Leavitt v. Blatchford and Leavitt v. Palmer (assignment to secure post-notes), 3 N. Y. 19, 51 Am. Dec. 333.

Bank Commissioners v. St. Lawrence Bank (time notes four to twelve months void), 7 N. Y. 513.

Safford v. Wyckoff (post-bill, dated August 15, 1839), 1 Hill, 11; 4 Hill, 442. Bank of Chillicothe v. Dodge (post-bill, dated September 30, 1839), 8 Barb. 233; Attorney-General v. Life and Fire Insurance Company (post-notes, called "Life and Fire Bonds "), 4 Paige, 224; 9 Paige, 471.

7. This act was (originally) passed because the courts began to regard notes payable abroad in the coin of a foreign country (Leavitt v. Palmer, 3 N. Y. 19, 51 Am. Dec. 333), as within the prohibition of section 4, chapter 363, Laws of 1840, and consequently void. The amendment was explanatory. Curtis v. Leavitt, 17 Barb. 320. The true construction of this section is "that the issue and circulation thereby intended to be prohibited was that of bank-notes proper, or of notes which were likely to enter into, and being on time or interest, to affect injuriously the circulating medium of the State." Notes, therefore, to come within the prohibition, must not only be on time or interest, but in similitude of bank-notes, or adapted to circulate as money. Id. 311; Leavitt v. Blatchford, 17 N. Y. 521; 5 Barb. 9.

8. They are not prohibited from giving their engagements on time, provided such engagements are not adapted nor intended to circulate as money. Tracy v. Talmage, 18 Barb. 456.

9. A bank cannot make an accommodation indorsement, and same is not binding except in hand of bona fide holder for value. Mosford v. Farmers' Bank, of S., 26 Barb. 568. For a full presentation of the authorities on this question, see editorial note to Flannagan v. California Nat. Bank, 23 L. R. A. 836.

10. This section is not confined in its interpretation to bills and notes capable of circulating as money. Applied to negotiable promissory note at twelve months with interest, such held illegal and void, p. 33. This issue of time paper belongs to commercial or mercantile business, not to that of bankers, and the acts (18291840-1851) were passed with view to remedy this evil. That these statutes extend to negotiable promissory notes and bills of exchange payable at a future day has been decided both here and elsewhere (citing 3 Denio, 70; 3 Barb. 222; 3 McLean, 102, Fed. Cas. No. 12,037, 3 McLean, 276, Fed. Cas. No. 6,259; 10 Paige, 113), p. 34. The legal liability remains, but the notes are void. Leavitt v. Palmer, 3 N. Y. 19, 51 Am. Dec. 333.

11. Receiving money on deposit on agreement to pay five per cent. interest, and issuing a certificate of deposit therefor is not within this statute. In Leavitt v. Palmer, 3 N. Y. 19, 51 Am. Dec. 333; the paper declared void was a promise to pay to order of W. R. C., twelve months after date, with interest, for value received, and it was plain from the nature of the transaction that the notes were designed for circulation, and were within the language of the act an issue of the bank. In that case forty-eight notes for £1,000 each were issued. In Swift v. Beers, 3 Denio, 70, a promise to pay to the order of S. & Co., for value received and interest, that was held void as violation of this section. In Safford v. Wyckoff, 1 Hill, 11, and Smith v. Strong, 2 id. 241, both were negotiable bills of exchange. In all these cases the instruments were negotiable paper, and evidently

issued for circulation. But in this case the certificate of deposit was merely given as a convenient evidence of debt. Pelham v. Adams, 17 Barb. 386.

§ 105. When bills of exchange to be without grace. All checks, bills of exchange or drafts appearing on their face to have been drawn. upon any bank or individual banker carrying on banking business under the laws of this state, which are on their face payable on any specified day or in any number of days after the date or sight thereof, shall be deemed due and payable on the day mentioned for the payment of the same, without any days of grace being allowed, and it shall not be necessary to protest the same for non-acceptance.

(Former section 85; R. S., 1541; L. 1882, ch. 409, § 120.)

See Negotiable Instruments Law, §§ 145, 146.

1. This act was intended to abolish grace on short time bills on banks or bankers it is specially confined to bills drawn on their face in days or a specified day, so that the holder should get his money upon such short bills at the day specified and does not apply to bills drawn for months or years on their face. Commercial Bank of Ky. v. Varnum, 49 N. Y. 278.

2. Such bills are due on the day following, not that preceding a public holiday. Id. 279.

3. Under date of January 16, 1908, the attorney-general held the following form of certificate of deposit to be unlawful because not payable on demand and because not payable to bearer or to the order of one named:

"Incorporated under the Laws of the State of New York.

of the United States of America, which said sum is payable in gold coin of the United States of America, of its present standard of weight and fineness to

after date upon presentation for and cancellation of this certificate, with interest thereon at the rate of 4% per annum, and payable half yearly to wit, on the first days of January and July in each year at the said

The

Bank.

Bank reserves the right to pay off this certificate or to change the rate of interest at any time upon giving the registered holder hereof 90 days' previous written notice of their intention so to do. This certificate may, with the consent of the said Bank, be transferred by endorsement thereon and proper registration thereof at the office of the said Bank, but until such registration has been completed, the transfer shall not be valid and the registered holder hereof shall, to all intents and purposes, be deemed the holder.

and signed

day of

in the

at the

by the proper officers thereof, this
(Seal) year of our Lord, one thousand, nine hundred and

City of New York, in the State of New York, and in the United
States of America.

Cashier.

Vice-President.

Attached thereto were ten coupons each in the following form, except that they were payable alternately on the first days of January and July:

in gold coin of the United States of America, of its present standard of weight and fineness, on the first day of January, being six months' interest then due on certificate of deposit.

No. A 248

BANK OF

Vice-President."

Cashier.

§ 106. Transfers of securities by superintendent to be countersigned by treasurer. No transfer of securities now held or hereafter received by the superintendent to secure circulation shall be valid or of binding force or effect unless countersigned by the treasurer of the state, or in his absence or inability to perform the duties of his office, by his deputy. The treasurer shall keep in his office or in the office of the superintendent of banks, a book in which shall be entered the name of every bank or individual banker, from whose account such transfer of securities is made by the superintendent, and the name of the party to whom such transfer is made, unless such transfer shall be made in blank, in which case the fact shall be stated in such book; and the par value of any stock so transferred shall be entered therein, and the treasurer shall immediately upon countersigning and entering the same, advise by mail the bank or individual banker from whose accounts such transfer is made, of the kind of security and amount of the same thus transferred. The treasurer shall present in his annual report to the legislature, the total amount of such transfers or assignments countersigned by him.

The treasurer shall, during office hours, have access to the books

of the superintendent of banks for the purpose of ascertaining the correctness of the transfer or assignment presented to him to countersign; and the superintendent shall, during office hours, have access to the book above mentioned kept by the treasurer to ascertain the correctness of the entries upon the same.

(Former section 86; R. S., 1541, 1542; L. 1882, ch. 409, §§ 121-124.)

§ 107. Unauthorized banking prohibited. No person unauthorized by law shall subscribe to or become a member of, or be in any way interested in any association, institution or company formed or to be formed for the purpose of issuing notes or other evidences of debt to be loaned or put in circulation as money; nor shall any such. person subscribe to or become in any way interested in any bank or fund created or to be created for the like purposes or either of them. No corporation, without being authorized by law, shall employ any part of its property, or be in any way interested in any fund which shall be employed for the purpose of receiving deposits, making discounts or issuing notes or other evidences of debt to be loaned or put into circulation as money. All notes and other securities for the payment of any money or the delivery of any property, made or given to any such association, institution or company, or made or given to secure the payment of any money loaned or discounted by any corporation or its officers, contrary to the provisions of this section, shall be void.

No person, association of persons or corporation, except such as are expressly authorized by law, shall keep any office for the purpose of issuing any evidences of debt, to be loaned or put in circulation as money; nor shall they issue any bills or promissory notes or other evidences of debt as private bankers, for the purpose of loaning them or putting them in circulation as money, unless thereto specially authorized by law.

Every person, and every corporation, director, agent, officer or member thereof, who shall violate any provision of this section, directly or indirectly, or assent to such violation, shall forfeit one thousand dollars to the people of the state.

(Former section 87; R. S., 1578; L. 1882, ch. 409, §§ 297-303.) See General Corporation Law, § 10.

See Penal Law, §§ 302, 666.

See New York Constitution, art. VIII, § 4.

1. The prohibitions against unauthorized banking are still in force, but banks organized under the general banking law are authorized to issue notes on condition of having the same secured and countersigned as specified in the said law; without performing these conditions, notes or obligations of any kind intended to circulate as money cannot be issued. Curtis v. Leavitt, 15 N. Y. 70, 71.

2. A negotiable draft or bill of exchange in ordinary form issued by an association organized under the general banking law, though without the sanction of the superintendent, will bind the association in favor of a bona fide holder, even if signed by the cashier only. Otherwise, however, as between the association and one who is not a bona fide holder, if it appear that it was issued as a loan or to be put in circulation as money. It appears a negotiable note or bill, though given by a corporation having only an incidental right to issue paper in certain special cases, must be presumed to be legally issued, until the contrary appears; but where there is sufficient on the face of a negotiable note or bill, etc., to create a suspicion that it is issued contrary to law, and put the party who takes it upon his guard, he is not entitled to be considered a bona fide holder. Safford v. Wyckoff, etc., 4 Hill, 442.

3. A note given to and discounted by a corporation, which by its charter has power to receive deposits, but not expressly to discount paper, is void, and note cannot be collected, but action may be maintained for money had and received. The policy of Restraining Act until 1837 was to give banks a monopoly of business, but since then it rests only on the principle of restraining corporations from exercising powers not given by their charter. The legislature did not intend money loaned on prohibited security should be lost. Pratt et al. v. Short et al., 79 N. Y. 437.

4. Mortgage to People's Safe Deposit and Savings Institution to secure notes - notes held void, but mortgage held valid. Though one security may be void, it does not follow that the other is. Cites Curtis v. Leavitt, 15 N. Y. 97; to same effect, Pratt et al. v. Eaton, 79 id. 449. The history of the Restraining Act is given in the above cases, with the authorities. The cases known as the Utica Insurance cases (19 Johns. 1) decided the law that the securities taken on such discounts were void, but the loans could be recovered. The court in 19 Johns. said: "The lending of money is not declared to be void, and, therefore, whenever money has been lent it may be recovered, although the security itself is void." This law has been followed in 8 Cow. 20; 3 Wend. 296; 4 id. 652. It has been criticised and not overruled in 25 id. 64, 35 Am. Dec. 653; Tracy v. Talmage, 14 N. Y. 189, 67 Am. Dec. 132, and Curtis v. Leavitt, 15 id. 97; 1 Wend. 56, 555. 5. The People's Safe Deposit and Savings Institution discounted notes. The notes were held void, and a mortgage given to secure them held void also. The Utica Insurance cases were referred to, and it was stated that their soundness had been repeatedly questioned. That the better opinion was that since the corporation was particeps criminis, the money loaned could not be recovered on grounds of public policy. This doctrine (though it has much in its favor both in reason and precedent) is overruled by cases cited below. Pratt et al. v. Eaton, 18 Hun, 294 (June, 1879).

6. A corporation whose charter allows it to receive deposits, which is a banking power, may not issue notes to circulate as money or discount commercial paper, and is subject to Restraining Act. The penalty, however, will not be car