f-$>^^ 'jl Cornell University Law Library The Moak Collection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 IN nenoRY of JUDGE DOUGLASS BOARDMAN FIBaT DEAN OF THE SCHOOL By his Wife and Daughter A. M. BOARDMAN and ELLEN D. WILLIAMS pz^' ^^ Cornell University Library KFN5250.A3 1885 The laws of the state of New York relat 3 1924 022 794 584 WW Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924022794584 THE LAWS STATE OF NEW YORK, BBLATIKO TO Banks, Banking and Trust Companies, COMPANIES RECEIVING MONEY ON DEPOSIT, ALSO THE NATIONAL BANK ACT AND COGNATE UNITED STATES STATUTES, AMENDMENTS AND ANNOTATIONS. BY - WILIvIS S. PAINE. ALBANY: WEED, PARSONS AND COMPANY, LAW PUBLISHERS. 1885. Entered, according to act of Congress, in the year eighteen hundred and eighty-five. By WILLIS S. PAINE, In the office of the Librarian of Congress, at "Washington. ELECTEOTTPBD AND FEINTED BT WEED, PARSONS AND COMPANT, ALBANY, N. T. PREFACE. The Le^slature of tlie State of New York, May 5, 1880, passed an act (ch. 170) to provide for the compilation and revision of the Laws affecting" banks, banking and trust companies, as follows : " Section 1. Within twenty days after the passage of this act, the Governor, by and vdth the' advice and consent of the Senate, is authorized to apppini , three persons as commissioners to compile and revise all statutes of the State of New York affecting banks, banking and trust companies which shall be in force at the time such commissioners shall make their report, and ia the execution of their duties, said commissioners shall have free access to any of the public records and papers of the State, and be permitted to examine the same without fee or reward. " § 2. When the said commissioners shall have completed the compilation and revision of the statutes as aforesaid, they shall cause a printed copy of the same to be submitted to the Legislature for the year eighteen hundred and eighty-one, and at the same time, they shall suggest to the Legislature such omissions, contradictions, and other imperfections as may appear in the original text, with their recommendations for amendment, either by repeal, or by sup- plementary or explanatory legislation, with their reasons for such recommen dations. " § 3. Each of said commissioners shall serve without pay. " § 4. The reasonable expenses of said commissioners for clerical services, and other incidental disbursements, provided the same does not exceed the sum of five thousand dollars, shall be paid to them from time to time, upon their requisition therefor upon the Comp- troller of the State, to be paid into the treasury by the banks, banking and trust companies in the same mauner as other expenses of the banking corporations are now paid. iv PREFACE. "§ 6. In case the said commissioners, or either of them, shall re- fuse to act in the premises, or shall die, resign or remove from the State before the completion of the duties assigned to them, it shall be the duty of the Governor to appoint others or another in their or his stead, who shall have the powers aforesaid. "§ 6. This act shall take effect immediately." Under this act Governor Cornell appointed George B. Sloan, of Oswego, David C, Van Cott, of Brooklyn, and the author, commis- sioners for the purposes indicated in the law. The then Comptroller of the State was of opinion that the wording of the fourth section of the act was not sufficient authority to warrant his paying the expenses of the commissioners from the funds at that time in the State Treasury. This defect in the original law, however, was rem- edied at the session of the succeeding Legislature by an act passed June 3, 1881 (ch. 445), amending the above-quoted fourth section so as to read as follows : " § 4. The reasonable expenses of said commissioners, providing the same does not exceed five thousand dollars, shall be paid to them from time to time, upon their requisition therefor upon the Comp- troller of the State, out of any funds reipaining in the treasury ot the State and not otherwise appropriated, to l)e paid into the treasury by the banks, banking and trust companies in the same manner as other expenses of banking corporations are now paid." Mr. Sloan during the meantime having i"esigned, William Dowd, of city of New York, was appointed his successor. Mr. Van Cott ceased to act as a member of the commission, and Mr. Dowd and the author began the preparation of the E'evision. Mr. Dowd's knowledge of practical banking was of service. He is en- titled to high praise in this connection, as well as in all the other relations of a busy life. The Revision became a law July 1, 1882 (ch. 409), the Repealing Act, in connection with the same, having passed the same day (ch. 402). In preparing the Revision, the author's attention was repeatedly called to the neces- CONTENTS. Faqb. Preface iii Table of cases xxxiii Historical Sketch of the Banking Methods of the State of New York, including those employed by Banks, Banking Associations, Sav- ings Institutions and other Moneyed Corporations. ARTICLE I. Banks, Banking Associations and Individual Bankers. Bank of North America 5 First and Second Banks of the United States 8 Bank of New York , 10 Restraining Act of 1804 13 Restraining Act of 1813 15 Restraining Act of 1818 17 Bank charters prior to 1835 19 Charter of Manhattan Company 20 First legislative specification of banking powers 33 Conspiracy trials of 1826 and 1837 22 Statute regulations of 1827 24 Safety fund system 27 Office of bank commissioners 31 General banking act 32 Constitutionality of the general banking law 33 Prominent provisions of the general banking act 34 Individual bankers 35 Responsibility of stockholders 36 Office of superintendent of the banking department 38 Superintendents 39 Increase of banking capital 39 Redemption of bank notes , , 39 Taxation , . , , 41 Conclusion 46 viii CONTENTS. AETIOLB II. Savings Institutions. Page. Savings banks benevolent, not charitable 56 Trustees of savings banks • . 5''' Investments • 59 Dividends 63 Surplus moneys ; 64 Compensation of trustees 66 Unclaimed deposits 67 Taxation '. 68 ARTICLE m. Moneyed Corporations other than Banks, Banking Associations and Savings Institutions. Trust companies 71 Guaranty or indemnity companies 75 Mortgage companies 76 Safe deposit companies , , , . . . 76 Repealing Act, being chapter 402 of the Laws of 1882. 81 The Revision of the Statutes of the State of New York relating to Banks, Banking Associations, Trust Companies and Companies Beceiving Money on Deposit, being chapter 409 of the Laws of 1882, and the acts amendatory thejreof and additional thereto. CHAPTER I. The Basking Bepartmbnt. Sec. 1. Establishing a banking department 89 3. The superintendent , 90 3. His powers and duties 91 4. Official seal ; 91 6. Rooms and furniture 91 6. Department expenses , 93 7. Compensation for extra services forbidden 93 8. Examination of securities 93 9. When agent appointed to examine 93 10. Unclaimed balances to be paid into treasury 94 11. Associations and bankers "subject to supervision of superin- tendent 94 CONTENTS. ix CHAPTER n. Examinations of Banks, Banking Associations and Individuai, Bankers. Page. Sec. 13. Examinations by superintendent or agent. Expenses. Exam- iner not to be receiver. 95 13. Agent to examine on oath 96 14. Attendance a,nd testimony of witnesses 96 15. Publication of report 97 16. Attorney-general to prosecute for violation of provisions of this act; 97 17. Bxaniination in case of impaired capital 97 18. Examination as to payment of capital 99 19. Court may order examioation by referee 99 CHAPTER IH. REPOBTS to and by the SirPKIlINTENDKNT. Sec. 20. Quarterly reports. Contents. Publication 101 21. Examination and penalty on failure to report 104 22. Report and summary, expense of publication. When neglect to report forfeits charter 105 33. Quarterly reports by individual bankers. Penalty 105 24. Classification and publication of abstracts 106 35. Publication as to unclaimed moneys 106 36. Contents of statements as to such moneys 106 27. Ajinual report of superintendent 107 28. Report of association or banker to be on oath 103 CHAPTER IV. GsNEKAIi PUOVISIONS RELATIVE TO BANKS, BANKINO ASSOCIATIONS AND Individual Bankers. Sec. 39. Formation of associations 110 30. Certificate to be filed. Its contents 113 31. Certificate may be used as evidence 115 33. Statement of residence. Penalty for neglect., 115 33. Notice of change of residence 116 34, Certificate of change in any particular 116 35.. General powers of association 116 36. Certain corpoiations may hold stock 118 37. Banks, associations and bankers may hold certain public secur- ities 118 38. Associations may purchase, hold and convey real estate for cer- tain purposes 119 39., Increase of capital and associates 119 40, If portion of capital withdrawn no dividends 119 B X CONTENTS. Page. Skc. 41. Reduction of capital 130 43. Notice of intention to reduce capital 131 43. Examination in case of such notice 131 44. Certificate of reduction to be filed and published 133 45. Liability of stockholders on such reduction 133 46. List of names of stockholders to be filed 1 33 47. Shares deemed personal. How transferable 133 48. Associations authorized to consolidate 133 49. Proceedings to consolidate 133 50. Consent of two-thirds of stockholders. Examination 134 51. Certificate of amount of stock 135 53. Publication of same 135 53. Consolidation perfected 135 54. Efiect of consolidation on pending legal proceedings 135 55. Liability of stockholders not changed 136 56. Stockholders not assenting to consolidation 136 57. Associations subject to certain provisions of the Eevised Stat- utes 136 58. Quorum for transaction of business 137 59. Contracts and legal proceedings 137 60. Actions against the president 139 61. Shareholders may sue and be sued by president 180 63. Set-ofiEs in such suits 133 63. DLicount, deposit and circulation. Location of business 133 64. When unlawful to sell business 133 65. Business continued by legatee or heir 133 66. Deposit of one thousand dollars. Action by superintendent. . . 133 67. United States and State stock to be deposited 134 68. Interest six per cent. Usury. Forfeiture 135 69. Associations and National banks on equality as to interest 136 CHAPTER V. ClKCTJLATIOK. Sec. 70. Superintendent to print and register circulating notes 139 71. Deposit of stocks to secure circulation 140 73. Notes may be circulated as money , 141 73. Notes stamped "secured by the pledge of public stocks " 141 74. Plates, dies, etc , to be in custody of superintendent. Expenses. 143 75. Bills not to be countersigned beyond amount of securities. . . . 143 76. To express liability of banker issuing. Penalty 143 77. Designation of banker and bank on notes 143 78. Certificate when others interested with banker 143 79. Destruction of returned circulating notes 144 80. When bank note plates to be destroyed 144 CONTENTS. xi Page. Sec. 81. New notes to be delivered for mutilated notes 145 83. Power of attorney to receive interest or dividends. Transfer of stocks 145 83. When interest and dividends may be returned 146 84. Securities held for redemption of bills and notes 146 85. Notes withheld and interest retained if bank unsouud 147 86. Agents and offices for redemption , 147 87. Appointment of agents for redemption , 148 • 88. List of agents to be published 148 89. Proceedings if agent neglects to redeem 148 90. Redemption at not exceeding one-quarter of one per cent discount 149 91. Protest on non-payment of circulating notes 149 93. When and how protested. Proceedings by superintendent. , . 151 93. Pledged stocks when sold to cancel notes 153 94. Damages for non-payment of notes 153 95. In what oases last section not to apply 153 96. Pees for protest, by whom paid 153 97. Notes not to be delivered until agent appointed for redemption. 154 98. Appointments of such agents may be revoked. 154 99. Agreement to appoint a common agent 154 100. Notes not to be purchased at less than face 155 101. Distribution of funds of insolvent banks 155 103. Distribution of residue 156 103. Lien on fund to cease after six months 156 104. Unclaimed portion of fund paid into treasury 156 105. Notice to creditors to be published 156 106. Redemption of notes held by banks 157 107. Election of place of redemption 157 108. Penalty of one thousand dollars for violating act 158 109. Deposit equal to outstanding circulation in place of former deposit. Proceedings thereupon , 158 110. Protest on failure of designated bank to redeem 160 111. On destruction of notes proportion of deposit returned 160 113. Circulation not required 161 113. Deposit without notice of intention to close 161 114. Circulation of foreign bank-notes prohibited 163 115. Notes not received at par not to be paid out 163 116. Notes less than one thousand dollars not to be payable except at office 163 117. No note or bill except payable on demand to circulate 163 118. Regulations as to foreign bank-notes 173 119. Violations of this act. Penalty. Misdemeanor 174 130. Certain checks, bills, drafts payable without grace 174 xii CONTENTS. Pagb. Swp. 131. Transfers of securities countersigned by treasurer 175 132. Treasurer to report thereon 175 1?3.. Treasurer to keep record of transfers 175 134. Treasurer and superintendent to Lave access to books ; . 175 CHAPTER VI. Peovisions to Enporcb the Responsibility of Stockholdbks. Sep. 135. Liability of stockholders 178 136. The term "stockholder," to whom applied 185 137. Exonerated as to stock transferred before default 187 138. Names and residences of stockholders entered in book 188 139. Judgments on demands against bank 189 130. On execution unsatisfied, corporation declared insolvent 190 131. Declaration of insolvency and injunction , 190 382. Hearing of parties, examination, injunction continued 191 133. Restraining order. Receiver 193 134. Declaration of insolvency on application of stockholder 193 135. Powers and duties of receivers 193 136. Conversion of securities. Dividends 194 137. Expenses of proceedings 195 138. Report on unsatisfied liabilities 195 139. List of stockholders to be reported 195 140. Reference thereupon to apportion debts 196 141. Hearing before referee 197 143. Six weeks after appointment referee to report 198 143. Further reference may be ordered 199 144. Report on confirmation to be filed 300 145. Distribution to creditoi's , 200 146. Allowance of expenses to referee and receiver 300 147. Delay of distribution not to exceed one year 308 148. After debts paid residue to stockholders 304 149. Appeal not to stay execution unless ordered 305 150. No stay on appeal without security 205 151. Order of reference not appealable 305 152. Receiver or stockholder may appeal 306 153. Appellate court niay order new apportionment 306 154. Securities to be filed with clerk of court , . . . . 207 1,55. How same may be enforced 207 156. Creditor neglecting to present demand 207 157. Action against non-resident stockholders 207 158. Order to be presumptive evidence 207 159. Compromise with stocliholders by receiver 208 IGO. Stockholder and creditors may oppose order 208 161. Proceeding supplementary to execution 208 CONTENTS. xiii Page. Sec. 163. Action against non-resident stockholder on execution unsat- isfied 209 163. When receiver may sue predecessor. '. 309 164. Receiver may sell judgment , 309 165 Docket and lien of judgment 210 CHAPTER VII. Changes peom State to National and from National to State Banks. Sec. 166. Assent to formation of national banks 311 167. National banks deemed State institutions 313 168. State bank changed to national deemed to have surrendered its charter 213 169. Notice of intention to change 313 170. Stockholders may vote by proxy. . , 314 171. After change old directors to continue 314 173. Reduction or increase of capital 314 173. Certificate of change, assets, circulating notes 315 174. Plates and dies to be obliterated 316 175. New association liable for prior. debts 316 176. Banks changed before passage of this act 316 177. On dissolution of national bank directors may organize as a State bank 316 178. Thereupon assets to vest in new bank by operation of law. Directors to continue 217 CHAPTER VIII. RBGtlLATIONS IN RELATION TO MoNETED CoRPOEATIONS. Sec. 179. Restrictions on moneyed corporations .... 319 180. Profits, how calculated , 231 181. Surplus profits 333 183. Losses, how to be charged 233 188. Loans, when to be called in 233 184. Proceedings on stock hypothecated when debt is not paid 333 185. Certain conveyances for use of corporation invalid 333 186. Certain conveyances by corporation invalid 334 187. Same continued 335 188. Penalty on director violating preceding sections 338 189. Prohibition on corporations having banking powers 339 190. Prohibition on same and their officers 229 191. Same continued 239 193. Affidavits required before commencing business 229 193. How made and filed 230 194. Penalty if not made 230 xiv CONTENTS. Page. Sec. 195. Election of directors. Inspectors 230 196. Vacancies, how supplied 231 197. Disability '. 231 198. Oath of inspector 231 199. Who may vote 231 200. And on what stock 232 201. Same continued 282 203. Challenge. Oath 232 208. Persons voting on proxies , 233 204. Their oath if challenged 238 205. Proceedings on challenge 233 206. Proceedings if election be not held 234 207. Certain by-laws invalid 234 208. Transfer book of stock ; 234 209. Penalty for refusing to exhibit books 285 210. Remedy of persons aggrieved by election 235 211. Proceedings 236 212. Same continued 236 213. Same continued 286 214. " Moneyed corporations " defined 287 215. This chapter how applied 237 216. "Directors" defined 237 317. "EflEects" defined 237 218! "Evidence of debt" defined 238 CHAPTER IX. Moneyed Corpoeations othek thak Bawks, Institutions fob Satengs AND Insurance Companies. Sec. 219. Reports to superintendent 239 220. Publication of same 241 221. Examinations by superintendent 241 223. Scope of examination 242 223. Duty of superintendent if corporation unsound or business improperly conducted 342 224. Deposit of securities with superintendent 242 225. Injunction on neglect to make deposit 244 236. Assessment for expenses of department 244 237. Restriction as to loans and deposits 244 238. Capital may be reduced, but not below one hundred thousand dollars 245 329. Notice of intention to reduce. Examination 345 830. Certificate of reduction to be recorded and published 346 281. Liability of stockholders and rights of creditors unchanged. . 246 233. Capital may be increased 246 CONTENTS. xy Page. Sec. 333. Impairment of capital ; ninety days to make good deficit 247 334. Report by superintendent to legislature 348 CHAPTER X. Savings Banks. Sec. 335. Savings banks declared corporations. Powers 350 336. Thirteen associates to organize 353 337. Certificate, ■what to contain 354 338. Bxeguted in duplicate and filed 254 239. Notice of intention to organize 354 340. Indorsement of certificate by superintendent 355 341. Defective certificate 355 343. Superintendent to ascertain facts 356 343. Certificate of authorization 356 344. Same to be filed 357 245. Refusal of authorization 357 346. Persons named in certificate a body corporate 357 347. Names of officers, place of business, etc 257 248. Business to begin within one year 258 349. First trustees 358 350. Thirteen trustees. Elections. Vacancies 359 351. By-laws 360 353. Meetings of trustees. Quorum 261 353. When office of trustee becomes vacant 361 254. Security from officers. Salaries 263 255. Prohibitions upon trustees 263 256. Deposits 365 357. Regulations as to deposits 266 358. Deposits by minors, etc., and in trust 370 359. Actions against savings banks. 271 260. Investments 373 361. Investments, current payments and expenses. .'. 276 262. Temporary deposits by savings banks 384 363. Real estate. Change of location 285 264. Loans • 386 365. Mortgaged property. Insurance ; . . . 387 ' 266. Restrictions as to business 387 267. Interest. Depositors classified. Extra dividends 389 268. Per cent of surplus, how determined 293 269. Compensation of trustees 293 270. Reports to superintendent 294 271. Contents of reports 394 373. Same 394 373. Reports to be verified 395 XVI CONTENTS. Page. Sbc. 374 iPailure to report. Penalty 295 275. No other reports or inspection ^^° 276. Superintendent to report to legislature 396 277. Examinations _• *®" 278. Notice to attorney-general. Proceedings. Distribution 397 279. Examination of vouchers and assets 399 280. Clerks and examiners. Salaries 399 381. Expenses ^^0 283. Debts to savings banks, when preferred 300 383. Unauthorized business prohibited 301 284. Reduction and increase of trustees 303 285. Change of name 303 286. Charters to conform. Misdemeanors 303 287. Evidences of deposit 304 288. Misnomer 304 389. This act, how construed 304 390. Deposit limited to three thousand dollars 305 391. Trustee must be resident of State 305 293. Receiver's quarterly statement 806 393. Voluntary close of business 306 294. Unclaimed deposits. Dissolution 307 295. Receiver's statement, and payment of balances to superintend- ent 307 296. Superintendent to deposit unclaimed moneys, and report to legislature 308 CHAPTER XI. Prohibitions against Unauthoiiizbd Banking. Sbc. 297. Associations for certain banking purposes prohibited 309 298. Penalty 811 299. Prohibition of unauthorized corporations 811 300. Penalty 313 301. Notes, etc., on forbidden loans void 813 303i Persons unauthorized, not to engage in certain banking opera- tions 313 303. Penalty 315 304. Restrictions as to foreign corporations 315 305 As to banks and officers of banks of this State 315 306. Bank-bills under one dollar not to be circulated. 315 307. Penalty, in what time and how to be sued for 316 308. Bank-bills payable otherwise than in money 316 309. Penalty, in what time and how to be sued for 316 310. Certain bills declared to be promissory notes 316 311. Penalties, how to be sued for and applied 31 7 CONTENTS. xvii CHAPTER xn. Taxation. Paob. Sec. 313. Stockholders taxable on shares. Deductions 818 313. List of stockholders. Inspection thereof by assessors 320 314. Tax collectible where bank situated 321 315. Dividends may be retained to pay tax 322 316. Saving clause as to taxes under law of one thousand eight hundred and eighty 322 317. Assessments of year one thousand eight hundred and eighty confirmed 332 318. Shares in State banks taxable only at same rate as shares in national banks. Oath on application for deduction 323 319. Intent of preceding section 323 330. Tax on individual bankers 334 331. Tax on certain corporations of other States and countries. .... 334 333. To make annual return to comptroller. Penalty 335 333. Accounts subject to inspection of comptroller 325 334. Trust companies, how taxabla 336 335. Dividend, how made on exempt stock 336 326. Exemption from taxation, for whose benefit 336 327. Taxes to be paid into treasury for general fund 337 Laws relatii^ to Safe Deposit Companies, being Chapter 613, Laws of 1875, as amended by Chapter 10, Laws of 1877, Chapters 273 and 338, Laws of 1883. Skc. 1. Number of corporators, objects, how incorporated, etc., capital to be paid in before commencing business 331 3. Corporation, how constituted, powers, prohibition as to certain loans 333 3. Trustees to manage affairs, election of, to be by ballot 333 4. Acts of trustees valid until successors are elected 334 5. President and other officers 334 6. Stock subscriptions payable as trustees may direct 335 7. By-laws, purpose of 335 8. Stock, how transferable. Prohibition against holding that of other corporations, exceptions 335 9. Liability of stockholders for debts 336 10. Semi-annual reports to be made to the superintendent 336 11. Report to superintendent may be published by him 337 12. Annual examinations to be made, expense of, how paid, powers of examiners 337 13. Inquiries to be made by examiners 337 14. Superintendent to direct discontinuance of unsafe practices when discovered. Proceedings by attorney-general when authorized ...,,.,,.,...,, 838 C xTiii CONTENTS. Laws relating to Building, Mutual Loan and Accumulating Fund Associations, being Chapter 122, Laws of 1851. Page. Sec. 1. Companies, how formed 341 3. Articles of association 343 3. Copy to be filed, powers and limitations 343 4. Calls upon stock 343 5. Authorized to borrow money for temporary purposes 343 6. Stock may be held for minors 343 7. Duration of corporation 344 8. Existing associations entitled to benefits of act 344 9. Embezzlement, how punished 345 10. Annual report to be published 345 11. Liability of stockholders and directors 345 13. Liability of trustees ' 346 13. Executors, trustees, etc., may vote as stockholders 346 14. Election of ofiicers. 346 15. Legislature may repeal or alter this act 346 16. Capital, how increased or diminished 347 17. Notice of meeting, how given 347 18. Meetings, how organized and conducted 347 19. Exemption of shares from sale on execution 348 20. Loans to association, to what amount 348 31. Certificate, how made evidence 348 Synopsis of Amendments to Laws relating to Savings and Building Fund Associations, being Chapter 564 of the Laws of 1875, as amended by Chapter 96 of the Laws of 1878. Sec. 1. Dividends, liability of trustee, usury 349 3. Annual reports to superintendent 850 3. Examinations, expense of 351 4. Inquiries to be made on examination 353 5. Action of superintendent in case of violation of charter 353 CONSTITUTIONAL PROVISIONS, GENEEAL STATUTES, ETC. ARTICLE I. Creation of Corpoeations. 1846, Constitution, Article VIII : Sbc. 1. Corporations, how created 3.57 2. Debts of corporations 358 3. " Corporations " defined 358 4. Charters for savings banks and banking purposes 359 5. Spepial purposes , 360 CONTENTS. xix 1846, Constitution, Article VIII. — Continued: Paqb. Sec. 6. Registry of bills or notes 360 7. Individual responsibility of stockholders 360 8. Insolvency of baaks, preferences 361 ARTICLE 11. The General . Powers, Privileges and Liabilities of Corporations. 1828, Revised Statutes, Part I, Chapter XVIII, Title III — of the general pow- ers, privileges and liabilities of corporations : Sec. 1. General powers 362 2. In what corporations to vest 364 3. What other powers to be possessed 364 4. Exercise of banking powers prohibited 365 5. Liability of stockholders 365 6. Quorum 365 7. Forfeiture for non-user 366 8. Reservation of power to repeal, etc 366 9. Trustees in case of dissolution 366 10. Their powers 367 ARTICLE III. Special Peovisions Relating to Certain Corporations and Joint Stock Associations. 1828, Revised Statutes, Part I, Chapter XVIII, Title IV — special provisions relating to certain corporations : Sec. 1. Certain books of incorporated companies to be kept open for certain time 368 2. Certain prohibitions and restrictions upon directors of cor- porations, of&cers, etc 369 3. Debts of corporations not to exceed certain amount ; penalty for excess 370 4. Certain transfers of property prohibited; corporations dis- solved in certain cases 371 5. Supreme court to correct illegal elections; proceedings for that purpose 371 6. By-laws regulating elections ; evidence of right to vote 372 7. Oath to be taken by inspectors of elections 373 8. On failure to hold elections of directors, new day to be ap- pointed ; proceedings 373 9. Penalty on corporations, etc., for purchasing their notes, etc., at less sum tlian that due thereon . . . '. 373 10. Officers, etc., of corporations not to loan upon notes offered to them ofScially for discount 374 11. Extent and application of the provisions of this title 374 XX CONTENTS. 1842, Chapter 165 — agent of foreign corporation to exhibit list of stockhold- ers : Page. Sec. 1. Duty of agents 375 2. Penalty 375 1850, Chapter 172 — corporations not to interpose defense of usury : Sec. 1. Defense of usury not to be interposed 375 2. Definition of term " corporation " 876 1867, Chapter 937 — corporations may extend term of existence : Sec. 1. Extension of term of existence 376 1870, Chapter 135 — defects in certificate of incorporation : Sec. 1. May file amended certificate 377 2. Pending suits not affected 377 1873, Chapter 151 — duplicates of lost certificates of stock: Sec. 1. Stockholders may compel corporations to issue duplicate cer- tificates in case of loss 377 2. Court to proceed summarily ; to order that duplicates be is- sued ; petitioner to give security ; obedience to order, how enforced 378 1877, Chapter 158 — foreign corporations may hold land in this State : Sec. 1. May purchase at mortgage foreclosure sale, etc 379 1877, Chapter 311 — corporations and companies of other States, etc. : Sec. 1. Evidence of corporate existence 380 ARTICLE lY. Pbooeedings against Corporations in Equity. 1858, Chapter 314 — powers of receivers, etc., extended: Sec. 1. Trustees may impeach assignments. ...... 381 2. And have actions against offenders 381 ARTICLE V. VoLtTNTART DISSOLUTION OF CORPORATIONS. 1828, Revised Statutes, Part III, Chapter Vm, Title IV, Article 3 — of the vol- untary dissolution of corporations : Secs. 58-65. (Repealed) 353 66. Receivers, security 3g^ 67. Their rights 384 68. Their authority qqk 69. To prosecute for arrears of stock 386 70. To give notice of appointment, etc 387 71. Certain sales, etc., void 387 72. Debtors to account to receivers : powers of receiver 388 78. Referring controversies 388 74. Meetings of creditors to be called, etc 389 75. Subsisting contracts 300 CONTENTS. xxi Page. 1828, Revised Statutes, Part HI, Chapter VII, Title IV, Article 3 — Continued: Sec. 76. Receiver's commissions 390 77. To retain certain moneys 390 78. Id., to meet suits 390 79. Order of payment of debts 391 80. Second and final dividend - 392 81. Proceedings therein 392 82. Debts not exhibited 393 83. Surplus to stockholders 393 84. Money retained 393 85. Control of receivers 393 86. Account by them 393 87. Previous notice thereof 394 88. Referee's duty 394 89. Settlement of account ; its effect, further accounts to be rendered 394 90 and 91. (Repealed.) 394 1880, Code of Civil Procedure, Part II, Chapter XVII, Title XI — proceed- ings for voluntary dissolution of corporations : Sbo. 2419. Petition for dissolution 395 2420. Id., when directors equally divided 395 2421. Contents of petition 396 2422. Affidavit to be annexed 397 2423. Presentation of petition; order to show cause 397 2424. Order to be published 398 2425. Id., to be served on creditors and stockholders 398 2426. Hearing 398 2427. Id.; original papers may be used 899 2428. Application for final order 399 2429. Pinal order 399 2430. Certain sales, etc., void 400 2431. Certain corporations excepted 400 ARTICLE VI. Service of Pkocbss on Corporations. 1877, Code of Civil Procedure : Sec. 431. Service of summons on domestic corporation 402 432. Id. upon foreign corporation 403 433. Id. of process to commence special proceeding 405 438. Id. of summons by publication 405 610. Id. of injunction order 405 1880: Sec. 2071. Id. of alternative writ of mandamus 405 2526. Id. of citation issued by surrogate's court 405 2879. Id. of summons in justices' court 405 xxii CONTENTS, ARTICLE VII. Actions belating to a Corporation. 1880, Code of Civil Procedure, Part 11, Chapter XV, Title 11— Actions relating to a corporation : (Art. 1.) Action by a corporation and action against a corporation to recover damages or property : Page. Sec. 1775. Complaint in actions by or against corporations 407 1776. When proof of corporate existence unnecessary 408 1777. Misnomer, when waived 409 1778. Action upon a note, etc 409 1779. When foreign corporation may sue. 410 1780. When foreign corporation may be sued 410 (Art. 2.) Judicial supervision of a corporation, and of the officers and members thereof : Sec. 1781. Action against directors for misconduct 414 1782. By whom action to be brought 417 1783. Construction of article 419 (Art. 3.) Actions to procure the dissolution of a corporation, and actions to enforce the individual liability of the officers or members of a corporation, with or without a dissolution thereof: 1784. Action by judgment-creditor for sequestration, etc. . . 420 1785. Id. to dissolve a corporation 421 1786. Id. by whom to be brought 423 1787. Temporary injunction 423 1788. Receiver may be appointed; powers of temporary receiver 424 1789. Additional powers may be conferred on temporary receiver 42g 1790. Making stockholders, etc., parties 437 1791. When separate action may be brought against them. 427 1792. Proceedings in either action 427 1793. Judgment ; property of corporation to be distributed. 427 1794. Id. ; stock subscriptions may be recovered 438 1795. Id. ; as to liabilities of directors and stockholders. . . 429 1796. Effect of this article limited 429 (Art. 4.) Action by the people to annul a corporation : Sec. 1797. Action by attorney-general when legislature directs.. 431 1798. Id., by leave of court 43I 1799. Leave ; when and how granted 433 1800. Action triable by a jury 432 1801. Judgment . 433 1802. Injunction may issue 433 1803. Copy of judgment-roll to be filed and published 433 CONTENTS. xxiii 1880, Code of Civil Procedure, Part II, Chapter XV, Title II — Continued: (Art. 5.) Provisions applicable to two or more of the actions specified in this title : Page. Sbc. 1804. Certain corporations excepted from certain articles of this title. 435 1805. Officers and agents may be compelled to testify 435 1806. Injunction staying actions by creditors 436 1807. Creditors may be brought in 436 1808. "When attorney-general must bring action 437 1809. Requisites of injunctions against corporations in cer- tain cases 437 1810. Id. of order appointing a receiver in certain cases. . . 438 1811. Id. of judicial suspension or removal of officer 489 1812. Application of last three sections 439 1813. In action against stockholders, misnomer, etc., not available 439 ARTICLE VIII. MiSCBLLANBOTJS PROVISIONS OF THE CODE OF ClVIL PROCEDURE, KBLATING TO Corporations and Joint-stock Associations. 1877. Sbcs. 263, 264. Jurisdiction of superior city courts 44 1 525. Verification of pleadings by corporations 441 624. Damages by injunction, how recovered 442 636. Attachment against foreign corporation or domestic cor- poration in certain cases 442 647. Interest of defendant in stock may be levied upon 448 650. Officers to give certificate of defendant's interest to sheriff. 443 651. Person refusing may be examined 444 791. Action on note, etc., entitled to preference 445 839. When admission of member is evidence against corpora- tion 445 868. Production on a trial of books and papers, how compelled. 445 869. May be produced by employer ; if attendance of officer required, must be subpoenaed 445 872. Deposition of officers or directors may be taken 445 960. Corporate seal, may be impressed directly on paper 446 1012. Reference in certain actions against a corporation 446 1880: Sbc. 1650. Action to compel determination of a claim to real property may be maintained 446 1879. Domestic corporation not subject to action to compel dis- covery ... 446 1948. Action against persons usurping franchises, etc 446 1950. Such actioDS triable by jury 448 xxiv CONTENTS. 1880— Goniinwed.' Page. Sbc. 1955. Final judgment for plaintiff must perpetually restrain defendants. Temporary injunction may be granted . . . 448 1984. Such action to be brouglit in the name of the people 448 1987. Costs in such action, how collected 448 2146. Corporation included in term " body or officer," in provi- sions concerning certiorari 448 2441, Corporations indebted, etc., to judgment debtor may be examined in supplementary proceedings concerning the same ■ • < "° 2463. Provisions concerning supplementary proceedings not applicable to certain corporations , 449 2865. Action in justices' court by or against corporations 449 3343, Subd. 18. Definition of "domestic corporation" and "for- eign corporation " 449 ARTICLE IX. Criminal Pkocbedings against Cokporations. 1881, Code of Criminal Procedure, Part IV, Title XII, Chapter IX — Proceed- ings against corporations : Sec. 675. Summons upon an information or presentment against a corporation, by whom issued, and when returnable. . . . 450 676. Form of the summons. . . 450 677. When and how served . . . , , 451 678. Examination of the charge , , 451 679. Certificate of magistrate and return thereof with the depo- sition , , . , , - 451 680. Grand jury may proceed as in the case of a natural person. 451 681. Appearance and pleatoindictment, and proceedings thereon. 451 682. Pine on conviction, how collected 451 ARTICLE X. Frattpxtlent Ih solvencies bt Corporations, and other FsAtrDs ik theib Manaqemeht. 1882, Penal Code, Title XV, Chapter XI ^-^ Fraudulent insolvencies by corpora- tions, and other frauds in their management: Sec. 590. Frauds in subscriptions for stock of corporations 452 591. Fraudulent issue of stock, scrip, etc 453 592. Frauds in procuring organization of corporation, or increase of capital 454 593. Unauthorized use of names in prospectuses, etc 455 594. Misconduct of directors of stock companies 455 595. Misconduct of directors of banking corporations 457 596. Loans made in violation of last section not invalid 458 597. S.aje or hypotbeoatioR of baak notes by ofijcer, etc 4,58 CONTENTS. XXV 1882, Penal Code, Title XV, Chapter Xl— Continued,: Paob. Sec. 698. Officer of bank putting excessive number of its notes in circulation 458 599. Officer or agent of banking corporation making a guarantee or indorsement in its behalf in certain cases 458 600. Bank officer overdrawing his account 459 601. Receiving deposits in insolvent bank 459 602. Frauds in keeping accounts, etc 459 603. Officer of corporation publishing false reports of its con- dition 459 604. Insolvencies of corporations deemed fraudulent, when. .. . 460 605. Directors participating in fraudulent insolvency, how pun- ishable 460 606. Violation of duty of directors of moneyed corporation .... 460 607 and 608. (Omitted, they relating exclusively to railway cor- porations) 461 609. Directors of corporation presumed to have knowledge of its affairs 461 610. Director present at meeting, when presumed to have as- sented to proceedings 461 611. Director absent from meeting, when presumed to have dis- sented to proceedings 461 612. Failure of director upon whom application for injunction is served, to disclose fact to other directors 461 613. Foreign corporations 462 614. "Director " defined 462 1855, Chapter 155. Punishment for fraudulent issue, etc., of stock : Sec. 1. False issue of stock a felony 462 2. Id., punishment 463 1869, Chapter 742. Suppression and punishment of bribery : S.BC. 1. Receiving of valuable considerations by public officers for official acts, deemed felony ; punishment thereof 463 2. Persons offering bribe, if accepted, not to be liable therefor. . 463 3. Penalty for attempting to bribe public officer 464 4. Proofthereof 464 5. Accused may testify in his own behalf 464 6 Expense of prosecutions to be charged against the State 464 7. Liability of directors or officers of corporations for use of money in violation hereof . . . 464 8. Persons not excused from testifying; testimony not to be used against witness in civil or criminal action 465 9. Conviction to be had only on corroborated testimony 465 1870, Chapter 151 — Proceedings by injunction regulated : . 1, 2 and 3. (Repealed.) 4. Punishment for concealing injunction notice , 465 5. (Repealed.) D xxvi CONTENTS. Table of Financial Institutions Chartered by the State of New York. Page. Table of banks chartered from 1791 to 1829 466 Table of banks chartered under the safety fund system from 1829 to 1838, 468 Table of banks chartered under the general law of 1838 (ch. 260) 473 Table of savings institutions chartered from 1819 - 489 Table of savings banks organized under the general law of 1875 (ch. 371), 495 Table of loan and trust companies chartered from 1822 496 Table of guaranty and indemnity companies chartered from 1864 500 Table of mortgage companies chartered 500 Table of safe deposit companies chartered from 1861 .... 501 Table of safe deposit companies organized under the general law of 1875 (oh, 613) 503 NATIONAL BANK ACT AND COGNATE UNITED STATES STATUTES. Introduction 507 Treasury notes 508 National bank act 511 National gold banks 513 Extension of charters 514 CertiGcation of checks 515 National banking system 515 Revised Statutes of the United States. Title LXII — National Banks. CHAPTEE I. OBGANIZATtON AND POWBBS. Sec. 5133. Formation of national banking associations 530 5134. Requisites of organization certificate 531 5135. How certificate shall be acknowledged and filed 531 5136. Corporate powers of associations 532 5137. Power to hold real property '. 537 5138. Requisite amount of capital 539 5139. Shares of stock and transfers 539 5140. How payment of capital stock must be made and proved 543 5141. Proceedings if shareholder fails to pay installments 543 5142. Increase of capital stock 544 5143. Reduction of capital stock , . , , 545 5144. Right of shareholders to vote 545 5145. Election of directors 545 5146. Requisite qualifications of directors 546 CONTENTS. xxvii Page. Sbc. 5147. Oath required from directors 546 5148. Filling vacancies 546 5149. Proceedings when no election was held on the proper day .... 547 5150. Election of president of the board 547 5151. Individual liability of shareholders 547 5152. Executors, trustees, etc., not personally hable 549 5153. Duties and liabilities when designated as depositaries of pub- lic moneys . 550 5154. Organization of State banks as national banking associations. . 551 5155. State banks having branches 553 5156. Reservation of rights of associations organized under act of 1863 553 CHAPTER n. OsTAININa AND IsSTTING ClBCITLATING NOTBS. Sbo. 5157. What associations are formed by chapters 2, 3 and 4 555 5158. Registered bonds intended by the term '' United States bonds." 555 5159. Deposit of bonds required before issue of circulating notes .... 555 5160. Increase or reduction of deposits to correspond with capital. . . 556 5161. Exchange of coupon for registered bonds 556 5162. Manner of making transfers of bonds 556 5163. Registry of transfers 557 5164. Notice of transfer to be given to associations interested 557 5165. Examination of registry and bonds 557 5166. Annual examination of bonds by associations 557 5167. Custody of bonds, collection of interest, etc 558 5168. Comptroller to determine if association can commence business. 559 5169. Certificate of authority to commence banking to be issued. . . . 559 5170. Publication of certificate 560 5171. Delivery of circulating notes 560 5172. Printing, denominations and form of the circulating notes. . . 561 5173. Plates and dies to be under control of, the comptroller 562 5174. Annual examination of plates, dies, etc 563 5175. Limit to issue of notes under five dollars 562 5176. Limit to amount of circulation of certain banks.. 562 5177. Limit to aggregate amount of circulating notes 568 5178. Apportionment of aggregate amount of circulating notes 563 5179. Equalizing the apportionment of circulating notes 563 5180. How the necessary amount of notes shall be withdrawn 564 5181. Removal of association to another State 566 5182. For what demands national bank notes may be received 565 5183. Issue of other notes prohibited 565 5184. Destroying and replacing worn-out and mutilated notes 566 6185. Organization of associations to issue gold notes authorized 566 xxviii CONTENTS. Page. Sec. 5186.- Their lawful money reserve, and duty of receiving notes of other associations 567 5187. Penalty for issuing circulating notes to unauthorized associa- tions 567 5188. Penalty for imitating national bank notes, etc 567 5189. Penalty for defacing, etc., national bank notes 568 CHAPTER ni. Kegtxlation of the Banking Business. Sec. 5190. Place of business of banking associations 570 6191. "Lawful money reserve'' prescribed . : . 570 5192. What may be counted toward the "lawful money reserve ". . . 571 5193. Certain certificates of deposit may be counted 572 5194. Limitation on the power to issue such certificates , 572 5195. Place for redemption of circulating notes to be designated. . . . 572 5196. National banks to receive notes of other national banks 573 5197. Limitation upon rate of interest which may be taken 573 5198. Consequences of taking usurious interest 575 5199. Dividends 577 5200. Limit to liabilities which may be incurred by any one person, etc 578 5201. Associations not to loan or purchase their own stock 579 5202. Limit upon indebtedness to be incurred 580 5203. Restriction upon use of circulating notes 581 5204. Prohibition upon withdrawal of capital 581 5205. Enforcing payment of deficiency in capital stock. 581 5206. Restriction upon use of notes of other banks 583 5207. United States notes not to be held as collateral, etc. Penalty. 582 5208. Penalty for falsely certifying checks 583 5209. Embezzlement. Penalty 583 5210. List of shareholders, etc., to be kept 585 5211. Reports to comptroller of the currency 586 5212. Report as to dividends 586 5213. Penalty for failure to make reports 586 5214. Duties payable to the United States 587 5215. Half-yearly return of circulation ; deposit and capital stock. . 587 5216. Penalty for failure to make return 587 5317. Penalty for failure to pay duties 588 5218. Refunding excessive duties 588 5219, State taxation 588 CONTENTS. xxix CHAPTER IV. DlSSOLTJTION AND EeCEIYEKSHIP. Pagb. Sec. 5220. Voluntary dissolution of associations 592 5221. Notice of intent to dissolve 593 5222. Deposit of lawful money to redeem outstanding circulation. . . 593 5223. Exemption as to an association consolidating with another. . . 593 522i. Reassignment of bonds ; redemption of notes, etc 593 5225. Destruction of redeemed notes 594 5226. Mode of protesting notes 594 5227. Examination by special agent 595 5228. Continuing business after default. 595 6229. Notice to holders; redemption at treasury; cancellation of bonds 596 5230. Sale of bonds at auction 596 5231. Sale of bonds at private sale 597 5232. Disposal of protested notes , 597 5233. Cancellation of national bank notes 597 5234. Appointment of receivers , . . 597 5235. Notice to present claims 602 6236. Dividends 602 5237. Injunction upon receivership 604 5238. Fees and expenses 605 5239. Penalty for violation of this title 605 5240. Appointment of occasional examiners 606 5241. Limit of visitorial powers 607 5242. Transfers, when void 607 6243, Use of the title "national" 609 Title Vn — The Department of the Treasury. CHAPTER IX. The Comptroller op the Curkenot. Seg. 324. Bureau of the Comptroller of the Currency 611 325. Comptroller of the Currency 611 326. Bond and oath of the Comptroller of the Currency 612 327. Deputy Comptroller of the Currency 612 328. Clerks 612 329. Interest in national banks 612 330. Seal of Comptroller of the Currency 612 331. Rooriis, vaults, furniture, etc., for Currency Bureau 613 382. Banks in District of Columbia 613 333. Report of Comptroller 613 XXX CONTENTS. Title XXXV — Internal Revenue. * CHAPTER Vin. Banks and Bankers. Page. Sec. 3407. Definition o£ the words " bank," " banker " 615 3408. Tax on deposits, capital and circulation of banks and bankers. 616 3409. Taxes, when payable 616 3410. Capital of banks expired or converted into national banks.. . . 616 3411. Circulation, when exempted from tax 616 3412. Tax on notes of persons or State banks used as circulation, etc 616 3413. Tax on notes of town, city or municipal corporations paid out by bank.", etc 616 , 3414. Banks and bankers' monthly returns 617 3415. In default of returns commissioner to estimate it, etc 618 3416. State banks converted into n'ational banks ; returns, how made , 618 3417. Provisions for bank tax and returns not to apply to national banks 618 Title LXV — Crimes. CHAPTER V. Crimes against the Operations of the G-ovbrnmbnt. Sec. 5413. Obligations or olher securities of the United States defined. . . 620 5414. Forging or counterfeiting United States securities 621 5415. Counterfeiting national bank notes 621 5430. Using plates to print notes without authority, etc 621 5431. Passing, selling, concealing, etc, forged obligations 623 5432. Taking impressions of tools or implements, etc 623 5433. Having in possession unlawfully such impressions 628 6434. Buying, selling or dealing in forged bonds, notes, etc 624 5435. False personation of holder of public stocks 624 5436. False demand on fraudulent power of attorney 624 5437 Circulating bills of expired corporations 625 Miscellaneous Provisions. Skc. 178. Vacancies in subordinate oflB.ces 626 380. Conduct of suits involving national banks 626 563. Jurisdiction of district courts , 627 629. Jurisdiction of circuit courts 627 640. Removal of suits against corporations 629 CONTENTS. xxxi Page. Sec. 711. Exclusive jurisdiction of United States courts 630 736. Proceedings to enjoin Comptroller of the Currency 632 884. Instruments of Comptroller of the Currency 632 885. Organization certificates of national banks 632 3701. Exemption from taxation 633 3811, Report on national banks , , 633 Amendments and Additional Acts, to and including the Pirst Session of the Forty-eighth Congress. FORTY-THIRD CONGRESS, SESSION I. Chapter 343. Sec. 1. The national bank act . . 637 2. Reserves on deposit 637 3. Five per cent on circulation to be deposited in treasury for redemp- tion 637 4. Withdrawal of circulation, etc 639 5. Charter numbers printed on national bank notes 689 6. Limit to amount of outstanding notes 639 7. Withdravral of currency to secure equitable distribution 639 8. Duty of Comptroller and Treasurer upon the failure of national banks to comply with requisitions 640 9. Redistribution of currency, etc , , , , . 641 Chapter 455. Appropriations for sundry expenses 642 FORTY-THIRD CONGRESS, SESSION II. Chapter 15. Sec. 1. Resumption of specie payments 642 2. No charge for converting gold bullion into coin 643 3. Circulation of national banks not restricted 643 Chapter 19. Limit to circulation of gold banks removed 644 Chapter 36. Sec. 15. Bank checks, etc 644 19. Tax on circulation of other than national banks 645 20. Tax on circulation of other than national banks paid out, etc . . 645 21. Returns of amount of circulation other than national banks. . . , 645 Chapter 80. Amendment of Revised Statutes 645 xxxii CONTENTS. OhAptbb 89. Page. Compensation of national bank examiners 648 FORTY-FOURTH CONGRESS, SESSION I. Chaptek 156. ' Sec. 1. Appointment of receivers of national banks 649 2. Individual liability of stockholders, how enforced 650 3. Meeting of shareholders after payment of debts and expenses of receivership 650 4. Sale of stock of shareholders refusing to pay assessments 651 5. Fraudulent notes to be stamped as " counterfeit " 652 6. Reports to comptroller by savings banks, etc 652 FORTY-SIXTH CONGRESS, SESSION II. Chapter 25. Conversion of national gold banks 653 FORTY-SIXTH CONGRESS, SESSION IH. Chapter 82. Verification of returns of national banks 654 FORTY-SEVENTH CONGRESS, SESSION I. Chapter 290. Sec. 1. National banking associations authorized to extend corporate existence 654 2. Consent of shareholders to amendment of articles of association. 655 3. Comptroller to make examination and issue certificate 655 4. Rights, privileges, etc., preserved 65Q 5. Shareholders not assenting to amendments may vyithdraw. 656 6. Redemption and destruction of certain circulating notes, etc 657 7. Closing of banking associations not accepting provisions of this act. 658 8. Bonds for security of circulation, etc 658 9. Withdrawal of circulation and deposit of lawful money 659 10. Associations to receive circulating notes upon deposit of bonds. . 660 11. Three per cent registered bonds issued in exchange for three and one-half per cent bonds 660 12. Gold certificates issued in exchange for gold coin C61 13. Penalty for falsely certifying checks 661 14. Right of Congress to repeal, etc 662 TABLE OF CASES. A. FAOE. Abbott V. Amer. Hard Rubber Co. , 456 Ackerman v. Emott 281 Ackerman v. Halsey 606 Adams, Mabey v 331 Adams, Pelham v 173 Adams, Howell v 149 Adams, Casey v 577 Adams v. Nasliville 590 Adderly v. Storm 181, 541 Adkins, Brabm v 535 Aiken, Kirkland v 443 Albany Hospital, People v 373 Alb. & Sus. R. R. Co., People v. . . 448 Albany City Ins. Co. v. VanVrankeu 436 Albany & Vt. R. R. Co., People v.. 422 423 Albemarle F. Co., Bradley v 409 Allen V. N. J. S. R. R. Co 418 Allen V. Williamsburgb Sav. Bk. . . 268 Allen V. Curtis - 418 A. Life Ins. Co. v. Dobbin 311 Am. Coal Co., Smitb v 186 Am. Life Ins. & Trust Co., Mumford V 364, 365 Am. Hard Rubber Co., Abbott v. . . 456 Am. Life Ins. Co., Strong v 313 Am. Linen Thread Co., DeGroffi v. . 373 Am. Atlantic & Paeiiic Canal Co., Leav 433, 433 Am. Life Ins. & Trust Co. v. Bayard. 432 Anderson, Receiver, v. Philadelphia Warehouse Co 541 Anderson v. Line 601 Anderson, G. E. R. Co. v 360 Angel, Bradley V 385 Applel3y, Brouwer v 453 Appleby v. Erie Co. Sav. Bk 368 Artisans' Bank v. Park Bank 413 Aspinwall v. Meyer 336 Assessors, People v 11, 42, 131 Assessors, Van Allen v 44, 589 Astor Fire Ins. Co., Riun v. . . 436, 437 Atlantic State Bank v. Savery. 117, 118 136, 574 Atlas Bank v. Brownell. . . . ! 533 Atlas Nat. Bank v. Savery ........ 536 PAGE. Attorney-General v. Utica Ins. Co. . 314 315 Attorney-General v. Guardian Mut. Life Ins. Co 418, 431, 435 Attorney-General v. Life & Fire Ins. Co 166, 171, 437 Attorney-General v. Bk. of Niagara. 113 Attorney-General v. North Am. L. Ins. Co 436, 436 Attrill V. Rockaway Beach Imp. Co. 437 439 Austin, in re 389 Austin V. Daniels 117, 416 Austin V. Rawdon 389 Austria v. Day 534 Avery, Eaton, Cole & Burnham Co. v. 457 B. Baack, Manufacturers' Nat. Bk. v.. 638 B. & A. R. R. Co., People v 358 B., H. T. &W. R. Co., People v. . . 433 447 B. T. & C. I. R. R. Co., People v. . . 448 Bach V. Pacific Mail S. S. Co 438 Badger, P. Warehousing Co. v.... 113 Bailey, Chemical Nat. Bank v. 600, 603 Bailey, Clark v 615 Bailey v. Hollister 181, 601 Bailey, Receiver, v. Sawyer 603 Baker, Cadlev 598, 605 Baker v. Star Printing & Pub. Co. . 408 Balch V. Wilson 608 Baldwin, Schieb v 444 Baldwin, Farmers & Mech. Bk. v. . 536 Bangs V. Duckiufield 434 Bank, Bullard v 533, 540, 579 Bank, Case V 603 Bank Com'rs v. St. L. Bank.34, 117, 140 166, 169 Bank Com'rs v. Bk. of Buffalo 331 Bank Com'rs v. James' Bank 149 Bank v. Hoch 535 Bank v. Kennedy 598, 599 Bank v. Lanier. 533, 537, 540, 541, 579 Bank, Maynard v 553 Bank, Potter v 314 XXXIV TABLE OF CASES. PAGE. Bank v. Supervisors 523, 633 Bank of Attic^i v. Manuf rs & Trad- ers' Bank '. . . : 133, 863 Bank of Attica, Robinson v, . . 113, 436 338, 371 Bank of Bethel v. Paliqnioque Bk . . 603 Bank of British Nortli America v. Merchants' Bank 149, 181 Bank of Buffalo v. Kortright 334 Bank of Central New York, Ferry v. 180 431, 425 Bank of Chenango v. Brown 358 Bank of Chilicothe V. Dodge. . 166, 167 Bank of Columbia v. Patterson. . . . 864 Bank of Commonwealth, Security Bank v 193 Bank of Georgia, U. S. Bank v 533 Bank of Havana v. Magee .... 108, 115 138, 364 Bank of Hudson, People v 433 Bank of Ithaca, Potter v 108, 133 Bank of New York, Livingston v.-. 180 ■ 181, 191 Bank of London v. Dash 443 Bank of Michigan v. Jessup. 410 Bank of Monroe v Fiulay 137 Bank of Mut. Redemption v. Stur- gis 444 Bank of Niagara, Atty. -General v. . 113 433 Bank of Niagara v. Johnson 370 Bank of Orleans v. Merrill 166, 810 566 Bank of Providence, Knight v 579 Bank of U, S., Osborne v. 516, 523, 577 Bank Of Utica v. City of Utica 43 Bank of Utica v. Smalley 334 Bank of Vergennes v. Warren 334 Bank of Washington and Warren, People V 433 Batiks V. Mayor 533 Barclay v. Quicksilver Mining Co. . 383 Barclay v. Talman. 413 Bard v. Poole 812 Barker, Bristol v 813 Barmore, Heath v 367 Barnes, Rochester v 358 Barnes v Mobile N. W. B. R. Co. . 405 Barnes v. Newcomb 435 Barnes v. Ontario Bank 138 Barnett v. National Bank 575, 600 Barnum, Paine v .... 286 Barre, Claflin v 442 Barry, Commonwealth v 585 Barry, Frothingham v 400 Barry, J.. Receiver, in re 887 Barry v. Merchants' Exchange Co. . Ill 863 Barton, People v 44, 313 Bassett, Holbrook v 336 PAGE. Bates V. First Nat. Bank 270 Baxter v. Mo. Kans. & Texas R. R.. 444 Bayard, Am. Life Ins. & Trust Co. v. 433 Beach v. Fulton Bank 313 Beach, Piatt, Receiver, v 571 Beebe, N. Y. Life Ins. & Trust Co. V 166, 169, 365 Beebe, Piatt V 598,633 Beecher v. Schieffelin 416 Beer v. Phoenix Glass Co Ill Beers v. Bridgeport Spring Co . . . , 578 Beers, Swift v 164, 166, 168, 173 Beers, Warner v. 34, 43, 131, 164, 165 Beldenv. Meeker Ill, 231 Belmont Branch Bank v. Hoge 376 Belmont v. Erie R. R. Co 415 Beltser, Bank of Waterville & West W. Bankv 130 Benckle v. Eckhart 441 Benedict, Bradt v 432 Bennett v. Edwards , 442 Bennett, United States v 563 Bennington, First Nat. Bank v 535 Bentley, Piatt, Receiver, v 600 Benton, Merritt v 136 Berry, Receiver, v. Brett 385, 600 Best, Receiver, Sistare v 391, 393 Best v. Thiel 363 Best, Zugner v 258 Bethel v. Pahquioque 193 Bigelow, Plimpton v 403, 404, 443 Bigelowv. Whitehall Mfg. Co. ... 441 Bingham v. Weiderwax 368 Bingston v. Thingvalla S. S. Co 408 Bird's Exrs. v. Cochran, Receiver . . 630 Bifshop, Haxton v 194 Bissell V. M. S. & Ind. N. R. R 418 Blake v. Sanborn 369 Blake, Third Nat. Bank v 537 Blakesley, Lyons v 448 Blatchford, Leavitt v 111, 113 117 166, 171, 330,' 331 Bliss, Merchants' Bank of New Haven v 374 Bliveu V. Peru Steel and Iron Co. '. 395 T,, J . ^ "tSl. 432 Bloodgood, Kane v 283, 367 Bloom, Slee v ] 432 Board of Assessors, People v 331 Board of Education, People v 43 Boatmen's Sav. Institution, Tiffany v , 15Y5 Boisgerard v. N. Y. Banking Co" in Bnlander v. Stevens 34 Bonaffe v. Fowler " ' . * iqi Boom V. City of Utica 368 Boone v. Citizens' Sav. Bank. ...... 267 Borst, Dayton v 113 igg Borst, Tinkham v 367' 4.1^ TABLE OF CASES. XXXV PAGE. Bostwick, Fislikill Sav. Institute v. 251 Bostwick, BrmkerkoS v 606 Bougliton, Savaoool v 820 Bowden v. Johnson 541, 548 Bowden v. Santos. 541 Bowen v. First Nat. Bank 444 Bowen v. Lease 375 Uowen, People v 358, 366 Bowery Bank, in re 191, 236, 384 Bowery Sav. Bank, Israel v 269 Boyd, Rutter V 445 Bradley v. Albemarle F. Co 409 Bradley v. Angel 385 Bradley, International Bank v 412 Bradt v. Benedict 423 Brady v. Mayor of Brooklyn. . 368, 364 Brady, XJ. S. Trust Co. v 357, 360 Brakm v. Adkins 535 Branck v. United States 551 Brewster v. Mick. C. R. R. Co. . . . 403 Brewster, People v. 313, 313 Bridge Co. v. Sillc Co 313 Bridgeport Bank v. Schuyler . . . . 579 Bridgeport Spring Co., Beers v 578 Briggs V. Peuniman 413, 431 Bringkurst, Commonwealtk v 545 Brinkerhoff v. Bostwick 606 Briukham, St. Louis Nat. Bank v. . 577 630 Brisbane, De Witt v 313 Bristol V. Barker 313 Britton, United States v 584, 585 Brook V. Nat. Mexican Con. Co. 411, 413 Brooklyn Elevated It. R., Keeler v. 416 Brooks, Hall v 444 Brooks v. Mexican Nat. Cou. Co. . . . 441 Brower v. Appleby 453 Brower, Cotkeal v 235, 369, 373 Brower v. Harbeck. . 237, 228, 387, 421 Brower V. Hill 426 Brownell, Atlas Bank v 533 Brown v. Harbeck 226 Brown, Thompson v 381 Brown v. Lamb 604 Brown v. Maryland 516 Brown, Roosevelt v 373 Bruce v. Fulton Nat. Bank 273 Bruce, Hayton v 226 Bruce v. Piatt 361 Bruen, Taylor v 314 Bruff, People v 416, 437 Buckingham v. White 444 Buffalo City Bank v.Codd. 163, 164, 173 Bullard v. Bank 533, 540, 579 Bunnell, Ontario Bank v 41 Barley, Laing v 543, 549 Burley, Burton v 531, 570 Burroughs, Peckham v 608 Burrows v. Smith 113 Burt, Second Nat. Bank v 139 D PAGB. Burton v. Burley 631, 570 Bush, Johnson v ; 337, 366 Bushnell v. Chautauqua County Nat. Bank 536 Butler V. Glen Cove Starch Co 379 Butler, Mayor of N. Y. v 364 Butler, Mitchell v 629 Butterworth v. O'Brien 231, 376 Butterworth v. Kennedy 223 Butts, Maine Bank v 17 Butts V. Wood 381, 416, 417, 456 Byrne, Osborn v 600 C. C. M. Ins. Co., in re 373 C. S. Road, People v 433, 438 Cadle V. Baker 598, 605 Cadlev. Tracy 576, 627 Calbraith, Searight v 525 Caldwell, U. Ins. Co. v 115, 311 Calef , Hawthorne v 549, 601 Campbell, Gillett v 128, 225 Canajoharie & Catskill E. R., in re. 429 Capitol Bank, Pape v 536 Cardozo, Mer. Ex. Nat. Bank v ... 633 Carey v. Galli 552 Carll, Clean Nat. Bank v 583 Carr v. Van Hoesau 443 Carroll, Farmers' L. & T. Co. v 364 Carthage v. Carthage Nat. Bank. . . 590 Gary, Hun, Receiver, v 263, 294 Case v. Bank 602 Case, Receiver, v. Citizens' Bank . . . 608 Case V. Mechanics' Bank Asso. 137, 131 Case, Nat. Bank v. . . 537, 541, 548, 601 Case V. Terrell 600 Casey v. Adams 577 Casey, Receiver, v. La Societe de Credit Mobilier 609 Casey V. Galli 213, 560, -582, 598 599, 682 Cayuga Lake R. R. Co. v. Kyle 408 Cazeoux v. Mali 418 Cecil, Matter of 872 Central Bank, People v 181 Central Cross-town R. R. Co. v. Twenty-third Street R. E. Co 445 Central Nat. Bank, Ordway v . 593, 631 Central R. R. Co. v. Kish 457 Chamberlain, Harper v 460 Chamberlain v. Rochester S. P. V. Co. 395, 398, 400 Charleston City Council, Western v. 523 Charleston v. People's Nat. Bank. . 544 Charleston, Weston v 516 Charter Oak Ins. Co. , Stud well v . . 445 Chase v. Lord 179 Chautauqua County Nat. Bk., Bush- nell v 536 Cheever v. G. E. Railway Co 371 XXXVl TABLE OF CASES. PAGE. Chemical Bank, Petersen v 411 Chemical Nat. Banlt v. Bailey. 600, 603 Chemical Nat. Bank v. Kohuer. 138, 129 Chenango M. Ins. Co. , in re 331 Chesapeake Bank v, First Nat. Bl;;. 530 Chicago & N, P, C. Co., Coffin v. . . 403 Chicago & N. W. R. E. Co., Howell V 413 Churchill, City of Utica v 44 Citizens' Bank, Case, Receiver, v. . . 608 Citizens' Bank, First Nat. Bank v, . 289 Citizens' Nat. Bank, Moores v 543 Citizens' Savings Bank, Boone v. . . 267 City Bank of Columbus, Western Bank V 412 City of Elmira, National Bank of Chemung v 320 City National Bank v. Phelps. 313, 315 aty of Newark, State v 591 City of Utica, Bank of Utica v 43 City of Utica, Boone v 363 City of Utica v. Churchill 44 Clark V. Bailey 615 Clark, Marcy v . 541 Clark V. Metropolitan Bank 162 Claflin V. Barre 443 Claflin V. F. & C. Bank 213 Clements, Marine Bank v 234 Cleveland & Columhus R. R. Co., Con. Mut. Life Ins. Co. v 413 Coats V. Donnell 129, 238 Cockran, Receiver, Bird's Ex. v 630 Codd, Buffalo City Bank v. 163, 164, 173 Codd V. Rathbone... 128, 130, 163, 864 Codd, Sacketts Harbor Bank v 174 Coffey V. National Bank 553 Coffin V. Chicago & N. P. C. Co ... 403 Cohocton, People v 448 Colby, National Bank v. . 600, 605, 609 Cole V. Ryan 113 Coleman v. Second Ave. R. E. Co. . 456 Columbia Ins. Co. v. Stevens 391 Colville, Gaffney v 238, 460 Commercial Bank v. Kortright 224 Commercial Bank v. Simmons 630 Commercial Bank v. Varnum 174 Commercial Nat. Bank, Pelton v. . . 590 Commercial Warehouse Co., Mer- chants' Exchange Bank v 376 Commissioner v. ELston 633 Commissioners, People v. . . 43, 44, 45 46, 313, 319, 330, 589, 591 Common Council, People v 447 Commonwealth v. Barry 585 Commonwealth v. Bringhurst 545 Commonwealth, Nat. Bank v.. 323, 591 Commonwealth Nat. Bk., Wayne v. 533 Comstock V. Willoughhy 118 Concordia Savings & Aid Associa- tion V. Read 408 TAGE. Conklin v. Furman 179 Conklin, People v 447 Connecticut Bank v. Smith. ... 408 Con. Mutual Life Ins. Co. v. Cleve- land & Columbus E. R. Co 413 Conway v. Halsey 606 Cook County Sat, Bank v. United States 601, 604 Cook, Mitchell v 147 Cooke V. State Nat. Bank 443, 531 570, 576 Corbett, Irving Nat. Bank v 408 Corning v. MoCollough ... 549 Cotheal v. Brower 235, 869, 372 County of Wilson v. National Bk. . 630 Courtrls v. Harrison 449 Cowles V. Cromwell. 113, 114, 186, 188 Craig V. Missouri 531 Crandall, Valk v 180, 453 Crocker v. Marine National Bank . . 576 Crocker v. Whitney 119 Cromwell, Cowles v. 113, 114, 186, 188 Crooke, Eno v 224 Crookshanks v. Turner 416 Crosby v. Day 389 Cross V. Jackson 453 Cross V. Sackett 460 Croswell, H. & N. H. R. R. Co. v. . 366 Croton Ins. Co., in re 389, 390, 438 Crowninshield, Sturgis v 533 Cruikshank v. Fourth Nat. Bank. . . 576 577, 638 Cumberland Coal Co. v. Sherman. . 416 Cummings v. Merchants' National Bank 590 Cummings, People v 373 Cunningham, Gallatin v 200 Currier v. Lebanon Slate Co 580 Curry, Mann v 386, 439 Curtis, Allen v 418 Curtis, Farmers' Loan and Trust Co. v 863 Curtis V. Leavitt. . . . Ill, 113, 117, 164 171, 180, 184, 331, 324, 326, 310, 365 375 Cutting V. Damerel. . 187, 365, 386, 429 D. Dakih, Thomas v 33, 42 Dalley, Wakeman v 456 Dambmau v. Einpire Mill 419 Damerel, Cutting v.. . 187, 365, 386, 429 Danenbacher v. Lehigh V. R. R. t!0 408^ 409 Daniels, Austin v II7, 416 Danzig, Smith v ' 436 Dash, Bank of London v 442 Davis V. Essex Baptist Society. . . . . 541 ^ . .„ , 549, 599 Davis, Parker v 517 TABLE OF CASES. XXXVIl PAGE. Davis, State of Tennessee v 138 Davis V. Stevens 541, 548, 601 Davis, Syracuse City Banlc v 357 Davis V. Weed 548, 549, 601 Day, Austria v 534 Day, Crosby v 389 Dayton v. Borst 113, 180 Dearing, Farmers' Nat. Banlc v . 516 530, 574 Declions v. Savatiu 383 De GrofE y. Am. Linen Thread Co. . 373 De Groot, Osgood, Receiver, v 385 De Groot v. Van Duzer 313, 315 Delafield v. Kinney Ill, 131 Denike v. N. Y. & Rosendale Lime Co 431, 435 Depeyster, Scott v 416, 417 Deuel, Howe v 413, 424 De Witt V. Brisbane 313 De Witt V. Hastings 408 Dinsmore, McGuffin v 446 Direct W . S. Cable Co. v. Dominion Tel. Co 410 Diven v. Lee 187, 300 Diven, Receiver, v. Duncan.. .. 181, 196 197 Dobbins, Am. Lite Ins. Co. v 311 Dodge, Bank of Chilicotlie v. . 166, 167 Dodge, Elwell v 225 Dolaa, People v 41, 320, 334 Dominion Tel. Co., Direct W. S. Cable Co. v 410 Donadi v. N. Y. State Mut. Ins. Co. 403 Donuell, Coats v 139, 338 Donnell v. Williams 443 Dooly V. Smitb 519 Dorsey v. Marsh 636 Doty, People v 113, 303 Douglass County, First Nat. Bk. v. 576 630 Dover, Stafford Nat. Bank v . .; ... 591 Downes v. Phoenix Bank 413 Draper, People v 447 Driscoll V. W. Bradley & C. M. Co . 363 Dry Dock Savings Bk. , Schrauth v. 370 Dubois, S. , Receiver, v 114 Dubois, Sagory v 179, 453 Duckinfield, Bangs v 434 Duncan, Diven, Receiver, v. . . . 181, 196 197 Dunkerson's Case 579 Dutcher, Assignee, v. Importers & Traders' Nat. Bank 326, 338, 371 Dwinelle, Kincaid v .... 433, 435, 438 £!. Eagle Fire Co., Scott v 323 Eastman, McLean v.. Ill, 113, 330, 331 East River Bank v. Judali 138 East River Bank v. Rogers ......... 408 PAGE. Eaton, Cole & Burnham Co. v. Avery 457 Eaton, Pratt v 76, 310, 311, 333 Eckhart, Benckle v 441 Edwards, Bennett v 443 Elliott, Ranken v 438 Elston, Commissioner v 033 Elwell V. Dodge 335 Ely, N. Y. Fire Ins. Co. v 18, 313 Ely V. Sprague 114 Em. Ind. Sav. Bank, Kelly v 367 Em. Ind. Sav. Bank, Mulcahy v.... 369 Emott, Ackerman v 381 Empire City Bank, in re. . 186, 190, 195 197, 198, 359, 361, 600 Empire Mill, Dambman v 419 Enfield Manuf g Co., Redmond v . . 413 Eno V. Crooke 234 Equitable Trust Co., Selden v 615 Erie County Sav. Bank, Appleby v. 368 Brie E. R. Co., Belmont v 415 Erie R. R. Co., Ramsey v 415 Erwin v. Oregon R. R. & Nav. Co. . 411 Essex Baptist Society, Davis v. 541, 549 599 Estate, Richard Ward in re. . . 368, 370 Exchange Bank, Smith v 536 Ex parte Desidoity 333, 335, 336 Ex parte Holcomb 633 Ex parte Holmes 333, 335 Ex parte Murphy, 336 Eyre, National Bank v 631 F. Fairchild, Gillett v 436 Fairchild, People v 447 Farmers' Bank V. Hale... 136, 137 Farmers' Bank, McBride v 411 Fai-mers' Bank, Mosford v 173 F. & C. Bank, Claflin v 313 Farmers' L. & T. Co. v. Curtis 363 Farmers' L. & T. Co. v. Carroll 364 Farmers' L. & T. Co. v. Mayor 43 Farmers & Mechanics' Bank v. Bald- win 536 Farmers & Mechanics' Bk. v. Jenks. 453 Farmers' Nat. Bank v. Dearing 516 530, 574 Faxon, Stetson v . 418 Feeny v. People Fire Ins. Co . ., 384, 408 Fenuo, Veazie Bank v ... 516, 533, 533 531, 616, 617 Ferris v. Strong 415 Ferry v, Bank of Central N. Y 180 421, 425 Fifth Nat. Bank v. Pittsburgh R. R. Co 537 Finlay, Bank of Monroe v 137 First Nat. Bank, Bates v 370 First Nat. Bank v. Bennington 535 First Nat, Bi^b\, Bowen v 444 TABLE OF CASES. PAGE. First Nat. Bank, Chesapeake Bk. v. 530 First Nat. Bank v. Citizens' Bank . . 289 First Nat. Bank v. Douglass County 576 630 First Nat. Bank, Foss v 629, 631 First Nat. Bank, Graham v 123 First Nat. Bank v. Gruber 516 First Nat. Bank v. Haire 539 First Nat. Bank v. Harris 536 First Nat. Bank, Hinterminster v.. 136 137 First Nat. Bank v. Hughes. .., 607 First Nat. Bank, Missouri E. T. Co. V 631 First Nat. Banls: v. Nat. Exchange Bank 535, 536 First Nat. Bank v. Ocean Nat. Bk. . 584 First Nat. Bank v. Peterborough. . . 590 591 First Nat. Bank v. Pierson 536 First Nat. Bank v. Rex 534 First Nat. Bank, Spofford v 537 First Nat. Bank v. Staufeer 576 First Nat. Bank, Van Leuven v . . . 535 First Nat. Bank, Weckler v. . . 534, 535 First Nat. Bank, Wiley v 534 First Nat. Bank, Wright v 575 Fish, O. F. B. Co. v 359 Fish, Pardee v 361 Fisher, Leavitt v 823 Fisher, United States v 521 Fishkill Iron Co., Tallmadge v 371 Fishkill Bav. Inst. v. Bostwick, Re- ceiver 251 Fiske, Marine Bank v 136 Flagg V, Munger 147, 153 Flecknerv. U. S. Bank.. 535, 536, 537 Foss V. First Nat. Bank 629, 631 Foss V. National Bank 630 Fourth Nat. Bank, Cruikshauk v . . 576 577, 628 Fowler, BonafEe v 181 Franklin Fire Ins. Co. v. Jenkins. . 460 Frantz, Whittlesey v 409, 425 Freeman, Merchants' Bank v 136 French, Lafayette Ins. Co. v 404 French Manuf g Co., in re 398 French, Receiver, v, Ingram 281 Frothiugham v. Barry 400 Fuller, State v 585, 631 Fulton Bank, Beach v 312 Fulton Nat. Bank, Bruce v 273 Funk, Martin v 268, 271 Furman, Coukliu v 179 Furniss v. Sherwood 227 G. Gaffney v. Colville 228, 460 Gallatin v. Cunningham 200 Galli.Casey V, 212,560, 582, 598, 599, 633 PAGE. Galli, Carey v 553 Galway v. U. S, S. S, R. Co 433 Gardiner v. Pollard 417, 418 Gardner, Paine v 603 Garrison v. Howe 181, 600 Gartter, New Amsterdam Bank V .. 600 Gelster v. Syracuse Sav. Bank 269 G. E. R. Co. v. Anderson 360 G. B. R. Co., Cheever v 371 Gibbs V. Queens Ins. Co 404, 411 Gibson, Kennedy v.. 548, 576, 598, 599 603, 627, 630 Gillett V. Campbell 128, 325 Gillett V. Fairchild 426 Gillett V. Moody. . . . 131, 179, 220, 365 Gillett V. Phillips 224, 236 Gleu Cove Starch Co., Butler v.. . . 379 Glen Cove Starch Co. v. Gotthold . . 444 Globe Ins. Co., Le Roy v 385, 390 Globe Mut. Life Ins. Co., People v. 425 439 Gold Mining Co. v. National Bank.. 578 Gotthold, Glen Cove Starch Co. v . 444 Gouge, Greaves V 417, 418 Gould, Hobart v 599 Graff, United Strftes v 333 Graham v. First National Bank. . . . 133 Graham, National Bank v 534, 596 Graves v. Lebanon Nat. Bank. 583, 533 Greaves v. Gouge 417, 418 Green, Harne v 633 Green, Hurd v 264 Greenman, Juillard v 511 Gridley, People's Bank v 543 Griswold, Hepburn v 517, 519, 522 Gruber, First Nat. Bank v 516 Grymes v. Hone 543 Guardian Mutual Life Ins. Co., At- torney-General v 418, 421, 425 Gunton, Zautzingers v 588 Hackettstown Nat. Bank v. Rea. . . . 814 Hadev. McVay, 600 Hagar v. Union Nat. Bank 578, 580 Haire, First Nat. Bank v 539 Hale, Farmers' Bank v 186, 137 Hale, Tower v 367,' 433 Hale V. Walker ' 541 Hall V. Brooks 444 Hallett V. Harrower 130 Halliday, Noble v 388 Halsey, Ackerman v 606 Halsey, Conway v 606 Halsted v. Mayor 364 Hamilton Avenue, Matter of 359 Hannas, Morgan v 288 Harbeck, Bronwer v . 227, 288', " 387 431 Harbeck, Brown v 286 H, & N. H. R. R. Co. v. Crofswell."...! 366 TABLE OP CASES. XXXIX PAGE. H. & N. H. B. R. Co. V. Kennedy. . 453 Harmony Fire Ins. Co., in re. . 393, 393 437 Harne v. Green 633 Harper v. Chamberlain 460 Harris, First Nat. Bank v. 536 Harris, U. S. Trust Co. v 331 Harrison, Coiirtris v 449 Harrower, Hallett v 13U Hastings, De Witt v 408 Hawley, Pentz v. . . ' 301 Hawthorne v. Calef 549, 601 Haxton v. Bishop 194 Hayton v. Bruce 326 Heatli V. Barmore 337 Heilbruu, Miller v , 590 Hein, Smoot v 444 Helmer, N. Y. T. & L. Co. v 311 Henry v. Salina Bank 339, 374 Hepburn v. Griswold 517, 519, 522 Hepburn v. School Directors 590 Herkimer Manuf'g Co. v. Small .... 453 Heroy v. Kerr 226 Hetzel V. Tannehill 403 Hibernia Nat. Bank v. Laoombe. . . . 413 Hicks, Moot V 364 Hill, Brouwer v 426 Hill, Sands v.; 388 Hills, People v 447 Hintermister v. First Nat. Bk 136 137 Hitz, Keyser v 548, 553, 560, 601 Hoag, Sawyer v 541, 599 Hobart v. Gould 599 Hoch, Bank v : . . . 535 Hollmau v. Van Nostrahd 387 Hoge, Belmont Branch Bank v. ... 376 Hoge, Redmond v 413 Holbrook v. Bassett 236 Holbrook v. Receivers 385, 393 Hollister, Bailey v 181, 601 Hollister Bank, in re ... . 179, 194, 204 306 Hollister V. Hollister Bank. ... 179, 361 Hone, Gsymes v 543 Houghton V. McAulifEe ^ 237 Houston V. Moore 631 Howe V. Deuel 412, 424 Howe, Garrison v 181, 600 Howell V. Adams 149 Howell V. Chicago & N. W. R. R. Cq. 412 Hoytv. Thompson 225, 436 Hubbard, Van Antwerp v 638 Hubbell V. Medberry 383 Hudson Manuf'g Co., Paulding y. 449 Hudson River E. R. Co., Johnson V 358 Hughes, First Nat. Bank v 607 Huguenot Nat. Bank V. Stud well... 418 Hulburd, Van Antwerp v 555, 603 PAGE. Hun, Receiver, v. Carey 268, 294 Hun V. Salter 264 Hun, Receiver, v. Van Dyok 363 Hunter's Lessees, Martin, v 631 Huntington v. Savings Bank 289 Kurd V. Green 364 Hurd V. Kelly 263, 264 Hutson V. Morrisania Steamboat Co 410 Hutton, Taylor v 530, 538 Hyde v. Lynde 427 I. Imp. & Traders' Nat. Bank, Butcher Association v 226, 228, 371 Ingram, French, Receiver v 281 Inmau, Lowry v 549 In re Austin 389 In re Barry, J., Receiver 387 In re Bowery Bank 191, 236. 384 In re Canajoharie & Catskill R. R. . 439 In re Chenango M. Ins. Co 331 In re C. C. M. Ins. Co 373 In re Croton Ins. Co 889, 390, 428 In re Empire City Bank . . 186, 190, 195 197, 198, 359, 600 In re Estate Richard Ward... 268, 270 In re French Manfg Co , 398 In re Harmony Fire Ins. Co. . . 392, 393 437 In re Insurance Co 231, 233 In re Hollister Bank. . 179, 194, 304, 206 In re Jacox 76, 333 In re Jackson Ins. Co 431 In re Knickerbocker Bank 200 In re L. I. Railroad Co 373 In re London Exchange Bank 580 In re M. & H. Railroad Co 373 In re Mohawk E. R. Co 331, 333 In re Murray 428 In re Niagara Bank 390 In re N. T. City Bank 181 In re N. Y. L. & W. R. R. Co 877 In re Oliver Lee & Co.'s Bank 186 In re Open Board of Brokers 400 In re Pyrolusite Manganese Co. 395, 398 399, 400 In re R. E. Co 280, 235, 236 In re Reciprocity Bank. . . 188, 204, 305 207 In re S. V. Railroad Case 372 In re Taxpayers of Kingston 358 In re Van Allen 198, 385, 389 In re Waterbury 391 In re Westchester Iron Co 397 Insurance Co., in re 331, 333 International Bank v. Bradley. - . . 412 Irons V. Manufacturers' Nat. Bank. 550 003 Irving Nat. Bank v. Corbett 408 xl TABLE OF CASES. PAGE. Irwin, Paine, Receiver, v 263 Israel v. Bowery Sav. Bank 2B9 Jackson, Cross v 453 Jackson Ins. Co., in re 421 Jacoby, Loaners' Bank v 408 Jacox, in re 76, 333 Jamen, Loury v 601 James Bank, Bank Commissioners v. 149 Jenkins, Franklin Fire Ins. Co. v . . 460 Jenks, Farmers & Mechanics' Bk v. 453 Jessup, Bank of Michigan v 410 Johnson, Bank of Niagara v 370 Johnson, Bowden v 541, 548 Johnson v. Bush 327, 336 Johnson v. H. R. R. R. Co 358 Johnson v. Kemp 130 Johnson v. Laflin. . . . 533, 540, 542, 580 581, 585 Johnson V. Nat. Bank 118 Johnson, National Bank v 574 Johnson, Railroad Co. v 519 Johnson, Rosenblatt v 591 Johnson, Scott v 226 Jones, Rogers v 260 Jones V. Robinson 198 Judah, East River Bank v 128 Juillard v. Gtreenman 511 Kane v. Bloodgood 283, 367 Keelerv. Brooklyn Elevated R. R. 416 Kelly V. Em. Ind. Sav. Bank 367 Kelly, Kurd v 262, 364 Kelsey v. National Bank 553 Kemp, Johnson v 130 Kennedy, Bank v 598, 599 Kennedy, Butterworth v 333 Kennedy v. Gibson. . 548, 576, 598, 599 603, 637, 630 Kennedy, H. & N. H. R. R. Co. v. . 458 Kerr, Heroy v 236 Kerr, Troy & Rut. R. R. Co. v 366 Keyport Steamboat Co. , May v 413 Keyser v. Hltz 548, 553, 560, 601 Kimball, Scammon v 600 Kincaid v. Dwinelle 433, 425, 428 Kinney, Delafield v Ill, 131 Kirkland v. Aiken 442 Kish, Central R. R. Co. v 457 Knapp, Receiver, v. Roche. . .,. 263, 277 Knickerbocker Bank, in re 200 Knight V. Bank of Providence. . . . 579 Knight V. Plymouth 281 Knox V. Lee 517 Knox, United States v 182, 548, 604 Kohner, Chemical Nat. Bank v. 128, 139 Kortright, Bank of Buiialo v 234 Kprtjight, Commercial Bank v 334 PAGE. Kost, Wheelock v 543, 549, 609 Kyle, Cayuga Lake R. R. Co. v 408 I.. Lacombe, Hibernia Nat. Bank v . . . 413 Lafayette Ins. Co. v. French 404 Laflin, Johnson v.... 533, 540, 542, 580 581, 585 Laing v. Burley 542, 549 Lake Ontario Nat. Bank v. Ononda- , ga Co. Bank 395 L. S. & M. S. R. R. Co., People v. . 335 369, 375 Lamb, Brown v 604 Lamb, Nat. Bank v 136 Landers v. Staten I. R. R. Co 441 Lanier, Bank v . 533, 537, 540, 541, 579 Lansing, Smith v. 117 La Societe de Credit Mobilier, Casey, Receiver, v 609 Lawrence, Palmer, Receiver, v. 113, 114 458 Lea V. Am. At. &Pac. Canal Co. 433, 423 Lead Mining Co., Moss v 225 Lease, Bowen v 375 Leavitt v. Blatchford. Ill, 113, 117, 166 171, 320, 221 Leavitt, Curtis v. Ill, 112, 117, 164, 171 180, 184, 321, 234, 226, 310, 365, 375 Leavitt v. Fisher 228 Leavitt v. Palmer. . . . Ill, 166, 168, 171 172, 566 Leavitt, State of Ohio v 117 Leavitt v. Tylee 237 Leavitt v. Yates Ill, 112, 118, 166 170, 314 Lebanon Nat. Bank, Graves v. . 582, 533 Lebanon Slate Co., Currier v 580 Lee, Diven v 187, 300 Lee, Knox v 517 Lehigh Valley R. R. Co., Darren- bacher V 408, 409 Lehman v. Williams 443 Leonardsville Bank v. Willard. 113, 138 Le Roy v. Globe Ins. Co 385, 390 Levin v. Russell 381 Libby v. Rosecrans 884 Life & Fire Ins. Co., Attorney-Gen- eral v 166, 171, 437 Line, Anderson v 601 L. I. Railroad Co. , in re 373 Livingston v. Bank of New York. . 180 181, 191 Loaners Bank v. Jacoby 408 Loder v. N. Y. U. & 0. R. R. Co. . .' 439 London Exchange Bank, in re 580 Lord, Chase v 179 Lovet V. S. S. Mill 334 Loury v. Jamen 601 Lowry v. luman 549 TABLE OP CASES. xli PAGE. Lydeoker, Moran v 438 Lyons v. Blakesly 443 Lynde, Hyde v 427 M. M. V. R. C. Bank 235 Mabey v. Adams 221 M. B. Co. V. U. & S. E. R. Co 359 M. & H. Railroad Co., in re 372 Magee, Bank of Havana v 108, 115 138, 364 Mahon, Smith v 405 Main v. Second Nat. Bank 576, 630 Maine Bank v. Butts 17 Mali, Cazeaux v 418 Mali, Mead V 418 M. P. Ins. Co., People v 323 Manhattan Co., People v 31, 365 Manhattan Co., Reichman v 445 Mann v. Curry 386, 429 Mann v. Pentz : . 365, 418, 438 Manuf s & " Builders' Bank, Rosen- back v 428 Manuf s & Merchants' Bank, Ryan V 138, 130 Manuf "s Nat. Bank v. Baack 628 Manufacturers' Nat. Bank, Irons v. 550 608 Manufacturers & Traders' Bank, Bank of Attica v 123, 363 Manuf's & Traders' Bank, Rosen- back V 801 Marcy v. Clark 541 Marine Bank v. Clement 224 Marine Bank v. Fiske 136 Marine Nat. Bank, Crocker v 576 Mariposa, Reddington v 403 Market Nat. Bank v. Pacific Nat. Bank 608 Marsh, Dorsey v 626 Martin v. Funk 268, 271 Martin v. Hunter's Lessees 631 Martin, Tapley v 533, 632 Maryland, Brown v 516 Maryland, McCullouch v. . 516, 519, 521 523, 526 Maryland v. Railroad Co 519 Massachusetts Nat. Bank, Mathews V 543 Mathews v. Massachusetts National Bank , 543 Mathews, Union Bank y 537 Matter of Cecil 373 Matter of Empire City Bank 361 Matter of Hamilton Avenue 859 Matter of Hollister Bank 361 Matter of Patterson, Receiver 301 Matter of Piatt, Receiver 600, 627 Matter of Reciprocity Bank 361 Matter of Sage, et al 369 PAGE. Matter of Van Campen 584 Matthews, Nat. Bank v 534, 538 Maynard v. Bank 553 Mayor, Banks v 522 Mayor, Brady v 363, 364 Mayor v. Butler 364 Mayor, Farmers' Loan and Trust Co V 42 Mayor, Halsted v 364 Mayor, People v 448 McAuliffe, Houghton v 337 McBride v. Farmers' Bank 411 McCoom V. White 443 McCullough, Corning v 549 McCullough V.Maryland.. 516, 519, 521 523 536 McCullough V. Moss 363, 364^ 367 McCullough V. Norwood 433 McCullough, People v 447 MoGraw v. Tatham 369 McGuflBn V. Dinsmore 446 McKee v. Metropolitan Life Ins. Co. 410 McLean v. Eastman. . Ill, 113, 320, 221 McNamara, Smith v 443 McQuade, Van Dyck v. . . . 199, 251, 290 460 McVay, Hade v 600 Mead V.Mali 418 Mead, Paine, Receiver v 258, 264 Mechanics' ]3ank Association, Case V 137, 131 Mechanics' Nat. Bank, Nat. Bank of Commonwealth v 603, 604 Mechanics' Nat. Bank, People's Bank v 608 Meeker, Beldeu v Ill, 331 Mechanics & Traders' Fire Ins. Co., O'Brien V 444 Mechanics & Traders' Savings Inst. , People V 268, 369, 373 Medberry, Hubbell v 283 Mercantile Ins. Co., Verplank v. . . . 426 Merchants' Bank, Bank of British North Amer. v 149, 181 Merchants' Bank v. Bliss 374 Merchants' Bank v. Freeman 136 Merchants' Bank, Mlddlebrook v. . . 285 Merchants' Exchange Co., Barry v. Ill 363 Merchants' Exchange Bank v. Com- mercial Warehouse Co 376 Mer. Ex. Nat. Bank v. Cardozo 633 Merchants' Nat. Bank, Cummings v. 590 Merchants' Nat. Bank, Orim v. ... 537. Merchants' Nat. B'k, Tappeu v. 46, 589 Merchants' Nat. Bank v. State Nat. Bank 535, 543, 585, 570 Merchants' Nat. Bank v. United States : 617 Merrick v. Santvoord 413 xlii TABLE OP CASES. PAGE, Merrill, Bank of Orleans v. 166, 310, 566 Merritt v. Benton 136 Messenger, Metcalf v 108 Metealf v. Messenger. 108 Metropolitan Bank, Clark v 162 Metropolitan Bank v. Van Dyck . . . 149 153 Metropolitan Life Ins. Co. , McKee v. 410 Met. Sav. Bank, ScLoenwald v 308 Mexican Nat. Const. Co., Brooks v. 413 441 Meyer, Aspinwall v 330 Mich. Cent. H. R. Co., Brewster v . 403 M. S. & Ind. N. R. R., Bissell v. . . . 418 Middlebrook v. Merchants' Bank. . . 835 Middletown v. Rondout & Oswego R. R. Co 438 Mills. S., Lovetv 324 Miller v. Heilbrun 590 Miller, Northern R. B. Co. v. . 366, 370 Miller, Union Nat. Bank v. . . 576, 577 Miller, Wheelau v 439 Miner, People v 447 Miner v. Village of Fredonia 108 Missouri, Craig v -^ 531 Missouri, Kansas & Texas R. R. Co., Baxter v. . . . •. 444 Missouri R. T. Co. v. First Nat. B'k C31 Mitchell V. Butler 639 Mitchell V. Cook 147 Mobile & N. W. R. R. Co., Barnes v. 405 Mohawk R. B. Co., in re 331, 333 Moody, GiUett v. . . . 131, 179, 330, 365 Moore, Houston v 631 Moore, Suydam v 366 Moores v. Citizens' Nat. Bank . 543 Moran v. Lydecker 438 Morgan v. Hannas 283 Morgan v. Skiddy 457 Morris v: Wheelan 447 Morrisania Steamboat Co. , Hutson v. 410 Morse v. Swits 103 Mosford V. Farmers' Bank 173 Moss V. Lead Mining Co 335 Moss, McCullouch v 363, 364, 867 Moss V. Rossie Lead Mining Co. . . . 363 Mott V. Hicks 864 Mulcahv V. Bmig. Ind. Sav. Bank . 369 Mumford v. Am. Life & Trust Co. . 864 365 Munger, Flagg v 147, 153 Murray, in re 438 Murray v. Vanderbilt 413 Mutual Trust Co., People v 340 Mutual Union Telegraph Co., Peo- ple v 432 N. Nash V. White's Bank of Buffalo. . . 135 Nashville, Adams v 590 TAOB. National Bank, Barnett v 575, 000 Nat. Bank v. Case. . . 537, 541, 548, COl National Bank v. City of Elmira. . . '620 National Bank, Coftey v "53 National Bank v. Colby. . . 600, 605, 609 Nat. Bank v. Commonwealth 338, 591 Nat, Bank of Commonwealth v. Mechanics' Nat. Bank 603, 601 National Bank, County of Wilson v. 630 National Bank v. Eyre 631 National Bank, Foss v 630 National Bank, Gold Mining Co. v. 578 National Bank v. Graliam 534, 506 National Bank v. Johnson 574 Nai ional Bank, Johnson v 118 National Bank v. Lamb 136 National Bank, Kelsey v 553 ^iational Banli v. Matthews. . . 534, 538 National Bank v. National Bank. . . 583 National Bank, Gates v 575 Nat. Bank, Peoples' Bank v 534 Nat. Bank v. Phoenix Wareh6using Co 314, 531, 633 Nat. Bank v. Raymond 538 Nat. Bank, Robinson v 442, 608 Nat. Bank, TifEany v. 516, 530, 574, 575 Nat. Bank v. Titusville 590 Nat. Bank, Upton v 538 Nat. Bank v. United States 533 Nat. Bank, Wheeler v 576 Nat. Bank v. Whitney 537 Nat. Bank, Yerkes v 585 Nat. Exchange B'k, First Nat. B'k v. 535 536 Nat. Mechanics' Bank, Shoemalcer V 534, 578, 605, 628 Nat. Mex. Con. Co., Brook v. . 411, 412 Nelson v. Wellington 336 New Amsterdam Bank v. Gartter. . 600 New Amsterdam Savings Bank v. Tartter 368 Newcomb, Barnes v 435 Newell V. National Bank 631 N. H. & Del. Bridge Co. v. Pough- keepsie Silk Go 315 N. Y. Banking Co., Boisgerard v. . . Ill 113, 130, 178 N. Y. City Bank, in re 181 N. Y. Cons. Stage Co., Smith v 456 N. Y. & E. Bank, Upton v 301 N. Y. Fire Ins. Co. v. Ely 18, 313 N. Y. Fire Ins. Co. v. Sturgis.. 313, 364 N, Y. Life Ins. Co. v. Universal Life Ins. Co 410 N. Y. Life Ins. & Trust Co. v. Beebe 166 169, 365 N. Y. L. M. Co., Strong v 376 N. Y. L. & W. R. R. Co., in re 377 N. Y. Nat. Exchange Bank, Seeley V 315, 540, 545", 578 TABLE OP CASES. xliii PAGE. N. T. & N. H. E. E. Co. v. Schuy- ler 543 N. Y. T. & L. Co. V. Helmer 311 N. Y. & Eosendale Lime Co., Deinke V 421, 425 N. Y. S. Mut. Ins. Co., Donadiv. . . 403 N. Y. TJ. & O. R. E. Co., Loder V. . 409 439 Niagara Bank, in re 390 Nickels v. Rock Caty Bank 872 Nicoll V. N. Y & Erie R. E. Co. . . . 363 N. J. S. R. R. Co., Allen v 418 Noble V. Halliday 388 Noble, Pettilou v 577, 629, 630 North Amer. Life Ins. Co., Attor- ney-General Y 426, 436 North, Silver Lake Bank v 539 North Amer. Trust & Banking Co., Tracy V 178 Northern R. R. Co. v. Miller. . 366, 370 Northrup v. Shook 615 Norwood; McCullough v 433 O. Gates V. National Bank 575 O'Brien, Butterworth v 231, 376 O'Brien v. Mechanics & Traders' F. Ins. Co 444 Ocean Nat. Bank, First Nat. Bank v. 534 0. F. B. Co. V. Fish 359 Ogdea, Osgood v 199 Ogden V. Raymond 326, 337 Ogdenv. RoUo 460 Ogdensburgh & Cent. E. R, Co. v. Ver. & Can. R. R. Co 403 O'Hare v. Second Nat. Bank 579 Olean Nat. Bank v. Carll 583 Oliver Lee & Co.'s Bank, in re 186 Oneida Bank v. Ontario Bank 164 Onondaga Co. Bank, Lake Ont. Nat. Bank v 395 Ontario Bank, Barnes v 128 Ontario Bank v. Bunnell 41 Ontario Bank, Oneida Bank v 164 Ontario Bank v. Schermerhorn. 166, 312 Open Board of Brokers, in re. . . . 400 Ordway v. Central Nat. Bank. . 593, 631 Oregon R. E. & Nav. Co , Erwin v. 411 Orim v. Merchants' Nat. Bank. . . . 537 Osborn v. Byrne 600 O.sborne v. Bank of United States. . 516 523, 577 Osgood v. Ogden 199 Osgood, Pardo v 385 Osgood, Receiver, v. De Groot. . . . 385 Owen v. Smith 303, 867 P. Packer, Southern L. & Trust Co. v. 375 Pacific Mail S. S. Co., Bach v 438 PAGE. P. M. S. S. Co., Eichmond v 385 Pacific Nat. B'k, Market Nat. B'k v. 608 Pacific Nat. Bank, Raynor v 609 Pahquioque Bank, Bank of Bethel V 193, 603 Paine, Receiver, v. Barnum 386 Paine, Eeceiver, v. Irwin 263 Paine, Eeceiver, v. Mead 258, 264 Paine, Receiver, v. Trustees 278 Palmer, Leavitt v.... Ill, 166, 168, 171 172, 566 Palmer, Eeceiver, v. Lawrence. 113, 114 453 Palmer v. Yates 227 Pape V. Capital Bank 536 Pardee v. Fish 361 Pardo V. Osgood 385 Park Bank, Artisans' Bank v 413 Parker v. Davis 517 Parker V. C. Co., People v 454 Parmley v. Tenth Ward Bank 100 Patterson, Bank of Columbia v . . . . 364 Patterson, Eeceiver, Matter of .... 301 Patterson v. Syracuse Nat. Bank. . . 117 Pattisou V. Syracuse Nat. Bank 534, 596 Paulding v. Hudson M'f g Co 449 Payne v. Gardner 603 Payson, Turnbull v 543 Peckham v. Burroughs 608 Pelham v. Adams 173 Pell, State of Ohio v, 170 Pell, Talmage v. . 20, 29, 34, 111, 117 131, 140, 166, 170, 179, 230, 365, 436 437 Pelton V. Commercial Nat. B'k .... 590 Penniman, Briggs v 413, 421 Pentz V. Hawley 201 Pentz, Mann v. 365, 418, 438 People V. Alb. Hospital 373 People V. Alb. & Sus. E. R. Co . . . . 448 People V. Alb. & Vermont R. R. Co. 423 423 People V. Assessors 11, 42, 131, 321 People V. B. H. T. & W. E. Co. 483 447 People V. Bank of Hudson 432 People V. Bank of Niagara 433 People V. Bank of Washington and Warren 433 People V. Barton 44, 313 People V. Board of Education 43 People V. B. & A. E. E. Co 358 People V. Bowen 358, 366 People V. Brewster 813, 318 People V. Bruff 416, 437 People V. B. T. & C. I. E. E. Co . . . 448 People V. Central Bank 181 People V. Cohocton 448 People V. Commissioners ... 43, 44, 45 46, 212, 319, 320, 589, 591 xliv TABLE OF CASES. PAGE. People V. Common Council 447 People V. Couklin 447 People V. C. S. Road 433, 433 People V. Cummings 873 People V. Dolan 41, 320, 324 People V. Doty . 112, 302 People V. Draper 447 People V. Falrchild 447 People V. Globe Mut. Life Ins. Co. . 425 439 People V. Hills 447 People V. L. S. & M. S. R. R. Co. . . 235 369, 375 People V. Manhattan Co 21, 365 People V. Mayor 448 People V. McCullougli 447 People V. Mechanics and Traders' Sav. Institution 268, 269, 272 People V. M. P. Ins. Co 323 People V. Miner 447 People V. Mutual Trust Co 240 People V. Mutual Union Telegraph Co 432 People T. Parker V. C. Co 454 People V. President 312, 422 People V. Security Life Ins. Co. 387, 437 People V. Supervisors 351 People, Supervisors V. 131, 132, 1G6, 465 People V. Thacher 447 People V. Tobacco Mfg Co 483 People V. Troy House Co 366 People V. Vail 103 People V. Walker 422 People V. Weaver 589 People's Bank v. Qridley 543 People's Bank v. Mechanics' Nat. Bank 608 People's Bank v. Nat. Bank 534 People's Fire Ins. Co., Feeny v. 364, 408 People's Nat. Bank, Charleston v . . 544 Phcenix Glass Co., Beer v Ill Persse & B. Paper Works v. Willet. 410 Peru Steel and Iron Co. , Bliven v . . 395 431, 433 Peterborough, First Nat. Bk. v. 590,. 591 Peterson v. Chemical Bank 411 Pettilou v. Noble 577, 629, 630 Phelps, City Nat. Bank v 313, 315 Phila. Warehouse Co., Anderson, Receiver, v 541 Phillips, Gillett v 324, 226 Phoenix Bank, Downes v 412 Phoenix Warehousing Co., Nat. B'k V 314, 531, 632 Pierson, First Nat. Bank v 536 Pittsburgh R. R. Co., Fifth Nat. Bank v 537 Piatt V. Beebee 598, 632 Piatt, Bruce v 361 Piatt, Receiver, v. Beach 571 PAGE. Piatt, Receiver, v. Bentley 600 Piatt, Receiver, Matter of 600, 627 Plimpton V. Bigelow 402, 404, 443 Plymouth, Knight V 281 Pollard, Gardner v 417, 418 Pollard V. Zuber 590 Poole, Bard v 313 Pope V. Terre Haute C. & M. Co. 403, 404 Potter V. Bank 314 Potter V. Bank of Ithaca 108, 138 Potter, We.st Reserve Bank v 314 Poughkeepsie Silk Co., N. H. & Del. Bridge Co. v 315 Pratt v. Eaton 76, 310, 311, 338 Pratt V. Short 310, 311 President v. R. R. Co 117 President, People v 312, 433 Price, Receiver, v. Yates 600 Pruyu V. Van Allen. . 181, 190, 201, 305 361 Pullman v. Upton 541 P. V. Utica Ins. Co 311 P. Warehousing Co. v. Badger .... 113 Pyrolusite Manganese Co. , in re ... . 895 398, 399, 400 Queens Ins. Co., Gibbs v 404, 411 Quicksilver Mining Co., Barclay v. . 383 R. R. Co., in re 280, 235, Railroad Co. v. Johnson Railroad Co. , Maryland v R. R. Co. , President v Radbourn v. Utica, I. & E. R. R. Co. Ramsey v. Erie R. R. Co Rankin v. Elliott Rathbone, Codd v 128, 130, 168! Rathbun, Smith v 416, 417, Rawdon, Austin v Raymond, Nat. Bank v Raymond v. Ogden 326, Raynor v. Pacific Nat. Bank Rea, Hackettstown Nat. Bank v Read, Concordia Savings & Aid As- sociation V , . Receivers, Holbrook v 385, Reddington v. Mariposa Reciprocity Bank, in re. . . 188, 204, Reciprocity Bank, Matter of Redmond v. Enfield Mfg. Co Redmond v. Hoge ] Reichmann v. Manhattan Co .'. . Rex, First Nat. Bank v Richmond v. P. JA. S. S. Co. . ....' Rinn v. Astor Fire Ins. Co 426, Robinson v. Bant of Attica . 113 228! 236 519 519 117 419 415 428 364 418 889 538 227 609 814 408 893 403 205 207 361 412 413 445 584 •:r;j j;i7 226 371 TABLE OP CASES. xlv PAGE. Robinson, Jones v 198 Robinson v. Nat. Bk of New Berne. 443 608 Robinson v. Robinson 383 Robinson v. Smith 415 Rocbe, Knapp, Receiver, v . . . 363, 377 Rochester v. Barnes 358 R. C. Bank, M. v 335 Rochester City Bank, Nickels v 873 Rochester & State Line R. E. Co., Wilkie V 438 Rochester S. P. V. Co., Chamberlain V 395, 898, 400 Rockaway Beach Imp. Co., Attrill V 487, 439 Rocky Mountain Nat. Bank, Union, etc., V 605 Rogers, East River Bank v 408 Rogers v. Jones 360 Rollo, Ogden v 460 Rondout & Oswego R. R. Co., Mid- dletonv 438 Roosevelt v. Brown 373 Rosecrans, Libby v 384 Rosenback v. Mf rs & Builders' Bk. 438 Rosenback v. Manf s & Traders' Bk. 301 Rosenback v. Salt Springs Nat. Bk. 133. Rosenblatt v. Johnson 591 Rossie Lead Mining Co., Moss v.. . . 363 Russell, Levin v 381 Rutter V. Boyd 445 Ryan.Colev 113 Kyan v. Manf s & Merchants'Bank. . 138 130 S. S. V. Railroad Case, in re. 873 Sacket, Cross v 460 Sacketts Harbor Bank v. Codd 174 SafEord v. WyckofE . . 140, 164, 165, 166 167, 173, 310 Sage, et al.. Matter of 869 Sagory v. Dubois 179, 453 Salina Bank, Henry v 339, 374 Salter, Hunn v 364 Salt Springs Nat. Bank, Rosenback V 133 Sanborn, Blake v 369 Sandsv. Hill 388 Santos, Bowden v 541 Santvoord, Merrick v , 418 Savatin, Dechous v 383 Savery, Atlantic State Bank v.. 117, 118 136, 574 Savery, Atlas Nat. Bank v 536 Savings Bank, Huntington v 389 Savocool V. Boughton 330 Sawyer, Bailey, Receiver, v 603 Sawyer v. Hoag 541, 599 Scanunon v. Kimball 600 PAGE. Schermerhom, Ontario Bank v. 166, 313 Schermerhorn v. Tolman 313 Schieb v. Baldwin 444 Schieffelin, Beecher v. , 416 Schoenwald v. Met. Sav. Bank 368 School Directors, Hepburn v 590 Schrauth v. Dry Dock Savings Bk . 370 Schrieber, Weiller v 443 Schuyler, Bridgeport Bank v. .... . 579 Schuyler, N. Y. &N. H. R. R. Co. v. 543 Scott V. Depeyster 416, 417 Scott V. Eagle Fire Co 333 Scott V. Johnson 336 Searight v. Calbraith 535 Second Ave. R. R. Co. , Coleman v. . 456 Second Nat. Bank v. Burt 139 Second Nat. Bank, Main v 576, 630 Second Nat. Bank, O'Hare v 579 Security Bank v. Bank of Common- wealth 193 Security Life Ins. Co., People v. 387, 437 Seeley v. N. Y. Nat. Exchange Bk. 315 540, 545, 578 Seignouret v. Southern Bank 413 Selden v. Equitable Trust Co 615 Shaw V. Van Rensselaer 443 Sherman, Cumberland Coal Co. v. . 416 Sherwood, Furniss v 337 Shoemaker v. Nat. Mechanics' B'k . 534 578, 605, 638 Shook, Northrup v 615 Short, Pratt v 310, 311 Silk Co., Bridge Co. v 813 Silver Lake Bank v. North 539 Simmons, Commercial Bank v 630 Sistare v. Best, Receiver 391, 393 Skiddy, Morgan v 457 Slee V. Bloom 433 Small, Herkimer Mfg Co. v 453 Smalley, Bank of tJtica v 334 Smith V. Am. Coal Co 186 Smith, Burrows v 113 Smith, Connecticut Bank v 408 Smith V. Danzig 436 Smith, Dooly v 519 Smith V. Exchange Bank 536 Smith V. Mahon 405 Smith V. Lansing 117 Smith V. McNamara 443 Smith V. N. Y. Consolidated Stage Co 456 Smith, Owen V 363, 367 Smith V. Strong 172 Smith V. Rathbun 416, 417, 418 Smith, Robinson v 415 Smith, Ward v 533 Smith & Warner v. Strong 166 Smoot V. Heim 444 Smyth, Willis v 371 Southern Bank, Seignouret v. .... . 413 xlvi TABLE OF CASES. PAGE. Southern Life & Trust Co. v. Packer. 375 SpofEord V. Nirst Nat. Bank 537 Sprague, Ely v 114 S., Receiver, v. Dubois 114 Stafford Nat. Bank v. Dover 591 Stanley, Supervisors v 321, 590 Stanton, Receiver, v. Wilkeson. 599, 602 Stanton v. Wilson 128, 453 Star Printing & PubHshing Co., Baker v ... 408 State V. City of Newark 591 State V. Fuller 585, 631 State V. Stimson 459 State Nat. Bank, Cooke v 443, 531 570, 576 State Nat. Bank, Merchants' Nat. Bank v 535, 543, 565, 570 State of Ohio v. Leavitt 117 State of Ohio v. Pell 170 State of Tennessee v. Davis 128 Staten Island R. R. Co.. Landers v. 441 Stauffer, First Nat. Bank v 570 St. L. Bank, Bank Commissioners v. 34 117, 140, 166, 169 St. Louis Nat. Rank v. Brinkham. . 577 630 Stetson v. Faxon 418 Stevens, Bolander v .... 34 Stevens, Columbia Ins. Co. v 391 Stevens, .Davis v 541, 548, 601 Stimson, State v 459 Storm, Adderly v 181, 541 Strong v. Amer. Life Ins. Co 312 Strong, Ferris v 415 Strong v. N. Y. L. M. Co 376 Strong V. Smith 236, 373 Strong, Smith v 173 Studvfell, Huguenot Nat. Bank v.. 418 Studwell V. Charter Oak Ins. Co. . . 445 Sturgis, Bank of Mutual Redemp- tion V 444 Sturgis V. Crovrninshield 533 Sturgis, N. Y. Fire Ins. Co. v. . 312, 304 Sturgis V. Vauderbilt 415, 433 Supervisors, Bank v 532, 633 Supervisors, People v 351, 465 Supervisors v. People 131, 133, 166 Supervisors v Stanley 331, 590 Suydam v. Moore 366 Swaizy v. Union Mfg Co 417 Swift V. Beers 164, 166, 168, 173 Swits.'Moss V 103 Syracuse City Bank v. Davis 357 Syracuse Nat. Bank, Pattison v. 534, 596 Syracuse Nat. Bank, Patterson v . . 117 Syracuse Sav. Bank, Qelster v 269 Taintor, United States v 584 Tallmadge v. Fishkill Iron Co 371 PAGE. Talmage v. Pell. ... 30, 39, 84, 111, 117 131, 140, 166, 170, 179, 330, 365, 436 437 Ta:lman, Barclay V 413 Tammany Society, Thompson v. 335, 373 Tannehill, Hetzel v 403 Tapley v. Martin 533, 633 Tappen v. Merchants' Nat. B'k. . 46, 589 Tartter, New Amsterdam Savings .Bankv 368 Tatham, McGraw v 369 Taxpayers of Kingston, in re 358 Taylor v. Bruen 314 Taylor v. Hutton 530, 533 Taylor, Venango Nat. Bank v. . 600, 601 Tenth Ward Bank, Parmley v 100 Terre Haute C. & M. Co., Pope v. . . 408 404 Terrell, Case v 600 Thacher, People v 447 Thatcher v. West River Nat. Bank. 533 553, 560, 633 Thiel, Best v 362 Thingvalla Steamship Co., Bingston V. 408 Third Nat. Banlc v. B-lake 537 Thomas v. Dakin 88, 43 Thompson v. Brown 381 Thompson v. Tammany Society. 235, 373 Thompson, Hoyt v 436 Tiffany v. Boatmen's Savings Inst . . 575 Tiffany v. Nat. Bank.. 516, 530, 574, 575 Tillman, U. Ins. Co. v 115 Tinkham v. Borst 867, 418 Titusville, Nat. Bank v 590 Tobacco Mfg Co., People v 483 Tolman, Schermerhorn v 813 Tower v. Hale 367, 433 Tracy, Cadle v 576, 627 Tracy v. North American Trust and Banking Co 178 Tracy v. Talmage. 118, 164, 166, 171, 310 Troy House Co. , People v 366 Troy & Rut. R. B. Co. v. Kerr 366 Trustees, Paine, Receiver, v 278 Trustees v. Tryon 409 Turnbull v. Payson 543 Turner, Grookshanks v 416 Twenty-third St. R. R. Co., Central Cross-Town R. R. Co. v 445 Tylee, Leavitt v 227 Tylee V.Yates 166, 170 Tyler v. Yates 164 U. Union Bank v. Mathews 537 Union, etc., v. Rocky Mdunta^n Nat. Bank . . .'. 605 U. Ins. Co. V. Caldwell 115, 311 U. Ins. Co. V. Tillman 115 TABLE OF CASES. xlvii PAGE. Union Manfg Co., Swaizy -v 417 anion Nat. Banli, Hagar v. . . 578, 580 Union Nat. Bank v. Miller. . . . 576, 577 Union Nat. Bank, Wilder v. . . 577, 638 630 U. S. Bank, Fleokner v. . . 535, 536, 537 U. S. Bank v. Bank of Georgia . . 523 United States, Branch v 551 United States v. Bennett 562 United States v. Britton 584, 585 United States, Cook County Nat. Bk V 601, 604 United States Fire Ins. Co., U. S. Trust Co., Receiver, v 183 United States v. FisUer 521 United States v. Graff 333 United States v. Knox .... 183, 548, 604 U. S. Metallic Spring Co., Van Pelt V 441 United States, Merchants' Nat. Bk v. 617 United States, National Bank t . . 523 United States v. Taintor 584 U. S. S. S. R. Co., Galway v 436 U. S. Trust Co., Receiver, v. Brady. 357 360 U. S. Trust Co. V. Harris 321 U. S. Trust Co., Receiver, v. U. S. Fire Ins. Co 183 Universal Life Ins. Co., N. Y. Life Ins. Co. V 410 Upton V. Nat. Bank 538 Upton V. N. T. & E. Bank. 301 Upton, Pullman v 541 Utica Ins. Co., P. v 311, 314, 315 Utica I. & E. R. R. Co., Radbouru v. 419 U. & S. R. R. Co., M. B. Co. V 359 Vail, People v Valk V. Crandall 130, Van Allen v. Assessors 44, Van Allen, in re 198, 385, Van Allen, Pruyn v. . 181, 190, 201, Van Antwerp v. Hubbard Van Antwerp v. Hulburd 555, Van Brunt, Van Cott v Van Campen, Matter of Van Cott V. Van Brunt Vanderbilt, Murray v Vanderbilt, Sturgis v 415, Van Duzer, De Groot v 313, Van Dyck, Hun, Receiver, v Van Dyck v. McQuade . . . 199, 251, Van Dyck, Metropolitan Bank v. . . . Van Hoesan, Carr v Van Leuven v. First Nat. Bank .... Van Nostrand, Hoffman v 103 453 589 389 205 361 628 603 439 584 439 413 433 315 363 390 460 149 153 443 535 367 PAGE. Van Pelt v. U. S. Metallic Spring Co 441 Van Rensselaer, Shaw v 443 Van Vranken, Alb. City Ins. Co. v 426 Varuum, Commercial Bank v ... 174 Veazie Bank v. Fenno 516, 522, 533 531, 616, 617 Venango Nat. Bank v. Taylor. 600, 601 Vermont & Canada R. R. Co., Ogd. & C. R. R. Co. V 403 Verplank v. Mercantile Ins. Co. . . . 436 Village of Fredonia, Miner v 108 Vough, Young v 533 W. Wakeman v. Dalley 456 Walker, Hale v 541 Walker, People v 432 Ward V. Smith 523 Warner v. Beers. . , 34, 42, 131, 164, 165 Warren, Bank of Vergennes v . . . . 334 Waterbury, in re 391 Watertown Fire Ins. Co. , Wells v . . 445 Way V. Keyport Steamboat Co. . . 413 Wayne v. Commonwealth Nat. Bk. 533 Weaver, People v 589 Weaver, Williams v 45, 330 Weber v. Weber 268 Weckler v. First Nat. Bank. . . 534, 535 Weed, Davis v 548, 549, 601 Weiderwas, Bingham v 363 Weiller v. Schrieber 443 Wellington, Nelson v 336 Wells V. Watertown Fire Ins. Co . . 445 West Bradley & C. M. Co., Driscoll V 363 West Chester Iron Co., in re 397 Western v. Charleston City Council. 533 Western Bank v. City Bank of Co- lumbus 413 Western Union Tel. Co., Williams V 446 Weston V. Charleston 516 West Reserve Bank v. Potter 314 West River Nat. Bank, Thatcher v. 533 553, 560, 683 Wheelan v. Millar 429 Wheelan Morris v 447 Wheeler v. National Bank 576 Wheelock v. Kost 542, 549, 609 White, Buckingham v 444 White, McCoon v 442 Whitehall Mf g Co. , Bigelow v. . . . 441 White's Bank of Buffalo, Nash v. . . 135 Whitney, Crocker v IIP Whitney, Nat. Bank v 537 Whittlesey v. Frantz 409, 435 V.'ilder v. Union Nat. Bank. . . 577, 6'28 Wiley V. First Nat; Bank 534 xJviu TABLE OF CASES. PAGE. Wilkeson, Stanton, Receiver, v. 599, 602 Wilkie V. Rochester & State Line R. R. Co 438 Willard, Leonardsville Bank v. 113, 128 Willet, Persse & B. Paper Works V 410 Williamsburgli Sav. Bank, Allen v. 268 Williams, Donnell v 443 Williams, Lelimau v 443 Williams v. Weaver 45, 320 Williams v. W. U. Tel. Co 446 Willis V. Smytt 271 Willougkby, Comstock y 118 Wilson, Balch v 608 Wilson, Stanton v 138, 458 Wood, Butts V 381, 416, 417, 456 Wright V. First Nat. Bank 575 PAGE. Wyckoff, SafEord v . . 140, 164, 165, 166 167, 173, 310 Y. Yates, Leavittv. . Ill, 113, 118, 166, 170 314 Yates, Palmer v 327 Yates, Price, Receiver, v 600 Yates, Tylee v 166, 170 Yates, Tyler v 164 Yerkes v. National Bank 535 Young v. Vough 533 Z. Zautziugers v. Gunton 538 Zuber, Pollard v 590 Zugner v. Best, Receiver 358 HISTORICAL SKETCH OF THE BANKIlSra METHODS OP THE STATE OF NEW YOKK, .INOLUDING THOSE EMPLOYED BY BANKS, BANKING ASSOCIATIONS, INDIVIDUAL BANKERS, SAV- INGS INSTITUTIONS AND OTHER MONEYED CORPORA- TIONS. BANKING METHODS, AKTIOLE I. Banks, Banking Associations and Individual Bankees. It is one of the most remarkable of phenomena that the first bank ever established won a success unequaled in later times. The Bank of Venice had its origin in 1111, from a forced public loan raised to fit out a fleet, and is the first appearance of a public funded debt. Every citizen was obliged to contribute the one-hun- dredth part of his possessions.* The persons assessed were then organized as a chamber of loans for their common protection, and for the receipt of the yearly interest of four per centum. Subse- quently, its creditors were permitted to transfer their claims to others, in whole or in part. The government, finding that these transfers were in demand, reduced the rates of interest until no inter- est was paid. Afterward, it sold cash inscriptions of credits on its books. These inscriptions cost gold, but were not convertible into gold. As a matter of fact, although termed a bank, its issues were government paper, and" its business was carried on solely for the benefit of the public treasury.f This bank was destroyed by the invasion of the French in 1797. For two hundred years the Bai^k of Venice stood alone. The magistrates of Barcelona created the Table of Exchange in that city, which was a bank of exchange and deposit. Six years after, the Banic of Genoa came into existence under the title of the Chamber of St. George. It was controlled by eight protectors, elected yearly by the stockholders and other creditors. The Bank of Amsterdam was founded January 31, 1609.;!: The commerce of this city involved such a variety of transactions that the expediency of regulating them became evident, and the magis- trates, under the authority of the United Provinces, declared them- selves the perpetual cashiers of the inhabitants, and declared that * Paine's Mass. Paper Currency, 50. t Moulton's Science of Money, 66. JQoddard's Hist, of Banking Inst., 11. 4 HISTOEIOAL SKETCH. all payments above 600 gilders and bills of exchange should be made in the bank. Merchants were, therefore, obliged to open ac- counts with it, and the beneficial effects of this institution in Holland were immediately recognized, and the bank money at once com- manded a premium. Before the creation of the Bank of England* there were but four * The Charter of the Bank of England contained the following noticeable provis- ions : Pkohibition against Teabing. — "And to the intent that their Majesties' subjects may not be oppressed by the said corporation, by their monopolizing or engrossing any sort of goods, wares or merchandises — Be it further declared and enacted by the authority aforesaid, that the said corporation to be made and created by this act shall not, at any time during the continuance thereof, deal or trade, or permit or suffer any person or persons whatsoever, either in trust or for the benefit of the same, to deal or trade with any of the stock, moneys, or effects of or any ways belonging to the said corporation, in the buying or selling of any goods, wares, or merchandise whatsoever, " except bullion. The penalty for a vio- lation of the foregoing prohibition was declared to be a forfeiture of treble the amount of the goods or merchandise so purchased or traded for, to be recovered by action of debt, wherein no privilege, injunction, restraint, protection or wager of law should be allowed. § 37. Loans to the KtNG Pkohibitbd. — By section 30 the bank was prohibited from loaning or advancing any sum of money to their Majesties, their heirs or successors, without the authority of Parliament ; and from purchasing lands or revenues belonging to the Crown ; and the penalty for a violation of this prohibi- tion was a forfeiture of treble the amount loaned, one-fifth to go to the informer. Trading in Bullion Allowed.— By the 28th section it was provided that the bank might buy and sell gold and silver bullion, and bills of exchange ; and might sell goods really and hona fide left or deposited for money lent thereon, if not re- deemed at the time agreed on, etc. Statutes at Large, quarto ed., vol. Ill, p. 558. The Bank of Scotland. — The act of the Scotch Parliament, creating this in- stitution, declares "that it shall not be lawful " for the managers, etc., of this bank, " on any pretense whatever, to follow any other trader with the joint stock to be employed in said bank, or any part thereof, or profits arising therefrom," than that of banking ; and the same act provides that if the directors should be found guilty of lending, on account of said bank, any money to the King, they shall be liable for every such fault, to triple the value of the money so lent. The Bank of Ikblanb. — The act of Parliament establishing this corporation prohibited loans to the King, and provides, " that to the intent that the subjects of the Kmg may not be oppressed by the said corporation, by their monopoly of any goods, wares or merchandise, it shall only be lawful for the corporation to deal in bills of exchange or in buying or selling bullion, gold or silver, or in sell- ing any goods, etc., really and bona fide left or deposited with the said corpora- tion for money lent or advanced thereon and not redeemed at the time agreed on.'' The Bank of France is " forbidden to traffick in any thing except money." Kee's Encyclo., article "Bank ;" Cleveland's Banking Laws, ix ; Lawson's Hist, of Banking, 362 ; 1 McCuUooh's Diet. 121 ; Levi's Mercantile Law, 157. HISTORICAL SKETCH. 5 large banks in Europe. Its charter was granted by William and Mary, July 27, 1694, for the period of twelve years, determinable on a year's notice ; the original capital subscribed by the proprietors was £1,200,000 in consideration of loaning the government the same sum for which they received a yearly interest of eight per centum. The Bank of Scotland dates from 1695; the Bank of Ireland was not established until 1Y83. Bank of ISToeth Ameeica. The incorporation, in the year 1781, of the Bank of North America, the first duly organized bank in the United States, was chiefly due to the efforts of Robert Morris, a man of distinguished financial ability, and a representative of Pennsylvania in the Continental Con- gress. The bulk of the circulation for some time previous, consist- ing of bills of credit, which Congress was obliged as were also several of the States to issue, in order to obtain supplies for the support of the army, the credit of both Congress and the States having been almost entirely exhausted, became so depreciated in value that it was impossible to secure the necessaries of life for the soldiers, who became dissatisfied, and it was greatly feared that the cause for which our people had suffered must ultimately be abandoned. The substantial aid furnished by this bank to the financial depart- ment of the government not only inspired our leaders with confi- dence, and infused fresh vigor into our troops, but also proved an able auxiliary in the expulsion of the British from our shores and estab- lishing American independence.* It came into existence as the result of a meeting of citizens of Philadelphia, which was called to consider plans for the purpose of raising money for the greater needed relief of the revolutionary army. At this meeting, held June 17, 1780, a resolution was adopted to open a security subscription to the amount of £300,000, Pennsylvania currency real money. The following articles were incorporated in the plan submitted by the promoters of the bank to Congress. " Item. That the Board at every quarterly meeting shall choose two directors to inspect and control the business of the bank for the ensuing three months. Item. That the inspectors so chosen shall, on the evening of every day, Sundays excepted, deliver to the Su- *Moulton"s History of Banks, 1. 6 HISTOEICAL SKETCH. perintendent of the Finances of America a state of the cash account, and of the notes issued and received."* The bank was established at tlie close of 1781 with a recommenda- tion by Congress that the several States should grant charters to the institution. This was done by Pennsylvania on the 1st of April, 1782. * Wlietlier from the want of capital in individuals, or from want of faith in the institution, in the fall of the year 1781, of the one thousand shares proposed, two hundred had not been subscribed, and it was some time after the business of the bank was fairly set a going before the sum received, upon all the subscriptions put together, amounted to $70,000. Under these circumstances the Superin- tendent of Finance subscribed above 1250,000 of the bank stock, for account of the United States. Upon this fund principally the operations of the institution were commenced. The bank was soon viewed as the source and as the support of credit, both private and public. In the beginning of the year 1782, the United States owed considerable sums of money. The requisitions of Congress for $8,- 000,000 for the expenses of the coming year did not call upon the States to pay before the first of April, and in fact they produced no effect for some time after, and even on the 30th June the sum paid in did not amount to $30,000. "At that period the public credit had gone to wreck, and the enemy built their most sanguine hopes of overcoming us upon this circumstance; but at that crisis our credit was restored by the bank." The treasury of the United States was so much in arrear that scarcely was the public money paid in with the one hand, before it was necessary to borrow it with the other. On tne 1st of April, 1783, the United States possessed stock in the bank to the amount of $252,918 28-90, and they were then indebted to the bank for money borrowed, $300,000. On the 1st of July, 1782, the United States held $253,000 28-90 in stock, and were indebted to the bank ^400,000. The directors some time after, becoming uneasy at this heavy loan, called for payment ; in consequence of which the Superintendent of Finance sold out stock held by the United States to the amount of $200,000, and paid $300,000 in part of the debt ; so that on the 1st of January, 1783, the United States held stock for not quite $54,000, and owed the bank $100,000. On the stock owned by the United States, they received a dividend from ten to sixteen per cent per annum, and paid but six per cent upon what they borrowed, but the direct loans of the bank were obtained by discounting the notes of indi- viduals, and thereby anticipating the receipt of public money ; besides which, the persons who had contracted for furnishing rations to the army were also aided with discounts upon the public credit. And in addition to all this it must be ac- knowledged that the credit and confidence which were revived by means of this institution, formed the basis of that system through which the anticipations made, within the bounds of the United States, had upon the 1st day of July, 1783, exceeded $820,000. There was due also upon that day to the bank (directly) nearly $130,000. If, therefore, the sums due (indirectly) for notes of individuals discounted, and the like, be talcen into consideration, the total will exceed $1,000,- 000. It may then be not only asserted, but demonstrated, that without the estab- lishment of the National bank, the business of the Department of Finance could not have been performed. " HISTOEICAL SKETCH. 7 April 11, 1782, an act was passed by the Legislature of the State of New York, entitled " An act to prevent the establishment of any bank within this State, other than the Bank of North America, and for incorporating the same within this State." The act begins thus : " Whereas,' the United States, in Congress as- sembled, did on the 26th day of May, 1781, resolve in the words . following," the act then recites the ordinance of the Continental Congress, and adds the following section : " I. Be it, therefore, enacted by the people of the State of New York, represented in Senate a/nd Assemhly, and it is hereby enacted by the authority of the same. That the said bank mentioned in the said ordinance shall be, and is hereby, incorporated and made a body politic within this State, by the name and style of The Presi- dent, Directors, and Company of the Bank of Noeth America, with all and singular the powers, privileges, and immunities in the said ordinance specified; and that no other bank, public or private, shall be established within this State during the present wa/r with Great Britain, on pain of the forfeiture of one hundred pounds for every offense, by every person concerned in such bank or banks, But the United States were not alone benefited by this institution. The Legislature of the State of Pennsylvania, being unable to pay the officers of the army, granted them certificates, and mortgaged the revenue of the excise for payment of the interest. When the interest became due the revenue was not collected, and the distress of the officers was great. On that occasion, without any particular application, the bank advanced the money and took the reimbursement when the revenue was collected. Afterward, on the application of the Legisla- ture, they advanced £5,000 for the defense of the frontiers, when the enemy's row-boats took vessels within the very ports of Philadelphia, and the State had not the means of granting protection against so inconsiderable though insulting an enemy ; on that occasion the bank, by an advance of about £35,000, enabled the merchants to fit out a ship which, within a few days, not only cleared the bay and river, but captured a cruiser of twenty guns belonging to the British fleet. Op- position to this bank gradually increased in Pennsylvania. This antagonism was largely due to demagogism, and to fear arising from the fate of the Continental currency. In 1785, petitions poured into the Pennsylvania Legislature praying that body to repeal the bank's charter, and in September of that year, the Legisla- ture, powerless to resist the popular demand, repealed the charter. Two years later, however, in March, 1787, the bank obtained a new charter from the State, limiting its existence to fourteen years, and after successive renewals it became, December 3, 1864, a National banlc, with a capital of $1,000,000, and it is still in existence. Official Statement of the Accounts of the United States ; Lalor's !Encyclo. 207 ; Eees' Encyclo. Article " Bank "; Lewis' Hist. Bank of North America ; Hildreth's Hist., vol. 3, 405. 8 HISTOEIOAL SKETCH. being thereof convicted in the Supreme Court of judicature of this State ; which forfeiture shall go one-half to the complainant, and the other half to the treasury of this State." Two other sections follow, making it felony without benefit of clergy to counterfeit its notes, or for any of its officers or servants to convert any property of the bank to their own use, and it concludes with the following proviso : " Provided always, and it is further enacted, that nothing in this act contained shall be construed to imply any right or power in the United States in Congress assembled to create bodies politic or grant letters of incorporation in any case whatever." * FiEST AND Second Banks of the United States. The first Bank of the United States was incorporated February 25, 1791. The capital stock W9,s fixed at $10,000,000 ; $2,000,000 of which was subscribed by the government, to be refunded in ten annual installments. Twenty-five United States citizens constituted the board of directors, who served without pay. The notes of the bank were receivable for all debts due to the United States. The bank immediately went into operation. The government disposed of its $2,000,000 of stock within the specified time, realizing a profit of fifty-seven per cent on the original investment. The second Bank of the United States was incorporated April 10, 1816, and began business January 7, 1817. The capital was not to exceed $35,000,000,. and the charter required the directors to be resident citizens and to serve without pay. The bank was a public depository, and allowed to establish branches and issue circulating notes receivable in payment of debts due the United States, and, in consideration of the sum of $1,500,000 to be paid to the United States, it was agreed that no other bank, outside of the District of Columbia, should be established during the ensuing twenty years, the period of its charter. During the first three years of its exist- ence it encountered numerous obstacles, which almost resulted in failure, but after 1820 it gradually recovered and surmounted all op- position until July 16, 1832, when President Jackson vetoed the bill granting a re-charter. During the year 1833 the government deposits were removed from * Greenleaf s Ed. Laws, Vol. I, page 50 ; Lalor's Cyclo., 207 ; Flagg's Banks of New York, 1. HISTOEICAL SKETCH. • 9 the Bank of the United States to various State banks, by the order of the Secretary of the Treasury The bank continued its existence by obtaining a charter from the State of Pennsylvania, February 18, 1836. The disastrous history of the bank under this charter, from 1837 until its last failure in 1843, is shown by the enormous decline in the value of its stock from 137 in 1837 to 1| in 1843. On finally closing the affairs of the first Bank of the United States, the stockholders received a premium on the par value of their stock of eight and one-half per cent. The second Bank of the United States paid nothing to its stockholders, the entire capital of $28,000,- 000 having been sunk, although its charter contained substantially the same prohibitions and restrictions, but made more severe. The other creditors, however, were paid in full. The second bank in the United States, to be chartered by a State government and to begin business under such charter, was the Massa- chusetts Bank, which was organized under an act of the Legislature of Massachusetts in the year 1784.* With this partial glance at the chronology of banking, we pass to the special history of New York legislation on the subject. "When a colony, bills of credit were issued by authority of the colo- nial Legislature from time to time. Loan commissioners were ap- pointed for their supervision, and numerous controversies occurred with the home government relative thereto. There were no incor- porated banks here under the colonial government, f Three distinct and widely differing systems of banking have been successively adopted by the State government. The first lasted from 1791 to 1829; the second from 1829 to 1838. These systems, after a thorough trial, have been abandoned, while the third has been in force sinc6 1838. The present system is the basis of the National Banking Act, aud has gone into general use.:]: * This institution is still in existence in the city of Boston and is a National bank. Paine's Mass. Paper Currency, 51. f See note, ch, 71, Laws of 1813, Van Ness and Woodworth's edition. I Its most distinguishing principle and most useful feature is that, which requires ample security for the redemption in specie of all bank issues, and which has become a part of the Constitution of the State as follows : "The Legislature shall provide by law for the registry of all bills or notes issued, or put in circulation as money, and shall require ample security for the redemption of the same in specie " (Art. 8, § 6). In the year 1844, Sir Robert Peel practically carried into effect the same principle, in dealing with the Bsnk 2 XO HISTOKIOAL SKETCH. Bank of New York. March 21, 1791, about nine years after the granting of the pre- viously-mentioned charter to the Bank of North America, the Legisla- ture of this State passed an act entitled " An act to incorporate the stockholders of the Bank of New York ;" an institution which had car- ried on a banking business with a capital of $500,000, in the city of New York, since February 26, 1774. The State government had been in operation nearly fourteen years before any one of the banking com- panies doing business in this State was permitted to conduct its busi- ness under an act of incorporation.* The reason for this remark- of England on the renewal of its charter in that year. By the renewed charter (1844) of this institution, it is enacted that there shall be transferred, etc., "to the issue department of the Bank of England, securities to the value of £14,- 000,000, whereof the debt due by the public to the said governor and company shall be and be deemed a part." Stat. 7 and 8 Vict., ch. 32. "The object of this statute (Stat. 7 and 8 Vict., ch. 32) has been to obviate the chances of overissue and sudden fluctuations in the quality and value of money, by limiting the power to issue notes payable on demand," etc. * * « ' ' While the directors are left to manage the banking department at their discre- tion, their management of the issue department is subjected to what seems to be a well-devised system of restraint. The bank is allowed to issue to £14,000,000 of notes, upon securities (of which the debt of £11,015,100 lent by her to govern- ment is a part) ; and whatever paper the issue department may at any time issue • over and above thi^ maximum amount of securities, it must have an equal amount of coin and bullion in its coffers. Hence, it is impracticable for the issue depart- ment to increase its issues without, at the same time, proportionally increasing its stock of coin and bullion, or to diminish the latter without proportionally diminishing the amount of paper supplied to the public and banking depart- ment.'' McCuUoch's Diet., Lond. ed., 82-88; Lawson's Hist, of Banking, Amer. ed., 76, 77 ; Gilbart on Banking, Amer. ed., 61 ; Levi on Mercantile Law, 303 ; Cleveland,'s Banking Law, 84. *" A corporation aggregate is a collection of individuals united in one body, under such a grant of privileges as secures a succession of members without changing the identity of the body, and constitutes the members, for the time being, one artificial person or legal being, capable of transacting some kind of business like a natural person. It does not occur to my mind, that any thing else can be essential to the definition. Such a union as I have mentioned can only be effected under a grant of privileges from the sovereign power of the State. A corpora- tion is, therefore, said to be a legal being, or the mere creature of law. It is convenient, though not absolutely necessary, that this artificial person, like a natural one, should have a name by which it may be known and designated in the transaction of business. And when the doctrine was that a corporation could only contract by its seal, a seal was said to be an indispensable requisite. So, immortality was once thought to be an attribute of all corporations ; but that now HISTOEICAL SKETCH. 11 able fact is to be found in the condition of affairs that then existed. The Continental paper money system had caused such severe losses that the representatives of the people were unwilling to countenance the creation of a corporation, the establishment of which seemed to favor, however remotely, the issuing of paper money by any associ- ation whatever, and this charter expressly states : " It shall not be lawful for the said corporation to emit any notes, or contract debts which -shall be payable in the bills of credit emitted by the laws of this State." * This, the first bank f charter granted in this State, after the act incorporating the Bank of North America, was substan- tially the model upon which all the bank charters granted in this State were framed, before the year 1825, at which time the form of these acts was changed, and new and more stringent prohibitions and restrictions were enacted by the Legislature. Its original capital was $900,000. April 10, 1792, the Bank of Albany was chartered (ch. 61), with a capital of $,240,000. March 6th of the succeeding year, the Bank of Columbia was chartered (ch. 38), with a capital of $160,000. It was located at Hudson, where it was proposed to open a foreign trade and to establish the whale fishery business by a com- pany from Ehode Island.;]: Shortly after the organization of the Bank means no more than a continued succession of members for such period, whether long or short, as may be allotted to this legal entity by its creator." Beonson, J. The People ». The Assessors of Watertown, 1 Hill, 630. " It has been said, that the great distinction between the common joint-stock companies or partnerships, and corporations, is that in the first, the law looks to the individuals of whom the partnership is composed, and knows the partnership no otherwise than as being such a number of individuals ; while in the second, it seems only the creature of the charter, the body corporate, and knows not the individuals." Wordsworth's Law of Joint-Stock Companies, 4. The constitution of this bank, adopted at the time of its organization, contained the provision, ' ' No stockholder shall be accountable to any individual or the public for money lodged in the bank for a greater sum than the amount of his stock." Domett's Bank of New York, 14. During the seven years intervening between its creation and incorporation, the stockholders were severally liable for the whole indebtedness of the concern, despite the foregoing declaration^ * Section 9, ch. 37, Laws of 1791. f This institution has never passed a dividend except in 1837, whfen it was obliged to do so by law. Previous to its incorporation there is reason to believe it paid in dividends 48 per cent. Since its incorporation it has paid 862J per cent, maJdng a total payment to its stockholders, during one hundred years of existence, 910^ per cent. Don^ett's Bank of New York, 109. J Hammond's Hist., vol. 1, p. 334. 12 HISTOEICAL SKETCH. of New York, the State of New York subscribed $50,000, thus in- creasing its capital by that amount,* and again in 1832, made a like subscription.f Eestraining Act of ISOi. The Legislature, April 11, 1804, passed an act which is known as the Restraining Act of that year. It enacted that from and after * The State Comptroller, in his report under date of January 30, 1807, says : "In tlie act incorporating tlie Merchants' Bank, the State reserved to itself the right of subscribing for 3,000 shares of the capital stock of that institution, in addition to the stock already held ; and the act appropriated all such shares and the dividend thereon to the use of common schools. As it is already ascertained that the stock in this bank produces nine per cent per annum, it is respectfully submitted to the Honorable the Legislature to provide for taking the residue of the stock from time to time, as the payments on the several items of the school fund shall enable the Treasurer to pay for it, and to provide that thereafter the receipts into the treasury, on account of this fund, be loaned agreeably to the act of 3d April, 1805." The same officer, in his report under date of January 38, 1809, says: "The provis- ion should be a direction to invest in bank stock as the best means of securing the greatest as well as the most regular revenue. First, in the stock which the State has reserved to itself the right of subscribing for in various banks ; and secondly, in the purchase of bank stock in market. In the one case there is but little doubt that the amount invested would produce at least nine per cent per annum, and in the other at least seven. The shares which the State has a right to, and are proposed to be subscribed for, are in the stock of the Manhattan Company to the amount of $50,000 ; Albany Bank, $30,000 ; Columbia; Bank, $30,000 ; Hud- son Bank, $15,000 ; Fanners' Bank, $20,000 ; State Bank, $30,000, and the Mo- hawk Bank, $5,000." " The funds have been augmented since the last report $50,000 by an invest- ment to that amount, in the capital stock of the Manhattan Company ; $20,000 by an investment in the stock of the Bank of Albany ; $20,000 by an investment in the stock of the Farmers' Bank ; and $30,000 by an investment in the stock of the JS^ew York State Bank." Extract from Comptroller's report of February 6, 1810, referring to the Manhattan Company. t The right reserved by the State to subscribe to the stock of banks chartered by it was sometimes given as a gratuity, as will be seen by the following quota- tion : " And be it further enacted. That the right reserved to this State to sub- scribe to the stock of the Bank of Utica, be, and the same is hereby transferred to the College of Physicians and Surgeons of the Western district, with full power to dispose of the same, or any part thereof, in such way and manner, and at such times as shall by them be deemed most beneficial to the interests of the said college ; Provided, that on the said shares so to be subscribed, shall be paid mto the said bank a sum not exceeding the amount paid by the former stock- holders, and in like manner from time to time, as calls may be made by the direc- tors of the said banlc. And provided further, That no part, of the principal of the moneys arising from the sale of the said shares shall be appropriated toward the HISTOEICAL SKETCH. 13 the passing of this act, no person unauthorized by law should subscribe to or become a member of any association, institution or company, or proprietor of any bank or fund for the purpose of Issuing notes, receiving deposits, making discounts or transacting any other busi- ness which incorporated banks may or do transact by virtue of their respective acts of incorporation ; " and if any person unauthorized payment of the salaries of any of the professors or tutors of the said college. "' § 11, ch. 119, Laws of 1814. The following statement, in connection with the proposed establishment of a new bank during the year 1814, is taken from the Appendix to Southwick's edi- tion of the Laws of that year, p. 385. "Bank of Utica." "The Senate added a clause to the supply bill, as follows : ' And be ic further enacted. That it shall be lawful for the president and directors of the Bank of Utica, at any time after the passing of this act, to establish an office of discount and deposit in the county of Ontario, under such rules and regulations as are practiced in said banli:, and to commit the management thereof to not less than one president and twelve directors, to be appointed by the said Bank of Utica.' The Assembly rejected the said clause, and the Senate receded from their amend- ment by a vote of 15 to 7. Banks. The following applications were made : 1. For one bank at Cooperstown. 9. For one bank at Salem. 2. For two banks at Albany. 10. For one banlc at Norwich. 3. For one bank at Schenectady. 11. For one bank at Geneva. 4. For one bank at Johnstown. 12. For one bank in Ulster. 5. For one bank at Poughkeepsie. 13. For one bank in Onondaga. 6. For six banlsis at New York. 14. For one bank at Ballstou Spa. 7. For one bank at Auburn. 15. For one banlc at Canandarqua. 8. For one bank at Owego. 16. For one bank at Catskill. " Without entering into the merits of these several applications, it is sufficient to mention that the Senate, at an early part of the session, evinced a determi- nation to resist the incorporation of any further banking companies in this State. The Commission Company at New York, the North American Coal, and the New York Coal Company, gave rise to the most interesting debates, but the banking privileges applied for suffered the same fate with other similar applications. It was intended to have taken a brief view of the subject, so far as related to coal companies, etc. , but considerations not necessary here to state have induced us to be silent. A bill was brought into the Assembly ' to regulate bankers and banking associations.' It proposed to allow any company of persons, not exceed- ing ten in number, to transact the ordinary business of banking, such as discount notes, issuing bills, etc. The bill contained certain restrictions and penalties not necessary to detail. On the question to reject the bill, 66 voted to reject and 24 the contrary. Of course the bill was rejected." 14 HISTORICAL SKETCH. by law as aforesaid, shall hereafter subscribe or become a member or proprietor as aforesaid, he shall forfeit and pay for every such offense the sum of $1,000, to be recovered by any persoa who shall sue for the same, in an action of debt, one-half thereof to his own use, and the other half to the use of the people of this State ; and all notes and securities for the payment of money, or the delivery of property, made or given to any such association, institution, or company, not authorized as aforesaid, shall be null and void : Pro- vided, nevertheless, that nothing herein contained shall be held in any way to extend to the association in the city of Albany, known by the name of the Mercantile Company, nor the association in the city of ISTew York, known by the name of the Merchants' Bank, until the first Tuesday in May, 1805.'' And it was further enacted, "All unincorporated associations, institutions, or proprieties, formed for any of the purposes afore- said, that now exist in this State, shall, after the first Tuesday in May, 1805, cease to issue notes and to loan money ; and any person concerned or interested in the issuing such notes, or loaning any such money as aforesaid, after the first Tuesday of May, 1805, shall forfeit and pay, for every such offense, the sum of $1,000, to be recovered and disposed of in the manner prescribed in the first sec- tion of this act."* At this time, gold and silver were not in circulation, and bank paper was, generally speaking, the medium by which business affairs were conducted; the banks, therefore, had the complete right to emit the money of the people. The total bank capital actually invested at this time, exclusive of the capital of the Manhattan Company, did not aggregate $2,000,000.t Both the Merchants' Bank and the Mercantile Company, herein 'referred to, were private associations formed for banking purposes. The first-named:]: obtained a charter in 1805, and some of the pro- * Laws of 1804, 615. f Hammond's Hist., vol. 1, 331. X Extract from cJiarter of the Mercliants' Bank, in the eity of New York, incorpo- rated by chapter 43 of the Laws of 1805. " And he it further enacted, That the capital stock of said corporation, exclu- sive of what may be subscribed on the part of the State, shall not exceed |1,250,- 000, and that a share in the said stock shall be fifty dollars ; and further. That this State shall have a right to subscribe any number of shares in the stock of the HISTOEICAL SKETCH. 15 prietors of the Mercantile Company succeeded, in 1811, in procur- ing an act incorporating themselves and associates under the title of the Mechanics and Farmers' Bank of Albany. Under this restraining statute* all unincorporated associations, except those expressly mentioned, were compelled to close. The Eesteaining Act of 1813. April 9, 1813, the Legislature enacted a law that it should be in the power of the person administering the government of this State, or in his absence from the city of New York, of the common council thereof, to authorize and direct the removal of the public records of the said city to some safe place, and also, in case of danger from the enemy, to authorize and direct the temporary removal of the banks, insurance companies and other moneyed institutions from the said city without prejudice to their chartered rights in any respect whatever, and the directors of the said banks, insurance companies and other moneyed institutions during such temporary removal were thereby authorized to execute the powers and to carry on the business committed to them by law. Ch. 87, Laws of 1813. The first portion of the restraining statute of 1804 was made a part of the restraining act of 1813, which was passed April 6 of that year. The first section enacted that no person or persons whomsoever, within this State, should give or receive ip payment of any debt or demand ^'shatsoever, or in any way attempt or offer to circulate, any bank bill or promissory note of any banking company within this State or elsewhere, for the payment of money which should be for less than the nominal value of one dollar ; and that any person offending against this act, either as giver, receiver, or circu- lator of such bank bill or promissory note, should forfeit and pay the nominal amount or value of such bank bill or promissory note so said corporation not exceeding in tlie wliole three thousand, at any time wlien the Legislature shall, by law, authorize any person or persons for that purpose, and in consequence of the interest or stock which this State may hold in the said corporation the Treasurer of this State shall be ex-offioio a director of the said company. ''At common law the right of banking pertains to every member of the com- munity. Its free exercise can only be restricted by legislative enactment, but that it legally can be thus restricted has never been questioned. Grant on Bank- ing, 1. 16 HISTOKICAL SKETCH. given or received, or attempted or offered to be circulated ; the same to be recovered with costs of suit in any court within this State having cognizance thereof, by action of debt, by any person who should sue for the same, to his or her own use ; provided, that such suit or action be brought or commenced at any time within thirty days after the offense be committed. 2 R. L., eh. 11. This last act was passed because, while a prohibition was put on the formation of associations for banking purposes, individuals were free to establish banks and issue bills, and both they and the incor- porated banks had overwhelmed the country with paper money for six, twelve, twenty-five, fifty and seventy-five cent bills.* The re- striction in this law in reference to issuing biUs of the nominal value of less than one dollar was abrogated in 1815 imtil the end of the next session of the Legislature. Ch. 32, Laws of 1815. This second Restraining Act was, however, modified by an Explan- atory Act so as not to apply to the Manhattan Company as follows : " Whereas, the Chamber of Commerce of the city of New York have, by their respectful memorial to the Legislature, expressed ap- prehension that the bill passed both houses of the Legislature at the present session, entitled " An act to restrain unincorporated bank- ing associations," may be so construed as to subject individuals to inconvenient restrictions in their usual commercial business and pur- suits ; Therefore, for the removal of those apprehensions, IX. Be it enacted amd declared, That nothing in the said bill con- tained shall be deemed or construed to prevent any person, associa- tion or company from transacting or pursuing any business other than such as companies or banks, incorporated for the express pur- pose of banking, usually do or transact, nor shall any thing in the said act coritained be deemed or construed in any manner or way to affect the incorporation in the city of New York, created by virtue of an act entitled " An act for supplying the city of New York with pure amd wholesome water." f The Legislature enacted a law November 12, 1816, that no bank- ing company should issue, or cause to be issued, any bills or notes, other than for the payment of money ; and that the sums which may be expressed in any bills or notes which any banks should issue, or * Flagg's Banks of New York, 13. t3 Wet). Ed. Laws, 611, § 9. HISTOKIOAL SKETCH. 17 cause to be issued, which, according to the terms thereof are receiv- able only in payment of debts due to the bank, should be recoverable by the bearer of such bills or notes, in like manner as if the same contained an express promise for the payment of money. Oh. 17, Laws of 1816. The Eesteaining Act of 1818. The third Restraining Act became a law April 21, 1818. It pro- vided that it should not be lawful for any person, or association of persons, or body corporate, from and after the ensuing first day of August, to keep any office of deposit for the purpose of discounting promissory notes, or for carrying on any kind of banking business or operations, which incorporated banks are authorized by law to carry on, or issue any bills or promissory notes, as private bankers, unless thereunto specially authorized by law. The exceptions were made that nothing in this act contained should be deemed to extend to the bank in New York owned by Jacob Barker, called the Ex- change Bank, until three years after the passing of this act ; or should be deemed or construed to abridge, enlarge, or in any way affect any rights heretofore granted by law to any incorporated company. Ch. 16, Laws of 1818. The enormous increase in the amount of paper money, much of which, especially that issued by private persons, was worthless, led to the passage of this act. It is evident the Legislature did not care to distinguish between a private bank which carried on a legitimate business based on actual capital and one created to manufacture paper credits, but seemed to hold the opinion that the issuing of bills was a necessary incident of a banking business.* But it should * Flagg's History of Banks, 13. In connection with tliese Restraining Acts, tlie following portion of a well-considered opinion of Savage, Cli. J., delivered in May, 1824, is of interest : " "WTiatistte meaning of the terms "banking powers," is next to be ascertained. In The Maine Bank v. Butts, 9 Mass. Rep. 54, Sbwall, Justice, says : " That expression (banking principles) if it has any peculiar meaning, is an authority to deduct the interest at the commencement of loans, or to make loans upon dis- counts, instead of the ordinary forms of security for an accruing of interest." Again : "The principal attributes of a bank are, the right to issue negotiable notes, discount notes, and receive deposits." Per Spencer. J., 15 Johns. 390. Previous to the Restraining Acts, there was no power possessed by a bank, not also allowed to individuals and private associations. They could, in common, issue notes, discount notes, and receive deposits ; the only difference was, that 3 18 HISTOEICAL SKETCH. be borne in mind that the incorporated banks were as obnoxious to the public condemnation for the state of things which existed in 1818, as the private banks. This is clearly shown by the message of Governor Clinton, an extract from which is given below.* tte former were not liable beyond their corporate property, wMle the latter were accountable in their persons, and to the full extent of their private estates. The first Restraining Act was passed in 1804. It had for its object the guaranteeing to banks a monopoly of the rights and privileges granted to them, which had been encroached upon, or infringed by private associations. This was re-enacted in the Revised Laws of 1813 ; and in 1818, the Legislature found it necessary to pass the act of April 21, of that year (Sess. 41, ch. 236), which places individ- uals upon the same footing with private associations, with the same view to a mo- nopoly, by the incorporated banking companies. The first of these acts prohib- its the formation of any bank or fund unauthorized by law, ' for the purpose of issuing notes, receiving deposits, making discounts, or transacting any other busi- ness which incorporated banks may or do transact, by virtue of their respective acts of incorporation. ' The second prohibits any person, or association of persons, or body corporate, from keeping any ojffice of deposit, for the purpose of discount- ing promissory notes, or carrying on any kind of banking business or operations which incorporated banks are authorized by law to carry on ; or to issue any bills or promissory notes, as private bankers, unless thereto specially authorized by law. Assuming, therefore, what in my opinion cannot be controverted, that banking powers consist in the right of issuing notes, making discounts and receiving deposits, and that the business which incorporated banks may do, by virtue of their acts of incorporation, is prohibited to all others, unless specially authorized by law, it follows, conclusively, that both the old and new company have done what they were not only not authorized by their charter to do, but what was abso- lutely prohibited by the Restraining Act, N. Y. Fire Ins. Co. v. Ely et al., 7 Cow. 710. * " The evils arising from the disordered state of our currency have been ag- gravated by the banking operations of individuals, and the unauthorized emissions of small notes by corporations. They require the immediate and correcting inter- position of the Legislature. I also submit it to your serious consideration, whether the incorporation of banks, in places where they are not required by the exigen- cies of commerce, trade, or manufactures, ought to be countenanced. Such institutions, having but few deposits of money, must rely for their profits princi- pally upon the circulation of their notes, and they are, therefore, tempted to ex- tend it beyond their faculties. These bills are diffused, either in the shapes of loans, or by appointing confidential agents to exchange them for those of other establishments, but the former mode, being conducive to profit, is at first gen- erally adopted ; and in the early stages of their operations, discounts are liber- ally dispensed. This produces an apparent activity of business, and the indica- tions of prosperity, but it is all fictitious and deceptive, resembling the hectic heat of consuming disease,' not the genial warmth of substantial health. A reac- tion soon takes place. These bills are in turn collected by rival institutions, or passed to the banks of the great cities, and payment being required, the only re- HISTORICAL SKETCH. 19 April 12, 1824, it was enacted that no person or persons whom- soever within this State should, after the ensuing first day of May, give or receive in payment of any debt or demand whatever, or in any way attempt or offer to circulate any bank bill or bills, or prom- issory note or notes of any banking company whatever, made pay- able or purporting to be made payable otherwise than in lawful money of the United States. Laws of 1824, p. 303. Bank Chartees Peioe to 1825. It may be noted that none of the bank charters, prior to 1825, contained any specification of banking powers. The Legislature, from 1791 to 1825, relied only on the restrictive clauses inserted in each charter. Prior to the beginning of the nineteenth century, but five banks had been incorporated by this State, viz. : The Bank of North America, 1782 ; the Bank of New York, 1791 ; the Bank of Albany, 1792 ; the Bank of Columbia, 1793 ; the Manhattan Company, in 1799 ; the Farmers' Bank was chartered in 1801, and the New York State Bank, in 1803. These several bank charters were derived from the acts incorpo- rating the Bank of England, in 1694, and the Bank of the United States, in 1791 ; and as neither of these charters, English or Ameri- can, defined or specified the banking powers intended thereby to be granted, it became necessary, by prohibitory clauses, to limit the powers of the corporations so created ; and we discover in all these public enactments, extending from 1694 to 1825, unequivocal dec- larations by the English Parliament, by Congress, and by successive sources left are to call in their debts, and exact partial or total returns of their loans. The continual struggle between conflicting establishments to collect each others' notes occasions constant apprehension. The sphere of their operations is narrowed. Every new bank contracts the area of their paper circulation ; and after subjecting the communities, within their respective spheres of operation, to the pernicious vicissitudes of loans — at one period profusely granted, and at another parsimoniously withheld — they finally settle down into a state of torpid inaction, and become mere conduits of accommodation to a few individuals. The Legislature are then solicited to apply a remedy by the incorporation of other banks, whereas every new one of this description, unless attended by peculiar circumstances, paralyzes a portion of capital, and augments the general distress, the banishment of metallic money, the loss of commercial confidence, the exhibi- tion of fictitious capital, the increase of civil prosecutions, the multiplication of crimes, the injurious enhancement of prices, and the dangerous extension of credit, are among the mischiefs which flow from this state of things." 30 HISTOEICAL SKETCH. legislatures of this State, that trading in any thing, except bullion, foreign coins and bills of exchange, is not banking ; and that the power to traffic in stocks or merchandise is not " either necessary or expedient to accomplish the purpose for which banks are insti- tuted." * While nothing of a political character at first entered into the establishment of banks, that feeling soon manifested it- self, and under the circumstances very naturally so. In 1799, John Adams was President, and another presidential election was immi- nent. The Bank of New York was in Federal hands and the Ke- publicans naturally wanted a bank of their own to control, but the Legislature was in the hands of the Federals, who were jealous of moneyed institutions, and the prospect of a Republican bank seemed dubious at least. Chaetbe of Mai^hattan Company. It was then Aaron Burr's fertile brain came to the rescue. New York had been visited by the yellow fever and it was believed that this malady was induced by the lack of wholesome water in fhat city. Here was the opportunity. It was proposed to incor- porate the " Manhattan Company " for the benevolent purpose of supplying New York with pare water ; $2,000,000 would do this; and as these watei- works might not absorb the entire amount, the pe- titioners asked for a provision axithorizing this institution to employ its surplus capital. •' In the purchaf e of public or other ftock, or in any other monied tranfactionf or operationf, not ineonfiftent with the conftitiition and lawf of thif ftate, or of the United Statef." And as the object was to supply a want that would always exist, it was not unreasonable that the grant should be given in perpetuity. This corporation, with its unassuming title, was too late seen to be a banking institution, with a charter of the most lib- eral character. The charter passed (ch. 84), the. Federals discovered their political mistake. The bill was introduced at the very close of the session, hastily pushed through the Assembly and Senate. In the latter body it was reported complete, by a select committee, and never referred to the committee of the whole. The Council of Revision then existed " To revise all bills about to be passed into * Talmage, v. Pell, 7 N. Y. 345 ; Cleveland's Banking Laws, xsi. HISTOKICAL SKETCH. 31 laws by the Legislature." The attention of this body was called by the Chief Justice, to whom the bill was referred, to the clause under which the banking powers existed. He objected to this clause, because he was apprehensive that the capital would be employed in trade, etc. The minutes of the Coun- cil indicate that there was not the slightest thought that the bill cre- ated banking powers.* The incorporation of the New York State Bank, at Albany, in 1803, of the Merchants' Bank in New York, 1805, and of the Bank of America, in 1812, was the occasion of bitter partisan contests and intrigues, and corrupt means were used to procure each of these charters. There -^as a provision in many of these early charters that on payment of some twelve to fifty per centum of the capital in specie the bank might begin business. A natural result was that irrespon- sible individuals borrowed the necessary small cash capital for a short time, and then returned the specie, its place being filled by cash ob- tained from discounting their own notes by the new bank and sub- stituting them for the specie. Such notes were, in those days, termed " stock notes." * The Manhattan Company has acted In the capacity of general transfer agent of the State of New York for all the stock issued for canal purposes from the year 1818, to the present time. From that year, to the year 1839, the certificates of State stock were signed by the cashier of the Manhattan Company alone ; since 1839, these certificates have been signed by the Comptroller of the State and coun- tersigned by the cashier of the bank during a period of sixty-six years with per- fect faithfulness and to the complete satisfaction of the State government. The Manhattan Company has issued, transferred and paid the public stocks, and the State has held, from the year 1810, one thousand shares, the nominal or par value of $50 a share, of the stock of this bank, for the account of the common school fund. Many persons are living in the Metropolis who can remember the large water wheel which was located on Reade, between Center and Elm streets. This corporation, as a water company, was a most beneficent institution. It has been a very conservatively managed bank. The following is a list of the incorporated banks of this State, the circulation of which is not secured, and which have not advertised for the final redemption of the same. Their charters, excepting that of the Manhattan Company, have expired. Chemung Canal Bank, Delaware and Hudson Canal Company, Livingston County Bank, Manhattan Company, Onondaga County Bank. Eeport of Superintendent of Banking Dep't, 1884, p. 33. Ham- mond's Hist., vol. 1, 239, 309, 325 ; 1 Burr, 413 ; People v. Manhattan Co., 9 Wend. 364 ; N. Y. Laws (Web. ed.), 370, § 8 ; Cleveland's Banking Laws, xxii ; Flagg's Banks of New York, 24 ; Civil List, 272. 22 HISTORICAL SKETCH. April 12, 1824:, it was enacted that no person or persons whomso- ever, within this State, shoiild, after the ensuing first day of May, give or receive in payment of any debt or demand whatsoever, or in any way attempt or offer to circulate, any bank bill or bills, or promis- sory note or notes, of any banking company whatsoever, made pay- able, or purporting to be payable otherwise than in lawful money of the United States. Gh. 303, Laws of 1824. At the close of the first quarter of the present century, the State of New York had forty- two banking institutions with the privileges of $28,900,000 capital. FlEST Le&ISLATIVE SpECEFICATION of BANKma PoWBES. In 1825, the Legislature passed a stringent law to prevent fraudu- lent bankruptcies. It granted but two of the numerous applications for bank charters — the Commercial Bank, of Albany, and the Dutchess County Bank, of Poughkeepsie. The act (ch. exvii) incorporating the first named is remarkable in that it contains a specification of banking powers as follows : " The President, Directors and Company of the Commercial Bank of Albany * * * * shall have and possess all incidental and nec- essary powers to carry on the business of banking, by discounting bills, notes and other evidences of debt ; by receiving deposits, by buying gold and silver, bullion and foreign coins, by buying and selling bills of exchange and by issuing bills, notes and other evi- dences of debt; but the said company shall have and possess no other powers whatever, except such as are expressly granted by this act ; * * * * and the said company shall not, directly or indirectly, through any trustee or otherwise, receive any transfer, pledge or hy- pothecation of any stock of the said company, or of any other incor- porated company, and every such transfer, pledge or hypothecation shall be utterly void ; and provided farther that the said bank shall be established in the city of Albany, and that its operation of dis- count and deposit shall be carried on in said city of Albany and not elsewhere." The Session Laws of 1826, 1827 and 1828 show no bank charters to have been granted during either of those years. CoNSPiKACY Trials of 1826 aud 1827. During the summer and fall of 1826 and early in 1827, several citizens of high character in the city of New York were indicted and tried for an alleged conspiracy to defraud the Morris Canal HISTORICAL SKETCH. 23 and Banking Company, the Fulton Bank, the Tradesmen's Bank, the Mercantile Insurance Company, the Merchants' Fire Insurance Company, and other moneyed institutions. Several of the officers and directors, or managing agents of the " Life and Fire Insurance Company," the " Sun Fire Insurance Company," the " United States Lombard Association," and the " Madison Fire Insurance Company," were implicated in these crim- inal prosecutions, which were widely and generally known and desig- nated at the time as the " conspiracy trials." Briefly, the Life and Fire Insurance Company were charged with using the express pow- ers given it for insurance purposes, to carry on a banking business. It caused its bonds to be engraved like bank notes, and so issued, were placed like so much paper currency in circulation.* The United States Lombard Association issued similar bank notes. ' In this connection,'" said Chancellor Walwoeth, "it was an attempt on the part of those who had the control of the affairs of this com- pany, to carry on banking business instead of the business for which they professedly obtained their charter. ***** There was sufficient on the face of those bonds to show that they were intended as a circulating medium, and were not given by the com- pany to the payees thereof, for an actual indebtedness, in the course of the legitimate business of the company. At least, there was suffi- cient to put those who received them upon inquiry as to the fact whether they were really given for any purpose within the authority of the corporation, and not in violation of the laws of the State."-}- The conspiracy trials;were still in progress, the excitement produced by them stUl continued, when the Legislature met in January, 1827, and Governor Clinton, in his annual message, stated that the then existing commercial convulsions should inculcate the necessity of avoiding a recurrence of such calamities, by avoiding the causes which produced them-; that the calamitous derangements in England had been ascribed to a transition state from war to peace, and to ex- cess of production ; but the better opinion then was that they were chiefly imputable to excessive emissions of paper money in the shape of bank notes ; and as similar disasters were experienced almost contemporaneously in this country, that they might be traced to *4 Paige, 334 ; 9 id. 470. Notes to sec. 117 of Revision, post. t 9 Paige, 470. 24 HISTORICAL SKETCH. similar causes ; that a bank might issue notes to three times the amount of its capital paid in ; that this was intended as a whole- some restriction, but was in fact a most pernicious authorization and could never be justified by any condition of affairs ; that the au- thority to create money would invariably be abused ; that the power of making money was a dangerous faculty, and its liability to perver- sion was in proportion to its extension ; that banking privileges de- posited in unskillful hands might be abused without design — but when granted to fraudulent men, who preferred wealth to character, there would be no bounds to the evils that would follow. The Gov- ernor further declared that experience had proved that applications for banking privileges were made for personal benefit, and not for , the public accommodation. In conclusion, he recommended great caution in making such grants in future ; and stated that " Some general restrictions were indispensably necessary for limiting the issue of bank paper, for regaining the possession of a certain quan- tity of metallic money, and adequate security for the redemption of bank notes — for compelling the attendance and increasing the re- sponsibility of directors — for detecting misstatements in the pe- riodical renditions of the condition of banking institutions, and for prohibiting the circulation of bank notes below a certain sum."* Statute Eegulations of 1827. In September, 1827, the Board of Revisers, appointed to revise the Statutes of the State, consisting of John Duer, John C. Spen- cer and Benjamin Y. Butler, reported to the Legislature General Statute Regulations to prevent the abuses of moneyed corporations. These were enacted in December, 1827, and took eflEect January 1, 1828.t The early bank charters, containing no reservation of power to the Legislature to alter or repeal them, were regarded as perpetual com- pacts ; it was, therefore, held to be a very questionable exercise of legislative power to make legislation, and so subject the then existing corporations to the new and severe regulations. These exceedingly objectionable portions of this law are as follows : § 11. Every director guilty of such violation (*'. e., the violation of any provision of the " regulations ") whether a loss shall or shall * See Gov. Clinton's Message, 1827, Cleveland's Banking Laws, sxxvi. 1 2 R. S. 589. See cli. 8 of the Revision, and note. HISTORICAL SKETCH. 25 not result, shall be deemed guilty of a misdemeanor, punishable by fine or imprisonment, or both, in the discretion of the court by which he shall be tried. § 12. Every director shall be deemed to possess such a knowledge .of the affairs of his corporation as to enable him to determine whether any act, proceeding or omission of its directors is a violation of the foregoing provisions of this article ; and every director who shall be present at a meeting of the directors, where such a violation shall happen, shall be deemed to have concurred therein unless he shall, at the time, cause, or in writing require, his dissent therefrom to be entered at large in the minutes of the directors. § 13. Every director not present at a meeting where such a viola^ tion shall happen shall, nevertheless, be deemed to have concurred therein, if the facts constituting such violation appear on the books of the company, and he remain a director of the same company for six months thereafter, and do not, within that time, cause, or in writing require, his dissent from such illegal proceeding to be entered at large in the minutes of the directors. § 14. Every insolvency of a moneyed corporation shall be deemed fraudulent, imless its affairs shall appear, upon investigation, to have been fairly and legally administered, and generally with the same care and diligence that agents, receiving a compensation for their services, are bound by law to observe ; and it shall be incumbent on the directors and stockholders of every such insolvent corporation to repel, by proof, the presumption of fraud. § 15. In every case of a fraudulent insolvency, the directors of the insolvent company, by whose acts or omissions the insolvency was, wholly or in part, occasioned, and whether then in office or not, shall each be liable to the stockholders and creditors of the company for his proportional share of their respective losses ; the proportion to be ascertained by dividing the whole loss among the whole num- ber of directors liable for its reimbursement ; but this section shall not be construed to diminish the liability of directors, as before declared, who shall have violated or have been concerned in violat- ing the provisions of this article. § 16. K the moneys remaining due to the creditors of a corpora- tion whose insolvency shall be adjudged fraudulent, after the dis- tribution of its effects, shall not be collected, in whole or in part, 4 36 HISTOEIOAL SKETCH. from the directors liable for their reimbursement, the deficiency shall be made good by the contribution of the stockholders of the company ; the whole amount of the deficiency shall be assessed on the whole number of shares of the capital stock, and the sum neces- sary to be paid on each share shall be then ascertained, and each stockholder shall be liable for the sum assessed on the number of shares held by him, not exceeding the nominal amount of such shares ia addition to the sums paid, or which he may be liable to pay, on account of those shares. § 17. Ii the amount assessed on the shares of any stockholder under the provisions of the last section, shall not be collected from such stockholder, by reason of his insolvency, or his absence from this State, the sum remaining ;due on such assessment shall be re- coverable against the person from whom the delinquent stockholder, at any time within six months previous to the insolvency of the company, shall have received a transfer of the shares, or any portion of the shares, then held by him ; and every person having made such transfer shall be liable in the same manner, and for the same pro- portion, that he would have been liable had he continued to hold the shares so transferred. § 18. The term " stockholders," as used in the preceding sections of this title, from the fourteenth section inclusive, shall extend to every equitable owner of stock appearing on the books of an insol- vent company in the name of another person, and to every person who shall have advanced the installments, or purchase-money, of any shares of stock standing in the name of any of his children un- der the age of twenty-one years ; but no person holding stock as an executor or administrator, or as a guardian or trustee, appointed by a last will or testament, or by a court of competent authority, and no legal or equitable owner of stock under the age of twenty-one years shall be individually responsible on account of the shares so held." April 2, 1829, the Legislature, by an act entitled " An act to create a fund for the benefit of certain moneyed corporations, and for other purposes," enacted, that the above sections, fourteen, fifteen, sixteen, seventeen and eighteen, " So far as they provide for the personal liabiUty of the stockholders of any insolvent corporation, shall not apply to any corporation subject to the provisions of this act ; but HISTORICAL SKETCH. 27 the directors of every corporation subject to this act shall be liable to the stockholders thereof as provided in the said sections." Ch. 94, Laws of 1829. March 8, 1830, the Legislature, by an act entitled " An act to repeal certain sections of title second of the eighteenth chapter of the first part of the Eevised Statutes," repealed sections eleven, twelve, thirteen, fourteen, fifteen, sixteen, seventeen and eighteen ; but such repeal " shall not be construed to extend to or affect any existing corporation, or any officer or member thereof." Ch. 71, Laws of 1830. The eight years from 1820 to 1828 were character- ized mainly by the regular and healthful transaction of business, but, in the undue expansion of the currency, and consequent pres- sure upon the banks in 1825, there were particular indications of a disposition to depart from sound principles of finance, the principles and imprudence of which were, perhaps, more clearly perceived by the financiers and statesmen of 'New York than by those of any other State. "Saj-ett Fund" System. In the State of Ifew York, on the 1st day of January, 1829, there were forty banks, the majority of whose charters were about to ex- pire, having a combined capital of $15,000,000 actually paid in, and loans and discounts aggregating more than $30,000,000, with liabili- ties of about the same amount. The question of renewing the charters greatly agitated the State, and involved problems of the greatest importance. Fortunately, during the crisis, the elec- tion of Martin Van Buren, as Governor, proved opportune. He re- viewed the situation impartially, and in his message to the Legislature in 1829, said : " To dispense with banks altogether is an idea which seems to have no advocate ; and to make ourselves wholly dependent upon those established by Federal authority deserves none." In considering the renewal of the charters of solvent institutions, he concluded with the following words : " The pecuniary convulsion that must result from a compulsory closing of these extensive con- cerns would be neither slight in its degree nor transient in its dura- tion." He strongly condemned the policy " of requiring the payment of a large bonus to the State, or the performance of some specious ser- 28 HISTOEICAL SKETCH. vice as the price of bank charters," on the assumption that the Leg- islature would decide to renew " the charters of banks whose sol- vency and present capacity to discharge all their duties shall, after a rigid and impartial scrutiny, be found free from doubt." He suggested " the propriety of making all the conditions you prescribe refer exclusively to the safety and stability of the institu- tions," and commended a plan " to make all the banks responsible for any loss that the public may sustain by the failure of any one or more of them." As to the proposed plan he said, " Most men will, upon the first impression, view it, as I certainly did as pre- senting a rigorous condition, but it is confidently believed by competent judges, that the form in which it is proposed to enforce the responsibility — being an annual and adequate appropriation of a part of their income toward a common fund, to be placed under the control of the State — the ample supervision over the institu- tions which it proposes to place under the direction of the contribut- ing banks, in conjunction with the authority of the State — the con- sequent high character and corresponding circulation it would give to our paper — - the expulsion from circulation of the doubtful paper which now engrosses it, and the substitution in its place of that issued by banks, in full credit with other advantages, would make the conditions such as would, upon more full consideration, be deemed advisable by all concerned." On the resignation of Governor Van Bnren, March 12, 1829, he was appointed Secretary of State, and proved an able auxiliary to President Jackson in his opposition to the Bank of the United States. In securing such a currency, the New York Legislature was first to move forward and inaugurate a system which will be admitted to have been a step in the right direction. April 2, 1829, the so-called " Safety Fund Act " became a law un- der the title of " An act to create a fund for the benefit of certain moneyed corporations, and for other purposes." By section 1 of this act it was enacted that " Every moneyed corporation having banking powers hereafter to be created in this State, or whose charter shall be renewed or extended, shall be subject to the provisions of this act." By section 52 of the G-eneral Code of Statute Hegulations, amended by this act. it' was declared that " The provisions of this HISTOEICAL SKETCH. 39 title shall be construed to apply to every moneyed corporation created" after January 1,1828, "unless such corporation shall be expressly exempted from the provisions of this title in the act creat- ing, renewing or extending such corporation." 1 E.. S. 599, § 52. In October, 1852, the Court of Appeals, in the case of Talmage V. Pell, held : " That every association organized under the act to authorize the business of banking, and the acts amending the same, is a moneyed corporation within the meaning of the statutes of this State relating to moneyed corporations, and is bound and affected by those statutes, excepting only so far as such statutes are incon- sistent with the provisions either of the act to authorize the business of banking, or of the acts amending the same," and also held " that such associations are banking corporations, and possess only authority to carry on the business of banking in the manner, and with the powers, specified in the said act." * The " Safety Fund " banks had among their expressed powers, the general, unrestricted, express power to carry on the business of banking "by issuing bills, notes and other evidences of debt ; " yet these banks were expressly pro- hibited by section 35 from issuing any bill or note payable on time, or with interest. Experience has fully demonstrated that the provision of the " Safety Fund " Law of 1829, which prohibited the issue of post- dated notes by banks, was more effective as a preventive of bank insol- vency, and in establishing a sound and uniform currency for the people of this State, than all the restrictions of the Laws of 1827. Under the " Safety Fund " system bank charters were of one un- varying form. These charters gave the name to each institution, fixed the place of business, the time to which the charter was extended, and the amount of capital of each. Each bank was further required by the " Safety Fund Act " to pay annually to the State Treasurer one-half of one per cent on its paid-up capital untU a sum equal to three per cent of such capital, excepting the amount held by the State, had been thus contributed. The " Bank Fund " thus constituted was to be invested by the Comptroller, and used by the Bank Commissioners in payment of the circulation and other debts of insolvent banks, the income from the fund to be applied to the payment of Commissioners' salaries, * 7 N. T. 338, 34T. 30 HISTOEICAL SKETCH. and the balance to be paid to the solvent banks in proportion to their contributions. If the liquidation of the debts of insolvent corporations reduced the fund below the required three per cent each bank was required to renew its annual contribution until it had paid the requisite three per cent of its capital stock. A trial of the new system, while indicating a marked improve- ment on the old plan, yet showed the " Bank Fund to be wholly in- adequate as an indemnity fund." There was no guaranty afforded the public against bank insolvency, by prohibiting the issue of bills or notes beyond twice the capital, or loans and discounts in excess of twice and one-half the capital. It was also seen that the publi- cation of a balance sheet offered in many instances no accurate state- ment of the actual condition of a bank, even when the directors were disposed to be honest, because bank directors seemed always in- clined to exaggerate the real value of their assets ; and in this manner, discounted notes, which were often placed on a level with coin, proved ahsolutely worthless. Previous over- trading with foreign nations caused a reaction in 1831, which severely affected New York city. October 1, 1833, pursuant to the order of President Jackson, the government de- posits were removed from the Bank of the United States, which was the commencement of a rapid reduction of the debt of the bank, whose discoimts were reduced at the annual rate of $10,000,000 ; notwithstanding the fact that its annual discounts previously ex- ceeded $20,000,000. In 1834, when there was an unusual supply of precious metals, and the Eepublic stood creditor in account with the commercial world ; when there was an abundance of produce throughout the country ; and when all branches of natural industry were unusually prosperous — an unreasonable demand for specie, which was increased by requiring custom duties to be paid in gold, produced a panic which precipitated a severe pressure on the banks of this State. After the lapse of two years, when business was unusually large and the banks were in a sound and healthy condition, a reaction set in, which became universal, and in May, 1837, caused the sus- pension of specie payment in New York city, which was partly due to excessive foreign trade. The reaction commenced in Europe, sud- HISTOKICAL SKETCH. 31 denly checking American credit. Our country produce became de- pressed in the foreign market, large amounts of our bills were returned, creating a demand for specie and raising it to a premium. Banks being only commercial agents, it is evident that the suspen- sion of specie payments was the inevitable result of their relations to commerce and not the result of defective organization. The whole amount contributed to the " Safety Fund " prior to 1848 was but a trifle more than seventy-five per cent of the debts of eleven banks, belonging to the " Safety Fund" system, which failed, and the deficiency was made good by the issue of six per cent stocks by the State, it being agreed that the State should be repaid by the then existing banks. The banking system of 1829 lost all public confidence; the " Bank Fund " became bankrupt ; May 10, 1837, all the New York city banks stopped payment in specie, and the 1st day of January, 1838, found not only all the banks of this State, but also those of the entire country, in a state of suspension. May 16, 1837, the Legislature passed an act "suspending for a limited time certain provisions of law, and for other purposes." By this act, every provision of law in force, requiring or authoriz- ing proceedings against any bank in this State, with a view to for- feit its charter, was " suspended for one year." Ch. 450, Laws of 1837.* At the bankers' convention in New York city, on April 11, 1838, when eighteen States were represented by one hundred and forty-three delegates, it was resolved " That it be recommended to all the banks of the several States to resume specie payments on the first Monday of January, 1839 ; withoiit precluding an earlier re- sumption on the part of such banks as may find it necessary or deem it proper." Of the eighteen States represented, fourteen voted in favor of the resolution, and only two against it. Office of Bank Commissionees. The previously mentioned law of 1829 directed the appointment of three Bank Commissioners, whose duty it was to visit the banks of * Sucli an act, at tlie present time, would be unconstitutional. Section 5, arti- cle 8, provides, ' ' tlie Legislature shall have no power to pass any law sanction- ing in any manner, directly or indirectly, the suspension of specie payments by any person, association or corporation issuing bank notes of any description. 32 HISTOEICAL SKETCH. the State, examine their condition at least once in every four months, and report annually to the Legislature the result of their investiga- tions. The Governor and Senate appointed one of the Commis- sioners ; the banks located in the first, second and third Senate dis- tricts another; and those in the fourth, fifth, sixth, seventh and eighth the other. The term of ofiSce was two years. The State, as representing the whole people, the banks of a certain division, which included the city banks, and the banks of another division, which included all the country banks, each in theory presumed to have antagonistic interests, were represented in this commission. In 1837 (ch. 74), a statute was passed authorizing the Governor and Senate to appoint all the Commissioners. The appointment of a fourth Bank Commissioner was provided for by an act passed May 14, 1840, and banks organized under the General Banking Law were placed under the supervision of the Commissioners. The office was abolished April 18, 1843, and the banks directed to report to the Comptroller, General Banking Act. On the 18th of April, 1838 (ch. 260), two days after the adjourn- ment of the before-mentioned bankers' convention, an act was passed by the Legislature of this State, entitled " An act to author- ize the business of banking." We are now brought to consider some of the distinctive princi- ples of the third and latest system of banking, introduced by the General Banking Act of 1838. We have seen that under the "Safety Fund" system of 1829, banks possessed among other pow- ers, that of issuing " bills, notes, and other evidences of debt," pay- able on demand and without interest. They had the power to issue currency at pleasure, Hmited only to the statutory amount. The General Banking Law of 1838 swept them away on the instant. It wisely separated the issuance of currency from the business of loans, discounts and deposits ; and placed the former under the exclusive direction of a State officer, and confined all issues of notes to him, to be duly registered at his department, whose official certificate each note was to bear. There is a vast difference in the methods prescribed by the differ- ent systems for securing bank issues. By the system of 1829, the HISTOEICAL SKETCH. 33 " Bank Fund," which was only an annual contribution from each bank, proportioned to the amount of its paid-up capital, was only- intended for the payment of debts, exclusive of capital stock, of insolvent safety fund banks. The Indemnity Fund, though in- tended for the liquidation of all the debts of . insolvent banks, exclu- sive of capital stock, was limited to a stated amount. CONSTITUTIONALITT OF THE GeNEEAL BanKING LaW. The General Banking Law of 1838 passed by a majority vote only — many members of the Legislature believing the measure to be unconstitutional. By the Constitution of the State of New York, of 1821, it was ordained as follows : " Section IX. The assent of two-thirds of the members, elected to each branch of the Legislature, shall be requisite to every bill appro- priating the public moneys or property for local or private purposes ; or creating, continuing, altering or renewing any body politic or corporate." The question as to the constitutionality of the act was immediately brought before the courts. In October, 1839, the Supreme Court held, that associations formed under the Greneral Banking Law are corporations, and a majority of the court held that the " Act to authorize the business of banking" was a valid and constitutional law, on the assumption that it received the assent of two-thirds of the members elected to each branch of the Legislature, and that, it would be presumed to have been thus passed, until the fact was denied by plea ; the court refused to pass on this question on a demurrer to a declaration by an associa- tion m a suit for the recovery of a debt.* In April, 18i0, the Court for the Correction of Errors held, (1) that the law entitled " An act to authorize the business of bank- ing," passed April 18, 1838, was valid and constitutionally passed, although it may not have received the assent of two-thirds of the members elected to each branch of the Legislature ; and held (2) that the associations organized in conformity with the provisions of the act entitled " An act to authorize the business of banking," were not bodies politic or corporate within the spirit and meaning of the * Thomas v. Dakin, 33 Wend. 9. 5 34 HISTORICAL SKETCH. Constitution, and this court reversed the judgments of the Supreme Court in these cases.* In October, 1852, the Court of Appeals reversed the judgment of the Supreme Court, and held that every association organized under the General Banking Law was a moneyed corporation, within the meaning of the statutes of this State relating to moneyed cor- porations ; and was bound and affected by those statutes, excepting only so far as such statutes are inconsistent with the provisions of the act to authorize the business of banking or of the acts amending the same ; it was further held that such associations were banking corporations and only possessed authority to carry on the business of banking in the manner and with the powers specified in the said act.f Prominent Pkovisions of the Gbnebal Banking Act. Under the system of 1838, the Superintendent of the Banking Department must be in actual possession of securities which shall fully equal the whole amount of circulating notes issued, before any such notes can be put in circulation ; these securities to be held in pledge, exclusively for the redemption of such circulating notes. The " Safety Fund" system established a fund by a tax upon the capital regardless of the amount of circulation issued ; the other pro- vided a fund according to the issues, regardless of the amount of capital. By the restraining statutes heretofore quoted of 1804, 1813, 1818 and 1880, banking had become a monopoly; and bank charters, which could only be obtained by special legislation, were often regarded, as has been stated, " the motive and the means of corrup- tion." The General Banking Act of 1838 completely abolished banking monopoly, by authorizing any number of persons to form organizations for the purpose of " establishing offices of discount, deposit and circulation," in accordance with the terms prescribed by the General Banking Act, and subject to all general enactments applicable to moneyed corporations. The act of 1838, among other things, provided that bank bills, whoUy secured by State stocks, should bear the stamp " Secured by pledge of public stocks;" and that bank bills partly secured by State stocks, and partly by bonds and mortgages, should bear the stamp " Secured by pledge of public stocks and real estate." * Warner v. Beers and Bolander «. Stevens, 23 Wend. 103, 190. t Talmage «. Pell, 7 N. T. 338 ; Bank Comm'rs v. St. Lawrence Bank, id. 513. HISTORICAL SKETCH. 35 But there was nothing in the act that required individual bankers or associations to deposit any particular amount of securities before they commenced banking. The country was then flooded with stocks from almost every State, and the consequence was that nu- merous banks sprung into existence under this law. Repudiation soon followed. Many States that did not repudiate failed to meet their obligations, confidence was impaired, credit was shaken, and stocks generally depreciated in the market. The re- sult was that many banks failed, and the Legislature partially re- trieved its error May 14, 1840 (ch. 363), by excluding all stocks except those issued by this State, and required those to be, made, equal to a five per cent stock. The sale of the securities of twenty-six insolvent banks, bearing a nominal or par value of $1,530,697, which were pledged for the redemption of a circulation, amounting to $1,197,559, showed a loss of $600,000, the stocks of the State of New York showing a loss of more than eleven per cent, while the stocks of other States showed a loss of over forty-live per cent of their nominal value. The bill- holders thereby sustained a loss of $300,000. Individual Bajj^iees. May 6, 1844, a statute was enacted (ch. 281), section 2 of which provided that every individual banker then doing business under the General Banking Law should state in his quarterly reports whether any person or persons, and who, are interested with him, directly or indirectly, in the securities deposited with the Comptroller for the circulating notes obtained by such individual banker, or in the busi- ness of circulating said notes, or the benefits or advantages thereof ; and if it should appear from such report that any other person is so interested with said banker, and in case two successive reports of said banker should not contain such statement, or if he omit twice in succession to make such quarterly reports, such banker should forfeit $1,000 for every omission to make such statement, or to file such reports as aforesaid, to be sued for and recovered by the Attorney- General in the name of, and for the benefit of, the people of this State. This law was defective in that it only applied to individual bank- ers then engaged in business under the General Banking Law. This 36 HISTOEICAL SKETCH. defect was amended AprU 15, 1854 (ch. 2i2), when a law was passed providing that the law above quoted be made applicable to all indi- vidual bankers who may hereafter do business under the General Banking Law. Section 6 of this act provided that when it should appear by the return of any individual banker, or by the report o( any person designated by the Superintendent of the Banking De- partment, that any person is interested with such individual banker, directly or indirectly, in the securities deposited by him for the pur- pose of obtaining circulating notes, or in the business of circulating such notes, or in the benefits and advantages thereof, the said Super- intendent should withhold all interest and dividends on the securities deposited with him by such banker, and all circulating notes from him, until such banker should have filed in the Banking Department a certificate signed by every person so returned or reported as inter- ested as aforesaid, and duly acknowledged by him, stating that such person is interested with such individual banker in the circulating notes obtained, or to be obtained, by him, and in the benefits and advantages of circulating the same, which certificate shall be evi- dence that the person so signing and acknowledging the same is a general partner with the said original banker in the business of banking, and as such is liable with him individually for all the debts and obligations created or made by him in the said business. By section 8 of the same act it was enacted that the " circulat- ing notes delivered to individual bankers shall express only the in- dividual liability of the banker issuing them, and shall be signed by him only, and not by any attorney or agent." Section 9 of the same statute made it unlawful for any individual banker having circulating notes obtained under the General Bank- ing Laws to sell or transfer the business of banking, upon the secu- rities deposited by him, to any person ; and until such business shall be closed by the return of the circulating notes issued, and the de- livery of the securities deposited, the same should be conducted only in the name of the individual banker by whom the said securities were deposited, and he was made individually liable for the pay- ment of all circulating notes delivered to him. Eesponsibilttt of Stockholders. The Convention of 1846 inserted a clause in the new Constitution rendering stockholders of banks issuing circulating notes " indi- HISTOEICAL SKETCH. 37 vidua] ly responsible to the amount of their respective share or shares of stock in any such corporation or association, for all debts and liabilities of every kind, contracted after January 1, 1850." The Legislature was directed to " provide by law for the registry of all bills or notes issued or put in circulation as money ; " and to " require ample security for the redemption of the same in specie." It was also provided that " In case of the insolvency of any bank or banking association, the bill holders thereof shall be entitled to pref- erence in payment over all other creditors of such bank or association;" and that " The Legislature shall have no power to pass any act grant- ing any special charter for banking purposes ; but corporations or associations may be formed for such purposes under general laws." The first section of chapter 226 of the Laws of 1849 provided that stockholders of " any corporation or joint-stock association for ■ banking purposes, issuing bank notes or any kind of paper credits to circulate as money, after the first day of January, 1850," should be individually responsible equally and ratably to the extent of their shares of stock, for any debt or liability contracted by such corporation or association after January 1, 1850. The subsequent sections of the act consist, mainly, of provisions for enforcing this responsibility. It was subsequently decided that when the bank actually issued bank notes, this provision required that in addition to the loss of the amount of the capital stock paid in, the contribution of an amount equal to the amount of the respective shares of stock.* As nearly every State bank issued circulating notes when this act was passed, its provisions afibrded a valuable safeguard for the protection of the creditors of State banking institutions. But con- gressional legislation in the year 1866, imposing a tax of ten per centum on the circulation of State banks, has resulted in driving such circulation out of existence. The Attorney-General transmitted an opinion to the Superintend- ent of the Banking Department, September 3, 1884, holding that the provisions of the act, the language of which made the responsi- bility of stockholders depend upon circulation, no longer affords any practical benefit to such creditors.f * Empire City Bank, 18 N. T. 199;17 How. Pr. 333; 15 N. T. 9 ; 31 id. 9; 33 id. 9. f Chapter 336 of the Laws of 1849 and the amendments thereto constitute chap- ter six, being sections 135 to 165, inclusive, of the Revision. See notes to section 135, post. 38 HISTOEICAL SKETCH. It should be noted that at this time a practice had grown up under the General Banking Law, of establishing banks in obscure places, in remote parts of the State, where little or no business was done, with a view of obtaining a circulation merely, and doing no other business. This circulation was then redeemed in New York or Albany by the agent of the bank, at one-half of one per cent dis- count, and again put in circulation without being returned to the bank, thereby enabling the bank to redeem its own paper at a dis- count, and again put it in circulation in the same place where it was redeemed. A statute passed April 12, 1848 (ch. 340), appears to be enacted for the purpose of breaking up that practice ; and to insure obedi- ence to its requirements, the Legislature provided that the president and cashier should, in every report made to the Comptroller, state that their business had been transacted at the place required by that act, and that such report should be verified by their oaths. By an act passed April 10, 1849 (ch. 313), incorporated banks were authorized to reorganize under the General Act of 1838. Office of Superintendent of the Banking Department. The banks continued to make their reports to the Comptroller until 1851, when a law (ch. 164) was passed, April 12, creating the office of Superintendent of the Banking Department. He is vested with the general supervision of the banks, banking associations and individual bankers existing or operated under State laws ; they report to him quarterly, and when issuing circulating notes deposit security for their redemption. The act of March 20, 1857, placed the sav- ings banks of the State under his supervision. Trust, loan, mort- gage, guaranty and indemnity companies or associations were re- quired to report to him semi-annually by chapter 324 of the Laws of 1874. By an act (ch. 613, Laws of 1875), passed June 21, 1875, corporations for the safe-keeping and guarantying personal property were also placed under his supervision. The institutions over which he has supervisory powers are regularly examined, savings banks biennially, trust and safe deposit cpmpanies annually, and banks of discount and deposit whenever in his discretion he deems proper. Ch. 47, Laws of 1884. The Superintendent gives a bond, in the sum of $50,000, for the faithful discharge of the duties of his office, and is prohibited from being interested in any bank, banking association, HISTOKICAL SKETCH. 39 or as an individual banker. He makes digests of the reports of the various institutions, which are incorporated in his two annual reports to the Legislature. The expenses of the department are paid by the institutions under its supervision. He receives his appoint- ment from the Governor and Senate, and holds office for three years. Those who have held the office are : SUPERINTENDENTS. NAMES. RESIDENCES. APPOINTED. Daniel B. St. John Albany, Albany county . . . . Albany, Albany county Ballston Spa, Saratoga county. Albany, Albany county Catskill, Greene county Ithaca, Tompkins county . . Bath, Steuben county Bochester, Monroe county . . . West Troy, Albany county. . . Colton, St. Lawrence county. . New York city April April January April August January February February April April 15, 4, 30, 16, 9, 3, 3, 19, 13, 37, 1851 Marius Schoonmaker James M. Cook 1854 1856 Henry H. Van Dyck 1861 1865 1866 1870 De Witt C. Ellis 1878 Henry L. Lamb, acting A. Barton Hepburn 1880 Willis S. Paine 1883 Ingeease of Bankdjg Capital. The rapidity with which banks multiplied from 1848 to 1853 is shown by the remarkable increase of banking capital, as compared with previous years. From 1843 to 1848, the increase was $735,- 512, while from 1848 to 1853, the increase exceeded $32,000,000. The stability of our banks during those years is also apparent from the fact that during the financial embarrassment of 1854, the banks of this State, with only a single exception, satisfied the demands of their bill holders, without resort to the securities deposited with the Banking Department. Redemption of Bank itsToTEs. By the act for the Eedemption of Bank Notes (ch. 202, Laws of 1840), each bank was to appoint an agent in Albany or New York to redeem its circulating notes, and the holder was author- ized to present them at such agency for redemption, and if the agent failed to redeem them at one-half of one per cent discount, then the bank was to pay interest at the rate of twenty per cent, and if such redemption and payment of interest was not made at 40 HISTOEICAL SKETCH. such agency within twenty days from the time when the first de- mand was made, then the Comptroller was to give ten days' notice to the bank to redeem, and if it failed to do so then, he was to give notice that he would redeem out of the securities in his hands. Thus requiring, when the demand was made at the agency and not at the bank, that the demand should be repeated at the agency on the twentieth day thereafter, to authorize the Comptroller to act. No proceedings, therefore, could be had by that oiScer until after the second demand was made. The only penalty for non-payment on the first demand at the agency was the liability to pay interest at twenty per cent, but when the second demand was made on the twentieth day, then the bank was clearly in default ; the Comptroller gave it notice to redeem, and if it did not within the ten days, he further gave notice that he would redeem out of the securities in his hands. It was enacted in 1851 (ch. 203), that it should be the duty of every corporation, banking association, and individual banker outside of the cities of New York, Albany, Brooklyn and Troy to redeem and pay on demand all circulating notes issued by such corporation, banking association or individual banker, presented for redemption or payment at the office of their said agent, in the city of New York, Albany or Troy, at a rate of discount not exceeding one-quarter of one per cent. The provision to be found in section 7 of the act of 1838, that to secure the payment of one-half of the whole amount of cir- culation bonds and mortgages might be transferred to the Comptrol- ler, was not well considered, and this mistake of judgment was not remedied until April 29, 1863, when it was enacted (ch. 241), that from and after the passage of this act, the securities hereafter to be deposited with the Superintendent of the Banking Depart- ment for notes for circulation to be issued to any corporation or joint-stock association for banking purposes, or individual banker, should be stocks of this State and of the United States, in the following proportions, that is to say, not to exceed two-thirds per centum in United States stocks, and not less than one-third per cen- tum in stocks of this State ; both stocks to be equal to or be made equal to stocks yielding interest at the rate of six per centum per annum ; and the securities then held by the Banking Department, so far as the same consist of United States stocks and stocks of this HISTORICAL SKETCH. 41 State, might be adjusted on the application of any party concerned, so as to be in accordance with the provisions of this law. In 1854, the banks had on deposit in the Banking Department bonds and mortgages to the amount of nearly $7,000,000. Taxation. Bank stock was first taxed in this State in 1823, in which year the Legislature enacted (ch. 262, §§ 14, 15 and 16), that all incor- porated companies receiving a regular income from the employment of capital were to be considered as persons and liable to taxation on the amount of their real and personal property, deducting from the latter the amount of stock held by the State or by any liter- ary or charitable institution. The tax or assessment was made, levied and collected in the same manner as in the case of individ- uals and was deducted from the dividends of the stockholders. A bank, however, was given the privilege of paying directly to the treasurer of the county in which it transacted business, ten per cent of its income and, if it availed itself of this privilege, no tax could be imposed. Commenting on this statute* Mr. Justice Hunt remarks that it was passed at the instance of the then Comptroller of the State and that the banks were averse to it. It nevertheless remained iu force till superseded by the Revised Statutes in 1828. ]S"o decisions of cases arising under this act have been reported. The Revised Statutes provided that the capital stock of all moneyed or stock corporations deriving any income from their capital oi otherwise should be taxed and assessed in the same manner as other real and personal estate of the county excepting stock held by the State and literary and charitable institutions. The first reported decision arising under this act was that of On- tario Bank v. Bunnell,f in which it was decided that a banking corporation located in a village authorized by law to raise money by tax for certain purposes was liable to pay its proportion of the village taxes, and when such taxes were directed to be assessed on the freeholders and inhabitants of the village according to law, * People V. Dolan, 36 N. Y. 59. 1 10 "Wendell, 186, Sup. Ct. 1833. 42 HISTOEIOAL SKETCH. a moneyed or stock corporation having its banking-house for the transaction of business within such village was declared to be an in- habitant within the meaning of the act. In 1838 the General Banking Law hereinbefore mentioned was enacted (eh. 260). Associations formed under it were held to be cor- porations, and as such, liable like other moneyed institutions to taxa- tion on their capital.* Other decisions with respect to the method of assessment were also rendered, it being held that the Legislature intended taxing cor- porations upon the nominal amount of the stock and not upon its actual value to the stockholders, and that by the term " personal estate " was meant so much of the capital stock paid in or secured to be paid in as will remain after deducting therefrom the actual cost of the real estate of the company and such portions of the stock as were exempt from taxation.f No other law relating to the subject was passed until December, 1847, when the Legislature enacted (ch. 419, §§ 4, 5), that all banks and individual bankers " Should be subject to taxation on the full amount of capital paid in, or secured to be paid in, as such capital, by them severally, at the market value of such securities, to be esti- mated by the Comptroller, without any deduction for the debts of such individual banker or banking association." It having been decidedf that corporations which were liable to taxation on their capital could not be taxed on their surplus profits remaining on hand and undivided, the Legislature next amended the Revised Statutes so as to render the surplus profits or reserved funds of all corporations over and above ten per cent of their capital, liable to taxation in addition to their former liability (ch. 65 Laws of 1853). Under this statute the banks were held to be liable to city, but not to county taxes on their personal property. Thus the law remained till 185T, in which year another statute was enacted (ch. 456), the third section of which subsequently gave rise to much conflicting litigation respecting the right of the State to * Thomas v. Dakin, 32 Wend. 9 ; Warner v. Beers, 23 id. 103 ; People v. Asses- sors of Watertown, 25 id. 686. f Bank of Utica v. City of Utica, 4 Paige, 399 ; Farmers' Loan & Trust Co. v. The Mayor, etc., of the City of New York, 7 Hill, 361. ^ Bank of Utica v. City of Utica, supra. HISTOEICAL SKETCH. 43 directly or indirectly tax securities of the United States which are or may be thereafter exempted by Congress from State taxation. The law of Congress, passed February 25, 1862, declared, " That all stocks, bonds and other securities of the United States, held by individuals, corporations or associations within the United States, shall be exempt from taxation by or under State authority." * The State courts held that taxing the paid up capital stock of a corporation was not equivalent either in fact or principle to the taxation of the property in which the money paid in for that capital was invested.f It was also decided that so far as this act of Con- gress was intended to withdraw from State taxation, securities of the United States already subject thereto, it (the act) was extra-con- stitutional and void.:]: The latter decision seems to have been acquiesced in, as no appeal was taken, but the former was carried to the United States Supreme Court and there reversed,§ thus rendering nugatory the law of 1857. The attempt to tax United States securities in the hands of the National banks by taxing the portion of capital stock they repre ■ sented having thus failed, it was next attempted to reach these securities by taxing the banks on a valuation equal to the amount of their capital stock ; the law of 1863 (ch. 240), passed for this pur- pose, declared that, " All banks, banking associations and other mon- eyed corporations and associations should be liable to taxation on a valuation equal to the amount of their capital stock paid in or secured to be paid in, and their surplus earnings (less ten per cent of such sur- plus) in the manjier now provided by law, deducting the value of the real estate held by any such corporation or association, and tax- able as real estate." The State courts upheld the validity of this act, II but were again reversed by the U. S. Supreme Court.^ " The effect of these decisions of the Federal court," says Mr. Justice Marvin, in the People v. Board of Education (46 Barb. 694), " is nothing more and nothing less than that the State cannot * Acts 1861-62, p. 346. t People v. Com. of Taxes, 33 N. T. 193 ; S. C, 34 Barb. 509. j People V Com. of Taxes, 36 N. Y. 163. §3 Black, 630. II People V. Com of Taxes, 40 Barb. 334. 1 People V. Com. of Taxes, 3 Wall. 300. 44 HISTOEIOAL SKETCH. by any system of taxation assess and tax the securities of the United States, whether held or owned by corporations or individuals, nor can such holder and owner be taxed on account of such securities." Yielding to the hostility exhibited to the law as it then stood, Congress during the year 1864 amended the act of 1862, so as to permit the inclusion of National bank shares held by any person or corporation in the valuation of the personal property of such per- son or corporation, in the assessment of State taxes at the place where such bank was located and not elsewhere. " But not at a greater rate than is assessed upon other moneyed capital in the hands of in- dividual citizens of such State ; provided further, that the tax so im- posed under the laws of any State, upon the shares of the associations, authorized by this act, should not exceed the rate imposed upon the shares of any of the banks organized under the authority of the State where such association is located ; provided, also, that nothing in this act should exempt the real estate of associations from either State,' county or municipal taxes, to the same extent, according to its value, as other real estate is taxed." * In view of this amendment, the Legislature the following year passed an act (ch. 97, Laws of 1865), providing that the shares in all State and National banks held by any person or corporation should be included in the valua- tion of the personal property of such person or corporate body, etc., the remainder of the act being in conformity to the act of Congress. Eut this attempt to reach National bank shares by including them in the .valuation of the personal property of the holder and owner also proved abortive, for while the Com-t of Appeals lield that the shares in a National bank could be assessed under, this law,-|- the U. S. Supreme Court decided that as no tax had been laid on shares in State banks at all. the act was void, though there was a tax on their capital. :j: The Legislature now abandoned the taxation of the capital of both State and National banks by enacting the following year (1866), that no tax should hereafter be assessed upon the capital of any bank or banking association organized under the authority *Actof 1864, § 41. f City of Utica v. Churchill, 33 N. Y. 171 ; overruling People v. Barton, 44 Barb. 148. JVanAllen.v. The Assessors, etc., 8 Wall. 473: People v. Com. of Taxes, 4 Otto, 415. HISTOEICAL SKETCH. 45 of this State, or of the TJnited States, but the stockholders in such banks and banking associations should be assessed and taxed on the value of their shares of stock therein ; said shares should be included in the valuation of the personal property of such stockholder, in the assessment of taxes at the place, town or ward where such bank or banking association is located, and not elsewhere, whether the said stockholder reside in said place, town or ward, or not, but not at a greater rate than is assessed upon other moneyed capital in the hands of individuals in this State. And in making such assessment there should also be deducted from the value of such shares such sum as is in the same proportion to such value as is the assessed value of the real estate of the bank or banking association, and in which any portion of their capital is invested, in which said shares are held, to the whole amount of the capital stock of said bank or banking association ; and provided, further, that nothing herein con- tained should be construed to exempt from taxation the real estate held or owned by any such bank or banking association ; but the same should be subject to State, county, municipal and other taxa- tion to the same extent and rate and in the same manner as other real estate is taxed (§ 1, ch. T61, Laws of 1866.) This act was subsequently upheld by the Court of Appeals in the case of People V. Com. of Taxes (35 N. Y. 423), which was in turn aiSrmed by the Supreme Court of the United States,* and thus after repeated efforts a law finally secured by which a tax on bank shares and bearing indirectly on the securities of the United States could be legally imposed. The substance of the last-mentioned decisions of the State and Federal courts was that the shares of stock in a bank, whether its capital be invested in U. S. bonds or other securities, are subject to taxation and assessment under State law at the place where the bank is located and not elsewhere, but not at a greater rate than that imposed on shares in State banks located at the same place, or upon other moneyed capital in the hands of individual citizens of the State imposing the tax. With respect to this last condition it has been heldf that the provision of the National Banking Act,:(: that the taxation of the shares of National banks " shall not be at a *S. C, 4 Wall. 244. ■I- Williams v. Weaver, 75 N. Y. 30. |U. S. E. S.,§5219. 46 HISTOEIOAL SKETCH. greater rate than is assessed upon other moneyed capital in the hands of individual citizens," refers to the rate of taxation exclu- sively and not to the assessed valuation. It was also decided at the same time that placing the valuation of the bank shares in a separate item, in a column with personal property, does not invalidate the assessment, it being a substantial compliance with both the act of Congress authorizing the shares to be " included in the valuation of the personal property " of the owner, and of the last-mentioned State law. It was further decided that the restriction contained in the State law of the place of taxatioij to the town or ward where the bank is located, whether the stockholders reside there or not, is valid for, this species of property may be considered apart from the owner and a situs given to it for the purpose of taxation.* As to the mode of ascertaining the valuation at which bank stock shall be assessed, it is heldf to be the duty of the assessor to deduct from the actual value of each share a sum bearing the same propor- tion thereto as the assessed value of the real estate of the bank bears to the actual value of all the capital stock. The expression "whole amount of capital stock," as used in the act, refers to the actual value of the stock, not its nominal amount. Speaking of this system of taxing bank shares, Judge Earl re- marks in People v. Com. of Taxes,:]: that it " is in entire harmony with that of taxing other personal property. The Revised Statutes provide that all personal estate ' shall be estimated and assessed by the assessors at its full and true value as they would appraise the same in payment of a just debt due from a solv^ent debtor.' This provision requires the assessment to be for the 'full and true value' and that there may be no mistake or evasion of this duty, it pro- vides a guide which will in all cases give the true value, to-wit : What.the same would be worth in payment of a just debt to a cred- itor entitled to and able to procure the cash for his debt," COKTCLUSION. Passing over the great panic of 1857, and its effects upon the country, we may note that the banking laws received no material * See, also, Tappen v. Merchants' National Bank, 19 Wall. 490. t People V. Com. of Taxes, 69 N. T. 91 ; S. C, 9 Hun, 650. i 67 N. Y. 530. HISTORICAL SKETCH. 47 amendment, the State of New York presenting the best banking system and the best currency of any State. In 1861 came the war of the rebellion, and with it the demand of the government for millions when thousands had heretofore answered. Bank suspension and panic became inevitable, and with the applica- tion by Congress of the New York system to its own currency, and with its taxation of ten per cent on the circulation of the State banks, the latter at once disappeared, and United States " legal tenders " so-called, and National Bank currency took its place. In 1882 a compilation and revision of the banking statutes became a law.* Whatever is excellent in the present National Bank system belongs not to one Secretary of the Treasury or another, but to the fact that the general government borrowed the principles of sound finance from the great State of New York. This system too has been applied to the Bank of England, so that New York may claim to be the Empire State of sound banking, whose' men and whose prin- ciples have given a currency whose actual value is the same as its nominal value, to two worlds. AETIOLE II. Savings Institutions. A savings institution is thus defined by the Supreme Court of the United States in a recent decision : " It is not a commercial partner- ship, nor is it an artificial being, the members of which have property interests in it. Nor is it strictly eleemosynary. Its purpose is rather to furnish a safe depository for the money of those members of the community disposed to intrust their property to its keeping. It is somewhat of the nature of such corporations as chui'ch wardens for conservation of the goods of the parish, the College of Surgeons for the promotion of medical science, or the Society of Antiquaries for the advancement of the study of antiquities. Its purpose is a public advantage, without any interest in its members." Present judicial decisions in the adjoining States of Pennsylvania, New Jersey and Connecticut, respectively, describe them as " Really charities for the benefit of the poor," as "large incorporated agen- * See preface. 48 HISTOEICAL SKETCH. cies for the comraon investment and care of deposits," and as " quasi- charitable and purely benevolent institutions." So soon as the earning capacity of money became recognized, phil- anthropic persons devised plans whereby the laboring classes might compel their small accumulations to lighten the burden of main- taining themselves and those dependent on their efforts. Savings banks had their origin in those plans which were, in the beginning, wholly pliilanthropic in their character. The first savings bank was founded in Hamburg in 1778, and that of Berne nine years later,* intended for and iiideed restricted to receiving the savings of servants, mechanics " and other trades peo- ple." A suggestion of a " frugality bank '' was made by Irving Bentham in 1797 ; whether or not he knew of the savings banks already established does not appear. The conclusion of the eighteenth centuryf witnessed the first at- tempt in England at establishing a savings bank, when Eev. Joseph • Smith, of Wendover, in conjunction with two of his parishioners, offered to receive from any inhabitant of his parish sums from two-pence upward, every Sunday evening during the summer months, and to repay to each individual, at Christmas, the amount of his deposit with an addition of one-third of the sum as a bounty upon his frugality. If the money was paid back before Christmas, no bonus was allowed. There can be no doubt that the Eev. Henry Duncan, minister at Ruthwell, Dumfreeshire, Scotland, did more than any other man to originate a self-sustaining bank which did not partake of the nature of a charity, and was applicable not to one locality only, but to the whole country. :{: The scheme which was started in May, 1810, showed deposits of * Scratcliley's Treatise on Savings Banks, 36. t"In this country [Great Britain], the first proposals for a bank for savings were made in 1798." Lewin's Hist, of Savings Banks, 19. X We are warranted on the whole to conclude, that though some institutions, similar both in their principles and details, had been formed before the Parish Bank of Euthwell, yet it was the first of the kind which was regularly and minutely organized and brought before the public ; and further, that as that so- ciety gave the impulse which is fast spreading through the kingdom, it is in all fairness entitled to the appellation of the parent society. Loudon Quarterly Re- view, vol. XVI, 102. HISTOKICAL SKETCH. 49" savings during the first year amounting to £151, which gradually increased until 1814, when the deposits amounted to £922. The first savings bank of any note in the city of London did not begin operations until the end of January, 1816.* In 1817, savings banks were for the first time recognized by the government of Great Britain.f Before this time they were purely voluntary asso- ciations of a local character, and necessarily limited in their opera- tions.;]: Savings banks were not established in France until 1834. The first savings bank in the United States was " The Phila- delphia Savings Fund Society,' ' which was organized as a private voluntary association in 1816, and commenced to receive deposits on the second of December in that year. This institution was not incorporated by the Legislature of Pennsylvania until February 25, ' 1819, while " the Provident Institution for Savings in the town of Boston, Massachusetts," was incorporated December 13, 1816, and the Savings Bank of Baltimore, Maryland, in December, 1818. The§ first meeting in ITew York for the purpose of establishing a savings bank was held in the assembly room of the City Hotel, New York city, on Friday evening, November 29, 1816. The institution then organized was certainly due to the efforts of Mr. Thomas Eddy, who had for many years been a correspondent of Mr. Patrick Colquhoun, a magistrate of London, and connected ^f(th many of the benevolent institutions of that city. Mr. Oolqu- houn advised Mr. Eddy, April 19, 1816, of the savings institutions then existing and being organized in Great Britain and Ireland, and inclosed him "the plan of an institution." To this direct sugges- tion Mr. Eddy's efforts are, without doubt, to be ascribed. From the report of the meeting given in the Evening Post of the Monday following, December 2, it appears that Mr. Eddy was called to the chair, and Mr. J. H. Coggeshall was appointed Secretary. After * London Quarterly Review, vol. XVI, 103. fThe preamble of tliis, the first act, begins as follows: " Wkereas certain provident institutions or banks for savings have been established in England for the safe custody and increase of small savings belonging to the industrious classes ; and it is expedient to give protection to such institutions and the funds established thereby, etc." Act 57, George III, ch. 130, 1817. X Lewin's Hist, of Savings Banks, 45. . § The author desires to acknowledge his indebtedness to Keyes' History of Sav- ings Banks, and can vouch for the general accuracy of that valuable work. 7 50 HISTOEIOAL SKETCH. discussion of the subject it was " Resolved, that it is expedient to establish a savings bank for the city of New York." Among the directors appointed were De Witt Clinton, Henry Eutgers (who founded, and gave his name to Eutgers College), Duncan P. Campbell, Eensselaer Havens, Eichard Yarick, Thomas Eddy, Peter A. Jay, and Gilbert Aspinwall. On the 10th of December following, sev- eral committees were appointed, one to secure a situation for the bank, another to apply to the Legislature for an act of incorporation (Peter A. Jay, chairman), and another to draft an address to the public (De Witt Clinton, chairman). On the Tuesday following, December 17, the following ofBeers were elected : William Bayard, President ; Noah Brown, First Vice-President ; Thomas E. Smith, Second Yice-President ; Thomas C. Taylor, Third Vice-President ; Thomas Eddy, Jr., Cashier. From thejast day of the year 1816, when a meeting of the directors was held, nothing further seems to have been done in the way of conducting business. Mr. Eddy states why this is so in a letter to Mr. Colquhoun, dated " New York, 4th mo., 9th, 1817." Speaking of the savings banks in England, he says : " A plan was formed, and a number of our most respectable citizens agreed to undertake the management of it ; but we found that we could not go into operation without an act of incorporation, for which we made an application to the Legislature, and the result is not yet known."* The records of the Legislature show that on February 3, 1817, the memorial of Eobert Browne and others, of New York city, was presented to the Legislature — the memorial declaring " Eobert Browne, and others, inhabitants of the city of New York, have formed an establishment in said city for the purpose of receiving on deposit such sums of money from persons belonging to the laboring classes of the community as they are able to save from their earnings, and to allow them an interest thereon." And the memorial further prays the Legislature to grant them an act of incorporation as an association to be known as " The Savings Bank of the City of New York." This memorial was read and referred to a select committee, consisting of Mr. Eussell, Mr. Sharpe, and Mr. Emmott. On the 11th of March following, this committee put forth the opinion : " However desirable it may be to encour- age the poorer class of community to save their hard earnings and * Knapp's Life of Eddy, 366. HISTOEICAL SKETCH. 51 to produce habits of industry and economy by holding out motives of interest to them to do so, still the committee are not convinced that, under the present state of society in this country, an institution like this, which may be beneficial under other circumstances and in older countries, can be put into operation with advantage." And then, having delivered themselves of this bit of conservative wis- dom, the committee further gravely declare " The expense nec- essarily attendant in such an establishment will lessen, if not defeat, the benevolent views of the petitioners." Still the committee mag- nanimously add " We are unwilling to preclude, by any opinion of ours, the subject from coming in the usual manner before the house, and therefore we are induced to ask for leave to report by bill." The house adopted the report of the committee, and granted Mr. Russell leave to bring in his bill, which was entitled "■An act to incorporate the Savings Bank of the City of New Yorlt^ which was read twice and sent to the committee of the whole for a third reading, the petitioners having leave to " print the usual number of copies of the said bill and the report thereon, for the use of the Leg- islature." Two weeks later, Tuesday, March 25, 1817, the bill was reached in committee of the whole, and the Monday following, the 31st, designated as the day for considering it. Yery clearly the legislators of those days understood the arts of procrastination as well as they a,re understood now ; and instead of ordering the bill to a third reading and putting it on its passage, the very unusual course in committee of the whole was resorted to, of referring the measure to a select committee. This committee, consisting of Messrs. Pen- dleton, Russell and Williams, reported the bill on the 2d of April following, changing the title from " An act to incorporate the Sav- ings Bank of the City of New York," to " An act to incorporate an association by the name of The Savings Corporation of the City of New York." This, bill was again referred to a committee of the whole house. There is no further legislative record of the bill during that session. The reason why the title of the bill was altered from " Savings Bank " to " Savings Corporation " does not at that time appear. There existed a deep-seated hostility to all " banks," as has been stated in the preceding article treating of banks of deposit and discount. It is possible, also, that the Legislature did not care to give the name " Bank " to a mere institution of de- 53 HISTOEIOAL SKETCH. posit. It should be stated here that on the 10th of March, the peti- tion of M. Willett and many others, praying to be incorporated as a New York Interest Bank — having in view the general purposes of a savings bank — was referred to a select committee, and three days later sent to the committee of the whole, which seems to have as efEectually strangled that bill as the other. At least it was not heard from again in that Legislature. The first bill for establishing a savings bank in 'Sew York city did not pass the Legislature and receive the necessary approval of the Council of Eevision imtil March 26, 1819, three years later.* It would seem, at the outset, that the parties whose efforts had been directed toward securing a charter for a savings bank were measurably discouraged. After the repeated commitment of the measure and changing the name in committee of the whole the bill had failed. A change of method seems to have been resolved upon ; and instead of a measure for incorporating a savings bank, the pro- jectors determined to nominally change the object ; instead of a bill for a savings institution, they would secure the same object under a different name ; they would apply for an act of incorporation for the relief and permanent benefit of the working classes, and perhaps it might prove the entering wedge for a savings bank. It was at the New York Hospital, on Friday, the 16th December, 1817, that a number of gentlemen met to consider the subject of pauperism. General Matthew Clarkson was appointed chairman, and Divie Bethune secretary. It was then and there '■' Hesolved, that the citizens present, with those who may hereafter unite in the meas- ure, be constituted a Society for the Prevention of Pauper- ism." It was also resolved to appoint a committee to prepare a constitution and report suggestions for the general management of the society. A committee of eight was appointed, five of whom appeared as directors in the previously projected savings bank. The committee consisted of John Griscom, Brockholst Livingston, Gar- rett N. Bleecker, Thomas Eddy, James Eastburn, Eev. Cave Jones, Zachariah Lewis and Divie Bethune. February 6, 1818, a meeting of the society was held, at which the committee's report was pre- sented ; among various recommendations by the committee the first * Statement made by Hon. P. W. Bngs, formerly Comptroller of the city of New York. Keyes' Hist, of Savings Banks, 318. HISTOEICAL SKETCH. 53 proposition is the establishment of savings banks or benefit societies, life insurance, etc. At that meeting a motion was made by Mr. John Griscom, who was a philanthropic gentleman, much interested in educational and scientific objects,* that a savings bank be organ- ized, which motion was adopted. Subsequent meetings continued to be held, and soon after the name of the eloquent preacher, E.ev. Dr. John M. Mason, appears as among its promoters. It was, however, too late to accomplish any thing with the Legislature at that time. Here it may be stated that the project of a Mr. M. Willett and others for an interest bank, hereinbefore mentioned and which had failed in the Legislature the preceding year, was renewed in the Legislature of 1818, but failed in the Senate by a vote of fif- teen to seven. The scheme seems to have been of a business rather than a philanthropic character. The conviction that an institution for savings was a desirable and even necessary one was forcing itself upon the public mind ; and no one was quicker in catching its spirit than the far-seeing DeWitt Clinton, who was elected Governor by an almost unanimous vote in the fall of 1817. In his message to the Legislature Governor Clin- ton commented at some length on the evils arising from poverty and idleness. With remarkable prescience he saw the difficulties in the path of the laboring class, while yet he regarded with no leniency the evils arising from inconsiderate alms-giving. A portion of the message is as follows : " While we must consider as worthy of all praise and patronage religious and moral societies, Sunday, free and charity schools, houses of industry, orphan asylums and savings banks * * * we are equally bound to discourage those institutions which furnish the aliment of mendicity by removing the incentives to labor, and administering to the blandishments of sensuality." In those days the Legislature sent a formal reply to the Governor's message, a practice borrowed from colonial precedent and not yet become obsolete ; and in their reply the Assembly declare they shall consider as highly deserving public patronage " all such institutions as your Excellency has enumerated which are so obviously calculated * It should not be forgotten that out of this "Society for the Prevention of Pauperism," and especially owing to the efforts of the same John (Jriscom, the "Society for the care of Juvenile Delinquents or House of Eefuge" came into existence, being the first organization of its kind in the world. Ch. 126, Laws of 1824. 54 HISTORICAL SKETCH. to alleviate the evils of pauperism by inspiring industry, dispensing employment and inculcating economy." The year 1819 will be ever memorable in th'e annals of New York, as the year when the first savings bank was chartered by the Legisla- ture. From the Assembly journal it appears that before the Legisla- ture had been more than two weeks in session — on the 19th of January — the memorial of Mr. M. Olarkson, in behalf of the Society for the Prevention of Pauperism, was received, praying for the incorporation of a savings bank in New York city. On the 13th of February the petition was favorably reported upon and leave given to bring in such a bill. On Saturday, February 27, the measure was discussed in the committee of the whole, and the discussion was con- tinued on the Monday following, March 1, when the bill passed the lower house. The bill was first considered in the Senate on Friday, March 5, and the first enacting clause being amended " William Bayard, John Murray, Jr., Noah Brown, "William Few, Brockholst Livingston, Oadwallader D. Golden, George Arcularius, Thomas Buckley, Duncan B. Campbell, Benjamin Clark, James Eastburn, Henry Eckford, Thomas Eddy, Philip Hone, John E. Hyde, Peter A. Jay, Zechariah Lewis, Dennis McCarthy, Andrew Morris, James Palmer, John Pintard, Abraham Russell, Jacob Sherred, Joseph Smith, Najah Taylor, Jeremiah Thompson, William Wilson and Samuel Wood " were " constituted a body corporate and politic by the name of ' The Bank for Savings in the City of New York.'" On the 6th day of March the bill, duly amended, passed the Sen- ate and was sent to the Assembly for concurrence. From March 6th to 22d the bill was repeatedly sent from one house to the other on the question of concurrence in the Senate amendments. Finally on Monday, March 22, the Assembly received from the Senate the bill duly passed without further amendment. The Assembly there- upon ordered " that the clerk deliver the same to the Honorable, the Council of Revision," from whom the Assembly received a message on Friday, March 26, returning the bill " approved." And thus the " Bank for Savings in the City of New York"* became an estab- *Tlais, the first savings bank established in tlie State of New York, commenced business on July 3, 1819, in the basement of a building on Chambers street, which was destroyed by fire in 1857, and is now the site of the new County Court House. The trustees subsequently built a substantial banking-house on Chambers street HISTOKIOAL SKETCH. 55^ lished fact in the legislative history of the State of New York. From this beginning what great results were to flow ! And who shall undertake to measure the sum of the good wrought by the savings banks since their first establishment but a little more than sixty-five years ago ? Who will undertake to state how much im- poverishment has been prevented and how much comfort has been realized us by this system of depositing the savings from labor in approved savings institutions ? The newly-chartered bank' s first report, covering a period of six months, was made to the Legisla- ture in the winter of 1820. Its success was assured. An accumu- lation of " more than $150,000 " was reported as having been re- ceived from 1527 depositors. Of these 840 were " mechanics, la- borers, tradesmen and domestics ; 287 were boys ; 276 girls ; 98 were widows; 20 were orphans; 15 apprentices, and 24 'unclas- sified.' " The bank also reported that at the opening of the institu- tion the trustees appointed three of their number in rotation to at- tend at the bank for one month as a committee " to receive deposits, to see that the entries were duly made, and to make inquiries as to the situation of the depositors, and ask such further questions as might promote the welfare either of the individual or of the institu- tion. By this means the whole of the board of trustees have be- come familiar with the depositors " and thoroughly acquainted with the methods of transacting that business of the bank, and with the condition of its affairs. The original charter of the bank restrained the trustees from investing moneys in any other debentures than in government securities, or in any stock created and issued under and in virtue of any law of the United States or of this State. Ac- companying the report mentioned was a petition of the trustees ask- ing the Legislature to permit them to invest their moneys either in bonds of the city or to loan on bond and mortgage on real estate in the city of New York. The petition of the trustees in this respect was granted. The success of this measurement led to the establish- ment of others. The second savings bank established was on a charter granted to Rev. William James and other citizens of Albany. neaxly opposite its first location, and afterward disposed of that property and erected another banking-house on the same street. The march of improvement and the convenience of depositors, however induced the trustees to also sell that property, and they finally located in their present banking-house on Bleecker street near Broadway. 56 HISTOEIOAL SKETCH. The petition of Mr. James and others was presented in the Assem- bly on January 28, 1820, and referred to a select committee consist- ing of Messrs. James, McKown, Irving and Sharpe. There was no delay as formerly. February ith this committee reported favorably on the petition asking leave to bring in a bill. Leave was granted. On the 18th of March the bill establishing the Albany Savings Bank passed the Assembly ; five days later it passed the Senate. The bill was returned from the Council of Eevision the 24:th day of the same month with its approval, and became a law on that day. Ch. 100, Laws of 1820. This institution received its first deposit on June 10 of that year. March 27, 1821 (ch. 163), a bank for sav- ings in the village of TJtica was chartered but not organized. A complete list of all the subsequent savings banks chartered in this State, or organized under the general act of 1875, will be found in the appendix. Having given the foregoing account of the inception of savings banks, the subject of this chapter can be best continued by giving, separately, a summary of the course of legislation in connection with the leading features of what may be termed, at this time, the Sav- ings Bank System of this State. Savings Baijks Benevolent, not Chaeitable. Before doing so, however, it may not be considered out of place to state that under no proper construction of our statutes are the savings banks of this State charitable institutions ; and the frequent designation of them as such, it is submitted, has become odious. As constituted and regulated by law they are, strictly speaking, benevo- lent institutions, and while the two terms are to a certain extent synonymous, they have a widely different significance when applied to our savings banks. He who has more than his necessities compel him to expend for the support of himself or family, and has a remainder to loan or save, though trifling in amount, is in no sense an object for charity. A natural person who is liberal in benefactions to the poor, thus relieving them in distress, and an artificial person which relieves the needy by the giving of alms, are properly termed charitable, while he who has ,a disposition to do good, who possesses a love for man- kind and a desire to promote their prosperity and happiness, and a HISTORICAL SKETCH. 57 corporation based upon such disposition and desire, are accurately termed benevolent. As we have stated the motives which primarily brought about the estabhshment of banks " for the savings of the poor " or to re- ceive '•' the surplus earnings of domestic servants," were in the be- ginning wholly philanthropic, yet the whole character of the institu- tions of which these so-called banks were the promoters has changed, and the use of an expression which savors, however remotely, with the giving of alms, must needs be peculiarly offensive to the tens of thousands of oar citizens whose thrift, economy and self-denial are . represented by the $431,080,010 of deposits now held by the sav- ings banks of this State.* Tetjstees of Savings Banks. We may first treat of changes of the laws relative to trustees. The first savings bank, as we have seen, had twenty-eight corpo- rators. In 1834: a savings bank was authorized with forty-three trustees ; and before and since then the number has varied from forty-three to nine, which represents the extremes; the average number being about twenty-five. In 1871 the Legislature passed a general law authorizing any savings bank to reduce the num- ber of its trustees designated in its charter to not less than fif- * The magnitude of the interest involved in these benevolent organizations is forcibly shown hy the following comparisons : The aggregate capital employed by the following described corporations trans- acting business within the State was, at the dates given, as follows : National banks, October 3, 1883 |86,894,160 00 State banks, September 30, 1883 31,761,700 00 Trust companies, January 1, 1884 18,637,000 00 Life, fire and marine insurance companies, January 1, 1884 86,731,134 50 Safe deposit companies, October 1, 1883 3,886,900 00 $311,900,894 50 The total gold coin and bullion, silver coin, legal tender notes and National bank notes in the United States on November 1, 1883, was $1,533,366,989 ; of this sum $606,683,964 was held by the United States treasury and by the National and State banks, leaving the amount in the hands of the people, in actual circu- lation, at $916,684,035. The savings bank deposits of the State to-day exceed forty-seven per cent of the entire actively employed circulation of the country ; and are more than double as much in amount as the entire capital employed in the State by all of the financial corporations named above. 8 58 HISTOEIOAL SKETCH. teen, by omitting to fill vacancies. Here it may be said that the matter of a quorum was left to be expressed in the charter or formu- lated in the by-laws; no general law was passed on this subject until the year 1875 (§ 18, ch. 371), when it was enacted that a quorum should consist of not less than seven trustees. The smallest number fixed upon by charter was five, and the smallest rela- tive number was six in a board of forty-three. April 15, 1853 (ch. 257, amended June 30, 1853, cb. 492), the Legislature passed an act applicable to New York and Kings counties only, prohibiting any trustee of a savings bank to be trustee of more than one sav- ings bank, and forbidding trustees of any savings bank, thereafter to be incorporated, from being directors at the same time in any bank where any part of the moneys of the savings bank was deposited. The law was special in character having no application outside New York and Kings counties — indeed it was intended for the cities of ]S"ew York and Brooklyn — the theory being a tendency toward the centralization of monetary interests in these cities. In some in- stances savings banks are often only adjuncts to other banking insti- tutions, the trustees in the one being directors in the other. There have been but two exceptions to the usual mode of consti- tuting the boards of trustees. The first may be found in the char- ter of the Institution for the Savings of Merchants' Clerks, which was obtained April 12, 1848 (ch. 324). Section 2 of that charter provided that its ofiicers should consist of a president, two vice-presi- dents and a treasurer, who, together with twenty trustees, should con- stitute a board of managers, five of whom, if one of the officers be present, should constitute a quorum. Section 3 provided that nine of the first managers should be elected by the Chamber of Commerce of the State of New York, from its own body, and the president, first vice-president and treasurer of the said Chamber of Commerce, and the president, vice-president and treasurer of the Mercantile Li- brary Association of the city of IS'ew York should always be ex officio managers, and the nine members elected by the said Chamber of Commerce, together with the six ex officio managers, should elect the remaining nine managers. The second exception is in connection with the hybrid concern chartered May 14, 1868'(ch. 816), known as the People's Safe Deposit and Savings Institution of the State of New York. Section 2 thereof provided that after the persons named in the charter should HISTOEICAL SKETCH. 59 serve as directors for one year, the directors were to be elected by the stockholders. Invjistments. "We may next discuss the policy of the State in relation to the in- vestments which have been from time to time authorized by the Legislature. As has been already stated, the first act authorizing the establishment of a savings bank permitted investments only in government securities or stocks created and issued under and by vir- tue of any law of the United States or State of New York. The Bank for Savings in the City of New York subsequently, upon peti- tion to the Legislature, and with the approval of Governor Clinton, was authorized to invest in bonds of the city of New York ; a war- rant, which in 1827 (ch. 114) was extended to include the bonds of the State of Ohio, a material enlargement of the scope of invest- ments. The same year the Legislature, with a spirit evincing more liberality than sense of security, authorized the Albany Savings Bank to invest its trust funds " in the stock of any of the banks of the cities of Albany and Troy." Here was decided descent in the scale of security from the bonds of the United States or of a particu- lar State to the stock of a banking corporation liable to the vicissi- tudes of commercial pursuits. It was fortunate for the savings bank that its trustees did not take advantage of their enlarged powers, or the suspension or failure of some of the banks, in the stock of which they were authorized to invest, would have led to serious results. In the year 1829 (ch. 17) the Seamen's Bank for Sav- ings was chartered with power to invest in the bonds of the United States, New York, Pennsylvania, Ohio, and the city of New York. In 1830 (ch. 96), the Bank for Savings in the City of New York was authorized to loan on real estate and to make temporary deposits in any incorporated bank in said city. The permission to loan on realty was first without limit as to the pi-oportion of loan to the value of the real estate, and later to the limitation of the loan being placed at half the value of the security. It would be practi- cally useless to foUow the history of legislation in detail as to sav- ings banks in the ensuing fifteen years ; during this time the fact remains to be emphasized, that there was a constant diminution of the United States public debt, until 1835, when it was practically nothing, being but $37,500. United States bonds were, therefore. 60 HISTOEICAL SKETCH. not available for investment by savings banks, now rapidly multiply- ing ; more and more bond and mortgage formed tbe basis of invest- ment, whHe the legislation of the State relating thereto was capri- cious and vacillating. Each savings institution had not only to pro- cure its own special charter, but, in the absence of general laws, it secured the most liberal one it could, with as few restrictions as possible ; the charters of no two banks were the same or included precisely the same privileges. In 1846 (ch. 176) a savings bank was incorporated containing a new provision in its charter authorizing the trustees to hold " an available fund of not exceeding $50,000, which they may keep to meet the current payments of said corporation." Here is the first appearance of a reserve fund, but singularly enough it was not made proportionable to capital or deposits as in the National banking sys- tem, but was fixed at an arbitrary amount not to be varied whether the deposits were a hundred thousand or a million of dollars, and a peculiar feature of the law was that this reserve was not necessarily to be in gold, silver or bank notes, or even negotiable securities, but " in such available form as the trustees may direct." In February of the same year, applications having been made for charters for savings banks at Buffalo and Rochester, the Assembly committee on banks seem to have become aroused to this peculiar condition of affairs. The savings bank deposits, at this time amounted to about $10,000,000. The committee, in their report to the Assembly, express surprise at the want of care in legislation, as they find the only guaranty the public have against loss by fraud or defalcation is " the high character and standing of these several boards of trustees,'' and declare the way is open for defaulters and swindlers if they choose to improve their opportunities, and assert that the pro- visions constituting a quorum (sometimes but one-third of the trus- tees being required) to be wholly unsatisfactory. They recommend that securities be not changed without the consent of two-thirds of the trustees, that the banks should be subjected to the supervision of the Comptroller, that the managers be placed under bonds, and they disapprove the requirement that the service of the managers should be gratuitous, for, they say, " where men get nothing for their ser- vices they are sure to become careless in their supervision." The Legislature chartered the Buffalo Savings Bank, adding sev- eral additional safeguards — refused a charter for a second bank at HISTOBICAL SKETCH. 61 Eochester, and also refused to pass a general law for the incorporar tion of savings banks. The Legislature of 1847 (ch. 456) amended the charter of the Buffalo Savings Bank, by prohibiting it from dis- counting business paper, and adding this provision, " whenever the amount of the moneys in deposit in such bank shall exceed the sum of $400,000, the available fund may, in the discretion of such trus- tees, be increased to any sum not exceeding $100,000." A general act was also passed authorizing deposits to be made with banking associations as well as with incorporated banks. Legislation con-, tinued special, presenting no marked feature except that the reserve fund was generally fixed at one-third of the deposits. In 1849 (ch. 179) investments were allowed in the stocks of any city in this State ; in 1853 (ch. 257) the Legislature allowed the savings banks of ISTew York city and Brooklyn to invest in the bonds of any State in the Union, and to loan on any of these securities as collaterals. Town bonds were not an authorized investment until 1863 (ch. 315), when the Legislature also authorized the savings banks to loan their funds on the bonds of cities or counties of this State, providing the act authorizing the issue of the bonds made provision for their pay- ment by the imposition of a tax. There was no change in the gen- eral legislation of the State relative to savings banks until the year 1875 (ch. 371), when a general law was passed. The amended Constitution of the State, ratified by popular vote in 1875, went into operation January 1, 1876 ; among its provisions was one requiring the Legislature by general law to conform all char- ters " of institutions for savmgs to a uniformity of powers, rights and liabilities.'' In compliance with such requirement, bills were in- troduced in both the Senate and the Assembly early in January of that year, one in the Senate and two in the House. Differences arose on the question whether, as in the case of other corporations, savings banks should be established under the general law to be passed, outside of any special authority of the Legislature, or whether the law being passed,no bank should be established under its provisions until the con- sent of the Legislature was obtained. In the midst of the conflict of views which prevailed,. an entirely new biU was framed containing the best features of all, together with some additional provisions. This bill was generally favored by the banking interests, and was largely the outcome of consultation with the trustees of savings banks. After extended discussion it passed the Assembly and was 62 HISTORICAL SKETCH. sent to the Senate, which body proposed amendments in which the Assembly refused to concur, and a conference committee became necessary. Contrary to general expectation, a conclusion was reached, and a bill agreed upon, substantially that of the Assembly, with some of the Senate's modifications incorporated. The bill not only contained the customary repealing clause, but also a provision repealing all charters and parts thereof inconsistent with the act. By its passage every savings bank in the State was brought under the provision of one fundamental law, containing uniform powers, limits and safeguards for all. Briefly epitomized, the bill provided for the organization of savings banks through the office of the Bank Superintendent ; limited individual deposits to $5,000 ; limited div- idends to six per cent per annum until a surplus of ten per cent upon deposits was accumulated ; required the accumulation beyond ten per cent to be divided every three years ; made trustees per- sonally liable for dividends declared and credited in excess of earn- ings; protected deposits of minors and females; pi'ohibited the banks from pleading the statute of limitations in defense of actions brought to recover deposits ; and authorized investments in the fol- lowing securities only : 1. Stocks issued or guaranteed by the United States. 2. New Tork State stocks. 3. Stocks of any State in the Union that has not, within ten years previous to the investment, defaulted in principal or interest. 4. Bonds of any city, county, town or village in this State issued in pursuance of law. 5. Bonds and mortgages on unincumbered real estate in this State, worth twice the amount loaned thereon, or when unproductive, not over forty per cent of its value, the total of such loans not to exceed sixty per cent of the deposits. 6. In real estate for banking purposes but under careful restrictions as to the amount. Investment in other securities is made a misdemeanor. A.n avail- able fund, in the form of cash on hand or deposited, is provided for, a flexible amount proportionable to deposits being prescribed. In addition the Superintendent of the Banking Department is .charged with the duty of examining every bank once in two years, and as much oftener as he may deem necessary; the expense of §uch ex- aminations to be borne by the banks. This, in brief, is a summary of the salient features of the general law which, up to the present time, with but few amendments, has admirably served its purpose. HISTOEICAL SKETCH. 63 The only securities in addition to tliose designated by the Law of 1875, in which trustees of savings banks are, at the present time, authorized to invest the moneys in their custody, are the bonds of the District of Columbia, commonly known as the 3-65 bonds, and any interest-bearing obligations issued by the county in which the bank making the investment is situated. Authority for the former was granted by Laws of 1879 (ch. 437), and for the latter by chapter 134 of the Laws of 1880. Dividends. An investigation of the subject of dividends to depositors is of interest. A customary provision in the charters granted by the Legislature was in these words : " It shall be the duty of the trustees to regulate the rate of inter- est to be allowed to depositors so that they shall receive, as nearly as may be, a ratable proportion of all the profits of the corporation after deducting the necessary expenses." An act passed April 23, 1831 (ch. 154), entitled " An act con- cerning the Bank for Savings, in the city of New York;" author- ized the board of trustees of that bank to regulate from time to time the interest to depositors, so that the interest allowed to depositors having $500 or more deposited with the bank should be at least one per cent less than the interest allowed to others. Section 5 of " An act relative to savings banks or institutions for savings in the city and county of IS'ew York and county of Kings," passed April 15, 1853 (ch. 257), provides that " No such savings bank or institution for savings hereafter to be incorporated shall re- ceive from any individual depositor a larger sum than $1,000, or a larger amount than $3,000,000 in the aggregate amount of deposits, exclusive of its banking-house; and the rate of interest on all de- posits of $500 and under, shall be one per cent per annum greater 64 HISTORICAL SKETCH. ttian shall be allowed on any sum exceeding law may be found in section 267 of the revision.* The present SuEPLus Moneys. Another source of legislative discussion was the surplus moneys which had accumulated in the several savings banks. Chapter 354. of the Laws of 1831, passed April 23, entitled " An act concerning the Bank for Savings, in the City of New York," provided for the accumulation of a surplus fund as follows: " The board of trustees of the Bank for Savings in the City of New York are hereby author- ized to accumulate gradually and hold invested a surplus fund not exceeding three per cent on the amount of deposits, to the end that in case of a reduction in the market price of the public stocks and securities, held or to be held by the said bank, below the par value January 1, 1858. January 1, 1850. January 1.1860.. January 1, 18H1. . January 1, 1862.. January 1, 1863. . January 1, 1864.. January 1, 1865.. January 1, 1866. January 1, 18B7. January!, 1868.. January 1, 1869. . January 1,1870.. January 1, 1871. January 1, 1873. . January 1, 1873. . January 1, 1874.. January 1, 1875. . January 1, 1876. . January 1, 1877. . January 1, 1878. January 1, 1879 . January 1, 1880. . January 1, 1881. . January 1, J882. . January 1, 1883. . January 1, 1884. . Deposits. Interest paid Number of Average of to depositors. open accounts each account. $41,432,672 $2,070,851 203,804 $203 24 48,194,847 2,197,787 230,074 209 47 .'58,178,160 2,610,912 273,697 208 91 67,440,397 2,834,249 800,693 224 28 64,083,119 3,088,921 300,511 213 21 76,538,183 ' 3,079,302 347,184 220 46 93,786,384 3,760,524 400,194 234 35 ' 111,737,763 4,593,901 456,403 244 82 11,5,472,566 5,647,505 465,001 248 33 131,769,074 5,678,453 488,501 270 10 151,127,562 7,400,110 537,466 281 18 169,808,678 8,666,374 588,556 288 51 194,360,217 10,320,207 651,474 296 80 230,749,408 12,148,985 712.109 324 03 267,905,828 13,744,144 776.700 344 92 285,286,621 14,977,613 822.642 346 79 285,520,085 16,153,997 839,472 340 12 303,935,649 16,139,949 872,498 348 35 319,260,202 16,990,284 859,738 37100 316,677,285 16,457,347 849,638 372 73 312,823,058 14,926,868 844,550 370 40 299,074,639 IS, 139, 690 810,017 369 22 319,258,501 13,462,081 864,470 369 52 353,629,657 13,660,977 953,707 370 79 387,832,893 13,672,308 1,036,106 374 32 412,147,213 14,153,005 1,095,971 376 05 431,080,010 14,724,663 1,147,583 375 64 Tliere has been credited and paid on account of interest to depositors in sav- ings banks during tlie last twenty-seven years, the sum of $366,291,007, wMch amount exceeds sixty-one per cent of tlie whole amount due depositors January 1, 1884, and ''more than fifty-three per cent of the aggregate resources January 1, 1884. The average of deposits during that period was $216,633,358, and the aver- age yearly interest paid depositors, $9,863,629, an average rate of .0455. In this connection the preceding table will be found of interest. HISTORICAL SKETCH. 65 thereof, any loss to the depositors by reason of such reduction may be prevented or made good by means of the said fund." Chapter ITS of the Laws of 1836, passed April 23, amended the charter of this institution in reference to authorized surphis, as follows: "The board of trustees of the said savings bank are hereby authorized to accumulate gradually, and hold invested, a surplus fund not exceeding ten per cent on the amount of deposits, to the end that in case of a reduction in the market price of the securities or public stocks, held or to be held by the said bank, below the par value thereof, any loss to the depositors by reason of such reduction may be prevented or made good by means of said fund." A general law, passed May 6, 1839 (ch. 347), made the following provision : " The board of trustees of the said savings banks are hereby authorized to accumulate gradually and hold invested in like securities, as authorized by the act incorporating said banks, a sur- plus fund not exceeding ten per cent on the amount of deposits in said banks, respectively, to the end that in ease of a reduction in the market price of the securities or public stocks, held or to be held by the said banks, or any of them, below the par value thereof, any loss to the depositors by reason of such reduction may be prevented or made good to them by means of said surplus fund." An amendment to the Constitution was adopted November 3, 1874, conforming all charters of savings bauks, or institutions for savings, to a uniformity of powers, rights and liabilities, " and all charters hereafter granted for such corporations shall be made to conform to such general law, and to such amendments as may be made thereto. And no such corporation shall have any capital stock, nor shall the trustees thereof, or any of them, have any inter- est whatever, direct or indii'ect, in the profits of such corporation ; and no director or trustee of any such bank or institution shall be interested in any loan or use of any money or property of such bank or institution for savings. The Legislature shall have no power to pass any act granting any special charter for banking purposes ; but corporations or associations may be formed for such purposes under general laws." Sec. 4 of art. VIII. As directed by the foregoing amendment, the Legislature passed the General Savings Bank Law of 1875 previously mentioned. Sec- tions 33 and 34 of the act are sections 267 and 268, as amended, of the Revision. Chapter 256 of the Laws of 1877, passed May 10, 9 66 HISTOEIOAL SKETCH. amended the General Savings Bank Law by reducing the rate of interest, which savings banks were authorized to pay depositors, to five per cent. It further authoriiied the accumulation of a surplus fund of fifteen per cent and required the trustees of savings banks to divide such surplus ^mong depositors when the same shall amount to fifteen per cent of the deposits held by the bank. The basis on which such surplus was estimated was changed so that the interest- paying stocks and bonds held by a savings bank should not be esti- mated above their par value or above their market value if below par. Compensation of Tbtjstees. A restraining clause in the original charter of the first bank for savings incorporated in this State was as foUows : " The trustees or managers of said institution shall not, directly or indirectly, receive any pay or emolument for their services." All charters subsequently granted in this State prior to the year 1850 contained a hke provision. Indeed, in some charters trustees were prohibited from being depositors except as guardians or trust- ees for others. The first authorization of trustees to receive pay when acting in any capacity, is found in an amendment to the charter of the Troy Savings Bank (ch. 216, Laws of 1850), where it was enacted : " It shall be lawful for the managers to pay to the president of the institution such compensation as they shall deem reasonable for superintending the business and concerns of said corporation, either wholly or with the aid of such clerk or clerks as the managers may, from time to time, appoint. Again in the year 1858 the law was changed making it lawful for trustees of institutions for savings in the counties of New York and Kings, and in the city of BufEalo, " to pay to their respective presidents such compensation for their ser- vices as shall, in the opinion of such trustees, be reasonable." Ch. 136. In 1863 (ch. 476) the Legislature amended the charter of thePough- keepsie Savings Bank by authorizing its trustees to pay the president of that bank a reasonable compensation out of the surplus earnings. The law now provides that no trustee of a savings bank shall have any interest whatever, direct or indirect, in the gains or profits thereof, nor as such, directly or indirectly, receive any pay or emolu- ments for his services, except ' as thereinafter provided. Another section provides that it shall be lawful for trustees of such corpora- HISTOEIOAL SKETCH. 67 tion, acting as officers of the same, whose duties require and receive their regular and faithful attendance at the institution, to receive such compensation as in the opinion of a majority of the board of trustees shall be just and reasonable; but it shall not be lawful to pay trustees, as such, for their attendance at meetings of the board. See §§ 255 and 269 of the Eevision. Unclaimed Deposits. The impression that the savings banks of the State hold a vast sum, in the aggregate, of money for which there are no claimants, has in the past afforded a proMc theme for legislative discussion, and numerous measures have been introduced having for their object the transfer of such unclaimed deposits to the custody of the State for its bene- fit. In the year 1853 a bill was introduced which required savings banks to transfer to the board of supervisors of their respective counties, the moneys of all depositors whose accounts had not been added to by new deposits or diminished by drafts during the pre- ceding twenty years. This bill failed to become a law. In 1859 the Legislature appointed a committee to examine the various savings banks for the purpose of ascertaining the amount of unclaimed deposits held by each; and again in 1862 a bill was in- troduced in the Assembly, having for its object the confiscation of these so-called unclaimed deposits. A committee of the Legislature was appointed with full power to investigate the subject. The re- port of such committee was submitted to the Legislature of 1863, in which they say : "The subject of unclaimed moneys, supposed to be lying in the several savings banks in the State, has been for many years, inside and outside of the Legislature, a fruitful source of discussion. The public press has, periodically, teemed with articles on the subject, and year after year bills and propositions have been introduced into the Legislature proposing to transfer these unclaimed moneys to the custody of the State, supposing them to amount to millions. The result of the present investigation, however, fully demonstrates that the public mind has been greatly misled as to the amount of these moneys. Whatever may be the power of the Legislature as to the disposition of the money itself, the amount is clearly not as large as it has generally been supposed to be, judging from the tone of the 68 HISTOEIOAL SKETCH. discussion of the question in the public press and in both branches of the Legislature. " No doubt many have confounded the surplus moneys of our savings banks with the unclaimed, and to this fact, probably, may justly be attributed the extravagant ideas that have been so preva- lent in the public mind upon the subject of the latter." The aggregate amount of deposits unclaimed for a period of twenty years, found by the committee, in all of the savings banks of the State, was $89,227.04. The committee in concluding their report further say : " As to the right of the Legislature to appropriate to itself the custody of these moneys, the committee have nothing to say ; that question they have not been asked by the Legislature to determine, it being simply their province to ascertain the amount of such un- claimed moneys. Able legal men have been found on both sides of this question, and the probability is that it would become a matter of judicial decision should the Legislature pass a law on the subject." In 18T5 public attention was again drawn to the subject of un- claimed deposits through a Senate resolution directing the Superin- tendent of the Banking Department to ascertain the amount of deposits or balances in the several savings banks of this State which have remained unclaimed for a period of twenty years and upward ; also the amount for ten years and upward, and with all convenient dispatch to report the same to the Senate. March 12, 1875, the Superintendent reported the amount of unclaimed deposits held by the several savings banks to be $854,844:. 72, of which amount $316,- 656.60 had remained unclaimed for twenty years and upward, and $538,188.12 for ten years and upward and less than twenty years, while the aggregate deposits held by the several savings banks Jan- uary 1, 1875, was $303,935,649. Taxation.* Notwithstanding that the clearly-defined policy of the State since the inception of the Savings Bank system has been to absolutely ex- empt the deposits and surplus of such institutions from taxation by State or local authorities, yet in the past earnest effort has, on sev- eral occasions, been made by individual members of the Legislature to impose upon these institutions the burdens of taxation. With but a single exception these efforts proved abortive. * See note to section 5319, U. S. R. S., post. HISTORICAL SKETCH. 69 A law was passed April 15, 1857 (cli. 456), entitled " An act in relation to the assessment of taxes of incorporated companies," section 4 of whicli is as follows : " The deposits in any bank for savings which are due depositors * * * shall not be liable to taxation other than the real estate and stocks which may be owned by such bank * * * and which are now liable to taxation under the laws of the State." An opinion by the Attorney-General was filed in the Banking Department June 12, 1878, in which that officer holds that this sec- tion exempts deposits in savings banks absolutely from taxation. He further states that a depositor cannot, therefore, be taxed for such deposits, this statute protecting the savings institutions as well as their depositors.* In 1866 an act of the Legislature made the surplus of savings banks subject to taxation ; in the following year the law was amended by exempting from taxation so much of the surplus as was invested in United States bonds, which exemption was a practical repeal of the statute. In 1868 the question of taxation was again the subject of legisla- tive discussion, as it has been on several occasions since that date, notably in 1880, when a bill was introduced proposing to levy a State tax on deposits in savings banks, of one-quarter of one per cent. This measure attracted considerable public attention and met with very general opposition. The press characterized it as a " tax on thrift and frugality," and the proposed law was defeated. September 1, 1879, Mr. Justice Barnard gave an opinion at Spe- cial Term that under the existing laws both the deposits and surplus of the savings banks of this State are absolutely exempt from taxa- tion, f Again, in 1884, the finance committee of the Assembly unani- mously reported an act " to provide revenue for the State by a tax on savings banks and institutions for savings." The bill provided that every savings bank should pay, as a tax on its corporate fran- chise or business, a sum equal to twenty-five cents on every $100, computed on the amount of its deposits and surplus funds in excess of $500,000, whether such was invested in United States securities * See note 1 to § 256 of Eevisiou, post. f See opinion in full, note 2, § 356 of the Revision post. 70 HISTORICAL SKETCH. or otherwise. So determined an opposition to the bill was at once developed that it was recommitted to the committee from which it emanated, and by that committee reported adversely. This exemption would seem to be amply justified from the fact that these institutions have proved great educators, and while the State exempts from taxation school property, both real and endow- ment, it would seem that both public economy and public morality just as imperatively demand that the means by which our citizens are taught to acquire habits of economy, thrift and enterprise should also be relieved from the burdens of taxation ; a tax would reduce the surplus, lessen dividends, discourage deposits and impair the usefulness of these institutions, thus injuring the public far beyond the measure of the tax received. No small element of strength of the Commonwealth is to be found in the institutions for savings which guard the accumulations of the people with a fidelity worthy of all praise and which add luster among many features of her social and political economy to the fair name of the State of New York. AETICLE III. Moneyed Coepoeations, othee than BAires, Banking Associa- tions, Individual Bankees and Savings Institutions. Instead of pursuing the plan indicated in the two preceding chapters of this sketch, of giving a history of the first of the moneyed corporations, mentioned in the heading of this article, beginning with the action of the Legislature, etc., it has been thought advisable, thus saving repetition, to speak in a general way of their respective charters, and amendments thereto, that have from time to time been obtained from the Legislature. The subject is divided into four classes, although in several instances, corporations have been created with such broad powers that they may with propriety be placed under all the various headings of this chapter. The appendix will be found to contain a table giving the names of each of these corporations referred to in the heading of the chapter, with the dates at which they were chartered, and the chapter number of the statutes creating them, together with refer- ence to the acts amending such charters. All of these institutions HISTOKICAL SKETCH. 71 came into existence under special laws, except the safe deposit companies, which have been organized since June 21. 1875, under a general law, which is hereafter mentioned. Trust Companies. The distinction between trust companies and banks of deposit and discount is not as broad practically as it is in theory. In theory, the latter, subject to but few restrictions, deal in investments of such character as they deem advisable, while the former must have a large capital, which, with their trust funds, should be invested in the best securities. There must be unquestionable security to depositors, and the interest that may be paid them is wholly of secondary con- sideration. The history of these institutions clearly shows that the more completely each has approximated their theoretical character as a class, the greater has been its success ; and the failures that have occurred are due, in every instance, at least, so far as our personal knowledge goes,* to the liberal provisions of the charter granted by the Legislature. The trust companies, generally speaking, have been created with all of the customary powers of corporations, and in addition author- ized to receive moneys, in trust and accumulate the same, at rates of interest to be agreed upon (in no case to exceed legal rates), and to accept and execute all trusts of every description committed to them by any person, persons or corporation, or such as may be transferred to them by order of the Supreme Court or by a surro- gate, or by any court of record. To take and accept by grant, as- signment, transfer, devise or bequest, and hold any real or personal estate on trusts created in accordance with the laws of this State, and execute such legal trusts in regard to the same, on such terms as may be declared, established or agreed upon, in regard thereto ; to act as agent, for the purpose of issuing, registering or countersign- ing stocks, bonds, or other evidences of debt of any corporation, association, municipality. State or public authority. To accept from and execute trusts for married women in respect to their separate property, and to act as guardian for infants. * It may not be altogether out of place to state ttat the author and his asso- ciates made, at the request of the then Superintendent of the Banking Department, the first two annual examinations of these and like institutions. Such examina- tions were authorized by chapter 334, Laws of 1874. 72 HISTOEICAL SKETCH. No bond or other collateral security can be required of the corpo- rations named when appointed guardian, receiver, depository, execu- tor or administrator. All investments of moneys received by such corporations, in either of the characters mentioned, have been and are at the sole risk of the corporation ; and for all losses of such money the capital stock, property and efEects of the corporation were and are absolutely liable. In the case of the dissolution of the cor- poration the debts due from it in either of the characters mentioned are made preferred claims. Whenever default is made in the payment of any debt or- liability contracted by the corporation, the stockholders, by most charters, are made individually responsible, equally and ratably for the amount of such debt or liability to an extent equal to the amount of their respective shares of stock in the company. Other of the char- ters fix the liability of stockholders at the par value of the stock held or owned. For all losses of money for which the capital stock shall not be sufficient to satisfy, the trustees are responsible in the same manner and to the same extent that trustees are responsible in law or equity. The trustees usually are required to be citizens of this State, and stockholders of their respective corporations to a fixed amount, Trustees and officers are prohibited, in most cases, from either di- rectly or indirectly borrowing the funds or securities in their custody or under their control. The capital of trust companies, by most charters, is required to be invested in bonds and mortgages on unincumbered real estate, situate in this State, worth twice the amount loaned thereon ; or in public stocks of the United States, New Tork State, or of indi- vidual States, or cities or counties of this State. The trustees of these corporations are authorized to invest the premiums and profits, as well as the moneys received by them, in public stocks of the United States, or of any individual State, or in the stock of any in- corporated city ; or in such real or personal securities as they may deem proper. The charters usually limit to $25,000 the amount of stock they may hold of any private incorporated company. The charters of several of the older corporations, in addition to the other powers conferred, authorized the insuring of all kinds of property against loss or damage by fire ; to make insurance on lives ; HISTOEICAL SKETCH, 73 to grant and purcliase annuities ; to make any other contingent con- tract involving the interest of money and the duration of life. April 30, 1868, a law (ch. 482) was passed authorizing any trust or loan company, by the direction of two-thirds of its board of di- rectors, to purchase or invest, by loan or otherwise, any of its funds in the bonds issued by any county, town or village of this State, any thing in its charter to the contrary notwithstanding. Previous to the year ISli, trust, loan, mortgage, security, guar- anty or indemnity companies or associations were operated under the provisions of their respective charters, there being no general laws applicable to them. The reports of the various corporations were made, some to the Comptroller of the State, and others to the Supreme Court. The Law of 1874, passed May 5 (ch. 324), placed all corporations of the class named under the supervision of the Superintendent of the Banking Department, and required the sev- eral corporations to make a full report* in writing to him of their condition and afEairs on the last business days of June and Decem- ber in each year ; such reports to be verified by the oaths of such officers of the corporation as the said Superintendent should desig- nate, which report shall be in the place of any report the corpora^ tions were required to make to the Supreme Court, the Comptroller, or otherwise. The act further required that the reports should be in such form, and contain such statements, returns and information as to the affairs, business, condition and resources of the corporation, as the Superintendent might from time to time prescribe or require. The Superintendent may also require reports from any of the corporations at any time he may deem it desirable. The Superintendent is required annually to visit and examine each of the corporations, or appoint some competent person or persons to make such examinations. The expense of examination to be paid by the corporation examined. The Superintendent and examiners have power to administer oaths, and may compel the appearance and attendance of any person whose testimony may be required, by summons, subpoena or attachment, in the manner authorized in re- spect to the attendance of persons as witnesses in the courts of record of this State, and all books and papers which it may be deemed nec- * See opinion of the Court of Appeals, filed April 39, 1884, note to § 319 of the Revision, post. 10 74 HISTOEICAL SKETCH; essary to examine by the Superintendent or the examiner or exam- iners shall be produced, and their production may be compelled in like manner. On every examination inquiry shall be made as to the condition and resources of the corporation generally, the mode of conducting and managing its affairs, the action of its di- rectors or trustees, the investment of its funds, the safety and pru- dence of its management, the security afforded to those by whom its engagements are held, and whether the requirements of its char- ter and of law have been complied with in the administration of its affairs. Whenever any corporation has committed a violation of its char- ter or of law, or is conducting business in an unsafe or unauthor- ized manner, the Superintendent shall direct a discontinuance of the illegal and unsafe practices, and in case of refusal or neglect to com- ply with such order, or whenever it shall appear to the Superintend- ent that it is unsafe or inexpedient for any such corporation to con- tinue to transact business, he shall communicate the facts to the Attorney-Greneral, who shall institute such proceedings against the corporation as the nature of the case may require. Every corpora- tion, whether chartered by this State, or any other State or coun- try, engaged in receiving deposits of money in trust in this State is required to transfer and assign to the Superintendent of the Banking Department registered public stocks of the United States, or of the State of New York, or of any incoi-porated city of this State authorized by the Legislature, to the amount in value of ten per cent of the paid-up capital stock of the corporation, but in no case shall such deposit be less than $50,000. The stocks de- posited are required to be registered in the name of the Superin- tendent officially, as held in trust, as security for the depositors with, and creditors of the corporation making the deposit ; and are sub- ject to sale and transfer, and to the disposal of the proceeds by said Superintendent, on the order of any court of competent jurisdiction only. With the approval of the Superintendent, the required de- posit may be made either wholly or in part in bonds and mortgages, on improved, unincumbered, productive real estate situate in this State, and worth at least twice the amount loaned thereon. The amount of money which any of the corporations named shall have on deposit or loan at any time shall not exceed ten times the HISTORICAL SKETCH. 75 amount of its paid-up capital and surplus, and its outstanding loans shall not at any time exceed said amount ; but any such corpora- tion authorized to receive court deposits may at any time receive on deposit and loan out any money which may be deposited with it by any of the courts of this State, including Surrogates' Courts, not- withstanding such limitation. The corporations subject to the pro- visions of chapter 324, Laws of 1834:, are assessed by the Superin- tendent to pay their proper proportion of the expenses of conducting the business of the Banking Department. An additional statute relating to trust companies and certain other moneyed corporations was passed May 18, 1878 (ch. 274) ; by it provision is made for the increase or reduction of the capital stock of such corporations. The minimum amount of capital stock au- thorized is fixed at $100,000. The act further directs the Super- intendent of the Banking Department to annually report to the Leg- islature a summary of the state and condition of each corporation of the class named from which reports have been received by him dur- ing the preceding year ; such summary shall give the date to which such reports refer, the amount of capital returned by each of said corporations, the whole amount of its debts and liabilities, the total sum of its resources, and such other information as he may deem useful ; and he is further required to report an abstract of the regu- lar examination of any such corporation made by his direction. Guaranty oe Indbmnitt Companies. By their charters the guaranty and indemnity companies have power to guaranty the payment, punctual performance and collec- tion of promissory notes, bills of exchange, contracts, bonds, ac- counts, claims, rents, annuities, mortgages, choses in action, evi- dences of debt and certificates of property or value and the titles to property, real or personal ; to receive upon storage, deposit or other- wise, merchandise, bullion, specie, plate, stocks, bonds, promissory notes, certificates and evidences of debt, contracts or other property and to take the management, custody and charge of real or personal estates or property and to advance moneys, securities and credits upon any property, real or personal, on such terms as may be estab- lished by the directors of the company. 76 HISTOEIOAL SKETCH. Mortgage Companies. Mortgage companies have the general powers and privileges and are subject to the liabilities declared by title 3 of chapter 18 of the first part of the Revised Statutes, and in addition thereto have power to loan on or purchase bonds and mortgages upon real estate ; to issue bonds of the company and to sell and dispose of the same ; to sell bonds secured by mortgages upon property situated within the United States, and to guaranty the payments of the principal and interest of the same ; to purchase, hold and convey all such real and personal estate as may be necessary for the corporation to use in the transaction of its business, or such as it may acquire in the collection or settlement of its demands or claims, or purchase or take on the foreclosure or enforcement of mortgages. No loan shall be made to any director or officer of the corpora^ tion, nor shall any loan or advance of money be made at a rate of interest exceeding the legal rate in the State in which the land on which the loan or advance is made is situated. Safe Deposit Compaoteb. Previous to the year 1875, corporations for the safe-keeping and guarantying of personal property were created by special charters granted by the Legislature. Chapter 613 of the Laws of 1875, passed June 21, made provision for their organization under a gen- eral law, which authorizes any five or more persons to form a com- pany for the pui-pose of taking and receiving upon deposit, as bailee for safe-keeping and storage, jewelry, plate, money, specie, bullion, stocks, bonds, securities and valuable papers of any kind, and other valuables, and guaranteeing their safety upon such terms as may be agreed upon between the company and the respective bailors thereof, and to let out vaults and safes and other receptacles for. the uses and purposes of the corporation. They are further authorized to lease, purchase, hold and convey any real or personal estate what- ever which may be necessary to enable them to carry on their busi- ness. The corporations are prohibited from making any loan or advance upon property held by them on storage or for safe-keeping.* The shareholders of the respective corporations are liable to an amount * Pratt T. Eaton, 79 N. Y. 452 ; In re Jaycox, 12 Blatchf. C. Ct. 209 ; 13 id. 70. HISTOEICAL SKETCH. 77 equal to the par value of their stock, over and above such stock, for all debts of the corporation. AU corporations of the class named are required to make verified semi-annual reports of their condition to the Superintendent of the Banking Department, and the said Superintendent is required annu- ally to examine each of the corporations, either personally or by some competent person to be appointed by him, the expense of such examination to be paid by the corporation examined. If it shall ap- pear from any examination that a corporation has committed a vio- lation of its charter or of law, or is conducting its business in an un- safe or unauthorized manner, the Superintendent shall, by an order under his hand and seal of office, direct the discontinuance of such illegal or unauthorized practices. In the event of non-compliance with such order, or whenever failure to report as required is made, the Superintendent shall communicate the facts to the Attorney- General for such action as the nature of the case may require. Chapter 10 of the Laws of 1877, passed February 5, authorized the organization of safe deposit companies with capital stock of $50,000 in cities or villages of less than 100,000 inhabitants. The minimum amount of capital authorized prior to the passage of the act was $100,000, with privilege of increasing the same to $1,000,- 000. The minimum amount of capital required for organization was further reduced to $10,000 in cities or villages of 100,000 inhabitants, by chapter 273 of the Laws of 1883, passed April 20 ; $100,000 be- ing the lowest authorized capital in cities containing more than 1 00,- 000 inhabitants. An additional act of the same year (ch. 338, passed April 30, of the same year) relates to the election of trustees. NoTB. — The organization of tuilding, mutual loan and accumulating fund associations was provided for by chapter 123 of tlie Laws of 1851, passed April 10. Tlie publication in two newspapers of a statement of the condition of the corporation, was all of the information as to their transactions which was required to be made public, until the passage of chapter 564 of the Laws of 1875, by which act these corporations are required to report annually, on the 1st day of Janu- ary, to the Superintendent of the Banking Department, a statement of the condi- tion of their affairs ; and it was made the duty of the Superintendent to once in two years examine, or cause to be examined, the condition, workings and affairs of each of the corporations transacting business. Chapter 96 of the Laws of 1878, passed April 1, amended that portion of the law which required regular examina- tions to be made, and provided for examinations only when five or more stock- holders should in writing make request for the same. The laws relating to these corporations will be found in the appendix. EEPEALII^G ACT BEIiATING TO Banks, Banking and Trust Companies COMPANIES RECEIVING MONEY ON DEPOSIT. EEPEALING ACT. The commissioners appointed to compile and revise the banking laws,* in transmitting their report to the Legislature, in connection with an act proposed to repeal certain then existing statutes, state as follows : " It is believed that the Revision, as submitted, embraces in com- pact and convenient form, the whole body of the statutory laws of this State in relation to banks, banking and trust companies in force at the date of this report. " This last statement should, perhaps, be qualified by the further explanatory statement that chapter 94 of the Laws of 1829, enti- tled ' An act to create a fund for the benefit of the creditors of cer- tain moneyed corporations, and for other purposes,' commonly known as the ' Safety Fund Act,' and the various subsequent provisions amendatory thereof, have not been in the Revision for the reason that they have become obsolete. There is no longer existing any thing upon which those statutes have, or can have, any operative force. The charter of the last safety fund bank expired fifteen years ago. The fund accumulated in the Banking Department under the provisions of those statutes, for the benefit of the credit- ors of those institutions, was required to be distributed to those hav- ing claims upon it by the Legislature in the year 1866, by chapter 564 of the Laws of that year. The Superintendent of the Banking Department reported to the Legislature, in the year 1870, that the account of the safety fund had been closed up, pursuant to said act, and the balance of the fund remaining after discharging aU claims upon it had been paid into the State treasury. " Inasmuch, therefore, as there are no longer any safety fund banks, nor any of their circulation outstanding to be protected, nor any safety fund, and the system of banking introduced by the act of 1829 having been wholly superseded by the free banking system * See preface. 11 83 HISTOEICAL SKETCH. provided for by chapter 260 of the Laws of 1838 and the amend- ments thereto, it has seemed to the commissioners proper, that the safety fund statutes should not only be omitted from the Eevision but should be expressly repealed. They have, therefore, provided for their repeal in the repealing act accompanying this report. " As it has been the purpose of the commissioners to have the Eevision embody the statutory law of the State, relating to banks, banking and trust companies, as it stands to-day, neither more nor less, and as they believe that every statute now in force, the safety fund statutes excepted, relating to the subject, has been incorpo- rated into the revision, they have prepared the form of a repealing act, to accompany this report, the passage of which they recommend, which repeals all previous legislation relating to the subject-matter covered by the Eevision, as well as the safety fund statutes before referred to. " The saving clause in the repealing act, being section second, is intended to prevent, and is broad enough in its terms, it is believed, to prevent the repealing act affecting any act done, suit or prosecu- tion commenced, right accrued or established, or penalty, forfeiture, offense or crime incurred or committed previous to its passage.'' This proposed law was adopted by the Legislature at the time of the enactment of the Eevision July 1, 1882, and is as follows : Chaptee 402, Laws of 1882. AN ACT to repeal certain acts and parts of acts. Section 1. The following acts and parts of acts, heretofore passed by the Legislature of the State, are hereby repealed, namely : 1. Of the Laws of eighteen hundred and twenty -nine: Chapter ninety-four. 2. Of the Laws of eighteen hundred and thirty : Chapter two hun- dred and forty-three. 3. Of the Laws of eighteen hundred and thirty-three : Chapter two hundred and seventy-four. 4. Of the laws of eighteen hundred and thirty-five : Chapter three hundred and seven. 3. Of the Laws of eighteen hundred and thirty-seven : Chapter twenty ; chapter one hundred and two ; chapter three hun- HISTOEIOAL SKETCH. 83 dred and fifty ; chapter four hundred and fifty ; section two of chapter four hundred and seventy-six. 6. Of the Laws of eighteen hundred and thirty-eight : Chapter two hundred and sixty. 7. Of the Laws of eighteen hundred and thirty-nine : Chapter three hundred and fifty-five. 8. Of the Laws of eighteen hundred and forty : Chapter eighteen ; ' chapter two hundred and two ; chapter three hundred and sixty-three. 9. Of the Laws of eighteen hundred and forty-one : Chapter fifty- six; chapter two hundred and ninety-two; chapter three hundred and nineteen. 10. Of the Laws of eighteen hundred and forty-two : Chapter two hundred and forty-seven. 11. Of the Laws of eighteen hundred and forty-three : Chapter two hundred and eighteen. 12. Of the Laws of eighteen hundred and forty-four : Chapter forty- one ; chapter two hundred and eighty-one. 13. Of the Laws of eighteen hundred and forty-five . Chapter eighty- seven ; chapter one hundred and ninety-five. 14. Of the laws of eighteen hundred and forty-seven : Chapter one hundred and sixty ; chapter four hundred and nineteen. 15. Of the Laws of eighteen hundred and forty-eight : Chapter three hundred and forty ; chapter three hundred and forty-four. 16. Of the Laws of eighteen hundred and forty -nine : Chapter ninety- seven; chapter two hundred and twenty-six; chapter three hundred and thirteen ; chapter four hundred and thirty-seven. 17. Of the Laws of eighteen hundred and fifty : Chapter two hun- dred and fifty-one; chapter three hundred and thirty -one; chapter three hundred and thirty-two. 18. Of the Laws of eighteen hundred and fifty-one : Chapter one hundred and sixty-four; chapter one hundred and ninety- seven ; chapter two hundred and three. 19. Of the Laws of eighteen hundred and fifty-three : Chapter two hundred and twenty-three. 20. Of the Laws of eighteen hundred and fifty-four : Chapter one hundred and thirty-eight ; chapter one hundred and eighty- five ; chapter two hundred and forty-two. 84 HISTOEICAL SKETCH. 21. Of the Laws of eighteen hundred and fifty-five : Chapter sixty- nine. 22. Of the Laws of eighteen hundred and fifty-seven : Chapter one hundred and three ; chapter one hundred and eighty-nine ; chapter eight hundred and four. 23. Of the Laws of eighteen hundred and fifty-nine : Chapter two hundred and thirty-six ; chapter two hundred and seventy- seven ; chapter three hundred and sixty-five. 24. Of >the Laws of eighteen hundred and sixty-two : Chapter sixty- two ; chapter four hundred and twenty-two. 25. Of the Laws of eighteen hundred and sixty-three: Chapter twenty-two ; chapter two hundred and forty ; chapter two hun- dred and forty-one ; chapter three hundred and seventy-two. 26. Of the Laws of eighteen hundred and sixty-five: Chapter ninety-seven. 27. Of the Laws of eighteen hundred and sixty-six : Chapter twenty- six; chapter five hundred and sixty-four ; chapter seven hun- dred and sixty-one. 28. Of the Laws of eighteen hundred and sixty-seven : Chapter one hundred and ninety-one ; chapter four hundred and seventy- five ; chapter four hundred and seventy-six. 29. Of the Laws of eighteen hundred and seventy : Chapter one hundred and sixty-three. 30. Of the Laws of eighteen hundred and seventy-one : Chapter four hundred and fifty-six. 31. Of the Laws of eighteen hundred and seventy-three : Chapter five hundred and eighty-five. 32. Of the Laws of eighteen hundred and seventy-four : Chapter one hundred and twenty-six; chapter three hundred and twenty-four. 33. Of the Laws of eighteen hundred and seventy-five : Chapter fifty ; chapter three hundred and seventy-one. 34. Of the Laws of eighteen hundred and seventy-seven : Chapter sixty-nine ; chapter two hundred and fifty-six. 35. Of the Laws of eighteen hundred and seventy-eight : Chapter two hundred and seventy-four ; chapter three hundred and forty-seven, except section two thereof ; chapter three hun- dred and seventy-two. HISTOEICAL SKETCH. 85 30. Of the Laws of eighteen hundred and seventy-nine : Chapter one hundred and twenty-two ; chapter two hundred and forty-seven ; chapter four hundred and twenty-two ; chapter four hundred and twenty-four ; chapter four hundred and twenty-eight ; chapter four hundred and thirty-seven. 37. Of the Laws of eighteen hundred and eighty : Chapter one hundred and thirty-four ; chapter one hundred and forty ; chapter two hundred and two; chapter two hundred and eighty-seven ; chapter five hundred and sixty-seven ; chapter five hundred and ninety-six. 38. Of the Laws of eighteen hundred and eighty-one: Chapter three hundred and seventy-three ; chapter foui hundred and seventy-seven. 39. Of the Revised Statutes : Title two of chapter eighteen of part one ; title twenty of chapter twenty of part one.* § 2. The repeal of any statutory provision, by the first section of this act, shall not afEeet any act done, right accrued or established, proceeding had, suit or prosecution commenced, or penalty, forfeit- ure, ofEense or crime, incurred or committed, previous to the time when such repeal shall take efEect ; but every such act, proceeding and right shall remain as valid, and every such suit or prosecution may lawfully proceed, and every such penalty, offense or crime, be recovered, or punished, as the case may be, as if the provision so re- pealed had remained in force." * As amended by chapter 434 of the Laws of 1884. REVISION OF THE STATUTES RIXATINO TO BANKS, BANKING AND TBDST COMPANIES. COMPANIES RECEIYIN6 MONEY ON DEPOSIT. BANKING LAWS. (Chapter 409— Laws of 1882, and amendments.) AN ACT To Revise the Statutes of this State eelating to Banks, Banking and Trust Companies. CHAPTER I. The Banking Department. Section 1. BstablisMng a tanking department. 2. Tlie superintendent. 3. His powers and duties. 4. Official seal. 5. Rooms and furniture. 6. Department expenses. 7. Compensation for extra services forbidden. 8. Examination of securities. 9. When agent appointed to examine. 10. Unclaimed balances to be paid into treasury. 11. Associations and bankers subject to supervision of superintendent. ■ Section 1. There is hereby established a separate and Estawish- distinct department which shall be charged with the execu- depart- tion of the laws in relation to banking associations and in- dividual bankers formed or transacting business under the laws of this State, savings banks, trust, loan, mortgage, security, guarantee or indemnity companies or associations, and every corporation or association having the power and receiving money on deposit, existing or incorporated, or which may hereafter exist or become incorporated under the laws of this State with power to receive deposits of 12 90 BANKING- LAWS. money, or assume obligations in this State, other than in- surance companies. Section 1. This section was constructed from section 1, cliapter 164, Laws of 1851, and section 1, chapter 334, Laws of 1874, omitting from the former the clause relating to safety fund banks, the charter of the last of which expired January 1, 1866. superin- § 2. The chicf officer of the department shall be denom- inated the superintendent of the banking department. He shall be appointed by the governor, by and with the advice and consent of the senate, and shall hold his office for the term of three years. He shall receive an annual salary of Salary. g^g thousand dollars, to be paid quarterly, in the first in- stance, out of the treasury on the warrant of the comptrol- ler. He shall employ from time to time the necessary clerks to discharge such duties as he shall assign them, whose compensation shall be paid to them monthly on his certificate, and upon the warrant of the comptroller, in the Deputy first instance, out of the treasury ; he shall appoint one of superin- ' tendent. the Said clcrks to be his deputy, who shall possess the pow- ers and perform the duties attached by law to the office of the principal during a vacancy in such office, and during the absence or inability of his principal. Within fifteen Oath of ^^y^ from the time of notice of their appointments respect- office, ively, the superintendent and his deputy shall take and sub- scribe the oath of office prescribed by the constitution, and ffle the same in the office of the secretary of State, and the said officers shall be in all respects subject to the pro- visions of the sixth title of chapter five of the first part of the Revised Statutes, so far as the same may be appli- Bond. cable. And the said superintendent of the banking de- partment shall give to the people of this State a bond in the penalty of fifty thousand dollars with two sureties to be approved by the comptroller and treasurer of this State, conditioned for the faithful discharge of the duties of his office, and the said superintendent shall not, either directly or indirectly, be interested in any bank or banking associa- tion, or as an individual banker: THE BANKING DEPARTMENT. 91 § 2 was section 3, chapter 184, Laws of 1851, as amended hj section 1, chapter 103, Laws of 1857. § 3. The superintendent of the banking department shall fuJ^?in-°' possess all the powers, perform aU the duties and be subject *®"'i«°*- to all the obHgations and penalties transferred from the comptroller to, and conferred and imposed upon the said superintendent, by chapter one hundred and sixty-four of the laws of this State of the year one thousand eight hun- dred and fifty-one, and as specially provided by this act. § 3 was section 8, chapter 164, Laws of 1851, the wording being changed so as to cover all powers conferred on the superintendent hy laws previous to revision. § 4. The seal of office of said superintendent shall be the seal, seal provided for said superintendent by chapter one hun- dred and ninety of the laws of eighteen hundred and eighty- two. Every certificate, assignment and conveyance executed by the said superintendent in pursuance of any authority conferred on him by law, and sealed with his seal of office, shall be received in evidence, and may be recorded in the proper recording offices in the same manner and with the like eflect as a deed regularly acknowledged or proved before an officer authorized by law to take proof or acknowledg- ment of deeds ; and all copies of papers in the office of the said superintendent, certified by him, and authenticated by the said seal, shall in all cases be evidence equally and in like manner as the original. An impression of such seal directly on paper shall be as valid as if made on a wafer or wax. § 4 was section 4 of same chapter, as amended by chapter 383, Laws of 1883 ; the first sentence being changed so as to continue the existing official seal. § 5. There shall be assigned to the said superintendent by Rooms the trustees of the State Hall suitable rooms therein forture.*"™' conducting the business of the said department, and the said superintendent shall, from time to time, furnish the neces- sary furniture, stationery, fuel, lights and other proper con- veniences for the transaction of the said business ; the ex- penses of which shall be paid on the certificate of the super- 92 BANKING LAWS. intendent, and the warrant of the comptroller, in the first instance out of the treasury, § 5 was section 6 of same chapter. Expenses, | Q ^n the expenses incurred in and about the conduct- defrayed. jjjg ^j^g business of the Said department, including the salary of said superintendent and clerks, shall be defrayed and paid by the incorporated banks, banking associations, bankers, savings banks, and every corporation and association re- quired to report to the superintendent of the banking de- partment under the provisions of section two hundred and nineteen of this act in whose behalf they are incurred, in such proportions as the said superintendent shall deem just and reasonable. The expenses incurred and services per- formed, specially for any incorporated bank, banking asso- ciation or banker, including the delivery of new bank bills for such as may be returned, and the destruction of the lat- ter, shall be charged to such incorporated banks, banking are n j to malte and the said superintendent shall make a requisition on said banking ciency. association to make such deficiency good, it shall be the duty of the directors of said association to give notice of such requisition to each shareholder of said association, and of the amount of his respective assessment for such purpose, by a written or printed notice, mailed to his place of residence. Stoolt of t^ 2. If any shareholder or shareholders in such banking association er refusing shall refuse or neglect to pay the pro rata assessment so ordered to sood^defl- ™*^^ ^^^^ deficit good, within sixty days from the date of said notice, ciency may the directors of such association shall have the right to sell, to the high- est bidder, at public auction, the stock of such shareholder or share- holders, after giving previous notice of such sale for two weeks in a EXAMINATIONS. 99 newspaper of general circulation published in the place or county where such banking association is located ; provided, that such stock shall not be sold for a smaller sum than the valuation put on it by the bank su- perintendent in his determination and certificate ; and the necessary costs of the sale shall be paid out of the avails of said stock sold. § 3. This act shall take effect immediately. This act was not a law when the revision was completed and submit- ted, and consequently was not included therein. See note section 41. § 18. Whenever any banking association or individual B^J"'"®- banker shall file with the superintendent of the banking Pf^™*"^ department the requisite certificate prior to commencing the business of banking under the laws of this State, it shall be the duty of the superintendent, and he shall have power, before such bank shall be authorized to commence business, to examine or cause an examination to be made in order to ascertain whether the requisite capital of such bank has been paid in cash ; and when upon such examination, or upon the presentation of evidence satisfactory to him, it shall appear that the requisite capital has been in good faith subscribed and paid in, in cash, he shall issue his cer- Business tificate to that effect in form, duly authorizing such bank to gegun ^^ commence business ; and it shall be unlawful for any bank- Ziperin- ing association or individual banker to commence theoerMoate business of banking until such certificate and authority have feet. - been granted. See note to preceding section. § 19. Upon the application of creditors, or shareholders, when of any banking association, whose debts or shares shall order ex- amount to one thousand dollars, and stating facts, verified "'"^ '™' by affidavit, the supreme court may, in its discretion, order a strict examination to be made by a referee, of all the af- fairs of such association, for the purpose of ascertaining the safety of its investments, and the prudence of its manage- ment ; and the result of every such examination, together with the opinion of the referee, and of the supreme court Result thereon, shall be published, in such manner as the supreme published, court shall direct, which shall make such order, in respect 100 BANKING LAWS. to the expenses of such examination and publication, as the court may deem proper. § 19 was section 25, chapter 360, Laws of 1838. This gives only a visitorial power, and authorizes no interference ex- cept examination, and the publication of the result. Paimly v. 10th Ward Bank, 3 Ed. Ch. 895. CHAPTEE III. Repoets to and bt the Supeeujtendent. Section 20. Quarterly reports. Contents. Publication. 21. Examination and penalty on fa;ilure to report. 22. Report and summary, expense of publication. When neg- lect to report forfeits charter. 23. Quarterly reports by individual bankers. Penalty. 24. Classification and publication of abstracts. 25. Publication as to unclaimed moneys. 26. Contents of statements as to such moneys. 27. Annual report of superintendent. 28. Report of association or banker to be on oath. § 20i It shall be the duty of the saperintendent of the Duty of bankina: department to fix upon and determine a day in tendent as 1 ■ 1 1 ^1 1 . ,' to quarter- respect to which the reports ot the character heremaiteriy report. specified, of incorporated banks, banking associations and individual bankers shall be made ; and the said superintend- ent shall, at least once in each, quarter of a j'ear, fix and designate some Saturday in such quarter, in respect to which the said reports shall be made. Immediately after each determination of such Saturday, the officer hereinbefore named shall cause notice thereof to be published daily for six successive days in such newspaper published in the city of Albany, as shall, for the time being, have the publication of legal notices, under the act entitled " An act to provide for the public printing," passed March fifth,, eighteen hundred and forty-six, or shall serve a copy of such notice upon each incorporated bank, banking association and individual banker in the State by delivering the same to some officer or clerk thereof, at their respective places of business, or by depositing the same in the post- office, directed to each of such banks, banking associations 102 BANKING LAWS. and individual bankers, or some officer thereof, at their places of business respectively. Reports to It shall be the duty of every incorporated bank, banking tendent. association or individual banker in the State, on or before the first days of February, May, August and November of each year, to make and transmit to the superintendent a quarterly report, which report shall be made on the oath of the president and cashier, and shall contain a true statement of the condition of the bank, banking association or individ- ual banker making such report, before the transaction of any business on the morning of the day specified in the notice of the superintendent, next preceding the date of such report, in respect of the following items and particu- lars, namely : Items to Loans and discounts, over drafts dae from banks, due be re- ' ... ported, from the directors of the bank or banking association mak- ing the report, due from brokers, real estate, specie, cash items, stocks and promissory notes, bills of solvent banks, bills of suspended banks, loss and expense account, capital, circulation (distinguishing that received from the superin- tendent from the old outstanding bills), profits, amount due to banks, amount due to individuals and corporations other than banks, amount due to the treasury of the State, amount due to commissioners of canal fund, amoimt due to depos- Keport to itors on demand, amount due not included under either of lished. ^jjg above heads. And it shall be the duty of the superin- tendent to publish such reports together in the newspaper published in the city of Albany, in this section before named, accompanied with a summary of the items of capital, circu- lation and deposits, specie and cash items, public securities and private securities ; and the separate report of each bank, banking association and individual banker shall be published in a newspaper published in the county ; if a newspaper is published in the city or town in which any bank is situated, such publication shall be had in such paper. All wiUful false swearing in respect to the reports in this section pro- vided for shall be deemed perjury and subject to the pun- ishment prescribed by law for that offense. KEPOETS. 103 § 20 was section 1, chapter 419, Laws of 1847, with necessary verbal changes only. 1. In addition to the penalties prescribed in the next section, the offi- cers of a banli are liable to anybody injured by misrepresentation in the quarterly reports of the bank, for his losses. Morse v. Switz, 19 How. 275. 2. The bank can be required to give a true statement of its condition as to its loans and discounts. A mere statement of totals is insufficient. The superintendent may require the bank to report "in a general way the largest loan to " any one individual, firm or corporation — also the aggregate loans upon paper made, accepted or indorsed by directors indi- vidually or as members of firms. People, etc, v. Vail, 57 How. Pr. 82. 3. An opinion by the attorney-general was filed in the banking depart- ment September 13, 1878, relative to certain new forms prepared under the direction of the superintendent of that department, for the quar- terly reports from banks, banking associations and individual bankers, subject to the supervision of the superintendent and the provisions of law relating thereto. The opinion holds that the forms are not beyond the provision of the statutes, and that the facts required to be reported may properly be called for by the superintendent. The attorney-general further says : " The statute creating the banking department, and giving to its head supervisory and inquisitorial powers over moneyed corpora- tions, is for the benefit of the public. It is a well-settled rule of con- struction, that a statute made pro bo7io puhlieo shall be continued in such manner that it may, as far as possible, attain the end proposed. All statutes made for the convenience or benefit of the public ought to have a liberal construction, to be expounded largely, and not with re- strictions. Before the banking department was created it was made the duty of every moneyed corporation, annually on the first day of January, to make out and transmit to the comptroller, in the form prescribed by him, a full statement of its affairs, verified by the oaths of its president and cashier, or treasurer or secretary. By the act creating the banking department, that department is charged with the execution of all laws relating to banks and the business of banking, and the superintendent succeeded to all the powers and duties of the comptroller, and all exist- ing laws were so modified and amended, that every power and duty con- ferred by them on the comptroller, was transferred to and conferred upon the superintendent. Other and additional powers were also given to him. The quarterly reports required to be made to the superintend- ent by every incorporated bank, banking association or individual banker in this State, the statute declares, 'shall contain a true statement of the condition of the bank, banking association or individ- ual banker making such report,' in respect to the following items and particulars, to-vrit : ' Loans and discounts, overdrafts due from banks, due from the directors of the bank or banking association making the report, due from brokers, real estate, specie, cash items, stocks and promissory notes, bills of solvent banks, bills of suspended banks, 104 BANKING LAWS. loss and expense account, capital, circulation (distinguishing that re- ceived from the superintendent from the outstanding bills), profits, amount due to banks, amount due to individuals and corporations other than banks, amount due to the treasurer of the State, amount due to the commissioners of the canal fund, amount due to depositors on de- mand, amount due not included under either of the above heads.' The object of these reports is to furnish the superintendent, who is the supervising representative of the State, with accurate and detailed information concerning the condition of the bank. The statute requires a true statement in respect to the various items and particulars enum- erated. Manifestly the siiperintendent must determine how full and detailed the statement must be, to inform him satisfactorily of the con- dition of the bank. Mere general statements can give him no useful information. The statute contemplates a complete disclosure of its affairs on the part of the bank. The forms prescribed call for no more than seems essential, to a thorough, and necessary knowledge of the bank. I think, therefore, the superintendent has not exceeded his duties or powers, in the forms prescribed for the quarterly reports. This view is strengthened by a subsequent section, which makes it the duty of the superintendent, whenever in his opinion there shall be good cause to suspect that any bank, banking association or individual banker has made an incorrect or imperfect quarterly return, or is in an unsound or unsafe condition to do banking business, to cause an examination to be made forthwith into the books, papers and aflEairs of the institution, and to cause a report thereof to be forthwith published at the expense of the bank." Mon'aiid' § 21- In CEse of neglect to make such report within five Faiiure'to" d^ys from the mailing of the notice, designating said day '*'"'" ■ upon which such report shall be made, it shall be the duty of the superintendent to cause the books, papers and affairs of the bank, association or bankers so neglecting to be ex- amined as directed by section twelve of this act ; and' the reasonable expenses of such examination, to be certified by the superintendent, shall be charged to the bank, association or banker so neglecting, and shall be collected in the man- ner herein prescribed in respect to other charges against them; and it shall also be the duty of the superintendent, in case of the failure or negleet of any bank, banking asso- ciation or individual banker to make said report within the |J^^*y' time above mentioned, to prosecute the same in any court of record and recover the sum of one hundred dollars for such neglect or refusal ; and the money so recovered shall EEPOKTS. 105 be paid into the treasury of this State, to be used for the purpose of defraying the miscellaneous expenses of the bank department. § 31 was section 9, same cliapter, as amended by section 3, chapter 189, Laws of 1857 ; tte first sentence omitted, being provided for in section 30 of the revision. § 22. The superintendent shall publish the reports and ^nS sum- summary required by section twenty of this act, together "JbUg^edf in one paper, on or before the twenty-fifth day of August, November, February and May in each year, and the ex- pense of such publication shall be defrayed by a percent- age, assessed upon the capital .stock of all the banks and banking associations and individual bankers doing business under the laws of this State, in the State ; and if any such bank, banking association, or individual banker shall fail to furnish to the superintendent its quarterly report in time jiooff or' for such publication, it shall forfeit and pay to the superin- report in tendent the sum of one hundred dollars to be applied by him to the payment of the expense of publishing the quar- terly reports ; and if any bank, banking association or indi- vidual banker shall neglect or refuse to make the quarterly neglect for "^ J. ./ ^yfQ quar- report required by section twenty of this act, for two sue- 1^™ ^°^ cessive quarters, it shall forfeit its charter (if an incorporated *8'' bank) and its privileges as a banking association or individ- ual banker ; and every such bank, banking association and individual banker may be proceeded against, and its affairs closed in the manner now required by law in case of an in- solvent bank or banking association. § 23 was section 3, chapter 419, Laws of 1847, with necessary verbal changes only. § 23. Each and every individual banker, doing business ^"*^fY'ly under the general banking laws of this State, shall state in b°ankera!*' his quarterly reports whether any person or persons, and who are interested with such individual banker, directly or indirectly, in the securities deposited with the superintend- ent for the circulating notes obtained by such individual banker, or in the business of circulating said notes, or the benefits or advantages thereof ; and if it shall appear from such report that any other person is so interested with said 106 BANKING LAWS. banker, and in case two successive reports of said banker tor"faiTure ^^^^^ ^°* contain such statement, or if he omits twice in sue- to report, session to make such quarterly reports, such banker shall forfeit one thousand dollars for each and every omission to make such statement, or to file such report as aforesaid, to be sued for and recovered by the attorney-general, in the name and for the benefit of the people of this State. § 33 was section 2, chapter 381, Laws of 1844, extended to conform to section 5, chapter 343, Laws of 1854. Pubiica- § 24. In the publication of the abstracts of the quarterly stractsof returns of individual bankers, the superintendent of the reports. ' ^ . banking department shall arrange them in a separate class, and shall specify the name and place of business of each, and the names and residence of the general partners. § 34 was section 7, chapter 343, Laws of 1854. Statement § 25. Every banking company or association now or here- ciaimed after incorporated or organized, or doing business under any dividends ^ ^ . , , , , . o i ■-,-■■,■, to be pub- general or special law oi this otate, and every individual banker, on or before the first day of September next, and annually thereafter, shall cause to be published for six suc- cessive weeks in one public newspaper printed in the county in which such company, association or individual banker may be located, and in the State paper, a true and accurate state- ment verified by the oath of the cashier, treasurer, or pre- siding officer, of all deposits made with said company or association, and of all dividends and interest declared and payable upon any of the stock, bonds or other evidence of indebtedness of said company or association, which at the date of such statement shall have remained unclaimed by any person or persons authorized to receive the same for two years then next preceding. § 35 was section 1, chapter 363, Laws of 1835, as amended by section 1, chapter 437, Laws of 1849. statement, § 26. Such Statement shall set forth the time that everj'^ what to . . 11' contain, such deposit was made, its amount, the name, and the resi- dence, if known, of the person making it, the name of the EBPORTS. 107 person in whose favor the dividend may have been declared, or interest accrued, its amount, and upon what number of shares, and on what amount of stock, bonds, or other evi- dence of indebtedness, of any such company, association or individual banker. § 26 was section 2 of chapter 437, Laws of 1849, with verbal changes to harmonize with section 25 of the revision. § 27. It shall be the duty of the superintendent; of the Annual banking department to report annually to the legislature, at superin- the commencement of its first session : 1. A summary of the state and condition of every incor- porated bank, banking association and individual banker, from whom reports have been received the preceding year, at the several dates to which such reports refer, with an abstract of the whole amoimt of banking capital returned by them, of the whole amount of their debts and liabilities, specifying particularly the amount of circulating notes out- standing, and the total amount of means and resources, speci- fying the amount of specie held by them at the times of their several returns, and such other information in relation to said banks, associations and bankers, as in his judgment may be useful ; 2. A statement of the banking associations and bankers whose business has been closed during the year, with the amount of their circulation redeemed and the rate of such redemption, per centum and the amount outstanding ; 3. To suggest any amendment to the laws relative to banking by which the system may be improved and the security of bill-holders and depositors may be increased ; 4. To report the names and compensation of the clerks employed by him, and the whole amount of the expenses of the department during the year, and the amount, if any, for which the treasury shall be in advance ; such report shall be made by or before the last day of the year, and the usual number of copies for the use of the legislature shall be printed in readiness for distribution on the meeting of the legislature by the printer employed to print legislative docu- ments ; and two hundred and fifty copies shall be printed 108 BANKING LAWS. for the use of the department, the expense of which shall be charged among the general expenses of the department. § 27 was section 11, chapter 164, Laws of 1851. Keports, § 28. Every report directed to be made, by any law of on oath, this State, from such association or individual banker, shall be verified by the oath of the president and cashier of such association, or such individual banker, that the usual busi- ness of ^aid association, or banker, has been transacted at the location required by this act, and not elsewhere. § 28 was a part of section 1, chapter 340, Laws of 1848. 1. A bank has no right to discount paper at any other place than that of its location, and a note so discounted would be void. But it would seem that a note so discounted to pay a debt due from a third party, would be valid. Potter v. Bank of Ithaca, 7 Hill, 530. 2. An individual banker, as far as his business is concerned, stands by law in the main upon the same footing as banking associations. His residence for the purpose of taxation of his capital is the place men- tioned in the certificate required by Law of 1844, chapter 381, section 3 (section 33 of this act), whether the banker has moved his residence or not, until after he has actually filed certificate of change and moved his bank. The statute does not intend to abridge a banker's right to live where he pleases, it only fixes his business residence. Miner v. Village of Fredonia, 37 N. Y. 155 ; cited, Matter of Metcalf v. Messenger, 46 Barb. 339. 3. As to the prosecution of a suit by an individual banker in a name importing a corporate character. See Bank of Havana v. Magee, 30 N. Y. 355. CHAPTEE IV. G-BNEEAL PeOVI8IONS KeLATIVE TO BaITKS, BAIirKIN& AS- SOCIATIONS AND iNDrVEDUAIi BaNKEES. Section 29. Formation of associations. 30. Certificate to be filed. Its contents. 31. Certificate may be used as evidence. 33. Statement of residence. Penalty for neglect. 33. Notice of change of residence. 34. Certificate of change in any particular. 35. General powers of association. 36. Certain corporations may bold stock. , 37. Banks, associations and bankers may bold certain public securities. 38. Associations may purcbase, hold and convey real estate. for certain purposes. 39. Increase of capital and associates. 40. If portion of capital withdrawn no dividends. 41. Reduction of capital. 43. Notice of intention to reduce capital. 43. Examination in case of such notice. 44. Certificate of reduction to be filed and published. 45. Liability of stockholders on such reduction. 46. List of names of stockholders to be filed. 47. Shares deemed personal. How transferable. 48. Associations authorized to consolidate. 49. Proceedings to consolidate. 50. Consent of two-thirds of stockholders. Examination. 51. Certificate of amount of stock. 53. Publication of same. 53. Consolidation perfected. 54. Effect of consolidation oil pending legal proceedings. 55. Liability of stockholders not changed. 56. Stockholder not assenting to consolidation. 57. Associations subject to certain provisions of Revised Stat- utes. 58. Quorum for transaction of business. 59. Contracts and legal proceedings. 110 BAIfKING LAWS. Sjbotton 60. Actions against tlie president. 61. Sliareliolders may sue and be sued by president. 63. Set-offs in such suits. 63. Discount, deposit and circulation. Location of business. 64. When unlawful to sell business. 65. Business continued by legatee or heir. 66. Deposit of one thousand dollars. Action by superintend- ent. 67. United States and State stock to be deposited. 68. Interest six per cent. Usury. Forfeiture. 69. Associations and National banks on equality as to interest. Whether banks organized under the Laws of 1838 (or this chapter, which is that law as amended) were, or are subject to the provisions of the Revised Statutes, known as " Regulations to prevent the Insolv- ency of Moneyed Corporations" (ch. 8 of this revision) has been questioned. The latter contains many important restrictions of moneyed corporations "having banking powers." Prior to this revision the weight of authority was decidedly that those "Regulations" did not apply to such banks (see notes below, and to section 179). Moreover, section 57 of this revision specifically makes such banks subject to sections 195 to 213 inclusive of chapter 8, while there is nowhere such a provision in reference to sections 179 to 194 inclusive, which are the regulations aforesaid. Therefore, it would seem to be manifest that the legislature did not intend those ' ' Regulations " to apply, Formation § ■^^" "^^^ number of persons may associate to establish of bank.s. ofHcBS of discount and deposit upon the terms and condi- tions, and subject to the liabilities prescribed in this act and the acts amendatory thereof, but the aggregate amount of the capital stock of any such association or bank shall not be less than one hundred thousand dollars ; provided, however, that banks with a capital of not less than fifty thousand dol- lars may be organized in any city, village or place, the popu- lation of which does not exceed thirty thousand inhabitants, and with the approval of the superintendent of the bank- ing department, banks with a capital of not less than twenty- five thousand dollars may be organized in any vil- lage or place, the population of which does not exceed six thousand inhabitants. § 39 was section 1, chapter 133, Laws of 1879, amending section 15, chapter 360, Laws of 1838, as amended by chapter 126, Laws of 1879. Amendment consisted in substituting " thirty thousand " instead of GBNEEAL PEO VISIONS. Ill "six thousand" inhabitants. This section was further amended, hy in- corporating in the revision the concluding clause commencing "and with the approval," etc. 1. Any association so formed may sue or be sued in its corporate name, or in the name of its president as president of such corporation. Delafield v. Kinney, president, 24 Wend. 345. See, also, section 59. 2. Associations organized under this act (chap. 260, L. of 1838) are not subject to the regulations to prevent the insolvency of moneyed cor- porations (1 E. S. 538) of the Revised Statutes, except so far as they have been incorporated or expressly applied by subsequent statutes. The legislature, when they enacted this law, ' ' undertook to initiate an entirely new system of banking. '' It was evidently intended that the act should contain within itself all the provisions necessary to carry the new scheme into effect. Hitherto the business of banking had been coniined to chartered monopolies. Now it was intended all voluntary associations of individuals might alike and upon equal terms exercise these privileges (Talmage v. Pell, 7 N. Y. 828, criticised). (This case discusses this question at considerable length, citing and criticising all former decisions on the subject.) Leavitt v. Blatchford, 17 N. Y. 534. To same effect, Belden v. Meeker, 47 N. Y. 811 ; McLean v. Eastman^ 38 Hun, 315. 3. The only essential difference between the act to authorize the busi- ness of banking (chapter 360, Laws of 1888), and the acts incorporating the safety fund banks (1829),consists in the insertion in the charters of the safety fund banks of restrictive clauses, prohibiting banks from trading in goods and in United States and State stocks unless in selling the same when pledged to them by way of security for debts, which are not contained in the act authorizing the business of banking. One question was, had the North America Trust and Banking Com- pany the right to borrow money? It was decided it had that right,and to give security therefor, and that such securities were valid against the receiver of the bank, provided the loan was "for the lawful purposes of the corporation." And it is further adjudged that to borrow money at a low rate and loan it at a higher rate,is part of the lawful business of a bank. Also that when a bank is short of money to meet its obli- gations, it may borrow for the purpose of paying its lawful debts, and hypothecate part of its assets. Citing : Leavitt v. Yates, 4 Ed; Ch. 165 ; Boisregard v. N. Y. Bank Co., 3 Sandf. Ch. 23 ; Leavitt v. Blatchford, 5 Barb. 53 ; Beer v. Phoenix Glass Co. , 14 Barb. 358 ; Barry v. Merchants' Exchange Co., 1 Sandf. Ch. 388 to 290 and 313 ; 7 Wend. 31 ; 1 Sandf. 53 ; 1 Duer, 144 ; Leavitt v. Palmer, 3 Comst. 19. 4. 1857, Curtis et al. v. Leavitt, 15 N. Y. 210 to 333. This case was an effort to set aside certain mortgage bonds of the North America Trust and Banking Company, given for borrowed money. This case (original and cross bills) occupies 297 pages in the report, and has been cited, perhaps, more frequently than any other case on the subject. From 113 BAISTKING LAWS. page 75 begins a history of banking legislation in tbis State, wbicli will repay perusal. 5. Tbe term "individual banker," as used throughout the statutes, is used to distinguish one person doing business in the way those acts au- thorize,froni an association of persons joined together therefor. The whole matter is discussed. This case favors the term ' ' private banker " when one doing a banking business, but not organized under any stat- ute of this State, is meant. People v. Doty, 80 N. T. 235. 6. All questions concerning the possession or forfeiture of chartered rights.belong to courts of law, exclusive of courts of equity. The ex- ercise of banking privileges without authority, is not a nuisance in the legal sense of the word; and if a bank continues its operation while in- solvent, or buys up its note at a discount, this would not authorize a court of equity to interfere by injunction. Attorney-General v. Bank of Niagara, 1 Hopk. (1835) 354. 7. Whenever a corporation can lawfully contract a debt for borrowed money, it can give any engagement to pay, and in any form not prohib- ited by statute. 1850, chapter 351, prohibits time engagements. Ibid. The restraining act (Revised Statutes, title 20, chapter 30 ; chapter 11 of this act) is still in force, and banks organized under this act.are only authorized by law to issue circulation.ou condition of securing and hav- ing circulating notes countersigned as prescribed therein. Curtis v. Leavitt, 15 N. Y. 70-71. 8. Associations organized under this act are not subject either to the provisions of the Safety Fund Act, nor of the provisions of the Revised Statutes to prevent the insolvency of moneyed corporations. (This latter was an act of 1838.) The cardinal principle of the latter (act of 1838) was to prevent insolvency ; of the act of 1839 to give some little security to the circulation, in combination with the purposes of the act of 1828, but the act of 1838 takes a Hew departure. Herein -is em- bodied the idea of securing the circulation of dollar for dollar, and let the banks themselves fail, or not, as they please. The panic of 1837 oc- casioned this act. Ibid., p. 74 to 83 inclusive. To same effect, Robinson v. Bank of Attica, 21 JST. Y. 409 et seq. See notes, section 179. Cites Lea- vitt V. Blatchford, 17 N. Y. ; McLean v. Eastman, 28 Hun, 312. To the contrary, Leavitt v. Yates, 4 Ed. Ch. 184, which holds provisions of Re- vised Statutes do apply. A certifl- § 30. Such persons, under their hands and seals, shall flied-what make a certificate which shall specify : to contain. r j 1. The name assumed to distinguish such association, and to be used in its dealings ; 2. The place where the operations of discount and deposit of such association are to be carried on, designating the par- ticular city, town or village ; GBNEEAL PROVISIONS. 113 , 3. The amount of the capital stock of such association, and the number of shares into which the same shall be divided ; 4. The names and places of residence of the shareholders, and the number of shares held by each of them respectively ; 5. The period at which such association shall commence How and terminate, which certificate shall be proved or acknowl- corded 'and ' ^ filed. edged and recorded in the office of the clerk of the county where any office of such association shall be established, and a copy thereof filed in the office of the superintendent of the banking department. § 30 was section 16, chapter 260, Laws of 1838, as amended by section 1, chapter 185, Laws of 1854, wliicli provided for filing certificate with superintendent of banking department.instead of secretary of State. 1. Signing this certificate containing names, residences and number of shares of each stockholder.is equivalent to a subscription for the num- ber of shares specified, and creates a legal liability to pay amount to corporation, and it may be enforced to an extent necessary to liquidate its debts. Dayton v. Borst, 31 N. Y. 435. Cites 3 Comst. 415 ; 15 Mass. 505 ; 9 Paige, 153 ; 16 N. T. 457. To same effect, P. Warehousing Co. V. Badger, 6 Hun, 293. 2 As against one who has dealt with banking associations, its incor- poration is sufficiently proved by the recording of its articles of associa- tion in the county clerk's office, and uses of its corporate powers, with- out proof that articles were filed in banking department. Leonardsville Bk. V. WUlard, 35 N. Y. 575 ; S. C, 16 Abb. Pr. 113. 3. Alteration of articles of association without consent of all stock- holders, discharges those who have not consented. Burrows v. Smith, 10 N. Y. 550. 4. A person who has agreed to take stock in a banking association, and who transfers his subscription to another with consent of bank, is absolved from liability on account thereof. Cowles v. Cromwell, 25 Barb. 413 ; Palmer v. Lawrence, 3 Sandf. Sup. Ct. 161. 5. Though the statute requires to be given " the name assumed to distinguish such association, and to be used in its dealings " — it does not declare that a variance in use of name shall invalidate its contracts. B. V. N. Y. Bk. Co., 3 Sandf. Cli. 34. 6. When a person signs a certificate, affixing the number of shares they take opposite their signature — this without any other subscription is sufficient to render them stockholders, and liable to take and pay for that number of shares. But the right to transfer exists unconditionally, except as limited by articles of association. And if the original sub- scriber transfers in good faith, and bank recognizes transferee, the lia- bility of the original subscriber is at an end. Cole v. Ryan, 52 Barb. 15 . 114 BANKING LAWS. 168 ; Cowles v. Cromwell, 35 Barb. 415. To same effect, Palmer, Re- ceiver, V. Lawrence, 3 Saudf. 161 ; S. C, 5 N. Y. 389. 7. The actual payment of capital need not precede the making and filing of the certificate, but it must be secured to be paid. The sub- scription to the stock will be deemed a compliance with the condition, as much as if each associate had given his note or bond. Ibid. , p. 172 ; see, however, section 18 of this act. 8. One who subscribes, must pay for stock subscribed for. S., re- ceiver N. Y. Bk. Co., V. Dubois, 3 Sandf. Ch. 490 et seq. 9. One who subscribes and gives his bond and mortgage for the stock, cannot refuse to pay interest thereon because directors refuse to declare dividend of interest and profits. The matter is in discretion of directors, and they cannot be compelled to pay any dividend. Ely v. Sprague, Clarke's Ch. R. p. 351. 10. In reply to an inquiry from the superintendent of the banking department, as to the right of banking associations to receive deposits at other than their regular places of business. The attorney-general rendered the following opinion on the subject, which was filed in the banking department under date of July 31, 1879. In which that ofBcer holds : " First. — Such associations cannot, by any officer or agent, have an office other than its banking-house at which deposits may be received for the account of the bank. Second. — Such associations, located in a city or town, cannot have an office separate from the banking-house, in the same city or town, at which they may receive deposits for the account of the bank. Third. — Such an association, located in one county, cannot have an office in another county for the convenience of depositors and customers in the latter county, for the reception of deposits for the account of the bank. Fourth. — Such an association cannot receive deposits from customers, at their respective places of business, by the hands of any officer or agent of the bank, appointed by the directors, to receive deposits daily and convey them to the bank. Fifth. — A deposit, or a sum of money to be deposited, given to any officer or agent of the bank, elsewhere than at the banking-house, is not a delivery to the corporation ; and in case of loss of the money, m transit or otherwise, the bank would not be liable, but the loss would have to be sustained by the depositor himself. In such a case the person to whom the money might be delivered, would be only the agent of the depositor for the purpose of delivery to the bank, and would not, in law, be the agent of the bank. The bank directors have no power to make the bank liable for transactions of that character. It is part of the usual business of banking, and can only be done at the banking-house.'' 11. In an opinion by the attorney-general, filed in the banking depart- ment August 12, 1881, in response to an inquiry from the superintendent of that department, as to whether there is any law which would prevent GENEEAL PROVISIONS. 115 certain persons, who proposed to organize under the statutes of this State as individual bankers, from, using the title "Bank of Clayton" simply, that officer says : "Upon examination of the banking statutes I do not find that there is any express prohibition of such use of an artificial name, neither do I find any thing authorizing such use, but in my opinion the manifest spirit of the banking laws of the State is against it. These gentlemen, after compliance with the statute, will be authorized to do business as "individual bankers." They will not be a " banking asso- ciation " within the meaning of that term as used in the banking laws, nor will they be a corporation, or competent legally to sue or be sued in the name of the Bank of Clayton should they assume to use such name. See Bank of Havana v. Magee, 20 N. T. (Ct. of App.) 355. They cannot be known officially in the banliing department by the title of 'Bank of Clayton' simply. The use of an artificial name, appropriate for a corporation, without the addition thereto of apt words to indicate the individual character of the business, would necessarily have a deceptive tendency. I think the department has no authority to officially recognize or sanction such use. " See notes to section 126. § 31. The certificate required by the last preceding sec- certfflcatei tion to be recorded and filed in the offices of theSae^aa county and superintendent of the banking department, as and to be aforesaid, or copies thereof, duly certified by either of those officers, may be used as evidence in all courts and places for and against any such association. § 31 was section 17 of same chapter, Laws of 1838, as amended by same section. Laws of 1854. Incorporation is sufficiently proved by exemplified copy certificate, and evidence of user. U. Ins. Co. v. Tillman, 1 Wend. 555 ; Same v. Caldwell, 3 Wend. 296. See notes to preceding section. § 32. Every individual banker who has not already done individual so shall, within sixty days after this act takes effect, file in flie a oer- . J hold •I D r JT and oon- 1. Such as shall be necessary for its immediate accommo- ^^y real dation in the convenient transaction of its business ; or, 2. Such as shall be mortgaged to it in good faith, by way of security for loans made by, or moneys due to such asso- ciation ; or, 3. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings ; or, 4. Such as it shall purchase at sales under judgments, de- crees or mortgages held by such association. The said association shall not purchase, hold or convey Prohibited real estate in any other case or for any other purpose ; and any otl^er*"^ all conveyances of such real estate shall be made to the cor- poration directly and by name. § 38 was section 24, chapter 260, Laws of 1838. A bank, unless restrained by its charter, may take a mortgage to se- cure auticipated.as well as actual liability. But the specification of cer- tain powers, is an implied prohibition of the exercise of other and dis- tinct powers (citing 15 Johns. 383). A National bank may not take a mortgage for future indebtedness — such mortgage is void under tJ. S. Law, June 3, 1864. Crocker v. Whitney, 71 N. Y. 161 ; 10 N. Y. 550 ; 1 Sandf. Ch. 179. § 39. It shall be lawful for any association of persons Articles organized under this act, by their articles of association, to yide for provide for an increase of tbeir capital and of the number oi capital, of associates, from time to time, as they may think proper. § 39 was section 20, chapter 260, Laws of 1838. § 40. If any portion of the original capital of any such if capital association shall be withdrawn for any purpose whatever, drawn, no .. J r r J dividends while any debts of the association remain unsatisfied, no to be •^ ' made, dividends or profits on the shares of the capital stock of the association shall thereafter be made until the deficit of 130 BANKING LAWS. capital shall have been made good, either by subscription of the shareholders or out of the subsequently accruing profits of the association ; and if it shall appear that any such mlEwng*""^ dividends have been made, it shall be the duty of the in^uch ^ supreme court to make the necessary orders and decrees for oaai}. closing the affairs of the association, and distributing its property and effects among its creditors and shareholders. § 40 was section 28, cliapter 260, Laws of 1838. Reduction § 41. It shall be lawful for any banking association, now stock. or hereafter organized under the general banking laws of this State, to reduce its capital stock to an amount which shall be equal to the value of the property and effects of such banking association, above and beyond all its debts and liabilities, and thenceforth the capital stock of such associa- tion shall be such reduced amount, and the par value of the shares thereof shall be reduced in the same proportion ; but in no case shall such capital stock be reduced below the amount required by law for a banking association. § 41 was section 3, chapter 132, Laws of 1879. 1. For like provisions for moneyed corporations and trust companies, see sections 338 to 231 inclusive. 2. The present superintendent of the banking department submitted the following questions to the attorney -general for his construction of statutes relating thereto : " (1.) Can a State bank, after requisition has been made upon it by the superintendent of the banking department to make good its capital stock, reduce its capital stock until such impairment has been first made good? "(3.) Can a bank reduce its capital stock for the purpose of making good an impairment of its capital ? "(3.) Can the stock of a bank held by the bank,be counted as an asset in aa examination for reduction of its capital ? and "(4.) Can a bank in petitioning for a reduction of its capital stock.use the stock held by such bank for the purpose of petitioning for such re- duction ? " The opinion of that officer on the questions submitted was filed in the banking department October 30, 1883, and is as follows : "I answer the first and second questions in the affirmative. Section 41 of the banking laws (chapter 409 of the Laws of 1883) provides that a bank may ' reduce its capital stock to an amount which shall be equal to the value of the property and effects of such banking association above and beyond its debts and liabilities, but not below the amount re-' GENERAL PROVISIONS. , 131 quired by law f or a banMng association.' I know of no reason why sucli reduction could not be made by a bank after tbe superintendent had called upon it to make good an impairment of its capital stock, nor why such reduction could not be made for the purpose of making good an impairment of its capital stock. " I also answer the third question affirmatively. Its outstanding stock is a portion of a corporation's liability. When its stock is owned or held by the corporation it remains practically extinguished, and to the extent it is so held or owned,it amounts to a practical reduction of cap- ital stock. Until it is reissued.it ought to be considered as an asset by the superintendent in making an examination for the reduction of cap- ital stock. "I answer the fourth question in the negative. Section 179, subdi- vision 5, and section 183 of the banking laws, permit a bank to purchase its own stock. And the authorities say that, in the absence of prohibi- tion by statute, a corporation may purchase its own stock, hold it un- extinguished and reissue it ; but they also say that while it is .so owned by the corporation.it is not to be considered as stock held by any one for the purpose of being voted upon, hence the bank could not use it in petitioning for a reduction of its capital stock." § 42. Whenever a banking association or corporation shall Notice of propose to reduce its capital stock according to the preceding *°''j^j^J'"® section, due notice thereof shall be given to the superintendent of the banking department, in writing, signed by a toajority of its board of directors, and accompanied by the written assent to such reduction of at least two-thirds in amount of the shareholders of such association or corporation. §§ 43 and 43 were section 3, chapter 50, Laws of 1875, substantially re-enacting section 2, chapter 377, Laws of 1859, and extending the same so as to include moneyed corporations required to report by chapter 334, Laws of 1874. § 43. It shall be the duty of the superintendent upon the Examina- filing of such notice, and within a reasonable time thereafter, to make, or cause to be made, an examination of its books, property, effects and liabilities, concerning which the officers thereof may be examined on oath. From the result of such redSSion* examination the said superintendent shall determine andtennined certify the reduced amount of capital stock of such banking *'* ^' association or corporation. See preceding note. 16 122 BANKIISTG LAWS. of deduced § ^- "^^^ determination and certificate in writing, made ?e?orded ^7 *^^ ^^^^ Superintendent, of the amount to which the cap- piibiished. it^,! stock has been reduced under this act shall be recorded in the office of the clerk of the county in which such bank- ing association or corporation shall be located, and a certified copy thereof filed in the bank department of the State of 'New York, and the same shall be published by the said su- perintendent once a week for six weeks successively, in the State paper, and at least one newspaper in the county where such association or corporation shall be located. § 44 was section 4, chapter 50, Laws of 1875, tlie clause in relation to expense being omitted, as has been done in a number of cases to avoid repetition of provisions on the same subject. Substantially re-enacting section 4, chapter 377, Laws of 1859. Liability § 45. ISTothing in this act contained shall in any way holder and change or Icsscu the liability of the stockholders of any banl^ un- ~ '^ ^ ^ -^ changed, banking association or corporation reducing its capital stock under its provisions, to the billholders or other creditors thereof, or any indebtedness or engagement, now existing, or that may so exist, either absolutely or contingently, against such association or corporation prior to, or at the time when such reduction shall take place, or by which the rights, remedies or security of the then existing creditors shall be weakened or impaired. § 45 was section 5, chapter 50, Laws of 1875, substantially re-enacting section 5, chapter 377, Laws of 1859. List of § 46. The president and cashier of every banking associa- share- tion formed pursuant to the laws of this State shall at all holders to and'flfed *™^^ ^^^P ^ *'''^^® ^^^ Correct list of the names of all the shareholders of such association, and shall file a copy of such list in the office of the clerk of the county where any office of such association may be located, and also in the office of the superintendent, on the first Mondays of Jan- uary and July, in every year. § 46 was section 30, chapter 260, Laws of 1838, with necessary verbal changes only. GENEKAL PEO VISIONS. 133 § 47. The shares of said association shall be deemed fe "I?-*° personal property, and shall be transferable on the books of ^°operty. the association in such manner as may be agreed on in the articles of association ; and every person becoming a share- share-" holder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of prior shareholders ; No change and no change shall be made in the articles of association by to impair o •' right of which the rights, remedies or security of its existing cred- ^^^j'^^|°J^' itors shall be weakened or impaired. Such association shall |eath%'to. not be dissolved by the death or insanity of any of the share- holders!' holders therein. § 47 was section 19, chapter 260, Laws of 1838. 1. A provision by by-law that debts due to bank shall be a preferred claim against stock, is invalid. The corporation has no authority to in- terfere with the disposition which a shareholder may make of his shares, except so far as such authority is conferred by the act itself (under which it is organized),or by some general law. If any such prohibition may be made, at any rate it must be contained in the articles of inoorpo- ration.and not by by-law. Bank of Attica v. Manufacturers and Traders' Bank, 20 N. T. 505. The provision of the by-law was, that no transfer of stock should be made unless all debts due bank by shareholders had been first discharged. To same effect 59 N. T. 96 ; Roseuback v. Salt Springs National Bank, 53 Barb. 504. 2. Where a married woman is the owner of stock ot a bank located in a State other than that in which she and her husband are domiciled, the effect of payment, by the bank to her husband, of dividends de- clared upon her shares of stocks, is to be determined by the law of the place where the bank is located, and not by the law of the owner's domicile. Graham v. First National Bank of Norfolk, 84 N. Y. 393. § 48. Any two or more banking associations organized ^"conSju- under the general banking laws of this State, and located "****• in the same city, village or town, are hereby authorized to consolidate the same into a single association, to be located in the same place, in the manner hereinafter pro- vided. § 48 was section 1, chapter 423, Laws of 1862. § 49. The directors of the said associations may enter into Proceed- - , . . ■' Ings to an agreement under their respective corporate seals, for5°°«o''- the union or consolidation of the said associations, prescribing the terms and conditions thereof, the mode of carrying the IM BANKING LAWS. same into effect, the name and duration of the new associa- tion, the number of directors, the names of the persons to constitute the first board of directors, the time and place of holding the first election of directors, the manner of converting the shares of each of said associations into the shares of the new association, with such other details and provisions as they may deem expedient, not inconsistent with the provisions of this act. Notice of the intention to consohdate said associations shall be served personally or by mail on each stockholder of each of said associations, at least ten days previous to entering into said agreement. g 49 was section 3, chapter 433, Laws of 1863, with necessary verbal , changes only. stMk-°* °* § SO- The written consent of stockholders, owning at hoidere. ^gg^g^ two-thirds in amount of the capital stock of each of said associations, shall be requisite to the validity of said agreement. Upon the presentation to the superintendent of the banking department, of the said agreement duly proved or acknowledged, together with satisfactory proof by affidavit or otherwise, of the assent thereto of stockholders owning two-thirds in amount of the capital stock of each of said associations so proposing to consolidate, and of the service of notice upon each stockholder, as aforesaid, the said superintendent shall, within a reasonable time there- after, make or cause to be made an examination of the books, property, effects and liabilities of such associations; upon which examination the officers thereof may be examined on «oa™y ^ oat^ as to the debts, liabilities, property and effects of such tenlent" associations, respectively. From the result of such examina- tion the said superintendent shall determine the value, in his judgment, of such property and effects above and beyond the debts and liabilities aforesaid, and certify the same in writing, and the amount so determined and certified shall be thereafter the capital stock of such consolidated banking association. § 50 was section 3, chapter 423, Laws of GENERAL PROVISIONS. 125 §51. The determination and certificate in writing to be ^^]^'J^<=^*8 made by the superintendent, of the amount at which the corded, capital stock of any banking association has been fixed under this act, shall be recorded in the ofiice of the clerk of the county in which such banking association shall be located ; bank de- and a certified copy thereof filed in the banking department of the State of New York. § 51 was first lialf of section 5, chapter 433, Laws of 1863. § 52. The determination and certificate provided for in Certifloate the last preceding section shall be published by the super- pubushed. intendent once a week for six weeks successively in the State paper, and at least one newspaper in the county where such association shall be located. § 53 was second talf of section 5, chapter 433, Laws of 1863, with nec- essary verbal changes only, and omitting provision for expense of pub- lishing, same being elsewhere provided lor. § 53. Upon the recording of the said agreement and cer- consoiida- tificate, the said consolidated associations shall be and be- feoted. come a single banking association, in accordance with the said agreement and certificate, with the same franchise, rights, powers and privileges, and subject to the same duties, conditions and limitations, as the several constituent asso- ciations ; and such consolidated association shall be vested with all the estate, property, credits and effects of the con- stituent associations, without deed or other transfer, and shall be liable for all their contracts, debts, obligations and liabilities ; and the separate existence and operation of such constituent associations shall thereupon cease and determine. § 53 was section 6, chapter 433, Laws of 1863. § 54. No action or other proceeding pending before any saving court or tribunal, in which either of the constituent associa- to^plnding tions may be a party shall be deemed to have abated or been discontinued by reason of their consolidation ; but the same may be prosecuted to final judgment and execution in the same manner as before such consolidation, or the said new association, by order of the court in which such proceeding may be pending, may be substituted as a party in place of 126 BANKING LAWS. either of the original associations, in any stage of such pro- ceedings. § 54 was section 7, chapter 423, Laws of 1863, with, necessary verbal changes only. Liabiuty g 55^ Nothing in the foregoing provisions for consolida- changed. .(.Jqjj gjjg^jj j^ ^ny way change or lessen the liability of the stockholders of any banking associations consolidating their capital stock thereunder, to the billholders or other creditors therefor ; or any indebtedness or engagement now existing or that may so exist, either absolutely or contingently, against such association prior to or at the time when such consoli- dation shall take place ; or by which the rights, remedies or security of the then existing creditors shall be weakened or impaired. § 55 was section 8, chapter 423, Laws of 1862, with necessary verbal changes only. stockhoid- s 56. If any stockholder in either of the associations er may dis- a ^'Vailing itself of the foregoing provisions for consolidation, bought. "^^^ shaH not have assented to such consoKdation, shall, within twenty days after the agreement and certificate here- inbefore mentioned shall be recorded in the clerk's office of the county in which such associations are located, object in writing to said consolidation, and demand payment for his stock, such consolidated association shall, within three months from the filing of such dissent, pay to the dissent- ing stockholder the value of his stock, as determined in the certificate of the superintendent of the banking department aforesaid ; and upon payment so made by the said associa- tion, the interest of said stockholder in the property and effects of said association shall cease, and the said stock may be held and disposed of by the said association for its own benefit. § 56 was section 9, chapter 433, Laws of 1862, with necessary verbal changes only. ^^socia? § ^'^- Every banking association which has been formed subjeouo'' or organized under the provisions of the act, entitled " An ilsVoais. act to authorize the business of banking," passed April GENERAL PE0VI8I0NS. 127 eighteen, eighteen hundred and thirty-eight, or of any act amending the same, or which shall hereafter be organized under this act, shall be subject to the provisions of sections one hundred and ninety -five to two hundred and thirteen, inclusive, of this act. § 67 was section 1, chapter 160, Laws of 1847, with necessary verbal changes only. § 58. In all cases where the articles of association of any Number of 11- • • -I • 1 !• directors banking association do not prescribe as to the number of to consti- o / tute a quo- directors necessary to constitute a quorum, and make no rum- provision for determining the same, such banking associa- tion may, by its directors, declare and fix the number of directors necessary to be present to constitute a quorum for the transaction of business, which number shall not be less than five, with the same effect as if the same was prescribed in the articles of association of such banking association. § 58 was section 1, chapter 33, Laws of 1863. § 59. Contracts made by any such association, and all contracts notes and bills by them issued and put in circulation as ^'^°f^gn^ money, shall be signed by the president or vice-president pJealalnt and cashier thereof; and all suits, actions and proceedings, f^^ "*'*''' brought or prosecuted by or on behalf of such association, may be brought and prosecuted in the name of the presi- dent thereof; and no such suit, action, or proceeding shall abate by reason of the death, resignation or removal from not abate office, of such president, but the same may be continued president, and prosecuted according to. such rules as the courts of law and equity may direct, in the name of his successor in office who shall exercise the powers, enjoy the rights and dis- charge the duties of his predecessor. § 59 was section 31, chapter 360, Laws of 1838. See note to section 61. 1. It seems that a contract or bill, or note, not void on its face, is valid as to and may be enforced by a holder in good faith, although not signed by the requisite officers. 4 Hill, 448. 3. An association organized under this act may be sued in the same manner as a corporation, by summons against it in its assumed name. Case V. Mechanics' Bk. Association, 1 Sandf . Sup. Ct. 693. 128 BANKING LAWS. 3. Suits may be prosecuted, in the name of the president, or in that under which it is incorporated. The foregoing provision, suits may be prosecuted in the name of the president, is permissive only, and not im- perative. Leonardsville Bani v. Willard, 25 N. T. 576 ; to, same effect E. River Bank v. Judah, 10 How. Pr. 136, 4. A certificate of deposit does not require the signature of the presi- dent or vice-president, in addition to that of the cashier, in order to bind a bank organized under the General Law (chap. 360, Laws of 1838),within this section (sec. 31). This section insomuch is permissive — it does not prohibit the corporation from appointing other agents to contract in its behalf. Barnes v. Ontario Bank, 19 N. Y. 152-157, following 4 ffiU, 442. 5. An action for recovery of stock subscription, may be brought in the name of the president at the time of commencing it, although the sub- scription was made before the association went into operation. Stanton V. Wilson, 3 Hill, 153: 6. All instruments or contracts signed by the proper oflEtcers of the bank are presumed to be made with authority, until the contrary is shown. Gillett v. Campbell, 1 Denio, 520. 7. A private banker is not a corporation (citing Bank of Havana v. Magee, 20 N. Y. 356 ; Codd v. Rathboue, 19 N. Y. 39). An owner must sue in his own name.and not as a corporation. Hallett v. Harrower, 33 Barb. 541 , Codd v. Rathbone, 19 N. Y. 40-41. 8. A cashier is the business officer of the bank, but only in the sense of one who transacts, not one who regulates or controls its affairs. The directors are the mind, and the cashier the hands of the corporation. They are also likened, the directors to the judge, and the cashier to the clerk of the court. The bank is not responsible for acts of his which are discretionary, semi-official and solely within the prerogative of the directors, though done in good faith, under color of authority, and af- fecting an innocent dealer. An enumeration of the general powers and duties of a cashier may be stated as follows : " Collection and payment of debts — power of borrowing money in ordinary course of daily busi- ness of the bank — power to draw check upon its money in other insti- tutions — power to indorse negotiable paper — power to conduct corre- spondence — power to transfer shares of stock;." Also for such acts as are especially authorized by usage — or by acquiescence or direct au- thority of the board, though beyond the scope of his ordinary duties. He cannot compromise a debt Chemical Nat. Bank v. Kohner, 8 Daly, 533-534 ; S. C, 58 How. Pr. 267 ; Ryan v. M. and M. Bank, 9 Daly, 808. 9. Although the cashier and president may, in the ordinary course of business, without the action of the board of directors, dispose of the ne- gotiable securities of the bank, yet they have not the power to pledge its assets for payment of an antecedent debt. State of Tennessee v. Davis, 50 How. Pr. 447. 10. K., defendant's intestate, being indebted to plaintiff's and to two other banks, proposed a compromise, by paying or securing a percent- age, which one or both of the other banks agreed to accept if plaintiff GBNEEAL PEOVTSIONS. 129 would. K. proposed to plaintiff's cashier to secure the specified per- centage on its claim by a note with G., as indorser. The cashier there- upon, after consultation with plaintiff's president, and at the request of K.'s agent, wrote to one of the other banks, using paper with the bank heading and signed as cashier, to the effect that plaintiff proposed to take K.'s note, indorsed by G. for the percentage to discharge K. in full on payment thereof. Soon after writing the cashier informed the presi- dent, and they concluded not to compromise. When, therefore, the in- dorsed note was tendered.the cashier refused to accept it, and repudi- ated the agreement ; before this was made known to K. , he had settled with the other banks on the terms proposed, and had been discharged. It did not appear that he owed any other debts. K. afterward tendered a certified check for the amount of the compromise. The president and cashier were the active managers of plaintiii's bank. The compro- mise was not repudiated on the ground of want of authority of the cashier, and no proof was given that he acted without authority. Com- promises were of common occurrence in said bank. In an action upon the original indebtedness, held, that the authority of the cashier to act was, under the circumstances, to be presumed ; that the agreement made was a valid composition agreement, and after performance by the other creditors, it was too late to recede. It seems that had there been proof that the cashier had exceeded his authority, the question would have been different. Chemical Nat. Bank v. Kohner, 85 N. T. 189. 11. Where the duty is imposed upon the cashier of a bank of carry- ing on its business, he cannot be held responsible for a neglect of duty in not consulting other officers of the bank or committees, whom by the by-laws he is required to consult in making discounts, where said com- mittees hold no meetings, and the oflScers systematically absent them- selves from the performance of their duties. Second Nat. Bank of Os- wego V. Burt, 93 N. T. 233. 12. The relations of a bank with its cashier are analogous to those of a principal with his agent, and the principles governing the right of disaffirming unauthorized acts of an agent.are applicable to similar acts of a cashier. Id. 13. A cashier of a bank has, as incident to his office, implied author- ity to borrow money for it, in the absence of any statutory restraint, to secure the loan by pledge of its property or funds ; and, as against third persons, the assumption of such authority by the cashier vrill con- clude the bank. Coats v. Donnell, 94 N. Y. 168. See notes to following section. § 60. All persons having demands against any such asso- Action elation may maintain actions against the president thereof ; pfesflent.* which suits or actions shall not abate by reason of the death, resignation, or removal from office, of such president, but may be continued and prosecuted to judgment against his 17 130 BANKING LAWS. successor ; and all judgments and decrees obtained or ren- dered against sucli president for any debt or liability of such association shall be enforced only against the joint property of the association, and ■which property shall be liable to be taken and sold by execution, under any such judgment or decree. § 60 was section 32, chapter 360, Laws of 1838. ~ 1. An individual banker is not a corporation, and suits must be brouglit in his name. Codd t. Rathbone, 19 N. Y. 40-41 ; Hallett v. narrower, 33 Barb. 541 3. The receiver of a banking corporation is not the successor in office of the president, and a suit cannot be continued by Mm in the name of the president. 9 Paige, 410. 3. Johnson v. Kemp, 11 How. Pr. 186, criticised and overruled (cited 12 Wend. 218 ; 6 Hill, 50 ; 4 Barb. 127). A corporation when suing need not aver.and need not prove its corporate existence, unless it be expressly pleaded that it is not a corporation. Bank of Waterville & West W. Banli; v. Beltser, 13 How. Pr. 271. 4. The president of a bank is the proper officer to assign its mort- gages, and he may use his own seal. Valk v. Crandall et al., 1 Sandf. Ch. 179. 5. Where a bank made an agreement, alleged to be defective as not signed by cashier, with one from whom it had borrowed money, held, lender might recover for money had and received, whether agreement was defective or not. B. v. N. Y. Bk. Co., 3 Sandf. Ch. 23. 6. A banking company is not liable for false representations, alleged to have been made by its president, but not shown to have been known to him at the time to be untrue. Per Larremore, J. , Ryan v. Manufac- turers and Merchants' Bank, 9 Daly, 308. sharehoid- § 61. Any person who shall be, or shall have been, an as- ers may u ./ j. j j suld by ^ sociate or shareholder of any such association, may, in respect dent^™^'" °^ ^^y demand which he may have either solely, or jointly with any other persons, against such association, commence and prosecute, either solely or jointly (as the case may be), any action, suit, or other proceeding in law or equity, against the president of such association ; and any president of such association may commence and prosecute any action, suit or other proceeding in law or equity against any person who may be or who may have been an associate or shareholder of such association, either alone, or jointly with any other person, against whom such association may have any demand GENEEAL PEOVISIONS. 131 whatever. All such suits or proceedings by or against such president shall be conducted and have the same legal effect as if such associate or shareholder had never been a member of such association. Nor shall any action or suit be in any way affected by reason of the plaintiffs or defendants, or any other person, who may be in any way interested in such action, being or having been a shareholder or associate of such association. Nor shall it be necessary in any pro- cess, pleading or proceeding, in behalf of or against any such association, to name the individuals composing the same. In July, 1850, in delivering the opinion of the court of appeals, in Gillett V. Moody, Bronson, Ch. J., said, — " There was a difEereuce of opinion between the supreme court and the court of errors on the question whether the constitution applied to the free hanks — the supreme court holding that it was applicable alike to all corporations, while the court of errors thought it applied only to corporations cre- ated by special charter, and not to those formed under general laws. But both courts were agreed that the free banks are corporations. If there was room for a doubt on this point after the decision of the court of errors in Warner v. Beers, 23 Wend. 103, the decision of the same court in The Supervisors of Niagara v. The People, 7 Hill, 504, removed all ground for such a doubt. And yet I notice that some of the free banks still keep up a practice which was adopted when it was thought necessary to keep up some such device to get round the constitution, and add the name of the president to the corporate name of the institution, in bringing suits. It was long since held that this was unnecessary, and that the free banks might sue and be sued in the same corporate name which is used in transacting their other business. The People v. The Assessors of Watertown 1 Hill, 621. And as it is now settled that the free banks have a legal existence, it may be hoped that the inconvenient practice of using the name of the president in bringing suits by and against the corporation, will be given up." 3 N. T. 485. Since the case of Gillett v. Moody, the court of appeals has decided the case of Talmage v. Pell, and has again adjudged "that every association, organized under the act to authorize the business of bank- ing, and the acts amending the same, is a moneyed corporation." 7 N. T. 347. As to the mode of bringing suits by and against associations under the general law, see, also, Delafield v. Kinney 34 Wend. 345 ; and Case v. The Mechanics' Banking Association, 1 Sandf. Sup. E. 693. In 1841, while the difference of opinion, alluded to by Judge Bron- son, existed between the supreme court and the court of errors, and 133 BANKING LAWS. before tlie decision by the latter court of tlie case of the Supervisors of Niagara v. The People, the legislature passed the act (oh. 56), entitled "An Act respecting suits and legal proceedings by or against banking associations," and this section (61) was section 2 of that chapter. Cleve- land's Banking Laws, 98. Set-offs in § 62. No claim or demand which any associate or share- ' holder may have in respect to his share or interest in the capital or joint-stock of any such association, or of any divi- dends, interest or profit thereon, shall be capable of being set off either at law or m equity, against any demand which such association may have against any associate or share- holder thereof. But all other demands may be set off in the same manner as in suits between individuals ; and in any suit against the president of any such association, as president thereof, he may set off demands belonging to it in the same manner and with the same effect as if such associa- tion was the nominal party in the cause. § 63 was section 3, chapter 56, Laws 1841. See preceding note, bank* of § ^^' "^^^ banking associations or individual bankers or- de'poSt"' g^'^ized under the provisions of the act passed April eigh- fatfon!^""' teenth, eighteen hundred and thirty-eight, entitled "An act authorizing the business of banking," and the several acts subsequently passed amendatory thereof, or which shall hereafter be organized under the laws of this State, shall be banks of discount and deposit, as well as of circulation ; and only at lo- the usual business of banking of said associations or indi- specifled in vidual bankers shall be transacted at the place where such certificate. . , banking associations or individual bankers shall be located, agreeably to the location specified in the certificates required by law to be made by them, respectively, and filed in the office of the superintendent, and not elsewhere, except as otherwise provided in sections eighty-six, ninety and ninety- nine, in relation to the redemption of circulating notes by agents. § 63 was section 1, chapter 340, Laws of 1848, with necessary verbal changes to conform to other provisions of the revision. 1. A bank has no right to discount paper at any other place than that ol its location, and a note so discounted would be void. But it would GENERAL PEOVISIONS. 133 seem that a note so discounted to pay a debt due from a third party, would be valid. Potter v. Bank of Ithaca, 7 Hill, 530. 3. Issue of circulating notes not required, see section 113. § 64. It shall not be lawful for any individual banker, unlawful having circulating notes, obtained under the general bank- haviDg cir- T ^i.>i m p II- j> oulating mg laws 01 this State, to sell or transfer the business oi notea to 1 , • • 1 -111. sellbusl- banking, upon the securities deposited by him, to any per- ge^^ .°f son or persons ; and until such business shall be closed, by the return of the circulating notes issued, and the delivery of the securities deposited, the same shall be conducted only in the name of the individual banker by whom the said securities were deposited; and he shall continue individually liable for the payment of all circulating notes delivered to him. § 64 was section 9, chapter 343, Laws of 1854. § 65. The last preceding section shall not be so construed Preceding , ., . . T ■ T 1 T 1 ,. 1 1 . 1 . section not as to prohibit an individual banker irom bequeathing his to prohibit - ^ ..-,.,, T . banker business of banking, upon the securities deposited by him, '''"'™ ??" to any person or persons ; nor shall it be so construed as to business, prohibit the business from being continued after his death by his legatee or heir-at-law. § 65 was the latter half of section 7, chapter 189, Laws of 1857, with necessary verbal changes only. § 66. Every bank, banking association and individual Deposits banker not having given notice of intention to close the banks, business of banking, is hereby required to keep on deposit baving in the bank department, in addition to the deposit now re- tice of ^ ^ ' ^ closing quired to secure the circulating notes of said bank, stocks business, of this State, or of the United States bearing interest, to the amount of one thousand dollars, and the same shall be held by the superintendent of the banking department as a pledge of good faith, and guaranty of compliance with the banking laws of this State, on the part of such bank, banking associa- tion or individual banker, and the proceeds of such stock or the interest thereof, or so much thereof as may be necessary, may be applied by the superintendent to the payment of any penalty incurred by, or the assessment imposed upon, the 134 BANKING LAWS. banking association or individual banker for whom such de- posit is held. The superintendent of the banking department teideni may, in his discretion, maintain an action in his name of Sn fo°/ office against any bank, banking association or individual Ifty!''*"' banker for the recovery of any penalty incurred by, or law- ful assessment imposed on any bank, banking association or individual banker. § 66 was section 1, chapter 302, Laws of 1880. Deposits to be In Inter- est bearing stoclis of this State or tlie United States. Deposit maybe clianged. § 67. Whenever any bank, banking association or individ- ual banker is required by law to make a deposit of securities with the superintendent of the banking department, in trust for such bank, banking association or individual banker, such deposit shall consist of any interest-bearing stock of the State of New York or of the United States. It shall also be lawful for any bank, banking association or individual banker, now having a deposit of stocks of the State of New York or of the United States in said banking department, to withdraw the same from the said banking department, after first delivering to the superintendent of the banking department an equal amount, at par, of any other stock of the State of New York or of the United States which bears interest which such bank, banking asso- ciation or individual banker may prefer to deposit in said department. § 67 was section 1, chapter 247, Laws of 1879, changed so as to make securities exclusively United States and New York State stock as pro- vided hj chapter 241, Laws of 1863, and section 1, chapter 202, Laws of 1880. The superintendent of the hanking department was requested to exe- cute a duplicate of an assignment of a mortgage executed by his prede- cessor in office in 1864, the original of which had been lost. The request was based on the fact, that certain entries in the books of the banking department showed that such an assignment had been executed and de- livered at the date n&med, though the records of that department con- tained no copy of the assignment. The question of the right of the superintendent to execute the duplicate assignment was submitted to the attorney -general. That officer, in his reply filed in the banking de- partment October 7, 1882, says : GENERAL PEOVISIONS. 135 " I do not think you are authorized to do more, than furnish an ex- emplified copy under your hand and seal of office of such entries in the books of your department. You certainly could not furnish a duplicate of an instrument, the terms and provisions of which you are ignorant." § 68. Every banking association organized and doing interest business under and by virtue of the laws of this State, and of six per ' cent may every private and individual banker or bankers doiug busi- be taken, ness in this State, are hereby authorized to take, receive, re- serve and charge on every loan or discount made, or upon any note, bill of exchange or other evidence of debt, inter- est at the rate of six per centum per annum ; and such in- terest may be taken in advance, reckoning the days for which the note, bill or evidence of debt has to run. The knowingly taking, receiving, reserving or charging a Usury, rate of interest greater than aforesaid shall be held and ad- judged a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon ; and in case a greater rate of interest has been paid, the person or persons paying the Penalty, same or their legal representatives may recover back twice the amount of the interest thus paid, from the associa- tion or private or individual banker taking or receiv- ing the same ; provided that such action is commenced within two years from the time the said excess of interest is taken. But the purchase, discount or sale of a hona fide bill of exchange, note or other evidence of debt, payable at another place than the place of such pur- chase, discount or sale, at not more than the current rate of exchange for sight drafts, or a reasonable charge for col- lecting the same, in addition to the interest, shall not be considered as taking or receiving a greater rate of interest than six per centum per annum. g 68 was section 1, chapter 567, Laws of 1880, with slight necessary verbal change only, amending section 1, chapter 163, Laws of 1870. 1. The banli took transfer of paper, and credited plaintiff's account with amount less more than seven per cent discount. Held, giving credit and taking absolute transfer of paper, was equivalent to charging and payment of excessive interest. (Banks are prohibited from charg- ing more than six per cent [1880] on any loan whatever.) Nash v. White's Bank of Buffalo, 68 N. T. 396. 136 BANKING LAWS. 2. The penalty recoverable from a National bank, under act of con- gress (U. S. R. S., § 5198),for usury.is twice the amount of interest paid in excess of legal rate, and not twice amount of entire interest. For- feiture of entire interest attaches, only when action is brought to enforce usurious contract (45 N. T. 446 and 46 5f. Y. 644 distinguished). A debt contracted or obligation given for a usurious loan made by a State or National bank is not void, but the forfeiture is limited to interest. (The National Bank of Whitehall v. Lamb, 50 N.T. 95 ; Farmers' Bank of F. V. Hale, 59 N. Y. 53, overruled. See note to next section.) Hiu- termisterv. First National Bank, 64 N. Y. 213 ; S. C, 3 Hun, 845; 5 T. & C. 484. 3. To same effect, Merchants' Bank v. Freeman (citing 64 N. Y. 212), 22 Hun, 360 ; Marine Bank v. Fiske, 10 Hun, 366 ; Atlantic Bk. v. Savery, 26 Hun, 42 ; 83 N. Y. 303. 4. Banking corporations are taken out of the general usury laws of the' State, and, as far as usury goes.are only amenable to this act. Farm- ers' Bank v. Hale, 59 N. Y. 53 (three separate opinions discussing the subject). 5. The including (charging) of a percentage, as the difference in the rate of exchange between the place of payee's residence and place of payment, is not, per se, evidence of usury, where the note is made so payable for the accommodation of the maker. Merritt v. Benton, 10 Wend. 117. See notes to following section. Intent to 8 69. It is hereby declared that the true intent and mean- and °state ^^S °^ *^® '^^^ p^ceding Section is to place and continue the banks on private and individual bankers and bankine; associations or- same r ^ o footing, ganized and doing business as aforesaid, on an equality, in the particulars, in said section referred to, with the If ational banks organized under the act of congress, entitled "An act to provide a National currency, secured by pledge of United States bonds, and to provide for the circulation and redemp- tion thereof," approved June third, eighteen hundred and sixty-four. § 69 was section 3, chapter 567, Laws of 1880. 1. Since the intention of this act (sections 68 and 69 of this revision) was to place State and National banks on equality in respect to interest on loans, it should receive the same interpretation as the act of congress, and as this has been interpreted by U. S. supreme court (1 Otto, 29), the same interpretation will be given to the State law. (See note preceding section.) This act was a transcript from the act of congress; it was given an interpretation by the court of appeals, but the U. S. supreme court, having given the act the interpretation above set forth, the court GENEEAL PE0VI8I0NS. 137 of appeals overrules its former decisions, in conformity therewitli. Hintermister v. First National Bank, 64 N. Y. 212. 2. A declaratory law (referring to sections now 68 and 69) has no force over the past, its action is limited to the future. 59 N. Y. 53. Judge Allen's opinion, p. 62, discusses this section and those of like character. See, also. Judge Johnson's opinion, p. 65, to same purpose. 3. This statute operates retroactively, and takes away the previous penalty for usury. Bank of Monroe v. Fiulay, 6 Hun, 584 4. The usury law of this State is, in eiiect,repealed as to State banks organized under the law of 1838. Farmers' Bank of F. v. Hale, 15 Abb. Pr. (N. S.) 376. CHAPTER 237, LAWS OF 1882. AN ACT in relation to advances of money upon warehouse receipts, bills jj^te of In- of lading, certificates of stocks, certificates of deposit and other nego- ioans*ori'' tiable instruments. warehouse receipts, Section 1. In any case hereafter in which advances of money, repay- **"• able on demand, to an amount not less than five thousand dollars, are made upon warehouse receipts, bills of lading, certificates of stock, cer- tificates of deposit, bills of exchange, bonds or other negotiable instru- ments pledged as collateral security for such repayment, it shall be law- ful to receive or to contract to receive and collect, as compensation for making such advances, any sum to be agreed upon, in writing, by the parties to such transaction. § 2. All acts or parts of acts inconsistent herewith are hereby repealed. § 3. This act shall take effect immediately. 18 CHAPTEE T. ClECIJLATION. Section 70. Superintendent to print and register circulating notes. 71. Deposit of stocks to secure circulation. 73. Notes may be circulated as money. 73 Notes stamped " secured by tbe pledge of public stock." 74. Plates, dies, etc., to be in custody of superintendent. Ex- penses. 75. Bills not to be countersigned beyond amount of securities. 76. To express liability of banker issuing. Penalty. 77. Designation of banker and bank on notes. 78. Certificate when others interested witb banker. 79. Destruction of returned circulating notes. 80. Wlieu bank note plates to be destroyed. 81. New notes to be delivered for mutilated notes. 82. Power of attorney to receive interest or dividends. Trans- fer of stocks. 83. When interest and dividends may be returned. 84. Securities held for redemption of bills and notes. 85. Notes withheld and interest retained if baulc unsound. 86. Agents and offices for redemption. 87. Appointment of agents for redemption. 88. List of agents to be published. 89. Proceedings if agent neglects to redeem. 90. Redemption at not exceeding one-quarter of one per cent discount. 91. Protest on non-payment of circulating notes. 92. When and how protested. Proceedings by superintendent. 93. Pledged stocks when sold to cancel notes. 94. Damages for non-payment of notes. 95. In what cases last section not to apply. 96. Fees for protest, by whom paid. 97. Notes not to be delivered until agent appointed for re- demption. 98. Appointments of such agents may be revoked. 99. Agreement to appoint a common agent. 100. Notes not to be purchased at less than face. 101. Distribution of funds of insolvent banks. CIECULATION, 139 Section 103. Distribution of residue. 103. Lien on fund to cease after six months. 104. Unclaimed portion of fund paid into treasury. 105. Notice to creditors to be published. 106. Redemption of notes held by banks. 107. Election of place of redemption. 108. Penalty of one thousand dollars lor violatmg act. 109. Deposit equal to outstanding circulation in place of former deposit. Proceedings thereupon. 110. Protest on failure of designated banlc to redeem. 111. On destruction of notes proportion of deposit returned. 113. Circulation not required. 113. Deposit without notice of intention to close. 114. Circulation of foreign bank notes prohibited. 115. Notes not received at par not to be paid out. 116. Notes less than one thousand dollars not to be payable except at office. 117. No note or bill except payable on demand to circulate. 118. Regulations as to foreign bank notes. 119. Violations of this act. Penalty. Misdemeanor. 130. Certain checks, bills, drafts payable without grace. 131. Transfers of securities countersigned by treasurer. 133. Treasurer to report thereon. 138. Treasurer to keep record of transfers. § 70. The superintendent is hereby authorized and re- superin- quired to cause to be engraved and printed in the best man- pr?n t*Sr-*° ner to guard against counterfeiting, such quantity of circu- notes'"^ lating notes in the similitude of banlc notes, in blank of the different denominations authorized to be issued by the in- corporated banks of this State, as he may from time to time deem necessary, to carry into effect the provisions of this act, and of such form as he may prescribe; such blank cir- culating notes shall be countersigned, numbered and regis- jj^^^g ^^ tared in proper books to be provided and kept for that pur- tersSied, pose in the office of said superintendent, under his direction, S™re£s- by such person or persons as the said superintendent shall *®™^" appoint for that purpose, so that each denomination of such circulating notes shall bear the uniform signature of such register, or one of such registers. § 70 was section 1, chapter 360, Laws of 1838, as amended by section 6, chapter 319, Laws of 1841. Associations under the General Banlung Law (chapter 260, of 1838, 140 BANKING LAWS. the basis of this revision) have no authority to issue circulating notes without the sanction of the comptroller (now superintendent), and in the form prescribed hy statute. No action can be maintained against a bank where such paper appears on its face to be illegally issued. The intention of an act must be judged by its consequences. Where these are pernicious the intent to work mischief becomes a question of law. Safford v. WycofE, 1 Hill, 13. Siperin- § 71. Whenever any person or association of persons, Btocks\nd formed for the purpose of banking, under the provisions of circulating *^^^ ^'''i ^^^^^ lawfully transfer to the superintendent any notes. interest-bearing stock of the State of New York or of the United States, such person or association of persons shall be entitled to receive from the superintendent an equal amount of such circulating notes of different denominations, regis- tered and countersigned as aforesaid, and it shall not be law- ful for the superintendent to take such stock at a rate above its par value, nor above its current market value. § 71 was section 2, chapter 360, Laws of 1838, and section 1, chapter 363, Laws of 1840, as amended by chapter 313, Laws of 1849, changed to conform to chapter 247, Laws of 1879, relative to deposits. It was adjudged by the court of appeals, in October, 1853, in Tal- mage v. Pell, 7 N. Y. 338, 347, 848, that associations, organized under the General Banking Law, " have no power to purchase State or other stocks for the purpose of selling them for profit, or as a means of rais- ing money, except when such stocks have been received in good faith as security for a loan made by, or a debt due to, such association, or when taken in payment, in whole or in part, of such loan or debt." See, also, The Bank Commissioners v. The St. Lawrence Bank, 7 N. T. 513. All bank charters granted by this State, from 1791 to 1838, contained an express prohibition, substantially in the following words: "The said corporation shall not, directly or indirectly, deal or trade in buying or selling any goods, wares, merchandise or commodities whatsoever, or in buying or selling any stock created under any law of the United States, or of any particular State, unless in selling the same when truly pledged by way of security for debts due to the said corporation." See the charters of every safety fund bank, as well as the charters granted before 1839. The two charters of the National Bank of the United States, granted by congress in 1791 and 1816, contained express prohibitions against trad- ing in any thing except bullion, etc. ; also, against purchasing any public debt whatever. See these charters in the United States Statutes at Large. The charters of the Bank of England, Bank of France, Bank of Scot- laud and Bank of Ireland also contain express prohibitions against trading. See historical sketch, ante. CIECULATION. 141 The principle of separating tlie issue from the banking department, was in 1838 adopted by the legislature of New York ; and in 1844 Sir Robert Peel practically carried into efEect the same principle in dealing with the Bank of England, on the renewal of its charter in that year. In that renewed charter it is enacted, that there shall be transferred, etc. , "to the issue department of the Bank of England, securities to the value of £14,000,000, whereof the debt due by the pub- lic to the said governor and company shall be and be deemed a part." See this act, Stat. 7 and 8 Vict., ch. 33. " The object of this statute (Stat. 7 and 8 Vict., ch. 33) has been," says Mr. McCuUoch, ' ' to obviate the chances of over-issue and sudden fluc- tuations in the quality and value of money, by limiting the power to is- sue notes payable on demand," etc. * * * " While the directors are left to manage the banking department at their discretion, their man- agement of the issue department is subjected to what seems to be a well- devised system of restraint. The bank is allowed to issue to £14,000,000 of notes, upon securities (of which the debt of £11,015,100 lent by her to government is a part) ; and whatever paper the issue department may at any time issue over and above this maximum amount of securities, it must have an equal amount of coin and bullion in its cofEers. Hence, it is impracticable for the issue department to increase its issues without, at the same, time proportionally increasing its stock of coin and bullion, or to diminish the latter without proportionally diminishing the amount of paper supplied to the public and banking department." In 1846 the people of this State made it a part of the fundamental law, that "the legislature shall provide by law for the registry of all bills or notes issued, or put in circulation as money, and shall require ample security for the redemption of the same in specie. " Constitution 1846, art. 8, g 6 ; McCulloch's Diet. (London ed.), 83 to 88 ; Lawson's History of Banking (Am. ed.), 76, 77 ; Gilbart on Banking (4th Am. ed.), 61 ; Levi on Mercantile Law, 303 ; Cleveland's Banking Law, 83. § T2. Such person or association of persons are hereby when authorized, after having executed and signed such circulat- be circ™ia- ing notes, in the manner required by law to make them money, obligatory promissory notes, payable on demand, at the place of business within this State, of such person or association, to loan and circulate the same as money, according to the ordinary course of banking business as regulated by the laws and usages of this State. §§ 73 and 78 were sections 8 and 6, chapter 360, Laws of 1838. See note to sections 70 and 29. § 73. The bills or notes so to be countersigned, and the buis to be payment of which shall be so secured by the transfer of pub- "seolfred," etc. 142 BANKING LAWS. lie stocks shall be stamped on their face, " Secured by the pledge of public stocks." Plates, § 74. The plates, dies and materials to be procured by the maTn in superintendent, for the printing and making of the circu- intendenr luting notes provided for hereby, shall remain in his custody and under his direction ; and the expenses necessarily in- curred in executing the provisions of this act shall be audited and settled by the superintendent, and paid out of any moneys in the treasury not otherwise appropriated ; and for the purpose of reimbursing the same, the said superintend- ent is hereby authorized and required to charge against and Expenses •-;■■ ■ .■ i • i i, inexecut- receive from such person or association applying tor such act. how circulating notes, such rate per centum thereon as may be sufficient for that purpose and as may be just and reason- able. § 74 was section 13, chapter 360, Laws of 1838. Superin- g Y5. It shall not be lawful for the superintendent or other °ount officer to countersign bills or notes for any person or asso- bOTond'* elation of persons, to an amount in the aggregate exceeding securities, ^be interest-bearing stocks of the State of New York or of the United States at their value, deposited with the super- intendent by such person or association on account thereof ; and any superintendent or other officer who shall violate the provisions of this section shall, upon conviction, be adjudged guilty of a misdemeanor, and shall be punished by a fine not forvioia- less than five thousand dollars, or be imprisoned not less provision, than five years, or by both such fine and punishment. § 75 was section 14, same oliapter, as amended by section 8, cTiapter 164, Laws of 1851, changed to conform to chapter 347, Laws of 1879. hj^nite's § '^^- "^^^ Circulating notes delivered to individual bank- onfy^^'ndi? ^^^ shall express only the individual liability of the banker binty of*' issuing them and shall be signed by him only and not by issSfnl any attorney or agent ; and any banker, or person acting as ^'"' his attorney or agent, who shall violate any provision of this For°noL section, shall be liable to a penalty of one hundred dollars compu- ^^j. gjj^^j^ offense, to be recovered in the name of the people CIECULATION. 143 of tliis State, with costs and to be paid into the treasury to defray the general expenses of the banking department. § 76 was section 8, chapter 343, Laws of 1854. § Y7. It shall not be lawful for the superintendent of the JJ^^'^X banking department to issue circulating notes to any indi- ^udbank vidual hereafter commencing the business of banking under °° "otes. the laws of this State designating such individual as a bank, unless as an addition to his own proper name, and the word " bank " is added thereto on such circulating notes ; and in case such individual shall have partners in the business of banking at the time of commencing the same, such fact shall be shown by the words " and company," to be added to his own proper name, upon every note issued to him or them from the banking department. § 77 was section 6, chapter 189, Laws of 1857, with necessary verbal changes only. § 78. When it shall appear, by the return of any indi- Persons vidual banker, or by the report of any person designated by ^^^^^ jq the superintendent of the banking department, that any per- to''be"ii'a-^ son is interested with such individual banker, directly or in- *"'*• directly, in the securities deposited by him for the purpose of obtaining circulating notes, or in the business of circu- lating such notes, or in the benefits and advantages thereof, the said superintendent shall withhold all interest and divi- dends on the securities deposited by him, by such banker, and all circulating notes from him, until such banker shall Banker to ° ' .„ . fllecertl- have filed, in the banking department, a certificate, signed oate. by every person so returned or reported as interested, as aforesaid, and acknowledged by him in the manner pre- scribed by law, to entitle deeds of land to be recorded, stating that such person is interested, with such individual banker, in the circulating notes obtained or to be obtained by him, and in the benefits and advantages of circulating game to be the same ; which certificate shall be evidence, in all courts S?a part- and places, that the person so signing and acknowledging "ndindi- the same is a general partner with the said original banker, biuty. in the biosiness of banking, and as such is liable with him 144 BANKING LAWS. individually for all the debts and obligations created or make by such individual banker in the said business. § 78 was section 6, chapter 343, Laws of 1854. Bank re- g 79, Whenever any circulating notes of any bank, bank, destruo*-' ^°S association or individual banker shall be returned to the oafetieS, banking department for destruction and burning, it shall be as witness, ^jjg jjj^y. q£ g^^jj bank, banking afisoeiation or individual banker, or the trustees or officers thereof, to procure the at- tendance of an agent to witness the counting, destruction and burning of such circulating notes, at the banking de- partment, and sign a certificate thereof. In case the indi- vidual banker, or the trustees or officers of any bank or banking association returning circulating notes to the bank department for destruction and burning, shall refuse or neg- lect to appoint or procure attendance of an agent to witness iSiure* ° the counting and burning thereof within ten days after the tenlent" to receipt of the bills at the banking department, it shall be the duty of the superintendent to select and appoint some indifferent person, who shall, as the agent of such bank, banking association, banker or trustee, witness and certify the counting and burning thereof ; and it shall be the duty of such bank, banking association, banker or trustee, forth- with to pay on demand to such person so appointed, wit- nessing and certifying as aforesaid, such compensation there- • for as the superintendent shall certify to be just and reason- able. § 79 was section 4, chapter 189, Laws of 1857. Sfnote § ^^- ^* ^^^^^ ^® *^^ ^^^y °^ ^^^ superintendent of the destroyed! banking department, and he is hereby authorized and di- rected to destroy or cause to be destroyed all bank note plates in his custody, of banks, banking associations or in- dividual bankers, which have failed or given notice of clos- ing their business ; and also all bank note plates in his cus- tody that are not used, and any impressions which may be on hand made therefrom ; and hereafter, whenever any bank, banking association or individual banker shall fail, or discontinue the business of banking, it shaU be the duty of CIRCULATION. 145 the said superintendent to destroy, or cause to be destroyed, all plates and impressions belonging to such bank, banking association or individual banker, and include in his next annual report a statement of the plates so destroyed. It pg']j3'J,*®J'gg shall be the duty of every public officer into whose hands ^ be^lul-^ shall come any counterfeit bank note plate or other device Jo°upe1-fn- for coimterfeiting bank notes, or any counterfeit or spurious *®°'^®''*- bank notes, immediately after using them when necessary in evidence against the parties implicated, to surrender the same to the superintendent of the banking department, to be destroyed under his supervision, and it shall be the duty superin- of the superintendent to destroy all such plates, devices or destroy , ,,,.."', r ^ plates, etc. notes thus surrendered to him, m the same manner as he is now authorized to do in case of banks whose charters have expired or have become insolvent, and to report the same to the legislature in his annual report. ^ 80 was section 5 of same chapter, and section 4, chapter 336, Laws of 1859, combined. § 81. It shall be the duty of the superintendent to receive ^"gg^^** mutilated circulating notes issued by him, and to deliver in changed, lieu thereof other circulating notes to the same amount. Every person who shall mutilate, cut, deface, disfigure or perforate with holes, or shall unite or cement together, or nmtiiatin*g to any other thing, any bank-biU, draft, note or other evi- notes, dence of debt issued by an incorporated bank in this State, or shall cause or procure the same to be done with intent to render such bank-bill, draft, note or other evidence of debt unfit to be reissued by said bank, shall, upon conviction, forfeit fifty dollars to the corporation or banking association injured thereby. § 81 was section 5, cliapter 363, Laws of 1840, and section 1, chapter 315, Laws of 1833, combined. § 82. The superintendent may give to any person or asso- Powers of elation of persons transferring stock in pursuance of the pro- *« ^e visions of this act, powers of attorney to receive interest or owners to , receive dividends thereon, which such person or association may oj^'fju"? ® receive and apply to their own use ; but such powers may *"°''^ 19 146 BANKING LAWS. b^'j-e- *° ^® revoked upon such person or association failing to re- voked, deem the circulating notes so issued, or whenever, in the opinion of the superintendent, the principal of such stock shall become an insufficient security ; and the said superin- tendent, upon the application of the owner or owners of Stocks such transferred stock in trust, may, in his discretion, change changed Or transfer the same for other stocks of the kinds before f erred. specified in this act, or may re- transfer the said stocks, or any part thereof, upon receiving and canceling an equal amount of such circulating notes delivered by him to such person or association, in such manner that the circulating notes shall always be secured in full. § 82 was section 5, cliapter 260, Laws of 1838, changed to conform to chapter 247, Laws of 1879. terettind § ^^' Whenever the securities deposited for the redemp- may'^be're- ^^^^ ^^ circulating notes shall, in the opinion of the superin- tatned. tendent, become insufficient for that purpose, he may receive the dividend on all stocks, and shall deposit the same in some safe bank or banking association in the city of Albany, in his name, in trust for the association or banker to whom Duty or the same may belong ; the deposit to be made on such terms tendent. and at such rate of interest as the superintendent may deem most conducive to the interest of such association or banker, and to be withdrawn and paid over, whenever, in the opinion of the superintendent, the securities of such association or banker shall be sufficient to warrant it. § 83 was section 7, cliapter 363, Laws of 1840, changed to conform to chapter 247, Laws of 1879. Securities § 84. The public debt to be deposited with the superin- dem^tion ^^^^''^'^ ^J ^^J ^^^^^ persou or association, as security for of notes, circulation, shall be held by said superintendent exclusively for the redemption of the bills or notes of such person or association put in circulation as money, until the same are paid. § 84 was section 12, chapter 260, Laws of 1838, changed so as to exclude the deposit of $1,000 as pledge of good faith, etc., required by section 1, chapter 303, Laws of 1880. CIECULATION. 147 1. Superintendent must hold mortgages (now United States and State stocks), except as allowed to assign by the ninth section (now obsolete) ; he has no power to assign to a third party, or receive from him the amount in circulating notes of bank from which mortgage was received. He cannot assign otherwise than as allowed by section 9. Flagg v. Munger, 9 N. Y. 497 ; also Mitchell v. Cook, 7 id. 541, to same efEect. But such third person may, under a previous agreement with the owner to purchase the bond and mortgage.and on such consideration paid to the comptroller, perfect his title thereto, by an assignment to him from the owner or owners,after a reassignment thereof by the comptroller to the latter. Mitchell v. Cook, 17 How. Pr. 110. 3. The legislature shall provide by law for the registry of all bills or notes, issued or put in circulation as money, and shall require ample security for the redemption of the same in specie. Art. 8, § 6, Const, of N. T. § 85. If it sliall appear from any examination made at ^°^^ ^ the instance of said superintendent, tliat any bank, banking gj^^l^'o™" association or individual banker is in an unsound or unsafe ^as^eise-' condition to do banking business, or that the business of auawfuf" banking is not transacted by such bank, association or n°otes and banker at the place where said circulating notes are dated securities and purport to be issued, or is not transacted in the manner held, prescribed by law, it shall be the duty of the superintendent to withhold and refuse to issue and deliver any registered notes to such bank, association or banker, and to retain the interest on all securities held in trust for such bank, associa- tion or banker, until such time as he shall be satisfied that such bank, association or banker is in a sound and safe con- dition to do a banking business, and that the business of banking is transacted by such bank, association or banker, at the place where said circulating notes are dated and pur- port to be issued. § 85 was section 3 Laws of 1854, chapter 343, with necessary verbal changes only. § 86. Every moneyed corporation in this State having Offices of banking powers, and issuing bills or notes of circulation, tion. and every banking association and individual banker carry- ing on banking business under the laws of this State, except those whose place of business is in the cities of New York, Albany, Brooklyn, or Troy, and who have not already made 148 BANKING LAWS. such an appointment, shall forthwith appoint an agent, ■who shall keep an office in the city of New York, Albany, or Troy, for the redemption of all circulating notes issued hy said corporation, banking association or individual banker, which shall be presented to such agent for payment or re- demption. § 86 was section 1, chapter 202, Laws of 1840, as amended by section 1, chapter 303, Laws of 1851, with necessary verbal changes only. Their ap- § 87. Such agent shall be appointed in writing, and such to'be filed appointment in writing shall be delivered to the superin- tendent'"" tendent forthwith, and filed in his office ; and any corpora- tion having banking powers, banking association, banker or If bank, other person may be an agent for the purpose of redemption ; superin- ' and if any such corporation, association or banker shall omit point'"' *° appoint such agent forthwith, the superintendent shall appoint such agent for such corporation, association or banker, and file such appointment in his office. § 87 was section 3, chapter 303, Laws of 1840, with necessary verbal changes only. List of § 88. The superintendent, immediately after such appoint- hep°ub-° ment and filmg thereof in his office, shall publish, during such time as he may deem proper, a list of such agents in the State paper, and in at least two daily newspapers in the city of New York, the expense whereof shall be paid by the corporations, associations and bankers above mentioned. § 88 was section 3 of same chapter, with necessary verbal changes only. Penalties § 89. Every such corporation, banking association or in- ' dividual banker, whose agent shall neglect or refuse to re- deem their notes on demand as aforesaid, shall pay to the person making such demand interest upon the notes so de- manded, at the rate of twenty per centum per annum ; and if such redemption and payment of interest is not made at said office within twenty days from the time when first de- manded, such corporation, banking association or individual banker shall be liable to be proceeded against by the super- intendent of the banking department in the same manner CIRCULATION. 149 'and with the like effect as though insolvent ; and such corpo- ration, banking association or individual banker shall not thereafter issue or put in circulation any of their bills or notes ; and the superintendent shall, in that case, proceed in the same manner as is directed in section ninety-two of this act. § 89 was section 5 of same cliapter, with necessary verbal changes only. 1. When the circulating notes of a bank are not paid immediately upon their first presentation for payment, the holder may commence suit for the amount thereof, and add twenty per cent interest, without waiting twenty days. The notes must be presented on or after the expiration of twenty days, and a demand be made, to enable the holder to apply to the comptroller (superintendent) for payment, or subject the association to forfeiture for non-payment. The association which has once made default in payment, must at its peril provide its agent with funds to redeem its bills whenever they are again presented for payment, even after the twenty days prescribed by law. Bank Comm'rs v. James Bank, 9 Paige, 456. . 3. The right of action against a bank to recover moneys on deposit does not accrue, until a demand and refusal of payment has been made; and the presentation and demand of payment of the depositor's check by a wrongful holder, the payee's indorsement thereon being forged, is not such a demand as perfects the depositor's cause of action. Bank of British jST. A. v. Merchants' Bank, 16 J. & S. 4. See, also, Howell v. Adams, 68 N. T. 314, and cases there cited. § 90. It shall be the duty of every such coi-poration, bank- Eedemp- ing association and individual banker out of the cities of exceeding i^ew York, Albany, Brooklyn and Troy, to redeem and pay ter of one on demand all circulating notes issued by such corporation, discount, banking association or individual banker presented for re- demption or payment at the oiBce of their said agent, in the city of New York, Albany or Troy, at a rate of discount not exceeding one-quarter of one per centum. § 90 was section 4, same chapter, as amended by section 3, chapter 303, Laws of 1851. The constitutional provision (art. 8, § 6), of this State, that bills be redeemed in specie is not self -operative, and an offer to redeem in legal tender, and refusal to redeem in specie, does not authorize banlt super- intendent to sell securities deposited with him. Metropolitan Bank v. Van Dyck, 27 N. Y. 400. § 91. "Whenever an action shall be brought against an in- Demand corporated bank, bankinsr association or individual banker, test for , , Don-pay- f or the recovery of the amount due on any circulating note ™8nt. 150 BANKING LAWS. or notes, registered in the superintendent's office, the pay- ment of which shall have been demanded at the banking- house or usual place of business of the defendant, if it shall appear on the trial, or otherwise, to the court in which such suit is brought, that at the time such demand of payment was made, the defendant offered in payment the circulating note or notes issued by any bank, association or banker, other than the defendant, which were at the time at par, in the city of New York, Albany or Troy, or a draft or drafts on any bank, association or banker in the city of New York, Albany or Troy, or either of the same, for the amount of the circulating note or notes so presented, with an affidavit, if required, that such draft or drafts is or are available to their full amount, to insure the immediate payment thereof on presentation, or in case any action shall be commenced upon such note or notes before the expiration of fifteen days from the time of the first demand thereof, as above mentioned ; and provided such bank, association or individ- ual banker shall be ready and prepared to redeem such note or notes in the lawful money of the United States at the counter or ordinary place of business of such bank, associar tion or banker, at the expiration of said fifteen days from the time of the first demand thereof, with interest, then in either case the plaintiff in such action shall not recover any costs, fees or disbursements whatever, against the defendant, and shall be entitled to recover no more than six per centum interest, in lieu of all damages for the non-payment of the said circulating note or notes ; but no interest shall be re- covered upon such note or notes in any action, unless the plaintiff or holder thereof shall have again presented the same for payment, at the banking-house or ordinary place of business of such defendant, on or after the fifteenth day af- ter such first demand, and before the twentieth day, and the defendant shall have neglected and refused to pay the same, with interest to that time, as aforesaid. And if such bank, association or banker, at the time of the first presentation of said circulating note or notes, shall have offered to pay cur- rent bank notes or drafts, or both, or either, in the manner CIECULATIOK. 151 above provided, and shall, at the time of the second preseil- tation, pay or tender the amount of such note or notes tlius demanded, in the lawful money of the United States, at their banking-house or ordinary place of business, then such bank, association or banker shall not be deemed to have sus- pended or refused specie payment, within the meaning of any statutes authorizing proceedings for the dissolution of the charter of such bank, or authorizing proceedings to re- strain or enjoin the ordinary business of such bank, associa- tion or banker, nor shall such bank, association or banker, in such case, be liable to any other or greater damages for the non-payment of such circulating note or notes than as above provided, any provision in the charter of any bank, or any other statute to the contrary notwithstanding. § 91 was section 3, chapter 303, Laws of 1851, changed to conform to chapter 567, Laws of 1880, by substituting six for seven per cent inter est. See section 89 and note § 92. In case the maker or makers of any such circu- when and ° _ ■' how notes latingnoteor notes, countersigned and registered as ^^ore-'^^J^^^^^^ said, shall at any time hereafter, on lawful demand during the usual hours of business, between the hours of ten and three o'clock, at the place where such note or notes is or are payable, fail or refuse to redeem such note or notes in the lawful money of the United States, the holder of such note or notes making such demand may cause the same to be protested, in one package, for non-payment, by a notary public, under his seal of office, in the usual manner, unless the president, cashier or teller of such bank shall ofEer to waive demand and notice of the protest ; and shall, in pur- suance of such ofEer, make, sign and deliver to the party making such demand, an admission, in writing, stating the time of the demand, the amount demanded, and the facts of the non-payment thereof, and the superintendent, on receiving and filing in his office such admission or protest together with such note or notes, shall forthwith give notice Notice and ... , 1 1 ,. 1 proceed- in writmg to the maker or makers of such note or notes, to ings if pay the same ; and if he or they shall omit to do so for paid in fifteen days after such notice, the superintendent shall daya. 152 BANKING LAWS. immediately thereupon (unless he shall be satisfied that there is a good and legal defense against the payment of such note or notes) give notice in the State paper that all the circulating notes issued by such person or association will be redeemed out of the trust funds in his hands for that purpose, and the superintendent shall be required to apply the said trust funds belonging to the maker or makers of such notes, to the payment jpro rata of all the circulating notes put in circulation by the maker or makers of such dishonored notes, pursuant to the provisions of this act, and adopt such measures for the payment of such notes as -will, in his opinion, most effectually prevent loss to the holders thereof. § 92 was section 4, chapter 260, Laws of 1838, and section 1, chapter 46, Laws of 1841, as amended by section 4, chapter 203, Laws of 1851. 1. The provision of the constitution that specie payment shall not be suspended is not self -executing, and a refusal of a bank to redeem in specie, but offer to redeem in legal tender, does not authorize banii; superintendent to sell securities in his hands. The sale is only to be made when note is not redeemed in lawful money of the United States. Metropolitan Bank v. Van Dyck, 37 N. T 400. 3. The legislature shall have no power to pass any law sanctioning in any manner, directly or indirectly, the suspension of specie payments, by any person, association or corporation issuing bank notes of any de- scription. Art. 8, § 5, Constitution of New York. When 8 93. In case such person or association of persons shall to be sold, fail or refuse to pay such bills or notes on demand in the manner specified in the last preceding section, the superin- tendent, after the ten days' notice therein mentioned, may Proceeds P^*^*^^®*^ ^o Sell, at public auctiou, the public securities so *°iel to " pledged, or any of them, and out of the proceeds of such sale of biifs°* shall pay and cancel the said bills or notes, default in paying which shall have been made as aforesaid; but nothing in this act contained shall be considered as implying any pledge on the part of the State for the payment of said bills or notes beyond the proper application of the securities pledged to the superintendent for their redemption. § 93 was section 11, chapter 260, Laws of 1838, with necessary verbal changes, and omitting bonds and mortgages in conformity to chapter 247, Laws of 1879. CIRCULATION. 15^ Thougli this power was given to secure speedy redemption after the failure, it does not interfere with the superintendent's power to collect before failure, where it may be for the interest of any of the parties beneficially interested, and its collection by superintendent discharges the security. Flagg v. Hunger, 9 N. Y. 494. § 94. Such association or individual banker shall be liable Damages ^ ... ^^^ non- to pay the holder of every bill or note put in circulation as payment, money, the payment of which shall have been demanded and refused, at the banking-house or usual place of business of such association or banker, damages for non-payment thereof in lieu of interest at and after the rate of six per centum per annum, from the time of such refusal until pay- ment of such evidence of debt and damages thereon. § 94 was section 39, chapter 260, I^aws of 1838, as amended by section 5, chapter 203, Laws of 1851, changing interest clause from seven to six per cent, to conform to chapter 567, Laws of 1880. S 95. Nothing contained in the last preceding three sec- Bxoep- tions shall apply to cases where circulating notes registered certain in the superintendent's office shall be presented for payment to the agent of any incorporated bank, banking association or individual banker appointed according to the provisions of this act relating to the redemption of bank notes, nor to any bank, banking association or individual banker, for whom there shall not be at the time an agent duly ap- pointed as prescribed in the provisions ; nor to banks, associa- tions or individual bankers, whose place of business is in either of the cities of I^ew York, Albany, Brooklyn or Troy. § 95 was section 6, chapter 203, Laws of 1851, with necessary verbal changes only. § 96. All fees for protesting * circulating notes issued Fees for by any banking association or individual banker shall be paid Eow^paid. by the person procuring the services to be performed, for which such association or banker shall be liable, but no part of the securities deposited by such association or banker shall be applied to the payment of such fees. § 96 was section 10, chapter 363, Laws of 1840. * So in original. 20 154 BANKING LAWS. Agents to g 97_ Every association and individual banker who shall pointed by j^ojeofter commence business under the laws of this State new asso- _ brfore In s^^^^) ^P°^ '^^^* receiving any circulatmg notes irom the fitof""" superintendent, appoint an agent for the purpose of redemp- nished. ^.Qj^^ ^^^ jjg subject in all respects to the provisions of this act in relation thereto ; and the superintendent is hereby directed not to deliver any circulating notes to such associar tion or banker, until such appointment is made and filed in his office ; and such appointment shall be immediately pub- lished by the superintendent of the banking department in manner aforesaid. § 97 was section 6, chapter 302, Laws of 1840, with, necessary verbal changes only. Appoint- § 98. Appointments of agents for the purpose of redemp- men^ may ^.^^ ^^^ ^^ revoked and new appointments of agents may be made from time to time, by delivering such revocation and appointment to the superintendent, who shall cause the same to be published as aforesaid. § 98 was section 7, same chapter, with slight necessary verbal changes. A number § 99. It shall be lawful for any number of incorporated may ap- banks, banking associations and private bankers by agree- common ment to associate together for raising a joint fund to be placed in the hands of their common agent, for the redemp- tion of their circulating notes in the city of New York or Albany, and also the circulating notes of other incorporated banks, banking associations and individual bankers, in such manner and under such regulations as may be agreed upon, and to employ such agents and clerks as they may deem necessary to carry on the business of such common agency ; but nothing in this section contained shall authorize the re- demption or purchase by such agency of any circulating notes at a discount of more than one-half of one per centum, nor to relieve or discharge such incorporated bank, banking association or individual banker, from any duty or liability required or imposed by this act. § 99 was section 8, chapter 303, Laws of 1840. CIECULATION. 155 § 100. Nothing in this act contained shall be so construed ^(g'^'^p^o. as to authorize any incorporated bank, banking association from^pur- or individual banker to purchase, buy in, or take up, di- "hlfr notes rectly or indirectly, their circulating notes at an amount less herlfa "^ than what purports to be due thereon at any other place, or p™^"*«^- In any other manner than is directed in and by this act. § 100 was section 9, chapter 303, Laws of 1840, § 101. It shall be the duty of the superintendent to make fribution" a final distribution of the funds in his hands arising from °| T^^^^ the sale of securities deposited with him by associations or blSL. individual bankers, under the act to authorize the business of banking, or under this act, who have failed or who may hereafter fail to redeem their circulating notes, which dis- tribution shall be made in the manner herein prescribed. At the expiration of six years after the first sale made by the superintendent, of the securities of any such insolvent banking association or individual banker, the superintendent shall issue a final notice to the holders of the circulating notes issued by such banking association, or individual banker, requiring the presentation of such notes within six months after the date of said notice, and any of such circu- lating notes which shall not be presented within the time Final no- thus specified shall cease to be a charge or claim upon the funds of said banking association or individual banker re- maining in the hands of the superintendent. Any of such circulating notes which shall be presented within the period above limited shall be received and paid by the superintend- ent at the same rate which shall have been paid on like notes previously presented, and if all the notes of any bank- ing association or individual banker so presented shall have been redeemed at their par value, he shall pay to said asso- ciation or banker the residue of the fund remaining in his hands belonging thereto. But in case said notes shall not have been redeemed at par, then the holder shall be entitled to a certificate, showing the balance, if any, due thereon. § 101 was section 1, chapter 331, Laws of 1850, with necessary verbal changes, so as to make the section cover deposits after the revis- ion takes effect, as well as those previously made. 156 BANKING LAWS. nfnd'^to be § ^^^- -^* *'^® expiration of the notice of six months, re- PTO^rato** quired to be given b v the preceding section, the superin- oate^ho?d- tendent sliall ascertain the amount of the residue of the fund ""• remaining in his hands belonging to the creditors of such insolvent association or banker, and after deducting there- from all expenses ji^stly chargeable thereon, he shall make a ^o rata distribution of the residue upon the outstanding certificates given for the balance due to the holders of the circulating notes of said association or banker, which shall have been redeemed in part, and it shall be the duty of the superintendent to issue a notice to the holders of such certi- ficates, stating the rate or amount payable thereon, and re- quiring said holders to present the same within six months after the date of said notice. §§ lOS and 103 were section 3, chapter 331, Laws of 1850. fiindt'tf § ^^^' "^^^ °^ *^^ certificates referred to in the last sec- ce^ase after tion which shall not be presented within the time specified months. {^ g^jd section shall cease to be a charge or claim upon the residuary fund in the hands of the superintendent. See preceding note. flind'w'be § ^04. After making the final distribution, directed in treiu?y? section one hundred and two of this act, if any portion of said fund shall remain unclaimed, the same shall be depos- ited in the treasury and applied toward paying the ordinary expenses of the banking departnient. §§ 104 and 105 were sections 3 and 4 of same act. aforeKiid § ^^^- '^^^ notice required to be given by this act to the lishecf"*'' creditors of insolvent banking associations or individual bankers shall be published at least six weeks in one or more newspapers which the superintendent shall deem best calcu- lated to inform such creditors, and the cost of such publica- tion shall be defrayed out of the fund to which said notice shall refer. See preceding note. CIEOULATION. 157 § 106. It shall be optioual with every incorporated bank, ^^*^P" banking association or individual banker^ doing the business gy*^|jj^|J^ of banking, under any statute of this State, and receiving, ®*''- on deposit, in the course of its or his business, or otherwise, the circulating notes issued by any other incorporated bank, banking association or individual banker, engaged in the business of banking under any such statute, to present such notes for redemption and payment, in the manner and upon the terms now provided by law, either to the lawful redeem- ing agents, or at the counters of the incorporated banks, banking associations or individual bankers issuing them; but every such incorporated bank, banking association and individual banker shall elect to present, and shall present such notes and all of them it or he may have on hand at the time of such presentation, either to the lawful agents, or at the counters of the banks, banking associations, or individual bankers issuing them, for redemption and payment, in the manner provided by law, as often at least as once in each successive week, when more than the sum of ten thousand dollars are held by said incorporated banks, banking associa- tion or individual banker. §§ 106, 107 and 108 were sections 1, 3 and 3, chapter 804, Laws of 1857, witli sliglit necessary verbal changes only. §107. If either of such banks, banking associations or Notice of individual bankers, holding such circulating notes, shall elect where ^ -, . , notes shall to present the same for redemption and payment at the^e preseu- counters of the banks, banking associations or bankers issu-P^y™®"*- ing them, it or he shall cause a written or printed notice of such election, attested by the sigrlature of the president or cashier of the bank, banking association or banker, so hold- ing them, under the seal of such bank, banking association or banker, that it or he will thereafter seal and present such notes and all of them that it or he shall have on hand at the time of such sealing, at the counter of the bank, banking association or banker issuing them, for redemption and pay- ment, as often at least as once in each successive week, when more than the sum of ten thousand dollars are held by said incorporated banks, banking association or individual banker, 158 BANKING LAWS. to be redeemed and paid in the manner required by law ; and when such notice shall have been given, such notes so re- ceived by such banks, banking associations and bankers aforesaid, giving such notice, shall thereafter be presented at b^e^presen- such counters, and not elsewhere, for redemption and pay- fng^ex-'^'^ ment, unless a further notice of ten days shall be given, in daya' no- the manner above provided, that such notes will thereafter change be be presented for redemption and payment to the lawful redeeming agent aforesaid, within the times and upon the terms prescribed by law ; but nothing herein contained shall be so construed as to prohibit banks, banking associations agree-* End individual bankers from redeeming, presenting, holding, ^owwted. pledging or exchanging each other's circulating notes in the manner, within the times, and upon such terms as they may agree upon, or may heretofore have agreed upon, and as shall be conformable to pre-existing laws. See preceding note. for"Ti*i - § ^^^' ^"^^^y incorporated bank, banking association and tion. individual banker, who shall knowingly and willfully neg- lect or refuse to comply with the provisions of the last two preceding sections shall forfeit and pay the sum of one thou- sand dollars, to be sued for and recovered in the name of the people of the State of New York, in any court having competent jurisdiction. See preceding note, Notice of § 109. 1. "Whenever any banking association, individual business, banker, receiver of a banking association, assignee or assign- ees, administrators, executors, personal representatives or successors of an individual banker, shall have given notice to the superintendent of their intention to close the business of banking, or the trustees or legal representatives of any incorporated bank whose charter has expired, or the receiver of any incorporated bank which shall have been declared Whende- insolvGut, shall have redeemed at least seventy-five per Ee^mSe'' Centum of the largest amount of their circulating notes out- seoljrit^es' standing at any time, as shown by the books of the banking drawn, department, they shall be entitled to deposit with the super- OIKOULATION. 159 intendent, and he is hereby authorized to receive a deposit of money equal to the amount of the outstanding circula- tion at the time of such deposit, to be placed by him in some bank in the city of Albany, in good credit, upon the receipt of which it shaU be lawful for the superintendent to give up all other securities theretofore deposited with him for the redemption of circulating notes issued thereon. 2. Upon the receipt of such deposit the superintendent Notice to shall immediately give notice in the State paper, and at liahed six least one newspaper in the county where such bank, banking association or banker shall have been located or doing busi- ness, which notice shall be published at least once a week for six months successively, that the notes of such bank, bank- ing association or banker will be redeemed by him, at the Notes not , , ., •! ^ presented bank where such deposit is made, at par; and that all the^'"^*"*!^ . . years, outstanding circulating notes of such bank, banking associa- tion or banker must be so presented for redemption within six years from the date of such notice and all notes which shall not be thus presented for redemption and payment within the time specified in such notice shall cease to be a charge upon the funds in the hands of the superintendent for that purpose. 3. At the expiration of such notice, it, shall be lawful for Money to the superintendent to surrender, and such bank, banking upon ex- ^. . ,' ' ° plration of association, banker, receiver, assignees or trustees, or their notice, legal representatives, shall be entitled to receive from him all the money remaining in his hands after such redemption, except so much thereof as may be necessary to pay the rea- sonable expenses chargeable against the said accounts, in- cluding the payment for the publication of the above-men- tioned notices. 4. All circulating notes of such bank, banking association Notes not or banker which shall not have been presented for payment, cease to\e within the period required by such notice shall, upon the ^ expiration of such period, cease to be a lien or charge upon the property and effects of such bank, banking association or banker, in the hands of such receivers, assignees, trustees or otherwise ; and all liability of such receivers, assignees, 160 BANKING LAWS. trustees, banks, banking associations or bankers, for or on account of any circulating notes which shall not have been presented within the time aforesaid, shall also cease. J™^*mly ^- ^^^^ trustees, receiver, assignees, bank, banking associa- sits'tttOT" ti<^ii °^ banker may, after the full payment of all the Sent rf circulating notes issued by them respectively, which shall °°'^^' have been presented within the time required by such notice, and of all other lawful claims and demands against such bank, banking association or banker, divide the remaining property and effects of said bank, banking association or banker among the stockholders thereof, their or his personal representatives or assigns, according to their respective shares and interest therein. § 109 was section 1, cliapter 336, Laws of 1859, as amended by chapter 348, Laws of 1865, and chapter 476, Laws of 1867. For provision for redemption without giving notice of intention to close business, see section 113. For unclaimed balances, see section 10. Notes to 8 HO. In case the bank so designated shall at any time be pro- ^ 1 tested on fail or refuse to redeem such notes at par when presented, refusal to ... redeem, ^j^gy shall be protested as required by section ninety-two of this act, and the superintendent shall thereupon, in manner required in said section, provide for the redemption of said notes. §§ 110 and 111 were sections 3 and 4, chapter 191, Laws of 1867, with necessary verbal changes only. Banking §111. On the return to the Superintendent and the destruc- tion, etc., tion by him of any of the notes of the banking association to receive ... proper- or individual banker making a deposit as aforesaid, the said amount banking association or individual banker or their legal rep- deposited, resentatives shall be entitled to receive from him a propor- tionate amount of the stock so deposited; and at the expiration of six years from the date of the notice required by section one hundred and nine of this act, the said notes shall cease to be a lien upon the stock so deposited, and the same shall be surrendered to the lawful claimant therefor. The existing provisions of law relative to the transfer and OIECULATIOK 161 exchange of stocks deposited with the superintendent, except as herein modified, shall apply to the stocks deposited pur- suant to the provisions of section one hundred and nine of this act. See preceding note. § 112. Nothing in the banking laws of this State shall beg'J^'j}^; construed as requiring any banking association or individual ^^^i'^"*- banker to issue circulating notes. § 113 was the first part of section 3, chapter 475, Laws of 1867. § 113. It shall be lawful for the superintendent of the Deposit " ■■■ received banking department to receive a deposit of cash, pursuant JJ'^^fg°"^f to the provisions of section one hundred and nine of this J" d.oseT act, without the notice of intention to close the business of banking therein required ; but where such notice is not given, the banking association or individual banker making such deposit shall continue to make such reports and state- ments, and to publish the same, as are or may be required of the banks of this State by the laws thereof, and be in all respects amenable to the banking laws of this State, as in full operation, as a bank of discount and deposit, until due notice and evidence of the discontinuance of such business of banking shall be given to the superintendent, which dis- continuance shall require the concurrence of the owners of a majority of the shares of stock in such bank ; and this provision shall extend and apply to any bank that has here- tofore made such deposit to redeem its outstanding circula- tion, without having given notice of intention to close the business of banking ; and any bank having given such notice, and made the deposit of cash or stocks as required by law, may withdraw such notice at any time within two years after ^ay b*e making such deposit, and may thereupon resume the busi- '■®™''®'^' ness of banking under its corporate name, and subject to the laws of this State in relation to banking ; but such with- drawal shall not affect the redemption of its circulating notes previously issued, according to the terms advertised by the superintendent, as required by law, nor shall such bank be 21 162 BANKING LAWS. entitled to issue any circulating notes until the time for the redemption of its previous issue shall have expired. § 113 was section 4 of same chapter, with necessary verbal changes only. Cirouia- g u^. It shall be unlawful for any incorporated banking etenbank institution within this State, and for any association or any hibSeS™" individual or individuals authorized to carry on the busi- ness of banking under the laws of this State, to receive, pay out, give or offer in payment, as money, to circulate or at- tempt to circulate as money, any bill, note or other evidence of debt, issued or purporting to have been issued by any corporation, association or individual situated or residing without this State, and which bill, note or other evidence of debt shall, upon any part thereof, purport to be payable or redeemable at any place, or by any person, association or corporation within this State. §§ 114 and 115 were sections 1 and 3, chapter 855, Laws of 1839, with necessary verbal changes only. "M. 1950. A. Bank op Chaklestoit. "A. No. 1750. Charleston, 8 New York, March 30th, 1829. J. G. Swift, Asst. Prest. H M. L. Davis, Sec. o •-i S (Endorsed) Geo. W. Gantz. 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, 8 N. Y. 19), as within the prohibition of section 4, chapter 363, Laws of 1840, and consequently void. The amendment was explanatory. Curtis V. Leavitt, 17 Barb. 330. 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 afEect 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. 811 ; Leavitt v. Blatchford, 17 N. Y. 531 ; 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. Talmadge, 18 Barb. 456. 9. A bank cannot make an accommodation indorsement, and same is 173 BANKING LAWS. not binding except in hand of boiia fide holder for value. Mosford v. Farmers' Bank of S., 36 Barh. 568. 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 (1829-1840-1851) 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 ; 8 Barb. 333 ; 3 McLean, 103-276 ; 10 Paige, 113), .p. 34. The legal liability remains, but the notes are void. Leavitt v. Palmer, 3 N. Y. 19. 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, 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, was 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. WyckofE, 1 Hill, 11, and Smith v. Strong, 3 id. 341, 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. Foreign § 118. It shall not be lawful for any incorporated banking not to be^ institution within this State, or any association or any in- by banks dividual or individuals authorized to carry on the business in this of banking under the laws of this State, or any person greater whatever within this State, directly or indirectly, on any rate of dis- t J j t j count than pretense whatever, to procure or receive or to offer to re- demption ceive, from any corporation, association, person or persons domestic whomsoever, any bank-bill, or note or other evidence of debt in the similitude of a bank note, issued or purporting to have been issued by any corporation, association or individ- ual situate or residing without this State, at a greater rate of discount than is or shall be at the time fixed by law for the redemption of the bills of the banks of this State at their agencies ; nor shall it be lawfiil for any banldng institution, association, individual or individiials, in the first part of this section mentioned, to issue, utter or cii'culate as money, or CIECULATION. 173 in any way, directly or indirectly, to aid or assist in the is- suing, uttering or circulating as money, within this State, of any such bank biU, note, or other evidence of debt, issued or purporting to have been issued by any corporation, asso- ciation or individual situate or residing without this State, or to procure or receive in any manner whatever, any such bank bill, note or evidence of debt, with intent to issue, utter or circulate, or Avith intent to aid or assist in issuing, utter- ing or circulating the same as money within this State ; but nothing in this act contained shall be construed to prohibit any bank or banking institution receiving and paying out such foreign bank bills as they shall receive at par in the ouT^r- ordinary course of their business ; and nothing in this sec- Mils our- tion contained shall prohibit the said banking institutions, associations or individual bankers, or any person whatever in the first part of this section mentioned, nor shall they be prohibited from receiving foreign notes from their dealers and customers in the regular and usual course of their busi- ness at a rate of discount not exceeding that which is or shall be at the time fixed by law for the redemption of the ^t™ ^for- bills of the banks of this State at their agencies, or from ob- |TOm''ou8- taining from the corporations, associations or individuals, by ordinary" which or by whom such foreign notes were made, the pay- busfness. ment or redemption thereof. §§ 118 and 119 were sections 2 and 4/ chapter 355, Laws of 1839, as amended by sections 1 and 3, chapter 223, Laws of 1853, with only nec- essary verbal changes, except that section 2 is altered to conform to and include section 2, chapter 223, Laws of 1853, relating to private persons. 1. The delivery of Canada bank bills to an individual banker, who makes agreement to receive them at one-quarter of one per cent discount, and to pay by seventeen days' draft on New York, is not a violation of this statute. Receiver is merely the agent of vendor to send them back for redemption. It was not a circulation of the notes. Buffalo City Bank v. Codd, 25 N. Y. 165. 2. This statute does not prohibit banks or individual bankers from selling or delivering such notes for any purpose, except circulation as money within this State. It is no offense for a bank or banker having lawfully taken such notes at par, to sell them to another bank or banker at any rate of discount, provided it be not with a view to their circula- tion in this State. The prohibition is only on the banker buying at a 174 BANKING LAWS. Penalty. Misde- meanor. greater than the legal discount. Sacketts Harbor Bank v. Codd, 18 N. T. 240. See notes to sections 89 and 114. § 119. Every corporation and every association and indi- vidual authorized to carry on the business of banking, who shall offend against any of the provisions of sections one hundred and fourteen, one hundred and fifteen, and one hundred and eighteen of this act, shall forfeit, for each and every offense, the sum of one thousand dollars, to be recov- ered with costs of suit, in the name and for the use of any person who shall sue for the same and prosecute such suit to judgment in any court having cognizance thereof ; and every oflBcer and clerk of such corporations and associations, and every such individual banker and his clerks and servants, who shall knowingly act or assist in any violation of any of said provisions of this act, shall, upon conviction, be deemed guilty of a misdemeanor, and shall be punished by fine or imprisonment, or both, in the discretion of the court before which such conviction shall be had ; but such fine shall not exceed five hundred dollars, and such imprisonment shall not exceed six months. See note to preceding section. Bill of ox- § 120. AU checks, bills of exchange or drafts, appearing payable on on their face to have been drawn upon any bank or upon specified i i . . . . , day to be any banking association, or individual banker, carrying on grace. 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. § 130 was section 2, chapter 416, Laws of ] 857. 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 mouths or years on their face. Commercial Bank of Ky. v. Varnum, 49 N. Y. 278. Such bills are due on the day following, not that preceding a public holiday. Id. 279. CIRCULATION. 175 § 121. No transfer of securities now held or hereafter re- o^ g°oJ|^/ ceived by the superintendent of the banking department, as J'n^tlnglnt security for circulating notes issued for the same by him, counter- shall be deemed valid or of binding force or effect, unless treaaurel-! the same be countersigned bj' the treasurer of the State, or in his absence from his oihce or inability to perform the duties of his office by his deputy. It shall be the duty of the treasurer aforesaid to keep in his office, or in the office of the superintendent of the banking department, a book in which shall be entered the name of every bank, banking to keep association or individual banker, from whose account such same and transfer of securities is made by the superintendent, and the bank, 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 said book, and the par value of any stock so transferred shall be entered therein ; and it shall be the duty of the treasurer, immediately upon countersigning and entering the same, to advise by mail the bank, banking asso- ciation or individual banker, from whose account such trans- fer is made, of the kind of security and amount of the same thus transferred. §g 131 and 133 were sections 3 and 3, chapter 103, Laws of 1857. § 122. The treasurer shall present in his annual report to Treasurer the legislature, the total amount of such transfers or assign- transfers ments countersigned by him. *"™- § 123. It shall be the duty of the treasurer, or in his ab- Treasurer sence from his office, or in case of his inability to perform to ooun- the duties of his office, of his deputy, to countersign and transfer "i ° and record enter upon the book m the manner aforesaid every transfer ^^^ same. or assignment of any securities held by the said superintend- ent, presented for his signature. §§ 138 and 134 were Sisction 4, same chapter. § 124. The treasurer shall have, at all times during office Treasurer hours, access to the books of the superintendent of the bank- intendent J. . , » . . , to have ac- mg department tor the purpose oi ascertaining the correct- ?^^\*° ness of the transfer or assignment presented to him to 176 BANKING LAWS. countersign ; and the superintendent shall have access to the book above mentioned, kept by the treasurer, during oflace hours, to ascertain the correctness of the entries upon the same. CHAPTER VI. Provisions to Enforce the Responsibility of Stock- holders. Section 135. Liability of stockholders. 126. The term " stockholder," to whom applied. 127. Exonerated as to stock transferred before default. 128. Names and residences of stockholders entered in hook. 129. Judgments on demands against bank. 130. On execution unsatisfied, corporation declared insolvent. 131 Declaration of insolvency and injunction. 133. Hearing of parties, examination, injunction continued. 183. Restraining order — receiver. 134. Declaration of insolvency on application of stockholder. 135. Powers and duties of receivers. 136. Conversion of securities — dividends. 137. Expenses of proceedings. 138. Report on unsatisfied liabilities. 189. List of stockholders to be reported. 140. Reference thereupon to apportion debts. 141. Hearing before referee. 143. Six weeks after appointment referee to report. 143. Further evidence may be ordered. 144. Report on confirmation to be filed. 145. Distribution to creditors. 146. Allowance of expenses to referee and receiver. 147. Delay of distribution not to exceed one year. 148. After debts paid residue to stockholders. 149. Appeal not to stay execution unless ordered. 150. No stay on appeal without security. 151. Order of reference not appealable. 153. Receiver or stockholder may appeal. 153. Appellate court may order new apportionment. 154. Securities to be filed with clerk of court. 155. How same may be enforced. 156. Creditor neglecting to present demand. 167. Actions against non-resident stockholders. 158. Order to be presumptive evidence. 159. Compromise with stockholders by receiver- 23 178 BANKING LAWS. Sectiqn 160, Stockliolder and creditors may oppose order. 161. Proceedings supplementary to execution. 163. Action against non-resident stockholder on execution unsatisfied. 163. When receiver may sue predecessor. 164. Receiver may sell judgment. 165. Docket and lien of judgment. The same notes in this chapter apply to so many sections that it is impossible to annotate each section without very great repetition. Therefore all should he consulted. Liability 8 125. Whenever default shall be made in the payment of stock- ^° , , T 1 .,. 11 . holders for of any debt or liability contracted by any corporation or tracted by joint-stock association, for banking purposes, issuing bank notes or any kind of paper credits to circulate as money, the stockholders of such corporation or association shall be individually responsible, equally and ratably, such responsi- bility to be enforced as hereinafter provided and in no other manner, for the amount of such debt or liability, with in- terest, to the extent of their respective shares of stock in any such corporation or association as hereinafter provided. § 125 was section 1, chapter 226, Laws of 1849, with slight necessary changes. 1. In 1841, the chancellor, upon a bill filed by one Tracy v The North American Trust and Banking Company (a banking association formed under the general banking law), restrained by injunction said associa- tion and its officers "from exercising any of the rights, privileges or franchises of the said association, and from paying out or otherwise transferring or delivering to any person, body politic or corporate, any of the money, property or effects of said association,'' until the court of chancery should otherwise order — and directed the appointment of a receiver of the effects of said association. Tracy, the plaintiff, was both a creditor, and a stockholder of said association. The order for said in- junction recited, that it appeared by the said Tracy bill (among other things), that said "association is insolvent and unable to meet and dis- charge its debts as they became due and payable, and hath violated the provisions of the said act" [the general banking law], "and of the acts amending the same, and the provisions of other laws of the State (3 K. S. 464, § 39)." The order made by the chancellor in the Tracy suit was made under the power conferred by that (39) section. 2. In 1844, Assistant Vice-Chancellor Sandford, in Boisgerard v. The New York Banking Company (an association under the general banking law) 3 Sandf. Ch. 83, held that banking associations under the general banldng law of 1838, were within the provisions of the Revised Statutes, entitled, "Of proceedings against Corporations in Equity." This case RESPONSIBILITY OP STOCKHOLDERS. 179 was afterward affirmed upon appeal by the chancellor, 4 Ch. Sent. 20. See, also, Sagory v. Dubois, 3 Sandf. Cli. 466 ; Gillett v. Moody, 3 N. Y. 479, and Talmage v. Pell, 3 N. Y. 328 ; Cleveland's Banking Law, 59. 3. This act was passed to give effect to article 8, section 7, constitu- tion of 1846, which is as follows : " The stockholders in every corpora- tion and joint-stock association for hanking purposes, issuing bank notes or any kind of paper credits, to circulate as money, after the first day of January, one thousand eight hundred and fifty, shall be individually responsible to the amount of cheir respective share or shares of stock in any such corporation or association, for all its debts and liabilities of every kind contracted after the said first day of January, one thousand eight hundred and fifty." It was held to apply to all banks,as well those organized before,as after 1846, provided right to amend charter was reserved. Reciprocity Bank, 22 N. T. 14, 15 ; S. C, 29 Barb. 369 ; S. C, 17 How. Pr. 328 ; Empire City Bank, 8 Abb. 192. 4. A statute which imposes upon the stockholders of a corporation a ' personal liability for the corporate debts,must be construed strictly. It is in derogation of the common law.and cannot be extended beyond its literal tei-ms. Chase v. Lord, 77 N. Y. 1. 5. Each stockholder is subject to a ratable share of the debts in pro- portion to the whole capital stock and whole indebtedness of the hank, and -without reference to the solvency of any other stockholder. When one assessment has been made and confimied, no second assessment can be made to supply a deficiency because some stockholders are insolvent. Hollister Bank of B., 27 N. Y. 893 ; approved Hollister v. HoUister B'k, 3 Abb, Ct. App. 367. 6. Though not free from obscurity, its (this act) design in one respect is perfectly clear. No payment was to be compelled from stockholders until all assets readily convertible into cash have been converted and distributed to creditors. In re Hollister Bank, 23 N. Y. 511. 7. In an action against stockholders of a corporation brought by a creditor to charge them individually with a debt, the recovery of a judg- ment for the debt is sufficient evidence of its indebtedness to charge them.unless obtained by fraud and collusion. Although the statute pro- hibits judgment against the stockholders, until judgment has been re- covered against the corporation and remains unpaid, they may be sued together with the corporation, and a judgment against the corporation authorizes a judgment against them also. Conklin v. Furman, 57 Barb. 484. 8. This act was designed to provide a cheap and expeditious way of winding up the affairs of insolvent banking corporations. One feature of the bill is that it prevents numerous and vexatious suits against the stockholders in case of insolvency. The leading features of the bill are 1st. To declare the liability which equitably exists under the constitu- tion. 2d. The speedy remedy of both creditors and stockholders of in- solvent institutions. Senate Document, 1849, No. 42. It supersedes proceedings against corporations in equity of Eevised Statutes,inasmuch 180 BANKING LAWS. as they apply to banks, etc. Ferry v. Bank of Central New York, 15 How. Pr. 446. 9. Almost immediately after the suspension of specie payments by the New York banks, in October, 1857, a meeting of the justices of the su- preme court of the first and second districts was held, for the purpose of determining the projjer course to be pursued in respect to proceedings that might be instituted against banks. The following minute of their proceedings is of interest in connection with the above proceedings . At a meeting of the justices of the supreme court held for the purpose of determining a uniform course of action among themselves : Present, Justices Strong, Emott, Birdseye, Mitchell, Eoosevelt, Davies, Clarke and Peabody, the following opinions were unsjiimously concurred in : In all cases where the act of 1849 is appli- cable, it is deemed to supersede the provisions of the Revised Statutes. 3 R. S. 464, §g 39 and 47. Accordingly no creditor of a bank who may have relief under that act.can have it under the Revised Statutes. That act gives the creditor a right to apply to a justice of the supreme court, only after the expiration of ten days from the refusal of a bank to pay its debts and liabilities. Even then a temporary injunction and imme- diate injunction can only be granted.if in the opinion of the judge it be expedient in order to prevent fraud or injustice. After both parties shall be heard before the judge.he is to determine whether the bank is clearly solvent or not. A bank is clearly solvent when it is clearly able to pay all its debts, although it may have suspended specie payment for a time. In the case of the N. American T. and B. Co. , this principle was held by the supreme court and court of appeals. Curtis v. Leavitt, 17 Barb. 309, 327. When a bank is clearly solvent and its officers are acting in good faith.no receiver should be appointed. Where the act of 1849 does not apply, if the part of the Revised Statutes does apply, it is discretionary on the part of the supreme court to grant an injunction or not. That discretion is controlled by legal rules, and the injunction should never be. granted if the bank is clearly solvent. An ex parte order for an in- junction should not be granted even after a suspension of specie pay- ments, unless it satisfactorily appears to the judge that it is necessary to prevent fraud and injustice. The mere fact of the suspension of specie payments (when it is general),is not of itself sufficient proof of fraud or injustice to authorize such injunction. As a general rule it is not expedient to grant any injunction against a bank, without previous notice. It was also resolved that Justice Mitchell be requested to fur- nish a copy of these opinions to each of the justices of the supreme court of the other districts, with a request that they respectively com- municate to him their views on the same points. Livingston v. B'k of N. Y., 5 Abb. Pr. 343 (note). 10. A judgment recovered against a corporation, after it has been dis- solved, is not even prima facie evidence of a debt due from the corpora- tion at the time of its dissolution, for the purpose of charging those RESPONSIBILITY OF STOCKHOLDERS. 181 ■who were tlien stockholders in tlie company witli tlie amount of the judgment in a subsequent suit against them. Admissions by assignees are not evidence to prove that a debt was due at the time of the assignment, in a suit to charge the stockholders individually with the debt. To recover from stockholders on a note given after actual insol- vency, it must be proved that it was given for a debt actually due. Bonaffe v. Fowler, 7 Paige, 576. 11. Money collected on an assessment of stockholders .should not be repaid until all the debts are paid. The intention of the constitution and acts was, to make the stockholders liable to the full amount of their stock, for the payment of the corporate debts. Pruyn v. Van Allen, 39 Barb. 354. 13 Action under this law is not barred because of a previous judg- ment in an action under Revised Statutes (3 E. S. 463, §§ 39-40), by a stockholder of bank to compel the application of its assets to the pay- ment of its debts. Diven, Eec'r Yates C. B'k., v. Duncan et al., 41 Barb. 530. 13. The provisions of the Revised Statutes (3 R. S. 464r-465), en- titled "Of proceedings against corporations in equity," are not repealed by this act, at least as far as actions by attorney-general for people are concerned. Livingston v. B'k of N. Y, 5 Abb. Pr. 343. 14. To proceedings by people, act is not applicable — therefore Re- vised Statutes are in so much still in force. People v. Central B'k, 53 Barb. 430 ; 35 How. Pr. 434. The right of action against a bank to recover moneys on deposit, does not accrue until a demand and refusal of payment has been made ; and the presentation and demand of payment of the depositor's check by a wrongful holder, the payee's indorsement thereon being forged, is not such a demand as perfects the depositor's cause of action. Bank of British N. A. v. Merchants' Bank, 16 Jones & Spencer, 4. 15. In determining who the stockholders are, the court will not look into the legal title, except perhaps where there has been a fraudulent transfer to avoid liability. Adderly v. Storm et aZ., 6 Hill, 634 ; Ex parte Van Riper, 30 Wend. 614. 16. In an action brought to enforce the individual liability of a stock- holder of an insolvent bank, he cannot set off against such liability its indebtedness to him. Garrison v. Howe, 17 N. Y. 464 ; In re Empire City Bank, 18 id. 337 17. The liability of a stockholder is in the nature of a contract, and as such was a personal liability for which the estate of the stockholder was holden after his death. Bailey v. Hollister, 36 N. Y, 116. 18. The liability of each stockholder is precisely for his ratable pro- portion of the sum total of that indebtedness of the bank which is to be borne by the shareholders, whether this be its entire indebtedness of every description, or only its indebtedness upon its circulating bills and notes. After he has once paid this proportional amount to any person or persons having a legal right to demand it from him, he is fully ac- quitted and discharged. 182 BANKING LAWS. His liability is for his share of the total indebtedness, not for his pro- portion of each item of that indebtedness. Neither are the solvent share- holders, or those who can be come at for collection, liable to assessment beyond the proportional amount above described, by reason of the in- solvency or inaccessibility of others of the shareholders. Those who are solvent and accessible, have not the burden of paying off the whole sum which is due from all together, but only their own pro- portionate shares ; it is the same if the bank owns shares of its own capital stock. In assessing the other shareholders, the calculation will be made upon a basis including these shares precisely as if they were held by an outside party. Making an equation according to the time- honored rule of three, the liability of each individual may be thus as- certained ; as the whole capital stock is to the entire indebtedness which all the shareholders are liable to discharge, so is the total par value of all the shares to any one shareholder's proportion of the amount to be redeemed. The last figure gives the sum which the individual is liable to pay. Morse Treatise on Banks, 2d ed. , 503 ; United States v. Knox, 102 TJ. S. 423, and cases there cited. 19. The following correspondence between the superintendent of the banking department and the attorney-general, and filed in that de- partment September 3, 1884, is of sufiicient importance to justify its publication in full : I. " I shall be glad to have your opinion as to the proper interpretation of section 125 of the revision of the Banking Laws in the following con- nection : That section is, with slight changes, section 1, chapter 236 of the Laws of 1849. This first section provided that stockholders of ' any corporation or Joint stock association for banking purposes, issu- ing bank notes or any kind of paper credits to circulate as money, after the 1st day of January, 1850," should be individually responsible, equally and ratably to the extent of their shares of stock, for any debt or liability contracted by such corporation or association after January 1, 1850. As nearly every State bank issued circulating notes when this act was passed, its provisions afforded a valuable safeguard for the pro- tection of the creditors of State banking institutions. But congres- sional legislation in the year 1866, imposing a tax of 10 per centum on the circulation of State banks, has resulted in driving such circulation out of existence. Does the provision of the act, the language of which made the responsibility of stockholders depend upon circula- tion, longer afford any practical benefit to such creditors ? " II. " Tour communication, requesting my opinion as to the liability of stockholders of State banks, not issuing bank note or paper credits to circulate as money, to the creditors of such banks, has been received. I have examined the question involved, and my conclusions in regard to the same are as follows : RESPONSIBILITY OF STOCKHOLDERS. 183 ' ' At common law, stockholdeTS of a corporation are not liable for its debts. The first general enactment of this State, imposing a liability for corporate debts upon bank stockholders, is to be found in section 7, article VIII of the constitution of 1846, which is as follows : " 'The stockholders in every corporation and joint- stock association for banking purposes, issuing bank notes or any kind of paper credits to circulate as money after the first day of January, one thousand eight hundred and fifty, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or as- sociation for all its debts and liabilities of every kind contracted after the said first day of January, one thousand eight hundred and fifty. ' " The section remains unchanged by revision or amendment. Section 1 of chapter 326, Laws of 1849, entitled ' An act to enforce the respon- sibility of stockholders in certain banking corporations and associations, as prescribed by the constitution, and to provide for the prompt pay- ment of demands against such corporations and associations, ' reiterated the rule laid down in the constitution, and pointed out the proceedings to be taken to enforce the liability. In the case of the United States Trust Company of New York, Receiver, etc., against the United States Fire Insurance Company, also cited as Matter of Empire City Bank (18 N. T. 199), it was held that the constitution and statute of 1849 defined a liability on the part of a stockholder of the banking associations therein mentioned not satisfied with the absorption of his capital stock, but requiring in addition thereto a contribution for the payment of debts to an amount equal to such stock. Chapter 226, Laws of 1849, was repealed by chapter 402, Laws of 1882, simultaneously with the enactment of chapter 409, Laws of 1882, entitled ' An act to revise the statutes of this State relating to banks, banking and trust companies.' Section 125 of the last-named statute is a re-enactment of the rule of liability as contained in the statute of 1849. "Prior to the adoption of the constitution of 1846, there were in operation in this State two kinds of banks; namely, those incorporated by special statutes.and those organized under the Banking Act of 1838. Under neither system were the stockholders responsible for the debts or liabilities of their respective corporations, except in rare cases, where the special statute incorporating an institution of the one class.or the articles of incorporation of one of the- other class, provided for the stockholders' liability in express terms. Those institutions were, al- most without exception, banks of issue. The currency issued by banks of the first class was practically unsecured. In 1829, the legislature passed an act providing for a safety fund. Such fund never became adequate to its purpose. The enactment of the General Banking Law of 1838 was a long step toward a secured currency. So long, however, as the banks incorporated by special statute remained in existence,no consistent and efiicient and general banking system could be built up. The State was flooded with notes of doubtful value issued by numerous insignificant banks. Failures were frequent among such institutions. 184 BANKING LAWS. Many of the evils of irredeemable paper currency were experienced. Tlie policy and intent of the constitutional provision to vfliicli I have above referred were, I think, directed solely to the curing of such evils, and were threefold : First, to give to bank -paper issued to circulate as money, the support of the personal responsibility of stockholders ; secondly, by the imposition of such liability,to drive out of circulation the issues of unreliable banks; and, third, to assist in bringing about a uniform State banking system. I think that these views are sus- tained by that provision of the section referred to, which postponed the accruing of the liability until the 1st day of January, 1850. The banks were thus given upward of three years in which to call in their issues of paper circulating as money, if they saw fit to do so, and thus relieve their stockholders from personal liability. "So far. therefore, as the conditions and surroundings of the State banking system prior to 1850 may properly be considered in malting the inquiry as to the intent of the constitutional and legislative declarations of 1846 and 1849, as a matter of history, they seem to point to the con- clusion that the framers of the constitution and the legislature had in view the imposition of a personal liability upon stockholders, only in those cases where the banking corporation issued bank notes or paper credits intended to circulate as money. Aside from the historical prob- abilities as to the intent of the framers of the constitutional regulation, there is a legal intent in these enactments. Such intent may be ascer- tained by resort to a well-established rule of statutory construction. As I have already said, at common law no stockholder is responsible for a corporate debt. A constitutional or legislative declaration imposing a liability not known to the common law.must be strictly construed, and must not be extended by intendment. Applying this clear rule to the present question, I have no hesitation in saying that the mere power in the corporation to issue bank notes or paper credits, is not sufficient to bring the stockholder within the rule of liability. Unless that power be exercised in an actual issue of bank notes or other paper credits in- tended to circulate as money, the stockholder is not responsible for the debts of the corporation. I do not think that the certification of checks, or the making and delivery of certificates of deposit, is 'an issuance of paper credits intended to circulate as money.' Vide Curtis v. Leavitt, 15 N. Y. 9, at pp. 222, 225. " For my views upon the general question,! have the warrant of vari- ous dicta of the judges and decisions of the courts Although there are no reported cases which may be cited as direct and conclusive prece- dents, the question has been several times incidentally considered by the courts, and uniformly the judges have expressed the view that the stockholder is not liable unless the bank actually issues bank notes. Vide Matter of Empire City Bank, 6 Abb. Pr. 385, 414 ; S. C, 13 N. Y. 199, 209 ; Matter of Oliver Lee & Co.'s Bank, 21 id. 9 ; Matter of Reci- procity Bank, 22 id. 9. "Moreover, I have now before me the manuscript opinion of Mr Jus- tice Merwin, in an unreported case in the Matter of the Merchants' RESPONSIBILITY OP STOCKHOLDERS. 185 Bank of Watertown, Special Term, November, 1883. The proceeding was instituted under the statute of 1849, for the purpose of fixing and enforcing the liability of stockholders. The bank was organized under the State banking law ; had never issued bank notes, and was insol- vent. The opinion is an exhaustive one. The learned justice looks at the question from various standpoints ; inquires whether the clause ' issuing bank notes or any kind of paper credits to circulate as money ' is one of extension or limitation ; reviews all the utterances of the courts upon the question, and unhesitatingly arrives at the conclusion that the stockholders are not liable. "In this case it will be seen that the precise question under consid- eration was involved and decided after a very careful examination, and although the amount involved was large, no appeal was taken from the decision. An examination of the history and policy of the banking system of this State, of the adjudged cases to which I have referred, and the application of well-settled principles of statutory construction, must, I think, lead to the conclusion that the stockholders of State banks, not issuing bank notes or paper credits intended to circulate as money,are not liable to the creditors of those institutions." See notes to sections 24 and 148, §126. The term, " stockholder," as used ia the provisions The term ^ of this chapter, shall apply, not only to such persons as ap- holder,"" pear by the books of the corporation or association to be such, to apply, but also to every equitable owner of stock, although the same may appear on such books in the name of another person ; and also to every person who shall have advanced the in- stallments or purchase-money of any stock in the name of any person under twenty-one years of age, and while such person remains a minor, to the extent of such advance ; and also to every guardian or other trustee who shall voluntarily invest any trust funds in such stock ; and no trust funds in the hands of such guardian or trustee shall be in any way Trustee, liable imder the provisions of this chapter by reason of any beneficiary such investment, nor shall the person for whose benefit any such investment may be made be responsible in respect to such stock, until thirty days after the time when such per- sons, respectively, become competent and able to control and dispose of the same ; but the guardian or other trustee making such investment, as aforesaid, shall continue respon- sible as a stockholder until such responsibility devolves upon the person beneficially interested therein ; and in respect to 24 186 BANKING LAWS. stock held by a guardian or other trustee, under a transfer of the same by a third person, or under positive direction by a third person for such investment, the person making such transfer or giving such directions, and his executors and administrators shall, for the purpose of this chapter, be deemed a stockholder, and the estate of such person, if he be deceased, shall be responsible for the debts and liabilities chargeable on such stock, according to the provisions of this chapter. § 126 was section 2, chapter 226, Laws of 1849, with slight necessary verbal changes. 1. The organization of a banking corporation and the subscription of the defendant to the capital stock thereof, creates a legal liability on his part to pay the corporation the amount of his subscription ; and that legal liability may be enforced to an extent necessary to liquidate its debts. Dayton v. Borst, 31 N. Y. 435. 3. The original articles of association relieved stockholders from all liability. The bank issued circulating notes after 1850 as before. Held, that stockholders are personally liable under the constitution and this act. In re Oliver Lee & Co.'s Bank, 31 N. Y. 9. 8. Persons to whom stock has been transferred on books as security for debt are liable as stockholders (not the borrower and pledgor),unless the debt has been paid and re-assignment made before default. It would seem that the provision charging the equitable owner,is limited to cases where the registered holder is merely the nominal owner like a trustee, and has no beneficial interest. In re Empire Bank, 18 N. Y. 336. 4. A delivery of a stock certificate as collateral security for a debt with the usual power of attorney indorsed thereon, signed by the owner in blank, transfers all the owner's title subject only to claims of the corpo- ration, though prohibited by by-law unless made on the books of the company. But the company having no notice of the transfer.are pro- tected in payment of dividends to original owner.and allowing him to vote until transferred on its books. Smith v. Am. Coal Co. , 7 Lans. 317. 5. A person who, after having subscribed for stock of a bank, transfers his subscription with consent of bank in good faith toanother.is relieved of responsibility on account of his subscription, and is not liable under this act. Cowles v. Cromwell, 35 Barb. 415. 6. The means for acquiring jurisdiction under this act over the per- sons of stockholders are unknown to the common law, and quite differ- ent from those re(}uired in actions under the Code. Personal service is not required in any case, and mere advertisement is suflicient as to all stockholders not residents of the county where principal office of banks is situated. Such a method may be justified as to a stockholder, since he would be likely to know that his bank had passed into a receiver's hands. Therefore jurisdiction can thus be acquired only over stock- RESPONSIBILITY OP STOCKHOLDERS. 187 holders, and not over any one who does not come within the deflnition given in the second section of act. Diven v. Lee, 34 How. Pr. 198 and 199 ; S. C, 36 N. Y. 303. 7. Defendant was the owner of certain shares of the capital stock of the bankers and brokers' association, a corporation organized under the act of 1867 (ch. 474), and by it made subject to the provisions of the Revised Statutes in relation to general powers, privileges and liabilities of corporations. (1 R. S. 599, § 1, tt seq.) He sold said stock to B. & Co., a firm of which the president of said corporation and one of the trustees were members, and transferred his certificate by executing an assignment in blank, no name being inserted as transferee. The stock was not transferred on the books of the corporation ; an in- dorsement was made upon the dividend book, that the dividends were to be paid to B. & Co. For four years thereafter the dividends were paid to B. & Co. , as appears by the books of the association on the account of B. with the company.and on the dividend book where it was marked as credited to them. The transaction relating to the stock was with B. alone. There was no declaration in the charter or by-laws that a transfer could only be made perfect by entry on the books. Said corporation having become insolvent, plaintifE, as the receiver, brought this action to recover an amount unpaid on said stock. Held, that the action could not be maintained. That B. & Co. took a complete and perfect title.and that the corporation could not contest its title ; and that the receiver occupied no other position and had no better right than the corporation. Cutting v. Damerall, 88 N. Y. 411 ; reversing 28 Hun, 339. See notes to section 30. § 127. The persons who shall be stockholders of any cor- Liability poration or association described in section one hundred and holders twenty-five of this act, at the time of contracting any debt ip section or liability by such corporation or association, shall be re- sponsible therefor, as declared in the said section, but shall be exonerated from such responsibility in respect to any stock which shall have been transferred, previous to any default in the payment of such debt or liability, on the books of such corporation or association, to any resident of this State, of full age, in good faith and without any intent to evade such responsibility ; and every assignee of any stock so trans- ferred previous to such default shall be responsible for debts and liabilities to the extent of such stock, in the same man- ner as if he had been the owner at the time of contracting such debt or liability, with the same exception in his favor, in respect to any stock transferred by him, as herein pro- 188 BANKING LAWS. vided ; and the same rule of responsibility shaU apply to each subsequent assignee. § 137 was section 3, cliapter 236, Laws of 1849, with slight necessary changes. 1. A transfer to the bank itself will not relieve former stockholder. It must, to have that effect, be to some one who takes a personal lia- bility, distinct from the bank. In re Reciprocity Bank, 23 N. T. 18. 2. A transfer by a subscriber of his subscription, and the acceptance of the assignee by the bank, relieves the subscriber from all liability on account of his subscription. Though articles of association declared that no transfer should be made on which any call for an installment for subscription was unpaid, this was merely for protection of bank.and did not prevent the bank from consenting to the substitution of one stock- holder for another. A " transfer " is the act of the holder of the stock alone, a " substitution " is the joint act of the transferee, transferrer, and the bank. Cowles v. Cromwell, 35 Barb. 415. ^ames of g J28. A book shall be provided and kept by every cor- and^resi- P^ratioH and association described in section one hundred be'entered ^^ is not within the prohibition of this section. Gillett v. Campbell, 1 Denio, 530. 11. This statute was designed to protect the corporation against its officers. A transfer in violation thereof is not void, but only voidable at suit of corporation, or one claiming under it. The debtor cannot avail himself of it as a defense. Blwell v. Dodge, 83 Barb. 336. See notes to the following section. § 187. Ifo such conveyance, assignment or transfer, nor same con- any payment made, judgment suffered, lien created, or secu- * ""* rity given by any such corporation when insolvent, or in contemplation of insolvency, vrith the intent of giving a preference to any particular creditor over other creditors of the company, shall be valid in law, and every person re- ceiving by means of any such conveyance, assignment, transfer, lien, security or payment, any of the effects of the corporation shall be bound to account therefor to its cred- itors or stockholders, or their trustees, as the case shall re- quire ; and whenever any incorporated company shall have refused the payment of any of its notes, or other evidences of debt, in specie or lawful money of the United States, it shall not be lawful for such company, or any of its oflScers, to assign or transfer any of the property or choses in action of such company, to any officer or stockholder of such com- pany, directly or indirectly, for the payment of any debt, and every such transfer and assignment to such officer or stockholder shall be utteriy void. 39 236 BANKING LAWS. 1. Payment of check of depositor wholly ignorant of insolvency of bankjis not within the statute. An act done by corporation in the ordi- nary and usual course of its business, uninfluenced by its financial con- dition, cannot be said to be done in contemplation of insolvency. Rob- inson V. Bk. of Attica, 31 N. Y. 406 ; Brown v. Harbeck, 5 Seld. 589, distinguished ; Butcher, Assignee, v. Importers & Traders' Nat. Bk. , 53 N. T. 5; reversing S. C, 1 T. & C. 400. 3. A transfer is in contemplation of insolvency, as well where the insolvency actually exists, as where it is anticipated. (Hayton v. Bruce, 3 Wend. 17, disapproved as to this point.) Eobinson v. Bk. of Attica, 21 N. T. 409 it seq. 3. This section is not violated, unless assignment is made to give a preference to some particular creditor over others. The intent is a fun- damental fact to be proved. Curtis v. Leavitt, 15 N. Y. 109. 4. Where a corporation is insolvent in such a sense that all its debts cannot probably be discharged from its assets, the payment of any one creditor in full is a preference within the meaning of the statute. Gil- lett V. Phillips, 13 N. Y. 119. 5. A general assignment without preferences is valid. In re Bowery Bank, 16 How. Pr. 58 ; 5 Abb. Pr. 417. 6. A transfer by a moneyed corporation of negotiable notes.as collat- eral security to secure a present loan to be used in the course of its tusinessiis not a transfer with intent to give preference to one creditor over others, within this act. Nelson et al. v. Wellington, 5 Bosw. 178- 186 ; Holbrook v. Bassett et al, id. 148. 7. A person who loans money to a company in good faith, on transfer to him as collateral security of subscription notes given for premiums in advance, amounting to over $1,000, and without notice that there had been no previous resolution of the board of directors authorizing the transaction, is entitled to recover thereon against the makers, al- though no such resolution had been passed. Scott et al. v. Johnson, 5 Bosw. 323. 8. "Except to a purchaser for valuable consideration and without noticfe," in section 8 (186) the notice must be of the fact that there had been no previous resolution. The fact must be. positively proven, or necessarily inferred from what is proven. Ogden v. Raymond, 5 Bosw. 26. 9. "Contemplation of insolvency" must also mean something more than mere expectation of its occurrence ; it must include provisions against its results,, so far as the transferee is concerned ; and that can only be applicable where he is already a creditor, and the object is to take his debt out of the equal ratable distribution of the assets of the company when insolvent. Heroy et al. v. Kerr, 8 Bosw. 300. 10. It was the design of this statute to guard against collusive trans- fers of the effects of corporations. It was not meant to interfere with honest transfers made in order to pay their just debts. Aspinwall v. Meyer, 3 Sandf. Sup. Ct. 180. REGULATIONS. 227 11. Every person who, for any consideration that the law judges to be valuable, has acquired, directly or indirectly, a legal or equitable title or interest by an assignment or transfer from a moneyed corporation, is to be deemed a purchaser within the meaning of section 8 (186). Palmer V. Yates, 3 Sandf. Sup. Ct. 138. 13. A transfer of a note by an insolvent moneyed corporation further to secure a loan made previous to its insolvency, on an understanding or verbal agreement with its president, that the lender should, at all times, be kept adequately secured by collaterals, is in violation of this statute, and cannot be sustained. Company was insolvent before trans- fer. Pumiss V. SJierwood, 3 Sandf. Sup. Ct. 533. 13. A special resolution is not necessary to authorize each particular transfer by an incorporation of over $1,000 of its efEects, where the trans- fer is made in and according to the ordinary course of business, and to pay just claims (citing 3 N. T. 290), 1 Duer, 136. 14. Statute has no application to a case of transfer to a Tjoiia fide holder for value. Ogden v. Raymond, 1 Keyes (Ct. of App.), 43. 15. Transferrer of note for over $l,000,must prove he took it in good faith and for value. Houghton v. McAulifEe,' 3 Abb. App. 410. 16. An insolvent banking corporation organized under the general law, after proceedings against it had been instituted and a receiver ordered, assigned property to a former stockholder to secure him and other stock- holders for liabilities incurred for bank. Held assignment was invalid by eighth and ninth sections (sections 186 and 187), and property must be restored. Leavitt v. Tylee and others, 1 Sandf. Ch. 307. 17. It cannot be objected to an action on a single note for less than $1,000, that it was one of many which, in the aggregate, exceeded $1,000, and therefore it is void by section 8 (186). Ogden v. Raymond, 3 Abb. App. 396. 18. Proof by subscribing witness that assignment was by authority of board of directors, and that seal was corporate seal and so affixed before commissioner of deeds, is prima faeie evidence of the facts therein recited. Johnson v. Bush, 3 Barb. Ch. 307. 19. The revisers say that the principal object sought to be obtained by this section was," in the event of insolvency to secure an equal dis- tribution of the efEects of a company among all its creditors. " 30. Upon insolvency, either actual or contemplated, every creditor acquires a right under the statute to a pro rata share of its assets, and any creditor paid in full must refund, whether ignorant or not of insol- vency. Such creditor has parted with nothing he had a right to receive, and upon repayment loses nothing he had a right to retain. His debt revives, and he again becomes a creditor and shares equally with the others. Brouwer v. Harbeck, 9 N. Y. 593. See note 14. 31. The cashier of the Mastin Bank arranged with defendants to accept four drafts amounting to $35,000 drawn on them in the firm name of John J. Mastin & Co., payable to the Mastin Bank, upon an agreement made by him on behalf of the bank as a condition of acceptance, that 238 BANKING LAWS. the bank should keep a corresponding balance to its credit with the defendants, which the defendants should hold and have a lien on as a security for their liability as acceptors, and that defendants be kept informed of the condition of the bank, and should have the right at any time to charge the bank with the amount of the bills so accepted, and take, appropriate or apply the said deposits of the bank, or so much thereof as was necessary to the payment of the liability of the bank because of such acceptance. Held, that the cashier had power to make the agreement. The facts that the bank was in need of funds, and its ofiScers were making efforts to keep its credit unimpaired and to meet all future calls on it, it not being supposed to be insolvent, and all claims on it having been paid as they were presented, do not bring the above agreement within the operation of the statute against transfers in con- templation of insolvency. Coates,v. Donnell, 16 J. & S. 53. 33. It was held in Brouwer v. Harbeck, 9 N. T. 589, that a payment made by an insolvent corporation, or one made in contemplation of in- solvency, when the intention of the corporation was to give preference to a particular creditor, was void irrespective of the questions, whether the insolvency was open and notorious,and whether the party receiving the payment knew of the insolvency.or the particular motive of the cor- poration in making the payment. A payment made with a view of giv- ing a preference to a particular creditor is one rarely, if ever, made in the usual course of business. In the case of Robinson v. Bank of Attica, 31 N. T. 406, the creditor was sought out by the debtor,and payment made by an unusual transfer of assets. An act done by a corporation in the ordinary and usual course of its business, uninfluenced by the condition of its affairs, cannot be. said to have been done in contemplation of in- solvency. Dutcher v. I. and T. Nat. Bk., 59 N. T. 11. See notes to section 179. Penalty 8 188. Every director who shall violate, or be concerned on direo- , . , . . . . , tor vioiat- m violating, any provision m the preceding sections of this ceding chapter contained shall b^ liable personally to the creditors and stockholders, respectively, of the corporation of which he shall be a director, to the full extent of any loss they may respectively sustain from such violation. When a stockholder brings an action for damages for violations of the provisions of preceding sections of this article, he need not join all the directors who participated, but may proceed against them separately. And in a suit against one of the directors for an act that could not be done by him alone, plaintiff must show that the board participated in it, and must show some loss. The act complained of should be alleged to have been done by them, and not that they caused, procured, authorized or permitted it to be done. But an allegation that they did the act will be sustained by evidence that they caused or procured it to be done. Qaffney v. ColviUe etcU.,^ Hill, 567. Receipt of dividend from capital EEGULATIONS. 239 does not stop stockholder from suing under this act, if lie had no knowl- edge of the facts rendering dividend illegal. Directors are not liable merely for receiving notes or other evidences of debt, with illegal intent mentioned in section 1, subdivision 4 (section 179), but only for receiving and discounting them. Same case. § 189. No corporation having banking powers shall issue Prohibi- for circulation any bill or promissory note of a less denomi- banks, nation than one dollar. §§ 188 to 194, inclusive, are sections 36 to 31, inclusive, of the same article, with necessary verbal changes only. § 190. No corporation having banking powers, and noneProhibi- of its directors, officers, agents or servants, shall directly or banks and indirectly purchase or be interested in the purchase of any officers, promissory note, or other evidence of debt, issued by such corporation, for a less sum than shall appear on the face thereof to be then due ; and every person violating the pro- visions of this section shall forfeit three times the nominal amount of the note, or other evidence of debt, so purchased. See note, section 188. § 191. No president, director, cashier, clerk or agent of Prohiw- any corporation having banking powers, and no person in banks and any way interested or concerned in the management of the offlo^rs. affairs of any such corporation, shall discount, or directly or indirectly make any loan, upon any note or other evidence of debt, which he shall know to have been offered for dis- count to the directors, or any officer of such corporation, and to have been refused ; and every person violating the pro- visions of this section shall for each offense forfeit twice the amount of the loan which he shall have made. See note, section 188. The statute declaring the act of discount or loan unlawful, the note or bill would also be void upon general principles. It is settled doctrine that a contract prohibited by statute is void. Henry v. Salina Bank, 1 N. Y. 87. § 192. No moneyed corporation shall commence the bus- Affidavits iness for which it shall be incorporated, until its president before - . . . . commonc- and cashier, or treasurer, or secretary, or its two principal ing busi- officers, by whatever name they may be described, shall have 230 BANKING LAWS. made and subscribed an affidavit, stating that the whole of the capital stock of such corporation, or such portion thereof as, by its charter, shall be required to be paid or secured be- fore the commencement of its operations, has been actually paid, or secured to be paid, according to the provisions of its charter. See note, section 188. How made 8 193. Every such affidavit, if made in a. city, shall be and filed. "^ •' ,,.,. \ . ,. made before the mayor or recorder oi said city, and it made in a county, before the county judge of the county, or any justice of the supreme court therein, and shall be filed in the clerk's office of the city and county, or of the county in which it shall be taken. See note, section 188, not'm*ade. § 194:. The charter of every such corporation shall be void, if the affidavit above required shall not be duly made and filed within one year from the time such charter shall be granted. See note, section 188. «reotora°' § 195- ^* every election for directors in any moneyed corporation, three persons shall be chosen by the persons entitled to vote for directors, as inspectors, at the next suc- ceeding election, whose duty it shall be to act as such, and rnspeotors ^^^ ^^^ ^^ whom shall be competent to act. Each acting osen. inspector shall be entitled to a reasonable compensation for his services, to be paid by the corporation for which he is chosen. §§ 195 to 313, inclusive, were sections 33 to 50, inclusive, of article 2, title 3, chapter 18, part 1, Revised Statutes. See section 57, 6tli edition Rev. Stat., vol. 3, p. 303. 1. By Laws of 1847, chapter 160, section 1 (section 57 of this Re- vision), these provisions of the Revised Statutes (article 3, title 3, chap- ter 18, p. 1), were made applicable to every banking association which has been or shall hereafter be organized under the general law of 1838. 3. Inspectors are nbt bound to close polls at the time prescribed by directors, but may exercise a reasonable discretion in the matter. In re E. E. Co., 19 Wend. 185. 3. When no time is limited in which the poll of an election must be REGULATIONS. 331 held, it may be adjourned from day to day in discretion of inspectors. In re Ins. Co., 19 Wend. 635. 4. When, by its charter, the directors of a corporation are to be elected annually, an election of less than the entire number, if more than a quorum for business, is valid, and the remainder may be elected at a subsequent election. 33 Wend. 591. § 196. The directors of the corporation shall supply any vacancies, vacancy that may occur by the death or removal from the piled, city or county where the corporation shall be situated, of any such inspector, or by his refusal to serve, or neglect to attend on the day of election. See note, section 195. § 197. No person shall be chosen or appointed an inspector Disability, of an election of directors in a corporation of which he shall be a director or officer. See note, section 195. § 198. Every such inspector, before he shall enter on theoathofin- duties of his office, shall take and subscribe the following oath, before any officer authorized by law to administer oaths : " I do solemnly swear that I will execute the duties of an inspector of the election now to be held with strict impartiality and according to the best of my ability." See note, section 195. Neglect to administer oath in the form described by statute, or of any oath whatever, will not be grounds on which to set aside an election, if the inspectors were duly appointed and entered upon the duties of their oflBce in good faith. In re Mohawk, etc. , R. R. Co. , 19 Wend. 135 ; iw re Chenango M, Ins, Co,, id. 635. § 199. At every election of directors the transfer books who may of the corporation shall be produced, to test the qualifica- tions of the voters ; and no person shall be admitted to vote, directly or by proxy, except those in whose names the shares of the stock of the corporation shall stand on such books, and shall have so stood for at least thirty days previous to the election. See note, section 195. 1. Trustees or guardians may vote on stock held for the benefit of others. 6 Wend. 509. 232 BANKING LAWS. 3. Wliere on transfer book, stock stands in name of a cashier as trus- tee. Ids successor cannot vote upon same, or give proxy ; and votes on sucli stock by successor may properly be refused. In re Moliawk, etc. , K. R. Co., 19 Wend. 135. 3. Eigbt to vote at election,must be determined by transfer-book ; in- spectors cannot look beyond it. In L. I. R. R. Co., 19 Wend. 36. 4. Executors and administrators holding stock as such are entitled to vote, although the stock appears on the corporate boolcs in the name of the person they represent. Matter of U. S. S. I. Ferry Co., 63 Barb. 571, To vote § 200. No person shall be admitted to vote oti any shares ouwhat or .i stock. of stock belonging, or hypothecated to the corporation in which the election is held, nor shall any person be admitted to vote on any shares of stock which shall then be hypothe- cated, or pledged as a collateral security, to any other per- son or company. See section 195. 1. Election of directors by vote on stock owned by company will be set aside, and those having a majority of the outstanding stock declared elected. Ex parte Desdoity, 1 Wend. 98. 3. A company cannot so hold stock, that it may be voted upon by its officers or trustees. 5 Wend. 434 ; Six parte Holmes, 5 Cow. 486. Who may § 201. No person shall be admitted to vote on any shares on what which shall have been transferred to him, for the sole pur- StOCKS. pose of enabling him to vote thereon, at the election then to be held ; nor upon any shares which he shall have previ- ously contracted to sell or transfer after the election, upon any condition, agreement or understanding in relation to his manner of voting at such election. See note, section 195. Challenge. § 202. Every person offering to vote may be challenged by any other person authorized to vote at the same election ; and to every person so challenged one of the inspectors shall ad- minister the following oath: " You do swear (or affirm, as the case may be), that the shares on which you now offer to Oath. '^ote do not belong and are not hypothecated to tbe (nam- ing the corporation for which the election is held), and that they are not hypothecated or pledged to any other corpora- tion or person whatsoever ; that such shares have not been transferred to you for the purpose of enabling you to vote REGULATIONS. 233 thereon at this election, and that you have not contracted to sell or transfer them, upon any condition, agreement or understanding, in relation to your manner of voting at this election." See note, section 195. 1. Election of directors will not be set aside because illegal votes were given, unless they were challenged at election ; nor although chal- lenged, if after deducting the illegal votes cast, the persons declared elected have a clear majority of all the votes. In re Ins. Co., 19 Wend. 685. 3. By section 1, chapter 331, Laws of 1851, married woman may vote if stockholder in any bank, insurance company (other than mutual in- surance company), manufacturing company, or any institution incor- porated under the laws of this State, by proxy or otherwise. § 203. No person shall be permitted to vote on the proxy Persons " ^ ^ ^ •> voting on of a stockholder, unless he shall produce, annexed to his proxies, proxy, an affidavit of such stockholder, stating the same facts to which the oath of such stockholder might have been required, upon a challenge, had he offered to vote in person upon the shares mentioned in the proxy. See note, section 195. An alien stockholder cannot vote by proxy where, by the terms of the charter, citizens only have the right to vote. 6 Wend. 509 ; 19 id. 635. § 204. If any person offering to vote upon a proxy shall ^e'r oatb, be challenged by an elector, he shall be required to take the '«nged. following oath, to be administered to him by one of the in- spectors : " You do swear (or affirm) that the facts stated'in the affidavit annexed to the proxy upon which you now offer to vote are true according to your belief, and that you have made no contract or agreement whatever, for the pur- chase or transfer of the shares, or any portion of the shares, mentioned in such proxy." See note, section 195. § 205. If any person duly challenged shall refuse to take Proceed- the proper oath, his vote shall be rejected, and shall not be ciiaUenge.- afterward received at the same election ; if he shall take the oath his vote shall be received. See note, section 195. 30 234 BANKING LAWS. ings'if *" § ^^^' -'-^ ^^ election for directors in any such corporation SoTheid!*^ ^-^^^^ not be held on the day appointed bylaw, it shall be the duty of the directors to notify, and cause such election to be held within sixty days after the day so appointed ; and on the day so notified, no person shall be admitted to vote ex- cept those who would have been entitled, had the electioa taken place on the day when, by law, it ought to have been held. See note, section 195. Certain | 207. No by-law of any such corporation, regulating the invalid, election of its directors, shall be valid, unless it shall be made at least sixty days before the day appointed by law for the election to be held, and shall have been pubhshed for at least two weeks in succession immediately following its enactment, in some newspaper in the city or county where the corporation is situated. See note, section 195. Transfer book of stocli. § 208. Every such corporation shall keep a book, in which the transfer of shares of its stock shall be registered ; and another book, containing the names of its stockholders; which books shall at all times during the usual hours of transacting business, for thirty days previous to an election of directors, be open to the examination of the stockholders. See note, section 195. 1. A refusal to permit a transfer of stock on its books renders corpo- ration liable for damages, and tbe measure of damages is the bighest price of tbe stock at any time between the refusal and commence- ment of suit. A blank transfer signed and sealed by holder is valid, and the transferee is authorized to fill up by writing a transfer and power of attorney above the signature. Bank of Buffalo v. Kortright, 22 Wend. 348 ; approved, 55 N. Y. 46. 2. Dividends are to be paid to those who appear as owners on the transfer book, 'regardless of any secret transfer. Bank of Utica v. Smal- ley, etc., 3 Cow. 770 ; S. C, 8 id. 398. 3. The object of the statute is to enable the stockholders at all reason- able times, and for thirty days before an election, to examine the books containing transfer of stocks and names of stockholders, to enable them to see who are qualified voters and to confer with them in relation to the election, and memoranda may be taken from the books. The statute, though penal toward those who violate it, is in the main highly EEGULATIONS. 236 ■beneficial and should be equitably construed. Cotheal v. Brouwer, 5 N. Y. 567. 4. This does not cut off the right of stockholders of corporations to examine its transfer books for proper purposes, and on proper occasions, at other times ; and court may interfere by mandamus whenever a proper case is shown, and compel an exhibition of the books. People, ex rel. Hatch, v. L. S. & M. S. E. R. Co., 11 Hun, 5 and 6. 5. Richmond v. P. M. S. S. Co., 50 Barb. 281, it was held (same case) 3 Abb. (N. S.) 364, that a stockholder cannot be deprived of his right to inspect the books of the company because they are kept in a particular way, or because they contain along with the information to which he is entitled, other information which he has no right to demand. The com- pany cannot defeat the object of the statute by omitting to keep the books prescribed. If the right books are not kept, inspection of such as they do keep must be allowed, and may be enforced by ntandamus. 6. The assignee of the stock of a domestic corporation may require an entry of the transfer on its books, though his title be derived from a foreign executor. Middlebrook v. Merchants' Bank, 3 Abb. App. 295 (1866). § 209. If any officer having charge of such books shall, Penalty for upon the demand of a stockholder, refuse or neglect to ex- to exhibit, hibit and submit them to examination, he shall for each offense forfeit the sum of two hundred and fifty dollars. See note, section 195. § 210. If any person shall conceive himself aggrieved by Eemedy of an election, or any proceeding concerning an election of di- aggrieved rectors or officers in any such corporation, he may apply to tion. the supreme court for redress, giving a reasonable notice of his intended application, to the party to be affected thereby. See note, section 195. 1. JEx parte Ttes&oitj, 1 Wend. 98. See note to section 200. Party complaining under this section must be named personally. In re R. R. Co., 19 Wend. 135. See note to following section. 2. Notice of application to directors claimed to be illegally elected is sufficient. Ex pa/rte Holmes, 5 Cow. 428. 3. The court will not enjoin the directors declared elected. M. v K. C. Bank, 11 Paige, 119. 4. This is the only method of review. Court of equity has no juris- diction. Thompson v. Tammany Society, 17 Hun, 312-315. 5. Where an application is so made to settle contests growing out of a disputed election.the court may go behind the transfer books of the company, and determine whether a transfer appearing thereon was a 236 BANKING LAWS. Proceed- IDgB. sale, or only a pledge of shares, and whetlier the pledgor or pledgee was entitled to vote thereon. In re James C. Strong v. Smith, 18 Hun, 332. 6. Notice to parties claiming to be elected, and to corporation.suffi- cient. It is not necessary that all stockholders have notice. 13 Abb. Pr. (N. S.) 395. (Schoharie Valley R. R. case.) § 211. It shall be the duty of the supreme court, upon such application, to proceed forthwith in a sumipary way to hear the proofs and allegations of the parties, or otherwise to inquire into the causes of complaint, and thereupon to make such order and grant such relief as the circumstances and justice of the case shall seem to require. If the election complained of shall be set aside, the supreme court may order a new election, at such time and place as they shall appoint. See note, section 195. 1. ^ porie Desdoity, 1 Wend. 98. See note to section 300. Where votes were improperly rejected by inspectors, if such votes would have been cast for and elected a certain ticket, supreme court cannot declare such ticket elected, but must order a new election. In re E. B. Com- pany, 19 Wend. 36. 3. Court will not declare directors elected on application for such declaration, if they hold their offices and no attempt is made to oust them. 33 Wend. 593. 3. To set aside an election it must appear affirmatively that so many illegal votes were cast for the successful ticket, as to give it a majority which it would not otherwise have. The mere circumstance that im- proper votes were cast will not vitiate an election. Ex parte Murphy, 7 Cow. 158. Proceed- ings. Proceed- ings. § 212. The supreme court, if they cannot otherwise arrive at a satisfactory result, may order an issue between the par- ties, to be made up in such manner and form, and to be tried in such court as they shall select ; or may permit or direct the attorney-general to file an information in the na- ture of a quo warranto, if the case be one in which that proceeding would be competent and effectual. See note, section 195. § 213. If any such issue shall be ordered or information permitted or directed to be filed, it shall be the duty of the supreme court to make such further orders in relation to EEGULATIOFS. 237 the time and mode of pleading, the examination of witnesses or the parties, the production of books and papers, and the time and place of trial or hearing, as shall in their judgment be effectual for expediting the proceedings, saving expense to the parties, and causing a final determination to be had with as little delay as the nature of the controversy will permit. See note, section 195, § 214. The term " moneyed corporation," as used in this " Moneyed o •/ X ' corpora^ chapter, shall be construed to mean every corporation bav-^^" ^^- ing banking powers, or having the power to make loans upon pledges or deposits, or authorized by law to make in- surances. §§ 314 to 218, inclusive, were sections 51 to 55, inclusive, of article 3 of tte same title. Revised Statutes, with slight necessary verbal changes only. § 215. The provisions of this chapter shall not apply to This any moneyed corporation existing on the first day of Janu- whS oor- ary, one thousand eight hundred and twenty-eight; but applied, they shall be construed to apply to every moneyed corpora- tion created, or whose charter shall be or shall have been renewed or extended after that time, unless such corporation shall be expressly exempted from the said provisions in the ' act creating, renewing or extending such corporation. See note, section 314. §216. The term "directors," as used in this chapter, "Direc- shall be construed to embrace aU persons having by law the fined, direction or management of the affairs of any such corpora- tion, by whatever name they may be described in its charter, or known in law. See note, section 314. § 217. The tenn "effects," as used in this chapter, shall "Effects" ■^ ' r ' defined. be construed to embrace every species of property, real and personal, including things in action. See note, section 314. 238 BANKING LAWS. o7deb°"' § 21^- '^^^ ^^^^ " evidence of debt," as so used, shall be defined, construed to embrace every written instrument or security, for the payment of money, ijnporting on its face the exist- ence of a debt, and whether under seal or otherwise. See note, section 214. CHAPTER IX. Moneyed Coepoeations othbk than Banks, Inbtitittionb FOE Savings and Instjeance Companies. Section 319. Reports to superintendent. 320. Publication of same. 231. Examinations by superintendent. 222. Scope of examination. 233. Duty of superintendent if corporation unsound or busi- ness improperly conducted. 234. Deposit of securities witli superintendent. 335. Injunction on neglect to make deposit. 336. Assessment for expenses of department. 337. Restriction as to loans and deposits. 338. Capital may be reduced but not below one hundred tbousand dollars. 229. Notice of intention to reduce. Examination. 330. Certificate of reduction to be recorded and published. 331. Liability of stockbolders and rights of creditors un- chajiged. 232. Capital may be increased. 233. Impairment of capital ; ninety days to make good deficit. 334. Report by superintendent to legislature. § 219. Every trust, loan, mortgage security, guarantee or Eeports to . , . , ■ , ■ 1 , . be made indemnity company or association, and every corporation to the su- . . , . 1 1 . ." perintend- or association having the power and receiving money onentofthe deposit existing or incorporated under any law of this^epMt- State, or any corporation or association not incorporated under the laws of this State which receives deposits of money or assumes obligations in this State (other than banks, institutions for savings and insurance companies), shall semi-annually make a full report in writing of the affairs and conditions of such corporation at the close of business on the last business days of June and December in each year, to the superintendent of the banking department, 240 BANKING LAWS. verified by oath, in such form and by such officers of the said corporation as the said superintendent may designate, which report shall be in place of any report which any such corporation has been heretofore required to make to the supreme court, the comptroller, or otherwise. Every such report shall be made within twenty days after the day to which it relates, and shall be in such form and contain such statements, returns and information as to the affairs, busi- ness, condition and resources of such corporation as the said superintendent may from time to time prescribe or require. And the said superintendent may, if he be of opinion that it is desirable, require that a like report, either wholly or in part, as to the particulars aforesaid, be made to him at any time, by any such corporation aforesaid, within such period as he may designate. § 219 was section 1, chapter 324, Laws of 1874, with necessary verbal changes only. The following is the unanimous opinion of the court of appeals, in People V. The Mutual Trust Co., filed April 29, 1884 (not to be reported). Eael, J. " We are of opinion that it (The Mutual Trust Co.) was bound to re- port. The language of section 1, of the act of 1874, is very broad and general, and the corporations required to report are ' every trust, loan, mortgage security, guarantee or indemnity company or association, and ' every corporation and association having the power and receiving money on deposit.' We think this company was within the meaning of the act, and authorized to receive deposits of money. " It was expressly authorized, and hence section 4, title 3, chapter 18, part 1 of the Revised Statutes, has no application ; it could receive deposits of earnest money to any amount. " The amount of money thus received for the various purposes for which it was authorized to be deposited could be very large. It was also a guarantee company within the meaning of the act; it was author- ized to guarantee the payment of bonds and other obligations. " That was a portion of the business which it was authorized to do ; it was authorized also to loan money, and it could loan its money on mortgage security, hence it was a loan company, and a mortgage security company vrithin the meaning of the act of 1874. If this had been exclusively a deposit company, or a loan company, or a guarantee company, or a mortgage security company, thus confined to one kind of business, it could not be doubted that it would come within the act of 1874 ; but the fact that its powers are so general, it being allowed to do all these various kinds of business, certainly cannot take it out of MONEYED COKPORATIONS, ETC. 241' the operation of the act. It is within the policy, and we think within the letter of the law, and hence the disposition made of it by the court below was right, and its judgment should be affirmed, with costs." § 220. The said superintendent may at any time, if lie EqIJ^'j?" . deem it to be expedient, cause any sucli statement, or any ports, statement or report which may be made to him as provided in tlie preceding section of this act, or any part or any ab- stract thereof, to be published in the State paper for at least three times, the expense of which shall be paid by the cor- poration to whose affairs such report may relate. § 320 was section 3, chapter 334, Laws of 1874, with necessary verbal changes only. § 221. It shall be the duty of the said superintendent, ^^^'by""' yearly, either personally or by some competent person or Pendent, persons to be appointed by him, to visit and examine every corporation required to report by section two hundred and nineteen of this act. The said superintendent and every such examiner shall have power to administer an oath to any person whose testimony may be required on any such ex- amination, and to compel the appearance and attendance of any such person for the purpose of such examination, by summons, subpoena or attachment, in the manner now an- thorized in respect to the attendance of persons as witnesses ^^^^^ d in the courts of record of this State ; and all books and fne^^®^*™" papers which it may be deemed necessary to examine by the superintendent or the examiner or examiners so appointed shall be produced, and their production may be compelled m the hke manner. The expense of every such examina- tion shall be paid by the corporation examined to such amount as the superintendent shall determine. Whenever such examination shall be made by the superintendent per- sonally, or by one or more of the regular clerks in his depart- ment, no charge shall be made on such examination but for necessary traveling and other actual expenses. § 331 was section 3, chapter 334, Laws of 1874, with necessary verbal changes only. 31 ness In an unsafe manner. 242 BANKIISrG- LAWS. Scope of^ § 222. Ou every such examination inquiry shall be made '•°°- as to the condition and resources of the corporation gener- ally, the mode of conducting and managing its affairs, the action of its directors or trustees, the investment of its funds, the safety and prudence of its management, the security afforded to those by whom its engagements are held, and whether the requirements of its charter and of law have been complied with in the administration of its affairs. § 222 was section 4, chapter 324, Laws of 1874. Duty of § 223. If it shall appear to the said superintendent, from tendent an examination made by him, or from the report of any ex- corpora- amination made to him, that any corporation has committed tion has . , . . . , - , . i . , . violated a Violation or its charter or ot . law, or is conauctmg busi- oharter or i ■ i i law, or is ness m an unsafe or unauthorized manner, he shall, by an conduct- ^ 7 ./ ing busi- order under his hand and seal of office, addressed to such neas in an ^ corporation, direct the discontinuance of such illegal or un- safe practices, and conformity with the requirements of its charter and of law, and with safety and security in its trans- actions ; and whenever any corporation shall refuse or neg- lect to make such report as is hereinbefore required, or to comply with any such order as aforesaid ; or whenever it shall appear to the superintendent that it is unsafe or inex- pedient for any corporation to continue to transact business, he shall communicate the facts to the attorney-general, who shall thereupon be authorized to institute such proceedings against any such corporation as are now, or may hereafter be, provided for by law in the case of insolvent corporations, or such other proceedings as the nature of the case may require. § 223 was section 5, chapter 324, Laws of 1874. Transfer § 224. Every corporation, whether chartered by this State, or mort ^ ^^ ^^^ othor State or country, engaged in receiving deposits t^*super- °^ money in trust in this State, and required to make a report, as to its affairs, by section two hundred and nineteen of this act, in case it shall not have already done so, shall within six months from the passage of tlus act, and from time to time thereafter, if need be, transfer and assign, to intendent in trust MONEYED COEPOKATIONS, ETC. 343 the said superintendent, registered public stocks of the United States, or of the State of New York, or of any in- corporated city of this State authorized by the legislature, to the amount in value (and to be at all times so maintained by said corporation) of ten per centum on the paid-up capital stock of said corporation, now or at any time hereafter, but not less, in any case, than fifty thousand dollars, which stocks must be registered, in the name of the said superintendent, ofiBcially, as held in trust under and pursuant to this act, and the same shall be held by the said superintendent in trust as security for the depositors with, and creditors of said corporation, and subject to sale and transfer, and to the dis- posal of the proceeds by the said superintendent, only on the order of any court of competent jurisdiction ; and, until the order of such court , authorizing such sale or transfer, or otherwise to the contrary, the said superintendent shall pay over to such corporation the interest which may be received on the said securities, or he may authorize the said corpora- tion to coUect and receive the same for its own benefit. Should any company, at any time, have deposited with the superintendent more than the amount hereby required, such excess may be refunded. With the approval of the super- intendent, such deposit may be made by any company, either wholly or in part in bonds and mortgages satisfactory to the said superintendent, on improved, unincumbered, pro- ductive real estate in this State, worth at least twice the amount loaned thereon ; and all the provisions of this sec- tion shall apply to such deposit. § 234 was section 6, chapter 334, Laws of 1874, with necessary verbal changes only. In an opinion by the attorney-general, filed in the banking depart- ment February 16, 1883, that officer holds that under the banking laws of the State of New York, the superintendent of the banking depart- ment has such incidental power as is necessary to carry out the general powers conferred upon him in relation to the deposits required by the above section; and further that such superintendent has the right to approve of mortgages upon property which is of sufficient value, condi- tional upon the insurance on the property being properly kept up, and in the assignment taken by him may require a clause to that efiect. If 24A BANKING LAWS. the insurances are not kept up, then there is not full compliance with the provision of the clause that the amount in value must be main- tained by the corporation. The attorney-general, in conclusion, says : " I do not think it was the meaning of the law to prohibit the taking of a mortgage upon city property upon which was erected a substantial block, though to make that security entirely satisfactory, an insurance in proper form in some solvent company might be required." In case of § 225. In case any corporation doing business in this make de- State, not chartered under the authority of this State, shall posit with ' ..11 ,1 superin- refuse or neglect to make the deposit with the said super- tendent, ° . - business intendent, hereinbefore required, the fact shall be reported may be ' ^ ' ^ enjoined. \)j i}jq gaid Superintendent to the attorney-general, who shall thereupon, without delay, take such proceedings as may be necessary to enjoin and restrain such corporation from trans- acting any business in this State, and the court to which such application shall be made shall be authorized to make such order or decree, and to issue such process in the prem- ises to enforce compliance by such corporation with the provisions of this act, or to restrain the transaction of busi- ness by such corporation in this State, as it' may deem proper. § 235 was section 7, chapter 334, Laws of 1874, with word " act " substituted for " statute " in twelfth line. Assess- § 226. Every corporation, subject to the provisions of sec- Spenses tiou two hundred and nineteen of this act, shall be assessed ing depart- by the Said superintendent to pay its proper propoition of the expenses of conducting the business of the banking de- partment, as provided for by section six of this act, and shall be considered in all respects as embraced within the provisions of the said section. § 326 was section 8, chapter 334, Laws of 1874, with necessary verbal changes only. Bestrio- § 227. The amount of money which any such corporation amounts shall have on deposit or loan at any time shall not exceed or loan, ten times the amount of its paid-up capital and surplus, and its outstanding loans shall not at any time exceed said amount; but any such corporation authorized to receive MONEYED COEPOEATIONS, ETC, 245 court deposits may at any time receive on deposit and loan out any money wliich may be deposited with it by any of the courts of the State, including the surrogate's court, not- withstanding such limitation. § 227 -was section 9, chapter 324, Laws of 1874. "Any life insurance company, or any trust or loan company, may, by the direction and consent of,two-thirds of their respective boards of directors, managers or finance committee, purchase or invest, by loan or otherwise, any of their funds in the bonds issued by any county, town or village of this State, pursuant to any law of this State, any thing in the charter of either of said companies to the contrary notwithstand- ing." § 1, ch. 482, Laws of 1868. § 228. It shall be lawful for any trust company or other ^t^P?^*Jna,y moneyed corporation required to report to the superintend- but^'no""® ent of the banking department by section two hundred and jioo.ooo. nineteen of this act, organized under the laws of this State, to reduce its capital stock to an amount which shall be equal to the value of the property and effects of such com- pany, over and above its debts and liabilities, and thence- forth the capital stock of such company shall be such reduced amount, and the par value of the shares thereof shall be re- duced in the same proportion ; but in no case shall such capital stock be reduced below one hundred thousand dollars. § 228 was section 1, chapter 274, Laws of 1878, with necessary verbal changes only. See sections 42-45, inclusive. § 229. Whenever a trust company shall propose to reduce Notice of its capital stock, due notice thereof shall be given to the *°'>^?'^«° superintendent of the banking department, signed by a^^^®^* majority of its board of trustees, and accompanied by the fwo-thirds written assent, duly acknowledged or proven, to such re- °* **°°''' duction, of at least two-thirds in amount of the sharehold- ers of such company, and it shall be the duty of the said superintendent, on the receipt and filing of such notice, and within a reasonable time thereafter, to make or cause to be made an examination of the books, property, effects and liabilities of such company, upon which examination the oflScers of such company may be examined on oath as 34:6 BANKING LAWS. Hon'to°bi '■^ *^® debts, liabilities, property and effects thereof. From fotureeap- *^® result of such examination the said superintendent shall deter- *"* determine the value, in his judgment, of such property therefrom, ^^^d effects, above and beyond the debts and liabilities afore- said, and certify the same in writing ; and the amount so determined and certified shall be thereafter the capital stock of such company, provided such amount be not less than one hundred thousand dollars, and the par value of the shares thereof shall be proportionably reduced. § 339 was section 3, chapter 374, Laws of 1878. See note, section 338. Certifloate § 230. The determination and certificate in writing of of reduced "- _ _ o bVie-^ *° t^6 superintendent of the amount to which the capital stock and^pub- ^^ ^^J ^^^^ Corporation has been reduced shall be recorded lished. jjj the office of the clerk of the county in which such com- pany shall be located, and a certified copy thereof filed in the banking department of the State of New York, and the same shall be published by said superintendent at the expense of such company, once a week for six weeks suc- cessively, in the State paper and at least one newspaper in the county in which such company shall be located. § 330 was section 3, chapter 374, Laws of 1878, with necessary verbal changes only. See note, section 388. Liability of § 231. Nothing in this act contained shall in any way ers and change or affect the liability of the stockholders of any credit- corporation reducing its capital stock to any of the creditors changed, thereof for any indebtedness or engagement that may exist, either absolutely or contingently, against such company or stockholders, at the time when such reduction shall take place, nor shall the rights, remedies or securities of the then existing creditors be in any way weakened or impaired thereby. § 331 was section 4, chapter 374, Laws of 1878. Capital § 232. Any such corporation that may reduce its capital increaaed. stock Under the foregoing provisions may, after such reduc- tion has been made, increase its capital stock to a sum not MONEYED COEPORATIONS, ETC. 247 exceeding the amount provided in the charter of such com- pany, or any act amendatory thereof. Such increase shall be apportioned among the then stockholders of such com- pany, who shall severally be notified in writing of such ap- portionment. And such notification shall be mailed to ori^°g'°eu° delivered at the last known residence of each shareholder, fendent And if they or any of them shall not within one month SSfders!' " after service of such notice accept the amount so appoi- tioned, then such increase or the amount not accepted by the stockholders may be sold and distributed by the board of trustees of such company in such manner as such board shall determine. Upon the payment to the company in money of such increased capital, the board of trustees shall certify to the said superintendent of the banking depart- ment the said increase of capital and the payment thereof, ^ ^ i */ 3 Increase and it shall be the duty of the superintendent to require ?° ^^fif'^ evidence satisfactory to him that the increased capital of such company has been actually paid in in money, and such proof shall be in writing and shall be filed in the banking department. § 232 was section 5, chapter 274, Laws of 1874, with slight verbal changes only. § 233. "Whenever it shall appear from any report of a When cap- ,. \. 4.1, ^ <-■ T,- -u ■ ital sup- trust company or other moneyed corporation which is re- posed to quired to report to the superintendent of the banking de- paired, yuperin- partment by section two hundred and nineteen of this acttendent ^ ■' may ex- or the superintendent shall have reason to believe that the j"'"® *^^ capital of any such corporation is reduced by any cause be-^^^*°'^® low the sum fixed by its charter or by law, it shall be the^"""^- duty of the superintendent, and he shall have power, to re- quire such corporation to make good such deficit, and he shall- have power to examine any such corporation, either personally or by persons appointed by him to ascertain the amount of such deficit or reduction of capital. If any such corporation shall refuse or neglect to make good the deficit found to exist for ninety days after such requisition has been made, it shall thereupon be the duty of the superin- tendent to report the facts to the attorney-general, whose 348 BANKING LAWS. Superin- tendent to report to legisla- ture, con- tents thereof. duty it shall then become to institute such proceedings against such corporation as the nature of the case may re- quire. § 233 was section 6, chapter 374, Laws of 1878, with necessary verbal changes only. § 234. It shall be the duty of the superintendent of the banking department to report annually to the legislature a summary of the state and condition of every trust company, and other moneyed corporation required to report to him by section two hundred and nineteen of this act, from which reports have been received during the preceding year ; and such summary shall give the date to which such reports refer, the amount of capital returned by each of said cor- porations, the whole amount of its debts and liabilities, the total sum of its resources, and such other information as he may deem useful ; and the superintendent shall also report to the legislature annually an abstract of the report of the regular examination of every such corporation made by his direction. § 234 was section 7, chapter 374, Laws of 1878, with necessary verbal changes only. CHAPTEE X. Savings Banks. Section 235. Sa'nngs banks declared corporations. Powers. 336. Thirteen associates to organize. 337. Certificate, what to contain. 338. Executed in duplicate and filed. 239. Notice of intention to organize. 340. Indorsement of certificate by superintendent. 241. Defective certificate. 343. Superintendent to ascertain facts. 343. Certificate of authorization. 244. Same to be filed. 345. Refusal of authorization. " 346. Persons named in certificate a body corporate. 247. Names of oflBcers, place of business, etc. 348. Business to begin within one year. 349. First trustees. 350. Thirteen trustees ; elections ; vacancies. 351. By-laws. 352. Meetings of trustees. Quorum. 253. When ofllce of trustee becomes vacant 354. Security from ofB.eers. Salaries. 355. Prohibitions upon trustees. 356. Deposits. 357. Regulations as to deposits. 358. Deposits by minors, etc., and in trust. 359. Actions against savings banks. ' 360. Investments. 261. Investments, current payments and expenses. 263. Temporary deposits by savings banks. 263. Real estate ; change of location. 364. Loans. 265. Mortgaged property ; insurance. 266. Restrictions as to business. 267. Interest ; depositors classified ; extra dividends. 368. Per cent of surplus, how determined. 269. Compensation of trustees. 270. Reports to superintendent. 32 250 BANKING LAWS. Section 271. Contents of reports. 372. Same. 273. Reports to be verified. 374. Failure to report ; penalty. 375. No otter reports or inspection. 376. Superintendent to report to legislature. 277. Examinations. 378. Notice to attorney-general ; proceedings ; distribution. 379. Examination of voucbers and assets. 280. Clerks and examiners ; salaries. 281. Expenses. 282. Debts to savings banks, when preferred. 383. tJnautborized business proMbited. 384. Keduction and increase of trustees. 385. Change of name. 386. Charters to conform ; misdemeanors. 387. Evidences of deposit. 288. Misnomer. 289. This act, how construed. 290. Deposit limited to three thousand dollars. 291. Trustee must be resident of State. 293. Receiver's quarterly statement. 293. Voluntary close of business. 294. Unclaimed deposits ; dissolution. 295. Receiver's statement, and payment of balances to super- intendent. 396. Superintendent to deposit unclaimed moneys, and report to legislature. Savings § 235. Every savings bank or institution for savings, now Glared to existing, Or vrhich may hereafter be organized under and by Dorations. virtue of any law of this State, is hereby declared to be a corporation possessed of the powers and functions of corpo- rations generally, and as such shall have power : General 1. To have perpetual succession by its corporate name. powers. 2. To sue and be sued, complain and defend, in any court of law or equity. 3. To make and use a common seal, which may be affixed by making an impression directly on the paper, and alter the same at pleasure. 4. To appoint such officers, managers and agents as the business of the corporation may require. 6. To make by-laws not inconsistent with the laws of this SAVINGS BANKS. 251 State, or of the TJnited States, for the management of its property and the regulation of its affairs. 6. To contract and be contracted with. 7. To receive money on deposit, to invest the same, and further transact the business of a savings bank as herein- after provided. 8. To exercise any corporate powers necessary to the ex- ercise of the powers above enumerated and given. § 235 was section 1, chapter 371, Laws of 1875, with verbal changes in fiist line — substituting " every " for '• all," etc. Former statutes inoperative after act of 1875. 1. "Its (act of 1875) title indicates a legislative intention not only to revise the laws relating to such corporation, but to treat the whole sub- ject de novo — prescribe a sole and complete rule for their existence and the exercise of their powers. It applies in terms to then existing cor- porations, as well as those thereafter to be formed, and by its broad and inclusive repealing clause leaves no doubt that its purpose was to make a tabula rasa of the existing law," and any right of action for penalties or forfeitures under former statutes were determined by the operations of this act. Van Dyck v. McQuade, 86 N. T. 48. 2. A repeal destroys a penalty. People, ex rel. v. Supervisors, 4 Barb. 64. 3. A savings institution and a national bank entered into an agreement, whereby all of the business of the two corporations was to be done in the same office and over the same counter, by the same individuals, the only separation being in the books of account. The institution as such received no money, but all of its funds were to be deposited in the bank, and corresponding credits were to take the place of actual pay- ments by the bank. The business of the institution and the bank was carried on under this arrangement, the former keeping no cash- drawer or safe for the deposit of money. One C. delivered over the counter of the bank to B. , who was both the treasurer of the institution and the cashier of the bank, a sum of money, which she desired deposited with the institution to her credit. B. received the money, entered it in C.'a pass-book, as deposited with the institution, and, as he testified, placed it in the cash-drawer of the bank ; it was not entered on the bank cash- book or credited to the institution, and, in some manner unexplained, it disappeared. In an action to recover, among other things, the amount of this deposit, held, that while as between C. and the institution, B. received the money as its treasurer, as between the bank and the insti- tution at the same instant he received it as cashier, it became the money of the bank, and the bank was liable to the institution therefor, also, that this was so, although the money did not go into the cash-drawer, but was embezzled by the said cashier and treasurer B. Pishkill Savings Institute v. Bostwick, Receiver, 93 N. Y. 565. 252 BANKING LAWS. 4. The superintendent of tlie banking department in January, 1882, asked tke opinion of the attorney-general whether a savings bank has the right to delegate its powers, and inclosed for his examination a con- tract which providedjthat in consideration of the receiving by a certain national bank of all the deposits, and also the income and interest from all the assets belonging to a savings bank occupying adjoining rooms, the national bank agreed with the savings bank — 1. To pay five per cent interest per annum on deposits in said insti- tution, to be computed and paid in accordance with the rules of said institution with its depositors. 2. To pay all salaries of the clerks and officers of said institution and all rents, taxes and incidental expenses connected with the keeping of the account thereof. 3. To pay the interest upon the surplus fund of the savings bank at the rate of five per cent per annum, which interest shall be paid semi-annually and added to the surplus fund. The amount of the surplus fund for the purpose of computing the interest thereon is understood and agreed to be by the parties on the 1st day of July, 1876, the sum of |9,285.78, and shall hereafter be increased only by crediting to it all premiums which shall hereafter be saved on bonds and other securities, gold and gold drafts, sold or redeemed ; but it was understood that all gold received for interest and premiums thereon should belong to and be the property of the national bank ; said surplus fund should also be increased by crediting to it the difEerence between the price paid for the bonds or securities and par, when such bonds or securities should be purchased at less than par. All premiums which should hereafter be paid by said institution for bonds, stocks, mortgages or other securities should be charged to and deducted from such surplus fund. 4. The national bank to pay all drafts made on it by the savings bank, either to pay depositors.or for investments. 5. The national bank to be responsible for the safe-keeping of the bonds or other securities.and the moneys of the savings bank. 6. The savings bank to bear all losses sustained on account of bad debts, depreciations and otherwise, and all expenses of litigation. 7. The contract to take effect on a certain day, and continue in force for the term of two years. In the reply by the attorney-general filed in the banking depart- ment, January 11, 1882, that officer, after quoting the law regulating the management of savings banks, says : "I think the contract amounts to an attempt to delegate the trust power of the trustees. " The general rules applicable to trusts apply with equal force to trus- tees of savings banks. The law permits such institutions to exist as places of safe deposit for the accumulation of limited amounts. They are generally patronized by people of small means, and the law takes cognizance of that fact. It means, therefore, that savings banks shall be safe and secure, and in order to so provide, it has hedged them about with the provisions of law above enumerated. The law clearly points SAVINGS BANKS. 253 out t]ie path to be pursued by its officers in tbe discharge of their trust. Being creatures of the statute, as well as trustees, the officers of such institutions are not permitted to deviate from the express rules laid down by statute for their guidance. " The trust is personal to the trustees. They cannot lawfully dele- gate their trust powers. Trustees of savings banks have no authority to provide for the investment and management of money received on deposit in any other way than by themselves,or the proper officers im- mediately employed by them and directly accountable to them. After trustees of a savings bank have invested the moneys received on deposit, they are accountable to depositors for the actual proceeds of such in- vestment as trustees, but not personally, if acting prudently and in good faith. Section 33 (267) says that the depositors shall receive ' as nearly as may be all the profits of such corporation after deducting necessary ex- penses,and reserving such amount as the trustees may deem expedient as a surplus fund for the security of depositors.' ' ' The trustees have no right to sell or bargain away those proceeds for a stipulated sum. The law does not contemplate that the trustees shall, by any bargain or arrangement, subject to hazard these trust funds. On the contrary, it has pointed out the course which must be pursued by them strictly, and whether a contract of this nature might be more advantageous to the depositors than for the trustees to obey the strict letter of the law.is not to be considered. Trustees are not per- mitted in any manner to speculate with these trust funds. "If the facts in this case should reveal that the stockholders of the national bank are the same persons who are the trustees of the savings institution, then clearly such an arrangement as is set forth in this con- tract, whereby the trustees should seek, under the guise of a contract between the savings bank and the national bank, to make money for themselves out of the deposits of the savings bank, would render the contract clearly Ulegal. " Section 21 (355) provides that the trustees of a savings bank shall not have any interest whatever, direct or indirect, in the gains or profits thereon, nor directly or indirectly receive any pay or emoluments for their services, except as provided for in the act. "Any arrangement, therefore, by which they should seek, directly or indirectly, to make money for themselves out of the deposits, and thereby deprive the depositors of the surplus which might accrue if they carried out strictly the provisions of the act, would be illegal. " I do not think the mere contract by a savings bank with a discount bank to have the clerical work of the savings bank done by such dis- count bank, would be illegal or a violation of the provisions of the Savings Bank Act, but if an arrangement is made by which a delegation of power to exercise judgment or discretion is conferred it would be illegal." § 236. Any number of persons, not less than thirteen, Not less may associate themselves together for the purpose of organ- teen a«9oI 254 BANKING LAWS. elates to izing a savings bank in accordance witli the provisions of this act ; but two-thirds of such number of persons shall reside in the county where the proposed bank shall be lo- cated. § 236 was section 3, chapter 371, Laws of 1875. I^oh per- g 237. Such persons, under their hands and seals, shall oertmoate. Gxecute a certificate in which shall be set forth : What to 1. The name assumed to distinguish such association- and contain. , ° to be used in its dealings, which shall be, in no material re- spect, similar to the name of any other savings bank organ- ized and doing business in this State. 2. The place where its business is to be transacted, desig- nating the particular city, village or town, and, if in any city, the ward in such city. 3. The name, residence (if in any city, the street and number), occupation and post-office address of each member of such association. 4. A declaration that each member of such association will accept the responsibilities and faithfully discharge the duties of a trustee in such institution when authorized ac- cording to the provisions of this act. § 237 was section 8, chapter 871, Laws of 1875. To be exe- § 238. Such certificate shall be executed in duplicate, and duplicate, be duly acknowledged before an officer of this State author- ized to take the acknowledgment of conveyances of real es- tate for record, and shall, within sixty days after such ac- knowledgment, be filed, one copy in the office of the county clerk of the county wherein such savings bank is proposed to be located, and one copy in the office of the superintend- ent of the banking department of this State. § 238 was section ,4, chapter 871, Laws of 1875. intenti °^ § ^^^' ^^ ^otice of intention to organize such savings ize to^be" ^^^^ shall be published at least once a week for four weeks published, previous to filing the certificate of association, as provided in the last preceding section, in at least one newspaper of the largest circulation published in the city, village or town SAVINGS BANKS. 255 where such savings bank is proposed to be located ; or, if there be no newspaper published in such village or town, then in some newspaper published in such county ; if none in said county, then in an adjoining county, which notice shall specify the names of the proposed corporators, the name of the proposed savings bank and the location of the Contents, same as set forth in the certificate of association ; and if there is any savings bank or banks organized and doing business in such county, a copy of such notice shall also be sent to each such savings bank so organized and doing busi- To notify other sav- ness, at least fifteen days before the filing of such certificate ings banks ' , •' " . . in county. of association, as provided for in the last preceding section. § 339 was section 5, chapter 371, Laws of 1875. § 240. Upon the receipt of any such certificate of associa- f "^^^t'to tion at the office of the superintendent of the banking de- iertiSate partment, if the same is in due form and duly executed ac- examina- cording to the provisions of sections two hundred and thirty- * °°" seven and two hundred and thirty-eight of this act, and is accompanied by evidence satisfactory to the superintendent of the proper publication and service, in good faith, of the notice required in the last preceding section, he shall forth- with indorse the same over his official signature " filed for examination," with the date of such indorsement. § 240 was section 6 chapter 371, Laws of 1875, with necessary verbal changes only. 8 241. If such certificate shall not be in form and sub- Defective stance as required by section two hundred and thirty-seven got to be of this act, or shall not be duly and properly acknowledged, as required by section two hundred and thirty-eight of this act, or shall not be accompanied by evidence satisfactory to the superintendent of the publication and service in good faith, according to the intent and purpose of this act, of the notice required by section two hundred and thirty-nine of this act, the superintendent shall refuse to file such certifi- cate until the same shall be amended in conformity to the provisions of this act. § 341 was section 7, chapter 371, Laws of 1875, with necessary verbal changes only. 256 BANKING LAWS. t"nd?°t"to § 242. It shall be the duty of the su{)eriBtendeiit of the cenSa" banking department, and he shall have power in regard to facta. ^jjy. certificate of association so filed by him, as hereinbefore provided, to ascertain from the best sources of information at his command : 1. Whether greater convenience of access to a savings bank wiU be afforded to any considerable number of depos- itors by opening a savings bank at the place designated in such certificate. 2. Whether the density of the population in the neigh- borhood designated for such savings bank, and in the sur- rounding country, affords a reasonable promise of adequate support to the enterprise. 3. Whether the responsibility, character and general fit- ness for the discharge of the duties appertaining to such a trust of the persons named in such certificate are such as to command the confidence of the community in which such savings bank is proposed to be located. § 242 was section 8, chapter 371, Laws of 1875. iMMte^of" § 2*^- -'^^ ^^^ superintendent shall be satisfied, from his tionshSi" knowledge or from information gained concerning the be Issued, geygfal points named in the last preceding section, that the organization of a savings bank, as proposed in such certifi- cate, will be a public benefit, he shall, within sixty days after the same has been filed by him for examination, issue under his hand and official seal, a certificate of authorization to the persons named in such certificate, or to them or to a portion of them, together with such other persons as a majority of those named in such certificate of association shall, in writ- ing, approve ; which certificate, so issued by him, shall au- thorize the persons named therein to open an office for the deposit of savings, as designated in the certificate of asso- ciation, subject to the provisions of this act ; provided, how- ever, that no person shall be named in such certificate of authorization, who shall not have duly made and acknowl- edged the declaration prescribed in subdivision four of sec- tion two hundred and thirty-seven of this act. SAVINGS BANKS. 257 § 343 was section 9, chapter 371, Laws of 1875, with necessary verbal changes only. 8 244. The superintendent shall transmit such certificate Authoriza- of authorization to the county clerk of the county in which flied by '' "^ county the savings bank, so authorized, is to be located, who shall ^^'-fi'^^'^g^ file the same and attach it to the certificate of association }'nt|n§|nt. previously filed by him, relating to the organization of such savings bank ; and the superintendent shall also file a du- plicate copy of such certificate in his own ofl&ce. § 344 was section 10, chapter 371, Laws of 1875. § 245. If the superintendent shall not be satisfied that f°^ll^ *" the establishment of a savings bank, as proposed in any "io^^'iza-""' certificate of association filed by him, is expedient and de- fu*^ed.* sirable, he shall, within sixty days after the filing of such certificate by him, give notice to the county clerk of the county in which such savings bank is proposed to be located, that he refuses to issue a certificate of authorization for such savings bank, which notice shall forthwith be filed by the county clerk with the certificate of association of such sav- ings bank. § 345 was section 11, chapter 371, Laws of 1875. § 246. Upon the filing of any certificate of authorization Persons of a savings bank, as hereinbefore provided, the persons oertmoate named therein, and their successors, shall thereupon and body cor- thereby be duly and lawfully constituted a body corporate and politic, and shall be vested with all the powers and charged with all the liabilities conferred and imposed by this act relating to savings banks. § 346 was section 13, chapter 371, Laws of 1875, with necessary verbal changes only. § 247. Before any savings bank, so incorporated, shall be Jfj^'®*"' authorized to receive deposits, such corporatiou shall trans- and place mit to the superintendent of the banking department thegf||*°j^? name, residence and post-office address of each of the ofii- tendent cers of such savings bank, and the place where its business 33 258 BANKING LAWS. is to be carried on, designating the same by street and niun- ber, when practicable. § 247 was seetion 13, chapter 371, Laws of 1875. Business 8 248. Any savings bank so incorporated, that shall not to be be- ° . ■' ° , . ' . . gun within organize and commence business within one year alter the one year. ^ - certificate of authorization of the same has been filed, as hereinbefore provided, shall forfeit its rights and privileges as a corporation under this act ; but the superintendent of the banking department may, for satisfactory cause to him be™!- ™*'' shown, extend the term within which such organization may **" ^ ■ be effected and such business commenced, but not for a longer period than one year ; and the order so extending such term shall be under his hand and seal, and shall be transmitted to the county clerk of the county in which such savings bank is to be located, who shall file the same, together with the certificate of association and the certificate of authorization of siich savings bank. § '348 was section 14, cliapter 871, I^aws of 1875. Those 8 249. The persons named in the certificate of authoriza- namediu " ^ . . c i . authoriza- tion issued pursuant to the provisions of this act shall be first trus- tiie first trustees of such corporation, and shall have the entire management and control of all the affairs of such cor- poration subject to the provisions of this act. § 349 was section 15, cliapter 371, Laws of 1875, withnecessajy verbal changes only. 1. A transaction entered upon the books of a savings bank, although made by the hank oflBcers, is presumed to have been done with the knowledge and assent of the trustees, who are responsible for the acts of the officers whom they place and retain in position. Trus- tees are legally chargeable with notice of the acts of the ofScers, especially when those acts are entered upon the books of the bank. And if trustees desire to escape liability, they must desist from ille- gal or improvident action, and try to remove officers who do them. Paine, Eeceiver, v. Mead, 59 How. Pr. 318. 3. A bond deposited for safe-keeping with the cashier of a savings bank, who placed the bond in the bank's safe, held to be in the custody of the bank and not of the cashier personally, and that the bank was chargeable with notice of the owner's [rights, 1879. Zuguer v. Best, Receiver, 44 Super. Ct. (J. & S.) 393. SAVINGS BANKS. 259 § 250. The business of every such corporation shall be ^an'thlr- managed and directed by a board of trustees of not less than [H^ f^^' thirteen, who shall elect from their number a president and f^tn't a™d' two vice-presidents, and shall elect or appoint from their officers, number, or otherwise, such other officers as they may see fit ; and all vacancies in such board by death, resignation or other- •'''=' Vaeanciea, wise, shall be filled by the board of trustees as soon as prac- tow miad. ticable, at a regular meeting after such vacancies shall occur. § 250 was section 16, chapter 371, Laws of 1875. The superintendent of the banking department submitted to the attorney-general the question of the right of a savings bank chartered in 1871, but subject to the provisions of the General Savings Bank Law, passed in 1875, to increase, by a resolution of its board of trustees, duly adopted, the number of trustees of the bank to nine, the number pro- vided for by their charter being seven, and in addition asks ' ' are not savings banks, by said chapter 371 of the Laws of 1875, and amendatory acts, required to increase the number of trustees to at least the mini- mum therein provided for, viz., thirteen? " Also, the further question, can the superintendent of the ba.nking department lawfully approve an increase of the members of a board of trustees of any savings bank, to a number less than the minimum fixed by the law of 1875, to-wit, thirteen ? In an opinion by the attorney -general filed in the banking depart- ment May 3, 1880, that ofiBcer says he has ""carefully examined the provisions of the General Savings Bank Act, and other statutes bear- ing upon the subject of inquiry, and is of opinion that section 16 (250) of that act, which fixes the minimum number of trustees at thirteen, has reference only to savings banks organized under the pro- visions of said act. The language of the' section is : ' The business of every such corporation shall be managed and directed by a board of trustees of not less than thirteen.' The words 'such corporation' manifestly refer to the corporation which the preceding sections provide for organizing, namely, new savings banks. Section 50 (284) of the act in question applies to both classes of savings corporations, those pre- viously organized and those organized under the act of 1875, and pro- vides that it shall be lawful for the board of trustees of any savings corporation * * * to reduce the number of trustees named in the original charter of such corporation to a number not less than the mini- mum named in this act » * * or the number of trustees may be increased to any number designated in a resolution for that purpose, where reasons therefor are shown to the satisfaction of the superintend- ent, and his consent in writing obtained thereto.'' He further states : " It will be observed that while the right to decrease down to the mini- mum ' thirteen ' is absolute, the right to increase to any number is sub- ject to the condition that reasons therefor must be shown to the satisfac- 260 BAITKING LAWS. tion of the superintendent, and Ms Consent in writing be obtained thereto. This seems to indicate very plainly that the legislature, in the act of 1875 (ch. 371, ch. 10 of this revision), while fixing a minimum of thirteen for corporations organized under its provisions, also recog- nized the fact that other savings banks existed under charters previously granted, with a less number of trustees than thirteen, which it did not intend to disturb in this particular, and that it regarded it entirely safe and proper to leave the matter of the increase in the number of trustees of both classes of savings corporations to be regulated by the sound dis- cretion of the superintendent. " I am of opinion, therefore, that the said savings bank may lawfully increase jthe nuniber of its trustees from seven to nine, subject to such approval and consent of the superintendent, and that he may lawfully approve of and consent to the same, if the reasons therefor appear to him satisfactory." bemale*" § ^^^- '^^^ board of trustees of any such corporation shall S?ed.''°''^ have power, from time to time, to make such by-laws, rules and regulations as they may think proper, for the election of officers, for prescribing their respective powers and duties, and the manner of discharging the same ; for the appoint- ment and duties of committees, and generally for transact- ing, managing and directing the affairs of the corporation ; provided such by-laws, rules and regulations are not repug- nant to, nor inconsistent with, the provisions of this act, the Constitution and laws of this State, or of the United States, and a copy of the same shall be transmitted to the superin- tendent of the banking department, who shall also be noti- fied of any amendment or change therein. § 251 was section 17, chapter 371, Laws of 1875. A by-law may be part valid and part void. Imposing same penalties for offenses, imposed by statute, does not make same void. Rogers v. Jones, etc., 1 Wend. 337. The following portion of an opinion of the attorney-general dated May 13, 1879, on file in the banking department, will be found per- tinent. "By section 17 (351) of the act of 1875 (chapter 371), boards of trus- tees have power, among other things, " for the appointment and duties of committees." Section 19 (353) declares, that the oflBce becomes vacant upon the failure of a trustee " to perform any of the duties de- volved upon him as such trustee for six successive months, without having first been excused by the board for such failure." " Committee duty is a duty devolved upon a trustee, as such, by the board, and in pursuance of law. If a trustee attends no meetings, or SAVINGS BANKS. 261 performs no committee duties, for six successive months, Ms office becomes i/pao facto vacant. Neglect to perform duties is equivalent to a refusal to serve, and a continuance of such neglect for six months is, in the purview of the statute, a permanent refusal to serve. The law requires active fidelity in the execution of such trusts, and does not tolerate passive indifference." See note to next section. § 252. Regular meetings of the board of trustees shall be Meeting of trustors . held as often as once in each month, for the purpose of re- ceiving the reports of its officers and committees, and for the transaction of other business. A quorum at any regu-*^"''™'"- lar, special or adjourned meeting shall consist of not less than seven trustees, of whom the president shall be one, ex- cept where he is prevented from attending any meeting by sickness, or other unavoidable detention, when he may be represented, in forming a quorum, by the first vice-presi- dent, who, in case of his absence for like cause, may be rep- resented by the second vice-president; but less than a quorum shall have power to adjourn from time to time, or until the next regular meeting. ,§ 252 was section 18, chapter 371, Laws of 1875. In an opinion by the attorney -general, filed in the banking depart- ment under date of April 12, 1884, that officer holds that a by-law, stating the time of holding of the regular or annual meeting of the trustees of a savings bank, is in itself sufficient notice to all parties. All proceedings, therefore, had at such a meeting (assuming that the meeting transacts only legitimate business, and is a fair and open meet- ing), are valid. § 253. Whenever a trustee of any savings bank shall here- when after become a trustee, officer, clerk or employee in anyt^stee ' _ ' r J J becomes Other savings bank, or upon his borrowing, directly or indi- 'vacant, rectly, any of the funds of the savings bank of which he is trustee, or becoming a surety or guarantor for any money borrowed of, or a loan made by such savings bank, or upon his failure to attend the regular meetings of the board, or to perform any of the duties devolved upon him as such trus- tee, for six successive months, without having been pre- viously excused by the board for such failure, the office of such trustee shall thereupon immediately become vacant : 362 BANKING LAWS. but the trustee vacating Ms office by failure to attend meet- ings or discbarge his duties may, in the discretion of the board, be eligible to a re-election. § 253 was section 19, chapter 371, Laws of 1875. See note, section 251. Security § 254. The trustees of any such corporation shall have required the power to require from the officers, clerks and agents of of officers. -"^ .^ . ^ ■ m t i the corporation such security for their ndelity and the faithful performance of their duties as they shall deem Salaries, necessary, and to fix the salaries of such officers and agents, subject to the provisions of this act. § 254 was section 20, chapter 371, Laws of 1875 . Trustees § 255. No trustee of any such corporation shall have any nottobe . " ''.-,. ^ ., . „•' interested mtcrest whatever, direct or indirect, in the gams or pronts in profits, ' , . '. . nor re- thereof, nor as such, directly or indirectly, receive any pay celve pay, ' ' "^ '^ ' j r j rowfunds ^^ emolument for his services, except as hereinafter pro- **"• vided ; and no trustee or officer of any such corporation shall, directly or indirectly, for himself or as the agent or partner of others, borrow any of its funds or deposits, or in any manner use the same, except to make such current and necessary payments as are authorized by the board of trustees ; nor shall any trustee or officer of such corporation hereafter become an indorser or surety, or become in any manner an obligor for moneys loaned by or borrowed of such corporation. § 255 was section 21, chapter 371, Laws of 1875. 1. A mortgage made by a trustee to a third party, and assigned by him to bank to make good a deficiency of assets, is not void ; a mort- gagor is estopped from claiming that there was no consideration there- for, since he authorized it to be reported as part of assets of bank, and on strength of it, bank was allowed to continue business. Best v. Thiel etal, 79 N. Y. 16. 2. Neither the foregoing defense, nor an allegation that obligor was deceived by the other trustees as to the real condition of the bank, is a defense to action on a bond given to be used as an asset of bank. Hurd V. Kelly, 78 N. T. 588. 8. Vice-President Bowling Green Savings Bank took checks signed by president and secretary, and used them in individual stock specula- tions. These checks were paid by other checks upon bank of discount SAVINGS BANKS. 263 where savings bank kept its deposit. It was claimed that there was no conversion, since no money was taken. Held, it amounted to unlawful taking and misappropriation. Knapp, Receiver, v. Boche, 63 N. Y. 614, memorandum. 4. An action was brought by the receiver of the People's Savings Bank, to recover from the trustees thereof, money lost by the bank by reason of the illegal purchase of North Carolina bonds, which, except under certain circumstances not existing when the purchase was made, the trustees were prohibited from buying. After the purchase of the bonds,the, superintendent of the banking department having caused the bank to be examined, and having found its financial condition to be un- satisfactory, required the trustees of the bault, as a condition precedent to not closing it,to give to it their bonds and other securities to make good any and all deficiencies in its assets to meet its liabilities. Upon the trial the court below found that the entire loss resulting from the illegal purchase had been reimbursed, principal and interest, by the obligors mentioned in the bond. Held, that the defendants were re- leased from liability by the payment of the damages sustained by reason of their illegal acts, although such payment was made by other persons, and that this action could not be maintained. Hun, Eeceiver, v. Van Dyck et al, 26 Hun, 567 ; affirmed, 93 N. Y. 660. 5. The relation between a. savings bank and its trustees or directors, is that of principal and agent, and that between the trustees and depositors, is similar to that of trustee and cestui que trust. If such trustees transcend the limits placed upon their powers in the charter of the bank, aud cause damage to the bank or its depositors, they are liable. They are also bound to exercise care and prudence in the execu- tion of their trust, in the same degree that men of common prudence ordinarily exercise in their own affairs. When loss is occasioned by the failure of a trustee to exercise ordinary care and judgment, he cannot excuse himself by claiming that he did not possess them ; by volun- tarily taking the position, he undertakes that he does possess and will execute them, and it is immaterial that the services are rendered gra- tuitously. Defendants were trustees of C. P. Savings Bank. When the deposits were only $70,000, the trustees bought a lot for $39,500 and erected a building thereon costing $27,000, and gave a mortgage on it for $30,- 500. At time of purchase, bank's expense exceeded its income.and had for some years, as trustees knew. Held, the facts justified a finding that it was a case of reckless improvidence and mismanagement, and that trustees were liable. Hun, Receiver, v. Gary et al., 82 N. Y. 65. 6. Where a savings bank in the city of New York purchased from a trustee of such bank, bonds and mortgages owned by him, aggregating $32,000, made by one person upon unproductive property in the city of Brooklyn of uncertain value, not worth twice the value of the mort- gages, such transaction is vltra mres. Paine, Receiver, v. Irwin et al., 59 How. Pr. 316. 264 BANKHSTG LAWS. 7. The cases of Hurd V. Green, 17Hun, 337, and Hurd v. Kelly, id., note, affirmed in 78 N. Y. 588, holding savings bank trustees liable on a bond conditioned to make good any deficiency in assets, in consideration of its continuance in business; followed. Hun v. Salter, 14 Weekly Dig. 413. 8. A trustee, who sanctioned the use of money by a co-trustee, equally with him violates a prohibition of the charter against any trustee di- rectly or indirectly borrowing its funds, and the prohibition cannot be avoided by resorting to a purchase from a trustee of mortgages, instead of loaning to him thereon. Id. 9. A transaction made by the bank officers and entered on the books, may, for the purpose of sustaining an action against the trustees for a negligent and illegal transaction, be presumed to have been done with the knowledge and consent of the trustees. Paine, Receiver, v. Meade, 59 How. Pr. 318. 10. In reply to an inquiry from the superintendent of the banking department, as to whether a person who directly or indirectly sustains the relation of debtor to a savings bank, either as owner of real estate upon which a mortgage is held by the bank, or as obligor upon any kind of in- strument securing a loan by a bank, or one who has interests with a bor- rower from, or a debtor to, a bank, which might conflict with strict and paramount fidelity to the bank, is eligible to the office of trustee under the provisions of the savings bank statutes of this State, the attorney-gen- eral, in an opinion filed in the banking department April 4, 1879, says : " The object of the statute is, to secure disinterested management of savings institutions solely in the interest of depositors, and to this end no circumstance should exist inconsistent with the fiduciary relation of the trustee to his trust. " The policy of the statute is.to exclude absolutely from the manage- naent of savings bank trusts all persons who have any pecuniary rela- tions with a bank, or with a borrower from a bank, which might induce a lack of vigilance as trustee, or antagonize duty by private interest. This is equally a rule of reason; and experience has too frequently shown, that where official duty and personal interests come in conflict, the former is likely to suffer. " The only rule of safety, therefore, for all classes in the different forms in which they may arise, is to adhere rigidly to the policy indicated by the statute, to deem as ineligible for the position of trustee or officer of a savings bank all persons who have any pecuniary interest, whether as owner of property subject to mortgage held by the banlc, or as borrower, guarantor, or partner of a debtor to a bank, which may influence in any degree the performance of official duty. " Strict enforcement of this rule may occasionally exclude a good man from such trust, but like results are incident to all general rules of public policy, and the number of improper men excluded will be much greater. The statute applies practically the principle that no man can faithfully serve two masters." See notes to sections 360, 261 and 36S. . SAVINGS BANKS. 265 § 256. It shall be lawful for any savings bank to receive |° olft®"® on deposit any sum or sums of money that may be offered for that purpose by any person or persons, or by any cor- poration or societies, and to invest the same, and declare, credit and pay dividends thereon, as hereinafter authorized and provided, and not otherwise. § 256 was section 33, chapter 371, Laws of 1875. 1. An opinion by the attorney-general was filed in the hanking de- partment June 13, 1878. In reply to a communication inquiring whether a depositor in a savings bank is liable to be assessed and taxed for his deposit, that officer says : "In my opinion, section 4 of chapter 456 of the Laws of 1857 exempts such deposits absolutely from taxation, and a depositor cannot, therefore, be assessed for such moneys. The law above mentioned, in my opinion, protects the individual depositor as well as the banlc. " Section 4 of chapter 456, Laws of 1857, referred to by the attorney- general, is an amendment of the fifteenth section of the fourth title of the thirteenth chapter of the first part of the Revised Statutes, entitled " Regulations concerning the assessment of taxes on incorporated oom- panies,and the commutation or collection thereof." Such section is as follows : " § 4. The deposits in any bank for savings which are due to depos- itors, and the accumulations in any life insurance company organized under the laws of this State, so far as the said accumulations are held for the exclusive benefit of the assured, shall not be liable to taxation, other than the real estate and stocks which may be owned by such bank or company, and which are now liable to taxation under the laws of the State." 3. The authorities of the Poughkeepsie Savings Bank applied to the supreme court for a writ of certiorari to review their assessments, and Mr. Justice Babnard's opinion was filed September 1, 1879. It is as follows : "The deposits in savings banks are not taxable. Under the Revised Statutes moneyed corporations were taxable upon their capital. Sav- ings banks have no capital; they simply receive deposits, for which they become liable to the depositor with accrued interest. The design was to afford institutions which would receive deposits generally in small amounts, and to invest the same so that the depositors would have an income from their earnings. There was nothing upon which to base taxation. The savings banks were debtors for the entire sums in their hands. Ordinarily the depositors would have been taxable, but the legislature by chapter 456, Laws of 1857, ordered that these deposits should not be taxable. "By chapter 761, Laws of 1867, section 7, it was provided that the privileges and franchises of savings banks should be deemed personal property, and liable to taxation, 'to an amount not exceeding the gross 34 266 BANKING LAWS. sum of tlie surplus earned.' It is under this law tliat this assessment seems to have been imposed. If the tax was imposed upon the savings hank under the Eevised Statutes, the bank would have been liable for the entire deposit, less its real estate. If this was the correct view, then there was no need of the statute taxing the franchise so far as the 'surplus earned.' The act of 1866, taxing surplus, is conclusive proof that before that act there was no liability of savings banks to taxation. There are two fatal objections to this tax under the Laws of 1866. In the first place, the banks have invested in TJ. S. bonds an amount greater than the entire surplus earned. These bonds are free from tax- ation, and must be deducted before a surplus for the purpose of taxa- tion is made up. In the second place the act of 1866 is repealed by the act of 1875 (chapter 371, Laws of 1875). Among the designated acts and parts of acts repealed, is enumerated section 7, chapter 751, Laws of 1866, and also ' any other acts or parts of acts relating to savings banks or institutions for savings ;' the law of 1875 is wholly silent as to taxation of savings banks, although it provides one rule for every sav- ings bank, whether incorporated before the act of 1875, or to be there- after incorporated. " Moreover it gives the surplus to the depositors, reserving ten per cent of the deposits for a surplus to cover depreciation of investments. The law exempting deposits on taxation is not repealed, except it be held repealed by the general words repealing ' any other act or parts of acts relating to savings banks or institutions for savings.' This ques- tion will be material only when depositors are taxed. That question is not presented by this return. My conclusion is, that the tax imposed by the assessors for the surplus earned is illegal,and must be set aside without cost." Hepay- ment of deposits. Hegula- tions for § 257. The sums so deposited, together with any divi- dends or interest credited thereto, shall be repaid to such depositors respectively, or to their legal representatives, after demand, in such manner and at such times, and after such previous notice, and under such regulations, as the board of trustees shall prescribe, which regulations shall be same to be put up iu some conspicuous place in the room where the business of such corporation shall be transacted, and shall be printed in the pass-books or other evidence of deposit furnished by the corporation, and shall be evidence between the corporation and the depositors holding the same, of the terms upon which the deposits therein acknowledged are made ; provided that evety su6h corporation shall have the right to limit the aggregate amount which any one person or society may deposit to such sum as they may deem it SAVINGS BANKS. 267 expedient to receive, and may, in their discretion, refuse to S|^°be* re- receive a deposit, and may also at any time return all or^"^®"^- any part of any deposit ; nor shall the aggregate amount of such deposit to the credit of any corporation at any time exceed five thousand dollars, exclusive of accrued interest, unless such deposit was made prior to the seventeenth day of May, one thousand eight hundred and seventy-five, or ^^o^*^tOgexj pursuant to the order of a court of record or of a surrogate. poratioii°.'^' § 257 was section 33, cliapter 371, Laws of 1875, with necessary and verbal changes only. 1. A payment to one who produces pass-book and forged order exon- erates bank, the depositor having been negligent in delaying notice of loss of pass-book. (There was the usual regulation, that payment to one who should produce pass-book should discharge bank.) Such a by-law is void, if it declares that though claimant be the wrong party, yet if he has the pass-book, even though feloniously obtained, a pay- ment to him shall protect the bank. It is an attempt without authority to change the rule of law, and strip the business of the defendants of a proper risk, and shift it upon the plaintiff. This the defendants can- not do. Kelly v. Emigrant Ind. Sav. Bk., 2 Daly, 329. 2. S. deposited with defendant, a, savings bank, a certain sum of money, receiving a pass-book which stated that the account was with her, in trust for Christopher Boone, plaintifE's intestate. S. received the pass-book, and drew out one year's interest. After her death de- fendant paid the amount to her administrator, upon production of his letters of administration and of the pass-book. In an action to recover the deposit, held, that In the absence of any notice from the beneficiary, the payment was good and effectual to discharge the defendant ; that the deposit constituted S. trustee and transferred the title to the fund from her individually, to her as such trustee ; that upon the death of S. her rights as trustee to demand and receive the fund devolved upon her administrator, and upon his demand defendant was bound to pay it over ; it had no right to inquire into the nature of the trust, and owed no duty to the beneficiary, until the latter by notice, by forbidding pay- ment, or by demanding it himself, created such right and duty. Boone V. Citizens' Sav. Bk., 84 N. Y. 83 ; reversing same case, 31 Hun, 385. 3. The defendant, the plaintifE's father, deposited in a savings bank a sum of money, upon an account then opened by the bank in the name of the defendant ' ' in trust " for the plaintiff. He made the deposit in this form for the purpose of obtaining the highest rate of interest which the bank allowed, and not intending to part with the ownership or right of receiving back the money from the bank, nor to make a gift or trans- fer of it or any part of it to the plaihtiff ; and upon an agreement with the bank that the money, or any part of it, should be withdrawn from the bank without the production of the bank-book, which he retained 268 BANKING LAWS. in his own possession. He afterward withdrew a part of the sum de- posited. Held, that the 'circumstances under which such a deposit is made.are admissible to vary or explain its apparent character as a trust ; that there was no intent on the part of the defendant to create any trust in this fund for the plaintifE.and that he created none, Weber V. Weber, 9 Daly, 211. 4. Notice to the beneficiary, or knowledge of the deposit, is not neces- sary to confirm his right to funds deposited in a savings bank "in trust " for him. S. deposited in savings bank money belonging to her, declaring she wanted the account in trust for M. M. was ignorant of deposit in her favor until after death of trustee, S. Held, transaction was a valid and sufficient declaration of trust. Martin v. Funk, 75 N. Y. 134. 5. Husband deposited in name of " Richard or Kate Ward " (his wife). She never had possession of bank-book during his life. Held, pre- sumptively his property exclusively. In re Estate Richard Ward, 2 Red. Sur. 251. 6. Payment to a person producing pass-book is good, in absence of no- tice of fraud on depositor, and if reasonable care and diligence are ex- ercised to insure payment to proper person. Ordinary care is not dis- pensed with by any rule. Schoenwald v. Met. Savings Bk. , 57 N. T. 418. To same effect, Appleby v. Erie Co. Sav. Bk., 62 id. 12. 7. A savings bank, in the absence of any rules assented to by its cus- tomers, is to be governed by the same legal principles which apply to other moneyed institutions ; but when it has prescribed rules, and its depositor has assented to them, such rules constitute the contract, and each party must keep it to preserve rights against the other. Ct. App., 1877, Allen v. Williamsburgh Sav. Bk., 69 N. Y. 314 ; affirming, 3 Abb. N. C. 343. 8. Where one who had given his bond and mortgage to a savings bank, was also a depositor therein, and the bank became insolvent and a receiver was appointed, held, that the mortgagor was entitled to a credit on his bond of the amount of his deposit at the time of the failure of the bank. New Amsterdam Sav. Bk. v. Tartter (1877), 4 Abb. N. C. 315. 9. The primary relation of a. depositor in a savings bank to the cor- poration,is that of creditor, and not that of a beneficiary of a trust. The deposit when made becomes the property of the corporation. The de- positor is a creditor for the amount of the deposit,which the corporation • becomes liable to pay, according to the terms of the contract under which it is made ; when payment is made, the claim of the depositor is extinguished, and he has no further claim upon the funds or assets of the bank. Upon insolvency, the assets and property of the corporation, as in the case of other corporations, is a trust fund for the payment of creditors, and depositors stand as other creditors, having'no greater, but equal rights to be paid ratably out of the insolvent estate. Ct. App., 1883, People v. Mechanics and Traders' Sav. Inst., 93 N. Y. 7 ; revers- ing, 38 Hun, 375. SAVINGS BANKS. 269 10. A creditor of a savings bank, who recovers a judgment in an action brouglit before,aud pending at the time of,the appointment of a receiver, and dissolution of the corporation, is not entitled to a preference over de- positors. Id. 11. The rules of a savings bank printed in the deposit book are, when properly made known to the depositor, a part of -the contract between him and the bank; and if the rules provide that payment to a person produc- ing the deposit book, shall be deemed a good and valid payment to the depositor, the latter cannot recover, in an action for his deposit, which the bank has paid out to a person who has wrongfully obtained posses- sion of the book, without showing a failure of the bank officials to ex- ercise reasonable care and prudence in disbursing the money. N. Y. Com. PL, 1881, Israel v. Bowery Sav. Bk., 9 Daly, 507. 12. Payment of the entire deposit to the administratrix of one of two joint depositors upon her presentation of the pass-book, made out to her intestate and plaintiff, after notice by plaintiff not to pay, held, not to discharge the bank from liability to the plaintiff for the amount depos- ited by her, notwithstanding the deposit was made on an agreement that either might draw out any part or all of the deposit, and a rule of the bank, printed in the pass-book, provided that payment to any one pre- senting it should discharge the bank. Citing Blake v. Sanborn, 8 Gray, 154: "The case was a proper one for an interpleader, in which the rights of the parties could be judicially ascertained." Andkbws, C. J., Mulcahey v. Em. Ind. Sav. Bk., 89 N. T. 435 ; reversing, 63 How. Pr. 463. 18. Upon insolvency of the corporation the depositors stand as other creditors, having no greater, but equal rights to be paid ratably out of the insolvent estate. Accordingly held, where a creditor of a savings bank obtained a judgment against a receiver thereof , in an action brought against the bank before the appointment of the receiver, in which ac- tion the receiver was substituted as defendant, that the plaintiff was not entitled to a preference over depositors in the payment of his judg- ment. Id. 14. Where a husband and wife have a bank account in their two names, and each draws and deposits in the absence of the other, the presumption is that at least half of the money belongs to the husband. Gelster v. Syracuse Sav. Bk., 17 Week. Dig. 138. 15. Depositors in a savings bank are creditors, not beneficiaries of a trust. Other creditors have no superior equity to the depositors to pay- mentjin case of a deficiency of assets. People v. Mechanics and Traders' Sav. Bk., reversing same case, 15 Week. Dig. 534 ; 16 id. 374. 16. When a husband makes a deposit for his wife in a bank,it becomes her property, irrespective of whether the funds were his or her own; and where he deposited funds of his wife in one bank in his own name, and drew the same out from time to time, replacing them with his own money, and subsequently made a deposit for her in another bank by de- livering thereto a check upon the first bank, held, that the deposit belonged to his wife. McGraw v. Tatham (1881), 84 N. Y. 677 ; see, 270 BANKING LAWS. also, Bates v. First Nat. Bk. of Brockport (1881), 23 Hun, 420, and In re Ward, 2 Eed. Sur. 253. 17. For an article of interest as to stolen books (citing cases) see Al- bany Law Journal, vol. I, 406. by minora § ^^^- -Wlienever any deposit shall be made by or in the repaid" ^^ name of any person being a minor, or a female, being or thereafter becoming a married woman, the same shall be held for the exclusive right and benefit of such depositor, and free from the control or lien of all persons whatsoever except creditors, and shall be paid, together with the dividends or interest thereon, to the person in whose, name the deposit shall have been made, and the receipt or acquittance of such minor or female shall be a valid and sufficient release and Trust de- discharge for such deposit, or any part thereof, to the cor- §e paid*to poration. And whenever any deposit shall be made by any oiMj?" person in trust for another, and no other or further notice of the existence and terms of a legal and valid trust shall have been given in writing to the bank, in the event of the death of the trustee, the same, or any part thereof, together with the dividends or interest thereon, may be paid to the person for whom the said deposit was made. § 258 was section 24, chapter 371, Laws of 1875. 1. Plaintiff in lier own name deposited a certain sum with, defendant. In proceedings subsequently commenced against defendant supplement- ary to an execution against plaintiff's husband, he, she, and an officer of the defendant appeared before a referee and were examined. Upon the report of the referee, an order was granted by the court before whom the proceedings were pending, requiring defendant to pay to the judg- ment creditor the amount of the deposit, which order defendant obeyed. In an action to recover the deposit, it did not appear that plaintifE had notice of the application for the order, or that she was heard in refer- ence thereto, or that she was in any way a party to the application. Held, that such payment was no defense, that she was not a party to the adjudication or bound thereby. Schrauth v. Dry Dock Savings Bk., 86 N. Y. 390. 2. An action was brought to determine the title to a deposit made by plaintiff's intestate, one U., with one of the defendants, the Seamen's Savings Bank of the city of New York. Said U. , in 1850, deposited a sum of money in said savings bank, which was credited to an account then opened with her, in trust for S. J. U., her daughter. The bank issued a pass-book, in which the account was entered as with her, in trust for her said daughter. This deposit was subsequently SAVINGS BANKS. 271 drawn out. In 1874, U. deposited $2,000 to the credit of said ac- count, which was entered in said pass-book. She also, at the same time, deposited $25 to the credit of an account, with her in trust, for a granddaughter, receiving another pass-book therefor, and on the same day she deposited the sum of $2,500 to her own individual account, in the Bowery Savings Bank. U. retained the pass-book until her death. In an action to determine the title to the deposit, held, that the transaction disclosed an intention to create a trust for the benefit of the daughter ; and that the latter was entitled to the fund. Willis V. Smyth et al., 91 N. Y. 297, sustaining Martin v. Funk, 75 id. 134, 142. See notes, section 257. § 259. In all actions in any court of this State against any Proceed- . "^ . ingson savings bank by a nnsband to recover for moneys deposited |"|5^g. by his wife in her own name, or as her own money, the wife r™^y*° may be examined and testify as a witness in like manner as deposits, if she were an unmarried woman. And in all actions against any savings bank to recover for moneys on deposit there- with, if there be any person or persons, whether husband or wife, or otherwise, claiming the same fund, who are not parties to tlie action, the court in which such action is pend- ing may, on the petition of such savings bank, and upon eight days' notice to the plaintiff and such claimants, make an order amending the proceedings in said action, by making such claimants parties defendant thereto ; and the said court shall thereupon proceed to hear and determine the rights and interest of the several parties to the said action in and to said funds. The said funds or deposits which are the sub- ject of the said action may remain with such savings bank, upon the same interest as other deposits of like amount, to the credit of the action, until £.nal judgment therein, and the same shall be paid by such savings bank in accordance with the order of the court ; or the deposit in controversy may be paid into court to await the final determination of the action, and when so paid into court the corporation shall be stricken out as a party to such action, and its liability for such deposit shall cease. The question of the costs in the actions referred to in this section shall, in all cases, be in the discretion of the court, and may be charged upon the fund affected by such action ; and the statutes limiting the time 273 BANKING LAWS. within which actions shail be commenced shall have no ap- plication to actions brought by depositors, their representa- tives or assigns, against savings banks for deposits made therein. Section 259 was section 25, chapter 371, Laws of 1S75. The primary relation of a depositor in a savings bank to the corpora- tion.is that of a creditor, and not that of a beneficiary of a trust. The deposit, when made, becomes the property of the corporation. The depositor is a creditor for the amount of the deposit, which the corporation becomes liable to pay according to the terms of the contract under which it was made. When payment is made the claim of the depositor is extinguished. Upon insolvency, the property of the corporation is a trust fund for the payment of creditors, and the depositors stand as other creditors, having no greater,but equal rights to be paid ratably out of the estate. The statutes regulating the distribution of the assets of insolvent cor- porations, recognize the equitable principle of equality between creditors, and furnish the proper rule of distribution in this case. (2 E. S. 464, g 43 ; id. 477, § 79.) Accordingly, held, where the creditor of a savings bank obtained a judgment against the receiver, in a suit brought against the bank before the receiver was appointed, and in which the receiver was substituted as defendant, that the plaiutifC was not entitled to a preference over depositors in the payment of his judgment. People v. M. and T. Savings Institution, 93 N. Y. 9, reversing 38 Hun, 375. Invest- 8 260. It shall be lawful for the trustees of any saviufrs ments of " . . deposits, bank to invest the moneys deposited therein only as follows, namely : 1. In the stocks or bonds or interest-bearing notes or obligations of the United States or those for which the faith of the United States is pledged to provide for the payment of the interest and principal, including the bonds of the District of Columbia, commonly known as the three-sixty- five bonds. 2. In the stocks or bonds of this State bearing interest. 3. In the stocks or bonds of any State in the Union that has not, within ten years previous to making such invest- ment by such corporation, defaulted in the payment of any part of either principal or interest of any debt authorized by any legislature of such State to be contracted. 4. In the stocks or bonds of any city, county, town or vil~ SAVINGS BAKKS. 373 lage of this State, issued pursuant to the authority of any law of this State, or in any interest-bearing obligations issued by the city or county in which such bank shall be situated. 5. In bonds and mortgages on unincumbered real estate situate in this State and worth at least twice the amount loaned thereon, but not to exceed sixty per centum of the whole amount of deposits shall be so loaned or invested ; but in case the loan is on unimproved and unproductive real estate, the amount loaned thereon shall not be more than forty per centum of its actual value ; and no investment in any bond and mortgage shall be made by any savings bank, except upon the report of a committee charged with the duty of investigating the same, and who shall certify to the value of the premises mortgaged or to be mortgaged, according to their best judgment, and such report shall be filed and preserved among the records of the institution. 6. In real estate subject to the provisions of section two hundred and sixty-three of this act. § 360 was section 1, chapter 287, Laws of 1880, with necessary verbal changes only — amending section 26, chapter 371, Laws of 1875. 1. Westchester county savings banks authorized to loan money to Union free school district number eight, in the town of Cortlandt, of said county, and its board of education, upon certain bonds of that dis- trict. Section 4, chapter 148, Laws of 1882. 2. Subdivision 1 of this section was frequently amended, leaving out and taking in District of Columbia bonds. 3. Corporation loaned money on stocks collateral — employed broker to sell stocks, who sold same. Bank -had formerly sold stock and omitted to notify broker, who could not deliver, and was compelled to pay purchaser $4,119 damages. In action against bank, held, that though illegality of loan might be a defense to the original parties thereto, it had nothing to do with.and could not affect broker's right to recover. The securities became the property of the bank, and it might sell them. Citing De Groff v. Am. Linen Thread Co., 21 N. Y. 134: ' ' If corporations acquired goods in such a way as to make transaction doubtful as a question of power, what are corporations to do with property thus forced upon their hands ? Must they purge the illegality by giving the goods away or destroying them, or may they not seU and transfer a good title to purchaser ? I think, beyond all doubt, that they may, and that the contract can be upheld and enforced on that ground." Bruce v. Fulton Nat. Bank, 23 Hun, 614-615. 35 274 BANKING LAWS. 4. The superintendent of tlie banking department submitted to the attorney-general a copy of a mortgage made by a safe deposit company to a certain trust company, both of which corporations were organized under the laws of this State. The mortgaged property was situated in the city of New York. The mortgage was given for the purpose of securing the bonds of the deposit company, issued under authority of a resolution of the directors of the company, to the amount of $100,000. It was provided in the said mortgage that the trust company, in case of a failure of the deposit company to make the payments when due of any money, principal or interest secured by said mortgage, may, when requested so to do, in writing, by the holder of at least ten per centum of the bonds secured by said mortgage, proceed to the foreclosure thereof. The opinion of the attorney-general was asked on the follow- ing propositions : (1.) As to whether it would be investing in " unincumbered real estate," within the meaning of the statute, for a savings bank to pur- chase ten or more of these bonds, or a number sufficient to enable them to enforce payment in case of default. (2.) Does the word " unincumbered " mean without prior incum- brance, or does it mean without Incumbrance except such as the savings bank owns in entirety ? (3.) Is there any legal objection to savings banks investing in one or more of a series of bonds secured by a mortgage upon real estate, there being no prior lien, and the sum held being sufficient to entitle the bank to institute foreclosure proceedings in case of default, the prop- erty mortgaged being situated wholly within this State, and worth at least double the amount loaned thereon, as certified by a committee charged with investigating the same, and the statute in other respects being complied with ? That officer, in his reply, filed in the banking department July 28, 1883, says. "In my opinion, the mortgage submitted for my in- spection, does not fall within the class of bonds and mortgages intended by the statute authorizing savings banlis to invest in bonds and mortgages on unincumbered real estate, for the following reasons : "First. Because the mortgage executed for the purpose of securing the payment of said bonds,does not require the trust company to insti- tute foreclosure proceedings when requested to do so by the holder of ten per centum of the bonds, but only provides that it shall not insti- tute such proceedings unless requested so to do by a holder of that amount of the bonds, and a refusal to take such proceedings, when so requested, could only be remedied by a suit in equity to compel the trust company to act. "Second. By 'unincumbered real estate,' in my opinion, is meant real estate without incumbrance, except such as the savings bank owns in entirety. The statute intends that the savings bank shall have the exclusive control of its investments, both as to the amount, and the time for which they are made. Although as in the present instance they SAVINGS BANKS. 275 may have tlie power, when owning a certain number of these bonds, to cause to be instituted foreclosure proceedings to secure the payment of such bonds, still any other holder of the same number of bonds would have the same right, and thus the bank could have no certainty as to the time or permanency of their investments, and no certainty as to the amount it might be forced to invest in such property at almost any time, in order to save itself from loss because of foreclosure proceedings instituted by parties over whom it had no control. ' ' Third. I am further of the opinion that the statute authorizing the incorporation of savings banks,does not intend that they shall act and be contracted vsdth through the medium of a trustee outside of the directors of the corporation. The trustee, if an individual, may die, or if a corporation, may be dissolved, or have its franchises annulled before the completion of the duties of the trust, and thus throw the affairs of the savings institution into a confusion, that only a recourse to the courts could unravel. These corporations are provided with directors and officers, whose duty it is to manage their affairs ; and, in my opinion, the statute intends that all contracts with the corporation shall be made directly with its governing body, without the aid of an intermediary trustee. ' ' For the foregoing reasons, I am of the opinion that savings banks have not the power to invest in one or more of a series of bonds not amounting to the whole number of such bonds, secured by a mortgage on real estate, there being no prior lien, and the sum held being suffi- cient to entitle the bank to institute foreclosure proceedings in case of default, even though all the other conditions of the statute be complied with." 5. An opinion of the attorney-general, filed in the banldng depart- ment June 30, 1883, held, "That the investment by savings banks of this State in Minnesota State bonds.is contrary to the spirit and scope of the act of 1880, and cannot be allowed ; the State within ten years hav- ing defaulted in the payment of a debt authorized by the legislature;" and further held : " The object of this statute undoubtedly was,to pre- vent the investment by savings banks in the stocks of a State which had authorized repudiation of any debt sanctioned by the law-making power of the State,as contra-distinguished from those bonds issued by some executive officer without any authority or warrant pf law." 6. The present superintendent of the banking department submitted to the attorney-general the question, whether subdivision 4 of this sec- tion authorized savings banks of this State to invest their deposits in the bonds issued by school districts. In an opinion, filed in the banking department under date of April 4, 1884, the attorney-general holds that ; " There is nothing in the pro- vision, which gives them the power to buy the bonds issued by school districts, either expressly or by tacit implication. The fact that a school district comprises a whole town, the boundaries of which were the same, would make no difference. The officers who issued town 376 BANKING LAWS. bonds, would act in an entirely different capacity, would derive their power from » different source, and generally would be a different set of men from the officers who issue the bonds of a school district." 7. The present superintendent of the banking department submitted to the attorney-general the question, as to the legal right of savings banks to invest the moneys deposited with them, in interest-bearing obliga- tions, which the Commonwealth of Massachusetts issues from time to time, under the authority of the legislature of the State, in anticipa- tion of taxes. The obligations are designated revenue certificates or revenue bonds, and are substantially in the following form : " COMMONTTBALTH OF MASSACHTJSETTS, ) " Tbeastjry Dbpaetmbnt, Boston, ,188. ) " Borrowed and received under authority of resolution , chapter , of the year , of , of , the sum of dollars, for the use of the said Commonwealth, the same to be repaid to , or order, , at this office in currency, in months from date, without grace, with interest, payable also in currency, at the rate of per cent per annum. "(Signed), , Treomi/rer. "(Countersigned), , Auditor. "(Approved), , Governor." That officer, in his opinion, filed in the banking department May 15, 1884, holds as follows : " It is doubtless true that this instrument is evidence of a loan to the State of Massachusetts, for the payment of which the faith and credit of that State is pledged, and it is unquestionably safe as an investment. "Obligations of this character, however, are evidently not intended as permanent loans ; the form of the security on its face indicates that the debt evidenced thereby is to be paid by the State in a very short time, perhaps in a few months from the date of issue, or even sooner. It is a mere temporary expedient to secure funds for the State treasury in anticipation of taxes levied and in process of collection, to be can- celed and paid as soon as the taxes are received by the State treasurer. "I do not think that it was the intention of the legislature, by sub- division 3, of section 260, of chapter 409, of the Laws of 1883, to include certificates of indebtedness of such a temporary and transient character within the term 'stocks or bonds of other States.' " This term as used in the statutes was, in my opinion, intended to apply to and include the permanent loans of the State, and not mere certificates of indebtedness issued from time to time for a temporary purpose, and liable to be called in and canceled within a few weeks or a few days from the date of their issue." Invest- § 261. It shall be the duty of the trustees of any such soon as corporation, as soon as practicable, to invest the moneys SAVINGS BANKS. 377 deposited with them in the securities named in the last pre- graetioa- ceding section of this act, except that, for the purpose of meeting current payments and expenses in excess of the receipts, there may be kept an available fund of not exceed- ing ten per centum of the whole amount of deposits with cent re- such corporation, and the same may be kept on hand, or on current deposit, in any bank or banking association in the State of ®^p°°^®^- New York, organized under any law or laws of this State, or of the United States, or with any trust company incor- porated by any law of this State, but the sum so deposited in any one bank or trust company shall not exceed twenty- five per centum of the paid-up capital and surplus of such bank or trust company ; or such available fund, or any part thereof, may be loaned upon pledge of the securities, or any of them, named in subdivisions one, two, three and four of the last preceding section of this act, but not in excess of ninety per centum of the cash market value of such securi- ties so pledged nor in excess of the par value thereof ; and oifoertaiii should any of the securities so held in pledge depreciate in ^®°"" value, after making any loan thereon, it shall be the duty of the trustees to require the immediate payment of such loan, or of a part thereof, or additional security therefor, so that the amount loaned shall at no time exceed ninety per eentmn of the market value of the securities pledged for the same. § 361 was section 37, cliapter 371, Laws of 1875, with necessary verbal changes only. 1. Loaning money on promissory notes, cashing checks, or permitting depositor to overdraw his account, renders any officer of a savings bank that is or was a party to it.liable. Knapp, Keceiver, v. Roche, 44 Supfer. Ct. (13 J. & S.) 348. 3. The author trusts that the length of this note needs no apology,aud that the unusual prominence given to a referee's opinion in the sub- joined case.is justified by reason of the fact that at the time of its rendi- tion it caused much comment. The professional standing of the coun- sel employed, the novelty of the issues, and the large amount (compara- tively speaking) claimed to be due from the defendants, all contributed to make the case a prominent one. (See article ' ' Trustees as tortfea- sors " by one of the counsel. Am. L. Rev. XIV, 36 ; XV, 159.) The superintendent of the banking department forwarded in Decem- ber, 1878, a circular to all the savings banks of this State, calling atten- 278 BANKIISTG LAWS. tion to this decision. And in Ms annual report to the legislature, con- cerning savings banks, dated April, 1879, he uses the following lan- guage : " Duties of trustees defined. — lu one of the failed savings banks in New York, a legal contest arose from suits brought by the receiver, Willis S. Paine, Esq., against trustees. The case was referred to Clifford A. Hand, Esq. The opinion is so wide in its comprehension, so broad and logical in its conclusions, so exhaustive in the authorities cited, and so luminous in the statement of the responsibilities ,and duties of trustees, that I have deemed it very useful to give it a place in the Appendix to this Report. " In July, 1879, said superintendent addressed a formal communica- tion to the attorney-general asking the following questions : "1. Can trustees of a savings bank lawfully appropriate the funds of the corporation, to other purposes than those expressly named in laws regulating their administration ? " 2. If funds have been, or should be, misappropriated by trustees of a savings bank, are not the trustees making such appropriations liable, personally, for the funds so used ? " 3. Would the ordinary statute of limitations hold in such cases of misappropriation of money, or is the liability of trustees continuous, as Mr. Hand holds in the case of Willis S. Paine, Receiver of the Bond Street Savings Bank, v. Trustees ? "4. Is it the duty of the superintendent of the bank department to require the restitution of funds misappropriated unlawfully by the trustees of a savings bank, to purposes wholly foreign to the affairs of the bank ? " 5. Would not the misuse of funds in such unlawful ways by any trustees, and refusal to restore them, constitute probable cause for the removal of such trustees from office under the law of 1879 (chapter 422)?" The reply of that officer was substantially as follows : " It is a settled rule of law that the powers of corporations are lim- ited by the acts creating them. Being artificial creatures they have only such powers as are granted, for the purposes of their creation. Trustees of corporate bodies can only exercise the powers granted to the corporation they represent. Their office is a trust, and their duty is to execute the trust conferred upon them ; and the duties imposed are the measure of their powers. Trustees acquire no interest in, or authority in respect to, the trust property, personal to themselves, nor any power over it beyond the charter or statutes under which they act. The courts have been rigid in enforcing these principles, and in holding trustees to personal accountability for abuses of j their trust, in assum- ing the exercise of powers not conferred, in the waste or illegal appli- cation of trust funds or property, and in restraining corporations to authorized acts. The court of appeals, upon this subject, uses the following explicit language : SAVINGS BANKS. 279 " ' The public are interested in restraining corporations to the enjoy- ment of the precise franchise granted, and the exercise of the powers expressly conferred, and the Incidental powers essential to the express power. Shareholders are also interested in keeping their trustees, the governing boards, within the limits of the delegated power with which they are clothed. It is axiomatic that a corporation can make no con- tracts, and do no acts.except such as are authorized by its charter, either expressly.or as incidental to its existence. Corporations necessarily depend, both for their powers and the mode of exercising them, upon the construction of the statute which gives them life and being.' (60 N. Y. 394.) "By the act relating to savings banks (chap. 371, Laws of 1875), the powers of savings banks and their trustees are clearly defined, and their powers are limited to those expressed in the statute. Every trustee of a savings bank takes his position subject to the limitations of the statute, and to the duties it imposes. By this statute savings banks have power " to receive money on deposit, to invest the same, and further transact the business of a savings bank as hereinafter pro- vided." § 1, sub. 7. (§ 235, sub. 7.) ' ' By section 26 (§ 360) the manner in which savings banks may invest the moneys deposited therein, is particularly prescribed. Section 37 (§ 361) authorizes a limited percentage of deposits to be kept on hand for current payments and expenses, and for violating ' the spirit and intent ' of this provision the superintendent, by section 38 (g 363), is required to report the bank to the attorney-general, to be proceeded against for mis- management. By section 28 (§ 357) the sums deposited, together with any dividend, or interest credited thereto, are required to be repaid to the depositors after demand and notice. • ' The trust, as thus defined by law, is to receive deposits, to invest them only in the manner prescribed, and to return the principal and interest to the depositor. The whole fund is protected by careful provisions of law. For the purpose of executing this trust, every bank is required to have a board of trustees of not less than thirteen, who must elect from their number a president and two vice-presidents, and also elect or appoint from their number, or otherwise, such other officers as they may see fit § 16 (§ 250) ; and the trustees, acting as officers of the corporation, whose duties require and receive their regular and faithful attendance at the institution, are authorized to receive such compensation as, in the opinion of a majority of the board of trustees, shall be just and reasonable ; such majority to be exclusive of any trus- tee to whom such compensation shall be given. And trustees are pro- hibited from receiving pay as trustees,for their attendance at meetings of the board. In addition to the compensation of officers, clerks and attorneys, expenditures may be lawfully made from the income, for the incidental and necessary expenses of the institution, such as furniture, rents, taxes, fuel, light, stationery, watchmen, and whatever may be requisite for the proper management of the trust property and its protection. 280 BANKING LAWS. Expenditures for those purposes fall within the legitimate duties of the trust ; but neither the deposits.nor their income.cau be lawfully used or expended for other purposes. They cannot be used ' to pay trustees compensation for services upon committees ; ' nor ' the chair- man of a regular standing committee for services as trustee in acting as such chairman ; ' nor ' to pay for an annual supper or entertainment for the trustees ; ' nor ' to pay for a service of plate donated to a local organizer of a railroad enterprise ; ' nor ' to make contributions ' for charitable, benevolent or sanitary objects ; nor to make ' gratuitous appropriations to the widows of deceased officers ; ' nor ' to pay costs and expenses to get bills through the legislature to pay interest ' on illegal loans ; nor to make ' gratuities to officers for past services, who had been paid regular salaries ; ' nor to lobby agents ' to procure general legislation relative to savings banks.' "Payments from the money of depositors for all such purposes are clearly illegal, and render the trustees who authorize or consent to them personally liable for the diversion of the funds. " It is undoubtedly the duty of the superintendent of the bank de- partment, to require the restitution of the funds misappropriated, or tmlawfuUy diverted by the trustees of a savings bank; and in case of failure to make restitution, to report the facts to the attorney-general that proceedings may be instituted for their recovery, according to law. Nor is there any doubt that the misuse of the funds, or their illegal ^expenditure by the trustees, and a refusal to make restitution, constitute such abuses of trust as to furnish ground for the removal of the culpable trustees under the provisions of chapter 423 of the Laws of 1879, and the Revised Statutes. "The statutes of limitations have no proper application to cases of trusts, but the liability of trustees, for illegal appropriation of trust funds, continues while the trust relation exists. If proper proceed- ings are delayed unreasonably after the relation ceases, recovery will be barred by lapse of time." The essential portion of Mr. Clifford A. Hand's opinion is as follows : " This case presents the alternative that heavy losses must be visited either upon the multitude of depositors in a savings bank, or upon a small number of trustees to whom the management of the bank was intrusted. Whatever the event, there is unavoidable hardship. The bank was itself in effect, merely a trustee. Its function or office was declared by the charter to be the receiving of deposits and invest- ment of them ' for the use, interest and advantage of the said de- positors.' From the time when its doors were first opened for busi- ness, until they were closed by the decree of this court, every trans- action was under this trust responsibility. It was the aim of the charter, in all its provisions, to secure safety of deposits, and to pre- vent exposure of them to hazard or venture for loss or gain. The persons for whose use and benefit the bank was thus chartered, were known to be such as were in need of special safeguards. Their SAVINGS BANKS. 281 savings were in amounts insufficient for separate investment, and tliey lacked tlie skill requisite to prudently invest them. At tlie same time a loss, however small, might easily cause them suffering which they were little able to bear. " Duties of trustees defined. — But we must rest content with the plan and provisions which the legislature has seen fit to prescribe. By that plan, the trustees were charged with the duty of keeping deposits duly invested, and they were clothed with ample power and discretion for the discharge of this duty. In the exercise of their discretion within the prescribed limits, it would be manifestly oppressive to hold them liable for every loss or misfortune happening to the fund. To such an in- justice the reasoning of Lord Hardwicke would apply : ' For as a trust is an office necessary in the concerns between man and man, and which if faithfully discharged is attended with no small degree of trouble and anxiety, it is an act of great kindness in any one to accept it. To add hazard or risk to that trouble, and to subject a trustee to losses which he could not foresee, would be a manifest hardship, and would be deter- ring every one from accepting so necessary an office.' (Knight v. Plymouth, 3 Atk. 480 ; and see Thompson v. Brown, 4 Johns. Ch. 628.) And this language is peculiarly applicable to the office of unpaid director, or gratuitous trustee. In short, the case must be tested by its circumstances and the established principles of equity jurisprudence, without undue regard to the hardship necessarily resulting to the one or the other of the parties. "That the director or trustee of a corporation is subject to the rules of duty and responsibility incident to other trusts, so far as these rules are capable of practical application, and except as they may be modified by special statutes, will hardly be denied. Whenever the point has arisen (as in French Receiver, v. Ingram, decided by Mr. Justice Van Brunt ; Butts v. Wood, 38 Barb. 181), the courts have so declared. And the cases are abundant where the analogy has been taken for granted. The degree of skill and diligence required of such a trustee, serving without compensation, is not so easy to define. The general require- ment, that it must equal that of a man of ordinary capacity and prudence in the management of his own affairs, is, perhaps, to be quali- fied, in view of the gratuitous character of the service, although trusts have always been regarded in English jurisprudence as offices of friend- ship or personal confideuce.rather than of profit. But whether an un- paid trustee is responsible for only gross.or for a less degree of negli- gence, there are certain rules of liability which admit of no question. There must be the strictest good faith, and there must be strict observ- ance of the restraints established or approved by the courts, and of special conditions or directions whenever they are affixed to the trust. (See 1 Perry on Trusts, 3d edition, §§ 420-460.) If a trustee passes the bounds set for the exercise of his discretion, no degree of care, dili- gence or good faith will protect him. (See 1 Perry on Trusts, § 460 ; Ackerman v. Emott, 4 Barb. 636 ; King v. Talbot, 40 N. T.) 36 382 BANKING LAWS. " Tlie a/oa/ilahle fund a/nd Us use. — It is, however, contended on tlie part of tlae defendants, ttat the loan was not subject to the restraints prescribed for investments upon real estate security, inasmuch as the sum loaned was outside the two-thirds of total amount of deposits required to be kept invested, and was part of the available fund. It is argued that the charter provisions for the safety of ordinary in- vestments,did not apply to this part of the resources of the bank. And it appears, from the evidence of the former superintendent of the banking department, that such was the construction adopted by him at the time, in similar, cases, after consultation with the attorney-general. "By the charter (section 6) it was made the duty of the trustees to keep invested in the specified securities, ' all sums received by them beyond an available fund of not exceeding one-third of the total amount of de- posits,' ' which they may keep to meet the current payments of the cor- poration, and which may, by them, be kept on deposit on interest, or otherwise, in such available form as the trustees may direct.' And temporary deposits could be made in banks in the city of New Tork.at rates of interest to be agreed upon. It is claimed that the phrase ' or otherwise ' applies to the entire disposition or management of the avail- able fund, and that the discretion of the trustees over it was absolute, provided only that the fund was not so placed as to deprive them of the legal right to recall it in case of need. The loan in question was shaped in harmony with this idea. While the mortgage security and the obligations of the mortgagor provided for a fixed period of credit, they were made collateral to promissory notes payable on demand. But I am unable to accede to this view of the statute.or of its efficiency to shield the trustees. In order to make the available fund readily and certainly available for the current needs of the bank, the trustees were authorized to ' keep ' it, instead of investing it. As a safe and con- venient mode of keeping^ the deposit of it ' on interest or otherwise ' was authorized. And the selection of depositories might be from banks in the city of New York. This seems to me the only construction con- sistent with the entire section,and with the end in view. And it malies impossible so anomalous a proceeding as the keeping of a fund available for current use in New York, by sending it to Illinois as a loan upon real estate there. At all events, it is not reasonable to suppose that, in providing for a fund of that character and having that office, the legis- lature designed to authorize, by implication, a species of investment, the use of which for investment purposes was by the same charter ex- pressly forbidden. Nor is it reasonable to infer that an act betraying such solicitude for the safety of deposits, tacitly consented to the lend- ing on mere personal security, which is a disposition of trust moneys re- garded by courts of equity as especially reprehensible. To combine the two qualities of a call loan upon promissory notes.and the security of a mortgage, in which specified periods of credits were reserved, was as- suredly not within the true scope of the charter provisions for an avail- able fund." Payment to trustees for committee work. — The payments made to SAVINGS BANKS. ' 283 trustees for services rendered by tliem as members of examining com- mittees, are also complained of. The charter (sec. 3) provides that the trustees " shall not, as such, directly or indirectly, receive any pay or emolument for their services." It is unnecessary to observe that all covert or circuitous methods of realizing compensation for the services of a trustee " as such," fail within the prohibition. In the present case there is no indication that an impropriety or in- direction was intended. The by-laws provided for appointment by the board in each December, of an examining committee of three of its members, and the provision was one of obvious propriety. The duties of the committee, " to make a thorough examination of the books and assets," and report upon them in detail, were onerous as well as important. The compensation awarded to the committees by the board, appears to have been as moderate as the most rigid economy could demand. Nevertheless I am compelled to decide that the allowance was forbidden by the charter. By delegation of trust duty to part of their number, the trustees could not alter the character of the duty or service, which remained that of trustee. The policy of the law is unyielding in this respect, and there would seem to be hardly any conceivable service personally rendered by a trustee to the trust estate, for which he is permitted to charge special compensa- tion upon the ground that it is outside the bounds of his duty as trus- tee. (See Morgan v. Hannas, 49 N. T. 667.) The licbbiUty of trustees — how long it lasts. — The remaining defense is, that each of the causes of action set forth in the complaint,is barred by the statute of limitations ; and it is undisputed that neither of the breaches of trust complained of by the plaintiff occurred within the six years immediately preceding the commencement of the action. The liability would seem to be of that continuous character which, of itself, suspends or delays the operation of the statute in the case of a trustee. (Eobinson v. Robinson, 5 Lans. 5 ; Kane v . Bloodgood, 7 Johns. Ch. 90 ; Dechons v. Savatin, 3 id. 190 ; Hubbell v. Medberry, 53 N. Y. 98.) So long as the trustee is in ofB ce.his duty to respond for the trust estate is one of continuous obligation, not terminated by past neglect to discharge the duty. It is not, perhaps, until he ceases to be trustee,or openly asserts title in hostility to the trust, or affirmatively refuses to account, that a cause of action can be said to accrue within the meaning of the stat- ute of limitations. And the propriety of such a rule is evident. No lack of diligence can fairly be imputed to the cestui que trust for delay in suing the trustee, when that delay is the natural result of the confi- dential relation subsisting between them, and of the essential depend- ence of one upon the good faith of the other. " If mistaken, however, in this view of the subject, it seems to me that the proper limitation is that of ten years, provided by statute for the general cases in which equitable relief is given. The liability of trustees is one, over which courts of equity have long exercised unquestioned Jurisdiction. And this jurisdiction is by statute law expressly extended, or recognized as 384 BANKING LAWS. extending, to directors and trustees of corporations, who can be com- pelled to account for their official conduct in the management and dis- position of the funds and property, and to pay to the corporation or its creditors whatever may have been lost or wasted by any violation of their duties." It may be well to add that no appeal was taken by the def endants.and that this, and like litigations brought against the trustees of the above- named bank, were settled by their paying to the plaintifE of the sum of one hundred and thirteen thousand five hundred dollars. 3. The superintendent of the banking department requested the opinion of the attorney -general, as to whether there is any provision of law Justifying the trustees of a savings institution in borrowing money, or pledging its securities. The reply of that officer, filed in the bank- ing department October 8, 1883, is as follows : "The statutes, so far as I have been able to examine them, contain no express authorization, or prohibition, of such a course of procedure on the part of the trustees of a savings institution. " I think, however, that it would be contrary to the spirit of the act, chapter 409 of the Laws of 1883, as that act describes very specifically as to how the money shall be invested, and provides for keeping an available fund to meet current expenses, and generally is very explicit in all its details as to the management and conduct of an institution of that description. If a savings bank can pledge part of its securities, it could pledge them all, and thus virtually defeat the effect of the stat- utes, providing for the safe-keeping and investment of the funds of its depositors. ' ' I am of opinion that such course would be contrary to the policy of the statute and should not be adopted." See notes to sections 255 and 263. de™Mit3 in § ^^^- ^^ ^^^^^ further be lawful for any such corporation banks, etc. ^o deposit temporarily in banks or trust companies, as pro- vided in the last preceding section of this act, the excess of current daily receipts over the payments, until such time as the same can be judiciously invested in the securities named in section two hundred and sixty of this act ; and whenever it shall appear to the superintendent of the banking depart- ment that the trustees of any such corporation are violating the spirit and intent of the foregoing provision, by keeping If undue permanently uninvested all, or an undue proportion, of the of°money" moneys received by them, it shall be his duty to report the iskeptun-- '' , '' ' , , ,, ■, . , inveated. lacts to the attorney-general, who shall proceed agamst sach corporation under the provisions of section two hundred and seventy-eight of this act. SAVINGS BANKS. 285 § 263 was section 28, chapter 371, Laws of 1875, with necessary ver- bal changes only. § 263. It shall be lawful for any such corporation to pui'- ^^J^hoia chase, hold or convey real estate only, as follows : rea°°es^ate 1. A plot whereon is erected, or may be erected a build- herein pro- ing or buildings requisite for the convenient transaction of ^' * ' its business, and from portions of which not required for its own use, a revenue maybe derived. The cost of such build ing or buildings and lot in no case to exceed fifty per centum of the net surplus of such corporation, except by written permission of the superintendent of the banking department, except where lots have been heretofore purchased, or wbere maps, plans and estimates have been made for the purpose of erecting a banking building. 2. Such as shall have been purchased by it at sales iipon the foreclosure of mortgages owned by such corporation, or upon judgments or decrees obtained or rendered for debts due to it or in settlements effected to secure such debts ; and all such real estate mentioned in the last preceding clause shall be sold by such corporation within five years after the same shall be vested in it, unless, upon application by the board of trustees, the superintendent of the banking department shall extend the time within which such sale shall be made ; and it shall be lawful for any such corpora- tion, with the approval in writing, and under the seal of the superintendent of the banking department, to change its lo- cation within the limits of any city or town wherein it may Location be established ; and in effecting such change of location, maybe' such corporation owning a banking-house and lot may pur- °''*°^®^' chase such additional plot under the provisions of subdi- vision one of this section as the corporation may require ; and such banking-house and lot previously owned and occu- pied shall be sold, as provided in subdivision two of this section, concerning real estate acquired in satisfaction of debts. § 263 was section 39, chapter 371, Laws of 1875. 1. A loan was made by the B. S. Savings Bank, to three persons of $20,000, $15,000 and $15,000 respectively, upon a promissory note by 286 BANKING LAWS. eacli for tlie amount lie received, with collateral security of promis- sory notes of an Illinois corporation, which notes were secured by trust deeds of such corporation upon unimproved vacant lots in that State, not worth over $10,000, and where one of the trustees of the bank at the time of the loan was a large stockholder in such foreign corpora- tion.and the loans were intended to be and were in fact loans to the corporation, such facts being known to the trustees of the bank, or could with reasonable diligence have been learned by them, and where the loans were intended to be to, said trustee, and were made because of his interest in the corporation, and the loans were in fact loans upon the security of the lots. Held, that under the laws of this State affecting savings banks, such transaction is unauthorized and illegal. Paine, Receiver, v. Barnum ei al. , 59 How. Pr. 303. 3. An opinion by the attorney-general was filed in the banking de- partment, September 36, 1879, in which that officer holds as follows : "In my opinion, a savings bank can only purchase and hold real estate (other than such as may be bought in at foreclosure sales), necessary for a banking building. The statute declares that ' it shall be lawful for any such corporation to purchase, hold or convey real estate only as follows : 1st. A plot whereon is erected, or may be erected, a building or builaings requisite for the convenient transaction of its business, and from portions of which, not required for its own use, a revenue may be derived.' § 39. (368.) " It is very clear that, under this statute, it is not lawful for a savings Dank to purchase adjoining property, upon the theory of protecting its vaults, nor for the purpose of erecting and renting buildings thereon. A bank should, of course, own a lot large enough for the safety and security of the building and vaults, and no definite rule can be laid down on that subject ; but the trustees should exercise a prudent dis- cretion. " In respect to purchases at foreclosure sales, and conveyances to the bank in settlement of mortgages, or other debts due the bank, I am of opinion that the amount which should be reported as invested in real estate, so acquired, should be the face of the loan or debt liquidated by the conveyance, with the accrued interest, and any costs attending the acquisition of title. " This should be regarded as the rule in all cases, unless other pay- ments or other securities are received by the bank, and in such cases the amount of such payments or securities would diminish the invest- ment in real estate to that extent. " See notes to sections 355 and 860. No loans § 264. It shall not be lawful for the trustees of any sav- on'perapn- Ings bank to loan the moneys deposited with them, or any a security. ^^^ thereof, upon notes, bills of exchange, drafts, or any other personal securities whatever ; and in all cases of loans upon real estate, a sufficient bond, secured by a mortgage SAVINGS BANKS. 387 thereon, shall be required of the borrower, and all the ex- bond\nd penses of searches, examinations and certificates of title or™°''*^^|®= appraisal of value, and of drawing, perfecting and recording mortgagor, papers, shall be paid by such borrower. § 364 was section 30, cliapter 371, Laws of 1875. § 265. Whenever buildinajs are included in the valuation Mortgaged property of any real estate upon which a loan shall be made by anv to be in- ■^ ^ . J Ml sured. such corporation, they shall be insured by the mortgagor in such company or companies as the trustees shall direct, and the policy of insurance shall be duly assigned, or the loss made payable as its interest may appear, to such corpora- tion ; and it shall be lawful for such corporation to renew such policy of insurance, in the same, or in any other com- pany or companies, as they may elect, from year to year, or for a longer or shorter term, in case the mortgagor shall neglect to do so, and may charge the amount paid to the gagor fails, mortgagor. And all the necessary charges and expenses insure, and ^ *-' ./ o 1 expenses paid by such corporation for such renewal or renewals shall ^ I'^o- be paid by such mortgagor to such corporation, and shall be a lien upon the property so mortgaged, recoverable with in- terest from the time of payment as part of the moneys se- cured to be paid by such mortgage. § 365 was section 31, cliapter 371, Laws of 1875. S 266. It shall be unlawful for anv savings bank, directly Restric- .-,.-, -, ^ T . ,' . ' 1 ti<"l 0° or indirectly, to deal or trade m real estate, m any other case method of r \ , . . , . . doing busi- er tor any other purpose than as authorized in section two ness. hundred and sixty-three of this act, or to deal or trade in any goods, wares, merchandise or commodities whatever, except as authorized by the terms of this act, and except such per- sonal property as may be necessary in the transaction of its business ; and it shall be unlawful for any savings bank, or for any officer thereof in his regular attendance upon the business of sucli bank in any manner to buy or sell ex- change, or gold or silver, or to collect or to protest promis- sory notes or time biUs of exchange; but this restriction shall not prevent savings banks from selling gold or silver received in payment of interest or principal or obligations 388 BANKING LAWS. owned by the bank, or from depositors in the regular course of business, nor from paying regular depositors, when re- quested by them, by draft upon deposits to the credit of the bank in the city of New York, and charging current rates of exchange for such drafts ; and no savings bank shall make or issue any certificate of deposit, payable either on demand or at a fixed day, nor pay any interest except regular quar- terly or semi-annual dividends upon any deposits or bal- ances, nor pay any interest or deposit, or portion of a deposit, or any check drawn upon itself by a depositor unless the pass-book of the depositor be produced, and the proper entry be made therein at the time of the transaction ; pro- vided, however, that the board of trustees may by their by- laws provide for making payments in cases of loss of pass- book, or other exceptional cases where the pass-book cannot be produced without loss or serious inconvenience to depos- itors, the right to make such payments to cease, however, when so directed by the superintendent of the banking de- partment upon his being satisfied that such right is being improperly exercised by any savings banks ; and provided further, that payments may be made upon the judgment or order of a court, or the power of attorney of a depositor. § 366 was section 1, chapter 374, Laws of 1878, amending and making considerable additions to section 33, chapter 371, Laws of 1875. The revision substituted "two hundred and sixty -three " for "twenty- nine " in fourth line. No other change. 1. The opinion of the attorney-general was asked by the superintend- ent of the banking department, upon the proposition whether it is within the corporate powers of a savings bank to receive special deposits of valuables for hire, under the terms of statutes permitting the organiza- tion and governing the management of such institutions. That officer holds that savings banks have no power to receive special deposits of valuables, and in his opinion, filed in the banking department October 7, 1883, says : " They are corporations formed for a special and limited purpose, and cannot engage in the common and ordinary business which a banking institution may conduct. They may not directly or indirectly deal or trade in real estate, or in any goods, wares or merchandise, buy or sell or exchange gold or silver, collect or protest promissory notes or time bills, or issue certificates of deposit (§ 266, chap. 409, Laws 1882). Their business is to receive money on deposit, and to invest the same in particular ways which are carefully specified in the stat- utes. SAVINGS BANKS. 289 "It is a well-known rule that corporations created by statute.can ex- ercise no powers, and have no rightB,except such as are expressly given or necessarily implied. Huntington v. Savings Bank, 6 Otto, 388 ; First National Bank of Manhattan v. Citizens' Bank of Topeka, 31 Int. Rev. Eec. 383. The power to receive such special deposits has not been given to such institutions by statute, and cannot be said to be one of those in- cidental powers which it is necessary or customary for them to exer- cise ; in this respect they difEer from corporations authorized to transact a general banking business. 80 N. Y. 98. I am of the opinion, there- fore, that the receiving of special deposits of valuables, for hire, by savings banks, is ultra vires and unauthorized." § 267. It shall be the duty of the trustees of every such Trustees corporation to reeulate the rate of interest or dividends not rate of in- , „ IT. terest, etc. to exceed nve per centum per annum upon the deposits therewith, in such manner that depositors shall receive, as nearly as may be, all the profits of such corporation after deducting necessary expenses and reserving such amount as the trustees may deem expedient as a surplus fund for the security of depositors, which, to the amount of fifteen per centum of their deposits, the trustees of any such corpora- tion are hereby authorized gradually to accumulate and hold, to meet any contingency or loss in its business from the depreciation of its securities, or otherwise ; provided, however, that the trustees of any such corporation may classify their depositors according to the character, amount and- duration of their dealings with the corporation, and regulate the interest or dividends allowed in such manner, which in"' 111 -in •! 11 • terest may that each depositor shall receive the same ratable proportion be allowed, of interest or dividends as all others of his class. It shall be unlawful for the trustees of any savings bank to declare or allow interest on any deposit for a longer period than the same has been deposited, except that deposits made not later than the tenth day of the month, commencing any semi- annual interest period, or than the third day of any month, or withdrawn on one of the last three days of the month ending any quarterly or semi-annual interest period, may have interest declared upon them for the whole of the period or month when so deposited or withdrawn. No dividends or interest shall be declared, credited or paid, ex- 37 Period for 390 BANKING LAWS. cept by the authority of a vote of the board of trustees, duly entered upon their minutes, whereon shall be recorded the ayes and nays upon each vote, and whenever any in- terest or dividends shall be declared and credited in excess of the interest or profits earned, and appearing to the credit of the corporation, the trustees voting for such dividend shall be jointly and severally liable to the corporation for the amount of such excess so declared and credited. And it shall be the duty of the trustees of any such corporation, whose surplus amounts to fifteen per centum of its deposits, Surplus to ^ . T . 1 .111 ^ ' be divided, at least once m three years, to divide equitably the accumu- lation beyond such authorized surplus, as an extra dividend to depositors, in excess of the regular dividends herein- Notice of before authorized. A notice posted conspicuously in the rate°^* °^ bank of a change in the rate of interest shall be equivalent to a personal notice. § 267 was section 1, cliapter 356, Laws of 1877, amending section 33, chapter 371, Laws of 1875. Further amended by chapter 48, Laws of 1884, to read as above. 1. The provisions of said section (§ 38),declaring the trustees of savings banks who vote for the declaring and crediting of any interest or dividend in excess of the interest or profits earned, personally liable to the corporation for the amount of the excess, does not limit the interest which may lawfully be voted for, to net profits. If the trustee votes for a dividend less than the whole amount of interest or profits earned, without any deduction therefrom for expenses, although the earnings have not been actually received, he does not, in the absence of fraud or bad faith, overstep his statutory duty, and is not liable to the penalty. " He may inquire what interest has been earned, and does not incur this penalty in declaring a dividend on it as a basis, although it has not been actually received." Van Dyck, Eeceiver, v. McQuade, 86 N. Y. 54. 2. Whenever a dividend is declared and credited to a depositor, it becomes his property, to which he is entitled in preference to the creditors of the corporation. Same case, 52. 8. It seems that a trustee, in an action against him to recover the penalty, cannot avoid liability because the manner of voting, and of recording the vote prescribed by the statute was not followed ; he could waive the direction, for it was made for his safety, but he camiot take advantage of the omission. But only the trustee voting is liable, not one who is not present. Same case, 50. 4. The Y. Savings Bank, of which defendant was a trustee, in pur- suance of the requirements of its charter (§ 6, ch. 338, Laws of SAVINGS BANKS. 391 1869) at the opening of its bank, posted notices of the rate of interest to be paid by it upon deposits ; and thereafter paid interest at the rate . stated up to January, 1877. In an action brought by plaintiff, who was appointed receiver of said bank in July, 1877, to recover the interest so paid, the referee found that the interest received from investments of the funds of depositors exceeded the interest paid them, but that its expenses exceeded its earnings and income. No fraud or other mis- conduct,or want of ordinary care and skill was imputed to defendant. Held, that defendant was not liable; that the order of payment of the debts of the bank, and what portion of its profits the trustees might from time to time divide, related to its general business, which was left to the judgment of the trustees (§§ 4-7),and as long as it was exercised in good faith, and in due course of management, no common-law liability was incurred, nor was there any injury to the corporation, so that in the light of the common law there was no rule by which damages could be assessed ; that no liability was imposed under the chapter of the Re- vised Statutes in reference to moneyed corporations (7 R. S. oh. 18) to which by said charter the bank was made subject " so far as applica- ble," as the prohibition in said chapter against paying dividends to stock- holders save from "surplus profits "has no application, the interest payable to depositors of savings banks not being dividends within the meaning of the statute, and as said statute prescribes the remedy for its violation ; that if said chapter of the Revised Statutes ever had any force as applicable to savings banks, it became inoperative after the passage of the said act of 1875, also that no liability attached under the provision of the act last mentioned § 33 (367) declaring the trustees of a savings bank, who vote for a dividend in excess of the interest or profits earned, liable to the corporation for the amount of the excess, as the interest paid was not in excess of that earned. Same case. 4. For references to kindred cases, see 23 Moak's Eng. 39. 5. An opinion of the attorney-general, filed in the banking depart- ment July 3, 1878, contains his interpretation of a portion of this section : " In my opinion a savings bank can lawfully pay interest on deposits withdrawn on any of the last three days of a semi-annual interest or dividend period, for the length of time the money has actually been on deposit since the last preceding dividend. For example, if the dividend period be January first and July first, interest may be paid on deposits withdrawn on any of the three last days of June or December, if the de- posits have been held the length of time required by section 33 of the act of 1875. In case of quarterly payment of dividends by a bank, I think the same rule does not apply, and that a withdrawal of the de- posit before the end of the quarterly interest period forfeits the right to interest. Section 33, before referred to, seems to contemplate only semi- annual payments of interest, and its provisions in reference to the with- drawal of deposits on the last three days.have reference solely to such semi-annual payments. 292 BANKING LAWS. " I am also of opinion that when deposits are withdrawn before the end of a quarterly dividend period, or more than three days before the end of a semi-annual dividend period, a savings bank cannot lawfully pay interest on such deposits. I think payment of interest in such cases is plainly and clearly prohibited by the statute, and that the prohi- bition is founded upon sound principl es of banking. It is a necessary measure of protection to savings banks. They would be very much at the mercy of transient depositors, under a rule allowing interest on de- posits withdrawn at any time." 6. An opinion by the attorney-general was filed in the banking de- partment under date of June 24, 1884, in response to a request from the present superintendent of that department for an official interpretation of the above mentioned chapter 48 of the Laws of 1884. The attorney- general, in his reply, says : "My construction of chapter 48 of the Laws of 1884, concerning which you ask my opinion, is that all savings banks which allow inter- est semiannually on deposits,may pay interest for the whole 'interest period,' provided the deposit upon which the interest is allowed is made any time within ten days from the commencement, or withdrawn on either of the last three days of the ending thereof. I find nothing in the act which makes the same exception in favor of banks which pay interest quarterly. If the ten days' provision could be extended by inl- plication to banks paying interest quarterly ,it could, with equal pro- priety, be extended to banks paying interest monthly, which would, in effect, abrogate by implication the express provision of the statute which declares ' that it shall be unlawful for the trustees of any sav- ings bank to declare or allow interest on any deposit for a longer period than the same has been deposited. " Per cent of § 268. In determining the per cent of surplus held bj how de- any savings bank, its interest-paying stocks and bonds shall not be estimated above their par value or above their market value if below par ; its bonds and mortgages on which there are no arrears of interest for a longer period than six months shall be estimated at their face, and its real estate at not above cost. Concerning such stocks or bonds, or bonds and mortgages as are in arrears of interest for six months or more, and concerning all other investments not herein enu- merated, the superintendent of the banking department shall determine the valuation of the same from the best informa- tion he can obtain, and he may change the valuation thereof from time to time according as he may obtain other and further information. § 268 was section 2, chapter 256, Laws of 1877, amending section 34, chapter 371, Laws of 1875. SAVINGS BANKS. 293 § 269. It shall be lawful for trustees of such corporation, fat™'^™; acting as officers of the same, whose duties require and re- trustees. ceive their regular and faithful attendance at the institution, to receive such compensation as in the opinion of a majority of the board of trustees shall be just and reasonable; but such majority shall be exclusive of any trustee to whom such compensation shall be voted ; but it shall not be lawful to pay trustees, as such, for their attendance at meetings of the board. § 269 was section 35, chapter 371, Laws of 1875. ' ' The relation existing between tlie corporation and its trustees is mainly that of principal and agent, and the relation between the trus- tees and depositors is similar to that of trustee and cestui que trust. ' ' The trustees are bound to observe the limits placed upon their powers in the charter, and if they transcend such limits and cause dam- age they incur liability. If they act fraudulently or do a willful wrong, they may be held for all the damage they may cause the bank or its de- positors. But if they act in good faith within the limits of powers con- ferred, using proper prudence and diligence, they are not responsible . for mere mistakes or errors of judgment. * * * * » " When one deposits money in a savings bank, or takes stock in a cor- poration, thus divesting himself of the immediate control of his prop- erty, he expects, and has the right to expect, that the trustees or direct- ors, who are chosen to take his place in the management and control of his property, will exercise ordinary care and prudence in the trust com- mitted to them — the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs. When one voluntarily takes the position of trustee or director of a corporation, good faith, exact justice and public policy unite in requiring of him such degree of care and prudence, and it is a gross breach of duty, crassa negligentia, not to bestow them. (Authorities cited.) " As I understand this language, I cannot assent to it as properly defining, to any extent, the nature of a director's responsibility. Like a mandatary, to whom he has been likened, he is bound not only to exercise proper care and diligence, but ordinary skill and judgment. As he is bound to exercise ordinary skill and judgment, he cannot set up that he did not possess them. When damage is caused by his want of judgment, he cannot excuse himself by alleging his gross ignorance. One who voluntarily takes the position of director or trus- tee and invites confidence in that relation, undertakes with those whom , he represents, or for whom he acts, that he possesses at least ordinary knowledge and skill, and that he will bring them to bear in the dis- charge of his duties. Such is the rule applicable to public officers, to professional men and to mechanics ; and such is the rule which must be applicable to every person who undertakes to act for another in a 894 BAlfKHSTG LAWS. situation or employment requiring skill and knowledge, and it matters not that the service is to be rendered gratuitously. » * * " The trustees may he treated as agents of.the hank, and for any mis- feasance or nonfeasance causing damage to the hank, they were respou- sihle to it upon the same principle that any agent is for like cause re- sponsible to his principal." Earl, J., in Hun, Keceiver, v. Gary et al., 59 How. Pr. 441 (aflBrming same case, id. 436). superin-" § ^^*^- Every such corporation shall, semi-annually on or tendent. before the first day of February and August in each year, make a report in writing to the superinten,dent of the bank- ing department, and in such form as he shall prescribe, of its condition on the morning of the first days of January and July preceding. § 370 was section 3, chapter 356, Laws of 1877, amending section 36, chapter 371, Laws of 1875. of report. § ^Tl. Such report shall state the amount loaned upon bond and mortgage, together with a list of such bonds and mortgages and the location of the mortgaged premises, as have not been previously reported, and also a list of such previously reported as have since been paid wholly or in part, or have been foreclosed, and the amount of such pay- ments respectively; the cost, par value and estimated market value of all stock investments, designating each par- ticular kind of stock ; the amoimt loaned upon the pledge of securities with a statement of the securities held as collateral for such loans ; the amount invested in real estate, giving the cost of the same ; the amount of cash on hand, and on deposit in banks or trust companies, with the names of such banks or trust companies, and the amount deposited in each; and such other information as the superintendent may require. § 371 was section 37, chapter 371, Laws of 1875. Contents 8 272. Such report shall also state all the liabilities of such of report . continued, savings corporation on the morning of the said first day of January ; the amount due to depositors, which shall include any dividend to be credited to them for the six months end- ing on that day, and any other debts or claims against such SAVINGS BANKS. 295 corporation which are or may be a charge upon its assets. Such report shall also state the amount deposited during the year previous, and the amount withdrawn during the same period ; the whole amount of interest or profits received or earned and the amount of dividends credited to depositors, together with the amount of each semi-annual credit of in- terest, and the amount of interest that may have been cred- ited at other than semi-annual periods; the number of accounts opened or re-opened, the number closed during the year, and the number of open accounts at the end of the year, and such other information as may be required by the superintendent. § 273 was section 38, chapter 371, Laws of 1875. § 273. Such report shall be verified by the oath of the Report to be verl- two principal officers of the institution, and the statement fled, of assets shall be verified by the oath of a majority of the trustees who examined the same, pursuant to the require- ments of section two hundred and seventy-nine of this act ; and any willful false swearing in regard to such reports, or in regard to any reports made to the superintendent of the banking department pursuant to the provisions of this act shall be deemed perjury, and be subject to the prosecutions and punishment prescribed by law for that offense. § 373 was section 39, chapter 371, Laws of 1851, with, necessary ver- bal changes only. S 274. If any savings bank shall fail to furnish the super- Failure to /? 1 1 1 ■ 1 report. intendent of the banking department any report or state- ment required by this act, at the time so required, it shall forfeit the sum of one hundred dollars per day for every day such report or statement shall be so delayed or with- held ; and the said superintendent may maintain an action in his name of office to recover such penalty, and when col- lected, the same shall be paid into the treasury of the State, and be applied to the expenses of the banking department ; but the superintendent, may, for sufficient cause, extend the time for making such report, not exceeding thirty days. § 274 was section 40, chapter 371, Laws of 1875. 396 BANKING LAWS. re°ort Hor § ^'^^- ^^ ^^^^ Corporation shall hereafter be required to *J^jPf^'°° make any annual or other report to the legislature, nor to p?5vwed. tli6 mayor or commonalty of any city, nor to the board of supervisors of any county, nor to any other officer or author- ity, whatsoever, except as in this act provided and required, any thing in the charter of any such corporation to the con- trary notwithstanding; nor shall they be subject to the inspection or supervision of any local officer or board, nor to any interference from any such local officer or board, in any matters pertaining to the business or dealings of such corporation. § 275 was section 41, chapter 371, Laws of 1875. Superin- 8 276. It shall be the duty of the superintendent of the tendent to - ^ report to banking department, on or before the first day of March in each year, to communicate to the legislature a statement of the condition of every such corporation from which a report has been received for the preceding year ; also the name and location of savings corporations authorized by him dur- ing the previous year, with the date of their incorporation, and particularly designating those incorporated at any time which have commenced business during the previous year. § 376 was section 43, chapter 371, Laws of 1875. Each two a 277. It shall be the duty of the said superintendent years, or " u ± re'iSredto °'^°® ™ ^^'^ years, either personally or by some competent amuSd person or persons to be appointed by him, to visit and ex- amine every savings corporation in this State. The super- intendent shall have power, in like manner, to examine any such corporation, whenever, in his judgment, its condition or management is such as to render an examination of its affairs necessary or expedient. The said superintendent and every such examiner shall have power to administer an oath to any person whose tes- timony may be required on any such examination, and to compel the appearance and attendance of any such person for the purpose of such examination, by summons, subpoena or attachment, in the manner now authorized in respect to the attendance of persons as witnesses in the courts of SAVINGS BANKS. 297 record of this State ; and all books and papers -which it may ^**|°* and be deemed necessary to examine by the superintendent or ^fg^of^' the examiner or examiners so appointed shall be produced, '«'*toesseB. and their production may be compelled in like manner. ' The expense of every such special examination, if any, shall be paid by the corporation examined, in such amount as the superintendent shall certify to be just and reasonable. Whenever such special examination shall be made by the siiperintendent in person, or by one or more of the regular clerks in his department, no charge shall be made except for necessary traveling and other actual expenses. The re- Eesuit suit of any such examination shall be certified by the exam- on records •' •^ _ of bank. iners, or one of them, upon the records of the corporation examined, and the results of all the regular examination? during the previous years shall be embodied in the annual report of the superintendent required by this act to be sub- mitted to the legislature. § 277 was section 43, chapter 371, Laws of 1875. § 278. Whenever it shall appear to the superintendent, irbankun- from any examination made by him, or from the report of neglect to .. , i.j-i report, or any examination made to mm, or from the report made by t"ist •' , , -^ "' abused, any such corporation pursuant to the requirements of sec- f^PI""!" tion two hundred and seventy of this act, that any such cor- *°to°n"^ poration has committed any violation of its charter or of general, law, or is conducting its business and affairs in an unsafe or unauthorized manner, he shall, by an order under his hand and seal, direct the discontinuance of such illegal and unsafe or unauthorized practices, and strict conformity with the re- quirements of the law, and with safety and security in its transactions ; and whenever any such corporation shall re- fuse or neglect to make any such report as is hereinbefore required, or to comply with any such order as aforesaid, or whenever it shall appear to the superintendent that it is un- safe or inexpedient for any such corporation to continue to transact business, or that any trustee or officer of a savings bank has abused his trust, or been guilty of misconduct or malversation in his official position injurious to the bank, 38 298 BANKING LAWS. or to its depositors, he shall commumcate the facts to the attorney-general, who shall thereupon institute such pro^ kigs'by^" ceedings as the nature of the case may require. The pro- ge'nerair cesdings instituted by the attorney-general may be for the removal of one or more of the trustees, or for the transfer of the corporate powers to other persons, or the consolidation and merger of the corporation with any other savings corpo- ration that may be willing to accept of the trust, or for such other or further relief or correction as the particular facts communicated to him shall seem to require. And the court before which such proceedings shall be instituted shall have power to grant such orders, and in its discretion from time to time to modify or revoke the same, and to grant such relief and render such judgment as the facts, or evidence in the case, and the situation of the parties, and the interests involved shall seem to require ; and whenever in such pro- ceedings an order shall be granted, upon notice, or without notice, restraining such corporation and its officers from paying out or disposing of any moneys or property of, or held by such corporation, the superintendent may, and if directed by the court, shall, take temporary possession of ?njunotion^ all the asscts, property and rights, of, or held by such cor- tendent poration, and hold such possession until the further order porary pos" of the court. If a receiver be appointed, he shall, subject to the direction of the court, proceed vdth diligence to convert the assets of the bank into money and to make distribution thereof. And every receiver of a savings bank shall, whenever required by the court upon the application of the attorney-general, render an account of his proceed- ings, and shall render a full account of all his proceedings final distri- and make final distribution within eighteen months from bution in ° ei«iiteeii the time of his appointment, unless the court, upon appli- cation by the receiver and notice to the attorney-general, shall give additional time for that purpose. The court may make such orders for the payment of small deposits by receivers, or such other provisions in respect to such de- posits, to facilitate the distribution of the assets, as may be just. Every official report made by the superintendent to session. SAVINGS BANKS. 299 the attorney-general, and every official report duly verified of any examination made under the provisions of this act, shall be presumptive evidence in all preliminary legal pro- ceedings on motion to appoint a receiver. § 278 was section 1, chapter 432, Laws of 1879, with necessary verbal changes only. It amended chapter 372, Laws of 1878, which amended section 44, chapter 372, Laws of 1875. § 279. It shall be the duty of the trustees of every savings 7° ex^m- bank, by a committee of not less than three of such trustees, ^''^ and , ' •/ ' assets, and on or before the first day of January and July in each year, be^^grije^ to thoroughly examine the books, vouchers and assets of such savings bank and its affairs generally ; and the state- ment or schedule of assets and liabilities reported to the superintendent of the banking department for the first of January and July in each year shall be based upon such ex- amination, and shall be verified by the oath of a majority of the trustees making such examination, but nothing herein contained shall be construed as prohibiting the trustees of any savings bank from requiring such examinations at such other times as they shall prescribe. It shall be the duty of the trustees of any such corporation, as often as once in each six months during each year, to cause to be taken an accurate balance of their depositors' ledgers, and in their semi-annual "^^e Ib^"^ report to the superintendent of the banking department, ^""^^ ^""^ they shall state the fact that such balance has been taken, f^^^^^'' and shall state the discrepancies, if any, existing between the amount due depositors as shown by such balances, and the amount due to depositors as shown by the general ledger. § 279 was section 4, chapter 256, Laws of 1877, with necessary verbal changes only. It amended section 45, chapter 371, Laws of 1875. § 280. The superintendent of the banking department is Superin- hereby authorized from time to time to employ so many employ clerks and examiners as may be necessary to discharge, in a proper manner, the duties imposed upon him by the provis- ions of this act in relation to savings banks ; and the salary of the said clerks and examiners shall be paid to them monthly out of the treasury of the State upon the certificate of the superintendent and the warrant of the comptroller. 300 BANKING LAWS. and it shall be the duty of the said superintendent, in his annual report to the legislature, to state the names of the clerks and examiners so employed, and the compensation allowed to them severally. § 280 was section 46, chapter 371, Laws of 1875, with necessary verbal changes only. Expenses. § 281. For the purpose of defraying the expenses incurred in the performance by the superintendent of the general duties-, including the regular examinations, imposed upon him by the provisions of this act in relation to savings banks, each savings corporation shall pay iive dollars, and the resi- due of such expenses shall be paid by savings corporations whose deposits exceed one hundred thousand dollars, in pro- portion to the amount of assets severally held and reported by them, and the sum so contributed shall be paid into the treasury of the State. If any such savings corporation shaU after due notice refuse or neglect for thirty days to pay its allotted share of such charges, the said superintendent may maintain an action in his name of office against such corpo- ration for the recovery of such charges. § 281 was section 47, chapter 371, Laws of 1875, with necessary ver- bal changes only. Debts due § 282. All the assets of any bank or banking association banks now or hereafter organized that shall become insolvent shall from in- *-' banks * re- ^^ ^^r providing for the payment of its circulating notes, if it ferred. shall have any, be applied by the directors, assignee, pv receiver thereof, in the first place to the payment in full of any sum or sums of money deposited therewith by any sav- ings corporation, but not to an amount exceeding that authorized to be so deposited by the provisions of section two hundred and sixty-one of this act ; and the foregoing provisions of this section shall also extend and apply to trust companies receiving deposits of savings corporations as authorized by this act, subject, however, to any preference in payment declared and provided in the charters of such trust companies respectively. § 283 was section 48, chapter 871, Laws of 1875, with necessary ver- bal changes only. SAVINGS BANKS. 301 1. This section only applies to deposits made in the ordinary course of business, and subject to the draft of the depositors to an amount not exceeding that authorized by section 37 (361) of this act. Loans on time,or payable on call, are not within the meaning of this provision. Loan cannot be changed into a deposit, because loan was illegal. Eosenback v. Manufacturers and Traders' Bank, 69 N. T. 358 ; afBrm- ing, 10 Hun, 148. 3. Troy Savings Bank made an agreement with Merchants and Mechanics' Bank, to deposit with it one-quarter of all moneys received during coming three years ; other three-quarters to be deposited in three other banks named, the deposits in the four banks to be kept as nearly equal as possible. The four banks agreed to pay checks of sav- ings bank at sight, allow four per cent interest, and not pay interest on any deposits of less than $1,000, from any person or corporation, and at the end of three years they were to account and settle balance of princi- pal and interest. Held, the Savings Bank was entitled to its preference as against Receiver M. and M. Bank. That even if it was admitted that deposit was greater than statute allowed, that that was a question for the State, and though it might thereby in action by State have forfeited its charter, that the M. and M. Bank was not thereby relieved from pay- ing its debts. Matter of Patterson, Eeceiver, etc., 18 Hun, 323-334; affirmed, 78 N. T. 608. 3. This section of act applies as well to deposits made prior to, as to those made subsequent to the act. Upton v. N. Y. & B. Bank, 18 Hun, 369. § 283. It shall not be lawful for any bank, banking asso- To adver ciation or indiyidual barjker, firm, association, corporation, S^^'f^^.j^ person or persons, to advertise or put forth a sign as a sav-°^*j?J'-y^_ ings bank, or in any way to solicit or receive deposits as a ^^^'^i- savings bank ; and any bank, bankiug association or indi- vidual banker, firm, association, corporation, person or per- sons, wMch shall offend against these provisions, shall forfeit and pay for every such offense the sum of one hundred dol- lars for every day such offense shall be continued, to be sued for and recovered in the name of the people of this State, by the district attorneys of the several counties in any court having cognizance thereof, for the use of the poor, chargeable to said county in which such offense shall be committed. § 383 was section 1, chapter 373, Laws of 1881, amending section 49, chapter 371, Laws of 1875. 1. The term "individual banker " applies only to one who has availed 302 BANKING LAWS. himself of the banMng statutes of this State, and has become empow- ered to do banking thereunder. It does not apply to a private banker, who exercises in his business no more than the rights and privileges common to all. Action was for penalty. (Doty & Warner did a regular banking business, under the name of " The Farmers' Bank of Batavia," except that they issued no circulating bills. They were not organized under any law of this State. They had a sign up "L. Doty's Savings Bank. ") The term ' ' individual banker " is used throughout the statutes to distinguish one person doing business in the way those acts authorize, from an association of persons joined together therefor. People v. Doty, 80 N. Y. 330. 2. The various banking acts expressive of the legislative intent in the use of the term "individual bankers," collated. Same case. 3. The words "person or persons," in third line, have been added to section since the foregoing decision. Number of § 284. It shall be lawful for the board of trustees of any trustees ... "' may be re- savings Corporation, by a resolution to be incorporated in increased, tjjeir bj-laws, a copy of which shall also be filed with the superintendent of the banking department, to reduce the number of trustees named in the original charter of such corporation to a number not less' than the minimum named in this act, such reduction to be effected gradually by the occurrence of vacancies by death, resignation or forfeiture, until the number is reduced to thirteen, or to such greater number as shall be designated in the aforesaid resolution ; or the number of trustees may be increased to any number designated in a resolution for that purpose, where reasons therefor are shown to the satisfaction of the superintendent, and his consent in writing obtained thereto. § 384 was section 50, chapter 371, Laws of 1875. Name of § 285. Whenever a maiority of the trustees of any such bank may "^ . , „ , i . ■, ■■ , . be corporation shall, by a resolution to be entered upon their changed. , '^ ' ■'^ . , , ^, mmutes, express a desire and purpose to change the name of such corporation, the same may be effected in the manner following, namely : Notice of intention to apply to the superintendent of the banking department for leave to change the name of such corporation, specifying the name thereof, and the name to which it is proposed to change the same shall be published SAVINGS BANKS 303 as required in section two hundred and thirty-nine of this f^°°f^' act. After such publication, application may be made to pose?'"'^" the superintendent to change the name of such corporation to such name as has been agreed upon in such resolution, and published in such notice, evidence of which resolution and publication must be made satisfactory to the superin- tendent, together with such application. If it' shall appear to the superintendent that it is expedient and proper that such change of name be made, he shall, by an order under his hand and seal of office, direct and aathorize such change of corporate name to be made, and designate some day in the future, not to exceed thirty days from the date of such order, when the said change shall take effect. Such order shall be executed in triplicate ; one copy shall be transmit- ted and filed in the office of the county clerk of the county in which such corporation is located ; one copy shall be trans- mitted to the corporation affected thereby ; and one copy shall be filed in the office of the sxiperintendent of the bank- ing department. Thereupon from the date designated in such order for such change of name to take effect, such cor- poration shall be known and described by the name desig- nated in such order, and by such name shall have all the rights and powers to which it would be entitled if such change had not been made; but no such change shall in any manner lessen or impair any liability of such corporation incurred or existing at the time such change of name shall be made. § 385 was section 51, chapter 371, Laws of 1875, with necessary verbal changes only. §286. The powers, privileges, duties, and restrictions charters ot conferred and imposed upon any savings corporation, bybanks''"^^ whatever name known by its charter or act of incorporation, to'oon-*'^ are hereby abridged, enlarged or modified, as each particu- tus act. lar case may require, in such manner that each and every such charter or act of incorporation shall be made to conform to the provisions of this act in relation thereto, and to such amendments as may be made thereto ; and each and every such savings corporation shall possess the powers, rights and 304 BANKING LAWS. privileges, and be subject to the duties and restrictions and liabiKties conferred and imposed by, this act, any thing in their respective charters or acts of incorporation to the con- trary notwithstanding. But nothing in tliis act shall be of Invest- construed to affect the legality of investments heretofore fore this made, or of transactions heretofore had, pursuant to any be aflfected. provisions of law in force when such investments were made, or transactions hadj nor to require the change of investments for those named in this act, except as the same can be done gradually by the sale or redemption of the securities so invested in, in such manner as to prevent loss or embarrassment in the business of such corporation, or unnecessary loss or injury to the borrowers on such seeuri- meanor to ties. And the investment hereafter in any such securities invest con- -, . . trary to not named in this act, or the amendments that may be made this act. ' ■' thereto, shall be deemed a misdemeanor, on the part of the trustees authorizing, or officers making the same ; and such trustees or officers shall be subject to the prosecutions and punishments prescribed by law for that offense. § 286 was section 53, chapter 371, Laws of 1875, with slight verbal changes only. Bvidenoea § 287. All Certificates or other evidences of deposit, made in pursuance of the regulations and usages of any such cor- poration, shall be as binding upon such corporation as though made under its common seal. § 287 was section 53, chapter 371, Laws of 1875. Misnomer § 288. The misnomer of any such corporation in any deed, pair any grant, contract, conveyance or other instrument shall not instru- ° . . , „ , ~. . , ment. Vitiate or impair the same, if the corporation be sufficiently described therein to ascertain the intention of the parties. § 288 was section 54, chapter 871, Laws of 1875. Act; how § 289. This act, so far as it relates to savings banks, is strued. hereby declared to be a public act, and shall be construed favorably for every beneficial purpose therein contained. § 289 was section 55, chapter 871, Laws of 1875, amended so as to coniine effect of same to this chapter of the revision. SxWINGS BANKS. 305 § 290. It shall be unlawful for any savings bank, directly ^f°i^|P°^*' or indirectly, to receive from any individual a deposit or exceed*" deposits in excess of tliree thousand dollars, but this limita- *3.ooo. tion shall not apply to deposits arising from judicial sales or trust funds. § 290 was section 2, chapter 347, Laws of 1878, with necessary verbal changes only. During the month of May, 1883, the superintendent of the banking department addressed the following questions to the attorney-general : " 1. Does not the section quoted (§ 3, chap. 347, Laws of 1878) limit the aggregate amount of deposits that may be received by any savings bank, to the credit of any one depositor (except it be a deposit arising from judicial sales or trust funds), to the sum of three thousand dollars 1 "3. Can savings banks lawfully pay interest to any depositor upon a deposit exceeding in the aggregate three thousand dollars, and which deposit has beeii received in whole or in part since May 23, 1878, the date of the passage of the act above referred to ? The reply of that officer filed in said department May 13, 1883, is as follows : "Section 8 of the act referred to provides as follows, viz. : ' It shall be unlawful after passage of this act for any savings bank, di- rectly or indirectly, to receive from any individual a deposit or deposits in excess of three thousand dollars, but this limitation shall not apply to deposits arising from judicial sales or trust funds.' The language of this section is too plain to admit of a doubt as to the intention of the act. Beyond question it limits the aggregate amount of deposits that may be received by any savings bank from any one depositor, except in cases specially excepted, to the sum of three thousand dollars. It would seem plain also, that the prohibition against receiving would also com- prehend all subsequent acts, and that if the initial act be against the express provisions of the statutes, no subsequent act based thereon could, so far as the public is concerned, ever be legal. I am of opinion, therefore, that in the cases suggested, the bank could not legally pay interest on the deposits above three thousand dollars. In reference to the right of the depositor to enforce payment of the interest, in cases where a savings bank has violated the provisions of the law by receiv- ing deposits in excess of the sum allowed, I express no opinion. That is a question of private rights which does not come within my province to decide.'' § 291. No person shall be elected trustee of any savings Trustee bank who is not a resident of this State ; and removal from resident, the State by any trustee hereafter elected shall vacate his office. § 391 was section 3, chapter 347, Laws of 1878, with necessary verbal changes only. 39 306 BANKING LAWS. fo^flif*^ § 292. It shall be the duty of the receiver of any sav- u'ndl™oatti ^^S^ bank or institution to keep an account of all moneys quarterly, j-gceived by him ; and on the first day of January, April, July and October of each year to make and file a written statement in the office of the county clerk of the county in which such savings bank is located, verified by his oath of its correctness and truth, showing the amount of money received by him, his agents and attorneys ; the amount he Contents has by law a right to retain, the items for which he has of same , . . ... retained it, and the distributive share due each person ia- terested therein ; and for a failure to comply with such requirement, it shall be sufficient cause for his removal § 293 was section 3, chapter 423, Laws of 1879. ; Eeceivers shall report semi-annually. Ch. 639, Laws of 1881. See general act in relation to receivers of corporations. Ch. 378, Laws of 1881, page 96, ante. Savings ^^ § 293. Whenever the trustees of any solvent savings oi°S'^ bank shall deem it necessary or expedient to close the busi- ness of such corporation, they may, by the affirmative vote of not less than two-thirds of the whole number of trustees at a meeting to be called for that purpose, of which all the trustees shall have notice, declare by a resolution their de- termination to close such business to pay the moneys due depositors and creditors, and t6 surrender the corporate franchise. The vote upon such resolution shall be taken by ayes and noes, and the resolution and the vote thereon shall be recorded in the minutes of said board of trustees. A copy of the record of such proceedings, certified by the president and secretary of such corporation, shall be filed in the banking department. The trustees shall thereupon give notice to all the depositors arid creditors of the adop- tion of such resolution, by publication thereof in a news- paper or newspapers most likely to give the same proper publicity, and by printed or written notice, personally served upon or mailed to every depositor and creditor of such savings bank, at their last known residence, postage prepaid. § 398 was section 1, chapter 434, Laws of 1879. SAVINGS BANKS. 307 § 294. "When the trustees of any such savings bank shall ^'^^^^ ^g. have paid the sums due respectively to all the depositors and i[nd*oredi- creditors whom they can discover, and who claim their de- statement posits, or the moneys due them, it shall be the duty of such Ind^un'- "^ trustees to make a transcript or statement from the books moneys of the said savings bank of the names of all the depositors in bank* and creditors who do not claim or have not received the bal- nfent. " ances to their credit or due them, and of the sums due them respectively, and to file such transcript in the bank- ing department, and to pay over and transfer all such un- claimed and unpaid deposits, credits and moneys to the su- perintendent of the banking department. The trustees shall thereupon report their proceedings duly verified to the su- preme court, and upon such report and the petition of the trustees and upon notice to the attorney -general and the On notice superintendent of the banking department, and such other pre™e^ notice as the court may deem necessary, the court shall ad-ii'^^o'^^- judge the franchises surrendered and the existence of the corporation terminated. § 294 was section 9, chapter 434, Laws of 1873. § 295. "Whenever the receiver of any insolvent savings Heceiver bank shall have paid the full per centum of the amount due paiS'tuu to depositors and qreditors which the avails of the assets a«e of as- enable him to pay to the depositors and creditors he can statement discover, and who claim their proportion or share of such claimed ' . , moneys assets, he must, before he can be discharged from his trust, g°pgPfJil"' make a transcript or statement from the books of said bank, ts^'ient. of the names of all the depositors and creditors who have not claimed or received the balances to their credit or due them, and of the suras due them respectively, and file such transcript in the banking department, and also pay over and transfer all such unclaimed deposits and moneys to the su- perintendent of the banking department. And all receivers of savings banks who have been discharged from their trusts, and who hold any such balances, shall forthwith make and file with said superintendent such transcript or statement, and transfer and pay over to him such balances. § 395 was section 3, chapter 434, Laws of 1879. 308 BANKING LAWS. et?.?t"be § ^^^- '^^° superintendent of the banking department to'^verif^ shall require the officers and receivers who make the tran- of *tran°s- scripts or Statements herein provided for, and it shall be their cripts, etc. (juty^ to Verify the completeness and accuracy of the same tmdJit" ^^ ^ satisfactory manner. The superintendent shall receive money^ito ^^^ ^^^^ moneys, and shall give a receipt therefor, and shall forthwith deposit the money in some solvent savings bant or savings banks in this State to the credit of the superin- tendent of the banking department, in his name of office, in trust for the depositors and creditors of the closed sav- eto™to'be ^^^^ bank for which they were received. And the said su- reported. perintendent shall report to the legislature, annually, in his report relative to savings banks, the names of such closed savings banks, and the sums of unclaimed and unpaid de- posits to the credit of each of them respectively. The su- Payments. perintendent may pay over to the persons respectively entitled thereto the money so held by him, upon being fur- nished with satisfactory evidence of their right to the same ; and in case of doubt or of conflicting claimants, he may re- quire an order of the supreme court authorizing and directing Interest the payment thereof. The superintendent may apply the piled interest earned by the moneys so held by him, toward de- towardex-j. . , "^ . , . , -,-,..-, penses. iraymg the expenses mcurred m the payment and distribu- tion of such unclaimed dividends to the depositors or creditors entitled to receive the same. And the said superintendent shall include in his report on savings banks, annually trans- mitted to the legislature, a statement of the amount of in- terest earned by such unclaimed dividends. § 396 was section 2, chapter 434, Laws of 1879, now amended by chap- ter 504, Laws of 1884, to read as above. Amendments consisted of some verbal changes, and the addition of the last two sentences. CHAPTEE XI. Peohibitions against Unauthoeized Banking. Section 297. Associations for certain banking purposes prohibited. 298. Penalty. 299. Proliibition of unauthorized corporations. 300. Penalty. 301. Notes, etc., on forbidden loans void. 803. Persons unauthorized, not to engage in certain banking operations. 803. Penalty. 304. Restrictions as to foreign corporations. 805. As to banks and officers of banks of this State. 806. Bank-bills under one dollar not to be circulated. 307. Penalty, in what time "and how to be sued for. 308. Bank-bills payable otherwise than in money. 309. Penalty, in what time and how to be sued for. 810. Certain bills declared to be promissory notes. 311. Penalties, how to be sued for and applied. This is the "Eestraining Act"' generally so called in the reported . cases. S 297. ITo person unauthorized by law shall subscribe to Assooia- 1 1 J- n . . ■■ . tionsfor or become a member oi, or be in any way interested m any certain ■ banking association, institution or company formed, or to be formed p"^^.?,^?^ for the purpose of issuing notes or other evidences of debt, to be loaned or put in circulation as money ; nor shall any person unauthorized by law 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. §§ 397-808 inclusive were sections 1, 3, 3, 4, 5, 6 and 7, chapter 20, title 20, part 1, of the Revised Statutes, as modified by section 1, chapter 30, Laws of 1887, with the word "title" in section 5 changed to "chapter,'' to conform to the arrangement of this revision. 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 310 BANKING LAWS. as specified in the said law ; witliout performing these conditions, notes or obligations of any kind intended to circulate as money cannot be is- sued. Curtis V. Leavitt, 15 N. T. 70, 71. 3. A negotiable draft or bill of exchange in ordinary form issued by an association organized under the general banking law, though with- out the sanction of the superintendent, will bind the association in favor of a Tjona fide holder, even if signed by the cashier only. Otherwise, however, as between the association and one who is not a iona fide holder, if it appear that it was issued as a loan or to be put in circula- tion 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 ap- pears ; but where there is sufficient on the face of a negotiable note or bUl, 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 consid- ered a bona fide holder. SafEord v. Wyckoff, etc., 4 Hill, 443. 3. A certificate of deposit payable six months after date with inter- est, is in efEect a negotiable promissory note. Bank of Orleans v. Morell, etc., 3 Hill, 395. 4. "The policy of .this whole statute was to restrain private banking, and to give to the chartered banks, and those regulated by law.the ex- clusive privilege of circulating bank notes. Bonds not issued to loan or put in circulation as money,are not prohibited.'' 1 Sandf. Ch. 313. 5. A note given to and discounted by a corporation, which by its charter has power to receive deposits, biit not expressly to discount paper, is void, and note cannot be collected, but action may be main- tained 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. Legislature did not intend money loaned on prohibited security should be lost. Pratt et al. v. Short et al., 79 N. Y. 437. 6. 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. T. 97 ; to same efEect, Pratt et al. v. Eaton, 79 id. 449. The history of the Restraining Act is given in the above cases, with the ' authorities. The oases 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. 30 ; 3 Wend. 296 ; 4 id. 653. It has been criticised and not overruled in 35 id. 64 ; Tracy v. Tahnage, 14 N. Y. 189, and Curtis v. Leavitt, 15 id. 97 ; 1 Wend. 56* 555. 7. The People's Safe Deposit and Savings Institution discounted PEOHIBITIONS, ETC. 311 notes. The notes were held void,Tind 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 pa/rticeps ervminis, 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 pre- cedent),is overruled by cases cited below. Pratt et al. v. Eaton, 18 Hun, 394 (June, 1879). 8. A corporation whose charter allows it to receive deposits, which is a banking power, may not issue notes to circulate as money or dis- count commercial paper, and is subject to Restraining Act. The penalty, however, will not be carried beyond that given in act ; an action will lie for money had and received. Pratt et aZ. v. Short, 79 N. T. 437 ; Pratt et al. V. Eaton, id. 449, reversing 18 Hun, 394 ; 84 N. Y. 190. ' 9. The principal attributes of a bank are the rights to issue negotiable notes, discount notes, and receive deposits. New York Trust and Loan Co. was authorized by special charter to buy or receive all kinds of property, real, personal or mixed, and to advance moneys on any prop- erty, real or personal. Held, that the act of discounting commercial paper for the purpose of raising money.and placing the proceeds to the credit and subject to the check of customers, constituted the business of banking, and was illegal, and that even if the charter authorized it, such authorization is in violation of section 4, article 8 of the Constitution of this State (citing P. v. Utica Ins. Co., 15 Johns. 388-390). N. Y. T. & L. Co. V. Helmer, 13 Hun, 43. 10. This act is penal, and must be strictly construed. A. Life Ins. Co. V. Dobbin, 1 H. & D. 359. See notes to sections 39, 117 and 301. § 298. Whoever shall subscribe to or become a member in Penalty, any such company, or interested in any such bank or fund, shall forfeit one thousand dollars. See note, section 397. § 299. ]Sro incorporated company, without being author- Prohibi- ized by law, shall employ any part of its effects, or be in authorized any way interested in any fund that shall be employed for tions. the purpose of receiving deposits, making discounts or issuing notes or other evidences of debt to be loaned or put into circulation as money. See note, section 397. 1. Loans made by issuing checks to circulate as bank notes are in- valid, and notes given for such loans are void. IT. Ins. Co. v. Cadwell, etc., 3 Wend. 396. 313 BANKING LAWS. 3. A contract for tlie loan of, as well as the security taken on loan made by corporation not autliorized to make loans, is void. See note to section 301 ; 79 N. Y. 437, and 77 id. 64 ; Beacli v. Fulton Bk., 3 Wend. 583. But this section does not preclude individuals or corpora- tions otherwise authorized, from lending money on promissory notes by way of discount or otherwise. People v. Brewster, 4 Wend. 498. 3. The Restraining Acts prohibited corporations not expressly author- ized, from engaging in the business of banking. Corporations formed be- fore the passage of these acts are not prohibited thereby ,and may carry on banking business. The People v. The President, etc., 9 Wend. 351. 4. It seems that a company has a, right to take interest in advance upon a note given for a lawful debt. This cannot properly be called the business of " discounting," which it seems was alone intended by the words ' ' making discounts " in the Restraining Act. N. T. F. Ins. Co. V. Sturges, 2 Cow. 664. 5. Taking interest on negotiable paper by a corporation without bank- ing powers, or by an individual, is not usurious. All have a general right to discount in the ordinary course of business. N. T. F. Ins. Co. V. Ely, 2 Cow. 678. 6. A foreign corporation conducting an illegal banking business in this State, made a, lawful loan on bond and mortgage. Held, that the only penalty incurred was that given by statute,and that so much of its business as was not in contravention of statute (including said loan), was valid. Bard v. Poole, 13 N. Y. 505. 7. See note 8 to section 302 ; 6 Hun, 78, post. It would seem from this case that ' ' authorized by law," means New York State law. 8. Negotiable security of an association, which upon its face appears to be duly issued, is valid in the hands of a iona fide holder without notice, although issued in fact without authority and in violation of law, A contract made in this State by a foreign corporation, is valid unless prohibited by law. Strong v. Am. Life Ins. Co., 11 Paige, 635. 9. Non-negotiable notes and drafts, which cannot be used and cir- culated as money, are not prohibited by statute, and may be issued by banks and banking associations, either as evidences of indebtedness to particular individuals.or for other legitimate purposes. Ontario Bk. v. Schermerhorn, 10 Paige, 110. 10. At common law any individual may issue notes, receive deposits and make discounts. Bristol v. Barker, Anthon's Nisi Prius, 335. Penalty. § 300. Anj director, or other agent or officer, of any in- corporated company, who shall violate any provision of the last section, shall forfeit one thousand dollars. See note, section 297. Notes, etc., 8 301. All notes and other securities for the payment of on forbid- "^ i n t j , . den loans, any money or the delivery of any property, made or given PROHIBITIONS, ETC. 313 to any such association, institution or company, that shall be formed for the purpose expressed in the first section of this chapter, or made or given to secure the payment of any money loaned or discounted by any incorporated company or its officers, contrary to the provisions of the third section of this chapter, shall be void. See notes to section 297. § 802. E^o person, association of persons, or body co^'po- u^^^ufoj.. rate, except such bodies corporate as are expressly authorized Jzed not to ' r r r J ^ ^ engage in by law, shall keep any office for the purpose of issuing any g^^i^ 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 pur- pose of loaning them or putting them in circulation as money, unless thereto specially authorized by law. See note, section 297. 1. The legislature intended to prohibit the issuing of any bills or promissory notes by any individual or corporations as private bankers, and the prohibition becomes absolute and unqualified. People v. Brewster, 4 Wend. 500 ; see notes to section 299. 2. A foreign banl<: may keep an office within the State to redeem its notes or bills brought into the State in the ordinary course of business. DeGroot v. Van Duzer, 17 Wend. 170. 3. A foreign corporation, keeping an office in this State for receiving deposits and discounting notes, cannot recover on note or other security, or in action for money loaned. Bridge Co. v. Silk Co., 25 Wend. 648. 4. A Canada bank furnished parties in Buffalo their bills for doing a discount and exchange business, taking a valid mortgage from the mort- gagor as security. Held a violation of this statute, and that bank could not recover on the mortgage, since the violation of this statute was a defense to mortgagor. DeWitt v. Brisbane, 16 N. T. 508. 5. To keep an office of deposit for the purpose of discounting notes is a specific violation of the statute. People v. Barton, 6 Cow. 290. 6. It is not necessary that they should have been capable of circu- lating as money ; it is enough to constitute an offense against the stat- ute that they should be issued to be loaned (p. 140). The issuing of ne- gotiable certificates of deposit for £1,000 each, payable at a distant day, in England, is not a violation of statute forbidding issue of certificates to circulate as money. But where such certificates are proved to have been issued to be loaned as money, it is a violation of the statute. Schermerhorn v. Tolman, 14 N. T. 93. 7. It seems that a single act does not constitute a violation of thestat- 40 314 BANKING LAWS. ute, unless it appears that it was iatended to evade the prohibition. Potter V. Bank, 5 Hill, 491. There are several cases to the same effect. 8. A National bank, located in Massachusetts, and having a New York office, cannot recover on a promissory note discounted at New York office, unless it can show that it is authorized to discount by New York law. National Bk. v. Phcenix Warehousing Co., 6 Hun, 73. 9. A note discounted by a foreign bank at its place of business, given by a resident of this State, is valid, as is also a mortgage taken to secure the same. Although the note is discounted at a higher rate than al- lowed by the law of the State where bank is situated, if it does not ex- ceed our rate it does not constitute usury. Hackettstown Nat. Bk. v. Eea, 64 Barb. 175. 10. The right of banking was formerly a common-law right to be ex- ercised by any one at pleasure. But the legislature thought proper by the Restraining Act of 1804, and which has since been re-enacted (1813, ch. 71), to take that right away from all persons not specially author- ized by law. But the remedy against those violating statute is in court of law, for the statutory penally, not in court of equity, and injunction will not lie. Attorney-General v. TJtica Ins. Co. , 2 Johns. Ch. 375. 11. If an incorporated bank of another State lends money on mort- gage in this State, it is not a violation of the statute. It only applies to operations done in State. 4 Johns. Ch. 373. 13. Section 6 (302) applies to foreign corporations as well as those or- ganized in this State, and foreign corporations are still prohibited (1847) from keeping any office in this State for the purpose of receiving depos- its, or for discounting notes or bills, and where such a corporation authorizes one of its officers to attend in this State from time to time at a fixed place for that purpose, such officer offends against this statute, and is personally liable to its penalties. Taylor v. Bruen, 2 Barb. Ch. 303. 13. A foreign moneyed corporation came by its officers within this State and purchased a mortgage, giving a draft on New York in pay- ment. Keeping an office within this State is necessary to a viola- tion of the law, and a single transaction is not such a keeping. Held, that statute was not violated thereby. West. Reserve Bk. v. Potter, Clarke's Ch. 452. 14. This act " incorporated into the revision of 1830 (1 R. S. 712) is still in force, and for aught I see, is applicable to all banking associa- tions and individual banlcers, except so far as it is modified by the pro- visions of the general banking law, allowing the issue of bills for circulation as money countersigned by the comptroller." McCoun, J. It is not the mere issue of notes, therefore, that is prohibited, for individuals and corporations may issue aiiy number that their convenience or lawful business may require, but it is the issue to be loaned out as money, or to be put in circulation as such so as to form part of the circulating me- dium, like bank notes, that the statute has prohibited as mischievous. Leavitt v. Yates, 4 Ed. Ch. 170 (1843). PROHIBITIONS, ETC. 315 15. De Groot v. Van Dazer, 17 Wend. 173, holds this act prohibits two things : one keeping an office for a particular purpose ; the other, doing a particular act, whether an office is kept or not. An agreement to redeem the bills of a, foreign bank at an office in this State would not be either against the spirit or letter of the act, though it might tend to give them a wider circulation and better credit. It is not unlawful to circulate foreign bank bills unless under five dollars. 16. N. H. and Delaware Bridge Co. v. Poughkeepsie Silk Co., 25 Wend. 648, held, that a foreign corporation having an office in this State for receiving deposits and discounting notes, could not maintain an action here, neither for money lent,nor on the notes so taken. § 303. Every person and every corporation, and every Penalty. member of a corporation, who shall contravene either of the provisions in the last section, or, directly or indirectly, assent to such violation, shall forfeit one thousand dollars. See note, section 297. Action must be brought for penalty. Equitable proceedings will not lie. Attorney-General v. Utica Ins. Co., 3 Johns. Ch. 375. § 304:. This chapter shall not be so construed as to au- Eeetrfc- thorize or permit any corporation created by the laws of any foreign other State or country, to keep any office for the purpose of tions. receiving deposits or discounting notes or bills, or issuing any evidence of debt to be loaned or put in circulation as money, within this State. § 304 was section 3, chapter 30, Laws of 1837. In first line word " chapter" substituted for "act." § 805. No incorporated bank in this State, nor any officer As to or director thereof, shall open or keep an office of deposit officers of '* ^ ^ '■ banks in or discount under this chapter, or be interested or concerned, t^s state, directly or indirectly, in any such association; the bank officer or director shall forfeit the sum of one thousand dollars for each violation of any of the provisions of this section. § 305 was section 3, chapter 30, Laws of 1837. In third line word "chapter" substituted for "act." § 306. No person shall pay, give or receive in payment, Bank biiis or in any way circulate, or attempt to circulate, any bank aouamot biU, or promissory notei, check, draft, or other evidence of i^ted. 316 BANKING LAWS. debt, issued by aay banking company within this State, or elsewhere, which shall purport to be for the payment of a less sum of money than one dollar. §§ 806 to 311, inclusive, were sections 8 to 13, inclusive^of chapter 20, title 30, part 1, Revised Statutes, witli one necessary verbal change only. ■^h'f'tim'^ § 307. Whoever shall ofEend against any provision of the to be'sued ^^^ section shall forfeit the nominal amount of the bill, *°''- promissory note, check, draft, or other evidence of debt so given, paid, received, circulated, or attempted to be circu- lated, to any person who will sue for the same, in the name of the overseers of the poor of the town where the offense is committed, with their consent, and under their direction, in an action to be commenced within thirty days after the commission of the offense. See note, section 306. Bank bills § 308. No person shall give, pay, or receive in payment, otherwise or in any way circulate, or attempt to circulate, any bank money. \)[\[^ or any promissory note, bill, check, draft, or other evi- dence of debt, issued by any banking company whatever, which shall be made payable otherwise than in lawful money of the United States. See note, section 806. Penalty, In § 309. Every person offending against any provision of and how the last Section shall forfeit the nominal amount or value of to be sued , , .in i for. such bill, note or other evidence of debt so given, paid, received, circulated or offered, to any person who will sue for the same in the name of the overseers of the poor of the town where the offense shall be committed, with their consent and under their direction, in an action to be com- menced within sixty days after the commission of the offense. See note, section 306. cert^n 8 310. All bills, notes or other instruments which shall be bills de- ° ' be'pronSs- i^^ucd by any banking company, purporting to be receivable sory notes, j^ payment of debts due to such company, shall be deemed PKOHIBITIONS, ETC. 317 and taken to be promissory notes for the payment on demand of the sum or value expressed in such instrument ; and such sum shall be recoverable by the holder or bearer of such instrument, in like manner as if the same were a promissory note. See note, section 306. § 311. The penalties prescribed in this chapter, where no Penalties, other provision is made, shall be recovered by suits in the sued for name of the people of this State, to be prosecuted by thep^ed. district attorney of the counties respectively where the offenses may be committed. All penalties herein prescribed, when collected, shall be paid to the county treasurer of the county for the use of the poor thereof. See note, section 306. CHAPTER XII. Taxation. Section 313. Stockholders taxable on shares. Deductions. 313. List of stockholders ; inspection thereof by assessors. 814. Tax collectible where bank situated. 815. Dividends may be retained to pay tax. 316. Saving clause as to taxes under law of one thousand eight hundred and eighty. 817. Assessments of year one thousand eight hundred and eighty confirmed. 818. Shares in State banks taxable only at same rate as shares in national banks. Oath on application for deduction. 819. Intent of preceding section. 820. Tax on individual bankers. 831; Tax on certain corporations of other States and countries. 333. To make annual return to comptroller. Penalty. 338. Accounts subject to inspection of comptroller. 824. Trust companies, how taxable. 835. Dividend, how made on exempt stock. 336. Exemption from taxation, for whose benefit. 337. Taxes to be paid into treasury for general fund. In this connection, see historical sketch, ante. ■ holders of § ^1^. The Stockholders in every bank or banking asso- banks, etc., giatjon organized under the authority of this State, or of the the value United States, shall be assessed and taxed on the value of shareT their shares of stock herein ; said shares shall be included ban ™is * in the valuation of the personal property of such stock- holders in the assessment of taxes at the place, city, town or ward where such bank or banking association is located, and not elsewhere, whether the said stockholders reside in eaid place, city, town or ward or not ; but, in the assessment of said shares, each stockholder shall be allowed all the deductions and exceptions allowed by law in assessing the value of other taxable personal property owned by indi- TAXATION. 319 vidnal citizens of this State, and tlie assessment and taxation shall not be at a greater rate than is made or assessed npon other moneyed capital in the hands of individual citizens of this State. In making such assessment there shall also be deducted from the value of such shares such sum as is in the tions to be same proportion to such value as is the assessed value of the real estate of the bank or banking association, and in which any portion of their capital is invested, in which said shares are held, to the whole amount of the capital stock of said bank or banking association. Nothing herein ofb^nfe**® contained shall be held or construed to exempt the real "mpted estate of banks or banking associations from either State, ^^''^''J- county or municipal taxes, but the same shall be subject to State, county, municipal and other taxation to the same extent and rate, and in the same manner according to its value, as other real estate is taxed. The local authorities Notice of charged by law with the assessment of the said shares shall, meuttobe given within ten days after they have completed such assessment, bank, but • 1 1 T , 1 • ■ • 1^^°^ stook- give written notice to each bank or banking association of bolder, such assessment of the shares of its respective shareholders, and no personal or other notice to such shareholders of such assessment shall be necessary for the purpose of this act. § 312 was Laws of 1880, chapter 596, as amended by section 4, chapter 477, Laws of 1881. The amendment consisted in omitting " Trust Com- panies " and insertion of word " municipal " before "taxes " in eleventh line from end, re-enacting with alterations and additions. Laws of 1866, chapter 761, section 1. 1. The words "whole amount of the capital stock" in the above section, and in this act, have reference to its value, not to the nominal amount of its capital. " Not at a greater rate," mean that they be equally assessed — neither more nor less. Market value — what shares would bring, is basis of assessment. Assessors are to consider every part of assets from which an income is derived. Surplus as well as every other investment — every thing which gives value to the shares (cites 67 N. Y. 516). Then assessed value of real estate is to be pro- portionately deducted. People, ex rel. v. Commissioners of Taxes, 69 N. T. 91. To same effect People ex rel. v. Commissioners of Taxes, 67 id. 516. 2. Taxation of stock of national banks is subject to United States Eevised Statutes, § 5219. Taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual 320 BANKING LAWS. citizens. 4 Wall. 24Mr-256. This species of property may be separated from tlie person of the owner, and a place given it for the purpose of taxation (citing 19 Wall. 490). That States under the banking act of the United States may tax bank shares, irrespective of fact that capital is invested in United States securities, exempt from taxation, is also estab- lished by law (citing 3 Wall. 573, and 9 id.). Assessment of this class of property, not subject to deduction or debts of individual (citing 36 N. T. 59). All United States law purposed, was to protect shares of national banks from unfavorable discrimination in taxation by State authorities (citing 95 D. S. 19). Williams v. Weaver ei a?., 75 N. Y. 30. 3. Power of assessors to act is derived from statute, and if they act outside same,their action is void. They have no power to determine what property is taxable. This is the province of the legislature, and they are liable to action for error in this. Their decision may be at- tacked collaterally. Action will lie to recover amount collected as tax on capital stock of bank, contrary to provisions of Laws of 1866, chapter 761. National Bank Chemung v. City of Elmira, 53 N. T. 49. 4. Having jurisdiction of subject-matter and person, their act is then judicial and they are protected, but if they lack jurisdiction they are liable. Ibid. (Cites 15 N. Y. 316.) 5. " The general principle is that the proceedings of magistrates and oflB.cers having special and limited jurisdiction, must bear on their face the evidence of their jurisdiction, or they will be adjudged invalid; and that in collateral proceedings their judgment may be questioned and disregarded, if it appears they had no authority to act in a given case.'' (Quoting from Savacool v. Boughton, 5 Wend. 170.) Ibid. 6. It was held in People v. Dolan, 36 N. Y. 59, that a shareholder who had been assessed upon the value of his shares in a bank pursuant to this act, was not entitled to a reduction by the assessor of the valua- tion on account of his debts, and that the legislature did not intend to change the policy before pursued by the State in taxing bank capital, but section 318, ch. 140, Laws of 1880 of revision alters this. He may now offset debts. 7. The stockholders of a national or State bank, where its capital is invested in the securities of the United States, may be assessed and taxed under State law for the value of their respective shares of the capital of said banlc. But the bonds and securities of the United States, whether owned by individuals or corporations, are not liable to be thus assessed or taxed. People v. Commissioners of Taxes, 35 N. Y. 433. (Citing United States Supreme Court authorities for this position, see pages 435-437.) List of § 313. There shall be kept at all times in the office where holders to the business of each bank or banking association organized subject to under the authority of this State, or of the United States, inspection , ,- , i j- n i i. i of aaaess- shall be transacted, a full and correct list of the names and era. TAXATION. 321 residences of all the stockholders therein and of the number of shares held by each ; and such list shall be subject to the inspection of the officers authorised to assess taxes during the business hours of each day in which business may be legally transacted. § 313 reads as section 3, chapter 761, Laws of 1866. It was amended by section 4, chapter 596, Laws of 1880 ; and again amended, restoring its original form by section 5, chapter 477, Laws of 1881. This is in substance, and with some omissions, a copy of section 40, act of con- gress, June 8, 1864. 1. Chapter 761, Laws of 1866, was in October Term, 1879, United States supreme court, in P. of State of New Tork, ex rel. Williams, v. Board of Assessors, City of A., declared invalid as to shares of national banks (and is consequently void under chapter 140, Laws of 1880, as to shares of State banks), because, while a debtor may deduct his debts from assessment of his moneyed capital, other than bank shares, he is not permitted %o do so as to assessment of his bank shares, thus taxing those shares at a greater rate than other moneyed capital. The Laws of 1880, chapters 140 and 596, were passed in consequence. Chap- ter 140, Laws of 1880, alters this (sec. 318 of revision). He may now offset debts. 3. When by a State statute the citizen may have the amount of his indebtedness deducted from the total value of his personal property, thus ascertaining the amount of his personal estate subject to taxation, and a subsequent statute relating to taxation of bank shares makes no provision for such deduction, the latter statute is nevertheless the valid rule for assessing such shares in all instances where there are no debts to be deducted. That the latter statute does not authorize a deduction for debts does not invalidate it, except as to that distinct and separable principle. Under such statutes assessments of bank shares where there are no debts to deduct, are valid. Even in cases of assessments where debts exist, which should be deducted, but are not, the assess- ments are voidable only, not void. Supervisors of Albany v. Stanley 1883 ; Fed. Reporter, XII, 83. § 314. "When the owner of stock in any bank or banking Tax to be association organized under the laws of this State, or of the where * United States, shall not reside at the same place where the situated, bank or banking association is located, the collector and county treasurer shall, respectively, have the same powers as to collecting the tax to be assessed by this act as they have by law when the person assessed has removed from the town, ward or county in which the assessment was made, and the county treasurer, receiver of taxes or other officer 41 323 BANKING LAWS. authorized to receive such tax from the collector may,- all or m°ay°be either of them, have an action to collect the tax from the co?ieot'* '° avails of the sale of his, her or their shares of stock, and the ^^""^ tax on the share or shares of said stock shall be and remain a lien thereon from the day when the property is by law Tax alien assesscd, till the payment of said tax, and if transfei-red after such day, the transfer shall be subject to such lien. § 314 was section 5, chapter 596, Laws of 1880, as amended by sec- tion 6, chapter 477, Laws of 1881, wliicli omits "trust companies," and adds words " her or their" in sixth line from end. So much § 315. For the purpose of collecting the taxes to be as- ^en^d^to be sessed uudcr the last three preceding sections of this act, by bank as and in addition to any other law of this State, not in con- may be re- ^ ' pay™uoh ^^''* '^^ *^® Constitution of the United States relative to **^- the imposition of assessment and collection of taxes, it shall be the duty of every such bank or banking association and the managing officer or officers thereof to retain so much of any dividend or dividends belonging to such stockholder as shall be necessary to pay any taxes assessed in pursuance of the last three preceding sections of this act, untU it shall be made to appear to such officer or officers that such taxes have been paid. § 315 was section 6, chapter 596, Laws of 1880, as amended by section 7, chapter 477, Laws of 1881, with necessary verbal changes only. This was substantially section 6, chapter 761, Laws of 1866. Taxes § 316. All obligations, liabilities and taxes heretofore ia- fore ira- curred or imposed under chapter five hundred and ninety- der chap- six of the laws of eighteen hundred and eighty are saved Laws ibao, and shall be enforced as if this act had not been enacted. saved. § 316 was section 8, chapter 477, Laws of 1881. AU taxes 8 31Y. All assessments for taxes levied and imposed upon on share- iitt.o .i i holder im- the shareholders m State or national banks during the posed dur- ^ ^mlT' y^^^ eighteen hundred and eighty, as the same appear on the assessment-rolls of the several cities, towns, wards or villages in this State, or upon the other books and records thereof, so far as such assessments are not in conflict with the constitution of the United States, are hereby confirmed, TAXATION. 323 assessed and levied upon such shareholders, whose names now appear on such assessment-rolls or other books and records thereof as assessed upon their bank shares, and may be collected from the shareholders of said banks in the manner authorized by law for the collection of other personal taxes in addition to all the remedies by law pre- scribed for the collection of taxes assessed against share- holders in such bank. § 317 was section 10, chapter 477, Laws of 1881. § 318. The shareholders of any bank, banking association share- .,. ,1.1. 11 holders of or corporation doing a banking business under the general state banking law or a special charter of this State, shall be "e taxed, assessed and taxed with respect to their shares of stock, ||2t''as^" only at the same rate and place, to the same extent, andnMionsa in the same manner, as shareholders of national banks may be liable at the same time to be assessed and taxed by au- thority of the State of New York ; provided, however, that No debt to no debts shaU be deducted f r.om any such assessment of any deducted, person applying for the benefit of this act, which have been deducted from the assessment of other personal property of such person ; and in making application for such deduction, every person making the application shall make oath that ^ppng^nt he has not applied to have such debts deducted from any ffou^fo "°~ other assessment against him, and that no such deduction ™^^® has been made. § 318 was section 1, oliapter 140, Laws of 1880. "The provision of the act of congress exempting United States bonds from taxation under State authority, is complied with by ex- empting the bonds as issued, and a deduction of their par value instead of their market value from the personal estate is proper." The right of exemption is limited by the principle, that State legislation which does not impair the usefulness or capability of such instruments to serve the government, is not within the rule of prohibition. (Cites from NatT Bank v. Commonwealth, 9 Wall. 853.) If the construction is doubtful, the decision should be against the exemption. People ex rel. M. F. Ins, Co., 76 N. Y. 65. § 319. It is hereby declared that the true intent and mean- intent of foregoing ing of the last preceding section of this act is to place and section to maintain shareholders of banks, associations and corporations a"'shed. part of the funds of such association, or assign, transfer, cancel, deliver up or acknowledge satisfaction of any bond, mortgage or other writtten instrument belonging to such association, unless duly axithorized, or be guilty of any fraud in the performance of his duties ; and every person guilty of a violation of this section shall be liable civilly to the party inj ured, to the extent of the damage thereby incurred, and shall also be liable to an indictment for a misdemeanor, punishable by a fine or imprisonment, or both, in the dis cretion of the court by v^hich he shall be tried. § 10. Each association formed under the provisions of ■*-°^'J^i re- this act shall, at the close of its first year's operations, and published, annnally at the same period in each year thereafter, publish in at least two newspapers published in the place where their business may be located, or if no newspaper shall be published in such place, then in any two newspapers pub- lished nearest such place, a concise statement verified on the oaths of its president and secretary, showing the actual financial condition of the association, and the amount of its property and liabilities, specifying the same particularly. § 11. All the shareholders of any association formed under Liability this act shall be individually liable to the creditors of said Sofders " association to an amount equal to the amount of stock held tors, by them respectively, for all debts contracted by such asso- ciation. The directors or other officers of every association formed under this act shall be personally liable for any fraudulent use, disposition or investment of any moneys oi property belonging to such association, or for any loss which shall be incurred by any investment made by such directors or other officers, other than such as are mentioned, in and authorized by this act, but no director or other officer of any such association shall be liable as aforesaid, except he au- thorized, sanctioned, approved or made such fraudulent use, disposition or investment as aforesaid. 346 BANKING LAWS. teustees °^ § 12. No persoa holding stock in any such company, or executor, administrator, guardian or trustee, and no person holding such stock as collateral security, shall be personally euhjeet to any liability as stockholder of such company, but the person pledging such stock shall be considered as hold- ing the same, and shall be liable as a stockholder accordingly ; and the estate and funds in the hands of such executor, administrator, guardian or trustee shall be liable in like manner and to the same extent as the testator or intestate, or the ward or person interested in such trust fund would have been if he had been living and competent to act, and hold the same stock in his own name. Eight of § 13. Every such execiitor, administrator, guardian or trustee shall represent the share of stock in his hands at all meetings of the company, and may vote accordingly as a stockholder ; and every person who shall pledge his stock as aforesaid may, nevertheless, represent the same at all such meetings, and may vote acccordingly as a stockholder. Election of 8 14. In case it shall happen at any time that an election officers. rr J of officers shall not be made on the day designated by the by-laws of said company, when it ought to have been made, the company for that reason shall not be dissolved ; but it shall be lawful on any other day to hold an election for trustees, in such manner as shall be provided for by the said by-laws ; and all acts of trustees shall be valid and binding as against such company, until their successors shall be elected. re°peaior § ^^' '^^^ legislature may at any time alter, amend or alter. repeal this act, or may annul or repeal any incorporation formed or created under this act ; but such amendment or repeal shall not, jior shall the dissolution of any such company take away or impair any remedy given against any such corporation, its stockholders or officers, for any liability which shall have been previously incurred. BUILDING, ETC., ASSOCIATIONS. 347 § 16. Any company wliicli may be formed under this act ft^Pkfhow may increase or diminish its capital stock, by complying or^fmin- with the provisions of this act, to any amount which may ^^^^^' be deemed sufficient and proper for the purposes of the corporation, but before any corporation shall be entitled to diminish the amount of its capital stock, if the amount of its debts and liabilities shall exceed the amount of capital to which it is proposed to be reduced, such amount of debts and liabilities shall be satisfied and reduced so as not to ex- ceed such diminished amount of capital. § 17. "Whenever any company shall desire to call a meet- ^°*\°ng* ing of the stockholders for the purpose of increasing or diminishing the amount of its capital stock, it shall be the duty of the trustees to publish a notice signed by at least a majority of them, in a newspaper in the county, if any shall be published therein, at least three successive weeks, and to deposit a written or printed copy thereof in the post- office, addressed to each stockholder at his usual place of residence, at least three weeks previous to the day fixed upon for holding such meeting, specifying the object of the meet- ing, the time and place when and where such meeting shall be held, and the amount to which it shall be proposed to increase or diminish the capital, and a vote of at least two-thirds of all the shares of stock shaU be necessary to an increase or diminution of the amount of its capital stock. 8 18. If at anytime and place specified in the notice Jieeting, ° •' r r how organ- provided for in the preceding section of this act, stock- '''®'*/°fed holders shall appear in person or by proxy, in numbers representing not less than two-thirds of all the shares of stock of the corporation, they shall organize by choos- ing one of the trustees chairman of the meeting, and also a suitable person for secretary, and proceed to a vote of those present, in person or by proxy ; and if, on canvassing the votes, it shall appear that a sufficient number of votes has been given in favor of increasing or diminishing the 348 BANKING LAWS. amount of capital, a certificate of the proceeding, showing a compliance with the provisions of this act, the amount of capital actually paid in, the whole amount of debts and lia- bilities of the company, and the amount to which the cap- ital stock shall be increased or diminished, shall be made out, signed and verified by the affidavit of the chairman, and be countersigned by the secretary, and such certificate shall be acknowledged by the chairman and filed as required by the first section of this act ; and when so filed, the capital stock of such corporation shall be increased or diminished to the amount specified in such certificate. Exemp- § 19. The shares held by the members of all associations in- corporated under the provisions of this act shall be exempt . from sale on execution for debt, to an extent not exceeding six hundred dollars in such shares at their par value. what *° § ^*^- ^^ ^^^^ made by any such association to any of its members may exceed in amount the par value of the capital stock for which such member may have subscribed. what amount. certiBcate, § 21. The copy of any certificate of incorporation, filed in evidence, pursuance of this act, certified by the county clerk or his deputy to be a true copy, and of the whole of such certifi- cate, shall be received in all courts and places as presump- tive legal evidence of the facts therein stated. § 22. This act shall take effect immediately. LAWS EELATING TO SAVINGS AND BUILDING FUND "associations. Pection 1. Dividends, liability of trustee, usury. 3. Annual reports to superintendent. 3. Examinations, expense of. 4. Inquiries to be made on examination. 5. Action of superintendent in case of violation of charter. 6. Penalty for failure to report. Chapter 564 of the Laws of 1875, as amended by chapter 96 of the Laws of 1878. An act to amend chapter one hundred and twenty-two of the laws of eighteen hundred and fifty-one, entitled "An act for the incorporation of building, mutual, loan and accumulating fund associations." Passed June 9, 1875. The People of the State of New YorTc, represented in Senate and Assembly, do enact as follows ; Section 1. The seventh section of chapter one hundred and twenty-two of the laws of eighteen hundred and fifty- one, entitled " An act for the incorporation of building, mutual, loan and accumulating fund associations," is hereby amended so as 'to read as follows : § 7. The trustees of any association formed under the Dividends, provisions of this act may, from time to time, declare divi- dends from the earnings of the association, payable in such manner as may be provided in the articles of association ; but no dividend shall be declared except from the earnings of the association, and if the trustees of any such associa- tion shall declare and pay any dividend when the company 350 BANKING LAWS. is insolvent, or any dividend the payment of which would nabiHty of ^6'^'i^'" i* insolvent, they shall be jointly and severally trusteas. jjable to the extent of the dividend so declared and paid, for all the debts of the association then existing or that shall be thei-eaf ter contracted while they shall respectively continue in office ; provided, that if any of the trustees shall object to the declaring of such dividend or to the pay- ment of the same, and shall, at any time before the time fixed for the payment thereol, file a certificate of his ob- jection in writing with the clerk of the company and with the clerk of the county, he shall be exempt from the said liability. But no trustee, who shall be present at any meeting when such dividend is declared, shall be exempt from such liability unless he shall then and there object to the declai'ation or payment of such dividend, and shall also procure his objection to be noted in the book of minutes of redeemed ®^^^ association. 'Eo holder of redeemed shares shall claim buttyfo"^ to be exempt from making the monthly or other stated pay- mento.^*^' nients provided in the articles of association upon the ground that, by reason of losses or otherwise, the association has con- tinued longer than was originally anticipated, whereby the payments made on such shares may amount to more than the amount originally advanced, with legal interest thereon ; nor shall the imposition of fines for the non-payment of dues Usury. Qj. £ggg^ Qj. Q^i^Qy. violation of the articles of association, nor shall the making of any monthly payment required by the articles of association, or of any premium for loans made to members, be deemed a violation of the provisions of any statute against usury. § 1 is section 1 of chapter 564, Laws of 1875. ■*^°°rt t § ^" -^^^^y corporation organized under the provisions of tenlelrtcf ^^^^ act, and every corporation heretofore organized under depS-* the laws of this State for purposes similar to those provided ment. £^^ ^^ g^j^j ^^^^ gj^g^jj annually make a full report in writing of the affairs and condition of such corporation, on the first day of January in each year, to the superintendent of the bank- ing department, in such form and by such officers of the said corporation as the said superintendent may designate, which BUILDING, ETC., ASSOCIATIONS. 351 report shall be in place of any report which any such cor- poration may now be required to make to the supreme court, the comptroller or otherwise. Such report shall be verified by the oath or affirmation of the officers making such re- port ; and any willful false swearing in regard to such re- port shall be deemed perjury and be subject to the prosecu- tions and punishments prescribed by law for that offense. Every such report shall be made within twenty days after the day to which it relates and shall be in such form and contain such statements, returns and information as to the affairs, business, condition, obligations and resources of such corporation, as the said superintendent may, from time to time, prescribe and require, and the said superintendent may, if he be of opinion that it is desirable, require that a like report, either wholly or in part as to the particulars afore- said, be made to him at any time, by any such corporation aforesaid within such period as he may designate. § 2 is sectiori 2 of chapter 564, Laws of 1875. § 3. Whenever the stockholders of any corporation or- Examina- ganized under the provisions of this act shall deem that a affairs of personal examination by said superintendent of the affairs tions. of said corporation is desirable or necessary, it shall be the duty of said superintendent, on the request in writing, signed by not less than five of the stockholders of said cor- poration, that such examination be made, either by himself or by some person duly appointed by him for that purpose, make a full and careful examination of the affairs of said corporation and make his report thereon as herein provided. The person making such examination shall have power to administer oaths and take aU testimony by him deemed nec- essary and proper, and to compel the attendance of wit- nesses and the production of books and papers by like process and in the same manner as now provided by law to procure the attendance of witnesses and the production of books and papers in the courts of record in this State. The expense of such examination shall be borne by said corpora^ Expense tion, but no charge shall be made therefor when the exam- atioa?™'° ination is made by said superintendent personally or by one 352 BANKING LAWS, of the salaried employees of his department, except for nec- essary traveling and other expenses. "Whenever said super- intendent shall appoint any person other than a salaried offi- cer in his department to make such examination, the amount charged therefor shall not exceed the sum of ten dollars per day for the time actually expended in making the same and the actual and necessary expenses as hereinbefore pro- vided. § 3 is chapter 96, Laws of 1878. Examina- g 4_ Qu every such examination inquiry shall be made as §emade° *^ *^® Condition and resources of the corporation generally, °°- the mode of conducting and managing its affairs, the action of its directors or trustees, the investment of its funds, the safety and prudence of its management, the security afforded to those by whom its engagements arte held, and whether the requirements of its charter and of law have been com- plied with in the administration of its affairs. § 4 is section 4 of chapter 564, Laws of 1875. Superin- § 5. If it shall appear to the said superintendent from the order by, report of any such corporation, or from any examination poration made bv him, or from the report of any examination made has vio- » ' t- .-.,.„ lated char- to him, that any corporation has committed a violation ot its charter or of law, or is conducting business in an unsafe or unauthorized manner, he shall, by an order under his hand and seal of office addressed to such corporation, direct the discontinuance of such illegal or unsafe practices and conformity with the requirements of its charter and of law, and with safety and security in its transactions ; and when- ever any corporation shall refuse or neglect to make such report as is hereinbefore required, or to comply with any such order as aforesaid, or whenever it shall appear to the superintendent that it is unsafe or inexpedient for any cor- poration to continue to transact business, he shall communi- cate the facts to the attorney-general, who shall thereupon geneSh^' be authorized to institute such proceedings against any such Fags by." corporation as are now or may hereafter be provided for by BUILDING, ETC., ASSOCIATIONS. 353 law in the case of insolvent corporations or such other pro- ceedings as the nature of the case may require. § 5 is section 5 of chapter 564, Laws of 1875. § 6. If any such corporation shall fail to furnisn to the Failure to superintendent of the banking department any report or port or .Tii.T. .!■ Statement, statement required by this act, at the time so required it penalty shall forfeit the sum of ten dollars per day for every day such report or statement shall be so delayed or withheld, and the said superintendent may maintain an action in his name of office to recover such penalty, and when collected, the same shall be paid into the treasury of the State and be applied to the expenses of the bank department. § 6 is section 6 of chapter 564, Laws of 1875. 45 CONSTITUTIONAL PROVISIONS, GENERAL STATUTES, ETC, CONSTITUTIONAL PEOVISIONS. AKTIGLE I. Ckeation of Cokpoeations. 1846 — Extract from the Constitution of the State of New York.— Article VIU. Adopted November 3, 1846. Section 1. Corporations, how created. 2. Debts of corporations. 3. ' ' Corporations " defined. 4. Charters for savings banks and banking purposes. 5. Specie payments. 6. Registry of bills or notes. 7. Individual responsibility of stockholders. 8. Insolvency of banks, preference. Section 1. Corporations may be formed under general Corpora- 1 , T n 1 11 -1 ,. tions, how laws; but shall not be created by special act, except forcreated. municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws and special acts, passed pursuant to this section, may be altered from time to time, or repealed. 1. A statute which does not profess to create a banking corporation, but merely remedies defects in the organization of one already created, is not a violation of the constitutional prohibition against special charters for banking purposes. Remedial statutes are valid which enable cor- porations to enforce acquired rights, where by reason of defects in organization or irregularities in practice they were previously unable to do so, such ' ' statutes are entitled to be most liberally construed for the advancement of the public welfare and the protection of individual rights." Gridley, J. Syracuse City Bank v. Davis, 16 Barb. 188,193. 2. The legislature is given, by the constitution, the entire discretion of creating other corporations than banks, by special charter, and courts cannot review the action of the legislature when that discretion has been exercised. United States Trust Co., Receiver, v. Brady, 20 Barb. 121. 358 BANKING LAWS. 3. The constitution of 1846 " plainly designed to abolish the former mode or system of creating corporations, and to adopt an entire new system, under which, by general and uniform rules, the individual liability of corporations for all the debts of their respective corporations, should be regulated and prescribed. " Johnson, J. Rochester et ai. v. Barnes et al., 26 Barb. 660. 4. The language of the constitution that ' ' corporations may be formed under general laws," is not mandatory but permissive, and hence it is a matter for the discretion of the legislature, where in their judgment the object of the corporation cannot be attained under general laws. In re Tax Payers of Kingston, 40 How. 444. To the same effect. People v. Bowenei al., 31 N. T. 517; affirming 30 Barb. 24; followed, 13 Otto (U. S.), .426. 5. This provision of the constitution is merely a direction for the exercise of authority, which had been restricted by former constitu- tions, and is not a, grant of power. Bank of Chenango v. Brown, 28 N. Y. 470. 6. ' ' By the constitution of 1846, ag well to place all corporations of the same character upon the same general footing, with uniform powers, privileges and duties, as to obviate the necessity of much special legis- lation, corporations were authorized to be formed under general laws, and the creation of any, except for municipal purposes, and in cases ■where the objects of the corporation could not, in the judgment of the legislature, be approved under the general laws, was prohibited. One design was, that all that desired to transact business in a corporate capacity might do so upon an equality, and with equal privileges and liabilities, with uniform powers and under uniform restraints. Equality between corporations themselves, as well as equality between corpora- tions and individual citizens, so far as the latter was practicable, was in the minds of the convention in framing this part of the constitution. " Allen, J. Johnson v. H. E. R. R. Co., 49 N. Y. 458. 7. Corporations which hold their property and exercise their func- tions for the public benefit, are subject to legislative control, and the legislature which has created them, may regulate the mode in which they shall transact their business. ' ' Such legislation violates no con- tract, taJies away no property, and interferes with no vested right." Earl, J. People, ex rel. Kimball, v. B. & A. R. R. Co., 70 N. Y. 571. Debts of § 2. Dues from corporations shall be secured by sucli corpora- u j. ./ tiona. individual liability of the corporators, and other means, as may be prescribed by law. "Corpora- 8 3. The term corporations, as used in this article, shall tlons" de- " ■■■ fined. be construed to include aU associations and joint-stock com- panies having any of the powers or privileges of corpora- tions not possessed by individuals or partnerships. And all CONSTITUTIONAL PROVISIONS. 359 corporations shall have the right to sue and shall be subject to be sued in all courts in like cases as natural persons. 1. This provision subjecting corporations to be sued like natural per- sons is an enabling, and not a restrictive, one. It does not require that they should be proceeded against only by regular action, but leaves them to summary proceedings at the discretion of the legislature. In re Empire City Bank, 18 N. Y. 317. 3. A grant by the legislature to a corporation without any restriction of the power of that body to grant a similar privilege to others, would not deprive a future legislature of the power to give a like privilege. O. F. B. Co. V. Fish, 1 Barb. Ch. 549. (Citing 11 Peters, 430.) But grants of exclusive privileges, " being in derogation of public rights belonging to the State, or its citizens generally, must be construed strictly, and with reference to the intent and particular objects of the grant." Chancellor, M. B. Co. v. U. and S. R. R. Co., 6 Paige, 565. 3. It is right that new grants should be made when the public good calls for them, although they may become rivals to pre-existing estab- lishments made under legislative authority. A franchise may be said to be "taken," within the meaning of the section -of the State constitu- tion, prohibiting the taking of private property for public use, without just compensation, when the owner is deprived of the power or means of exercising it. But it is not taken when its emoluments are merely diminished by an improvement, which does not destroy or impair such power or means. " The philological interpretations of the verb ' to take ' are very numerous, but none of them indicate that an indirect reduction of the profits of a thing constitute a seizure of it, so long as its substance, whether physical or moral, remains intact. The damage from a loss of profits may be equally great, whether it results from a deprivation of their substantial emolument, or from other and indirect causes, but the remedies may be different, and, in many cases where the means are indirect, the law gives no redress." Strong, J., Matter of Hamilton ave., Brooklyn, 14 Barb. 411 ; id. 559. § 4. The legislature shall, by general law, conform all charters charters of savings banks, or institutions for savings, to a banks to* uniformity of powers, rights and liabilities, and all charters form?"' hereafter granted for such corporations shall be made to conform to such general law, and to such amendments as may be made thereto. And no such corporation shall have any capital stock, nor shall the trustees thereof, or any of them, have any interest whatever, direct or indirect, in the profits of such corporation ; and no director or trustee of any such bank or institution shall be interested in any loan Legisia- or use of any money or property of such bank or institution *"'® ^™' 360 BANKING LAWS. hibked for savings. The legislature shall have no power to ; sr|°*^{'s any act granting any special charter for banking purposes ; for bank- but Corporations or associations may be formed for such polea?"^' purposes under general laws. 1. This section was amended by vote of the people November 3, 1874. Went into efEect January 1, 1875. 3. "The charter of the United States Trust Company is not unconsti- tutional. It is a corporation created for banking purposes within the meaning of section 4 of the constitution. Banking is there used in its still familiar and proper sense, that business which might be carried on by banking associations under the law to authorize the business of bank- ing passed April 18, 1838. That law has been amended and reference made each time to its title authorizing ' the business of banking ' before the constitution was adopted in 1840, chapter 363, in 1841, chapters 26 and 319, in 1844, chapters 41 and 381, and the meaning of the word had thus become fixed by legislative use also." Mitchell, J. United States Trust Co. Keceiver v. Brady, 30 Barb. 131. " The legislature is the sole and final judge in respect to the cases in,and the purposes for which corporations should be created by special laws, rather than under general laws, and may, by special act, grant a charter for any lawful purpose other than a banlt or a village." Allen, J. G. E. R. Co. V. Anderson, 3 Abb. N. C. 454. Specie pay- 8 5 The legislature shall have no power to pass any law mentsDot " , , . & ■,.,,. -i- ,i ,^i to be BUS- sanctioning in any manner, directly or indirectly, the sus- pension of specie payments, by any person, association or corporation issuing bank notes of any description. Begistry | 6. The legislature shall provide by law for the registry ing bills or of all bills Or notes, issued or put in, circulation as money, and shall require ample security for the redemption of the same in specie. Liabiiityof § 7. The stockholders in every corporation and joint-stock SlOCk— ■ • 1 holders In association for banking purposes issuing bank notes or any uons'*" ^^°*^ ^^ paper credits to circulate as money, after the first day of January, one thousand eight hundred and fifty, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or associa- tion, for all its debts and liabilities of every kind, contracted after the said first day of January, one thousand eight hun- dred and fifty. CONSTITUTIOKAL PE0VI8I0NS. 361 1. See section 125 of tlie Revision and notes, p. 178, ante. 3. " These constitutional provisions manifest a decided intention to protect at all events the creditors of the bank as against the bank, to the extent of its ability to pay, and as against the stockholders in addition to the extent of their stock." Hogeboom, J. Pruyn v. Van Allen, Re- ceiver, Bank of Albany, 39 Barb. 356 ; Matter of Empire City Bank, 18 N. T. 199 ; Matter of Reciprocity Bank, 33 id. 9. 3. It was not the intention of the constitution that stockholders should be reimbursed any part of their contribTitions, until the debts of the cor- poration were extinguished ; but on the contrary, it was designed to make the stockholders liable to the creditors to the full extent of their stock, until the debts are f lilly paid. Id. 4. The liability imposed " upon the stockholders of banking associa- tions, is a several liability for a ratable and equal share of the debts, in proportion to the whole debts and the whole capital stock, and not a liability to each creditor until he is paid, limited only by the amount of stock held by stockholders, and the statute gives no authority or juris- diction to make more than one judgment, the first apportionment and judgment remaining unreversed." Emott, J. Matter of HolUster Bank, 37 N. T. 400. 5. The stockholders of a bank organized under the laws of this State which becomes insolvent, are not entitled to receive or have divided among themselves any of its assets.until its debts are paid in full. In this case, upon an application by the receiver to the court for an order to divide the residue of the assets in his hands pro rata among the cred- itors, certain of the stockholders who had paid their ratable proportion of the apportionment made upon them as aforesaid, claimed that by vir- tue of such payment they had become creditors of the bank, and were entitled, with other creditors, to be included in such pro rata distribu- tion. Held, that such stockholders must remain debtors to the corpora- tion, until the creditors are paid the amount of the apportionment. Hol- lister et al. v. Hollister Bank of Buffalo, 3 Keyes, 345. 6. A safe deposit company had authority under its charter (§ 5, chap- ter 816, Laws of 1868), to issue certificates for moneys deposited. Held, the grant of this power was not in conflict with the constitutional pro- hibition against the granting of a special charter for banking purposes. Pardee v. Fish, 60 N. Y. 371 ; same case, 19 Am. Rep. 176, affirming 67 Barb. 407. 7. Authorities collated upon the question as to when, so far as the liability of trustees and stockholders of a corporation is concerned, it may be deemed to be dissolved. Bruce et al. v. Piatt et al., 80 N. Y. 379. § 8. In case of the insolvency of any bank or banking Buihoid- association, the billholders thereof shall be entitled to pref- solvent"' erence in payment, over all other creditors of such bank or titled to°~ . , . preference. association. 46 AETICLE II. GrENEEAL POWEES, PeIVILEGES AND LIABILITIES OF COEPOEA- TIONS. 1828, B. S., Part I, Ch. XVm, Title HI— Of the general powers, privileges and liabilities of corporations. Section 1. Powers of corporations. 2. To vest in every corporation hereafter created. 3. Corporations not to possess any additional powers except ttose given by charter. 4. No corporation to exercise banting powers, unless expressly authorized. 5. When the stockholders may be required to pay in the balance on their stock. 6. A majority of the body authorized to act for the corpora- tion, may do business. 7. If corporation do not commence business in a year, powers to cease. 8. Every charter hereafter granted, subject to alteration by legislature. 9. Who to settle afEairs of corporation upon its dissolution. 10. Powers and liabilities of persons so acting. General SECvrioN 1. Every corporation as siicli has power : powers. J 1. r 1. To have succession by its corporate name for the period limited in its charter ; and when no period is limited per- petually ; 2. To sue and be sued, complain and defend, in any court of law or equity ; 3. To make and use a common seal, and alter the same at pleasure. i. To hold, purchase and convey such real and personal estate as the purposes of the corporation shall require, not exceeding the amount limited in its charter. GENERAL POWEES, PRIVILEGES, ETC. 363 5. To appoint sucli subordinate officers and agents as the business of the corporation shall require and to allow them a suitable compensation ; 6. To make by-laws not inconsistent with any existing law, for the management of its property, the regulation of its affairs, and for the transfer of its stock. 1. Within tlie limitations prescribed in its charter, or an express pro- vision of law, every corporation as such, for the purpose of effecting the objects of its incorporation, has the capacity to take and grant prop- erty and to contract obligations, and in so doing may deal precisely as an individual. Barry v. Merchants' Exchange Company, 1 Sandf. Ch. 280. 3. The capital stock of a corporation does not limit the amount of property it may own,or liabilities it may acquire. Id. 3. A mere authorization in the charter of a corporation to divide its profits among its stockholders, does not take away the right of retain- ing and accumulatiug the profits as a surplus, if it prefers that course to dividing them. Id. 4. It will be presumed that a corporation acted within the scope of its lawful powers in taking or transferring real estate in any instance, although not authorized under all circumstances and for every purpose to do so. Farmers' Loan and Trust Company v. Curtis, 7 N. Y. 466. 5. A corporation authorized to take and hold laud.may take the title thereto in fee, though itself created for a limited period. Nicoll v. The New Tork and Erie R. R. Co., 13 N. Y. 121. 6. The title to land held by a corporation will, in case of the dissolu- tion of the latter, revert to the grantor, unless there be some provision in the charter of the corporation or statute to avert that consequence. Bingham v. Weiderwax, 1 N. Y. 513 ; 3 Kent's Com. 305 ; Angell & Ames on Corporations, 128, 139. But see Owen v. Smith, 31 Barb. 641. 7. The General Banking Act invests the stock or shareholders of banks formed under it, with the unconditional right of transferring their stock. This right cannot be interfered with by a by-law or by any act, of the directors, except the same be authorized or provided for in the articles of association. The Bank of Attica v. The Manufacturers and Traders' Bank, 30 N. Y. 501 ; Driscollv. West Bradley & C. M. Co. et al, 59 id. 96. 8. A corporation cannot be bound by the acts of its agents, when such acts are without the power conferred upon it by its charter. Such con- tracts being ultra TO>6S,cannot be made valid by su bsequent ratification of the directors or trustees. McCuUough v. Moss, 5 Denio, 567. (Over- ruling Moss V. Rossie Lead Mining Co., 5 Hill, 137; Boom v. City of Utica, 3 Barb. 104.) 9. Corporations may arbitrate, and a simple resolution to that effect at a meeting of the corporation is sufficient. The form of submission is a matter of indifference, and need not be under seal. Brady v. Mayor 364 BANKING LAWS. of Brooklyn, 1 Barb. 584. (Citing the Mayor, etc., of New York v. Butler, 1 Barb. 335. ) 10. Associations formed under the general banking act.are corpora- tions by virtue of certain corporate attributes conferred on them by that act. Private bankers, however, possess none of the powers pecu- liar to corporations, but are only relieved from certain provisions of the Restraining Acts. Bank of Havana v. Magee, 20 N. Y. 355. (Citing Codd V. Kathbone, 19 N. T. 37.) In what g 2. The powers enumerated in the preceding section vest^ *° shall vest in everj corporation that shall hereafter be created, although they may not be specified in its charter or in the act imder which it shall be incorporated. New York Firemen's Insurance Co. v. Sturges, 2 Cow. 664 ; McCul- lough V. Moss, 5 Denio, 567. What 8 3. In addition to the powers enumerated in the first other pow- . „,.., ,, ,. .. era to be scction 01 this title, and to those expressly given m. its possessed. , , , , -i charter, or in the act under which it is or shall be incor- porated, no corporation shall possess or exercise any cor- porate powers, except such as shall be necessary to the exer- cise of the powers so enumerated and given. 1. A corporation has no other powers than those conferred by the act of incorporation, and such as are necessary to carry these powers into effect. The New York Firemen's Ins. Co. v. Sturges, 2 Cow. 664. (Citing 15 Johns. 383 ; Halstead v. The Mayor, etc., of New York, 3 N. Y. 430.) 2. This section does not establish any rule inconsistent with the pre- sumption that a corporation, being an artificial person, is capable of making every contract a natural person could make. (Feeny v. People's Fire Ins. Co., 2 Robt. 599.) 3. Corporations may enter into contracts in the same manner as indi- viduals, and within the restrictions imposed by their charter or neces- sary implication, have the same powers with respect thereto. Brady v. Mayor of Brooklyn, 1 Barb. 584 ; Bank of Columbia v. Patterson, 7 Cranch, 399 ; Mott v. Hicks, 1 Cow. 519. 4. ' ' Where a corporation relies upon a grant of power from the legisla- ture, for authority to do an act, it is as much restricted to the mode pre- scribed by the statute for its exercise, as to the thing allowed to be done." Welles, J. Farmers' Loan and Trust Co. v. Carroll, 5 Barb. 649. 5. " Corporations created in one State may transact such business as their charters authorize, in another State, provided the transaction of such business is not contrary to the known policy of that State, and is not injurious to its public interests ; and contracts growing out of such transactions may be enforced, if not otherwise unlawful." Mumford v. GENERAL POWERS, PRIVILEGES, ETC. 365 American Life and Trust Co., 4 N. T. 483. (Citing 18 Peters, 520 ; 4 How. 16.) 6. Associations formed under the act of 1828, "to authorize the busi- ness of banking," are moneyed corporations, and as corporations are such to all intents and purposes. " Such associations are subject to all general laws relating to moneyed corporations, not in conflict with the one under which they were created." Gardiner, J. Talmage v. Pell, 7 N. Y. 340, 341. (Qting Gillet v. Moody, 3 id. 485.) §4. No corporation created, or to be created, and not ex-j^^«J?^y°' pressly incorporated for banking purposes, shall, by any ^^Xblted. implication or construction, be deemed to possess the power of discounting bills, notes, or other evidences of debt, of receiving deposits, of buying gold and silver, bullion or foreign coins, of buying and selling bills of exchange or issuing bills, notes or other evidences of debt, upon loan, or for circulation as money. People V. The Manhattan Co., 9 Wend. 392 ; Curtis v. Leavitt, 17 Barb. 316 ; New York Life Ins. and Trust Co. v. Beebe, 7 N. Y. 364. § 5. Where the vrhole capital of a corporation shall not ^'ookto^d' have been paid in, and the capital paid shall be insufficient ®'^' to satisfy the claims of its creditors, each stockholder shall be bound to pay, on each share held by him, the sum nec- essary to complete the amount of such share, as fixed by the charter of the company, or such proportion of that sum as shall be required to satisfy the debts of the company. 1. A transfer of stock of a corporation by a holder thereof, to be per- fect, need not, in the absence of such requirement in the charter or by- laws of the corporation, be entered in the books of the latter, and where the transfer has come to the knowledge of and been recognized by the officers of the corporation, the transferrer of such stock is relieved from all liability ander this section. Cutting v. Damerel, 88 N. Y. 410. (Dis- criminated from 6 HiU, 634 ; 2 Barb. 294, and 11 N. Y. 148, and revers- ing same case, 33 Hun, 339.) 2. Under this section each stockholder is liable only in due propor- tion with the others who have not paid up the full amount of their shares, and cannot be proceeded against singly. Mann v. Pentz, 3 N. Y. 415. (Reversing same case, 3 Sandf. Ch. 257.) § 6. When the corporate powers of any corporation are Quorum- directed by its charter to be exercised by any particular body, or number of persons, a majority of such body, or 366 BANKING LAWS. persons, if it be not otherwise provided in the charter, shall be a suflScient number to form a board for the transaction of business ; and every decision of a majority of the persons duly assembled as a board shall be valid as a corporate act. Forfeiture g 7. If any corporation hereafter created by the legislature "ser. shall not organize and commence the transaction of its busi- ness within one year from the date of its incorporation, its corporate powers shall cease. Johnson v. Bnsh, 3 Barb. Ch. 237. 1. Where a special act of incorporation declares that the company thereby incorporated shall be deemed to be organized upon the happen- ing of certain events, which do not happen within a year from the date of incorporation, it will be held that the legislature intended to and did relieve the corporation from the effect of this section. People V. Bowen, 30 Barb. 24. 2. The word "business " as used in this section, refers only to such business as the corporation can lawfully do under the act of incorpora- tion ; the transaction of other business would not be a user of the powers conferred. The People v. Troy House Co., 44 Barb. 633. Keserva- § 8. The charter of every corporation that shall hereafter power to be granted by the legislature shall be subiect to alteration, repeal, etc. * . •' 1 • ^l, j- i- j; li, i • 1 suspension and repeal, in the discretion of the legislature. 1. Where a general act providing for the formation of certain corpora- tions, contains special provisions which are thereby made applicable to existing corporations of the kind referred to in the act, these special provisions become as much a part of the charter of said existing cor- porations formed since the Revised Statutes took effect, as if they had been originally inserted in their charters. Suydam v. Moore, 8 Barb. 364. 2. A corporation is not bound to accept every alteration the legislature may see fit to mate in its charter, especially where it goes further than those duties which immediately affect the public interests or of police. Troy and Rutland R. R. Co. v. Kerr, 17 Barb. 603. 3. Alterations procured by the corporation itself may be so extensive and radical, as to absolve from liability on their subscriptions such of the stockholders as do not assent to the alterations. The Hartford and New Haven R. R. Co. v. Croswell, 5 Hill, 383. (Distinguished from 23 Hun, 866. But see The Northern R. R. Co. v. Miller, 10 Barb. 383.) inoase'of ^ ^' ^P"'^ *^® dissolution of any corporation created, or tion°'"" *° ^® created, and unless other persons shall be appointed by the legislature, or by some court of competent authority, the directors or managers of the affairs of such corporation GENERAL POWERS, PRIVILEGES, ETC. 367 at the time of its dissolution, by whatever name they may be known in law, shall be the trustees of the creditors and stockholders of the corporation dissolved, and shall have full power to settle the affairs of the corporation, collect and pay the outstanding debts, and divide among the stockhold- ers the moneys and other property that shall remain after the payment of debts and necessary expenses. (1 R. L. 248, § 1.) 1. The directors or other managers of the affairs of a corporation, who are by statute, on its dissolution, made trustees, with power to settle its concerns, are entitled to the benefit of the plea of the statute of limitations. Kane v. Bloodgood, 7 Johns. Ch. 128. 3. Only those who are stockholders at the time a suit is instituted, are liable under a provision in its charter making the stockholders of a corporation liable for its debts. McCuUough v. Moss, 5 Denio, 567. 3. Creditors of dissolved corporations have an equitable lien on its assets for the payment of their debts. Tinkham v. Borst, 31 Barb. 407- 4. Under the Revised Statutes both the real and personal property of a corporation.upon its dissolution, vests in trustees for the benefit of creditors and stockholders. Owen v. Smith, 31 Barb. 641 ; Towar v. Hale, 46 id. 365 ; Heath v. Barmore, 50 N. Y. 802. §10. The persons so constituted trustees shall have au- Their pow- thority to sue for and recover the debts and property of the dissolved corporation by the name of the trustees of such corporation, describing it by its corporate name; -and shall be jointly and severally responsible to the creditors and stockholders of such corporation, to the extent of its prop- erty and effects that shall come into their hands. (1 R. L. 249, § 2.) The liability of the directors or managers of a corporation as trustees of the corporate property, upon its dissolution, is expressly limited to the extent of the property and effects that shall come into their hands. Hoffman v. Van Nostrand, 42 Barb. 174. AETICLE III. SpEOIAI, PEOVIBIOiTS RELATING TO CERTAIN CoEPOEATIONS AND Joint-Stock Associations. 1828. B. S., Part 1, Ch. XVXEI, Title IV— Special Provis- ions relating to certain corporations. Section 1. Certain books of incorporated companies to be kept open for certain time. 3. Certain proHbitions and restrictions upon directors of cor- porations, officers, etc. 3. Debts of corporations not to exceed certain amount ; penalty for excess. 4. Certain transfers of property prohibited ; corporations dis- solved in certain cases. 5. Supreme court to correct illegal elections ; proceedings for that purpose. 6. By-laws regulating elections ; evidence of right to vote. 7. Oath to be taken by inspectors of elections. 8. On failure to hold elections of directors, new day to be ap- pointed ; proceedings. 9. Penalty on corporations, etc., for purchasing their notes, etc. , at less sum than that due thereon. 10. Officers, etc., of corporations not to loan upon notes ofEered to them officially for discount. 11. Extent and application of the provisions of this title. Certain SECTION 1. The book or books of anv incorporated corn- books to , , , " * be open at panv in this State in which the transfer of stock m any such certain . times. company shall be registered, and the books containing the names of the stockholders in any such company, shall, at all reasonable times during the usual hours of transacting business, be open to the examination of every stockholder of such company for thirty days previous to any election of directors, and if any officer having charge of such books shall, upon demand by any stockholder as aforesaid, refuse or neglect to exhibit such books, or submit them to examina- tion as aforesaid, he shall for every such offense forfeit the SPECIAL PROVISIONS, ETC. 369 sum of two hundred and fifty dollars, the one moiety thereof to the use of the people of this State, and the other moiety to him who will sue for the same, to be recovered by action of debt in any court of record, together with the costs of such suit. (Laws of 1835, 448, § 1.) 1. This statute, although penal in its character, " is beneficial gener- ally, and should therefore be equitably construed." Paige, J., Cotheal V. Brouwer, 5 N. Y. 568. 2. Domestic corporations are required (1 R. S. 601, § 1) to keep their transfer books, and books containing the names of the stockholders, open for inspection for thirty days previous to the election of directors, and they may also be compelled on proper occasion and for proper pur- poses to permit an inspection of the same by a stockholder at other times than that mentioned in the statute. Matter of Sage et aZ., 70 N. Y. 220 ; People, ex rel. Hatch, v. L. S. and M. S. E. R. Co., 11 Hun, 1. § 2. It shall not be lawful for the directors or managers Dividends /• • T • T • n 1 1. • for surplus 01 . any incorporated company m this btate to make divi- profits dends, excepting from the surplus profits arising from the business of siich corporation ; and it shall not be lawful for the directors of any such company to divide, withdraw, or „*? to"be in any way pay to the stockholders, or any of them, any '"e'i"'=ed. part of the capital stock of such company, or to reduce the said capital stock, without the consent of the legislature ; and it shall not be lawful for the directors of such company Notes for to discount or receive any note, or other evidence of debt, ments on /■ .11 n n T . 1 stock, not in payment oi any mstallment actually called m and re- to be dis- , ^ •' , ' ■' counted. quired to be paid, or any part thereof, due or to become due on any stock in the said company ; nor shall it be lawful for such directors to receive or discount any note, or other evidence of debt, with the intent of enabling any stock- ^"^"h-*^ holders in such company to withdraw any part of the stTiun'enta money paid in by him on his stock ; and in case of any vio- ^*"*' lation of the provisions of this section, the directors under whose administration the same may have happened, except Liability those who may have caused their dissent therefrom to be torsfor ' entered at large on the minutes of the said directors at the these 'pro- time, or were not present when the same did happen, shall, in their individual and private capacities, jointly and sev- erally be liable to the said corporation, and to the creditors 47 Proviso. 370 BANKING LAWS. thereof in tlie event of its dissolution, to the full amount of the capital stock of the said company so divided, with- drawn, paid out or reduced, and to the full amount of the notes or other evidences of debt so taken or discounted in payment of any stock, and to the full amount of any notes or evidences of debt so discounted with the intent aforesaid with legal interest on the said respective sums, from the by atat^^ time such liability accrued ; and no statute of limitations tioiw!"**" shall be a bar to any suit at law or in equity, against such directors for any sum for which they are made liable by this section : Provided, That this section shall not be construed to prevent a division and distribution of the capital stock of such company, which shall remain after the payment of all its debts, upon the dissolution of such company, or the expiration of its charter. Laws of 1835, 448, § 2. Under tMs act, an action prosecuted by the receivers in the name of the corporation may he maintained against a bank director for the penalty incurred by paying a portion of the capital stock of the company to a stockholder, although it be admitted by the pleadings that the bank had been insolvent for one whole year, but during that time neglected to redeem its notes and had suspended its ordinary business. "The act expressly provides (3d section, page 449) that the individuals who shall incur the liability shall be liable therefor to the corporation and to the creditors tliereof, in the event of its dissolution." Sutherland, J., Bank'of Niagara v. Johnson, 8 Wend. 656 ; N. E. E. Co. v. MUler, 10 Barb. 360. d^°s"°* °* § 3. The total amount of the debts which any incorporated company shall at any time owe, whether for deposits, or by bond, bill, note, or other contract, over and above the actual deposits with the said company, shall not at any time exceed three times the amount of the capital stock actually paid in, and in case of any excess the directors under whose of mrecl. administration the same may have happened, except those °r« f""' ^lio may have caused their dissent therefrom to be entered at large on the minutes of the said directors at the time, and except those who were not present when the same did hap- pen, shall in their individual and private capacities, jointly and severally, be liable for puch excess to the said corporar tion, and in the event of its dissolution, to any of the cred- SPECIAL PROVISIONS, ETC. 371 itors thereof, to the full amount of such excess, with legal interest from the time such liability accrued : and no statute Not barred •' ' . by statute of limitations shall be a bar to any suit at law, or m equity, °y™"*- against such directors for any sums of money for which they are made liable by this section. (Laws 1825, 448, § 3.) Tallmadge v. The FisUdll Iron Co., 4 Barb. 888. § 4. Whenever any incorporated company shall have re- ^^.^n^era fused the payment of any of its notes, or other evidences of °rty™ro- debt, in specie, or lawful money of the United States, it ^ibited. shall not be lawful for such company, or any of its officers, to assign or transfer any of the property or choses in action of such company to any officer or stockholder of such com- pany, directly or indirectly, for the payment of any debt ; and it shall not be lawful to make any transfer or assign- ment in contemplation of the insolvency of such company, to any person or persons whatever ; and every such transfer and assignment to such officer, stockholder or other person, or in trust for them or their benefit, shall be utterly void. (Laws of 1835, 450, § 6. The above portion of the original section of the Revised Statutes was repealed by Laws of 1883, ch. 345, and was re-enacted by Laws of 1884, ch. 434.) Associations organized under the general banking act are within the provisions of this section. They are not excluded, by the exception mentioned in the eleventh section of this statute. Eobinson, Eeceiver, v. Bank of Attica, 31 N. T. 411. The assignee of an insolvent bank brought suit to recover payment by a bank, known by its officers to be insolvent, of a check drawn by a depositor wholly ignorant of its financial con- dition. Held, such payment is not within the meaning of this section, and such payment cannot be recovered back by such assignee. Dutcher, Assignee, v. Importers and Traders' Nat. Bank, 59 N. T. 5 ; Cheever v. G. E. Railway Co., 43 N, Y. 479, § 5. It shall be the duty of the supreme court, upon the Powers of application of any person or persons or body corporate that court™^ may be aggrieved by, or may complain of, any election, or Ktions. any proceeding, act or matter, in or touching the same (reasonable notice having been given to the adverse party, or to those who are to be afEected thereby, of such intended application), to proceed forthwith, and in a summary way, 373 BANKING LAWS. to hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and thereupon to establish the election so complained of, or to order a new election, or make such order and give such relief in the premises as right and justice may appear to the i/gsl^^ ' said supreme court to require, provided, that the said supreme court may, if the case shall appear to require it, either order an issue or issues to be made up in such manner and form as the supreme court may direct, in order to try the respect- ive rights of the parties who may claim the same, to the office or offices or franchise in question ; or may give leave to exhibit, or direct the attorney -gen oral to exhibit, one or more information or informations in the nature of a quo warranto in the premises. (Laws of 1835, 451, § 9, amended pursuant to the " Act concerning the Revised Statutes," passed December 10, 1828, § 15.) Mickles v. Eoclaester City Bank, 11 Paige, 134 ; Matter of Cecil, 36 How. 477 ; Strong v. Smith, 15 Hun, 333 ; Thompson v. Society of Tammany, 17 id. 305. Certain | 6. 'So by-law of the directors and managers of any in- r^iSd"" corporated company, regulating the election of directors or officers of such company, shall be vaUd, unless the same shall have been published for at least two weeks in some newspaper in the county where such election shall be held, at least thirty days before such election ; and in all cases where the right of voting upon any share or shares of the stock of any incorporated company of this State shall be of rigSrto *l'^^®^''i°^®*^) ^* ^^^'^ ^® ^^^ ^^^J o^ *^^ inspectors of the ^°*°" elections to require the transfer books of said company, as evidence of stock held in the said company ; and all such shares as may appear standing thereon in the name of any person or persons shall be voted on by such person or per- sons, directly by themselves, or by proxy, subject to the provisions of the act of incorporation. (Laws of 1835, 451, § 13.) In re L. I. Railroad Co., 19 Wend. 45 ; In re M. & H. Railroad Co., id. 135; People v. Albany Hospital, 11 Abb. Pr. (N. S.) 16 ; The S. V. Railroad Case, 13 id. 394 ; Cotheal v. Brouwer, 5 N. T, 563. SPECIAL PROVISIONS, ETC. 373 § 7. The inspectors who may be appointed to conduct any fp^'^t°fg'°f election of directors or any other officer of any incorporated ^'so^'o"' company of this State shall be required, before entering on the duties of their appointment, to take or subscribe the following oath or affirmation : " I, A. B,, do solemnly swear (or affirm, as the case may be) that I will execute the duties of an inspector for the election now to be held, with strict impartiality and according to the best of my ability." (Laws 1825, 451, § 13.) In re C. C. M. Ins. Co., 19 Wend. 635. § 8. If at any time hereafter the election for directors of o°eiect'on any bank or other incorporated company of this State shall |ay to%e not be duly held on the day designated and appointed by ^■ppoioted. the act incorporating such bank or other incorporated com- pany, it shall be the duty of the president and directors of such bank or other incorporated company to notify and cause an election for directors to be held within sixty days, immediately thereafter ; and in all cases no share or shares ^"^^o" shall be voted upon except by such person or persons who such Tub- may have appeared on the transfer books of said company |ay"*°* to have had the right to vote thereon on the day when, by the act of incorporation of such company, the election ought to have been held, which said right so to vote shall be exercised by the persons so appearing as aforesaid upon the transfer books of such company on any day when such election may be held. (Laws 1825, 451, § 13.) Eosevelt v. Brown, 11 N. T. 152 ; People v. Cummings, 72 id. 433. § 9. It shall not be lawful in any company incorporated Corpora^ for banking purposes, its officers, agents or servants, or any its officers, of them, directly or indirectly, to purchase or be interested fts'^^t^gat in the purchase of any promissory note or other evidence of » discount, debt issued by any such company at a less sum than ap- pears by the face thereof to be due and payable ; and any Penalty, person offending against the provisions of this section shall forfeit and pay three times the nominal amount of the note or other evidence of debt so purchased, to be recovered 3U BANKING LAWS. with costs of suit by any person who will sue for the same in any court of competent jurisdiction. (Laws 1835, eh. 335, § 15.) ete.°o"ior- § 1^- I* s^^^l '^'^^ ^^ lawful for any person being presi- SSt to'iSan the appointment of the receiver is only to be made on an application for the final order. In re Open Board of Brokers, 3 Law Bull. 57. 2. Proceedings for the voluntary dissolution of a corporation are spe- cial and statutory, and the court, though of general jurisdiction, has no authority to appoint a receiver therein, except in conformity with the statute. Chamberlin v. The Rochester S. P. V. Co., 7 Hun, 557 ; In re Pyrolusite Manganese Co. , 3 C. P. 370. 3. The title of the receiver does not vest until the filing of his bond . (see § 67, p. 384), and until then a creditor of the corporation may obtain a lien by judgment or attachment on the assets of the corporation. Chamberlin v. The Rochester S. P. V. Co., 7 Hun, 557. 4. Upon dissolution, it is the duty of the trustees to convert the as- sets into money. They have no right to exchange any portion of them for the stock of another corporation, without the consent of all the stockholders. Frothingham v. Barry, 6 Hun, 366. Certain § 2430. A Sale, assignment, mortgage, conveyance, or sales, etc., ^^^ler transfer, of any property of a corporation, made after the filing of a petition as prescribed in this title, in payment of or as security for an existing or prior debt, or for any other consideration ; or a judgment thereafter rendered against the corporation by confession, or upon the accept- ance of an offer, is absolutely void as against the receiver appointed in the special proceeding, and as against the cred- itors of the corporation. See notes to section 71, p. 387, ante. Certain 8 2431. TAs amended, 1884, ch. 406.1 This title does not corpora- " . , i i i . ■,. . Mods ex apply to an mcorporated library society, to a religioxis cor- from this poration, or to a select school or academy, incorporated by the regents of the university or by the legislature, or to a VOLUNTARY DISSOLUTION OF A COEPOEATION. 401 municipal or other political corporation. In case of cor- porations, affected by the provisions of this title and not having stockholders, it shall be sufficient for the purposes of this title to notify, name and refer to the members of such corporations instead of stockholders, as herein pro- vided. 51 AETICLE VI. Sbrvioe of Peooess on Coepoeations. 1877, Code of Civil Procedure, Part I, Chapter V, Title I, Article 1. How per- Seotion 431. Personal service of the summons upon a sonal Ber- ,»,-., Tioe of defendant, being a domestic corporation, must be made by ™domestio delivering a copy thereof, virithin the State, as follows : tio'n."*" 1- I^ t^e action is against the mayor, aldermen and com- monalty of the city of New York, to the mayor, comptrol- ler or counsel to the corporation. 2. If the action is against any other city, to the mayor, treasurer, counsel, attorney, or clerk ; or, if the city lacks either of those officers, to the officer performing correspond- ing functions, under another name. 3. In any other case, to the president or other head of the corporation, the secretary or clerk to the corporation, the cashier, the treasurer, or a director or managing agent. 1. "A domestic corporation is a corporation created by or under the laws of the State ; or located in tlie State, and created by or under the laws of the United States; or by or pursuant to tlie laws in force in the colony of New York, before the 19th day of April, in the year 1775. Every other corporation is a ' foreign corporation.' " Code Civil Pro- cedure, § 3343, subdi v. 18. 2. When a corporation doing business in this State is foreign simply because of its having been incorporated under the laws of another State, the distinction between it and a domestic corporation being nominal, such distinction should not (and it appears will not) be made without some provision in the law indicating the necessity of its adoption. "No such provision has been inserted in the Code as it now exists." Brady, J. Plimpton v. Bigelow, 8 Civ. P. Eep. 190. (Same case other- wise reversed, 93 N. Y. 593.) 3. After judgment dissolving it, an action cannot be commenced against the corporation by serving process on one of its ofScers. Hetzel V. Tannehill S. M. Co., 4 Abb. N. C. 40. SEKVICE OF PROCESS ON CORPORATIONS. 403 4. Where the functions of the offlcer,or other person served with the gunmions,are such as to render it doubtful whether he is one of those designated in this section, it will be incumbent on the corporation seek- ing to set aside such service.to show clearly what are the exact relations between the oflBcer served and themselves. Donadi v. N. T. State Mut. Ins. Co., 2 B. D. Smith, 519. 5. For definition of managing clerk, see Reddington v. Mariposa Land M. Co., 19 Hun, 405 ; Brewster v. Michigan C. R. R. Co., 5 How. 183. § 432. [Amended 18Y7, ch. 416.] Personal service of the "j^^^fgO" summons upon a defendant, being a foreign corporation, y°^°''*' must be made by delivering a copy thereof, within the State,. as follows: 1. The court has jurisdiction of an action for the sale of the collateral security of a foreign corporation, held in this State, so far as its juris- diction depends on the corporation having property in the State. Coffin V. The Chicago & Northern Pacific C Co., 67 Barb. 337. 2. Jurisdiction over the persons of trustees appointed by the courts of another State, of an insolvent corporation created by such State,for acts done in their capacity as such trustees, must stand on the same footing as the foreign corporation which they represent. ' ' As such they constitute a quad corporation foreign in all that relates to official acts or duties,and must be so treated by our courts whenever they de- cline our jurisdiction." James, J. The Ogdensburgh & C. R. R. Co. v. The Vermont & Canada R. R. Co., 16 Abb. Pr. 249. 1. To the president, treasurer or secretary ; or, if the corporation lacks either of those oflBcers, to the officer per- forming corresponding functions under another name. 1. In order to make effectual service on an officer of a foreign corpora- tion designated in this subdivision, it is not needful that the officer should be here in his official capacity, or engaged in the business of the corporation, or that the corporation should have any property within this State, or that the cause of action arose within this State. Pope v. Terre Haute C. & M. Co., 87 N. T. 137. 2. To a person designated for the purpose by a writing, under the seal of the corporation, and the signature of its president, vice-president, or other acting head, accompanied with the written consent of the person designated, and filed in the office of the secretary of State. The designation must specify a place, within the State, as the office or residence of the person designated ; and if it is within a city, the street, 404 BANKIISTG LAWS. and street number, if any, or other suitable designation of the particular locality. It remains in force, until the filing in the same oflSce of a written revocation thereof, or of the consent executed in like manner ; but the person designated may, from time to time, change the place specified as his office or residence, to some other place within the State, by a writing, executed by him, and filed in like manner. The secretary of State may require the execution of any instru- ment, specified in this section, to be authenticated as lie deems proper, and he may refuse to file it without such an authentication. An exemplified copy of a designation so filed, accompanied with a certificate that it has not been revoked, is presumptive evidence of the execution thereof, and conclusive evidence of the authority of the officer exe- cuting it. 1. Where a foreign corporation has made the designation provided for in this subdivision, it seems, that it thereby subjects itself to the juris- diction of our courts (Gibbs v. Queens Ins. Co., 63 N. Y. 114, and cases therein distinguished), and that a judgment obtained upon service of process in the person so designated, is entitled to credit, and to be enforced in another State. See The Lafayette Ins. Co. v. French, 18 How. (U. S.) 404. And such service, it will be seen by reference to the subdivision, may be made irrespective of whether the corporation has property or ofBlcers within the State, or where the' cause of action arose. 3. Where a foreign corporation carries on business regularly within the State, it is within the State m propria persona for the purpose of the jurisdiction of the courts of the State, and for the purpose of a judg- ment valid within the State. Gibbs v. Queens Ins. Co., 63 N. T. 114, and opinion of Andrews, J., in Plimpton v. Bigelow, 4 Giv. P. Eep. 196, Court of Ap'peals, November, 1883. 3. If sucb a designation is not in force, or if neither the person designated, nor an officer specified in subdivision first of this section can be found with due diligence, and the corporation has property within the State, or the cause of action af ose therein ; to the cashier, a director, of a man- aging agent of the corporation, within the State. (Laws of 1855, chap. 279.) 1. In order to serve the Cashier, director, or managing agent of a foreign corporation, within the State, it is necessary that the corporation have property within the State or that the cause of action arose therein. Pope V. Terre Haute C. & M. Co., 87 N. T. 137. SERVICE OP PROCESS ON CORPORATIONS. 405 2. To sustain service on a director of a foreign corporation, on the ground that it has property in the State, such property must have some substantial value. Barnes v. Mobile N. W. E. E. Co., 13 Hun, 126. S 433. The provisions of this article, relating to the mode Service oi , -, . , o process, of service of a summons, apply likevrise to the service of etc., to ' 1 -L ./ comDience any process or other paper, whereby a special proceeding is pj^^og°g|} commenced in a comt, or before an officer, except a proceed- '°^" ing to punish for contempt, and except where special pro- vision for the service thereof is otherwise made by law. Beferences to other Provisions of the Code of Civil Proced- ure on the subject. [The matter in italics gives only the substance of or a reference to the sections mentioned in this article.] § 438. Sub. 1. Orders may he made directing service of summons upon a foreign corporation, without the State or hy publication. Sub. 6. Also in lihe manner upon a domesH.c corporation in certain, cases. Smith V. Mahon, 27 Hun, 40. § 610. Service of an injunction order upon a corporation may he made in the manner prescribed for making personal service of a svmvmons upon a corporation. Copies of the papers upon which the order was grcmted m,ust ie delivered with the copy of the order. § 2071. Service of a/nalt&rnatvoe writ ofmomdamus upon, a corporation m,ay he made upon any officer thereof upon whom a summons may he served. § 2526. Service of a citation issued hy a surrogates court may he made upon a corporation, in the manner prescribed for personal service of a summons upon a corporation. § 2879. In actions injustices' courts the simimons may be personally served upon a corporation by delivering a copy thereof to an officer or person, to whom a copy of a 406 BANKING LAWS. summons in an action against the corporation in the supreme court might be delivered, as prescribed in sections 431 and 432 of this act ; or to any director or trustee of the corpora- tion, by whatever ofBcial title he is called. ARTICLE VII. Actions Relating to a Coepoeation. 1880, Code of Civil Procedure, Part II, Chapter XV, Title II— Actions relating to a corporation. Article 1. Action by a corporation, and action against a corporation, to recover damages or property. 2. Judicial supervision of a corporation, and of the officers and members thereof. 3. Actions to procure the dissolution of a corporation, and actions to enforce the individual liability of the officers or members of a corporation, with or without a dissolution thereof. 4. Action by the people to annul a corporation. 5. Provisions applicable to two or more of the actions specified in this title. Akticle I. — Action bt a Cobpohation, and Action against a Cor- poration, TO Recoteb Damages oh Pbopertt. Section 1775. Complaint in actions by or against corporations. 1776. When proof of corporate existence unnecessary. 1777. Misnomer, when waived. 1778. Action against a corporation upon a note, etc. 1779. When foreign corporation may sue. 1780. When foreign corporation may be sued. § 1775. In an action brought tiy or against a corporation, complaint the complaint must aver that the plaintiff^ or the defendant, ^y *5*'°"^ as the case may be, is a corporation ; must state whether it Sorpora- is a domestic corporation or a foreign corporation ; and if ' °°^' the latter, the State, country or government by or under whose laws it was created. But the plaintiff need not set forth, or specially refer to, any act or proceeding by or under which the corporation was created. 408 BANKING LAWS. 1. In an action brought by a corporation, held, that " The complaint does not fail to state facts sufficient to constitute a cause of action (even if it fails to show legal capacity to sue), merely because there is no averment that the plaintiflE is a corporation." " If it is, the objection should be taken by answer." Barrett, J. Irving National Bank v. Cor-' bett, 10 Abb. N. C. 85 ; contra, 3. F. Daly, J. Baker v. Star Print and Publishing Co., 3 Law Bull. 39, C. P. 2. The complaint need not set out the powers of the corporation. Feeny v. People's Fire Ins. Co., 2 Rob. 599. 3. What acts are sufficient to constitute a corporation de facto. De Witt et al V. Hastings, 69 N. Y. 518 ; Cayuga Lake E. R. Co. v. Kyle, 64 id. 185. Toofof § 17Y6. In an action brought by or against a corporation, corporate the plaintiff need not prove, upon the trial, the existence of unneoea- tjje corporation, unless the answer is verified, and contains an affirmative allegation that the plaintiff or the defendant, as the case may be, is not a corporation. 1. In an action against a foreign corporation, the answer alleged on information and belief, that the defendant " is not and never was a cor- poration." Held, that such allegation was not affirmative, and did not put in issue the incorporation of the defendant. Bingston v. Thing- valla Steamship Co. , 3 Civil Procedure, 263. (Affirmed, 4 Civil Procedure, 260.) Held, also, in East River Bank v. Rogers, 7 Bosw. 493, that an allegation in an answer by the defendant, " that he is informed and be- lieves the plaintiff is not a corporation," does not amount to a plea, "that the plaiutiilis not a corporation." Where the complaint alleged that plaintiff is a corporation organized under a law of this State, and the answer simply averred that defendant had no knowledge or in- formation sufficient to form a belief as to the truth of the allegation, held, that plaintiff was not required to prove the corporate existence ; such an averment is not equivalent to an "affirmative allegation," that plaintiff is not a corporation. The Concordia Savings and Aid Associ- ation V. Read, 93 N. Y. 474. 2. A corporation need not prove the fact of its incorporation where its adversary is estopped from denying the same, as by contracting with the corporation by their corporate name (Connecticut Bank v. Smith, 9 Abb. 168 ; The Bast River Bank v. Rogers, 7 Bosw. 493), or by giving a bond to it. It was held in the Loaners' Bank v. Jacoby, 10 Hun, 143, where an action was brought by the bank against one T, and the defendant had given a bond reciting the bank's claim, etc., held, in an action brought on the bond, that by giving the bond the defendants were estopped from denying the legal existence of the bank. 3. InDerrenbacherv. Lehigh Valley R. R. Co., 31 Hun, 613, decided in July, 1880, Davis, P. J., in connection vrith this section, says: "* * * Where a corporation is sued, its general appearance and answer in the ACTIONS EELATING TO A COEPORATIOlSr. 409 action ought to be deemed an admission of its corporate existence, as mucli as the general appearance and answer of a natural person is an admission of his existence and identity." "At all events in such case, it is enough to show user or corporate acts,to malte a prima facie case of the entity and identity of the artificial person that has appeared and is defending the suit." This section, however, did not take effect till September 1, 1880. (See § 3347, subd. 11.) Derrenbacher v. Lehigh Val- ley E. E. Co., was otherwise reversed in 87 N. Y. 676. § 1711. In an action or special proceeding brought by or Misnomer, against a corporation, tlie defendant is deemed to have waived, waived any mistake in the statement of the corporate name, unless the misnomer is pleaded in the answer or other plead- ing in the defendant's behalf. 1. The objection provided for by this section is waived unless pleaded, and this as well when the corporation sufiers a default, as when it ap- pears and answers. Whittlesey v. Frantz, 74 N. Y. 461. 2. Misnomer is waived by pleading nvZ tiel corporation. Trustees of M. E. Church v. Tryon, 1 Denio, 451. § 1778. In an action against a foreign or domestic cor- Action poration to recover damages for the non-pavment of acorpora- . . , r -, T !•■,■, t t'""^ upon promissory note, or other evidence of debt, lor the absolute a note, etc. payment of money, upon demand, or at a particular time, an order extending the time to answer or demur shall not be granted, except by the court, upon notice to the plaintiff's attorney. In such an action, unless the defendant serves, with a copy of his answer or demurrer, a copy of an order of a judge, directing that the issues presented by the plead- ings be tried, the plaintiff may take judgment as in case of default in pleading, at the expiration of twenty days after service of a copy of the complaint either personally with the summons, or upon the defendant's attorney, pursuant to his demand therefor ; or, if the service of the summons was otherwise than personal, at the expiration of twenty days after the service is complete. 1. The section is in derogation of the common law, and is, therefore, to be strictly construed. It applies only to actions founded exclusively on an evidence of debt issued by a corporation. Bradley v. Albemarle F. Co., 3 Civ. Pro. E. 50. But see § 3345, post. 2. The service of a copy of an order directing trial of the issues with the defendants pleading as required by this section, is not re- 53 410 BANKING LAWS. stricted to any particular description of cases, but is necessary in all cases. Hutson et ail. v. Morrisania Steamboat Co., 64 How. 368. 3. The provision applies only to an instrument wUct is in itself evidence of debt, as a note, bond or bill of exchange, and does not apply to an instrument creating » contingent liability, not even when the liability has become fixed by the happenings of the contingency. N. T. Life Ins. Co. v. Universal Life Ins. Co., 88 N. Y. 434. (Over- ruling 19 Hun, 127 ; McKee v. Metropolitan Life Ins. Co., 35 Hun, 583.) eten cor-'" § 1^'^^' -^^ action may be maintained by a foreign cor- may su". poration, in like manner, and subject to the same regula- tions, as where the action is brought by a domestic corpora- tion, except as otherwise specially prescribed by law. But a foreign corporation cannot maintain an action, founded upon an act, or upon a liability or obligation, express or implied, arising out of, or made and entered into in con- sideration of, an act, which the laws of the State forbid a corporation or association of individuals to do, without express authority of law. This section does not affect the validity of a meeting of the stockholders or directors of a foreign corporation, held within the State, where such a meeting is authorized by the laws of the State, country, or government, by or under which the corporation is created ; or of an act, done at such a meeting, which is not in conflict with the same laws, or the laws of the State. 1. The furnishing of security for costs,is not a condition precedent to the right of a foreign corporation to sue. Bank of Michigan v. Jessup, 19 Wend. 10 ; Persse & B. Paper Works v. Willet, 14 Abb. 119. 2. In an action brought by one foreign corporation against another and certain arbitrators, residents of this State, to restrain the prosecu- tion of ap arbitration begun under the provisions of a contract between the corporations to submit their differences to arbitration, the proceed- ings thereunder to be governed by the English common law procedure and the awaxd to be made a rule of the queen's bench, held, that the supreme court (in which the action to restrain was brought) had juris- diction. The Direct W. S. Cable Co. v. The Dominion Tel. Co. etal., 84 N. Y. 153. When for- § 1780. An action against a foreign corporation may be poration maintained by a resident of the State, or by a domestic cor- may be ■' c . a . sued. poration, for any cause oi action. An action against a foreign corporation may be maintained by another foreign ACTIONS EELATINa TO A COKPORATION. 411 corporation, or by a non-resident, in one of the following cases only : i 1.' Where the action is brought to recover damages for the breach of a contract, made within the State, or relating to property situated within the State, at the time of the making thereof. 2. Where it is brought to recover real property situated within the State, or a chattel, which is replevied within the State. 3. Where the cause of action arose within the State, except where the object of the action is to affect the title to real property situated without the State. 1. Tlie action given Ijy tMs section is general, and not directed against particular property. QiWas v. Queens Ins. Co., 63 N. Y. 114 3. The restrictions of this section may be evaded by the assignment of the cause of action to a resident, when not within the exceptions contained in section 1910. Such exceptions are : (a.) Where it is to recover damages for a personal injury, or for a breach of promise to marry. (b.) Where it is founded upon a grant, which is made void by a stat- ute of the State ; or upon a claim to or interest in real property, a grant of which, by the transferrer, would be void by such a statute. (c.) Where a transfer thereof is expressly forbidden by a statute of the State or of the United States, or would contravene public policy. McBride v. Farmers' Bank,. 26 N. Y. 450 (Affirming 25 Barb. 657) ; Petersen v. Chemical Bant, 32 N. T. 40. 8. This section does not prevent the court from obtaining jurisdiction over the person of a foreign corporation, defendant in an action brought by a non- resident, etc., where such corporation appears generally before answering ; but the court does not thereby gain jurisdiction of the cause of action, unless it be within the provisions of either of the sub- divisions of this section, which limit the jurisdiction of the court in actions brought against foreign corporations by another foreign corpora- tion, or a non-resident. Erwin v. The Oregon R. R. & Nav. Co. 63 •How. 490. (Affirmed 38 Hun, 269.) 4. Where a foreign corporation appears before answering, it may subsequently object to the jurisdiction, the same as any other defendant. Id. 5. If the non-existence of the facts showing want of jurisdiction of the court in an action brought by a non-resident or foreign corporation, against another foreign corporation, is not set up in the answer, the court will presume them to exist. Brook v. National Mexican Con- struction Co., 3 C. P. E. 36. 412 BANKING LAWS. 6. It was lield in Downes v. Plioenix Bank, 6 Hill, 397, that the non- residence of the plaintiff in an action against a foreign corporation is matter in abatement merely, and is waived by appearing and pleading in bar. But see Seignouret v. Southern Bank of New Orleans, 3 Law Bull. 59. 7. A judgment obtained by a non-resident or foreign corporation against another foreign corporation, unless authorized by this section, is Toid and will, it seems, be set aside on motion for want of jurisdiction whenever that is shown. Seignouret v. Southern Bank of New Orleans, 3 Law Bull. 59. 8. The superior court of New York city has no jurisdiction over a for- eign corporation, in an action brought by a non-resident against the former, and the objection to the jurisdiction of the court may be taken at any time, although it has not been taken by answer. Brooks v. Mexi- can National Construction Co., 3 C. P. R. 36. 9. Where a draft on bankers in New York city was drawn in New Orleans by one foreign corporation in favor of another, and acceptance refused, held, in an action, that the cause of action arose in this State. Hibemia Nat. Bk. v. Lacombe, 84 N. Y. 367. (Affirming same case, 21 Hun, 166.) But where a draft of like character was given as security for a loan made out of the State by one such corporation to another, la an action to recover the amount of the loan, held, that the cause of action did not arise in this State. Western Bank v. City Bank of Columbus, 7 How. 238. 10. But, in an action against an indorser, the cause of action arises where the indorsement is made, regardless of where the note or hill is payable. "The contract of indorsement is undoubtedly a contract to pay where the indorsement is made." Sutherland, J. The Artisans' Bank v. The Park Bank, 41 Barb. 599. And in support of jurisdic- tion it will be presumed, after judgment, that the indorsement was made within the jurisdiction, though the defendant indorser lives out- side. International Bank v. Bradley, 19 N. Y. 245. 11. Where bonds and coupons executed without the State are payable within the State, the cause of action arises here,and the court has juris- diction, though both parties are foreign corporations. The Con. Mutual Life Ins. Co. v. The Cleveland, Columbus, etc., E. R. Co., 41 Barb. 28, and 23 Hun, 180. 13. Our courts are not authorized to regulate the internal afiairs of a foreign corporation, or to interfere with its general business. They pos- sess no visitorial power over them. Howell v. Chicago & N. W. R. R. Co., 51 Barb. 378 ; Howe v. Deuel, 43 id. 504 ; Way v. Keyport Steam- boat Co., 16 Abb. 320 (n). 13. The courts of this State will not, in the absence of fraud, enter- tain jurisdiction over a foreign corporation so as to compel a distribu- tion of its assets among the stockholders, even where the trustees are residents of this State. Howell v, Chicago & N. W. R. R. Co., 51 Barb. 378 ; Redmond v. Enfield Mfg. Co., 13 Abb. (N. S.) 334. So, also, where ACTIONS RELATING TO A CORPORATION. 413 it is soughit to restrain such a corporation f rdm making a dividend, where no fraud or illegality is shown, and the party has an ample remedy in the State where the corporation has a legal existence, the courts here should decline, in such case, any equitable jurisdiction. Merrick v. Van Santvoord, 34 N. T. 208. 14. The courts of this State have no jurisdiction to enable them to dissolve a foreign corporation. Barclay et al. v. Talman, 4 Edw. Ch. 123, distinguished from Penniman v. Briggs, 8 Cowen, 387. 15. Notwithstanding a voluntary assignment (including property in this State), for the benefit of its creditors by a foreign corporation, yet, in the absence of its actual dissolution .its property in this State caimot be applied and distributed by our courts in the same manner as upon a distribution, and a winding up, and final settlement of the concerns of the corporation. Barclay v. Talman, Id. 16. But for the purpose of preserving the property of an insolvent foreign corporation, the court may appoint a receiver. Murray v. Van- derbilt, 39 Barb. 140 ; Redmond v. Hoge, 3 Hun, 171. 17. Where a fund forming part of the assets of an insolvent (dis- solved) foreign corporation exists in this State, on which a citizen of this State has an equitable lien, our courts vrill detain and appropriate such fund, or so much thereof as may be necessary, to the satisfaction of the lien, although the persons holding the fund may be accountable to a foreign jurisdiction with respect to it. Tinkham v. Borst, 31 Barb. 407. AETICLE n. eTuDIOIAL StTPEEVISION OF A CoEPOEATION, ASD OF THE Offiobes and Membees thereof. Section 1781. Action against directors, etc., of a corporation, for mis- conduct. 1783. By wlioin action to be brought. 1783. This article, how construed. Action Section 1781. An action may be maintained against one against ^ ^ i o directors, or mors trustses, directors, managers, or other officers of a tioa for" Corporation, to procure a judgment for the following pur- dliot""" poses, or so much thereof as the case requires : 1. Compelling the defendants to account for their official conduct, in the* management and disposition of the funds and property committed to their charge. 2. Compelling them to pay to the corporation which they represent, or to its creditors, any money, and the value of any property, which they have acquired to themselves, or transferred to others, or lost, or wasted, by a violation of their duties. 3. Suspending a defendant from exercising his office, where it appears that he has abused his trust. 4. Eemoving a defendant from his office, upon proof or conviction of misconduct, and directing a new election to be held by the body or board, duly authorized to hold the same, in order to supply the vacancy created by the removal ; or, where there is no such body or board, or where all the members thereof are removed, directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies. 5. Setting aside an alienation of property, made by one or more trustees, directors, managers or other officers of a JUDICIAL SUPEKVISION, ETC. 415 corporation, contrary to a provision of law, or for a pur- pose foreign to the lawful business and objects of the cor- poration, where the alienee knew the purpose of the alienation. 6. Restraining and preventing such an alienation, where it is threatened, or where there is good reason to apprehend that it will be made. 1. The court can only interfere witli a corporation upon some of the grounds specified in the statute, either against the directors or officers personally (§§ 1781 and 1783), or against the corporate body itself for a dissolution. See section 1785, post ; Ferris v. Strong et al., 3 Edw. Ch. 127. 3. A court of equity has no visitorial power over corporations, except such as may be expressly conferred by statute. Belmont v. Erie R. R. Co., 53 Barb. 637. 3. Independent of the Revised Statutes, the directors of a moneyed or other joint-stock corporation who willfully abuse their trust or mis- apply the funds of the corporation, are personally liable to make good the resulting loss; and they are equitably liable for the loss or waste of corporate property, caused by their gross negligence or inattention to duty. Robinson et al. v. Smith et al., 3 Paige, 333. 4. In an action by the stockholders of an incorporated company against the individual directors, for fraud and mismanagement, etc., the corporation is a necessary party either as plaintiff, or defendant. Robinson et al. v. Smith et al. , 3 Paige, 333. 5. "A court of equity will not interfere by injunction,where the suit is brought on behalf of any stockholders who have sanctioned.or ac- quiesced in the acts cpmplained of." Angell & Ames on Corp., § 313 ; Balcom, J. Ramsey v. Erie R. R. Co., 7 Abb. (N. S.) 189. 6. "The remedy in case of loss by a corporation, by misjudgment merely of the directors, is to be found not in the courts, but in the cor- poration itself in its power by new elections to confide its interests to other managers." Id. 7. No officer of a corporation should be suspended from exercising his office, except upon clear and positive proof." Id. 8. Though by general rule of law, directors of a corporation elected for a definite term may hold over, yet there is no rule which compels them to do so ; and when a director sells out his stock in a corporation, and ceases to take part in the management of its affairs or the meeting of its directors, he need not, after the expiration of his term of office, tender a formal resignation or see that his successor is elected, and will not be liable for the subsequent mismanagement of the affairs of the cor- poration by the directors, though no successor to him be elected. Sturgis V. Vanderbilt, 73 N. Y. 391. 9. An action brought by a director for the purposes specified in sub- division one of this section, will not prevent a subsequent action by the 416 BANKING LAWS. attorney-general for the purposes specified in subdivisions one and three while the former is still pending; for in the latter action the officfers of the corporation may be removed, and more complete relief granted. People v. BrufE, 9 Abb. N. C. 153 ; Keeler v. Brooklyn Ele- vated R. E., id. 166. 10. Bank ofBcers are but agents of the corporation, and if they trans- cend or abuse their powers, are as much responsible to their principal, as are the agents of an individual. Austin, Receiver, etc., v. Daniels, 4 Denio, 299. 11. In a suit to set aside an alienation, provided for in subdivision five of this section, only those personally connected with the transfer are necessary parties defendant. Beecher v. Schieffelin, 4 Civ. Pr. E. 230. 13. As to the liability of the oflicers and directors of a corporation and trustees, it was held in that the directors are not liable for an in- nocent mistake or error of judgment in regard to their corporate rights and privileges, even where a loss has accrued as the direct and imme- diate consequence of the error, and in Crookshanks v. Turner, 7 Br. P. C. 355, cited in the same case, it was decided that a trustee should not be answerable for a mistake committed innocently, and from which he derived no advantage ; and that a court of equity would grant a per- petual injunction to prevent any proceedings at law grounded on such mistake. Scott v. Depeyster, 1 Edw. Ch. 518. 13. Where the official acts of the directors of a corporation, done without authority of law, are expressly or impliedly sanctioned by the stockholders, they become the acts of the corporation and binding equally upon all the corporators, although as to the public or third persons they are illegal. Id. 14. In such case whatever illegality there may be, attaches not to the directors individually and solely, but to the stockholders as well, and neither one is liable to the other for any damage arising out of such illegal transactions, even when it is the immediate and direct conse- quence. Id. 15. The directors of a corporation have a right to repose confidence in their employees in every thing within the scope of their duties, and where the secretary of a corporation had embezzled its funds to the extent of over $179,000, in an action brought to throw the entire loss on the directors individually, held that in the absence of fraud or collusion, there being no want of care or prudence on their part, the directors were not liable. Id. 16. The relation between a corporation and its stockholders is that of trustee and cestui que trust (Butts v. Wood, 37 N. Y. 818 ; Cumber- land Coal Co. V. Sherman, 80 Barb. 371) ; between the corporation and its directors, that of principal and agent. Smith v. Rathbun, 66 Barb. 402. (Same case reversed on questions of practice only, 75 N. Y. 133.) It seems there is no direct, but only " a certain kind of trust relation between the stockholders and directors of a corporation." Potter, J. JUDICIAL SUPEEVISION, ETC. 417 Smitli V. Eathbun, id. 408 ; Gardner v. PoUard, 10 Bosw. 691. Tlie Eevised Statutes expressly provide for the direct liability of directors to stockholders. (3 R. S. 589, § 1; id. 591, § 10.) 17. As to the extent of the liability of the officers and directors of a corporation in general, the rule of the civil law was held applicable in the above quoted case of Scott v. Depeyster, viz. : That ' ' those who are named by companies and corporations to have the direction of their affaira.are obliged to take the same care and diligence as factors or agents. They are answerable not only for any fraud and gross negligence which they may be guilty of, but also for all faults that are contrary to the care required of them." JDomat, Book 3, tit. 3, § 3, and it was held (S. v. De P.), that the degree of care required of them was to be determined by the law of bailments, which embraces the trust assumed by directors, and places them in the light of bailees of the property belonging to the corporations; and as the directors are generally interested in the joint stock of the company, and therefore act in relation to a bailment bene- ficial to both parties, the true rule of their liability (as to neglect) is that they are answerable for ordinary neglect, which is understood to be the omission of that care which every man of common prudence takes of his own concerns. Gardiner v. Pollard, 10 Bosw. 691. 18. A director of a corporation, being a trustee, cannot act in the auditing of his own claim against the corporation; and a meeting of directors at which his presence is necessary to constitute a quorum,has no authority to entertain the claim; and if entertained and allowed, the transaction will be avoided,and repayment compelled at the suit of any stockholder. Butts v. Wood, 37 N. T. 316. (Affirming 38 Barb. 181.) § 1782. An action may be brought, as prescribed in the By whom last section, by the attorney-general in behalf of the people be brought of the State ; or, except where the action is brought for the purpose specified in subdivision third or fourth of that sec- tion, by a creditor of the corporation, or by a trustee, direc- tor, manager or other officer of the corporation, having a general superintendence of its concerns. 1. As to who is a manager, see Swaizy v. Union Mfg. Co., 43 Conn.' 556. 3. Previous to the enactment of this section (in 1880),it was held that an action against an officer of a corporation for damages caused by his misapplication or waste of the corporate funds and property, must be brought in the name of the corporation; unless such corporation, upon being applied to, refuse to bring the action. "In that contingency, and then only, can a stockholder bring an action for the benefit of him- self and others similarly situated, and in such action the corporation must necessarily be made a party defendant. " Miller, J. Greaves v. Gouge, 69 N. T. 154 ; affirming same case, 53 How. 58 ; 49 id. 79. 63 418 BANKING LAWS. 3. Tlie omission of the corporation to elect officers and to transact business is not a dissolution of the corporation,and affords no sufBcient reason for not making it party defendant. Allen v. N. J. So. E. E. Co. 49 How. 14 ; 10 Bosw. 674. 4. When a stockholder brings an action against an officer of a corpo- ration for damages caused by the officer's misconduct, the complaint should allege that the corporation, on being applied to, refused to prose- cute. Without such averment the complaint is defective and Insuffi- cient. Greaves v. Gouge, 69 N. T. 154 ; 8 Hun, 1 ; 49 How. 14 ; 3 Paige, 232 ; 5 id. 607. 5. It seems that, in the action last mentioned, all the stockholders must be made parties, or the action must be brought by the stockholder in his own behalf, and for the benefit of all others standing in the same situation as himself. Smith v. Rathbun, 66 Barb. 503 ; Allen v. Curtis, 26 Conn. 450 ; 56 How. 216 ; 49 id. 14. 6. The directors or other agents of a corporation may, however, be- come directly liable to the stockholders (individually),for special injury caused the latter by the fraudulent acts of the former, beyond the cor- porate injury ; e. g., slanders affecting the value of the stock, the Issue of spurious stock, which is equivalent to a false assertion of the amount issued. Cazeaux v. Mali, 35 Barb. 578 ; Mead v. Mali, 15 How. 847. (Affirmed, 25 Barb. 578.) The depreciation of the market value of the stock below its intrinsic worth, by the abstraction of the funds of the corporation. Stetson v. Faxon, 19 Pick. 147. But, it seems, the action must be brought to recover special damages only. See, on whole sub- ject, Garaner v. Pollard, 10 Bosw. 674 ; Bissell v. M. S. & Ind. N. E. E., 33 N. T. 375 ; Smith v. Eathbun, 66 Barb. 503. 7. The 53d section of the National Banking Act (§ 5339 H. S. E. S., p. 1, post), also provides that in case of any violation of the provisions of the said act, every director, who participated in or assented to the same, shall be held liable in his personal and individual capacity for all dam- ages which the association, its shareholders, or any other person shall have sustained in consequence of such violation. 8. Where a corporation appears by an attorney, upon the return of an order to show cause, that gives jurisdiction,without other proof of ser- vice, to appoint a receiver and wind up the corporation. Attomey-G eneral v. Guardian Mut. Life Ins. Co., 77 N. T. 373. 9. As to the questions relating to the powers of a receiver appointed under this section, and whether the corporation is necessarily dissolved by the appointment of a final receiver, see sections 1788 and 1789, p«sf. The appointment of a receiver is provided for in section 1878. 10. A corporation is not dissolved by the appointment of a receiver and a sequestration of its property. Huguenot Nat. Bk. v. Studwell, 6 Daly, 18 ; Mann v. Pentz, 8 N. T. 415. (Reversing 2 Sandf. Ch. 387.) 11. Proceedings for the sequestration of a corporation's effects are based upon the recovery of a final judgment.and the return of an exe- cution issued thereon unsatisfied ; and where the judgment was oh- JUDICIAL SUPEEVISION", ETC. 419 tained by default, and the default subsequently opened, and the defend- ant allowed to come in and defend, held, that notwithstanding the judgment' was allowed to stand as security, it was no longer a final judgment upon which the plaintifE might have the supplementary remedy of sequestration, and that an order appointing a receiver therein should be vacated. Rodbourn v. TJtica I. & B. R. E. Co., 28 Huu, 369. 12. The pendency of proceedings under this section,will not prevent the attorney-general from bringing an action in a proper case to dis- solve the corporation, or a general creditor from instituting proceedings to restrain the improper exercise of certain powers, or to procure payment of his debt. The institution of either of these proceedings does not preclude the others, but each party may pursue the remedy given him by statute, subject to the general controlling power of the court. Dambman v. Empire Mill, 13 Barb. 341. 8 1Y83. This article does not divest or impair any visito- This arti- . 1 . 1 • 1 1 cle, how rial power over a corporation, wnicn is vested by statute construed, in a corporate body, or a public officer. AETICLE III. Actions to Peootiee the Dissolutioit of a CoEPOEATioiiry AND Actions to Enfoece the iNDiYrouAi, Liability of THE OfFICBES OE MbMBEES OF A OoEPOEATION, WITH OE wirHOUT A Dissolution theeeof. Sbction 1784. Action by judgment creditor, for sequestration, etc. 1785. Action to dissolve a corporation. 1786. Id. ; by whom to be brought. 1787. Temporary injunction. 1788. Eeceiver may be appointed. Permanent and temporary receiver. Powers, etc., of temporary receiver. 1789. Additional powers ^and duties may be conferred upon. temporary receiver. 1790. Making stockholders, etc., parties. 1791. When separate action may be brought against them. 1793. Proceedings in either action. 1793. Judgment ; property of corporation to be distributed. 1794. Id. ; stock subscriptions to be recovered. 1795. Id. ; as to liabilities of directors and stockholders. 1796. EfEect of this article limited. Action by § 1784. Where final judgment for a sum of money haa OTelttor"* been rendered against a corporation created by or under the t?ation"'^"laws of the State, and an execution issued thereupon to the **"■ sheriff of the county, where the corporation transacts its general business, or where its principal office is located, has been returned wholly or partly unsatisfied, the judgment creditor may maintain an action to procure a judgment, sequestrating the property of the corporation, and providing for a distribution thereof, as prescribed in section 1793 of this act. 1. Where a corporation appears by its attorney on the return of an order to show cause, the court acquires jurisdiction without other proof ACTIONS TO PROCUEE DISSOLUTION, ETC. 421 of service to appoint a receiver and wind up the corporation. Att'y- Gen. V. Guardian Mutual Life Ins. Co., 77 N. Y. 373. 3. Mr. Throop, in his note to this section, says that the questions ■which have been much discussed, relating to the .powers of a receiver appointed under this section, and whether the corporation is necessarily dissolved by the appointment of a final receiver, have been rendered practically obsolete by sections 1788 and 1789 of the Code of Civil Pro- •cedure. § 1785. In either of tlie following cases, an action to ^, etc-, the proceedings cannot be taken by a person properly made *'''^- a defendant in the action, on the ground that the plaintifE has joined with him, as a defendant in the action, a person whose name appears on the stock-books of the corporation or association as a stockholder thereof, by the name so ap- pearing, but who is misnamed or dead, or is not liable for any cause. In such a case, the court may, at any time be- 440 BANKING LAWS. fore final judgment, upon motion of eitter party, amend the pleadings and other papers without prejudice to the pre- vious proceedings, by substituting the true name of the person intended, or by striking out the name of the person who is dead or not liable, and, in a proper case, inserting the name of his representative or successor. See Code of Civil Procedure, section 1934. ARTICLE yill. MisoELLAiirEOTrs Pbotisions of the Code of Civil Pro- CEDUEE KELATING TO CoEPOEATIONS, ETC. [The matter in italics gives only the substance of or a reference to the sections mentioned in this article.] § 263. Subd. Y. Sv/perior city courts have jurisdiction (?/'juri3dio- certain actions aqwmst foreiqn corporations. superior ^ t/ a jr gjty courts 1. The city court of Brooklyn has no jurisdiction over domestic cor- porations, except such as transact their general business within said city, or are established by law therein. Appearing and raising the objection by answer, does not waive the objection to the jurisdiction. Benckle v. Eckhart, 3 Comst. 133 : Landers v. Staten Island R. E. Co., 53 N. Y. 450. 3. The superior court of the city of New York "has no jurisdiction over a foreign corporation in an action brought by a non-resident, and the objection to the jurisdiction of the court may be taken at any time, al- though it has not been taken by answer. " Truax, J, Brooks et al. v. The Mexican Nat. Const. Co., 3 Civ. Pr. E, 36. Subd. 8. Superior city courts have jurisdiction of pro- ceeding to sell property or to dissolve domestic corporations. The decisions under former laws relating to the dissolution of domestic corporations by superior city courts,seem to be put beyond doubt by this subdivision. See, however, Van Pelt v. IT. S. Metallic Spring Co., 13 Abb. (N. S.) 335, and cases cited in note. § 264. When domestic corporation or joint-stoch company whendo- deemed residents of city, for the purpose of determining ™o^ratfon"' jurisdiction of superior city covHs. resident. § 525. Subd. 1. Yerification of pleading where domestic corporation is apa/riy, to he made hy an officer thereof. 1. A director of a domestic corporation may verify the answer of the corporation. Bigelow v. Whitehall Mfg. Co., 1 City Ct. (Marine Ct.) R. 138. 56 442 BANKING LAWS. 2. An agent may verify a reply wliere lie could the complaint. Kirkland v. Aiken, 66 Barb. 211. Damage^ § ^^^- J^^i^ctges Sustained hy corporation or jomt-stock ^°^^°^^- association hy reason of an injunction, how ascertamed and recovered. ^tMh-* °' § ^^^- Warrant of attachment may be granted against be*gra™f/d ^^^ property of a foreign corporation, or of a domestic cor- cases!'*'"^ poration in certain cases. If the action is to recover dam- ages for breach of a contract, the affidavit must show that the plaintifE is entitled to recover a sum stated therein, over and above all counterclaims known to him. 1. As to the sufBciency of the affidavits upon which an attachment is granted, the general rule as laid down by the general term of the supreme court in the case of Bennett v. Edwards, 27 Hun, 352, is, that they should be explicit (a), and in clear and concise terms state a cause of action (b), and such facts as will satisfy the court or officer to whom the application is made of the attempt and intent of the defendant to cheat and defraud his creditors (c). In general these facts should be stated upon positive knowledge (d) ; but when, from the circumstances of the case, they cannot be so stated, they may be stated upon informa- tion and belief (e), in which case the names of the persons and the sources from which the information is derived, and the reasons why the affidavits of those having positive knowledge cannot be procured should be given. 2. The clause "over and above all counter-claims" is an essential part of the affidavit, and if omitted, a warrant issued thereupon is void ab initio. Donnell v. Williams, 21 Hun, 216 ; Lyons v. Blakesly, 19 id. 299. Oontra. Carr v, Van Hoesan, 26 id. 316. In any event it will be set aside on motion. Carr v. Tan Hoesan, 26 id. 316. 3. See also as to the sufficiency of the affidavit, Claffin v. Baere, 57 How. Pr. 190 ; Bank of London v. Dash, 60 id. 124 ; Shaw v. Van Rensselaer, id. 143 ; McCoon v. White, id. 149 ; Weiller v. Schrieber, 63 id. 491. 4. The provision of the National Banking Act (U. S. Eev. Stat., § 5242), p. post, prohibiting the issuing of an attachment, injunction or execution against associations organized under it or their property be- fore final judgment, applies only to an association which has become insolvent or about to become so, as specified in the preceding part of the section. Robinson v. National Bank of Newberne, 81 N. Y. 385. (Affirm- ing 19 Hun, 477.) 5. " It is only where jurisdiction cannot be aotjuired without resort to an attachment, that the power of congress to inhibit, or rather topost- pone,the use until final judgment of such a provisional remedy, seems MISCELLANEOUS PROVISIONS, ETC. 443 to be at all questionable." Barrett, J. Cooke v. State National Bank, 50 Barb. 339. § 647. The rights of shares which the defendant has in ^g^^i|°* the stock of an association or corporation, together with the "^jly^l^ interest and profits thereon, may be levied upon, and the""* sheriffs certificate of the sale thereof entitles the purchaser to the same rights and privileges, with respect thereto, which the defendant had, when they were so attached. 1. In tlie case of Plimpton v. Blgelow, 93 N. Y. 593, tlie court of appeals (Andrews, J.) "with, respect to this section say, "We are therefore of the opinion, that the fundamental condition of attachment proceed- ings, that the res must be within the jurisdiction of the court in order to an effectual seizure, is not answered in respect to shares in a foreign corporation by the presence here of its officers, or by the fact that the corporation has property and is transacting business here, and that sec- tion 647 must be construed as applying to domestic corporations only." 3. This section is the only authority for the attachment of shares of a defendant in a corporation. Plimpton v. Bigelow, 98 N. Y. 593. (Ee- versingsame case, 39 Hun, 363, and affirming same case, Sp.T., 68 How. Pr. 485,) S 650. Upon the application of a sheriff, holding a warrant Certmoate of attachment, the president or other head of an association a°,*f'°*«'^ 6Sii uO D6 or corporation, or the secretary, cashier, or managing agent furnished thereof, or a debtor of the defendant, or a person holding property, including a bond, promissory note, or other in- strument for the payment of money, belonging to the defendant, must furnish to the sheriff a certificate, under his hand, specifying the rights or number of shares of the defendant, in the stock of the association or corporation, with all dividends declared or incumbrances thereon, or the amount, nature, and description of the property, held for the benefit of the defendant, or of the defendant's interest in property so held, or of the debt or demand owing to the defendant as the case requires. 1. A receiver cannot be required to give a certificate to the sheriff on a levy of an attachment. Smith v. McNamara, 15 Hun, 447. The plaintiff must rely on the notice to the receiver of their lien, and seek redress upon the judgment when recovered in the proper tribunal. Lehman v. Williams, 1 Law Bull. 58, Brady, J. 444 BANKINa LAWS. 2. It seems that in any event the person to whom application is made, as prescribed in this section, cannot he made to furnish the certificate. Buckingham v. White, 35 Hun, 441. At any rate not after judgment. Schieb v. Baldwin, 33 How. 378. But see Bowen v. First National Bank of Medina, 34 How. Pr. 408, and cases cited in note. (Followed in Smoot V. Heim, 1 Civ. Pr. K. 308.) 3. A bailee of goods having a lien thereon for a sum far exceeding their value, may not for that reason certify that he holds no goods for the benefit of the bailor, but if he does so under a misapprehension, he does not thereby forfeit his lien (under the general principle that a claim by a factor inconsistent with his actual right may work a waiver of his lien). The Bank of Mutual Redemption v. Sturgis et al., 9 Bosw. 660. Examin- § 651. Persons refusing such certificate or gi/ving false of persons; certificate may he examined under oath concerning the oertlfloate. same. 1. When the certificate is refused.plaintifE's remedy is by the examin- ation provided for in this section, after which, it seems, there is no au- thority which the court can be required to exercise,to compel the person so examined to furnish the certificate (Buckingham v. White, 35 Hun, 441); but when the property is tangible,and the examination shows it to be under the control of the person examined, he may be summarily re- quired to deliver it to the sherifE. Hall v. Brooks, 35 Hun, 577. 3. An examination may be had under this section, of the person giv- ing the certificate prescribed in section 650, after final judgment in the action. The judgment does not supersede the attachment. Smoot v. Heim, 1 Civ. Pr. R. 308. 8. When the person giving or required to give the certificate under section 650,claims title to the property by assignment from the defend- ant, on examination of such person under this section the consideration of the assignment may be inquired into. Glen Cove Starch Mfg. Co. v. Gotthold, 1 Civ. Pr. R. 366, note ; 1 Law BuU. 43. 4. Refusal to give the certificate does not suspend action upon the attachment, or prevent a levy untU the examination is had. That pro- ceeding is for the benefit of the creditor and sherifE, but they are not bound to resort to it. If the certificate is given, the sherifE is not bound by it, but may attach the property described by the certificate, and all other property liable to attachment in the possession of the party. O'Brien v. Mechanics and Traders' Fire Ins. Co., 56 N. T. 52. 5. An attaching creditor cannot be deprived of his right to an ex- amination under this section,because the person giving or refusing to give the certificate makes an affidavit that the property in his hands is held in trust, and cannot be applied in payment of plaintiff's debt. Baxter v. Missouri, Kansas & Texas R. R. Co., 4 Hun, 630; 67 Barb. 283. MISCELLANEOUS PEOVISIONS, ETC. 445 6. The person examined cannot put an end to the examination, by denying under oath the defendant's ownership of the goods in question. And where he places his denial upon a construction of certain papers relative to the goods, he must produce the papers, and let them speak for themselves. Butter v. Boyd, 3 Abb. N. C. 6, Barrett, J. § Y91. Subd. 7. An action against a corporation or joint- Actions, stock association, issuing bank notes or any kind of paper credits to circulate as money, or by or against a receiver of suck corporation or association. An action in whicb a county or town is sole plaintifE or defendant. Subd. 8. An action against a corporation founded upon a note or other evidence of debt, for the absolute pay- ment of money. An action upon an undertaking given upon an appeal to the court of appeals, or to stay the exe- cution on an appeal to the court of appeals. Studwell V. Charter Oai Ins. Co., 19 Hun, 138 ; Wells v. Watertown Fire Ins. Co., 21 id. 409. § 839. Admission of member of an aggregate corpora^ Admission tion^ not evidence against the. corporation, except it was ber"of "cor- made concerning and while engaged in a transaction in ^°'* which he was the authorised agent of the corporation. § 868. Production upon a trial of a iooh or pa/per of corporation may be compelled by subpoena duces tecum, or by an order ; such subpoena or order deemed sufficiently obeyed if produced by subordinate officer or employee having requisite knowledge. 1. Where the production of the books and papers desired can be secured by a subpoena diices tecum, it is customary to refuse an order. Central Cross Town E. R. Co. v. Twenty-third Street R. E. Co., 53 How. 47. § 869. Jf the personal attendance of a particular officer of the corporation is required, a subpoena without a duces tecum, clause must also be served upon him. § 872. Subd. 7. Deposition of officers or directors of a corporation man) be taken. 1. This section authorizes the examination of the officers and directors of a corporation where their testimony is necessary and material, but does not authorize the examination of its servants, agents or employees. Eeichmann v. Manhattan Co., 26 Hun, 433. M6 BANKING LAWS. 3. The examination of parties before trial, and the discovery or in- spection of books, etc. , are two entirely different and distinct proceed- ings, and may be pursued either concurrently, or at different stages of the litigation. McGtuffin v. Dinsmore, 4 Abb. N. C. 341. 3. A foreign corporation doing business in a distant State,should not be required to produce its papers, which are probably in constant use by it in that State, before a referee in this State. In such case,the order should direct it,to deliver to the plaintiff sworn copies of so much of their contents as relates to the subject-matter mentioned in the order, within a reasonable time, etc. 4. The moving afladavit, upon an application for the examination of an officer of a corporation defendant, as a party before trial,must state the name of the officer or director whose testimony is necessary and mate- rial. Williams v. Western Union Tel. Co., 47 N. T. Supr. Ct. 380. (Affirming 1 C. P. 84.) 5. An affidavit and order for the production of the papers, etc., of a corporation must give the names of the papers to be produced. Williams v. Western Union Tel. Co., 1 C. P. 84. (Affirmed, 47 N. Y. Supr. Ct. 380.) Seal. § 960. Seal of corporation authorized or required hy law may he impressed directly on the paper. Reference, § 1012. A reference shall not he made, of course, upon granted, consent of the parties, in an action against a corporation to ohtain the dissolution thereof, the appointment of a re- ceimer of its property, or the distribution thereof, unless it is hrought hy the attorney-general. But the court may, in its discretion, where the parties consent to a reference, grant or refuse a reference, and, where a reference is granted, the court must designate the referee. § 1660. Action to compel the determination of a claim to real property may he maintained hy or against a corpora- tion as if it was a natural person. § 1879. Domestic corporation not subject to action hy judgment creditor to compel discovery. wwch'ma § 1948. The attorney-general may maintain an action tain™d'by ^po^i ^^^ own information, or upon the complaint of a pri- penerair "^^^^ person, in either of the following cases : 1. Against a person who usurps, intrudes into, or unlaw- MISCELLANEOUS PEOVISIONS, ETC. 447 fully holds or exercises, within the State, a franchise or pub- lic office, civil or military, or an office in a domestic cor- poration. 3. Against one or more persons who act as a corporation, within the State, without being duly incorporated ; or ex- ercise, within the State, any corporate rights, privileges or franchises, not granted to them by the law of the State. 1. It is not necessary for the attorney-general to obtain leave to bring an action under this section. The reason for the distinction in this re- spect (i. e., as to obtaining leave) between this section and section 1798 (p. 431 ante) is ,that the former relates to cases where there is an exercise of or intrusion into offices or franchises to which the party has no right, while the cases under section 1798 are, in general terms, those of an abuse of a franchise which the party possesses. People v. Boston, H. T. & W. R. R. Co., 27 Hun, 538. 2. The right to bring an action of quo warranto vests in the State alone, and in this respect the attorney-general represents the State, and his decision as to whether such an action shall be brought, is final, and cannot be overruled by the courts. People, «a; reZ. Demarest, v. Fairchild, 8 Hun, 334. (Affirmed, 67 N. Y. 334.) 3. Our statute has extended the remedy {quo warranto) to any fran- chise within this State, or any office in a corporation created by the au- thority of this State ; but what constitutes an " office " within the mean- ing of the statute extending the remedy, must still be determined by the general rules of the common law. People, ex rel. McCouville, v- Hills, 1 Lans. 202. 4. In an action to try the title to an office.an injunction pendente lite cannot be granted. Morris v. Wheelan, 64 How. 109 ; People, ex rel. Wood, V. Draper, 24 Barb. 265 ; People, ex rel. Floyd, v. Conklin, 5 Hun, 452. 5. In action by the attorney-general to try the title to an office, the burden is upon the defendant to show his right to the office. Possession is not evidence of such right. And when the action is brought on the relation of one claiming the office,the failure of the defendant to prove his title does not establish that of the relator upon that issue, the plaintiffs have the affirmative, and the burden is upon them to main- tain it. People, ex rel. Judson, v. Thacher, 55 N. Y. 525. 6. §M0 warranto will only lie where the party proceeded against is either a de facto or de jure officer in possession of the office, and where the facts are in dispute. People, ex rel. Kelly, v. Common CouncU of City of Brooklyn, 77 N. Y. 503 ; People, ex rel. Martin, v. McCullough, 11 Abb. (N. S.) 139. 7. The attorney-general is given no right to bring an action to declare official acts void. People v. Miner, 3 Lans. 396. 8. A quo warranto action brought by the attorney-general to try the 448 BANKING LAWS. title to a corporate office, is an action at law, and the issues therein are strictly legal, and the trial thereof by a jury is a constitutional right. If with such a cause of action, other equitable causes are united, all must be tried' by jury unless waived. People v. Albany and Susquehanna R. K. Co., 57 N. T. 162. 9. If an action is commenced in the name of the people without the consent of the attorney -general, he cannot subsequently ratify the pro- ceeding. People V. Mayor, 19 How. 389. 10. The attorney-general can only interfere when public interests are concerned ; not in the interests of mere individuals and private rights. People V. B. T. and C. I. R. R. Co., 89 N. Y. 76. § 1950. Such actions triable iyjury. Injunc- tions. § 1955. Final judgment m favor of plaintiff must per- petually restrain defendants from comjnission of acts com- plained of. Tempora/ry imjv/notion may also he granted in such action. § 19S4. Such action to he hrought in the nam,e of the people. aotlion?' § 1987. Costs in such action may he collected hy execution against a/ny of the persons claiming to he a corporation, or hy attachment, or other process against the person of any director or other officer of the corporation. 1. It is only in actions against individuals acting as a corporation within the State without being duly incorporated, or exercising within the State corporate rights, privileges or franchises not granted to them by the law of the State (§ 1948, subd. 3), that the directors or other officers of a corporation can be held liable to attachment,or other process for the payment of costs under this section. People v. Cohocton Stone Road, 25 Hun, 13. § 2146. Corporation included in term " body or officer " in provisions concerning certiorari. Supple- I 2441. Corporation indebted to or having personal Footed- property of judgmsnt-d^tor may he examined in suppU- vnentary proceedings concerning the same. 1. Where a j adgment is recovered against a joint-stock association in the name of its president or treasurer, the judgment is not against the officer personally, and he or any other member of the association maybe MISOELLANEOTJS PEOVISIONS, ETC. 449 examined under this section on complying with its provisions. Cour- tris V. Harrison, Treasurer, etc., 12 How. Pr. 359. § 2463. Provisions concerning supplementary proceed- ings not appUccMe where the judgment-debtor is a corpora- tion created by or under the laws of the State or a foreign corporation specified in section 1812, ante, p. , of this act. § 2865. An action cognizable ly a justice of the peace may ie brought by or agaim,st a corporation. 1. A justice's court, having jurisdiction of the subject-matter, may ac- quire jurisdiction over the defendants, in a suit commenced therein against a foreign corporation, by the voluntary act of the corporation in appearing and pleading to the merits. Paulding v. The Hudson Mfg. Co., 3 E. D. Smith, 38. § 3343. Subd. 18. A domestic corporation is a corpora- Definition tion created by or under the laws of the State ; or located in "domestic ■' ' corpora^ the State and created by or under the laws of the United ''°"-" States ; or by or pursuant to the laws in force in the colony of New York, before the nineteenth day of April, in the year seventeen hundred and seventy-five. Every other cor- • poration is a "foreign corporation." AETICLE IX. CEtMtNAL PeOCEBDINGS AGAINBT CoEPOEATIONS. 1881, Code of Criminal Proeediire, Part IV, Title XII, Chap. IX — Proceedings against corporations. Section 675. Summons upon an information or presentment against a corporation, by whom issued, and when returnable. 676. Form of the summons. 677. When and bow served. 678. Examination of the charge. 679. Certificate of the magistrate, and return thereof with the depositions. 680. Grand jury may proceed as in the case of a natural person. 681. Appearance and plea to indictment, and proceedings thereon. 683. Fine, on conviction, how collected. Summons § 675. TJpon an information against a corporation, the informa- magistrate must issue a summons, signed by him, with his tion or pre- o 7 ^^ j ^ agaiSt'a ° ^'^^ ^^ office, requiring the corporation to appear before him, tion,'*by ^* ^ Specified time and place, to answer the charge ; the time I^'^d'^and ^o be uot Icss than ten days after the issuing of the summons. rurnib?e". 3 «• S-, 1046, §§ 56, 57, 58. § 676. The summons must be in substantially the follow- ing form : Form of " CouTfTT OF At.tjajty [or as the case may be] : " In the name of the people of the State of New York : "To the [naming the corporation] : " Tou are hereby summoned to appear before me, at [naming the place], on [specifying the day and hour], to answer a chiarge made against you, upon the informoMon of A. B., for [designating the ofEense generally]. " Dated at the cUy [or ' town ' ] of , the day of ,18 . " G. H., Jttstiee of the Peaae." [or as the case may be.] summons. OEIMINAL PROCEEDINGS, ETC. 451 § 6Y7. The summons must be served at least, five days J^" and before the day of appearance fixed therein, by delivering a served, copy thereof and showing the original to the president, or other head of the corporation, or to the secretary, cashier, or managing agent thereof. § 678. At the time appointed in the summons, the magis- §on™f't^e trate must proceed to investigate the charge, in the same charge, manner as in the case of a natural person brought before him, so far as those proceedings are applicable. § 679. After hearing the proofs, the magistrate must certify of oJe"*'* upon the depositions, either that there is or is not sufficient Sfl'retum cause to believe the corporation guilty of the offense charged, witif the and must return the depositions and certificate in the manner tions. prescribed in section 221. 3 E. S. IpOl, § 38. 1. "To the next court of oyer and tenniner,or court of sessions of tlie county or city court having power to inquire into the offense by the in- tervention of a grand jury, at or before its opening on the first day." Extract from section 321. Code of Criminal Procedure. S 680. If the magistrate return a certificate that there is Grand jury o c3 may pro- sufficient cause to believe the corporation guilty of the of- "^I'^^e'of f ense charged, the grand jury may proceed thereon, as in p^on'®' the case of a natural person held to answer. § 681. If an indictment be found against a corporation, it Appear- may appear by counsel to answer the same. If it do not §}^f^°^^" thus appear, a plea of not guilty must be entered and .the gg^^fngs same proceedings had thereon as in other cases. ftereon. § 682. When a fine is imposed upon a corporation, on Fine on conviction, it may be collected by virtue of the order im- **J'^g'gt'^^^ posing it, by the sheriff of the county, out of their real and personal property, in the same manner as upon an execution in a civil action. AETIOLE X. FBATIDtrLENT INSOLVENCIES BT CoEPOEATIONS AUD OTHEB FEAUDS IN THEIE MANAGEMENT. 1882, Penal Code, Title XV, CStiapter XI— Fraudulent in- solvencies by corporations and other &auds in their man- agement. Section 590. Frauds in subscription for stock of corporations. 591. Fraudulent issue of stock, scrip, etc. 593. Frauds in procuring organization of corporation, or in- crease of capital. 593. Unauthorized use of names iu prospectuses, etc. 594. Misconduct of directors of stock corporations. 595. Id., of banlting corporations. 596. Certain loans not invalid. 597. Penalty for saJe or hypothecation of bank notes. 598. Id., for excessive issue of notes. 599. Guaranty or indorsement beyond certain amount. 600. Overdrawing account, by ofBcer. 601. Receiving deposits in insolvent bajiks. 603. Frauds in keeping accounts, etc. 603. Officer of corporation publishing false reports of its con- dition. 604. Insolvencies of corporation deemed fraudulent, when. 605. Directors participating iu fraudulent insolvency, how punishable. 606. Violation of duty of directors of moneyed corporations. (607 and 608 relate to railroad corporations.) 609. Directors of corporation presumed to have knowledge of its affairs. 610. Director present at meeting, when presumed to have as- sented to proceedings. 611. Directors absent from meetings, when presumed to have assented to proceedings. 613. Failure of director upon whom application is served, etc. 613. Foreign corporations. 614. " Director " defined. Fraud in § 590. A person who signs the name of a fictitious per- tion for son to any subscription for or agreement to take stock corpora- in any corporation, existing or proposed, and a person who- signs to any subscription or agreement the name of any- FRAUDULENT INSOLVENCIES, ETC. 453 person, knowing that such person does not intend in good faith to comply with the terms thereof, or under any under- standing or agreement that the terms of such subscription or agreement are not to be compHed with or enforced, is guilty of a misdemeanor. 1. "Tiis section, whicli is new, is intended to reach a species of fraud frequently practiced in the organization of corporations." Orig- inal note. 3. "The law must now be considered as settled, that the obligation of actual payment is credited in all cases by a subscription to a capital stock, unless the terms of subscription are such as plainly to exclude it. Stanton t. Wilson, 3 Hill, 153 ; Cross v. Jackson, 5 id. 478 ; VaJk v. Crandall, 1 Sandf . Ch. 180 ; Farmers and Mechanics' Bank v. Jenks, 7 Mete. 393 ; Herkimer Mfg. Co. v. Small, 31 Wend. 373 ; Hartford and New Haven E. R. Co. v. Kennedy, 13 Conn. 499. " And in a masterly opinion in which all the cases are reviewed, the late assistant vice-chan- cellor has very clearly shown that the general rule applies with peculiar force to the associates of a banking company under the general law." Duer, J. Palmer, Special Receiver, v. Lawrence et aZ., 3 Sandf. Sup. Ct. 164; Quoting Sagory, Receiver, v. Dubois, 3 Sandf. Ch. 466. (Affirmed, 5 N. Y. 389.) 3. The general rule, which is fairly deducible from all the cases on this subject, was stated and acted upon by this court in Brouwer v. Ap- pleby, 1 Sandf. Sup. Ct. 108. It is, that " a defendant who has con- tracted with a corporation de faeio,is never permitted to allege any de- fect in its organization as affecting its capacity to contract or sue ; but that all such objections, if valid, are only available on behalf of the sovereign power of the State." Id. 170. 4. An original associate in a banking associatiou,cannot be permitted to impeach the certificate which he has subscribed. He cannot, there- fore, deny the legal existence of the company, or the validity of its shares. The transferee of the stock of such original associate, and as- suming the indebtedness to the company upon his subscription, places himself in the same relation to the company, and wiU be estopped from disputing the validity of the debt upon any ground, that could not have been taken by the original associate himself. Id. 174. § 691. An ofScer, agent or other person in the service of Fraudu- any joint-stock company, or corporation formed or existing of stock, under the laws of this State, or of the United States, or of any State or Territory thereof, or of any foreign govern- ment or country, who willfully and knowingly, with intent to defraud, either 1. Sells, pledges, or issues, or causes to be sold, pledged, 454 BANKING LAWS. or issued, or signs or executes, or causes to be signed or executed, witli intent to sell, pledge, or issue, or cause to be sold, pledged, or issued, any certificate or instrument pur- porting to be a certificate or evidence of the ownership of any share or shares of such company or corporation, or any bond or evidence of debt, or writing purporting to be a bond or evidence of debt of such company or corporation, without being first thereto duly authorized by such com- pany or corporation, or contrary to the charter or laws un- der which such corporation or company exists, or in excess of the power of such company or corporation, or of the limit imposed by law or otherwise upon its power to create or issue stock or evidences of debt ; or 2. Reissues, sells, pledges, or disposes of, or causes to be reissued, sold, pledged, or disposed of, any surrendered or canceled certificates, or other evidence of the transfer or ownership of any such share or shares. Is punishable by imprisonment for not less than three years nor more than seven years, or by a fine not exceeding three thousand dollars, or by both. 1. The oflScers, directors and stockliolders of an incorporated com- pany cannot, even by an unanimous agreement made under an honest misapprehension of their powers, give to the corporation any iacreased power beyond that which has been conferred upon it by the law of the legislature. If the officers and directors increase the capital of the com- pany, or issue certificates of stock beyond the amount of capital, or .as- sume to exercise other powers without legislative sanction, such un- authorized acts would be good cause to cancel its charter. An oflScer, therefore, by a secret and fraudulent act of issuing certificates of stock beyond the amount of its capital, cannot make such an act legal and binding. A corporation being limited in its powers by law cannot, even by implication, authorize acts, not permitted by its charter, to be per- formed by its agent. People, ex rel. Jenkins et al., v. Parker V. C. Co. etal, 10 How. 546. Frauds In § 592. An officer, agent, or clerk, of a corporation, or of organiza- persons proposing to organize a corporation, or to increase poration, the Capital stock of a corporation, who knowingly exhibits or increase ■*■ . of capital, a false, forged, or altered book, paper, voucher, security, or other instrument of evidence to any public officer or board authorized by law to examine the organization of such cor- FKAUDULBNT INSOLVENCIES, ETC. 455 poration, or to investigate its affairs, or to allow an increase of its capital, with intent to deceive such officer or board in respect thereto, is punishable by imprisonment in a State prison not exceeding ten years and not less than three years. See Laws 1829, chap. 94, § 29. § 593. A person who, without authority, subscribes the^nauthor- name of another to, or inserts the name of another in, any names in ' T J prospectus, prospectus, circular, or other advertisement or announcement ^to. of any corporation or joint-stock association existing, or in- tended to be formed, with intent to permit the same to be published, and thereby to lead persons to believe that the person whose name is so subscribed is an officer, agent, member, or promoter of such corporation or association, is guilty of a misdemeanor. § 594. A director of a stock corporation, who concurs in Misoon- any vote or act of the directors of such corporation, or any rectors of" . 1. ? ./ stock cor- of them, by which it is intended porations. 1. To make a dividend, except from the surplus profits arising from the business of the corporation, and in the case and manner allowed by law ; or 2. To divide, withdraw, or in any manner pay to the stockholders, or any of them, any part of the capital stock of the corporation ; or to reduce such capital stock without the consent of the legislature ; or 3. To discount or receive any note or other evidence of debt in payment of an installment of capital stock actually called in, and required to be paid, or with intent to provide the means of making such payment ; or 4. To receive or discount any note or other evidence of debt with intent to enable any stockholder to withdraw any part of the money paid in by him on his stock ; or 5. To apply any portion of the funds of such corporation, except surplus profits, directly or indirectly, to the purchase of shares of its own stock ; or 6. To receive any such shares in payment or satisfaction of a debt due to such corporation ; or 456 BANKING LAWS. T. To receive in exchange for the shares, notes, bonds, or other evidences of debt of such corporation, shares of the capital stock or notes, bonds or other evidences of debt issued by any other stock corporation, Is guilty of a misdemeanor. 3 R. S. 397, § 1. 1. A trustee is disqualified from acting where the board are dealing with himself, and in such case, without another member being present, the trustees acting had no authority to transact business. Butts v. Wood, 37 N". T. (Affirmed, 38 Baxb. 181.) 3. The directors of a corporation, as such, and without special author- ity for that purpose, have no power to sell the entire movable property of the corporation, which is necessary for the transaction of its customary business. They are only authorized to do such things as are directly or impliedly directed or implied by the charter, and when the acts of such directors are inconsistent with the object and purpose for which the corporation was created, they are void. Abbot v. Am. Hard Rubber Co., et aZ. 33 Barb. 578 ; same case, 31 How. Pr. 193. (Affirming 11 Abb. Pr. 304.) 3. The directors of a company are chosen to manage the business of the corporation, not to destroy it, and a general assignment by them of all its property is fraudulent and void as against the stockholders not consenting thereto, whether the company be solvent or not. In the language of Judge Allen in Abbot v. Am. Hard Rubber Co., above quoted, "it was ultra' wes." Smith v. N. T. Consolidated Stage Co.; same case, 38 How. Pr. 377. 4. The director of a company is not liable for statements false in fact, but not known to him to be such, made in its clrculars.and on which his name appears only as one of the directors. Wakeman v. Dalley, 51 N. T. 37 ; same case, Thoms. Liab. of OfE. and A. of Corporations, 399. (Affirming, 44 Barb. 398.) 5. " The principle that trustees, directors.and others acting in a trust relation, cannot make valid contracts with themselves afifecting the trust estate, is well established and clearly applicable here. The trustee cannot fix the price of the property of the trust estate, which they take under the name of a purchase ; nor can they sell to the estate which they represent, and conclusively settle the price to be received. Where the trustees have bought or sold such property, as it was necessary for the estate which they represented to buy or sell, at fair and reasonable prices, the transaction is not necessarily to be disturbed. But if the price is unreasonable or unfair, or any fraud or advantage has been imposed or taken, courts are swift to hold the transaction void ; or to open the contract so as to fix a proper compensation between the trustees and the estate which they represent, as upon the whole the transaction may be just." Leonard, J. Coleman v. Second Ave. R. R. Co., 48 Barb. 890. (Affirmed, 38 N. T. 301.) FRAUDULENT INSOLVEKOIES, ETC. 457 6. The mere fact that a trustee of a corporation allows his name and credit to be used to sell its stock, which afterward turns out to be valueless, does not constitute actionable fraud in the absence of proof of knowledge on his part, or that he has made or permitted any false state- ment; but "it is hardly necessary to say that a director of a company, who knowingly issues or sanctions the circulation of a false prospectus containing untrue statements of material facts, the natural tendency of which is to mislead and deceive the community,and to induce the public to purchase its stock, is responsible to those who are injured thereby. Mere exaggerated statements of the prospects of a new enterprise will not subject those who make them to liability ; but as was said by the chancellor in Central Railroad Company v. Kish, Law Eep., 3 Eng. and Irish App. 100 : ' No material misstatement, or concealment of any material fact, ought to be permitted.' The directors of a company are supposed to know the facts touching its condition and property, and their statements in respect to its affairs naturally attract public confi- dence. If they fraudulently unite in an attempt to deceive the public, and by false statements of facts to give credit and currency to its stock, is it not simple justice that they shall answer to those who have been deluded into giving confidence to 'them ? " Andrews, J. Morgan v. Skiddy, 63 N. T. 336. 7. " The rule thus laid down accords with the principle of adjudica- tions in analogous cases, in which it has been held,that it is not essential that a representation should be addressed directly to the party who seeks a remedy for having been deceived and defrauded by means thereof." Eapallo, J. Eaton, Cole and Bumham Co. v. Avery, 83 N. T. 33 (cases cited). § 595. A director of a corporation organized under the Miaoon- laws of this State, having banking powers, who concurs in directors any vote or act of the directors of such corporation, or oprp^o°ra-°^ any of them, by which it is intended, either 1. To make a loan or discount, by which the whole amount of the loans and discounts of the corporation shall be greater than the amount allowed by law, or, where there is no express statutory limitation of the amount greater than three times its capital stock then paid in and actually possessed ; or 2. To make a loan or discount to any director of such corporation, or upon paper upon which any such director is responsible to an amount exceeding the amount allowed by statute, or where there is no express statutory limitation of the amount, exceeding in the aggregate one-third of the 58 458 BANKING LAWS. capital stock of such corporation, then paid in and actually possessed, is guilty of a misdemeanor. 2 R. S. 297, § 1. m°ad°e^in § 596. Nothing in the last section shall render any loan onMt°'' made by the directors of any such corporation, in yiolation section not ^, j, . , . , Invalid, thereof, mvaJid. 3 R. S., § 1, subd. 6. potheo^''' § ^^'^- -^^ officer or agent of any corporation having baQk°ioteg banking powers, who sells, or causes or permits to be sold, etc? ""' any bank notes of such corporation, or pledges or hypothe- cates, or causes or permits to be pledged or hypothecated, with any other corporation, association or individual, any such notes, as a security for a loan or for any liability of such corporation, is punishable by imprisonment in a county jail not exceeding one year, or by a fine not exceeding five thousand dollars, or both. 3 R. S. 311, §§ 91, 95; Laws of 1842, ch. 247, § 10. ban™put- § 5^^- -^ officer or agent of any corporation having ce°five banking powers, who issues or puts in circulation, or causes its notes °in °^ permits to be issued or put in circulation, the bank notes circulation ^^ g^^j^ corporation to an amount which, together with pre- vious issues, leaves in circulation or outstanding a greater amount of notes than such corporation is allowed by law to issue and circulate, is punishable by imprisonment ia a county jail not exceeding one year, or by a fine not exceed- ing five thousand dollars, or both. 2 R. S. 297, §§ 93, 95 ; Laws of 1843, ch. 247, § 11. ^nfoT § 599. An officer or agent of any banking corporation, oOTpo?f- who makes or delivers any guaranty or indorsement on inggSran- behalf of such Corporation, whereby it may become liable doree-'"^" upon any of its discounted notes, bills or obligations, in a Kliiiif, sum beyond the amount of loans and discounts whifjh such oases! * " corporation may legally make, is guilty of a misdemeanor. 3 R. S. 812, §§ 93, 95 ; Laws of 1841, ch. 393, § 2. FRAUDULENT INSOLVENCIES, ETC. 459 § 600. An officer, agent, teller or clerk of any bank, geTove^ banking association or savings bank, who knowingly over- ^f^^^ draws his account with such bank, and thereby wrongfully °°^'^^- obtains the money, notes or funds of such bank, is guilty of a misdemeanor. See Nixon's Dig. Laws of N. J. 373, § 4 ; State v. Stimson, 4 Zabr. (N. J.) 478. § 601. An officer, agent, teller or clerk of any bank, f ®°®^yt's?n banking association or savings bank, and every individual b^™]^™"* banker or agent, and any teller or elerk of an individual banker, who receives any deposits knowing that such bank, or association, or banker is insolvent, is guilty of a misde- meanor. § 602. A director, officer or agent of any corporation or Frauds in joint-stock association who knowingly receives or possesses Ij®"""*^' himself of any property of such corporation or association, otherwise than in payment of a just demand, and with intent to defraud, omits to make, or to cause or direct to be made, a full and true entry thereof, in the books or accounts of such corporation or association ; and a director, officer, agent or member of any corporation or joint-stock associa- tion, who with intent to defraud, destroys, alters, mutilates or falsifies any of the books, papers, writings or securities belonging to such corporation or association, or makes or concurs in making any false entry, or omits or concurs in omitting to make any material entry in any book of ac- counts, or other record or document kept by such corpora- tion or association, is punishable by imprisonment in a State prison not exceeding ten years, and not less than three years, or by imprisonment in a county jail not exceeding one yeai, or by a fine not exceeding five hundred dollars, or by both such fine and imprisonment. Laws of 1839, chap. 94, § 29 ; Laws of 1843, chap. 318, § 6. 8 603. A director, officer or agent of any corporation or Officers of • • X i. 1 ■ X.- T. T ■ ^ • 1 ■ corpora^ jomt-stock association, who knowingly concurs m makmg or t'o^ pub- publishing any written report, exhibit or statement of its *«'se re- 460 BANKING LAWS. condition? ^^^^ ov pecuniary condition containing any material state- ment which is false, other than such as are elsewhere, by this Code, specially made punishable, is guilty of a misde- meanor. Laws 1874, §§ 1, 3, oh. 440. Officers who publish false statements tending to produce a helief that the stock of a corporation is at least of par value, and that the business is paying a dividend, etc., are liable in an action for deceit. It seems that there is no wrong or fraud which directors of a joint-stock com- pany, incorporated or otherwise, can commit, which cannot be redressed by appropriate and adequate remedies. Cross v. Sackett, 6 Abb. Pr. 347, and numerous cases there cited ; Harper v. Chamberlain, 11 Abb. Pr. 234, insoiven- § 604. The insolvency of a moneyed corporation is deemed poraticms fraudulent unless its affairs appear, upon investigation, to lent v^en ^^^^ heen administered, fairly, legally and with the same care and diligence that agents receiving a compensation for their services are bound by law to observe. 3 R. S. 399, § 14. See Laws of 1870, ch. 151, § 4 ; note to section 613, post. nirectors § 605. In every case of the fraudulent insolvency of a participat- " •'_ _ •' . , fraudulent ^''^^y^*^ Corporation, every director thereof who partici- ifow pun'?'' pS'ted in such fraud, if no other punishment is prescribed ishable. theref or by this Code, or any special statute, is guilty of a misdemeanor. 3 R. S. 399, § 15. Violation § 606. A director of any moneyed corporation who will- directors fully does any act as such director which is expressly for- «d corpo- bidden by law, or willfully omits to perform any duty expressly imposed upon him as such director by law, the punishment for which act or omission is not otherwise pre- scribed by this Code, or by some special statute, is guilty of a misdemeanor. 3 R. S. 398, § 10. Franklin Fire Ins. Co. v. Jenkins, 3 Wend. 130 ; GafEney v. CoMUe, 6 Hill, 567 ; Van Dyck, Receiver, v. McQuade, 86 N. Y. 38 ; Ogden v. RoUo, 13 Abb. Pr. 300. FRAUDULENT IKSOLVENOIES, ETC. 461 (Sections 607 and 608 relate to railway corporations and are omitted.) § 609. A director of a corporation or joint-stock associa- ^f co"5!^Jra- tion must be deemed to have sucli a knowledge of the af- sifmlj'to fairs of a corporation or association as to enable him to knowledge determine whether any act, proceeding or omission of its flilf, "*' directors is a violation of this chapter. 3 B. S. 299, § 14. § 610. A director of a corporation or joint-stock associa^ Director ^^ tion who is pi'esent at a meeting of the directors at which ^^|n pf'g. any act, proceeding or omission of such directors in viola- |,ave*as-° tion of this chapter occurs, must be deemed to have con- proceed" curred therein, unless he at the time causes, or in writing '°^' requires, his dissent therefrom to be entered in the minutes of the directors. 3 R. S. 398, §§ 13, 13. S 611. A director of a corporation or joint-stock associa- Director ° , , . \ T -,. absent tion, although not present at a meetmsr ot the directors, atfrommeet- ,. . . ~ T T . ing, when which any act, proceedmg or omission of such directors, m presumed violation of this chapter occurs, must be deemed to have assented ^ ^ to pro- concurred therein, if the facts constituting such violation ap- oeedings. pear on the records or minutes of the proceedings of the board of directors, and he remains a director of the same company for six months thereafter, without causing, or in writing requiring, his dissent from such illegality to be en- tered in the minutes of the directors. 3 B. S. 398, §§ 13, 13. § 612. A director, trustee or other officer of a joint-stock Failure of association or corporation, upon whom a notice of applica- upon ... rr • n , 1. » Whom ap- tion for an injunction aiiecting the property or business of plication such joint-stock association or corporation is served, who^*"- omits to disclose to the other directors, officers or managers thereof, the fact of such service and the time and place of such application is guilty of a misdemeanor. 462 BANKING- LAWS. ■ corpora- § ^^^' "'■* ^^ ^^ defense to a prosecution for a violation of tiona. ^j^g provisions of this chapter, that the corporation was one created by the laws of another State, government or country, if it carried on business, or kept an office therefor, within this State. "Diree- § 614. The term "director, ' as used in this chapter, em tor" de- " ' . r ) fined. braces any of the persons having by law the direction or management of the afiFairs of a corporation by whatever name such persons are described in its charter or are known in law. 3 R. S. 304, § 56. . Chapter 155, Laws of 1855 — An act to provide for the pun- ishm.ent of the fraudulent and unauthorized issue and transfer of the stock and bonds of corporations and joint- stock companies. False issue Seotion 1. Every officer and every agent of any incor- of stock a , J i.' j: J • i- 1 felony. poratcd compauy or corporation, formed or existing under or by virtue of the laws of any of the United States, who shall, within this State, willfully and designedly sign, or procure to be signed, with intent to issue, sell or pledge, or to cause to be issued, sold, or pledged, or shall willfully and designedly issue, sell or pledge, or cause to be issued, sold, or pledged, any false or fraudulent certificate, or other evi- dence of the ownership or transfer of any share or shares of the capital stock of such incorporated company or corpo- ration, or any false or fraudulent bond, or evidence of debt of such incorporated company or corporation, or any cer- tificate or other evidence of the ownership or transfer of any share or shares in such incorporated company or cor- poration, or any instrument purporting to be a certificate or other evidence of ownership or transfer of such share or shares, or purporting to be such bond or evidence of debt, the signing, issuing, selling or pledging of which shall not be authorized by the charter and by-laws of such incorporated company or incorporation, or some amendment thereof, shall FEAUDULENT INSOLVENCIES, ETC. 463 be deemed guilty of a felony, and shall be punished by a fine not exceeding three thousand dollars, and imprisonment in a State prison for a term not less than three nor more than seven years. § 2. Every oflBcer and agent of every incorporated com- id- pany, joint-stock company or corporation formed or existing under or by virtue of the laws of any of the United States, who shall, within this State, knowingly, willfully and designedly sign, or procure to be signed, with intent to issue, sell or pledge, or cause to be issued, sold or pledged, or who shall knowingly, willfully and designedly issue, sell or pledge, or cause to be issued, sold or pledged, any cer- tificate or other evidence of the ownership or transfer of any share or shares of the capital stock of such incorporated company, joint-stock company or corporation, or any bond or evidence of debt of such incorporated company, joint- stock company or corporation, or any instrument purporting to be a certificate or other evidence of ownership or trans- fer of such share or shares, or purporting to be such bond or evidence of debt, without being thereunto first authorized and empowered by such incorporated company, joint-stock company or corporation, and every such ofiicer and agent who shall reissue, sell, pledge.or dispose of, or cause to be reissued, sold, pledged or disposed of, any surrendered or canceled certificate or other evidence of the ownership or transfer of any such share or shares, or of any right or in- terest therein, with the intent of defrauding any such cor- poration, or any person or persons, shall be deemed guilty of a felony, and shall be punished by a fine not exceeding three thousand dollars and imprisonment in the State prison not less than three nor more than seven years. CJhapter 742, Laws of 1869 — An act for the more effbctual suppression and piuiishment of bribery. Section 1. Eeoeiving of valuable considerations by public officer for official acts deemed felony ; punisbment tbereof . 2. Persons ofEering bribes, if accepted, not to be liable therefor. 464 BANKING LAWS. Section 3. Penalty for attempting to bribe public officers. 4. Proof tbereof. 5. Accused may testify in his own behalf. 6. Expenses of prosecution, to be a charge against the State. (Section 7 is the only one relating to corporations, and is as follows:) Liability § 7. Any officer, agent or director of any corporation who tors or ' shall in any way, directly or indirectly, use, or cause to be ooriiora- usod, any money or other property belonging to such cor- use of _ poration, in violation of any of the provisions of this act, or violation shall knowingly assent to or approve of such use, or know- ingly audit or allow any account rendered for the money or other property of such corporation so used, shall be liable to any stockholder or stockholders of such corporation, in a civil action, for the amount, which shall bear the same proportion to the whole amount proved to be thus used, as the amount of stock held by such stockholder or stock- holders at the time the action is brought, bears to the whole amount of the stock of such corporation. Such action shall be brought both for the benefit of the plaintiff therein and also for that of all stockholders, who may, at least ten days before the trial of said action, file in the office of the clerk of the county where such action is triable a petition that said action may be prosecuted for their benefit, and give notice thereof to the parties plaintiff and defendant, in said action. And when any such petition or petitions are so filed such petitioners shall be deemed, for the purpose of determining the amount of the recovery, plaintiffs in such action, and shall be jointly and severally liable to the de- fendant in said action for costs, in case costs shall be adjudged to the defendant. In case of the recovery by the plaintiff in such action, he shall be entitled to costs, without regard to the amount of such recovery. No action brought in pursuance of this section shall be discontinued without the consent of all parties who may have filed their petitions as hereinbefore provided. Judgment rendered in any such action shall be no bar to any other action that may be brought for the same cause, except as to plaintiff therein, and as to such parties as may have filed their petitions FKATJDULENT INSOLVETSFCIES, ETC. 465 therein as aforesaid, and persons claiming under or through such plaintiff or petitioners. The liability of such officers, agents or directors shall be joint and several. The term " stockholder," as used in this section, shall be construed to include all persons holding stock of said corporation at the time of the act complained of or at any time thereafter. Section 8. Persons not to be excused from testifying on trials or inves- tigations ■ testimony given not to be used against witness in any action, civil or criminal. 9. Convictions to be had only on corroborated testimony. Chapter 151, Laws of 1870 — An act to regulate proceed- ings against corporations by injunction and otherwise. (Sections 1, 3 and 3 were repealed by Laws of 1880, chap. 245.) § 4. Any director or other officer of a corporation or joint- Punish- stock association upon whom shall be served any notice of conceai- an application lor an injunction restraining or aiiectmg the tion notice business of such corporation or joint-stock association, or for a receiver of its property and effects, or any part thereof, who shall conceal from or omit to disclose to the other directors, trustees, managers and officers thereof the fact of such service, and the time and place at which such application is to be made, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by fine or imprisonment, or both such fine and imprisonment, and shall be liable, in a civil action, to the corporation or joint-stock association for all damages which shall be sustained by it by reason of such proceedings. (Section 5 was amended by Laws of 1875, ch. 438, and the latter act was repealed by Laws of 1880, ch. 345, whereby section 5 is ab- solutely repealed. People v. Supervisors of Montgomery, 67 N. T. 109.) 59 BANKS CHARTERED BY THK STATE OF NEW YOEK, FEOM 1791 TO 1829.* Tear. Names of Banks. Original Capital. 1791. Bank of N"ew York $1, 000, 000 1792. Bank of Albany 260, 000 1793. Bank of Columbia 160, 000 1799. Manhattan Company 2, 050, 000 1801. Farmers' Bank 300, 000 1803. New York State Bank 460, 000 1805. Merchants' Bank 1, 250, 000 1807. Mohawk Bank 200, 000 1808. Bank of Hudson 300, ODD 1810. Mechanics' Bank in the city of New York 1, 500, 000 1811. Bank of Newburgh. . ., 400, 000 1811. Bank of Troy 500, 000 1811. Union Bank 1, 800, 000 1811. Mechanics and Farmers' Bank in the city of Albany 600, 000 1811. Middle District Bank 500, 000 1812. Bank of America. 6, 000, 000 1812. City Bank of New York 2, 000, 000 1812. New York Manufacturing Company 700, 000 1812. Bank of Utica 1, 000, 000 1813. Bank of Orange County 400, 000 1813. Ontario Bank 500, 000 * The Bank of North America was chartered by the Continental Congress in 1781. It never transacted business under its New York charter, which was granted in 1782, and authorized a capital of ten millions of dollars. See Histori- cal Sketch, omte. BANKS CHARTEEED. 467 Tear. Karnes of Banks. Original Capital. 1813. Bank of Lansingburgh $200, 000 1813. Catskill Bank 400, 000 1814. 1815. 1816. Bank of Niagara 400, 000 1816. Jefierson County Bank 400, 000 1817. Bank of Geneva 400, 000 1817. Phoenix Bank 700, 000 1817. Bank of Auburn 400, 000 1817. Bank of Washington and Warren 400, 000 1817. Bank of Plattsburgh 300, 000 1818. Centra] Bank 200, 000 1818. Bank of Chenango .... 200, 000 1818. Franklin Bank 500, 000 1818. Greene County Bank 90, 000 1820. 1821. 1822. 1823. Tradesmen's Bank 600, 000 1824. Fulton Bank 500, 000 1824. Chemical Bank 400, 000 1824. Long Island Bank 300 000 1824. Bank of Eochester 250, 000 1825. Commercial Bank of Albany 300, 000 1825. Dutchess County Bank 150, 000 1825. Dry Dock Bank 200, 000 1826. ■ 1827. , 1828. ... Aggregate capital $29,170,000 Forty-two banks during a period of 38 years. BANKS CHAKTERED BY THE STATE OF N'EW YOEK, UNDBB THE SAFETY FUND SYSTEM, (Ch. 94, Laws of 1839.) FROM 1829 TO 1838. Year. Names of Banks, Original Capital. 1829. National Bank $1, 000, 000 1829. Canal Bank of Albany 300, 000 1829. Bank of Genesee 100, 000 1829. Bank of Ithaca 200, 000 1829. Loekport Bank 100, 000 1829. Merchants and Mechanics' Bank 300, 000 1829. Merchants' Exchange Bank 750, OOO 1829. Bank of Monroe 300, 000 1829. Ogdensbnrgh Bank 100, 000 1829. Wayne County Bank 100, 000 1829. Bank of White-Hall 100, 000 Banks Re-Chaeteeed. 1829. Bank of Albany 260, 000 1829. Bank of Auburn , 400, 000 1829. Bank of Catskill '. 400, 000 1829. Central Bank 200, 000 1829. Bank of Chenango 200, 000 1829. Farmers' Bank 250, 000 1829. Bank of Geneva 400, 000 1829. Jefferson County Bank 400, 000 1829. Mechanics and Farmers' Bank 600, 000 SAFETY FUND SYSTEM. 469 Year. Names of Banks. Original Capital. 1829. Middle District Bank $500, 000 1829. Mohawk Bank 200, 000 1829. Bank of Newburgh 400, 000 1829. New York State Bank 460, 000 1829. Ontario Bank , 500, 000 1829. Bank of Troy 600, 000 1829. Bank of Utica 1, 000, 000 Banks Chaetbeed. 1830. Butchers and Drovers' Bank 300, 000 1830. Greenwich Bank 200, 000 1830. Hudson Eiver Bank 100, 000 1830. Livingston County Bank 100, 000 1830. Mechanics and Traders' Bank 200, 000 1830. Onondaga County Bank 150, 000 1830. Otsego County Bank 100, 000 1830. Bank of Ponghkeepsie 100, 000 1830. Saratoga County Bank 100, 000 1831. Broome County Bank 100, 000 1831. Bank of Buffalo 200, 000 1831. Chautauque County Bank 100, 000 1831. Madison County Bank 100, 000 1831. Montgomery County Bank 100, 000 1831. Oswego County Bank 150, 000 1831. Tanners' Bank 100, 000 1831. Ulster County Bank 100, 000 1831. Yates County Bank 100, 000 Banks Ke-Chaeteeed. 1831. Bank of America 2, 000, 000 1831. City Bank 2, 000, 000 1831. Mechanics' Bank 2, 000, 000 1831. Merchants' Bank 1,490,000 1831. Bank of New York 1, 000, 000 1831. Tradesmen's Bank 600, 000 1831. Union Bank , , . . . 1, 800, 000 Banks Chaeteeed. 1832. Brooklyn Bank 200, 000 1832. Essex County Bank 100,000 470 BANKING LAWS. Tear. Names ol Banks. Original Capital. 1832. Leather Mainifacturers' Bank $600, 000 1832. Bank of Eome 100, 000 1832. Bank of Salina 150, 000 1832. Schenectady Bank 150, 000 1832. Steuben County Bank 150, 000 Baizes Ee-Chaeteeed. 1832. Bank of Lansingburgh 200, 000 1832. Bank of Orange County 400, 000 BAliTKS ChAETEEED. 1833. Cayuga County Bank 250, 000 1833. Chemung Canal Bank 200, 000 1833. Herkimer County Bank 200, 000 1833. Lewis County Bank 100, 000 1833. Seneca County Bank 200, 000 1833. Seventh Ward Bank 500, 000 1833. Troy City Bank 300, 000 1833. Westchester County Bank 200, 000 1834. Albany City Bank 500, 000 1834. Commercial Bank of Buffalo 400, 000 1834. Commercial Bank of New York 500, 000 1834. Farmers and Manufacturers' Bank 300, 000 1834. Highland Bank 200, 000 1834. Lafayette Bank of the City of New York 500, 000 1834. Bank of Orleans 200, 000 1834. Sackett's Harbor Bank 200, 000 1835. • 1836. Atlantic Bank ' 500,000 1836. City Bank of Buffalo 400, 000 1836. Clinton County Bank 200, 000 1836. Commercial Bank of Oswego 350, 000 1836. Kingston Bank 200, 000 1836. Bank of Lyons 200, 000 1836. Oneida Bank 400, 000 1836. Bank of Owego 200, 000 1836. Kochester City Bank 400, 000 1836. Bank of the State of New York 2, 000, 000 1836. Tompkins County Bank 250, 000 SAFETY FUND SYSTEM, 471 Tear. Names of Banks. Original Capital. 1836. "Watervliet Bank $250, 000 1837. Aggregate capital $35, 360, 000 Eighty-Beven banks during a period of nine years. BANKING ASSOCIATIONS Organized under the General Banking La^pr (Ch. 260, Iiaws of 1838) in the City of New York. Date. Names. Original Capital. 1838, July 10, Bank of "Western New Tork $500,000 1838, July 18, North American Trust and Banking Co , 2, 000, 000 1838, Aug. 7, Bank of the United States 200, 000 1838, Aug. 21, Mechanics' Banking Association ... . 128,175 1838, Oct. 1, American Exchange Bank 500, 000 1838, Nov. 8, Stuy vesant Banking Co 300, 000 1838, Nov. 12, New Tork Banking Co 1, 000, 000 1838, Nov. 16, East Kiver Bank 100, 000 1838, Nov. 20, Chelsea Bank 1, 000, 000 1838, Dec. 8, Tenth Ward Bank 100, 000 1838, Dec. 24, Wool Growers' Bank 100, 000 1838, Dec. 29, Hudson River Bank 100, 000 1839, Jan. 1, Bank of the City of New Tork .... 100, 000 1839, Jan. 2, United States Trust and Banking Co. 1,000,000 1839, Jan. 4, North Bank 100, 000 1839, Jan. 7, Bank of North America. 100, 000 1839, Jan. 18, First Ward Bank 100, 000 1839, Jan. 22, Greenwich Banking Co 200, 000 1839, Jan. 25, Broadway Bank 100, 000 1839, Jan. 28, Washington Bank 126, 000 1839, Jan. 29, Atlantic and Pacific Trust and Bank- ing Co 300, 000 1839, Jan. 29, Clinton Bank 100, 000 1839, Jan. 29, Farmers and Gardeners' Bank 100, 000 1839, Feh. 15, Bank of Commerce 5, 000, 000 1839, March 2, Real Estate BanS 100, 000 1839, March 8, Atlantic Bank 2, 000, 000 BANKING ASSOCIATIONS. 473 Sate. Names, Original Capital. 1839, March 13, City Trust and Banking Oo $100, 000 1839, March 18, Eagle Bank 100, 000 1839, March 19, Manhattan Exchange Bank 300, 000 1839, April 4, City Exchange Bank 100, 000 1839, April 13, Market Bank 250, 000 1839, May 3, Union Exchange Bank 250, 000 1839, Oct. 24, Merchants' Banking Co 1,000, 000 1S39, Nov. 14, North American Bank 100, 000 1839, Dec. 4, Great Western Bank 100, 000 1840, Jan. 11, New York Exchange Bank 100, 000 1840, Jan. 20, Merchants and Mechanics' Bank . . . 100, 000 1840, Feb. 28, North River Banking Co 100, 000 1840, Feb. 28, "Western Banking Co. . . .' 100, 000 1840, April 14, Globe Bank 100, 000 1840, May 9, New York City Bank 200, 000 1840, July 16, Farmers and Mechanics' Bank 500,000 1840, Sept. 17, English Bank 1, 000, 000 1840, Sept. 30, Croton Bank.^ ." 100, 000 1842, April 11, North Eiver Bank 500, 000 1844, Jan. 15, Fulton Bank 600, 000 1844, Feb. 5, Chemical Bank 300, 000 1847, Aug. 10, Bowery Bank 300,000 1849, Aug. 15, Broadway Bank 300, 000 1849, March 24, Merchants' Exchange Bank 1, 000, 000 1849, Dec. 22, Ocean Bank 500, 000 1850, Jan. 8, Mercantile Bank 200, 000 1850, Oct. 8, Pacific Bank 500,000 1851, Jan. 25, Bank of the Eepublic 1, 000, 000 1851, Feb. 6, Chatham Bank 300, 000 1851, Feb. 27, People's Bank 250, 000 1851, March 29, Irving Bank 250, 000 1851, April 1, Bank of the Metropolis 100, 000 1851, April 3, Hanover Bank 500, 000 1851, April 10, Metropolitan Bank 250, 000 1851, April 14, New York Exchange Bank 250, 000 1851, May 3, Citizens' Bank 300, 000 1851, Aug. 15, Grocers' Bank .■ 150, 000 1851, Oct. 4, Knickerbocker Bank 200, 000 1852, Jan. 3, Empire City Bank 600, 000 60 474 BANKING LAWS. Date. Names. Original Capital. 1852, May 26, City Bank $800,000 1852, June 16, Astor Bank 200, 000 1852, July 3, Suffolk Bank 500, 000 1852, Sept. 11, East Eiver Bank 300, 000 1852, Oct. 19, Market Bank 650, 000 1852, Oct. 28, Nassau Baak 600,000 1852, Nov. 15, Continental Bank 200, 000 1852, Dec. 6, Bowery Bank 300,000 1852, Dec. 7, New York City Bank 100, 000 1852, Dec. 16, Butchers and Drovers' Bank 600, 000 1852, Dec. 21, Bank of New York 2, 000, 000 1852, Dec. 21, Corn Exchange Bank 500, 000 1852, Dec. 21, Union Bank 1,000,000 1852, Dec. 30, Bank of America 2, 000, 000 1852, Dec. 30, Shoe and Leather Bank 600, 000 1852, Dec. 31, Marine Bank 500, 000 1853, Jan. 11, Morrisania Bank 100, 000 1853, March 12, Central Bank 300, 000 1853, March 22, Bank of the Commonwealth 750, 000 1853, May 25, Bank of the Union 300, 000 1853, May 27, Alliance Bank 400, 000 1853, July 6, Oriental Bank 300, 000 1853, July 28, Island City Bank 300, 000 .1853, Aug. 9, Eighth Avenue Bank 100, 000 1853, Nov. 21, "Washington Bank 500 000 1853, Dec. 27, Phcenix Bank 1, 200, 000 1854, July 18, Bulls' Head Bank , . . 300, 000 1854, Dec. 18, Mechanics' Bank 2, 000, 000 1854, Dec. 28, Tradesmen's Bank 800, 000 1855, May 30, Greenwich Bank 200, 000 1855, June 25, New York County Bank 200, 000 1855, Nov. 28, Importers and Traders' Bank 1, 000, 000 1856, March 12, Park Bank 2, 000, 000 1856, Aug. 22, Artisans' Bank 600, 000 1856, Dec. 22, National Bank 1, 500, 000 1856, Dec. 24, Merchants' Bank 1, 500, 000 1856, Dec. 30, Mechanics and Traders' Bank 400,000 1857, July 3, American and European Banking Association 100, 000 BANKING ASSOCIATIONS. 475 Date. Names. Original Capital. 1858, May 3, Mechanics' Banking Association $316, 000 1858, June 26, Domestic Exchange Bank 600, 000 1859, Nov. 10, Manufacturers and Merchants' Bank. 600, 000 1862, May 14, Leather Manufacturers', Bank 600, 000 1862, Dec. 2, Seventh Ward Bank 500, 000 1866, Nov. 23, New York Gold Exchange Bank.. . 500, 000 1867, Feb. 2, Stuy vesant Bank 200, 000 1867, June 6, Eleventh Ward Bank 200, 000 1867, July 25, Bank of Union Square 100, 000 1868, Nov. 14, Wall Street Exchange Bank 100, 000 1868, Dec. 18, Harlem Bank 100,000 1869, April 5, Manufacturers and Builders' Bank . . 100,000 1869, April 19, GermaniaBank 200, 000 1869, May 11, Pacific Bank 422, 700 1869, June 4, West Side Bank 250, 000 1869, July 1, Grocers' Bank 300, 000 1869, July 6, Mutual Bank 200, 000 1870, March 16, Security Bank 250, 000 1870, June 9, German- American Bank 500, 000 1870, Aug. 31, Murray Hill Bank 200, 000 1870, Nov. 12, Cotton Exchange Bank 250, 000 1870, Dec. 18, Ninth Ward Bank 200, 000 1871, March 15, Dry Goods Bank 1, 000, 000 1872, Feb. 17, German Exchange Bank 20O, 000 1872, July 2, Produce Bank , 200, 000 1874, Dec. 10, Grand Central Bank 100, 000 1875, July 1, Commercial Bank 100, 000 1875, July 25, Fifth Avenue Bank 100, 000 1876, Oct. 28, Brewers and Grocers' Bank 100, 000 1880, Dec. 11, Mount Morris Bank 100, 000 1881, Sept. 1, Deposit and Cheque Bank 100, 000 1882, April 28, Madison Square Bank 200, 000 1882, Dec. 7, Bank of the State of New York. . , 800, 000 1882, Dec. 30, Saint Nicholas Bank 600, 000 1882, Dec. 3o, Seaboard Bank 500, 000 1883, April 24, Home Bank 125, 000 1883, May 10, Columbia Bank (organized as Bank of Banks) 100, 000 1883, June 25, New York Produce Exchange Bk. .. . 1,000,000 476 BANKING LAWS. Date. Names. Original Capital. 1883, Oct. 19, Wall Street Bank $500, 000 1884, March 4, Nineteenth Ward Bank 100, 000 1884, April 25, Mechanics and Traders' Bank 200, 000 Aggregate capital $66, 416, 875 One hundred and forty-four banks during a period of forty-six years. OTHER BANKING ASSOCIATIOlirS Organized under the General Banking Law in the State of New York. Date. Kame and Location. Original Capital. 1838, July 14, Bank of Western New York, Koch- ester $180,000 1838, Aug. 24, Staten Island Bank, Port Kiehmond, 100, 000 1838, Sept. 4, Erie County Bank, Buffalo 100, 000 1838, Sept. 6, Lockport Bank and Trust Co., Lock- port 500, 000 1838, Sept. 17, Bank of Central N. T., Utica 100, 000 1838, Sept. 22, Bank of Syracuse, Syracuse 100, 000 1838, Oct. 6, Farmers' Bk. of Orleans, Gaines 200,000 1838, Oct. 15, St. Lawrence Bank, Ogdensburg... 100,000 1838, Oct. 24, Merchants and Farmers' Bk., Ithaca.. 150,000 1838, Nov. 6, Willoughby Bank, Brooklyn 100, 000 1838, Nov. 22, Farmers' Bank, Ovid 100, 000 1838, Dec. 10, Bank of Waterville, Waterville 100, 000 1838, Dec. 10, Millers' Bk. of N. T., Clyde 300, 000 1838, Dec. 12, Albany Exchange Bank, Albany. . . 100, 000 1838, Dec. 13, Farmers and Mechanics' Bank of Genesee, Batavia 100, 000 1838, Dec. 19, Bank of Kinderhook, Kinderhook. . 125,000 1838, Dec. 19, Genesee County Bank, Le Eoy 100, 000 1838, Dec. 19, United States Bank, Buffalo 100, 000 1838, Dec. 22, Le Eoy Bank, Le Boy 100, 000 1838, Dec. 22, Merchants' Exchange Bk., Buffalo. . 200,000 1838, Dec. 24, Genesee Central Bank, Attica 100,000 1838, Dec. 24, Mechanics & Farmers' Bk., Ithaca. . . 100, 000 1838, Dec. 26, Bank of Lowville, Lowville 100, 000 1838, Dec. 29, Erie Canal Trust and Banking Co., Buffalo 200, 000 478 BANKING LAWS. Date. Name and Location. Original Capital. 1838, Dec. 29, Powell Bank, Eewburgh $130, 000 1838, Dec. 30, Exchange Bank of Genesee, Alex- ander 100, 000 1838, Dec. 31, Bank of Brockport, Brockport 150,000 1838, Dec. 31, Bank of "Waterford, Waterford 100,000 1838, Dec. 31, Deposit Bank, Albany 100, 000 1838, Dec. 31, Ithaca Bank, Ithaca 250, 000 1838, Dec. 31, Patriot Bank, Batavia 100, 000 1838, Dec. 31, Silver Lake Bank, Perry 100, 000 1839, Jan. 2, Fort Plain Bank, Fort Plain 100, 000 1839, Jan. 2, Troy Exchange Bank, Troy 100, 000 1839, Jan. 3, Eailroad Bank, Coxsackie 100, 000 1839, Jan. 4, James Bank, Jamesville 106,000 1839, Jan. 5, Bank of Warsaw, Warsaw 100, 000 1839, Jan. 7, Howard Trust and Banking Co., Troy 100, 000 1839, Jan. 8, Commercial Bank, Troy 100, 000 1839, Jan. 9, Bank of Saratoga Springs, Saratoga Springs 100, OOO 1839, Jan. 10, Bank of Binghamton, Binghamton. . 100,000 1839, Jan. 11, Farmers' Bank and Trust Co., Li- vonia 100, 000 1839, Jan. 14, Bank of Yernon, Vernon 100, 000 1839, Jan. 15, Real Estate Bank, Ithaca 100, 000 1839, Jan. 16, Bank of Lodi, Lodi 100, 000 1839, Jan. 17, Bank of Corning, Corning 117, 000 1839, Jan. 17, Hitchcock Bank, Yernon 100, 000 1839, Jan. 18, Erie Canal Bank, Eochester 100, 000 1839, Jan. 18, Farmers' Bank, Geneva 100, 000 1839, Jan. 21, Farmers' Bank, Penn Yan 100, 000 1839, Jan. 21, Eochester Trust and Banking Co., Rochester 100, 000 1839, Jan. 21, Watertown Bank and Loan Co., Watertown 100, 000 1839, Jan. 21, Williamsburgh Bk., Williamsb'gh. . . 100,000 1839, Jan. 24, Bank of Tonawanda, Wheatfield .... 100, 000 1839, Jan. 26, Bank of Watertown, Watertown. . . 100, 000 1839, Jan. 26, Farmers' Bank, Auburn 100, 000 1839, Jan. 31, Ballston Spa Bank, Ballston Spa . . . 100, 000 BANKING ASSOCIATIONS. 479 Date. 1839, Jan. 31, 1839, Feb. 1, 1839, Feb. 1, 1839, Feb. 1, 1839, Feb. 1, 1839, Feb. 7, 1839, Feb. 9, 1839, Feb. 14, 1839, Feb. 15, 1839, Feb. 21, 1839, Feb. 28, 1839, March 5, 1839, March 5, 1839, March 5, 1839, March 7, 1839, March 8, 1839, March 8, 1839, March 19, 1839, March 21, 1839, March 28, 1839, April 5, 1839, April 8, 1839, April 16, 1839, April 26, 1839, May 17, 1839, May 30, 1839, June 10, 1839, July 16, 1839, July 16, 1839, Aug. 27, 1839, Sept. 9, Name and Location. Wool-growers' Bank, Norwich .... Bank of Arcadia, Newark Bank of Havana, Havana -. . Fayetteville Bank, Fayetteville Trust and Banking Co. of Buffalo, Buffalo Farmers' Bank, Hudson Farmers' Bank, Binghamton Mercantile Bank, Schenectady Farmers and Mechanics' Bank, Rochester Bank of West Troy, West Troy . . . . Bk. of Whitestown, Whitesborough. . Agricultural Bank, Herkimer Crooked Lake Bank, Hammonds- port Canal Bank, Lockport Mechanics' Bank, Buffalo Buffalo Exchange Bank, Buffalo Washington County Bank, Union Tillage Farmers and Mechanics' Exchange Bank, Silver Creek Delaware Bank, Delhi Mohawk Valley Bank, Mohawk . . . Bank of Aurora, Aurora Commercial Bank, Rochester Pine Plains Bank, Pine Plains Farmers' Bank of Amsterdam, Am- sterdam , Middletown Bk., South Middletown. Farmers' Bank of Seneca County, Romulus Bank of Dausville, Dansville Bank of Albion, Albion Farmers and Drovers' Bk., Somers. Bank of Commerce, Buffalo Farmers and Mechanics' Bank, Man- Uus , i Original Capital. $100, 000 100, 000 100, 000 100, 000 200, 000 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 150, 000 200, 000 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 400, 000 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 111, 150 100, 000 250, 000 480 BANKING LAWS. Date. Name and Location. Original Capitai. 1839, Sept. 27, Cortland County Bank, Truxton . . . $100, 000 1839, Sept. 30, Bank of America, Bufialo 100, 000 1839, Oct. 9, State Bank of IST. T;, Buffalo 100, 000 1839, Oct. 14, Union Bank, Buffalo 100, 000 1839, Oct. 25, Bank of Silver Creek, Silver Creek. 100, 000 1839, Nov. 2, Phoeuix Bank, Buffalo 500, 000 1839, Nov. 11, Western Agency Bank, Buffalo 100, 000 1839, Nov. 30, Canal Bank, Eochester 100, 000 1839, Dee. 6, United States Bank, Syracuse 200,000 1839, Dec. 23, Globe Bank, Seneca Falls 50, 000 1839, Dec. 30, Mineral Bank, Syracuse 100, OQO 1839, Dec. 30, Marine Bank, Buffalo 100, 000 1839, Dec. 30, Baldwinsville Bank, Baldwinsville . 100,000 1840, Jan. 16, Bank of Liberty, Eockland 100, 000 1840, Jan. 20, Bank of Clean, Glean 100, 000 1840, Jan. 28, Bank of Lodi, Lodi 100, 000 1840, Feb. 3, Bank of Chili, Mill Creek 100, OuO 1840, Feb. 4, Bank of Dexterville, Dexterv'le . . . 100, 000 1840, Feb. 4, Cattaraugus County Bank, Eandolph 100,000 1840, Feb. 6, Mechanics' Bank, Eochester 100, 000 1840, Feb. 19, Bank of Clyde, Clyde 100, 000 1840, March 25, Franklin Bank, Fort Covington . . . 100, 000 1840, April 27, Farmers' Bank, Ellicottville 100, 000 1840, May Y, Eochester Canal Bk., Eochester 100,000 1841, May 8, Bank of Eossi, Eossi 100, 000 1843, Aug. 31, Farmers and Mechanics' Bank, Og- densburgh 100, 000 1844, Jan. 30, Oliver Lee & Co.'sBank, Buffalo .... 100, 000 1845, June 16, Long Island Bank, Brooklyn 200, 000 1845, June 19, Merchants' Bank, Poughkeepsie . . . 110, 000 1846, May 11, Chester Bank, East Chester 100, 000 1846, May 25, Sisson Bank, Lyons 100, 000 1846, Aug. 20, Luther Wright's Bank, Oswego 100, 000 1847, July 3, Commercial Bank, Albany 300, 000 1847, Oct. 20, Patchin Bank, Buffalo 100, 000 1847, Nov. 5, Fort Stanwix Bank, Eome 110, 000 1848, April 10, Camden Bank, Camden 112, 550 1848, Aug. 30, Utica City Bank, Utica 125, 000 1848, Oct. 5, Bank of Eondout, Eondout 100, 000 BANKING ASSOCIATIONS. 481 Date. Name and Locatiou. Original Capital. 1849, Jan. 24, Merchants' Exchange Bank, Water- town $100, 000 1849, April 4, Bank of Pawling, Pawling 125, 000 1849, April Y, Putnam County Bank, Farmers Mills 100, 000 1849, Aug. 15, Commercial Bank, "Whitehall 100, 000 1849, Dec. lY, City Bank, Oswego 125, 000 1849, Dec. 18, Bank of Utica, Utica 600, 000 1849, Dee. 21, Syracuse City Bank, Syracuse 100, 000 1850, Jan. 2, Bank of Auburn, Auburn 200, 000 1850, Jan. 26, Hollister Bank, Buffalo 100, 000 1850, Jan. 28, Bank of Fishkill, Fishkill 120, 000 1850, April 24, Bank of Attica, Bufialo 160, 000 1850, July 15, Marine Bank, Buffalo 170, 000 1850, Oct. 26, New York State Bank, Albany. . . . 250, 000 1850, Nov. 16, City Bank of Brooklyn, Brooklyn.. 150,000 1850, Dec. 17, Bank of Newburgh, Newburgh 200, 000 1851, Jan. 20, Union Bank, Troy 250, 000 1851, Feb. 18, Eome Exchange Bank, Eome 100, 000 1851, Feb. 21, Merchants' Bank, Syracuse 136, 000 1851, March 3, Union Bank of Sullivan County, Monticello 110, 000 1851, May 6, Genesee Valley Bank, Grenesee 120,000 1851, May 13, Farmers' Bank of Saratoga County, Half Moon 100, 000 1851, June 16, Black Eiver Bank, Watertown 100, 000 1851, Aug. 18, Bank of Malone, Malone 100, 000 1851, Sept. 25, Goshen Bank, Goshen 110, 000 1851, Sept. 29, Mechanics' Bank, Syracuse 140, 000 1851, Oct. 3, Bank of Fort Edward, Ft. Edward.. 100, 000 1851, Oct 31, Glens Falls Bank, Glens Falls 150,000 1851, Nov. 12, Exchange Bank, Lockport 160, 000 1851, Dec. 22, Bank of Genesee, Batavia 100, 000 1852, Feb. 4, Salt Springs Bank, Syracuse 125, 000 1852, Feb. 6, Ilion Bank, Ilion 100, 000 1852, Feb. 25, "Williamsburgh City Bank, Wil- liamsburgh 200, 000 1852, March 19, Quassaick Bank, Newburgh 130, 000 '^ 1852, March 27, Eagle Bk. of Rochester, Eochester.. 100, 000 61 48a BANKING LAWS. Date. Name and Location. Original Capital. 1852, April 26, Bank of West Troy, West Troy $200, 000 1852, April 28, Fulton County Bank, Glovers vUle.. 100,000 1852, May 11, Bank of Saratoga Springs, Saratoga Springs 100, 000 1852, May 12, Grouse Bank, Syracuse 110, 000 1852, May 20, State Bank, Troy 250, 000 1852, June 14, Union Bank, Watertown 100, 000 1852, June 17, Fallkill Bank, Poughkeepsie 150, 000 1852, June lY, Bank of Ulster, Ulster Tillage 100,000 1852, June 21, Farmers and Citizens' Bank, Wil- liamsburgh 200, 000 1852, Aug. 12, Manufacturers' Bank, Troy 200, 000 1852, Aug. 12, Mechanics' Bank, Brooklyn 200, 000 1852, Aug. 12, New York and Erie Bank, Dunkirk. 120,000 1852, Sept. 27, Oneida Yalley Bank, Oneida 105, 000 1852, Oct. 13, Mohawk BanK", Schenectady 125,000 1852, Nov. 4, Mechanics and Farmers' Bank, Albany 350, 000 1852, Nov. 6, Bank of Troy, Troy 440, 000 1852, Nov. 13, Farmers' Bank, Troy 350, 000 1852, Nov. 17, Bank of Binghamton, Binghamton. 160,000 1852, Nov. 20, Bank of Geneva, Geneva 205, 000 1852, Dec. 7, Rensselaer County Bank, Lansing- burgh 200, 000 1852, Dec. 11, Bank of Chemung, Elmira 100, 000 1852, Dec. 28, CatskiU Bank, Catskill 110, 007 1853, Jan. 3, Bank of the Capitol, Albany 150, 000 1853, Jan. 3, Mutual Bank, Troy 200, 000 1853, Jan. 20, Union Bank, Eochester 400, 000 1853, Jan. 22, Merchants' Bank, Albany 250, 000 1853, Feb. 1, Bank of Cooperstown, Cooperstown. 160,000 1853, Feb. 4, Bank of Port Jervis, Port Jervis.. . 120, 000 1853, Feb. 4, Chittenango Bank, Chittenango 105,000 1853, Feb. 5, Central Bank, Troy 200, 000 1853, Feb. 19, Hamilton Bank, Hamilton 110, 000 , 1853, Feb. 22, Buffalo City Bank, Buffalo 100,' 000 1853, March 4, Bank of Ooxsackie, Coxsackie 120, 000 1853, March 15, Niagara River Bank, Tonawanda, . . 100, 000 1853, March 17, Oneida County Bank, Utica 125, 000 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1853, 1854:, 1854, 1854, 1854, 1854, 1854, 1854, 1854, 1854, 1854, 1854, 1864, 1854, 1854, BANKING ASSOCIATIONS. 483 Date. Name and Location. Orlsinal Capital. April 9, White' s Bank, Bufialo .-. 100, 000 April 9, Cuyler' s Bank, Palmyra 100, 000 April 19, Mechanics' Bank, "Williamsburgh . . 250, 000 April 22, Bank of Khinebeck, Ehinebeck 125,000 April 25, Huguenot Bank, New Paltz 125, 000 April 28, Commercial Bank, Glens Falls 150, 000 May 17, Bank of Salem, Salem 100, 000 May 31, Spraker Bank, Canajoharie 100,000 June 8, Union Bank, Albany 250, 000 June 23, Union Bank, Kinderhook 125, 000 July 6, Market Bank, Troy 200, 000 July 6, Auburn City Bank, Auburn 200, 000 July 9, State of New York Bank, Kingston. 100, 000 July 13, Bank of Sing Sing, Sing Sing 125, 000 Aug. 9, Central Bank, Brooklyn 200, 000 Aug. 23, Citizens' Bank, Saratoga Springs . . 250, 000 Sept. 8, Citizens' Bank, Fulton 125, 000 Sept. 16, Pulaski Bank, Pulaski 100, 000 Sept. 17, Hungerford's Bank, Adams 125,000 Sept. 29, Onondaga County Bank, Syracuse . . 150, 000 Oct. 1, Genesee Eiver Bank, Mount Morris. 130, 000 Oct. 21, Jefferson County Bank, Waterford.. 200, 000 Oct. 29, Oneida Central Bank, Eome 150, 000 Dec. 15, Merchants and Mechanics' Bk., Troy. 300,000 Dec. 30, Otsego County Bank, Cooperstown. 200, 000 Jan. 19, Bank of Fayetteville, Fayetteville. . 110, 000 Feb. 6, Frankfort Bank, Frankfort 105, 000 March 10, West Winfield Bank, West Winfield. 100, 000 March 31 , Eochester Bank, Eochester 100, 000 March 31, Farmers' Bank, Lansingburgh 200, 000 April 6, Bank of Newark, Newark 100, 000 April 22, Elmira Bank, Elmira 200, 000 April 29, Frontier Bank, Potsdam 100, 000 May 1, Onondaga Bank, Syracuse 115,000 May 11, International Bank, Buffalo 400, 000 June 26, Bank of Yonkers, Yonkers 150, 000 July 12, Weedsport Bank, Weedsport 100,000 Aug. 1, Judson Bank, Ogdensbnrg 132, 000 Oct. 3, Oswegatchie Bank, Ogdensburg. . . 200, 000 484 BANKING LAWS. Date. Name and Location. Original Capital. 1854, Dec. 5, Bank of Albany, Albany |360, 000 1854, Dec. 13, Broome County Bank, Binghamton. 100, 000 1854, Dec. 27, Central Bank, Cherry Yalley 200, 000 1855, Jan. 31, Susquehanna Valley Bank, Bing- hamton 100, 000 1855, March 30, Canajoharie Bank, Canajoharie 100, 000 1855, April 23, Hudson Kiver Bank, Hudson 200, 000 1855, June 20, Cambridge Yalley Bank, North "White Creek 115, 000 1855, June 20, Cuba Bank, Cuba 100, 000 1855, June 22, Bank of Lansingbtirgh, Lansingb'gh. 120, 000 1855, Aug. 20, Waverly Bank, Waverly 100, 000 1855, Oct. 3, Oswego Eiver Bank, Fulton 125, 000 1855, Nov. 5, Dairymen's Bank, Newport 100, 000 1855, Dec. 24, Ontario Bank, Utica 500, 000 1855, Dec. 28, Bank of Chenango, Norwich 120, 000 1856, Jan. 2, Mohawk Eiver Bank, Fonda 100,000 1856, Jan. 24, Mercantile Bank, Plattsburgh 100, 000 1856, Feb. 8, National Bank, Albany 600, 000 1856, Feb. 16, Auburn Exchange Bank, Auburn. . 150,000 1856, Feb. 18, Commercial Bank, Saratoga Springs. 125, 000 1856, Feb. 21, Bank of Norwich, Norwich 125, 000 1856, Feb. 28, Bank of Cazenovia, Cazenovia 120, 000 1856, Feb. 28, Canastota Bank, Canastota 110, 000 1856, March 4, Flour City Bank, Kochester 200, OOO 1856, March 16, Bank of Kent, LudingtonviUe 100, 000 1856, March 21, Croton Eiver Bank, South East 100, 000 1856, April 25, Leonardsville Bank, Leonardsville.. 100,000 1856, May 7, Niagara County Bank, Lockport .. . 200,000 1856, June 20, Bank of Tioga, Owego 100, 000 1856, June 25, Bank of Hornellsville, Hornellsville. 100, 000 1856, June 25, Marine Bank, Oswego 125, 000 1856, June 26, Manufacturers and Traders' Bank, Buffalo 200, 000 1856, June 30, Farmers' Bank, Fort Edward 200, 000 1856, July 2, Fredonia Bank, Fredonia 100, 000 1856, July 3, CUnton Bank, Buffalo 250, 000 1856, July 28, Manufacturers' Bank, Eochester... 200,000 1856, Aug. 20, Bank of EUicott, Jamestown ...... 100, 000 BAISTEING ASSOCIATIONS. 485 Date. Name and Location. Original Capital. 1856, Nov. 12, Deposit Bank, Deposit $125, 000 1856, Nov. 28, Saratoga County Bank, Waterford. . 100, 000 1856, Dec. 30, Montgomery County Bank, Johns- town 100, 000 1857, Feb. 12, Dover Plains Bank, Dover 100, 000 1857, March 17, Lake Ontario Bank, Oswego 250, 000 1857, May 1, Queens County Bank, Hempstead . . 100,000 1857, May 26, Monroe County Bank, Eoehester . . 100,000 1857, June 4, Bank of the Interior, Albany 700, 000 1857, June 9, WaUkiU Bank, Middletown 125, 000 1857, Sept. 19, Otseningo Bank, Binghamton 125, 000 1857, Dec. 31, Bank of Poughkeepsie, Poughkeep- sie 200, 000 1858, Jan. 23, Bank of Old Saratoga, SchuylerviUe. 110, 000 1858, April 2, Bank of Newport, Newport 100, 000 1858, June 8^ Stissing Bank, Pine Plains 120, 000 1858, Sept. 16, Cataract Bank, Lockport 100, 000 1869, Jan. 28, Nassau Bank, Brooklyn 300,000 1859, March 18, Bank of Cohoes, Cohoes 100, 000 1859, April 9, Medina Bank, Medina 100, 000 1859, June 14, Bank of Whitehall, Whitehall .... 100, 000 1859, Oct. 10, Bank of Niagara Falls, Niagara Falls 100,000 1859, Dec. 13, Orleans County Bank, Albion 100, 000 1859, Dee. 20, Saugerties Bank, Saugerties 125, 000 1859, Dec. 28, Brooklyn Bank, Brooklyn 300, 000 1859, Dec. 29, Tanners' Bank, Catskill 100, 000 1859, Dec. 31, Chautauqua County Bank, James- town 100, 000 1860, July 14, Kockland County Bank, Nyack 100,000 1860, Aug. 24, Bank of Amsterdam, Amsterdam . . 100,000 1860, Aug. 31, City Bank, Poughkeepsie 200, 000 1860, Oct. 8, Setauket Bank, Setauket 100, 000 1861, Feb. 26, Bank of Orangetown, Orangeburgh. 100, 000 1861, March 18, Hampden Bank, North Castle 100, 000 1861, March 27, Columbia Bank, Chatham Four.Cor- ners 100, 000 1861, May 25, Ulster County Bank, Kingston 150, 000 1861, June 27, Bank of Jamaica, Jamaica 100, 000 486 BANKING LAWS. Date. Name and Location. Original Capitai. 1861, Julv 20, Kochester Exchange Bank, Eoches- ter $100, 000 1861, Nov. 9, Union Bank, Medina 100, 000 1861, Nov. 13, Bank of Otego, Otego "100, 000 1861, Dec. 17, Bank of Orange County, Goshen.. 110,000 1861, Dec. 24, Schenectady Bank, Schenectady 100,000 1861, Dec. 31, Steuben County Bank, Bath 150, 000 1862, April 2, Palisade Bank, Yonkers 100, 000 1862, April 3, Lincoln Bank, Clinton 100, 000 1862, June 17, Iron Bank, Plattsburgh 100, 000 1862, July 28, Bank of Ontario, Canandaigua 100, 000 1862, Nov. 20, Chemung Canal Bank, Elmira 100, 000 1862, Dec. 20, Cayuga County Bank, Auburn 250, 000 1862, Dec. 23, Herkimer County Bank, Little Falls. 200 000 1862, Dec. 30, "Westchester County Bank, Peekskill. 200,000 1862, Dec. 31, Troy City Bank, Troy 300, 000 1863, April 1, P. E. "Westfall's Bank, Lyons 100, 000 1863, May 27, Bank of Trumansburgh, Trumans- burgh 100, 000 1863, June 30, Lake Bank, Skaneateles 100, 000 1863, July 31, Bank of Canton, Canton 100, 000. 1863, Sept. 7, Hope Bank, Albany 100, 000 1863, Dec. 9, Highland Bank, Newburgh 350,000 1863, Dec. 21, Farmers and Manufacturers' Bank, Poughkeepsie 300, 000 1863, Dec. 29, Albany City Bank, Albany 500, 000 1864r, March 29, Bank of Port Byron, Port Byron . . 100, 000 1864, July 19, J. N. Westf all & Co.' s Bank; Jordan. 100,000 1865, Sept. 4, Harlem Eiver Bank, Morrisania .... 100, 000 1867, Jan. 30, Mechanics and Traders' Bank, Brooklyn 100, 000 1867, June 12, Unadilla Bank, Unadilla 120, 000 1867, June 18, Bank of Monroe, Eochester 100, 000 1868, July 9, Commercial Bank, Brooklyn 100, 000 1868, Aug. 4, Mechanics and Farmers' Bank, Albany 350, 000 1868, Oct. 28, Central Bank of "Westchester Co., White Plains 100, 000 1868, Dec. 31, Merchants and Mechanics' Bank, Troy 300,000 BANKING ASSOCIATIONS. 487 ate. Name and Location. Original Capital. 1869, March 4, Phoenix Bank, Phoenix $100, 000 1869, July 14, Bank of Skaneateles, Skaneateles. . 100, 000 1869, Nov. 25, Carroll Park Bank, Brooklyn 100,000 1870, Jan. T, Fulton Bank, Brooklyn 100, 000 1870, March 1, Farmers' Bank, Fayetteville 100, 000 1870, March 29, Merchants' Bank, Watertown 150, 000 1870, Sept. 23, State Bank of Clean, Olean 100, 000 1870, Dec. 30, Exchange Bank, Lansingburgh 100, 000 1871, Feb. 25, Security Bank, Watertown 100, 000 1871, March 27, Albany County Bank, Albany 200, 000 1871, March 28, State Bank of Fort Edward, Fort Edward 100, 000 1871, April 19, Bank of Haverstraw, "Warren 100, 000 1871, May 23, German Bank, BuflEalo 100, 000 1871, June 29, Bank of Wappingers Falls, Wappin- gers Falls , . 100, 000 1871, Dec. 7, Bank of Oswego, Oswego 100, 000 1872, July 10, Manufacturers' Bank, Cohoes 100,000 1872, Aug. 2, City Bank, Eochester 400, 000 1872, Dec. 16,2Atiantic State Bank, Brooklyn 200, 000 1873, Jan. 14, State Bank, Syracuse 100, 000 1873, Jan. 16, Flushing and Queens County Bank, Flushing 100, 000 1873, Feb. 7, Bank of BuflEalo, Buffalo 300, 000 1873, March 18, Madison Bank, Madison 100, 000 1873, April 19, Manufacturers' Bank, Amsterdam.. 100,000 1874, Feb. 11, Delaware County Bank, Walton. . . 160, 000 1874, May 28, State Bank, Oneida 60, 000 1874, June 20, City Bank, Schenectady 100, 000 1874, June 26, Citizens' Bank, Waverly 50, 000 1874, Aug. 17, State Bank, Eandolph 65, 000 1875, Feb. 1, Bank of Eochester, Eochester 100, 000 1875, March 8, Bank of Chatham Yillage, Chatham Village 50, 000 1875, May 1, Baldwinsville State Bank, Baldwins- ville 50,000 1875, May 28, Commercial Bank, Eochester 100,000 1875, June 24, Union Bank, Buffalo 100, 000 1875, Sept. 15, Genesee County Bank, Le Eoy 150, 000 488 BANKING LAWS. Date. Name and Location. Original Capital. 1875, Nov. 9, Bank of Kome, Kome $100, 000 1875, Dec. 13, Cuba State Bank, Cuba 100, 000 1876, April 25, Bank of Batavia, Batavia 50, 000 1877, July 7, Cataract Bank, Niagara Falls 50, 000 1877, Nov. 10, New York State Banking Compauy, Syracuse 100, 000 1879, Jan. 15, Ogdensburg Bank, Ogdensburg 100,000 1879, April 24, Johnstown Bank, Johnstown 50, 000 1879, July 3, Bank of Gouvemeur, Gouverneur. . 60, 000 1880, April 24, Eobert Gere Bank, Syracuse 100, 000 1880, Oct. 14, Eondout Bank, Eondout 300, 000 1881, April 29, Baldwin's Bank, Penn Tan 50, 000 1881, April 29, St. Lawrence County Bank, Canton. 60, 000 1881, May 3, Merchants' Bank, Buffalo 300, 000 1882, Feb. 28, Dundee State Bank, Dundee 50, 000 1882, April 22, German^American Bapk, Buffalo . . 100, 000 1882, May 31, State Bank of Bolivar, Bolivar 100, 000 1882, Aug. 4, Bank of East Aurora, East Aurora. 30,000 1882, Nov. 30, Bank of Niagara, Niagara Falls 50, 000 1882, Dec. 9, Bank of Clayton, Clayton 26, 000 1883, April 23, State Bank, North Tonawanda 100, 000 1883, Aug. 4, Bank of Hamburgh, Hamburgh.. . . 26, 000 1883, Dec. 13, Merchants' Bank, Eochester 100, 000 1884, Jan. 1, German American Bank of Eoches- ter (formerly Bank of Eochester), Eochester 200, 000 1884, Feb. 28, Bank of Worcester, Worcester 30, 000 1884, March 22, Farmers and Merchants' Bank, Spen- cer 25, 000 1884, April 28, Bank of , Syracuse, Syracuse 126,000 1884, July 7, Exchange Bank, Clayton 30, 000 1884, An^. 20, Patchogue- Bank, Patchogue 25, 000 Aggregate capital $55, 079, 707 Three hundred and ninety-nine banks, during a period of forty- six years. SAYINGS INSTITUTIONS CHARTERED FROM 1819-1884. 1819. Bank for Savings in city of New York. 1820. Albany Savings Bank. 1821. Bank for Savings in village of TJtica, not organized. 1823. Troy Savings Bank. 1827. Brooklyn Savings Bank. 1829. Seamen's Bank for Savings, New York. 1830. Ontario Savings Bank, Canandaigua, closed. 1831. Poughkeepsie Savings Bank. 1831. Kochester Savings Bank. 1833. Greenwich Savings Bank, New York. 1834. Bowery Savings Bank, New York. 1834. Schenectady Savings Bank. 1836. Buffalo Savings Bank, not organized (see year 1846). 1839. Savings Bank of Utica. 1841, Ithaca Savings Bank, closed (see year 1863). 1842. Auburn Savings Bank, not organized (see year 1849). 1842. Palmyra Savings Bank, not organized. 1846. Buffalo Savings Bank. 1848. Binghamton Savings Institution, not organized. 1848. Dry Dock Savings Institution, New York. 1848. East River Savings Institution, New York. 1848. Institutions for Savings of Merchants' Clerks, New York. 1849. Auburn Savings Bank. 1849. Syracuse Savings Institution. 1850. Albany City Savings Institution. 1850. Emigrant Industrial Savings Bank, New York. 1850. Hudson City Savings Institution. 1850. Manhattan Savings Institution, New York. 1850. Monroe County Savings Bank, Eochester. 62 490 BANKING LAWS. 1850. Oswego Savings Institution, not organized. 1850. Soutli Brooklyn Savings Institution. 1851. Broadway Savings Institution, New York. 1851. Central City Savings Institution, Utica, failed. 1851. Oohoes Savings Institution. 1851. Dutchess County Savings Bank, "Washington Hollow, closed. 1851. Irving Savings Institution, New York. 1851. Knickerbocker Savings Institution, New York, failed. 1851. Niagara County Savings Bank, Lockport, failed. 1851. Onondaga County Savings Institution, Syracuse, not organized. 1851. Home Savings Bank. 1851. Ulster County Savings Institution, Kingston. 1851. Western Savings Bank, Buffalo. 1851. Williamsburgh Savings Bank. 1852. Mechanics and Traders' Savings Institution, New York, failed. 1852. Metropolitan Savings Bank (formerly Mariners'), New York. 1852. Newburgh Savings Bank. 1852. Staten Island Savings Bank, Southfield, not organized (see year 1857). 1853. Brockport Savings Bank, closed. 1853. Dunkirk Savings Bank, not organized. 1853. Penn Yan Savings Bank, closed. 1853. Sixpennny Savings Bank, New York, failed. 1853. Westchester County Savings Bank, Tarrytown. 1854. Albany Dime Savings Bank, closed. 1854. Elmira Savings Bank, closed. 1854. Erie County Savings Bank, Buffalo. 1854. New York Savings Bank (formerly Eose HiU). 1854. Sing Sing Savings Bank. 1854. Sixpenny Savings Bank, Albany, closed. 1854. Sixpenny Savings Bank, Rochester, failed. 1854. Third Avenue Savings Bank (formerly Bloomiagdale), New York, failed. 1864. Yonkers Savings Bank. 1855. Chenango VaUey Savings Bank, Binghamton, re-chartered 1857 and 1867. 1855. Commercial Savings Bank, Troy, closed. 1856. Mechanics and Farmers' Savings Bank, Albany. SAVINGS INSTITUTIONS. 491 1855. Mercantile Savings Bank, Albany, closed. 1855. Onondaga County Savings Bank, Syracuse. 1855. Union Savings Bank, Albany, closed. 1856. Albany Exchange Savings Bank. 1856. State Savings Bank, Troy. 1857. Central Savings Bank, Brooklyn, not organized. 1857. Central Savings Bank, Troy. 1857. Fishkill Savings Institute, Fishkill. 1857. Manufacturers' Savings Bank, Troy. 1857. Mutual Savings Bank, Troy. 1857. Kural Savings Bank, Ha,rlem, not organized. 1857. Staten Island Savings Bank, Southfield, re-chartered 1864. 1858. Mechanics' Savings Bank, Buffalo (formerly Emigrant Savings Bank), closed. 1858. Southold Savings Bank. 1859. Dime Savings Bank, Brooklyn. 1859. German Savings Bank, New York. 1859. Jefferson County Savings Bank, Watertown. 1859. Oswego City Savings Bank. 1859. Peekslrill Savings Bank. 1859. Queens County Savings Bank, Flushing. 1859. Union Dime Savings Institution, New York. 1860. Bond Street Savings Bank (formerly Atlantic), New York, failed. 1860. Chenango County Savings Bank, Norwich, closed. 1860. Citizens' Savings Bank, New York. 1860. Corning Savings Bank, closed. 1860. East Brooklyn Savings Bank. 1860. Franklin Savings Bank, New York. 1860. Kings County Savings Institution, Brooklyn. 1860. People's Savings Bank of Dutchess County, Poughkeepsie, not organized. 1860. Khinebeck Savings Bank. 1860. Rockland County Savings Bank, Piermont, closed. 1860. Sag Harbor Savings 'Bank. 1860. Union Savings Bank of Batavia, not organized. 1861. Market Savings Bank, Troy, not organized. 1861. Mount Vernon Savings Bank of Westchester County, not organized. 492 BANKING LAWS. 1861. Seneca Falls Savings Bank, revived 1870 and organized 1871. 1861. "Wayne County Savings Bank, Lyons, not organized. 1863. Anglo- African Savings Bank, New York, not organized. 1863. Emigrant Savings Bank, Brooklyn, closed. 1863. Harlem Savings Bank. 1863. Ithaca Savings Bank, re-chartered and organized 1868. 1863. Market Savings Bank, New Tork, failed. 1863. People's Savings Bank, re-chartered and organized, 1867. 1864. Dime Savings Bank of Williamsburgh. 1864. Mutual Savings Bank, Auburn. 1864. Staten Island Savings Bank, organized 1867. 1865. Huntington Savings Bank, not organized. 1865. Long Island Savings Bank, Brooklyn, failed. 1865. Morrisania Savings Bank, re-chartered 1868, closed. 1865. National Savings Bank, Utica, closed. 1865. New Eochelle Savings Bank, failed. 1865. Port Chester Savings Bank. 1866. Amsterdam Savings Bank, not organized. 1866. Chautauqua County Savings Bank, Fredonia. 1866. Cortland Savings Bank, Cortland village. 1866. German Saviugs Bank, Brooklyn. 1866. German TJp-town Savings Bank (formerly TJp-town Savings Bank, New Tork), failed. 1866. Hope Savings Bank, Albany, closing. 1866. Jamaica Savings Bank. 1866. Mechanics' Savings Bank of Fishkill-on-Hudson. 1866. Middletown Savings Bank, organized 1869. 1866. North River Savings Bank, New York. 1866. Oneida Savings Bank. 1866. People's Savings Bank, Yonkers. 1866. Skaneateles Savings Bank. 1867. Binghamton Savings Bank. 1867. Carthage Savings Bank, closed. 1867. Central Park Savings Bank, New York, failed. 1867. Germania Savings Bank, Brooklyn. 1867. Hamilton Savings Bank, Brooklyn, closed. 1867. Mechanics' Savings Bank, Rochester. 1867. Mutual Savings Bank of Brooklyn, closed. 1867. National Savings Bank of Buffalo. SAVINGS INSTITUTIONS. 493 » 1867. National Savings Institution, New York, closed. 1867. Orleans Savings Bank, Albion, closed. 1867. Saratoga Savings Bank, Saratoga Springs, failed. 1868. Bowling Green Savings Bank, New York, failed. 1868. Bushwick Savings Bank, Brooklyn. 1868. CatskiU Savings Bank. 1868. Clinton Savings Bank, New York, failed. 1868. Clyde Savings Bank, not organized. 1868. Coxsackie Savings Institution. 1868. East New York Savings Bank. 1868. German Savings Bank, Morrisania, failed. 1868. Green Point Savings Bank, Brooklyn. 1868. Guardian Savings Institution, New York, failed. 1868. Industrial Savings Bank, Newburgh, not organized. 1868. Mutual Benefit Savings Bank, New York, failed. 1868. National Savings Bank, Albany, organized 1869. 1868. Park Savings Bank, Brooklyn, closing. 1868. People's Safe Deposit and Savings Institution, Syracuse, failed. 1868. Kondout Savings Bank. 1868. Security Savings Bank, Buffalo, closed. 1868. Security Savings Bank, New York, organized 1869, failed. 1868. Teutonia Savings Bank, New York, revived 1870, failed. 1868. Tioga County Savings Bank, Owego, closed. 1868. West Side Savings Bank, New York. 1869. Abingdon Square Savings Bank, New York, failed. 1869. Brevoort Savings Bank, New York, not organized. 1869. Central Savings Bank, New York, revived 1870, failed. 1869. Clinton County Savings Bank, Plattsburgh, closed. 1869. Dansville Savings Bank, not organized. 1869. East Side Savings Bank, Eochester. 1869. Eleventh Ward Savings Bank, New York, closing. 1869. EUenville Savings Bank. 1869. Equitable Savings Institution, New York, closing. 1869. Excelsior Savings Bank, New York. 1869. First National Savings Bank, LowviUe, not organized. 1869. Greenburgh Savings Bank. 1869. Little Falls Savings Bank, not organized. 1869. New Amsterdam Savings Bank, New York, failed. 1869. Ogdensburg Savings Bank, not organized. 494 BANKING- LAWS. 1869. Oneida County Savings Bank, Rome. 1869. Oriental Savings Bank, !N"ew Tork, organized 1871, failed. 1869. People's Savings Bank, Buffalo, not organized. 1869. Port Jervis Savings Bank, closed. 1869. Sixth Avenue Savings Bank, New Tork, not organized. 1869. Southern Tier Savings Bank, Elmira, closing. 1869. Stuyvesant Savings Bank, New Tork, not organized. 1869. Suffern Dime Savings Bank, not organized. 1869. Tontine Mutual Savings Bank, New Tork, revived 1871. time extended to September, 1872, not organized. 1869. Wappinger's Savings Bank, "Wappinger's FaUs. 1869. White Plains Savings Bank, closing. 1869. Torkville Savings Bank, New Tork, failed. 1870. ClairmoDt Savings Bank, New Tork, organized 1871, failed. 1870. Farmers and Mechanics' Savings Bank, Loekport. 1870. Livingston County Savings Bank, Greneseo, not organized. 1870. Oswego County Savings Bank, Oswego, 1 870. Pacific Savings Bank, New Tork, not organized. 1870. Pawling Savings Bank, Pawling. 1870. Trades' Savings Bank, New Tork, failed. 1870. Westfield Savings Bank, Westfield, not organized. 1871. Citizens' Savings Bank of Syracuse, closed. 1871. Cornwall Savings Bank, Cornwall. 1871. East Chester Savings Bank, Mount Vernon. 1871. East Side Savings Bank for Sailors, New Tork. 1871. Eighth "Ward Savings Bank, New Tork, not organized. 1871. Enterprise Savings Bank, College Point, not organized. 1871. Farmers and Mechanics' Savings Bank of Schenectady, closed. 1871. Fulton Savings Bank, Fulton. 1871. Goshen Savings Bank, Goshen. 1871. Haverstraw Savings Bank, failed. 1871. Matteawan Savings Bank, Matteawan. 1871. Mechanics' Savings Bank, Brooklyn, closing. 1871. Milton Savings Bank, Milton, not organized. 1871. New Paltz Savings Bank, New Paltz. 1871. People's Savings Bank, Poughkeepsie, not organized. 1871. Putnam County Savings Bank, Brewsters. 1871. Eockland Savings Bank, Orangetown, failed. 1871. Saugerties Savings Bank, Saugerties. SAVINGS INSTITUTIOlSrS. 495 1871. Home (formerly Sixth Ward) Savings Bank of the city of Albany. 1872. OoUege Point Savings Bank, College Point. 1872. Port Eichmond Savings Bank, Port Richmond, not organized. 1872. Eiverhead Savings Bank, Eiverhead. 1872. "Walden Savings Bank, Wdden. 1872. Whitestone Savings Bank, Whitestone, closing. 1873. Gloversville Savings Bank, closed. 1873. Mechanics' Savings Bank of Cohoes. 1873. People's Savings Bank of Amsterdam, closed. 1873. Union Savings Bank of Saratoga Springs, failed. 1874. Albany County Savings Bank. 1874. Citizens' Savings Bank of HornellsviUe, closed. 1874. Farmers and Mechanics' Savings Bank, Medina, closed. 1874. Farmers and Mechanics' Savings Bank, Palmyra, closed. 1874. Kingston Savings Bank. 1874. Newtown Savings Bank, closed. 1874. Rosendale Savings Bank, not organized. 1874. St. John's Savings Bank of Fordham, closed. 1874. Seneca County Savings Bank, not organized. 1874. Teutonia Savings Bank, Brooklyn, not organized. 1876. The Twelfth Ward Savings Bank in the city of New York, not organized. SAVINGS BANKS ORGANIZED UNDER THE GENERAL LAW OP 1875. (Oh. 371.) 1875. Warwick Savings Bank, Warwick. 1875. Long Island City Savings Bank. 1875. Bedford Savings Bank, closed. 1875. Eoslyn Savings Bank of Eoslyn. 1881. The Queen City Dime Savings Bank of Buffalo, not organ- ized. 1882. American Savings Bank, New York city. LOAN AND TRUST COMPANIES. (CHAETEEED FROM 1822 — 1884.) Farmers' Loan and Trust Company was chartered February 28, 1822 (ch. 50) as the Farmers' Fire Insurance and Loan Company." Original capital, $350,000. Charter amended, ch. 240, 1822, ch. 211, 1836, ch. 117, 1852, ch. 216, 1860, ch. 397, 1868, ch. 217, 1875, ch. 277, 1880. - New York Loan Company was chartered April 12, 1825 (ch. 119). Original capital, $200,000. New York Mount Hope Loan Company was chartered April 18, 1825 (ch. 202). Original capital, $300,000. New York Life Insurance and Trust Company was chartered March 9, 1830 (ch. 75). Capital, $1,000,000. Charter amended, ch. 250, 1834, ch. 286, 1870, ch. 630, 1872. BufEalo Trust Company was chartered April 16, 1852 (ch. 327). Capital, $100,000. Charter amended, ch. 131, 1853, ch. 21, 1854, ch. 484, 1855. United States Trust Company was chartered April 12, 1853 (ch. 204). Capital, $1,000,000. Charter amended, ch. 60, 1863. People's Loan and Eelief Company was chartered April 17, 1858 (ch. 296). Capital, $250,000. Charter amended, ch. 400, 1859. Loaners' Association of New York City was chartered April 10, 1861 (ch. 166). Capital, $25,000. Union Trust Company was chartered April 23, 1864 (ch. 316). Capital, $1,000,000. Charter amended, ch. 501, 1866, ch. 273, 1870, ch. 781, 1873. Brooklyn Trust Company was chartered April 14, 1866 (ch. 571). Capital, $125,000, Charter amended, ch. 110, 1868, ch. 853, 1869 ; ch. 199, 1870, ch. 55, 1874, ch. 383, 1877. LOAN AND TEUST COMPANIES. 497 Trust Company of Eocliester was chartered April 20, 1866 (ch. 718). Capital, $100,000. Trust and Deposit Company of Onondaga was chartered May 4, 1866 (ch. 874), as the "Trust Company of Onondaga." Capital, $100,000. Charter amended, ch. 802, 1867. Warehouse Loan Company was chartered April 13, 1867 (ch. 379). Capital, $500,000. National Trust Company of the City of New York was chartered April 19, 1867. Capital, $1,000,000. Charter amended, ch. 276, 1870, ch. 725, 1872. City Loan and Trust Company of New York was chartered May 8, 1.-68 (ch. 730), as the "Cosmos Life Policy Trust Conipany." Capital, $50,000. Charter amended, ch. 754, 1870. Mercantile Trust Company was chartered May 9, 1868 (ch. 806), as the " Fire-proof Warehousing Company." Capital, $1,500,000. Charter amended, ch. 121, 1870, ch. 845, 1873, ch. 345, 1877, ch. 185, 1869. German Loan and Trust Company, of Brooklyn, was chartered May 8, 1869 (ch. 719). Capital, $100,000. Charter amended, ch. 685, 1870. American Trust Company of the City of New York was chartered May 11, 1869 (ch. 872). Capital, $1,000,000. Charter amended, ch. 659, 1870, ch. 623, 1871, ch. 624, 1871. Safe Deposit and Trust Company, of Auburn, was chartered May 6, 1870 (ch. 690). Original capital, $20,000. Tlie Bankers' Loan and Trust Company, of New York, was chartered May 6, 1870 (ch. 687), as the " Bankers' Life Insurance and Trust Company of New York." Original capital, $250,000. Charter amended, ch. 871, 1871, ch. 459, 1872, ch. 685, 1873, eh. 707, 1881. The New York Loan and Improvement Company was chartered May 6, 1870 (ch. 689). Original capital, $100,000. Charter amended, ch. 540, 1871, ch. 755, 1872. New York Loan and Indemnity Company was chartered May 6, 1870 (ch. 730). Original capital, $25,000. Charter amended, ch. 661, 1872. The New York State Loan and Trust Company was chartered May 6, 1870 (ch. 686). Original capital, $150,000. Troy Security and Trust Company was chartered March 28, 1871 (ch. 196). Original capitiil, $50,000. 63 498 BANKING LAWS. "Westchester County Trust Company was chartered April 6, 1871 (ch. 341). Original capital, $100,000. Charter amended, eh. 678, 1873, ch. 593, 1874. Real Estate Trust Company was chartered April 14, 1871 (ch. 506). Original capital, $200,000. Mutual Benefit Life Policy, Loan and Trust Company of New York was chartered ^April 19, 1871 (ch. 616). Original capital, $50,000. The American Mortgage and Trust- Company was chartered May 12, 1871 (ch. 923). Original capital, $200,000. Mutual Trust Institution of the City of New York was chartered April 24, 1872 (ch. 362). Original capital, $100,000. Charter amended, ch. 257, 1873, ch. 165, 1874, ch. 318, 1875. New York Deposit and Loan Company was chartered May 7, 1872 (eh. 566). Original capital, $100,000. Rochester Trust Company was chartered May 14, 1872 (ch. 712). Original capital, $50,000. The German-American Loan and Mortgage Company was char- tered May 22, 1872 (ch. 818). Capital, $2,000,000. Charter amended, ch. 674, 1873. American Loan and Trust Company was chartered June 1, 1872 (ch. 868), as the " United States Loan and Security Company." Original capital, $100,000. Charter amended, ch. 486, 1874, ch. 189, 1880, ch. 391, 1882, ch. 260, 1884. New York Loan and Security Company was chartered April 21, 1873 (ch. 242). Original capital, $100,000. Long Island Loan and Trust Company was chartered May 14, 1873 (ch. 508). Original capital, $150,000. Charter amended, ch. 597, 1874, ch. 345, 1877, ch. 488, 1883. New York Mortgage and Trust Company was chartered May 28, 1873 (ch. 629). Original capital, $1,000,000. Albany Loan and Trust Company was chartered June 6, 1873 (ch. 658). Original capital, $50,000. Kings County Trust Company was chartered June 13, 1873 (ch. 749). Original capital, $125,000. Atlantic Guarantee and Trust Company was chartered June 14, 1873 (ch. 783). Original capital, $100,000. Charter amended, ch. 393, 1874; ch. 460, 1881. Central Trust Company of New York was chartered June 26, LOAN AND TRUST COMPANIES. 499 1873 (ch. 832). Original capital, $300,000. Charter amended, ch. 306, 1874, ch. 250, 1875. Manhattan Loan and Trust Company was chartered Jime 26, 1873 (eh. 840). Original capital, $500,000. Saratoga Safe Deposit and Trust Company was chartered June 27, 1873 (ch. 844). Original capital, $100,000. Commercial Loan and Trust Company was chartered May 6, 1874 (ch. 333), as the " Cotton Excliange Trust Company." Original capital, $100,000. Charter amended, ch. 418, 1883. The International Trust Company of New York was chartered June 9, 1873 (ch. 684), as the " International Exchange and Agency Company of New York." Original capital, $500,000. Charter amended, ch. 571, 1874. The Knickerbocker Trust Company was chartered June 1, 1874 (ch. 596"), as the "Manhattan Mortgage Company." Original cap- ital, $125,000. Charter amended, ch. 329, 1878, ch. 258, 1882, ch. 108, 1884. Merchants' Loan Company was chartered June 1, 1874 (eh. 592). Original capital, $500,000. Metropolitan Trust Company of the City of New York was char- tered April 20, 1881 (eh. 124). Original capital, $1,000,000. Buffalo Loan, Trust and Safe Deposit Company was chartered May 12, 1881 (ch. 241). Original capital, $100,000. Charter amended, eh. 694, 1881, ch. 141, 1882. Franklin Loan and Trust Company of the City of New York was chartered May 27, 1882 (eh. 230). Original capital, $500,000. Title, Guarantee and Trust Company, chartered July 1, 1882 (ch. 392), as the *' German-American Loan and Trust Company of the City of New York." Original capital, $500,000, Charter amended, ch. 367, 1883, ch. 167, 1884. The Eochester Trust and Safe Deposit Company was chartered April 12, 1884 (ch. 134). Original capital, $200,000. GUARANTY AND INDEMNITY COMPANIES. (CHARTERED FROM 1864—1884.) New York Guaranty and Indemnity Company was chartered April 13, 1864 (ch. 179). Original capital, $50,000. Charter amended, ch. 20, 1865, ch. 827, 1871. National Indemnity Company was chartered April 19, 1866 (eh, 685). Original capital, $100,000. Insurers' Indemnity Company of the City of New York was char- tered April 26, 1868 (^ch. 281). Original capital, $500,000. Charter amended, eh. 452, 1869, ch. 211, 1870. Metropolitan Indemnity Company was chartered May 11, 1869 (ch. 833). Original capital, $100,000. The New York Eeal Estate Guaranty Company was chartered June 12, 1873 (ch. 731). Original capital, $100,000. Brooklyn Guaranty and Indemnity Company was chartered May 19, 1874 (ch. 481). Original capital, $100,000. MORTGAGE COMPANIES. United States Mortgage Company was chartered May 12, 1871 (ch. 924). Original capital, $1,000,000. SAFE DEPOSIT COMPAMES. (CHAETERED FROM 1861 — 1874.) Safe Deposit Company of New York was chartered April 15 1861 (ch. 255). Original capital, $50,000. National Safe Deposit Company of the city of New York was chartered April 14, 1866 (ch. 573). Capital, $200,000. Charter amended, ch. 805, 1868. Bond Deposit Company of the city of New York was chartered April 20, 1866 (ch. 694). Original capital, $100,000. Charter amended, ch. 931, 1871, ch. 610, 1872. The Safe Deposit Company of Albany was chartered April 21, 1866 (ch. 746). Capital, $100,000. T'he Safe Deposit Company of Brooklyn was chartered April 30, 1866 (ch. 854). Capital, $100,000. Stay vesant Safe Deposit Company of the city of New York was chartered March 23, 1867 (ch. 111). Capital, $200,000. Safe Deposit Company of Utica was chartei-ed March 23, 1867 (ch. 119). Capital, $l00,000. Commercial Warehouse Company of New York was chartered April 13, 186^ (eh. 378). Original capital, $250,000. Charter amended, ch. 385, 1873. Long Island Safe Deposit Company was chartered May 9, 1867 (ch. 864). Capital, $100,000. Charter amended, ch. 817J 1869. Safe Deposit Company of Eochester was chartered March 30, 1868 (ch. 84). Capital, $100,000. Safe Deposit Company of Binghamton was chartered May 8, 1868 (ch. 756). Capital, $100,000. Commercial Warehouse Company of Albany was chartered May 9, 1868 (ch. 800). Original capital, $100,000, bO'Z SAFE DEPOSIT COMPANIES. People's Safe Deposit and Savings Institution of the State of New York was chartered May 14, 1868 (cli. 816). Capital, $200,000. Fidelity Safety Deposit Company of the city of New York was chartered May 8, 1869 (ch. 735). Capital, $200,000. "Williamsburgh Safe Deposit Company was chartered May 11, 1869 (ch. 838). Capital, $100,000. Troy Safe Deposit Company was chartered May 5, 1870 (ch. 677). Capital, $100,000. Richmond County Storage and Business Company was chartered May 6, 1870 (ch. 684). Original capital, $25,000. Excelsior Safe Deposit Company was chartered April 14, 1871 (ch. 510). Original capital, $50,000. The People's Safe Deposit Company was chartered April 28, 1871 (ch. 823). Capital, $100,000. Central Safe Deposit Company of the city of New York was chartered April 14, 1871 (eh. 509) as the " Security Deposit Com- pany of the City of New York." Name changed by order of the Supreme Court, June 14, 1875, under the provisions of ch. 322, 1870. Traders' Deposit Company was chartered April 19, 1871 (ch. 604). Original capital, $25,000. Brooklyn City Safe Deposit Company was chartered April 30, 1872 (ch. 443). Original capital, $25,000. Albany Safe Deposit Company was chartered February 28, 1873 (ch. 31). Capital, $50,000. Charter amended, ch. 581, 1873. Buffalo Safe Deposit Company was chartered June 7, 1873 (eh. 673). Original capital, $50,000. Charter amended, eh. 629, 1874. Metropolitan Safe Deposit Company of the city of New York was chartered April 23, 1874 (ch. 236). Original capital, $100,000. Harlem Safe Deposit Company was chartered June 1, 1874 (ch. 594). Original capital, $25,000. SALE DEPOSIT COMPANIES. 503 SAFE DEPOSIT COMPANIES ORGANIZED UNDER THE GENERAL LAW OP 1875 [Ch. 613]. Mercantile Safe Deposit Company was organized December 7, 1875. Capital, $300,000. Bankers' Safe Deposit Company was organized August 27, 1880. Capital, $100,000. Grand Union Safe Deposit Company was organized July 2, 1881. Capital, $300,000. Lincoln Safe Deposit Company was organized July 27, 1881. Capital, $300,000. Manhattan Sfefe Deposit Company was organized February 6, 1882. Capital, $150,000. Knickerbocker Safe Deposit Company was organized April 20, 1882. Capital, $200,000. American Safe Deposit Company was organized May 22, 1882. Capital, $200,000. Mount Morris Safe Deposit Company was organized October 20, 1882. Capital, $150,000. New York Produce Exchange Safe Deposit and Storage Com- pany was organized April 27, 1883. Capital, $150,000. NATIONAL BANK ACT AND COGNATE UNITED STATES STATUTES. 64 INTRODUCTION. It is stated in the preceding historical sketch * that the first Bank of the United States was chartered in 1791. After an existence of twenty years, the bill to re-charter the same was defeated in each house of Congress by a single vote. Five years afterward a second United States Bank was created, which likewise continued in existence twenty years. This last mentioned bank had a capital of $35,000,000. If a similar institution were to be established to-day, bearing a like proportion to the wealth of the country, it would require a cap- ital of more than $600,000,000, many fold larger than the com- bined wealth of the Bank of England and the Bank of France. The contemplation of such an enormous power placed in the hands of any body of men, gives a just appreciation of the conduct and motives of President Jackson in his contest with this institution. His judgment was correct. He saw that such a corporation, increas- ing with the growth of the country, would surely tend to corruption, while its unlimited power might be directed to interfere with the inde- pendence of Congress, and with the liberty of the people.f After the downfall of the second United States Bank, several unsuccessful attempts were made to establish a National Bank. During the administration of President Tyler, Congress passed a bill creating such a bank. This bill was vetoed by him because of certain features which he alleged were objectionable ; yet notwith- standing the removal by Congress of the objfectionable features from the bill, he vetoed it a second time. The Treasury Department was established September 2, 1789. The Government began its existence by assuming debts amounting * See title ' ' First and Second Banks of the United States," Historical Sketch, p. 8, ante. f Blaine's Twenty Years of Congress, vol. 1, p. 418. 503 BANKING LAWS. in the aggregate to $72,775,895, of which $12,556,874: was foreign, and $40,256,802 was domestic debt of the Confederation, and $19,962,219 was debt of the States. From 1833, when the renewal of the bank charter was refused to 1836, the note circulation of the country increased from $94,000,000 to $149,000,000. The public debt was paid in full in 1835. In the year 1836 the Government found itself in the pos- session of a large surplus revenue, amotfntiaig to over $40,000,000, resulting chiefly from the sale of public lands. All such surplus, ex- cept the sum of $5,000,000^ was distributed ainong the States, on the basis of their respective Congressional representation. January 1, 1849, the public debt was $63,000,000. The greater part of this sum was incurred by reason of the Mexican war. It was increased $5,000,000 in 1850 by the payment of the Texan Indem- nity. January 1, 1851, the debt amounted to $68,304,796, and January 1, 1857, it amounted to but $28,699,831. In 1846, Congress established the Independent Treasury. From that time the Government has collected and disbursed its revenues, without the intervention of the banks. Its receipts and payments were thereafter in specie alone. This was the system in vogue at the beginning of the civil war in 1861. At that time the debt of the Government was $90,580,873. The increase was due to the expenses of several Indian wars, and to some stnaU loans made in anticipation of internal difficulties Teeasttet Notes. Prior to the civil war, no bank of issue had ever been created by the government of the United States. At that time the amoxmt of paper money in circulation was about $200,000,000, three-fourths of which had been issued by the banks located in the Northern States. Shortly after the commencement of hostilities, the govern- ment was compelled to borrow money from the associated banks of New York, Philadelphia and Boston. July 17, 1861, Congress authorized the issuing of notes payable on demand, to the amount of $250,000,000, or so much thereof as the Secretary of the Treasury might deem meeesBary for the public service (ch. 5). This law did not make such notes a legal tender. INTRODUCTION. 509 Statutes were enacted during the year 1862 by the national legis- lature, on February 25 (ch. 33), and July 11 (ch. 142), authorizing the issue of treasury notes to the amount of $300,000,000, of which sura $50,000,000 were in lieu of the notes issued in pursuance of the act first mentioned. This last issue was made a legal tender except in payment of duties on imports, and of interest on the national debt. By the act of March 3, 1863, an additional issue of $150,000,000 of treasury notes was authorized (eh. 73). June 30, 1864, an act was passed providing that the total of legal tenders should not exceed $400,000,000, and such additional sum not exceeding $50,000,000, as might be " temporarily required for the redemption of temporary loans " (ch. 172). The highest point which the Grovernraent debt ever reached was $2,844,649,626, August 31, 1865, when the annual interest charge was $150,977,697. The largest amount of legal tenders in circu- lation was during this year, and aggregated $432,687,966. ^pril 12, 1866, a statute was enacted to fund the legal tender notes, under which more than $72,000,000 were retired (ch. 39); but Feb- ruary 4, 1868, an act became a law without the approval of the President, whereby any further reduction was prohibited (ch. 6), thus leaving the volume of legal tenders outstanding at $356,- 000,000. During the year 1866, many of the State banks changed to the national system, because of a law passed March 3, 1865, imposing a tax of ten per centum on the amount of notes of any State bank or banking association paid out after July 1, 1866, (ch. 78). The law of March 18, 1869, declared the faith of the United States to be solemnly pledged to the payment, in coin or its equivalent, of aU its obligations, not bearing interest, known as United States notes, and of all its obligations bearing interest, except in cases where the law authorizing the issue of any such obligations has ex- pressly provided that the same might be paid in lawful money, or other currency than gold or silver (ch. 1). The maximum amoimt of treasury notes was fixed at $382,000,000 ; by section 6 of the act of June 20, 1874 (ch. 343). A statute, entitled " An act to provide for the resumption of specie payments," was enacted January 14, 1876, whereby Congress 510 EAIJKING LAWS. repealed section 5177 of the Revised Statutes,* limiting tlie aggre- gate amount of circulating notes of national banking associations, and enacted that whenever and so often as circulating notes should be issued to such associations, it should be the duty of the Secretary of the Treasury to redeem legal tender notes to the amount of eighty per centum of the national bank notes so issued, and to continue such redemption until there should be outstanding the sum of $300,000,000 of such legal tender notes and no more; and that on and after the Ist day of January, 1879, that officer should redeem in coin the United States legal tender notes then outstanding, upon their presentation for redemption at the office of the assistant Treasurer of the United States, in the city of New York, when presented in sums of not less than $50 (eh. 15). The act of J une 20, 1874, previously mentioned, authorized banks to deposit with the Treasurer lawful money for the redemption of their circulation, and to withdraw from deposit a proportionate amount of bonds. Many banks, induced by the high premiums upon their government bonds and by the low rates of profit to be gained by issuing circulating notes, availed themselves of this authorization, and withdrew their circulation in whole or in part ; hence the effect of the law under discussion, althougli it removed all bounds to the increase of notes to be issued by the banks both as to amount and geographical limits, was not to augment, but on the contrary, for a considerable period, to decidedly diminish the volume of circulation. To enable that officer " to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues, from time to time, in the Treasury not otherwise appro- priated, and to issue, sell and dispose of, at not less than par in coin" any of the five, four and a half and four per cent bonds authorized by the law of July 14, 1870. The unlimited power thus given to the Secretary of the Treasury by this law, enables him to stop, by the sale of bonds, any transfer of coin to foreign countries, which transfer might hazard the redemption of the legal tender notes. May 31, 1878, a statute was enacted, entitled " An act to forbid the further retirement of United States legal tender notes." This law was to the effect, that it should be unlawful for the Secretary of * In June, 1866, Congress directed the revision and consolidation of all the gen- eral and permanent statutes of the United States (ch. 140). Such revision, em- bracing the laws in force December 1, 1873, was approved June 20, 1874, and was entitled the ' ' Revised Statutes of the United States " (ch. 333). mTRODUOTIOK 511 the Treasury to cancel or retire any more legal tender notes, but when any of the same are redeemed or received into the Treasury under any law, they should not be retired or destroyed, but should be re-issued, and kept in circulation. This statute in terms repealed all laws in conflict therewith (ch. 146). It is evident that the inten- tion of this act is, that notes re-issued should retain their original quality of legal tender. A recent decision of the Supreme Court of the United States in connection with this statute declares, that Congress has the constitutional power to emit, at any time in its dis- cretion, unlimited issues of government notes with all the legal attri- butes of coin. In other words, the National legislature may make any kind of paper currency a legal tender in payment of private debts, and this power may be exercised whenever a condition of afEairs obtains which that body shall consider to be an exigency.* National Bank Act. The Secretary of the Treasury, in his annual report for 1861, sub- mitted two plans for obtaining the necessary means for prosecuting the war: First, to substitute government notes payable in coin on demand, for those already issued by private corporations. Second, to gradually issue national bank notes secured by the pledge of government bonds, to take the place of the then existing State bank notes issued pursuant to authority derived from the statutes of the several States.f * TMs decision was given in Juillard v. Greenman, reported at tlie end of this article. ■f See report of Millard Fillmore, Comptroller of this State, December 30, 1848 (pp. 56, 57), suggesting tliat circulating notes issued by State banks be secured by United States stocks, tbe same "to be received for public dues to tbe national treasury ; this would give to such notes a universal credit, co-extensive with the United States, and leave nothing further to be desired in the shape of a national paper currency." An article written by John J. Knox, formerly Comptroller of the Currency, may be found in Hunt's Merchant's Magazine of January, 1863, advocating the passage by Congress of a National Bank Law of a like character to the Free Bank- ing Act of this State. During the month of August, 1861, Orlando B. Potter, a member of the bar of the city of New York, and at the present time a member of Congress from that city, submitted to President Lincoln and to Secretary Chase a plan for a national currency secured by government stocks. This plan was to permit banks 612 BANKING LAWS. That officer in his report urged the adoption of the second of these plans. A bill* to establish national banks having been introduced in Congress, it was urged that the proposed system would prove of great beneiit in furnishing a permanent market for tbei large issues of bonds, which it was then evident must be made to meet the expenditures of a great war. The bill met with strong opposition ; but after spirited and able debate, it passed both branches of the National Legislature by an exceedingly small majority, and be- came a law February 25, 1863 (ch. 68). The statute creating this system of national banks is dissimilar in many essential respects from . and bankers, duly authorized, in the loyal States, to secure their bills by deposit- ing, with a superintendent appointed by the government, government stocks at their par value, in the same way that the banks and bankers in New Tork then secured their circulation, by depositing' stocks of the State of New Tork or of the United States with the State Banking Department, thus making the stocks of the United States a basis of banking on which alone a national circulation can be se- cured. To do this, he stated, " it is necessary only for the government to author- ize and appoint a superintendent connected with the treasury, whose duty it shall be to receive from duly authorized banks and bankers within loyal States, United States stocks in sums of not less than, say, $300,000 from one party, and hold the same as security for an equal amount of bills to be properly stamped and signed by such superintendent, and delivered to the depositing bank or banker. This mark or stamp and signature of such superintendent to guarantee to the holder of the bills issued, that the same are secured by United States stocks deposited with and held by the government ; and that in case the same shall fail to be re- deemed by the bank or banker issuing them, then, on due demand and protest, such superintendent will sell, after proper notice to the bank or banker, and ap- ply to the redemption of said bills, the stocks held to secure the same. This money might properly be designated United States currency, as dis- tinguishing it from the bills issued in the several States, and not thus secured; and should be so plainly and unmistakably designated as to be readily dis- tinguishable everywhere at sight. It might be received and paid out by the gov- ernment in cases where it is not otherwise agreed or provided, but this is not at all essential to the plan, and might encounter the prejudices of those who think specie more reliable than the faith and covenant of the government under which they live." He further stated that the foregoing plan would be fully understood, by an examination of the statutes of this State regulating the securing of their circulations by our banks, by deposit with the State. It will be noticed that this is the plan substantially adopted by Congress, February 33, 1863, with the excep- tion that national banks were created subject to the supervision of the general government. * This bill was introduced by Elbridge G. Spaulding, formerly Treasurer of the State of New Tork, and then representing the Second Congressional District of that State. INTEODUCTION. 513 the previously mentioned laws incorporating the two Banks of the United States. This act is entitled " An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," and is based upon the Free Banking Act (eh. 260, Laws of 1838) of the State of New York.* The satisfactory experience of the people of this State in connection with the practical working of the general bank- ing law of 1838, doubtless led to the adoption, by the National Legis- lature, of its leading features ; and it is a remarkable fact, that ex- perience has demonstrated, that only in a few instances have either the State or the national act required any change in order to improve tliem. Prior to November 28, 1863, 134 national banking associa- tions had organized, under this law, having a total capital of $7,184,- 715. The bonds deposited with the Treasurer amounted to $3,' 925,275. The act of 1863 was repealed during the first session of the Thirty- eighth Congress, by the law of June 3, 1864 (ch. 106) ; the latter being a substituted act containing similar provisions. The few amendments which have been made by Congress, from time to time, are hereafter mentioned in the notes to the following sections of the United States Revised Statutes, and are printed in full in an Appendix. An act of June 20, 1874 (ch. 343), declares this law shall liercafter bo known as " the National Bank Act." On October 1, 1865, there were in existence 1,513 national banking associations with a capital of $395,729,597.83, and having bonds deposited with the Treasurer to the amount of $276,219,950. National Gold Banks. July 20, 1870, an act (ch. 252) was passed, authorizing the organization of national gold banks. These banks are permitted to receive from the Treasurer of the United States, upon govern- ment bonds deposited with him, eighty per centum thereof in cir- culating notes. Such notes are payable in gold at the office of issue, and are a legal tender in payment of debts to any other national gold banlc, provided the association b}' which they were issued is still redeeming its notes. These banks are obliged to maiu- * See Historical Slcetcli, p. 47, ante. 63 514 banki:n'G laws. tain a reserve in gold and silver coin of an amount equal to one- quarter of their circulation ; and, except as to circulation, are subject to the same regulations as other national banks. An act (ch. 25), of Congress passed' February 14, ] 880, authorized the conversion of national gold banks into currency banks, with the same powers and privileges granted by law to the latter associations. March 3, ISSl, the capital and deposits of banks, bankers and national bank- ing associations, were excepted from taxation by the act passed to reduce internal revenue taxation (ch. 121). Extension of Chaetees. The last important statute enacted, became a law July 12, 1882, and is entitled " An act to enable national banking associations to extend their corporate existence, and for other purposes." (Ch. 290.) It permitted such banks to extend the period of succession for not more than twenty years, by an amendment to their articles of associa- tion. The law also provided, that " the jurisdiction for suits brought subsequent to its enactment in connection with any of such associa- tions, except suits between them and the United States, or its oiBcera or agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under the United States Statutes, which do or might do banking business where such national banking associations may be doing business, when such suits may be begun." Section 12 of this act, authorized and directed the Secretary of the Treasury to receive deposits of gold coin, and to issue certi- ficates for the same ; such certificates, as well as silver certificates, to be counted as part of the lawful reserve of banks. The object of this amendment is to make the use of specie more available, by saving the expense of transporting it from place to place. By the original law national banks were required to pay their own notes at their counter, and also to redeem them through the agency of a like bank located in one of eighteen enumerated cities, called redemption cities ; but by section 3 of the act just quoted, they were required to redeem their notes at the treasury of the United States. Banks carrying on business in these cities, are required to appoint a redemption agent in the city of New York. Sixteen of the cities are now termed reserve cities.* * See § 5192, U. S. B. S., p. 511,. post. INTRODUCTION. 515 CeETIFIOATION of CHECKiS. The last section but one (13) of the statute of July 12, 1882, pro- vided that certified checks are not to be issued contrary to the pro- visions of the act of March 3, 1869 ; the same being section 5208 of the TJuited States Kevised Statutes, and prescribed a penalty for such illegal issue, in that conviction therefor should result in the im- position of a fine of not more than $5,000, or imprisonment for not more than five years, or both, in the discretion of the court. The act just mentioned, was the first legislative notice taken of the cer- tification of checks. The last-mentioned section provided that it should be unlawful for any ofiicer, clerk, or agent of any national bank, to certify any check drawn upon said bank, unless the drawer should, at the time Buch check is certified, have on deposit in said bank an amount of money equal to the amount of such check, which was, nevertheless, to be a good and valid obligation against the bank. The penalty for such illegal certification, was the appointment by the Comptroller of a receiver of the offending institution. It may not be irrelevant to add that the custom of certifying checks originated with the banks of the State of New York and was time-honored long before the present national banking system came into existence and that the loan of credit, duly secured, is as proper as the loan of other capital ; experience does not indicate that such loans of credit have been a source of disaster to either the banks of this State or the national banks. National Bankestg System. November 1, 1884, there were in existence 2,671 national banking associations, which is the largest number in operation at any time. Since the establishment of the system, 3,261 have been organized. National banks were established for the purpose in part of pro- viding a currency for the whole country, and in part to create a market for the loans of the general government ; it could not have been intended, therefore, to expose them to the hazard of unfriendly legislation by the States, or to ruinous competition with State banks. On the contrary, much has been done to insure their taking the place of State banks. The latter have been substantially taxed out of existence by the imposition of a duty upon their issues so large as 516 BANItING LAWS. to manifest a purpose to compel a withdrawal of all issues from circulation.* National banks are instruments designed to be used to aid the government in the admmistration of an important branch of the public service ; they are means appropriate to that end ; of the degree of necessity which existed for creating them, Congress is the sole judge. The Stales, as such, can exercise no control over them, nor in any wise affect their operation, except in so far as Con- gress may see proper to permit. But any thing beyond this is " an abuse, because it is the usurpation of power which a single State can- not give ; " against the national will " the States have no power, by taxation or otherwise, to burthen, or in any manner control, the ope- ration of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government."f It may be remarked, in conclusion, that the prominent source of weakness in this system is that it requires, to insure its continu- ance, that the national debt should be permanent. A debt which ought to be paid and naturally will be within the next twenty-three J ears. Under the present law the payment of that debt will ob- viously result in the retirement of the currency issued by the Na- tional banks. This evil, however, may be met by substituting a sys- tem whereby circulating notes secured by the deposit of approved State and other proper bonds may be issued to duly organized State banks, subject to suitable supervision, thus insuring a national cur- rency. The United States Government has maintained a constantly increasing credit for financial integrity, and to-day deservedly stands in the foremost rank. The example of the general gov- ernment has had a salutary effect ; and the credit of most of the States, and some of the corporate towns and other civil divisr ions of the same, is only second to that of the United States. It is a question whether the constitutional function of the gen- eral government in relation to banks, includes a supervision of their operations in so far as they affect alone the citizens of the States in which they are located. The relations of the banks * Tiffany v. National Bank of Missouri, 18 Wall. 409 ; First National Bank of Clarion v. Gruber, 87 Penn. St. 477. f Farmers, etc., National Bank v. Dearing, 91 XJ. S. (1 Otto) 29 ; citing Weston et ai. V. Charleston, 2 Pet. 466 ; McCulloch v. Maryland, 4 Wheat. 316 ; Osborne V. Bank of United States, 9 id. 708 ; Brown v. Maryland, 12 id. 419 ; VeazieBank V. F^nno, 8 Wall. 533. INTRODUCTION. 517 to the depositors, as trustees of the latter's funds, are properly the objects of State control. While no one will deny that the na- tional banking system has been of inestimable value to the country, it is equally true there is no necessity for national banks as m- struments for furnishing a sound and uniform national currency. The entire duty of the general government is performed in provid- ing uniform circulating notes throughout the Country, and this is done by its holding satisfactory securities for such notes, and redeem- ing the same by sale of the securities in cases where the banks is- suing fail to redeem. This method of banking, with the modifica- tion suggested, will furnish, there is reason to believe, a system oi combined flexibility and safety, never surpassed. Our national cir- culating notes are becoming the currency of the American continent, and are everywhere as convertible into gold as the issues of the Bank of England. The importance of the following recent decision of the Supreme Court of the United States on the legal tender question, especially in view of its historical character, justifies the publication of its essential portions as an Appendix to the foregoing introduction. A synopsis of the dissenting opinion of Mr. Justice Field is added. Tliia is the third decision in this connection given by this court. The first was in Hepburn v. Griswold, 8 Wall. 603. The court was at that time December, 1830), composed of eight members ; and, after an elaborate argument it rendered its decision declaring the Legal Tender Act unconstitutional by a vote of five to three, the majority of five being Chase, Nelson, Grier, Cliff'ord and Field ; and the minority, Swayne, Davis and Miller. By Act of Congress of April 10, 1869, another member had been added to the court, and in March, 1870, Judge Bradley was appointed to this place. In 1869, also, Judge Grier died and Judge Strong was appointed in his stead. Both of these appointments were made by President Grant. At this time there stood on the docket of the court two cases involving this question, Knox v Lee, and Parker v. Davis (generally quoted as the Legal Tender Cases), 13 Wall. 457. , These cases were argued before the court, and ou May 1, 1871, the court, by a bare majority, rendered its decision, overruling Hepburn v. Griswold, and declaring the act constitutional, the five judges concurring in the decision being Swayne, Davis, Miller. Strong and Bradley, and the four dissenting, Chase, Nelson, Clifford and Field. The present case arose undor the act of May 31 1878, authorizing the reissue and circulation of these notes, and making them a legal tender: and, in this case, eight of the judges, Waite, Miller, Bradley, Har- lan, Matthews, Wood. Gray and Blatchford, hold the tender good, Judge Field alone dissenting. The defense of the legal tender acts> m both the decisions of 1869 and 1871, was placed almost exclusively ou the necessity created by the war, the exigency of the situation alone furnishing a reason for their con- stitutionality. This opinion (Gray, J.) holds, however, that Congress has the constitutional power tq make the treasury notes of the United States a. legal 518 BANKING LAWS. tender in payment of private debts, in time of peace as well as m time of war. And further holds that under the act of Congress of May 81 1878 (ch. 146), which enacts that notes of the United States issued during the war of the rebellion under acts declaring them to be a legal tender in payment of private debts, and since the close of that war, redeemed and paid in gold coin at the treasury, shall be reissued and kept in circulation. Notes so reissued are a legal tender. One Juilliard brought suit against one Greenman, in the United States Circuit Court, for the Southern District of the State of New York, to recover the sum of $5,100 for certain bales of cotton sold and delivered to the defendant. Greenman, in his answer,- stated that he tendered to Juilliard in full payment $3S.oO in gold coin of the United States, forty cents in silver coin of the United States, and two United States notes, one of the denomination of $5,000, and the other of the denomination of $100, of the description known as United States legal tender notes, purporting by recital thereon to be legal tender at their respective face values, for all debts, public and private, except duties on imports and interest on the public debt, and which, after having been presented for payment, and redeemed and paid in gold coin, since January 1, 1879, at the United States sub- Treasury in New York, had been reissued and kept in circulation under and in pursuance of the act of Congress of May 31, 1878 (ch. 146), that, at the time of offering and tendering these notes and coin to the plaintiff, the sum of $5.1!i3.90 was the entire amount due and owing m payment for the cotton, but the plaintiff declined to receive the notes in payment of $5,100 thereof ; and that the defendant had ever since remained, and still was ready and willing to pay to the plaintiff the sum of $5,100 in these notes, and brought these notes into court, ready to be paid to the plaintiff if he would accept them. The plaintiff' demurred to the answer upon the grounds that the defense, con- sisting of new matter, was insulficient in law upon its face, and that the facts stated in the answer did not constitute any defense to the cause of action alleged. The Circuit Court overruled the demurrer and gave judgment for the defend- ant, and the plaintiff sued out his writ of error. " The notes of the United States, tendered in payment of the defendant's debt to the plaintiff, were originally issued under the acts of Congress of February 35, 1862, ch. 33 : July 11, 1863, ch. 143. and March a, 1863, oh 73. passed during the war of the rebellion, and enacting that these notes should " be lawful money and a legal tender in payment of all debts, public and private, within the United States," except for duties on imports and interest on the public debt. 13 Stat. 345, 533, 709." The court then states that the provisions of the earlier acts of Congress, so far as it is necessary for the understanding of the recent statutes to cite them, are re-enacted in §§ 3579 to 8583 inclusive, and 8588 of the Revised Statutes. " The act of January 14, 1875, chapter 15, to provide for the resumption of specie payments, enacted that on and after January 1, 1879, the Secretary of the Treasury shall redeem in coin the United States legal tender notes then out- standing, on their presentation for redemption at the office of the Assistant Treas- urer of the United States in the city of New York, in sums of not less than fifty dol- lars ; and authorized him to use for that purpose any surplus revenues m the treas- ury, and the proceeds of sales of certain bonds of the United States. IS rftat 396. The act of May 31, 1878, chapter 146, under whXck the notes in question were INTRODUCTION; 519 reiBSued, is entitled " An act to forbid the further retirement of United States legal tender notes," and enacts as follows: "From and after the passage of this act it shall not be lawful for the Secretary of the Treasury, or other officer unaer him to cancel or retire any more of the United States legal tender notes Ana when any of said notes may be redeemed or be received into the treasury under any law, from any source whatever, and shall belong to the United Stales they shall not be retired, canceled, or destroyed, but they shall be reissued and paid out again and kept in circulation : Provided, that nothing herein shall prohibit the cancellation and destruction of mutilated notes, and the issue of other notes of like denomination iu then; stead, as now provided by law All acts and parts of acts in conflict herewith are hereby repealed." 20 Stat, 87. The manifest intention of this act is that the notes which it directs, after having been redeemed, to be reissued and kept in circulation, shall retain their original quality of being a legal tender. The single question, therefore, to be considered, and upon the answer to which the iudgment to be rendered between these parties depends, is whether notes of the United States, issued in time of war, under acts of Congress declaring them to be a legal tender in payment of private debts, and afterward in time of peace redeemed and paid in gold coin at the treasury and then reissued under the act of 1878. can, under the Constitution o{ the United States, be a legal tender iu payment of such debts. Upon full consideration of the case, the court is unanimously of opinion that it cannot be distinguished in principle from the cases heretofore determined, reported under the names of the Legal-tender Cases, 12 Wall. 457 ; Dooly v. Smith, 13 id 604, Railroad Company v. Johnson, 15 id. 1D5 ; and Maryland v. Kailroad Company, 23 id. 105; and all the judges, except Mr. Justice Field, who adheres to the views expressed in his dissenting opinions in those cases, are of opinion that they were rightly decided. The elaborate printed briefs submitted by counsel in this case, and the opin- ions delivered in the Legal-tender Cases, and in the earlier case of Hepburn v, Griswold, 8 Wall. 603, which those cases overruled, forcibly present the arguments on either side of the question of the power of Congress to make the notes of the United States a legal tender iu payment of private debts. Without undertaking to deal with all those arguments, the court has thought it fit that the grounds of its judgment in the case at bar should be fully stated. No question of the scope and extent of the implied powers of Congress under the Constitution can be satisfactorily discussed, without repeating much of the reasoning of Chief Justice Marshall in the great judgment in McCulloch v. Mary- land, 4 Wheat. 316, by which the power of Congress to incorporate a bank was demoustrated and affirmed, notwithstanding the Constitution does not enu- merate, among the powers granted, that of establishing a bank or creating a cor- poration. The people of the United States by the Constitution, established a National Government, with sovereign powers, legislative, executive and judicial. " The Government of the Union," said Chief Justice Marshall, ' though limited in its powers, is supreme within its sphere of action," "and its laws, when made in pursuance of the Constitution, form the supreme law of the laud." " Among the enumerated powers of Government, we find the great powers to lay and col- 520 BANKING LAWS. lect taxes ; to borrow money ; to regulate commerce ; to declare and conduct a war ; to raise and support armies and navies. The sword and the purse, all the external relations, and no inconsiderable portion of the industry of the nation, are intrusted to its (jo vernment . " 4 Wheat. 405, 406, 407. A constitution establishing a frame of Government declaring fundamental prin- ciples, and creating a national sovereignty, and intended to endure for ages, and to be adapted to the various crises of human affairs, is not to be Interpreted with the strictness of a private contract. The Constitution of the United States, by apt words of designation or general description, marks the outlines of the powers granted to the National Legislature, but it does not undertake with the precision and detail of a code of laws to enumerate the subdivisions of those powers, or to specify all the means by which they may be carried into execution. Chief Jus- tice Marshall, after dwelling upon this view, as required by the very nature of the Constitution, by the language in which it is framed, by the limitations upon the general powers of Congress introduced in the ninth section of the first article, and by the omission to use any restrictive term which might prevent its receiving a fair and just interpretation, added these emphatic words : " In considering this question, then, we must never forget that it is a constitution we are expounding." 4 "Wheat. 407 ; see, also, page 415. The breadth and comprehensiveness of the words of the Constitution are no- where more strikingly exhibited, than in regard to the powers over the subjects of revenue, finance and currency, of which there is no other express grant than may be found in these few brief clauses : "The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States ; but all duties, imposts and excises shall be uniform through- out the United States ; " To borrow money on the credit of the United States ; " To regulate commerce with foreign nations, and among the several States, and with the Indian tribes ; " To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.'' The section which contains the grant of these and other principal legislative powers, concludes by declaring that the Congress shall have power " to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States, or in any department or officer thereof." By the settled construction, and the only reasonable interpretation of this clause, the words " necessary and proper" are not limited to such measures as are abso- lutely and indispensably necessary, without which the powers granted must fail of execution ; but they include all appropriate means which are conducive or adapted to the end to be accomplished, and which in the judgment of Congress will most advantageously effect it. That clause of the Constitution which declares that " the Congress shall have power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States," either embodies a grant of power to pay the debts of the United States, or presupposes and assumes that power as inherent in the United States as a sovereign govern- ment . But in whichever aspect it be considered, neither this nor any other clause of the Constitution, makes any mention of priority or preference of the United INTEODUOTION. 521 states aa a creditor over other creditors of an individual debtor. Yet this court, in the early case of United States v. Fisher (3 Cranch, 358), held that under the power to pay the debts of the United States, Congress had the power to enact that debts due to the United States should have that priority of payment out of the estate of an insolvent debtor, which the law of England gave to debts due to the crown. In delivering judgment in that case, Chief Justice Marshall expounded the clause giving Congress power to make all necessary and proper laws aa follows : " In construing this clause it would be incorrect, and would produce endless diffi- culties, if the opinion should be maintained that no law was authorized which was not indispensably necessary to give effect to a specified power. Where va- rious systems might be adopted for that purpose, it might he said with respect to each that it was not necessary, because the end might be obtained by other means. Congress must possess the choice of means, and must be empowered to use any means which are, in fact, conducive to the exercise of a power granted by the Constitution. The Government is to pay the debt of the Union, and must be authorized to use the means which appear to itself the most eligible to effect that object." 3 Cranch, 396. In MoCulloch v. Maryland, he more fully developed the same view, concluding thus: "We admit, as all must admit, that the powers of the Government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the National Legislature that dis- cretion with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it in the manner most beneficial to the peoplte. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional." 4 Wheat. 431 . The rule of interpretation thus laid down has been constantly adhered to and acted on by this court, and was accepted as expressing the true test by all the judges, who took part in the former discussions of the power of Congress to make the treasury notes of the United States a legal tender in payment of pri- vate debts. The other judgments delivered by Chief Justice Marshall contain nothing ad- verse to the power of Congress to issue legal tender notes. By the articles of confederation of 1777, the United States in Congress assem- bled were authorized " to borrow money or emit bills on the credit of the United States;" but it was declared that " each State retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right which is not by this confederation expressly delegated to the United States in Congress assembled." Art. 3, Art. 9, Sec. 5; 1 Stat. 4, 7. Yet, upon the question whether, under those articles. Congress, by virtue of the power to emit bills on the credit of the United States, had the power to make bills so emitted a legal tender, Chief Jus- tice Marshall spoke very guardedly, saying : " Congress emitted bills of credit to a large amount, and did not, perhaps could not, make them a legiil tender. This power resided in the States." Craig v. Missouri, 4 Pet. 410, 43j. But in the Constitution, aa he had before observed in McCulloch v. Maryland, " there is no phrase which, like the articles of confederation, excludes incidental or implied powers, and which requires that every thing granted shall be expressly and ml- 66 522 BANKING LAWS. nutely described. Even tlie tenth amendment, which was framed for the pur. pose of quieting tlie excessive jealousies which had been excited, omits the word ' expressly,' and declares only that the powers ' not delegated to the United States, nor prohibited to the States, are reserved to the States or to the people;" thus leaving the question whether the particular power which may become the subject of contest has been delegated to the one government, or prohibited to the other, to depend on a fair construction of the whole instrument. The men who drew and adopted this amendment had experienced the embarrassments resulting from the insertion of this word iu the articles of confederation, and probably omitted it to avoid those embarrassments. " 4 Wheat. 405, 406. The sentence sometimes quoted from his opinion in Sturges v. Crowninshield, had exclusive relation to the restrictions imposed by the Constitution on the powers of the States, and especial reference to the effect of the clause prohibiting the States from passing laws impairing the obligation of contracts, as will clearly appear by quoting the whole paragraph : " Was this general prohibition intended to prevent paper money ? We are not allowed to say so, because it is expressly provided that no State shall ' emit bills of credit ; ' neither could these words be intended to restrain the States from enabling debtors to discharge their debts by the tender of property of no real value to the creditor, because for that subject also particular provision is made. Nothing but gold and silver coin can be made a tender in payment of debts." 4 Wheat. 122, 204. The court then reviews the debates in the convention that framed the Con- stitution, to show that there was no intention to prohibit Congress from making its notes a legal tender ; that, while the States were forbidden to make any thing but gold and silver coin a tender* in payment of debts. Congress has not so prohibited. "The words 'to borrow money,' aa used in the Constitution, to designate a power vested in the National Government, for the safety and welfare of the whole people, are not to receive that limited and restricted interpretation and meaning which they would have in a penal statute, or in an authority conferred by law, or by contract, upon trustees or agents for private purposes. " The power ' to borrow money on the credit of the United States ' is the power to raise money for the public use on a pledge of the public credit, and may be exercised to meet either present or anticipated expenses and liabilities of the Gov- ernment. It includes the power to issue, in return for the money borrowed, the obligations of the United States in any appropriate form, of stock, bonds, bills or notes ; and in whatever form they are issued, being instruments of the Na- tional Government, they are exempt from taxation by the governments of the several States. Western v, Charleston City Council, 2 Pet. 449 : Banks v. Mayor, 7 Wall. 16 ; Bank v. Supervisors, id. 26. Congress has authority to issue these obligations in a form adapted to circulation from hand to hand in the ordinary transactions of commerce and business. In order to promote and facilitate such circulation to adapt them to use as currency, and to make them more current in the market, it may provide for their redemption in coin or bonds, and may make them receivable in payment of debts to the Government. So much is settled be- yond doubt, and was asserted or distinctly admitted by the judges who dissented from the decision in the Legal-tender Cases, as well as by those who concurred in that decision. Veazie Bank v. Fenno, 8 Wall. 533, 548 ; Hepburn v. Griswold, id. 616, 636 ; Legal-tender Cases, 12 id. 543, 544, 560, 582, 610, 613, 637. INTEODUCTION. 523 It is equally well settled that Congress has the power to incorporate national banks, with the capacity, for their own profit as well as for the use of the Gov- ernment in its money transactions, of issuing bills which, under ordinary circum- stances, pass from hand to hand as money at their nominal value, and which, when so current, the law has always recognized as a good tender in payment of money debts, unless specifically objected to at the time of the tender. United States Bank v. Bank of Georgia, 10 Wheat. 333, 347 ; Ward v. Smith, 7 Wall. 447, 451. The power of Congress to charter a bank was maintained in McCulloch v. Maryland, 4 Wheat. 816, and in Osborn v. United States Bank, 9 id. 738, chiefly upon the ground that it was an appropriate means for carrying on the money transactions of the Government. But Chief Justice Marshall said: "The cur- rency which it circulates, by means of its trade with individuals, is believed to make it a more fit instrument for the purposes of government than it could other- wise be ; and, if this be true, the capacity to carry ou this trade is a faculty in- dispensable to the character and objects of the institution." 9 Wheat. 864. And Mr. Justice Johnson, who concurred with the rest of the court in upholding the power to incorporate a bank, gave the further reason that it tended to give effect to "that power over the currency of the country which the framers of the Con- stitution evidently intended to give to Congress alone." Id. 878. The constitutional authority of Congress to provide a currency for the whole country is now firmly established. In Veazie Bank v. Fenno, 8 Wall. 533, 548, Chief Justice Chase, in delivering the opinion of tlie court, said : " It cannot be douljted that under the Constitution the power to provide a circulation of coin is given to Congress. And it is settled by the uniform practice of the Government, and by repeated decisions, that Congress may constitutionally authorize the emis- sion of bills of credit." Congress having undertaken to supply a national cur- rency, consisting of coin, of treasury notes of the United States, and of bills of national banks, is authorized to impose on all State banks, or national banks, or private bankers, paying out the notes of individuals or of State banks, a tax of ten per cent upon the amount of such notes so paid out. Veazie Bank v. Fenno, above cited ; National Bank v. United States, 101 U. S. 1. The reason for this conclusion was stated by Cliief Justice Chase, and repeated by the present Chief- Justice, in these words: "Having thus, in the exercise of undisputed constitu- tional powers, undertaken to provide a currency for the whole country, it can- not be questioned that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation. To this end. Congress has denied the quality of legal tender to foreign coins, and has provided by law against the im- position of counterfeit and base coin on the community. To the same end Con- gress may restrain, by suitable enactments, the circulation as money of any notes not issued under its own authority. Without this power, indeed, its attempt to secure a sound and uniform currency for the country must be futile." 8 Wall. 549 ; 101 U. S. 6. By the Constitution of the United States the several States are prohibited from coining money, emitting bills of credit, or making any thing but gold and silver coin a tender in payment of debt. But no intention can be inferred from this to deny to Congress either of these powers. Most of the powers granted to Congress are described in the eighth section of the first article ; the limitations intended to be set to its powers, so as to exclude cer'aiu things which might otherwise be taken to be included in the general grant, are defined in the ninth section ; the 624 BANKING LAWS. tenth section is addressed to the States only. This section prohibits the States from doing some things which the CTnited States are expressly prohibited from doing, as well as from doing some things which the United States are expressly authorized to do, and from doing some things which are neither expressly granted nor expressly denied to the United States. Congress and the States equally are expressly prohibited from passing any bill of attainder or ex post facto law, or granting any title of nobility. The States are forbidden, while the President and Senate are expressly authorized to make treaties. The States are forbidden, but Congress is expressly authorized to coin money. The States are prohibited from emitting bills of credit ; but Congress, which is neither expressly authorized nor expressly forbidden to do so, has, as we have already seen, been held to have the power of emitting bills of credit, and of making every provision for their circulation as currency, short of giving them the quality of legal tender for private debts — even by those who have denied its authority to give them this quality.'' Congress, the court claimed, has the power to issue, in return for money bor- rowed, the obligations of the United States, and to issue them in a form adapted to circulation in the ordinary transaction of business, for the purchase of mer- chandise and payment of debts, " as accord with the usage of sovereign govern- ments." It claims that this power was a quality everywhere understood to belong to sovereignty at the time of the adoption of the Constitution of the United States, and instances a modern case, where the Emperor of Austria, aa King of Hungary, obtained from the English Court of Chancery an injunction against the issue in England, without his license, of notes purporting to be pub- lic paper money of Hungary. (Austria v . Day, 2 QifE. 638, and 3 D. F. & J. 217.) The court further says that this power was long exercised by the States and Colonies of this country, and during the war of the Revolution, the States, upon the recommendation of the Congress of the Confederation, had made bills issued by Congress a legal tender. " This position is fortified by the fact that Congress is vested with the exclu- sive exercise of the analogous power of coining money and regulating the value of domestic and foreign coin, and also with the paramount power of regulating foreign and interstate commerce. Under the power to borrow money on the credit of the United States, and to issue circulating notes for the money bor- rowed, it^ power to define the quality and force of those notes as currency is as broad, as the like power over a metallic currency under the power to coin money and to regulate the value thereof. Under the two powers, taken together. Con- gress is authorized to establish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as regards the National Government or private individuals. The power of making the notes of the United States a legal tender in payment of private debts, being included in the power to borrow money and to provide a national currency, is not defeated or restricted by the fact that its exercise may affect the value of private contracts. If, upon a just and fair interpretation of the wliole Constitution, a particular power or authority appears to be vested in Congress, it is no constitutional objection to its existence, or to its exercise, that the property or the contracts of individuals may be incidentally affected. The decisions of this court, already cited, afford several examples of this. INTEODUCTION. 525 Upon the issue of stock, bonds, bills, or notes of tlie United States, tlie States are deprived of their power of taxation to the extent of the property invested by individuals in such obligations, and the burden of State taxation upon other private property is correspondingly increased. The ten per cent tax imposed by Congress on notes of State banks and of private bankers not only lessens the value of such notes, but tends to drive them, and all State banks of issue, outiof existence. The priority given to debts due to the United States over the private debts of an insol- vent debtor diminishes the value of these debts, and the amount which their hold- ers may receive out of the debtor's estate. So, under the power to coin money and to regulate its value, Congress may (as it did with regard to gold by the act of June 28, 1834, ch. ^5, and, with regard to silver by the act of February 38, 1878, ch. 20) issue coins of the same denomi- nation as those already current by law, but of less intrinsic value than those by reason of containing a less weight of the precious metals, and thereby enable debt- ors to discharge their debts by the payment of coins of the less real value. A contract to pay a certain sum in money, without any stipulation as to the kind of money in which it shall be paid, may always be satisfied by payment of that sum in any currency, which is lawful money at the place and time at which payment is to be made. (1 Hale's P. C. 193-194 ; Bac Ahr. Tender, B. 2 ; Pothier's Contract of Sale, No. 416 ; Pardessus, Droit Commercial, Nos. 304,305 ; Searight v. Calbraith, 4 Dall. 334.) As observed by Mr. Justice Strong, in delivering the opinion of the court in the Legal-tender Cases : " Every contract for the payment of money, simply, is necessarily subject to the constitutional power of the Government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power." (13 Wall. 549.) Congress, as the Legislature of a sovereign nation, being expressly empowered by the Constitution " to lay and collect taxes, to pay the debts and provide for the common defense and general welfare of the United States," and "to borrow money on the credit of the United States," and "to coin money and regulate the value thereof and of foreign coin ; " and being clearly authorized, as incidental to the exercise of those great powers, to emit bills of credit, to charter national banks, and to provide a national currency for the whole people, in the form of coin, treasury notes, and national bank bills ; and the power to make the notes of the Government a legal tender in payment of private debts being one of the powers belonging to sovereignty in other civilized nations, and not expressly withheld from Congress by the Constitution,— we are irresistibly impelled to the conclusion, that the impressing upon the treasury notes of the United States the quality of being a legal tender in payment of private debts, is an appropriate means, conducive and plainly adapted to the execution of the undoubted powers of Congress, consistent with the letter and spirit of the Constitution and, there- fore, within the meaning of that instrument, " necessary and proper for carrying into execution the powers vested by this Constitution in the Government of the United States." Such being our conclusion in matter of law, the question whether at any par- ticular time, in war or in peace, the exigency is such, by reason of unusual and pressing demands on the resources of the Government, or of the inadequacy of the supply of gold and silver coin to furnish the currency needed for the uses of the Government and of the people, that it is, as matter of fact, wise and expe- 526 BANKIJSTG LAWS. dient to resort to tliis means, is a political question, to be determined by Congress when the question of exigency arises, and not a judicial question, to be afterward passed upon by the courts. To quote once more from the judgment in McCulloch V. Maryland : " Where the law is not prohibited, and is really calculated to effect any of the objects intrusted to the Government, to undertake here to inquire into the degree of its necessity would be to pass the line which circumscribes the judicial department, and to tread on legislative ground." (4 Wheat. 423.) It follows that the act of May 31, 1878 (ch. 146), is constitutional and valid, and that the Circuit Court rightly held that the tender in treasury notes, reissued and kept in circulation under that act, was a tender of lawful money in payment of the defendant's debt to the plaintiff." Judgment aflBrmed. Field, J., in an elaborate opinion, dissents from this judgment and from all the positions advanced in its support. A condensed report of the argument used by him is as follows : First. That it is established that the framers of the Constitution intended to prohibit the issue of legal tender notes both by the General Government and by the States, and thus prevent interference with the contracts of private parties. For nearly three-quarters of a century after the adoption of the Constitution, and until the legislation during the recent civil war, no jurist and no statesman of any position in the country ever pretended that a power to impart the quality of legal tender to its notes was vested in the General Government. All conceded as an axiom of constitutional law, that the power did not exist. That when the idea of imparting the legal tender quality to the notes was first broached in 1862, the advocates of the measure supported it upon the ground that it was a war measure, and one to which the Goverilment was compelled to resort by the exi- gencies of its condition , being under a heavy daily expenditure for the mainte- nance of its army and navy, and that members of the House, although doubting its constitutionality, supported it on this ground. In the excitement and appre- hensions of the war, the considerations of its unconstitutionality were unheeded, and the measure was passed as one of overruling necessity in a perilous crisis of the country. Now it is no longer advocated as one of necessity, but as one that may be adopted at any time. The " medicine of the Constitution " has become its daily bread. Secondly. That the term to ' " borrow money " does not mean any thing different in the Constitution than in any other instrument ; that it means a power only to contract for a loan of money upon considerations to be agreed between the parties, and it does not imply that the borrower can give to his promise to refund the money any security to the tender outside of property or rights which he possesses. Thirdly. That the meaning of the term to " coin money " is definite and not doubtful. That it is to mould metallic substances into forms convenient for cir- culation and to stamp them with the impress of the Government authority, indicating their value with reference to the unit of value established by law. That the clause to coin money, must be read in connection with the prohibition upon the States to make any thing but gold and silver coin a payment of debt. The two taken together clearly show that the coin to be fabricated under the authority of the General Government, and, as such, to be a legal tender for debts, are composed principally, if not entirely, of the metals gold and silver. INTEODUOTION. 52T Fourthly. That the doctrine that a power not expressly forbidden may he ex- ercised, is erroneous and dangerous. That all through the intftrumeut we find limitations upon the powers both of the General and the State Government. The learned justice concludes as follows : " Prom the decision of the court, I see only evil likely to follow. There have been times within the memory of all of us when the legal tender notes of the United States were not exchangeable for more than one-half of their nominal value. The possibility of such depreciation will always attend paper money. This inborn infirmity no mere legislative declaration can cure. If Congress has the power to make the notes a legal tender, and to pass as money or its equiv- alent, why should not a sufficient amount be issued to pay the bonds of the United States as they mature 1 Why pay interest on the millions of dollars of bonds now due, when Congress can in one day make the money to pay the prin- cipal ? And why should there be any restraint upon unlimited appropriations by the Government for all imaginary schemes of public improvement, if the printing press can furnish the money that is needed for them ? " REVISED STATUTES OFTHEIUNITED STATES. TITLE LXII. NATIONAL BANKS. CHAPTER ONE. Oeganization Airo Powees. Sbction 5133. Formation of national banking associations. 6184 Requisites of organization certificate. 5135. How certificate shall be acknowledged and filed. 5136. Corporate powers of associations. 5137. Power to hold real property. 5138. Requisite amount of capital. 5139. Shares of stock and transfers. 5140. How payment of capital stock must be made and proved. 5141. Proceedings if shareholder fails to pay installments. 5143. Increase of capital stock. 5143. Reduction of capital stock. 5144. Right of shareholders to vote. 5145. Election of directors. 5146. Requisite qualifications of directors. 5147. Oath required from directors. 5148. Filling vacancies. 5149. Proceedings where no election was held on the proper day. 5150. Election of president of the board. 5151. Individual liability of shareholders. 5153. Executors, trustees, etc. , not personally liable. 5153. Duties and liabilities when designated as depositaries of public moneys. 5154. Organization of State banks as national banking asso- ciations. 67 530 BANKING LAWS. Section 5155. State banks having branches. 5156. Reservation of rights of associations organized under act of 1863. Formation | 5133. Associations for carrying on the business of assoote? banking under this Title may be formed by any number tions. Q-f natural persons, not less in any case than five. They shall enter into articles of association, which shall specify in general terms the object for which the association is formed, and may contain any other provisions, not inconsistent with law, which the association may see fit to adopt for the regu- lation of its business and the conduct of its affairs. These articles shall be signed by the persons uniting to form the association, and a copy of them shall be forwarded to the Comptroller of the Currency, to be filed and preserved in his office. 1. The articles of association of a national banking corporation, when approved by the Comptroller, are in the nature of a charter. Thus, where one of the articles of association of a bank organized under the National Banking Act, and approved by the Comptroller of the Currency, provided that its president should hold office for a term fixed, " unless he should become disqualified or sooner removed by a two-third vote of the board "' of directors. Held, that the right of removal was complete, independent of any by-law on the subject. Taylor v. Hutton, 18 Abb. Pr. 16 ; S. C, 43 Barb. 195. 2. National banks were established for the purpose in part of provid- ing a currency for the whole country, and in part to create a market for the loans of the general government. Tiffany v. National Bank of Mis- souri, 18 Wall. 413. 3. Being brought into existence for this purpose by Congress, which- is the sole judge of the necessity for their creation, the State can exer- cise no control over them, nor in any wise afEect their operation, except in so far as Congress may see fit to permit. Farmers', etc. , National Bank j. Bearing, 91 U. S. (1 Otto) 29. 4. The constitutionality of the " National Banking Act " is unques- tioned. It rests on the same principle as the act creating the second bank of the United States. Id. 5. Congress has power to create national banks, and to make any pro- visions which tend to promote their efficiency, and to protect them, not only against State legislation, but also against suits or proceedings in State courts by which that efficiency would be impaired. Chesapeake Bank v. First National Bank, 40 Md. 269.- 6. Congress having legally undertaken to provide a currency for the OEGANIZATION AND POWEKS. 531 wHole country, may secure the benefit of it to the people by appropriate legislation. Veazie Bank v. Fenno, 8 Wall. 533. § 5134. The persons uniting to form such an association ^^^^fl^^ shall, under their hands, make an organization certificate, ^^""g^®"^ which shall specifically state : First. The name assumed by such association, which name shall be subject to the approval of the Comptroller of the Currency. Second. The place where its operations of discount and deposit are to be carried on, designating the State, Terri- tory, or district, and the particular county and city, town or village. Third. The amount of capital stock and the number of shares into which the same is to be divided. Fourth. The names and places of residence of the share- holders and the number of shares held by each of them. Fifth. The fact that the certificate is made to enable such persons to avail themselves of the advantages of this title. 1. " The general business of au officer of a national hank is to he ' transacted at its regular place of business. At the same time we know that in the course of business between banks, occasionally the oflBcers do give instructions away from the place of business of the bank. " If the bank doing such business sends a statement of the same to the other bank, and it, through its proper officer, recognizes the validity of the same, it is bound by such recognition. Drummond, J., in Burton v. Burley, 13 Chic. Leg. News, 178. 3. A national bank is a citizen of the State where, by law, it is lo- cated within the meaning of the Constitution. The designation of its place of business in the certificate of organization determines its lo- cality, and it can have no other. In this case, the authorities upon the subject of the citizenship of corporations are collected and discussed. Cooke V. State National Bank, 52 N. Y. 96. 3. A national bank organized and doing business in another State, is prohibited by the Revised Statutes of the State of New York from keep- ing an office of discount or deposit in the State of New York, and can- not maintain an action upon any note discounted by it at such office. National Bank of Fairhaven v. The Phcenix W. Company, 6 Hun, 71, 73. §5135. The organization certificate shall be acknowl- How cer- edged before a judge of some court of record or notary shau be public ; and shall be, together with the acknowledgment edged and 532 BANKING LAWS. thereof, authenticated by the seal of such court or notary, transmitted to the Comptroller of the Currency, who shall record and carefully preserve the same in his ofSee. See note 3 to § 885, post, citing Tliatclier v. West Eiver National !Qank, 19 Mich. 196. Corporate § 5136. Upon duly making and filing articles of asso- assooia- ciation and an organization certificate, the association shall become, as from the date of the execution of its organiza- tion certificate, a body corporate, and as such, and in the name designated in the organization certificate, it shall have power — First. To adopt and use a corporate seal. Second. To have succession for the period of twenty years from its organization, unless it is sooner dissolved ac- cording to the provisions of its articles of association, or by the act of its shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law. Third. To make contracts. Fourth. To sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons. Fifth. To elect or appoint directors, and by its board of directors to appoint a president, vice-president, cashier, and other officers, define their duties, require bonds of them, and fix the penalty thereof, dismiss such officers or any of thera at pleasure, and appoint others to fill their places. 1. It is not necessary tliat the directors of a national bank shall sig- nify their acceptance of the official bonds of their cashier, by entering a memorandum to that effect in their journal or minute book. The re- tention of the bond by the directory, after being submitted for approval, and the entering upon and continuation in office of the cashier, create a presumption of acceptance, which may also be proved by oral evidence. Graves v. Lebanon National Bank, 12 Wheat. 64 ; 10 Bush (Ky.), 23. 2. Where the directors of a national bank published a statement of the condition of the bank, showing that its affairs were being prudently and honestly administered, by reason of which statement persons sub- sequently became sureties for the cashier on his bond, he having, previ- ously to the publication of the statement, given none, but at the time was guilty of fraud and embezzlement of the funds of the bank, — Held, in an action to enforce the liability of the sureties, for embezzlements ORGANIZATION AND POWERS. 533 by the cashier subsequent to the execution of the bond, that they (sure- ties) had a right to believe that the directors, before publishing the state- ment, made some investigation of the condition of the bank, and being misled and deceived by the misrepresentations of the statement, were released. Id. 3. A surety upon the bond of a cashier of a bank is not discharged by the mere fact that the cashier was, at the time the bond was given, a defaulter. Nor will the neglect of the bank to ascertain that fact dis- charge him. The books of the bank, and the statements of the bank sent to the Comptroller of the Currency, under the National Banking Law, are not admissible in evidence to prove the negligence of the bank officers, nor as tending to establish the fact of knowledge on the part of the bank of the existence of the defalcation. Tapley v. Martin, 116 Mass. 375 ; Wayne v. Commonwealth National Bank, 53 Penn. St. 343 ; Atlas Bank v. Browuell, 9 R, I. 168. But see Graves v. Lebanon, 10 Bush (Ky.), 33, where it was held that sureties on the bond of a cashier are released by the negligence of the directors. Sixth. To prescribe, by its board of directors, by-laws not inconsistent with law, regulating the manner in which its stock shall be transferred, its directors elected or ap- pointed, its officers appointed, its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed. 1. It is not necessary that any by-laws should be adopted before a president may be chosen, or removed, or another appointed in his place. Taylor v. Hutton, 43 Abb. Pr. 195. 2. A national bank, organized under and controlled by the act of 1864, cannot acquire a valid lien upon the shares of its stockholders by the articles of association or by-laws BuUard v. Bank, 18 Wall. 597, citing Bank v. Lanier, 11 Wall. 369. And speaking of the latter case the court (in BuUard v. Bank) said, "this court held that after the passage of the latter act (1864), a by law giving a lien upon a debtor's stock was inconsistent with its provisions and invalid. Of course if the act destroyed an existing by law, it must prevent the adoption of a new one to the same effect. See, also, Johnson v. Laflin, 103 U. S. 803. The cases cited in this note over-rule Young v. Vough, 33 N. J. Eq. 335. 3. Whatever power the directors of a national bank possess to regulate transfers of its stock, they derive not from section 5133 or the articles of association, but from this section (5136) and section 5139 by express and direct grant. Bullard v. Bank, see above. Seventh. To exercise by its board of directors, or duly authorized officers or agents, subject to law, all such inci- dental powers as shall be necessary to carry on the business 534 BANKING LAWS. of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt ; by receiving deposits ; by buying aad selling exchange, coin and bullion ; by loaning money on personal security ; and by obtaining, issuing and circulating notes according to the pro- visions of this title. But no association shall transact any business except such as is incidental and necessarily preliminary to its organiza- tion, until it has been authorized by the Comptroller of the Currency to commence the business of banking. (See sec- tions 5168, 5169.) 1. Under this section (sub. 7) national banks may, for the purpose of securing an indebtedness to themselves, hand over, with an indorsement and guaranty, promissory notes, drawn payable to maker, and indorsed by him to third parties. People's Baak v. National Bank, 101 U. S. 181. 2. It was held in National Bank v. Matthews, 98 U. S. 631, that the clauses contained in this and section 5137, prohibiting loans by national banks on real estate security, will not vitiate such securities when taken by these banks. That a disregard of the prohibition, only lays the asso- ciation open to proceedings by the government for a judgment of ouster and dissolution. 3. As to the liability of the directors, see section 5239. 4. A national bank has power to lend money upon the notes, or other personal obligations of the borrower, secured by a pledge of stock of a coporation as collateral security. Shoemaker v. National Mechanics' Bank, 3 Abb. (U. S.) 416. 5. This subdivision contains five distinct grants of power, and no one grant is a limitation upon any other. Id. 6. The enumeration in this section (sub. 7) of the powers which may be exercised by a national bank, is not of the incidental, but of the princi- pal powers, and to them are superadded all incidental powers, of wtich the power of receiving special deposits is one. Pattison v. Syracuse National Bank, 80 N. Y. 83, and cases cited. 7. National banks, therefore, have power to receive special deposits, gratuitously or otherwise, and when received gratuitously, they are liable for their loss by gross negligence ^ouly. Id. ; and First National Bank v. Rex, 89 Penn. 308. 8. The term " special deposits" includes money, securities and other valuables delivered to banks, to be specifically kept and re-delivered ; it is not confined to securities held by the banks as collateral to loans. Id. ; National Bank v. Graham, 100 U. S. 699. But see (contra) Wiley. v. First National Bank, 47 Vt. 546 ; First National Bank of Lyons v. Ocean National Bank, 60 N. Y. 278; Weckler v. First National Bank of Eoglestown, 47 Md. 581. See also section 5238 and note. OEGANIZATION AND POWERS. 535 9. A deposit is general, unless tlie depositor makes it special, or de- posits expressly in some particular capacity. Brahm et al. v. Adkins, 77 111. 263. 10. Under tliis section, a bank having coin in pledge may sell its special property, in wMcli case the assignee will acquire the legal right of the assignor. Merchants' National Bank v. State National Bank, 10 Wall. 604. 11. National banks have the power to certify checks, and this power may be exercised by the cashier without any special authorization. The directors can limit this power, but such limitation will be no defense as to parties having no notice. Id. See also section 5308, and Act of Congress, approved July 13, 1883. 13. A national bank is not authorized by its charter to act as a broker or agent in the purchase or sale of bonds and stocks. Bank of Allen- town v. Hoch, 89 Penn. 337 ; citing 3 Otto, 133, note 15 below ; 33 P. F. Smith, 463. See also Weokler v. First National Bank, 43 Md. 593. and compare Yerkes v. National Bank (note 14 below). 13. It was held in the First National Bank of North Bennington v. The Town of Bennington, 16 Blatchf. 53, that interest coupons from bonds issued by the defendant, in aid of a railroad company, were prom- issory notes within the statute 3 and 4 Anne, chapter 9 and of this section. 14. National banks can properly deal in government securities, and an agreement by one with a customer to exchange for the latter, for suflScient consideration, uon- registered for registered United States bonds, is binding on the bank ; and where it neglects to fulfill the agreement, and is robbed meantime and the bonds stolen, it will be held liable for the damages thereby occasioned the owner. Terkes v. National Bank, 69 N. T 382 : Van Leuven v. The First National Bank, 54 N. Y. 671. But as to first proposition see following note. 15. A national bank organized under the National Banking Act, may, in a fair and iona fide compromise of a contested claim against it, grow- ing out of a legitimate banking transaction, pay a larger sum than would have been exacted in satisfaction of the demand, so as to obtain a transfer of certain stocks in railroad and other corporations ; it being honestly believed, at the time, that by turning the stocks into money, under more favorable circumstances than then existed, a loss which would otherwise accrue from the transaction might be averted or dimin- ished. Such a-transaction would not amount to a dealing in stocks. First National Bank v. National Exchange Bank, 92 U. S. (3 Otto) 128, citing Fleckner v. U. S. Bank, 8 Wheat. 351. Note 30 below. 16. Compromises, to avoid or reduce losses arising in the course of a legitimate banking business, come within the general scope of the powers committed to the board of directors and the officers and agents of the bank, and are submitted to their judgment and discretion, except to the extent that they are restrained -by the charter or by-laws. Banks may do in this behalf, whatever natural persons could do under like circum- stances. Id. 536 BANKING LAWS* 17. In an action at law, the fact was found that the note in question was a purchase, and not a discount, or the lending of money on the credit of it. Held, that a national bank has no right to traffic in promis- sory notes as a species of personal property, or to acquire any title to such paper by a purchase, made admittedly not in the way of discount or by lending money on it. The word "negotiating" gives no implied au- thority to speculate or traffic in pap-^r of the character of the note in question, or in financial securities of any description. First National Bank of Rochester v. Pierson, 24 Minn. 140 ; Farmers and Mechanics' Bank v. Baldwin, 33 Minn. 198. But see note 21 below. 18. A national banking association has the right to purchase commer- cial paper in the market in the usual course of business, and if there be any fraud in the making of such notes, it must be brought to the knowledge of the bank in order to bind it. Atlas National Bank v. Savery, 127 Mass. 75 : to same effect see Smith v. Exchange Bank, 26 Ohio St. 141. But see note 21 below. 19. A bank having power under its organic act to discount negotiable notes, has also power to purchase such notes. Pape v. Capital Bank, 20 Kans. 440. But see note 21 below. 20. The prohibition against dealing in stocks, etc., is implied from the failure to grant the power (First National Bank v. National Exchange Bank, note 15 above), but a prohibition against trading and dealing is nothing more than a prohibition against engaging in the ordinary business of buying and selling for profit, and does not include purchases resulting from ordinary bankiog transactions. Hence, the acceptance by a national bank of an indorsed note in payment of a debt due, was held not to be a " dealing " in notes. Fleckner v. U. S. Bank, 3 Wheat. 351. 21. Whether the purchase of a promissory note by a national bank for purely speculative purposes comes within the provisions of this section, or is vlira vires, is a question upon which the decisions are in conflict. That such purchase is ultra vires see First National Bank v. Pierson, 16 Alb. L. J. 319; S. C, 24 Minn. 140; Farmers and Mechanics' Bank v. Baldwin, 23 Minn. 198. That such purchase is valid, see Smith V. Exchange Bank, 26 Ohio, 141 ; Pape v. Capital Bank of Topeka, 20 Kans. 440; Atlas National Bank v. Savery, 127 Mass. 75. 22. A national bank may hold collateral for the performance of con- tracts between third parties, and it will be estopped to say that such act was ultra vires. Bushnell v. Chautauqua County National Bank, 10 Hun, 378. 28. Granting of power to national banks to discount and negotiate promissory notes and other evidences of indebtedness, gives express authority to buy the checks of individuals drawn upon other banks, whether payable to bearer or to order. First National Bank v. Harris, 108 Mass. 514. 24. A national bank is not prohibited from loaning money on the shares of another national bank, causing the shares so taken as pledge or collateral security to be transferred to it (or one of its officers). And OEG^A:^TIZATION AND POWEES. 537 if it were, it could not set up its own illegal act to escape the responsi- bility existing therefrom. National Bank v. Case, 99 U. S. 638. 25. The placing bj one bank of its funds on permanent deposit with another bank, is a loan within the spirit of this section. Bank v. Lanier, 11 Wall. 369. 26. A chattel mortgage taken by a national bank to secure a pre- existing debt is valid, and wiU be enforced. SpofEord v. First National Bank, 37 Iowa, 181. 27. An indorsement of a promissory note by a married woman, whereby she charges her separate and personal estate with the payment of the note, is to be treated as personal security within the meaning of the National Banking Act. Such indorsement is not a mortgage in any sense. Third National Bank v. Blake, 73 N. Y. 260. 28. Shareholders have no standing in court to interfere for the pro- tection of their company, until the board of directors has neglected or refused to take the proper steps to protect the interests of the company. Fifth National Bank v, Pittsburgh, etc., E, R, Co,, 1 Fed, Eep 190. § 5137. A national banking association may purchase, ^Xrea? hold and convey real estate for the following purposes and property. for no others : First. Such as shall be necessary for its immediate accom- modation in the transaction of its business. Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted. 1. Notwithstanding this prohibition, a mortgage taken by a national bank, as security for future advances, will be held valid. Whatever objection there may be to it from the prohibitory provisions of the statute, the objection can only be urged by the government. Fleckner v. United States Bank, 8 Wheat. 338-355 ; National Bank v. Whitney, 103 U. S. 99. And in Union Bank v. Mathews, 98 U. S. 658, the court recognized the doctrine that ' ' where a corporation is incompetent by its charter to take title to real estate, a conveyance to it is not void but only voidable, and the sovereign alone can object. It is valid unless assailed in a direct proceeding for that purpose." 2. A national bank may enforce a mortgage on real estate taken by it as collateral security for the payment of an indebtedness of the mort- gagee to the bank, existing at the time of the execution of the mortgage. National Bank v. Whitney, 103 U. S. 99. 3. In Orim v. Merchants' National Bank, 16 Kans. 341, the defendant took a lien upon real estate to secure a pre-existing debt. Subsequently it paid $500 to discharge a prior lien upon the same property, taking a note and mortgage on land in Kansas to secure the latter payment. Held, that the taking of the last-mentioned mortgage was not a viola- tion of this section. 538 BANKING LAWS. 4. A national bank may sell its real estate on terms of credit, and re- ceive a mortgage to secure the price. N. 0. National Bank v. Raymond, 29 La. Ann. 359. And see remaining notes to this section below. Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. A national bank is not restricted in the purchase of real estate to secure a debt to the exact amount owing it, but is entitled to purchase such real estate as may be necessary in order to secure the debts due it, so long as the security of such debts is the real object of the purchase. Upton V. Natl. Bank of South Reading, 120 Mass. 153. In this case, a, national bank advanced money to a person already indebted to it, and took a mortgage on real property to secure both the advance and prior indebtedness. Held, that the transaction was valid under this section. Fourth. Such as it shall purchase at sales under judg- ments, decrees, or mortgages held by the association, or shall purchase to secure debts due to it. But no such association 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. 1. Although a bank or its trustees in liquidation, on the expiration of its charter, may be deprived of the power to take or hold real estate, this will not prevent either of them from having such property, on which they have a lien for a debt due the bank, placed in a situation where the money can be realized. And if in doing this they are com- pelled, for their own protection, to buy off other incumbrances, so that, when sold and converted into money, all of it should be paid to them, no principle of law or justice is violated. E. g., the charter of a bank being about to expire and its affairs pass into the hands of trustees in liquidation, it may cause real estate on which it has a lieu (there being prior incumbrances) to be purchased by a person as agent of the bank, it supplying the money and he giving his note therefor, and subse- quently transferring the property, with power of sale, to one of the trustees in liquidation (the charter having expired in the interim) to hold in trust as security for the payment of the note, and in case of sale for the last-mentioned purpose to pay any residue he as agent might direct, which he subsequently ordered should be paid to the trustees in liquidation. By this means the bank gets rid of prior incumbrancers, and the note being (properly) left unpaid, it gets the entire proceeds of sale (less expenses), without either it or its trustees ever having had the legal title or the power of sale, or the right to control the time or the terms of the sale. Zautzingers v. Gunton, 19 Wall. 82. 2. In National Bank v. Matthews, 98 U. S. (8 Otto) 621, the defend- ORGANIZATION" AND POWERS. 539 ant and another executed their joint note to B. , and to secure tlie payment tliereof , the former executed a deed of trust on lands, which was in effect a mortgage with power of sale thereto annexed. Thereafter the plaint- iff, on the security of the note and deed, loaned money to B. . who there- upon assigned them to the plaintiff. The note not heing paid at ma- turity, plaintiff directed the trustee named in the deed of trust to sell, who was proceeding to do so when the defendant filed a bill to enjoin the sale upon the grounds that, by virtue of the provisions of sections 5136 and 5137, the deed did not inure as a security to plaintiff for its loan. Held (Mr. Justice Miller dissenting), that the plaintiff bank was entitled to enforce the collection of the note by a sale of the lands. 3. In the First National Bank of Ft. Dodge v. Haire, 36 Iowa, 443, the bank refused to discount a note for a firm, but did make the loan upon a note made by one member of the firm to the other, and indorsed by the latter to the bank, the maker giving a bond and mortgage upon sufficient real estate to secure the indorser against liability upon his indorsement, with a stipulation that, in case of default in due payment of the note, the security should inure to the bank. Default being made, the bank filed a bUl to foreclose, and the defense was set up that the bond and mortgage were within the prohibition contained in this sec- tion, and, therefore, did not inure as security to the bank. Held, that they were not within the prohibition , but were legal and binding and could be enforced for the benefit of the bank. In disposing of this point, the court said : " Every loan or discount by a bank is made in good faith, in reliance by way of security upon the real or personal property of the obligors, and unless the title by mortgage or conveyance is taken to the bank directly, for its use, the case is not within the prohibition of the statute. The fact that the title or security may inure indirectly to the security and benefit of the bank will not vitiate the transaction." See Silver Lake Bank v. North, 4 Js. C. R. 170. § 6138. No association shall be organized under this title Requisite with a less capital than one hundred thousand dollars ; except capital, that banks with a capital of not less than fifty thousand dol- lars may, with the approval of the Secretary of the Treas- ury, be organized in any place the population of which does not exceed six thousand inhabitants. No association shall be organized in a city the population of which exceeds fifty thousand persons with a less capital than two hundred thou- sand dollars. §5139. The capital stock of each association shall be shares of divided into shares of one hundred dollars each, and be transfers. deemed personal property, and transferable on the books of 540 BANKING LAWS. the association in such manner as may be prescribed in the by-laws or articles of association. 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. See notes to section 5151, and note 3, subdivision 6, of section 5136. 1. National bank shares are salable and transferable at tlie will of the owner. They are in this respect like other personal property, though the statute authorizes every association to prescribe the manner of their transfer. Johnston v. Laflin, 103 U. S. 803 ; BuUard v. Bank, 18 Wall. 597 ; Bank v. Lanier, 11 id. 369. 3. The power of a national bank to regulate transfer of its stock, can only go to the extent of prescribing conditions essential to the protec- tion of the association against fraudulent transfers, or such as may be designed to evade, the just responsibility of the stockholder. It is to be exercised reasonably, and cannot be used to clog the manner of transfer with useless restrictions, such as mSlring it dependent on the consent of the directors or other stockholders. Johnston v. Laflin, 103 IT. S. 803. 3. The entry of the transaction on the boolcs of the bank, when stock is sold, is not required for the translation of the title, but for the protection of the parties and others dealing With the bank, and to en- able it to know who are its stockholders entitled to vote and receive dividends. It is necessary to protect the seller against subsequent lia- bility as a stocltholder, and perhaps also to protect the purchaser against proceedings of the seller's creditor. Id. 4. As between the parties to a sale it is enough that the certificate ia delivered with authority to the purchaser, or any one he may name, to transfer it on the books of the company, and the price paid. If a sub- sequent transfer of a certificate be refused by the bank, it can be com- pelled at the instance of either of them. Id. 5. A bank having wrongfully fef used to permit the shares of a stock- holder to be transferi'ed upon its books, is liable for the value of the shares. Seeley v. New York National Exchange Bank, 4 Abb. N. C. 61. 6. One Stevens bought shares in a national bank and caused them to be transferred to one Elston, who was irresponsible and in the employ of S.'s broker. S. remaining the real owner and having a power of attor- ney to act as E.'s agent, he, S., subsequently purchasing more of the same stock and selling from the same account, i. e., in E.'s name. At the time of the first transfer there was no suspicion of the insolvency of the bank, and its credit remained good for more than a year after- -waid. Held, upon failoie of the bank, that both Stevens and Elstoa OEGANIZATIOlSr AND POWEKS. 541 were liable as stockholders. Tlie former as being the real owner, and the latter for assenting to the transfer to him on the hooks. Davis v. Stevens (Waite, C. J.), 17 Blatchf. 359. And see also Bowden v. John- son, 107 U. S. 251. 7. A fraudulent transfer of the shares held by the shareholder, in order to avoid liability for the debts of the corporation, leaves such shareholder still liable. Marcy v. Clark, 17 Mass. 339; Bowden v. San- tos, 1 Hughes, 158. 8. An arrangement by which the stock is nominally paid, and the money immediately taken back as a loan to the stockholder, is a device to change the debt from a stock debt to a loan, and is not a valid payment against creditors of the corporation, though it may be g6od as between the company and the shareholder. The capital stock or shares of a cor- poration constitute a trust fund for the benefit of the general creditors of the corporation, which cannot be defeated by a simulated payment of the stock subscription, or by any device short of actual peyment in good faith. Sawyer v. Hoag, 17 Wall. 610. 9. As to the liability of a transferee of shares it was held in National Bank v. Case, 99 XJ. S. 638, that a party who by way of pledge or collat- eral security for a loan, accepts stock of a national bank which lie causes to be transferred to himself on its books, incurs immediate liability as a stockholder, and he cannot relieve himself therefrom by making a color- able transfer of the stock with the understanding that at his request it shall be re-transferred. See also Pullman v. Uptown, 96 TJ. S. 328 ; Adderly v. Storm, 6 Hill, 624 ; Hale v. Walker, 81 Iowa, 344. 10. In the abseoce of fraud, a mere pledgee of stock in a national bank is not liable to its creditors, where he is not registered as owner, and this where he takes the security for his benefit in the name of an irresponsible trustee, for the avowed purpose of avoiding individual liability. Anderson, Eeceiver, v. Philadelphia Warehouse Co., Ill TJ. S. (3 Davis), 479. 11. Where the certificates of stock in a national bank declare that stock is transferable on the books of the bank in person or by attorney, on surrender of the certificates and not otherwise, and which, notwith- standing, suffers a holder to transfer on the books his stock without such surrender, is liable to a iona fide transferee for value of the same stock, who produces such certificates vrith power of attorney to transfer, and it makes no difference that the bank has not been given notice of the transfer. Bank v. Lanier, 11 Wall. 369. 12. Persons holding national bank stock as trustees, etc., to relieve themselves from liability as individual stockholders, must cause it to appear on the books that they hold as such trustees. Creditors have a right to know who have pledged their personal liability, and if a trustee fails to disclose his trusteeship, he is guilty of laches for which others should not suffer. Davis v. Essex Baptist Society, 44 Conn. 583. This case although cited in a State report, was decided in the United States District Court for the district of Connecticut. Shipman, J. 543 BANKING LAWS. 13. When the charter of a corporation provides that the stock should be transferred in such manner as the board of directors may prescribe, and the board enact a by-law that the stock shall be transferred only on tlie books of the company, and that in each certificate issued must be " transferable only on the books of the company subject to the by-laws of the company." A creditor of a person in whose name stock stands on the books of the company, who causes an execution to be levied on such stock, will hold the same as against one who has assignment of the stock certificates, but not a transfer on the books. People's Bank V. Gridley, 1 Mo. Jur. 589. 14. A person is presumed to be the owner of stock when his name appears on the books of a company as a stockholder ; and when sued as such, the burden of disproving that presumption is cast upon Mm. Turnbull v. Payson, 5 Otto, 418. 15. The signing of a transfer in blank on a certificate of stock, is a warranty of the genuineness of the certificate. Mathews v. Massachu- setts National Bank, 1 Holmes, 396. 16. AVhatever rights the purchaser of a certificate of stock, may ac- quire as between Mmself and his vendor, it is well settled, as between himself and the corporation, he acquires only an equitable title ; and until he secures a transfer on the books of the company he is not a stockholder, and has no claim to act as such. N. Y. and N. H. E. R. Co. V. Schuyler, 34 N. Y. 80 ; Grymes v. Hone, 49 id. 17. 17. "As between a corporator and the corporation, the records of the corporation, or its stock book, as it is called, is the evidence of their relation. Meetings of the stockholders, elections and dividends, etc., are regulated by this record. The certificate is but secondary evidence, and is never demanded except when the stockholder deals with the cor- poration in a contract relation. " Bank of Commerce's Appeal, 73 Penn. St. 59. 18. In Johnson v. Laflin, 17 Alb. L. J. 146, affirmed 103 U. S. 803 (see note 1 above), the United States Circuit Court said of a. sale by transfer of the stock of a bank : "that the transaction between Laflin and Britton was complete without registration of the transfer, and that it is equally complete as to the bank, unless the bank had some valid reason for refusing to register the transfer." 19. While it may be that a national bank would not be bound to admit a purchaser of shares of its stock "to all the rights, etc., of the prior holders of such shares," unless the transfer to him was made on the books of the association in such manner as may have been prescribed in the by-laws or articles of association, nevertheless, when the associa- tion does issue certificates of shares of stock to a subsequent purchaser in lieu of the certificate of the prior owner, without observing its by- laws in regard to transferring stock on its books, certainly, so far as its creditors are concerned, a party holding such stock will be subject to the liabilities imposed by section 5151. Laing v. Burley, 101 111. 591 ; Wheelock v. Kost, 77 111. 296. OEGANIZATION AND POWEKS. 543 20. A party having dealt with the cashier of a national bank indi- vidually, and loaned him money for his private use, and received from him as security therefor a certificate of stock in the bank, in the party's own name, which stated that shares were transferable on the books of the bank, and on surrender of former certificates (the cashier appearing at the time on said books as the owner of a larger number of shares than that mentioned in said certificate, and the party, accepting such certificate, as a transfer of shares of which the cashier represented himself as owner), and no certificate having been surrendered by the cashier or party so dealing with him, the bank not having ratified or received any benefit from the transfer, such party cannot, the said cer- tificate being worthless by reason of the cashier as matter of fact own- ■ ing no stock at the time it was issued by him (and he being insolvent), recover its value from the bank. Moores v. Citizens' National Bank, 111 U. S. (3 Davis), 156. In this case the court cited Merchants' Bank V. State Bank (10 Wall. 604, 644), in which case the general doctrine was stated to be that " where a party deals vrith a corporation in good faith — the transaction is not ultra vires ■ — and he is unaware of any defect of authority or other irregularity on the part of those acting on the part of the corporation, and there is nothing to excite suspicion of such defect or irregularity, the corporation is bound by the contract al- though such defect or irregularity exists." § 5140. At least fifty per centum of the capital stock of Howpay- every association shall be paid in before it shall be author- raptol^ '"^^ ized to commeace business ; and the remainder of the capi- be made"^ tal stock of such association shall be paid in installments " ^™™ ' of at least ten per centum each, on the whole amount of the capital, as frequently as one installment at the end of each succeeding month from the time it shall be authorized by the Comptroller of the Currency to commence business ; and the payment of each installment shall be certified to the Comptroller, under oath, by the president or cashier of the association. § 5141. Whenever any shareholder, or his assignee, fails Proceed- to pay any installment on the stock when the same is required ho1de?(S by the preceding section to be paid, the directors of such staSme^s. 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 comity where the association is located ; or if 544 BANKING LAWS. 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, to be 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 can- celed and deducted from the capital stock of the association. If any such cancellation and reduction shall reduce the capi- tal of the association below the minimum of capital required by law, the capital stock shall, within thirty days from the date of such cancellation, be increased to the required amount ; in default of which a receiver may be appointed, according to the provisions of section fifty-two hundred and thirty-four, to close up the business of the association. inoreMe of g 5142. Any association formed under this title may, by stock. itg articles of association, provide for an increase of its capi- tal from time to time, as may be deemed expedient, subject to the limitations of this title. But the maximum of such increase to be provided 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 is paid in, and notice thereof has been trans- mitted to the Comptroller of the Currency, and his certiii- cate 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. The approval of the Comptroller, as required by this section, is abso- lutely essential to the increase of the capital stock of a national bank, and a resolution of the stockholders to that end is no more than a prop- osition among themselves, the efEect of which is subject to the assent of the Comptroller, and until obtained the capital remains as originally fixed. Charleston v. People's National Bank, 5 So. Car. 114. In this case the bank, on July 1, 1871, voted to increase its capital stock from $750,- OEGANIZATION AND POWEES. 545 000 to $1,000,000, which by virtue of section 5139, U. S. B. S., would require the issue of 3,500 additioual shares. These additional shares were subscribed for by the first day of January following, and the amount thereof (|350,000) was secured to be paid by securities held by the cash- ier in trust for the purpose, and a semi-annual dividend was declared and paid on said additional stock, for the half year ending January 1, 1873. The Comptroller did not make his certificate required by section 5143 till January 5, 1873, and the city of Charleston levied a tax on said additional shares assessed from January 1, 1873. Held, that the addi- tioual shares were not valid and properly constituted shares of the asso- ciation, and consequently not taxable. § 5143. Any association formed under this title may, T^yo/^^S" the vote of shareholders owning two-thirds of its capital ^'°°^- stock, reduce its capital to any sum not below the amount required by this title to authorize the formation of associa- tions ; but no such reduction shall be allowable which will reduce the capital of the association below the amount required for its outstanding circulation, nor shall any such reduction be made until the amount of the proposed reduc- tion has been reported to the Comptroller of the Currency and his approval thereof obtained. A national bank cannot, after reducing the amount of its capital stock, retain as a surplus, or for other purposes, the whole or any portion of the money which it received for the stock that is retired. Seeley v. New York National Exchange Bank, 4 Abb. N. C. 61. § 5144. In all elections of directors, and in deciding all ^teM "^ questions at meetmgsoi 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 writ- ing; but no officer, derk, teller, or book-keeper of such association shall act as proxy ; and no shareholder whose liability is past due and unpaid shall be allowed to vote. Where, at a corporate election of directors, votes were cast by proxy, and were disregarded by the inspectors of election, and it was shown that neither the charter nor by-laws of the corporation provided for such manner of voting, Held, that in the absence of any such provision, corporate stockholders cannot vote by proxy. Commonwealth v. Bruig- hurst, Supreme Court of Pennsylvania, 1883, §5145. The affairs of each association shall be managed Election of an directors. 546 BANKING LAWS. loj not less than five directors, who shall be elected by the shareholders at a meeting to be held at any time before the association is authorized by the Comptroller of the Cur- rency to commence the business of banking ; and afterward at meetings to be held on such day in January of each year as is specified therefor in the articles of association. The directors shall hold office for one year, and until their suc- cessors are elected and have qualified. ^uaiilfc'^ § 5146. Every director mast, during his whole term of rectors* ^^' Service, be a citizen of the United States, and at least three- fourths of the directors must have resided in the State, Ter- ritory, or District in which the association is located for at least one year immediately preceding their election, and must be residents therein during their continuance in office. Every director must own, in his own right, at least ten shares of the capital stock of the association of which he is a direc- tor. Any director who ceases to be the owner of ten shares of the stock, or who becomes in any other manner disquali- fied, shall thereby vacate his place. Oath re- 8 5147. Each director, when appointed or elected, shall Quired . romdi- take an oath that he will, so far as the duty devolves on him, rectors. , , . . i )v t diligently and honestly administer the affairs of such asso- ciation, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this title, and that he is the owner in good faith, and in his own right, of the number of shares of stock required by this title, subscribed by him, or standing in his name on the books of the associ- ation, and that the same is not hypothecated, or in any way pledged, as security for any loan or debt. Such oath, sub- scribed by the director making it, and certified by the officer before whom it is taken, shall be immediately transmitted to the Comptroller of the Currency, and shall be filed and preserved in his office. cancies. Filling va- §5148. Any vacancy in the board shall be filled by ap- pointment by the remaining directors, and any director so appointed shall hold his place until the next election. ORGANIZATION AND POWERS. 547 § 5149. If, from any cause, an election of directors is not i^^J'^^^ere made at the time appointed, the association shall not for that P^j^gJl'^o^ " cause be dissolved, bnt an election may be held on any sub-^ayf^"^*' sequent 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 news- paper 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 iix the day on which the election shall be held, or if no election is held on the day fixed, the day for the election shall be designated by the board of directors in their by-laws, or otherwise ; or if the directors fail to fix the day, shareholders representing two- thirds of the shares may do so. § 5150. One of the directors, to be chosen by the board Election of " ' •' president shall be the president of the board. of the ^ board. 8 5151. The shareholders of every national banking asso-, individual • ■ 1 11 • T .T T liability of ciation shall be held individually responsible, equally and shareboid- ratably, and not one for another, for all contracts, debts and engagements of stich 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 share holders 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 Cur- rency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept nndiminished, and be in addition to the surplus pro- vided for in this title ; and if at any time there is a defi- ciency in such surplus of twenty per centum, such associa- tion shall not pay any dividends to its shareholders until the deficiency is made good ; and in case of such deficiency, the Comptroller of the Currency may compel the association to close its business and wind up its affairs under the proi visions of chapter four of this title. 548 BANKING LAWS. For tlie purposes of coustruction, this section and section 5139 are to be considered together. (Waite, C. J.) Davis v. Stevens, 17 Blatchf. 259. Tliey originally formed part of the same section, viz., section 12 of the act of June 3, 1864. See notes to sections 5189 and 5152. 1. The liability of the stockholders is several, not joint. The limit of their liability is the par of the stock held by each one. Kennedy v. Gibson, 8 Wall. 505. 2. It was not intended to put the shareholders in the relation of guar- antors or sureties, "one for another," as to the amount vphich each might be required to pay. Hence the insolvency of one stockholder, or his being beyond the jurisdiction of the court, does not in any way affect the liability of another. United States v. Knox, 102 IJ. S. (13 Otto) 425. 3 In fixing the liability of each shareholder, it is necessary to ascer- tain, first, the whole amount of the par value of the stock held by all the shareholders ; second, the amount of the deficit to be paid after exhausting all the assets of the bank ; third, then to apply the rule that each shareholder shall contribute such sum (not exceeding the par value of the amount of stock held by him), as will bear the same pro- portion to the whole amount of the deficit, as his stock bears to the whole amount of the capital stock of the banli at its par value. (Swayue, J.) Id. 4. When a person buys national bank stock, and to avoid a stockhold- er's responsibility causes it to be registered in the name of another who is pecuniarily irresponsible, the buyer, so long as he remains the actual owner, is a shareholder within the meaning of this section and section 5139. In such case, both the actual and registered owners are liable. Davis V. Stevens, 17 Blatchf. 259 ; Bowden v. Johnson, 107 U. S. 251. See, also, National Bank v. Case (99 id. 628), where it was held that if a registered owner transferred his stock in a failing corporation to an ir- responsible person, for the mere purpose of escaping liability, or if the transfer was colorable only, the transaction was void as against creditors. 5. The liability assumed by virtue of this section by a purchaser of stock in a national banlc, is not by contract, but wholly statutory. Hence it exists as an incident of the ownership of the stock, and attaches to all who are legally capable and become owners, without reference to any supposed voluntary assumption of the liability by express or irnplied contract. Hence, where national bank stock is held by a feme covert, either in her own right, or subject to the common law marital rights of the husband, she alone is liable for the consequences of such ownership, and , her individual liability may be enforced without joining the hus- band, as would be the case in the enforcement of any common -law lia- bility against her. Keyser v. Hitz, 2 Mackey Sup. Ct. (D. C.) 473. But to the contrary of the proposition, that the liability assumed by virtue of this section by a shareholder in a national bank is wholly statutory, see Davis v. Weed (a case decided in the United States Dis- trict Court for District of Connecticut, and reported in 44 Conn. 569, ORGANIZATION AND POWEES. 549 pp. 500, 501), in which case it was held (Shipman, J.) that the liahility of such shareholder to pay the assessments which may be ordered by the Com.ptroller was "a voluntary agreement, evidenced by his sub- scription or by his becoming a stockholder." That "it is not imposed by way of forfeiture or penalty." That "it is imposed by the statute, but it also exists by virtue of the contract which " the shareholder " en- tered into when he became a stockholder." And again in the following case (Davis v. Essex Baptist Society, id. 532) the same Justice says : " The liability of the stockholder arises from his virtual contract, etc. * * * It is not in form a contract, but is an agreement resulting from the assent of the parties to the statutory liability," citing Lowry v. Inman, 46 N. T. 125 ; Hawthorne V. Calef, 3 Wall. 33 ; Corning v. McCullough, 1 N. T. 47. 6. In Laing v. Burley (101 111. 591), the court speaking of this section said: " It will be noted the liability is imposed upon the " aha/reholder," and it is a matter of no consequence that such shares may not have been transferred to such shareholder on the books of the association in exact conformity with its by-laws. It is sufl5cient if the ownership of the shares is in fact in the person holdihg the certificate, to constitute him a "shareholder" in the association, and subject him to the liabilities imposed by the Banking Law under which such association may have been organized," citing Wheelock v. Kost, 77 111. 396. § 5152. Persons holding stock as executors, administra- Executors, tors, guardians, or trustees, shall not be personally subject ete.f n*ot to any liabilities as stockholders ; but the estates and funds SaWe" ^ in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in such trust funds would be if living and competent to act and hold the stock in his own name. 1. The principal object of this section, is to prevent a personal liability from running against the persons named in the section, who have pur- chased in their representative capacity, or to whom national bank shares have been transferred as such representatives for the benefit of the trust estate. Davis v. Weed, 44 Conn. 581. 3. This section was not intended to afEect the liability of estates in process of settlement. The liability of the stockholder is in the nature of ^contract, and as such is a personal liability for which his estate is holden at his death. Id., citing Hawthorne v. Calef, 3 Wall. 33 ; Lowry V. Inman, 46 N. T. 119. 3. But to avail themselves of this exemption, trustees must disclose their trusteeship on the books of the bank. If they do not, they are guilty of laches, and in an action in such case to hold them personally liable, they cannot resort to extrinsic evidence for the purpose of proving the trust. Davis v. Essex Baptist Society, 44 Conn. 586. 550 BANKING LAWS. 4. The liability of a deceased shareiolder on his stock survives against Ms estate. The purpose of section 5151 of the National Bank Act, is to render the excess of the amount paid by the stockholder up to the par value an asset ui his han^s, to be resorted to in case of the in- solvency of the bank for the payment of its debts. Section 5153 is de- signed to protect those holding such stock in a representative capacity from any personal liability, and only makes the funds in their hands, or under their control, liable. Irons v. Manufacturers' National Bank, U. S. Dist. Ct„ N D, 111. Decided July 14, 1884. Duties and §5153. All national banking associations, designated for when desig- that purpose by the Secretary of the Treasury, shall be de- depos^ita- positaries of public money, except receipts from customs, uo moneys, under such regulations as may be prescribed by the Secre- tary ; and they may also be employed as financial agents of the Government ; and they shall perform all such reason- able duties, as depositaries of public moneys and financial agents of the Government, as may be required of them. The Secretary of the Treasury shall require the associations thus designated to give satisfactory security, by the deposit of United States bonds and othierwise, for the safe-keeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the Government. And every association so 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 into the Government for internal revenue, or for loans or stocks. 1. Designating a national bank as a depositary of public money under this section, does not change the character of its organization, or convert its managers into public oflScers, or give to the government any addi- tional control over the institution, or render the United States liable for any of the acts, contracts or obligations of the bank. Nor does it constitute the bank a general financial agent of the government, but when after such a designation it is required by law or by direction of the Secretary of the Treasury to perform any financial duties for the United States, it then becomes a special agent for the particular purpose required, with no power to bind the government beyond the special authority conferred upon it. In short, constituting a national bank a depositary of public money, is an employment of the institution for busi- ness purposes, as it is employed by individual depositors, and not an OEGANIZATION AND POWBES. 551 assumption of its powers and liabilities by the national government; nor tlie malung of it, as an institution, a part of tlie United States Treasury. Branch v. United States, 12 Ct. of CI. 44 ; S. C, 13 Bank Mag. 61. In this case, 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 depositary of public moneys. The bank failed. Held, that the United States were not liable for the money so deposited. 3. The term "public money," as used m the statutes of the United States, ordinarily means the money of the government, received from the public revenues, or intrusted to its officers charged with the duty of receiving, keeping, or disbursing the same, whatever it may be. Id. § 5154. Any bank incorporated by special law, or any ^J|*°|''*- banking institution organized under a general law of any as^nationS State, may become a national association under this title assod^ by the name prescribed in its organization certificate ; and*""^" in such case the articles of association and the organiza- tion certificate may be executed by a majority of the di- rectors of the bank or banking institution ; and the certifi- cate shall declare that the owners of two-thirds of the capital stock have authorized the directors to make such certificate, and to change and convert the bank or banking institution into a national association. A majority of the directors, after executing the articles of association and or- ganization certificate, shall have power to execute all other papers, and to do whatever may be required to make its organization perfect and complete as a national association. The shares of any such bank may continue to be for the same amount each as they were before the conversion, and the directors may continue to be the directors of the asso- ciation until others are elected or appointed in accordance with the provisions of this chapter; and any State bank which is a stockholder in any other bank, by authority of State laws, may continue to hold its stock, although either bank, or both, may be organized under and have accepted the provisions of this title. When the Comptroller of the Currency has given to such association a certificate, under his hand and official seal, that the provisions of this title have been complied with, and that it is authorized to com- jmence the business of banking, the association shall have 553 BANKING LAWS. the same powers and privileges, and shall be subject to the same duties, responsibilities and rules, in all respects, as are prescribed for other associations, originally organized as national banking associations, and shall be held and re- garded as such an association. But no such association shall have a less capital than the amount prescribed for associa- tions organized under this title. 1. No authority from the State is necessary to enable a State bank to organize as a national bank. Carey v, Galli, 94 TJ. S. (4 Otto) 673. 2. Tlie certificate of the Comptroller is conclusive as to the regularity of the proceedings by which the conversion is effected. Id. 3. The fact that a banlt is shown to have been doing business long prior to the date of its organization as a national bank, does not prove that it is a difEerent body from that named in the certificate. Section 5154, U. S. E. S., makes full provision for banks incorporated under State laws to organize as national banks. Thatcher v. West River Natl. Bank, 19 Mich. 196. 4. When two-thirds of the stockholders of a State bank consent to its conversion into a national bank, such conversion may take place with- out reference to the concurrence of the rest. Keyser v. Hitz, 2 Mackey, 490. 5. It seems that in order for a stockholder in the old (State) bank, (or at least one who has not consented to the conversion) to become a stock- holder in the new (national) bank, his consent, that his original stock shall be converted into stock of the national bank, must first be obtained. Id. 6. When, however, this consent is given, he becomes by virtue of that consent a stockholder in the new bank, notwithstanding an omission to issue new certificates in the name of the national bank. Id. 7. Although more regular, it is not necessary that, upon conversion, a new stock book should be opened and new certificates issued in the name of the national bank; neither the rights nor liabilities of the stock- holders are affected by the failure to do so. Id. 8. It seems that savings banks may take advantage of this section to organize as national banks. Id. 9. The conversion of a State bank into a national bank, works no dis- solution of the former. There is a transition, but not a new creation. The liabilities remain the same. Coffey v. National Bank, 46 Mo. 140 ; Maynard v. Bank, 1 Brewst. (Penn.) 483 ; Kelsey v. National Bank, 69 Penn. St. 436. 10. Nor does such conversion pay off or refund the stock of the State bank ; until provided for such stock is outstanding after the conversion. Maynard v. Bank, 7 Flula. 6. ORGANIZATION AND POWEES. 553 § 5155. It shall be lawful for any bank or banking asso- If^^ j^^^^. elation, organized under State laws, and having branches, {,°|^p]jgg the capital being joint and assigned' to and used by the mother bank and branches in definite proportions, to become a national banking association in conformity with existing laws, and to retain and keep in operation its branches, or such one or more of them as it may elect to retain ; tbe amount of the circulation redeemable at the mother bank, and each branch, to be regulated by the amount of capital assigned to and used by each. §5156. Nothing in this title shall affect any appoint- Reserva- ments made, acts done, or proceedings had or commenced ^^0^^°* prior to the third day of June, eighteen hundred and sixty- g°°^°J four, in or toward the organization of any national banking oJiK"* associations under the act of February twenty-five, eighteen hundred and sixty-three ; but all associations which, on the third day of June, eighteen hundred and sixty -four, were organized or commenced to be organized under that act, shall enjoy all the rights and privileges granted, and be subject to all the duties, liabilities and restrictions imposed by this title, notwithstanding all the steps prescribed by this title for the organization of associations were not pur- sued, if such associations were duly organized under that act. 70 CHAPTEE TWO. Obtaining and Issuing Cieculating Notes. Section 5157. What associations are governed by cliapters 3, 3 and 4. 5158. Eegistered bonds intended by tlie term "United States bonds." 5159. Deposit of bonds required before issue of circulating notes. 5160. Increase or reduction of deposits to correspond with capital. 5161. Exchange of coupon for registered bonds. 5162. Manner of making transfers of bonds. 5163. Registry of transfers. 5164. Notice of transfer to be given to associations interested. 5165 Examination of registry and bonds. 5166. Annual examination of bonds by associations. 5167 Custody of bonds, collection of interest, etc. 5168. Comptroller to determine if association can commence business. 6169. Certificate of authority to commence banking to be is- sued. 5170. Publication of certificate. 5171 Delivery of circulating notes. 5172. Printing, denominations and form of the circulating notes. 5173. Plates and dies to be under control of the Comptroller. 5174. Annual examination of plates, dies, etc. 5175. Limit to issue of notes under five dollars. 5176. Limit to amount of circulation of certain banks. 5177. Limit to aggregate amount of circulating notes. 5178. Apportionment of aggregate amount of circulating notes. 5179. Equalizing the apportionment of circulating notes. 5180. How the necessary amount of notes shall be withdrawn. 5181. Removal of association to another State. 5183. For what demands national bank notes may be received. 5183. Issue of other notes prohibited. 5184. Destroying and replacing worn out and mutilated notes. 5185. Organization of associations to issue gold notes author. ized. CIRCULA.TION. 555 Section 5186. Tlieir lawful money reserve, and duty of receiving notes of other associations. 5187. Penalty for issuing circulating notes to unauthorized as- sociations. 5188. Penalty for imitating national bank notes, etc. 5189. Penalty for defacing, etc., national bank notes. §. 5157. The provisions of chapters two, three and four what mso- of this title, which are expressed without restrictive words, eS^f^hlpI as applying to "national banking associations," or to "asso-anll'.* ciations,' apply to all associations organized to carry on the business of banking under any act of Congress. § 5158. The term " United States bonds," as used through- Registered out this chapter, shall be construed to mean registered bonds J^^'^tl^^^ of the United States. sSf^ bonds." § 5159. Every association, after having complied with thebondfre-' provisions of this title, preliminary to the commencement j'ore®ssu|' of the banking business, and before it shall be authorized to fnVnStet^ commence banking business under this title, 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, and not less than one-third of the capital stock paid in. Such bonds shall be received by the Tre.asurer upon deposit, and shall be by him safely kept in his office, xmtil they shall be otherwise disposed of, in pursuance of the provisions of this title. See act of June 30, 1874, section 4, p. 639, post. See act of July 13, 1883, section 8, p. 658, post. 1. A national bank has the equitable, if not the legal interest in the securities transferred or delivered to the United States Treasurer under this section, subjectito their disposal, or the disposal of so much of them as may be necessary for the redemption of the circulating notes of the banks ; "and this residuary interest the bank may, in the ordinary course of its business before the appointment of any receiver, assign for a proper consideration. Per Hall, J., Van Antwerp v. Hulburd, 8 Blatchf. 383. 2. The residuary interest of the bank in the securities thus pledged, if not assigned by the bank before the appointment of a receiver, is necessarily a part of the assets of the bank ; the same as though such securities had been pledged to a private person as collateral security for 556 BANKING LAWS. the payment of an ordinary commercial debt; and a properly appointed receiver, as tlie representative of tlie bank, bas tbe rigbt to demand and receive tbe property so pledged as an asset of tbe bank, in tbe one case tbe same as in ibe otber. Id. 3. Until tbe moneys representmg sucb residuary interest are legally transferred from tbe Treasurer to the receiver, tbey are in tbe possession of tbe Treasurer, as cbe officer of tbe United States, as tbe bolder of a pledge for tbe bank. Id. Increase or 8 5160. The deposit of bonds made by each association reduction " '■ " of deposit siiall be increased as its capital may be paid up or increased, to corres- r j r ir j oapitaY'"' ^'^ ^'^^* 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. And any association that may desire to reduce its capital or to close up its business and dissolve its organization, may take up its bonds upon returning to the Comptroller its cir- culating notes in the proportion hereinafter required, or may take up any excess of bonds beyond one-third of its capital stock, and upon which no circulating notes have been deliv- ered. See act of July 12, 1882, section 8, p. 658, post. Exchange 8 5161. To facilitate a compliance with the two preced- of coupon , . , „ c T m for regis- ing sectious, the Secretary of the Treasury is authorized to bonds. receive from any association, 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. Manner of 8 5162. All transfers of United States bonds, made by making "^ ■ _ } J ^oi'bon^ any association under the provisions of this title, shall be made to the Treasurer of the United States in trust for the association, with a memorandum written or printed on each bond, and signed by»the cashier, or some other officer of the association making the deposit. A receipt shall be given to the association, by the Comptroller of the Currency, or by a clerk appointed by him for that purpose, stating that the bond is held in trust for the association on whose behalf the transfer is made, and as security for the redemption and OIKCULATION. 557 payment of any circulating notes that have been or may be delivered to such association. No assignment or transfer of any such bond by the Treasurer shall be deemed valid unless countersigned by the Comptroller of the Currency. § 5163. The Comptroller of the Currency shall keep in^/s^|]^'J his office a book in which he shall cause to be entered, im-i'e''s. mediately upon countersigning it, every transfer or assign- ment by the Treasurer of any bonds belonging to a national banking association presented for his signature. He shall state in such entry the name of the association from whose account the transfer is made, the name of the party to whom it is made, and the par value of the bonds transferred. §5164. The Comptroller of the Currency shall, imraedi-^o'^^fgOfj^ ately upon countersigning and entering any transfer or assign. afsfcIaSo'n ment by the Treasurer of any bonds belonging to a national '"terested. banking association, advise by mail the association from whose accounts the transfer is made, of the kind and numeri- cal designation of the bonds, and the amount thereof so transferred. 8 5165. The Comptroller of the Currency shall have at Examina- f fcion of reg- all times, during office hours, access to the books of the istry and ° _ bonds. Treasurer of the United States for the purpose of ascer- taining the correctness of any transfer or assignment of the bonds deposited by an association presented to the Comp- troller to countersign ; and the Treasurer shall have the like access to the book mentioned in section fifty-one hundred and sixty-three, during office hours, to ascertain the correct- ness of the entries in the same ; and the Comptroller shall also at aU times have access to the bonds on deposit with the Treasurer to ascertain their amount and condition. § 6166. Every association having bortds deposited in the -^^niuai ex. ° f , m ciTT-io amination office of the Treasurer of the United States shall, once or °f''°°'5s by ' associa- of tener in each fiscal year, examine and compare the bonds *'°"^- pledged by the association with the books of the Coniptrol- ler of the Currency and with the accounts of the associa- tion, and, if they are found correct, to execute to the Treas- 558 BANKING LAWS. ■ Tirer a certificate setting forth the different binds and the amounts thereof, and that the same are in the possession and custody of the Treasurer at the date of the certificate. Such examination shall be made at such time or times, during the ordinary business hours, as the Treasurer and the Comp- troller, respectively, may select, and may be made by an officer or agent of such association, duly appointed, in writ- ing, for that purpose ; and his certificate, before mentioned, shall be of like force and validity as if executed by the presi- dent or cashier. A duplicate of such certificate, signed by the Treasurer, shall be retained by the association. Custody of s 5167. The bonds transferred to and deposited with the boDds, col- '^ ^ interest"' Treasurer of the United States, by any association, for the ®*'°" security of its circulating notes, shall be held exclusively for that purpose, until such notes are redeemed, except as provided in this Title. The Comptroller of the Currency shall give to any such association powers of attorney to receive and appropriate to its own use the interest on the bonds which it has so transferred to the Treasurer; but such powers shall become inoperative whenever such asso- ciation fails to redeem its circulating notes. Whenever the market or cash value of any bonds thus deposited with the Treasurer is reduced below the amount ot the circulation issued for the same, the Comptroller may demand and re- ceive 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 such deprecia- tion continues. And the Comptroller, upon the terms pre- scribed by the Secretary of the Treasury, may permit an exchange to be made of any of the bonds deposited with the Treasurer by any association for other bonds of the United States authorized to be received as security for circulating notes, if he is of opinion that such an exchange can be made without prejudice to the United States ; and he may direct the return of any bonds to the association which transferred the same, in sums of not less than one thousand dollars, upon the surrender to him and the cancellation of a proportion- CIRCULATION. 559 ate amount of such circulating notes : Provided, That the remaining bonds which shall have been transferred by the association offering to surrender circulating notes are equal to the amount required for the circulating notes not suri'en- dered by such association, and that the amount of bonds in the hands of the Treasurer is not diminished below the amount required to be kept on deposit with him, and that there has been no failure by the association to redeem its circulating notes, nor any other violation by it of the pro- visions of this Title, and that the market or cash value of the remaining bonds is not below the amount required for the circulation issued for the same. See act of June 20, 1874, § 4, p,639, post. % 5168. Whenever a certificate is transmitted to the g?'?P*/°^ Comptroller of the Currency, as provided in this Title, and assoc^ ^^ the association transmitting tlie same notifies the Comptroller commeace that at least fifty per centum of its capital stock has been duly paid in, and that such association has complied with all the provisions of this Title required to be complied with before an association shall be authorized to commence the business of banking, the Comptroller shall examine into the condition of such association, ascertain especially the amount of money paid in on account of its capital, the name and place of residence of each of its directors, and the amount of the capital stock of which each is the ovsner in good faith, and generally whether such association has complied with all the provisions of this Title required to entitle it to en- gage in the business of banking ; and shall cause to be made and attested by the oaths of a majority of the directors, and by the president or cashier of the association, a statement of all the facts necessary to enable the Comptroller to deter- mine whether the association is lawfully entitled to com- mence the business of banking. See note to tlie following section. § 5169. If, upon a careful examination of the facts so re- Certificate ported, and of any other facts which may come to the knowl- 'ty to com- 560 BANKING LAWS. bknkin to ^^S^ ^^ ^^^ Comptroller, whether by means of a special be issued, ccminissioii appointed by him for the purpose of inquiring into the condition of such association, or otherwise, it ap- pears that such association is lawfully entitled to commence the business of banking, the Comptroller shall give to such association a certificate, under his hand and official seal, that such association has complied with all the provisions required to be complied with before commencing the business of banking, and that such association is authorized to commence sucli business. But the Comptroller may withhold from an association his certificate authorizing the commencement of business, whenever he has reason to suppose that the share- holders have formed the same for any other than the legiti- mate objects contemplated by this Title. It is the duty of the Comptroller to decide as to tlie completeness of organization, and his certificate of compliance with the National Bank- ing Act removes any objection which might otherwise have been raised to the evidence upon which he acted. Thatcher v. West River National Bank, 19 Mich. 196 ; Casey v. Galli, 94 tr. S. 673 ; Keyser v. Hitz, 3 Mackey, 490. Pubiioation 8 5170. The associatiou shall cause the certificate issued of certifi- *^ cate. under the preceding section to be published in some news- paper printed in the city or county where the association is located, for at least sixty days next after the issuing thereof ; or, if no newspaper is published in such city or county, then in the newspaper published nearest thereto. Delivery of § 5171. Upon a deposit of honds as presartbed ly sec- notes. tions fifty-one hundred and fifty-nine and fifty-one hwrir dred and sixty, the association making the sam.e shall he entitled to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, regis- tered and countersigned as hereinafter provided, equal in amount to ninety per centum of the current market value of the United States lands so transferred and deUvered, hut not exceeding ninety per centum of the amount of the honds at the par value thereof, if hearing interest at a rate not less than five per centum per annum : Provided, That the- amoimt of circulating notes to he furnished to each associa- CIRCULATION. 561 Hon shall le in proportion to its paid-up capital, as fol- lows, and no more : First. To each association whose capital does not exceed fioe hundred thousand dollars, ninety per o&ntum of such capital. Second. To each association whose capital exceeds fioe hundred thousa/nd dollars, hut does not exceed one million of dolla/rs, eighty per centum of such capital. Third. To each association whose capital exceeds one million of dollars, hut does not exceed three millions of dollars, seventy-fi/ve per centum of such capital. Fourth. To each association whose capital exceeds three millions of dollars, sixty per cenl/um of such capital. Repealed by section 10, act July 13, 1882, p. 660, post. § 5172. In order to furnish suitable notes for circulation, Printmg the Comptroller of the Currency shall, under the direction wons, and of the Secretary of the Treasury, cause plates and dies to oircuiating be engraved, in the best manner to guard against counter- feiting and fraudulent alterations, and shall have printed therefrom, and numbered, such quantity of circulating notes in blank, of the denominations of one dollar, two dollars, three dollars, five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars, five hundred dollars, and one thousand dollars, as may be required to supply the associa- tions entitled to receive the same. Such notes shall express upon their face that they are secured by United States bonds, deposited with the Treasurer of the United States, by the written or engraved signatures of the Treasurer and Register, and by the imprint of the seal of the Treasury ; and shall also express upon their face the promise of the association receiving the same to pay on demand, attested by the signatures of the president or vice-president and cashier; and shall bear such devices and such other state- ments, and shall be in such form as the Secretary of the Treasury shall, by regulation, direct. See section 5183 and notes. The imprint of tlie seal of the Treasury is simply intended to be evi- dence with regard to the security of the contract, and forms no part of 71 562 BANKING LAWS. the contract itself. Hence the circulating notes of a national bank are valid without it. U. S. v. Bennett, 17 Blatch. 357. Kates and § 5173. The pktes and special dies to be procured by the troi'^of''""' Comptroller of the Currency for the printing of such cir- comptroi- culating notes shall remain under his control and direction and the expenses necessarily incurred in executing the laws respecting the procuring of such notes, and all other ex- penses of the Bureau of the Currency, shall be paid out of the proceeds of the taxes or duties assessed and collected on the circulation of national banking associations under this Title. See section 3, act June 20, 1874, p. 637, post, and section 8, act July 12, 1883, p. 658, post. ^m?"aMof § ^1'^*- '^^^ Comptroller of the Currency shall cause to dfesj^'^c.' be examined, each year, the plates, dies, but-pieoes, [bed- pieces,] and other material from which the national bank circulation is printed, in whole or in part, and iile in his oflBce annually a correct list of the same. Such material as shall have been used in the printing of the notes of associa- tions which are in liquidation, or have closed business, shall be destroyed under such regulations as shall be prescribed by the Comptroller of the Currency and approved by the Secretary of the Treasury. The expenses of any such ex- amination or destruction shall be paid out of any appropria- tion made by Congress for the special examination of national banks and bank note plates, ^il^ofnotls § ^I'^S- ^'^^ 1^°^® *^^^ one-sixth part of the notes f ar- ^'ouara*™ nished to any association shall be of a less denomination than five dollars. After specie payments are resumed no associa- tion shall be furnished with notes of a less denomination than five dollars. a^antot §5176. No hauTcing association Organized Subsequent to of certain the twelfth day of July, eighteen hnndred and seventy, shall have a ciroulation in excess offme hundred thousamd dollars. Repealed' by act July 1^, 1883, section 10, p. 660, posi. CIRCrLATION. 563 § 5177. The aggregate amount of circulating notes issiied'^^l^^^^ under the act of February twenty -pve, eighteen hundred and ^^°^^^ sixty-three, and under the act of June three, eighteen hun- dred and sixty four, and under section one of the act of July twelve, eighteen hundred and seventy, and under this Title, shall not exceed three hundred a/nd fifty four millions of dollars. Repealed by act January 14, 1875, section 3, p, 643, post. § 5178. One hundred and fifty millions of dollars of^l°^°^^_ the entire amount of circulating notes authorised to iefl^l^^^ ^j issued shall he apportioned to associations in the States, in notes.*""^. the Territories, and in the District of Golumhia, according to representative population. One hundred and fifty mil- lions shall he apportioned hy the Secretary of the Treasury among associations formed in the several States, in the Ter- ritories, and in the District of Columhia, having due re- gard to the existing hanking capital resources, and business of such States, Territories and District. The remaining fifty four millions shall he apportioned among associations in States and Territories having, under the apportionments above prescribed, less than their full proportion of the aggregate amount of notes authorized, lohich made due ap- plication for circulating notes prior to the twelfth day of July, eighteen hundred and seventy-one. Any remainder of such fifty four millions shall be issued to hanking asso- ciations applying for circulating notes in other States or Territories having less than their proportion. Superseded by act of January 14, 1875, section 3, p. 643, post. 8 5179. In order to secure a more equitable distrihution'^'^^^^ • 7 7 » . 7 7 *^® appor- of the national banking currency, there may he tssued aV-*'?°.™<"'* culating notes to banki?ig associations organized in State s'"^'^^^^- and Territories having less than their proportion, and the amount of circulation herein authorized shall, under the direction of the Secretary of the Treasury, as it may be required for this purpose, be withdrawn, as herein provided, from ha/nking associations organized in States having more than their proportion, hut the amount so withdrawn shall 564 BANKING LAWS. not exceed twenty-fi/oe million dollars / provided, that no circulation shall he withdrawn under the provisions of this section until after the fifty-four millions granted in the first section of the act of July twelfth, eighteen hundred and seventy, shall hawe been taken up. Superseded by act of January 14, 1875, section 3, p. 643, post. See act of June 20, 1874, section 7, p. 639, post. ?e°olssa?y § ^^^^- The Comptroller of the Currency shall, under *™^™sj,°'i the direction of the Secretary of the Treasury, make a dravm!'" Statement showing the amount of circulation in each State and Territory, and the amount necessary to be withdrawn from each association, and shall forthwith make a requisi- tion for such amount upon such associations, commenciug with those having a circulation exceeding one million of dollars, in States having an excess of circulation, and with- drawing their circulation in excess of one million of dollars, and then proceeding proportionately with other associations having a circulation exceeding three hundred thousand dol- lars, in States having the largest excess of circulation, and reducing the circulation of such associations in States having the greatest proportion in excess, leaving undisturbed the associations in States having a smaller proportion, until those in greater excess have been reduced to the same grade, and continuing thus to make such reductions until the full amount of twenty-five millions has been withdrawn ; and the circulation so withdrawn shall be distributed among the States and Territories having less than their proportion, so as to equalize the same. TTpon failure of any association to return the amount of circulating notes so required, within one year, the Comptroller shall sell at public auction, having given twenty days' notice thereof in one daily newspaper printed in Washington and one in New York city, an amount of the bonds deposited by that association as security for its circulation equal to the circulation required to be withdrawn from the association and not returned in compli- ance with such requisition ; and he shall, with the proceeds, redeem so many of the notes of such association, as they CIRCTTLATION. 565 come into the treasury, as will equal the amount required and not returned ; and shall pay the balance, if any, to the association. See act of January 14, 1875, section 3, p. 643, post. S 5181. Any association located in any State haviagmoreRe^o^aio* than its proportion of circulation may be removed to any ^"J^^""*^®' State having less than its proportion of circulation, under such rules and regulations as the Comptroller of the Cur- rency, with the approval of the Secretary of the Treasury, shall prescribe ; jpromded, that the amount of the issue of said banks shall not be deducted from the issue of fifty-four millions mentioned in section five thousand one hundred and seventy-eight. See act of January 14, 1875, section 3, p. 643, posi. § 5182. After any association receiving circulating notes For what -,..-, -, , demands under tnis title has caused its promise to pay such notes on national ' -^ ■' bank notes demand to be signed by the president or vice-president and "fg^® ™" cashier thereof, in such manner as to make them obligatory promissory notes, payable on demand, at its place of busi- ness, such association may 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 duties to the United States, except duties on imports ; and also for all salaries and other debts and demands owing by the United States to individuals, corpo- rations and associations within the United States, except interest on the public debt, and in redemption of the na- tional currency. § 5183. No national banking association shall issue post- issue of notes or any other notes to circulate as money than such as prohibited! are authorized by the provisions of this Title. See act of February 18, 1875, correcting Revised Statues, p.647,^o««. See in this connection § 5173. 1. The certification of checks in the ordinary manner in the course of business, by national banks, does not come within the prohibition of this section. Merchants' Bank v. State Bank, 10 Wall. 604. 2. A certificate of deposit, payable at a future day, is a promissory 566 BANKING LAWS. note, and void under a statute prohibiting the circulation by a bank of its bills or notes not payable on demand. Bank of Orleans v. Merrill, 2 Hill, 295 ; Leavitt v. Palmer, 3 N. Y. 19. FnlreTac? § ^^^*- ^^ ^^^'^ ^® ^^^ ^^^^ of the Comptroller of the mft and"' Currency to receive worn-out or mutilated circulating notes Si)"ls°''^'^ issued by any banking association, and also, on due proof of the destruction of any such circulating notes, to deliver in place thereof to the association other blank circulating notes to an equal amount. Such worn-out or mutilated notes, after a memorandum has been entered in the proper books, in accordance with such regulations as may be established by the Comptroller, as well as all circulating notes which shall have been paid or surrendered to be canceled, shall be burned to ashes in presence of four persons, one to be ap- pointed by the Secretary of the Treasury, one by the Comp- troller of the Currency, one by the Treasurer of the United States, and one by the association, under such regulations as the Secretary of the Treasury may prescribe. A certificate of such burning, signed by the parties so appointed, shall be made in the books of the Comptroller, and a duplicate thereof forwarded to the association whose notes are thus canceled. Modified by act of June 23, 1874, p. 643, pogt. tion°ofM^ §5185. Associations may be organized in the manner pre- tSfssu™^ scribed by this Title for the purpose of issuing notes pay- autho^'ed. able in gold ; and upon the deposit of any United States bonds bearing interest payable in gold with the Treasurer of the United States, in the manner prescribed for other associations, it shall be lawful for the Comptroller of the Currency to issue to the association making the deposit cir- culating notes of different denominations, but none of them of less than five dollars, and not exceeding in amount eighty per centum of the par value of the bonds deposited, which shall express the promise of the association to pay them, upon presentation at the office at which they are issued, in gold coin of the United States, and shall be so redeemable. But no such association shall have a circulation of more than one million of dollars. CIRCULATION. 567 § 5186. Every association organized under the preceding ^^jJ^J^'^^'^- section shall at all times keep on hand not less than tyrenty-anddrnVof live per centum of its outstanding circulation, in gold ornotiy'o"*' silver coin of the United States; and shall receive at par sociatfons. in the payment of debts the gold notes of every other such association which at the time of such payment is redeeming its circulating notes in gold coin of the United States, and shall be subject to all the provisions of this Title. Provided, That, in applying the same to associations organized for is- suing gold notes, the terms " lawful money " and " lawful money of the United States " shall be construed to mean gold or silver coin of the United States ; and the circulation of such association shall not be within the limitation of cir- culation mentioned in this Title. See act of January 19, 1875, p. 644, 'post. % 5187, No officer acting under the provisions of this ^|°?^'y *g; Title shall countersign or deliver to any association, or to n"ieg?f any other company or person, any circulating notes contem- Jied^Mso- plated by this Title, except in accordance with the true in- '=i^*'<"'s- tent and meaning of its provisions . Every officer who vio- lates this section shall be deemed guilty of a high misde- meanor, and shall be fined not more than double the amount so countersigned and delivered, and imprisoned not less than one year and not more than fifteen years . § 5188 . It shall not be lawful to design, engrave, print, ^ftaM^*""" or in any manner make or execute, or to ntter, issue, dis- bt^notes, tribute, circulate, or use, any business or professional card, *'"■ notice, placard, circular, hand-bill, or advertisement, in the likeness or similitude of any circulating note or other obli- gation or security of any banking association organized or acting under the laws of the United States which has been or may be issued under this Title, or any act of Congress, or to write, print, or otherwise impress upon any such note> obligation, or security any business or professional card, no- tice or advertisement, or any notice or advertisement of any matter or thing whatever. Every person who violates this 568 BANKING LAWS. section shall be liable to a penalty of one hundred dollars, recoverable one-haK to the use of the informer. Penalty for 8 5189. Everv person who mutilates, cuts, defaces, dis- defaoing, ° / . i i i . ^ i etc., na- figm-es, or perforates with holes, or unites or cements to- notes. gether, or does any other thing to any bank-bill, draft, note, or other evidence of debt, issued by any national banking association, or who causes or procures the same to be done, with intent to render such bank-bill, draft, note, or other evidence of debt unfit to be reissued by said association, shall be liable to a penalty of fifty dollars, recoverable by the association . CHAPTER THEEE. RBGTJIiATION OF THE BANKING BuSINBSB. Section 5190. Place of business of banking associations. 5191. " Lawful money reserve " prescribed. 5193. What may be counted toward the " lawful money re- serve.'' 5193. Certain certificates of deposit may be counted. 5194. Limitation on the power to issue such certificates. 5195. Place for redemption of circulating notes to be designated. 6196. National banks to receive notes of other national banks. 5197. Limitation upon rate of interest which may be taken. 5198. Consequences of taking usurious interest. 5199. Dividends. 5300. Limit to liabilities which may be incurred by any one person, &c. 5301. Associations not to loan or purchase their own stock. 5303. Limit upon indebtedness to be incurred. 5303. Restriction upon use of circulating notes, 5304. Prohibition upon withdrawal of capital. 5305. Enforcing payment of deficiency in capital stock. 6306. Restriction upon use of notes of other banks. 5307. United States notes not to be held as collateral, etc . ; penalty. 5308. Penalty for falsely certifying checks. 5309. Embezzlement ; penalty. 6310. List of shareholders, etc., to be kept. 5311. Reports to Comptroller of the Currency. 5213. Report as to dividends. 5313. Penalty for failure to make reports. 5314. Duties payable to the United States. 5215. Half-yearly return of circulation deposit and capital stock. 6216. Penalty for failure to make return. 5317. Penalty for failure to pay duties. 5318. Refunding excessive duties. 5319. State taxation. 72 570 BANKING LAWS. Place of business. § 5190. The usual business of each national banking asso- ciation shall be transacted at an office or banking-house located in the place specified in its organization certificate. 1, This section does not prevent the transaction away from the banks, of such of its business as is unavoidably done at some other and proper place than its oflBce ; e. ^. , it does not prevent the purchase of coin by one bank at the banking-house of another, or the certification of a check by the cashier of one bank at the oflloe of another. Merchants' Bank V. State Bank, 10 Wall. 651. 3. A bank's certificate of organization designating its place of busi- ness determines its locality. It can have no other. Cooke v. State Na- tional Bank, 53 N. T. 96. 3. " The general business of an oflBcer of a national bank, is to be transacted at its regular place of business. At the same time, we know that in the course of business between banks occasionally the officers do give instructions away from the place of business of the bank." If the bank doing such business sends a statement of the same to the other bank, and it, through its proper officer, recognizes the validity of the same, it is bound by such recognition. Drummond, J., in Burton v. Burley, 13 Chic. Leg. N. 178. "Lawful money re- serve " prescribed § 6191. Every national banking association in either of the following cities : Albany, Baltimore, Boston, Cincinnati, Chicago, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, New York, Philadelphia, Pittsburgh, Saint Louis, San Francisco, and Washington, shall at all times have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of the aggregate amount of its notes in circulation and its deposits ; and every other association shall at all times have on hand in lawful money of the United States, an amount equal to at least fifteen per centum of the aggregate amount of its notes in circulation, and of its deposits. Whenever the lawful money of any association in any of the cities named shall be below the amount of twenty-five per centum of its circular tion and deposits, and whenever the lawful money of any other association shall be below fifteen per centum of its circulation and deposits, such association shall not increase its liabilities by making any new loans or discounts other- wise than by discounting or purchasing bills of exchange payable at sight, nor make any dividend of its profits until REGULATION OP THE BANKING BUSINESS. 571 the required proportion, between the aggregate amount ot its outstanding notes of circulation and deposits and its lawful money of the United States, has been restored. And the Comptroller of the Currencj' may notify any association, whose lawful-money reserve shall be below the amount above required to be kept on hand, to make good such re- serve ; and if such association shall fail for thirty days there- after so to make good its reserve of lawful money, the Comp- troller may, with the concurrence of the Seci'etary of the Treasury, appoint a receiver to wind up the business of the association, as provided in section fifty-two hundred and thirty-four. See act of Jane 20, 1874, section 2, p.637, post. See act of July 12, 1882, section 12, p. 661, post. Where tlie appointment of a receiver of a national bank by the Comp- troller requires the concurrence of the Secretary of the Treasury, the appointment is, in law, equivalent to an appointment by the Treasurer, and the receiver so appointed is, therefore, an officer of the United States and not of the court, and as such is entitled to bring suits at common law in the United States courts, under the provisions of the act of Congress of March 3, 1815. Piatt, Receiver, v. Beach, 2 Benedict, 317. S 5192. Three-fifths of the reserve of fifteen per centum what may .-,,-, T . 11 .be counted required by the preeedmg section to be kept may consist toward the of balances due to an association, available for the redemp- "none?, tion of its circulating notes, from associations approved by the Comptroller of the Currency, organized under the act of June three, eighteen hundred and sixty-four, or under this Title, and doing business in the cities of Albany, Baltimore, Boston, Charleston, Chicago, Cincinnati, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, New York, Phila- delphia, Pittsburgh, Richmond, Saint Louis, San Francisco, and Washington. Clearing-house certificates, representing specie or lawful money specially deposited for the purpose, of any clearing-house association, shall also be deemed to be lawful money in the possession of any association belonging to such clearing-house, holding and owning such certificate, within the preceding section. See act of June 20, 1874, section 3, p. Q37,post. re- serve." 573 BANKING LAWS. MfliSe"™?' § '^l^^- '^^^ Secretary of the Treasury may receive may be United States notes on deposit, without interest, from any counted, national banking associations, in sums not less than ten thou- sand dollars, and issue certificates therefor in such form as he may prescribe, in denominations of not less than five thousand dollars, and payable on demand in United States notes at the place where the deposits were made. The notes so deposited shall not be counted as part of the lawful-money reserve of the association ; but the certificates issued therefor may be counted as part of its lawful-money reserve, and may be accepted in the settlement of clearing- house balances at the places where the deposits therefor were made. Limitation on the 5194. The power conferred on the Secretary of the fssursuch Treasury by the preceding section shall not be exercised so cates^' as to create any expansion or contraction of the currency. And United States notes for which certificates are issued under that section, or other United States notes of like amount, shall be held as special deposits in the Treasury, and used only for the redemption of such certificates. Plan for §5195. Each association organized in any of the cities 'iS"t° " named in section fifty-one hundred and ninety-one shall desf^nated^ Select, Subject to the approval of the Comptroller of the Currency, an association in the city of New York, at which it will redeem its circulating notes at par ; and may keep one-half of its lawful money reserve in cash deposits in the city of New York. But the foregoing provision shall not apply to associations organized and located in the city of San Francisco for the purpose of issuing notes payable in gold. Each association, not organized within the cities named, shall select, subject to the approval of the Comp- troller, an association in either of the cities named, at which it will redeem its circulating notes at par. The Comptroller shall give public notice of the names of the associations selected, at which redemptions are to be made by the re- spective associations, and of any change that may be made EEGTJLATION OF THE BANKING BUSINESS. 573 of the association at which the notes of any association are redeemed. Whenever any association fails either to make the selection or to redeem its notes as aforesaid, the Comp- troller of the Currency may, upon receiving satisfactory evidence thereof, appoint a receiver in the manner provided for in section fifty-two hundred and thirty-four, to wind up its afEairs. But this section shall not relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful money on demand. See act of June 20, 1874, section 3, p. 637, post. § 6196. Every national banking association formed or^^^n'|^°°f^ existing under this Title shall take and receive at par, for notes™of stnj debt or liability to it, any and all notes or bills issued tfilfai °^ byanylawfuUy organized national banking association. But this provision shall not apply to any association organized for the purpose of issuing notes payable in gold. § 5197. Any association may take, receive, reserve, and^'™'^*^™ charge on any loan or discount made, or upon any note, bill ^^^^''^^■^ of exchange, or other evidences of debt, interest at the rate^® taken, allowed by the laws of the State, Territory, or district where the bank is located, and no more, except that where by the laws of any State a different rate is limited for banks of is- sue organized under State laws, the rate so limited shall be allowed for associations organized or existing in any such State, under this Title. When no rate is fixed by the laws of the State, or Territory, or district, the bank may take, receive, reserve, or charge a rate not exceeding seven per centum, and such interest may be taken in advance, reckon- ing the days for which the note, bill, or other evidence of debt has to run. And the purchase, discount, or sale of a honafide bill of exchange, payable at another place than the place of such purchase, discount or sale, at not more than the current rate of exchange for sight-drafts in addition to the interest, shall not be considered as taking or receiving a greater rate of interest. 1. This section is an enabling and not a restraining one, except so far as it fixes a maximum rate in all cases where State banks of issue are 574 BANKING LAWS. not allowed a greater. Tiffany v. National Bank of Missouri, 18 Wall. ■ 411. 2. It allows to national banks the rate allowed to natural persons gen- erally, and the same rate as allowed to State banks even where the latter are allowed a higher rate than natural persons. Id. 3. The sole particular in which national banks are placed on an equality with natural persons, is as to the ra.te of interest they may charge, and not as to the character of the contracts they are authorized to make, so that if in any State a natural person may discount paper without regard to any rate of interest fixed by law, the same privilege is not extended by virtue of this section to national banks. The privi- lege only extends to charging the rate allowed by the State law to natural persons, and the rate thus fixed is applicable to both loans and discounts. National Bank v. Johnson, 104 U". S. 271. In New York State the statutory rate for the use of money (i. e. on loans) was seven (now six) per centum, but there is no rate fixed for the discount of commer- cial paper. Accordingly the National Bank of Gloversville, N. Y. (plaintiff in error, in the case just mentioned), relying on the latter fact, discounted notes amounting to $158,003 (being mostly commercial or business paper) for one Johnson at the rate of twelve per cent, or $6,564.88, being an excess of $2,735.36 beyond what the interest would have amounted to computed at the legal rate. The notes were paid at maturity. Subsequently Johnson sued the bank to recover under this and the following section (5198) the penalties therein prescribed for a violation of their provisions, viz. : Twice the amount of the interest paid in excess of the legal rate (seven per cent) and had judgment as prayed for, amounting to $5,470.72. On appeal to the New York Court of Appeals (74 N. Y. 329), that court in af^rming the judgments of the lower courts held, that the object of this section was to limit the rate to be charged upon discounts as well as upon loans, and this rate is limited to the rate of interest fixed by the State law for interest for the use of money, " and not the rate fixed by such law for the discount of commercial paper. If, however," the court said, "it should be deemed to refer to the rates fixed for discounts, as well as for the use of money, then as there is no rate fixed in this State for such discounts, the pro- vision of the act of Congress (see this section), that where no rate is fixed by the laws of the State, the banks may take a rate not exceeding seven per cent, would apply." The court further said, "that the framers of the act iinderstood that it applied to the discount of business as well as accommodation paper, is apparent from the concluding provision of (this) section 5197." On appeal to the United States Supreme Court the judgment was affijmed. (National Bank v. Johnson, above quoted.) The case in the Court of Appeals was also approved in Atlantic State Bank v. Savery, 82 N. Y. 291. 4. State laws relative to usury do not apply to national banks. Farm- ers and Mechanics' National Bank v. Dearing, 1 Otto, 29. EEGULATION OF THE BANKING BUSINESS. 575 §5198. The taking, receiving, reserving, or charging a°°°^fi"™- rate of interest greater than is allowed by the preceding J|^^'?f„g section, when knowingly done, shall be deemed a forfeiture ""t^rest. of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representa- tives, may recover back, in an action in the nature of an ac- tion of debt, twice the amount of the interest thus paid from the association taking or receiving the same ; provided such action is commenced within two years from the time the usurious transaction occurred. [That suits, actions, and pro- ceedings against any association under this Title 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.] See act of February 18, 1875, correcting Revised Statutes, p. 647, post. 1. This section, prescribing a penalty for usury, must be strictly con- strued. Tiffany v. National Bank, 18 Wall. 409. 2. The penalty imposed by tliis section, where the greater rate of in- terest has been paid, can only be recovered in a suit brought specially and exclusively for that purpose. That the borrower from a national bank has in that, or in previous transactions with the same bank, paid a usurious rate of interest, can avail him nothing as a defense or by way of set-off or counter-claim, when sued by the bank for the amount of the loan. Barnett v. National Bank, 98 U. S. (8 Otto) 555. 3. The National Banking Act does not declare the contract under which usurious interest is paid, to be void. Hence, where a borrower from a national bank at a usurious rate indorses before maturity a note of a third person held by him (borrower) to the bank as collateral secu- rity, for the court to hold the contract of indorsement void (at the in- stance of the third person or borrower) would be adding a penalty to that imposed by the act, which the court has no power to do. Gates v. National Bank, 100 U. S. (10 Otto) 350. As w the validity of such contracts outside the National Banking Act, where no penalty is pre- scribed, see Tiffany v. Boatmen's Savings Institution, 18 Wall. 375. 4. The right of action to recover the penalty prescribed by this sec- tion is a "claim" or "debt," which passes to an assignee in bank- ruptcy, who is the " legal representative " of the bankrupt in whose favor it has accrued, within the meaning of this section. Wright v. First National Bank, 8 Bissell, 343. 576 BANKING LAWS. 6. The discount of a note by a national bank at a usurious rate, works a forfeiture of sucli interest as would otherwise have accrued after the maturity of the note. First National Bank y. StaufEer, 1 Fed. Rep. 187. This section was amended by the act of February 18, 1875, p. 647, post, by adding a sentence providing in what courts suits, etc., may be brought. 6. The National Banking Act is to be liberally construed to effect the ends for which it was passed ; but a forfeiture under its provisions should not be declared, unless the facts upon which it must rest are clearly established, as when a bank discounts bills of exchange payable elsewhere, and in a suit brought thereupon by the bank the defense of usury is set up, it should appear affirmatively that the bank knowingly received or reserved an amount in excess of the statutory rate of interest and the current exchange for sight drafts ; and where, in such case, it is proven that a certain rate of exchange was charged in addition to the legal rate of interest, but not that such exchange was in excess of the current rate at the time of discount. Held, insufficient to authorize a forfeiture. Wheeler v. National Bank, 96 TJ. S. 268. 7. Under this section, suits may be brought "by" aswellas "against" national banks. The word " by " omitted by mistake. Kennedy v. Gib- son, 8 Wall. 505. 8. National banks may, by reason of their character, sue in the Fed- eral courts. First National Bank of Omaha v. Douglass County, p Dillon, 299. This decision seems to be overruled by section 4 of act of Congress of July 12, 1882, p. 656, post. See also Union National Bank V. Miller, 15 Fed. Kep. 703, in which case it was held that the effect of the said act (section 4) "is to place national and other banks, in respect to their right to sue in the Federal courts, on the same footing." That a national bank cannot, therefore, in virtue of any corporate right, sue in a Federal court. But as to right of removal into Federal courts, by national banks, of suits begun by or against them in State courts, see section 3 of act of Congress of March 3, 1875. The decision in Cruikshank v. Fourth National Bank, 21 Blatchf . 322, construing said section, practically gives to these banks the right to remove every such suit into the Federal courts. 9. The provisions of this section, respecting the jurisdiction of State courts in actions (by or) against, national banks, was intended as a restriction on the general provision in regard to jurisdiction in subdi- vision 4 of section 5136 by confining the jurisdiction of such actions to the State, county or municipal court in the county or city in which the association is located. Cadle v. Tracy, 11 Blatchf. 115. See also to same effect, Crocker v. Marine National Bank, 101 Mass. 240 ; and contra, Cooke V. State National Bank, 52 N. Y. 96. The decision (11 Blatchf.) seems to be overruled by act of Congress of July 12, 1883, p. 654, post. 10. A national bank cannot be sued in the United States District Courts outside of the district where it is located. Main v. Second National Bank, 6 Bissell, 26. EEGULATION OF THE BANKING BUSINESS. 577 11. National banks are not authorized to sue in the Federal courts out of tlie districts in which they are located, when the amount in contro- versy does not exceed |500. St. Louis National Bank v. Brinkham, 1 McCrary, 9. 12. This section relates to transitory actions only, and not to such actions as are by law local in their character. It was not the intention of Congress to exempt banks from the ordinary rules of law, affecting the locality of actions. Hence a national bank can be sued in a State court, in a local action, in any other county or city than that where the bank is located. Casey v. Adams, 103 U. S. (13 Otto) 66. In Cruikshank V. Fourth National Bank, above cited, it was held that a suit against a na- tional bank is a case arising under the laws of the United States, within the meaning of section 2 of act of March 3, 1875, in regard to the removal of suits. Wallace, J. , in his decision, stating that he did not believe that the judgments to the contrary, in the cases of Pettilon v. Noble, 7 Bissell, 449, and Wilder v. Union National Bank, 9 id. 178, are a correct exposition of the section. In Union National Bank v. Miller, above cited, the court after stating the effect of section 4 of act of July 13, 1883, to be the placing "of national and other banks, in respect to their right to sue, in the Federal courts on the same footing," says, " but like other banks and citizens, it (national bank) may thap sue (in Federal courts) when, ever the subiect-matter of litigation involves some element of Federal jurisdiction, of which a Federal court may, under the law, take judicial cognizance." But in Osborn v. Bank of United States, 9 Wheat. 738, it was decided "that any suit brought by a corporation created by Con- gress, was one arising under the laws of the United States, although the questions upon which its (court's) decision might depend were to be solved by the general principles of common law or equity, because the law of Congress, which created the corporation, * * * -was of neces- sity an ingredient in the case." See Cruikshank v. Fourth National Bank, above cited. Thus it would seem that every action by or against a national bank, in a State court, may be removed at the option of the bank into the Federal courts. § 5199. The directors of any association may, semi-annu- Dividends, ally, declare a dividend of so much of the net profits of the association as they shall judge expedient ; but each associa- tion shall, before the declaration of a dividend, carry one- tenth part of its net profits of the preceding half year to its surplus fund, until the same shall amount to twenty per centum of its capital stock. 1. When a dividend has once been declared, the directors cannot afterward refuse to pay it, because they have determined to establish a surplus fund with a view to benefit the corporation and its stockholders. The dividend, when declared, becomes a debt, and cannot thenceforth 73 578 BANKING LAWS. be disposed of witliout tlie consent of him who is entitled to it. Beers V. Bridgeport Spring Company, 3 N. Y. Week. Dig. In connection with this last statement, see also Seeley v. New Tork National Exchange Bank, 4 Abb. N. C. 66. 2. A national bank has the right to hold a cash dividend as pledged for the indebtment of the shareholder to the bank. It may also attach the shares of a stockholder therein for his debt due the bank. Hagar V. Union National Bank, 63 Me. 509. uiwHtiea §5200. The total liabilities to any association, of any per- whioh may gQ^, or of any company, corporation, or firm, for money bor- person etc ^^wed, including, in the liabilities of a company or firm, the liabilities of the several members thereof, shall at no time ex- ceed one-tenth part of the amount of the capital stock of such association actually paid in . But the discount of bills of exchange drawn in good faith against actually existing val- ues, and the discount of commercial or business paper act- ually owned by the person negotiating the same, shall not be considered as money borrowed . 1. A loan made by a national bank in excess of the restriction impoeed by this section, is not void on that account. ' ' When a statute prohibits an act, or annexes (as in this case) a penalty for its commission, it does not follow that the unlawfulness of the act was meant to avoid a con- tract made in contravention of it." Hunt, J. Even though the loan were voidable, it seems the borrower, after obtaining and holding to his own use the money, cannot be allowed to interpose the plea that the bank had no right to loan the money. Gold Mining Company v. Na tional Bank, 96 U. S. 640. 3. Where a national bank loans money in excess of the restriction contained in this section and takes collateral security therefor, the con- tract being executed, the bank acquires an absolute or qualified' title to the securities, and the borrower cannot recover the latter without re- turning the loan, even though the contract were illegal and void. Shoe- maker V. National Mechanics' Bank, 31 Md. 396. 3. In a suit by a national bank against an indorsee on notes discounted for the drawer's accommodation, where the defense set up was, that, at the time of the discount, the drawer was indebted to the bank for money lent in excess of one-tenth of its capital, and that the loan was, therefore, void under this section. In holding to the contrary, the court said, "that the fact of the excess of indebtedness, and the bank's knowl- edge pf the fact, was only collateral to the contract of discount and not presumed to be within the knowledge of the borrower, and the note was not intended by both parties to be the instrument of committing a f raifd upon the Ifiw. " The court further said, the section " was intended REGULATION OF THE BANKING BUSINESS. 579 as a general rule for conducting the business of the hank." O'Hare v. Second National Bank, 77 Pa. 103. § 5201 . No association shall make any loan or discount ^^n"^^,; on the security of the shares of its own capital stock, nor p° 5.° h^°e be the purchaser or holder of any such shares, unless such stock"''" security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith ; and stock so purchased or acquired shall, within six mouths from the time of its purchase, be sold or disposed of at public or pri- vate sale ; or, in default thereof, a receiver may be appointed to close up the business of the association, according to sec- tion fifty-two hundred and thirty-four. 1. A deposit by one bank with another is a loan; and where, at the time of making the deposit, the depositor takes a pledge of its own shares as security for the deposit then made, and for future deposits, the transaction, as to national banks, is illegal, as coming within the pro- hibition of this section. Banlc v. Lanier (citing Bridgeport Bank v. Schuyler, 34 N. T. 30), 11 Wall. 869. 2. Loans by national banks to their stockholders, do not give a lien to the former on the stock of the latter. Id. 3. A national bank issued two certificates of stock to C. , wherein it was declared that he was entitled to 150 shares of the institution, and that these shares were transferable on the books of the bank, in person or by attorney, only on the surrender of the certificate. L. and H. pur- chased 138 of these shares of C. for value, and received the certificate regularly assigned. The bank refused to transfer the stock on the books, on the ground that the shares had been pledged to it by C. as security for deposits made by it with him, and had already sold and transferred to other parties under a power of attorney from C. before the bank had notice of L. and H.'s purchase. L. and H. sued to obtain damages. Held, that the action would lie, and that the pledge of the stock by C. to the bank being illegal, the previous transfer was no defense. Id. 4. National banks cannot acquire a valid lien upon the shares of their stockholders by virtue of the articles of association or by-laws, even when constructed and adopted for the express purpose. Congress in- tended by leaving out of the act of 1864, section 36 of the act of 1863 (restricting a shareholder from transferring his stock so long as he owed the bank), to relieve shareholders from the restriction imposed by that section. The policy on the subject was changed, and banks were there- after required to deal with their shareholders as they dealt with other people. BuUard v. Bank, 18 Wall. 589. This decision overrules Duu- kerson's Case, 4 Biss. 227, and Knight v. Bank of Providence, 4 Am. Law T. 340. 5. "Inasmuch as this act in express tenqs prohibits a national bank 580 BANKING LAWS. from thus becoming a ' purchaser of the shares of its own capital stock' (H. S. , S 5301), if L. had made a contract to sell his shares to the hank, or to its president for the hank, it is plain that such a contract would have been extra mres and illegal, both as respects creditors and other shareholders, and the transaction could have been impeached by the bank in its corporate capacity, or by its other shareholders, even if the banlt were still solvent and going on, or by the receiver as the officer appointed to wind up its affairs, lie London, etc.. Exchange Bank, Law Eep., 5 Ch. App. 149; Currier v. Lebanon Slate Co., 56 N. H. 362. And although L. did not contract to sell his shares directly to the bank, or to the president for the bank, still, if, before the transaction was completed as to him, he had notice, actual or constructive, that the pur- chase was in fact a purchase for the bank, and paid for by the money of the bank, the transaction cannot stand, and the receiver may compel him to pay back the money thus received, and have him declared stiU to be a shareholder." Dillon, J. Johnson v. Laflin, 17 Alb. Law J. 146 ; affirmed 103 U. S. 803. 6. This section implies a " restriction on the shareholder from selling his own shares to the bank itself, or to a known trustee of the bank. And a shareholder cannot transfer his shares colorably, and thereby cease to be a shareholder as respects creditors and other shareholders who would be injured by such transfer. There may also be an implied prohibition against the right to transfer shares to an infant or person not capable in law of assuming the liabilities, as well as enjoying the rights of the transfer, or the shares in respect thereto, but we have no occasion to determine this point. Rev. Stat., sec. 5139; compare id., sec. 5153 ; Weston's Case, Law Rep , 5 Ch. App. 614, 621. And on general principles, there may also be an implied prohibition against the transfer of shares to a pauper, or man of straw, or insolvent person, for the fraudulent purpose of escaping liability, but this is a matter that need not be now considered." Id. 7. The provisions of this section do not forbid the attachment by a national bank of any of its shares," unless it shall be necessary to pre- vent loss," etc. The attachment or sale on execution of shares, does not imply a purchasing or holding on the part of the creditor. Hagar v. Union Natl. Bank, 63 Me. 509. Limit on indebted- ness to be incurred. § 5202. No association 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 account of demands of the nature following : First. Notes of circulation. Second. Moneys deposited with or collected by the asso- ciation . EEGULATION OF THE BANKINQ BUSINESS. 581 Third. Bills of exchange or drafts drawn against money actually on deposit to the credit of the association, or due thereto. Fourth. Liabilities to the stockholders of the association for dividends and reserve profits. § 5203. No association shall, either directly or indirectly, J^^^'i^g"^ pledge or hypothecate any of its notes of circulation, for the ^Qj'g'^"'°s purpose of procuring money to be paid in on its capital stock, or to be used in its banking operations, or otherwise ; nor shall any association use its circulating notes, or any part thereof, in any manner or form, to create or increase its capital stock; § 5204. No association, or any member thereof, shall, prohibition during the time it shall continue its banking operations, dFawaTof withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. If losses have at any time been sustained by any such association, equal to or exceeding its undivided profits then on hand, no dividend shall be made; and no dividendshallever be made by any association, while it continues its banking operar tions, to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due to any associations on which interest is past due and unpaid for a period of six months, unless the same are well secured, and in process of collection, shall be con- sidered bad debts within the meaning of this section. But nothing in this section shall prevent the reduction of the capital stock of the association under section fifty-one hun- dred and forty-three. See, in tliis connection, Johnson, Receiver, v. Laflin, 17 Alb. L. J. 146 • aff'd 103 U. S. 803. § 5205. Every association which shall have failpd to pay Enforcing up its capital stock, as required by law, and every associa-Sf^"fl?* tion whose capital stock shall have become impaired byca^toi"* losses or otherwise, shall, within three months after receiving notice thereof from the Comptroller of the Currency, pay 582 BANKING LAWS. the deficiency in the capital stock, by assessment upon the shareholders ^0 rata for the amount of capital stock held by each ; and the Treasurer of the United States shall with- hold the interest upon all bonds held by him in trust for any such association, upon notification from the Comptroller of the Currency, until otherwise notified by him. If any such association shall fail to pay up its capital stock, and shall refuse to go into liquidation, as provided by law, for three months after receiving notice from the Comptroller, a receiver may be appointed to close up the business of the association, according to the provisions of section fifty-two hundred and thirty-four. See act June 30, 1876, section 4, p. 651, pogt. When sued by the receiver upon an assessment made by the Comp- troller, the stockholder cannot deny the validity of the creation of the bank, nor question the decision of the Comptroller as to a deficiency of assets, nor show that the proceedings prior to the making of the assess- ment were irregular. Casey v. Galli, 94 U. S. 673 ; Olean National Bank V. Carll, 7 Hun, 387. Eestriotiou 8 5206. No association shall at any time pay out on loans upon use . , of notes of or discounts, or m purchasing drafts or bills of exchange, banks. or in payment of deposits, or in any other mode pay or put in circulation, the notes of any bank or banking association which are not, at any such time, receivable, at par, on de- posit, and in payment of debts by the association so paying out or circulating such notes ; nor shall any association know- ingly pay out or put in circulation any notes issued by any bank or banking association which at the time of such pay- ing out or putting in circulation is not redeeming its circula- tion notes in lawful money of the United States, United § 5207. No association shall hereafter offer or receive notes not United States notes or national bank notes as security or as as couat- collateral security for any loan of money, or for a considera- penaity. ' tion agree to withhold the same from use, or offer or receive the custody or promise of custody of such notes as security, or as collateral security or consideration for any loan of money. Any aissociation offending against the provisions of this section shall be deemed guilty of a misdemeanor, and shall bo KEGTJLATIOK OF THE BANKING BUSINESS. 583 fined not more than one thousand dollars and a further sum equal to one-third of the money so loaned. The offi- cer or officers of any association who shall make any such loaa shall be liable for a further sum equal to one-quarter of the money loaned ; and any fine or penalty incurred by a violation of this section shall be recoverable for the benefit of the party bringing such suit. § 5208. It shall be imlawf ul for any officer, clerk, or agent Penalty for ,. . , , -1 . . . .,.1,1 *»'sely oer- of any national banking association to certify any check drawn t'fy'^ upon the association unless the person or company drawing the check has on deposit with the association, at the time such check is certified, an amount of money equal to the amount specified in such check. Any check so certified by duly au- thorized officers shall be a good and valid obligation against the association ; but the act of any officer, clerk, or agent of any association, in violation of this section, shall subject such bank to the liabilities and proceedings on the part of the Comptroller as provided for in section fifty-two hundred and thirty-four. See act of July 13, 1883, section 13, p. 661, post. This section does not invalidate a promise on the part of a national bank to pay a clieck, when the drawer shall have funds for the purpose in its possession ; e. g., whenever a draft left with it for collection hy the drawer, and sufficient in amount for the purpose, shall have been paid. National Bank v. National Bank, 7 W. Va. 549. § 5209. Every president, director, cashier, teller, clerk, Embezzie- or agent of any association, who embezzles, abstracts, or will- Sty. ' ^™ fully misapplies any of the moneys, funds, or credits of the association ; or who, without authority from the directors, issues or puts in circulation any of the notes of the associa- tion ; or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of ex- change, makes any acceptance, assigns any note, bond, draft, biU of exchange, mortgage, judgment, or decree; or who makes any false entry in any book, report, or statement of the association, with intent, in either case, to injure or de- fraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer 584 BANKING LAWS. of the association, or any agent appointed to examine the affairs of any such association ; and every person who with like intent aids or abets any officer, clerk, or agent in any violation of this section, shall be deemed guUty of a misde- meanor, and shall be imprisoned not less than five years nor more than ten. 1. Where a president of a bank, charged as a trustee with the adminis- tration of the funds of the bank in his hands, converts them to his own use, he embezzles and abstracts them within this section, unless he shows authority for so doing. In the Matter of Van Campen, 3 Ben. 423. 2. Where false entries are made by a clerk in accordance with direc- tion of the president of a bank, this is sufficient to make the president a principal in the offense, and to constitute a making of the entries by him. Id. 3. It was intended in this section, by the use of the word ' ' misapply, " to cover cases of unlawful dealing with the funds of a bank by its officers, although without corrupt motive — the word "embezzle" and perhaps the word " abstract " referring to acts done for the actor's benefit as against the bank. Nor do the words ' ' with intent to injure or de- fraud," coupled with the former, defeat this intention, for while the word ' ' defraud " may be limited to a malicious dealing with property for the personal advantage of the doer : the word "injure" is not of such limited application, and was doubtless inserted to cover cases of misap- plication, causing injury to the association, without benefit to the offender. Hence the guilty intent, required by the section, would be shown by proof of general guilty intent involved in the act knowingly committed, and this though it be admitted that no personal pecuniary benefit was anticipated by the actor. Proof of the latter fact may, therefore, be properly rejected. United States v. Taintor, 11 Blatchf. 377, concurred in by Woodruff, Blatchf ord and Benedict, JJ., but see following note. 4. The willful misapplication, made an offense by this section, does not mean acts of official maladministration referred to in section 5339. " It must be a willful misapplication for the use or benefit of the party charged, or of some person or company other than the association, with intent to injure and defraud the association, or some other body corpo- rate or some other natural person. " Woods, J. , 655. Hence the purchase by a bank of its own shares, when not necessary to prevent a loss on a debt due it, is not a criminal misapplication of its funds. XTiuted States v. Britton, 107 U. S. 668. 5. The purchase of stock in violation of section 5201, IT. S. R. S., though made with intent to defraud, and by one or more of the officers of the bank named in this section, is not a crime under this section. Id. 660. 6. It is not an offense under this section where an insolvent officer of a national bank procures the directors to discount his note, with an REGULATION OP THE BANKING BUSINESS. 585 insolvent indorser as security, tliey knowing tlie facts, and tie using the proceeds of tlie discount for Lis own purposes. United States v. Britton, 108 U. S. 193. 7. Nor would it constitute a criminal misapplication of tlie funds of a national bank for the president, even though specially charged by the directors with the duty of looking after the deposits of debtors of the bank, and of applying their deposits to the payment of their debts, to allow a depositor, while indebted to the association, to withdraw and assign to another bank his deposit in the first. Id. 8. The directors of a national bank, while they may be subject to a personal liability for damages, are not rendered liable to a criminal prosecution, where they declare a dividend by the association when there are no net profits to pay it. Id. 199. 9. It is competent for a State to protect, by penal enactments, its citi- zens in their business dealings, whatever they may be, with a national bank, located within its limits. Such an enactment is not predicated on, and has no relation to any la .v of Congress or offense created thereby, of which State courts have no jurisdiction. State v. Fuller, 34 Conn. 280. 10. Hence a penal statute of a State relating to embezzlement by the officers of a bank, applies to officers of a national bank who purloin a special deposit made by one of its customers, but it is inoperative in respect to the embezzlement of the property of the bank by its agents, for which the act of Congress provides a remedy. Id. 11. The fact that an officer of a national bank is subject to punishment under this section for a breach of trust, does not relieve him from lia- bility to punishment for the same act as a larceny at common law, or under State statutes. There is no identity in the character of the two ofEenses. Exclusive jurisdiction of the one, does not exclude jurisdic- tion of the other. Commonwealth v. Barry, 116 Mass. 6. § 5210. The president and cashier of every national ijjs* °^ banking association shall cause to be kept at all times a full ll\lV- . and correct list of the names and residences of all the share- holders in the association, 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 association, and the officers authorized to assess taxes under State authority, during business hours of each day in which business may be legally transacted. A copy of such list, on the first Monday of July of each year, verified by the oath of such president or cashier, shall be transmitted to the Comptroller of the Currency. See in this connection, Johnson, Receiver, v. Laflin, 17 Alb. L. J. 146. 74 586 BANKING LAWS. comM?o'i° § 5211. Every association shall make to the Comptroller Currency 0^ ^^^ Currency not less than five reports during each year, according to the form which may be prescribed by him, verified by the oath or atfirmation of the president or cashier of such association, and attested by the signature of at least three of the directors. Each such report shall ex- hibit, in detail and under appropriate heads, the resources and liabilities of the associations at the close of business on any past day by him specified ; and shall be transmitted to the Comptroller vpithin five days after the receipt of a re- quest or requisition therefor from him, and in the same form in which it is made to the Comptroller shall be published in a newspaper published in the place where such association is established, or if there is no newspaper in the place, then in the one published nearest thereto in the same county, at the expense of the association ; and such proof of publication shall be furnished as may be required by the Comptroller. The Comptroller shall also have power to call for special reports from any particular association whenever in his judgment the same are necessary in order to a full and complete knowledge of its condition. See act of February 26, 1881, p. 654, post. Bep9rtas §5212. In addition to the reports reqiiired by the pre- deuds. ceding section, each association shall report to the Comp- troller of .the Currency, within ten days after declaring any dividend, the amount of such dividend, and the amount of net earnings in excess of such dividend. Such report shall be attested by the oath of the president or cashier of the association. Penaityfor § 5213. Every association which fails to make and trans- failure to . .it., make re- mit any report required under either oi the two preceding sections shall be subject to a penalty of pne hundred dol- lars for each day after the periods, respectively, therein mentioned, that it delays to make and transmit its report. Whenever any association delays or refuses to pay the pen- alty herein imposed, after it has been assessed by the GomptroUer of the Currency, the amount thereof may be EEGULATION OF THE BANKING BUSINESS. 587 retained by the Treasurer of the United States, upon the order of the Comptroller of the Currency, out of the inter- est, as it may become due to the association, on the bonds deposited with him to secure circulation. All sums of money collected for penalties under this section shall be paid into the Treasury of the United States. §5214. In lieu of all existing taxes, every association Duties pay. shall pay to the Treasurer of the United States, in theUn"ed months of January and July, a duty of one-half of one per centum each half year upon the average amount of its notes in circulation, and a duty of one-quarter of one per centum each half year upon the average amount of its de- posits, and a duty of one-quarter of one per centum each half year on the average amount of its capital stock, beyond the amount invested in United States bonds. § 5215. In order to enable the Treasurer to assess the Half yearly ,.. Til T • 1 . return of duties imposed by the preceding section, each association circulation, shall, within ten days, from the first days of January and and capital July of each year, make a return, under the oath of its president or cashier, to the Treasurer of the United States, in such form as the Treasurer may prescribe, of the average amount of its notes in circulation, and of the average amount of its deposits, and of the average amount of its capital stock, beyond the amount invested in United States bonds, for the six months next preceding the most recent first day of January or July. Every association which fails so to make such return shall be liable to a penalty of two hundred dollars, to be collected either out of the interest as it may become due such association on the bonds deposited with the Treasurer, or, at his option, in the manner in which penalties are to be collected of other corporations under the laws of the United States. § 6216. Whenever any association fails to make the half Penalty for yearly return required by the preceding section, the duties ""ake re- to be paid by such association shall be assessed upon the 588 BANKING LAWS. amount of notes delivered to such association by the Comp- troller of the Currency, and upon the highest amount of its deposits and capital stock, to be ascertained in such manner as the Treasurer may deem best. Penalty for 8 5217. "Whenever an association fails to pay the duties failure to "^ -in pay duties, imposed by the three preceding sections, the sums due may be collected in the manner provided for the collection of United States taxes from other corporations ; or the Treas- urer may reserve the amount out of the interest as it may become due, on the bonds deposited with him by such de- faulting association. fiefanding s 5218. In all cases where an association has paid or may excessive " r j duties. pg^y jj^ excess of what may be or has been found due from it, on accouut of the duty required to be paid to the Treas- urer of the United States, the association may state an ac- count therefor, which, on being certified by the Treasurer of the United States, and found correct by the First Comp- troller of the Treasury, shall be refunded in the ordinary manner by warrant on the Treasury. state taxa- § 5219. IS'othing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the State within which the association is located; but the legislature of each State may determine and direct the manner and place of taxing all the shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citi- zens of such State, and that the shares of any national bank- ing association owned by non-residents of any State shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either State, county or municipal taxes, to the same extent, according to its value, as other real property is taxed. EEGULATION OF THE BANKING BUSINESS. 589 1. Under tMs section and -witliin tlae limitations therein prescribed, the whole interest of a shareholder in the shares held by him in a na- tional bank are left subject to State taxation, which the State has a sov- ereign right and concurrent power with Congress to impose (but from the exercise of which Congress, by reason of its paramount authority, may exclude the State), although the capital of such bank be wholly in- vested in securities of the^ United States. Van Allen v. Assessors, 3 Wall. 573. 2. The intention of Congress in the first of said limitations was that the rate of taxation of the shares should be the same, or not greater, than upon the moneyed capital of the individual citizen which is sub- ject or liable to taxation. That is, no greater proportion or percentage of tax in the valuation of the shares should be levied, than upon other moneyed taxable capital in the hands of the citizens. Id. 3. The test by which to prevent discrimination against the shares, is confined to the rate of assessments upon moneyed capital in the hands of individual citizens, so that the fact of insurance companies created under the laws of the State, and doing business in the city of New York, being respectively assessed upon the balance of their capital and surplus profits, liable to taxation, after deducting therefrom such part as is invested in United States securities, has no bearing on the question of the taxation of shares. These institutions are not within the words or the contemplation of Congress ; they are taxed on their capital, and not on the shareholder, at the same rate as other personal property in the State. People v. The Commissioners, 4 Wall. 244. 4. Shares of stock in national banks are a species of personal prop- erty which is, in one sense, intangible and incorporeal, but the law which creates them may separate them from the person of their owner for the purposes of taxation, and give them a situs of their own. This has been done by this section which is a law of the property, and by virtue of which every person, resident or non-resident, on becoming owner, voluntarily subjects himself to the jurisdiction of the State in which the bank is established for all the purposes of taxation on ac- count of such ownership, and the State may legislate accordingly. Tap- pan V. Merchants' National Bank, 19jWall. 490. 5. The effect of this section is not limited to a discrimination in the percentage levied as a tax without regard to equality in the valuation on which that tax is levied. It is intended to prevent any rule of valu- ation which will operate unjustly or unequally against these shares, as well as to secure uniformity in percentage. People v. Weaver, 100 U. S. 539. In this case it was held that a statute of the State of New York, which refused to plaintiff the same deduction for debts due by him from the valuation of his shares of national bank stock, that it allows to those who have moneyed capital otherwise invested, is in conflict with this section. 590 BANKING LAWS. 6. Where, notwithstanding a statute required all moneyed capital to be appraised for the purpose of taxation at its true cash value, the assessors systematically appraise all other moneyed capital at much less than its true value while national bank shares are assessed at their full value, — Held, that the tax on shares thus assessed was invalid, and that upon payment into court of the amount due upon a valuation determined according to the rule by which other moneyed capital is valued, a court of equity will restrain the collection of the balance. Pelton v.. Com- mercial National Bank, 101 U. S. 143. See, also, on this subject, Cum- mings V. Merchants' National Bank, id 153 ; Pollard v, Zuber, 65 Ala. 635 ; Miller v. Heilbrun, 58 Cal. 133. 7. But where by a State statute the citizen may have the amount of his indebtedness deducted from the total value of his personal prop- erty, thus ascertaining the amount of his personal estate subject to taxation, and a subsequent statute relating to taxation of bank shares makes no provision for such deduction, the latter statute is nevertheless the valid rule for assessing such shares in all instances where there are no debts to be deducted. That the latter statute does not authorize a deduction for debts does not invalidate it, except as to that distinct and separable principle. Under such statutes, assessments of hank shares, where there are no debts to deduct, are valid. Even in cases of assess ■ ments where debts exist, which should be deducted, but are not, the assessments are voidable only, not void. Supervisors of Albany v. Stanley, 105 U. S. (15 Otto) 305. 8. National bank shares may be assessed for the purpose of taxation at an amount above the par value, when the latter is exceeded by the market value, if such valuation is made by the State law, on other moneyed capital in the assessment of taxes. Hepburn v. School Di- rectors, 23 Wall. 480. - 9. The right of a national bank to conduct its business, is in no way dependent on a license to be obtained from the State where located, or any of its municipalities, and a fee therefor cannot be exacted. Carthage V. Carthage National Bank, 71 Mo. 508 ; National Bank v. Titusville, 13 Fed. Rep. 439. 10. By a statute of Pennsylvania, it was enacted that " all mortgages, judgments, recognizances and money owing upon articles of agreement for the sale of real estate shall be exempt from taxation, except for State purposes." It was objected that this exemption by relieving cer- tain specified property from taxation brought the case within the first restriction mentioned in this section, and thus violated the tax sought to be enforced. The court held otherwise in Hepburn v. School Di- rectors, 23 Wall. 480. See Adams v. Nashville, 95 TJ. S. (5 Otto) 19. 11. Where national bank shares are required in any State to be taxed at their par value, the surplus fund, if any, of such bank, in excess of the amount they are required by law to keep on hand, is taxable (First National Bank v. Peterborough, 56 N. H. 38) ; and, when the State laws so provide, may be taxed against the bank as to uon residents ; but where such law provides that it be taxed in connection with the REGULATION OF THE BANKING BUSINESS. 591 capital stock in tlie hands of the stockholders, it is not taxable sepa- rately. State, etc., v. City of Newark, 10 Vroom, 380 ; reversed, 11 id. 559, on ground that bank cannot be taxed for shares of resident stock- holders (note amended in accordance therewith), 13. The surplus fund which a national bank is required by this sec- tion to reserve from its net profits, is not excluded in the valuation of its shares for taxation. Strafford NationalBank v. Dover, 58N. H. 316 ; First National Bank v. Peterborough, 56 id. 38 ; Thomp. N. B. Cases, 658 ; National Bank v. Commonwealth, 9 Wall. 353 : Thomp. N. B. Cases, 34 ; People v. Commissioners, 67 N. T. ; aame qase, 94 0. S. 415. 13. The personal property of an insolvent national bank, in the hands of a, receiver appointed under section 5234, is exempt from taxation under State laws. Such property in legal contemplation still belongs to the bank, though in the hands of a receiver, to be administered under the law. The bank does not cease to exist on the appointment of a receiver. Its corporate capacity continues until its affairs are finally wound up and its assets distributed. If the shares have any value, they are taxable in the hands of the holders or owners under this sec- tion ; but the property held by the receiver is exempt to the same extent it was before his appointment. Waite, C. J. Rosenblatt v. Johnston, 104 U. S. (14 Otto) 463. CHAPTER FOUR Dissolution and Rbceiveeship. Section 5320. Voluntary dissolution of associations. 5321. Notice of intent to dissolve. 5222. Deposit of lawful money to redeem outstanding circula- tion. 5323. Exemption as to an association consolidating with an- other. 5324. Reassignment of bonds ; redemption of notes, etc. 5335. Destruction of redeemed notes. 5236. Mode of protesting notes. 5337. Examination by special agent. 5228. Continuing business after default. 5229. Notice to holders ; redemption at Treasury ; cancellation of bonds. 5230. Sale of bonds at auction. 5231. Sale of bonds at private sale. 5383. Disposal of protested notes. 5233. Cancellation of national bank notes 5384. Appointment of receivers. 5285. Notice to present claims. 5236. Dividends. 5237. Injunction upon receivership. 5338. Fees and expenses. 5339. Penalty for violation of this title. 5340. Appointment of occasional examiners. 5341. Limit of visitorial powers. 5343. Transfers, when void. 5243. Use of the title " national." voiuntaty § 5220. Any association may go into liquidation and of associa^be closed by the vote of its shareholders owning two- thirds of its stock. It was not intended by this section that, upon simply resolving to go into liquidation, and providing for the redemption of its circulating notes, the banking association should be dissolved If by such acts it were dissolved, all actions by or against it would abate and parties might DISSOLUTION AND RECEIVEESHIP. 593 be left utterly without remedy for the enforcement of the plainest right, or recompense for the most grievous wrong. Ordway v. Central Natl. Bank, 47 Md. 317. § 5221. Whenever a vote is taken to go into liquidation ^1^^°^ it shall be the duty of the board of directors to cause notice dissolve, of this fact to be certiiied, under the seal of the association, by its president or cashier, to the Comptroller of the Cur- rency, and publication thereof to be made for a period of two montlis in a newspaper published in the city of New York, and also in a newspaper published in the city or town in which the association is located, or if no newspaper is there published, then in the newspaper published nearest thereto, that the association is closing up its affairs, and notifying the holders of its notes and other creditors to present the notes and other claims against the association for payment. § 5222. "Within six months from the date of the vote tOj^^°f« "' go into liquidation, the association shall deposit with the ^delm*" Treasurer of the United States lawful money of the United ""gc'S^oSTa- States sufficient to redeem all its outstanding circulation. *'°''' The Treasurer shall execute duplicate receipts for money thus deposited, and deliver one to the association and the other to the Comptroller of the Currency, stating the amount received by him, and the purpose for which it has been re- ceived ; and the money shall be paid into the Treasury of the United States, and placed to the credit of such associa- tion upon redemption account. § 5223. An association which is in good faith winding up Exemption Its business tor the purpose of eonsoHdating with another ^"^^^o'/i^^j. association shall not be required to deposit lawful money foi-jJIfothe? its outstanding circulation ; but its assets and liabilities shall be reported by the association with which it is in process of consolidation. §5224. Whenever a sufficient deposit of lawful moueyEe-assign- to redeem the outstanding circulation of an association pro- ™on •' against na. tablished under any law providing for national banking ^°°^ associations within the district for which the court is held. ***** ^{. See section 4, act of July 13, 1883, p. 656, post. 1. " Considering this section in connection with the succeeding section, the implication is clear that receivers also may sue in the courts of the United States, without reference to their citizjenship." Swayue, J. Kennedy v. Gibson, 8 Wall. 498. 3. Under this section, the receiver may file a bill against the share- holders of the bank for the purpose of enforcing their stockj liability. Id. See, also, Cadle v. Tracy, 11 Blatchf. 101. 3. The District Court of the United States is "a court of record of competent jurisdiction " to authoTize the receiver of a national bank to compromise a doubtful claim. Matter of Piatt, Receiver P. and C. National Bank, 1 Ben. 534. It is also provided that the Circuit Court of the United States shall have original jurisdiction of all suits brought by or against national banks, by the following two sub- divisions of section 629 of chapter 7, entitled "Circuit Court Jurisdiction," of the same title : § 629. The Circuit Courts shall have original jurisdiction jurisdic- as follows : *'™- 628 BANKING LAWS. against na- Tenth. Of all suits by or against any banking associatior baSks. established in the district for which the court is held, undei any law providing for national banking associations. eujo1n°he Eleventh. Of all suits brought by [or against] any banking ler'oF'the' association, established in the district for which the court h curreDcy. j^^j^^ ^^^^^ ^^^ provisions of title " The National Banks,'' to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by said title. ****** 1. A bill was filed by a stockholder of a national bank, to enjoin tie ofBcers of the bank from misapplying its funds to the prejudice of the interests of the stockholders therein, by acts which are not warranted by the charter or am.ount to a breach of trust. Held, the United States Circuit Court had jurisdiction. Shoemaker v. National Mechan- ics' Bank, 3 Abb. (U. S.) 416. 3. A national bank has the legal right to bring suits in the courts oi the United States outside of the district in which it is located. Manu- facturers' National Bank v. Baack, 8 Blatchf. 137. 3. It was not until the act of March 3, 1875, that Congress authorized the removal of a case from the State to the Federal court, because it was a case arising under the Constitution and laws of the United States. 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 United States court. To authorize a removal on the ground that the contro- versy 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. Accordingly, where in a petition for removal to the Federal court, the defendant states that certain laws of a State in- fringe upon or violate the tenth section of article 3 of the Constitu- tion of the United Stat;es, " 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. " If the record presents a Federal question, that is, a right of action or defense arising under the Constitution and laws of the United States, then the citizenship of the parties has nothing to do vidth the right to remove." Blodgett, J. Wilder v. Union National Bank, 9 Biss. 178 ; but see Cruikshank v. Fourth National Bank, 21 Blatchf. 322. 4. The Circuit Court has no jurisdiction of a suit by a private person, to restrain, interfere with, or control the Treasurer of the United States, or the Comptroller of the Currency, in the discharge of theii duties in respect to bonds deposited with the Treasurer to secure the redemption of circulating notes pf a national bank, Van Antwerp v. Hubbard, 7 Blatchf. 436, MISCELLANEOUS PEOVISIONS. 629 5. A national bank sued in a State court, cannot enforce the removal of the cause to the Federal court on the ground that the latter has ex- clusive jurisdiction. Pettilon v. Noble, 7 Biss. 449. 6. The Federal Circuit Court has unconditional jurisdiction of aU suits to which a national bank is a party, irrespective of amount in con- troversy or the citizenship of the parties. Mitchell, etc., v. Butler, 8 ' Rep. 383. 7. "It may be regarded as settled that national banks may sue and be sued in the Federal courts, by virtue of the provisions of section 639. " McCrary, C. J. (citing 3 Dillon, 398 ; 8 Wall. 498, and 14 id. 383-395). Foss V. First Nat. Bank, 3 Fed. Rep. 185. 8. "It seems to be well settled that the joining in suit of merely nom- inal or formal parties can have no effect, either in conferring or excluding jurisdiction." Id. (citing 5 Cranch, 303 ; 8 Wheat. 431, and 18 How.467). 9. Trustees, executors and the like, however, are not formal parties within the meaning of the rule, where in fact interested in the litiga- tion. 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. Id. It is provided that suits brought in any court, other than a Circuit or District Court, against certain corporations other than a banking corporation, may be removed for trial in the circuit court for the district where the suit is pending, by the following section of chapter 7 of title XIII, entitled « The Judiciary." § 640. Any suit commenced in any court other than a Removal Circuit or District Court of the United States, against any against cor. , . . , , poratlons corporation other than a banking corporation, organized or&anized under a law of the United States, or against any member "f^j^l^j thereof, as such member, for any alleged liability of such ^*'^*^- corporation, or of such member as a member thereof, may be removed for trial in the Circuit Court for the district where such suit is pending, upon the petition of such de- fendant, verified by oath, stating that such defendant has a defense arising under or by virtue of the Constitution or of any treaty or law of the United States. Such removal, in all other respects, shall be governed by the provisions of the preceding section. 1. Section 639, F. S. R. S., does not give the United States court 630 Banking laws. exclusive jurisdiction of national banking associations. Sucli jurisdic- tion is only concurrent with that of the State courts, and if suit is brought against such an association in a State court, it has no right as such to remove the cause to a Federal court. Pettilon v. Noble, 7 Biss. 449, to the same effect, where a receiver of such an associatiou was sued, and sought to remove the case to a United States circuit court. Bird's Executors v. Cockran, Receiver, 3 Woods, 33. 3. The defendant bank urged its right to remove the ease from the State to the Federal court, on the ground that it was a national bank. " It is now, I think, the well settled law by decisions of justices of the Supreme Court and circuit judges at their circuits, although there is no decision to that effect to my knowledge by the Supreme Court, that this statute remains in force, except so far as it is repugnant to and thereby constructively repealed by the act of March 3, 1875 ; and if so, corpora- tions, like this defendant, are expressly excepted from the right of removal." Blodsett, J. Wilder v. Union National Bank, 13 Chicago Leg. News, 75 ; S. C, & Biss. 178. 8. It may be stated generally that Federal courts have jurisdiction over suits, by or against national banks, commenced in the Circuit Court in the district in Which the bank is located, irrespective of citizenship or subject-matter. Foss v. National Bank, 1 McCrary, 474 ; Bank v. Douglas County, 3 Dillon, 398; Commercial Bank v. Simmons, 6 Chicago Leg. News, 344 ; Kennedy v. Gibson, 8 Wall. 498 ; County of Wilson v. National Bank, 13 Otto, 770. But the banlc cannot bring suit out of the district when the sum in controversy does not exceed $500. St. Louis National Bank v. Brinkham, 1 McCrary, 9. Nor be sued in a Federal court outside of the district. Main v. Second National Bank, 6 Biss. 36. Reporter. Id. The courts of the United States are vested with exclusive jurisdiction in connection with all suits for penalties or for- feitures incurred under the laws of the United States, by the following subdivision of section 711 of chapter 12, en- titled "Provisions Common to More than One Court or Judge," of the same title : Exclusive 8 711. The iurisdiction vested in the courts of the United jurisdiction ~ . , it of courts of States, m the cases and proceedings hereinafter mentioned, states. shall be exclusive of the courts of the several States. ******* Second. Of all suits for penalties and forfeitures incurred under the laws of the United States. ******* 1. "Where a national bank lends money upon a usurious contract, such penalties, and only such, can be enforced as are provided in the MISCELLANEOUS PKOVISIONS. 631 National Banking Act." And where it attempts to enforce such con- tract in a State court, the defendant may insist upon such usury as a defense. National Banlf v. Eyre, 2 North Western Rep. 995. 3. State courts have no jurisdiction of offenses created by act of Con- gress, and, therefore, such courts cannot punish officers of national banks for embezzling the property of the bank ; but State courts can punish such officers for purloining the property of others. State v. Fuller, 34 Conn. 280. 3. An action lies against a national bank in a State court to recover the penalties imposed by Congress for exacting unlawful interest. Ord- way V. Central Nat. Bank, 47 Md. 217. But see Missouri R. T. Co. v. First Nat. Bank, 74 111. 217, where it was held that the courts of one State have no jurisdiction of an action against a national bank located in another State, to recover the penalty imposed by the act of Congress for the taking of unlawful interest. It seems that State courts have no jurisdiction of actions to recover penalties imposed by the National Banking Act. See, also, Newell v. Nat. Bank, 13 Bush, 57. 4. The courts of the United States have jurisdiction over (in equity, as well as law) all suits by and against national banks, irrespective of the subject-matter. Joining merely nominal or personal parties has no effect either to confer or exclude the jurisdiction ; but trustees, execu- tors, and the like are not formal parties within the meaning of the rule, when, 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 Nat. Bank, 8 Fed. Rep. 185 ; same case, 1 Am. L. Rev. 741. 5. "The plaintiff relies upon section 711 of the Revised Statutes of the United States, which provides, in substance, that the United States courts shall have exclusive jurisdiction of all suits for penalties and forfeitures incurred under the laws of the United States ; and while an attempt was made in the National Banking Act to confer upon State courts jurisdiction in all proceedings against any association organized under the act, yet it is said that the attempt is wholly uugatory,because it is not within the power of Congress to add to or enlarge the jurisdic- tion of State courts. Upon this point the plaintiff cites Martin v. Hunter's Lessees, 1 Wheat. 304 ; Houston v. Moore, 5 id. 1 ; and Mis- souri River Tel. Co. v. First National Bank of Sioux City, 74 111. 217. In the view which we take of the case it is not necessary to determine whether it is within the power of Congress to confer upon a State court jurisdiction of a matter, of which it has not already jurisdiction under the Constitution and laws of the State in which the court exists. The provision in question should certainly be deemed sufficient, to evince the intention on the part of Congress that the jurisdiction of the Federal courts should not be held to be exclusive." Adams, J. 3 N. W. Eep 995. 632 BANKING LAWS. It is also provided by the following section of the same chapter and title, that all proceedings by a national bank to enjoin the Comptroller of the Currency shall be had in the district where the bank is located. Proceed- § 736. All proceedings by any national banking associa- ioin comp- tion to enjoin the Comptroller of the Currency, under the the cur- provisions of any law relating to national banking associar tions, shall be had in the district where such association is located. See section 5237, p. 604, ante. It is provided that instruments and copies certified by the Comptroller of the Currency may be evidence, by the fol- lowing sections of chapter 17, entitled " Evidence," of the same title. instru- § 884. Every certificate, assignment, and conveyance exe- 8?m'^tr°i ^'^i*®*^ ^7 t^® Comptroller of the Currency, in pursuance of leroJ the Jaw, and sealed with his seal of ofliee, shall be received Currency. ' ' in evidence in all places and courts ; and all copies of papers in his office, certified by him and authenticated by the said seal, shall in all cases be evidence equally with the originals. An impression of such seal directly on the paper shall be as valid- as if made on wax or wafer. ti'l^'er?" § ^^^' Copies of the organization certificate of any na- nauon^' tioual banking association, duly certified by the Comptroller of the Currency, and authenticated by his seal of office, shall be evidence in all courts and places within the jurisdiction of the United States, of the existence of the association, and of every matter which could be proved by the production of the original certificate. 1. The production of the certificate of the Comptroller of the Currency is sufficient proof of the incorporation of a national bank. Nat. Bank v. Phoenix W. Co., 6 Hun, 71, 73 ; to same effect, Tapley v. Martin, 116 Mass. 275 ; Casey v. Galli, 94 U. S. 675. 3. Such certificate is material, relevant and competent on the issue as to the corporate existence of a national bank. Mer. Ex. Nat. Bank v. Car- dozo, 35 N. T. Supr. Ct. 163, 168. See, also, Piatt v. Beebe, 57 N. T. 339. 3. 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 baDks. MISCELLANEOUS PROVISIONS. 633 was acknowledged was one of the shareholders of the bank. The Comp- troller'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. Thatcher v. W. R. Nat. Bank, 19 Mich. 196. Provision is made for the exemption of the securities of the United States from taxation by the following section of title XIII, id., entitled " The Public Debt." § 3701. All stocks, bonds, treasury notes, and other obliga- goS"?^ tions of the United States shall be exempt from taxation by *'°°' or under State, or municipal, or local authority. See, also, in this connection, section 3417, p. 618, and section 5413, »p. 630, ante. The circulating notes of national banks, known as "national cur- rency," are not exempt from taxation by a State. Commissioner v. Elstou, 33 Ind. 37. But see Harne v. Green, 53 Miss. 453, where the contrary was held. See, also, Bank v. Supervisors, 7 Wall. 36. The law in reference to the filing of the annual report of the Comptroller of the Currency, is found in the follow- ing section of title XLY, id., entitled "Public Printing, Advertisements and Public Documents." § 3811. When the annual report of the Comptroller of Report on the Currency upon the national banks and banks under State banks, and Territorial laws is completed, or while it is in process of completion, if thereby the business may be sooner dis- patched, the work of printing shall be commenced, imder the superintendence of the Secretary, and the whole shall be printed and ready for delivery on or before the first day of December next after the close of the year to which the report relates. 80 AMENDMENTS ADDITIOITAL ACTS, TO AUD INCLUDING THE FIRST SESSION OF THE FORTY- EIGHTH CONGRESS, I 1883-'84. AMENDMENTS AND ADDITIONAL ACTS. FOETT-THIED CONGEESS, SESSION I. Chapter 343. An act fixing the amount of United States notes, providing for a redistribution of the national-bank currency, and for other purposes. Be it enacted hy the Senate and House of Bepresentatives The War- of the United States of America in Congress assenibled. That ^^nt Act. the act entitled " An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June third, eighteen hundred and sixty-four, shall hereafter be known as " the National Bank Act." § 2. That section thirty- one of " the National Bank Act ' ' be so amended that the several associations therein pro- vided for shall not hereafter be required to keep on hand reserves on any amount of money whatever by reason of the amount of their respective circulations; but the moneys required by said section to be kept at all times on hand shall be deter- on deposit mined by the amount of deposits in all respects, as provided for in the said section. § 3. That every association organized, or to be organ- Five per Ized, under the provisions of the said act, and of the several curatton^to' acts amendatory thereof, shall at all times keep and have ited tn°^' on deposit in the Treasury of the United States, in lawful torredemp- 638 BANKING LAWS. cufat/on"'" money of the United States, a sum equal to five per centum of its circulation, to be held and used for the redemption of counted as such circulation ; which sum shall be counted as a part of ser™. ^^ its lawful reserve, as provided in section two of this act ; and when the circulating notes of any such associations, assorted or unassorted, shall be presented for redemption redeemed in sums of One thousaud dollars or any multiple thereof, to on presen- ^ r ' treasurer *^® Treasurer of the United States, the same shall be redeemed in United States notes. All notes so redeemed charled to ^^^^^ ^® charged by the Treasurer of the United States to alsocfa-™ the respective associations issuing the same, and he shall Monttiy notify them severally, on the first day of each month, or redemp.' ofteuer, at his discretion, of the amount of such redemp- *'°°^' tions and whenever such redemptions for any association shall amount to the sum of five hundred dollars, such wit?i°Trea3- association so notified shall forthwith deposit with the amount Treasurer of the United States a sum in United States notes re- notes ec[ual to the amount of its circulating notes so re- when. ' deemed. And all notes of national banks, worn, defaced, treasurer mutilated. Or Otherwise unfit for circulation, shall, when and depos- • -, ■• ... -, . ■, itariesto received by any assistant treasurer or at any designated mutilated depository of the United States, be forwarded to the Treas- notes to -^ *' Imreiem - "^^^ ^^ *^® United States for redemption as provided herein, tion. ^Q(j when such redemptions have been so reimbursed, the de°eme™to circulating notes so redeemed shall be forwarded to the ed to'^Ms^' respective associations by which they were issued ; but if any Tora^^mu- ^'^ such notes are worn, mutilated, defaced, or rendered other- et^'^notes ^^^^ uufitfor use, they shall be forwarded to the Comptroller warde'd'^to oi the Currency and destroyed, and replaced as now pro- ler'oFcurl vided by law : ProvidM, That each of said associations shall stro%dan(} reimburse to the Treasury the charges for transportation, and Associa- the costs for assorting such notes ; and the associations here- oo°sTo't'^''^^fter organized shall also severally reimburse to the Treasury in|°and'^aa- the cost of engraving such plates as shall be ordered by each AsMcm- association respectively ; and the amount assessed upon each after or™ association shall be in proportion to the circulation redeemed, pay'oost'ofan4 be charged to the fund on deposit with the Treasurer: ei^raving ^^^^^^^^^y^^^^g^.^ That so much of section thirty-two AMENDMENTS. 639 of said National Bank Act requiring or permitting the Proportion- * ° ■*■ ^ ate assess- redemption of its circalating notes elsewhere than at its ownmentof '^ " _ charges. counter, except as provided for in this section, is hereby repealed. § 4. That any association organized under this act, or witMraw- any of the acts of which this is an amendment, desiring to'a'ion- withdraw its circulating notes, in whole or in part, may, upon the deposit of lawful money with the Treasurer of the United States in sums of not less than niae thousand dollars, take up the bonds which said association has on deposit with the Treasurer for the security of such circulating notes, which bonds shall be assigned to the bank in the manner specified in the nineteenth section of the national-bank act ; and the Eedemp- ' tlon and outstanding notes of said association, to an amount equal to destruction the legal- tender notes deposited, shall be redeemed at the „ \°g'°s Treasury of the United States, and destroyed as now pro- vided by law; Provided, That the amount of the bonds on J'J^*^"^ deposit for circulation shall not be reduced below fifty dipos°tf°° thousand dollars. § 5. That the CoraptroUer of the Currency shall, under charter such rules and regulations as the Secretary of the Treasury of assnoia- may prescribe, cause the charter numbers oi the association printed on ,. 1 1, .111 1., national to be printed upon all national bank notes which may be ^ait notes. hereafter issued by him. § 6. That the amount of United States notes outstanding Limit to and to be used as a part of the circulating medium shall notoutstSid- exceed the sum of three hundred and eighty-two million stltes"' ^ dollars, which said sum shall appear in each monthly state- ^^ '^^-. ment of the pubKc debt, and no part thereof shall be held rIserJe ^ or used as a reserve. § 7. That so much of the act entitled '^ An act to pro- vide for the redemption of the three per centum temporary loan certificates, and for an increase of national bank notes," as provides that no circulation shall be withdrawn under the provisions of section six of said act, until after the fifty- 640 BANKING LAWS. four millions granted in section one of said act shall have been taken up, is hereby repealed ; and it shall be the duty of the Comptroller of the Currency, under the direction of the Secretary of the Treasury, to proceed forthwith, and he is hereby authorized and required, from time to time, as applications shall be duly made therefor, and until the full amount of fifty -five million dollars shall be withdrawn, to make requisitions upon each of the national banks described in said section, and in the manner therein provided, organized Withdraw- in States having an excess of circulation, to withdraw and rency'to' rctum SO much of their circulation as by said act may be equitable apportioned to be withdrawn from them, or, in lieu thereof, tion. to deposit in the Treasury of the United States lawful money sufficient to redeem such circulation ; and upon the return of the circulation required, or the deposit of lawful money, as herein provided, a proportionate amount of the bonds held to secure the circulation of such association as shall make such return or deposit shall be surrendered to it. ■When na- tional banks fail § 8. That upon the failure of the national banks upon which requisition for circulation shall be made, or of any witTre^ui- of them, to return the amount required, or to deposit in the duty'of Treasury lawful money to redeem the circulation required, ler™^ ro - ^j^-j^j^ thirty days, the Comptroller of the Currency shall at once sell, as provided in section forty-nine of the National Currency Act, approved June third, eighteen hundred and sixty ^f our, bonds held to secure the redemption of the cir- culation of the association or associations which shall so fail, to an amount sufficient to redeem the circulation required of such association or associations, and with the proceeds, which shall be deposited in the Treasury of the United States, so much of the circulation of such association or associations shall be redeemed as will equal the amount required and not returned ; and if there be any excess of proceeds over the amount required for such redemption, it Duty of shall be returned to the association or associations whose as^SStsI bonds shall have been sold. And it shall be the duty of taries?^"^' the Treasurer, assistant treasurers, designated depositaries. AMENDMENTS. 641 and national bank depositaries of the United States, who shall be kept informed by the Comptroller of the Currency of such associations as shall fail to return circulation as required, to assort and return to the Treasury for redemp- tion the notes of such associations as shall come into their hands until the amount required shall be redeemed, and in like manner to assort and return to the Treasury, forredemp-jf^^g^jp. tion, the notes of such national banks as have failed, or gone notea°' into voluntary liquidation for the purpose of winding up Squidatfon! their affairs, and of sn(}h as shall hereafter so fail or go into liquidation. § 9. That from and after the passage of tliis act it shall ^^^'^^^^: be lawful for the Comptroller of the Currency, and he is^awnT"'' hereby required, to issue circulating notes, without delay, as applications therefor are made, not to exceed the sum of fifty-five million dollars, to associations organized, or to be organized, in those States and Territories haxdng less than their proportion of circulation, under an apportionment made on the basis of population and of wealth, as shown by the returns of the census of eighteen hundred and seventy ; and every association hereafter organized shall be subject to, and be governed by, the rules, restrictions, and limitationp, and possess the rights, privileges, and franchises, now or hereafter to be prescribed by law as to national banking associations, with the same power to amend, alter, and repeal provided by " the National Bank Act ;" Provided, That the wiSdrawai whole amount of circulation withdrawn and redeemed from banks transacting business shall not exceed fifty-five million dollars, and that such circulation shall be withdrawn and redeemed as it shall be necessary to supply the circulation previously issued to the banks in those States having less than their apportionment : And provided further, That Proviso, not more than thirty million dollars shall be withdrawn and redeemed as herein contemplated during the fiscal year end- ing June thirtieth, eighteen hundred and seventy-five. Approved June 20, 1874. 81 643 BANKING LAWS. Ohaptee 455. exteact feom An act making appropriations for sundry civil expenses of the Government for the fiscal year ending June 30, 1875, and for other purposes. Purchase For the maceration of national bank notes. United States of engine ' chiiSyfor^o*®^) and other obligations of the United States authorized S1bank''°°*o be destroyed, ten thousand dollars; and that ajl such notes, etc. jgg^es hereafter destroyed may be destroyed by maceration instead of burning to ashes, as now provided by law; and that so much of sections twenty-four and forty-three of the Destruc- national currency act as requires national bank notes to be maceration burned to ashes is hereby repealed ; that the pulp from such burning, macerated issue shall be disposed only under the direction of the Secretary of the Treasury. Approved June 23, 1874. FOETT-THIED OONGEESS, SESSION H. Chaptee 15. An act to provide for the resumption of specie payments . ot'Ien,""'"^ 5e it enacted ly the Senate am,d House of Representatw&s Ind'flfty™"/ t^^ United States of America in Congress assemUed, coinid "aSd That the Secretary of the Treasury is hereby authorized demptiqn "and required, as rapidly as practicable, to cause to be ai currency coined at the mints of the United States, silver coins of the denominations of ten, twenty-five, and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of fra(!tional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the sub-treasuries, public depositaries, and post- offices of the United States; and, upon such issue, he is hereby authorized and required to redeem an equal amount of such fractional currency, until the whole amount of such fractional currency outstanding shall be redeemed. AMENDMENTS. 643 § 2. That 80 much of section three thousand five hundred aud twentj-four of the Revised Statutes of the United States as provides for a charge of one»fifth of one per centum for converting standard gold bullion into coin is hereby re- pealed ; and hereafter no charge shall be made for that ser- vice. § 3. That section five thousand one hundred and seventy- seven of the Eevised Statutes of the United States, limiting the aggregate amount of circulating notes of national banking associations, be, and is hereby, repealed ; and each existing banking association may increase its circulating notes in accordance with existing law with- ^ out respect to said aggregate limit ; and new hanking °^^°|tiJ'°a' associations may be organized in accordance with exist- J®?^™'^®^ ing law without respect to said aggregate limit; and the^*'® """*■ provisions of law for the withdrawal and redistribution provisions of national-bank currency among the several States and drawai and m ■ • 11 iTAii 1 redistribu- ierritories are hereby repealed. And whenever, and so won. often, as circulating notes shall be issued to any such bank- ing association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal tender United ^nitg^ States notes in excess only of three hundred million of dol-noUsfaex- lars, to the amount of eighty per centum of the sum of n a- $300,000,000 tional-bank notes so issued to any such banking association deemelin as aforesaid, and to continue such redemption as such cireu- ratio to lating notes are issued until there shall be outstanding the of national sum of three hundred million dollars of such legal tender lation. United States notes, and no more. And on and after the Eedemp- first day of January, Anno Domini eighteen hundred and umted seventy-nine, the Secretary of the Treasury shall redeem, in notes in •' ' ■J •' ' coin after coin, the United States legal-tender notes then outstanding, January 1, on their presentation for redemption at the office of the as- sistant treasurer of the United States in the city of If ew Appropria- York, in sums of not less than fifty dollars. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is au- 644 BANKING LAWS. bonds to thorized to use any surplus revenues, from time to time, in meMs V the treasury not otherwise appropriated, and to issue, sell, Un5ld'°^ and dispose of, at nof less than par, in coin, either of the notesf descriptions of bonds of the United States described in the act of Congress approved July fourteenth, eighteen hundred and seventy, entitled " An act to authorize the refunding of the national debt," with like qualities, privileges, and exemptions, to the extent necessary to carry this act into full efiect, and to use the proceeds thereof for the purposes aforesaid. And all provisions of law inconsistent with the provisions of this act are hereby repealed. ;^ Approved January 14, 1876. Chaptek 19. An act to remove the limitation restricting the circulation of banking associations issuing notes payable in gold. £e tt enacted hy the Senate and Hotise of Representa- ti/oes of the United States of America in Congress assem- bled, That so much of section five thousand one hun- dred and eighty-five of the Revised Statutes of the United States as limits the circulation of bankiiig associations, or- ganized for the pui-pose of issuing notes payable in gold, Limit to severally to one million dollars, be and the same is hereby o?goid*'°" repealed ; and each of such existing banking associations moved, ' may increase its circulating notes, and new banking associa- tions may be organized in accordance with existipg law, with- out respect to such limitation. Approved January 19, 1875 . Chapter 36, extract from An act to amend existing customs and internal revenue laws, and for other purposes. Bank § ^^- That the words " bank check, draft, or order for draft^'eto. ^^^ payment of any sum of money whatsoever, drawn upon any bank, banker or trust company, at sight or on AMENDMENTS. 645 demand, two cents," in Schedule B of the act of June thirtieth, eighteen hundred and sbcty-four, be and the same is hereby stricken out and the following paragraph inserted in lieu thereof : " Bank check, draft, order or voucher for the payment of any sum of money whatsoever, drawn upon any bank, banker or trust company, two cents.'* § 19. That every person, firm, association other than na- ^^^^^^'''Jj tional bank associations, and every corporation. State banko^ej^'^j^"! or State banking association, shall pay a tax of ten per*'*"''^- qentum on the amount of their own notes used for circula- tion and paid out by them. § 20. That every such person, firm, association, corpora- TMconcir- tion. State bank or State banking association, and also every gj^^^e^ national backing association, shall pay a like tax of ten per w™^^ ^^^ centum on the amount of notes of any person, firm, asso-""**' ®'^" ciation other than a national banking association, or of any corporation. State bank or State banking association, or of any town, city or municipal corporation, used for circulation and paid out by them. § 21. That the amount of such circulating notes, and of Eeturus of " ° ' amount o( the tax due thereon, shall be returned, and the tax paid at circulation ' ' '^ other tban the same time, and in the same manner, and with like pen-°^^^ alties for failure to return and pay the same, as provided by law for the return and payment of taxes on deposits, capital and circulation, imposed by the existing provisions of inter- nal revenue law. Approved February 8, 1875. Chaptee 80. extracts feom An act to correct errors and supply omissions in the Re- vised Statutes of the United States.* JBe it enacted iy the Senate and House of Represent. Aniend- atives of the United States of America in Congress as- Revised statutes. * The corrections indicated have been made in the text. 646 BANKING I;AWS. semlled, That for the purpose of correcting errors and supplying omissions in the act entitled "An act to revise and consolidate the statutes of the United States in force on the first day of December, Anno Domini one thousand eight hundred and seyenty-three," so as to make the same truly express such laws, the following amendments are hereby made therein. * * * » * * Section three hundred and thirty is amended by adding thereto the following : " A description of the seal, with an impression thereof, and a certificate of approval by the Sec- retary of the Treasury, shall be filed in the office of the Secretary of State." Section three hundred' and thirty-three is amended by in- serting after the word " Congress," in the second line, the words " at the commencement of its session." ****** Section six hundred and twenty-nine is amended by strik- ing out, in the first line of paragraph eleven, the words " or against." ****** Section three thousand four hundred and seventeen is amended by inserting, in the fourth line, after the word " twelve," the words " thirty-four hundred and thirteen." Section three thousand four hundred and twenty-two is amended by inserting, after the word " issued," in the twenty- seventh line, the following : " And provided further^ > That where it shall appear to said collector, upon oath or other- wise, to his satisfaction, that any such instrument has not been duly stamped at the time of making or issuing the same, by reason of accident, mistake, inadvertence, or urgent necessity, and without any willful design to defraud the United States of the stamps, or to evade or delay the pay- ment thereof, then, and in such case, if such instrument, or, if the original be lost, a copy thereof, duly certified by the officer having charge of any records in which such original is required to be recorded, or otherwise duly proven to the satisfaction of the collector, shall, within twelve calendar AMENDMENTS. 647 months after the making or issuing thereof, be brought to the said collector of revenue to be stamped, and the stamp- tax chargeable thereon shall be paid, it shall be lawful for the said collector to remit the penalty aforesaid, and to cause such instrument to be duly stamped." ****** Section three thousand eight hundred and eleven is amended by striking out " Secretary of the Treasury," and inserting " Comptroller of the Currency ; " also, by adding, after the word " banks," in the second line, the words, " and banks imder State and territorial laws." ****** Section five thousand one hundred and eighty-three is amended by inserting, after the word " issue," in the second line, the words " post-notes or." Section five thousand one hundred and ninety-eight is amended by adding thereto the following : " That suits, ac- tions and proceedings against any association under this title 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 associa- tion is located having jurisdiction in similar cases." Section five thousand two hundred and twenty-four is amended by adding thereto the following : " And if any such bank shall fail to make the deposit and take up its bonds for thirty days after the expiration of the time specified, the Comptroller of the Currency shall have power to sell the bonds pledged for the circulation of said bank, at public auc- tion in New York city, and, after providing for the redemp- tion and cancellation of said circulation and the necessary expenses of the sale, to pay over any balance remaining to the bank or its legal representative." Section five thousand two hundred and twenty-eight is amended by striking out, in the third line, the words " of forfeiture of the bonds," and inserting the word " thereof." 648 BANKIISTG LAWS. Section five thousand four hundred and thirteen is amended by inserting, in the third line, after the word " national," the word " bank." ****** ' Approved February 18, 1875. Chapteb 89. An act to amend section five thousand two hundred and forty of the Revised Statutes of the United States, in relation to the compensation of national-bank examiners.* Be it enacted hy the Senate and House of Representative's of the United States of America in Congress assembled, That section five thousand two hundred and forty of the Revised Statutes of the United States be so amended that the latter clause of said section, after the word " Comptroller " in the eighth line of said section, be amended so that the same "xami'nere shall read as follows, namely : " That all persons appointed to bank^*'°°*' be examiners of national banks not located in the redemption tio™f™^^ cities specified in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, shall receive compensation for such examination as follows : For examining national banks hav- ing a capital less than one hundred thousand dollars, twenty dollars; those leaving a capital of one hundred thousand dollars and less than three hundred thousand dollars, twenty- five dollars ; those having a capital of three hundred thou- sand dollars and less than four hundred thousand dollars, thirty-five dollars ; those having a capital of four hundred thousand dollars and less than five hundred thousand dol- lars, forty dollars ; those having a capital of five hundred thousand dollars and less than six hundred thousand dollars, fifty dollars ; those having a capital of six hundred thousand dollars and over, seventy-five dollars ; which amounts shall be assessed by the' Comptroller of the Currency upon, and paid by, the respective associations so examined, and shall *This amendment has been incorporated mto the text. AMENDMENTS. 649 be in lieu ot the compensation and mileage heretofore al- lowed for making said examinations ; and persons appointed to make examination of national banks in the cities named in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Terri- tories, shall receive such compensation as may be fixed by the Secretary of the Treasiiry upon the recommendation of the Comptroller of the Currency ; and the same shall be assessed and paid in the manner hereinbefore provided." Approved February 19, 1875. FOETT-FOUETH CONGEESS, SESSION I. Chapter 156. An act authorizing the appointment of receivers of national banks, and for other purposes. £e it enacted iy the Senate and Hoiise of Representatives when re- Gdiv6T* for ft of the United States of America in Conaress assembled, Thutna.uonai 1 -111- • ■ 1 T, 1 T bankmay whenever any national banking association shall be dis- be appoint- solved, and its rights, privileges, and franchises declared pomptroi- forfeited, as prescribed in section fifty-two hundred andrency. thirty-nine of the Eevised Statutes of the United States, or whenever any creditor of any national banking association shall have obtained a judgment against it in any court of record, and made application, accompanied by a certificate from the clerk of the court stating that such judgment has been rendered and has remained unpaid for the space of thirty days, or whenever the Comptroller shall become satis- fied of the insolvency of a national banking association, he may, after due examination of its affairs, in either case, appoint a receiver, who shall proceed to close up such associa- tion, and enforce the personal liability of the shareholders, as provided in section fifty-two hundred and thirty-four of said statutes. 82 650 BANKING LAWS. J°dWduai g 2. That when any national banking association shall ers^'^how to ^^^® 8°"® "^'■° liquidation under the provisions of section forced. ^^e thousand two hundred and twenty of said statutes, the individual liability of the shareholders provided for by sec- tion fifty-one hundred and fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity in the nature of a creditor's bill, brought by such creditor on behalf of himself and of all other creditors of the asso- ciation, against the shareholders thereof, in any court of the United States having original jurisdiction in equity for the district in which such association may have been located or established. ^arehoic^ § ^- That whenever any association shall have been or payment shall be placed in the hands of a receiver, as provided in andex'-^ Section fifty-two hundred and thirty-four and other sections recewer"' of Said statutes, and when, as provided in section fifty-two ^ '^" hundred and thirty-six thereof, the Comptroller shall have paid to each and every creditor of such association, not including shareholders who are creditors of such association, whose claim or claims as such creditor shall have been proved, or allowed as therein prescribed, the full amount of such claims and all expenses of the receivership, and the redemption of the circulating notes of such association shall have been provided for by depositing lawful money of the United States with the Treasurer of the United States, the Comptroller of the Currency shall call a meeting of the Notice of shareholders of such association by giving notice thereof meeung. ^ _ . . for thirty days in a newspaper published in the town, city, or county where the business of such association was car- ried on, or if no newspaper is there published, in the news- paper published nearest thereto, at which meeting the share- Eiection of holders shall elect an agent, voting by ballot, in person or sharehoM- by proxy, each share of stock entitling the holder to one vote ; and when such agent shall have received votes repre- senting at least a majority of the stock in value and num- ber of shares, and when any of the shareholders of the asso- Bond for ciatiou shall have executed and filed a bond to the satisfac- payment of debts, tion of the Comptroller of the Currency, conditioned for the payment and discharge in full of any and every claim that AMENDMENTS. 651 may hereafter be proved and allowed against such associa- tion by and before a competent court, and for the faithful performance and discharge of all and singular the duties of such trust, the Comptroller and the receiver shall thereupon aSs and transfer and deliver to such agent ail the undivided or agent. ^ " uncollected or other assets and property of such association then remaining in the hands or subject to the order or con- trol of said Comptroller and said receiver, or either of them ; ^ ^ ' Instru- and for this purpose, said Comptroller and said receiver are ^^'^1°/ hereby severally empowered to execute any deed, assign- ment, transfer, or other instrument in writing that may be necessary and proper ; whereupon the said Comptroller and the said receiver shall, by virtue of this act, be discharged Discharge and released from any and all liabilities to such association, of comp- ■^ troller and and to each and all of the creditors and shareholders thereof ; receiver, and such agent is hereby authorized to sell, compromise, p°™^^|'»'' or compound the debts .due to such association upon the^^ent. order of a competent court of record or of the United States circuit court for the district where the business of the asso- ciation was carried on. Such agent shall hold, control, and dispose of the assets and property of any association which he may receive as hereinbefore provided for the benefit of the shareholders of such association as they, or a majority of them in value or number of shares, may direct, distribut- ing such assets and property among such shareholders in proportion to the shares held by each ; and he may, in his own name or in the name of such association, sue and be sued, and do all other lawful acts and things necessary to finally settle and distribute the assets and property in his hands. In selecting an agent as hereinbefore provided, ad- . . ministrators or executors of deceased shareholders may actuators, ■/ guardians, and sign as the decedent might have done if living, and f^^ :^^y guardians may so act and sign for their ward or wards. agent.'"^ § 4. That the last clause of section fifty-two hundred and P- jo'if "' five of said statutes is hereby amended by adding to the said *'"®'"^®'*- section the following proviso : 653 BANKING LAWS. ft^ck'of '■'■ And provided, That if any shareholder or shareholders holder re- of siich bank shall neglect or refuse, after three months' pay°aM'ess- notice, to pay the assessment, as provided in this section, it "'™'" shall be the duty of the board of directors to cause a suffi- cient amount of the capital stock of such shareholder or shareholders to be sold at public auction (after thirty days' notice shall be given by posting such notice of sale in the office of the bank, and by publishing such notice in a news- paper of the city or town in wliich the bank is located, or in a newspaper published neai-est thereto), to make good the deficiency ; and the balance, if any, shall be returned to such delinquent shareholder or shareholders," Fraudment g 5_ T]iat all United States officers charged with the re- "'eoimtti'-^ ceipt or disbursement of public moneys, and all officers of disbursing'' national banks shall stamp or write in plain letters the word tanifoffl-'"' " counterfeit," " altered," or "worthless," upon all fraudulent '^^^^' notes issued in the form of, and intended to circulate as money, which shall be presented at their places of business ; and if such officers shall wrongfully stamp any genuine note Officer lia- of the United States, or of the national banks, thev shall bletor . ' 1 ,. " 1 wrongfully upon presentation, redeem such notes at the face-value stamping. Jr i 7 thereof. Reports to I 6. That all savings-banks or savings and trust com- savings panics organized under authority of any act of Congress banks, etc. ^^^ \^q^ j^^] ^pg hereby, required to make, to the Comp- troller of the Currency, and publish, all the reports which national banking associations are required to make and pub- lish under the provisions of sections fifty-two hundred and eleven, fifty-two hundred and twelve and fifty-two hundred and thirteen of the Revised Statutes, and shall be subject to the same penalties for failure to make or publish such Penalties reports as are therein provided ; which penalties may be for failing ' • i i- . ,■ , tt • t <~i . to report, collected by suit betore any court of the United States m the district in which said savings banks or savings and trust Savings companies may be located. And all savings or other banks and other . . banks^m ^ now Organized, or which shall hereafter be organized, in Columbia ^q. District of Columbia, under any act of Congress, which AMENDMENTS. 653 shall have capital stock paid up in whole or in part, shall ™^«„^"J^;. be subject to all the provisions of the Eevised Statutes, *^'° '^™- and of all acts of Congress applicable to national banking associations so far as the same may be applicable to siieh Paid-in 11, , • 1. 1 capital of savings or other banks, provided that such savings banks existing now established shall not be required to have a paid-in cap- banks, ital exceeding one hundred thousand dollars. ' Approved June 30, 1876. FOETT-SIXTH CONGEESS, SESSION II. Chaptee 25. An act authorizing the conversion of national gold banks. Be it enacted l>y the Senate aiid House of Representatives'^^^^^^^ of the United States of America in Congress assemhled, <:o''™"'sion. That any national gold bank organized under the provisions of the laws of the United States, may, in the manner and sub- ject to the provisions prescribed by section fifty-one hun- dred and fifty-four of the Eevised Statutes of the United States, for the conversion of banks incorporated under the laws of any State, cease to be a gold bank, and become such an association as is authorized by section fifty-one hundred and thirty-three, for carrying on the business of banking, and shall have the same 'powers and privileges, and shall be subject to the same duties, responsibilities and rules, in all respects, as are by law prescribed for such associations : Provided, That all certificates of organization which shall ^°'''^' be issued under this act shall bear the date of the original organization of each bank respectively as a gold bank. Approved Febraary 14, 1880. 654 BANKING LAWS. FOETT-SIXTH CONGEESS, SESSION III. Chapter 82. An act defining the verification of returns of national banks. Be it enacted hy the Senate and House of RepresentaUves of the United States of America in Congress assembled. That the oath or afiirmation required by section fifty-two veriflca- hundred and eleven of the Revised Statutes, verifying the tura^o™' returns made by national banks to the Comptroller of the nationa Currency, when taken before a notary public properly authorized and commissioned by the State in which such notary resides and the bank is located, or any other oflacer having an official seal, authorized, in such State to ad- minister oaths, shall be a sufficient verification as contem- plated by said section fifty-two hundred and eleven : Pro- vided, That the officer administering the oath is not an officer of the bank. Approved February 26, 1881. Proviso. FORTY-SEVENTH CONGRESS, SESSION I. Chapter 290. An act to enable national banking associations to extend their cotyorate existence, and for other purposes. Be it enacted hy the Senate and House of Representatives of the United States of America in Congress assembled, National That any national banking association organized under the associa- acts of February twenty-fifth, eighteen hundred and sixty- *^°™|'^^t_p three, June third, eighteen hundred and sixty-four, and Fstencef^" February fourteenth, eighteen hundred and eighty, or under sections fifty-one hundred and thirty-three, fifty-one hundred and thirty-four, fifty-one hundred and thirty-five, fifty-one , Term of AMENDMENTS. 655 hundred and thirty-six and fifty-one hundred and fifty-four of the Kevised Statutes of the United States, may, at any time within the two years next previous to the date of the expiration of its corporate existence under present law, and with the approval of the Comptroller of the Currency, to succession, be granted as hereinafter provided, extend its period of Buccession by amending its articles of association for a term of not more than twenty years from the expiration of the period of succession named in said articles of association, and shall have succession for such extended period, imless sooner dissolved by the act of shareholders owning two-thirds of its forfeiture stock, or imless its franchise becomes forfeited by some vio- ohfse'"" lation of law, or unless hereafter modified or repealed. § 2. That such amendment of said articles of association consent m " writing of shall be authorized by the consent in writing of shareholders of'°hare^^ owning not less than two-thirds of the capital stock of the amend-'" association ; and the board of directors shall cause such eon- mfcies of sent to be certified under the seal of the association, by its tion. '^" president or cashier, to the Comptroller of the Currency, ac- companied by an application made by the president or cashier for the approval of the amended articles of associa- tion by the Comptroller ; and such amended articles of certified association shall not be valid until the Comptroller shall give t "com^pf' to such association a certificate under his hand and seal that currency the association has complied with all the provisions required vai. ^^p™" to be complied vrith, and is authorized to have succession for the extended period named in the amended articles of asso- ciation. § 3. That upon the receipt of the application and certifi- i^^to^m^e cate of the association provided for in the preceding section, amfnttion' the Comptroller of the Currency shall cause a special ti'on^aSd^" examination to be made, at the expense of the association, tllcateT" to determine its condition ; and if, after such examination or otherwise, it appears to him that said association is in a satisfactory condition, he shall grant his certificate of ap- proval provided for in the preceding section, or if it appears Proviso. Jurisdic- tion for suits. 656 BANKING LAWS. that the condition of said association is not satisfactory, he shall withhold such certiticate of approval. pritu^es' § ^- That any association so extending the period of its blnkfifg as- succession shall continue to enjoy all the rights and privi- preser?ed. leges and immunities granted and shall continue to be sub- ject to all the duties, liabilities, and I'estrictions imposed by the Revised Statutes of the United States and other acts having reference to national banking associations, and it shall continue to be in all respects the identical association it was before the extension of its period of succession : /Pro- vided, however, That the jurisdiction for suits hereafter brought by or against any association established under any law providing for national-banking associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the juris- diction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national banking associations may be doing business wlien such suits may be begun. And all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby, repealed. ers^ot°' n^ § 5 . That when any national banking association has ame'nd- '° amended its articles of association as provided in this act, artidesot ^^'^ ^^^ Comptroller has granted his certificate of approval, tfon^may ally shareholder not assenting to such amendment may give notice in writing to the directors, within thirty days from the date of the certificate of approval, 6f his desire to with- draw from said association, in which case he shall be entitled Conditions to receive from said banking association the value of the of with- ^ drawai. shares so held by him, to be ascertained by an appraisal made by a committee of three persons, one to be selected by such shareholder, one by the directors, and the third by the first two ; and in case the value so fixed shall not be satisfactory to any such shareholder, he may appeal to the Comptroller of the Currency, who shall cause a reappraisal to be made, which shall be final and binding; and if said AMENDMENTS. 657 reappraisal shall exceed the value fixed by said committee, the bank shall pay the expenses of said reappraisal, and other, wise the appellant shall pay said expenses ; and the value BO ascertained and determined shall be deemed to be a debt due, and be forthwith paid, to said shareholder, from said bank ; and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section : Provided, „ . Proviso That in the organization of any banking association intended to replace any existing banking association, and retaining the name thereof, the holders of stock in the expiring associa- tion shall be entitled to pi'eference in the allotment of the shares of the new association in proportion to the number of shares held by them respectively in the expiring association. § 6. That the circulating notes of any association so ex- Kedemp- tending the period of its succession which shall have beenjestrup. " r^ tion of cer- issued to it prior to such extension shall be redeemed at the J^iP cireu- Treasury of the United States, as provided in section three ''°'®^' of the act of June twentieth, eighteen hundred and seventy- four, entitled " An act fixing the amount of United States notes, providing for redistribution of national-bank cur- rency, and for other purposes," and such notes when re- deemed shall be forwarded to the Comptroller of the Cur- Deposit of rency, and destroyed, as now provided by law ; and at the money with end of three years from the date of the extension of theofu.s.,for • till! • • 1 '■edemp- corporate existence of each bank the association so extended tio" ot cir- •^ ^ culating shall deposit lawful money with the Treasurer of the United ""t^^- «'° States sufficient to redeem the remainder of the circulation which was outstanding at the date of its extension, as pro- Gains from vided in sections fifty-two hundred and twenty-two, fifty- present*" two hundred and twenty-four, and fifty-two hundred andredemptton twenty-five of the Revised Statutes ; and any gain that may benefit arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States ; and from time to time, as such notes are redeemed or lawful Ne^^potes ' to be issued money deposited therefor as provided herein, new circulating ^J,^*'^^^''- notes shall be issued as provided by thjs act, bearing such *^® °''*- 83 658 BANKING LAWS. pi°ates*or ^evices, to be approved by the Secretary of the Treasury, as burse ™to"" ^^^^^ make them readily distinguishable from the circulating by^banSng notes heretofore issued: Provided, however, That each uons"*' banking association which shall obtain the benefit of this Proviso, act shall reimburse to the Treasury the cost of preparing the plate or plates for such new circulating notes as shall be is- sued to it. bankf^ M- § '''• That national banking associations whose corporate not'^ccept- existence has expired or shall hereafter expire, and which do ions "oTtws not avail themselves of the provisions of this act, shall be *° ■ required to comply with the provisions of sections fifty- two hundred and twenty-one and fifty-two hundred and twenty-two of the Revised Statutes in the same manner as if the shareholders had voted to go into liquidation, as pro- vided in section fifty-two hundred and twenty of the Re- vised Statutes; and the provisions of sections fifty-two hundred and twenty-four and fifty-two hundred and twenty- five of the Revised Statutes shall also be applicable to such associations, except as modified by this act; and the fran- chise of such associations is hereby extended for the sole piirpose of liquidating their affairs until such affairs are finally closed. , Bonds for 8 8. That national banks now organized or hereafter or- security of " , ^ circulation gauizcd, having a capital of one hundred and fifty thou- not to ex- o ^ o r . j fourthof ^^"^"^ dollars or less, shall not be required to keep on deposit stock*' or deposit with the Treasurer of the United States United bonds den'^ States bonds in excess of one-fourth of their capital stock excess* to as Security for their circulating notes, but such banks shall cuiatlon?"^' keep on deposit or deposit with the Treasurer of the United Circulation States the amount of bonds as herein required ; and such of in no case iit- ^ .ii- p \ to exceed those bauKs havmg on deposit bonds m excess ot that amount centum of are authorized to reduce their circulation by the deposit of par value , ' , of bonds lawful moiiey as provided by law : Provided, That the amount of such circulating notes shall not in any case ex- Provisos. gQ(j^ ninety per centum of the par value of the bonds de- posited as herein provided : Provided further. That the national banks which shall hereafter make deposits of law- AMENDMENTS. 659 f ul money for the retirement in full of their cirnulation shall, at the time of their deposit, be assessed, for the cost of transporting and redeeming their notes then outstand- ing, a sum equal to the average cost of the redemption of national-bank notes during the preceding year, and shall tnereupon pay such assessment; and all national banks which have heretofore made or shall hereafter make de- posits of lawful money for the reduction of their circula- tion, shall be assessed, and shall pay an assessment in the manner specified in section three of the act approved June ments for twentieth, eiojhteen hundred and seventy-four, for the cost tion and . 11.1. 1 1 ,. redemption of transportmg and redeemmg their notes redeemed from of cirouia- such deposits subsequently to June thirtieth, eighteen hun- sta^^^s- dred and eighty-one. § 9. That any national banking association now organ- ized, or hereafter organized, desiring to withdraw its circu- lating notes, upon a deposit of lawful money with the Treas- urer of the United States, as provided m section four of the act of Jiine twentieth, eighteen hundred and seventy- four, entitled "An act fixing the amount of United States ai of cireu" notes, providing for a redistribution of national-bank cur- deposit of 1 /. 1 \SMt\lL\ rency, and for other purposes," or as provided m this act,™oney is authorized to deposit lawful money and withdraw a pro- the order portionate amount of the bonds held as security for its cir- culating notes in the order of such deposits; and no na- tional bank which makes any deposit of lawful money in order to withdraw its circulating notes shall be entitled to JjioulatfoS' receive any increase of its circulation for the period of six^*"®"' months from the time it made such deposit of lawful money p™it'JS'*^ for the purpose aforesaid : Provided, That not more than money in three millions of dollars of lawful money shall be deposited mraith.* during any calendar month for this purpose : And provided vroyisos. further, That the provisions of this section shall not apply Bonds to bonds called for redemption by the Secretary of the Treas- redemption . . . . , •' exempt ury, nor to the withdrawal of circulating notes in conse-*^°.'np™- •' ^ ° visions of quence thereof. ^^^ ^*- 660 BANKING LAWS. § 10. That upon a deposit of bonds as described by sec- tions fifty-one htmdred and fifty-nine and fifty-one hun- dred and sixty, except as modified* by section four of an act entitled " An act fixing the amount of United States notes, providing for a redistribution of the national-bank currency, tion°upo"n and for other purposes," approved June twentieth, eighteen boffito hundred and seventy- four, and as modified by section eight cuiating of this act, the association making the same shall be entitled notes in ■ blank, etc. to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, registered and coiintersigned as provided by law, equal in amount to ninety per centum of the current market value not exceeding par, of the United States bonds so transferred and delivered, Circulation and at no time shall the total amount of such notes issued ceednin^ty to any such association exceed ninety per centum of the of paid-in amount at such time actually paid in of its capital stock ; stock. and the provisions of sections fifty-one hundred and seventy- one and fifty-one hundred and seventy-six of the Revised Statutes are hereby repealed. Three and § n . That the Secretary of the Treasury is hereby au- reeeiv^d°fn thorized to receive at the Treasury any bonds of the United forthre? States bearing three' and a half per centum interest, and re|isto«d to issue in exchange therefor an equal amount of regis- bonds. ^Qj-ed bonds qf the United States of the denominations of fifty, one hundred, five hundred, one thousand, and ten thousand dollars, of such form as he may prescribe, bearing interest at the rate of three per centum per annum, payable quarterly at the Treasury of the United States. Such bonds ft-o^tax"" ^^^^^ ^® exempt from all taxation by or under State authority, *'"• and be payable at the pleasure of the United States : Pro- Proviso. ryi^ed, That the bonds herein authorized shall not be called in and paid so long as any bonds of the United States here- tofore issued bearing a higher rate of interest than three per centum, and which shall be redeemable at the pleasure of the United States, shall be outstanding and uncalled. The last of the said bonds originally issued under this act, AMENDMENTS. 661 and their substitutes, shall be first called in, and this order of payment shall be followed until all shall have been paid S 12. That the Secretary of the Treasury is authorized Gow certi- o J J ^ fioaies is- and directed to receive deposits of gold coin with the Treas.su|dinex- urer or assistant treasurers of the United States, in sums^^g°^^'^jj°' not less than twenty dollars, and to issue certificates there- Gold re- for in denominations of not less than twenty dollars each, for redemp- corresponding with the denominations ot United States tiflcates. notes. The coin deposited for or representing the certifi-hlidby^''^^ cates of deposit shall be retained in the Treasury for the sociattons^ payment of the same on demand. Said certificates shall bepartofiaw- receivable for customs, taxes, and all public dues, and when ^sgocia- 60 received may be reissued ; and such certificates, as also haJte?™" silver certificates, when held by any national-banking asso-t,e'iSii?1n" elation, shall be counted as part of its lawful reserve ; and houses not no national-banking association shall be a member of any gold aaf clearing-house in which such certificates shall not be receiv- tifloatesTn able in the settlement of clearing-house balances : J'rovided, of balances That the Secretary of the Treasury shall suspend the issue proviso, of such gold certificates whenever the amount of gold coin and gold bullion in the Treasury reserved for the redemp- tion of United States notes falls below one hundred millions of dollars ; and the provisions of section fifty -two hundred otissue q? and seven of the Revised Statutes shall be applicable to thelcater certificates herein authorized and directed to be issued. § 13. That any oificer, clerk, or agent of any national f^s^iy^^°l banking association who shall willfully violate the provisions ehelS^ of an act entitled " An act in reference to certifying checks by national banks," approved March third, eighteen hundred and sixty-nine, being section fifty-two hundred and eight of the Revised Statutes of the United States, or who shall re- sort to any device, or receive any fictitious obKgation, direct or collateral, in order to evade the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered to the credit of the dealer upon the books of the banking association, shall be deemed guilty of a misdemeanor, and shall, on conviction thereof in any cir- 662 BANKING LAWS. cuit or district court of the United States, be fined not more than five thousand dollars, or shall be imprisoned not more than five years, or both, in the discretion of the court. § 14. That Congress may at any time amend, alter, or repeal this act and the acts of which this is amendatory. Approved July 12, 1882. INDEX. For convenience of reference, the laws relating to Savings Banks and National Banks, etc., are separately indexed. Page. Savings Banks index 682 National Banks, etc., index 689 GENERAL INDEX. A. Accounts : secaon. Page, frauds in keeping, of corporations 602 459 Act: authorizing certain corporations to extend term of exist- ence •. I 376 providing punishment for fraudulent issue or transfer of stock and bonds of corporations 1,2 462 for suppression and punishment of bribery 7 463 Actions : by and against banking associations may be brought in the name of the president 60 129 Actions by or against a corporation : complaint in 1775 4°7 when proof of corporate existence unnecessary in 1776 408 against, upon a promissory note, etc 1778 409 when foreign corporation may sue or be sued 1779-1780 410 against directors for misconduct 1781 414 by whom to be brought 1782 417 by judgment creditors for sequestration 1784 420 Actions to dissolve corporations: cases in which may be maintained 1785 421 to be brought by attorney-general 1786 423 temporary injunction in 1787 423 receiver may be appointed in 1788 424 additional powers and duties of temporary receiver in. . . 1789 426 making stockholders parties to 1790 427 6G4 INDEX, Actions to dissolve corporations — Continued: Section. Page. separate actions against stockholders, trustees, etc 179' 427 proceedings in either action 1792 427 judgment, property to be distributed 1793 427 stock subscriptions to be recovered 1794 428 liabihty of directors and stockholders 1795 429 Actions by the people to annul a corporation : to be brought by attorney-general when directed by leg- islature 1797 431 may be brought upon leave of court, when 1798 431 triable by a jury 1800 432 judgment in . . . 1801 433 injunction in 1802 433 copy judgment-roll to be filed and published in 1803 433 Agent : to witness destruction of notes 79 I44 for redemption of notes, to be appointed by banks and bankers 86 147 in case of failure, superintendent to appoint 87 148 appointment to be filed in banking department 87 148 list of to be published 88 148 to examine books and securities in banking department, 8 93 Appeal : from order, not to stay execution unless security is given, 149 205 when and by whom made 152 206 security on 1 54 207 Assessments : of expenses of banking department 6 92 how enforced 6 92 of stockholders to make good impairment of capital. .... i 98 Assets : how and when divided 109 160 after payment of creditors, to be divided 148 204 Attorney-general : to bring action against directors for misconduct 1781 414 when must bring certain actions 1808 437 to bring actions for dissolution of corporations. . . . 1786, 1797 ( 423 (431 B. Banking department: establishment of I 89 charged with the executions of the laws relating to banks, banking associations and individual bankers i 89 expenses of, how defrayed 6 92 rooms and furniture of 5 91 seal of office of superintendent of 4 91 certificate of association to be filed in 31 115 INDEX. 665 Banking associations : Section. Page. certificate of, to be filed 31 iiS shares deemed personal property 47 123 how capital may be increased or reduced 42) 43 121 if capital withdrawn, no dividends to be made 40 119 when capital impaired, duty of superintendent 17 97 general powers 35 116 number of directors to constitute a quorum 58 127 business confined to location specified in certificate 63 132 interest may be" taken at six per cent 68 135 penalty for taking greater rate of interest 68 135 on an equality with National banks 69 1 36 to be banks of discount, deposit and circulation 63 132 may hold and convey certain real estate 38 119 subject to Revised Statutes as to election of directors. . . 57 126 actions against banking associations 59. 60 j 127 ( 130 list of names and residence of stockholders to be kept.. . 46 122 securities to be transferred for circulating notes 82 146 to be held exclusively for redemption thereof 84 146 superintendent may give power of attorney to receive interest 82 145 when interest and dividends may be retained 83 146 examination of securities deposited in banking depart- ment 8 93 appointment of agent to examine 8 93 proceedings against, if circulating notes not redeemed. . 89 148 what stocks may be owned by 37 118 prohibited from receiving deposits as savings banks 283 301 to redeem its circulating notes at not to exceed one- fourth of one per cent discount 90 149 when prohibited from buying their own circulating notes, 100 155 securities held for the redemption of circulating notes, how sold and distributed loi, 103 (155 circulating notes owned by banks, how redeemed 107 156 iiS7 I158 notice of election when circulating notes shall be pre- sented for payment 107 1 57 two or more may consolidate 48 123 proceedings to consolidate 49 123 pending suits of consolidated, not affected 54 125 liability of stockholders not changed 55 126 in case any stockholder shall not assent to consolidation of 56 126 when and by whom declared insolvent 130, 1 34 ] 190 I 192 judgments against, when and how entered 1 29 1 89 conversion of, into National banks 166, 168 J 2ii ( 213 conversion of National banks into 177 216 in case of deposit of cash, without notice of intention to close, reports required 113 161 regarded as banks in full operation until notice of inten- tion to close is given 113 161 when such notice may be revoked ; 113 161 84 666 INDEX. Banking associations — Continued: section. Page, deposit of cash to protect circulation, after notice of closing 109 158 publication of notice of redemption 109 159 circulating notes to be presented within six years 109 159 money to be given up after expiration of notice 109 159 when trustees may divide assets 109 160 unclaimed balances to be paid into treasury 10 94 stock to be surrendered in proportion to notes returned, m 160 to appoint agents for the redemption of notes. ...'... 86, 97, 99 ( 14.8 (154 any number may appoint common agent 99 154 taxation of. Chapter XII 312 318 to make report to comptroller 322 325 to keep an account of money used, and deposits subject to the inspection of the comptroller 323 326 preferences in case of insolvency of 8 361 Banking : unauthorized, prohibited 297 309 Bank charters prior to 1825 19 Bank commissioners : office of - .... 31 Banking act: general 33 prominent provisions of the 34 Banking capital : increase of 39 Banking department: office of superintendent of the .... 38 Banking law: constitutionality of the general 33 Banking methods 3 Banking powers: first legislative specification of 22 Bank notes : registry of 6 360 redemption of 39 sale or hypothecation of 597 458 Bank officers: putting excessive number of its notes in circulation .... 598 458 overdrawing their accounts , 600 459 ' INDEX. 667 Banks : Section. Page. of the United States 8 receiving deposits in insolvent 6oi 459 Balances : unclaimed, to be paid into treasury - 10 94 Bills. See Notes. of exchange, payable on a day specified, to be without grace 120 174 Bond: of superintendent 2 go Books, papers, etc. : certain, of corporations to be kept open i 368 Building, mutual loan and accumulating fund associations: how formed i 341 articles of association of 2 342 copy of articles of, when filed 3 342 powers and limitations of 3 343 duration of ; 7 344 calls upon stock of 4 343 dividends of 7 349 may borrow money for certain purposes 5 343 stock of, for minors, etc 6 343 frauds of officers, etc., how punished 9 345 annual reports of 2, jo ( 345 (350 liability of stockholders and directors of 11 345 liability of trustees of 7, 12 ( 346 (350 election of officers of 14 346 right of those voting at elections of 13 346 power of legislature to repeal or alter 15 346 capital stock of, how increased or diminished 16 347 meetings of stockholders of 18 347 notice of meeting 17 347 exemption of shares of, from sale.. . .' 19 348 limit to loans by 20 348 certificate of, how made evidence 21 348 examination of, expense of 3 351 violation of charters of 5 352 failure of, to make reports 6 353 C. Capital : of banking association 29 no examination as to payment of 18 99 of banks and individual bankers to be paid in, in cash. . 18 99 articles may provide for increase of 39 119 when and how may be reduced 42 121 must give notice of intention to reduce 42 121 668 INDEX. Capital — Continued : amount ot reduction to be determined by superintendent, in case of withdrawal or impairment of 4°. '7 Certificate : of association as evidence certified copy of, to be received as evidence of residence of individual banker change of articles of association to be recorded and filed, of reduced capital to be recorded, filed and published. . . of amount of capital to be recorded, filed and published, of associates of individual bankers to be filed same to be evidence of a partnership and individual lia- bility 78 143 Charters : of corporations subject to repeal, etc 8 366 when forfeited 22 J 105 Circulation. See NoUs. banking association or individual banker not required to issue Clerks : appointment and duties of Contracts : to be signed by president and cashier. Conveyances : of real estate shall be made to the corporation, and by name by the superintendent, how executed Conspiracy trials, 1826-1827 43 [21 17 \ 97 I 119 30 112 31 "5 4 91 32 115 34 116 44 122 SI I2i 78 143 )366 161 2 90 59" 127 38 4 119 91 Corporations : certain, may hold stock 37 118 (See Banking associations and individual bankers.) how created i 357 debts of, how secured 2 358 term, defined 2, 3 j 358 (376 ' ' domestic " and " foreign, " terms defined 3343 449 liable to taxation 312 318 how assessed for taxes 312 318 general powers of i 362 exercise of banking powers by, prohibited 4 365 liability of stockholders of 5 365 quorum of directors of 6 365 forfeiture of corporate powers of 7 366 charter of, subject to repeal, etc 8 366 trustees in case of dissolution of 9 366 powers of trustees of lo 367 certain books of, to be kept open i 368 INDEX. 669 Corporations— C(j>«^zV2«^(f.' section. Page. dividends by, from surplus profits only 2 369 capital of, not to be reduced 2 369 certain notes of, not to be discounted 2 369 liability of directors of 2 369 amount of debts of, permitted 3 37° certain transfers of property by, prohibited 4 371 powers and proceedings of supreme court respecting elections of 5 37i certain by-laws of, to be published 6 372 elections of directors, etc., of 6 372 oath of inspectors of elections of 7 373 not to interpose defense of usury i 375 may extend term of existence in certain cases i 376 when certificates of stock of, lost to issue new ones i 377 of other States may purchase at certain foreclosure sales, etc I 379 receivers of 66, 70 j 384 I387 voluntary dissolution of 383 (See Dissolution of corporation^ service of process on 431 402 actions by or against 1775 407 (See Actions^ actions for dissolution of 1785 421 actions by the people to annul 1797 431 officers and agents of, must testify in actions for dissolu- tion of 1805 435 removal or suspension of officers of, by court or judge . 181 1 439 criminal proceedings against 675 450 frauds in organization and management of 590 452 592 454 insolvency of, deemed fraudulent, when 604 460 bribery of officers of . .' , 7 464 Creditors : meetings of, to be called by receivers 74 389 may be brought into action for dissolution of corpora- tions 1807 436 Criminal proceedings against corporations 450 D. Debts OF corporations 2 358 order of payment of, by receivers 79 391 Definitions : "corporations " , 3 358 " domestic,'' and " foreign " corporations 3343 44^ "directors" 614 462 "effects" 217 237 " evidence of debt " 218 238 " moneyed corporation " 214 237 670 INDEX. Deputy Superintendent : section. Page. how appointed • 2 90 powers and duties of 2 90 salary of 2.6 (90 (92 oath of office of 2 90 Deposits : by banks and individual bankers, upon organization 66 133 may be changed 67 134 upon retiring circulation 113 161 deposits and dividends unclaimed to be published 25; 106 Directors : number of 5^ 127 how elected 19S. 210 ( 230 (235 vacancies, when and how supplied 196 231 term defined 614 462 of corporations, liability of 2, 3 369 actions against, for misconduct 1781 414 actions by whom to be brought 1782 417 of stock corporations, misconduct of 594 455 chargeable with knowledge of affairs of corporation 609 461 participating in fraudulent insolvency, how punished . . . 605 460 when presumed to have assented to proceedings 610 461 to disclose to associates fact of service of process upon them 612 461 liability of, for use of money of corporation for purpose of bribery 7 464 Dissolution of corporations: actions for 1785 421 cases in which may be maintained 1784 420 to be brought by the attorney-general 1786 423 temporary injunction in . 1787 423 receiver may be appointed in 1788 424 additional powers and duties of temporary re- ceiver in 1789 426 making stockholders parties in 1790 427 separate actions against stockholders, trustees, etc 1791 427 proceedings in either action 1792 427 judgment, property to be distributed 1793 427 stock subscriptions to be recovered 1794 428 liability of directors and stockholders 1795 429 Dissolution, voluntary, of corporations. (See Corpora- tions, Receivers, etc.): majority of directors may petition court for order to show cause 2419 395 proceedings in case directors are equally divided 2420 395 contents of petition 2421 396 affidavit to be annexed to petition 2422 397 order to be published 2424 398 order to be served on stockholders and creditors 2425 398 the hearing 2426 398 application for final order 2428 399 INDEX. 671 Dissolution, voluntary, of corporations — Continued: Section. Page. final order , 2429 399 certain sales, etc., void after petition , 2430 400 certain corporations excepted 2431 400 Dividends: of corporations from surplus profits only 2 369 dividends and deposits unclaimed to be published 25 106 in case of insolvency, not to be delayed beyond one year, 147 203 on exempt stock, how made 325 326 not to be made if capital impaired 40 119 to be made only from surplus profits 179 219 when and how made in certain cases 137 195 Domestic corporation: term defined 3343 449 E. Effects : term defined 217 237 Elections : of corporations generally 6 372 Evidence of debt : term defined 218 238 Expenses : of banking department, how defrayed 6 92 of examinations 21,221 ( 104 (241 of printing notes and bills 74 142 of examining agent 9 93 Examination : of books and securities in banking department .made by agent in certain cases in case of impaired capital by the court upon application of creditors when, report imperfect or unsoundness suspected upon failure to report in case of reduction of capital in case of consolidation 8 93 8 93 17 97 19 99 12 95 21 104 43 121 SO 124 12 9S 13 96 14 96 Examiner : appointment of. oath of powers and duties of 13, 14 F. Foreign companies : duty of agents of i 375 may purchase at certain foreclosure sales, etc., in this State I 379 evidence of incorporation of i 380 672 INDEX. Foreign companies — ConUnueti : section. Pag^e. when, may sue or be sued I779 41° superior city courts have jurisdiction of certain actions against.. 263 441 term defined 3343 449 subject to same law as domestic corporations 613 462 Forfeiture : of corporate powers 7 366 Frauds : in management of corporations 590, 59'? I 452 Fraudulent issue or transfer of stock of corpora- tions S91 453 G. Guaranty or indemnity companies. See Trusi companies. H. Historical sketch , 2 I. Individual bankers: certificate of residence to be filed 32 115 change of residence, superintendent to advertise 33 116 unlawful for bankers, having circulating notes, to sell business 64 133 but may bequeath business 65 133 may issue circulating notes 72 141 notes of, to express only individual liability 76 142 penalty for non-compliance 76 142 designation of banker, and bank on circulating notes ... 77 143 persons interested with, liable 78 143 to file certificate of persons interested, with superintend- ent 78 143 same to be evidence of partnership and liability 78 143 (in other respects individual bankers are subject to same regulations as Banking Association, which see) Indemnity companies. See Trust companies. Injunction : in case of insolvency 132 191 upon dissolution of corporations 1802 433 Insolvency : of corporations deemed fraudulent, when 604 460 Inspectors : of election for directors 195, 198 ( 230 { 2^1 oath of 198 231 INDEX. 673 Interest : Section. Page. rate of 68 135 usury 68 135 Investments : history of 59 J. Joint-stock companies. See Corporations, etc. Judgments : against banking associations 129 189 when and how entered 129 189 proceedings supplementary to 161 208 against non-resident stockholders 162 209 lien of 165 210 in actions for dissolution of corporations 1801 433 Loan companies. See Trust companies. Loans : of moneyed corporation, when to be called in 183 222 M. Manhattan company ; charter of 20 Misconduct : of directors of stock corporations 594 455 Moneyed corporations. See Corporations: restrictions on 179 219 profits of, ' how calculated 180 221 losses of, how charged 182 222 loans of, when to be called in 183 222 certain conveyance for use of, invalid 185 223 penalties for violation of law by director of 188 228 affidavits from, hereafter created 192 229 charter of, void if such affidavit is not filed 194 230 inspectors of elections of 195 230 elections of directors of 195 230 proceedings when election not held 206 234 by-laws of 207 234 transfer book of stock of 208 234 remedy, if person aggrieved by election 210 235 term " moneyed corporations " defined 214 237 term "directors " defined .' 216 237 term " effects " defined ... 217 237 term " evidence of debt " defined 218 238 violation of duty by directors of . v 606 460 regulations in relation to. See Chapter VIII, 179 219 Mortgage COMPAnjss, See Trust companies, 85 674 INDEX. N. Names : Section. Page, of persons, unauthorized use of, in prospectus of corpo- rations ■ S93 455 National banks : Separately indexed. See page 689. New York : banlt of 10 North America: bank of Notes : circulating may be issued by banks 72 141 banks not required to issue 112 161 securities to be deposited 71 140 to be stamped, " secured by the pledge of public stocks" 73 141 how printed 70,77 S 139 ( 143 not to be countersigned beyond pledged securities 75 142 to express only liability of bankers issuing them 76 142 return to banking department and destruction of 79 144 mutilated, may be exchanged 81 145 penalty for mutilating 8i 145 counterfeit, surrendered to superintendent for destruc- tion 80 144 office of redemption 86 147 redemption agents, how appointed 87 148 list of agents to be published . . 88 148 rate of discount , 90 149 penalties for neglect of agents to redeem 89 148 appointment of agents may be revoked 98 1 54 demand and protest for non-payment of 91 149 when and how to be protested 92, no (151 \ 160 notice and proceedings if notes not paid in fifteen days . 92 151 securities to be sold in case of non-payment 93 152 damages for non-payment 94 153 exceptions in certain cases 95 153 held by banks and individual bankers, how redeemed. . . 107 157 fees for protest how paid 96 153 when notes cease to be a lien on funds held by superin- tendent 103, 109 (156 I 159 if not received at par not to be circulated 115 162 less than $1,000, payable only at the office of the asso- ciation 116 163 must be made payable on demand, without interest 117 163 penalty for violation 117 163 foreign, not to be circulated at a greater rate of discount than the redemption rate of domestic bills 118 172 of certain foreign banks not to be circulated 118 173 may pay out foreign bank notes current at par 118 173 INDEX. 675 ^OT-£S — Continued : Section. Page, may receive foreign notes in the regular course of busi- ness ii8 173 penalty for violation of law, as to circulation of foreign banknotes 119 174 not to be issued of less denomination than one dollar, 189, 306 229 security held for redemption of 84 146 on forbidden loans, void 301 312 not to be given payable otherwise than in money 308 316 certain ones to be promissory notes 310 316 Notice : by superintendent to present circulating notes for re- demption loi 155 to present certificate of claims against funds in hands of superintendent loi 155 of election, where notes shall be presented for payment. 107 157 of closing business by banks and bankers 109 1 58 by superintendent, upon receipt of deposit to retire cir- culation 109 159 of intention to close, may be revoked 113 161 as to quarterly reports 20 loi O. Oath: of superintendent 2 90 of deputy superintendent 2 90 of examiner, to be filed 13 96 of president and cashier, as to quarterly reports 20 102 of president and cashier, as to location of business 28 108 of inspectors 198 231 of persons voting on proxies 204 233 Officers : of banking association, how chosen 35 116 to sign contracts 59 1 27 may be examined on oath 13 96 of corporation, publishing false report of condition of. . . 603 459 of corporations, bribery of 7 464 removal of, by court or judge 1811 439 P. Penalty : for refusal of witness to appear or answer 14 pg for neglect to make good deficiency in capital 17 97 for failure to make quarterly report j 21, 22 ( 104 ( loS for failure to file certificate of residence 32 115 for making dividends when capital withdrawn , . , 40 119 for taking usury 68 135 for countersigning bank notes beyond securities pledged 75 142 for individual bankers to issue notes, not expressing only individual liability , 76 142 for mutilating bank notes 8i 154 676 INDEX. Penalty — Continued: section. Page, for neglect of individual banker to report parties in in- terest 78 143 for neglect to redeem circulating notes on demand 89 148 for violation of act in relation to redemption of notes. . . 108 158 for issuing notes not payable on demand 117 163 for circulating foreign bank notes 119 174 for paying out notes received less than par 119 174 for refusal to exhibit books 128 188 for refusal to exhibit books to stockholders 209 235 for circulating notes without authority 300, 303 307 f 312 a; (31 31S 6 for neglect to report to comptroller 322 325 for advertising as a savings bank, without authority .... 283 301 Plates and Dies: when to be destroyed 80 144 counterfeit, to be surrendered to superintendent for de- struction 80 145 Pleading : verification .of, by corporation , 525 441 Process: officer to disclose to associates fact of service of, upon him 612 461 Protest. See Notes. Proxies,,, , , 203, 204 233 Quorum 6 365 R. Receivers : of corporations, powers and duties of 1788 424 to give security 66 384 authority of 68 385 to prosecute for arrears of stock 69 386 to give notice of appointment 70 387 certain sales by, void 71 387 debtors to account to 72 388 ~ may refer controversies 73 388 to call meetings of creditors 74 389 course with regard to subsisting contracts 75 389 compensation of 76 390 may retain certain moneys 77 390 order of payment of debts by 79 391 second and final dividends by '. 80 392 debts not exhibited to 82 393 surplus to be paid by, to stockholders 83 393 distribution of moneys retained by 84 393 INDEX, 677 Receivers — Continued: Secaon. Page. subject to control of court 85 393 accounting by 86 393 settlement of account of 89 394 relative to order appointing in certain cases 18 10 438 when and how appointed 133 192 powers and duties, of 135, 139 (193 ( 195 when to convert securities into cash 136 194 when to make dividends 136 194 expenses, when deducted 137 195 assets, how distributed by 137 195 report as to unpaid debts 138 195 report as to stockholders 140 196 further powers and duties 142, 164 (198 I 209 Referee : powers and duties in case of insolvency 136, 165 ( 194 \ 210 Removal of officers : of corporations by court or judge- 1811 439 Report ; of examiner when to be published quarterly, to superintendent what to contain when to be published penalty for failure to by individual banker to superintendent annual of superintendent to legislature verification of, by banks and bankers by referee as to unpaid debts 138 as to list of stockholders 139 of treasurer to legislature, as to stocks transferred 122 Repealing act Restraining act of 1804. Restraining ACTOF1813. Restraining act of 1818. S. Safe deposit companies : number of corporators of, objects, etc... organization of, when perfected. . , management of, by trustees when authorized to commence business. election of trustees of notice of elections, failure to elect trustees of president and officers of payment of stock of forfeiture for non-payment by-laws of 12 95 15 97 20 lOI 20 102 20 102 21 104 22 los 27 107 28 108 38 19s 39 195 22 175 81 12 ... 15 17 I 331 2 333 3 333 I 332 3 334 3 333 4 334 s 334 6 .335 6 335 7 335 8 9 10 335 336 336 11 337 12 337 13 337 338 678 INDEX. Safe deposit companies — Continued: Section. Page. stock of, how transferable personal liability of stockholders of reports of, time of making publication of reports of visitation and examination of, expense, etc.- subject of inquiry by examiners of proceedings agai'nst, for violation of charters " Safety Fund " system 27 Savings banks. Separately indexed. See page 682. history of , 47 benevolent, not charitable 5^ trustees of 57 Security : to be deposited by banks and individual bankers upon organization 66 133 to be deposited for circulation. See Notes. held by banks and other corporations 36, 37 118 transferred by superintendent must be countersigned and recorded by the treasurer 121 175 record of transfer to be kept by the treasurer 121 175 transfers of, to be reported to the legislature 122 175 may be changed or transferred 82 145 held by superintendent in case of insolvency, to be con- verted into cash 136 194 Security companies. See Trust companies. Seal of Superintendent 4 91 State Treasurer : to have access to books in banking department 124 175 to countersign transfers of stock made by superintendent, etc 121 175 Statute Regulations of 1827 24 Statutes : revision of the 87 Stock : when certificates of, lost, new ones to be issued fraud in issue of 591 Stockholders : liability unchanged by a reduction of capital list of names to De kept and filed shares of, peisonal property rights of ' to consent to consolidation liability not changed in case of consolidation may dissent from consolidation I 377 191 453 45 122 46 122 47 123 47 123 50 124 55 126 56 126 INDEX. 679 Stockholders — Continued: Section. Page. may sue and be sued by the president 6i 130 set-oflfs in such suits 62 132 liability of, for debts contracted by banks defined. .125, 127 j 178 I 187 names and residences of, to be entered in a book 128 188 book to be open for inspection during business hours. . . 128 188 penalty for refusal to exhibit book 128 188 one or more may apply for order declaring corporation insolvent 134 192 non-resident ; proceedings against IS7 207 may compromise with receiver 1 59 208 action on judgment against - 162 209 taxation of See Chapter XII 312 318 assessment upon, to make good impairment of capital, how enforced, chapter 191 1,3 98 of corporations, liability of 5 365 to be made parties to actions for dissolution of corpora- tions 1790 427 Subscriptions for stock : fraud in 590 452 Supreme court : powers of, relative to elections of corporations 5 371 Suspension of officers of corporation : by court or judge 181 1 439 Superintendent : how appointed.^ , salary of oath of oiBce and bond of powers and duties of seal of salary and expenses of, how defrayed rooms to be assigned to no compensation for extra services to be received by not to be interested in banking to pay unclaimed balances into treasury to make examination of banks in certain cases as to banks refusing to be examined, duty of to ascertain whether capital has been paid in, in cash . . . to issue certificate of authority to commence business . . to designate date as to quarterly reports annual report of, to legislature to examine in case of reduction of capital to determine amount of reduced capital to examine and certify capital stock in case of consolida- tion to print circulating notes to countersign number and register same to receive securities and deliver circulating notes to procure plates and dies and retain custody of same . . . to collect expense of printing notes not to countersign notes beyond securities pledged 2 90 2 90 2 90 3 91 4 91 6 92 5 91 7 92 2 90 10 94 12 9? 16 97 18 99 18 99 20 lOI 27 107 43 121 43 121 50 124 70 139 70 139 71 140 74 142 74 142 75 142 680 INDEJC. Superintendent — Continued: Section. Page. penalty for violation . , 75 142 to destroy notes 79 144 to destroy bank-note plates 80 144 may grant power of attorney to collect interest, or divi- dends on trust funds 82 145 when to retain interest or dividend on trust fund 83 146 to hold securities for the redenjption of notes 84 146 to withhold notes and interest of insolvent bank 85 147 to sell and distribute securities held for the redemption of circulating notes loi, 102, 104 (155 /156 to give final notice of presentation of notes loi 155 to pubhsh notice of redemption of notes lo; 156 to surrender funds held after expiration of notice 109 158 to surrender securities in proportion to notes returned and canceled , in 160 may receive deposits of cash from banks without notice of intention to close 113 161 to have access to certain transfer books of the treasurer. 124 175 in case of insolvency to convert securities into cash 136 194 may publish reports of trust, loan, security, mortgage guarantee and indemnity companies 220 241 to examine same 221 241 may examine witnesses ... 221 241 ' to assess expenses of examination 221 241 duty of, in case of violation of law or improper manage- ment 223 242 in case of refusal to deposit, superintendent to enjoin . . . 225 244 to assess proper proportion of the expenses of the bank- ing department 226 244 in case of reduction of capital, to examine and certify amount of capital stock 229 246 when capital impaired to examine and require deficit to be made good 233 247 to report condition of said companies to legislature 234 248 Surplus moneys 64 T. Taxation. See Chapter XII 318 exemption from taxation, for whose benefit 326 326 Trust companies : toreport to superintendent 219 239 report to be published 220 241 examination of 221 241 expense of examination 221 241 witnesses may be subpoenaed and examined 221 241 scope of exarnination 222 242 proceedings against, in case of violation of law 223 242 to transfer securities to superintendent 224 242 foreign corporations refusing to deposit securities, to be enjoined 225 244 INDEX. 681 Trust COMFAJ^I'ES — CcnUnued : Section. Page. to be assessed by the banking department 226 244 restrictions as to deposits and loans 227 244 capital may be reduced 228 245 notice and method of reduction 229 245 examination .in such case 229 246 certificate of reduced capital to be recorded and published . 230 246 liability of stockholders, and rights of creditors un- changed . . .'. 231 246 capital may be increased, method thereon 232 246 proceedings in case of impairment of capital 233 247 superintendent to report condition to the legislature annually 234 248 Trustees : powers of 10 367 U. Usury 68 135 corporation not to interpose defense of i 375 V. Valuations : of capital stock, etc., for purposes of taxation 312 318 Verification of pleadings by corporation 525 441 W. Witness : examiner may summon any inhabitant of the county. 14, 221 j 96 (241 penalty for refusal to appear or answer 14, 221 j 96 J 241 86 682 INDEX. SAVINGS BANKS. Chapter X. , A. Act : section. Page. declared a public act 289 304 Association : certificate of ' 237 254 what to contain and how to be executed 237 254 to be filed in banking department 238 254 Attorney-General : may proceed against a savings bank for neglect to invest money 262 284 also under section 278, upon facts reported by superin- tendent 278 298 Authorization : certificate of. See Superintendent. to be issued within sixty days 243 256 to whom to be issued 243 256 to be transmitted to county clerk 244 257 duplicate to be filed in banking department 244 257 superintendent may refuse to issue 245 257 county clerk to be notified of refusal to grant 245 257 when granted, in whom powers are vested 246 257 persons named in, to be the first trustees 249 258 Available Fund : how to be kept or loaned 261 277 B. Bank building. See Real estate. Banking department. See Superintendent. Bank of discount : temporary deposits may be made in, by savings banks. . 262 284 an available fund of 10 per cent may be kept on deposit with 261 277 where saving banks are depositors with, to be preferred creditors in cases of insolvency 282 300 not to solicit or receive deposits as savings banks 283 301 By-Laws and regulations : may be made by trustees. 251 260 deposits and dividends to be repaid as trustees prescribe. 257 266 regulations to be posted in banking room 257 266 INDEX. 683 C. Certificate of Association. See Association. Charters : Sect on. Page, conformation of, to this act. See Corporations 286 303 Contributions: by savings banks for expenses of banking department . . 281 300 Corporations, Savings: declared corporations with general powers 235 250 to have perpetual succession 235 250 may sue and be sued 235 250 may make and use a common seal 235 250 may appoint officers and agents 235 250 may make by-laws 235 250 may contract and be contracted with 235 251 may receive deposits and invest the same 235 251 duties before receiving deposits 247 257 to commence business within one year 248 258 name of, may be changed 285 302 conformity of charters not to affect prior legal rights. . . . 286 304 misnomer of, not to impair certain instruments 288 304 may close voluntarily 293 306 County Clerk. See Superintendent. certificate of association to be filed with 238 254 certificate of authorization to be filed with 244 257 superintendent's refusal to issue certificate to be filed with 245 257 extension of time for commencing business to be filed with 248 258 approval of change of name to be filed with , 285 303 Court : duty of, in action for the recovery of money 259 271 duty of, in proceedings by attorney-general 278 298 superintendent, by direction of, may take possession. . . . 278 298 may adjudge franchises surrendered 294 307 D. Deposits : Before received, duty of corporation 247 257 of money may be received and invested 256 265 and dividends to be repaid as trustees prescribe 257 266 may be limited,, refused or returned 257 867 single, not to exceed $5,000 257 267 single, not to exceed $3,000 290 305 in name of minors to be paid to them 258 270 in trust, may be paid to principal 258 270 claimants of, may be made parties defendant 259 271 certificate, or evidences of, binding without seal 287 304 prohibition against the receiving of, by persons, firms, etc. 283 301 684 INDEX. Deposits by savings banks ; SecUon. Page. may be made in banks or trust companies 261 276 uninvested moneys may be temporarily deposited 262 284 in banks or trust companies becoming insolvent 282 300 Dividends or interest : may be declared, credited and paid on deposits 256 265 and deposits to be repaid as prescribed by trustees 257 266 not to exceed five per cent 267 289 depositors may be classified with respect to 267 289 in excess of profits, trustees liable therefor 267 290 to be declared only upon vote of board of trustees 267 290 to be declared only for the time moneys have been on deposit , 267 289 extra may be declared 267 290 change in rate to be posted in bank 267 290 E. Evidence ; of deposit. Se^ Dejiosit 287 304 Examination : savings banks subject only to, by bank superintendent.. 275 296 of savings banks to be made once in two years 277 296 expenses of special, to be paid by bank examined 277 297 result of special, to be certified by examiners 277 297 result o£ regular, to be embodied in annual report of superintendent 277 297 illegal and unsafe practices discovered by. See Superin- tendent 278 297 of books, assets, etc., to be made semi-annually by trustees 279 299 Examiners : may be appointed by superintendent 280 299 may compel attendance of persons and papers 277 297 expenses of. See Expenses 277 297 shall certify result of special examination 27^ 297 Expenses : of perfecting mortgage papers, to be paid by borrower. . 264 287 of reinsurance of mortgaged premises, may be paid by bank 265 287 penalties collected from savings banks to be paid into treasury 274 295 of special examination to be paid by corporation exam- ined 277 296 salaries of clerks and examiners to be paid from State treasury 280 299 of banking department to be assessed on savings banks, 281 300 Female. See Deposits. INDEX. 685 I. Insurances : sectkn. Page. of mortgaged premises to be made payable to bank 265 287 if neglected by mortgagor may be renewed by bank 265 287 Interest. See Dividends. Investments : may be made only as authorized 260 ( 272 shall be made as soon as practicable 261 276 legally made, prior to 1875 not affected by this act 286 304 L. Loans : from the available fund , 261 277 upon notes, drafts or personal securities, unlawful 264 286 upon bond and mortgage 264 286 expense of effecting, to be paid by the borrower 264 287 Location : may be changed with approval of the superintendent . . . 263 285 M. Meetings. See Trustees. Minors, See Deposits. N. Name: of savings bank how changed 285 302 Notice : of intention to organize, to be published 239 254 of refusal to grant certificate to be filed with county clerk 245 257 of change of rate of interest to be posted in bank 267 290 of intention to apply for change of name to be published, 285 302 o. Officers : to be chosen by trustees 250 259 shall not borrow the funds of the corporation 255 262 shall not become surety for money loaned by the bank.. 255 262 prohibitions against dealing in notes, exchanges, etc. . . . 266 287 two principal, to verify reports to superintendent 273 295 commit a misdemeanor in making certain investments. . 286 304 Organization : what necessary to perfect 236 253 notice of intention to organize to be published 239 254 failure to commence busmess in one year forfeits rights, 248 258 686 INDEX. P. Penalty : Section. Page. for failure to report to superintendent , 274 295 for discount banks soliciting savings deposits 283 301 Perjury : false swearing in regard to reports, deemed 273 295 Prohibitions : against certain persons being named in certificate 243 256 against trustees being connected with other savings banks 253 261 against trustees borrowing the funds of the corporation, 253 261 against trustees having interest in the profits of the cor- poration 255 262 against trustees receiving pay for services 255 262 against single deposits exceeding $5,000 257 267 against receiving deposit or deposits in excess of $3,000. 290 305 against deposits in banks exceeding twenty-five percent of capital and surplus 261 277 against loaning on securities more than ninety per cent of their value .....' 261 277 against cost of banking-house exceeding fifty per cent of surplus 263 285 against holding real estate longer than five years 263 285 against loaning upon notes or personal securities 264 286 against trading in real estate, goods or other com- modities 266 . 287 against dealing in notes, exchanges, etc 266 287 against issuing certificates of deposit 266 288 against payment of interest except regular dividends. ; . 266 288 against payment to depositors except on production of pass-book 266 288 against allowing interest for longer period than moneys are held 267 289 against payment of dividends except on recorded vote of trustees 267 290 against trustees receiving pay as such 269 293 against banks, firms, persons, etc., soliciting savings de- posits 283 301 against investments in securities not authorized 286 304 Profits. See Dividends. Quorum : shall consist of 252 261 less than, may adjourn from time to time 252 261 R. Real estate: investments in, to be made subject to section 263 260 273 loans upon, shall be on bond and mortgage 264 286 loans on, to be insured when buildings are included .... 265 287 unlawful to deal or trade in, except as authorized 266 287 INDEX. 687 Receivers : section. Page. duties of 278 298 to transfer unclaimed balances to superintendent 295 307 when may be discharged 295 307 Regulations. See By-Laws. Reports : to be made to superintendent semi-annually 270 294 shall be verified by two principal officers 273 295 what to contain 271, 272 ( 294 (295 false swearing concerning, deemed perjury 273 295 penalty for failure to report 274 295 time for making, may be extended , 274 295 no other, than to superintendent required 275 296 by superintendent to legislature 276 296 when from, illegal and unsafe busmess is discovered .... 278 297 of assets to be based on examination by trustees 279 299 to state that balances of depositors' ledgers have been taken 279 299 s. Superintendent of banking department: copy of certificate of association to be filed in office of. . 238 254 to indorse such certificate " filed for examination " if com- plete 240 255 may refuse to file certificate if incomplete 241 255 to ascertain prospects of success for a new bank 242 256 shall issue certificate of authorization within sixty days . . 243 256 shall transmit to county clerk copy of certificate 244 257 when may refuse to issue certificate of authorization 245 257 notice of refusal to issue certificate to be filed with county clerk 245 257 information to be transmitted to superintendent before receiving deposits 247 257 may extend time for savings banks to commence business 248 258 copy of by-laws to be transmitted to 251 260 shall report to attorney-general violations of law. See section 278 262 284 when permission of, is required to erect a banking-house, 263 285 may extend time for sale of real estate 263 285 may approve change of location of savings banks 263 285 may direct discontinuance of payments when pass-book is not produced . 266 287 duty of, in determining per cent of surplus 268 292 form of reports to be made to 270 294 penalties, how recovered by 274 295 may extend time for making report 274 295 shall report to the legislature before March I of each year, 276 296 shall cause savings banks to be examined once in two years 277 296 shall direct discontinuance of unsafe practices 278 2q7 shall communicate to attorney-general certain facts 278 298 688 INDEX. Superintendent of banking department — Co^/z^w^^.- Section. Page, if court directs, may take possession of a savings bank. . 278 298 may employ necessary clerks and examiners 280 299 expenses of, how paid 281 300 may authorize change of name of savings bank 285 302 shall receive and receipt for unclaimed balances trans- ferred to him 296 308 may pay unclaimed balances to depositors 296 308 Surplus fund: of fifteen per cent may be accumulated 267 289 how determined 268 292 Trust companies. See Banks. Trustees : persons named in certificate of organization to be first. . 249 258 to have the management of the corporation 249 258 board of, not to be less than thirteen 250 259 vacancies in board of, how filled 250 259 board of, to make by-laws 251 260 regular meetings of, to be held monthly 252 261 not less than seven to constitute a quorum 252 261 when office of, shall become vacant. See section 235. . . 253 261 may require security from officers 254 262 prohibitions against 253, 255 (261 \ 262 may invest deposits only as authorized by this act 260 272 committee of, to certify valiie of premises to be mort- gaged 260 273 duty o^ to invest deposits as soon as practicable 261 276 duty of, in case of depreciation of securities on which loans are made 261 277 may apply to superintendent for extension of time to sell real estate ... '. 263 285 not to loan on notes, exchanges, etc 264 286 non-residents of the State ineligible 291 305 removal of, from State vacates office 291 305 may pay deposits when pass-books cannot be produced, 266 288 shall regulate rate of interest not to exceed five per cent, 267 289 may accumulate a surplus fund of fifteen per cent 267 289 may classify depositors 267 289 dividends to be declared only on vote of 267 290 may once in three years make extra dividends 267 290 may receive compensation when acting as officers 269 293 shall, by committee, make semi-annual examination 279 299 number of, may be reduced 284 302 number of, may be increased ." 284 302 a misdemeanor for, to make unauthorized investments. . 286 304 action to be taken by, in voluntary liquidation 293 306 to transfer unclaimed balances, in closing bank, to super- intendent. - 295 307 INDEX. 689 NATIONAL BANKS. A. Attachments. See Transfers. B. Banks AND BANKERS. See National banks. Section. Page. not to use the word " National " in title of firm 5243 609 Bonds deposited with treasurer: deposit of, before commencing business 5159 555 what kind of, to be deposited 5159 SS5 increase or decrease of. 5160 556 registered to be issu.ed for coupon 5161 556 transferor. 5162, 5164 (556 \ 557 examination of transfers 5165 557 annual examination of 5166 557 custody of, etc 5167 558 withdrawal of 5x60 556 comptroller to have access to 5165 557 interest on, how collected 5167 558 limitation of withdrawal of 5167 558 ratio of circulating notes to 5171 560 may be sold for failure to withdraw circulation 5180 564 description of, by National gold banks 5185 566 interest on, when withheld 5205,5213,5215, 5217 S 581 (588 forfeiture of 5227 595 cancellation of 5229 596 sale of 5230, 5231 j 596 ( 597 Bonds, official: of comptroller , 326 612 of deputy comptroller 327 612 of receiver , 5234 597 to be given by stockholders 3 650 Bonds of United States: defined 5158 555 not taxable under State or local authority 3701 633 may be issued to provide for coin redemption. . , 3 643 By-laws : of associations. . . , 5136 532 87 690 INDEX. C. Capital : Section. Page. minimum amount of 5138 539 failure to pay installments of 5 140 543 increase of 5^42 544 reduction of 5143 545 impairment of 5205 5^' tax upon ; 5214 587 of bank at dissolution, assumed to be its capital 3410 616 of savings banks in District of Columbia 6 652 of converted State banks, minimum amount of 5154 551 Cards : in imitation of circulating notes, penalty for issuing 5188 567 Cashier : appointed by board of directors 5136 532 oath of, required to payment of installments of capital stock 5140 543 as to report of dividends. . ^ 5212 586 penalty for embezzlement by 5209 583 after money is deposited no fraud of, can free bank from liability '. 5136 532 Charters : extension of 514 Checks : certification of 515 penalty for certifying beyond amount of deposit 5208 583 bank not liable unless it agrees to pay, 5136 532 certifying, is warranty that there are funds to pay 5208 583 Circuit courts of United States : jurisdiction of suits by or against national banks 629 627 may grant injunction in case of national banks in hands of receivers 5237 604 Circulating notes • provisions for obtaining and issuing 5171 560 amount of , 5171 560 equalizing apportionment of circulating notes 5179 563 how withdrawn 5180 564 for what receivable 5182 565 not at par not to be paid out by banks 5206 582 delivery of 5171 560 printing denominations, etc 5172 561 control of plates, etc 5173 562 examination of plates, etc 5174 562 limit of amount of small notes 5175 562 limit of circulation, etc 5176, 5180 J 562 (564 how signed, etc 5182 565 to be received by all bank^ 5196 573 INDEX. 691 Circulating notes — Continued: section. Page. restriction upon use of .... 5206 582 issue of other notes prohibited 5183 565 destroying, etc 5184 566 redemption of 5220, 5225 J 592 ( 594 mode of protesting 5226 594 proceedings on failure to redeem S227. 5233 l 595 (597 redemption of, at treasury 5229 596 issuing, to unauthorized associations 5187 567 printing in imitation of. 5188 567 mutilating, etc 5189 568 counterfeiting, etc 5415 621 buying, selhng, etc 5434 624 included under term "obligation or other security of the United States " 5413 620 issue of gold notes 5185, 5186 (566 (567 Coin : United States notes to be redeemed in 3 643 silver, to be used in redemption of fractional currency . . i 642 Comptroller of Currency : to be chief of currency bureau 324 611 appointment, salary, etc 325 611 oath and bond of 326 612 employment of clerks by 328 612 not to be interested in national banks 329 612 seal of office of 330 612 examination of banks of District of Columbia by 332 613 annual report by 333 613 how to be printed ... 381 1 633 jurisdiction of circuit courts in suits to enjoin.. 629 627 in what district , 736 632 certificates, etc., and copies of papers in office, evidence of. 884 632 articles of association of national banks to be sent to 5133, 5135 S 530 I 531 title of banks subject to approval of 5134 531 payments of installments of capital to be certified to ... 5140 543 banks not to begin business until authorized by 5136 1:32 increase and decrease of stock approved by S142, 5143 (544 ( 545 oaths of directors of banks to be sent to, . . , 5147 546 to determine as to capital, etc 5 1 5 1 547 to receipt for bonds deposited by banks 5162 556 to keep a. register of bonds transferred 5163 557 to notify banks of transfers, etc 5164 557 to have access to books of treasurer 5165 557 bonds of banks to be annually compared with books of. 5166' 557 duties as to interest on bonds, etc 5167 558 to see to correctness of organization, etc 5168 559 permission to banks to commence business 5169 559 to issue circulation to banks , ,,, 5171 560 to cause potes to be engraved, etc ■■•-.x- 5172 561 692 INDEX. Comptroller OF Currency — Continued: Section. Page.. to have custody of plates, etc . ■■ 5 '73 5^2 to make requisition for return of circulation to equalize apportionment .... 5'^° 5^4 to prescribe rules for removal of banks from one State to another 5181 565 to replace worn out notes 5 1 84 566 when to issue gold notes to banks 5185 566 to notify banks to make up reserve 5191 570 when may appoint receivers 5191,5195,5201,5205, 5234 3570 \ 597 to approve selection of redemption agencies 5195 572 to require banks to make good impaired capital 5202 580 list of shareholders to be sent to 5210 585 reports to 521 1 586 dividends reports sent to ... 5212 586 may fine for failure to make reports 5213 586 vote of bank to go into liquidation to be certified to. . . . 5221 593 duties of, in relation to banks redeeming circulation, 5222, 5225 j 593 I 594 on failure to redeem notes . 5226 594 dividends to creditors of banks 5236 602 may be enjoined in proceedings against banks .... .... 5237 604 forfeiture of franchises at suit of 5239 605 may appoint occasional examiners 5240 606 suit by bank to enjoin, must be in district court 736 632 to compel banks to close 5151 547 to cause annual exarriination of plates 5172 561 savings banks, etc., established under acts of Congress, must report to 6 652 decides on sufficiency of evidence as to organization ... . 5169 559 his certificate is proof of incorporation of bank 5169 559 Comptroller of Treasury: duties as to refund of taxes paid by national banks in excess of what is due 5218 588 Copies : of books, records and papers in the office of comptroller of currency shall be received in evidence 884 632 Counterfeit : to be stamped on fraudulent United States notes 5 652 to be stamped on fraudulent national bank notes 5 652 penalty for having or passing such notes 5431 623 penalty for buying or selling, receiving or delivering such notes 5434 624 Counterfeiting : or altering circulating notes, penalty for 541 5 621 bank-note plates, or having in possession, penalty for. . 5430 621 Crimes against operations of the government. . .5430, 5437 3621 I 625 INDEX. 693 Currency, bureau of national : section. Page. comptroller of currency to be chief of. . 324 611 expenses of, to be paid out of taxes on national bank circulation 5173 562 See National banks, D, Defacing notes, etc. : of national banks, penalty ., 5189 568 Definitions : of " bank " and " banker " in laws relating to taxation .. . 3407 615 of " United States bonds " 5158 555 Deposits : national banks may receive 5136 532 proportion of reserve to be kept on 5191 570 not to certify checks in excess of 5208 583 to pay duty or tax on 5214 587 to make return to treasurer 5215 587 duty or tax on, how assessed and collected in default of return and payment. 5216 587 refunding of excessive duties , 5218 588 Depositaries of public moneys: national banks may be designated as 5153 550 Deputy Comptroller of Currency : appointment, salary, duties, etc 327 612 not to be interested in national banks 329 612 Directors : when may sell shares of delinquent stockholders 5141 543 shall hold office for one year 5145 545 oath of, required as to facts in relation to organization. . 5135 531 of State banks, how may convert organizations into national banks 5154 551 appointment or election of 5 1 36 532 powers of 5136 532 number of 5145 545 board of, officers, etc 5136 532 votes in election of 5144 545 qualifications of 5146 546 oath of 5147 546 vacancies in board of 5148 546 failure to elect, on proper day 5149 547 president elected from and by 5150 547 penalty for embezzlement by 5209 583 reports signed by 521 1 586 shall give notice of intent to dissolve 5221 593 penalty for violations of law by 5239 605 Dissolution : voluntary 5220 592 notice of intended , 5221 593 694 INDEX, Dissolution — Continued: Section. Page, deposit to redeem circulation 5222, 5223 593 redemption of notes, etc 5224 593 destruction of redeemed notes : 5225' 594 manner of protesti ng notes 5226 594 failure to pay notes, proceedings on 5227 595 business, after failure to pay notes, unlawful 5228 595 notice to holders of notes, sale of bonds, etc 5229, 5231 596 disposal of redeemed notes 5232 597 cancellation at treasury 5233 597 notice of appointment of receivers 5235 602 notice to creditors to present claims 5235 602 dividends to creditors 5236 602 when receiver may be enjoined 5237 604 fees and expen ses of receivers 5238 605 transfers after act of insolvency void 5242 607 deposit not required where intent is consolidation 5223 593 reassignment of bonds 5224 593 examination by special agent 5227 595 sale of bonds at auction 5230 596 sale of bonds at private sale 5231 597 District Attorneys : to conduct certain suits in proceedings respecting national banks 380 626 District courts of United States : jurisdiction of, suits by or against national banks 563 627 See Suits. Dividends. See National banks: while reserve is below minimum none can be made 5191 570 may be declared, when 5199 577 not counted as a debt of the bank, when 5202 580 shall not exceed net profits 5204 581 reported to comptroller, when and how 5212 586 penalty for failure to report 5213 586 in hands of receiver 5236 602 Dues: to United States, circulating notes receivable for 5182 565 Duties. See Taxes: on imports, not payable in national bank notes 5182 565 E. Embezzlement of funds of national banks: by president, cashier, agent 5209 5^3 Equity : United States district court can entertain bill to appoint receiver 5234 597 Evidence: papers of comptroller of currency to be used as 884 632 INDEX. 695 ■ Examiners : ection. Page. appointment, duties, etc 5240 606 in case of failure to redeem notes , 5227 595 Executors : holding bank stock, not liable 5152 549 See Guardians. Expense : of special examinations 3 655 of reappraisal of stock S 656 of redemption of notes covered by deposit of lawful money 8 658 of transportation of notes 8 659 of plates 6 658 of examining banks in District of Columbia 332 613 of bureau of the currency 5173 562 of destroying plates and dies 5174 562 of sale of bonds of closed banks 5224 593 of examination and receivership 5238 605 of redeeming notes, and of new plates , 3 638 F. Financial agents: national banks may be employed as 5153 550 Forfeiture : of interest in case of usury 5 198 575 of bonds for failure to redeem circulating notes ........ 5227 595 of corporate franchise 5239 605 suits for, to be in United States court 711 630 Forging and counterfeiting S4i4. 54iS 621 Fractional currency: to be replaced by silver coins i 642 Franchise : of expiring associations extended 7 658 limit of extension of i 655 G. Gold banks: organized to issue notes 5185 566 reserve of, redemption by 5186 567 of San Francisco, not required to redeem notes in New York 5195 572 limit of circulation of, removed 5185 566 may be converted into currency banks i 653 powers and privileges of, converted i 653 Gold certificates 12 661 what receivable for 12 661 to be counted as reserve 12 661 may be reissued 12 661 696 INDEX. Gold CKRII-FICAT-ES — Continued .- Section. Page. cannot be security for loans 12 661 cannot be withheld from circulation 12 661 denominations of 12 66i when not to be issued 12 661 Gold coin : may be deposited ; 12 661 shall be retained in treasury 12 661 Guardians : holding stock not personally liable 5152 549 H. Hand bills: penalty for issuing, in imitation of circulating notes .... 5188 567 Hypothecation : of circulating notes, when unlawful 5203 581 I. Indebtedness : limit of 5202 580 Injunction : of comptroller and receiver by bank under protest 5237 604 not to issue from State court before final judgment 5242 607 proceedings in, must be in United States court 629 627 proceedings to enjoin comptroller must be in district where bank is located 736 632 bank may enjoin appointment of receiver, when 5237 604 Impairment of capital : to be made good, or receiver appointed 5205 581 Increase of capital: how mad^ 5142 544 Insolvent banks; agent of stockholders of 3 650 certain acts of, void 5242 607 Interest : on bonds deposited, how collected 5167 558 rate of, which may be taken 5197 573 usurious, consequence of taking 5198 575 J. Judgments. See Suits. in State courts to be final before attachments issue 5242 607 purchase of real estate at sales under 5137 537 Jurisdiction : of circuit courts over national banks 629 627 of district courts i 563 627 INDEX, L. Lawful money: Section. Page. meaning of term in case of gold banks 5 1 86 567 receiver of, by national banks 5 1 95 572 Lawful money reserve: prescribed .- 5191 570 what may be counted toward , , 5192 571 certificates of deposit with United States treasurer 5193 572 limitation on power to issue such certificates 5194 572 Liabilities : of converted State banks 5154 55i of associations organized before June 4, 1864 5156 553 limitation of, for money borrowed 5200 578 not to exceed capital stock, exceptions 5202 580 on circulating notes of closed banks 5224 593 of shareholders 5 1 5 1 547 of directors 5239 605 Lien: of United States on assets of closed bank, paramount. . . 5230 596 Liquidation. See Dissolution. Loans and discounts: not to be made when reserve is reduced, except 5191 570 rate of interest on 5197 573 banks not to loan on, or purchase their own stock 5201 579 loans on personal security 5136 532 limit of, to any one person 5200 578 M. Maximum : of monthly lawful money deposit 9 659 of circulating notes in proportion to bonds deposited. . . 5 171 560 of circulating notes in proportion to capital 5171 560 increase of capital determined by comptroller 5142 544 of aggregate circulation 5177 563 of IJnited States notes outstanding 6 639 Minimum : capital of any association ". 5138 539 capital of converted State bank 5154 551 amount of bonds deposited by any association 5159 555 amount of bonds which may be transferred to association, 5167 558 to which bonds deposited may be reduced by withdrawal, 5160 556 Mutilated notes : of national banks replaced, etc 5 184 566 88 698 INDEX. N. National banks; section. Page. what associations subject to laws relating to 5157 555 title " national " not to be used by other banks 5243 609 district attorneys to conduct suits respecting 380 626 jurisdiction of district courts in suits of 5^3 627 proceedings by, to enjoin comptroller 736 632 copy of organization certificate of, when evidence 885 632 report of comptroller upon 381 1 633 may change from State bank to 166, 176, 5154 ( 2H ^ 216 (551 may change from national to State system 177 216 articles of association of ,., 5'33 53° contents of organization certificate, etc 5134 531 comptroller to examine articles of association of 5168 559 may give or withhold certificate 5169 559 certificate to be published 5170 560 powers of 5136, 5137 (532 I 537 minimum capital of S'S^ 539 paying in of capital stock of 5140 543 failure to pay installments on stock of 5 141 543 increase of capital of , 5142 544 reduction of capital of 5143 545 rights of shareholders to vote 5 144 545 individual liability of shareholders 5151 547 executors, etc., holding stock, not personally liable. 5152 549 designated as public depositaries 5153 550 for issue of gold notes 5185, 5186 566 State banks may become 5154. 5i55 (211 ^216 (551 rights of, organized under former act 51 56 553 deposit not required when intent is consolidation 5223 593 examination of, by special agent . . 5227 595 sale of bonds at auction, at private sale 5230 596 voluntary dissolution of 5220 592 notice of intended dissolution of .. . , 5221 593 deposit by, to redeem circulation 5222, 5223 593 redemption of notes of 5224 593 destruction of redeemed notes of 5225 594 manner of protesting notes of 5226 594 failure of, to pay notes, proceedings on 5227 595 business of, after failure to pay notes, unlawful 5228 595 disposal of redeemed notes of 5232 597 cancellation at treasury 5233 597 appointment of receivers of 5234 597 dividends to creditors of 5236 602 fees and expenses of receivers of 5238 605 transfers by, after act of insolvency, void 5242 607 location of business of 5190 570 reserve of,- prescribed, i 5191, S193 57° deposit by, with redemption agencies t.. .... 5195 572 INDEX. 699 National "Rks^?, — Continued: Section. Page. shall receive each other's notes at par 5196 573 dividends of. 5199 577 limit of loans, etc 5200 578 cannot loan or purchase their own stock 5201 579 limit as to indebtedness of 5202 580 not to pledge their own notes 5203 581 impairment of capital of 5205 581 not to withdraw capital, etc 5204 581 restriction on use of notes of other banks by 5206 582 not to receive United States notes as collateral 5207 582 when officers of, may certify checks 5208 583 list of shareholders of 5210 585 reports by 5211, 5215 J 586 1587 failure of, to make reports 5213 586 tax on failure of, to make returns 5216, 5217 587 refunding excess of duty to 5218 588 shares, etc., liable to taxation , 5219 588 evidence of indebtedness of 3412 616 number of persons necessary to form a bank 5133 530 may hold real estate 5137 537 no officer or clerk of, can act as proxy 5 144 545 shareholders of, in default, cannot vote 5144 545 shareholders elect directors of 5 145 545 National BANK ACT 511 National BANKING SYSTEM 515 National GOLD BANKS 513 Notaries public: duty of, on protest of national bank notes 5226 594 Notice : by national banks of liquidation 5221 593 after receiver is appointed 5235 602 Notes. See Circulating notes. of State banks paid out, tax on 3412 616 of town, city or municipal corporation, tax on 3413 616 not at par not to be paid out 5206 582 fraudulent, to be stamped , 5 652 o. Oath: of comptroller of currency 326 612 of deputy comptroller >. 327 612 of persons signing organization certificate 5135 531 as to certificate of payment of stock 5 1 40 543 required, before authorized to commence business 5168 559 required upon election of directors 5147 546 required upon reports of condition, dividends, etc. 5211, 5212 5215 586 must be taken before duly authorized officer i 654 700 INDEX. Officers : Section. Page. appointment of 5136 532 certificate of 5168 559 unlawful certification of checks by 5208 583 cannot be appointed to examine their own bank 5240 606 penalty for violation of act by 5239 605 penalty for embezzlement by 5209 583 must stamp counterfeit notes 5 652 Organization certificate : what to contain 5134 531 to be acknowledged and forwarded to comptroller 5135 531 of converted State bank 5154 551 business conducted at place specified in 5190 570 certified copy of, to be evidence 885 632 P. PEIfALTIES : for falsely certifying checks 5208 583 for failure to make reports 5213 586 for failure to pay duties 5216 587 for violation of banking law 5239 605 for use of " national " 5243 609 for crimes at common law State courts have jurisdiction, 5209 583 Place of business: must be as specified in organization certificate 5190 570 Power of banks: to adopt and use a seal 5136 532 to exist for twenty years 5136 532 to make contracts 5 1 36 532 to sue and be sued. . . 5136 532 to appoint directors, etc 5136 532 to make by-laws 5 1 36 532 to conduct a banking business 5136 532 cannot transact business until authorized by comptroller, 5136 532 Private sale: of bonds for default in paying notes 5231 597 of stock taken for debt 5201 579 of bonds for failure to withdraw circulation 8 640 Profits: disposition of net 5199 577 dividends limited to amount of. 5204 581 semi-annual report of 5212 586 Protests : of national bank notes 5226 594 Publication : of sale of stock of delinquent shareholders 5141 543 of certificate of authority to commence business 5170 560 of notice of deferred ejection of directors , 5149 547 INDEX. 701 Publication — Continued: Section. Page, of notice of sale of bonds for failure to withdraw circula- tion 5180 564 of names of redemption agents 5195 572 of reports of associations 5211 586 of notice to creditors 5221 593 of notice of sale of delinquent stock 4 652 Purchase : of real estate 5137 537 of bills of exchange 5197 573 of shares of its own stock, how restricted 5201 579 Qualifications: of directors of National banks 5146 546 R. Real estate: when national banks may purchase 5137 537 necessary for its accommodation 5137 537 mortgage to it for previous debt 5137 537 conveyed to it in satisfaction of debt 5137 537 purchased to secure debts 5 1 37 537 when cannot be held more than five years 5137 537 act does not render loan on, void. . .' 5137 537 the government only can enforce forfeiture 5137 537 debtor and his creditors estopped 5 1 37 537 Re-assignment : of bonds, on return of circulating notes 5160 556 of bonds, in sums not less than $1,000 5167 558 of bonds on deposit of lawful money... 5224 593 Receivers : may be appointed on failure to make capital equal to legal minimum 5141 543 when reserve is not made good 5191 570 on failure to redeem notes 5234 597 when bank continues to own its own stock. ...... 5201 579 on refusal to make good impaired capital 5205 581 when creditor shall have obtained judgment 1 649 duties of 5234 597 fees and expenses of. 5238 605 suits to enjoin 5237 604 must give bond 5234 597 take possession of books, etc 5234 597 collect or sell assets 5234 597 enforce liability of stockholders 5234 597 pay moneys over to comptroller 5234 597 report to comptroller 5234 597 702 INDEX. Redemption : Section. Page. of notes of national banks 5'95 572 proceedings on failure to provide for 5195 572 when at treasury of United States 5224 593 of banks in liquidation, account to be kept 5222 593 protest on failure of 5226 594 when notes shall be charged to 5222 593 proceedings on notice of failure of. 5227 595 agencies of national- banks to be selected for 5195 572 banks cannot do business after failure to redeem 5228 595 Regulation of business : location of business 5190 570 reserve prescribed S191. 5i93 57° not to contract or expand currency 5194 572 deposit with redemption agencies! 5195 572 shall receive each other's notes at par 5196 573 rate of interest 5r97 573 penalty for taking unlawful interest 5198 575 dividends 5199 577 limit of loans, etc 5200 578 cannot loan or purchase their own stock 5201 579 limit as to indebtedness 5202 580 not to pledge their own notes 5203 581 not to withdraw capital, etc 5204 581 impairment of capital 5205 581 restriction on use of notes of other banks 5206 582 not to receive United States notes as collateral, etc 5207 582 when officers may certify checks 5208 583 penalty for embezzlement 5209 583 list of shareholders 5210 585 report pf assets, etc 521 1 586 report of dividends 5212 586 failure to make reports 5213 586 reports for purposes of taxation 5214, 5215 587 tax on failure to make returns 5216, 5217 587 refunding excess of duty. 5218 588 shares, etc., liable to taxation 5219 588 evidence of indebtedness 3412 616 Removal : of bank to another State 5181 565 Reports: printing of, on national banks 381 1 633 to comptroller, by savings banks 6 652 to comptroller of currency 521 1 586 as to dividends 5212 586 penalty for failure to make 5213 586 Reserved funds: amount, etc 5191 570 what, may consist of 5192 571 when half of, may be kept in New York . 5195 572 issuing gold notes 5 1 86 567 INDEX. 703 S. Sale . Section. Page. of stock of delinquent shareholder 5 '4i 543 of bills of exchange 5197 573 » of stock taken for debt 5201 579 of bonds, for failure to deposit legal tender 5224 593 of bonds under protest 5231 597 of assets, by receiver . . 5234 597 of bonds, for failure to withdraw circulation 8 640 of appraised stock of extended associations 5 656 Savings banks: not to use " national " in title except 5243 609 Seal; of comptroller of currency 330 612 Shareholders : stock shall be paid for, how 5140 543 payment to be certified to comptroller 5140 543 may be sold out for failure to pay for stock 5141 543 one vote for each share of stock 5144 545 vote may be by proxy 5144 545 names of original 5134 531 shares of 5139 539 rights and liabilities of succession 5139 539 failure of, to pay installments 5 141 543 may reduce capital 5143 545 directors elected by 5i45, 5146 545' may fix day for election of directors 5149 547 individual liability of 5 1 5 1 547 assessed to make good capital, etc 5205 581 list of, open to inspection, etc 5210 585 two-thirds of, can vote bank into liquidation 5220 592 discharge from liability 5224 593 surplus paid to 5236 602 right of, to vote 5 144 545 in default, cannot vote 5144 545 executors, etc., holding stock not individually liable. . . . 5152 549 when creditor's bill may be filed against 2 650 may take assets from possession of receiver 3 650 when liability of, may be enforced by creditors' bill. .... 2 650 when may elect agent in place of receiver 2 650 to whom remaining assets shall be turned over 3 650 Shares of stock : how divided, and how transferable 5139 539 payment for, how made 5140 543 each payment on to be certified to comptroller 5140 543 if shareholder fails to pay for, may be sold out 5 141 543 how such stock shall be disposed of 5 141 543 how stock may be increased 5142 544 must be approved by comptroller 5143 544 how may be reduced 5143 545 704 INDEX. Shares of ^tock. — Continued: section, Page. to what extent 5i43 545 shareholder entitled to one vote on each share 5^44 545 in person or by written proxy Si44 545 but no officer shall act as proxy 5144 545 shareholders elect directors 5145 545 Special agents: to examine national bank 5227 595 expenses of, how paid 5238 605 State banks : not to use " national " in the name of 5243 609 internal revenue tax on circulation of 3412 616 to apply to evidences of indebtedness 341 2 616 how may become national banks 5154 551 capital in, on conversion, what amount to be 3410 616 liabilities of shareholders on becoming such 5154 551 may keep in operation any branches it had before change, 5155 553 Stock of national banks. See Shares. Suits : by or against associations 5136 532 for usury, limitation of 5198 575 to enjoin comptroller 5237 604 against directors 5239 605 jurisdiction of, by or against national banks. 4 656 when district courts of United States have jurisdiction.. 563 627 when circuit courts of United States have jurisdiction. . 629 627 removal of 640 629 Surplus fund: what part of profits to be carried to 5199 577 T. Taxes: on notes of persons and State banks 3412 616 penalty remitted in certain cases 3412 6x6 not to apply to national banks 3417 618 on notes of towns, etc., paid out, is constitutional 3413 616 circulation and deposits of banks 5214 587 how assessed on (fefault of return 5216 587 on notes, etc 3412, 3417 j 616 I 618 monthly returns of such notes 3414, 34i7 3617 J6i8 on circulation and deposits 5214 587 returns on circulation, for. . ., 5215 587 failing to make returns or pay duty 5216, 5217 j 587 1588 exemption from tax on circulation, when 341 1, 3417 3 616 )6i8 how collected on default in payment 5217 588 INDEX. 705 Taxes — Continued. . section. Page. how refunding excess of payment 5218 588 States authorized to levy 5219 588 Transfers : when void 5242 607 State court has jurisdiction .■ 5242 607 Treasurer of United States: bonds transferred to 5160 556 may retain interest on bonds for failure to make reports, 5213 586 tax on bank to be paid to 5214 587 report to, as basis of semi-annual tax 5215 587 may assess tax without report 5216 587 may reserve tax out of interest on bonds , . . . 5217 5^8 to certify claim of bank for return of duty 5218 588 when to redeem national bank notes 5224 593 when to destroy national bank notes 5225 594 receivers of National banks to pay money collected to . . 5234 597 Treasury notes , 508 Trustees : holding national bank stock, not personally liable 5152 549 U. United States notes : certificate of deposit for 5190 570 received for certificates, not to be issued 5193 572 not to be received by banks as collateral 5207 582 Usury : penalty for taking 5198 575 suits for recovery of 5198 575 limit to right of action for recovery of 5198 575 when the purchase of bills of exchange, etc., shall not be considered as 5197 S73 V. Vacancies : , in departments, how filled 178 626 ViSITORIAL powers: limitation of. 5241 607 89