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ANNUAL RETORT

OF THE

COMPTROLLER OF THE CURRENCY
TO THE

FIRST SESSION OF THE FIFTY-SEVENTH CONGRESS

OP

THE UNITED STATES.

IXECEIMBER 2 , 19O1.

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

WASHINGTON:
GOVERNMENT PRINTING OFFICE.




1901.




TREASURY DEPARTMENT,

Document No. 2253 A. Vol. I.
Comptroller of the Currency.

CONTENTS.
Abstract of reports of national banks
Changes in capital stock
Voluntary liquidations
National-bank failures
Summary of reports during the year
Specie and other currency
Individual deposits
Reserve required and held
Rates for loans
Clearing-house transactions
Bonds and circulation
Profit on circulation
Capital and surplus of banks
Distribution of banking facilities
Aggregate resources of reporting banks
Earnings, dividends, and expenses
National-bank shares and shareholders
Organization of national banks
Operations under act March 14,1900
Expiration and extension of corporate existence of national banks
Insolvent national banks
State, savings, and private banks
Savings Banks of the United States
Gold, etc., holdings by banks
School savings banks
Building and loan associations
State and private bank failures
Banks and banking in Hawaii, Porto Rico, and the Philippines
Savings banks of the world
Foreign banks of issue
Banking power of the world
Recommendations relative to—
Extensions
,
Deposit of lawful money by banks extending their existence
Repeal of provision limiting amount of notes of the denomination of $5
Loans to directors and other officers
Excessive loans
Examiners' compensation
Monetary standard and financial system
Subtreasury system
National banks as public depositories
Asset bank currency
Philippine bank reports
Hawaiian bank statutes
-




..

Page.
ix
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XIII
XIII
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XVIII
XVIII
xix
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XXXIII
xxxiv
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xxxix
XL
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XLII
XLII
XLII
XLIII
XLIII
XLIII
XLIII
XLIV
XLVII
LII

III

IV

CONTENTS.
CONTENTS OF APPENDIX.

Digest of national-bank decisions
Comptrollers and Deputy Comptrollers of the Currency

Page.
1
267

APPENDIX TABLES.

No. 1. Names and compensation of officers and clerks in the office of the Comptroller of the
Currency October 31, 1901
No. 2. Expenses of the office of the Comptroller of the Currency for the year ended June 30,
1901
\
No. 3. Number of national banks organized, number now in operation, and the number passed
out of the system since February 25,1863
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
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,
1901
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
1901
No. 7. Number of national banks organized, in voluntary liquidation, insolvent, and in operation in each State and Territory October 31,1901
No. 8. Number and capital of national banks organized in each State and Territory during the
year ended October 31,1901
No. 9. National banks organized since March 14,1900
No. 10. Number and capital of national banks in each State extended under the act of July 12,
1882
No. 11. Number, capital, and circulation, by States, of national banks the corporate existence
of which was extended during the year ended Octobei 31, 1901
No. 12. Title, location, and capital of national banks the corporate existence of which expired
during the year ended October 31, 1901, and of succeeding associations
No. 13. National banks the corporate existence of which will expire during the year ending
October 31,1902, with the date of expiration, and capital
No. 14. National banks the corporate existence of which will expire for the second time during
the year ending October 31, 1902
No. 15. National banks, numerically arranged, the corporate existence of which will expire
from November 1,1901, to December 31,1903, and which may be extended under act
July 12, 1882
No. 16. National banks, numerically arranged, the corporate existence of which will expire
for the second time from July 14, 1902, to December 31, 1903, renewal of which will
require additional legislation
No. 17. National banks closed to business, by voluntary liquidation and otherwise, during the
year ended October 31,1901, with date of authority to commence business, date of
closing, capital and circulation issued, redeemed, and outstanding
No. 18. Authorized capital stock of national banks on the first day of each month from January
1,1876, to November 1,1901, 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
No. 19. Profit on national-bank circulation, based on a deposit of $100,000 United States bonds . .
No. 20. Changes in capital, bonds, and circulation of national banks, by geographical divisions.
No. 21. Decrease or increase of national-bank circulation during each of the years ended October
31, 1893 to 1901




268
269
269

270

271

272
273
273
274
287
287
288
288
291

291

297

301

303
308
309
314

CONTENTS.

V

Page.
No. 22. National-bank circulation issued, lawful money deposited to retire circulation, from
June 20, 1874, to October 31,1901, and the amount on deposit, by States, at the latter
date
315
No. 23. National-bank notes outstanding1, lawful money on deposit to redeem circulation, bonds
on deposit to secure circulation, and public deposits on October 31, 1901, with the
changes during the preceding year and the preceding month
316
No. 24. Yearly increase or decrease in national-bank circulation from January 14, 1875, to
October 31,1901
317
No. 25. National-bank notes issued, redeemed, and outstanding, by denominations and amounts,
on October 31, 1864 to 1901, inclusive
318
No. 26. National gold bank notes issued, redeemed, and outstanding October 31, 1901
321
No. 27. National-bank notes issued during the year ended October 31, 1901, and the total amount
issued, redeemed, and outstanding
321
No. 28. National-bank notes outstanding and the amount and per cent of notes of $5 on four
dates since March 14, 1900
321
No. 29. Number and denominations of national-bank notes issued and redeemed since the
organization of the system, and the number outstanding October 31, 1901
322
No. 30. Vault account of currency received and issued by this Bureau during the year
322
No. 31. National banks having no circulation outstanding
322
No. 32. Additional circulation issued and retired, by States, during the year ended October 31,
1901, and the total amount issued and retired since June 20, 1874
323
No. 33. 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
324
No. 34. National-bank notes received at this Bureau and destroyed yearly since the establishment of the system
324
No. 35. Vault account of currency received and destroyed during the year
325
No. 36. Taxes assessed on circulation, deposits, and capital of national banks from 1864 to 1882. 325
No. 37. Taxes assessed on national-bank circulation, cost of redemption, cost of plates, and
examiners' fees, 1883 to 1901
326
No. 38. Taxes collected on capital, deposits, and circulation of national banks to June 30, 1901. 326
No. 39. Taxes collected on circulation, deposits, and capital of banks other than national, 1864
to 1882
326
No. 40. Taxes collected by the Internal-Revenue Bureau on capital and surplus of national
and other banks, act June 13, 1898
326
No. 41. Average amount of national-bank notes in circulation and duty paid thereon, year
ended June 30, 1901
327
No. 42. Capital and surplus of national banks and tax paid thereon, year ended June 30,1901.. 328
No. 43. Capital and surplus of State banks and tax paid thereon, year ended June 30,1901
329
No. 44. Capital and surplus of private banks and tax paid thereon, year ended June 30,1901
3304
No. 45. Capital and surplus of loan and trust companies and tax paid thereon, year ended
June 30, 1901
331
No. 46. Capital and surplus «nd tax paid thereon by all incorporated and private banks in the
United States, year ended June 30, 1901; number of banks and average number of
inhabitants per bank in each State and geographical division
332
No. 47. Specie and bank-note circulation of the United States from 1800 to 1859
333
No. 48. Coin and paper circulation of the United States, 1860 to 1901
334
No. 49. Currency and gold, value of, 1862 to 1878
335
No. 50. United States bonds on deposit to secure circulating notes of national banks on June 30,
1865 to 1901, and amount owned and held by banks for other purposes, including those
deposited to secure public deposits
.•
337
No. 51. United States bonds on deposit to secure circulating notes of national banks on October
31,1882 to 1901
338



VI

CONTENTS.
Page.

No. 52. Interest-bearing bonded debt of the United States, 1865 to 1901
No. 53. United States bonds, monthly range of prices in New York, 1860 to October 31, 1901
No. 54. Investment value of United States coupon bonds, 1895 to 1901
No. 55. Number of national banks in each State, etc., capital, bonds on deposit to secure circulation on September 30, 1901, minimum amount of bonds required, and excess on
deposit, September 30, 1901, and September 5,1900
No. 56. Number of national banks in each State, etc., with capital of $150,000 and under, 1900
and 1901
No. 57. Number of national banks in each State, etc., with capital exceeding $150,000, 1900 and
1901
No. 58. Comparative statement of the resources and liabilities of national banks, 1864 to 1901...
No. 59. Abstract of the resources and liabilities of national banks on September 30, 1901, in New
York, all central reserve cities, other reserve cities and elsewhere, and the aggregate
in the United States
No. 60. Highest and lowest points reached in the principal items of resources and liabilities of
national banks during the existence of the system
No. 61. Percentages of loans, United States bonds, and lawful money to the aggregate resources
of national banks, 1866, 1888 to 1901
No. 62. Classification of loans made by national banks in reserve cities, etc., in October, 1897 to
1901
No. 63. Classification of loans by national banks in New York City for the last six years.
No. 64. Classification of loans and discounts in national banks in the reserve cities, etc., on September 30, 1901
No. 65. Loans and discounts, capital, surplus, other undivided profit, and circulation of national
banks on September 30, 1901
No. 66. Specie and circulation of national banks at date of each report from December 13, 1900,
to September 30, 1901
No. 67. Gold, silver, coin certificates, legal tenders, and currency certificates held by national
banks at date of each report since January 20, 1877
No. 68. Specie held by national banks in New York City at date of each report since February
26,1891
No. 69. Deposits and reserve of national banks on or about October 1, 1875, to September 30,
1901
No. 70. Lawful money reserve of national banks December 13,1900, to September 30,1901
No. 71. Deposits in national banks, reserve required and held December 13, 1900, to September
30,1901
No. 72. Net deposits of national banks, reserve required and held on three dates in 1896 to 1901.
No. 73. Lawful money reserve of national banks at date of each report since September 28,1895.
No. 74. Abstract of reports of earnings and dividends of national banks from September 1,1900,
to September 1,1901
No. 75. Ratios to capital and to capital and surplus of the earnings and dividends of national
banks in each State, etc., from March 1, 1897, to September 1, 1901
No. 76. Number of national banks, capital, surplus, dividends, net earnings, etc., 1870 to 1901 ..
No. 77. National banks in voluntary liquidation under the provisions of sections 5220 and 5221,
United States Revised Statutes
No. 78. National banks in liquidation under section 7, act July 12, 1882, succeeded by associations with the same or different titles
No. 79. 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
No. 80. National banks in liquidation under section 7, act July 12, 1882




339
340
375

376
378
379
380

383
384
384
385
386
387
388
390
410
416
418
420
440
441
444
446
454
458
459
480

481
484

CONTENTS.

VII

Page.
No. 81. 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 1901, inclusive
486
No. 82. Insolvent national banks, dates of failure and final liquidation, assets, collections, dividends paid, etc., 1865 to 1901
508
No. 83. Capital, nominal assets at date of failure, and disposition of assets of insolvent national
banks the affairs of which have been finally closed, 1865 to 1901
536
No. 84. Capital, nominal assets, etc., of insolvent national banks, in each State, the affairs of
which have been finally closed
560
No. 85. Capital, surplus, and other liabilities of national banks which failed during the year . . . 563
No. 86. National banks against the capital stock of which an additional assessment has been
levied, with amount of capital, and date and amount of assessment
563
No. 87. 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
563
No. 88. National-bank receiverships in an inactive condition
564
No. 89. National-bank receiverships closed during the year
564
No. 90. Dividends paid to creditors of insolvent national banks during the year
565
No. 91. Comparative statement of the transactions of the New York clearing house for the last
forty-eight years
567
No. 92. Comparative statement for two years of the transactions of the New York clearinghouse. 567
No. 93. Exchanges, balances, percentage of balances to exchanges, and percentage of funds used
in settlement of balances by the New York clearing house, 1892 to 1901, inclusive
568
No. 94. Transactions of the clearing houses of the United States, 1892 to 1901, inclusive
568
No. 95. Comparative statement of the exchanges of the clearing houses of the United States for
the years ended September 30,1901 and 1900
568
No. 96. Clearing-house transactions of the assistant treasurer of the United States at New York
for the year ended September 30,1901
569
No. 97. Monetary systems and stocks of money in the principal countries of the world, in 1901.. 570
No. 98. Resources and liabilities of joint stock and private banks in the United Kingdom, etc.,
December, 1900, and June, 1901
572
No. 99. Abstract of reports of chartered banks of Canada
574
No. 100. Abstract of reports of banks in Australia
574
No. 101. Resources and liabilities of banks of Japan
574
Abstract of reports of condition of State, savings, and private banks, and loan and trust companies
575
Growth of savings banks, as indicated by number of depositors and amount of deposits since
1820
592
Specie and other cash resources of State banks from 1873 to 1901
594
Dividends paid by State banks and loan and trust companies, 1901
595
Capital stock of banks, by classes, in each State in July, 1901
596
Population and distribution of aggregate resources of national and other banks, by States and
geographical divisions, 1901
597
Resources of banks, by classes, in each State and geographical division, 1901
598
Insolvent State banks, etc., for the year ended June 30, 1901
599
Condition of loan and trust companies in the District of Columbia on September 30, 1901
600
Resources and liabilities of the first Bank of the United States in January, 1809 and 1811
601
Resources and liabilities of the second Bank of the United States from 1817 to 1840
602
Principal items of resources and liabilities of Colonial and State banks, 1774 to 1833
603
Comparative statement of resources, etc., of State banks, 1834 to 1901
604
Loans, capital, surplus, and deposits of national and other banks, June 29, 1901, as shown by
official and unofficial returns
608




VIII

CONTENTS.
Page.

Loans, capital, surplus, and deposits of each class of banks by geographical divisions, June 29,
1901, as shown by official and unofficial returns
Aggregate resources and liabilities of national banks from October, 1863, to October, 1901
Abstracts of reports of condition of national banking associations since December 13, 1900
Summary of the condition of national banks in each State, Territory, and reserve city from
December 13,1900, to September 30,1901
Important items of resources and liabilities of national banks, by States, from 1863 to 1901
Index




615
617
645
727
785
811

REPORT

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

Washington, December #, 1901.
STR: In compliance with the requirements of section 333 of the
Revised Statutes of the United States, the thirty-ninth annual report
of the operations of the Currency Bureau for the year ended October
31, 1901, is submitted herewith.
CONDITION OF NATIONAL 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:
ABSTRACTS OF REPORTS OF CONDITION OF NATIONAL BANKS IN THE UNITED STATES
FROM DECEMBER 13, 1900, TO SEPTEMBER 30, 1901.
Dec. 13, 1900,
3,942 banks.

Feb. 5, 1901,
3,999 banks.

April 24, 1901,
4,064 banks.

July 15, 1901,
4,165 banks.

Sept. 30, 1901,
4,221 banks.

RESOURCES.

Loans and discounts.. #2,706,534,643.35 $2,814,388,346.45 82,911,526,276.00 $2,956,906,375.97 $3,018,615,918.40
Overdrafts
33,086,161.88
36,693,829.29
28,036,550.54
24,147,213.49
41,682,539.65
U. S. bonds to secure
circulation
306,622,180.00 317,916,330.00 323,511,830.00! 326,971,080.00 329,372,830.00
U. S. bonds to secure
U. S. deposits
101,414,820.00 101,749,780.00 102,111,450.00! 105,327,250.00 107,107,100.00
U. S. bonds on hand..
7,896,560.00
10,024,920.00
11,073,370.00
10,734,410.00
9,381,190.00
Premiums on U. S.
10,015,978.16
8,488,368.83
bonds
8,237,153.25
8,520,701.77
8,888,885.62
Stocks, securities, etc. 373,479,621.87 391,438,492.25 420,680,992.16 435,002,188.20 448,614,538.31
Banking house, furniture, and fixtures...
86,141,913.02
84,647,346.34
83,961,147.73
82,375,256.07, 82,596,860.68
Other real estate and
23,098,722.53
mortgages owned . .
25,032,667.95
23,892,105.54
25,363,718.81
26,006,292.4'.
Due from national
banks
244,577,101.41 246,655,587.90 255,347,521.14 262,567,988.13 256,513, 214.43
Due from State banks
71,881,186.46
and bankers
72,224,719.20
71,581,761.27
72,320,663.40
73,682,522.19
Due from approved
reserve agents
417,722,712.14 472,178,337.12 480,032,111.19 454,077,288.44 456,638,517.75
Internal - r e v e n u e
600,139.12
stamps
1,273,005.50
1,117,213.16
680,696.18
1,448,459.90
Checks and other cash
26,706,693.58
items
21,693,900.87
19,342,532.03
18,611,077.60
25,213,997.97
Exchanges for clearing house
183,475,503.48 238,845,632.12 290,162,041.82 300,689,828.04 236,656,336.45
Bills of other national
23,681,783.00
26,465,478.00
banks
25,258,411.00
24,978,528.00
24,703,730.00
Fractional currency,
1,315,365.17
nickels, and cents . .
1,346,361.86
1,311,546.36
1,375,719.53
1,257,946.37




IX

X

REPORT OF THE COMPTROLLER OS THE CURRENCY.
IT

ABSTHACTS OF REPORTS OF CONDITION OF NATIONAL BANKS IN THE UNITED STATES
FROM DECEMBER 13, 1900, TO SEPTEMBER 30, 1901—Continued.
Dec. 13, 1900,
3,942 banks.

Feb. 5, 1901,
3,999 banks.

April 24, 1901, July 15, 1901,
4,064 banks.
4,165 banks.

Sept. 30, 1901,
4,221 banks.

RESOURCES—cont'd.
$107,561,080.11 $110,369,107.35 $110,280,301.82 $108,871,024.66 $106,736,761.CO
Gold coin
Gold Treasury certificates
102,269,910.00 133,447,930.00 122,950,940.00 108,490,040.00 117,806,580.00
U. S. certificates of
deposit
4,785,000.00
11,855,000.00
a 850,000.00
3,760,000.00
Gold clearing-house
certificates
91,789,000.00 89,154,000.00 82,315,000.00 85,465,000.00 89,854,000.00
Silver dollars
Silver Treasury cer-

tificates
Silver fractional coin.

9,748,534.00

10,436,238.00

9,593,379.00

9,399,355.00

8,649,959.00

40,763,675.00
7,540,024.95

48,533,778.00
8,015,090.58

53,893,133.00
7,740,938.39

51,259,021.00
7,601,102.36

46,467,349.00
7,167,222.13

360,522,224.06 399,956,143.93 390,533,692.21 375,870,543.02 388,536,871.13
Total specie
Legal-tender notes ... 141,284,945.00 152,386,332.00 159,324,246.00 164,929,624.00 151,018,751.00
Five per cent redemp14,832,543.31 15,423,179.99 15,811,356.03 15,933,782.54
tion fund
16,104,962.69
Due from Treasurer
U. S
2,630,940.52
2,669,699.52
2,610,830.45
2,444,169.96
1,743,751.88

Total

5,142,089,692.52 5,435,906,257.78 5,630,794,367.15 5,675,910,042.63 5,695,347,294.96

LIABILITIES.

Capital stock paid i n . . 632,353,405.00
Surplus fund
262,387,647.59
Undivided profits, less
expenses and taxes. 141,505,613.64
National-bank notes
outstanding
298,917,320.00
State bank notes outstanding
52,231.50
Due to other national
banks
581,894,283.32
Due to State banks
and bankers
244,141,379.79
Due to trust companies
and savings banks.. 179,697,906.01
Due to approved reserved agents
38,901,889.24
Dividends unpaid
975,675.14
Individual deposits... 2,623,997,521.88
U. S. deposits
87,992,782.73
Deposits of U. S. disbursing officers
6,385,362.91
Notes and bills rediscounted
4,924,761.90
Bills payable
10,887,991.14
Liabilities other than
those above
27,073,920.73
Total

634,696,505.00
266,520,594.87

640,778,600.00
267,810,239.88

645,719,099.00
274,194,175.90

132,938,589.86

148,216,895.69

142,545,641.99

151,029,249.26

309,466,046.50

317,202,078.00

319,008,811.00

323,863,597.50

655,341,880.00
279,532,858.62

52,231.50

52,232.50

52,231.50

51,874.50

655,570,230.93

676,147,920.04

645,038.393.50

638,361,792.37

273,029,869.25

278,719,623.71 275,928,820.01

293,275,148.49

247,780,356.05

241,900,371.68

250,222,981.04

220,381,919. C
O

33,266,344.70
28,684,680.76 30,100,172.15 35,626,197.50
3,621,615.33
2,555,706.84
905,578.29
1,407,607.28
2,753,969,721.62 2,893,665,449.71 2,941,837,428.77 2,937,753,233.33
101,408,774.93
88,709,088.92 89,681,990.21 93,825,077.82
6,323,688.13

6,320,499.78

5,247,189.30

5,451,374.86

3,439,066.78
7,347,556.38

4,034,556.56
7,902,488.94

5,899,668.67
11,751,607.69

10,970,717. 66
17,648,405.12

25,970,423.95

27,355,670.01

26,457,012.10

23,388,509.29

5,142,089,692.52 5,435,906,257.78 5,630,794.367.15 5,675,910,042.63 5,695,347,294.96

a For legal tenders.

The authorized capital stock of the 4,279 national banking associations in existence on October 31, 1901, was $663,224,195, which is a
net increase during the year of $30,721,800. There was an increase
in capital stock of $21,674,500 by banks organized during the year,
including $120,000 of newly organized associations which increased
their capital stock to that amount subsequent to the date of organization. The associations which were in existence on October 31,
1900, increased their capital stock during the year to the extent of
$21,815,000. There was a decrease of capital stock of $8,040,000 by
voluntary liquidations. 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. During the year 13 associations, with capital stock of
$1,960,000, were placed in charge of receivers, 2 of which, however,



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XI

with combined capital stock of $200,000, were proved to be solvent
and permitted to resume business, leaving the number and capital stock
of insolvent banks for the year 11 and $1,760,000, respectively.
There was a further loss of capital stock of $3,752,700 by the reduction of capital stock of active associations. Of the 39 associations
placed in voluntary liquidation 22 were succeeded by or amalgamated
with other national banks; 6 were absorbed by State banks or trust companies, and 11 liquidated for the purpose of winding up their affairs.
As hereinbefore set forth, reports of condition were made by national
banks to the Comptroller of the Currency on five dates during the
report year. The number of reporting associations increased from
3,942 on December 13, 1900, to 4,221 on September 30, 1901. The
aggregate resources of the banks on the latter date reached a higher
point than ever before in the history of the national banking system,
namely, $5,695,347,294.96, an increase since September 5, 1900, of
$647,208,795.67. Each successive report during the year shows an
increase in volume of loans and discounts. On December 13, 1900, the
amount of assets of this character aggregated $2,706,534,643.35, and
on September 30, 1901, $3,018,615,918.40, an increase since the report
on September 5, 1900, of $331,856,275.83.
On February 13, 1900, the date of report nearest to March 14 of
that year, when the act was approved authorizing the issue of circulating notes to the par value of bonds deposited therefor, bonds for
that purpose were held by the Treasurer of the United States in trust
to the amount of $236,283,870. On December 13,1900, the amount had
increased to $306,622,180, and on September 30,1901, to $329,372,830.
Bonds on deposit as security for Government deposits increased from
$101,414,820 on December 13, 1900, to $107,107,100 on September 30,
1901. The total investments of national banks in Government bonds
on December 13, 1900, amounted to $418,061,920, and on September
- 30,1901, to $444,376,490.
Specie, including gold and silver certificates, in the vaults of the
banks on December 13, 1900, amounted to $360,522,224.06, classified
as follows: Gold coins, $107,561,080.11; gold treasury certificates,
including $850,000 U. S. certificates for legal tenders, $103,119,910;
gold clearing-house certificates, $91,789,000; silver dollars, $9,748,534;
fractional silver coins, $7,540,024.95; silver certificates, $40,763,675.
By February 5, 1901, the specie holdings had increased to $399,956,143.93, the largest amount held at date of any report during the year.
On April 24, 1901, the holdings had fallen to $390,533,692.21, and on
July 15,1901, to $375,870,543.02. At date of the September 30, 1901,
statement specie holdings had increased to $388,536,871.13, of which
$326,252,341 was in gold and gold certificates, and $62,284,530 in silver
and silver certificates. Legal-tender notes to the greatest amount were
held on July 15, 1901, namely, $164,929,624; on December 13, 1900,
the amount of notes was at the minimum during the vear, namely,
$141,284,945; on September 30, 1901, the amount held aggregated
$151,018,751.
Referring again to the condition of banks on February 13, 1900, it
is shown that the paid-in capital stock of the 3,604 banks on that date
aggregated $613,084,465. By December 13, 1900, with an increase of
banks to 3,942, there was an increase of capital to $632,353,405. At
date of last report from the 4,221 banks, their paid-in capital stock is
shown to have been $655,341,880. Compared with September 5,1900,



XII

REPOKT OF THE COMPTROLLER OF THE CURRENCY.

the paid-in capital stock has increased since that date in the sum of
$25,042,849.28. The surplus and net undivided profits of the associations on September 30,1901, were $279,532,858.62 and $151,029,249.26,
respectively, or approximately an amount equal to two-thirds of the
paid-in capital stock. Since September 5, 1900, the outstanding circulation of national banks, as shown by the reports of condition, has
increased in the sum of $39,914,966, standing on September 30, 1901,
at $323,863,597.50. There is still carried on the books of a few associations converted from State banks circulating notes issued by the
latter to the amount of $51,874.50.
National banks held the greatest amount of individual deposits during
the existence of the system on July 15,1901, namely, $2,941,837,428.77.
Liabilities to depositors on December 13,1900, aggregated $2,623,997,521.88, and at date of last report $2,937,753,233.33, a decrease since
July 15, 1901, of $4,084,195.44, but an increase since September 5,
1900, of $429,504,675.80.
The obligations of the banks on account of notes and bills rediscounted and bills payable fluctuated between $10,786,623.16 on February 5, 1900, and $28,619,122.78 on September 30, 1901. Government deposits with the banks increased during the year from
$87,992,782.73 on December 13, 1900, to $101,408,774.93 on September 30, 1901.
RESERVE REQUIRED AND HELD.

The net amount of liabilities of national banking associations on September 30,1901, on which reserve was required, aggregated $3,661,644,311.74, the reserve required thereon being $759,743,977.87, and amount
held $1,012,299,102.57, or 27.65 per cent. The composition of the
reserve held was as follows: Specie, including coin certificates of every
character, $388,536,871.13; legal-tender notes, $151,018,751; funds on
deposit with reserve agents, $456,638,517.75; 5 per cent redemption
fund, $16,104,962.69. The national banks located in the central reserve
cities of New York, Chicago, and St. .Louis held in bank a reserve
of $285,055,426.37, or 26.16 per cent, on liabilities amounting to
$1,089,501,324.34. Banks in the 29 reserve cities, which are required
to maintain a total reserve of 25 per cent, cash credits to the amount
of one-half of which may be with central reserve city banks, held a total
reserve of $298,171,510.20 on deposits aggregating $1,015,471,986.83,
the average reserve held being 29.36 per cent. National banking
associations located outside of reserve cities are required to maintain
a reserve of 15 per cent, two-fifths of which must be retained in bank
and the remainder may be deposited with approved reserve agents.
Banks of this class held a reserve of $429,072,166, or 27.56 per cent,
on liabilities aggregating $1,556,671,000.57. The reserve held is represented by $87,300,318.73 specie; $1,155,000 United States certificates
for gold deposited; $42,023,565 legal tenders; $288,151,642.63 deposits
with reserve agents, and $10,441,639.64 redemption fund with, the
Treasurer of the United States.
RATES FOR LOANS.

In volume the loans and discounts of national banks located in the
city of New York amount, approximately, to one-fifth of the aggregate accommodations made by all national banking associations.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XIII

During the year ended October 25, 1901, rates for prime commercial
paper in the New York market varied but slightly, the minimum, 3 to
4 per cent, having been demanded on February 1, and the maximum,
5 to 5£ per cent, during September last. The average rates have fluctuated between 3^ to 4 per cent and 4^- to 5 per cent. The fluctuations in the rates for call loans have been more marked. The lowest
rates prevailed in the latter part of January, namely, l i to 2 per cent,
and the maximum on June 28 and July 25, namely, 6 to 11 per cent
and 6 to 25 per cent, respectively. On October 4 rates for this class
of paper were 3i to 4 per cent; on October 11 and 18, 3 to 3i per cent,
and on October 25, 3 to 4 per cent.
CLEARING HOUSE TRANSACTIONS.

Through the courtesy of the manager of the New York Clearing
House, statistics have been received relative to the transactions of the
various clearing houses of the United States, of the New York Clearing House, and of the assistant treasurer of the United States at New
York with the latter, during the year ended September 30, 1901.
Exchanges passing through the clearing houses of the United States
during the year amounted in the aggregate to $114,190,226,021, an
increase over the previous year of $29,607,775,940.
The transactions of the New York Clearing House were approximately 70 per cent of the total, namely, $77,020,672,494. The
balances paid in money amounted to $3,515,037,741, of which
$3,509,969,000, or 99.6 per cent, was in gold and certificates and the
balance, $5,068,741, legal tenders, etc. The average daily clearings
and balances were $254,193,639 and $11,600,785, respectively, the
percentage of balances to clearings being 4.56.
The membership of the New York Clearing House for the year numbered 62 (which includes 42 national banks) and represented an aggregate capital of $81,722,700.
Since the formation of the New York Clearing House in 1854 to the
close of the year ended September 30,1901, the aggregate transactions
represented by the clearings amounted to $1,360,408,679,557, and the
aggregate balances paid in money to $64,885,824,657. The average
daily clearings and balances paid in money during this period were
$92,582,596 and $4,415,804, respectively, the average percentage of
balances to clearings being 4.77.
Exchanges received from the clearing house by the assistant treasurer of the United States at New York during the year ended September 30, 1901, amounted to $451,733,788.49. Balances received from
the clearing house aggregated $4,426,506.72. The exchanges delivered
and balances paid to the clearing house were $222,608,869.20 and
$233,551,426.01, respectively.
UNITED STATES BONDS AND NATIONAL BANK CIRCULATION.

The currency act of March 14, 1900, resulted in material changes in
the class of bonds on deposit with the Treasurer of the United States
in trust as security for national bank circulation and in amount and
denomination of circulating notes issued.
The act referred to authorized the Secretary of the Treasury to
receive at the Treasury any of the outstanding bonds of the United



XIV

EEPORT OF THE COMPTROLLER OF THE CURRENCY.

States bearing interest at 5 per cent per annum, payable February 1,
1904; bonds bearing 4 per cent interest, payable July 1,1907, and bonds
bearing interest at 3 per cent per annum, payable August 1, 1908, and
to issue in exchange therefor an amount of coupon or registered bonds
of the United States bearing interest at the rate of 2 per cent per
annum, the principal payable in gold coin, at the pleasure of the
United States, after thirty years from date of issue. Section 12 of
the act authorized the issue of circulating notes of national'banks to an
amount equaling the par value of the bonds on deposit, and section 13
reduced the semiannual duty on national bank circulation secured by
deposits of bonds issued under authority of the act to one-fourth
of 1 per cent. It is also provided that '' No national banking association shall, after the passage of this act, be entitled to receive from the
Comptroller of the Currency or to issue or reissue or place in circulation more than one-third in amount of its circulating notes of the
denomination of $5."
At the close of business on March 13, 1900, bonds to the amount of
$243,651,420 were on deposit with the Treasurer of the United States
in trust as security for circulating notes of national banking associations. Included therein were $56,164,820 3 per cent bonds of 1908;
$130,302,250 4 percents of 1907; $14,697,850 4 percents of 1925;
$21,996,350 5 percents of 1904, and $20,490,150 2 percepts of 1891.
By October 31 of that year the bond deposits had increased to
$301,123,580, of which $270,006,600 were consols of 1930. On October 31, 1901, the deposits had increased to $329,833,930, all of which
except about -4 per cent were 2 per cent consols of 1930, the total
amount of the latter being $316,625,650.
The changes in amounts and classes of bonds on deposit to secure
circulation on dates named are shown in the appended table:
Cla
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 c e n t .
Consols of 1930,2 per cent
Total .

Mar. 13,1900. Oct. 31,1900. Oct. 31,1901.
$56,164,820
130,302,250
14,697,850
21,996,350
20,490,150

W7, 756,580
13,544,100
7,503,350
1,293,000
1,019,950
270,006,600

$3,983,780
6,032,000
2,911,100
268,900
12,500
316,625,650

243,651,420

301,123,580

329,833,930

On March 13, 1900, the outstanding circulation of national banks
secured by deposits of bonds aggregated $216,022,075, and the amount
secured by deposits of lawful money, on account of failed and liquidating associations and those reducing circulation, $38,004,155, making
the total outstanding issues at that date $254,026,230. The issue of
notes of the denominations of $1 and $2 having been discontinued in 1879,
denominations of $1,000 in 1884, and of $500 in 1885, the outstanding
issues are practically represented by notes of the denominations of $5,
$10, $20, $50, and $100. On March 13,1900,notes of the denominations of
$5 to the amount of $79,310,710 were outstanding; $10's to the amount of
$79,378,160; $20's, $58,770,660; $50's,$11,784,150; $100's,$24,103,400.
By October 31, 1901, the outstanding issues had increased to $359,832,715, of which $328,198,614 were secured by deposit of bonds, and
$31,634,101 by lawful money. Notes of the denomination of $5 have
been reduced to $60,265,645, or 16.7 per cent of the total, as compared



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XV

with 31.2 per cent on the date of the passage of the currency act.
Notes of the denomination of $10 were outstanding to the amount of
$143,280,120; of $20 to the amount of $104,454,400; of $50, $16,732,200;
of $100, $34,430,900.
Since the organization of the national banking system there have
been issued circulating notes to the amount of $2,497,486,135 and
notes redeemed to the amount of $2,137,687,735. The issues during
the current year were $123,100,200, and the destructions of notes
redeemed $94,881,929.50, an increase of 019,701,328.50 over 1900.
The amount, by denominations, of national bank circulation outstanding on March 1.3 and October 31, 1900, and October 31, 1901, is
shown in the following table:
Mar. 13,1900. Oct. 31,1900. Oct. 31,1901.

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

.

.
.

Total
Circulation secured by lawful money
Circulation secured by bonds

.

.

8346,729
166,406
60,265,645
143,280,120
104,454,400
16,732,200
34,430,900
97,000
25,000
34,315

331,613,268

359,832,715

38,004,155
216,022,075

.

8347,552
167,056
70,363,595
123,088,280
88,408,100
16,186,900
32,889,200
102,500
27,000
33,085

254,026,230

»
.

8348,275
167,466
79,310,710
79,378,160
58,770,660
11,784,150
24,103,400
104,000
27,000
32,409

32,784,203
298,829,065

31,634,101
328,198,614

The Government actuary has made a calculation, for this report, of
the profit, with money at 6 per cent, on the issue of $100,000 nationalbank circulation secured by deposit of $100,000 in bonds purchased at
market prices on October 31, 1898, 1899, 1900, and 1901. The market
price of twos of 1930 on October 31, last, was $108,712; and on circulation to the amount of $100,000 the profit is shown to be $796.84,
or 0.733 per cent, but on fours of 1925 at $138,261 there is a loss of
0.09 per cent. The prices of other bonds available as security for circulation, and also the rates per cent of profit on circulation secured
thereby, are as follows:
Class.
Fives of 1904
Fours of 1907
Threes of 1908

Price.
$106,639
111,799
108,258

Per cent.
0.714
.417
.407

The method of calculating the profit on circulation is given in detail
in the appendix.
CAPITAL AND SURPLUS OF NATIONAL AND OTHER BANKS, AND DISTRIBUTION OF BANKING FACILITIES, YEAR ENDED JUNE 30, 1901.

In compliance with the provisions of the war-revenue act of 1898,
taxing the capital and surplus of banking institutions, returns from
14,455 banks and bankers, for the fiscal year ended June 30,1901, were
made to the Internal Revenue Bureau and compiled in this office.



XVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

The aggregate capital and surplus reported amounts to $1,692,037,175,
on which tax was paid to the amount of $3,269,969.32.
The Eastern States lead in volume of banking capital, namely,
$694,455,830; followed by the Middle States, with $425,555,039; the
New England States, with $227,311,333; the Southern States, $186,746,269; the Pacific States, including Hawaii, $89,635,586; and the
Western States, with $68,369,118.
The State of New York is in the lead, with $374,660,141 banking
capital, or over 22 per cent of the total. The population of the State
is nearly 10 per cent of that of the country, and the State has nearly 8
per cent (1,131) of the total number of banks—1 bank for every 6,548
inhabitants. The 996 banks in the State of Pennsylvania have banking capital aggregating $225,269,422, and in this State there is 1 bank
for every 6,639 of population. Massachusetts is third in the list in
volume of capital, the amount being $134,494,936, held by 339 banks—
1 institution for every 8,454 inhabitants.
The fourth State in the list is Illinois, with capital of $102,313,723
and 1,052 banks, or 1 for every 4,686 inhabitants. No other State in
the Union has banking capital reaching the $100,000,000 mark, though
Ohio has only about $12,000,000 less than Illinois.
The returns show that there are 792 banks in the New England
States—1 to every 7,056 inhabitants. In the Eastern States, 2,518
banks—1 to 6,922; Southern States, 2,528—1 to 8,897; Middle States,
5,950—1 to every 3,946; Western States, 1,986—1 to every 2,634;
Pacific States, 681—1 to every 4,881 of population. Taking the whole
country into consideration, the returns show that there is 1 bank for
every 5,371 inhabitants.
There are more banks in Iowa (1,320) than in any other State of the
Union, and, with one exception, the State has the greatest number, in
proportion to population, namely, 1 to every 1,717 inhabitants; South
Dakota, the exception, has 1 bank to every 1,702 of population.
The Western, Middle, and Pacific States, in the order mentioned,
have the largest number of banks in proportion to population and the
Southern States the least. In other words, the Western States, with
6.8 per cent of population, have 13.7 per cent of the number of banks;
the Middle States 30.3 per cent of the population and 41.2 per cent
of the banks; the Pacific States 4.3 per cent of the population and
4.7 per cent of banks, while the Southern States, with 28.8 per cent
of the population, have but 17.5 per cent of the number of banks
reporting.
The average capital and surplus per bank is the greatest in the New
England States, namely, $287,009; the average in the Eastern States is
$275,796; in the Pacific States, $131,170; in the Southern States,
$73,791; in the Middle States, $71,522, and in the Western States,
$34,425. The average per bank in the United States is shown to be
$117,057.
AGGREGATE RESOURCES, ETC., OF BANKS.

Incorporated in the appendix will be found a table on lines heretofore followed relating to the aggregate resources of national, State,
savings, private banks, and loan and trust companies, as shown by
reports made to the Comptroller, or obtained from other sources,
on or about the close of the fiscal year ended June 30, 1901. This
table shows also the estimated population of the country by States;



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XVII

the average per capita of resources of each and all classes of banks by
States and geographical divisions; the aggregate resources and average
per capita for each class of banks in the Union. The population of
the country on June 1,1901, as estimated by the Government actuary,
was 77,647,000; the aggregate resources, $12,329,560,255; the average
per capita in all banks, $158.79; and the average per capita in each class
of banks as follows: National, $73.10; State, $27.47; savings, $35.50;
private, $1.92; loan and trust, $20.80.
In 1899 a special investigation was made by the Comptroller of the
Currency relative to the number of depositors and borrowers and the
amount of deposits and loans of all banks in the United States. Of
the 12,804 banks, information relating to capital and surplus of which
was obtained from returns on taxable capital and surplus made to the
Internal-Revenue Bureau, statistics pertaining to deposits and loans
were obtained from State banking departments and reports made direct
to this office from 9,732 institutions. The estimated capital of the
12,804 banks was shown to be approximately $1,150,000,000, deposits
$7,513,954,361, and loans and discounts $5,751,467,610. For the fiscal
year ended June 30,1901 (including returns from national banks of date
July 15, 1901), reports of condition have been received and compiled
from 11,406 banks, with loans aggregating $6,425,431,261; deposits,
$8,554,467,366, and aggregate resources, $12,357,477,376. Combining
with returns, official and unofficial, relating to the condition of banks
and banking institutions in the country, returns relating to loans,
capital, deposits, surplus, and other undivided profits of nonreporting
institutions obtained from reports published by commercial agencies,
there are shown statistics relating to the principal items of resources and
liabilities of 12,972 banks and bankers, with capital of $1,138,042,134;
surplus and undivided profits of $693,465,095 and $270,855,253,
respectively; deposits, $8,619,285,110, and loans and discounts,
$6,491,630,743.
These consolidated returns are presented in the appendix in detail
for each class of banks in each State and geographical division, and all
banks of each class in geographical divisions and in the United States.
In the New England States there are shown to be in operation, by
these returns, 1,103 banks, with deposits aggregating $1,511,209,112
and loans of $1,112,156,141. In the Eastern States the returns from
1,976 banks show deposits aggregating $4,156,162,050 and loans of
$2,831,479,771. The excess of deposits over loans in this geographical
division and in the New England States is due to large investments in
stocks, bonds, and other securities by savings banks.
The deposits in banks in the Southern States amount to $501,905,118
and loans to $493,188,951; in the Middle States deposits aggregate
$1,720,073,957 .and loans $1,520,994,394; in the Western States the
deposits in the banks are shown to be $294,383,819 and the loans
$229,665,067; in the Pacific States deposits aggregate ^12,534,452
and loans $290,198,156.
Statistics were obtained on the same lines from 1 national, 3 other
incorporated, and 2 private banks in Hawaii; 3 incorporated banks in
Porto Rico, and 7 incorporated banks, including branches, in the Philippine Islands, making an aggregate of 16 institutions in these new
territorial possessions. The aggregate capital reported is $4,313,978:
surplus and undivided profits, ll,627,250; deposits, $23,018,602, and
.loans, $13,908,262.
CUR 1901, PT 1
II



XVIII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EARNINGS, DIVIDENDS, ETC., OF NATIONAL BANKING ASSOCIATIONS.

It was not until March 3, 1869, that legislation was enacted requiring the filing with the Comptroller of the Currency of reports of the
earnings and dividends of national banking associations, in consequence
of which, all statistics relating thereto date from the passage of that
act. During the year ended March 1, 1870, 1,526 reporting associations, with capital of $409,008,896, paid dividends to the amount of
$43,246,926 (10.5 per cent) from net earnings aggregating $58,218,118.
An average rate of, practically, 10 per cent was maintained to the
close of 1876. From 1877 to 1893 the average rate varied from a
maximum of 8.9 per cent in the first year of that period to a minimum
of 7.5 per cent in 1892 and 1893. From 1894 to 1898 the average
rate ranged between 6.7 per cent in 1897 and 6.9 per cent for the
years 1895, 1896, and 1898. The rate rose to 7.4 per cent in 1899
and to 7.9 per cent in 1900.
During the year ended March 1, 1901, on average capital of
$622,366,093.60 and surplus of $257,948,296.36, the earnings in gross
amounted to $197,903,623.24, from which were charged off losses and
premiums aggregating $34,854,407.68 and expenses of $75,375,040.92,
leaving net earnings of $87,674,174.64, from which dividends were
paid at an average rate of 8.1 per cent, the amount being $50,219,115.21.
Combining capital and surplus, the rate of dividends paid thereon was
5.7 per cent.
Reports of earnings and dividends filed do not show the cost of
operation or amount of State and local taxes. In the fiscal year ended
June30,1901, however, the banks paid to the Government $1,599,221.08
semiannual duty on $297,071,834, the average amount of outstanding
circulating notes and revenue tax on the average amount of capital and
surplus at the rate of one-fifth of 1 per cent, under the war-revenue
act of 1898, to the amount of $1,731,928.86. In addition to these taxes,
the banks were assessed $146,236.18 for expenses incident to the
redemption of circulating notes, being at the rate of $0.9956 per
$1,000; $277,816.07 for examinations, and $99,475, the cost of plates
for the printing of circulating notes for new banks and those whose
corporate existence has been extended.
NATIONAL BANK SHARES AND SHAREHOLDERS.

Every national banking association is required by law to file with
the Comptroller of the Currency a list showing the names and holdings
of stockholders as of the first Monday in July. The lists filed in July
last show the number of shares outstanding at a par of $100 to have
been 6,477,160 and the number of shareholders as 276,858. Holders
of stock in banks located in the New England States numbered 79,935;
in the Eastern States, 104,973; in the Southern States, 28,859; in the
Middle States, 48,873; in the Western States, 9,764, and in the Pacific
States, including Hawaii, 4,454.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

XIX

The following table shows the number of shares and shareholders of
banks in each State and geographical division:
Number
of shares.

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

79,935
32,662
11,185
48,646
2,041
9,235
1,204

2,137,642

104,973
2,663
1,552
1,559
1,232
1,663

6,824
3,081

723,482

28,859

491,251
154,170

New York
New Jersey
Pennsylvania
Delaware
Maryland
District of Columbia

1,354,808

52,960
40,610
31,260
20,480
44,660
13,550
35,900
11,300
38,600
221,503
10,950
128,759
72,950

Total New England
States

7,762
3,993
3,695
44,125
8,249
12, 111

980,698
154,300
791,614
21,590
159,170
30,270

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

Number
of shareholders.

109,210
55,500
66,450
775,525
144,552
203,571

States.

15,837
4,503

476

1,202

508

1,254
6,547
298

States.
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
Hawaii

Number
Number of of shareshares.
holders.
010
850
650
500
250
600

8,645
3,696
3,228
3,384
5,474
4,106

1,720,281

:8,873

17,250
15,100
100,450
86,346
24,300
8,600
44,270
7,618
14,150
19,000

527
635
2,782
3,123
480
261
872
179
298
607

337,084

9,764

32,550
23,950
114,250
6,250
16,000
820
4,550
500
5,000

787
747

382
115
104
121
149
201

667
24

24
122

Total Pacific States..

203,870

4,454

Total United States ..

6,477,160

~276,858

ORGANIZATION OF NATIONAL BANKS.

Under authority of the act approved February 25,1863, 488 national
banks were organized, of which 280 are still in active operation. The
act of June 3,1864, repealed and reenacted, with material amendments,
the national currency act of 1863, under the provisions of which 5,005
national banking associations have been organized. This number
includes 10 gold banks, organized under the act of July 12, 1870, the
circulating notes issued by which were payable in gold coin. Nine of
these banks were organized in California and 1 in Massachusetts. The
latter, however, and 2 of the California banks were placed in liquidation soon after organizing, and on February 14,1880, Congress passed
an act authorizing the conversion of these associations into currency
banks, the course of procedure being similar to that provided for the
conversion of State banks into national banking associations with the
exception that their periods of succession dated from the original incorporation. During 1880, 4 of these banks, converted under authority
of the act referred to, and the 2 remaining took similar action in 1883
and 1884, respectively. Gold notes issued by these banks amounted,
in the aggregate, to $3,465,240, all of which has been presented for
redemption, with the exception of $78,970.
The act of March 14, 1900, authorizing the organization of national
banks with a minimum capital of $25,000, in towns with population



XX

REPORT OF THE COMPTROLLER OF THE CURRENCY.

not exceeding 3,000, resulted in the incorporation of 503 banks of that
class, 4 of which, however, went into voluntary liquidation soon after
the issue of charters, and 1 failed and was placed in charge of a receiver.
Summarizing the foregoing, it appears that, under the various acts
cited, 6,006 associations, with authorized capital stock at date of incorporation, of $795,467,682, were organized, of which 4,279 were in
active operation at the close of the report year, October 31, 1901,
1,340 in voluntary liquidation, and 387 in charge of receivers, or finally
closed.
The following table sets forth the number of organizations effected
under the provisions of each of the acts cited, and the number placed
in voluntary liquidation, in the charge of receivers, and in active
operation at the close of the year:
Act of—
1863
1864
1870
1900

."
Total

In volunOrganized. tary liqui- Insolvent.
dation.

Active.

488
5,005
10
503

173
1,160
3
4

35
351
1

280
3,494
7
498

6,006

1,340

387

4,279

Prior to the passage in 1865 of the act taxing the circulation of State
banks, there had been organized but 587 national-banking associations.
During that year 1,014 were added to the system, of which 411 were
conversions of institutions organized under State authority. During
the next five years 115 banks were organized, and in 1871 and 1872, 345
were added to the list. In the next nine }^ears, beginning with 1873
and terminating in 1881, there were organized 520 associations. From
1882 to 1893 the number was increased by 2,349, the greatest number,
307, with the largest amount of capital stock, $36,250,000, of banks
organized between 1865 and 1890 having been chartered in the lastnamed year. The effects of the monetary stringency of 1893 were very
noticeable in the limited number of banks organized from 1894 to 1899,
the additions for each vear being as follows: 1894, 50 banks; 1895, 43;
1896, 28; 1897, 44; 1898, 56, and 1899, 78.
In the year ended October 31, 1900, organizations numbered 383, of
which 249, with aggregate capital of $6,575,000, were of the class authorized by the act of March 14,1900, namely, those with capital stock of
less than $50,000. During the same period 134 banks with capital of
$50,000 or over, with aggregate capital of $13,450,000, were added to
the system.
During the report year ended October 31,1901, there were chartered
394 banks, with total capital of $21,554,500, of which 254 were with
capital of less than $50,000, the aggregate being $6,619,500, and 140
with capital of $50,000 or over, the aggregate being $14,935,000.
Included in the total number were 44 banks with capital of $3,330,000,
conversions of State banking institutions; 111 with capital of $5,330,000, organizations created to succeed State or other banks closed for
the purpose of reorganization; and 239, with $12,894,500 capital stock,
primary organizations not formed for the purpose of succeeding to the
business of existing banks or banking institutions.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXI

The number and capital, by States, Territories, and geographical
divisions of national banks organized from November 1, 1900, to
October 31, 1901, are shown in the following table:
NATIONAL BANKS ORGANIZED FROM NOVEMBER 1, 1900, TO OCTOBER 31, 1901.
Capital less t h a n
$50,000.

Capital, $50,000
or over.

No.

States, etc.

No.

Capital.

1
1
3
1

Maine
New Hampshire
Massachusetts
Rhode Island

Total Southern States

Ohio
Indiana
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
Arizona
Hawaii

$50,000
100,000
300,000
500,000

950,000

6

950,000

$275,000
155,000
385,000
25,000
122,000

5
3
28

1,450,000
250,000
1,865,000

3

460,000

16
9
43
1
7

1,725,000
405,000
2,250,000
25,000
582,000

37

Virginia
West Virginia

Tennessee

1
1
3
1

Capital.

6

Total Eastern States

Louisiana
Texas...
Arkansas
Kentucky

$50,000
100,000
300,000
500,000

No.

11
6
15
1
4

962,000

39

4,025,000

76

4,987,000

3
5
5
4
5
1
2
40
3
2
4

80,000
125,000
125,000
115,000
127,500
25,000
50,000
1,090,000
75,000
50,000
105,000

1
1
1
1
4
1
4
19

50,000
50,000
50,000
50,000
250,000
75,000
550,000
1,300,000

2
1

150,000
50,000

4
6
6
5
9
2
6
59
3
4
5

130,000
175,000
175,000
165,000
377,500
100,000
600,000
2,390,000
75,000
200,000
155,000

74

1,967,500

35

2,575,000

109

4,542,500

12
9
9
1
6
12
13
2

325,000
235,000
235,000
25,000
150,000
300,000
340,000
50,000

11
5
6
4
2
1
8
4

2,000,000
800,000
500,000
300,000
100,000
50,000
500,000
1,185,000

23
14
15
5
8
13
21
6

2,325,000
1,035,000
735,000
325,000
250,000
350,000
840,000
1,235,000

64

1,660,000

41

5,435,000

105

7,095,000

4
7
8
6
1
1
3
1
19
19

100,000
175,000
200,000
150,000
25,000
25,000
85,000
25 000
475,000
510,000

1

50,000

1
2
1

50,000
100,000
250,000

3
2

200,000
150,000

5
7
9
8
2
1
3
1
22
21

150,000
175,000
250,000
250,000
275,000
25,000
85,000
25 000
675,000
660,000

69

1,770,000

10

800,000

79

2,570,000

1
3

30,000
75,000

2

150,000

7

1,000,000

3
3
7
3
2
1

180,000
75,000
1,000,000
75,000
55,000
25,000

Total New England States
New York
New Jersey
Pennsylvania
Delaware
Maryland

North Carolina
Georgia
Alabama
Mississippi

Capital.

Total organizations.

.

.

3
2
1

75,000
55,000
25,000

Total Pacific States

10

260,000

9

1,150,000

19

1,410,000

Total United States

254

6,619,500

140

14,935,000

394

21,554,500

From March 14, 1900, to October 31, 1901, there were organized
742 national banking associations with capital stock aggregating
$39,029,500, and bond deposits to secure circulation of $11,025,850.
Banks organized included 503 with individual capital of less than



XXII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

$50,000, chartered under authority of act of March 14, 1900. The
capital of these banks aggregated $13,194,500. Associations organized with capital of $50,000 or over numbered 239, the aggregate
capital being $25,835,000. Bonds deposited by the smaller class amount
to $4,569,100 and by the larger class $6,456,750.
Geographically, the largest number of banks chartered during this
period were organized in the Middle States, namely, 230, with aggregate capital of $12,305,000, 161 of which were of the smaller class and
69 were with capital of $50,000 or over.
In the Southern States there were organized 179 banks with authorized capital of $9,465,500, classified as follows: 115 of the smaller class
with $3,050,500, and 64 of the larger class with capital of $6,415,000.
The organizations in the Western States numbered 157 with capital
of $5,080,000,134 of the number with capital of $3,480,000 being of the
smaller class, and 23 with capital of $1,600,000 of the larger class. In
number of organizations the Eastern States are fourth, but third in
order in aggregate amount of capital stock, namely, 138 and $8,819,000,
respectively. In this division 75 banks with capital of $1,964,000 were
of the smaller class, and 63 with capital of $6,855,000 of the larger.
In the Pacific States, including Hawaii, 14 banks of the smaller class
were organized with aggregate capital of $360,000, and 12 of the larger
class with $1,800,000 capital. There were but 12 banks organized in
the New England States, namely, three- each in New Hampshire,
Massachusetts, and Connecticut, two in Maine, and one in Rhode
Island, their aggregate capital being $1,200,000. Four of this number of banks were organized with individual capital of $25,000, and 8
with capital of $50,000 or over.
Texas is the leading State in number of banks organized, namely,
93, with capital of $3,623,000, followed by Pennsylvania with 80 banks
and capital of $4,732,000. Iowa is third on the list with 53 banks and
capital of $1,760,000. Next in order are Ohio, 44 banks, with capital
of $3,595,000; Illinois, 40 banks, with capital of $1,705,000; Oklahoma,
39 banks, with capital of $1,140,000; Indian Territory, 37 banks, with
capital of $1,185,000; Minnesota, 29 banks, with capital of $800,000;
New York, 28 banks, with capital of $2,520,000; Indiana, 27 banks,
with capital of $1,530,000; Nebraska and Kansas, 21 each, with capital
of $575,000 and $690,000, respectively. In other States in which
banks were organized the number ranges from 1 to 18. One or more
banks were organized in every State and Territory of the Union
except Vermont, District of Columbia, Utah, Nevada, and Alaska.
Included in the total number of banks organized since March 14 were
106 banks with capital of $7,890,000, converted from State banking
institutions under the provisions of section 5154 of the Revised Statutes of the United States. Of the conversions, 69, with capital of
$1,870,000, were of the smaller class, and 37, with capital of $6,020,000,
banks with individual capital of $50,000 or over.
National banks organized from March 14,1900, to October 31,1901,
showing in detail the number, capital, and bond deposit of each class
in each State, Territory, and geographical division, are set forth in
the following table:




REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXIII

NATIONAL BANKS ORGANIZED FROM MARCH 14, 1900, TO OCTOBER 31, 1901.
Capital, less
t h a n $50,000.

Capital, $50,000

or over.

Total organizations.

States, etc.
No.

Maine
New Hampshire...
Massachusetts
Rhode Island
Connecticut
Total New England States —

Total E a s t e r n
States
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Tennessee
Total Southern
States
. .
. ...

Missouri
To 1

No.

Capital.

No.

Capital.

Banks
capital,
less t h a n
$50,000.

Banks
capital,
$50,000

Total.

or over.
$12,500
50,000
75,000
50,000

$24,500
60,000
75,000
50,000
32,500

54,500

187,500

242,000

149,550
126,050
383,800
25,000
51,450

435,000
62,500
1,017,000
175,000

584,550
188,550
1,400,800
25,000
226,450

735,850

1, 689,500

2,425,350

81,000
66,500
66,500
7,000
30,250
7,500
33,500
6,250
12,750
556,900
18,750
57,550
33,250

75,000
80,000
12,500
20,000
125,000
50,000
95,000
18,750
125,000
511,500
50,000

156,000
146,500
79,000
27,000
155,250
57,500
128,500
25,000
137,750
1,068,400
18,750
357,550
83,250

9,465,500

977,700

1,462,750

2,440,450

3,595,000
1,530,000
1,705,000
540,000
1,055,000
800,000
1,760,000
1,320,000

232,950
164,300
316,800
28,550
71, 200
237,000
420,500
61,250

645,000
260,000
575,000
157,500
222,500
57,000
165,000
152,500

877,950
424,300
891,800
186,050
293,700
294,000
585,500
213,750

230 12,305,000

1,532,550

2,234,500

3,767,050

350,000
250,000
575,000
690,000
275,000
150,000
415,000
50,000
1,140,000
1,185,000

111,250
78,500
172,550
157,000
6,500
12,500
30,250
16,300
335,550
239,550

12,500
12,500
100,000
50,000
50,000
115,000

250,000
350,000

13
10
21
21
2
4
8
2
39
37

67,500
87,500

123,750
78,500
185,050
257,000
56,500
62,500
145,250
16,300
403,050
327,050

23

1, 600,000

157

5,080,000

1,159,950

495,000

1,654,950

2

150,000
1,150,000
500,000

20,000
26,750
16,500
25,050
13,750
6,500

300,000

i

205,000
75,000
1,200,000
100,000
55,000
525,000

37,500

9

4
3
11
4
2
2

50,000

57,500
26,750
316,500
25,050
13,750
56,500

12

1,800,000

26

2,160,000

108,550

387,500

496,050

742 39,029,500

4,569,100

6,456,750

11,025,850

$50,000
200,000
300,000
500,000
50,000

2
3
3
1
3

$75,000
225,000
300,000
500,000
100,000

8

1,100,000

12

1,200,000

10
4
43

2,060,000
350,000
3,765,000
680,000

28
15
80
2
13

2,520,000
640,000
4,732,000
50,000
877,000

63

6,855,000

138

8,819,000

3
5
1
1
4
1
6
•1
5
29

150,000
300,000
50,000
60,000
650,000
200,000
350,000
75,000
600,000
1,885,000

6
2

i, 995,666
100,000

12
12
8
2
8
2
11
2
7
93
3
11
8

380,000
480,000
225,000
85,000
765,000
230,000
477,500
100,000
650,000
3,623,000
75,000
2,120,000
255,000

64

6,415,000

179

18
9
10
6
8
3
11
4

2,900,000
1,050,000
900,000
430,000
800,000
150,000
650,000
1,185,000

44
27
40
10
18
29
53
9

4,240,000

69

8,065,000

300,000
250,000
525,000
410,000
25,000
50,000
115,000
50,000
890,000
835,000

1

50,000

1
4
1
2
4

50,000
250,000
250,000
100,000
300,000

4
6

134

3,480,000

2
3
2
4
2
1

55,000
75,000
50,000
100,000
55,000
25,000

14

360,000

1
2
3
1
1

1
1

$25,000
25,000

2

50,000

4

100,000

18
11
37
2
7

New York
New Jersey
Pennsylvania
Delaware
Maryland

Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa

Capital.

Bonds deposited.

460,000
290,000
967,000
50,000
197,000

6

75 1,964,000
9
7
7
1
4
1
5
1
2
64
3
5
6

230,000
180,000
175,000
25,000
115,000
30,000
127,500
25,000
50,000
1,738,000
75,000
125,000
155,000

115

3,050,500

26
18
30
4
10
26
42
5

695,000
480,000
805,000
110,000
255,000
650,000
1,110,000
135,000

161
12
10
20
17
1
2
4
2
35
31

$12,000
10,000
32,500

300,666

Middle

States

North Dakota
South Dakota
Nebraska
Kansas .
Montana
Wyoming
Colorado
New Mexico
Oklahoma
Indian Territory ..
Total w e s t e r n
States
Washington
Oregon
California
Idaho ..
Arizona
Hawaii
Total Pacific
States
Total U n i t e d
States

503 13,194,500




239 25,835,000

XXIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EXPIRATION AND EXTENSION OF THE CORPORATE EXISTENCE OF
NATIONAL BANKING ASSOCIATIONS.

On February 25, 1863, Congress passed an act entitled " An act to
provide a national currency," etc., section 11 of which provides in
part that any association organized thereunder " shall have succession
by the name designated in its articles of association for the period
limited therein, not, however, exceeding twenty years from the passage of this act."
Under this act 488 national banking associations were organized, of
which 98 were for a period of nineteen years only. Of the total
number of associations organized prior to June 3, 1864, in other
words, under the act of February 25, 1863, 208 were closed—151
by voluntary liquidation, 21 by reason of expiration of corporate
existence, 35 by insolvency, and 1 by reason of failure to complete
organization. Sixty of the banks placed in voluntary liquidation
were succeeded by new associations and 6 were consolidated with other
banks; 1? of the 21 whose corporate existence expired by limitation
were reorganized under the same or different titles. Of the continuing banks organized under this act, 280, with capital of $66,853,300,
whose corporate existence was extended under the provisions of the
act of July 12, 1882, will reach the termination of their second corporate existence during the calendar years 1902 and 1903, the number
and capital of banks expiring in each "year being as follows: 1902, 35
banks, capital, $6,265,000: 1903, 245 banks, capital, $60,588,300. The
date of the first expiration is July 14,1902.
The failure by Congress to take timely action authorizing the extension of the charters of banks organized under the act of February 25,
1863, necessitated the liquidation and subsequent reorganization of 77
associations desiring to continue in the system under different charter
numbers, but with the same or similar titles.
The act of June 3, 1864, repealing the act of February 25, 1863,
and reenacting, with amendments, the national-banking law, included
a provision to the effect that any national bank organized thereunder
" shall have succession by the name designated in its organization
certificate for a period of twenty years from its organization." A
national bank under section 5135 becomes a body corporate from the
date of the execution of its organization certificate, the date of the
last acknowledgment (where there is more than one) being construed
as the date of the execution of the certificate.
During the last session of Congress the following bill to provide for
the extension of the charters of the national banks passed the House
of Representatives, but failed to receive consideration in the Senate:
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That the Comptroller of the
Currency is hereby authorized, in the manner provided by, and under
the conditions and limitations of, the act of July twelfth, eighteen
hundred and eighty-two, to extend for a further period of twenty
years the charter of any national-banking association extended under
said act which shall desire to continue its existence after the expiration
of its charter.
Passed the House of Representatives February 4, 1901.



BEPORT OF THE COMPTROLLER OF THE CURRENCY.

XXV

It is urgently recommended that this bill, or a similar measure,
be enacted into law. As heretofore stated, inasmuch as the first
charter will expire in July, 1902, prompt action on the part of
Congress is necessary, in order that this association and others whose
corporate existence will terminate early in the coming year may
avoid the expense and inconvenience incident to enforced liquidation
and reorganization as new associations, and be afforded ample time to
take the preliminary steps necessary to an extension before expiration
of their charters.
The act of July 12, 1882, providing for the extension of the corporate existence of national banking associations included provisions
requiring national banking associations whose corporate existence was
extended, to deposit, within three years, lawful money with the
Treasurer of the United States to redeem the remainder of the circulation which was outstanding at date of extension, and the issuing of
new circulating notes bearing devices making them readily distinguishable from the notes theretofore issued.
In order to facilitate the redemption of old note issues of banks
extending their corporate existence, it is respectfully recommended
that a provision be added to the foregoing extension bill, applicable
alike to banks whose charters are extended or reextended, requiring a
deposit of lawful money within six months from the date of extension
instead of three years, as provided in the act of July 12, 1882.
In addition to the national banking associations whose charters were
extended under the act of July 12, 1882, and will reach the termination of their second corporate existence between July 14, 1902, and
December 31, 1903, the charters of 370 banks, capital $56,900,000,
will expire between November 1, 1901, and December 31, 1903. The
expirations in 1901 number 27; in the calendar year 1902, 180, and
1903, 163. The expirations of charters for the first and second time
during the period beginning on November 1, 1901, and terminating
December 31, 1903, number 650, the capital stock of the banks interested being $123,753,300. The number and aggregate capital of banks
whose charters will expire during that Deriod are set forth in the following table:
Year.
1901
1902
1902
1903
1903

Expiration.
First
do.

No.

Capital.

27
180
35
163
245

Total

$6,130,000
29,449,000
6,265,000
21,321,000
60,588,300

650

Second
First.
Second

123,753,300

INSOLVENT NATIONAL BANKS.

From April 15, 1865, to October 31, 1901, 404 national banks were
placed in the hands of receivers, the aggregate liabilities of which at
the dates of failure amounted to $184,868,844, on which claims were
settled to the amount of $139,300,851, or 75.35 per cent.
Of the total number of banks which failed .16 were permitted to
resume business and one was taken out of the receivers' hands and
liquidation effected through the shareholders, the Comptroller having



XXVI

REPOBT OF THE COMPTROLLER OF THE CURRENCY.

been satisfied of their ability to meet the claims of all depositors and
other creditors. The affairs of 290 failed banks have been finally
liquidated through receivers or this office.
On October 31,1900, there were 113 insolvent national banks in the
hands of receivers, and during the year the affairs of 26 were finally
closed, leaving in operation on October 31, 1901, 98 trusts, of which
35 are in an inactive condition, due mainly to pending litigation.
The claims proved by creditors of the 290 closed insolvent banks
amounted to $83,599,846, on which dividends were paid to the amount
of $62,054,595, or 74.23 per cent. One hundred and two of these banks
paid dividends at the rate of 100 per cent and interest in full or in part.
The liabilities of the 26 trusts closed during the year aggregated
$6,013,665, on which dividends were paid to the amount of $4,752,629,
or 79.03 per cent.
The liquidations, including receivers' salaries, legal fees, etc., have
been effected at a cost of about 8.81 per cent of the total collections.
The following table shows the number of insolvent national banks
which were finally closed during the year ended October 31,1901, with
their capital stock, liabilities, liabilities paid, and the percentage of
claims paid to total liabilities:
INSOLVENT NATIONAL BANKS CLOSED DURING THE Y E A E .

Title and location of bank.
First National Bank Alma, Nebr
Atchison National Bank, Atchison, Kans
Big Rapids National Bank, Big Rapids, Mich
Commercial National Bank, Denver, Colo
First National Bank, Deming, N. Mex
Cocheco National Bank, Dover, N. H
First National Bank, Flushing, Ohio
National Bank of Guthrie Okla
Second National Bank, Grand Forks, N. Dak
Citizens' National Bank, Hillsboro, Ohio
First National Bank, Ithaca, Mich
National Bank of Jefferson, Tex
Merchants' National Bank, Jacksonville, Fla
First National Bank, Livingston, Mont
Livingston National Bank, Livingston, Mont
Union National Bank, Minneapolis, Minn
Bellingham Bay National Bank, New Whatcom, Wash.
Merchants' National Bank, Ocala, Fla
Yates County National Bank, Penn Yan, N. Y
First National Bank, Ravenna, Nebr
Second National Bank, Rockford, 111
Merchants' National Bank, Seattle, Wash
Fifth National Bank, St. Louis, Mo
Washington National Bank, Tacoma, Wash
First National Bank, Watkins, N. Y
First National Bank, White Pigeon, Mich
Total

Capital
stock.

Percentage of
Liabilities. Liabilities liabilities
paid.
paid.

$50,000
50,000
100,000
250,000
100,000
150,000
50,000
100,000
50,000
100,000
50,000
100,000
100,000
50,000
50,000
500,000
60,000
100,000
50,000
50,000
200,000
200,000
300,000
100,000
50,000
50,000

$57,016
195,466
19,274
621,275
168,842
123,950
66,503

$5,417
102,607
10,005
421,770
87,221
126,207
69,399

9.50
52.49
51.91
67.89
51.66
101.82
104.35

173,624
420,408
91,710
184,925
264,096
26,406
118,659
291,375
125,613
189,772
183,314
50,693
458,084
471,677
1,313,976
131,134
208,133
57,740

154,705
307,241
97,101
177,269
214,447
25,090
82,230
285,463
68,649
78,612
80,859
32,258
440,536
346,542
1,275,138
108, 938
96,549
58,376

89.10
73.08
105.88
95.86
81.20
95.02
69.30
97.97
54.65
41.42
44.11
63.63
96.17
73.47
97.04
83.07
46.39
101.10

3,010,000

6,013,665

4,752,629

79.03

STATE, SAVINGS, PRIVATE BANKS, LOAN AND TRUST COMPANIES.

The law requires the Comptroller of the Currency to incorporate in
his report to Congress information relating to the condition of banks
and banking institutions incorporated under State authority, statistics
to be obtained from reports made to the legislatures or officers of
the different States and Territories, or from such other authentic
sources as may be available. While under the internal-revenue law



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXVII

returns are required to be made of the average amount of capital and
surplus of incorporated and private banks, there is nothing contained
therein indicating the number of each class. From a careful examination of the returns, however, in connection with lists of banks published in bankers' directories, it would appear that there are in operation 5,204 commercial banks organized under State authority, 403 loan
and trust companies, 1,007 savings banks, including 660 mutual savings
institutions, and approximately 4,000 private banks. Statements
showing the resources and liabilities of commercial banks, classed as
State banks, have been received from the banking departments in all
the States except Delaware, South Carolina, Alabama, Arkansas, Oregon, Idaho, and Nevada, and directly from banks located in the States
named, to the total number of 4,970. In official returns from Kentucky, North and South Dakota, Nebraska, Kansas, Utah, and Arizona,
with respect to incorporated banks are included private banks and
bankers.
Appended to the abstract of * reports of banks of this character are
statistics relating to 7 incorporated banks and branches in the Philippines, 3 in Hawaii, and 3 in Porto Rico. The aggregate capital of
all reporting banks of this class is $255,052,073; surplus and undivided profits $103,578,871 and $44,146,547, respectively; deposits,
$1,610,502,246, and total liabilities $2,160,976,280. Loans and discounts amount to $1,183,901,443, of which $67,755,400 are reported
as being secured by real estate; $36,305,722 by collateral other than
real estate. Overdrafts are reported amounting to $10,526,465. The
investments of these banks in bonds, stocks, and other securities are
as follows: United States bonds, $4,687,837; State, county, and municipal bonds, $5,831,686; railroad bonds and stock, $2,376,579; bank
stocks, $130,422; all other stocks, bonds, and securities, $228,445,686;
cash held in bank, $174,855,265.
Reports of condition were received from 334 loan and trust companies with aggregate capital of $137,361,704, deposits of $1,271,081,174,
and total liabilities of $1,614,981,605. Of the loans and discounts
$59,579,122 were made on real estate security, $607,868,759 on other
collateral, and $272,321,010 not classified as to character of security.
These corporations held in United States bonds $2,099,021; State,
county, and municipal bonds, $10,428,652; railroad bonds and stocks,
$21,980,385; bank stocks, $3,236,661; all other stocks, bonds, and securities, $358,478,135; cash on hand, $24,810,203.
Statements relating to the condition of private banks and bankers to
the number of 917, exclusive of those included in abstracts of State
bank reports, were received. The reported capital was $19,306,375;
deposits, $118,621,903, and total liabilities, $149,104,346. The loans
of these banks, including overdrafts, amounted to $90,223,166; investments in stocks, bonds, and other securities, $11,933,529, and cash on
hand, $7,350,947.
SAVINGS BANKS.

Savings banks reports are divided into two classes, first, mutual
institutions, i. e., those without capital stock, operated by trustees for
the sole benefit of depositors, to whom returns are made of the net
profits or interest paid at fixed rates, as determined by statutes or regulations; second, those with capital stock, the shareholders participating
with depositors in the net earnings. With the exception of 22 insti


XXVIII

EEPOET OF THE COMPTROLLER OF THE CURRENCY.

tutions, mutual savings banks are located in the New England and
Eastern States, the exceptions being as follows: West Virginia, 1;
Ohio, 4; Indiana, 5; Wisconsin, 1; Minnesota, 11. The total number
of reporting institutions of this character was 660, with aggregate
resources of $2,467,078,729. The surplus and undivided profits
amounted to $176,591,280 and $28,646,556, respectively. Their
deposits aggregated $2,260,273,524, an increase since June, 1900, of
$125,802,394. These deposits#stand to the credit of 5,612,434 depositors, whose average account is shown to amount to $402.73. New
York leads in amount of deposits and number of depositors, namely,
$987,621,809 and 2,129,790, respectively, the average deposit account
being $463.72. Massachusetts is second, with deposits of $540,403,687
and depositors of 1,535,009, the average account being $352.05. The
reports show loans not classified amounting to $150,965,415; loans
secured by real estate, $860,787,459; loans on other collateral,
$35,248,618. These banks held in United States bonds $81,740,427;
State, county, and municipal bonds, $473,633,327; railroad bonds and
stocks, $306,454,296; bank stocks, $36,224,501; other stocks, bonds,
and securities, $314,541,522; cash in bank to the amount of $26,043,168
and on deposit with other banks and bankers, $102,193,427.
Stock sayings institutions to the number of 347 reported, which
includes 4 in the District of Columbia, 13 in North Carolina, 11 in
South Carolina, 7 in Tennessee, 256 in Iowa, and 56 in California.
The capital of these banks is shown to be $18,681,405; savings deposits,
$256,569,769, and deposits subject to check, $1,756,243; the aggregate
liabilities being $289,426,374. The investments in loans and discounts
aggregated $172,225,940, and in stocks, bonds, and other securities
$73,403,298.
Consolidating the returns from the 1,007 mutual and stock savings
banks, aggregate resources are shown of $2,756,505,103; savings deposits, $2,516,843,293; deposits subject to check, $1,756,343; number
of depositors, 6,099,808, and average deposit account $412.61.
Hereinafter is presented a comparative statement for the past
two years relative to the number of depositors, aggregate deposits,
and average deposit account in savings banks in each State and geographical division. The returns from the State of Illinois include
deposits in savings departments of commercial banks, shown separately by the reports obtained from the auditor of public accounts,
resources and liabilities of such institutions, however, being included
with the abstract of State bank reports only. The aggregate deposits
of these institutions for the current year are shown to amount to
$2,597,094,580, number of depositors 6,358,723, and average deposit
account $408.30. Compared with the prior year, there is shown to
have been an increase in deposits of $147,546,695, in number of depositors of 251,640, and in average deposit of $7.20. In all of the Eastern
States and New England States, with the exception of Rhode Island,
there is shown to have been an increase during the year in the volume
of deposits. In the former division, deposits have increased from
$1,148,691,356 to $1,232,325,780, the number of depositors from
2,794,708 to 2,902,168, and the average deposit from $411.02 to
$424.62. In the New England States deposits in savings banks aggregated $963,386,503, against $939,790,300 in 1900. There was also an
increase in number of depositors from 2,464,377 to 2,538,451, but the
average deposit account has fallen from $381.35 to $379.52.



REPORT OF THE COMPTROLLER OF THE CURRENCY. XXIX

Deposits in savings banks in the Middle States have increased from
$185,806,444 to $218,659,364, the number of depositors from 544,811
to 634,864, and the average account from $341.05 to $344.42. The
fact that reports were received from but 31 banks in the Southern
States, against 37 in 1900, presumably accounts for the apparent
decline in volume of deposits from $14,840,199 to $11,964,842. This
is the only geographical division in which there is not shown an increase
in savings deposits over the prior year. Reports from banks in the
Pacific States and Territories were confined to California and Utah for
the year 1900 and to California for the current year. Notwithstanding this fact, deposits in banks in this division have increased from
$160,419,586 to $170,758,091.
Statistics hereinbefore referred to are given in detail in the following
table:
NUMBER OF SAVINGS DEPOSITORS, AGGREGATE SAVINGS DEPOSITS, AND AVERAGE
AMOUNT DUE TO DEPOSITORS IN SAVINGS BANKS IN EACH STATE IN 1899-1900 AND

1900-1901.
1900-1901.

1899-1900.

States, etc.

Maine
...
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
Total New E n g l a n d
States
New York
New Jersey
Pennsylvania
Delaware
Maryland
District of Columbia
Total Eastern States
West Virginia
North Carolina
South Carolina
Florida
Louisiana
Texas
Tennessee
Total Southern States
Ohio
Indiana
Illinois
Wisconsin
Minnesota
Iowa
Total Middle States
California
Utah
Total Pacific States
Total United States

Number Amount of Average Number Amount of Average
of
to each
of
to each
depositors. deposits. depositor. depositors. deposits. depositor
8361.18
394.72
323.52
358.01
517.18
442.94

196,583
134,482
123,151
1,535,009
138,884
410,342

$69,533,058
57,128,61640,209,059
540,403,687
72,330,141
183,781,942

$353.71
424.80
326.50
352.05
520.80
447.88

183,103
136,544
118,354
a 1,491,143
142,096
393,137

$66,132,677
53,896,711
38,290,394
533,845,790
73,489,533
174,135,195

2,464,377

939,790,300

381.35

2,538,451

963,386,503

379.52

2,036,016
a 202,682
a 361,220
20,300
171,130
3,360

922,081,596
57,886,922
105,416,854
5,027,395
57,857,276
421,313

452.89
285.60
291.84
247.65
338.09
125.39

2,129,790
211,278
6356,418
23,307
175,740
5,635

987,621,809
63,361,489
113,748,461
5,511,495
61,250,694
831,832

463. 72
299.90
319.14
236.47
348.53
147.62

2,794,708 1,148,691,356

411.02

2,902,168 1,232,325,780

424.62

12,369
a 8,550
a 25,150
877
10,518
2,980
19,687

1,926,407
1,717,158
5,086,451
225,395
3,284,892
584,424
2,015,472

155.74
200.84
202.24
257.01
312.31
196.12
102.37

4,728
12,171
23,164

563,264
2,096,453
5,785,792

119.13
172.25
249.78

i9,823

3,519,333

177.54

80,131

14,840,199

185.20

59,886

11,964,842

199.79

44,535,975
5,650,961
c64,777,036
568,187
12,066,170
58,208,115

447.18
267.93
309.95
192.93
234.67
362.05

90,803
22,354
& 258,916
3,385
56,179
5203,227

43,672,493
6,561,464
c80,251,287
684,236
13,961,616
73,578,268

480.96
293.53
309.95
187.37
248.52
362.05

a 99,592
21,091
& 208,992
2,945
51,418
6160,773
544,811

185,806,444

341.05

634,864

218,659,364

344.42

& 216,534
6,522

158,167,462
2,252,124

730.45
345.31

b223,354

170,758,091

764.52

223,056

160,419,586

719.19

223,354

170,758,091

764.52

6,107,083 2,449,547,885

401.10

6,358,723 2,597,094,580

408.30

a Partially estimated.
b Estimated,
c Savings deposits in State institutions having savings departments—abstract of reports included
with State banks.




XXX

REPORT OF THE COMPTROLLER OP THE CURRENCY.

There is given in the appendix a table relating to the number of savings banks, depositors therein, aggregate and average deposit account
in savings banks of the U nited States in the years 1820,1825,1830,1835,
1840, 1845 to 1901, inclusive, to which is appended a column showing
the average per capita credit in institutions of this character based on
Federal census returns from 1820 to 1900, and the average for the years
1891 to 1899 and 1901, based on the population of the country as estimated by the Government actuary. From 1873, the date on which,
by Congressional resolution, the Comptroller was required to incorporate in his reports information relating to State banking institutions,
there is shown to have been a constant increase of deposits in savings
banks with the exception of the year 1894, the deposits on that date
amounting to $1,747,961,280, a reduction from $1,785,159,957 in the
prior year. In 1895, however, the volume of deposits had increased
to an amount greater than ever before reported.
In the following table is shown the rates of interest paid to depositors
in savings banks for the current year, including banks in three States
relative to which no information was received later than 1900. By
comparison with similar returns for last year a slight reduction in
rates will be observed.
AVERAGE RATE OF INTEREST P A I D DEPOSITORS IN SAVINGS BANKS.

State.
Maine a
New Hampshire a
Vermont: a
3paid
24 paid
1 paid
12 paid
Massachusetts b
Rhode Island a
Connecticut a
New York a
New Jersey a
Pennsylvania: b
lpaid
1 paid
7 paid
Delaware c
District of Columbia:
3 paid
1 paid

Rate.

State.

Per cent.
3.32
3 to 3.50

....

a Official.

Per cent.
3.14

Maryland c
West Virginia: a
1 paid
4 North Carolina: a
3.50
8 paid
3.25
3 paid
3
South Carolina c .
3.81 Ohio: a
2paid
1 paid
1 paid
3.30
Indiana a
Minnesota b
3.75 Wisconsin: a
lpaid
3.50

b1900.

Rate.

4
3
3.75
4
3.50
3
2
3+
3.50

c Unofficial.

Consolidating the returns from incorporated State, savings banks,
trust companies, and private banks and bankers with returns from the
4,165 national banking associations reporting on July 15, 1901, there
is shown a total of 11,406 reporting banks and banking institutions,
with aggregate resources of $12,357,477,376, an increase from 10,382
banks with $10,785,824,444 resources in 1900. Capital stock is shown
as amounting to $1,076,120,656; surplus and undivided profits,
$955,606,096, and deposits, $8,554,467,366. The principal items of
resources were as follows: Loans and discounts, $6,425,431,261;
United States bonds, $540,601,259; other bonds, stocks, and securities,
$2,280,595,298, and cash on hand, $807,516,075. Special efforts have
been made to ascertain in detail information with respect to the amount
and character of lawful money held by reporting banks, but, with the
exception of returns from national banks, the information is not satis


REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXXI

factory in view of the fact that other banking institutions to a large
extent merely report the amount of cash on hand not classified. A
summary of the returns is incorporated in the following table:
GOLD,

ETC.,

HELD

B Y N A T I O N A L B A N K S ON J U L Y 15, 1901, A N D
A N D B A N K E R S ON OR ABOUT T H E S A M E D A T E .

BY OTHER

BANKS

National
banks (4,165).

Classification.
Gold coin
Gold Treasury certificates
United States certificates for gold deposited
Gold clearing-house certificates
Silver dollars
Silver, fractional
Silver Treasury certificates
Legal tenders
National-bank notes
Fractional currency
Specie, not classified
.*
Cash, not classified
Total.

All other
banks (7,241).

Total all
banks (11,406).

$108,871,025
108,490,040
4,785,000
85,465,000
9,399,355
7,601,102
51,259,021
164,929,624
25,258,411
1,311,546

$78,753,247

$187,624,272
108,490,040
4,785,000
85,465,000
30,095,260
7,601,102
51,259,021
240,974,026
25,258,411
1,311,546
8,424,616
56,227,781

20,695,905
a 76,044,402
8,424,616
56,227,781
240,145,951

567,370,124

807,516,075

a Includes bank notes and coin certificates.

From the most reliable data at the command of the Department it
is shown that the coin and paper circulation of the United States on
on June 30, 1901, was $2,483,147,292, of which $1,734,861,774 was
represented by coin, coin certificates, and bullion in the Treasury, and
$748,285,518 United States and national-bank notes. On that date
there was held in coin, bullion, and paper money in Treasury assets
$307,760,015, leaving in circulation $2,175,387,277, the per capita
based on the estimated population of the country on that date being
$27.98. In 1860the circulation per capita was $13.85; in 1870, $17.50;
1880, $19.41; 1890, $22.82; 1900, $26.94.
For purposes of comparison there is given herewith a table showing
the principal items of resources and liabilities of banks other than
national in the years 1896 to 1901, inclusive:
Items.

1896.

1897.

$2,279,515, 283 $2,231, 013,262 $2,480,874,360 $2,
.
:
,
1,659,940,630 $3,013,449,827 $3,
1,444,377,672
Loans
1,210,827,389 ;248,150,146 1,304,890,322 1,527,595,160 1,723,830,351 1,935,625,964
Bonds
Cash
169,198,601 193,094,029 194,913,450 210,884,047 220,667,109 240,145,951
Capital
400,831,399
380,090,778 370,073,788 368,746,648 403,192,214 430,401,557
Surplus and undivided profits...
362,602,702 382,436,990 399,706,497 418,798,087 490,654,957 538,866,278
3,276,710,916 3,324,254,807 3,664,797,296 4,246,500,852 4,780,893,692 5,518,804,859
Deposits
4,200,124,955 4,258,677,065 4,631,328,357 5,196,177,381 5,841,658,820 6,681,567,334
Resources

In the following table are shown the principal items of resources
and liabilities of national banks on July 15,1901, of other banks and
banking institutions on or about the same date, and consolidated
returns from all reporting banks:
4,165 national
banks.
Loans
United States bonds
Other bonds
Cash
Capital
Surplus and profits.
Deposits
Total resources
,




7,241 other
banks.

$2,981,053,589
450,568,405
435,002,188
567,370,124
645,719,099
416,739,818
3,035,662,507
5,675,910,042

$3,444,377,672
90,032,854
1,845,593,110
240,145,951
430,401,557
538,866,278
5,518,804,859
6,681,567,334

11,406 banks.
$6,425,431,261
540, 601,259
2,280, 595,298
807, 516,075
1,076,120,656
955, 606,096
8,554,467,366
12,357,477,376

XXXII

REPORT OF THE COMPTROLLER OF THE

CURRENCY.

In addition to statistics relating to the condition of national banking
associations from the inception of the system to October 31,1901, there
will be found in the appendix returns relating to the condition of joint
stock and private banks of the United Kingdom, colonial and foreign
banks with London offices, chartered banks of Canada, Australia,
Japan, and banks in the island possessions of the United States.
SCHOOL SAVINGS BANKS.

The office has been placed in possession, by Mr. J. H. Thiry, of
Long Island City, N. I . , of statistics relating to the operations of
school savings banks in the United States, brought down to January
1, 1901.
The system was inaugurated sixteen years ago. At date of report
there were in operation 3,588 banks (each class room where savings are
collected by a teacher constituting a bank), in 732 school buildings,
located in 99 cities in 18 different States. The number of pupils
registered in these schools was 234,838, of which 63,567 were depositors. Funds have been collected to the amount of $876,229.65, of
which $540,701.49 have been withdrawn, leaving on deposit to the
credit of the pupils $335,528.16. During the year 1900 the system
was extended to 21 additional cities, but was discontinued in 16, and
in that year deposits were made to the amount of $94,110.99, of which
$93,735.70 was withdrawn.
BUILDING AND LOAN ASSOCIATIONS.

In the Comptroller's last annual report to Congress there was exhibited the number of building and loan associations in the United States,
together with the number of members and aggregate assets in June,
1900, as shown by the reports presented to the United States League
of Local Building and Loan Associations at the meeting held in Indianapolis in July. The last annual convention of the league was held
on February 15 and 16, 1901, at New Orleans, La. A copy of the
proceedings has been furnished through the courtesy of Mr. D.
Eldredge, of Boston, one of the ex-presidents of the league, from
which the accompanying statistics have been obtained.
In July, 1900, there were in operation 5,485 associations, with membership of 1,512,685, and total assets of $581,866,170. The returns for
the current year relate to the same number of associations as reported
in 1900, but the membership and assets have decreased to 1,496,294
and $575,518,212, respectively.
Herewith is presented an abs tract for 1900-1901.
s




EEPORT OF THE COMPTROLLER OF THE CURRENCY.

XXXIII

BUILDING AND LOAN ASSOCIATIONS.
Number
of associa- Total m e m bership^
tions.

State.
Pennsylvania
Ohio
Illinois

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

.
. . . .

Total
Net decrease

1,200
770
572
360
300
408
126
148
174
66
70
15
60
48
33
40
23
40
16
6
1,010
5,485

Total assets.

Increase i n

285,000 $113,000,000
103,500,000
291,000
47,896,148
85,000
47,561,890
97,115
38,000,000
90,000
29 637 826
103 812
27,722,136
71,965
18,935,883
37,456
11.448.394
33,000
10,118,876
32,677
5,500,000
20,000
3,850,000
13,000
3,697,356
15,000
3,490,469
13,000
8,064
2,862,178
10,000
2,700,000
4,339
2,665,631
6,000
2,600,000
4,800
1,830,162
1,966
393,263
273,100
98,108,000

$879,564
1,100,301

1,496,294

575,518,212

assets.

Decrease in
assets.

$6,208,454
1,461,890
746, 275
1,797,761
977,489
1,349,571
2,387,423
40,686
223,799
75,474
354,575
92,453
113,538
180,764
208,466
248,179
91, 765
29,133
970,200
6,594,901

12,942,859
6,347,958

In the United Kingdom at the close of 1899, as shown by the 1901
Statistical Abstract for the United Kingdom, there were in operation
in the British Isles £,325 building societies, with the following liabilities: On shares, £31,645,414; on other deposits, £11,748,216; on unappropriated profits, £2,358,621.
STATE AND PRIVATE BANK FAILURES.

Through the courtesy of Mr. Frank Greene, managing editor of
Bradstreet's, the Comptroller has been placed in possession of information relative to the number, assets, and liabilities of incorporated
and private banks which failed during the }^ear ended June 30, 1901.
The failures during the vear numbered 56, and the assets and liabilities of the concerns were $6,373,372 and $13,334,629, respectively.
Included in the number of failures are 41 private banks, with assets
of $3,925,372 and liabilities of $10,250,629.
There were but 8 failures of commercial banks, the assets and liabilities of which were $1,003,000 and $1,440,000.
The report shows the failure of 3 savings banks, with assets of
$450,000 and liabilities of $531,000. Four loan companies are shown
to have failed, having assets of $995,000 and liabilities of $1,113,000.
By comparison with the returns of the year ended June 30,1900, there
is shown to be an increase in the number of failures and total liabilities. The failures in 1900 were 32, the assets and liabilities of the
banks being $7,675,792 and $11,421,028, respectively.
No information, official or otherwise, is at command relative to the
progress toward and final result of liquidation of insolvent State and
private banks. Generally receivers of insolvent State and private
banks are appointed by, and report to, the courts, and there is no
public official in each State charged with the compilation and publication of returns of this character on the lines followed by the Comptroller of the Currency with respect to insolvent national banks.
In 1896 a list of banks which failed in each State, from 1863 to June
30, 1896, was secured, through the same source from which the foreCUR 1901, PT 1
in



XXXIV

REPORT OF THE COMPTROLLER OF THE CURRENCY,

going statistics were obtained, a copy of which was furnished to each
national-bank examiner, with directions to communicate in person, or
otherwise, with court officers, receivers, and assignees, with a view to
ascertaining the results of final liquidation. Reports, more or less
complete, were obtained relative to the liquidation of 1,234 banks and
bankers failing during the period covered by the inquiry. Capital
involved aggregated $53,632,259, nominal assets, $214,312,190, and
liabilities to creditors, $220,629,-988. On claims proved, dividends
were paid to the amount of $100,088,726, or 45.4 per cent. Statistics
compiled in this office and published in the Comptroller's annual
reports to Congress show the condition of each insolvent bank trust,
closed and active, and in addition thereto a table relating exclusively
to trusts finally closed.
From April 14, 1865, the date of the first national bank failure, to
October 31,1901, the affairs of 290 of the 404 insolvent national banks
have been closed and receivers discharged. The aggregate capital
of these banks at date of failure was $43,595,920; claims proved,
$83,599,846, on which dividends were paid to the amount of $62,054,595,
or 74.23 per cent. Including '' offsets allowed and loans paid " creditors
received about 80 per cent on their claims. Of the collections by
receivers 88 per cent was derived from the assets and 12 per cent from
assessment on shareholders.
BANKS AND BANKING IN HAWAII.

Information relating to banks and banking institutions in Hawaii
has been secured from two sources—first, from statements transmitted
directly to the office by a number of banks and banking companies
doing business in the Territory, and, second, from returns obtained
by Mr. A. R. Serven, representing this office in an official capacity at
Hawaii, while on a visit to the islands during the past season. Reports
from both sources show the existence of banks with banking capital
as follows: Bank of Hawaii, capital $600,000, surplus and undivided
profits $204,000, deposits $1,250,000; First American Savings and
Trust Company of Hawaii, capital $250,000, deposits about $200,000;
First National Bank of Hawaii, capital $500,000; surplus and undivided profits, $44,995; deposits, $741,266; Claus Spreckels & Co.,
capital $500,000, deposits $869,706; Bishop & Co., capital $800,000;
Hawaii Trust and Investment Company. All of these banks and banking firms are located at Honolulu. There is also in operation at this
point branches of the Yokohama Specie Bank and the Kei Hin Bank,
Limited, of Tokyo. In addition to transacting general banking business, selling exchange, etc., the banks generally allow interest on
deposits.
At Hilo, the second town of importance in the islands, there is in
operation the First Bank of Hilo, with capital of $200,000 and deposits
of $100,000. At Wailuku there has reoently been organized the First
National Bank of Wailuku, with capital of $25,000.
Several of the more important plantation agents have banking
departments in connection with their other branches of business and
aid the planters very materially by advancing funds for the production
and marketing of crops. The demand for money is apparently steady,
as the moving of the large sugar crop, which is practically the only
crop, is in progress the entire twelve months.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXXV

The deposits in all of the banks are approximately $3,500,000, while
the actual cash in circulation, including Hawaiian silver coinage
amounting to $1,000,000, will probably not exceed $2,000,000. The
Hawaiian silver coinage was minted at San Francisco in 1883 and 1884,
during the reign of Kalakaua. These coins, in denominations of dollars, halves, quarters, and dimes, have the same intrinsic value as
United States silver.
During the past three or four years new enterprises, capitalized at
about $75,000,000, have been launched without sufficient money in
circulation to properly float them; consequently at the present time
there is a great demand for more capital, and loans can be readily made
at 7, 8, and 9 per cent interest on what are considered gilt-edged
securities, that is, stocks, etc., of the sugar industries.
Section 6 of the act of Congress approved May 30, 1900, entitled
64
An act to provide a government for the Territory of Hawaii," provides u that the laws of Hawaii, not inconsistent with the laws of the
United States or the provisions of this act, shall continue in force, subject to repeal or amendment by the legislature of Hawaii or the Congress of the United States," and section 55 of the act provides, among
other things, that the legislature "may by general act permit persons
to associate themselves together as bodies corporate for * * * conducting the business of insurance, savings banks, banks of discount
and deposit (but not of issue), loan, trust, and guaranty associations."
The laws of Hawaii not repealed and relating to banking are reproduced in the appendix to this report.
PORTO RICO.

No national bank has been organized in the island of Porto Rico,
notwithstanding the fact that the Attorney-General, in an opinion
rendered June 2, 1900, held that the following provision of the act
approved April 12, which took effect May 1, 1900, was broad enough
to authorize the organization of national banks in Porto Rico: "That
the statutory laws of the United States not locally inapplicable, except
as hereinbefore or hereafter otherwise provided, shall have the same,
force and effect in Porto Rico as in the United States except the
internal-revenue laws, which in view of the provisions of section 3
shall not have force and effect in Porto Rico."
The only bank of issue in the island is the Spanish Bank of Porto
Rico, chartered by royal decree on May 5,1888, the chartered rights of
which were recognized in the Paris treaty and in joint resolution
adopted by Congress on June 6,1900. The authorized capital stock of
this bank is $900,000, and the aggregate resources on June 29, 1901,
were $1,833,416. There is also in operation in the island the American
Colonial Bank of Porto Rico, a corporation chartered under the laws
of the State of West Virginia, and which has been designated by the
Secretary of the Treasury as the depository in the islands for United
States funds. This bank has capital of $400,000, and its aggregate
resources, including United States bonds on deposit to secure public
deposits, amount to $1,349,888. Through the courtesy of the officers
of the Credito y Ahorro Ponceno the office has been placed in possession of a statement of condition of the bank on June 30, 1901. This
bank has a capital of $120,000 and aggregate resources of $630,738.
An abstract of these reports will also be found in the appendix.



XXXVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.
THE PHILIPPINES.

The bulk of the banking business in the Philippine Islands is transacted through the instrumentality of the Hongkong and Shanghai
Banking Corporation, The Chartered Bank of India, Australia, and
China, and the Spanish Filipino Bank. The first-named corporation
has agencies at Manila and Iloilo, The Chartered Bank of India, etc.,
at Manila and Cebu, the main office of the Spanish Filipino Bank
being at Manila, with agency at Iloilo. There is also in operation at
Manila a savings institution and public pawn shop entitled u Monte de
Piedad." This institution, as stated by Mr. Edward W. Harden, special commissioner of the United States, is operating under a charter
issued by the Spanish Government, and is practically under control of
the church. Savings deposits are received in sums from 50 cents to
$25, and interest allowed at the rate of 4 per cent, which is compounded
annually. In the pawn department loans are made on precious metals,
jewelry, clothing, etc., at 6 per cent per annum. The report of con
dition of this institution, of date June 30, 1901, shows the capital stock
as amounting to $243,978.92; savings deposits, $699,099.12, and total
liabilities, $1,156,718.38. The loans on bonds, stocks, and certificates
of deposit aggregated $141,275 and on pledges $647,593. The Comptroller is indebted to Hon. Frank A. Branagan, treasurer of the Philippine Archipelago, for reports of condition and of examinations made
under his supervision for the quarter ended June 30,1901, an abstract
of which is incorporated with reports from banks other than national,
and will be found in the appendix.
SAVINGS BANKS OF THE WORLD.

In the May, 1901, number of the Bulletin de Statistique appear
tables compiled by M. Guillaume Fatio, relating to savings banks of
22 of the principal countries of the world. The tables show the number of depositors in savings banks in each country, total deposits in
francs, average deposit account, average deposit per inhabitant, and in
a few countries rates of interest paid to depositors. Deposits are
shown to aggregate $8,908,340,000 (44,541,700,000 francs), and
the number of depositors to be 63,070,000. The average deposit
account is 706.23 francs ($141.24), and the average deposit per inhabitant 8.9 francs ($1.78). The rates of interest vary from 2 per cent in
Belgium and 2i per cent in Great Britain and France to 5 per cent in
Germany and 6 per cent in Sweden. The average rate, however,
is shown to be approximately 3 per cent. In number of depositors,
Germany leads with 13,500,000, followed by France with 9,665,000 ;
Great Britain, 8,767,000; United States, 5,688,000; Italy, 4,976,000;
Japan, 3,001,000; Belgium, 2,753,000; Russia in Europe, 2,160,000.
In Greece the depositors in savings banks number but 5,000, in Servia
11,000, in Bulgaria 41,000. In other countries the number ranges
from 113,000 (in Roumania) to 1,664,000 (in Sweden).
In volume of deposits the United States, as for years past, stands
at the head with 11,553,300,000 francs ($2,310,660,000). The country
with the next largest amount of savings deposits is Germany with
$1,900,000,000. Austria-Hungary follows with $1,201,240,000. The
savings deposits in the Banks of France and the United Kingdom are
$854,220,000 and $829,020,000, respectively. The only other countries



REPORT OF THE COMPTROLLER OE THE CURRENCY.

XXXVII

with savings deposits of $200,000,000 or over are Russia, Belgium, and
Switzerland.
The average amount to the credit of depositors in savings banks is
greatest in the United States, namely, $406.23. The average in Canada is $340.24; in Austria-Hungary, $221.59; Denmark, $168.80; in
Switzerland and Australia, $153.84 and $153.30, respectively; Servia
and Greece, $150.64 and $150.32, respectively; Spain, $142.13; Norway, $124.96, and Russia, $100.84. In no other country does the
average deposit exceed $100.
The greatest average deposit per inhabitant is shown in Denmark,
the amount being $77.88. In Switzerland the average is $65.06; Germany, $37.64; Norway, $37.16; Australia, $36.60; Belgium. $31.76;
United States, $31.22; Austria-Hungary, $27.08; Sweden, $25.36;
France, $22.18; Great Britain, $20.62.
A table is also given showing the number of persons to each 100
inhabitants who are depositors in savings institutions. The proportion of depositors to population is the greatest in Denmark, namely,
46.12 per 100; in Switzerland the number is 42.29; Belgium, 41.80;
Sweden, 33.50; Norway, 29.74; Germany, 25.82; France, 25.10; Australia, 23.90; Great Britain, 21.81; Holland, 18.49; Italy, 15.80; Austria-Hungary, 12.22. The proportion in other countries ranges from
a maximum of 7.68 in the United States to a minimum of 0.22 in
Greece.
Included in the statistics referred to appears a classification of
deposit accounts in the savings banks of France and Belgium. In the
former country 7,471,000, or 70.93 per cent of depositors, are credited
with 14.7 per cent of the deposits, no account exceeding $100, the
average being $17.06. Depositors having to their credit over $100,
and not over $300, number 1,983,000, with an average deposit of
$181.27, the amount credited to this class being 41.4 per cent of the
total. Accounts exceeding $300, the average being $352.64, number
1,079,000. This class of depositors, while representing only 10.2 per
cent in number, is credited with 43.9 per cent of the total deposits.
The depositors in the Belgium savings banks number 1,642,778, of
which 1,431,122 have an individual credit of $200 or less, the average
account being $24.63. This class represents 87.1 per cent of the total
number and holds 28.9 per cent of the aggregate deposits. Depositors with a credit of $200 to $600 number 192,714, or 11.7 per cent, the
average account being $369.04. The depositors in this class are credited with 58.5 per cent of the aggregate. The third classification represents depositors with a credit account of over $600, the number being
18,492, average account $808.28, per cent of depositors 1.2, and percentage of deposits to the aggregate 12.6.
In the October issue of the London Bankers' Magazine appears an
article relating to the operations of the post-office department of the
United Kingdom which is of special interest, as particular reference
is made to the operations of the postal-savings bank. It is stated that
u
the post-office, by transmission of letters and telegrams, assists banks,
as it does any other business of the country, but it also competes with
them. It does this in two different directions, in the work of transmission of money and through the operations of the post-office savings
bank. It is able to compete in the transmission of mone}^ through the
fact that it has not to pay any stamp duty on the drafts that it issues.
It is able to compete, and successfully, in the business which the sav


XXXVIII

EEPOBT OF THE COMPTROLLER OF THE CURRENCY.

ings banks undertake, because it allows a rate of interest frequently
higher than bankers can afford or than it receives itself from the
investments in which its deposits are placed. It is able to do this
because it keeps no reserve whatever against the losses which even a
business which deals in nothing but Government securities must inevitably incur, and because it keeps no specie reserve whatever against
any period of emergency. It is thus able to save expenses which
other banks have to meet, and when it makes a loss it applies to Parliament to make up the deficiency."
The following statistics relating to the post-office savings bank
appear in the article referred to. The number of savings bank
accounts at the close of the year 1896 was 6,862,035, and had increased
at the close of 1900 to 8,439,983. During the same period the deposits
had increased, in round numbers, from £108,000,000 to £135,000,000.
During 1899 deposits to the amount of £1,770,170 were invested in
consols at 107J." In 1900 the investments aggregated £2,830,513 at
99f.
Subsequent to the compilation of the foregoing returns there was
received a copy of the Statistical Abstract for the United Kingdom, in
which appear statistics relative to post-office and trustee savings banks
of that country brought down to the close of the report year, ended
November 20,1900. The abstract shows that during that year deposits
were made in the post-office savings banks to the amount of £43,662,412
and withdrawals to the amount of £38,231,372, leaving the balance to
the credit of depositors £135,549,645. The number of open accounts
at the close of the year was 8,439,983. Depositors in trustee savings
banks were credited during the year with deposits to the amount of
£12,247,672, and charged with withdrawals to the extent of £13,448,957.
The credit balance at the close of the year was £51,455,917. The number of accounts is shown to be 1,625,023. Consolidating the returns
from both classes of institutions, it appears that the aggregate amount
due on the 10,065,006 accounts was £187,005,562.
This method of employing the deposits made in the savings banks
in Government securities is stated to have many disadvantages:
" When these securities are low, the thrifty man wrho saves prefers to
invest himself in the funds, or in some other way which will give him
a better return for his money than he can obtain in the savings bank.
When the funds are high, and the return from investment in them is
low, he puts his money in the savings bank, leaving the post-office to
bear the brunt of the risk of loss through an investment made when
the funds are abnormally high. Under these circumstances, it is no
matter for wonder that the balance sheet of the post-office savings
bank shows an excess of liabilities over assets of more than £2,000,000."
Prior to 1893, the amount receivable from any one depositor in one
year was limited to £30. In that year the annual limit was raised to
£50. Between December 31, 1893, and December 31, 1895, the volume of deposits increased to the extent of about £28,500,000, and at
the close of the calendar year 1896 the earnings, owing to the
increase in the annual deposit limit, and also to the high price of
consols, in which deposits to a large extent were invested, showed a
deficiency, a condition which appears to have continued. On this
subject a correspondent of the London Economist says:
" These institutions (postal savings banks), it has to be remembered,
were established for the safe custody and increase solely of the small



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XXXIX

savings of the industrial classes, but it has long been manifest that
they are being utilized by classes of the community who have no claim
to the special advantages which they afford to depositors."
At the close of 1895, 90 per cent of the depositors in these savings
banks were credited with only about one-third of the total deposits,
the average being approximately $30. In this connection the same
correspondent stated that the increase in the aggregate was mainly
through the deposits of u people who are presumably capable of taking
care of their money without the parental assistance of the Government, and have no claim to have their banking accounts conducted for
them at a loss to the public."
The most important of the tables compiled by M. Fatio is herewith
reproduced.
NUMBER OF DEPOSITORS, AMOUNT OP DEPOSITS ( I N MILLIONS OF FRANCS), AVERAGE
DEPOSIT ACCOUNT, AVERAGE DEPOSIT P E R INHABITANT, AND RATES OF INTEREST
ON DEPOSITS P A I D BY SAVINGS BANKS OF THE WORLD, Y E A R ENDED DECEMBER

31, 1899.
[Bulletin de Statistique, May, 1901.]
Country.

Number of
depositors.

Total de-

Average Average Rate of
deposit ac- deposit per interest.
count. inhabitant.

1,013,000
1,300,000
41,000
5,000
11,000
1,063,000
616,000

Russia (in Europe) .
United States
Germany
Japan
Austro-Hungary
Great Britain
France
Italy
Spain
Belgium
Roumania
Canada
Holland
Sweden
Portugal
Australia
Switzerland
Bulgaria
Greece
Servia
Denmark
Norway

Francs.
1,089
11,553.3
9,500
266.5
6,006.2
4,145.1
4,271.1
2,146.4
151.3
1,046
31.6
299.4
271.1
629.4
62.4
775.7
1,000
3.6
3.8
8.3
897.2
384.3

Francs.
504.20
2,031.15
710.80
88.80
1,107.95
470.55
441.90
431.35
713.65
380.00
279.75
1,701.20
293.00
378.20
(a)
766.50
769.20
86.80
751.60
753.20
844.00
624.80

63,070,000

44,541.7

706.23

2,160,000
5,688,000
13,500,000
3,001,000
5,421,000
8,767,000
9,665,000
4,976,000
212,000
2,753,000
113,000
176,000
925,000
1,664,000

(a)

Total and averages.

Per cent.
Francs.
10.25
156.10
188.20
4 to 5
5.95
135.40
103.10
2.5
110.90
2 5 to 3
68.20
8.75
158.80
2 to 3
5.80
56.55
54.15
126.80
3 to 6
12.70
183.00
325.30
3.5
1.45
1.55
3.50
389.40 " 3 * to 4
185. 80
3.5
8.90

No information.
PRINCIPAL FOREIGN BANKS OF ISSUE.

A table is herewith reproduced from the Bulletin de Statistique,
relating to the amount of specie, circulation, and deposits of the
principal foreign banks of issue at the close of the first quarter of
1901. The total holdings of specie amount, in round numbers, to
$2,341,100,000, of which $1,518,500,000, or approximately 65 per
cent, represents gold. The circulating notes of the banks amount to
$3,113,100,000, and deposits, including accounts current, to $1,289,200,000. Taking into consideration all the banks, the specie holdings
amount to 75 per cent of the circulation and to 53 per cent of circulation and deposits combined. The table does not show the amount of
liabilities to depositors and on accounts current of the banks of Scotland and Ireland. Information relating thereto, however, has been



XL

REPORT OF THE COMPTROLLER OF THE CURRENCY.

obtained from another source, and with the addition of these liabilities
to the aggregate reported, it would appear that the specie held amounts
to an average of 45 per cent of liabilities of the character indicated.
The only banks in the list which hold specie to a greater amount than
their outstanding note issues are the Bank of England and the Imperial
Bank of Russia. The specie held by the Bank of France amounts
to 90+ per cent of the note issue, the percentage held by the Bank
of Austro-Hungary being 87—, and that by the Imperial Bank of Germany 65.2. The Bank of France holds the largest amount of gold, followed in the order named by the Imperial Bank of Russia, the
Bank of Austro-Hungary, and the Bank of England. The total
holdings of gold of these four banks are over 83 per cent of the
total holdings of gold of the banks in the list.
SPECIE, CIRCULATION, ETC., IN MILLIONS OF FRANCS, OF THE PRINCIPAL FOREIGN
BANKS OF ISSUE AT THE CLOSE OF T H E FIRST QUARTER, 1901.

[Bulletin de Statistique, July, 1901.]

Banks.

Gold.

Imperial Bank of Germany
Banks of issue of Germany
Bank of Austria-Hungary
National Bank of Belgium
National Bank of Bulgaria
National Bank of Denmark..
Bank of Spain
Bank of Finland
Bank of France
National Bank of Greece
Bank of Italy
Bank of Naples
Bank of Sicily
Bank of Norway.. .
Bank of Netherlands
Bank of Portugal
National Bank of Roumania
Bank of England
Banks of Scotland
Banks of Ireland.
Imperial Bank of Russia
National Bank of Servia
Royal Bank of Sweden .
Private banks of Sweden
Banks of Switzerland
Imperial Ottoman Bank
Bank of Japan
Total

Silver.

977.3

280.4

95.8
350 1
20.7
2,464

426.8
2.7
1,120.6

291
68.3
35.3
42.3
154.5
27.3
37.4
960.4

i, 89i. 2

57.8
13.2
1.8
144.5
45.6
5.9

5.3
56.8
13.3
101.6

202.7
9.3
7.4
13
12.1

7,592.6

2,343.8

Total
specie.

Circulation.

Deposits Minimam
and ac- rate of
counts
discurrent. count.

1,120.8
93.2
1,257.7
109.9
15.8
95.8
776.9
23.4
3,584.6
1.9
348.8
81.5
37.1
42.3
299
72.2
43.3
960.4
157.9
87.3
2,093.9
14.6
64.2
26.3
113.7
65.7
161.9

1,718.7
225.5
1,449.4
581.3
24
141.7
1 605.6
62.3
3, 955.8
139.2
781
251.1
62.5
85.2
472
378.8
122.3
749.7
197
180
1,458.7
32.9
89.1
106.2
212
23.9
459.8

756.6
136.9
73.2
57.7
75.4
4.6
727 4
24.7
645.3
65.3
208.1
60.1
33.3
11.6
5.5
15.4
11.2
1,022.2

11,705.8

15,565.7

gl

6,446.1

317.6
2.4
51.1
816.9
1,118.1
181.4
24.1

4
3
8
3a
3
5
5

5
6
3

I1
3
5
6
4

BANKING POWER OF THE WORLD.

The late M. Gk Mulhall, in his Dictionary of Statistics, edition of
1898, stated the banking power of the world in 1890 as amounting to
approximately <£3,197,000,000. This banking power, as expressed by
that statistician, consists of the capital, surplus, and undivided profits,
issues and deposits of banks. The banking power of the United
Kingdom, which amounted in 1890 to £910,000,000, has increased to
£1,199,000,000, as shown by reports of the incorporated and private
banks on or about the close of the year ended June 30, 1901, and of
the post-office and trustee savings banks of the Kingdom at the close
of the year 1900. This indicates an increase during that period of



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XLI

.£289,000,000, or 31 per cent. It was assumed, in calculating the
banking power of Continental Europe and other foreign countries,
that the same proportion of increase occurred therein as in the United
Kingdom. The banking power of the United States has been augmented since 1890 by £1,249,000,000, an increase of 121 per cent.
Aggregating the banking power of the United Kingdom and the
United States with the estimated power of Continental Europe and
other countries, an increase since 1890 is shown of £1,926,000,000, or
60 per cent. In other words, the world's banking power increased
from £3,197,000,000 in 1890 to £5,123,000,000 in 1901. The table
hereinbefore referred to is as follows:
Year.

Increase.

Countries.
1890.

United Kingdom
. . .
.
Continental Europe
Australia, Canada, Cape Colony, Argentina, Uruguay
United States

1901.

Amount. Per cent.

Millions. Millions. Millions.
£910
£1,199
£289
1,037
1,357
320
220
288
68
1,030
2,279
1,249

Total

3,197

5,123

31

31
31
121

1,926

60

The composition of the banking power of the United States, as
shown by the returns from each class of banks, reports relative to
which have been compiled in this office for the year 1901, is exhibited
in the accompanying table:
Banks.

Capital.

National banks
State banks
Loan and trust companies . .
Private banks

$645,719,099
271,085,198
145,592,586
56,963,846

Total
Savings banks.
Grand total

Surplus, etc.

Deposits.

Circulation.

$416,739,818 $3,035,662,506 $354,725,154
150,816,337 1,637,564,351
169,756,168 1,278,202,674
10,839,535
149,256,043

Total.
$4,452,846,577
2,059,465,886
1,593,551,428
217,059,424

1,119,360,729
18,681,405

748,151,858
216,168,390

6,100,685,574
2,518,599,536

354,725,154

8,322,923,315
2,753,449,331

1,138,042,134

964,320,248

8,619,285,110

354,725,154

11,076,372,746

RECOMMENDATIONS.

The second proviso to section 12, act March 14, 1900, has not been
found to operate with satisfaction to the banks or to this Bureau. The
limiting of issues of notes of the denomination of $5 requires banks
desiring notes of that denomination to order also a plate for the printing of other denominations, thus doubling the expense for plates.
This extra outlay is of little moment to the larger banks, but it is an
item to be considered by banks with the minimum amount of capital
required by law and limited volume of business.
The location of banks of this character is such as to confine the
demand mainly for notes of the minimum denomination. In the case
of a bank with but $25,000 capital and bond deposit of $6,250, desiring
to issue $5 notes, the maximum amount obtainable of this denomination would be $2,083. The balance issuable might be in 10's and 20's
or 50's and 100's. The expense for plates for 5's, 10's, and 20's would
be $150, and for 5's, 50's, and 100's, $125.



XLIT

REPORT OF THE COMPTROLLER OF THE CURRENCY.

It becomes necessary, by reason of the requirement of this proviso,
to examine the circulation account of each bank before making a shipment of new currency to ascertain whether the limit has been reached
in issues of notes of the denomination of $5.
The evident intent of the lawmakers was to limit the issue of notes
of that denomination to one-third of the total issues, but as a matter
of fact in no year since 1874 has the proportion of issues of the
denomination of $5 amounted to one-third of the total volume of
national bank circulation outstanding. On October 31, 1899, the percentage of $5 notes was 31, on October 31, 1900, 21, and on October
31, 1901, 16.7.
As the limit was not exceeded from 1875 to 1901, it is evident that
the object proposed to be accomplished by the law of March 14,1900,
is in consonance with normal conditions, and it is, therefore, recommended that so much of the proviso referred to, which reads as follows, be repealed: u Except that no national banking association shall
after the passage of, this act be entitled to receive from the Comptroller of the Currency or to issue or reissue or place in circulation more
than one-third in amount of its circulating notes of the denomination
of $5."
As shown by the records of this office and by the special investigation made by the Comptroller in 1900, the restrictions of the present
law are not sufficient to properly check in some cases the undue tendency of executive officers of national banks to misuse their powers for
personal purposes. It also appears that a large percentage of nationalbank failures was caused by excessive accommodation to directors and
executive officers. The importance of restrictive legislation in this
respect has been considered and recommended by Comptrollers Lacey,
Hepburn, Eckels, and Dawes, and during the last session of Congress
a carefully considered bill was introduced by the late Congressman
Brosius and presented in the last annual report issued from this Bureau,
which had in view the remedial legislation suggested. The enactment
into law of this or a similar measure is earnestly recommended.
Section 5200 of the Revised Statutes of the United States provides
in part that "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."
That this limitation is unscientific in principle and generally impracticable in application is claimed by bankers and other financiers and
recognized as well by every Comptroller of the Currency. While
every known violation of the law is the occasion of a written protest,
there is no statutory penalty for such violations except enforcement
of the individual liability of directors for damages sustained by associations, their shareholders, or others, by reason of violations of law
or the forfeiture of franchise. It is therefore practically impossible
to enforce a compliance with the requirement. In the last annual
report to Congress it was shown that on June 29, 1900, over 40 per
cent of the national banks reporting on that date had made loans in
excess of the statutory limit. Attention is again called to the facts
and statistics presented in that document, with the recommendation
that the subject shall receive consideration by Congress.



REPORT OF THE COMPTROLLER OF THE CURRENCY. XLIII

The desirability of an amendment to the law relating to the method
of compensating national-bank examiners has also been recommended
by former Comptrollers. In the interest of better examinations and
in justice to examiners, it is suggested that fixed salaries be paid to
examiners, to be derived from funds collected from the banks for that
purpose, in place of fees, as now provided by law.
Owing to the short time available for the preparation of this report,
the more general questions of the finances of the Government have not
been treated of to the extent frequently done by previous Comptrollers
in the annual reports from this office. The events which led to the
passage of the act of March 14, 1900, entitled " An act to define and
fix the standard value, to maintain the parity of all forms of money
issued or coined by the United States, to fund the public debt, and for
other purposes," and the passage of this act have been accepted by the
people not only of the United States, but of all the commercial countries of the world, as definitely settling the question of our monetary
standard and establishing our financial system firmly upon a gold basis.
The advantageous effects of this settlement of the controversy over
the gold standard are apparent in the wonderful revival of business of
all kinds throughout the country which has followed so promptly.
The financial affairs of the Government and the business of the people
now rest on a firm basis of sound finance which should be disturbed as
little as possible, and only after thorough discussion and deliberation.
The mistakes in our Government finances have been due more to
ill-advised legislation than to lack of legislation.
Former Comptrollers have repeatedly called attention to the disadvantages of our subtreasury system and the derangements its operations
cause in our financial matters. There could be no better illustration
of this than its operations in the last few months. The result has
been to needlessly lock up and take out of circulation vast sums of
money just at a time when it was badly needed for moving crops and
transacting the regular business of the country. The relief afforded
by the purchase of bonds by the Secretary of the Treasury only partially and temporarily meets the difficulty and repairs the damage done.
The mistake of maintaining this system after the business of the Government and the country has long outgrown it should be corrected and
the business community be given relief from its operations in taking
money out of circulation when most needed. If the Secretary of the
Treasury is given authority so that he can arrange to have more of the
money collected by the Government deposited with the national banks
and kept there until needed, it can be done under such regulations,
restrictions, and supervisions as to insure the Government against loss
and give relief from the present system. An examination of the
records of all the national banks during the first thirty-six }^ears of
their operations shows that if the surplus money in the Treasury had
been deposited in the banks of the clearing-house cities and the Government had been given a first lien on the assets of these receivingbanks there would have been not one dollar of loss to the United
States Government; that is, the money would have been just as safe
as it has been locked up in the vaults of the Treasury, and, being
thus kept in the banks, it might have formed the basis for loans on
the part of the banks which would have been at times of great service.




XLIV

REPORT OF THE COMPTROLLER OF THE CURRENCY.

During the thirty-six years above referred to an average of about
$50,000,000 could have been safely withdrawn for deposit in the banks
and a good working balance left in the Treasury. While the object of
these deposits should not be primarily to earn interest for the Government, the banks receiving those deposits would readily pay for them
an amount which would not only provide a guarantee fund to repay
all losses, but also an amount of interest.which would be a large source
of revenue. These deposits could be made absolutely safe. They
would prevent what is practically a heavy contraction of the currency
and leave the money in circulation for use in the regular business of
the country.
There has been some criticism of the act of March 14, 1900, to the
effect that it does not sufficiently safeguard the gold standard, but
leaves it possible for the Secretary of the Treasury to practically undo
the effect of the act by departmental action and regulation without
further legislation. If the act can be made stronger by amendment
and the gold standard of value rendered more secure from any future
uncertainty, it should be done without any delay while the question is
still uppermost and before it gets shoved to one side by the great number of new questions being urged as subjects for action by Congress.
Since the passage of the act of March 14,1900, the total amount of
circulation which all the national banks have outstanding has been increased from $254,026,230 to $359,832,715, an increase of $105,806,230,
or over 41 per cent.
The provisions of the act have also added somewhat to the elasticity
of the national-bank currency. It, however, leaves much to be desired
in the way of elasticity, the lack of which is the greatest fault of our
national-bank issues.
Congress has already had under discussion and consideration various
measures for the modification of the national-bank currency. There
is much discussion of the subject by bankers and financiers, and many
plans are urged for adoption. Somewhere between the views of the
ardent advocates of asset currency and those who oppose it with vehemence as unsafe and unsound in every respect there should be found
safe middle ground. Most of the more enlightened countries of the
world and those which have the most satisfactory banking systems
have some kind of asset banking currency. We should be able to
incorporate some features of this kind with our national-bank currency in such a way as to in no way impair its safety, but add to its
efficiency and usefulness in other respects.
Under proper laws an asset currency can be used to supply an emergency circulation for which there is a pressing need not now supplied
by our national banks; and as our people become more used to it and
see its good points the use may be extended. Progress in this direction should be and will have to be slow. The absolute security of our
national-bank notes and the fact that no one ever looks at a note to see
by what bank it is issued has popularized them with our people, and
there will always be a strong sentiment in favor of letting well enough
alone when it comes to changing our bank notes. This question is,
however, becoming pressing and immediate. In the near future it will
have to be determined by Congress what shall be done with the national
banks and their circulating notes and what changes are to be made in
the various kinds of paper currency now in circulation. For many



REPORT OF THE COMPTROLLER OF THE CURRENCY.

XLV

reasons now is a good time to make the necessary reforms. While
everything is prosperous and business is good we can do without disturbance many necessary things which in different times might be
much more doubtful in their effects.
The time for the preparation of this report has been so short that
the Comptroller has had to depend more than is usual upon his associ
ates in the office for its preparation, and wishes to especially acknowledge the value and efficiency of their services and his high appreciation
of their work. He wishes also to express his obligations to his predecessor, Hon. Charles G. Dawes, for many valuable suggestions, investigations made, and statistics gathered by his direction, and to publicly
testify to the high state of efficiency in which he finds the Comptroller's
Office and the thoroughness of organization Mr. Dawes has maintained.
WM. B. RIDGELY,

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




APPENDIX.
U.

S.

MILITARY GOVERNMENT,
PHILIPPINE ARCHIPELAGO,
OFFICE OF THE TREASURER,

Manila, P. Z , July 22,1901.
The COMPTROLLER OF THE CURRENCY,

Washington, D. C
(Through the executive secretary of the civil governor).
SIR: I have the honor to inclose herewith quarterly statements of
the condition of the following banking institutions in the Philippine
Islands at the close of business June 30, 1901:
Hongkong and Shanghai Banking Corporation, Manila, and subagency at Iloilo.
Spanish Filipino Bank at Manila, and subagency at Iloilo.
Chartered Bank of India, Australia, and China at Manila, and subagency at Cebu.
Monte de Piedad at Manila.

Very respectfully,
FRANK A. BRANAGAN,

Treasurer of the Philippine ArchipeL go.
Statement of condition of the Manila (P. I.) branch of the Hongkong and Shanghai
Banking Corporation.
Assets.
Loans and discounts
Overdrafts
Stocks, securities, etc
Furniture and fixtures
Other real estate and other mortgages owned
Due from other banks in Manila...
Due by our own head office and
branches
Due by agents and correspondents.
Bills of exchange
United States gold coin, $435,550
at 2
United States notes, $2,291,410 at 2.
United States silver dollars, $51,000
at 2
United States fractional currency,
$78,713 a t 2
Gold bullion, other ]
countries
1 /T>n+PN
Silver bullion, other p K a t e )
countries
J
Mexican pesos
Spanish-Filipino pesos a n d half
pesos
Spanish-Filipino fractional c u r rency
Banco Espanol-Filipino notes
Checks a n d other cash items
Resources other t h a n those a b o v e . .
Bills for collection, $451,682.

3,757,805.31
1,442,517.88

Total

60, 604.15
4,015,340.31
110,816.65
1,187,453.50
871,100.00
4,582,820.00
102,000.00
157,426.00
4,350,10
2,140,000.00
542,000.00
26,000.00
19,050.00
10,189.30
7,163.54

19,036,636.74

Pesos.

Liabilities.

Pesos, (a)

Capital stock
Reserve fund
Undivided profits, less expenses
and taxes
Bank notes outstanding
*
Due to other banks in Manila
Due to our own head office and
branches
Due to agents and correspondents .
Dividends due and unpaid
Individual deposits:
Time
At call
Current accounts
Deposit of insular treasurer:
(a) Local silver currency
(6) United S t a t e s m o n e y
(gold), $1,251,255.12 at 2..
Deposit of disbursing officers, insular funds:
(a) Local silver currency
(5) United S t a t e s m o n e y
(gold), $1,028,464,54 at 2 . .
Notes and bills rediscounted
Bills payable:
Domestic
Foreign exchange
Cashier's checks outstanding
Certified checks
Loans payable against securities
Liabilities other than those above.
Bills in hand for collection,
$451,682.
Total

1,000,000.00
593.672.36
453,218.32
87,868 47
2,281,258 29
35,671.22
1,994,152.2f
3,807,182.69
3,872,125.01
2,502,510.24
113,119.12
2,056,929.08

50,995.42
104,104.46
32,282.40
51,547.43

19,036,636.74

a Two pesos=$1.
I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 30th day of June, 1901.
For the Hongkong and Shanghai Banking Corporation:




W. ADAMS ORUM, Agent.

XLVII

XLVIII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Statement of condition of the lloilo (P. I.) agency of the Hongkong and Shanghai Banking Corporation.
Assets.
Loans and. discounts
Overdrafts
Stocks, securities, etc
Furniture and. fixtures
Other real estate and other mortsrasres owned
Due from other banks in Manila
Due by our own head office and
branches
Due by agents and correspondents.
Bills of exchange
United States gold coin, $43,905, at 2.
United States notes, $222,201, at 2 . . .
United States silver dollars, $11,100,
at2
United States fractional currencv,
$4,107.50, at 2
Gold bullion, other countries (lira 84.10, at 9.70).. $819.65
Gold bullion, other countries (lira 20.7)
7.00
Silver bullion, other countries
Mexican pesos
Spanish-Filipino pesos and half
pesos
Spanish-Filipino fractional c u r rency
Banco Espanol-Filipino notes
Checks and other cash items
Resources other than those above..
Bills for collection, $11,011.97.

Liabilities.

Pesos.
361,750.00
1,487.12

173,589.12
87,810.00
444,402.00
22,200.00
8,215.00

826.65
326,600.00
715,900.00
24,524.79
2,955.00
18.25

Capital stock
Reserve fund
Undivided profits, less expenses
and taxes
Bank notes outstanding
Due to other banks in Manila
Due to our own head office and
branches
Due to agents and correspondents
Dividends due and unpaid
Individual deposits:
Time
At call
Current accounts (local currency, $314,248.62; United
States currency, $26,736.98, at
2, $53,473.96, less amount due
to disbursing officer)
Deposit of insular treasurer:
(a) Local silver currency
(b) United States money
Deposit of disbursing officers, insular funds:
(a) Local silver currency, in current
gold
$70,422.55
(6) United States
money, account,
$103,759.49,at 2... 207,518.98
Notes and bills rediscounted
Bills payable:
Domestic
Foreign exchange
Cashier's checks outstanding:
Local currency)... $147,003.98
United States currency $430, at 2..
860.00
Certified checks
Loans payable against securities
Liabilities other than those above.

Total

2,170,277.93

Total

Pesos.

1,275,016.07

87,559.25
6,400.00

367, 722.58

4,494.55
277,941.53

147,863.98
834.32
2,445.65
2,170,277.93

I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 29th day of June, 1901.
For the Hongkong and Shanghai Banking Corporation.
W. H. BURFOKN, Acting Agent.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

XLIX

Statement of condition of the Banco Espanol Filipino at Manila, P. I.

Loans and discounts
j 5,406,004.00
Overdrafts
./.. i
Stocks, securities, etc
I
608,791.77
Furniture and fixtures
|
71,305.00
Other real estate and other mort- j
gages owned
!
,
Due from other banks in Manila.. J
Due by our own head office and
branches
Due by agents and correspondents.. 1,449,123.94
Bills of exchange
United States gold coin (Filipino
gold coin)
!
15,300.00
United States notes
!
6,100.00
United States silver dollars
!
United States fractional currency.. I
1.50
Gold bullion, other countries
'
Silver bullion, other countries
Mexican pesos
505,770.00
Spanish-Filipino pesos and half
pesos
Spanish-Filipino fractional cur2.57
rency
Banco Espanol-Filipino notes
1,980,065.00
Checks and other cash items
Resources other than those above..
Effects in custody
410,078.00
Total .

10,452,541.78

Capital stock
Reserve fund
Undivided profits, less expenses
and taxes
119,068.62
Bank notes outstanding
2,164,040.00
Due to other banks in Manila
275,666.91
Due to our own head office and
branches
Due to agents and correspondents.
Dividends due and unpaid
7,686.10
Individual deposits:
Time
|
978,390.34
At call
|
212,902.76
Current accounts
| 1,958,910.82
Notes in the treasury
j l, 980,065.00
Deposit of effects (goods)
|
410,078.00
Notes and bills discounted
Bills payable:
Domestic
Foreign exchange
Cashier's checks outstanding
Certified checks
75,403.6
Loans payable against securities...
Liabilities other than those above.
5,329.57

Total.

10,452,541.78

I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 30th day of June, 1901.
For El Banco Espanol Filipino, El Director de Tunio.
JOSE DE LA ROSA.

Statement of condition of the Ilo'do (P. 7.) branch of the Banco Espanol Filipino.
Pesos.
Loans and discounts
j
Overdrafts
j
Stocks, securities, etc
|
Furniture and fixtures
|
Other real estate and mortgages I
owned
'
Due from other banks in Manila... i
Due by our own head office and
branches
Due by agents and correspondents.
Bills of exchange
United States gold coin, 813,920, at 2.
United States notes, $14,777, at 2 . . . .
United States silver dollars, $1,200,
at 2
[
v
United States "fractional currency,
$53, at 2
Gold bullion, other countries
silver bullion, other countries
j
Mexican pesos
Spanish-Filipino pesos and half
pesos
Spanish-Filipino fractional currency
Banco Espanol-Filipino notes
Notes received from the head office.
Checks and other cash items
Effects in custody
Resources other than those above,
some accounts
Total .

Liabilities

Pesos.

Capital stock
'•
Reserve fund
Undivided profits, less expense
and taxes
19, 485.00
Bank notes outstanding
Due to other banks in Manila
Due to our own head office
;
Due to agents and correspondents.i
age
g
p i d j
d
nds d
Dividends due and unpaid
Individual deposits:
Time, one year
27,840.00
At call
29,554. 00
Current accounts
Deposits of effects (goods) . . .
Deposit of insular treasurer:
2,400.00
(a) Local silver currency
j
(h) United States money
\
106.00
Deposit of disbursing officers, insular funds:
65,000.00
(a) Local silver currency
(b) United States money
25,200.00 Notes and bills rediscounted
Bills payable:
71.65 i
Domestic
Foreign exchange
j
296,800.00 | Cashier's checks outstanding
Certified checks
i
30,578.00 j Loans payable against securities ..!
Liabilities other than those above .
3,435. 72 !
535,163.59
176,963. 16

.1 1,212,597.12

Total.

296,800.00
583.766.35
'.
(>, 700. 00
6,237.50
228,671.82
30,578.00

59,843.45
1,212,597.12

I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 30th day of June, 1901.
Por El Banco Espanol Filipino. El Director de Turno.
JOSE DK LA ROSA.

CUR 1901, PT 1




IV

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Statement of condition of the Manila (P. I.) branch of the chartered bank of India,
Australia, and China.
Assets.

Pesos.

Liabilities.

Loans and discounts
Overdrafts
Stocks, securities, etc
Furniture and fixtures
Other real estate and mortgages
owned
Due from other banks in Manila...
Due by our own head office and
branches
Due by agents and correspondents.
Bills of exchange
United States gold coin,$108,160,at2.
United States notes, 81,700,103, at 2.
United States silver dollars, $192,000,
d,t 2
.
United States fractional currency,
$96,687.29, at 2
Gold bullion, other countries, at
various rates
Silver bullion, other countries
Mexican pesos
Spanish-Filipino pesos and half
pesos
Spanish-Filipino fractional currency
Banco Espanol-Filipino notes
Checks and other cash items
Resources other than those above.
Charges on sundry bills for collections

1,839,685.07
1,186,203.32

Capital stock
Reserve fund
Undivided profits, less expenses
and taxes. This item, together
with $95,232.04, drawn on our
London office has been placed
to reserve fund against bad and
doubtful debts
Bank notes outstanding
Due to other banks in Manila
Due to our own head office and
branches
Due to agents and correspondents.
Dividends due and unpaid
Individual deposits:
Time
Current accounts
Current accounts, U n i t e d
Statesmoney, $37,029.48, a t 2 . .
Deposit of insular treasurer:
(a) Local silver currency
(6) United States m o n e y ,
!
$1,119,726.17, at 2
Deposit of disbursing officers, insular funds:
(a) Local silver currency
(&) United States m o n e y ,
$559,905.13, at 2
Notes and bills rediscounted
Bills payable:

16,150.34
302,931.23
1,736,328.37
128,778.05
196,261.90
216,320.00
3,400,206.00
384,000.00
193,374.58
53,657.69
2,173,000.00
1,438,381.00
32,101.51
9,800.00
7,095.50
924.71

Foreign exchange
Cashier's checks outstanding
Certified checks
Loans payable against securities
Liabilities other than those above.
13,315,199.27

Total

Total

Pesos.
302,000.00

174, 767.96

224,419.71
165,061.44
1,416,478.37
2,865,033.87
74,058.96
4,345,900.76
2,239,452.34
287,340. .
1,119,810.26

10,251.09
53,827.11
3,834.40
32,962.42
13,315,199.27

I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 30th day of June, 1901.
For the chartered bank of India, Australia, and China.
T. E. SANSOM, Agent, Manila.

Statement of condition of the Cebu (P. /.) branch of the Chartered Sank of India,
Australia, and China.
Assets.
Loans and discounts
Overdrafts
Stocks, securities, etc
Furniture and fixtures
Other real estate and other mortgages owned
Due from other banks in Manila . . .
Due by our own head office and
branches
Due by agents and correspondents.
Bills of exchange
United States gold coin, $2,425, at 2.
United States notes, $37,859, at 2 . . .
United States silver dollars, $6,387,
at 2
United States fractional currency,
$4,116.40, at2
:
Gold bullion, other countries
Silver bullion, other countries
Mexican pesos
Spanish-Filipino pesos and half
pesos
Spanish-Filipino fractional currency
9
Banco Espanol-Filipino notes
Resources other than those above;
stamps
Total

Pesos.

Liabilities.

Pesos.

100,000.00
149,809.04

Capital stock
Reserve fund
Undivided profits, less expenses
3,703.02
and taxes
Bank notes outstanding
Due to other banks in Manila
Due to our own head Office and
branches
Due to agents and correspondents.
Dividends due and unpaid
5,000.00 Individual deposits:
Time
4,850.00
At call
75,718.00
Current accounts
12,774.00 Deposit of insular treasurer:
(a) Local silver currency
8,232.80
(b) United States money
Deposit of disbursing officers, insular funds;
ii5,"38O."66"
(a) Local silver currency
(6) United States monev
126,796.00 Notes and bills rediscounted
Bills payable, domestic
2,646.31 Bills payable, foreign exchange...
385.00 Cashier's checks outstanding
Certified checks.
179.28 Loans payable against securities
Liabilities other than those above.
605,473.45

Total

4,943.71

230,662.21

45,000.00
324,467.53

400.00

605,473.45

I certify the above statements are correct and exhibit a true statement of the assets and liabilities
of this bank on the 29th day of June, 1901.
For the Chartered Bank of India, Australia, and China.
ALEX. G. HOWARD, Agent, Cebu.




REPOBT OF THE COMPTROLLER OF THE CURRENCY,

LI

Monte de Piedad y Caja de Ahorros de Manila.
RESOURCES.

LIABILITIES.

Loans on bonds, stocks, and certificates of deposit
Loans of pledges
Bonds, stocks, and other securities
owned
Banking houses, furniture, and fixtures
Due from other banks
Other real estate and mortgages
owned
Cash on hand:
Check and cash
United States gold
Spanish-Philippine bills
Mexican silver
Resources other than those above..

Capital stock
Surplus
Loan of t h e archbishop and Spanish-Philippine treasury of the
year 1884
Savings-bank deposits
Judicial deposits
Deposits without interest, including old current accounts
Undivided profits, less current expenses and taxes
Balance due from sale of pledges..
Due other banks
Liabilities other than those above.

Total

$141,275.00
647,593.00
36,313.00
140,973.55
10,689.33

1,000.00
200.00
4,810.00
1,562.07
172,302.43

Total

$243,978.92

95,000. O
C
699,099.12
52,869.23
15,909.86
25,098,43
23,516.25
1,246.57
1,156,718.38

1,156,718.38

E. and O. E.

.

MANILA, June 30, 1901.
J. PEREZ DE TAGLE, Accountant
The Director, EMILIO D. MORETA:

I certify that I have examined the above statements, and they seem to be correct.
FRANK A. BRANAGAN,

Treasurer of the Philippine Archipelago.

STATUTES OF HAWAII RELATING TO BAJSKING, ETC., NOT REPEALED BY THE ACT
OF CONGRESS APPROVED MAY 80, 1900, ENTITLED "AX ACT TO PROVIDE A GOVERNMENT FOR THE TERRITORY OF HAWAII."
CHAPTER 129.—Banking companies.

SEC. 2045. Charters of incorporation for the purpose of carrying on the business of
banking may be granted by the treasurer, by and with the advice and consent of the
governor, subject to the provisions of this chapter, in like manner as other charters of
incorporation may by law be granted.
SEC. 2046. Every such charter shall designate:
The name of the corporation.
The principal place of its business.
The amount of its capital stock.
The number of shares into which the capital stock is divided.
The names and places of residence of the incorporators.
The amount of stock subscribed by the incorporators.
The term of years during which the corporation shall exist.
The names and places of residence of the directors who are appointed for the first
year.
SEC, 2047. Before filing an application for any such charter the persons applying
for the same must subscribe a memorandum of association containing the following
particulars:
First. The name of the company, with the addition of the word "limited" at the
end of the name.
Second. The principal place of its business.
Third. The objects for which the corporation is established.
Fourth. A declaration of the liability of its members being limited.
Fifth. The amount of its capital and the number of shares into which such capital
is divided, and the amount of stock subscribed by the incorporators.
Sixth. Whether it is proposed to increase the amount of such capital.
Seventh. And also articles of association prescribing and defining the constitution,
business, and capital of the company; the amount, transfer, and forfeiture of shares;
the assessments or calls to be made on the stockholders; the appointment, qualifica' tion, remuneration, powers, and duties of directors and of officers, and such other
regulations as the subscribers of the memorandum may deem expedient.
SEC. 2048. Certified copies of the memorandum of association and articles of association shall be filed with the application for the charter.
SEC. 2049. Upon the granting of the charter the memorandum and articles of association shall bind the corporation and its members as if each member had executed
these instruments as deeds.



LII

REPORT OF THE COMPTROLLER OF THE CURRENCY.

SEC. 2050. The granting of the charter shall be conclusive as to the fact of the corporation having complied with the requirements of this chapter up to the date of the
issuing of such charter.
SEC. 2051. The corporation may, by passing special resolutions at general meetings, from time to time alter or add to the regulations contained in its articles, and
such regulations so altered or added shall be deemed of the same validity as if they
had been originally in the articles of association.
SEC. 2052. No charter shall be granted under the provisions of this chapter to any
company whose capital stock is less than two hundred thousand dollars.
SEC. 2053. At least se,venty-five per cent of the whole capital stock shall have been
subscribed, and at least fifty per cent of the whole capital of every such corporation
shall be paid in, before it shall be authorized to commence business, and if through
any cause such paid-in stock shall be diminished, the corporation shall, within
thirty days, increase the same to the amount required by this section, and in default
thereof shall be closed and its business wound up by a receiver appointed In due
process of law. Any proceedings which may be requisite for the purposes last aforesaid may be instituted by the treasurer or by any shareholder or creditor of the
corporation.
SEC. 2054. Whenever any shareholder or his assignee shall fail to pay any installment of the capital stock required to be paid in by the directors, and no other provision is made by the articles of association, the directors may sell the stock of such
delinquent shareholders, at public sale, in the city of Honolulu, after notice of such
sale has been given by publication thereof in the English language in a newspaper
published in the city of Honolulu, and the excess, if any, received upon such sale,
after deducting the amount due thereon and the expense of such sale, shall be paid
to such delinquent shareholders: Provided, That if no bidder can be found who will
pay for such stock the amount due thereon to the corporation, the amount thereof
paid in on such stock shall be forfeited to the corporation and such stock shall be
sold as the directors may order within six months from the time of such forfeiture,
and if not sold it shall be canceled.
SEC. 2055. It shall be lawful for any corporation formed under this chapter to provide in its articles of incorporation for increasing the capital from time to time by
consent of two-thirds of its shareholders by a special resolution, but no such increase
shall be valid until the increased capital shall be paid in and until notice thereof
shall have been given to the treasurer and a certificate has been issued by him specifying the amount of such increase of capital stock, and that he is satisfied that the
same has been paid in, and such certificate shall be advertised in the like manner
and for the like time as the original certificate authorizing the corporation to commence business; and such corporation may in like manner, by consent of two-thirds
of its shareholders, reduce its capital to any sum not below the amount required by
this chapter to authorize the formation of such corporation, nor below the amount
required for the payment of its outstanding obligations, nor shall such reduction be
made until the amount of the proposed reduction has been sanctioned by an order
of the supreme court or one of the judges thereof. When such sanction and special
resolution has been obtained the capital may be reduced, whether fully paid up
or not.
SEC. 2056. The treasurer shall examine into the condition of the corporation formed
under this chapter and ascertain the amount of money paid in on account of its capital, the name and place of residence of each director, and the amount of capital stock
which each director owns in good faith, and generally whether such corporation has
complied with the provisions of this chapter to entitle it to engage in the business of
banking; and if it satisfactorily appear to said treasurer that such corporation is lawfully entitled to commence the business of banking he shall deliver to such corporation a certificate stating that said corporation has complied with the provisions
required to be complied with before commencing tho business of banking, and that
such corporation is authorized to commence such business, and such certificate shall
be published in a newspaper published in the city of Honolulu for at least sixty days
after the issuing thereof and shall be conclusive evidence as to the fact of the corporation having complied with the requirements of this chapter up to the date of
such certificate.
SEC. 2057. Each stockholder of a corporation formed under this chapter is individually and personally liable for such portions of its debts and liabilities as the amount
of stock or shares owned by him bears to the whole of the subscribed capital stock
or shares of the corporation, and for a like proportion only of each debt or claim
against the corporation. And in the event of any judgment being obtained against
the corporation, and the assets thereof being insufficient to satisfy such judgment,
the court in which such judgment shall have been obtained, or any judge thereof,



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIII

may order execution to issue against the stockholders severally for the proportion of
the claim payable by each; or any creditor of the corporation may institute joint or
several actions against any of its stockholders for the proportion of his claim payable by each, and in such action the court shall ascertain the proportion of the claim
or debt for which each defendant is liable, and a several judgment shall be rendered
against each in conformity with such liability. If any stockholder pays his proportion of any debt due from the corporation, incurred while he was such stockholder,
he is relieved from any further personal responsibility for such debt, and if an action
has been brought against him upon such debt, it shall be dismissed as to him. The
liability of each stockholder is determined by the amount of stock or shares owned
by him at the time the debt or liability was incurred, and such liability is not
released by any subsequent transfer of the stock. The term " stockholder," as
used in this section, shall apply not only to such persons as appear by the books
of the corporation to be such, but also to every equitable owner of stock, although
the same appear on the books in the name of another. Stock held as collateral
security, or by a trustee, or any other representative capacity, does not make the
holder thereof a stockholder within the meaning of this section, so as to charge him
with any proportion of the debts or liabilities of the corporation, but the pledger or
the person or estate represented is to be deemed the stockholder as respects such
liability.
SEC. 2058. Every corporation authorized to carry on business by virtue of the provisions of this chapter before it commences business, and on the last Monday in
January and July in every year, shall make a statement in the form prescribed by
the schedule annexed to this chapter, or as near thereto as circumstances will admit,
which statement shall be verified by the oath of the president, secretary, or cashier;
and any person who shall swear to the said statement knowing the same or any part
thereof to be false shall be guilty of perjury in the second degree, and shall be liable
on conviction to all the penalties prescribed by law for such offense. A copy of such
statement shall be put up in some conspicuous place in the principal office and in
every branch or place where the business of the company shall be carried on, and
the directors shall cause the said statements to be published in Honolulu in the
English and Hawaiian languages in at least one weekly for three times and one daily
newspaper for one week.
If the corporation shall make default in compliance with any of the provisions of
this section, it shall be liable to a penalty not exceeding fifty dollars for every day
of default, and any director or manager permitting or allowing such default shall
be liable to a like penalty. All such penalties may be recovered before any district
magistrate.
SEC. 2059. The president and cashier of any corporation formed under this chapter
shall cause to'be kept at all times a full and correct list of the names and residences
of all the shareholders in the corporation, and the number of shares held by each,
in the office where its business is transacted. Such list shall be subject to the inspection of all the shareholders and creditors of the corporation during the regular business hours of the corporation.
A copy of such list, verified by the oath of the president or cashier, shall, on the
first Monday of September of each year, be filed in the office of the treasurer.
SEC. 2060. The treasurer and the registrar of public accounts ot the Territory shall,
not less than two nor more than four times in each year, make an examination into
all the affairs of any corporation formed under this chapter, and for that purpose
may examine any officer and agent of the same under oath, and shall make a full
and detailed report of the condition of the corporation to the governor, and no such
corporation shall be subject to any other visitorial powers except those which are
vested in the courts of justice.
SEC. 2061. The stockholders of any corporation formed under this chapter shall at
no time be allowed to be collectively indebted or liable to such corporation, either
as principal debtors or as sureties, or both, to an amount greater than three-fifths of
the capital stock actually paid in and remaining undiminished by losses or otherwise; nor shall the directors be so indebted or liable, except to such an amount and
in such manner as shall be prescribed by the by-laws of such corporation.
SEC. 2062. The capital stock of any corporation formed under this chapter shall be
divided into shares of equal value of an amount to be declared in the articles of
incorporation, and the said shares shall be assignable on the books of the corporation, in such manner as its by-laws shall prescribe; but no shareholder in any such
corporation shall have the power to sell or transfer any share held in his own right
so long as he shall be liable, either as principal debtor, surety, or otherwise to the
corporation for any debt w^hich shall have become due and remain unpaid, nor in
any case shall the shareholder be entitled to receive any dividend, interest, or profit



LIV

REPORT OF THE COMPTROLLER OF THE CURRENCY,

on such shares so long as such liabilities shall continue, but all such dividends, interest, or profit shall be retained by the corporation and applied toward the discharge
of such liabilities.
SEC. 2063. No corporation formed under this chapter shall take as security for any
loan or discount a lien upon any part its own capital stock, and no such corporation
shall be the purchaser of any part of its own capital stock, nor of the capital stock
of any other corporation formed under this chapter, or of any incorporated company
or partnership firm, unless such purchase shall be necessary to prevent loss from a
debt previously contracted in good faith, or unless in the case of the forfeiture of
stock for nonpayment of installments due thereon; and all stock thus purchased or
acquired shall be disposed of again within six months from the date of purchase
or acquisition.
SEC. 2064. The affairs of every corporation formed under this chapter shall be managed by not less than five nor more than eleven directors, subject to the provisions
herein contained. It shall be lawful for the corporation to prescribe by its articles
of association and qualifications of directors the time and method of their election
and the terms for which they shall hold office, and to define their powers and authorities, to provide for their removal from office, the filling of vacancies, and all other
matters in connection with their office and with the management of the business of
the corporation: Provided, That the directors elected or appointed shall be residents
of the Hawaiian Islands.
SEC. 2065. No person shall serve as a director who does not own in his own right
at least ten shares of the capital stock of said corporation; nor unless when appointed
or elected he shall take an oath that he will, so far as the duty devolves on him,
diiigently and honestly administer the affairs of such corporation, and will not
knowngly violate or willingly permit to be violated any of the provisions of this
chapter, and that he is the owner in good faith of the number of shares of stock
required by this chapter standing in his name on the books of the corporation, or
subscribed by him, and that the same is not in any way hypothecated or pledged as
security for any loan or debt. Such oath, subscribed by the person taking it and
certified by the officer before whom it is taken, shall be filed in the office of the
treasurer.
SEC. 2066. No corporation formed under this chapter shall at any time be indebted
or in any way liable to an amount exceeding the amount of its capital stock at such
time actually paid in and remaining undiminished by losses or otherwise, except on
the following accounts, viz:
First. On account of moneys deposited with or collected by such corporation.
Second. On account of bills of exchange or drafts drawn against money actually on
deposit to the credit of such corporation or due thereto.
Third. On account of liabilities to its shareholders for money paid in on the capital
stock or for dividends and reserved profits.
SEC. 2067. No part of the capital stock of a corporation formed under this chapter
shall, during the time it continues its business, be withdrawn either in the form of
dividends or otherwise.
SEC. 2068. Twice at least in every year the accounts of every corporation carrying
on business under the provisions of this chapter shall be examined by an auditor or
auditors, who shall be elected annually by the corporation in general meeting.
No shareholder nor officer of the corporation shall be capable of being elected an
auditor of such corporation.
An auditor on quitting office shall be eligible for reelection.
If any casual vacancy occurs in the office of any auditor the surviving auditor or
auditors (if any) may act; but if there is no surviving auditor the directors shall forthwith call a special general meeting of stockholders for the purpose of supplying the
vacancy or vacancies in the auditorship.
Every auditor shall have a list delivered to him of all J)ooks kept by the corporation, and shall at all reasonable times have access to the books and accounts of the
corporation; and any auditor may, in relation to such books and accounts, examine
the directors or any other officer of the corporation.
The auditor or auditors shall make a report to the stockholders on the accounts
examined by him or them, and on every balance sheet laid before the corporation in
general meeting during his or their tenure of office; and in every such report shall
state whether in their or his opinion the balance sheet referred to in the report is a
full and fair balance sheet, properly drawn up, so as to exhibit a correct view of the
state of the corporation's affairs as shown by the books of the corporation, and such
.eport shall be read before the corporation in general meeting.
The remuneration of the auditor or auditors shall be fixed by the general meeting
appointing such auditor or auditors.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

LV

SEC. 2069. Every balance sheet submitted to the annual or other meeting of the
members of the corporation shall be signed by the auditor or auditors and by the
president, secretary, or manager (if any), and by the directors of the corporation, or
three of such directors at the least.
SEC. 2070. Every corporation formed under the provisions of this chapter shall, in
addition to the powers conferred upon bodies corporate by the provisions of chapter
one hundred and twenty-seven, have the following powers, subject to all the restrictions and provisions herein contained, to carry on the business of a bank of discount
and deposit in this Territory and to make loans of money on cash, credit accounts,
promissory notes, bills of exchange or letters of credit, and other securities of the
like nature. And it shall also be lawful for the corporation to deal in money, bullion,
specie, precious metal, and exchanges of and with all countries, and in notes, bills, or
other securities for money, and generally to transact all such other business as is or
shall or may at any time hereafter be usual or lawful for establishments carrying on
banking in all its branches, except as a bank of issue, to do or transact; also to take
security by hypothecation of bills of lading for the .payment of any bill or bills of
exchange drawn against any shipment of any description of produce, bullion, or merchandise shipped for exportation to foreign ports, or from foreign ports to any port of
this Territory, or from one port to another in this Territory. Also to make any advances
of money to the proprietors of any sugar mill or sugar or rice plantation on condition
of receiving in payment as security only for such money the crops of sugar and other
produce of such proprietor. And also to accept and take such real estate as shall be
mortgaged to it in good faith by way of security, such as shall be conveyed to it in
satisfaction of debts previously contracted, such as it shall purchase at sales under
judgments, decrees, or mortgages held by the corporation, or shall purchase to secure
debts due to it; but no such corporation shall hold the possession of any real estate
under mortgage or the title and possession of any real estate purchased to secure any
debts due to it for a longer period than five years. It may hold and dispose of every
kind of personal property, chattels, wares, and merchandise, franchises or incorporal
rights and easements which it may have taken in good faith as security in the ordinary course of its business, as the interest of the corporation may require. The
corporation shall not undertake or be employed in any commercial, agricultural,
manufacturing, or common-carrier business; and its right to hold and dispose of
property acquired from securities or in payment of debts shall not be construed to
authorize the bank to undertake, engage in, or carry on any such business as last
above mentioned.
SEC. 2071. If for any reason any corporation formed under this chapter desires to
disincorporate and wind up its affairs, it shall present a petition to the treasurer,
together with a certificate setting forth that at a meeting of its stockholders, called
for that purpose, it was decided by a vote of three-fourths or more of the stockholders to dissolve the corporation, which certificate shall be signed by the presiding
officer and secretary of such meeting. The treasurer shall enter such petition and
certificate of record in his office, and after thirty days' notice, by publication in
Hawaiian and English in two newspapers published in Honolulu, shall proceed to
consider the same, and if satisfied that the vote certified has been duly taken and
that all debts due by the said corporation have been paid and discharged he shall
declare the corporation dissolved.
SEC. 2072. Unless other persons are appointed by some court of competent jurisdiction in pursuance of due process of law, the directors of the corporation at the
time of the dissolution shall continue to act as trustees of the stockholders, and shall
have full power to settle and wind up the affairs of the corporation and distribute
the proceeds among the stockholders pro rata.
SEC. 2073. So much of chapter one hundred and twenty-seven as relates to banking corporations, and all acts and parts of acts of the legislature in so far as they may
€onflict with the provisions of this chapter, are hereby repealed.
SEC. 2074. This chapter may be cited in all proceedings and for all purposes as the
banking act of eighteen hundred and eighty-four.
SEC. 2075. The schedule hereinbefore referred to:
The banking act of eighteen hundred and eighty-four.
Return pursuant to section fourteen of the said act.
The capital of the company is
, divided into
shares of
each.
The number of shares issued is
.
Assessments to the amount of
per share have been made, under which the
sum of
has been received.
The liabilities of the company on the first day of January (or July) were
.
Debts owing to sundry persons by the company:
On judgment
.



LVI

REPORT OF THE COMPTROLLER OF THE CURRENCY.

On specialty
On notes or bills
.
On simple contracts
.
On deposits
.
On estimated liabilities
.
The assets of the company on that day were:
Government securities (stating them)
.
Bills of exchange and promissory notes
.
Cash on hand
.
Other securities
.
NOTE TO CHAPTER 129.—Sections 2035-2075 are S. L. 1884, oh. 23.
CHAPTER 135.—Interest.

SEC. 2139. When there is no express contract in writing fixing a different rate of
interest, interest shall be allowed at the rate of six per centum per annum for all moneys
after they become due on any bond, bill, promissory note, or other instrument of
writing, for money lent, for money due on the settlement of accounts, from the day
on which the balance is ascertained, and for money received to the use of another
from the date of a demand made.
SEC. 2140. Interest at the rate of six per centum per annum, and no more, shall be
allowed on any judgment, recovered before any court in this Territory, in any civil
suit.
SEC. 2141. It shall in no case be deemed unlawful to stipulate by written contract
for any rate of interest not exceeding one per centum per month, provided the contract to that effect be signed by the party to be charged therewith.
SEC. 2142. No action shall be maintained in any court of this Territory to recover a
higher rate of interest than one per centum per month upon any contract made in this
Territory: Provided, however, That this section shall noc be held to apply to contracts
for money lent upon bottomry bonds, or upon other maritime risks, nor upon contracts made prior to the passage of this chapter.
SEC. 2143. No action shall be maintainable in any court of this Territory to recover
compound interest upon any contract whatever.
NOTE TO CHAPTER 135.—Sections 2139-2142 are S. L., 1898, act 4; section 2143 is
C. L.; sections 1480-1484. Cases in Hawaiian reports: Jones v. Wright, 8 Haw., 618;
Bolte v. Akau, 8 Haw., 743; Herblay v. Norris, 8 Haw., 338.
REAL AND PERSONAL PROPERTY TAX.

SEC. 817. Except as herein provided, all real property and all personal property
within the Territory shall be subject to an annual tax of one per cent upon the full
cash value of the same.
CORPORATION AND PARTNERSHIP SHARES NOT TAXABLE TO SHAREHOLDERS.

SEC. 830. The property of a company shall be assessed to the company under its
corporate or firm name, and the individual stockholders or members thereof shall
not be liable to be assessed in respect of their individual shares or interest in such
companies.




APPENDIX.

CUR

1901,

PT




1-

DIGEST OF NATIONAL BANK DECISIONS.
CONTENTS.
Page.
ABATEMENT
ACCOMMODATION PAPER
ACTIONS
AGENT OF SHAREHOLDERS
APPEAL
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
C R I M I N A L LAW
DEPOSITS
D E P U T Y COMPTROLLER
DIRECTORS
D I S T R I C T ATTORNEY
DIVIDENDS
ESTOPPEL
EVIDENCE
EXECUTION
EXPIRATION
EXTENSION
F A L S E ENTRIES
F O R F E I T U R E OF CHARTER
FORGERIES
GUARANTY
INCREASE OF CAPITAL STOCK
INDICTMENT
INJUNCTION




17
17
19
23
24
25
45
48
51
51
52
52
56
56
58
61
66
66
70
78
79
80
81
81
95
101
101
101
101
102
106
110
Ill
Ill
Ill
114
114
117
120
120
122

INSOLVENT BANKS
INTEREST
JURISDICTION
LEASE
.
L I A B I L I T Y OF BANK
LIEN...
LIMITATION OF ACTIONS
LIQUIDATION
LOANS
MANDAMUS
MARRIED WOMEN
MORTGAGE
N EGOTIABLE PAPER
NOTARY PUBLIC
NOTICE
OATH OF DIRECTOR
OFFICERS
OFFSET
P A S S BOOK
P L A C E OF BUSINESS
POST NOTES
P O W E R S OF BANK
PRACTICE
PREFERENCE
P R E F E R R E D CLAIMS
PRESIDENT
R E A L ESTATE
RECEIVER
R E D U C T I O N OF CAPITAL STOCK . . .
R E P O R T OF CONDITION
RESIDENCE
RESTRAINING ACTS . „
SAVINGS BANKS
SHAREHOLDERS
SPECIAL DEPOSITS
TAXATION
TRANSFER OF STOCK
ULTRA VIRES
USURY
VICE-PRESIDENT
VOTING

3

124
131
133
143
144
149
150
151
152
155
156
156
160
167
168
171
171
185
191
191
192
192
195
197
204
208
208
211
217
217
218
218
218
218
222
226
248
254
257
266
266

TABLE OF CASES.
Pao

Aberdeen, F i r s t National Bank of, v.
Andrews et al
79,193, 210
Aberdeen, First National Bank of, v. Chehalis County et al
229,244
Adair, Tax Collector, v. Kobinson et a l . . .
232
Adams v. Daunis
137
Adams v. Mayor, etc., of N ashville
232
Adams v. Spokane Drug Company
188
iEtna National Bank v. The Fourth National Bank
95
Agnew v. United States
88
Alabama Iron and Railway Company v.
Austin
110,142
Alabama National Bank v. Halsey
162
Albany, National Albany Exchange Bank
of,v!Hills e t a l
240,242
Albany City National Bank v. Maher, Receiver, etc
240
Albany, Supervisors of, v. Stanley
79
Alberger v. National Bank of Commerce..
200
Albuquerque National Bank v. Perea . . . . 226, 230
Aidrich et al., I n r e
240
Aldrich v. Chemical National Bank
148
Aidrich V.Campbell
40
Aldrich v. McClaine
40, 42,151
Aidrich v. Skinner
40,150
Aldrich v. Yates
38
Allen v. F i r s t N ational Bank of Xenia
153
Allentown, F i r s t National Bank of, v.
Hoch
52,254
Allentown, First National Bank of, v.Rex.
225
Allentown National Bank v. Trexler
165
Alves v. Henderson National Bank
258
American Exchange National Bank v.
Crooks
170
American Exchange National Bank ?;.
Dugan
170
American Exchange National Bank v.
Oregon Pottery Company
> ] 84
American National Bank v. Loye
118
American National Bank v. National Wall
Paper Company
104
American National Bank v. Williams
105,133
American Surety Lo.upany v. Pauly
50
Anderson v. Alton National Bank
77
Anderson v. First N ational Bank
255
Anderson v. Gill
71
Anderson v. Kjssam
174
Anderson v. Line
29
Anderson v. Pacific Bank
200
Anderson v. PhiladelphiaWarehouseCompany
31, 219
Andrews v. Varrell
186
Anheuser-Busch Brewing Association v.
Clayton
74
Anniston National Bank v. School Committee of Town of Durham
170
Armour Packing Company v. Davis
77
Armstrong v. American Exchange National Bank
125
Armstrong v. Bank
128
Armstrong v. National Bank of Boyertown
75
Armstrongs. Chemical National Bank . . .
68,
149,154,199
Armstrong v. Ettlesohn
216
Armstrong, I n re
71,127,199
Armstrong v. Second National Bank of
Springfield
52,192
Armstrong v. Stanage
53,124,213
Armstrong v. Trautman et al
141
Armstrong v. Warner
190
Armstrong v. Wood
53, 213
Arnau v. F i r s t National Bank
25




Arnot v. Bingham
78
Aspinwall v. Butler
53,54,106
Atchison, Exchange National Bank of, v.
Washita Cattle Company
138
Atlanta National Bank v. Davis
76
Atlantic National Bank v. Harris
80
Atlas National Bank v. Holm et al
163
A tlas National Bank v. Savery
134
Auburn, National Bank of, v. Lewis
259
Auburn Savings Bank v. Hayes
126,198
Austin v. The Aldermen....'
238
Auten v. U. S. National Bank of New
York.
182

I
I
|
I
j
1
,
!
I
|

|
I
I

Babcockv. Wolf
195,255
Bacon v. United States
92
Bain et al. v. Peters
126
Bailey v. Mosher
172,180
Bailey v. Sawyer
27,31
Bailey v. Tillinghast
143, 221
Baker v. Ault et al
122
Baker v. Beacli et al
36
Baker v. Old National Bank of Providence, R. I., et al
37
Baker v. Reeves et al
37
Baker v. Texarkana National Bank et al.
24
Balbach et al. v. Frelinghuysen
73, 96,186, 205
Balch v. Wilson
188
Baldwin v. Canfield
209
Baldwin v. State National Bank of Minneapolis
158
Ballinger National Bank v. Bryan
157
Baltimore, Central National Bank of, v.
Con necticut Mutual Life Insurance Company
152
Baltimore, National Exchange Bank of,
v. Peters et al
179
Baltimore, Third National Bank of, v.
Boyd
144,148
Ban go r, Merchants' National Bank of, v.
Glendon
106
Bank v. Armstrong
147,194, 215
Bank of Bethel v. Pahquioque Bank
19,
20,110,124,134, 212
Bank v. Kennedy
211
Bank v. Lanier
149,153,248,254
Bank v. Latimer
201
Bank v. Mclntyre
80
Bank v. Zent..
225
Bank of the Metropolis v. First National
Bank of Jersey City
168
Bank of Redemption v. Boston
227, 229,230
Barbour v. National Exchange Bank
191
Barhorst et ux. v. Armstrong et al
123
Barnes v. Swift
141
Barnett v. Muneie National Bank
257,258
Bartlett v. Woodbine Savings Bank
170
Bashaw v. United States
101
Batchelor v. United States
83
Bates, I n re
200
Bates v. Paddock
67
Bates v. Salt Springs National Bank
149
Bath Savings Institution v. Sagadahoc
National Bank
102, 253
Bayor v. American Trust and Savings
Bank
127
Beal v. Essex Savings Bank
219
Beal v. National Exchange Bank of Dallas
76
Beal v. City of Somerville
205
Beard v. Independent District of Pella ..
208
Beardsley v. Webber
160
Beaver v. Beaver
99
Becker's Investment Agency v. Rea
153
Beckham v. Shackelford
214

5

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
Bell v. Hanover National Bank
68
Bellville, People's Bank of, v. Manufact u r e r s ' National Bank of Chicago
118
Benton v. German-American National
Bank
168
Benton v. Holmes
186
Berney National Bank v. Guyon
200
Bickford v. F i r s t National B'ank of Chicago
59,61
Bird's Executors v. Cockrem
216
Birmingham National Bank v. Bradley
21,65,108,137
Birmingham National B a n k v. Mayer . . .
127
Bissell v. The F i r s t National Bank of
Franklin
173
Blackmore v. Guarantee Company of North
America et al
49
Blackmore v. Woodward et al
32
Blame, F i r s t National Bank of, v. B l a k e . . 171,172
Blair v. F i r s t National Bank of Mansfield.
171
Blanchardv. Commercial Bank of Tacoma. 107, 215
Bletz v. Columbia National Bank
134
Bloch v. Creditors
65
Board of County Commissioners of Rice
County -p. Citizens' National Bank of
Faribault
235
Board of Commissioners of Montgomery
County v. Elston
66, 227
Bobs v. People's National Bank
257
Boone County National Bank v. Latimer.
199
Booth et al. v. Welles
205
Boston, Central National Bank of, v. Hazard et al
213
Boston, City of, v. Beal
213, 214, 233
Boston National Bank v. Jose
160
Boston National Bank v. City of Seattle..
233
Bosworth v. Jacksonville National Bank.
147
Bowdell v. Farmers and Merchants' National B a n k of Baltimore
28, 218, 248
Bowden v. Johnson
27, 31,107, 218, 240
Bowden v. Santos
249
Bowenv. Needles National Bank 19, 61,119,196, 256
Bowman et al. v. Clark et al
74
Bowman v. F i r s t National Bank
206
Boyer v. Boyer
228, 230, 231
Boy kin v. Bank of Fayetteville
77
Boynoll v. State
227
Brayden's Estate, I n re
55
Bradley v. The People
227
Brahani v. First National Bank
164
Branch v. T h e United States
78, 98
Branch v. United States National B a n k . .
78
Breese v. United States
94
Bressler v. Wayne County
241
Breyfogle et al. v. Walsh et al
122
Briggs v. Spaulding
176,180, 212
Brinckerhoff v. Bostwick
20,135, 179
Britton v. Evansville National Bank
220
Brodrick v. Brown
32
Brooke v. Tradesmen's National B a n k . . - .
63
Brown v. Carbonate Bank of Leadville . . .
203
Brown v. Ellis
36, 41,3 06
Brown v. Farmers and Merchants' National Bank
103,184
Brown v. Finn
218
Brown v. F i r s t National Bank
104
Brown v. French
104,123, 216, -J43
Brown v. Marion National Bank
265
Brown v. Smith
142
Brown v. The Second National Bank of
Erie
262
Biown v. Tillinghast
55
Bruner v. F i r s t National Bank
131
Buchanan et al. v. Drovers' National Bank
of Chicago
258
Buchanan County, F i r s t National Bank
of, v. Deuel County
137,156
Buffalo County National Bank v. Gilcrest.
24
Buffalo, Farmers and Merchants'National
Bank of, v. Rogers
196
Buffalo German Insurance Company v.
Third National 15ank
150
Buie v. Commissioners of Fayetteville
243
Bullard v. Bank
52,149, 248
Bundy v. Cocke
34
Bundy v. J ackson
250
Bunt v. Rheum
122




Page.
Burbage v. American National Bank
171
Burlington, Howard National Bank of, v.
Loomis
158
Burnham et al. v. F i r s t National Bank of
Leoti
134
Burrill v. President, Directors, etc., of t h e
NahantBank
179
Burroughs v. Tradesmen's National B a n k .
64
Burrows v. Niblack
194
Burrows v. State
63
B u r t v. Bailey
219
B u r t v . Richmond
222
Burtnett, Administrator, v. The F i r s t
National Bank
96
Burton v. Burley
192
Bushnell v. Leland
36
Bushnell v. The Chautauqua County
National Bank
'.
192
Butler, Receiver, v. Aspinwall
29
Butler et al. v. Cockrill
103,127,149
Butler v. Coleinan
47,197
Butler v. Demmon
47
Butler v. Eaton
25, 54, 218
Butler v. Mixter
47
Butler v. Poole
20, 28
Butler??. Whitney
47
C.
Cadiz, Bank of, v. Sleraons
102
Cadle v. Baker
103
Cadle v. Tracy
134
Cady v. Case
64
Cake v. The F i r s t National Bank of
Lebanon
263
California Bank v. Kennedy
43,141, 221
Caniden, National State B a n k of, v.
Pierce
232
Cameron v. F i r s t National Bank
154
Campbells F i r s t National Bank
184
Caniield v. The State National Bank of
Minneapolis
154
Carlisle, F i r s t National Bank of, v• Graham
148
Carson et al. v. Commercial National
Bank, Independence, Kans
42
Carthage, City of, v. F i r s t National Bank
of Carthage
232
Case v. Bank
20, 31, 249
Case v. Citizens' Bank of Louisiana . . 197,198, 251
Case, Receiver, v. Small
28, 212. 213
Case v. Terrell
135, i l l
Casey v. Adams
19
Casey v. (Jalli
25, 26, 31, 80, 81,103,106
Casey v. La Society de Credit Mobilier de
Paris
102,125,198,254
Castle v. Corn Exchange B a n k
., .
65
Castles v. City of New Orleans
232
Cecil National Bank v. T h u r b e r
122
Central National Bank v. P r a t t
257
Central National Bank v. Richland National Bank
* 45
Central National Bank v. Spratlen
147
Central National Bank v.United States 226,229, 230
Centralia, F i r s t National Bank of, v. Marshall
152
Charleston v. People's National Bank
54, 226
Charlotte, F i r s t National Bank of, v. National Exchange Bank of Baltimore
192
Charnley v. Sibley et al
189
Chase National Bank v. F a u r o t
161, 262
Chattahoochee National Bank v. Schley . .
222
Chattanooga, National Bank of, v. Mayor.
232
Chemical National Bank v. A r m s t r o n g . . .
68,
132,147,194. 214
Chemical National Bank v. Bailey
125
Chemical National Bank v. City Bank
137,147
Chemical Bank v. City Bank of P o r t a g e . .
22
Chemical National Bank ?;. Hartford Deposit Company
126,143,144, 215, 216
Chemung, National Bank of, v. Elmira
237
Chesapeake Bank v. The F i r s t National
Bank of Baltimore:
78
Chetwood v. California National B a n k . . .
23
Chetwood, E x partu
23, 216
Chicago, First National Bank of, v. Corbin
140
Chicago, First National B a n k of, v. Reno
County Bank.'.
71

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
Chicago, F i r s t National B a n k of, v. Steinway et al
138
Chicago, German National B a n k of, v.
Bimball
241
Chicago, M e r c h a n t s ' N a t i o n a l B a n k of, et
al. v. Sabin e t al
Ill
Chicago Railway E q u i p m e n t Company v.
Merchants' Bank
."...
167
Chipman v. N i n t h National B a n k
99
Chism v. F i r s t National B a n k
64
Chrystie et al. v. F o s t e r .
183
Chubb v. U p t o n
54
Cincinnati, Hamilton a n d Dayton Railroad Company v. Metropolitan National
Bank
21
Cincinnati, Union National B a n k of, v.
Miller, T r e a s u r e r of H a m i l t o n County,
Ohio
138
Cincinnati Oyster and F i s h Company v.
National Lafayette B a n k
....
60
Circle ville, F i r s t National B a n k of, v.
B a n k of Monroe
72
Citizens' Bank v. Houston
76
Citizens' National B a n k v. Dowd
125, 206
Citizens' National B a n k v. W i n t l e r
161
City National B a n k v. P a d u c a h
227
City National Bank v. P h e l p s
80
City National B a n k v. Thomas
118
Cla'asen, I n re
87
Claasen v. United States
87
Claffin v. Houseman
134
Clarion, F i r s t National B a n k of, v. Brenneinan's E x e c u t o r s
Ill
Clarion, Second National B a n k of, v. Morgan
257, 262
Clarke National B a n k v. T h e B a n k of
Albion
59,173
Clemnier v. Drovers' National Bank
96
Cleveland, Cincinnati, Chicago and St.
Louis R a i l w a y Company v. H a w k i n s et
al
:
.'
225
Cleveland, Brown &• Co. v. Shoeman
67
Cleveland, Commercial B a n k of, v. Simmons
137
Clews et al. v. Bardon et al
178
Clinton, Iowa, N a t i o n a l B a n k of. v. Dors e t t P i p e a n d P a v i n g Company
197
Cochecho National B a n k v. Haskell
102,173
Cochran v. United States
112, 218
Cockrill v. Abeles et al
181, 210
Cockrill v. Butler et al
181
Cockrill v. Cooper et al
181
(Joffey v. T h e National Bank of Missouri. 80, 222
Coffin v. The U n i t e d States
83, 84, 86, 121
Collins v. Chicago
226
Collins v. State
95
Colt v. Brown
186
Columbia National B a n k v. Rice
103,108,170
Columbia National B a n k v. W e s t e r n I r o n
and Steel Company
22,162
Columbus, T h e First National Bank of,
plaintiff in error, v. Garlinghouse et a l .
263
Commercial Bank of P e n n s y l v a n i a v.
Armstrong
74
Commercial National Bank v. A r m s t r o n g .
75
Commercial National Bank v. Canniff
25
Commercial N a t i o n a l B a n k 'v. F i r s t National B a n k
64
Commercial Bank, I n r e
97, 200
Commercial National B a n k v. K i n g
County
233
Commercial N a t . Bk. e t al. v. P i r i e et al . .
119
Commercial National B a n k v. City of
Seattle
".
233
Commissioners of Rice County v. Citizens'
National Bank of F a r i b a u l t
227
Commissioners of Silver Bow County v.
Davis
241
Commonwealth v. Bank of K e n t u c k y
233
Commonwealth v. Barry
83
Commonwealth v. Deposit B a n k
233
Commonwealth v. F a r m e r s ' Bank
233
Commonwealth v. Felton
82,134
Commonwealth v. M a n u f a c t u r e r s and Mechanics' Hank of Philadelphia
232
Commonwealth v. M e r c h a n t s and Manuf a c t u r e r s ' National B a n k
234




Page.
Commonwealth v. Frankfort National
Bank
233
Commonwealth v. State National B a n k . . .
233
Commonwealth v. Tenney
82
Commonwealth Bank v. Clark.
209
Commonwealth ex rel. T o r r e y v. K e t n e r . . 82,134
Concord, F i r s t N a t i o n a l B a n k of, v. Hawkins
39, 43,105
Concordia, F i r s t National Bank of,
Rowley
261
Congdon & Co. v. Beard
172
Conklin v. The Second National Bank . . . 52, 248
Connaway, Receiver, In re
47
Connecticut River Banking Company
et al. v. Rockbridge County
215
Consolidation l^ational Bank v. Fidelity
and Casualty Company of New York . .
49
Continental National Bank v. Eliot National Bank et al
45
Continental National Bank v. McGeoch.. 129, 181
Con way v. Halsey
20, 179
Conzman v. First National Bank
232
Cooke v. The State National Bank of
Boston
59
Cook County National Bank v. United

States.

185, 204

Cooper Insurance Company v. H a w k i n s . .
255
Cooper v. Hill
172
Cooper v. Leather Manufacturers' National Bank
140
Corcoran v. Batchelder
152
212
Corn Exchange Bank v. Hlye
Corn Exchange Bank v. Mechanics' National Bank of Newark, N. J
46
Corwine et al. v. Thompson National Bank
of Putnam et al
211
County Commissioners v. Farmers and
Mechanics' National Bank of Frederick. 227, 241
County of Lancas er v. Lancaster County
National Bank
Covington City National Bank v. Commercial Bank
170
Covington, Ky., Farmers and Traders'
National Bank of, v. Greene et al
107
Covington, City of, v. First National Bank
233
Covington, City of, v. German National
Bank
233
265
Cox v. Beck et al
221
Cox v. Elmendorf
Cox v. Montague
34
Cox v. Robinson
194
204, 206
Cragie et al. v. Hadley
Cragie v. Smith
74
Crane v. Fourth Street National Bank
Creveling et al. v. Bloomsbury National
Bank
Crocker v. F i r s t National Bank of Chetopa
257
Crocker v. Marine National Bank of New
137
York
209, 210
Crocker v. Whitney
21, 98
Crook v. First National Bank
138
Cruikshank v. Fourth National Bank
230
Cummings v. National Bank
D.
Daggs v. Phoenix National Bank
133
Dakota, National Bank of, v. Taylor
250
Dallas, National Exchange Bank of, v.
73
Beal
Danforth et al. v. National State Bank of
El izabeth
257
Darby v. Berney National Bank
174
Davenport Bank v. Davenport
228
Davenport National Bank v. Mittelbuscher, Collector, et al
79
Davis v. Cook
134,218
Davis v. Elinira Savings Bank
200, 201,203
Davis v. Essex Baptist Society
27,218
Davis v. Industrial Manufacturing Company
187
190
Davis v. Knipp
257
Davis v. Randall
28, 218
Davis, Receiver, v. Stevens
Davis v. Watkins
Davis v. Weed

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Paga
Dearborn v. T h e Union National B a n k of
Bru. swick
67
Dearborn v. Washington Savings B a n k . .
97
Decatur, F i r s t National B a n k of, v. Johnston
198
Decatur, F i r s t N a t i o n a l Bank of, v. P r i e s t
146
Decorah, F i r s t National B a n k of, v.
Holan
162
D e H a v e n v. K e n s i n g t o n N a t i o n a l B a n k . .
148
Delano v. B u t l e r
26, 53, 54
Delaware, L a c k a w a n n a and W e s t e r n Railroad Company v. Oxford I r o n Company
149
Denton v. B a k e r
'. 216, 217
Denver, A m e r i c a n National B a n k of, v.
National Benefit a n d Casualty Company
et al. (Wiswall, intervene!)
214
Denver, F i r s t N a t i o n a l B a n k of, v. W i l d e r .
167
Deposit B a n k v. F r a n k l i n County
235
Des Moines N a t i o n a l B a n k v. H a r d i n g . . .
157
D e W e e s e v . Smith
39,43
D i t t y v. Dominion National B a n k of Bristol, Va
131,147
Dooley v. Hadden
124
Dooley v. Pease
48
Dorchester, F i r s t National Bank of, v.
Smith
261
Dorsey v. United States
92
Doty v. F i r s t National Bank
252
Doud et al. v. National P a r k Bank
117
Dougherty v. Hoifstetter
160
Dow v. I r a s b u r g h National Bank of Orleans
138
D o w e t a l . v . United States
89
D r a k e s . Rolio
186
Dresser v. Traders' National Bank
255
Driesbach v. National Bank
258
Drovers' National Bank v. Blue
162
Dumond v. Merchants' National Bank
145
Dumont v. F r y
150
Duncan v. F i r s t National Bank of Mount
Pleasant
132
D u r k e e v. National Bank
100
Dutton v. Citizens' National Bank
235
Dutton v. F i r s t National Bank
235
Dygert v. Vermont Loan and T r u s t C o . . .
266
E.
Eans v. Exchange Bank
80
Earle v. Carson
42
Earle v. Conway
48
Earle v. Coyle
39
Earle, I n re
70
Earle v. Miller
191
E a r l e v . Pennsylvania
47,48
Earle v. Rogers et al
43
E a s t River Nation al Bank v. Oove
145
Eastern Townships Bank v. Vermont National Bank of St. Albans and A n o t h e r .
154
Eaton v. Pacific National Bank
124
Eaton v. Union County National B a n k . . .
234
Eccles v. Drovers and Mechanics' National
Bank
216
Elder v. F i r s t National Bank of O t t a w a . .
153
E l k h a r t , F i r s t National Bank of, v. Armstrong
72
E l k h a r t National Bank of E l k h a r t , Ind.,
v. N o r t h w e s t e r n Guaranty Loan Co. of
Minneapolis, Minn., et al
36,141
Ellisv.Little
212
Ellis v. F i r s t National Bank of Olney . . . .
258
El Paso National Bank v. Fuchs
147,190, 224
El wood y. F i r s t National Bank
151
Emmerling v. First National Bank
256
Eno, l u r e
134
Evansville Bank v. Britton
231
Evansville, First National Bank of, v.
Fourth National Bank of Louisville
144,168
Evansville National Bank v. Metropolitan
Natioual Bank
250
E v a n s v. United States
120
Erisman v. Delaware County National
Bank
18
Exchange National B a n k v. Clement
47
Exchange National Bank v. Johnson et a l .
165
Exchange National Bank v. Wolverton . .
160
E x e t e r National Bank v. Orchard
261,262




Page.
F.
F a i r b a n k s v. M e r c h a n t s ' National Bank .
171
Fairhaven, National Bank of, v. T h e Phoenix Warehousing Company
51,102, 218
Fallkill National B a n k v. Sleight
157
F a r m e r s ' Bank v. Board of Councilmen of
City of Frankfort
233
F a r m e r s ' Bank v. City of Henderson
233
F a r m e r s ' Bank v. F r a n k l i n County
233
Farmers' National B a n k v. B a c k u s .
196
Farmers' National Bank v. Dearing
258
F a r m e r s ' National Bank v. Thomas
18
F a r m e r s and Mechanics' Bank v. Baldwin
254
F a r m e r s and Mechanics' B a n k v. Dearing
78,257
F a r m e r s and Mechanics' Bank v. Hoagland
260
F a r m e r s and Merchants' National Bank
v. Novitch
165
Farmers and Merchants' National Bank
v. Smith
255
F a r m e r s and Merchants' National Bank
v. Waco Electric Railway and L i g h t
Company
24, 46,103,128,149,154,162, 215
F a r m e r s a n d T r a d e r s ' National B a n k v.
Connor
255
F a r m e r s and Traders' National Bank v.
Hoffman
234
F a r m e r s and T r a d e r s ' National B a n k v.
Snodgrass
118
F a y e t t e County, National B a n k of, v.
Dushane
'
263
Fidelity Safe Deposit and T r u s t Company
v. A r m s t r o n g
143
Fifth National Bank v. Armstrong, etc . .
75
Fifth National Bank v. Central National
Bank
64
F i n n v. Brown
27,103
111
F i r s t National Bank v. Allen
81
F i r s t National Bank v. Anderson
F i r s t National Bank v. A r m s t r o n g
73,75
234, 235
F i r s t National Bank v. A y e r s
234
F i r s t National Bank v. Bailey
157
F i r s t National B a n k v. Bayliss
166
F i r s t National Bank v. Bonner
232
F i r s t National Bank v. Brodhecker
F i r s t National Bank v. California National
109
Bank
158
F i r s t National Bank v. Carter
24
F i r s t National Bank v. Cass County
163
F i r s t National Bank v. Cecil
'.
235
First National Bank v. Chehalis County160
F i r s t National Bank v. Chilson
F i r s t National B a n k v. City N a t i o n a l
Bank
77
F i r s t National B a n k v. City of Covington
246
246
F i r s t National B a n k v. City of Richmond .
64,98
F i r s t National B a n k v. Clark
109
F i r s t National B a n k v. Cody
162
F i r s t National Bank v. Collins
F i r s t National Bank v. Commercial Na200
tioual Bank
First National Bank v. Craig
77
F i r s t National Bank v. De Morse
188
F i r s t N a t i o n a l B a n k v . District T o w n s h i p
108
of Doon (Iowa)
F i r s t National Bank v. Douglas C o u n t y . . 229, 235
F i r s t National Bank v. Dovetail Body and
103.129
Gear Company
.'
133
F i r s t National Bank v. F o r e s t
257
F i r s t National Bank v. Garlinghouse
132
F i r s t National Bank v. Gruber
209
F i r s t National Bank v. H a i r e
166
F i r s t National J»ank v. H a r r i s
108
F i r s t National Bank v. Hellyer
235
F i r s t National Bank v. H e r s h i r e
51,78
F i r s t National Bank v. H u g h e s
F i r s t National B a n k v. H u n t i n g t o n Dis149
tilling Company
157, 262
F i r s t National Bank v. L a m b e r t
160
First National B a n k v. Laughlin
170
First National Bank v. Led better
150
F i r s t National Bank v. L i n d e n s t r u t h

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
First National Bank v. Lynch
104
F i r s t National Bank v. Mann
69
F i r s t National Bank v. Mansfield Savings
Bank
77
First National Bank v. Marshall
157
F i r s t National Bank v. Marshall and IlsleyBank
104,157
First National Bank v. McKinney
108
First National Bank v. Mclnturff
262
First National Bank v. Merchants' National Bank
63
F i r s t National B a n k v. Miller
64
F i r s t National Bank v. Morgan
134,258
F i r s t National B a n k v. M u n z e s h e i m e r . . .
254
F i r s t N a t i o n a l B a n k v. National Exchange
Bank
192,254
F i r s t National B a n k v. Nelson
64
F i r s t National Bank v. N o r t h w e s t e r n National B a n k
60,115
F i r s t National B a n k v. P e a v e y
53
F i r s t National B a n k v. Peltz
98
F i r s t National Bank v. Peterborough
227
F i r s t National Bank v. Sanford ..."".
200
F i r s t National B a n k v. Schmidt
69
F i r s t National B a n k v. City of Seattle
233
F i r s t National B a n k v. Smith
163
F i r s t National Bank t;. Stuetzer
166
F i r s t National B a n k v. Still
49
F i r s t National Bank v. Stone
103
F i r s t National B a n k v. T u r n e r
262
F i r s t National B a n k v. Van Ness
163
F i r s t National Bank v. Weston
170
F i r s t National Bnuk v. Wills Creek Coal
Company
64
F i r s t National Bank v. Wood
18
F i r s t National Bank v. Zeims
160
Fisher v. A d a m s
215
Fieher v. Continental National Bank
126
F i s h e r v. Denver National B a n k
69
F i s h e r v. K n i g h t
188
Fisher v. Simons
214
F i s h e r v. Tradesmen's National B a n k
126
F i s h e r v. United States National B a n k . . .
126
F i s h e r v. Toder
135
Flannegan et al. v. California National
Bank et al
173
F l i n t v. Board of Aldermen of Boston
236
F l i n t Road ('art Company v. Stephens
203
Florence Railroad and I m p r o v e m e n t Company v. Chase National Bank
17, 262
Flour City National B a n k v. Grrover
160
F l o u r City National B a n k v. Miller
262
Foerderer v. Tradesmen's National B a n k
of New York
81
Foil's appeal
248
Follett v. Tillinghast:
141
Forster v. Second National Bank
21
F o r t Edward, National Bank of, v. The
W a s h i n g t o n County National Bank
145
Fortier v. New Orleans National Bauk.193, 208, 209
Fort- Scott, F i r s t National Bank of, v.
Drake
181
Port Worth,-.City National Bank of, v.
Hunter
156
F o r t Worth, City National B a n k of, I n r e .
155
Foss v. F i r s t National B a n k of D e n v e r . . .
139
Foster v. Chase et al
33
F o s t e r v. Lincoln et al
33,35,252
Foster v. Rincker
74
Foster v. Wilson
220
F o u r t h Street National Bank v. Yardley,
receiver
204, 207
Fowler v. Scully
209
Fox v. Home Company
18
F r a n k l i n County National B a n k v. Beal..
75
F r a n k l i n National B a n k v. Newcombe
69
F r a t e r v. Old National Bank
41
Frazer v. Seibern
227
Freeman Manufacturing Company v.
National Bank of Republic
.*
122
Freiberg v. Stoddart
74
Frelinghuysen, Receiver, etc., v. Baldwin
etal
216
Friberg v. Cox
65,130
Friend, I n re
77
Fridley v. Bowen
209
Furber v. Stephens
205




Page.
G.
Gale v. Chase National Bank
175
Gallot v. United States
89
Gardes v. United States
89
Garfield National Bank v. Kirchway
24
Gardner v. Dunn
161
Garner v. Second National Bank
46
Garnett, F i r s t National Bank of, v. A y e r s .
234
Gatch v. Fitch
31,198
Georgia National Bank v. Henderson
145
German National Bank v. Leonard
109
German National Bank v. Louisville
Butchers' Hide and Tallow Company..
103
German National Bank v. Meadowcroft..
102
Germania National Bank v. Case
27,139
Gernerv. Thompson
21,114
Getmanv Second National BankofOswego
264
Gettysburg National B a n k v . Chisolm
160
Gibbons v. Anderson et al
181
Gibbons v. Hecox
149
Gibbs v. Howard
186
Gibson v. Peters, receiver
101
G i l b e r t s McNulta
217
Girault v. United States
89
Glenn v. Porter
251
Gloversville, National Bank of, v. Wells..
195
Gold Mining Company v. Rocky M o u n t a i n
National B a n k
152,153
Goldsbnry v. I n h a b i t a n t s of W a r w i c k
237
Goldth waite v. N a t i o n a l B a n k
188
Gordon v. Third National B a n k of Chattanooga
167
Goshen National B a n k v. State
145,168
Graf ton, F i r s t N a t i o n a l B a n k of, v. Bab
bidge et al
169
G r a h a m v. National B a n k of N e w Y o r k . .
209
G r a n t v. Spokane National Bank e t al
213
Graves v. Corbin
140
Graves v. T h e Lebanon National B a n k . . .
48
Graves v. U n i t e d S t a t e s
88
Gray v.Rollo
186
Green v. Purcell N a t i o n a l B a n k
65
Green v. W a l l k i l l National B a n k
20
Greenville, City National Bank of, v. Bruce
159
Greenville, F i r s t National B a n k of, v.
Sherburne
194
Greer v. T h e Dalles National B a n k
208
Griffin v. P e t e r s
201
Grow v. Cockrill
154
GTubers. F i r s t National Bank of Clarion.
264
G r u e t t e r v. S t u a r t
38
Grundy County National Bank v. Rulison.
110
Guelich v. T h e National State B a n k of
Burlington
70
Guernsey v. Black Diamond Coal and
Mining Company (Iowa)
131
Guild v. F i r s t National Bank of Dead wood
260
Guntersville, Bank of, v. W e b b
97
Guthrie v. Reid
70, 264
H.
H a c k e t t s t o w n National Bank v. Ming . . . 104,122
Hadden et al. v. Dooley et al
24,124,175
Hade v. McYay
134
H a g a r v. Union National Bank
45,149
Hailey, F i r s t National B a n k of, v. G. V .
B. Mining Co
155
Hale v. W a l k e r
218
Hallam v. Tillinghast
139
Hallo well National Bank v. Marston
165
H a m b r i g b t v . National Bank
264
Hamert)'. F i r s t National Bank
109
Hammond v. H a s t i n g s
149
Hancock Nation a 1 B a n k v. Ellis
220
Harrington v. F i r s t National Bank of
Chittenango
171,172
H a r v e y v. Allen
46
Harvey v. Girard National Bank
78
Harvey, Receiver, etc.. v. Lord
17
H a t c h v Johnson Loan and T r u s t Company
167
H a t h a w a y v. F i r s t National Bank of Cambridge
196
H a u e r w a s v. Goodloe
108
H a u g a n v. Sunwol
174
H a u p t m a n v. F i r s t Nation al Bank
96

10

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
Havens v. National City Bank of Brooklyn
47
H a w k i n s v. State Loan and T r u s t Company
22
Hayden v. Brown
102
Hayden v. Chemical National Bank
129, 203
Hay den v. Thompson
21,101,114,127
Hayden v. Williams
102,110,221
Hayes v. Fidelity Insurance T r u s t and
Safe Deposit Company
42
Hayes, Receiver, v. Beardsley
199
Hayes v. Shoemaker
30, 249
Hay ward v. Eliot National Bank
104
Hazard v. National Exchange Bank of
Newport
250
H e a t h v. Second National Bank of Lafayette
..
209
Hedlund v. De wey
254
Heidelbaoh v. National P a r k Bank
64,189
Hendee v. Connecticut and Passumpsic
Railroad Company
135
Henderson v. Myers
20
Henderson v. O'Connor
76
Henderson, use of Second National Bank
of Titusville, v. Waid
263
Hennessy v. City of St. Paul et al
255
H e p b u r n v. Danville National Bank
215
Hepburn v. Kincannon
131
Hepburn v. School Directors
246
Herman, I n re
213
Hershire v. F i r s t National Bank
229, 235
Hettinger v. Meyers
167
Hibernia National Bank, appeal of
-- 219
Higgins e t al.#. Citizens'National Bank
of K a n s a s City
261
Higgins v. Worthington
128
Hightstown, F i r s t National Bank of, v.
Christopher
168
Higley v. T h e F i r s t National Bank of
Beverly
263
Hill v. National Bank of Barre
260.
Hill v. Exchange Bank
231
Hiinrod v. Bangh
186
Hind/nan v. F i r s t National Bank of Louisville e t a l
148,256
Hines v. Marmolejo
132
Hintermist.er v. First National Bank
257, 258
Hirsh v. Jones et al
19
Hiscock v. Lacy
135
Hitz 1 . J e n k s
>
212
Hobart, receiver, etc., v. Gould
28
Hobart, receiver, etc., v. Johnson
28
Hobbs v. Chemical National Bank (Ga.)..
23
Hobbs v. Western National Bank
180,250
Hoke v. People
138
Holmes v. Boyd
209
Holt v. Thomas
:
32
Homer v. National Bank of Commerce
150,191
Hopkinsville, City Bank of, v. Blaekmore.
206
H o m e v. Greene
66, 227
Horton v. Mercer
219
Hot Springs Independent School District,
etc., v. F i r s t National Bank of H o t
Springs
136
Houghton v. Hubbell
221
Howe v. Karney et al
20,179
Ho well v. T h e Village of Cassopolis
237
Hower v. Weiss Malting and Elevator
Company et al
122
Hubbell v. Houghton
36
Jmdson, F a r m e r s ' National Bank of, v.
Jones, Governor
156
Huffaker v. National Bank of Monticello.
102
Hughes v. Neal Loan and Banking Company
76
H u g h i t t v. Hayes
186
Hulings v. Hulings Lumber Company et al
64
H u l i t t v. Bell e t al
"
.
36

Hulitt, I n re
39
Humphreys v. Third National Bank of
Cincinnati, Ohio
109,196
Hungerford National Bank v. Van Nostrand
109
Hunt, appellant
57
Hunt, In re
192
Hunt v. Townsend
75
Hutchinson National Bank v. Crow
108,210




I.

Page.

Illinois P a p e r Company v. Northwestern
National Bank
201
Illinois T r u s t and Savings B a n k v. F i r s t
National Bank and another, receiver, etc.
205 •
Imperial Roller Milling Company v. F i r s t
National Bank
186
Implement Company v. Stevenson
54
Importers and T r a d e r s ' National B a n k v.
Peters et al
75
I n d i a n Head National B a n k v. Clark
162
I n d i a n a National B a n k v. F i r s t National
Bank
115
Indianapolis, Meridian National Bank of,
v. F i r s t National Bank of Shelbyville..
60
Insurance Company v. Phinney
185
Irons et al. v. Manufacturers' National
B a n k of Chicago e t al
29,33,151, 212,249
Israel v. Gale
19
J.
Jackson v. Fidelity and Casualty Company
Jackson v. United States
Jacobus v. Monongahela National Bank of
Brownsville
Jefferson, National B a n k of, v. Bruhn et al
Jefferson, National Bank of, v. F a r e et a l .
J e n k i n s v. National Village Bank of Bowdoinham
J e w e t t v. United States
J e w e t t v. Whitcomb
J e w e t t e t al. v. Yardley
J o h n s o n v. Laflin
1
Johnson v. National Bank of Gloversville.
Johnston v. Charlottesville National Bank
J o h n s t o n Fife H a t Company v. National
Bank
Jones v. Rushville National B a n k
Jordan, administratrix, etc.,v.The National Shoe and Leather Bank of New Y o r k .

216
185
45
67,132
78,136
67
93
136
131
248, 249
257, 259
17
147
232
186, 254

K.
Kaiser et al. v. F i r s t National B a n k of
Brandon
164
Kaiser v. Unit* d S t a t e s ' National Bank
(Ga.)
23
Kansas City, Mo., Metropolitan National
Bank of, v. Campbell Commission Com
pany
201
Kansas City, M e r c h a n t s ' National B a n k
of, v. Lovitt
169
Kansas National Bank v. Qninton
194
Kansas Valley National Bank v. Rowell..
209
Kellej v. Phoenix National Bank
78
Kelly, Maus & Co. v. Sioux National Bank
etal
140
Kelsey v. The Nation al Bank of C rawford.
80
Kemp et al. v. National Bank of t h e Republic of N e w York
159
Kennedy v. California Savings Bank et a l .
193
Kennedy v. F i r s t National Bank
253
Kennedy v. Gibson. 19,20, 25, 26, 31, 33,101, 211, 219
Kentucky, B a n k of, v. A r m s t r o n g
233
Kentucky, Bank of, v. Board of Councilmen of City of F r a n k f o r t
233
K e n t u c k y F l o u r Company's Assignee v.
Merchants' National B a n k
191
K e r r v . Urie
36
Kesner v. World's F a i r Hippodrome
220
Keyserv. Hitz
26,101,156,218
Kimball v. Dunn
Ill
K i n g et al. v. Armstrong, receiver
32, 188
Kingman, Citizens' National B a n k of, v.
Berry e t al
182,184
Kirkwood v. E x c h a n g e National B a n k . . .
168
K i r k wood v. F i r s t National B a n k
168
Kissam v. Anderson
130
Klepper v. Cox
130
K y l e v . T h e Mayor, etc
235
L.
Lacon, T h e F i r s t National Bank of, v.
Myers
:
La Dow v. F i r s t National Bank

57
132

REPORT OP THE COMPTROLLER OF THE CURRENCY.
Pago.
L a F a y e t t e , The National State B a n k of, v.
Ringel
57
La Grande National B a n k v. Blum
160
La Grande B u t t e r T u b Company v.
National Bank of Commerce
200
Laing v. Burley
26
L a k e E r i e and "Western Railroad Comp a n y y. Indianapolis National Bank
199
L a k e National* Bank i>. Wolfe borough Savings Bank et ai
139
Lamson v. Beard
172
i.anaux, La., Succession of
219
Lancaster County National Bank v. Boffenmyer
163
Lanham v. F i r s t National Bank
262
Lantry v. Wallace
40, 256
La Kose et al.v. Logansport National Bank
et al
48, 49
Latimer v. Bard et al
54
Latimer v. Wood ct al
18
Lawrence v. Greenup
102
Lawrence v. Stearns
105,184
Lazear v. National Union U.aik of Baltimore
254, 257, 264
Leach a . H a l e
193,223
Lease v. Barschall et al
42
L e a t h e r Manufacturers' National Bank v.
Cooper, j r
135
Lebanon National Bank v. K a r m a n y
265
Lehman v. l l o t h b a r t h
25
Leoti, F i r s t National B a n k of, v. F i s h e r . .
226
Le Sassier v. Kennedy
135
Lewis v. Switz
33, 219
Lexington, Town Council of, v. Union
National Bank
23
L ' H e r b e t t e v. Pittsfield National B a n k . . . 96,147
Libby v. Union National Bank
209
Lilianthal, I n re
46
Lilly v. T h e Board of Commissioners of
Cumberland County
66, 227
Lincoln National Bank v. Butler
165
L i n n County National B a n k V.Crawford 18,136,161
Lionberger v. Rouse
227
Little Rock, M e r c h a n t s ' National Bank
of, v. United States
66, 230, 242
Lockwood v. The American National
Bank
80,171
Logan County National Bank v. Townsend
79,134,193, 254
Louisiana, Citizens' B a n k of, v. Board of
Assessors
230
Louisiana, Citizens' Bank of, v. J a n i n
68
Louisville B a n k i n g Company v. City of
Louisville
233
Louisville, City of, v. B a n k of K e n t u c k y . .
233
Louisville, T h i r d National Bank of, v.
Stone
246
Louisville, T h i r d National B a n k of, v.
Vicksburg Bank
148
Louisville T r u s t Co. v. K e n t u c k y National B a n k et al
'
265, 266
Lowell, P r e s c o t t National Bank of. v.
Benjamin F . Butler
193
Luberg v. Commonwealth
83
Lucas v. Coe
37
Lucas v. Government National Rank
257
L y n c h b u r g , F i r s t National Bank of, v.
Marye, A u d i t o r
80,247
L y n c h b u r g National B a n k v. Marye, Au"ditor
.'
80, 247
L y n c h b u r g , National E x c h a n g e Bank of,
v. Marye, A u d i t o r
80, 247
Lynchbiirg, People's National Bank of,
'v. Marye, A u d i or
80,247
Lyndonville National Bank v. Fletcher . . 103,116
Lyons ?;. Lyons National Hank
192
Lyons, F i r s t National Bank of, v. Ocean
National Bank
173,179
M.
Madison, National Bank of, v. Davis
259, 263
Magruder v. Coll son
249
M a g u i r e v. Board of Revenue and Road
Commissioners of Mobile County
245
Main, Assignee, v. Second National Bank
of Chicago
137




11

Page.
Manistee, Mich., F i r s t National B a n k of,
et al. v. Marshall & Ilsley B a n k of Milwaukee, W i s
105
Manufacturers' National B a n k v. Continental Bank et al
75
Manufacturers' National Bank, I n re
125
Mapes v. Scott
209, 210
M a r b u r y v. F a r m e r s and Mechanics'
National B a n k
67
Marine National Bank v. H u m p h r e y s
164
Market Bank v. Pacific National Bank . . .
198
Market and F u l t o n National Bank v.
Sargent
164
Marshall National Bank v. O'Neal
65
Massey v. Fisher
126,189,199
Mathews v. Columbia National Bank of
Tacoina et al
54
Matteson v. Dent
41
Matthews v. T h e Massachusetts National Bank
173
Matthew.-, v. Skinker
210
Maynard v. Bank
81
Mayor v. F i r s t National Bank of Macon . .
229
McAden v. Commissioners of Mecklenb u r g County
243
McBee v. Purcell National Bank
99
McCann v. F i r s t National Bank of Jeffersonville
55
McCartney v. K i p p
153
McClellaJi v. Chipman
203
McConville v. Gilinour
23
McCord v. California National Rank
64
McCormick v. Market National Bank . 79,144, 255
McCullooli v. Maryland
78
McDonald, Receiver, v. Chemical National Bank
6G
McDonald, Receiver, v. Williams
102, 221
McDonald v. State of N e b r a s k a
143,151
McDonald v. Thompson
40,151
McFarlin v. F i r s t National Hank
219
McGhee v. F i r s t National Bank of Tobias.
261
McGhee v. I m p o r t e r s and Traders' National Bank
119
M c l v e r v. Robinson
228
McLoghlin v. National Mohawk Valley
Bank
'. 107,133
M c K n i g h t v. United States
92
McMahon, I n re, v. Palmer
241
McNulty v. W e s t Chicago P a r k C o m ' r s . . 110, 208
McVeagh v. T h e City of Chicago et al
236
Mead v. National B a n k of P a w l i n g
166
Meldrum v. Henderson
128
Memphis, Continental National Bank of,
v. Butord
173
Memphis National Bank v. Snead
19
Mendota, F i r s t National Bank of, v. Smith
I'M
Mercantile Bank v. New York
226, 229
Mercantile National Bank v. Lander
247
Mercantile National Bank v. Shields
232
Mercer v. Dyer
189
Merchants' National Bank v. Ault
25
M e r c h a n t s ' National B a n k v. Carliart -, - 224
Merchants' National Bank v. Demere
67
Merchants' National Bank v. Guilmartin.
224
Merchants' National Bank v. Me Anility..
25,
109,162
Merchants' National Bank v. McGee
84
Merchants' National Bank v. McNeir
108
Merchants' National Bank v. Mears
209
Merchants' National Bank v. Peet
25
Merchants' National B a n k v. Robinson . .
189
Merchants' National B a n k v. School Dist r i c t No. 8
100,133
Merchants' National Bank v. Sevier et a l .
260
Merchants' National Bank v. Spates
22,162
M e r c h a n t s ' National Bank v. State National Bank
58. 60,145,191,192
M e r c h a n t s ' National Bank v. Tracy
168
Merchants and F a r m e r s ' Bank v. A u s t i n .
76
Merchants and Manufacturers' National
Bank v. Cummings
70
Merchants and Manufacturers' Bank v.
Pennsylvania
245
Merchants and 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
110, 216
Merrill v. National Bank of Jacksonville
25,102,105,128,142

12

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
Merrill v. Florida L a n d Improvement
Company
126, 248
Metropolitan National Bank v. C l a g g e t t . . 80,135
Metropolitan National B a n k v. J a n s e n e t
al
25
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
46,
47,103,128,149,154,162,215
Meyers v. Valley National Bank
248
Michigan I n s u r a n c e Bank v. Eldred
80
Midland National B a n k v. Schoen
163
Miller's estate
67
Miller v. F i r s t National B a n k
97,111
Miller v . H e i l b r o n
240
Miller v. Howard e t al
180
Miller v. National B a n k of Lancaster
138
Miller v. W e s t e r n National B a n k
97
Milmo National B a n k v. Carter
104
Missouri River Telegraph Company v.
F i r s t National B a n k of Sioux City
135,258
M i t c h e l l s . First National Bank of Chicago.
80
M i x v. T h e National Bank of Bloomington
106
Mize v. Bates County National Bank
219
Mobile, National Commercial B a n k of, v.
Mayor, etc., of Mobile
242
Modern Woodmen of America v. Union
National B a n k
25,57
Mohrenstecher et al. v. W e s t e r v e l t . . .
50,51
Monongahela National Bank v. Overholt 264
Monmouth, F i r s t National B a n k of, v.
Brooks
145
M o n t a g u et al. v. Pacific Bank et al
225
Montgomery, F i r s t National Bank of, v.
Armstrong
72
Monticello B a n k v. Bostwick et al
116
Montpelier, F i r s t National Bank of, v.
H u b b a r d et al
137
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)
.".
156
Moore v. J o n e s
28, 218
Moore v. Mayor and Commissioners of
Fayetteville
243
Moores v. Citizens' National B a n k of
Piqua
*
169
Morehouse v. Second National B a n k of
Os wego
264
Moreland v. Brown
226
Morris v. Eufaula National B a n k
146
Morrison v. P r i c e
29
M o s s v . Whitzel
41,152
Mound City P a i n t and Color Company v.
Commercial National B a n k
78
M o u n t Pleasant, F i r s t National B a n k of,
v. Tinsman
132
M o u n t Sterling National B a n k v. G r e e n . .
98
Movius, Receiver, etc., v. Lee et al
171,177
M u l t n o m a h County et al. v. Oregon National B a n k et al
199
M u r p h y v. F i r s t National Ban k
96
M u r r a y v. American Surety Company of
New York
* . . . 128, i:!0
M u r r a y v. P a u l y
57
M u s t a r d v. Union National Bank
133
M y e r s v. H e t t i n g e r . . . . - „
142

N.
N a s h u a Savings Bank v. Anglo-American
Land Mtg. and Agency Co
42
National B a n k v. Butler
198
National B a n k v. Carpenter
257
National Bank v. Case
25, 26, 66,218,249
National B a n k of Redemption v. City of
Boston
243
National B a n k v. Colby
46,125
National B a n k v. Commonwealth
203,229,244
National B a n k v. Dan forth
265
National Bank v. D r a k e
180
National B a n k v. E a r l
193
National Bank v. Graham
222
National Bank v. I n s u r a n c e Company
151
National Bank v. J o h n s o n
132,257
National B a n k v. K e n n e d y
20
National Bank v. M a t t h e w s
208, 209




Page.
v. Taylor
164,220
v. United States
243
vt W h i t n e y
208, 209
of Commerce v. A t k i n s o n .
17,
.182,194
National B a n k of Commerce v. City of
Seattle
233
National B a n k of Commerce v. G a l l a n d . . 108,162
National Bank of Commonwealth v. Mechanics' National Bank
124,125
National Board of Marine U n d e r w r i t e r s
v. National Bank of t h e Republic
115
Nat ional Commercial Bank v. McDonnell. 67,102
National Commercial B a n k v. Miller &
Co
58,63
National E x c h a n g e B a n k v. P e t e r s et a l . .
124
National E x c h a n g e B a n k v. Wilgus's
Executors
163
National Gold B a n k and T r u s t Company
v. McDonald
63
National Loan and I n v e s t m e n t Co. v.
Rockland Co
172
National P a r k B a n k v. Goddard
46
National P a r k B a n k v. G u n s t
19
National P a r k Bank v. Harmon
35
National Pemberton B a n k v. P o r t e r
134
National Security B a n k v. Butler
198
National Security B a n k v. E d w a r d F .
Cushman
171
National Security Bank v. Price, Receiver.
197
National State B a n k v. Y o u n g
227
National Union B a n k v. Earle
66
Nead v. Wall
33,219
N e b r a s k a National B a n k v. Ferguson
165
Nebraska, State of, v. N a t i o n a l B a n k of
Orleans
99,155,195
Neill v. Rogers Bros. Produce Company . .
46
Nelson v. B u r r o u g h s
20
Nelson v. F i r s t National B a n k of Killinglv
69,107,167,170
N e w a r k B a n k Company v. N e w a r k
226, 229
Newark, National State B a n k of, v. BoyIan
259
Newark. North W a r d National B a n k of,
v. City of N e w a r k
227
Newbegin v. Newton National B a n k
126
Newburgh, National B a n k of, respondent,
v. Daniel Smith
99
Newell v. National Bank of Somerset
259
New Orleans Canal and B a n k i n g Company v. City of New Orleans
242
N e w Orleans National B a n k v. R a y m o n d .
209
New Orleans, Germania National B a n k of,
v.Case
27
Newton National Bank v. Newbegin
129
N e w York, American E x c h a n g e National
B a n k of, v. F i r s t National B a n k of Spokane Falls e t al
155
N e w Y o r k Breweries Company v. Higgins
95
New York, Chatham National B a n k of,
v. Merchants' National B a n k of W e s t
Virginia, appellant
137
New York, Chemical National B a n k of,
v. A r m s t r o n g
194
New York Fidelity and Casualty Co. v.
Consolidated National Bank
49
New York, Germania B a n k of, v. L a Follette et al
161
New York, Hanover National Bank of, v.
F i r s t National B a n k of Burlingame,
Kans
185
New York, M a r k e t National Bank of, v.
Pacific National Bank of Boston
46
New York, Mayor of, etc., v. T e n t h National B a n k
154
New York, Mercantile National B a n k of
City of.i'. Mayor, etc., of City of N e w
York and another
244
New York, M e r c h a n t s ' National B a n k of
t h e City of, v. Samuel and another
65
New York, National Shoe and L e a t h e r
Bank of t h e City of, v. Mechanics' Natioual B a n k of Newark, N . J
46
New York, People's B a n k of t h e City of>.
Mechanics' National B a n k of N e w a r k . .
46
New York, Security B a n k of, v. National
Bank of t h e Commonwealth
20
National
National
National
National

Bank
Bank
Bank
Bank

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
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 K a n s a s et al
69,117
New York, T h e Metropolitan National
Bank of, v. Lloyd
62
Niblack v. Cosier
57,225
Nichols v. State
97
Nickerson v. Kimball
239
Nicollet National Bank v. City Bank
253
Niles v.Shaw
:
232
Noblesville, Citizens' State Bank, of, v.
Hawkins
255
North Bennington, F i r s t National Bank
of, v. Town of Bennington
192
North Dakota, Guarantee Co. of, v. Hanway
24,143
Northern Bank v. Bourbon County
233
Northern National Bank v. Maumee Rolling Mill Company
17
N o r t h River Bank, I n re
204
Northwestern National Bank v. J . Thompson & Sons' Manufacturing Company..
69
Norton v. Derby National Bank
'...
22
O.
Oates v. F i r s t National Bank of Montgomery
Ocean National Bank v. Carll
O'Connor v. Brandt
O'Connor v. Witherby
Oddie et al. v. The National City Bank of
New York
O'Hare v. Second National Bank of Titusville
Old National Bank v. German American
National Bank
Oldham v. Bank
Omaha, F i r s t National Bank of, v. County
of Douglas
'.
Omaha National Bank v. Walker et al
Onondaga County Savings Bank v. United
States
'.
Ordway v. Central National Bank
Ornn v. Merchants' National Bank
Osborne v. Bank of the United States
Oswego, Second National Bank of, v. Burt Overholt v. National Bank of Mount Pleasant
Owensboro National Bank v. Owensboro..

79,257
135, 212
191
33
61
152,158
76
166,191
137, 235
118
76
134,151
209
78
173
257
246

P.
Pacific National Bank v. Eaton
25, 53, 54, 218
Pacific National Bank v. Mixter
20, 45, 46
Palmer v. McMahon
226, 231
Palmer v. National Bank of Allentown
45
Pape v. Capital Bank of Topeka
193
Parker v. Robinson
33
Parkersburg National Bank v. Als
96
P a r k Hotel Co. v. F o u r t h National Bank
of St. Louis
19
P a r k h u r s t v. F i r s t National Bank of
Clyde
261
Pattison v. Syracuse National Bank . . 192,193, 222
Pauly v. Coronado Beach Company
256
Pauly v. O'Brien
161
Pauly v. State Loan and T r u s t Company.
35
Pauly v. Wilson
69
Pearce and Miller Engineering Company
v. Brouer
69
Pearce v. Rice
119
Peck et al. v. F i r s t National Bank
72
Pelton v. Commercial National Bank
227,230
Penn Bank v. Farmers' Deposit National
Bank
191
Pennsylvania, Commercial Bank of, v.
Armstrong
74
People ex rel. Williams v. Assessors of
Albany
238
People ex rel. Williams v. Weaver
228
People v. The Commissioners of Taxes
and Assessments
228
People ex rel. Tradesmen's National Bank
v. Commissioners of Taxes and Assessments
238
People v. The Commissioners
,
228
r.




13

People v. Dolan
228
People v. Fonda
139
People v. Merchants' Bank
77
People v. Remington
67
People v. St. Nicholas Bank
58,190
People's Bank t?. National Bank
46,102,193
People's Bank and T r u s t Company v.
Tufts
191
People's National Bank v. Clayton
165
People's Savings Bank v. Hughes
175
Peterborough National Bank i>. C h i l d s . . .
258
Peters v. Bain
201
Peters v. Foster
216
Petition of P l a t t
137, 212
Petri v. Commercial National Bank of
Chicago
139
Pettilon v. Noble
139
Phelps v. Beard
172
Philadelphia, City of, v. Aldrich
100
Philadelphia, City of, v. Eckels
100
Philadelphia, Fourth Street
National
Bank of, v. Yardley
207
Philadelphia National Bank v. Dowd
72
Philadelphia, Third National Bank of, v.
Miller
257
Philler v. J e w e t t
189
Philler v. Patterson
17, 69,194
Philler v. Yardley
189
Phillips v. Mercantile National Bank of
the City of New York
145
Phipps et al. v. Harding
166
Pickett v. Merchants' National Bank of
Memphis
259
Pickle v. People's National Bank
65
Pittsburg, Fifth National Bank of, v.
P i t t s b u r g and Castle Shannon Railroad
Company
139
P i t t s b u r g Locomotive and Car Works v.
State National Bank of Keokuk
66
Pittsburg, Third National Bank of, v.
Mylin
139
P l a t t v. Adriance
81
P l a t t v. Beach
212
P l a t t v. Beebe
106, 213
P l a t t v. Bentley
186
Plattsburg, F i r s t National 15ank of, v.
Sowles et al
179
Pollard v. The State
79
Porter v. United States
91
Potter v. Beal et al
223
Potter v. Traders' National Bank
158
Potter et al. y. Zeis
70
Poughkeepsie, City National Bank of, v.
Phelps
80
Prescott v. Haughey
180
Preston National Bank v. Emerson
109
Preston v. Prather
224
Price, Receiver, v. Abbott
213
Price, Receiver, v. Colson
213
Price, Receiver, v. Coleman et al
197
Price, Receiver of Yenango National
Bank, v. Yates
28, 79, 212
Price, Receiver, v. Whitney
29
Prosser v. F i r s t National Bank of Buffalo.
220
Providence Institution for Savings and
Jewels v. City of Boston
238
Pry se v. Farmers' Bank
175
Puget Sound National Bank v. City of
Seattle
233
P u t n a m Savings Bank v. Beal
204,223
Putnam v. United States
85,184

Quanah, Tex., City National Bank of, v.
Chemical National Bank of St. Louis,
Mo
Quin v. Earle

175
100

R.
Rand et al. v. Columbia National Bank of
Tacoma, Wash., et al
37,105
Randolph National Bank v. Hornblower..
60
Raynor v. Pacific National Bank
45,46
Resh v. F i r s t National Bank of Allentown
98

14

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Page.
Reynes v. Dumont
150
Reynolds v. Bank of Mt. Vernon
101
Reynolds v. F i r s t National Bank of Crawfbrdsville
208,209
Rhoner v. National B a n k of A l l e n t o w n . . .
45
Ricaud v. Tyson
22
Ricaud v. Wilmington Savings and T r u s t
Company et al
251
Rich v. State National Bank of L i n c o l n . . .
192
Richards v. Attlehoro National B a n k . I l l , 152,253
Richards e t al. v. Incorporated Town of
Rock Rapids
140
Richards v. Kountze
158
Richardson v. Continental National B a n k .
203
Richardson v. Denegre
99
Richardson v. Louisville B a n k i n g Company
110,133,217
Richardson v. New Orleans Coffee Co
100
Richardson v. New Orleans DeDenture
Redemption Co
100
Richardson v. Olivier
131
Richmond, F i r s t National Bank of, v.
Davis
75
Richmond, F i r s t National Bank of, v. City
of Richmond e t al
228
Richmond, F i r s t National Bank of, v. Wilmington and Weldon Railway ComRi^hmondV."irons!.'] "20,"27, 31,133,"£51,212, 219, 249
Richmond, City of, v. Scott
228, 238
Riddle v.Dow
•....
157
Riddle v. F i r s t National Bank
56,192, 211
Ridgely et al. v. F i r s t National Bank
158
Ridgely National Bank v. Matheny
159
Ridgely National Bank v. Patton & Hamilton
61
Rieger v. United States
94
Ripley National 1 ank v. Latimer
108,170
Riverside Bank v. F i r s t National Bank of
Sbenandoah
61
Roberts, Receiver, etc., v. Hill, Administrator, etc
197
Robertson v. Buffalo County National
Bank
183
Robinson v. City of Wilmington et al
138
Robinson v. Hall et al
180
Robinson v. National Bank of Newbern . . 45,138
Robinson v. Southern National Bank
39,43, 81
Robinson v. Turrentine et al
32
Rochester, F i r s t National Bank of, v.
Harris
192
Rochester, First National Bank of, v.
Pierson
19,254
Rock Springs National Bank v. L u m a n . . .
169
Rockville, The National Bank of, v. The
Second National Bank of Lafayette
63
Rockwell v. Farmers' National Bank
132, 259
Roebling Sons Company v. F i r s t National
Bank et al
210
Rome, Merchants' National Bank of, v.
Fouche
37
Rood v. Whorton
53
Root v. Erdelmeyer
237
Hose v. Winnsboro National Bank
109
Rosenblatt v. Johnston
125,233
Rnffin v. Board of Commissioners
66, 227
Ruggles v. Kuler
186
Rush?;. F i r s t National Bank, Kansas City.
160
S.
St. Albans, I n re F i r s t National Bank of.
26
Si. Louis and San Francisco Railway
Company v. Johnston
73,126, 205
St. Louis National Bank v. Allen et al
138
St. Louis National Bank v. Bloch
65
St. Louis National Bank v. Brinkman .
139
St. Louis National Bank v. Papin
228
St. Paul, Merchants' National Bank of, v.
Hanson
164
Safford v. First National Bank
35
Salisbury v. F i r s t National Bank
109,163
San Diego County v. California National
Bank
199, 200, 204
San Diego, I n r e Certain Shareholders of
t h e California National Bank of
31
Sandy Hill, F i r s t National B a n k of, v.
Fancher
236




Page.
San Francisco, Nevada Bank of, v. P o r t
land National Bank
146
Sanger v. Upton
54
Savary v. Savary
186
Sayles v. Cox
128
Scammon v. Kimball
186
Schierenberg v. Stephens
124
Schofield v. State National B a n k
256
Schofield v. Goodrich Bros. B a n k i n g Co . .
195
School District v. F i r s t National Bank . . .
95
Schraderv. Manufacturers' National Bank
of Chicago
119
Schuyler National Bank v. Bollong
258,259
Scofield v. State National B a n k of Lincoln
158, 256
Scott v. Armstrong
185,186,189, 212
Scott v. Deweese
44, 56
Scott v. Latimer
221
Scott. Plaintiff in Error, v. National Bank
of Chester Valley
148
Scott et al. v. Pequonnock National B a n k .
249
Scovill v. Thayer
54
Seattle National Bank v. City of S e a t t l e . .
233
Seattle, P u g e t Sound National B a n k of, v.
King County et al
229
Second National Bank v. D u n n
161
Second National Bank v. H e w i t t
161
Second National Bank v. H u g h e s et al
51
Second National Bank v. Sproat
69
Second National Bank v. Wentzel
116
Security National Bank v. National Bank
of t h e Commonwealth
20
Sedalia, School District of, v. DeWeese 110,151,171
Seeber v. Commercial National B a n k of
Ogden
118,175
Seeley v. New York National Exchange
Bank
55
Seligman v. Charlottesville National B a n k
17
Selma, City National B a n k of, v. B u r n s . . .
62
Selma, F i r s t National Bank of, v. Colby . .
17,46
Shafer v. F i r s t National Bank
'....
259
Sharpe v. National Bank of Birmingham .
68
Sheffield et al., F i r s t National Bank of, v.
Tompkins
:
145,168
Shenandoah National Bank v. Read . . 122,195, 255
Shinkle v. The F i r s t National Bank of
Ripley
262
Shoemaker v. The National Mechanics'
Bank
66,152
Short et al. v. Hepburn
17, 21,110,137
Show-alter v. Cox
65
Shunk v. The F i r s t National Bank of
Galion
257
Shute v. Pacific National Bank
187
Sick els v. Herold
190
Simmons v. Aldrich
235
Simmons v. United States
86
Simons et al. v. Fisher
182
Sioux City, F i r s t National Bank of, v.
Peavey
52,136,195
Sioux Valley State Bank v. Drovers' National Bank
64
Skiles v. Houston
186
Sleppy v. Bank of Commerce et al
57
Smith v. F i r s t National Bank of Westfield
153,
193, 222, 262
Smith v. Sabin
25
Smif v. The Exchange Bank of P i t t s bui f
254,257
Smithson v. Hubbel et al
140
Snohoinish County v. P u g e t Sound National Bank
141
Snyder v. Foster
252
Snyder v. Mount Sterling National B a n k .
262
Snyder's Sons Company v. A r m s t r o n g
187
Somerville, City of, v. Beal
75,204
r
South wick v. £he> F i r s t National Bank of
Memphis
*.
45
Sowles v. National Union B a n k of Swanton
47,217
Sowles v. W i t t e r s et al
30,101,130,141
Spafford v. The F i r s t National Bank of
Tama City
156
Speckart et al. v. German National B a n k
etal
142
Spokane, City of, v. F i r s t National B a n k . .
206
Spokane County v. Clark
199
Spokane County v. F i r s t National B a n k . .
206

BEPORT OF THE COMPTROLLER OF THE CURRENCY,

15

Page.
Page.
Spokane, E x c h a n g e National Bank of, v.
Terry v. Birmingham National Bank
07
T e x a r k a n a National Bank v. Daniel
150
Bank of L i t t l e Rock
116
Thatcher v. W e s t River National Bank . .
106
Spring City, National Bank of, v. National
Thayer v. Butler
25,54, 218
B a n k of Pottstown
149
Third National Bank v. Angell
164
Springfield, City of, v. F i r s t National Bank
Third National Bank v. Blake
156,193
of Springfield
241
Third National Bank v. City of Louisville.
233
Spurr v. United States
90
Squires v. F i r s t National Bank
21,175
Third National Bank v. Harrison et al . . .
169
Stafford National Bank v. Dover
^
227
Third National Bank v. Hastings
166
Stanley v. Board of Supervi ors of the
Third National Bank, I n re
213
County of Albany
188,242
Third National Bank v. M e r c h a n t s ' National Bank
115
Stanton v. Wilkeson
20, 31, 211
Stapylton v. Anderson et al
19
Third National B a n k v. Stillwater Gas
Stapylton v. Carmichael
19
Company
99
Stapylton v. Cie des Phosphates de France
203
Thomas v. City National Bank
182.193
Stapylton v. Stockton
210
Thomas v. F a r m e r s ' Bank of M a r y l a n d . . .
80,81
Thomson v. Beal
57
Stapylton v. Teague
19
Stapylton v. Thaggard
246
Thompson National B a n k v. Dow
157
State v. Bard well
96
Thompson v. German Insurance Company et al
34, 35
State v. Carpenter
156
Thompson v. Pool
137, 215
State v. Eifert
84
State v. Fields
83
Thompson v. St. Nicholas National B a n k . 59, 254
Thompson v. Sioux Falls National B a n k .
60
State v. Gasting
66
Thornton v. National E x c h a n g e Bank
67, 209
State National Bank v. F l a t h e r s
210
T h u r b e r v. Miller
136
State v. T h e National Bank of Baltimore.
236
State, N o r t h Ward National Bank, pros.,
Ticonic National Bank v. Bagley
196
v. Newark
242
Tiffany v. National Bank of the State of
State National B a n k v. Newton National
' Missouri
132
Bank
174
Tillinghast v. Bailey et al
55
State of N e b r a s k a v. F i r s t National Bank
155
Tillinghast v. Carr
217
State v. Sattley
83
Timberlake et al. v. F i r s t National Bank.
132
State v. Smith"
84
Titusville, Appeal of Second National
State v. Teahan
84
Bank of
263, 265
State v. Toller
82,83
Toledo, Merchants' National Bank of, v.
State v. Wells
85
dimming
239
Staunton v. Wilkeson
211
Tompkins County National Bank v. BunStearns v. Lawrence
185
nell and Eno Investment Company
162
Steckel v. F i r s t National B a n k of AllenTootle et al. v. First National Bank of
town
224
Port Angeles
254
Stephens v.Bernays
79,135
Tourtelot v. Finke
37
Stephens v. Follett
30
Tourtelot v. Stolteben
40,110
Stephens v. Monongahela National Bank. 114, 258 Townsendv. Williams
97
Stephens v. Overstolz
114,178
Tradesmen's National Bank v. Bank of
Stephens?;. Schuchmann
191
Commerce
18,154
Stetson v. City of Bangor
78, 229, 236
Tradesmen'sNational Bank, People ex rel.,
v. Commissioners of Taxes and AssessStevens v. Catlin
166
ments
238
Stewart v. A r m s t r o n g
102,126
Stewart v. National Union Bank of MaryTrenholm, Comptroller, v. Commercial
land
152,153
National Bank
114
Stowe v. Yarwood
186
Trent Title Company v. F o r t Dearborn
Strong v. South worth et al
26, 28 1 National Bank of Chicago
146
S t u a r t v. Hayden et al
32, 38, 195, 251
Trustees of F i r s t Presbyterian Church v.
.Studebaker v. P e r r y
41
National State Bank
111,193
Stufflebeam v. De Lashmut t
40, 221
Turner v. F i r s t National Bank of KeoS t u r d i v a n t v. Memphis National B a n k . . . 164, 262
k u k et al
211
Sturgis National Bank v. Smyth
160
Turner v. F i r s t National Bank of MadiSturgis, The F i r s t National Bank of, v.
son
209
Bennett et al
183
Turner v. Union National Bank
22
Sumter County v. National Bank of
Turner v. Utah Title Insurance and Trust
Gainesville
243
Company
22
Sunniau v. Gatch et al
198
Turner v. Wells, Fcrgo & Co
22
Supervisors v. Stanley
231
Tuttle v. Frelin g;huysen
201
Swope v. Leffingwell
208, 209
Twin City Bank v. Nebeker
244
Sykes v. Holloway et al
253
Tyler v. United States
93
Tyson v. Western National Bank of BalT.
timore
71
Tabor v. Commercial National Bank
Tacoma, Columbia National B a n k of, et
al. v. Matt hews
Tacoma, Wash., National B a n k of Commerce of, v. Wade et al
Tacoma, Washington National B a n k of,
v.Eckels
Talbot v. Silverbow County, Montana
Talcott v. Firstf National Bank
Taliuage v. Third National Bank
Tapley v. Martin
Tappan v. Merchants' National Bank
Taylor v. Hutton
Taylor v. National Bank
Tecumseh, F i r s t National B a n k of, v.
Overman
Tecumsfh National Bank v. Harmon
Tehan v. F i r s t National Bank et al
Tennessee et al., State of, v. Bank of Commerce et al




25
55
141
151,214
226, 231
191
134,150
48,106
231
171,184
55
258
195
135
230

U
Ulrich v. Santa Rosa National Bank
Ulster County Savings Institution v.
Fourth National Bank
Underwood v. Metropolitan
National
Bank
Union Gold Hill Mining Company v.
Rocky Mountain National Bank
Union Mills First National Bank v. Clark.
Union National Bank v. City of Chicago..
Union National Bank v. City of Cleveland.
Union National Bank v. Grant
Union National Bank v. Henry Dreyfus..
Union National Bank v. L., N . A . and C.
It. Company
Union National Bank v. Oceana County
Bank
'.
Union Stock Yards National Bank v.
Dunmond

22, 25
134
158
154
62
245
149
165
190
258
61
145

16

REPORT OF THE COMPTROLLER OF THE CURRENCY.

Pagr.
Union Stock Yards National Bank v.
Moore et al
99,196
Uniontown, First National Bank of, v.
Stauffer
260
United States v. Allen
112
United States v. Allis
83,112
United States v. American Exchange National Bank
76,115
United Statesv. Berry
92,114
United States, ex rel., v. Barry
266
United Spates v. Bennett
66
United States v. Booker
86.93
United States v. Britton
81, 82, 83,321
United States v. Cadwallader
83
United States v. Clinton National Bank..
116
United States v. Conant
83
United States v. Cooke County National
Bank
79
United States v. Crecelius
Ill
United States v. Curtis
121,167,171
United States v. Edgerton
122
United States v. E«e
Ill
United States v. Eno
120
United States v. Fish
81, 83, 111
United States v. Folsom
112
United States v. French et al
112,121
United States v. Graves
112, 217
United States v. Harper
82,111,177
United States v. Hughitt
Ill
United States v.Jewett
113
United States v. Kenney
91
United States v. Knox
26
United States v. Lee
86
United States, plaintiff in error, v. Mann. 51, 244
United States v. McClure
93
United States v. Means et al
172,178
United States v. National Bank of Asheville et al
96
United States v. National Exchange
Bank
137
United States v. Neale
176
United States v. North way
120
United States v. Patterson, Keeper, e t c . . .
87
United States v. Peters
90
United States v. Potter
86,120,121
United States v. Stockgrowers' National
Bank of Pueblo
99
United States v. Tain tor
81
United States v. Vorhees
79
United States v. Warner
120
United States v. Toutsey
91
United States Bung Manufacturing Company v. Armstrong
188
United States National Bank v. First National Bank of Little Rock et al
170,184
United States National Bank v. McNair.
160
Upton v. National Bank of South Readying
209
upton v. Tribilcock
54
Utica, First National Bank of, v. Waters
and another
240
V.
Valparaiso, Ind., The Farmers' National
Bank of, v. Sutton Manufacturing Company
79
Van Allen v. The American National
Bank
62,96
Van Allen v. The Assessors
226, 227, 231
Van Antwerp v. Hulburd
125, 137
Van Campen, I n re
82, 111
Vance v. Mottlev
,
174
Van Leuven v. First National Bank
193
Van Slyke v. State
227
Veazie Bank v. Fenno
66, 78, 230, 231
Veeder v. Mudgett
54
Venango National Bank v. Taylor
186,187
Venner v. Cox
200
Vicksburg Bank v. Worrell
227
Viets v. The Union National Bank of Troy
62
Vilas National Bank v. Barnard
18
Virginia, National Bank of, v. City of
Richmond et al
226
Vose v. Philbrook
186




Page.
W.
Wachusett National Bank v. Sioux City
Stove Works
134
Wadsworth v. Duncan
21
Wadsworth v. Hocking
21
Wadsworth v. Laurie
21
W a i t ? . Dowley
231
W a l k e r v . Miller
107
Walker et al. t. Windsor National Bank.
134
Wallace v. Hood
38
Wallace v. Stone
76
Warner v. Penoyer et al
181
Warren v. De W i t t County National Bank
209
Warren v. First National Bank
149
Warren-Scharf Asphalt Pav. Co. v. Commercial National Bank
116
Washington National Bank v. City of
Seattle
233
Washington National Bank v. King
County
233
Washington National Bank v. Pierce
171
Wasson v. Bank
228
Wasson v. Hawkins
205
Waterloo, First National Bank of, v. Elmore
209
Waterloo Milling Company v. Kuenster..
76
Watkins v. National Bank of Lawrence . .
151
Watson v. Sheafe
97
Waxahachie National Bank v. Vickery...
145
Weaver v. Kelley
142
Weber v. Spokane National Bank
153
Weckler v. The First National Bank of
Hagerstown
52, 254
Welles v. Graves
114,178
Welles v. Larrabee
29
Welles v. Stout
30
Wells burg, The First National Bank of,
v. Kimberlands
183
Wellston, First National Bank of, v. Armstrong
72,193
West v. Bank of Rutland
67
West Chicago Park Com'rs v. McNulty.. 110,208
West v. St. Paul National Bank
71
Western National Bank v. Armstrong
172,185
Western National Bank v. Wood
164
Westervelt v. Mohrenstecher et al
175
Weston v. Estey
147
West Side Bank v. Mechanics' National
Bank of Newark, N. J
46
W h a r r y v . Hale
210
Wheeler v. Union National Bank of Pittsburg
260
Wheeler v. Walton & Whann Company..
215
Wheelock v. Kost
103,124, 218
Whitbeck v. Mercantile Bank
228, 231
White v. Knox
124,125
White etal. v. Iowa National Bank of Des
Moines
24
Whitehall, F i r s t National Bank of, Respondent, v. James Lamb et al., Appellants
265
Whitney v. Butler
249
Whitney v. The First National Bank of
Brattleboro
222
Whitney et al. v. General Electric Company of New York et al
215
Whitney National Bank v. Parker
229
Whitney et al., Appellants, v. Ragsdale,
Treasurer
237
Whittaker v. Amwell National Bank
22,70
Whittemore v. Amoskeag National Bank.
133
Wichita National Bank et al. v. Smith
136
Wickham v. Hull
26,136
Wild, In re
132,259
Wilder v. Union National Bank . . . >
139
Wiley v. The First National Bank of
Brattleboro
222
Wiley v. Starbuck
257
Williams, People ex rel., v. Weaver
228
Williams v. American National Bank of
Arkansas City, Kans., et al
55
Williams v. Board of Supervisors of the
County of Albany
241
Williams v. City National Bank
179
Williams v. Cox
65

REPORT OF THE COMPTROLLER OF THE CURRENCY.
Page.
"Williams v. Weaver
228
Williamson et al. v. American Bank et al. 24,152
Williamsport National Bank v. Knapp . . . 109,138
Wilmington, First National Bank of, v.
Herbert, State Treasurer
245
Wilson, Assignee, v. National Bank of
Rolla
260
Wilson v. Merchants' Loan and Trust Co. 40,110
Wilson v. Pauly
24,170
Wingate v. Orchard
190
Winstandley v. Second National Bank . . .
127
Winter v. Baldwin
51
Winters v. Armstrong
53, 213
Winterset, National Bank of, v. Eyre et al.
134
186, 264
Winton v. Little
210
Witters v. Foster
20,135,177
Witters v. Sowles
26, 79,130,156,177,188, 223
Wolverton v. Exchange National B a n k . . .
133
Wood, Appeal of
55
Wood River Bank v. First National Bank
of Omaha
64, 65, 71,146
Woods v. People's National Bank of Pittsburg
158
Woodward v. Ellsworth
233,242
Woolman v. Capital National Bank
190
Worcester National Bank v. Cheeney
209
Worcester, Mass., First National Bank
of, v. Lock-Stitch Fence Company et al.
164
Wright v. First National Bank of Greensburg
212,257

17

Page.
Wright v. Merchants' National Bank
212
Wright v. Robinson et al
64
Wylie v. Northampton National B a n k . . . 222,223,
224, 225, 254
Wyman v. Citizens' National Bank of
Faribault
153
X.

Xenia, First National Bank of, v. Stewart-

52,
67,173

Y
Yakima National Bank v. Knipe
107,133
Yardley t;. Clothier
185,187
Yardley v. Philler
207
Yardley v.Wilgus
31,218
Yerkea v. National Bank of Port Jervis..
193
Young v. Andrews et al
79,193,210
Young v. McKay
30
Young v. Wempe et al
30,10.1
Youngstown, First National Bank of, v.
Hughes et al
51, 230,240
Z.

Zeigler v. First National Bank of Allentown
Zeis v. Potter et al
Zimmerman v. Carpenter

98
70
37

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 filed 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 geueral 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 plaintiffs claim." Rev. St., sec. 5522; Northern National
Bank v. Mawmee 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.

CUR 1901, PT 1
2


18

REPORT OF THE COMPTROLLER 01^ THE CURRENCY.

ACCOMMODATION PAPER—Continued.

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 rote 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, ^hat the maker was liable
on the note to the bank's receiver. Linn County National Bank v Crawford (C. C), 69 Fed. Bep., 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.
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 W. 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 reply 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.), 35N. Y. S , S96, distinguished. lYadesmen's National
Batik v. Bank of Commerce (Sup.), 39 N. 1. 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, aud 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
y a t the Farmers' National Bank, Adams, N. Y. Value received."
Held, that the deli very of the indorsed blanks did not authorize the holder to
fill them out so as to make them payable lt on demand " instead of at a specified time after date, or to add the words "with interest." Farmers'
National Bankv. Thomas (Sup.), 29N. Y. S.,-837.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

19

ACCOMMODATION PAPER—Continued.

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, aud, 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, Rep., 532.
15. One who takes accommodation paper from the party for whose benefit it was
made and gives him credit for the same on aprecedent indebtedness, though
advancing no money, is a holder of such paper for value. lb.
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
safely recover upon it without proof that the agent was expressly and
specially authorized by his principal to do the act or make tbe contract 11).
18. It is ultra vires of a corporation to make accommodation paper, or to guarantee the payment of the obligations of others, lb.
19. A contract which a corporation has no power to make, it has no power to
ratify, and no power to estop.itself from denying, lb.
20. A national bank receiver can not recover upon notes made for the accommodation and sole benefit of the bank, without consideration. Stapylton
v. league; same v. Anderson et al.; same v. Carmichael, 85 Fed. Rep., 407.
21. Accommodation indorsements or acceptances by a national bank are ultra
vires, and void in the hands of holders with notice. Bowenv. Needles
National Bank, 87 Fed. Rep., 430.

ACTIONS.

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. JV. 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. Pier son, 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. Case}/ 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 V. 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.



20

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ACTIONS.

See Jurisdiction—Continued.

8. Under the original act respecting national banks, and before the act of
June 30, 1876, a court oi 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., 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 H'in, 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. Conway v. Halsey, 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 tc
contribute to pay the debts of the association, an action against such
directors may be brought by a shareholder on behalf of himself itnd 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.
Brinckerhoff Y. Bostwick, 88 N. ¥., 52.
13. A receiver may sue either in his own name or the name of the bank.
National Bank y. 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
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 1;he act,
without reference to the locality of their personal citizenship. II.
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., 35?.
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. S., 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., 616; 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 York v. National
Bank of the Commonwealth, 4 ThompsonfyCook, 518; 1 N. B, C, 774: Green
v. The Wallkill National Bank, 7 Hun, 63; 1 N. B. C., 786.



REPORT OF THE COMPTROLLER OF THE CURRENCY.
ACTIONS.

21

See Jurisdiction—Continued.

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. Hep,, 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. < I). B. Co. v. Metropolitan
f
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. Hay den 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. Hep.,
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
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.
31. 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. Wadsworth v. Hocking, 61 III. App., 156; Same v. Duncan, Ib.;
Same v. Laurie, Ib.
32. 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.
33. 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 loaued. Squires v. First National Bank, 59 III.
App., 134.
34. 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.),52N. W.,1131.
35. 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.
36. 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.
37. 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



22

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ACTIONS.

See Jurisdiction—Continued.

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.
38. 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 tho maker
would have been of no avail. Merchants'1 National Bank v. Spates ( W. Va.),
23 S. E., 681.
39. 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., Wo.
40. 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 atf&cked as
fraudulent, testimony that deceased said she intended plaintiff to have all
her property when she died is incompetent. Turner v. Utah Title Insurance
$ Trust Co. (Utah), 37 P., 91; Same v. Wells, Fargo cf Co., Ib., 94; Samev.
Union National Bank, Ib., 95.
41. 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. Ulrichv. Santa Rosa National Bank (Cal.\ 37
P., 500.
42. 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
the Chicago bank in assumpsit, declaring specially on the note, which it
alleged was made l>y 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. Statl, 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. Rep., 160.
43. 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. Rep., 334; 3 N. B. C, 568.
44. 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
wrought 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, liicaud v. Tysen, 78 Fed. Rep., 561.
45. 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.
46. An action by the receiver of an insolvent national bank, in 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 < Trust
f
Co., 79 Fed. Rep., 50.



REPORT OF THE COMPTROLLER OF THE CURRENCY.
ACTIONS.

23

See Jurisdiction—Continued.

47. 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.
48. In an action by a bank upon a negotiable note payable to order, the title to
which, by appropriate indorsement, has become vested in the name of a person as cashier, the declaration must show that such person is plain tiff'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.
49. 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. Ex parte Chetwood, 165 U. S., 443.
50. 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
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. McConville v. Gilmour et al.f 36 Fed. Rep., 277.
2. 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" as the plaintiff on the
record in place of the ureceiver" in a suit already commenced by the
latter. Ib.
3. 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 has
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. Ex parte Chetwood, 165 U. S., 443.
4. A duly elected "agent," who is substituted under the act of June 30, 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.
5. 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. Chetwood v. California National Bank (Cal.),
45 P., 854.
6. 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. Field, that such agent takes the place
of the receiver, and is at least a quasi public officer, the regularity nnd
validity of whose appointment can riot be questioned in a collateral
proceeding. Ib.



24

REPORT OF THE COMPTROLLER OF THE CURRENCY.

AGENT OF SHAREHOLDERS—Continued.

7. An action by or against an agent of the shareholders of a national bank,
chosen by them in pursuance of "An act authorizing the appointment of
receivers of national banks, and for other purposes/7 approved June 30,
1876, and its amendments (19 Stat., 63, c. 156; 27 Stat., 345, c. 360; 29
Stat., 600, c. 354), is a suit arising under the laws of the United States, of
which a Federal court has jurisdiction, under sections 1 and 2 of the acts
of 1887-J88 (25 Stat., 434). Guarantee Co. of North Dakota v. Hanway, 104
U. 8., 369.
8. The only authorized procedure for enforcing the individual liability of the
shareholders of a national bank which has gone into voluntary liquidation
is by a bill in equity in the nature of a creditor's bill brought by a creditor
"on behalf of himself and of all other creditors of the association." The
trustee appointed by the stockholders has no authority to enforce this
liability. The suit must be brought in the district in which the bank is
situated. Williamson et al. v. American Bank et ah, 109 Fed. Rep., 86.
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 1o refuse
to admit evidence offered by such an intervener, when his intervention
has not been brought to an issue with the original parties, Jtaker v.
Texarkana National Bank el ah, 74 Fed. Rep., 598.
3. On an appeal from an order denying a motion to dissolve an injunction
peudente lite, restraining an execution sale of personal properly, field,
that the court of appeals could not determine questions of lavr which
might depend upon undisclosed facts, or questions of fact upon <x 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 pro(eedings
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 ah v. Dooley et ah, 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
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 sil\ might
be sold under the execution, after ample notice, and the proceed*; 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. Rep., 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. Cans County (N>br.), 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 Raihvay and Light Co. {Tex.
Sup.), 34 S. W., 73>7.
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. Garjield National Bank v. Kirohway {City Ct. N. ¥.), 37
N. Y.S.,1140.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

25

APPEAL—C on t inued.
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 (111. Sup.), 42 N. E., 777; Smith v. Satin (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 (Gal.), 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. Jb.
16. 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. Peet (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. Hep., 208.
20. When a peremptory instruction is given in favor of either party, the only
question with respect to the charge which is open for consideration by an
appellate court is whether such direction to find for one party or the other,
when considered in the light of the pleadings and all the evidence, was
right. Assignments of error as to other matters contained in the charge
are in such case immaterial. Modern Woodmen of America v. Union Nat.
Bank, 108 Fed. Bep., 753.
21. Special findings made by a jury, as authorized by the State practice, have the
same weight and effect as special findings of fact by the court where a jury
has been waived, and can not be reviewed by the appellate court, for the
purpose of determining whether there was any evidence to support them,
where the bill of exceptions does not state affirmatively that it contains
all the evidence. Metropolitan Nat. Bank v. Jansen et al., 108Fed. Bep., 572.
22. Wagering contracts on the future market price of grain, where it is shown
that, notwithstanding their terms, no actual delivery of the grain was
contemplated by the parties, are generally held to be illegal and void in the
United States, even in the absence of an express statute declaring them
invalid. Ib.
23. The maker and endorser of a promissory note are competent witnesses to
testify to facts which render such note invalid between the parties thereto,
as that the consideration was illegal, as against an indorsee after maturity
who took the paper with knowledge of the facts. Ib.
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 }T. 8., 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. 8., 227; Thayer v. Butler, Ib., 234; Butler v. Eaton, Ib., 240.



26

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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.f 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 iu 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. Rep., 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. Rep., 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. Eitz, 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. Southworth, 8 Ben., 331; Kennedy x. 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 deiiciency caused by the insolvency of other shareholders.
United States v. Knox, 102 V. 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.
Rep., 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 set up 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. Laimj v. Barley, 101 III., 591; 3 N. B. C, 369.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

27

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 0. 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. S., 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. S., 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. 8., '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
bauk's failure. Held, that the stockholder incurred the statutory liability. II).
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 fraudulently made, and
$1,750 therefor placed to the credit of V. on its books. He, learning on
that day of the transfer of the 50 shares, ordered I)., 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, H2 U. S., 56.
23. In winding up au 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 corporation. 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.



28

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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. Bowdeil 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 of 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 uecessar^ 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.

31. 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 A^alue thereof, in addition to the amount invested in
such shares. 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 auswer for the
default or liability, of any other person," 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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

29

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, Bep., 405.
42. After a national bank has 7become 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. Manufacturers7 National
Bank of Chicago et al., 17 Fed. Hep., 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 or 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 u 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, Receiver, 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. Manufacturers7 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. He 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 tlio 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., 86 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," is 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.



30

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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 o^ 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. Held, 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 he 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 belouging 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 tiie
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. Sowles v. Witters el al., 39 ed. 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, fb.
54. A person who becomes a stockholder in \\ national bank thereby submits
himself to the provisions of the nation 1 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 ah, 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 u 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 com


REPORT OF THE COMPTROLLER OF THE CURRENCY.

31

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
pound the statutory liability of certain stockholders by accepting payment of a gross sura, 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 Ceriain 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. Yard-ley v. Wilgtts, 56 Fed, Hep., 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. II).; Casev. 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. StantonY.
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 courso 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
iii 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 tiled 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. Bow den v. Johnston, 107 TJ. 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 U. S., 27.
68. The creditors of an insolvent association must seek their remedy through
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 tho 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



32

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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 n© 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 "' 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 pet off by B. in an action
against him on the notes by the receiver of the bank. Broderich 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 interest 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.

Blackmore v. Woodward et al., 71 Fed. Rep., 321.

/4. The capital, the unpaid subscriptions to the capital stock, and the liability
of the holders of the paid-up stock to pay an additional amouut 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.
Hay den 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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

33

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. Hep., 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 ah,
74 Fed. Rep., 382.
77. 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 ah, 75 Fed. Bept, 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., sec. 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. Witherby {Cah), 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, Fx'r, etc., and others v. Manufacturers7 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,
CUR 1901, PT 1
3




34

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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 bo 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 filing 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 bo used or invested by her in her name. Bundy v.
Cocke, 128 U. 8., 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 j)raying 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.y 77 Fed. Be})., 258.
93. On a bill by tho receiver of an insolvent national bank to collect an assessment by tho 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 transferrer 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. Bep., 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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

35

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." Lb.
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 it* not liable, as
a shareholder, to assessment on the stock. National Park Bank of City of
New York v. Harmon, 79 Fed. Hep., 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 Fx'r, 79 Fed.
Rep., 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 al., 76 Fed. Eep., 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, lb.
100. The bar of a statute of limitations will be enforced, when applicable, in
equity as well as at law. lb.
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. lb.
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 Avay 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, oauses the shares to be transferred on



36

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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 trausfers it to his wife, also a resident of Maryland, she becomes owner thereof, and is subject to stockholders' liability,
under Revised Statutes, United States, sec. 5152, without regard to the
laws of the other State relative to contract by married women. Kerr v.
Urie (Aid.), 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 jurisdiction 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. Northwestern
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. Reid, 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., sec. 5205, that the bank's
capital is impaired 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. Rulitt v. Bell et al., 85 Fed. Rep., 98,



REPORT OF THE COMPTROLLER OF THE CURRENCY.

37

ASSKSSMENT. See Insolvent banks; Receivers, etc.—Continued.
.115. An assessment to restore impaired capital, under Rev. St., sec. 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., sec. 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 hhe 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 ah, 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, 11. I.} et ah,
86 Fed. Rep., 1006.
123. Where shares of an insolvent bank are registered on the books " F. 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. Rep., 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
or the Currency. Rand et ah v. Columbia National Bank of Tacoma, Wash.,
etah, 87 Fed. Rep., 520.
129. A sale of ail 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. Merchants1 National Bank of Rome v. Fonche,
Supreme Court of Georgia, July, 1898,



38

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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, 8., 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 f creditors of a national bank to look to the individual liability
of shareholders, to the extent indicated by the statute, for ite 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. Hood,
C. C., 89 Fed. Bep., 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 national 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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

39

ASSESSMENT. See Insolvent 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, to whom the certificate, with a duly
executed 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 transfer was ever made of the stock on the books of the bank.
Earle v. Coyle, C. C, 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. Davis'8 Estate v. Watkins, 76 N. W., 575.
146. The investment by the First National Bank of Concord, N. II., 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 U. S., 864.
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. Bobinsonv.
Southern National Bank of New York, 94 Fed. Rep., 964.
148. Shareholders in a national bank who, in good faith, paid an invalid assessment on 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., "as cashier" of the bank, and requested him to transfer the shares
to the purchaser thereof; and this, notwithstanding a by-law of the bank
that " n o 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 determined 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 of 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.




40

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
154. The action of the Comptroller in ordering an assessment against the stockholders of an insolvent national hank 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 (CO. 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. Bep., 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 w ay of counterclaim, a claim for damages against the 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., sec. 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. (0. C),
98 Fed. Bep., 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. Bep., 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 bank, such an action is governed as to limitation
by the statute of the State where it is brought, by virtue of Rev. St., sec.
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 the 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. Bep., 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. Nebr., 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. Bep., 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. Bep., 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 againsi? 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. Be Lashmutt (0. C), 101 Fed, Bep., 367.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

41

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. 1b.
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, and 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 stock 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.
174. The officers of a national bank have no power to incur a liability on the part
of such bank after it has gone into liquidation which will be binding on
the shareholders, and a judgment on a liability so created, rendered against
the bank by collusion of the officers, is not conclusive on the shareholders.
Moss v. Whitzel, 108 Fed. Rep., 579.
175. The fact of an assessment by the Comptroller upon the stockholders of a
national bank does not conclude such stockholders as to the validity of the
debts to pay which the assessment is made, and they are entitled to their
day in court upon that question before being required to pay the assessment in an action against them by the receiver. Where the defendants in
such an action assert the invalidity of a judgment against the bank which
is the basis of the assessment, the appropriate procedure would seem to
be for them to file a bill in equity to determine the validity of such judgment, and to enjoin the action against them, giving bond for the payment
of the judgment therein in case the injunction should be dissolved after
hearing. Ib.
176. An owner of shares in a national bank, who sold the same in good faith,
without knowledge or reason to believe that the bank was insolvent, and
who did everything that was reasonably possible to have the proper formal transfer made on the books of the bank, can not be treated as a shareholder, and held liable to an assessment made by the Comptroller upon the
subsequent closing of the bank as insolvent, upon evidence showing that



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REPORT OF THE COMPTROLLER OF THE CURRENCY

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
the bank was in fact insolvent at the time the sale was made, and that the
purchaser was also insolvent. The statute imposes no restriction upon the
right to transfer shares because of the insolvency of the bank or the transferee, nor do considerations of public policy justify it where the seller has
exercised due diligence, and has acted in the transaction with fairness
and good faith. E'arle v. Carson, 107 Fed. Hep., 639.
177. A pledgee of shares of stock in a national bank, with a power of attorney
in blank to transfer the same indorsed thereon and signed by the pledgor,
does not become liable as owner for an assessment thereon by causing
them to be transferred on the books of the bank to a third person for the
purpose of being held by him as trustee for both parties, and in accordance
with the contract of pledge, although the pledgor did not expressly authorize such transfer. Hayes v. Fidelity Insurance, Trust and Safe-Deposit Co.,
105 Fed. Bep., 160.
178. Under the national banking act (Rev. St., sec. 5151), requiring that the shareholders of every national bank shall be held individually responsible,
equally and ratably, and not one for another, for all debts of the bank, to
the extent of the amount of their stock, at the par value thereof, in addition to the amount invested in such stock, a stockholder can not be
required to make good the failure of another stockholder to pay his
assessment; and, where an assessment has been made, it must be considered, for the purpose of making a second assessment, as if the entire
assessment had been paid. Lease v. Barschall et al.f 106 Fed. Bep., 762.
179. Where stockholders of a national bank have paid an assessment to a receiver
of the bank, the receiver becomes the trustee of the creditors; and any
loss he may sustain by investments, in endeavoring to save the debts of
the bank, can not be charged to the shareholders and made the subject
of an additional assessment. lo.
180. An assignment of error based on the refusal of an instruction submitting to
the j ury a question of fraudulent intent in including in a mortgage certain
items of indebtedness of a third party to the mortgagee raises no question which can be considered, where the bill of exceptions does not set
out the evidence, but merely gives its substance, and contains a recital
that there was evidence tending to show that such indebtedness had previously been assumed by the mortgagor, and that there was no evidence
tending to show that its inclusion was with any fraudulent purpose.
Carson et al.,y. Commercial Nat. Bank of Independence, Kans., et ah, 104 Fed.
Bep., 733.
181. The liability of a stockholder of a national bank to respond to an assessment on his stock in case of insolvency of the bank is contractual, though
founded on the national banking act (Rev. St., sec. 5151), making shareholders individually liable for all debts of the bank to the extent of the par
value of their stock therein, since an assent to the liability attached to
the ownership of bank stock is implied by his voluntary act of acquiring
it; and if he is a resident of Washington, and the bank is located there,
a suit to enforce such liability is governed by Ballinger's Ann. Codes and
St., sec. 4800, subd. 3, which provides that an action on a contract or liability, express or implied, which is not in writing and does not arise out of
any written instrument, may be commenced within three years after the
cause of action shall have accrued. Aldrich v. McClaine, 106 Fed. Bep., 791.
182. In an action by a corporation of Great Britain against a stockholder to enforce
liability for unpaid assessments on the stock, the statutes governing such
liability are sufficiently authenticated and proved by the testimony of an
English solicitor, familiar with company law, and who was also a director
in the company, stating under what acts it was organized, and that copies,
which he produced were copies of such acts, and also that they were published by governmental authority. Nashua Savings Banky. Anglo-American Land-Mortgage and Agency Co., Limited, 108 Fed. Bep.,.764.
183. Where the record on a writ of error from the circuit court does not purport
to contain all the evidence or all the material evidence, the questions
whether the court erred in refusing a request to direct a verdict for defendant or in directing a verdict for plaintiff can not be considered. 1 b.
184. In an action by a foreign corporation against a stockholder to recover an
assessment made on his stock, the fact that no evidence was offered by
plaintiff to show that it was insolvent when the assessment was made, or
that such call or assessment was made for the benefit of creditors or in
payment of debts, does not preclude a recovery, where, under the statutes
governing the corporation, calls might legally be made for other purposes;



REPORT OF THE COMPTROLLER OF THE CURRENCY.

43

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
and where, on appeal from a judgment for plaintiff, the record does not
purport to contain all the evidence, it must be presumed that due proof
was made of the regularity of the corporate meetings and of the calls. Ib.
185. In an action by a foreign corporation in a court of the United States against
a stockholder to recover a call made upon his stock, which by the statutes
under which the corporation was organized is made a debt from the stockholder to the corporation, for which the corporation is also given a lien on
the stock, the plaintiff is not restricted to the forfeiture and sale of defendant's stock, because that is the only remedy provided by the laws of the
State in which the action is brought, but may enforce defendant's personal
liability. Strictly speaking, such action is not based upon the foreign
statute, but on the contract voluntarily made by the defendant when he
became a stockholder, of which such statute defining the liability of stockholders became a part. Ib.
186. The English companies act (25 and 26 Viet., c. 89, sec. 16) provides that "all
moneys payable by any member to the company in pursuance of the conditions and regulations shall be deemed to be a debt due from such member
to the company, and in England and Ireland to be in the nature of a
specialty debt." Reid, that assumpsit was the proper form of action in
a court of the United States to enforce the liability of a stockholder to a
company organized under such acts for a call made upon his stock pursuant
to the provisions thereof. Ib.
187. A testator directed by his will that a daughter's share in his estate should
remain in the hands of his executors, and be invested by them, and the
income paid to the daughter during her life, and at her death the part of
the estate so "held in reserve" by the executors should revert to the general estate. The executors set apart as a portion of the daughter's share
certain shares of stock in a national bank held by the testator, and caused
the same to be transferred on the books of the bank to themselves as
"trustees." Held, that the legal title to such shares devolved upon them
as executors, and they had no power to devest themselves of such title by
any transfer, and that an action to recover an assessment on the stock was
properly brought against them as executors, and especially where the
assessment was not made until after the daughter's death. Earle v. Rogers
et ah, 105 Fed. Rep., 208.
188. The State National Bank of Vernon, Texas, having become insolvent, Robinson was appointed receiver, and the Comptroller made an assessment upon
the stock and its owners. This action was brought to recover such assessment from the Southern National Bank. One hundred and eighty shares
of the stock so assessed were the property of one Curtis. His certificates
were deposited with the Southern Bank as collateral, but the stock
remained in his name, and so continued till the commencement of this
suit. Held, that the case was not one in which the bank was estopped by
having assumed an apparent ownership of the stock. Robinson v. Southern
National Bank, 180 Fed. Rep., 295.
189. By the mere act of bidding in this stock at a nominal price the Southern
National Bank is not to be regarded as having subjected itself to liability
as the real owner thereof. Ib.
190. As between the Southern National Bank and Curtis and Thomas, the bank is
under no legal or equitable obligation to assume or answer for the assessment made by the Comptroller on the stock. Ib.
191. California Bank v. Kennedy (167 U. S.f 362) and Concord Bank v. Hawkins [174
U. S.,364) followed; but this court is not disposed, at present, to push the
principle of these cases so far as to exempt such banks from liability as
other shareholders when they have accepted and hold stock of other
corporations as collateral security for money advanced (which is not
decided). Ib.
192. There is a presumption in such cases against any intention on the part of the
lending bank to become an owner of the collateral shares. Ib.
193. The statutes and the settled law of the land at the time a contract is made
become a part of it, and must be read into it. Deweese v. Smith et ah, 106
U. S., 438.
194. The liability of the shareholders of national banks for their debts under
section 5151 of the Revised Statutes is based upon contract. Ib.
195. The contract of the shareholder of a national bank with the bank and its creditors regarding its debts is that, to an amount not exceeding the par value
of his shares of stock, and not exceeding his equal and ratable proportion,
he will pay, at such times and in such amounts as the Comptroller of the
Currency shall demand, the debts and obligations of his bank. Ib.'



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
196. A judgment for a part of an entire, indivisible demand, all of which is due
when the action is commenced, is an election to take the part in satisfaction
of the whole, and it estops the plaintiff from recovering the residue. Ib.
197. But a judgment for a part of such a demand which is due does not estop the
plaintiff from maintaining another action for another part of the demand
which becomes due subsequent to the commencement of the first action. Ib.
198. A judgment in favor of the receiver of an insolvent national bank for the
recovery of an assessment made by the Comptroller upon a shareholder
does not estop him from maintaining a second action against the same
shareholder for another assessment which had not been made or was not
due when the first action was commenced. Ib.
199. While the construction of statutes by the officers to whom Congress has
intrusted their execution and the uniform practice of such officers are persuasive and entitled to careful consideration, yet a court can not lawfully
renounce its judicial powers; and it is its duty, if satisfied upon reason
or authority that a correct determination of the question before it requires
a decision contrary to such construction and practice, to render that decision. Ib.
200. The decision of the Comptroller of the Currency that it is necessary to collect, %nd his requisition of a certain percentage of the liability of the
shareholders of a national bank, in order to pay its debts, is not a decision
that a larger percentage will not be necessary, and he has plenary power
to make successive assessments until the full liability of the shareholder
is exhausted. Ib.
201. The statute of limitations does not commence to run against the enforcement of the entire liability or against the enforcement of any particular
portion of the liability of the shareholder of a national bank to pay its
debts until the time when the Comptroller has declared the entire liability
or the particular portion of it in issue to be clue. Ib.
202. One who would attack in a Federal court the decision of a quasi judicial
officer for mistake of fact must proceed in equity, and must allege and
prove the evidence before the officer from which the mistake resulted, the
way in which it was made, and the fact that in its absence his decision
would have been otherwise, before a court can enter upon a reconsideration of the issue before the officer. Ib.
203. Under the acts of Congress tne Comptroller of the Currency is constituted
a quasi judicial tribunal to determine at what times and what amounts,
x
not exceeding the full liability of the stockholders, it is necessary to collect
from them to pay the debts of the bank. His decisions of these questions
are impervious to collateral attack and open to avoidance by a court only
in a direct attack upon them for error of law, fraud, or mistake. Ib.
201. Section 5142 of the Revised Statutes of the United States, providing for
the increase of the capital stock of a national bank, and declaring that
no increase of capital stock shall be valid until the whole amount of the
increase is paid in and until the Comptroller of the Currency shall certify
that the amount of the proposed increase has been duly paid in as part of
the capital of s,uch association, does not make void a subscription or
certificate of stock based upon capital stock actually paid in, simply
because the whole amount of any proposed or authorized increase has not
in fact been paid into the bank; certainly the statute should not be so
applied in Uehalf of a person sought to be made liable as shareholder,
when, as in the present case, he held at the time the bank suspended and
was put into the hands of a receiver a certificate of the shares subscribed
for by him; enjoyed, by receiving and retaining dividends, the rights of
a shareholder, and appeared as a shareholder upon the books of the bank,
which were open to inspection, as of right, by creditors. Scott v. Deweese,

181 U. S.,
'202.
205. As between the bank and the defendant, the latter, having paid the amount
of his subscription for shares in the proposed increase of capital, was
entitled to all the rights of a shareholder, and therefore, as between himself and the creditors of the bank, became a shareholder to the extent of
the stock subscribed and paid for by him. Ib.
206. That the bank, after obtaining authority to increase its capital, issued certificates of stock without the knowledge or approval of the Comptroller
and proceeded to do business upon the basis of such increase before the
whole amount of the proposed increase of capital had been paid in, was a
matter between it and the Government under whose lawvS it was organized,
and did not render void subscriptions or certificates of stock based upon




REPORT OF THE COMPTROLLER OF THE CURRENCY.

45

ASSESSMENT. See Insolvent banks; Receivers, etc.—Continued.
capital actually paid in nor have the effect to relieve a shareholder who
became such by paying into the bank the amount subscribed by him from
the individual liability imposed by section 5151. Ib.
207. Upon the failure of a national bank the rights of creditors attach under section 5151, and a shareholder who was such when the failure occurred can
not escape the individual liability prescribed by that section upon the
ground that the bank issued a certificate of stock before, strictly speaking,
it had authority to do so. Ib.
208. If a subscriber to the stock of a national bank becomes a shareholder in consequence of frauds practiced upon him by others, whether they be officers
of the bank or officers of the Government, he must look to them for such
redress as the law authorizes, and is estopped, as against creditors, to deny
that he is a shareholder within the meaning of section 5151 if at the time
the rights of creditors accrued he occupied and was accorded the rights
appertaining to that position. Ib.
ATTACHMENT :

1. The stock of a shareholder indebted to it may be attached by the association and sold on execution. Bagar 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 Bank v. Mixter, 124 U. 8., 721.
3. No attachment can issue from United States circuit court in an action
against a national bank before final judgment in the cause, and a bond
given on such attachment is illegal. Ib.
4. An attachment can issue against a national bank from a State court, llobinsonv. National Bank of Newbern, 58 How. Pr., 806; 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
brought, and not to cases where the action is against a nonresident corporation. Southwick v. The First National Bank of Memphis, 7 Hun., 96;
1 N. B. C.f 789.
6. 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.
Rhoner v. National Bank of Allentown, Pa.; Palmer v. Same, 14 Hun., 126;
2 N. B. C, 331.
7. 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.
8. 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. Raynor v. Pacific National Bank, 93 N. Y., 371;
3 N. B. a, 624.
9. An unrecorded transfer of national-bank stock will take precedence of a
subsequent attachment in behalf of a creditor without notice. Continental National Batik v. Eliot National Bank et al.} 7 Fed. Rep., 369.
10. 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.
11. 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. Ib.
12. 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.



46

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ATTACHMENT—Continued.

13. 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 Baixk of Selma v. Colby, 21 Wall., 609; Harvey v. Allen,
16 Blaich., 29.
14. 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 Banky. Mixter, 124 U. S., 721.
15. 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. Mechanics7 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.
16. An attachment issued against an insolvent national bank is invalid (U. S. R. S.,
sec. 5242), and is not made valid by the subsequent acquisition by the
bank of further capital. Baynor v. Pacific National Bank, 93 N. Y., 371;
3 N. B. C, 624.
17. 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. Ib.
18. 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.
19. 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.
20. 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.
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. K, 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.t 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. 1
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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

47

ATTACHMENT—C ontinued.

28.

29.

30.

31.

32.
33.
34.

35.

36.

37.
38.

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.
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.
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.
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.
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 Federal court may not issue a writ of attachment before final judgment against
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., sections 3261, 3262), which do not include nationalbank stock in their provisions, is of no effect against the defendant in attachment. Soivles v. National Union Bank of Swanton, Yt., 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.
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.
Overtoil 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., sec. 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 U. S. Rep., 421.
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.
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.




48

REPORT OF THE COMPTROLLER OF THE CURRENCY.

ATTACHMENT—Continued,

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. Bep., 456.
41. In Illinois the law does not permit the owner of personal property to sell it
and still continue in possession of it, so as to exempt it from seizure and
attachment at the suit of creditors of the vendor; and in cases of this
kind the courts of the United States regard and follow the policy of the
State law. Dooley v. Pease, 180 Fed. Rep., 126.
42. Where a case is tried by the court, a jury having been waived, its findings
upon questions of fact are conclusive in the courts of review. Ib.
43. Errors alleged in the findings of the court are not subject to revision by the
circuit court of appeals or by this court, if there was any evidence upon
which such findings could be made. Ib.
44. Applying the settled law of Illinois to the facts as found, the conclusion
reached in this case by the circuit court, and affirmed by the circuit court
of appeals, that the sale was void against the attaching creditors, must be
accepted by this court. Ib,
BONDS OF OFFICERS:

1. It is not necessary that national banking associations shall Bignify their approval of the official bonds of their officers by memoranda entered upon
the journals or minutes of the directors. The acceptance is to be 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
extent and character of the obligation are the same as to both, depending
only upon, the form in which it is expressed. La Rose ei al. v. The Logansport
National Bank et ah, 102 Ind., 332.
5. 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 principal
will pay or perform according to his original engagement, and that they
will answer for his default in the event of failure, is a contract of
guaranty. Ib.
6. 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.
7. 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.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

49

BONDS OF OFFICERS—Continued.

8. Where by a by-law of a bank its cashier is made responsible for ths 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.
9. 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.
10. 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,
11. A continuing contract, guaranteeing the fidelity of a bank cashier, may be
revoked by the guarantors without cause, upon proper notice, but the
right must be exercised reasonably. Ib.
12. A bond of suretyship for an employee, which is to u 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.
13. Plaintiff, 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 at., 71 Fed.
Eep., 363.
14. 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 deniult 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. Eep., 116.
15. 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
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. Held, that the
cashier was not liable on his bond. First National Bank v. Still (Tex. Civ.
App.),32S.W.,61.
16. 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
within 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
CUR 1901, PT 1



4

50

REPORT OF THE COMPTROLLER OF THE CURRENCY.

BONDS OF OFFICERS—Continued.

for which the company would be responsible l'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 notified 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, 72 Fed. Bep., 470; 170 U. S., 134.
17. 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 from 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.
18. 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.
19. For the purpose of showing the dealings with the bank of the president, who
was chargetl 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 the 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.
20. 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 certificate 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.
21. When a case goes twice to an appellate court, questions decided upon the
first occasion will not be considered upon the second. Mohremtecher et ah
v. Westervelt, 87 Fed. Rep., 157.
22. 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.
23. 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.
24. 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. 1&.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

51

BONDS OF OFFICERS—Continued.

25. 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.
26. 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.
27. 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.
28. 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 dealings with 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 corporation 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 for State
taxation of the deposits as against the depositors. First National Bank of
Youngstown v. Hughes et ah; Second National Bank v. Same, 2 N. B. C, 176.
4. A national bauk 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. Eep., 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
objects subject to such 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 five 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. S., 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 Fairhaven v. The Phcenix WareCo., 6 Hun., 71; 1 N. B. C, 784,



52

REPORT OF THE COMPTROLLER OF THE CURRENCY.

BRANCH BANKS—Continued.

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. Rep., 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 Allentoivn v.
Horh, 89 Penn. St., 324; Weckler v. The First National Bank of
4°2 Md., 581.
CAPITAL STOCK.

Hagerstown,

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. S.,
676; 8 N. B. C, 96.
3. The articles of association and the by-laws of a national bank prohibited
the transfer 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 shares of the stockholders.
Billiard 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 Sioux City v. Peavey, 69 Fed. Bep., 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
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. lo.
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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

53

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
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. Hood v. Whorton, 74 Fed.
Bep., 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 in 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 y. Stanage; Same v. Wood, 37 Fed. Rep., 508.
9. Such a subscription is iinpliedly 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
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
Y. 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. 8., 595,



54

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
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. 8., 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., 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, can not question validity of proceedings for such increase to annul
such subscription and payment. Delano v. Butler, 118 U. 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; 1N.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. Rep., 372.
23. Under the national banking law (Rev. St., sec. 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 au
action to enforce the liability of the stockholders. Latimer v. Bard et al.,
76 Fed. Rep., 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
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 estopped 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 up 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., 143, and Implement Co. v. Stevenson, 13 C. C. A., 661,
66 Fed., 633, distinguished. Ib.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

55

CAPITAL STOCK. /^Shareholders; Transfer of stock—Continued.
27. A national hank reducing its capital can not retain, as a surplus or for anyother 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 thereafter 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., 854;
3 N. B. C, 484.
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. B.), 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 ah, 85 Fed. Bep., 376.
32. It is no defense to an action against 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 ah, 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 ah v. Matthews, 85 Fed. Bep., 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 " i n the same manner as I
should do were I there personally present," is estopped by the vote of his
proxy as respects any irregularity in the proceedings or calls of the meeting, which he could have waived if personally present. 79 Fed. Bep., 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. Bep., 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 amount of $50,000, or any
multiple thereof not exceeding $300,000, were valid and binding on the
subscribers. Ib,



56

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CAPITAL STOCK. See Shareholders; Transfer of stock—Continued.
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 amount 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.
41. Section 5142 of the Revised Statutes of the United States, providing for the
increase of the capital stock of a national bank, and declaring that no
increase of capital stock shall be valid until the whole amount of the increase is paid in, and until the Comptroller of the Currency shall certify
that the amount of the proposed increase has been duly paid in as part of
the capital of such association, does not make void a subscription or certificate of stock based upon capital stock actually paid in simply because
the whole amount of any proposed or authorized increase has not in fact
been paid into the bank. Certainly the statute should not be so applied
in behalf of a person sought to be made liable as shareholder when, as in
the present case, he held, at the time the bank suspended and was put
into the hands of a receiver, a certificate of the shares subscribed for by
him; enjoyed, by receiving aud retaining dividends, the rights of a shareholder, and appeared as a shareholder upon the books of the bank, which
were open to inspection, as of right, by creditors. Scott v. Deweese, 181
U. 8.9 202.
42. As between the bank and the defendant, the latter having paid the amount
of his subscription for shares in the proposed increase of capital, was entitled to all the rights of a shareholder, and therefore, as between himself
and the creditors of the bank, became a shareholder to the extent of the
stock subscribed and paid for by him. 16.
43. That the bank, after obtaining authority to increase its capital, issued certificates of stock without the knowledge or approval of the Comptroller
and proceeded to do business upon the basis of such increase before the
whole amount of the proposed increase of capital had been paid in, was a
matter between it and the Government under whose laws it was organized,
and did not render void subscriptions or certificates of stock based upon
capital actually paid in, nor have the effect to relieve a shareholder,
who became such by paying into the bank the amount subscribed by him
from the individual liability imposed by section 5151. Ib.
44. Upon the failure of a national bank the rights of creditors attach under section 5151, and a shareholder who was such when the failure occuried can
not escape the individual liability prescribed by that section upon the
ground that the bank issued a certificate of stock before, strictly speaking,
it had authority to do so. Ib.
45. If a subscriber to the stock of a national bank becomes a shareholder in con- '
sequence of frauds practiced upon him by others, whether they be officers
of the bank or officers of the Government, he must look to them for such
redress as the law authorizes, and is estopped, as against creditors, to
.deny that he is a shareholder, within the meaning of section 5151, if at the
time the rights of creditors accrued he occupied and was accorded the
rights appertaining to that position. Ib.
CASHIER.

See Officers.

CERTIFICATE OF DEPOSIT:

1. National banking associations may issue certificates of deposits. Middle v.
First National Bank, 27 Fed. Hep., 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 fche 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




REPORT OF THE COMPTROLLER OF THE CURRENCY.

57

CERTIFICATE OF DEPOSIT—Continued.

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 National 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. Bingel, 51 Ind., 393.
8. Held, therefore, that the payee could recover on said stolen certificate without giving a bond to indemnify the bank against a subsequent claim
thereunder by another person. Io.
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 certificate 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"
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 "in 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.
13. When a peremptory instruction is given in favor of either party, the only
question with respect to the charge which is open for consideration by an
appellate court is whether such direction to find for one party or the other,
when considered in the light of the pleadings and all the evidence, was
right. Assignments of error as to other matters contained in the charge
are in such case immaterial. Modern Woodmen of America v. Union Nat.
Bank of Omaha, 108 Fed. Rep., 753.
14. An instrument executed by the cashier of a bank which merely certifies
that on a prior date named a party had a stated sum on deposit to its
credit in the bank, but which contains no words of negotiability or



58

EEPORT OF THE COMPTROLLER OF THE CURRENCY.

CERTIFICATE OF DEPOSIT—Continued.

promise to pay, is not a certificate of deposit or an obligation of the bank
upon which an action can be maintained, but is merely evidentiary in
character. Ib.
15. Z was head banker of plaintiff, which was an incorporated insurance order,
. and as such had the custody of its funds. After the expiration of his term
of office he retained certain of such funds, although they had been
demanded by plaintiff, and kept the same on deposit in a bank in Grand
Island, Nebr., of which he was a stockholder and director. The cashier
of such bank wrote to the cashier of the defendant bank, which was its
Omaha correspondent, explaining that his bank had certain money of
plaintiff on deposit; that on a certain date plaintiff would issue a statement, and, for reasons concerning his own bank, he did not wish such
deposit to appear therein. He requested defendant to give plaintiff a
fictitious credit for the amount on said date, inclosing his note for the
amount to be credited, and also a check for the same amount, to be used
in paying the note a day or two later. He further stated that the
arrangement had been fully explained to and was understood by Z and
plaintiff's directors. The arrangement was carried out, and defendant's
cashier, a few days later, on request, issued a certificate stating that on
the date named plaintiff had such sum on deposit in his bank. This certificate was sent to the Grand Island bank, and by it given to Z, who forwarded it to plaintiff. Three weeks later the Grand Island bank failed,
and Z and his sureties were also insolvent. Plaintiff, having made
demand, brought action against defendant to recover the amount, suing
both on the certificate and for money had and received. Held, that the
certificate executed by defendant's cashier was not an obligation that
would support an action, nor would the action lie on an implied promise,
since defendant did not in fact receive any money on deposit; that it was
not estopped to show such facts by the certificate, which was issued only
as an accommodation to its correspondent and without any intention to
deceive plaintiff or knowledge that it would be so used, but, on the contrary, with the understanding tLat plaintiff's officers had full knowledge
of the transaction; that, when there is nothing in the circumstances of a
case indicating that one making a false statement intended that the complaining party should act on it, the party making such statement is not
estopped from showing the truth. Ib.
16. Where a bank issued a certificate falsely stating that on a certain date it
had on deposit a sum to the credit of a party, and it was claimed that the
certificate misled the party and occasioned damage, but it appeared that
such damage was much less than the amount of the certificate: Held,
that the proper remedy was an action ex delicto for deceit, rather than in
assumpsit to recover the amount of the certificate. Ib.
OEKTIFICATION OF CHECKS.

See Collections.

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 $• 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.



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

59

See Collections—Continued.

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 V. 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,
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 Clarke 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 payment 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 faith 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., 288.
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 "good"
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



60

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CERTIFICATION OF CHECKS—See Collections—Continued.

17.

18.

19.

20.

21.

22.

23.

24.

25.
26.
27.

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.
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.
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
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 commissioners. 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. Hornbloiver et ah, 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, the drawer will not be discharged from liability on the check. Cincinnati Oyster 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 liability 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 Shelby ville, 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 he 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




REPORT OF THE COMPTROLLER OF THE CURRENCY.

61

CERTIFICATION OF CHECKS—See Collections—Continued.

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.
28. 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.
29. 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.
CHECKS.

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., 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, 80 111., 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.7 and B., for account
of C. & Co., ten hundred and eighteen 23-100 dollars/ and signed by the
depositor, is a valid bank check, 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 Ridgely National Bank v. Patton fy 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 Mm 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 with 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



62

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS—Continued.
protest was given to defendant, who subsequently paid the amount to M.
In an action upon the check, held, 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 one 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
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. Y., 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 file 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 cf 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 uo 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, II).




REPORT OF THE COMPTROLLER OF THE CURRENCY.

63

CHECKS—Continued.
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 may be 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 cj- 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
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 Cal., 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 r 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.
Ib.
25. In such case a finding by the court that the check was received as a cash
deposit is erroneous. 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 Bockville v. The Second
National Bank of Lafayette, 69 Ind., 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. Burroivs v. State, 87 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 lor 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, 22 N Y. St., 633; 68 Hun., 129.
31. The measure of damages will be 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 bank to
pay the check, is not an injury for which the bank would be liable. Ib,



64

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS—Continued.
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
drawn aud delivered, as between the drawer and the payee or holder.
Hulings y. Rulings Lumber Company et al., 18 S. E., 620; 38 W. Fa., 351.
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.
8., 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.
JSeidelbach v. National Park Bank (Sup.), 33 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 five days
later, the depositor can recover only nominal damages against the bank.
Burroughs v. Tradesmen's National Bank (Sup-.), 33 N. Y. £., 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 che^k, 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 indprser; 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 (Tenn. Sup.), 36 S. W., 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. E., 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. Drovers' 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), U S. E., 524.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

65

CHECKS—Continued.
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. Ib.
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 plaintiff that defendant was
an accommodation indorser. Marshall National Bank v. O'Neal (Tex. Civ,
App.), 84 S. W.,344.
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.),42N.E.,518.
56. The holders of a draft before maturity are not bound by the acts of indorsers
after the transfer. Blochv. Creditors (La.), 16 So., 267; St. Louis National
Bank v. Bloch. 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 River 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. Merchants' National Bank of the City of New York v.
Samuel et al., 20 Fed. Rep., 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 check 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 bank 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
without 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. Sho. waiter 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., 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
CUB 1901 ? PT 1
5



66

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CHECKS—Continued.
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.
National Union Bank v. Earle (C. C), 93 Fed. Bep., 330.
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 cannot 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. IAlly 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 the
States have a right to tax it. Buffin 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 &tate 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 Walk, 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 end 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 amount of 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. Merchants7 National Bank of Little
Bock v. United States, 101 U. 8., 1; 2 N. B. C, 100.
9. The circulating notes of national banking associations are included in the
phrase "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 7as 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 Keokuk3 2 Cent. L. J.f 692; 1 N. B. C, 315.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

67

COLLATERAL SECURITIES—Continued.

4. A national banking association may take as collateral security for a loan a
warehouse receipt for merchandise. Cleveland, Brown < Co. v. Shoeman,
f
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. Steivart, 107 U. S., 676.
6. Creditor of insolvent bank has the right to prove and have dividends upon
his entire claim, irrespective of collateral security he may hold. People
v. Be7nington, 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, thepledgor 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."
Meld, 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 Bowdoinham, 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 nonnegoti able 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
S. 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. Merchants1 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




68

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLATERAL SECURITIES—Continued.

20.

21.

22.

23.

24.

25.

26.

27.

28.
29.
30.

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.
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.
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.
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.
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.
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
i nsolvency from collateral securities held by them. Ch emical National Bank
v. Armstrong, 59 Fed. Rep., 372.
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.
The plaintiff, a judgment creditor of the defendant, had the steamboat Kinta
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 actuai 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.
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.
It (the Third National) could not obtain possession through the agency of
the sublessee, who held possession for his lessor, the defendant. Ib.
A pledge can not be made perfect by the sublessee's delivery of possession
without the consent of his lessor. Ib.
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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

69

COLLATERAL SECURITIES—Continued.

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
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. Hep., 548.
32. Plaintiff 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. Where 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. Hep., 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. Neivcombe
{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. Newcombe (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. ThompsonfySons Manufg Co.
 (C. C. A.), 71 F., 113.


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REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLATERAL SECURITIES—Continued.

44. Where a debtor assigns to different persons assets as collateral security for
their cJaiins, 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. WMttaker v. Amwell National Bank
(N. J. Ch.), 29 A., 203.
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 Manufacturers1 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. Beid, 107 Penn. 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. Rep., 22.
48. One who sells notes secured by a second mortgage, falsely representing such
mortgage to be a first lien, can not invoke the record of a prior mortgage
held by himself as notice to the purchaser, but as between them the purchaser is entitled to priority of lien. N Zeis v. Potter et al.; Potter el al v.
Zeis, 105 Fed. Kep., 671.
49. The reasonable rule would seem to be that purchasers of overdue or nonnegotiable paper should take subject to the equities of all who appear or
are known to have had an interest in it. Ib.
*
50. A borrower from a bank pledged as collateral, among other securities, a certificate of purchase of real estate at judicial sale, the consideration stated
therein being $6,740. The certificate was in an envelope, which was
indorsed with the figures " $4,750." On inquiry as to the discrepancy, the
pledgor stated that a third person owned an interest of $2,000 in the certificate, and that he could only pledge the same ior the amount of his own
interest, which was $4,750. Whether the name of the third person interested in the certificate was asked for or given did not clearly appear. In
fact, as between the pledgor and such third person, the latter was entitled
to priority of interest in the certificate. A statute of the State (Hurd's
Rev. St. 111., c. 77, § 29) made such certificates assignable by indorsement, and declared the assignee " entitled to the same benefits therefrom
in every respect that the person therein named would have been if the
same had not been assigned." Held, that the bank was put upon inquiry,
and took the certificate subject to the rights which might have been
asserted as against the pledgor. Ib.
51. Where a borrower from a bank presented collaterals to the assistant
cashier, who was authorized to represent the bank in the transaction, and
was directed by the latter, in accordance with custom, to take such collaterals to the note teller, who had charge of the collaterals to be checked
up, notice to the teller in regard to the rights of a third person in one of
the securities pledged was notice to the bank. Ib.
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 of 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 before 1 o'clock. Before 3 o'clock bank A presented the check
in question for payment, which was refused; whereupon it immediately



REPORT OF THE COMPTROLLER OF THE CURRENCY.

71

COLLECTIONS. See Checks; Certified checks—Continued.
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.
Beno 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," 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
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 Biver Bank v. First National Bank of Omaha, 55 N. W., 239.
11. The indorsement of a draft to a bank "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. Bep., 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. Bep., 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 over 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,



72

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
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 bank 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. Held, 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 plaintiffs' 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 uncon trover ted 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
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. Held, 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 were 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.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

73

COLLECTIONS. See Checks; Certified checks—Continued.
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.
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. Rep., 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 tj- S, F. Ry. Co. v. Johnston, Receiver, etc., 27
Fed. Rep., 243.




74

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS—See Checks: Certified checks—Continued.
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.
Mep., 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.
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. Ib.
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 remittiug 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. Eep., 1111.
38. A national 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 the money derived from his
note was a trust fund, which did not become a part of the bank's assets.
Foster v. Bindery 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. v. Clark el al., 38 P., 211.
40. Where one deposits a draft with a national bank and the bank sends it to an
agent for coflection, 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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

75

COLLECTIONS—See Checks; Certified checks—Continued.
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. Townsend, 26 S. W., 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 ajid agent as to any paper
ceased on collection, and the relation of creditor and 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, since, 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, Eep., 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. Hep., 790.
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. Hep., 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.
Hep., 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. Armstrong, 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. ¥., 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 Boyertoivn, 11S. W., 411; Manufacturers1 National Bank v.
Continental Bank et al., W N W., 193.




76

REPORT OP THE COMPTROLLER OP THE CURRENCY.

COLLECTIONS. See Checks; Certified checks—Continued.
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 Farmers1
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. Hep., 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. O'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.
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. Citizens' Bank y. Houston (Ky.), 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.f 61, affirmed; Waterloo Milling Co. v. Kuenster (III.
Sup.), 41N.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 has a right of action against the depositor for the deficit. 16.
59. Where a cheek 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 States
for the amount so collected. Onondaga Co. Sav. Bank v. United States (C,
C. A.), 64 F., 703, distinguished; United States v. American Exchange National
Bank (D.C.),70Ft, 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 sender
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 Ijer claim arisiug 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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

77

COLLECTIONS. See Checks; Certified checks—Continued.
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 holds the amount of the collection in trust for 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. Y. S., 9S9; In re Friend. Tb.
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. II.. 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. F., 357.
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. F., 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 against 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 Banky. City National Bank (Tex. Civ. App.),
34 & 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 required $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




78

REPORT OF THE COMPTROLLER OF THE CURRENCY.

COLLECTIONS—See Checks; Certified checks—Continued.
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.
n
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..
61%.

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 the correspondent upon the insolvency of the remitting
bank. Branch v. United States Xational 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. Phcenix
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.
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 final
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.t 25 Fed. Rep., 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. Dearing, 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 Bang or, 56 Me., 274.
8. National banking corporations, organized under the acts of Congress providing for their creation, are agencies or instruments of the General



REPORT OF THE COMPTROLLER OF THE CURRENCY

79

CONSTITUTIONALITY—Continued.

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 Y. The State 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. S., 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 Farmers' National Bank of Valparaiso, Ind.,
v. Sutton Manufacturing Company, 52 Fed. Eep., 191.
2. The intention of the legislature, clearly expressed iu 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 should
be disregarded which leads to absurd consequences. Gates v. First National
Bank of Montgomery, 100 U. S.,_ 239; 2 N. B. C, 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 unaifected 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. Rep., 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
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.f
295; 2 N. B. C, 204.
6. 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.
7. 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 at., 15 Fed. Rep., 225.
8. 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.
9. 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.
10. 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.
11. 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
v. Same, 34 P., 913; 7 Wash., 261.
12. 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 "the 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. E., 381.




80

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CONSTRUCTION OF LAW—Continued.

13. Where the validity of a statute under a State constitution has been determined by the highest court of the State, its decision will be followed
by the Federal courts. People's National Bank of Lynchburg v. Marye,
Auditor of Public Accounts; First National Bank of Lynchburg v. Same;
Lynchburg National Bank v. Same; National Exchange Bank of Lynchburg v.
Same, 107 Fed. Rep., 570.
14. Whatever may be the nature of a question presented for judicial determination—whether depending on Federal, general, or local law—if it be
embraced by the issues made, its determination by a court having jurisdiction of the parties and of the subject-matter binds the parties and
their privies so long as the judgment remains unmodified and unreversed.
Mitchell v. First National Bank of Chicago, 180 Fed. Eep., 471.
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.
Bans 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. Farmers1 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.
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 E. 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. 1b.
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. Eep., 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. A tlantic 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.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

81

CONVERSION—Continued.

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 nob 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 bank 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. Ba7ik, 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. Ib.
17. A State statute authorizing the State bankiug institutions to become banking associations under the laws of the United States, and 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
ics business," etc.,7 is not in conflict ivith the national banking act.
Thomas v. Farmers 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.
19. J. & Co., factors in Pennsylvania, received a consignment of wool from
another Pennsylvania factor, and made advances without notice that their
consignor was not the actual owner. J. &, Co. shipped the wool to Massachusetts, to purchasers; but before delivery defendant seized the same
in replevin and, being unsuccessful in the suit, defendant elected to hold
the wool and pay its full value, with damages, under a stipulation with J.
&L Co.; whereupon plaintiff, the original owner, brought trover for its
conversion. Held, that the stipulation amounted to a sale, which J. &
Co.'s consignors had a right to make under Pennsylvania factor's act, §
3, declaring that where a factor disposes of or pledges property in his
possession as security for advances the transferee acquires the title; and
hence defendant acquired a good title to the wool from J. & Co., and
plaintiff could not recover. Foerderer v. Tradesmen's National Bank of New
York, 107 Fed. Rep., 219.
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. Rep., 772.
2. Under Rev. St., § 1001, as construed 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.

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 intent 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. — - — CUR 1901, PT 1



0

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CRIMINAL LAW. See False entries; Indictment—Continued.
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. 8., 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 nat 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.f 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 bank, 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.
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. v 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. Bep., 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. Keiner, 92 Penn, St., 372; Commonwealth v. Feltonf 101 Mass., 204,



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83

CRIMINAL LAW. See False entries; Indictment—Continued.
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.
Commonivealth 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., 129; 2 N. B. C, 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,
etc., 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 j oined 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. Tuller, 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 Ferrn. 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., see. 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.f 394.
28. 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, 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 ojfficer" 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.
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. Allis, 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 vf Sattley (Mo. Sup.)? 33 S. W.} 41,



84

REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
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 be guilty of larceny, and punished, etc., sufficiently prescribes the nature of thecrime, as required by Const., art. 12, § 27. Ib.
34. The receiving of a deposit, and issuing of a certificate therefor, creates " a n
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, and 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/ 7 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 N. 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 {Iowa), 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., 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.
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



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85

CRIMINAL LAW. See False entries; Indictment—Continued.
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 sum, 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 anu identical sum.
Held (overruling a contention that the words "said" and a s 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" might 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 dei>osit. State v. Wells {Mo. Sup.), So S. W., 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 in 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
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 leavingto the jury to decide the question of the guilt of the accused. Ib.




86 ' REPORT OP THE COMPTROLLER OF THE CURRENCY.
CRIMINAL LAW. See False entries; Indictment—Continued.
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 specific 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 statute, 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 presiden t, director, cashier, teller, clerk, or agent of any association
organized as a national banking association. United States v. Lee, 12 Fed.
Rep., 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.
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 business. United States v. Potter, 56 Fed. Rep., 83, 97, disapproved; United States
v. Booker, 80 Fed. Rep., 876.
68. 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.




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87

CRIMINAL LAW. See False entries; Indictment—Continued.
69. 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.
7
0. 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., 140.
71. Iii 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.
72. 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.
73. 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,7'
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.
74. 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.
75. Sucli 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.
76. At the time of the conviction no writ of error from this court 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.
77. 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.
78. 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.
79. 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
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 have7been 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.
Eep., 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
judgment, 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



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
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. Held, 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 the 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 meaning of the statute. Mr. Justice Harlan dissenting. Graves v. United States,
165 U. S.t 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 he did not resign because of transactions of the
defendant similar to that charged in the indictment. II.
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 ho 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.
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 con-,
trol 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 (21C. 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




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89

CRIMINAL LAW. See False entries; Indictment—Continued.
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 reading
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 Fed. Eep., 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. Bep., 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, the 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.
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. Bep., 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.



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CRIMINAL LAW. See False entries; Indictment—Continued.
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 comprehension 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 necessary 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 the 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 indictmetit. 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
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
States 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 himself 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 believed 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.


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91

CRIMINAL LAW. ' See False entries; Indictment—Continued.
117. If money is left with a national bank in a sack, with the express understanding that it is not to he 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 if 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 toward the bank.
It is sufficient that the unlawful intent is such as, if carried infco 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 stockbrokers
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. Rep., 494.
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.
Youtsey, 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 national 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



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

CRIMINAL LAW. See False entries; Indictment—Continued.
makers of the notes taken up to be solvent, and the makers of the newnotes 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. Bep., 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 itb 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, where 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." Ib.
136. To constitute the offense of making a false report of the condition of a national
bank, within Rev. 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 identities the
report by its date and sets out the particular statement claimed to be
false. Dorsey v. United States (C. C. A.), 101 Fed. Bep., 746.
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 field 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 snowing that defendant acted in bad faith toward 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
such 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" the entry to be made. McKnight v.
United States, 98 Fed. Bep., 208.



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93

CRIMINAL LAW. See False entries; Indictment—Continued.
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. Bep., 291.
147. Indictment charging one, as president, director, and agent of national bank,
with willfully misapplying its assets, is not bad for duplicity. Jewett 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. Lb.
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.
154. Judgment will not be arrested on motion for insufficiency of the indictment
if any one of the counts therein is good. United States v. McClure, 170
U. S., 268.
155. A count in an indictment for aiding the misapplication of national-bank
funds in violation of Rev. St., % 5209, with ample allegations of fraudulent
intent and purpose, distinctly charged embezzlement by the cashier of a
national bank on many different days and times between May 24, 1897,
and March 24, 1900, for the benefit and gain of defendant, by a pretended
discount of paper contrary to the express direction of the directors, whereby
defendant obtained $140,000 of its moneys and funds, and converted the
same to his own use. Held, good on a motion in arrest, in view of section
1024, declaring the form of an indictment to be immaterial, provided the
substance is there; the word "embezzlement/ 7 as used therein, showing a
misapplication by the cashier of the property in his official possession,
within the meaning of the statute, and the punishment prescribed being
not so much for each offense, but so inuch for every officer or agent who
commits such offenses, and every person who aids or abets, irrespective of
the number of times. Ib.
156. In determining the number of peremptory challenges to which a bank teller
accused of embezzling funds of the bank in violation of Rev. St. U. S.,
§ 5209, is entitled, the offense will be considered a misdemeanor, regardless
of the penalty attached thereto, since the statute defining and creating it
explicitly says that a party guilty thereof " shall be deemed guilty of a
misdemeanor." Tyler v. United States, 106 U. S., 137.
157. In the prosecution of a bank teller for embezzling funds of the bank in violation of Rev. St., § 5209, the Comptroller's certificate of the organization
of the bank and the extension of its powers and privileges was admissible. Ib.
158. Evidence as to how he conducted himself in the performance of his duty as
teller was competent. Ib.
159. A deposit slip introduced in evidence was delivered to accused by the clerk
of the depositor at the time he deposited money and checks specified
therein, and the deposit was made with the accused as teller; and the
.depositor's pass book showed the entry, in the handwriting of the accused,
of $274, the amount of the deposit. Held, that an entry by the accused
of a deposit of the same amount, in the ledger of the bank under a subsequent date, as made by a depositor of the same surname, but different
initials, was not res inter alios, especially as the book was not in his
charge or kept by him. Ib,



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CRIMINAL LAW. See False entries; Indictment—Continued.
160. A teller in a bank, testifying to checks on it, may refresh his memory by
examining entries in its books, though some of them were not written by
him. Breese v. United States, 106 U. S., 680.
161. As evidence that overdrafts on a bank by its president were made with
intent to abstract or misapply its funds it may be shown that at the time
of the overdrafts it was hopelessly insolvent, that this was due to its assets
being notes of wholly irresponsible persons, and that these notes had been
used by the president in connivance with the cashier, who was a director,
and another director, to give him a fictitious credit. Ib.
162. On the question of whether or not a bank president is guilty of abstracting
or misapplying its moneys, it is immaterial that he drew out some of it for
his children. Ib.
163. The acts and intent of the president of a bank in obtaining money from it
on worthless securities, being such as to make him guilty of embezzlement, abstraction, or willful misapplication of its funds, it is immaterial
that his acts were permitted, sanctioned, or ratified by the other officers
of the bank, with knowledge of the facts. 16.
164. Though the president of a bank, in appropriating and converting its funds
to his own use, does it in such a way that ifc can be easily discovered, and
he is liable to a civil action, and does not abscond, or otherwise avoid the
civil suit, he may be convicted of embezzlement. Ib.
165. It is within the discretion of the judge to refuse to charge that there is no
evidence in the case justifying a conviction. Ib.
166. An expression of opinion by the judge that defendant is guilty is not error,
he having cautioned the jury that they were the sole judges of the facts,
and should not be governed by the opinion of the court. Ib.
167. An indictment under the national banking laws, which, following the words
of the statute, charges the president of the bank with embezzling,
abstracting, and misapplying moneys, funds, and credits of the bank at
various times, need not specify how much was moneys, how much funds,
and how much credits. Ib.
168. The record in a misdemeanor case not showing that defendant was present
when sentenced, the case will be remanded for new sentence. Ib.
169. In an indictment under Rev. St., § 5209, charging an officer of a national
banking association with the willful misapplication of certain moneys,
funds, and credits of the bank by using the same to discount an unsecured
note of a person known to be insolvent, such note does not constitute the
subject-matter of the offense, and need not be set out in hsec verba. A
description by giving the date and amount and the name of the maker, so
as to advise the accused with reasonable certainty what note is intended,
is sufficient. Bieger v. United States, 107 Fed. Rep., 916.
170. It is not a substantial defect in such an indictment to aver that the misapplication of the funds was without the knowledge " a n d " consent of the
bank, its directors, etc., instead of using the disjunctive form. Ib.
171. An averment that defendant misapplied " certain moneys, funds, and credits "
of the bank does not render the indictment bad for indefiniteness where
it is followed by an explicit statement that the misapplication was committed by means of discounting a note, sufficiently described, which was
known by him to be worthless. Ib.
172. An averment that such note was "made and drawn" by a person designated
by his full first and sur names is supported by proof that it was made by
such person, although it is not shown whether it was signed with his full
first name or by his initials. Ib.
173. The indictment averred that the note was dated on the 8th day of December,
1894, and was due and payable " on the 11th day of April, A. D. 1894." The
proof corresponded with the indictment as to date, but showed that the
note was due on the 11th day of April, 1895. Held, that the mistake in the
indictment was one so obvious that it could not have misled the accused
to his prejudice, and that the variance was not fatal. The note not being
the subject-matter of the offense, and the averment of the date of its
maturity one which was immaterial and unnecessary to its identification,
the allegation as to the day of maturity might be rej ected as surplusage. Ib.
174. An averment in the indictment that the misapplication of funds by the
accused was for the benefit of himself " a n d other persons to tjie grand
jurors aforesaid unknown" did not entitle the defendant to have the question whether the grand jury did in fact know, or should have known, the
names of such other persons, submitted to the jury for the purpose of
establishing a variance, since the failure to state such names, even if they
might have been stated? could not have been prejudicial to defendant, Ih



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95

CRIMINAL LAW. See False entries; Indictment—Continued.
175. A jury returned into court and requested the judge to reread the portion of
his instructions relating to the particular charge made in one count of
the indictment. The judge did so, and the attorney for defendant then
requested that the portion of the charge relating to the presumption of
innocence and reasonable doubt be also reread. This request the court
refused, after having asked the jury if they desired to have such parts
reread, and received a reply, through the foreman, that they did not.
Held, that such action by the court was not error. Ib.
176. The willful misapplication of the funds of a national bank by an officer without the knowledge or consent of the bank, in violation of Rev. St., $ 5209,
is not changed, as to its criminal character, by the fact that the act subsequently became known to the officers of the bank, and that they impliedly
consented thereto by taking no action in regard to it. Ib.
177. The refusal of the court in a criminal case to instruct the jury, as requested,
that they might find the defendant guilty or innocent of some of the offenses
charged in the indictment, and return a verdict of disagreement as to
others, can not be held error prejudicial to the defendant, where he was
found guilty upon one count and acquitted upon the others. It must be
presumed that the verdict would have been the same had such instruction
been given. Ib.
178. Where an indictment, under Rev. St., § 5209, fora criminal misapplication of
the funds of a national bank, fully describes the act constituting the
alleged offense, so as to advise the accused of the particular transaction
which is called in question, and the act is averred to have been done willfully and with intent to injure and defraud the bank, and without its
knowledge or consent, it is sufficient to allege generally that it was done
for the use, benefit, and advantage of the accused, or some company or
person other than the bank, and a conversion of the fund or credit need
not be averred. Ib.
'179. To constitute the offense of willful misappropriation of the funds of a
national bank, under Rev. St., § 5209, it is not essential that the money
should be actually withdrawn from the bank, but the offense may be consummated by giving fraudulent credits and the transfer of the same in
the usual way by means of checks. An indictment for such offense, alleged
to have been committed by discounting a certain note, is sustained by
proof that defendant, as president of the bank, without the knowledge
or consent of the directors, discounted such note, which he knew to be
worthless and insufficiently secured, crediting the proceeds on the books
of the bank to the maker, subject to his check; that the maker drew a
check for the amount in favor of a third person, who indorsed the same
to defendant; and that defendant by means of such check paid a note
held by the bank for which he was himself liable. 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. Y., 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
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.
4. 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. Rig gins, 29 N. Y. S., 416.
5. 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.


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REPORT OF THE COMPTROLLER OF THE CURRENCY.,

DEPOSITS—Continued.

6. Where an agent deposits in a bank, to his own account, the proceeds of property sold by him for his principal under instructions tlms to keep it, a trust
is imposed upon the deposit in favor of the principal, and his right thereto
is not aifected 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.
7. 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, 88 Mich., 630.
8. 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. Va., 50.
9. 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. Hep., 675.
10. 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 (Iowa), 63
N. W., 702.
11. 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. 8.,864.
12. 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. Ullerbette v. Pittsfield
National Bank (Mass.), 38 N. E., 368.
13. 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.
14. 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 the 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.
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. Drovers7 National Bank (III. Sup.),
41 N. JE., 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*



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97

DEPOSITS—Continued.

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 (Fa. 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 overdraft. 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 i( 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. ToivnsendY. 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, u 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.
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 for 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 it 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.
http://fraser.stlouisfed.org/
CUR 1901, PT 1Federal Reserve Bank of St. Louis

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REPORT OF THE COMPTROLLER OF THE CURRENCY.

DEPOSITS—Continued.

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 hank 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. " Ml.
"
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 indorser 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 alter 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 Bank v. 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 v. 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 depositony of public moneys does not constitute it an agent of the Government, or render the Government liable
for moneys lost by a failure of such bank. Branch v. The United States, 1
N. B. C.y 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.
Held, that the United States were not liable for the money so deposited. Ib.
39. 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 bank
upon the note. Eesh v. First National Bank of Allentown, 93 Penn. St., 397;
8 N. B. C.} 724.
40. 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 Allentoivn, 93 Penn. St., 393; 39 Am. Rep., 758;
S N. B. C., 721.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

99

DEPOSITS—C ontinued.
41. 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,
Rep., 705.
42. 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 Stockgrowers7 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 bank, 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.
43. Money deposited in a bank without stipulation as to place of payment is
payable to the depositor at the bank. HcBee v. Purcell National Bank
(Indian Ter.), 37 S. W., 55.
44. Where, after the maturity of a promissory note held by a bank, and due
protest and 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.
45. 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 value, and is not entitled to the protection of a bona fide holder
of paper. Ib.
46. 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. Y., 421.
47. 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. Stilhvater Gas Co., 30 N. W., 440; 36 Minn., 75.
48. A firm made an assignment, part 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 assignment,
matured. Held, that it could not be set off in the suit by the assignee.
Chipman v. Ninth National Bank (Pa.), 13 A., 707.
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, lb.
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. Benegre, 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



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

DEPOSITS—Continued.

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.
53.

54.

55.

56.

Merchants' National Bank v. School Dist. No. 8, of Meagher County, Mont.,
94 Fed. Rep., 705.
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.
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. Sep., 728.
To constitute fraud on the part of a bank in receiving a deposit when insolvent, which will authorise the depositor to rescind the c o n t r a c t e d 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.
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 by
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.
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,



REPORT OF THE COMPTROLLER OF THE CURRENCY.

101

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.
ffitz, 133 U. 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 al., 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
etal., 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
r
funds not being 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.
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 1ST. 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.




102

REPORT OF THE COMPTROLLER OF THE CURRENCY.

DIVIDENDS—Continued.

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. Ray den v. Brown, 94 Fed. Rep., 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 U. S., 131.
14. The receiver of an insolvent national bank may recover from a stockholder
dividends declared and paid after the bank became insolvent where necessary to meet the demands of creditors. Ray den 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 Run, 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, 34 Ohio St., 142.
3. Where a national banking association 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 SocieU 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 U. 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.
Ruffaker 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,
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
Bankv. Raskell etal., 51 N R., 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 judicially 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. Reid, 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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

103

ESTOPPEL—Continued.

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 his 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. 8., 673; Wheelock v. Kost, 77 III., 296.

120 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 Butchers' 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. Rep., 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 and Merchants1 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.
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. Rice {Neb.), 67 N. W., 165.
22. The fact that the bank stamped the original note "Paid," instead of
u
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 (Vt.), 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 ty Gear Co. {Ind.
 Sup.), 42 N.E.,924.


104

REPORT OF THE COMPTROLLER OF THE CURRENCY.

E STOPPEL—C on tinued.
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
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. TV., 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 NationaT Bank (Ind. Sup.), 37
N.E.,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. First 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.)l 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. Hayivard v. Eliot National Bank, 96
U. S., 611; 2 N. B. C, 1.
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.



REPORT OF THE COMPTROLLER OF THE CURRENCY

105

ESTOPPEL—Continued.

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 j 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., at al., v. Marshall and Tlsley Bank of
Milwaukee, Wis., 83 Fed. Eep., 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. Band v.
Columbia National Bank, 94 Fed. Rep., 349; Same v. Tillinghast, 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. 8., 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 U. 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
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 inexperienced
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.



106

REPORT OF THE COMPTROLLER OF THE CURRENCY.

E STOPPEL—C ontinued.
42. 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. Bep., 834.
43. 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.
44. 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.
45. 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.
46. 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.
47. 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.
48. 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 Mel 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 priina facie, the existence
of the corporation. Mix v. The National Bank of Bloomington, 91 Ill.f 20;
Merchants7 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. Beebet 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
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.
6. 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. Ib.
7. 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. Aspinwall v.
Butler, 133 U. 8., 595.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

107

EVIDENCE—Continued.

8. 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 IT. S., 251.
9. 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. Takima National Bank v. Knipe, S3 P., 834; 6
Wash., 348.
10. 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 Killvngley, 69 Fed. Rep., 798.
11. A letter written in the ordinary course of business by a clerk in the ofiice 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.
12. 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
witnesses 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 the appointment of a receiver and the sale of the assets
in accordance with the statutory requirements. 1b.
13. 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 relates. Ib.
14. 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.
15. 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, made 1after its
tendency and effect have been disclosed. Farmers and Traders National
Bank of Covington, Ky., v. Greene et al., 74 Fed. Rep., 439.
16. 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.
17. 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.
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. Rep., 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 MohaivJc
Valley Bank (Sup.), 20 N Y. S., 171.




108

REPORT OF THE COMPTROLLER OF THE CURRENCY.

EVIDENCE—Continued.

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. Hutchin8on 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. Merchants1 National Bank v. McNeir (Minn,), 53N. W., 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. Asseru., 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. Bipley 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 snowing that an alteration could not be made without
detection. Ib.
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.
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.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

109

EVIDENCE-—Continued.

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 National Bank v. Leonard (Neb.), 59 N. W.t 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. W., 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 indorsee, and not
as joint maker, as presumed by law. Salisbury v. First National Bank
(Neb.), 56 N. W.f 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. Eose 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. Merchants1 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. Harrier 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 payment 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. Hep., 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. Bep., 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,



110

REPORT OF THE COMPTROLLER OF THE CURRENCY.

E VIDENCE—C ontin ued.

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. Rep., 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
Railway 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 older 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. Hayden v. Williams, 96 Fed. Rep., 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 and Trust
Co. of Chicago, III. (C. C. A.), 98 Fed. Rep., 688.
53. In a suit by a park board to recover funds alleged to have been misappropriated by its treasurer, irom 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 Com'rs (C. C, A.), 99
Fed. Rep., 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. JJe Weese (C. C), 100 Fed. Rep., 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.)f 101 Fed. Rep., 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 snch part. Shoi*t v. Hepburn, 75 Fed. Rep., 113.
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.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

Ill

EXECI3 TION—Continued.
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.
Merchants' 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 OF 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 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. Stat., sec. 5145.
Richards v. Attleboro National Bank, 148 Mass., 187; 3 N. B. C, 495.
EXTENSION OP 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, 21N. 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. Rep., 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 "false 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.
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. Hughitt, 45 Fed.
Rep., 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,
Rep., 852.



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

FALSE ENTRIES—Continued.

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. Rep., 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. Hep., 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.
Iiep.f 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.f 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.
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. Bep.% 165.




REPORT OF THE COMPTROLLER OF THE CURRENCY.

113

FALSE ENTRIES—Continued.

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, t h a t h e 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. Ib.
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. Ib.
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.
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 "every * * * cashier * * * of any"
national bank from making "any false entry in any * * * report
* * * with intent to injure or defraud," etc., and prescribing a like
OUR 1901, PT 1
8



114

REPORT OF THE COMPTROLLER OF THE CURRENCY.

FALSE ENTRIES—Continued.

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 Rep., 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. Hep., 438; 2 N. B. C.f 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
such 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. Hep., 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. Hep., 771.
5. In an information charging that " the banking association and the directors
thereof did knowingly permit,5' 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. Rep., 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. Rep., 459, reaffirmed. Hay den v. Thompson, 17 C. C. A., 592; 71 Fed.
Rep., 60, distinguished. Stephens v. Overstolz, 43 Fed. Rep., 771, disapproved.
Gerner v. Thomson et al., 74 Fed. Rep., 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
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. Ib.
3. But if the omission of the depositor to discharge such duty has resulted in no
injury to the bank, the depositor may recover. Ib.
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. Ib.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

115

FORGERIES—Continued.

5. Plaintiff bank paid defendant bank money on a forged order, made payable
at plaintiff bank, bearing the general iDdorsenient 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 showloss 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 defendant would
not be liable. National Board of Marine Underwriters v\ National Bank of
the Republic, 29 N. Y. S., 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 1
favorable
results might have arisen." Third National Bank v. Merchants National
Bank, 27 N. Y. S., 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 her 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. Bep., 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 purchased 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., Avere 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 plain


116

REPORT OF THE COMPTROLLER OF THE CURRENCY.

FORGERIES—Continued.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

tiff 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. Bostwick et
al., 71 Fed. Hep., 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 Banky. Wentzel {Pa. Sup.),
21 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 which 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. 2b.
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 tirst 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, 28 Fed. Eep., 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 Bock, 58 Fed. Eep., 140.
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.
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
National Bank, Fed. Bep., 181.




REPORT OF THE COMPTROLLER, OF THE CURRENCY.

117

FOEGERIES—Continued.

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 indebtedness 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 rjersonal interest
of the guarantors in the advances constituting a consideration moving to
them. Doud et al. v. National Parlc Bank, 54 Fed. Hep., 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 and T?'ust Co. et al. v. Lombard Inv.
Co. of Kansas et al., 73 Fed. Hep., 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.
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.



118

REPORT OF THE COMPTROLLER OF THE CURRENCY,

GtJ ARANTY—C ontinued.
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., 378.
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 and Traders^ National Banky. 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 (Nebr.), 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. Hep.,
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.
Seeder 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 guaranty: "In accordance with your telegram
I herewith i 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. Reid, that the bank was liable on
the guaranty. People's Bank of Belleville v. Manufacturers7 National Bank
of Chicago, 101 U. 8., 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 injunction 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 thebank. P., as assignee of H. & Co., filed a cross bill in the equity
suit, showing that the judgment in favor of the bank ivas 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
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) that 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




REPORT OF THE COMPTROLLER OF THE CURRENCY.

119

GUARANTY—Continued.
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 arex>lication 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. Reid, (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. Manufacturers' National Bank of Chicago, 133
TJ. S., 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. 76.
17. The act of Congress authorizing the organization of national banks confers
upon them no authority, either in express terms 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 al. y. Pirie et al., 82 Fed. Hep., 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. 1b.
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. 76.
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. 76.
22. An agreement by a national bank 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. Hep., 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. 76.
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. Hep., 925.



120

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INCREASE OF CAPITAL STOCK.

See Capital stock.

INDICTMENT. See False entries.
1. An indictment under act of July 12, 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. Ib.
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, " a n amount of
money equal to that specified" 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" to certain persons named, was bad for failure to allege the fact that made such
payment unlawful or criminal. United States v. Eno, 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. S., 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 States, 14 S. Ct., 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,"
in alleging that the defendant was president or director of such bank
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,




EEPORT OF THE COMPTROLLER OF THE CURRENCY.

121

INDICTMENT. See False entries—Continued.
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. Mep., 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 " See schedule,"
it is not a valid objection to the indictment that these words are not
explained. United States v. French et al., 57 Fed Rep., 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 aiuing 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 and 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. S., 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 82A his oath verifying report
was taken before notary appointed by a State. United States v. Curtis, 107
U. 8., 671.
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.
33. An indictment of H. and other persons for violation of Rev. St., sec. 5209,
averred that "said H., then and there being president" of a certain
national bank, "by virtue of his said office as president, aforesaid,"
"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." 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




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REPORT OF THE COMPTROLLER OF THE CURRENCY.

INDICTMENT. See False entries—Continued.
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, Reid, that the indictment averred tho 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 ot 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," 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 put questions
to him. United States v. Edqerton, SO 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 udgnient, 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 Multing and Elevator Co. et al., 55 Fed. Hep., 356.
2. State courts have no power to grant before linal 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 benetit of a party to it. Breyfogle et al, 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. IV., 667; 52 Jowa, 619y distinguished.
Shenandoah National Bank v. Read (Iowa), 53 N. W., 9t>.
6. A prayer for injunction to preserve property from sale pending litigation
can not be made a ground of equity 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
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. Hackettstown 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., sec. 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.f 78 Fed. Rep.f 394.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

123

INJUNCTION—Continued.

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
note 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. Barliorst et ux. v. Armstrong et al , 42 Fed. lie})., 2.
11. In July, 1895, Harold F. Hadden and James E. S. Hadden brought an action
in the New York supreme court for the city and county of New York
against the Natchaug Silk Company, Michael F. Dooley, personally and
as receiver of the First National Bank of Willimantic; Jphn A. Pangburn
and others, including William I. Buttling, sheriff of Kings County. The
complainant alleged certain fraudulent and collusive proceedings between
the Natchaug Silk Company, Dooley, receiver of the First National Bank
of Willimantic, and John A. Pangburn, and, under a prayer of the bill, an
injunction, pendente lite, was granted restraining the sheriff of Kings
ounty from selling property of the silk company in his possession, as
sheriff, upon executions against said company in favor of John A. Pangburn or Dooley, as receiver, and restraining Pangburn and Dooley from
further proceedings at law against the property of the silk company in
the State of New York. The action was removed to the circuit court of
the United States for the southern district of New York, and repeated
motions to dissolve the temporary injunction were^there made and denied,
and the order of the circuit court denying the motions was, on appeal,
affirmed by the circuit court of appeals. Subsequently, the taking of testimony in the case having been closed, the defendants, Dooley and Pangburn, made another motion, upon the plenary proofs, to dissolve the
injunction, and this motion was granted, after hearing, by Circuit Judge
Lacombe, on November 27, 1896. The case came to final hearing in the
circuit court, and resulted in the decree dismissing the bill on January 27,
1898. Upon appeal by the complainants, the circuit court of appeals
reversed the decree in part and affirmed it in part. From this decree of
the circuit court of appeals the complainants appealed to this court on the
ground that the decree should have adjudged to the complainants priority
of lien on all the goods in dispute, and the defendants appealed on the
ground that the circuit court of appeals erred in reversing the decree of
the circuit court. The facts, as stated in the opinion of Circuit Judge
Shipman, were substantially these: On April 23, 1895, the Natchaug Silk
Company, a Connecticut corporation, owed the First National Bank of
Willimantic, a national banking association located in Connecticut, over
$300,000, and was entirely insolvent. In consequence of this indebtedness
the bank suspended, and Michael F. Dooley was appointed its receiver on
April 26, 1895, by the Comptroller of the Currency. On April 23, 1895,
J. D. Chaffee, as president and general manager of the silk company, in
consideration of and to reduce this indebtedness, sold to the bank 107 cases
of manufactured silk, the value of which can not be accurately ascertained,
but which is said to be about $20,000. They were then, or had been,
shipped to New York, where they were subsequently taken by Dooley into
his possession and removed to Brooklyn. On May 8, 1895, he, as receiver,
attached the goods by attachment, which was subsequently dissolved. On
May 30, 1895, he sold and assigned to Pangburn, who is a resident of the
State of New York, notes of the silk company not paid by this transfer
amounting to about $67,000 for the nominal consideration of $200, which
sale Dooley made by virtue of an order of the circuit court of the southern
district of New York with the approval of the Comptroller of the Currency,
for the purpose of enabling a suit to be brought in the State of New York
by a resident of that State, in his own name, against the silk company, a



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

INJUNCTION—Continued.

foreign corporation. Pangburn did bring suit on said notes against the
silk company on June 1, 1895, in the proper State court, and obtained an
order of attachment, a judgment for the full amount thereof, and an execution which was levied by the sheriff of Kings County upon these cases
of silk. The sale was stopped by this injunction order. On June 6,1895,
the complainants, who are creditors of the silk company to the amount of
about $22,000, brought suit against it in a court of the State of New York,
and obtained an order of attachment under which the sheriff of Kings
County levied an attachment upon the same silk. On July 2, 1895, the
complainants brought a bill in equity upon which the injunction order
in question in this suit was issued. Held, that the decree of the circuit
court of appeals, in so far as it reversed the decree of the circuit court,
should be reversed, and the decree of the circuit court, dismissing the bill
of complaint, should be affirmed. Dooley v. Hadden, Sadden v. Dooley, 179
U. 8., 646.

INSOLVENT BANKS. See Preferred claims; Receiver.
1. A return of nulla bona 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 period of administration. National Bank of Commonwealth v. Mechanics' National Bank, 94
U. 8., 437; White 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. Bep., 568.
4. The directors of a national bank voted to increase the capital stock " t o
$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 u o n 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. Held,
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
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 Bank v. Peters et al.t 44 Fed. Rep., 13.
7. A national bank does not lose its corporate existence by mere default in paying its notes and the appointment of a receiver. Bank 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. 1b.
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. 8., 784.



REPORT OP THE COMPTROLLER OF THE CURRENCY.
INSOLVENT BANKS.

125

See Preferred claims; Receiver—Continued.

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. 8., 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. Citizens7 National Bank v. Dowd, 35 Fed. Bep., 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. 8., 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 requiring 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. 1b
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
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 Socitte
de Credit Mobilier de Paris, 2 Woods, 77; 1 N. B. C.} 285.



126

REPORT OF THE COMPTROLLER OF THE CURRENCY.

INSOLVENT HANKS. See Preferred claims; Receiver—Continued.
24. Insolvent debtors of an insolvent national bank assign, giving preferences
in favor of the bank. Quaere, whether the debt preferred shall carryinterest. 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. Rep., 307.
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 "arising under the laws of the United States."
Auburn Savings Bank v. Hayes, 61 Fed. Rep., 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. Rep., 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;
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 Railway Co. v.
Johnston, 183 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 v. Armstrong, 56 Fed. Rep., 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. Hep., 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 condition, it being in fact insolvent at the time, is entitled to a judgment
against the bank and its receiver for the purchase money paid. Newbegin
v. Newton National Hank (C. C. A.), 66 Fed. Rep., 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
hank obtaining the discount in reporting such proceeds to the Comptroller
of the Currency as part of its cash reserve. Fishery. Tradesmen's National
Bank (C. C. A.), 64 Fed. Rep., 706.
34. A contract by which one bank pledges any of its property in the hands of
another bank, as collateral to notes discounted for 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 note«, until the
amount of the lien has been ascertained. Fishery. Continental National
Bank (C. C. A.), 64 Fed. Rep., 707.
35. A ^tatemenfc 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. Rep., 710.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

127

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
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. Hep., 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. Hep., 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
etal. v. Cockrill, 73 Fed. Rep., 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
taking for the bank's creditors the proportion applicable to such of the
notes as were retained by the bank. Ib.
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. Baypr 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.y 956.
44. The California "Bank commissioners' act" (fet. 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



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

INSOLVENT BANKS. See Preferred claims j Receiver—Continued.
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 officer^ 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 collect 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
8. 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 tl was
insolvent, having suspended its business" on a certain day. Higgins v.
Worthington (Sup.), 35 N Y. S., 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.), 43 P., 148.
48. A creditor of an insolvent national bank is entitled to prove the whole
amount of the claims 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., 312; 16 U. S. App., 465, followed. Merrill v. National Bank of
Jacksonville, 75 Fed. Rep., 148; 173 U. S. Rep., 131.
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.), 36 S. W., 131; Metropolitan Trust Co. v. Farmers and Merchants' 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,



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129

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
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 plaintiff's 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., 185.
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 (Ind. Sup.), 42
N. E., 924.
56. Remittances made by a national bank to its correspondents, in tlio ( rdinary
course of business, before the commission of any act of insolvency, are
not void under Rev. St., sec. 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.} 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 the 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,
CUR 1901, PT 1



9

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REPORT OF THE COMPTROLLER OF THE CURRENCY.

INSOLVENT BANKS. See Preferred claims; Receiver—Continued.
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. Kissamv. Anderson, 145 U. S., 435.
58. The time of commencement of judicial proceedings to avoid a statute bar may
be shown by parol. Witters, Eeceiver, v. Sowles and others, assignees, 32 Fed.
Rep., 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 parties
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. II.
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,
p.
65. In an action against the receiver of a bank for dividends upon a debt for a
deposit in the name of " S., trustee/' the mere general statement of S. that
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.
Sowlea ei ah v. Witters, 35 Fed. Bep., 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



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131

INSOLVFNT BANKS. See Preferred claims; Receiver—Continued.
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 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 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. Rep., 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. (Ioiva), 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.
74. A check 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,
who may recover the proceeds from the receiver, where they are shown to
have come into his possession. Richardson v. Oliver, 105 Fed. Rep., 277.
75. The rights of a depositor in a national bank, as such, in case of the bank's
insolvency, are not affected by the fact that he is also a stockholder, his
duties and liabilities as stockholder being measured by the provisions of
the statute; and he has the same right to reclaim a deposit fraudulently
received from him when the bank was known by its officers to be in a
failing condition as any other depositor, where he had no knowledge of
the bank's condition, and did not participate in the frauds of its officers. Ib.
76. A suit by a depositor in a bank against its receiver to recover the proceeds of
a check fraudulently received by the officers of the bank after its insolvency,
and which came into the hands of the receiver, commenced within three
years after the insolvency, is not barred by laches, in the absence of a
statute of limitations which would bar an action at law of like character,
where no injury to anyone has resulted from the delay, which was due
solely to a misunderstanding of his rights by complainant, caused in part,
at least, by statements made to him by the receiver. Ib.
77. Complainant was a depositor in a national bank, and on the day the bank
closed its doors, and when it was known by its officers to be insolvent, he
deposited a check. On the statement of the receiver tbat the proceeds of
the check had gone into the general funds of the bank, he included the
amount of the check in the proof of his claim in the insolvency proceedings, and received partial dividends on such claim. In fact, the check
was collected by the bank examiner after the suspension, and the proceeds went into the hands of the receiver. Held, that the action of complainant in including the amount of the check in his claim under such
circumstances did not amount to an election of a remedy, or create an
equitable estoppel which precluded him, on learning the facts, from maintaining a suit against the receiver to recover the proceeds of the check as
his property, on tendering back the dividends received thereon, before the
closing of the estate in insolvency, and while the money was still in the
receiver's hands. Ib.
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




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REPORT OF THE COMPTROLLER OF THE CURRENCY.

INTEREST. See Usury; Insolvent banks—Continued.
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. S., 271.
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 loans.
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'1 National
Bank, 36 P., 905.
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. F., 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, find
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. NaUonal 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. Bep., 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




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133

INTEREST. See Usury; Insolvent "banks—Continued.
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.
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.
YaHma 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 Mohawk Valley Bank,
139 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. Merchants' 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., sec. 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 " 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. WhitiemoreY. 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.



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

See Actions—Continued.

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.
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. The 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, 47 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; Commonivealth, 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 j urisdiction, under
sec. 5328, Rev. St., is exclusively cognizable by the Federal courts. In re
Eno, 54 Fed. Bep., 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., 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. Bep., 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. Bep., 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. Ib.
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 personal 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,



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135

See Actions—Continued.

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.f 401.
22. When a State hank acting under a statute of the State calls in its circulation issued under State laws and becomes a national bank under the laws
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 question
arises which may give this court jurisdiction in error. Metropolitan
National Bank v. Claggett, 141 U. S., 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., 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. Hep., 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. R. B. Co.,
26 Fed. Rep., 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. Rep., 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.
Rep., 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. Brinckerhoff v. Kostwick, 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 Hun., 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. Rep., 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



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36.

37.

38.

39.

40.

41.

42.
43.

44.

45.
46.
47.

See Actions—Continued.

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.
Rep., 326.
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. Rep., 417.
The tenth subdivision of sec. 629, Rev. St., which confers upon the circuit
court of the United States jurisdiction of all suits by or against any national
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 y. Fare et al., 25 Fed. Hep., 200.
A Federal court has jurisdiction of an action brought by the receivers of an
insolvent 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.
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 withoufcregard to the citizenship of the parties or the nature
of the controversy. Jewett v. Whitcomb et al., 69 Fed. Rep., 418.
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 nofc 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. Feavy, 69 Fed. Rep., 455.
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 shail
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.
Rep., 341.
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.
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 tbe
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. Rep., 532.
A suit brought in a State court can be removed to a Federal court "on the
ground 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.
Rep., 371, followed. Wichita National Bank et al. v. Smith, 72 Fed. Rep., 568.
A national bank can not remove a suit upon the ground that it is a Federal
corporation. Ib.
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.
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




REPORT OF THE COMPTROLLER OF THE CURRENCY.
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48.
49.
50.

51.
52.
53.

54.

55.

56.
57.

58.
59.

60.

61.
62.
63.

64.

137

See Actions—Continued.

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. Rep., 373.
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.
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.
The fact that the State supreme court, in affirming a judgment, decided
against an immunity from liability expressly claimed under the laws of the
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., sec. 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 notes and choses in action does not apply. 1 b.
The circuit court has no j urisdiction 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 national
banking act explained. Van Antwerp v. Rulburd, 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 au 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. Merchants1 National
Bank of West Virginia, appellant, 4 Thompson $ Cook, 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 1, the petition stating that defendant then entered its appearance




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See Actions—Continued.

and had not done so before. Held, a valid compliance with the Federal
statute requiring the defendant " a t the time of entering his appearance in
the State court" to file his petition. Ib.
65. Section 7 of the act creating the circuit court of appeals (26 Stat., 828) gives
no jurisdiction of an appeal from an interlocutor order dismissing a
restraining order and denying an injunction. Bobinson v. City of Wilmington et ah, 60 Fed. Hep., 469.
66. 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
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.
Cruikshank 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, 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 specially set up or claimed" must be claimed by the plaintiff in error for himself, 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, 122 111., 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 Hoiv. 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. Steinway 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)



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139

See Actions—Continued.

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
ah, 78 Fed. Rep., 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 tiled 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.
81. A national bank, sued in a St
.
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 refused 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 any suit 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 under 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, lb.
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
ah, 76 Fed. Rep., 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 oourt 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. S., CXLIV App.



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See Actions—Continued.

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 appeal 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, executed 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 fy Co. v. Sioux City National Bank et al., 81 Fed. Rep., 3.
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
wmount 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 Manufacturers1 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.



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See Actions—Continued.

104. The owners of shares in national banks are, under section 5219, Rev. St., U. S.,1
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,
but "the provisions of this section shall not be held to affect the jurisdiction 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." 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. Rep., 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). Sowles 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. Reid, that a petition
for removal filed September 4 was in apt time. Ib.
109. The kState 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 wTind up the affairs of the bank. Snohomish
County v. Puget Sound National Bank (C. C), 81 Fed. Rep., 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.
Rep., 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 Tacoma,
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



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REPORT OF THE COMPTROLLER OF THE CURRENCY.

JURISDICTION.

116.

117.

118.

119.

120.
121.

122.
123.

124.
125.

126.
127.

128.
129.
130.

131.

See Actions—Continued.

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.
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 conversion 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.
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.
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.
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 el al., 85 Fed. Rep., 12.
A receiver of an insolvent national bank is an officer of the United
States. Ib.
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.
It seems that in such a suit, in a State court, the receiver of the national
bank is not a necessary party. Ib.
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 such, is entitled to have the cause removed. Ib.
It seems that a State court is a " court of competent jurisdiction" to adjudicate upon disputed claims against insolvent national banks. Ib.
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.
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. Bep., 565.
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. Bep., 417.
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. Bep., 370.
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 Railway Co. y. Austin, 94 Fed. Bep., 897.
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.
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




REPORT OF THE COMPTROLLER OF THE CURRENCY.
JURISDICTION.

132.

133.

134.
135.

136.

137.
138.

139.
140.

141.

143

See Actions—Continued.

to authorize such increase, in favor of the public and against the subscribers to such stock. Bailey v. Tillinghast (C. C. A.), 99 Fed. Eep., SOI.
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.
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
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.
An action against a receiver of a national bank in his official capacity is one
arising under the laws of the United States, of which a Federal court has
jurisdiction. McDonald v. State of Nebraska, 101 Fed. Rep., 171.
An action by or against an agent of the shareholders of a national bank,
chosen by them in pursuance of "An act authorizing the appointment of
receivers of national banks, and for other purposes," approved June 30,
1876, and its amendments (19 Stat., 63, c. 156; 27 Stat., 345, c. 360; 29 Stat.,
600, c. 354), is a suit arising under the laws of the United States, of which
a Federal court has jurisdiction, under sections 1 and 2 of the acts of
1887-88 (25 Stat. 434). Guarantee Co. of North Dakota v. JIanway, 104
Fed. Eep., 369.
Such an action is also a cause for winding up the affairs of a national banlc,
and is by or against an officer thereof, and hence cognizable by a Federal
court, under the last clause of section 4 of the acts of 1887-88 (25 Stat.,
436). Ib.
For the reasons above stated, an action by or against an agent of the shareholders of a national bank is removable from a State to a Federal court. Ib.
Where a case is not removable when the time for its removal prescribed in
the acts of Congress expires, but subsequently becomes removable by
amendment or otherwise, the filing of a petition and bond for removal
within a reasonable time thereafter entitles the petitioner to a transfer of
the case to the Federal court. Ib.
One may waive objections to the time and manner of removal of a suit from
a State to a Federal court by silently proceeding to trial upon the merits,
because matters of time and method are formal and modal, and not essential to the right of removal. Ib.
The nature of the action, and not the character of the defense to it, constitutes the test to determine whether it arises under the laws of the United
States. If the determination of the claim made in the action invokes a
consideration of those laws, and the effect of the acts or omissions of parties to the suit under them, it arises under the laws of the United States,
whether the defense to the suit is good or bad. Ib.
A successory trustee of a fund takes it in privity with his predecessor, and
subject to suits pending against him which affect the administration of the
trust. Such suits are not abated or defeated by a change of trustee. Ib.

LEASE:

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. Itep., 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.f 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.




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REPORT OF THE COMPTROLLER OF THE CURRENCY.

LEASE—Continued.
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. 8., 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 reletting. 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 of
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. MoCorrtiiohv. 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 Coinp- •
troller of the Currency, becomes a corporation, with power "to make
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.
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,



REPORT OF THE COMPTROLLER OF THE CURRENCY.

145

LIABILITY OF BANK—Continued.

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 ah 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. Merchants'
National Bank v. State National Bank, 10 Wall, 604.
7. Where a bank issues a certificate of deposit, payable on its return properly
indorsed, ifc 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., 60S.
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 paid. 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. lo.
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. Fickery, 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
he is not authorized to receive the money, it is a payment to the bank, and
the latter is bound thereby. The East Eiver National Bank v. 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 Bankv. 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 Monmouth 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. Merchants' National Bank, ibt) 864.

CUR 1901, PT 1
10


146

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIABILITY OF BANK—Continued.

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
"is 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. 1b.
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. 1b.
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 of exchange, drawn on defendant, was sent by plaintiff to a bank for
collection, and on presentation to defendant was accepted by its treasurer
and redelivered to the bank. On the same day defendant's treasurer
learned that the 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., 33.
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 coutrary, 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.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

147

LIABILITY OF BANK—Continued.

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.
VHeroeite 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 of 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. S., 346; Chemical National Bank v. Armstrong, 65 Fed Rep.,
573.
34. Where the president of a banking corporation, having control and management 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,
which 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. App.), 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
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 casnier, 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.
37. 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.
38. 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, Fa., 75 Fed. Rep., 769.
39. In an action against a national bank to recover bonds deposited with it for
safe-keeping, without compensation, and which the bank alleged were



148

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIABILITY OF BANK—Continued.

40.

41.

42.

43.
44.

45.

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 after
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. Ttiird 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. Vicksburg 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., 562.
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
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 Qincinnati 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,




REPORT OF THE COMPTROLLER OF THE CURRENCY.

149

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. Billiard v. Bank, 18 Wall., 589.
3. Loans by bank to stockholder do not give lien to bank on his stock. II).;
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, Lackaivanna
and Western Railroad Company v. Oxford Iron Company, 38 N. J. Eq., 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 Montg. Co. Law Rep'r, 64.
10. One claiming a lien on attached property, superior to the attachment
plaintiff, can not, in a cross bill, traverse the affidavit for attachment.
Farmers and Merchants1 National Bank v. Waco Electric Railway and Light
Co. (Tex. Civ.App.), 36 S. W., 131; Metropolitan Trust Co. v. Farmers and
Merchants7 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
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. R., 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. Huntington Distilling Co. (W. Va.), 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 mechanics' 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 agent and agrees to consign all its
products to him, does not give the latter a lien for advances on money due
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.



150

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIEX. See Preferred claims—Continued.

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 1o 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. Talmaye 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. Ib.
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. Beynes
v. Dumont; Dumontv. Fry, ISO 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.
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,
1his 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 capital
stock, provides no penalty for its violation, and only subjects the bank to
proceedings by the United States to annul its charter. Buffalo German
Insurance Company v. Third National Bank (Sup.), 43 N. Y. S., 550.
27. 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. Hep., 345.
2. 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. Ib.



tfcEt>ORi: OF THE COMPTROLLER OP tfHE CURRENCY.

l5l

LIMITATION OF ACTIONS—Continued.

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 out 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. Aldrichv. McClaine (C. C), 98
Fed. Rep., 378.
6. Fraud or concealment which will prevent the running of limitation against
an action must be that of the defendant. School Diet, 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 unable 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 Laivrence, 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
its affairs are completely settled. National Bank v. Insurance Company,
104 U. S.,54; Ordway v. Central National Bank, 47 Md., 217.
3. 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.
4. 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.
5. 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.
6. Where a national bank is insolvent and in process of voluntary liquidation,
and its affairs are being greatly mismanaged by its managing agents, to
the inj ury 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.
7. 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. Ib.



152

REPORT OF THE COMPTROLLER OF THE CURRENCY.

LIQUIDATION—Continued.

8. 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.
9. 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 bad
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.
10. 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. S., 54; 3 N. B. C, 20.
11. 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.
12. The officers of a national bank have no power to incur a liability on the part
of such bank after it has gone into liquidation which will be binding on
the shareholders, and a judgment on a liability so created, rendered against
the bank by collusion of the officers, is not conclusive on the shareholders.
Moss v. Whitzel, 108 Fed. Rep,, 579.
13. The fact of an assessment by the Comptroller upon the stockholders of a
national bank does not conclude such stockholders as to the validity of
the debts to pay which the assessment is made, and they are entitled to
their day in court upon that question before being required to pay the
assessment in action against them by the receiver. Where the defendants
in such an action assert the invalidity of a judgment against the bank which
is the basis of the assessment, the appropriate procedure would seem to
be for them to file a bill in equity to determine the validity of such judgment, and to enjoin the action against them, giving bond for the payment
of the judgment therein in case the injunction should be dissolved after
hearing. Ib.
14. The only authorized procedure for enforcing the individual liability of the
shareholders of a national bank which has gone into voluntary liquidation
is by a bill in equity in the nature of a creditor's bill, brought by a creditor
"on behalf of himself and of all other creditors of the association." The
trustee appointed by the stockholders has no authority to enforce this
liability. The suit must be brought in the district in which the bank is
situated. Williamson et al. v. American Bank et al., 109 Fed. Rep., 36.
LOANS:

1. Section 5200, Rev. St., which provides that the total liabilities to any asso-»
ciation 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 Bank, 96 U. S., 640;
O'Hare v. Second National Bank of Titusville, 77 Penn. St., 96; Shoemaker v.
The National Mechanics' Bank, 2 Abb., U. S., 416; Stewart v. National Union
Bank of Maryland, 2 Abb., U 6'., 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 JV. B. C, 491.



REPORT OF THE COMPTROLLER OF THE CURRENCY.

153

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. O'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 can 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 of the Government. A contract entered into by the bank in violation of this section
is not void. Wyman v. Citizens7 National Bank of Faribault, 29 Fed. Bep., 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 at. 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. Steivart v. The National
Union Bank of Maryland, 2 Abb. XJ. 8., 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 law allows can not be taken advantage of either by the debtor
or another creditor of his. McCartney v. Kipp (Pa. Sup.), S3 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. Bea (Minn.), 65 N. W., 928.




154

REPORT OF THE COMPTROLLER OF T t i
tf

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 8. W.9 178.
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., 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. Farmer8 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., 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. Plaintiffs
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 that 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 drew
two drafts for the amount on a Boston bauk, delivered them to defendant
and received tho 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. Allans and another,
22 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. Cockriil {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 borrowing bank in the absence of notice to the contrary to its correspondents.
 Armstrong v. Chemical National Bank of City of New York, 83 Fed. Rep., 556.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

155

LOANS—Continued.

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 borrower's directors, amounts drawn
on the credit constitute a loan to the bank, and not to its directors.
29.

30.

31.
32.
33.

34.

35.

American Exchange National Bank of New York v. First National Bank of
Spokane Falls et al., 82 Fed. Bcp., 961.
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 it 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.
On the question whether a loan was made to a bank or to its directors, the
private arrangements of the directors as to how the transaction should
be entered on the bank's books would not be controlling as against the
lender. Ib.
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.
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.
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.
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 the
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. Min. Company, 89
Fed. Bep., 439.
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. Bep., 947.

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. 8., 246.



156

REPORT OF THE COMPTROLLER OF THE CURRENCY.

MANDAMUS—Continued.

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., 261.
3. When the officers of a corporation refuse, on demand, to issue a certilicate
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 Batik 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.
8. A suit against the officers of a State to compel them to do acts which would
impose a contractual pecuniary liability upon the State, or to issue any
evidence of debt which would have that result, is, in fact and legal effect,
a suit against the State, of which a Federal court has no jurisdiction.
Farmers7 National Bank of Hudson v. Jones, Governor of Arkansas, et al., 105
Fed. Rep., 459.
9. A bill in equity to compel a board of public officers to issue bonds to plaintiff is, in effect, a petition for a peremptory mandamus, and neither can be
maintained unless the act sought to be coerced is a purely ministerial one,
enjoined on the defendants by positive requirements of law, which leaves
nothing to their discretion. Ib.
10. Act Ark., May 8,1899, which authorizes and directs the State debt board to fund
the valid bonded indebtedness of the State by exchanging new bonds for
outstanding valid bonds, which shall be presented by the holders, confers
no power on such board to issue new bonds in lieu of old bonds which have
been lost or destroyed, even though they were erroneously destroyed by the
officers of the State; nor can such power be conferred by a court on equitable grounds, the only remedy of the creditor being through legislation. 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. Y., 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. 8., 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 " b y 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 Montpelier\. Sioux City Terminal Railroad and Warehouse Co. (Trust Co. of North America, Intervener), 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



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157

MORTGAGE. See Real estate—Continued.
other, and the lease contained a provision, with an express covenant by
the lessee, for the payment to the trustee under the mortgage of 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.
McClain's 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.
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.)f 43 P., 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. E., 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 $ Ilsley Bank (Mich.),
65 N. W,t 604.



158

REPORT OF THE COMPTROLLER OF THE CURRENCY.

MORTGAGE. See Real estate—Continued.
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, plaintiffs 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. 8., 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
he had taken possession under the mortgage, putting one of the clerks in
charge, and he proceeded forthwith to the county seat to record the mortgage. Before the mortgage was recorded an attachment was levied on the
goods, though the 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
any 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. Bep., 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, iu 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 Vt., 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.
29. In proceedings in the circuit court of appeals under Baukr. Act, 1898, § 246,
for the review of an order made by a court of bankruptcy distributing a




REPORT OF THE COMPTROLLER OF THE CURRENCY.

159

MORTGAGE. See Real estate—Continued.
fund in the hands of the trustee of a bankrupt in payment of fees, costs,
and expenses, in accordance with a petition of the trustee, where none of
the distributees, except such trustee, were parties to the record below,
they need not be made parties to the petition for revision, but will be
deemed sufficiently represented by the trustee. Eidgely Nat. Bank v.
Matheny, 105 Fed. Rep., 754.
30. A decree was entered in a State court foreclosing a first and second mortgage
on real estate and ordering its sale. Before the time fixed for the sale,
creditors filed a petition against the mortgagors on which they were
adjudicated bankrupts. Such creditors also filed a bill in the circuit
court of the United States on which they obtained an injunction restraining further proceedings for the sale of the mortgaged property by the
State court. Thereafter the mortgagees joined in a petition to the court
of bankruptcy asking that the property be sold by the trustee for payment of their liens, and such sale was ordered and made, the proceeds
received being insufficient to pay the mortgage debts. On petition of the
trustee the court ordered the first mortgage paid from the proceeds, but
displaced the second in favor of the costs and expenses incurred in both
the bankruptcy proceedings and the injunction suit, including fees
allowed to counsel for the creditors and trustee. No other assets of the
bankrupt came into the hands of the trustee. Held, that such order was
erroneous, except in so far as it directed payment of the costs incurred in
selling the property, including the compensation to the trustee not exceeding that to which the master in the State court would have boen entitled. Ib.
31. Under Bankr. Act, 1898, §§ 40, 48, providing that ft referees and trustees in
bankruptcy shall be entitled to commissions on dividends" paid by the
estate, they are not entitled to commissions on sums paid to mortgagees
from the proceeds of the mortgaged property on its sale by order of the
court of bankrupcy, such sums not being dividends within the meaning
of the statute. Ib.
32. A mortgage given by a bankrupt within four months prior to his bankruptcy,
in order to constitute a valid lien, under Bankr. Act, 1898, § 67d, must have
been given or accepted in good faith, and not in contemplation of, or in
fraud upon, the act, and " for a present consideration." Where a mortgage
so given was in part for a present consideration, and in part as security
for a renewal of an antecedent debt previously secured by a mortgage,
which was void as against other creditors because not recorded, it constitutes a valid lien to the extent of the new consideration, but is voidable
as a preference to the extent that the notes secured were based upon the
prior debt. City National Bank of Greenville v. Bruce, 109 Fed. Rep., 69.
33. A decree which determines the invalidity of a trust deed is final ami appealable as to the trustee and beneficiary in such deed, although it is interlocutory only as to other matters involved in the suit, in which suck
parties have no interest. Kemp et al. v. National Bank of the Republic of
New York, 109 Fed. Rep., 48.
34. Under the laws of Virginia, as they existed in 1896, a debtor, although
insolvent, had the right to prefer certain creditors, if done in good faith
and for a valid consideration, and such preferences are not invalid because
they operate to hinder and delay other creditors. Ib.
35. An officer of a bank can not avail himself of the statute of frauds, requiring
a promise to answer for the debt of another to be in writing to sustain an
action thereon, to protect him from liability arising from a false and
fraudulent statement made by him to a depositor in regard to the condition of the bank, by reason of which the depositor suffered loss. Ib.
36. Creditors can not invoke the statute of frauds to defeat a liability of their
debtor, which he has himself recognized by giving his notes and security
therefor. Ib.
37. A county treasurer, who was a large depositor of public money in a national
bank, applied to the president for information as to the bank's condition,
and was by him assured that the bank was solvent and able to pay all its
indebtedness. It was in fact insolvent, as the president knew, and subsequently failed, and the depositor was obliged to individually make good
to the county the amount lost through his deposit. Thereafter the president, who was also insolvent, without the knowledge of the depositor,
executed to him his individual notes, secured by a trust deed for the
amount so lost. Held, that such notes and deed were supported by a
legal consideration, which was the liability of the maker for the loss sustained by reason of his false and fraudulent statement, and were valid as
against his other creditors. Ib.




160

REPORT OF THE COMPTROLLER OF THE CURRENCY.

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 ratines 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
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 the others. United States National Bank v. McNair (N. C.), 21S. 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 half 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 Ail. Bep., 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 any 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 twelve 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. Beardsley 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 (Nebr.), 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. 8., 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. Bush v. First National Bank of Kansas City, 71 Fed.
 Bep., 102.


REPORT OF THE COMPTROLLER OF THE CURRENCY.

161

NEGOTIABLE PAPEK.—Continued.

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.
Pauly v. O'Brien, 69 Fed. Eep., 460.
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 Bank v. Crawford, 69 Fed. Rep., 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, Avhich
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 Batik of New York v. La Follette et al., 72 Fed.
Eep., 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., 80; 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. Citizens' National Bank v. Wlntler {Wash.), 45 P., 38.
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. Seco7id National Bank v. Hewitt (N. J. Sup.), 34 A., 988.

CUE, 1901? PT



1—11

1G2

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPKK—Continued.

25. The doctrine of lis pendens does not apply to a purchaser of negotiable bonds
for value before maturity. Farmers and Merchants7 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 wjbre 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.),
f
40 N. Y.S.,411.
27. A mere credit given by a bank to its depositor for a note procured by fraud
docs 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. Drovers1 National Bank v. Blue (Mich.), 67N. 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 liona iide purchase. Ib.
29. The fact that a guaranty is written on the back of a note, above the signature of the paj^ee, 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. Galland (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," 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 Bankv. 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 Batik 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 estoppel 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.
Merchants' National Bank v. McAnulty (Tex. Sup.), 33 S. W., 963.
36. An assignee of an invalid nonnegotiable draft who relies on its invalidity
as excusing him from attempting by 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. Merchants' National
Bank v. Spates ( W. Va.), 23 S. E., 681.




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163

NEGOTIABLE PAPER—Continued.

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
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.
40. Where a signer of a joint and several note assigned his property to another,
and the payee thereupon called on such assignee, and, 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.
41. 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.
42. One who, by his acts and declarations in dealing Avith a bank, holds himself
out to it as a member of a firm, 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. Sap.), 39 A., 855.
43. 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. TV., 547.
44. Where a partner is invested with general authority to use the firm name on
notes ior his individual purposes, the firm is liable on notes discounted on
the faith of such authority. Ib.
45. 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.
46. 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.
47. 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.%
71 Fed. Rep., 489.
48. In order to deprive one of the character of a bona fide purchaser it is not
enough 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.
49. There is no presumption that a purchaser of a note was aware of existing
defenses thereto. Ib.
50. A note signed by only one member of a firm was binding upon both members.
Held, that the fact that such note is renewed alter 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. TV., 2.
51. 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 payee, 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.
52. 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



164

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPER—Continued.

53.

54.

55.

56.

57.
58.

59.

60.
61.
62.

63.

64.

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 subrogated 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.
Until it is shown that the note in 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 lide holder for a valuable consideration.
Third National Bank v. Any ell (R. I.), 29 A., 500.
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 Mel, 348.
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.
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.
It is an equitable defense to an action against the maker of a promissory
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. 8., 642.
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; Ib., 736.
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.
The indorsement of a note "for collection" is notice to a purchaser that the
indorsee is not the owner. Ib.
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.
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 j>hysical possession of the notes after dishonor
was no evidence that it was not a bona fide holder for value. Ib.
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.




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165

NEGOTIABLE PAPER—Continued.

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 Avhich 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 for 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. Hep., 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.
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.), 08 N.W., 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 bank 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 signed by ail 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 Raid indorsee to insist that his
waiver of demand and notice should have been in writing. Hallowell
National Bank v. Alarston, 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 thereafter consider it necessary, the failure of the
bank to record the mortgage until too late to realize anything thereon Avill
not discharge the accommodation indorser from liability on the note.
Allenlown 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 iudorser's 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 words 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 Merchants' 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 BanJc 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. Peoples National Bank v. Clayton ( Ft.), 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




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REPORT OF THE COMPTROLLER OF THE CURRENCY.

NEGOTIABLE PAPER—Continued.

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 hona fide holder for value to
the extent of the note secured, and could maintain action thereon. lb.
11. 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 ''do our utmost to put you in funds
at an early date," and express a hope to be "able to take up this paper,"
and declare a willingness to confess judgment when sued, is sufficient
evidence of waiver of demand and notice, lb.
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. lb.
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. lb.
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, while such statute was in force, and delivered and
payable in Massachusetts. lb.
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 plaintiff, 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. Held, 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. Y. S., 401, affirmed. Third National Bank v. Hastings (N. Y. App.),
32NE.,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. E.y 1023.
86. A note coming into the hands of the maker after payment cannot 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.f 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




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167

NEGOTIABLE PAPER—Continued.

90.

91.
92.

93.

94.

latter indorsed it and .orrowed money upon it, waiving demand and
protest. The waiver was stamped upon the back of the note by mistake
over both indorsements. Heldj that the liability of the maker was not
affected thereby. Gordon v. Third National Bank of Chattanooga, 144
U. 8., 97.
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.
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. Be})., 828.
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 iide indorsee, 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, live thousand dollars, at
First Nat. Bank of Chicago, Illinois, with interest thereon at the rate of
— per cent per annum from date until paid. This note is one of a series
of twenty-live 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 l Blue Line, C. & E. I. R. R. Co. ; 7 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 ratably secured on said
cars. No. 1. Geo. B. Burrows, vice-president. Countersigned by E. D.
Buffington, 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 th*e 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. Merchants1 Bank, 136 U. S., 368.
A court of law—especially one which is vested with jurisdiction both at
law and in equity—has power to require a plaintiff to give a bond of indemnity as a condition precedent to a recovery in an action brought
therein on a lost negotiable instrument. First JSTat. Bank of Denver v.
Wilder, 104 Fed. Rep., 187.
The payee of a negotiable instrument, who claims to have lost the same
before maturity, but that it had not been indorsed, should not be allowed
to recover thereon against the maker without giving reasonable indemnity,
unless the evidence tl at the paper has been actually destroyed is so cogent
that there is practically no risk of its reappearance. A finding of the
jury in such an action that the instrument was not negotiated, but was
lost while unindorsed, is not in itself a ground for dispensing with the
requirement of indemnity, since it would not be available to the maker
as a defense against an action by a third person who produced the instrument properly indorsed. Ib.

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 Stales v. Curtis, 107 U. S., 671; 3 JV. 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. Neteon
 v. First National Bank of killingly, 69 Fed. Rep., 798.


168

REPORT OF THE COMPTROLLER OF THE CURRENC

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 he 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. S., 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 lie 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
lie 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. Ib.
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 firm, 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.
6. The 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 counection with
the other corporation. Benton v. German-American National Bank, 26 S.
W.,975.
7. 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. Helds 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 no*tice 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 w^hom a note has been offered
for discount, accepts it, and accepts a note payable to him and indorsed to



REPORT OF THE COMPTROLLER OF THE CURRENCY.

169

NOTICE—Continued.
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. Harrison et aL, 10 Fed. Rep., 243.
13. An 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 actiug 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. Hep., 141. Affirmed, 111
U. S.K 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 n. 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 haying 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: Held, that the knowledge
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 not 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 to7 his title to the paper which is the subject of the transaction. Merchants National Bank of Kansas City v. Loviti (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 bunk, 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 aL, 36 N. E.,462; 160 Mass., 503.
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 sheej),
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
Avhich 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 iraputablo to the bank,
and it was not bound by his acts. Bock Springs National Bank v. Luman
{Wyo.),38 B.,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. Bock Springs National Hank v. Luman (IVyo.),42
B,, 874.



170

REPORT OF THE COMPTROLLER OF THE CURRENCY.

NOTICE—Continued.
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 of Little
Mock, 64 Fed. Bep., 985.
2,3. 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. Rep., 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 indorser constitutes such
notice. Nelson v. First National Bank of Killingly, 69 Fed. Bep., 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. Ifc
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
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. Bep., 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., 792.
28. Where the payee of a check mails it to tbe 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. Bipley National Bank v.
Latimer, 2 Mo. App. Bep'r, 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 property for
his individual benefit. Columbia National BankY. Bice(Nebr.)y 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. Bugan, 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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

171

NOTICE—Continued.
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.), S3 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.
38. 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 DisU of City of Sedalia, ^Mo., v. De Weese (C. C.), 100 Fed.
Rep., 70S.
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. Lockivood v. The American National Bank, 9 R. 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 at a legal meeting
where a quorum is present a majority of those 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 V. 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. Hutton, supra
3. An officer may, in the ordinary course of business, borrow money of the
association. Blair v. First National Bank of Mansfield, 1Q Chicago Legal
News, 84; 2 N. B. C, 173.
4. The law providing no particular mode by which a director is to resign from
the board, an oral resignation would be as good as any. Movius v. Lee, 30
Fed. Rep., 298.




172

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

A. In general—Continued.
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. Western National Bank v.
Armstrong, 152 V. 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. Rep., 599.
12. The rule that where a bank officer is dealing with the bank on his own
account his knowledge will not be imputed to the bank does not apply
where such officer is the sole representative of the bank 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. Rep., 30.
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
fy Co. v. Same, Ib.; 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. Rockland Co., C. C., 94 Fed. Rep., 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.
Rill, C. C, 94 Fed. Rep., 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.
20. Sand. & H. Dig. Ark., sec. 1337, requires the president and secretary of every
corporation to annually make and file a certificate showing the condition
of the affairs of the corporation in certain designated particulars either
on the 1st day of January, in which case the certificate shall be filed on
or before February^ 15 following, or on the 1st day of July, in which case
it shall be filed on or before August 15 following. Section 1347 provides
that if such officers shall neglect or refuse to file such certificate they
shall be jointly and severally liable to an action founded on the statute
for all debts of the corporation "contracted during the period of any such



REPORT OF THE COMPTROLLER OF THE CURRENCY.

173

OFFICERS—Continued.
A. In general—Continued.
neglect or refusal.7' Held, that under such statute the officers had their
election as to whether the certificate should relate to January 1 or July 1,
but that it must be filed each year not later than August 15, and that if
not so filed the officers were individually liable for any debt thereafter
contracted by the corporation during the remainder of the year. Continental NaU Bank of Memphis, Tenn., v. Buford, 107 Fed. Rep., ll'8.
21. A right of action to enforce such statutory liability accrues at once when the
debt of the corporation is contracted, and continues for three years under
the statute of limitations of the State; and the time for bringing the
action can not be extended beyond such three years by extensions of the
note of the corporation by which the debt is evidenced; the action being
based upon the statute, and not upon the note. Ib.
22. A complaint in an action against the president of a corporation to enforce
his individual liability under such statute must clearly state the date
when the debt of the corporation was contracted and facts showing that
at such time the officers were in default for having failed to file the certificate required by the statute for the then current year. Ib,
B. Cashier—
23. It is within scope of general authority of cashier to receive offers for purchase of securities hold 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.
24. If a cashier, without authority from the directors so to do, makes a loan in
excess of one-tenth of the capital of the association, he Avill be liable, in
case of loss, for the amount of the excess. Second National Bank of Oswego
v.Burt,93 N. Y.,233.
25. 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 customers,
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.
Rep., 959.
26. 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. Cocheco National Bank v•. Haskell et al.,
51 N. H., 116.
27. 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.
28. 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.
29. 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.
30. 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.
31. 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.
32. 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.
33. 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.




174

REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

B. Cashier—Continued.
34. 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. Barney National Bank, 11
So., 881; 97 Ala., 643.
35. 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 tbem from the bank
upon which they were drawn, and applied the avails to tbe 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 peri] that the cashier had authority outside of his ordiuary 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.
Bep.t 699,
36. 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.
37. The circumstance that the 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 againsi 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 the damages, to show that, notwithstanding the
wrongful conversion of the paper, the cashier's bank did not suffer loss. Ib.
38. 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.
39. 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.
40. 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. TV., 593; 92 Term., 310.
41. 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.
42. He is liable for loss on loans made by him through want of care, diligence,
and reasonable skill. Ib.
43. 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.
44. 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. Sunwal (Minn.), 62 N. TV., 398.
45. 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.
46. 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 suret5r on a note



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175

OFFICERS—Continued.
B. Cashier—Continued.
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. A pp. Bep'r, 549.
47. 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 S. W., 532.
48. 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.
49. The office of cashier of a national bank is not an annual office, but the 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.
Mohren steelier et ah, 76 Fed. Bep., 118.
50. 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 reappoiutment in accordance
with such by-law at the beginning of each year. Ib.
51. 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.
52. 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.
53. 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. Bep.,
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 connected 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. Bep., 859.
55. 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. Bep., 274.
56. The cashier of a bank has no authority, by virtue of his office, to bind the
bank by a certification of his own individual check drawn thereon; and
as in this case he had neither real nor apparent authority, the certification
was invalid. Gale v. Chase Nat. Bank, 104 Fed. Bep,, 214.
57. A creditor who receives payment of his debt in money in due course of business, and in good faith, can not be required to repay the money to one from
whom the debtor illegally obtained it. Ib.




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REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

B. Cashier—Continued.
58. The cashier of a bank, as such, has no authority to issue cashier's drafts to
his own order in payment of his individual debts, and a creditor accepting a draft so drawn takes the risk of such Jack of authority. Ib.
59. To warrant the rinding that the cashier of a bank had implied authority to
issue cashier's drafts to his own order in payment of his individual debts,
such as will bind the bank and protect a creditor in accepting a draft so
drawn for a sum so large as to be out of the usual line of conduct in the
banking business, a settled course of business must be shown, by which he
was permitted, with the acquiescence of the directors, to exercise such
authority during a series of years or in numerous transactions; and evidence that ha had drawn not exceeding nine drafts in all in payment of
his own debts, only four of which were to his own order, and all of which
were issued within the preceding six months, is insufficient. Ib.
C. Directors—
60. 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. Briggs v. Spaulding, 141 TJ. S., 132.
61. 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.
62. 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.
63. 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.
64. 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 denned, 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.
65. 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 resigu, and if frauds are committed during
his absence and without his knowledge, whereby the bank suffers loss, he
is not responsible for them. Ib.
66. 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. Eep.y 767.
67. 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 ot
"city," and used the seal of said bank instead of his own official seal, such
error did not affect the oath taken. Ib.
68. 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 for any loan or debt, and if he
took it willfully, and not believing that he was stating 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.
69. 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.
70. 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



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177

OFFICERS—Continued.

C. Directors—Continued.
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.
71. A bill brought to charge the directors of an insolvent national bank 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.
Movins, Receiver, v. Lee ct al, 30 Fed. Rep., 298.
72. 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 stockholders, 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.
73. A director of a national bank who, before the 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 the
sustaining 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.
71. 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.
75. 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.
70. 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.
77. 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.
78. Bank directors can not be held personally liable for money paid out for
dividends " t o 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.
79. 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.
80. 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.
81. 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

CUR 1901, PT 1


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REPORT OF THE COMPTROLLER OF THE CURRENCY.

OFFICERS—Continued.

C. Directors—Continued.
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. Bar don et al., 36 Fed. Rep., 617.
82. 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
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.
83. 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.
84. 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.
85. 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. draves et al., 41 Fed. Rep.. 459.
86. 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 five years. Ib.
87. Directors of a national bank are "officers" within the meaning of Rev. St.,
sec. 5209, whioh 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. Rep., 599.
88. 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.
89. 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.
90. 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.
91. 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



REPORT OF THE COMPTROLLER OF THE CURRENCY.

179

OFFICERS—Continued.
C. Directors—Continued.
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.
92. 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., 13.
93. A stockholder in an insolvent national bank for which a receiver has been
appointed can 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 al., 45 Fed. Rep., 668.
94. 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
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.
95. 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.
96. 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.
97. 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.
98. 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.
S9. Such action may be brought in a State court. Ib.
100. The bank and the receiver, as such, are necessary parties defendant to such
an action. Ib.
101. 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 Naliant Bank, 2 Metcalf, 163.
102. A board of bank directors may delegate authority to a committee of its
members to alienate or mortgage real estate; and such authority to convey real estate necessarily implies authority to execute proper instruments
for that purpose and to affix the corporate seal thereto. Ib.
103. 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.
104. 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.
Conway v. Halsey, 44 N. J. L., 462; 3 N. B. C, 511.
105. 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 >S. W., 147.




180

REPORT OF THE COMPTROLLER OF THE CURRENCYO

OFFICERS—Continued.
C. Directors—Continued.
106. 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.
107. 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 the 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.
108. 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
in charge of its fund, properties, and books by the Comptroller. Robinson
v. Hall et al., 63 Fed. Rep., 222.
109. 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.
110. Their duty as directors does not cease until after the appointment of a
receiver. Ib.
111. If directors were depositors, and knew two months 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.
112. Directors «f 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.
Bri(jg8 v. Spaulding, 11 S. C, 924; 141 U. S., 132, distinguished. Ib.
113. 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.
111. 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. Frescott v. Haughey, 65 Fed. Rep., 653.
115. 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.
116. 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. F., 305,




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181

OFFICERS—Continued.
C. Directors—Continued.
117. 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. McGeoch (Wis.), 66 N. TV., 606.
118. 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. Drake, 35 Kans., 564; 57 Am. Rep., 193; 3 N. B. C, 445.
119. 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