Van Ness
(Idaho), 43 P., 59.
Where a signer of a joint and several note assigned his property to another,
and the payee thereupon called on such assignee, aud, to induce him to
sign, said, " Unless you sign the note we will contest the conveyance,"
whereupon the assignee signed, it was sufficient to warrant a jury in
finding an implied agreement to forbear. First National Bank v. Cecil
(Or.), 31 P., 61.
Where a signer of a joint and several note assigned his property to another,
and the assignee thereupon assigned the note, the payee agreeing to forbear, the assignee became a party to a new contract, on a new and additional consideration; the rule being that, when one signs his name to a
joint and several note for a valuable consideration, after delivery he
becomes, as between himself and the payee, a maker, and may be sued as
such. Ib.
One who, by his acts and declarations in dealing with a bank, holds himself
out to it as a member of a lirm, thus inducing the bank to discount notes,
and pass the proceeds to the credit of the firm, will be liable to the bank
on the notes as a member of the firm. Lancaster County National Bank v.
Boffenmyer (Pa. Sup.), 29 A., 855.
The course of business between members of a firm may show the authority
of one partner to act for and charge the firm. Midland National Bank v.
Schoen (Mo. Sup.), 27 S. W., 547.
Where a partner is invested with general authority to use the firm name on
notes for his individual purposes, the firm is liable on notes discounted on
the faith of such authority. Ib.
Where a note is given by a firm for the debt of one partner it may be
renewed by any one of the partners without altering the firm's liability. Ib.
Where a partner has general authority to give notes of the firm for his private
debts it is not necessary to show special authority on the particular notes
sued on. Ib.
A note given in part in consideration of an agreement to refrain from bidding at a public sale of goods by a statutory assignee is invalid, except in
the hands of an innocent purchaser. Atlas National Bank v. Holm et al.f
71 Fed. Rep., 489.
In order to deprive one of the character of a bona fide purchaser it is not
euough that he neglected to make the inquiry which a prudent man would
or ought to have made, but he must have acted in bad faith. Ib.
There is no presumption that a purchaser of a note was aware of existing
defenses thereto. Ib.
A note signed by only one member of a firm was binding upon both members.
Held, that the fact that such note is renewed after the death of the nonsigning member does not release his estate from liability on the original
note, the payee not having intended to release him, and having canceled
the original note through inadvertence. National Exchange Bank v. Wilgus's Executors (Ky.), 25 S. W.} 2.
A person other than a payee, who signs his name in blank upon the back of
a promissory note at the time of its execution, and before its delivery to
the paevee, is, as to a subsequent bona fide holder for value, liable thereon
as a joint maker, and not as accommodation indorser. Salisbury v. First
National Bank (Nebr.), 56 N. W., 727.
A complaint in an action on a note alleged that the payee delivered the note
for collection at a bank, which sent it to plaintiff, who caused the same to
be protested; that the payee claimed the protest to be invalid, and insisted
that the bank pay the note, and that the bank, believing itself liable,
required plaintiff to pay the same; and that on such payment the bank,
as agent for the payee, delivered the note to plaintiff, and prayed that
plaintiff be surrogated to the rights of the payee. Held, that the absence
of an averment that the bank was authorized to deliver the note to plaintiff
on payment, or that the payee received the money paid, or ratified the
transaction, rendered the complaint insufficient on demurrer. Marine
National Bank v. Humphreys (Minn.), 64 N. W., 148.
Proof of fraud in the inception of a note casts on the indorsee the burden of
showing that he took it for value before maturity without notice; but
proof that he paid full value before maturity raises a presumption that he
purchased it in good faith without notice. Ib.




150

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPER—Continued.

54. Until it is shown that the note iu suit was never delivered by the maker, or
that it was obtained from him by undue means, it is not incumbent on
plaintiff to show himself a bona fide holder for a valuable consideration.
Third National Bank v. Any ell (R. /.), 29 A., 500.
55. If one signs a printed blank for a note and intrusts it to another to have the
blanks filled up, he confers the right, and the note carries on its face an
implied authority, to fill up the blanks at pleasure, so far as is consistent
with the printed words. #As to all purchasers for value without notice,
the person to whom the blank note is intrusted must be deemed the agent
of the signer; and an oral agreement between such principal and agent,
limiting the amount for which the note shall be perfected, can not affect
the rights of an indorsee who takes the note for a different amount, before
maturity for value, in ignorance of such agreement. Market and Fulton
National Bank v. Sargent, £7 A., 192; 85 Me., 348.
56. Where a bank takes a note for shares of its stock sold by its president,
with knowledge of president's representations as to stock's value, the
maker, in an action on the note, may set up the defense that the representations were false. National Bank v. Taylor (S. D.), 58 N. W., 297.
' 57. An agreement by the maker of a note to pay 10 per cent commission, if the
note be not paid at maturity, and is collected by an attorney, is valid.
Braham v. First National Bank (Miss.), 16 So., 203.
58. Lc is an equitable defense to an action against the maker of a promissory
f
note that the indorsee took it with notice that it was given to his immediate indorser by the maker as a security. Western National Bank v. Wood
{Com. PI. N. Y.), 20 N. Y. S., 642.
59. A note executed in one State and payable in another is governed, as to
defenses against an indorsee, by the law of the latter State, though sued
on in the State wherein it was executed. Sturdivant v. Memphis National
Bank (C. C. A.), 60 Fed. Rep., 730; 11$., 736.
60. A national bank may recover upon negotiable paper purchased by it.
Merchants' National Bank of St. Paul v. Hanson, 33 Minn., 40; 53 Am,
Rep., 5; 3 N. B. C, 509.
61. The indorsement of a note "for collection" is notice to a purchaser that~the
indorsee is not the owner. Ib.
62. The fact that a purchaser, for valuable consideration, of negotiable notes,
from a member of the payee firm, who claims to be the owner thereof,
knows that the latter is the president of a bank whose indorsement in
blank appears on the notes, after the indorsement of the firm, is not
sufficient to put the purchaser on inquiry, or charge him with notice
that the notes belong to the bank. Kaiser et al. v. First National Bank of
Brandon, 78 Fed. Rep., 281.
63. One who was president both of the A bank and the B bank received from
the president of a third bank two notes, which the latter claimed to own
individually, as collateral both for balances due from his bank to the A
bank and for debts due by him individually to the B bank. The notes
were kept by the A bank until dishonored, and until its own balances
were discharged, and were then sent to the B bank. Held, that the fact
that the B bank received physical possession of the notes after dishonor
was no evidence that it was not a bona fide holder for value. Ib.
64. A third party who places his name upon the back of a negotiable promissory
note at the time of its execution by the maker and before its delivery to the
payee will be liable as a joint maker, and the note itself, with the indorsement thereon, is prima facie evidence of such liability. First National
Bank of Worcester, Massachusetts, v. Lock-Stitch Fence Co. and others, 24 Fed.
Rep., 221.
65. The question of the liability of such a party is one of general commercial
law, and the decisions of the courts of the State in which the note is executed and made payable are not necessarily controlling in the decision
thereof by a United States court. Ib.
66. If the indorsee constitute the indorser or original holder, his agent, by relying on him to collect of the maker, taking himself no steps tor that purpose until after the failure of the indorser, payment to the original holder
will be good. Exchange National Bank v. Johnson et al., 30 Fed. Rep., 588.
67. If a bank accepts the note of the indorser in discharge of his liability as
indorser the title to the first note reverts to the indorser, and payment to
him is good, although the indorser leave the note on deposit with the
bank; but it is a question for the jury to determine whether, on the facts
of the case, the new note be taken in discharge of the indorsees liability, or as a mere memorandum note, not intended to affect the title to the
 old note. Ib,


REPORT OF THE COMPTROLLER OF THE CURRENCY.

151

NEGOTIABLE PAPER—Continued.

68. If the maker pay other than the rightful owner of the note, he can not rely
on facts unknown to him, and not influencing his action, as an estoppel,
but if the facts be of a character that establish an agency for collection,
that is a defense against repayment. Ib.
69. A note executed by stockholders of a corporation in the corporate name,
without authority of the directors, becomes a corporate liability, if ratified by the corporation by permitting judgment to go against it on the
note, Nebraska National Bank v. Ferguson (Nebr.) 68 N. W.y 370.
70. A second indorser of a note having learned that the maker had failed, and
that the first indorser, who lived in the same place as the maker, had agreed
to meet it, wrote to his indorsee to recall it. Said indorsee had forwarded
it through the usual hank channels for collection, and the indorser merely
wished to save the protest charges. The'indorsee consented to recall the
note on condition that the new note should be sigued by a!l the local
indorsers. Three days before maturity the second indorser received a
request from the first indorser to have the note forwarded for protest.
Under directions from the second indorser the indorsee tried by telegraph
to order the note forward, not knowing where it was, but on the day of
maturity it came back to his residence too late for protest. Held, That
the second indorser was estopped as against said indorsee to insist that his
waiver of demand and notice should have been in writing. Hallowell
National Bank v. Marston, 27 A., 529; 85 Me., 488.
71. Where the maker of a note gives to the bank which discounts it a mortgage
as collateral security, on the express condition that it shall not be recorded
unless the bank shall thereaiter consider it necessary, the failure of the
bank to record the mortgage until too late to realize anything thereon will
not discharge the accommodation indorser from liability on the note.
Allentown National Bank v. Trexler {Pa. Sup.), 34 A., 195.
72. Where the maker of a note previously indorsed for his accommodation
alters the same without the indorsees consent, by adding the words "with
interest at 10 per cent per annum," there being at the time the maker
received it no blank space for the insertion of interest nor w^ords indicating that interest should be expressed, the note will be invalid, as
against the accommodation indorser, even in the hands of a bona fide
holder. Farmers and Merchants1 National Bank v. Novich (Tex. Sup.), 34
S. W., 914.
73. One who indorses a note payable to another before its delivery to the payee
is presumed to be liable as a subsequent indorser. Lincoln National Bank
v. Butler (City Ct. N. Y.) 36 N. Y. S., 1112.
74. An indorser of a note, whether a surety or an indorser in the strict mercantile sense, will be released if, without his consent, the holder releases the
maker of the note, though at maturity of the note he waived demand,
notice, and protest. Union National Bank v. Grant (La.), 18 So., 705.
75. Defendant indorsed his debtor's note to be discounted and the proceeds
applied to his debt. Defendant was secured for his indorsement. The
debtor having pledged the note as collateral security for a preexisting
debt, defendant notified plaintiff of the purpose of the indorsement.
Thereafter, plaintiff extended two of the debtor's notes, under an agreement made before receipt of such notice that plaintiff was to hold the
indorsed note as additional collateral security. Held, that plaintiff was
not a bona fide holder of the note in respect of the notes extended. People's National Bank v. Clayton (Vt.), 29 A., 1020.
76. Defendant indorsed a note of his debtor to be discounted and part of the
proceeds applied to his debt. The debtor pledged it with plaintiff as
collateral security for another note of his in consideration of the latter's
extension. Plaintiff had no notice of the agreement as to the application
of the proceeds. Held, that plaintiff was a bona fide holder for value to
the extent of the note secured, and could maintain action thereon. Lb.
77. A promise by an indorser to pay a note after maturity, with knowledge that
no demand was made and no notice given, waives such demand and
notice. First National Bank v. Bonner (Tex. Civ. App.), 27 S. W., 698.
78. A letter to the holders of a note, written after maturity of the note by the
indorsers, wherein they promise to " d o our utmost to put you in funds
at an early date," and express a hope to be "able to take up this paper/ 7
and declare a willingness to confess judgment when sued, is sufficient
evidence of waiver of demand and notice. Ib.
79. An indorser may waive the benefit of a statute requiring suit to be brought
at the first term of court after the cause of action accrues. Ib.




152

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPER—Continued.

80. By the general commercial law parties who place their names on the back
of a promissory note, before its delivery, for the purpose of giving credit
to the maker, are joint makers of the note, and will be so treated in the
Federal courts, though the note is made in a State whose courts hold such
parties to be indorsers. Phipps et al. v. Harding, 70 Fed. Rep., 468.
81. The several States are not without power to change by statute the general
commercial law, but each State has the right to impose such conditions
and limitations upon contracts, not inhibited by the terms of its own or
the Federal Constitution, as it may see proper. Ib.
82. The Massachusetts statute (St. 1874, c. 404) providing that "all persons
becoming parties to promissory notes payable on time, by signature on the
back thereof, shall be entitled^ to notice of nonpayment thereof the same
as indorsers/' is a valid exercise of the power to change the general commercial law, and becomes a term of the contract, evidenced by a note
made in Wisconsin, white such statute was in force, and delivered and
payable in Massachusetts. Ib.
83. In an action by a bank on a note it appeared that the defendant, a resident
of New York, made the note for the accommodation of the payees, residents of another State, who indorsed it to plaintiif, situated in the same
State. The indorsers were afterwards discharged in insolvency proceedings, in.which plaintiff proved the note as a claim and received a dividend
thereon. Seld, that the maker was not discharged from liability, since
the indorsers would have been discharged as to plaintiff if it had not
appeared and taken the dividend, and defendant was not injured thereby.
12 N. 7. S., 401, affirmed. Third National Bank v. Hastings (N. Y. App.)y
32 N. E., 71.
84. Where a note, with the name of a corporation in the margin, signed by two
persons, designated as "president" and "treasurer," respectively, is discounted for the payee without inquiry as to whether it was the note of
the corporation or of the individual makers, the holder may treat it as a
personal obligation of the makers. First National Bank v. Stuetzer (Sup.),
30 N. Y. S., 83.
85. Where there are three or more joint makers of a note, and one of them dies
while the note is unpaid and before suit brought, the surviving makers
are jointly liable on the note. Stevens v. Cailin (III. Sup.), 37 N. F., 1023.
86. A note coming into the hands of the maker after payment can not be reissued
by him, so as to bind a surety thereon, in the hands of one taking it with
knowledge of the suretyship. First National Bank v. Harris (Wash.),
34 P., 466.
87. The maker of a note can not assert as a defense thereto against the payee, a
bank, that he signed the note at the request of the cashier and teller of
the bank, who stated that they wished to use his name in stock speculations, for which purpose the notes would be discounted by the bank; that
their names could not appear because of their official connection with the
bank; and that he should not be charged with any of the notes given nor
credited with anything received on the sale of the stock; and that the
bank would take care of the notes as they became due, an agreement that
a note given for a proper consideration shall not be collected being nugatory. Mead v. National Bank of Pawling (Sup.), 34 N. Y. S., 1054.
88. A national bank may purchase a note in favor of a third party, and thereby
acquire a collateral mortgage on land, and the claim may be incorporated
with other indebtedness to the bank, and a new mortgage on land taken
by the bank to secure the whole sum. Oldham v. Bank, 85 N. C, 240; 3
N. B. C.,688.
89. A promissory note payable to the order of the maker, being indorsed by
him, was indorsed and delivered to another for his accommodation. The
latter indorsed it and borrowed money upon it, waiving demand and
protest. The waiver was stamped upon the back of the note by mistake
over both indorsements. Held, that the liability of the maker was not
affected thereby. Gordon v. Third National Bank of Chattanooga. 144
U. S., 97.
90. The maker of a promissory note given in payment for stock in a national
bank, and immediately transferred by indorsement to said bank by the
payee, can not resist payment of the note, in the hands of a receiver of
the bank, on a plea of failure of consideration, because of the insolvency
of the bank where the payee has fully indemnified him against loss.
Hettinger v. Meyers, 81 Fed. Rep.\ 805.
91. A receiver of a national bank holds its negotiable notes subject to the same
defenses that applied to the bank itself. Hatch v. Johnson Loan and Trust
Co. (C. C ) , 79 Fed. Rep., 828.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

153

NEGOTIABLE PAPEK—Continued.

92. The maker executed in the State of Illinois and delivered to the promisee
a series of notes, one of which was acquired by a bona fide endorsee, and
was as follows: "$5,000. Chicago, 111., January 20, A. D. 1884. For
value received, four months after date the Chicago Railway Equipment
Company promise to pay to the order of the Northwestern Manufacturing
and Car Company, of Stillwater, Minnesota, five thousand dollars, at
First Nat. Bank of Chicago, Illinois, with interest thereon at 1he rate of
— per cent per annum from date until paid. This note is one of a series
of twenty-five notes, of even date herewith, of the sum of five thousand
dollars each, and shall become due and payable to the holder on the
failure of the maker to pay the principal and interest of any one of the
notes of said series, and all of said notes are given for the purchase price
of two hundred and fifty railway freight cars manufactured by the payee
hereof and sold by said payee to the maker hereof, which cars are numbered from 13000 to 13249, inclusive, and marked on the side thereof with
the words and letters ' Blue Line, C. & E. I. R. R. Co.; y and it is agreed
by the maker hereof that the title to said cars shall remain in the said
payee until all the notes of said series, both principal and interest, are
fully paid, all of said notes being equally and ratabiy secured on said
cars. No. 1. Geo. B. Burrows, vice-president. Countersigned by E. D.
Bufnngton, treas." Held, (1) that this was a negotiable promissory note
according to the statute of Illinois, where it was made, as well as by the
general mercantile law; (2) that its negotiability was not affected by the
fact that the title to the cars for which it was given remained in the
vendor until all the notes of the same series were fully paid, the title
being so retained only by way of security for the payment of the notes,
and the agreement for the retention for that purpose being a short form of
chattel mortgage; (3) that its negotiability was not affected by the fact
that it might, at the option of the holder and by reason of the default of
the maker, become due at a date earlier than that fixed. Chicago Railway
Equipment Company v. Merchants' Bank, 136 U. S., 268.

NOTARY PUBLIC:

1. Before the passage of the act of February 26, 1881, notaries public in the
several States had no authority to administer to officers of national banking associations the oath required by sec. 5211, Rev. St., and an indictment
against an officer of a national bank under sec. 5292 for a willfully false
declaration or statement in a report made under sec. 5211, so verified, would
not lie. United States v. Curtis, 10?[ U. S., 671; 3 N. B. C, 91.
2. Since the removal of the disqualification of interested witnesses, a notary who
is an officer of a bank may legally protest paper belonging to it. Nelson
v. First National Bank of Killingly, 69 Fed. Bep., 798.
NOTICE :

1. Where the cashier of a bank conspires with a third person to sell worthless
property to defendant at par, in order that the proceeds may be applied to
the payment of a debt due the bank, the bank is chargeable with the
knowledge that the cashier had of such conspiracy. Merchants' National
Bank v. Tracy, 29 N. Y. 8., 77.
2. In an action on a check there was evidence that defendant gave the check,
postdated, to one G. for the price of stock of a corporation, under an agreement that G. should not use the check until defendant had further considered the purchase of the stock; that defendant was induced to give the
check by representations of G. as to the prosperity of the company, which
was in fact insolvent; that the cashier of plaintiff bank knew of the negotiations between defendant and G.; that G. immediately procured the check
to be discounted by plaintiff'and placed the proceeds to the credit of the
company, which was largely indebted to plaintiff. Held, that a finding
that plaintiff was not a bona fide holder for value was sustained by the
evidence, though plaintiff's cashier denied that he knew of the negotiations
between defendant and G. Ib.
3. A bank discounting a note before its maturity is not chargeable with the
knowledge of illegality or want of consideration acquired by one of its
directors in other than his official capacity, such director not having acted
with the board in making the discount. First National Bank of Hightstown
v. Christopher, 40 N. J. Law, 435.
4. A director offering a note, of which he is the owner, to the bank of which
he is a director, for discount, is regarded in the transaction as a stranger,
and the bank is not chargeable with the knowledge of such director of an
infirmity or defect in the consideration of the note. I&.




154

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NOTICE—Continued.
5. P. was a member of the firm of M. & J. S. P., and also a director of the bank
of H. He obtained at the bank the discount of a note belonging to the
firm, which had been got of the maker by fraud. He had notice, as a
member of the lirm, of the fraud before the note was offered for discount,
but did not communicate his knowledge to any of the officers of the bank.
Held, that the knowledge of P. was not, constructively, notice to the
bank. Ib.
(? ^he cashier of a bank was also the secretary of another corporation, and
while working in the interest of the latter, sold stock therein, taking the
purchaser's note therefor, which note was afterwards discounted by the
bank. Held, that the bank was not affected with its cashier's knowledge
as to the value of the stock sold, obtained through his connection with
the other corporation. Benton v. German-American National Bank, 26 S.
W.y 975.
"?. A certificate of deposit with provision that "This deposit not subject to
check; with interest at six per cent if left six months; no.interest after
six months/' is overdue, so as to charge purchaser with notice of equities
after six months. Kirkwood v. First National Bank, 58 N, W,, 1016; Same
v. Exchange National Bank, ib., 1135.
8. The form of the draft in such case does not convey notice to the creditor
that the funds of the bank are being used to pay the private debt of the
cashier. Goshen National Bank v. State, 36 N. E., 316.
9. Where grantor states to director of bank that he is willing to convey a
half interest in certain land to the bank's president, with the understanding that such president was to deed the whole interest to the bank,
and the president of the bank was to pay him by giving him credit
upon notes then running against him in the bank. Held, not to amount
to notice to the director that the grantor intends to retain a vendor's
lien, but rather imports a notice that no such lien is to be retained.
First National Bank of Sheffield et al. v. Tompkins, 57 Fed. Rep., 20.
10. An indorsement upon negotiable paper, "For collection; pay to the order
of A. B.," is notice to all purchasers that the indorser is entitled to the
proceeds. Bank of the Metropolis v. First National Bank of Jersey City, 19
Fed. Rep., 301.
11. A bank is charged with notice of letters duly mailed to it and received by
the general bookkeeper, whose duty it is to open and distribute mail
matter, although he conceals such letters to hide certain irregularities
in his office and thereby prevents their coming into the hands of the
other bank officers. First National Bank of Evansville v. Fourth National
Bank of Louisville, 56 Fed. Rep., 967.
12. Where a bank, in the absence of a director by whom a note has been offered
for discount, accepts it, and accepts a note payable to him and indorsed to
it as collateral, its rights are not affected by such collector's knowledge
of illegality in the inception of the note accepted as security. Third
National Bank v. Hari'ison et al.f 10 Fed. Rep., 243.
13. Ac indorsee for value of a promissory note is presumed, in the absence of
evidence to the contrary, to have taken it without notice of equities subsisting between the maker and payee. Ib.
14. An agent can not lawfully act for his principal and for himself in matters
in which they have adverse interests, and every person dealing with an
agent who is acting for himself as well as for his principal in such matters
is put upon inquiry as to authority and good faith of the agent. Moore v.
Citizens' National Bank of Piqua, Ohio, 15 Fed. Rep., 141.. Affirmed, 111
U. 8., 156.
15. The plaintiff contracted to loan money to M, cashier of the defendant bank,
for his individual uses, on his representations that he held a number of
shares of stock of said bank, and his agreement to transfer a certain number thereof to the plaintiff as security for the loan. In pursuance of said
agreement, M afterwards produced a certificate of stock bearing the genuine signatures of the president and of himself as cashier, on the faith of
which plaintiff loaned him the money. In fact, M had previously hypothecated and transferred to others all the stock of said bank which he had
held, and the certificate was fraudulently issued, without any transfer of
stock and without any knowledge of any of the officers of the bank except
himself, he having used for that purpose a certificate left with him for
use as occasion might require, signed by the president in blank. The
plaintiff had no knowledge of the fraud, and believed that the certificate
had been issued in good faith and by competent authority, but knew
that the transaction was for the benefit of M: Meld, that the knowledge




REPORT OF THE COMPTROLLER OF THE CURRENCY.

155

NOTICE—Continued.
that M was acting for himself as well as for the bank in issuing the certificate put the plaintiff upon inquiry as to the authority and good faith
of M, and, having failed to make it, the bank is hot liable on the certificate. Ib.
16. Where an officer of a bank is dealing with it in his individual interest, the
bank is not chargeable with his uncommunicated knowledge of facts derogatory to his title to the paper which is the subject of the transaction. Merchants' National Bank of Kansas City v. Loviit (Mo.), 21 S. W., 825.
17. Where the president acts for the bank in accepting for discount paper offered
by another officer, the bank is not affected by any knowledge of the latter
regarding such paper, since he is acting in the transaction in his own behalf.
Ib.
18. The fact that the discount was calculated by the officer offering the paper
would not be material in such case. Ib.
19. The president of plaintiff bank, without consideration, obtained defendant's
note as a personal loan, and without disclosing the want of consideration
procured its discount by plaintiff's cashier. Held, that though the cashier
was without authority to discount paper, his agency in discounting the
note not having been disavowed by plaintiff, it could recover on the note,
as the president's knowledge of its infirmity could not be imputed to it.
First National Bank of Grafton v. Babbidge et at., 36 N. E., 462; 160 Mass. ,563.
20. A bank cashier who was indebted to the bank and also to a firm of which
its president was a member gave another creditor a mortgage on sheep,
which provided that the mortgagor might sell part of the sheep, and that
the proceeds should be applied on the debt secured. The cashier took
part of the sheep to market, and sent a draft for the proceeds, in a letter,
to the vice-president of the bank, who acted as cashier in his absence, in
which he simply said, "Place to my credit." The vice-president applied
part of the draft to the debt due the bank, and the balance on the debt
due such firm. Held, that the knowledge of the cashier that the draft
was the proceeds of the mortgaged sheep was not imputable to the bank,
and it was not bound by his acts. Hock Springs National Bank v. human
(Wyo.),38 P., 678.
21. Where the president of the bank knew that its cashier had purchased sheep
from plaintiff, and was in debt therefor, that outside of them he could not
pay the price, and that he had gone with the sheep to market, to sell them,
the bank is chargeable with notice that a draft, sent to it by the cashier,
was the proceeds of the sheep, and of plaintiff's interest therein as mortgagee of the sheep, and was liable to plaintiff for a portion of the draft
applied on its own debt. Hock Springs National Bank v. Luman ( Wyo.), 42
P., 874.
22. The fact that notes offered for discount by a bank are payable to its president and bear his indorsement, followed by that of the bank affixed by
him, does not give notice to the discounting bank that they are the property of such president, and the bank's indorsement is for accommodation,
especially when the negotiations for the discount have been carried on by
letters written in their official capacity by the president and cashier of the
offering bank. United States National Bank v. First National Bank, 64 Fed.
Bep., 985.
23. Where there is a custom between brokers and bankers that on application of
a broker a bank will certify as to whether it has any lien on certain of its
stock by the holder thereof being indebted to it, a bank, by being asked
by a broker to give such a certificate, is thereby put on inquiry and
charged with notice that a loan for a certain amount had been made to the
holder of the stock. Covington City National Bank v. Commercial Bank, 65
Fed. Bep., 547.
24. It is not essential that a notice of dishonor or of protest of a note should
state in so many words that the holder looks to the indorser for payment,
but a notice from which that fact may be reasonably inferred is sufficient.
A copy of the note and of the protest sent to the iudorser constitutes such
notice. Nelson v. First National Bank of KiUingly, 69 Fed. Rep., 798.
25. The receiver of the C. National Bank brought an action against one W. on
certain promissory notes, made by him directly to the bank. W. defended
the action on the ground that the notes were given for the purchase
money of an interest in a brickyard, which W. had been induced to purchase by the misrepresentations of C , the president of the bank. It
appeared that the bank held sundry notes of the principal owner of the
brickyard, which notes were worthless; that the notes made by W. were
substituted for these, and that C. pretended to be interested himself in



156

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NOTICE—Continued.
the brickyard, and to enter into a partnership with W. and the former
owner of the yard, for the purpose of inducing W. to make the notes to
the bank, which would replace the worthless notes it then held. There
was also evidence tending to show that C. was the active party in the
transaction, and misrepresented the facts to W. Held, that the bank,
being the payee of the notes, could not be held to have been without",
notice of the fraud, or unaffected by C.'s knowledge thereof, and that it
was error to direct the jury to render a verdict against W. Wilson v.
Pauly, 72 Fed. Rep., 129.
26. Where the president of a bank received notice while engaged in business for
the bank the bank was chargeable therewith. Bartlett v. Woodbine Sav.
Bank, 57 III. App., 425.
27. The fact that the chairman of the defendant committee was the attorney for
the creditor in a garnishment proceeding did not affect the liability of
defendant under the notice received by him as agent of the defendant
several months before. Anniston National Bank v. School Committee of
Town of Durham (N. C.)%24 S. E.f 792.
28. Where the payee of a check mails it to the drawee bank, it is the duty of
the bank to give the payee notice of dishonor, if the drawer has no funds
on deposit from which payment can be made. Ripley National Bank v.
Latimer, 2 Mo. App. IlepW, 967.
29. One who knowingly receives partnership property with knowledge that its
proceeds are passing to the individual use of one partner is charged with
notice of such partner's want of authority to dispose of the proporty for
his individual benefit. Columbia National Bankv. Bice(Nebr.), 67 N. W., 165.
30. Notice to the cashier of a national bank is notice to the bank. First National
Bank v. Ledbetter (Tex. Civ. App.), 34 S. W., 1042.
31. Notice of expiration of time to redeem from sale of land for taxes, which the
statute provides shall be served on the person in whose name the land is
taxed if he is a resident of the county, and may be served on a nonresident
of the county by publication, is properly addressed, in the case of a nonresident, to the "Am. Ex. Bank," that being the name as it appeared on
the lists to whom the land was taxed. American Exchange National Bank
v. Crooks (Iowa), 66 N. W., 168; Same v. Dugan, Ib.
32. Where a note is presented'for discount by the first indorser, the presumption
is that it had its inception in his hands; and the bank is not chargeable
with notice that the note was owned by the maker, and that the indorsements were, therefore, for his accommodation. First National Bank v. Weston (Sup.), 34 N. Y. S., 558.
33. The fact that the maker of a note told the president of a bank, at the office
of a company of which they were both directors, that a certain note had
been obtained from him by fraud will not be held notice to the bank, where
it afterwards discounts the note. Washington National Bank v. Pierce,
(Wash.), 33 P., 972.
34. The fact that defendant, with his family, is absent from the county because
of the prevalence of an epidemic does not prevent service of process on
him by leaving a copy thereof at his residence during such absence. Burbage v. American National Bank (Ga.), 20 S. E., 240.
35. Defendant executed his promissory note to C, and delivered it upon condition that it was to be surrendered to him upon C.'s failure to perform stipulated acts. C. immediately transferred this note by indorsement to a bank
of which he was president and general manager. Held, that, as C. himself
was the sole representative of the bank in the transfer of the note to it,
the bank is chargeable with his knowledge of the condition to which it
was subject, and so can not sue on the note until that condition is performed. First National Bank of Blaine v. Blake, 60 Fed. Rep., 78.
36. If a director of a bank, who acts for the bank in discounting a note, has
knowledge that the note was procured by fraud, the bank is affected
with his knowledge. National Security Bank v. Edward F. Cushman, 121
Mass., 490.
37. The pledgee of stock can not be said to acquiesce in the payment of dividends thereon to the pledgeor where he has no notice of it, actual or constructive. Fairbanks v. Merchants' National Bank, 30 III., App., 28;
reversed, 22 N. E., 524.
!>8. A bank is not chargeable with notice of the misappropriation of money by its
cashier acting as agent for a third party in his individual capacity; nor is
it liable to the principal for such money, when it received no benefit
therefrom. School Dist. of City of Sedalia, Mo., v. De Weese (C. 0.), 100 Fed.
Hep., 705.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

157

OATH OF DIRECTOR:

1. By the provisions of sec. 44 of the national banking act, upon conversion of
a State bank to a national bank, all the directors of the former become
those of the latter until an election or an appointment by the national
bank. Semble that no oath is required from these ad interim directors,
the oath prescribed by sec. 9 of the aforesaid act being designated for
those regularly elected by the national bank; but assuming its necessity,
a majority of those who were the directors of the State bank before its
conversion is necessary to make a quorum of the board of the national
bank. Lockivoodv. The American National Bank, 9 E. I., 308; 1 N. B. C,
895.
2. In all cases where an act is to be done by a corporate body, or a part of a
corporate body, and the number is definite, a majority of the whole number is necessary to constitute a legal meeting, although ar a legal meeting
where a quorum is present a majority of thosa present may act. Ib.
3. Hence a by-law adopted at a meeting of six ad interim directors of a national
bank which had twelve directors before its conversion is invalid, because
not adopted by a majority or quorum of the board. Ib.
4. Prior to the act of February 26, 1881, a notary public holding his commission under a State had no authority to administer the oath required by
sec. 5211, Rev. St.; and therefore a cashier who made oath before such
notary to a false statement of the condition of his association was not
guilty of perjury. United States v. Curtis, 107 U. S., 671.
OFFICERS :

A. In general—
1. Directors of national banking associations may remove the president, both
under the law of Congress and the articles of association, where the latter
so provide. The power exists, though the association has adopted no bylaws. Taylor v. Hutton, 43 Barb., 195.
2. The officers of a national banking association can hold their positions only
by the tenure specified in sec. 5136, Rev. St., viz, the pleasure of the board
of directors. Harrington v. First National Bank of Chittenango, 1 N. B. C,
760; lThomp.<f Cook, 361; Taylor v. Button, supra
3. An officer may, in the ordinary course of business, borrow money of the
association. Blair v. First National Bank of Mansfield, 10 Chicago Legal
News, 84; 2 N. B. C, 173.
4. The law providing no particular mode by whkih a director is to resign from
the board, an oral resignation would be as good as any. Movius v. Lee, 30
Fed. Eep., 298.
5. The president being the head of the board, a resignation to him is a resignation to the board. Ib.
6. A director is not prohibited from resigning during the year. The apparent
purpose of the provision in regard to the term of office is to make it conform to the time of the new election, and not to absolutely require every
director to serve the full term. Ib.
7. The borrowing of money by a bank, though not illegal, is so much out of
the course of ordinary and legitimate banking business as to require
those making the loan to see to it that the officer or agent acting for the
bank had special authority to borrow money. TVestern National Bank v.
Armstrong, 152 U.S., 346.
8. A national bank can not hire one of its officers for a specified time. Harrington v.First National Bank of Chittenango, supra..
9. Knowledge, without objection, by the directors of a bank that one is acting
in its employ does not ratify the details of a contract for his employment
by the president unless they know of such details. Ib,
10. Creditor of insolvent national bank can not sue to enforce personal liability
of officers and directors for violation of national-bank laws. The receiver
alone can maintain the action. Bailey v. Mosher, 63 Fed. Rep., 488.
11. Directors of a national bank are "officers" within the meaning of Rev. St.,
sec. 5209, which makes it a misdemeanor for bank officers to make false
entries in any book, report, or statement of the bank, with intent to
deceive any of its officers. United States v. Means et al., 42 Fed. Eep., 599.
12. The rule that where a bank officer is dealing with the bank on his own
account his kn wledge will not be imputed to the bank does not apply
where such officer is the sole representative of the bunk in the transaction.
First National Bank of Blaine v. Blake, 60 Fed. Rep., 78.
13. In the absence of special authority from the directors of a bank, its president
has no authority to draw drafts on its funds in payment of personal debts.
Lamson v. Beard, C. C, 94 Fed. Hep., 30.




158

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.
A. In general—Continued.
14. Knowledge by the president of a bank of his misappropriation of bank funds
held not notice to the bank. Lamson v. Beard, C. C. A., 30; C. B. Congdon
4' Co. v. Same, II).; Phelps v. Same, Ib.
15. Officers of corporations, who are also directors, and who have rendered their
services under an agreement that they shall receive reasonable but indefinite compensation therefor, may recover as much as their services are
worth, and it is not beyond the powers of the board of directors to fix and
pay reasonable salaries to them after the services are rendered. National
Loan and Investment Co. v. Bockland Co., C. C, 94 Fed. Bep., 335.
16. Where, after the organization of a corporation, it was agreed and understood
at an informal meeting of all the stockholders that the officers should be
paid a reasonable compensation for their services, and by a by-law the
board of directors was given power to fix the compensation of officers,
their subsequent action in voting the president a reasonable salary for
past services was legal, and a note of the corporation, executed to him.
therefor, was not without consideration. Ib.
17. A national bank which has lawfully acquired the title to property in payment of a debt has implied authority to make reasonable repairs thereon
for the purpose of putting it in salable condition, and its directors can not
be held personally liable for money so expended in good faith. Cooper v.
Hill, C. C, 94 Fed. Bep., 582.
18. When a loss has been caused to a national bank by the appropriation of its
funds to a purpose unauthorized by law, or by culpable negligence, or conversion of its funds, the officers who participated in or consented to the
act are jointly and severally liable for the entire amount. Ib.
19. When the directors and officers of a bank have misappropriated its funds,
they are liable for interest on the amount from the date of the misappropriation as damages, and no statute is necessary to authorize the allowance
of such interest by a court of equity. Ib.
B. Cashier—
20. It is within scope of general authority of cashier to receive offers for purchase of securities held by the bank, and to state whether or not bank
owns securities in its possession. Xenia Bank v. Stewart et al., 114 U. S., 224.
21. If a cashier, without authority from the directors so to do, makes a loan in
excess of one-tenth *>f the capital of the association, he will be liable, in
case of loss, for the amount of the excess. Second National Bank of Oswego
Y.Burt,93 N. Y.,233.
22. Under sec. 5136 of the national-bank act the cashier of a national bank has
no power to bind it to pay the draft of a third person on one of its custgmers
to be drawn at a future day, when it expects to have a deposit from him
sufficient to cover it, and no action lies against the bank for its refusal to
pay such a draft. Flannagan et al. v. California National Bank et al., 56 Fed.
Bep., 959.
23. Ordinarily the cashier of a bank has no authority to discharge its debtors
without payment, or to bind the bank by an agreement that a surety
should not be called upon to pay a note he had signed, or that he would
have no further trouble from it. Cochecho National Bank v. Haskell et al.,
51 N. H., 116.
24. It is within the general authority of the cashier of a bank to sign, in its
behalf, a blank transfer upon a certificate of stock in the name of the bank,
held by it as collateral security for a loan, and deliver the certificate to
the pledgeor on payment of the loan. Matthews v. The Massachusetts
National Bank, 1 Holmes, 396.
25. The cashier of an incorporated bank is the general executive officer to manage its concerns in all things not peculiarly committed to the directors;
he is agent of the corporation, not of the directors. Bissell v. The First
National Bank of Franklin, 69 Pa. St., 415.
26. The cashier or other executive officer of a national bank has not, in the
absence of special authority from the directors, or of a usage or practice so
to do, power to receive, on behalf of the bank, property for safe-keeping.
First National Bank of Lyons v. Ocean National Bank, appellant, 60 N. Y.,
278; 1 N. B. C, 728.
27. The cashier of a bank, as one of its financial officers, in its daily and ordinary business transactions, has authority to certify checks drawn on the
bank by its customers in all cases where any officer could do the same and
bind the bank. Clarke National Bank v. The Bank of Albion, impleaded, etc.,
52 Barb., 592.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

159

OFFICERS—Continued.
B. Cashier—Continued.
28. This authority is regarded as general, growing out of a cashier's position in the
bank, and persons dealing with the bank are not in any way affected or
bound by the special restrictions and limitations imposed upon him by the
corporation, whose agent he is. Ib.
29. A cashier has no power, however, to make the certification unless he has the
funds of the drawer in hand to meet the check. This limitation on his general authority is, in the law, presumed to be known by all the bank's customers and others who act upon the statements and representations of its
agent. Ib.
30. Neither has the cashier power, as the agent of the bank, to certify a check
until on or after the day the same is made payable Ib.
31. A bank may sue as payee on a note payable to its cashier, alleging either that
the promise was made to the cashier for it, or that the cashier's name was
used by adoption for that of the bank. Darby v. Berney National Bank, 11
So., 881; 97 Ala., 643.
32. The cashier of a bank kept an account with the defendants, who were brokers, and bought and sold stocks for him, and from time to time the defendants received checks of his bank upon another bank, its correspondent,
drawn by him in his official capacity, and collected them from the bank
upon which they were drawn, and applied the avails to the cashier's individual account. In an action brought by a receiver of the bank of the cashier
to recover of defendants the amount of the checks received by them, Held,
the checks being made payable to the order of the defendants, for the
cashier's individual use, the defendants took them under an obligation to
ascertain at their peril that the cashier had authority outside of his ordinary official authority to make the checks, and could not assume that he
was acting within the scope of his official duties. A purchaser of commercial paper made by an agent can not acquire any title to it as against the
principal, unless he can show that it was made by the agent upon due
authorization; and when he knows that the agent has made it in the name
of the principal for his own use, he must be prepared to show that special
authority in that behalf was delegated by the principal, and can not rely
upon the implied or ostensible authority of the agent to make such paper
in the ordinary business of the principal. Anderson v. Kissam et al., 35 Fed.
Rep., 699,
33. It having been shown that the cashier had no authority to make the checks,
and that the checks were paid by the bank upon which they were drawn,
the defendants were prima facie liable in action of trover for the face
amount of the checks. Ib.
34. The circumstance that rhe cashier clandestinely deposited funds with the
bank upon which the checks were drawn to the credit of his own bank,
which deposits were credited to his own bank, is not competent in mitigation of damages. When credited to the cashier's bank the deposits became
the property of that bank as against the cashier and the defendants. The
case of the plaintiff was complete when it appeared that the checks had
been paid by the bank upon which they were drawn, out of funds standing to the credit of the cashier's bank; the plaintiff was then entitled to
recover the full amount, and it was then incumbent upon the defendants,
if they sought to reduce fche damages, to show that, notwithstanding the
wrongful conversion of the paper, the cashier's bank did not suffer loss. Ib.
35. The fact that some of the moneys thus clandestinely deposited by the cashier
were paid in by the defendants, at his request, does not affect the defendants' liability, or go in mitigation of damages. Ib.
36. Evidence of a usage that bankers and brokers regard payments made by
means of such checks as ordinary payments of cash made by individuals
for their own account is not admissible. Ib.
37. Where the cashier of a bank conceals the defalcation of another officer the
statute of limitations will not begin to run in favor of such cashier or his
estate until such defalcation is disclosed to the directors or stockholders.
Vance v.'Mottley, 21 S. W., 593; 92 Tenn., 310.
38. A cashier is bound to exercise reasonable skill, care, and diligence in the
discharge of his duties, and if he fails so to do, and the bank suffer damage in consequence, he is liable therefor. Ib.
39. He is liable for loss on loans made by him through want of care, diligence,
and reasonable skill. Ib.
40. Though the act of the cashier which occasions the loss is a tort, the tort
may be waived and an action for value maintained against him or his
estate. Ib.



160

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

B. Cashier—Continued.
41. The power of a bank cashier to transfer notes and securities held by the
bank can be questioned only by the bank or its representative. Haugan
v. Sunival {Minn.), 62 N. W.,398.
42. A cashier of a bank has no implied authority to bind the bank by a pledge
of its credit to secure a discount of his own notes for the benefit of a corporation in which he was a stockholder. State National Bank v. Newton
National Bank, 66 Fed. Rep., 691.
43. Where a statute creating a banking corporation provides that its affairs
shall be managed by a board of directors, who shall appoint and remove
a cashier and other employees, the power to discharge a surety on a note
without payment can not be exercised by the cashier unless expressly
delegated to him by the board of directors. People's Savings Bank v.
Hughes, 1 Mo. App. Rep'r, 549.
44. A cashier on whom, by continued absence of the directors, has devolved the
duty of making loans and discounts will be liable for losses through overdrafts and discounts made by him only where it appears that he failed to
make reasonable inquiry into the financial standing of those making the
overdrafts, and those whose paper was discounted, and failed to exercise
the care and discretion which an ordinarily prudent man would exercise
in his own business. Pryse v. Farmers' Bank (Ky.), 33 8. W., 532.
45. A bank cashier is the agent of the bank in financial transactions with customers, and his acts will bind it, unless contrary to the provisions of the
charter, or of general law, or against public policy. Squires v. First
National Bank, 59 III. App., 134.
46. The office of cashier of a national bank is not an annual office, bivUthe term
of the incumbent continues until he resigns or until he is removed or a
successor is appointed by the board of directors of the bank. Westervelt v.
Mohrenstecher et al,, 76 Fed. Rep., 118.
47. Since the national-bank act expressly provides that the cashier of a national
bank shall hold his office subject to the pleasure of the board of directors,
a by-law providing that a cashier shall hold his office for one year, and
shall be elected annually, is nugatory, as is a reappointment in accordance
with such by-law at the beginning of each year. Ib.
48. A bond conditioned for the proper performance by a cashier of his duties
"for and during all the time he shall hold the said office" binds the sureties for all such time, irrespective of the fact that he is reappointed at the
beginning of each year. Ib.
19. In an action on a cashier's bond for damages arising from breach thereof by
his misappropriation of money and making of excessive loans, the fact
that the bank and its receiver have sued and obtained judgment upon
notes taken by the cashier for such misappropriated money and excessive
loans is no defense. Ib.
50. Under an allegation that the guaranty sued on was executed by the defendant bank in the name of its cashier, and that such cashier was authorized
by a general usage to bind the bank to similar contracts, the plaintiff
may prove any competent authority to the cashier, and is not restricted to
proof of usage. Seeber v. Commercial National Bank of Ogden, 77 Fed. Rep.,
957.
51. The cashier of the Q. bank, who, in addition to his usual powers as such, was
allowed by the officers to have full control of its business, applied to a
bank in another city for accommodation, sending to the latter bank what
purported to be the signatures of the officers of the Q. bank and a resolution of its directors authorizing him to borrow money and rediscount
paper. Thereafter loans were made to the Q. bank on its notes, signed by
the cashier in its name. It was customary for banks in the region where
the Q. bank was located to borrow at certain seasons, and everything con
nected with the transaction was apparently done in the usual and regular
course of business. Held, that the Q. bank was liable on the notes signed
by the cashier, though it afterwards appeared that the signatures of the
officers and the resolutions sent by him to the lending bank were forgeries,
and the proceeds of the loans were used by him for his own benefit. City
National Bank of Quanah, Tex., v. Chemical National Bank of St. Louis, Mo.,
80 Fed. Rep., 859.
52. A bank can not be charged with responsibility as principal for the action of
its cashier, performed as a director of a manufacturing company, in assisting to promulgate false statements as to the company's financial condition
for the purpose of defrauding all of its creditors, including the bank, so as
to affect the validity of the bank's claims against the company. Hadden

 v. Dooley, 92 Fed. Rep., 274.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

161

OFFICERS—Continued.

C. Directors—
53. The degree of care required of directors of corporations depends upon the
subject to which it is to be applied, and each case is to be determined in
view of all the circumstances. Brig g 8 v. Spaulding, 141 U. S., 132.
51. Directors of a corporation are not insurers of the fidelity of the agents
whom they appoint who become by such appointment agents of the corporation ; nor can they be held responsible for losses resulting from the
wrongful acts or omissions of other directors or agents unless the loss is a
consequence of their own neglect of duty. Ib.
55. A director of a national bank is not precluded from resignation within the
year by the provision in Rev. St., sec. 1545, that when elected he shall
hold office for one year and until his successor is elected. Ib.
56. Persons who are elected into a board of directors of a national bank about
which there is no reason to suppose anything wrong, but which becomes
bankrupt in ninety days after their election, are not to be held personally
responsible to the bank because they did not compel an investigation or
personally conduct an examination,, Ib.
57. Directors of a national bank must exercise ordinary care and prudence in
the administration of the affairs of a bank, and this includes something
more than officiating as figureheads. They are entitled under the law to
commit the banking business, as defined, to their duly authorized officers;
but this does not absolve them from the duty of reasonable supervision,
nor ought they to be permitted to be shielded from liability because of
want of knowledge of wrongdoing, if that ignorance is the result of gross
inattention. Ib.
58. If a director of a national bank is seriously ill, it is within the power of the
other directors to give to him leave of absence for a term of one year
instead of requiring him -to resign, and if frauds are committed during
his absence and without his knowledge, whereby the bank suffers loss, he
is not responsible for them. Ib.
59. A notary of the city of Alexandria is authorized to administer the oath
required by law to be taken by a director of the First National Bank of
that city as to his ownership of the capital stock of such bank. United
States v. Neale, 14 Fed. Rep., 767.
60. When the oath is taken and subscribed by the accused it is complete, so far
as the accused can make it, and if the notary, in certifying the fact of the
oath having been taken, erroneously used the term " county ' instead of
"city," and used the seal of said bank instead of his own official seal, such
error did not affect the oath taken. Ib.
61. If accused took an oath in which he stated that he was the bona fide owner
in his own right of the number of shares of stock then standing in his
name on the books of the bank, and that the said shares were not hypothecated or in any way pledged as security ior any loan or debt, and if he
took it willfully, and not believing that he was statiug the truth, it is
perjury, if in point of fact he was not the owner of said stock or had
pledged the same for a loan or debt. Ib.
62. An irrevocable power of attorney given by the accused, wherein he constituted and appointed a third party his attorney for the purposes therein set
forth, being a general power covering any indebtedness of accused to said
third party, is a pledge of the shares of stock owned by accused mentioned
therein as long as there was any debt due by the accused to such third
party. Ib.
63. Under the laws of Vermont an action against a director of a national bank
for the negligent performance of duty in not requiring a bond from the
cashier, and otherwise mismanaging the affairs of the bank, abates by his
death, and can not be revived against his administrator. Witters, Receiver,
etc., v. Foster, Administrator, etc., 26 Fed. Rep., 737.
64. A bill brought to charge the directors of an insolvent national hank with the
amount of losses caused by the bank's failure alleged that one of the
defendants sold and transferred his stock on the day named, but the evidence showed that defendant had not paid anything for the stock, but
delivered it to a messenger of another one of the defendants, from whom
he had agreed to purchase it, and that such defendant then sold and
indorsed the stock to a third party, as it was agreed he might do if he so
desired. Plaintiff moved to amend the bill to conform to the proofs and
make it allege that the transfer was merely formal. Held, unnecessary.
Movius, Receiver, v. lee et al., 30 Fed. Rep., 298.
65. A receiver of an insolvent national bank, in his own name or in the name of
a bank, may enforce against the directors, for the benefit of the stock 1900, PT 1
CUR
11


162

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.
C. Directors—Continued.
holders, depositors, and other creditors of the bank, any right or claim
resting upon the nonperformance or negligent performance of their duties
that the bank itself could have enforced. Ib.
66. A director of a national bank who, before tho expiration of his term, sells his
stock and orally resigns his office to the president, in his place of president
at the bank, and afterwards receives the money for his stock prior to tinsustaining of losses by the bank, ceases to be a director and can not be
held liable for subsequent losses caused by the negligence of the directors. Ib.
67. The president of a national bank, being in failing health, was anxious to
resign his position, but at a suggestion of a majority of the directors consented to take a year's leave of absence, and during such absence, and without any fault on his own part, losses were sustained by the bank, and it
became insolvent. Held, in a suit by the receiver to charge the directors
with such losses, that he was not liable. Ib.
68. The directors of a national bank which has become insolvent by reason of
losses caused by the discount from time to time of paper not properly
secured, indorsed by a director who is a man of wealth and the largest
stockholder in the bank, and in whom the other directors have reason to
place confidence, can not be held liable for the mere failure to discover
the illegal transactions and to prevent such director from continuing .
therein. Ib.
69. The officers of an insolvent national bank can not be held personally
responsible to creditors for losses on loans and discounts made by them
in good faith, and, as they thought at the time, for the best interests of
the bank, merely because such loans and discounts appear to have been
unwise and hazardous when looked back upon. Witters, Receiver, etc., v.

Sowles et al., 31 Fed. Rep., 1.
70. Under Rev. St., sec. 5200, directors of a national bank who make or assent
to the making of a loan to any one person of a sum exceeding one-tenth
of the capital stock of the bank become personally and individually
liable for all loss sustained thereby; but where the borrower in such a
case is also one of the directors he is not so liable, but simply as a debtor
to the bank. Ib.
71. Bank directors can not be held personally liable for money paid out for
dividends (< to a greater amount than net profits, after deducting losses
and bad debts" (Kev. St., sec. 5204), because there were debts bad in fact,
but supposed to be good when the dividends were declared and paid.
Bad judgment on the part of the directors as to the condition of the
assets, without bad faith, does not make them individually liable. Ib.
72. Directors of a national bank can not be held to the common-law liability
for inattention to duty as directors in not preventing a hazardous,
imprudent, and disastrous loan if such loan was made by their associates
without their knowledge, connivance, or participation. Ib.
73. Directors or the managing committee of a national bank may, in the honest
exercise of official discretion, make loans or discounts for the actual or
supposed benefit of the association, and, although the transaction may be
injudicious and actually result in loss or damage to the bank, there is no
criminal liability, so long as their acts are not in bad faith, for the purpose
of personal gain or private advantage to the officials. United States v.
Harper, 33 Fed. Rep., 471.
74. A national bank was organized with a capital of $60,000. The promoter of
the bank took 380 shares of stock in his own name and procured the
defendants to be directors, as well as a person to be elected cashier by
them. The directors were not acquainted with the banking business. The
proposed cashier was known to the directors, at least by reputation, and
was supposed by them to be competent and trustworthy and of considerable experience in the business, and they had full confidence in his integrity
and ability to take charge of the bank. The cashier acted as manager of
the loan and discount business of the bank, and the directors merely as
advisers when applied to. The promoter of the bank knew, and the other
stockholders were presumed to know, that the directors were wholly unused
to the banking business. Held, that the directors were not liable for the
acts of the cashier in violation of the banking law done without their participation or knowledge.

Clews et al. v. Bardon et al., 36 Fed. Rep., 617.

7.r». The cashier made loans in excess of 10 per cent of the capital to a manufacturing corporation supposed by him and by the public to be entirely solvent. None of the directors knew of the "loans when made, but after a




REPORT OF THE COMPTROLLER OF THE. CURRENCY.

163

OFFICERS—C ontinued.

C. Directors—Continued.
loan of $3,000 in excess of the lawful limit had been made the cashier
informed one of them of such loan, and was by him advised to call it in
when due; and thereafter such director's advice was asked as to a further
discount to the same corporation, and he disapproved of it, and it was not
made. Afterwards further loans or discounts were made to the same corporation without the knowledge or consent of any of the directors. About
eight months after the bank commenced business one or more of the debtors
of the bank failed, and the directors thereupon took the active management into their own hands. Held, That none of the directors had knowingly violated or knowingly permitted to be violated any of the provisions
of the banking law, and were not liable for such violation by the cashier. Ib.
76. Under the banking law the management of a national bank may be exercised
either by the directors or by the cashier or other officers; therefore the
directors are not liable for the illegal or negligent acts of the cashier or
other officers by whom the bank is managed if they have no knowledge of
such acts and do not connive at them or willfully shut their eyes and permit them. Ib.
11. It seems that the liability of directors of a national bank is substantially the
same under the banking law as at the common law. Ib.
78. The personal liability of directors of a national bank for violation of Rev.
St., sec. 5204, by declaring dividends in excess of net profits, and of sec.
5200, for loaning to separate persons, firms, or corporations amounts exceeding one-tenth of the capital stock, can not be enforced in an action at
law.

Welles v. Graves et ah, 41 Fed. Rep.. 459.

19. If the personal liability imposed by Rev. St., sec. 5239, upon directors for
violation of the provisions of the banking act in favor of anyone injured
thereby can be enforced without reference to whether the charter has
been forfeited or not, it is not a penalty within the meaning of sec. 1047,
limiting actions for penalties to live years. Ib.
80. Directors of a national o
bank are " officers" within the meaning of Rev. St.,
Mrectors
sec. 5209, which makes it a misdemeanor for bank officers to make false
entries in any book, report, or statement of the bank, with intent to
deceive any of its officers. United Stales v. Means et ah, 42 Fed. Rep., 599.
81. An act of Congress imposing a legal liability on the directors of a national
bank for certain things which they may do which shall result in an injury
to the bank, its stockholders, or creditors, and making them liable for the
amount of the damage, is a remedial and not a penal statute, and therefore an action under it survives against the estate of a director. Stephens
v. Overstolz, 43 Fed. Rep., 465.
82. Where a bank director makes a wrongful loan of money from which loss
occurs, it is no defense to an action by the receiver of the bank against
the director's estate that the insolvency of the person to whom the loan
was made was not discovered until after the death of the director and the
appointment of the receiver. Ib.
83. An action by a receiver of a bank whose charter has been forfeited under
above statute against a director is properly brought at law, there being
no necessity for invoking the aid of a court of chancery, either because
of the nature of the issues involved or to avoid a multiplicity of actions.
Ib., 771.
84. In such action plaintiff may state the aggregate amount of the excessive
loans made to each party and the damage resulting therefrom in each
case, accompanying each allegation with an exhibit showing the dates
and amounts of the several loans that go to make up the aggregate sum
stated in the petition, and is not compelled to declare in a separate count
for each loan made. Ib.
85. Rev. St., sees. 5234 and 5239, prescribing the method of enforcing the liability
of the directors of national banks for violation of the banking law, are
exclusive of other remedies, and a creditor of an insolvent bank for which
a receiver has been appointed can not sue its directors for the purpose
of making them personally liable for the mismanagement of the bank.
National Exchange Bank of Baltimore v. Peters et al., 44 Fed. Rep., IS.
86. A stockholder in an insolvent national bank for which a receiver has been
appointed car not sue its directors to make them personally liable for the
mismanagement of the bank, as the right of action is in the receiver and
not in the individual stockholder. Howe v. Barney et ah, 45 Fed. Rep., 668.
87. Defendants, as directors, during a run on their bank posted conspicuously
in the bank a notice, signed by them and addressed to the general public,
representing the bank to be solvent. Plaintiff saw the notice, and, after




164

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.
C. Directors—Continued.
a consultation with the directors, loaned the bank money, which was lost.
Held, that the notice, not being addressed to plaintiff, could not entitle it
to recover from the directors under R. L. Vt., section 983, which provides
that no action shall be brought to charge any person upon a representation concerning the credit of another unless such a representation is in
writing and signed by the party to be charged; and the fact that the
notice was signed by defendants as directors would prevent a recovery
from them individually, even if the notice were a sufficient representation
in writing. First National Bank of Plattsburg v. Soivles et al., 46 Fed. Rep.,
731.
88. The executive officers of an association can not bind it as a gratuitous bailee
unless they have a special authority from the board of directors so to do
or there exists a general custom or usage to that effect. First National
Bank of Lyons v. Ocean National Bank, 60 N. Y., 278.
89. An action may be brought by a receiver of a national bank against its directors to recover damages sustained by their gross negligence. Brinckerhoff
v. Bostwick, 88 N. Y., 52; 3 N. B. C, 591.
90. If the receiver is one of the directors, such action may be maintained by the
stockholders, or, when they are numerous, by one or more in behalf of
all. Ib.
91. I t is not necessary to allege in the complaint a direction from the Comptroller, or a demand upon him and a refusal, to direct the receiver to bring
the action, or a refusal of the receiver to sue. Ib.
92. Such action may be brought in a State court. Ib.
93. The bank and the receiver, as such, are necessary parties defendant to such
an action. Ib.
94. The board of directors of a bank is a body recognized by law, and to all
purposes of dealing with others constitutes the corporation. Burrill v.
President, Directors, etc., of the Nahant Bank, 2 Metcalf, 163.
95. A board of bank directors may delegate authority to a committee of its
members to alienate or mortgage real estate; and such authority to conArey real estate necessarily implies authority to execute proper instruments
for that purpose and to affix the corporate seal thereto. Ib.
96. Where a board of bank directors authorized a committee of its members " t o
sell and transfer any estate owned by the bank," and the committee gave
mortgage of the real estate of the bank to a creditor who had recovered
judgment against the bank on its bills, and took from him at the same
time a bond conditioned that he would not put those bills in circulation,
and the board of directors accepted said bond and acted on it, and the
cashier paid the costs of the suit in which said judgment was recovered,
according to the agreement made between said creditor and said committee, it was held that, whether the committee had or had not authority to
mortgage the estate, the mortgage had been ratified by the board of
directors. Ib.
97. A stockholder in a national bank can not maintain an action against the
president and directors for their neglect and mismanagement of the affairs
of the bank, whereby insolvency ensued and the stock became worthless.
Conivay v. Halsey, 44 N. J. I., 462; 3 N. B. C, 571.
98. A judge who is a director of a national bank can not try a case to which it
is a party, since, by Rev. St., sec. 5146, he must necessarily be interested as
a stockholder. Williams v. City National Bank, 27 8. W., 147.
99. The election of an individual as a director does not constitute him an agent
of the corporation with authority to act separately and independently of
his fellow-members. It is the board duly convened and acting as a unit
that is made the representative of the association. The assent or determination of the members of the board, acting separately and individually, is not the assent of the corporation. The law proceeds upon the
theory that the directors shall meet and counsel with each other, and
that any determination affecting the association shall be arrived at and
expressed only after a consultation at a meeting of the board, attended
by at least a majority of its members. National Bank v. Drake, 35
Kans., 564.
100. Stockolders have no standing in court to interfere for the protection of their
company until the board of directors of the company have neglected or
refused an application to take tbe proper steps to protect the interests of
the company. Hobbs v. Western National Bank, 8 Weekly Notes of Cases,
181; 2 N. B. C, 187.
101. It is a mistake to suppose that the directors of national banks cease to be
 such, and that their duty to the bank lapses, when an examiner is put


REPORT OF THE COMPTROLLER OF THE CURRENCY.

165

OFFICERS—Continued,
C. Directors—Continued.
in charge of its fund, properties, and books by the Comptroller. Robinson
v. Hall et al., 63 Fed. Rep., 222.
102. They were, still, as much the advisers of the bank examiner as they had
been of the cashier, notwithstanding they were not invested by law with
the control over him which they were empowered to exercise over the
cashier. Ib.
103. Their duty as directors does not cease until after the appointment of a
receiver. Ib.
104. If directors were depositors, and knew two mouths or more before suspension that that event was inevitable, and that the bank could pay only a
percentage of its deposits, and yet checked for the whole of their own
balances, thereby diminishing the percentage to which other creditors
would be entitled, they certainly defrauded to the extent of the diminution
the creditors whose interests they were relied upon to protect, and should
be held to strict accountability. Ib.
105. Directors of a national bank left its management for more than three years
almost wholly to its cashier, who had but little property, and of whom
they required no bond; and they knowingly permitted loans to be made
to individuals and firms largely in excess of the amounts allowed by law.
They failed to record mortgages given to secure large debts due the bank
after they were aware of its insolvency, and erroneously advised an
examiner who had taken charge of the bank that it was not necessary to
record them. Held, that the directors were personally liable for the losses
caused by such neglect and the fraud and defalcations of the cashier.
Briggs v. Spaulding, 11 S. C, 924; 141 U. S., 132, distinguished. Ib.
106. A creditor of an insolvent national bank that is in the hands of a receiver
can not sue to enforce against officers and directors who have violated the
banking laws the personal liability imposed by Rev. St., sec. 5239, as such
liability is an asset belonging equally to all creditors, and must be enforced
by the receiver. Bailey v. Mosher, 63 Fed. Rep., 488.
107. The liability of directors of a national bank to a common-law action of
deceit for false and fraudulent representations made by them in the pretended performance of duties imposed upon them by the national banking
law is not precluded by the liability imposed in that law for violation of
its provisions. Preseott v. Haughey, 65 Fed. Rep., 653.
108. Complaint alleging false and fraudulent representations by directors of a
national bank in advertisements, statements, and reports as to its condition, whereby plaintiffs, relying thereon, were induced to deposit money
with the bank, and were deceived and damaged. Held, to state a common-law cause of action for deceit, not removable as involving a Federal
question. Ib.
109. Directors of a national bank, who on its suspension issue a circular declaring
the solvency of the bank, and that they hope to reopen within 60 days,
and authorize the bank officers to receive money on special deposit, and
keep it in the vaults of the bank, subject only to the check of the
depositor, and subsequently, on the appointment of a receiver for the
bank, turn over to him deposits made pursuant to the circular, are personally liable to the depositors for the amount of such deposits. Miller v.
Howard et al., 32 S. E., 305.
110. On an issue whether the plaintiff bank had knowledge of the preference of
a creditor of its debtor, it was proper to charge that the bank was not
chargeable with knowledge of its directors acting individually, but that
the jury might consider the knowledge of the directors as tending to
prove knowledge on the part of the bank. Continental National Bank
v. McG-eoch (Wis.), 66 N. W., 606.
111. To bind a national bank the directors must act together as a board; their
separate individual assent is ineffectual. First National Bank of Fort
Scott v. Brake, 35 Kans., 564; 57 Am. Rep., 193; 3 N. B. C, 445.
112. The duty of the board of directors is not discharged by merely selecting
officers of good reputation for ability and integrity, and then leaving the
affairs of the bank in their hands without any other supervision or examination than mere inquiry of such officers, and relying upon their statement until some cause for suspicion attracts their attention. The board
is bound to maintain a supervision of the bank's affairs, to have a general knowledge of the character of the business and the manner in which
it is conducted, and to know at least on what security its large lines of
credit are given. Gibbons v. Anderson et al., 80 Fed. Rep., 345.
113. A receiver of a national bank may sue the directors to hold them responsible
 for the malfeasance of the managing officer when it appears that they were


166

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

C. Directors—Continued.
so negligent as to make practically no examination of its books or affairs,
and to hold meetings only at rare intervals, and then to limit their business
almost wholly to the election of directors and the declaration of dividends.
In such case their liability for losses should begin at a time when they
ceased to discharge the duty of giving proper supervision to the conduct of
the bank's affairs. In the circumstances of the present case thej^ were held
liable from the time when, by reason of the failure to earn dividends for
more than a year, their attention should have been drawn to the necessity
of making a thorough examination. Ib.
114. The right of action against the directors of a national bank, for violation of
the provisions of the national banking act, given by Rev. St., § 5239, is for
a tort, and comes within the common-law definition of actions on the case.
Cockrill v. Butler et al, 78 Fed. Rep., 679.
115. The forfeiture of the bank charter in a suit brought by the Comptroller of
the Currency is not a condition precedent to the maintenance of a suit
against its directors, under Rev. St., §§5200, 5239, for excessive loans.
Cookrill v. Cooper et al., 86 Fed. Rep., 7.
116. A court of equity has jurisdiction of a suit against the directors of a national
bank for excessive loans, under Rev. St., §§5200, 5239, where the suit is
against a large number of directors whose terms of service were not identical, where the excessive loans were inaugurated by one set of directors
and continued, renewed, or enlarged by another, and where the directors
were also charged with a violation of Rev. St., §5204, in declaring dividends. Tb.
117. A receiver of an insolvent national bank has a right to maintain a suit in
his own name against directors to charge them for losses that may have
been sustained by the corporation and its creditors through their wrongful or fraudulent a