director. Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and that he is the bona fide owner, in his own right, of the number of shares of stock required by this act, subscribed by him, or standing in his name on the books of the association, and that the same is not hypothecated, or in any way pledged, as security for any loan or debt; which oath, subscribed by himself, and certified by the officer before whom it is taken, shall be immediately transmitted to the comptroller of the currency, and by him filed and preserved in his office." Ib. § 9. See, also, DIRECTORS.

24. Elections. "The directors of any association first elected or appointed shall hold their places until their successors shall be elected and qualified. All subsequent elections shall be held annually on such day in the month of January as may be specified in the articles of association; and the directors so elected shall hold their places for one year, and until their successors are elected and qualified. But any director ceasing to be the owner of the requisite amount of stock, or having in any other manner become disqualified, shall thereby vacate his place. Any vacancy in the board shall be filled by appointment by the remaining directors, and any director so appointed shall hold his place until the next election. If from any cause an election of directors shall not be made at the time appointed, the association shall not for that cause be dissolved, but an election may be held on any subsequent day, thirty days' notice thereof in all cases having been given in a newspaper published in the city, town, or county in which the association is located; and if no newspaper is published in such city, town, or county, such notice shall be published in a newspaper published nearest thereto. If the articles of association do not fix the day on which the election shall be held, or if the election should not be held on the day fixed, the day for the election shall be designated by the board of directors in their by-laws, or otherwise: Provided, That if the directors fail to fix the day, as aforesaid, shareholders representing two-thirds of the shares may." Ib. § 10. See, also, ELECTIONS.

25. Votes. "In all elections of directors, and in deciding all questions at meetings of shareholders, each shareholder shall be entitled to one vote on each share of stock held by him, Shareholders may vote by proxies duly authorized in writing; but no officer, clerk, teller, or bookkeeper of such association shall act as proxy; and no snareholders whose liability is past due and unpaid shall be allowed to vote." lb. § 11. 26. Stock and stockholders. "The capital stock of any association formed under this act shall be divided into shares of one hundred dollars each, and be deemed personal property and transferable on the books of the association in such manner as may be prescribed in the bylaws or articles of association; and every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such

shares, and no change shall be made in the articles of association by which the rights, remedies, or security of the existing creditors of the association shall be impaired. The shareholders of each association formed under the provisions of this act, and of each existing bank or banking association that may accept the provisions of this act, shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares; except that shareholders of any banking association now existing under State laws, having not less than five millions of dollars of capital actually paid in, and a surplus of twenty per centum on hand, both to be determined by the comptroller of the currency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept undiminished, and be in addition to the surplus provided for in this act: and if at any time there shall be a deficiency in said surplus of twenty per centum, the said banking association shall not pay any dividends to its shareholders until such deficiency shall be made good; and in case of such deficiency, the comptroller of the currency may compel said banking association to close its business and wind up its affairs under the provisions of this act." 1b. § 12.

27. Increase or reduction of capital. "It shall be lawful for any association formed under this act, by its articles of association, to provide for an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this act: Provided, That the maximum of such increase in the articles of association shall be determined by the comptroller of the currency; and no increase of capital shall be valid until the whole amount of such increase shall be paid in, and notice thereof shall have been transmitted to the comptroller of the currency, and his certificate obtained specifying the amount of such increase of capital stock, with his approval thereof, and that it has been duly paid in as part of the capital of such association. And every association shall have power, by the vote of shareholders owning two-thirds of its capital stock, to reduce the capital of such association to any sum not below the amount required by this act, in the formation of associations: Provided, That by no such reduction shall its capital be brought below the amount required by this act for its outstanding circulation, nor shall any such reduction be made until the amount of the proposed reduction has been reported to the comptroller of the currency and his approval thereof obtained." Ib. § 13.

28. Paying in the capital. Fifty per cent. of the capital stock must be paid in before the association is authorized to commence business; and the remainder at least as fast as ten per cent. on the whole amount, every month. 16. § 14.

29. "If any stockholder, or his assignee, shall fail to pay any instalment on the stock when the same is required by the foregoing section to be paid, the directors of such association may sell the stock of such delinquent shareholder at public auction, having given three weeks' previous

notice thereof in a newspaper published and of general circulation in the city or county where the association is located, and if no newspaper is published in said city or county, then in a newspaper published nearest thereto, to any person who will pay the highest price therefor, and not less than the amount then due thereon, with the expenses of advertisement and sale; and the excess, if any, shall be paid to the delinquent shareholder. If no bidder can be found who will pay for such stock the amount due thereon to the association, and the cost of advertisement and sale, the amount previously paid shall be forfeited to the association, 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 cancelled and deducted from the capital stock of the association; and if such cancellation and reduction shall reduce the capital of the association below the minimum of capital required by this act, the capital stock shall, within thirty days from the date of such cancellation, be increased to the requirements of the act; in default of which a receiver may be appointed to close up the business of the association." lb. § 15.

30. Securing the circulation. "Every association, after having complied with the provisions of this act, preliminary to the commencement of banking business under its provisions, and before it shall be authorized to commence business, shall transfer and deliver to the Treasurer of the United States any United States registered bonds bearing interest to an amount not less than thirty thousand dollars nor less than one-third of the capital stock paid in, which bonds shall be deposited with the Treasurer of the United States, and by him safely kept in his office until the same shall be otherwise disposed of, in pursuance of the provisions of this act; and the Secretary of the Treasury is hereby authorized to receive and cancel any United States coupon bonds, and to issue in lieu thereof registered bonds of like amount, bearing a like rate of interest, and having the same time to run; and the deposit of bonds shall be, by every association, increased as its capital may be paid up or increased, so that every association shall at all times have on deposit with the Treasurer registered United States bonds to the amount of at least one-third of its capital stock actually paid in." Provision for allowing associations to take up their bonds, on reducing their capital or closing their business. 16. § 16.

31. Commencing business. Comptroller to examine the condition of each association; and may give it a certificate authorizing it to commence the business of banking. Ib. §§ 17, 18.

32. Transfer of securities. Mode of transferring bonds by banking associations, to fulfil the requirements of the law; and mode of recording assignments and transfers,-prescribed. Ib. SS 19, 20.

the current market value of the United States bonds so transferred and delivered, but not exceeding ninety per centum of the amount of said bonds at the par value thereof, if bearing interest at a rate not less than five per centum per annum." Ib. § 21.

34. Limit prescribed to the amount of circulating notes which may be issued to any association, in proportion to the aggregate amount of its capital. 16. § 21, as amended by act of April 6, 1865, 13 U. Š. Stat. at L. 498.

35. "The entire amount of notes for circulation to be issued under this act shall not exceed three hundred millions of dollars." Authority to engrave and print circulating notes conferred. Their form and denomination. Ib. § 22.

36. "After any such association shall have caused its promise to pay such notes on demand to be signed by the president or vice-president and cashier thereof, in such manner as to make them obligatory promissory notes, payable on demand, at its place of business, such association is hereby authorized to issue and circulate the same as money; and the same shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except for duties on imports; and also for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on the public debt, and in redemption of the national currency. And no such association shall issue post notes or any other notes to circulate as money than such as are authorized by the foregoing provisions of this act." Ib. § 23.

37. Provision for supplying the place of worn out or mutilated notes; and for burning them. Ib. § 24.

38. Custody of securities. The bonds deposited with the Treasurer by any banking association for the security of its circulating notes, shall be held exclusively for that purpose, until such notes shall be redeemed, except as provided in this act; but the comptroller shall give to such association powers of attorney to receive to its own use the interest; but such powers shall become inoperative whenever such banking association shall fail to redeem its circulating notes. Whenever the market value of any bonds deposited shall be reduced below the amount of the circulation issued for the same, the comptroller is authorized to demand and receive the amount of such depreciation in other United States bonds at cash value, or in money, from the association, to be deposited with the Treasurer as long as the depreciation continues. Bonds deposited may be exchanged for others, on certain terms. Ib. § 26. 39. Powers in respect to real property. Any such association may purchase, hold and convey real estate, as follows:

"1. Such as shall be necessary for its immediate accommodation in the transaction of its business.

"2. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted.

53. Agencies for the government. "All associations under this act, when designated for that purpose by the secretary of the treasury, shall be depositaries of public money, except receipts from customs, under such regulations as may be prescribed by the secretary; and they may also be employed as financial agents of the government; and they shall perform all such reasonable duties, as depositaries of public moneys and financial agents of the government, as may be required of them. And the secretary of the treasury shall require of the associations thus designated satisfactory security, by the deposit of United States bonds and otherwise, for the safekeeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the government: Provided, That every association which shall be selected and designated as receiver or depositary of the public money shall take and receive at par all of the national currency bills, by whatever association issued, which have been paid in to the government for internal revenue, or for loans or stocks." Ib. § 45.

54. Proceedings in case of default to pay notes. Protest authorized to be made by a notary when any association makes default to redeem its circulating notes on demand. A copy to be forwarded to the comptroller. "And after such default, on examination of the facts by the comptroller, and notice by him to the association, it shall not be lawful for the association suffering the same to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to deliver special deposits." Ib. § 46.

55. Authority conferred upon the comptroller to appoint an agent to ascertain whether the association has refused to pay its circulating notes; and, if satisfied it is in default, to declare the securities pledged by the association forfeited to the United States; and to give notice to the holders of circulating notes of such association to present them for payment at the treasury of the United States; and, as they are paid, to cancel an equal amount of the bonds pledged. the comptroller, instead of cancelling the bonds, may cause them to be sold, to redeem the circulating notes. Ib. §§ 46, 47, 48.

Or

56. On becoming satisfied that an association has refused to pay its circulating notes, and is in default, the comptroller may appoint a receiver (with security) who, under the direction of the comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues and claims belonging to such association, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, sell all the real and personal property of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders. Such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the comptroller of the currency, and also make

his acts and proceedings. The comptroller shall cause advertisement to be made for claims against the association. And, from time to time, after provision is made for redemption of circulating notes, the comptroller shall make dividends out of the proceeds paid over to him by the receiver, on such claims as shall be proved; and the remainder of such proceeds, if any, shall be paid over to the shareholders of such association, or their legal representatives, in proportion to the stock by them respectively held. Provisions, however, enabling the association to litigate the question whether it has failed to redeem its circulating notes, before the nearest circuit, district or territorial court of the United States, by injunction suit against the comptroller. lb. § 50. See DISSOLUTION; RECEIVER.

57. Transfers fa contemplation of insolvency, void. All transfers of the notes &c. and other evidences of debt owing to any association, or of deposits to its credit; all assignments of mortgages &c. in its favor; all deposits of money &c. for its use or the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, with a view to prevent the application of its assets in the manner prescribed by this act, or with a view to the preference of one creditor to another, except in payment of its circulating notes, declared void. Ib. § 52.

58. Violations of the law. Any violation of the act declared a ground of forfeiture of the franchises of the association, and of personal liability against every director participating in, or assenting to it. Ib. § 53.

59. Embezzlement of assets of association; or issuing its notes without authority; or making &c. without authority any certificate of deposit, order, bill of exchange, acceptance or assignment of evidence of debt, or any false entry in the books &c. of the association, with intent to defraud, when committed by any president, director, cashier, teller, clerk or agent of any association, declared a misdemeanor, punishable by imprisonment not less than 5 nor more than 10 years. Ib. § 55.

60. Jurisdiction of national courts. "Suits, actions, and proceedings, against any association under this act, may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established; or in any State, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases: Provided, however, That all proceedings to enjoin the comptroller under this act shall be had in a circuit, district, or territorial court of the United States, held in the district in which the association is located." Ib. § 57.

61. Offences. Mutilating, or forging, counterfeiting &c. the notes of national banking associations; or uttering &c. forged notes as true; or engraving &c. plates like their notes,-how punished. Ib. §§ 58, 59, 60.

62. Who are stockholders. "Persons hold, ing stock as executors, administrators, guardians, and trustees, shall not be personally subject to any

liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in said trust-funds would be if they were respectively living and competent to act and hold the stock in their own names." Ib. § 63. See STOCKHOLDERS.

III. UNDER STATE BANKING SYSTEMS.

1. Safety-fund Acts.*

63. The New York safety-fund act was a general act, applicable to all moneyed corporations "hereafter to be created" within the State. It provided for the creating and keeping up a

At the present time a great majority of the banks throughout the United States are conducted under the National Banking law; being either new banks organized under that law in the first instance, or State banks which have been converted into National banks under the provi

sions of section 44 of the act.

See Homans' Merchants' & Bankers' Almanac, for

1868, pp. 1-75, for a list of 1650 National banks in busi

ness, January, 1868, with statistics as to their location, chief officers, amount of capital, &c.; against only 270 banks still operating under State laws.

In consequence of this extensive and remarkable change in the banking business of the country, the decisions of the State courts in former years, upon the organization and corporate character and management of banks, will possess less general interest and value than formerly, unless there shall be, in future, some return to the State systems. In this work, decisions on banks conducted under special charters, are placed under general heads of law, where they may be

useful as illustrating principles applicable to other corpora

many

tions than banks. We give in the text a sketch of the "safety fund" and "free banking" systems, with decisions under them adapted to illustrate the National Banking law.

In addition to the decisions cited in the text, reference may be made to the following cases depending more or less upon local or temporary laws, or on provisions of particular charters: Banking laws; their constitutionality, construction, &c. Wilson v. Tesson, 12 Ind. 285; Green v. Graves, 1 Dougl. 351; Smith v. Barstow, 2 Dougl. 155; Falconer v. Campbell, 2 McLean, 195; White v. How, 3 McLean, 111; Nesmith v. Sheldon, 7 How. 812; Bleakney v. Farmers &c. Bank, 17 Serg. & R., 64; State v. Lehre, 7 Rich. 234. Or ganization of banks; articles; capital; subscriptions; branch banks. Charitable Society of Hartford v. Farmers' & Mechanics' Bank, 26 Conn. 60; State v. Bank of Charleston, Dudl. 187; McCulloch v. State of Maryland, 4 Wheat. 816; Osborn v. Bank of United States, 9 Wheat. 738; Murphy v. State Bank, 2 Eng. 57; Wallace v. State Bank, Id. 61; State v. Ashley, 1 Pike, 513; McNeil v. Wyatt, 3 Humph. 125; Nashville v. Henderson, 5 Yerg. 104; State v. Thompson, 27 Mo. 365; Bank of the State v. Smith, 83 Mo. 364; Bank of Utica v. Magher, 18 Johns. 841. Enforcement of bank obligations; visitation by commissioners; periodical reports; taking security for circulation. Colgin v. State Bank, 11 Ala. 222; Young v. Hughes, 12 Smed. & M. 93; Montgomery v. Commissioners of Sinking Fund, 7 How. (Miss.) 13; People v. Campbell, 14 IZZ 400; Rich v. Shaw, 10 Shepl. 843; Townsend v. Smith, 1 Bensl. 350: Collins v. Central Bank, 1 Kely, 435; Conwell. Hill, 14 Ind. 131; Ewing v. Robeson, 15 Ind. 26; Marine Bank v. Auditor of State, 14 Ill. 185; People v. Holmes, 8 Mich 544; People v. State Treasurer, 4 Mich. 27. Suits by and against banks; and special remedies and proceedings allowed in them. Logwood v. Huntsville Bank,

fund, raised by prescribed contributions from the banks, to be equal ultimately to three per cent. on their capital, to be paid into the treasury of the State and held by the State as a "bank fund," inviolably appropriated and applied to the payment of the debts of any of the banks which might become insolvent. Meantime the fund was declared the property of the banks contributing to it, and any net income from it, was payable to them. Detailed provisions were made for ascertaining and discharging from the fund, debts of insolvent banks, and for winding up their business. Bank commissioners were constituted, whose duty it was made to inspect from time to time the affairs of the banks, according to directions given in the act. Banks were limited to a circulation not exceeding twice their capital; were required to have all their capital paid in before making any loans or discounts; were placed under special restrictions in respect to loans and discounts, and were forbidden to issue any bills or notes, except such as should be made payable on demand and without interest. N. Y. Laws of 1829, 167, ch. 94.*

64. New York restraining act of 1804. No person, unauthorized by law, can become a member of an association &c. or proprietor of any bank, or fund for issuing notes, receiving deposits, making discounts, or transacting other banking business. N. Y. Laws of 1804, 615; re-enacted 2 Rev. L. of 1813, 234, ch. 71, § 2. 65.

body corporate, to keep any office of deposit for - of 1818. No person, association, or discounting promissory notes, or for carrying on any kind of banking business, or to issue bills or promissory notes as a private bank, unless specially authorized by law. N. Y. Laws of 1818, 242, ch. 236, § 1.

66. Prohibitions of Revised Statutes. No corporation, not expressly incorporated for banking, possesses the power of discounting bills, notes, or other evidences of debt, of receiving deposits, of buying bullion and foreign coin, of buying and selling bills of exchange, or of issuing bills, notes, or other evidences of debt

Minor, 23; Duncan v. Tombeckbee Bank, 4 Port. 181; Hancock v. Branch Bank, 5 Ala. 440; Ford v. Branch Bank, 6 Ala. 286; Leigh v. State Bank, 10 Ala. 339; Morgan v. Ramsey, 15 Ala. 190; Bussey v. Branch Bank, 15 Ala. 216; Jemison v. Planters' & Merchants' Bank, 17 Alu. 754; Stanley v. Bank of Mobile, 23 Ala. 652; Bank of Chilicothe v. Yoe, 4 Ham. 125; Bank v. Turner, 3 Marsh. 567; State v. Commercial & Railroad Bank, 12 Smed. & M. 276; Clinton Bank v. Hart, 19 Ohio, 872. Winding up the business of banks. Duncan v. Biscoe, 2 Eng. 175; Emerson v. Washington County Bank, 11 Shepl. 445; Bank of Circleville v. Iglehart, 6 McLean, 568; Miners' Bank v. Thomas, 4 Greene, 336; Commercial Bank of Natchez v. Chambers, 8 Smed. & M. 9.

The "safety fund act" of 1829 was amended, and the banks subject to its provisions were further regulated by N. Y. Laws of 1833, ch. 274; 1835, ch. 307; 1837, ch. 74, ch. 102, ch. 305, ch. 450, ch. 476; 1840, ch. 18; 1841, ch. 292; 1842, ch. 247; 1843, ch. 218; 1845, ch. 114; 1846, ch. 97; 1847, ch. 419; 1848, ch. 344; 1849, ch. 97; 1850, ch. 332; 1851, ch. 197; 1854, ch. 138, ch. 242; 1857, ch. 370.

+ By these restraining acts a monopoly of the business of banking within the State of New York was secured to the chartered and the safety-fund banks.