Cornell University Law Library 
 
 The Moak Collection 
 
 PURCHASED FOR 
 
 The School of Law of Cornell University 
 
 And Presented February 14, 1893 
 
 IN HEnORY OF 
 JUDGE DOUGLASS BOARDMAN 
 
 F(R3T DEAN OF THE 6CM00L 
 
 By his Wife and Daughter ' 
 A. M. BOARDMAN and ELLEN D. WILLIAMS 
 
Cornell University Library 
 KF 995.A25 
 
 V.1 
 
 National bank cases, containing all decis 
 
 3 1924 018 830 160 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924018830160 
 
NATIONAL BANK CASES, 
 
 CONTAINING 
 
 ALL DECISIONS 
 
 THE FEDERAL AND STATE COURTS 
 
 BELATINQ TO 
 
 NATIONAL BANKS, 
 
 NOTES AND REFERENCES, 
 
 Bt ISAAC GEANT THOMPSON, 
 
 Editor of The Albany Law Jouknal and of The American Ebpokts. 
 
 1864-1878. 
 
 ALBANY: 
 
 JOHN D. PARS05srS, Jr., PUBLISHEK. 
 
 . 1878. 
 
Entered according to act of Congress, in tlie year eighteen hundred and seventy-eight, 
 
 By JOHN D. PARSONS, JE., 
 
 In the ofloe of the Librarian of Congress, at Washington. 
 
 STEREOTYPED AND PRINTED BY 
 WEED, PARSOHS AND COMPANY. 
 ALBAKY, a. x. 
 
PREFACE. 
 
 I have endeaTored to present in this volume a complete collec- 
 tion of all the cases relating to National banks. I have carefully 
 gone over the volumes of reports, both Federal and State, published 
 since 1864 — when the National Banking Act was passed — exam- 
 ining each case. I have in addition examined the various legal 
 periodicals published since that date ; and from these sources I 
 have gathered every adjudication found pertaining to National 
 banks. I have also added some cases not heretofore published in 
 any form. The cases that have been superseded by a change in the 
 statute laws or have been overruled by the higher courts, I have 
 reported briefly in the Memoranda at the end of the volume. 
 
 I, believe I have omitted nothing that could, by any possibility, 
 be of use to any one ; on the other hand I have included some 
 cases of no considerable value to-day, but they were necessary to 
 make the collection complete, and they will, at least, serve to illus- 
 trate the history of the law relating to National banks and the 
 reasons upon which some of its most important rules were based. 
 
 Of the wisdom of the National Banking Act this volume affords 
 the most convincing proof. Projected without precedent or experi- 
 ence, — prescribing a financial system for a great commercial people 
 at the gloomiest period of its financial history, — superseding the 
 peculiar schemes of the several States and trenching upon what, 
 from use, they had come to consider their special prerogative, it 
 was yet drafted with such judgment and skill that the experience 
 of fourteen years has shown but few particulars in which it could 
 be improved by the "amending hand," while its terms are so clear 
 and explicit that there has scarcely been a difference among the 
 Courts as to its interpretation. 
 
 Isaac Grant Thompson-. 
 
 Albany, May 4, 1878. 
 
TABLE OF CASES REPORTED. 
 
 PAGE. 
 
 Abbott V. City of Bangor (Me.) 933 
 
 Abbott V. Bangor (Me.) .^ ... 943 
 
 Adams v. Dauois (La.) 510 
 
 Adams v. Mayor, etc., of Nashville (S. 
 
 C.TJ.S.) 148 
 
 Aldermen. Austin v. (Mass.) 934 
 
 Aldermen, Austin v. (U. S.) 15 
 
 Aldrioh, Simmons T. (Wis.) 931 
 
 Allen T. First Nat. Bank (Ohio) 828 
 
 American Nat. Banl£, Locliwood v. 
 
 (R.I.) 895 
 
 Assessors, People ex rel. Williams v. . . 776 
 
 Assessors, Van Alien t. (U. S.) 1 
 
 Austin V. Aldermen (S. C. U. S.) 15 
 
 Austin V. Board of Aldermen (Mass.) . . 934 
 
 Baack, Manufacturers' Nat. Bank v. 
 
 (S. C.TJ.S.) 161 
 
 Bailey, Chemical Nat. Bank v. (C. C. 
 
 U.S.) 260 
 
 Bailey V. Sawyer (C.C. TJ. S.) 356 
 
 Baker, Cadle t. (S. C. V. S.) 108 
 
 Bangor, Abbott v. (Me.) 933 
 
 Bangor, Abbott v. (Me.) ! 
 
 Bangor, Stetson v. (Me.) 530 
 
 Bangor, Weld v. (Me.) 531 
 
 Bank, Bullard V. (S. C. U. S.) 
 
 Bank v. Kennedy (S. C. U. S.) 87 
 
 Bank V. Lanier (S. O. TJ. S.) 70 
 
 Bank of Bethel T. Pahquioque Bank 
 
 (S.C.U.S) 77 
 
 Bank, Maynard v. (Penn.) 893 
 
 Barry, Commonwealth v. (Mass.) 605 
 
 Bayard, City of Evansville v. (Ind.), . . . 933 
 
 Beach, Piatt v. (D. C. U. S.) 183 
 
 Beebe, Piatt v. (N. T.) 725 
 
 Bentley, Piatt V. (N. T.) 758 
 
 Berwin, Case' v. (La.) 933 
 
 Bird's Executors v. Cockrem (C. C. 
 
 TJ. S.) 284 
 
 BIy V. Second Nat. Bank (Penn.) 937 
 
 Board of Aldermen, Austin v. (Mass.). . 934 
 Board of Aldermen, Flint v. (Mass.). . . 571 
 
 Boston, Flint V. (Mass.) 571 
 
 Boston, Providence Inst, for Saving v. 578 
 
 Bowden V. Morris (TJ. S.) 930 
 
 Bowdenv. Santos (TJ. S.) 271 
 
 PAGE. 
 
 Bowen v. First Nat. Bank (N. T.) 935 
 
 Boyd, Third Nat. Bank of Baltimore v. 
 
 (Md.) 545 
 
 Boylau, Nat. State Bank v. (N. T.) 798 
 
 Bradley V. People (TJ. S.) 14 
 
 Branch v. United States (Ct. of Claims, 
 
 U.S.) 363 
 
 Brown v. Second Nat. Bank (Penn.).. . 849 
 
 BuUardv. Bank (S.C.U.S.) 93 
 
 Burlington, Clapp v. (Vt.) 938 
 
 Bushnell v. Chautauqua Co. Nat. Bank 
 
 (N.Y.) 794 
 
 Cadle V. Baker (S. C. U. S.) 108 
 
 Cadlev. Tracy (C.C. U.S.)., 230 
 
 Cake V. First Nat. Bank (Penn.) 890 
 
 Canfield v. State Nat. Bank of Minne- 
 apolis (C. C.U.S.) 313 
 
 Carll, Ocean Nat. Bank v. (N. T.) 792 
 
 Case V. Berwin (La.) 933 
 
 Case V. Citizens' Bank of Louisiana 
 
 (C.C. U.S.) 376 
 
 Case V. Terrell (S. C. U. S.) 67 
 
 Casey v. (Jalli (S. C. U. S.) 143 
 
 Casey v. La Soci6t§ de Credit Mobilier 
 
 de Paris (C. C. U. S.) 285 
 
 Central Nat. Bank, Ordway v. (Md.) ... 559 
 
 Central Nat. Bank v. Pratt (Mass.) 595 
 
 Central Nat. Bank v. Richland Nat. 
 
 Bank (N.Y.)....' 801 
 
 Chad well, McLaughlin v. (Tenn.) 938 
 
 Charleston v. People's Nat. Bank 
 
 (S. C.) .■ 898 
 
 Chatham Nat. Bank v. Merchants' 
 
 Nat. Bank (N. T.) 769 
 
 Chattahoochee Nat. Bank v. Schley 
 
 ((Ja.) 379 
 
 Chautauqua Co. Nat. Bank, Bushnell v. 
 
 (N: T.) , 794 
 
 Chemical Nat. Bank v. Bailey (C. C. 
 
 U. S.) 360 
 
 Chesapeake Bank v. First Nat . Bank 
 
 of Baltimore (Md.) 531 
 
 Chicago, Collins v. (D. C. U. S.) 191 
 
 Chicago, McVeagh v. ail.) 381 
 
 Citizens' Bank of Louisiana, . Case v. 
 
 (C.C. U. S.) 376 
 
VI 
 
 TABLE OF CASES EBPOETED. 
 
 PAGB. 
 
 Citizens' Nat. Bank, County Commia- 
 
 sloners of Bice County v. (Minn.) 639 
 
 Citizens' National Banl£, Lee v. (Ohio) 936 
 Citizens Nat. Bank v. Lemiug (U. S.) . . 929 
 City Nat. Bank v. Paduoah (C. 0. F. S.) 300 
 
 City of Bangor, Abbott V. (Me.) 933 
 
 City of Bangor, Stetson y. (Me.) 520 
 
 City of Bangor, Weld ¥. (Me) 521 
 
 City of Boston, Providence Institution 
 
 for Savings V. (Mass.) 578 
 
 City of Burlington, Clapp v. (Vt.) 938 
 
 City of Chicago, MoVeagh v. (111.) 381 
 
 City of BvansvUIe v. Bayard (Ind.) 932 
 
 City of Lewiston, Packard v. (Me.) 933 
 
 City of Newark, State, North Ward 
 
 Nat.Baukv. (N.J.) 672 
 
 City of Pittsburgh v. First Nat. Bank 
 
 (Penn.) 936 
 
 City of Richmond v . Scott (Ind.) «,5 
 
 Clapp V. City of Burlington (Vt.) 938 
 
 Cockrem, Bird's Executors v. (C. O. 
 
 U. S.) 284 
 
 Coffey V. Nat. Bank of Missouri (Mo.) . . 64i 
 
 Colby, Nat . Bank v. (S. C. TJ. 8.) 109 
 
 Collinsv. Chicago (D. C. U. S.) 191 
 
 Colston, Magruder v. (Md.) 554 
 
 Commercial Bank of Cleveland v. Sim- 
 mons (0. C. F. S.) 29i 
 
 Commissioners of Montgomery Coun- 
 ty v. Blston(Ind.) 425 
 
 Commissioners of Taxes, People v. (S. 
 
 C.U. S.) 130 
 
 Commissioners of Taxes, People ex 
 
 rel. Tradesmen Nat. Bank v. (N. T.) 752 
 
 Commissioners, RufEn v. (N. C.) 806 
 
 Commonwealth V. Barry (Mass.) 605 
 
 Commonwealth v. Felton (Mass.) 578 
 
 Commonwealth, Manuf. and Mech. 
 
 Bank V, (Penn.) 937 
 
 Commonwealth, National Bank v. (S. 
 
 C. U.S.) 34 
 
 Commonwealth v. Tenney (Mass.) 568 
 
 Conklin v. Second Nat. Bank (N. T.).. 693 
 
 Cook, Davis v. (Nev.) 656 
 
 Cooke V. State Nat. Bank of Boston 
 
 (N.Y.) 698 
 
 County Commissioners of Rice County 
 
 V. Citizens' Nat. Bank (Minn.) 629 
 
 County of Douglas, First Nat. Bank of 
 
 Omaha V. (C. C. tr. S.) 267,268 
 
 County of Montgomery, Mintzer v! 
 
 (Penn.) 938 
 
 Craft V. Tuttle and.) 932 
 
 Crocker v. First Nat. Bank of Chetopa 
 
 (C.C.F.S.) 317 
 
 Crocker v. Marine Nat. Bank of New 
 
 York (Mass.) 576 
 
 Crocker v. Whitney (N. T.) 745 
 
 PAGE. 
 Cumming, Merchants' Nat. Bank v. 
 
 (D-.S.) 926 
 
 Curtisv.Ward (Mo.) 935 
 
 Daunis, Adams V. (La.) 510 
 
 Davis, Nat. Bank of Madison v. (C. 0. 
 
 U.S.) 350 
 
 Davis V. Cook (Nev.) 656 
 
 Davis v. Randall (Mass.) 600 
 
 Dearlng, Farmers & Mechanics' Nat. 
 
 ^ankv. (H.C.U.S.) 117 
 
 De Haven v. Kensington Nat. Bank 
 
 (Penn.) 882 
 
 Dolan, People ex rel. Cagger v. (N. T.) 684 
 Douglas Co., First Nat. Bank v. (U. S.) 267 
 
 Dowley, Waite v. (U. S.) 137 
 
 Duncan v. First Nat. Bank of Mt. 
 
 Pleasant (D. C.U. S.) 360 
 
 Elder v. First Nat. Bank of Ottawa 
 
 (Kan.) 488 
 
 Elmira, Nat. Bank of Chemung v. (N. 
 
 Y.) 715 
 
 Blston, Board of Commissioners of 
 
 Montgomery County v. (Ind . ) 425 
 
 Erdelmeyer, Root v. (Ind.) 432 
 
 Bvansville Nat. Bank v. Metropolitan 
 
 Nat. Bank(C. C. U. S.) 189 
 
 Evansville V. Bayard (Ind.) 932 
 
 Everett's Appeal (Penn.) 937 
 
 Exchange Bank, Smith V. (Ohio) 836 
 
 Fanoher, First Nat. Bank of Sandy 
 
 HiUv. (N. Y.) 697 
 
 Farmers & Mechanics' Nat. Bank v. 
 
 Bearing (S. C.U. S.) 117 
 
 Felton, Commonwealth v. (Mass.) 673 
 
 Fenno, Veazie Bank v. (S. C. U. S.).... 22 
 
 First Nat. Bank, Allen v. (Ohio) 828 
 
 First Nat. Bank, Bo wen v. (N.Y.) 935 
 
 First Nat. Bank, Cake v. (Penn.) 890 
 
 First Nat. Bank, Chesapeake Bank v. 
 
 (Md.) 531 
 
 First Nat. Bank, City of Pittsburgh v. 
 
 (Penn.) 936 
 
 First Nat. Bank v. County of Douglas 
 
 (C. C. U. S.) 267, 268 
 
 First Nat. Bank, Crocker, assignee, v . 
 
 _ (O.C.U.S.) 317 
 
 First Nat. Bank, Duncan v. (D. C. U. S.) 360 
 
 First Nat. Bank, Elderv. (Kan.) 488 
 
 First Nat. Bank V. Fanoher (N. Y.)... 697 
 First Nat. Bank v. Garlinghouse (Ohio) 811 
 First Nat. Bank v. Graham (Penn.)... 875 
 
 First Nat. Bank v. Haire (la.) 480 
 
 First Nat. Bank, Harrington v. (N. Y,) 760 
 
 First Nat. Bank v. Harris (Mass.) 590 
 
 First Nat. Bank, Hershire v. (la.) 476 
 
 First Nat. Bank v. Hershire (la.) 465 
 
TABLE OP OASES EEPORTED. 
 
 Vll 
 
 PAGE. 
 
 First Nat. Bank, Higley v. (Ohio) 833 
 
 First Nat. Bank, Hintermister v. (N. T.) 141 
 
 First Nat. Bank v. Hubbard (Vt.) 912 
 
 First Nat. Bank v. Kidd(Minn.) 935 
 
 First Nat. Bank t. Merchants' Nat. 
 
 Bank(W. Va.) 915 
 
 First Nat. Bank, Missouri Eiver Tele- 
 graph Co. V. an.) 401 
 
 First Nat. Bank v. Nat. Exchange 
 
 Bank (S. C. U. S.) 124 
 
 First Nat. Bank v. Ocean Nat. Bank 
 
 (N. Y.) 738 
 
 First Nat. Bank v. Peterborough (N. 
 
 H.). 
 
 First Nat. Bank t . Plerson (Minn.) 637 
 
 First Nat. Bank, Schmidt v. (La.). ... 505 
 
 First Nat. Bank Shinkle v. (Ohio) 834 
 
 First Nat. Bank, Shunk v. (Ohio) 830 
 
 First Nat. Bank, Smith v. (Mich.) 934 
 
 First Nat. Bank v. Smith (111.) 390 
 
 First Nat. Bank, Soutliwick v. (N. T.) 789 
 
 First Nat. Bank, Spaflord v. (la.) 486 
 
 First Nat. Bank, Turner v. (la.) 454 
 
 First Nat. Bank, Van Leuvenv. (N. T.) 734 
 
 First Nat. Bank, Weckler v. (Md.) 533 
 
 First Nat. Bank, Wiley v. (Vt.) 905 
 
 Flint T. Board of Aldermen ;of Boston 
 
 (Mass.) 571 
 
 Fowler v, Scully (Penn.) 854 
 
 Frazer V. Seibern (Ohio) 936 
 
 Galli, Casey V. (S. C. U. S.) 142 
 
 Garlinghouse, First Nat. Bank v. (Ohio) 811 
 
 Gasting, State v. (La.) 508 
 
 Gibson, Kennedy v.(S.C. U.S.) 17 
 
 Goldsbury v. Inhabitants of Warwick 
 
 (Mass.) 593 
 
 Gorgas' Appeal (Penn.) 937 
 
 Government Nat. Bank, ILucas v. 
 
 (Penn.) 872 
 
 Graham, First Nat. Bank v. (Penn.). ... 875 
 
 Graves v. Lebanon Nat. Bank (Kj.) 493 
 
 Green, Home v. (Miss.) 643 
 
 Green v. WalklU Nat. Bank (N. T.) ... 788 
 Gunst, Nat. Park Bank v. (N. T.) 797 
 
 Hagar v. Union Nat. Bank (Me.) 523 
 
 Haire, First Nat. Bank v. (Iowa) 480 
 
 Hale, Leach v. (Iowa) 466 
 
 Hale V. Walker (Iowa) 471 
 
 Harrington v. First Nat. Bank of Chlt- 
 
 tenangoCN. T.) 760 
 
 Harris, First Fat. Bank of Eochester v. 
 
 (Mass.) 590 
 
 Hartford Bank, State v. (Conn.) 931 
 
 Havensv. Nat. City Bank(N. T.) 783 
 
 Hepburn v. School Directors (S. C. 
 
 U.S 113 
 
 Hershlro, First Nat. Bank v. (Iowa) 465, 479 
 
 PAOE. 
 
 Higley V. First Nat. Bank (Ohio) 833 
 
 Hintermister V. First Nat. Bank (N. T.) 741 
 
 Home V. Green (Miss.) 643 
 
 Howell y. Village of Cassopolis (Mich.) 627 
 
 Hubbard, First Nat. Bankv. (Vt.) 912 
 
 Hubbardv. Supervisors (Iowa) 933 
 
 Huftaker v. Nat. Bank of Montioello 
 
 (Ky.) 604 
 
 Hulburd, Van Antwerp v 208, 317 
 
 Hungerf ord Nat. Bank v. Van Nostrand 
 
 (Mass.) 589 
 
 Hutton, Taylor v. (N.TT.) 755 
 
 Inhabitants of Warwick, Goldsbury v. 
 
 (Mass.) 593 
 
 Irons V. Manufacturers' Nat. Bank (C. 
 
 C. U.S.) 203 
 
 Johnson, Eeoeiver, etc., v. Laflin, (C. C. 
 U. S.) 331 
 
 Kansas Valley Nat. Bank v. Eowell (C. 
 
 C.U. S.) 364 
 
 Kelsey v. Nat. Bank of Crawford 
 
 (Penn.) 847 
 
 Kennedy, Bank v. (S. C. U. S.) 87 
 
 Kennedy v. Gibson (S. C. U. S.) 17 
 
 Kensington Nat. Bank, De Haven v. 
 
 (Penn.) 883 
 
 Kldd, First Nat. Bank v. (Minn.) 935 
 
 Kimball, Nickerson V. (HI.) 409 
 
 Knight V. Old Nat. Bank (U. S.) 929 
 
 Kost, Wheelockv. (S. cm.) 406 
 
 Kountze, Eichards v. (Neb.) 652 
 
 Kyle V. Mayor (N. C.) 808 
 
 Laflin, Johnson, Eeoeiver, etc. v. (C. C. 
 
 U. S.) 331 
 
 Lanier, Bank v. (S. C. U. S.) ., 70 
 
 La Sooi6t6 De Credit Mobilier de Paris, 
 
 Casey v.(C. C. U. S.) 285 
 
 Leach v. Hale (la.) 466 
 
 Lebanon Nat. Bank, Graves v. (Ky.) ... 493 
 
 Lee V. Citizens' Nat. Bank (Ohio) 936 
 
 Leming, Citizens' Nat. Bank v. (U. S.) . . 929 
 
 Lewiston, Packard V. (Me.) 933 
 
 Lionberger v. Bouse (S. C. U. S) 41 
 
 Lockwood V. American Nat. Bank 
 
 (B.I.) 895 
 
 Lucas V. Government Nat. Bank 
 
 (Penn) 872 
 
 Main, Assignee, v. Second Nat. Bank 
 
 of Chicago (D. C. U. S.) 300 
 
 Magruderv. Colston (Md.) 554 
 
 Mann, United States, plaintiff In error, > 
 
 V. (S.C. U.S.) 154 
 
 Manufacturers' Nat. Bank, In re (U. S.) 192 
 Manufacturers' Nat. Bank, Irons v. 
 (C. C. a. S.) .' 203 
 
Till 
 
 TABLE OP OASES KEPOKTED. 
 
 PAQB. 
 Manufacturers' Nat. Bank V. Baack 
 
 (S.C.0. S.) 161 
 
 Manuf . and Mech. Bank v. Common- 
 wealth (Penn.) 927 
 
 Marine Nat. Bank of New Tofk, Crook- 
 
 erv. (Mass.) 575 
 
 Martin, Tapley v. (Mass.) 611 
 
 Mathews V. Skinker (Mo.) 647 
 
 Maynardv. Bank (Penn.) 892 
 
 Mayor, Adams v. (S. C. tJ. S .) US 
 
 Mayor.Kyle V. (N. C.) 808 
 
 Mayor, Nat. Bank v. (Tenn.) 903 
 
 Mayor v. TJiomas (Tenn.) 938 
 
 Molver y. Kobinson (Ala.) 372 
 
 McLaughlin v. Chadwell (Tenn.) 938 
 
 MoVeagh y. City of Chicago et al. (111.) 381 
 Mears, Merchants' Nat. Banky. (C. C. 
 
 U. S.) 353 
 
 Mechanics' Bank, Nat. Bank of Com- 
 monwealth y. (tr. S. S. C.) 133 
 
 Merchants and Farmers' Nat. Bank y. 
 
 Myers (N. C.) 936 
 
 Merchants' Nat. Bank, Chatham Nat. 
 
 Banky 769 
 
 Merchants' Nat. Bank, First Nat. Bank 
 
 y. (W. Va.) 915 
 
 Merchants' Nat. Bank, Ornn y. (Kan.). 490 
 Merchants' Nat. Bank, Tappan v. (S. 
 
 C.U. S) 100 
 
 Merchants' Nat. Bank v. Cummlng, ' 
 
 (U. S.) 926 
 
 Merchants' Nat. Banky. Mears (C. C. 
 
 U. S.) 353 
 
 Merchants' Nat. Bank v. State Nat. 
 
 Bank(S. C. U. S.) 47 
 
 Merchants' Nat. Bank, Wright y. (C. C. 
 
 tr. S.) 321 
 
 Metropolitan Nat. Bank, Evansyille 
 
 Nat. Banky. (C. C. CT. S.) 189 
 
 Mintzer y. County of Montgomery 
 
 (Penn.) 936 
 
 Missouri River Telegraph Co. y. First 
 
 Nat. Bank of Sioux City aH.) 401 
 
 Montgomery Co., Mintzer y. (Penn.). 936 
 Montgomery County y. Elston(Ind.).. 435 
 Moore, Nat. Exchange Banky. (U. S.) 925 
 
 Morris, Bowden v. (TJ. S.) 930 
 
 Morseman y. Tounkln (111.) 460 
 
 Myers, Merchants and Farmers' Nat. 
 
 Banky. (N. C.) 936 
 
 Nat. Bank of Crawford, Kelsey y. 
 
 (Penn.) 847 
 
 Nat. Bank of Baltimore, State y. (Md.) 627 
 Nat. Bank of Chemung v. Blmlra, 
 
 (N.T.) 715 
 
 Nat. Bank of Chester Valley, Soott y. 
 
 (Penn.) 864 
 
 Nat. Bank of Commonwealth, Security 
 
 Banky. (N. Y.) 774 
 
 PAGE. 
 Nat. Bank of Commonwealth y. Me- 
 chanics' Nat. Bank (S. C. TJ. S.) 133 
 
 Nat. Bank of Fairhayen y. Phcenlx 
 
 Warehousing Company 784 
 
 Nat. Bank of Madison y. Dayls (C. C. 
 
 TJ.S.) 350 
 
 Nat. Bank of Missouri, Coffey y. (Mo.). 644 
 Nat. Bank of Missouri, Tiffany v. (S. C. 
 
 tr. S.) 90 
 
 Nat. Bank of Monticello, Huffaker y. 
 
 *(Ky.) 504 
 
 Nat. Bank of Sumerset, Newell y. (Ky.). 501 
 Nat. Bank of South Beading, Upton y. 
 
 (Mass.) 618 
 
 Nat. Bank of the Comm., Security 
 
 Bank y 774 
 
 Nat. Bank, Overholt y . (Penn.) 883 
 
 National Bank y. Colby (S. C. U. S.). . . . 109 
 National Bank v. Commonwealth (S, 
 
 C. U.S.) 34 
 
 Nat. Bank y. Mayor (Tenn.) 903 
 
 Nat. City Bank, Havens v 783 
 
 Nat. Exchange Bank, First Nat. Bank 
 
 of Charlotte v. (S. C. U. S.) 134 
 
 Nat. Exchange Bank v. Moore (U. S.). 929 
 Nat. Mechanics' Bank, Shoemaker v. 
 
 (Md.) 934 
 
 Nat. ;Mechanics' Bank, Shoemaker v. 
 
 (S. C. U.S.) 169 
 
 Nat. Park Bank v. (Junst (N.T.) 797 
 
 Nat. State Bank of Oskaloosa v. Young 
 
 (la.) 451 
 
 Nat. State Bank, Second Nat. Bank y. 
 
 (Ky.) 932 
 
 Nat. State Bauk v. Boylan (N. T.) 798 
 
 Nat. Union Bank, Stewart v. (S. C. U. 
 
 S.) 175 
 
 Newark, State, North Ward Nat. 
 
 Banky.(N. J.) 672 
 
 Newell V. Nat. Bank (Ky.) 501 
 
 New Orleans Nat. Bank v. Eaymond 
 
 Banky. (La.) 516 
 
 New York Exchange Nat. Bank, Seeley 
 
 V. (N.Y.) 804 
 
 Nickerson v. Kimball (111.) 409, 410 
 
 Ocean Nat. Bank, First Nat. Bank of 
 
 Lyon V. (N.T.) 738 
 
 Ocean Nat. Bank v. Carll (N. Y.) 792 
 
 O'Donneil, Story v. (Penn.) 938 
 
 O'Hare y. Second Nat. Bank (Penn.)... 269 
 
 Old Nat. Bank, Knight v. (U. S.) 929 
 
 Ordway y. Central Nat. Bank (Md.) 559 
 
 Ornn v. Merchants' Nat. Bank (Kan.) . 490 
 Overholt V. Nat. Bank (Penn.) 883 
 
 Packard v. City of Lewiston (Me.) 933 
 
 Paducah, City Nat. Bank y. (C. C. U. S.) 300 
 Pahquioque Bank, Bank of Bethel v. 
 (S. C.U.S.) 77 
 
TABLE OP OASES EEPOETED 
 
 IX 
 
 PAGE. 
 Papln, St. Louis Nat. Bank v. (C. C. U. 
 
 S.) 326 
 
 People ex rel. Oagger v. Dolan (N. T.) 684 
 People ex rel. Tradesmen Nat. Bank v. 
 
 Commissioners of Taxes (N. Y.).... 753 
 People ex rel. Williams v. Assessors. . . 776 
 
 People, Bradley V, (tr. S ) i 
 
 People V. Commissioners (S. C. IT. S.).. 9 
 People T. Commissioners of Taxes (S. 
 
 C.TJ. S.) 130 
 
 People's Nat. Bank, Charleston v. (S. 
 
 C.) 898 
 
 People's Nat. Bank, Woods v. (Penn.). . 888 
 Peterborough, First Nat. Bank T. (N. 
 
 H.) 658 
 
 Phoenix Bank, State v. (Conn.) 930 
 
 Phoenix Company, Nat. Bank of Fair- 
 
 haveuT 784 
 
 Pierson, First Nat. Bank of Eoohester 
 
 v. (Minn.) 637 
 
 Pittsburgh Locomotive and Car Works 
 
 V. State Nat. Bank (C. C. U. S.) 315 
 
 Pittsburgh t. First Nat. Bank (Penn.) . . 936 
 
 Piatt, Petition of (U. S.) 181 
 
 Piatt T. Beach (D. C. U. S.) 183 
 
 Piatt V. Beebe (N. Y.) 725 
 
 Piatt V. Bently (N. Y.) 758 
 
 Pratt, Central Nat. Bank v. (Mass.) 595 
 
 Providence Institution for Savings and 
 
 Jewell y. City of Boston (Mass.) 678 
 
 Eagsdale, Whituey v. ffnd.) 429 
 
 Eandall, Davis V. (Mass.) 600 
 
 Eaymond, New Orleans Nat. Bank t. 
 
 (La.) B16 
 
 Ehawn, United States v. (D. C. U. S.). . 358 
 Eice Co. V. Citizens' Nat. Bank (Minn.) 629 
 
 Eichards V. Kountze (Neb.) 653 
 
 Eichland Nat. Bank, Central Nat. Bank 
 
 V. (N. Y.) 801 
 
 Eichmond v. Scott (Ind.) 445 
 
 Eobinson, Mclver v. (Ala.) 372 
 
 Eocky Mountain Nat. Bank, Union 
 
 Gold Hill Mining Co. v. (S. C. U. S.) 151 
 
 Boot v. Brdelmeyer (Ind.) 432 
 
 Eouse, Lionbergery. (S. C. U. S.) 41 
 
 Eowell, Kansas Valley Nat. Bank v. 
 
 (C.CU. S.) 264 
 
 BuiSn V. Commissioners (N. C.) 806 
 
 Santos, Bowdeny.(C. C. U. S.) 271 
 
 Sawyer, Bailey v. (C. C. U. S.) 356 
 
 Schley, Chattahoochee Nat. Bank y. 
 
 (Ga.) 379 
 
 Schmidty. First Nat. Bank (La.) 605 
 
 School Directors, Hepburn y. (S. C. 
 
 U.S.) 113 
 
 Scott, City of Eichmond y. (Ind.) 445 
 
 Scott v. Nat. Bank of Chester Valley 
 
 (Penn.) 864 
 
 B 
 
 PAGE. 
 
 SouUy, Fowler V. (Penn.) 854 
 
 Second Nat. Bank, Bly v. (Penn.) 937 
 
 Second Nat. Bank, Brown v. (Penn.).. 849 
 Second Nat. Bank, Conklinv. (N. Y.) 693 
 Second Nat. Bank, Main, assignee, y. 
 
 (D.C. U. S.) 200 
 
 Second Nat. Bank, O'Hare v. (Penn.).. 869 
 Second Nat. Bank y. Nat. State Bank 
 
 (Ky.) 933 
 
 Security Bank y. Nat . Bank of the Com- 
 monwealth 774 
 
 Seeley V. New York Ex. Nat. Bank (N. 
 
 Y.) 804 
 
 Seibern, Frazer v. (Ohio) 936 
 
 Shlnkle v. First Nat. Bank (Ohio) 834 
 
 Shoemaker v. Nat. Mechanics' Bank 
 
 (S. C. U. S.) 169 
 
 Shoemaker v. Nat. Mechanics' Bank 
 
 (Md.) 934 
 
 Shunk y. First Nat. Bank (Ohio) 820 
 
 Simmons, Commercial Bank of Cleve- 
 land y. (C. C. U. S.) 394 
 
 Simmons y. Aldrloh (Wis.) 931 
 
 Skinker, Matthews v. (Mo.) 647 
 
 Smith, First Nat. Bank of Mendota y. 
 
 (111.) 390 
 
 Smithy. Exchange Bank (Ohio) 836 
 
 Smith V . First Nat . Bank (Mich . ) 934 
 
 Smithy. Webb (Minn.) 935 
 
 Southwiok V. First Nat. Bank (N T.) 789 
 SpafEordv. First Nat. Bank (Iowa) .... 488' 
 
 Starbuck, Wiley y. (Ind.), 436 
 
 State Nat. Bank, Canfleldy. (C. C. U. 
 
 S.) 313 
 
 State Nat. Bank, Cooke y. (N. Y.).... 698 
 State Nat. Bank, Merchants' Nat. 
 
 Banky. (S. C. U. S.) 48 
 
 State Nat. Bank, Pittsburgh Locomo- 
 tive and Car Works y. (C. C. U. S.).. 315 
 State, Northward Nat. Bank of New- 
 
 arky. City of Newark (N. J.) 673 
 
 State, VanSlyke V. (Wis.) 939 
 
 State V. Hartford Bank (Conn.) 931 
 
 State V. Gastlng (La.) '. 508 
 
 State V. Nat. Bank of Baltimore (Md.) 527 
 
 Statey. Phoenix Bank (Conn.) 930 
 
 State y. TuUer (Conn.) 375 
 
 Stetson y . City of Bangor (Me.) 620 
 
 Stewart v. Nat. Union Bank of Mary- 
 land (S. C. U. S.) 175 
 
 Stiltz V. Tutewllerdnd.) 932 
 
 St. Louis Nat. Bank y. Papin (C. C. 
 
 U.S.) 326 
 
 Story y. O'Donnell (Penn.) 938 
 
 Supervisors, Hubbard v. (Iowa) 932 
 
 Taintor, United States y. (C. C. U. S.).. 256 
 
 Tapley y. Martin (Mass.) 611 
 
 Tappan v. Merchants' Nat. Bank (S. C. 
 U. S.) 100 
 
X 
 
 TABLE OF OASES EEPOBTED. 
 
 PAGE. 
 
 Taylor, Venango Nat. Bank v^ (Penn.) 842 
 
 Taylor v.Hutton(N.T.) 755 
 
 Tenney, Commonwealth v. (Mass.) — 668 
 
 Terrell, Case v. (S. C. U. S.) 67 
 
 Thatcher t. West Riyer Nat. Bank 
 
 (Mich.) 633 
 
 Third National Bank of Baltimore v. 
 
 Boyd{Md.) 545 
 
 Thomas, Mayor v. (Tenn.) 938 
 
 Tiffany v. Nat. Bank of Missouri (S. C. 
 
 U.S.) 90 
 
 Traey, Cadle y. (C.C.U. S.) 230 
 
 Tuller, State v. (Conn.) 376 
 
 Turner v. First Nat. Bank of Keokuk 
 
 (Iowa) 454 
 
 TutewUer, Stiltz Y. ffud.) 932 
 
 Tuttle, Craft y. and.) 932 
 
 Union Gold Hill Mining Co. v. Kooky 
 
 Mountain Nat. Bank (8. C. U. S.)... 151 
 
 UnioH Nat. Bank, Hagar y. (Me.) 523 
 
 United States, Branch v. (C. of Claims 
 
 U. S.) 363 
 
 United States, plaintiff in error, v. 
 
 Maun (S. C. U. S.) 154 
 
 United States V. Rhawn(D. C. U. S).. 358 
 United States v. Taintor (0. C. U. S.). 256 
 Upton T. Nat. Bank of South Beading 
 
 (Mass.) 618 
 
 Van Allen v . Assessors (U . S . S . C) . . . . 1 
 Van Antwerp y. Hulburd (C. C. U. S). 208 
 
 217 
 
 PAOE. 
 
 Van Campen, Matter of (U. S.) 186 
 
 Van Leuven v. First Nat. Bank (N. T.) 7S4 
 Van Nostrand, Hungerford Nat. Bank 
 
 y. (Mass.) 689 
 
 Van Slyke t. State (Wis.) 939 
 
 Veazie Bank v. Fenno (S. C. U. S) 22 
 
 Venango Nat. Bank v. Taylor (Penn. .) 842 
 Village of Cassopolis, Howell y. (Mich.) 627 
 Vough, Toungy. (N.J.) 935 
 
 Waite y. Dowley (U. S.) 137 
 
 Walker, Hale v. (Iowa) 471 
 
 Walkill Nat. Bank, Green v 786 
 
 Ward, Curtis V. (Mo.) 935 
 
 Webb, Smith T. (Minn.) 935 
 
 Wecklery. First Nat. Bank (Md.) 533 
 
 Weld y. City of Bangor (Me.) 521 
 
 West Elver Nat. Bank, Thatcher y. 
 
 (Mich.) 622 
 
 Wheelocky. Kost(Ill.) 406 
 
 Whitney, Crockery. (N. T.) 745 
 
 Whitney t. Eagsdale (Ind.) 429 
 
 Wild, In re (U.S.) 246 
 
 Wiley V. First Nat. Bank (Vt.) 905 
 
 Wileyv. Starbuok ffnd.) 436 
 
 Woodsy. People's Nat. Bank (Penn.). 888 
 Wright y. Merchants' Nat. Bank (C. 
 
 C. n. S.) 321 
 
 Tounkin, Morseman y. (Iowa) 460 
 
 Young, Nat. State Bank of Oskaloosa 
 
 \. (Iowa) 451 
 
 Youngy. Vough (N. J.) 935 
 
TABLE OF CASES CITED. 
 
 PAGE. 
 
 Abbott T. Bangor, 56 Me. 310./ 532, 6T2 
 
 Adams v. Daunis, 39 La. Annual, 315. . . 714 
 Adams v. Mayor, 16 Albany Law Jour. 
 
 416 445 
 
 Adderly v. Storm, 6 Hill, 624 to 628, 407, 
 
 475, 476, 554, 557 
 Albert v. Savings Bank of Baltimore 
 
 2Md. 159, 160 180,638 
 
 Alexander v. Berchfleld, 7 Manning & 
 
 Granger, 1067 57 
 
 Alexander v. Mackenzie, 6 0. B. 766. . . 703 
 Allen v. Freedman's Savings and Trast 
 
 Co., 14 Fla. 418 889 
 
 Allen V. Furbish 4 Gray, 504 604 
 
 Allen's Case, Law Rep., 16 Eq. 449, 559, 
 
 343, 345, 349 
 American Bank v. Adams, 13 Pick. 303, 
 
 617, 618 
 
 Ames V. Merlam, 98 Mass. 294 593 
 
 Amherst Bank v. Root, 2 Mete. 523, 494, 
 
 618, 616 
 
 Amor V. Fearon, 9 Ad. & BU. 551 767 
 
 Anne, 7 Cr. 571 ; Conkl. Treat., 5th ed., 
 
 546 159 
 
 Anon, 2 Salkeld, 522 54 
 
 Apt) V. Corgell, 3 Penn. 494 863 
 
 Ashhurst v. Mason, Law Rep. 30 Eq. 
 
 335 348 
 
 Atlantic and Pacific Telegraph Co. v. 
 
 Barnjs, 64 N. T. 385 ; 8. C, 31 Am. 
 
 Hep. 621 616 
 
 Atlas Bank v. Brownell, 9 K. I. 168 ; S. 
 
 C, 11 Am. Eep. 231 614 
 
 Atlas Bank T. Nahant Bank, 3 Mete. 
 
 581 263 
 
 Augusta V. North, 57 Me. 392 522 
 
 Aurora City v. West, 7 Wall. 83, 105, 137, 534 
 Austin V. Aldermen of Boston, 7 Wall. 
 
 694; 14 Allen, 359, 100, 571, 572, 579, 933, 934 
 
 Austin V. Daniels, 4 Denio, 299 68 
 
 Ayres v. Western Railroad Co., 48 
 
 Barb.132 771, 774 
 
 Badgeley v. Beale, 3 Watts, 363.... 862, 863 
 Badger v. Bank of Cumberland, 36 Me. 
 
 428 59, 735 
 
 Bagnall v. State, 35 Wis. 112 934 
 
 Baillie v. Kell, 4 Bing. N.C. 638, 651, 764, 767 
 Baines v. Bwing, Law Rep., 1 Exch. 320, 703 
 Ballston Spa Bank v. Marine Bank, 16 
 
 Wis. 130 63 
 
 Bank V. BuUard 898 
 
 Bankv. City of New Albany, 11 Ind. 
 
 139 434, 450 
 
 BankComm. V. St. Lawrence Bank, 7 
 
 N. Y. ,513 537 
 
 Bank v. Kennedy, 7 Wall. 19, 22,. ..357, 788 
 Bank V. Lamb, 50 N. Y. 95, 98; S. C, 10 
 
 Am. Hep. 438 661, 663 
 
 Bank v. Lanier, 11 Wall. 869, 377, 96, 340, 
 
 341, 342, 848, 344, 524, 525. 862, 933 
 Bank Tax Case, 2 Black, 620; 2 Wall. 200, 
 
 693, 779 
 
 PAGE. 
 
 Bank v. Taylor 847 
 
 Bank of America v. McNeill, 10 Bush 
 
 (Ky.) 54,58, 343, 347 
 
 Bank of Augusta v. Barle, 18 Pet. 619, 
 
 687; 3 Kent, 3907, 60, 126, 202, 299, 640, 
 
 855, 862 
 Bank of Bethel v. Pahquioque Bank, 
 
 14 Wall. 17, 89, 230, 818, 383, 398, 401, 
 
 510, 515, 559, 660, 714, 778 
 Bank of Carlisle v. Hopkins, 1 Min, 
 
 (Ky.)245 618 
 
 Bank of Chilicothe v. Swayne et al., 8 
 
 Ohio 280, 288 180, 815 
 
 Bank of Commerce's Appeal, 78 Penn. 
 
 St. 59 343 
 
 Bank of Genesee v. Patchin Bank, 3 
 
 Kern. 309 66,735 
 
 Bank of Kentucky v. Schuylkill Bank, 
 
 1 Pars. Select Cases, 183 59, 535 
 
 Bank of Louisville v. Bank of Newark, 
 
 10 Bush, 367 ; 37 Mo. 398 624, 649 
 
 Bank of Lyons v. Ocean Nat. Bank, 19 
 
 Am. Hep. 181 881 
 
 Bank of the Metropolis v. Jones, 8 Pet. 
 
 12 63 
 
 Bank of Middleburg v. Bingham, 88 Vt. 
 
 636 175 
 
 Bank of New Orleans v. Tucker Bros. 
 
 511, 512 
 Bank of New York V. Bank of Ohio, 29 
 
 N. Y. 618, 619 63,66 
 
 Bank of New York v. Vanderhorst, 33 
 
 N. Y. 653, 559. 560 727 
 
 Bank of Orleans v. Merrill, 3 Hill, 295. . 703 
 Bank of Pennsylvania v. Heed, 1 Watts 
 
 and S. (Penn.) 101 45,63,65 
 
 Bank of St. Mary v.Calder, 8 Strobh.(S. 
 
 C.)403 66,618 
 
 Bank of Salina v. Alvord, 81 N. Y. 472, 751 
 Bank of Savings r. Collector, 3 Wall. 
 
 495 636 
 
 Bank of Selma v. Colby, U. S. S. C, Oct. 
 
 1874 788 
 
 Bank of State, etc., v. Burton, 27 Ind. 
 
 426 648 
 
 Bank of the U. S. v. Bank of Georgia, 
 
 lOWheat.888 65 
 
 Bank of the U. S. v. Dandridge, 12 
 
 Wheat. 64, 68, 70, 71.. 62, 293, 493, 636, 
 
 539, 748, 858 
 Bank of the U. 8. v. Davis, 2 Hill, 465. . . 55 
 Bank of the U. S. v. Deveaux, 5 ("r. 
 
 85, 86 338, 578, T02, 918 
 
 Bank of the U. S. v. Dunn. 6 Pet 51.. 63, 702 
 Bank of TT. S. v. Etting, 31 Wheat. 59. . . 615 
 
 Bank of the IT. S. v. M'Culloch. 131 
 
 Bank of the IT. S. v. Owens, 2 Pet. 538, 
 
 179, 444, 703, 861 
 Bank of U. S. v. Pardridge, 12 Wheat.44. 748 
 Bank of the IT. S. v. Waggener, 9 Pet. 
 
 378 444 
 
 Bank of Ftioa v. City of ITtloa, 4 Paige, 
 
 399 687 
 
Xll 
 
 TABLE OP OASES OITED. 
 
 PAGE. 
 Bank ot TJtloa v. Smalley, 3 Cow. T70, 
 
 778 343,344 
 
 Bank of Vergennes v. Warren, 7 Hill, 
 
 91, 94 59, 68, 64 
 
 Bank of Washington v. Barrlngton, 2 
 
 Penn. 37 66,618 
 
 Bargate v. Shortrldge, 5 House of Lords 
 
 Cases, Z97, 323 347 
 
 Barhyte v. Shepherd, 35 N. T. 238 719 
 
 Barnes v. Ontario Bank, 19 N. Y. 152, 
 
 156,166 (8,63,65,537 
 
 Barnet v. Smith, 10 Foster (N. H.) 356, 58 
 
 Barrlok v. Austin, 21 Barb. 241 63 
 
 Barrlngton v. Bank of Washington, 14 
 
 Sere. & R. (Peon.) 405 66,618 
 
 BarwTok v. Eng. Joint Stock Bank, L. 
 
 E., 2 Exoh. 259 534 
 
 Bates V. Bank of Alabama, 2 Ala. 459, 
 
 462 175, 180 
 
 Bates T. N. Y. Ins. Co., 3 Johns. Caa. 
 
 238 524 
 
 Bathgate v. Haskins, 59 N. Y. 633 801 
 
 Bayne etal. V. TJ. S.,94F. S. Bep... 368 
 
 Beatty y. Knowles, 4 Pet. 167 127 
 
 Beckham v. Drake, 2 H. L. Cases, 640. . 320 
 Beckwlth etux. v. Dargeta, 18 Iowa, 
 
 303 458 
 
 Beers v. Bridgeport Spring Co., 2 
 
 Weekly Digest, 8 805 
 
 Beers et al. T. People, 9 Leg. News, 
 
 176 425 
 
 Beers ¥. Phoenix Glass Co., 14 Barb. 358, 
 
 59, 62 
 Belmont Bank T. Hoge, 35 N. Y. 65.... 252 
 
 Bennett V. Hardaway, 6 Munf. 125 919 
 
 Benoit v. Conway, 10 Allen, 528 702 
 
 Bickf ord v. First Nat. Bank, 42 111 . 238, 58 
 
 Biddis V. James, 6 Binn. 329 862 
 
 Bird's Executors v. Cookrem, 2 Woods, 
 
 32 . . 769 
 
 Biss'ell v'. j'effersonviiie,' 24'How. 'm.'.'. 55 
 Bissell V. Mich. Southern & Northern 
 
 Ind. R. E. Co., 22 N. Y. 258, 259. . .293, 831 
 Black V. Ottoman Bank, ISMoore'sP. C. 
 
 472; S. C.,8Jur. (N. S.)801 617 
 
 Black ¥. Zaoharle, 3 How. 483 343, 344 
 
 Blair V. Perpetual Ins. Co., 10 Mo. 559, 849 
 Bliven V. New England Screw Co., S 
 
 Blatchf. Ill 702 
 
 Bloodgood T. Clark, 4 Paige, 574 322 
 
 Board of Commissioners v. Elston, 32 
 
 Ind. 37 643 
 
 Board of Supervisors v. Davenport, 40 
 
 111. 197,198 398, 432 
 
 Board of Supervisors v. Otis, 62 N. Y. 
 
 88 617 
 
 Boehem V. Sterling, 7 Tenn. 430 57 
 
 Booth V. Clark, 17 How. 332 86 
 
 Boston Glass Co . v. Boston, 4 Mete. 181, 723 
 Boston Glass Manuf. Co. v. Langdon, 
 24 Pick. 49; Ang. & Am. on Corp.,§ 
 
 773 •. 560 
 
 Bowden v. Morris, 1 Hughes, 378 142 
 
 Bowen V. First Nat. Bank of Medina, 
 
 34 How. 408, 409 235, 771, 797 
 
 Boyd V. Emerson, 2 Adolphus & El- 
 lis, 184 57 
 
 Bradley V. People, 9 Wall. 459 100, 934 
 
 Branch Bank v. Steele, 10 Ala. 915 68 
 
 Brass v. Worth, 40 Barb. 648 768 
 
 Bridenbeoker T. Lowell, 32 Barb. 9. .. 65 
 Bridgeport Bank v. Schuyler et al.,34 
 
 N. Y.BO 76 
 
 Bright V. McCulloch,27Ind.223 4.50 
 
 Bringhurst v. Outhbert, 6 Binn. 398 894 
 
 Brinkerhoff v. Brown, 7 Johns. Ch. 217, 560 
 
 Brown V. Lamb, 6 Mete . 203 862, 264 
 
 Brown v. Leckie etal, 43111. 497 58 
 
 Brown v . London, 1 Levlnz, 298 60 
 
 Browny. Maryland, 13 Wheat. 119 121 
 
 PAOS. 
 
 Brown V. Mott, 7 Johns. 361 626 
 
 Brown V. Strode, 5 Cr. 303.... ..^,...... '02 
 
 Brown v Second Nat. Bank of Brie, 22 
 
 PP. Smith, 209 117, 133, 317, 741, 744 
 
 824, 873, 884, 887, 888 
 Brownson v.Gifford, 8 How. (N. Y.) 389, 458 
 Brua's Appeal, 5 P . F. Smith, 295. ... 863 
 
 Buck V. JPeople, 78 111. 560, 566 416, 42o 
 
 BuUard v. Bank, 94, 189, 524, 537, 693, 929, 
 
 933, 935 
 Bureau Co. v. Chicago, B. & Q. E. E. 
 
 Co., 44 111. 238 ,1 ••;:„ 191 
 
 Burgess v. Eve, L. E., 13 Bq. 450 617 
 
 Burnham v. Webster, 19 Me. 234 69 
 
 Burnhisel v. Fireman, Assignee, 22 
 
 Wall. 170 122 
 
 Cadle V. TAcy, li;Blatobf. 101. .401, 510, 714 
 
 802 
 Caldwell V. Nat. Mohawk Valley Bank, 
 
 64 Barb. 333 63, 
 
 Caliot V. Walker, 3 Anstr. 495 
 
 Campbell v. Slidell, 5La. Ann. 274 
 
 Camp V. Bryne, 41 Mo. 525 
 
 Candler v. Pettit, 1 Paige, 168 
 
 Capron v. VauNoorden, 2 Cranoh, 126.. 
 
 Carey V. Giles, 10 Ga. 9 
 
 Caroline, 7 Cr. 500 
 
 Cartmell's case. Law Eep., 9 Ch. App. 
 
 691 
 
 Carrington v. Goddln, 13 Gratt. 687.... 
 
 Caruthers V. West, 11 Q. B. 143 
 
 Case V. Citizens' Bank, 2 Woods, 23 
 
 Case T. Terrell, 11 Wall. 201 
 
 Casey V. GalU, 366 
 
 Center Warren Eoad Co. v. Black, 32 
 
 Ind. 468 
 
 Central Nat. Bank. v. Pratt, 115 Mass. 
 
 539 117, 123, 604, 
 
 Chancy v. Duke, 10 Gill. & J. U 
 
 Chappell's case. Law Rep., 6 Ch. App. 
 
 903 
 
 Charlesv. Marsden, 13 Taunt. 224. 
 
 Charleston V. People's Nat. Bank 
 
 Chatham Nat. Bank v. Merchants' Nat. 
 
 Bank, 4 Thomp. & C. 196 
 
 Chattahoochee Nat. Bank v. Schley. . 
 Cheale v. Ken ward, 3 De Gex & J. 27. . . 
 Chegaray v. Jenkins, 5 N. Y. 376.. 717, 
 
 Chemical Nat. Bank v. Bailey 
 
 Chesapeake Bank v. First Nat. Bank, 
 
 40 Md. 269 109, 715, 
 
 Chiniquy v. People, 78 111. 572 416, 
 
 Chouteau Spring Co. v. Harris, 20 Mo. 
 
 282 341, 
 
 City Bank of New Haven v. Perkin, 29 
 
 N. Y. 554 
 
 City of Dunleith v. Eeynolds, 53 111. 
 
 45 105, 
 
 City of Lexington v. Butler, 14 Wall. 
 
 295 >.... 
 
 City Nat. Bank v. Paducah, 5 Cent. 
 
 Law Jour. 347 629,684, 
 
 Citizens' Nat. Bank of Piqua v. Lem- 
 
 mlng,8Int. Eev. Eecord, 132 
 
 City of Richmondv. Scott 
 
 City of Dtica v. Churchill, 33 N. Y. 
 
 „161 392,598, 
 
 Clafliu V Houseman, 93 U."B. 130: 3 
 
 Cent. L. J. 803 565, 
 
 Clark, Assignee, v. Iselin, 31 Wall. 360. . 
 
 .190, 
 
 536 
 136 
 291 
 146 
 322 
 317 
 64 
 159 
 
 847 
 920 
 636 
 288 
 85 
 930 
 
 304 
 
 180 
 
 349 
 626 
 lOO 
 
 284 
 9U 
 
 344 
 719 
 771 
 133 
 
 Clark V. Farrlngton, 11 Wis. 823 
 
 Clayton's Case, 1 Mer. 608 
 
 Cleghorn v. Posthwaite, 43111. 428 ... 
 
 Clements v. Bowes, 17 Sim. 167 
 
 Clippenger v. Hepeaugh, 5 W. & S. 315, 
 
 Coohecho Nat. Bank v. Haskell, 51 N 
 
 H.116;S. C.,13Am. Eep. 67 
 
 425 
 
 343 
 
 63 
 
 398 
 
 534 
 
 723 
 
 117 
 933 
 
 692 
 
 912 
 
 294 
 
 127 
 747 
 414 
 334 
 863 
 
 63 
 
TABLE OF OASES CITED. 
 
 xiu 
 
 PAGE. 
 Co. Commissioners A.A.Co. y. Duckett, 
 
 20 Md. 468 838 
 
 Coggsv. Bernard, 1 Ld. Eaym. 909.. 54, 
 
 865, 866, 876, 878, 909 
 
 Coliee V. Cooper, 8 Blackf . 115 444 
 
 Cole V. Bansemer, 26 Xnd. 94 444 
 
 Columbia Bank aud Bridge Co. v. 
 
 Holdeman, 7 W. & S. 233 863 
 
 Commercial Bank of Albany v. Hughes, 
 
 17 Wend. 94 733 
 
 Commercial Bank v. Kortright, 22 
 
 Wend. 348 344, 345 
 
 Commercial Bank of Lake Brie v. Nor- 
 ton etal.,1 Hill, 501 59 
 
 Commercial Bank v. Norton, 1 Hill, 
 
 501 60 
 
 Commercial Bank v. Simmons, 10 Al- 
 bany Law Jour. 155 510 
 
 Commercial Bank v. TeuEyck, 48 
 
 N. Y. 305 66,618 
 
 Commercial and Railroad Bank of 
 
 Vicksburg v. Slocombe, 14 Pet. 60, 65, 244 
 Commissioners of Knox Co. v. Aspin- 
 
 wall, 21 How. 539 736 
 
 Common Council of Indianapolis v. 
 
 MoLean,8 Ind. 328 434 
 
 Commonwealtli v. Allegheny County, 
 
 37Penn. St. 287 55 
 
 Commonwealth v. Barry 256, 568, 573 
 
 Commonwealth v. Berry, 99 Mass. 438, 610 
 Commonwealth v. Cook, 13 B. Monr. 
 
 149, 159 
 Commonwealth v. Davis, 104 Mass. 548, 
 
 608, 610 
 Commonwealth v. Felton, 101 Mass. 304, 
 
 568, 608, 609, 610 
 Commonwealth y. Fuller, 8 Mete. 313, 
 
 570, 574, 608 
 Commonwealth v. Hall, 97 Mass. 570... 568 
 Commonwealth v. People's Savings 
 
 Bank, 5 AUen, 428, 431 578 
 
 Commonwealth v. Peters, 12 Mete. 387, 570 
 Commonwealth v. Pittsburgh, 34 Penn. 
 
 St. 496 55, 736 
 
 Commonwealth v. Provident Inst, for 
 
 Savings, 12 Allen, 313 579 
 
 Commonwealth v. Tenney, 97 Mass. 50 
 
 256, 574, 608, 610 
 Conklin v Second Nat. Bank, 45 N. Y. 
 
 655 94 
 
 Continental Nat. Bank v. Nat. Bank of 
 
 Commonwealth, 50 N. Y. 681 56 
 
 Cook Co. V. Chicago, etc.,E. E. Co., 
 
 35 111. 465 304, 722 
 
 Cooke V. State Nat. Bankof Boston, 50 
 Barb. 339 ; 52 N. Y. 62, 65, 96, 201, 230, 
 242, 401, 510, 575, 656, 714, 769, 789, 790, 
 
 . 801, 913 
 
 Cook V. Tunis, 18 Wall. 332 290 
 
 Cooley V. Lawrence, 12How. 176 774 
 
 Cooper V. Curtis, 30 Me. 488 64 
 
 Cooper V. Shaver et al., 41 Barb. 
 
 151 146 
 
 Coppell V. Hall, 7 Wall. 542, 558 ... 180, 861 
 Covington Draw Bridge Co. v. Shep- 
 herd, aO How. 227, 233, 234 1&, 702 
 
 Corfleld v. Corgell,4 Wash. C. C. 380... 579 
 Cowles V. Mercer Co., 7 Wall. 121.. 164, 708 
 
 Craig V. Pleiss, 2 Casey, 271 853 
 
 Crandall v. State, 10 Conn. 343 579 
 
 Craj)8ey v. Sweeny, 27 Barb. 310: Moak's 
 
 Van Santvoords PL, 3d ed., 186 796 
 
 Creese et al. v. Babcock et al., 10 Mete. 
 
 525,547 475,554,557 
 
 Crisp V. Banburg, 8 Bing. 894 703 
 
 Crocker v. First Nat. Bank, 3 Am. Law 
 
 Times Eep. Cr. S. 350 350 
 
 Crockery. Marine Nat. Bank, 101 Mass. 
 
 240 201, 231, 240, 401, 510, 702, 714, 802 
 
 Crockery. Whitney 888 
 
 PAGE. 
 
 Crockett v. Young, 9 Miss. 240 64 
 
 Curran v, Arkansas, 15 How. 304 347 
 
 Currier v. Lebanon Slate Co., 56 N. H. 
 
 262 337 
 
 Curtis V. Leavitt. 15 N. Y. 52, 168 539 
 
 Cutler v. Kae, 7 How. 739 218 
 
 Cussons V. Skinner, 11 Mees. & Wels. 
 
 161 763 
 
 Danbury & N. Eaiiroad Co. v. Wilson, 
 
 22 Conn. 435 146 
 
 Darby's Trustees v. Boatmen's Sav. 
 Inst., 1 Dill. 141; S. C, 18 Wall. 375. .. . 330 
 
 Darling v. Gunn, 50 111. 424, 459 414, ttS 
 
 Dartmouth College v. Woodward, 4 
 Wheat. 518, 636; 2 Kent, 299.. 488, 536 
 
 640,855 
 
 Davidson v. Lanier, 4 Wall. 447 703 
 
 Davis, lOWall. 15 68 
 
 Davis V.Cook, 9Nevada,134 769 
 
 Davis V. Lee, 26 Miss. 505 343 
 
 Davis V. Packard, 6 Wend. 327 218 
 
 Davis V. Eaudall, 115 Mass. 547. .117, 123, 883 
 
 Davis V. Turner, 4 Hand. 422 . 373 
 
 Davison v. Champlin, 7 Conn .344 377 
 
 Dawson V. Lawes, Kay,380; S.C.,23L. 
 
 J. Chan. 434 617 
 
 Day V. Newark India Eubber Manufac- 
 turing Co., IBlatohf. 628 302 
 
 Dearborn v. Union Nat . Bank, 58 Me. 
 
 273; S.C., Olid. 369 912 
 
 Deanv. English,18B Monr. (Ky.)136.. 458 
 Dedham Bank v. Chickering. 3 Pick. 
 
 335 . . . . 493 
 
 DeGroot v.' tf.'S. ', 5 Wali.iig! '.'.'.'.'.'.'.'. '. . 68 
 DeGroot v. Dan Duzer, 20 Wend . 390. . . 786 
 De Haven v. Kensington Nat. Bank, 81 
 
 Penn. St. 95 911 
 
 Delafleld v. State of 111., 2 Hill, 160. .. . 914 
 DePauw v. City of New Albany, 22 Ind. 
 
 204 446 
 
 Detroit V. Martin, 34 Mich. 170 723 
 
 Dezell V. Odell, 3 Hill, 216 55 
 
 Disbrow v. Driggs, 8 Abb. 306 702 
 
 Dispatch Line v. Bellamy Manufactur- 
 ing Co., 12 N. H. 204 293 
 
 Dobbins V. Erie Co., 16 Pet. 435 121 
 
 Dockminique V. Davenant, 1 Salk. 230. . 217 
 
 Dodge V. Woolsey, 18 How. 341 170 
 
 Dooley v. Wolcott, 4 Allen (Mass.), 407. 146 
 Doorman v. Jenkins, 2 Ad. & Ell. 256 . 865 
 Dorsey v. Abrahams, S. C. Penn. ; 5 
 
 Eep. 53 65 
 
 Downey v. Eaymond 517 
 
 Dows V. City of Chicago, 11 Wall. 108. . 304 
 
 722 
 Dred Scott V, Sanford, 19 How. 393. .216, 218 
 Duncan v. First Nat. Bank, 11 Bank 
 
 Mag. 787 833 
 
 Duncan v. Md. Savings Inst., 10 Gill. 
 
 &J. 299 536 
 
 Duncanson v. MoLure, 4 Dall. 308 863 
 
 Dunham et al. v. City of Chicago, 55 
 111.357 395 
 
 East Anglican B'y v. Eastern Counties 
 
 R'y, 7 Eng. Law & Bq. 508 127 
 
 Eaton et al. v. Aspinwall, 19 N. Y. 119; 
 
 S. C.,6Duer (NT Y.), 176 146 
 
 Edgell V. Haywood, 3 Atk. 352 322 
 
 Edgell V. McLaughlin, 6 Whart. 176. .. . 883 
 
 BlUot V. Abbott, 12 N.'H. 549 59 
 
 Ellis V. Schmack & Thomas, 5 Bing. 
 
 531 146 
 
 Eno V. Woodworth, 4 Comst. 249 796 
 
 Empire City Bank, 18 N. Y. 199 476 
 
 Eppes V . Eaiiroad Co ., 85 Ala. 33 146 
 
 Brie Bank v. Smith, Randolph & Co., 3 
 
 Brewst. 9 550 
 
 Evans v. Dravo, 12 Hzirris, 65 863 
 
XIV 
 
 TABLE OF CASES CITED. 
 
 PAGE. 
 EvansvlllB Nat. Bank v. Metropolitan 
 
 Nat. Bank, 2 Bias. 537 94, 524. 693 
 
 Everett's Appeal, 71 Penn. St. 216 312 
 
 Everett v. IT. S., 6 Port. (Ala ) 166 64 
 
 Ex parte Bagge>. Northern Coal Co., 13 
 
 Beav. 162 347 
 
 Ex parte Heavens, 9 Ves., Jr., 223 136 
 
 Ex parte Bennett, 27 Eng. L. & Bq. 572. 274 
 Ex parte BoUman, 4 Cranch, 75, 114, 125, 
 
 130 187 
 
 Ex parte Dalby, Sowell's Dec. 431... . 291 
 Ex parte Do Pass, 5 Jurist (N. S.), 1193, 
 
 1194; Ang. & Ames gn Corp., § 623. . . 554 
 Ex parte Elliott, Law Rep., 2 Cli. Div. 
 
 lOi 342 
 
 Ex parte Littledale, Law Bep., 9 Cli. 
 
 App.257 347, 348 
 
 Ex parte McNeil, 13 Wall. 240 121 
 
 Ex parte Penny, Law Bep., 8 Oh. App. 
 
 446 343 
 
 Ex parte Smith, 2 Cranch, CO., 693. . . 184 
 Ex parte Walker, 27 Eng. L. & Eq. 572, 
 
 273, 274 
 
 Farmers' Bank v. Burohard, 33 Vt. 448, 175 
 Farmers' Bank v. Hale, 59 N. Y. 53, 595, 
 
 14, 42 
 Farmers' Loan & Trust Co. v. Curtis, 3 
 
 Sold. 466 65, 736 
 
 Farmers & Mechanics' Bank T. Bald- 
 win, 23 Minn. 193 637, 638, 639 
 
 Farmers and Mechanics v. Butchers & 
 
 Drovers' Bank, 4 Duer, 219 ; 16 N. Y. 
 
 125, 133; 14 id. 624. .15, 56, 58, 60, 62, 65, 702 
 712, 736 
 Farmers' Nat. Bank v. Dearlng, 91 U. 
 
 S. 29, 35.. 314, 352, 445, 562, 595, 800, 801, 811 
 833, 883, 929, 930 
 Farmers & Mechanics' Bank v. Little, 8 
 
 Watts & Sargeant, 207 113 
 
 Farmers & Mechanics' Bank v. Troy 
 
 City Bank, 1 Dougl . (Mich .) 457 .... 65, 66 
 Farmlngtonv. Stanley, 60 Me. 472.. 613, 617 
 
 Field V. Holland, 6 Cranch, 8 135 
 
 Filbert's Case, Law Kep., 5 Ch. App. 
 
 559,565 3&, 345 
 
 Filson v. Hines, 5 Burr. 452 863 
 
 Fiuuoane v. Small, 1 Bsp. 315 865 
 
 Firemen's Ins. Co. v. Kly, 2 Cowen, 
 
 703 503 
 
 First Nat. Bank V. Douglas Co., 3 Dill. 
 
 330 465 
 
 First Nat. Bank v. Hall, 44 N. T. 395; 
 
 S. C, 4 Am. Bep. 698 66 
 
 First Nat. Bank v. Haire, 36 Iowa, 443, 
 
 264, 488, 618 
 First Nat. Bank v. Harris, 108 Mass. 
 
 514 ^9, 888 
 
 First Nat. Bank y. Peterborough, 56 N. 
 
 H. 38 100, 672 
 
 First Nat. Bank v. Pierson, 16 Alb. 
 
 Law Jour. 319 466, 590, 836, 913 
 
 First Nat. Bank ol Charlotte v. Nat. 
 
 Exchange Bank of Baltimore, 39 Md. 
 
 600, 610; 92 D". S. 123 313,535,537 
 
 First Nat. Bank of Columbus v. Gar- 
 
 linehouse, 22 Ohio St< 492, 493, 502, 
 
 S. C., 10 Am. Bep. 751.. 117, 133,695, 
 
 600,826,830, 831, 883 
 First Nat. Bank v. Graham, 79 Penn. 
 
 St. 106; S. C, 21 Am. Bep. 49. .66, 
 
 379, 911, 913 
 'First Nat. Bank of Hannibal y. Mere- 
 dith, 44 Mo. 500 303 
 
 First Nat Bank of Lyons v. Ocean Nat. 
 
 Bank, 50 N. T. 378; S. C, 19 Am. 
 I Bep. 181.. 66, 137, 379, 380, 466,537,543, 
 
 549 640, 724, 911 
 First Nat. Bank of Mendota y. Smith, 
 
 65 IU.54 421 
 
 PAGE. 
 First Nat. Bank of Plymouth v. Price, 
 
 33Md. 487 587 
 
 First Nat. Bank of Shawneetown v. 
 
 Cook et al., 77IU.623 414 
 
 First Nat. Bank of South Bend v. 
 
 Lanier, 11 Wall. 70, 369 190, 695, 696 
 
 First Nat. Bank of Whitehall y. Lamb, 
 
 50 N. f. 95; 77 Barb. 429, 118, 123, 250 
 
 432, 442, 595, 600, 815, 816 
 Fisher y.N. T. C. & H. E. E. E. Co., 
 
 46N.Y. 644 744 
 
 Fleckner y. Bank of the tJ. S . , 8 Wheat. 
 
 338, 339, 357, 360 59, 63, 129, 641, 702, 738 
 
 Flint v. Aldermen of Boston, 99 Mass. 
 
 k 141 580 
 
 Flowery. Lance, 59N.T. 603 723 
 
 Folgery. Columbian Ins. Co., 99 Mass. 
 
 372:: 14 Allen, 359 577, 579 
 
 Fosdlok y. Perrysburg, 14 Ohio St. 472, 823 
 Foster V. Essex Bank, 17 Mass. 479, 498, 
 
 599.. 380 536,538, 734,865, 866,878, 898, 
 
 907. 909, 910, 911 
 Fowler V. Scully, 72 Penn. St. 456,461, 
 
 516.. 127, 284, 466, 537, 543, 618, 647, 653, 
 
 751, 871, 881, 888, 889, 890 
 Frankford Bank y. Johnson, 24 Me. 
 
 490" 55, 63 
 
 Franklin Bank v. Cooper, 36 Me. 179.. 615 
 Franklin Bank y. Stevens, 39 Me. 532.. 613 
 Franklin Bank y. Steward, 37 Me. 519. . 63 
 Freeman y. Buckingham, 18 How. 182.. 702 
 Fripp V. Chard Eaiiway Co., 21 Eng. 
 
 Law& Eq. 53 334 
 
 Frost .V. Coal Co., 24 How. 283; Ang. 
 
 & Am. on Corp., 9th ed. 777; Aljbott's 
 
 Digest, title "Corporations," 338; 
 
 Grant on Corporations, 295 85 
 
 Frothingham V Morse, 45 N.H. 545 646 
 
 Fuller v. Bennett, 3 Hare, 394 703 
 
 Fulton Bank y. N. Y. & Sharon Canal 
 
 Co., 4 Paige, 137, 137, 327.. 419, 702, 703, 736 
 Fyfe's Case, Law Eep.,4Ch. App. 768.. 345 
 
 Gaines v. Ballou, 6 Pet. 761 868 
 
 Gardner y. Appeal Tax (iourt, 3How. 
 133 
 
 Gassies V. Ballou, 6Pet. 761 
 
 Gelpcke y. Dubuque, 1 Wall. 293, 206 
 
 55, 
 
 German Union Ass. y. Sendsmeyer, 
 50 Penn. St. 67 343,344, 
 
 Gerrard y. 0'Reiley,3 Dru. & War. 414, 
 
 Giblin v. MoMuilen, L. E., 2 P. C. 
 Cases, 327 734, 
 
 Gibson y. Warden, 14 Wall. 248 
 
 Giiman y. Philadelphia, 3 Wall. 713. . . . 
 
 Girard Bank y. Bank of Penn Town- 
 ship, 89 Penn. St. 92 
 
 Glenny y. Hutchins, 4 How. Ft. 98 
 
 Godfrey Barnesly y . Tucker Bros 
 
 Gooch's Case, Law Eep . , 8 Ch. App. 266 
 
 Goodwin y. Hardy, 57 Me. 143 
 
 Gordon v. Longest, 16 Pet . 97 
 
 Granger y. Bassett, 98 Mass. 469 
 
 Grant y. Elliott, 7 Wend. 227 
 
 Grant v Norway, 10 C. B. 665 
 
 Graves y . Lebanon Nat. Bank, 10 Bush, 
 23 
 
 Gray y . Bennet, 3 Mete. 523 
 
 Great Eastern y. Turner, Law Eep.,S 
 
 Oh App. 149, 153 337,346, 
 
 Greeley y. Smith, 3 Story, 658 
 
 Green y. London Omnibus Co , 7 C. B. 
 
 (N.S.) 290 
 
 Green v. WalkiU Nat. Bank 
 
 Gregory v. Oaksmith, 13 How. (N. Y.) 
 
 Grew y. Breed et al ., 10 Meto. 569. . . ' 
 Grim y. School District, 57 Penn. St. 
 434 
 
 13 
 
 163 
 
 534 
 
 345 
 703 
 
 738 
 291 
 121 
 
 58 
 798 
 512 
 345 
 525 
 701 
 525 
 626 
 703 
 
 814 
 122 
 
 649 
 112 
 
 55 
 
 774 
 
 458 
 475 
 
 723 
 
TABLE OF OASES OITED. 
 
 XY 
 
 Grocers' Nat. Bank v. Clark, 48 Barb. Z6 646 
 
 GroTes v. Slaughter, 15 Pet. 449 679 
 
 G*ymes v. Howe, 49 N. T. 17 343 
 
 Hadden v. Spades, 20 Johns. 553 321 
 
 Hagaav. Kandall, 62Me. 439 525 
 
 Hagan v . Walker, 14 How. 29 180 
 
 Hale V. Walker, 31 la. .344, 354 406. 554 
 
 Hallet V. Bassett, 100 Mass. 167, 171 594 
 
 Halsey V. Hard, 6 McLean, 14 215 
 
 Hamilton V. LeGrange, 2 H. Black. 145 137 
 Hamilton v. N. Y. C. B. R. Co., 54N. 
 
 Y. 334 740 
 
 Hamilton v. Watson, 12 CI. & F. 109, 
 
 258 615, 617 
 
 Hamtramaok v. Bank of Edwardsville, 
 
 a Mo. 169 146 
 
 Han. St.JoeK. R. Co. v. Marlon Co., 
 
 36M0.294 649 
 
 Hargreaves v. Bothwell, 1 Kern. 154.. 703 
 Harris v. Runnels, 13 How. 79. .152, 163, 180 
 
 Hart V. Boiler, 15 S. & R. 162 891 
 
 Hartford Bank v. Barry, 17 Mass. 94... 65 
 
 Hayden v. Davis, 3 McL. 276 703 
 
 Haynes v. Brown, 36 N. H. 568 347 
 
 Head v. Providence Ins. Co., 2Cranch, 
 
 127 536, 649, 748, 855 
 
 Heavenridge y. Mondy, 34 Ind 28 445 
 
 Hendy V. Soule, Deady, 400 723 
 
 Henry t. Cuyler, 17 Johns. 469, 471 118 
 
 Hepburn v. Sewell, 5 H. & J. 211 552 
 
 Hepburn v. School Directors, 23 Wall. 
 
 480.. .100, 131, 149, 300, 305, 309, 812, 445, 752 
 
 937 
 
 Hern v. Nichols, 1 Salkeld, 289 55, 56 
 
 Heywood v. City of Buffalo, 14 N. Y. 
 
 534 304, 722 
 
 Hidleyv. Bank 117 
 
 Higley v. First Nat. Bank 824 
 
 Hill T. Hunt, Spenc. 476 681 
 
 Hill V. Manchester, etc., Co., 2 Nev. 
 
 & M. 573; 5 Barn. & Adol. 874 347 
 
 Hill V.Pine River Bank, 45 N. H. 300.. 
 
 341 311 
 
 Hintage's Case, Law Rep., 9 Eq. 5 '345 
 
 Hlntermister v. First Nat. Bank, 64 
 
 N. Y. 212 117,317,595, 883 
 
 Hodge V, Nat. Bank, 22Gratt. (Va.) 51. . 63 
 Hoffman v. Hancock Mut. Life Ins. 
 
 Co.,92U.S. 161 642 
 
 Holbrook-^r. Holbrook, lPiok.248,254.. 686 
 
 Holt V. Bacon, 25 Miss. 567 64 
 
 Holyoke Bank v. Burnham et al.,11 
 
 Cush. 187 554, 557, 558 
 
 Home Ins. Co. v. Stanfleld, 1 Dill. 
 
 424 273 
 
 Hood V. N. Y. & N. H. E. E., 22 Conn. 
 
 1,502 127,538 
 
 Hoppet, 7 Or. 393; 2 Pars, on Ship. & 
 
 Adm. 386 158 
 
 Hoppinv. Buflum,9E. I. 513 343 
 
 Hornev. Green 508 
 
 Horn V. Mayor and Common Council, 
 
 30 Md. 218 538 
 
 Houghton V. First Nat. Bank, 26 Wis. 
 
 663; S.C, 7 Am. Rep. 107 66 635 
 
 Houston V. Moore, 5 Wheat. 1, 27; 1 
 
 Kent's Com., 12th ed., 399 608, 915 
 
 Howell V. State, 3 Gill. 14 631 
 
 Hoyt V. Thompson, 1 Seld. 320.. 64, 732, 735 
 Hubbard v. Supervisors, 23 la. 130. .452 
 
 461, 933 
 
 Hubberaty v . Ward. 8 Bxeh . 330 702 
 
 Huffaker v. Nat. Bank, 13 Bush, 287, 784 
 Hughes V. Bank of Somerset, 5 Litt. 
 
 (Ky.) 47 147 
 
 Hume V. Goesett, 43 111. 297 194 
 
 HungerfordNat. Bank v. VanNostrand 504 
 Hutchins v. State Bank, 12 Mete. 241.. 398 
 Hylton y. United States, 3 Dallas, 171 . . 30 
 
 PAGE. 
 Illus V. N. T. & N. H. R. R. Co., 13 N. 
 
 Y.597 701 
 
 111. Central E. R. Co. v. County of Mc- 
 Lean, 17111. 291 304 
 
 Industrial Scho'ol v . Whitehead, a Beas. 
 
 290 681 
 
 In matter of Oliver Lee & Co.'s Bank, 
 
 21N. Y.9 679 
 
 In re Empire City Bank, 18 N. Y. 199.. 407 
 In re Bigelow, 1 Bankruptcy Reg. 203. . 94 
 In re Manufacturers' Nat. Bank, 5Biss. 
 
 499 326 
 
 In re Martin , 5 Blatchf . C. C. 303 187 
 
 In re Shultz, 11 Serg. & Eawle, 182.... 261 
 In re Stranton, etc. , Co., Law Bep., 16 
 
 Bq.559 342 
 
 Irons V. Manufacturers' Nat. Bank, 6 
 
 Biss. 301 192, 321, 325 
 
 Jackson v.Ashton, 8 Pet. 148..., 217 
 
 Jackson v. Blodgett, 5 Cow. 296 654 
 
 Jenkins V. Nat. Village Bank, 58 Me. 
 
 275 912 
 
 Jenness V. Cutler, 12 Kan. 511 317 
 
 Jewell V. Van Steenburgh, 58 N. Y. 85.. 417 
 John V. Ciiiy etc., R. R. Co., 35 Ind. 539, 433 
 Johnson v. Laflin, 17 Alb. Law. Jour. 
 
 147 94, 693 
 
 Johnson v. People, 4 Denio, 364, 368 .. . 188 
 Jones V. Bank of Tennessee, 8 B. Monr. 
 
 (Ky.)122 145 
 
 Jones V. Charlemont, 18 Sim. 271 .324 
 
 Jones V. Cincinnati Type Foundry, 14 
 
 Ind. 89 146, 147 
 
 Jones V. Seward, 26 How. Pr. 436 703 
 
 Jordan v. Dennis, 7 Mete. 590 218 
 
 Joslyn V. Wyman, 5 Allen, 62 621 
 
 Kanouse v. Martin, 15 How. 198 701 
 
 Kansas Valley Nat. Bank v. Rowell, 3 
 
 Dill. 371 353, 481, 490, 642, 888 
 
 Kendall v. United States, 32 Pet. 534. . . 210 
 
 Keen v. Beard, 8 C. B. (N. S.) 373 57 
 
 Kellogg V. Hickok, 1 Wend. (N. Y.) 531. 137 
 
 Kelsey v. National Bank of Brie 644 
 
 Kennedy v. Gibson, 8 Wall. 17, 498, 506, 
 86, 89, 144, 147, 163, 168, 197, 306, 240 ,344, 
 
 296, 325, 357, 510, 560, 787, 788, 913 
 
 Kepner v. Keef er, 6 Watts, 231 863 
 
 Kilsby V. Williams, 5 Barnewell & 
 
 Alderson, 816 57 
 
 Kimball v. Cleveland, 4 Mich .606 64 
 
 Kirk V. Bell, 12 Eng. Law. & Bq. 385 ; 
 Ang. & Ames on Corp., 8§ 299, 300, 301, 
 702; Story on Agency, §§ 114, 115; 13 
 
 Stat, at Large, 19 702 
 
 Kirkpatrick V. Houston, 4 W. & S. 115. . 853 
 Knox Co. V. Asplnwall, 21 How. 539. .. . 65 
 
 Lacey v. Central Nat. Bank, 4 Neb. 179. 68 
 Lafayette Bank v. State Bank, 4 Mc- 
 Lean, 208 64 
 
 Lafayette Ins. Co. v. French, 18 How. 
 
 404 163 
 
 Lake v. Smith, 4 Bos. & Pul. 174 662 
 
 Lamb v. Lindsley, 4 W. & S. 44 853 
 
 Lancaster Bank v. Smith, 62 Penn. St. 
 
 47; Code, §§ 2104, 3105 380, 911 
 
 Lancaster Co. Bank v. Smith, 13 P. F. 
 
 Smith, 47, 54 865, 866, 877 
 
 Lane County v. Oregon, 7 Wall. 73, 77. . 
 
 27, 664 
 
 Latterett v. Cook, 1 la. 1 487 
 
 L. C. & 0. R. R. Co. V. Letson, 2 How. 
 
 (U.S.) 497 707 
 
 Leach v. Hale, 31 la. 70 536, 639, 913 
 
 Leavitt v. Fisher, 4 Duer, 1 343, 345 
 
 Leavitt v. Palmer, 3 N. Y. (3 Comst.) 19, 
 
 179, 703 
 
XTl 
 
 TABLE OF CASES CITED. 
 
 PASS. 
 
 Leazure r. HiUegas. 7 S. & E. 313 863 
 
 Lee V. Jones, 14 C. B. (N. SO 386 617 
 
 Leggett V. Banking Co., 1 N. J. Eg. 541, 64 
 Leggett V. N. Y. Manuf . Co., Sandf. Ch. 
 
 733 
 322 
 
 751 
 
 541.. 
 
 Lewis v. Zouohe, 2 Sim. 388 
 
 Life & Fire Ins. Co. v. Mercliants' Ins. 
 
 Co.,7Wend. 31 55,732, 
 
 Lilly V. Commr's, 69 N. C. 300 806, sua 
 
 Lionbergerv. Bouse, 9 Wall. 468,477.... 
 100, 270, 300, 307, 309, 374, 445, 448, 677, 935 
 
 Livermore t. Jenks, 11 How. Pr. 479 701 
 
 Livingston v. Gibbons, 4 Johns. Cli. 94 702 
 Lloyd V. West Brancli Bank, 15 Penn. 
 
 St. 172; 3Harris,176 59,734, 877 
 
 Lookwood V. Merchants' Nat. Bank, 9 
 
 B. I. 308 896 
 
 Loomis V. Bank of Rochester, 1 Dis- 
 ney, 285 419 
 
 London, etc., Bxch. Bank, Be, Law 
 
 Rep.,5 Ch. App. 444, 452. 337 
 
 London, etc., Tel. Co., Be, Law Eep., 4 
 
 Ch.App.20 341 
 
 Lordv. Ocean Bank, 20 Penn. St. 384... 626 
 
 Lott V. Sweezy, 29 Barb. 87-92 723 
 
 Louisville & N. A. E. E. Co. v. State, ex 
 
 rel., McCarty, etc., 25 Ind. 177 431 
 
 Louisville R. R. Co. v. Letson, 2 How. 
 
 497 167,702, 772 
 
 Lowell Bank v. Winchester, 8 Allen, 
 
 109 702 
 
 Lowes' Case, Law Eep., 9 Bq. 589 342 
 
 Lowther v. Carleton, 2 Atk. 342 ; Liv. 
 
 on Agency, ch. 10, § 3 703 
 
 Luby V. Hudson Biv. R. R. Co., 17 N. T. 
 
 131 740 
 
 Lucas V. Government Nat. Bank, 28 P. 
 
 F.Smith, 209 117,824, 849 
 
 MoAflerty V. Hale, 24 Iowa, 356 490 
 
 McClung V. Silliman, 6 Wheat. 598 210 
 
 McCuUoch V. Maryland, 4 Wheat. 130, 
 
 304, 316.. 416, 437, 438, 530, 578 
 598, 667, 668, 674, 738, 807, 816 
 McEuen v. West London Wharves, eto., 
 
 Co., Law Eep., 6 Ch. App. 655 346 
 
 McFarlan v. Taiton Ins. Co., 4 Denio. 
 
 (N.Y.)392 146 
 
 Mclntire v. Wood, 7 Cranch, 504 210 
 
 McNeal v. Bank, 46 N. Y . 325 343 
 
 McVeagh v. Chicago, 49 111. 329 107 
 
 Magruder V.Colston, 44Md. 271, 849.. 106, 471 
 
 Magruder v. State Bank, 18 Ark. 9 175 
 
 Main v. Second Nat. Bank, 6 Biss. 26. . . 161 
 230, 401, 715 
 Maitland v. Citizens' Nat. Bank, 40 Md. 
 
 540; S.C.,17Am. Eep. 620 550 
 
 Majoribanks v. Hovenden, Drury, 11; 
 
 Story on Agency, 8 139 703 
 
 Maltby's Case, 1 Dow'a Parliament 
 
 Manuf.Nat.'Bankv. Baa'ot'a'Abbiu.S. 
 
 232; 8 Blatchl. 137, 147:40 How. Pr. 
 
 409 200, 201, 230, 235, 6.56, 657, 702, 714 
 
 Manufacturers' Nat. Bank, Ee, 5 Biss. 
 
 499 321 
 
 Marbury v. Madison, 1 Cransh, 137 210 
 
 March v. Eastern E. E. Co., 43 N. H. 
 
 515 525 
 
 Maroyv. Clark, 17 Mass. 334 654 
 
 Marine Bank v. Fulton Bank, 2 Wall. 
 
 252 733 
 
 Marine Nat. Bank v. Nat. City Bank, 59 
 
 N. Y. 67; S. C, Am. Eep.a)5 61 
 
 Marshall v. Baltimore & Ohio E. E. Co., 
 
 16 How. 14, 314, 326-329 167, 702 
 
 Marshall V. Vick8burgh,15 Wall. 146... 122 
 Martin v. Hunter's Lessee, 1 Wheat. 304, 
 
 336,337 240 
 
 Mary Ann, 8 Wheat. 389 158 
 
 FAan. 
 
 Maryland Marine Ins. Co. v. Dalrymple, 
 
 25Md.244 553 
 
 Mass. Iron Co. v. Hooper, 7 Cush. 178.. 524 
 Masters' Case, Law Hep., 7 Ch.App. 292. 345 
 Matter of Empire City Bank, 18 N. Y. 
 
 223 554 
 
 Matter of Farmers' Nat. Bank of Hud- 
 son, 1 Thorap. & C. 383 752 
 
 Matter of New Amsterdam Savings 
 
 Bankv Gartter, 54 How. 385 758 
 
 Matter of Van Campen, 3 Benedict, 419, 
 
 256, 6U 
 Matthews V. Massachusetts Nat. Bank, 
 
 1 Holmes, 398; S. C, 10 Alb. Law 
 
 Jour. 199 61, 536 
 
 Matthew V. Rutherford, 7 La. Ann. 
 
 225 292 
 
 Matthew v. Skinker, 62 Mo. 329. .264, 642, 888 
 
 Maybin v. Conlin, 4 Dall. 298 863 
 
 Maynard V. Bank 644 
 
 Maury and Osbom v. Coyle, 34 Md. 335, 553 
 Maxtedv. Paine, Law Rep., 6 Exch. 
 
 132 315 
 
 Mayor and Common Council v. Esh- 
 
 baoh,18Md. 278 538 
 
 Mayor V. Lord, 9 Wall. Ill 55 
 
 Mayor and Common Council v. Eey- 
 
 nolds,30Md.l 538 
 
 Meads y. Merchants' Bank, 25 N. Y. 
 
 116 58, 60, 62 
 
 Medbmak Bank v. Curtis, 11 Me. 36. . .. 65 
 
 Medyl V. Mayes, 6 Band. 658 273 
 
 Mechanics' Bank v. N. Y. and N. H. 
 
 EailroadCo.,13 N. Y. 600 538 
 
 Mechanics' Bank v. New YorkEailroad 
 
 Co.,3Kern 637 398,421 
 
 Mendonv. Worcester, 10 Pick. 211. ... 688 
 Mercer Co. v. Hackett, 1 Wall. 93, 95, 
 
 55, 531 
 Merchants' Bank v. Central Bank, 1 
 
 Ga. 118 65 
 
 Merchants' Bank v. Defendant, 10 
 
 Wall. 601 711 
 
 Merchants' Bank v. Marine Bank, 3 
 
 Gill. 96, 125 65,536 
 
 Merchants' Bank v. State Bank, 10 
 
 Wall. 804, 644 43, 64, 634, 555, 735 
 
 M. N. Bank v. Baack, 10 How. Pr. 409, 708 
 Merchants' Nat. Bank v. Cardozo, 3 
 
 Jones & S. 162 725 
 
 Merchants' Nat. Bank v. MacNaugh- 
 
 ton 797 
 
 Merchants' Nat. Bankv. Mears 888 
 
 Merrltt v. Farris. 22 111. 511 395 
 
 Miami Exporting Co. v. Clark, 13 Ohio, 
 
 1 180 
 
 Miller V. Black, 1 Barr. 420 846, 847 
 
 Miller v. Illinois Central Railroad Co., 
 
 24Barb.313 419 
 
 Mills V. Thornton, 26 111. 300 398 
 
 Miners' Ditch Co. v. Zellerbaok et al., 
 
 1 Withrow's Am. Corp. Cases, 275 37 
 
 Cal. 543 535, 538 
 
 Minor v. Mechanics' Bank, 1 Pet. 46, 
 
 70. .43, 61, 64, 66, 536, 613, 616, 617, 702, 732, 738 
 
 Minotv. Paine, 99 Mass. 101 535 
 
 Missouri River Telegraph Co. v. Nat. 
 
 Bank, 74 111. 217 375, 601, 559, 715, 881 
 
 Mitchell V. Smith, 1 Binn . 110.^ 883 
 
 Mitchell V. Winslow, 3 Story, 630 291 
 
 Mitlord V. Mitford, 9 Ves. Jr. 100 291 
 
 Mix V. People, 73 HI. 241 415 
 
 Molson V. Hawley, 1 Blatohf . 409 626 
 
 Moore V. Bank, 62 Mo. 377 341, 343 
 
 Moran V. Commissioners, 2 Black, 733, 55 
 
 Mores v. Conham, Owen, 133 64 
 
 Morris Canal Co. v. Van Vorst, 1 Zabr. 
 
 100 616,617,618 
 
 Morris Eun Coal Co. v. Barkley Coal 
 
 Co. 18 P. F. Smith, 174 871 
 
"TABLE OP CASES CITED. 
 
 xvii 
 
 PAGE. 
 Morse V. Massachusetts Nat. Bank, 1 
 
 Holmes, Z09 43, 64 
 
 Morseman v. Younkln 932 
 
 Moses Taylor, 4 Wall. 411, 429 240 
 
 Moss V. Oakley, 2 Hill, 270 554 
 
 Moss V. Rossie Co., 5 Hill, 137 293 
 
 Mott T. TJ. S. Trust Co., 19 Barb. 56, 569, 
 
 180 490 
 Murama v. Potomac Co., 8 Pet. 281 ... ! 112 
 MuDu T. Commission Co., 15 Johns. 44, 840 
 
 Munsen V. Minor, 22 111. 694 304 
 
 Musgrave v. Gibbs, 1 DaU, 216 853 
 
 Musselm£in v. MoBlhenny, 23 Ind. 4. . . . 444 
 
 Mussey v. Beecher, 3 Gush. 511 702 
 
 Mussey v. Eagle Bank, 9 Mete. 306 702 
 
 Mygatt Case, 15 N. r 721 
 
 Mytton V. Cock, 2 Strange, 1089 865 
 
 Nathan v. Whitlock, 9 Paige (N. T.) 156; 
 
 6id.337 274 
 
 Nat. Bank of Buffalo t. Bearing, 91 0. 
 
 S.29 791 
 
 Nat. Bank of Commerce v. Nat. Me- 
 chanics' Bank, 55 N. Y. 211; S. 0., 14 
 
 Am. Eep. 232 61 
 
 Nat. Bank of the Com. v. Mechanics' 
 
 Nat. Bank, 94 U. S. 437 260 
 
 Nat. Bank v. City of Chicago 393 
 
 Nat. Bank v. Commonwealth, 9 Wail. 
 34, 353. .46, 100, 271, 374, 465, 479, 660, 661 
 663, 666, 668, 672, 674, 675, 677, 810 
 
 Nat. Bank V. Cook, 3 Vroom,347 400 
 
 Nat. Bank t. Davis, 6 Cent. Law Jour. 
 
 106 436,833,883, 884 
 
 Nat. Bank v. Mears 264 
 
 Nat. Bank v. Roweil, 2 Dill. C. Ct. E. 
 
 371 751 
 
 Nat. Bank of Whitehall v. Lamb, 50 N. 
 
 T.95 742 
 
 Nat. Exchange Bank V. Moore 117 
 
 Nat. Park Bank t. Gunst 656, 769, 797 
 
 Nations' Case, Law Hep . , 3 Eq. 77 342 
 
 Nav. Co. V. Weed, 17 Barb. 378 293 
 
 Newell T. Nat. Bank, 12 Bush, 57.. 401, 436 
 
 559, 884 
 New Hampshire Savings Bank v. Down- 
 ing, 16 N. H. 187 64 
 
 N. H. K. K. Case,34N. T. 30 702 
 
 New Haven Eaiiroad Co . , 30 Conn . 270, 96 
 New Hope Bridge Co. v. Phoenix Bank, 
 
 3N.T. 156 66 
 
 New Hope Delaware Bridge Co. v. 
 Poughkeepsie Silk Co., 25 Wend. 
 
 648 ; 1 E. S. (2d ed.) 708, §§ 6, 7 786 
 
 New Orleans Nat. Bank v. Baymond, 518 
 
 889 
 New York Firemen Ins. Co. v. Ely, 
 
 Cowen, 678, 699 641, 733 
 
 New York Ins. Co. v. Ely, 2 Cow. 678. . 751 
 New York & New Haven Eaiiroad Co. 
 V. Schuyler, 38 Barb. (S. C.) 536; 34 
 
 N. Y. 30,38 56, 343, 702 
 
 Niagara County Bank v. Baker, 15 Ohio 
 
 St. 68 641,642, 840 
 
 Nickalls v. Merry, Law Eep., 7 House of 
 
 Lords Cases, 530 345 
 
 Nixon V. Hamilton,2Dru. &War. 391.. 703 
 
 Nixon V. Palmer, 8 N. Y. 398 768 
 
 Northern Bank of Kentucky v. John- 
 son, 5 Cold. (Tenn.)88 65 
 
 Northern E. E. Co. v. Miller, 10 Barb. 
 
 260 324 
 
 North Brit. Ins. Co. v. Lloyd, 10 Exch. 
 
 523 615 
 
 North EiverBank v. Agmar, 3 Hill, 262, 
 
 268 59, 535 
 
 North Elver Ins. Co. v. Lawrence, 3 
 
 Wend. 482 751 
 
 Norton v. Hayes, 4 Denio, 245 702, 773 
 
 Oakeav. Hill, 14 Pick. 443 612 
 
 PAGE 
 
 Ochiltree v. Railroad Co . , 21 Wall. 249. . 679 
 Ogllvie T. Knox Insurance. Co., 22 
 
 How 380.. 322 
 
 O'Hare v. Second Nat. Bank of Titus- 
 
 ville, 77 Penn. St. 96 153, 937 
 
 Ohio & Miss. R. E. Co. v. Wheeler, 1 
 
 Black, 286 163,702 
 
 Oliver v. Washington Mills, 11 Allen, 
 
 268,275 578, 581 
 
 Olney V. Chadsey, 7 E. I. 224 83 
 
 Onslow V. Corrie, 2Madd. 340 554 
 
 Ordway v. Central Nat. Bank .401, 501, 786 
 
 884, 912 
 Ornnv. Merchants' Nat. Bank, 16 Kan. 
 
 341 264,618,888, 889 
 
 Osborne v. Bank of the U. S., 9 Wheat. 
 
 738, 859. . .120, 168, 240, 296, 576, 599, 702, 705 
 
 816, 913 
 Osborn v. Bryne, 43 Conn. 155; S. C., 
 
 21 Am. Eep. 641 758 
 
 Osborn v. Nicholson, 13 Wail. 654 678 
 
 Osgood V. Chicago, etc., E. E. Co., 6 
 
 Biss. 330 161, 200 
 
 Ottawa Glass Co. v. McCaleb, 81 111. 
 
 556 420, 421 
 
 Overholt v. Nat. Bank. .741, 744, 824, 849, 872 
 
 890, 891 
 
 Owenv. Homan,8 Mac. &G. 378 616 
 
 Oyster v. Longnecker, 4 Harris, 260 853 
 
 Pacific Ins. Co. v. Soule, 7 Wall. 434..^. 32 
 
 Packard v. Lewiston, 55 Me. 456 523 
 
 Packet Boat Co. v. Ciough 740 
 
 Padcock V. Bishop, 3 B. & C. 605 617 
 
 Pahquioque Bank v. Bank of Bethel, 
 
 36 Conn .325 787 
 
 Palen v. Johnson, 50 N. Y. 49 800 
 
 Palmer v. Lawrence, 3 Sandf . 161 784 
 
 Pangburn v. Westlake, 36 Iowa, 546. ... 153 
 
 Parish v. Wheeler, 22 N. Y. 494 831 
 
 Parks et al. v. First Nat. Bank of Mo.. 823 
 Parkhurst v. Kinsiaan, 2 Blatchf . 78. . . 332 
 
 Patterson v. Ford, 2 Gratt. 18 919 
 
 Payne v. Commercial Bank, 14Miss. 24. 65 
 
 Payne v. Gardner, 29 N . Y . 146 263 
 
 Peabody V. Wash. Co. Mutual Ins. Co., 
 
 20 Barb. 339 458 
 
 Pearce v. Mad. & Ind. E. E., 21 How. 
 
 442 126, 127 
 
 Pease v. Barber, 3 Gaines, 265 136 
 
 Feckham, Assignee, v. Burrouglis, 3 
 
 Story, 564 278, 288 
 
 Peel V. Tatlock, 1 Bos. & P. 419 617 
 
 Pendergast v. Bank of Stockton, 4 Am. 
 
 Law Times Eep. 247 94 
 
 Pendleton v. Bank of Kentucky, 1 T. 
 
 B.Monroe, 182 60 
 
 Penn. Del. & Md. Steam Nav. Co. v. 
 
 Dandridge 126, 536, 338 
 
 Fenrise v. Chesapeake & Del. Canal 
 
 Co., 9 How. 184 855 
 
 People ex rel. Duer v. Tax Commission- 
 ers, 6 Am. Law Eeg. 467 270 
 
 People ex rel. Gallatin Nat. Bank v. 
 
 Commissioners 629, 772, 754, 755 
 
 People ex rel. Kennedy v. Coms. of 
 
 New York 692 
 
 People ex rel. Marsh v. Delaney, 49 N. 
 
 Y. 655 781,782 
 
 People ex rel . v. Miner, 46 111. 384 194 
 
 People V.Bradley, 39111. 130 384 
 
 People V. Caryl, 13 Wend. 547 188 
 
 People V. Commissioners. . .100, 113, 149, 188 
 400, 801, 934 
 People V. Dennis, 1 Parker's Cr. Eep. 
 
 469 188 
 
 People V. Flint, 39 Cal 422 
 
 People V. Peabody, 25 Wend. 472 188 
 
 People V. President, etc., of the Man- 
 hattan Co., 5 Conn. 383 636 
 
XVlll 
 
 TABLE OF CASES CITED. 
 
 PAGE. 
 
 People V. Beynolds, 28 Cal. 11 422 
 
 People V. Supervisors of Allegany, 15 
 
 Wend. 198 783 
 
 People V. Supervisors of Westclie8ter,12 
 
 Barb. 446 678 
 
 People V. Utloa Ins. Co., 15 Johns. 390. . 536 
 
 641,749 
 
 People V. Wilbur, 4 Park. C. C. 31 159 
 
 PermoU v. First Municipality, 8 How. 
 
 (U. S.) 589 679 
 
 Perrine v. Ches. & Del. Canal Co., 9 
 
 How. 184 126 
 
 Perry v. Skinner, 2 Mees. & Wels. 471. . . 45 
 
 Peters v. Myers, 22 Wis. 602 924 
 
 Peyser v. Mayor of New Fork, 16 Alb. 
 
 law Jour. 283 723 
 
 Phila. & Baltimore Bailroad Co. v. 
 
 Quigley, 21 How. 202, 209 55, 534, 737 
 
 Philips V. Foxall, L. E., Q. B. 668 617 
 
 Pierce v. Delmater, 1 Comst. 17 678 
 
 Pierce v. Mad. & Ind. Bailroad Co , 21 
 
 How. 443 538 
 
 Pinokney v. Wallace, 1 Abb. (N. T.) 82. 458 
 Plquignot v. Penn. E. K. Co., 16 How. 
 
 104 218 
 
 Piatt V. Beebe 108 
 
 Piatt V. Bently, 11 Am. Law Beg. 171. . . 842 
 Piatt V. Crawford, 8 Abb. Pr. (N. S.) 297 108 
 
 Pledge V. Buss, Johns. (Bng.) 663 617 
 
 Pollard V. Binley, 20 Wall. 520 409 
 
 Pomeroy v. New Tork & New Haven E. 
 
 E. C0..4 Biatohf. 120 202 
 
 Pope V. Bank of Albion, 67 N. Y. 127. . 65 
 
 Porter v.Bronson, 20 How. 292 773 
 
 Porter et al. v. Eockford, Eock Island 
 
 & St. Louis Eailroad Co., 76 111. 561.. 420 
 Portland Bank v. Apthorp, 12 Mass. 252, 
 
 255 578 
 
 Potter v. Merchants' Bank, 28 N. Y. 
 
 641 65 
 
 Powlea, etc., v. Page, 3 Mann. G. & S. 
 
 16 419 
 
 Prattv. Topeka Bank, 13 Kan. 570 66 
 
 Preston V. Boston, 12 Pick, 7 723 
 
 Prigg V. Penn, 16 Pet. 539 404, 608 
 
 Prosser v. Secor, 5 Barb. 608 718, 719 
 
 Providence Inst, for Savings v. City of 
 
 Boston, 101 Mass. 575 374 
 
 Purringtou v. People, 79 111 . 11 425 
 
 Queen v. Arnond, 9 Ad. & El. (N . S ) 806 5 
 
 Eabb V. Boss Co. Bank, 41 Barb. 586.. 666 
 
 Eailroad Co. v.Peniston, 18 Wall. 5.... 664 
 
 672, 674, 675 
 
 Eailroad V. Pennsylvania, 15 Wall. 819, 102 
 
 Eailroad Co. v. Prary, 22 111. 24 304 
 
 Eailroad Tax Cases, 2 Otto, 611 310 
 
 Eailtonv. Matthews, 10 CI. & F. 934.. 615 
 Eaneer v. Great Western Eailway Co., 
 
 5 House of Lords Cases, 86 55 
 
 Eashdell v. Ford, L. E, 2 Eq. Cas. 750. . 535 
 Bay V. Bank of Kentucky, 10 Bush, 344, 913 
 
 Eaymond v. Pritchard, 24 Ind. 318 438 
 
 Sector & Co. v. Lovett,lHail (N.Y.) 191 146 
 
 Eeeside V. Walker, 11 How. 272 310 
 
 Eees V. Berrington, 3 White & Tudor's 
 
 Lead. Cas. 1871 496, 614 
 
 Eenwick V. Williams. aMd. 356 626 
 
 Ehode Island v. State of Mass. 12 Pet. 
 
 657 317 
 
 Eichards v. Kountze 889 
 
 Bldgway v. Hungertord Market Co. 3 
 
 Ad. & Ellis, 171; 4 Nev. &Man. 797 763 766 
 Eipley v. Harris, 3 Biss. C. Ct. E. 190 761 
 
 Robinson v. Bland, 2 Burr. 1087 137 
 
 Eobson v. Bennett, 2 Taunton, 395. . 175 
 EocliEiverBank v. Sherwood, 10 Wis. 
 
 230 155 
 
 Eocky Mountain Nat. Bank 934 
 
 PAQE. 
 
 Boman v. Fry, 5 J. J. Marsh. 634 554 
 
 Boot V. Godard, 3 Me. L. 1^ 703 
 
 Eosa V. ButterHeld, 33 N. Y. 665 253 
 
 Eosenback v. Salt Springs Nat. Bank, 
 
 53 Barb. 495. .- ■••3??? 
 
 Eosevelt v. Brown, 1 Kern. 148. ...475, 4i6 
 
 554, 557 
 „0S3V. S. W. E. E. Co., 63 Ga. 514.... 343 
 
 Eowan v. Eunnels, 6 How. 134 679 
 
 Boyal British Bank v. Turquand,6 Ellis 
 
 & Blackburn, Q. B. & Ex . 327 55, 756 
 
 Eugg V. Spencer, 59 Barb. 388 773 
 
 Eugglas V. Collier, 43 Mo. 353 649 
 
 Bundle v. Barltan Canal Co. 14 How. 80 
 ^' 702, 708 
 Eussell V. Topping, 5 McLean, 197.... 137 
 Eyan v. Dunlop, 17 111. 40 .63 
 
 Saflord v. WyckofE, 1 Hill, 11 703 
 
 Salem Bank v. Gloucester Bank, 17 
 
 Mass. 139 64,65 
 
 Sanderson V. Aston, L. E., 8 Bxch. 73. 617 
 Sanfordv. Boyd, gCranch'sC. C 78.. 184 
 Sanger v. Upton, Assignee, 1 Otto, 60. . 274 
 
 Sand3,T.Hill,4a Barb. 651 784 
 
 Sargent v. Franklin Ins. Co., 8 Pick. 
 
 90 224 
 
 Savacooly. Boughton, 6 Wend. 170 ... 718 
 Sohofleld et al. v. Watkins et al., 22 111. 
 
 66 395 
 
 School District v. Thompson, 5 Minn. 
 
 280, 286 640 
 
 Schuyler's Case, 34 N. Y. 30 713 
 
 Scott V. Central E. E. Co.,52Barb. 45. 525 
 
 Scott v. Dufley, 2 Harris, 20 863 
 
 Scott V. Nat. Bank, 379, 734, 789, 877, 878 
 
 911, 912 
 
 Security Bank V. Nat. Bank, (Md.) 786 
 
 Selserv. Brock, 3 Ohio St. 306 815, 818 
 
 Seneca Co. Bank v. Lamb, 26 Barb. 
 
 595 179 
 
 Serle v. Norton, 2 Moody & Eobinson, 
 
 404 57 
 
 Shaw V. Fiaher, 2 De Gex & S. 11 344 
 
 fchiells V. Blackburne, 1 H. Black. 158.. 865 
 Bhinkle v. First Nat. Bank of Eipley, 
 
 23 Ohio St. 516. . . .137, 537, 543, 798, 833, 883 
 Shoemaker V. Nat. Exch. Bank, 3 Abb. 
 
 (IT. S,)416 313 
 
 Shoemaker v. Nat. Mechanics' Bank, 3 
 
 Abb. C. C. 416; 31Md. 896. .127, 175, 488, 537 
 Shortridge v. Bosanguet, 16 Beav. 84. . . 341 
 Shropshire, etc., Eailway-& Canal Co. 
 
 V. Queens, Law Rep., 7 House of 
 
 Lords Cases, 496, 513 345 
 
 Shunk V. Bank 117 
 
 Sidenbenderv. Charles, 4 S. &E 863 
 
 Silver Lake Bank v. North, 4 Johns. Ch. 
 
 370 485, 751 
 
 Siren, 7 Wall. 152 68 
 
 Smith V. Bank of Scotland, 1 Dow. 272, 617 
 
 Smith V. Bxch. Bank of Pittsburg 639 
 
 Smith V. First Nat. Bank 913 
 
 Smith V. Kernochen, 7 How. 198 317 
 
 Smith V. Knox, 3 Bsp. 46 626 
 
 Smith V. Manufactui'ers' Bank, 9 B. E. 
 
 133 324 
 
 Smithv. Marvin, 27 N. Y. 137 800 
 
 Smith V. Strong, 2 Hill, 241 703 
 
 Society for Savings v. City of New 
 
 London, 29 Conn. 174 55, 736 
 
 Southeote v. Bennet, Cro. Eliz. 815; 
 
 4 Eep. 83 909 
 
 Southwick V. Nat. Bank of Memphis, 
 
 7Hun 96 109,802, 803 
 
 Spattord v. First Nat. Bank, 37 Iowa, 
 
 181 264 
 
 Spaiuv. Arnott, 2Stark. N P. 237 767 
 
 Sparks v. Farmers' Bank, 9 Am. Law 
 
 Eeg. 365 616 
 
TABLE OF CASES CITED, 
 
 XIX 
 
 PAGE. 
 Squire v. Whitten, 1 H. L. Cas. 333. . 617 
 State Bank V. Chetwood, 3 Halt. 1. 616, 
 
 617, 618 
 
 State Bank T. Kain, 1 111. 75 65 
 
 State Farmers' Nat. Bank v. Cook, 32 
 
 N.J. 349 419 
 
 State V. Bank of Md., 6 Gill. & Johns. 
 
 205 560 
 
 State V. City of Newark 658 
 
 State T. Commercial Bank, 14 Miss. 218, 63 
 State V. Comm'rs of K. K. Taxation, 8 
 
 Vroom, 238; S. C ,9 id. 472, 681 
 
 State T. Davis, BO How. Pr. (N. Y.) 447, 63 
 
 Statev Drake, 33 N.J. 194 419 
 
 Staggv. Elliott, laC. B. (N. S.)373.... 702 
 
 Stafford v. IngersoU, 3Hill, 38 123 
 
 State V. Eiohmond, 26 N. H . 233 417 
 
 State V. TuUer, 34 Conn. 280. . . .356, 401, 501 
 
 559, 508 
 Steam Nav. Co. v. Dandrldge, 8 G. & J. 
 
 318,319 548 
 
 Steam Nav. Co. v. Weed, 17 Barb. 3T8, 784 
 Steel T. Smith, 1 Barn. & Aid. 99; 
 
 159; Conkl. Treat. (5th ed.) 548 159 
 
 Stetsonv. Gulliver, 2 Cush. 494 612 
 
 Stevensv. Phoenix Ins. Co., 41 N. Y. 
 
 149 703, 773 
 
 Stewart t. Nat. Union Bank, 2 Abb. (U. 
 
 S.) 434 537 
 
 Stirling v. Garritee, 18 Md. 468 553 
 
 St. Joseph Board of Public Works v. 
 
 Patten, 63 Mo. 444 678 
 
 St. Louis, etc., Ins. Co. v. Goodfellow, 
 
 9 Mo. 149 341 
 
 St. Louis Nat, Bank v. Papin, 3 Cent. 
 
 Law Jour. 669 733 
 
 St. Louis V. Kussell, 9 Mo. 507 649 
 
 Stocker v. Warner, 1 C. B. 149 45 
 
 Stoney v. American Life Ins. Co., 11 
 
 Paige,635 55 
 
 Stone V. Lane, 10 Allen, 74 631 
 
 Striker v. Mott, 6 Wend. 465 218 
 
 Sturges V. Bank of Circleville, 11 Ohio 
 
 St.l53 63 
 
 Sturges V. Spofford, 46 N. Y. 446 144 
 
 Supervisors of Bureau Co. v. C. B. & Q. 
 
 B. K. Co., 44 111. 339 384 
 
 Supervisors v. Schenck, 5 Wall. 772 55 
 
 Susquehanna Bank v. Supervisors, 35 N. 
 
 Y.312 722 
 
 Swan V. British North Australian Co., 
 
 7 Hurlstone & Norman, 6ff3 55 
 
 Swan V. Scott, 11 S. & E. 164 863 
 
 Swift V. City of Poughkeepsie, 37 N. T. 
 
 511 719 
 
 Swift V. Jewsburg, P. O., L. R., 9 Q. B. 
 
 301 536 
 
 Swift V. Winterbottom, P. O., L. E., 8 
 
 Q. B. 244 534, 636 
 
 Symon's Case, Law. Rep., 6Ch. App. 
 
 298 345 
 
 Tahiti Cotton Co., Ke, Law Rep., 17 Eq. 
 
 273 344 
 
 Talmage v. Pell, 3 Seid. 338 ; 7 N. Y. 327, 
 
 338, 343 137,537,643,641, 643 
 
 Tapley v. Martin, 116 Mass. 275 490, 633 
 
 Tappan v. Merchants' Nat. Bank, 19 
 
 WalL 490. 303, 373, 384, 393, 695, 935 
 
 Tar River Nav. Co. v. Neal, 3 Hawks, 
 
 (N.C.), 520 147 
 
 Taylor v. Bank of Ky., 2 J. J. Marsh. 
 
 665.. 
 
 347 
 
 Taylor v. Hughes, 2 Jones and Lat. 24 
 
 Taylor v. Jones, 2 Atk. 600 332 
 
 Teall V. Felton, 1 Comst. 537 ; S. C, 13 
 
 How 284 576, 913 
 
 Teasdale v. Rambler, Bee's Rep. 9 316 
 
 Teese v. Phelps, 1 McAllister, 48 216 
 
 Ter Eoven v. Keene, 3 Barr. 99 3e0 
 
 PAGE. 
 Thatcher v. West Hiver Nat. Bank, 19 
 
 Mich. 196 579,611 725 
 
 Thayer v. Boston, 19 Pick. 511 55 
 
 Theriah V. Hart, 3 Hill, 381 31 
 
 Third Nat. Bank v. Boyd 379, 911 
 
 Thomas v. Brady, 10 Barr. ITO 863 
 
 Thomas v. Shoemaker, 6 W. & S. 179. .. 
 
 883, 874 
 
 Thompson T. Patrick, 4 Watts, 415 54 
 
 Thompson v. Shepherd, 13 Mete. 311. . . 636 
 Thomson v. Lee County, 3 Wall. 331. .. . 634 
 Thomson v. Pacific Railroad, 9 Wall. 579 
 
 663, 673 
 Thorp v.Wegefarth, 58 Penn. St. 83.... 646 
 Tiffany v. Boatmen's Institution, 18 
 
 Wall. 376 
 
 Tiffany v. Lucas, 15 Wall. 410 
 
 Tiffany V. Nat. Bank of Mo. 18 Wall. 409 ; 
 
 1 Deacon on Bankruptcy, 3d ed., 523, 
 
 534 117,317,318,743, 
 
 Toland v. Sprague, 12 Pet. 338, 330.. .203, 
 
 Tone V. Parkerburgh Branch E. E. 
 
 Co., 39 Md. 36, 70 534, 
 
 Tompkins v. Saltmarsh, 14 Serg. & 
 
 Kawle,375 865, 
 
 Toote, 33 Pick. 399. 
 
 390 
 290 
 
 303 
 217 
 
 536 
 
 635 
 Topping V. Bickford, 4 Allen (Mass.), 
 
 131. 146 
 
 Toulmin v. Steere, 3 Meriv. 333 703 
 
 Town of Belvidere v. Warren R. R. Co., 
 
 6 Vroom, 193; S. 0., 6 id. 584 678 
 
 Town of Geneva y. Woodruff et al., 92 
 
 U. S.502 137 
 
 Town V. Wiley, 23 Yt. 355 906 
 
 Tracy v. Talmadge,14N.Y. (4 Kern ) 163, 180 
 TrentonBanking Co. v. Woodruff, 2 N. 
 
 J. Bq. 117 66 
 
 Truscott V. King, 6 N. Y. 147 747 
 
 Turner v. Bank of Keokuk, 36 Iowa, 263 
 
 379, 788 
 
 Turner v. Calvert, 13 S. & R. 46 123, S53 
 
 Turner V. Robinson, 5 Barn. & Adol. 789, 
 
 36 Bug. Com. L. 267 767 
 
 Tyler v. Hand, 7 How. 573 217 
 
 Tylee v. Yates, 3 Barb. (N. Y.) S:?.. ... 137 
 
 tTnion Bank v. Forrest, 3 Cranch, 218. . 618 
 Union Bank v. Laird, 2 Wheat. 390. .341 
 
 343, 344 
 Union Bank v. Ridgely, 1 Har. & G. 324 ; 
 
 1 H. & G. 325, 413, 430 494, 550 
 
 Union Gold Hill Mining Co. v. Rocky 
 
 Mountain Nat. Bank 170, 175 
 
 Union Nat. Bank v. Chicago, 3 Biss. 
 
 82 100, 302 
 
 United States Bank v. Defendant 297 
 
 United States Bank v. Planters' Bank 
 
 of Ga., 9 Wheat. 905 299 
 
 United States Trust Co. of New York v. 
 
 U. S. Fire. Ins. Co., 18 N. Y. 334 657 
 
 United States v. Babbitt, 1 Black, 61. . . 31 
 United States v. Barton, Gilpin, 439... 184 
 United States v. City Bank of Colum- 
 bus, 31 How. 356. . . .63, 64, 536, 538, 703, 735 
 United States v. Commissioners, 5 
 
 Wall. 663 310 
 
 United States T. Cook, 17 Wall. 67; 1 
 
 Bishop's Cr. Pro., 3d ed., g 81 ; Arch 
 
 Cr. PL&Bv., 18th ed., 54....' 157 
 
 United States v. Bckford, 6 Wall. 484.. 68 
 United States v. Guthrie, 17 How. 284. . 210 
 United States v. January, 7 Cranch, 572 135 
 United States v. Kirkpatrlck, 9 Wheat. 
 
 720 135, 613, 616 
 
 United States v. Mann, 17 Alb. Law. 
 
 Jour. 85 358 
 
 United States v. Morse, 3 Story, 87 184 
 
 United States v. Reeve, 93 U. S. 315. . . 679 
 United States v. Ehawn 154 
 
XX 
 
 TABLE OF CASES CITED. 
 
 PAGE. 
 
 United States v. Taintor,ll Blatchf. 371 
 
 375, 588, 6U 
 United Statea v. Wilson, Baldwin's C. 
 
 C.E. 78,103 188 
 
 Upton, Assignee, v. Trlbilook, 1 Otto, 
 
 4T 274 
 
 Upton v. Nat. Bank 889 
 
 Utioa V. Churchill, 33 N. T. 233 578 
 
 Van Allen v. Assessors, 3 'Wall. 573, 583, 
 
 584.. 12, 13, 14, 43, 100, 132, 370, 393, 419, 
 
 443, 573, 668, 674, 692, 698, 779, 780, 934 
 Van Antwerp v. Hulburd, 7 Blatchf. C. 
 
 O.K. 426 231 
 
 Vandervoort V. Palmer, 4 Duer,677. .701, 703 
 Van Leuven v. First Nat. liank of 
 
 Kingston, 6 Lans. 873; 54 N. Y. 671. . . 466 
 538, 543, 704, 736, 737 
 
 Van Slyke v. State, 23 Wis. 655 934 
 
 Veazie Bank t. Penno, 8 Wall. 633. .703, 807 
 808, 816, 817 
 Venango Bank V. Taylor, 56 Penn. St. 
 
 14 650,758, 855 
 
 Vining v. Bricker, 14 Ohio St. 331 153 
 
 VoorheesT. Bank of the U. S., 10 Pet. 
 
 449, 473, 474 317 
 
 Voorhies V. Baxter, 1 Abb. (N. Y.) 44.. 458 
 
 Wager v. Hall, 16 Wall. 599 278 
 
 Wagonseller v. Snyder, 7 Watts, 343.. . 863 
 Walton V. Walton, 7 Johns. Ch. Cas. 
 
 258 894 
 
 Ward V. Arredondo, 1 Palne's C. C. 410. 702 
 
 Ward V. Jenkins, 10 Mete. 591 576, 913 
 
 Warden v. Boai'd of Supervisors, 14 
 
 Wis. 618 304 
 
 Warren v. Mayor, 3 Gray, 98, 99; Sedge- 
 wick on Statutes, 413, 414 (ed . of 1874) . 133 
 Washington County Nat. Bank v. Lee, 
 
 112Mass.521 589 
 
 Watson V. Bennett, 12 Barb. 196, 341. . . 63 
 Weaverv. Devendorf, 3 Den. 118. ..718, 719 
 Webster V. Upton, Assignee, 1 Otto, 65, 
 
 71 274,311,343,344 
 
 Weckler v. First Nat. Bank, 43 Md. 
 
 581 63, 380, 466, 548, 650, 911 
 
 Weed V. Pierce, 9Con. 733 333 
 
 Welland Canal Co. v. Hathaway, 8 
 
 Wend. 480 56 
 
 Western Bank of Scotland t. Addie, L. 
 
 E.,1H. L. So. 145 536 
 
 Western Union Telegraph Co. v. City 
 
 of Richmond, 3 Am. Law Times (U. 
 
 S.)Eep. 149; 36Gratt 675 
 
 FAOE. 
 Weston's Case, Law Rep., 5 Ch. App. 
 
 614,630 342, 345 
 
 Weston T. City of Charleston, 2 Pet. 
 
 449 121,304 
 
 West St. Louis Savings Bank t. Parm- 
 
 alee, etc., Bank, 16 Alb. Law Jour. 
 
 473 66 
 
 Wheaton v. Hibbard, 20 Johns. 270. ... 800 
 
 Wheelockv. Kost,77111.296 471,554 
 
 Whitaker v. Sumner, 20 Pick. 339, 495. 54 
 
 White V. Coventry, 39 Barb. 305 784 
 
 White V. Kailroad, 21 How. 576 534 
 
 White V. Eoss, 16 Abb. Pr. 66 784 
 
 White V. Vermont and Mass. Ey. Co., 
 
 •21HOW.575 534 
 
 Whitney Arms Co. v. Barlow, 63 N. Y. 
 
 62 796 
 
 Whitney v. Eagsdale, 33 Ind. 107 446 
 
 Whitney V. Thomas, 33 N. Y. 281... 717, 730 
 
 Wild,Ee "117 
 
 Wild v. Bank of Passamaquoddy, 3 
 
 Mason, 506 59, 62 
 
 Wileyv. FirstNat. Bank 63, 66, 127, 379 
 
 380, 466, 533, 537, 543, 545, 549, 639, 643, 650 
 
 738, 738, 864, 875, 881, 883, 911 
 
 Wileyv. Starbnck, 44Ind. 898.. U7, 133, 833 
 
 Wilkeyv. atyofPekin, 19111. 160 397 
 
 Wilkinson V. CoUey, 5 Barr, 3694 562 
 
 Willets V. Phoenix Bank, 3 Duer, 121. . . 58 
 Willmouth V. Crawford, 10 Wend. 343, 654 
 Wil., Col. &A. A. E E. Co. V. Coms. of 
 
 Brunsvrick, 72 N. C. 15 8U 
 
 Wood v. Davis, 18 How. 467 703 
 
 Wood v. Duramer, 3 Mason, 308 274 
 
 Woods V. People's Nat. Bank, 83 Penn. 
 
 St.57 364,745,854 
 
 Woodson V. Bank of Gallipolis, 4 B. 
 
 Monr. (Ky.) 203 145 
 
 Woodward v. Barnes, 46 Vt. 333 906 
 
 Worcester Med. Ins. Co. v. Harding, 11 
 
 Cush. (Mass.) 285 147 
 
 Wormley v. Wormley, 8 Wheat. 451 702 
 
 Worrell v. Judson, 5 Barb. 210 557 
 
 Wright V. Boyd, 3 Barb. 523 66 
 
 Wright V. Merchants' Nat. Bank 203 
 
 Wright V. Morse, 9 Gray, 337 604 
 
 Wright V. Stilz, 27 Ind. 338 435 
 
 Wycoff V. Longhead, 2 Ball. 92 853 
 
 Wynne v. Price, 3 De Gex & S. 310 344 
 
 Wythes v. Labenohere, 3 De G. & J. 
 
 593 616 
 
 Yancy V. Teter, 39 Ind 305 444 
 
 Young V. Vough, 8 C. E. Green, 335... 693 
 
GASES DECIDED 
 
 IN THE 
 
 SUPREME COURT 
 
 OF THE 
 
 UNITED STATES. 
 
 Vak Alleit t. The Assessors. 
 
 (3 Wallace, 573.) 
 Taxation of shares of National 'banks under State statutes. 
 
 A State may authorize tlie taxation of the stock of National banks in the hands 
 of stockholders, although the capital of such banks be wholly invested in 
 stocks and bonds of the United States. 
 
 A State statute provided that shares in National banks should be taxed "but 
 not at a greater rate than is assessed upon other moneyed capital in the hands 
 of individuals of this State." The State banks were taxed on their capital, 
 but not on their shares. Held, that a tax on the capital was not equivalent to 
 a tax on the shares of stockholders, and that, therefore, the statute was void 
 under that provision of the National Banking Act which forbids a State to 
 impose on a National bank a tax greater than is imposed on the State banks. 
 
 THIS was an action involTing the question of the right of a State 
 to tax shares in National banks created under the act of 
 Congress of 3 June, 1864 (13 Stat, at Large, 668). 
 
 By a statute of the State of New York passed March 9, 1865 
 (Laws 1865, ch. 97), entitled "An act enabling the banks of this 
 State to become associations for the purpose of banking under the 
 laws of the United States," it was provided as follows: 
 
UNITED STATES 
 
 Van Allen v. The Assessors. 
 
 " § 10. All the sbares in any of the said banking associatiojis, organized under 
 . . the act of Congress, held by any person or body corporate, shall be included 
 in the valuation of the personal property of such person or body corporate, or 
 corporation, in the assessment of taxes in the town or ward where such bank- 
 ing association is located and not elsewhere, whether the holder thereof 
 reside in such town or ward, or not ; but not at a greater rate than is assessed 
 upon other moneyed capital in the hands of individuals of this State, pro- 
 vided that the tax so imposed upon such shares shall not exceed the par 
 value thereof ; and provided further, ifhat the real estate of such association 
 shall be subject to State, county or municipal taxes, to the same extent, accord- 
 ding to the value, as other real estate is taxed." 
 
 Under this statute the assessors of the city of Albany assessed 
 the plaintiff in error, Van Allen, for fifty shares, owned by him, of 
 the capital stock of the First National Bank of Albany, and as- 
 sessed all the shareholders in like manner for theirs. 
 
 At the time of the assessment, the whole capital of the bank was 
 invested in various obligations of the Federal government, in 
 regard to all of which, Congress had enacted, that "whether held 
 by individuals, corporations, or associations," they should be " ex- 
 empt from taxation by or under State authority." 
 
 On a case stated, the legality of the assessment was afiirmed by 
 the Supreme Court and the Court of Appeals of the State (33 
 N. Y. 161), and was thence taken to the Supreme Court of the 
 United States on writ of error. 
 
 Mr. Evarts, Mr. Sedgwick, Mr. Tremaine, Mr. Edmonds and Mr. 
 Miller, for Van Allen. 
 
 Mr. Kernan, Mr. Parksr and Mr. Reynolds, for the Assessors. 
 
 Mr. Justice Nelson delivered the opinion of the court. 
 
 The decree of the Court of Appeals, from which this case comes 
 to us, must be reversed, on the ground that the enabling act of the 
 State of New York, passed March 9th, 1865, does not conform to 
 the limitations prescribed by the 41st section of the act of Con- 
 gress, passed June 3, 1864, organizing the National banks, and 
 providing for their taxation. The defect is this : one of the limi- 
 tations in the act of Congress is "that the tax so imposed under 
 the laws of any State upon the shares of the associations authorized 
 by this act, shall 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. " The enabling act of the State con- 
 
SUPREME COURT, 1865. 
 
 Van Allen v. The Assessors. 
 
 tains no such limitation. The banks of the State are taxed upon 
 their capital ; and although the act provided that the tax on the 
 shares of the National banks shall not exceed the par value, yet, 
 inasmuch as the capital of the State banks may consist of the bonds 
 of the United States, which are exempt from State taxation, it is 
 easy to see that this tax on the capital is not an equivalent for a 
 tax on the shares of the stockholders. 
 
 This IS an unimportant question, however, as the defect may be 
 readily remedied by the State legislature. 
 
 The main and important question involved, and the one which 
 has been argued at great length and with eminent ability, is, 
 whether the State possesses the power to authorize the taxation of the 
 shares of these National banks in the hands of stockholders, whose 
 capital is wholly vested in stock and bonds of the United States ? 
 
 The court are of opinion that this power is possessed by the 
 State, and that it is due to tjie several oases which have been so 
 fully and satisfactorily argued before us at this term, as well as to 
 the public interest involved, that the question should be finally dis- 
 posed of. I shall proceed, therefore, to state, as briefly as prac- 
 ticable, the grounds and reasons that have led to their judgment 
 in the case. 
 
 The first act providing for the organizatipn of these National 
 banks, passed 25th February, 1863, contained no provision con- 
 cerning State taxation of these shares ; but Congress reserved the 
 right by the last section at any time " to amend, alter, or repeal 
 the act." The present act of 1864 is a re-enactment of the prior 
 statute, with some material amendments, of which the section con- 
 cerning State taxation is one. 
 
 It will be readily perceived, on adverting to the act, that the 
 powers and privileges conferred by it upon these associations are 
 very great powers and privileges ; founded upon a new use and 
 application of these government bonds, especially the privilege of 
 issuing notes to circulate in the community as money, to the 
 amount of ninety per centum of the bonds deposited with the 
 treasurer ; thereby nearly doubling their amount for all the opera- 
 tions and business purposes of the bank. This currency furnishes 
 means and facilities for conducting the operations of the associa- 
 tions, which, if used wisely and skillfully, cannot but result in 
 great advantages and profits to all the members of the association — 
 the shareholders of the bank. 
 
UNITED STATES 
 
 Van Allen v. The AsaesBors. 
 
 In the granting of chartered rights and privileges by govern- 
 ment, especially if of great value to the coi-porators, certain 
 burdens are usually, if not generally, imposed as conditions of the 
 grant. Accordingly we find them in their charter. They are very 
 few, but distinctly stated. 
 
 They are, first, a duty of one-half of one per centum each half 
 year, upon the average amount of its notes in circulation; second, 
 a duty of one-quarter of one per centum each half year upon the 
 average amount of its deposit; third, 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 ; and fourth, 
 a State tax upon the shares of the association held by the stock- 
 holders, not greater than assessed on other moneyed capital in the 
 State, nor to exceed the rate on shares of stock of State banks. 
 
 These are the only burdens annexed to the enjoyment of the 
 great chartered rights and privileges that we find in this act of 
 Congress; and no objection is made to either of them except the 
 last, — the limited State taxation. 
 
 Although it has been suggested, yet it can hardly be said to have 
 been argued, that the provision in the act of Congress concerning 
 the taxation of the shares by the State is unconstitutional. The 
 suggestion is that it is by the State upon the bonds of the govern- 
 ment which constitute the capital of the bank, and which this 
 court has heretofore decided to be illegal. But this suggestion is 
 scarcely well founded; for were we to admit, for the sake of the 
 argument, this to be a tax of the bonds or capital stock of the bank, 
 it is but a tax upon the new uses and new privileges conferred by 
 the charter of the association ; it is but a condition annexed to 
 the enjoyment of this new use and new application of the bonds; 
 and if Congress possessed the power to grant them these new rights 
 and new privileges, which none of the learned counsel has denied, and 
 which the whole argument assumes, then we do not see but the 
 power to annex the conditions is equally clear and indisputable. 
 The question involved is altogether a different one from that 
 decided in the previous bank cases, and stands upon different con- 
 siderations. The State tax, under this act of Congress, involves no 
 question as to the pledged faith of the government. The tax is 
 the condition for these new rights and privileges conferred upon 
 
 these associations. 
 
SUPEEMB COUET, 1865. 
 
 Van Allen v. The Assessors. 
 
 But, in addition to this Tiew, the tax on the shares is not a tax 
 on the capital of the bank. The corporation is the legal owner of 
 all the property of the bank, real and personal ; and within the 
 powers conferred upon it by the charter, and for the purposes for 
 which it was created, can deal with the corporate property as ab- 
 solutely as a private individual can deal with his own. This is 
 familiar law, and will be found in every work that may be opened 
 on the subject of corporations. A striking exemplification may 
 be seen in the case of The Queen v. Arnoud, 9 Ad. & El. 
 (N. S.) 806. The question related to the registry of a ship 
 owned by a corporation. Lord Denman" observed : "It appears to 
 me that the British corporation is, as such, the sole owner of the 
 ship. The individual members of the corporation are no doubt 
 interested, in one sense, in the property of the corporation, as they 
 may derive individual benefit from its increase, or loss from its 
 decrease; but in no legal sense are the individual members the 
 owners. 
 
 The interest of the shareholder entitles him to participate in thp 
 net profits earned by the bank in the employment of its capital, 
 during the existence of its charter, in proportion to the number of 
 his shares, and, upon its dissolution or termination, to his propor- 
 tion of the property that may remain of the corporation after the 
 payment of its debts. This is a distinct independent interest or 
 property, held by the shareholder like any other property that may 
 belong to him. Now, it is this interest which the act of Congress 
 has left subject to taxation by the States, under the limitations 
 prescribed, as will be seen on referring to it. That act provides as 
 follows: 
 
 " That nothing in this act shall be construed to prevent all the 
 shares of any of the said associations, held by any person or body 
 corporate, from being included in the valuation of personal prop- 
 erty of such person or corporation in the assessment of taxes 
 imposed by and under State authority, at the place where 
 such bank is located and not elsewhere ; but not a greater 
 rate than is assessed upon other moneyed capital in the hands of 
 individual citizens of such State; provided further, that the tax 
 so imposed under the laws of any State, upon the share of 
 the associations, authorized by this act, shall 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; 
 
UNITED STATES 
 
 Van Allen v. The Assessors. 
 
 proTided, also, that nothing in this act shall 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." § 41. 
 
 It is said that Congress possesses no power to confer upon a 
 State authority to be exercised which has been exclusively delega- 
 ted to that body by the Constitution, and, consequently, that it 
 cannot confer upon a State the sovereign right of taxation ; nor is 
 a State competent to receive a grant of any such power from Con- 
 gress. We agree to this. But as it respects a subject-matter over 
 which Congress and the States may exercise a concurrent power, 
 but from the exercise of which Congress, by reason of its para- 
 mount authority, may exclude the States, there is no doubt Con- 
 gress may withhold the exercise of that authority an leave the 
 States free to act. An example of this relation existing between 
 the Federal and State governments is found in the pilot laws of 
 the States, and the health and quarantine laws. The power of 
 taxation under the Constitution as a general rule, and as has been 
 repeatedly recognized in adjudged cases in this court, is a concur- 
 rent power. The qualifications of the rule are the exclusion of the 
 States from the taxation of the means and instruments employed 
 in the exercise of the functions of the Federal government. 
 
 The remaining question is, has Congress legislated in respect to 
 these associations, so as to leave the shares of the stockholders sub- 
 ject to State taxation ? 
 
 "We have already referred to the main provision of the act of 
 Congress on this subject, and it will be seen it declares " that 
 nothing in this act shall be construed to prevent all the shares in 
 any of the said associations, held by any person, or body corporate, 
 from being included in the valuation of the personal property of 
 such person or corporation in the assessment of taxes imposed 
 by or under State authority, at the place where such bank is loca- 
 ted; " and in another section of the act (40) it is declared, " that 
 the president and cashier of every such association shall cause to 
 be kept, at all times, a full and correct list of the names and resi- 
 dences of all the shareholders in the association, and the number 
 of shares held by each, in the oflBce where its business is trans- 
 acted, and such list shall be subject to the inspection of all share- 
 holders and creditors of the association, and the officers authorized 
 
SUPEBME COUET, 1865. 
 
 Van Allen r. The Assessors. 
 
 to assess taxes under State authority during business hours of 
 each day," etc. 
 
 These two proTisions — the one declaring that nothing in the act 
 shall be construed to prevent the shares from being included in 
 the Taluation of the personal property, etc., in the assessment of 
 taxes imposed by State authority; and the other providing for the 
 keeping of the list of the names and residences of the sharehold- 
 ers, among other things, for the inspection of the officers author- 
 ized to assess the State taxes — not only recognize, in express terms, 
 the sovereign right of the State to tax, but prescribe regulations 
 and duties to these associations, with a view to disembarrass the 
 officers of the State engaged in the exercise of this right. ]!fothing, 
 it would seem, could be made plainer, or more direct and compre- 
 hensive on the su-bject. The language of the several provisions is 
 so explicit and positive as scarcely to call for judicial construction. 
 
 Then as to the shares and what is intended by the use of the 
 term ? The language of the act is equally explicit and decisive. 
 
 The persons forming an association are required to make a cer- 
 tificate, which shall specify, among other things, the amount of 
 its capital stock, and the number of shares into which the same 
 shall be divided, and the names and places of residence of the 
 shareholders, and the number of shares held by each. (§6.) The 
 capital stock shall be divided into shares of one hundred dollars 
 each, and shall be deemed personal property. The shareholders of 
 the association shall be held individually responsible, equally and 
 ratably, and not one for another, for all contracts, debts, and en- 
 gagements of such association to the extent of the amount of their 
 stock therein at the par value, in addition to the amount invested 
 in such shares. (§ 13. ) In the election of directors, and in deciding 
 all questions at meetings of shareholders, each shareholder shall be 
 entitled to one vote on each share of stock held by him. (§11.) 
 Fifty per centum of the capital stock of every association shall be 
 paid in before it shall commence business, and the remainder in 
 installments of a,t least ten per centum per month till the whole 
 amount is paid ; and if any shareholder, or his assignee, shall 
 fail to make the payment, or any installment on his stock, the 
 directors may sell the stock at public auction. (§§ 14, 15.) No 
 association shall make any loan or discount on the security of the 
 shares of its own capital, (§ 35 .) 
 
UNITED STATES 
 
 Van Allen v. The Assessors. 
 
 We hare already referred to the list of the names and residences 
 of the shareholders, and the number of shares, to be kept for the 
 inspection of the State assessors. 
 
 Now, in Tiew of these seyeral provisions in which the term shares, 
 and shareholders, are mentioned, and the clear and obvious mean- 
 ing of the term in the connection in which it is found, namely, the 
 
 whole of the interest in the shares and of the shareholders : when 
 
 ft ' 
 
 the statute provides that nothing in this act shall be construed to 
 prevent all the shares in any of the said associations, etc., from 
 being included in the valuation of the personal property of any 
 person or corporation in the assessment of taxes imposed by State 
 authority, etc., can there be a doubt that the term "shares," as 
 used in this connection, means the same interest as when used in 
 the other portions of the act ? Take, for example, the use of the 
 term in the certificate of the numbers of shares in the articles of 
 association, in the division of the capital stock into shares of one 
 hundred dollars each ; in the personal liability clause, which sub- 
 jects the shareholder to an amount, and, in addition, to the amount 
 invested in such shares ; in the election of directors, and in de- 
 ciding all questions at meetings of the stockholders, each share is 
 entitled to one vote ; in regulations of the payments of the shares 
 subscribed ; and, finally, in the list of shares kept for the inspec- 
 tion of the State assessors. In all these instances, it is manifest that 
 the term, as used, means the entire interest of the shareholder ; 
 and it would be singular, if, in the use of the term m the connec- 
 tion of State taxation. Congress intended a totally different mean- 
 ing, without any indication of such intent. 
 
 This is an answer to the argument that the term, as used here, 
 means only the interest of the shareholder as representing the por- 
 tion of the capital, if any, not invested in the bonds of the govern- 
 ment, and that the State assessors must institute an inquiry into 
 the investment of the capital of the bank ; and ascertain what 
 portion is invested in these bonds, and make a discrimination in 
 the assessment of the shares ; if Congress had intended any such 
 discrimination, it would have been an easy matter to have said so ; 
 certainly, so grave and important a change in the use of this term, 
 if so intended, would not have been left to judicial construction. 
 
 Upon the whole, after the maturest consideration which we have 
 been able to give to this case, we are satisfied that the States pos- 
 sess the power to tax the whole of the interest of the shareholder 
 
SUPREME COURT, 1866. 
 
 People V. The Commiasiouers. 
 
 in the shares held by him in these associations, within the limit 
 prescribed by the act authorizing their organization. But, for the 
 reasons stated in the forepart of the opinion, the judgment miist 
 be reversed and the case remitted to the Court of Appeals of the 
 State of New York, with directions to enter judgment for the 
 plaintiffs in error, with costs. 
 
 Chief Justice Chase delivered a dissenting opinion, in which 
 Justices Watse and Swatnb concurred. 
 
 Judgment reversed and the case remitted to the Court of Appeals 
 of the State of New York, with direction to enter judgment for 
 the plaintiffs m error, with costs. 
 
 People v. The Commissiokbks. 
 
 (4 Wallace, 24i.) 
 
 Taxation of National hanks under State laws — Section A\ of the National Bank 
 Act construed — Bate of taxation. 
 
 The .41st section of the National Banking Act which provides that shares in 
 National banks may be taxed by the States, " but not at a greater rate than 
 is assessed upon other moneyed capital in the hands of individual citizens 
 of such States," means that the rate of taxation of the shares shall be the 
 same, or not greater than upon moneyed capital of the individual citizen 
 which is subject to taxation. 
 
 Therefore, Tield, that the fact that individual citizens were not assessed on 
 United States securities owned by them was not a valid reason against the 
 validity of the State tax on the shares of National banks, the capital of 
 which was invested in United States bonds. 
 
 CERTIORARI to the commissioners of taxes and assessments 
 for the city of New York, issued out of the Supreme Court 
 of the State of New York, on the relation of Denning Duer and 
 of Ralph Mead. The facts are sufficiently stated in the opinion 
 of the court. 
 
 W. M. Evarts, B. D. Silliman, J. E. Burrill and E. S. Van- 
 WinJcle, for relators. 
 
10 UNITED STATES 
 
 People V. The Commiasionera. 
 
 C. O'Connor, A. J. Parlcer, R. 0' Gorman and W. Hutchins, for 
 respondents. 
 
 Mr. Justice Nelsok delivered the opinion of the court. 
 
 These cases are writs of error to the Court of Appeals of the State 
 of New York. The relator in the first is an owner of one hundred 
 and fifty-two shares of stock in the National Bank of Commerce 
 in New York. 
 
 The capital of the bank consists of one hundred thousand shares 
 of one hundred dollars each, and which is invested in United 
 States securities, and exempt from State taxation. The commis- 
 sioners of taxes, in making their assessments, valued the shares at 
 par, and imposed upon them the same rate of tax as was imposed 
 upon other personal property in this city. 
 
 The commissioners, in their return to the certiorari, state that in 
 estimating the value of the shares, they made no deduction on 
 account of the investment of the capital of the bank m United 
 States securities. That in the valuation of the personal estate of 
 individuals, these securities held and owned by them were deducted 
 and the tax assessed on the balance; and the like deductions were 
 made from the capital of insurance companies. 
 
 The assessment of this tax on the shares of the relator in the Bank 
 of Commerce was carried to the Supreme Court of the State, and, 
 after argument, was affirmed, and thence to the Court of Appeals, 
 where the judgment of the Supreme Court was affirmed. The 
 case is now here on error under the twenty-fifth section of the Judi- 
 ciary Act. 
 
 The first objection taken to the legality of the tax is on the 
 ground that the commissioners in the valuation of the shares re- 
 fused to deduct the amount of capital of the bank invested in 
 United States securities, and hence refused [to regard this deduc- 
 tion in the valuation of the shares. 
 
 This question has heretofore been considered by this court, and 
 after full deliberation, determined, in the case of Van Allen v. The 
 Assessors, 3 Wall. 573 {ante, p. 1 ), and need not again be ex- 
 amined. That case was one of the large class of cases which were 
 very thoroughly argued, and received, at the time, the most careful 
 examination of the court. 
 
 The next, and perhaps the only material question in the case, 
 arises upon a construction of a clause in the first proviso of the 
 
SUPEEME COUET, 1866. H 
 
 People V. The Commissioners. 
 
 forty-first section of the National Bank Act. After referring to 
 the taxation of these shares by State authority, it provides 
 " But not at a greater rate than is assessed upon other moneyed 
 capital in the hands of individual citizens of such State." 
 
 It is argued tha_t the assessment upon the shares of the relator is 
 at a greater rate than that of the personal property of individual 
 citizens, upon the ground that allowance was made on account of 
 United States securities held and owned by them, when at the same 
 time the deduction was disallowed to him. 
 
 The answer is, that upon a true construction of this clause of 
 the act, the meaning and intent of the law-makers were, 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 
 . subject 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 citi- 
 zens. 
 
 This rule seems to be as effectual a test to prevent unjust dis- 
 crimination against the shareholders as could well be devised. It 
 embraces a class which constitute the body politic of the State, who 
 make its laws and provide for its taxes. They cannot be greater 
 than the citizens impose upon themselves . It is known as sound 
 policy, that in every well-regulated and enlightened State or gov- 
 ernment, certain descriptions of property, and also certain institu- 
 tions — such as churches, hospitals, academies, cemeteries, and the 
 like — are exempt from taxation; but these exemptions have never* 
 been regarded as disturbing the rates of taxation, even where the 
 fundamental law had ordained that it should be uniform. 
 
 The objection is a singular one. At the time Congress enacted 
 this rule as a limitation against discrimination, it wa^ well known 
 to that body that these securities in the hands of the citizen were 
 exempt from taxation. It had been so held by this court, and, for 
 abundant caution, had passed into a law. 
 
 The argument founded on the objection, if it proves any thing, 
 proves that these securities should have been taxed in the hands of 
 individuals to equalize the taxation; and hence that Congress, by 
 this clause in the proviso, intended to subject them, as thus situated, ■ 
 to taxation; and, therefore, there was error in the deduction. This 
 we do not suppose is claimed. But if this is not the result of the 
 argument, then the other conclusion from it is, that Congress 
 
12 UNITED STATES 
 
 People V. The Commissioners. 
 
 required that the commissioners should deduct the securities, and 
 at the same time intended the deduction, if made, should operate 
 as a violation of the rate of the tax prescribed. We dissent from 
 both conclusions, and think a sound construction of the clause, 
 and one consistent with its words and intent, is also consistent 
 with all the acts of Congress on the subject. 
 
 The commissioners, in their returji, state that insurance compa- 
 nies created under the laws of the State, and doing business in the 
 city of New York, were 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. 
 
 Another objection taken is, that the taxation of the shares of 
 the relator is illegal, on account of this deduction, it being a de- 
 parture from the rate of assessment prescribed in the clause already 
 cited. 
 
 The answer is, that this clause does not refer to the rate of as- 
 sessment upon insurance companies as a test by which to prevent 
 discrimination against the shares; that is, confined to the rate of 
 assessments upon moneyed capital in the hands of individual citi- 
 zens. These institutions are not within the words or the contem- 
 plation of Congress ; but even if they were, the answer we have 
 already given to the deduction of these securities in the assessment 
 of the property of individual citizens is equally applicable to them. 
 These companies are taxed on their capital, and not on the share- 
 holder, at the same rate as other personal property in the State. 
 There is not much danger to be apprehended of a discriminating 
 tax in their favor, prejudicial to the rights or property of the citi- 
 zen ; and, of course, to the rights of the shareholders in these 
 National banks, who stand on the same footing. 
 
 The relator in the second case, Ealph Mead, is the holder and 
 owner of twenty-five shares of stock in the Com Exchange Bank, 
 in the city of New York, incorporated under the laws of the 
 State. 
 
 The act of April 23d, 1866, imposed a tax on the shares of these 
 banks. 
 
 It is insisted that the tax is illegal on account of the refusal of 
 the commissioners to deduct the United States securities in which 
 a portion of the capital stock of the bank was invested. 
 
 The general question was distinctly presented in the bank cases 
 of the last term, of which Van Allen v. The Assessors was one of 
 
SUPEEME COUET, 1866. 13 
 
 People V. The Commissioners. 
 
 the class (3 Wall. 573, 583 and 584), and disposed of. It was there 
 said: " But, in addition to this "view, the tax on the shares is not 
 a tax on the capital of the bank. The corporation is the legal 
 owner of all the property of the bank, real and personal ; and 
 within the powers conferred upon it by the charter, and for the 
 purpose for which it was created, can deal with the corporate prop- 
 erty as absolutely as a private individual can deal with his own. 
 The interest of the shareholder entitles him to participate in the 
 net profits earned by the bank, in the employment of its capital, 
 during the existence of its charter, in proportion to the number of 
 his shares ; and upon its dissolution or termination, to his propor- 
 tion of the property that may remain, of the corporation, after the 
 payment of its debts. This is a distinct independent interest or 
 property, held by the shareholder like any other property that may 
 belong to him ; " and, we add, of course, is subject to like taxa- 
 tion. 
 
 It was supposed, on the argument, that this principle was in 
 conflict with that which governed the decision of this court in the 
 case of Gardner v. The Appeal Tax Court, 3 How. 133 ; but this 
 is a mistake. That case turned upon the construction of an act of 
 Maryland, exempting the bank from taxation on account of a large 
 bonus to the State for the extension of the charter. This court 
 held, that upon a true construction of the act, the stockholders 
 were within the scope of the exemption. The court say: " In 
 whatever way we examine the acts of 1813 and 1821, we are of 
 opinion that it appears, from the eleventh section in those acts, to 
 have been the intention of the legislatures which passed them, to 
 exempt the stockholders from taxation as persons, on account of 
 the stock which they owned in the banks. 
 
 Some other questions were discussed on the argument, besides 
 those we have noticed, but they are questions of which this court 
 cannot take cognizance. We have examined all of them that are 
 here under the twenty-fifth section of the Judiciary Act. 
 
 Judgment of the court below affirmed. 
 
 The Chief Justice: In concurrence with my brothers Watkb 
 and SwATNB, I dissent from the opinion just read. The reasons of 
 dissent suificiently appear in our dissenting opinion in the case of 
 Van Allen v. The Assessors, read at the last term, and we do not 
 think it necessary to repeat them. 
 
14 UNITED STATES 
 
 Bradley v. The People. 
 
 Bbadlet V. The People, 
 
 (1 Wallace, 159.) 
 State taxation of National bavJcs. 
 
 A taz on the capital of a bank is not equivalent to a tax on the shares, and 
 therefore, where State banks are taxed on their capital only, a State statute 
 imposing a tax on the shares of National banks is void. Van Allen v. T?ie 
 Assessors, ante, p. 1, affirmed. 
 
 WEIT of error to the Supreme Court of IHinms, to review a 
 decision of that court revising a decision of the board-of 
 supervisors of Peoria county, to the efEect that the shares of stock 
 of National banks held by Bradley were not subject to a State and 
 county tax. The State Supreme Court held the shares liable to 
 such tax. (39 111. 130.) 
 
 The objection to the validity of the tax was, that under the State 
 statute the shares of National banks were taxed at a greater rate 
 than State banks, the latter being taxed only on their capital stock, 
 and not on the shares held by stockholders. 
 
 Messrs. Dexter and Walker, for the shareholders, plaintiffs in 
 error. 
 
 Mr. Palmer, contra. 
 
 Mr. Justice Nblsoit delirered the opinion of the court. 
 
 The question raised in this case came before us in the case of 
 Van Allen v. The Assessors, 3 Wall. 573, 581 {ante, p. 1), from 
 New York, where the statute taxing the State banks was substan- 
 tially like that of Illinois. We there held the tax unauthorized for 
 the defect stated. 
 
 It was in that case attempted to be sustained on the same ground 
 relied on here, that the tax on the capital was equivalent to tax on 
 the shares, as respected the shareholders. But the position was 
 answered that, admitting it to be so, yet, inasmuch as the capital 
 of the State banks may consist of the bonds of the United States, 
 which were exempt from State taxation, it was not easy to see that 
 the tax on the capital was an equivalent to a tax on the shares. 
 
SUPEEMB OOUKT, 1866. 15 
 
 Austin V. The Aldermen. 
 
 We see no distinction between the two cases, and the judgment 
 of the court below must be reversed, and the proceedings re- 
 manded, with directions to enter a judgment affirming the decision 
 
 of the board of supervisors. 
 
 Judgment accordingly. 
 
 AusTiir V. The Aldeembn. 
 
 (7 Wallace, 694.) 
 
 Taxation of shares — Where to he taxed. 
 
 A State statute required the assessors of each city and town in which any 
 shareholder in National banks resided to include such shares in the assess- 
 ment of such person. The defendant resided in Boston, owned shares in 
 several National banks there situated, and was there assessed on such 
 shares. He refused to pay the tax on the ground that the State statute 
 was in violation of the National Banking Act permitting States to tax 
 shares of National banks " at the place where such bank is located and not 
 elsewhere." Held, that as in this case the assessment was in conformity to 
 the act of Congress, the defendant had no cause for complaint and could 
 not impeach the validity of the State statute. 
 
 EKEOE to the Supreme Judicial Court of Massachusetts. 
 The action was brought by the aldermen of Boston to recover 
 a tax which the city had assessed on defendant's bank stock. The 
 case was reported below in 14 Allen, 359. 
 The opinion states other facts. 
 
 . /. <7. Austin, for plaintiff in error. 
 No argument on the other side. 
 
 Mr. Justice Swatne delivered the opinion of the court. 
 
 This case is brought before us by a writ of error, issued pursuant 
 to the twenty-fifth section of the Judiciary Act of 1789. 
 
 The legislature of Massachusetts, by a statute passed on the 15th 
 of May, 1865 (ch. 342), provided for "the taxation of shares in 
 associations for banking, established under the laws of the United 
 States," and prescribed the mode of procedure for that purpose. 
 The statute is confined to such associations in that State, and to 
 
16 UNITED STATES 
 
 Austin V. The Aldermen. 
 
 shares held by persons living within its limits. The third section 
 enacts that the assessment for taxation shall be made where the 
 shareholders reside. 
 
 The proviso in the act of Congress which permits the shares to 
 be taxed by the States, requires them to be included " in the v^Jua- 
 tion of the personal property " of the holder, " in the assessment of 
 taxes imposed by or under State authority, at the place where such 
 bank is located, and not elsewhere." . Act of June 3, 1864, ch. 106, 
 § 41, 13 Stat, at Large, 112. There are other regulations upon the 
 subject, but they do not affect the point to be considered, and 
 need not to be more particularly adverted to. 
 
 The plaintiff in error lived in Boston, and was the owner of 
 stock in six National banks there situated, and the valuation and 
 assessment were there made. 
 
 It is not denied that this was in conformity to the act of Con- 
 gress, but it is insisted that the taxes assessed were illegal and 
 void, because the statute of the State requires that they shall be 
 assessed at the place of the residence of the shareholder, without 
 reference to the locality of the bank. 
 
 The only question of Federal jurisdiction, and of which this 
 court can take cognizance is, whether the plaintiff in error has 
 been deprived of any right, contrary to the act of Congress, upon 
 which he relies for protection. 
 
 The facts bring the case within the terms of the act, according 
 to the strictest construction which can be given to them. This 
 is conclusive of the case. Whether, in another case, arising upon 
 a different state of facts, the statute may not produce results in 
 conflict with the act of Congress, and which this court will there- 
 fore be bound to revise and correct, is an inquiry upon which we 
 are not called to enter. "We can only consider the statute in con- 
 nection with the case before us. Having ascertained that it has 
 wrought no effect which the act forbids, our jurisdiction is at an 
 end. The twenty-fifth section of the Judiciary Act is explicit 
 upon the subject. 
 
 The right of taxation, where it exists, is necessarily unlimited 
 in its nature. It carries with it inherently the power to embarrass 
 and destroy. 
 
 It is well settled that the States cannot exercise this authority 
 in respect to any of the instrumentalities which the general gov- 
 ernment may create for the performance of its constitutional func- 
 
SUPREME COUET, 1869. 17 
 
 Kennedy v. Gibson. 
 
 tions. It is equally well settled that this exemption may be waived 
 wholly, or with such limitations and qualifications as may be 
 deemed proper by the law-making power of the nation ; but the 
 waiver must be clear, and every well-grounded doubt upon the sub- 
 ject should be resolved in favor of the exemption. 
 
 In respect to the class of cases to which the one before us be- 
 longs, the waiver is expressed in clear and unmistakable language. 
 
 Important questions have arisen as to the construction and efEect 
 of the permission given to tax, by the act of Congress under con- 
 sideration, with reference to the National securities held by the 
 banks. These questions have been settled by this court in repeated 
 decisions. Van Allen v. The Assessors, 3 WWlace, 573 ; The People 
 V. The Gommissioners, 4 id, 244 ; Bradley v. The People, id. 459. 
 
 In this case, the only question open for our examination must, 
 
 for the reasons before stated, be resolved against the plaintiff in 
 
 error. 
 
 Judgment affirmed. 
 
 Kennedy v. Gibsox. 
 
 (8 WaUace, 498.) 
 SvMs by recemers against stockholders -^ Parties — Suits by National banks. 
 
 The provision of the National Banking Act that suits under it, in which ofBcers 
 or agents of the United States are parties, shall be conducted by the district 
 attorney, is directory only, and the fact that private counsel ia employed to 
 conduct a suit by the receiver of a National bank against the stockholders 
 thereof is not a matter of defense to the stockholders. 
 
 It is the duty of the Comptroller of the Currency to decide when proceedings 
 are necessary against- the stockholders of a National bank to enforce their 
 personal liability, and to what extent such liability shall be enforced ; and in 
 an action by a receiver to enforce such liability, such prior determination of 
 the Comptroller must be distinctly averred and proved. 
 
 Where less than the entire liability of stockholders is sought to be enforced, 
 proceedings may be had in equity and an interlocutory decree may be taken 
 for contribution. Where contribution only is sought, all the stockholders 
 who can be reached by the process of the court may be joined in the suit, 
 and it will be no objection that there are others beyond the jurisdiction of 
 the court who cannot, for that reason, be made co-defendants. 
 
 3 
 
]8 UNITED STATES / 
 
 Kennedy v Gibson. 
 
 Creditors of a National bank cannot proceed directly in their own name 
 against the stockholders or debtors of the bank, nor are they proper parties 
 to a suit by a receiver. * 
 
 Suits may be brought by National banks as well as against them under sec- 
 tion 57 of the National Banking Act, of June 3, 1864. 
 
 APPEAL from a decree of the Circuit Court of the United 
 States for the District of Maryland. The opinion states the 
 case. 
 
 Messrs. Brent and Merrick, for appellant. 
 
 Mr. Steele, contra. 
 
 Mr. Justice Swatne delivered the opinion of the court. 
 
 This is an appeal in equity, from the decree of the Circuit Court 
 of the United States for the District of Maryland. The bill was 
 filed by the appellant. For the purposes of the points necessary to 
 be considered, the case may be briefly stated. The appellant has 
 been duly appointed receiver of the Merchants' Bank of Washing- 
 ton city, under the 50th section of the act of June 3d, 1864, and 
 brings this bill to charge the defendants, who are alleged to be 
 stockholders of the bank, with the personal liability prescribed by 
 the 13th section of the act. The facts necessary to warrant the 
 appointment of a receiver are sufficiently set forth. It is averred, 
 that he "has already ascertained that the assets and credits of 
 the association are wholly insufficient to pay its debts and liabili- 
 ties, and that it will be necessary to the complete and entire ad- 
 ministration of the trust reposed in him, that recourse shall be had 
 to the personal liability imposed upon the stockholders; " that two 
 thousand shares of the capital stock, amounting to $300,000, were 
 issued by the bank to its stockholders ; that it will be necessary to 
 collect from them this amount to make good the deficiency in the 
 means to meet the balance of the indebtedness of the bank, which 
 will remain after the application of all the available assets, to the 
 discharge of its liabilities, and that "after such application is 
 made, a balance of the indebtedness will remain due, largely ex- 
 ceeding the said sum of $200,000." The stockholders, besides the 
 defendants, are named, and it is alleged that a part of them reside 
 in the District of Columbia, and one of them in the State of New 
 York. The prayer of the bill is, that an account may be taken, 
 and that each of the defendants shall be decreed to pay to the re- 
 
 * See, however, Act of Congress of June 30, 1876, section 2. 
 
SUPKEME COURT, 1869. 19 
 
 Kennedy t. Gibson. 
 
 ceiyer his pro rata share of the indebtedness of the bank, which 
 may remain, after applying to the liabilities all ibs effects, as re- 
 quired by the act before mentioned, and for general relief. The 
 biU is signed by the special counsel of the receiver. The name of 
 the attorney of the United States does not appear in the case. 
 The defendants demurred. Our opinion will cover all the points 
 brought to our attention by their counsel in the argument, without 
 particularly stating them. 
 
 The receiver is the agent of the United States, and, according to 
 the 56th section of the act (13 Stat, at Large, 116), this suit should 
 have been conducted by their attorney. But this provision is 
 merely directory. The question which arises is between the United 
 States and its officers. The rights of the defendants are in nowise 
 concerned, and they cannot be heard to make the objection, that 
 this duty of the local law officer of the government has been de- 
 volved upon another. It is to be presumed there were sufficient 
 reasons to warrant this departure from the letter of the law. 
 
 The 50th section of the act provides, that the receiver, under 
 the direction of the Comptroller of the Currency, shall take posses- 
 sion of the books and assets of every description of the association, 
 collect all the debts and claims belonging to it, and may — proceed- 
 ing in the manner prescribed — sell or compound bad and doubtful 
 debts, and sell all its real and personal property; " and may, if nec- 
 essary to pay the debts of such association, enforce the individual 
 liability of the stockholders." He is required to pay all the mon- 
 eys he may realize to the Treasurer of the United States, subject to 
 the order of the Comptroller, and to report to the Comptroller all 
 his proceedings. The Comptroller is required to give notice to all 
 persons having claims against the association to present and prove 
 them, and after making provision for refunding to the United 
 States " any deficiency in redeeming the notes of such association, 
 as mentioned in this act," to make a ratable dividend of the mon- 
 eys paid over to him by the receiver, " on all claims which have 
 been proved to his satisfaction, or adjudicated in a court of com- 
 petent jurisdiction." He is to make further dividends, from time 
 to time, as the means shall come into his hands, "on all claims 
 previously proved or adjudicated, and the remainder of the pro- 
 ceeds, if any, shall be paid over to the stockholders of such associa- 
 tion or their legal representatives." 
 
20 UNITED STATES 
 
 Kennedy v. Gibson. 
 
 The receiver is the instrument of the Comptroller. He is ap- 
 pointed by the Comptroller, and the power of appointment carries 
 with it the power of removal. It is for the Comptroller to decide 
 when it is necessary to institute proceedings against the stock- 
 holders to enforce their personal liability, and whether the whole or 
 a part, and if only a part, how much shall be collected. These ques- 
 tions are referred to his judgment, and discretion, and his deter- 
 mination is conclusive. The stockholders cannot controvert it. 
 It is not to be questioned in the litigation that may ensue. He 
 may make it at such a time as he may deem proper, and upon 
 such data as shall be satisfactory to him. This action on his part 
 is indispensable, whenever the personal liability^ of the stock- 
 holder is sought to be enforced, and must precede the institution 
 of suit by the receiver. The fact must be distinctly averred in all 
 such cases, and if put in issue must bo proved. 
 
 The liability of the stockholders is several and not joint. The 
 limit of their liability is the par of the stock held by each one. 
 Where the whole amount is sought to be recovered the proceeding 
 must be at law. Where less is required the proceeding may be in 
 equity, and in such case an interlocutory decree may be taken for 
 contribution, and the case may stand over for the further action of 
 the court — if such action should subsequently prove to be neces- 
 sary — until the full amount of the liability is exhausted. It would 
 be attended with injurious consequences to forbid action against 
 the stockholders until the precise amount necessary to be collected 
 shall be formally ascertained. This would greatly protract the 
 final settlement, and might be attended with large losses by insol- 
 vency and otherwise in the intervening time. The amount must 
 depend in part upon the solvency of the debtors and the validity 
 of the claims. Time will be consumed in the application of these 
 tests, and the results in many cases cannot be foreseen. The same 
 remarks apply to the enforced collections from the stockholders. A 
 speedy adjustment is necessary to the efficiency and utility of the 
 law; the interests of the creditors require it, and it was the obvious 
 policy and purpose of Congress to give it. If too much be col- 
 lected it is provided by bhe statute that any surplus which may re- 
 main, after satisfying all demands against the association, shall be 
 paid over to the stockholders. It is better they should pay 
 more than may prove to be needed than that the evils of delay 
 should be encountered. When contribution only is sought, all the 
 
SUPEBMB OOTJET, 1869. 21 
 
 Kennedy T. Gibson. 
 
 stockholders who can be reached by the process of the court may 
 be joined in the suit. It is no objection that there are others be- 
 yond the jurisdiction o£ the court who cannot for that reason be 
 made co-defendants. 
 
 The claims of creditors may be proved before the Comptroller, or 
 established by suit against the association. Creditors must seek 
 their remedy through the Comptroller in the mode prescribed by 
 the statute; they cannot proceed directly in their own name against 
 the stockholders or debtors of the bank. The receiver is the " 
 statutory assignee of the association, and is the proper party to 
 institute all suits; they may be brought both at law and in equity, 
 in his name, or in the name of the association for his use. He 
 represents both the creditors and the association, and when he sues 
 in his own name it is not necessary to make either a party to the 
 suit. 
 
 The 59th section of the act of February 25th, 1863, provides that 
 all suits by or against such associations may be brought in the 
 proper courts of the United States or of the State. The 57th sec- 
 tion of the act of 1864 relates to the same subject, and revises and 
 enlarges the provisions of the 59th section of the preceding act. 
 In the latter the word "by," in respect to such suits, is dropped. 
 The omission was doubtless accidental. It is not to be supposed 
 that Congress intended to exclude the associations from suing in 
 the courts where they can be sued. The difference in the language 
 of the two sections is not such as to warrant the conclusion that it 
 was intended to change the rule prescribed by the act of 1864. 
 Such suits may still be brought by the associations in the courts of 
 the United States. If this be not the proper construction, while 
 there is provision for suits against the associations, there is none 
 for suits by them, in any court. Theriah v. Hart, % Hill, 381, note. 
 
 The 59th section directs "that all suits and proceedings arising 
 out of the provisions of this act, in which the United States or its 
 oflBcers or agents shall be parties, shall be conducted by the district 
 attorneys of the several districts, under the direction and super- 
 vision of the Solicitor of the Treasury." 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 by 
 virtue of the act, without reference to the locality of their personal 
 citizenship. United States v. BaiMt, 1 Black, 61. 
 
22 UNITED STATES 
 
 Veazie Bank v. Penno. 
 
 The bill in the case before us contains no averment of any action 
 by the Comptroller touching the personal liability of the stock- 
 holders. The demurrer of the defendants was, therefore, properly 
 sustained, and the decree of the Circuit Court is 
 
 Affirmed. 
 
 Veazie Bank t. Fenno. 
 
 (8 Wallace, 533.) 
 Oonstitutional law — Bight of Congress to tax circulation of State banks. 
 
 The tax of ten per cent imposed by the act of July 13, 1866 (14 Stat, at Large, 
 146, § 9) on the circulation of State banks used for currency and paid out by 
 the National or State banks is not repugnant to the Constitution, either on 
 the ground that the tax is a direct tax which must be apportioned among 
 the seyeral States, or that the act impairs franchises granted by the State. 
 
 Congress having undertaken, in the exercise of undisputed constitutional 
 power, to provide a currency for the whole conntry, may constitutionally 
 secure the benefit of it to the people by appropriate legislation, and to 
 that end may restrain, by suitable enactments, the circulation of any notes 
 not issued under its own authority. 
 
 ON certificate of division from the Circuit Court for Maine. 
 The 9th section of the act of Congress of July 13, 1866 
 (14 Stats, at Large, 146), amendatory of the Internal Eevenue Act, 
 provided as follows : 
 
 " That every National banking association, State bank, or State banking 
 association, shall pay a tax of ten per centum on the amount of notes of any 
 person. State bank, or State banking association, used for circulation and paid 
 out by them after the 1st day of August, 1866, and such tax shall be assessed 
 and paid in such manner as shall be prescribed by the commissioner of inter- 
 nal revenue." 
 
 Under this act a tax of ten per cent was assessed upon the 
 Veazie Bank, for its bank notes issued for circulation after the 
 day named in the act. 
 
 The Veazie Bank was a corporation chartered by the State of 
 Maine, with authority to issue bank notes for circulation, and the 
 notes on which the tax imposed by the act was collected were issued 
 under this authority . The bank refusing to pay the tax, the col- 
 
SUPEBME COUET, 1869. 23 
 
 Veazie Bank v. Fenno. 
 
 lector of internal revenue, Fenno, was proceeding to distrain for 
 it, whereupon the bank paid it under protest and brought this 
 action against the collector to recover it. The court below was 
 divided upon the question whether that portion of the act quoted 
 above, was a valid and constitutional law. 
 
 Reverdy Johnson and Caleb Cushing, for the Veazie Bank. 
 
 Mr. Hoar, Attorney-General, contra. 
 
 Mr. Chief Justice Chase delivered the opinion of the court. 
 
 The necessity of adequate provision for the financial exigencies 
 created by the late rebellion suggested to the administrative and 
 legislative departments of the government important changes in 
 the systems of currency and taxation which had hitherto prevailed. 
 These changes, more or less distinctly shown in administrative 
 recommendations, took form and substance in legislative acts. We 
 have now to consider, within a limited range, those which relate to 
 circulating notes and the taxation of circulation. 
 
 At the beginning of the rebellion, the circulating medium con- 
 sisted almost entirely of bank notes issued by numerous independ- 
 ent corporations, variously organized under State legislation, of 
 various degrees of credit, and very unequal resources, administered 
 often with great, and not unfrequently with little skill, prudence, 
 and integrity. The acts of Congress, then in force, prohibiting 
 the receipt or disbursement, in the transactions of the National 
 government, of any thing except gold and silver, and the laws of 
 the States requiring the redemption of bank notes in coin on de- 
 mand, prevented the disappearance of gold and silver from circu- 
 lation. There was, then, no National carrency except- coin j there 
 was no general (see the act of December 37th, 1854, to suppress 
 small notes in the District of Columbia, 10 Stat, at Large, 599), 
 regulation of any other by National legislation, and no National 
 taxation was imposed in any form on the State bank circulation. 
 
 The first act authorizing the emission of notes by the treasury 
 department for circulation, was that of July 17th, 1861. 12 Stat. 
 at Large, 359. The notes issued under this act were treasury 
 notes, payable on demand in coin. The amount authorized by it 
 was $50,000,000, and was increased by the act of February 12th, 
 1862 (id. 338), to $60,000,000. 
 
24 UNITED STATES 
 
 Veazie Bank v. Fenno. 
 
 On the 31st of December, 1861, the State banks suspended 
 specie payment. Until this time the expenses of the war had been 
 paid in coin, or in the demand notes just referred to; and, for 
 some time afterward, they continued to be paid in these notes, 
 which, if not redeemed in coin, were receiyed as coin in the pay- 
 ment of duties. 
 
 Subsequently, on the 35th of Eebruary, 1862 (id. 345), a new 
 policy became necessary in consequence of the suspension, and of 
 the condition of the country, and was adopted. The notes hitherto 
 issued, as has just been stated, were called treasury notes, and were 
 payable on demand in coin. The act now passed authorized the 
 issue of bills for circulation under the name of United States notes, 
 made payable to bearer, but not expressed to be payable on demand, 
 to the amount of $150,000,000; and this amount was increased by 
 subsequent acts to $450,000,000, of which $50,000,000 were to be 
 held in reserve, and only to be issued for a special purpose, and 
 under special directions as to their withdrawal from circulation. 
 Act of July 11th, 1863, id. 533; act of March 3d, 1863, id. 710. 
 These notes, until after the close of the war, were always con- 
 vertible into, or receivable at par for bonds payable in coin, and 
 bearing coin interest at a rate not less than five per cent, and the 
 acts by which they were authorized declared them to be lawful 
 money and a legal tender. ■ 
 
 This currency, issued directly by the government for the dis- 
 bursement of the war and other expenditures, could not, obviously, 
 be a proper object of taxation. 
 
 But, on the 35th of February, 1863, the act authorizing National 
 banking associations (Act of March 3d, 1863, 13 Stat, at Large, 
 670), was passed, in which, for the first time during many years, 
 Congress recognized the expediency and duty of imposing a tax 
 upon currency. By this act a tax of two per cent annually was 
 imposed on the circulation of the associations authorized by it. 
 Soon after, by the act of March 3d (1863, id. 713), a similar, but 
 lighter tax of one per cent, annually, was imposed upon the circu- 
 lation of State banks in certain proportions to their capital, and of 
 two per cent on the excess; and the tax on the National associa- 
 tions was reduced to the same rates. 
 
 Both acts also imposed taxes on capital and deposits, which need 
 not be noticed here. 
 
SUPREME COUET, 1869. 25 
 
 Veazie Bank v Fenno, 
 
 At a later date, by the act of June 3d, 1864 (13 id. Ill), which 
 was substituted for the act of February 35th, 1863, authorizing 
 National banking associations, the rate of tax on circulation was 
 continued and applied to the whole amount of it, and the shares of 
 their stockholders were also subjected to taxation by the States; 
 and a few days afterward, by the act of June 30, 1864 (id. 277), to 
 provide ways and means for the support of the goyernment, the tax 
 on the circulation of the State banks was also continued at the 
 eame annual rate of one per cent, as before, but payment was re- 
 quired in monthly installments of one-twelfth of one per cent, with 
 monthly reports from each State bank of the amount in circula- 
 tion. 
 
 It can hardly be doubted that the object of this provision was to 
 inform the proper authorities of the exact amount of paper money 
 in circulation, with a view to its regulation by law. 
 
 The first step taken by Congress in that direction was by the act 
 of July 17, 1863 (act of March 3d, 1863, 13 Stat, at Large, 593), 
 prohibiting the issue and circulation of notes under one dollar by 
 any person or corporation. The act just referred to was the next, 
 and it was followed some months later by the act of March 3d, 
 1865, amendatory of the prior internal revenue acts, the sixth sec- 
 tion of which provides that every E"ational banking association. 
 State bank, or State banking association, shall pay a tax of ten per 
 centum on the amount of the notes of any State bank, or State 
 banking association, paid out by them after the 1st day of July, 
 1866." 13 id. 484. 
 
 The same provision was re-enacted with a more extended appli- 
 cation on the 13th of July, 1866, in these words: "Every National 
 banking association. State bank, or State banking association, 
 shall pay a tax of ten per centum on the amount of notes of any 
 person, State bank, or State banking association, used for circula- 
 tion, and paid out by them after the first day of August, 1866, 
 and such tax shall be assessed and paid in such manner as shall 
 be prescribed by the commissioner of internal revenue." 14 id. 146. 
 
 The constitutionality of this last provision is now drawn in ques- 
 tion, and this brief statement of the recent legislation of Congress 
 has been made for the purpose of placing in a clear light its scope 
 and bearing, especially as developed in the provisions just cited. It 
 will be seen that when the policy of taxing bank circulation was 
 first adopted in 1863, Congress was inclined to discriminate for, 
 4 
 
26 UNITED STATES 
 
 Veazie Bank v. Fenno. 
 
 rather than against, the circulation of the State banks ; hut that 
 when the country had been sufficiently furnished with a National 
 currency by the issues of United States notes and of National bank 
 notes, the discrimination was turned, and very decidedly turned, 
 in the opposite direction. 
 
 The general question now before us is, whether or not the tax of 
 ten per cent imposed on State ban'ks or National banks paying 
 out the notes of individuals or State banks used for circulation, is 
 repugnant to the Constitution of the United States. 
 
 In support of the position that the act of Congress, so far as it 
 provides for the levy and collection of this tax, is repugnant to the 
 Constitution, two propositions have been argued with much force 
 and earnestness. 
 
 The first is that the tax in question is a direct tax, and has not 
 been apportioned among the States agreeably to the Constitution. 
 
 The second is, that the act imposing the tax impairs a franchise 
 granted by the State, and that Congress has no power to pass any 
 law with that intent or effect. 
 
 The first of these propositions will be first examined. 
 
 The difiBculty of defining with accuracy the terms used in the 
 clause of the Constitution, which confers the power of taxation 
 upon Congress, was felt in the convention which framed that in- 
 strument, and has always been experienced by courts when called 
 vrpon to determine their meaning. 
 
 The general intent of the Constitution, however, seems plain. 
 The general government, administered by the Congress of the con- 
 federation, had been reduced to the verge of impotency by the ne- 
 cessity of relying for revenue upon requisitions on the States, and 
 it was a leading object in the adoption of the Constitution to re- 
 lieve the government to be organized under it from this necessity, 
 and confer upon it ample power to provide revenue by the taxation 
 of persons and property. And nothing is clearer, from the discas- 
 sions in the convention and the discussions which preceded the 
 final ratification by the necessary number of States, than the purpose 
 to give this power to Congress, as to the taxation of every thing 
 except exports, in its fullest extent. 
 
 This purpose is apparent, also, from the terms in which the tax- 
 ing power is granted. The power is "to lay and collect taxes, 
 duties, imposts and excises, to pay the debt and provide for the 
 common defense and general welfare of the United States." More 
 
SUPEEME COTJET, 1869. 27 
 
 Veazie Bank v. Fenno. 
 
 comprehensiTe words could not have been used. Exports only are 
 by another provision excluded from its application 
 
 There are, indeed, certain virtual limitations, arising from the 
 principles of the Constitution itself. It would undoubtedly be an 
 abuse of the power if so exercised as to impair the separate existence 
 and independent self-government {Lane Ootmty v. Oregon, 7 Wal- 
 lace, 73) of the States, or if exercised for ends inconsistent with . 
 the limited grants of power in the Constitution. 
 
 And there are directions as to the mode of exercising the power. 
 
 If Congress sees fit to impose a capitation, or other direct tax, 
 it must be laid in proportion to the census ; if Congress determines 
 to impose duties, imports, and excises, they must be uniform 
 throughout the United States. These are not strictly limitations 
 of power. They are rules prescribing the mode in which it shall 
 be exercised. It still extends to every object of taxation, except 
 exports, and may be applied to every object of taxation to which it 
 extends, in such measure as Congress may determine. 
 
 The comprehensiveness of the power, thus given to Congress, 
 may serve to explain, at least, the absence of any attempt by mem- 
 bers of the Convention to define, even in debate, the terms of the 
 grant. The words used certainly describe the whole power, and it 
 was the intention of the Convention that the whole power should 
 be conferred. The definition of particular words> therefore, be- 
 came unimportant. 
 
 It may be said, indeed, that this observation, however just in its 
 application to the general grant of power, cannot be applied to the 
 rules by which different descriptions of taxes are directed to be 
 laid and collected. 
 
 Direct taxes must be laid and collected by the rule of apportion- 
 ment ; duties, imposts and excises must be laid and collected un- 
 der the rule of uniformity. 
 
 Much diversity of opinion has always prevailed upon the ques- 
 tion, "What are direct taxes ? Attempts to answer it by reference 
 to the definitions of political economists have been frequently 
 made, but without satisfactory results. The enumeration of the 
 different kinds of taxes which Congress was authorized to impose 
 was probably made with very little reference to their speculations. 
 The great work of Adam Smith, the first comprehensive treatise 
 on political economy in the English language, had then been re- 
 cently published ; but in this work, though there are passages 
 
28 UJ5JITED STATES 
 
 Veazie Bank v. Fenno. 
 
 which refer to the characteristic difference between direct and in- 
 direct taxation, there is nothing which affords any Taluable light 
 on the use of the words "direct taxes" in the Constitution. 
 
 "We are obliged, therefore, to resort to historical evidence, and 
 to seek the meaning of the words in the use and in the opinion 
 of those whose relations to the government and means of knowl- 
 edge warranted them in speaking with authority. 
 
 And, considered in this light, the meaning and application of 
 the rule, as to direct taxes, appears to us quite clear. 
 
 It is, as we think, distinctly shown in every act of Congress on 
 the subject. 
 
 In each of these acts, a gross sum was laid upon the United 
 States, and the total amount was apportioned to the several States, 
 according to their respective numbers of inhabitants, as ascertained 
 by the last preceding census. Having been apportioned, provision 
 was made for the imposition of the tax upon the subjects specified 
 in the actj fixing its total sum. 
 
 In 1798, when the first direct tax was imposed, the total amount 
 was fixed at two millions of dollars (act of July 14th, 1798, Stat, at 
 Large, 597) ; in 1813 the amount of the second direct tax was fixed 
 at three millions (act of August 3d, 1813, 3 id. 53) ; in 1815 the 
 amount of the third at six millions, and it was made an annual 
 tax (act of July 9th, 1815, id. 164); in 1816 the provision making 
 the tax annual was repealed by the repeal of the first section of 
 the act of 1815, and the total amount was fixed for that year at 
 three millions of dollars (act of March 5th, 1816, id. 255). No 
 other direct tax was imposed until 1861, when a direct tax of twenty 
 millions of dollars was laid and made annual (act of August 
 5th, 1861, 12 id. 294), but the provision making it annual was sus- 
 pended, and no tax, except that first laid, was ever apportioned. 
 In each instance the total sum was apportioned among the States 
 by the constitutional rule, and was assessed at prescribed rates, on 
 the subjects of the tax. These subjects, in 1798 (act of July 9th, 
 1798, 1 Stat, at Large, 586), 1813 (act of July 23d, 1813, 3 id. 26), 
 1815 (id. 166), 1816 (id. 255), were lands, improvements, dwelling- 
 houses and slaves ; and in 1861, lands, improvements and dwelling- 
 houses only. Under the act of 1798 slaves were assessed at fifty 
 cents on each ; under the other acts, according to valuation by as- 
 sessors. 
 
SUPEEME COURT, 1869. 29 
 
 Veazie Bank v. Fenno. 
 
 This review shows that personal property, contracts, occupations 
 and the like, have never been regarded by Congress as proper sub- 
 jects of direct tax. It has been supposed that slaves must be con- 
 sidered as an exception to this observation. But the exception is 
 rather apparent than real. As persons, slaves were proper subjects 
 of a capitation tax, which is described in the Constitution as a 
 direct tax ; as property, they were, by the laws of some, if not 
 most of the States, classed as real property, descendible to heirs. 
 Under the first view, they would be subject to the tax of 1798, 
 as a capitation tax ; under the latter, they would be subject to 
 the taxation of the other years as realty. That the latter view 
 was that taken by theframers of the acts after 1798, became highly 
 probable when it is considered that in the States where slaves 
 were held, much of the value which would otherwise have attached 
 to land passed into the slaves. If, indeed, the land only had been 
 valued without the slaves, the land would have been subject to 
 much heavier proportional imposition in those States than in 
 States where there were no slaves ; for the proportion of tax im- 
 posed on each State was determined by population, without refer- 
 ence to the subjects on which it was to be assessed. 
 
 The fact, then, that slaves were valued, under the acts referred 
 to, far from showing, as some have supposed, that Congress re- 
 garded personal property as a proper object of direct taxation un- 
 der the Constitution, shows only that Congress, after 1798, regarded 
 slaves, for the purpose of taxation^ as realty. 
 
 It may be rightly affirmed, therefore, that in the practical 
 construction of the Constitution by Congress, direct taxes have 
 been limited to taxes on land and appurtenances, and taxes on 
 polls or capitation taxes. 
 
 And this construction is entitled to great consideration, especi- 
 ally in the absence of any thing adverse to it in the discussions of 
 the conventions which framed, and of the conventions which rati- 
 fied the Constitution. 
 
 What does appear in those discussions, on the contrary, supports 
 the construction. Mr. Madison informs us (3 Madison Papers, 
 1337), that Mr. King asked what was the precise meaning of direct 
 taxation, and no one answered. On another day, when the ques- 
 tion of proportioning representation to taxation, and both to the 
 white and three-fifths of the slave inhabitants, was under consid- 
 eration, Mr. Ellsworth said : " In case of a poll tax, there would 
 
30 UNITED STATES 
 
 Veazie Bank v. Fenno. 
 
 be no difficulty ;" and speaking, doubtless, of direct taxation, he 
 went on to obserTe : " The sum allotted to a State may be levied 
 without difficulty, according to the plan used in the State for rais- 
 ing its own supplies." All this, doubtless, shows uncertainty as to 
 the true meaning of the term "direct tax" ; but it indicates, also, an 
 understanding that direct taxes were such as may be levied by 
 capitation, and on lands and appurtenances ; or, perhaps, by val- 
 uation and assessment of personal property upon general lists. 
 For these were the subjects from which the States at that time 
 usually raised their principal, supplies. 
 
 This view received the sanction of this court two years before 
 the enactment of the first law imposing direct taxes eo nomine. 
 
 During the February term, 1796, the constitutionality of the 
 act of 1794, imposing a duty on carriages, came under considera- 
 tion in the case of Hylton v. United States, 3 Dallas, 171. Suit was 
 brought by the United States against Daniel Hylton, to recover 
 the penalty imposed by the act for not returning and paying duty 
 on a number of carriages, for the conveyance of persons, kept by 
 the defendant for his own use. The law did not provide for the 
 apportionment of the tax, and, if it was a direct tax, the law was 
 confessedly unwarranted by the Constitution. The only question 
 in the case, therefore, was, whether or not the tax was a direct tax. 
 
 The case was one of great expectation, and a general interest was 
 felt in its determination. It was argued, in support of the tax, by 
 Lee, Attorney-General, and Hamilton, recently Secretary of the 
 Treasury ; in opposition to the tax, by Oaijipbell, attorney for the 
 Virginia District, and IngersoU, Attorney-General of Pennsylvania. 
 
 Of the justices who then filled this bench, Ellsworth, Pateeson 
 and Wilson had been members, and conspicuous members, of the 
 Constitutional Convention, and each of the three had taken part in 
 the discussions relating to direct taxation. Ellsworth, the Chief 
 Justice, sworn into office that morning, not having heard the whole 
 argument, declined taking part in the decision, Cushikg, senior 
 Associate Justice, having been prevented, by indisposition, from 
 attending to the argument, also refrained from expressing- an 
 opinion. The other judges delivered their opinions in succession, 
 the youngest in commission delivering the first, and the oldest the 
 last. 
 
 They all held that the tax on carriages was not a direct tax, 
 within the meaning of the Constitution. Chase, Justice, was in- 
 
SUPREME COURT, 1869. 31 
 
 Veazie Bank v. Fenno. 
 
 clined to think that the direct taxes contemplated by the Constitu- 
 tion are only two : a capitation or poll tax, and a tax on land. He 
 doubted whether a tax by a general assessment of personal property 
 can be included within the term " direct tax." Patersok, who had 
 taken a leading part in the Constitutional Convention, went more 
 fully into the sense in which the words, giving the power of taxation, 
 were used by that body. In the course of this examination he 
 said : 
 
 " Whether direct taxes, in the sense of the Constitution, com- 
 prehended any other tax than a capitation tax, and tax on laud, is 
 a questionable point. If Congress, for instance, should tax, in the 
 aggregate or mass, things that generally pervade all the States in 
 the Union, then, perhaps, the rule of apportionment would be the 
 most proper, especially if an assessment was to intervene. This 
 appears from the practice of some of the States to have been con- 
 sidered as a direct tax. Whether it be so, under the Constitution 
 of the United States, is a matter of some diflSculty ; but as it is 
 not before the court, it would be improper to give any decisive 
 opinion upon it. I never entertained a doubt that the principal — 
 I will not say the only — objects that the framers of the Constitu- 
 tion contemplated as falling within the rule of apportionment 
 were a capitation tax and a tax on land." 3 Dallas, 177. 
 
 Iebdell, J., delivering his opinion at length, concurred gener- 
 ally in the views of Justices Chase and Patekson, Wilsoit had 
 expressed his opinion to the same general efEect, when giving the de- 
 cision upon the Circuit, and did not now repeat them. Neither 
 Chief Justice Ellswokth nor Justice CusHiifG expressed any dis- 
 sent; and it cannot be supposed if, in a case so important, their judg- 
 ments had differed from those announced, that an opportunity 
 would not have been given them by an order for reargument to 
 participate in the decison. 
 
 It may be safely assumed, therefore, as the unanimous judgment 
 of the court, that a tax on carriages is not a direct tax, and it may 
 further be taken or established upon the testimony of Paterson, 
 that the words "direct taxes," as used in the Constitution, com- 
 prehended only capitation taxes, and taxes on land, and perhaps 
 taxes on personal property by general valuation and assessment of 
 the various descriptions possessed within the several States. 
 
 It follows necessarily that the power to tax without apportion- 
 ment extends to all other objects. Taxes on other objects are in- 
 
32 UNITED STATES 
 
 Veazie Bank v. Fenno. 
 
 eluded under the heads of taxes not direct, duties, imposts, and 
 excises, and must be laid and collected by the rule of uniformity. 
 The tax under consideration is a tax on bank circulation, and may 
 very well be classed under the head of duties. Certainly it is not, 
 in the sense of the Constitution, a direct tax. It may be said to 
 come within the same category of taxation as the tax on incomes 
 of insurance companies, which this court, at the last term, in the 
 case of Pacific Insurance Co. t. Soule, 7 Wallace, 434, held not to 
 be a direct tax. 
 
 Is it, then, a tax on a franchise, granted by a State, which Con- 
 gress, upon any principle exempting the reserved powers of the 
 State from impairment by taxation, must be held to have no 
 authority to lay and collect ? 
 
 We do not say that there may not be such a tax. It may be ad- 
 mitted that the reserved rights of the States, such as the right to 
 pass laws, to give efEect to laws through executive action, to ad- 
 minister justice through the courts, and to employ all necessary 
 agencies for legitimate purposes of State government, are not 
 proper subjects of the taxing power of Congress. But it cannot 
 be admitted that franchises granted by a State are necessarily ex- 
 empt from taxation ; for franchises are property, often very valu- 
 able and productive property ; and when not conferred for the 
 purpose of giving efEect to some jeserved power of a State, seem 
 to be as properly objects of taxation as any other property. 
 
 But in the case before us the object of taxation is, not the fran- 
 chise of the bank, but property created, or contracts made and 
 issued under the franchise, or power to issue bank bills. A rail- 
 road company, in the exercise of its corporate franchises, issued 
 freight receipts, bills of lading, and passenger tickets, and it can- 
 not be doubted that the organization of railroads is quite as im- 
 portant to the State as the organization of banks. But it will 
 hardly be questioned that these contracts of the company are ob- 
 jects of taxation within the powers of Congress, and not exempted 
 by any relation to the State which granted the charter of the rail- 
 road. And it seems difficult to distinguish the taxation of notes 
 issued for circulation from the taxation of these railroad contracts. 
 Both descriptions of contracts are means of profit to the corpora- 
 tions which issued them ; and both, as we think, may properly be 
 made contributory to the public revenue. 
 
SUPEEME COUET, 1869. 33 
 
 Veazie Bank v. Penno. 
 
 It is insisted, however, that the tax in the case before us is excess- 
 ive, and so excessive as to indicate a purpose on the part of Con- 
 gress to destroy the franchise of the bank, and is, therefore, be- 
 yond the constitutional power of Congress. 
 
 The first answer to this is that the judicial cannot prescribe to 
 the legislative departments of the government limitations upon the 
 exercise of its acknowledged powers. The power to tax may be 
 exercised oppressively upon persons, bnt the responsibility of the 
 legislature is not to the courts, but to the people by whom its 
 members are elected. So if a particular tax bears heavily upon a 
 corporation, or a class of corporations, it cannot, for that reason 
 only, be pronounced contrary to the Constitution. 
 
 But there is another answer which vindicates equally the wis- 
 dom and the power of Congress. 
 
 It cannot be doubted that under the Constitution the power to 
 provide a circulation of coin is given to Congress. . And it is set- 
 tled by the uniform practice of the government and by repeated 
 decisions, that Congress may constitutionally authorize the emis- 
 sion of bills of credit. It is not important here to decide whether 
 the quality of legal tender, in payment of debts, can be constitu- 
 tionally imparted to these bills ; it is enough to say that there can 
 be no question of the power of the government to emit them ; to 
 make them receivable in payment of debts to itself ; to fit them 
 for use by those who see fit to use them in all the transactions of 
 commerce ; to provide for their redemption ; to make them a cur- 
 rency, uniform in value and description, and convenient and useful 
 for circulation. These powers, until recently, were only partially and 
 occasionally exercised, ^ately, however, they have been called into 
 full activity, and Congress has undertaken to supply a currency 
 for the entire country. 
 
 The methods adopted for the supply of this currency were briefly 
 explained in the first part of this opinion. It now consists of 
 coin, of United States notes, and of the notes of the National 
 banks. Both descriptions of notes may be properly described as 
 bills of credit, for both are furnished by the government ; both are 
 issued on the credit of the government, and the government is re- 
 sponsible for the redemption of both ; primarily as to the first 
 description, and immediately upon default of the bank as to the 
 second. When these bills shall be made convertible into coin, at 
 the will of the holder, this currency will, perhaps, satisfy the 
 6 
 
34 UNITED STATES 
 
 National Bank v. Commonwealth 
 
 wants of the community in respect to a circulating medium, as 
 perfectly as any mixed currency that can be devised. 
 
 Having thus, in the exercise of undisputed unconstitutional 
 powers, undertaken to provide a currency for the whole country, 
 it cannot 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 imposition of counterfeit and 
 base coin on the community. To the same end Congress may re- 
 strain, by suitable enactments, the circulation as money of any 
 notes not issued under its own authority. Without this power, 
 indeed, its attempts to secure a sound and uniform currency for 
 the country must be futile. 
 
 Viewed in this light, as well as in the other light of a duty on 
 contracts or property, we cannot doubt the constitutionality of the 
 tax under consideration. 
 
 The three questions certified from the Circuit Court of the Dis- 
 trict of Maine must, therefore, be answered 
 
 Affirmatively. 
 
 Mr. Justice Nelson', with whom concurred Mr. Justice Davis, 
 delivered a dissenting opinion. 
 
 National Bank v. Commonwealth. 
 
 (9 Wallace, 353.) , 
 
 State taaxLtion of National banks ^Oonstruction of statute — Tax "onhank stock" 
 Requiring banks to pay the tax. 
 
 Where the capital of a National bank ia invested in United States securities 
 it cannot be taxed by the State ; bat the shareholders of such bank may be 
 taxed, provided the tax ia not at a greater rate than is assessed on other 
 moneyed capital in the hands of individual citizens of the State. 
 
 A State statute imposed a tax " on bank stock, of fifty cents on each share 
 thereof equal to one hundred dollars of stock therein, owned by individu- 
 als, corporations or societies." Held to be a tax on the shares of the stock- 
 holders. 
 
 The law further required " the cashier of a bank whose stock is taxed" to pay 
 " the amount of the tax due.'' Held valid. 
 
SUPREME COUET, 1869. 35 
 
 National Bank v. Commonwealth. 
 
 The implied limitation upon State taxation derived from the express permis- 
 sion to tax shares in the National banking associations, is to be so construed 
 as not to embarrass the imposition or collection of State taxes to the extent 
 of the permission fairly and liberally interpreted.* 
 
 ACTION , to recover of the First National Bank of Louisville 
 the sum of $4,000 — that being the amount of tax assessed 
 upon the stock of said bank under the following statute of the 
 State of Kentucky (3 E. S. Stats. 239, 266) laying a tax : 
 
 " On bank stock, on stock in any moneyed corporation of loan on discount, 
 fifty cents on each share thereof, equal to one hundred dollars, on each one 
 hundred dollars of stock therein owned by individuals, corporations or socie- 
 ties." 
 
 " The cashier of a bank, whose stock is taxed, shall, on the first day of July 
 in each year, pay into the treasury the amount of tax due. If such tax be 
 not paid, the cashier and his sureties shall be liable for the same, and twenty 
 per cent upon the amount ; arid the said bank or corporation shall thereby 
 forfeit the privilege of its charter." 
 
 The answer of the defendant alleged the following four grounds 
 of defense : 
 
 1. That the bank was not organized under the law of the State, 
 but under the bank act of the United States, and was, therefore, 
 not subject to State taxation. 
 
 2. That it had been selected and was acting as a depository and 
 financial agent of the government of the United States, and, 
 therefore, was not liable to any tax whatever, either on the bank, 
 its capital, or its shares. 
 
 3. That its entire capital was invested in securities of the gov- 
 ernment of the United States, and that its shares of stock repre- 
 sented but an interest in the said securities, and were, therefore, 
 not subject to State taxation. 
 
 4. That the shares of the stock were the property of the indi- 
 vidual shareholders, and that the bank could not be made respon- 
 sible for a tax levied on those shares, and could not be compelled 
 to collect and pay such tax to the State. 
 
 The Commonwealth demurred, and the case resulting in a judg- 
 ment in its favor in the Court of Appeals, this writ of error was 
 prosecuted by the bank. 
 
 The act of Congress establishing the National Bank (13 Stat, at 
 Large, 111) enacted : 
 
 *See Thomxony. Paoifio Railroad, 9 Wall. 579, 590. 
 
36 UNITED STATES 
 
 National Bank v. Commonwealth. 
 
 " Sbctiok 40. That the president and cashier of every such association 
 shall cause to be kept a correct list of the names and residences of all the 
 shareholders in the association, and the number of shares held by each, and 
 such list shall be open to the inspection of the officers authorized to collect 
 taxes under State authority. 
 
 " Section 41. Provided, that nothing in this act shall be construed to pre- 
 vent all the shares in any of the said associations held by any person, from 
 being included in the valuation of the personalty of such person, in the as- 
 sessment of taxes imposed by or under State authority, at the place where 
 such bank is located, and not elsewhere ; but not at a greater rate than is as- 
 sessed upon other moneyed capital in the hands of individual citizens of such 
 State. Provided, further, that the tax bo imposed, under the laws of any 
 State, upon the shares of any of the associations authorized by this act, shall 
 not exceed the rate imposed upon the shares of any of the banks organized 
 under authority of the State where such association is located." 
 
 Mr. Wills, for plaintiff in error. 
 
 Mr. Albert Pike, contra. 
 
 Mr. Justice Millek delivered the opinion of the court. 
 
 In the several recent decisions concerning the taxatiou of the 
 shares of the National banks, as regulated by sections 40 and 
 41 of the act of Congress of June 3d, 1864, it has been estab- 
 lished as the law governing this court that the property 6r 
 interest of a stockholder in an incoi^orated bank, commonly called 
 a share, the shares in their aggregate totality being called some- 
 times the capital stock of the bank, is a different thing from the 
 moneyed capital of the bank held and owned by the corporation. 
 This capital may consist of cash, or of bills and notes discounted, 
 or of real estate combined with these. The whole of it may be 
 invested in bonds of the government, or in bonds of the States, or 
 in bonds and mortgages. In whatever it may be invested, it is 
 owned by the bank as a corporate entity, and not by the stockhold- 
 ers. A tax upon this capital is a tax upon the bank, and we have 
 held that when that capital was invested in the securities of the 
 government, it could not be taxed, nor could the corporation be 
 taxed as the owner of such securities. 
 
 On the other hand, we have held that the shareholders or stock- 
 holders, by which is meant the same thing, may be taxed by the 
 States on stock or shares so held by them, although all the capi- 
 tal of the bank be invested in Federal securities, provided the tax- 
 ation does not violate the rule prescribed by the act of 1864. 
 
SUPEEMB OOUET, 1869. 37 
 
 National Bank v. Commonwealth. 
 
 It is not intended here to enter again into the argument by 
 which this distinction is maintained, but to give a clear statement 
 of the propositions that we haye decided, that we may apply them 
 to the case before us. 
 
 If, then, the tax for which the State of Kentucky recovered 
 judgment in this case is a tax upon the shares of the stock of the 
 bank, and is not a tax upon capital of the bank owned by the cor- 
 poration, the first, second, and third grounds of defense must fail. 
 
 There are, then, but two questions to be considered in the case 
 before us : 
 
 1. Does the law of Kentucky, under which this tax is claimed, 
 impose a tax upon the shares of the bank, or upon the capital of 
 the bank, which is all invested in government bonds ? 
 
 2. If it is found to be a tax on the shares, can the bank be com- 
 pelled to pay the tax thus levied on the shares by the State ? 
 
 The revenue law of Kentucky imposes a tax "on bank stock, or 
 stock in any moneyed corporation of loan and discount, of fifty 
 cents on each share thereof, equal to one hundred dollars of stock 
 therein, owned by individuals, corporations, or societies." 
 
 We entertain no doubt that this provision was intended to tax 
 the shares of the stockholders, and that if no other provision had 
 been made, the amount of the tax would have been primarily col- 
 lectible of the individual or corporation owning such shares, in the 
 same manner as other taxes are collected from individuals. It is 
 clear that it is the shares owned or held by individuals in the bank- 
 ing corporation which are to be taxed, and the measure of the tax 
 is fifty cents per share of one hundred dollars. These shares may, 
 in the market, be worth a great deal more or a great deal less than 
 their par or nominal value, as its capital mayhave.been increased or 
 diminished by gains or losses, but the tax is the same in each case. 
 This shows that it is the share which is intended to be taxed, and 
 not the cash or other actual capital of the bank. 
 
 It is said that there may be, or that there really are, banks in 
 Kentucky whose stock is not divided into shares of one hundred 
 dollars each, but into shares of fifty dollars or other amounts, and 
 that this shows that the legislature did not intend a tax of fifty 
 cents on the share, but a tax on the capital. But the argument is 
 of little weight. What the legislature intended to say was, that 
 we impose a tax on the shares held by individuals or other corpora- 
 tions in banks in this State. The tax shall be at the rate of fifty 
 
38 UNITED STATES 
 
 National Bank v. Commonwealth. 
 
 cents per share of stock equal to one hundred dollars. If the 
 shares are only equal to fifty dollars, it will be twenty-five cents on 
 each of said shares. If they are equal to five hundred dollars it 
 will be two dollars and fifty cents per share. The rate is regulated 
 so as to be equal to fifty cents on each share of one hundred dol- 
 lars. 
 
 But it is strongly urged that it is to be deemed a tax on the cap- 
 ital of the bank, because the law requires the ofiBcers of the bank 
 to pay this ta.x on the shares of its stockholders. Whether the 
 State has the right to do this we will presently consider, but the 
 fact that it has attempted to do it does not prove that the tax is 
 any thing else than a tax on' these shares. 
 
 It has been the practice of many of the States for a long time to 
 require of its corporations, thus to pay the tax levied on their share- 
 holders. It is the common, if not the only, mode of doing this in 
 all the New England States, and in several of them the portion of 
 this tax which should properly go as the shareholder's contribution 
 to local or municipal taxation is thus collected by the State, or the 
 bank, and paid over to the local municipal authorities. In the 
 case of shareholders not residing in the State, it is the only mode 
 in which the State can reach their shares for taxation . "We are, 
 therefore, of opinion that the law of Kentucky is a tax upon the 
 shares of the stockholder. If the State cannot require of the 
 bank to pay the tax on the shares of its stock, it must, because the 
 Constitution of the United States, or some act of Congress, forbids 
 it. There is certainly no express provision of the Constitution 'on 
 the subject. 
 
 But it is argued that the banks, being instrumentalities of the 
 Federal government, by which some of its important operations are 
 conducted, cannot be subjected to such State legislation. It is 
 certainly true that the Bank of the United States, and its capital, 
 were held to be exempt from State taxation, on the ground here 
 stated, and this principle, laid down in the case of McOulloch v. 
 Maryland, 4 Wheat. 316, has been repeatedly af&rmed by the court. 
 But the doctrine has its foundation in the proposition, that the 
 right of taxation may be so used in such cases as to destroy the 
 instrumentalities by which the government proposes to effect 
 its lawful purposes in the States, and it certainly cannot be main- 
 tained that banks or other corporations or instrumentalities of the 
 government, are to be wholly withdrawn from the operation of 
 
SUPEEME OOUET, 1869. 39 
 
 National Bank v. Commonwealtli. 
 
 State legislation. The most important agents of the Federal gov- 
 ernment are its ofl&cers, but no one will contend that when a man 
 becomes an officer of the government, he ceases to be subject to 
 the laws of the State. The principle we are discussing has its limi- 
 tation, a limitation growing out of the necessity on which the 
 principle itself is founded. That limitation is, that the agencies 
 of the Federal government are only exempted from State legisla- 
 tion, so far as that legislation may interfere with, or impair their 
 efficiency in performing the functions, by which they are designed 
 to serve that government. Any other rule would convert a prin- 
 ciple founded alone in the necessity of securing to the government 
 of the "United States, the means of exercising its legitimate powers, 
 into an unauthorized and unjustifiable invasion of the rights of the 
 States. The salary of a Federal officer may not be taxed ; he may 
 be exempted from any personal service, which interferes with the 
 discharge of his official duties, because those exemptions are essen- 
 tial to enable him to perform those duties. But he is subject to 
 all the laws of the State, which affect his family or social relations, 
 or his property, and he is liable to punishment for crime, though 
 that punishment be imprisonment or death. So of the banks. 
 They are subject to the laws of the State, and are governed in their 
 daily course of business, far more by the laws' of the State, than of 
 the Nation. All their contracts are governed and construed by 
 State laws. Their acquisition and transfer of piroperty, their right 
 to collect their debts, and their liability to be sued for debts, are all 
 based on State law. It is only when the State law incapacitates 
 the banks from discharging their duties to the government that it 
 becomes unconstitutional. We do not see the remotest probability 
 of this, in their being required to pay the tax which their stock- 
 holders owe to the State for the shares of their capital stock, when 
 the law of the Federal government authorizes the tax. 
 
 If the State of Kentucky had a claim against a stockholder of 
 the bank, who was a non-resident of the State, it could undoubt- 
 edly collect the claim by legal proceeding, in which the bank could 
 be attached or garnisheed, and made to pay the debt out of the 
 means of its shareholder under its control. This is, in effect, what 
 the law of Kentucky does in regard to the tax of the State on the 
 bank shares. It is no greater interference with the functions of 
 the bank than any other legal proceeding, to which its business 
 
40 UNITED STATES 
 
 National Bank v. Commonwealth. 
 
 operations may subject it, and it in no manner hinders it from per- 
 forming all the duties of financial agent of the government. 
 
 A very nice criticism of the proviso to the 41st section of the 
 National Bank Act, which permits the States to tax the shares of 
 such bank, is made to us to show that the tax must be collected of 
 the shareholder directly, and that the mode we have been consid- 
 ering is by implication forbidden. But we are of opinion that while 
 Congress intended to limit State taxation to the shares of the bank, 
 as distinguished from its capital, and to provide against a discrimin- 
 ation on taxing such bank shares unfavorable to them, as compared 
 with the shares of other corporations, and with other moneyed capi- 
 tal, it did not intend to prescribe to the State the mode in which the 
 tax should be collected. The mode under consideration is the one 
 which Congress itself has adopted in collecting its tax on divi- 
 dends, and on the income arising from bonds of corporations. It 
 is the only mode which, certainly and without loss, secures the 
 payment of the tax on all the shares, resident or non-resident ; and, 
 as we have already stated, it is the mode which experience has jus- 
 tified in the New England States as the most convenient and proper, 
 in regard to the numerous wealthy corporations of those States. 
 It is not to be readily inferred, therefore, that Congress intended 
 to prohibit this mode of collecting a tax which they expressly per- 
 mitted the States to levy. 
 
 It is said here in argument that the tax is void because it is 
 greater than the tax laid by the State of Kentucky on other moneyed 
 capital in that State. This proposition is not raised among the 
 very distinct and separate grounds of defense set up by the bank 
 in the pleading. Nor is there any reason to suppose that it was 
 ever called to the attention of the Court of Appeals, whose judg- 
 ment we are reviewing. We have so often of late decided, that 
 when a case is brought before us by writ of error to a State court, 
 we can only consider such alleged errors as are involved in the 
 record, and actually received the consideration of the State court, 
 that it is only necessary to state the proposition now. As the ques- 
 tion thus sought to be raised here was not raised in the Court of 
 Appeals of Kentucky, we cannot consider it. 
 
 Judgment affirmed. 
 
SUPEEME COURT, 1869. 41 
 
 Lionberger v. Bouse. 
 
 LlONBEEGER V. EOUSE. 
 
 (9 Wallace, 468.) 
 
 State taaxition of National banks — Discrimination against National banks. 
 
 The proviso in tlie National Banking Act, that the tax impoeed by State laws 
 on shares in National banks " shall not exceed the rate imposed upon the 
 shares in any of the banks organized under the authority of the State, 
 Tchere such association is located," means only that the State, as a condition 
 to the exercise of the power to tax the shares of National banks, shall, as 
 far as it has the capacity, tax in like manner the shares of banks of its own 
 creation. 
 
 Where a State has, by contract, disabled itself from taking its banks of issue 
 beyond a certain amount, but not its banks of discount and deposit ; and it 
 lays a tax on all shares of stock in banks and incorporated companies gen- 
 erally, — the fact that it cannot collect the tax, beyond the amount limited, of 
 the banks of issue, is no bar to the collection of the tax on the shares of 
 National banks for a greater amount. 
 
 EEEOR to the Supreme Court of Missouri. Prior to 1857, there 
 had been, in Missouri, several banking institutions which re- 
 ceived deposits, lent money, and dealt in exchange ; but which 
 had not the privilege of issuing notes to circulate as money ; not, 
 therefore, banks of issue. 
 
 In that year the State established ten banks, which were banks 
 of issue. The act establishing the ten banks of issue declared 
 that 
 
 " Each banking company (incorporated under it) agrees to pay to the State 
 annually one per cent on the amount of capital stock paid in by the stockhold- 
 ers other than the State, which shall be in full of all bonus and taxes to be 
 paid to the State by the respective banka " 
 
 Of these ten banks of issue eight became National banks under 
 the act of 1864. Two, however, did not. These two remained 
 State institutions with the privilege of the one per cent, as before. 
 The old associations, that is to say the banks not of issue, all of 
 which had charters independently of the act of 1857, and which 
 had not the privilege to pay one per cent in lieu of all other taxes, 
 remained State institutions. 
 
 The legislature of Missouri, by an act of the 4th February, 1864, 
 concerning revenue, provided that " shares of stock in banks and 
 
42 UNITED STATES 
 
 Lionberger v. EouBe. 
 
 other incorporated companies" should be subject to assessment as 
 other property. The statute provided the mode of assessment as 
 follows : 
 
 " Persons owning shares in banks and other incorporated companies, taxable 
 Toy law, are not required to deliver to the assessor a list thereof; but the pres- 
 ident or other chief officer of such corporation shall deliver to the assessor, a 
 list of all shares of stock held therein, and<the names of the persons who hold 
 the same. 
 
 " The tax assessed on shares of stock, embraced in said list, shall be paid by 
 the corporations respectively, and they may recover from the owners of such 
 shares the amount so paid by them, or deduct the same from dividends ac- 
 cruing on such shares." 
 
 Under this act, a tax of nearly two per cent was levied by the 
 State on the assessed valuation of the shares of one Lionberger, a 
 resident of St. Louis, and a shareholder in the Third National Bank 
 of St. Louis. Payment of the tax being refused, the collector, a 
 certain Eouse, collected it forcibly. Lionberger thereupon brought 
 suit against him, in one of the State courts, for the alleged wrong- 
 ful act ; asserting that the proviso in the 41st section of the act of 
 1864, imposing a limitation on the power of the States, had refer- 
 cence to banks of issue alone ; that the State had disabled itself by 
 its contract with them to tax that sort of bank otherwise than it 
 had contracted for (one per cent), and that the assessment and col- 
 lection, if made under color of law, were without any legal 
 authority whatever. It was not denied that the two State banks 
 of issue held a very inconsiderable portion of the banking capital 
 of the State, and that the shares of all other associations in the 
 State (of which there were many, some created after 1857, and 
 some before), with all the privileges of banking except the power to 
 emit bills, were taxed like the shares in National banks. The court 
 in which the suit was brought decided adversely to the position set 
 up, and on appeal the Supreme Court of the State — observing that 
 the moneyed associations, saving and banking institutions of the 
 State, were banks to all intents and purposes, and that their share- 
 holders were taxed at the same prescribed rate as the shareholders 
 in the National institutions — affirmed the decision. The case 
 was now brought here for review. Many shareholders in the 
 National banks in Missouri had also refused to pay the tax laid 
 under the State statute, and the present case was in the nature of 
 
SUPREME COUET, 1869. 43 
 
 Lionberger v. Rouse. 
 
 a test ease to settle its validity ; more than 1300,000 of such taxes, 
 as was said, being dependent on the judgment. 
 
 Messrs. Evarts and Broadhead, for plaintiff in error. 
 
 Messrs. Blair and Dick, contra. 
 
 Mr. Justice Davis deliyered the opinion of the court. 
 
 This case has received the careful consideration of the court, as 
 well on account of the principle involved, as of the large amount 
 of money dependent on the decision of the suit. 
 
 It is no longer an open question in this court, since the decision 
 in the case of Van Allen v. The Assessors, 3 Wallace, 573,* that 
 the shareholders in a National bank are subject to State taxation, 
 although the entire capital of the bank be invested in the bonds of 
 the United States, which cannot be taxed by State authority. The 
 difBoulties which have arisen since that decision do not relate to 
 the abstract right of taxation, but grow out of the supposed con- 
 flict of State legislation with the provisions of the act of Congress 
 on the subject. The forty-first section of the act of Congress of 
 3d of June, 1864 (13 Statutes at Large, 111), placing these shares 
 within the reach of the taxing power of the States, annexed two 
 conditions to the exercise of the power. The State was forbidden 
 to tax them higher than it taxed other moneyed capital in the 
 hands of its own citizens, or to impose on them a tax exceeding 
 the rate imposed upon the shares in any of the banks organized 
 under State authority. If there was no discrimination in these 
 particulars, the State could lawfully tax shares in the National 
 banks. It is conceded the tax exacted from the plaintiff in error 
 was not greater than was assessed on other moneyed capital belong- 
 ing to individuals or corporations,but it is claimed that it is higher 
 than the rate paid by the State banks. 
 
 And this brings us to the consideration of the main question in 
 the case. It is contended that the tax in question is invalid, be- 
 cause the two State banks chartered in 1857 which did not, like 
 the remaining eight, become National banks, cannot be taxed more 
 highly than one per cent, while the assessment of the shares of 
 the plaintiff in error equals nearly two per cent. It is not denied 
 that these two banks hold a very inconsiderable portion of the bank- 
 
 Ante, p. 1. 
 
44 UNITED STATES 
 
 Lionberger v. Rouse. 
 
 ing capital of the State, and that the shares of all other associa- 
 tions in the State (there being many), with all the priyileges of 
 banking except the power to emit bills, are taxed like the shares 
 in National banks, but it is claimed the proviso in the forty-first 
 section of the National Banking Act, imposing a limitation on the 
 power of the States, has reference alone to banks of issue. To as- 
 certain the sense in which the word"i)ank" is used in the proviso to 
 this section, it is necessary to recur to the mischief which Congress 
 desired to guard against. The National banks were established to 
 provide a National currency, at a time when the State banks fur- 
 nished the entire paper circulation of the country. In providing 
 a system by which the States, where National banks were located 
 and did business, could tax their shares, it was important, as their 
 notes came in competition with State bank paper, that there should 
 be no unfavorable discrimination against them. It was easy to 
 see that an unfriendly State could legislate so as to drive them out 
 of circulation, and this consideration induced Congress to limit 
 the State power of taxation in two particulars. In declaring that 
 National bank shares should be taxed like other moneyed capital, 
 and that no burdens should be imposed on them from which State 
 banks were exempt, all was done that the necessity of the case re- 
 quired. There was nothing to fear from banks of discount and 
 deposit merely, for in no event could they work any displacement 
 of National bank circulation. It seems, therefore, clear that the 
 proviso to the forty-first section was meant by Congress to apply 
 to banks of issue. It is proper in this connection to observe that 
 the changed condition of the banking interests of the country has 
 been the occasion of further legislation by Congress on this sub- 
 ject, and that now the power of State taxation over the shares of 
 National banks is subject only to the restriction that the taxation 
 shall not be at a greater rate than is assessed upon other moneyed 
 capital in the hands of individual citizens. 15 Statutes at Large, 
 p. 34. 
 
 Having determined that Congress, in imposing conditions on the 
 power of the State to tax, had reference to banks of circulation, 
 the question arises whether the tax in this case was invalid because 
 of the status of the two banks left in Missouri. According to the 
 words of the law the tax was not warranted, but did Congress in- 
 tend that the law should have such an effect ? Did it contemplate 
 that the shares of National banks should escape taxation, if the 
 
SUPEEMB COURT, 1869. 45 
 
 Lionberger v. Rouse. 
 
 State complied, so far as it had the ability to do so, with the require- 
 ments of the forty-first section of the National Banking Act ? In 
 our opinion the answers to these inquiries must be in the negative. 
 It is a universal rule in the exposition of statutes that the intent of 
 the law, if it can be clearly ascertained, shall prevail over the let- 
 ter, and this is especially true where the precise words, if con- 
 strued in their ordinary sense, would lead to manifest injustice. 
 Dwarris on Statutes, chap. 13; Perry v. Skinner, 3 Mees. & Wels. 
 471; Stacker v. Warner, 1 C. B. 149. 
 
 It is very clear that Congress, in conceding to the States the 
 right to tax, adopted a measure which it was supposed would 
 operate to restrain them from legislating adversely to the interests 
 of the National banks. The measure itself had reference to pros- 
 pective legislation by the States, and its object was accomplished 
 when the States conformed, bo far as practicable, their revenue 
 systems to it. Each conformity was required, if attainable, but the 
 law-making power did not intend such an absurd thing, as that the 
 power of the State to tax should depend on its doing an act, which 
 it had obliged'itself not to do. It was well known at the time, and 
 Congress must be supposed to have legislated on this subject with 
 reference to it, that States, by contract with individuals or corpora- 
 tions, could grant away the right of taxation, and that this power 
 had been frequently exercised. It was equally within the knowl- 
 edge of Congress that the policy on this subject varied in different 
 States; while some of them retained in their own hands the power 
 of taxation over all species of property, except such as were de- 
 voted to religious or charitable purposes, others had parted with it to 
 interests of a purely business character, like banks and railroads- 
 Can it be supposed that Congress, in this condition of things in 
 the country, meant to confer a privilege by one section of a law 
 which by another it made practically unavailable ? If the con- 
 struction contended for by the plaintiff in error be allowed, then a 
 State so unfortunate as to have a single bank, whose shareholders 
 are exempt by contract from taxation in the manner provided by 
 Congress, can derive no benefit from the power given to tax the 
 shares of National banks. And this further consequence would 
 follow, that the shareholders of National banks located in one State 
 would escape all taxation, while those whose property was invested 
 in banks in a different locality would have to contribute their full 
 share of the public burdens. This court will not impute to Con- 
 
46 UNITED STATES 
 
 Lionberger v. Bouse. 
 
 gress a purpose that would lead to such manifest injustice, in the 
 absence of an express declaration to that eSect. Without pursuing 
 the subject further, it is enough to say, in our opinion, Congress 
 meant no more by the second limitation in the proviso to the forty- 
 first section of the National Banking Act, than to require of each 
 State, as a condition to the exercise of the power to tax the shares 
 in National banks, that it should, as far as it had the capacity, 
 tax in like manner the shares of banks of issue of its own creation. 
 
 Testing the case in hand by this rule, it is apparent that the tax 
 complained of was properly assessed and collected. Missouri has 
 complied, so far as it had the ability to do it, with the demands of 
 the law. 
 
 The legislature, as soon as the National banking system was 
 created, passed a law enabling the ten banks of issue in the State to 
 wind up their business, in order that their shareholders could, if they 
 chose, transfer their interests to the new system. Eight of these 
 banks availed themselves of the privilege, surrendered their char- 
 ters as State corporations, and became National bank associations. 
 Two of them declined the proposition tendered by the State, and 
 are still doing business in St. Louis. There is no way the State 
 could compel them to relinquish their charters, nor has it the power 
 to tax their stockholders on their shares of stock. Having con- 
 tracted with these banks to accept from them annually, in lieu of 
 all taxes, one per cent, on their paid-in capital stock, it cannot 
 turn around and assess a tax on the shareholders. As the State 
 did all that it could to conform its legislation to the requirements 
 of the law, it was therefore in a condition to impose the tax in 
 question on the shares of stock held by the plaintiff in error. 
 
 It is objected that the mode of assessment provided by the gen- 
 eral revenue law of the State is inconsistent with the provisions of 
 the act of Congress of June 3d, 1864, as it requires the tax assessed 
 on the shares of stock, to be paid by the corporations respectively, 
 instead of the individual shareholders. This was one of the ques- 
 tions in the case of the National Bank v. Commonwealth, decided 
 at this term, supra, 34, and it was there held that this mode of as- 
 sessment was not inconsistent with the terms of the law, but in all 
 respects unobjectionable. It is unnecessary to repeat the argument 
 presented in that case, or to consider the point further, as we see 
 no reason to question the soundness of that decision. 
 
 Judgment affirmed. 
 
SUPREME COURT, 1870. 47 
 
 Merchants' National Bank v. State National Bank. 
 
 Merchants' National Bank v. State National Bank. 
 
 (10 Wallace, 604.) 
 Ceiiified checks — Power of cashier to certify — Place of bunneas of banks. 
 
 A certificate of a bank that a check is good is equivalent to an acceptance ; it 
 implies that the check is drawn upon sufficient funds in thp hands of the 
 drawee, that they have been set apart for Its satisfaction, and that they shall 
 he so applied whenever the check is presented for payment. (See note, p, 
 61.) 
 
 National banks have the power to certify checks, and this power may be exer- 
 cised by the cashier without special authorization. The directors may 
 limit his exercise of this power as they deem proper, but such limitation 
 will not affect a person ignorant thereof who deal with the cashier in re- 
 lation to matters apparently within the scope of his power.* (See note, p. 
 61) 
 
 The provision of the National Bank Act requiring " the usual business " of 
 the banks to be transacted " at an office or banking-house in the place speci- 
 fied in its organization certificate," does not prevent the purchase of coin by 
 one bank at the banking-house of another. 
 
 M. and S., who was cashier of defendants' bank, went to plaintiffs' bank and 
 bought gold, paying for it by M.'s checks on defendants' bank, which S., as 
 such cashier, certified to be " good." The defendants' bank refused to pay 
 the checks, alleging that the cashier had no authority to certify them. It 
 was not shown what became of the gold. Both banks had power to buy 
 and sell coin ; and defendants' by-laws conferred upon their cashier large 
 general powers, although the power to certify checks or to buy gold was 
 not specifically mentioned. Cashiers of other banks in the same locality 
 testified that they exercised the same powers, and were authorized to bor- 
 row and lend the moneys of their bank of and to each other, and to pledge the 
 credit of their banks; and that these transactions were uniformly con- 
 ducted ou the faith of the cashier's implied powers. There was no proof 
 that either S. or any of them had ever certified checks or purchased gold. 
 Seld, 1. That if the gold actually went into defendant's bank, the bank was 
 liable for money had and received, irrespective of the cashier's authority. 
 
 * The present Revised Statutes of Any check so certified by duly author-, 
 
 the United States enact as follows : ized officers shall be a good and valid 
 
 "Sec 5208. It shall be unlawful for obligation against the aasooiatiou; but 
 any officer, clerk, or agent of any Na- the act of any officer, clerk, or agent 
 tional banking association to certify of any association, in violation of this 
 any check drawn upon the association section, shall subject such bank to the 
 unless the person or company drawing liability and proceedings on the part 
 the check has on deposit with the as- of the Comptroller as provided for in 
 sociation, at the time such check is section fifty-two hundred and thirty- 
 certified, an amount of money equal four." 
 to the amount specified in such check. 
 
48 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 2. If it did not, it wag a question for the jury under the evidence of the 
 powers exercised by the cashier and the usages of banks, whether his power 
 to bind the bank by his contract might not fairly be inferred, applying the 
 rule that where an innocent party deals with a corporation unaware of any 
 defect in its agent's authority, and there is nothing to excite suspicion, if 
 the contract can, in fact, be valid under any circumstances, the party has a 
 right to presume their existence, and the corporation is estopped to deny it. 
 
 EEROE to the Circuit Court for the District of Massachusetts, 
 in an action by the Merchants' National Bank against the 
 State National Bank, upon three checks of Mellen, Ward & Co., 
 amounting to $600,000, drawn on the latter bank and marked 
 "good" by its cashier. The opinion of the court states the facts. 
 
 Messrs. S. Bartlett, J. Q. Abbott and William M. Evarts, for the 
 plaintiff in error, the Merchants' National Bank. 
 
 Messrs. B. R. Curtis, G. B. Goodrich and B. F. Thomas, contrg,. 
 
 Mr. Justice Swatnb delivered the opinion of the court. 
 
 This is a writ of error to the Circuit Court of the United States 
 for the District of Massachusetts. The plaintiff in error was the 
 plaintiff in the court below. It appears, by the bill of exceptions, 
 that upon the evidence in behalf of the plaintiff being closed, the 
 defendants' counsel moved the court to instruct the jury that it 
 was not suflBcient to warrant them to find a verdict for the plain- 
 tiff upon either of the counts in the declaration. This instruction 
 was given. The jury found for the defendant. The plaintiff ex- 
 cepted, and has brought that instruction here for review. This 
 renders it necessary to examine the entire case as presented in the 
 record. According to the settled practice in the courts of the 
 United States, it was proper to give the instruction of it here 
 clear that the plaintiff could not recover. It would have been idle 
 to proceed further when such must be the inevitable result. The 
 practice is a wise one. It saves time and costs ; it gives the cer- 
 tainty of applied science to the results of judicial investigation; it 
 draws clearly the line which separates the provinces of the judge 
 and the jury, and fixes where it belongs the responsibility which 
 should be assumed by the court. The facts disclosed in the bill of 
 exceptions are neither numerous nor complicated. The defendant 
 called no witnesses. There is no conflict in the testimony. The 
 questions which it is our duty to examine are questions of law. 
 None are made upon the pleadings, and it is unnecessary to consider 
 
SUPREME COUET, 1870. 49 
 
 Merchants' National Bank v. State National Bank. 
 
 them. It is sufficient to remark, that the declaration is so framed 
 as to meet the case in every legal aspect which it can assume. 
 
 On the 26th of February, 1867, Fuller, the plaintiff's cashier, re- 
 ceived from the Second National Bank of Boston $200,000 of gold 
 certificates, and paid the bank, upon their delivery, the amount of 
 their face and a premium of twenty-five per cent. Payment was 
 made in currency and legal tender notes. The next day he received 
 from the same bank $200,000 more of like certificates, and paid for 
 them at the same rate in currency and a ticket of credit by the 
 Merchants' Bank in favor of the National Bank for $175, 000. Both 
 transactions were pursuant to an arrangement with Mellen, Ward 
 & Co., brokers in Boston. The market premium upon gold at that 
 time was 40 per cent. It was understood between Fuller, the cash- 
 ier, and Mellen, Ward & Co., that the latter might receive the 
 same amount of gold from the Merchants' Bank at any time there- 
 after by paying the amount advanced, compensation for the trouble 
 the bank had incurred, and interest at the rate of six per cent. 
 There had been like- transactions upon those terms between the 
 parties prior to that time. The president of the bank was con- 
 sulted in advance as to both the purchases from the Second Na- 
 tional Bank, and approved them. The following testimony is 
 taken from the record: 
 
 "George H. Davis testified as follows: I am the paying teller 
 of the Merchants' Bank. From about the 1st of January, 1867, 
 and previous to the 23d of February, the bank several times received 
 gold, or gold certificates from Mellen, Ward& Co., for which it 
 paid currency at the rate of $125 for $100 in gold. At that time 
 they had deposited in the bank about $90,000 in gold. No note, mem- 
 orandum, or check was taken connected with it in any way. The 
 gold was added to the gold of the bank ; on my cash book it was 
 added to the item of gold, and the gold was mixed with the 
 gold of the bank in the vault. If it consisted of certificates, they 
 were put in a pocketbook kept in my trunk with other certificates 
 and bills. The paying teller's book was put in, and from the en- 
 tries in it on the 26th, 27th, and 28th of February, 1867, it ap- 
 peared that the gold received from Mellen, Ward & Co . was added 
 to the gold of the bank." 
 
 On the 28th day of February, Carter, of the firm of Mellen, 
 Ward & Co., and Smith, the cashier of the State Bank, called to- 
 7 
 
•50 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 gether at the Merchants' Bank. Garter said to Fuller, " We have 
 come in for gold." Smith, the cashier, said, "We have come to 
 get an amount of gold," and that he would "pay for it by certify- 
 ing these checks," referring to two papers which Carter held in 
 his hand. The teller handed EuUer 84 gold certificates of $5,000 
 each, making the sum of 1420,000. Puller announced the amount. 
 Smith said that was the amount wanted, and the amount covered 
 by the checks. He received the certificates, certified the checks, 
 and handed them over to the plaintifE's cashier. They were drawn 
 by Mellen, Ward & Co., upon the State National Bank in favor of 
 Fuller, the plaintiff's cashier, or order, and were certified " Good ; 
 C. H. Smith, cashier." One was for $350,000, and the other for 
 $275,000. Smith thereupon left the bank with the certificates in 
 his possession Nothing was said by Fuller to Carter, or by Carter 
 to Fuller, in relation to the checks, and Fuller did not know what 
 checks Smith referred to until they were delivered to him. Smith 
 did not certify or deliver the checks until he had got possession 
 and control of the funds upon which his certificates were appar- 
 ently founded, and this was known to the plaintiff's agent when 
 he received the checks. . Later on the same day Smith and Carter 
 called again at the Merchants' Bank. Fuller was absent. Smith 
 received $60,000 more of gold and gold certificates from the teller, 
 and gave in return a check for $75,000, drawn by Mellen, Ward & 
 Co. on the State Bank, payable to " gold or bearer." Like the two 
 previous checks, it was certified " Good ; C. H. Smith, cashier." 
 This arrangement was in pursuance of the same agreement as that 
 under which the gold certificates were delivered in the earlier part 
 of the day. Both transactions were alike within its scope. 
 
 On the first of March Havens, the president of the Merchants' 
 Bank, called at the State Bank and complained that Smith had not 
 paid the checks. Smith said he was going out to get the money. 
 Havens inquired, " Didn't you have the money — the gold ? Were 
 not gold certificates delivered to you?" He answered, "Yes; I 
 had them here, but they are not here now. I am going out to get 
 it, and will come in and attend to it." Subsequently, in the same 
 conversation, he said, "You hold the State Bank." Later in the 
 day Havens called upon Stetson, the president of the State Bank. 
 Stetson denied that Smith was authorized to certify the checks, 
 and appealed to a director who was present. The director was 
 silent. In an account which Fuller rendered to Mellen, Ward & 
 
SUPEBME COUET, 1870. 51 
 
 Merchants' National Bank v. State National Bank. 
 
 Co., after their failure, showing the disposition of Tarious collat- 
 erals which Mellen, Ward & Co. had deposited from time to time 
 with the Merchants' Bank, the amount paid for gold was put down 
 as a loan, and interest was charged, but in his testimony before 
 the jury he denied that the money was loaned, and insisted that 
 the gold was bought by the Merchants' Bank. The agreement be- 
 tween Mellen, Ward & Co., and the Merchants' Bank rested wholly 
 in parol. No written Youcher was given or received on either side 
 touching any of the transactions between the parties. The record 
 discloses nothing else in this connection which is material to con- 
 sider.. 
 
 The State Bank was organized under tl;e act of Congress " to 
 provide a National currency," etc, of the 3d of June, 1864 (13 Stat, 
 at Large, 99). The eighth section of that act authorizes such asso- 
 ciations, by their directors, to appoint a cashier and other officers, 
 and to exercise, "under this act, all such incidental powers as shall 
 be necessary to carry on the business of banking by discounting 
 and negotiating promissory notes, drafts, bills of exchange, and 
 other evidences of debt ; by receiving deposits, by buying and 
 selling exchange, coin, and bullion ; by loaning money on personal 
 security ; by obtaining, issuing, and circulating notes, according 
 to the provisions of this act," etc. It is further provided that the 
 directors may, by by-laws, regulate the manner in which its busi- 
 ness shall be conducted and its franchises enjoyed ; and that its 
 general business shall be transacted at an office " located in the 
 place specified in its organization certificate. " 
 
 The 5th of the articles of association authorizes the board of 
 directors to appoint a cashier and such other officers as may be 
 necessary, and to define their duties. The 7th by-law declares that 
 the cashier " shall be responsible for the moneys, funds, and other 
 valuables of the bank, and shall give bond," etc. The 17th by-law 
 requires that all " contracts, checks, drafts, receipts, etc., shall be 
 signed by the cashier or by the president, and that all indorsements 
 necessary to be made by the bank shall be under the hand of the 
 cashier or president," unless absent. 
 
 The by-laws contain nothing further upon this subject. The 
 directors failed to define more specifically the powers and duties 
 of the cashier. 
 
 Smith, the defendant's cashier, exercised habitually very large 
 powers without any special delegation of authority. An account 
 
52 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 was kept on the books of the bank with him as cashier, which 
 represented these transactions, and printed blank checks were kept 
 in the bank to facilitate them. The checks given by him for the 
 proceeds of bills discounted and for the purchase of exchange 
 during the five months preceding the 23d of February, 1867, 
 amounted in the aggregate to two and a half million of dollars. 
 This was exclusive of his clearing-house checks. His checks for 
 money borrowed of other banks, during the six months preceding 
 the same 23d of February, amounted to one million five hundred 
 and forty-seven thousand dollars. A large number of the cashiers 
 of other banks, in Boston, were examined, and testified that they 
 exercised the same powers under like circumstances. There is no 
 proof that either they or Smith ever certified checks. It is not 
 shown what became of the gold. Perhaps some light is thrown on 
 the subject by the remark of the president of the Merchants' Bank 
 to the president of the State Bank, " that the latter had better go to 
 the sub-treasury, and that he would perhaps find his gold there. " 
 We find no reason to doubt that both banks, as represented by their 
 cashiers, acted in entire good faith throughout the transactions, 
 until they were closed by the delivery of the last of the certified 
 checks. Neither could then have anticipated the diflBculties and 
 the conflict which subsequently arose. 
 
 The first question presented for our consideration is, what was 
 the title of the plaintiff, and what were the rights of Mellen, Ward 
 & Co., in respect to the gold certificates delivered by the Second 
 • National Bank to the Merchants' Bank ? No very searching 
 anlysis of the facts disclosed is necessary to enable us to find a 
 satisfactory answer to this inquiry. It does not appear that Mellen, 
 Ward & Co. had any connection with the certificates received from 
 the Second National Bank until after the plaintifE took the action 
 which they invoked, and came into possession of the property. 
 
 The Merchants' Bank applied for them, bought them, paid 
 for them, received them, and deposited them with its other 
 assets of like character. It does not appear that any special 
 mark was put upon them, or that any thing was done to distin- 
 guish them from the other effects of the bank in which they were 
 mingled. Upon the face of the transaction it was a simple sale 
 by the Second National Bank, whereby the entire title and 
 property became vested in the plaintiff. But gold was then at a 
 premium of 40 per cent in currency. The Merchants' Bank paid 
 
StrPKEME COUKT, 1870. 53 
 
 Merchants' National Bank y. State National Bank. 
 
 but 35, according to the contract between the bank and Mellen, 
 Ward & Co. The latter were to pay, and it is to be presumed did 
 pay the additional 15 per cent. 
 
 This was a part of the consideration upon which the Merchants' 
 Bank entered into the contract. It is eyident that the bank did 
 not agree to deliyer to Mellen, Ward & Co. the identical gold cer- 
 tificates which were purchased, but gold, or its equivalent in certifi- 
 cates to the same amount, and any gold or any certificates would 
 have satisfied the contract. The bank cannot, therefore, be re- 
 garded as holding the certificates in pledge. The want of the ele- 
 ment, that the identical certificates were to be delivered, is conclu- 
 sive against that view of the subject. If Mellen, Ward & Co. had 
 tendered performance and called for gold, and the bank had failed 
 to respond, Mellen, Ward & Co. could have sustained an action for 
 the breach of the contract. But they could not have maintained 
 detinue, trover, or replevin against the bank. The real character 
 of the transaction was, that the bank took the title and entire 
 property, but Mellen, Ward & Co. had the right to purchase from 
 the bank the like amount of gold or its equivalent in certificates, 
 according to the terms of the contract, which were that they 
 should pay what the bank paid, compensation for its trouble and 
 interest from the time the purchase by the bank was made. 
 
 In respect to the $60,000 of gold and gold certificates delivered 
 by the teller in the absence of the cashier, and excess of gold 
 certificates over $400,000 delivered by the cashier, the facts 
 are substantially the same as those in regard to the $400,000, ex- 
 cept that the excess of certificates, and what was delivered by the 
 teller, had reference to gold and gold certificates deposited in the 
 bank by Mellen, Ward & Co. This difference is not material. 
 With this qualification the same remarks apply which have been 
 made touching the $400,000 of certificates, and we are led to the 
 same legal conclusions. 
 
 The transactions between the State Bank and the Merchants' 
 Bank were apparently of the same character as that between the 
 Merchants' Bank and the Second ]N"ational Bank. What the un- 
 derstanding between Mellen, Ward & Co. and the defendant was is 
 not disclosed in the evidence. But it is fairly to be inferred that 
 it was the same as that between them and the Merchants' Bank. 
 When the arrangement was proposed by Carter to Fuller on the 
 22d of February, Carter said that " when the gold was taken from 
 
54 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 the Merchants' Bank he thought it would go through some other 
 bank or banks." The assent of Mellen, Ward & Co. to the sale to 
 the State Bank by the Merchants' Bank extinguished their claim 
 upon the latter. The Merchants' Bank certainly had a title of 
 some kind, and whatcTer it was it passed to the State Bank, unless 
 the contract was void, because the State Bank had no corporate 
 power, or its cashier had no authority to make the purchase. The 
 act of Congress expressly authorizes the banks created under it to 
 buy and sell coin. No question of ultra vires is therefore iuTolved. 
 
 If the Merchants' Bank held the certificates as a pledge it had 
 a special property which might be sold and assigned. The as- 
 signee in such cases becomes invested with all the legal rights 
 which belonged to the assignor. Such is the rule of the common 
 law, and it has subsisted from an early period. Mores v. Conham, 
 Owen, 133 ; Anon., 3 Salkeld, 533 ; Goggs v. Bernard, 3 id. 368 ; 
 WTiitakerY. Sumner, 20 Pickering, 399, 405 ■ Thompson y. Patirick, 
 4 Watts, 415 ; Story on Bailments, § 334. 
 
 But we are entirely satisfied with the other view we have ex- 
 pressed upon the subject. Modus et conventio vincunt legem. 
 
 It is insisted by the defendants' counsel that the transaction was 
 a loan to Mellen, Ward & Co. As the bank parted with its title, 
 if there were a loan in the eye of the law, it would not in any 
 wise affect the conclusions at which we have arrived. 
 
 Eecurring to the subject of the authority of the cashier of the 
 State Bank to make the purchase and excluding from considera- 
 tion for the present the certified checks, three views, we think, may 
 be properly taken of the case in this aspect: 
 
 1. If the certificates and the gold actually went into the State 
 Bank, as was admitted by Smith to Havens, then the bank was lia- 
 ble for money had and received, whatever may have been the defect 
 in the authority of the cashier to make the purchase, and this 
 question should have been submitted to the jury. 
 
 3. It should have been left to the jury to determine whether, 
 from the evidence as to the powers exercised by the cashier, with 
 the knowledge and acquiescence of the directors, and the usage of 
 other banks in the same city, it might not be fairly inferred that 
 Smith had authority to bind the defendant by the contract which 
 he made with the Merchants' Bank. 
 
 3. Where a party deals with a corporation in good faith — the 
 transaction is ultra vires — and he is unaware of any defect of author- 
 
SUPREME COURT, 1870. 55 
 
 Merchants' National Bank v. State National Bank. 
 
 ity or other irregularity on the part of those acting for the corpora- 
 tion, and there is nothing to excite suspicion of such defect or ir- 
 regularity, the corporation is bound by the contract, although such 
 defect or irregularity in fact exists. 
 
 If the contract can be yalid under any circumstances, an inno- 
 cent party in such a case has a right to presume their existence, 
 and the corporation is estopped to deny them. 
 
 The jury should have been instructed to apply this rule to the 
 evidence before them. 
 
 The principle has become axiomatic in the law of corporations, 
 and by no tribunal has it been applied with more firmness and 
 vigor than by this court. Supervisors v. Schench, 5 Wall. 772 ; 
 Xnox Co. V. Aspinwall, 21 How. 539 ; Bissell v. Jeffersonville, 24 id. 
 288 ; Moran v. Commissioners, 2 Black, 722 ; QelpcTce v. Dubuque, 
 1 Wall. 203 ; Mercer Co. v. Hackett, id. 93 ; Mayor v. Lord, 9 id. 
 414 ; Royal British Bank v. Turquand, 6 Ellis & Blackburn, Q. B. 
 & Ex. 327 ; TJie Farmers' Loan and Trust Co. v. Curtis, 3 Selden, 
 466 ; Stoney v. American Life Ins. Co., 11 Paige, 635 ; Society for 
 Sapings v. New London, 29 Conn. 174 ; Commonwealth v. City of 
 Pittsburg, 34 Penn. St. 497 ; Commonwealth v. Allegheny County, 
 37 id. 287. 
 
 Corporations are liable for every wrong of which they are guilty, 
 and in such cases the doctrine of ultra vires has no application. 
 Philadelphia S Baltimore Railroad Co. v. Quigley, 21 How. 209 ; 
 Green v. London Omnibus Co., 7 C. B. (N. S.) 290 ; Life and Fire 
 Ins. Co. v. Mechanics' Fire Ins. Co., 7 Wend. 31. 
 
 Corporations are liable for the acts of their servants while en- 
 gaged in the business of their employment in the same manner and 
 to the same extent that individuals are liable under like circum- 
 stances. Ranger v. The Great Western Railway Co., 5 House of 
 Lords Oases, 86 ; Thayer v. Boston, 19 Pick. 511 ; Frankfort Bank. 
 v. Johnson, 24 Me. 490; Angell & Ames on Corporations, §§ 382, 388. 
 
 Estoppel in pais presupposes an error or a fault and implies an 
 act in itself invalid. The rule proceeds upon the consideration that 
 the author of the misfortune shall not himself escape the conse- 
 quences and cast the burden upon another. Swan v. The British 
 North Australian Co., 7 Hurlstone & Norman, 603 ; Hern v. 
 Nichols, 1 Salkeld, 289. Smith was the cashier of the State Bank. 
 As such he approached the Merchants' Bank. The bank did not 
 approach him. Upon the faith of his acts and declarations it 
 
56 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 parted with its property. The misfortune occurred through him, 
 and as the case appears on the record, upon the plainest principles 
 of justice the loss should fall upon the defendant. The ethics and 
 the law of the case alike require this result. Dezell v. Odell, 3 Hill, 
 316. 
 
 Those who created the trust appointed the trustee and clothed 
 him with the power that enabled him to mislead, if there were any 
 misleadings, ought to suffer rather than the other party. Farmers 
 and Mechanics' Bank of Kent Oo. v. Butchers and Drovers' Bank, 
 16 N. Y. 133 ; Welland Ganal Go. v. Hathaway, 8 Wendell, 480. 
 
 In the Bank of the United States y. Davis, 3 Hill, 465, Nelsok, 
 Chief Justice, said: " The plaintiffs appointed the director and held 
 him out to their customers and the public as entitled to confidence 
 They placed him in a position where he has been enabled to com- 
 mit this fraud." 
 
 The director has fraudulently appropriated the proceeds of a bill 
 discounted for the drawer. It was held the drawer was not liable. 
 
 The reasoning of Justice Selden' in the Farmers and Mechanics' 
 Bank of Kent County v. The Butchers and Drovers' Bank, supra, is 
 also strikingly apposite in the case before us. He said: "The 
 bank selects its teller and places him in a position of great re- 
 . sponsibility. Persons having no voice in his selection are obliged 
 to deal with the bank through him. If, therefore, while acting in 
 the business of the bank and within the scope of his employment, 
 so far as is known or can be seen by the party dealing with him, 
 he is guilty of misrepresentation, ought not the bank to be respon- 
 sible?" 
 
 The same principle was applied in the New York and New Haven 
 Railroad Oo. v. Schuyler, 38 Barb. S. C. 536 ; S. 0. affirmed, 
 34 N. Y. 30. 
 
 It was explicitly laid down by Lord Holt, in Hern v. Nichols, 1 
 Salkeld, 389. He there said: "Eor seeing somebody must be a 
 loser by this deceit, it is more reason that he that employs and 
 puts trust and confidence in the deceiver should be a loser than 
 a stranger, and upon this the plaintiff had a verdict." 
 
 Smith, by his conduct, if not by his declaration, avowed his au- 
 thority to buy the certificates and gold in question from the Mer- 
 chants' Bank, and the bank, under the circumstances, had a right 
 to believe him. 
 
SUPEEME COUKT, 1870. 57 
 
 Merchants' National Bank v. State National Bank. 
 
 We have thus far examined the controversy as if the certified 
 checks were void or had not been given. It remains to consider 
 that branch of the case. Bank checks are not inland bills of ex- 
 change, but have many of the properties of such commercial paper; 
 and many of the rules of the law merchant are alike applicable to 
 both. Each is for a specific sum payable in money. In both cases 
 there is a drawer, a drawee, and a payee. Without acceptance, no 
 action can be maintained by the holder upon either against the 
 drawer. The chief points of difference are that a check is always 
 drawn on a bank or banker. No days of grace are allowed. The 
 drawer is not discharged by the laches of the holder in the present- 
 ment for payment, unless he can show that he has sustained some in- 
 jury by the default. It is not due until payment is demanded, and 
 the statute of limitation runs only from that time. It is by its face 
 the appropriation of so much money of the drawer in the hands of 
 the drawee to the payment of an admitted liability of the drawer. 
 It is not necessary that the drawer of a bill should have funds in 
 the hands of the drawee. A check in such a case would be a fraud. 
 Grant on Banking, 89, 90; Keen v. Beard, 8 0. B. (N. S.) 373; 
 Serle v. Norton, 2 Moody & Eobinson, 404, n.; Boehm v. Sterling, 
 1 Tenn. 430; Alexander v. Berchfield, 7 Manning & Granger, 1067. 
 
 All the authorities, both English and American, hold that a 
 check may be accepted, though acceptance is not usual. Bobson v. 
 Bennett, 2 Taunton, 395; Grant on Banking,89 ; Ohitty on Bills (10th 
 ed.), 261 ; Boyd v. Emmerson, 2 Adolphus and Ellis, 184 ; Kilsly 
 V. Williams, 6 Barnewall and Alderson, 816 ; Story on Promissory 
 Notes, §§ 489, 490. By the law merchants of this country, the 
 certificate of the bank that a check is good is equivalent to accept- 
 ance. It implies that the check is drawn upon sufficient funds in 
 the hands of the drawee, that they have been set apart for its satis- 
 faction, and that they shall be so applied whenever the check is pre- 
 sented for payment. It is an undertaking that the check is good 
 then and shall continue good, and this agreement is as binding on 
 the bank as its notes of circulation, a certificate of deposit payable 
 to the order of the depositor, or any other obligation it can assume. 
 The object of certifying a check, as regards both parties, is to 
 enable the holder to use it as money. The transferee takes it with 
 the same readiness and sense of security that he would take the 
 notes of the bank. It is available also to him for all the purposes 
 of money. Thus it continues to perform its important functions 
 
58 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 until in the course of business it goes back to the bank for re- 
 demption and is extinguished by payment. 
 
 It cannot be doubted that the certifying bank intended these 
 consequences, and it is liable accordingly. To hold otherwise would 
 render these important securities only a snare and delusion. 
 
 A bank incurs no greater risk in certifying a check than in giv- 
 ing a certificate of deposit. In weM-regulated banks the practice 
 is at once to charge the check to the account of the drawer, to 
 credit it in "a certified check account," and when the dheck is 
 paid, to debit that account with the amount. Nothing can be sim- 
 pler or safer than this process. 
 
 The practice of certifying checks has grown out of the business 
 needs of the country. They enable the holder to keep or convey 
 the amount specified with safety. They enable persons not well 
 acquainted to deal promptly with each other, and they avoid the 
 delay and risks of receiving, counting, and passing from hand to 
 hand large sums of money. 
 
 It is computed by a competent authority that the average daily 
 amount of such checks in use in the city of New York, throughout 
 the year, is not less than one hundred millions of dollars. 
 
 We could hardly inflict a severer blow upon the commerce and 
 business of the country than by throwing a doubt upon their 
 validity. 
 
 Our conclusions as to their legal effect are supported by authori- 
 ties of great weight. Bickford v. First National Bank, 42 111. 
 238 ; Willets v. Phoenix Bank, 2 Duer, 131 ; Barnet v. Smith, 10 
 Foster (N. H.), 256 ; Meads v. Merchants' Bank, 25 N. Y. 146 ; 
 Farmers and Mechanics' Bank v. Butchers and Drovers' Bank, 4 
 Duer, 219; affirmed, 14 N. Y. 624; Brown v. Leckie et al., 43 
 111. 497; Girard BankY. Bank of Penn Township, 39 Penn. St. 92. 
 
 Congress has made them the subject of taixation by name. 13 
 Stat, at Large, 278. 
 
 But it is strenuously denied that the cashier has authority to 
 certify the checks in question. To this there are two answers : 
 
 1. In considering the question of his authority to buy the gold, 
 the evidence that he had given his checks for loans to his bank, 
 and for the proceeds of discounts, was fully considered. Our 
 reasoning and the authorities cited upon that subject apply here 
 with equal force. We need not go over the same ground again. 
 The questions whether the requisite authority was not inferable, and 
 
SUPEEME COURT, 1870. 59 
 
 Merchants' National Bank v. State National Bank. 
 
 whether the principle of estoppel in pais did. not apply, should in 
 this connection also have been left to the jury. 
 
 2. As before remarked, the organic law expressly allowed the bank 
 to buy coin and bullion. We have also adverted to the provisions 
 of the by-laws, that the cashier shall be responsible " for the moneys, 
 funds, and all other valuables of the bank ; " and that " all con- 
 tracts, checks, drafts, receipts, etc., shall be signed either by the 
 cashier or president" The power of the bank to certify checks 
 had also been sufficiently examined. The question we are now 
 considering is the authority of the cashier. It is his duty to re- 
 ceive all the funds which come into the bank, and to enter them 
 upon its books. The authority to receive implies and carries with 
 it authority to give certificates of deposit and other proper vouch- 
 ers. Where the money is in the bank he has the same authority to 
 certify a check to be good, and charge the amount to the drawer, 
 appropriate it to the payment of the check, and make the proper 
 entry in the books of the bank. This he is authorized to do, vir- 
 tute officii. The power is inherent in the office. Wild v. The 
 Bank of Passamaquoddy, 3 Mason, 506; Burnham v. Webster, 
 19 Me. 234 ; Elliot v. Abhott, 12 N. H. 549; Bank of Vergennes v. 
 Warren, 7 Hill, 91; Lloyd v. The West Branch Bank, 15 Penn. St. 
 172; Badger v. The Bank of Cumberland, 26 Me. 428; Bank of 
 Kentucky v. The Schuylkill Bank, 1 Pars. Select Oases,, 182; Fleck- 
 ner y. Bank of the United States, 8 Wheat. 360. 
 
 The cashier is the executive officer, through whom the whole 
 financial operations of the bank are conducted! He receives and 
 pays out its moneys, collects and pays its debts, and receives and 
 transfers its commercial securities. Tellers and other subordinate 
 officers may be appointed, but they are under his direction, and are, 
 as it were, the arms by which designated portions of various func- 
 tions are discharged. A teller may be clothed with the power to 
 certify checks, but this in itself would not afEect the rights of the 
 cashier to do the same thing. The directors may limit his authority 
 as they deem proper, but this would not afEect those to whom the 
 limitation was unknown. Commercial Bank of Lake Brie v. Ifor- 
 ton et al., 1 Hill, 5(5l; Bank of Vergennes v. Warren, 7 id. 94; 
 Beers v. Phcenix Glass Company, 14 Barb. 358; Farmers and 
 Mechanics' Bank v. Butchers and Drovers' Bank, 14 N. Y. 624 ; 
 North River Bank v. Aymar, 3 Hill, 262, 268; Barnes v. Ontario 
 Bank, 19 N. Y. 156, 166. 
 
60 UNITED STATES 
 
 Merchants' National Bank v. State 'National Bank. 
 
 The foundation upon which this liability rests was considered 
 in an earlier part of this opinion. Those dealing with a bank in 
 good faith have a right to presume integrity on the part of its 
 officers, when acting within the apparent sphere of their duties, 
 and the bank is bound accordingly. 
 
 In Barnes v. Tlie Ontario Bank, 19 N. Y. 156, the cashier had 
 issued a false certificate of deposit. « In the Farmers and Mechan- 
 ics' Bank v. Butchers and Drovers' Bank, 14 N. Y. 624; S. C, 16 
 N. Y. 133, and in Meads v. The Merchants' Bank of Albany, 25 
 N. Y. 146, the teller had fraudulently certified a check to be good. 
 In each case the bank was held liable to an innocent holder. 
 
 It is objected that the checks were not certified by the cashier at 
 his banking-house. The provisions of the act of Congress as to 
 the place of business of the banks created under it must be con- 
 strued reasonably. The business of every bank, away from its 
 office — frequently large and important — is unavoidably done at 
 the proper place by the cashier in person, or by correspondents or 
 other agents. In the case before us, the gold must necessarily 
 have been bought, if at all, at the buying or the selling bank, or 
 at some third locality. The power to pay was vital to the power 
 to buy, and inseparable from it. There is no force in this objec- 
 tion. Bank of Augusta v. Uarle, 13 Pet. 519; Pendleton v. Bank 
 of Ketitucky, 1 T. B. Monroe, 182. 
 
 It is also objected that each of the checks, after being certified, 
 required an additional stamp. The act of Congress relating to 
 the subject directs certified checks to be included in the circula- 
 tion of the bank for the purpose of taxation. 13 Stat, at Large, 
 278, ch. 173, § 110. This is a conclusive answer to the objections. 
 
 In Broiun v. London, 1 Levinz, 398, judgment in a suit upon 
 two accepted bills of exchange was arrested after verdict " entire 
 damages" were given, and the count, upon one of the bills, failed 
 to aver that by the custom of merchants and others trading in 
 England, the acceptor was obliged to pay. This was in 1671. 
 Other decisions in this class of cases, not less remarkable, are 
 familiar to those versed in the learning of thg elder reports. The 
 law merchant was not made. It grew. Time and experience, if 
 slower, are wiser law makers than legislative bodies. Customs 
 have sprung from the necessities and the convenience of busi- 
 ness, and prevailed in duration and extent until they ac- 
 
SUPEEMB COURT, 1870. 61 
 
 Merchants' National Bank v State National Bank. 
 
 quired the force of law. This mass of our jurisprudence has thus 
 grown, and will continue to grow, by successive accretions. 
 
 "We have disposed of this case as it is before us. 
 
 How far it may be changed in its essential character, if at all, 
 by a full development of the evidence on both sides in the further 
 trial, which will doubtless take place, it is not for us to anticipate. 
 
 The judgment below is reversed, and a venire de novo awarded. 
 
 Mr. Justice Miller was not present at the arguments of this 
 case, and did not participate in its decision. 
 
 Mr. Justice Cliffoed (with whom concurred Mr. Justice 
 Davis) delivered a dissenting opinion. 
 
 Note. — The ErPEOT of a Cbrtifica- ing the Bpeoification of the amount to 
 TION. — A bank by certifying a check be paid and the name and identity of 
 drawn on it warrants only the genuine- the payees, then obviously there must 
 ness of the drawer's signature and that occur an immediate and complete 
 he has the amount of the check to hia change in the modes of doing business, 
 credit. Nat. Bank of Commerce \. Nat. which would defeat and practically 
 Mechanics' ^aiiJc, 55N. Y. 311;S.C.,14 put an end to the use of certified checks. 
 Am. Rep. 232. In that case a check was For no bank under such a rule could 
 "raised" a/fer it had been certified, and safely certify a check without, in the 
 was paid as " raised." It was held that first instance, investigating its origin 
 the bank could recover back the sum so and history by inquiring of the makers 
 paid less the original amount of the and payers. The burden of such in- 
 check. And in Marine Nat. Bankv. quiries could not be borne without 
 Nat. City Sank, hQ N. Y. 67; S. C, 17 interfering with or interrupting the 
 Am. Rep. 305, the doctrine was applied other necessary business of the banks, 
 to a case where a check had been cer- and the practice of certifying checks 
 tifled after it had been "raised." There would have to be abandoned, or a staff 
 the check was fraudulently altered as of inquiries instituted in every bank 
 ti> date, name of payee, and amount, specially charged with these duties, 
 and, so altered, was certified and after- It is plain that banks, in self protection, 
 ward paid by the bank. It was held would be compelled to refuse al- 
 that the bank could recover the money together to certify checks, and that this 
 paid beyond the original amount. convenient aud useful invention of 
 
 The court said: "When a check modern business would come to an end. 
 is presented to a bank on which it is The mischief would arise from charg- 
 drawn for certification, the purpose is ingthe banks with a knowledge that in 
 to ascertain, with certainty, what the the nature of things they cannot pos- 
 bank alone can know, and this \%, sess. With their responsibility limited 
 whether the drawers of the check have to the facts within their knowledge, 
 funds sufiScient to meet it; andfurther, the practice imposes no burden upon 
 to obtain the engagement of the bank banks and subserves the convenience 
 that these funds shall not be withdrawn of commerce. No construction ought 
 from the bank by the drawers of the to be put on facts, in the usual course 
 check. To this extent the knowledge of busiuess, which wiU impose upon the 
 of the bank must of necessity enable it parties interested the necessity of im- 
 saf ely to go i n the way of assertion ; mediately altering it. For, as the 
 and its own power over its own funds question is necessarily, what did the 
 will suffice to protect it as to its obli- parties mean, we cannot without vio- 
 gation. T3ut if the doctrine contended lent construction attribute to them a 
 for in opposition to this view is correct, meaning so burdensome .that it will 
 and the certifying bank is bound to necessitate a change of the usual way 
 warrant.notonly thegenufneuessof the of doing business. Such a meaning 
 drawer's signature and the sufficiency we know they cannot have enter- 
 of their credit, but also the genuine- tained. We have been referred to 
 ness of the check in all its parts, iuclud- various expressions in different cases 
 
62 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 stating in quite positive and general those to whom the limitation was 
 terms the obligation of banks upon unknown." Commercial Bank v. No7-- 
 oertified checks : Farmers' Bank v. ton, 1 Hill, 501 ; Bank of Vergennes v. 
 Butchers" Bank, 16 N.Y.12&; First Nat. Warren, 7 Id. 91; Beers v. Phoenix 
 Bank V. Leach, h2 id. SSO; Cooke V. State Glass Co., 14 Barb. 358; Farmers and 
 Nat. Bank, id. 115. (See last two cases Mechanics' Bank v. Butchers & Dro- 
 cited hereafter in this volume.) These vers' Bank, 14 N. T. 624; Barnes v. On- 
 are to be construed with reference to tario Bank, 19 id. 156 ; Wild v. Bank 
 the facts disclosed in the oases. In of Passamaquoddy, 3 Mason, 505; 
 such cases the question has been, in Franklin Bank v. Steward, 37 Me. 519; 
 various forms, whether the bank certi- Meads v. Merchants' JBanft, 25 N. Y. 
 fying a check could defend itself upon 14e» 
 
 the ground of want of authority in the In Bank of Vergennes v. Warren, 
 certifying officer, or that the drawer supra, a creditor, in order to redeem of 
 had no funds. These being facts a bank lands sold under judgment, 
 within the knowledge of the certifying went to the banking-house during 
 bank, it was necessarily precluded business hours and paid the money to 
 from disputing its certificate. But the cashier, who accepted it and gave a 
 there is no ground of reason or au- receipt. On the question of the cash- 
 thority for extending the rule to mat- ier's authority the opinion was as fol- 
 ters not being especially within the lows : " It is said that the cashier of 
 knowledge of the certifying bank, the Farmers' Bank had no authority to 
 such as to those which form the ground transact such business ; that the plain- 
 in this case on which the bank's claim tiff should have gone to the board of 
 of immunity rests." directors. But it is enough that the 
 
 See, also, City Bank of Houston v. plaintiff went to the banking-house in 
 First Nat. Bank, 45 Texas, 203. business hours and there made the 
 
 The Supreme Court of Louisiana, payment to one of the principal agents 
 however, in Louisiana National Bank of the corporation, who, by accepting 
 V. Citizens' Bank, 1 La. Law Jour. 80, the money, professed to have author- 
 disapproved of the foregoing decision ity to receive it. His authority will be 
 andheld that "By certifying a check presumed until the contrary expressly 
 the bank bound itself to pay the amount appears. Indeed, I think it would not 
 which it said was good." defeat 'the purchase if it could be 
 
 The Powers OF Oashiebs. — Sec. 5136 shown that the cashier had been for- 
 of the Revised Statutes of the United bidden by his principals to transact 
 States provides that National banking such business. A creditor having the 
 associations shall have power among right to purchase from a corporation 
 other things: must of necessity have the right to 
 
 "Fifth, To elect or appoint direct- deal with the principal officer or agent 
 ors, and by its board of directors to of the company, who may be found at 
 appoint a president, vice-president, his place of business. To hold that the 
 cashier and other oflcers, define their creditor must go to the board of direo- 
 duties, require bonds of them and fix tors would be to put it in their power 
 the penalty thereof, dismiss such ofii- by refusing or neglecting to meet, to 
 oers or any of them at pleasure, and deprive him of a right secured to him 
 appoint oflicersto fill their places." by law." 
 
 A bank will be bound by the acts of In Wildy. Bank of POfSsamaguoddy, 
 a cashier de/oeto— that is, one who has supra, it was said that any bank choos- 
 not been appointed, or lawfully ap- ing to restrict the ordinary scope of 
 pointed to the office, but who is its cashier's authority is at perfect 
 permitted by the bank to act in liberty to do so ; but that in such case 
 that capacity. Bank of the U. S. v. it is incumbent on the bank to show, 
 Dandridge, 12 Wheat. 64; Minor v. not only that it has imposed a certain 
 Mechanics' Bank, 1 Pet. 40. restriction, but further, that the impo- 
 
 While directors may define the duties sition of such restriction is known to 
 of a cashier they cannot, so far as af- those with whom it is in the habit of 
 foots third persons, deprive him of the doing business. In Franklin Bank v. 
 powers usually appertaining to the of- Steward, supra, it is said: "His (the 
 fice. One dealing with a cashier of a cashier's) true position appears to be 
 bank within the ordinary scope of such that of a general agent tor the perform- 
 au officer's authority, has a right to ance of his official and accustomed du- 
 asaume, as against the bank, that the ties. While acting within the scope 
 officer is invested with his customary of his authority he would bind the 
 powers. In the language of the opin- bank, although he might violate his 
 ion in the foregoing case, "thedireo- private instructions." 
 tors may limit his authority as they In Cook v. The State National Bank, 
 deem proper, but this would not affect 53 N. Y. 96 ; 11 Am. Rep, 667, report - 
 
SUPREME COUET, 1870. 63 
 
 Merchants' National Bank v. State National Bank-. 
 
 ed hereafter in this volume, which wag superintendence of the banks and of the 
 an action growing out of trausaotious payments and receipts of the bank, 
 between some of the parties in the Sturges v. Bank of Circlem,lle,li-Ohio St. 
 above principal case, the Court of Ap- 153 The charge of the notes, securities 
 peals of New York said : " The bank and other funds of the bank, and of the 
 having placed the cashier in the posi- business of negotiating, managing and 
 tion which implies this inherent au- disposing of them. Wild v. Bank of 
 thority (to certify checks), those who Passamaquoddy, 3 Mason, 505. The su- 
 deal with the bank have a right to ia- periutendenoeof the collection of protes- 
 ter that he possesses it , and although ted. notes. Bank of Pennsylvania v. Reed, 
 the exercise of it in a given case may 1 W. & S. 101; the receipt of all moneys 
 not be warranted on account of the and notes of the bank, the giving up 
 existence or non-existence of some ex- of discounted notes and securities when 
 trinslc fact peculiarly within his official paid, the drawing of checks to with- 
 knowledge, yet the bank is responsi- draw funds of the bank on deposit else- 
 ble instead of an innocent party, upon where, and as executive officer the 
 every principle of reason and moral- transaction of most of the business of 
 ity." To the same effect also are Cald- the bank. United SfMes v. City Bank 
 well V. National Mohawk Valley Bank, of Columbus, 21 How. 356; the charge 
 64 Barb. 333. of moveable property of the bank. 
 
 But it is to be observed that to bind Franklin Bank v. titeward, 37 Me. 519; 
 the bank the act o£ the cashier must be the transfer of the negotiable paper 
 one within the corporate powers of the belonging to the bank, City Bank of 
 bank, for if the directors could not law- New Baven v. Perfc in, 29 N. Y. 554; 
 fully do the act the cashier cannot bind Bank of New York v. Bank of Ohio, id. 
 them or the bank by doing it. Week- 618 ; to borrow money on behalf of the 
 lew. The Mr^t National Bank, 42 M.d. bank, Barnes v. Ontario Bank, Id N.Y. 
 581, posi; Wiley v. First National Bank, 152; Ballston Spa Bank v. Marine Barik, 
 47 Vt. 546, posJ. 16 Wis. 120; to discharge a mortgage 
 
 So to bind a bank, the act of the cash- securing a note due to the bank, Ryan 
 ier must be within the scope of his in- v. JJunlap, 17 111 40. 
 herent authority, or within the estab- But a cashier cannot, without ex- 
 lished custom or usage of the particular press authority from the directors, or 
 bank, or the banks in that locality, in pursuance of the usage or custom, 
 The officers of the banks are held out transfer non-negotiable paper belong- 
 to the public as having authority to ing to thebauk;Stoiev. Cams, 50 How. 
 act according to the general usage, Pr. (N. Y.) 447; iJarricfc Y.Austin, 'Zl 
 practice and course of business of such Barb. 241 ; nor bind the bank to indem- 
 iustitutions, and their acts, within the nify an officer for levying on property 
 scope of such usage, practice and under an execution in favor of the 
 course of business, bind the bank in bank; Watsonv. Bennett,'12 Barb. 196; 
 favor of third persons having no kuowl- nor bind the bank by a discharge of 
 edge to the contrary. Story on Agency, its debtors without judgment; Hodge 
 %ili; Minor V. Mechanics' Bank, IFet. v. Nat. Bank, 22 Gratt. (Va.) 51; nor 
 46; Meckner v. Bank, 8 Wheat. 339; release a surety by au agreement that 
 Frankford Bank v. Johnson, 24 Me. 490; he should not be called upon to pay a 
 Cook V. State Nat. Bank, 53 N. Y. 96, note that he was liable on in ordinary 
 post; Ryan v. Dunlop, 111 111.40. In cases. Cochecho Nat. Bank v. Haskell, 
 United States V .City Bank of Columhus. 51 N. H. 116;S.C.,12 Am.Rep. 07; Olney 
 21 How. 356, Mr. Justice Wayne said- v. CTiudsej/, 7 R. 1 . 224 ; butitwasfur- 
 "That, though the directors had power, ther held in the same case that it a 
 under the act of incorporation, to fix cashier deceives a surety into the belief 
 the duties of the cashier, and though that the note is paid, and thereby leads 
 whetber they had done so or not did the surety to change his position as to 
 not appear, yet the acts of the cashier the principal to the surety's injury, the 
 done in the ordinary course of the busi- bank will be estopped — so far as the 
 ness actually conjided to such an officer Baiety is concerned — from denying 
 may well be deemed prima facie evi- that the note was paid. So a cashier 
 deuce that they feU within the scope of caniiot bind the bank by representing 
 his duty." Andin Fleckner v. Bank, 8 to one about to indorse a note that 
 Wheat. 339, it was held that the acts of sufficient bank stock to secure pay- 
 a cashier done in the ordinary course of mentof the note has been pledged by 
 business of the bank are prima facie the maker, and that the indorser's lia- 
 evidence that they fell within the scope bility will be merely nominal ; Bank of 
 of his duties. See also State v. Commer- the United States v. Dunn, 6 Pet. tl; 
 cial Bank, 14 Miss. 218. Bank of the Metropolis v. Jones, 8 id. 
 
 Among the ordinary and inherent 12; nor by a promise to pay a forged 
 duties of a cashier are the following. Tlie note purporting to be issued by the 
 
64 
 
 UNITED STATES 
 
 Mercliants' National Bank v. State National Bank. 
 
 bank ; Salem Bank v. Olouoester Bank, nature in blank as cashier to the 
 17 Mass. 29; nor by an agreement to printed form of transfer on the back, 
 give notice to a surety In case of the de- Subsequently C. obtained a loan from 
 fault of a maker to a note pledged as plaintiff, giving the said certificate as 
 collateral; ^eio Hampshire Savings collateral. The forgery having been 
 iJonfc V. Doi«?img, 16 N.H. 187; nor has discovered, plaintiff brought action 
 he power to create any agency for the against defendant for the damages 
 bank; United States v. City Bank, 21 sustained by him. HeW, that the sig- 
 How. 356; nor transfer a judgment of nature of the cashier bound the bank, 
 the bank ; Holt v. Baoon, 25 Miss. 567 ; aud that the bank by that signature so 
 nor assign the ohoses in action or cor- far warranted the genuineness of the 
 porate property of the bank for the certificate as to be estopped from set- 
 payment of its precedent debts ; Hoyt ting up the f orgeiy as a defense. 
 v.Thompson,5N. X- 320 ; although the Shepley, J., said: "The real question 
 contrary was held in Kimibally. (Jleve- presented in the case is whether the 
 land, 4 Mich. 606; Crockett v. Young, bank by signing the blank transfer has 
 
 9 Miss. 240; nor to sell or mortgage so far warranted the genuineness of 
 property of the bank ; United States v. the certificate, that it is estopped from 
 City Bank, 21 How. 356; Holtv. Bacon, setting up the forgery as a defense to 
 25 Miss. 567; Leggett v. Banking Co., this action. Defendant denies that the 
 1 N- J. Bq. 541; but in Bank of Ver- cashier had authority or right to bind 
 gennes v. Warren, 7 Hill, 91, the cashier the bank by the contract declared on. 
 was held to have authority to accept Cashiers of a bank are held out to the 
 and receipt for money paid to redeem public as having authority to act ac- 
 property sold under an execution in cording to the general usage, practice 
 favor of the bank. and course of business conducted by 
 
 From the cases last cited it appears the bank. Their acts, within the scope 
 that the cashier cannot sell the prop- of such usage, practice and course of 
 ertyof the bank, other than its usual business, will in general bind the bank 
 negotiable securities in the usual course in favor of third persons possessing no 
 of business; but after the directors other knowledge. Morse v. Massa- 
 have determined to sell such property, ch/usetts Nat. jBan/i; , 1 Holmes, 209; 
 the cashier is the proper person to carry Minor r. The Mechanics' ^ank, 1 Pet. 
 out that determination . 70; Merchants' Bank y. State Sank, 10 
 
 In some of the States it is held that Wall. 604. One of the ordinaiy aud 
 a cashier may, in the ordinary course well-known duties of the cashier of a 
 of business, transfer or assign the se- bank is the surrender of notes and 
 curicies of the bank for the purpose of securities upon payment, and his sig- 
 paying its debts; Everett v . United natare to the necessary transfers of 
 States, 6 Port .(Ala.) 166; Caret/v. Giles, securities or collaterals when in the 
 
 10 Ga . 9 ; Lafayette Bank v . Stale Bank, form of bills of exchange, choses in 
 4 McLean, 208 ; Kimball v. Cleveland, action, stock certificates, or similar 
 4 Mich . 606 ; Crockett v Young, 9 Miss . securities for loaus, which are personal 
 241; Cooper v. Viirtis, 30 Me. 488. property, is an act within the scope of 
 
 It is within the general authority of the general usage, practice and course 
 the cashier of a bank to sign in its be- of business in which cashiers of a bank 
 halt, a blank transfer upon a certificate are held out to the public as having au- 
 of stock in the name of the bank held thority to act. Undoubtedly the ordi- 
 by it as collateral security for a loan, nary duties of a cashier do not compre- 
 and to deliver the certificate to the hend the making of a contract which 
 pledgor on payment of the loan. This involves the payment of money, with- 
 was expressly held iu Matthews v. out au express authority from the di- 
 Massachusetts NationalBank, 1 Holmes, rectors, unless it be such as relates to 
 396; S. C, 10 Albany Law Journal, the usual and customary transactions 
 199, which was a decision by Shepley, of the bank. But the transfer of oer- 
 J., iu the Circuit Court of the United tificates of stock held as collateral is 
 States for the district of Massachusetts, certainly one of the usual and custom- 
 In that case the defendant, a National ary transactions of banks, and the pub- 
 bank, loaned money to C, taking in lie would be no more likely to require 
 good faith, as security therefor, what evidence of a special authority to the 
 purported to be a certificate of two cashier to make such transfer than of a 
 hundred shares of the stock of a rail- special authority to draw checks on 
 road company issued^by the company to other banks, or to perform any other of 
 the bank, but which was a forgery by the daily duties of his office. The sig- 
 C. C. paying the loan, the cashier of nature of the cashier must therefore be 
 defendant, for the purpose and with considered as the signature of the 
 the intent of restoring the certificate bank, and the question returns whether 
 to C, returned it to him with his sig- such blank assignment on the back of 
 
SUPEBME COTIET, 1870. 65 
 
 Merchants' National Bank v. State National Bank. 
 
 the certificate by the bank be so far checks, and the decision was put upon 
 a warranty of the genuineness of the grounds so general as to Include cash- 
 certificate that the bank is estopped iers. But such is no longer the law, at 
 from setting up the forgery as a de- least as to cashiers, 
 feuse." lu Farmers', etc., Bank v. Butchers' 
 
 The cashier may take such measures etc., Bank, 16 N. Y. 125, it was decided 
 for the security or collection of debts that tellers could bind the bank by 
 due the bank as he deems proper, and certifying checks where such was their 
 he may act in reference to theoolleo- practice. But in the more recent case of 
 tiou or compromise thereof, according Pope v. Bank of Albion, 57 N. Y. 126, it 
 to the general usage, practice and was held that a certificate by any one 
 course of business; Brldeiibecker v. of less authority than a cashier, as an 
 iotoeH, 32 Barb . 9 ; Hartford Bank v. assistant cashier or teller, was not good 
 Barry, IT Mass . 94 ; Bank of Pennsyl- where there were no funds, in the 
 na?)tov.iJeed,l Watts. &S.(Penn.) 101; absence of express authority, or of a. 
 Payne v . Commercial Bank, 14 Miss . custom or usage, for assistant cashiers 
 24; Potter v. Merchants' Bank, 28 N. or tellers to certify. But as that case 
 Y. 641 . was properly decided on the point that 
 
 Where it was provided in a bank the check was postdated it is doubtful 
 charter, that the funds of the bank if it wiU be followed ou the point of 
 Bbould in no case be liable for any con- the power of an assistant cashier or 
 tract or engagement, unless the same teller. Certainly prior to that case it 
 should be signed by the president, and was considered settled in this State 
 countersigned by the cashier, it was that the certificate of a teller bound the 
 held that this did not apply to the ordi- bank. See opinion of Folger, J.. Con- 
 nary business and duties of a cashier, tinental Nat. Bank v. Nat, Bank of Com- 
 suoli as indorsing bills, etc. Merchants' nionwealth, 50 N. Y. 581. However 
 Bank -7. Central Bank, 1 Ga. 418; Cary there can be no doubt of the power of 
 v.McDougall, 7 Ga. 84; Northern Bank any officer or ageiit of the bank to bind 
 of Kentucky V. Johnson, i Cold. (Tenn.) the bank by a certificate without funds 
 88. where a usage or practice of the bank 
 
 If the cashier of a bank enters into a is proved for such officer or agent to 
 contract in behalf of the corporation, certify checks where a drawer has 
 without authority for the purpose, and funds. 
 
 the bank claims the benefit of the con- A cashier has, however, implied pow- 
 traot, it is thereby ratified by the cor- er to certify checks only in the regular 
 poration. Medomak Bank v. Curtis, course of business, so that he cannot 
 2iMe. 36; Farmers andMecha/iiics' Bank bind the bank by a certificate to a 
 v- Troy City Bank, IDougi. (Mich.) 457. check given as collateral security and 
 
 If the cashier of a bank should pay to reciting its purpose upon its face. Dor- 
 a bona fide holder the amount of a sey v . Abrahams (Sup. Ct. Penn.), 5 
 forged check drawn on the bank, or of Rep. 53. 
 
 forged notes of the bank, the payment It is to be observed that the bank is 
 cannot be recalled ; because he is in- only bound by the wrongful act of its 
 trusted by the bank with an implied cashier or other officer in favor of an 
 authority to decide on the genuineness innocent person, that is, one who has 
 of the handwriting of the drawer of no knowledge of the wrong. So that 
 the check, and of the paper of the bank, if a cashier or teller certify a check to 
 The act of payment is to be distin- be good when there are no funds, the 
 guished in this respect, from a mere ad- bank is not liable thereon to one who 
 mission. Bank of United States v. Bank knew that there were no funds. Farm- 
 nf Georgia, 10 Wheat. 333, S. V., Salem ers' Bank v. Butchers', etc.. Bank, 16 N. 
 jSaufe V. (Gloucester Bank, 17 Mass. 1; Y. 125; Sadm Bank v. Gloucester Batik, 
 Merchants' Bank 'v. Marin Bank,3 Gill. 17 Mass.l. 
 (Md.) 96. In the case last cited a forged certifi- 
 
 Among the inherent powers of a cation of a check was presented at the 
 cashier is that of certifying checks, and bank upon which the check was drawn 
 while as between himself and the bank to the teller whose certificate it purport- 
 he has no right to certify a check to be ed to be, and he pronounced it genuine, 
 good unless there are funds in the bank Beld, that he thereby adopted the cer- 
 at the time to meet it, yet if he does tifioation, and that the bank was bound 
 give such a certificate, the bank will be by it the same as if it was genuine, 
 liable thereon to a holder in good faith. So a cashier may bind his bank, to an 
 Cook V. State Nat, Bank, 52 N. Y. 96, iimocent party, by a certificate of de- 
 rep.jrted hereafter in this volume. posit when there is no deposit. Barnes 
 
 It was long ago decided in Massachu- v. Ontario Bank, 19 N. Y. 152; State 
 setts (Mussey v. Eagle Bank) that a Bank v. Kain, 1 III. 75. 
 bank teller had no authority to certify But in the absence of express au- 
 9 
 
66 UNITED STATES 
 
 Merchants' National Bank v. State National Bank. 
 
 thority from the directors or of knowl- A bill drawn payable to the order of 
 edge and assent or implied assent ou the "cashier" of a bank is payable to 
 their part, a cashier cannot, by gratui- the bank, and no indorsement is ueo- 
 tously receiving securities for safe- essary to give title to the bank. First 
 keeping, render the bank liable for National Bank v. Hall, 44N. Y. 395;S. 
 them in case' of loss. First National C, 4 Am. Rep. 698; Bank of New 
 Bank v. Ch-dham, 79 Perm. St. 106; Yorkv. Bank, 29 N. Y. 619; Wrightv. 
 S. C, 21 Am. Rep. 49; First National Boyd, 3 Barb. 523; Laceyv. Central 
 Bank v. Oeeim National Bank, GON.Y. Nat' I Bank, 4 Neb. 179; Pratt v. To- 
 278; S. C, 19 Am. Rep. 181; WUey v. peka Bank, 12 Kan. 570. 
 First National Bank, 47 Vt. 546; S.C, Notice to a cashier in the course of 
 19 Am. Rep. 122; all of which cases the duties of his office is notice to the 
 are reported in this volume. And in bank. Trenton Banking Co, v. Wood- 
 the case last cited it was held that ua- I'uff, 2 N. J. Bq. 117 ; Mranch Bank v. 
 tional banks were not authorized to Steele, 10 Ala. 915; New Hope Bridge 
 take special deposits for safe-keeping, Co. v. Phcenix Bank, 3 N. Y. 156. 
 and that a cashier could not render the A cashier is bound to exercise reaa- 
 bank liable thereon by an express agree- onable skill and ordinary care and 
 ment. And this view was approved by diligence in the discharge of his duties, 
 the Court of Appeals of New York in and if he fails in either regard and in 
 First National Bank V. Ocean National consequence thereof the bank suffers. 
 Bank, supra. he is liable to make good the injury. 
 
 The indorsement of negotiable paper And much more is he liable to respond 
 by the cashier of a bank, by writing his if he cause any damage to the bank by 
 name on the back of it with the addi- any illegal, fraudulent or tortious act. 
 tion of the name or designation of hia Commercial Bank v. Ten Eyck, 48 N. 
 office merely.isasulficient indorsement Y. 305; Minor v. Bank of -Alexandria, 
 to bind the bank. Robb v. Ross County 1 Petera, 70; Austin v. JJaniels, 4 De- 
 Bank, 41 Barb. 586; Bank of Oenesee v. uio, 299. 
 Patchin, 13 N. Y. 309. It is a violation of duty for a cashier 
 
 Thus where the cashier, for the ac- to allow an overdraft. Bank of St. 
 commodation of the payee or prior Mary v. Colder, 3 Strobh. (S. C.) 403; or 
 indorser, indorsed his name upon a tocertify a check without funds; or that 
 note, not belonging to the bank, thua a deposit has been made when in fact 
 A. B. Cas., held, that the indorsement none has been made, or to change with- 
 was official and binding on tho bank, out authority the securities of the bank, 
 Hou^ghton v. Tlie First National Bank, Barrington v. Bank of Washington, 14 
 26 Wis. 663; 8. C, 7 Am. Rep. 107. Serg. & R.(Penu.)405; to omitsomeduty 
 
 A cashier cannot bind the bank by required of him by law, as to make a 
 an accommodation indorsement ex- report to the Comptroller of the Cur- 
 cept in favor of an innocent person rency, whereby the bank has been sub- 
 who has been prejudiced by the in- jected to a fine or otherwise injured, 
 dorsement. Bank v. Patchin, supra; Bank of Washington v. Barrington, 2 
 Farmers, etc., Bankv. Troy City Bank, Perm. 27 And in each case the suretiea 
 1 Dougl. (Mich.) 457. Nor can he bind to the oashier.'s bond are liable. A 
 the bank as an accommodation in- cashier's bond conditioned "well and 
 dorser of his own promissory rtote. truly to execute the duties of cashier," 
 Such a note so indorsed would carry includes not only honesty but reason 
 notice to a purchaser of its character able skill and diligence. Minor v. 
 and in an action to charge the bank Mechanics' Bank of Alexandria, 1 
 the holder would be required to show Peters, 46. 
 
 actual authority in the cashier before As to the liability of the sureties on 
 he could recover. West St. Louis Sav- a cashier's bond, see Ta/pley v. Martin, 
 ings Bank v. Parmalee, etc.. Bank (U. post, and note; Qi-avesv. Lebamm Nat- 
 S. Supreme Ct.,1878), 16 Alb.Law Jour, ionai Bank, post. 
 473. — Rbpoktbb. 
 
SUPEEMB COURT, 1870. 67 
 
 Case V. Terrell. 
 
 Case v. Tbebell. 
 
 (U Wallace, 199.) 
 
 Receiver — whom lie represents. 
 
 The receiver of a National bank represents the bank, its stockholders and its 
 creditors, but not in any sense the National government ; nor can the govern- 
 ment be subjected to litigation, growing out of its relations to these banks, 
 in all the various courts in which their affairs may be the subject of 
 judicial controversy. 
 
 APPEAL from the Circuit Court for the District of Louisiana. 
 Terrell and others, creditors of the First National Bank of New 
 Orleans, which had failed and been put into liquidation, brought 
 this bill in chancery in the court below against one Case, who on 
 the failure of the bank had been appointed receiver of it, Hurlburd, 
 Comptroller of the Currency of the United States, and one May and 
 Beaureguard, citizens of Louisiana. 
 
 The prayer for relief was that a certain admitted debt due to the 
 United States from the bank be ascertained ; that they (the United 
 States) be charged with certain sums, and required to account for 
 them, and that a writ of injunction issue restraining the Comptroller 
 from making a dividend of the funds of the bank until the account 
 be adjusted. Case and Hurlburd, the receiver and Comptroller as 
 aforesaid, appeared and answered ; the answer of the latter being 
 put in for him by the district attorney, and neither signed by 
 Hurlburd nor sworn to by him. In it, " he submits, on behalf of 
 the United States, to the decisions of the court the claims of the 
 United States to priority of payment over the allowed claims of 
 the creditors of said bank that are not disputed." 
 
 The final decree, besides making a general order on the Comp- 
 troller to distribute the funds of the bank in his hands ratably 
 among its creditors as the law directs, decreed against the United 
 States in favor of the creditors of the bank for the sum of $206,- 
 039. 91, and that no claim of the United States shall have any 
 priority in the distribution of the funds of the bank except as to 
 the bonds pledged to secure its circulation. Prom this decree 
 Case, the receiver, and Hurlburd, the Comptroller, appealed. 
 
68 UNITED STATES 
 
 Case V. Terrell. 
 
 B. H. Bristol!), Solicitor-General, and G. H. Hill, Assistant At- 
 torney-General, for Hurlburd, Comptroller ; Mr. Case, for himself. 
 
 J. A. Camplell and H. B. Kelly, contra. 
 
 Mr. Justice Millee delivered the opinion of the court. 
 
 It is seen, from the biU and decree, that while the United States 
 was not made a defendant, and while it is well settled that it could 
 not be sued in the court below, the only relief prayed by the bill 
 was relief against the United States, and the only decree rendered 
 which was not merely formal was a decree against the United States 
 for $200,000, and a further decree barring the right to assert her 
 priority as a creditor of the bank in the distribution of its funds. 
 It is strange that in any court professing to administer the Eng- 
 lish system of equitable jurisprudence such a decree could be ren- 
 dered against any one not made a party to the suit, and! who had 
 in no manner appeared in the case ; and it is almost incredible that 
 in any Federal court of this Union, except the Court of Claims, a 
 moneyed judgment could be rendered against the United States. 
 
 The contrary has been so repeatedly decided that it is a waste of 
 time to re-argue the proposition, which will be found fully asserted 
 in the recent cases of DeGroot v. United States, 5 "Wallace, 419 ; 
 United States v. Echford, 6 id. 484 ; The Siren, 7 id. 153 ; and Th.e 
 Davis, 10 id. 15. In the case of the United States v. Echford it 
 was held that, although in a suit in which the United States was 
 plaintiff, a set-oiS could be pleaded and allowed, yet no judgment 
 could be rendered for a balance found to be due to the defendant 
 by the verdict of the jury, either in the Circuit Court, where the 
 case was tried, or in the Court of Claims, where suit had been 
 brought on the verdict. It is true, that in the two last cases cited 
 above it was held that in a case of admiralty, where the res was 
 rightfully before the court, and was taken into possession by its 
 officer without the necessity of suit or process against the United 
 States, it could be subjected to certain maritime liens, though the 
 ownership was in government. But in these cases the government 
 came into court of its own volition to assert its claim to the prop- 
 erty, and could only do so on condition of recognizing the superior 
 rights of others. 
 
 We are quite at a loss to know on what principle the jurisdiction 
 in the present case is asserted, for the briefs for the appellees are 
 devoted wholly to the merits of the controversy. But we must 
 
SUPEEME COUET, 1870. 69 
 
 Case V. Terrell. 
 
 suppose that it is claimed on the ground that the receiver and 
 Comptroller, both of whom appeared and answered the bill, repre- 
 sent the United States, and can subject the government to the 
 jurisdiction of the court. 
 
 As to the receiver, the claim, if any such be made, is not worth 
 serious consideration. He represents the bank, its stockholders, 
 its creditors, and does not in any sense represent the government. 
 
 Nor can such authority be conceded to the Comptroller of the 
 Currency. It may very well admit of doubt whether it is within 
 his competency to submit himself, in the exercise of duties specially 
 confided to him by acts of Congress, to the control of the courts, 
 and especially of those which can assert no such jurisdiction by 
 reason of their territorial limits. We are not called upon here to 
 decide this question, but we have no hesitation in holding that, 
 however'he may submit himself to the jurisdiction of those courts, 
 and consent to be governed in his official action by their decrees, 
 so far as they affect rights of parties who may come into court and 
 be impleaded in the same suit, he has no authority to subject the 
 United States to such jurisdiction, and to submit the rights of the 
 government to litigation in any court, without some provision of 
 law authorizing him to do so. 
 
 There is no analogy in the case before us to suits against officers 
 of the customs or of the internal revenue, to recover for illegal as- 
 sessments or collections of taxes or duties, for they are suits against 
 the officer for a tort, or for money had and received, and ' when a 
 judgment is rendered against him, the government protects him 
 by paying it, because the money was received for its use. But 
 this, by virtue of statute, and the mode of proceedings is pointed 
 out and well defined, and the remedy is limited to cases where the 
 mode is Strictly pursued. 
 
 In the answer filed for the Comptroller in this case, he says, or 
 is made to say (for it is neither signed nor sworn to by him), that 
 he "submits, on behalf of the United States, to the decision of 
 the court the claims of the United States to priority of payment 
 over the alleged claims of the creditors of said bank that are not 
 disputed." We have already said that the Comptroller has no power 
 to subject the United States to such jurisdiction. 
 
 But he here seems only to submit the question of the govern- 
 ment's claim to priority of payment, while the court not only de- 
 cides against this priority of payment, but renders a further decree 
 
70 UNITED STATES 
 
 Bank v. Lanier. 
 
 requiring repayment of money had and received from the bank, 
 and the payment of money which the United States is supposed to 
 have assumed to pay in a contract with private parties not before 
 the court. If the government is liable to the bank or its receiver, 
 or its creditors, for either of these claims, it would seem that it 
 would be, in the first case, on an implied contract for money had 
 and received, and in the second, on the express contract to pay as 
 alleged. When guch liability is denied, or payment is refused, the 
 Court of Claims has jurisdiction, and no other court has. 
 
 The United States cannot be subjected to litigation growing out 
 of its relations to these banks in all the various courts in which 
 their affairs may be the subject of judicial controversy. 
 
 •But it is useless to pursue the matter further. The only sub- 
 stantial relief asked by the bill, or granted by the decree, is against 
 the United States. The manifest purpose of the proceeding was 
 to subject the government to a tribunal which could rightfully exer- 
 cise no jurisdiction in the premises. It was no party to the suit, 
 nor did any party represent its interests who had authority to bind 
 it. 
 
 Decree reversed, with directions to the court below to 
 
 Dismiss the bill. 
 
 Bank v. Laniee. 
 
 (U Wallace, 369.) 
 Loans and discounts on security of hank's own stock — Lien on stock. 
 
 Kational banks can make valid loans or discounts on the security of Iheir own 
 stock only wlien necessary to j)revent loss on debts previously contracted 
 in good faith. 
 
 The placing by one bank of its funds on permanent deposit with another 
 bank is a loan within the prohibition. 
 
 Loans by National banks to their stockholders do not give them a lien on the 
 stock of such stockholders. 
 
 A bank issued two certificates of stock to 0, declaring him the owner of one 
 hundred and fifty shares, and that they were transferable on the books of 
 the bank " only on the surrender of the certificate." A purchased some of 
 these shares of C, 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, 
 
SUPEEME COUET, 1870. 71 
 
 Bank v. Lanier. 
 
 and had already been sold and transferred to other parties under a power 
 of attorney from C before the bank had notice of A'a purchase. A 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 de- 
 fense. 
 
 IN error to the Circuit Court for the District of Indiana. 
 The plaintifEs, Lanier and Handy, brought an action in the 
 court below against the First National Bank of South Bend, to 
 recover damages for the refusal of that bank to permit the transfer 
 to them on its books of certain shares of stock. The following 
 • facts were alleged in the declaration : 
 
 In July, 1865, the defendant bank issued two certificates of stock 
 to one Culver, wherein it was declared that said Culver was en- 
 titled to 150 shares in the capital stock 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 certificates. This limi- 
 tation on the power of transfer was in conformity with the terms 
 of a by-law on the subject. On the 39th of January, 1866, Lanier 
 and Handy purchased 138 shares of this stock from Culver, for 
 value, and obtained from him the stock certificates regularly as- 
 signed, with the usual powers of attorney to transfer the stock, of 
 which transaction the bank was notified on the 31st day of the 
 same month of January. This purchase was not followed by any 
 immediate request for the transfer of the stock, but in the month 
 of January, 1868, this request was regularly made and refused. 
 
 The bank, in justification of this conduct, interposed three pleas 
 in bar, which set up two distinct defenses. 
 
 The first and third pleas justified the refusal, on the ground that 
 at the time the stock was taken by Culver he had pledged it as a 
 security for such deposits as the bank might from time to time 
 make with the house of Culver, Penn & Co., of New York, of which 
 he was a member, and that to make the pledge more effectual, by 
 power of attorney regularly executed, he authorized his attorney in 
 fact to sell and transfer the stock in case the bank conceived it to 
 be necessary, and to apply the proceeds to liquidate any balance 
 due the bank from Culver, Penn & Co., and that 50 shares had ac- 
 tually been sold in pursuance of this agreement, and the pro- 
 ceeds applied before Culver assigned the stock certificates to the 
 plaintifEs, and the remaining shares had been sold before the bank 
 had notice that they were assigned. 
 
72 UNITED STATES 
 
 Bank v. Lanier. 
 
 The second plea alleged the organization of the bank under the 
 act of 1863, and that being so organized, it established certain by- 
 laws for conducting its business and for its protection, and to regu- 
 late the transfers of stock which were in pursuance of the authority 
 vested in the bank by the act of Congress, aforesaid, and that the 
 same had been from the time of their adoption, and still were in 
 force, unrepealed and unchanged; tjiat by virtue of the 15th sec- 
 tion of these by-laws, it was provided that the stock of the bank 
 should be assignable only on its books, subject to the provisions 
 and restrictions of the act of Congress; that among the provisions 
 and restrictions of the act was one contained in the 36th section, 
 providing that the stock should be assignable on the books in such 
 manner as the by-laws of the bank should prescribe, but that no 
 shareholder should have power to sell or transfer any share so long 
 as he should be liable to the bank for any debt. And the plea 
 averred that the provisions of the said section 36, by the 
 force of the by-laws of the said bank, and by virtue of said 15 th 
 section of them, became, and was a part of the by-laws of the 
 bank, and regulated the transfers of the shares of stock held and 
 owned in the same, and was still a part thereof, in full force and 
 unrepealed by any act of the bank. And it averred further that 
 Culver was indebted, etc. 
 
 To each of these pleas the plaintiffs filed general demurrers, 
 which, on joinder, were sustained by the court, and the bank de- 
 clining to answer further, judgment was rendered against it. It 
 now brought the case here on error. The error complained of 
 being upon the rulings of the court in sustaining the demurrer to 
 the pleas. 
 
 McDonald and Roache, for the plaintifE in error. 
 
 T. A. Hendricks, contra. 
 
 Mr. Justice Davis delivered the opinion of the court. 
 
 It is unnecessary to decide whether the first and third pleas 
 would answer the declaration, if the transaction pleaded were law- 
 ful, because the directors of the bank were forbidden by law from 
 dealing with Culver in the manner they did. At the time this pro- 
 ceeding took place, the Currency Act of 1863 had been superseded 
 by the act of June 3, 1864, which expressly repealed the former 
 act. It is, therefore, by the provisions of the latter act, that the 
 
SUPREME COURT, 1870. 73 
 
 Bank v. Lanier. 
 
 conduct of banking associations must be governed, whether they 
 were organized before or after it became a law. And in looking 
 into this act, we find these associations expressly prohibited from 
 making any loan or discount on the security of the shares of their 
 own capital stock. And so marked is the policy of Congress on 
 this subject, that it does not allow a bank to become the purchaser 
 or holder of its shares at all, unless absolutely necessary to prevent 
 loss on a debt previously contracted in good faith, and not then for 
 a longer period than six months. It is easy to see, that' if the 
 power were given to a bank to loan money on the security of its 
 shares, it would imply also a power to become the owner of those 
 shares, and this Congress intended to guard against. 
 
 These institutions were created to subserve public purposes, and 
 not the mere private interests of their stockholders. And in no 
 better way could this object be attained than by placing share- 
 holders, in their pecuniary dealings with the bank, on the same 
 footing with other customers. Besides, how could the capital of 
 the bank be kept available for active use, if the shareholder, who 
 had pledged his stock for borrowed money, should be unable to 
 meet his obligations ? To the extent of the debt the capital would 
 be withdrawn, and -it is hardly possible that this could be the case 
 for any length of time, were the debt secured outside of the shares 
 of the bank. But it is unnecessary to seek for the reason of this 
 prohibition, as the provision concerning it is explicit, and free 
 from ambiguity. 
 
 Although the section in question forbids loan on discounts by a 
 bank on the security of its own shares of stock, it is argued that 
 this inhibition does not extend to the case of deposits made by one 
 bank with another. But a deposit is nothing but a loan of money, 
 and is within both the letter and spirit of the provision. It is well 
 known that country banks keep on deposit in New York, with 
 bankers and merchants, a considerable amount of money for their 
 own convenience, for which they receive more or less of interest. 
 But whether interest be obtained or not, these deposits are, equally 
 with paper discounted over the counter of the bank, loans of 
 money, and the reason of the rule is equally applicable to them. 
 
 The banker is accountable for the deposits he receives as a 
 debtor, and the individual borrower of money from the bank sus- 
 tains no other relation to it. In both cases money is borrowed, to 
 10 
 
74 UNITED STATES 
 
 Bank v. Lanier. 
 
 be returned in a greater or less period of time, according to the 
 contract of the parties. Without pursuing the subject further, it 
 is clear that the contract between the South Bend Bank and Culver 
 was illegal, and cannot, therefore, be pleaded in avoidance of any 
 duty imposed on the bank. It would seem, from the date of the 
 certificates issued to Culver, that as soon as he took the stock he 
 pledged it, and the bank is, theve^Te, without the excuse of en- 
 deavoring to secure a pre-existing debt contracted in good faith. 
 The contract in its inception was in violation of law, and the bank 
 cannot complain if it is made to suffer in consequence of it. 
 
 The defense interposed by the second plea is equally unavailing 
 to the plaintiffs in error. This plea assumes that the bank had a 
 lien upon the stock of Culver for his indebtedness to it, without 
 any special agreement on the subject, by virtue of the provisions 
 of the 36th section of the Currency Act of 1863, restricting a share- 
 holder from transferring his stock as long as he owes the bank, 
 which refliained in operation, although the section was repealed by 
 the act of 1864, by means of a by-law adopted when the section 
 was in force, declaring that the stock of the bank shall be trans- 
 ferable only on the books of the bank, subject to the provisions 
 and restrictions of the act of Congress aforesaid. 
 
 If it be conceded by the by-law intended to embrace the restric- 
 tions contained in the 36th section, it is hard to see what good it 
 accomplished, because, as long as this section was in force, it was 
 the law of the corporation, known to all men, and did not need the 
 aid of a by-law to render it operative, and if it be contended that 
 a bank may, through the agency of a by-law, retain a particular 
 section that has been repealed, it is diificult to see why it may not 
 by the same means retain all the remaining sections of the repealed 
 statute that are applicable to its business, and thus antagonize it- 
 self to the whole policy of Congress on the subject. But of neces- 
 sity a by-law cannot operate in this way, nor is there any reason to 
 suppose it was intended that this one should have such an effect. 
 In the absence of any action taken by the bank on the subject 
 since the new law went into operation, the fair inference is that 
 this by-law is used as an afterthought to serve the purpose of this 
 suit. Congress evidently intended, by leaving out of the law of 
 1864 the 36th section of the act of 1863, to relieve the "holders of 
 bank shares from the restrictions imposed by that section. The 
 policy on the subject was changed, and the directors of banking 
 
SUPEEME COUET, 1870. 75 
 
 Bank v. Lanier. 
 
 associations were in efEect notified that thereafter they must deal 
 with their shareholders as they dealt with other people. As the 
 restrictions fell, so did that part of the by-law relating to the sub- 
 ject fall with them. 
 
 It remains to be seen whether, on the case stated, Lanier and 
 Handy can recover of the bank for a breach of corporate duty, 
 notwithstanding the specific shares had already been transferred 
 to other persons through the power of attorney which Culver gave 
 when he attempted to pledge his stock as securiby for the deposits 
 to be made with his New York house. And, in considering the 
 question, we are relieved of any necessity of deciding between con- 
 flicting equities, for this suit does not seek to disturb the title of 
 the adverse purchasers to the specific stock. It leaves them in pos- 
 session of the property, and undertakes to subject the bank to 
 damages for refusing to transfer the stock to the defendants in 
 error. And, as we view this controversy, it makes no difference 
 whether the transfers were actually made to other parties before or 
 after the bank received notice of the assignment of the stock cer- 
 tificates by Culver to Lanier and Handy. 
 
 The power to transfer their stock is one of the most valuable 
 franchises conferred by Congress on banking associations. With- 
 out this power, it can re'adily be seen the value of the stock would 
 be greatly lessened, and, obviously, whatever contributes to make 
 the shares of the stock a safe mode of investment, and easily con- 
 vertible, tends to enhance their value. It is no less the interest of 
 the shareholder than the public that the certificate representing 
 his stock should be in a form to secure public confidence, for with- 
 out this he could not negotiate it to any advantage. 
 
 It is in obedience to this requirement that stock certificates of 
 all kinds have been constructed in a way to invite the confidence 
 of business men, so that they have become the basis of commercial 
 transactions in all the large cities of the country, and are sold in 
 open market the same as other securities. Although neither in 
 form or character negotiable paper, they approximate to it as nearly 
 as practicable. If we assume that the certificates in question are 
 not different from those in general use by corporations, and the 
 assumption is a safe one, it is easy to see why investments of this 
 character are sought after and relied upon. No better form could 
 be adopted to assure the purchaser that he can buy with safety. 
 He is told, under the seal of the corporation, that the shareholder 
 
76 UNITED STATES 
 
 Bank y. Lanier. 
 
 is entitled to so much stock, which can be transferred on the books 
 of the corporation, in person or by attorney, when the certificates 
 are surrendered, but not otherwise. This is a notification to all 
 persons interested to know that, whoever in good faith buys the 
 stock and produces to the corporation the certificates, regularly as- 
 signed, with power to transfer, is entitled to have the stock trans- 
 ferred to him. And the notificatiqp goes further, for it assures 
 the holder that the corporation will not transfer the stock to any 
 one not in possession of the certificates. 
 
 In this state of case Lanier and Handy made their purchase of 
 Culver. They bought for value, without knowledge of any adverse 
 claim, in full faith that the bank would observe its engagements, 
 and pursued in all respects the direction given in the certificates. 
 They were not told to give notice to the bank of their purchase, 
 nor was there any necessity for notice, because, by the rules of the 
 bank, Culver could not transfer the stock in the absence of the 
 certificates, and these they had in their possession. It is therefore 
 clear, in making their purchase of Culver, that they had a right to 
 rely on the certificates as securinff to them the stock which they 
 represented. And it is equally clear that the bank, in allowing 
 this stock to be transferred to other parties while the certificates 
 were outstanding in the hands of bona fide holders, was guilty of a 
 breach of corporate duty, and as its conduct operated to the injury 
 of Lanier and Handy, an action will lie in their behalf to obtain 
 satisfaction for the injury. 
 
 These views dispose of this case, and they are sustained by re- 
 cent decisions in the Court of Appeals of New York and the Su- 
 preme Court of Connecticut: Bridgeport Bank v. JSFew York and 
 New Haven Railroad Company, 30 Conn. 370 ; Same v. Schuyler 
 etal., 34 N. Y. 30, and, as we are advised, they also are supported 
 by the Supreme Court of New Jersey in a case not yet reported. 
 
 Judgment affirmed. 
 
SUPEBME COUET, 1871. 77 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 Bank of Bethel v. Pahquioque Bakk. 
 
 (U Wallace, 383.) 
 
 Action against National banks — Effect of winding-up proceedings — Decision of 
 receiver as to validity of claims not conclusive. 
 
 An action may be brought against a National bank in any State, county, or 
 municipal court in the county or city where such bank is located, having 
 jurisdiction, under State laws, of similar controversies. 
 
 The receiver appointed under the National Banking Act, to wind up a bank 
 which had suspended payment, disallowed a claim against the bank, and an 
 action thereon was commenced in a State court. Held, (1) that the decision 
 of the receiver disallowing the claim was not final, but that the creditor 
 could have the validity of the claim adjudicated in a State court ; (2) that 
 the banking association was not so far dissolved by the winding-up proceed- 
 ings as to bar the action against it. 
 
 IN error to the Supreme Court of Connecticut. The decision of 
 the Supreme Court of Connecticut was reported in 36 Conn. 
 335, and in 4 Am. Eep. 80. 
 
 The action was in assumpsit for money had and received, 
 brought in the Supreme Court of Fairfield county, Connecticut. 
 The facts are briefly as follows : The defendant bank failed in 
 1868, and the IT. S. Comptroller of the Currency, in pursuance of 
 sections 46 to 50 of the Currency Act, found it to be in default, de- 
 clared the bonds deposited with the gorernment to secure the cir- 
 culation forfeited, and procured the appointment of a receiver. 
 The plaintiff bank presented its claims to the receiver, and, upon 
 their being disallowed, brought this suit to determine their validity. 
 The suit was defended under the direction of the Comptroller, in 
 the name of the defendant bank for the benefit of the stockholders 
 and creditors. 
 
 The grounds of the defense were, among other : 
 
 1. That the courts of the United States alone had jurisdiction 
 after the appointment and acceptance of the receiver. 
 
 2. That prior to the suit brought, the Bank of Bethel had for- 
 feited its charter by a violation of the Currency Act, in not paying 
 its notes, and could not be sued anywhere. 
 
 3. That it could not be sued because it was. at the time, under 
 the control and in possession of a duly appointed receiver, "inca- 
 
78 • UNITED STATES 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 pable of self-defense, and entitled to the legal protection and 
 guardianship thrown about it by the law." 
 
 4. That the decision of the receiver on the presentation of the 
 claim was concjusive on the parties to the suit as an adjudication, 
 unless set aside by the Comptroller of the Currency, or by some 
 court of the United States having juinsdiction. 
 
 But the court gave judgment for the Pahquioque Bank for the 
 full amount of its claim. The Bethel Bank then took the case on 
 error before the Supreme Court of the State, where the judgment 
 of the Supreme Court was affirmed. The Bank of Bethel there- 
 upon brought this writ of error. 
 
 0. B. Goodrich, Roger Averill and L. D. Brewster, for the Bank 
 of Bethel, plaintifE in error. 
 
 W. F. Taylor and 0. 8. Seymour, contra. 
 
 Mr. Justice Cmfeoed delivered the opinion of the court. 
 
 Associations for banking, formed pursuant to the act to provide 
 a National currency, and duly authorized by the Comptroller of 
 the Currency to commence the business of banking, become bodies 
 corporate and have a succession for the period of twenty years from 
 their organization, unless sooner dissolved according to the provis- 
 ions of their articles of association, or by the act of the share- 
 holders owning two-thirds of the stock, or unless the franchise 
 shall be forfeited by a violation of the act under which the as- 
 sociation was formed. Such an association is allowed to select, 
 subject to certain conditions and the approval of the Comptroller 
 of the Currency, another such association at which it will redeem 
 its circulating notes at par, but the provision is that nothing in 
 that section shall relieve any such association from its liability to 
 redeem its notes in circulation at its own counter, at par, in lawful 
 money, on demand ; and in case of failure so to do, the holder may 
 cause the same to be protested in one package by a notary public, 
 unless the president or cashier of the association which issued the 
 notes, on the president or cashier of the association designated as 
 the place for redeeming the same, will waive demand and notice of 
 protest and execute an admission in writing, stating the amount 
 demanded and the fact of non-payment, and it is made the duty of 
 the notary forthwith to forward the admission or notice of protest, 
 
SUPREME COURT, 1871. • 79 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 as the case may be, to the Comptroller of the Currency for his infor- 
 mation and action in the premises. 
 
 Notes to a large amount, issued by the corporation defendants 
 for circulation, were held by the corporation plaintiffs, and the 
 plaintiffs presented the same to the defendants for redemption, and 
 the defendants failing to redeem the same, the plaintiffs offered the 
 notes for protest, but the defendants having waived demand and no- 
 tice of protest, and having tendered an admission in writing, stating 
 the amount demanded and the fact of non-payment, the plaintiffs 
 accepted the written admission, and the notary forwarded the same 
 to the Comptroller of the Currency as required under such circum- 
 stances. Pursuant to the requirement of law the Comptroller of the 
 Currency appointed a special agent to ascertain whether the facts 
 set forth in the protest were true, and the agent so appointed having 
 reported that the defendants had failed to redeem in lawful money 
 their circulating notes when payment thereof was duly and law- 
 fully demanded, he, the Comptroller of the Currency, appointed a 
 receiver of the delinquent association, with all the powers, duties 
 and responsibilities given to or imposed apon such an appointee in 
 such case made and provided, and the record shows that the re- 
 ceiver entered upon the duties of his office and took possession of 
 all the books, records, and assets, real and personal, of the associa- 
 tion, and that he has ever since had the exclusive possession of the 
 same, to be disposed of according to law. Before the commence- 
 ment of the suit the Comptroller of the Currency caused notice to 
 be published requiring all claimants to present and make proof of 
 their claims against the delinquent association, and the record also 
 shows that the plaintiffs presented the claim in controversy to the 
 receiver for allowance, and that the receiver having disallowed the 
 same, the plaintiffs instituted the present suit in the State court 
 to recover the amount. Appropriate proceedings followed, as in 
 an action of assumpsit, and the parties having been heard, the 
 subordinate court where the suit was brought made a finding of 
 facts, but reserved the question whether the case ought to be dis- 
 missed for want of jurisdiction, and if not, what judgment ought 
 to be rendered in the case, and all questions of law arising upon the 
 facts found, for the opinion and advice of the Supreme Court of Er- 
 rors. Proper measures were adopted to obtain the opinion and advice 
 of the appellate tribunal, and they were duly received, and thereupon 
 the subordinate court rendered judgment in favor of the plaintiff for 
 
80 • UNITED STATES 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 the whole amount claimed in the declaration. Proceedings in the 
 nature of a writ of error were instituted by the defendants, by 
 which the cause was removed into the Supreme Court of Errors, 
 where the parties were again heard and the decision of the Court 
 of Errors was that the judgment should be in all things affirmed. 
 Final judgment having been rendered in the State court, the de- 
 fendants sued out a writ of error .under the 25th section of the 
 Judiciary Act and removed the cause into this court. 
 
 Four only of the errors assigned will be examined, as the others, 
 in the view of the case taken by the court, either involve substan- 
 tially the same considerations or present questions not re-examin- 
 able in this court under a writ of error to a State court. Briefly 
 stated, the errors assigned to be examined are as follows: 
 
 (1.) That the State court had no jurisdiction of the case or of the 
 parties at the time the suit was commenced. 
 
 (3.) That the defendant association, prior to the institution of 
 the suit, had forfeited its franchise by a violation of the act under 
 which it was formed, and had been dissolved by the action of the 
 Comptroller of the Currency. 
 
 (3.) That the defendant association could not be impleaded at 
 the time the action was commenced, as prior to that time the as- 
 sociation was prohibited by the act of Congress from paying or 
 satisfying any of its creditors. 
 
 (4.) That the decision of the receiver disallowing the claim of 
 the plaintiffs was final and was not subject to review in the State 
 court. 
 
 Support to the first proposition is supposed to be derived from 
 the conceded fact that such associations are created by an act of 
 Congress, and that they are instruments of the National government 
 intrusted with the power of carrying on the business of banking 
 and of employing and circulating treasury notes as a National cur- 
 rency, subject to the supervision and direction of the Comptroller 
 of the Currency and of the Secretary of the Treasury. Banking 
 associations, it is said, were established as instruments by which the 
 government may perform the trust of furnishing and regulating 
 the National paper currency, and the argument is, that inasmuch as 
 they are instruments of the government to carry into effect a 
 National purpose they cannot be impleaded in a State court. Con- 
 firmation of that view is also attempted to be drawn from the fact 
 that such associations are controlled by the Treasury Department, 
 
SUPKEMB COURT, 1871. 81 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 that all the notes which they circulate as money are received from 
 the Comptroller of the Currency, and that they cannot issue any 
 instrument for circulation or use as money except the notes in- 
 trusted to them by the Comptroller of the Currency, as authorized 
 by the act of Congress. 
 
 Beyond all doubt such associations are. created by an act of Con- 
 gress and for the purposes assumed by the defendants, but the con- 
 clusion attempted to be drawn from those facts cannot be sustained, 
 as express provision is made by the fifty-seventh section of the act, 
 that suits, actions, and proceedings against any such association 
 may be had " in any State, county, or municipal court in the county 
 or city in which said association is located, having jurisdiction in 
 similar cases." Commenced as the action was in the proper court 
 of the State where the association is located, and in a court having 
 jurisdiction in similar cases, which is not denied, it is quite clear 
 that the objection to the jurisdiction of the court founded upon the 
 character of the association as an instrument of the National gov- 
 ernment, must be overruled. Jurisdiction in such suits is un- 
 questionably vested in any circuit, district, or territorial court of 
 the United States held within the district in which such association 
 may be established, but the decisive answer to the objection of the 
 defendants is ihatthe same section of the act of Congress gives au- 
 thority to creditors to prosecute such controversies in " any State, 
 county, or municipal court in whi-chsaid association is located," in 
 all cases where it appears that such courts have jurisdiction under 
 the State laws in similar controversies. Proceedings to enjoin the 
 Comptroller of the Currency under that act must, it is true, be in- 
 stituted and prosecuted in a circuit, district, or territorial court of 
 the United States, but the act allows creditors to sue in the proper 
 State courts in all suits, actions, and proceedings against the asso- 
 ciation, as specifically provided in the fifty-seventh section of the act 
 Authorities to support the proposition are not necessary, as it rests, 
 upon an express provision in the act of Congress. 13 Stat, at Large, 
 116. 
 
 II. Associations of the kind have a succession for the period of 
 twenty years from their organization, unless sooner dissolved in 
 some one of the modes pointed out in the act under which such 
 associations are formed, and throughout that period, unless sooner 
 dissolved, they may make contracts in the name designated in their 
 organization certificate, and may sue and be sued, or complain and 
 11 
 
82 UNITED STATES 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 defend in any court of law or equity as fully as natural persons. 
 Such corporate franchises cease to exist when the term for which 
 they were granted expires, and the association may at any time go 
 into liquidation and be closed by the Tote of its shareholders own- 
 ing two-thirds of the stock, but it is not necessary to remark upon 
 those topics, as it is not pretended that the defendant association 
 has ceased to exist or been dissolred in either of those modes. All 
 such associations are bound to redeem their circulating notes either 
 at their own counter or at such other similar association as they 
 are allowed to select for that purpose, and the provision is that if 
 any association shall fail either to make the selection or to redeem 
 its notes as required, the Comptroller of the Currency may, upon 
 receiving satisfactory evidence thereof, appoint a receiver, in the 
 manner provided in the act, to wind up its affairs. Holders of the 
 circulating notes of such an association may demand payment 
 thereof at the office of such association, or at its place of redemp- 
 tion designated as aforesaid, and if the association fail to redeem 
 the same in lawful money, they may cause the same to be protested, 
 as before explained, and the notary, on making such protest or 
 upon receiving such admission, shall forthwith forward the same 
 to the Comptroller of the Currency for his information and action 
 in the premises. Being informed of the default of the association 
 in that mode, it is made the duty of the Comptroller to make an 
 examination into the facts, and if satisfied that, the default has 
 been committed, to give notice to the association ; and the same 
 section provides that from that time it shall not be lawful for 
 the association suffering the default to pay out any of its notes, 
 discount any notes or bills, or otherwise prosecute the business of 
 banking, except to receive and safely keep money belonging to it 
 and to deliver special deposits. On receiving such notice the Comp- 
 troller of the Currency, with the concurrence of the Secretary of 
 the Treasury, may appoint a special agent to examine into the facts 
 of the case, and if satisfied from the protest or the report of the 
 special agent that the charge of default as made is true, he shall, 
 within thirty days, declare the bonds and securities pledged by the 
 association forfeited and give notice to the holders of the circulating 
 notes to present the same for payment at the treasury, and the pro- 
 vision is that in that event he may in his discretion cause an 
 amount of the bonds pledged, equal at current rates to the amount 
 paid to redeem the outstanding notes of the association, or he may 
 
SUPEEME COUET, 1871. 83 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 cause such an amount of the bonds pledged as may be necessary to 
 redeem the outstanding notes, to be sold at public auction ; or, if 
 he shall be of the opinion that the public interest will be best pro- 
 moted thereby, he may sell at private sale any of the bonds .so 
 pledged and receive therefor either money or the circulating notes 
 of such failing association. Power is also conferred upon the 
 Comptroller of the Currency in such a case forthwith to appoint a 
 receiver, to take possession of the books, records, and assets of every 
 description of the association, and to collect all debts due and claims 
 belonging to it, and upon the order of a court of record of compe- 
 tent jurisdiction he may sell or compound all bad or doubtful debts 
 and may sell all the real and personal property of the association 
 on such terms as the court shall direct, and may, if necessary to 
 pay the debts of the association, enforce the individual liability of 
 the stockholders, as enacted by the twelfth section of the act. All 
 moneys so made by the receiver he is to pay over to the Treasurer of 
 the United States, subject to the order of the Comptroller of the 
 Currency, and he is also to make report to that officer of all his 
 acts and proceedings. Eeceivers may also be appointed for other 
 causes than those already mentioned ; as for example, in case the 
 money reserve which the association is required to have on hand 
 shall fall below the prescribed amount, and when notified to make 
 it good the association shall fail for thirty days to comply with the 
 requirement, or shall fail for thirty days to increase the capital 
 stock of the association to the minimum amount required, where 
 the same has been reduced below that amount by the delinquency 
 of the shareholders and consequent sale and reduction of the stock ; 
 or, in case any such association which is required to keep undi- 
 minished the twenty per centum surplus mentioned in the twelfth 
 section of the act, shall fail to keep it good, in which event the 
 provision is that the Comptroller of the Currency may compel said 
 banking association to close its businesss and wind up its affairs, 
 as provided in the act under which it was organized. When^er a 
 receiver is appointed, the Comptroller is required to give notice of 
 the fact, requesting all persons having claims against the associa- 
 tion to present the same, and to make legal proof thereof. 
 Provision is first to be made by the Comptroller for refunding to 
 the United States any such deficiency in redeeming the notes of the 
 association as is mentioned in the act, and having refunded that 
 amount the Comptroller is required in the next place to make a 
 
84 UNITED STATES 
 
 Bank of Bethel v. Pahqnioque Bank. 
 
 ratable diyidend of the money paid over to him by the receiver on all 
 such claims as may hare been proved to his satisfaction, or adjudi- 
 cated in a court of competent jurisdiction. Claims proved to the sat- 
 isfaction of the Comptroller are to be included in the list, and he is 
 also to include in the list all claims adjudicated in a court of com- 
 petent jurisdiction, which shows conclusively that claims disallowed 
 by the Comptroller may be prosecuted in a court having jurisdiction 
 in such cases. Kennedy v. Gibson, 8 Wall. 506. Where the whole as- 
 sets are not collected' and distributed in the first dividend, further 
 dividends on claims proved and adjudicated may be made as the 
 proceeds of the assets are collected and paid to the treasurer, and 
 the remainder, if any, shall be paid to the shareholders. 
 
 None of these proceedings, however, support the theory that the 
 association ceased to exist when the receiver was appointed, nor at 
 any time before the assets of the association are fully administered 
 and the balance, if any, is paid to the owners of the stock or their 
 legal representatives. 
 
 Delinquent associations whose notes have been protested, and 
 whose officers have been nobified by the Comptroller that proceed- 
 ings for liquidation under the act have been instituted, cannot law- 
 fully pay out any of their notes, or discount any notes or bills, or 
 otherwise prosecute the business of banking, except to receive and 
 safely keep money belonging to the association, and to deliver 
 special deposits, which, of itself, refutes the theory that the asso- 
 ciation at that stage of the proceedings has ceased to exist. Evi- 
 dence to refute that theory is also found in the proviso to the 
 fiftieth section of the act, which empowers the association, if they 
 deny having failed to redeem their circulating notes, to apply, 
 within ten days after being so notified by the Comptroller that 
 such proceedings have been commenced, to the nearest circuit, or 
 district, or territorial court of the United States, to enjoin further 
 proceedings in the premises, and those courts are invested with 
 full jurisdiction to hear and determine the matters put in issue by 
 such an application. 
 
 Such associations are authorized to elect or appoint directors, 
 and the directors are empowered to exercise all such incidental 
 powers as shall be necessary to carry on the business of banking. 
 They may make by-laws, discount and negotiate promissory notes, 
 drafts, bills of exchange, or other evidences of debt; receive deposits, 
 buy and sell exchange, coin and bullion; loan money on personal 
 
SUPEEME COUET, 1871.. 85 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 security and obtain, issue, and circulate notes according to the pro- 
 visions of the act to provide a National currency. Throughout, 
 they are enjoined to conform to the regulations of that act, and 
 the provision is, that if they knowingly violate any of its provisions, 
 or knowingly permit them to be violated, all the rights, privileges 
 and franchises of the association derived from the act shall be 
 thereby forfeited; but the further provision is, that such violation, 
 before the association shall be declared dissolved, shall be deter- 
 mined and adjudged by a proper circuit, district, or territorial 
 court of the United States, which shows conclusively that the act 
 of the Comptroller in appointing a receiver does not work a com- 
 plete dissolution of the association, as is supposed by the defend- 
 ants. Frost V. Goal Company, 34 How. 383; Ang. & Am. on Corp. 
 (9th ed.) 777; Abbott's Digest, title " Corporation," 338; Grant 
 on Corporations, 395. 
 
 III. Express power to sue and be sued, complain and defend, in 
 any court of law and equity, is conferred on such associations by 
 the eighth section of the act providing for their organization, and it 
 seems quite clear that the association is a proper party to be 
 sued in all matters in which the corporation is interested, un- 
 less the association is disqualified for that purpose by virtue of the 
 appointment of a receiver or by his subsequent action as such un- 
 der his appointment. Neither power to sue nor to be sued in such 
 cases is anywhere in terms conferred upon the receiver, nor upon 
 the Comptroller of the Currency in any case except when he insti- 
 tutes a suit to forfeit the rights, privileges, and franchises of 
 the association, and in that case the provision is express that the 
 suit shall be in his own name. Case v. Terrell, 11 Wallace, 301- 
 Beyond doubt the appointment of a receiver supersedes the power 
 of the directors to exercise the incidental powers necessary to carry 
 on the business of banking, as the receiver is required to take pos- 
 session of the books, records and assets of every description of the 
 association, and from that moment the association is forbidden to 
 pay out any of its notes, discount any notes or bills, or otherwise 
 prosecute the business of banking, but the corporate franchise of 
 the association is not dissolved, and the association, as a legal entity, 
 continues to exist, as is shown to a demonstration by the fact that 
 it is required safely to keep the money on hand belonging to it, 
 and may deliver special deposits in its keeping to the rightful own- 
 ers. 
 
86 UNITED STATES 
 
 Bank of Bethel v. Pahquioque Bank. 
 
 Much aid cannot be derived from authorities in the examination 
 of this proposition, as the question turns chiefly if not entirely 
 upon the construction of the act of Congress, and suffice it to say 
 that we are all of the opinion that the act contains nothing in its 
 subsequent provisions inconsistent with the theory of the plaintiffs, 
 that the association may sue and be sued, complain and defend, in 
 all cases where it may be necessary ihat the corporate name of the 
 association shall be used for that purpose in closing its business 
 and winding up its affairs under the provisions of the act wTiich 
 authorized its formation. 
 
 Suits and proceedings under the act, in which the United States 
 or their ofilcers or agents are parties, whether commenced before or 
 after the appointment of a receiver, are to be conducted by the 
 district attorney under the direction of the Solicitor of the Treas - 
 ury, and no doubt is entertained that the directors, from the time 
 a receiver is appointed, cease to have any power in respect to such 
 matters, and that the control and supervision of the same are vested 
 in the proper officers of the United States. Claims presented 
 by creditors may be proved before the Comptroller or may be estab- 
 lished by a suit against the association in any court of competent 
 jurisdiction. Kennedy v. Wilson, 8 Wallace, 506. Creditors, say the 
 court in that case, must seek their remedy through the Comptrollers 
 in the mode prescribed in the act of Congress, and cannot proceed 
 directly in their own names aglinst the stockholders or debtors of 
 the corporation. Suits may be brought by the receiver, both at 
 law or in equity, and the express decision there is that he may sue 
 in his own name or in the name of the association for his use, and 
 no reason is perceived to doubt the correctness of the rule adopted 
 in that case, though the act of Congress does not in terms give 
 him authority to sue in his own name. Booth v. Clark, 17 How- 
 ard, 322. 
 
 IV. Enough has already been remarked to show that the fourth 
 proposition of the defendants cannot be sustained, as the act of 
 Congress provides that the receiver, in making the basis for a divi- 
 dend, shall include in the list, not only claims proved before him to 
 his satisfaction, but claims also adjudicated in a court of compe- 
 tent jurisdiction. 
 
 Attempt is made to show that the adjudicated claims there re- 
 ferred to are only such as had been adjudicated before the receiver 
 was appointed, but the court is of the opinion that such a con- 
 
SUPKEME OOUKT, 1871. 87 
 
 Bank V. Kennedy. 
 
 struction is not warranted either by the language employed, or the 
 subject-matter to which it relates, or the purpose to be accom- 
 plished, or by the analogies of the law or the usual rules of inter- 
 pretation which courts apply in ascertaining the meaning of a leg- 
 islative provision of a remedial character. Tested by any one or 
 all of these criterions the court is of the opinion that the con- 
 struction assumed by the defendants is quite too narrow to carry 
 into effect the intention which the framers of the provision had in 
 view at the time it was adopted. Claims presented by creditors 
 may be proved before the receiver, or they may be put in suit in 
 any court of competent jurisdiction, as a means of establishing 
 their validity and to determine the amount owed by the association, 
 but the judgment when recovered will not give the creditor any 
 lien on the property of the delinquent association, nor secure to 
 the judgment creditor any preference over other creditors whose 
 claims are proven before the receiver. All alike must await the ac- 
 tion of the Comptroller of the Currency, and be content with a 
 just and legal distribution of the proceeds of the assets collected 
 by the receiver and liquidated by the Comptroller according to the 
 act of Congress in such case made and provided. 
 
 Kothing further need be remarked in respect to the other errors 
 assigned, as it is clear that the conclusions announced dispose of all 
 the questions in the case which are examinable under a writ of 
 error to a State court. 
 
 Judgment affirmed. 
 
 Bank v. Kenkbdy. 
 
 (in Wallace, 19.) 
 Action by receiver to collect debts. 
 
 The receiver appointed to wind up a National bank may bring suit to collect 
 debts due tbe bank either in his own name as receiver or in the name of the 
 bank. 
 
 Such receiver may bring an action to recover an ordinary debt due the bank 
 without an order from the Comptroller of the Currency. Kennedy v. Gib- 
 son, ante, p. 17, distinguished. 
 
 EEEOE to the Supreme Court of the District of Columbia. 
 The action was by Kennedy, receiver of the Merchants' Na- 
 tional Bank, against tie National Bank of the Metropolis, tojrecover 
 
88 UNITED STATES 
 
 Bank v. Kennedy. 
 
 a balance alleged to be due on a check of fifty thousand dollars drawn 
 by one Robinson on the said Bank of the Metropolis, in favor of 
 said Merchants' Bank, and duly presented for payment and admitted 
 to be due. 
 
 The only question of interest was as to the authority of the 
 receiver to sue — the other questions being solely questions of evi- 
 dence. 
 
 Verdict and judgment in the court below were given for the 
 plaintiff. 
 
 Mutley Ashton and W. D. Davidge, for plaintiffs in error. 
 
 R. T. and W. M. Merrick, contra. 
 
 Mr. Justice Bradlex delivered the opinion of the court. 
 
 The first and second errors assigned are that the plaintiff, who 
 is a receiver appointed by the Comptroller of the Currency under 
 the fiftieth section of the National Banking Law, is not entitled to 
 bring suit without the authority or direction of the said Comp- 
 troller — which is not alleged or shown in this case ; and that the 
 action cannot be maintained by the receiver in his own name as 
 such. 
 
 These objections are based upon the language of the act referred 
 to as well as the general nature of the receiver's office. The stat- 
 ute (§ 50, 13 Stat, at Large, 114) enacts: 
 
 "That on becoming satisfied, as specified in this act, that any 
 association has refused to pay its circulating notes as therein men- 
 tioned, and is in default, the Comptroller of the Currency may 
 forthwith appoint a receiver, and require of him such bond and 
 security as he shall deem proper, who, under the direction of the 
 Comptroller, shall take possession of the books, records and assets 
 of every description of such association, collect all debts, dues and 
 claims belonging to such association, and upon the order of a 
 court of competent jurisdiction, may sell or compound all bad or 
 doubtful debts, and, on a like order, sell all the real and personal 
 property of such association, on such terms as the court shall 
 direct; and may, if necessary to pqy the debts of such association, 
 enforce the individual liability of the stockholders provided for by 
 the twelfth section of this act ; and such receiver shall pay over 
 all money so made to the Treasurer of the United States, subject 
 to the order of the Comptroller," etc. 
 
SUPEEME COURT, 1873. 
 
 Bank v. Kennedy. 
 
 We have already decided in the case of this very receiver that he 
 may bring suit in his own name, or use the name of the association. 
 Kennedy v. Gibson, 8 "Wall. 498 {ante, p. 17). 
 
 The subject was also largely discussed in the case of The Bank of 
 Bethel v. The Pahquioque Bank, 14 Wall. 383,* and the same views 
 ■were held; the action in that case being brought against the insolvent 
 bank. This disposes of the question as to the legal right of the 
 receiver to sue. 
 
 It remains, therefore, to determine whether it is necessary for 
 the receiver, before bringing suit in an ordinary case of a debt or 
 claim due the bank, to have the order of the Comptroller for that 
 purpose. In the case already referred to, the receiver had instituted 
 a suit in equity against some of the stockholders of the bank for the 
 purpose of charging them with the personal liability prescribed by 
 the twelfth section of the act; and we held that he had no right to 
 do this without the Comptroller's direction. But it will be per- 
 ceived that that was a very special case, out of the ordinary course, 
 and one which involved an important consideration of the policy 
 to be pursued. 
 
 Stockholders are not ordinary debtors of the bank, but are 
 rather in the light of creditors, their stock being regarded as a 
 liability. They are entitled to all the surplus that remains, if any 
 should remain, after the payment of the debts. They are only 
 conditionally liable for those debts after all the ordinary resources 
 of the bank have been exhausted, and they ought not to be prose- 
 cuted without due regard to the circumstances of the case. 
 The determination on the part of those charged with winding up 
 the affairs of the bank, to resort to this ultimate remedy, requires 
 the exercise of due consideration; and a receiver ought not to take 
 it upon himself to decide so important a question without reference 
 to the Comptroller under whose direction he acts. Although it is 
 his duty to collect the assets of the institution he does not distrib- 
 ute them, and cannot ordinarily know, without reference to the 
 Comptroller, whether a prosecution of the stockholders will be 
 necessary or not. Hence our decision in the case of Kennedy v. 
 Gibson cannot fairly be quoted for the government of a case like 
 the present, which is a suit to recover an ordinary debt. The Ian- ' 
 guage of the statute authorizing the appointment of a receiver to 
 act under the direction of the Comptroller, means no more than 
 that the receiver shall be subject to the direction of the Comptroller. 
 
 Ante, p. 77. 
 
 12 
 
90 UNITED STATES 
 
 Tiffany v. National Bank of Missouri. 
 
 It does not mean that he shall do no act without special instruc- 
 tions. His very appointment makes it his duty to collect the assets 
 and debts of the association. With regard to ordinary assets and 
 debts no special direction is needed ; no unusual exercise of 
 judgment is required. They are to' be collected of course; that is 
 what the receiver is appointed to do. We think there was no error 
 in the decision of the court below on these points, and that the 
 action was properly brought by the receiTer. 
 
 (The remainder of the opinion was devoted to a consideration 
 of questions as to the admissibility of evidence.) 
 
 Judgment affirmed. 
 
 TiEFAJSTT T. National Bakk of Missouei. 
 
 (18 Wallace, 409.) 
 
 Interest — rate of, on loans. 
 
 Tlie 30th section of the National Banking Act (R. S., § 5197) provides that 
 National banks " may take, receive, reserve and charge on any loan, * * * 
 interest at the rate allowed by the laws of the State or Territory 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 issue, organized under State laws, the rate 
 so limited shall be allowed for associations organized in any such State under 
 this act." Held, that where the rate of interest allowed generally was higher 
 than that allowed to State banks of issue National banks were entitled to the 
 higher rate. 
 
 EEEOK to the Circuit Court for the District of Missouri. 
 Action by Tiffany, trustee of Darby, a bankrupt, against the 
 National Bank of Missouri, to recover, under the provisions of 
 section 30 of the National Banking Act of 1864 (R.S., § 5197), 
 twice the amount of interest paid by said Darby on certain loans 
 made by the bank to him before he was adjudicated a bankrupt. 
 The ground of the action was that the interest charged and paid 
 was 9 per cent, whereas the lawful rate was alleged to be 8 per cent. 
 
 In Missouri the general rate of interest was 10 per cent, but 
 State banks of issue were limited to 8 per cent. 
 
 On demurrer the court below held that the National banks of 
 Missouri could take more than 8 per cent. 
 
 S. Knox, for appellant. 
 
 J. 0. Broadhead, contra. 
 
SUPEEMB COURT, 1873; 91 
 
 Tiffany v. National Bank of Missouri. 
 
 Mr. Justice Steon'G delivered the opinion of the court. 
 
 In an action like the present, brought to recover that which is 
 substantially a statutory penalty, the statute must receive a strict, 
 that is, a literal construction. The defendant is not to be subjected 
 to a penalty unless the words ol the statute plainly impose it. 
 
 The question, therefore, is whether the thirtieth section of the 
 act of Congress of June 3d, 1864, relative to National banking as- 
 sociations, clearly prohibits such associations in the State of Missouri 
 from reserving and taking a greater rate of interest than 8 per cent. 
 The rate limited by the laws of that State to be charged by the banks 
 of issue organized under its laws. It is only in case a greater rate of 
 interest has been paid than the National banking associations are al- 
 lowed to receive that they are made liable to pay twice the interest. 
 The act of Congress enacts that every such association " may take, re- 
 ceive, 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 allowed by the laws of the State or Territory where the bank 
 is located and no more ; except that where, by the laws of any 
 State, a diflerent rate is limited for banks of issue organized under 
 State laws, the rate so limited shall be allowed for associations or- 
 ganized in any such State under the act." What, then, were the 
 rates of interest allowed in Missouri when the loans were made by 
 the defendants that are alleged to have been usurious ? It is ad- 
 mitted to have been 10 per cent, per annum, allowed to all 
 persons, except banks of issue organized under the laws of the State, 
 and they were allowed to charge and receive only 8 per cent. 
 
 The position of the plaintiff is, that the general provision of the 
 act of Congress that National banking associations may charge and 
 receive interest at the rate allowed by the laws of the State where 
 they are located, has no application to the case of these defendants, 
 and that they are restricted to the rate allowed to banks of issue of 
 the State, that is, to 8 per cent. This, we think, cannot be main- 
 tained. 
 
 The act of Congress is an enabling statute, not a restraining 
 one, except so far as it fixes a maximum rate in all cases where State 
 banks of issue are not allowed a greater. There are three provisions 
 in section 30, each of them enabling. If no rate of interest is 
 defined by State laws, 7 per cent is allowed to be charged. If there 
 is a rate of interest fixed by State laws for lenders generally, the 
 banks are allowed to charge bhat rate, but no more, except that if 
 
92 UNITED STATES 
 
 Tiffany t. National Bank of Missouri. 
 
 State banks of issue are allowed to reserve more, the same privilege 
 is allowed to National banking associations. 
 
 Such, we think, is the fair construction of the act of Congress, 
 entirely consistent with its words and with its spirit. It speaks of 
 allowance to National banks, and limitations upon State banks, 
 but it does not declare that the rate limited to State banks shall 
 be the maximum rate allowed to National banks. 
 
 There can be no question that if the banks of issue of Missouri 
 were allowed to demand interest at a higher rate than 10 per cent 
 National banks might do likewise. And this would be for the 
 reason that they would then come within the exception made by 
 the statute, that is, the exception from the operation of the re- 
 strictive words "no more" than the general rate of -interest allowed 
 by law. But if it was intended they should in no case charge a 
 higher rate of interest than State banks of issue, even though the 
 general rule was greater, if the intention was to restrict rather 
 than to enable, the obvious mode of expressing such an intention 
 was to add the words " and no more" as they were added to the 
 preceding clause of the section. The absence of those woi-ds, or 
 words equivalent, is significant. Coupled with the general spirit 
 of the act, and of all the legislation respecting National banks, it is 
 controlling. It cannot be doubted, in view of the purpose of Con- 
 gress in providing for the organization of National banking associa- 
 tions, that it was intended to give them a firm footing in the dif- 
 ferent States where they might be located. It was expected they 
 would come into competition with State banks, and it was intended 
 to give them at least equal advantages in such competition. In 
 order to accomplish this they were empowered to reserve interest 
 at the same rates, whatever those rates might be, which were al- 
 lowed to similar State institutions. This was considered indis- 
 pensable to protect them against possible unfriendly State legisla- 
 tion. Obviously, if State statutes should allow to their banks of 
 issue a rate of interest greater than the ordinary rate allowed to 
 natural persons. National banking associations could not compete 
 with them, unless allowed the same. 
 
 On the other hand, if such associations were restricted to the 
 rates allowed by the statutes of the State to banks which 
 might be authorized by the State laws, unfriendly legislation might 
 make their existence in the State impossible. A rate of interest 
 might be prescribed so low that banking could not be carried on, 
 
SUPREME COURT, 1873. 93 
 
 BuUard v. Bank. 
 
 except at a certain loss. The only mode of guarding against such 
 contingencies was that which, we think, Congress adopted. It was 
 to allow to National associations the rate allowed by the State to 
 natural persons generally, and a higher rate if State banks of issue 
 were authorized to charge a higher rate. This construction ac- 
 cords with the purpose of Congress, and carries it out. It accords 
 with the spirit of all the legislation of Congress. National banks 
 have been National favorites. They were established for the pur- 
 pose, in part, of providing 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 compe- 
 tition 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. A duty has been im- 
 posed upon their issues so large as to manifest a purpose to compel 
 a withdrawal of all such issues from circulation. In harmony 
 with this policy is the construction we think should be given to the 
 thirtieth section of the act of Congress we have been considering. 
 It gives advantages to National banks over their State competitors. 
 It allows such banks to charge such interest as State banks may 
 charge, and more, if by the laws of the State more may be charged 
 by natural persons. 
 
 The result of this is that the defendants, in receiving 9 per cent 
 interest upon the loans made by them, have not transgressed the 
 act of Congress, consequently they are under no liability to the 
 plaintiff. 
 
 Judgment affirmed. 
 
 Btillaed t. Bank. 
 
 as Wallace, 589.) 
 
 National hanks cannot acquire lien on their own stock. 
 
 The articles of association and the by-laws of a National bank prohibited the 
 transfer of stock owned by any stockholder indebted to the bank until such 
 Indebtedness should be satisfied. Held, that the prohibition was invalid, 
 under section 35 of the National Banking Act, and that the bank could not 
 thus acquire a lien on the shares of the stockholders.* 
 
 * See Bank v. Lanier, ante, p. 70. This case overrules Dunkerson's Case, i 
 Bias. 227, and Knight v. Bank of Providence, 4 Am. Law Times Rep. 240, 
 
94 UNITED STATES 
 
 BuUard v. Bank. 
 
 ON certijacate of division in opinion between the judges of the 
 Circuit Court for the District of Massachusetts. 
 Action by BuUard as trustee in bankruptcy of one Clapp, against 
 the National Eagle Bank of Boston, to recoTer for a refusal by 
 said bank to allow certain stock owned by Clapp to be transferred.. 
 The defendant was organized under the National Banking Act of 
 1864, the thirty-fifth section of whieh provided: 
 
 " That no associations shall make any loan or discount on the security of the 
 shares of its own capital stock, nor be the purchaser nor holder of any such 
 shares, unless such security or purchase shall be necessary to prevent loss 
 upon a debt previously contracted in good faith." 
 
 The act also provided that associations for carrying on banking 
 might be formed " by any number of persons not less than five, 
 who 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 the provis- 
 ions of this act which the association may see fit to adopt for the 
 regulation of the business of the association, and the conduct of 
 its affairs. 
 
 Section 8 provided: 
 
 "That every association formed pursuant to the provisions of this act shall 
 from the date of the execution of its organization certificate, be a body cor- 
 porate * * * and its board of directors shall have power to define and regulate 
 by by-laws not inconsistent with the provisions of this act, the manner in 
 which its stock shall be transferred * * • its general business conducted, and 
 all the privileges granted by this act to associations organized under it shall 
 be exercised and enjoyed. 
 
 " Sbc. 13. That the capital stock of any association formed under this arit 
 shall be divided into shares of $100 each, and be deemed personal property, 
 and transferable on the books of the association in such manner as may be 
 prescribed in the by-laws or articles of association." 
 
 wherein it was held that a National bank could, by a by-law, create a 
 lieu on the shares of a stockholder who was indebted to it. It also overrules 
 Pendergast v. Bank of Stockton, i Am. Law Times Rep. 247; and In re Bigdow, 
 1 Bankruptcy Reg. 202. In Rosenback v. Salt Springs National Bank, 53 Barb. 
 495, the Supreme Court of New York held that a lien could not be created by 
 by-law, but the court was of opinion that the articles of association could author- 
 ize such lien — an opinion directly at variance with this case of BuUard v. Bank. 
 In Conklin v. The Second National Bank, post, the Court of Appeals of New 
 York held void a clause in the certificate of stock giving the bank a lien. 
 See, also, EvansviUe National Batik v. Metropolitan Bank, post ; and Johnson 
 V. Laflin, post. 
 
SUPREME COURT, 1873. 95 
 
 BuUard v. Bank. 
 
 The articles of association of the National Eagle Bank contained 
 a provision that the directors of the association shall 
 
 "Have the power to make all by-laws that it may be proper and convenient for 
 them to make under said act^for the general regulation of the business of the as- 
 sociation, and the entire management and administration of its affairs ; which 
 by-laws may prohibit, if the directors so determine, the transfer of stock 
 owned by any stockholder who may be liable to the association, either as prin- 
 cipal debtor or otherwise, without the consent of the board." 
 
 Subsequently, on the 32d of November, 1871, at a meeting of 
 the directors, the following by-law was adopted : 
 
 " In pursuance of one of the articles of association, and to carry the same 
 into effect, and in the exercise of an authority conferred by an act, under 
 which the bank was organized, to define and regulate the manner in which its 
 stock may be transferred, it is hereby declared, ' All debts actually due and 
 payable to the bank (days of grace for payment being passed) by a stockholder, 
 as principal debtor or otherwise, requesting a transfer, shall be made, unless 
 the board of directors shall direct to the contrary. " 
 
 And on the 7th of December, 1871, this by-law was amended by 
 adding the words, "And no person indebted to the bank shall be 
 allowed to sell or transfer his or her stock without the consent of a 
 majority of the directors, and this whether liable as principal or 
 surety and whether the debt or liability be due or not." 
 
 The said Clapp purchased one hundred and fifty shares of stock 
 in said bank. He afterward borrowed money of the bank, and 
 was subsequently decreed to be a bankrupt, and Ballard was ap- 
 pointed trustee. Ballard claimed the stock as part of the assets of 
 the estate and demanded a transfer of them to him, which was re- 
 fused, and this action brought. The judges in the court below 
 differed in opinion as to what judgment should be given, and 
 certified to this court for answer these questions: 
 
 First. Whether a National bank, organized under and controlled 
 by the act of 1864, can acquire a valid lien upon the shares of its 
 stockholders by the articles of association or by-laws , as proved m 
 this case. 
 
 Second. Whether if such articles of association and by-laws, or 
 both, created any valid lien upon the shares of the stockholders in 
 a National bank organized under the act of 1864, such lien at- 
 tached to the shares before the time when there was an existing 
 debt, from the stockholders to the bank due and unpaid ? 
 
96 UNITED STATES 
 
 Bullard v. Bank. 
 
 Third. Whether the National Eagle Bank is entitled to hold the . 
 interest of Clapp, in the stock mentioned, by way of lien or secu- 
 rity, for any of the notes mentioned? 
 
 B. R. Ourtis, for plaintiff. 
 
 C. B. Goodrich, contra. 
 
 Mr. Justice Steong delivered the opinion of the court. 
 
 The extent of the powers of National banking associations is to 
 be measured by the act of Congress under which such associa- 
 tions are organized. The fifth section of that act enacts that the 
 articles of association "shall specify in general terms the ob- 
 ject for which the association is formed, and may contain any 
 other provisions not inconsistent with the provisions of 
 this act, which the association may see fit to adopt for the regula- 
 tion of the business of the association and the conduct of its af- 
 fairs. " And the eighth section of the same act empowers the board 
 of directors " to define and regulate by by-laws, not inconsistent with 
 the provisions of this act, the manner in which its stock shall be 
 transferred." There are other powers conferred by the act, but 
 unless these confer authority to make and enforce a by-law giving 
 a lien on the stock of debtors to a banking association very plainly 
 it has not been given. What then were the intentions of Congress 
 respecting the powers and rights of banking associations ? The 
 act of 1864 was enacted as a substitute for a prior act, enacted Feb- 
 ruary 25th, 1863, and in many particulars the provisions of the 
 two acts are the same. But the earlier statute, in its thirty-sixth 
 section,, declared that no shareholder in any association under the 
 act should have power to transfer or sell any share held in his own 
 right so long as he should be liable, either as principal, debtor, 
 surety, or otherwise, to the association for any debt which had be- 
 come due and remained unpaid. This section was left out of the 
 substituted act of 1864, and it was expressly repealed. Its repeal 
 was a manifestation of a purpose to withhold from banking associ- 
 ations a lien upon the stock of their debtors. Such was the opin- 
 ion in this court in Banh v. Lanier, 11 Wall. 369. In that case it 
 appeared that a bank had been organized under the act of 1863, 
 and that it had adopted a by-law, which had not been repealed, 
 that the stock of the bank should be assignable only on its books, 
 subject to the provisions and restrictions of the act of Congress, 
 
SUPEEME COURT, 1873. 97 
 
 BuUard t. Bank. 
 
 among which provisions and restrictions was the one contained in 
 the thirty-sixth section, that no shareholder should haye power to 
 sell or transfer any share so long as he should be liable to the bank 
 for any debt due and unpaid. And when the bank was sued for 
 refusing to permit a transfer of stock, it set up, in defense, that 
 the stockholder was indebted to it, and that under the by-law he 
 had no right to make the transfer. But this court said: 
 "Congress evidently intended, by leaving oat of the act of 
 1864 the thirty^sixth section of the act of 1863, to relieve 
 the holders of bank shares from restrictions imposed by 
 that section. The policy on the subject was changed, and 
 the directors of banking associations were, in effect, notified 
 that thereafter they must deal with their shareholders as they 
 dealt with other people. As the restrictions fell, so did that part 
 of the by-law relating to the subject fall with them." But this 
 could have been only because the restriction was regarded as incon- 
 sistent with the policy and spirit of the act of 1864 It cannot 
 truly be said that the by-law was founded upon the thirty-sixth 
 section, though it doubtless referred to that section. It was not 
 in that the power to make by-laws was given. The eleventh sec- 
 tion was the one which authorized associations to make by-laws, 
 not inconsistent with the provisions of the act, for the manage- 
 ment of their property, the regulation of their affairs, and for the 
 transfer of their stock; and that was substantially re-enacted in 
 the act of 1864. Moreover, the sixty-second section of the latter 
 act, while repealing the act of 1863, enacted that the repeal should 
 not affect any appointments made, acts done, or proceedings had, 
 or the organization, acts, or proceedings of any association organ- 
 ized, or in the process of organization under the act aforesaid, and 
 gave to such associations all the rights and privileges granted by 
 the act, and subjected them to all the duties, liabilities and restric- 
 tions imposed by it,,it is, therefore, manifest that it was not the re- 
 peal of the thirty-sixth section which caused the by-law to fall. 
 It fell because it was considered a regulation inconsistent with the 
 new Currency Act, the policy of which was to permit no liens in 
 favor of a bank upon the stock of its debtors. It is impossible, 
 therefore, to see why the decision in the case of The Bank v. Lanier 
 does not require that the certified question should be answered in 
 the negative. 
 An attempt was made in the argument to distinguish that case 
 13 
 
98 UNITED STATES 
 
 Bullard v. Bank. 
 
 from the present, by the fact that the articles of association of 
 the Eagle Bank contain the provision to which we have referred, 
 namely, that the directDrs should have the power to make by-laws 
 which may prohibit the transfer of stock owned by any stockholder 
 who may be a debtor to the association, without the consent of the 
 board, a provision which, it is said, the associates were justified in 
 making by the fifth section of the act of 1864. The argument is, 
 that though the act of Congress does not itself create a lien on a 
 debtor's stock (as did the act of 1863), it does by the words of its 
 fifth section authorize the creation of such a lien by the articles of 
 association, and by by-laws made under them. 
 
 This leads to the inquiry whether the fifth section does authorize 
 any provision in the articles of association that by-laws may be 
 made prohibiting the transfer of stock of debtors to a bank, for if 
 it does not, the foundation of the argument is gone. 
 
 Certainly, there is no express grant of 'authority to make such a 
 prohibition contained in that section. There is no specification of 
 such a power, and if such a grant could be implied from the words 
 used by Congress, the implication would be in direct opposition to 
 the policy indicated by the repeal of the thirty-sixth section of the 
 act of 1863, and the failure to re-enact it, as well as by the provisions 
 of the thirty-fifth section, which prohibit loans and discounts by 
 any bank on the security of the shares of its own capital stock, and 
 prohibits, also, every bank from purchasing or holding any such 
 shares, unless such security or purchase shall be necessary to pre- 
 vent loss upon a debt previously contracted in good faith. Surely 
 an implication is inadmissible which contradicts either the letter 
 or the spirit of the act. Surely, when the statute has prohibited 
 all express agreements for a lien in favor of a bank upon the stock 
 of its debtors, there can be no implication of a right to create such 
 a lien from any thing contained in the fifth section. But 
 were there no such policy manifest in the act, the words of the 
 fifth section would not bear the meaning attributed to them. The 
 articles of association required by that section to be entered into 
 must specify in general terms the object for which the association 
 is formed, and may contain any other provisions not inconsistent 
 with the provisions of the act, which the association may see fit to 
 adopt for the regulation of its business and the conduct of its afEairs. 
 To us it seems that a by-law, giving to the bank a lien upon its 
 stock, as against indebted stockholders, .ought not to be considered 
 
SUPREME COURT, 1873, 99 
 
 Ballard v. Bank. 
 
 as a regulation of the business of the bank, or a regulation for the 
 conduct of its affairs. That Congress did not understand the 
 section as extending to the subject of stock transfer is very evi- 
 dent in view of the fact that in another part of the statute express 
 provision was made for such transfers. The eighth section em- 
 powers the board of directors of every banking association to define 
 and regulate by by-laws, not inconsistent with the provisions of 
 the act, the manner in which its stock shall be transferred. 
 
 This would be superfluous if the power had been previously given 
 in the fifth section. That Congress considered it necessary to 
 make such an enactment is convincing evidence that they thought 
 it had not elsewhere been made. Whatever power, therefore, the 
 directors of a bank possess to regulate transfers of its stock, they 
 derive, not from the fifth section of the act, and not from the articles 
 of association, but from the eighth and twelfth sections by express 
 and direct grant. It cannot, therefore, be maintained that the 
 present case is not governed by the decision made in Bank v. Lanier, 
 because the articles of association for the Eagle Bank authorized 
 the directors to make a by-law restricting the transfer of stock. 
 In that case there was a by- law prohibiting the transfer, as in this. 
 Independent of the thirty-sixth section of the act of 1863, there 
 was as much authority to make and enforce such a by-law as is 
 given by the act of 1864. The eleventh and twelfth sections of 
 the act of 1863 enacted that associations formed under it might 
 make by-laws, not inconsistent with the laws of the United States 
 or the provisions of the act, for the transfer of their stock, and 
 that that stock should be transferable on the books of the associa- 
 tion "in such manner as might be prescribed in the by-laws or 
 articles of association.'' These powers given to the associates 
 under that act are quite as large as those given by the act of 
 1864. Yet this court held that- after the passage of the latter 
 act 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. We hold, therefore, in the authority of Bank v. 
 Lanier, that the first question certified must be answered in the 
 negative, and consequently the same answer must be given to the 
 other two questions. 
 
 Answered in the negative. 
 
100 UNITED STATES 
 
 Tappan v. Merchants' National Bank. 
 
 Tappan, Collector, t. Meechan-ts' National Bank. 
 
 09 Wallace, 490.) " 
 
 Taxation of stockholders of National banks — Validity of statute prowMng 
 where tax shay,he assessed 
 
 A State statute provided that the stockholders in National banks should be 
 taxed on such stock in the county, town or district within the State where 
 such bank was located, whether such stockholders resided in such town, 
 county or district, or not. Meld to be constitutional and valid.* 
 
 APPEAL from the Circuit Court for the Northern District of 
 Illinois. 
 The action was brought by the Merchants' National Bank of 
 Chicago against Tappan, collector, to enjoin him from collecting 
 taxes upon any of the shares of stock in the said bank assessed 
 under the following statute of the State of Illinois passed in 1867: 
 
 " No tax shall be assessed upon the capital of any bank or any banking 
 association, organized under the authority of this State, or organized under 
 the authority of the United States, and located within this State. 
 
 " But the stockholders in such banks or banking associations shall be assessed 
 . and taxed on the value of their shares of stock therein in the county, town 
 or district where snch bank or banking association is located, and not else- 
 where, whether such stockholders reside in such town, county, or district, or 
 not, but not any greater rate than is or may be assessed upon other moneyed 
 capital in the hands of individuals in this State." 
 
 The Constitution of the State of Illinois at the time provided: 
 
 "Article IX. 
 " Skction 3. The General Assembly shall provide for levying a tax by val- 
 uation, so that every person and corporation shall pay a tax in proportion to 
 his or her property, such value to be ascertained by some person or persons to 
 
 * The statute in this case was passed before the act of Congress approved Feb- 
 ruary 10, 1868 (R. S. § 5219), which gave a legislative construction to the words 
 " place where bank is located and not elsewhere." The above decision over- 
 rules Union National Bank v. Chicago, 3 Biss. 82. See Va/nAlleny. The Asses- 
 sors, ante, p. 1; People v. Commissioners, ante, p. 9; Bradley v. People, ante, p. 
 14 ; Austin v. Aldermen, ante, p. 15 ; National Bank v. Commonwealth, ante, 
 p. 34 ; Lioriberger v. Rouse, ante, p. 41 ; Hepburn v. School Directors, post, 113 ; 
 People V. Commissioners, post; Adams v. Mayor, post; Charleston v. People^ a 
 National Ba/nk, post; First National Bank v. Peterborough, post. 
 
SUPEEMB OOUET, 1873. 101 
 
 Tappan v. Meicliants' National Bank. 
 
 be elected or appointed in such manner as the General Assembly shall direct 
 and not otherwise. 
 
 " Sec. 5. The corporate authorities of counties, townships, school districts, 
 cities, towns, and villages, may be vested vnth power to assess and collect 
 taxes for corporate purposes, such taxes to be uniform in respect to persons 
 and property, within the jurisdiction of the body imposing the same. And the 
 General Assembly shall require that all the property within the limits of 
 municipal corporations, belonging to individuals, shall be taxed for the pay- 
 ment of debts contracted under authority of law." 
 
 The act of Congress of 1864 under which this bank was organ- 
 ized provided as follows : 
 
 " Sec. 41. Nothing in this act shall be construed to prevent all the shares 
 in any of the said associations held by any person or body corporate from being 
 included in the valuation of the personal property of such person or corporation 
 in the assessment of taxes imposed by or under State authority, at the place 
 where such bank is located and not elsewhere ; but not at a greater rate than 
 is assessed upon other moneyed capital in the hands of individual citizens of 
 such State." 
 
 Some of the shares of stock assessed were held by persons in 
 Chicago where the bank was situated, while other shares were held 
 by persons who did not reside in Chicago, and many were held by 
 persons residing out of the State of Illinois. 
 
 The bill filed by the bank, after setting out the facts of non-res- 
 idence, etc., already stated, and the violation of the Constitution in 
 levying the tax complained of, and a threat of the collector to sell 
 the stock of the bank, if the taxes claimed were not paid, alleged, 
 by way of giving a jurisdiction in equity, that the shareholders re- 
 fused to pay the taxes and forbade the payment of them by the 
 bank, and threatened a multiplicity of suits against the bank in 
 case it paid them, or in case it deducted the amount thereof from 
 any dividends upon the stock ; that if the collector sold the stock 
 irreparable damage would be done to the stockholders ; that the 
 bank was the trustee of its stockholders, and as such entitled to 
 protect their interests ; and that a sale of their stock would preju- 
 dice the bank in the public mind, and work damage to it incapable 
 of remedy at law. 
 
 The court below on demurrer to the bill for want of equity, con- 
 sidering that the law of Illinois laying tax was in violation of its 
 
102 UNITED STATES 
 
 Tappan v. Merchants' National Bank. 
 
 Constitution, decreed an injunction. From that decree this appeal 
 was taken. 
 
 M. W. Fuller, in support of the decree. 
 
 Mr. J. K. Edsall, Attorney-General of Illinois, contra. 
 
 Mr. Chief Justice Waitb delivered the opinion of the court. 
 
 We are called upon in this case to determine whether the Gen- 
 eral Assembly of the State of Illinois could, in 1867, provide for 
 the taxation of the owner of shares of the capital stock of a Na- 
 tional bank in that State, at the place, within the State, where the 
 bank was located, without regard to their places of residence. The 
 statute of Illinois, under the authority of which the taxes com- 
 plained of were assessed, was passed before the act of Congress, ap- 
 proved February 10th, 1868 (15 Stat, at Large, 34), which gave a 
 legislative construction to the words, "place where the bank is 
 located, and not elsewhere," as used in section 41 of the 
 National Banking Act (13 id. 113) ; and permitted the State to 
 determine and direct the manner and place of taxing resident share- 
 holders, but provided that non-residents should be taxed only in the 
 city or town where the bank was located. 
 
 The power of taxation by any State is limited to persons, prop- 
 erty, or business within its jurisdiction. State tax on foreign- 
 held bonds {Railroad v. Pennsylvania, 15 Wall. 319). Personal 
 property, in the absence of any law to the contrary, follows the 
 person of the owner, and has its situs at his domicile. But, for 
 the purpose of taxation, it may be separated from him, and he may 
 be taxed on its account at the place where it is actually located. 
 These are familiar principles, and have been often acted upon in 
 this court and in the courts of Illinois. If the State has actual 
 jurisdiction of the person of the owner, it operates directly upon 
 him. If he is absent, and it has jurisdiction of his property, it 
 operates upon him through his property. 
 
 Shares of stock in National banks are personal property. They 
 are made so in express terms by the act of Congress under which 
 such banks are organized. 13 Stat, at Large, 102, § 13. They are 
 a species of personal property 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 section 
 
SUPEEMB COURT, 1873. 103 
 
 Tappan v. Merchants' National Bank. 
 
 41 of the National Banking Act, it is in effect provided that 
 all shares in such banks, held by any person or body corporate, 
 may be included in the valuation of the personal property of such 
 person or corporation in the assessment of taxes imposed under 
 State authority, at the place where the bank is located, and not 
 elsewhere. 13 Stat, at Large, 113. This is a law of the property. 
 Every owner takes the property subject to this power of taxation 
 under State authority, and every non-resident, by becoming an 
 owner, voluntarily submits himself to the jurisdiction of the State 
 in which the bank is established for all the purposes of taxation 
 on account of his ownership. His money invested in the shares is 
 withdrawn from taxation under the authority of the State in which 
 he resides and submitted to the taxing power of the State where, 
 in contemplation of the law, his investment is located. The State, 
 therefore, within which a National bank is situated has jurisdic- 
 tion, for the purposes of taxation, of all the shareholders of the 
 bank, both resident and non-resident, and of all its shares, and 
 may legislate accordingly. 
 
 The State of Illinois thus having had, in 1867, the right to tax 
 all the shareholders of National banks in that State on account of 
 their shares, it remains to consider at what place or places within 
 the State such taxes could be assessed. 
 
 It is conceded that it was within the power of the State to tax 
 the shares of non-resident shareholders at the place where the bank 
 was located, but it is claimed that under the Constitution of the 
 State, resident shareholders could only be taxed at the places of their 
 residence. We have not been referred to any express provision 
 of the Constitution to that effect. There is nothing which in terms 
 prohibits the General Assembly from separating personal property 
 within the State from the person of the owner and locating it at 
 appropriate places for the purposes of taxation, but it is insisted 
 that sections 2 and 5 of article 9 of the Constitution of 1848, 
 which was in force when the act of 1867 was passed, contain an 
 implied prohibition. 
 
 Section 2 directs that " the General Assembly shall provide for 
 levying a tax by valuation, so that every person or corporation 
 shall pay a tax in proportion to the value of his or her property; 
 Buch value to be ascertained by some person or persons to be elected 
 or appointed in such manner as the General Assembly shall direct, 
 and not otherwise." Section 5 directs that "the corporate au- 
 
104 UNITED STATES 
 
 Tappan v. Merchants' National Bank. 
 
 thorities of counties, townships, school districts, cities, towns, and 
 villages, may be vested with power to assess and collect taxes for 
 corporate purposes; such taxes to be uniform in respect to persons 
 and property within the jurisdiction of the body imposing the 
 same. And the Grener'al Assembly shall require that all property 
 within the liinits of municipal corporations belonging to individ- 
 uals shall be taxed for the payment of debts contracted under au- 
 thority of law." The corresponding provisions of the Constitu- 
 tion of 1870 are in substance the same. 
 
 The object of these sections is to secure uniformity of taxation . 
 That, it is said in Bureau Go. v. Chicago, B. & Q. R. R. Co., 44 
 111. 338, is to be regarded as the cardinal principle, the dominant 
 idea of this article of the Constitution. But uniformity in this 
 connection is only another name for equality, for the provision is 
 for "levying a tax by valuation so that every person and corpora- 
 tion shall pay a tax in proportion to the value of his or her prop- 
 erty." The value of the property being ascertained, the same rate 
 of taxation must be laid upon all. 
 
 Property is made the constitutional basis of taxation. This is 
 not unreasonable. Governments are organized for the protection 
 of persons and property, and the expenses of the protection may 
 very properly be apportioned among the persons protected accord- 
 ing to the value of their property protected. 
 
 The Constitution does not undertake to fix the value of the 
 property. Neither does it prescribe any rules by which it is to be 
 fixed. That is left to the General Assembly, for the provision in 
 that respect is, "such value to be ascertained by some person or 
 persons to be elected or appointed in such manner as the General 
 Assembly shall direct, and not otherwise." The mode and manner 
 in which the persons appointed to make the valuation shall pro- 
 ceed, are left to the discretion of the General Assembly. In fact, 
 the whole machinery of taxation must be contrived and put into 
 operation by the legislative department of the government. As 
 part of this machinery taxation districts must be created. All 
 property within the district must be taxed by uniform rate. If 
 property is actually within a district it is but proper that the legis- 
 lature should provide that it should be listed, valued, and assessed 
 there. In fact, the last clause of section 5, article 9, seems to 
 make that a duty, for it provides that the General Assembly shall 
 require that all property within the limits of municipal corpora- 
 
SUPEEME COUET, 1873. 105 
 
 Tappan vs. Merchants' National Bank. 
 
 tions belonging to individuals shall be taxed for the payment of 
 debts contracted under authority of law. 
 
 This power of locating personal property for the purpose of tax- 
 ation without regard to the residence of the owner has been often 
 exercised in Illinois, and sustained by the courts. Gity of Dunleith 
 V. Reynolds, 53 111. 45. Since the adoption of the Constitution of 
 IST'O, which did not enlarge the powers of the General Assembly 
 in this particular, very extended legislation has been had with a 
 view to such location. Thus, live stock and other personal property 
 used upon a farm must be listed and assessed where the farm is 
 situated ; property in the hands of agents at the place where the 
 business of the agent is transacted ; water craft where they are 
 enrolled ; or, if not enrolled, where they are kept ; the property 
 of bankers, brokers, merchants, manufacturers, and many other 
 classes of persons especially enumerated, at the place where their 
 business is carried on. This became necessary in order that the 
 burdens of taxation might be equally distributed among those who 
 should bear them. 
 
 We do not understand the counsel for the appellee to dispute 
 this power, where the property is tangible and capable of having, 
 so to speak, an actual situs of its own, but he claims that if it is 
 intangible, it cannot be separated from the person of its owner. It 
 must be borne in mind that all this property, intangible though it 
 may be, is within the State. That which belongs to non-residents 
 is there by operation of law. That which belongs to residents is 
 there by reason of their residence. All the owners have submitted 
 themselves to the jurisdiction of the State, and they must obey its 
 will when kept within the limits of constitutional power. 
 
 The question is then presented whether the General Assembly, 
 having complete jurisdiction over the person and the property, 
 could separate a bank share from the person of the owner for the 
 purpose of taxation. It has never been doubted that it was a 
 proper exercise of legislative power and discretion to separate the 
 interest of a partner in partnership property from his person for 
 that purpose, and to cause him to be taxed on its account at the 
 place where the business of the partnership was carried on. And 
 this, too, without reference to the character of the business or the 
 property. The partnership may have been formed for the purpose 
 of carrying on mercantile, banking, brokerage, or stock business. 
 The property may be tangible or intangible, goods on the shelf or 
 
106 UNITED STATES 
 
 Tappan v. Merchants' National Bank. 
 
 debts due for goods sold. The interest of the partner in all the 
 property is made taxable at the place where the business is located. 
 
 A share of bank stock may be in itself intangible, but it repre- 
 sents that which is tangible. It represents money or property in- 
 vested in capital stock of the bank. That capital is employed in 
 business by the bank, and the business is yery likely carried on -at 
 a place other than the residence of some of the shareholders. 
 The shareholder is protected in his person by the government at 
 the place where he resides ; but his property in this stock is pro- 
 tected at the place where the bank transacts his business. If he 
 were a partner in a private bank doing business at the same place, 
 he inight be taxed there on account of his interest in the partner- 
 ship. It is not easy to see why, upon the same principle, he may 
 not be taxed there on account of his stock in an incorporated bank. 
 His business is there as much in the one case as in the other. He 
 requires for it the protection of the government there, and it seems 
 reasoaable that he should be compelled to contribute there to the 
 expenses of maintaining that government. It certainly cannot be 
 an abuse of legislative discretion to require him to do so. If it is 
 not, the General Assembly can rightfully locate his shares there 
 for the purpose of taxation. 
 
 But it is said to be a violation of the constitutional rule of uni- 
 formity to compel the owner of a bank share to submit to taxation 
 for this part of his property at a place other than his residence, be- 
 cause other residents are taxed for their personal property where 
 they reside. It is a sufiBcient answer to this proposition to say that 
 all persons owning the same kind of property are taxed as he is 
 taxed. Absolute equality in taxation can never be attained. That 
 system is the best which comes the nearest to it. The same rules 
 cannot be applied to the listing and valuation of all kinds of prop- 
 erty. Eailroads, banks, partnerships, manufacturing associations, 
 telegraph companies, and each one of the numerous other agen- 
 cies of business which the inventions of the age are constantly 
 bringing into existence, require different machinery for the pur- 
 pose ot their taxation. The object should be to place the burden 
 so that it will bear as nearly as possible equally upon all. For this 
 purpose different systems, adjusted with reference to the valuation 
 of different kinds of property, are adopted. The courts permit 
 this. Thus, in a case in Illinois, involving the system adopted 
 for the taxation of bank shares, it was said by the Supreme Court 
 
STJPEEME COTJET, 1873. 107 
 
 Tappan v. Merchants' National Bank. 
 
 {Mo Veagh y. Chicago, 49 111. 339), " in view of this legislation it 
 must be apparent that a system of taxation for bank shares was 
 designed peculiar to itself and independent of the general revenue 
 law of the State ; " and the authority of the law was sustained 
 and enforced. 
 
 Again, it is said the law in question destroys the uniformity of 
 taxation, because it provides for the collection of the taxes assessed 
 on account of this kind of property in an unusual way. The Con- 
 stitution does not require uniformity in the manner of collection. 
 Uniformity in the assessment is all it demands. When assessed, 
 the tax may be collected in the manner the law shall provide; and 
 this may be varied to suit the necessities of each case. 
 
 Since the decree was rendered in the Circuit Court, the Supreme 
 Court of Illinois has passed upon this same question, and declared 
 the law of 1867 to be constitutional. We might have con- 
 tented ourselves by acknowledging the authority of this decision, 
 but we are willing not only to acknowledge its authority, but to 
 admit its correctness. 
 
 We have not felt called upon to consider whether the General 
 Assembly could, under the provisions of the act of Congress, pro- 
 vide for the taxation of shareholders at any other place within the 
 State than that in which the bank is located. It is sufficient for 
 the purposes of this case that it might tax them there. 
 
 Other questions have been discussed in the argument, and 
 among them one which relates to the power of the bank to inter- 
 fere in behalf of its stockholders in the manner which has been 
 done. We have not deemed it necessary to pass upon any of these 
 questions, as those already decided are conclusive of the case. 
 
 Decree reversed, and the cause remanded with instructions to 
 
 proceed 
 
 In conformity with this opinion. 
 
108 UNITED STATES 
 
 Cadle V. Baker. 
 
 Cadlb V. Bakee. 
 
 (20 Wallace, 650.) 
 Beeeiver — debtors cannot impeach appointment of. 
 
 The debtors of a National bank, when sued by a receiver of the bank, cannot 
 inquire into the validity of his appointment.* 
 
 EEEOE to the District Court for the Middle District of Ala- 
 bama. Action by Cadle, receiver of the Eirst National Bank 
 of Selma, against Baker, to recover a debt due the bank. The 
 declaration alleged in general terms the appointment of the plain- 
 tifE as receiver, and the defendant demurred on the ground that it 
 did not specifically aver each and every thing which was pro- 
 vided for in the National Banking Act as the ground of appoint- 
 ing a receiver. The court below sustained the demurrer and gave 
 judgment for the defendant, whereupon the receiver brought error. 
 
 F. Phillips, for plaintifE in error. 
 
 No opposing counsel. 
 
 Mr. Chief Justice "Waite delivered the opinion of the court. 
 
 We think such averments as the defendant alleges to be neces- 
 sary, and the want of which he has assigned for cause of demurrer, 
 were not necessary. The debtors of a bank, when sued by a receiver, 
 cannot inquire into the legality of his appointment. It is sufficient 
 for the purposes of such a suit that he has been appointed and is 
 receiver in fact. As to debtors, the action of the Comptroller in 
 making the appointment is conclusive, until set aside on the appli- 
 cation of the bank. The bank may move in that behalf, but the 
 debtor cannot. Section 50 makes express provision for a contest 
 by the bank. 
 
 The court below erred in sustaining the demurrer, and for that 
 reason the judgment is reversed and the cause remanded, with 
 instructions to overrule the demurrer to the declaration and 
 
 Proceed accordingly. 
 
 * See Piatt v. Seebe, post, affirming Piatt v. Crawford, 8 Abb. Pr. (N. S.) 297. 
 
SUPEEMB COURT, 1874. JOg 
 
 National Bank v. Colby. 
 
 National Bank t. Colby. 
 
 (a Wallace, 609.) 
 
 Attached, property of hank cannot be sold afer appointment of reeeiiier — Action 
 abates by dissolution of corporation. 
 
 The property of a National bank attached at the suit of an individual creditor, 
 after the bank has become insolvent, cannot be subjected to sale for the pay- 
 ment of his demand, against the claim for the property by a receiver of the 
 bank subsequently appointed* 
 
 A suit against a National bank to enforce the collection of a demand is abated 
 by a decree dissolving the corporation, and forfeiting its rights and 
 franchises. 
 
 EEROE to the Supreme Court of Alabama. 
 The First National Bank of Selma, organized under the act 
 of June 3, 1864, ceased business on the 16th of April, 1867, and a 
 receiver of its effects was appointed by the Comptroller of the Cur- 
 rency. Subsequently an information was filed by the Comptroller, 
 charging violation of its charter, and a decree was entered in the 
 District Court of the United States forfeiting all the rights, fran- 
 chises and privileges of the bank and adjudging its dissolution. 
 
 On the 17th of April, being the day after the bank ceased busi- 
 ness, Colby sued out an attachment in the State court against the 
 bank on a debt alleged to be due him. 
 
 On the trial of the attachment suit, the receiver proved his ap- 
 pointment and the decree dissolving the bank, and thereupon 
 moved the court to dissolve the attachment and discharge the 
 levy. This motion was overruled, and the jury gave a verdict for 
 the plaintiff, and the judgment entered thereon was affirmed by 
 the Supreme Court of the State. The case was brought to the 
 Supreme Court of the United States, under section 709 of the 
 Revised Statutes. 
 
 Alexander White, for Colby. 
 
 P. Phillips and G. Case, contra. 
 
 * As to attachments, etc., of National banks, see Soutli/wick v. First National 
 Sank, post; Chesapeake Bank v. First National Bank of Baltimore, post. 
 
110 UNITED STATES 
 
 National Bank v. Colby. 
 
 Mr. Justice Field delivered the opinion of the court. 
 
 Two questions are presented in this case for our determination : 
 1st, whether the property of a National bank organized under the 
 act of Congress of June 3d, 1864 (13 Stat, at Large, 99), attached 
 at the suit of an individual creditor, after the bank has become 
 insolvent, can be subjected to sale for the payment of his demand, 
 against the claim for the property by> a receiver of the bank subse- 
 quently appointed; and 3d, whether a suit against a National 
 bank to enforce the collection of a demand is abated by a decree 
 dissolving the corporation, and forfeiting its rights and franchises. 
 
 To the first question the act of Congress furnishes an answer in 
 the negative; to the second, the general law respecting corporations 
 gives one in the affirmative. 
 
 The act of Congress prescribes the conditions upon which Na- 
 tional banks shall be created ; the powers they shall possess ; and 
 the consequences of their failure to meet their obligations. All per- 
 sons dealing with these institutions can only acquire and enforce 
 rights against them under the limitations there designated. 
 
 The object of the act, as its title imports, was to create a Na- 
 tional currency secured by a pledge of the bonds of the United 
 States. And to that end it requires security in government bonds 
 for all notes issued; and in case any bank fails to redeein its notes 
 on demand, it provides for their payment on presentation at the 
 treasury of the United States. 
 
 To make good any deficiency which may exist in the proceeds of 
 the bonds to meet the amount expended in paying the notes of a 
 bank the act declares that the " United States shall have a first and 
 paramount lien upon all the assets " of the association. Whatever 
 disposition, therefore, may be made of the property of an insolvent 
 bank, the lien of the United States thereon must exist until the 
 government is fully reimbursed. 
 
 As to the general creditors, the act evidently intends to secure 
 equality among them in the division of the proceeds of the prop- 
 erty of the bank. The fiftieth section provides for the appoint- 
 ment of a receiver of an insolvent bank, who shall take possession 
 of its assets, collect its debts, and upon the order of a court of 
 record, sell its real and personal property and pay over the money 
 to the treasury of the United States, subject to the order of the 
 Comptroller of the Currency ; that the Comptroller shall then ad- 
 vertise for creditors to present their claims against the association, 
 and after making provision for refunding to the United States any 
 
SUPKBME COUKT, 1874. \]\ 
 
 National Bank v. Colby. 
 
 deficiency in redeeming its notes, shall make a ratable dividend of 
 the money on all claims proved to his satisfaction or adjudicated 
 in a court of competent jurisdiction. 
 
 The fifty-second section, further to secure this equality, declares 
 that all transfers by an insolvent bank of its property of every 
 kind„and all payments of money made after the commission of an 
 act of insolvency, or in contemplation thereof, with a view to pre- 
 vent the application of its assets in the manner prescribed by the 
 act, or "with the view to the 'preference of one creditor over an- 
 other, except in the payment of its circulating notes, shall be ut- 
 terly null and void." 
 
 There is in these provisions a clear manifestation of a design on the 
 part of Congress: 1st, to secure the government for the payment 
 of the notqs, not only by requiring in advance of their issue a de- 
 posit of bonds of the United States, but by giving to the govern- 
 ment a first lien for any deficiency that may arise on all the assets 
 sebsequently acquired by the insolvent bank ; and 3d, to secure the 
 assets of the bank for ratable distribution among its general credit- 
 ors. 
 
 This design would be defeated if a preference in the application 
 of the assets could be obtained by adversary proceedings. The 
 priority of the United States and the ratable distribution among 
 the general creditors so studiously provided for in the act, would in 
 that case be lost. As justly observed by counsel, if preference was 
 left to the race of diligence, creditors living remote from the loca- 
 tion of bank would always be distanced in the contest, and the 
 equality promised to them by the act would be a mere mockery. 
 
 It is too late for counsel to question in this court the right of 
 the receiver to appear in the State court and move the discharge of 
 the attachment and the abatement of the suit, or to contest the 
 case at the trial. Whatever informality may have existed in the 
 proceeding, it was waived by the silence of the parties. Objec- 
 tions in matters of form to modes of procedure in the court below 
 cannot be urged here for the first time. 
 
 But, independently of this consideration, we are of opinion that 
 it was a proper proceeding on the part of the receiver to apply to 
 the court below to discharge the attachment, on proof of the facts 
 presented by him, and the production of his appointment and the 
 decree dissolving the association. Invested with the rights of the 
 bank to the possession of the property by his appointment, it was 
 
112 UNITED STATES 
 
 National Bank v. Colby. 
 
 his duty to take the necessary steps to remove the levy. That levy 
 was void as against his claim to the property ; and, in our judgn. 
 ment, it was error for the court to refuse to discharge it on his ap- 
 plication. 
 
 But, in addition to this, the suit had abated by the decree of the 
 District Court of the United States forfeiting the rights, privi- 
 leges, and franchises of the corporation, and adjudging its disso- 
 lution. The act of Congress provides for such forfeiture whenever 
 the directors themselves violate, or knowingly permit any oflBcers, 
 servants, or agents of the association to violate any of the provis- 
 ions of the act. The information filed against the bank by the 
 Comptroller of the Currency disclosed several gross violations of 
 the act by the directors ; and the justice and validity of the decree 
 were not questioned in the State court. With the forfeiture of its 
 rights, privileges and franchises the corporation was necessarily 
 dissolved, as the decree adjudged. Its existence as a legal entity 
 was thereupon ended ; it was then a defunct institution, and judg- 
 ment could no more be rendered against it in a suit previously 
 commenced than judgment could be rendered against a dead man 
 dying pendente lite. This is the rule with respect to all corpora- 
 tions whose chartered existence has come to an end, either by 
 lapse of time or decree of forfeiture, unless, by statute, pending 
 suits be allowed to proceed to judgment notwithstanding such 
 dissolution. The prolongation of the corporate life for this specific 
 purpose as much requires special legislative enactment as does the 
 original creation of the corporation. No such enactment is found 
 in the act of Congress authorizing the creation of National banks 
 and prescribing their powers, nor is there any provision elsewhere 
 that we are aware of which would prevent the dissolution of a cor- 
 poration from working the abatement of a suit pending against it 
 at the time. 
 
 "I cannot distinguish," says Stoet, in Greeley v. Smith, 3 
 Story, 658 ; see, also. Farmers and Mechanics' Bank v. Little, 
 8 Watts & Sargeant, 207, and Mumma v. The Potomac Company, 
 8 Peters, 281, " between the case of a corporation and the case of 
 a private person dying pendente lite. In the latter case the suit is 
 abated at law, unless it is capable of being revived by the enact- 
 ment of some statute, as is the case as to suits pending in the 
 courts of the United States, when, if the right of action survives, 
 the personal representative of the deceased party may appear and 
 
SUPEEME COUET, 1874. 113 
 
 Hepburn v. The School Directors. 
 
 prosecute or defend the suit. No such provision exists as to cor- 
 porations, nor, indeed, could exist without reviving the corpora- 
 tion pro hac vice, and, therefore, any suit pending against it at its 
 death abates by mere operation of law. " 
 
 Some criticism is made upon the facb that the decree of dissolu- 
 tion was entered on the first of June, when the summons cited the 
 directors before the court on a different day. 
 
 It is a suflBcient answer to this criticism that no objection of the 
 kind was made to the decree in the court below, nor was its valid- 
 ity questioned. The presumption is, in the absence of such ob- 
 jection, that an answer existed which would have been made had 
 the objection been taken. The decree was admitted in evidence, 
 and the decision of the court was placed on the ground that the 
 provisions of the act of Congress did not interfere with proceedings 
 by attachment, in the State court, nor affect the liability of an 
 insolvent corporation to be thus sued, and " that matter of abate- 
 ment could not be given in evidence on an issue upon the merits, 
 a default, or a failure to plead;" the court apparently considering 
 the abatement of the attachment, and not the abatement of the 
 suit, as the object sought by the production of the decree. 
 
 Judgment reversed, and the cause remanded, with directions to 
 discharge the attachment levied on the property of the bank. 
 
 HEPBijEsr V. The School Directors. 
 
 (33 Wallace, 480.) 
 
 Sha/res may le taxed at their ma/rket value — Effect of exemption of certain 
 
 moneyed capital. 
 
 Shares of National banks may be taxed, under State laws, at an amount ex- 
 ceeding their par value, if their market value exceed the par value.* 
 
 In one county of a State " all mortgages, judgments, recognizances and money ' 
 owing upon articles of agreement for the sale of real estate were exempt 
 from taxation except for State purposes." Seld, that shares of stock in a 
 National bank located in such county could, nevertheless, be lawfully taxed 
 for county, school, municipal and local purposes. 
 
 * See People v. Commissioners, post. 
 15 
 
114 UNITED STATES 
 
 Hepburn v. The School Directors. 
 
 EKROE to the Supreme Court of Pennsylvania. 
 Action by the school directors of the borough of Carlisle to 
 recover a tax assessed for school purposes on 460 shares of stock of 
 the First National Bank of Carlisle, owned by the defendant 
 Hepburn. This tax was assessed under the following act of 
 Assembly of Pennsylvania of March 31, 1870: 
 
 " All the shares ol National banks, located within this State, shall be taxable 
 for State purposes at the rate of three mills per annum, upon the assessed 
 value thereof, and for county, school, municipal , and local purposes, at the 
 same rate as now is or may hereafter be assessed and imposed upon other 
 moneyed capital in the hands of individual citizens of the State." 
 
 Another act of Assembly of the same State provided that in 
 Cumberland county wherein was Carlisle : 
 
 "All mortgages, judgments, recognizances, and money owing upon article's 
 of agreement for the sale of real estate, shall be exempt from taxation except 
 for State purposes," etc. 
 
 The act of Congress February 10, 1868 (15 Stat, at Large, 34), 
 relating to the taxation of shares in National banks, provided as 
 follows: 
 
 " The legislature of each State may determine and direct the manner and 
 place of taxing all the shares of National banks located within said State, 
 subject to the restriction that the taxation shall not be at a greater rate than 
 is assessed upon other moneyed capital in the hands of individual citizens of 
 such State." 
 
 The Supreme Court of Pennsylvania decided in favot of the 
 legality of the tax (79 Penn. St. 759), and Hepburn brought this 
 writ of error. 
 
 Joseph Casey, for plaintiff in error. 
 
 /. M. Carlisle <& J. D. McPherson, contra. 
 
 Mr. Chief Justice Waitb delivered the opinion of the court. 
 
 The most important question presented by the assignment of 
 errors is, whether shares of stock in a National bank can be valued 
 for taxation by the State in which the bank is located, at an amount 
 exceeding their par value. It is certain that they cannot be taxed 
 
SUPEBME COUET, 1874. US 
 
 Hepburn v. The School Directors, 
 
 at a greater rate than is assessed upon other moneyed capital in the 
 hands of individual citizens of the State. Such is the express pro- 
 vision of the act of Congress. It is contended that the term 
 " moneyed capital," as here used, signifies money put out at inter- 
 est, and that as such capital is not taxed upon more than its par or 
 nominal value, the par value of these shares is their maximum 
 taxable value. 
 
 We cannot concede that money at interest is the only moneyed 
 capital included in that term as here used by Congress. The words 
 are " other moneyed capital." That certainly makes stock in 
 these banks moneyed capital, and would seem to indicate that 
 other investments in stocks and securities might be included in 
 that descriptive term. 
 
 But even if it was true that these shares can only be taxed as 
 money at interest is, the result contended for would not necessarily 
 follow. The money invested in a bank is not money put out at 
 interest. The money of the bank is so put out and the share of 
 the shareholder represents his proportion of that money. What 
 the amount of this share is, must, in some form, be ascertained in 
 order to determine its taxable value. If the nominal or par value 
 of the stock necessarily indicated this amount, there might be 
 some propriety in making that the taxable value; but, as all know, 
 such is not the case. The available moneyed capital belonging to 
 a bank may be diminished by losses or increased by accumulated 
 profits. Therefore, some plan must be devised to ascertain what 
 amount of money at interest is actually represented by a share of 
 stock. The State of Pennsylvania has provided that this may be 
 done by an of&cial appraisement, taking care to prevent abuses by 
 declaring that such appraisement shall not be higher than the cur- 
 rent market value of the stock at the place where the bank is 
 located, and by giving an appeal to the Auditor-General, who is 
 authorized to inquire into the value and correct any errors that 
 may appear. There certainly is no apparent injustice in this. It 
 is not the amount of money invested which is wanted for taxation, 
 but the amount of moneyed capital which the investment repre- 
 sents for the time being. 
 
 If the value set upon the share does not exceed this amount it 
 will not be assessed at a greater rate than other money at interest. 
 Other plans may be devised to accomplish the same end, but it is 
 
116 UNITED STATES 
 
 Hepburn v. Tlie Sctool Directors. 
 
 sufficient for the purposes of this case that this plan is not 
 unreasonable. If a shareholder is not satisfied with the original 
 appraisement, all he has to do is to appeal to the Auditor-General, 
 make known to him. the actual condition of the affairs of the bank, 
 and have the error, if any exists, corrected. Hepburn did not see 
 fit to avail himself of this right which he had. He preferred to 
 rest upon his supposed right, under the act of Congress, to limit 
 the power of assessment to the par value. This right, we think, 
 he did not have. 
 
 It is next insisted that no municipal or school taxes could be as- 
 sessed upon the shares of the First National Bank of Carlisle, a 
 National bank located within the borough of Carlisle, because by 
 the laws of Pennsylvania, as is claimed, other moneyed capital in the 
 hands of individual citizens at that place is exempt from such tax- 
 ation. 
 
 In support of this claim it is shown that all mortgages, judg- 
 ments, recognizances, and moneys owing upon articles of agree- 
 ment for the sale of real estate are exempt from taxation in that 
 borough except for State purposes. This is a partial exemption 
 only. It was evidently intended to prevent a double burden by the 
 taxation both of property and debts secured upon it. Necessarily 
 there may be other moneyed capital in the locality than such as is 
 exempt. If there is, moneyed capital, as such, is not exempt. 
 Some part of it only is. It could not have been the intention of 
 Congress to exempt bank shares from taxation because some mon- 
 eyed capital was exempt. Certainly there is no presumption in 
 favor of such an intention. To have effect it must be manifest. 
 The affirmative of the proposition rests upon him who asserts it. 
 In this case it has not been made to appear. 
 
 Judgment affirmed. 
 
SUPKEME COURT, 1875. 117 
 
 Farmers and Mechanics' National Bank y. Bearing. 
 
 Fabmbbs and Mechakics' National Bank v. Dbabinq. 
 
 (91 tr. S. 29.) 
 Usury — National hanks are not governed by State laws as to. 
 
 The provisions of the National Banking Act imposing penalties upon National 
 banks for taking usury, supersede the State laws upon that subject.* 
 
 National banks organized under the act are the instruments designed to be 
 used to aid the government in the administration of an important branch of 
 the public service ; and Congress, which is the sole j udge of the necessity 
 for their creation, having brought them into existence, the States can ex- 
 ercise no control over them, nor in any wise aflFect their operation, except so 
 far as it may see proper to permit. 
 
 Ij^EEOE to the Court of Appeals of the State of New York. 
 J The facts are stated in the opinion of the court. 
 
 U. G. Spaulding, for plaintifE in error. The real question 
 ^presented in this case is, whether the discount of a note by a Na- 
 tional bank, — organized under the act of Congress, approved 
 June 3, 1864, — at a rate of interest then allowed by the statutes 
 of the State where such bank is located, renders it liable to the 
 penalty for usury provided by the State statute. 
 
 The act of June 3, 1864, supersedes the State laws imposing 
 penalties for usury in so far as they are applicable to National 
 banks. Davis, Receiver, S Go. v. Randall, 115 Mass. 547 ; Central 
 National Banhy. Pratt, id. 539 ; Broiuny. National Bank of Erie, 
 72 Penn. St. 209 ; Wiley v. Starluch, 44 Ind. 298 ; Tiffany v. Missouri 
 State BanTc, 18 Wall. 409 ; Citizens' National Bank of Piqua v. 
 Leming, 8 Int. Rev. Record, 132 ; First National Bank of Oolum- 
 ius v. Garlinghouse, 22 Ohio St. 492.; S. C, 10 Am. Rep. 751. 
 
 Thad. C. Davis, for defendant in error. No privilege of immu- 
 nity from the usury laws of the State is conferred upon the Na- 
 tional banks by the act of Congress of 1864 ; and a contract for a 
 loan made in the State of New York with one of these organiza- 
 
 *See Tiffany v. Bank, ante,, p. 90; Lucas v. Bank, post; Central National 
 Bank v. Pratt, post; Hintermister v. First National Bank, post; Re Wild, post; 
 Wiley V. Starhuck, post; National Exchange Bank v. Moore, post; Davis v. 
 Randall, post; Shunk v. Bank, post; First National Bank v. Oarlinghouse, post; 
 Higley v. Bank, post. 
 
118 UNITED STATES 
 
 Farmers and Mechanics' National Bank v. Bearing. 
 
 tious, by which it reserved a greater rate of interest than seven per 
 cent, is void. First National Bank of Whitehall v. Lamb, 50 W. 
 Y. 95 ; S. G., 10 Am. Kep. 438, 
 
 Mr. Justice Swatke delivered the opinion of the court. 
 
 The question presented for our determination involves the con- 
 struction of the provisions of the National Bank Act of Congress 
 of the 3d of June, 1864 (13 Stat. 99), upon the subject of the in- 
 terest to be taken by the institutions organized under that act. 
 
 The plaintiff in error is one of those institutions. The thirtieth 
 section of the act declares "that every association may take, re- 
 serve, and charge, in any loan or discount made, or upon any 
 notes, bill of exchange, or other evidences of debt, interest at the 
 rate allowed by the laws of the State or Territory 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 issue organized under 
 State laws, the rates so limited shall be allowed for associations or- 
 ganized in any such State under this act. And, when no rate is 
 fixed by the laws of the State or Territory, the bank may take, re- 
 ceive, reserve, or charge at a rate not exceeding seven per centum, 
 and such interest may be taken in advance, reckoning the days for 
 which the note, bill, or other evidence of debt has to run. And 
 the knowingly taking, receiving, reserving, or charging a rate of 
 interest greater than aforesaid shall be held and adjudged a for- 
 feiture 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 same, or their legal representatives, may re- 
 cover back, in any action of debt, twice the amount of interest 
 thus paid from the association taking or receiving the same, pro- 
 vided that such action is commenced within two years from the 
 time the usurious transaction occurred. But the purchase, dis- 
 count, or sale of a hona fide 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 addi- 
 tion to the interest, shall not be considered as taking or receiving 
 a greater rate of interest. 
 
 The facts of the case are few and simple. On the 3d of Septem- 
 ber, 1874, it was agreed between the parties that Bearing should 
 make his promissory note to one Deitman for $3,000, payable one 
 month from date, and that the bank should discount the note for 
 
SUPEEME COUET, 1875. 119 
 
 Farmers and Mechanics' National Bank v. Dearing. 
 
 Bearing and at the rate of interest of ten per cent per annum. 
 This agreement was carried out. The bank received the note and 
 paid to Dearing the sura of $1,981.67. The discount reserved and 
 taken was $18.33. The rate of interest which the bank was legally 
 authorized to take was seven per cent per annum. The excess re- 
 served over that rate was $5.50. Dearing failed to pay the note at 
 maturity. The bank thereupon sued him in the Superior Court at 
 Buffalo. He answered, that the agreement touching the discount 
 was usurious, corrupt, and illegal ; that it avoided the note ; and 
 that he was in no wise liable to the plaintiff. The court sustained 
 this defense, and gave judgment for the defendant. 
 
 At a General Term of that court the judgment was affirmed, and 
 the judgment of affirmance was subsequently affirmed by the Court 
 of Appeals. 
 
 No searching analysis is necessary to eliminate the several pro- 
 visions of the section to be considered to develop the true meaning 
 of each, and to draw the proper conclusions from all of them taken 
 together. 
 
 (1.) The rate of interest chargeable by each bank is to be that 
 allowed by the law of the State or Territory where the bank is sit- 
 uated. 
 
 (2.) When, by the laws of the State or Territory, a different 
 rate is limited for banks of issue organized under the local laws, 
 the rate so limited is allowed for the National banks. 
 
 (3.) Where no rate of interest is fixed by the laws of the State 
 or Territory, the National banks may charge at a rate not exceed- 
 ing seven per cent per annum. 
 
 (4.) Such interest may be reserved or taken in advance. 
 
 (5.) Knowingly reserving, receiving, or charging a rate of inter- 
 est greater than aforesaid shall be held and adjudged a forfeiture 
 of the interest which the note, bill, or other evidence of debt, car- 
 ries with it, or which has been agreed to be paid thereon." 
 
 (6.) If a greater rate has been paid, twice the amount so paid 
 may be recovered back, provided suit be brought within two years 
 from the time the usurious transaction occurred. 
 
 (7.) The purchase, discount, or sale of a bill of eschange, paya- 
 ble at another place, at not more than the current rate of exchange 
 on sight drafts, in addition to the interest, shall not be considered as 
 taking or reserving a greater rate of interest than that permitted. 
 
 These clauses, examined by their own light, seem to us too clear 
 
120 UNITED STATES 
 
 Farmers and Mechanics' National Bank v. Dearing. 
 
 to admit of doubt as to any thing to which they relate. They form 
 a system of regulations. All the parts are in harmony with each 
 other and cover the entire subject. 
 
 But it is contended that the phrase, "a, rate of interest greater 
 than aforesaid," as it stands in the context, has reference only to the 
 preceding sentence, which relates to banks where no rate of interest 
 is fixed by law ; and that hence it leares the consequence of usury, 
 where such rate is fixed, to be governed wholly by the local law 
 upon the subject. This, in the State of New York, would, in all 
 such cases, render the contract a nullity and forfeit the debt. 
 Such the Court of Appeals held to be the law of this case and 
 adjudged accordingly. Neither of these views can be maintained. 
 The collocation of the terms in question does not grammatically 
 require such a construction. Viewed in this light, the phrase is 
 as much applicable to both the foregoing clauses as to the next pre- 
 ceding one. The point to be sought is the intent of the law- 
 making power. The offense of usury under this section is as great 
 where the local law does not, as where it does, define the rate of 
 interest. The same considerations apply in both cases. Why should 
 Congress punish in one class of cases, and, so far as its action is 
 concerned, exempt in the other ? Why such discrimination? The 
 result would be that in Pennsylvania, where the contract would be 
 void only as to the unlawful excess, the bank would lose nothing 
 but such excess ; while in New York under a contract precisely the 
 same, except as to the identity of the lender, the entire debt would 
 be lost to the bank. This would be contrary to the plainest princi- 
 ples of reason and justice. 
 
 A purpose to produce or permit such a state of things ought not 
 to be imputed to Congress, unless the circumstances are so cogent 
 as to render that result inevitable. 
 
 We find nothing within the scope of the subject of that charac- 
 ter. The second proposition — that the State law, including its 
 penalties, would apply if the first proposition be sound — is equally 
 untenable. If the construction contended for were correct, the 
 State law would have no bearing whatever upon the case. The 
 constitutionality of the act of 1864 is not questioned. It rests on 
 the same principle as the act creating the second bank of the Uni- 
 ted States. The reasoning of Secretary Hamilton and of this 
 court in McGulloch v. Maryland, 4 Wheat. 316, and in Osborne v. 
 The Bank of the United States, 9 id. 738, therefore, applies. The 
 
SUPEEMB COUET, 1875. 121 
 
 Farmers and Mechanics' National Bank v. Bearing. 
 
 National banks organized under the act are instruments designed 
 to be used to aid the government in the administration of an im- 
 portant branch of the public seryice. They are means appropriate 
 to that end. Of the degree of the necessity which existed for cre- 
 ating them Congress is the sole judge. Being such means, brought 
 into existence for this purpose and intended to be so employed, 
 the State can exercise no control oyer them, nor in any wise affect 
 their operation, except in so far as Congress may see proper to 
 permit. Any thing beyond this "is an abuse, because it is the 
 usurpation of power which a single State cannot giye." Against 
 the National will, "the States have no power, by taxation or other- 
 wise, to retard, impede, burthen, or in any manner control the 
 operation of the constitutional laws enacted by Congress to carry 
 into execution the powers vested in the general government." Bank 
 of the United States y. McGulloch, supra j Weston and others^. 
 Charleston, % Pet. 449 ; Brown v. Maryland, 12 Wheat. 419 ; Doi- 
 bins V. Erie County, 16 Peter, 43-5. 
 
 The power to create carries with it the power to preserve. The 
 latter is a corollary from the former. The principle announced in 
 the authorities cited is indispensable to the efficiency, the inde- 
 pendence and indeed to the beneficial existence of the general gov- 
 ernment ; otherwise it would be liable, in the discharge of its most 
 important trusts, to be annoyed and thwarted by the will or caprice 
 of every State in the Union. Infinite confusion would follow. 
 The government would be reduced to a pitiable condition of weak- 
 ness. The form might remain, but the vital essence would have 
 departed. In the complex system of polity which obtains in this 
 country, the powers of government may be divided into four classes: 
 Those which belong exclusively to the States ; those which belong 
 exclusively to the National government ; those which may be exer- 
 cised concurrently and independently by both ; and those which 
 may be exercised by the States ; but only with the consent, express 
 or implied, of Congress. Whenever the will of the nation inter- 
 venes exclusively in this class of cases, the authority of the State 
 retires and lies in abeyance until a proper occasion for its exercise 
 shall recur. Gilman v. Philadelphia, 3 Wall. 713 ; Ex parte McNeil, 
 13 id. 240. The power of the States to tax the existing National 
 banks lies within the category last mentioned. It must always be 
 borne in mind that the Constitution of the United States, "and 
 the laws which shall be made in pursuance thereof," are " the su- 
 16 
 
122 UNITED STATES 
 
 Farmers and Meohanica' National Bank v. Dearing. 
 
 premelawof the land" (Const., art. 6), and that this law is as 
 much a part of the law of each State, and as binding upon it au- 
 thorities and people, as its own local constitution and laws. In 
 any view that can be taken of the thirtieth section, the power to 
 supplement it by State legislation is conferred neither expressly 
 nor by implication. There is nothing which gives support to such 
 a suggestion. • 
 
 There was reason why the rate of interest should be governed by 
 the law of the State where the bank is situated; but there is none 
 why usury should be visited with the forfeiture of the entire debt 
 in one State, and with no penal consequence whatever in another. 
 This, we think, would be unreason, and contrary to the manifest 
 intent of Congress. 
 
 Where a statute prescribes a rate of interest and simply forbids 
 the taking of more, and more is contracted for, the contract is 
 good for what might be lawfully taken, and void only as to the 
 excess. Burnhisel v. Fireman, Assignee, 22 Wall. 170; Turner v. 
 Calvert, 12 Serg. & E. 46. Forfeitures are not favored in the law. 
 Courts always incline against them. Marshall v. Vichsburgh, 15 
 Wall. 146. When either of two constructions can be given to a 
 statute, and one of them involves a forfeiture, the other is to be 
 preferred. Vattel, 20th Kule of Construction. 
 
 Where a statute creates a new offense and denounces the penalty, 
 or gives a new right and declares the remedy, the punishment or 
 the remedy can be only that which the statute prescribes. Stafford 
 V. Ingersoll, 3 Hill, 38; First National Bank of Whitehall v. 
 Laml, 57 Barb. 429. 
 
 The thirtieth section is remedial as well as penal, and is to be 
 liberally construed to effect the object which Congress had in view 
 in enacting it. Gray v. Bennet, 3 Mete. 522 
 
 The forty-sixth section of the Banking Act of February 35, 1863 
 (12 Stat. 679), declared that reserving or taking more than the inter- 
 est allowed should " be held and adjudged a forfeiture of the debt 
 or demand." In the act of 1864, the forfeiture of the debt is 
 omitted, and there is substituted for it the forfeiture of the interest 
 stipulated for, if it had only been reserved and the recovery of 
 twice the amount where the interest had been actually paid. In 
 the Kevised Statutes of the United States of the 22d of June, 1874 
 1011, the provisions of the thirtieth section of the act of 1864 are 
 divided into two sections, and the language is so changed as to 
 
STJPEEME COUET, 1875. 123 
 
 Farmers and Mechanics' National Bank v. Dearing. 
 
 render impossible in that case the same construction as that of the 
 thirtieth section contended for by the counsel of the defendant in 
 error in this case. 
 
 In the " act to amend the usury laws of the District of Colum- 
 bia," of the 33d of April, 1870 (16 Stat. 91), it is provided that 
 six per cent per annum shall be the lawful rate of interest, but 
 that parties may contract for ten per cent; and that, if more than 
 ten per cent be contracted for, the entire interest shall be forfeited, 
 and that only the principal debt shall be recoverable. It is further 
 declared, that, if the unlawful interest has been paid, it may be 
 recovered back, provided it be sued for within a year. 
 
 It is declared in the last section that this act shall not afEect the 
 Banking Act of 1864. This latter legislation shows the spirit by 
 which Congress was animated in passing the thirtieth section of 
 the act here under consideration, and is not without value as 
 affording light whereby to ascertain the true meaning of that sec- 
 tion, if there could otherwise be any doubt upon the subject. This 
 section has been elaborately considered by the highest court of 
 Massachusetts, of Pennsylvania, of Ohio and of Indiana. Davis, 
 Receiver, v. Randall, 115 Mass. 547; Central National Bank v. Pratt, 
 id. 639; Brown v. Second National Bank of Erie, 73 Penn. St. 209; 
 First National Bank of Columbus v. Ourlinghouse, 33 Ohio St. 493; 
 Wiley et al. v. Stariuck, 44 Ind. 398. In all these cases views were 
 expressed in conflict with those maintained in the First National 
 Bank of Whitehall^. Larrib et al., 50 N". Y. 100. This adjudica- 
 tion controlled the result of the litigation between these parties. 
 Upon reason and authority, we have no hesitation in coming to the 
 conclusion that there is error in the case before us. The plaintiff 
 below was entitled to recover the principal of the note sued upon, 
 less the amount of the interest unlawfully reserved. Whether he 
 was entitled to recover interest upon the amount of the principal 
 so reduced, after the maturity of the note, is a point which has not 
 been argued, and upon which we express no opinion. 
 
 The judgment of the Court of Appeals is reversed, and the case 
 will be remanded with directions to 
 
 Proceed in conformity with this opinion. 
 
124 UNITED STATES 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 First Natioital Bajstk of Ohaklottb v. National Exchange 
 Bank of Baltimokb. 
 
 Ufational hanks may take stock in payment of debts. 
 (92 U. S. 123.) 
 
 A National bank may, in a fair and hona fide compromise of a contested claim 
 against it, growing oat of a legitimate banking transaction, pay a larger 
 sum than would have been exacted in satisfaction of the demand so as to 
 obtain by the arrangement a transfer of certain stock in railroad and other 
 corporations, it being honestly believed at the time that by turning the 
 stock into money under more favorable circumstances than then existed, a 
 loss might be averted or diminished. 
 
 Although National banks are impliedly prohibited from dealing in stocks, yet 
 they may take stock in payment or compromise of a doubtful debt, in order 
 to avoid loss, and with a view to convert the stock into money. 
 
 EREOE to the Court of Appeals of Marylaad. 
 Action to recover money. The plaintiff, a National bank, 
 doing business at Charlotte, N. C, desiring to deposit with the 
 Treasurer of the United States, fifty thousand dollars in United 
 States bonds, for the purpose of increasing its capital stock, em- 
 ployed Bayne & Co., of Baltimore, to procure such bonds and 
 deliver them at the treasury. Not having the money to pay for 
 them at the time, the plaintiff sent its president, "Wilkes, to Balti- 
 more, with a certificate previously prepared in Charlotte, as follows: 
 
 " FiBST National Bank of Charlotte, N. C, ) 
 Charlotte, Dec. 15, 1865. ' ) 
 
 "Rfecei ved on deposit from Bayne & Co. , fifty-five thousand United States 5-20 
 bonds, third issue, pay ble to the order of themselves on return of this certificate. 
 
 " John Wilkes, 
 " President First National Bank, Charlotte, N. 0." 
 
 This certificate was delivered by Wilkes to Bayne & Co., in 
 Baltimore; and on the 18th of December, 1865, they, having in- 
 dorsed the same, deposited it, together with other securities, with 
 the National Exchange Bank of Baltimore, as collateral security 
 for a call loan of 180,000 then made by that bank to said firm of 
 Bayne & Co. 
 
 A few days after the delivery of said certificate, the plaintiff 
 deposited in New York, to the credit of Bayne & Co., a sum suflS- 
 cient to pay the same, and received, in January, 1866, oral notice 
 
SUPEEME COUET, 1875. 125 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 from them that the certificate was discharged, and subject to its 
 order. In March, 1866, the plaintiff received a written notice to 
 the same effect, but did not apply for the surrender of said certifi- 
 cate. In April following, Bayne & Co. failed; and the plaintiff 
 was then notified by the defendant that it held the certificate of 
 deposit for yalue, and demanded the deliyery of the bonds therein 
 mentioned. 
 
 Wilkes, the president, was sent by the plaintiff to Baltimore to 
 negotiate for the return of said certificate. He informed the de- 
 fendant that it had been satisfied by the payment to Bayne & Co., 
 and disavowed any legal liability on account of.same to the defendant. 
 To avoid suit, however, Wilkes offered to pay $5,000 upon the de- 
 livery of the certificate; which defendant refused, but offered to 
 take 130,000, and threatened suit unless so settled. Wilkes de- 
 clined to pay this sum, but asked for delay until he could return 
 to Charlotte and consult the directors of his bank. He again 
 returned to Baltimore, and new negotiations for compromise of the 
 controversy between the two banks in regard to their respective 
 rights to the certificate were opened. Wilkes ascertained that the 
 defendant held, among its collaterals from Bayne & Co., a large 
 number of shares of Washington, Alexandria and Georgetown Eail- 
 road stocks, the market value of which had been seriously depressed 
 by the failure of Bayne & Co. Having informed himself in regard to 
 the condition of the stock and its supposed value, and after one or 
 two interviews with the president and directors of the defendant, 
 it was finally agreed that the plaintiff should take four hundred 
 shares of the Washington, Alexandria and Georgetown Eailroad 
 stock, and one thousand shares of the Maryland Anthracite stock, 
 the same being valued at $40,000, and one hundred and twenty- 
 five shares of the stock of the plaintiff, valued at $15,000, — the 
 latter, inasmuch as he was advised that a National bank could 
 not buy its own stock, to be taken by Wilkes himself; thus making 
 $55,000. Upon the basis of this settlement, the defendant was to de- 
 liver to Wilkes the certificate held by it for the $55,000 United 
 States bonds. The plaintiff paid to the defendant the sum of 
 $40,000, according to the terms of the above settlement, and re- 
 ceived the certificate for one thousand shares coal stock. The 
 four hundred shares of railroad stock were not then delivered, 
 there being a suit about it at the time of the agreement which 
 prevented all transfers; but it was regarded and treated by both 
 parties as belonging to the plaintiff. 
 
126 UNITED STATES 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 In September, 1869, nearly three years after the date of the 
 settlement, suit was brought by the plaintiff in the Superior Court 
 of Baltimore city, to recover the $40,000 paid by it to the defend- 
 ant in pursuance of the arrangement above stated. At the request 
 of the plaintiff, the court granted the following propositions of 
 law: 
 
 First, that if the plaintiff agreed to purchase for $40,000 the 
 railroad and coal stock, and paid that sum, then the court must 
 find for the plaintiff for that amount, provided the court shall find 
 that the defendant knew the plaintiff to be a National bank, and 
 shall further find that the certificate of deposit was delivered up 
 in consequence of said contract, if, by said contract, no part of the 
 $40,000 was to be paid for the certificate. 
 
 Second, that if the plaintiff agreed to purchase the said stock 
 for $40,000, and Wilkes also agreed to purchase for $15,000 one 
 hundred and twenty-five shares of plaintiff's stock, and the induce- 
 ment to both agreements was Wilkes' desire to obtain the certificate 
 of deposit, and he did so obtain it, that does not inure to make 
 the first contract valid, provided the court shall find, that, by the 
 first-mentioned contract, the consideration for which the sijm of 
 $40,000 was to be paid was the railroad and coal stock, and that no 
 part of said sum was to be paid for the certificate of deposit. 
 
 Third, that if the plaintiff, in order to compromise the certifi- 
 cate of deposit, agreed to purchase it and the railroad and coal 
 stock for $40,000, and paid the money, then the plaintiff is entitled 
 to recover so much of said sum as the court shall find was paid for 
 said stock. 
 
 The court found for the defendant, and rendered a judgment in 
 its favor, which the Court of Appeals aflBrmcd, whereupon the case 
 was brought here by writ of error. 
 
 J. Upshur Dennis and John Scott, Jr., for plaintiff in error. 
 The determination of the validity of the transaction involved in 
 this case must necessarily depend upon the construction of the 
 National Banking Law. 
 
 The eighth section of that law enumerates the powers which a 
 National bank can exercise. Every other power is as much with- 
 held as if it was in express terms prohibited. Pearce v. Mad. S 
 Ind. R. R., 21 How. 443; Bank of Agusta v. Earle, 13 Pet. 587; 
 Perrine v. Ches. & Bel. Canal Co., 9 How. 184; Penn., Del. <& Md. 
 Steam Nav. Co. v. Dandridge, 8 G. & J. 319. 
 
SUPREME COUET, 1875. 127 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 No clause gives it power to purchase stocks; on the contrary, the 
 authority specifically conferred on it to buy exchange, coin and 
 bullion, raises the conclusive presumption that the omission of that 
 power was intentional. Expressio unius exclusio alterius. 
 
 Conceding that the two agreements — the one for the abandon- 
 ment of the claim, and the other for the purchase of stock — may 
 be inseparably united, it is insisted that the court below erred in 
 holding that a power to acquire stocks is incidental to that of pro- 
 viding for the discharge of a disputed claim by way of compromise. 
 Taking any thing from the defendant but a release or a discharge, 
 transcends the limits of necessary powers, and enables a corpora- 
 tion to accomplish indirectly that -which was intended to be pro- 
 hibited. Upon the principle which underlies the opinion of the 
 Court of Appeals, it may be said that a corporation has, as an 
 incident to the power to discharge its indebtedness, that of acquir- 
 ing the requisite funds; and, as a legitimate means of so doing, 
 the privilege of engaging in business of any kind,, provided its real 
 and bona fide object is to meet outstanding demands against it, this 
 line of argument would give these creatures of the statute every 
 power, the exercise of which is not in positive terms forbidden. 
 
 The true doctrine is, that an implied or incidental power must 
 be deducible from the grant, and fairly within its scope; partake 
 of the same character as the specifically granted powers, but not 
 enlarge them; and tend naturally to secure the same result. A 
 power to discharge may embrace that of making a payment of any 
 kind whatever, but not that of purchasing or acquiring. That is 
 a distinct and substantive power of an entirely different nature. 
 Pearce v. Mad. S Ind. R. R., supra; East Anglican R'y v. Eastern 
 Counties R'y, 7 Eng. Law & Bq. 508; Hood v. JV. Y. S N. H. R. R., 
 22 Conn. 1; id. 503; Russell v. Topping, 5 McLean, 197; Clark v. 
 Farrington, 11 Wis. 323; Beatty v. Knowles, 4 Pet. 167. 
 
 The precise proposition involved in this controversy has been 
 decided in Talmage v. Pell, 3 Seld. 328. See, also. Fowler v. Scully, 
 72 Penn. St. 461 {post) ; Shoemaher v. National Mechanics' Bank, 2 
 Abb. C. C. 422 (see j?osO; Shinkle v. First National Bank of Ripley, 
 22 Ohio St. 516 (see post); Wiley v. First National Bank of Brattle- 
 loro, 47 Vt. 552 {aeepost); First National Ba'Ak of Lyons y. Ocean 
 National Bank, 60 N. Y. 278 (see post). 
 
 William F. Frick, contra. 
 
128 UNITED STATES 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 Mr. Chief Justice Waitb delivered the opiuion of the court. 
 
 The question presented for our consideration in this case is, 
 whether a National bank, organized under the National Banking 
 Act, may, in a fair and bona fide compromise of a contested claim 
 against it growing out of a legitimate banking transaction, pay a 
 larger sum than would have been exacted in satisfaction of the de- 
 mand, so as to obtain by the arrangement a transfer of certain 
 stocks in railroad and other corporations; it being honestly be- 
 lieved 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 
 diminished. Such, according to the finding below, was the state 
 of facts out of which this suit has arisen. That finding is conclu- 
 sive upon us. 
 
 A National bank can " exercise by its board of directors, or duly 
 authorized officers or agents, subject to law, all such incidental 
 powers as shall be necessary to carry on the business of banking, 
 by discounting and negotiating promissory notes, drafts, bills of 
 exchange, and other evidences of debt ; by receiving deposits ; by 
 bupng and selling exchange, coin, and bullion ; by loaning money 
 on personal security ; and by obtaining, issuing and circulating 
 notes." E. S., § 5136, par. 7 ; 15 Stat. 101, § 8. 
 
 Authority is thus given to transact such a banking business as 
 is specified, and all incidental powers necessary to carry it on are 
 granted. These powers are such as are required to meet all the 
 legitimate demands of the authorized business, and to enable a 
 bank to conduct its afEairs, within the general scope of its charter, 
 safely and prudently. This necessarily implies the right of a bank 
 to incur liabilities in the regular course of its business, as well as 
 to become the creditor of others. Its own obligations must be 
 met, and debts due to it collected or secured. The power to adopt 
 reasonable and appropriate measures for these purposes is an inci- 
 dent to the power to incur the liability or become the creditor. 
 Obligations may be assumed that result unfortunately. Loans or 
 discounts may be made that cannot be met at maturity. Compro- 
 mises to avoid or reduce losses are oftentimes the necessary results 
 of this condition of things. These compromises 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 
 
SUPEEME OOUET, 1875. 129 
 
 First National Bank of Charlotte v. National Exchange Bank of Baltimore. 
 
 judgment and discretion, except to the extent that they are re- 
 strained by the charter or by-laws. Banks may do, in this behalf, 
 whatever natural persons could do under like circumstances. 
 
 To some extent it has been thought expedient in the National 
 Banking Act to limit this power. Thus, as to real estate, it is 
 provided (Eev. Stat., § 5137; 13 Stat. 107, § 28) that it may 
 bo accepted in good faith as security for, or in payment of, debts 
 previously contracted ; but, if accepted in payment, it must not 
 be retained more than five years. So, while a bank is expressly 
 prohibited (§ 5301; 13 Stat. 110, § 35) from loaning money 
 upon or purchasing its own stock, special authority is given for the 
 acceptance of its shares as security for, and in payment of, debts 
 previously contracted in good faith ; but all shares purchased un- 
 der this power must be again sold or disposed of at private or pub- 
 lic sale within six months from the time they are acquired. 
 
 Dealing in stocks is not expressly prohibited ; but such a prohi- 
 bition is implied from the failure to grant the power. In the hon- 
 est exercise of the power to compromise a doubtful debt owing to 
 a bank, it can hardly be doubted that stocks may be accepted in 
 payment and satisfaction, with a view to their subsequent sale or 
 conversion into money so as to make good or reduce an anticipated 
 loss. Such a transaction would not amount to a dealing in stocks. 
 
 It was, in effect, so decided in Fleckner v. Bank U. 8., 8 Wheat. 
 351, where it was held that a prohibition against trading and 
 dealing was nothing more than a prohibition against engaging in 
 the ordinary business of buying and selling for profit, and did not 
 include purchases resulting from ordinary banking transactions. 
 Eor this reason, among others, the acceptance of an indorsed note 
 in payment of a debt due was decided not to be a "dealing" in 
 notes. Of course, all such transactions must be compromises in 
 good faith, and not mere cloaks or devices to cover unauthorized 
 practices. 
 
 It is difficult to see how a debt due from, or a contested obliga- 
 tion resting upon a bank, occupies any difEerent position in respect 
 to this power of adjustment and compromise from that of a debt 
 owing to it. The object in both cases is to get rid of or reduce an 
 apprehended loss growing out of legitimate business ; and it would 
 seem that whatever might be done in the one case ought not to be 
 excluded from the other under the same circumstances. Often a 
 discharge by a bank of its own obligation creates a debt due to it 
 
 17 
 
130 UNITED STATES 
 
 People V. CommissioneTs of Taxes and Assessments. 
 
 from another. Such was the case here. Bayne, without authority, 
 transferred to the defendant, as collateral security for his indebt- 
 edness, a certificate of deposit issued to him by the plaintiff, and 
 afterward collected the money due upon the certificate from the 
 plaintiff without disclosing the transfer. Any payment by the 
 plaintiff to the defendant, therefore, in discharge of its liability 
 upon the certificate, became a lawful charge against Bayne. He 
 was insolvent. It was, on this account, not only the right, but tte 
 duty of the oflBcers and agents of the plaintiff, to protect by their 
 arrangements, as far as possible, the stockholders whose interests 
 they represented. This was necessarily left to their judgment and 
 discretion. No question of good faith is involved. , The transac- 
 tion for all the purposes of this suit must be taken to have been, in 
 fact, what it purports to be, — a fair and honest compromise of an 
 outstanding claim, with a view to ultimate protection against an 
 impending loss. As such, we think it was within the corporate 
 powers of the bank, and that the Court of Appeals did not err in 
 so holding. 
 
 Judgment affirmed. 
 
 People v. Commissioneks of Taxes and Assessments. 
 
 (M U.S. 415.) 
 
 Bank sha/res to he taxed at their market value. 
 
 The shares of stock of a National bank in New York should he taxed at their 
 
 market value.* 
 
 IN error to the Court of Appeals of New York. 
 The proceedings were instituted to review an assessment made 
 by the respondents. The opinion states the facts. 
 
 Daniel D. Lord, for the plaintiff in error. 
 
 Hugh L. Gole, contra. 
 
 Mr. Justice Hunt delivered the opinion of the court. 
 
 The relators complain that their shares of stock in the Gallatin 
 
 * See S.Rpbwm v. School Director.'), ante, p. 113. 
 
SUPKEME COURT, 1876. 131 
 
 People V. CommisBioners of Taxes and Assessments. 
 
 National Bank are assessed at too large a sum. They appeal from 
 the judgment of the Court of Appeals sustaining the determination 
 of the commissioners of taxes, which fixed the taxable value of 
 such shares at $59 each, whereas the par or nominal value of such 
 shares is 850 each. 
 
 Many grave questions were discussed by the counsel upon the 
 argument, to which we do not think it necessary to refer. We 
 place our judgment upon a single ground. 
 
 The laws of the State of New York provide that shares of stock 
 like those we refer to shall be assessed " on the value" of the shares, 
 and at " their full and true value, as they (the assessors) would 
 appraise the same in payment of a just debt due from a solvent 
 debtor," deducting the proportional value of the real estate owned 
 by the bank. 2 Stat. N. Y. 1866, p.' 1647, ch. 71; IE. S. N. Y, 
 393, § 17. 
 
 The assessors were justified, under this authority, in fixing the 
 value as we have stated. The appraisement included the reserve 
 fund, which is as much a part of the property of the bank, and 
 goes to fix the value of shares, equally as if it were not called by 
 that name, but remained as a part of the specie, bills discounted, 
 or other funds of the bank, undistinguished from the general mass. 
 
 The forty-first section of the act of Congress of June, 1864, pro- 
 vides that the States may tax the shares of National banks, subject 
 to two restrictions: 1st. That this taxation shall not be "at a 
 greater rate than is assessed upon other moneyed capital in the 
 hands of the individual citizens of such State;" and, 3d, "that the 
 
 tax so imposed shall 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." 13 Stat. 113. In Hep- 
 burn V. The School Directors, this court decided that, in making 
 assessment of bank shares by this authority, it was competent to 
 assess them at an amount above their par value. 23 Wall. 480. 
 
 But the relators insist that, by the act of the legislature of the 
 State of New York, passed March 9, 1865, it was enacted that the 
 shares of a bank could not be assessed at an amount greater than 
 the par value thereof, and that such statute created a contract with 
 the banks organized under the same, which could not be altered 
 by a subsequent legislature. Hence, it is argued that the act of 
 1866, authorizing such shares to be assessed at a rate which may 
 
132 UNITED STATES 
 
 People V. CommissioneTs of Taxes and AsaeBsments. 
 
 exceed their par yalue,, is a law impairing the obligation of a con- 
 tract, and is void. 
 The section of the statute of 1865 referred to is as follows, viz.: 
 "Section- 10. All the shares in any of the said banking associa- 
 tions, organized under this act, or the act of Congress * * * 
 held by any person or body corporate, shall be included in the 
 valuation of the personal property of such person or body corpor- 
 ate or corporation, in the assessment of taxes in the town or ward 
 where such banking association is located, and not elsewhere, 
 whether the holder thereof reside in such town or ward, or not; 
 but not at a greater rate than is assessed upon other moneyed capi- 
 tal in the hands of individuals of this State. Provided, that the 
 tax so imposed upon such shares shall not exceed the par value 
 thereof; and provided further, that the real estate of such associa- 
 tions shall be subject to State, county or municipal taxes, to the 
 same extent, according to its value, as other real estate is taxed." 
 
 Had this been a valid statute, we might have been called upon' 
 to discuss the point raised. But it was held in Van Allen v. The 
 Assessors, 3 Wall. SYS, that this statute was fatally defective, in 
 that it did not contain a proviso that the tax thereby authorized to 
 be imposed' should not exceed the rate imposed upon banks organ- 
 ized under the authority of the State. The system of taxation de- 
 vised by the statute of 1865 was adjudged to be illegal and void. 
 
 The clause now laid hold of by the relators was simply a proviso 
 or qualification of that system. It necessarily fell with it. When 
 the main idea was thrown out of existence, the subordinate parts, 
 "which were adjuncts of and dependent upon the main theory, 
 ceased to exist. There never was, legally speaking, any such pro- 
 viso or enactment as the relators claim the benefit of. Of course, 
 there could be no such thing as a violation of contract contained 
 in a proviso which never existed. Warren v. The Mayor, 3 Gray, 
 98, 99 ; Sedgwick on Statutes, 413, 414 (ed. of 1874). 
 
 Judgment affirmed. 
 
SUPEBMB COUET, 1876. 133 
 
 National Bank of Commonwealth v. Mechanics' National Bank. 
 
 Natioital Bank of Commokwealth v. Mechanics' National 
 
 Bank. 
 
 (9i U. S. 437.; 
 
 Interest on deposits after demand and refusal — Nature of claim, for deposits. 
 
 A National hank, holding deposits, refused to pay the same on demand and 
 
 thereafter a receiver was appointed. Held, that the depositor was entitled 
 
 to interest thereon from the date of the demand.* 
 The entire principal of the deposits, but no interest thereon, was paid by the 
 
 receiver. Held, that interest upon the aggregate of unpaid interest was 
 
 recoverable. 
 The claims of depositors in a suspended National bank are, when proved to 
 
 the satisfaction of the Comptroller of the Currency, on the same footing as if 
 
 they were reduced to judgments. 
 
 EKEOE to the Circuit Court of the United States for the 
 Southern District of New York. 
 
 Solicitor- General PMlKps, for plaintiff in error. 
 
 William 8. Opdyhe, contra. 
 
 Mr. Justice Swatnb delivered the opinion of the court. 
 
 This suit was brought by the defendant in error as an original 
 claimant, and as the assignee of other parties. 
 
 All the claims have a common origin, and involve the same 
 principle. 
 
 On the 32d of November, 1873, the Bank of the Commonwealth 
 refused to pay its circulating notes on demand, and became in 
 default. The Comptroller of the Currency appointed a receiver, 
 and the bank has since been in his hands. The Mechanics' Bank 
 and its assignors had funds on deposit. On the 24th of Septem- 
 ber, 1873, all the parties demanded payment. Nothing was paid. 
 
 Installments on account of the principal debts were subsequently 
 paid from time to time to each of the parties. On the 20th of 
 November, 1874, the last installment was paid in each case, and 
 the principal debts were thereby extinguished. At each payment, 
 interest from the 24th of September, 1873, on the amount so paid 
 was demanded and refused. The other parties assigned to the 
 defendant in error their claims respectively for such interest. The 
 
 * See Chemical National Bwnk v. Bailey, post. 
 
134 UNITED STATES 
 
 National Bank of Commonwealtli v. Mechanics' National Bank. 
 
 Mechanics' Bank instituted this suit. The declaration demands 
 the payment of this interest in all the cases, with interest upon 
 the aggregate amount from the 20th of November, 1874. The 
 Bank of the Commonwealth demurred. Judgment was given 
 against it, and this writ of error was thereupon prosecuted. 
 Two errors are assigned: 
 
 1. That the plaintiff below was not entitled to recover any 
 interest. 
 
 2. If interest was recoverable, as demanded on each installment 
 when paid, the plaintiff was not entitled to interest on the gross 
 amount of such interest from the 20th of November, 1874, the 
 time when the last installments of the principal were paid. 
 
 There is but one demurrer, and that is to the whole declaration. 
 The point ' is, therefore, well taken by the counsel for the defend- 
 ant in error, that if any part of the declaration be good, and divis- 
 ible in its nature from the residue, the demurrer must be overruled. 
 1 Chitty's Plead. 664. But the view which we take of the case 
 renders it unnecessary to apply this rule. 
 
 By the common law, interest could in no case be recovered. As 
 early as the reign of King Alfred, in the ninth century, it was held 
 in detestation. Church men and laymen alike denounced it. 
 Glanville, Pleta, and Bracton all speak of it in terms of abhorrence. 
 The first English statute upon the subject was the 37 Hen. VIII, 
 ch. 9. 
 
 This statute fixed the lawful rate of interest at ten per cent per 
 annum, and visited receiving more with forfeiture and imprison- 
 ment. Other statutes regulating the subject were passed in later 
 reigns from time to time, until finally an act of Parliament in 1854 
 (17 and 18 Vict., ch. 90), swept all the usury laws in the English 
 statute books out of existence, and established "free trade in 
 money." The first impulse to public opinion in this direction was 
 given by Bentham, near the close of the last century. The final 
 result was doubtless largely due to his labors. 
 
 The fiftieth section of the National Banking Act (13 Stat. 113), 
 requires the Comptroller of the Currency to apply the moneys paid 
 over to him by the receiver " on all such claims as may have been 
 proved to his satisfaction, or adjudicated in a court of competent 
 jurisdiction." The act is silent as to interest upon the claims 
 before or after proof or judgment. Can it be doubted that a judg- 
 ment, if taken, would include interest down to the time of its 
 rendition? 
 
SUPEEME COUET, 1876. 135 
 
 National Bank of Commonwealth v. Mechanics' National Bank. 
 
 Section 996 of the Eev. Stat. p. 183, declares that all judgments 
 in the courts of the United States shall bear the same rate of inter- 
 est as judgments in the courts of the States respectively where they 
 are rendered. Interest is allowed by the law of New York upon 
 judgments from the time they are perfected. Eev. Code of N. Y. 
 (ed. 1859), vol. Ill, p. 637. 
 
 If these claims had been put in judgment, whether in a court of 
 the United States or in a State court of that State, the result as to 
 interest upon the judgment would have been the same. It was un- 
 necessary to reduce them to judgment, because they were proved to 
 the satisfaction of the Comptroller. After they were so proved, 
 they were of the same efficacy as judgments, and occupied the same 
 legal ground. Hence, they are within the equity, if not the letter 
 of these statutes, and bear interest as judgments would have done. 
 Sedgw. on Constr. 311, 315. This is conclusive upon the first 
 assignment of error. 
 
 The rule settled by this court as to the application of payment is, 
 that the debtor or party paying the money may, if he chooses to do 
 so, direct its appropriation ; if he fail, the right devolves upon the 
 creditor; if he fail, the law will make the application according to 
 its own notions of justice. Neither of the parties can make it 
 after a controversy upon the subject has arisen between them, and 
 a fortiori not at the trial. United States v. Kirhpatrick, 9 Wheat.' 
 730; United States v. January, 7 Oranch, 573; Field v. Holland, 
 6 id. 8. In the present case, the appropriation was made unequivo- 
 cally by the party from whom the money was received. How it 
 would have been applied by the law if neither of the parties had 
 given any direction is a question which we need not, therefore, 
 consider. 
 
 The interest lawfully accruing upon each of the claims was as 
 much a part of it as the original debt. The creditor had the same 
 right to the payment of the one as of the other. If there had been 
 a judgment, and the full amount due upon it had not been paid, 
 an action of debt might have been brought upon it to recover the 
 balance. 1 Chitty's Plead. 111. 
 
 Such balance would have been adjudged to the plaintifE with in- 
 terest in the shape of damages for the detention of the debt. If, 
 in that case, the judgment debtor had chosen to pay only the prin- 
 cipal of the judgment, leaving the interest unsatisfied, and the 
 suit had been for the balance, consisting of interest only, the same 
 result would have followed. 
 
136 UNITED STATES 
 
 National Balik of Commonwealth v. Mechanica' National Bank. 
 
 We haye shown that the claims, when proved to the satisfaction 
 of the Comptroller, were upon the same footing as if they had 
 been in judgment. The amount in arrear was liquidated, and as 
 certain as if it consisted wholly of principal instead of interest 
 This action was, therefore, well brought. If it had been in debt, 
 damages would have been awarded for the detention of the debt 
 sued for. The action not being in debt, the same amount was 
 properly included in the mass of the damages for which the judg- 
 ment was rendered. 
 
 The compounding of interest, so far as it has occurred, was due 
 entirely to the fault of the agent of the plaintiff in error. The 
 principle of estoppel in pais applies. No exception can be taken 
 upon that ground. 
 
 The plaintiff in this action was entitled, ex equo et bono, to the 
 money sought to be recovered. Where the right to recover exists 
 in this class of cases, it includes interest as well as principal, un- 
 less there is something which would render the payment of th,e 
 former inequitable. 
 
 KEiirT, 0. J., said upon this subject : " Each case will depend 
 upon the justice and equity arising out of its peculiar circum- 
 stances to be disclosed at the trial. Pease v. Barber, 3 Caines, 
 365 ; see, also, Robinson v. Bland, 2 Burr. 1087. 
 
 In the latter case. Lord Maksfield said : " The interest is an 
 accessory to the principal ; and the plaintiff cannot bring a new 
 action for any interest grown due between the commencement of 
 his action and the judgment in it. * * * I don't know of 
 any court in any country (and I have looked into the matter) which 
 don't carry interest down to the last act by which the sum is liqui- 
 dated." 
 
 The treasury authority fell into an error ; there should have been 
 no discrimination between principal and interest in making the 
 payments. The creditor had the same right with respect to both 
 as if he had been pursuing the defaulting debtor under other cir- 
 cumstances. The Comptroller should have done just what the 
 law would have done if the case had not come under his cogni- 
 zance. 
 
 Numerous cases, both English and American, are to be found in 
 which compound interest^ under special circumstances, was recov- 
 ered. It is sufficient to refer to a few of them : Ex parte Beavans, 
 9 Ves. Jr. 323 ; Galiot v. Walker, 2 Anstr. 495 ; Hamilton v. Le- 
 
SUPREME COURT, 1876. 137 
 
 Waite V. Dowley. 
 
 Orange, 2 H. Black. 145 ; milogg r. HickoTc, 1 Wend. (N. Y.) 531; 
 Tylee v. Yates, 3 Barb. (N. Y.) 233 ; Aurora City r. West, 7 Wall. 
 82 ; Town of Genoa v. Woodruff et al., 93 U. S. 503, 
 
 The demand for the interest was properly made upon the plain- 
 tiff in error. 
 
 Judgrnent affirmed. 
 
 Waite v. Dowlet. 
 
 (94 U. S. 527.) 
 State statute requiring cashier to send list of shareholders to town derks valid. 
 
 A State statute required, under a penalty for his neglect or refusal, the cashier 
 of each National bank within the State to transmit annually to the clerks of 
 the several towns in which any stock or shareholder should reside, a true 
 list of the names of such stock or shareholders on the hooks of such banking 
 association, together with the amount of money actually paid in on each 
 share. Eeld, that the statute was valid. 
 
 TERROR to the Supreme Court of Vermont. A statute of Ver- 
 mont provided as follows: 
 
 J^ 
 
 " An act providing for taxing stock in the several banking associations in 
 this State formed under the act of Congress approved June 3, 1864, entitled 
 ' An act to provide a National currency. 
 
 " Section 1. It shall be the duty of the cashiers of the several banking asso- 
 ciations in this State, formed under the act of Congress approved June 3, 1864, 
 entitled ■ An act to provide a National currency,' and the cashiers of all other 
 banks in this State, to transmit to the clerks of the several towns in this State 
 in which any stock or shareholders of such banking association shall reside, a 
 true list of the names of such stock or shareholders on the books of such 
 banking association, together with the amount of money actually paid in on 
 each share on the first day of April in each year, and hereafter, on or before 
 the fifteenth day of April in each year. 
 
 " Sec. 2. The stock and shares of all such banking associations shall be set 
 in the list, and taxed in the same manner that the stock in the several banks .in 
 this State, which are chartered under the authority of this State, are liable to 
 be taxed by the existing laws thereof. 
 
 " Sbc. 3. If any of the stock of such banking associations is owned by, or 
 stands in the name of, any person residing out of this State, it shall be the 
 duty of the cashier of such banking association to transmit to the clerk of the 
 18 
 
138 UNITED STATES 
 
 Waite V. Dowley. 
 
 town in which, such banking association is situated, the names of all such non- 
 resident stock or shareholders, with the number of shares standing against 
 the name of each of such stock or shareholders on the books of such banking 
 association, together with the amount of money actually paid in on each share 
 on or before the fifteenth day of April in each year. 
 
 " Sbc. 4. Whenever the collector in any town in which any such banking 
 association is situated shall have a tax against any stock or shareholder in 
 such banking association who is not a resident of this State, it shall be the 
 duty of the cashier of such banking association, upon the presentation of such 
 tax to him by such collector, to pay the same, and charge the same to such 
 stock or shareholder on the books of such banking association, and all 
 dividends due and becoming due upon the same shall be holden to such bank- 
 ing association for the payment of such tax . 
 
 " Sbc. 5. If any cashier shall neglect or refuse to make returns to any town 
 in this State, *s provided in this act, he shall forfeit and pay to the treasurer 
 of such town, for the benefit of such town, the sum of $500, to be recovered by 
 an action on the case, in the name of such treasurer, founded on this statute." 
 
 This action was brought in March, 1870, in the County Court 
 of Windham county, Vermont, by Dowley, as treasurer of the town 
 of Brattleboro, against Waite, the cashier of the First National Bank 
 of Brattleboro, to recover the penalty prescribed by the fifth sec- 
 tion of the foregoing act, for refusing, in 1866 and 1867, to make 
 to that town the returns provided for in the first section. 
 
 The only defense set up at the trial was, that as the bank was 
 organized under the law of Congress, Waite, as such cashier, was 
 amenable to no law but that, and that the State had not power to 
 prescribe or define his duties as such cashier. 
 
 Waite also offered evidence tending to show, that at all times 
 during the years in question, the bank kept such lists of its stock- 
 holders as the act of Congress requires, which were open to the 
 inspection of the trustees of said town, who were permitted at all 
 times to transcribe therefrom, and set in the grand list of the town 
 all such stock of said bank as they deemed taxable. 
 
 Dowley waived all objection to the admission of the evidence, but 
 claimed that, if admitted, it constituted no legal defense to the 
 action. 
 
 The court thereupon directed a verdict for Dowley, which was 
 taken. 
 
 To the decision, Waite duly excepted j his exceptions were allowed, 
 and the cause passed to the Supreme Court for review. 
 
 That court rendered a decision afiBrming the judgment of the 
 
SUPEEMB COURT, 1876. 139 
 
 Waite V. Dowley. 
 
 County Court, and giving judgment for Dowley against "Waite for 
 the amount of the verdict with subsequent interest. 
 
 Waite thereupon brought this writ here, assigning for error that 
 the Supreme Court of Vermont erred. 
 
 First. In holding that the statute of the State was valid under 
 the Constitution of the United States, as not repugnant to nor in 
 conflict with the acts of Congress providing for the organization 
 and management of JN'ational banks, being the acts of March 35, 
 1863, and June 3, 1864. 
 
 Second. In rendering judgment against him for the penalties 
 provided by a statute which is invalid, or repugnant to and in 
 conflict with said acts of Congress. 
 
 E. J. Phelps, for plaintiff in error. 
 
 Charles N. Davenport, contra. 
 
 Mr. Justice Miller delivered the opinion of the court. 
 
 This is a writ of error to the Supreme Court of the State of Ver- 
 mont, and, as is frequent in writs to the State courts, it is objected 
 that there is no jurisdiction. 
 
 The plaintiff in error was cashier of a National bank in that 
 State, and the judgment which this writ brings here for review, 
 was rendered against him for penalties imposed by a statute of that 
 State, for his refusal to transmit to the clerk of the town of Brattle- 
 boro, a true list of the shareholders of the bank who resided in that 
 town, with the number of shares held, and the amount paid on 
 said shares. The record shows that "the defendant's counsel 
 claimed in defense, that, as said bank was organized under the law 
 of Congress referred to in plaintiff's declaration, the defendant, as 
 such cashier, was amenable to no law but said law of Congress, and 
 that the State legislature had not power to prescribe or define his 
 duties as such cashier." That this proposition raises what is called 
 a Federal question, within the meaning of the act of 1867, admits 
 of no doubt. We are also of opinion that no judgment could have 
 been rendered against the defendant in the State courts, without 
 holding, and in effect deciding that this plea was bad; for, if the 
 State could not impose the duty of making such a list on the 
 cashier, by reason of the act of Congress or the Constitution of the 
 United States, then the defendant was guilty of no offense, and the 
 
140 UNITED STATES 
 
 Waite V. Dowley. 
 
 judgment is for that reason erroneous. This plain proposition can- 
 not be eyaded by any opinion delivered by the Supreme Court of 
 that State. This court, therefore, has jurisdiction. 
 
 And the single question raised by the record is whether the stat- 
 ute of the State is void which requires the cashier of each National 
 bank within the State, and the cashiers of all other banks, to 
 transmit to the clerks of the several < towns in the State in which 
 any stock or shareholder of such banking association shall reside, 
 a true list of the names of such stock or shareholders, with the 
 number of shares standing against the name of such share or 
 stockholder on the books of such banking association, together 
 with the amount of nioney actually paid in on such share on the 
 first day of April. 
 
 The proposition on which this statute is asserted to be void is 
 that Congress has legislated upon the same subject, and that, when 
 there exists a concurrent right of legislation in the States and in 
 Congress, and the latter has exercised its power, there remains in 
 the States no authority to legislate on the same matter. It is not 
 necessary to dispute that proposition, nor, when stated in this gen- 
 eral language, can it be controverted. It is none the less true, how- 
 ever, that the line which divides what is occupied exclusively by 
 any legislation of Congress from what is left open to the action of 
 the States is not always well defined, and is often distinguished by 
 such nice shades of difference on each side as to require the closest 
 scrutiny when the principle is invoked, as it is in this case. 
 
 We have more than once held in this court that the National 
 banks organized under the acts of Congress are subject to State 
 legislation, except where such legislation is in conflict with some 
 act of Congress, or where it tends to impair or destroy the utility 
 of such banks, as agents or instrumentalities of the United States, 
 or interferes with the purposes of their creation. 
 
 This doctrine was clearly and distinctly announced in National 
 Bank v. Commonwealth, 9 Wall. 353 ; and that case has been often 
 referred to since, with approval, in this court. 
 
 The statute of Kentucky required " the cashier of a bank whose 
 stock is taxed to pay into the treasury the amount of the tax due. 
 If not he was to be liable for the same, with twenty per cent upon 
 the amount." The stock thus to be taxed was, as in the present 
 case, the stock of the shareholders, as authorized by the act of 
 Congress ; and that statute went a step farther than to require a 
 
SUPEEME COURT, 1876. 141 
 
 Waite V. Dowley. 
 
 list of the names of these shareholders and the amount of their 
 stock, and obliged the cashier to collect the tax out of the diyi- 
 dends, and pay it over to the State. 
 
 The precise point raised here was taken there and overruled by 
 this court ; namely, that the laws of the State could impose no 
 such duty on the banks organized under the laws of the United 
 States. The case is directly and conclusively in point. 
 
 It seems to have been supposed that, because Congress has 
 required of each National bank that a list of its stockholders shall 
 be kept posted up in some place in their business otSce, this covers 
 the same ground as that covered by the Vermont statute. 
 
 The act of Congress, however, was merely designed to furnish to 
 the public dealing with the bank a knowledge of the names of its 
 corporators, and to what extent they might be relied on as giving 
 safety to dealing with the bank. It had no such purpose as the 
 Vermont statute, and was wholly deficient in the information 
 needed for the purposes of taxation by the State, as conceded to it 
 by the act of Congress itself. 
 
 Some legislation of Vermont was, therefore, necessary to the 
 proper exercise of the rightful powers of the State, and, so far as 
 it required this list, was not in conflict with any provision of the 
 act of Congress. 
 
 This leads to the second objection to the validity of the State 
 statute, namely, that its purpose was to tax bank shares at other 
 places than those where the bank was located. 
 
 This case does not raise that question. 
 
 1. Because the bank whose cashier is the plaintiff in error was 
 located in the town of Brattleboro', and the judgment against him 
 is for refusing to deliver the list of shareholders to the clerk of 
 that town, and not for his refusal to deliver such a list to any other 
 town. The delivery to this clerk of a list of the shareholders in 
 that town would have been in aid of the taxation of the shares at 
 the place where the bank was organized and did business, and such 
 taxation is leg^l within the narrowest definition of the act of Con- 
 gress. 
 
 2. But if it be true that so much of this statute as is supposed 
 to authorize other towns in which shareholders reside to tax 
 such shares is unconstitutional, that does not invalidate the part of 
 it we have been considering. It will be time enough to decide the 
 provision of the State law authorizing such taxation unconstitu- 
 
142 UNITED STATES 
 
 Casey v. Qalli. 
 
 tional when an attempt is made to collect such a tax, and the party 
 resisting it shall bring the question here. His rights are not 
 affected by the acts demanded of the cashier ; and the latter has no 
 right to make a case for him in advance. This court does not sit 
 here to try most cases to solve a question which may never be raised 
 by any party entitled to raise it. 
 
 Judgment affirmed. 
 
 Caset v. Galli. 
 
 (9i V. S. 673.) 
 Insolvent National banks — Liability of stockholders, how enforced. 
 
 The order of the Comptroller of the Currency determining to what extent the 
 individual liability of the stockholders of an insolvent National bank shall be 
 enforced, is conclusive on the stockholders ; and the amount bears interest 
 from the date of the order.* Kennedy v. Oibson, ante, p. 17, approved. 
 
 When the order is to collect the full amount of the par of the stock, the action 
 therefor must be at law, and in such action the stockholder is estopped 
 from denying the existence or the validity of the corporation ; the certifi 
 cate of the Comptroller is conclusive as to the validity of the organization 
 of such corporation. 
 
 No authority from a State is necessary to enable a State bank to become a 
 National bank 
 
 ACTION at law brought in the Supreme Court of the United 
 States by the Eeceiver of the New Orleans National Banking 
 Association to enforce the individual liability of the defendant as 
 a stockholder in said bank. 
 The opinion states the case. 
 
 Charles Case, for plaintiff. 
 
 /. W. McPherson, for defendant, 
 
 Mr. Justice Swatnb delivered the opinion of the court. 
 
 The declaration avers as follows : On and before the third day 
 of June, 1864, the Bank of New Orleans was a banking corpora- 
 tion organized under the laws of the State of Louisiana, and as 
 such carried on the business of banking until about the first day of 
 July, 1871, when the bank, by due proceedings under the act of 
 *Thi3 case overrules Boviden v. Morris, 1 Hughes, 378. 
 
SUPREME COURT, 1876. 143 
 
 Casey v. Galli. 
 
 Congress, entitled, ' 'An act to provide a National currency, secured 
 by a pledge of United States bonds, and to provide for the circu- 
 lation and redemption thereof," approved June 3, 1864, became a 
 National banking association under said act of Congress, and as 
 such took the name and style of the " New Orleans National Bank- 
 ing Association," and carried on the business of banking until the 
 fourth day of October, 1873, when it failed and suspended pay- 
 ment. 
 
 Thereupon the Comptroller of the Currency, after due proceed- 
 ings had, appointed a receiver for the association, and it was put 
 in liquidation under the act of Congress before mentioned and the 
 acts amending it, and the plaintiff is such receiver, being lawfully 
 appointed under the said act. By the conversion of the bank of 
 New Orleans into such banking association, every holder of the 
 shares of the capital stock of said Bank of New Orleans became a 
 shareholder of the capital stock of said New Orleans Banking As- 
 sociation to the amount of his shares, and as such subject to the 
 liabilities imposed by said act of Congress on such shareholders. 
 There is owing by the association to its creditors large sums of 
 money. Its assets are insuflScient to pay its debts. It has become 
 necessary, in order to pay the debts, to enforce the liability of the 
 shareholders. The Comptroller has decided that this shall be 
 done. On the seventh day of June, 1875, by his order in writing, 
 he required the plaintiff, as such receiver, to enforce such liability 
 against each stockholder to the amount of the par value of his 
 stock held at the time of the failure of the association. The cap- 
 ital stock of the association was $600,000, divided into twenty 
 thousand shares of the par value of $30 each. 
 
 The defendant is an alien, a subject of the Kingdom of Italy, 
 and vice-consul, etc. At the date of the failure of the association 
 he was the owner of fifty shares of the capital stock of the par 
 value of $30 for each share. By reason thereof he is liable to pay 
 the sum of $1,500. He has been specially requested to pay that 
 sum, and has refused to do so. The plaintiff is, therefore, entitled 
 by force of the statute to recover the said sum of $1,500, with in- 
 terest at the rate of five per cent per annum. 
 
 It was agreed by the parties that demurrers, pleas, replications, 
 and other pleading^ might be filed without reference to the order 
 in which they were properly pleadable. 
 
 The defendant demurred to the declaration, and assigned the 
 following causes : 
 
144 UNITED STATES 
 
 Casey v. Oiilli. 
 
 1. That the defendant is bound to contribute ratably, and that 
 the proper amount can be ascertained only in equity. 
 
 3. That the defendant is bound to contribute ratably to pay, a 
 large sum; that this sum is not stated in the declaration, and 
 hence what would be ratable and proper does not appear. 
 
 3. That the obligation of the defendant is to pay into the hands 
 of the Comptroller of the Currency, a ratable portion of the debts 
 of the association proved before him, and that the declaration does 
 not show that any debts had been so proved. 
 
 4. That the declaration demands a larger sum than the defend- 
 ant is required by the statute to pay, and also an additional sum 
 by way of interest. 
 
 In regard to the first three of these objections, it is sufficient to 
 say that Kennedy v. Gibson and others, 8 Wall. 498, is conclusive 
 against them. It is there said that the amount to be paid rests in the 
 judgment and discretion of the Comptroller; that his determina- 
 tion cannot be controverted by the stockholders in suits against 
 them; and that, when the order is to collect the full amount of 
 the par of the stock, the suit must be at law. It is unnecessary to 
 reproduce the reasoning of the court in support of these proposi- 
 tions. The sum to be paid being liquidated, and due and payable 
 when the Comptroller's order was made, it follows that the amount 
 bears interest from the date of the order. Otherwise there would 
 be no motive to pay promptly, and no equality between those who 
 should pay then and those who should pay at the end of a pro- 
 tracted litigation. The defendant filed three pleas in abatement: 
 
 1. Nul tiel corporation. 
 
 3. That there was not then, nor when the plaintiff was appointed, 
 such supposed receiver of said New Orleans Banking Association, 
 nor before, nor since that time, any such corporation in existence, 
 because the Bank of New Orleans had no power by its charter, nor 
 authority otherwise from the State of Louisiana, to change its or- 
 ganization to that of a National banking association, under the 
 laws of the United States; wherefore it was prayed that the decla- 
 ration be quashed. 
 
 3. That there was not then, nor when the plaintiff was appointed 
 such supposed receiver of the New Orleans Banking Association, 
 nor before nor since that time, any such corporation in existence, 
 because the owners of two-thirds of the capital stock of the Bank 
 of New Orleans did not authorize the bank to be converted into a 
 
SUPEEME COUET, 1876. I45 
 
 Casey v. Galli. 
 
 National banking association under the laws of the United States, 
 nor to accept an organization certificate as such banking associa- 
 tion; wherefore it was prayed that the declaration be quashed. 
 
 The plaintifl filed a Joint demurrer to all these pleas. At the 
 argument the first plea was abandoned. The other two remain to 
 be considered. 
 
 The pleas were properly framed in abatement, and not in bar. 
 Jones V. The Bank of Tennessee, 8 B. Monr. (Ky.) 132; Woodson v. 
 The Bank of GalUpolis, 4 id. 303. 
 
 The second plea is clearly bad. No authority from the State was 
 necessary to enable the bank so to change its organization. The 
 option to do that was given by the forty-fourth section of the 
 Banking Act of Congress. 13 Stat. 113. The power there conferred 
 was ample, and its validity cannot be doubted. The act is silent 
 as to any assent or permission by the State. It was as competent 
 for Congress to authorize the transmutation as to create such in- 
 stitutions originally. 
 
 The third plea is also bad. The eighteenth section of the act 
 requires the Comptroller to make a careful examination in all cases 
 of original applications, and, if he found the association was " law- 
 fully entitled to commence the business of banking," he- was to 
 give a certificate to that effect ; and it is declared that the associa- 
 tion " shall transact no business except such as is incidental to its 
 organization, and necessarily preliminary, until authorized by 
 the Comptroller of the Currency to commence the business of 
 banking." 13 Stat. 101. A like examination and certificate 
 are required by the forty-fourth section, where an existing bank 
 organizes under the act. That section provides " that when the 
 Comptroller shall give to such association a certificate, under his 
 hand and ofBcial seal, that the provisions of this act have been 
 complied with, and that it is authorized to commence the business 
 of banking under it, the association shall have the same powers and 
 privileges and shall be subject to the same duties, responsibilities, 
 and rules, in all respects, as are provided in this act for associations 
 organized under it." 13 Stat. 113. 
 
 The declaration avers that the association became such by due 
 and regular procee<iings under the act. The plea denies the regu- 
 larity of the proceedings in the single particular that the owners of 
 two-thirds of the capital stock of the bank did not authorize the 
 directors of said bank to convert it into a National banking asso- 
 19 
 
146 UNITED STATES 
 
 Casey v. Galli. 
 
 elation, nor to accept au organization certificate as auch banking 
 association. According to the law of pleading, what is not denied 
 is conceded. The giving of the Comptroller's certificate is covered 
 by the averment in the declaration, is not denied by the plea, and 
 is, therefore, to be taken as admitted. The plea proposes to go 
 behind the certificate, and contradict it. This cannot be done. 
 The Comptroller was clothed with jurisdiction to decide as to the 
 completeness of the organization, and his certificate is conclusive 
 upon the subject for all the purposes of this litigation. 
 
 It has the same effect, and for the same reason, as his determina- 
 tion and order with respect to the amount to be collected from 
 each stockholder in the event of the failure of the association. No 
 question can be raised in this collateral way as to either. 
 
 In Thatcher v. The West River National Bank, 19 Mich. 196, it was 
 held that whether there was any defect in the process of organization 
 was a question for the Comptroller to decide, and that " his certifi- 
 cate of compliance with the act of Congress removes any objection 
 which might otherwise have been made to the evidence upon which 
 he acted." 
 
 In this we concur. 
 
 There is another ground upon which both pleas must be held bad. 
 Where a shareholder of a corporation is called upon to respond to a 
 liability as such, and where a party has contracted with a corporation, 
 and is sued upon the contract, neither is permitted to deny the 
 existence or the legal validity of such corporation. To hold other- 
 wise would be contrary to the plainest principles of reason and of 
 good faith, and invohe a mockery of justice. Parties must take 
 the consequences of the position they assume. They are estopped 
 to deny the reality of the state of things which they have made, 
 appear to exist, and upon which others have been led to rely. 
 Sound ethics require that the apparent, in its efEects and conse- 
 quences, should be as if it were real, and the law properly so regards 
 it. Eaton et al. v. Aspinwall, 19 N. Y. 119 ; S. C, 6 Duer (N. Y.), 
 176 ; Cooper v. Shaver et al., 41 Barb. (N. Y.) 151 ; Camp v. Byrne, 
 41 Mo. 525 ; Danhury S N. Railroad Go. v. Wilson, 22 Conn. 435 ; 
 Ellis V. Schmach & Thomas, 5 Bing. 521 ; McFarlan v. The Triton 
 Ins. Co., 4 Denio (N. Y.), 392 ; Rector & Go. v. Lovett, 1 Hall (N. 
 Y.), 191 ; Topping v. BicJcford, 4 Allen (Mass.), 121 ; Dooley v. 
 Wolcott, id. 407 ; Eppes v. Railroad Company, 35 Ala. 33 ; Ham- 
 iramack v. Bank of Edivardsville, 2 Mo. 169 ; Jones v. Cincinnati 
 
SUPREME COURT, 1876. |47 
 
 Casey v. Galll. 
 
 Type Foundry, 14 Ind. 89 ; Worcester Med. Ins. v. Harding, 11 
 Cush. (Mass.) 285 ; Hughes t. Bank of Somerset, 5 Litt. (Ky.) 47 ; 
 Tar River Nav. Go. v. Neal, 3 Hawks (N. C), 520. 
 
 Demurrer sustained. 
 
 At a subdequent day of the term, pursuant to leave granted, 
 three pleas were filed. The question arising upon demurrers to the 
 special pleas were argued by the same counsel. 
 
 Mr. Justice Swayue delivered the opinion of the court. 
 
 Since the opinion of the court was delivered in this case, the 
 defendant obtained leave to plead further, and has filed three 
 pleas. They are: 
 
 First. Nil debet, upon which the plaintiff has taken issue. 
 
 Second. That the Comptroller of the Currency has " determined 
 and decided to exact from the defendant, and from a number of 
 stockholders of said National banking association less than the 
 whole, such sums of money as would suffice to pay all the debts and 
 liabilities of the said National banking association, with the intent 
 and purpose to compel this defendant and others of said shareholders 
 who may be solvent to contribute the entire sum necessary to 
 pay the debts and liabilities of the said National banking associa- 
 tion, without any contribution from those who are insolvent." 
 
 It is a sufficient objection to this plea that the Comptroller has 
 ordered that each stockholder shall pay to the receiver the par of 
 his stock. This order cannot be controverted in a suit against the 
 stockholder. It is conclusive upon him, and makes it his duty to 
 pay. Kennedy v. Gibson and others, 8 Wall. 498. What may be 
 done or intended with respect to other stockholders is immaterial 
 in his case. 
 
 The plea is, also, manifestly bad for vagueness and uncertainty. 
 
 Third. That the Comptroller has decided to pay a large amount 
 of claims against the bank for which the bank is not responsible, 
 and that, aside from these claims, there are means enough already 
 in his hands to meet the liabilities of the bank. 
 
 The same objection lies to this plea as to the preceding one, and 
 the same authority applies. If the receiver intends to violate, or 
 shall violate, his djity in discharging the trust confided to him, 
 the remedy must be sought in another proceeding. It cannot avail 
 the defendant in this action. 
 
 Both demurrers are sustained. 
 
148 UNITED STATES 
 
 Adams v. Mayor, etc, of Nashville. 
 
 The parties have filed a written stipulation submitting the issues 
 raised upon the first plea to the court and waiving the intervention 
 of a jury. 
 
 With respect to this issue, we find the proofs in the record 
 amply sufficient to sustain the plaintiff's case. 
 
 Judgment must, therefore, be rendered against the defendant for 
 the par of his stock, with interest, as claimed in the declaration, and 
 costs, and it is 
 
 So ordered. 
 
 Adahs v. Matok, etc., of Nashville.* 
 
 (16 Alb. Law Jour. 416.) 
 
 State taxation of National hanks. 
 
 The act of Congress of June, 1864, in relation to the taxation of National banks, 
 does not curtail State power as to the subject of taxation, or cut off the 
 right to exempt certain kinds of property if a legislature chooses to do so. 
 Its only object is to prevent unfriendly discrimination against National 
 banks. 
 
 I 
 
 N error to the Supreme Court of the State of Tennessee. Suffi- 
 cient facts appear in the opinion. 
 
 Ed. Baxter, for plaintiff in error. 
 
 J. E. Basley and John Lellyett, contra. 
 
 Mr. Justice Hunt delivered the opinion of the court. 
 
 The plaintiffs in error, who are stockholders in the Fourth Na- 
 tional Bank of Nashville, Tennessee, filed their bill in the chancery 
 court of that State against the defendant in error, a municipal cor- 
 poration, to enjoin the collection of a tax imposed upon their shares 
 of stock by said corporation, and to have the tax declared illegal 
 and void. 
 
 The bill was demurred to. The chancellor sustained the demur- 
 rer and dismissed the bill. Upon appeal to the -Supreme Court of 
 Tennessee, the highest court of law or equity in the State, the 
 
 * This case ia not yet reported in the U. S. Supreme Court Reports. 
 
SUPEEME OOUKT, 1877. 149 
 
 Adams v. Mayor, etc., of Nashville. 
 
 decree of the chancellor was affirraed, and thereupon the case was 
 brought to this court by writ of error. 
 
 It is contended that the statute of the United States which au- 
 thorizes the taxation by State authority of the shares of stock in a 
 National bank, but provides that such taxation shall not be at a 
 greater rate than is assessed upon other moneyed capital in the 
 hands of individuals, has been violated in the case of the present 
 plaintiff. 13 Stat, at Large, 103. The first cause of complaint 
 arises out of the act of the legislature of the State of Tennessee of 
 March 1, 1869. The act, it is said, provides that no tax shall be 
 assessed upon the capital of any bank or Joint-stock company or- 
 ganized under the laws of that State. This, .it is insisted, is an 
 exemption from taxation of property in the hands of individual 
 citizens, and operates to produce a greater rate of taxation on the 
 plaintiffs' shares in the Fourth National Bank of Nashville than is 
 assessed on other moneyed capital in the hands of individuals, to 
 wit, on such banking capital, and hence, that such taxation is illegal. 
 
 The statute enacts that no tax shall be assessed upon the capital 
 of a State bank, but proceeds in the same section, to say that its 
 shares shall be included in the valuation of the personal property 
 of the owner, for the purpose of assessment for State, county add 
 municipal taxation, at the same rate that is assessed upon other 
 moneyed capital, and that, in addition thereto, the real estate 
 owned by the bank shall be subject to the same taxation. as other 
 real estate. 
 
 This objection, in its general character, may be considered in con- 
 nection with the second objection. The answer to both of them is 
 found in the principle thus laid down in People v. Commissioners: 
 " That the rate of taxation upon the shares should be the same or 
 not greater than upon the moneyed capital of the individual citizen 
 which is liable to taxation; that is, no greater in proportion or 
 percentage of tax in the valuation of shares should be levied than 
 upon other moneyed taxable capital in the hands of the citizens." 
 4 Wall. 256. See, also, Hepburn v. School Directors, 33 id. 
 480 {anie, p. 113). 
 
 Second. By an ordinance of the defendants' corporation, passed 
 on the 18th of April, 1870, it is provided that certain interest- 
 paying bonds issued by the said corporation shall be exempt from tax- 
 ation by said corporation. It is said that there are many such bonds 
 in existence in the hands of individuals ; that by such exemption 
 
150 UNITED STATES 
 
 Adams v. Mayor, etc., of Nashville. 
 
 the complainaats' shares are taxed at a greater rate than is assessed 
 upon such bonds, and that, therefore, the taxation complained of 
 is in violation of the act of Congress forbidding the taxation of 
 National shares at a greater rate than is assessed upon other mon- 
 eyed capital in the hands of individuals. 
 
 There are several answers to this objection: 
 
 1st. It is not alleged in the bill that the bonds therein referred 
 to are in fact exempted from taxation for municipal purposes. 
 After reciting the issue and proposed exemption, the bill says 
 that said property is " thus exempted from all municipal taxes ; " 
 that is, that, as a matter of law, it follows from the facts before 
 stated that it is thus exempt. 
 
 This is not sufficient, especially when it is alleged in the brief 
 opposed that the fact is otherwise. 
 
 2d. By the statutes of the State of Tennessee, passed subse- 
 quently to the issue of the bonds, all personal property, of every 
 kind and nature, is required to be listed and assessed for taxation. 
 
 The Supreme Court of Tennessee hold, in the case before us, 
 that this statute repeals and overrides the ordinance of exemption 
 and brings these bonds within the scope of general taxation. This 
 is a decision of a State tribunal upon the construction of its own 
 statutes, which we are bound to respect. 
 
 3d. Considering the objection on its merits and in connection 
 with the objection first described, the case is met by Hepburn v. 
 School Directors, 23 Wall. 480. 
 
 By a statute of Pennsylvania, it was enacted that " all mort- 
 gages, judgments, recognizances and money owing upon articles of 
 agreement for the sale of real estate shall be exempt from taxation, 
 except for State purposes." There, as here, it was objected that 
 this exemption by relieving certain specified property from taxa- 
 tion brought the case within the prohibition of the act of Con- 
 gress, and thus vitiated the tax sought to be enforced. This court 
 held otherwise. 
 
 The act of Congress was not intended to curtail the State power 
 on the subject of taxation. It simply required that capital invested 
 in National banks should not be taxed at a greater rate than like 
 property similarly invested. It was not intended to cut off the 
 power to exempt particular kinds of property if the legislature 
 chose to do so. Homesteads, to a specified value, a certain amount 
 of household furniture (the six plates, six knives and forks, six 
 
SUPEEME COURT, 1877. 151 
 
 Union Gold Hill Mining Co. v. Rooky Mountain National Bank. 
 
 tea-cups and saucers, of the old statutes), the property of clergy- 
 men to some extent, school-houses, academies and libraries, are 
 generally exempt from taxation. The discretionary power of the 
 legislature of the States oyer all these subjects remains as it was 
 before the act of Congress, of June, 1864. The plain intention of 
 that statute was to protect the corporations formed under its 
 authority from an unfriendly discrimination against them of the 
 power of State taxation. That particular persons or particular 
 articles are relieTed from taxation is not a matter to which either 
 class can object. 
 
 • The third objection is equally untenable. The statute referred 
 to does not purport to relieve any property from taxation. It pro- 
 vides a mode for ascertaining the average capital of the merchant, 
 and for giving a license to carry on the business of a merchant. 
 He is required to pay an ad valorem tax on all his capital and a 
 license tax in addition. 
 
 The observations already made are pertinent under this head. 
 
 Judgment affirmed. 
 
 Union- Gold Hill Mining Co. t. Rocky Mountain National 
 
 Bank.* 
 
 Loans in excess of one-tenth of capital. 
 
 Loans to any person or company in excess of one-tenth part of the capital 
 stock of a National bank are not void, and in an action to recover such loans 
 the defendant cannot interpose the defense that they were in violation of 
 the National Banking Act. 
 
 ERROR to the Supreme Court of the Territory of Colorado. 
 Action to recover $20,000 loaned and advanced by the defend- 
 ant in error — the Rocky Mountain National Bank — to the Union 
 Gold Hill Mining Co. Plea, the general issue, and that the 
 capital of the bank was only $50,000, and that under the National 
 Banking Act all loans to an individual or company in excess of 
 one-tenth of said capital were void. There was a demurrer to the 
 special plea, which was sustained, and a verdict rendered for the 
 
 ♦This case is not yet reported in the U. S. Supreme Court Reports. 
 
152 UNITED STATES 
 
 Union Gold Hill Mining Co. v. Rocky Mountain National Bank. 
 
 plaintiff. The defendant brought error. The other material facts 
 are stated in the opinion. 
 
 WTiMler H. Peckharh, for plaintiff in error. 
 /. M. Woolworth. 
 
 Mr. Justice HtrifT delivered the opinion of the court. 
 
 The Kocky Mountain Bank brought its action to recover a bal- 
 ance of over-draft, due upon the account kept in the name of the 
 Union Gold Mining Company at that bank. The balance of over- 
 draft exceeding $30,000 was created by drafts or checks drawn by 
 one Sabin, acting in the name of the mining company and claiming 
 to be its authorized agent, and he also made deposits from time to 
 time to the credit of the mining company. The jury rendered a 
 verdict in favor of the bank for the amount of the over-draft with 
 interest ($30,358.33), and from the judgment entered upon that 
 verdict the present writ of error is brought. 
 
 The defendant presented formal requests to charge to the num- 
 ber of forty, one of which was subdivided into three parts. It 
 asked for a new trial upon ten grounds severally set forth, and the 
 assignment of errors below discloses one hundred and thirty-three 
 allegations of error. 
 
 There was but a single question in the case, to-wit: were the acts 
 of Sabin the acts of the gold-mining company, either by original 
 authority or by ratification; as it was finally put to the jury, was 
 there a ratification of his aots by the company? We shall consider 
 the objections most seriously urged and having the greater plausi- 
 bility. 
 
 The first objection to the recovery arises from the amount of 
 the debt. The plaintiff is a National bank organized under the 
 act of Congress of 1864 (13 Stat, at Large, p. 108). By the 39th 
 section of that act, it is provided as follows: " The total liabilities 
 to any association of any person, company, corporation, or firm, 
 for money borrowed, including in the liability of a firm the liabili- 
 ties of the several members thereof, shall at no time exceed one- 
 tenth part of the amount of the capital stock of such association 
 actually paid in. Eev. Stat., § 5300. 
 
 After obtaining and holding to its own use the money of the 
 bank, can the mining company be allowed to interpose the plea that 
 the bank had no right to loan the money? In Harris v. Runnels, 
 
SUPREME COUET, 1877. I53 
 
 Union Gold Hill Mining Co. v. Rocky Mountain National Bank. 
 
 1% How. 79, the court say " that where the defendant sued upon 
 a note sets up the illegality of the consideration, the whole statute 
 must be examined to discover whether the legislature intended to 
 prevent courts of justice from enforcing contracts in relation to the 
 act prohibited. When a statute prohibits an act or annexes a 
 penalty for its commission, it does not follow that the unlawful- 
 ness of the act was meant to avoid a contract made in contravention 
 of it. When a statute provided that slaves should not be brought 
 into this State without a previous certificate signed by two free- 
 holders, and the slaves were brought in without such certificate 
 and sold, the contract is not void, but the purchaser must pay his 
 note given for the purchase-money." Justice Wayne says 
 that the rule is allowed not for the benefit of either party to the 
 illegal contract, but altogether upon grounds of public policy. 
 
 In O'Hare v. The Second National Banlc of Titusville, 77 Penn. 
 St. 96,* the question was made upon the statute we are considering, 
 and it was objected that the bank could not recover the amount 
 of the loans in excess of the proportion specified. The court held 
 that the section of the statute referred to was intended as a rule 
 for the government of the bank, and that the loan was not void. 
 See, also, Pangburn v. Westlake, 36 Iowa,. 546; Vining v. Bricher, 
 14 Ohio St. 331. 
 
 We do not think it required by public policy or that Congress 
 intended that an excess of loans beyond the proportion specified, 
 should enable the borrower to avoid the payment of the money 
 actually received by him. This would be to injure the interests of 
 creditors, stockholders, and all who have an interest in the safety 
 and prosperity of the bank. 
 
 We are of the opinion that this objection is not well taken. 
 
 [The remainder of the opinion was not important. ] 
 
 Judgment affirmed. 
 
 *See post . 
 
154 UNITED STATES 
 
 United States v. Mann. 
 
 TJnited States, plaintiff in error, v. Majtw.* 
 
 (V! Alb. Law Jour. 85.) 
 
 BigAt of revenue collector to examine paid hank checks. 
 
 Under section 3177 of the United States JRevised Statutes, authority is given 
 to any collector, deputy collector, or inspector of internal revenue, to enter, 
 in the day-time, any building or place within his district, where any articles 
 or objects subject to such taxation are made, produced, or kept, so far as 
 it may be necessary for the purpose of examining such objects or articles, 
 and the provision is that any owner of such building or place, or any per- 
 son having the agency or superintendence of the same, who refuses to ad- 
 mit such ofiBcer or suflFer him to examine snch articles or objects, shall for 
 every such refusal forfeit five hundred dollars. Held, that under this pro- 
 vision, paid bank checks, which were duly and sufficiently stamped at the 
 time they were made, signed and issued, are not articles or objects subject 
 to taxation, and an officer of a bank where such checks are may lawfully 
 refuse to sufier the collector to examine such checks.f 
 
 EEKOR to the Circuit Court of the United States for the District 
 of Minnesota. The facts fully appear in the opinion. 
 
 Mr. Justice Clifford delivered the opinion of the court. 
 
 Authority is given to any collector, deputy collector, or inspector 
 of internal revenue to enter, in the day-time, any building or place 
 within his district, where any articles or objects subject to such 
 taxation are made, produced, or kept, so far as it may be necessary 
 for the purpose of examining such objects or articles, and the pro- 
 vision is that any owner of such building or place, or any person 
 having the agency or superintendence of the same, who refuses to 
 admit such officer or suffer him to examine such articles or objects, 
 shall for every such refusal forfeit five hundred dollars. Eev. Stat., 
 § 3177. 
 
 Founded upon that provision in the act of Congress the complaint 
 filed in the Circuit Court alleges and charges that the defendant, 
 having at the time mentioned the care and superintendence of the 
 described bank and its place of business, in which certain paid bank 
 checks were then and there kept, refused then and there to suffer 
 the collector of the district, who then and there entered the bank 
 for the purpose, to examine the said paid bank checks so kept then 
 and there in said place of business, though thereto requested by the 
 
 * This case is not yet reported In the U. S. Supreme Court Reports. 
 1r See United States v, Rhawn, post. 
 
SUPREME COURT, 1877. 155 
 
 United States v. Mann. 
 
 collector, which said refusal was then and there contrary to the 
 form of the statute in such case made and provided. 
 
 Service was made and the defendant appeared and demurred to 
 the complaint. Hearing was had and the court sustained the de- 
 murrer, the reasons for the conclusion not being exhibited in the 
 transcript, but the record contains a statement to the effect that 
 the plaintiffs standing on their complaint, the court rendered judg- 
 ment for the defendant. Error was assigned by the plaintiffs, and 
 they sued out the present writ of error. It is now contended by 
 the United States that the judgment was for the wrong party, that 
 It should have been rendered for the plaintiffs and not for the de- 
 fendant, which is the only error assigned for the consideration of 
 this court. 
 
 Bank cheeks, drafts, or notes for the payment of money, drawn 
 upon any bank, broker, or trust company, at sight or on demand, 
 are subject to a tax of two cents, to be paid by the person who makes, 
 signs, or issues the same, or for whose use or benefit the same are 
 made, signed or issued. Rev. Stat., § 3418; 18 Stat, at Large, 310. 
 Exceptions exist to that requirement in behalf of Federal and State 
 officers and in behalf of county, town, and other municipal corpo- 
 rations, when in the strict exercise of functions belonging exclu- 
 sively to their ordinary governmental or municipal capacity. Id., 
 § 3420. 
 
 Cases arise where such an instrument is issued, without being 
 duly stamped, and in such a case the provision is that neither the 
 instrument nor any copy thereof shall be admitted or used in evi- 
 dence in any court until a legal stamp denoting the amount of the 
 tax is affixed thereto, as prescribed by law. Instruments of the 
 kind are required to be stamped at the time of their issue, and 
 the provision is that unless a stamp or stamps of the proper amount 
 shall be affixed to the same and canceled, it shall not be lawful to 
 record the instrument, and that the record, if so made, shall be 
 utterly void. Provision is also made that parties violating those 
 regulations by making, signing, or issuing any such instrument, 
 a document, or paper, without being duly stamped, shall for every 
 such offense forfeit the sum of fifty dollars, and that the unstamped 
 instrument shall be deemed invalid and of no effect. Id., § 3432. 
 
 Such officer may enter in the day-time any building or place 
 within his district where any articles or objects subject to taxation 
 are made, produced, or kept, so far as it may be necessary for the 
 
156 UNITED STATES 
 
 United States v Mann. 
 
 purpose of examiuing said articles or objects. Unless articles or 
 objects of taxation are made, produced, or kept in any building 
 belonging to another, the collector derives no authority under that 
 act to enter the building at all, and even then his right to enter 
 the same is strictly limited by the words so far as it may be neces- 
 sary for the purpose of examining such articles or objects. 
 
 Where articles or objects subject to taxation are made, produced, 
 or kept in any building, by whomsoever owned, the provision is that 
 the collector or other officer named may enter the same, so far as 
 it may be necessary for the purpose of examining said articles or 
 objects, but the act of Congress gives the officer no authority 
 whatever to enter the building of another for any other purpose 
 than that which the act specifically describes. 
 
 Strictly limited as the right conferred is, it is a privilege easily 
 defined, and it is equally clear that the prohibition addressed to 
 the owner or person in charge of the place of business is explicitly 
 confined to the refusal to suffer the officer to enter the building 
 where the articles or objects subject t'o taxation are made, produced, 
 or kept, for the special purpose particularly set forth in the section. 
 Owners of such a building or persons having the agency or super- 
 intendence of the same are forbidden to refuse to admit the col- 
 lector, deputy collector, or inspector to enter such building for the 
 described special purpose, and the provision is that if they do so 
 refuse and do not suffer the officer to examine such articles or 
 objects, they shall for every such refusal forfeit five hundred 
 dollars. 
 
 Persons other than the owner of the building or place of busi- 
 ness cannot be held liable to the penalty prescribed in the section 
 unless it be alleged and proved that he or they had at the time the 
 agency or superintendence of the same, and that it was a building 
 or place where articles or objects subject to taxation were made, 
 produced, or kept, and that the person or persons accused of 
 having violated the prohibitit)n of the section, then and there 
 refused to allow the officer to enter the building or place of busi- 
 ness for the described purpose, or to suffer him to examine the 
 articles or objects subject to taxation then and there kept in said 
 building or place of business. 
 
 Information for offenses or penalties created and defined by 
 statute, like indictments, must follow the words of the statute, and 
 where there is no substantial departure from that requirement, the 
 
SUPEEME COUET, 1877. |57 
 
 United States v. Mann. 
 
 information, like the indictment, is in general sufBcient, except in 
 cases where the statute is illiptical, or where, by necessary implica- 
 tion, other constituents are component parts of the offense. 
 Offenses created by statute as well as offenses at common law con- 
 sist, with rare exceptions, of more than one ingredient, and the 
 rule is uniyersal that cTery ingredient of which the offense is com- 
 posed must be accurately and clearly expressed in the indictment 
 or information, or the pleading will be held bad on demurrer. 
 United States v. Cook, 17 Wall. 67 ; 1 Bishop's Or. Pro. (2d ed.), 
 § 81 ; Arch. Or. PI. & Bv. (18th ed.) 54. 
 
 Orders for the payment of money, including checks and drafts 
 drawn upon any bank, banker or trust company, are subject to a 
 tax of two cents, and it is understood to be the opinion of the 
 department that the exaction specified is a tax upon the instru- 
 ment, to be paid by the person who makes, signs, or issues the same, 
 or the person for whose use or benefit the order or check was made, 
 signed or issued. Eev. Stat., § 3418; 18 Stat, at Large, 310. 
 
 Suppose that is so, then it may perhaps be suggested that a bank 
 check, though paid, if it was made, signed, and issued without 
 being duly stamped with a stamp denoting the amount of the tax, 
 is still an article or object subject to taxation within the meaning 
 of the provision under consideration, unless -it can be held that the 
 tax is merged in the penalty prescribed for the Tiolation of the 
 requirement that the instrument shall be stamped at the time it is 
 made, stamped and issued. Id., § 3431. 
 
 Such a question may arise in a subsequent case, but it is wholly 
 unnecessary to discuss it in the case before the court, as it is not 
 alleged in the information that the paid bank checks therein 
 described were not duly stamped at the time the same were made, 
 signed and issued, as required by the act of Congress. Instead of 
 that the charge in the information is to the effect that the paid bank 
 checks were then and there kept in the bank or place of business 
 then and there under the charge and superintendence of the 
 defendant; that the collector of the district then and there entered 
 the said bank or place of business for the purpose of examining the 
 said paid bank checks, and that he, the collector, then and there 
 requested the defendant to suffer him to examine the said paid 
 bank checks so kept by the said bank then and there in their said 
 place of business, and that the defendant then and there refused 
 the said request of the said collector. Matters not alleged in the 
 
158 UNITED STATES 
 
 United States v. Mann. 
 
 information cannot be regarded as confessed by the defendant, as 
 the demurrer only admits what is well pleaded. 
 
 Certain bank checks which had theretofore been drawn upon 
 and paid by the bank, it is alleged in the information, were then 
 and there kept in the rooms and vaults of the bank, and it is 
 proper to say that the said checks are described in the preliminary 
 part of the information as "articles subject to tax," but it is 
 nowhere alleged in the information that the said paid bank checks 
 were not duly stamped with stamps denoting the tax to which the 
 same were subject at the time the checks were made, signed and 
 issued. 
 
 Ingredients or elements not set forth in the information or other 
 criminal accusation cannot be incorporated into the charge against 
 the defendant after he is served with process, and it is equally clear 
 that paid bank checks, which were duly and suflBciently stamped 
 at the time they were made, signed and issued, are not articles or 
 objects subject to taxation within the meaning of the act of Con- 
 gress on which the information in this case is founded, and if so, 
 then it follows as a necessary conclusion that the defendant might 
 lawfully refuse to sufEer the collector to examine the paid bank 
 checks described in the information. 
 
 Penal ofEenses created by statute, whether to be prosecuted by 
 indictment or information, must be accurately and clearly described 
 in the pleadings for the recovery of the penalty, and if the ofEense 
 cannot be so described without expanding the allegations beyond 
 the mere words of the statute, then it is clear that the allegations 
 of the accusation must be expanded to that extent, as it is univer- 
 sally true that no pleading in such a case can be suflBcient which 
 does not accurately and clearly allege all the ingredients of which 
 the charge is composed, so as to bring tjie accused within the true 
 intent and meaning of the statute defining the accusation. 
 
 " In general," says Marshall, Ch. J., " it is sufficient in a libel 
 of information to charge the ofEense in the very words which direct 
 the forfeiture, but the proposition, we think, is not universally 
 true. If the words which describe the subject-matter of the prohi- 
 bition are general, including a whole class, * * * we think the 
 charge in the libel ought to conform to the true sense and meaning 
 of the words as used by the legislature." The Mary Ann, 8 Wheat. 
 389; The Hoppet, t Cr. 393; 3 Pars, on Ship. & Adm. 386. 
 
 Examples of the kind where it has been held that it is not suffi- 
 
SUPREME COUET, 1877. 159 
 
 United States v. Mann. 
 
 cient to follow the words of the statute are quite numerous, and 
 they show that many of the exceptions are as extensively recognized 
 and as firmly settled as any other rule of pleading in such cases. 
 Views of a corresponding character are expressed by this court in 
 another case, where the opinion was delivered by Mr. Justice Stoet: 
 Having stated the rule that it is in general suflQcient to allege the 
 offense in the very terms of the statute, he proceeds to remark. 
 We say in general, for there are doubtless cases where more par- 
 ticularity is required either from the obvious intention of the legis- 
 lature or from the known principles of law, both of which 
 exceptional requirements are applicable in this case. 
 
 Known principles of law require greater particularity to be ob- 
 served in order that all the ingredients which constitute a violation 
 of the statutory offense may be accurately and clearly alleged, and 
 it is equally clear that the intention of Congress requires the same 
 thing, as it is obvious that Congress never could have intended 
 that paid bank checks, duly and sufficiently stamped at the time 
 they were made, signed and issued, should be regarded as articles 
 or objects subject to taxation within the meaning of the provision 
 in the act of Congress under consideration. The Caroline, 7 Cr. 
 500; The Anne, id. 571; Coukl. Treat. (5th ed.) 546. 
 
 Authorities other than those already referred to are not necessary 
 to show that an information to recover a penalty created by statute 
 must state all the material facts and circumstances which con- 
 stitute the offense, so as to bring the party impleaded precisely 
 within the provision of the statute defining the offense; but should 
 it be desired to consult other authorities, it will be found that the 
 following fully support the propositions: 3 Colby's Cr. Law, 114; 
 People V. Wilbur, 4 Park. C. 0. 21 ; Com. v. Cooh, 13 B. Monr 
 149 ; Steel v. Smith. 1 Barn. & Aid. 99: Conkl. Treat. (5th ed.) 
 548. 
 
 Viewed in the light of these suggestions it is clear that the right 
 conferred upon the ofiBcer to enter the building or place of busi- 
 ness of another in such a case is strictly limited to a building or 
 place of business in which articles or objects subject to taxation 
 are, at the time of the proposed entry and examination, made, pro- 
 duced, or kept, and that paid bank checks, unless it is alleged and 
 proved that they were not duly and sufficiently stamped at the 
 time they were made, signed and issued, are not articles or objects 
 subject to taxation within the meaning of the act of Congress on 
 which the information is founded. Nothing is admitted by the 
 
160 UNITED STATES SUPREME COUET, 1877. 
 
 United States v. Maun. 
 
 demurrer except what is well pleaded in the information, and inas- 
 much as the only charge of the information in that regard is that 
 paid bank checks were then and there kept in the said building or 
 place of business described, the court is of the opinion that the in- 
 formation does not set forth any legal ofEenSc against the defend- 
 ant, as defined by the said act of Congress. 
 
 ^ Judgment affirmed. 
 
CASES DECIDED 
 
 IN THB 
 
 CIRCUIT AND DISTRICT COURTS 
 
 UNITED STATES. 
 
 Mamtfactukbbs' Natiou'al Bank v. Baack. 
 
 (2 Abb. U. S. 232 ; 8 Blatch. 147.) 
 Action by National banks — Where may be brought. 
 
 A National bank located in one State may bring an action in the Circuit Court 
 of tbe United States sitting witbin another State against a citizen thereof.* 
 
 In such action it will be presumed, so far as the question of jurisdiction Is 
 concerned, that the stockholders of such bank are citizens of the State 
 where the bank is located. 
 
 (Circuit Court, Second Circuit, Southern District of New York, January, 1871.) 
 
 APPLICATION for au injunction and receiyer. The opinion 
 states the case. 
 
 Francis 0. Barlow, for the motion. 
 
 C. A. Seward andi P. 0. Talman, opposed. 
 
 * See Main v. Second National Bank, post. The act of Congress of March 3, 
 1875, confers upon the Circuit Courts jurisdiction of suits "in which there 
 shall be a controversy between citizens of different States" — so that it is no 
 longer essential that one of the parties to a suit iu that court shall be a citizen 
 of the State where the suit is brought. See Osgood v. Chioago, etc., Bailway 
 Company, 6 Biss. 330. 
 21 
 
162 UNITED STATES 
 
 Manufacturers' National Bank v. Baack. 
 
 Blatchbord, J. The bill in this case describes, the plaintiffs as 
 "Manufacturers' National Bank of Chicago, Illinois, a banking 
 corporation, incorporated and existing under and by yirtue of an 
 act of the Congress of the United States, 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 3, 1864, and having capacity |o sue by the above title, and a 
 citizen of the State of Illinois, and located and residing and doing . 
 business in the city of Chicago, in said State." It describes the 
 defendants as citizens of the State of New York. The allegations 
 of the bill as to the incorporation and location of the plaintiffs are 
 admitted by stipulation. The plaintifEs move for an injunction, 
 and the appointment of a receiver in the case; and the question 
 arises whether, on the allegations of the bill thus admitted, with 
 the fact that the allegation of the bill as to the citizenship of the 
 defendants is not denied by the answers, this court has jurisdiction 
 of the suit. 
 
 The eighth section of the act of June 3, 1864: (13 Stat, at Large, 
 101), under which the plaintiffs are incorporated, provides that 
 every association formed pursuant to the provisions of the act 
 shall be a body corporate, and may have a corporate seal, and shall 
 have succession by the name designated in its organization certifi- 
 cate, and may, by such name, " sue and be sued, complain and de- 
 fend, in any court of law and equity, as fully as natural persons." 
 The effect of this provision is not to give to the corporation the 
 right to sue, or the capacity to be sued, in every court within the 
 United States, whether State or Federal, or to give to every such 
 court jurisdiction over every suit which may be brought in it, 
 wherein the corporation is plaintiff or defendant. Its only proper 
 effect is to provide that the corporation, when it has come or been 
 brought as a suitor into a court which has jurisdiction of the suit, 
 shall stand in court, in all respects, in the same position, as regards 
 its own rights, or the rights of others against it, as to the subject- 
 matter of the suit, in which a natural person who is a suitor in 
 such court can stand. The question as to the proper court in 
 which the suit is to be brought, in respect of jurisdiction, is left 
 to be determined by other provisions of law. If a natural person 
 had brought this suit in this court against the defendants, as citi- 
 zens of New York, he would have been obliged to aver himself to 
 be a citizen of some State other than New York, the bill being what 
 
OIECUIT OOUET, 1871. 163 
 
 Manufacturers' National Bank v. Baact. 
 
 is known as a creditors' bill, founded on a judgment at law and 
 . praying for equitable relief. Therefore, so far as the provisions of 
 section 8 of the act are concerned, the plaintifEs must show, by the 
 averments of their bill, jurisdiction of this suit by this court by 
 showing proper citizenship in the parties. 
 
 There is no other provision of the act which can be cited as giv- 
 ing to this court jurisdiction of this suit. Section 57, even if under 
 the dictum of Mr. Justice Swatne, in Kennedy v. Gibson, 8 Wall. 
 498, 506, it be held to refer to suits by National banks as well as to 
 suits against them, relates only to suits to be brought in courts of 
 the United States held within the district in which the bank is 
 established, and does not affect the question of the jurisdiction of 
 this court in this suit. Such jurisdiction, in order to be sustained, 
 must, therefore, appear, by the averment of the bill, to be brought 
 within that provision of section 11 of the Judiciary Act of Sep- 
 tember 24, 1789 (1 Stat, at Large, 78), which gives to this court 
 original cognizance of all suits of a civil nature in equity, where 
 the matter in dispute exceeds, exclusive of costs, the sum or value 
 of five hundred dollars, and the suit is between a citizen of the 
 State where the suit is brought and a citizen of another State. 
 
 The averment in the bill that the plaintiff corporation is a citi- 
 zen of the State of Illinois is, in and of itself, not sufficient to 
 show jurisdiction, as a corporation cannot be a citizen of a State, in 
 the sense in which that word is used in the Constitution of the 
 United States. Lafayette Ins. Co. v. French, 1 8 How. 404 ; Cov- 
 ington Drawbridge Co. v. Shepherd, 20 id. 227, 233, 234. The 
 substance of the averments in the bill in regard to the status of the 
 plaintiffs is, that they are a banking corporation, incorporated under 
 the act of Congress named ; that their members are authorized to 
 sue by the title given to the corporation ; that the corporation is 
 located and does business at Chicago, in the State of Illinois ; and 
 that, therefore, the real plaintiffs, the members of the corporations, 
 must be regarded, on such averments, as citizens of the State of 
 Illinois. 
 
 The various decisions of the Supreme Court, in cases of suits in 
 the Federal courts by "and against corporations created by the laws 
 of the States, where the jurisdiction depended on the citizenship 
 of the parties to the suit, are reviewed in the opinion given by that 
 court, in the case of Ohio & Mississippi B. R. Co. v. Wheeler, 1 
 Black, 286. The law is there stated to be settled, that where a 
 
164 UNITED STATES 
 
 Manufacturers' National Bank v. Baack. 
 
 corporation is created by the laws of a State, the legal presumption 
 is that its members are citizens of such State; that a suit b y or 
 against such corporation, in its corporate name, must be presumed 
 to be a suit by or against citizens of the State which created the 
 corporation ; and that no averment or evidence to the contrary is 
 admissible, for the purpose of withdrawing the suit from the juris- 
 diction of a ceurt of the United ^States. In the case of Cowles v. 
 Mercer County, 7 Wall. 118, 131, the rule is thus stated : " A cor- 
 poration created by the laws of a State, and having its place of 
 business within that State, must, for the purposes of suit, be 
 regarded as a citizen, within the meaning of the Constitution 
 giving jurisdiction founded upon citizenship." This rule, however, 
 does not, ex vi termini, cover the case of a corporation created by 
 act of Congress. 
 
 The argument urged against a jurisdiction in this case drawn 
 from citizenship, is that, as the corporation is created by the United 
 States, the only legal presumption that can be drawn is, that its 
 members are citizens of the United States ; and that there is no 
 presumption that they are citizens of the State in which the corpo- 
 ration is located. 
 
 With a view to the consideration of the question raised, it will 
 be necessary to examine the statutory provisions in respect to the 
 location of banking associations. Section 6 of the act of 1864 pro- 
 vides that the organization certificate of every association for car- 
 rying on the business of banking, formed under the act (and which, 
 by the execution of such certificate, becomes, under section 8, a 
 body corporate), shall specify the place where the operations of 
 discount and deposit of the association are to be carried on, desig- 
 nating the State, Territory, or district, and also the particular 
 county and city, town, or village. Section 44 provides that any 
 bank incorporated or organized under a law of a State may, by 
 authority of such act of Congress, become a National association 
 under the provisions of such act, by the name prescribed in an organ- 
 ization certificate, such as is required by such act, to be executed by 
 a majority of its directors, the certificate declaring that the owners 
 of two-thirds of the capital stock have authorized the directors to 
 make such certificate, and "to change and convert the said bank 
 or banking institution into a National association under this act," 
 and that, on a compliance with certain provisions prescribed in that 
 section, the association shall be held and regarded as an association 
 
CIKCTJIT COUET, 1871. 165 
 
 Manufacturers' National Bank v. Baack. 
 
 under the act. There is, therefore, no difierence, in regard to 
 its status, between an association formed under the act, and one 
 converted into a National association under the act. In each 
 case, it must be regarded as holding its corporate existence under 
 and by "virtue of the act. 
 
 What, then, are the consequences of the fixing of place provided 
 for in section G ? Section 8 provides that the usual business of the 
 association shall be transacted at an oflB.ce or banking-house " loca- 
 ted " at the place specified in its organization certificate. Section 9 
 provides that at least three-fourths of the directors shall have 
 resided in the State in which the association is " located " one year 
 next preceding their election as directors, and be residents of the 
 same during their continuance in oflBce. Sections 10, 15, 18 and 
 43 speak of the association as being "located " in a city, town, or 
 county. Section 30 speaks of the laws of the State where the bank 
 is "located." Section 34 speaks of the place where the association 
 is "established." Section 41 speaks of taxes imposed "by or 
 under State authority, at the place where such bank is located." 
 The word " place," in this section 41, is declared by the act of 
 February 10, 1868 (15 Stat, at Large, 34), to mean " the State within 
 which the bank is located." This act of 1868 also provides that 
 the legislature of each State may determine and direct the manner 
 and place of taxing all the shares of the National banks "located " 
 within said State, and that the shares of any National bank owned 
 by non-residents of any State shall be taxed in the city or town 
 where such bank is "located." Section 50 of the act of 1864 pro- 
 vides that an association may apply to the " nearest " circuit, or dis- 
 trict, or territorial court of the United States, in certain cases, to 
 enjoin the Comptroller of the Currency. Section 57 provides that 
 suits, actions, and proceedings against any association under the act, 
 may be had in any circuit, district, or territorial court of the United 
 States held within the district in which the association may be 
 "established," or in any State, county, or municipal court in the 
 county or city in which the association is "located," having juris- 
 diction in similar cases, provided that all proceedings to enjoin the 
 Comptroller under the act shall be had in a circuit, district, or 
 territorial court of the United States, held in the district in which 
 the association is "located." 
 
 Section 31 of the act of 1864, as amended by the act of March 
 3, 1865 (13 Stat, at Large, 498), provides, that of the three hundred 
 
166 TJlSriTED STATES 
 
 Manufacturers' National Bank v. Baack. 
 
 millions of dollars of circulating notes authorized to be issued, 
 one hundred and fifty millions of dollars shall be apportioned to 
 associations in the States, in the District of Columbia, and in the 
 Territories, according to representative population, and that the 
 remainder shall be apportioned by the Secretary of the Treasury 
 among associations formed in the several States, in the District of 
 Columbia, and in the Territories, having due regard to the. existing 
 banking capital, resources, and business of such States, districts, 
 and Territories. The act of July 13, 1870 (16 Stat, at Large, 351, § 
 1), provides that fiity-four millions of dollars, in notes for circula- 
 tion, may be issued to Tfational banking associations, in addition to 
 the three hundred millions of dollars, and shall be furnished to 
 banking associations organized or to be organized in those States 
 and Territories having less than their proportion under the appor- 
 tionment contemplated by the act of 1865, before referred to ; and 
 that a new apportionment of such increased circulation shall be 
 made as soon as practicable, based upon the census of 1870. 
 
 Section 6 of the act of 1870 provides for " a more equitable dis- 
 tribution " of the National banking currency, by withdrawing cir- 
 culating notes from banking associations organized in States hav- 
 ing a circulation exceeding that provided for by the act of 1865, 
 and issuing a like amount of notes to banking associations or- 
 ganized in States and Territories having less than their proportion, 
 the intention being, as declared by the section, that "the circula- 
 tion so withdrawn shall be distributed among the States and Ter- 
 ritories having less than their proportion, so as to equalize the 
 same." Section 7 of the act of 1870 provides that after January 
 13, 1871, any banking association " located " in any State having 
 more than its proportion of circulation, may be removed to any 
 State having less than its proportion of circulation, under such 
 rules and regulations as the Comptroller of the Currency, with the 
 , approval of the Secretary of the Treasury, may require. 
 
 It is quite apparent, from all these statutory provisions, that 
 Congress regards a National banking association as being " located " 
 at the ^place specified in its organization certificate. If such 
 place is a place in a State, the association is located in that Stata 
 It is, indeed, located but at one place in the State, but, when 
 it is so located, it is regarded as located in the State. The re- 
 quirement that at least three-fourths of the directors of the asso- 
 ciation shall be residents, during their continuance in office, in 
 
OIEOTJIT COTJET, 1871. 167 
 
 Manufacturers' National Bank v. Baack. 
 
 the State in which the association is located, especially indicates an 
 intention on the part of Congress to regard the association as 
 belonging to such State. Three-fourths of the legal representa- 
 tives of the unknown associates forming the corporation, with 
 which representatives any person dealing with the corporation 
 must deal, are required to reside in the State where the corpora- 
 tion is " located." The reasons, so forcibly stated in the opinion 
 of the court in the case of Marshall v. Baltimore S Ohio B. R. Co., 
 16 How. 314, 326-329, why a grant of power by a competent au- 
 thority, to certain associated persons to act by representatives, and 
 to sue and be sued in a collective or corporate name, should not be 
 allowed to prejudice any right of those dealing with such persons, 
 apply as fully to the case of a bank created by Federal authority* 
 and located in a particular State, as to one created by State au- 
 thority and located in the State which created it. The view taken 
 by the court in that case was, that the persons using the corporate 
 name of a corporation created by a State may be justly presumed 
 to be resident in the State which is the necessary habitat of the 
 corporation; that the presumption arising from the habitat of a 
 corporation created by a State in the place of its creation is con- 
 clusive as to the residence or citizenship of those who use the cor- 
 porate name, and exercise the faculties conferred by it; that the 
 right of choosing an impartial tribunal is a privilege of no small 
 practical importance, and more especially in cases where a distant 
 plaintifE has to contend with the power and influence of great num- 
 ers, and the combined wealth wielded by corporations in almost 
 every State, and that it is of importance, also, to corporations them- 
 selves, that they should enjoy the same privileges in other States, 
 where local prejudices or jealousy might injuriously affect them. 
 The principle has been settled ever since the case of Louisville R. R. 
 Co. V. Letson, 2 How. 497, that where a corporation is created by the 
 laws of a State, the legal presumption is that its members are citi- 
 zens of such State. Where a corporation is created by competent 
 authority — authority as competent within a given State, to create 
 such corporation, and to locate it in such State, as is the State 
 itself — and a loc9,tion and habitat within such State, and not else- 
 where, is given by the creating authority to such corporation, there 
 is no reason why the legal presumption should not be that the 
 members of such corporation are citizens of such State, within the 
 meaning of section II, of article III of the Constitution, and of 
 
168 UNITED STATES 
 
 Manufacturers' National Bank v. Baack. 
 
 section 11 of the Judiciary Act of 1789. The presumption, in the 
 case of a corporation created by a State, is only arrived at by pre- 
 suming the members of the corporation to be citizens of the 
 United States, and to be residents in the State, and, therefore, un- 
 der the decision in Qassies v. Ballon, 6 Pet. 761, citizens of the 
 State. The members of a corporation created by the United 
 States, and located in a particular State, in the manner and to the 
 extent in which National banking associations are located in par- 
 ticular States, may as properly be presumed to be citilzens of the 
 United States and residents in the State where the corporation is 
 located, so as thereby to be citizens of such State, as the members 
 of a corporation created by a State may be presumed to be citizens 
 of the United States, and residents in the State creating it and in 
 which it is located, and, therefore, citizens of such State. 
 
 But it is urged that the legislation of Congress shows an inten- 
 tion not to confer upon National banking associations the right 
 to sue in the Federal courts. The first National banking law was 
 passed February 25, 1863 (12 Stat, at Large, 665), and was re- 
 pealed by section 62 of the act of June 3, 1864. Section 59 of the 
 act of 1863, provided that "suits, actions, and proceedings by and 
 against any association under this act may be had in any circuit, 
 district, or territorial court of the' United States held within the 
 district in which such association may be established. " The cor- 
 responding section (57) of the act of 1864, provides, that " suits, 
 actions, and proceedings against any association under this act 
 may be had in any circuit, district, or territorial court of the 
 United States held within the district in which such association 
 may be established, or in any State, county, or municipal court in 
 the county or city in which said association is located, having ju- 
 risdiction in similar cases." It is urged that this legislation indi- 
 cates an intention that National banking associations shall not 
 come into the Federal courts as plaintiffs, although they may be 
 brought into those courts as defendants. But, independently of 
 the view taken of section 57 of the act of 1864, in the opinion given 
 by Mr. Justice Swatnb in the case of Kennedy v. Gibson (before 
 cited), it may well be said, that the object of such section is to 
 enable a suit to be brought against a bank in any Federal court 
 held in the district where the bank is established, without reference 
 to the citizenship of the plaintiff in the suit. Under the decision 
 in the case of Osborn v. Banh of the United States, 9 Wheat. 738, 
 
CIECUIT COUET, 1869. 169 
 
 Shoemaker v. The National Mechanics' Bank. 
 
 such suit is a case arising under a law of the United States, within 
 the meaning of the Constitution, the bank being incorporated 
 by a law of the United States ; and it is competent for Congress to 
 confer jurisdiction over it on the Federal courts. But the juris- 
 diction is expressly confined, by section 57, to suits brought in a 
 Federal court held in the district where the association is estab- 
 lished. Under it, howeyer, these plaintiffs, a National bank, could 
 bring a suit in this court against a National bank established 
 in this district. The section embraces any plaintiff who has 
 capacity to sue at all in any court. If these plaintiffs can sue an- 
 other National bank in this court, it is difBcult to see why they 
 should not be allowed to sue in this court defendants who are cit- 
 izens of New York. I can perceive no evidence, in the legislation 
 referred to, that Congress intended that this court should not as- 
 sume the jurisdiction invoked in this suit. So, too, the provision 
 in section 2 of the act of July 27, 1868 (15 Stat, at Large, 227), 
 withholding from banking corporations organized under a law of 
 the United States, the priAdlege conferred by that act on other cor- 
 porations organized under a law of the United States, of removing 
 into a Federal court, certain suits brought against it, cannot be 
 regarded as affecting the question of original jurisdiction involved 
 in this case. 
 
 I am, therefore, satisfied that the averments of the bill are suffi- 
 cient to show jurisdiction, and that this court has jurisdiction of 
 this suit. 
 
 On the merits, the plaintiffs are entitled to the receivership and 
 the injunction asked for in their notice of motions, so far as con- 
 cerns the property specified in the first and second clauses of such 
 notice ; but,- inasmuch as such property exceeds the amount of the 
 plaintiffs' claim, the receiverships and injunction will be discharged 
 on furnishing to the plaintiffs satisfactory security for the payment 
 of their claim, if they shall recover in the suit. 
 
 An order will be settled on notice, embodying proper provisions. 
 
 Shoemakeb v. The Natiokal Mechanics' Bank. 
 
 (2 Abbott, U. S., 416.) 
 
 Enjoining misapplication of funds by officers of a Nationaliamk — Loans in 
 excess of one-tenth of capital — Loans on stock as collateral security. 
 
 The Circuit Court has jurisdiction, at the suit of a stockholder, to enjoin the 
 o£BcerB of a National hank from any misapplication of its funds which might 
 22 
 
170 UNITED STATES 
 
 Shoemaker v. The National Mechanics' Bank. 
 
 result from any act not warranted by its charter, or which would amount to 
 
 a breach of trust. 
 A loan made to an individual or company by a National bank is not void 
 
 because it is in excess of one-tenth of its capital stock paid in ; and the 
 
 money loaned may be recovered.* 
 A National bank may lend money upon the personal obligation of the borrower 
 
 secured by a pledge of stock of a corporation as collateral security. 
 
 (Circuit Court, Fourth Circuit, District of Maryland, March, 1869.) 
 A PPLIOATION for an injunction. 
 
 Giles, J. This bill is not filed to have the charter of defend- 
 ant, as a National bank, declared null and void for the causes 
 mentioned in section 53 of the act to provide a National currency, 
 etc., passed June 3, 1864. This would not be the appropriate pro- 
 ceeding for such a purpose. That could only be accomplished by 
 a suit instituted by the Comptroller of the Currency. But this is 
 a bill filed by one of the stockholders in the National Mechanics' 
 Bank of this city, to restrain the president and directors of the 
 said bank from pursuing a course which, he alleges, is in violation 
 of the requirements of their charter under the said act, and by 
 which they are wasting the assets of the said bank, to the loss and 
 injury of the complainant and its other stockholders. 
 
 Such being the object of the bill, if its allegations were admitted 
 by the answer, or proved on final hearing to the satisfaction of the 
 court, it would Ipe its duty to restrain the officers of ^the said bank 
 from any further misapplication of its funds which might result 
 from any act not warranted by its charter, or which wbuld amount 
 to a breach of trust. 
 
 This is clear from the decision of the Supreme Court in the case 
 of Dodge y. Woolsey, 18 How. 341. In that case the court says: 
 " It is now no longer doubted, either in England or the United 
 States, that the courts of equity in both have jurisdiction over 
 corporations, at the instance of one or more of their members, to 
 apply preventive remedies by injunction to restrain those who 
 administer them from doing acts which would amount to a viola- 
 tion of charter, or to prevent any misapplication of their capitals 
 
 *See Union Gold Hill Mining Co. v. Rooky Mountain National Bank, amte, 
 p. 151. 
 
CIRCUIT COURT, 1869. 171 
 
 Shoemaker v. The National Mechanics' Bank. 
 
 or profits which might result in lessening the dividends of stock- 
 holders, or the value of their shares, as either may be protected by 
 the franchise of a corporation, if the acts intended to be done cre- 
 ate what is in the law denominated a breach of trust." 
 
 The motion for this injunction has been heard on bill and 
 answer; and the principle is now almost universally recognized, 
 that, where the answer denies all the circumstances upon which 
 the equity of the bill is founded, the court will refuse the writ of 
 injunction. 
 
 It becomes necessary, therefore, to carefully examine the bill and 
 answer; the bill, that we may learn what are the facts which is 
 sets forth, and on which claims the equitable interference of the 
 court, and the answer, that we may see if these facts are admitted 
 or denied. Now there are many things stated in the bill, and 
 replied to in the answer, with which we have nothing to do, on 
 this motion. Whether the loan to Bayne, by the defendant, was 
 made under such circumstances as will render the ofBcers who 
 made it responsible to the stockholders for any loss the bank may 
 incur therefrom, can only be answered when this case comes before 
 the court on final hearing. And it may be doubtful whether such 
 question could even be decided on the pleadings in^ this case; it 
 would seem to require a bill to be filed against the oflBcers who 
 made the loan individually. This is a bill against the bank in its 
 corporate capacity. The allegations on which the preliminary 
 injunction is asked, are the following: " That in violation of said 
 express prohibition, and in violation of the trust as aforesaid con 
 fided to its officers, the said bank and its officers lent to Bayne and 
 Bayne & Co., of the funds or capital of the said bank, from time 
 to time, divers sums of money, in the whole largely exceeding one- 
 tenth of the capital stock of said bank actually paid in, and that 
 for many months the amount of money so loaned exceeded three 
 hundred thousand dollars. " And it is further alleged that said loans 
 were made upon collateral security of shares of stock, etc., some of 
 which were spurious, and that among these were twelve hundred 
 and fifty shares, purporting to be the stock of the Washington, 
 Georgetown, and Alexandria Railroad Company, a corporation 
 which the bill charged never had any legal existence, etc. And 
 that said bank is joining in the prosecution of or has been 
 made party to certain suits, touching or concerning the interests 
 of said railroad company. 
 
172 UNITED STATES 
 
 Shoemaker v. The National Mechanics' Bank. 
 
 It also charges that the said defendant, by its officers and agents, 
 has offered to pay into the Circuit Court of the United States for 
 the Eastern District of Virginia, the sum of twenty thousand dol- 
 lars of the funds of said bank, in a cause therein depending, in 
 which the said bank has no interest whatever, and to which it is 
 not a party, and did actually pay in said cause two hundred dollars 
 fees to commissioners, and did actually pay one hundred dollars to 
 the trustees of Bayne & Co., upon some illegal and unauthorized 
 agreement as to said securities taken by them from Bayne, and 
 that they are negotiating for and offering to expend the money 
 and funds of said bank inland about the repairs and reconstruction 
 of the bridge of the said railroad company across the Potomac 
 river, in which said bank has no sort of interest, and cannot legally 
 have any. Said bridge, it is estimated, will cost over one hundred 
 thousand dollars to repair it. And it concludes with a prayer that 
 the said bank, its officers, agents, and attorneys, may be restrained 
 from farther prosecuting or defending any one or more of said 
 suits at the cost or charge, or in the name of said bank. 
 
 The answer admits that Bayne & Co. did pledge with its cashier, 
 early in the month of February, 1866, as collateral security for its 
 money loaned and advanced to the said firm, one thousand two 
 hundred and fifty shares of the capital stock of said railroad com- 
 pany, of the par value of one hundred dollars each, and that the 
 trustees of Bayne & Co. did subsequently, for one hundred dollars, 
 assign all the equity of redemption of said stock to the cashier of 
 this defendant. 
 
 It also admits that as a holder of stock of the said railroad com- 
 pany, it did agree with certain stockholders of said company to 
 advance a portion of the sum of twenty thousand dollars, which 
 was offered to be paid into the Circuit Court of the United States 
 for the Eastern District of Virginia, in a cause in which the said 
 railroad company and others were defendants, and Adams Express 
 Company was complainant, to abide the decision of said, cause, with 
 the purpose of preventing the said railroad from passing into the 
 hands of a receiver, to be appointed by said court, but said offer 
 was refused by said court, and no money was paid on account 
 thereof, and that this defendant was to have been adequately 
 secured if said money had been actually advanced, and that it did 
 advance about forty dollars, part of defendant's commissioner's 
 
CIECUIT OOUET, 1869. 173 
 
 Shoemaker v. The National Mechanics' Bank. 
 
 fees, ia said cause. And this defendant denies that it is negotiating 
 or offering to expend its money or funds in the repair and recon- 
 struction of the railroad bridge across the Potomac. It also denies 
 that it, or any of its oflBcers, at the time said stock was issued in 
 the name of its cashier, or previous thereto, had any knowledge or 
 good reason to believe that the said railroad company had no legal 
 existence, or that the certificates were fraudulently issued, but that 
 as late as May, 1866, the stock of the said railroad company was 
 held and esteemed as valuable stock, at par or over par, and that 
 as late as the middle of May, 1866, large loans were effected upon 
 the pledge of its certificates of stock at or about par. 
 
 Now, the only fact admitted in the answer, pertinent to the 
 present inquiry, is that the defendant did receive from Bayne & 
 Oo. a pledge of the railroad stock as collateral security for loans 
 made to said firm, and that said bank is now, in company with 
 other stockholders of said railroad, engaged in suits, upon whose 
 final decision depends the very existence of said road and the value 
 of its stock. Will these facts warrant the granting of a prelimi- 
 nary injunction ? Now the granting or refusing of an injunction 
 is a matter resting in the sound discretion of a court of equity. It 
 is one of the highest powers confided to a court of equity, and its 
 exercise ought, therefore, to be guarded with extreme caution, and 
 the remedy applied only in very clear cases. 
 
 As to the first charge in this bill against the defendant, in refer- 
 ence to the amount loaned to Bayne & Co., in violation of section 
 39 of the act of Congress passed June 3, 1864 (under which act the 
 defendant beoame a National bank), I would only say that the loan 
 made under such circumstences is not void — it can be enforced as 
 any other loan made by the bank. This I apprehend is clear, from 
 the fact that section 39 provides no penalty for its violation, and sec- 
 tion 53 of the same act, for all violations of the provisions of the 
 said act, provides two penalties: first, a forfeiture of the privileges 
 and franchises of the said bank, derived from the said act, to be 
 adjudged in a suit brought for that purpose in the Federal court ; 
 and second, a personal liability by every oflBcer of a bank who par- 
 ticipated in or assented to such violation, for all damages which the 
 bank may sustain in consequence thereof. 
 
 Indeed, this clause was not pressed in the very able argument of 
 the learned counsel who closed on behalf of complainant. The 
 point so forcibly made by him was that the defendant was prohib- 
 
174 UNITED STATES 
 
 Shoemaker y. The National Mechanics' Bank. 
 
 ited by its charter from making this loan on a pledge of stock, and 
 if so, no title to this stock passed from Bayne & Co. to the defend- 
 ant. Clearly, if the defendant's title to this stock depended on a 
 purchase as an inTestment by it, such purchase would be beyond 
 its corporate powers, and void. The learned counsel, however, 
 contended that by the true construction of section 8, this loan was 
 not embraced among the enumerated powers of the bank, — " that 
 no loans are valid except those made on personal security." The 
 language of that section is, "and exercise under this act all such 
 incidental powers as shall be necessary to carry on the business of 
 banking, by discounting and negotiating promissory notes, drafts, 
 bills of exchange, and other evidences of debt, by receiving depos- 
 its, by buying and selling exchange, coin, and bullion, by loaning 
 money on personal security, by obtaining, issuing and circulating 
 notes, according to the provisions of this act. 
 
 I understand that the language I have quoted contains five dis- 
 tinct grants of power, and that no one grant is a limitation on any 
 other. By the first the bank is authorized to discount promissory 
 notes, drafts, bills of exchange, and other evidences of debt; sec- 
 ond, to receive deposits; third, to buy and sell exchange, coin, and 
 bullion; fourth, to loan money on personal security (I understand 
 by this, on any personal security that is mentioned in the first 
 grant); fifth, to obtain, issue, and circulate the National currency. 
 If I am right in this construction, then the loan to Bayne & Co. 
 was authorized by the said section, as the charge in the bill is that 
 the loans to Bayne & Co. were made upon paper evidences of debt; 
 upon bonds, notes, checks, etc.; and upon collateral security of 
 stocks, etc. ; and the answer states that the stock in said railroad 
 was pledged with its cashier as collateral security for its money 
 loaned. If collateral security, then collateral to personal responsi- 
 bility of Bayne & Co., on the notes, checks, and bills of exchange, 
 cashed for said firm by this defendant; for, collateral security, in 
 bank phraseology, means some security additional to the personal 
 obligation of the borrower. But admit that this construction is 
 doubtful, it is not so doubtful as that construction which would 
 limit the banks to the power of loaning money only on personal se- 
 curity, and deny to them the power of taking a pledge of stock as 
 collateral security for notes or bills of exchange cashed by them. 
 And, as I said before, a court of equity should never grant a pre- 
 liminary injunction in a doubtful case. 
 
CIEOUIT COURT, 1869. 175 
 
 Stewart v . The National Union Bank oi Maryland. 
 
 However, I have no doubb that the taking this collateral secu- 
 rity from Bayne & Co. was a valid transaction, and whether it will 
 ever avail the defendant any thing, it will depend upon the decis- 
 ions of those tribunals before whom is now pending the question of 
 the validity of the charter of the said railroad company, and the 
 character of its stock. 
 
 The preliminary injunction asked for in this case is refused. 
 
 For authorities to sustain the view I have taken of the law gov- 
 erning this case, I refer to the following cases : Bates v. Bank of 
 Alabama, 2 Ala. 463; Magruder v. State Bank, 18 Ark. 9; Banlc of 
 Middlehurg v. Bingham, 33 Vt. 636; Farmers' Bank v. Buechard, 
 33 id. 348; and Rock River Bank t. Sherwood, 10 Wis. 230. 
 
 Injunction refused. 
 
 Stewart v. The Nation'AL Union" Bank of Maetland. 
 
 (3 Abbott, TJ. S., 434.) 
 Loa/m in excess of one-tenth of capital. 
 
 Loans by a National bank to an individual or company in excess of one-tenth 
 of its paid-up capital are not void. The loan may be collected though the 
 bank is exposed to forfeiture of its franchise and the officers participating 
 are declared personally liable.* 
 
 (Circuit Court, Fourth Circuit, District of Maryland, October, 1869.) 
 T\BMUREER to a bill in equity. 
 
 Giles, J. The complainant in this case filed a general credit- 
 or's bill against the defendant, alleging, among other things, that 
 he was and is a creditor of Bayne & Co. to a large amount ; that 
 Bayne & Co. are bankrupts ; that the National Union Bank, the 
 National Mechanics' Bank, and the National Exchange Bank, are 
 National banks, organized under the act of Congress entitled "An 
 act to provide a National currency," approved June 3, 1864 ; that 
 section 39 of said act provides "that the total liabilities to any 
 association of any person or of any company, corporation, or firm, 
 
 * See Union Gold Rill Mining Go. y. Rocky Mountain National Bank, ante, 
 p. 151; Shoemaker v. National Mechanics' Bank, ante, p. 169. 
 
176 UNITED STATES 
 
 Stewart T. The National Union Bank of Maryland. 
 
 for money borrowed, including in the liabilities of a company or 
 firm the liabilities of the several members thereof, shall at no time 
 exceed one-tenth part of the amount of the capital stock of such 
 association actually paid ;" that on May 3, 1866, the loans to 
 Bayne & Co. by the National Union Bank amounted to two 
 hundred and eighty-soTen thousand six hundred and forty-one 
 dollars and thirty-one cents ; by the» National Mechanics' Bank, to 
 three hundred and seyenty-seven thousand four hundred and forty- 
 four dollars and seventeen cents ; and by the National Exchange 
 Bank, to one hundred and forty thousand four hundred and thirty- 
 one dollars and twenty-nine cents, which loans were made with the 
 knowledge and permission of the directors of said banks, and were 
 not within the reservations or provisos of section 39 ; that the 
 largest part of the assets of Bayne & Co. are deposited with and 
 held as collateral security by said National banks, defendants, for 
 the illegal loans, so made by them to Bayne & Co. ; that of such 
 collaterals, the National Mechanics' Bank held three hundred and 
 eighty-five thousand eight hundred and sixty-four dollars, the 
 National Union Bank, three hundred thousand one hundred and 
 thirty-nine dollars, and the National Exchange Bank, one hundred 
 and sixty-four thousand two hundred and fifty dollars ; that the 
 capital stock of the said National Mechanics' Bank is six hundred 
 thousand dollars ; of the said National Union Bank is one million 
 two hundred thousand dollars, and of the National Exchange 
 Bank four hundred thousand dollars ; that the loans to Bayne & 
 Co. by said banks were, on May 3, 1866, largely in excess of the 
 ten per cent of their respective capitals actually paid in, and there- 
 fore contrary to law, and a fraud on the rights of complainant and 
 other creditors of Bayne & Co. The bill prays for a discovery of 
 the amount and nature of said collaterals, also of all transactions 
 between Bayne & Co. and the banks, and for an order of this court 
 transferring the collaterals so held by the banks to the assignee in 
 bankruptcy of Bayne &Co., for adjustment of rights between their 
 creditors, for a decree in favor of complainant, and for general 
 relief. 
 
 To all that part of the bill which attacks these loans made by 
 the banks on the ground that they are void by section 29 of the 
 act of 1864, and prays for a decree of this court ordering them to 
 be transferred to the assignee of Bayne & Co. , the banks demur ; 
 and for cause of demurrer show " that according to the true con- 
 
CIKOUIT COUET, 1869. 177 
 
 Stewart v. The National Union Bank of Maryland. 
 
 Btruction of the act of 1864, the complainant has no right to call 
 upon this court to examine into and decide upon the matters above 
 demurred to, but the same are examinable only at the instance and 
 suit of the government of the United States and its authorized 
 officer, and in conformity with the provisions of said act." "And 
 that the said matters, as alleged, do not affect the vaHdity of the 
 said loan by these defendants to the said Bayne & Co., nor do they 
 destroy, invalidate, or affect the title of these defendants to the 
 said collaterals and securities." 
 
 The issues raised by this demurrer are two. First, the right of 
 complainant to the relief sought in his bill against the banks ; 
 and second, the validity under the act of Congress of the loans so 
 as aforesaid made by the said banks to Bayne & Co. 
 
 [The first issue was decided against the complainant on the 
 ground that if the securities did not vest in the bank they belonged 
 to the general assignee of Bayne & Co.] 
 
 This disposes of that part of the case now submitted to me, and 
 I might rest my decision here ; but as the second issue raised by 
 the demurrer has been argued at length and with great ability by 
 the complainant and the learned counsel engaged in the cause, and 
 as I have carefully examined all the authorities referred to, I shall 
 state briefly the conclusions to which. 1 have arrived as to the true 
 construction of section 29, and of the rights of the parties to such 
 loans as are here alleged. Now, it is observable that this section only 
 provides, " that the total liabilities to any association, of any per- 
 son, or of any company, corporation or firm, for money borrowed, 
 including in the liabilities of a company or firm the liabilities of 
 the several members thereof, shall at no time exceed one-tenth part 
 of the amount of the capital stock actually paid in." It contains 
 no penalty, and no provision " that such loans shall be void." 
 
 In the very next section (§ 30), which regulates the rate of in- 
 terest, it is provided that " the knowingly taking, receiving, re- 
 serving, or charging a rate of interest greater than aforesaid, 
 shall be held and adjudged a forfeiture of the entire interest," etc. 
 And in case a greater rate of interest has been paid, the person or 
 persons paying the same, or their legal representatives, may recover 
 back, in any action of debt, twice the amount of the interest thus 
 paid, from the association taking or receiving the same. 
 
 So in section 31 it is enacted that every association m certain 
 cities " shall always keep on hand, in lawful money, twenty-five 
 23 
 
J 78 UNITED STATES 
 
 Stewart v . The National Union Bank of Maryland. 
 
 per centum of the aggregate amount of its notes in circulation 
 and its deposits. And if any association, whose lawful money 
 shall fall below the amount aforesaid required to be kept on hand, 
 shall fail, for thirty days after notice, to make good such reserve, 
 the Comptroller of the Currency, with the concurrence of the 
 Secretary of the Treasury, may appoint a receiver to wind up the 
 business of such association." 
 
 See, also, section 52, in which all transfers of the notes, bonds, 
 and other evidences of debt owing to any association, and of any 
 and all property belonging to the association, made after the com- 
 mission of an act of bankruptcy, etc., are declared null and void. 
 
 Now, when you read these sections and find no such provision of 
 forfeiture in section 39, but find that in section 53 provision is 
 made, " that if the directors of any association shall knowingly 
 violate any of the provisions of this act, all the rights, privileges, 
 and franchises of the association, derived from this act, shall be 
 thereby forfeited — such violation shall, however, be determined and 
 adjudged by a proper District or Circuit Court, in a suit brought 
 for that purpose by the Comptroller of the Currency, in his own 
 name, before the association shall be declared dissolved " — the con- 
 clusion seems to be irresistible, that Congress never intended by 
 section 29 to forfeit all loans made in excess of the amount speci- 
 fied in section 39, no matter whether they were made through 
 inadvertence or by mistake, for the forfeiture provided for in sec- 
 tion 53 depends upon the guilty knowledge of officers making it. 
 
 The general banking powers are granted by section 8 of the act 
 in the following terms : "And exercise under this act all such inci- 
 dental powers as shall be necessary to carry on the business of 
 banking, by discounting and negotiating promissory notes, drafts, 
 bills of exchange, and other evidences of debt, by receiving deposits, 
 by buying and selling exchange, coin, and bullion, by loaning money 
 on personal security, and by obtaining, issuing, and circulating 
 notes according to the provisions of this act." The granting of 
 'banking powers is full and ample in this section, and in view of 
 the whole act it appears to me that section 29, like many other 
 sections of the act, is directory only, and for its violation there is 
 no forfeiture but the one provided for in section 53. That section, 
 it is admitted, applies to all violations of section 29, with guilty 
 knowledge, and there can be no clearer rule for the interpretation 
 of statutes than to hold that, where Congress has expressly provided 
 
CIRCUIT COUET, 1869. 179 
 
 Stewart v. The National Union Bank of Maryland. 
 
 a penalty for the commission of any act, you are not so to construe 
 the statute as to add, in addition, any common law forfeiture or 
 penalty. So that it appears to me that although these loans made 
 by defendants, the three banking associations aboye named, exceeded 
 in amount one-tenth part of the amount of their capital stocks 
 actually paid in, the loans are not void, and if the associations 
 were now in court, seeking to recover the same, I should have great 
 difficulty in permitting Bajme & Co., or any one claiming through 
 them, to set up this defense. 
 
 But can there be any doubt of this principle, that where the con- 
 tracts are executed, even if the court would not have enforced 
 them, the court will leave the parties where it finds them, 
 giving aid or relief to neither ? The learned counsel for the 
 complainant, in his very full argument, seemed to feel the force of 
 this principle, and to try and escape from its application. He con- 
 tended that it did not apply to this case, and if these defendants 
 could not sustain an action in a court of law on these contracts, 
 the court must overrule the demurrer. 
 
 The cases to which he referred, I have examined, and it does 
 not appear to me that they sustain this position. In the case of 
 Bank of United States v. Owens, the court decided that the bank 
 could not recover upon a note which had been discounted at more 
 than six per cent interest. The bank charter forbid the taking of 
 a greater rate of interest than six per cent, but it did not declare 
 such a contract void. The court held such a contract void on 
 general principles, and that courts could not lend their aid to 
 enforce such contracts. I have examined the charter of the bank, 
 and it contains no clause imposing any penalty whatever on the 
 taking of more than six per cent interest. It was, then, a prohi- 
 bition without any specific penalty, and Congress must be supposed 
 to have left the violation of the section to the common law penalty 
 of a denial by the courts to enforce such a contract. 
 
 The ease of Leavitt v. Palmer, 3 N. Y. (3 Comst.) 19, was de- 
 cided on similar grounds. In that case the court held that the 
 notes issued by an institution in violation of the provisions of the 
 general banking law of New York, which might circulate as a cur- 
 rency, and the deed of trust to secure the same, were void. It did 
 not touch the question of the validity of the original advance by 
 the London house. 
 
 The case of Seneca County Banh v. Lamb, 26 Barb. 595, only 
 
180 UNITED STATES 
 
 Stewart v. The National Union Bank of Maryland. 
 
 decides what the Supreme Court had decided in 2 Pet., that a 
 bank that has discounted paper, taking more than six per cent 
 interest, cannot recover upon the paper thus discounted. The 
 court, in their opinion, says: "It will leave the parties to such a 
 contract where it finds them." 
 
 To the same effect is the case of the Bank of Ghillicothe v. 
 Swayne, 8 Ohio, 280. and the case of the Miamai Exporting Go. v. 
 Clark, 13 id. 1. 
 
 In the case of Albert v. Savings Bank of Baltimore, 2 Md. 160, 
 the court only decided that, although the contract was executed, 
 yet the cestui que trust whose property had been assigned unlaw- 
 fully to the bank could have relief in a court of equity. That is 
 not this case. 
 
 The case of Ooppell v. Hall, 7 Wall. 542, only decided that upon 
 a contract for the purchase of cotton in violation of the non-inter- 
 course acts, during the late civil war, there could be no recovery in 
 the courts of the United States. 
 
 The case of Hagan v. Walker, 14 How. 29, is not applicable to 
 this case; and the case of Chancy v. Duke, 10 Gill & J. 11, is, if 
 applicable at all, in favor of the defendants. The Court of Appeals 
 in that case held that the mere omission of the vendor of a slave to 
 give a bill of sale as required by the act of 1817 (ch. 112), would 
 not prevent his maintaining an action for the purchase-money. 
 
 I consider the law of this case settled by the decisions to which 
 I shall now refer. In the case of Mott v. United States Trust Co., 
 19 Barb. 569, the court held that a person who has borrowed 
 money from a savings institution upon his promissory note, secured 
 by a pledge of bank stock, was not entitled to an injunction to 
 prevent the prosecution of the note on the ground that the savings 
 bank was prohibited by its charter from making loans of that 
 description. So, in the case of Tracy v. Talmadge, 14 N. Y. (4 
 Kern.) 163, the court held, that while the certificates of deposit 
 given in violation of law were void, yet that the plaintiff could 
 recover whatever the stocks sold were worth at the time of sale 
 leaving the contract of sale, so far as it had been executed by pay- 
 ment or its equivalent, undisturbed; and in the case of Bates v. 
 Bank of the State of Alabama, 2 Ala. 459, the court decided that & 
 clause in the bank charter similar to section 29 of the act of 1864, 
 was directory merely, and that if it were disregarded, no one party 
 to its violation could take advantage of it. 
 
DISTEIOT COUET, 1867. 181 
 
 Petition of Piatt. 
 
 The case of Harris v. Runnels, 13 How. 80, is directly in point, 
 and sustains the view I have taken of the construction of section 29. 
 That was an action brought to recover the price of slaves brought 
 into Mississippi, in contravention of a statute of that State regulat- 
 ing the importation of slaves. Section 4 provided that no slaves 
 should be brought into the State without a previous certificate, 
 etc., being obtained. Section 6 declared that both the seller and 
 buyer of such slaves shall pay one hundred dollars for every slave 
 so sold and imported in violation of the law. The Supreme Court 
 says: that " the two sections, considered conjunctively, seem to us 
 to imply that the penalty only, without any loss to either the seller 
 or buyer, was to be inflicted," and the court held that the contract 
 of sale was not void. 
 
 Now, although by the bill as originally filed, it would appear 
 that the said banks held collaterals to a larger amount than their 
 loans and advances, yet by the amended schedule and agreement 
 of counsel in reference to the same, it is clearly shown that the 
 advance made by the banks to Bayne & Co. far exceeds in amount 
 the value of the collaterals they received from said firm. 
 
 The court, for the reason I have given, will sustain the demurrer 
 filed by the banks, and will sign a decree dismissing the bill as to 
 them. 
 
 Bill dismissed. 
 
 Pbtitiost of Platt. 
 
 (1 Benedict, 531.) 
 Receiver of a National Bank — Compromise of debts — District Court may order. 
 
 A District Court of tlie United States may order tlie receiver of a National 
 bank to compromise doubtful debts under section 50 of the National Bank- 
 ing Act (13 Stat, at Large, 115), which authorizes receivers to compromise 
 such debts " on the order of a, court of record of competent jurisdiction.'' 
 
 THIS was a petition of Platt, as receiver of the Farmers and 
 Citizens' National Bank, made to the United States District 
 Court for the Eastern District of New York, for authority to com- 
 
182 UNITED STATES 
 
 Piatt V. Beach. 
 
 promise a debt. Section 50 of the National Banking Act provides 
 that the receiver may compromise doubtful debts " on the order of 
 a court of record of competent jurisdiction." The question arose 
 whether this court was a court of " competent jurisdiction." The 
 court, Benedict, J., after consideration, decided that it had 
 jurisdiction, and ordered the matter to be referred to a commis- 
 sioner to take proof of the facts of the case with his opinion 
 thereon. 
 
 Platt v. Beach. 
 
 (a Benedict, 303.) 
 
 Meeeiver is an officer of the United States — Jurisdiction. 
 
 The receiver of a National bank appointed by the Comptroller of the Cur- 
 rency is an officer of the United States, and therefore the District Court 
 has jurisdiction of an action at common law to collect a claim due the bank 
 at the time of the receiver's appointment. 
 
 (District Court, Eastern District of New York.) 
 
 ACTION for money. The plaintiff was appointed by the Comp- 
 troller of the Currency, under the 31st section of the National 
 Banking Act, receiver of the Farmers and Citizens' National Bank 
 of Brooklyn, and brought this action in the United States Dis- 
 trict Court for the Eastern District of New York, to recover a 
 debt alleged to have been due from defendant to the bank at the 
 time of his appointment. 
 
 The defendant demurred to the complaint on the grounds : 
 
 First. That the court had no jurisdiction of the subject of the 
 action. 
 
 Second- That the plaintiff had not the legal capacity to sue. 
 
 Third. That the complaint did not state facts sufficient to con- 
 stitute a cause of action. 
 
 B. H. Huntley, in support of the demurrer. 
 
 B. F. Tracy, District Attorney, and R. D. Benedict, for plain- 
 tiff. 
 
 Benedict, J. This is an action at common law, brought by. a 
 receiver of a National hank. A demurrer has been interposed to 
 
DISTEICT COUET, 1868. 183 
 
 Piatt V. Beach. 
 
 the complaint, for the purpose of raising the question of tlie right 
 of tlie plaintifE to maintain suoh an action in a court of the 
 United States. The claim to this right, on the part of the plaintifE, 
 is based solely upon the fourth section of the act of March 3d, 
 1815, it being conceded that there is no provision in the act creat- 
 ing the National banks, which expressly gives to the National 
 courts jurisdiction of such an action. The provision in the act of 
 1815 relied on, confers upon the District and Circuit Courts of the 
 United States, jurisdiction of "all suits at common law where the 
 United States or any officer thereof, under the authority of any 
 act of Congress, shall sue ; " and the question is, whether a re- 
 ceiver of a National bank appointed by the Comptroller of the 
 Currency, with the concurrence of the Secretary of the Treasury, 
 in accordance with the provision in section 31 of the act of June 
 3d, 1864 (vol. 13, chap. 10), which provides for the creation 
 and winding up of the National banks, is an officer of the United 
 States within the meaning of the fourth section of the act of 1815 
 above referred to ? As to the construction of this latter act, it can 
 hardly be doubted, I apprehend, that it includes all persons hold- 
 ing oflSce under any act of Congress, whose appointment is required, 
 bylaw, to be made in the mode prescribed by the Constitution for 
 the appointment of officers of the United States. The provision 
 of the Constitution (art. 2, § 2, sub. 2) is this : 
 
 " The President shall nominate, and by and with the advice and 
 consent of the Senate, shall appoint ambassadors, other public min- 
 isters and consuls, judges of the Supreme Court, and all other 
 officers of the United States whose appointments are not herein 
 otherwise provided for, and which shall be established by law. 
 But the Congress may, by law, vest the appointment of such in- 
 ferior officers as they think proper in the President alone, in the 
 courts of law, or in the heads of departments." 
 
 If, then, this receiver, who is appointed under an act of Congress 
 to perform certain official duties by virtue of the act, is by law re- 
 quired to be appointed by the President, a court of law, or a head 
 of a department, he must be deemed to have the right, und«r the 
 act of 1815, to resort to this court to bring such actions as he may 
 be required to bring in the discharge of the duties imposed upon 
 him by law. The mode of his appointment is prescribed in the 
 same provision which provides for the appointment of such a re- 
 ceiver, as follows. " The Comptroller of the Currency may, with 
 
184 UNITED STATES 
 
 Piatt v. Beach. 
 
 the concurrence of the Secretary of the Treasury, appoint a receiver 
 to wind up the business of such association, as provided by the 
 act." (§ 13, Stat., p. 709.) An appointment. so made is equiva- 
 lent in law to an appointment by the Secretary of the Treasury, 
 who is the head of a department. This same question has arisen 
 in regard to inspectors of the customs who are appointed under the 
 act bf March 2, 1799, which provides that the collector "shall, 
 with the approbation of the principal officer of the treasury depart- 
 ment, employ proper persons as weighers, gangers, measurers and 
 inspectors." Under this act it was long ago decided that inspect- 
 ors of the customs were, in law, officers appointed by the head of the 
 treasury department. United States v. Barton, Gilpin, 439; United 
 States V. Morse, 3 Story, 87 ; SanfordY. Boyd, 2 Cranch's C. 0. 78 ; 
 Ex parte Smith, id. 693. The words of the Banking Act are certainly 
 as strong as those used in the act of 1799, and must be held to have 
 the like effect. It follows, then, that the plaintiff is an officer of the 
 United States as defined by the Constitution, and accordingly within 
 the meaning of the act of March 3d, 1815. The nature of the du- 
 ties imposed upon a receiver of a National bank also leads to the 
 same conclusion. These duties are not defined by any contract, 
 but by law and rule prescribed by the government. They are 
 similar to those appertaining to an ordinary receiver appointed by 
 a court. But such receivers have always been considered to be 
 officers (Bouv. Law Diet., word " receiver ;" Edwards on Ee- 
 ceivers, p. 3), and they are officers of the court which appoints 
 them. The plaintiff, then, is an officer, and as it is not seen how 
 he can be considered to be an officer of any court, he must be an 
 officer of the government which appoints him, into whose treasury 
 he is required to pay all moneys he shall collect, by whose district 
 attorney he is required by law to be represented in court, and under 
 the direction and supervision of whose Solicitor of the Treasury 
 all his suits and proceedings are to be conducted (§ 56). The 
 judgment must accordingly be in favor of the plaintiff upon the 
 demurrer, with leave to the defendant to answer on payment of 
 costs. 
 
DISTEIOT OOUET, 1868. 185 
 
 In tlie Matter of Van Campen. 
 
 Ik the Mattee ov Vak Campen. 
 
 (2 Benedict, 419.) 
 Embezzlement and false entries iy officers of National hanks. 
 
 The president of a National bank was charged before a United States Commis- 
 sioner with embezzlement of the funds of the bank, and with having made 
 Salse entries in its books, and, after examination, was held for trial. The 
 proceedings having been brought before the District Court for review by 
 hcbeas corpus, and certiorari, held, (1) that the court would examine the 
 eviience and do what the commissioner ought to have done; (3) that if the 
 evidence showed probable cause of the defendant's guilt he was rightfully- 
 held for trial ; (3) that proof of the de facto existence of a bank called a 
 Natioinal bank and that the defendant acted as president of it was sufficient 
 • to establish the legal incorporation of such bank and of the defendant's offi- 
 cial connection therewith. 
 
 Where false entries are made in the books of a bank by a clerk in the bank, 
 by diredion of the president, the latter is liable therefor as principal. 
 
 An intent \o defraud a bank is to be inferred from the fact of embezzlement 
 
 Where the president of a National bank, charged as trustee with the admin- 
 istration of the funds of the bank in his hands, converts them to his 
 own use, he embezzles and abstracts them, within section 55 of the Na- 
 tional BaDking Act (13 Stat, at Large, 116) unless he shows authority for 
 so doing. , 
 
 (District Court, Southern District of New York.) 
 
 1 
 
 PETITION for a writ of habeas corpus and of certiorari. The 
 opinion states the case. 
 
 0. A. Seward and J. L. Ward, for the petitioner. 
 
 B. K. Phdps, assistant district attorney, for the United States. 
 
 BlatchfoRd, J. The prisoner was arrested in this district, on 
 warrant issiJed by the marshal of this district, on the 30th of 
 April, 1868, by Commissioner Betts, a commissioner of the Circuit 
 Court for this district, on a complaint made on oath before him, 
 charging the prisoner with having, at Blmira, Northern District 
 of New York, at various times specified in the warrant, during 
 the year 1867, and while president of the First National Bank 
 23 
 
186 UNITED STATES 
 
 In the Matter of Van Campen . 
 
 of Elmira, "an association and body corporate, created and or- 
 ganized under and by virtue of the act of Congress, entitled ' An 
 act to provide a National currency, secured by a pledge of United 
 States stocks, and to provide for the circulation and redemption 
 thereof,' approved February 25th, 1863, and the acts amendatory 
 thereof," embezzled, abstracted, and willfully misapplied moneys, 
 funds and credits of the association, to the amount of $36,000, thd 
 property of the association, and a certain draft for 87,000, tie 
 property of the association, and, with intent to defraud the asso- 
 ciation, and to deceive the officers and agents appointed to exam- 
 ine its affairs, and especially the bank examiner of the Urited 
 States, made divers false entries in the books of the association, 
 and in its reports and statements, which false entries are sei forth 
 particularly in the complaint. The prisoner was brought before 
 the commissioner, and an examination of witnesses on the part of 
 the United States, in support of the charge, took place or the 8th 
 and 11th of May. The prisoner appeared by counsel, wiio cross- 
 examined the witnesses, on the part of the United States ; but no 
 witnesses were examined, or testimony put in, on the part of the 
 prisoner. On the 13th day of May, after the case had been sum- 
 med up before the commissioner, by the counsel on both sides, 
 he committed the prisoner to the custody of the marsial for this 
 district, for trial in the Northern District of New Yo:k. At this 
 stage of the proceedings a petitiooi was presented to this court by 
 the prisoner, praying for a writ of habeas corpus to the marshal, 
 and a writ of certiorari to the commissioner, in order "iiat a review 
 might be had, by this court, of the ground on which the prisoner 
 was committed. The writs were issued on the 12th day of May, 
 and under them the prisoner has been brought before this court, 
 and the proceedings and evidence before the commissioner have 
 been returned to this court, and the case has been fully argued on 
 an application by the prisoner to be discharged from custody. 
 
 The particular offenses in regard to which testimony was taken 
 before the commissioner are made such by the fif ty-fiith section of 
 the act of June 3d, 1864 (13 U. S. Stat, at Large, 116). That 
 section provides, that " every president, director, cashier, teller, 
 clerk, or agent of any association, who shall embezzle, abstract, or 
 willfully misapply any of the moneys, funds, or credits of the asso- 
 ciation * * * or shall make any false entry in any book, 
 report, or statement of the association, with intent, in either case, 
 
DISTEICT COUET, 1868. 187 
 
 In the Matter of Van Campen. 
 
 to injure or defraud the association, or any other company, body 
 politic or corporate, or any individual person, or to deceive any 
 officer of the association, or any agent appointed to examine the 
 affairs of any such association, shall be deemed guilty of a misde- 
 meanor, and, upon conviction thereof, shall be punished by im- 
 prisonment, not less than five, nor more than ten years." 
 
 It is settled by authoritative decisions, that this court, in review- 
 ing, on habeas corpus and certiorari, the action of a committing 
 magistrate, who acts under the laws of the United States, will 
 examine the evidence on which the commitment was grounded, 
 and will do that which the magistrates ought to have done. Ex 
 parte Bollman, 4 Oranch, 75, 114 ; In re Martin, 5 Blatch. C. 0. 
 303. 
 
 I have examined the testimony put in before the commissioner 
 in this case, and am entirely satisfied that there is sufficieat 
 evidence to hold the prisoner for trial, as having been guilty of 
 embezzlement, and of making false entries, within the provisions 
 of the statute cited. In Ex parte Bollman,,i. Cranch, 75, 125, 
 Chief Justice Maeshall says, that the inquiry, in a case like 
 this, being one which, without deciding upon guilt, precedes the 
 institution of a prosecution, the question to be determined is, 
 whether the accused shall be discharged or held to trial ; and, in 
 that case, as well as in the case of Burr's trial (1 Burr's Trial, 11), 
 he cites, with approbation, the remark of Blackstone, that if, upon 
 such, an inquiry, it manifestly appears that no such crime has been 
 committed, or that the suspicion entertained of the prisoner was 
 wholly groundless, in such cases only is it lawful totally to dis- 
 charge him ; otherwise he must either be committed to prison, or 
 give bail. 
 
 Chief Justice Marshall adds (1 Burr's Trial, 11), that the 
 foundation of the proceeding musb be a probable cause can only be 
 done away with in the manner stated by Blackstone. This probable 
 cause {Ex parte Bollman, 4 Cranch, 75, 130) must be proved by 
 testimony in itself legal, and which, though, from the nature of 
 the case, it must be ex parte, ought, in most other respects, to be such 
 as a court and jury might hear. In this case there is probable 
 cause shown, on legal testimony, to believe the prisoner guilty of 
 embezzlement, and of making false entries, within the statute, 
 and this probable cause has not been done away with in any man- 
 ner. 
 
188 UNITED STATES 
 
 In the matter of Van Campen. 
 
 It is objected that no evidence was given before the commis- 
 sioner, of the existence of the bank, or of the prisoner's oflScial 
 connection therewith. The record does not show that any such 
 objection was taken before the commissioner. If it had been, the 
 presumption from the evidence is, that the defect could have been 
 supplied by proper official papers. The evidence against the pris- 
 oner is of such a character, that, even if this objection could pre- 
 vail, I should not be at liberty to discharge the prisoner,' but would 
 be obliged to hold him, to give an opportunity to the prosecution 
 to supply the proof wanting. But I think there is sufficient prima 
 facie proof on both points. Two witnesses testified, without objec- 
 tion of the prisoner, to the existence de facto of an institution 
 called the First National Bank of Blmira, and to the fact that the 
 prisoner acted as president of it until October, 1867, when he 
 resigned. There is also a great deal of testimony as to acts 
 done by the prisoner as president, and directions given by him in 
 that capacity. This is enough on an inquiry of this nature. It is 
 sufficient, not only pn the charge of embezzlement, but also on the 
 charge of making false entries, with intent to defraud the bank. 
 The People v. Caryl, 12 Wend. 547; The People v. Davis, 21 id. 
 309, 313; The People v. Peabody, 25 id. 472; Johnson v. The 
 People, 4 Denio, 364, 368; The People v. Dennis, 1 Parker's Or. 
 Eep. 469; The People v. Ohadwick, 2 id. 163. 
 
 In regard to the charge of making false entries, it is objected, 
 that the prisoner did not personally make the false entries, but that 
 they were made by a clerk in the bank, by the direction of the 
 prisoner. This is sufficient to make the prisoner a principal in 
 the ofEense, and to constitute a making of the entries by him. 
 United States v. Wilson, Baldwin's C. C. E. 78, 103. 
 
 An intent to defraud the bank is to be inferred from the fact of 
 the embezzlement, and an intent to deceive its officers from the 
 circumstances in evidence attending the false entries. 
 
 The indebtedness of the prisoner to the bank is claimed to be 
 merely an overdraft, and not criminal. This is not so. Where a 
 president of a bank, charged,. as a trustee, with the administration 
 of the funds of the bank in his hands, converts them to his own 
 use, he embezzles and abstracts them, within the statute referred 
 to, unless he shows authority for so doing. There is sufficient evi- 
 dence that the prisoner, while acting' as president of the bank, 
 converted to his own use over $30,000 of the moneys of the bank, 
 and he shows no warrant for so doing. 
 
CIRCUIT COUET, 1871. 189 
 
 Bvansville National Bank v. Metropolitan National Bank. 
 
 The writ of habeas corpus is discharged, and a warrant will issue 
 to the marshal, under section 33 of the act of September a4th, 
 1789 (1 U. S. Stat, at Large, 91), for the remoTal of the prisoner to 
 the Northern District of New York. 
 
 EvAKSviLLE National Bajstk v. Mbteopolitan NATioifAL Bank. 
 
 (3 Bissell, K7.) 
 National bank) home no lien on their own stock. 
 
 The by-laws of a National bank provided that no transfer of tbe stock should 
 be made by any shareholder who was indebted to the bank, and this pro- 
 vision was also included in the certificates of stock. Held invalid, and 
 that a transfer of stock by a shareholder while indebted to the bank was 
 good.* 
 
 (Circuit Court, Seventh Circuit, District of Indiana.) 
 
 APPEAL from the District Court. 
 Action by the Bvansville National Bank .to recover two hun- 
 dred shares of its capital stock. Said bank was organized under 
 the act of 1864. One of its articles of association provided that 
 the directors might prohibit the transfer of stock without their 
 consent, and in pursuance thereof the directors, by by-law, pro- 
 hibited the transfer of shares of stock without their consent by any 
 shareholder who was indebted to the bank, and this provision was 
 incorporated in the certificates of stockj After the adoption of 
 such by-law. Watt, Crane & Co. became the owners of two hundred 
 shares of stock which, while they were indebted to the bank, 
 they transferred to the defendants to secure money loaned them. 
 
 The firm of Watt, Crane & Co. becoming bankrupt, the Bvans- 
 ville National Bank brought this action to recover the said stock. 
 
 The District Court decided for the defendant. 
 
 Asa Inglehart, for plaintifE. 
 
 Hendricks, Hord <& Hendricks, for defendant. 
 
 * This case was appealed to the Supreme Court, and affirmed by a divided 
 court, and consequently no opinion was given. See Bullard v. Bank, ante, p. 93. 
 
190 UNITED STATES 
 
 Evansville National Bank v. Metropolitan National Bank. 
 
 Deummond, J. The only question in the case is whether this 
 by-law was valid under the law of June 3d, 1864. The 8th section 
 of that act authorizes the board of directors to make by-laws, but 
 declares they must' not be inconsistent with its provisions. 
 
 The 35th section declares that no association shall make any 
 loans, or discount on the security of the shares of its own capital 
 stock, nor be the purchaser or holder of any such shares, unless 
 to prevent loss on a debt previously contracted in good faith. 
 
 The counsel for the plaintiff, in the able argument he has pre- 
 sented, claims that the operation of the by-law upon the shares of 
 stock, because of the indebtedness of Watts, Crane & Co., and their 
 transfer to the Metropolitan Bank, without the consent of the 
 board of directors, was not a loan or discount made on the security 
 of the shares, that there must be a distinct assignment or hypothe- 
 cation of the stock as security for a loan or discount made, and 
 some authorities have been cited which, seem to sustain that prin- 
 ciple. But if a by-law declares, in substance and effect, that for all 
 loans or discounts made to the shareholder a lien shall exist 
 against his stock, the result would be the same as if there were a 
 separate transaction and security given in each case. The share- 
 holder always has the credit on the security of his stock, and thus 
 the very object is accomplished which the 35th section sought to 
 prevent, the absorption of the shares into the assets of the bank. 
 And it will be observed that the law only allows the stock to be 
 taken by the bank as security, or purchased or held to avoid loss on 
 a debt previously contracted in good faith, and even then the stock 
 is to be retained by the bank only a limited time. An extended 
 examination of the authorities cited by counsel is unnecessary, 
 because in the case of the First JVatioiial Bank of South Bend v. 
 Lanier, recently decided by the Supreme Court of the United States, 
 11 "Wall. 369 {ante, p. 70), the question involved here is discussed by 
 that court, and a principle established that is decisive of this case. 
 
 In that case the bank had made a by-law, declaring that the 
 stock of the bank should be transferable only on its books, subject 
 to the provision of the 36th section of the act of 1863 (12 U. S 
 Statutes at Large, 675) (by which a shareholder was prevented from 
 transferring his stock when he owed the bank). 
 
 The bank sought to avail itself of this by-law, notwithstanding 
 the repeal of the 36th section, by the act of 1864, and the court 
 held that that could not be done. This was in effect deciding 
 
DISTEICT COUET, 1867. 191 
 
 Collins v. Chicago. 
 
 that no such by-law could be in force under the provisions of the 
 act of 1864. The language of the court is : " Congress evidently 
 •ntended, by leaving out of the law of 1864 the 36th section of 
 the act of 1863, to ' relieve the holders of bank shares from the 
 restrictions imposed ' by that section. The policy on the subject 
 was changed, ' and the directors of banking associations were in 
 eflect ' notified that thereafter they must deal with their sharehold- 
 ers as they dealt with other people. As the restrictions 'fell, so 
 did that part of the hj-la.^ relating to the subject fall' with them." 
 The decree of the District Court is aflEirmed. 
 
 OoLLisrs V. Chicago. 
 
 (4 Biasell, i72.) 
 State Taxation of National banks. 
 
 The capital stock of a National bank cannot be assessed, aa such, by State 
 
 authority. 
 The only way such stock can be reached ia by assessment of the shares of the 
 
 different stockholders. 
 
 (Circuit Court, Seventh Circuit, Northern District of Illinois.) 
 
 Drummond, J. The material facts in this case are that the city 
 caused to be assessed, for the payment of taxes, under the law of 
 Illinois, the stock of the First ISTational Bank of this city, as so 
 much capital in the aggregate, with the intention of having the 
 tax levied on the sum total of the capital stock of the bank. 
 PlaintifE, a non-resident stockholder, has applied to have the as- 
 sessment set aside as illegal. 
 
 The assessment is in violation of the acts of Congress authoriz- 
 ing the existence of National banks. The capital stock of the 
 bank, as such, cannot be assessed under State authority. The only 
 way that such stock can be reached is to assess the shares of the 
 different stockholders in the same manner that assessments are 
 made in other cases against property owned by the citizens and in- 
 habitants of the State. 
 
192 UNITED STATES 
 
 In re Manufacturers' National Bank. 
 
 In KB Maitufactukebs' National Bank. 
 
 (5BlsseIl, 499.) 
 
 National hanks not subject to the bankrupt act. 
 
 National banks are not subject to the bankrupt act, and bankruptcy courts 
 have no jurisdiction as against such associations. If insolvent they can be 
 wound up only in the mode provided by the National Banking Act.* 
 
 (District Court, Northern District of Illinois. ) 
 
 PETITION in bankruptcy for a rule on the Manufacturers' Na- 
 tional Bank of Chicago, to show cause why it should not be 
 adjudged a bankrupt. The opinion states the case. 
 
 Harding, McCoy & Pratt, and T. 0. Whiteside, for petitioners. 
 
 Lazorence, Winston, Gampiell <& Lawrence, and Ayer S Kales, 
 for the bank. 
 
 BlodgetTj J. On the 15th day of November last Messrs. E. J. 
 Smith & Co. filed in this court their petition setting forth that they 
 are creditors of the Manufacturers' National Bank of this city, 
 for money deposited with said bank indue course of business, and 
 alleging that the said bank had suspended payment on its commer- 
 cial paper for over fourteen days, and had, when insolvent, made 
 preferential payments, for which acts they prayed that the bank be 
 adjudged bankrupt. 
 
 Being aware that grave doubts had been expressed by many law- 
 yers and business men as to the application of the bankrupt law to 
 National banks, I directed notice of the application for a rule to 
 show cause to be served on the officers of the bank, and have heard 
 arguments for and against the application. 
 
 The law now .in force for the organization and government of 
 National banks was enacted on the 3d of June, 1864 (13 U. S. 
 Statutes at Large, p. 99), and has been amended by the act of Feb- 
 ruary 4, 1868 (15 id. 34), the act of Feb. 19, 1869 (15 id. 270), 
 
 *See Irons v. The Manufactwrers^ National Bank, post. 
 
DTSTEIOT COURT, 1873. 193 
 
 In re Manufacturers' National Bank. 
 
 the act of July 12, 1870 (16 id. 251), and the act of March 3, 1873 
 (17 id. 603). Embodied in the original act are very fall and ample 
 provisions, for winding up and settling the afEairs of these banking 
 associations, mainly through the Federal courts. The fundamental 
 purpose of the act and its amendments was to provide a N"ational 
 currency and insure its prompt redemption, and incidentally, to 
 provide banking or fiscal agencies through which the ordinary 
 financial business of the country could be safely transacted. 
 The leading features of the system were: 
 
 1. The security of the circulating notes of those banks by the 
 pledge of Government bonds in the hands of the Treasurer of the 
 United States, and in case of the failure of the bank; to redeem its 
 notes, then redemption of those notes by the Government, for 
 which it is to be reimbursed by the proceeds of the bonds deposited 
 and a first lien on all the assets of the bank. 
 
 2. The responsibility of the stockholders of the bank to the 
 extent of the par value of the stock held by them respectively, in ad- 
 dition to the amount invested in their shares. 
 
 3. The whole system to be under the surveillance of the Comp- 
 troller of the Currency, with full powers to examine into the 
 afEairs of each bank, and, in cases of non-compliance with the provis- 
 ions of the law, to appoint a receiver to administer and wind up 
 their afEairs. 
 
 On the 2d day of March, 1867, Congress passed an act to estab- 
 lish a uniform system of bankruptcy throughout the United States; 
 and by the thirty-seventh section of said act it is declared "that 
 the provisions of this act shall apply to all moneyed, business, or 
 commercial corporations and Joint-stock companies," and by the 
 third clause of the same section it is declared that " all payments, 
 conveyances, and assignments declared fraudulent and void by this 
 act, when made by a debtor, shall in like manner and to the like 
 extent and with like remedies be fraudulent and void when made 
 by a corporation or company. " 
 
 The forty-eighth section declares that the word " person," when 
 used in this act, shall beheld to include and mean "corporation," 
 and by the ninth clause of the thirty-ninth section it is made an 
 act of bankruptcy for any "banker" to suspend payment of his 
 commercial paper for fourteen days. 
 
 The bankrupt law is the latest expression of the legislative will, 
 and its general terms and provisions must be held to repeal all pre- 
 25 
 
194 UNITED STATES 
 
 In re Manufacturers' National Bank. 
 
 Tious statutes necessarily incompatible with it. The question then 
 is, does the bankrupt law repeal and supersede the provisions in 
 the Currency Act for winding up the affairs of insolvent National 
 banks ? or can its provisions be applied to those corporations and 
 leave intact the provisions of the Currency Act on the same subject? 
 There is no doubt of the soundness of the general rule of inter- 
 pretation cited by the counsel for the respondent: That a statute, 
 although so general in its terms that its letter would comprehend 
 all classes of persons and things to which it can relate, will never- 
 theless be construed by the courts as not applying to a particular 
 class which has been especially provided for and regulated by 
 another statute relating solely to such class, if there is no language 
 in the general statute, repealing the former statute, or in any man- 
 ner referring to it. Hume v. Oossett, 43 111. 297; The People ex 
 ret V. Miner, 46 111. 384. 
 
 A thing which is in the letter of a statute is not within the 
 statute unless it be within the intention of the makers. Bacon's 
 Abridgment, title Statute, 385. 
 
 " Where the intention of the legislature is not apparent to that 
 purpose, the general words of an other and later statute shall not 
 repeal the particular provisions of a former one." . Dwarris on 
 Statutes, 117, quoted from Coke. 
 
 The rule is thus stated in Sedgwick, on the construction of statu- 
 tory and constitutional law, p. 97 (2nd ed.) : 
 
 " In regard to the mode in which laws may be repealed by sub- 
 sequent legislation, it is laid down as a rule, that a general statute 
 without negative words will not repeal the particular provisions of 
 a former one, unless the two acts are irreconcilably inconsistent. 
 The reason and philosophy of the rule is that when the mind of 
 the legislator has been turned to the details of a subject, and he 
 has acted upon it, a subsequent statute in general terms, or treat- 
 ing the subject in a general manner, and not expressly contradict- 
 ing the original act, shall not be considered as intended to affect 
 the more particular or positive previous provisions, unless it is 
 absolutely necessary to give the later act such a construction, in 
 order that its words shall have any meaning at all." 
 
 The Currency Act provides for the appointment of a receiver to 
 wind up the affairs of a National bank in the following cases : 
 
 1. For not keeping good a surplus ^- 13th section. 
 
 3. For not keeping stock at minimum — 15th section. 
 
 3. For not keeping good its reserve — 31st section. 
 
DISTEICT COUET, 1873. I95 
 
 In re Manufacturers' National Bank. 
 
 4. For not selecting a place for tHe redemption of its notes — 32d 
 section. 
 
 5. For holding its own stock over six months — 35th section. 
 
 6. For non-payment of its circulating notes — 50th section. 
 
 7. For improperly certifying a check — section 1, act March 3, 
 1869. 
 
 8. For failure to pay up capital stock, and for allowing same to 
 become and remain impaired by losses — section 1, act March 3, 
 18?3. 
 
 Upon the happening of either of these contingencies the Comp- 
 troller may appoint a receiver to take possession of all the books, 
 records and assets of the corporation, who shall proceed to convert 
 the assets into money under the direction of a court of competent 
 jurisdiction. And the money so realized shall be paid over to the 
 treasury of the United States, subject to the order of the Comp- 
 troller, who, after deducting in full whatever amount shall be due to 
 the United States, shall distribute the balance ratably among the 
 creditors of the bank, the claims of creditors to be proven before 
 the Comptroller, or adjudicated in a court of competent jurisdic- 
 tion. 
 
 By the 52d section the "application of its assets in the manner 
 prescribed by this act, with a view to the preference of one cred- 
 itor to another, except in payment of its circulating notes, shall be 
 utterly 'null and void." 
 
 And by the 48th section it is made unlawful for any such bank, 
 after suffering a protest of its circulating notes, and after notice 
 from the Comptroller, to in any manner prosecute the business of 
 banking, except to receive and safely keep its money and deliver 
 special deposits. 
 
 And by the 53d. section, any violation of the provisions of the 
 Currency Act, done knowingly, by either a bank, or its officers or 
 agents, works a forfeiture of all its rights and franchises, to be ad- 
 judged by a Federal court at the suit of the Comptroller. 
 
 The 8th section provides that said corporations, i. e., National 
 banks, may sue and be sued, complain and defend, in any court of 
 law and equity as fully as natural persons. 
 
 And by the 57th section it is declared, that "suits, actions and 
 proceedings against any association under this act may be had in 
 any circuit, district or territorial court of the United States, held 
 within the district in which such association may be established, or 
 
196 UNITED STATES 
 
 In re Manufacturers' National Bank. 
 
 in any State, county, or munidpal court in the county or city in 
 which such association is located, having jurisdiction in similar 
 cases." And by the amendment to this section, made by the act 
 of March 3, 1873, it is further provided that " no attachment, 
 injunction or execution shall be issued against such association or 
 its property before final judgment." 
 
 I am not aware that any adjudication has yet been made deter- 
 mining what is an " act of insolvency" within the intent and mean- 
 ing of the 53d section, but it seems to me to be an act which shows 
 the bank to be insolvent ; such as non-payment of its circulating 
 notes, bills of exchange, or certificates of deposits ; failure to make 
 good the impairment of capital, or to keep good its surplus or 
 reserve ; in fact, any act which shows that the bank is unable to 
 meet its liabilities as they mature, or to perform those duties which 
 the law imposes for the purpose of sustaining its credit. 
 
 It will thus be seen that while the Currency Act does not specify 
 in detail, and provide for all the specific acts of bankruptcy enu- 
 merated in the bankrupt law, it yet does furnish, through the 
 functions of an important public officer — the Comptroller of the 
 Currency — a very complete and detailed scheme or plan for admin- 
 istering the affairs of an insolvent National bank. It is true, there is 
 no provision for an individual creditor's putting this machinery in 
 motion. But the presumption is that Congress deemed it wiser to 
 leave this duty to an impartial public officer rather than iatrust it 
 to the hasty, inconsiderate, and perhaps selfish action of one or 
 more creditors. It was probably thought that the necessity of 
 maintaining the public confidence in the system was such as would 
 compel the Comptroller to act in all cases when a bank had become 
 derelict or discredited, and that this consideration, together with 
 the clear obligations of duty, thrown upon the officer, would be 
 sufficient to insure his action in all cases when he acquired the 
 right to do so. At all events, the law as it was enacted contained 
 ample and specific provisions for creating and managing these 
 corporations, and for administering their affairs when they became 
 unable or refused to perform their public functions. 
 
 The system has been in operation nearly ten years. Over two 
 thousand banks have been organized under it. Of these, twenty- 
 one have been wound up through the agency of the Comptroller and 
 a receiver — the great part of them since the enactment of the bank- 
 rupt law. All the legislation of Congress has looked toward the 
 
DISTRICT OOUET, 1873. 197 
 
 In re Manufacturers' ^National Bank. 
 
 perfecting and perpetuation of the system, and ought we now to 
 say that Congress, by the enactment of the general bankrupt law, 
 intended to place these corporations under the provisions of that 
 law, and to repeal the elaborate plan which it had specially fur- 
 nished for winding up their affairs when they became insolvent or 
 incapable of transacting banking business ? 
 
 That it did not intend to repeal them is conclusively evidenced 
 by the fact that in two of the important amendatory acts, those of 
 March 3d, 1869 (15 TJ. S. Stat, at Large, 336), and March 3d, 1873, 
 especial reference is made to those winding-up provisions of the 
 original act, and they are treated as being in full force. So, too, 
 in several cases which have been before the Supreme Court since 
 the enactment of the bankrupt law, reference has been made to 
 these winding-up powers as still in force. 
 
 It being clear, then, that Congress did not intend to repeal the 
 winding-up clauses of the Currency Act, the question arises, did it 
 intend that the two remedies, that is, the one given by the Cur- 
 rency Act and the one given by the Bankrupt Act, should exist as 
 co-ordinate or concurrent remedies, and the affairs of an insolvent 
 National bank be administered by that tribunal which first acquired 
 control. 
 
 This construction might be admitted if the two were entirely 
 compatible with each other, or if each was equally as complete as 
 the other ; that is, if each could reach and administer upon all 
 the assets of the debtor bank so as to leave nothing to be done by 
 the other. 
 
 But we find upon examination that the important duty of pay- 
 ing the holders of circulating notes, and distributing the proceeds 
 of the bonds deposited to secure them on the surplus of those 
 bonds, and of enforcing the liability of stockholders, is left with 
 the Comptroller, and can only be enforced by or through him. 
 This latter point was fully discussed and decided by the Supreme 
 Court {Kennedy v. Gibson, 8 Wall. 498), where it was expressly 
 held that the Comptroller alone could enforce the personal liability 
 clause. The court says : " The receiver is the instrument of the 
 Comptroller. He is appointed by the Comptroller, and the power 
 of appointment carries with it the power of removal. It is for the 
 Comptroller to decide when it is necessary to institute proceedings 
 against stockholders to enforce their personal liability, and whether 
 the whole or a part, and, if a part, how much shall be collected. 
 
198 UNITED STATES 
 
 In re Manufacturers' National Bank. 
 
 These questions are referred to his judgment and discretion, and 
 his determination is conclusive. The stockholders cannot contro- 
 Tert it. 
 
 " It is not to be questioned in the litigation that may ensue. He 
 may make it at such times as he shall deem proper, and upon such 
 data as shall be satisfactory to him. This action on his part is 
 indispensable, when the personal liability of the stockholders is 
 sought to be enforced and must precede the institution of a suit by 
 a receiver. The claims of creditors may be proved before the 
 Comptroller or established by suit against the association. Creditors 
 must seek their remedy through the Comptroller in the manner 
 prescribed by statute." 
 
 Much stress was laid by the attorneys for petitioners upon the 
 inadequacy of the security for creditors under the Currency Act, 
 mainly because creditors could not of their own motion initiate 
 winding-up proceedings, but how much more inadequate would the 
 bankrupt court be to the same end if it cannot reach or distribute 
 assets, and, perhaps, must pay what it gets over to a government 
 officer for distribution ? 
 
 I do not say that an assignee would be obliged to pay over to the 
 Treasurer, but that there is grave ground for a claim that he should 
 do so, and that collision might grow out of such claim. 
 
 The relief which could be afforded to the creditors of a National 
 bank, then, being so incomplete, I cannot think it was the inten- 
 tion of Congress to clothe bankrupt courts with jurisdiction over 
 this class of corporations. I have already cited the evidence which 
 shows to my mind that Congress did not intend to repeal the 
 winding-up provisions of the Currency Act by the passage of the 
 bankrupt law, and a comparison of the provisions of the two acts 
 show with equal' clearness to my mind that it did not intend to 
 inject the provisions of the Bankrupt Act into the Currency Act, so 
 that creditors could apply the remedies of the Bankrupt Act, and 
 the Comptroller the remedies of the Currency Act ; because such a 
 construction would inevitably produce collisions and conflicts of 
 jurisdiction, and the remedies given by the Bankrupt Act would be 
 so far unavailing in regard to important assets as to make it evi- 
 dent that there was no intention to apply such a remedy. Suppose 
 this court were to adjudge this respondent bankrupt to-day, and 
 send its messenger and assignee to take possession of the assets, 
 the officer of the court could in no event enforce the personal lia- 
 
DISTEICT COUET, 1873. jgg 
 
 In re Manufacturers' National Bank. 
 
 bility clause, or obtain possession of the government bonds depos- 
 ited to secure the circulation, or any surplus of those bonds after 
 fully redeeming the circulation. Those assets are beyond the reach 
 of this court or its officers, and can only be approached by the way 
 of the Comptroller and his receiver. Then why should this court 
 take cognizance of a case that it cannot administer ? 
 
 Why not, rather, say that Congress has acted upon the subject- 
 matter of insolvent National banks and made specific provisions 
 for administering their affairs, and inasmuch as the general bank- 
 rupt law has not expressly repealed these specific provisions, nor 
 necessarily suspended them, the courts will presume it was the in- 
 tention of Congress to except this class of corporations from the 
 operation of the later statate? Such conclusion seems to me con- 
 sistent with authority, and is, in fact, the only conclusion that will 
 not lead to inextricable complication and conflict. 
 
 But it is urged that the Currency Act makes these corporations 
 liable to all suits and actions which might be brought against nat- 
 ural persons, and that they can, therefore, be proceeded against in 
 bankruptcy. 
 
 A sufficient answer to this might be found in the fact that when 
 the Currency Act was passed there was no bankrupt law in force, 
 and therefore the general language must be held, subject to this 
 limitation. But, I take it, there is no doubt that the legislative 
 power which creates an artificial person or corporation can also 
 prescribe what remedies shall be had against it, and that such rem- 
 edies would be held to be exclusive, and that the provisions of the 
 general bankrupt law would not be held to apply to corporations 
 at all, but for the express terms of the act. Should they, then, be 
 held to apply to a class of corporations which have, as it seems, a 
 bankrupt law of their own ingrained into their own constitution 
 and part of their organic law, by the same authority which enacted 
 the bankrupt law? I think not. Nor does it seem to me that 
 there is any necessary hardship in denying the remedies of the 
 bankrupt law to the creditors of this corporation. There is no 
 evidence that either this petitioning creditor, or any other cred- 
 itor, has applied to the Comptroller to take possession and administer 
 the assets. Additional force is also given to this consideration 
 from the fact that in the very latest amendment to the Currency 
 Act it is expressly provided that no attachment, injunction or exe- 
 cution shall issue against a bank until judgment is obtained. 
 
200 UNITED STATES 
 
 Main v. Second National Bank of Chicago. 
 
 It is well known that in many of the States proceedings by attach- 
 ment may be taken by a creditor in the first instance, and, as a 
 matter of course, and in nearly or quite all the States, attachments 
 can issue upon affidavits showing the existence of certain facts, 
 while injunctions are almost uniTersally issued before Judgment or 
 decree in equity cases when a case is made for one. And yet these 
 corporations are, probably, for reasons of public policy, exempted 
 from liability to all this class of summary proceedings. Here we have 
 a restriction upon the powers of the bankrupt court, almost, if not 
 wholly, incompatible with the jurisdiction. For of what use would 
 it be to proceed in bankruptcy against a debtor, in a large number 
 of cases, unless he could be enjoined and his property seized by 
 process of the court? Before adjudication or judgment could be 
 obtained, the property of the debtor might be wasted or spirited 
 away, so that the adjudication would be barren of results. 
 
 I do not say that the prohibition to enjoin or attach property 
 necessarily implies want of jurisdiction, but only that it goes far to 
 show that it was never the intention of Congress to clothe a bank- 
 rupt court with jurisdiction as against these corporations. 
 
 I am, therefore, of the opinion that the rule to show cause should 
 be denied, and the petition dismissed for want of jurisdiction. 
 
 Maik, Assignee, v. Second National Bank of Chicago. 
 
 (6 Bissell, W.) 
 Jurisdiction of Federal courts. 
 
 A National bank cannot be sued in tbe Federal court, outside of the district 
 where it is located. Service on the cashier when found within another dis- 
 trict, does not give jurisdiction.* Manufacturers' National Bank v. Baack, 
 post. 
 
 The Practice Act of June 1, 1873, does not change this rule, nor enlarge the 
 jurisdiction of the Federal courts. 
 
 (District Court, Western District of Wisconsin, March, 1874.) 
 
 * The act of Congress of March 3d, 1875, extends the jurisdiction of United 
 States Circuit Courts to " controversies between citizens of different States," 
 and, therefore, in such courts it is no longer necessary that one of the parties be a 
 citizen of the State where the suit is brought. Osgood v. Chicago, etc., R. B. 
 Co., 6 Biss. 330. —Rep. 
 
DISTEICT COUBT, 1874, 201 
 
 Main v. Second National Bank of Chicago. 
 
 MOTION to dismiss for want of jurisdiction, the defendant being 
 a National bank, located and doing business in the city of 
 Chicago, State of Illinois, and service having been had upon John P. 
 McGregor, the cashier, who was found within the district. 
 
 Tenneys, Flower & Abercrombie, for the motion, cited Crocker v. 
 The Marine National BanTc of New York, 101 Mass. 340 ; Oook v. 
 State National Bank of Boston, 50 Barb. 339. 
 
 H. S. Orton and W. F. Vilas, contra. 
 
 Hopkins, J. In the argument filed in support of the motion 
 it is claimed that a National bank cannot be sued in any court 
 out of the judicial district where it is "located" or "estab- 
 lished." I do not think the general banking law admits of 
 such an interpretation. The eighth section of the act of June 3d, 
 1864 (13 U. S. Statutes at Large, 101), provides that such corpora- 
 tions " may sue and be sued in any court of law and equity as fully 
 as natural persons." 
 
 I do not think the provision in the fifty-seventh section of the 
 act restrictive of this general authority, but that it was intended 
 rather to enlarge the operations of' the twenty-first section of the 
 Judiciary Act of 1789 (1 U. S. Statutes at Large, 78), and to confer 
 upon such organizations the right to sue and be sued in the Fed- 
 eral courts, in the district where located, by a citizen of the same 
 district ; and I fully concur with Judge Blatchfokd's views 
 expressed in his opinion in the Manufacturers' National Bank of 
 Chicago v. Baack, 8 Blatchford's 0. C. Eep. 137,* that the banks 
 organized under the general banking act of Congress are to be 
 deemed residents or inhabitants of the State and distriqt where 
 they are " located" and "established." The provisions of the act 
 referred to by him are sufficient to warrant that conclusion, and if 
 this were the only point I should have no hesitancy in overruling 
 the motion. 
 
 But there is a question arising under the provision of the 
 eleventh section of the Judiciary Act of 1789, which, as interpreted 
 by numerous decisions of the Federal courts, seemed to me to con- 
 stitute an insuperable objection to the plaintiff's right to prosecute 
 this defendant in this court. 
 
 That section provides that " no civil suit shall be brought before 
 
 *Post. 
 26 
 
202 UNITED STATES 
 
 Main v. Second National Bank of Chicago. 
 
 either of the courts (Circuit or District) against an inhabitant of 
 the United States, by an original process, in any other district than 
 whereof he is an inhabitant, or in 'which he shall be found at the 
 time of serving the writ. " That the defendant was not an " inhabit- 
 ant " of this district when this suit was commenced, is too plain 
 for discussion. The remaining question is, was the defendant 
 found " here at that time ? " 
 
 The defendant, as before stated, was " located " at Chicago ; 
 that was its habitation j that does not move around with the person 
 of its officers ; the corporation is not migratory. It could not of 
 its own will, and without authority of law, change its location to 
 this State. Therefore, I must hold that this court has no jurisdic- 
 tion over this defendant ; that it was not "found " here within the 
 meaning of that statute. In the case of The Bank of Augusta v. 
 Earle, 13 Peters, 519, the court says, in speaking of locality of cor- 
 poration : " It must dwell in the place of its creation ; it cannot 
 migrate to another sovereignty. " This, it is true, was said of a 
 State bank, but the same may with equal propriety be said of a 
 National bank. They have a local habitation, an office, and place 
 of business within a State or district as much as a State bank. 
 Justice Nelson, in Day v. Newark India Rubber Manufacturing 
 Co., 1 Blatchford, 638, and in Pomeroy v. New York £ New Haven 
 R. R. Co., 4 id. 130, examined this question very fully, and arrived 
 at the conclusion in both cases, notwithstanding there was a 
 statute of the State of New York authorizing service to be made 
 upon officers of such foreign company within the State, which 
 would give the State courts jurisdiction of the corporations, that 
 the corporations were not "inhabitants" of the State, and were not 
 " found " there because their officers and agents resided or came 
 into that district ; that the officers were not the corporations, and 
 the corporations were not, therefore, found within the district. 
 
 This is a jurisdictional question, and " State laws can confer no 
 authority on ,this court in the exercise of its jurisdiction, by the 
 use of State process, to reach either person or property, which it 
 could not reach within the meaning of the law creating it." Toland 
 V. Sprague, 12 Pet. 338. 
 
 I do not think the Practice Act of June 1st, 1873 (17 U. S. Stat- 
 utes at Large, 196), changes the rule. That relates to the practice 
 and proceedings in suits against parties, who may be prosecuted in 
 the Federal courts, but 'does not profess to enlarge their jurisdic- 
 
CIKCUIT COUET, 1875. 203 
 
 Irons V. T]ie Manufacturers' National Bank. 
 
 tion or to extend it over persons or cases not before within tlie 
 cognizance of the court. As said in Toland t. Sprague, 12 Peters, 
 330, "the acts of Congress adopting the State process, adopt the 
 form and mode of service only so far as the persons are rightfully 
 within the reach of such process, and did not intend to enlarge the 
 sphere of the jurisdiction of the Circuit Courts." 
 
 I think the same construction should be giyen to the act of 1873 
 above mentioned, and so construed, it does not relieve the case of 
 the question of the liabitat of this defendant being without the 
 district, and not therefore subject to the process of this court. 
 
 The motion is therefore granted and this suit dismissed. 
 
 Ieons v. The Manufactubees' National Bake. 
 
 (6 Bisaell, 301.) 
 Insolvent National banks — WTten court may appoint a receiver. 
 
 In cases not within the special provisions of the National Banking Act, a Nation- 
 al bank may be proceeded against in the same manner as any other debtor 
 or corporation.* 
 
 A bill in equity by a judgment creditor of a National bank alleged that the 
 judgment was for moneys deposited with the bank ; that the bank had 
 gone into voluntary liquidation : that it had withdrawn its bonds on deposit 
 with the Treasurer of the United States ; that the officers had fraudulently 
 applied the funds of the bank to the payment of other persons than the 
 complainant, and that there was no property subject to seizure on execu- 
 tion. Held, a proper case for the appointment of a receiver by the court. 
 
 (Circuit Court, Seventh Circuit, Northern District of Illinois.) 
 
 B 
 
 ILL in equity filed in the Circuit Court for the Northern Dis- 
 trict of Illinois. The opinion states the case. 
 
 Gardner & Schuyler, for complainant. 
 
 J. Hutchinson and Tenneys, Flower & Alercrombie, for defend- 
 ant. 
 
 Blodgett, J. This is a creditor's bill, setting forth in sub- 
 stance that the complainant was a depositor in the Manufacturers' 
 
 * See Wright v. Merchants' National Sank, post. 
 
204 UNITED STATES 
 
 Irons V. The Manufacturers' National Bank. 
 
 National Bank; that, at the time the bank closed its doors in Octo- 
 ber, 1873, he had a large sum deposited there; that the bank has 
 since that time gone into voluntary liquidation, or pretended to do 
 so; that it has withdrawn its bonds on deposit with the Treasurer 
 of the United States, and has since that time in some manner, 
 through the agency of various oflBcers, converted its funds, under 
 the pretexts of paying portions of some of its debts, and that in the 
 meantime the complainant has brought suit against the bank, and 
 recovered judgment in this court for the amount of his debt, 
 something over $12,000, issued his execution, and been unable to 
 make any thing. He charges that the officers of the bank have 
 fraudulently applied the funds of the bank to the payment of 
 other persons than himself; that they have made fraudulent settle- 
 ments and dispositions of the property of the bank; and there is no 
 property subject to seizure or execution which the complainant can 
 obtain by proceeding at law, and asks for the discovery of whatever 
 assets the bank or the officers of the bank may now have under 
 their control belonging to the bank, and for the appointment of a 
 receiver to take possession of these assets; and, also, that the adjust- 
 ments or settlements which have been made by the officers of the 
 bank, which are fraudulent, and in violation of the provisions of 
 the banking law under which the defendant was organized, shall 
 be set aside and held for naught, and the property equally dis- 
 tributed among all the creditors alike. 
 
 The bill does not show the fact, but an exhibit filed with the 
 bill shows that within the last few months certain creditors of the 
 bank have applied to the Comptroller of the Currency, under the 
 provisions of the general banking law of the United States, asking 
 that he appoint a receiver for this bank under the provisions of 
 that law, and pursuant to it, for the purpose of winding up its 
 affairs, and the Comptroller has responded to that request by the 
 statement, in substance, that some time in the early part of Janu- 
 ary, 1874, the bank deposited government notes with the Treasurer 
 to the amount of its circulation, and took np its bonds ; and that 
 the relations between the bank and the department of the Comp- 
 troller of Currency from that time on have ceased, and the Comp- 
 troller now has, or claims that he has, no authority to appoint a 
 receiver; that he has no official notice of any protest of any of the 
 circulating notes of the bank, and thinks that he has no authority 
 to appoint a receiver. 
 
 The defendant files a general demurrer. 
 
CIECUIT COUET, 1875. 205 
 
 Irons V. The Manufacturers' National Bank. 
 
 It would seem, from an examination of the banking law, that the 
 Comptroller of the Currency has no authority to appoint a receiver 
 except in certain contingencies, such as the failure to make good a 
 reserve, the failure to redeem circulating notes on demand, the 
 failure to make good the capital stock, whenever the same becomes 
 impaired, and the failure to meet certain other requirements of the 
 banking law. 'Now, neither of these contingencies are charged in 
 this bill to have occurred, and it is only in the case of such contin- 
 gencies that the Comptroller acquires the right to appoint a 
 receiver. 
 
 It is claimed on the part of the defendant, and has been very 
 strenuously and ingeniously argued, that there is no power in any 
 court to appoint a receiver for this bank, because the delegation of 
 the power to the Comptroller of the Currency to appoint a receiver 
 in certain contingencies to wind up the affairs of the bank excludes 
 the authority of any other tribunal or person to appoint a receiver. 
 I have carefully examined the banking law and the decisions of the 
 Supreme Court, and those of various States made since this bank- 
 ing law took effect upon the various questions which have arisen, 
 and do not find that this precise question has ever been made. But 
 I can see nothing in the law itself, nor in the decisions of the courts 
 upon the law, so far as they have gone, to exclude the idea that a 
 corporation, created as this is under an act of Congress for certain 
 specific purposes, does not come within the general provision of 
 the law regulating the remedies of creditors as against this corpo- 
 ration as much as against any other corporation, except where 
 there are specific provisions to meet those cases. For instance, 
 a holder of the circulating notes of the bank, who had pre- 
 sented them for payment, and payment had been refused, would 
 undoubtedly find this remedy within the special provisions of 
 the banking law itself, because there is a specific provision meet- 
 ing that case, and his remedy would undoubtedly be found in 
 the action of the Comptroller of the Currency, but there are 
 many cases like the one before us, where the bank may not 
 have so violated any of the provisions of the banking law as to call 
 for the appointment of a receiver by the Comptroller. 
 
 The allegations in this bill are very full that this bank was insolv- 
 ent at the time it closed its doors, and has been ever since ; that 
 it failed to pay its debts ; that a large amount of its debts are still 
 unpaid, and the question is, what remedy have the creditors of this 
 
UNITED STATES 
 
 Irons V. The Manufacturers' National Bank. 
 
 bank if a court of equity cannot take on itself the administration 
 of its affairs, where the banking law does not provide that it shall 
 be done by the Comptroller of the Currency ? It is true that in 
 the case of Kennedy t. Gibson, 8 Wall. 498, the Supreme Court 
 state that the provision of the banking law making the stock- 
 holders liable for the debts of the corporation to the amount of the 
 stock held by them respectively, c^ld not be enforced except 
 under the action of the Comptroller through a receiver appointed 
 by him. Whether that opinion will be found to entirely express 
 the full meaning and intention of the Supreme Court, whenever 
 they come to examine it in the light of future cases and facts 
 which may be brought before it, is at least a matter of doubt. I 
 do not feel sure that the Supreme Court will adhere to quite as 
 broad a statement as is made in that case ; but still they may. 
 But even that does not oust the jurisdiction of a court of equity to 
 take hold of whatever assets the bank may have aside from the 
 personal liability of the stockholders, and administer those as it 
 would the afEairs of any insolvent corporation. 
 
 The law is well settled in this State and in the courts of the 
 United States, that the proper remedy of a creditor against a cor- 
 poration, when the assets are of such a nature that they cannot be 
 levied upon and sold on execution, is by a proceeding in equity to 
 marshal and distribute the assets. It is unnecessary to cite author- 
 ities upon that question. The law, I think, is as well settled as 
 any branch of the law can be considered settled in this country. 
 
 The general banking law provides, by the fifty-second section, 
 " That all transfers of the notes, bonds, bills of exchange, and 
 other evidences of debt owing to any National banking association, 
 or of deposits to its credit, or assignment of mortgages or sure- 
 ties on real estate, or of judgments or decrees in its favor ; all 
 deposits of money, bullion or other valuable things for its use, or 
 for the use of its shareholders or creditors ; and all payments of 
 money to either, made after the commission of an act of insolvency 
 or in contemplation thereof, with a view to prevent the application 
 of its assets in the manner prescribed by this act, or with a view to 
 the preference of one creditor to another, except in the payment 
 of its circulating notes, shall be utterly null and void. U. S. Ke- 
 vised Statutes, 1874, § 5342. 
 
 Now by the fiftieth section of the banking law it is provided in 
 substance that, after making provision for the payment, or rather 
 
CIEOUIT COUKT, 1875. £07 
 
 Irons V. The Manufacturers' National Bank. 
 
 indemnification, of the government for the redemption of the 
 circulating notes of a ISTational bank, all the remainder of the pro- 
 ceeds of its assets shall be divided ^ro rata among its creditors, 
 share and share alike, according to the amount due to each. And 
 the section which I have just read makes void all payments and 
 settlements which are made to one creditor, to the exclusion of 
 other creditors, after the commission of an act of insolvency. 
 
 The allegations in this bill, which are confessed by the demurrer 
 as true, show that the bank became insolvent, closed its doors, and, 
 I think, was guilty of an act of insolvency within the meaning of 
 the banking law — the organic act of incorporation. 
 
 It was urged by defendant's counsel that the only act of insolv- 
 'ency contemplated by this fifty-second section, was such an act of 
 insolvency as authorized the Comptroller to appoint a receiver, 
 that would be merely the failure to pay its circulating notes, and 
 that a failure to pay a depositor, or its bills of exchange, or notes, or 
 drafts, would not be an act of insolvency. 
 
 It can hardly be possible that Congress intended to give all the 
 remedies in the banking law merely to the note-holder of these 
 National banks, and leave depositors and general creditors entirely 
 unprovided for. It must have been in the contemplation of Con- 
 gress in the enactment of this act, that these National banks could 
 receive deposits, because they are specially authorized to do so ; 
 that they would issue bills of exchange, and be otherwise liable to 
 individuals and corporations, because there is express provision in 
 various sections for payment of that class of indebtedness. And I 
 think the term, "act of insolvency," mentioned in the fifty-second 
 section, is clearly an act which would be an act of insolvency on 
 the part of an individual banker ; that is, the closing of the doors, 
 refusing to pay depositors on demand, refusal to go on in the due 
 course of business to transact its business as a bank, and discharge 
 its liabilities to its creditors. 
 
 So that, upon the allegations in this bill, which are, as I said be- 
 fore, admitted to be true by the demurrer, it would seem that this 
 bank has been making preferences in direct contravention of the 
 provision of the banking law for a year past. How far a court of 
 equity will deem it its duty to disturb these transactions, and re- 
 quire repayment from parties who have received payment from 
 the officers of the bank in the course of liquidation of its affairs, 
 is a matter for future consideration. But it certainly furnishes 
 
208 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 the ground for the intervention of a court of equity, it seems to 
 me, when it is made to appear that a bank is going on and 
 paying some creditors to the exclusion of others. It was the 
 plain intention of the banking law that all creditors should 
 share equally, and that no preference should be allowed in favor of 
 one creditor as against others ; that the United States government, 
 as the guarantor of the circulating notes of the bank, is the only 
 party that is entitled to any preference whatever ; that all other 
 creditors are to share alike. And, therefore, it would seem to fol- 
 low that, if a bank is not in a condition to pay all its creditors, it 
 can only pay them pro rata, — that it has no right to pay a part in 
 full and have others unpaid. 
 
 Entertaining these views, and without taking longer time to 
 explain my views upon the question, it is sufficient to say that I 
 think a case is made by the bill for an appointment of a receiver. 
 
 J. D. Harvey was accordingly appointed receiver under a bond of 
 $100,000. 
 
 Van Antwerp v. HtrLBtrKc. 
 
 (7 Blatchford, 406.) 
 Deposits to secure circulation — Courts cannot control disposition of. 
 
 The Circuit Court has no iurisdiction of a suit by a private person, to restrain, 
 interfere with, or control the Treasurer of the United States, or the Comp- 
 troller of the Currency, in the discharge of their duties, in respect to bonds 
 deposited with the Treasurer to secure the redemption of circulating notes 
 of a National bank. 
 
 The provisions of sections £6 and 57 of the National Banking Act explained. 
 
 (Circuit Court, Second Circuit, June, 1877). 
 
 ACTION by Van Antwerp, as assignee of all the right, title and 
 interest of the National Bank of Unadilla, in certain United 
 States bonds deposited with the Treasurer of the United States, to 
 secure the circulation of said bank against Hulburd, Comptroller 
 of the Currency, Spinner, United States Treasurer, and Kingsley, 
 receiver of said bank, to compel said Comptroller and Treasurer to 
 disclose what disposition had been made of said bonds, and to 
 obtain a decree directing said ofl&cers as to their duty and authority 
 as to said bonds. 
 
CIEOUIT COUET, 1870. 209 
 
 Van Antwerp v. Hulburd. 
 
 The said bonds were deposited by said bank in pursuance of the 
 National Banking Act, for the purpose of procuring circulating 
 notes and to secure their redemption. The bank, having gone 
 into liquidation, assigned its interest in said bonds to the plaintifE. 
 
 WooDEUFF, J. The discovery and relief sought by the bill of 
 complaint include an inquiry into, and a direct interference with 
 the administration of the duties of the Comptroller of the Currency, 
 and of the Treasurer of the United States, in respect of bonds 
 deposited with such Treasurer, under the act of June 3d, 1864, to 
 provide a National currency (13 U. S. Stat, at Large, 99),' to 
 secure the redemption of the circulating notes of a National bank. 
 The bill assumes that this court has jurisdiction and authority to 
 call those officers of the government to account for their oflBcial 
 acts ; to require them to state what, in their official capacity, they 
 intend further to do ; to restrain them by injunction from doing 
 what is unjust or inequitable toward the plaintifE ; and, by decree, 
 to compel them to exercise their functions, in respect to such bonds, 
 according to the law, as interpreted by the court, and to render 
 justice and equity to the plaintiff. 
 
 The action is not brought against them as individuals, to restrain 
 or redress a wrong, which, as private persons, they are doing or 
 threaten to do, to the private rights of the plaintiif ; and, if it were, 
 their residence at "Washington would forbid any attempt to give this 
 court jurisdiction, by the service of process of subpoena, unless 
 they should be found and served within this district. The act of 
 Congress relating to both the Circuit and District Courts is quite 
 explicit, that no civil suit shall be brought before either of said 
 courts, against an inhabitant of the United States, by any original 
 process, in any other district than that whereof he is an inhabitant, 
 or in which he shall be found at the time of serving the writ. 
 Act of September 24th, 1789, § 11, 1 U. S. Stat, at Large, 78, 79. 
 
 It is not claimed that this court has, by virtue of the stat- 
 utes creating the court, any jurisdiction of the officers of the 
 executive department at Washington, to review or control their 
 official acts, or to prescribe rules for the administration of their 
 officers, on allegations that, in such administration, they have 
 violated, or are about to violate, the private rights of an indi- 
 vidual, even though such public officers should be found in this 
 district and be here served with process. I say nothing of private 
 wrongs, committed without color of official authority, or even 
 27 
 
210 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 with such color, if outside of the jurisdiction of such officers, but 
 it would be a most extraordinary claim, that the Secretary of State 
 of the United States, or the Treasurer of the United States, is 
 liable to be sued in any district or districts of the United States 
 where he may at any time, or from time to time, be found, by any 
 individual who conceives himself aggrieved by his official acts^ or 
 who alleges a title to be paid moneys which have been paid into 
 the Treasury of the United States, or to receive other property 
 held by the last-named officer, as such Treasurer. The power of 
 the Circuit Court in the District of Columbia, and, incidentally, 
 the question whether the Circuit Courts of the United States, sev- 
 erally, had power to issue writs of mandamus to compel an officer 
 of the United States to perform a ministerial act, were fully dis- 
 cussed in Kendall v. United States, 13 Peters, 524, and the cases 
 there cited affirm, that even that power has not been conferred on 
 the Circuit Courts within the States. See Marbury v. Madison, 1 
 Cranch, 137 ; Mclntire v. Wood, 7 id. 504 ; McGlung v. Silli- 
 man, 6 Wheat. 598 ; Reeside v. Walker, 11 How. 272 ; United 
 States V. Guthrie, 17 id. 284 ; United States v. The Commissioners, 
 5 Wall. 563. 
 
 The present suit proceeds in this court as a court of equity, 
 against the defendant Hulburd, as Comptroller of the Currency, 
 and against the defendant Spinner, as Treasurer of the United 
 States. It arraigns their acts in that capacity, and seeks to control 
 their official acts in the future. It being conceded that they are 
 inhabitants of the city of Washington, and the statute plainly for- 
 bidding that a civil suit should be brought against them in this 
 district by the service upon them in Washington of subpoena to 
 answer, the jurisdiction of this court over them is claimed to be 
 conferred, and, as an incident, the right to summon them to 
 appear here, by the special provisions of the act to provide a Na- 
 tional currency, before referred to, and the acts amending the same. 
 
 Deferring for the present the inquiry whether the proper mode 
 of raising the question is by the plea which has been interposed on 
 behalf of the Comptroller of the Currency and the Treasurer, I 
 deem it proper to examine, first, the claim that the act, called, for 
 convenience, the National Currency Act, confers the power and 
 jurisdiction contended for. The sections of the act which are 
 relied upon as conferring jurisdiction are the fifty-sixth and fifty- 
 seventh. 
 
CIRCUIT COURT, 1870. 211 
 
 Van Antwerp v. Hulburd. 
 
 The fiity-sixth section provides that all suits and proceedings 
 arising out of the provisions of the act, in which the United 
 States, or its ofiQcers or agents, shall be parties, shall be conducted 
 by the district attorneys of the several districts, under the direc- 
 tion and supervision ,of the Solicitor of the Treasury. O'bviously, 
 this section neither expressly, nor by implication, affects the juris- 
 diction of any court. It assumes, it is true, that suits may be 
 brought and proceedings instituted which have their foundation in 
 the provisions of the act, and that the United States, or its officers 
 or agents, may be parties to such suits, and declares, and only 
 declares, that such suits and proceedings shall be conducted by 
 the district attorney. If this section is not solely applicable to 
 actions and proceedings instituted by or in the name of the United 
 States, or its officers or agents, and may, by a liberal construction, 
 be held to impose upon the district attorney any duty of conduct- 
 ing the defense of suits and proceedings to which third parties 
 may see fit to make the United States, or its officers or agents, 
 parties defendant, still this language cannot be held to authorize 
 the institution of such suits, or to give jurisdiction to a court not 
 having, independently of this section, authority to entertain them. 
 
 The most obvious meaning, intent and effect of this section are, 
 to impose upon the district attorneys the duty of conducting suits 
 and proceedings which may be necessary to carry into full effect 
 the provisions of the act, whether such suits are brought in the 
 name of the United States or of the Comptroller of the Currency, 
 or in the name of, or by, the receiver of a banking association, and 
 in whatever courts such suits may be prosecuted. In general, the 
 language employed, that such suits and proceedings ''shall be con- 
 ducted," imports prosecution, either civil or criminal, and not 
 defense, and, in the other provisions of the act, there are numer- 
 ous cases contemplated, to which such use of the language applies. 
 But, as already, in substance, said, this section, whether it is eon- 
 fined to the prosecution, or includes also the defense, in nowise 
 purports to indicate when, where, or for what purpose such suits 
 or proceedings may be instituted, or to give them any legality or 
 efficiency. Such legality and efficiency must be determined by 
 other provisions of law. This section can no more be said to en- 
 large the jurisdiction of the Circuit Court of the United States 
 either as to person or subject-matter, than it can to confer upon a 
 State court a jurisdiction not possessed before the enactment. 
 
212 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 How far is the plaintiffs position aided by the fifty-seventh sec- 
 tion ? That section enacts, that suits, actions and proceedings 
 against any association under the act, may be had in any circuit, 
 district or territorial court of the United States held within the 
 district in which such association may be established, or in any 
 State, county or municipal court in the county or city in which 
 said association is located, having' jurisdiction in similar cases. 
 It is not, and plainly it cannot be, claimed, that this affirmative 
 enactment has any application to a suit against the Comptroller of 
 the Currency or the Treasurer of the United States. Its terms are 
 explicit, and the only suits, actions, or proceedings mentioned, are 
 those against an association. 
 
 But there is a proviso to the fifty-seventh section, which, it is 
 claimed, warrants the present suit. That proviso is in these terms: 
 " Provided, however, that all proceedings to enjoin the Comptroller 
 under this act shall be had in a circuit, district or territorial court 
 of the United States, held in the district in which the association 
 is located." It is argued that, because the present suit is brought 
 to obtain an injunction, and appertains to the alleged rights of the 
 plaintifE to bonds deposited in pursuance of the act, therefore, 
 this proviso declares that this suit shall be brought in this or some 
 other Federal court, and, by necessary implication, gives this court 
 jurisdiction to summon the Comptroller, if not also the Treasurer 
 of the United States, to appear therein and answer. This is a vio- 
 lent construction, I think, to the language of a proviso which is 
 in the form of limitation, not of affirmative authorization, and 
 has, I think, no such meaning. 
 
 What are the proceedings which may be had to enjoin the Comp- 
 troller " under this act ? " No section provides for or refers to 
 such a suit as the present. The eighth section declares, that the 
 association itself shall have power to sue, and may be sued, com- 
 plain and defend in any court of law and equity, as fully as nat- 
 ural persons. Under this section, if the association should prosecute 
 a suit of any nature against any defendants whomsoever in any 
 court, all the conditions of jurisdiction over the person of the 
 defendant, and of the subject-matter, must be satisfied. The forty- 
 sixth section relieves the association from the consequences of a 
 refusal to redeem circulating notes, and of the protest of such 
 notes, when the payment of such notes has been restrained by order 
 of a "court oi competent jurisdiction.'' This, of course, declares 
 
CIKCUIT COURT, 1870. 213 
 
 Van Antwerp v. Hulburd. 
 
 nothing in respect to the nature or extent of the jurisdiction of 
 any court. So, qf that part of section 50 which makes the 
 adjudication of a court of competent jurisdiction competent proof 
 of claims against an association ; and, also, of section 58, which 
 authorizes the recovery by the association of the penalty for muti- 
 lating its bills ; and, also, of the sections which declare counterfeit- 
 ing the bills, or engraving plates for forging, a felony, or punish- 
 ble by fine or imprisonment. Section 53 gives the circuit, district 
 and territorial courts of the United States, jurisdiction of a suit 
 brought by the Comptroller of the Currency, to obtain a judg- 
 ment declaring a forfeiture of the franchises, etc., of an associa- 
 tion, for violation of the provisions of the act. 
 
 Section 50, however, provides a case in which the Comptroller 
 of the Currency maybe enjoined, and prescribes the mode in which 
 he may be called upon to show cause why he should not be enjoined. 
 By that section, the Comptroller, on becoming satisfied that any asso- 
 ciation has refused to pay its circulating notes, and is in default, is 
 authorized to appoint a receiver to take possession of the books, 
 records and property of the association, collect the debts, etc., of 
 the association, and sell its real and personal estate, and pay over 
 all money made or realized, to the Treasurer of the United States, 
 subject to the order of the Comptroller of the Currency. But the 
 proviso to the section declares, that, if such association shall deny 
 its default, it may apply to the nearest circuit, district, or terri- 
 torial court of the United States, to enjoin further proceedings, 
 and that such court, after citing the Comptroller of the Currency 
 to show cause why further proceedings should not be enjoined, and 
 after a decision or finding that such association is not in such default, 
 shall make an order enjoining such Comptroller, and any receiver 
 he may have appointed. This proviso contemplates a proceeding 
 (not necessarily a formal suit or action, biit a proceeding sum- 
 mary in form) instituted by the association, to continue its own 
 existence, preserve its property, and avoid an ex parte receivership, 
 ordered by the Comptroller to have effect and operate upon the 
 association and its property in the very place where it is located. 
 Such receiver might be appointed upon erroneous information or 
 mistaken evidence, and considerations of convenience required 
 that the association should have speedy and convenient means within 
 its own district, and where the proofs must necessarily be, of recti- 
 fying a mistake and disproving the allegations upon which such 
 
214 UNITED STATES 
 
 Van Antwerp v. Hu]biird. 
 
 ex parte action of the Comptroller had proceeded. The proviso to 
 the 57th section had one further object, which, I have no doubt, 
 was its chief purpose, namely, to exclude any possible attempt to 
 procure an injunction in any State court, to restrain the Comp- 
 troller in the discharge of his duty to appoint a receiver to close up 
 the affairs of a bank that had become insolvent, or failed to com- 
 ply with the provisions of the act. It was intended that, in that 
 matter. State courts should have no jurisdiction. 
 
 I find no other circumstances in which proceedings to enjoin the 
 Comptroller under the act are authorized by it. It is unnecessary, 
 for the purposes of this case, to say, and I do not say, that no case 
 can arise in any court in which, under the general principles of 
 law and equity, the legality and effect of the acts of the Comp- 
 troller of the Currency, or of the Treasurer of the United States, 
 may not be subjected to adjudication, nor that no case can exist 
 in any court in which an injunction to stay the action of either of 
 them may be obtained. What I mean to say is, that such a case is 
 not provided for in the act in question, save as above stated and 
 commented upon ; and the court must seek its jurisdictional 
 power over the subject-matter, and over the persons of the defend- 
 ants, in some source other than the act referred to. 
 
 The conclusion necessarily follows, bhat the plaintiff is not, by 
 the act of Congress relied upon, warranted in prosecuting an action 
 in this court, as assignee of the bonds deposited with the Treasurer 
 of the United States pursuant to the provisions of that act, to call 
 such Treasurer and the Comptroller of the Currency to an account 
 for their acts in their official character in relation thereto, and that 
 this court has no jurisdiction to summon them, by writ of subpcena, 
 to answer to the present bill of complaint. 
 
 It is, however, insisted that the Comptroller and Treasurer 
 have, by their plea, submitted to the jurisdiction, and that their 
 plea to the jurisdiction should, therefore, be overruled. If the 
 only ground of objection to the jurisdiction of the court were the 
 service of the subpcena out of the district, the consideration of the 
 plaintiff's claim in this respect would be material. It is a familiar 
 rule, often recognized in the Federal courts, that a party may waive 
 his privilege, if he be relieved from liability to be sued in a partic- 
 ular court, and he may even waive the service of any process ; and, 
 by pleading or answering to the merits, he does submit to the 
 jurisdiction. This, however, assumes that the court has jurisdic- 
 
CIKCUIT COUKT, 1870. 215 
 
 Van Antwerp v. Hulburd. 
 
 tion of the controversy between the parties. But it is equally 
 clear that exemption from liability to be sued in a particular court, 
 and the objection that the process of the court is served out of the 
 jurisdiction, are the pi-oper subjects of a plea in abatement. I 
 think the court might, in the present case, have granted a motion 
 to set aside the proceeding as to the Comptroller and Treasurer on 
 that sole ground ; but the defendants were not bound to abide the 
 result of a mere motion. It was a matter which could be made to 
 appear of record, and in a form which would make it subject to 
 review. Such pleas at law and in equity are warranted on com- 
 mon law grounds, and in courts of general jurisdiction, as in Eng- 
 land ; and the treatise and dicta cited to us do not deny this, but 
 establish the contrary. Much more clearly is this true in a court 
 whose jurisdiction is derived from statutes, in which the jurisdic- 
 tion of the subject-matter and of persons, and the limitation of the 
 modes of acquiring jurisdiction, are prescribed, and in terms pro- 
 hibitory of any other. This will appear well recognized in decis- 
 ions in the Federal courts, some of which will be presently refer- 
 red to. 
 
 I am, therefore, clear, that, independently of the broader ques- 
 tion which I have above discussed, if this case is to be disposed of 
 on the plea that the process herein was served in the District of 
 Columbia, and not in this jurisdiction, and upon defendants who 
 were then inhabitants of that district, and not within this jurisdic- 
 tion, the matter of the plea is sufficient to defeat the action. A 
 party is not, by merely pleading to the jurisdiction, and alleging 
 the facts which, if true, show want of jurisdiction, to be deemed 
 to submit to the jurisdiction or waive its defect. So simple a 
 proposition needs no authority. Every case, which countenances 
 such a plea, affirms it. In Halsey v. Hurd, 6 McLean, 14, it was 
 held, that a plea in abatement for want of service of process was 
 not a waiver of process ; and that the plea might be abandoned, 
 and a motion to quash the writ for defective service of process 
 might be substituted. 
 
 If there be any embarrassment to a decision based solely upon 
 the plea in this case, it arises, not from the matter of the plea, 
 or the fact that the objection is raised by plea, but from 
 the form of the plea, or the manner in which the plea is in- 
 terposed. The elementary rule on that subject found in text 
 writers, enforced by the courts in England, and countenanced, to 
 
216 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 some extent, at least, in the practice of the Federal courts, is that 
 pleas which are in abatement, and grounded upon personal privi- 
 lege, or relief from liability to be sued in a particular court, must be 
 put in in propria persona, and the appointment of attorney, solici- 
 tor or agent, by whom the plea is put in, is, per se, an appearance, 
 an admission that the court has jurisdiction, and a submission 
 thereto. See Teese v. Phelps, 1 McAllister, 48 ; Teasdale v. The 
 Ramtler, Bee's Eep. 9 ; the plea in Dred Scott v. Sandford, 19 
 How. 393. The rule is, in a high degree, technical, and it is not 
 necessary, in the yiew that I have taken of the whole case, to affirm 
 or enforce it here. 
 
 It was stated on the argument, that the present plea was, at the 
 instance of the court, made a substitute for a motion to quash the 
 proceeding or set aside the service of process on these defend- 
 ants, in order that the matter might appear of record. My learned 
 associate, before whom the motion was made, confirms this, and 
 counsel insisted, on the argument, that they ought, if purely tech- 
 nical objections arise, to be at liberty to withdraw the plea and pro- 
 ceed upon their motion without being prejudiced by having 
 pleaded; and my associate, who is familiar with what occurred in 
 regard to the motion, thinks that should be permitted. Upon 
 what precise reason does not appear, but the defendant in Halsey 
 V. Hurd (above cited) was permitted to abandon his plea and 
 move to quash the writ for defective service. If, therefore, I were 
 of opinion that the plea put in by the solicitor was, in its present 
 form, to be deemed a submission to the jurisdiction, I should 
 acquiesce in the views expressed by my associate on the argument. 
 But," entertaining the opinion which I do, that we have no jurisdic- 
 tion between these parties to grant the relief sought, I deem ib 
 unnecessary to pursue the inquiry last above referred to any 
 further. If I am right in my views, we cannot pronounce judg- 
 ment between these parties upon the facts alleged in this bill of 
 complaint; and, therefore, whether the particular plea before us is 
 formal or informal, whether the matter were before us on motion 
 or otherwise, it is our duty to dismiss the bill as to these defend- 
 ants. 
 
 The general principle, that waiver of objection by the parties 
 does not give jurisdiction of the cause or matter in controversy 
 between them, would, probably, not be denied. But it has been 
 acted upon so often in the Federal courts, and in cases in which the 
 
V CIECUIT OOUET, 1870. 217 
 
 Van Antwerp v. Hulburd 
 
 subject of a plea to the jurisdiction in equity, as well as at law, is 
 adverted to, that some may be profitably cited. In Gapron v. Van 
 Noordeti, 2 Cranch, 136, it was held, that, on writ of error, a plain- 
 tiff might assign for error the want of jurisdiction in the court in 
 which he himself brought the suit, and so take advantage of his 
 own error in not showing his title to sue in that court. In Jack- 
 son V. Ashton, 8 Pet. 148, in equity, the court directed the dis- 
 missal of the bill because it did not affirmatively appear that the 
 Circuit Court had jurisdiction, though it did not appear negatively 
 that it had not. This was done by the court of its own motion. 
 The counsel were anxious to have the case heard and decided on 
 the merits, but Chief Justice Mabshall stated the opinion of the 
 court to be, that the bill must be dismissed. In The State of 
 Rhode Island v. The State of Massachusetts, 12 Pet. 657, also in 
 equity, the distinction above adverted to between cases in which a 
 party may and must plead to the jurisdiction, is stated. It is there 
 said: " Jurisdiction is the power to hear and determine the subject- 
 matter in controversy between parties to a suit, to adjudicate or ex- 
 ercise any judicial power over them. * * * An objection to juris- 
 diction on the ground of exemption from the process of the court in 
 which the suit is brought, or the manner in which the defendant is 
 brought into it, is waived by appearance and pleading to issue; but 
 when the objection goes to the powers of the court over the parties, 
 or the subject-matter, the defendant need not, for he cannot, give 
 the plaintiff a better writ or bill." It is also there said, that the 
 Supreme Court is one of limited powers and must be confined 
 to cases and parties over whicH the Constitution and laws have 
 authorized it to act, and that any proceeding without the limits 
 prescribed is coram non judice, and its action is a nullity ; and, in 
 that case, the distinction between the courts of England and the 
 Federal courts, in particulars important to this subject, is pointed 
 out. See, also, Toland v. Sprague, 13 Peters, 300 ; Voorhees v. Bank 
 of the United States, 10 id. 449, 473, 474. In Smith v. Eernochen, 
 7 How. 198, the right and duty to plead in abatement a personal 
 privilege or want of jurisdiction of the person is held. The power 
 and duty of the court to recognize their want of jurisdiction is 
 concisely stated in Tyler v. Hand, 7 How. 573, citing Dockminique 
 T. Davenant, 1 Salk. 330. If the matter or ground of objection 
 to the jurisdiction be extrinsic, the defendant must plead it ; if 
 intrinsic, the court will act upon it on motion or notice it of them- 
 28 
 
218 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 selves. In Cutler r. Rae, 7 How. 739, a libel in admiralty was 
 prosecuted in the District Court of Massachusetts, the proofs were 
 taken, a hearing was had and a decree was rendered for the libel- 
 ants, which was affirmed in the Circuit Court. Chief Justice 
 Taket, in the Supreme Court, discusses the question of the juris- 
 diction of the District Court. He says : " It is true the counsel 
 for the appellant has waived all objections on that score ; " but 
 "if the proceedings show a case which the District Court was 
 not authorized to try, it is the duty of this court to take notice 
 of the want of jurisdiction, without waiting for an objection 
 from either party," and the decree was reversed on that distinct 
 ground. In the case of Dred Scott v. Sandford, 19 How. 393, 
 this subject is discussed by nearly all of the judges. There, a 
 plea in abatement had been decided in favor of the plaintiff 
 below, and it was insisted that he could not allege error in that 
 decision. But it was held that the court could give no judgment 
 for the plaintiff or for the defendant in a case in which it had not 
 jurisdiction, no matter whether there were a plea in abatement or 
 not. See pp. 402, 456, 458, 472 to 474, and numerous cases cited. 
 Judge Curtis (p. 567) says : " The course of the court is, where 
 no motion is made by either party, on its own motion to reverse 
 such a judgment for want of jurisdiction, not only in cases where 
 it is shown, negatively, by a plea to the jurisdiction, that jurisdic- 
 tion does not exist, but even where it does not appear affirmatively 
 that it does exist. It acts upon the principle that the judicial 
 power of the United States must not be exerted in a case to which 
 it does not extend, even if both parties desire to have it exerted." 
 See Piquignot v. Pennsylvania R. R. Go., 16 How. 104. For the 
 same principles, see, also. Striker v. Mott, 6 Wend. 465 ; Henry v. 
 Ouyler, 17 Johns. 469, 471 ; Davis v. Packard, 6 Wend. 327 ; 
 Jordan v. Dennis, 7 Mete. 590, in State courts. 
 
 If, therefore, I am right in my opinion that this court has no 
 jurisdiction to hear and determine, between this plaintiff and the 
 Comptroller of the Currency and the Treasurer of the United 
 States, the matters alleged in the bill of complaint, we can and 
 must so hold, whether the particular plea put in by the defendants 
 is good or not. 
 
 The bill, as to those defendants, should be dismissed. 
 
 Hall, J., concurred in the result of the foregoing opinion. 
 
CIEOUIT COURT, 1871. 219 
 
 Tan Antwerp v. Hulburd. 
 
 Vait Antwerp v. Hulburd. 
 
 (8 Blatohford, 282.) 
 Title to bonds deposited to secure circulation. 
 
 The plaintiff, a citizen of New York, claiming title by assignment to tlie bonds 
 deposited with the Treasurer of the United States to secure the circulation 
 of a National bank, filed a. bill setting forth that the Comptroller of the 
 Currency and the Treasurer refused to recognize his right to the bonds or 
 their proceeds ; that the Comptroller had appointed one K., a citizen of New 
 York, receiver of the said bank, and intended to sell the said bonds and to 
 pay the proceeds, after redeeming the circulation of the bank, to the gen- 
 eral creditors of the bank, or to K. as such receiver, and that K. claimed as 
 such receiver an interest adverse to the plaintiff in said bonds. The bill 
 made the Comptroller, the Treasurer and K. parties defendant, and prayed 
 a, decree establishing the plaintiff e title and requiring the Comptroller and 
 the Treasurer to deliver to the plaintiff the surplus of the bonds after 
 redeeming the notes of the bank and annulling the appointment of K. 
 as receiver. K. demurred to the bill for lack of equity. Held, that the 
 demurrer must be sustained. 
 
 Per WooDKUFP, J. (1) The plaintiff could not question the validity of K.'s 
 appointment as receiver ; (2) that, as the court could not grant the relief as 
 to the Comptroller and Treasurer, it could not as to K.; (3) that as under 
 the National Banking Act the proceeds of the bonds could never come into 
 the possession of K., He had no concern in the suit ; (4) that the allegation that 
 plaintiff was informed and believed that K. claimed an interest in the bond 
 adverse to the plaintiff, was not suflBcient to sustain the bill. 
 
 Per Ham,, J. That the residuary interest of the bank in the bonds was a 
 part of the assets of the bank to which K . , as receiver, was entitled, unless 
 the plaintiffs claim thereto was good, and that therefore the bill presented 
 a question of property between plaintiff and K., but that as plaintiff and 
 K. were residents of the same State the Circuit Court had not jurisdiction. 
 
 ACTION in equity before Woodeufb and Hall, JJ., in the 
 United States Circuit Court for the Northern District of New 
 York. 
 
 John IT. Reynolds, for plaintiff. 
 
 Mwin W. StougMon and William Dorsheimer (district attor- 
 ney), for defendant Kingsley. 
 
 WooDRUFB, J. The object of the present suit is to establish the 
 title of the complainant to the United States bonds which were 
 
220 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 deposited with the Treasurer of the United States by the National 
 Unadilla Bank, under the act of Congress, entitled An act to pro- 
 vide a National currency secured by a pledge of United States 
 bonds, etc., approved June 3d, 1864 (13 U. S. Stat, at Large, 99), 
 and the acts amendatory thereof, for the purpose of securing circu- 
 lating notes. The complainant alleges that the bank determined 
 to go into liquidation and close its affairs as a National bank, and, 
 upon considerations stated, assigned to him all the right, title and 
 interest of the bank in or to such bonds, and that he agreed to 
 redeem the circulating notes ; that the Comptroller of the Cur- 
 rency and the Treasurer of the United States refuse to recognize 
 his rights, have sold some of the bonds, have given notice of the 
 redemption of such circulating notes, and have redeemed a portion 
 thereof ; that, although the complainant has offered to deposit 
 legal tender notes to the amount of such circulating notes, provided 
 the bonds are returned to him, the officers mentioned refuse to deliver 
 the bonds, or the proceeds thereof, to him ; that, shortly after such 
 assignment to the complainant, the Comptroller of the CuiTeney, 
 acting under the said act of Congress, but without any legal ground 
 therejfor, the said bank not having done or omitted any act which 
 warranted the same, assumed to appoint the defendant Kingsley 
 receiver, and he accepted such appointment, and has taken posses- 
 sion of the assets and property of the bank ; that the Comptroller 
 of the Currency has wrongfully sold some of the bonds, and the 
 proceeds have been paid into the treasury of the United States, 
 and he, in defiance of the complainant's rights, threatens to dispose 
 of the residue, and, as the complainant is informed and believes, 
 intends to retain the proceeds, and, after the redemption of all the 
 circulating notes, to pay any surplus thence arising to the general 
 creditors of the National Unadilla Bank, or to the said Kingsley, 
 as the pretended receiver thereof ; and that, as the complainant is 
 informed and believes, the said Kingsley claims, in his capacity of 
 receiver, an interest adverse to the complainant in the bonds so 
 deposited with the Treasurer for the redemption of the said circu- 
 lating notes, and afterward assigned to the complainant. The 
 bill, upon these facts and others, which it is unnecessary here to 
 recite, bearing upon the administration of the defendants Hul- 
 burd and Spinner, in respect to the bonds, calls upon the latter to 
 account for their administration, and to disclose what they have 
 done, and what they intend to do, and asks a decree estab- 
 
CIECUIT COURT, 1871. 221 
 
 Van Antwerp v. Hulburd. 
 
 lishing the complainant's title, and that, after the redemption of 
 the said circulating notes, or adequate provision made therefor, the 
 ofiBcers last named be decreed to deliver the surplus of the bonds, 
 and interest accrued or accruing thereon, to the complainant, and 
 that it be decreed that the pretended appointment of Kingsley is 
 null and void, with a prayer, also, for an injunction. To the bill 
 of complaint the defendant Kingsley demurs generally, for that 
 the complainant is not entitled to the relief prayed by the bill 
 against the defendant. 
 
 The complainant shows no interest in the National Unadilla 
 Bank, or its property or assets, of any description, except such title 
 and interest in the bonds which that bank deposited with the 
 Treasurer of the United States, to procure circulating notes, as he 
 alleges he acquired by the assignment of those bonds to him by the 
 bank. In so far as the receivership of the defendant Kingsley ex- 
 tends to any other property than those bonds, the complainant has 
 no right to assail the appointment of such receiver as illegal or 
 irregular. Whether the appointment is valid or void does not 
 concern him. The sole object of the action is to assert the rights 
 acquired by the assignment of those bonds to the complainant, 
 and control the administration thereof. If, therefore, it appears, 
 upon the bill of complaint, that this court has no jurisdiction of 
 the ofi&cers of the government in whose possession and control 
 the bonds, or the proceeds thereof, now are, and cannot, as to them, 
 grant the relief which the complainant seeks, there would seem 
 no ground for sustaining the suit as against the demurrant, unless 
 he has done, or is about to do, some act which prevents or hin- 
 ders the prosecution of the complainant's title before the govern- 
 ment officers, or which prevents a recognition of those rights by 
 them. 
 
 Upon a consideration of the subject growing out of the argument 
 upon the bill of complaint and the plea interposed by the Comp- 
 troller of the Currency and the Treasurer of the United States, 
 I have discussed the question at some length ( Van Antwerp v. 
 Hulburd, 7 Blatchf. C. C. R. 436*), and have come to the conclu- 
 sion, that this court in this action, and upon the admitted facts, 
 has no jurisdiction as against those officers, to grant the relief 
 sought, and that, as to them, the bill must be dismissed. So far 
 as the views there expressed are material to the right of the com- 
 
 See ante, p. 308. 
 
222 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 plainant to maintain the action at all, it is sufficient to refer to 
 the opinion. But, in my judgment, the making of the defendant 
 Kingsley a party to the suit was erroneous, upon grounds independ- 
 ent of the question there considered. 
 
 The defendant Kingsley has no custody, possession or control 
 of the bonds in question, and, under no administration thereof, 
 under the act of Congress, can they,*or any proceeds ther of, ever 
 come to his possession, custody, or control. He has no title nor 
 interest in the bonds, or their proceeds, legal, equitable, or official, 
 nor has he any duty to perform in respect thereto. His authority 
 and his duty are founded upon section 50 of the act which, 
 with sections 31 and 34, declares the case in which the Comptroller 
 of the Currency may appoint a receiver. The character, powers 
 and duties pertaining to such receivership are distinctly defined 
 in section 50. He shall, under the direction of the Comptroller, 
 " take possession of the books, records and assets, of every descrip- 
 tion, of such association, collect all debts, dues and claims belong- 
 ing to such association, and, upon the order of a court of record, 
 of competent jurisdiction, may sell or compound all bad or doubt- 
 ful debts, and, on a like order, sell all the real and personal prop- 
 erty of such association, on such terms as the court shall direct, 
 and may, if necessary to pay the debts of such association, enforce 
 the individual liability of the stockholders provided for by the 12th 
 section of this act; and such receiver shall pay over all money so 
 made to the Treasurer of the United States, subject to the order of 
 the Comptroller of the Currency, and also make report to the 
 Comptroller of the Currency of all his acts and proceedings." 
 This is the beginning, scope and end of his duty and functions. 
 It is the Comptroller who is to advertise for claims against the 
 bank, and divide the money (after redeeming the circulating notes) 
 to and among the creditors of the bank. Whatever power to sue may 
 be implied as necessary to the performance of the duties of the 
 receiver, and even if such receivership be held to involve the vest- 
 ing in him pro hac vice, the legal title to the property and the 
 debts, dues and claims which he is to collect or sell and convert 
 into money, the receivership is limited, by the object of its crea- 
 tion, and the duties which it involves. For the full accomplish- 
 ment of the object, and the due discharge of those duties, it may 
 be conceded he has all necessary title, authority and power. But 
 he cannot touch one of the bonds deposited with the Treasurer, or 
 
OIECUIT COUET, 1871. 223 
 
 Van Antwerp v. Hulburd. 
 
 a dollar of the proceeds thereof. They are committed to a different 
 and a higher administration. All that he collects he is to pay to 
 the Treasurer. The bonds and all proceeds thereof are already there. 
 Practically, the receiver is the mere agent of the Comptroller, to 
 bring the residue of the assets into the United States treasury. 
 True, the language of the section is, that he shall take possession 
 of the books, records and assets of every description, of such asso- 
 ciation. But this was not intended to displace the custody of the 
 bonds held by the Treasurer, or the authority of the Comptroller 
 of the Currency over such bonds. The administration ^of such 
 bonds, and the mode and manner of their appropriation to the 
 purposes for which they are held, are fully prescribed in other sec- 
 tions of the act, and these are to be had in view in the construc- 
 tion of the language last cited. The bonds, and the interest 
 accrued thereon, and the proceeds thereof, are already, by the other 
 express enactments, in the hands of the Treasurer; and it is absurd 
 to say, that the title thereto, or some interest therein, was vested 
 in the receiver, for the purpose of paying them over to the Treas- 
 urer. The bonds, if sold, are to be sold by the Comptroller of the 
 Currency. The receiver has no office or duty to perform in respect 
 thereto, and has no administration of the proceeds, when the 
 Comptroller has made the sale and paid them over to the Treas- 
 urer. In short, the receiver has no concern in the subject-matter of 
 this suit. He has no power to do any thing, and it is not alleged 
 that he has done, or attempted to do, any thing, which impairs, in 
 any manner, the alleged rights of the complainant, or hinders 
 or prevents his obtaining the recognition of his rights, or any 
 redress to which he is entitled, if those rights are not respected. 
 But the complainant has inserted in his bill the statement, that 
 he is informed and believes that the demurrant claims, in his 
 capacity as such receiver, an interest, adverse to him, in the bonds 
 so deposited with the Treasurer; and, inasmuch as a demurrer 
 admits the facts stated, it is claimed that the fact and the admission 
 thereof are sufficient ground for making the receiver a party 
 defendant, and for requiring him to answer the bill. 
 
 I am, of course, aware that it is the common practice in the 
 State of New York, in actions for the foreclosure of mortgages, 
 and, perhaps, some others, to assign as a reason for making some 
 defendants parties, that they claim some interest, as mortgagees, 
 judgment creditors, or otherwise, in the premises. But this is a 
 
224 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 part of a plan devised to save the expense of setting out their 
 interest in detail, and is accompanied by provisions for giving them 
 notice that no formal claim is made against them, and, on the one 
 hand, relieving thern from the necessity of answering, when, in 
 fact, no interest adverse to the complainant exists, and from liability 
 for costs ; and, on the other, saving the plaintiff from the effect of 
 a disclaimer. This practice has no hearing upon the present ques- 
 tion. 
 
 It is not true, when the bill of complaint shows affirmatively, on 
 its face, that the defendant has no interest in the matter, has 
 neither a legal nor an equitable interest in the subject of the con- 
 troversy, has no apparent documentary or other means of asserting 
 a title or interest, not even color for a claim, when he has nothing 
 which can be affected by the decision the court is required to make 
 touching the rights of the complainant, or in short, where, upon 
 the facts stated, it is clear that he stands wholly indifferent and 
 unaffected, that the complainant may make him a party, and com- 
 pel him to answer by merely stating that he is informed and 
 believes that he claims an interest. This is not enough to set the 
 power of a court of equity in motion. This does not show that 
 a resort to a court of equity is necessary to protect the complain- 
 ant against such claim, or that he is in any danger by reason 
 thereof. In the present case, it not only is not shown that such 
 claim is not an idle, harmless pretense, but the bill states a case in 
 which the court is bound to say, as matter of law, it is utterly 
 groundless, if not frivolous, and the complainant states no fact 
 which warrants an appeal to a court of equity to protect him. It 
 is not suggested in the bill that this alleged claim is used, or has 
 been used, in any manner to the complainant's prejudice, or that 
 it is in any way an obstacle to his obtaining possession of his bonds 
 or their proceeds from the officers of the government. No facts 
 are stated bringing this alleged claim within any analogy to suits 
 to settle doubtful or conflicting claims, or to remove a cloud upon 
 title, or to suits quia timet. A bill of interpleader resting upon 
 such a naked allegation would not be entertained for a moment 
 The case in this respect stands upon the assumption that a com- 
 plainant may bring into his controversy with one who holds and 
 claims to hold the subject-matter in dispute, any defendant of 
 whom he can say that he is informed and believes that such defend- 
 ant claims an interest therein, and this, although as matter of 
 
CIEOUIT COUET, 1871. 225 
 
 Van Antwerp v. Hulburd. 
 
 law in the case made, no such interest, legal or equitable, exists, 
 and no fact is stated showing that such person is doing any thing 
 whatever in hostility to, or to the prejudice of, the complainant's 
 right. When to this is added, that, upon grounds more fully 
 stated in reference to the other defendants who have pleaded to 
 the bill, we have no jurisdiction to grant any relief to the com- 
 plainant against the only defendants who are shown to have any 
 possession or control over the subject of. the controversy, the con- 
 clusion is inevitable that the demurrer of this defendant must be 
 sustained. 
 
 Hall, J. The bill in this case sets forth the organization of 
 the National XJnadilla Bank, under the General Banking Act of 
 the United States ; the subsequent deposit by the bank, with the 
 Treasurer of the United States, of $111,300, in United States 
 registered bonds, as security for circulating notes to be issued 
 under the authority of that act ; the receipt by the bank, from the 
 Comptroller of the Currency, of $100,000, in circulating notes ; 
 and that such bonds were held exclusively for the redemption of 
 such circulating notes. It also states, that, afterward and on the 
 8th of June, 1867, the said bank, by a vote of its directors and 
 shareholders owning at least two-third? of its capital stock, deter- 
 mined to go into liquidation as a National bank, and notified the 
 Comptroller of the Currency thereof ; that all lawful proceedings 
 were had and taken in due form to put all its affairs in liquida- 
 tion ; that on the last-mentioned day the bank assigned to the 
 complainant all its interest in the bonds so deposited ; that the 
 complainant agreed to redeem all such circulating notes, and has 
 always been ready to do so ; that the Treasurer of the United 
 States and the Comptroller of the Currency were immediately noti- 
 fied of such assignment and its conditions ; that the complainant 
 offered to deposit with the proper ofiicer $100,000 of the legal 
 tender notes of the United States, to secure such circulating 
 notes, on receiving the bonds so deposited, and such offer 
 was refused ; that afterward, and in August, 1867, the defendant 
 Hulburd, the Comptroller of the Currency, without any legal right 
 or authority whatever (the non-existence of any fact or condition 
 of things upon which such legal right or authority could be based 
 being expressly alleged by the bill), assumed to appoint the defend- 
 ant Kingsley as a receiver of the assets of said National Unadilla 
 Bank ; that the Comptroller of the Currency has wrongfully sold 
 
226 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 some of the said bonds, and has paid the proceeds into the 
 Treasury of the United States, and intends to sell the remaining 
 bonds and retain all the proceeds thereof, and, after the redemp- 
 tion of the circulating notes of the bank, to pay any surplus 
 thence arising to the general creditors of the bank, or to the 
 defendant Kingsley, as the pretended receiver thereof; that 
 Kingsley thereafter took possession of all the assets of the bank as 
 such receiver, and that the complainant is informed and believes 
 that the said Kingsley, in his capacity as such receiver, claims an 
 interest in said bonds so deposited, adverse to the complainant. It 
 is expressly averred, that the National Unadilla Bank has ceased to 
 exist as a National bank, and had not failed to redeem its notes, 
 and had committed no act authorizing the Comptroller of the Cur- 
 rency to appoint a receiver, and that he and the Treasurer had no 
 ofiScial duty to perform in respect to such securities, except to hold 
 them as security for the redemption of the circulating notes of 
 such National bank, or dispose of them for the payment and 
 redemption of such notes in the manner provided for in said 
 General Banking Act, and that such securities had a market value 
 of about eight per cent over their par value. To this bill the 
 defendant Kingsley demurred and alleged that the bill shows that 
 the plaintiff is not entitled to the relief prayed. 
 
 The bill contains sundry other allegations, but it is unnecessary 
 to state its allegations more fully, as the ground upon which the 
 validity of the demurrer was based is well set forth in the opinion 
 of my learned brother (to whose conclusion in this respect I am 
 unable to assent), in the statements that the defendant Kingsley 
 has no custody, possession, or control of the bonds in question, 
 and that, under no administration thereof, under the act of Con- 
 gress, can they, or any proceeds thereof, ever come to his posses- 
 sion, custody or control ; and that he has no title or interest in 
 the bonds, or their proceeds, legal, equitable or official, or any 
 duty to perform in respect thereto. 
 
 In one sense, and upon the allegations of the plaintiff's bill, it 
 is certainly true, that the defendant .Kingsley has no interest in 
 the bonds deposited by the bank ; but its truth, in that sense, fur- 
 nishes no ground for the demurrer. It is true because, upon the 
 allegations of the bill, the plaintiff's right to the bonds, or their 
 proceeds, after the payment of 1100,000, of the circulating notes 
 of the bank, is perfect, and necessarily excludes all right of any 
 
CIRCUIT COUET, 1871. 227 
 
 Yan Antwerp v. Hulburd. 
 
 representative of the bank ; bnt it is not in that sense that the state- 
 ments of my learned brother are intended to be understood. It is 
 quite certain, from other portions of his opinion, that he bases such 
 statements upon the conclusion that the defendant Kingsley would 
 have had no right to the possession, custody, or control of such 
 bonds, or any portion of their proceeds, after the full redemption 
 of all the circulating notes of the bank, even if there had been no 
 assignment of the interest of the bank in the bonds so deposited. It 
 is true that there is some language in his opinion which might indi- 
 cate that this was not the sole ground upon which the statements 
 referred to are based ; but such language must be considered in 
 connection with the general law of pleading, and it is not likely 
 that it was intended to be based upon the fact, that the bill 
 showed that the defendant Kingsley had no interest in the subject- 
 matter of the suit, inasmuch as it showed that the plaintiff's title 
 to the residue of the bonds, or their proceeds, after the circulating 
 notes of the bank were redeemed, was perfect and unquestionable, 
 as against the bank and its representative. On that ground, many, 
 if not most, bills would be demurrable ; for it is, ordinarily, the 
 very object and purpose of a bill in equity to show that the defend- 
 ant against whom relief is sought has no paramount or other right 
 to the subject of the controversy, and that the plaintiff's right 
 to relief is unquestionable. Surely, this is no ground for a demur- 
 rer to a bill which shows an interest in the defendant if the plain- 
 tiff's claims are not sustained, and also shows, by direct and 
 express averment, that such defendant claims a right adverse to 
 that asserted by the plaintiff. 
 
 In this view of the case, it is proper to consider the provisions of 
 the General Banking Act under which such securities were deposi- 
 ted, and also the provisions of the same act under which the 
 Comptroller of the Currency assumed to appoint the defendant 
 Kingsley as such receiver. 
 
 These bonds were deposited by the banJ£ with the Treasurer of 
 the United States, under the 16th, 26th, and other sections of the 
 General Banking Act of June 3d, 1864 (13 U. S. Stat, at Large, 
 99), and, under the 36th section, they were to be held exclusively 
 for the purpose of securing the circulating notes of the bank. By 
 the 16th section, the bank is authorized to return its circulating 
 notes to the Comptroller and take up the securities deposited there- 
 for, in the proportions and to the extent described ; and, by the 
 
228 UNITED STATES 
 
 Van Antwerp v. Hulburd. 
 
 26tli section, the bank is entitled to a power of attorney to receive 
 and appropriate to its own use the interest on these securities, 
 until it shall have failed to redeem its circulating notes. These 
 and other provisions of the act show conclusively that the bank, 
 before its assignment to the plaintiff, had the equitable, if not the 
 legal, interest, in these securities, subject only to the power and 
 right of the proper ofiBcers of the Government to dispose of them, 
 or so much of them as might be necessary, in the manner pre- 
 scribed by the act, for the redemption of the circulating notes of 
 the bank ; and this residuary interest the bank might, in the ordi- 
 nary course of its business before the appointment of any receiver, 
 assign for a proper consideration. This residuary interest, if not 
 assigned by the bank before the appointment of a receiver, is neces- 
 sarily a part of the assets of the bank ; and the 50th section of the 
 act, under the provisions of which the defendant Kingsley acts as 
 receiver, after authorizing the appointment of a receiver, under 
 certain circumstances, provides, that he " shall take possession of 
 the books, records, and assets of every description. of such associa- 
 tion " (bank), " collect all debts, dues, and claims belonging to 
 such association," etc. The same section also provides that the 
 receiver shall pay the moneys made or realized by him out of the 
 assets of the bank, " to the Treasurer of the United States, subject 
 to the order of the Comptroller of the Currency," and that the 
 Comptroller (after paying preferred claims, etc.), " shall make a 
 ratable dividend of the money so paid over to him by such receiver, 
 on all such claims as may have been proved to his satisfaction or 
 adjudicated in a court of competent jurisdiction." There is no- 
 where in the act any other provision for the division or disposition 
 of the moneys arising out of the residuary interest of the bank in 
 bonds pledged as security for its circulating notes ; and it is only 
 of the moneys paid over by the receiver, under this 50th section, 
 that the Comptroller is authorized to make a dividend. • There is 
 no provision in the act authorizing the Comptroller or Treasurer to 
 dispose of the residue or surplus proceeds of such bonds in pay- 
 ment of the debts of the bank, or otherwise, and, therefore, until 
 the moneys arising therefrom are legally transferred from the 
 Treasurer to the receiver, they are in the possession of the Treas- 
 urer, as the oflBcer of the United States, as the holder of a pledge 
 for the bank ; and the Comptroller has no power to make any dis- 
 tribution thereof, in payment of the general debts of the bank. 
 
CIKCUIT COUKT, 18'M. 229 
 
 Van Antwerp v. Hulburd. 
 
 until they have passed into the hands of the receiver and have been 
 by him paid over to the Treasurer, subject to the order of the 
 Comptroller of the Currency. The residuary interest of the bank 
 in the securities thus pledged is a part of the assets of the bank, 
 the same as though Buch securities had been pledged to a private 
 person, as collateral security for the payment of an ordinary com- 
 mercial debt ; and a properly appointed receiver, as the represen- 
 tative of the bank, has the right to demand and receive the prop- 
 erty so pledged, as an asset of the bank, in the one case the same 
 as in the other. 
 
 It seems very clear, then, that upon the case made by the bill, 
 the right to this residuary interest is in the plaintiff ; and that, if 
 the plaintiff's right under the assignment set forth is not estab- 
 lished, no one but the defendant Kingsley, as such receiver (if he 
 has been legally appointed and become vested with the right 
 of the bank), has a right to the same. There is, therefore, 
 a question of property between these parties, upon the claim 
 made by the defendant, as expressly charged in the bill ; and the 
 demurrer, consequently, admits, that the defendant, as such 
 receiver, claims an interest in such securities adverse to the plain- 
 tiff. These adverse claims to this residuary interest may, there- 
 fore, be properly litigated, in this suit, between the plaintiff and 
 Kingsley, as the only party who appears to claim a legal pecuniary 
 interest adverse to the plaintiff's alleged right, and as the only 
 party who can now have a legal standing in court to represent that 
 interest and litigate the claims of the plaintiff, if the receiver was 
 properly appointed. It does not appear that any one but the 
 defendant Kingsley asserts any claim to such residuary interest 
 in the subject in controversy, as against the plaintiff, and he 
 claims, as such receiver, and as the representative or legal assignee 
 or successor of the bank, for the purpose of paying the same to the 
 general creditors of the bank ; and, as a decree in this case would 
 determine the question of right as between these two parties, the 
 demurrer should, in my judgment, be overruled, in case this court 
 has jurisdiction of this suit, as between the plaintiff and the 
 defendant Kingsley. 
 
 I do not remember that this question of jurisdiction was raised 
 upon the hearing, and my minutes of the argument do not show 
 that it was discussed by the counsel, or that any act of Congress 
 conferring jurisdiction in such a case as this, when the plaintiff 
 
230 UNITED STATES 
 
 Cadle V. Tracy. 
 
 and defendant are alleged to be citizens and residents of the same 
 State, was cited. And I am not aware that any such act is in force. 
 For that reason I concur in the conclusion that the demurrer must 
 be allowed. 
 
 Cable v. Tract. 
 
 01 Blatchford, 101.) 
 
 Aetiona against National banks — Where to be brought — Jurisdiction of State 
 
 courts — Estoppel. 
 
 A creditor, resident in Kentucky, of a National bank located in Alabama, 
 brought suit against the bank in the Supreme Court of New York, and 
 attached property in New York alleged to belong to such bank. Held, that 
 the State court had no jurisdiction under the provisions of section 57 of the 
 act of 1864 (13 Stat, at Large, 116). 
 
 A National bank can be sued only in the courts designated in section 57 of 
 said act, i. e., "in any circuit, district or territorial court of th* United States 
 held within the district in which said 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." * 
 
 An action having been commenced in a State court against an insolvent Na- 
 tional bank, the receiver of the bank appointed by the Comptroller of the 
 Currency was, on his own application, substituted as defendant. Held, 
 that the receiver was not thereby estopped from questioning the jurisdiction 
 of the court. 
 
 (Circuit Court, Second Circuit, Southern District of New York.) 
 
 BLATCHFOED, J. So far as the bill of Cadle, the plaintiff 
 herein, and the answer of the defendant Tracy, raise issues 
 between those two parties, such issues, and the subject-matter of 
 
 ♦See Manufactwrers' National Bank v. Baack, ante, p. 161; Main v. Second 
 National Bank, ante, p. 200; Bank of Bethel v. Pahquioque Bank, ante, p. 77. 
 
 Section 51 of the act of 1864 provided : " That suits, actions and proceedings 
 against any association under the act may be had in any circuit, district or 
 territorial court, held within the district in which such association may be 
 established, or in any State, county or municipal court, in the county or city in 
 which said association is located, having jurisdiction in similar cases, provided, 
 however, that all proceedings to enjoin the Comptroller under this act, shaU 
 be had in the circuit, district or territorial court of the United States, held in 
 the district in which the association is located." 
 
 la Cook V. State National Bank, 53 N. Y. 96, hereinafter reported, the Court 
 
CIRCUIT COURT, 1873. 
 
 Cadle T. Tracy. 
 
 the controTersy created thereby, are the same as in. the suit in the 
 Supreme Court of New York, between those two parties. 
 
 In the bill in this suit, the plaintiff, after setting forth his title 
 as receiver of the First National Bank of Selma, in Alabama, under 
 the act of Congress of June 3d, 1864 (13 U. S. Stat, at Large, 99), 
 avers, that the Selma Bank became insolvent as early as the 16th 
 of April, 1867; that, when it became insolvent, part of its assets, 
 amounting to $6,973.88, in currency, and $8,409.96 in gold coin, 
 were in the possession of the Ocean National Bank of the city of New 
 York; that the Ocean Bank still has such assets; that the defend- 
 ant Tracy claims a part of them under an attachment issued 
 in his favor, as a creditor of the Selma Bank, by the Supreme 
 Court of New York, on the 39th of April, 1867; that the Selma 
 Bank, on and before the 12th of April, 1867, was indebted to the 
 United States in more than $350,000; that the United States 
 recovered a judgnlent for that amount against said bank, in the 
 District Court of the United States, for the Southern District of 
 New York, on the 20th of August, 1867; and that the United 
 States have 'a prior lien on the said assets in the hands of the 
 Ocean Bank. The prayer of the bill is, that Tracy may be enjoined 
 from proceeding further on his attachment, or on any judgment in 
 the suit in which said attachment was issued, and that the moneys 
 in the hands of the Ocean Bank may be paid to the plaintiff. 
 
 The answer of the defendant Tracy, in this suit, admits, that 
 the Selma Bank became insolvent on the 16th of April, 1867; that 
 the Ocean Bank had in its possession the assets referred to; and 
 that the United States recovered the judgment above mentioned. 
 It then avers, that the Selma Bank, on the 15th of April, 1867, 
 gave to the defendant Tracy, eight drafts drawn by it, on the 
 Ocean Bank, all dated that day, for $8,500 in all, payable to his 
 
 of Appeals of New York held that the foregoing section, except the proviso, was 
 permissive only, and that an action would lie in a State court of New York, 
 against a National bank located in Boston. 
 
 On the other hand, in Crocker v. The Marine National Bank, post, the Supreme 
 Court of Massachusetts held otherwise, and that a suit would not lie in a Massa- 
 chusetts court against a National bank located in New York. 
 
 The Revised Statutes of the United States give to the District Courts juris- 
 diction " of all suits by or against any association established under any law 
 providing for National banking associations, within the district for which the 
 court is held." Section 563. Section 639 gives to the Circuit Courts Jurisdiction 
 " by or against any banking association established in the district for which 
 the court is held under any law providing for National banking associations." 
 
2B2 UNITED STATES 
 
 Cadle v. Tracy. 
 
 order; that payment of the drafts was demanded of, and refused 
 by the Ocean Bank, on the 27th of April, 1867; that, on the same 
 day, adyice thereof was duly given to the Selma Bank; that, on 
 the 29th of April, 1867, an action was commenced on the drafts by 
 Tracy, against the Selma Bank, in the Supreme Court of New 
 York, by publication of a summons and by attachment; that on the 
 same day the attachment was duly levied by the sheriff on the 
 money in the Ocean Bank; that on the 13th of May, 1868, an 
 order was made in that suit on the application of Cadle, whereby 
 he, as receiver of the Selma Bank, was substituted as defendant in 
 that suit, with the like force and effect as if that suit were con- 
 tinned in the name of the Selma Bank; that thereupon Cadle 
 interposed an answer in that suit; that the suit was tried, and 
 Tracy recovered judgment in it on the 9th of February, 1871, 
 for $11,573.24, to be levied and collected of the moneys at- 
 tached, being the moneys in the Ocean Bank; that Cadle ap- 
 pealed from the judgment, and the General Term of the Supreme 
 Court afiBrmed it; that both of the judgments remain in force; 
 that thereby Tracy has a lien on said moneys, which is paramount 
 to the claim of Cadle, and the amount of the judgments ought first 
 to be paid out of said moneys, and the rights of Cadle extend only to 
 the surplus of said moneys; that Cadle, by his answer, in the suit in 
 the State court, claimed, as his defense, that the State court had 
 no jurisdiction either over him, as an ofScer, or over the Selma 
 Bank, or over the subject of the action; that it was his duty as 
 receiver of that bank, to make such disposition of its assets as was 
 required by the act before mentioned; and that, to permit service 
 of process in that suit, by attachment, to be effective, or to make 
 him amenable to that suit, would be contrary to law and to said 
 act; that said Cadle, by said answer, also set up the said indebted- 
 ness of the Selma Bank to the United States, and the said judg- 
 ment in favor of the United States, and claimed that the United 
 States had a prior lien on said moneys; that, on the trial of thai 
 suit, the State court found, as conclusions of law, that it acquired 
 jurisdiction over the Selma Bank and over Cadle, to the extent of 
 the funds attached; that it had jurisdiction over the subject of the 
 action; that the cause of action arose in the State of New York; 
 that the said act contained no provision operating to defeat the 
 attachment in that suit; that the United States had not acquired 
 any prior lien on the funds, and that Tracy was entitled to judg- 
 
CIKCUIT COUET, 1873. 233 
 
 Cadle V. Tracy. 
 
 ment against Cadle, as such receiver, for $10,766.48 and costs, to be 
 levied and collected of the attached funds; that judgment was ren- 
 dered therefor, and affirmed as above stated; that the bill in this 
 suit is for the same matters, and based on the same grounds as were 
 set up by Cadle in the said suit in the State court; that all the claims 
 and rights which are asserted by Cadle in said bill, in reference to the 
 moneys in the Ocean Bank, were asserted and litigated in the said 
 suit in the State court, and were decided adversely to Cadle, and in 
 favor of Tracy, by said judgment; and that the validity of the claim 
 of Tracy, by virtue of the attachment and judgments in the said suit 
 in the State court, and the right of Tracy to have the same paid out 
 of said moneys, was finally and judicially determined by the State 
 court in that suit. The answer then states that Tracy sets up the 
 said judgments, and prays the same benefit of them, and of the 
 matters alleged in his answer, as if he had specially pleaded the 
 same in bar to the bill, and as an estopnel to the plaintiff in this 
 suit. 
 
 The recor^ of the proceedings in the suit in the State court is in evi- 
 dence. On the 23d of April, 1868, an order was made in that suit, 
 continuing it in the name of the Selma Bank, under the provisions of 
 the act of the Legislature of New York, of April 26th, 1832 (Sess. 
 Laws of 1833, ch. 295, § 4), until a final judgment should be had, 
 which should have the like effect on the rights of the parties as if 
 the corporation had not been dissolved, such order to have effect as 
 of the 1st of June, 1867. On the 13th of May, 1868, on a motion 
 made in that behalf by Cadle, as receiver^ an order was made in 
 that suit that Cadle, as receiver, be substituted as defendant 
 therein, with the like force and effect as if the action were con- 
 tinued in the name of the Selma Bank. 
 
 In July, 1868, Cadle, as receiver, put in his answer in the suit 
 in the State court. That answer contained the averments and 
 raised the defense, which the answer of Tracy in this suit states it 
 contained and raised. On the trial the State court found to the 
 effect set forth in said answer of Tracy, and the judgment referred 
 to was rendered, and appealed from by Cadle, and affirmed. 
 
 It follows, from the foregoing facts, that, if the State court had 
 jurisdiction to render the judgment which it did render, between 
 Tracy and Cadle, this court cannot in this suit re-examine the mat- 
 ters settled by that judgment, as between Tracy and Cadle. 
 
 The summons and the complaint in the suit in the State court 
 30 
 
234 UNITED STATES 
 
 Cadle V. Tracy. 
 
 asked for. judgment against the Selma Bank for the amount of the 
 drafts, and the judgment rendered was a judgment that Tracy 
 recover of Cadle, as receiver of the Selma Bank, $10,766.48, and 
 $806. 76. costs, being in all $11,573.24, "to be levied and collected 
 of the moneys and property whereon an attachment has been here- 
 tofore levied in this action." The judgment was, in form, one in 
 personam against Cadle, as receiver of the Selma Bank, to be col- 
 lected out of the attached property. 
 
 The Code of Procedure of New York, § 227, provides that in an 
 action arising on contract, for the recovery of money only " against 
 a corporation created by or under the laws of. any other State, gov- 
 ernment or country," the plaintiff, at the time of issuing the sum- 
 mons, or at any time afterward, may have the property of such 
 corporation attached, in the manner thereinafter prescribed, as a 
 security for the satisfaction of such judgment as the plaintiff may 
 recover ; and that for the purposes of that section an action shall 
 be deemed commenced when the summons is issued, provided it be 
 personally served, or publication thereof be commenced within 
 thirty days. The same Code, § 427, provides that an action 
 " against a corporation created by or under the laws of any other 
 State, government or country," may be brought in the Supreme 
 Court of New York, by a plaintiff not a resident of. the State of 
 New York, "when the cause of action 'shall have arisen, or the 
 subject of the action shall be situated, within the State." 
 
 The record of the suit in the State court shows, that Tracy 
 resided in Kentucky when the suit was brought ; that the Selma 
 Bank was a corporation created under the act before mentioned ; 
 and that the suit was commenced by attachment and publication 
 of the summons. 
 
 The Jurisdiction of the State court is attacked, on the ground 
 that such court could not acquire any jurisdiction, at least in 
 invitum, of a suit against a corporation created under the act 
 before mentioned ; and on the further ground that the cause of 
 action, in the suit in that court, did not arise within the State of 
 New York. 
 
 It is provided by section 8 of the act before mentioned, under which 
 the Selma Bank was created, that every association, formed pursu- 
 ant to the provisions of the act, shall be a body corporate, and, by 
 its name, may "sue and be sued, complain and defend, in any 
 court of law and equity, as fully as natural persons." I have here- 
 
CIKCUIT COURT, 1873. 235 
 
 Cadle V. Tracy. 
 
 tofore held {The Manufacturers' National Bank of Chicago v. 
 BaacTc, 8 Blatch. C. 0. 137), that the effect of this provision 
 is, not to give to the corporation the capacity to be sued in every 
 court within the United States, whether State or Federal, or to 
 give to every such court jurisdiction over every suit which may be 
 brought in it, wherein the corporation is defendant ; that its only 
 proper effect, as regards the corporation, when a defendant, is, to 
 provide, that, when the corporation has been brought, as a suitor, 
 into a court which has jurisdiction of the suit, it shall stand in 
 court, in all respects, in the same position as regards its own rights, 
 or the rights of others against it, as to the subject-matter of the 
 suit, in which a natural person who is a suitor in such court can 
 stand J and that the provision leaves the question as to the proper 
 court in which the suit is to be brought in respect of jurisdiction 
 to be determined by other provisions of law. There can be no 
 doubt, I think, that the provision of section 437 of the Code of New 
 York, before cited, gives to the Supreme Court of New York juris- 
 diction, so far as that provision is concerned, over a suit against a 
 National bank located in another State, as a corporation created 
 under the laws of another government, in favor of a plaintiff not 
 a resident of the State of New York, in the cases provided for by 
 that section. Such has been, in effect, the construction of the 
 statute of New York by the courts of that State. 
 
 In Bowen v. The First National Bank of Medina, 34 How. Pr. 
 408, it was held by the General Term of the Supreme Court of New 
 York, for the Eighth District, construing sections 237 and 437 of 
 the Code, that the Supreme Court of New York had jurisdiction, 
 under those sections, of an action against a National bank located 
 in that State, and also jurisdiction to proceed, by attachment, 
 against the property of such bank, in an action against it, arising 
 on contract, for the recovery of money only, on the ground that, 
 within the language of each of these sections, the bank was a 
 corporation created by or under the laws of another government. 
 In Gooke v. The State National Bank of Boston, 50 Barb. S. C. 339, it 
 was held by the Special Term of the Supreme Court of New York 
 in the First District, that the statutes of New York gave to the 
 Supreme Court of New York jurisdiction of an action against a 
 National bank located in Massachusetts, and, also, jurisdiction to 
 proceed, by attachment, against the property of such bank, the 
 decision being placed on the ground, that under the provisions of 
 
236 UNITED STATES 
 
 Cadle V. Tracy. 
 
 the Code of New York, a National bank is a corporation created 
 under the laws of another government, at least where it is located 
 in another State, and is foreign both in its origin and its location. 
 Then we have the fact of the decision of the Supreme Court of 
 New York, Special Term and General Term, in the suit brought by 
 Tracy against the Selma Bank, which resulted in the judgment 
 against Cadle. No decision of any* State court of New York 
 is cited, giving any other interpretation to the statutes of New 
 York under which the suit of Tracy was brought, and the attach- 
 ment was issued ; and, although the point does not appear to have 
 been passed upon by the highest court in New York, yet, under the 
 settled doctrine, that a Federal court will follow the decisions of 
 the State tribunals on all questions depending upon the local stat- 
 ute laws of the States, it must be held, that, so far as the statutes 
 of New York are concerned, the Supreme Court of New York had 
 jurisdiction to entertain the suit of Tracy against the Selma Bank, 
 and to proceed against the property of such bank by attachment, 
 in such suit. But it is contended that the jurisdiction of the Su- 
 preme Court of New York over that suit is restricted and taken 
 away by the 57th section of the said act of June 3d, 1864, which 
 provides, " that suits, actions and proceedings against any associa- 
 tion under this act, may be had in any circuit, district or terri- 
 torial court of the United States held within the district in which 
 such association may be established, or in any State, county, mu- 
 nicipal court in the county or city in which said association is 
 located, having jurisdiction in similar cases, provided, however, 
 that all proceedings to enjoin the Comptroller under this act, 
 shall be had in a circuit, district, or territorial court of the 
 United States, held in the district in which the association is 
 located." 
 
 It is urged, on the part of Tracy, that the expression, " unde 
 this act," in the 57th section, where it occurs first, "suits, actions 
 and proceedings against any association under this act," has the 
 same meaning which it must necessarily have where it occurs the 
 second time in that section, "proceedings to enjoin the Comp- 
 troller under this act," and that it refers, in both cases, solely to 
 proceedings provided for by the act ; that, where it first occurs, it 
 refers to proceedings which seek to enforce the various obligations 
 imposed upon the corporation and its officers, to guard against the 
 mal-administration of the affairs of the corporation, and to collect 
 
CIECUIT COURT, 1873. 237 
 
 Cadle V. Tracy. 
 
 the penalties and determine the forfeitures established by the act ; 
 that sucTi proceedings are? under section 41, suits against the associa- 
 tion to collect taxes from it, and to collect penalties for not making 
 returns, and, under section 53, suits to forfeit the franchise of the asso- 
 ciation and dissolve it; that such proceedings must, from the general 
 principles applicable to corporations, be had in courts established 
 in the place where the corporation is located ; and that the words, 
 " under this act," in the 57th section, are only equivalent to the 
 words, "arising out of the provisions of this act," used in the 
 56th section, in the enactment, that " all suits and proceedings 
 arising out of the provisions of this act, in which the United States 
 or its officers or agents shall be parties, shall be conducted by the 
 district attorneys of the several districts, under the direction and 
 supervision of the Solicitor of the Treasury." 
 
 There is much force, at first, in this view, and it derives some 
 strength from the language of the provision of the 8th section, 
 before cited, and also from a consideration of the language of the 
 11th and 59th sections of the prior Banking Act of February 25th, 
 1863 (12 U. S. Stat, at Large, 665), which latter act was repealed 
 by the 62d section of the act of June 3d, 1864. 
 
 The 11th section of the act of 1863 contained the same provis- 
 ion found in the 8th section of the act of 1864, that the associa- 
 tion, by its corporate name, could "sue and be sued, complain and 
 defend, in any court of law or equity, as fully as natural persons." 
 The 59th section of the act of 1863 provided that " suits, actions, 
 and proceedings, by and against any association under this act, 
 may be had in any circuit, district or territorial court of the 
 United States, held within the district in which such association 
 may be established." Considering the 11th section of the act of 
 1863 by itself, it is not unreasonable to say, that that section 
 enacted that the corporation could sue and be sued, in any court 
 which, by its constitution and practice, and by the actual course of 
 proceeding in the particular suit, would have jurisdiction of the 
 subject-matter of the suit and of the parties thereto ; and that this 
 was a provision in respect to suits which might arise out of the 
 dealings of the corporation with other persons, in the way of its 
 business, in such dealings, by way of contract or otherwise, as a 
 natural person might have in his relations with other persons. 
 Then came the question as to providing for suits and proceedings 
 arising out of the provisions of the act. So the 55th section of the 
 
238 UNITED STATES 
 
 Cadle V. Tracv. 
 
 act of 1863 was enacted, in the same words, before cited, as the 
 56th section of the act of 1864. So, als#, the 59th section of the 
 act of 1863 was enacted in the words before cited. That section, 
 in terms, provides for suits "by and against' any association 
 under this act," while the 57th section of the act of 1864 provides 
 only for suits " against any association under this act." The 29th 
 section of the act of 1863 provided, as does the 50th section of the 
 act of 1864, for a suit by an association, in the nearest circuit, 
 district, or territorial court of the United States, on the denial 
 of its failure to redeem its circulating notes, to enjoin the Comp- 
 troller of the Currency from proceeding to wind it up. So, too, 
 the 19th section of the act of 1863 made the association liable to a 
 suit for a penalty for not making a return, and the 50th section of 
 that act made it liable to a suit to forfeit its franchise and dis- 
 solve it. 
 
 In the case of The Bank of the United States v. Deveaux, 5 
 Cranch, 61, the question arose whether the Bank of the United 
 States, incorporated by the United States in 1791, was competent 
 to sue in a Circuit Court of the United States. The act of incor- 
 poration conferred on the corporation in terms, act of February 
 35th, 1791 (1 U. S. Stat, at Large, 192, § 3), the capacity to "sue 
 and be sued, plead and be impleaded, answer and be answered, 
 defend and be defended, in courts of record or any other place 
 whatsoever." But the court held that this provision did not 
 enlarge the jurisdiction of any particular court, but only gave "a, 
 capacity to the corporation to appear, as a corporation, in any court 
 which would, by law, have cognizance of the cause if brought by 
 individuals ;" that if that clause gave jurisdiction to the Federal 
 courts, it gave it equally to all courts having original jurisdiction ; 
 and that a general right to sue in all courts and in any court did 
 not imply a right to sue in the courts of the United States, unless 
 such right was expressed. The court based this view, in part, on 
 the fact that the act in one part of it authorized a suit to be 
 brought against the directors individually, for creating an excess 
 of debt in any court of record, Federal or State. The conclusion 
 was that no right was conferred on the bank, by its act of incor- 
 poration, to sue in the Federal courts. 
 
 In enacting the Banking Act of 1863, it was necessary, then, it is 
 contended, for Congress, if it desired to give jurisdiction of pro- 
 ceedings under that act to the Federal courts, to so enact in terms. 
 
CIRCUIT COURT, 1873. 239 
 
 Cadle V. Tracy. 
 
 The 39th section of the act of 1863 (in terms such as are found 
 re-enacted in the 50th section of the act of 1864), provided that 
 the association might "apply to the nearest circuit, district or 
 territorial court of the United States," to enjoin the Comptroller 
 of the Currency, and the 50th section of the act of 1863 (in terms 
 such as are found re-enacted in the 53d/8ection of the act of 1864, 
 except that the latter act requires the suit to be brought by the 
 Comptroller of the Currency), provided that the franchise of the 
 association might be adjudged to be forfeited, and it might be 
 declared to be dissolved "by a proper circuit, district or terri- 
 torial court of the United States." But the terms " the nearest " 
 court and " the proper " court, -were entirely vague. Therefore, it 
 is said, the 59th section of the act of 1863 was enacted, giving ju- 
 risdiction to particular Federal -courts, of the suits by the associa- 
 tion provided for by the 39th section of that act, and of the suits 
 against the association, provided for by the 19th and 50th sections 
 of that act. 
 
 Passing, now, to the act of 1864, the same reasons, it is urged, 
 existed for Congress to so enact in terms, if it desired to give ju- 
 risdiction to the Federal courts of proceedings under that act. 
 Hence, it is said, the 57th section of the act of 1864 was enacted, 
 giving jurisdiction to particular Federal courts of the suits against 
 the association, provided for by the 41st and 53d sections of that 
 act. 
 
 The diflBculty in giving such a restricted meaning to the words, 
 " under this act," in the first part of the 57th section of the act 
 of 1864, as will confine their meaning to proceedings arising out of 
 the provisions of that act is, that the provision of that section 
 allowing such proceedings to be taken "in any State, county or 
 municipal court in the county or city in which said association is 
 located, having jurisdiction in similar cases," can have no scope 
 for operation, except in respect to' a suit under the 41st section of 
 the act of 1864, against the association, to collect a penalty for 
 liot making a return — a penalty to the United States, and one 
 which it would not be likely to sue for in any court but a court of 
 the United States, and one which it could sue for in such court. 
 
 The 53d section of the act of 1864 requires, that a forfeiture shall 
 be adjudged by a court of the United States, and the suit by the 
 association, to enjoin the Comptroller of the Currency (even if 
 the word "against," in the 59th section of that act, is, under the 
 
240 UNITED STATES 
 
 Cadle v. Tracy. 
 
 intimation in Kennedy v. Gibson, 8 Wall. 498, 506, to be read, 
 "by and against," as in the 59th section of the act of 1863), must, 
 under the 50th and 57th sections of the act of 1864, be brought in 
 a court of the United States . 
 
 In addition to the fact, that, on this restricted meaning of the 
 words, "under this act," there is, practically, no field for the 
 operation of the jurisdiction given to the State courts by the 57th 
 section of the act of 1864, it is to be observed, that Congress was 
 creating corporations which were to have business connections with 
 vast numbers of persons, and were expected to take the place of 
 State institutions of a like character. It- was, therefore, to be 
 expected, that Congress, in clothing such corporations with all 
 their functions, would prescribe in what tribunals, not only pro- 
 ceedings against them, taken under the act, but aU suits against 
 them, should be brought. As the corporations are created by 
 Congress suits against such corporations are cases arising under a law 
 of the United States, within the meaning of the Constitution 
 (art. 3, § 2), and it was competent for Congress to confer on the 
 Federal courts jurisdiction over such suits. Oshorny. The Bank of 
 the United States, 9 Wheat. 738. It was, also, competent for 
 Congress to make jurisdiction of such suits exclusive in the Fed- 
 eral courts. Martin v. Hunter's Lessee, 1 Wheat. 304, 336, 337 ; 
 The Moses Taylor, 4 Wall. 411, 429. Under that power it 
 could allow such suits to be brought in certain specified Federal 
 courts, in terms which would, by necessary intendment, exclude 
 all other Federal courts, and exclude all State courts ; and it could 
 qualify the exclusion of State courts, by allowing such suits to 
 be brought in certain specified State courts, in terms which would, 
 by necessary intendment, exclude all other State courts. The ques- 
 tion in the present case is, as to what Congress has done in that 
 regard, by the enactments in the 8th and 57th sections of the act 
 of 1864. The language of the opinion of the Supreme Court in 
 Kennedy v. Gibson (before cited) treats the 59th section of the act 
 of 1863, and the 57th section of the act of 1864, as providing for 
 suits generally, and not merely for proceedings arising under the 
 statute, although the- point was not involved in that case. That 
 is, also, the view of the Supreme Court of Massachusetts, in Crocker 
 V. The Marine National Bank of New York, 101 Mass. 340. [See 
 post.'] A suit "against any association under this act" means, a suit 
 against any association created under the act. An "association 
 
CIRCUIT COURT, 1873. 241 
 
 Cadle V. Tracy. 
 
 Tinder this act " means, properly interpreted, and in ordinary 
 speech, " an association existing or formed under this act," because, 
 if an association at all, it is one under the act, and, having no 
 existence except from the act, it is an association under, that is, 
 by virtue of the act. 
 
 Now if the 8th section stood alone, the association might be 
 sued in any court which had authority to exercise jurisdiction over 
 it. But the 57th section must be regarded as intended to regu- 
 late the whole subject of jurisdiction over suits against associa- 
 tions. It gives jurisdiction to the Federal courts of the district 
 in which the association is established. 
 
 Under this provision, a citizen of the State where'the association 
 is established, as well as a citizen of another State, may sue it in 
 such Federal courts. So, also, the section provides that the asso- 
 ciation may be sued in any State court in the county or city in 
 which it is located, which has jurisdiction in similar cases. It is 
 true, that the word used is " may," and that that word is used, in 
 the section, in reference to both Federal courts and State courts. 
 But that word cannot, in regard to the State courts, be regarded 
 as permissive or enabling, because under the 8th section, a State 
 court in the county or city in which the association is located, 
 having jurisdiction in similar cases, might have jurisdiction 
 of a suit against the association if the State authority so 
 provided ; and, therefore, the provision of the 57th section, in 
 regard to State courts, if merely permissive or enabling, is sur- 
 plusage, and contains no more than was already contained in 
 the 8th section. Under the 69th section of the act of 1863, Con- 
 gress made the jurisdiction of suits against associations exclusive in 
 the Federal courts of the district in which the association was 
 established. Under the 57th section of the act of 1864, it extended 
 such jurisdiction, also, to certain specified State courts. But 
 there is a clear indication that the jurisdiction of such suits by 
 State courts was intended to be confined to the State courts speci- 
 fied. 
 
 If this is not so, there was no need of saying any thing about 
 State courts, in the 57th section of the act of 1864. 
 
 The State courts specified in that section are already covered by 
 the 8th section of the same act. It cannot be supposed that Con- 
 gress did not intend that the provision in the 57th section in regard 
 to State courts should have some meaning, and it can have none 
 31 
 
242 UNITED STATES 
 
 Cadle V. Tracy 
 
 unless as a restriction on the general provision in regard to juris- 
 diction found in the 8th section. 
 
 Moreover, Congress having provided for the creation of these 
 associations, and having power to say where they may be sued, 
 when, taking the 8th and 57th sections of the act together, we find 
 that Congress has prescribed that they may be sued in certain 
 designated courts, it is a proper construction of the language, to 
 hold that they must be sued in those courts, and cannot be sued 
 in any others. 
 
 The only reported decision to which I have been referred, which 
 holds that the suit of Tracy against the Selma Bank could be main- 
 tained, is that' of GooTce v. The State National Bank of Boston 
 (before cited), in December, 1867, which holds that the provisions 
 of the 57th section of the act of 1864 do not control or modify 
 those of section 8 of the same act. 
 
 The subject is not discussed in the opinion delivered in that ease, 
 and the decision seems to be put principally on the ground that, un- 
 less the State courts of New York have jurisdiction of a suit against 
 a National bank located in another State, such bank could, by 
 removing its funds to New York, place them beyond the reach of 
 any action that could be brought against the corporation. Congress 
 must be presumed to have considered that question, when limiting 
 the jurisdiction of the State courts by the 57th section, and to have 
 regarded the provisions made by the act for obtaining possession of 
 the assets of an insolvent bank as sufficient. 
 
 The Supreme Court of Massachusetts, in the case before cited, 
 by the unanimous opinion of six judges in a suit brought in Massa- 
 chusetts against a National bank located in New York, held that, 
 notwithstanding the provision of the 8th section of the act of 
 1864, the 57th section of that act, in designating the locality of 
 the Federal and State courts in which suits maybe brought against 
 associations, had regulated the whole subject of suits against them, 
 and had excluded the- power to bring suits against them in any 
 courts except those designated in that section 
 
 The subject appears to have been carefully considered by that 
 tribunal. In the suit against the Selma Bank by Tracy, no opin- 
 ion by either the Special or the G-eneral Term is furnished to me. 
 On a full consideration of the question, I must hold that the 
 Supreme Court of New York had no jurisdiction of the suit of 
 Tracy against the corporation, on the ground that such jurisdic- 
 tion was forbidden to it by the 57th section of the act of 1864. 
 
CIEOUIT COUET, 1873. 243 
 
 Cadle V. Tracy. 
 
 This conclusion makes it unnecessary to consider the point aris- 
 ing under the statute of New York, as to whether the cause of 
 action on the drafts arose in New York. 
 
 I only desire to say that I do not mean to be understood as 
 assenting to the view that such cause of action did arise in New 
 York. 
 
 It is contended that Cadle, by procuring himself to be made a 
 defendant, as receiver of the bank in the suit of Tracy, submitted 
 himself to the jurisdiction of the State court, and that, however 
 it may have been as to the jurisdiction of that court over the bank 
 when the suit was brought, Cadle is estopped from questioning its 
 jurisdiction over him, or its jurisdiction to render against him the 
 judgment which it did render. 
 
 The answer to this view is obvious. By the order of the State 
 court of May 13th, 1868, Cadle, as receiver, was substituted as 
 defendant in the action, with the like effect as if the action were 
 continued in the name of the bank. Such are the express terms of 
 the order. 
 
 Therefore, the substitution of Cadle as defendant can have no 
 effect in respect to the jurisdiction of the court in the action, over 
 its subject-matter, and over the bank as defendant, to confer a ju- 
 risdiction in those particulars which the court would not have had 
 if Cadle had not been substituted as defendant. Oadle, after 
 being appointed receiver, moved in the State court, in the suit at 
 Special Term, to discharge the attachment. The motion was denied. 
 That decision was, on an appeal by Cadle, affirmed by the General 
 Term. Cadle then appealed to the Court of Appeals. That court 
 held (37 N. Y. 533), that Cadle had no status to make such a 
 motion, because he was not a party to the suit. 
 
 Cadle then procured himself to be made a party to it, in the 
 manner stated. 
 
 But it was, at most, as representative and agent of the corpora- 
 tion that he became such party, if, indeed, he can be considered, 
 as regards that suit, and as regards the plaintiff therein, as repre- 
 senting any thing except the funds attached therein. 
 
 Tracy had no cause of action against Cadle. 
 
 He proceeded in the suit, after Cadle was made defendant, to 
 establish the original cause of action against the bank, on which 
 the suit had been brought, and to establish it under a summons 
 and complaint against the corporation, and under the same sum- 
 
244 UNITED STATES 
 
 Cadle V. Tracy. 
 
 mons and complaint which were originally put in against the cor- 
 poration in the suit. The judgment is against Cadle, as receiver, 
 to be collected of the moneys attached — that is, against Cadle, as 
 receiver, so far as the moneys attached were concerned, and against 
 him, as receiver, to that extent only, or as receiver of those moneys. 
 Tracy was not establishing or enforcing any other right, against 
 those moneys, but such right as he had to collect his debt out of 
 those moneys, in the suit he had brought against the bank. Cadle, 
 then, having come in, and, in his answer in that suit, raised the 
 point, that the court had no jurisdiction to entertain originally 
 the suit against the bank, or to issue the attachment, cannot be 
 regarded as having, by that act, conferred any jurisdiction on the 
 court, to render the judgment which it did render, which it would 
 not have had if the suit had proceeded without the substitution of 
 Cadle as a defendant. 
 
 In The Commercial & Railroad Bank of Vicksiurg v. Slocomi, 
 14 Peters, 60, 65, it is held, that, in the case of a corporation aggre- 
 gate, no waiver of an objection to jurisdiction can be produced by 
 the fact that the corporation appears and pleads by attorney, " be- 
 cause, as such a corporation cannot appear but by attorney, to say 
 that such an appearance would amount to a waiver of the objec- 
 tion, would be to say, that the party must, from necessity, forfeit 
 an acknowledged right, by using the only means which the law 
 affords of asserting that right." 
 
 This principle must apply, a fortiori, to the case of an insolvent 
 and dissolved corporation represented by a receiver of its assets, 
 acting under specific provisions of law. 
 
 If the State court had no jurisdiction originally of the suit 
 against the corporation, and ho right to attach the funds, it had 
 no jurisdiction to render the judgment it did render, and the ques- 
 tion stands, in this court, as if Cadle had never been made a defend- 
 ant, or answered, in the suit in the State court, but had, instead, 
 brought this present suit, in this court. 
 
 As the State court had no jurisdiction, the attachment, which is 
 the only claim asserted by Tracy to a right to the moneys in the 
 hands of the Ocean Bank, must fall, and the plaintiff must have a 
 decree, declaring his title to such moneys to be free from any claim 
 made by Tracy. 
 
 Of his title to them, under the act, the claim of Tracy being out 
 of the way, and of his right and duty, under the 50th section, to 
 
CIRCUIT COUET, 1873. 245 
 
 Cadle V. Tracy. 
 
 collect them, and of his right to bring this suit in this court, to 
 collect them, there can be no doubt. Kennedy v. Gibson, 8 Wall. 
 498. 
 
 Some disposition, before a decree can be entered, must be made 
 of the case as against the defendant Kelly, as late sheriff, either 
 by taking the bill as confessed against him, or otherwise. The 
 injunction prayed for against Tracy must issue. 
 
 As the bill sets up and admits the lien of the United States on 
 the moneys in the Ocean Bank, and the answer of the United 
 States attorney also claims such lien, such lien must be recognized 
 and declared by the decree in respect of such moneys as the Ocean 
 Bank shall be decreed to pay. 
 
 The bill claims, that the Ocean Bank should pay to the plaintiff 
 the full sums of money, with interest from April 15th, 1867. That 
 bank has gone into insolvency. 
 
 Its receiver, by his answer, sets up that he has declared divi- 
 dends of 70 per cent, from the assets of that bank, and expects to 
 declare further dividends therefrom. He also admits that the 
 Ocean Bank had the $6,972.88,in currency and the 18,409.96 in gold 
 coin, and avers that the latter has been converted into $9,155.43 
 in currency, making an aggregate of $16,138.31 in currency, and 
 that he has 70 per cent of that sum in his possession, to the credit 
 of the Selma Bank, and payable as may be decreed by this court. 
 The plaintiff, in a special replication to such answer, objects to the 
 sale of the gold, and claims that the receiver of the Ocean Bank 
 should account for the gold and currency, with interest, as a special 
 fund or trust, unaffected by any ability to declare any dividends. 
 
 This question has not been discussed on the part of the receiver 
 of the Ocean Bank, and the parties interested in it are entitled to 
 be heard upon it. 
 
 Sterne Ghitienden, for plaintiff. 
 
 Eugene Smith, for Tracy. 
 
 Henry E. Tremain, for United States Attorney. 
 
246 UNITED STATES 
 
 In re Wild. 
 
 Its eb Wild. 
 
 (U Blatohford, 343.) 
 
 Interest on loans to corporations in New York. 
 
 In New York the rate of interest which a corporation may pay is not limited. 
 A National bank, located in that State, loaned money to a corporation at a 
 rate of interest exceeding seven per cent per annum. Held, that the interest 
 on the loan was forfeited under section 30 of the National Banking Act (13 
 Stat, at Large, 108), which provided that when no rate of interest was fixed 
 by the law of a State, a National bank might charge a rate not exceeding 
 seven per cent, and that if it charged more, the entire interest should be for- 
 feited. 
 
 (Circuit Court, Second Circuit, Southern District of New York.) 
 
 WOODRUFF, J. On the 13th of February, 1871, the bankrupt 
 Alfred Wild, without consideration, and as mere surety, be- 
 came the indorser of two promissory notes made by the Portage Lake 
 and Lake Superior Canal Company, one for $73,902.51, and the 
 other for $35,111.49, which, on that day, were delivered to the 
 Ocean National Bank, and were made payable with interest. 
 These notes were given in renewal of a number of other notes then 
 unpaid, which had been also given in renewal of prior notes held 
 by the bank, and which were taken from the Canal Company for a 
 loan of two sums of $75,000 each, made on and after the 7th of 
 January, 1867, by the said bank. One of the sums was agreed, on 
 the 5th of January aforesaid, to be loaned in form to the said Canal 
 Company, and the other was at the same time agreed to be loaned to 
 P. J. Avery, but is proved by the testimony, and was fo*nd by the 
 referee in the District Court, to have been in fact for the benefit of 
 the Canal Company, who, in the accounts kept of the transaction, 
 was treated as the actual debtor for both amounts. 
 
 The reason assigned for giving to the transaction the form of 
 two loans, one to the Canal Company and the other to P. J. Avery, 
 was, that the National Banking Law prohibits an indebtedness by 
 any one party, as borrower, to associations formed thereunder, to 
 an amount greater than one-tenth of the capital of the association 
 making the loan. 
 
 There is inconsistency, in permitting the bank, or its receiver. 
 
CIRCUIT COURT, 1873. 247 
 
 In re Wild. 
 
 to make such a transaction, and avoid the charge of violating the 
 Banking Act, by making it a loan in part to Avery, and in part 
 only to the Canal Company, and, on the other hand, to avoid the 
 statutes against usury, of the State of New York, by declaring the 
 whole to be a loan to the Canal Company, a corporation. 
 
 It would be no injustice to the bank to hold the form given to 
 the transaction in order to save the bank from a violation, or from 
 an apparent violation of the Banking Act, conclusive; and circum- 
 stances might, I think, be suggested, in which the bank would be 
 estopped by it to aver that the transaction was other than it 
 appeared on its face, and in the written instruments by which it 
 was agreed that the loan should be made, and in the form of the 
 notes actually given to the bank by Avery therefor. 
 
 For the purposes of the case before me, I have concluded to 
 treat the transaction in the aspect most favorable to the bank, and 
 in accordance with the claim made in its behalf as a loan to the 
 Canal Company, a corporation of the State of Michi'gan. 
 
 The above-mentioned note for $73,902.51 was, on the 18th of 
 September, 1871, renewed for the amount of 170,000, and a new 
 note for the last-named sum, payable with interest thereon, was 
 given by the same corporation under a new name: " Lake Superior 
 Ship Canal Railroad and Iron Company," indorsed by the bankrupt 
 Wild and others. 
 
 The two notes, one dated September 18th, 1871, for $70,000 and 
 interest, the other, dated February 13th, 1871, for $35,111.49 and 
 interest, constitute the claim made by the receiver of the bank 
 against the estate of the bankrupt Wild, who indorsed them; and 
 it is the allowance of that claim by the District Court which 
 is appealed from by the assignee to this court. 
 
 The loan originally made by the bank was further secured by 
 the delivery to the bank of coupon bonds of the Canal Company, 
 sfecured by mortgage to the amount of two hundred thousand dol- 
 lars, and it was made a condition of the loan, that the Canal Com- 
 pany should purchase and receive from the bank certain bonds, 
 amounting on their face to $237,000, of a Georgia railroad corpora- 
 tion, whose road had been stripped of its rails and furniture, whose 
 track had grown up with trees and bushes, which had not been 
 used for many years, on whose bonds no interest had been for a 
 long time paid, and whose bonds had no market value; and their 
 want of intrinsic value was more fully shown by a foreclosure soon 
 
248 UNITED STATES 
 
 In re Wild. 
 
 after affected, on which the road, the mortgage security for the entire 
 issue of bonds, $934,600, of which these were a part, was sold at 
 public auction to the highest bidder for $1,500. It is true that the 
 purchaser of the road, who seems to have acted for the Canal Com- 
 pany, states that after obtaining an act of the Legislature of Georgia, 
 incorporating a new company, and an act authorizing the State to 
 guarantee another large issue of bonds to enable the new company 
 •to reconstruct the railroad, he received a like amount of stock in 
 the new company, $237,000, and succeeded in selling that for 
 $47,000, which sum he paid to the Canal Company, as and for the 
 proceeds of the purchase which they made from the bank, and of 
 his exertions to obtain a new charter and the pledge of State aid, 
 without which the stock would seem to be of little, if any, value. 
 
 Eecurring to the transaction between the Ocean National Bank 
 and the Canal Company, it was made a condition of the loan of 
 the $150,000 by the bank to the Canal Company that, besides pay- 
 ing interest at seven per cent per annum, and securing the same 
 by $300,000 of their mprtgage bonds, with power to the bank, at 
 any time, to sell such bonds at any price not less than ninety cents 
 on the dollar, toward the repayment of the loan (which might, 
 therefore, not continue for more than a very brief term), the Canal 
 Company should, also, purchase from the bank the before-mentioned 
 nearly worthless bonds of the Georgia Eailroad Company, and 
 should pay therefor the sum of $100,000, securing such payment 
 by a like amount of their mortgage coupon bonds. 
 
 There was, also, a further requirement, to wit, that the trustee 
 to whom the mortgage securing the Canal Company's coupon 
 bonds was executed, should be removed or should resign his trust, 
 that the president of the bank should be substituted in his place, 
 and that the moneys loaned by the bank should only be drawn by 
 the Canal Company from the bank by checks countersigned by the 
 president of the bank, as such trustee. 
 
 Their president was active in the negotiations with the company 
 and in settling the terms of the loan ; and he required of the 
 Canal Company, professedly for his own benefit, $50,000 of their 
 mortgage coupon bonds, as compensation for acting as trustee. 
 
 I shall place no special stress upon that payment to the presi- 
 dent, as affecting the question of the liability of the bankrupt in 
 this case. 
 
 It, however, belongs to the history of the transactioo. 
 
OIKCUIT COURT, 1873. 249 
 
 In re Wild. 
 
 The Canal Company having received the proceeds of the dis- 
 counts of the various notes given for the loan, subsequently paid 
 considerable sums, by paying the interest coupons attached to the 
 bonds, held by the bank as collateral security, and other considera- 
 ble sums derived otherwise ; and it seems conceded, that the two 
 notes indorsed by the bankrupt. Wild, and the subject of contro- 
 versy here constitute the residue of the claim of the bank arising 
 out of the said loan, assuming its entire validity and their title to 
 the same, with interest. 
 
 The assignee of "Wild (the appellant here) insists, that the loan 
 was usurious, and that there is, on that ground, no valid claim 
 against Wild, as indorser ; that, under the National Banking Act, 
 the loan being made by the bank reserving a compensation exceed- 
 ing seven per cent interest per annum, all interest on the loan was 
 forfeited, and the payments made by the Canal Company amount 
 to satisfaction of the principal debt ; and that the notes, there- 
 fore, which are here presented bearing the indorsement of the 
 bankrupt, are without consideration, and constitute no valid claim 
 against his estate. 
 
 In the court below the transaction was assumed to be such, 
 that, had the loan been made to an individual instead of a corpo- 
 ration, it was a violation of the statutes of New York regulating 
 the subject of interest, and the securities or notes given therefor 
 would have been void for usury. 
 
 In that view of the subject I most fully concur, and must find, 
 as a fact, upon the evidence, that the conditions of the loan 
 reserved to the bank, in money, more than seven per cent per 
 annum. No one unaffected by interest, bias or prejudice can, I 
 think, read the testimony without being satisfied that the bank, in 
 prescribing the terms of the loan, made it an occasion for extorting 
 from the Canal Company most onerous conditions, greatly exceed- 
 ing lawful interest, and that the form of a sale of Georgia railroad 
 bonds, for a price far above their either real or market value (if, 
 indeed, they had any value, which is very doubtful), was only a 
 cover and means of securing in money the excessive and illegal 
 compensation the bank reserved and secured for making this loan. 
 
 It was, however, held below, that under the laws of the State of 
 
 New York, which forbid a corporation to interpose the defense of 
 
 usury, the transaction must be deemed between the bank and the 
 
 Canal Company a legal transaction, the notes given by the Canal 
 
 32 
 
250 UNITED STATES 
 
 In re Wild. 
 
 Company to the bank legal and binding notes, and, therefore, the 
 indorsement thereof by the bankrupt, as surety for the Canal 
 Company, a legal and binding indorsement; and, further, that the 
 proTisions of the National Banking Law relating to the interest 
 which National banks may receive, and imposing penalties for 
 charging more, do not afEect the transaction, because they only 
 apply to States which have no laws fixing the rate of interest. 
 
 It was not the intention of Congress, when enacting the National 
 Banking Law, to authorize National banks in respect to exacting 
 interest, to violate the laws of the States within which they might 
 be organized, nor, as I think, to relieve them from the conse- 
 quences of such violation prescribed by the State laws, if they were 
 guilty thereof. 
 
 This is the result of the decision of the Court of Appeals of the 
 State of New York, in First National Bank of Whitehall v. Lamb, 
 50 N. Y. 95. 
 
 Without adopting the reasoning of the opinion in that case, I 
 deem the conclusion as above stated correct. 
 
 On the other hand, it was entirely competent for Congress when 
 providing for the organization of National banks, to place them 
 under such restrictions in respect to the rate of interest which they 
 might charge or receive, as Congress might see fit. 
 
 As creatures of their own creation, they could be subjected to 
 such inhibitions as were deemed expedient, even though the privi- 
 leges were far short of those enjoyed by State banks, or by indi- 
 viduals within the several States. 
 
 This would involve no conflict with State laws, nor be an attempt 
 to regulate private and domestic affairs within the States beyond 
 t'he powers of the Federal government. 
 
 It would be merely defining the powers and regulating the con- 
 duct of the organizations which existed only by force of Federal 
 enactment, possessed the powers Congress chose to confer upon 
 them, and exercised them subject to the restrictions and conditions 
 of the law giving them existence. Indeed, the acceptance of the 
 organization under the law, and the enjoyment of its privileges are 
 necessarily subordinate to the conditions upon which the powers 
 and privileges are conferred. Hence, had Congress seen fit to say 
 that no National bank should contract for, reserve, or receive more 
 than at the rate of five per cent per annum for a loan of money, or 
 for or upon the discounting of a note, bill, or other security, it 
 would have been a perfectly valid limitation of their powers. 
 
CmOUIT COURT, 1873. 251 
 
 In re Wild. 
 
 It would be in no conflict with any law of a State which per- 
 mitted the making of loans in general at a higher rate of interest; 
 and, if Congress could do this. Congress could also declare the for- 
 feiture or penalty incurred by the National bank for Tiolating the 
 prohibition. 
 
 Such bank would still be left subject to the operation of the 
 State law imposing, it might be, a different penalty for the violation 
 of its own State laws, as was held by the New York Court of 
 Appeals in the case above referred to. 
 
 It follows that transactions may not be condemned by the State 
 laws, applied to individuals or to corporations in general, and may, 
 under such State laws, be legal and valid, which, nevertheless. 
 National banks may not make, and for which, if made, they may 
 be liable to penalties or forfeitures prescribed by the law of their 
 being. It may be that in reference to the conduct of merely pri- 
 vate or domestic affairs within the States, having no connection 
 with or relation to their functions or agents of the government. 
 Congress cannot authorize National banks to do what is forbidden 
 by State laws, nor relieve them from the forfeitures or penalties 
 prescribed by State laws for doing what is so forbidden. 
 
 But this concession would be far short of admitting that, within 
 the range of what the State laws do permit. Congress may not 
 restrict National banks as is seen fit, or may not impose such pen- 
 alties and forfeitures for a violation of those restrictions as Con- 
 gress thinks lawful. These latter propositions are unquestionable. 
 
 How, then, do the laws of the State of New York and the 
 National Banking Law bear upon the case under consideration ? 
 
 The 30th section of the National Banking Act of June 3d, 1 864 
 (13 U. S. Stat, at Large, 108), provides that " every association may 
 take, receive, reserve, and charge on any loan or discount made, 
 or upon any note, bill of exchange, or other evidence of debt, 
 interest at the rate allowed by the laws of the State or Territory 
 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 issue 
 organized under State laws, the rate so limited shall be allowed for 
 associations organized in any such State under this act. 
 
 And, when no rate is fixed by the laws of the State or Territory, 
 the bank may take, receive, reserve, or charge a rate not exceeding 
 seven per centum, and such interest may be taken in advance, 
 reckoning the days for which the note, bill, or other evidence of 
 debt has to run. 
 
252 UNITED STATES 
 
 lu re Wild. 
 
 And the knowingly taking, receiving, reserving, or charging a 
 rate of interest greater than aforesaid, shall be held and adjudged 
 a forfeiture of the entire interest which the note, bill, or other evi- 
 dence of debi; carries with it, or which has been agreed to be paid 
 thereon. 
 
 And, in case a greater rate of interest has been paid, the per- 
 son or persons paying the same, or their legal representatives, may 
 recover back, in any action of debt, twice the amoiint of the inter- 
 est thus paid, from the association taking or receiving the same : 
 Provided, that such action is commenced within two years from 
 the time the usurious transaction occurred." 
 
 The State of K'ew York has statutes which prohibit the taking, 
 receiving, or reserving of interest for the loan or forbearance of 
 money, etc.^ at a greater rate than seven per cent per annum, and 
 making any note, or bill, or other contract whereon or whereby 
 any greater rate is reserved void. 
 
 But the State has a further statute (Laws of 1850, chap. 172, p. 
 334) which enacts that no corporation shall interpose the defense 
 of usury in any action. 
 
 Such was the state of the law in New York when the National 
 Banking Act was passed. 
 
 The force and effect of this last-named statute has been declared 
 by the courts of the State of New York in numerous cases. 
 
 Those cases are collected, carried to what is deemed their legiti- 
 mate conclusion, by the Court of Appeals, and distinctly aflBrmed, 
 in Eosa v. Butterfield, 33 N. Y. 665. 
 
 The doctrine of that case is, that the dealings of a corporation, 
 as a borrower, and its contracts or obligations for loans, are unaf- 
 fected by any laws of the State of New York regulating interest ; 
 that, as to them, such laws theretofore existing are repealed ; that, 
 therefore, the rate of interest which corporations may agree to pay 
 is not fixed or limited, but they may agree to pay any rate 
 they see fit, and their contract will be valid ; and, also, that one 
 who becomes surety, guarantor, or indorser of such a contract is 
 legally bound to its performance — in short, that, as to contracts 
 made by corporations, whether foreign or domestic, whether made 
 in the State of New York or elsewhere, they stand, in the State 
 of New York, as if no usury law existed. See, also, Belmont Bank 
 v. Hoge, 35 N. Y. 65. 
 
 In respect to contracts made within the State of New York, or 
 
CIECUIT COUET, 1873. 253 
 
 In re Wild. 
 
 entered into under or with reference to the laws of the State, I 
 may accept the exposition thus given of the state of the law of 
 New York ; and it follows, that there is no law in New York fixing 
 the rate of interest which any one may take upon the loan of 
 money to a corporation, or, in other words, any rate of interest is 
 allowed to which the parties may agree. 
 
 As to dealing with corporations, National banks in the State of 
 New York are, therefore, within the case described in the National 
 Banking Law above cited, to wit, " when no rate is fixed by the laws 
 of the State or Territory, the bank may take, receive, reserve, or 
 charge a rate not exceeding seven per centum," etc. 
 
 This is a necessary and logical result. 
 
 If the rate were fixed by the laws of New York, then her usury 
 laws would apply. 
 
 If the limitations in her statutes relating to interest do not ap- 
 ply, theii no rate is fixed by her laws. 
 
 Hereupon the restriotion, contained in the section of the Na- 
 tional Banking Law, comes into effect without any interference or 
 conflict with State laws, that is to say, a National bank "may 
 take, receive, or charge a rate not exceeding seven per centum, and 
 such interest may be taken in advance," etc., " and the knowingly 
 taking, reserving, or charging a rate of interest greater than the 
 aforesaid, shall be held and adjudged 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 persons paying the same, 
 or their legal representatives, may recover back, in any action of 
 debt, twice the amount of the interest thus paid, from the associa- 
 tion taking or receiving the same ; provided that such action is 
 commenced within two years from the time the usurious transac- 
 tion occurred." 
 
 It is not necessary that I should express an opinion upon the 
 question whether this forfeiture and right to recover back can, in 
 any circumstances, be applicable to the case mentioned in the 
 previous clause of the section, to wit, where the National bank 
 reserves or receives a greater rate of interest than is allowed by the 
 laws of a State in which a rate is fixed and limited by the State 
 laws. It is sufficient for the purposes of the present case that it 
 does apply to a case in which no rate is fixed and limited. 
 
 By the laws of the State of New York, as expounded by her high- 
 
254 UNITED STATES 
 
 In re Wild. 
 
 est court no rate of interest upon loans to a corporation is fixed or 
 limited. 
 
 It follows, that the transaction in question was within. the pro- 
 hibition of the National Banking Law, and that the bank, eo 
 instanti, it made the loan upon the terms exacted, incurred the 
 forfeiture of the entire interest which the notes received, carried 
 with them, or which was agreed to b»paid thereon. 
 
 Discounting the notes did not render it less true, that the notes 
 themselves carried with them the principal loaned and the interest 
 agreed to be paid, which, with the bonds also given, necessarily- 
 included all the pecuniary benefit agreed to be paid as compensa- 
 tion for the loan, whatever form the transaction was made color- 
 ably to assume. 
 
 The bankrupt, as mere accommodation indorser or security, is, 
 upon familiar principles of equity, entitled to all the protection 
 which his principal (the Canal Company) would have if the notes 
 in question were sought to be enforced against it. 
 
 I do not say that he can recover back money paid by the Canal 
 Company, but he has a right to inquire whether, in view of the 
 forfeiture of the entire interest by the bank, there is any thing due 
 to the bank upon the notes which he indorsed, and thereby to 
 ascertain whether, and to what extent the two notes now in ques- 
 tion are without consideration. 
 
 It is claimed, by the assignee of the bankrupt, that treating the 
 entire interest as forfeited, the bank has already been paid the 
 whole of the principal of the loan. 
 
 I am not fully satisfied that a small sum, part of such principal, 
 is not still due. 
 
 Upon the proofs taken, the account would seem to stand thus: 
 
 Db. 
 
 Loan $150,000 00 
 
 Lees the interest or discount included in tlie notes 
 
 given therefor from time to time 27,117 26 
 
 1122,883 74 
 
 Ck. 
 
 Cash payment \>j Canal Company $88,750 00 
 
 Coupons paid Canal Company 58,476 67 
 
 Notepaid 13,798 90 
 
 Cash paid on giving the note for $73,903.51, which 
 according to the testimony made up the whole 
 
 amount, $76,533.19 2,629 68 
 
 Carried forward $163,655 35 $122,882 74 
 
CIRCUIT COUET, 1873. 255 
 
 In re Wild. 
 
 Brought forward $163,655 25 $122,883 74 
 
 Cash, paid on renewal of the note for $73,902.51, when 
 
 the $75,000 note, now in question, was given. . . 3,903 51 
 
 From which are to he deducted sundry charges to 
 which these payments appear to have been in part 
 applied, viz.: 
 
 Another note for $35,000, and interest $35,453 80 
 
 Another note for $12,500, and interest 
 
 Interest on these notes after maturity 
 
 Coupons paid by the bank for the company 
 Interest thereon 
 
 $166,557 76 
 
 13,726 40 
 
 678 00 
 
 8,068 12 
 
 113 35 
 
 47,038 57 
 
 
 119,519 19 
 
 Leaving a balance of principal due when the notes in question were 
 
 indorsed by the bankrupt $3,363 55 
 
 To this extent, of $3,363.55, without interest, it would seem the 
 claim of the receiver should be allowed, but the estate of the bank- 
 rupt is entitled to have the collateral security held by the receiver 
 of the bank, or the proceeds thereof, applied to this balance, in 
 exoneration of the estate of the bankrupt, on a sale of a portion of 
 which, by order of the District Court, it appears, by the order ap- 
 pealed from, $23,663.30 has been already realized. 
 
 I by no means make this statement of the account as a final and 
 conclusive statement. 
 
 The proofs on the part of the bank do not appear to have been 
 put in with a view to the statement of an account upon the princi- 
 ple affirmed in this opinion. 
 
 The value of the collateral security held by the receiver, or the 
 proceeds of that portion thereof which appears to have been depos- 
 ited in the Trust Company, under the order of the District Court 
 ($33,663.30), may be, and probably are, so clearly greater than any 
 balance which a more accurate statement of the account would 
 show to be due, upon the principles of this opinion, that any further 
 expense of taking proofs and stating the account would be improvi- 
 dent and wasteful. 
 
 But, if insisted upon, a reference may be had to state such 
 account. 
 
 The order appealed from must be modified to conform to the 
 foregoing opinion. 
 
 JEverett P- Wheeler and Francis 8. Silvester, for the assignee. 
 
 Francis N. Bangs, for the receiver. 
 
256 UNITED STATES 
 
 United States v. Taintor. 
 
 United States v. Taintoe. 
 
 (11 Blatchford, 374.) 
 
 Indictment for embezzling and misapplying funds of hank — M)idenee 6f — 
 
 Intent. *• 
 
 The cashier of a National bank was indicted under section 55 of the act of 
 1864 (13 Stat, at Large, 116), for embezzling, abstracting and willfully mis- 
 applying the moneys and funds of the bank " with intent to injure or defraud 
 the association." Held, that the intent to injure or defraud was conclusively 
 presumed upon proof of the act charged, and that therefore evidence was 
 not admissible to prove that the cashier used the funds with the knowl- 
 edge and consent of the president, and some of the directors of the bank, 
 and on account of and for the benefit of the bank.* 
 
 (Circuit Court, Second Circuit, Southern District of New York.) 
 
 INDICTMENT of Taintor, cashier of the Atlantic National 
 Bank, under section 55 of the act of 1864 (13 Stat, at Large, 
 116), for embezzling, abstracting and willfully misapplying the 
 moneys and funds of said bank "with intent to injure or defraud 
 the association. 
 
 On the trial the prosecution proved that the defendant took the 
 moneys and funds of the bank and used them in stock specula- 
 tions carried on in his own name by depositing the same with a 
 stock broker as " margins" for stocks bought on his account. 
 
 * See lAaUer of Van dampen, ante, p. 185 ; State v. Tuller, post ; Commonwealth 
 V. Tenney, post; Commonwealth v. Barrju post, a,nd oases cited.. The Revised 
 Statutes provide as follows: " Sec. 5309. Every president, director, cash- 
 ier, teller, clerk, or agent of any asaooiation, who embezzles, abstracts, or will- 
 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 association; or who, without such authority. Issues or puts 
 forth any certificate of deposit, draws any order or bill of exchange, makes 
 any acceptance, assigns any note, boud, draft, bill of exchange, mortgages, 
 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 defraud 
 the association or any other company, body politic or corporate, or any indi- 
 vidual person, or to deceive any officer of the association, or any agent ap- 
 pointed to examine the affairs of any such association, and every person who 
 with like intent aids or abets any ofBcer, clerk, or agent in any violation of this 
 section, shall be deemed guilty of a misdemeanor, and shall be imprisoned not 
 less than five years nor more thau ten." 
 
CIRCUIT COURT, 1873. 257 
 
 United States v. Taintor. 
 
 For the purpose of disproving the allegation that the acts were 
 done with intent to injure or defraud the association, evidence was 
 offered on behalf of the defendant to prove that the moneys and 
 funds were so used with the knowledge and approbation of the 
 president and some of the directors of the bank, and that all the 
 said transactions were intended for the account and benefit of the 
 bank, and were believed by the defendant to be sanctioned by the 
 president and some of the directors, although there was no formal 
 resolution of the board of directors authorizing or approving them. 
 
 This evidence was excluded and the defendant was committed. 
 
 A motion for a new trial was now made, and was heard by 
 WooDEUFF, Blatchfokd and Benedict, JJ. 
 
 George Bliss, district attorney, for the United States. 
 
 A. Oahey Hall and James 0. Carter, for defendant. 
 
 Benedict, J. The ruling called in question upon this motion 
 involved two propositions, namely, that the guilty intent charged 
 in the indictment was shown by the proof of the acts done by the 
 defendant; and, further, that the facts offered to be proved by the 
 defendant would not, in law, avail to negotiate that intent. It 
 has hardly been doubted upon this motion, that the first of the 
 proposition is correct. The correctness of the second is strenuously 
 denied, and is now to be determined. 
 
 It is a general rule of law, that a man must be held to intend 
 the necessary consequences of his acts. This rule is applicable as 
 well to cases of crime as in civil causes, for, whatever proves 
 intent anywhere proves it everywhere. It has often been so 
 applied. Furthermore, in certain cases, and these criminal, the 
 proof of guilty intent afforded by evidence of acts knowingly done 
 has been held to be conclusive, and not overthrown by proof of any 
 other facts; and this class of cases has not been limited to acts 
 mala in se, nor to crimes at common law. On this argument it 
 was conceded that, by virtue of the rule in question, the guilty 
 intent is conclusively shown by proof of the act done, where the 
 nature of the act is such that a guilty intent is so clearly mani- 
 fested thereby as to admit of no question. It appears to us that 
 the rule, even thus limited, covers the present case and justifies the 
 decision made at the trial. For, the act done by the defendant 
 was clearly unlawful, and he is precluded from denying knowledge 
 33 
 
258 UNITED STATES 
 
 United States v. Taintor. 
 
 that it was so. He was an oflBcer of an association created under 
 a statute which does not permit any person to make such a use of 
 the funds of the association as were here made. Furthermore, 
 the act of the defendant rendered the association liable to a for- 
 feiture of its charter. Still further, it cast upon the bank a risk 
 which attached at the instant of the doing of the act, and this a 
 risk notoriously great, extraordinary.in character, and outside of 
 the bounds of proper commercial use. It placed the capital of the 
 bank beyond the control of the officers of the association, and it 
 was an unlawful dealing with the money of a corporation belong- 
 ing to a class of institutions whose welfare is intimately connected 
 with the public welfare, which are liable to be depositaries of the 
 public moneys, and which cannot justly be considered to be merely 
 private pecuniary trusts. The act of the defendant, therefore, nec- 
 essarily involved injury, not only to the association, but also in a 
 proper sense, to the public. An act having such characteristics, 
 and involving such consequences when knowingly done, discloses 
 moral turpitude, and cannot be innocent. It may, therefore^ well 
 be held, that proof of such an act proves conclusively an intent to 
 injure, because, when knowingly done, it affords no opportunity 
 for justification or legal excuse, and manifests so clearly a general 
 guilty intent as to make it of no consequence what other particular 
 intent co-existed therewith, and to preclude inquiry as to such 
 other intent, or into the motives which impelled to its commission. 
 A generous motive is not inconsistent with a guilty intent, and 
 proof of the one does not disprove the other. Our opinion, there- 
 fore, is, that the circumstances offered to be proved by the defend- 
 ant would not tend to disprove the guilty intent charged in the 
 indictment. 
 
 But it is contended that the phraseology of the statute under 
 which the indictment is framed, requires proof of something more 
 than the general guilty intent necessarily involved in such a misap- 
 plication of the funds of a National bank, inasmuch as it couples 
 with the words " embezzle, abstract, and willfully misapply," the 
 words "with intent to injure or defraud the association," and thus 
 requires the presence of a corrupt motive, a design to cheat the 
 association out of money, in order to constitute the offense. It is 
 unnecessary to determine whether the latter words, as here used, 
 are intended to be taken in connection with the words " embezzle, 
 abstract, or willfully misapply," because this has been assumed by 
 
CIECUIT COURT, 1873. 259 
 
 TJuited States v. Taiutor. 
 
 the prosecution, and the indictment in each count charges an 
 intent to injure and defraud the association. The question pre- 
 sented, therefore, is as to the effect produced upon the words, 
 "embezzle, abstract, or willfully misapply," by the addition of the 
 words "with the intent to injure or defraud the association." 
 
 In considering this phraseology, it will be noticed that, while 
 the word "embezzle," and perhaps, also, the word "abstract," 
 refers to acts done for the benefit of the actor as against the bank, 
 the word " misapply " covers acts having no relation to the pecuni- 
 ary profit or advantage of the doer thereof. A design to make 
 criminal acts done without reference to personal advantage is thus 
 clearly disclosed, and it appears that the intention of the statute 
 was to cover cases of unlawful dealings with the funds of the bank 
 by its oflftcers, although without a corrupt motive. This intention, 
 manifested by the insertion of an emphatic and significant term 
 in the commencement of the section, it cannot be supposed was 
 intended to be defeated by the subsequent use of the words " with 
 intent to injure or defraud." Nor can such effect be given these 
 words without treating the word " injure " as synonymous with 
 " defraud," and as referring to a misapplication for the benefit of. 
 the doer. But, if the signification of the word " defraud " be lim- 
 ited to a malicious dealing with property for the personal advant- 
 age of the doer — and it is always to be so limited — the word 
 "injure "is not of such limited application, and was doubtless 
 inserted to cover cases of misapplication causing injury to the asso- 
 ciation without benefit to the offender. The guilty intent required 
 by the statute would, therefore, still exist, although it be shown 
 that no personal pecuniary benefit was anticipated by the defend- 
 ant, and the requirement of the statute is fulfilled by proof of 
 general guilty intent involved in the act knowingly committed. 
 
 The phrase "intent to injure or defraud" is the same one used 
 in indictments for forgery. There it refers to a general guilty 
 intent, and such indictments are held conclusively proved when the 
 act is proved to have been knowingly committed. The phrase 
 should be considered to have the same meaning in the statute, and 
 to be proved in the same way. Nor does this construction render 
 the words nugatory. On the contary, they are given precisely the 
 same effect which they are held to have in indictments where their 
 presence has been considered to be necessary. A similar effect has 
 been given to this same phrase in other statutes. Thus Lord Oh. 
 
260 UNITED STATES 
 
 Chemical National Bank v. Bailey. 
 
 J. TiKDAL has observed, that, " where a statute directs that, to 
 complete an offense, it must have been done with intent to injure 
 or defraud any person, there is no occasion that any malice or ill- 
 will should subsist against the person whose property is so de- 
 stroyed. It is a malicious act in contemplation of law, when a 
 man willfully does that which is illegal, and which, in its necessary 
 consequences, must injure his neighbor." 5 C. & P. 266, note ; 
 Euss. on Crimes, 575 ; Com. v. SnelUng, 15 Pick. 340. It is, 
 indeed, true, that this construction of the statute under considera- 
 tion imputes to the legislature the policy of making some acts 
 criminal which may not have been before classed as crimes ; and if, 
 as it seems to be here suggested, the moral sense of the business 
 community has become so blunted that such acts as this defendant 
 is conceded to have committed have come to be considered " inno- 
 cent or even praiseworthy," the urgent need of the adoption of 
 such a policy affords good ground for supposing that its adoption 
 was intended by the statute. 
 
 Our opinion, therefore, is, that no error was committed in reject- 
 ing the evidence offered by the defense upon the trial of this cause ; 
 and the motion for a new trial must, accordingly, be denied. 
 
 Chemical National Bank v. Bailet. 
 
 (12 Blatchford, 480.) 
 Interest on claims against insolvent banks — Demand not neeessary iy a depositor . 
 
 Where a National bank is declared in default by the Comptroller of the Cur- 
 rency, and a receiver is appointed, and a sufficient fund is realized from its 
 assets to pay all claims against it and leave a surplus, the Comptroller 
 should allow interest on the claims, during the period of administration, 
 before appropriating the surplus to the stockholders of the bank. 
 
 An action of assumpsit to recover such interest will not lie against the Comp- 
 troller of the Currency or the receiver of the bank, but will lie against the 
 bank. 
 
 Where a bank has, by reason of its own default, been placed in the hands of a 
 receiver, a demand of payment by a depositor is no longer a necessary con- 
 dition precedent to a right of action for the deposit ; and the deposit bears 
 interest from the time of such default. * 
 
 (Circuit Court, Second Circuit, Southern District of New York.) 
 
 * See National Bank of the Commonwealth v. Mechanics' National Bank, 
 ante, p. 133. 
 
OIECUIT COUET, 1875. 261 
 
 Ctemical National Bank y. Bailey. 
 
 WALLACE, J. It is stated by counsel that these actions are 
 brought to determine whether, when the Comptroller of the 
 Currency has declared a National bank in default, and appointed a 
 receiver under the provisions of the act under which such banks 
 are organized, and a sufiBcient fund is realized from the assets to 
 pay all claims against the bank and leave a surplus, the Comp- 
 troller should, or should not, allow interest on the claims during 
 the period of administration, before appropriating the surplus to 
 the stockholders of the bank. It is to be assumed from this state- 
 ment that the claims in question were due and payable when the 
 Comptroller took control of the affairs of the bank. If they were 
 not, of course no interest should be allowed upon them, except 
 from such time as they may have become due, unless thev were for 
 demands conditioned for the payment of interest. 
 
 The equity of the creditors to receive interest on their claims 
 for the time during which they have been precluded from receiving 
 their principal, is obvious. On general principles, and by adjudi- 
 cations in point, their right is clear. Interest is allowed not only 
 on strict legal grounds, where there is a contract for the payment 
 of interest, or by way of damages, where there is a wrongful deten- 
 tion of debt, but upon considerations of equity and natural justice 
 which always arise where a party is entitled to a payment of money 
 and cannot obtain it, except by resort to a fund, created by opera- 
 tion of law, the distribution of which is attended with delay. It 
 is upon this ground that when, by statute, preference is given to 
 one class of creditors over another in the distribution of an estate, 
 the preference includes interest on the preferred class of claims. 
 In re Shultz, 11 Serg. & Eawle, 182. 
 
 There is nothing in the provisions of the act under which this 
 fund is to be distributed in conflict with this general rule. While 
 the Comptroller is not directed by express terms to allow interest 
 to creditors, the act contains no language which in terms or by 
 implication prohibits him from doing so. The 50th section of the 
 act of June 3d, 1864 (13 U. S. Stat, at Large, 115), authorizes 
 him, on becoming satisfied that an association has made default in 
 the payment of any of its circulating notes, to appoint a receiver 
 of its affairs and place him in possession of its assets. The receiver 
 is required to pay over all moneys realized from the assets to the 
 Treasurer of the United States, subject to the order of the Comp- 
 troller, and it is the duty of the Comptroller, from time to time. 
 
262 UNITED STATES 
 
 Chemical National Bank v. Bailey. 
 
 to make ratable dividends from such moneys upon " all such claims 
 as may have been proved to his satisfaction, or adjudicated in a 
 court of competent jurisdiction," and to distribute the remaining 
 proceeds among the stockholders. His position in reference to the 
 distribution of the fund confided to him is analogous to that of an 
 assignee of an insolvent estate, or an administrator of the estate 
 of a deceased person. When an insolvent law provides that, after 
 the payment of all debts proved, the assignee shall pay any sur- 
 plus to the debtor or his legal representatives, the creditors are 
 entitled to interest on their debts during the period of administra- 
 tion, and without regard to the fact whether the debts are those 
 upon contract conditioned for the payment of interest or not. 
 Brown v. Lamb, 6 Mete. 203 ; Atlas Bank v. Nahant Banh, 3 
 id. 581. Claims proved to his satisfaction are to be paid by the 
 Comptroller, as debts proved against an insolvent are to be paid by 
 his assignee ; and in the one case, as in the other, the interest is 
 an incident of the debt or claim, and to be paid before distribution 
 of the surplus. 
 
 Thus far the general question of liability for interest has been 
 considered. It remains to consider other questions pi-esented by 
 the record, which are necessary to the proper determination of 
 these actions in the form in which they have been brought. In 
 each action the complaint counts in assumpsit, and a general de- 
 murrer has been interposed, alleging that the complainant does not 
 state sufficient facts to constitute a cause of action. The practice 
 of the courts of this State now prevails in actions at law in this 
 court, and by that practice judgment may be rendered for or 
 against one or more of several defendants. 
 
 It is clear that this action cannot be maintained- against the 
 receiver or the Comptroller. The receiver has no control over the 
 assets, except to pay their proceeds to the Treasurer of the United 
 States, and would, therefore, not be liable to the plaintiff in any 
 form of action. If an action could be maintained against the 
 Comptroller, it would be one to enforce a proper distribution of 
 the fund, and for this purpose the action of assumpsit is not an 
 appropriate remedy. As against these defendants, therefore, no 
 cause of action is alleged in the complaint, and as to them the 
 demurrer is well taken, and judgment must be ordered in their 
 favor. 
 
 As against the defendant, the National Bank of the Common- 
 
CIRCUIT COURT, 18'?5. 263 
 
 Chemical National Bank v. Bailey. 
 
 wealth, the demurrer nxust be overruled. The corporation con- 
 tinues to exist for the purpose of being sued, notwithstanding the 
 Comptroller has intervened pursuant to the provisions of the act 
 under which it was organized; and demands against it can be 
 prosecuted to adjudication in any court of competent Jurisdiction. 
 Bank of Bethel v. Pahquioque Banh, 14 Wall. 313.* In such an 
 action interest is recoverable upon all demands originated in con- 
 tracts conditioned for the payment of interest, and on all demands 
 for money due and unpaid, by way of damages for the non-payment 
 after such demands became due. It is urged, that interest is not 
 recoverable upon debts against the bank, because it has been pre- 
 vented by law and by superior authority from paying the principal. 
 It is a snflBcient answer to this argument to say, that this proposi- 
 tion is not applicable, because the bank, by its own default, sub- 
 jected itself to the proceedings of the Comptroller, and it does not 
 lie with the bank to assert any exemption from liability by reason 
 of its own acts or defaults. 
 
 In one of these cases, a portion of the plaintiff's demand is for a bal- 
 ance due upon deposits made in the ordinary way with the bank, 
 and it does not appear that any demand was made for the amount 
 until a long time after the receiver had taken possession. Ordi- 
 narily, an action cannot be maintained by a depositor, against a 
 bank, until a formal demand has been made ; and of course, no 
 interest can be recovered except that arising after the demand. 
 The bringing of an action does not amount to a demand, in such 
 cases. Payne v. Gardner, 39 N. Y. 146. But, if the bank, by 
 words or contract, denies the depositor's right to his balance, it be- 
 comes presently liable to an action, without formal demand, and 
 interest would be recoverable, as damages. All the facts are set 
 forth in the complaint, which justified and led to the action of the 
 Comptroller. The bank, by its default, initiated proceedings which 
 resulted in a transfer of the moneys of its depositors to a receiver, 
 and thus put it out of its own power to pay its depositors, when 
 called upon to do so. A demand, under such circumstances, would 
 have been an idle ceremony. The bank cannot be permitted to 
 say that the depositor should have made a demand, when, if made, 
 it would have been nugatory and useless. It has been held, that, 
 in cases of insolvency, where a debt is payable on demand, and no 
 special demand is shown, interest is to be computed from the first 
 
 ArtU, p. TI. 
 
264 UNITED STATES 
 
 Kansas Valley National Bank v. Eowell. 
 
 publication of the proceedings in insolTency. Brown v. Lamb, 6 
 Mete. 203. Reason and analogy favor the application of the rule to 
 the present case. 
 
 Judgment is accordingly ordered for the plaintiff in each action, 
 as against the bank. 
 
 E. Piatt Johnson and Richard M. Henry, for plaintiff. 
 Edward H. Smith (assistant district attorney), for defendants. 
 
 Kansas Valley Natio^stal Bakk v. Eowell. 
 
 • (3 Dillon, 371.) 
 
 Power of National banks to take mortgages on real estate. 
 
 A National bank may take a mortgage on real estate to secure a debt previ- 
 ously contracted, but not to secure either a contemporaneous loan or future 
 advances.* 
 
 (Circuit Court, Eighth Circuit.) 
 
 BILL in equity for the reformation of a mortgage executed by 
 one Schuyler, a bankrupt, to the complainant, a National 
 bank, to secure the payment of the sum of $3,000 then owing from 
 said Schuyler to the complainant, and also to secure any moneys 
 advanced to said Schuyler by said complainant within one year 
 from the date of the mortgage. The ground for reformation was, 
 that the mortgage was so drawn as not to cover the property 
 intended. 
 
 The 8th section of the National Banking or Currency Act, of 
 June 3d, 1864, in enumerating the powers of associations formed 
 thereunder, provides that they " may make contracts * * * as 
 fully as natural persons," * * * and " exercise under this act 
 all such incidental power as shall be necessary to carry on the busi- 
 ness of banking by discounting and negotiating promissory notes, 
 
 * See National Bank v. Mears, post ; also the following cases hereinafter re- 
 ported ; Matthews V. Skirmer, 62 Mo. 329; OrnnY. Merchcmta' National Bank, 
 16 Kans. SH; Spafford v. First National Bank, ST Iowa, 181; First National 
 Bank v. Haire, 36 Iowa, 443; Fowler y. Scully, 72 Penn. St. 456: Woods v. Peo- 
 ple's National Bank, 83 Penu. St. 57.— Repokteb . 
 
CIKOUIT COUET, 1873. 265 
 
 Kansas Valley National Bank v. Rowell. 
 
 drafts, bills of exchange, and other evidences of debt ; by receiTing 
 deposits ; by buying and selling exchange, coin, and bullion ; by 
 loaning naoney on personal security ; by obtaining, issuing, and 
 circulating notes according to the provisions of this act ; and its 
 board of directors shall also have power to define and regulate, by 
 by-laws, not inconsistent with the provisions of this act, the man- 
 ner in which its general business shall be conducted, and all the 
 privileges granted by this act to associations organized under it 
 shall be exercised and enjoyed," etc. 
 
 The 28th section enacts " that it shall be lawful for any such 
 association to purchase, hold, and convey real estate as follows: 
 First. Such as shall be necessary for its immediate accommodation 
 in the transaction of its business. Second. Such as shall be mort- 
 gaged to it in good faith by way of security for debts previously 
 contracted. Third. Such as shall be conveyed to it in satisfaction 
 of debts previously contracted in the course of its dealings. 
 Fourth. Such as it shall purchase at sales under judgments, 
 decrees, or mortgages, held by such association, or shall purchase 
 to seciire debts due to the said association. 
 
 " Such association shall not purchase or hold real estate in any 
 other case, or for any other purpose, than as specified in this sec- 
 tion. 
 
 " Nor shall it hold the possession of any real estate under mort- 
 gage, or hold the title and possession of any real estate purchased 
 to secure any debts due it for a longer period than five years." 
 
 The cause came before the court on a general demurrer to the 
 bill for want of equity. 
 
 C. G. Clemens, for plaintiff. 
 
 John K. Cruvens, for assignee. 
 
 Dillon, Circuit Judge. The mortgage, of which a foreclosure is 
 sought, was made by the bankrupt for the double purpose of 
 securing a debt to the plaintiff previously contracted, and to secure 
 further advances, which are alleged to have been subsequently 
 made. The mortgage is upon real estate. 
 
 The bill alleges a mistake in the description of the property, and 
 asks that this mistake be corrected and the mortgage foreclosed. 
 
 The assignee files a general demurrer, and insists that under the 
 National Banking Act of June 3d, 1864 (§§ 8 and 28), the plaintiil, 
 34 
 
266 UNITED STATES 
 
 Kansas Valley National Bank v. Eowell. 
 
 as a corporation organized under that enactment, has no right to 
 take, hold, or foreclose a mortgage upon real estate, except as a 
 security for a debt contracted before the taking of such mortgage ; 
 that the mortgage here in question was made upon but one con- 
 sideration, part of which, to wit, that part which related to future 
 advances, is illegal, and being so, the mortgage is wholly Toid. 
 
 Upon the averments of the bill it is my opinion that the mort- 
 gage was made for the two purposes above mentioned, namely, to 
 secure a precedent debt to the bank, and also to secure future ad- 
 vances to be made by the bank. 
 
 I am also of the opinion (under §§ 8 and 38 of the National 
 Banking Act), that a mortgage upon real estate is clearly author- 
 ized as " a security for debts previously contracted," and as clearly 
 unauthorized when made as a security for money to be thereafter 
 advanced by the bank, on the strength of such security. 
 
 The mortgage in question rests upon a valid consideration, and 
 is authorized by the law, so far as it secures a debt previously due 
 to the bank, by the mortgagor, and it is invalid so far as it under- 
 took to secure a debt then or thereafter to be created. 
 
 The line which separates that which is good from that which is 
 bad, is plain ; and I am of opinion that the defendant's counsel 
 are mistaken in supposing this to -be a case in which the consider- 
 ation is indivisible and the whole mortgage void. 
 
 The two parts of the security are easily separable, and the result 
 is that the good stands, and the bad must fall. 
 
 It follows that the court may correct the mistaken description 
 in the mortgage in suit and enforce the same, so far, and so far 
 only, as it was given to secure a debt to the bank previously con- 
 tracted. 
 
 The demurrer being general, it is overruled. 
 
 Delahat, J., concurs. 
 
 Judgment accordingly 
 
CIRCUIT COURT, 1873. 267 
 
 First National Bank of Omaha v. County of Douglas. 
 
 FissT National Bake of Omaha t. OouiiTTT of Douglas. 
 
 (3 Dillon, 398.) 
 
 National hanks may sue in the Federal courts — Tax on capital — When a 
 court of equity mil restrain. 
 
 National banks may, by reason of their character as such, sue in the Federal 
 courts. 
 
 Where there is no means of recovering back from the State taxes illegally 
 assessed and paid into the treasury, a court of equity will enjoin their col- 
 lection ; and when both State and county taxes are included in one warrant 
 and are for a common reason illegal, the court will at the same time deter- 
 mine the validity of both the State and the county taxes. 
 
 State authorities will be enjoined from collecting a tax on the capital stock of 
 a National bank, invested in United States securities. 
 
 (Circuit Court, Eighth Circuit.) 
 
 BILL for an injianction to restrain the collection of State and 
 county taxes leyied on the capital stock of the plaintiff. 
 
 J. M. Woolworth, for plaintiff. 
 
 /. 0. Cowin, for defendant. 
 
 MiLLEE, Circuit Judge, held: 
 
 1. National banks may, by reason of their character as such, 
 sue in the Federal courts. 
 
 2. A part of the taxes sought to be restrained being for the State 
 of Nebraska, and the county treasurer being by the revenue law of 
 the State required to pay the same into the treasury when they are 
 collected, and no provision being made by law for an execution or 
 other proceedings against the State for the recovery of them back 
 if illegally exacted, the plaintiff has no adeqixate remedy at law, 
 and equity will intervene by injunction to restrain the collection of 
 such illegal taxes. 
 
 3. When a county treasurer holds one warrant in which he is 
 commanded to enforce payment of both State and county taxes, 
 which for a common reason are illegal, equity, having jurisdiction 
 to restrain the treasurer from enforcing the payment of the State 
 
268 tJNITBD STATES 
 
 First National Bank v. Douglas County. 
 
 taxes, may proceed to the determination of the validity of the 
 county taxes as well and restrain them also. 
 
 4. The First National Bank of Omaha filed its bill against the 
 county of Douglas and its treasurer, to have it declared that the 
 taxes of 1870 and 1871, levied by the State of Nebraska and the 
 county of Douglas upon the capital stock of the bank, were illegal, 
 and to restrain that officer "from making distress upon the prop- 
 erty of the plaintiff, as he threatened to do, and from all other 
 proceedings to enforce the payment " of the taxes. On motion for 
 an injunction the defendant objected to the jurisdiction of the 
 court as a Federal court, and also as a court of equity. Held, that 
 there was jurisdiction to entertain the bill and allow an injunc- 
 tion. 
 
 Injunction allowed. 
 
 First National Bank v. Douglas County. 
 
 (3 Dillon, 330.) 
 
 Taxation of National hank shares — Distraint of hanh property to enforce pay- 
 ment of tax. 
 
 A State statute provided tliat " the stockholders of every National bank 
 located in this State, or of any bank incorporated under the laws of the 
 State, shall be assessed and taxed on the value of their shares of stock 
 therein, subject to the restriction that taxation of such shares shall not be 
 at a greater rate than is assessed upon any other moneyed capital in the 
 hands of individual citizens of this State in the county or precinct ■where 
 such bank is located. The taxes against such shares shall be levied against 
 the holder of the same, and shall be paid by the bank. " Seld, that a tax 
 so imposed on the shares of a National bank was valid, and that payment 
 thereof could be enforced by distraint of the property of the bank. 
 
 (Circuit Court, Eighth Circuit.) 
 
 B 
 
 ILL in equity to restrain the collection of a tax. The opinion 
 states the case. 
 
 J. M. Woolworth, for plaintiff. 
 
 J. G. Cowan and /. M. Thurston, for defendant. 
 
 Dillon, Circuit Judge. This is a bill by the First National 
 Bank of Omaha, to restrain the collection of a tax assessed and 
 levied under the revenue laws of the State, for the year 1873, upon 
 the shares of the shareholders in the bank, and which tax, it is 
 
CIRCUIT COURT, 1874. 
 
 First National Bank v. Douglas County. 
 
 alleged, the collector is about to collect by entering the banking- 
 house of the plaintiff and seizing its property. 
 
 The bill avers that the capital of the plaintiff is $300,000, and 
 that this amount is wholly invested in bonds issued by the United 
 States; the stock is divided into shares of 1100 each, and is valued 
 for taxation at that sum. The object of this bill is to have the 
 whole tax declared void, and to restrain its collection. 
 
 The principal ground for the relief asked is, that the act of the 
 Legislature of the State, passed February 37th, 1873, which pro- 
 vides for the taxation of shares in Ifational banks, is void, for non- 
 compliance with the conditions upon which, under the acts of Con- 
 gress, such taxation by the State, or under its authority, is permissible. 
 
 The third section of this act is in these words: " The stock- 
 holders of every National bank located in this State, or of any 
 bank incorporated under the laws of the State, shall be assessed 
 and taxed on the value of their shares of stock therein in the 
 precinct where such bank is located, whether the stockholders 
 reside in such place or not. Such shares shall be listed and assessed 
 with regard to the ownership thereof, subject, however, to the 
 restriction that taxation of such shares shall not be at a greater 
 rate than is assessed upon any other moneyed capital in the hands 
 of individual citizens of this State, in the county or precinct where 
 such bank is located. The shares of capital stock of liTational 
 banks not located in this State, held in this State, shall not be 
 required to be listed under the provisions of this act. Bach 
 National bank shall furnish to the assessor a full and correct list 
 of the names and residences of its stockholders, and the number of 
 shares held by each, and the assessor shall report the same to the 
 county clerk in his assessment return. The taxes against such 
 shares shall be levied against the holder of the same, in the list of 
 personal property, and shall be paid by the bank. 
 
 The revenue law of the State further provides that the value of 
 stock incorporations shall be taxed, and that "in assessing the 
 value of such stock, the actual value, in cash, of all the property 
 that is represented, shall be considered, and no deduction shall be 
 made in such valuation by reason of debts owing by said corpora- 
 tion, unless, as in other cases, such deductions be made from the 
 item of money and credits listed by such corporation." 
 
 The plaintiff contends that the act of February 37th, 1873, is 
 void, and no tax can be lawfully levied thereunder, because : 
 
 1. The act does not provide that the tax imposed on the shares 
 
270 UNITED STATES 
 
 First National Bank v. Douglas County. 
 
 shall not exceed the rate imposed upon the shares of banks organ- 
 ized under the authority of the State. 
 
 2. The act in effect provides for the taxation of the capital of the 
 National bank, and not of the shares in the hands of the stock- 
 holders thereof, forasmuch as thereunder the valuation of the 
 entire property of the bank is to be first ascertained, and the bank 
 itself to pay the taxes — the name of* the stockholder being used 
 merely to give to the proceedings the color of a tax upon the share- 
 holder's interest. 
 
 The act of Congress, in express terms, allows the States to impose 
 taxes upon the shares of National banks, and the only substantial 
 limitation upon the power of the States is that they shall not sub- 
 ject these shares to taxation to an amount greater than they assess 
 upon their own banks, or upon moneyed capital in the hands of 
 their own citizens. 
 
 The first objection above stated to the State enactment is not 
 well taken. The act provides in terms that the stockholders in all 
 banks. State and National, shall be assessed and taxed on the value 
 of their shares therein. This is equivalent to a provision that 
 there shall be no discrimination in favor of the State banks, and 
 against the National banks, and it is not necessary that there should 
 be added a clause that the tax imposed on the shares in National 
 banks shall not exceed that imposed on shares in State banks. 
 
 It is next urged as an objection to the State legislation above 
 mentioned, that it in effect provides for a tax upon the capital 
 instead of the shares of the banks, and that the capital of the plain- 
 tiff is invested in United States securities, which are exempt from 
 taxation, the taxation under the law of the State is illegal. By 
 recurring to the act of the State, it will be seen that it does not 
 undertake to tax capital, but only shares, and that this mode is 
 prescribed for shares in both classes of banks. It is settled by the 
 decisions of the Supreme Court of the United States that, as re- 
 spects the power to tax, there is a distinction between capital and 
 shares ; and that the shares may be taxed although the entire 
 capital of the bank is invested in United States bonds, and that in 
 the valuation of such shares for taxation, such valuation is not 
 illegal because the assessing officers have not deducted the value 
 conferred upon the shares by the non-taxable United States securi- 
 ties owned by the bank. Van Allen v. Assessors, 3 Wall. 573 ; Peo- 
 ple ex rel. Duer v. Tax Commissioners, 6 Am. Law Keg. 467 ; Lion- 
 lerger v. Rotise, 9 Wall. 470. 
 
CIECUIT COUET, 1877. 271 
 
 Bowden v. Santos. 
 
 The above cases are decisive against the objection we are now 
 considering to the act of the State. It does not attempt to dis- 
 criminate against the National banks, but provides one and the 
 same mode for ascertaining the value of shares in the stock of all 
 corporations, and more than this the legislation of Congress does 
 not require. Lionlerger v. Rouse, supra. 
 
 The bill does not state that the valuation of the shares in the 
 plaintifE's bank is in excess of their actual value, nor that the valu- 
 ation of the shares in the State Bank of Nebraska is less than their 
 real value, and states no fact showing that the taxation, which the 
 plaintiff seeks to avoid, is in fact excessive or disproportionate. It 
 is, therefore, destitute of any substantial equity. 
 
 It is alleged on information and belief that the capital of the 
 banking partnership of Caldwell, Hamilton & Co. has not been 
 assessed for taxation, but it is not stated that this has been inten- 
 tionally done, nor does the bill negative that this may have been 
 an accidental omission, and hence makes no case entitling the 
 plaintiff to relief against the payment of taxes in question. 
 
 It is, however, insisted that the bank cannot be made liable in 
 respect of the taxes on the shares, and that the collector ought to be 
 restrained from making distress of the property of the bank. But 
 the act of the State in terms provides that the taxes on the shares 
 "shall be paid by the bank," and it is competent to make such a 
 provision. National Banh v. Commonwealth, 9 "Wall. 354 ; Lion- 
 lerger Y. Bouse, supra. Undoubtedly the bank could be made lia- 
 ble to pay such taxes by suit, and no reason is seen why the collec- 
 tion may not be enforced by distraint in the same manner as other 
 taxes are collected. Tie demurrer to the bill is sustained and the 
 bill dismissed. 
 
 Decree accordingly. 
 
 Bowden v. Santos. 
 
 a Hughes, 158.) 
 
 Transfer of stock to escape liaMUty to creditors. 
 
 Shareholders in a National bank, knowing it to be insolvent, transferred their 
 shares for the purpose of escaping liability to creditors. Held, that as to 
 such creditors the transfer was void.* 
 
 (Circuit Court, Fourth Circuit, Eastern District of Virginia.) 
 
 *See Magruder v. Colston (44 Md. 349), post. 
 
272 UNITED STATES 
 
 Bowden v. Santos. 
 
 BILLS in chancery filed by Bowden, receiver of the First National 
 Bank of Norfolk, fo enforce the personal liability of defend- 
 ants as owners of shares of stock in said bank, 
 
 L. L. Lewis, for plaintiff. 
 
 Baker S Walke and W. H. 0. Mli^, for defendant. 
 
 HxTGHEa, J. The bill in this case is filed to set aside certain 
 transfers of the shares of the capital stock of the First National Bank 
 of Norfolk (of which the plaintiff is receiyer), made by the defend- 
 ant Santos, to the defendants Lamb and Williams, a few days 
 before the suspension of the bank, in May, 1874. It also prays 
 that Santos may be decreed to pay to the plaintiff the par value of 
 the shares thus transferred. 
 
 As to the facts, the bank suspended on the 36th day of May, 1874, 
 and is utterly insolvent. The defendants Santos and Lamb, at the 
 time of its suspension, were directors, and for a long time prior 
 thereto had been oflScers of the bank. The defendant Lamb was 
 president up to a short time before its suspension. For some time 
 before that event the bank had been in a critical condition, and it 
 had been evident to the officers that its "suspension was a mere 
 question of time." The defendant Santos, aware of the condition 
 of the bank (it was the subject of frequent discussion by the 
 directors), and anxious to relieve himself of liability as the holder 
 of the stock in question, transferred in due form, on the books of 
 the bank, to Lamb, nineteen of his shares on the 16th May, and 
 his remaining twenty shares to Williams, on the 21st day of May, 
 1874. 
 
 At the time of these transfers both Lamb and Williams were 
 insolvent, and have ever since been unable to respond to the 
 demands of the creditors on account of these shares. At the time 
 of the transfers there was already standing in the name of Lamb on 
 the books of the bank over 200 shares of its capital stock. The 
 receiver has been unable to make any thing out of either Lamb or 
 Williams, on account of their liabilities to the bank. 
 
 On the other hand, Santos, at the time of the transfers, was, 
 and is, a man of high standing and credit in business circles, and 
 of large means. In his answer it is averred by Santos that the 
 transfer of the shares was a iona fide transaction, and for valuable 
 
OIEOUIT COURT, 1877. 273 
 
 Bowden v. Santos. 
 
 consideration; but the allegation in the bill that Williams was 
 insolvent, and unable to respond to the demands of the creditors 
 on account of these shares, is not denied. It is abundantly estab- 
 lished by the evidence in the case that the transfers were made to 
 exonerate the defendant Santos from his liability as stockholder. 
 
 In his answer, Santos declares that he was never the purchaser 
 or owner of the nineteen shares transferred to Lamb, and yet the 
 testimony shows that he executed his note (which he has since been 
 requested to pay) for these shares, and that they stood in his name 
 on the books of the bank for a considerable number of months 
 before he transferred them to Lamb. 
 
 The defense set up that these shares were formerly bought in by 
 Lamb for account of the bank, and that it was agreed between 
 them that if Lamb, acting for the bank, would buy the shares for 
 the bank, he might place them in Santos' name, provided he would 
 indemnify him, i. e., take a transfer of the shares when it should 
 be desired by Santos, is invalid. Under the provisions of the 
 National Currency Act (Eev. Stats., § 5301), a National bank is 
 prohibited from purchasing or holding its own shares. What is 
 forbidden to be done directly the law does not allow to be done 
 indirectly. Consequently the promise on the part of Lamb to take 
 the shares when requested, if it could be sustained on any ground, 
 under the circumstances of this case, certainly cannot be sustained 
 on the ground upon which it is placed in the answer. It is founded 
 upon an illegal agreement, and the case cdtaes strictly within the 
 ruling of the judges in the case of Ex parte Walker, 39 Eng. L. 
 and Bq. 579. 
 
 Plain as these facts are, they are no plainer than the law of the 
 case. Indeed, there is no serious defense set up against the prayer of 
 the bill, except the technical one that a bill does not lie, no discovery 
 being sought, and there being adequate remedy at law. Counsel 
 for defense rely, as to the doctrine that there is no such thing as 
 fraud per se, on Davis v. Turner, 4 Eand. 422, and as to jurisdic- 
 tion of equity where no discovery is sought, on Home Ins. Oo. v. 
 Stanfield, 1 Dill. 434, and Medyl v. Mayes, 6 Eand. 658. But this 
 is a case of trust, and equity has jurisdiction in all matters of trust. 
 That the capital stock of an incorporated company is a trust fund 
 for the payment of the debts, and is required by courts of equity 
 to be honestly and faithfully regarded and handled, is settled by 
 very many decisions of the courts of this country. I refer only to 
 
 00 
 
274 UNITED STATES 
 
 Bowden v. Santoa. 
 
 Wood V. Bummer, 3 Mason, 308 ; Upton, Assignee, v. TriUloch, 1 
 Otto, 47 ; Sanger v. Upton, Assignee, id. 60 ; Webster v. Upton, 
 Assignee, id. 71 ; Nathan, Receiver, t. Whitlock, 9 Paige (N. Y. ), 
 159 ; 6 id. 337; see, also, % Story's Equity, § 1252. Any contract, 
 especially among the officers of an incorporated company, involving 
 the withdrawal of any portion of the capital stock from the reach 
 of creditors, will not be tolerated by arfjourt of equity. 6 Paige, 337 ; 
 Ex 'parte Bennett, 37 Eng. L. and Eq. 573 ; Ex parte Walker, id. 
 576, etc. 
 
 In the case of Nathan, Receiver, v. Whitlock, 9 Paige, 159, the 
 defendant, Whitlock, who had been a director of the company, 
 transferred his stock to Brown, the president of the company, the 
 latter giving his note, in place of Whitlock's, for the stock trans- 
 ferred. The company afterward failing, and Brown being insolvr 
 ent, the receiver was allowed to recover of Whitlock the amount 
 of his shares transferred to Brown. The court held the trans- 
 fer of the stock to be a fraud upon the rights of the creditors, 
 and inefEectual to relieve Whitlock of his liability, and that 
 Whitlock, having been a director of the company, must be presumed 
 to have known its situation, and had no right to shift from him- 
 self to an irresponsible person the liabilities of a holder of the 
 capital stock transferred. 
 
 In Upton, Assignee, v. Tribilock, 1 Otto, 47, the Supreme Court 
 says : " The capital stock of a moneyed corporation is a fund for 
 the payments of its debts. It is a trust fund, of which the 
 directors are the trustees. It is a trust to be managed for the 
 benefit of its shareholders during its life, and for the benefit of its 
 creditors in the event of its dissolution. This duty is a sacred 
 one and cannot be disregarded. Its violation will not be under- 
 taken by any just-minded man, and will not be permitted by the 
 courts." 
 
 Again, in the case of Sanger v. Upton, Assignee, 1 Otto, 60, the 
 law is laid down as follows : " The capital stock of an incorporated 
 company is a fund set apart for the payment of its debts. It is a 
 substitute for the personal liability which subsists in private 
 copartnership. When debts are incurred, a contract arises with 
 the creditors that it shall not be withdrawn or applied otherwise 
 than upon their demands, until such demands are satisfied." 
 
 Again, in the case of Webster v. Upton, assignee, it is said (p. 71, 
 Otto): " The whole subscribed capital stock of a corporation is a; 
 
CIKCUIT COURT, 1877. 275 
 
 Bowden v. Santos. 
 
 trust fund for the payment of creditors when the corporation 
 
 becomes insolvent The stock cannot be released, i. e., the 
 
 liabilities of the stockholders cannot be discharged, to the injury 
 of creditors, without payment." 
 
 In Angell & Ames on Corporations (10th ed.), § 535, it is said 
 that a solvent stockholder who has given a stock note for his stock, 
 cannot, upon the insolvency of the company, or in contemplation 
 of that event, even with the consent of the directors, transfer his 
 stock to an irresponsible person and be discharged from liability. 
 So, at section 623, it is said that, however strictly the personal 
 responsibility imposed upon members of an incorporated company 
 may be construed to be against creditors, one point is very clear, 
 and that is, that no member can exonerate himself from his liabil- 
 ity, and defeat the claims of creditors, by transferring his stock to 
 a bankrupt. 
 
 Any other doctrine is offensive to the plainest and best settled 
 principles of. morality and equity. A man is estopped to deny the 
 truth of his admissions that have been acted upon by others." He 
 who is silent when he ought to speak will not be heard when he 
 ought to remain silent." So, as Mr. Santos silently sat by and 
 saw innocent persons contracting with the First National Bank of 
 Norfolk, perhaps on the strength of his name appearing on the stock 
 list of the bank, he will not be heard in a court of equity to 
 say, against the just demands of creditors, that " he was never the 
 purchaser or owner of the stock transferred as aforesaid." 
 
 The ground of the equitable liability of the members is the 
 credit which the company has gained, as a corporation, on the 
 proi^ise of the individual members to raise a fund to enable the 
 corporation to fulfill its engagements. Angell & Ames on Corpora- 
 tions (10th ed.), § 603. 
 
 To the same effect many authorities might be cited, but it is 
 confidently believed that sufficient has been adduced to establish 
 the conclusions that the transfers of the stock made by Mr. Santos 
 were illegal and void, and that consequently the defendant Santos 
 must be held liable ior the par value of the thirty-nine shares of 
 stock transferred to his co-defendants. 
 
 I will sign a decree requiring the defendants, or either of them, 
 to pay the par value of the shares held by Santos before their 
 transfer, with costs. 
 
276 UNITED STATES 
 
 Case V. Citizens' Bank of Louisiana. 
 
 Case v. Citizens' Baij-k of Louisiana. 
 
 (2 Woods, 23.) 
 "Insolmeney" of National banks — Transfers in amtemplation of. 
 
 The word "insolvency," as used in section 53 of the act of 1864 (13 Stat, at 
 Large, 115 ; E. S., § 5243), making void all transfers, assigmhents, payments, 
 etc. , " made after the commission of an act of insolvency or in contempla- 
 tion thereof," is synonymous with the same word as used in the Bankrupt 
 Act, and means a present inability to pay in the ordinary course of busi- 
 ness. 
 
 To make transfers, assignments, etc., void under said section 53, it is only 
 necessary that the insolvency should be in the contemplation of the bank 
 making transfers; the party receiving the transfers need not know of or con- 
 templata such insolvency. 
 
 (Circuit Court, Fifth Circuit.) 
 
 BILL in equity and which was submitted for final hearing and 
 decree upon the pleadings, evidence and arguments of coun- 
 sel. 
 
 John A. Gamphell, Thomas Allen Clarke, J.D. Rouse, and T. F. 
 Case, for complainant. 
 
 Armand Pitot and M. M. Cohen, for defendant. 
 
 Woods, Circuit Judge. The 52d section of the " Currency Act " 
 (13 Stat. 115) declares that "all transfers of the notes, bonds, 
 biUs of exchange, or other evidences of debt owing to any associa- 
 tion, or of deposits to its credit ; all assignment of mortgages, 
 sureties on real estate, or of judgments or decrees in its favor ; aU 
 deposits of money, bullion, or other valuable thing, for its use, or 
 for the use of any of its shareholders or creditors, and all payments 
 of money to either, made after the commission of an act of insol- 
 vency, or in contemplation thereof with a view to prevent the 
 application of its assets in the manner prescribed by this act, or 
 with a view to the preference of one creditor to another, except in 
 payment of its circulating notes, shall be utterly null and void." 
 
 Belying upon these provisions of the statute, the complainant, 
 Charles Case, the receiver of the Crescent City National Bank, 
 files this bill against the Citizens' Bank of Louisiana. 
 
CIEOUIT COURT, 1874. 277 
 
 Case V. Citizens' Bank of Louisiana. 
 
 The bill, after averring the appointment of the complainant as 
 receiver, alleges in substance that between the 1st day of Decem- 
 ber, 1872, and the 6th of February, 1873, the Orescent City Bank 
 drew bills of exchange on F. de Lizardi& Co., of London, amount- 
 ing in the aggregate to £36,501, 5s. 7d., each, being payable in 
 sixty days after sight, and sold the same to the defendant, the Cit- 
 izens' Bank. That afterward, about the 26th of February, 1873, 
 the said Lizardi & Co., having, after the acceptance by them and 
 before the maturity of the bills, failed, the defendant demanded 
 from the Crescent City Bank indemnity against loss on said bills, 
 and for the purpose of such indemnity the Crescent City Bank 
 transferred to the defendant promissory notes, bills and evidences 
 of debt amounting to $150,000, which were then and there the 
 property of the Orescent City Bank. That at the time of the 
 transfer, the Crescent City Bank had drawn and had negotiated 
 for value bills of exchange on Lizardi & Co. to an amount largely 
 exceeding its capital stock ; that the bank had provided Lizardi & 
 Co. with funds to meet the same at maturity ; that by the failure 
 of Lizardi & Co. the bills would be dishonored and the bank held 
 liable therefor, and that the funds provided for the payment of 
 said bills, had been then lost to the bank by reason of the failure 
 of Lizardi & Co. and that by reason thereof and of other losses 
 the bank was then insolvent ; that its insolvency was known to 
 itself and the defendant ; that said notes, bills and evidences of 
 debt were transferred to the defendant in contemplation of the 
 insolvency of the Crescent City Bank, with a view to give prefer- 
 ence to the defendant over other creditors. The bill prays that 
 the transfer of said assets be declared void, and that defendant 
 be compelled to account for them to the complainant. 
 
 The answer of the defendant, the Citizens' Bank, which is given 
 under the common seal of the corporation, denies all the material 
 averments of the bill, except that the Crescent City Bank had pro- 
 vided Lizardi & Co. with funds to meet the bills drawn on them ; 
 that by the failure of Lizardi & Co. the said bills would be dishon- 
 ored and the bank held liable therefor, and bhat the funds provided 
 had been lost to the bank at the time of the transfer to the defend- 
 ant of said assets. 
 
 The complainant files the general replication. 
 
 In passing upon the case it is material to consider what it is 
 necessary for ihe complainant to establish in order to render void 
 
278 UNITED STATES 
 
 Case V. Citizens' Bank of Louisiana. 
 
 the transfer of the notes, bills, etc., to the Citizens' Bank. The 
 transfer must haye been made after the commission of an act of 
 insolvency, or in contemplation of insolvency, and with a view to 
 give a preference to one creditor over another, or with a view to 
 prevent the application of the assets of the bank in the manner 
 prescribed by the Currency Act. 
 
 I know of no reason why a different meaning should be given 
 to the word " insolvency " as applied to banks in the Currency Act, 
 from the meaning given the same word in the Bankrupt Act as 
 applied to traders. 
 
 "Insolvency, as used in the Bankrupt Act, when applied to 
 traders does not mean an absolute inability of the debtor to pay 
 his debts at some future time, upon a settlement and winding up 
 of his affairs, but a present inability to pay in the ordinary course 
 of his business ; or in other words, that a trader is insolvent when 
 he cannot pay his debts in the ordinary course of his business, 
 as men in trade usually do, and such mast be the conclusion even 
 though his inability be not so great as to compel him to stop busi- 
 ness. Wager v. Hall, 16 Wall. 599. 
 
 This definition of insolvency, in my Judgment, is the meaning 
 of the word in the Currency Act. It is only necessary that the 
 insolvency should be in contemplation of the bank making the 
 transfer. The party to whom the transfer is made need not know 
 of or contemplate the insolvency of the bank which makes the 
 transfer. 
 
 Thus it was held by Mr Justice Stobt, under the Bankrupt Act 
 of 1841, that to constitute a conveyance "in contemplation of 
 bankruptcy," it was not necessary that the professed creditor 
 should know of the debtor's insolvency, or should co-operate with 
 him to obtain a priority of payment. Pechham, Assignee, v. Bur- 
 roios, 3 Story, 544. 
 
 The facts clearly established by the evidence and about which there 
 seems to be no dispute, are as follows: Between December 2, 1872, 
 and February 6, 1873, the Crescent City Bank had drawn bills on 
 P. de Lizardi & Co., of London, which had been sold by the bank, 
 and which were held as follows: 
 
 By the Citizens' Bank £19,400 
 
 By the Canal Bank of New Orleans 5,500 
 
 By the State National Bank of New Orleans 5,000 
 
 By Eugene Kelly & Co ^ 35,000 
 
CIECUIT COUET, 1874. 279 
 
 Case T. Citizens' Bank of Louisiana. 
 
 By Edward C. Palmer £10,000 
 
 By Mr. A. Carriere 4,000 
 
 By Duncan, Sherman & Co 5,000 
 
 and other bills held by other persons. So that at the time of the 
 failure of the house of Lizardi & Co., there were bills outstanding 
 drawn by the Crescent City Bank on Lizardi & Co., to the amount 
 of £111,000. The failure of the house of Lizardi & Co., the draw- 
 ers and acceptors of these bills, took place on February 14, 1873, 
 before the maturity of any of the bills, and was positiyely known 
 to Summers, the president of the Crescent City Bank, on the 16th 
 inst. 
 
 By the transfer of notes, bills, and other evidences of debt, on 
 February 26th, by the Crescent City Bank to the Citizens' Bank, 
 the latter was fully secured, for the bills held by it, drawn on 
 Lizardi & Co. by the Crescent City Bank, to the amount of £19,400 
 On March 13th, in consequence of the failure of Lizardi & Co., 
 the circulation of the Crescent City Bank went to protest, and the 
 bank has since been put in liquidation. 
 
 The Citizens' Bank lost nothing by the failure of the Crescent 
 City Bank, having been fully secured for the bills held by it on 
 Lizardi. The Canal Bank, Eugene Kelly & Co., Palmer & Car- 
 riere, received no security on all payment of the bills held by them 
 amounting to £54,500. The capital stock of the Crescent City Bank 
 was $500,000. 
 
 These facts show the commission of an act of insolvency by the 
 Crescent City Bank, the insolvency of the bank, the transfer of 
 notes, bonds, etc., and the preference of one creditor to another. 
 
 These facts alone]do not, however, make the transfer void. It is 
 necessary to the complainant's case to establish two additional 
 facts: 1. That the transfer was made in contemplation of the 
 insolvency of the Crescent City Bank, and 3, that it was made 
 with a view to give a preferEuce to the Citizens' Bank over other 
 creditors, and to prevent the application of said assets in the man- 
 ner provided by the Currency Act. 
 
 If the complainant had established these facts in addition to 
 those already stated, he has made out the case averred in his bill. 
 
 In passing upoh the first point, it is pertinent to inquire. Was 
 the Crescent City Bank really insolvent at the time of the transfer 
 of the notes, bills, etc., to the Citizens' Bank, on the 36th of Feb- 
 ruary, 1873? 
 
280 UNITED STATES 
 
 Case V. Citizens' Bank of Louisiana. 
 
 We have, in eTidence, a report of the condition of the bank on 
 the 14th of February, 1873, the very day that Lizardi & Co., of Lon- 
 don, failed. On that day the resources are stated at $1,545,854.51, 
 in which is included an item of $561,958.01, under the head of 
 "Other cash assets." This item is shown by the testimony of 
 John Davis, the book-keeper of the bank, " to consist of a class of 
 bonds, stocks, etc., which bonds amount to 90 per cent of the 
 capital, which is $564,000, the bonds are $500,000, so that on 
 account of $564,000, they were $500,000 bonds." 
 
 It is evident, from this statement, that this item of $561,958.01 
 consisted mainly of the bonds of the United States to secure the 
 circulation of the bank, with the premium thereon. It was not, 
 therefore, a cash item; it was not available for the payment of the 
 liabilities of the bank. The exhibit in which this item occurs, and 
 the same item is found in the exhibits made on February 34th, 
 February 38th and March 7th, was not a fair statement of the con- 
 dition of the bank. This is made apparent by the fact, that among 
 the liabilities of the bank, the capital stock is not set down as a 
 liability to offset the bonds deposited to secure circulation, with 
 the premium thereon. 
 
 The item, therefore, of $661,958.01, should be stricken from the 
 statement of the resources of the bank. This leaves the resources 
 at $983,896.50, on February 14th. On the same day, the liabilities 
 of the bank are stated at $973,303.13, showing an excess of 
 resources over liabilities of $10,593.38 only. But on the 14th of 
 February, Lizardi & Co., of London, failed. On that day, as 
 shown by the evidence of Davis, the exchange clerk of the Crescent 
 City Bank, the amount of the bills outstanding drawn by the Crescent 
 City Bank on Lizardi & Co., of London, was £111,000, which, 
 reduced to dollars at the current rate of exchange at that time, 
 would be about $604,000. The bank had sent forward about 
 $606,000 to cover these drafts; these remittances were misappro- 
 priated by Lizardi & Co., and none of the $604,000 of exchange 
 drawn by the Crescent City Bank on Lizardi & Co. was paid by 
 them. Here, then, is a bank which, on February 14th, shows 
 resources over liabilities to the amount of only $10,593, and, on 
 that day, by the failure of Lizardi & Co., has withdrawn from its 
 available resources, for an indefinite period, the sum of $606,000, 
 with the prospect of losing in the end a large portion thereof. 
 This statement makes perfectly clear the "inability" of the Ores- 
 
DIECUIT COUET, 1874. 281 
 
 Case V. Citizens' Bank of Louisiana. 
 
 cent City Bank "to pay its debts in the ordinary course of busi- 
 ness;" in other words, makes clear its. insolvency. This loss or 
 suspension of assets by the failure of Lizardi & Co. was greater 
 than the available resources of the bank added to its capital stock, 
 by more than $95,000. 
 
 Summers, the president of the Crescent City Bank, must have 
 known of this condition of afEairs before the 26th of February. 
 In fact he must have known it ; it is impossible he should not 
 have known it as soon as he heard of the failure of Lizardi & Co. 
 
 Eeynes testified that " on the 15th of February he received a dis- 
 patch from Eugene Kelly, of ISTew York, who held bills of the 
 Crescent City Bank on Lizardi & Co. to the amount of £35,000, 
 that the acceptances were due that day, and that they were unpaid, 
 and that such dishonor was virtually the failure of the bank, and 
 that he ezpected no preferred payments. Eeynes showed the tele- 
 gram to Summers, the president of the Crescent City Bank, and 
 insisted on his acting according to it." 
 
 Faurie, the cashier of the Crescent City Bank, testifies that the 
 remittances sent by the bank by Lizardi & Co., of London, to pay 
 those bills, were misappropriated and therefore the bills came back. 
 " When we found the remittances were misappropriated we thought 
 it would break the bank." 
 
 " Some of the directors thought that if the remittances had been 
 properly appropriated, they would come out all right ; but if they 
 had not been properly appropriated, they knew the bank had gone 
 under. They said so. As soon as we were advised of the misap- 
 propriation of the remittances made by Lizardi & Co., of London, 
 every ofificer of the bank knew that it was broken." 
 
 George Jonas, the president of the Canal Bank, testifies that as 
 soon as it was known that the house of Lizardi & Co., of London, 
 had failed, the credit of the Crescent City Bank was materially 
 impaired, its business was diminished, there was urgency and 
 anxiety among its creditors to obtain security. As soon as it was 
 known that Lizardi & Co. had failed, every creditor wanted secur- 
 ity if he could get it. He (Jonas) went to see Summers, the pres- 
 ident, several times, to get security. Summers made an appoint- 
 ment to meet him on February 23d, and said he would bring bills 
 receivable of a suflScient amount to cover the bills held by the 
 Canal Bank. He failed to keep the appointment, but sent Jonas 
 word, the next day, that his board determined to make no further 
 36 
 
282 UNITED STATES 
 
 Case V. Citizens' Bank of Louisiana. 
 
 preferences, and declined to give any security whatever." He fur- 
 ther testified that upon the failure of Lizardi & Co., the stock of 
 the Crescent City Bank ran down rapidly, and he heard of par- 
 ties who were anxious to get rid of it for nothing, on account of 
 their liability as stockholders in case of a failure. 
 
 Edward 0. Palmer testifies, that he was in commercial business 
 in New Orleans, and was director in a National bank at the time 
 of the failure of Lizardi & Co. He says that upon that event there 
 was but one opinion expressed, that it could not do any thing else 
 but ultimately break the Crescent City Bank. This was a general 
 opinion among financial men that he talked with. 
 
 L. P. Generes, who had often been director of banks in New 
 Orleans, testifies that immediately on the failure of Lizardi & Co., 
 of London, there was great anxiety here about the Crescent City 
 Bank from its relations with Lizardi & Co. It manifested itself 
 some days after the failure was known. At first there was no 
 anxiety, but still it grew up and became very urgent. The result 
 of this evidence is that upon the failure of Lizardi & Co., of Lon- 
 don, the Crescent City Bank was insolvent. As soon as it was known 
 that Lizardi & Co. had misappropriated the funds sent to pay the bills 
 drawn on them by the bank, the insolvency of the bank was known 
 to its cashier and directors, and was currently rumored and sus- 
 pected by the interested public. The board of directors, as early 
 as February 22d, had "determined to make no further prefer- 
 ences." Here is the official act of the board of directors, which, in 
 effect, implies the insolvency of the bank. Is it possible that Sum- 
 mers, a member of and president of the board of directors, and who 
 himself reported this action of the board to Jonas, did not know 
 of the insolvency of the bank? The " contemplation of insolvency" 
 is in my judgment clearly established. 
 
 It remains to inquire whether the transfer of notes, etc., made 
 on the 36th of February to the Citizens' Bank, in contemplation of 
 insolvency, was made with a view to the preference of one credi- 
 tor to another. 
 
 The fact is beyond dispute that the Citizens' Bank was preferred, 
 be'cause it was paid in full, while other creditors, similarly situated, 
 were not paid any part of their claims. Did Summers, in making 
 the transfer of notes, etc., do it with a view to a preference ? 
 The law presumes he had in view the natural result of his acts. 
 But defendant claims to have shown that the transfer was made to 
 
OIKCUIT COURT, 1874. 283 
 
 Case V. Citizens' Bank of Louisiana. 
 
 provide means to pay the bills drawn by the Crescent City Bank in 
 London, and thus save the credit of the bank. Why, then, were 
 not all the holders of the bills applied to to discount paper from 
 the portfolio of the bank, and thus furnish the means, each to take 
 care of his own bills. This arrangement was made with a part, 
 but not with all. It was made with the Citizens' Bank and others. 
 They were secured, and the bills held by them paid. The bills 
 held by others were left unsecured, and were protested. How was 
 the credit of the bank to be maintained by such a course ? 
 
 E. C. Palmer, who held £10,000 of the bills of the Crescent 
 City Bank, drawn on Lizardi & Co., heard of the failure of the 
 drawers on February 15th, and within two hours went around to 
 the bank. He saw Faurie, the cashier, who told him to go in and 
 see Summers, the president of the bank. He found him talking 
 with three or four of the . directors. No ofEer was made to Palmer 
 to transfer to him assets from the portfolio of the bank, in order 
 to secure him. Doubtless he would have been willing to take care 
 of the £10,000 of bills of exchange which he held, drawn by the 
 Crescent City Bank on Lizardi & Co., if he could have been made 
 secure out of the portfolio of the bank. So would the Canal Bank, 
 and Eugene Kelly & Co., and Carriere. But no such opportunity 
 was afforded them. These favors were reserved by Summers for the 
 Citizens' Bank and others. 
 
 The truth is, as is evident by the testimony, that one at least of 
 the purposes of the transfer of assets to the Citizens' Bank by the 
 Crescent City Bank, was to secure the Citizens' Bank on the bills 
 which it had purchased from the Crescent City Bank on Lizardi & 
 Co. The pretense that this transfer was to sustain the credit of 
 the Crescent City Bank is too transparent to deceive any one. 
 
 I am of opinion, therefore, after a review of all the evidence 
 in the case, that the transfer by the Crescent City Bank to 
 the Citizens' Bank, of the notes, bills, etc., mentioned in the 
 bill of complaint, was made in contemplation of insolvency, with a 
 view to the preference of one creditor to another, and is, therefore, 
 utterly null and void. 
 
 Let a decree be entered as prayed in the bill. 
 
284 tJNITED STATES 
 
 Bird's Executors v. Cockrem. 
 
 Bied's Exectjtoks t. Cockbem. 
 
 (2 Woods, 33.) 
 Actionn against receivers of National banks — Removal of, to United States courts. 
 
 Receivers of National banks have not the pfivilege in all cases of being sued 
 in the Federal courts, and are not entitled to remove causes against them 
 from the State to the United States courts.* 
 
 (Circuit Court, Fifth Circuit.) 
 
 ACTION against Cockrem, receiver of the New Orleans National 
 Banking Association, for not surrendering property alleged 
 to belong to the plaintiff. 
 
 The cause was heard upon the motion of defendant to vacate the 
 order removing the case from the Fifth District Court of the 
 Parish of Orleans. 
 
 Messrs. J. Ad. Rosier and Geo. W. Race, for plaintiff. 
 
 Mr. J. D. Rouse, for defendant. 
 
 Bbadlby, Circuit Justice. It is unnecessary to decide the 
 question raised by counsel, whether the act of July 27th, 1868 
 (Eev. Stat., § 640), allows all corporations, or only corporations 
 of the United States, when sued, to remove their causes into the 
 United States courts, since banks of the United States are excepted 
 in any case; and, also, since this is not a case against a corpora- 
 tion, but against a receiver, and the case is not within the 57th 
 section of the National Banking Act (13 Stat. 116), which gives 
 State courts concurrent jurisdiction with the courts of the United 
 States, in suits against any association under the act, inasmuch as 
 this is not a suit against the association. It is simply a suit against 
 the receiver for not surrendering property alleged to belong to the 
 plaintiffs. Now, unless a receiver, as such, has the privilege in all 
 cases of being sued in the United States courts, I can see no 
 ground for the removal of this cause from the State court. I am 
 not aware of any such prerogative which a receiver of a National 
 
 * As to removal of causes by National banks, see Ghafham National Bank v. 
 Merchants' National Bank, 4 'Hbomp. & C. 196, post. 
 
CIRCUIT COURT, 1874, £85 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 bank has over other persons. Officers and agents acting under 
 authority of the United States, in making arrests, seizures, etc., 
 during the war, may remove all suits brought against them for 
 such cause, into the United States courts. But this is not one of 
 that class of cases. 
 
 The order for removal must be vacated, and the cause remanded 
 to the State court. 
 
 Casey v. La Societe de Ckedit Mobiliee de Paris. 
 
 (2 Woods, 77.) 
 
 Transfers of bank property in contemplation of insolvency — Bights of receiver 
 — Contracts ultra mres — Wfien bank estopped from repudiating 
 
 To render a transfer by a National bank made after an act of insolvency, or 
 in contemplation of insolvency, void, under section 53 of tbe act of 1864 
 (H. S., § 5342), it must have been made either with a view to prevent the 
 application of the assets in the manner prescribed by the National Banking 
 Act, or with a view to the preference of one creditor to another. 
 
 The preference of one creditor to another, mentioned in section 53 of the act 
 of 1864, is a preference given to an existing creditor for a pre-existing debt ; 
 and does not refer to a case where one makes a loan to a bank and receives 
 a concurrent transfer of property as security therefor. 
 
 The receiver of a National bank holds the same title to the assets of the bank 
 that the bank itself held ; and he has no greater rights in enforcing their 
 recovery than the bank itself would have had. 
 
 A bank, being in an embarrassed financial condition, received a loan of money 
 from defendant upon depositing with a certain commercial firm a portion of 
 its assets as security. Held, that the fact that one of the members of such 
 firm was president of the bank did not render the transaction illegal ; 
 and that the bank could not escape liability for such loan on the ground 
 that the president had no authority to eflect it where it appeared that it 
 was effected with the knowledge of the directors, and the money was 
 received and used by the bank. 
 
 A National bank which entered into a contract not authorized by its charter 
 cannot repudiate the contract and at the same time retain its fruits. 
 
 BILL in equity by Casey, receiver of the New Orleans Banking 
 Association, to have certain transfers of the property of said 
 bank declared void, and such property decreed to be surrendered 
 up for administration. 
 
286 ' UNITED STATES 
 
 Casey v. La Societl de Credit Mobilier de Paris. 
 
 The case as presented by the pleadings and proofs was substan- 
 tially as follows : On the 12th of July, 1873, the New Orleans 
 National Banking Association, a corporate body organized under 
 the National Banking Act, June 3, 1864 (13 Stat. 99), was engaged 
 in the banking business in the City of New Orleans, and continued 
 to carry on business until the 4th day of October, 1873, when it 
 suspended payment. On the said Igth day of July, 1873, the 
 defendant, " Society de Credit Mobilier," of Paris, entered into an 
 arrangement with the said banking association through Charles 
 Cavaroc, Sr., its president, whereby the " societe " agreed on its 
 part to accept bills of exchange to be drawn by the banking asso- 
 ciation, payable ninety days after sight, to the amount of one mil- 
 lion francs, and the association agreed to place with the society 
 ten days before the maturity of said bills the amount thereof. 
 The banking association further agreed to deposit securities in the 
 hands of the commercial firm of C. Cavaroc & Son, of which said 
 Charles Cavoroc, Sr., was a member, for the purpose of securing the 
 societ6 against loss from the failure of the association to place the 
 amount required to meet said bills at maturity. The said firm of 
 C. OaTaroc & Son was constituted by the society its agent to 
 receive and hold said securities. 
 
 In pursuance of this arrangement, on or about the 12th of July, 
 1873, bills of exchange were drawn upon the society by the bank- 
 ing association at ninety days' sight to the amount of one million 
 francs, and the same were sold by the banking association, and the 
 proceeds, amounting to $218,450.34, were appropriated by the 
 banking association — were credited on its books to the soeiet6, 
 and the bills were accepted by the society. 
 
 On the day of the date of the drafts, or the day following, a list 
 was made out of notes due the association, amounting to $220,021.43, 
 and the notes named in the list were put in an envelope and handed 
 to 0. Cavaroc & Son, by direction of 0. Cavaroc, Sr., the president 
 of the association, to be held as security for the society, to protect 
 it from loss by reason of its acceptance of the drafts. 
 
 It was subsequently stipulated by 0. Cavaroc, Sr., on behalf of 
 the association, that as soon as any of said notes matured, they 
 should be replaced by others of like amount. Some time subse- 
 quent to the 12th of July, C. Cavaroc, Sr., fearing that the notes 
 already set apart would not be sufficient to secure the society for 
 its acceptance of said bills, caused another list of notes, amount- 
 
CIECUIT COUET, 1874 287 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 ing to about $100,000, to be made out, and the notes to be depos- 
 ited with 0. Cavaroc & Son, as additional security. 
 
 As notes matured and were paid or renewed, they were replaced 
 by others, in pursuance of the agreement above stated. 
 
 The evidence showed that on the 13th of July the association 
 was embarrassed; and that long before its suspension, on the 4th 
 of October, it was insolvent. 
 
 When the banking association suspended payment, C. Cavaroc 
 & Son claimed to hold all of said notes then in their hands, amount- 
 ing to $335,011.26, to secure the societe for its acceptance of said 
 bills. , 
 
 After the suspension of the bank it was placed by the order of 
 the Comptroller of the Currency, in the custody of John Cockrem, 
 as receiver. Cockrem having resigned, the present complainant 
 was appointed receiver in his stead. 
 
 The bill asks the court to adjudge and decree that all of the said 
 notes held by C. Cavaroc & Son belong to and are the property of 
 said banking association, and that the same, and all the proceeds 
 thereof, be placed in the hands of complainant as receiver, to be 
 administered and applied to the payment of the claims of the cred- 
 itors of said association. 
 
 The bill is based upon the 53d section of the National Currency 
 Act (Eev. Stat., § 5342), which declares as follows : 
 
 " That all transfers of the notes, bonds, bills of exchange and other evi- 
 dences of debt to any association, or of deposits to its credit, all assignments 
 of mortgages, securities on real estate, or of judgments or decrees in its favor, 
 all deposits of money, bullion, or other valuable thing for its use or for the 
 use of any of its shareholders or creditors, and all payments of money to 
 either, made after the commission of an act of insolvency, or in contemplation 
 thereof, with a view to prevent the application of its assets in the manner pre- 
 scribed by this act, or with a view to the preference of one creditor to another, 
 except in payment of its circulating notes, shall be utterly null and void," 
 
 J. D. Rouse and J. R. Beekwifh, for complainant. 
 
 Thomas Allen Clarice, Thomas L. Bayne and Henry Benshaw, Jr., 
 for La Society de Credit Mobilier, of Paris. 
 
 Edward G. Billings, John Finney and H. G. Miller, for various 
 other defendants. 
 
 Woods, Circuit Judge. The claim of the complainant is that 
 the alleged transfer of the notes and assets of the banking associa- 
 
288 UNITED STATES 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 tion of C. Cavaroc & Son, to secure the society for its acceptance 
 of tHe bills of the association, was a transfer thereof in contempla- 
 tion of insolvency, with a yiew to prevent the application of the 
 assets in the manner prescribed by the National Currency Act, and 
 with a view to the preference of one creditor to another ; that such 
 transfer is therefore null and void, and that said notes are still the 
 property of the association, and applicable to the payment of its 
 debts. 
 
 It has been held by this court that to make " transfers, assign- 
 ments, deposits and payments " void under the 52d section of the 
 Currency Act, it is only necessary that the insolvency should be in 
 contemplation of the bank making the transfer, and not that it 
 should be known to or contemplated by the party to whom they 
 are made. Case, Receiver, v. The Citizens' Bank, ante, p. 276 ; 
 Peckham, Assignee, v. Burroughs, 3 Story, 554. 
 
 The evidence in the case satisfies my mind that the banking 
 association, at the time it made the arrangement already recited 
 with the society, to wit : on the 13th of July, 1873, was in an ex- 
 ceedingly embarrassed condition, if not actually insolvent. Al- 
 though C. Cavaroc, Sr., its president, testifies that he did not at 
 that time think that the bank was insolvent, he had abundant rea- 
 son to know soon after that date that it was embarrassed and in a 
 critical situation. This is evidenced by his application for assist- 
 ance to other banks of the city of New Orleans. In my judgment 
 the evidence shows so much clearly, but it does not show more. 
 
 But conceding that 0. Cavaroc, Sr., the president of the bank, 
 at the time he transferred the notes to C. Cavaroc & Son, for the 
 security of the society, knew that the association was insolvent, 
 will that fact render the transfer made under the circumstances 
 recited void ? 
 
 That alone is not sufficient. One of two alternatives must exist: 
 (1) It must be with a view to prevent the application of the assets 
 in the manner prescribed by the Currency Act, or (2) with a view to 
 the preference of one creditor to another. 
 
 Is it the meaning of the section of the Currency Act on which 
 the bill is based, that after a National bank is in contemplation of 
 insolvency, no person could do business with it except at the risk 
 of having any means he may put under the control of the bank, 
 no matter under what solemn contract for security, confiscated for 
 the use of the general creditors of tlie bank ? If this is the con- 
 
CIKCUIT COURT, 1874. 289 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 struction to be given to the 52d section of the Currency Act, then 
 the moment a bank becomes embarrassed, it must give up and sus- 
 pend payment, for all who come to its assistance must do so with- 
 out security. In my judgment, the preference of one creditor to 
 another, mentioned in the 52d section, is a preference given to an 
 existing creditor for a pre-existing debt. If a customer or friend 
 of a bank, knowing it to be embarrassed and in need of assistance, 
 proffers it, for instance, a loan of 850,000 in cash, in receiving 
 security for the amount by a transfer of a part of its portfolio, 
 that cannot be fairly construed as giving him a preference over 
 other creditors. Other creditors are not injured by such a transac- 
 tion, for the securities that such a creditor takes out, he leaves an 
 equivalent in cash. He becomes a creditor solely on condition of 
 receiving security. The policy of the law is plain, namely: to pre- 
 vent preference among creditors holding pre-existing debts. It 
 clearly was not the purpose of the act to forbid the bank from 
 giving security to its friends for means to be advanced on the spot 
 or in the future. The general creditors are not injured by such an 
 arrangement ; they may be greatly benefited by it. 
 
 Take the case in hand. Suppose the association were actually 
 insolvent on the 12th of July. The society in effect puts one mil- 
 lion of francs into the possession of the bank, and takes security 
 for it. Is the general creditor any worse off ? The bank had 
 nothing when the securities were transferred. It gets dollar for 
 dollar for what it transfers. Can that be called giving a preference 
 to one creditor over another ? 
 
 As claimed by counsel for defense, it is in effect an exchange of 
 value rather than the giving of a preference to a creditor. 
 
 It seems to me to be established beyond all controversy by the 
 evidence in this case, that the pledge of the notes of the associa- 
 tion complained of was not made in contemplation of insolvency, 
 but it was a struggle on the part of the officers of the bank to 
 avoid insolvency; it was not made to give preference of one credi- 
 tor over another, but it was a plan adopted by the bank to secure 
 means to carry on its business with a view to be able to pay all its 
 creditors. 
 
 The construction claimed by complainant for the 52d section of 
 
 the Currency Act, would make the banks a trap in which the means 
 
 of their friends, furnished on the pledge of securities, would be 
 
 drawn in and applied to the payment of the general creditors. In 
 
 37 
 
290 UNITED STATES 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 i^y judgment the construction placed on the 3oth section of the 
 Bankrupt Act is applicable also to the 53d section of the Currency 
 Act. 
 
 That section of the Bankrupt Act declares that any sale or other 
 disposition of property made by a person insolvent, or in contem- 
 plation of insolvency, within six months before the filing of a peti- • 
 tion in bankruptcy, by or against "him, by any person who has 
 reasonable cause to believe him insolvent, such sale being made 
 with a view to prevent the property coming to his assignee in 
 bankruptcy, etc., shall be void. Under this section it has been 
 held that a sale made in good faith, for the honest purpose of dis- 
 charging a debt, and in the confident expectation that by so doing 
 the person could continue business, will be upheld. Tiffany v. 
 Lucas, 15 Wall. 410. 
 
 So in Cook v. Tullis, 18 Wall. 332, it was held that an exchange 
 of values may be made at any time, though one of the parties to 
 the transaction may be insolvent ; that there is nothing in the 
 Bankrupt Act that prevents an insolvent from dealing with his 
 property, selling or exchanging it for other property, at any time 
 before proceedings in bankruptcy are taken by or against him, pro- 
 vided such dealings be conducted without any purpose to delay or 
 defraud his creditors or give a preference to any one, and does not 
 impair the value of his estate. And in Tiffany v. The Boatmen's 
 Institution, 18 Wall. 376, it was held that a man really insolvent, 
 but not having yet openly failed, and hoping to overcome his difii- 
 culties and to carry on his business, violates no provision of the 
 Bankrupt Act by pledging his property for money lent, this money 
 being lent at the time when the pledge was made. See, also, 
 Olark, Assignee, v. Iselin, 21 Wall. 360. 
 
 On the strength of these authorities, construing a provision of 
 the Bankrupt Act similar to the 52d section of the Currency Act, 
 and upon my own independent judgment of what is the purpose 
 and intent of said section, I am of opinion that the original transfer 
 made by the banking association to the societ6 of the assets men- 
 tioned was not void. 
 
 But the complainant insists that the transfer was void, because 
 not made in compliance with the Code of Louisiana. It is claimed 
 that the Code requires that when a negotiable instrument is pledged 
 by a debtor it must not only be delivered to the creditor to whom 
 it is transferred, but must be indorsed (Civil Code, art. 3123), and 
 
CIRCUIT COURT, 1874 291 
 
 Casey v. La Socie.te de Credit Mobilier de Paris. 
 
 as it was conceded there was no indorsement of the notes in ques- 
 tion, the attempted transfer was ineffectual to carry title. 
 
 There has been some confusion in the legislation of Louisiana 
 upon this subject, so that it is not by any means clear whether an 
 indorsement as well as delivery of a negotiable instrument is neces- 
 sary in order to complete an act of pledge. The act approved 
 March 15, 1855, entitled "An act relative to pledges " (see Fuqua's 
 Civil Code, 421, note), appears to have been a re-enactment of the 
 act of 1853 (see acts of 1852, p. 15). The first section of this act 
 declares that when a debtor wishes to pawn promissory notes, 
 bills of exchange, etc., he shall deliver to the creditors the notes, 
 bills of exchange, etc., so pawned ; and such pawn so made, with- 
 out further formalities, shall be valid as well against third persons 
 as against the pledgers thereof, if made in good faith. There can, 
 it seems to me, be no doubt that the purpose of this section was to 
 make the delivery of a promissory note without indorsement suffi- 
 cient as an act of pledge. 
 
 But in a subsequent revision of the statute law of the State, the 
 provision requiring indorsement was allowed to remain ; so that we 
 have in the same statute book an article declaring that indorse- 
 ment as well as delivery is necessary to the pledge of a promissory 
 note, and another article in effect declaring that indorsement is 
 not necessary. In my judgment it is not necessary to determine in 
 this cause whether indorsement is or is not essential. 
 
 The receiver holds only the estate and title of the bank in its 
 assets. His title is the same as that of an assignee in bankruptcy. 
 It will not be pretended that the bank could recover back the assets 
 which it had pledged and delivered to the agents of the society 
 because they were not indorsed, and at the same time hold on to 
 the proceeds of the draft, for the acceptance of which the assets 
 were pledged, unless there was fraud ; and there was no fraud in 
 this case. 
 
 An assignment in bankruptcy, like any other assignment, by 
 operation of law, passes the rights of the bankrupt precisely in the 
 same plight and condition as he possessed them, subject to all 
 equities. Mitford v. Mitford, 9 Ves. Jr. 100 ; Gibson v. Warde?i, 
 U Wall. 248 ; OampMl v. SUdell, 5 La. Ann. 274 ; Mitchell v. 
 Winsloiv, 2 Story, 630 ; Ex parte Dalhy, Lowell's Dec. 431. 
 
 There seems to be no reason why the position of receiver of an 
 insolvent bank under the Currency Act is any better than that of 
 
292 UNITED STATES 
 
 Casey V. La Societe de Credit Mobilier de Paris. 
 
 an assignee in bankruptcy. If the receiver held the same title to 
 the assets of the bank that the bank itself held, he cannot avoid a 
 pledge which the bank could not avoid. He is not a third person 
 in the sense of the Civil Code. 
 
 Inthe case of Matthews v. Rutherford, 7 La. Ann. 335, it was held 
 that a notarial act of pledge or a written act registered in a 
 notary's office is a formality which is necessary to protect the payee 
 against third parties, but its omission is unimportant as between 
 pledger and pledgee. 
 
 I am of opinion, therefore, that the failure to indorse the notes 
 pledged by the bank is a defect of formalities in making the pledge 
 of which neither the bank nor the receiver can take advantage. 
 
 It is further claimed by the complainant that C. Cavaroc, Sr., 
 the president of the association, could not at the same time act as 
 president and agent of the association and as the agent of the 
 society. 
 
 It is true that the same person cannot sell as the agent of one 
 and at the same time buy as the agent of another, and a contract 
 made by one who acts as the agent of both parties may be avoided 
 by either principal. See Story on Agency, § 311, and note. 
 Such a contract, made by a person acting as agent for two princi- 
 pals, involves an absurdity. But in this case the contract was made 
 between the "societe" and the " association," the latter acting 
 through its president. But it seems to me clear that there was no 
 legal obstacle, the contract having been made and being in force, 
 to the turning over by the association, acting through Cavaroc, its 
 president, of the assets in pledge to be held by the commercial 
 firm of C. Cavaroc & Son. In fact, C. Cavaroc & Son were mere 
 depositaries or stakeholders, and all stakeholders are agents for 
 both parties. 
 
 It is further claimed by complainant that Cavaroc, the president 
 of the banking association, could only act by authority of the char- 
 ter or by vote of the directors in making the pledge of the assets of 
 the association, and that no such authority is found in the charter 
 or minutes of the board of directors. The minutes of the board of 
 directors are evidence, however, that they knew what arrangement 
 had been made between their bank and the "society," and they 
 approve it by voting a compliment to C. Cavaroc, Jr., by whose 
 agency the arrangement had been made. The books of the bank 
 showed that it had received a million of francs as the result of 
 
OIECUIT COUKT, 1874. 293 
 
 Casey v. La Societe de Credit Mobilier de Paris. 
 
 this arrangement. It is impossible that the directors should haTe 
 been ignorant of these facts — they never repudiated the contract 
 nor returned to the society the fruits of it. This is a ratifica- 
 tion. The acts of a corporation evidenced by a vote, written or 
 unwritten, are as completely binding upon it, and as full author- 
 iby to its agents, as the most solemn acts done under the corporate 
 seal, and promises and engagements may as well be implied from 
 its acts and the acts of its agents as if it were an individual. Abb. 
 Dig. on Corp. 579, and cases there cited. 
 
 A corporation which has received the benefit of a loan cannot 
 avoid liability on a mortgage to secure its payment by denying the 
 authority of those who contracted the loan on its behalf. Bissell 
 V. Railroad Company, 33 N. Y. 358; Bank v. Dandridge, 13 
 Wheat. 70, 71. 
 
 It is claimed, lastly, by the complainant, that the contract 
 between the banking association and the society was not legitimate 
 banking business, and could not be lawfully carried out. 
 
 We are not cited to any clause in the National Currency Act 
 forbidding such a contract, and can see no reason why the associa- 
 tion might not lawfully make it. But conceding that the Cur- 
 rency Act, which is the charter of the association, did not author- 
 ize such a contract, it does not follow that the association can 
 repudiate the contract and keep its fruits. Corporations have no 
 right to violate their charters, but they have capacity to do so and 
 to be bound by their acts when a repudiation of such acts would 
 result in manifest wrong to innocent parties. Bissell v. Railroad 
 Company, 33 N. Y. 258. 
 
 When it is a simple question of capacity to contract, arising 
 either on a question of regularity of organization or of powers con- 
 ferred by the charter, a party who has had the benefit of the con- 
 tract cannot be permitted in an action founded upon it to question 
 its validity. Navigation Company v. Weed, 17 Barb. 378; see, also, 
 Dispatch Line v. Bellamy Manuf. Company, 13 N. H. 205; Moss 
 V. The Rossie Company, 5 HiU, 137. 
 
 I am of the opinion, therefore, that even admitting that the 
 business carried on under the contract between the association and 
 the society was irregular, and not within the limits of legitimate 
 banking, that, having made the contract and enjoyed its fruits, 
 neither the association nor its receiver can demand to keep the 
 money of the aocietS, which was received by virtue of the contract, 
 
294 UNITED STATES 
 
 Commercial Bank of Cleveland v. Simmons. 
 
 and require the societe to deliver up the assets that were trans- 
 ferred to it in consideration of the contract. 
 
 Complainant further insists that the notes pledged by the asso- 
 ciation were changed from time to time, as they fell due, and others 
 substituted in their stead, and that this renders void the pledge, at 
 least so far as such substituted notes are concerned. 
 
 The evidence leaves no doubt on my mind that such substitu- 
 tion was made. In fact, it is admitted by defendant. But has the 
 substitution the efEect claimed by complainant? 
 
 The case of Olark, Assignee, v. Iselin, 31 Wall. 360, is a pointed 
 authority to sustain the negative of this proposition, and settle this 
 objection to the title of defendant conclusively against com- 
 plainant. 
 
 I have gone over the grounds relied upon by complainant, to 
 avoid the pledge and transfer of the assets of the New Orleans 
 Banking Association to the Societe de Credit Mobilier. I am unable 
 to find that any of the grounds are tenable. In my judgment, the 
 pledge of these assets was a good one to secure the society against 
 loss by the failure of the association to comply with its contract, 
 and the receiver is not entitled to the pledged notes or the proceeds, 
 until the society has been made whole. 
 
 The bill must, therefore, be dismissed, and the injunction here- 
 tofore allowed dissolved. 
 
 Commercial Bank op Cleveland v. Simmons. 
 
 (10 Alb. Law Jour. 155.) 
 National banks — BigM to sue not controlled by Judiciary Act. 
 
 Held, that the plaintiff, a National bank, had the right to bring suit in the 
 United States Circuit Court of the district where the bank was located upon 
 two notes indorsed to it by the payee, who was also a citizen of the State 
 and resident of the district. 
 
 That a National bank does not sue by virtue of any right conferred by the 
 Judiciary Act, but by virtue of the right conferred upon it by the act of 
 1864 authorizing and creating it, and which constitutes its charter, that 
 having no right to sue under the Judiciary Act, the limitation in the 11th 
 section, as to suits on indorsed notes and choses in action, does not apply. 
 
 (Circuit Court, Sixth Circuit, Northern District of Ohio.) 
 
CIEOUIT COUET, 1874. 295 
 
 Commercial Bank of Cleveland v. Simmons. 
 
 WELKER, J. This suit is brought on two promissory notes, 
 payable to the order of John G. Simmons & Co., and in- 
 dorsed to the plaintiff. 
 
 The petition states that the plaintiff is a corporation existing 
 under the laws of the United States, and does not state that the 
 payee of the notes is not a citizen of Ohio. 
 
 The defendants, Thompson and Mills, demur to the petition, 
 and assign three grounds of demurrer : 
 
 1st. That it appears on the face of the petition in each of said 
 causes of action that the court has no jurisdiction of the defend- 
 ants, or either of them, or of the subject of the action. 
 
 2d. That the plaintiff and its assignor are both residents of the 
 State of Ohio, and of said district, and have no legal rights to bring 
 suit against the defendants in this court. 
 
 3d. For other good and sufficient reasons, appearing in the face 
 of the petition. 
 
 This demurrer raises two questions : 
 
 1st. Whether the plaintiff can sue in this court, being located 
 in the State of Ohio, and in this district. 
 
 2d. Whether, under the Judiciary Act of 1789, and the limitation 
 of the 11th section thereof, the plaintiff can sue in this court upon 
 the promissory notes in the petition described, the assignor thereof 
 to the plaintiff being a citizen of the State of Ohio, and of this 
 district. 
 
 In order to dispose of the questions made it will be necessary to 
 examine the provisions of the act of Congress to provide a National 
 currency, etc., approved June 3, 1864, under which the plaintiff 
 was organized, and also the act on the same subject, approved in 
 1863. 
 
 The 59th section of the act of 25th February, 1863, provides that 
 " All suits, actions and proceedings, by or against any association 
 under the act, may be had in any circuit, district or territorial 
 court of the United States held within the district where such 
 association was established." 
 
 The 57th section of the act of 1864 provides, " that suits, actions 
 and proceedings against any association under this act may be held 
 in any circuit, district or territorial court of the United States, 
 held within the district in which said association may be estab- 
 lished ; or in any State, county or municipal court in the county 
 or city in which said association is located, having jurisdiction in 
 similar cases." 
 
296 UNITED STATES 
 
 Commercial Bank of Cleveland v. Simmons. 
 
 It is claimed by the defendants that under this section ; as 
 amended, suits cannot be brought by National banks in the State 
 in which they were established ; that it only applies to suits against 
 such associations. That, it is true, would seem to be the provision 
 of the section. 
 
 But the Supreme Court of the United States, in the case of Ken- 
 nedy V. Gibson and others, 8 Wall. 498, has given a construction of 
 these two sections that is binding upon this court. 
 
 Mr. Justice SwATifE, delivering the opinion of the court, says : 
 "The 59th section of the act of February 25th, 1863, provides that 
 all suits by or against such associations may be brought in the 
 proper courts of the United States, or of the State. The 57th sec- 
 tion of the act of 1864 relates to the same subject, and revises and 
 enlarges the provisions of the 59th section of the preceding act. In 
 the latter the word by, in respect to such suits, is dropped. The 
 omission was doubtless accidental. It is not to be supposed that 
 Congress intended to exclude the association from suing in the 
 courts where they can be sued. The difEerence in language of the 
 two sections is not such as to warrant the conclusion that it was 
 intended to change the rule prescribed by the acts of 1863-4. Such 
 suit may still be brought by the associations in the courts of the 
 United States. If this be not the proper construction, while there 
 is provision for suit against the associations, there is none for suits 
 by them in any court." 
 
 Again, in 10 Wallace, 605, The National Bank of Boston sued a 
 State bank of the same State, in the Circuit Court of Massachu- 
 setts, and the action was maintained. This case recognizes the 
 construction given to these sections by Justice Swayitb by enter- 
 taining jurisdiction in that case. We may then regard the section 
 as reading by or against and authorizing suits by or against these 
 associations. It is claimed also by defendants that the 57th sec- 
 tion only' provides for suits under or authorized by the act. That 
 is, for liabilities under the act. 
 
 This is not tenable, ^he words "under this act," refer to and 
 apply to associations under the act, as descriptive of the parties 
 authorized to sue or be ,sued, and not liabilities or causes of action. 
 
 We now come to the second question made, and one presenting 
 a very important one, and about which there may well be differ- 
 ence of opinion. I have examined it with much care in order to 
 arrive at a correct conclusion, and feel well satisfied at the conclu- 
 sion to which I have arrived. 
 
CIKCUIT OOUET, 1874. " £97 
 
 Commercial Bank of Cleveland v. Simmons. 
 
 Suppose the plaintiff has the right to sue generally in this court, 
 as we have determined, has it the right to sue on promissory notes 
 assigned to it by a resident of this district? 
 
 I can find no adjudicated case under the banking law, settling 
 this question. The 11th section of the Judiciary Act of 1789, after 
 stating that Circuit Courts shall have jurisdiction in civil cases, etc., 
 " in all cases where the suit is between a citizen of the State where 
 the suit is brought and a citizen of another State," provides, "nor 
 shall any District or Circuit Court have cognizance of any suit to 
 recover the contents of any promissory note or other chose in 
 action, in favor of an assignee, unless a suit might have been pros- 
 ecuted in such court to recover the said contents, if no assignment 
 had been made, except in cases of foreign bills of exchange." 
 
 I find two cases in 9th "Wheaton, decided by the Supreme Court 
 under a similar question made, which arose under the charter of 
 the old United States Bank. 
 
 In the first case, Osiorn v. The United States Bank, 9 Wheat. 
 740, it is decided that the charter of the bank confers on the bank 
 the right to sue in any Circuit Court of the United States. In 
 delivering the opinion in this case. Chief Justice Marshall says : 
 " The charter of incorporation not only creates it, but gives it 
 every faculty which it possesses. The power to acquire rights of 
 any description, to transact business of any description, to make 
 contracts of any description, to sue on these contracts, is given 
 and reassured by its charter, and that charter is the law of the 
 United States. This being can acquire no right, make no contract, 
 bring no suit which is not authorized by a law of the United 
 States." Another case was decided at the same term of the 
 Supreme Court, The United States Bank v. the Planters' Bank of 
 Georgia, 9 Wheat. 905. This suit was originally brought by The 
 United States Bank v. The Defendant, in the Circuit for the Dis- 
 trict of Georgia, upon notes payable to a citizen of Georgia, and 
 indorsed and transferred to the bank. The defense set up was 
 that the court had no jurisdiction under the 11th section of the 
 Judiciary Act, or rather the limitation to it. 
 
 In delivering the opinion of the court. Chief Justice Maeshall 
 says: "We proceed next to inquire whether the jurisdiction of the 
 court is ousted by the circumstance that the notes on which the 
 suit was instituted were made payable to citizens of the State of 
 Georgia. The words of the Judiciary Act (§ 11), are (he then 
 38 
 
UNITED STATES 
 
 Commercial Bank of Cleveland v. Simmons. 
 
 quotes the part of the act above quoted, being the limitation, and 
 says): "This is a limitation on the jurisdiction conferred by 
 the Judiciary Act. It was apprehended that bonds and notes given 
 in the usual course of business, by citizens of the same State, to 
 each other, might be assigned to the citizens of another State, and 
 thus render the maker liable to a suit in the Federal courts. To 
 remove this inconvenience, the act < which gives jurisdiction to the 
 courts of the Union, over suits brought by the citizen of one State 
 against the citizen of another, restrains that jurisdiction where the 
 suit is brought by an assignee, to cases where the suit might have 
 been sustained had no assignment been made. But the bank does 
 not sue in virtue of any right conferred by the Judiciary Act, but 
 in virtue of the right conferred by its charter. It does not sue 
 because the defendant is a citizen of a different State from any of 
 its members, but because its charter confers upon it the right of 
 suing its debtors in a Circuit Court of the United States. 
 
 "There is, consequently, scarcely a debt due to the bank for 
 which a suit could be maintained m a Federal court, did the juris- 
 diction of the court depend on citizenship. A general power to 
 sue in any Circuit Court of the United States expressed in laws 
 obviously intended to comprehend every case, would thus be con- 
 strued to comprehend no case; such a construction cannot be the 
 correct one. 
 
 " We think, then, that the charter gives to the bank a right to 
 sue in the Circuit Court of the United States without regard to 
 citizenship." 
 
 Now let us examine the Banking Law itself under which the 
 plaintiff was organized. Section 8 of the act of 1864 provides 
 that every association formed pursuant to the provisions of this 
 act, shall, from the date of the execution of its organization certifi- 
 cate, be a body corporate ; * * * by such name it may make 
 contracts, sue and be sued, complain and defend in any court of 
 law and equity as fully as natural persons; * * * and exercise 
 under this act all such incidental powers as shall be necessary to 
 carry on the business of banking, by discounting and negotiating 
 promissory notes, drafts, bills of exchange, and other evidences of 
 debt; by receiving deposits; by buying and selling exchange, coin 
 and bullion; by loaning money on personal security," etc. 
 
 Then follows in the same act (§ 57), already quoted, providing 
 " that suits, actions and proceedings ly or against any association 
 
CIRCUIT COURT, 1874. 299 
 
 Commercial Bank of Cleveland v. Simmona. 
 
 under this act, may be had in any circuit, district or territorial 
 court of the United States held within the district in which such 
 association may be established." 
 
 To ascertain the privileges and powers conferred upon these bank- 
 ing associations, these sections are to be taken and construed 
 together. It seems to me that these privileges and powers, thus 
 given in this act, are as broad and comprehensive as those given to 
 the United States bank by its charter, and referred to in the case 
 in 9 Wheaton. 
 
 It must be borne in mind that, in the Judiciary Act, the right 
 to sue or be sued, mainly depends upon citizenship of the parties; 
 that corporations are only allowed to sue or be sued in the Federal 
 courts under the act, through the legal fiction of citizenship, aris- 
 ing from the presumption that such corporations are citizens of 
 the State under whose laws they are created. 
 
 These banking associations, not being created by State laws, 
 have no State citizenship growing out of the presumed residence 
 of the stockholders. 
 
 Under the Judiciary Act, then, they have no power to sue in 
 Federal courts, and must, therefore, derive it from the act creating 
 them. Having no right to sue under that act, the limitation on 
 the 11th section, as to suits on indorsed notes and choses in action, 
 does not apply. The right to sue under that section and the limi- 
 tation thereto go together, the one controlling the other. 
 
 If the matter of citizenship in reference to the National banks 
 is dispensed with in favor of such banks, then what reason is there 
 for the application of the limitation as to suits on assigned paper? 
 That limitation is only attached to enforce the privileges of citi- 
 zenship, and to prevent its abuse in bringing suits in Federal 
 courts; and further, the banks, in purchasmg notes, etc., do only 
 what the law authorizes them to do. 
 
 I may then well say, as was said in the case in Wheaton: That 
 the bank does not sue in virtue of any rights conferred by the 
 Judiciary Act, but in virtue of the right conferred upon it by the 
 act of 1864, authorizing and creating it, and which constitutes its 
 charter. 
 
 The charter of the old United States Bank was but a law, as this 
 general act is a law of the United States. 
 
 That the Judiciary Act does not control the right and power of 
 these banks to sue in the Federal courts. 
 
 The demurrer to the petition is overruled. 
 
300 UNITED STATES 
 
 City National Bank v. Paducah. 
 
 CiTT National Bank v. Padfoah. 
 
 (5 Cent. Law Journal, 347.) 
 
 Taxation of National bank shares — Injunction to restrain — Parties — BMe of 
 taxation — Deductions for debts and real estate. 
 
 A National bank is a proper party complainant to a bill in equity, to enjoin 
 the collection of a tax upon ita shares, assessed against its stockholders, if 
 it be shown that the bank would be subjected to a multiplicity of suits, 
 whereby its business will be interfered with, its credit impaired and its 
 stock depreciated. 
 
 The remedy by injunction to stay the collection of a tax upon personal prop- 
 erty may be invoked where the enforcement of the tax would lead to the 
 multiplicity of suits, or where the law authorizing the tax is itself invalid. 
 
 Where, by the laws of a State, or municipality, different rates of taxation are 
 imposed upon different classes of moneyed capital, such State or munici- 
 pality may not tax the shares of National banks at the highest rate imposed 
 upon any class, regardless of the proportion which that class bears to other 
 classes ; nor, upon the other hand, is it confined to the lowest rate imposed 
 upon any class. 
 
 Where different rates of taxation are prescribed for different classes of " other 
 moneyed capital," the rate imposed upon shares in National banks should 
 not, as a general rule, exceed that imposed upon other moneyed capital of 
 the same class, viz .: shares in State banks. 
 
 Where, practically, the entire banking capital of the State of Kentucky was 
 exempted from taxation beyond fifty cents per share, and included in this 
 enumeration, was a State bank in Paducah, the capital stock of which 
 exceeded that of all the National banks located there, it was held that an 
 ordinance imposing a tax of $1 . 05 nominally upon all banks in the city, 
 but from which the State banks had been adj udged exempt, was an unlawful 
 discrimination against the National banks, and therefore invalid.* 
 
 Where other moneyed capital than bank stocks was also taxed at $1.05, but 
 with a proviso that from the amount of this capital the entiro indebtedness 
 of the owner should be deducted before the assessment was made, and no 
 such deduction was allowed where such capital consisted of shares in National 
 banks, the tax upon such shares was held invalid. 
 
 The tax was also held invalid for the reason that no provision was made for 
 deducting the value of real estate owned by the bank, which was thereby 
 subjected to double taxation. 
 
 (Circuit Court, Sixth Circuit, District of Kentucky.) 
 
 *See Lionberger v. Rouse, ante, p. il; Hepburn v. School Directors, ante, 
 p. 113. 
 
CIKCUIT COURT, 1877. 301 
 
 City National Bank v. Paducah. 
 
 rPHIS was a bill in equity against the city and a tax collector of 
 \_ Paducah, to enjoin the collection of a tax upon the shares of 
 the complainant's bank. In 1867 the Legislature passed an act to 
 tax the shares of National banks, and provided that the tax should 
 not exceed the rate imposed upon the shares of banks organized 
 under the laws of the State. The amount so assessed upon the 
 State banks under the general laws of the State of Kentucky 
 was fifty cents per share. Under this law complainant has for sev- 
 eral years reported to the auditor the number of its shares and 
 paid the tax thereon which was in lieu of all other taxes. 
 
 In 1871 the city of Paducah, under an amended charter passed 
 that year, was authorized to levy and collect a tax at the rate of 
 not exceeding two dollars and fifty cents per hundred dollars of 
 property within the city limits made taxable by law for State pur- 
 poses, and also upon all bank stock located therein incorporated 
 under the laws of iihe State of Kentucky or of Congress. No 
 steps were taken under this act until April, 1875, when the 
 common council of Paducah passed an ordinance providing for 
 the collection of a tax of one dollar and five cents on a share for 
 the year 1875, and for all subsequent years at a rate levied by the 
 common council for other taxation, which ordinance was made 
 applicable by its terms to banks organized under the State law, as 
 well as National banks. It was, however, by the courts of Ken- 
 tucky, held invalid as to State nanks. This tax was assessed for 
 the year 1875, and the books placed in the hands of the collector, 
 and this bill was filed to enjoin him from proceeding thereunder 
 against the bank. 
 
 The other facts of the case, so far as they are material to the 
 questions involved, are stated in the opinion of the court. 
 
 Charles 8. Marshall and L. D. Husbands, for complainant. 
 
 Xing & Gilbert and Campbell & Greer, for defendants. 
 
 Brown, J. Upon the threshold of this case we are confronted 
 with the objection that, inasmuch as the tax in question is laid 
 upon the individual shareholders, the bill cannot be maintained in 
 the name of the bank ; that the suit is one which concerns the stock- 
 holders only, and that they are the only proper parties complain- 
 ant. Though this question has been raised before the Supreme 
 
302 UNITED STATES 
 
 City National Bank v. Paducah. 
 
 Court several times, it has never been directly passed upon. In 
 Dows V. The City of Chicago, 11 Wall. 108, the bill was filed by 
 a stockholder simply upon the ground of the illegality of the tax. 
 The bank itself filed a cross-bill, also alleging the illegality of the 
 tax assessed, on various grounds ; and averring that if the share 
 were permitted to be sold, irreparable injury would only be done 
 the shareholders, but also to the bank, which would be thereby 
 subjected to great loss of standing and other injury, for the redress 
 of which the law afforded no remedy; and that such also would be 
 the result if the bank paid the taxes, and was subject to suits by 
 each of the shareholders by reason of so doing ; and that in either 
 event a multiplicity of suits would be rendered necessary to adjust 
 the rights of the parties. A demurrer was interposed to both 
 bills, and both were dismissed ; the original bill because it was 
 based solely upon the ground that the tax was illegal, and the 
 cross-bill because it must share the fate of the original. The 
 court intimated, however, that if the cross-bill had been an original, 
 with like averment, it might have been sustained to avoid a multi- 
 plicity of suits. The question appears to have been fully argued 
 in Tappan v. The Merchants' National Bank, 19 Wall. 490,* 
 under an allegation in the bill similar to the one under consid- 
 eration, and to have been ruled by the Circuit Court of Northern 
 Illinois in favor of the jurisdiction. Union National Bank v. 
 Chicago, 3 Biss. 83. In the Supreme Court the case went off on 
 another point, and the court expressly declined to pass upon this 
 question. The only case I have found in which the jurisdiction 
 was denied is that of The First National Bank of Hannibal v. 
 Meredith, 44 Mo. 500, where, notwithstanding the taxes were 
 assessed on the bank, and sought to be collected by seizing and selling 
 all the shares comprising the capital stock, the court declined to 
 interfere on the ground that an injunction to restrain the collec- 
 tion of the tax was not the proper remedy, unless the sale of the 
 property was accompanied by irreparable damage. Incidentally, the 
 court remarked that the plaintiff had no equity, for the reason 
 that its property was not in jeopardy ; that the bank, as a cor- 
 poration, would lose nothing if the shares of its stockholders were 
 sold, and that its shareholders, if any one, were entitled to relief. 
 The point, however, does not seem to have been maturely consid- 
 ered, and indeed it is doubtful whether the petition in that case, 
 charging as it did not an impending multiplicity of suits, but that 
 
 * See ante, p. 100. 
 
CIRCUIT COURT, 1877. 303 
 
 City National Bank v. Paducah. 
 
 the sale of the shares would greatly damage the bank, by impairing 
 its credit and stability and injuring the owners of the stock, by 
 casting a cloud over the title and destroying its convertibility, 
 made out a case for relief. 
 
 The bill under consideration alleges, and the evidence meets, 
 substantially, the avSrment, that the city is threatening to sue the 
 bank and each of its stockholders, in separate suits, and will, 
 unless restrained, sue out attachment garnishing the bank and 
 attaching the stock of the shareholders, involving the plaintiff in 
 a great many petty suits, breaking down the business of the bank, 
 depreciating its stock, bringing endless confusion on the owner- 
 ship of the same, injuring the credit of the bank, putting a cloud 
 upon the same, and doing it an irreparable injury. That if the 
 bank pays these taxes, the stockholders will sue it ; and, in either 
 event, a multiplicity of suits will result. Upon the whole, I think 
 the bank is so far the trustee of the stockholders, and the custodian 
 of their dividends, that it is entitled to maintain the bill. It 
 might be subjected to great annoyance by stockholders, who denied 
 the legality of the tax, and gave the bank notice that it would pay 
 it at the peril of being sued by them. It is certainly no hardship 
 to permit the whole question to be litigated in a single action. 
 
 We assume in this connection that all the stockholders in this 
 bank, each having the same ground for relief, and the same defense 
 being applicable to all, might have united in a single bill without 
 multifariousness. Cooley on Taxation, 545. This being so, we 
 see no objection to the bank maintaining a like bill as trustee for 
 the entire body of stockholders. We should feel inclined to go to 
 the limit of the law in sustaining a practice so convenient, and, so 
 far as we can see, so unobjectionable. 
 
 It is also insisted that a remedy by injunction cannot be in- 
 voked in this case. While it is freely conceded that a court of 
 equity has no general power to restrain the collection of taxes for 
 any irregularity of assessment or levy, or for overvaluation or un- 
 just discrimination, and that to sustain a bill the case must be 
 brought within some acknowledged head of equity jurisdiction, we 
 think this exigency is met in either of the two following cases : 
 
 1. Where the enforcement of the tax would lead to a multiplicity 
 of suits ; or 
 
 2. Where the law authorizing the tax is itself invalid. 
 
 Upon the first ground the interference of a court of equity was 
 
304 UNITED STATES 
 
 City National Bank v. Paducali. 
 
 held proper in Heymood v. City of Buffalo, 14 N. Y. 534, and in 
 Daws T. City of Chicago, 11 Wall. 108. The opinion in that 
 case received the sanction of the Supreme Court of the United 
 States. The second ground of interference was also recognized by 
 the Supreme Court in the same case, approving Cook County v. The 
 Chicago, Burlington and Quincy E. R. Co., 35 111. 460. In the 
 case'of the same RaiUoay Company v. Frary, 33 III. 34, speaking 
 of exceptions to the general rule, that a court of equity will not 
 interfere, it is observed : " Those exceptions are confined almost, 
 if not entirely, to cases where the tax itself is not authorized by 
 law, or if the tax is authorized, it is assessed upon property which 
 is not subject to the tax. The case of The Illinois Central R. R. 
 Co. V. The County of McLean, 11 111. 391, fell within the latter ex- 
 ception. The same rule is practically affirmed in Munson v. Minor, 
 23 111. 594, and Center Warren Road Co. v. Black, 33 Ind. 468. 
 In Warden v. Board of Supervisors, 14 Wis. 618, an exception is 
 mentioned of objections which go to the very groundwork of the 
 tax assessed, so as to affect materially its principle and to show it 
 must necessarily be illegal. " Where it appears that the established 
 principle of taxation has been violated, and that actual injustice 
 will ensue, or that the tax is levied for an unauthorized purpose, of 
 course equity will interfere, in proper cases, to prevent the wrong." 
 See High on Injunctions, 195-300. Both of the reasons above 
 given for the exercise of equity jurisdiction are apparent in this 
 case, and we think the complainant has not mischosen its remedy. 
 While in a case of over-valuation or unjust discrimination an ap- 
 peal to the supervising officers might correct the error, they would 
 have no power in a case like this to question the validity of the 
 ordinance by virtue of which the tax was assessed. 
 
 Coming now to the vital point in this case, viz., the validity 
 of the legislation by which the tax in question was imposed, we 
 find the general proposition firmly established, that banks organ- 
 ized under acts of Congress are regarded as fiscal agents of the 
 government and are exempt from taxation, except as Congress may 
 specially authorize it. M'Culloch v. Maryland, 4 Wheat. 316; 
 Weston V. City of Charleston, 2 Pet. 449; Farmers' Bank v. Bear- 
 ing, 9 U. S. 34. 
 
 In the organization of National banks, Congress has given a quali- 
 fied authority for State taxation in the following Bection of the 
 Kevised Statutes: 
 
OIECUIT OOUET, 1877. 305 
 
 City National Bank v. Paducah. 
 
 Sbc. 5319. " Nothing 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 Na- 
 tional 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 citizens of such State ; 
 and that the shares of any National banking association, owned by non-resi- 
 dents 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." 
 
 While the section in question would not be open to construction 
 if the entire moneyed capital of the State, in the hands of indi- 
 viduals, were taxed at a uniform rate, the interpretation to be put 
 upon it, where difEerent rates of taxation are imposed upon differ- 
 ent classes of moneyed capital, is not free from doubt. Has the 
 State a right to tax the shares of National banks at the highest 
 rate imposed upon any class of moneyed capital, regardless of the 
 proportion which that class bears to other classes ? 
 
 On the other hand, it is confined to the lowest rate imposed upon 
 any class of moneyed capital, with like disregard of the relatiye 
 amount of the different classes ? The last question is answered 
 directly, in the case of Hepburn v. Tlie School Directors, 23 Wall. 
 480,* in which it was proved that mortgages, judgments, recogniz- 
 ances and moneys owing upon articles of agreement for the sale 
 of real estate were exempt from taxation in a certain district, ex- 
 cept for State purposes. This was held a partial exemption only, and 
 it is said it cannot be the intention of Congress to exempt bank 
 shares from taxation, because some moneyed capital was exempt." 
 Suppose, howeyer, there were in a certain district a very small 
 amount of moneyed capital of one species, and a very large amount 
 of another ; that the former was heavily taxed and the latter exempt 
 altogether, would the municipality be authorized to tax the shares 
 of National banks at the rate imposed upon the former ? Suppose, 
 for example, that State banks, exempted from taxation, absorbed 
 three-fourths of "the other moneyed capital" of a certain city, 
 and the remaining one-fourth was heavily taxed, would it not be 
 not only an unjust discrimination, but a mere evasion, to tax the 
 shares of National banks at the rate imposed upon the tax quarter ? 
 
 * See ante, p. 313. 
 39 
 
306 UNITED STATES 
 
 City National Bank v. Paducali. 
 
 The questions have never been definitely settled, bat bearing in 
 mind that the obvious intention of Congress vp^as to permit taxa- 
 tion, but to inhibit unjust discrimination, it would seem that the 
 answer would be easy. I regard the true construction to be this: 
 That when by local legislation different rates are prescribed for 
 different classes of moneyed capital, the rate imposed upon shares 
 of National banks should approximate as closely as may be to the 
 rate imposed upon other moneyed capital of the same or similar 
 class, viz., shares of State banks. While this rule might be Subject 
 to qualifications in localities where the capital of State banks bore 
 a very small proportion to other moneyed capital, and the exemp- 
 tion was intended as a bounty, I think it furnishes, as a general 
 rule, a safe guide to the validity of the tax. 
 
 It is urged, however, that the course of legislation upon this 
 subject repels the interference here drawn from the language of 
 the section, and shows, affirmatively, that Congress intended to 
 permit the States to discriminate in favor of their own banks, by 
 repealing a proviso inhibiting such discrimination, originally 
 annexed to the section in question. 
 
 The 41st section of the original act of 1864: (13 Stat. 113) pro- 
 vides that nothing in this act shall be construed to prevent all the 
 shares in any of the' said associations, held by any person or body 
 corporate, from being included in the valuation of personal prop- 
 erty of said person or corporation, in the assessment of taxes 
 imposed by or under State authority, at the place where such 
 " bank is located, and not elsewhere; but not at a greater rate than 
 is assessed upon other moneyed capital in the hands of individual 
 citizens of such State; provided, that the tax so imposed under the 
 laws of any State, upon the shares of any of the associations 
 authorized by this act, shall not exceed the rute imposed upon the 
 shares in .any of the banks organized under authority of the State 
 where such association is located. Provided, also, that nothing in 
 this act shall 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 1868 a short act was passed (15 Stat. 34) not amending, 
 but explanatory of the 41st section entitled " An act in relation to 
 taxing shares in National banks." The language is as follows : 
 "That tlip words 'place where the bank is located, and not else- 
 where,' in section 41, etc., shall be construed and held to mean the 
 
OIEOUIT COUKT, 1877. 307 
 
 City National Bank v. Paducah. 
 
 State -within which the bank is located, and the legislature of each 
 State may determine and direct the manner and place of taxing 
 all the shares of National banks located within said State, subject 
 to the restriction that the taxation shall not be at a greater rate 
 than is assessed upon other moneyed capital in the hands of indi- 
 vidual citizens of such State. And provided, always, that the shares 
 of any National bank owned by non-residents of any State shall 
 be taxed in the city or town where said bank is located, and not 
 elsewhere." The intent of Congress was manifest. A difference 
 of opinion has arisen with regard to the meaning of the words, 
 " place where the bank is located, and not elsewhere," and in some 
 States the assessing officers were taxing the shares in the town or 
 city where the bank was located, notwithstanding the owner lived 
 in a different town or city in the same State. To define the mean- 
 ing of these words was the sole object of the act of 1868. This is 
 evident not only from the language of the act itself, but is an 
 actual fact — though possibly it is not a legitimate argument 
 here — as appears from the remarks of the chairman of the com- 
 mittee which reported the bill. (See Congressional Glole, 3d ses- 
 sion, 40th Congress, p. 921.) The two provisions in the original 
 act were neither of them alluded to in the act of 1868, although 
 out of abundant caution the words " the taxation shall not be 
 at a greater rate than is assessed upon other moneyed capital " were 
 repeated, and an entirely new proviso added, that the shares of 
 non-residents should be taxed in the city where the bank was 
 located. There is certainly no express repeal of the two provisos 
 in the original act, and nothing from which an implication of 
 repeal can arise. Were it not for the Ee vised Statutes, I should 
 hold both the provisos in the act of 1864 to be still in force. I am 
 aware that in the case of Liotibei-ger v. Rouse {ante, p. 41), Mr. Jus- 
 tice Davis indicates an opinion, that und«r the act of 1868, the 
 power of State taxation was subject only to the restriction that " the 
 taxation shall not be at a greater rate than is assessed upon other 
 moneyed capital j" but the point does not seem to have been 
 argued, and was unnecessary to the decision of the case. In the 
 revision, the second proviso, that the real estate of the bank should 
 remain subject to taxation, is retained ; while the first, limiting 
 the tax expressly to the rate imposed upon the shares of State 
 banks, was omitted. If there were any thing in the act of 1868 
 which could be construed as a repeal of the first proviso, I see no 
 
3(^ UNITED STATES 
 
 City National Bank v. Paducah. 
 
 reason why it should not operate also as a repeal of the second; but, 
 as observed before, I think the two acts should have been constrned 
 harmoniously, and the restriction in the act of 1868 should not have 
 been regarded as exclusive of those in the former act, while the 
 omission of the first proviso in the Eevised Statutes undoubtedly 
 operates, under section 5596, as a repeal of such proviso, yet consider- 
 ing the manner in which the repeal, was effected, I think no intent 
 can be inferred on the part of Congress thereby affirmatively to 
 permit States to subject the shares of National banks to a greater 
 rate of taxation than they impose upon State banks, if any such 
 intent could ever arise from the repeal of a prohibitory clause. So 
 far as the question arising in this case is concerned, section 5219 
 should be construed precisely as if no prior legislation on the same 
 subject had been had. 
 
 The ordinance of Paducah nominally imposed a tax of $1.05 upon 
 all banks within its limits, State as well as National, but as there 
 is but one State bank in the city, viz., the Commercial Bank, which 
 is exempt from taxation beyond fifty cents per share, and a possible 
 tax of fifty cents on each hundred dollars of its contingent fund, 
 which seems never to have been collected, the tax is really appli^ 
 cable only to the three National banks, the aggregate capital of 
 which is less than the capital of the Commercial Bank. It is true 
 an attempt was made to assess the same tax upon the Com- 
 mercial Bank, but an injunction against its collection appears to 
 have been granted and perpetuated by the State court. I feel 
 authorized, then, to treat it as exempt from this tax. That the 
 Commercial Bank is not exceptionally favored in this particular, 
 is shown by the certificate of the Auditor of Public Accounts of 
 the State, which is in evidence and exhibits a complete list of all 
 banks doing business under the laws of Kentucky. They are fifty- 
 three in number, having an aggregate capital of $13,473,641.50, 
 and each pays the State a tax of fifty cents on every hundred dol- 
 lars of its capital, in lieu of all other taxes, though there are slight 
 variations in the different charters. If there are any State banks, 
 the taxation of which is not regulated by their charters, they fall 
 Avithin the general provision of chapter 93, article 2, section 1, " on 
 bank stock, or stock in any moneyed corporation of loan or discount, 
 fifty cents on each share thereof, equal to one hundred dollars." 
 The result is the same in either case, a few apparent exceptions 
 being set forth in the answer; but practically, the entire banking 
 
CIRCUIT COURT, 1877. 309 
 
 City National Bank v. Paducah. 
 
 capital of the State is subject to a tax of fifty cents per share of 
 one hundred dollars, in lieu of all other taxes. If the city of Padu- 
 cah may tax National banks at $1.05 per share for the year 1875, 
 it may increase the tax at any time to $3.50, the amount author- 
 ized by the Legislature, and to as much greater an amount as the 
 Legislature may hereafter see fit to authorize. (It was conceded 
 upon the argument that the tax for 1876 had been increased to 
 $1.40.) Indeed, the Legislature may authorize like taxation by 
 every municipality in the State, while the State banks, under their 
 special charter, will escape their burden altogether. Certainly, here 
 is a large discrimination in favor of State banks. I am not unmind- 
 ful in this connection of the case of Lionberger v. Rouse, above 
 cited, nor of the case of Hepiurn v. ScJiool Directors, 33 Wall. 480, 
 in which it was held that the exemption of small amounts of 
 moneyed capital, in particular cases, would not invalidate the tax, 
 if the great body of moneyed capital was subjected to it. In both 
 these cases, however, the amount exempted was small in propor- 
 tion to the aggregate amount of moneyed capital, and the great 
 mass of moneyed property was subjected to the same tax levied 
 upon the shares of National banks. It is true that the fifty-three 
 State banks in Kentucky are not chartered by general law, but by 
 special acts in each case; but this seems to me to make no differ- 
 ence. The fact remains, that, practically, the entire banking cap- 
 ital of the State pays a tax of fifty cents, in lieu of all other taxes, 
 even upon its real estate. The law will look, not at the manner in 
 which the tax is imposed, but at the result of the system. A like 
 answer may be made to the argument that many of these State 
 charters have expired, and that in renewing them the power to 
 increase the taxation is reserved. This power never seems to have 
 been exercised. 
 
 It is insisted, however, that although the legislation in question 
 may discriminate in favor of State banks, there is no discrimina- 
 tion against National banks, inasmuch as "all other moneyed cap- 
 ital, in the hands of individuals," except shares in State banks, 
 pays the same tax. Under the general laws of Kentucky (and the 
 charter of Paducah adopts the same rule of assessment) property 
 subject to taxation is listed in five classes : 
 
 1, Real estate ; 3, horses, mules and the like ; 3, cattle ; 4, 
 watches, plate, clocks, pianos, vehicles and harnesses ; 5, " the as- 
 sessor, after having taken the lists of all property required to be 
 
310 UNITED STATES 
 
 CSty National Bank v. Paducah. 
 
 taken, listed as above, shall require each person on oath to fix the 
 amount he or she is worth from all other sources on the day to 
 which said list relates, after taking out his or her indebtedness 
 from said amount ; and the said assessor shall take from the said 
 amount the sum of one hundred dollars, and list the balance for 
 taxation." This section includes all property not exempt or pre- 
 viously mentioned, such as spirituous liquors, the produce of 
 mines, farms, forests, manufactures, notes, accounts, bonds, bills 
 of exchange and choses in action, debts and demands of every kind, 
 but does not include bank stock. The whole amount of this 
 fifth class, in which " other moneyed capital " is included, in the 
 city of Paducah, is shown by the assessors' books to be in all S303,- 
 865. From this must be deducted all which is not moneyed capi- 
 tal. The residue, consisting of money on deposit, notes, bonds, 
 mortgages, judgments and other choses in action, is the only 
 "other moneyed capital," and the amount of this it is impossible 
 to ascertain, as it is nowhere listed or taxed as such. A liberal 
 estimate would probably not place it over 1300,000. Upon this 
 the tax of $1.05 is imposed, subject, however, to a deduction of all 
 the indebtedness of the tax payers. If, then, the property of the 
 tax payer consists of National bank stocks, purchased by him and 
 for which he has given his note for the full amount, he pays, not- 
 withstanding, the tax of $1.05 per share ; but if his property con- 
 sists of any other moneyed capital, and his debts are equal to the 
 value of the capital, he pays nothing. It is true exact uniformity 
 can never be attained, but the law requires at least an approxi- 
 mation to it, else the proviso in the Eevised Statutes is useless. 
 While the tax is legal, if laid at the same " rate " as other moneyed 
 capital is taxed, and it may be said to be uniform if the rate is 
 uniform, yet uniformity of rate presupposes uniformity of valua- 
 tion. If, for instance. State bank stocks were appraised at their 
 par value and National bank stocks at their cash value, there 
 would be no real uniformity of rates, though the percentage might 
 be the same in both cases, since the cash value might be half or 
 double the par value. This principle is recognized in the Railroad 
 Tax Cases, 3 Otto, 611, where the tax was sustained upon the 
 ground that the rate imposed on railroad property was no greater 
 than that upon other property, and the valuation was assessed 
 upon the same principle which was applied to the property of indi- 
 
OIECUIT COUET, 1877. 311 
 
 City National Bank v. Padacah. 
 
 Tiduals. Althougli by the term " moneyed capital," in section 5219, 
 is meant taxable moneyed capital, yet this must be understood 
 only as distinguishing a class of capital which is taxable from 
 another, which, from motives of public policy, is exempt. All 
 moneyed capital listed under the fifth subdivision of the equaliza- 
 tion law belongs to the class of taxable moneyed capital, made the 
 basis of comparison in section 5219 ; but if in the hands of "A" 
 this capital is taxed, and in the hands of "B" it is not taxed, 
 because he is in debt to its full value, like discrimination should be 
 made if this capital consists of National bank stock, or the tax is 
 not uniform. The Legislature may discriminate among different 
 classes of capital without violating the requirements of uniform- 
 ity, yet as between individuals of the same class the burden must 
 be laid equally. It cannot tax A and exempt B, if the property is 
 of the same class. Now, the act of Congress classifies National 
 bank stock with other taxable moneyed capital, and inhibits dis- 
 crimination against it and in favor of other moneyed capital. If 
 a deduction of debts is allowed in one case, it should be in the 
 other, or there is no uniformity. 
 
 Nor is this discrimination likely to work a hardship, only in 
 rare instances. Most business men, amoag whom bank stock is 
 principally owned, are more or less indebted, and the system which 
 permits the debts of one to be deducted and not those of another, 
 can hardly be said to be uniform. It is true the deduction of this 
 indebtedness may be practically impossible so long as the shares of 
 banks are listed under the equalization law above quoted ; but this 
 is an argument to show, not that the tax is uniform with that lev- 
 ied upon other moneyed capital ; but that the rule announced 
 earlier in this opinion, that the taxation of National banks should 
 conform to that of State banks, is the only one under which taxa- 
 tion can be practically and uniformly imposed. 
 
 Another want of uniformity exists in the fact that no provision 
 is made for the deduction of the value of real estate from the 
 aggregate value of the shares. The laws of Ohio, and it is believed 
 of other States, require the appraised value of the real estate to be 
 deducted from the actual total value of the shares before they are 
 listed for taxation. Without such provision, a double tax is paid 
 upon the value of the real estate, from which other moneyed cap- 
 ital is exempt. 
 
 I lay no stress upon the deduction of one hundred dollars, 
 
312 TNITED STATES 
 
 Canfield v. The Stcte National Bank of Minneapolia. 
 
 allowed by the equalization law, or upon the fact that shares owned 
 by colored people may be taxed for the support of common schools 
 in violation of the law applicable to other moneyed capital. These 
 exemptions fall within the rule laid down in Hepburn t. School 
 Directors, and Everitt's Appeal, 71 Penn. St. 216 (see^os^); and do 
 very little to disturb the practical uniformity of the law. De 
 minimis non curat lex. 
 
 But from whaterer point of view this case is considered, the 
 fact is apparent, that by the ordinance of Paducah a large tax is 
 imposed upon the shares of National banks, from which the bank- 
 ing capital of the State is wholly exempt ; and though the per- 
 centage is nominally the same, the tax is far more onerous than 
 that laid upon other moneyed capital in the city. For these reasons 
 it seems to me the legislation is in conflict with the act of Con- 
 gress, and therefore invalid. 
 
 A decree will be entered perpetuating the injunction. 
 
 Cakfield v. The State National Baitk of Minkeapolis. 
 
 (1 Northwestern Eeporter, 173.) 
 National hanks may take stock as collateral security. 
 
 A National bank loaned money and took stock in a corporation as collateral 
 security therefor. Held, that it had not exceeded its powers.* 
 
 (Circuit Court, Eighth Circuit, District of Minnesota.) 
 
 IN this cause a motion is made for an injunction, and is heard 
 upon bill, and answer used by defendants as an aflBdavit, and 
 a counter afiEidavit. 
 
 The allegations in the bill of complaint are briefly, that the com- 
 plainant is the owner of about sixty-flve acres of land in Hennepin 
 county, in this district, of which he is in possession, and that the 
 defendants claim some interest therein adverse to him, and he de- 
 
 * See Mrst Nat. Bank of Oha/rlotte v. Nat. Exehcmge Bank, ante, p. 124; and 
 Shoemaker v. Nat. ExaJumge Bank, ante, p. 169 . 
 
OIEOUIT COURT, 1877. 313 
 
 Canfield v. The State IN^ational Bank of Minneapolia. 
 
 sires that the respective claims may be litigated. He states that 
 the Minnesota Agricultural and Mechanical Association was organ- 
 ized in June, 1871, as a body corporate, with a capital stock of 
 $40,000, represented by shares of 150 each, all of which was taken 
 by certain parties therein named, and that the corporation soon after 
 its organization, purchased the land now in possession of the com- 
 plainant, for the sum of $10,000, and erected buildings upon the 
 same of equal value. That the object of the association and the 
 purpose for which the property was purchased and the buildings 
 erected, were confined to holding fairs, of which one or two were 
 held during 1871, and none since. That the real estate was placed 
 under the control of William S. King, one of the stockholders, and 
 a director, to be used by him as he saw fit, a majority of the stock 
 being owned by him ; and that prior to August 14, 1873, he had 
 purchased and acquired the stock of the corporation, and that it 
 had been transfered to him by the other holders and owners. Also 
 that King had, prior to the above date, acquired the real estate in 
 fee, and free from all claims and demands of the association, and 
 of each of the other directors and former stockholders, with an 
 obligation on the part of the association to make and execute a con- 
 veyance of the same to King, his heirs and assigns, or to such per- 
 sons as he might designate as grantee. 
 
 The bill further states that the complainant contracted with 
 King for the purchase of the real estate August 14, 1873, and the 
 same was finally consummated and deeds were executed and de- 
 livered to him by King, and also by all of the directors of the asso- 
 ciation, but no delivery of any stock was made as he states on 
 account of his forgetf ulness and inadvertence in requesting it. 
 
 It also appears substantially in the bill, that Brackett, one of the 
 directors, borrowed money of the bank in April, 1873, for which 
 he gave his note and transferred as collateral to it, two hundred 
 shares of stock of the Agricultural and Mechanical Association, 
 and three promissory notes of William S. King, dated in Novem- 
 ber, 1873, for the payment of which the stock had been pledged; 
 and also that R. J. Mendenhall, one of the directors of the associa- 
 tion, borrowed money from the bank and gave his note, and trans- 
 ferred as collateral, one hundred shares of stock and. certain notes 
 of Wm. S. King, dated in 1873, for the payment of which the 
 stock had been pledged. 
 
 It is charged that the bank has no title whatever or claim to the 
 40 
 
314 UNITED STATES 
 
 Canfield v The State National Bank of Minneapolis. 
 
 remaining five hundred shares of stock, and that it was never 
 deposited as collateral, or pledged in any manner. 
 
 The maturity of the notes for which the shares of stock were 
 pledged is alleged, and that the bank is about to sell them at pub- 
 lic auction, having given notice thereof. 
 
 The answer of the defendant, the bank, denies the material alle- 
 gation in the bill as above stated, but admits that it holds the three 
 hundred shares of stock substantially as therein set forth, and also 
 states that in July, 1873, King, owner of the five hundred shares 
 remaining, borrowed certain gas stock, property of E. J. Baldwin, 
 the cashier of the bank, to enable himself to raise a certain amount 
 of money, and, in consideration of the loan, transferred the five 
 hundred shares to Baldwin, as security for the return of the gas 
 stock, and also to retain as additional security for the payment of 
 the Brackett and Mendenhall notes, held by the bank. 
 
 It is charged that the security taken by the bank is in violation 
 of lafw, and an injunction is asked restraining the sale of the stock 
 by the bank. 
 
 Palmer & Bell, for motion. 
 
 Geo. Bradley, contra. 
 
 Nelson, J. The shares of stock held by the bank are a security 
 not objectionable, in my opinion, to section 5136, Rev. Stat. (XT. S.), 
 par. 7. If so, the right to sell three hundred shares pledged as col- 
 lateral to the King notes, originally given Brackett and Menden- 
 hall, is not doubtful. A second pledgee holds the security to the 
 extent of the debt for which it is pledged, and can sell at any time 
 after the debt is due and payable. It is optional with the bank to 
 stand to its remedy against the pledge or sue for its debt, and the 
 law gave it the right to sell, ex mero motu, on proper notice of an 
 intention so to do, or to file a bill in equity to foreclose and sell 
 under a decree. Hilliard on Mortgages, vol. 3, Appendix, 526. 
 
 Although the King notes and the Brackett and Mendenhall notes 
 had been overdue a long time, it is not deprived of this privilege 
 given by law -to select its remedy. It is charged that the bank has 
 no title to the remaining five hundred shares of stock, and that the 
 same have not been pledged or deposited with it as a collateral 
 security for any sum whatsoever, or with any right to sell. 
 
CIRCUIT, OOUET, 1875. 315 
 
 Pittsburgh Locomotive and Car Works T. State National Bank of Keokuk. 
 
 The answer of the bank, which was used upon the motion as an 
 affidavit, denies this allegation, and the counter affidavit and 
 exhibits produced by the complainant do not overcome, but rather 
 support the substantial claim set up in the answer by the bank to 
 lien upon this amount of stock. 
 
 Applying the usual rule, on motions of this kind, the complain- 
 ant's equity is not so clear as to entitle him to an injunction, for 
 there is reasonable doubt as to the facts upon which the motion is 
 based, and the injury resulting from a sale of the stock is not im- 
 probable. The purchaser would take only such title as the pledger 
 had at the time the security was given, and the rule of caveat emp- 
 tor will govern. 
 
 Having come to a conclusion adverse to the complainant's appli- 
 cation for the reason stated, it is not proper to consider at this 
 time the effect of the judgment set up in the answer as a defense 
 in a case in which the parties are substantially reversed. 
 
 Motion for an injunction denied. 
 
 PiTTSBUEGH LOCOMOTIVE AND OaR WORKS V. StATB NATIONAL 
 
 Baktk of Keokuk. 
 
 (2 Cent. Law. Jour. 692.) « 
 
 National hanks may take pledge of chattels. 
 
 National banks may take personal chattels (e. g. , a locomotive) as security for 
 loans and discounts. 
 
 (Circuit Court, Eighth Circuit.) 
 
 REPLEVIN for a locomotive engine. In July, 1873, the plain- 
 tiffs and the Miss. Valley & West. E. R. Co. (an Iowa and 
 Missouri corporation) entered into a written contract, by the terms 
 of which it " let " or leased to the railroad company the locomotive 
 engine for nine months, for a sum equal to the value of the loco- 
 motive, one-fourth of which was paid at or near the date of the 
 instrument, and the balance was to have been paid within the nine 
 months. If paid, the plaintiff was to execute to the railroad com- 
 
316 UNITED STATES 
 
 Pittsburgh Locomotive and Car Works v. State National Bank of Keokuk. 
 
 pany a bill of sale ; if not paid, the plaintifE " was to re-possess 
 and enjoy the engine as though the instrument had never been 
 made." 
 
 The instrument contained a stipulation on the part of the rail- 
 road company, that the said locomotive engine should be taken to 
 Keokuk, Iowa, by the railroad company, and there kept and used 
 and not removed from the control of the railroad company without 
 the consent of the plaintiff. 
 
 The engine was sent to the railroad company, and was received 
 by it at a town on its line in Missouri. While there, to wit, in 
 September, 1873, said railroad company borrowed of the State 
 National Bank of Keokuk $1,350, and pledged the engine to the 
 bank as security, placing the same in the actual custody of a third 
 person for the security of the bank. The bank had no notice of 
 the plaintiff's lease or claim on the locomotive, and the plaintiff's 
 lease was never recorded. The question in the case is whether the 
 pledge to the bank gives it the right to hold the locomotives as 
 security for its loan to the railroad company as against the plain- 
 tiff. 
 
 At the date of these transactions there was in force in the State 
 of Iowa the following statute : 
 
 " No sale or contract or lease wherein the transfer of title or 
 ownership of personal property is made to depend upon any con- 
 dition, shall be valid against any creditor or purchaser of the ven- 
 dee or lessee in actual possession obtained in pursuance thereof 
 without notice, unless the same be in writing, executed by the 
 vendor or lessor, acknowledged and recorded the same as chattel 
 mortgages." Code, 1873, § 1932. 
 
 Howell S Anderson, for plaintiff. 
 
 Gillmore S Anderson, for bank. 
 
 Dillon, Circuit Judge, orally said : 
 
 1. Conceding that the instrument of lease was executed in 
 Pennsylvania, and that as between the parties it does not show a 
 sale of the engine, and that, a;side from the Iowa statute (Code 
 1873, § 1933), the plaintiffs would have the superior right, I am of 
 the opinion, in view of the express stipulation of the contract, that 
 the locomotive was to be taken to Iowa and there used by the rail- 
 road company; that the Iowa statute controls the case, and has the 
 
CIECUIT COUKT, 1876. 317 
 
 Crocker v. First National Bank of Chetopa. 
 
 effect to subordinate the rights of the plaintiffs to the lien of the 
 bank as pledge. 2. I am furthermore of the opinion, that under 
 the National Banking Act the bank had the right, on making the 
 loan to the railroad company, to take a pledge of the locomotive as 
 security. National banks are not, in my judgment, confined, in 
 the taking of security for discounts and loans, to the security 
 afforded by the names of indorsers or personal sureties, but may 
 take a pledge of bonds, choses in action, bills of lading, or other 
 personal chattels. The words " loans on personal security," in the 
 Banking Act, are used in contra-distinction to real estate security. 
 Such has been the usage of the banks, and any other construction 
 would throw a bombshell into the community, and injure both the 
 banks and their customers. 
 
 Judgment for defendant. 
 
 Ceockbr, assignee, v. First National Bajstk of Chetopa. 
 
 (3 Am. Law Times Rep. [N. S.] 350.) 
 
 Revised Statutes, §S5 S\.V^,5\S%, construed — Bate of interest — Bight of action to 
 recover hack illegal interest passes to assignee in bankruptcy — Extent of recovery. 
 
 A National bank located in Kansas charged and received interest at the rate 
 of eighteen per cent per annum. Meld, that it was liable under the National 
 Banking Act (Rev. Stats., §§ 5197, 5198) to pay back twice the amount of in- 
 terest thus received. 
 
 If the person who paid such illegal interest is adjudged a bankrupt, the right 
 of action passes to his assignee in bankruptcy, such assignee being his 
 "legal representative" within the meaning of section 5198 of the Revised 
 Statutes. 
 
 The amount of the recovery is twice the full amount of interest paid, and is 
 not limited to twice the excess of interest paid over the legal rate.* 
 
 (Circuit Court, Eighth Circuit, District of Kansas.) 
 
 THIS is an action by an assignee in bankruptcy, brought in 1875 
 to recover from the defendant, a bank organized under the 
 act of Congress commonly known as the National Banking Act, 
 
 * See, contra, Hintermister v. Mrst Wat. Bank (64 N. Y. 313), post, and 
 Brown v. Second Nat. Bank (72 Paun. St. 309), post, wherein it was held that 
 the recovery was limited to twice the excess of interest paid. — Rep. 
 
318 UNITED STATES 
 
 Crocker v. First National Bank of Chetopa. 
 
 double the amount of interest which he charges was taken from 
 the bankrupts by the defendants upon numerous transactions after 
 1872 and prior to the bankruptcy. The petition charges in each 
 count that the interest charged was " a greater rate of interest 
 than was allowed by the laws of the State of Kansas." 
 
 It is material to inquire what was the law of the State of Kan- 
 sas in regard to interest, during the period covered by the counts 
 not barred by the statute. To properly understand the Kansas 
 interest law, it is necessary to begin with the General Statutes, 
 1868, chapter 51, page 535, which contains the following : 
 
 " Sec. 3. The parties to any bond, bill, or promissory note, or other instru- 
 ment of writing for the payment or forbearance of money, may stipulate 
 therein for interest receivable upon the amount of such bond, bill, note, or 
 other instrument, at any rate not exceeding twelve per cent per annum. 
 
 " Sbc. 3. All payments of money or property made by way of usurious inter- 
 est, or of inducement to contract for more than twelve per cent per annum, 
 whether made in advance or not, shall be deemed and taken to be payments 
 made on account of the principal, and the courts shall render judgment for no 
 greater sum than the balance found due after deducting the payments of 
 money or property made as aforesaid, without the interest ; nor shall any 
 debtor be deemed in equal wrong on account of having paid, or having agreed 
 to pay, such usurious interest or such inducement, but shall have like remedy 
 and relief in either case. 
 
 " Sbc. 4. Any person contracting, by promissory note, bill of exchange, 
 bond, or otherwise, to receive a greater rate of interest than that allowed by 
 this act, shall forfeit all interest, and shall recover' no more than the principal 
 of such note, bill, bond, or other contract." 
 
 Those sections clearly limited the rate of interest to twelve per 
 cent per annum, and punished the creditor who contracted for 
 more with an entire forfeiture of all interest, at the same time 
 rewarding the debtor with a credit upon the principal debt of so 
 much as he might have paid for interest on a usurious contract. 
 This remained the law until June 30, 1872, when sections 2, 3, and 
 4 quoted were repealed by the act of February 38, and the follow- 
 ing took efEect : 
 
 Laws 1873, p. 384. " Sec. 3. The parties to any bond, bill, promissory 
 note, or other instrument of writing for the payment or forbearance of money , 
 may stipulate therein for interest receivable on the amount of such bond, bill, 
 note, or other instrument of writing ; provided, that no person shall recover in 
 any court more than twelve per cent interest thereon per annum. 
 
 " Sbc. 3. All payments of money or property made by way of usurious inter- 
 est or inducement to contract for more than twelve per cent per annum. 
 
CIECUIT COUET, 1876. 319 
 
 Crocker v. First National Bank of Chetopa . 
 
 whether made in advance or not, shall be deemed and taken to be payments 
 made on account of the principal and twelve per cent interest per annum, and 
 the courts shall render judgment for no greater sum than the balance found 
 due after deducting the payments of money or property made as aforesaid." 
 
 A general denial was filed to the petition, a jury waived, and 
 the cause tried by the court. 
 
 McOomas & McKeighan, for plaintiff. 
 
 John K. Cravens, contra. 
 
 DiLLOif, Circuit Judge. The usurious transaction in respect of 
 which this action is brought occurred after the State statute of 
 June 30, 1872 (Laws of 1873, p. 384), went into operation. This 
 statute, as construed by the Supreme Court of the State, " allowed 
 parties to contract for any rate of interest they might choose, but 
 did not allow the creditor to recover for more than the princij)al 
 and interest at the rate of twelve per cent per annum." Jenness 
 V. Cutler, 13 Kan. 511, per Valentine, J. 
 
 On the loans to the bankrupts, the defendant bank contracted 
 for and received interest at the rate of eighteen per cent per annum. 
 If the debtors had not been adjudged bankrupt, could they have 
 recovered under section 30 of the National Banking Act? Kev. 
 Stats., §§ 5197, 5198. If so, does this right of action pass to 
 their assignee in bankruptcy? And if so, what is the extent of 
 the recovery? These are the questions in the case. 
 
 1. If the effect of the State statute of June 20, 1873, was to 
 abrogate all rates of interest ; if after that enactment no rate of 
 interest existed or " no rate is fixed by the laws of the State " of 
 Kansas, then National banks would be restricted to seven per cent 
 as the maximum rate they could lawfully charge. Eev. Stats., 
 § 5197 ; Tiffany v. National Bank of Missouri, 18 Wall. 409 
 (ante, p. 90). 
 
 If, however, this was not the effect on that enactment, then 
 twelve per cent is the maximum legal rate allowed by the laws of 
 Kansas. In either event, the defendant bank charged and received 
 an illegal rate. If bankruptcy had not supervened, it is clear that 
 Marsh & Overhuls, the bankrupts, might, under the National 
 Banking Act (Eev. Stats., § 5198), have recovered from the defend- 
 ant bank twice the amount of interest paid, as therein provided. 
 
 Indeed, the right of action is yet in them if it is not barred by 
 
320 UNITED STATES 
 
 Crocker v. First National Bank of Chetopa. 
 
 the two years limitation (Rev. Stats., § 5198), unless it has passed 
 to their assignee in bankruptcy. 
 
 3. The next question is, Is the assignee in bankruptcy their 
 "legal representative " within the meaning of the statute? Rev. 
 Stats., § 5198. It is our opinion that an assignee in bankruptcy 
 is, in respect of such a claim as this, which has injuriously affected 
 and reduced the estate in bankruptgy, and which is to be enforced 
 " by an action in the nature of an action of debt," peculiarly and 
 most appropriately "the legal representative" of the bankrupt. 
 Every reason which in case of the death of the debtor, without 
 bankruptcy, would give the right of action to the administrator or 
 executor, as his legal representative, applies with full force to the 
 assignee in bankruptcy, if his estate is, during his life-time, admin- 
 istered in a court of bankruptcy. See Tiffany v. National Bank 
 of Missouri, supra ; 1 Deacon on Bankruptcy (3d ed.), 523, 524 ; 
 Beckham v. Brake, 2 H. L. Cases, 640. 
 
 In this view it is unnecessary to determine whether the right of 
 action would vest in the assignee under the Bankrupt Act (Rev. 
 Stats., §§ 5044, 5045, 5046, 5047), though it seems not improbable 
 that the provisions of these sections are comprehensive enough to 
 embrace it. Darby's Trustees v. Boatmen's Sav. Inst., 1 Dillon, 
 141 ; S. C, 18 Wall. 375. 
 
 Under the English Bankrupt Act no right of action passes to 
 the assignee for a mere personal tort to the bankrupt, as for assault 
 or libel, but it is otherwise m respect of injuries or torts which 
 result in diminishing the estate of the bankrupt ; and the distinc- 
 tion is taken between rights of action where personal suffering or 
 inconvenience is the primary cause of the action (which do not 
 pass), and when pecuniary I'oss or damage is the primary cause of 
 action, which do pass. 1 Deacon on Bankruptcy (3d pd.), 522 et 
 seq. This distinction seems to be made in our Bankrupt Act, 
 which vests in the assignee all such "rights of action." 
 
 3. The next question is, whether the recovery shall be for double 
 the whole amount of interest paid, or only double the amount in 
 excess of the legal rate, whether that be seven or twelve per cent? 
 Where an illegal rate of interest is charged, and an action is 
 brought on the contract, the statute declares a " forfeiture of the 
 entire interest," and if the usurious interest has been paid, the 
 statute gives an action to recover back, not simply the excess over 
 the legal rates, but "twice the amount of interest thus paid," 
 that is, paid in pursuance of an usurious contract or transaction. 
 
CIECUIT COUET, 1876. 
 
 Wright V. The Merchants' National Bank. 
 
 National banks owe a duty to the public to observe the limita- 
 tions of the act of Congress in respect of the rate of interest ; 
 limitations wisely imposed, but in many of the Western States, at 
 least, very frequently disregarded. They have privileges enough, 
 without usurping others. They have powers enough, without exer- 
 ercising those not conferred, or transcending the limits of their 
 charters. They ought not to become usurers ; and if they do, 
 public policy is promoted by an enforcement of the penalties which 
 the statute has denounced. It should be borne in mind that the 
 statute confirms the action to the person who has paid the illegal 
 interest, or to his legal representative, thus showing that it was in 
 part its purpose to repair this loss or reimburse his estate — there 
 being superadded the further purpose of preventing such viola- 
 tions of the law, the infliction of a penalty of twice the amount 
 of interest paid. This penalty was, doubtless, supposed by Con- 
 gress to be no more than would be reasonably sufficient to cover 
 the excess of interest over the legal rate, and costs and expenses 
 of litigation, and at the same time make it more profitable to the 
 banks to obey the law than to violate it. 
 
 Judgment will be entered for the plaintiff for $2,219.93, that 
 being twice the full amount of interest paid on the usurious trans- 
 actions set out in the petition, nor barred. 
 
 Judgment accordingly. 
 
 Weight v. The Mbechants' National Bank. 
 
 (3 Cent. Law Jour. 351.) 
 Appointment of receiver of National tank by the court. 
 
 The provisions of the General Banking Law for winding up National banks 
 under the direction of the Comptroller of the Currency, are not exclusive 
 and were not Intended to oust the courts of their power to appoint a receiver 
 upon a judgment-creditor's bill* 
 
 (Circuit Court, Sixth Circuit, Western District of Tennessee.) 
 
 DEMUKEER to judgment-creditor's bill. 
 The bill sets forth in substance that complainant had recently 
 obtained Judgment of ten thousand dollars against defendant in 
 
 * See Irons v. Manufacturer^ Nat. Bank, ante, p. 204 ; also Ue Manufact- 
 urers' Nat. Bank, amte, p. 193. 
 
 41 
 
322 UNITED STATES 
 
 Wright V. The Merchants' National Bank. 
 
 the State court; that she was unable to obtain payment of the 
 same; that the bank had closed its doors, discontinued business, 
 and was insolvent; and that, in contemplation of such insolvency, it 
 had conveyed and transferred all its assets to one creditor, a cor- 
 respondent bank in the city of New York, which was also a large 
 stockholder in the defendant corporation; that this preferred 
 creditor is appropriating all the assets to its own debt; that noth- 
 ing will be left for the plaintiff, or can now be collected by legal 
 process, and she, therefore, prayed for an injunction and receiver. 
 Demurrer was taken to the bill upon the sole ground, that under 
 the provisions of the National Banking Law, a receiver could only 
 be appointed by the Comptroller of the Currency. 
 
 Messrs. Welsh, T. W. Brown and W. Y. G. Hmnes, for com- 
 plainant. 
 
 M?: Beard, for defendant. 
 
 Beown, J. The power and duty of a court of equity to appoint 
 a receiver upon the application of a judgment-creditor, is too well 
 established to admit of doubt. Edwards on Keceivers, 396; Sad- 
 den V. Spader, 20 Johns. 553; Taylor v. Jones, 2 Atk. 600; Edgell 
 V. Haywood, 3 id. 353; Candler v_, Pettit, 1 Paige, 168; Weed v. 
 Pierce, 9 Cow. 733; Lewis v. ZoucTie, 3 Sim. 388; Bloodgood v. 
 Clarlc, i Paige, 574; Ogilvie v. Knox Insurance Co., 33 How. 380; 
 Parhhurst v. Kinsman, 3 Blatchf. 78. There is no allegation in 
 the bill that execution has been issued and returned unsatisfied, 
 but as no demurrer is interposed upon that ground, and as the 
 point was not made upon the argument, I shall notice it no 
 further. 
 
 Indeed, it was practically conceded that a case for a receiver was 
 made out, unless the power of appointing receivers of National 
 banks was exclusively vested in the Comptroller of the Currency. 
 Title 63 of the Eevised Statutes, relating to the organization of 
 banks, provides for the appointment of a receiver by the Comp- 
 troller of the Currency to wind up their affairs, only in the follow- 
 ing cases: First, for not keeping good a surplus. § 5151. Second, 
 for not keeping stock at minimum. § 5141. Third, for not keep- 
 ing good its reserve. § 5191. Fourth, for not selecting a place 
 for the redemption of its notes. § 5195. Fifth, for holding 
 its own stock over six months. § 5301. Sixth, for non-pay- 
 
CIECUIT COURT, 1876. 328 
 
 Wright V. The Merchants' National Bank. 
 
 ment of its circulating notes. § 5234. Seventh, for improperly 
 certifying a check. § 5208. Eighth, for failing to pay up cap- 
 ital stock, and to allow the same to become, and to remain, 
 impaired by losses. § 5205. 
 
 If a judgment-creditor may not inroke the aid of a court of 
 equity he is powerless to enforce his claim, unless he can persuade 
 the Comptroller of the Currency to interfere in his behalf. Section 
 5242 provides that a " transfer of notes, bills of exchange, bonds 
 .or other evidences of debt owing to any National banking associa- 
 tion, or of deposits to its credit, all assignments or mortgages, 
 sureties on real estate, or of judgments or decrees in its favor, all 
 deposits of money, bullion, or other valuable thing for its use, or 
 for the use of any of its shareholders or creditors, and all payments 
 of money to either, made after the commission of an act of insolv- 
 ency, or in contemplation thereof, made with a view to prevent the 
 application of its assets in the manner prescribed by this chapter, 
 or with a view to the preference of one creditor to another, except 
 in payment of its circulating notes, shall be utterly null and void." 
 No method, however, is provided of winding up a bank guilty of 
 any of the acts mentioned in this section, nor is the power given to 
 the Comptroller of the Currency apparently designed to reach these 
 cases. It is at least doubtful whether he would have power, upon 
 the application made by this bill, to interfere and appoint a receiver. 
 That the winding-up provisions of the act were not designed to be 
 exclusive, it seems to me is fairly to be inferred from section 5241, 
 which provides, that "no association shall be subject to any visi- 
 torial powers other than such as are authorized by this title, or are 
 vested in the courts of justice. " There is certainly an implication 
 here that the courts may exercise a visitorial power, and as this 
 power is usually if not always exerted through the agency of a 
 receiver, I should regard the language of this section as justifying 
 the appointment of one. 
 
 But even if the power had been given to the Comptroller of the 
 Currency to appoint a receiver in cases like the present, in the 
 absence of restrictive language, it is at least doubtful whether it 
 should be regarded as forestalling the jurisdiction of the courts. 
 
 The general rule with regard to the election of remedies is stated 
 in Sedgwick on Statutory Law, pages 93-401. "Where aright 
 originally exists at common law, and a statute is passed giving a 
 new remedy without any negative, express or implied, upon the old 
 
324 UNITED STATES 
 
 Wright V. The Merchants' National Bank. 
 
 common law, the party has his election either to sue at common 
 law or to proceed upon the statute ; the statutory remedy is merely 
 cumulative." A clause in a railroad act authorizing the directors 
 to exact a forfeiture of the stock and previous payments, as a pen- 
 alty for non-payment of installments, does not, before forfeiture 
 has been declared, impair the remedy of the directors to enforce 
 payment by action at common law. Northern Railroad Go. v. Mii- 
 ler, 10 Barb. 260. 
 
 These principles have been applied to the winding-up act of 
 English corporations, and have uniformly been held as not exclu- 
 sive of the ordinary remedies provided by law. Lindlay on Part- 
 nership, 861. 
 
 In Jones v. Gharlemont, 16 Sim. 271, a bill was filed for the pur- 
 pose of winding up the afEairs of a railroad company. The defend- 
 ant demurred upon the ground that plaintiffs might have obtained 
 their object under the special act of 9 and 10 Vict., to facilitate the 
 dissolution of railway companies, and that that act had ousted the 
 court of its jurisdiction in cases clearly within its operation. The 
 vice-chancellor, however, declined to hear counsel for the complain- 
 ant, and overruled the demurrer. 
 
 The same question again before the court in the case of Glements 
 V. Bowes, 17 Sim. 167, which was a bill by a shareholder in a 
 company on behalf of himself and others, praying an account of 
 receipts and payments of defendants on behalf of the company. 
 Defendants were members of a finance committee who were alleged 
 to have exclusive control over the money afEairs of the corporation. 
 They demurred on the ground that the Legislature having provided 
 a method of winding-up and dealing with the affairs of a railway 
 company, the court ought to refuse to a party the right of coming 
 to have the accounts taken. The court observes: '"To oust the 
 jurisdiction of a court of chancery in such a case, the Legislature 
 should have so declared. It is plain where a court of equity has 
 jurisdiction in such a case, an act of giving further relief does not 
 by that oust the title of the court of equity, without express terms 
 being used to put an end to the jurisdiction which is inherent in 
 the court." 
 
 Similar views were expressed by the Court of Chancery in 1853, 
 in the case of Fripp v. The Ghard Railway Go., 21 Eng. Law and 
 Eq. 53, which was an application by a mortgagee for the appoint- 
 ment of a receiver. A provision in the act that any mortgagee whose 
 
CIECUIT COURT, 1876. 325 
 
 Wriglit V. The Merchants' National Bank. 
 
 interest was in arrears for twenty-one days might have a receiver 
 appointed upon application to two justices, was held to oust the juris- 
 diction of the court to appoint a receiver with the usual powers. 
 Counsel for defendant cited to the court upon the argument the case 
 of Smith V. Manufacturers' Bank, 9 B. E. 123 (same case under 
 name of In re Manufacturer^ Nat. BanTc, ante, p. 192), in which 
 Judge Blodgett, of the Northern District of Illinois, held that the 
 Bankrupt Act was not intended to apply to National banks, and that 
 the provision made by Congress for their winding-up, when insolv- 
 ent, was exclusive. Although the two cases are not exactly anal- 
 ogous, the reasoning of the court in that case undoubtedly applies 
 to the one at bar. Having intimated an opinion upon the argument 
 before this case was cited, and that the winding-up provisions were 
 not exclusive, I felt bound on hearing the case, in deference to the 
 views of the learned judge, to withhold my decision until I had 
 made a more careful examination of the law. Prom correspond- 
 ence with him I am informed that he has modified, to some extent, 
 the views expressed in that opinion, and that in the subsequent 
 case of Irons v. The Manufacturers' National Banlc (ante, p. 
 204), he appointed a receiver of the same bank upon the appli- 
 cation of a judgment-creditor. He there observes: "It would 
 seem that the Comptroller only has the right to appoint a receiver 
 upon the existence of the facts which clothe him with that power, 
 and that he rightfully declines to act in this case. I can see noth- 
 ing in the law itself, nor in the decision of the courts upon the 
 law, so far as they have gone, to exclude the idea that a corporation 
 created as this is, under an act of Congress for certain specified 
 purposes, does not come within the general provision of the law 
 regulating the remedies of creditors the same as any other corpora- 
 tion, except where there are specific provisions to the contrary." 
 
 It is not intended in this case to decide whether the court would 
 be authorized to appoint a receiver upon the happening of the con- 
 tingencies authorizing such apppointment by the Comptroller of 
 the Currency. I am clearly of the opinion, however, that when the 
 act does not provide for the introduction of the Comptroller, a judg- 
 ment-creditor is entitled to the aid of a court of equity. I see 
 nothing in the case of Gibson v. Kennedy, 8 Wall. 498 {ante, p. 17), 
 which conflicts with these views. Nothing was decided in that case, 
 except that it is for the Comptroller to determine when it is neces- 
 sary to institute proceedings against the stockholders to enforce their 
 
326 UNITED STATES 
 
 St. Louis National Bank v. Papin. 
 
 personal liability, and whether a whole or part, and if a part, how 
 much shall be collected. It is true there are certain dicta in the 
 opinion which, literally construed, would indicate that creditors 
 must, in all cases, seek their remedy through the Comptroller in 
 the mode prescribed by statute, but I am satisfied the court did 
 not intend that language to be of universal application, and that 
 it should be limited to the facts before it. Nor is there any force 
 in the objection that a receiver appointed by this court would be 
 powerless to obtain possession of the surplus of bonds on deposit 
 in Washington, for the redemption of its circulating notes. I can- 
 not assume that the Comptroller of the Currency would refuse to 
 comply with the order of a court having jurisdiction of the case. 
 
 On the whole, I am of the opinion that in the absence of action 
 on the part of the Comptroller of the Currency, this court has the 
 power to appoint a receiver upon the application of a judgment- 
 creditor, subject, possibly, to his being superseded by the action of 
 the Comptroller. 
 
 The demurrer must be overruled. 
 
 St. Louis National Bank v. Papin. 
 
 (3 Cent. Law Jour. 669.) 
 
 BeitraAning collection of tax — Construction of statutes — Construction of Na- 
 tional Banking Act — Missouri B&oenue Act. 
 
 Shares being taxable, and no excessive valuation being complained of, equity 
 will not restrain the collection of the taxes, though the assesBing officers 
 may have arrived at a correct result by some erroneous method. 
 
 Where an act of the Legislature is susceptible of two interpretations, one of 
 which will overthrow the act or make it unconstitutjoaal, and the other 
 will support the act and give it effect, the latter is to be adopted by the 
 judicial branch of the government. This principle is one which com- 
 mends itself to the Federal courts with great force, in all cases where they 
 are called upon to expound and apply State legislation, and especially so 
 where courts are asked to overthrow the revenue laws of the States. 
 
 By the section of the National Banking Act (Rev. Stats., § 5319) which per- 
 mits the States to authorize all the shares held in National banks by any 
 person, to be included in the valuation of his personal property, and to be 
 assessed at the place where the National bank is located, subject to the re- 
 striction ',' that the taxation shall not be at a greater rate than is assessed 
 
OIECUIT COUKT, 1876. 327 
 
 St. Louis National Bank v. Papin. 
 
 upon other moneyed capital in the hands of individuals," Congress has lim- 
 ited the States to taxation upon the shares in National banks as distinguished 
 from taxation of the banks eo nomine upon their property or capital. A 
 State cannot evade the restrictions of the act by requiring the value of the 
 property of the bank to be added to the value of the shares otherwise 
 ascertained, and thus produce an unfavorable discrimination in the taxation 
 of bank shares. 
 As regards National banks, section 35 of the Revenue Act of Missouri may be 
 construed as intended to impose a tax upon the shares only in such banks 
 as their actual cash value, to be estimated by the taxing officers upon an 
 inquiry inter alia into the actual value of the property of the banks, so far 
 as it imparts or confers a value upon the shares. 
 
 (Before Hon. John P. DrLLON, Circuit Judge, and Hon. Samtjbl Treat, Dis- 
 trict Judge.) 
 
 THE National Banking Act permits all the States to authorize 
 all the shares held in National banks by any person to be 
 included in the yaluation of his personal property, and to be 
 assessed where the National bank is located, subject to the restric- 
 tion (the only one here inTolved), that such shares shall not be 
 taxed " at a greater rate than is assessed upon other moneyed capi- 
 tal in the hands of individuals." Eev. Stats., § 5319. The 
 Constitution of Missouri requires all property to be taxed in pro- 
 portion to its value. In the Eevenue Act of the State of Missouri, 
 approved March 30, 1873 (Wag. Stat., eh. 118), are the following 
 provisions in respect to the taxation of property and shares in cor- 
 porations. 
 
 Section 35 of this act provides as follows : 
 
 " Persons owning shares of stock in banks or any joint-stock institution or 
 association doing a banking business, or any insurance company, whether fire, 
 marine, life, health, accident, or other insurance, incorporated under or by any 
 law of the United States or of this State, are not required to deliver to the 
 assessor a list thereof ; but the president or other chief officers of such corpo- 
 ration shall, under oath, deliver to the assessor a list of all shares of stock 
 held therein, and the names of the persons who hold the same, and shall also 
 state the actual cash value of such stock and all the property belonging to 
 such corporation. In estimating the value of such stock and property, the 
 officer making the same shall estimate and include all reserve funds, undi.- 
 vided profits, premiums or earnings, and all other values belonging to such 
 corporation, which cash value shall be assessed and taxed as other personal 
 property. Insurance companies, or any corporations doing business on the 
 mutual plan without capital stock, shall make like returns of the net value, and 
 shall be assessed and taxed in like manner ; private bankers, brokers, money 
 brokers and exchange dealers shall in like manner make returns of all moneys 
 
328 UNITED STATES 
 
 St. Louis National Bank v. Papiu. 
 
 or values of any description invested in, or used in, tlieir business, wliicli shall 
 be taxed as otber personal property." 
 
 Sec. 36. " The taxes assessed on shares of stock embraced in such list shall 
 be paid by the corporations respectively, and they may recover from the 
 owners of such shares the amount so paid by them, or deduct the same from 
 the dividends accruing on such shares, and the amount so paid shall be a lien 
 on such shares respectively, and shall be paid before a transfer thereof can be 
 made. " 
 
 Sections 37 and 18 and 130 of the act refer to the mode of pro- 
 ceeding to collect the taxes, and penalties for non-compliance with 
 its provisions. 
 
 Six of the ISTational banks located in St. Louis brought in this 
 court bills in equity for an injunction to restrain the collection, 
 amounting to $158,772.53, levied for the year 1875, under the 
 authority of the revenue laws of the State, upon the shares of the 
 respective shareholders of the said banks. Answers were filed and 
 proofs taken, and the cases were argued and submitted together. 
 
 James 0. Broadhead, Henry Hitchcock, Noble and Orrick, and 
 M. B. Jonas, for plaintifE. 
 
 F. J. Bowman, Samuel Reber and Q. A. Madill, for defendant. 
 
 DiLLOif, Circuit Judge, Teeat, District Judge, concurring. 
 
 The bills do not allege that the State has taxed or attempted to 
 assess any tax against any of the banks eo nomine in respect of 
 property (other than real estate) owned by them in their corporate 
 capacity. The only tax assessed by the State or under its authority, 
 except a tax on the real estate, of which no complaint is made, is a 
 tax upon the shares of the shareholders. It is not alleged in the 
 bills, as a ground for injunction or relief, that the shares have in 
 fact been valued for taxation at more than their actual cash value. 
 
 But the special ground of complaint is that the taxes in ques- 
 tion are not authorized, and if authorized, are authorized by 
 section 35 of the Eevenue Act of 1873, above quoted, and 
 that section that prescribes a mode of ascertaining and fixing 
 the valuation of the shares (which mode the taxing officers 
 of the State are bound to follow) in conflict with the permis- 
 sion given in the National Banking Act to the States to tax the 
 shares, and which, if carried out, as it must be if any taxes what- 
 ever are levied under it, results necessarily as contended in taxing 
 these shares more than the other moneyed capital in the State is- 
 
CIECUIT COUET, 1876. 329 
 
 St. Louis National Bank v. Papin. 
 
 taxed, thus at once contrareiiing the restriction in this respect 
 contained in the act of Congress, and the provision as to equality 
 of taxation contained in the Constitution of the State. 
 
 It is contended by the counsel for the banks that by the provis- 
 ion of section 35 of the Eevenue Act of 1872, above given, 
 the Legislature has provided for taxing the shareholders not only 
 upon the value of their shares as such, but in addition to this, for 
 taxing them through their shares upon all the property of the 
 bank by commanding the taxing officers to " include " the value of 
 all such property in the valuation of the shares. 
 
 It is probably a sound view of the Federal legislation as jt stands 
 (Eev. Stat., § 5319) that Congress has limited the States to taxa- 
 tion upon the shares in National banks, as distinguished from 
 taxation of the banks eo nomine upon their property or capital, 
 and if so, the States could not evade the restrictions of the act of 
 Congress by requiring the value of the property of the bank to be 
 added to the value of the shares otherwise ascertained, and thus 
 produce an unfavorable discrimination in the taxation of bank 
 shares. The question is, whether the Legislature of Missouri has 
 done what the counsel for the banks assert. 
 
 It must be that the language of section 35 is not free from 
 obscurity, and that has been quite manifest upon the argument 
 before us, since it showed that the counsel for the defendant have 
 put difEerent constructions upon it. In reaching a conclusion the 
 court must bear in mind certain established principles of construc- 
 tion. One is, that where an act of the Legislature is susceptible 
 of two interpretations, one of which will overthrow the act or 
 make it unconstitutional, and the other will support the act and 
 give it effect, the latter is to be adopted by the judical branch of 
 the government. This principle is one which commends itself to 
 the Federal courts with great force, in all cases where they are 
 called upon to expound and apply State legislation, and with more 
 than ordinary persuasiveness and cogency in cases in which these 
 courts are asked to overthrow the Eevenue Law of the State. 
 
 The court is of opinion that section 35, in respect of the valua- 
 tion of the shares in National banks, does not necessarily require 
 the construction which the banks put upon it. That is to say, it 
 does not require the value of the property of the bank as a corpor- 
 ate entity, to be added to the value of the shares, and the whole 
 to be divided by the number of shares, the quotient giving the 
 42 
 
330 UNITED STATES 
 
 St. Louis Nationa] Bank v. Papin. 
 
 value of each share. But its requirement is to ascertain and tax 
 the share at its actual cash yalue ; but in ascertaining that value, 
 the officer is directed to regard and include in his estimate all 
 reserve funds, profits, earnings, and other values. Why not ? 
 These are important elements in the question of value, and they 
 shouldbe included in estimating the value of the stock. Prom these, 
 indeed, the stock derives its principal pecuniary value. Suppose 
 the direction to the taxing officers wsls to assess the shares at their 
 cash value, without prescribing how that value should be ascer- 
 tained. The cash value may be more or less than the par value, or 
 more or less than the market value. The actual value of shares 
 depends chiefly upon the capital, property and values owned by the 
 bank. Any intelligent determination of the value of a share 
 involves an inquiry into the assets and property of the bank. 
 
 The act did not intend to make the estimate of value fixed by 
 the president of the bank conclusive. The duty of estimating the 
 valjie is devolved on the officers of the State; and as respects 
 National banks, the provision requiring the president of the bank 
 to return the property of the bank and state its value, can and 
 should be regarded as intended to supply the assessing officer with 
 data to form a just and fair judgment as to the actual value of the 
 shares. To this end, and to preclude controversy, the act directs 
 " reserve funds, undivided profits, premiums or earnings, or other 
 values belonging to the corporations," to be included in estimating 
 the value of the shares. It does not seem to us that the act ex- 
 cludes from the consideration of the assessor the liabilities of the 
 bank, since these must be taken into account, if the "actual cash 
 value" of the stock and no more is to be ascertained and taxed. 
 This view is confirmed by the next sentence, which requires cor- 
 porations on the mutual plan " to make like returns of the net 
 value," which would allow liabilities to be regarded in ascertaining 
 the value of the assets to be taxed. 
 
 We do not think a fair construction of section 35 requires the assess- 
 ing officers to exclude from their consideration the liabilities and 
 actual instead of nominal value of the assets of the bank, in ascer- 
 taining the taxable value of the property of the bank, as one means 
 of arriving at the value of the shares. 
 
 As respects National banks, our judgment is that the act of the 
 Legislature can be fairly construed as intended to impose a tax upon 
 the shares only in National banks at their actual cash value ; that 
 
CIRCUIT COURT, 1878. 331 
 
 Johnson v. Laflin. 
 
 SLich cash value is to be estimated by the taxing ofBcers upon an 
 inquiry inter alia into the actual value of the property of the banks, 
 so far as this imparts or confers a value upon the shares, and that 
 this is the -purpose which should be judicially ascribed to the Legis- 
 lature rather than a purpose to impose taxes upon an illegal valua- 
 tion. The proofs do not show that the valuation of the shares by 
 the taxing officers is excessive; at all events an excessive valuation 
 in fact is not made an object of relief in the bills. Inasmuch as 
 the shares are taxable, and no excessive valuation is complained of, 
 equity would not restrain the collection of the taxes, even though 
 the assessing officers may have arrived at a correct result by some 
 erroneous method. 
 A decree will be entered in each case 
 
 Dismissing the Mil of complaint. 
 
 JoHKSON, Receiver, etc., v. Lafliij. 
 
 07 Alb. Law Jour. 146.) 
 
 Sha/reholder's rigM to transfer shares in a N'ational bank — Elements of a com- 
 plete transfer — Oertifieates — Blank power to transfer — Registration of 
 transfer — Bev. Stat., §§ 5139,5141, 5301, 5351, construed. 
 
 Under the National Banking Act, a shareholder has the right to make an actual 
 and bona fide sale and transfer of his shares to any person capable in law of 
 taking and holding the same, and of assuming the transferor's liabilities 
 in respect thereto ; and, in the absence of fraud, this right is not subject to 
 a veto by the directors or the other shareholders. 
 
 Where such a sale of shares is made and the transfer entered on the books of 
 the bank, the transferer ceases to be a shareholder, and is freed from liabil- 
 ity in respect of such shares. 
 
 The provision of the National Banking Act (Rev. Stats., § 5139) that shares 
 shall " be transferable on the books of the association," construed ; and held 
 not to give the directors the power to refuse to register a bona fide transfer 
 of stock without some valid and sufficient reason for such refusal. 
 
 As between the seller and purchaser of shares in a National bank, the sale ia 
 complete when the certificate of the shares duly assigned, with power to 
 transfer the same on the books of the bank, is delivered to the buyer, and pay- 
 ment therefor is received by the seller ; and either the purchaser or seller 
 may compel a registration of the transfer on the books of the bank, unless 
 the bank has some valid and sufficient ground for refusing to register the 
 transfer. 
 
332 UNITED STATES 
 
 Johnaoo v. Laflin. 
 
 The defendant Laflin, owning full-paid shares of stock in a National bank of 
 which his co-defendant, Britton, was the president, employed a broker to 
 sell the same in the market ; the broker, without Laflin's direction or knowl- 
 edge at the time, sold the same at the market value to Britton individually, 
 and received in payment his individual check on the bank for the purchase- 
 price, and delivered to the purchaser the share certificates assigned in blank, 
 with blank powers of attorney thereon indorsed, authorizing the transfer of 
 the shares on the books of the bank ; subsequently, after the amount of the 
 check had been collected, but on the same day, the president, without the 
 knowledge of Laflin or the broker, directed the book-keeper of the bank to 
 credit his individual account with the amount of the check which he had 
 given for the shares, and to transfer the shares (the book-keeper inserting 
 his own name in the blank power of attorney as attorney to make the trans- 
 fer) to Britton, "trustee," not specifying for whom he was trustee, and charg- 
 ing the sum to the "sundry stock account" of the bank, all of which was 
 done. The bank, although it had not committed any act of insolvency, 
 was then insolvent, but this fact was not known by Laflin or the broker. 
 Meld, that, although the bank, or its oificers for it, was prohibited from 
 purchasing its own shares (Rev. Stat., § 5301), yet that Laflin having sold 
 in good faith, without notice of the illegal purpose of Britton in buying the 
 stock, or of his intended misappropriation of the funds of the bank in paying 
 therefor, was not liable to pay back to the receiver the money received in 
 payment of the shares. 
 
 (Circuit Court, Eighth Circuit.) 
 
 THE plaintiff is the receiyer of the National Bank of the State of 
 Missouri, appointed June 33, 1877, by the Comptroller of the 
 Currency. 
 
 That bank suspended payment and closed its doors June 20, 1877. 
 
 The defendant Laflin had, for some years prior to May 16, 
 1877, been the owner of 85 shares of full-paid stock in that bank, 
 but was not a director. The defendant Britton was the president 
 of the bank. 
 
 On the 10th day of May, 1877, Mr. Burr, the president of 
 another bank in which Laflin was a director, wrote a letter to a cor- 
 respondent, who was the owner of stock in the National Bank of 
 the State of Missouri, stating (without giving the grounds of his 
 advice), "you had bettor sell your stock in that bank, because you 
 can buy it back again at a profit if yoa wish to do so." Mr. Burr 
 casually showed Laflin this letter and said, " Go do likewise." An 
 election was to be held for directors on the 29th day of May, 1877, 
 which it was supposed would give the stock a greater value in the 
 market before the election than it would have after that event. 
 
CIECUIT COUET, 1878. 333 
 
 Johnson v. Laflin. 
 
 Acting upon this general advice of Mr. Burr, and without per- 
 sonal knowledge of the actual financial condition of the bank, Laflin, 
 on the 16th day of May, 1877, authorized one Keleher, a broker, 
 to sell in the market his 85 shares of stock. Keleher sold the 
 same at private sale for $5,037.50 to James H. Britton, who then 
 was, and for some years had been, the president of the bank. Mr. 
 Britton gave Keleher to understand that he was buying either for 
 himself or a party whose name he did not disclose. Britton paid 
 Keleher the $5,037. 50 by his individual check on the bank of which 
 he was president, and Keleher thereupon delivered Britton the cer- 
 tificates assigned in blank for the 85 shares of stock, together with 
 a blank power of attorney, indorsed thereon, signed by Laflin, 
 authorizing the transfer of the stock on the books of the bank. 
 The stock certificates contained this provision : " Transferable 
 only on the books of the said bank in person, or by attorney on the 
 return of this certificate, and in conformity with the provisions of 
 the laws of Congress and by the by-laws which may be in force at 
 the time of such transfer." 
 
 There were no by-laws on the subject of the transfer of stock. 
 Keleher immediately presented Britton's check at the counter of 
 the bank, and received thereon $5,037.50, and deposited the amount 
 in his own name with his bankers, the Messrs. Bartholow, Lewis 
 & Co., upon whom he gave Laflin his own check for $4,995 — being 
 the proceeds of the sale to Britton less his commission of 50 cents 
 per share. Keleher did not inform Laflin to whom he had sold 
 the stock, and even declined to do so. Laflin did not actually 
 know that it had been sold to Britton until some time afterward. 
 Keleher supposed Britton was making the purchase for himself or 
 for some other person, and did not know that he was buying it as 
 "trustee for the bank." After Keleher had delivered the stock 
 certificates for the 85 shares assigned in blank, with the blank 
 power to transfer indorsed thereon, and had collected the check 
 and had left the bank, but on the same day, Britton delivered the 
 stock certificates, together with the blank powers of attorney signed 
 by Laflin, to one E. Grirault, the general book-keeper of the bank, 
 with instructions to credit from the general funds of the bank, 
 Britton's individual account with the amount paid for the stock, 
 viz., $5,037.50, which was done, and to charge the like amount in 
 the books of the bank to " sundry stocks " account, and to transfer 
 
334 UNITED STATES 
 
 Johnson v. Laflin. 
 
 the 85 shares on the stock transfer book to " James H. Britton, 
 trustee." Girault obeyed these directions. The transfer of the 
 stock on the transfer book was accordingly made to "James H. 
 Britton, trustee," not stating for whom he was the trustee. But in 
 the stock ledger the transaction was entered in an account entitled, 
 " James H. Britton, trustee for bank," meaning Britton's own 
 bank. Girault, in making the transfer of the shares, filled in his 
 own name as attorney in the blank powers of attorney signed by 
 Laflin, and signed the transfer to Britton as trustee thus, " S. H. 
 Laflin by E. Girault, attorney.'' Girault had actual knowledge at 
 the time that this stock had been paid for in the manner hereinbe- 
 fore stated. No new certificate of stock for the 85 shares were ever 
 issued to Britton or any one else. Neither Keleher nor Laflin knew 
 of the foregoing directions of Britton to Girault, nor what Girault 
 did in respect thereto. Other stock to a yery large amount was 
 from time to time purchased from other persons by Britton and 
 paid for in the same way, and transferred and entered in the same 
 manner. No formal resolution of the directors appears authorizing 
 this to be done, but directors knew of and assented to Britton's 
 acts in this regard. 
 
 At the time of the suspension of the bank, June 20, 1877, there 
 were, it seems, 4,599 shares of its own stock standing in the name 
 of "James H. Britton, trustee," which had been purchased by him 
 with the funds of the bank, under circumstances more or less 
 similar to the purchase from the defendant Laflin. 
 
 All of the stock thus standing in the name of Britton, trustee, 
 including that purchased from Laflin, was voted by him at the 
 election of directors, held May 29, 1877. Britton had been for 
 years the owner of a large amount of stock in the bank in his own 
 name and right, and thus owned 1,542 shares when the bank sus- 
 pended. Britton's credit was good at the time of this transaction, 
 and there was nothing in the nature of the transaction — in the 
 fact of the purchase, the amount or mode of payment or the price 
 paid — calculated to awaken suspicion on the part of Keleher, 
 that it was not a regular transaction on Britton's own account. 
 Laflin did not receive more than the stock was then considered 
 worth in the market. Laflin did not know that the bank was 
 insolvent, and his firm continued to deposit money with it until it 
 closed. Keleher testifies that he considered the bank " sound in 
 
CIKCUIT COUET, 1878. 335 
 
 Johnson v. Laflin. 
 
 all respects " when he made the sale to Britton. The bank had 
 not at that time committed any act of insolvency. 
 
 This is a bill in equity by the receiver against Laflin & Britton, 
 to compel Laflin to payback the $5,037.50; to set aside the transfer 
 of the 85 shares of stock; to have Laflin declared to be still a stock- 
 holder in the said bank in respect of said shares, and to have Brit- 
 ton ordered to re-transfer the shares to Laflin on the book of the 
 bank. 
 
 The bill as to Britton stands confessed. Laflin answered denying 
 the material charges in the bill. Eeplication was filed and proofs 
 taken. The cause is before the court on final hearing. 
 
 The following provisions of the National Banking Act, taken 
 from the Eevised Statutes, are those which more directly relate to 
 the questions arising in this case : 
 
 Sbc. 5139. The capital stock of each association shall be divided into shares 
 of $100 each, and be deemed personal property, and be transferable on the 
 books of the association in such manner as may be prescribed in the by-laws 
 or articles of the association. Every person becoming a shareholder by such 
 transfer shall, in proportion to his shares, succeed to all the rights and liabili- 
 ties of the prior holder of such shares, and no change shall be made in the 
 articles of association by which the rights, remedies or securities of the exist- 
 ing creditors of the association shall be impaired. 
 
 Again, Sec. 5151. The shareholders of every National banking association 
 shall be held individually responsible, equally and ratably, and not one for 
 the other, for all contracts, debts and engagements of such association to the 
 extent of the amount of their stock therein at the par value in addition to the 
 amount invested in such shares. ******* 
 
 Sec. 6201. No association shall make any loan or discount on the security of 
 the shares of its own capital stock, nor be the purchaser or holder of any such 
 shares, unless such 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 months from the time of its purchase be sold or disposed of at 
 public or private sale, or in default thereof a receiver may be appointed to close 
 up the business of the association, according to section 5334. 
 
 Sec. 5304. No association or member thereof shall, during the time it shall 
 continue its banking operations, withdraw, or permit to be withdrawn, either in 
 the form of dividends or otherwise, any portion of its capital. * * * But 
 nothing in this section shall prevent the reduction of the capital stock of the 
 association under section 5148. 
 
 Sec. 5152. Persras holding stock as executors * * * or trustees, shall not 
 be personally subject to any liabilities as stockholders ; but the estates and 
 funds in their hands shall be liable in like manner and to the same extent as 
 the testator, * * * or person interested in such trust funds would be, if 
 living and competent to act and hold the stock in his own name. 
 
336 UNITED STATES 
 
 Johnson v. Laflin. 
 
 Sec. 5210. Requires a full and correct Hat of all the shareholders to be kept 
 subject to inspection of all the shareholders and creditors, and a verified copy 
 of such list to be sent annually to the Comptroller of the Currency, 
 
 Henderson & Shields, for plaintiff. 
 
 A. W. SlaylacTc, for defendant Laflin. 
 
 Dillon, Circuit Judge. The plaintiff is the receiver of the 
 National Bank of the State of Missouri, appointed by the Comp- 
 troller of the Currency, June 33d, 1877, the bank having sus- 
 pended payment three days before. Kev. Stats., § 5234. The 
 defendant Laflin had, for some years prior to May 16, 1877, been 
 the holder of fuU-paid 85 shares in that bank. At the date 
 of the suspension of the bank the defendant James H. Britton 
 was its president, and had been such for some years prior to that 
 event. On the 16th day of May, 1877, Laflin sold through one 
 Keleher, a broker, the eighty-five shares of stock to Britton, and 
 delivered to him the share certificates, duly assigned in blank, 
 with powers of attorney in blank thereon indorsed, to transfer the 
 shares on the books of the bank. Laflin's broker, who effected the 
 sale, understood that he sold to Britton individually, or to some 
 unknown person for whom Britton acted, and he received in pay- 
 ment for the shares the personal check of Mr. Britton on the bank 
 for $5,037.50, which was immediately presented and paid. Laflin 
 did not know until some time after the transaction who had become 
 the purchaser of his shares. After the shares had been thus deliv- 
 ered and paid for by Britton's check and the money received, but 
 on the same day, they were transferred in pursuance of Mr. Brit- 
 ton's directions by Mr. Girault, the book-keeper of the bank (by 
 virtue of the powers of attorney from Laflin), to " James H. 
 Britton, trustee," and at the same time the book-keeper credited 
 Britton's individual account at the bank with the amount of his 
 check given in payment for the shares, and charged the same 
 amount to the " sundry stocks account " on the books of the bank. 
 On the ofiBcial stock register, the shares were thus made to stand in 
 the name of " James H. Britton, trustee," without stating for 
 whom he was trustee. On the stock ledger of the bank the trans- 
 action was entered in an account entitled "James H. Britton, 
 trustee for the bank." Neither Laflin's agent, who negotiated the 
 sale of the shares, nor Laflin himself, had any actual notice of the 
 
OlECiriT COXJET, 1878. 337 
 
 Johnson v. Lafliu. 
 
 manner in which the transfer of the stock had been registered, nor 
 that the funds of the bank had been thus used to pay for it, nor of 
 the entries in respect thereto on the books of the bank. But of all 
 these facts Mr. Girault, the book-keeper of the bank who made the 
 entries, and who had inserted his name in Laflin's blank power of 
 attorney to transfer the stock, had actual knowledge at the time. 
 
 This is a bill in equity by the plaintiff as the receiver of the 
 bank, against Laflin and Britton, to compel Laflin to repay the 
 $5,037.50 (the amount of Britton's cheek for the shares paid by the 
 bank), and to set aside the registered transfer of the 85 shares on 
 the stock transfer books of the bank. 
 
 The case presents questions of grave moment concerning the 
 rights of stockholders and creditors in National banking associa- 
 tions. And if the insolvency of the bank here in question is such 
 as shall make it necessary to enforce the individual liability of the 
 shareholders (Rev. Stats., § 5151), it is important to those share- 
 holders who made no sale of their stock, to know who are share- 
 holders with them liable to contribute to meet "the contracts, 
 debts and engagements of the association." These questions prin- 
 cipally depend upon the true construction of certain provisions in 
 the National Banking Act to which we shall refer as we proceed. 
 
 Inasmuch as this act in express terms prohibits a National bank 
 from thus becoming a "purchaser of the shares of its own capital 
 stock" (Eev. Stats., § 5203), if Laflin had made a contract to sell 
 his shares to the bank, or to its president for the bank, it is plain 
 that such a contract would have been extra vires, 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 bank were still solvent and 
 going on, or by the receiver as the officer appointed to wind up its 
 affairs. Re London, etc.. Exchange Bank, Law Rep., 5 Oh. App 
 444, 452 ; Great Eastern R'y Co. v. Turner, Law Eep., 8 Oh. App. 
 149 ; Currier v. Lebanon Slate Co., 56 N. H. 262. And although 
 Laflin did not contract to sell his shares directly to the bank, or to 
 the president for the bank, still, if, before the transaction was com- 
 pleted as to him, he had notice, actual or constructive, that the 
 purchase 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 still to be a shareholder. 
 43 
 
338 UNITED STATES 
 
 Johnson y. Laflin. 
 
 It would be easy to support these propositions by argument and 
 by the authority of adjudicated cases, but they are so plain that it 
 is not necessary to do so. But Laflin, or his agent, Keleher, did 
 not deal with the bank or with the president with knowledge that 
 the latter in fact intended to pay for the shares out of the moneys 
 of the bank. Laflin was acting in good faith. Neither he nor his 
 agent Keleher had any actual knowledge of Britton's purpose bo 
 turn these shares over to the bank, and to pay for them out of the 
 funds of the bank. If Laflin can be charged with notice, it must 
 be constructive notice, arising either, first, from the mere fact 
 that he was a shareholder in the bank, or second, from the law 
 imputing to him all the knowledge in this behalf which was pos- 
 sessed at the time by Mr. Girault, the book-keeper, who made the 
 transfer of the shares on the transfer books of the bank under 
 Laflin's blank powers of attorney, and who contemporaneously 
 made the entries on the private books of the bank, which showed 
 that Britton had been paid for the shares out of the general funds 
 of the bank, and had acknowledged that he held the shares as the 
 trustee of the bank. 
 
 The controlling question in the case is, whether Mr. Laflin is 
 affected with constructive notice in one or the other of these modes. 
 The solution of this question, in its turn, depends upon the nature 
 and extent of the right of a shareholder in a National banking 
 association to transfer his shares, and also upon the elements or 
 requisites of a completed transfer, by which is meant such a trans- 
 fer as shall release the transferor from liability to the bank, its 
 stockholders and creditors. 
 
 In considering these questions our first proposition is that under 
 the National Bank Act a shareholder has the unrestricted right to 
 make an out-and-out bona fide and valid sale and transfer of his 
 shares to any person or corporation, capable in law of taking and 
 holding the same, and of assuming the transferor's liability in 
 respect thereto. 
 
 The right to transfer shares in a corporation is usually recog- 
 nized or given in express terms in the charter or constituent act, 
 which also, not unfrequently, prescribes the manner in which the 
 transfer shall be made. The capital stock of a corporation is 
 invariably divided into shares of a fixed amount for the purpose, 
 among others, of allowing it to be readily transferred. In an 
 ordinary partnership the consent of aU the partners to the admis- 
 
CIECUIT COURT, 1878. 339 
 
 Johnson v, Laflin 
 
 sion or retiremeat of a member is necessary, and every such change 
 involves the dissolution of the old and the formation of a new 
 partnership. But in incorporated companies this is different. 
 Indeed, it is one of the leading objects of an incorporated body to 
 avoid the operation and effect of this doctrine of the law of part- 
 nership. Accordingly, in this country, shares in corporations are 
 universally bought and sold without reference to the consent of 
 the other shareholders. 
 
 The restrictions on the right bona fide to sell and transfer shares 
 must be found in express legislative enactment, or in authorized 
 by-laws. The National Banking Act (Eev. Stats., § 5139), by pro- 
 viding that shares shall " be transferable on the books of the asso- 
 ciation, in such manner as may be prescribed in the by-laws or 
 articles of the association," recognizes the right of the shareholder 
 to transfer his shares. There is nothing peculiar in this provision. 
 A similar provision is found in nearly all the incorporating acts 
 and charters in this country. The right to transfer is given or 
 implied, in the section just referred to (Eev. Stats., § 5139), and 
 that right the association cannot take away or defeat. It contem- 
 plates a transfer on the books of the association, and all that the 
 association is authorized to do is to prescribe the manner in which 
 the transfer shall be made on its books. There is here no limita- 
 tion whatever upon the right of transfer, and none exist except 
 such as is implied from the nature of the transaction, or from 
 other provisions of the act. Another section (Eev. Stats., § 5301) 
 prohibits the bank from dealing in its own shares. This implies 
 a restriction on the shareholder from selling his shares to the bank 
 itself, or to a known trustee for the bank. And a shareholder can- 
 'not transfer his shares colorably, and thereby cease to be a share- 
 holder as respects creditors and other shareholders, who would be 
 injured by such a transfer. There may also be an implied prohi- 
 bition 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. Eev. Stats., § 5139 ; 
 compare id., § 5152, Weston's case. Law Eep., 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. 
 
340 UNITED STATES 
 
 Johnson v. Laflin. 
 
 Subject, however, to such prohibitions and limitations, the right 
 of the shareowner to make an actual and iona fide sale and trans- 
 fer of his shares to any person, capable in law of taking and hold- 
 ing the same and of assuming the liabilities of the transferor in 
 respect thereto, is plainly deducible from the National Banking 
 Act itself. But if any doubt could exist on this subject, it would 
 be remoTcd by the judicial decisions, construing the provisions of 
 the Banking Act in this regard, and similar provisions in other 
 legislative enactments. 
 
 In the Banlc v. Lanier, 11 Wall. 369,* arising nnder the National 
 Banking Act, it was expressly held by the Supreme Court of the 
 United States that the owner of shares in a National bank may 
 transfer the same by an assignment and delivery of the certificates, 
 and the transferee may compel the bank to register the transfer 
 on its books. The learned justice who delivered the opinion of 
 the court in that case, after speaking of the additional value given 
 to this species of property by reason of its transferable quality, 
 says : " Whoever in good faith buys the stock and produces to 
 the corporation the certificates, regularly assigned, with power to 
 transfer, is entitled to have the stock transferred," even if the 
 transferor is the debtor of the bank. The duty of the bank to 
 make the transfer in such a case is held to be a corporate duty, in 
 respect of which the bank is liable for the wrongful acts and omis- 
 sions of its officers. 
 
 It was urged in the argument at the bar, in the present case, 
 that the provision that the shares should " be transferable on the 
 books of the bank," gave the directors of the bank the power to 
 approve or disapprove of any given transfer of shares, and to reg- 
 ister or refuse to register the same, as in their judgment the inter- 
 ests of the bank or of the other stockholders might require. Such, 
 however, is not the object of this very common provision in char- 
 ters and acts of incorporation. The purpose of requiring a trans- 
 fer on the books of the bank is, that the bank may know who are 
 the shareholders and as such entitled to vote, receive dividends, 
 etc., and for the prptection of bona fide purchasers of the shares 
 and of creditors and persons dealing with the bank. That such is 
 the meaning of the provision in question, and that it does not 
 restrict the right of the owner to transfer his stock or clothe the 
 corporation with the power to refuse to register bona fide transfers, 
 
 *A.nte, p. 70. 
 
CIRCUIT COURT, 1878. 341 
 
 Johnson v. Laflin. 
 
 is settled beyond all question by numerous decisions in the English, 
 and the Federal and State courts. Black t. Zacharie, 3 How. 
 483 ; Union Bank v. Laird, 3 "Wheat. 390 ; Webster v. Upton, 1 
 Otto, 65, 71 •,Banh v. Lanier, 11 Wall. 369 ; St. Louis, etc., Ins. 
 Co. V. Ooodfellow, 9 Mo. 149 ; Chouteau Spring Co. v. Harris, 20 
 id. 382 ; Moore v. Bank, 52 id. 377 ; Hill v. Pine River Bank, 45 
 N. H. 300 ; Re London, etc., Tel. Co., Law Eep., 9 Eq. 653. 
 
 The general subject of the right to transfer shares has been 
 much discussed in the cases in England arising under the various 
 Companies' Acts. Some of these acts give the directors express 
 power to refuse to assent to or register transfers of shares, and 
 some do not. The result of the English cases is that the directors 
 cannot refuse to register a hona fide transfer of stock unless the 
 power to do so is expressly given in the act of Parliament or the 
 articles of association. The leading authority on this point is 
 Weston's case, Law Rep., 4 Ch. App. 20. See, also, Gilbert's case. 
 Law Rep., 5 Oh. App. 559. In Weston's case. Law Rep., 4 Ch. 
 App. 20, Lord Justice Page- Wood, in considering this subject, 
 said : 
 
 " I have always understood that many persons enter these com- 
 panies for the very reason that they are not like ordinary partner- 
 ships, but that they are partnership from which members can retire 
 at once, and free themselves from responsibility at any time they 
 please, by going into the market and disposing of and transferring 
 their shares without the consent of directors or shareholders, or 
 anybody, provided only it is a bona fide transaction ; hy which I 
 mean an out-and-out disposal of the property, without retaining 
 any interest in them. But if it is desired by a company that such 
 unlimited power of assignment shall not exist, then a clause is in- 
 serted in the articles by which the directors have powers of rejec- 
 tion of members. Shortridge v. Bosatiquet, 16 Beav. 84, which 
 went to the House of Lords, was a case of that kind. In the 
 absence of any such restriction, I think it is perfectly plain that 
 the Companies Act, 1862, in the 32d section gives a power of trans- 
 ferring shares. * * I think there is no such power given to the 
 shareholders, and that the shares are at once transferable under the 
 statute, unless something is found to the contrary in the articles of 
 association. * * It would be a very serious thing for the share- 
 holders in one of these companies, to be told that their shares, the 
 whole value of which, consists m their being marketable and passing 
 
UNITED STATES 
 
 Jolmson V. Laflin. 
 
 freely from hand to hand, are to be subject to a clause of restric- 
 tion, which they do not find in the articles. And I may add that 
 if we were to hold that such powers were vested in the directors it 
 would be a very serious thing for them, and would impose upon 
 them much more onerous duties than any which are really imposed 
 upon them by this clause." In Gilbert's case. Law Kep., 5 Ch. App. 
 559, 565, Lord-Justice GtIfpaed said": "1 agree that according to 
 Weston's case, and according to what I have always considered to 
 be the law, there is no inherent power in the directors, apart from 
 the provisions of the articles of association, to refuse to register a 
 proper and valid transfer, if that proper and valid transfer is sub- 
 mitted to them." 
 
 And although there is express power to the directors to refuse to 
 assent to or register a transfer, this power must be exercised in a 
 reasonable manner and hona fide, and they must have some valid 
 and lawful reason for refusing to register. Ux parte Penny, Law 
 Eep., 8 Oh. App. 446 ; Nation's case. Law Eep., 3 Eq. 77 ; Lowe's 
 case. Law Eep., 9 Eq. 589 ; Allin's case. Law Eep., 16 Eq. 449, 
 559 ; Weston's case. Law Eep., 5 Ch. App. 630 ; Ux parte Elliott, 
 Law Eep., 2 Ch. Div. 104. 
 
 In a case where the directors had power to approve or reject the 
 transfer of shares, one of the vice-chancellors, speaking of the 
 right of a shareowner to dispose of his shares, said : " One of the 
 incidents (of this class of property) is the right to transfer it — a 
 right to make a present and complete transfer of it. It is the duty 
 of the directors to receive and register the transfer or to furnish 
 some (valid and sufficient) reason for refusing to transfer." In re 
 Stranton, etc., Co., Law Eep., 16 Eq. 559, per Bacom', Vice-Chan- 
 cellor. 
 
 Similar observations are made by the Supreme Court of the 
 United States in the Banh v. Lanier, supra. Mr. Justice Davis 
 then says : " The power to transfer their stock is one of the most 
 valuable franchis'es conferred by Congress. * * It enhances the 
 value of the stock. Although neither in form nor character nego- 
 tiable paper, they (the share certificates) approximate to it as 
 nearly as possible." 
 
 It would be a new, and I apprehend, a startling doctrine to pro- 
 claim that the holder of shares in a corporation, where the only 
 provision on the subject of transfers was one requiring them to be 
 made on its books,' had no right to make a complete and effectual 
 
CIECUIT COURT, 1878. 
 
 Johneon v. Laflin. 
 
 disposition of them without the consent of the directors or other 
 shareholders. No such power over the right of transfer has been 
 given in the National Banking Act. Such a power is so capable of 
 abuse and so foreign to all received notions and the universal prac- 
 tice and mode of dealing in these stocks that it cannot in the 
 absence of legislative expression, be held to exist. 
 
 For these reasons and upon these authorities the proposition 
 must be considered as established that a sliareowner in a National 
 bank, while it is a going concern, has the absolute right in the 
 absence of fraud to make a lonafide and actual sale and transfer 
 of his shares at any time, to any person capable in law of purchasing 
 and holding the same, and of assuming the transferor's liabilities 
 in respect thereto, and that this right is not, in such casesi subject 
 to the control of the directors or other stockholders. 
 
 Our second proposition is that Laflin did make a complete and 
 effectual sale and transfer of his shares to James H. Britton indi- 
 vidually, and that as to Laflin, it was not a sale and transfer of 
 the stock to the bank. Laflin sold through the broker or agent, 
 Keleher ; and the latter dealt with Britton as an individual, with- 
 out knowledge that Britton intended to turn over the shares to the 
 bank, and he received in payment for the shares the personal check 
 of Mr. Britton, and delivered to him at the same time the certifi- 
 cates of stock assigned, in blank, with powers of attorney in blank 
 thereon indorsed, authorizing the transfer of the shares on the 
 books of the bank. 
 
 As between Laflin and Britton, the transfer was complete by the 
 sale, assignment, delivery and payment, without registration, and 
 this whether it gave Britton before the registration, the legal title 
 to the shares as against Laflin, or only a complete equitable title. 
 Union Bank v. Laird, 2 Wheat. 390 ; Webster v. Upton, 1 Otto, 
 65, 71 ; Blach v. Zacharie, 3 How. 483 ; Banh v. Lanier, 11 Wall. 
 369, 377 ; Chouteau Spring Oo. v. Harris, 30 Mo. 383 ; Moore v. 
 Bank, 53 id.; N. Y., etc., R. R. Go. v. Schuyler, 34 N. Y. 30 ; 
 McNeil V. Bank, 46 id. 335; Grymes y. Howe, 49 id. 17; Bank 
 of Utica V. Smalley, 3 Cowen, 778 ; Bank of Commerce's Appeal, 
 73 Penn. St. 59 ; Ross v. S. W. R. R. Co., 53 Oa. 514 ; Hop- 
 pin V. Buffum, 9 R. I. 513 ; Bank of America v. McNeil, 10 Bush 
 (Ky.), 54 ; Davis v. Lee, 36 Miss. 505 ; German, etc., Ass. v. Sends- 
 meyer, 50 Penn. St. 67 ; Leavitt v. Fisher, 4 Duer, 1. 
 
 That the transaction is complete as between seller and purchaser 
 
344 UNITED STATES 
 
 Johnson v. Laflin. 
 
 of stock by the assignment and delivery of the certificate, with the 
 power to transfer, and the receipt of payment is fully shown by 
 these cases, and is also evident from the fact that thereupon each 
 of them has the legal right to have a transfer of the shares made 
 on the books of the bank. The seller of the shares, for his protec- 
 tion against creditors of the bank in case of insolvency, may trans- 
 fer the same on the books to the vendee, the purchase being the 
 authority to the seller to do this. Webster v. Upton, 1 Otto, 65. 
 
 And for like reason the seller of shares who has done all that is 
 necessary to enable the purchaser to transfer the shares on the 
 books may file a bill to compel the vendee to record the transfer. 
 Shaw V. Fisher, 2 De Gex & S. 11 ; Oheale v. Eenward, 3 De Gex 
 & J. 2r ; Wynne v. Price, 3 De Gex & S. 310 ; Webster v. Upton, 1 
 Otto, 65, 71. 
 
 So, also, the vendee of the shares, where the vendor has done all 
 that is necessary to enable the transfer to be registered, may for his 
 own protection compel the bank to register the transfer, or hold it 
 liable in damages for a wrongful refusal. Banlc v. Lanier, 11 Wall. 
 369 ; Hill v. Pine River Bank, 45 IST. H. 300 ; Bank of Utica v. 
 Smalley, 2 Cowen, 770 ; Oommercial Bank v. Kortright, 32 Wend. 
 348. 
 
 The delivery of the share certificates and blank transfers will 
 entitle the bona fide vendee to have the transfer registered. " Who- 
 ever in good faith buys the stock, and produces to the corporation 
 the certificates regularly assigned, with power to transfer, is entitled 
 to have the stock transferred (per Davis, J., Bank v. Lanier, 11 
 Wall. 369), unless there exists some valid and legal reason in favor 
 of the bank for refusing to register the transfer as in the case of 
 the Union Bank v. Laird, 2 Wheat. 390. In that case the charter 
 gave the bank a lien for the shareholders' debt to it, and provided 
 that "stock shall be transferable only on the books of the bank." 
 Under these circumstances, the bank was held to have a lien on the 
 shares to secure the shareowner's indebtedness to it, which was 
 superior to the right of the unregistered transferee of the stock. 
 Black V. Zacharie, 3 How. 483. 
 
 If the foregoing propositions are sound, Britton against Laflin had 
 the right immediately on delivery and payment to register the 
 transfer of the shares, and had the power to fill up the blank trans- 
 fers, and have the transfer registered. Re Tahiti Cotton Go., Law 
 Eep., 17 Eq. 273 ; German Union Ass. v. Sendmeyer, 50 Penn. St. 
 
CIECUIT COUKT, 1878. 345 
 
 Johnson v. Laflin. 
 
 67 ; Leavitt v. Fisher, 4 Duer, 1 ; Commercial Bank t. KortrigM, 
 23 Wend. 348. Nothing more was required to be done by Laflin or 
 needed to enable Britton to make his title complete. And Laflin 
 could have compelled Britton to register the transfer. If Laflin 
 had proceeded against Britton he could have forced him to have 
 accepted a transfer of the stock in his own name or in the name of 
 some person capable of taking and holding the same. Maxted v. 
 Paine, Law Kep., 6 Exch. 132. It would have been no answer to 
 Laflin for Britton to have said : "I bought this stock, not for 
 myself, but for the bank." Laflin could have rejoined, "You 
 purported to act for yourself. I suppose you were so acting, and 
 you had no authority, and could have had none, to act for the 
 bank." 
 
 It is held in England under the Companies Acts that the trans- 
 feror of shares is liable to be treated as a stockholder, until he 
 transfers to one who is in law capable of holding, and liable iu re- 
 spect of the shares, and whose purchase is registered, unless, per- 
 haps, where the neglect to register is entirely the fault of the cor- 
 poration or its officers. Fyfe's case, LawEep., 4 Oh. App. 768; 
 Lowe's case. Law Kep., 9 Eq. 589; Shropshire, etc.. Railway and 
 Canal Co. v. The Queen, Law Eep., 7 House of Lords Cases, 496, 
 513 ; McEuen v. West London Wharves, etc., Co., Law Eep., 6 Ch. 
 App. 655 ; Weston's Case, Law Eep., 5 Ch. App. 614, 620 ; Gooch's 
 case. Law Eep., 8 Oh. App. 266 ; Gilbert's case, Law Eep., 5 Ch. 
 App. 559 ; Master's case, LawEep., 7 Oh. App. 292 ; Nickalls v. 
 Merry, Law Eep., 7 House of Lords Cases, 530 ; Symon's case, 
 Law Kep., 5 Ch. App. 298 ; Heritage's case. Law Kep., 9 Eq. 5. 
 
 Assuming without deciding, that this principle applies in all its 
 force under the National Banking Act, if Laflin had sold to an 
 infant, his liability would remain, notwithstanding the transfer 
 was registered. 
 
 Nickalls v. Merry, Law Rep., 7 House of Lords Oases, 530 ; Sy- 
 mon's case. Law Eep., 5 Ch. App. 298. If he had sold to the bank, 
 he would remain ^rma/aae if not actually liable, if the bank 
 should so elect. And if the seller of shares remains liable under 
 the National Banking Act until there is a registered valid transfer 
 — that is, until some person succeeds to the stock who is capable 
 of holding it and liable in respect to it — this principle will not 
 make Laflin liable under the facts of the present case. Here the 
 transfer was registered, but Britton, instead of registering it ia his 
 44 
 
346 UNITED STATES 
 
 Johnson v. Laflin. 
 
 own name, as it was his duty toward Laflin to do, registered it in 
 his name as " trustee," without Laflin's knowledge. But the act 
 (Eev. Stats., § 5153) authorizes the holding of stock by a trustee. 
 If Laflin, in order to relieve himself of liability, is bound to see 
 the transfer of the stock registered, the registry actually made 
 would not charge him with constructive notice that the bank was 
 in reality the cestui que trust. 
 
 Britton is responsible personally, inasmuch as he had no 
 authority to act for the bank, and as there is no cestui que trust 
 who is liable. He is liable for the unauthorized investment and 
 use of the trust moneys of the bank, and can be compelled to refund 
 it. Great Eastern R'y Go. v. Turner, Law Rep., 8 Ch. App. 149. 
 If it becomes necessary to assess the stockholders he will be 
 estopped to say that he is not individually responsible, since he was 
 not acting by authority of any cestui que trust capable of taking 
 and holding the shares. If the sale of this stock has been regis- 
 tered to Britton individually, it is clear that Laflin would not have 
 been liable to the bank or its creditors ; and as the matter now 
 stands, the bank and its creditors have every right and remedy 
 against Britton, which they would have had if the shares had been 
 transferred to him individually, instead of to him as "trustee." 
 
 Our third proposition is, that Laflin is not liable, because the 
 money received for the stock was unlawfully taken by Britton from 
 the bank. The reason for this conclusion is that Laflin parted 
 with value — with his shares, with his power of control over them 
 and the right to sell them to others, and had no notice at, or prior 
 to the consummation of the transaction that Britton was acting 
 ultra vires and intended to misappropriate the funds of the bank. 
 If he had dealt directly with the bank, or if he or his agents had 
 known what took place inside the counter before the transaction 
 with Britton had been completed, he would have been liable. 
 
 It is urged by the receiver's counsel that Laflin had constructive 
 notice. Mr. Shields, in his argument, bases Laflin's liability on the 
 proposition that, being a shareholder in the bank, he is charged 
 with constructive notice of the condition of the bank, and of what 
 was done by the president in violation of law and of his official 
 duty in respect of these shares. I admit that if in a transaction 
 directly with the bank, he had received moneys to which he was 
 not entitled, he could be made to pay back the same irrespective 
 
CIKCUIT COURT, 1878. 347 
 
 Johnson v. Lafliu. 
 
 of the question of knowledge on his part. Ourran t. Arkansas, 
 15 How. 304 ; Railroad Co. v. Howard, 1 "Wall. 392. 
 
 But it is to be remembered in this case that Laflin is sought to 
 be made liable in respect of the sale and transfer of his shares, 
 which sale and transfer he had the perfect right to make, if he 
 acted bona fide ; and he has the same right to sell his shares to 
 another shareholder, that he would have to sell them to a person 
 not a shareholder. 
 
 Even directors have the right to make a hona fide sale of their 
 shares and thus get rid of liability, if they pursue the articles or 
 charter, and take no advantage of their position and commit no 
 fraud. Gilberts case, Law Rep., 5 Ch. App. 559 ; Ex parte Little- 
 dale. Law Rep., 9 Ch. App. 257. 
 
 And shareholders in the exercise of their right to transfer shares 
 are not bound, it seems, to take notice of irregularities on the part 
 of the directors in respect to the transfer of shares. Bargate v. 
 Shortridge, 5 House of Lords Cases, 297, 323; Taylor v. Hughes, 2 
 Jones and Lat. 34; Ex parte Bagge v. Northern Coal Co., 13 Beav. 162. 
 
 Nor are directors, much less shareholders, in the transfer of , their 
 stock bound, it seems, to take notice of the books of account of the 
 company. Cartmell's case, Law Rep., 9 Ch. App. 691; Hill v. Man- 
 chester, etc., Co., 2 Nev. and M. 573; 5 Barn, and Adol. 874; Haynes 
 V. Brown, 36 N. H. 568. 
 
 We are of opinion, therefore, that the sale and transfer of the 
 stock as between Laflin and Britton was complete as soon as the 
 stock was delivered and assigned, with the power to transfer, and 
 payment received; and that what Britton, without Laflin's knowl- 
 edge, afterward did, although on the same day, in transferring the 
 shares to himself as trustee for the bank, and in reimbursing him- 
 self out of the funds of the bank, could not refcroact upon Laflin, 
 whose status had already been fixed, and whose rights had already 
 been acquired. Bank of America v. McNeill, 10 Bush (Ky.), 54, 58. 
 
 Mr. Henderson's argument for the receiver went mainly upon 
 the ground that Laflin was chargeable through Mr. Girault, with 
 constructive notice of Britton's wrongful acts in the purchase of 
 these shares and in the use of the bank's money to reimburse him- 
 self therefor. 
 
 This argument rests upon these propositions: First, that the 
 sale was not complete until the transfer was registered; that in 
 making the transfer, Girault, although acting under Britton's 
 
348 UNITED STATES 
 
 Johnson v. Laflin. 
 
 directions, was solely Laflin's agent (by virtue of his inserting his 
 name in the blank power of attorney), and that inasmuch as 
 Girault knew of Britton's acts in directing the transfer for the 
 benefit of the bank, and in paying himself for the purchase-money 
 out of the general means of the bank, the law imputes this knowl- 
 edge to Mr. Laflin. The first branch of this proposition is incon- 
 sistent with the one which we have alcove attempted to maintain, 
 viz.: 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, Britton had the 
 right to register the purchase in his own name. He was in good 
 credit with the bank and in the community. He was not then 
 known to be insolvent. Indeed, it is not shown by the proofs that 
 he is now insolvent. Laflin could have compelled him to register 
 the transfer in his own name. In the eye of the law the transfer 
 to Britton, as "trustee," is a transfer to Britton individually — 
 for as above shown, Britton could not set up his ultra vires acts to 
 defeat his personal responsibility. Ashhurst v. Mason, Law Eep., 30 
 Eq. 225; Ex parte Littledale, Law Eep., 9 Ch. App. 257. If Laflin 
 had a completed right immediately on receiving payment for the 
 shares to have Britton register the transfer of the shares; and if 
 immediately on such payment, Britton had the right to register 
 the transfer to himself, and if the bank could, not have resisted 
 Laflin's application to compel a registration of the transfer to Brit- 
 ton, it is obvious that notice subsequently received by Laflin per- 
 sonally, or through an agent, would be immaterial. 
 
 If this view is sound, it is unnecessary to decide the further 
 question whether Girault, in consequence of his relations to Brit- 
 ton and the fact that he acted as his servant and implicitly obeyed 
 his directions, is to be regarded, in making the formal act of trans- 
 fer on the books, as the agent of Laflin, in such sense that knowl- 
 edge required by him from Britton is to be imputed to Laflin. It 
 deserves consideration whether under the circumstances Girault 
 was Laflin's agent so as constructively to affect Laflin with notice 
 of what was being done, not in the necessary or lawful execution 
 of his authority, but in violation of that authority, and in hostility 
 to his rights as well as those of the batik. These are the positions 
 taken by Mr. Slayback in Mr. Laflin's behalf, and they certainly 
 have great force. For in this view, if the name of some one 
 
CIEGUIT COUKT, 1878. 349 
 
 Johnson v. Laflin. 
 
 outside of the bank, haying no knowledge of what was going on 
 inside the bank, had been filled in by Britton as the attorney to 
 naake the transfer, or if Britton had it filled in his own name, 
 Laflin would not be liable. It is certainly extremely narrow ground 
 to make Laflin's liability depend upon the accident whose name 
 shall be used to make this formal transfer, and upon what knowl- 
 edge of the interior workings of the bank such person may happen 
 to possess, especially in view of the custom to transfer stock in 
 blank through many hands before any registry is made. 
 
 It was strongly urged at the bar by Mr. Henderson for the 
 receiver, that the foregoing views of the right of the shareholder 
 to transfer his shares will have the efEect to permit transfer to per- 
 sons not able to respond to the double liability imposed on share- 
 holders, and thus work an injury to the solvent shareholders and 
 to creditors. But we must hold to the absolute right of the share- 
 owner, to transfer his stock in good faith, or the alternative that 
 the directors may have the right to refuse their assent to such 
 transfer, thus putting a shareholder in their power. Not a syllable 
 can be found in the Banking Act giving the directors such a power; 
 while on the other hand the right to transfer shares is expressly 
 recognized. If it is desirable for the security of the shareholders 
 or creditors that the existing members should, through the direct- 
 ors, have a veto on the right of a shareholder to transfer his shares, 
 such a power must be plainly conferred. It has not been given and 
 cannot, therefore, be held to exist. 
 
 It is proper to remark in order to preclude erroneous inferences 
 frow the views here maintained, that it is probable that the unre- 
 stricted right to transfer has reference to transfers in solvent and 
 going concerns, and are not intended to enable shareholders to 
 escape from liability where the association has committed an act 
 of insolvency or has ceased to be a going concern. Allen's case, 
 Law Hep., 16 Eq. 449, per Lord Chancellor Selboubke; Ohappell's 
 case, Law Eep., 6 Ch. App. 902. While we maintain the right of a 
 shareholder to dispose of his shares absolutely, by an out and out 
 sale and registered transfer, and thus escape liability, provided the 
 sale is made lonafide, and the purchaser is in law capable of assum- 
 ing the liabilities of the transferor, yet this does not involve the 
 right to transfer shares for a fraudulent purpose, or under circum- 
 stances which the transferor knows will make the transfer, if it is 
 
350 UNITED STATES 
 
 National Bank of Hadison v. Davis . 
 
 sustained, work a fraud on the other shareholders or on the credit- 
 ors of the bank. 
 
 The result is that there must be a decree dismissing the bill as 
 to Laflin, and as the bill is not framed for separate relief against 
 Britton, dismissing the same as to him also, but without prejudice. 
 
 Bill dismissed. 
 
 NATioiirAL Bank of Madisok v. Davis. 
 
 (6 Cent. Law Jour. 106.) 
 Usury — Recovery or recoupment of exaessme interest. 
 
 If a National bank discount a note at a usurious rate of interest, paying the 
 borrower the proceeds less the interest, it can recover only the face of the 
 note leas the entire interest received. But if such note be renewed, the 
 borrower paying the usurious interest out of his pocket, in advance, the 
 defendant may recoup, or recover in an independent action, double the 
 amount of the entire interest paid at the renewal. If, instead of paying the 
 usurious interest at each renewal, it be added to the principal and included 
 in the renewal notes, the bank can only recover the amount originally paid 
 to the borrower, i. e., the amount of the last of the renewal notes less all 
 interest included in it.* 
 
 (Seventh Circuit ; before Dbtjmmond, Circuit Judge, and Qrbsham, District 
 Judge.) 
 
 A CTION on a promissory note. The opinion states the case. 
 
 G. E. Walker and C. L. Holstein, for plaintiff. 
 
 Herod & Winter, for defendant. 
 
 GrKESHAM, J. The plaintiff, on the 19th of May, 1869, for the 
 defendant, Jacob Davis, discounted his note for $3,000 at four 
 months, with two indorsers, at the rate of twelve per cent per annum, 
 paying Davis the proceeds less 1138.50, the interest reserved. 
 There were divers renewals of this note, each renewal being for the 
 full amount of the principal, Davis actually paying the interest in 
 
 *See as to amount of interest which may be recovered or recouped, Crocker 
 V. First Nat. Bank, ante, p . 317, and note. See as to recoupment, Wiley v. 
 Starbuck. 
 
CIKCUIT COUET, 1877. 351 
 
 National Bank of Madison v. Davis. 
 
 advance, the bank reserving nothing out of the proceeds of the 
 discount. The indorsers were accommodation indorsers, and there 
 were different indorsers upon different renewals. 
 
 In 1873 Davis paid $700 on the principal, thus reducing his loan 
 to $3,300, for which sum four different renewal notes were given. On 
 December 9, 1873, Davis paid on one of these renewal notes twelve 
 per cent interest in advance. This was the last usurious interest 
 paid. Prom that date the plaintiff received only legal interest at 
 the rate of ten per cent per annum. On April 1st, 1875, Davis 
 renewed his loan by giving his two notes for like amounts, matur- 
 ing at different dates, and the note sued on was given in renewal 
 of one of these notes. 
 
 Section 30 of the Ifational Bank Act, approved June 30, 1864, 
 reads as follows : 
 
 " Sec. 30. And be it further enacted, that every association may take, receive 
 reserve, and charge on any loan or discount made, or upon any note, bill of 
 exchange, or other evidence of debt, interest at the rate allowed by the laws 
 of the State or Territory 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 issue, 
 organized under State laws, the rate so limited shall be allowed for associa- 
 tions organized in any such State under this act. And when no rate is fixed 
 by the laws of the State or Territory, the bank may take, receive, reserve, or 
 charge a rate not exceeding seven per centum, and such interest may be taken 
 in advance, reckoning the days for which the note, bill or other evidence of 
 debt has to run. 
 
 " And the knowingly taking, receiving, reserving, or charging a rate of 
 interest greater than aforesaid, shall be held and adjudged 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 same, or their legal 
 representatives, may recover back in any action of debt twice the amount of 
 the interest thus paid from the association taking or receiving the same ; 
 provided, that such action is commenced within two years from the time the 
 usurious transaction occurred. But the purchase, discount, or sale of a bona 
 fide bill of exchange, payable at any other place than the place of such pur- 
 chase, 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." 
 
 If a National bank discount a note at a usurious rate of interest, 
 paying the borrower the proceeds, less the interest, and suit be 
 brought to recover the loan, and the borrower plead the usury, the 
 bank will recover the face of the note less the entire interest 
 taken out, received or reserved, and no more. It will thus collect 
 
352 UNITED STATES 
 
 National Bank of Madison v. Davis. 
 
 the sum of money it actually paid out, being punished for receiving 
 interest in excess of the legal rate by forfeiting all interest. But 
 if the note thus discounted be renewed for the same amount, the 
 borrower paying usurious interest out of his pocket in adyance, 
 and suit be brought on the renewed note, the defendant may 
 recoup double the amount of the entire interest actually paid on 
 renewal, or in an independent actioh^of debt, he may recover from 
 the bank double the amount of the entire interest thus paid. 
 
 In either case the punishment of the bank is the same. In the 
 latter case the bank forfeits double the amount of the interest 
 paid, and yet recovers the amount it actually paid out, for it will 
 be remembered the note sued on includes the amount of interest 
 originally reserved. True, if the note be renewed in the same 
 manner more than once, and the borrower be allowed to recoup, or 
 in an independent action recover double the amount of usurious 
 interest paid, the bank will lose part of the principal as well as all 
 of the interest. But forfeiture of double the entire interest paid 
 is barred after the lapse of two years. 
 
 If, instead of paying the usurious interest at each renewal of the 
 loan, the same be added to the principal and included in the 
 renewal notes, the bank, if the usury be pleaded, will recover the 
 amount it originally paid to the borrower; that is to say, it will 
 recover the amount of the last of the renewal series sued on, less 
 all the interest included in it. 
 
 Usury forfeited the entire loan or debt under the Banking Act of 
 February 25, 1863. This, Congress thought, was too severe, and 
 the act of 1864, with the exception already noticed, limits the for- 
 feiture to the interest only. 
 
 In the case of Farmers', etc., National Bank v. Bearing, 1 Otto, 
 29,* the court say: "In the act of 1864 the forfeiture of the debt is 
 omitted, and there is substituted for it the forfeiture of the inter- 
 est stipulated for, if it had only been reserved, and the recovery of 
 twice the amount when the interest had been actually paid." 
 
 The only forfeitures visited upon National banks, when they 
 stipulate for or receive illegal interest, are those found in the 
 Banking Act. They are not subject to any penalties or forfeitures 
 contained in State statutes. 1 Otto, 2 . 
 
 It is a familiar principle that forfeitures are never favored. 
 
 See ante,, p. 117. 
 
CIECUIT COUKT, 1878, 353 
 
 Merchants' National Bank v. Mears. 
 
 All actual payments in excess of the legal rate were made more 
 than two years before the defendant's plea of usury was filed, and, 
 in fact, more than two years before this suit was brought. The 
 plaintiff is entitled to recover the amount of the note in suit with 
 interest, less $128.50, the interest reserved on the original discount, 
 which is to be credited as of the date of the reservation, all other 
 interest having been actually paid. 
 
 My brother Dbtjmmond concurs in this opinion. 
 
 Merchants' National Bank t. Meaks. 
 
 (10 Chicago Leg. News, 180.) 
 WJien National banks can take real security. 
 
 A National bank cannot loan money on real estate Becurity ; but after a cred- 
 itor has made default, or after a loan has been actually made, the bank 
 may take real estate security therefor unless the transaction be colorable 
 for the purpose of evading the statute.* 
 
 (Circuit Court, Seventh Circuit, Northern District of Illinois.) 
 
 BILL in equity to foreclose a mortgage. Simeon Mears was a 
 regular customer of the bank, and borrowed as much as 
 $13,000 at once. Some time prior to 1875, he borrowed $5,000 on 
 short time paper, and deposited as security, note of J. E. Warren 
 for $4,740, secured by mortgage to B. Ashley Mears, the note being 
 payable to E. Ashley Mears, and indorsed over by him to Simeon 
 Mears. When the latter's note matured he could not pay it, and 
 the bank took Warren's note. When that matured Warren was 
 insolvent, and Simeon Mears, who had indorsed it, was called 
 upon to pay. The bank all the while held other securities, and by 
 selling these, Mears' debt was reduced to $3,887, September 3, 
 1875, when he gave a new note for this sum, and the Warren note 
 was treated as collateral for this. 
 
 Blodgett, J. This case was submitted to the court on final 
 hearing upon the briefs of counsel and upon the proof taken 
 before the master. It is a bill filed to foreclose a mortgage given 
 by J. Esias Warren and wife to E. Ashley Mears, by E. Ashley 
 
 ♦See Kansas Valley National Sank v. Rowell, ante, p. !J64 and note. 
 
 45 
 
354 UNITED STATES 
 
 Merchants' National Bank v. Meara. 
 
 Mears assigned to Simeon Mears, and by Simeon Mears assigned to 
 the complainant. The defendants to the bill are Simeon Mears 
 and the mortgagor, and George B. Warren, who claims, as a grantee 
 of the mortgagor, by a quit-claim deed made some month or so 
 after the mortgage was made, but recorded prior to the mortgage. 
 The quit-claim from Esias "Warren, the mortgagor, to George B. 
 Warren, was put on record something like a month prior to the 
 recording of the mortgage, although the mortgage was made prior 
 to the quit-claim deed, but the testimony of George B. Warren 
 shows Tery clearly that he took title from J. Esias Warren, mort- 
 gagor, subject to all liens then existing against the property, but 
 took it merely as security, and with the understanding that he 
 took it subject to any liens which had been created upon the prop- 
 erty. 
 
 There are two objections by these defendants to the foreclosure, 
 first on behalf of George B. Warren, that he is an innocent pur- 
 chaser without notice, which I have said is sufficiently disposed of 
 by his own testimony. The second is, that this bank — the com- 
 plainant in this case, being a National bank, acting under the 
 National Banking Law, cannot make loans upon this class of 
 sectirity. The facts about which there is to be no dispute are, that 
 Warren made his note, secured by a mortgage, to B. Ashley Mears ; 
 E. Ashley Mears assigned to his father, Simeon Mears, and Simeon 
 Mears took it to the complainants in this case, the Merchants' 
 National Bank of this city, and effected a loan, giving the note as 
 collateral security for the loan. This was some time shortly after 
 the note was made — within a few months. It was carried along 
 until sometime in the year 1875, when Mr. Mears paid up part of 
 the loan, and the bank further reimbursed itself for the full loan, 
 by the sale of other collaterals, and became the owner by sale, and 
 an agreement between themselves and Mears, of the Warren note 
 and mortgage as final security for the payment of the balance of 
 twenty-seven or twenty-eight hundred dollars. It is objected, as I 
 said before, that this transaction is ultra vires, that it is beyond' 
 the power of a National bank to make a loan upon real estate secu- 
 rity, and a large array of authorities is cited in support of this 
 proposition, and it is a proposition in regard to which I have no 
 doubt, where it is invoked in a proper case ; but here, I do not 
 think the loan can be said to have been made upon real estate 
 security. 
 
OTEOTJIT OOUET, 1878. 355 
 
 Merchants' National Bank v. Mears. 
 
 It was made upon a note to Mears, secured by collateral. The 
 collateral was the Warren note — with such incidental security as 
 the Warren note had. 
 
 I had occasion, about a year ago now, to go quite carefully into 
 this question in a suit brought by the Northwestern National Bank 
 against Loewenthal, where precisely this same question was raised 
 and contested very yigorously. All the authorities were there con- 
 sidered that entered into this brief ; and I held then, and on re- 
 examination of my position at that time, I am contented with the 
 view I then took of the case — that the transaction cannot be held 
 to be within the limitations, either expressed or implied, of the 
 National Banking Law. The seventh clause of section 6136 reads 
 as follows : " To exercise by its board of directors or duly author- 
 ized officers or agents, subject to law, and all such incidental pow- 
 ers as shall be necessary to carry on the business of banking by dis- 
 counting and negotiating promissory notes, drafts, bills of exchange 
 and other evidences of debt, by receiving deposits, by levying and 
 selling exchange coin and bullion, by loaning on personal security, 
 and by obtaining, issuing and circulating notes, according to the 
 provisions of this title." 
 
 It is claimed, and I think it has been amply held by various 
 State courts, and indirectly by the United States court, that Na- 
 tional banks can only loan money on personal security directly. 
 Section 5137, second clause, provides : " A National banking asso- 
 ciation may purchase, hold and convey real estate for the following 
 purposes, and no others : Such as shall be mortgaged to it in good 
 faith by way of security for debts previously contracted." 
 
 Here is the express power to take a mortgage on real estate for 
 debts which have been previously contracted. You may not loan 
 money on real estate security ; but after the creditor has made de- 
 fault, or after the loan has been actually made, the bank may take 
 real estate security, unless the transaction should be colorable for 
 the purpose of evading the statute — making the loan first, and 
 taking security so soon afterward as to show it was part of the 
 original understanding ; but in a case such as is provided here, 
 there is no doubt but what the bank, after having made a loan, if 
 it becomes doubtful of the borrower's solvency or ability to give 
 satisfactory security, may then take a mortgage on real estate, so 
 that this case now before me is not affected by the clause which I 
 have just read. It simply authorizes them to take security on real 
 estate under certain circumstances. 
 
356 UNITED STATES 
 
 Bailey v. Sawyer. 
 
 The former objection whicli I read in the preceding clause un- 
 doubtedly contemplates that the National banking business — that 
 its loans and transactions shall be made upon personal security. 
 But was this any thing but personal security ? The bank had the 
 note of Simeon Mears with a large amount of other collaterals, the 
 whole transaction, in its inception, amounting to thirteen thousand 
 dollars, and from time to time, Mr. Mears made payments, and 
 other securities were applied which were held by the bank, until 
 the indebtedness from thirteen thousand dollars was reduced to 
 twenty-seven hundred dollars, and then, by an arrangement between 
 the parties, this was taken as final satisfaction or security for the 
 twenty-seven hundred dollars balance. 
 
 I think that this cannot be held within the inhibiting clause, 
 and I am most clear that the defense set up cannot avail. 
 
 There will be a decree for the complainant for the amount found 
 due, and it will be determined, of course, after the sale of the 
 estate, whether there is any residue to go to the other parties in 
 interest, after satisfying the lien of the bank. 
 
 Bailey v. Sawyeh. 
 Winding up National hank — Individual liability of stockTiolders, liow 
 
 In winding up an insolvent National bank, the Comptroller of the Currency 
 is vested with authority to determine when a deficiency of assets exists, so 
 that the individual liability of the stockholders may be enforced, and no 
 appeal lies from his decision. 
 
 The liability of a stockholder of a National bank is several, and is fixed by 
 his taking stock in the corporation. 
 
 When an assessment upon the stockholders is ordered by the Comptroller, a 
 suit at law is the proper remedy to enforce it.* 
 
 (District Court, District of Minnesota.) 
 
 rpHIS is a common law action brought by the receiver of the 
 J_ Eirst National Bank of Duluth to enforce the individual lia- 
 bility of a stockholder in the Eirst National Bank of Duluth, and 
 to cover the amount of an assessment ordered by the Comptroller 
 
 * See Casey v. Qalli, ante, p. 142. 
 
DISTRICT COURT, 1877. 357 
 
 Bailey v. Sawyer. 
 
 of the Currency to the extent of seventy-five per centum of the 
 par value of the shares of the capital stock of the bank, under 
 and by virtue of the act of Congress in relation to National banks. 
 A demurrer is interposed to the complaint. Upon the argument 
 it is urged : 
 
 (1) That the complaint should set forth the facts and data upon 
 which the Comptroller determined that a necessity existed which 
 authorized proceedings to enforce the individual liability of stock- 
 holders. 
 
 (2) That the suit should have been in equity, and not in law. 
 
 W. W. Billson, for demurrer. 
 
 Ensign & Gash, contra. 
 
 Nelson, J. The Comptroller of the Currency, by virtue of 
 the National Banking Law in winding up an insolvent bank, is 
 vested with authority to determine when a deficiency of assets 
 exists, so that the individual liability of the stockholders may be 
 enforced. This liability is conditional and was so held in Banh v. 
 Kennedy, 17 Wall. 32, but the Comptroller, in the exercise of 
 a judicial discretion, decides upon the data before him when "it is 
 necessary," to compel contribution from stockholders to pay the 
 debts of the bank. The law clothes him with this authority, and 
 no appeal lies from his decision by a stockholder. He appoints a 
 receiver and resorts to the ultimate remedy whenever in his judg- 
 ment the condition of the bank requires its enforcement. And as 
 stated in Kennedy v. Gibson etal., 8 Wall. 505, a more speedy set- 
 tlement of the affairs of an insolvent bank is thus obtained. 
 Again, this obligation of the stockholder is fixed when he becomes 
 a member of the corporation by taking stock therein, and is sev- 
 eral, not joint. There is no necessity for invoking the aid of a 
 court of chancery to determine the sum each stockholder must pay, 
 for that is regulated by the number of shares of stock owned. 
 When the Comptroller declares and orders an assessment, the pre- 
 cise amount each stockholder must contribute is a certain exact 
 sum. A suit at law would seem to be the suitable proceeding to 
 collect the assessment. 
 
 Demurrer overruled. 
 
358 UNITED STATES 
 
 The United States v. Ehawn. 
 
 The United States v. Ehawn. 
 
 (33 Legal Intelligencer, 258.) 
 Exa/mination of National han^s by revenue officers. 
 
 The law under which National hanks are incorporated does not exempt them 
 from examination by the internal revenue officers, mentioned in section 
 3177 of the Revised Statutes.* 
 
 A clerk of a supervisor of internal revenue is, however, not such an officer. 
 
 THIS case was tried at the November Sessions, 1875, of the United 
 States District Court, for the Eastern District of Pennsylvania, 
 before Judge Oadwaladbe, who charged the jury as follows : 
 
 Cadwaladee, J. Section 3177' of the Eevised Statutes of 
 the United States enacts, that any collector, deputy-collector, 
 or inspector may enter, in the day time, any building or place 
 where any articles or objects subject to tax are * * * kept, 
 within his district, so far as it may be necessary for the purpose of 
 examining said article or articles, and that any owner or person 
 having the agency or superintendence of such building or place, 
 who refuses to suffer such ofBcer to examine such article or arti- 
 cles, shall, for every such refusal, forfeit five hundred dollars. 
 Section 3163 enacts, that every supervisor, under the direction of 
 the commissioner, shall see that all laws and regulations relating 
 to the collection of internal revenue taxes are faithfully executed 
 and complied with, etc. 
 
 The present suit is to recover $500, a penalty alleged to have 
 been incurred by the defendant, who is president of a National 
 bank, by refusing to suffer a person who was acting under the 
 direction of Mr. Tutton, the supervisor of internal revenue, to 
 examine such checks of customers of the bank as were kept in it, 
 in order to discover whether any and which of them were un- 
 stamped, contrary to the provisions of the Internal Revenue Law 
 upon the subject. 
 
 It is alleged that there was an application to the defendant to 
 suffer such an examination to be made, and that the defendant 
 refused to suffer this to be done. 
 
 * See United States v. Mann, ante, p. 154. 
 
DISTEICT COURT, 1875. 359 
 
 The United States v. Rhawn. 
 
 The defendant contends that the revenue officer had no right to 
 make the examination requested. The ground of this contention 
 is, that the law under which the National banks are incorporated 
 provides for the occasional examination of their affairs, and for 
 reports of their condition to the Comptroller of the Currency, and 
 enacts that they shall not be subject to any visitorial powers other 
 than are authorized by the act, or are vested in the courts of jus- 
 tice. 
 
 These banks are fiscal agents of the government of the United 
 States, and it would be most extraordinary that Congress should 
 have exempted their customers from a necessary and proper scru- 
 tiny under the revenue laws in a matter which has no legitimate 
 connection whatever with the affairs of the banks. As to the posi- 
 tion thus taken by the defense, I am of the opinion that it is 
 wholly unreasonable and unfounded in law. If you believe the 
 testimony of Mr. Tutton, he told the defendant that there was no 
 desire or intention to examine into the affairs of the bank, or the 
 accounts of its customers, and stated that the sole purpose was to 
 ascertain whether checks in its keeping were unstamped. If un- 
 stamped, they were subject to tax under the revenue law. 
 
 The visitorial powers over a corporation are the subject of a 
 distinct head under the law of corporations. The examination of 
 such checks under the revenue law is not the exercise of a visito- 
 rial power under the act of Congress relative to the banks. This 
 part of the defense, therefore, fails in law. 
 
 It appears, however, that the person who asked to make the 
 examination in this case was a clerk to the supervisor. Such a 
 person is not an officer within the meaning of the law. The words 
 of section 3177 are, " any collector, deputy-collector or inspector ;" 
 and a clerk to the supervisor is not included in this description. 
 
 If the supervisor was himself authorized to make such an exam- 
 ination, he could not delegate this power to his clerk. Your ver- 
 dict should, therefore, for this reason, be for the defendant. 
 
 John K. Valentine, Esq., U. S. Attorney, for plaintiff. 
 
 Charles S. Pancoast, Esq., for defendant. 
 
360 UNITED STATES 
 
 Duncan v. First National Bank of Mt. Pleasant. 
 
 DuKCAJf T. First Natiokal Bake of Mt. Pleasant. 
 
 (U Bank. Mag. 787.) 
 
 Usury by National banks — Bate of intere^ — Limitation of actions to recover 
 twice amount of interest paid. 
 
 National banks are not authorized to take the rate of interest allowed by 
 special statutes of a State to a few banks of issue where such rate is higher 
 than that allowed to banks of issue generally. 
 
 Where a National bank has taken usurious interest on a loan or discount, it 
 may elect to apply the excess of interest on the principal at any time before 
 the loan is paid in full, or before judgment is entered for the full amount. 
 
 Therefore, the two years within which an action may be brought to recover 
 twice the amount of interest paid do not begin to run until the principal has 
 been paid or a judgment entered for the full amount thereof. 
 
 THESE cases, for the recovery of penalties for exacting usurious 
 interest, were decided in the United States District Court at 
 Pittsburgh, on March 14th, 1878, the jury rendering a verdict for 
 the plaintiffs in double the amount of interest charged. The ver- 
 dict for Millinger was $76.04, and for William Duncan & Brother, 
 $1,359.92. The charge of the court, delivered by Judge Ketcham, 
 is as follows: 
 
 Ketcham, J. These are cases brought by the plaintiffs to 
 recover from the defendant the penalty for taking usurious in- 
 terest under the thirtieth (30th) section of the National Bank 
 Law of June 3, 1864. By agreement of counsel, both these cases, 
 William Duncan & Brother and Benjamin Millinger, are tried by 
 you together. The plaintiffs, as you have seen in the course of the 
 testimony at different times, loaned money of the defendants, Dun- 
 can & Brother, at three different times; $500 on January 30, 1873, 
 $4,000 on July 9, 1873, and $500 July 18, 1873. Benjamin Millin- 
 ger loaned $250 January 27, 1873, and $274.35 January 15, 1875. 
 At the time of the loan in each case the bank retained nine per 
 cent as discount and credited the plaintiff with the balance, taking 
 their notes respectively for the full amount of proceeds and dis- 
 count. The notes of Duncan & Brother were not paid at maturity, 
 but were renewed from time to time. The first note of $500, of 
 January 30, 1873, was renewed till the fall of 1874. It had been 
 reduced by payments to the sum of $150. The note of July 9, 
 
DISTRICT COURT, 1878. 361 
 
 Duncan v. First National Bank of Mt. Pleasant. 
 
 1873, for 1400, was renewed till October, 1874. The note of July, 
 1873, for $500, was renewed till November, 1874. At each renewal 
 nine per cent interest was charged, and was paid by the plaintiffs. 
 These notes were all sued and judgment obtained upon them for 
 the face of the notes or principal, before the bringing of this suit. 
 The Millinger notes were renewed; the note of January 37, 1873, 
 for $250, from time to time till March, 1874, when it was paid in 
 full; the note of January 15, 1875, for $274.35, was renewed at the 
 end of three months, for two months, and then for one month, 
 and remained unpaid until suit was brought upon it. Judgment 
 was obtained upon it for the full amount and interest from maturity 
 to judgment. Interest was charged at each renewal at nine per 
 cent. No credit was given on the principal of any payment of 
 interest by way of reducing the principal of either of the notes of 
 Millinger or Duncan & Brother. Judgment was entered for the 
 notes in full, independent of interest. And the note that Millin- 
 ger paid he paid in full without reduction of any payment made of 
 interest. The nine per cent that had been paid and retained was 
 left entirely out of the computation. 
 
 The act of Congress permits the National banks to charge the 
 rate of interest fixed by law in the State where they are located, 
 and no more except when by the laws of any State a different rate 
 is limited for banks of issue organized under State laws, the rate 
 so limited shall be allowed for associations organized or existing in 
 any such State under this title. The legal rate of interest in Penn- 
 sylvania is six per cent. The rate of discount allowed to banks of 
 issue is also six per cent and no more. It is true there are some 
 banks, that, by special acts of Assembly, are allowed to charge 
 more, but these are exceptions to the general law of the State. Con- 
 gress deals with general rules, and when it excepts banks of issue 
 under the State laws, it means the general law, applicable to the 
 whole State, and relating to banks of issue all over the State. The 
 special acts authorizing banks of issue, if there are any, apply only 
 to the particular bank created by them, or permitted by them, to 
 take more than six per cent discount. The National Banking Law 
 prohibits a National bank in Pennsylvania from taking more. In 
 case a greater rate of interest has been paid, the person by whom it 
 has been paid, or his legal representative, may recover back, in an 
 action in the nature of an action of debt, twice the amount of the 
 interest thus paid from the association taking or receiving the 
 46 
 
362 UNITED STATES 
 
 Duncan v. First National Bank of Mt. Pleasant. 
 
 same, provided such action is commenced within two years from 
 the time the usurious transactions occurred. 
 
 From the origin of the loan, from the retaining of the first dis- 
 count through all the renewals up to the time of final payment of 
 the principal, or up to the time of entering judgments, there is a 
 locus penitenticB for the party taking the excessiTe interest. Any 
 time till then he may consider the excessive interest paid on account 
 of the loan, and so apply it, and lessen the principal. Up to that 
 time he may make this election. When payment is actually made 
 or judgment is entered, the election is made, and if, as in these 
 cases, judgment is entered for the face amount of the notes or full 
 amount of the loan, or payment is taken in full without any 
 reduction by taking out the excessive interest, the cause of action 
 is complete. The original loans in these cases were more than two 
 years before these actions were brought, but the payment of one of 
 the Millinger notes was made, and the judgment on the other 
 Millinger note and the judgments on all the Duncan & Brother 
 notes were entered, near the time of bringing these suits, less than 
 two years before. The payment and the judgment concluded the 
 transaction, and determined their character to be usurious. Till 
 that time it was undetermined and the statute did not begin to 
 run. These actions were brought February 1, 1876. The Millin- 
 ger note was paid in March, 1874. The judgment against Millinger 
 and those against Duncan & Brother were obtained before Febru- 
 ary 1, 1876. So that they are within the statute. The Millinger 
 note was not paid in money direct, but by the proceeds of another 
 note, made by another person, and indorsed by Millinger. This 
 was not a renewal, but payment. It closed out the old note and 
 commenced another transaction on a different piece of paper, with 
 different parties under difEerent liabilities. The defendants treated 
 it as payment, and made the entries in their books accordingly. 
 The amount of interest charged in these cases is computed, and is 
 agreed upon by the counsel of both parties as correctly computed. 
 It amounts in the case of Benjamin Millinger to $38. 02. In the 
 case of William Duncan & Brother to the sum of $629. 91. It is 
 the amount of interest retained and paid upon each of the notes 
 sued by defendants up to the entry of judgment, and upon the 
 note paid by Millinger to the time of the payment. You will find 
 double the amount in each case for the plaintifEs respectively. 
 
COUET OF CLAIMS, 1877. 363 
 
 Branch v. The United States. 
 
 Branch v. The Ukited States. 
 
 (12 Bank. Mag. 61.) 
 National hanks aa depositaries of puUie money. 
 
 Designatuig a National bank as a depositary of public moneys does not con- 
 stitute it an agent of the government, or render the government liable for 
 moneys lost by a failure of such bank. 
 
 Such bank does not become a custodian of the public moneys deposited with 
 it, but it becomes a debtor to the United States the same as it does to other 
 depositors for individual deposits. 
 
 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. 
 
 RICHAKDSON, J., delivered the opinion of the court. The 
 facts in this case, concisely stated, are these : In the year 
 1865 the claimants were owners of fifty bales of cotton which 
 were seized by the marshal of the middle district of Alabama, 
 upon a warrant duly issued by the District Court, on an informa- 
 tion filed therein by the district attorney and others, informers, for 
 the seizure, confiscation, and condemnation thereof, under the act 
 of August 6, 1861, chap. 50 (12 Stats. 319), because the same was 
 used and employed by the owners, or with the consent of the own- 
 ers, in aiding, abetting, and promoting insurrection or resistance 
 to the laws and authority of the United States. While the suit 
 upon the information was pending the cotton was sold by the 
 marshal, by order of court, for the sum of $4,050, and the net 
 proceeds after deducting expenses were brought into court and 
 paid over to the clerk, amounting to $1,873.50. The clerk, hav- 
 ing been notified by a circular from the Secretary of the Interior, 
 that the First National Bank of Selma, Ala., had been designated 
 by the Secretary of the Treasury, as a depositary of public money 
 under the provisions of the act of June 3, 1864, oh. 106, § 45 (13 
 Stats. 113), deposited the money thus held by him in said bank to 
 his own credit as clerk, pending proceedings in the suit for con- 
 demnation, and to await further orders of court. In 1867 the 
 bank failed, went into involuntary liquidation, a receiver was 
 appointed by the Comptroller of the Currency, and its affairs were 
 
364 UNITED STATES 
 
 Branch v. The United States. 
 
 wound up, paying a dividend of thirty-five per cent to its cred- 
 itors. 
 
 In January, 1871, the suit for condemnation was dismissed on 
 motion of the district attorney, and judgment was entered for the 
 defendants therein, for costs. In 1875, the dividend on the clerk's 
 deposit in the bank, amounting to 8641.32, was brought into court 
 by the receiver, paid over to the clerk, and subsequently allowed 
 and paid to the present claimants by order of the court. 
 
 All that the claimants received of the money for which the cot- 
 ton was sold was thirty-five per cent of the net proceeds deposited 
 in the bank. 
 
 Upon this state of facts the claimants come into this court and 
 seek to charge their loss upon the United States. Without setting 
 forth in their petition the grounds on which it is claimed that the 
 defendants are liable, they pray judgment for the whole amount 
 for which their cotton was sold, less the dividend received by them, 
 with interest thereon from the day of seizure, as though the 
 United States were to be charged with damages for an illegal seiz- 
 ure. But in a supplementary brief, in manuscript, handed to the 
 court since the argument by the claimants' attorney, they present 
 their case as an action for money had and received, and rely en- 
 tirely upon the position which they assume that the First National 
 Bank of Selma, having been designated as a depositary of public 
 money by the Secretary of the Treasury, was part of the Treasury 
 of the United States, and that the money deposited therein by the 
 clerk of the court was for the time being " public money " in the 
 Treasury of the defendants, which they were bound to keep safely 
 apd return to the claimants when their right thereto became estab- 
 lished. 
 
 This view of the relation of the National banks, which are des- 
 ignated depositaries of public money, to the United States gov- 
 ernment is, in our opinion, wholly untenable. 
 
 National banks are private corporations, organized under a gen- 
 eral law of Congress, by individual stockholders, with their own 
 capital, for private gain, and managed by officers, agents, and 
 employees of their own selection. They constitute no part of any 
 branch of the government of the United States, and whatever 
 public benefit they contribute to the country in return for grants 
 and privileges conferred upon them by statute is of a general 
 nature, arising from their business relations to the people through 
 individual citizens, and not as direct representatives of the State 
 
COUET OP CLAIMS, 1877. 365 
 
 Branch v. The United States. 
 
 as a body politic, in exercising its legal and constitutional func- 
 tions. 
 
 The Comptroller of the Currency has certain supervisory pow- 
 ers and duties in relation to National banks, designed to keep the 
 officers within the limits of the law, in conducting their legitimate 
 business, and, as far as lies within the province of official super- 
 vision by the government, to protect the creditors and stockholders 
 against fraud, negligence and mismanagement. But in all con- 
 tracts the banks act for themselves alone, and have no authority to 
 involve the government in liability, except the statute liability for 
 the final redemption of their circulating notes. These notes, 
 denominated " National currency," and forming to a large extent 
 the circulating money of the country, are the notes of the banks 
 and not of the United States, although in case of insolvency of 
 the banks they are payable out of the Treasury, and are secured 
 by bonds deposited with the Treasurer, and by a preference in the 
 distribution of the assets of the banks. But the bonds so depos- 
 ited are held as a special pledge for the redemption of the circu- 
 lating notes, and can be held and used by the government for no 
 other purpose, not even to secure other indebtedness or obligations 
 to the United States. 13 Opins. Attys.-Gen. 549. 
 
 By the forty-fifth section of the General Banking Law (13 Stats. 
 113), it was provided : 
 
 " That all associations under this act, when designated for that purpose by 
 the Secretary of the Treasury, shall be depositaries of public money, except 
 receipts from customs, under such regulations as may be prescribed by the 
 Secretary ; and they may also be employed as financial agents of the govern- 
 ment ; and they shall perform all such reasonable duties as depositaries of 
 public moneys and financial agents of the government as may be required of 
 them. And the Secretary of the Treasury shall require of the association 
 thus designated, satisfactory security, by the deposit of United States bonds 
 and otherwise, for the safe-keeping and prompt payment of the public money 
 deposited with them, and for the faithful performance of their duties as finan- 
 cial agents of the government." Rev. Stats., §5153. 
 
 Designating a National bank as a depositary of public money 
 under this provision does not change the character of its organiza- 
 tion, or convert its managers into public officers, or give to the 
 government any additional control over the institution, or render 
 the United States liable for any of the acts, contracts, or obliga- 
 tions of the bank. Nor does it constitute the bank a general 
 financial agent of the government, but when after such designa- 
 
366 UNITED STATES 
 
 Branch v. The United States. 
 
 tion 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 goyernment beyond the special authority 
 conferred upon it. In short, constituting a National bank a deposit- 
 ary of public money is an employment of the institution for busi- 
 ness purposes, as it is employed by individual depositors, and not 
 an assumption of its powers and liabilities by the National govern- 
 ment, nor the making of it, as an institution, a part of the United 
 States Treasury. Under the provision of the post-office laws, now 
 no longer in force, allowing "all official communications addressed 
 to either of the Executive Departments of the government, by an 
 officer responsible to that department," to be sent free through the 
 mail, it was early held by advice of the Attorney-General, that the 
 officers of designated depositaries, under the general banking law, 
 were not officers responsible to the Treasury Department, but were 
 officers of the banks, responsible only to the institutions themselves, 
 and so their correspondence on official business with the Secretary 
 of the Treasury could not be carried free by mail. 11 Opins. of 
 Attys.-Gen. 23. 
 
 The United States Treasury proper, as constituted by what is 
 commonly known as the "independent treasury" act, first passed 
 July- 4, 1840 (5 Stat, at Large, 385), repealed August 13, 1841, and 
 again re-enacted with additional provisions August 6, 1846 (chap. 
 90, 9 Stat, at Large, 59), is a depository of public money, where the 
 actual money of the government — gold, silver, bullion, notes and 
 currency — is kept in kind, as received from the public revenues, 
 or deposited there by express authority of law, and where it remains 
 the specific property of the government, and cannot be inter- 
 mingled with other funds, as the Treasurer is not authorized to 
 permit other money to be deposited therein, except in special cases 
 expressly provided for by statute. And the "Sub-Treasuries," 
 commonly so called, under the charge of assistant treasurers, where 
 the public money is received and kept under like regulations, as 
 well as the mints and perhaps other like places of deposit, may, in 
 a general sense, be considered as parts of the United States Treas- 
 ury. Rev. Stats., §§ 3591, 3592, 3593, 3594, 3595, etc. It is made 
 the duty of the Treasurer, all assistant treasurers, and those per- 
 forming the duties of assistant treasurers, all collectors of customs, 
 all surveyors of the customs acting as collectors, all receivers of 
 
COUET OP CLAIMS, 1877. 367 
 
 Branch v. The United States. 
 
 public money of the seyeral land-offices, all postmasters, and all 
 public officers of whatever character, to keep safely any public 
 money intrusted to them, without loaning, using, converting to 
 their own use, depositing in banks, or exchanging the same for 
 other funds than as specially allowed by law, and severe penalties 
 are attached to any breach of such duty. Eev. Stats., §§ 3639, 
 5489, etc. 
 
 But when public money is deposited with a designated-deposit- 
 ary National bank, it is not there retained in kind as the special 
 property of the United States, of which the bank is made the cus- 
 todian, but it becomes at once the property of the bank ; is mingled 
 with its other funds, is loaned or otherwise employed in the ordi- 
 nary business of the corporation ; and the bank, instead of being a 
 custodian of public money, becomes a debtor to the United States 
 precisely as it does to other depositors on receipt of individual 
 deposits. Such was the practical construction adopted immedi- 
 ately on the designation of National banks as depositaries of pub- 
 lic money, after the passage of the National Banking Law, and ever 
 since uniformly followed without question. The government has 
 the same rights and remedies against the bank as other creditors 
 have. If the bank fails, the United States resort to the collateral 
 security, if any, given to secure the deposits of public money to the 
 extent of the proceeds thereof, and if, after that is exhausted, a 
 balance due for deposits remains unpaid, the government takes its 
 dividend thereon, with other creditors, and is entitled to no priority 
 or preference, if the construction given in opinions of the Attorneys- 
 General who have advised the executive officers on that subject be 
 correct, which has not been judicially determined. 13 Opins. of 
 Attys.-Gen. 549 ; 13 id. 538. 
 
 By section 3640 of the Eevised Statutes it is provided that " the 
 Secretary of the Treasury may (except as to money belonging to the 
 postal service) transfer the money in the hands of any depositary of 
 public moneys, to the Treasury of the United States, to the credit 
 of the Treasurer." 
 
 Thus it is manifest that designated-depositary banks are not 
 made part of the Treasury of the United States proper, rendering 
 the government liable for the safe-keeping or repayment of the 
 money deposited therein, to the credit of the customers of those 
 institutions. As to its own public money intrusted thereto, it 
 relies upon the credit of the corporations, and the securities taken 
 
368 UNITED STATES 
 
 Branch v. The United States. 
 
 as collateral, of which the one is subject to the vicissitudes of the 
 institutions, and the other to the care and yigilance of the public 
 officers. Such money, or the credits therefor, when under the 
 control of the Treasurer of the United States, and subject to his 
 draft, may, to that extent, and in some sense, be regarded as in 
 the public Treasury, and other government money deposited there 
 to the credit of other public officers charged with its receipt or 
 expenditure, may be considered as public money, although not in 
 the Treasury. 
 
 The term "public money," as used in 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. Such money, when illegally obtained therefrom, may be 
 followed by the government into the hands of the wrong-doer, and 
 recovered as a debt due from him, with the preference over other 
 creditors in the distribution of his assets in case of insolvency given 
 to the United States by statute. Bayne et al. v. The United States, 
 94 U. S. Eeports. It does not include the money of States, coun- 
 ties, cities and towns, although with reference to those governments 
 and municipalities such funds in other connections would be 
 deemed public money. N'or does it include money in the hands of 
 the marshals, clerks, and other officers of courts, held by them 
 under authority of law, to await the judgment of the court in rela- 
 tion to the ownership thereof. Such money constitutes trust funds 
 held by individual litigants, and not for the public, as represented 
 by the government — money which cannot be used by anybody 
 until the rightful ownership is determined, and when deposited in 
 any bank is at the risk of the true owner, or of the officer deposit- 
 ing it, according as the latter has or has not legal authority for 
 substituting the credit of the bank for his own custody thereof. 
 The term is thus used in the act originally establishing the Treas- 
 ury Department, passed September 3, 1789, chap. 13, § 6 (1 Stat, at 
 Large, 65), in the acts of July 4, 1840, chap. 41 (5 Stat, at Large, 
 385), and August 6, 1846, chap. 90 (9 Stat, at Large, 59), establish- 
 ing the " independent treasury," in all of the numerous revenue 
 and fiscal acts of Congress found in the Statutes at Large, as well 
 as in the Eevised Statutes, where it forms one of the principal 
 divisions of the laws in that volume, as the fortieth title. Eev. 
 Stats., §§3591, 3659. 
 
OOUET OF CLAIMS, 1877. 369 
 
 Brancli v. The United States. 
 
 From the year 1814: to the present time, there hare been special 
 proTisions of law for the deposit and safe-keeping of money paid 
 into the District and Circuit Courts of the United States, different 
 from those applicable to public money. By the act of April 18, 
 1814, chap. 62 (3 Stat, at Large, 137), money paid into said courts 
 to abide the order of court, was required to be deposited in such 
 incorporated bank as the court should designate, and there remain 
 until it should be decided to whom it of right belonged. If there 
 were no such bank in the district, the court might direct the 
 money to be deposited according to its discretion. By the act of 
 March 3, 1817, chap. 108 (3 Stat, at Large, 395), all money paid 
 into said courts or received by the officers thereof, in cases pending 
 therein, was required to be deposited in a branch of the United 
 States Bank, if there were one in the district, to the credit of the 
 court, and to be drawn only upon the order of the judge, and if 
 there were no such branch bank in the district, then in some incor- 
 porated State bank, and if there were neither in the district, then 
 it was to be deposited according to the discretion of the judge. 
 These acts remain still in force, still requiring officers of courts to 
 deposit in State banks their trust funds, long after it was made a 
 penal offense for "all public officers of whatever character" to de^ 
 posit in any bank the public money collected by them (act of 1846, 
 chap. 90, § 6, 5 Stat, at Large, 60) and after the passage of the 
 general banking law of June 3, 1864, by which National banks 
 might be made depositaries of public money ; and they were not 
 repealed until the year 1871. Chap. 2, § 6, 17 Stat, at Large, 2. 
 
 Such was the statute law so far as applicable in 1866, when the 
 money now in question was deposited in the First National Bank 
 of Selma. There being no branch bank of the United States in 
 existence, the clerk was bound by law to deposit the money in an 
 incorporated State bank or otherwise, according to the discretion 
 of the court. He had no right to deposit it anywhere to the credit 
 of the United States Treasurer, nor in the public treasury to the 
 credit of anybody. It was required to be deposited as a private 
 credit within the exclusive control of the court. In selecting a 
 National bank, the clerk was no doubt acting under the direction 
 and according to the discretion of the court, as he was bound by 
 law to act, influenced perhaps by the circular of the Secretary of 
 the Interior, giving notice that the First National Bank of Selma 
 had been designated as a depositary of public money. That circu- 
 47 
 
370 UNITED STATES 
 
 Branch v. The United States. 
 
 lar, howeYev, did not change the legal duties and obligations of the 
 courts, or the ofiScers thereof, or of the banks named therein, and 
 it created no liabilities whatever on the part of the United States. 
 
 The clerk did not attempt to place the money in the United 
 States Treasury. He intrusted the funds in his custody to the safe- 
 keeping of the bank, and took the obligation of that corporation 
 and not of the government. The bank became his debtor, and the 
 United States were neither creditors of the bank nor debtors to the 
 depositor on account thereof. The government not only did not 
 receive the money, but could not have recovered it by action nor 
 have obtained possession of it by any process. 
 
 It will be noticed that the facts proved do not show and the 
 petition does not allege that the Secretary of the Treasury had 
 taken any security from the bank for this deposit, or for the deposit 
 of any public money therein, and that it does not appear that he 
 was ever notified or ever knew of this deposit having been made by 
 the clerk of the court. 
 
 Under all these circumstances, nothing can be more clear than 
 that the defendants are not liable in an action for money had and 
 received, or in any other form, for the safe-keeping and return of 
 money not belonging to the United States, nor intrusted to any of 
 their officers, but deposited by the clerk of the court in the First 
 National Bank of Selma, in his own name and to his own credit. 
 
 Since the rights and liabilities of the parties in this case, arising 
 from the transactions set forth in the findings, were fixed. Congress 
 has made new and different provisions, by the act of March 24, 
 1871, in relation to moneys paid into the courts of the United 
 States, expressly repealing the acts of 1814 and 1817, above 
 referred to (Eev. Stats., §§ 798, 995, 996, 5504, 5505), but 
 not repealing the provisions in relation to money in the hands of 
 assignees in bankruptcy. Eev. Stats., § 5059 ; 14 Opins. of Attys.- 
 Gen. 362. 
 
 By the law now in force, all money paid into any court of the 
 United States, or received by the officers thereof, in any cause 
 pending or adjudicated therein, must forthwith be deposited with 
 the Treasurer, an assistant treasurer, or a designated depositary of 
 the United States, in the name and to the credit of the court, 
 unless it is delivered upon security according to the agreement of 
 parties, under the discretion of the court, as it may be by virtue of 
 a proviso in the act of 1871, re-enacted in Kevised Statutes, sec- 
 
COUET OP CLAIMS, 1877. 371 
 
 Branch v. The United States. 
 
 tion 995. When such money is deposited with the Treasurer, or 
 an assistant treasurer, where it is mingled with the public money, 
 it is undoubtedly intrusted to the custody of the government, but 
 when deposited in a bank, though a designated depositary, it would 
 still seem to be the private deposit of trust funds for the security 
 of which the credit of the bank, and not of the government, is 
 taken. 
 
 Whether or not the proceeds of securities taken for the protec- 
 tion of public money simply can be applied to the repayment of 
 deposits to the credit of the courts, either pro rata with the debts 
 due to the government, or after the payment of such debts to the 
 extent of any balance of the proceeds remaining, in case of the fail- 
 ure of a depositary bank owing both classes of deposits, or whether 
 the Secretary of the Treasury may now legally and properly require 
 of designated depositaries securities sufiBcient to protect court funds 
 as well as public money, and so expressly pledged, or whether it is 
 not rather within the power of the litigants interested and the dis- 
 cretion of the courts themselves, either to require security for such 
 deposits, under the proviso above referred to, or to intrust them 
 wholly to the credit of the corporations, are questions for consider- 
 ation elsewhere, and not here, and we express no opinion thereon. 
 
 The judgment of the court is that the petition be dismissed. 
 
OASES DECIDED 
 
 m THB 
 
 COURTS OF THE SEYERAL STATES. 
 
 McIVEE T. EOBINSON. 
 
 (63 Alabama, 156.) 
 
 Taxation of National banks. 
 
 A State statute provided that all property, real and personal, not otherwise 
 specified therein, or exempt from taxation, should be " listed " for taxation. 
 There was an exemption of " all shares of the capital stock of any company 
 or corporation which is required to list its property for taxation." Held, 
 that this exemption did not apply to National banks whose capital was 
 invested in government bonds, and that the shares of such banks were 
 property to be listed. 
 
 PETITION for a writ of certiorari to revise the action of Rob- 
 inson, tax collector of Montgomery county, who had assessed 
 taxes of plaintiff's shares in the First National Bank of Montgom- 
 ery. The defendant demurred to the petition and the demurrer 
 was sustained. 
 
 The petitioner appealed. 
 
 Stone & Clopton and James W. Lapsley, for appellant. 
 Henry G. Semple and D. 8. Troy, contra. 
 
 Beickell, Circuit Judge. The case presents but two questions, 
 which are, it seems to us, free from all difficulty, in view of the 
 decisions Of the Supreme Court of the United States, and of the 
 
SUPEEMB OOUET, 1875. 373 
 
 Mclver v. Robinson. 
 
 appellate courts of the several States, in which they have been 
 considered. The first of these is, the liability of shares in National 
 banks to State taxation at the place where the bank is located, 
 without regard to the residence of the shareholder ; the second is, 
 whether the revenue law of 1868 imposed a tax on such shares, 
 and if imposed, is it at a greater rate than is imposed upon other 
 moneyed capital in the hands of individual citizens of the State ? 
 
 The acts of Congress under which National banks are organized 
 expressly authorize State taxation of the shares in such banks, 
 at the place where the bank is located, without regard to the domi- 
 cile or residence of the respective shareholders. Tappan v. Mer- 
 chants' National Banlc, 19 Wall. 490.* The restriction or limitation 
 on the power of the States to impose such taxation, originally 
 fixed, was, not only that it should not exceed the rate assessed on 
 other moneyed capital, but that it should not exceed the rate 
 imposed upon the shares in any of the banks organized under the 
 authority of the State. State banks having been dissolved, or merged 
 into National banks because of the tax imposed on them by Congress, 
 to promote the policy of the National banking system, in 1868, the 
 power of the State to tax was subjected to the sole limitation that 
 it should not impose a greater rate of taxation than was imposed 
 on other moneyed capital. 15 U. S. Stats. 34. Property, real or 
 personal, is the legitimate subject of taxation, because of the pro- 
 tection afforded it by government. The law of the State in which 
 the National bank may be located affords to it, and to its share- 
 holder, the measure of protection extended to the citizen, and to 
 his property. In the absence of positive congressional enactment, 
 the contracts into which the bank may enter are construed and 
 enforced according to the law of the State in which it is located. 
 The courts of the State are open to it as freely as to the citizen. 
 Whatever of profits the shareholder may derive are derived from 
 business transacted in the State, and under its laws. The substan- 
 tial reason for exempting them from State taxation, which might 
 be urged, is, that they are instrumentalities or agencies of the 
 Federal government, by which some of its most important opera- 
 tions are conducted. If subjected to State taxation, the power 
 could be so exercised as to destroy them, or if not, to embarrass 
 them, and to embarrass the Federal government. That reason was 
 fully considered by the Congress, and against such perversion or 
 
 * See ante, p. 100. 
 
374 ALABAMA 
 
 Mclver v. Robinson. 
 
 abuse of the taxing power of the States, the banks and the gov- 
 ernment were guarded. Equality of, and not exemption from, 
 taxation by the State was secured. National Bank v. Common- 
 wealth, 9 Wall. 353 {ante, p. 34) ; Lionberger v. Rouse, id. 468 {ante, 
 p. 41) ; Providence Institution for Savings t. Gity of Boston, 101 
 Mass. 575 {post). 
 
 By the express terms of the act of Congress, shares in National 
 banks are declared personal property. Independent of such 
 declaration, they would have been so regarded. The purpose of 
 the revenue law of 1868, expressed in more than one section, was 
 to impose a tax on all property, real' and personal, not specially 
 exempted, taxable by the State. The 6th section enumerates the 
 property to be listed for taxation, specifies all real property, speci- 
 fic personal property, and then concludes, "all other property, 
 real or personal, not otherwise specified herein, or exempt by law 
 from taxation, and its value." Pamph. Acts, 1868, p. 301. The 
 11th section declares, " that there shall be, and hereby is, levied 
 on all property in this State, real and personal, not herein exempt 
 from taxation, an annual tax of three-fourths of one per cent." 
 Id. 303. There is no exemption of shares in a National bank, or 
 of any corporate property, except of municipal, educational, or 
 religious corporations, or of unsold and uncultivated lands donated 
 by Congress to railroads. There is an exemption of " all shares of 
 the capital stock of any company or corporation which is required 
 to list its property for taxation in this State." Pamph. Acts, 1868, 
 p. 399. This exemption is applicable only to shares of the stock 
 of corporations the capital of which consists of property the cor- 
 poration is required to list for taxation. The shares represent the 
 interest of the shareholder in such property ; and as the property 
 is taxed, to avoid double taxation, the shares are exempt. The 
 capital of the National bank in which the appellant holds shares 
 consists largely, if not entirely, of the bonds of the government of 
 the United States, which the bank is not required to list for taxa- 
 tion, if it consists, and it is almost impossible to conceive that it 
 may, of any property the bank is required to list for taxation, the 
 record does not disclose it. This exemption we cannot suppose 
 has any reference to National banks. 
 
 We do not deem it necessary to inquire whether the revenue law 
 of 1868 specifically enumerates shares in a National bank as a sub- 
 ject of taxation. It does not ; as we have already .intimated, they 
 
SUPKEME COUKT, 1868. 375 
 
 State V. Tuller. 
 
 are embraced under the general terms, " all other property, real or 
 personal," not specially enumerated or specially exempt. It has 
 not been suggested, nor could it have been, that the tax assessed 
 against the shares of appellant were greater than that assessed on 
 other moneyed capital. To such tax they are liable, and it appears 
 to have been properly assessed. 
 The judgment of the Circuit Court is affirmed. 
 
 State t. Tullee. 
 
 (34 Connecticut, -aSO.) 
 
 Mnbezzlement and larceny by officers and servants of National hanks. Juris- 
 diction of State courts of fhe offense. 
 
 A State statute prescribed punishment for any officer or servants of any 
 bank " incorporated by authority in this State" who should purloin, etc., 
 any moneys, etc., belonging to or deposited in such bank. Seld, (1) to 
 apply to tellers of National banks ; (3) that a teller of such bank could be 
 punished under the statute for purloining property deposited with the bank 
 for safe-keeping, but (3) semible that such teller could not be punished 
 under the statute for purloining or embezzling the property of the bank.* 
 ■State courts have no jurisdiction of offenses created by act of Congress, and, 
 therefore, such courts cannot punish officers of National banks for embezz- 
 ling the property of the bank; but State courts can punish such officers for 
 purloining the property of others, f 
 
 INFORMATION for theft and embezzlement. 
 The first count of the declaration charged, in substance, that 
 the defendant Tuller stole sundry bonds and notes issued by the 
 United States. The second count charged, in substance, that said 
 Tuller was, on September 4, 1866, a teller in the Hartford National 
 Bank, located in Hartford, Conn., and that on or about said date, 
 while acting as such teller, he fraudulently and feloniously took 
 and purloined from the banking-house of said bank, and secreted, 
 embezzled and appropriated to his own use, ten other bonds of the 
 United States, which were fully described, the property and estate 
 
 * See United States v. Taintor, ante, p. 256 and note. 
 
 + See Missouri River Telegraph Co. v. National Bank, post, 401 ; Newell v. 
 National Bank, post. 
 
376 CONNECTICUT 
 
 State V. TuUer. 
 
 of Loyal "Wilcox, of said Hartford, and which had been by him 
 deposited with said bank for safe-keeping. 
 
 The evidence supported the declaration, and the defendant was 
 convicted. The defendant moved for a new trial. 
 
 iV. Shipman and RoMnson, for the motion. 
 
 C. Chapman and McFarland, contra. 
 
 BuTLBK, J. [After deciding several' points of practice.] Several 
 important practical questions are raised upon the motion for a new 
 trial, and upon the eight requests to charge made by the defendant 
 to the court. The import of the first, second, fifth, sixth and 
 eighth requests is, that the prisoner could not be convicted under 
 the second count of the information. The claims involved in those 
 requests are, first, that the information would not lie under the 
 statute of this State, because that statute does not embrace tellers 
 of National banking associations; second, because the package was 
 not the property of, or a deposit in the bank, within the meaning 
 of that act; and third, that the court had no jurisdiction of such 
 an offense, because the Legislature had no constitutional right to 
 apply it to a National bank. These claims we will consider in 
 their order. 
 
 The first claim is not founded. The statute is made to apply to 
 all ianks incorporated by authority in the State. The language of 
 the statute was originally of the State, and was changed by the 
 revisers and General Assembly in 1866. These alterations and the 
 general language of the first clause of the act, taken in connection 
 with the particular language subsequently used, sufficiently show 
 the intention of the Legislature to embrace tellers in the National 
 banks. Although termed banking associations in the act by which 
 they are incorporated, they are created to do a banking business, 
 and are universally known as " banks," and that is the name gen- 
 erally assumed by them in cases where they had previously existed 
 under a State law, and re-organized under the National law. Such 
 is the name assumed by the institution in question, and such was 
 the name applied to it by the counsel for the prisoner in their 
 requests to the court. It is very clear, then, that the revisers and 
 the Legislature intended the statute to apply to tellers of the 
 National banks doing business in the State. 
 
SUPEBMB COURT, 1868. 377 
 
 State V. Tuller. 
 
 The second claim is also without foundation. The property is 
 not laid in the second count as the property of the bank; but as a 
 special deposit by a third person, differing from money deposited 
 on general account, intended by both parties to be mingled with 
 the assets of the bank, and to become its property. These special 
 deposits are yery common, and that fact, and the language used, 
 taken in connection with the provisions in respect to the persons 
 who may be defrauded, makes it very clear that the Legislature 
 intended to provide for just such a case. 
 
 It seems equally clear that the third claim is untenable. . It is 
 undoubtedly true that the laws of Congress, if operative at all, are 
 supreme and exclusive, and that offenses against them are not 
 cognizable by the State courts. And it seems to be settled in this 
 State by the case of Davison v. Ohamplin, 7 Conn. 244, and 
 by high authority elsewhere, that Congress has no power to 
 give the courts of the States criminal jurisdiction in respect to 
 offenses against Federal laws. It follows therefore that the Legis- 
 lature have no power to constitute such offenses cognizable by our 
 courts. So far as they have attempted to do any such thing by 
 the statute in question, the statute is inoperative. But a statute 
 may be good and operative in part and in part inoperative. 
 
 Congress, by the National Currency Act, incorporated the bank 
 in question as a bank located within this State. They enacted all 
 the provisions which were necessary to constitute it a corporation 
 and give it being, and all of power or restraint, that they deemed 
 essential to regulate that being. They authorized it in general 
 terms to do a baiihing iusiness, but they did not undertake, by 
 any regulation or restraint, to regulate that business ; and they 
 left that to be regulated by the laws of the State and land. They 
 did enact in the 55th section of the Currency Act, that if any 
 teller or other officer of the bank should, embezzle the property of 
 the lank they should be punishable by fine and imprisonment. 
 That provision goes to the being and internal working of the 
 bank, and is intended to protect its property from its agents. It 
 was not intended to regulate and has not the effect of regulating 
 the business of the bank with its customers. Now the business of 
 the bank is conducted within the jurisdiction of this State, with 
 our citizens, and in conformity to our laws, and it is competent 
 for the Legislature to pass any laws affecting that business, or pro- 
 tect the bank or its customers in the conduct of that business by 
 48 
 
378 CONNECTICUT 
 
 State V. Tuller. 
 
 any penalty, and such law and penalty 'will not be predicated on . 
 any law or offense created by Congress, or have any relation or be 
 repugnant to the Currency Act, or in any manner infringe the 
 jurisdiction of Congress or the Federal courts. It is theft by our 
 law to steal from a National bank ; it is burglary to break into one 
 for the purpose of stealing ; and it is cheating to obtain money 
 from one by false pretenses. As a corporate being, located in the 
 State, its property and interests and business are protected by State 
 laws and subject to State legislation, and so it is competent for the 
 legislature to protect its customers, the citizens of the State, in 
 their business dealings with it, whatever they may be, whether con- 
 stituting the relation of borrower and lender or of special or gen- 
 eral depositor and bailee ; and they may be controlled and pro- 
 tected by penal enactments, without interference with the laws of 
 Congress. , 
 
 Such is the character of the statute in question. It is in part 
 repugnant to the law of Congress, but it also protects a special 
 depositor of the bank against the felonious or fraudulent appropri- 
 ation of the deposit by the agents of the bank, who have access to 
 it, and so far forth it is not open to the objection urged. 
 
 The import of the third and fourth requests, if I correctly 
 understand them, is that there could be no conviction under the 
 first count for larceny, if the prisoner took the package entire and 
 unbroken from the bank ; but it is not a case for the application 
 of the principle claimed. It is not alleged, nor was it attempted 
 to be proved, that the prisoner received the package, or that he 
 was intrusted with it, or that he ever had any care or possession of 
 it. All that is alleged or could be proved is, that he had access to 
 the place of deposit. There being no trust, or possibility of the 
 breach of trust, no possession nor custody, the technical rule in 
 relation to the breaking, of a package is entirely inapplicable 
 Moreover, it appears, without denial upon the motion, that he did 
 dispose of the contents in parcels, and must, therefore, have broken 
 the package at some time. 
 
 [The remainder of the opinion was devoted to a consideration of 
 a question of practice.] 
 
 In this opinion all the other judges concurred, except MoCttkdt, 
 J., who dissented. 
 
SUPKEME OOTJET, 1877. 379 
 
 The Chattahoochee National Bank v. Schley. 
 
 The Chattahoochee Natiokal Bakk v. Schley. 
 
 (58 Georgia, 369.) 
 
 LiabiMty of National banks as to deposits for safe-keeping — Power to with- 
 draw deposits. 
 
 A National bank which habitually receives special deposits for safe-keeping 
 as matter of accommodation, is bound by the act of its cashier in receiving 
 on special deposit, a package of stocks and bonds. The bank, though act- 
 ing without reward, becomes a bailee and is responsible for gross negli- 
 gence.* 
 
 If a person withdraws from a bank a special deposit, in pursuance of authority 
 conferred upon him by the depositor, the bank is discharged, though at the 
 time its officers were not aware of his authority. 
 
 Written authority indorsed on a certificate of deposit of stocks and bonds to 
 pay to a certain person dividends or coupons is no authority for surrender- 
 ing the stocks and bonds themselves, 
 
 TEOVER by Eliza Schley as guardian against the Chattahoochee 
 National Bank, to recover the value of certain bonds left with 
 the bank for safe-keeping, and which the bank failed to return on 
 demand. 
 
 At the time the bonds were left the assistant cashier of the bank 
 gave a receipt, specifying the bonds and stating that they were 
 received "on special deposit." On the back of this receipt Mrs. 
 Schley indorsed the following: "Will pay above dividends and 
 coupons to" a person specified. 
 
 The person so specified afterward called at the bank, received the 
 bonds and never returned them again. 
 
 The bank had occasionally accommodated its friends by allowing 
 them to place valuables in its vaults for safe-keeping. It, however, 
 made no charge therefor, and there was no charge made to nor 
 compensation expected from Mrs. Schley. 
 
 On the part of the bank it was also proved that when they 
 
 *The first proposition of the head note, and which is but a repetition of the 
 first proposition of the opinion, is obiter— that question not arising in the 
 case. It is also contrary to the decision of the Supreme Court of Vermont in 
 Wiley V. The First National Bank, post, and to the decision of the Court of 
 Appeals of New York, in First National Bank v. Ocean National Bank, post. 
 It is, however, supported by the decisions of the Supreme Court of Pennsylva- 
 nia in First- National Ba/iik v. Oraham, post ; Scott v. National Bank, post. See 
 The Third National Bank v. Boyde, post, and Twrne.r\. First Nationai Sank, 
 post, and notes to above cases. — Rep. 
 
380 GEOEGIA 
 
 The Chattahoochee National Bank v. Schley. 
 
 receiyed the bonds in question, their assistant cashier, who was the 
 only officer of the bank that knew of the transaction, or ever knew 
 that the bonds were on deposit, refused at first to give a receipt, 
 saying that the bank would not be responsible for them, but upon 
 its being represented that all that was wanted was a memorandum, 
 to show the numbers and amount in case of accident, such memo- 
 randum was given, stating simply that the bonds specified were 
 received on special deposit. 
 
 The evidence tended to show that Mrs. Schley had orally author- 
 ized the person who received the bonds from the bank to use them, 
 though such authority was not known to the bank at the time the 
 bonds were delivered to him. 
 
 The officers of the bank testified that there was no rule, law, or 
 by-law of the bank authorizing the deposit of valuables for safe- 
 keeping ; but that they had allowed friends to place in their bank- 
 vault valuable packages, but without any idea that the corporation 
 would thereby be made liable. 
 
 The jury rendered a verdict for the plaintiff for the value of the 
 bonds, and defendant moved for a new trial, which was denied. 
 
 Johnson & Ingram, and R. J. Moses, for plaintiff in error. 
 
 Thornton S Grimes, for defendant. 
 
 Bleckley, J. 1. A National bank that habitually receives 
 special deposits for safe-keeping, as matter of accommodation, is 
 bound by the act of its cashier in receiving, on special deposit, a 
 package of stocks and bonds. The bank, though acting without 
 reward, becomes a bailee, and is responsible for gross negligence. 
 Lancaster Bank v. Smith, 63 Penn. St. 47 ; Code, §§ 2104, 3105. 
 Compare Wiley v. First National Bank, 47 Vt. 546 ; First National 
 Bank v. Ocean National Bank, 60 N. Y. 378 ; Wechler v. First 
 National Bank, 43 Md. 581 ; Foster v. Essex Bank, 17 Mass. 
 479. 
 
 3. If a person withdraws from a bank a special deposit, in pur- 
 suance of authority conferred upon him by the depositor, the bank 
 is discharged, though the authority be unknown at the time to the 
 corporation, or to the officer representing it in the transaction. 
 
 3. Written authority, signed by the depositor, on the certificate 
 of deposit, in these terms : "Will pay above dividends or coupons 
 
STJPEEME OOUET, 1868. 3gl 
 
 MoVeagh. v. The City of Chicago et al. 
 
 (naming a particular person) for my account," will not justify the 
 bank in parting -with possession of the bonds themselves and the 
 certificates of stock described in the certificate of deposit, though 
 possession be yielded to the person thus named. 
 
 4. In charging the jury, it is not appropriate to say to them that 
 they are to determine what is in evidence, or that it is for them to 
 settle what is in evidence. Phraseology like this might mislead by 
 inducing them to suppose that they were to consider the compe- 
 tency of the testimony, aa well as its credibility and effect. 
 
 Judgment reversed. 
 
 MoVbagh v. The City of Chicago bt al. 
 
 (49 IIUqoIs, 318.) 
 
 Taxation of National hank shares — Method of taxation — Deductions for debts 
 — Payments of tax, how eompeUed. 
 
 The provision of the act of June 13, 1867, requiring the assessment of shares in 
 banks to be made for the year 1867, with regard of the first day of July, 
 1867, instead of the first day of the preceding April, does not violate the 
 principle of equality and uniformity established by the Constitution. 
 
 But if, in making an assessment under that act, the valuation of the shares 
 was determined on the first day of July, and the law required it should be 
 determined as of the first day of April, it would be necessary for the owner 
 of the shares, calling upon a court of equity for relief, to show that he was 
 injured thereby — that by reason thereof, the valuation put upon them on 
 the first day of July was greater than they justly bore on the first day of 
 April preceding, or that he was compelled to pay a double tax, first on the 
 money listed for taxation on the first day of April, and again on the bank 
 shares he purchased with this same money between that day and the first 
 day of July. 
 
 Where a particular species of property has been omitted from taxation for 
 a given year, the Legislature have the power to pass a special law to cure 
 the omission. 
 
 So the tax on National bank shares, not having been equally assessed for 
 the year 1867, by reason of the defective law under which it was attempted, 
 the act of June of that year was designed to supply the omission, and there 
 was no want of constitutional power to enact it. 
 
 In assessing the shares in National banks under State authority, it is not 
 necessary that they shall be included in the list of the personal property, so 
 that upon aggregating the personal property, shares included, the taxable 
 
382 ILLINOIS 
 
 MoVeagh v. The City of Chicago et al. 
 
 portion would be shown by what remained after the reduction for debts was 
 made, as provided by the general revenue law. It is quite immaterial on 
 what portion of the list these shares are found. 
 
 Under the act of 1867, a system of taxation for bank shares was designed, 
 peculiar to itself, and independent of the general revenue system of the 
 State. The only deduction allowed by the act, from the shares of each 
 owner. Is a proportionate sum for the real estate in which a portion of the 
 capital might be invested. No deduction for debts owing by the owner can 
 be made from the valuation of his bank shares. 
 
 Nor is this discrimination in not allowing a deduction from the valuation 
 of bank shares, for debts owing by the owner, as is allowed to be made 
 from the valuation of other personal property under the general revenue 
 law of the State, contrary to the limitations imposed by the provision of the 
 41st section of the National Banking Act of June 3, 1864, which provides 
 that shares in these banks shall not be taxed under State authority " at a 
 greater rate than is assessed upon other moneyed capital in the hands of 
 individual citizens of such States.'' The " rate " of taxation is not affected 
 by the different modes adopted to ascertain the taxable value of the various 
 kinds of property. 
 
 Should a collector be compelled to sell the bank shares for the non-pay- 
 ment of taxes, under the act of 1867, and the bank refuse to transfer them 
 to the purchaser on the books of the bank, a court of chancery, on a bill 
 filed for such purpose, would compel the transfer. 
 
 Or if the taxes upon such shares remain unpaid through the dividends, as 
 provided by this bank, the State could by mandamus compel the officers of 
 the bank to appropriate the dividends, or such portions as might be neces- 
 sary to pay the taxes. 
 
 No actual notice of the assessment of bank shares is required to be given to 
 the owner, the act requiring only that notice shall be published in a news- 
 paper a certain length of time. 
 
 WKIT of error to the Circuit Court of Cook county ; the Hon. 
 Ebastus G. Williams, Judge, presiding. 
 The opinion contains a sufiScient statement of the facts in this 
 case. 
 
 Mr. Melville W. Fuller and Messrs. Mattocks and Mason, for 
 plaintiff in error 
 
 Mr. Q. A. Irvin, for defendants in error. 
 
 Mr. Chief Justice Beeese delivered the opinion of the court. 
 
 This was a bill in chancery in the Cook Circuit Court, instituted 
 by Franklin MoVeagh against the city of Chicago, to restrain the 
 collections of the taxes assessed by the authorities of that city on 
 
SUPEEMB COUKT, 1868. 383 
 
 MoVeagh v. The City of Chicago et al. 
 
 certain shares of stock held by complainant in the Commercial 
 E"ational Bank of Chicago, on the allegation, among others, that 
 the act of the General Assembly, of June 13, 1867, was unconstitu- 
 tional and Toid so far as it provides for taxation in respect to bank 
 shares of the year of 1867, and that the assessment was void be- 
 cause contrary to the first proviso of section 41 of the National 
 Banking Act, in these particulars, that the shares in question were 
 not included in the valuation of the personal property of the owner, 
 and that the assessment and tax are void, because the shares are 
 placed in the valuation at a greater rate than other moneyed capi- 
 tal, no deductions being allowed for debts due and owing by the 
 shareholders, and because the act of 1867 is contrary to the iNa- 
 tional Bank Law. 
 
 A demurrer was sustained to the bill, and a judgment rendered 
 against complainant for costs, to reverse which, assigning as error, 
 sustaining the demurrer to the bill. The several points made by 
 the bill are argued at great length, and we have given them full 
 consideration. 
 
 The first objection implies a want of constitutional power in the 
 Legislature to enact the law. That must be shown by the party 
 making the charge, the presumption being that every law passed by 
 the Legislature is in conformity with the Constitution, unless the 
 contrary be shown, and it must be, as this court has often decided, 
 a clear and palpable case, before this court will undertake to decide 
 an act of co-ordinate department of the government was beyond 
 their constitutional competency to enact. 
 
 The argument of counsel in support of this objection is founded 
 on the fact that, inasmuch as appellant's shares were not assessed 
 on the first day of July thereafter, for the year 1867, for that would 
 violate the principle of equality and uniformity established by the 
 Constitution. 
 
 An examination of the revenue law of the State has not shown 
 us that the shares should be assessed for taxation on the first day 
 of April. Indeed, it would be inpracticable so to do, as the assess- 
 ment may require months to complete it. This assessment was for 
 municipal, not State purposes, and if the charter of the city 
 required the assessment to be made on the first day of April, and 
 it was not so done, or it could not be, then it should be shown 
 that an injury has resulted by making the assessment on a difEerent 
 day. 
 
384 ILLINOIS 
 
 McVeagh v. The City of Chicago et al. 
 
 Admit the valuation of appellant's shares was determined on the 
 first day of July, and the law required it should be determined as 
 of the first day of April, surely it would be. necessary for appel- 
 lant, calling upon a court of equity for relief, to allege and prove 
 he has been injured thereby, that by reason thereof his shares 
 have been valued too high, or that there was a difEerence in their 
 value on the two specified days, being higher on the first day of 
 July than they were on the first day of the preceding April, 
 whereby he would be compelled to pay a greater tax. No such 
 matter is alleged in the bill of complaint. If no injury has been 
 occasioned by the act of which complaint is made, or omission to 
 act in strict compliance with the law, it is certainly incumbent on 
 complainant to show that in his case the tax assessed against him 
 at the time charged, violated the principle of uniformity and 
 equality required to be observed by constitutional provisions and 
 by decisions of this court. 
 
 The great central idea of our Constitution in this behalf, as we 
 have before said in The Supervisors of Bureau County v. G. B. 
 & Q. B. B. Co., 44 111.239, was equality of taxation, so that one 
 man or corporation should not be required to pay a greater tax on 
 the same description of property, than another in the same local- 
 ity. 
 
 In what way the violation here complained of violates this prin- 
 ciple is not perceived. It is not alleged or pretended that in tax- 
 ing appellant's shares, a discrimination has been made to his 
 prejudice, or that he has paid a double tax, first on the money 
 listed for taxation on the first of April, and again on the bank 
 shares he purchased with the same money between that day and the 
 first day of July. 
 
 We cannot perceive wherein the act violates the Constitution. 
 It is not claimed appellant has paid any tax whatever upon the 
 money with which he purchased these shares, nor is it shown they 
 have been valued higher than like shares in the same institution, 
 or that the valuation put upon them on the first day of July was 
 greater than they justly bore on the first day of April preceding. 
 
 It is admitted, taxation of a property owner should be by the 
 operation of a general law affecting all classes of people, but where 
 a particular species of property has been omitted from the taxation 
 for a given year, where is the inhibition upon the Legislature to 
 pass a special law to cure the omission ? Such is the nature of the 
 
SUPREME COURT, 1868. 385 
 
 MoVeagh v. The City of Chicago et al. 
 
 law in question. The tax on bank shares was not properly assessed, 
 they were not, in fact, assessed by reason of the defective law 
 under which it was attempted. This act was designed only to 
 supply that omission, and we must give it effect, not being con- 
 vinced of the want of constitutional power in the Legislature to 
 enact it. 
 
 The next objections, that the sixth section of the act is void, 
 being contrary to the limitation imposed by the proviso of the 
 41st section of the National Banking Act of June 3, 1864, in 
 prescribing a mode of taxation different from that applied to other 
 personal property, whereas the bank act requires the shares to be 
 included in the list of the personalty of the owner delivered to 
 the assessor for taxation, and that the shares are placed in the 
 valuation at a greater rate than other moneyed capital, no deduc- 
 tions being allowed for debts due and owing by shareholder. 
 
 The argument is, taking the objections together, as they should 
 be so taken, having such an intimate connection, that the shares 
 should have been included in that list, so that, upon aggregating 
 the personal property, shares included, the taxable portion would 
 be shown by what remained after the deduction for debts was made, 
 and that the policy of the law is that a man shall be taxed on what 
 he is worth, at least so far as personal property was concerned. 
 
 The objections are satisfactorily answered by considering the 
 proviso of the act of 1864, and the connection of our act of 1867 
 therewith. 
 
 That provision is as follows : 
 
 " Provided, That nothing in this act shall be construed to prevent all the 
 shares in any of the said associations held by any person or body corporate 
 from being included in the valuation of the personal property of such person 
 or corporation in the assessment of taxes imposed by or under State authority 
 at the place where such bank is located, and not elsewhere, but not at a 
 greater rate than is assessed upon other moneyed capital in the hands of 
 Individual citizens of such State." 
 
 The sixth section of our act is as follows: 
 
 " Sec. 6. All assessments of the capital stock of banks organized under the 
 laws of this State, or of the property of such banks, made for State, county 
 or municipal purposes for the year A. D. 1867, by virtue of the laws heretofore 
 in force, are hereby vacated and declared to be void and of no effect ; and it is 
 hereby made the duty of the assessors of the several counties and towns, cities 
 or districts in the State in which such banks ao organized, or in which any 
 49 
 
386 ILLINOIS 
 
 McVeagh v. The City of Chicago et al. 
 
 banks or banking associations organized under the laws of the United State 3 
 are or may be located, to assess the shareholders in the same upon the value 
 of their shares, and to assess the real estate, if any, in which any part of the 
 capital stock of such banks or banking asssciations is invested, in the same 
 manner and subject to the same regulations, except as provided in this act, as 
 provided by law for the assessment of other real and personal property, in the 
 same county or town, city or district, such assessment to be made for the year 
 1867, with regard to the ownership and value of such shares on the first day 
 of July, 1867, and annually thereafter with regard to the ownership and value 
 of the same on the day which may be specified by the laws in force concern- 
 ing the assessments of other taxable personal property in this State." 
 
 The object of this section is quite apparent, being plainly 
 expressed. Assessments before its passage had been made for rev- 
 enue purposes, upon the capital stock of these banks, and the taxes 
 were in process of collection. This act vacated the assessments, 
 and put a stop to the collection of that tax, and to supply the 
 deficiency in the revenue, which would be thereby occasioned, the 
 assessors were required to assess the shareholders in the banks upon 
 the value of their shares. The act of Congress did not intend to 
 prescribe a mode by which alone the State could tax the shares. 
 That was for State legislation, under the limitations and restric- 
 tions prescribed bv the act. To get at the shares, it would be 
 proper to require them to be included in the valuation of the per- 
 sonal property, not that they should, but might, occupy a different 
 column in the list. It cannot be understood to mean, as appel- 
 lant's counsel insist, that it should be included in such valuation, 
 to enable the shareholders to deduct from their value such debts 
 as he might owe, as required by the general revenue law. To us it 
 appears that this part of the proviso was intended merely to indi- 
 cate to the assessors in making up the assessment roll, to place the 
 value of the shares in the column in which personal property is 
 placed separately, so as to show its separate amount. 
 
 In this particular case, the shares could not be included in the 
 valuation of the personal property, for that had been made long 
 before the passage of this act, and the act was intended to supply 
 an omission, as we have before said, and could not contain such a 
 provision. The great object intended by the proviso was that the 
 shares should be assessed at the place where the bank was located, 
 and that they could not be assessed at a greater rate than should 
 be assessed upon other moneyed capital in the hands of individual 
 citizens. 
 
SUPKBMB COUET, 1868. 387 
 
 McVeagh v. The City of Chicago et al. 
 
 But is the appellant entitled to the deduction he claims? For, 
 if he is not, the first objection is quite immaterial, no matter 
 where, on what portion of the list, those shares are found. If it 
 had been the intention of the Legislature to permit a deduction, 
 they would have used language indicative thereof, by declaring 
 that the bank shares shall be taxed like other property. Having 
 been denied the right to tax the capital stock of the banks, the 
 Legislature declares that the shareholders shall be assessed and 
 taxed on the value of their shares, by which mode as much rev- 
 enue would be derived as from the former exploded mode: 
 
 The language and subject of the act are plain. This is the first 
 section: 
 
 " Hereafter no tax shall he assessed upon the capital of any hank or bank- 
 ing association, organized under the authority of this State, or organized 
 under the authority of the United States and located within this State; hut 
 the stockholders in such banks and banking associations shall be assessed and 
 taxed on the value of their shares of stock therein in the county, town or dis- 
 trict where such bank or banking association is located, and not elsewhere, 
 whether such stockholders reside in such town, county or district, or not, hut 
 not at any greater rate than is assessed upon other moneyed capital in the hands 
 of individual citizens in this State. And in case any portion of the capital of 
 such bank or banking association is invested in real estate, then there shall be 
 deducted, in making the assessment of such shares, from the value of the 
 same, such sum as shall bear the game proportion to the value of such shares, 
 as the assessed value of all such real estate bears to the whole capital stock of 
 such bank or banking association ; 
 
 " Provided, that nothing herein contained shall be held or construed to 
 exempt from taxation the real estate held or owned by any such bank or 
 banking association, but the same shall be subject to State, county, municipal 
 and other taxation, to the same extent and rate, and in the same manner, as 
 other real estate is or may be taxed." 
 
 The old system of taxing banks on their capital stock being 
 exploded, this new system was devised, by which an amount of 
 revenue would accrue, equal to that derived from taxing the capital 
 stock. The only deduction allowed by the act, from the value of 
 the shares of each owner, is a proportionate sum for the real estate 
 in which a portion of the capital might be invested. 
 
 Appellant's case is not governed by the general law, but by this 
 act, and we look in it in vain for any sanction to the claim for 
 deduction on which he insists. The intention of the Legislature 
 is further evident from the second section of the act, which is as 
 follows : 
 
388 ILLINOIS 
 
 McVeagh v. The City of Chicago et al. 
 
 " Sec. 2. There shall be kept, at all times, in the office where the business 
 of such bank or banking association, organized under the laws of this State, 
 or of the United States, shall be transacted, a full and correct list of the names 
 and 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 
 authorized to assess taxes or to assess property for taxation, during the busi- 
 ness hours of each day in which business may be legally transacted ; and it 
 shall be the duty of each county, town, city or district assessor to ascertain 
 and report to the county clerk of his county, or the other proper officer, as a 
 part of his return of the assessment of property, a correct list of the names 
 and residences of all stockholders in any such bank or banking associations 
 located in his county or town, with the number and value of all such shares 
 held by each of them respectively, showing the name of such banks or bank- 
 ing associations in which such shares are held ; and such return shall also 
 show what deduction, if any, is to be made from the value of such shares on 
 account of the investment of any of the capital stock of such bank or banking 
 association in real estate, as set forth in the first section of this act." 
 
 A deduction for real estate investment being specially named, 
 excludes the idea of any other deduction. It is quite apparent 
 that owners of bank shares, under the system inaugurated by this 
 act, were not intended to be placed on the same footing with own- 
 ers of other personal property. The object of this act was to sup- 
 ply the place of a system which has been overturned by a decision 
 m the Supreme Court of the United States, in Bradley's case, and 
 to substitute for the capital stock the full shares into which that 
 stock was divided, without any deduction save for investments in 
 real estate, and which was taxable as other real estate, and thus 
 obtain from the bank and the shareholders together as much as it 
 did before from tax on the capital. 
 
 That a new system was devised, is further discoverable from sec- 
 tion 4: 
 
 " Sec. 4. The collector of taxes, and the officer or officers authorized to receive 
 taxes from the collector, may all, or either of them, have an action to collect 
 the tax assessed on any share or shares of stock owned by non-residents of 
 this State, from the avails of the sale of such share or shares ; and the taxes 
 assessed against such share or shares shall be and remain a lien thereon till 
 the payment of said tax " 
 
 No such provision as this is found in the revenue law, nor is 
 such an one as is contained in section 5, found in it: 
 
 "Sec. 5. For the purpose of collecting such taxes, and in addition to any 
 other law not in conflict with the Constitution of the United States, relative 
 to the imposition of taxes, it shall be the duty of every such bank or banking 
 
SUPREME COUET, 1868. 389 
 
 McVeagh v. The City of Chicago et al. 
 
 association, and the managing officers thereof, to retain so much of any divi- 
 dend or dividends belonging to such stockholders as shall be necessary to pay 
 any taxes assessed in pursuance of this act, until it shall be made to appear to 
 such officers that such taxes have been paid ; and any officer of any such 
 bank, who shall pay over or authorize the paying over of any such dividend, 
 or any portion thereof, contrary to the provisions of this seetion, shall thereby 
 become personally liable for aU such tax, and if the said tax shall not be paid, 
 the collector of taxes where the bank is located, shall sell said share or shares 
 to pay the same, like other personal property." 
 
 In view of this legislation, it must be apparent that a system of 
 taxation for bank shares was designed, peculiar to itself and inde- 
 pendent of the general revenue system of the State. 
 
 No deduction being allowed under this system, except for invest- 
 ments in real estate, the objection that the shares are valued at a 
 greater rate than other moneyed capital of the State falls to the 
 ground. Value of property is one thing, and the rate at which it 
 shaU be taxed is entirely different. Rate is the proportion or per- 
 centage which property shall bear, no matter what its value. It 
 does not vary as values vary, but it is always the same. One per 
 cent or three per cent on an ascertained valuation applies to all 
 property equally, however much the values may differ. The 
 meaning of the act evidently is, that the rate or percentage of 
 taxation on bank shares shall be no greater than the rate imposed 
 on other property. No violation of the act is shown in this regard. 
 
 This provision of the fifth section is attacked by appellant, on 
 several grounds. We do not deem it necessary to defend it, as the 
 remaining portions of the act would be effectual for the purpose 
 intended, if that was stricken out, save the last clause, to which 
 no objection has been made. Under that clause, should a collector 
 be compelled to sell the shares for non-payment of the taxes, and 
 the bank refusje to transfer them to the purchaser on the books of 
 the bank, a court of chancery, on a bill filed for such purpose, would 
 compel the transfer. But on principle, we can perceive no valid 
 objection to the section. 
 
 The State is entitled to its revenues. It has a right to use all 
 the means, summary or otherwise, not prohibited by a higher power, 
 to collect them. In case of bank shares, if they are taxed and the 
 tax remains unpaid through the dividends as provided by this law, 
 the State could by mandamus compel the officers of the bank to 
 appropriate the dividends, or such portions as might be necessary 
 to pay the taxes. 
 
ILLINOIS 
 
 First National Bank of Mendota v. Smith. 
 
 This question is fully discussed by the Court of Appeals of 
 Maryland, in the case of The State v. Mayhew, 2 Gill, 487, in most 
 of the reasoning of which, and in the conclusion, we concur, and 
 are in accordance with what we have said above. 
 
 Upon the last point made, that appellant has no notice of the 
 assessment, it is sufficient to say, that it is not necessary he should 
 have actual notice, the law requiring only that notice of the assess- 
 ment should be published in a newspaper of the city, a certain 
 length of time. It is not denied such notice was given. 
 
 Perceiving no error in the record, the decree dismissing the bill 
 must be affirmed. 
 
 Decree affirmed. 
 
 FiKST National Bank ob' Mendota v. Smith. 
 
 (66 Illinois, U.) 
 
 Taxation of Sfational banks — Place where taxable — Power of Legislature to 
 fix situs of shares for taxation — Natu/re of shares. 
 
 A State statute providing that shares of stock in National banks shall be taxed 
 in the county, town, or districts where such banks are situated, whether the 
 shareholders reside in such county, town, or district or not, is valid.* 
 
 SemUe, that shares in National banks are in the nature of choses in action. 
 They are mere demands for dividends as they become due. The certificates 
 of stock are merely evidence of the holder's title to a given share in the 
 property and franchises of the corporation of which he is a member. The 
 bank is the trustee of the stockholders, who must come to its counter for 
 their dividends and their share of assets on final liquidation, and no transfer 
 of stock can be completed until shown upon the books of the bank. 
 
 APPEAL from the Circuit Court of La Salle county ; the Hon. 
 Edwin S. Leland, Judge, presiding. 
 
 Frank J. Crawford and Orooker & Hunter, for appellant. 
 Mayo & Widmer, for appellee. 
 
 Mr. Justice McAllister delivered the opinion of the court. 
 This was a bill in equity exhibited in the Circuit Court of La 
 
 * The doctrine of this case is affirmed by Tappan v. Merchants' National 
 Bank, ante, p. 100, wherein the same statute was construed. — Rep. 
 
SUPREME COURT, 1873. 39I 
 
 First National Bank of Mendota v. Smith. 
 
 Salle county, by the First National Bank of Mendota, against the 
 tax collector of the township of Mendota, in which the bank was 
 situated, to restrain the collection of the taxes assessed for the 
 year 1871, against the stockholders of the bank, upon their respect- 
 ive shares of stock. The defendant demurred to the bill. The 
 court sustained the demurrer, and no amendment of the bill being 
 proposed, it was dismissed. The complainant appealed to this 
 court. 
 
 The ground upon which the bill seeks to restrain the collection 
 of these taxes is, that the taxes are levied in La Salle county 
 against all the shareholders, while only a part of them reside in 
 that county, and the others reside in Bureau county. The 
 position taken is, that there is no power to levy the tax against 
 the shareholders residing in Bureau county, because their 
 shares must be considered as having their situs only in the 
 county where the holders reside. Therefore the taxes, as respected 
 all that class, were illegal and void, and being illegal and void as 
 to them, they were likewise as to stockholders residing in the 
 county where the bank is located, by operation of the rule of the 
 Constitution requiring uniformity. For these reasons, and because 
 the bank is trustee of all the stockholders, it is insisted that upon 
 the ground of avoiding multiplicity of suits, the bill can be main- 
 tained by the bank. 
 
 The propositions upon which this bill is based, when specifically 
 stated, are briefly these: (1) That in order to a valid tax the 
 Legislature must have power or jurisdiction over the person or 
 property in the county where the tax is authorized to be levied. 
 (3) That, inasmuch as a portion of the owners resided out of the 
 county, though in the State, and the situs of their shares was at 
 their domicile, the Legislature was powerless to change that situs, 
 so that there could be no jurisdiction of either the person or prop- 
 erty in the county of the bank, and, therefore, as to all that class 
 of owners, the tax was void. And, lastly, inasmuch as the tax was 
 void in respect to owners of shares who did not reside in La Salle 
 county, the tax was likewise, under the constitutional rule of the 
 State requiring uniformity and equality, void in respect to those 
 who did reside in that county. 
 
 The 41st section of the act of Congress passed in 1864 expressly 
 recognizes the right of the States to tax all shares in the stock of 
 National banks. Notwithstanding this recognition, the right was 
 
392 ILLINOIS 
 
 First National Bank of Mendota v. Smith. 
 
 soon denied by the banks ; and the question first came before this 
 court in the case of Tlie People t. Bradley, 39 lU. 130. It was there 
 held that the stock was taxable, as had previously been held by the 
 Court of Appeals' in the cases of The City of Uiicar. Churchill, and 
 Van Allen t. Supervisors, 33 N. Y. 162. 
 
 In Bradley's case, as in the New York cases, the tax was levied 
 upon the capital stock of the bank in the aggregate, and not upon 
 the individual shareholders. These cases were taken to the Su- 
 preme Court of the United States, and reversed upon the sole 
 ground that the tax must, under the act of Congress, be levied 
 upon the individual shareholders. 8 Wall. 573 ; 4 id. 459. In 
 this mode, it was held the shares could be taxed. 
 
 In obedience to this decision of that court, our Legislature, in 
 1867, passed an act requiring the taxes to be assessed upon the indi- 
 vidual shareholders " in the county, town or district where such 
 bank or banking association is located, and not elsewhere, whether 
 such stockholders reside in such county, town or district or not." 
 
 Having successfully resisted the attempt to tax the stock of the 
 bank as a corporation, as appears by the cases referred to, it is now 
 sought to prevent taxation of the stockholders upon their shares. 
 This language is considerately employed, and "it is believed to be 
 not too broad; because, as will be presently seen, if the grounds 
 now taken on behalf of the stockholders are maintainable, it will 
 only be necessary that the stock of the various National banks in 
 the State shall be held in the name of non-residents, in order to 
 withdraw the shares altogether from the reach of State legislation 
 for taxation. 
 
 Before proceeding further in this case, it should be observed, 
 that the question involved depends entirely upon the laws of this 
 State, and is in no manner embarrassed by any act of Congress. 
 
 The 41st section of the act of Congress above referred to, under 
 which these banks are organized, required State taxes to be im- 
 posed " at the place where the bank is located, and not elsewhere." 
 But by an act of February, 1868, Congress declared these words — 
 "place where such bank is located, etc.," to mean " the State in which 
 the bank is located and not elsewhere." 
 
 This provision places the shares in such banks under the taxing 
 power of the State wherein the bank is located, and prohibits their 
 being subject to State taxation elsewhere. This limitation, with 
 the further ones that the taxation imposed should not be at a greater 
 
SUPREME COURT, 1873. 393 
 
 First National Bank of Mendota v. Smith. 
 
 rate than upon other moneyed capital in the hands of individual 
 citizens of the State where made ; and that the tax so imposed, 
 under the laws of any State, upon the shares of the association 
 authorized hy that 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, constitute the only limita- 
 tions by Congress on the taxing power of the State where the bank 
 is located, none of which have any application to this case. Our 
 Legislature was therefore left at liberty to impose the same tax upon 
 the value of shares in National banks located here, which it could 
 upon any other moneyed capital of our citizens, and fix the situs 
 of such shares in its discretion, unless restrained by our own Con- 
 stitution. We have made this reference to the acts of Congress in 
 order to show that the questions involved depend solely upon the 
 laws of the State, and are in no respect embarrassed by any laws of 
 Congress. 
 
 We will now consider the validity of the arguments urged in 
 favor of the exemption of stockholders of such banks located within 
 this State, from State taxation, under th. act of 1867. 
 
 The counsel for appellant cite as authority the case of The Union 
 National Bank v. The City of Chicago,* decided in 1871 in the 
 Circuit Court of the United States fO' the Northern District of 
 Illinois. We have been furnished with a copy of the opinion 
 delivered in that case, and have given it a very careful examina- 
 tion. The same question now under consideration was presented 
 there, and was decided adversely to the right of taxation upon the 
 same grounds which are urged by counsel for appellant in the case 
 before us. While we have great respect for the opinion of the 
 learned district judge who decided that case, we find ourselves un- 
 able to concur either in his reasoning upon the question or the con- 
 clusion at which he arrives. 
 
 In order that the position of the coiirt in that case, and that of 
 the counsel for the appellant in the case before us, may be fairly 
 stated and understood, we quote the language of the court, whose 
 reasoning the counsel for appellant adopt as the principal founda- 
 tion for their argument. 
 
 After giving the clauses of our State Constitution of 1848, 
 requiring uniformity in taxation, the opinion proceeds as follows : 
 
 * The doctrine of this case having been overruled by Tappan v. Merchants' Na- 
 tional Bank, ante, p. 100, the case is not included in this volume. — Ejkp. 
 50 
 
394 ILLINOIS 
 
 First National Bank of Mendota v. Smith. 
 
 " And by a series of adjudications of the Supreme Court of Illi- 
 nois, it has become settled law that these provisions are restric- 
 tions upon the power of taxation by the Legislature, or any authority 
 under it. All taxes therefore assessed by municipal corporate au- 
 thorities must be proportionate and uniform within the jurisdiction 
 of the body imposing them. Where there is jurisdiction neither 
 of the persons nor property, the imposition of a tax would be ultra 
 vires and void. Jurisdiction is as necessary to valid legislative as 
 to valid judicial action. 
 
 " Shares of stock are incorporeal personal property, and as such, 
 are held incapable of having any situs save at the domicile of the 
 owner. In the eye of the law they have in themselves no locality. 
 They accompany the person of the owner where he goes, and he 
 may deal with them and dispose of them according to the law of 
 his domicile, which, if he die intestate, governs their disposal. The 
 act of June 13, 1867, directs taxes to be assessed by the authorities 
 of counties, towns, cities and districts upon the shares of these 
 banks in the county or town where the bank is located, without 
 regard to the residence of the owner of the situs of the shares, and 
 in that respect I regard it as a violation of the Constitution of the 
 State. 
 
 " The complainants show, and it is not denied, that their share- 
 holders are scattered over the State, and such taxation upon them 
 appears to me a clear infringement of the constitutional requisi- 
 tion that all assessments by the corporate authorities of cities, etc., 
 shall be uniform in respect to persons and property within their 
 limits. This compels the taxation of the stock owned by residents 
 of the State in the county, city, town, or district where they reside, 
 for the purpose of collecting county, city, town, or district taxes, 
 and a failure to do so destroys the rule of uniformity with respect 
 to property within the limits of the body imposing the taxes, while 
 neither the persons nor prdperty are within the jurisdiction of the 
 taxing power at the place of the bank's location. 
 
 "If then this statute is void as to those who do not reside in the 
 district where the bank is located, it must be as to those who do ; 
 because it would then be undeniable that every person would not 
 be obliged to pay a tax in proportion to the value of his or her 
 property, and the tax for State purposes would not be levied with 
 uniformity. And if the law be not valid as to shares of stock be- 
 longing to residents, the shares of non-residents cannot be taxed, 
 
STJPKEMB COTJET, 1872. 
 
 First National Bank of Mendota v. Smith. 
 
 because the provisions of section 41 of the act of 1864 inhibit any tax 
 upon non-residents that is not imposed upon residents of the State, 
 and such a regulation would be in conflict with the Federal Con- 
 stitution, which says: 'the citizens of each State shall be entitled 
 to all the privileges and immunities of the citizens of the several 
 States.' I cannot avoid the conclusion that this law violates the 
 imperative rule of the Constitution." 
 
 There are two vital points involved in the foregoing reasoning 
 and conclusion which challenge serious attention. One is, in effect, 
 that all shares in the stock of National banks in this State, though 
 claiming and receiving the protection of our laws and of our State 
 and municipal governments, will wholly escape State, county, town 
 or district taxation if owned by non-residents of the State, and 
 will be beyond the reach of any statute the Legislature can pass. 
 Neither can they be taxed where the owner resides. 
 
 They will thus escape taxation anywhere, although by the act of 
 Congress under which these banks are created, there is a clear and 
 manifest intention that stockholders should be subject to taxation 
 in the State where the bank is located. The reasoning is, that 
 they cannot be taxed in this State because, by a mysterious and 
 indissoluble tie, the situs of the shares is with the non-resident 
 owners. They cannot be taxed where the owners live, because, by 
 the act of Congress, they can be taxed only in the State where the 
 bank is located. 
 
 The other point of this decision is, that if an assessor includes 
 in his assessment certain property not legally subject to taxation, 
 not only may the owner of such property enjoin the collection of 
 the tax illegally imposed upon that property, but all other tax 
 payers, though their taxes are thereby lessened in amount, may 
 avail themselves of Ms grievances and enjoin the collection of taxes 
 assessed upon their property; and this upon the theory that the 
 addition to the assessment roll of property not subject to taxation 
 violates the constitutional requirement of equality and uniformity. 
 We are unable to understand how this conclusion is reached. When 
 property subject to taxation is wholly left out of the assessment, it 
 might be contended with much plausibility that uniformity was 
 not attained. But even in that case this court has held that the 
 collection of the tax cannot be restrained by equity. Merritt v. 
 Farris, 22 111. 511; Schofield et al. v. Watlcins et al., id. 66. 
 
 And again, in Dunham et al. v. City of Chicago, 55 111. 357, 
 
396 ILLINOIS 
 
 First National Bank of Mendota t. Smith. 
 
 where the omission by the assessors to assess property subject to 
 taxation was set up as a defense to the application for judgnaent 
 against delinquent lands, it was held by this court that such omis- 
 sion afforded no sufficient ground for declaring the taxes void. 
 
 But whateyer ground of complaint there might be on the part of 
 the .owners of assessed property because other property liable to 
 taxation had been omitted from tke assessment, and thus increas- 
 ing their burdens, we are entirely unable to comprehend how tax 
 payers can complain because property not liable to taxation had 
 been included. The result to them is simply that their taxes are 
 thereby lessened; which is certainly a very novel reason for asking 
 an injunction. 
 
 The case in the United States Circuit Court to which we have 
 been cited, was a bill brought by the bank to restrain the collection 
 of city taxes from any of the shareholders, whether resident or 
 non-resident in the city of Chicago. The shares of the residents 
 were, even in the view of the court, properly taxable there. The 
 shares of the non-residents were, in the view of the court, not within 
 the city, but attached to the persons of their owners, at the domi- 
 cile of the latter, and were, therefore, not taxable there. For 
 aught that appeared there, all the property in the city subject to 
 taxation was assessed. The addition to that assessment of property 
 belonging to non-residents, and not within the city, according to 
 the view of the court, may have been, if that view were correct, a 
 wrong to the non-resident owners, but certainly was none to the 
 resident tax payers, and did not destroy either equality or uni- 
 formity of taxation as between them. 
 
 We have commented at such length on this position of the Fed- 
 eral court because the same position is taken by counsel in the case 
 before us, on the authority of that decision, and the same relief is 
 asked for the resident stockholders that was granted there. 
 
 As is apparent in the extract from the opinion already given, the 
 decision rests upon two propositions: First, that a tax cannot be 
 assessed where there is no jurisdiction of either the person or the 
 property. Second, that personal property has no situs of its own, 
 but follows the person of its owner, and if this is not always true 
 of tangible personal property, it is of incorporeal personal properby 
 like shares of bank stock. 
 
 The correctness of the first proposition is not questioned. It is 
 undoubtedly true that the Legislature could not constitutionally 
 
SUPEEME COTJET, 1873. 397 
 
 First National Bank of Mendota v. Smith. 
 
 authorize Cook county to levy a tax upon lands or other property 
 having a fixed situs in La Salle county. 
 
 The second proposition is correct as a general rule of the com- 
 mon law. It is one of obvious convenience in determining what 
 law shall govern in the distribution of estates of deceased persons. 
 But while it is a rule of the common law, that is all that can be 
 said of it. The fallacy of the reasoning of the Federal court 
 referred to, and of the counsel for the appellant, seems to be in 
 assuming that this rule of the common law cannot be changed by 
 statute. The Legislature, by the act of 1867, certainly intended 
 to change it in regard to bank shares ; and to fix their ^itus, for 
 all purposes of taxation, in the county where the bank is situated. 
 The language employed is broad enough to effect the change, and 
 it has been made, if the Legislature had the constitutional power 
 to make it. Where is the constitutional provision which prohibits 
 the change ? We have been referred to none ; and in what pro- 
 vision lurks the prohibition we confess ourselves at a loss to conjec- 
 ture. That the decision of the Federal court assumes and is based 
 upon the theory that the situs of the shares is inseparable, even by 
 statute, from the person of the owner, is undeniable. Yet we are 
 pointed to no provision of the Constitution prohibiting what would 
 seem to be an exercise of one of the plainest and simplest of leg- 
 islative powers. That the Legislature can change the rule of the 
 common law in this respect, seems to us a proposition too plain for 
 argument ; and if the power had not been practically denied by a 
 court of such respectability we should deem it one so palpably 
 clear as not to admit qf controversy. 
 
 Story, in his Conflict of Laws, section 550, speaking of this 
 question of situs, says: 
 
 " The general doctrine is not controverted that although mova- 
 bles are for many purposes to be deemed to have no situs except 
 that of the domicile of the owner, yet this being but a legal fiction, 
 it yields whenever it is necessary for the purposes of justice that 
 the actual situs of the thing should be examined." 
 
 The separation of the situs of personal property from the domi- 
 cile of the owner for the purposes of taxation is familiar doctrine 
 in the courts of this country, and has been sanctioned by this court 
 in various cases. In Wilkey v. The City of Pekin, 19 111. 160, it 
 was held that a ^resident of that city could not, under the charter, 
 be taxed on personal property not having its actual situs within 
 
398 ILLINOIS 
 
 First National Bank of Mendota v. Smith. 
 
 the city. The situs of the property was held, under the charter, 
 not to attach to the person of the owner. In Mills v. Thornton, 
 26 111. 300, a like severance of the situs from the person, for the 
 purposes of taxation, was again recognized. In the Gity of Dun- 
 leith T. Reynolds, 53 El. 45, the court held certain personal prop- 
 erty within the city subject to taxation, though the owners resided 
 elsewhere. These, it is true, were cftses of tangible property. But 
 in the Board of Supervisors v. Davenport, 40 111. 198, the same 
 principle was applied to property not tangible. It was there held 
 that money belonging to a resident of New York, and sent to an 
 agent in Tazewell county to be loaned, was taxable by the county. 
 The property was a mere chose in action, but its situs was, by the 
 terms of the Eevenue Law, severed from the owner and attached to 
 the agent in this State who loaned the money. It might be said in 
 reference to the latter case that the possession of the agent was 
 that of the principal. If this be conceded, it may also be said that 
 the bank files this bill as trustee of the stockholders ; and as such 
 possesses the lawful control over the rights and interests of the 
 cestuis que trust, much greater than that of a mere agent for the 
 loan of money. 
 
 Shares in joint-stock companies are not, however, strictly speak- 
 ing, chattels, and it has been considered that they bear a closer 
 resemblance to choses in action, or, in other words, they are merely 
 evidence of property. They are, it is held, mere demands for divi- 
 dends as they become due, and differ from movable property, which 
 is capable of possession and manual apprehension. "If," says 0. 
 J, Shaw, " a share in a bank is not a chose in action, it is in the 
 nature of a chose in action, and, what is more to the purpose, it is 
 personal property." Ang. & Ames on Corp. (9th ed.), § 560; Hutch- 
 ins V. State Banh, 12 Mete. 421. 
 
 "Certificates of stock," says Comstook, J., in Mechanics' Bank 
 V. New York R. R. Co., 3 Kern, 627, " are not securities for money 
 in any sense, much less are they negotiable securities. They are 
 simply the muniments and evidence of the holder's title to a given 
 share in the property and franchises of the corporation of which 
 he is a member." 
 
 Under this view of the law it would seem to be eminently proper 
 for the Legislature to fix the situs of property so anomalous in 
 nature, for the purposes of taxation. The question, however, is 
 not whether the act of 1867, under which these taxes were levied. 
 
SUPEBME COURT, 1873. 
 
 PiPBt National Bank of Mendota v. Smith. 
 
 was just or reasonable, but simply whether it was within the limits 
 of legislative power. If it was not, then there is no power in our 
 Legislature to change any artificial rule of the common law, and 
 many of the acts within our statute books are yoid for the same 
 reason. 
 
 But in our opinion the act of 1867 was not only constitutional, 
 but was also a very proper and even necessary exercise of legisla- 
 tive power. It prescribes no unreasonable rule. It places the dtus 
 of bank shares where, from the very nature of the property, it 
 ought to be placed for the purposes of taxation. The act of Con- 
 gress itself contemplates a severance of the situs at such shares 
 from the person of their owner, by providing that they should not 
 be taxed except in the State where the bank is established. But 
 apart from this, it is really much more reasonable to fix the situs 
 of shares at the place where the bank is located, and where it must 
 continue to do its business or wind up its affairs, than to separate 
 by legislation tangible personal property from the person of its 
 owner. The latter may be in one county to-day, and in another 
 to-morrow. Its actual situs is liable to constant change, and the 
 title may be transferred by the owner wherever he may be. But 
 not so with bank shares. The banking corporation has a fixed 
 locality, where it must transact its business, and there wind up its 
 affairs when it ceases to exist. It is the trustee of the stockholders, 
 who must come to its counter for their annual dividends and their 
 share of assets on final liquidation. Its debts are payable at its 
 counter, and credits receivable there. No transfer of stock can be 
 completed unless shown upon the books of the bank. A list of the 
 names and residence of all the stockholders must be there kept. 
 The property, in its own nature, possesses ranch more of the im- 
 mobility of real estate than any other personal property which we 
 can now call to mind. The Legislature, then, did no violence to 
 the nature of this property when it fixed the situs of the shares at 
 the locality of the bank. 
 
 We have seen that the exercise of the power by the Legislature was 
 both proper and legitimate. We have shown why it was proper and 
 legitimate. It was necessary, because if this act had not been 
 passed much of the bank stock in the State would have soon es- 
 caped taxation by modes so obvious as to need no specification. 
 As it is, this is impossible. The assessor of each county knows 
 every bank in the county, and has but to go to the books to ascer- 
 
400 ILLINOIS 
 
 First 'National Bank of Mendota v. Smith. 
 
 tain the ownership of these shares. The act, instead of defeating 
 uniformity and equality of taxation, which is the theory upon 
 which its invalidity is asserted, does, in our judgment, tend to 
 secure these results more effectually than any other method that 
 could have been adopted. 
 
 This question has been before the highest courts of New York 
 and New Jersey, and they have decided as we do. National Bank 
 ■V.Cook, 3 Vroom, 347; The People v. Commissioners of Taxes, 35 
 N. Y. 423. 
 
 We know of no authority that can be cited in support of the 
 ruling of the Circuit Court of the United States, for the Northern 
 District of Illinois, to which we have already suflBciently adverted. 
 The case just cited from 35th New York, in which this point was 
 expressly ruled, was afterward carried to the Supreme Court of 
 the United States ; this point was not deemed of sufficient import- 
 ance to be raised before that court ; and the judgment of the Court 
 of Appeals of New York was affirmed there without reference by 
 the court to the question. 4 Wall. 244. 
 
 We cannot regard the attempt of the National banks to shield 
 their stockholders from all State taxation as at all meritorious. 
 They offer no grounds for the alleged exemption which we can re- 
 gard as even plausible. 
 
 Although their franchises are conferred by act of Congress, still, 
 all their business, so far as conducted with reference to profit, is 
 done under our State laws, the same as corporations created by the 
 laws of this State. It is by the laws of the State that their bus- 
 iness transactions are governed, and by the same laws that their 
 property is protected. So that they are under the same duty to 
 contribute to the support of the State and municipal governments 
 as any natural person or State corporation may be. Unless exempted 
 by some plain rule of law, they should not ask a court of equity to 
 relieve their stockholders from that duty. 
 
 Decree affirmed. 
 
SUPEEME COTJET, 1874. 401 
 
 Missouri River Telegraph Company v. First National Bank of Sioux City. 
 
 Missouri Eiver Telegraph Company t. First National 
 Bank of Sioux City. 
 
 (7i Illinois, 217.) 
 
 Jurisdiction of actions against National hanks to recover penalties. 
 
 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.* 
 
 Semble, That State courts have no jurisdiction of actions to recover penalties 
 imposed by the National Banking Act. f 
 
 ACTION against the First National Bank of Sioux City to re- 
 coTer penalties alleged to have been incurred by it. Appeal 
 from the Superior Court of Cook county. 
 
 Bennett, Kratzinger & Veeder, for appellant. 
 
 Tenneys, Flower & Abercromhie, for appellee. 
 
 Mr. Chief Justice Walker delivered the opinion of the court. 
 
 It appears that appellee is a corporation organized under the 
 Banking Law enacted by the Congress of the United States, and is 
 located in the State of Iowa; and appellant, who sues for the use 
 of Percy and Daggitt, is also a foreign corporation, organized 
 and transacting business under the laws of Iowa. The first 
 count of the declaration avers that appellee, in violation of the laws 
 of Congress, received from appellant, interest over and above the 
 rate allowed by the laws of Iowa, at divers times, the sum of five 
 hundred dollars, whereby, under the act of Congress, appellee 
 became, and was liable to pay to appellant double that sum, 
 amounting to one thousand dollars. The common counts were also 
 
 *See Cook v. State National Bank, post, wherein the Court of Appeals of 
 New York held that the courts of that State had jurisdiction of an action 
 against a National bank located in Boston. See, however, Crocker v. The 
 Marine National Bank, post, wherein the Supreme Judicial Court of Massa- 
 chusetts held otherwise. See, also, Cadle v Tracy, ante, p. 230 ; Main v. Second 
 National Ba/nk, ante, p. 200; and Bank of Bethel v. Pahquioque Bamk, ante, 
 p. 77. 
 
 + 8ee State v. Tuller, ante, p. 375; Newell v. NaMonal Bamk, post; and Ordway 
 V. Central National Bank, post. 
 61 
 
402 ILLINOIS 
 
 Missouri River Telegraph Company v. First National Bank of Sioux City. 
 
 added. To this declaration defendant filed a demurrer, whicli the 
 court sustained, and rendered judgment for defendant, and this 
 appeal is prosecuted. 
 
 It is urged in affirmance that the court below has no jurisdic- 
 tion to try a cause of the character shown in the first count of the 
 declaration; that it is for the recovery of a penalty imposed hy the 
 laws of another State, or of CongBess, or both, and, inasmuch as 
 courts never execute the criminal or penal laws of another State or 
 government, that the rule would be violated to hold that this penal 
 law may be executed by our courts. There can be no pretense that 
 any law of this State has been violated, as it is averred that the 
 transaction occurred beyond the limits of the jurisdiction of the 
 courts in this State. And it is equally true that both the gov- 
 ernments of the United States and Iowa are whoUy independ- 
 ent of this State. They severally have all of the attributes of 
 sovereignty essential to the enactment and enforcement of laws for 
 the government of their citizens within the limits of their consti- 
 tutions. And, in accordance with long-settled rules of law, this 
 State cannot enforce their criminal or penal laws. See Sherman v. 
 Oassett, 4 Gilm, 521, But the jurisdiction is claimed under the 
 fifty-seventh section of the act of Congress to provide a National 
 currency, etc. (13 Statutes at Large, p. 117), which provides that all 
 suits, actions and proceedings arising under that act may be had in 
 the United States courts or in " any State, county or municipal 
 court in the county or city in which said association is located, 
 having jurisdiction in similar cases." It is manifest that this 
 language confers no jurisdiction on any court in this State to try 
 this case, for the obvious reason that the appellant's bank or asso- 
 ciation is not located in this State. The jurisdiction attempted to 
 be conferred is only in the State courts, the county courts or 
 municipal courts in the State in which the bank is situated. By 
 the plain meaning of the language of this section. Congress 
 Intended only to confer jurisdiction upon the State courts of Iowa, 
 the county court of Woodbury county and the municipal court of 
 Sioux City, if they had jurisdiction of similar cases under the 
 laws of that State. The effort to confer jurisdiction was not on 
 such courts generally, but simply upon the courts in the jurisdic- 
 tion in which the delinquent bank might be located. The language 
 is so plain that it will not admit of construction. The clear and 
 unequivocal meaning of the law would be violated to hold other- 
 
SUPEEME COURT, 1874. 403 
 
 Missouri River Telegraph Company v. First National Bank of Sioux City. 
 
 wise, and it is manifest that the Superior Court does not answer to 
 the description of any one of the courts enumerated by the act, 
 and hence Congress neither intended to, nor did it confer jurisdic- 
 tion in this case upon that court. 
 
 It is urged for reversal that our courts entertain jurisdiction in 
 cases where these banks are parties either plaintifE or defendant, 
 as we do with individuals, whether resident or non-resident. This 
 is true, but the jurisdiction that our courts exercise in such cases 
 results from the power conferred by our Constitution and laws, 
 and not by any means from acts of Congress. All of their 
 jurisdiction comes from that, and not from a foreign source. They 
 are brought into being and exist alone by virtue of our organic 
 law. And the same is true of the United States .courts, as they 
 derive all their powers from the Federal Constitution. We presume 
 no one has ever conceived the novel idea that a State could, by 
 legislative enactment, confer any power or jurisdiction on the Fede- 
 ral courts or officers. Nor can it be imagined that any one would 
 suppose that if such an effort were made, and the Federal courts 
 should refuse to exercise such jurisdiction, there is the least shadow 
 of power by mandamus or otherwise to coerce obedience to the 
 requirement of such a law. 
 
 If we could imagine that a law of that character could be passed, 
 does any one believe that the Federal courts would thus acquire 
 the semblance even of authority to act thereby ? Does any one 
 doubt that all acts under such an enactment would be void ? Does 
 any one suppose this State can rightfully confer judicial power on 
 any other courts than those provided for and created under our 
 fundamental law ? Could our Legislature confer judicial power on 
 the courts of other States ? Surely not, and if the effort were 
 made and the law were acted under, all their proceedings in pursu- 
 ance of such a requirement would be clearly void.' 
 
 The first section of . article 4 of our Constitution provides that 
 the judicial power of the State, except as otherwise therein pro- 
 vided, shall be vested in one Supreme Court, Circuit Courts, 
 County Courts, justices of the peace, police magistrates, and in 
 such courts as may 'be created by law in cities and incorporated 
 towns. This section has exhausted the judicial power of the people 
 of the State. It is there fully disposed of, leaving no residuum. 
 There is nothing in that article that can be tortured into authority 
 to confer any of the judicial power of the State on courts of other 
 
404 ILLINOIS 
 
 Missouri Eiver Telegraph Company v. First National Bank of Sioux City. 
 
 States, or the Federal courts, hence it would be palpably uncon- 
 stitutional to enact such a law. 
 
 The first section, article 3, of the Federal Constitution, pro- 
 vides that : " The judicial power of the United States shall be 
 vested in one Supreme Court, and such inferior courts as the Con- 
 gress may from time to time ordain and establish." This provision 
 has disposed of the judicial power, and it is vested in such Federal 
 courts as have been ordained and established by Congress ; and 
 under the express requirements of that section of the Federal Con- 
 stitution it must remain there as now distributed until Congress 
 shall see proper to organize other courts to which a portion of that 
 judicial power may be distributed. In the face of this clear and 
 unmistakable disposition of all the judicial power of the general 
 government, can it be reasonably insisted that Congress may con- 
 fer any of that power on courts they have not ordained or estab- 
 lished ? And it will, we apprehend, be contended by no one that 
 the Superior Court of Cook county was ordained or established by 
 an act of Congress. Suppose the court below, on motion, had dis- 
 missed this suit, — to what Federal court or ofiBcer would counsel 
 have applied to compel it to take jurisdiction and proceed to hear 
 the cause. It seems to us to be impossible to imagine where such 
 Federal power lies. If it exists it has, so far as we know, been 
 unsuspected. The United States government, when created, was 
 provided with all means necessary for the enactment of laws, their 
 adjudication and enforcement, and it was supposed that the power 
 would be exercised by its own agency, consisting of its own officers, 
 created and maintained for that purpose, and that it would not 
 require the officers of the State government to enforce its laws. 
 See Prigg v. Penn, 16 Pet. 539. That case holds that whilst State 
 officers cannot be compelled to execute laws of Congress, although 
 such laws may empower them to do so, still, when such officers so 
 act they are fully justified and their acts will be valid and binding. 
 This may be true, but that fact by no means compels State officers 
 or tribunals to enforce the laws of Congress. 
 
 Our courts, under the powers conferred upon them by our Consti- 
 tution, have jurisdiction over all persons and things within the 
 borders of the State. And when persons or corporations, without 
 reference to when or where the latter are created, come into this 
 State, they are within the jurisdiction of our courts. And it is by 
 virtue of this power thus conferred that our courts exercise their 
 
SUPEEME COUET, 1874. 405 
 
 MiBBOuri Eiver Telegraph Company v. First National Bank of Sioux City. 
 
 jurisdiction, and not by virtue of congressional action or Federal 
 grant of power. If either of these corporations were to sue in our 
 courts for any matters, except such as those to which the court 
 would refuse to exercise its functions in favor of a natural person, 
 our courts would take jurisdiction and proceed to trial and judg- 
 ment. The law regards such bodies as persons, and extends to 
 them the rights and privileges of natural persons but no more or 
 greater rights. It then follows that the court below decided cor- 
 rectly in sustaining the demurrer to the special count of the decla- 
 ration. 
 
 But it was manifest error to sustain the demurrer to the com- 
 mon counts. They are in the approved form. No objection to 
 them has been suggested. It is true, that it is said that no account 
 was filed under these counts. This court has held that such ac- 
 count is no part of the declaration and we can hardly see how it 
 ever became necessary to make such a decision, as any one at all 
 conversant with the elementary principles of pleading must see 
 that it can form no part of the declaration. 
 
 We have examined the seventeenth section of the Practice Act 
 (Laws 1871-3) and fail to see in what manner it has the slightest 
 bearing on the question. It is true that it refers to attachment 
 suits, and provides that in such cases the plaintiff may be required 
 to file his declaration at the first term and the defendant have a 
 trial at such term. How this can have the remotest connection 
 with the question as to sustaining a demurrer to a common count in 
 proper form is beyond our comprehension. We must conclude 
 that there is a wrong reference as printed in appellee's brief. 
 
 For the error indicated in sustaining the demurrer to the com- 
 mon counts, the judgment must be reversed and the cause re- 
 manded. 
 
 Judgment reversed. 
 
406 ILLINOIS 
 
 Wheelock v. Kost. 
 
 Wheelock t. Kost. 
 
 (77 Illinois, 296.) 
 
 8h(M-eholder in Sfational bank, what constitvtea — Estopped from questioning 
 incorporation — BvidenMe ofinsoheney. 
 
 Shares of stock in a National bank were issued to defendant as collateral se- 
 curity for money loaned tlie bank, and the dividends thereon were paid to 
 him. Beld, that defendant thereupon became a shareholder as to credit- 
 ors and liable as such.* 
 
 A stockholder in a de facto National bank, who has participated in its transac- 
 tions as such and received dividends, is estopped from denying the legality 
 of its incorporation. 
 
 A return of nuUa iona made by a sheriff upon execution issued against a Na- 
 tional bank is suflScient evidence of its insolvency. 
 
 THIS was a creditors' bill, filed by Elias Kost and others, creditors 
 of the First National Bank of Decatur, against Otis L. Whee- 
 lock and others, stockholders of such bank. The opinion of the 
 court states the material facts of the case. Otis L. Wheelock alone 
 appealed from the decree below. 
 
 Grea & Eiving, for appellant. 
 
 Parh S Lee, and JSfelson & Roby, for appellees. 
 
 Mr. Justice Scott delivered the opinion of the court. 
 
 This bill was to compel parties, alleged to be stockholders in the 
 First National Bank of Decatur, to pay certain judgments pre- 
 viously obtained against the bank. On the 16th day of February, 
 1870, the bank ceased to do a general banking business, and, it is 
 alleged, it became insolvent. Executions, issued on the several 
 judgments obtained by the creditors of the bank, were returned 
 7mlla lona. 
 
 Whether appellant was a stockholder in the bank at the date it 
 ceased to do business and became insolvent, is a question that lies 
 at the foundation of the relief sought, and must be first de- 
 termined. 
 
 Briefly, the facts are : the appellant made some loans of money 
 
 * See Hale v. Walker, jjost; Magruder v. Colston, "post. 
 
STJPEEMB OOTJET, 1875. 407 
 
 Wlieelock v. Kost. 
 
 to the bank, and made and delivered to it his promissory note, 
 partly as an accommodation, to be held among its other assets. It 
 was agreed that fifty shares of stock in the bank, equal in value to 
 $5,000, should be issued to appellant, as collateral security for the 
 loans of money so made, and as indemnity against liability on his 
 promissory note held by the bank. That number of shares was in 
 fact issued, and delivered to appellant, and certificates to that effect 
 given, upon which he received, at different times, semi-annual divi- 
 dends. 
 
 Whatever relation appellant may have sustained to the corpora- 
 tors of the bank, it seems clear that, as to its creditors, he occu- 
 pied the position of a stockholder, and must bear all the burdens 
 that relation imposed. The stock had in fact been transferred to 
 him ; it stood in his name as owner, and he availed of the divi- 
 dends it earned. Having voluntarily assumed the relation of stock- 
 holder, it makes no difference he may have done it with a view to 
 assist the bank in its credit or otherwise. The legal title to the 
 stock was in appellant by his own procurement, although the equit- 
 able title may have been in other parties ; but it would be a singu- 
 lar doctrine to hold that the creditor should seek out the equitable 
 owner against whom to enforce his claim. Primarily, he may pro- 
 ceed against the party in whom is the legal title to the stock. 
 Where shares of stock in a banking incorporation have been hypoth- 
 ecated, and placed in the name of the transferee, he will be sub- 
 jected to all the liabilities of the ordinary owners. It is for the 
 reason the property is in his name, and the legal ownership ap- 
 pears to be in him. Morse on Banking, 433 ; Adderly v. 8iorm, 6 
 Hill, 624 ; In re Empire City Bank, 18 N. Y. 199. 
 
 It being determined appellant is a stockholder, he cannot be 
 permitted to urge, as defense, that the bank was not legally incor- 
 porated under the general banking laws. Having participated in 
 the acts of user of a corporation (Ze/ac^o, a stockholder therein will, 
 by such acts, be estopped to insist the corporation was not legal, 
 when it is sought to enforce any liability he may have incurred. 
 By the receipt of dividends on the shares of stock held by him, 
 appellant participated in the transactions of the corporation. 
 Whether the bank had been regularly organized, is not a defense 
 that can be availed of by a stockholder as against a lonafide cred- 
 itor, if it appears there was a corporation de facto, and that such 
 stockholder was concerned in its transactions. 
 
408 ILLINOIS 
 
 Wheelock v. Kost. 
 
 The allegation in the bill is, the bank was insolvent. Assuming 
 it was obligatory upon complainants to make proof of this fact, no 
 better eyidence need be produced than a return of nulla lona, made 
 by the sheriff upon the several executions issued against the prop- 
 erty of the bank. This was done in this case, and it is sufficient to 
 authorize proceedings by a creditor of the bank against an indi- 
 vidual stockholder. Morse on Banks, 434. 
 
 Our conclusion being that appellant is liable as a stockholder in 
 the bank, one other question remains to be considered, viz. : was 
 the decree against him for too large a sum ? 
 
 It is alleged, the several parties made defendants each owned a 
 certain number of shares in the bank, of the par value of $100 
 each. The total number of shares, comprising the entire stock of 
 the bank, is conceded to be one thousand. Of this number, it is 
 charged appellant owned fifty shares. That is the number of 
 shares hypothecated to him, and that stood in his name, as we 
 have seen. 
 
 By the 12th section of the National Currency Act, the share- 
 holders are "individually responsible, equally and ratably, and not 
 one for another, for all contracts, debts and engagements, to the 
 extent of their stock therein, at the par value thereof, in addition 
 to the amount invested in such shares." Act of June 3, 1864. 
 
 The bill seems to have been dismissed as to the heirs of some of 
 the deceased shareholders. The court found the number of shares 
 held by the remaining defendants was nine hundred and sixty, 
 which, added to the number owned by parties dismissed out of the 
 case, makes a total of one thousand shares. As we understand the 
 decree, the assessment was made upon the basis the entire, stock 
 of the bank consisted of one thousand shares. Appellant was 
 treated as being the owner of fifty shares, in ascertaining the 
 amount of the decree to be rendered against him. The mode 
 adopted would only charge him with his just proportion of the 
 debts of the bank, in proportion to the number of shares of stock 
 standing in his name. It seems the mode adopted for making the 
 assessments against the individual shareholders leaves out of view 
 the fact that some of the share owners were insolvent, and other 
 shares were owned by unknown heirs, against whom complainants 
 did not choose to proceed. 
 
 Under the law, each individual shareholder is bound equally and 
 ratably for the contracts, debts and engagements of the bank, in 
 
SUPBRIOK COUET, COOK COUNTY, 1877. 409 
 
 Nickerson v. Kimball. 
 
 proportion to the par value of his stock, in addition to the amount 
 invested in such shares, but no liability rests upon him for his fel- 
 low shareholders. 
 
 So far as the decree affects appellant, we do not understand it is 
 different from what it would have been had the decree passed 
 against all of the shareholders, whether solvent or not, and each 
 adjudged to pay his ratable proportion. 
 
 The case of Pollard v. Bailey, 20 Wall. 520, is analogous to the 
 one at bar, and is authority for the view of the law we have adopted. 
 
 No error appearing in the record, the decree of the Circuit Court 
 will be affirmed. 
 
 Decree affirmed. 
 
 Mr. Chief Justice Walkek and Mr. Justice Ceaig : We are 
 unable to concur in the decision reached in this case by the ma- 
 jority of the court. 
 
 NiCKEESON y. Kimball. 
 
 (1 Chicago Law Journal, 4Z.) 
 
 Taxation of National hanks — Constritction of statute — Equalization — Notice 
 of complaint that bank shares were assessed too low — Deduction of real estate. 
 
 The statute of Illinois provided that the stockholders in banks, whether State 
 or National, should be assessed on the value of their shares in the county, 
 town, district, village or city, where the bank was located, whether such 
 stockholder resided there or not ; but not at a greater rate than was assessed 
 on other moneyed capital where such bank was located ; that each bank 
 should keep a list of the names, residences, and number of shares of each 
 shareholder, which should be open to the inspection of the revenue officers • 
 that the assessors should ascertain and report to the county clerk a correct 
 list of the names and residences of all stockholders, with the number and 
 assessed value of thejr shares ; that the county clerk should enter the 
 assessed valuation of such shares in the tax list, and compute and extend 
 the taxes thereon ; that such tax should be a lien on the shares and that 
 the bank officers should retain the dividends on such stock until the tax was 
 paid. Held constitutional. 
 
 Under the statutes of Illinois any one may complain to the board of equaliza- 
 tion, that another is assessed too low, but such complaint is not to be acted 
 upon until the person so assessed or his agent has been notified of such 
 52 
 
410 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 complaint, if a resident of the county ; and no error or formality in the pro- 
 eedings of any of the officers connected with the assessment, levying or col- 
 lecting of the taxes, not affecting the ' substantial justice of the tax itself, 
 shall vitiate, or in any manner affect, the tax or the assessment thereof. 
 Held, (1) that notice of the complaint to the person assessed was not essential 
 to give the board jurisdiction ; (2) that the bank was the agent of the share- 
 holders, ahd service of notice on the officers of the bank was sufficient ; 
 (3) that the complaint need not specify each person claimed to be assessed 
 too low, but a description of them as " shareholders in " a particular bank 
 was sufficient. 
 A National bank alleged that it had been assessed on both its shares of stock 
 and its real estate, and that the value of the real estate was n'ot deducted 
 from the gross value of the stock. It appeared that the aggregate assessed 
 valuation of both the stock and the real estate was less than half their real 
 value. Held, that the bank had no cause to complain. 
 
 BILL in chancery for an injunction to restrain the collection of 
 a tax assessed on shares in National banks, on the ground that 
 such assessment had been unlawfully increased by the board of 
 equalization. 
 
 Charles Hitchcock, Wirt Dexter, Sidney Smith, Melvin W. Fuller 
 and George W. Kretzmeyer, for plaintiffs. 
 
 Elliott Anthony and John M. Roundtree, for defendants. 
 
 Mr. Justice Mooee delivered the opinion of the court. May 9, 1877. 
 
 The Constitution of the State provides for raising revenue by 
 levying taxes, by or according to " valuation " of the property to be 
 taxed ; every one shall be taxed and pay in proportion to the value 
 of his property. This rule is extended to persons and corporations 
 owning or using franchises and privileges. Taxes must be " uni- 
 form " in respect to persons and property ; every law that imposes 
 a tax must regard every man alike. Vide Constitution, art. 9, §§ 1, 
 9, 10 ; Kurd's Eev. Stat., pp. 74, 75. 
 
 The law must not discriminate for or against any one. It must 
 be uniform. The law enacted under the Constitution must be en- 
 forced by men who may err in judgment, and therefore burdens 
 may fall unequally. This will result from the different views that 
 different men may take of values and the like, and does not show 
 that the law imposing a tax is wanting in the principle of uniform- 
 ity. This principle of uniformity must extend to every person and 
 to every corporation. 
 
SUPERIOE COURT, COOK COUNTY, 1877. 411 
 
 Nickerson v. Kimball. 
 
 " Personal property .... shall be valued at its fair cash, yalue," 
 Chap. 120, § 3, Kurd's Eer. Stat., p. 857. 
 
 " Tlie stockholders in every bank located within this State, 
 ■whether such bank has been organized under the banking laws of 
 this State, or of the United States, shall be assessed and taxed on 
 the value of their shares of stock therein, in the county, town, 
 district, village or city where such bank is located, and not else- 
 where, whether such stockholders reside in such place or not 
 
 Taxation of such shares shall not be at a greater rate than is assessed 
 
 upon any other moneyed capital where such bank is located." 
 
 In each of said banks there shall be a list of the names and resi- 
 dences of its stockholders, and of the number of shares held by 
 each. This list shall be open to the inspection of the revenue offi- 
 cers, "and it shall be the duty of the assessor to ascertain and 
 report to the county clerk a correct list of the names and residences 
 of all stockholders in any such bank, with the number and assessed 
 value of all such shares held by such stockholder." § 36! 
 
 " The county clerk shall enter the valuation of such shares 
 
 in the tax list in the names of the respective owners of the same, 
 and shall compute and extend taxes thereon the same as against 
 the valuation of other property in the same locality." § 37. 
 
 This tax is declared to be a lien upon the respecive shares of 
 stock. § 38. 
 
 It is made the duty of the bank or its officers to retain the divi- 
 dends belonging to the respective stockholders until the tax shall 
 have been paid. Any officer violating this provision of the law shall 
 thereby become liable for such tax. The collector may sell the 
 shares of stock when the owner refuses to pay the tax. Chap. 120 
 §§ 35, 36, 37, 38, 39, Eev. Stat., p. 864. 
 
 There can be no question but that these provisions of the law 
 are in harmony with the Constitution. The " valuation " is required, 
 as is " uniformity," and all as provided by the Constitution. The 
 law makes the same provision in valuation to every one who may 
 own the stock of the various banks in the State. If the tax im- 
 posed by this law operates unequally, it must be because the law 
 itself is not complied with. 
 
 It was seen that the assessor must be a man, and so might fail . 
 in discharging bis duty. Hence the county board, acting as a 
 board of equalization, may review and correct what has not been 
 done correctly. " On the application of any person considering 
 
412 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 bimself aggrieyed, or who shall complain that the property of 
 another is assessed too low, they shall review the assessment and 
 correct the same as shall appear to be just." That is to say, if any 
 one thinks his property has been valued too high and so considers 
 himself "aggrieved," he may complain, and if the board regard his 
 complaint as well founded, then they will review and correct the 
 assessment, by reducing the valuation; or it may be some one 
 thinks that burdens are not equal, and so "complains that the 
 property of another is assessed too low." It is then the duty of the 
 board to jeview and correct the assessment as shall appear to be just. 
 If the complaint is well founded, as .in the former case, the assess- 
 ment can be corrected only by increasing the " valuation." How- 
 ever, it is provided that "no complaint that another is assessed 
 too low shall be acted upon until the person so assessed, or his 
 agent, shall be notified of such complaint, if a resident of the 
 county." Chap. 130, § 97, sub-sec. 2, Eev. Stat., p. 873. 
 
 One other provision of the statute has been referred to in con- 
 sidering these cases. That provision, it is claimed, modifies the 
 other provisions referred to materially, modifies many decisions of 
 the Supreme Court. It is provided {inter alia) that "no error or 
 informality in the proceedings of any of the oflBcers connected with 
 the assessment, levying or collecting of the taxes, not affecting the 
 substantial justice of the tax itself, shall vitiate or in any manner 
 affect the tax or the assessment thereof." Chap. 120, § 191, Eev. Stat, 
 p. 890. True it is, this provision is found in the middle of a sec- 
 tion that is providing for the proper mode of rendering judgment on 
 the delinquent tax lists; but yet there is no language or words used 
 in any other part of the section that changes, or modifies, or limits 
 the meaning of the provision enacted. The words would mean the 
 same, neither more nor less, if they stood alone in a separate sec- 
 tion, or in any other connection. 
 
 The provisions under consideration, when brought together, then 
 may be read in this way: "Any one may complain that another 
 is assessed to low, but such complaint shall not be acted upon until 
 the person so assessed, or his agent, shall be notified of such com- 
 plaint, if a resident of the county; and no error or informality in 
 •the proceedings of any of the officers connected with the assess- 
 ment, levying or collecting of the taxes, not affecting the substantial 
 justice of the tax itself, shall vitiate or in any manner affect the 
 tax or the assessment thereof." 
 
STJPEEIOE COURT, COOK COU^NTY, 1877. 413 
 
 Nickerson v. Kimball. 
 
 Nickerson ei al. arer that they are shareholders of the stock of 
 the First National Bank of Chicago. Barton et al. are sharehold- 
 ers of the stock of the Fifth National Bank of Chicago. Coolbaugh 
 et al. are like shareholders of the stock of the Union National 
 Bank of Chicago. Blair et al. are shareholders of the stock of the 
 Merchants' National Bank of Chicago. Fairbank et al. are share- 
 holders of the stock of the Commercial National Bank of Chicago; 
 and Sturges et al. are the shareholders of the stock of the North- 
 western National Bank of Chicago. The respective complainants 
 make substantially the same averments. The complainants are all 
 residents of the county of Cook, and the respective banks are located 
 in Chicago. 
 
 In addition to other averments which are necessary to give juris- 
 diction, it is averred that the shares of stock of each bank were 
 " assessed and taxed on the value of the shares; " that the assessor 
 of the town of South Chicago, as such assessor, listed the shares 
 of the capital stock of the respective banks for taxation, he giving 
 the valuation thereof as fixed by himself; that this assessment so 
 made by him was returned to the county clerk; that then it was 
 the duty of the clerk to enter the valuation of the shares, as made 
 by the assessor, in the tax lists, in the names of the respective 
 owners, and compute and extend the tax therein on the valuation 
 so made; that these things are required by the provisions of the 
 statutes hereinbefore quoted; " that the assessor, in making the 
 assessment for the year 1876, listed all bank shares and like prop- 
 erty at one-third of the value which, in his judgment, said shares 
 were actually worth." 
 
 To this point no question is raised, bub that the law has been 
 complied with. But complaint was made by persons stating that 
 they considered themselves aggrieved, and complained that the 
 personal property of the following named persons, firms and cor- 
 porations have been assessed too low for the year 1876, to-wit: 
 shareholders " of the stock of the respective banks, and designat- 
 ing the name of the bank. This complaint was addressed to the 
 board of commissioners of Cook county, and those complaining 
 asked the board to review the assessments for 1876 of said persons, 
 firms and corporations, and correct the same as shall appear to be 
 just. " This was the only complaint that was filed, and the only 
 notice of this complaint was given to the presidents or cashiers of 
 the banks. 
 
414 ILLINOIS 
 
 Nickersou v. Kimball. 
 
 The board did review the assessments, and corrected them by in- 
 creasing the valuation very considerably; but in no case did the val- 
 uation or assessment thus increased amount to more than one-third 
 of what apJJears to be a fair cash market value of the respective 
 shares of stock. It is admitted that the stock is personal property, 
 and it is not claimed by any complainant that the shares, by either 
 the assessor or board, were "valued at their fair cash value." 
 
 The complainants aver that the county board had no jurisdic- 
 tion of the matter, or, rather, of the persons of the complain- 
 ants, until the complainants or their respective agents had notice 
 of such complaint; and they claim that neither the bank nor any 
 officer of the bank was agent of the shareholders. 
 
 A number of authorities are referred to by the learned counsel to 
 show that the question of notice i& jurisdictional. It is perhaps by 
 some of the counsel conceded that the county board had juris- 
 diction of the subject-matter, and it is claimed that the said board 
 could have jurisdiction of the persons residing in Cook county only 
 when they have notice. This notice is not required as to any one 
 residing beyond the limits of Cook county. If the complainants 
 be correct, then the fact that notice to non-residents is not required 
 must operate as a hardship. It is not protecting all alike. It must 
 be borne in mind that the valuation or assessment made and re- 
 turned by the assessor is made by procuring the necessary informa- 
 tion from the bank. The officer calls at the bank and makes his 
 list, and then the valuation is made and returned. Of this fact 
 and of the additional fact that dividends must be retained by the 
 bank until the tax is paid, every person must take notice. This 
 assessment and this return, it may be said, is the matter that, in 
 the first place, 'confers jurisdiction or sets in motion the officers 
 and those having jurisdiction. It has been held in our own State, 
 " that where the board of supervisors exercise the power to revise 
 the assessment of an individual, he must have notice, and an 
 opportunity to be heard, before it can be legally done." Glegliorn v. 
 Ponthwaite, 43 111. 438; Darling y. Gunn, 50 id. 424; First National 
 Bank of Shawneetoivn v. Gook et al., 77 id. 622. 
 
 This last-named decision was made under the law as it existed 
 March 7, 1873. The provision of the law that is supposed to 
 modify the law as it then existed took effect July 1, 1873, and pro- 
 vides that no error or informality not affecting the substantial jus- 
 tice of the tax itself shall vitiate or affect the tax on the assess- 
 ment thereof. 
 
SUPBEIOE COURT, COOK COUNTY, 1877 415 
 
 Nickerson v, Kimball. 
 
 In the ease of Darling t. Gunn, 50 111. 459, the court holds : 
 "The tax, to the extent it was increased,. . . .haying been levied on 
 an unauthorized assessment, made by persons having no jurisdic- 
 tion of the person to make the assessment, without notice to the 
 appellant, its collection should have been enjoined." 
 
 This case falls within the former decisions of the court, in which 
 it is held that a court will not interfere to restrain the collection of 
 a tax unless it is levied by persons having no authority. As the 
 law then stood, it was incumbent on the court to find that error 
 existed; but it was not necessary to find more than that error ex- 
 isted. That was all that was required. It was not necessary to 
 pass upon the jurisdictional question. As the law now stands, this 
 inquiry is necessary, since the court will not enjoin the collection 
 of a tax for mere error or informality. It cannot be that the 
 various oflBcers must give notice to every one specially concerned 
 before they can act in relation to the assessment of taxes. 
 
 In the case of the National Bank of Bhawneetown v. Cook, 77 
 111. 622, the assessment had been made and corrected by the State 
 board of equalization, and then, without notice, the valuation was 
 increased; and the court holds : " that it is a proposition upon 
 which there can be no doubt that the board had no power to make 
 any change in the assessment without notice to appellant." By 
 this language the court is understood as holding no more than that 
 it was simply error in the board to exercise the power without 
 special notice to be affected thereby. That was the direction of 
 the statute, and it is still the direction of the statute, and to dis- 
 regard it is an error. 
 
 In. the case of Mix-v, People, 73 111. 241, it was held that the 
 levy must be made within the time prescribed by law, or it would 
 be void. Was it necessary for the court to hold language so strong ? 
 Was it intended to decide any thing more than that, as the law then 
 existed, it was such an error as vitiated the levy of the tax ? The 
 Supreme Court afterward said : "It is also urged that the local 
 taxes were not levied and returned to the clerk in time ; and in 
 support of the position, the case of MixY. The People, supra, is 
 referred to as controlling this. That tax was levied under the law 
 of 1872, whilst this is under the statute of 1873, which amends 
 the prior law. See § 191, p. 890, Eev, Stat. 1874. That section 
 • declares that no error or informality in the proceedings of any of 
 the oflBcers connected with the assessment, levying or collecting of 
 
416 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 the taxes, not afEecting the substantial justice of the tax itself, 
 shall vitiate or in any manner affect the tax or the assessment 
 thereof. This provision most effectually disposes of this question." 
 Buchy. The People, 78 111. 560. 
 
 Then again it is held by the Supreme Court : " It is urged that 
 the certificates of the levy of the local municipal taxes were not 
 filed in the time required by the statute. The answer to this is, as 
 was said in Buck v. The People, supra, that ' it is cured by the 
 191st section of the Eevenue Law.' This cures all defects growing 
 out of the failure to file the certificate on or before the day named 
 in the 122d section." Ghiniquy v. The People, 78 HI. 570. 
 
 In the section 133 referred to in the last-cited case, the provision 
 
 is positive, and appears to be mandatory : " The authorities 
 
 collecting taxes . . . .shall annually, on or before the second Tuesday 
 in August, certify," etc. § 123, Kev. Stat. 878. This language is 
 not less peremptory than the language used in § 97, Eev. Stat. 
 873: " No complaint that another has been assessed too low shall 
 be acted upon until the person so assessed or his agent shall be 
 notified of such complaint, if a resident of the county; and yet it 
 is held that since the adoption of § 191, Eev. Stat., the fact that 
 the certificate is not filed in apt time is not such an error as will 
 vitiate either the tax or the assessment. The amendment intro- 
 duced into the 191st section of the present Eevenue Law has pro- 
 duced a radical change in proceedings to recover judgment for 
 delinquent taxes, and has overruled or modified most, if not all, of 
 our previous decisions on the questions thus arising. "Ft'de Chiniquy 
 V. The People, supra. 
 
 It will be borne in mind that in all these cases the people were 
 seeking judgments, and must show jurisdiction. 
 
 In the cases now under consideration, those denying the jurisdic- 
 tion are the complainants. They must make out their respective 
 cases. The people in the cases cited must show that all the oflBcers 
 have complied substantially with the law, or they fail. In these 
 cases now being considered, the complainants take upon themselves 
 to show that the county board had not jurisdiction of the persons 
 of the complainants ; and this they must do by overcoming the 
 presumption that a lawful tribunal, in the exercise of its duties, 
 confines itself to whatever authority has been conferred upon it. 
 This is especially true when it is conceded that the tribunal has 
 jurisdiction of the subject-matter of the controversy. 
 
SUPEEIOE COURT, COOK COUNTY, 1877. 417 
 
 Nickerson v. Kimball. 
 
 Can it be questioned that the law might provide for the assess- 
 ment, and review of the assessment, without notice to any one ? 
 But courts cannot render a judgment until there is a service of pro- 
 cess, either actual or constructive. A judgment without service of 
 some kind would be void and nugatory in every land. And yet, 
 such a rule will not be applied to any tax or revenue matter. 
 
 The fact that a man must be taxed on all that he has and that 
 lie must be so taxed every year is known to and by every one. The 
 assessor is directed to call on him or on his agent and assess his 
 property. He knows that must be reported, and he should take 
 some notice of what is done in the premises thereafter. There is 
 recognized no provision of section 97 that fails to require notice to the 
 shareholder of stock not residing in Cook county. As opposed to 
 this view the learned counsel refers to a New York case. School 
 trustees levied a tax for school purposes. In making up the assess- 
 ment roll the valuation of plaintiff's property was increased from 
 the valuation thereof upon the town assessment roll. Before mak- 
 ing the roll the trustees gave no notice. This assessment is an 
 original assessment, made without any call upon the tax payer ; so 
 that it might well be said there- is no jurisdiction of his person 
 until he has notice. In that case the learned chief justice reviews 
 the authorities, and says, " the authorities are not entirely in har- 
 mony, and the precise question has not been passed upon by this 
 court." The opinion concludes, "that the weight of authority is 
 that the omission to give the notice is a jurisdictional defect." Vide 
 Jewell V. Van Steenburgh, 58 N". Y. 85. These school trustees 
 were allowed to take the assessment roll of the town assessors, and 
 upon proper notice make such changes as to them might seem right ; 
 and then for school purposes the trustees could levy their tax. 
 This was as truly an original assessment as that made by the town 
 assessor. There was no original call so as to confer the jurisdiction. 
 It is not clear that this authority is opposed to the suggestions 
 herein made. 
 
 A well-considered New Hampshire case is referred to, and judg- 
 ments that are void or only voidable are carefully discussed. 
 
 It is found by the court that tribunals which have jurisdiction of 
 the subject-matter are not absolutely void by reason of any irregu- 
 larity or illegality of the proceedings in general, but they are avoid- 
 able by proper and timely objections. The State v. Richmond, 26 
 N. H. 233. 
 53 
 
418 ILLINOIS 
 
 Niokerson v. Kimball. 
 
 If it still be claimed that there was no jurisdiction of the per- 
 sons of the complainants until they respectively, or their agents, 
 had notice, and that the county board could not review the assess- 
 ment until such notice had been given, then it becomes an import- 
 any inquiry how and to whom may such notice be given ? There 
 can be no question but that if knowledge was brought home to any 
 of the complainants, such as had the knowledge must be regarded 
 as having had notice. "Actual notice exists where knowledge is 
 actually brought home to the party to be affected by it." Bouvier's 
 Law Dictionary. It will be readily conceded that notice to an agent 
 is notice to the principal. If doubted at all it must still be true 
 in thQ case under consideration, since the statute requires notice to 
 the party or Ids agent. Then, if knowledge is actually brought 
 home to the agent of the complainants they must be regarded as hav- 
 ing notice, even if they had, in point of fact, no knowledge that 
 the complaint had been made to the county board that their shares 
 of stock had been assessed too low. It is claimed by one of the 
 counsel that notice to one of his clients, as president of the bank, 
 was not notice to him personally. If knowledge of a fact be notice, 
 and sometimes more than mere notice, then this position cannot 
 be maintained. The statute does not say what kind of notice must 
 be given. It simply requires notice. If any officer of a bank have 
 knowledge that the complaint has been made, and he be the owner 
 of any of the shares of stock, he cannot be allowed to say that he 
 individually has no notice. He has more than mere notice. He 
 has actual, positive knowledge that the complaint is made. In 
 this view there can be no question. 
 
 In addition to such actual knowledge, it appears that some of the 
 officers, who are complainants, actually appeared before the county 
 board and opposed the complaint. A party appearing in a suit, 
 with or without service, cannot afterward deny that he is properly 
 before the court. A party appears and cross-examines a witness 
 when giving a deposition ; he cannot afterward say he did not have 
 notice of the time and place of taking the deposition. These are 
 familiar principles, admitted by all, and show conclusively that 
 snch as appeared before the county board, and resisted the review 
 and correction of the assessment, will not be allowed to deny that 
 they had notice of the complaint. What is notice to those who had 
 no such knowledge ? What is notice to such as did not appear and 
 oppose the correction ? 
 
SUPEEIOK COUET, COOK COUNTY, 1877. 419 
 
 Niokerson v. Kimball. 
 
 The notice required is not, in every particular, like unto the 
 process to be serTed on a party to bring him before the court. 
 Original process cannot, as a general thing, be served on an 
 agent. In this matter it is only necessary that the agent be 
 notified. The Eevenue Law deals with shares of stock and taxes 
 them as the personal property of each shareholder, and such a tax 
 is not a tax on the capital or property of the bank. State Farmers' 
 National Bank v. Cooh, 33 N. J. 349 ; Van Allen v. Assessors, 3 
 Wall. 573 {ante, p. 1). 
 
 The case of Farmers' Bank v. Cook, supra, does not pass upon 
 the question of service of notice otherwise than as by way of argu- 
 ment. Counsel refers to the case of State v. Drake, 33 N. J. 194. 
 In that case it is correctly held that a notice under the tax law, 
 served upon the tenant of the one complaining of the tax, is not a 
 sufficient service. There is no reason in concluding that a man's 
 tenant is his agent. It would be more reasonable to select a man's 
 regular attorney or solicitor, and yet it will hardly be contended 
 that such notice might be served on such attorney or solicitor. It 
 is held that a notice to a bank cannot be served on a director hav- 
 ing no share in the management of the matter about which the 
 notice is given. The directors or trustees, when assembled for the 
 transaction of business, are the agents of the corporation, and notice 
 to them, when thus assembled, is notice to the corporation and bind- 
 ing upon their successors. But notice to an individual director, 
 who has no duty to perform in relation to the subject-matter of 
 the notice, is not a notice to the corporation. Powles, etc. v. Page, 
 3 Mann. G. & S. 16; The Fulton Bank v. The New York & Sharon 
 Canal Co. et al., A Paige, 137. 
 
 This general doctrine will not be questioned, and yet in our 
 State the statute provides that a process against a corporation may 
 be served upon a " clerk," " cashier," " director," etc., if the presi- 
 dent shall not be found in the county. 
 
 Again, it is held, and is certainly a fundamental principle, that 
 notice served on the agent, in order that it may bind the principal, 
 must be served whilst the agent is acting within the scope of his 
 agency. Miller v. Illinois Central Railroad Co., 34 Barb. 313; 
 Loomis V. Bank of Rochester, 1 Disney, 285. 
 
 In this connection, whilst laying down general principles, it will 
 be seen that the provision is not that notice shall be given to the 
 principal, and may be given by delivering a copy of a notice to an 
 
420 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 agent of such principal. The language of the statute is, " no com- 
 plaint .... shall be acted upon until the person assessed, or Ms agent, 
 shall be notified." That is to say, the principal may be notified, 
 or, if more convenient, the agent only may be notified. 
 
 It is claimed that the bank is the agent of the shareholders of 
 the stock. It is the duty of the corporation, by its oflScers, to so 
 direct and manage its affairs as to preserve and promote the highest 
 interest of those interested therein. It is true the officers act 
 directly for the bank, but the bank is an artificial person and can 
 have no interest to preserve or promote, save and only the rights 
 and interests of the shareholders. None others can have an 
 interest in the management. The bank owns the property, the 
 land, the money, all the assets, the privileges and franchises; 
 but the officers are elected by the shareholders of the stock, and 
 they are selected for the purpose of managing well the property of 
 the bank. The shareholders measure the value of their shares of stock 
 by the value of the property and franchises belonging to the bank. 
 If these be under unskillful or improvident management, the amount 
 of dividends and the value of the shares of stock are diminished. 
 If the shares are valued and assessed at a high rate by the assessor, 
 their productive resources are diminished to that extent. There 
 can be no person so well qualified to determine the real productive 
 and market value of shares of stock as the officers who manage 
 and control the bank for the interest and benefit of the sharehold- 
 ers. " When shares of capital stock have any value as an article of 
 sale, it is because the purchaser supposes that the tangible and 
 intangible property and the franchises are sufficient, if the affairs 
 of the company were wound up, to pay all the debts and pay a 
 surplus in distribution to the shareholders equal to the per cent 
 the purchaser gives." Ottawa Glass Co. y. Mc Caleb, 81 111. 556; 
 Porter et at. v. Rockford, Rock Island & St. Louis Railroad Co., 
 76 id. 561. 
 
 It is self-evident that the value of an article of sale must depend 
 largely upon the skill put forth in the management by the officers. 
 It will be conceded that there is none so suitable to look after all 
 matters pertaining to the assessment and taxing the shares of 
 stock as the officers of the bank. 
 
 By the statute it is required that the .bank shall keep the list of 
 the names of the stockholders and of the number of shares held by 
 each, and this list is for the inspection of the officers authorized to 
 
SUPEEIOE COTJET, COOK COUNTY, 1877. 421 
 
 Nickersou v. Kimball. 
 
 assess property for taxation. From the bank the officer obtains 
 the information that enables him to make and return a list to the 
 clerk. 
 
 " For the purpose of collecting the taxes it shall be the duty of 
 every such lanTc, or the managing officer or officers thereof, to 
 retain so much of any dividend belonging to the stockholders as 
 shall be necessary to pay any taxes levied upon the shares, until it 
 shall appear that such taxes have been paid." §§ 36, 37, 39, 
 Eevenue Law, Eev. Stat. 864. 
 
 It is the bank that ' gives the information to the officer and 
 enables him to value the shares. It is the bank that is required to 
 retain the dividend until the tax is paid, and it is the officer of the 
 bank who is made liable if the dividend is not so retained. It is 
 thus made quite clear that the statute makes the bank the agent of 
 the stockholder for some purposes connected with the taxation of 
 the shares of stock. In the case of The Ottatm Glass Go. v. McGalei, 
 supra, His stated that " a corporation acts as quasi trustees in 
 managing the business of the shareholders, and it is competent to 
 the General Assembly to require the whole taxes to be paid by the 
 corporation, which corporation may then require repayment of the 
 tax on shares to be refunded by the shareholders, either by deduct- 
 ing the amount from dividends or otherwise." 
 
 It has been held by the Supreme Court of the United States, 
 and by the courts of Kew York, !N"ew Jersey and of this State, that 
 under the provisions of the act of Congress, the right of the States 
 to tax all shares in the stock of the National banks clearly exists. 
 First National Bank of Mendota v. Smith, 65 111. 44, and the vari- 
 ous authorities there cited. 
 
 It has been held in the same case {supra) that the bank is the 
 trustee of the stockholders (p. 54), "and as such possesses the law- 
 ful control over the rights and interests of the cestuis que trust, 
 much greater than that of a mere agent for the loan of money. 
 
 " Certificates of stock are not securities for money, in any sense, 
 much less are they negotiable securities. They are simply the muni- 
 ments and evidence of the holder's title to a given share in the 
 property and franchises of the corporation of which he is a mem- 
 ber." Mechanics' Bank v. New York Railroad Go., 3 Kern. 627; 
 First National Bank of Mendota v. Smith, 65 111. 44. 
 
 The banking corporation has a fixed locality where it must tran- 
 sact its business, and there wind up its affairs when it ceases to 
 
422 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 exist. It is the trustee of the stockholders who must come to its 
 counter for their annual diyidends, and their share of assets on 
 final liquidation. 65 111. 56, supra. 
 
 It is thus seen that the stockholder has a title to a share in the 
 property and franchises of the bank, that he is one of the owners of 
 the bank, that this property and the franchises are managed and 
 controlled by officers selected by the stockholders, that it is man- 
 aged for the stockholders, that the bank is the trustee of the 
 stockholders, that it is peculiarly and especially the duty of the 
 bank to do and manage every thing so as to make the shares of stock 
 valuable, and so as to make them yield a dividend, and to guard 
 against every thing that may diminish the amount of dividends. 
 The conclusion is inevitable that the bank must be the agent of 
 the shareholder; it was only necessary to give notice to the bank. 
 It has been seen that even original process could be served on the 
 bank by serving on the president, cashier or director. Some of 
 these notices were served on the president and others on the cash- 
 ier. There was then sufficient notice to give jurisdiction of the 
 p'ersons of the shareholders. Was there a sufficient complaint ? is 
 the next question requiring attention. 
 
 The provision of the statute is, a citizen may '•' complain that 
 the property of another is assessed too low." It is not stated what 
 averments the complaint shall contain, nor is it stated whether the 
 complaint shall be oral or written. The complaints in these cases 
 contain nothing more than that they complain that the personal 
 property of the shareholders of the several banks (naming them) 
 has been assessed too low. It is objected that this is too uncertain; 
 that no person is named, and no traversable fact is complained of 
 and that it is vague and general. 
 
 " To complain of an assessment set opposite to each name on the 
 assessment list, and to ask that evidence may be heard in each and 
 every case and every name on the assessment list, or to the value of 
 the property therein assessed, and to change the value as may seem 
 just, and that the valuation may be reduced or raised as may seem 
 just and equitable," has been held to be too general and too vague 
 and uncertain. " Such complaint states no fact and is nugatory." 
 There should be something complained of, and the party appear- 
 ing should be informed of the matters which he may be required to 
 meet. People v. Reynolds, 38 Oal. Ill, and People v. Flint, 39 id. 
 673. 
 
SUPEEIOE COUET, COOK COUNTY, 1877. 423 
 Nickerson v. Kimball. 
 
 The California statute may not be like our statute in every par- 
 ticular, but no reason is seen why the Illinois courts should hold 
 differently from the authorities cited. 
 
 In the complaint held to be nugatory there was no complaint of 
 any valuation, or of any parcel of property or to any species of 
 property. It was not complained that the valuation was too high 
 or too low. No person or class of persons is described in the com- 
 plaint. In these cases under consideration no one person, but a 
 class of persons, is named ; no one article of property is described. 
 The averment is, the shares of stock of the shareholders of the 
 particular bank is valued too low. The complaint and notice might 
 have named each particular shareholder, and they might have 
 designated the number of shares owned by each shareholder. But 
 why? The shareholders, if named each by himself, and if told the 
 precise number of shares owned by each, would not be the wiser for 
 the information. The description, " shareholders in a particular 
 bank," though not the names of persons, is so definite and certain, 
 that no other persons can be mistaken for them. There can be 
 no question as to who is meant. It is the stock, it is the shares of 
 stock, that is described as assessed "too low." This can be easily 
 understood. This would be the case even though there was noth- 
 ing else in the record. But all these shares of stock had been regu- 
 larly assessed to each respective owner thereof, so that the com- 
 plaint and notice meant that the shares of stock belonging to each 
 of the respective shareholders had been valued "too low." The 
 notice and complaint must be held sufficient. 
 
 Finding the notice and complaint sufficient, it remains to in- 
 quire what wrong or what injustice has been or is about to be done 
 to either of the complainants? 
 
 It has frequently been held that a court of equity will not enter- 
 tain a bill to restrain the collection of taxes, except in cases where 
 it has been assessed upon property not subject to taxation, or where 
 the tax is unauthorized by law, or where the property has been 
 fraudulently assessed, at too high a rate. This doctrine has been an- 
 nounced so frequently, in so many cases and under such varied cir- 
 cumstances, and under such varied forms of expression, that it can- 
 not be necessary to cite authority. But, for fear that a different 
 doctrine might be insisted upon, the General Assembly has enacted 
 section 191 of Eevenue Law. And now " No error or informality in 
 the proceedings of any of the officers connected with the assessment, 
 
424 ILLINOIS 
 
 Nickerson v. Kimball. 
 
 levying or collecting of the taxes, not afEecting the substantial jus- 
 tice of the tax itself, shall vitiate or in any manner affect the tax 
 or the assessment thereof." In none of these bills is it claimed that 
 any injustice has been done. The property is clearly subject to 
 taxation. The tax is unquestionably authorized by law. It is not 
 in any one of the bills claimed that the property has been assessed at 
 too high a rate. It is not shown or claimed that any thing has been 
 done that affects the substantial justice of the tax itself. It is 
 simply averred that the assessment made and returned by the 
 assessor was increased, and that it should not have been so in- 
 creased. It is not claimed that the present valuation amounts to 
 more than one-third the actual cash market value of the stock 
 There is but one exception to this statement. The shareholders of 
 the Union National Bank state that the bank has been taxed on its 
 real estate, and that when the shares of stock were assessed the value 
 of the real, estate should have been deducted from the gross value 
 of the stock. They claim that this deduction was made in the 
 assessment of the stock of all the other banks where they owned 
 real ^ estate. But, unfortunately for the shareholders of the Union 
 National Bank, they fail to show that any injustice is done. 
 
 If the value of the real estate be added to the assessed value of 
 the stock, the aggregate value falls considerably below one-half the 
 actual cash value of the stock. They simply show that others are 
 assessed entirely too low, whilst they are not yet assessed as high 
 as they should be. The propriety of assessing any property below 
 its actual cash value may well be questioned, if not designated as 
 pernicious. If all the property in the county and State was 
 assessed at its actual value, the grand total would be increased so 
 much that the actual wealth and resources of the State would be 
 known and would amount to such an enormous increase over the 
 present assessments that the rate per cent of taxation might be 
 much reduced. 
 
 The statute provides that personal property shall be valued at its 
 fair cash value, and yet if this cash value is imposed in only one 
 county or town, it would be oppressive to the people of such county 
 or town. The rule, to be of advantage, should extend throughout 
 the State. 
 
 In no one of these cases has it been shown that the property is 
 made to bear more than its just burden of taxation, nor have the 
 owners been debarred of any substantial rights secured by the law 
 
SUPREME COURT, 1869. 425 
 
 Board of Commissioners of Montgomery County v. Elstou. 
 
 of the land. The tax on the property is just, and no Yoid reason 
 is made to appear why the owners should not pay it. A careful 
 examination of the cases presented for the consideration of the 
 court fails to show any thing that affects the substantial justice of 
 the tax itself, and until this is shown the court cannot grant the 
 relief sought. 
 
 "The statutes unmistakably show that it was the legislative 
 will that mere technical objections not afEecting the justice of the 
 tax itself should not be regarded." Beers et al. v. The People, 9 
 Leg. News, 176 ; Buck v. The People, 78 111. 566 ; Ghiniquy t. The 
 People, id. 573 ; Purrington v. The People, 79 id. 11. 
 
 The law imposing the taxes is in all its parts " uniform." It 
 provides for the constitutional "valuation," and does not go 
 counter to the law of Congress. 
 
 The complainants fail to show that any act of injustice is about 
 to be done to them. They do not show any thing that affects the 
 substantial justice of the tax they seek to enjoin. 
 
 The injunction asked for in each case is denied. 
 
 Injunction denied. 
 
 BOAED OF COMMISSIONEES OF MONTGOMBEY COUNTY V. ElSTON. 
 
 (32 Indiana, 37.) 
 
 Taxation of National currency. 
 
 The circulating notes of National banks, known as " National currency," are 
 not exempt from taxation by a State. 
 
 THIS was a complaint by the appellee against the board of com- 
 missioners and treasurer of Montgomery county, to restrain a 
 sale of certain personal property, levied upon by the said treasurer 
 by virtue of a warrant to collect the sum of $418.49, being the 
 amount of tax and penalty on $37,175 in the hands of the appellee 
 on the 1st day of January, 1868. 
 
 One-half of this sum was in treasury notes of the United States, 
 known as "greenbacks;" the remaining portion was in the notes 
 of National banks, designated as "National currency." This sum 
 had been returned for taxation under protest. 
 54 
 
426 INDIANA 
 
 Board of Commissioners of Montgomery County v. Elston. 
 
 A demurrer was overruled to this complaint, and a perpetual 
 injunction was granted. 
 
 R. H. Galloway and P. S. Kennedy, for appellants. 
 
 S. 0. & L. B. Willson and /. M. Butler, for appellee. 
 
 B.AT, J. [After stating facts and deciding, in accordance with 
 Bank v. Supervisors, 7 Wall. 26, that the United States treasury 
 notes were not liable to taxation, continued] : 
 
 There remain but two questions. Has Congress attempted to 
 extend this exemption from State taxation to the currency issued 
 by the National banks? If she has declared this exemption, was 
 the subject within her jurisdiction? 
 
 The act of February, 1862, declares that " all stocks, bonds and 
 other securities of United States held by indiyiduals, corpora- 
 tions or associations, within the United States, shall be exempt 
 from taxation by or under State authority." 12 Stat, at Large, 
 346, § 2. 
 
 And this provision is re-enacted, in application to the second 
 issue of United States notes, by the act of July 11, 1863. 12 
 Stat, at Large, 546. 
 
 And, as if to remove every possible doubt from the intention of 
 Congress, so far as treasury notes were involved (the National bank 
 notes not then being issued), the act of March 3, 1863 (12 Stat, at 
 Large, 709), which provides for a further issue of treasury notes, 
 omits in its exemption clause the word "stocks," and substitutes 
 for "other securities " the words " treasury notes or United States 
 notes issued under the provisions of this act." The act authorizing 
 the issue of National bank notes was approved June 3, 1864, and the 
 22d section provides that the notes shall express upon their face 
 the promise of the association receiving the same to pay on demand, 
 and that they are secured by the deposit of United States bonds 
 with the Treasurer of the United States.- But these bonds are not 
 the property of the United States, but of the National bank issuing 
 the notes. It is true, that the government in the act agrees to 
 redeem the notes on failure of the bank, but the primary liability 
 rests upon, and promise to pay comes from, the National bank; 
 and before the government does so redeem, she declares forfeit to 
 herself all bonds deposited as security for the issue, these bonds 
 
SUPEBME OOUET, 1869. 427 
 
 Board of CommisBionera of Montgomery County v. Elstou. 
 
 being in excess of the aggregate of notes, and the bonds her own 
 promise. Thus, in fact, in payment of the notes, by her, she 
 simply pays her own bonds at less than their face, and may cancel 
 an amount of said bonds at their current rate, not to exceed par, 
 equal to the currency redeemed, and shall hold a first and perma- 
 nent lien for any deficiency in the proceeds of the bonds, if sold, 
 on the assets of the bank. There is no clause in this act exempting 
 the notes from State taxation, but an express provision making its 
 shares liable. 
 
 It is insisted, however, that the act approved June 30, 1864, 
 entitled "An act to provide ways and means for the support of 
 the government, and for other purposes " (13 Stat, at Large, 218), 
 exempts this issue of the " National currency," as it is entitled. 
 The first section of that act declares that " all bonds, treasury 
 notes and other obligations of the United States shall be exempt 
 from taxation by or under State or municipal authority." 
 
 The last section is as follows: 
 
 " Sec. 13. And he it further enacted, that the words ' obligation or other 
 security of the United States,' used in this act, shall be held. to include and 
 mean all bonds, coupons, NationaJ currency. United States notes, treasury 
 notes, fractional notes, checks for money of authorized oflScers of the United 
 States, certificates of indebtedness, certificates of deposit, stamps, and other 
 representatives of value of whatever denomination, which have been or may 
 be issued under any act of Congress." 
 
 This, at a first glance, might seem to bring " National currency" 
 within the exemption, and, as we are not indebted to counsel for a 
 solution of the difficulty, doubtless has misled them in the argu- 
 ment. But the words in quotation in the thirteenth section are 
 technical, and are not the identical words used in the same order 
 in the first section, and, therefore, the reference to that section 
 would be more than questionable. All doubt, however, is removed 
 by the use of the same technical phrase, in the eleventh section of the 
 same act, in which it is provided, " that if any person having control, 
 custody or possession of any plate or plates from which any obliga- 
 tion or other security, or any part thereof, shall have been printed," 
 etc., "or shall have or retain in his custody or possession, after a 
 distinctive paper shall have been adopted by the Secretary of the 
 Treasury for obligations and other securities of the United States, 
 any similar paper adapted to the making of any such obligations 
 or other security," etc., "every person so offending shall be deemed 
 
428 INDIANA 
 
 Board of Commissioners of Montgomery County v. Elston. 
 
 guilty of a felony, and shall, on conviction thereof, be punished," 
 etc. 
 
 It thus appears plain that the entire intent and purpose of the 
 last section of the act was to throw around "National currency" 
 the same guards against counterfeiting that were by law proyided 
 for " obligations and other securities of the United States." 
 
 Clearly, no exemption in any act prior to the authority given to 
 issue "National currency" can apply, and as they are not obliga- 
 tions of the United States, in any proper sense of that expression, 
 as they do not rest primarily on the promise of the government to 
 pay them as her own debt, but simply on her promise that she will 
 amply indemnify herself in her own bonds, and only after failure 
 of the bank and forfeiture of the bonds to her will she regard her- 
 self as finally liable; certainly, there is nothing in the letter of the 
 law exempting this circulation from taxation; and though we do 
 not discuss the power of Congress to make such exemption, we are 
 free to admit that we see nothing in the paper itself or the circum- 
 stances of its issue which would authorize such a limit to be placed 
 on the power of the State to tax. 
 
 It follows, that the amount of the assessment on the moiety con- 
 sisting of treasury notes was unauthorized and illegal; and that the 
 amount rated upon that portion consisting of currency of the 
 National banks was legal and proper. 
 
 Under a rule often expressed in this court, the appellee, not 
 having tendered to the treasurer of the county the amount legally 
 due, cannot successfully invoke the aid of the court by the inter- 
 position of its extraordinary remedy of injunction to prevent the 
 collection of a tax in part legal and in part illegally assessed. 
 
 Judgment reversed, and cause remanded, with direction to sus- 
 tain a demurrer to the complaint for injunction. 
 
STJPEEME COUET, 1870, 429 
 
 Whitney et al. v. Eagsdale. 
 
 Whitney et al., appellants, v. Eagsdale, Treasurer, 
 
 (33 Indiana, lOT.) 
 Twxationof NatioTud banks — Oonatitutional law — Place' of taxation. 
 
 By an act oi the Indiana Legislature passed in March, 1867, shares of the capi- 
 tal stock of National banks within the State were taxed for that year, and 
 the cashier of each bank was required to represent each stockholder in list- 
 ing and valuing his stock. fl«M, that the statute took eflfect from the Ist 
 day of January, 1867, that it was a valid exercise of the taxing power, and 
 that it did not conflict with the constitutional requirement of " a uniform 
 and equal rate of assessment and taxation.'' 
 
 The requirement of such act, that the stock shall be taxed at the place where 
 the bank is located, is not invalid where the owner of the stock lives in 
 another county or State. 
 
 INJUIfCTION to restrain the collection of a tax. The appellants 
 filed their complaint in the court below, against the appellee, 
 on ,the 39th of July, 1868. It alleged, that the plaintiffs were 
 stockholders in the Second N"ational Bank of Franklin, located at 
 Franklin, Johnson county ; the bank being organized under the 
 National Bank Act of Congress. The amount of stock held by the 
 plaintiffs, respectively, is stated ; that from January 1st, 1867, to 
 the filing of the complaint, all the capital of the bank was invested 
 in United States bonds and stocks, except the banking-house, on 
 which all taxes had been paid ; that under color of the act of the 
 Legislature, of March 15th, 1867, the board of commissioners of 
 the county assessed a tax, for State and county purposes, on their 
 stock in bank for the year 1867 ; that the assessment was placed 
 on the tax duplicate ; and that pursuant to precept placed in his 
 hands, the treasurer was proceeding to collect the tax, with penal- 
 ties, etc.,. by levy and sale of plaintiffs' property ; that none of the 
 plaintiffs were residents of Johnson county, E. G. Whitney, Wm. 
 B. Whitney, Maria Whitney and Thomas Eeid, residing in Jeffer- 
 son county, and all the others being citizens of Kentucky ; that 
 such had been their respective residences since prior to January Ist, 
 1867. 
 
 Prayer for perpetual injunction. The defendant demurred to 
 the complaint. The demurrer was sustained by the court. Ex- 
 ception taken by plaintiffs. 
 
430 INDIANA 
 
 Whitney et al. v. Bagsdale. 
 
 The plaintiffs abiding their complaint, final judgment against 
 them went on the demurrer. 
 Plaintiffs appealed. 
 
 T. A. Hendricks, 0. B. Hord, A. W. Hendricks and A. E. Wal- 
 ker, for appellants. 
 
 T. W. Woollen, D. D. Banta and G. Byfield, for appellee. 
 
 Eat, J. [After stating the facts.] The only question in this 
 case is, does the act of March 15th, 1867 (Acts 1867, p. 316), 
 authorize the collection of such tax. 
 
 The appellants contend that the act should be construed as hav- 
 ing prospective operation only, and not as authorizing any such 
 tax for the year 1867, because it has been the course of legislation 
 in this State to impose all taxes for the year upon property declared 
 subject to it, as the same exists or is owned on the 1st day of Jan- 
 uary in each year. That on the day named, this property was 
 exempt from tax, and therefore worth more than if it had been 
 taxed. Giving the act in question a retrospective operation would 
 take away this additional value. 
 
 But it cannot reasonably be insisted that this additional value 
 was not subject to the pleasure of the Legislature and liable at 
 any moment to be taken away by the imposition of a tax. The 
 argument results then in this, that as the Legislature had not hereto- 
 fore subjected property free from tax on the 1st day of January to 
 such a burden at a subsequent date, we are, therefore, not to place 
 such a construction upon this act as would result from a change of 
 legislative practice. 
 
 To this may be answered, that the Constitution of the State, 
 article 10, section 1, requires the Legislature to "prescribe such 
 regulations as shall secure a just valuation for taxation of all prop- 
 erty, both real and personal," and that, therefore, where there has 
 been a neglect of the Legislature to comply with this requirement 
 and impose the tax at the usual time, it is our clear duty to aid by 
 reasonable construction any attempt by that body to supply such 
 omission. Nor can it be said that such a construction deprives the 
 owner of property thus omitted of any right. All property is, by 
 the Constitution, subject to this public burden, and it is also 
 equitable that it should support its proportionate share. 
 
 That the tax was intended to apply for the year 1867 is evident 
 
STJPEEME COURT, 1870. 43I 
 
 Whitney et al. v. Eagsdale. 
 
 from the language employed. The second section of the act 
 requires the president or cashier of the bank to deliver a statement 
 of the names and amount of interest of each stockholder to the 
 proper county auditor on or before the 15th day of March in 
 each year. The act was approved and went in force on that day. 
 To enable bank officers to comply with the law for that year, how- 
 ever, the second section of the act declares, that " the sworn state- 
 ment, required by the second section of this act, may be made for 
 the year 1867, at any time on or before the 1st day of May, but 
 for subsequent years shall be made within the time required by the 
 said second section ." 
 
 To construe the word " may" as simply permissive would ren- 
 der the provision not only idle, but absurd. It would be an insult 
 to the Legislature to suppose that they intended to allow each 
 bank to elect whether or not its stockholders should be taxed. 
 
 The next objection is to the law itself. While it is admitted 
 that this law is within the act of Congress, it is contended that it 
 is in conflict with a provision contained in the section of the State 
 Constitution already cited, requiring "a uniform and equal rate of 
 assessment and taxation." The specification is, that as to the list- 
 ing and valuing of all his other personal property, each owner is 
 allowed to attend to it himself, but as to National bank stock, he 
 is represented by an officer of the bank. But as to real estate, he 
 makes no return or estimate of value. In that case, as in this, 
 such return and estimate are made by another person under oath. 
 But this objection was disposed of in the case of The Louisville & 
 N. A. R. R. Co. V. The State ex rel. McOarty, etc., 25 Ind. 177, 
 where the point was made, that where the law provided a special 
 method for the appraisement of the real estate belonging to a rail- 
 road, it was in contravention of the constitutional provision in 
 question, and was, therefore, void. But this court, in deciding 
 that case, sustaining the law, said: "The Constitution does not 
 require a uniform method of valuation of property, but only ' such 
 regulations as shall secure a just valuation for taxation of all 
 property, both real and personal.' The Legislature must use a 
 discretion as to the best method of securing a just valuation of 
 property, and unless the method adopted be clearly inadequate to 
 secure that result, we cannot question its action." 
 
 It is objected, again, that the act requires the stock to be taxed 
 where the bank is located, irrespective of the residence of the 
 
432 INDIANA 
 
 Boot V. Brdelmeyer. 
 
 owner. It is not contended that this violates any act of Congress, 
 but that it conflicts with the "general revenue system of the 
 State." But we are referred to no provision of the Constitution 
 which prohibits the Legislature from declaring that all National 
 bank stock shall be taxed at the place where the bank is located, 
 and that all shares in other corporations shall be taxed where the 
 owners reside. The rate of assessment and taxation is still uni- 
 form and equal. That some of the stockholders are non-residents 
 of the State is no reason for this exemption from taxation. " It 
 is not necessary that a person, to be amenable to the taxing power 
 of the State, shall be a citizen of the State, or domiciled within it. " 
 Board of Supervisors v. Davenport, 40 El. 197. 
 
 The final fault found with the act in question is, that it is inef- 
 fectual, because it provides that an officer of the bank shall list the 
 stock. It is contended, that such officer is " an officer of one of 
 the fiscal agents of the general government," and, therefore, the 
 duty cannot be imposed upon him. As the duty is not inconsist- 
 ent with the trust imposed upon him as such officer of such fiscal 
 agent, we are not prepared to admit his exemption from State 
 authority by virtue of his position. ' 
 
 In this case, however, the tax has been assessed, and whether or 
 not the act provides for extreme cases is not necessary for our con- 
 sideration now. 
 
 Judgment is affirmed, with costs. 
 
 EooT V. Bedblmetbe. 
 
 (37 Indiana, 236.) 
 
 What is not a tax for " municipal purposes." 
 
 Under a statute of Indiana, National bank stock was not taxable for municipal 
 purposes. Held, that a tax for school purposes or for a donation by a town 
 ship to aid in building a railroad was not a tax for " municipal purposes," 
 and, therefore, not within the restriction. 
 
 WOKDEN, C. J. Deloss Eoot, suing for himself as well as all 
 others interested in the question, filed his complaint against 
 the appellees, to restrain the collection of three items of taxes 
 
SUPREME COURT, 1871. 433 
 
 Root V. Brdelmeyer. 
 
 assessed against shares of the capital stock of the Eirst National 
 Bank of Indianapolis, viz. : first, a tax of twenty-five cents on the 
 hundred doUars, levied by the school trustees of the city of Indian- 
 apolis, for school-house purposes in said city; second, a tax of one 
 cent on the hundred dollars, levied for Center township; third, a 
 tax of twenty cents on the hundred dollars, levied by the commis- 
 sioners of Marion county, on the property of Center township, to 
 aid, by way of donation, the Illinois Central Railway Company. 
 
 A demurrer was sustained to the complaint in the court below, 
 at the Special Term, which ruling was sustained on appeal to the 
 General Term. 
 
 The plaintifE below seeks a reversal of the judgment rendered 
 against him on demurrer. 
 
 In respect to the item of taxes to aid the railway company, it 
 may be observed that in the case of John v. The Gin., etc., R. R. 
 Co., 35 Ind. 539, this court decided that a township might aid, by 
 way of subscription to the stock of a railroad company, as well as 
 a county. And in the opinion of a majority of the court, a dona- 
 tion and subscription stand upon essentially the same ground. 
 They are both provided for by law and must stand or fall together. 
 
 These observations bring us to the main and only other objec- 
 tion to the taxes in question, which is that they are assessed for 
 *' municipal purposes," in violation of section 9 of the act of March 
 15th, 1867 (3 Ind. Stat. 34), which provides as follows, viz. : 
 
 "Nothing in this, or any other act, shall be so construed as to 
 authorize the taxation of stock in the bank of the State of Indiana, 
 or in any National bank, for municipal purposes." 
 
 By the statute above cited, provision is made for taxing the 
 shares of capital stock "in any bank or banking association, char- 
 tered or organized under the laws of this State, or chartered or 
 organized under the laws of the United States, and having its 
 banking-house, or place of business, in this State." 
 
 The question arises, what is meant by the words "municipal 
 purposes," as used in the section above quoted? 
 
 The appellant contends that the words were used in the broad 
 sense that would embrace taxation for county and township pur- 
 poses, as counties and townships are municipalities. But in this 
 broad sense a municipality embraces the State itself. This broad 
 construction of the words would defeat the entire law, inasmuch 
 as the State is as much a municipality as a county or township. 
 55 
 
434 INDIANA 
 
 Root V. Erdelmeyer. 
 
 Webster says, "Municipal, as used by the Komans, originally 
 designated that which pertained to a municipium, a free city or 
 town. It still retains this limited sense, but we have extended it 
 to what belongs to a State or nation as a distinct, independent 
 body. Municipal law or regulation respects solely the citizens of a 
 State, and is thus distinguished from, commercial law, political 
 law, and the law of nations." 
 
 We are of opinion that the word " municipal," as used in the 
 aboTe statute, was used in its original restricted sense, having 
 reference to the incorporated cities and towns in the State having 
 authority to levy and collect taxes, and that the restriction extends 
 only to taxes for such city or town purposes. This construction is 
 adopted from several cQnsiderations; first, if an enlarged meaning 
 is to be given the word " municipal," so as to embrace counties 
 and townships, no very good reason occurs to us why it should not 
 embrace the State, which would defeat the law itself, or the section 
 above set out would be nugatory; second, laws exempting property 
 from taxation are to be strictly construed. The Common Council 
 of Indianapolis v. McLean, 8 Ind. 328; third, the history of legis- 
 lation on this subject places the construction we have adopted be- 
 yond reasonable question. 
 
 The charter of the bank of the State of Indiana contains the 
 following section : 
 
 " Sbc. 15. The capital stock of said bank shall be subject to the same rate 
 of taxation for State and county purposes as the property or stock of other 
 moneyed corporations ; and the real estate and other property of said bank 
 and branches, situated in any city or town, shall be taxable for municipal pur- 
 poses, in the same manner as other property so situated, but the capital stock 
 of said bank or branches shall not be taxable for municipal purposes." 1 Q. 
 H. 143. 
 
 In this section it is too clear to admit of controversy, that 
 towns and cities are the municipalities contemplated, and that 
 the prohibition to tax for municipal purposes is a prohibition only 
 to tax for town or city purposes. 
 
 This prohibition was held valid in the case of The Bank v. The 
 City of New Albany, 11 Ind. 139. In the case cited, there is no 
 intimation that the prohibition extended beyond cities and towns. 
 If there is any such provision in the general banking law of the 
 State, it has escaped our notice- 
 Then came the National banks. An act of Congress permits 
 
SUPREME COURT, 1871. 435 
 
 Boot V. Erdelmeyer. 
 
 the shares in the capital stock of the National banks to be taxed 
 by the States; provided, " that the tax so imposed under the laws of 
 any State, upon the shares of any of the associations authorized by 
 this act, shall not exceed the rate imposed upon the shares in any 
 of the banks organized under authority of the State where such 
 association is located." See Wright, Auditor, etc., r. Stilt, 37 Ind. 
 338. 
 
 Now, in the act of March 15th, 1867, it is apparent that the Leg- 
 islature intended to put the bank of the State and the National 
 banks, in respect to taxation upon their shares of stock, upon an 
 equality, and that they used the term "municipal purposes" there- 
 in in the same sense in which it was used in the act providing for 
 the establishment of the bank of the State. 
 
 The township tax, and the tax levied by the board of commis- 
 sioners for railroad purposes, are in no sense levied for municipal 
 purposes within the meaning of the law in question. The same is 
 also true with respect to the tax levied by the school trustees of 
 the city for school-house purposes. These taxes for school-houses 
 are not levied for any purposes of cities as such, but for a State 
 purpose in the fullest sense of the term. They are levied to carry 
 out the system of common school education provided for by the 
 State, and by virtue of the laws of the State. To be sure, " each 
 civil township and each incorporated town or city in the several 
 counties of the State is hereby declared a distinct municipal cor- 
 poration for school purposes." 3 Ind. Stat. 441, § 4. Thus each 
 civil township in the State, as well as each incorporated city and 
 town, is made an instrumentality by means of which the educa- 
 tional purposes of the State are carried out. But when taxes are 
 assessed by means of these instrumentalities for building school- 
 houses, they are assessed for school or educational purposes, and 
 not for municipal purposes. 
 
 We are of opinion that no error was committed by the court 
 below. 
 
 The judgment below is affirmed, with costs. 
 
 S. E. Perkins, F. J. Mattler, and 8. E. Perhins, Jr., for appel- 
 lant. 
 
 • L. Barbour and G. P. Jacobs, for appellees. 
 
436 INDIANA 
 
 Wiley V. Starbuck. 
 
 W^ET T. StAKBTTCK. 
 
 (41 Indiana, S98.) 
 
 Usury Ijy National banks — Remedy for taking unlawful interest — Recoupment. 
 
 By the statute of a State, six per cent was declared to be the legal rate of inter- 
 est, but parties were authorized to agree in writing for a higher rate not 
 exceeding ten per cent. Held, that National banks located in the State could 
 charge ten per cent.* 
 
 In an action on a note given for money borrowed of a National bank, the de- 
 fendant cannot recoup illegal interest paid in advance. The remedies given 
 by the National Banking Act for the taking of unlawful interest are exclu- 
 sive and cannot be supplemented by the statutes of the State.f 
 
 A CTION on promissory notes. The opinion states the case. 
 
 J. B. Julian and J. F. Julian, for appellants. 
 W. A. Bickle, for appellee. 
 
 BusKiRE, J. The action below was on two several writings 
 obligatory, payable jointly and severally, as follows : 
 
 1. For one thousand two hundred doUai's, dated December Wh, 
 1868, payable at ninety days, to Edward Starbuck, or order, at the 
 First National Bank of Union City. 
 
 3. For four thousand dollars, dated November Ist, 1868, payable 
 at sixty days to the First National Bank of Union City. This last 
 note is indorsed to said Edward Starbuck by said bank. The notes 
 in other respects are similar, and each contains waiver of demand 
 of payment, notice, and protest, and authorizes any attorney at law 
 to appear for the parties, or either, in any court in Indiana or Ohio, 
 or elsewhere, and confess judgment for the note and interest, with 
 damages on bills within the jurisdiction of the United States and 
 without the jurisdiction of Ohio and Indiana, with costs, attor- 
 ney's fees, and without relief, etc., and "with interest at ten per 
 cent per annum, if not paid when due," etc. 
 
 To this action an answer in nine paragraphs was filed. The first 
 is a general denial. The second was a general plea that the plaintiff 
 
 * See NevieU v. National Bank, post- 
 
 f SeeNaiional Bank r. Davia, ante, p. 350.. 
 
SUPREME COURT, 1873. 437 
 
 Wiley V. Starbuok. 
 
 was laot the real party in interest, without the allegation of any facts. 
 The third, general plea of payment: The fourth and fifth para- 
 graphs are to the first paragraph of the complaint, which declares 
 on the note for one thousand two hundred dollars payable to Star- 
 buck. The fourth paragraph is pleaded to four hundred and eighty- 
 one dollars of said note as the aggregate of the sums of thirty- 
 seven dollars^ alleged to have been " demanded," " received," and 
 "reserved," by the bank at the end of each ninety days from the 
 inception of the note, in December, 1865, to the giving of the note 
 sued on; alleging that the note was given to Starbuck, president 
 of the bank, to cover up the "illegal transaction of the bank;" 
 that the sum of thirty- seven dollars was twelve per cent reserved 
 by the bank "illegally;" that the said Starbuck had "no interest 
 in the said money loaned, or the note given for the same." 
 
 The fifth paragraph is also pleaded to the first count, and is 
 addressed to the interest of thirty-seven dollars paid on the note 
 sued on and accruing interest. It alleges that the transaction was 
 with the bank; that said Starbuck had no interest in the money 
 loaned or note given. 
 
 The sixth and seventh paragraphs are pleaded, in the same order 
 and substantially to the same effect as the above, to the second count 
 on the four thousand dollar note. 
 
 The eighth is on the common money count for indebtedness of 
 the bank to defendant in the month of September, 1870. The ninth 
 paragraph was as follows: 
 
 " 9th. The defendants Wiley and Wiley, for a ninth paragraph 
 of answer, say that they are the sureties of the defendant McKemy 
 on the notes sued on, he being the principal; that said notes were 
 discounted by the First National Bank of Union City, an incorpora- 
 tion organized under the National Banking Law of the United 
 States, and doing business in Randolph county, Indiana, and the 
 money therein described was advanced and loaned by said bank, 
 the said plaintiff being the president thereof and transacting the 
 business, but having no interest whatever in said notes or the 
 money loaned, and simply holding and taking the same in trust for 
 the use of said bank, and taking one of them in his own name, and 
 an assignment of the other with full knowledge of the facts stated, 
 to cover up and conceal the illegal character and effect of the tak- 
 ing of illegal interest on said loan as hereinafter stated. And the 
 said defendants say, that at the time of the discounting of the 
 
438 INDIANA 
 
 Wiley V. Starbuck. 
 
 said notes, the said bank illegally charged, contracted for, reserved, 
 and receiyed interest on said several sums of money at the rate of one 
 and one-half per cent per month, in advance, during the ninety 
 days following the several discounts of said several notes; where- 
 fore, because of such illegal and unwarranted acts of said bank, 
 the defendants say that said notes are void." 
 
 issue was taken on the third and eighth paragraphs. 
 
 A demurrer was sustained to the second, fourth, fifth, sixth, sev- 
 enth, eighth and ninth paragraphs of the answer, and proper excep- 
 tions were taken. 
 
 The cause was submitted to the court for trial and resulted in a 
 finding for the plaintifE in the sum of five thousand four hundred 
 and thirty-dollars and ninety-three cents. 
 
 The plaintifE moved the court for a new trial, for the following 
 reasons: 
 
 1. The court erred in refusing to allow the plaintifE attorney's 
 fees in said cause on said notes. 
 
 2. The court erred in refusing to compute interest on said notes 
 from the date of each. 
 
 The defendants moved the court for a new trial for the reasons 
 following : 
 
 1. Because the finding and judgment of the court is excessive. 
 
 2. Because the judgment ought to have been for the defend- 
 ants. 
 
 3. Because the court erred in sustaining demurrers to the 
 defendants' answer. 
 
 Both motions were overruled, and each party took an exception. 
 
 The plaintifE has assigned the following cross error : 
 
 That the court erred in overruling his motion for a new trial. 
 
 The defendants have assigned for error the sustaining of the 
 demurrers to the answer of the defendants, and in overruling their 
 motion for a new trial. 
 
 Did the court err in sustaining the demurrer to the several para- 
 graphs of the answer ? 
 
 The second paragraph of the answer was clearly bad, for the 
 reason that it did not state facts sufficient to constitute a defense. 
 Raymond v. Pritchard, 24 Ind. 318. 
 
 The fourth, fifth, sixth, and seventh paragraphs of the answer 
 present for our decision the questions of what rate of interest the 
 
SUPEEME COUET, 1873. 439 
 
 Wiley V. Starbuck. 
 
 National banks may charge in this State, and whether a person who 
 has paid an illegal rate of interest may deduct the amount so paid 
 from the principal of the note, in an action upon such note. 
 
 The solution of these questions depends upon the construction 
 to be placed upon the 30th section of the National Banking Law, 
 and the laws of this State. 
 
 Section 30 of said law reads as follows : 
 
 " Sbc. 30. And be it further enacted, that every 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 allowed by 
 the laws of the State or Territory where the bank ia located, and no more 
 except that where by the laws of any State a different rate is limited for 
 banks of issue organized under State laws, the rate so limited shall be allowed 
 for associations organized in any such State under this act. And when no rate 
 is fixed by the laws of the State or Territory, the bank may take, receive, 
 reserve, or charge a rate not exceeding seven per centum, and such interea 
 may be taken in advance, reckoning the days for which the note, bill, or other 
 evidence of debt has to run. And the knowingly taking, receiving, reserving, 
 or charging a rate of interest greater than aforesaid, shall be held and 
 adjudged a forfeiture of the entire interest which the note, bill, or other evi- 
 dence 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 pay- 
 ing the same, or their legal representatives, may recover back, in any action of 
 debt, twice the amount of the interest thus paid from the association taking 
 or receiving the same : Provided, that such action is commenced within two 
 years from the time the usurious transaction occurred. But the purchase, dis- 
 count, or sale of a iona fide 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 con- 
 sidered as taking or receiving a greater rate of interest . " 
 
 The above section contains five distinct propositions, namely : 
 
 1. That every association may take, etc., on loans, etc., interest 
 at the rate allowed by the laws of the State, etc., where the bank 
 is located, and no more, except where a different rate is limited for 
 banks of issue under the State, the same shall be allowed, etc., for 
 such first-named associations. 
 
 3. When no rate is fixed by the laws of the State, they may take 
 seven per cent. 
 
 3. The " knowingly taking," etc., a greater rate "than afore- 
 said" shall be held a "forfeiture of the entire interest which the 
 note," etc., " carries with it, or which has been agreed to be paid 
 thereon." 
 
440 INDIANA 
 
 Wiley V. Starbuck. 
 
 4. If a greater rate has been paid, twice the amount may be recov- 
 ered,back, if the action is brought within two years from the time the 
 usurious transaction occurred. 
 
 5. But the purchase, etc., or sale of bills of exchange, with cur- 
 rent rate of exchange added to the interest, shall not be considered 
 as taking or receiving greater interest. 
 
 Here, then, we have four rules prescribed for the taking of inter- 
 est in the above first, second, and fifth subdivisions. 
 1. The rate allowed by the laws of any State, etc. 
 3- Any rate that any bank of issue in any State may take. 
 
 3. If no rate is fixed, seven per cent. 
 
 4. Current exchange added to interest. 
 
 There being a bank of issue, created by the laws of this State, we 
 are required to ascertain what rate of interest may be charged and 
 received by such bank. 
 
 The 13th section of the charter of the Bank of the State of In- 
 diana reads as follows : 
 
 " Sec. 13. Said bank shall be entitled to charge and receive for money loaned 
 the legal rate of interest established by law in this State, and not more, and 
 the same may, according to bank rules, be taken in advance out of the sums 
 loaned, and may be computed according to the standard and rate set forth in 
 'Rowlet's Tables,' reckoning the days for which a note or bill has to run 
 inclusively ; but it shall not, directly or indirectly, place any money in the 
 hands of any broker or other person, to be loaned to others, or chai^ge, take, or 
 receive any interest, compensation, or benefit, whatever, from any loan made 
 by any other person or party, whether such loan be made from its own funds 
 or otherwise." 1 G. & H. 141-42. 
 
 By the above section, the bank of the State is entitled to charge 
 and receive the legal rate of interest established by the laws of this 
 State. 
 
 The first section of an act concerning interest on money, approved 
 March 9th, 1867, reads as follows : 
 
 " That interest upon the loan or forbearance of money, goods or things in 
 action, shall be at the rate of six dollars a year upon one hundred dollars, and 
 no greater rate of interest shall be taken, directly or indirectly, unless the 
 agreement to pay a higher rate of interest be made in writing-, and signed by 
 the party to be charged ; but such rate of interest shall in no case exceed the 
 rate of ten dollars a year on one hundred dollars ; but it may be taken yearly, 
 or for any shorter period, in advance." 3 Ind. Stat. 317. 
 
 By the above section, six per cent is the legal rate of interest in 
 this State, unless there is an agreement in writing to pay a higher 
 
SUPREME COUET, 1873. 441 
 
 Wiley V. Starbuck. 
 
 rate of interest, signed by the party to be ciiarged, but sach rate of 
 interest can in no case exceed the rate of ten per cent per annum. 
 
 The National ban^s organized and doing business in the State of 
 Indiana may charge and receive interest at the rate of ten per 
 cent, to which may be added the current rate of ozchange for sight 
 drafts, where there is a purchase, discount or sale of a bona fide 
 bill of exchange payable at another place than the place of purchase, 
 discount or sale. 
 
 We proceed to inquire, whether the appellants had the right, in 
 this action, to deduct from the principal of the notes sued upon the 
 interest which had been paid in advance, the bank haying charged 
 and receiyed illegal interest. 
 
 It is provided in the above quoted section of the National Bank- 
 ing Law, that " the knowingly taking, receiving, reserving, or 
 charging a rate of interest greater than aforesaid shall be held and 
 adjudged 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 it is further provided in such section, that 
 " in case a greater rate of interest has been paid, the person or 
 persons paying the same, or their legal representatives, may recover 
 back, in any action of debt, twice the amount of interest thus paid 
 from the association taking or receiving the same. " 
 
 It is very plain that where an action is brought by a National 
 bank upon a note, bill, or other evidence of debt payable to or for 
 the use of such bank, and it is shown that such bank had knowingly 
 taken, received, reserved, or charged a greater rate of interest than 
 is allowed by law, the entire interest which such note, bill, or other 
 evidence of debt carries with it, or which has been agreed to be 
 paid, is forfeited, and no recovery can be had for interest which 
 remains unpaid. 
 
 And it is equally plain that where any person or persons have 
 paid to any such bank a greater rate of interest than is allowed by 
 law, such person or persons paying the same, or their legal repre- 
 sentatives, may, in an action of debt against such bank, recover 
 twice the amount of interest thus paid from the association taking 
 or receiving the same. 
 
 But suppose a loan has been made of a National bank, and a note 
 
 has been taken payable ninety days after date, upon which usurious 
 
 interest has been charged and received in advance, and an action 
 
 is brought upon such note, will the interest thus paid be regarded 
 
 56 
 
442 INDIANA 
 
 Wiley V. Starbuck. 
 
 and treated as a payment upon the principal of the note, or will 
 the person T3aying the same be driven to his action of debt against 
 the bank, to recover twice the amount of interest thus paid ? 
 
 The solution of this question depends upon whether we are to be 
 governed exclusively by the National Banking Law, or whether the 
 usury laws of this State have any application to an action brought 
 by a National bank. In other words, are the defendants confined 
 to the remedy conferred by the act of Congress, are the penalties 
 prescribed by the act of Congress merely cumulative to those of the 
 States, and may the penalties prescribed by the statutes of this State 
 be set up as a defense ? 
 
 The precise question involved here came before the Supreme 
 Court of New York, in the case of The First National Bank of 
 Whitehall v. Lamb, 57 Barb. 439, where the court say : " The act 
 of Congress in question is the only statute in existence, on that sub- 
 ject, enacted by the Federal Legislature ; it cannot therefore be said 
 to be in pari materia with any other statute. The statutes passed 
 by Legislatures under other governments have no influence or con- 
 trol over this ; and its construction is not controlled by them. It 
 is to be construed by itself. It is repugnant to the provisions of no 
 statute enacted by the s4me government ; and if repugnant to 
 statutes under another government, it in nowise affects this. Other 
 governments have no power to enact statutes which can limit or 
 control the absolute, supreme and sovereign power of this govern- 
 ment. Congress has not in this attempted to repeal or interfere 
 with the statutes of the State of New York on the subject of usury, 
 and have not the direct power to do so, should they attempt it. 
 Nor has Congress, either in terms or by implication, adopted the 
 statute law of New York, or its penalties, on this subject. With 
 its own unrestrained power to legislate on this subject, it has 
 matured its own independent project of governmental agencies, 
 which stands alone as a single, separate and distinct system of bank- 
 ing and agency, unaided by, and disconnected with, other systems. 
 It has conferred benefits upon the corporators themselves and per- 
 haps upon the public ; and in consideration thereof has demanded 
 and received in return, from these agencies, therefor, various and 
 onerous duties, aids, securities and credits to the government, and 
 from the institutions so authorized. These are to be regarded as 
 fair and equal equivalents, with mutual considerations passing from 
 the one to the other. The government was authorized to employ 
 
SUPKEMB COUET, 1873. 443 
 
 Wiley V. Starbuck. 
 
 them as depositories of the public moneys, and as financial agents 
 of the government, and their supervision was committed to an 
 agent of the Federal government. The institutions were bound to 
 deposit securities for the government's protection, and also to keep 
 deposits and accumulate a surplus fund for that purpose. It has, 
 in this system, permitted the institutions to receive a fixed and fair 
 equivalent, to be received for loans and discounts to individuals, of 
 money upon notes and bills of exchange, and at the same time has 
 thrown its protecting influences over such individuals to prevent 
 abuse and oppression (as it must be supposed) by adequate penal- 
 ties to be inflicted for violations of the statute. In other words, 
 for the value to the corporators of chartered rights and privileges 
 conferred, the government imposed certain burthens upon these 
 agencies as a condition to the grant ; and the conferring and re- 
 ceiving of these reciprocal benefits, with these duties and burthens 
 and subject to its penalties, are the terms, and these only, of the 
 compact between the government and the corporators in these in- 
 stitutions. '!N"o other burthens are annexed to the enjoyment of 
 the rights and privileges conferred by this act of Congress.' " Van 
 Allen V. The Assessors, 3 Wall. 583. 
 
 Some of the evil consequences, which would result from hold- 
 ing that the penalties prescribed by the acts of Congress are cumu- 
 lative only, are pointed out in the opinion of the court in the 
 above case, where the court say: "If the penalties given by the 
 act of Congress are cumulative, leaving the State law also in force, 
 the penalties in the former would probably never be set up as a 
 defense ; the latter being a defense to the whole contract, princi- 
 pal and interest, while the former goes only to the interest. So if 
 both are in force, the State law can first be used to defeat the entire 
 recovery upon the contract, which is thereby made void ; and by 
 the law of Congress there would be superadded, by way of further 
 penalty, the liability to have recovered back twice the amount of 
 the interest that had been paid._ I do not think it reasonable to 
 suppose that Congress intended to add to the penalties existing by 
 the State law. That was no part of the reason for its enactment,, 
 and therefore the law of Congress is not cumulative." 
 
 The same consequences and confusion would result in this State. 
 As we have seen by the act of Congress, there are imposed, as pen- 
 alties for usury, the forfeiture of the entire interest unpaid and 
 the right to recover back twice the amount paid. While in this 
 
444 INDIANA 
 
 Wiley V. Starbuck. 
 
 State, the excess only over the legal rate of interest can be re- 
 couped, in an action upon the instrument affected with usury. 
 
 It was decided by this court, in Musselman t. McElhenny, 23 
 Ind. 4, that, "if usurious interest is paid on the note after its exe- 
 cution, it amounts to a payment of .so much on the principal of 
 the note ; and if the amount thus paid exceeds the principal, it 
 may be recovered back." 
 
 It was held in Yaiicy t. Teter, 39 Ind. 305, that the excess over 
 the rate of interest as fixed by the statute of the contract of the 
 parties could be recovered back or recouped. 
 
 If the penalties prescribed by the act of Congress and of this 
 State are to be enforced, then it would seem that in an action on 
 an instrument tainted by usury, the illegal interest that had been 
 paid would be regarded as a payment upon the principal, and the 
 party could afterward recover in an action against the bank twice 
 the amount of the interest paid. 
 
 It is finally insisted by counsel for appellee, that the fourth, fifth, 
 sixth, and seventh paragraphs of the answer were bad, because it 
 is not alleged that the usurious interest was corruptly reserved and 
 received. 
 
 It was held in The Bank of the U. S. v. Oiuens, 2 Pet. 527, and 
 in the case of The Bank of the U. 8. v. Waggener, 9 id. 378, that 
 the word " corruptly " meant intentionally and designedly. The 
 language of the present National Banking Law is " knowingly," 
 and it is charged in the several paragraphs of the answer that the 
 contract for the usurious interest was knowingly made, and we 
 think that such averment is equivalent to charging that it was cor- 
 ruptly made, even if, under the usury laws of this State, it was 
 necessary to charge that the contract was corruptly made. 
 
 It was held in Gohee v. Gooper, 8 Blackf. 115, that in a plea of 
 usury it was necessary to charge that the unlawful interest was cor- 
 ruptly reserved, and such ruling was followed in subsequent cases ; 
 but in the well-considered case of. Uole v. Bansemer, 26 Ind. 94, it 
 was held that under the usury laws as they have existed since 1861, 
 such allegation was unnecessary. 
 
 The court in that case say : " There is therefore now no reason 
 here for the allegation that the contract was corruptly made, and 
 the rule of pleading requiring it must consequently be deemed to 
 have ceased to exist." 
 
 It is very plain and obvious to us, that the appellants were not 
 
SUPREME COURT, 1874. 445 
 
 City of Richmond v. Scott. 
 
 entitled in this action to recoup the interest which they had paid 
 upon the notes in suit. The facts stated in the paragraphs under 
 examination are sufiScient to show that the transaction was with 
 the bank, and not with the plaintiff, and that the bank is charge- 
 able with the acts of the plaintiff as the president thereof, and that 
 the penalties prescribed by the act of Congress attach in the same 
 manner, and to the same extent, as though the action was brought 
 by and in the name of the bank. But it does not result from this, 
 that the action could not be maintained by the plaintiff, for the 
 facts alleged show that he was the trustee of an express trust and 
 as such was entitled to maintain the action. Heavenridge v. Mondy, 
 34 Ind. 28. 
 
 It results, from what has been said, that the court below com- 
 mitted no error in sustaining the demurrer to the fourth, fifth, 
 sixth and seventh paragraphs of the answer. 
 
 [The court then decided that the taking of illegal interest did 
 not render the contract void; a point settled by the Supreme 
 Court of the United States in Farmers and Mechanics' National 
 Bank v. Bearing, ante, p. 117.] 
 
 City of Richmond v. Scott. 
 
 (48 Indiana, B68.) 
 Twxation — Biscrimination — DovhU taxation. 
 
 State banks were exempt from taxation under a statute passed prior to the 
 National Banking Act. Keld,, that shares in National hanks could neverthe- 
 less be taxed.* 
 
 A tax was levied on money belonging to plaintiff on the first day of January. 
 In March, he bought, with this money, shares in the stock of a National 
 bank. HM, that the shares could be also assessed under a statute provid- 
 ing that persons should be assessed for bank stock held by them on April 
 first. 
 
 * See Liar\berge,r v. JZowse, ante,, p. 41 ; Bepbv/m v. School Direetore, ante., p. 
 113; Adams v. Mayor, ante, p. U8. 
 
446 INDIANA 
 
 City of Richmond v. Scott. 
 
 "OEOM the Wayne Circuit Court. 
 W. A. Bichle, for appellants. 
 /. P. Siddall and C. H. Burchenal, for appellee. 
 
 WoKDEK, J. This was a complaint by the appellee against the 
 city of Eichmond and her treasurer, to enjoin the collection of 
 certain taxes levied by the city upon the shares of stock held by 
 the appellee in the Eichmond National Bank, a corp6ration organ- 
 ized under the General Banking Law of the United States. It 
 appears that the taxes were levied for the year 1873, at the same 
 rate as was levied upon real and other personal property within the 
 city. 
 
 There were two paragraphs in the complaint, one alleging that 
 the bank was organized on the 1st of March, 1873, and that on or 
 about that day the plaintiff became the owner of the stock; the 
 other alleging, that the bank was organized in March, 1873, when 
 the plaintifl became the owner of the stock. It appears from the 
 complaint, that there are several branches of the Bank of the State 
 of Indiana, organized under "an act to establish a bank with 
 branches," passed March 3, 1855, still in existence. See 1 G. & H. 
 139. Demurrers to each paragraph of the complaint, for want of 
 suificient facts, overruled, and exception. Final judgment for 
 the plaintiiJ. The errors assigned call in question the correctness 
 of the ruling on the demurrers. 
 
 The taxes appear to have been regularly levied, and no objection 
 is made to their validity, except that the law under which the levy 
 was made is invalid, or, if valid, that it does not authorize the levy 
 for the year 1873. 
 
 The taxes are expressly authorized by the act of March 4th, 
 1873 (Acts 1873, p. 214), by which it is clearly contemplated that 
 they may be levied for the year 1873, as well as subsequent years. 
 See, on this point, DePauw v. The Oity of New Albany, 32 Ind. 
 304; Whitney v. Ragsdale, 33 id. 107. 
 
 The first section of the statute last above cited attempts to 
 authorize the levying of taxes, tor municipal purposes, upon " the 
 shares of capital stock owned or held by any person or body cor- 
 porate, in any bank or banking association, chartered or organized 
 under the laws of this State, or chartered or organized under the 
 
SUPKEME COURT, 1874. 447 
 
 City of Bichmond v. Scott. 
 
 laws of the United States (including the Bank of the State of Indi- 
 ana, and its several branches, and National banks or banking asso- 
 ciations)." 
 
 It is claimed, that as the 15th section of the act to establish a 
 bank with branches, supra, provides that " the capital stock of 
 said bank or branches shall not be taxable for municipal purposes," 
 it follows, that the shares of stock in the National banks are 
 entitled to the same immunity. This is based upon the theory 
 that no tax can be imposed by a State upon the stock in National 
 banks, except such as is imposed upon the stock of the most favored 
 banks in the State. The 41st section of the act of Congress pro- 
 viding for National banks (13 Stat, at Large, 3) places the shares 
 of stock in them within the taxing power of the States, on two 
 conditions; that the taxes assessed under State authority shall not 
 be higher than is assessed upon other moneyed capital in the hands 
 of its own citizens; and that the tax imposed upon the shares shall 
 not be at a greater rate than is imposed upon the shares in any 
 banks organized under State authority. 
 
 "We shall enter upon no discussion of the question, whether the 
 State can authorize any assessment for municipal purposes upon 
 the shares of stock in the Bank of the State of Indiana. The char- 
 ter of the bank has been supposed to be a binding compact between 
 the State and the corporation, including its stockholders, which 
 would prevent the imposition of such taxes, if the Constitution of 
 the United States, as expounded in the Dartmouth College case 
 and the unnumbered cases following it, affords any protection. No 
 power is reserved to the State to amend or alter the charter, except 
 "by and with the consent of the president and directors of the 
 bank, and of the president and directors of each branch." § 91. 
 
 We shall take for granted, for the purposes of this case, that such 
 taxes cannot be imposed, and that the provision in our statute 
 authorizing such assessment is unconstitutional and void. But it 
 by no means necessarily follows, that the part of the law providing 
 for an assessment of shares of stock in the National banks is void. 
 These provisions are so distinct and separate that one may stand 
 and the other fall. 
 
 The Bank of the State of Indiana was chartered in 1855, with 
 the provision, as we have seen, that the capital stock of the bank 
 and branches should not be taxable for municipal purposes. After 
 the National Banking Law passed, most of the banking business of 
 
448 INDIANA 
 
 City of Richmond v. Scott. 
 
 the state was done by the National banks. Some half dozen 
 branches of the Bank of the State of Indiana, however, are still in 
 existence. 
 
 A construction has been placed upon the second proviso to the 
 forty-flrSt section of the National Banking Law, by the Supreme 
 Court of the United States, in the case of Lionberger v. Rouse, 9 
 Wall. 468 {ante, p. 41), which clearly'establishes the validity of the 
 tax in question here, although the State had, before the passage of the 
 National Banking Law, so tied up her hands as that she could not 
 impose the like tax upon the stock of the Bank of the State of Indi- 
 ana, even had the second proviso remained in force. In that case, it 
 was held that the proviso was a measure that had reference to 
 prospective legislation by the States, and its object was accom- 
 plished when the States conf onned, as far as practicable, their reve- 
 nue systems to it. The court, after discussing the point at some 
 length, say : "Without pursuing the subject further, it is enough 
 to say, in our opinion, Congress meant no more by the second limi- 
 tation in the proviso to the forty-first section of the National Bank- 
 ng Act, than to require of each State, as a condition to the exer- 
 cise of the power to tax the shares in National banks, that it should, 
 as far as it had the capacity, tax in like manner the shares of banks 
 of issue of its own creation." 
 
 The National Banking Act, however, was modified in 1868, so 
 that the limitation above mentioned does not exist at all. An act 
 of Congress, approved February 10th, 1868 (see 15 Stat, at Large, 
 p. 34), entitled "an act in relation to taxing shares in National 
 banks," provides, amongst other things, that "the Legislature of 
 each State may determine and direct the manner and place of tax- 
 ing all the shares of National banks located within said State, sub- 
 ject to the restriction that the taxation shall not be at a greater 
 rate than is assessed upon other moneyed capital in the hands of 
 individual citizens of such State." Thus the provision, as it stood 
 in the original act of Congress, that the tax to be imposed by the 
 States upon shares of stock in the National banks should not exceed 
 the rate imposed upon the shares in any of the banks organized un- 
 der the authority of the States, is swept away. The only limita- 
 tion now is, 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 the State. It is not shown; nor is it claimed, that the tax 
 in question violates the provision above quoted of the act of 1868. 
 
SUPEEME COUET, 1874. 449 
 
 City of Bichmond v. Scott. 
 
 It is clear, therefore, that the second paragraph of the complaint 
 did not allege facts sufficient to constitute a cause of action, no 
 good ground being shown for enjoining the collection of the taxes 
 specified in that paragraph. 
 
 The first paragraph alleges, as before stated, that the bank was 
 organized, and the plaintiff acquired his stock, on the 1st of March, 
 1873, and it is insisted, that as he was not the owner of the stock 
 on the 1st of January of that year, he cannot be charged with any 
 municipal taxes upon it for that year. It is assumed, that as a 
 general rule, municipal taxes can be assessed against persons only 
 for property held by them on the 1st of January. See the act for 
 the incorporation of cities. 3 Ind. Stat. 63. 
 
 By the act to provide for a uniform assessment of property, etc. 
 (Acts 1872, p. 57), the 1st of April in each year is the day fixed 
 for the government of assessments. Persons are to be assessed for 
 what property, real or personal, may be owned by them on that 
 day. §§ 37 and 38 of the act above cited. Shares of stock are 
 to be assessed according to their yalue on that day. § 63 . 
 
 This act does not in terms apply to assessments for municipal 
 purposes, unless we have overlooked some of its provisions. But 
 the act of March 4th, 1873, supra, clearly contemplates that the 
 assessments of bank shares for municipal purposes shall be based 
 upon the same statements that are required to be made by the act 
 of 1873, for general purposes, and thereby the 1st of April becomes 
 the day in each year to which reference must be had in determin- 
 ing for what shares of stock a person is liable under the law to be 
 taxed for municipal purposes. 
 
 But it is insisted that the law is unconstitutional, inasmuch as 
 one period of time is referred to in determining for what shares of 
 stock a person shall be assessed for municipal purposes, and another 
 period in determining for what other property he shall be assessed 
 for the same purposes. 
 
 The Constitution, article 10, section 1, provides, that " the Gen- 
 eral Assembly shall provide by law for a uniform and equal rate of 
 assessment and taxation ; and shall prescribe such regulations as 
 shall secure a just valuation for taxation of all property, both real 
 and personal," etc. Without deciding whether this provision of 
 the Constitution, if it applied to municipal taxation, would be 
 violated by the law in question, we are of opinion that the pro- 
 vision can have no reference to municipal taxation. There cannot 
 57 
 
450 . INDIANA 
 
 City of Bichmond v. Scott. 
 
 in the nature of things, be a uniform rate of taxation for muni- 
 cipal purposes. Taxes for corporate purposes cannot be equal. 
 The wants and necessities of towns and cities cannot be equal. 
 Some require a higher and some a lower rate of taxation. See The 
 Bank, etc., v. The City of New Albany, 11 Ind. 139 ; Bright v. 
 McGullough, %1 id. 323. 
 
 We are of opinion, therefore, that the law is not unconsti- 
 tutional. 
 
 As the appellee owned his stock on and before the 1st of April, 
 1873, we think he was liable to be taxed thereon for that year for 
 municipal purposes ; and we conclude, therefore, that the first 
 paragraph of the complaint, as well as the second, fails to state 
 facts sufficient to constitute a cause of action, and that the de- 
 murrer to it, as well as to the second, ought to haye been sus- 
 tained. 
 
 The judgment below is reyersed, with costs, and the cause 
 remanded, with instructions to the court below to sustain the 
 demurrers to each paragraph of the complaint. 
 
 DowiSTET, J., was absent when this cause was considered.- 
 
 ON PETITIOK FOE A EEHEAKING. 
 
 WoBDEsr, J. In one of the paragraphs of the complajnt, in this 
 case, it is alleged, that the money with which the plaintiff pur- 
 chased his bank-stock on or about the 1st of March, 1873, was 
 assessed against him by the city as having been owned by him on 
 the 1st of January of that year, and that he has paid the taxes 
 thereon ; and it is claimed that he cannot be assessed for the stock 
 held by him on the 1st of April, because he paid the taxes on the 
 money with which the stock was purchased, for the same year. 
 
 On this point a rehearing is asked for. 
 
 We are of opinion, upon a re-examination of the statute, that 
 municipal taxes generally, not including those assessed upon bank- 
 stock, as provided for in the act of March 4th, 1873, are to be 
 assessed upon persons for what they have on the 1st of January in 
 the current year, as intimated in the original opinion. 
 
 The plaintiff was rightfully assessed for the money which he 
 held on the 1st of January. It was optional, with him to purchase 
 the bank-stock before the 1st of April. He must be supposed to 
 have done so with the knowledge that the city might impose the 
 tax upon him for the stock which he held on that day. There 
 may be a hardship in the law as it applies to some particular cases, 
 
SUPREME COUET, 1868. 45I 
 
 National State Bank of Oskaloosa v. Toung. 
 
 but this does not render it unconstitutional or invalid. It is im- 
 possible to so frame a law for the assessment and collection of 
 taxes, as that it will not in some cases work a hardship. Says Mr. 
 Oooley (Const. Lim. 513) : "Absolute equality and strict justice 
 are unattainable in tax proceedings. The Legislature must be left 
 to decide for itself how nearly it is possible to approximate so 
 desirable a result. It must happen under any tax law that some 
 property will be taxed twice, while other property will escape tax- 
 ation altogether. * * * NeTertheless, no question of constitu- 
 tional law is involved in these cases, and the legislative control is 
 complete." 
 
 In this case, if the plaintiff had acquired the money after the 
 1st of January, and purchased the stock after the 1st of April, he 
 would have escaped municipal taxation on either for that year. 
 But as he owned the money at the time it was assessed to him, and 
 the stock at the time that was assessed to him, we see no legitimate 
 way in which he can escape payment of the assessment on both. 
 If the plaintiff is not liable for the tax on the stock for the year 
 1873, then the stock escapes municipal taxation altogether for 
 that year. 
 
 The petition for a rehearing is overruled. 
 
 National State Bank op Oskaloosa v. YoTma. 
 
 (25 Iowa, 3U.) 
 
 Taxation of personal property of National hanks. 
 
 The personal property and assets of National banks, such as safes, office fur- 
 niture, etc., are not taxable. 
 
 BILL in chancery to enjoin the collection of a certain tax alleged 
 to be illegally assessed against plaintiff, upon $61,360 of per- 
 sonal property. 
 
 Decree in the District Court perpetually enjoining the collection 
 of the tax. 
 
 Defendant appeals. 
 
452 IOWA 
 
 National State Bank of Oskaloosa v. Young. 
 Z. F. Fisher, for appellant. 
 Seevers S Cutis, for appellee. 
 
 Beck, J. The cause was before us at the June term, 1867, upon 
 the appeal of the defendant, from an order overruling a demurrer 
 to plaintiff's biU. The judgment of the District Court was affirmed 
 and the cause remanded. Upon a trial, the defendant having an- 
 swered the petition, a decree, as prayed for by plaintiff, was entered, 
 and defendant again appeals to this court. 
 
 The plaintiff is a banking association, organized prior to Janu- 
 ary 1, 1866, under the act of Congress of June 3, 1864, with a cap- 
 ital stock of $100,000. It was assessed for taxation, for the year 
 1866, in the sum of $61,260, upon personal property, by the assessor, 
 and return of such assessment duly made. The basis of this as- 
 sessment appears to have been the capital stock of the bank, after 
 deducting the value of government bonds deposited with the Treas- 
 urer of the United States, and real estate held by the bank. The 
 plaintiff claims that, under the decision of this court, the assessment 
 is illegal, the capital stock not being subject to taxation. See 
 Hubhard v. Supervisors of Johnson County, 23 Iowa, 130. 
 
 The defendant maintains that, while the capital of the bank is 
 not subject to taxation as such, yet personal property held by it is 
 liable to taxation, as like property held by other incorporations or 
 citizens of the State, and that all such property or means of the 
 bank, excepting United States bonds, are taxable as personal prop- 
 erty. In other words, that the safes, office furniture, cash on 
 hand and due from other banks, bills discounted, etc., etc., which 
 make up what is called assets, are subject to taxation. 
 
 The case presents the question as to what extent the National 
 banks are subject to taxation by the State and involves the con- 
 struction of the act of Congress creating them. 
 
 It is proper to remark, that, under the theory of defendant's 
 counsel, which is in effect that the property of the bank should be 
 assessed as other property, his estimate of the amount or value 
 upon which tax should be paid is erroneous and would operate 
 most unjustly. The cash on hand, cash items, bills receivable and 
 amounts due from other banks, under his view of the law, should 
 be assessed as moneys and credits ; if that be so, from the amount 
 thereof the honafide debts of the bank, such as the amount due 
 depositors and the circulation, should be deducted. But the bank 
 
SUPEEMB COUET, 1868. 453 
 
 National State Bank of Oskaloosa v. Toung. 
 
 is charged in making the assessment -with all its cash and credits, 
 but no deduction is made for its debts. This is in violation of the 
 rule which is advocated by defendant's counsel. 
 
 Section 41 of the act of Congress, approved June 3d, 1864, 
 authorizing the organization of National banks, provides that, "in 
 lieu of all existing taxes every association shall pay to the Treasurer 
 of the United States " certain duties upoa its circulation, depos- 
 its, and capital stock not invested in United States bonds, and in 
 these words : " That nothing in this act shall be construed to pre- 
 vent all the shares of said association held by any person or body 
 corporate, from being included in the valuation of the personal 
 property of such person or corporation in the assessment of taxes 
 imposed by or under State authority, at the place where such bank 
 is located, and not elsewhere, but not at a greater rate than is 
 assessed upon other moneyed capital in the hands of individual 
 citizens of sucli State." * * * "Provided, also, that nothing in 
 this act shall 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." 
 
 From the payment of what taxes does this act exempt these 
 associations? The language of the act replies in explicit terms, 
 "all existing taxes," that is, all actual assessments for revenue that 
 are denominated taxes. The terms include all State, county or 
 municipal taxes. The power of Congress thus to legislate is not 
 doubted, and we are not aware that it is denied. That such was 
 the intention of Congress is most apparent from the language of 
 the section above quoted, as well as from the context. The shares 
 of the bank, and not estate owned by it, are excepted from the 
 exemption by express words, and the State is permitted to tax such 
 property. The express grant of this power to tax specific property 
 is conclusive evidence of the intention to withhold the power to 
 tax other property. Expressio unius est exclusio alterius. Neither 
 are the taxes from which the banks are exempt such as may be 
 levied upon particular kinds of property or in a particular manner, 
 but all assessments for revenue that may be intended by the general 
 term "taxes," are included within the language of the law. 
 
 We conclude, therefore, that no revenue can be collected by a 
 State, county or municipality from banks organized under this act, 
 except by assessments upon their shares and real estate. This con- 
 clusion we conceive to be consistent with just and equitable taxa- 
 
454 IOWA 
 
 Turner v. The First National Bank of Keokuk at al. 
 
 tion. The shares of the stockholders represent the capital of the 
 institution. To tax the shares and also the property of the bank 
 would be double taxation. 
 
 A and B are equal partners in a mercantile firm, with a capital 
 of $100,000 iuTested in goods. It would be gross injustice to 
 require each partner to pay taxes on $50,000 for his interest in the 
 firm, and to tax the firm on $100,000 for the goods in which the 
 capital is inyested. Now, the interest which the partner has in 
 the firm is precisely the same that the stockholder has in the bank, 
 which is called shares. It would be double taxation and gross 
 injustice to assess taxes on both the shares and the property which 
 those shares represent. 
 
 The defendant insists that the plaintiff did not make a proper 
 application to the supervisors for the correction of the assessment 
 roll, and cannot, therefore, have relief in this action. Without de- 
 termining that such an application was necessary, we find by the 
 eyidence that it was made. 
 
 The cashier of defendant, upon application of the assessor, ren- 
 dered a sworn statement, from which the assessment was made. 
 It is claimed by defendant's counsel that plaintiff is thereby estop- 
 ped to deny the correctness of the assessment and tax ; this by 
 no means follows. It does not appear that the cashier intended 
 to bind plaintiff to pay the tax, or if he so intended, that he had the 
 power so to do. 
 
 The decree of the District Court is 
 
 Affirmed. 
 
 TuBN-ER V. The Fibst National Bank of Keokuk et al. 
 
 (26 Iowa, 562.) 
 
 National hanks : Suspension of — Wifiat are debts against — Parties. 
 
 tTnder section 50 of the act entitled "An act to provide a National currency," etc., 
 the assets in the hands of the receiver of a bank that fails are, when reduced to 
 money, to be ratably divided and appropriated to the payment of all legal 
 liabilities of the association, whether such liabilities are debts, technically 
 so called, or result from the non-feasance or malfeasance of the association 
 
SUPEEME COUET, 1869. 455 
 
 Turner v. The First National Bank of Keokuk et al. 
 
 in respect of its binding obligations and duties — as from its failures while 
 in possession of bonds left by an individual with it on special deposit or for 
 safe-keeping.* 
 In a proceeding for the adjudication of a claim against a National bank that 
 has suspended, the receiver appointed under the National Banking Act may 
 be properly joined as a party defendant. 
 
 * Section 50 of the National Banking Act is substantially repeated in the 
 Revised Statutes, sections 5234 to 5237 inclusive . By section 3 of an act of 
 Congress approved June 30, 1876, it is provided as follows : 
 
 " Sec. 3. That whenever any association shaU have been or shall be placed in 
 the hands of a receiver, as provided in section fifty-two hundred and thirty- 
 four and other sections 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 aU expenses of the receivership, and the redemption of the cii-oulating 
 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 shareholders of such asso- 
 ciation by giving notice thereof for thirty days in a newspaper published in the 
 town, city or county where the business of such association was carried on, or 
 if no newspaper is there published, in the newspaper published nearest thereto, 
 at which meeting the shareholders shall elect an agent, voting by ballot, in 
 person or by proxy, each share of stock entitling the holder to one vote; and 
 when such agent shall have received votes representing at least a majority of 
 the stock in value and number of shares, and when any of the shareholders of 
 the association shall have executed and filed a bond to the satisfaction of the 
 Comptroller of the Currency, conditioned for the payment and discharge 
 in full of any and every claim that may hereafter be proved and allowed 
 against such association 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 transfer and deliver to such agent 
 aU the undivided or uncollected or other assets and property of such association 
 then remaining in the hands or subject to the order or control of said Comp- 
 troller and said receiver, or either of them ; and for this purpose, said Comp- 
 troller and said receiver are hereby severally empowered to execute any 
 deed, assignment, transfer, or other instrument in writing that may be neces- 
 sary and proper ; whereupon the said Comptroller and said receiver shall by 
 virtue of this act be discharged and released from any and all liabilities to 
 such association, and to each and all of the creditors and shareholders thereof; 
 arid such agent is hereby authorized to sell, compromise or compound the debts 
 due to such association upon the order of a competent court of record or of the 
 United States Circuit Court for the district where the business of the association 
 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, distributing such assets and 
 property among such shareholders in proportion to the shares held by each ; 
 and he may, in his own name or.iu the name of such association, sue and be 
 sued, and do all other lawful acts and things necessary to flaally settle and dis- 
 
456 IOWA 
 
 Turner v. The First National Bank of Keokuk et al. 
 
 ACTION to recover the Talue of $1,500, of seven-thirty bonds of 
 the United States, dated July 15, 1865, left by plaintiff with 
 the First National Bank of Keokuk on special deposit, or 
 "for safe-keeping." The bank failed, and the defendant, H. W. 
 Sample, was appointed receiver, by the Comptroller of the Cur- 
 rency, under the "Act to provide a National currency," etc., ap- 
 proved June 3, 1864. The petition alleges the deposit of the bonds; 
 the receipt of the interest on the coupons from the cashier of the 
 bank every six months, up to and including January, 1868; the 
 failure of the bank ; the appointment of Sample as receiver, and 
 his refusal to allow the claim of plaintiff, or to pay it, or any part 
 of it ; that the bonds were received by the bank, according to its 
 custom, and in the ordinary course of business ; that they were 
 either in the bank at the time of its failure, or were fraudulently 
 removed or embezzled by some oflBcer or agent thereof, by the gross 
 negligence and want of care and prudence on the part of the bank; 
 that the claim is unpaid, and there is no just set-off to it. 
 
 An amendment to the petition was filed, alleging that the bank 
 agreed to safely keep said bonds and return them to plaintiff, on 
 demand ; that plaintiff has not received said bonds, or their value ; 
 that he has demanded the 'return of said bonds, of Sample, receiver, 
 since the failure of said bank, and that he refused to deliver the 
 same. 
 
 To this petition and amendment the defendant. Sample, receiver, 
 demurred, because : 1. They do not state facts sufficient to con- 
 stitute a cause of action ; 2. It appears therefrom that the relation 
 of bailor and bailee of the bonds existed between the plaintiff and 
 the bank, and no conversion, except in the alternative, is alleged ; 
 3. There is an improper joinder of causes, tort and contract ; 4. 
 There is an improper joinder of parties, the bank and receiver ; 5. 
 That the plaintiff shows himself a bailor, and not a creditor of the 
 bank ; and the receiver cannot be liable for the wrongful acts of 
 the bank. This demurrer was overruled, and the defendant. Sam- 
 ple, receiver, appeals. 
 
 R. P. Lowe, for appellant. 
 
 Ranhin 8. McCrary, for appellee. 
 
 tribute the assets and property in hia hands . In selecting an agent as herein- 
 before provided, administrators or executors of deceased shareholders may 
 act and sign as the decedent might have done if living, and guardians may 
 so act and sign for their ward or wards." 
 
SUPEEME COURT, 1869. 457 
 
 Turner v. The First National Bank of Keokuk et al. 
 
 CoiE, J. The main point relied upon in argument by the appel- 
 lant's counsel is, that the claim of the plaintiff is not a deit of the 
 bank, under the 50th section of the act of Congress, entitled, " An 
 to provide a National currency, etc.," approved June 3, 1864. The 
 section is as follows : 
 
 " That on becoming satisfied, as specified in this act, that any association has 
 refused to pay its circulating notes, as therein mentioned, and is in default, 
 the Comptroller of the Currency may forthwith appoint a receiver, and require 
 of him such bond and security as he shall deem proper, who, under the direction 
 of the Comptroller, shall take possession of the books, records and assets of 
 every description of such association, collect all debts, dues and claims belonging 
 to such association, and, upon the order of a court of record, of competent 
 jurisdiction, may sell or compromise all bad or doubtful debts, and, on a like 
 order, sell all the real and personal property of such association, on such terms 
 as the court shall direct ; and may, if necessary to pay the debts of such associa- 
 tion, enforce the individual liability of the stockholders, provided for by the 12th 
 Bection of this act ; and such receiver shall pay over all moneys so made to the 
 Treasurer of the United States, subject to the order of the Comptroller of the 
 Currency, and also make report to the Comptroller of the Currency of all his 
 acts and proceedings . The Comptroller shall, thereupon, cause notice to be 
 given, by advertisement in such newspapers as he may direct, for three con- 
 secutive months, calling on all persons who may have claims against such asso- 
 ciation to present the same, and to make legal proof thereof. And, from time 
 to time, the Comptroller, after provision shall have been first made for refund- 
 ing to the United States any such deficiency, in redeeming the notes of such asso- 
 ciation, as is mentioned in this act, shall make a ratable dividend of the money 
 BO paid over to him by such receiver, on all such claims as may have been 
 proved to his satisfaction, or adjusted in a court of competent jurisdiction ; 
 and, from time to time, as the proceeds of the assets of such association shall 
 be paid over to him, he shall make further dividends, as aforesaid, on all 
 claims previously proved or adjusted ; the remainder of such proceeds, if any, 
 shall be paid over to the shareholders of such association, or their legal repre- 
 sentatives, in proportion to the stock by them respectively held. Provided, 
 etc. * * * * " 
 
 We have copied the entire section, it being the best negation which 
 could be made of the position assumed by appellant's counsel. It is 
 argued by counsel that the language " and may, if necessary to pay the 
 debts of such association, enforce the individual liability," etc., 
 limits the liability to "debts," technically so called; or, at least, 
 that the word " debt " necessarily implies the relation of creditor 
 and debtor, and cannot be extended to the obligations resulting 
 from the relation of bailor and bailee. But the error of this 
 strict construction will be seen from the subsequent language of 
 68 
 
458 IOWA 
 
 Turner v. The First National Bank of Keokuk et al. 
 
 the section, that the Comptroller shall give notice to " all persons 
 having claims," etc., and that he " shall make a ratable dividend 
 of the money so paid over to him by such receiver on all such 
 claims as may be proved to his satisfaction or adjusted in a court 
 of competent Jurisdiction," and from time to time shall pay " on 
 all claims previously proved or adjusted," etc. In our opinion 
 it is reasonably clear, from the language of this section and the 
 entire act, that the assets of the association in the hands of the 
 receiver, or when reduced to money and placed subject to the order 
 of the Comptroller, are to be ratably divided and appropriated to 
 the payment of all legal liabilities of the association, whether such 
 liabilities are debts, technically so called, or result from the non- 
 feasance or malfeasance of the association in respect of its binding 
 obligations and duties. * * * * [The court then 
 disposed of some questions of practice.] 
 
 The fourth ground of demurrer is, that the defendant, Sample, 
 receiver, is improperly joined as a party with the bank ; it appear- 
 ing from the petition, that said bank has failed, and its powers 
 and functions suspended by the appointment of a receiver, and 
 made incapable of being sued. 
 
 By the fourth subdivision of section 2876, Code of Iowa, it is 
 made a ground of demurrer, " that there is a defect of parties, plain- 
 tifEs or defendants." But it has been held, under statutes identical 
 with this, that a defendant cannot demur to the complaint because 
 others are improperly, or unnecessarily, made defendants. PincJc- 
 ney v. ■ Wallace, 1 Abbott (N. Y.), 82 ; Voorhies v. Baxter, id. 44. 
 And also, that where there is a defect of parties, by non-joinder, 
 that is, whe^e necessary parties are omitted, the defendant may 
 demur ; but where there is a misjoinder, that is, where persons who ' 
 ought not to be, are made defendants, the defendant with whom 
 they are thus improperly joined, cannot demur, for that reason, 
 and can only take advantage of the misjoinder by motion to strike 
 out the names of those improperly joined. Dean v. English, 18 B. 
 Monr. (Ky.) 136; Gregory v. Oaksmith, 12 How. (N. Y.) 134;' 
 Peabody v. Wash. Co. Mutual Insurance Co., 20 Barb. 339 ; Brown- 
 son V. afford, 8 How. (N. Y.) 389 ; Beckwith etux. v. Dargets, 18, 
 Iowa, 303. 
 
 But without resting our decision solely upon this construction 
 of the statute, let us examine the case upon its merits, in respect of 
 this question. By section 46 of the act aforesaid, it is provided 
 
SUPKEME COTJET, 1869. 459 
 
 Turner v. The First National Bank of Keokuk et al. 
 
 that after the default, or failure of the bank, and notice by the 
 Comptroller to the association, " it shall not be lawful for the asso- 
 ciation suffering the same, to pay out any of its notes, to discount 
 any of its notes or bills, or otherwise prosecute the business of 
 banking, except to receive and safely keep money belonging to it, 
 and to deliver special deposits." * 
 
 From this it is clear that the bank, after its failure, might prop- 
 erly deliver to plaintiff the bonds sued for ; and if they are still in 
 its possession the duty is devolved upon it to deliver the same. If 
 the bonds have come to the possession of the receiver, it would be 
 also very clearly his duty to deliver the same to plaintiff. If they 
 had been converted into money by the bank, and the proceeds 
 placed in its common funds, and in that way passed to the receiver; 
 or by the gross negligence of the bank the bonds were lost, so as to 
 render the bank liable to the plaintiff for their value ; in either 
 alternative of this latter proposition, it seems to us, the receiver is 
 a proper party, as being the active agent or fiduciary, through 
 whom, under the direction of the Comptroller, the affairs of the 
 bank are to be closed and settled. 
 
 Under the peculiar and indefinite language of section 50 of the 
 act aforesaid, it is a question of great doubt, whether the receiver 
 or Comptroller is the proper party to proceedings for the adjudica- 
 tion of claims spoken of in said section. But since the receiver is 
 upon the ground, and within the same jurisdiction as the bank 
 whose assets, etc., he holds, gives bond and security for the faith- 
 ful discharge of his duties, and is made the active agent for the 
 protection of the bank and its creditors, we are, for these and 
 other reasons, inclined to, and do, hold, that the receiver is a 
 proper party in proceedings for the adjudication of claims against 
 the bank. 
 
 Under our Eevision, section 3761, any person may be made a 
 defendant who has, or claims, an interest in the controversy adverse 
 to the plaintiff ; or who is a necessary party to a complete deter- 
 mination or settlement of the question involved in the action." 
 As we have just seen, the receiver is a proper party, as represent- 
 ing an interest adverse to the plaintiff, and since the bank might 
 rightfully and had the legal duty to deliver the bonds to plaintiff 
 if it still held them, the bank is a necessary party to the complete 
 determination of the question involved. We conclude, therefore, 
 
 * The same language is used in Rev. Sts., § 6228.— Rep. 
 
460 IOWA 
 
 Morseman v. Tounkin. 
 
 even if the question of misjoinder could be made by demurrer, 
 that there was no error in overruling it on this ground. 
 
 V. As to the fifth ground of demurrer, that the receiver cannot 
 be made liable to the plaintiff, a bailor, for the ■wrongful or crim- 
 inal acts of the bank, it is only necessary to remark that it is not 
 sought to make the receiver liable, but to make the bank liable, 
 through the receiver. 
 
 The point as to the plaintiff being a bailor, rather than a cred- 
 itor, has been already disposed of. The positions assumed and 
 argued with the characteristic zeal, learning and ability of the 
 counsel for appellant as to the rights of a special depositor ; the 
 retention of the title by him ; that the right or title to such depos- 
 its does not pass to an assignee or receiver ; the necessity for aver- 
 ment of conversion or demand and refusal, etc., may well be con- 
 ceded. In the view we take of the pleadings, these questions do 
 not at all interfere with our duty to order the judgment of the 
 
 District Court to stand 
 
 A^rmed. 
 
 MOESBMAN Y. YOUKKIN. 
 
 (27 Iowa, 350.) 
 
 Taxation of National hanks — Conatmetion of Iowa statute. 
 
 A State statute providing for the taxation of shares in National banks having 
 been declared illegal by the court because the capital instead of the shares 
 of State banks were taxed, the Legislature passed a new statute for taxing 
 shares in National banks, and therein repealed " all acts and parts of acts 
 inconsistent " with its provisions. Held, that the repealing clause amounted 
 to a repeal of the provision taxing the capital of State banks, and since 
 those banks, if any there were, aould be taxed on their shares under the 
 general revenue law of the State, the provision for taxing National banks 
 was in accordance with the act of Congress. 
 
 ACTIONS involving the legality of a tax assessed on National 
 bank shares. There were four cases decided at the same time. 
 
 Edmunds & Ransom, Clark & Haddock, James T. Lane, Stuart 
 £ Armstrong, for plaintiffs. 
 
 Henry O'Connor, John Williams, J. D. Campbell, for defendant. 
 
SUPREME COUET, 1869. 461 
 
 Morseman v. Younkin. 
 
 Wright, J. It was held in Hubbard v. Supervisors of Johnson 
 Co., and the other cases therewith decided, 33 Iowa, 130, by a 
 majority of the court, under the provisions of the 41st section of 
 the act of Congress of June 3, 1864, and the statutes of the State 
 as they then stood, that there could be no taxation of the shares in 
 National banks. Without repeating them, we refer to the facts of 
 the cases there decided, that the poin ts then and now ruled may be 
 the better apprehended and understood. 
 
 In 1868 (February 10, the case above referred to was ruled in 
 July, 1867), Congress passed an act entitled " An act in relation to 
 taxing shares in National banks," containing this provision: " And 
 the Legislature of each State may determine and direct the manner 
 and place of taxing of all the shares of National banks located 
 within said State." 
 
 In April, 1868, the General Assembly of the State passed an act 
 for the taxation of the shares of National banks (Laws of 1868, p. 
 213), which provides: that all the shares of the associations, held 
 by any person or persons, shall be included in the valuation of the 
 personal property owned by them ; but not at a greater rate than 
 is assessed on other moneyed capital in the hands of individuals in 
 this State. 
 
 The second section declares that if Congress should change, alter, 
 or amend the acts providing for a National currency, the assessors 
 in townships, towns and cities, should assess these shares in con- 
 formity with such new legislation, but not at a greater rate than 
 is imposed upon other moneyed capital in the hands of individ- 
 uals in this State. 
 
 The second section declares that if Congress should change, alter, 
 or amend the acts providing for a National currency, the assessors 
 in townships, towns and cities, should assess the shares in con- 
 formity with such new legislation, but not at a greater rate than 
 is imposed upon other moneyed capital, etc. The act of April 3, 
 1866 (and which was construed in the Hubbard case), and . all 
 other acts and parts of acts inconsistent, etc., are repealed. 
 
 There is no difference of opinion upon the proposition that all 
 property should be equally taxed, or as to the meaning and scope 
 of the statute which declares that all property (aside from certain 
 specified articles), real and personal, within the State, is subject to 
 taxation. Rev., § 713. But we held in the previous cases, following 
 the decision of the Federal courts, that taxation of the capital was 
 
462 IOWA 
 
 Moraeman v. Tounkin. 
 
 not the taxation of the shares of these banks. And it was held 
 (under section 1598 of the Kevision), that the tax was to be upon the 
 capital of banks organized within the State, and not upon the 
 shares, and that as a consequence, under the act of Congress the 
 Legislature could not, by the act of 1866 (April 3), tax these 
 shares in National banks. But for this proTision, I am not mis- 
 taken in saying that the taxation would have been sustained. For 
 it is expressly provided that stock or shares in any corporation or 
 company, not required by law to be otherwise taxed, shall be liable 
 to taxation. 
 
 It was held that by section 1598, stock in banking corporations 
 was to be otherwise listed and taxed, to be taxed through the capi- 
 tal, and hence not by the shares, as in other cases. It was also 
 held that it might be competent for the State, in granting a fran- 
 chise, to affix as conditions of the grant, that shares and capital 
 of the company should be subject to taxation, but that this should 
 not be allowed, lest double taxation might ensue, unless this was 
 the clearly expressed intention of the statute. This intention, in 
 our opinion, did not appear, and hence, as the capital was to be 
 taxed, the shares should not be. And yet nothing was clearer than 
 that if there had been no provision for the taxation of the capital 
 of banking associations, thus placing such companies upon a 
 peculiar and distinct ground, the right under the general law to 
 tax the shares would be undeniable, and from the conclusion that 
 the shares in National tanks would have hence been taxable, there 
 would have been no escape. 
 
 Does the act of 1868 then make the matter any better for the 
 taxing power ? It repeals all acts and parts of acts inconsistent 
 with its provisions. The law of 1866 had just been declared in- 
 effectual to accomplish the purpose designed. 
 
 As we have seen, but for section 1598 (being a part of section 11 of 
 the " G-eneral Banking Act '.' of this State) the unquestioned legis- 
 lative intent could have been carried out. We then inquire, does 
 not this obstacle still remain ? It seems to me not. The law of 
 1868 provides for the taxation of the shares of Naljonal banks. 
 
 This is allowed by the 41st section of the act of Congress of June 
 3, 1864, and it is not pretended that there is any thing in the act 
 of February 8, denying or making less manifest or certain this 
 right. Our law (of 1868, p. 313) provides for their taxation like 
 other moneyed capital in the hands of individuals, and hence. 
 
SUPEEME COUET, 1869. 463 
 
 Morseman v. Tounkin. 
 
 under the general law, like shares in other banks and corporations. 
 Section 1598 is inconsistent with these provisions, in conflict with 
 the declared will of the Legislature upon this subject, a will 
 declared after a construction of the prior statute, and designed to 
 remoTe the obstacle pointed out, and, if inconsistent, is declared 
 repealed, and hence, must be so regarded. In view of all the legis- 
 lation, general and special, upon the subject, the policy of the law 
 that all property should bear its just and due proportion of the 
 public burden, it seems to me there can be no fair escape from 
 this conclusion. ' 
 
 This view is strengthened by some other considerations. A grave 
 doubt might arise whether this repeal was intended, if after such 
 repeal there remained no law for the taxation of shares in banks 
 organized under our general law. We have already seen, however, 
 that these can be reached under the General Eevenue Law. Then, 
 again, we know there is not, if there ever was, in the State a bank 
 organized under this law. 
 
 This thought is quite material, as indicating the actual condi- 
 tion of things in the State, and the absence of objection to the 
 legislative comprehension in passing the repealing clause. For it 
 could well be reasoned : " There has never been a bank under this 
 law — or if any, certainly none now — if now or hereafter, then, 
 this section out of the way, the shares therein can be taxed like shares 
 in other corporations. This section is the obstacle in the way of 
 making these shares in National banks meet their just proportions 
 of the public taxes, as just declared by the highest judicial tribu- 
 nal of the State, and hence, by repealing ' all acts and parts of 
 acts inconsistent with this act,' we leave the way clear and unob- 
 structed." If this is not so, then it is difficult to see why they 
 should re-enact the law of 1866, as was done, so far as the first sec- 
 tion was concerned, it being the section making the shares liable to 
 taxation. 
 
 Then, to look at another thought. There was no difficulty under 
 the congressional legislation as to the right of the State to subject 
 this property to taxation. As to the intention and purpose of our 
 own Legislature there can be no doubt. And hence it will be seen, 
 that by the second section of the act under consideration, the as- 
 sessors were given the power to assess these shares, in conformity 
 to any change in congressional legislation. 
 
 What could more clearly show the intention and purpose to tax 
 
464 IOWA 
 
 MoTseman v. Younkin. 
 
 these shares, and to remove the last obstacle, if possible, in the 
 way of such intent ? It has been declared that with section 1598 
 in force, there could be no taxation. This continued, the way was 
 effectually hedged up. To confer this power upon the assessors, 
 and yet leave the law so that there could be no taxation, as the 
 Federal legislation then stood, or to suppose that it was only to have 
 prospective force, is most unreasonabTe. It is our duty to give the 
 law force and effect, if we can. It repeals any thing in the way of 
 or inconsistent with its operation. If this property is to escape 
 taxation, the right ought to rest upon some clear and just ground. 
 
 The Legislature having declared its liability, courts are not jus- 
 tified in indulging in nice distinctions, in defeating this will. The 
 way is, to our mind, clearer, plainer, better sustained by reason and 
 in principle to uphold than to defeat the legislative will, and 
 hence we hold this property liable to taxation. 
 
 Before passing to another point made in this connection, it is 
 proper to say that the case is ruled up on our State legislation, with- 
 out reaching the argument drawn from the recent legislation of 
 Congress, and quoted in the commencement of this opinion (pro- 
 viso to act of Feb. 10, 1868). That statute is certainly not in con- 
 flict with the result here reached. It does not in any way lessen 
 or take from the States the power to tax these shares. And there is, 
 to say the least of it, much plausibility in the proposition that this 
 act grew out of "the adjudication in the State and Federal courts, 
 and the apparent and indeed actual difiSculty in every instance, of 
 so framing the legislation as to carry out the rule of Congress (un- 
 der the proviso of the 41st section of the act of 1864), and reach a 
 large amount of property which was regarded as escaping its just 
 proportion of the public burden. And therefore the act of 1868 
 leaves the States to determine the manner and place of taxing the 
 shares of National banks. 
 
 It is suflBcient for us, however, without getting into this argu- 
 ment or expressing an opinion thereon, to say that the recent act 
 is not in conflict with the power to tax under our law as it now 
 stands. It sustains rather than denies the right. 
 
 [The court then passed upon a question of Constitutional Law, 
 not relating to the subject of this volume.] 
 
 AH the judges concurring, it is ordered that the first and second 
 causes be reversed and the others affirmed. 
 
 Judgments accordingly. 
 
SUPREME COURT, 1870. 465 
 
 First National Bank v. HersMre. 
 
 PiEST Nation'AL Bank v. Heeshiee. 
 
 (31 Iowa, 18.) 
 
 Taxation of Nationalhank sha/res — Seizure of bank property. 
 
 A collector of taxes has no authority to seize the property of a National bank 
 to satisfy a tax assessed against a shareholder.* 
 
 T)BPLEVIN to recover a package of bank bills belonging to 
 XL plaintiff, a National bank, which defendant, the treasurer of 
 Johnson county, had seized to satisfy a tax assessed upon the share- 
 holders of such bank. Plaintiff had judgment and defendant 
 appealed. 
 
 Gaston S Williams and Robertson S Patterson, for appellants. 
 Edmonds & Ransom, for appellees. 
 
 Day, Ch. J. Whether, under the provisions of chapter 153, 
 Laws Twelfth General Assembly, banks organized in this State pur- 
 saant to provisions of acts of Congress, are liable absolutely for the 
 payment of taxes assessed upon the shares of stockholders, or only 
 when it is shown that dividends have been declared in favor of 
 the shareholders, is a question upon which the court, as now 
 advised, is not agreed. And, as its consideration is not necessary 
 to a determination of the case, we waive its consideration for the 
 present. We unite in the opinion that the treasurer was not author- 
 ized to seize the property of the bank for the tax. 
 
 The tax, under the law, must be assessed against the shareholder. 
 Section 756 of the Revision makes it the duty of every person sub- 
 ject to taxation to attend at the ofBce of the treasurer and pay his 
 taxes, and provides that, if he neglects to pay them before the first 
 day of February following the levy of the tax, the treasurer shall 
 make the same by distress and sale of his personal property, and 
 the tax list is made a sufficient warrant for such distress. 
 
 * See National Bank v. Commonwealth, ante, p. 34, and First National Bank 
 V. Douglas Coimty, ante, p. 268, wherein it was held that the property of the 
 bank could be distrained to pay the tax. 
 59 
 
466 IOWA 
 
 Leach v. Hale. 
 
 An assessment against a shareholder, however, does not author- 
 ize the seizure of the property of the bank for its liquidation. If 
 the bank is liable for the payment of the tax, the liability is to be 
 enforced by ordinary process of law. 
 
 For the reason that there was no authority for seizing the prop- 
 erty of the bank, the judgment of the General Term is 
 
 Afflrmed. 
 
 Leach v. Hale, Eeceiver, appellant. 
 
 (31 Iowa, 69.) 
 
 National hanks — Powers of — Bight of, to exchange aeewrities. 
 
 Where a National bank received on deposit United States bonds of one class 
 for the purpose of converting the same into bonds of another class, held, (t) 
 that the bank was not a mere mandatary or bailee acting without compensa- 
 tion, but was liable to the depositor for the value of the bonds on its refusal to 
 deliver them on demand ; (3) that the business of receiving one class of United 
 States bonds, to be converted into another, is within the scope of the powers 
 conferred upon National banks by the act of Congress under which they are 
 organized ;* (3) that where a certificate of deposit is inadmissible as evidence 
 for want of a proper stamp, parol evidence is admissible of the facts it 
 recites. 
 
 THE plaintiff avers in his petition that he deposited in the First 
 National Bank of Keokuk $400 in 7-30 United States bonds, to 
 be converted into 5-30 six per cent United States securities ; that 
 such bonds were at a premium of ten per cent, and worth $440 ; 
 that a demand was made of the receiver of the bank for the return 
 of one of the other class of bonds, which was refused ; and that the 
 conversion of UnitedBtates bonds from one class into another was a 
 part of the legal business of the bank from which it derived profit. 
 A written receipt, executed by the cashier of the bank, was annexed 
 to, and made a part of, this petition. 
 
 * See Van Leuven v. J^irst National Bank (54 N. Y. 671), post, but which waa 
 said in First National Bank v. Ocean National Bank (60 N. T. 278), post, de- 
 cided "no general principle"; Wiley v. First National Bank (47 Vt. 546), post; 
 Weckler v. First National Bank (42 Md. 58), post ; Fowler v. Soully (73 Penn. St. 
 466), posf ,■ First National Bank v. Peatrson, post. 
 
SUPREME COURT, 1870. 467 
 
 Leach v. Hale. 
 
 An amended petition was subsequently filed reciting substantially 
 the same facts, but making no reference to the receipt above men- 
 tioned. 
 
 The answer denies the allegations of the petition, and that the 
 bonds were ever a part of the assets of the bank, or were ever ap- 
 propriated or converted to its use. 
 
 Trial by the court, and Judgment for plaintiff. 
 
 Among the facts found by the court were the following 
 
 1. The First National Bank of Keokuk was an association under 
 the laws of the United States, doing a general banking business at 
 the date the bonds in question were received by it. 
 
 2. That about that time its cashier advertised in a newspaper, 
 published in Keokuk, that it would convert 7-30 United States 
 securities into bonds called 5-30's without charge. 
 
 3. That at that time it was the custom of banks at Keokuk to 
 convert one class of United States bonds into another as a part of 
 their general business. 
 
 4. That plaintiff left with the cashier of the bank 1400 in United 
 States bonds, to be converted into bonds of another class. 
 
 5. That the cashier of the bank executed a receipt for said bonds 
 set out in plaintiff 's petition. 
 
 6. That, while the bank advertised that it would convert United 
 States securities without charge, it was in some form compensated 
 therefor. 
 
 Motion by defendant in arrest of judgment and for a new trial 
 on the following grounds: 1. The petition does not state a cause 
 of action. 3. The facts set out show a tort if any thing, and the 
 cause of action set out in the petition is ex contractu. 3. The de- 
 cision of the court is not sustained by the evidence and is contrary 
 to law. 4. The facts found are not supported by the evidence. 
 Motions overruled, and judgment for plaintiil. Defendant appeals. 
 
 H. P. Lowe, for appellant. • 
 
 W. B. Collins, for appellee. 
 
 Beck, J. We will notice the objections made by defendant's 
 counsel in the order they are discussed in the printed argument. 
 The first point presented for our consideration is this one : The 
 transaction, which is the foundation of the action, amounts in law 
 to a bailment and not to an indebtedness or promise to pay money. 
 
468 IOWA 
 
 Leach v. Hale. 
 
 The petition claims recoTsry as upon an indebtedness or promise to 
 pay money ; judgment, therefore, cannot be rendered thereon. In 
 support of his views defendant's counsel argues that, from the 
 evidence, it appears that plaintiff deposited certain bonds with the 
 cashier of the bank to be exchanged for other bonds, and that this 
 service was to be rendered by the bank without compensation. He 
 concludes that the transaction is a bailment in the nature of a 
 mandate. In considering this question we will look to the findings 
 of the court to determine the nature of the transaction. The 
 question, whether the findings are supported by the evidence, will be 
 hereafter considered in passing upon the objections made to them 
 by defendant. We will also concede that the transaction was 
 within the scope of the bank's business, and that it had power to 
 receive and convert the bonds of plaintiff. This is denied by de- 
 fendant and a question raised thereon, which we will consider in 
 its order. 
 
 The transaction, in the light we are now considering it, amounts 
 to the deposit of certain securities with an undertaking to return 
 those of a different class, and was within the scope of the general 
 business of the bank. The court made no finding as to the fact 
 whether the bank received, in this particular case, compensation, 
 though it is found that generally for such business it was in some 
 form compensated. As to the liability of the bank the transaction 
 is governed by the same rules which would apply in the case of the 
 deposit of money to be repaid in different currency, or the receipt 
 by the institution of commercial paper for collection . Can it be 
 claimed that the deposit of a draft in bank, under a special agree- 
 ment that it shall be collected and the proceeds paid in gold or 
 United States securities, creates a bailment in the nature of a 
 mandate ? "We are unable to see any distinction between a transac- 
 tion of that kind and the one before us. If no agreement was 
 made for the payment of compensation to the bank, or if it was 
 agreed that none should be paid, in neither case is its liability 
 different from the case of deposits of money securities or com- 
 mercial paper for purposes within the limits of its general business. 
 Institutions of this kind, in dealing in such property, are compen- 
 sated for their services by direct benefits to their business. It 
 would startle the financial and commercial world to announce the 
 rule contended for by defendant's counsel, that banks receiving 
 securities from their customers for a purpose within the limits of 
 
SUPREME COUET, 1870. 459 
 
 Leach v. Hale. 
 
 their proper business, eTcn without compensation, are liable only 
 as mandatary ? 
 
 In our opinion the bank's liability on account of the transaction, 
 as it appears from the court's findings, is sufficiently set out in the 
 petition, and judgment was correctly rendered thereon. 
 
 It is next claimed that the transaction in question is not within 
 the range of banking business authorized by the act of Congress 
 under which the institution exists. The act referred to confers 
 upon National banks organized under its provisions authority to 
 exercise " all such incidental powers as shall be necessary to carry 
 on the business of banking by discounting and negotiating promis- 
 sory notes, drafts, bills of exchange and other evidences of debt; 
 by receiving deposits; by buying and selling exchange, coin and 
 bullion; by loaning money upon personal security; by obtaining, 
 issuing and circulating notes according to the provisions of this 
 act." It is argued that the business of receiving from the custom- 
 ers of the bank one class of United States bonds to be converted 
 into another is not within the scope of the powers conferred by 
 this act. We are not informed by the record as to the acts that 
 were necessary to have been done by the bank in order to " convert" 
 bonds of the government from one class to another. It may have 
 been done by forwarding the bonds to be converted to the proper 
 oflBcer of the government, and receiving from him in return their 
 equivalent in a different series; or it may have been accomplished 
 by their sale and the purchase of the kind desired. We think the 
 bank, under the provisions of the act above cited, was clothed with 
 authority to pursue either course in order to "convert" the bonds 
 of its customers. It was authorized to receive deposits. It cannot 
 be doubted that it might have received deposits of United States 
 bonds, and certainly such deposits could have been received under 
 a contract to return bonds of another class in their place. It was 
 empowered to purchase and sell such bonds, and, undoubtedly, it 
 was within the limits of its power to sell plaintiff's bonds when 
 deposited with it and buy others to be returned in their place. We 
 are unable to see why these transactions may not have taken place 
 with the proper officer of the government, the bank delivering to 
 him one class of bonds and receiving in return another. It is the 
 policy of the government to encourage the purchase and sale of its 
 bonds and to facilitate transactions in them, for thereby their 
 value will be enhanced and the credit of the government in a meas- 
 
470 IOWA 
 
 Leach v. Hale. 
 
 ure promoted. It is not probable that Congress intended to impose 
 restrictions upon the National banks, the most numerous class of 
 financial agents in the country, which would operate to prohibit 
 dealing in the securities of the government in a manner usual 
 among bankers and banking institutions. The effect of such legis- 
 lation, it is apparent, would tend to discourage transactions in 
 these securities, and in a measure operate to lessen their value. 
 
 The receipt given by the cashier of the bank, it is claimed, is 
 not sufiBciently stamped and was, therefore, improperly admitted 
 in evidence. The record recites, that when offered in evidence, 
 objection was made to its admission on account of the want of a 
 stamp; that it was received subject to the objection, which was to 
 be afterward passed upon. No further mention is made in regard 
 to the objection, nor is it stated what ruling was made thereon. 
 Neither does it appear that the court based its finding of the fact 
 of the delivery of the bonds to the cashier of the bank upon the 
 receipt. There was other evidence before the court competent to 
 establish the transaction. Parol evidence is admissible for that 
 purpose. The petition does not claim recovery upon the receipt; 
 it is not set up as the foundation of the action, but is referred to 
 as evidence of the fact of the delivery of the bonds and failure to 
 return them by the bank. Admitting that the receipt is not com- 
 petent, the facts it recites are sufficiently established by other evi- 
 dence. Its admission, if it was considered as evidence, was, there- 
 fore, error without prejudice. 
 
 It may be conceded that the contract between the plaintiff and 
 the bank is embodied in the receipt, yet, if it is void, that contract 
 may be proved by parol evidence. McAfferty v. Hale, 24 Iowa, 356 
 Such evidence was properly admitted under the pleadings. 
 
 It is finally objected that the findings of the court are contrary 
 to the evidence. We have given the evidence careful consideration 
 and are of the opinion that the conclusions of the coiirt are well 
 sustained. 
 
 The judgment of the court is 
 
 Affirmed. 
 
SUPEEME COUET, 1871. 471 
 
 Hale V. Walker. 
 
 Hale v. Walkeb, appellant. 
 
 (31 Iowa, 344.) 
 
 NationaZ hanks — Transfer of stock — Liability of transferee. 
 
 A person who appears upon tlie books of a National bank as the legal owner 
 of shares of its stock is, upon the failure of such bank, liable for the debts 
 of the association to the extent of the shares held by him, although he 
 received and holds such shares as collateral security for a loan to a share- 
 holder.* 
 
 ACTION by a receiver of an insolvent National bank against a 
 shareholder to enforce the individual liability of such share- 
 holder for the debts of the association, according to the provision 
 of section 13 of the National Banking Act. 
 
 On the 28th day of December, 1868, the plaintiff, Hale, filed a 
 petition in the Van Buren District Court, in which he alleged his 
 appointment as receiver of the First National Bank of Keokuk, 
 organized under the Currency Act of Congress, of Feb. 25, 1863 ; 
 the refusal of the bank to pay its circulating notes and other liabil- 
 ities ; the absence of available assets to pay over fifty per cent of 
 the liabilities of the bank — the necessity for him as receiver to 
 enforce the individual liability of the stockholders — and that, at 
 the time of the failure of the bank, the defendant, Joel Walker, 
 ■was the transferee of H. K. Love, and owner of fifty shares of stock 
 of $100 each, in said bank, amounting to $5,000, as appears from 
 the stock-books of said bank. The plaintiff asks judgment for 
 $5,000 with interest. 
 
 The following exhibit is annexed to the petition : 
 
 " Copy from the stock-books of the bank. Dr. — Joel Walker, May 24, 
 1866, fifty shares, paid $5,000. Cr.— May 28, 1866, paid up, $5,000." 
 
 On the 15th day of January, 1869, the defendant filed his answer 
 to this petition, in which he denies " that at the time the said 
 banking association closed its doors, and failed to redeem its circu- 
 lation and pay its liabilities, the said Joel Walker became the 
 owner (as the transferee of H. K. Love, or otherwise) of fifty shares 
 of stock of $100 each in said bank, amounting to $5,000 ; and as 
 
 * See Whedock v. Kost, ante, p. 406; Magruder v. Colston (44 Md. 349), post. 
 
472 IOWA 
 
 Hale V. Walker. 
 
 to all the foregoing averments of the petition not herein specific- 
 ally denied, which defendant neither admits nor denies, he calls for 
 strict proof." 
 
 And by way of further answer he shows that on June 21, 1865, 
 this defendant was the owner of the following described United 
 States bonds, yiz. : of bonds known as 10-40 bonds, $3,000, and of 
 7-30 bonds, $3,000 ; that one H. K. Love, being then and there the 
 president of said banking association (and so remaining until on 
 and after February 21, 1868), being desirous of procuring the loan 
 and use of said bonds, either for himself or otherwise, borrowed 
 the same of this defendant, giving defendant as security therefor a 
 pledge of certain shares of stock in said banking association, as 
 will fully appear by the agreement, of date June 21, 1865, of which 
 a copy is hereto attached, marked '''Exhibit A," and made part of 
 this answer. 
 
 That afterward, to wit, on or about May 24, 1866, the said Love 
 (still acting as, and being president of said bank as aforesaid), 
 representing that the aforesaid agreement and pledge of bank stock 
 was not in as reliable and perfect a shape and condition as would 
 be desirable for the interest of defendant, so as to make him the 
 unqualified pledgee of said bank stock, and informing defendant 
 that to make said pledge secure and reliable, its transfer on the 
 books of said bank, as said pledge, would be desirable if not neces- 
 sary, induced defendant to surrender said agreement and pledge as 
 shown by "Exhibit A," and thereupon executed to defendant, 
 instead thereof, a new mortgage or pledge thereof, a copy of which 
 is hereto attached, marked "Exhibit B," and made part hereof. 
 And he shows that in the execution of said agreement it was fully 
 and explicitly understood between said Love and this defendant, 
 that the defendant, under said agreement, continued to hold said 
 stock only as the pledgee or mortgagee thereof, and not otherwise ; 
 that in no intendment was he to be held or construed as a purchaser 
 or owner thereof, or as a shareholder of said banking association ; 
 that in all said matters this defendant acted under and relied upon 
 the representation of the said Love ; that the defendant was ignorant 
 of and unskilled in transactions of this nature, and knowing said 
 Love to be the president of said bank, constant in his attendance 
 thereon, and fully qualified by experience as a banker, trusted im- 
 plicitly to the representation by him then and there made, as to the 
 nature and effect of said written agreement ; and he avers and is 
 
SUPKBMB COUET, 1871. 473 
 
 Hale V. Walker. 
 
 ready to show that if, by any construction or intendment of law, 
 the said instrumeutj or any part of the same, shall seem to hold 
 this defendant to be a purchaser, and not a mortgagee of said stock, 
 then said instrument so set forth, which was then and there writ- 
 ten by the said Love, was either false or fraudulently so written, or 
 so done by mistake, as the whole tenor and purport of said agree- 
 ment fully shows, and therefore, should be corrected and reformed 
 so as to correctly agree with the intention of the defendant and the 
 representations and agreements of said Love, as made at the time 
 and with the evident purport and intention of said instrument 
 taken as a whole. 
 
 The defendant prays that the cause may be transferred to the 
 equity side of the court, that a decree may be entered reforming 
 the contract as set out in Exhibit " B," so that the same may be 
 conformable to the real intent and purpose of the parties, etc. 
 
 The following is Exhibit "A" referred to in the answer: 
 
 " First National Bank of Keokuk, Iowa, No. 46, fifty shares. Be it known 
 that H. K. Love is the proprietor of fifty shares of the capital stock of the 
 First National Bank of Keokuk, on which $100 per share have been paid, and 
 which is transferable only on the books of the association by him or his attor- 
 ney, on surrender of this certificate : 
 
 " Kboktik, June 31, 1865." 
 " H. K. Love, President. 
 
 " Joel Walker has deposited with me $2,000 in TTnited States 10-40 bonds, 
 and $3,000 in United States 7-30 bonds, with semi-annual coupons attached, 
 which I agree to return to him or his order on the 15th day of August, 1867. 
 For the use of said bonds I agree to collect the interest and pay it over to said 
 Walker without charge. As security for the safe return of said bonds, I have 
 placed in the hands of said Walker share No. 46 of the First National Bank of 
 Keokuk, Iowa, calling for fifty shares of the stock of said bank, which is to 
 be returned to me with this certificate when the above United States bonds 
 
 will be returned to him. 
 
 " H. K. LOVB. 
 " Keoktik, Jum 21, 1865." 
 
 The following is exhibit " B," referred to in the answer : 
 
 " This agreement between Joel Walker and H. K. Love, witnesseth : that 
 the said Walker has this day purchased of the said Love fifty shares of the First 
 National Bank of Keokuk, for which he has paid the said Love in United States 
 10-40 bonds $2,000, and 7-30 bonds $3,000 ; the said stock will appear upon 
 the books of said bank and certificate No. 46, in the name of said Walker, for 
 fifty shares, amounting to $5,000. 
 
 " Now, therefore, said H. K. Love hereby agrees to guaranty to said Walker 
 semi-annual dividends upon said bank stock, at the rate of 7-30 per cent per an- 
 60 
 
474 IOWA 
 
 Hale V. Walker. 
 
 num in currency on $3,000, and 5 per cent per annum in specie on $3,000, free 
 from all taxes, said dividends to be due and payable to said Walker on the 15tU 
 of August and 15tli of February eacb year . And in consideration of said guar- 
 anty the said Love is to have and receive all said bank stock has made, or may 
 hereafter make, over and above 7-30 per cent, and 5 per cent per annum, as 
 above specified. And said Walker hereby assigns to said Love all the earn- 
 ings of said bank stock over and above 7-30 per cent and 5 per cent per annum, as 
 aforesaid. And said bank is hereby authorized and directed to pay over the 
 same to said Love or his order. 
 
 " This agreement, unless extended by mutual consent, wUl terminate on the 
 15th day of August, 1867, at which time said Walker is to make over and trans- 
 fer to said Love the certificate No. 46, calling for fifty shares of stock of the 
 First National Bank of Keokuk, and said Love is to return to him, in full pay- 
 ment for the same, $3,000 in United States 10-40 bonds, and $3,000 in United 
 States 7-30 bonds ; whereupon the certificate No. 46, above referred to, will be 
 the property of said Love, and the stock will be transferred upon the books of 
 said bank to him. Witness our hands this 34th day of May, 1866. 
 
 " Joel Walker, 
 '• H. K. Love." 
 
 « * * * Tiig time on the within contract is extended to February 15, 
 1868, at which time the whole $5,000 is to be paid (without notice) in 5-30 
 bonds, and interest at the rate of 7-30 in currency per annum. 
 
 " H. K. Love, 
 
 " August 14, 1867. " Joel Walker." 
 
 The plaintifE demurred to this answer on the ground of want of 
 equity. Demurrer sustained and defendant appeals. 
 
 H. H. Trimble, for appellant. 
 
 R. P. Lowe, for appellee. 
 
 Dat, C. J. In section 13 of the act to provide a National cur- 
 rency, "it is enacted that the capital stock of any association 
 formed under the act shall be deemed personal property, and trans- 
 ferable on the books of the association in such manner as may be 
 prescribed in the by-laws or articles of the association ; and that 
 every person becoming a shareholder by such transfer shall, in pro- 
 portion to his shares, succeed to all the rights and liabilities of the 
 prior holder of such shares ; and that the shareholders of each 
 association formed under the provisions of the act shall be held 
 individually responsible for all contracts, debts, and engagements 
 of such association to the extent of the amount of their stock therein, 
 at the par value thereof, in addition to the amount invested in 
 such shares." 
 
 The petition avers " that, at the time said bank closed its doors 
 
SU.PEEME COUET, 1871. 475 
 
 Hale V. Walker. 
 
 and refused to pay its liabilities, the defendant, Joel Walker, was 
 the transferee of H. K. Lore, and owner of fifty shares of stock of 
 $100 each in said bank, * * as will fully appear from the stock 
 books in said bank." A careful scrutiny of the answer of defend- 
 ant shows that he does not deny the allegation that he is the trans- 
 feree upon the books of the bank of H. K. Love. In one paragraph 
 of the answer he "denies that at the time the said banking associ- 
 ation closed its door and failed to redeem its circulation and pay 
 its liabilities, that the said Joel Walker became the owner (as the 
 transferee of H. K. Love, or otherwise) of fifty shares of stock of 
 $100 each in said bank." The statement in the petition that Joel 
 Walker " was the owner of fifty shares of stock" is the mere legal 
 conclusion of the pleader, from the averment of the fact that he 
 was the transferee of H. K. Love. This conclusion of law, but 
 not the averment of fact, the defendant denies. 
 
 The agreement referred to in the answer as exhibit "B" states 
 "that the said Walker has this daj purchased of the said Love fifty 
 shares of the First Ifational Bank of Keokuk," and stipulates that 
 " the said stock will appear upon the hooks of said hank and certifi- 
 cate No. 46, in the name of said Walker, for fifty shares amounting 
 to $5,000." 
 
 It is quite apparent, from the entire answer, that the fact of 
 transfer is conceded, and that the defendant relies for immunity 
 upon the fact that the transfer was made as security to defendant 
 for a loan to H. K. Love. The question thus presented upon the 
 record, though a new one here, has been the subject of judicial deter- 
 mination in some of the sister States. In the case of Creese et al. v. 
 Babcock et al., 10 Mete. 525, it was held, under a statute contain- 
 ing provisions as to the liability of a shareholder, substantially the 
 same as those of the one under consideration, that the holder of 
 stock at the time of the dissolution of the charter, although he held 
 the shares as collateral security, or as trustee for other persons, was 
 individually responsible for the debt of the corporation. This 
 doctrine was re-afl&rmed in the same court in the case of Grew v. 
 Breed et al., 10 Mete. 569, in which it was held, that those who 
 hold stock as collateral security, and those who hold it in trust, 
 whether the trust does or does not appear on the books of the 
 bank, are liable for the payment and redemption of unpaid bills. 
 
 In Adderly v. Storm, 6 Hill, 624, it was held, that the transferee 
 of shares of stock, as collateral security, was liable for a debt of the 
 
476 IOWA 
 
 Herstire v. The First National Bank. 
 
 corporation contracted after the debt, as security for which the 
 transfer was made, had been paid, and after a power of attorney 
 had been given to make a re-transfer, but before such re-transfer 
 was executed. In Rosevelt v. Broton, UN. Y. 148, the case of 
 Adderly t. Storm was cited and approved, and the liability of the 
 holder of stock as collateral security re-affirmed. 
 
 In the matter of The Umpire Gity BUnh, 18 N. Y. 199, the same 
 doctrine was announced. We have been referred to no adjudication 
 at variance with these cases. 
 
 Counsel for appellant concede their correctness, but claim that 
 they are not applicable to this case. We are unable to distinguish 
 them in principle from the case under consideration. In Orees et 
 dl. V. Babcock et al. a plea and answer strikingly similar to the 
 answer in this case were held to constitute no defense. The doc- 
 trine of these cases will doubtless work a hardship in some instan- 
 ces ; yet this hardship is particular while that of the converse doc- 
 trine would be general. As was said in Adderly v. Storm, "if we 
 depart from the terms of the law, and inquire into the equities 
 which may exist between the stockholder and some third person, it 
 cannot fail to embarrass creditors in seeking a remedy for the 
 wrongs which may be done by the corporation. If creditors must 
 look beyond the legal title they can never know against whom to 
 proceed." 
 
 [The remainder of the opinion disposes of a question of practice.] 
 
 Judgment affirmed. 
 
 Heeshiee v. The Piest Natioital Bank. 
 
 (35 Iowa, 872.) 
 
 Taxation of shares — Payment of tax iy hank. 
 
 TTnder the statute of Iowa a National bank is not liable for the tax assessed 
 against a shareholder unless it have in its possession dividends or property 
 belonging to such shareholder. National Bank v. Commonwealth, ante, p. 
 34, distinguished. 
 
 ACTION by Hershire, treasurer of Johnson county, against the 
 First National Bank of Iowa City to recover about $3,000 
 of taxes, interest and penalty, for the years 1868 and 1869, due 
 
SUPKEME COURT, 1873. ^77 
 
 Herahire v. The First National Bank. 
 
 upon certain shares of the capital stock of said bank, owned by 
 different non-resident persons whose names are given. There 
 was a demurrer to the petition, by the defendant, which was sus- 
 tained by the court. The plaintiff appeals. 
 
 Clark £ Haddock and Robinson S Patterson, for appellant. 
 
 Edmonds S Ransom, for appellee. 
 
 Cole, J. The averments of the petition are, substantially, that 
 the plaintiff Hershire is treasurer of the plaintiff Johnson county, 
 which is a municipal corporation under the laws of Iowa ; that the 
 defendant is a banking corporation duly organized under the acts 
 of Congress to provide a National currency, and doing business in 
 Iowa City, and was so doing business in 1868 and 1869 ; that sun- 
 dry shares of the capital stock, aggregating in value $23,000, were 
 held and owned in those years by divers persons (the name and 
 amount held by each being stated, and most of such persons being 
 non-residents of the State); that the said shares while so held and 
 owned were legally listed and assessed for taxation ; that the taxes, 
 interest and penalty now due thereon amount to $2,000 ; that said 
 persons had neglected or refused to pay the same or any part 
 thereof, and by virtue of the statute in such case made and provi- 
 ded, plaintiffs are entitled to demand and recover the same from 
 the defendant, but the defendant has utterly failed and refused to 
 pay the same or any part thereof. Wherefore plaintiffs ask judg- 
 ment, etc. 
 
 The demurrer by the defendant to this petition was because : 
 1. There is a misjoinder of parties. 2. Neither party can bring 
 the suit, nor is there a cause of action set forth in the petition. 
 3. The exclusive method of collecting taxes is pointed out by stat- 
 ute, and no other can be resorted to. 4. There is no averment in 
 the petition that defendant has any dividends or other property of 
 the taxed shareholders named, or ever had, from which the tax 
 could be paid. 5. There is- no tax claimed to have been levied on 
 defendant, but only a tax against individual shareholders ; and 
 defendant cannot be made to pay it, unless defendant has divi- 
 dends or property of such shareholders, and there is no averment 
 in the petition to that effect. 6. The plaintiffs are not the legal 
 parties in interest, and no debt is shown against the defendant. 
 This demurrer was sustained ; and this ruling is assigned as error. 
 
478 IOWA 
 
 HersMre v. The First National Bank. 
 
 It is only necessary for us to consider the grounds specified in 
 the fourth and fifth divisions of the demurrer. That is to say, if 
 an action at law can be maintained for taxes due, and the plaintiffs 
 are the proper parties to bring such action (and we express no 
 opinion upon either), whether it is necessary in this case to aver 
 that the defendant has dividends or other property of the delin- 
 quent shareholders in its possession or under its control, in order 
 to state a cause of action against the defendants. 
 
 The act of Congress under which the defendant was organized 
 provides : 
 
 " Sec. 40. That the president and cashier of every such association shall 
 cause to be kept a correct list of the names and residences of all the share- 
 holders in the association, and the number of sharep held by each, and such 
 list shall be open to the inspection of the officers authorized to collect taxes 
 under State authority." 
 
 The next section enacts that the tax upon the shares, 
 imposed under the State laws, shall not exceed the rates imposed 
 upon the shares of any of the banks organized under the authority 
 of the State where such association is located. In providing for 
 the taxation of the shares in banking associations, pursuant to the 
 act of Congress, our statute enacts: 
 
 " That it shall be the duty of the principal accounting officer of each of said 
 associations on or before the 1st day of May, 1868, and between the 1st and 
 15th days of January of each year thereafter, to list the shares of the associ- 
 ation, giving the assessor the name of each person owning shares and the 
 amounts owned by each ; and for the purpose of securing the taxes assessed 
 upon said shares, each banking association shall be liable to pay the same as 
 the agent of each of its shareholders, under the provisions of section 725 of 
 the Revision of 1860 ; and it shall be the duty of the association to retain so 
 much of any dividend or dividends belonging to any shareholder as shall be 
 necessary to pay any taxes levied upon his or her shares." Laws of 1868, 
 chap. 153, 3. 
 
 The following is a copy of the Ee vision of 1860: 
 
 " Sec, 735. Any person acting as the agent of another, and having in his 
 possession, or under his control or management, any money, credits, assets or 
 personal property, belonging to such other person, with a view of investing 
 or loaning, or in any other manner using the same for pecuniary profit, shall 
 be required to list the same at the real value, and such agent shall be person- 
 ally liable for the tax on the same, and if he refuse to render the list or 
 swear to the same, the amount of such money, property, notes or credits, may 
 be listed and valued according to the best knowledge and iudgment of the 
 assessor, subject to the provisions of section 35 of this act." 
 
SUPEEMB COURT, 1872. 479 
 
 Hershire v. The First National Bank. 
 
 It will be observed upon the bare reading of our statute, that it 
 does not, like the Kentucky statute, involved and construed in 
 National Bank v. Commonwealth, 9 Wall. 353 {ante, p. 34), make the 
 banking association directly liable for the taxes levied upon the 
 shares. But our statute only makes the banking association liable to 
 pay the taxes on such shares as the agent of the shareholders, the 
 same as other agents are liable under the provisions of section 725 
 for taxes upon property under their control for investing, etc.; and 
 our statute also devolves the further duty, upon the banking asso- 
 ciations, of retaining sufficient of the dividends to pay the taxes. 
 
 Now, since other agents are only liable under the provisions of 
 section 725, for taxes upon money, property, etc., under their con- 
 trol with a view of investing, loaning or otherwise using for pecun- 
 iary profit, it would seem necessarily to follow that the banking 
 association could only be made liable, when it had the money, prop- 
 erty or credits of its shareholders under its control, or when it re- 
 tained or failed to retain dividends. In other words, the liability 
 of the bank for the tax of its shareholders will arise, when the 
 liability of an agent for the tax of his principal will arise ; and the 
 liability of neither can arise except upon the fact that there is 
 money, property or credits under the control of the bank or agent. 
 Hence this fact must be averred in order to state a cause of ac- 
 tion. 
 
 The shares in the capital stock of the banking association are the 
 property, and under the control of the shareholders. They are not 
 under the control or management of the banking association in 
 any legitimate sense. Even if it be granted that the rules or by- 
 laws of every banking association require, that in order to con- 
 stitute a valid and complete transfer of such shares the same must 
 be entered upon the stock-book of the association, yet this could 
 not limit or restain the absolute power of sale and alienation by 
 the shareholder himself, and doubtless, any refusal to enter such 
 transfer upon the stock-book might be overruled, and corrected 
 by mandamus or other proper remedy. Of course, we are not here 
 questioning or discussing the right of the banking association to 
 retain the dividend for the purpose of paying the taxes, or of pro- 
 viding by rule or by-law, properly made and recorded, for the 
 liability of the shares themselves for any indebtedness of the share- 
 holder to the bank or the like, so that any transfer of such shares 
 could not affect the right of the bank as against a purchaser hav- 
 
480 IOWA 
 
 First National Bank v. Haire. 
 
 ing notice of such by-law. All that we here intend to say is, that 
 the shareholder himself in legal contemplation owns, controls, and 
 manages his own shares, nothing different in fact being shown. 
 And hence, the banking association is not liable for the tax due 
 from shareholders, under our statute, simply because they are 
 holders of shares in the capital stock of such banking association. 
 Other averment and showing must be made that the shares are in 
 fact under the control or management of the association, before it 
 can be made liable. 
 
 If there have been dividends, then it is made expressly the duty 
 of the bank to retain them, or sufficient of them, to pay the taxes. 
 And if it should appear that the bank had made no dividends, but 
 might have done so, and instead thereof, placed its earnings and 
 profits to its assets as surplus, such surplus might posssibly be held 
 to be money, credits, assets or personal property belonging to the 
 shareholders and under the control of the banks, and hence make 
 it liable to that extent for the taxes due from its shareholders. In 
 brief, our view of the statute is, that it effectuates a statutory 
 garnishment of the bank, to secure the payment of the taxes due 
 from its shareholders. To make it liable it must be shown that the 
 bank now has or has had dividends or other money or property 
 belonging to the delinquent shareholder. Whereas, the Kentucky 
 statute makes the bank liable absolutely for the taxes upon shares. 
 If that is better than ours, it is for the Legislature, and not for 
 us, to enact it here. Affirmed. 
 
 First National Bakk v. Haieb. 
 
 (36 Iowa, 443.) 
 
 When National hank may take mortgage on real estate. 
 
 A National bank loaned money upon a note made by one member of a firm to 
 another, and indorsed by the latter to the bank. The maker, when the note 
 was made, gave the indorser a bond and mortgage on real estate to secure 
 him against loss, and it was agreed between the parties and the bank that in 
 case of default the security should inure to the bank. Seld, that the bond 
 and mortgage were not within the provision of the National Banking Act 
 
SUPREME OOUET, 1873. 481 
 
 First National Bank y. Haire. 
 
 forbidding National banks purchasing real estate, and tliat they were legal 
 and binding and could be enforced by the bank.* 
 
 ACTION to foreclose a mortgage. The opinion states the 
 case. 
 
 Polh, HuVbell & Ooode and Oalusha Parsons, for appellants. 
 W. H. Johnson pro se. Buncombe d Springer, for appellee. 
 
 Cole, J. Under the issues made by the pleadings as amended, 
 the following facts are proved: In 1856 John Haire began a general 
 mercantile business in Ft. Dodge, with the funds and in the name 
 of his wife, Mary M. Haire, he acting as her agent; and continued 
 it till November 1st, 1866, when a partnership was formed 
 between Mary M. Haire and John H. Taafe, under the name of 
 Haire & Co., by whom the business was continued, John Haire 
 acting in the new firm business, for and on behalf of his wife. 
 By the terms of partnership, each was to furnish $4,000 capital. 
 Taafe furnished his in cash at once ; but Mrs. Haire then only 
 furnished the stock of goods on hand, worth, as agreed, $1,530. 
 While Mrs. Haire was doing business alone she acquired the title 
 to lots 4 and 5, in block 23 of Ft. Dodge, and upon the former she 
 had erected a storehouse and residence used as a homestead. 
 
 On the 25th of January, 1869, the firm of Haire & Co. was 
 largely indebted, but was in good credit and was supposed to be 
 solvent. The firm desired to borrow of plaintifE $5,000, which 
 plaintiff was unwilling to loan, on the bare credit of the firm. It 
 was then agreed between all the parties, that since Mrs. Haire had 
 not paid up all her capital stock to the firm, the firm of Haire & 
 Co. should execute two notes for $3,500 each, payable to the order 
 of John H. Taafe at the plaintiff's bank, sixty days after date ; 
 that Taafe should indorse the same to plaintiff ; and further, that 
 the said Mary M. and John Haire should execute a bond in the 
 sum of $10,000 to Taafe to secure him on account of such indorse- 
 ments, and the renewals thereof for one year, and should also exe- 
 cute to Taafe a mortgage upon the said two lots to secure the per- 
 formance of the conditions of said bond, and with the distinct un- 
 derstanding that in case said parties failed to pay the notes, this 
 
 * See Kansas VaUey National Bank v. Bowell, ante, p. 264, and oases referred 
 to in note. 
 61 
 
482 IOWA 
 
 First National Bank v. Haire. 
 
 security should inure to the benefit of the plaintiff. The papers 
 were all duly executed accordingly, and the plaintifE discounted 
 the notes and placed the proceeds to the credit of the firm on the 
 books of the bank with which the firm had theretofore been doing 
 business. The proceeds were used in paying the debts of the firm, 
 $1,016 of which was to the bank on a note then due, and a part of 
 the balance was used in paying debts to merchants, then in the 
 bank for collection. 
 
 The notes were afterward renewed in April and in September, 
 but the renewals were made in the name of Mary M. Haire, and in- 
 dorsed by Haire & Co., and by Taafe ; no part of either has ever 
 been paid. A power of attorney of same date as the bond was exe- 
 cuted by Taafe to E. G. Morgan, who was a cashier in the bank, 
 authorizing him to assign the bond and mortgage ; and the bond 
 was also indorsed, in blank, by J. H. Taafe. The bond and 
 mortgage came to the possession of the plaintifE about the time of 
 the first renewal, but the assignment, by the attorney in fact, was 
 not written out or signed till January 6, 1870. 
 
 In October, 1869, a difference arose between the members of the 
 firm of Haire & Co., and each commenced a suit against the other 
 to close up and settle the partnership ; these suits were consoli- 
 dated and a receiver of partnership effects was appointed and had 
 made considerable progress in the settlement of the affairs, when, 
 and on the 31st day of February, 1870, a petition in bankruptcy 
 was filed in the TJ. S. District Court for Iowa, by creditors against 
 the firm of Haire & Co. The firm and Taafe were adjudged bank- 
 rupts ; but, on demurrer, the proceeding as to Mrs. Haire was dis- 
 missed on the ground that she was a married woman. The effects 
 of the firm and of Taafe were transferred to assignee by deed of date 
 June 8, 1870. 
 
 Prior to bringing this action, the plaintiff commenced a like 
 action in the Circuit Court ; the defendants demurred to the peti- 
 tion ; the demurrer was argued, and pending its consideration, the 
 plaintiff entered a dismissal of the action in the clerk's oflSce ; no 
 further proceedings have ever been had in it, and both parties have 
 treated it as dismissed. 
 
 [The court here decided some questions of practice.] 
 
 III. As to the right of the plaintiff, upon general equity princi- 
 ples, to the lenefit of the bond and mortgage executed iy Haire and 
 husband to Taafe. It will be remembered that the execution of 
 
SUPEBME COUET, 1873. 483 
 
 First National Bank v. Haire. 
 
 this bond and mortgage by Mrs. Haire and her husband, to Taaf e, 
 as the indorser of the notes, was the condition upon which the 
 plaintiff would loan the money, or discount the notes ; and the 
 bond and mortgage were executed for the express purpose of in- 
 creasing the security by enhancing the value of Taafe's indorse- 
 ment. Upon the faith of this enhanced value, Mrs. Haire, for the 
 benefit of herself individually and of the firm of which she was a 
 member, obtained the loan of the plaintiff. To allow her now to 
 set up matters between herself and Taafe, to defeat the mortgage 
 and the purpose of its execution, would be violative of the plainest 
 principles of equity. The facts create an equitable estoppel in 
 behalf of plaintiff as against Mrs. Haire. 
 
 IV. As to the effect of the limitation of the plaintiff's powers, by 
 the act of Congress creating National lanhs. By that act it is pro- 
 vided in section 8, that such banks shall have power to loan money 
 on personal security. Section 38 provides as follows : " And be it 
 further enacted that it shall be lawful for any such, association to 
 purchase, hold and convey real estate, as follows : First. Such as 
 shall be necessary for its immediate accommodation in the trans- 
 action of its business. Second. Such as shall be mortgaged to it in 
 good faith by way of security for debts previously contracted. 
 Third. Such as shall be conveyed to it in satisfaction of debts pre- 
 viously contracted in the course of its dealings. Fourth. Such as 
 it shall purchase on sales under judgments, decrees or mortgages 
 held by such association, or shall purchase to secure debts due to 
 said association. Such association shall not purchase or hold real 
 estate in any other case or for any other purpose than as specified 
 in this section, nor shall it hold the possession of any real estate 
 under mortgage, or hold the title and possession of any real estate 
 purchased to secure any debts due to it, for a longer period than 
 five years." 
 
 This is the whole of the section and all of the law having any 
 bearing upon the question ; the italics are those of the appellant's 
 counsel, and serve to call attention to the particular language upon 
 which their claims are grounded. It is claimed by the defendants, 
 Mary M. Haire and her husband, John Haire, that the mortgage 
 was executed to secure a debt contracted contemporaneously with 
 its execution, and if it was intended to inure to the benefit of the 
 bank, it was void by force of the section of the act of Congress above 
 quoted, and hence cannot be foreclosed in favor of the plaintiff. 
 
484 IOWA 
 
 First National Bank v. Haire. 
 
 We would not construe this, or any other statute, strictly and 
 by its Tery letter only ; but would look to its object and purpose, 
 and give to its language such just and fair interpretation as would 
 most completely effectuate that purpose.. Not forgetting this, let 
 us look first at its terms. It does not prohibit the mortgage of 
 real property to another to be by that other held as security for a 
 contemporaneous loan made by the bank ; it says in effect that the 
 bank may hold such real estate as shall be mortgaged to it in good 
 faith for debts previously contracted, and that such association 
 (bank) shall not hold real estate for any other purpose than as 
 specified. Now, it will be noticed that the real estate in contro- 
 versy was not mortgaged to the plaintiff and that the plaintiff does 
 not now hold it. Hence, this case is not within the letter of the 
 statute. 
 
 But it is claimed that the effect of the transaction, as claimed by 
 plaintiff and as proved, is the same as a mortgage to it, and there- 
 fore, it is within the spirit or purpose of the law. When prudent 
 officers of a bank are asked to make a loan, they look inter alia to 
 the ability of the borrower to pay as evidenced by his property, 
 real and personal. If he has not sufficient property, they decline 
 the loan ; but if some friend of his shall convey to him in fee 
 sufficient real estate, the same officers might make the loan. The 
 loan, so made, would not be within the act, although the officers, 
 in good faith, relied upon such real estate by way of security for 
 the repayment of the loan. And, if an indorser was offered who 
 was thought insufficient, but when certain real estate was conveyed 
 to him, he was regarded as sufficient, the rule would be the same. 
 And, if, instead of being conveyed absolutely, it was simply mort- 
 gaged to the indorser, and thereby he was thought to be sufficient 
 security, the rule would not be different. In either case the reli- 
 ance would be upon the real estate and the ability to pay by reason 
 of it. Neither would be within the prohibition of the act of Con- 
 gress. Nor would it alter the case, if the borrower or indorser 
 should say to the officers, if I fail to pay at maturity, there is the real 
 estate and you may subject .it to the payment of the debt. This 
 they could do without such declaration. In other words, 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 
 or directly for its use, the case is not within the prohibition of the 
 
SUPKEME COURT, 1873. 485 
 
 First National Bank v. Haire. 
 
 statute. The fact that the title or security may inure indirectly 
 to the security and benefit of the bank will not yitiate the transac- 
 tion. Some of the cases upon quite analogous statutes go much 
 further than this. Silver Lake Bank v. North, Johns. Oh. 370. 
 
 There is another view of the entire transaction which leads to 
 the same conclusion. It is this: If we look to the transaction in 
 view of its ultimate effects only, then we would find that the mort- 
 gage becomes a security to the bank and that the money was wholly 
 applied to debts of the mortgagor previously contracted. So that, 
 upon its face, the transaction is not inhibited by the statute, nor 
 does it effectuate results contrary to either its letter or spirit. The 
 manifest purpose of the inhibition was to prevent such associations 
 from acquiring or holding the title to real estate, except so far as 
 necessary in order to accomplish the legitimate objects for which 
 they were created. 
 
 V. A point is made, but not confidently pressed, that the evi- 
 dence shows Mrs. Haire to have executed the mortgage under 
 duress of her husband. She does not so directly testify; and the 
 testimony, on that point, aside from hers, is entirely against such 
 a theory. 
 
 Some effort is also made to show that the notes sued upon, or now 
 held by the bank, are different from the notes described in the bond, 
 and hence, a foreclosure cannot be had. But there is no dispute 
 that the notes were given in renewal of those described in the bond, 
 and that the original debt secured by the mortgage is evidenced by 
 them. This is sufficient. 
 
 VI. On the part of the assignee in bankruptcy, it is urged, that 
 since the assignment of the bond and mortgage was made within 
 four months prior to the bankruptcy proceedings, and after the 
 plaintiff had actual knowledge, as it is claimed, of acts of bank- 
 ruptcy, no rights could be acquired thereby. But, as we have seen, 
 the rights of this plaintiff inhere in, and arise out of the orig- 
 inal transaction and relate to it. So far as its real equities are 
 concerned, the date of the assignment by the attorney in fact of 
 the mortgagee is quite immaterial. No question is made by the 
 assignee or other party respecting the rightful jurisdiction of the 
 District Court of the State over the whole matter. 
 
 We have given to the case a careful examination and find our 
 views result in entire accord with those of the learned district judge 
 who tried the case in the court below. Inasmuch as the evidence 
 
486 IOWA 
 
 SpafFord v. The First National Bank of Tama City. 
 
 tends to show a homestead right in a part of the mortgaged prop- 
 erty, it will be ordered that the homestead shall not be sold, except 
 to satisfy any deficiency remaining after the sale of the other 
 property liable to either a general or special execution in this 
 case. 
 
 Affirmed. 
 
 Spaffoed t. The Fiest National Bank of Tama City. 
 
 (37 Iowa, 181.) 
 
 National banks — Bight to take chattel mortgage. 
 
 A National bank has a right to take a chattel mortgage for the purpose of 
 securing a previously contracted debt, and to enforce the same. 
 
 rpHB plaintiff avers that Warren was owner of a private bank, 
 _l called the Tama County Bank, with which the plaintifE did 
 buiness for a year or more, prior to September 30, 1871 ; that loans 
 had been made to and overdrafts allowed him at usurious rates, and 
 thereby, at said date, he owed said bank $7,763.05; that $5,000 was 
 due by note and the balance on account ; that at said date the First 
 National Bank of Tama city, a corporation under the laws of Con- 
 gress, with a capital of $50,000, and in which Warren was cashier 
 and principal stockholder, was organized and commenced business; 
 that on said date, the business of the said Tama County Bank was 
 transferred to the National bank, and, also, by agreement between 
 plaintifE and Warren, cashier, the said claim, including usury, was 
 transferred to said National bank, and plaintiff executed to said 
 National bank two notes for the 15,000 note, one for $3,000 and the 
 other for $3,000, and at the same time, also, executed a chattel 
 mortgage to said bank, on the stock of goods in controversy, to 
 secure said $3,000 note ; that the balance of said claim was simply 
 transferred from the books of one bank to the books of the other ; 
 that plaintiff afterward continued to do business with the National 
 bank, up to the 17th day of February, 1873; and that said National 
 bank, by agreement with the plaintiff, and contrary to the law of its 
 organization, also received and charged usurious interest on loans 
 
SUPKEME COUET, 1873. 487 
 
 Spafford v. The Firet National Bank of Tanaa City. 
 
 to, and on drafts by, plaintifE up to said last date, when on settle- 
 ment and by including all said usury, it was found that the plain- 
 tifE owed said National bank $9, 000, and for which plaintifE exe- 
 cuted his five seyeral notes, and also executed a chattel mortgage 
 on the stock of goods in controversy, to secure them; that not 
 more than $50 of said sum was due defendant, after excluding 
 usury, which sum plaintifE had ofEered in writing to pay, and it was 
 refused; that defendant, the bank, had seized the stock of goods, 
 and was about to seU them under the mortgage. PlaintifE asked an 
 injunction against the sale of the goods; that the mortgage be de- 
 clared null and void, and for an accounting, etc. A temporary 
 injunction was allowed. 
 
 The defendants for answer, deny in toto the usury, transfer of the 
 business of one bank to the other, the transfer of plaintifE's ac- 
 , count as stated, and admitted, substantially, all the other aver- 
 ments of the petition ; and also averred that the National bank 
 loaned to plaintifE, on the date named, September 30, 1871, the 
 $5,000 evidenced by the two notes, and the $3,763.05, stated as being 
 in a book account. 
 
 On these pleadings, the plaintifE moved for judgment, as prayed 
 for in the petition, because it appeared from the pleadings that the 
 chattel mortgage was taken in violation of the act of Congress 
 under which the defendant, the National bank, was organized. 
 This motion was overruled ; and the plaintiff appeals. 
 
 G. R. Struble and Applegate d Kinne, for appellant. 
 
 Stivers & Safely and Harmon S Mills, for appellees. 
 
 Cole, J. The only ground assigned in the motion is that the 
 mortgage was taken in violation of the law of Congress entitled 
 " An act to provide a National currency," etc. We can properly 
 only consider and determine the questions made to and passed upon 
 by the District Court. Latterett v. Coolc, 1 Iowa, 1, and cases cited. 
 Whether such a motion as was made in this case can properly, un- 
 der Revision, section 3138, be made and entertained at the stage 
 of the case when it was done and before a trial, we do not decide ; 
 but conceding it properly made, we dispose of the question upon 
 its merits. 
 
 From the pleadings it is apparent that the indebtedness secured 
 by the mortgage was contracted to the National bank on and after 
 
488 KANSAS 
 
 Elder T. First Kational Bank ol Ottawa. 
 
 September 30, 1871, and prior to the mortgage, February 17, 1873. 
 The fact that a part of the debt, the note for $3,000, was secured 
 by a chattel mortgage contemporaneous with its creation to the 
 bank, can have no hearing here, since that security has been can- 
 celed and surrendered. If its invalidity be granted, such invalidity 
 would not follow the debt, which was in no manner tainted by it, 
 into the new security subsequently acquired. 
 
 Conceding, as we do, that the National bank defendant, " being 
 the mere creature of the law, possesses only those properties which 
 the charter of its creation confers upon it " {Dartmouth College v. 
 Woodward, 4 Wheat. 518), and conceding as we may (but without 
 deciding it), that the second subdivision of section 28 of the 
 National Bank Act, to wit: " Second, such as shall be mort- 
 gaged to it in good faith by way of security for debts previously 
 contracted," relates only to real estate ; yet there being no express 
 prohibition we hold the mortgage valid, and that the authority in 
 the bank to take, hold and enforce it, for a previously contracted 
 debt, exists under the implied power to protect itself from loss, 
 save its .property and security from sacrifice, and successfully to 
 execute the purpose of its creation, "We thus hold, both upon 
 principle and authority, as we think; and this, too, without calling 
 in aid of the same conclusion, the express grant to such corpora- 
 tions of the same right as natural persons " to make contracts, 
 sue and be sued," contained in section 8 of the act. The First 
 National Bank t. Haire, 36 Iowa, 443 {ante, p. 480). 
 
 Affirmed. 
 
 Elder v. Fikst NAxioisrAL Bank op Ottawa. 
 
 (12 Kansas, 238.) 
 
 Loam in excess of one-tenth of capital. 
 
 A National bank will not be enjoined from transferring to an innocent third 
 person securities taken to secure a loan, ou the ground that such loan was 
 in excess of one-tenth of its capital stock.* 
 
 * The same point was ruled in Shoemaker v. National Mechanics' Bank, 31 
 Md. 396, but as it is well settled that a loan is not void because in excess of 
 one- tenth of its capital stock it is not necessary to include that case in this 
 collection. 
 
SUPEEME COURT, 1873. 489 
 
 Elder v. First National Bank of Ottawa. 
 T)ETITION for an injunction. The opinion states the case. 
 
 J. W. Deford, for plaintiff in error. 
 A. W. Benson, contra. 
 
 Brewer, J. Plaintiffs in error seek by this proceeding to have 
 reversed an order of the district judge dissolving a temporary 
 injunction. The facts, as disclosed in the petition (and this waa 
 all the evidence on the hearing) are briefly these: On the 20th of 
 April, 18'?'2, the First National Bank of Ottawa loaned to the plain- 
 tiffs $14,954.08, which was an amount exceeding one-tenth of its 
 capital stock, of which amount $10,000 and interest was secured 
 by a mortgage on real estate. The notes given for the $4,954.08 
 were transferred to the National Bank of Lawrence, and by it, 
 after maturity, placed in judgment. The notes secured by mort- 
 gage were not due when this action was commenced. It was 
 alleged that this mortgage and securities were taken in violation of 
 the National Banking Act under which the corporations defend- 
 ant were organized, and that the Ottawa Bank threatened to trans- 
 fer these notes and mortgage for value to some innocent purchaser 
 before their maturity, and thus prevent the plaintiffs from avail- 
 ing themselves of their legal defense to them. The prayer was, 
 that the Ottawa Bank might be temporarily restrained from trans- 
 ferring the notes and mortgage, and that upon a final hearing these 
 instruments be decreed to be void, and ordered canceled. It is 
 unnecessary for us to determine whether these securities are valid 
 or not, for conceding that the whole transaction was one forbidden 
 by the Banking Act, and that the notes and mortgage were void, 
 and could not be enforced, still we think the petition discloses no 
 cause of action, no ground for relief. The cardinal principle of 
 equity, that which underlies its whole jurisprudence, is this, that 
 he who seeks equity must do equity. To grant the plaintiffs the 
 relief they ask would be in plainest disregard of this principle. 
 They admit borrowing from the bank over fourteen thousand dol- 
 lars of its money. They have never paid it back, but still hold it 
 all. With this money of another's in their pocket they ask a court 
 of equity to permit them to keep it. Grant that the bank was 
 guilty of an infraction of the law in making the loan, and that by 
 reason thereof it can never enforce payment in the courts ; still, 
 62 
 
490 KANSAS 
 
 Ornn v. Merchants' National Bank. 
 
 the wrong of the bank does not give to the plaintiff any moral 
 right to appropriate the money of another. It is not enough for 
 the plaintiff in an equity suit to show that the defendant has done 
 wrong; he must also make it appear that he has done right. Many 
 words could not make this plainer, and until they can make it 
 apparent that it is according to equity and good conscience to bor- 
 row money and not repay it, the plaintiffs need expect no relief in 
 an action like this. Mott t. Trust Co., 19 Barb. 568. The case 
 in many features resembles that of a usurious loan, and in such 
 ease it is well settled that the borrower must tender the amount 
 borrowed before he can ask for the cancellation of the securities. 
 1 Story's Eq. Juris., § 301. The judgment will be 
 
 Affirmed. 
 
 Obnn v. Merchants' National Bank. 
 
 as Kansas, 34,1.) 
 
 Mortgage of real estate to National tank. 
 
 A National bank took a mortgage on real estate to secure the payment of 
 money previously loaned. There was a prior lien on the property which 
 the mortgagor agreed to discharge, but he being unable to do so, the bank 
 at his request and in order to protect its own lien advanced the money and 
 took another bond and mortgage to secure such advance. Held, that such 
 second bond and mortgage were valid.* 
 
 ACTION to foreclose a mortgage given by the defendant Ornn 
 to the plaintiff, a National bank. The court found the fol- 
 lowing facts : 
 
 " 1st. That at the time of the execution of the note and mort- 
 gage stated in this case, the defendant, Lewis Ornn, owed the 
 plaintiff about $4,000 ; that $2,500 of this sum was secured by a 
 mortgage upon his mill at Cherokee, Crawford county, and the 
 remaining $1,500 was secured by a deed conveying to the plaintiff 
 certain property in the city of Chicago, Illinois, both of which 
 last-mentioned securities were taken to secure indebtedness exist- 
 ing against Ornn prior to their being taken by plaintiff. 
 
 *See Kansas Valley National Bank v. BoweU, ante, p. 364, and case referred 
 to in note. 
 
SUPREME OOUET, 1876. 491 
 
 Ornn v. Merchants' National Bank. 
 
 "2d. That this Chicago property was originally owned by one 
 Walker, who sold it to one Watson, who sold it to defendant Lewis 
 Ornn. The property was valued at about $4,000, and Watson exe- 
 cuted to Walker a deed of trust for $2,000 of the purchase-money. 
 This deed of trust was an existing lien on the property at the time 
 it was conveyed by Watson to Lewis Ornn, and at the time he con- 
 veyed it to plaintiff, and which said existing lien Ornn agreed to 
 pay off when due, and protect the second lien held by plaintiff of 
 $1,500. 
 
 " 3d. That after the Chicago property was conveyed to the plain- 
 tiff, $500 of the indebtedness upon said deed of trust became due 
 and payable, and the plaintiff, upon the request of Lewis Ornn, and 
 in order to protect its lien of $1,500 from being lost, paid it ; and 
 the note and mortgage in suit here were given for that $500, but 
 were given before said payment was made ; and that the plaintiff, 
 after taking this note and mortgage, sent drafts to Chicago to 
 make payment of said $500. 
 
 " 4th. That the property described in the mortgage in suit here, at 
 the time of the making of the note and mortgage, was the home- 
 stead of the defendants, Lewis Ornn and his wife, Abbie B. Ornn. 
 
 " 5th. That the plaintiff is a National bank. 
 
 " And as a conclusion of law, the court finds that this mortgage 
 is valid under the N"ational Banking Law." 
 
 McOomas S McKeigJian, for plain tiifs in error. 
 
 VALESTTiifE, J. [After deciding a question of practice.] The 
 plaintiffs in error also claim that the mortgage now sued on is void. 
 They claim that it is void for the reason that it is a mortgage upon 
 real estate given to secure a debt concurrently created. The facts 
 affecting this question are substantially as follows : The bank is a 
 National bank. Lewis Ornn owed it a large sum of money. To 
 partially secure the payment thereof he gave a mortgage to the 
 bank on some property owned by him in Chicago, Illinois. There 
 was a prior lien of $2,000 on said Chicago property which Lewis 
 Ornn agreed to pay. Five hundred dollars of the same afterward 
 became due, and the bank, in order to save and protect its own lien 
 on said Chicago property, and at the request of said Lewis Ornn, 
 paid said sum of $500, and then took the note and mortgage now 
 sued on for that amount on property situated in Crawford county. 
 
492 KENTUCKY 
 
 Graves v. The. Lebanon National Bank. 
 
 Kansas. We think the mortgage is Talid. The taking of the mort- 
 gage under such circumstances was not a violation of the National 
 Banking Law. We think the bank had a right to get all the secu- 
 rity it could for money which it necessarily had to pay out. And 
 therefore we do not think that the mortgage is Toid. 
 
 The judgment of the court below is affirmed. 
 
 All the justices concurring. 
 
 Graves, appellant, v. The Lebanost Natioital Baitk. 
 
 (10 Bush, 23.) 
 
 Bank — Sureties on official bond of cashier released by negligence of direaors — 
 Presumption as to date of instrument — Acceptance of bond. 
 
 Defendants became sureties on the official bond of a bank cashier, being in- 
 duced BO to do by a statement published by the directors, according to law, 
 whereby the affairs of the bank appeared to be well managed. The cashier 
 of the bank was a defaulter when the statement was published, of which 
 fact the directors, by the use of slight care, might have learned. In an 
 action on the bond for subsequent embezzlements, held, that the sureties 
 were not liable ; they had a" right to believe that, before publishing the 
 statement, the directors had used reasonable diligence in ascertaining the 
 condition of the bank, and, being misled by the statement, were not bound. 
 
 A bond was dated the day of 1869. Meld, that the legal presump- 
 tion was that it did not become binding on the obligors until the last day of 
 that year. 
 
 It is not essential that National banks shall signify their acceptance of the 
 official bonds of their officers in writing.* 
 
 ACTION against the sureties on an official bond. The opinion 
 states the case. 
 
 Roundtree S Rodman, for appellants. 
 
 W. J. Lisle and W. B. Harrison, for appellees. 
 
 Lindsay, J. The judgment now before this court for revision 
 
 ''' As to the bonds of officers of National banks and the liability of sureties 
 thereon, see note to Tapley v. Martin, post. 
 
COUET OP APPEALS, 1873. 493 
 
 Graves v. The Lebanon National Bank. 
 
 is that rendered in the cross-action of the National Bank of Leba- 
 non Y. U. A. Graves, D. L. Graves, and R. G. Harris, sureties for 
 Mitchell, the defaulting cashier. 
 
 Although the bond sued on was executed to the president and 
 directors of the bank, it is evident that it was for the protection 
 of the association, and no sufficient reason is perceived why it may 
 not maintain the action. 
 
 The right to take advantage of a supposed defect of parties ap- 
 pearing on the face of the cross-petition has been waived. Appel- 
 lants did not make this defect a ground of demurrer, nor was it 
 taken advantage of by plea. The answer goes to the merits of the 
 controversy, and upon the issues raised the cause was prepared 
 and submitted for judgment. The fact that there is a defect of 
 parties plaintiff cannot be made a question for the first time in 
 this court. 
 
 The ^National Bank of Lebanon organized under the provisions 
 of the National Currency Act of June 3, 1864. It commenced 
 business on or about the 3d of August, 1869, at which time Mitch- 
 ell was selected as cashier, and was at once inducted into office. 
 Although required to execute bond immediately, for reasons not 
 satisfactorily explained by the record, the bond was not delivered 
 until about the 1st of November following. In June, 1870, Mitch- 
 ell was discovered to be a defaulter to a large amount. He failed 
 to make good the losses occasioned by his breach of duty, or to 
 sufficiently indemnify the bank, and this action was instituted to 
 recover from his bondsmen the amount of these Iqsses. 
 
 Prom what has already been said it is not necessary to notice 
 further the technical defenses relied on by appellants, except to 
 state that we do not regard it as essential that banking institutions 
 doing business under the National Currency Act shall signify their 
 acceptance of the ofiS.cial bonds of their cashiers by a written 
 memorandum to that effect entered upon the journals or minute- 
 books kept by their directory. 
 
 The acceptance of the bond may be presumed from the fact that 
 after it has been submitted to the directory for approval it is 
 retained by the bank, and the cashier permitted to enter upon or 
 continue in the discharge of his duties ; and that it was presented 
 to and approved by the directory may be established by oral testi- 
 mony. Bank of United States v. Dandridge, 12 Wheat. 64 ; Ded- 
 ham Bank v. Ghickering, 3 Pick. 335 ; Amherst Bank v. Root, % 
 
494 KENTUCKY 
 
 Graves v. The Lebanon National Bank. 
 
 Mete. (Mass.) 532 ; Union Bank v. Ridgely, 1 Har. & G. 324 ; 1 
 Morse on Banking, 333. 
 
 The defalcations for which appellants are sought to be held 
 liable are alleged to hare occurred between the 14th of September, 
 1869, and the 3d of June, 1870. The court below adjudged that 
 the sureties in the bond should account for such as occurred 
 after its acceptance, and rendered judgment against them for 
 $8,089.33. 
 
 The first business transacted by the bank after its organization 
 was the purchase of the assets of the banking firm of Burton, 
 Mitchell & Co. 
 
 Mitchell, the defaulting cashier, was a member of that firm, and 
 had been acting as its cashier. The National Bank accepted from 
 Burton, Mitchell & Co. bills and notes represented to amount to 
 about fifty-one thousand dollars, but which in point of fact 
 amounted to only about thirty-nine thousand dollars. This dis- 
 crepancy was the result of embezzlements upon the part of 
 Mitchell while acting as cashier for said firm. It may be presumed 
 that Burton, the senior member of the firm, who became one of 
 the directors of the National Bank, was ignorant of these embez- 
 zlements. The directory seem to have relied implicitly upon the 
 integrity of Mitchell, and hence he was enabled not only to con- 
 ceal the frauds practiced on Burton, Mitchell & Co., but by such 
 concealment to commence the discharge of his duties as cashier of 
 the National Bank by a fraud upon it. 
 
 In October, 1869, the banking association, pursuant to the pro- 
 visions of section 34 of the National Currency Act, and the amend- 
 ment thereto of March 3, 1869, made a report to the Comptroller 
 of the Currency, and on the 23d day of that month caused 
 it to be published in the Lebanon Glarion, showing in detail and 
 under appropriate heads its resources and liabilities at the close of 
 business October 9, 1869. This report was sworn to by Mitchell, 
 and certified to be correct by three members of the directory. 
 
 Similar reports were made and published in the same newspaper 
 touching the condition of the association on the 33d of January, 
 the 34th of May, and the 9th of June, 1870. None of these reports 
 showed embezzlements upon the part of the cashier or any officer 
 connected with the bank. They were not only not calculated to 
 excite suspicion as to the manner in which the affairs of the asso- 
 ciation were managed, but tended to inspire the public with confi- 
 
COUET OP APPEALS, 1873. 495 
 
 Graves v. The Lebanon National Bank. 
 
 dence in its prosperity and in the integrity of those to whom its 
 business affairs were committed 
 
 Appellants plead and rely upon the statements thus officially 
 promulgated by the officers of the bank as constituting an estoppel 
 upon it to assert against them claims that cannot be established 
 without showing that these official reports, made and published in 
 obedience to law, were not true. We are not inclined to the opin- 
 ion that they can claim immunity upon account of any report made 
 after they became the sureties of Mitchell. The reports are sworn 
 to by him, and it may be assumed that upon his representations, 
 and upon what appeared from the books of the association as kept 
 by him, the directors were induced to certify to their accuracy. 
 
 The directors may haye been negligent in the discharge of their 
 duties, and this negligence may have enabled Mitchell for the time 
 to misappropriate the funds of the bank, and to conceal its true 
 condition by the false reports made to the Comptroller of the Cur- 
 rency and by false entries upon the books of the association. But 
 this negligence cannot avail the sureties who covenanted that their 
 principal should " well and truly perform the duties " of his posi- 
 tion, and should " well and truly account for all moneys and other 
 valuables that ' might ' pass through his hands." Their covenant 
 is unconditional, and no failure of duty upon the part of the direct- 
 ors of the association, short of actual fraud or bad faith, can be 
 deemed sufficient to exonerate them from its performance. The 
 exaction of the bond implies that the association was not willing 
 to rely alone upon the watchfulness and care of the directory. It 
 required in addition to that safeguard that the honesty and fidelity 
 of its cashier should be guaranteed by sureties who were able to 
 make good any losses it might sustain by reason of his negligence 
 or dishonesty. 
 
 There is a question, however, arising upon the facts stated in the 
 pleading and fully sustained by the proof, the decision of which, it 
 seems to this court, must be in favor of the sureties ; and this 
 question being decided in their favor, their exoneration from liabil- 
 ity on account of Mitchell's misconduct while acting as appellee's 
 cashier, and after the bond was delivered and accepted, follows as 
 a necessary sequence. 
 
 There is no principle of law better settled than that persons pro- 
 posing to become sureties to a corporation for the good conduct and 
 fidelity of an officer to whose custody its moneys, notes, bills, and 
 
49fi KENTUCKY 
 
 Graves v. The Lebanon National Bank. 
 
 other valuables are intrusted, have the right to be treated with per- 
 fect good faith. If the directors are aware of secret facts materi- 
 ally affecting and increasing the obligation of the sureties, the 
 latter are entitled to have these facts disclosed to them, a proper 
 opportunity being presented. Morse on Banking, 326. 
 
 White and Tudor, in their note to the case of Eees v. Berrington, 
 2 Leading Oases in Equity, page 707, state the rule as follows: 
 " Wherever, therefore, there is any misrepresentation, or even con- 
 cealment from the surety, of any material fact which had he been 
 aware of he might not have entered into the contract of surety- 
 ship, it will thereby be rendered invalid, and the surety will be 
 discharged from his liabilities." 
 
 The cases cited by the commentators fully sustain the principles 
 as stated. 
 
 Mr. Justice Stokt takes even broader ground: " Thus, if a party 
 taking a guaranty from a surety conceals from him facts which 
 go to increase his risk, and sufEers him to enter into the contract 
 under false impressions as to the real state of facts, such conceal- 
 ment will amount to a fraud, because the party is bound to make 
 the disclosure, and the omission to make it under such circumstan- 
 ces is equivalent to an affirmation that the facts do not exist." 1 
 Story's Eq. Jur., § 215. 
 
 The learned judge cites in this connection from Maltby's case, 
 1 Dow's Parliament Cases, the instance of a party who, knowing 
 himself to have been cheated by his clerk, concealed the fact, ap- 
 plied for security in such a manner and under such circumstances 
 as held out the clerk as one whom he considered as a trustworthy 
 person, and thereby induced another to become his surety. The 
 contract of suretyship thus obtained was held to be void, and 
 silence under such circumstances being treated as expressive of a trust 
 and confidence held out to the public equivalent to an affirmation. 
 
 It may not be true that the directors of the Lebanon Bank had 
 actual knowledge of the frauds committed by Mitchell while cashier 
 of Burton, Mitchell & Co., nor of the false entries made by him 
 on the books of the institution under their control in order to con- 
 ceal those frauds, but it is true that either with or without exam- 
 ination they published reports of the affairs of the banking 
 institution, the natural if not the necessary effect of which was to 
 mislead the public. That these reports reached the eyes of appel- 
 lants we cannot doubt. 
 
COTJET OP APPEALS, 1873. 497 
 
 Graves v. The Lebanon National Bank. 
 
 They each resided in or near the town of Lebanon, and were 
 subscribers to and readers of the local paper in which the publica- 
 tions were made ; and as they were each largely interested as stock- 
 holders in the banking institution, it may be assumed that they 
 read and examined at all eyents the first ofBLcial statement made by 
 the officers to whom they had intrusted the management of that 
 portion of their estate invested in the stock of the banking associ- 
 ation. If it could be shown that the directors were cognizant of 
 the fraud of Mitchell, committed on the first day of his connection 
 with the bank and in the performance of his first duty as cashier, 
 and that they concealed this fact from these appellants, and per- 
 mitted the false statement of October 9, 1869, to be forwarded to 
 the Comptroller of the Currency and published to the world, there 
 could be no shadow of doubt that the concealment and publication 
 would amount to a fraud upon the sureties. 
 
 It is proper, howeyer, to consider the legal effect of two circum- 
 stances connected with the failure of the directory of the bank, to 
 apprise the sureties of the fraud of Mitchell, and of the publication 
 of October 23 in the Lebanon newspaper. The first is, that the 
 directors, or at least so many of them as were sworn as witnesses, 
 state that they were not apprised of the perpetration of the 
 fraud. The second is, that the reporb of October 9, 1869, published 
 on the 33d of that month, was but a statement of the condition 
 of the affairs of the association as shown by its books. 
 
 Upon the first question it is to be observed that several of the 
 directors, and among them Burton, of the firm of Burton, Mitchell 
 & Co., upon whose indorsement its assets were received by the 
 Lebanon Bank, were not sworn at all ; and further that it appears 
 upon the journal kept by the directory, as of date August 3, 1869, that 
 " the bills of exchange and accounts of the firm of Burton, 
 Mitchell & Co., bankers, having been submitted for examination and 
 examined, it was resolved by the board of directors to receive the 
 same, with the ind orsement of Messrs. Burton, Mitchell & Co., and the 
 cashier was directed to transfer the same to the books of the Na- 
 tional Bank." Whether this written memorandum, kept by the 
 directory as evidence of its official action, is or not conclusive as 
 to the examination of the bills of exchange and accounts of the firm 
 of Burton, Mitchell & Co. , need not here be decided. The fact of the 
 examination is not directly contradicted by any evidence in the 
 
 63 
 
498 KENTUCKY 
 
 Graves v. The Lebanon National Bank. 
 
 case, and for the purposes of this litigation the presumotion should 
 be indulged that it was actually made. 
 
 Prom the depositions of the president of the bank, of Wilson, a 
 director, and of Wilkins, who was first the clerk and is now the cashier 
 of the institution, it is manifest that the most cursory examination 
 of the bills, notes, and accounts turned over to the bank by Burton, 
 Mitchell & Co. would have disclosed a deficit of more than twelre 
 thousand dollars. 
 
 We cannot, without disregarding the proof before us, fail to con- 
 clude that the directory either was advised of this discrepancy in 
 Mitchell's accounts, or that it relied on his representations and the 
 indorsement of Burton, Mitchell & Co., and made no examination, 
 notwithstanding the bills, notes, and accounts purchased amounted 
 in the aggregate to more than half as much as the capital of the 
 institution for which they were acting. 
 
 The directors may not have been bound to notify the sureties of 
 the manner in which this transaction was conducted ; but most 
 assuredly these parties had the right, under the circumstances, to 
 presume that in the first business transaction of the bank, involv- 
 ing as it did so considerable an amount, the directory exercised at 
 least slight diligence, and this presumption was greatly strength- 
 ened by the published report appearing on the 33d of the following 
 October. A fraud may be perpetrated as well by the assertion of 
 facts that do not exist, ignorantly made by one whom the person 
 acting npon the assertion has the right to suppose has used reason- 
 able diligence to inform himself, as by concealing facts known to 
 exist which in equity and good conscience ought to be made known. 
 
 The publication as to the resources and liabilities of the associa- 
 tion on the 9th of October, 1869, does not purport to have been 
 made from its books. It was styled " Eeport of the Condition of 
 the National Bank of Lebanon at the close of business October 9, 
 1869." The resources and liabilities are stated under appropriate 
 heads. The report is sworn to by the cashier, and its accuracy 
 attested by three members of the board of directors. 
 
 There is nothing in the publication to indicate that it was founded 
 upon the books of the association. The clear import of the lan- 
 guage used is that it exhibits the actual condition of the affairs of 
 the bank. 
 
 It is in proof that the forms furnisned by the Comptroller of the 
 Currency authorized the reports to be made out from the books ; 
 
COUET OF APPEALS, 1873. 499 
 
 Graves v. The Lebanon National Bank. 
 
 but it is not shown that the sureties knew any thing about these 
 forms ; and looking to the law defining the duties as well of the 
 Comptroller as of the officers of the bank, they would acquire no 
 such information. 
 
 The 34th section of the Currency Act requires eyery association 
 organized under its provisions at stated times to make reports to 
 the Comptroller, which "shall exhibit in detail and under appro- 
 priate heads the resources and liabilities of the association before 
 the commencement of business on the morning of the first Monday 
 of the months of January, April, July, and October of each year." 
 The amendment of March 3, 1869, requires five of these reports 
 each year to be verified by the oath or affirmation of the president 
 or cashier and attested by the signature of at least three of the 
 directors, each of which is to be published in a newspaper pub- 
 lished in the place where the association does business, if there 
 be one, and if not, then in a newspaper published in the county 
 nearest thereto. This amendment provides, as did the original 
 act, that the resources and liabilities of the association shall be 
 reported ; and as conclusive evidence that the actual and not the 
 apparent resources and liabilities are to be reported, the Comp- 
 troller is empowered by the amendatory act to call for special 
 reports from auy particular association whenever in his judgment 
 it shall be necessary, "in order to a full and complete knowledge of 
 its condition." 
 
 It seems therefore that before the delivery and acceptance of the 
 cashier's bond, and before appellants had become guarantors for 
 his diligence, honesty, and fidelity, the banking association, pur- 
 suant to the provisions of the law to which it owed its existence, 
 published to them and to the world a statement of its condition, 
 from which it appeared that its affairs were being prudently and hon- 
 estly administered, and from which they and the public had the right 
 to believe that the cashier, to whom had been intrusted the moneys, 
 notes and valuables of the bank, had up to that time acted as a 
 trustworthy person. 
 
 If the sureties acted upon the impression thus created by the 
 affirmative act of the party now claiming to enforce the stipula- 
 tions of their bond, it is plain that they should be discharged from 
 liability. 
 
 For reasons satisfactory to our minds we have already decided 
 that it should be presumed that the sureties did read and examine 
 
500 KENTUCKY 
 
 Graves v. TheXebanon National Bank. 
 
 the report published in the Clarion of the 23d of October, 1869. 
 It yet remains to be determined whether the bond was accepted 
 before or after that time. It bears no date except " the day , 
 1869." The legal presumption therefore is that it did not become 
 binding on the bondsmen until the last day of that year. 
 
 The bank fails to show the exact date of its delivery. One of 
 the directors gives it as his recollection that it was about the 1st 
 of October, 1869. The president and one other director fix the 
 time of delivery at about the 1st of November, 1869, and the pres- 
 ident states as a circumstance conducing to sustain his recollec- 
 tion that he was in that year a member of the State Legislature, and 
 that the bond was handed to him a month or more before he left 
 for Frankfort, which was early in December. The directory itself 
 was not willing to fix the date of the acceptance of the bond, and 
 in an order entered upon its minute-book, purporting to record the 
 action of the board at the time of its approval, neither the month 
 nor the day is given. 
 
 Considering the presumption arising from the want of a specific 
 date to the bond and the preponderance of the testimony offered 
 by the bank itself, we conclude that it was not accepted earlier 
 than the 1st of November, 1869, about one week subsequent to the 
 publication of the report of October 9th of that year. 
 
 We have, therefore, a case in which the directory of the bank 
 held out to others as a trustworthy oflB.cer a man who had been 
 guilty of repeated embezzlements and frauds, all of which might 
 have been discovered by the exercise of slight diligence. However 
 innocently the publication tending to show that Mitchell was an 
 honest and faithful officer may have been made, the fact remains 
 that the public had the right to act upon the presumption that the 
 three directors attesting the accuracy of the statements contained 
 in the publication had made some investigation at least to inform 
 themselves as to the matters to which it related. 
 
 The effect of the published report was to inspire the public with 
 confidence in the officers of the bank, to disarm suspicion, and to 
 prevent inquiry. 
 
 The losses occasioned by the fraudulent appropriations by Mitch- 
 ell of the bank's money after the acceptance of his bond must fall 
 upon either the association or upon his sureties. The latter are 
 free from blame. They acted in the matter with reasonable pru- 
 dence and discretion. They relied upon the truth of representa- 
 
COUET OP APPEALS, 1876. 501 
 
 Newell V. National Bank of Somerset. 
 
 tions made by those haYing the right to speak for the bank. These 
 representations have turned out to be untrue. Had the sureties 
 suspected that they were untrue, it cannot be supposed they would 
 have entered into the contract of suretyship. Such being the case, 
 the contract must be adjudged invalid. 
 
 The judgment against the sureties is reversed, and the cause 
 remanded with instructions to dismiss appellee's cross-petition. 
 
 Nevtell v. Nation'al Bank of Someeset. 
 
 (12 Bush, 67.) 
 
 Interest — What rate National hanks may exact — State courts will not enforce 
 penalties imposed by act of Congress. 
 
 By the statute of Kentucky no more than six per cent interest could be exacted, 
 but parties were allowed to contract to pay and receive ten per cent " by 
 memorandum in writing, signed by the party chargeable thereon, and not 
 otherwise." A National bank located in the State discounted notes, charg- 
 ing interest in advance at the rate of ten per cent without other " memoran- 
 dum in writing " than the notes, wherein was a promise to pay the prin- 
 cipal and accrued interest at the rate of ten per cent. Held, that the trans- 
 action was not usurious. 
 
 Semble, that the State courts will not enforce the penalties imposed by the 
 National Banking Act for exacting unlawful interest.* 
 
 ACTION by the National Bank of Somerset against Newell and 
 others, on promissory notes discounted by the bank. There 
 were three cases. Judgments were rendered for the plaintiff below 
 and the defendants appealed. 
 
 Fox and Morrow and A. J. James, for appellant. 
 
 John S. Van Winhle, for appellee. 
 
 Lindsay, J. These three appeals present the same question. 
 
 J. E. and J. P. Ingram, with these appellants as sureties, com- 
 menced in 1873 to borrow money from the appellee. The notes 
 were made payable to one or more of the accommodation parties, 
 
 *See state v. Tuller, ante, p. 376 ; Missouri River Telegraph Co. v. National 
 Bank, ante, p. 401 ; Ordway v. Central National Bank, post. 
 
502 KENTUCKY 
 
 Newell V. National Bank of Somerset. 
 
 and by him or them indorsed to the bank. They were made to 
 run four months, and were from time to time renewed as they 
 fell due. The bank, at the time of the discounting of the first 
 notes and at each and erery renewal, retained the interest in 
 advance. The sums so retained were in proportion to ten per 
 cent per annum upon the face of the notes. 
 
 The notes last accepted in the way of renewals were not paid at 
 maturity, and these actions were instituted to enforce their collec- 
 tion. 
 
 The sureties pleaded the facts above set out, and insist that the 
 bank, by retaining the said amounts of interest in advance, in 
 effect charged and received interest at a rate greater than ten dol- 
 lars upon one hundred dollars for a year, and that it thereby vio- 
 lated the fifth section of the act of March 14, 1871 (Session Acts 
 1871, page 61), and the fourth section of article 2, chapter 60, 
 General Statutes, and forfeited to the borrowers the whole amount 
 of interest paid. 
 
 They further claim that it also violated the 30th section of the 
 National Currency Act of June 3, 1864, and forfeited to the bor- 
 rowers twice the amount of the interest paid. 
 
 They sought to have their claims arising out of those supposed 
 forfeitures set ofE against the notes sued on, and prayed to be 
 credited by the amounts thus made up. 
 
 We need not inquire as to the rights of the parties under the 
 provisions of the act of Congress. The forfeitures claimed under 
 said act are highly penal in their natui-e. The courts of this State 
 have not up to this time undertaken to enforce penalties arising 
 under the laws of the government of the United States, and' these 
 cases present no suSicient reason to authorize the inauguration of 
 a new judicial policy upon that subject. 
 
 It is undoubtedly true that by retaining out of the sum loaned 
 the full amount of the legal interest that would accrue thereon 
 during the time for which the note is to run, banks are enabled to 
 realize upon their available capital a greater rate of interest than 
 could be realized if the interest was not collected until the note 
 became due; but the practice of thus discounting bills or notes 
 began with the business of banking, and was soon so firmly estab- 
 lished that the courts sanctioned it almost of necessity. 3 Parsons 
 on Contracts, 131. 
 
 This practice must be confined to short paper; and the instru- 
 
COUET OF APPEALS, 1876. 503 
 
 Newell V. National Bank of Somerset. 
 
 ment discounted, or upon which the interest is taken in advance, 
 must be such as will circulate in the course of trade, or such as by 
 statute has been placed upon the footing of that character of paper. 
 Id. 133 ; Firemen's Insurance Co. v. Ely, 3 Cowen, 703. 
 
 The deduction of legal interest from the face of the note or bill 
 discounted has always been tolerated in this State; and it was long 
 since held by the Supreme Court of the United States that trans- 
 actions of that sort are not to be treated as usurious. 8 Wheaton, 
 354; 3 Peters, 40. 
 
 We find nothing in the legislation of this State upon the subject 
 of interest and usury to take such transactions out of the general 
 rule applied to them by the courts of the United States and of 
 our various sister States. We therefore conclude that neither sec- 
 tion 5 of the act of March 14, 1871, nor section 4, article 3, chap- 
 ter 60, General Statutes, entitles appellants to recover the supposed 
 forfeitures claimed in their several answers. 
 
 But there is still another view of the case. It is not denied that 
 interest, at the rate of ten per cent per annum, was collected in 
 advance on each and all of the notes indorsed to the bank. By 
 the laws of the Commonwealth, no more than six per cent interest 
 can be lawfully collected for the loan or forbearance of money, 
 unless it be upon contract, evidenced by a memorandum in writ 
 ing signed by the party or parties chargeable thereon. Acts 1871, 
 page 61. The General Statutes provide that the contract must be 
 " by memorandum in writing, signed by the party or parties charge- 
 able thereon, and not otherwise." 
 
 It is not denied that the borrower may pay and the banks receive 
 interest at the rate of six per cent per annum under oral agree- 
 ments; but appellants insist that the additional four per cent 
 admitted to have been paid was usury, and claim that the bank 
 cannot refuse to credit each note by the excess of interest over six 
 per cent paid on the debt evidenced by it, unless the payments 
 were made under contracts reduced to writing and signed by the 
 parties charged therewith. 
 
 Strictly speaking, there were no written memorandums author- 
 izing the bank to collect interest in advance ; but the notes signed 
 and delivered to the bank were written memorandums signed by 
 the parties to be charged, and they evidenced the contracts or 
 agreements to pay at maturity to the bank sums of money equal 
 to the principal and the accruing interest, at the rate of ten per 
 
504 KENTUCKY 
 
 Huffaker v. National Bank of Monticello. 
 
 cent per annum for the time they were each to run. It follows, 
 therefore, that the contracts touching the payment of interest on 
 the Tarious notes conformed to the spirit and letter of the conven- 
 tional interest law, and that they were properly upheld by the 
 Circuit Court. 
 
 Consequently the judgments of said court, refusing to allow the 
 defenses relied on by the appellantis in the three cases under con- 
 sideration, must be Affirmed. 
 
 By an act to amend chapter 60 of the amended as to change the rate^ of con- 
 General Statutes of Kentucky, title ventional interest from not exceeding 
 " Interest and Usury," approved March ten to not exceeding eight per centum 
 14,1876, the General Statutes are so per annum SeggionActslStd, page 68. 
 
 Huffaker v. National Bank of Monticello. 
 
 (12 Bush, 287.) 
 
 Organization of National hank — How put in issue. 
 
 The organization of a National bank under the National Banking Act may 
 be put in issue by a party who has not estopped himself. But a party who 
 has accepted as payee a promissory note payable at a banking institution 
 which the parties to the note style a National bank, and has sold and trans- 
 ferred the note to such banking institution, cannot be allowed to raise that 
 issue by merely averring want of knowledge or information sufficient to 
 form a belief as to whether the institution is a body corporate, etc. * 
 
 ACTION by the National Bank of Monticello against HufEaker and 
 others, as indorsers of a promissory note, payable at the plain- 
 tiff's bank, and by the said defendants, who were payees, indorsed 
 and transferred to the plaintifE. The defendants answered, alleging 
 want of knowledge as to whether the plaintiff was a National 
 bank. "We give below only, such part of the opinion as relates to 
 National banks. 
 
 Gibson and Gibson, for appellant. 
 
 /. S. Van Winkle and Alexander & Dickinson, for appellees. 
 * See Hitjiger/ord JTationoJ Bonfc v. Von Npat/ra/nd, post. 
 
SUPEEME COUET, 1870. 505 
 
 Sclimidt V. The First National Bank of Selma. 
 
 Li2«fDSAT, C. J. [After deciding questions of practice.] The 
 demurrer to the first paragraph of the appellants' answer was 
 properly sustained. We do not doubt the right of a party who has 
 not estopped himself from so doing to put in issue the organization of 
 a corporation professing to have organized and to be doing business 
 under the proTisions of the act of Congress known as the National 
 Currency Act. But when, as in this case, the party attempting to 
 raise such an issue has accepted as payee a promissory note made 
 payable at a banking institution which the parties to the note style 
 a National bank, and has sold and transferred said note to said 
 banking institution, he cannot be allowed to raise the issue by 
 merely averring want of knowledge or information suflScient to 
 form a belief as to whether the institution is a body corporate 
 organized and doing business under the act of Congress. Whilst 
 he is not estopped to make the defense, he has placed himself in 
 an attitude which makes it his duty to ascertain from an examina- 
 tion of the public records of the treasury department of the general 
 government whether the association with which he has been volun- 
 tarily dealing has authority to do business as a National bank. 
 
 Schmidt v. The Piest National Bank of Selma. 
 
 (22 Louisiana Annual, 314.) 
 
 Pwramount lien of United States on assets of National banks. 
 
 The National Banking Act gives to the United States a first and paramount 
 privilege upon all the assets of a banking association organized under the 
 act to reimburse to the United States the amount expended in paying the 
 circulating notes of such bank association. Therefore, the privilege given 
 to an attaching creditor over the assets of the First National Bank of Selma 
 must be postponed to that of the privilege of the United States where it is 
 shown, as in this case, that the Louisiana National Bank, a debtor of the 
 First National Bank of Selma, had notice of the claim of the United States 
 on the assets of the First National Bank of Selma before the seizure by the 
 creditors under the attachment. 
 
 APPEAL from Seventh District Court, parish of Orleans. Col- 
 lens, J. 
 64 
 
506 LOUISIANA 
 
 Schmidt v. The First National Bank of Selma. 
 
 Budd and Qrover, for plaintiffs and appellee. 
 JE. Pearson, for defendant and appellant. 
 
 Tallafeeko, J. The plaintiffs, being holders of two drafts or 
 checks drawn upon the Louisiana National Bank by the First 
 National Bank of Selma, in Alabama, and their payment being 
 refused, brought suit in New Orleans against the Selma Bank, pro- 
 ceeding by attachment and process of garnishment. The Louisiana 
 National Bank answered, through its officers, that there were funds 
 of the Selma Bank in their custody, but that they had been notified 
 by the government, prior to the notice served on them, of seizure 
 by the plaintiffs, that it claimed a lien upon all the assets in their 
 hands, belonging to the Selma Bank, and ordered that they be held 
 subject to the claim of the United States. Cadle, who had been ap 
 pointed receiver of the First National Bank of Selma, appeared 
 and filed an exception to the plaintiffs proceeding, on the ground, 
 that, at the time of the institution of the plaintiffs' suit and long 
 prior thereto, the Selma Bank was in liquidation; that he had been 
 duly appointed receiver thereof, and that the court before which 
 the plaintiffs brought their action, is without jurisdiction. A cura- 
 tor ad hoc was appointed, who subsequently filed an exception of 
 similar import, and these exceptions being overruled, the curator 
 answered by general denial. A judgment was rendered in favor of 
 the plaintiffs with privilege upon the property attached. 
 
 This judgment was signed in the lower court on the 19th of June, 
 1868. An execution was issued, and the receiver came in as third 
 opponent, claiming that he w;as entitled to be put into possession 
 of all the assets of the Selma Bank in controversy, in preference to 
 any and every lien or privilege set up by Schmidt & Ziegler, aver- 
 ring his privilege to be established by the Currency Act of Congress, 
 approved June 3, 1864; and that on or about the 17th of April, 
 1867, the First National Bank of Selma, having failed to redeem its 
 notes as required by law, the Louisiana National Bank, the garnishee 
 in this case, was duly notified thereof, and that the government 
 of the United States had, and claimed a lien upon all the assets of 
 the Selma Bank in possession of the Louisiana National Bank, and 
 that it was ordered to hold all such funds and assets subject to the 
 claim and lien of the United States. 
 
 To this third opposition the plaintiff opposed the plea of res judi- 
 
SUPREME COURT, 1870. 507 
 
 Schmidt v. The First National Bank of Selma. 
 
 cata, alleging that the same matter now set up in the opposition 
 had been presented in this case by defendant before judgment 
 rendered, and were decided by that judgment adversely to him. 
 
 A judgment was rendered on this third opposition, on the 39th of 
 June, 1869, by the judge of the Seventh District Court of New 
 Orleans, the case having been transferred to that court from the 
 Third District Court. The judgment was in favor of the plain- 
 tiffs, and the defendant, on the 2d of July, 1869, took an appeal 
 from both judgments; the appeal being devolutive as to the judg- 
 ment on the 19th of June, 1868, and suspensive as to that of 2d of 
 July, 1869. The plaintiff opposes prescription in bar of the oppon- 
 ent's right to appeal from the judgment rendered on the 19th of 
 June, 1868. 
 
 This cannot avail him, the opponent not being a resident of the 
 State, may appeal within two years. The plaintifE acquired no right 
 as against the United States by attaching the assets of the Selma 
 Bank, or the Louisiana National Bank, of New Orleans. 
 
 It is expressly provided by the act of Congress, approved the 3d 
 of June, 1864, 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," in regard to the associa- 
 tions for banking purposes authorized by that act, " that for any 
 deficiency in the proceeds of the bonds pledged by such association 
 when disposed of as hereinafter specified, to reimburse to the U nited 
 States the amount so expended in paying the circulating notes of 
 such association, the United States shall have a first and perma- 
 nent lien upon all the assets of the association, and such deficiency 
 shall be made good out of such assets in preference to any and all 
 other claims whatever, except the necessary costs and expenses of 
 administering the same."* This law enacted in the public policy of 
 the country by the Congress of the United States none can be pre- 
 sumed to be ignorant of. It is shown that previous to notice to 
 the Louisiana National Bank of the plaintifE 's seizure in its hands 
 of the assets of the Selma Bank, the Louisiana National Bank had 
 been notified of the lien claimed by the government upon these 
 assets, and ordered to hold the same subject to the claim of the 
 United States. 
 
 The right of the receiver of the Selma Bank to the possession 
 
 ♦This language is substantially repeated in Rev. Stats., § 5230. 
 
508 LOTJISIANA 
 
 State V. Gasting. 
 
 and control of the assets in question, we think fully made out, and 
 conclude that the judgment of the lower court is erroneous. It is 
 therefore ordered, adjudged and decreed that the judgment of the 
 District Court be annulled, avoided and reversed. It is further 
 ordered that there be judgment in favor of the defendant and 
 opponent, and that he, in his capacity of receiver of the First Na- 
 tional Bank of Selma, have and be pilt into possession and control 
 of all the assets of the Selma Bank in the Louisiana National 
 Bank of New Orleans, and which constitute the subject-matter of 
 this controversy. It is further ordered that the plaintiffs and ap- 
 pellees pay all costs of this suit. 
 
 State t. Gastiitg. 
 
 (23 Louisiana Annual, 1609.) 
 National hank Ulla are " United States currency." 
 
 The notes or bills issued by the National banks of the United States, which 
 are authorized by law to circulate throughout the Union aa a medium of 
 trade, are included in the phrase, " United States currency."* 
 
 Larceny of such notes is, therefore, larceny of United States currency. 
 
 APPEAL from the Eleventh Judicial District Court, parish of 
 Union. Egan, J. 
 
 W. W. Farmer, district attorney of the Fourteenth Judicial Dis- 
 trict, for the State. 
 
 J, and J, W. Young, for defendant and appellant. 
 
 Howe, J. The defendant was indicted for larceny of ten dol- 
 lars in " United States currency," ten dollars in gold coin, and ten 
 dollars in silver coin. He was tried, convicted, sentenced to hard 
 labor, and has appealed. 
 
 The only question presented is raised by the defendant's bill of 
 exceptions, and is, substantially, whether notes or bills of National 
 banks are included properly in the phrase, " United States cur- 
 rency." • 
 
 * See Home v. Oreen, post. 
 
SUPEEMB COUET, 1871. 509 
 
 State V. Gasting. 
 
 The act of Congress by which the associations known as National 
 banks were authorized, is entitled "An act to provide a National 
 currency, secured by a pledge of United States stocks, and to pro- 
 vide for the circulation and redemption thereof," and its title seems 
 to be a correct index to its contents. The notes or bills issued 
 are not only receivable at par, in all parts of the United States, 
 in payment of taxes, excises, public lands and all other dues to 
 the United States (except for duties on imports), but also they are 
 a legal tender for all salaries and other debts and demands owing 
 iy the United States to individuals, corporations and associations 
 within the United States (except interest on the public debt). Laws 
 of 1863, p. 670, § 20. 
 
 They are prepared by the oflficers of the treasury and bear their 
 engraved signatures and seal. The words "National currency" 
 are emblazoned conspicuously upon them, being derived, evidently, 
 from the title of the act. They circulate in all parts of the Union, 
 being everywhere received at par as a medium of trade, without 
 regard to the local domicile of the associations, respectively. 
 
 Currency may be properly defined as something which circulates 
 as a medium of trade. It conveys at the present time the idea of 
 paper money, of some sort. National currency is that which is 
 issued under the sanction of a nation. The nation which au- 
 thorizes the issue of what we term National bank notes is the 
 United States. Considering, therefore, the title and terms of the 
 act of February 35, 1863, above cited, in connection with these 
 familiar definitions, we think it fair to decide that the phrase 
 " United States currency" includes the " National currency" author- 
 ized by the United States — declared to be for many important 
 purposes a lawful tender — and designed to circulate as a medium 
 of trade in all parts of our country. 
 
 Judgment affirmed. 
 
510 LOUISIANA 
 
 Adams y. Caunis. 
 
 Adams v. Dauxis. 
 
 (29 Louisiana Annual, 315.) 
 Actions against National hanks and receivers of National hanks. 
 
 National banks, like any other corporations, and the receivers of them may sue 
 
 and be sued in the State courts of their domicile. 
 The receiver of a National bank is amenable to the jurisdiction of a State 
 
 court in a parish other than that in which the bank was located and in 
 
 which he has his domicile.* 
 
 APPEAL from the Fifteenth Judicial District Court, parish of 
 Lafourche, Beattib, J. 
 
 Clay Knobloch, for plaintiffs and appellees. 
 
 J. D. Rouse and Andrew J. Murphy, for N". W. Casey, receiyer. 
 
 Mabe, J. On the 34th of February, 1860, Tucker Brothers exe- 
 cuted a mortgage, which was recorded on the same day, on a plan- 
 tation in the parish of Lafourche, in favor of Robert Tucker or any 
 future holder, to secure four promissory notes for five thousand 
 dollars each, of which two only seem to have been used. 
 
 The Bank of New Orleans held one of these notes, and Godfrey 
 Barnsley held the other. The bank' obtained judgment against 
 Tucker Brothers on the note held by it, with recognition of the 
 mortgage, which was recorded as a judicial mortgage on the 28th 
 of June, 1867. Barnsley brought suit on the note held by him, 
 which was not prosecuted to judgment ; and it seems to have 
 been discontinued. 
 
 Execution issue& on the judgment in favor of the bank, under 
 which the sheriff seized the mortgaged property, and sold it on the 
 7th of September, 1867, to A. W. Cummings, for cash. 
 
 The first mortgage in date bore on part only of the property, and 
 •was in favor of Gaubert and Richard, who had obtained judgment 
 against Tucker Brothers for the amount due them, which was 
 recorded as a judicial mortgage on the 14th of July, 1866; and 
 
 * See Kennedy v. Qibson, ante, p. 17 ; Bank of Bethel v. Pahguiogue Bank ; 
 Cadle V. 2Vocj/, ante, p. 230 ; Commercial Bank v. Simmons, ante, p. 894 ; Cook v. 
 State National Bank, post; Crocker v. Marine National Bank, post. 
 
SUPEEME COUET, 1877. 511 
 
 Adams v. Daunis. 
 
 the next in rank was that nnder which the hank and Barnsley 
 claimed. The price of the adjudication was not sufficient to pay 
 the amount due these creditors in the second rank. Of course the 
 junior mortgagees were cut ofE, and the creditors in the first and 
 second ranks were the only persons who were interested in the dis- 
 tribution of the proceeds of the sale. 
 
 The sheriff, in his return, after the usual recitals, states that the 
 property was adjudicated to the last and highest bidder, A. "W. 
 Cummings, "for and in consideration of the sum of $13,035, paid 
 as follows, to wit . 
 
 "First. The purchaser retained in his hands the sum of 
 $1,851.10," the amount due to the first mortgage creditors, Gau- 
 bert and Eichard, "which amount remained secured by same mort- 
 gage." 
 
 "Second. The balance of adjudication, $11,173.90, is applied 
 to the settlement of the claim of the plaintiff and Godfrey Barns- 
 ley, each holding a five-thousand-dollar note, secured by the second 
 mortgage * * * j^ ^^ following proportions, the fund being 
 insufficient to extinguish these claims, viz. : to the bank, to cover 
 principal, interest, and costs, pro rata, $6,369.50 ; to G. Barnsley 
 pro rata, $4,904.40 ; as will more fuUy appear by act of comprom- 
 ise and agreement between the parties, etc." 
 
 The agreement referred to in the return is of the same date as 
 the sale. It begins with the declaration by Cummings "that he 
 has this day purchased at sheriff's sale, in the case entitled the 
 Banh of New Orleans v. Tuclcer Brothers, for cash ; " and then 
 follows a description of the property and statement of the price of 
 the adjudication. The agreement then recites : " That the pur- 
 chase-price was not in reality paid in cash ; but the purchaser 
 compounded and compromised with the mortgage creditors herein- 
 before named, who agreed to give him time without, however, 
 impairing or novating their original claims, the right to enforce 
 which they expressly reserve." 
 
 The payments were to be in three installments. With respect to 
 Gaubert and Eichard, declared to be the creditors first in rank, 
 after dividing the $1,851.10, to be paid them, into three parts, as 
 agreed upon, and fixing the dates from which they are respectively 
 to bear interest, the agreement states : 
 
 " It is distinctly understood, however, that if any of these install- 
 ments should not be paid at maturity the whole amount shall be 
 
512 LOUISIANA 
 
 Adams v. Daunis. 
 
 exigible, and Gaubert and Richard shall be and are hereby author- 
 ized and expressly empowered to enforce the aforesaid judgment 
 in case Uto. 487 on the tract to them mortgaged specially by privi- 
 lege, the said Cummings binding himself to interpose no objection 
 or obstacle thereto." 
 
 After dividing the $4,905.40 to be paid to Barnsley and the $6,- 
 369.50 to be paid the bank into thr%e parts each, and fixing the 
 dates of payment and the time from which they are to bear interest, 
 the agreement proceeds : 
 
 " It is understood, as above stated, that the parties hereto do 
 not by these presents impair, affect, or novate their existing claims, 
 and that in -case of non-payment they will be entitled to enforce 
 the judgments which may be held by them, and, furthermore, that 
 the original mortgages and privileges remain in full force and effect, 
 and are not hereby novated, and, if need be, for the purpose of 
 avoiding all doubt the said privileges and mortgages are hereby 
 recognized as operating on the said property in the proportions 
 aforesaid and to secure the debts aforesaid, with the rank above 
 stated. 
 
 " The mortgage of the said Barnsley and the bank results from 
 an act executed before the undersigned recorder on 24th Febru- 
 ary, 1860, inscribed in this office on the same day, as will more 
 fully appear by suit No. 578, entitled Sank of New Orleans v. 
 Tucker Brothers, and No, 793, entitled Godfrey Barnsley v. 
 Tuclcer Brothers, on file in the Third District Court of Lafourche." 
 
 This agreement was recorded in the book of conventional mort- 
 gages on the day of its date, 7th September, 1867. 
 
 Pursuant to the sale and adjudication of the 7th September, the 
 sheriff on the 9th September made a deed to Cummings, in which 
 he recites all that he had done touching the sale, and copies his 
 return in full. He then proceeds to " sell, set over, transfer, and 
 convey unto the purchaser, A. W. Cummings, for the sum above 
 stipulated aM«Zjpai(Z as aforesaid, all the rights, title, and interest 
 which defendants, Tucker Brothers, had in or on the aforesaid 
 property." 
 
 The sheriff treated the sale as having been made for cash, and 
 reserved no mortgage on the property. The deed was registered 
 on the 30th September in the book of conveyances. 
 
 In December, 1868, Cummings sold the property to Mrs. Tucker, 
 who assumed to pay the debts for which Cummings had bound 
 
SUPREME COTTET, 1877. 513 
 
 Adams v. Daunls. 
 
 himself; and on the same day she sold half of it to Thomas J. 
 Daunis, with whom she formed a planting partnership. Daunis 
 assumed the same debts, but neither he nor Mrs. Tucker gave any 
 mortgage to secure the payment. 
 
 On the 3d of April, 1870, Daunis and Mrs. Tucker mortgaged 
 the property to John I. Adams & Co., and on the 1st of April, 
 1871, Mrs. Tucker sold her half to Daunis, who assumed all the 
 debts for which she had bound herself, but he gave no mortgage to 
 secure the payment. 
 
 On the 35th of July, 1875, Adams & Co. required the recorder to 
 cancel and erase the inscription of the conventional mortgage of 
 the 34th of February, 1860, on the ground that more than ten 
 years had elapsed after the date of this inscription when they on 
 the 3d of April, 1870, acquired their mortgage on the property, 
 and this inscription had not been renewed. 
 
 The recorder complied with this demand, as he was hound to do 
 by the act of 1843 (Revised Statutes, §§ 450, 3141), amending arti- 
 cle 3333, now article 3369, of the Civil Code ; and on the 38th of 
 July Adams & Co. proceeded against Daunis on their mortgage by 
 seizure and sale. The property was sold on the 3d of October, 1875, 
 and the mortgagees became the purchasers for some $17,519, less 
 than half the mortgage debt due them. The sheriff refused to 
 complete the adjudication without payment of certain mortgage 
 claims against Tucker Brothers, among others that of the Bank of 
 New Orleans, resulting from the judgment recorded on the 38th of 
 June, 1867. 
 
 Adams & Co. then took a rule on the recorder ; N. W. Casey, 
 receiver of the New Orleans National Banking Association, the 
 successor of the Bank of New Orleans ; Goodrich & Co., R. & E. L. 
 Tanner, Gaubert and Richard, and the sheriff : the recorder and 
 the several creditors to show cause why the mortgages appearing in 
 the names of these creditors, respectively, in so far as they affect 
 the property in question, should not be canceled and erased ; and 
 the sheriff to show cause why he should not complete the adjudi- 
 cation, and put the purchasers in possession. 
 
 Casey alone appeared and contested this rule. He pleaded want 
 of jurisdiction; and that the proper and necessary parties were 
 not before the court. He also pleaded a general denial ; and set 
 up the judgment against Tucker Brothers in favor of the Bank 
 of New Orleans, recorded as a judicial mortgage on the 38th of 
 65 
 
514 LOUISIANA 
 
 Adams v. Daanis. 
 
 June, 1867, which he alleged had not been paid, and was in full 
 force. 
 
 The judgment of the court below made the rule absolute, and 
 ordered the recorder to cancel and erase the several mortgages 
 specified in the rule, and in accordance with its terms ; and the 
 sherifE to complete the adjudication, and to put the purchaser in 
 possession. Prom this judgment Oasey took a devolutive appeal. 
 
 The plea to the jurisdiction is twofold : 1. That the National 
 banks cannot be sued in a State court, except in the county or 
 parish in which they are located. 2. That the rights of the bank 
 cannot be determined on a rule, but only by direct action. 
 
 First. As to this latter objection, it suflBces to say that in such 
 a case as this the law requires the proceeding to be summary. Code 
 of Practice, 754, 755 ; Eev. Stats., §§ 1943, 2903. 
 
 Second. The other plea to the jurisdiction is based upon sec- 
 tion 57 of the National Bank Act, which was omitted in the Re- 
 vised Statutes of the United States ; but is to be found in the 
 appendix, p. 1437, as an amendment to section 5198, as follows : 
 
 " Suits, actions, 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 associar 
 tion is located, having jurisdiction in similar cases." 
 
 We do not understand this section as excluding all other juris- 
 dictions than those specified. The State courts derive their juris- 
 diction from State law, not from the laws of the United States ; 
 and we must look to the State law to ascertain whether a State 
 court has jurisdiction in any given case, eicept where exclusive 
 jurisdiction is given to the Federal tribunals by the Constitution 
 and laws of the United States. 
 
 Section 5136 of the Revised Statutes, section 8 of the National 
 Bank Act, authorizes the banks " to sue and be sued, complain 
 and defend, in any court of law and equity, as fully as natural 
 persons." That is, these banks are corporations, and they proceed 
 and are proceeded against as other corporations. Once vested with 
 this power and capacity, they are amenable to the jurisdiction of 
 the courts of the States in which they are respectively located, 
 just as other corporations or natural persons are ; and section 57 of 
 the Bank Act is merely declaratory, and was not intended as an 
 abridgment of the power and jurisdiction of the State courts, touch- 
 
SUPEEME COUET, 1877. 515 
 
 Adams v. Daunis. 
 
 ing property or persons, natural or corporate, within their terri- 
 torial limits. Of course these corporations, just as natural persons, 
 may have causes in which they are parties heard and determined in 
 the Federal courts, either on original process or by removal in the 
 cases provided by the laws of the United States. 
 
 In Louisiana the ju'risdiction of the courts depends upon the 
 subject-matter in controversy and the domicile of the defendant. 
 The New Orleans National Banking Association had its domicile 
 at New Orleans ; and, in an ordinary civil case, it could not have 
 been sued out of the parish of Orleans. Casey, the receiver, has 
 his domicile at the city of New Orleans ; and in like manner he is 
 not subject to tbe ordinary jurisdiction of the courts of other 
 parishes. 
 
 The association was not made a party to this proceeding. The 
 Bank of New Orleans no longer exists. It was converted into the 
 New Orleans National Banking Association in 1871, and Casey, 
 receiver of that association, administered the effects which formerly 
 belonged to the Bank of New Orleans. If the association were a 
 party it would be amenable to the jurisdiction of any State court 
 in which a natural person, having his domicile at the city of New 
 Orleans, could be sued. The case cited by appellant's counsel, 
 Bank of Bethel v. Pahquioque Bank, 14 Wall. 383 {ante, p. 77), 
 simply decides that a National bank does not lose its corporate 
 existence by the appointment of a receiver, and that it may still be 
 sued, just as a natural person, in a court of the State, precisely as 
 if a receiver had not been appointed. 
 
 The question in this case is not whether this National Banking 
 Association may be sued in a State court after a receiver has been 
 appointed ; but whether, a receiver having been appointed, he is 
 amenable to the jurisdiction of a State court in a parish different 
 from that in which the association was located, and in which also 
 he has his domicile. 
 
 By the act of 1841, re-enacted in 1855, p. 497, § 37, and again 
 in the Eevised Statutes of 1870, §§ 1942, 3903 : " Whenever 
 a conflict of privileges arises between creditors, all the suits and 
 claims shall be transferred to the court by whose mandate the 
 property was first seized, either in mesne process or on execu- 
 tion, and the said court shall proceed to class the privileges and 
 mortgages according to their rank and privilege in a sioimnary man- 
 ner after notifying the parties interested." 
 
516 LOUISIANA 
 
 New Orleans National Sank v. Eaymond. 
 
 The whole controversy in this case is a conflict of privileges. 
 The property was situated in Lafourche ; it had been seized and 
 sold under process of the District Court of that parish, and no other 
 court in the State had power or jurisdiction to settle the contro- 
 versy, and to distribute the proceeds of the sale among the several 
 creditors asserting mortgages and privileges against the property. 
 
 [The remainder of the opinion considers other questions.] 
 
 New OKLEAisrs Natioital Baitk v. Eaymond. 
 
 (29 Louisiana Annual, 355.) 
 
 WationaX hank may sell real estate and take mortgage. 
 
 A National bank may sell real estate owned by it and take back a mortgage 
 tbereon to secure the payment of tbe purchase-money. 
 
 APPEAL from the Fifth District Court, parish of Orleans. 
 CULLOM J. 
 
 Charles Louque and Oarleion Hunt, for Joseph Billgery, plaintifE 
 in rule, and appellee. 
 
 McGloin & Nixon, and. Magruder & Richardson, for Mrs. A. B. 
 Baranco, appellant. 
 
 Spencer, J. The Union National Bank of New Orleans sold 
 to Joseph Eaymond, by authentic act of date the 37th of February, 
 1873, a certain parcel of ground in the square bounded by First, 
 Second, Dryades, and Baronne streets, for the price of $14,666.66, 
 one-fifth of which was paid in cash, and for the balance Eaymond 
 executed notes at one, two, three and four years, secured by special 
 mortgage and pact of non alienando on the property. 
 
 On the loth of April, 1873, Eaymond entered into a contract 
 with the city of New Orleans, acting through its mayor under ordi- 
 nance No. 3041 administration series. By that contract Eaymond 
 bound and obligated himself in substance to erect on said grounds 
 a market-house according to certain specifications ; to free the 
 property of all mortgages and. incumbrances on or before the com- 
 pletion of said building, and to keep the market as required by 
 
SUPEEMB COUET, 1877. 517 
 
 New Orleans National Bank v. Raymond. 
 
 the city ordinances, etc. Kaymond during the first ten years was 
 to receive all the rents and revenues. At the expiration of the first 
 ten years the city was for the next ten years to farm out the market 
 and take all the rents and revenues in excess of five hundred dollars 
 per month, or six thousand dollars per year ; the rents up to said 
 amounts to be paid to Eaymond, his heirs or assigns. At the end of 
 this second term of ten years, Eaymond was to transfer the grounds 
 and market in full ownership to the city, binding himself not to 
 alienate or incumber the same to the prejudice of this agreement. 
 
 On the 10th of March, 1874, the New Orleans National Bank 
 obtained judgment on a bill of exchange for^even hundred dollars 
 against Joseph Eaymond, issued execution thereon, seized, and, 
 on the 34th of July, 1876, sold and purchased for one hundred 
 and fifty dollars " all the right, title, and interest of Joseph Eay- 
 mond in, to, and under the contract made with the city of New 
 Orleans of date April 10, 1873." * * * "The said act of April 
 10, 1873, conferring upon him the right to the revenues of a market 
 constructed by him at the corner of Second and Dryades streets, 
 in the square bounded by Second, First, Dryades and Baronne 
 streets, for the term of twenty years," etc. 
 
 On the 5th of September, 1876, said New Orleans National 
 Bank sold and transferred, in consideration of the amount due it, 
 with subrogation, to Mrs. Baranco, all its rights in, to and under 
 said judgment and purchase. 
 
 On the 25th of May, 1876, the Union National Bank, under exe- 
 cutory process against Eaymond upon said vendor's mortgage, 
 seized the above described lots of ground, " together with all the 
 buildings and improvements thereon," and advertised the same for 
 sale on the 1st of July, 1876. 
 
 On June 39, 1876, Joseph Billgerypurchased and was subrogated 
 to the judgment in the case of " Andrew G. Downey v. Joseph 
 Raymond," for some twelve hundred and fifty dollars, being for 
 work done on said market buildings. 
 
 On the 1st of July, 1876, the day of sale, Joseph Billgery paid 
 to the Union National Bank the mortgage note due, and the sale 
 was not made. Subsequently he took up and paid the remaining 
 outstanding vendor's note held by the Union Bank. Billgery did 
 not take a formal act of subrogation at the time of his payment on 
 the 1st of July, but on the 3d of August, 1876, the bank gave him 
 a receipt and subrogation to its rights. 
 
518 LOUISIANA 
 
 New Orleans National Bank v. Raymond. 
 
 Billgery, as subrogee of Union National Bank, caused said prop- 
 erty to be re-advertised for sale on February 10, 1877, and re-adver- 
 tised again for sale on March 3, 1877. 
 
 On the 34:th of February, 1877, he commenced the proceeding now 
 before us, being a rule taken on Mrs. Baranco to show cause why 
 the act of adjudication by the sheriff to the New Orleans National 
 Bank above described (to which she'had been subrogated) should 
 not be erased and canceled from the books of the ofiSce of convey- 
 ances, for the reason that the same is null and void and operates 
 injuriously to him (Billgery) as a cloud upon the title of said prop- 
 erty. 
 
 Mrs. Baranco pleads by way of exception and answer in substance 
 as follows : 
 
 First. That plaintiff in rule, not being a party to the suit of 
 The New Orleans National Bank v. Joseph Raymond, cannot pro- 
 ceed in this summary manner to set aside the adjudication, and 
 should proceed by direct action. 
 
 Second. That the pretended mortgage to the Union National 
 Bank is void, as taken in contravention of the laws of the United 
 States, creating National banks; that said bank under said laws is 
 prohibited from owning real estate and from taking or holding 
 mortgages thereon under the circumstances of this case. 
 
 Third. That the mortgage to the Union National Bank has been 
 extinguished by payment, and that said Billgery was not subro- 
 gated thereto. 
 
 Fourth. She alleges her ownership of the rights of Raymond 
 under the said contract with the city, and that she is entitled 
 thereby to the rents and revenues of said market in the hands of 
 the sheriff. 
 
 Fifth. By way of reconvention she prays and demands the 
 nullity of Billgery's pretended mortgage rights and for their can- 
 cellation, and that she be declared entitled to the revenues of said 
 market. 
 
 Upon these issues the case was tried. There was judgment for 
 plaintiff ordering the erasure and cancellation of Mrs. Baranco's 
 title, and decreeing its nullity. She prosecutes this appeal. ' 
 
 [The court here decided a question of practice.] 
 
 It therefore only remains for us to inquire whether Joseph Bill- 
 gery shows an interest in having this done. 
 
 He claims to be subrogee of the vendor's mortgage held by the 
 
SUPREME COTJET, 1877. 519 
 
 New Orleans National Bank v. Eaymond. 
 
 Union National Bank. If that be a valid mortgage and he be 
 the holder of it, his demand is well founded. 
 
 Counsel for defendant in the rule urges strenuously that the 
 mortgage in favor of the bank was in its inception null and void, 
 as violative of the National Bank Act. He admits that the bank 
 was the owner of the lots in question, but contends that it could 
 not sell them on a credit, reserving a mortgage and privilege for 
 the price, and that such mortgage and privilege were absolutely 
 void. The 28 bh section provides as follows: 
 
 " And be it further enacted, That it shall be lawful for any such association 
 to purchase, hold, and convey real estate as follows : 
 
 " First. Such as shall be necessary for its immediate accommodation in 
 the transaction of its business. 
 
 " Second. Such as shall be mortgaged to it in good faith for debts previously 
 contracted. 
 
 " Third. Such as shall purchase at sales under judgments or decrees or 
 mortgages held by such association, or shall purchase to secure debts due to 
 said association. 
 
 " Such association shall not purchase or hold real estate in any other case or 
 for any other purpose than as specified in this section," etc. 
 
 As stated, there is no dispute as to the bank having been owner 
 of the lots, and therefore it must have acquired in some one of 
 the modes specified in the act. The act gives authority to purchase 
 under certain restrictions, but there is no restriction upon the 
 power " to convey." The intent and policy of the law is manifest. 
 It was to discourage, to prevent, the accumulation of real estate in 
 the hands of these banks. But if such was the intent, it would be 
 strange if the power and right " to convey," to sell, were restricted. 
 We would expect the largest liberty in this direction, as being in 
 furtherance of purposes of the lawgiver. It is unreasonable to con- 
 clude that because the law gives the power to do business " by 
 loaning money on personal security," and restricts the right to 
 purchase real estate, that therefore it forbids the sale of such real 
 estate as may have been lawfully acquired upon the usual custom- 
 ary terms of the commercial world, and strikes with nullity such 
 vendors' liens and mortgages as may be retained to secure deferred 
 parts of the price.' If defendant's theory be right, then a National 
 bank in Louisiana cannot sell real estate on a credit at all, even 
 without mortgage, for under our law the vendor has for his security, 
 by mere operation of law, both his lien and the right of resolution 
 of the sale, which would constitute real securities for debt in vio- 
 
MAINE 
 
 Stetson V. City of Bangor. 
 
 lation of the Banking Act. We conclude therefore that there is 
 nothing in the law preventing a National bank from selling its 
 real estate on terms of credit and reserving a mortgage to secure the 
 price. 
 
 The remaining question is, was Billgery subrogated to the bank's 
 mortgage ? It is unnecessary to discuss the effect of the receipt 
 and conventional subrogation given to him by the bank on the 2d 
 of August, 1876. He was a creditor of Eaymond on the 39th of 
 June, 1876, by subrogation to the judgment of Andrew Gr. Downey. 
 He paid the mortgage note to the bank on the 1st of July, 1876. 
 Subrogation took place by effect of law. C. C. (old) 3157. 
 
 There is no proof that Billgery acted as Eaymond's agent; that 
 is satisfactory. It is conceded on all sides that it was Billgery's 
 money that was paid, and the weight of evidence is largely in favor 
 of his having done so in his own interest and behalf. 
 
 It is therefore ordered, adjudged, and decreed by the court that 
 the judgment appealed from be affirmed with costs of both courts. 
 
 Stetson v. City of Bangok. ' 
 
 (56 Maine, 274.) 
 TcKmtion of National hanks — State statute prohibiting hanking eom/paniea. 
 
 Municipal officers cannot assess a tax on shares of stock of a National bank 
 
 unless authorized by a law of the State. 
 A statute authorizing " the taxation of all shares in moneyed corporations," 
 
 held sufficient authority to tax shares in National banks. 
 A State statute prohibiting the establishment of banking companies in the 
 
 State, without authority of the Legislature, does not apply to National 
 
 banks. 
 
 ASSUMPSIT to recover back taxes assessed April 1, 1864, on 
 plaintiff's shares in a National bank organized under the 
 National Currency Act of 1863. 
 
 Rome S J. A. Peters, for plaintiff. 
 
 A. W. Paine, for defendants. 
 
SUPEEME JUDICIAL COUET, 1871. 521 
 
 Weld V. City of Bangor. 
 
 DiCKEKSOK, J. [After deciding that the shares in banks organ- 
 ized under the Currency Act of 1863 could be taxed by the State.] 
 
 Before, however, municipal oflBcers can rightfully assess a tax 
 upon the shares of National banks, they must be authorized so to 
 do by some law of the State. They are the creatures of State law, 
 and derive their powers in this respect solely from State enactments. 
 
 Though the shares in National banks are not specifically men- 
 tioned in our Tax Act, we think they are included in section 5, chap- 
 ter 6, of E. S., "which authorizes the taxation of all shares in moneyed 
 corporations." Sections 79 to 82, of chapter 47, E. S., prohibiting the 
 establishment of banking companies in this State without author- 
 ity of the Legislature, were not intended to apply to banking cor- 
 porations created by authority of Congress, since such corporations 
 may be legally established in the State without the consent of the 
 Legislature. 
 
 According to the agreement of the parties the 
 
 Nonsuit must be confirmed. 
 
 CuTTiiTG and Bareow, JJ., concurred. 
 
 Kent and Taplet JJ., concurred in the result. 
 
 "Weld v. City of Bangoe, 
 
 (59 Maine, 416.) 
 Tax on National hank sTiares, how collected. 
 
 The plaintiff, a non-resident of Bangor, was duly assessed therein, upon his 
 shares of stock in the First National Bank. After legal demand, the plain- 
 tiff, refusing to pay the tax upon the warrant of the collector of the city, 
 issued April, 1870, was duly arrested by the sheriff of the county in the fol- 
 lowing May, for the tax, which the plaintiff then paid under protest, 
 together with costs, to the officer, and he to the city treasurer. In assumpsit 
 to recover the money thus paid, Tield, (1) that the collection of such tax is 
 to be enforced in accordance with the general law ; and (3) that chapter 209 
 of the Public Laws of 1868 related exclusively to the assessment, and in 
 nowise affected the collection of taxes duly assessed under previously exist- 
 ing laws. 
 
 66 
 
522 MAINE 
 
 Weld T. City of Bangor. 
 
 ASSUMPSIT for money had and received. 
 The plaintiff, during no part of the last twenty years, has been 
 a resident of Bangor or had any property taxed there, except in 1867, 
 when, without his consent, he was, in due and legal form, assessed 
 there upon his shares of stock in the First National Bank, a bank- 
 ing institution established under t^e laws of the United States, 
 located in Bangor. 
 
 After legal demand upon him, the plaintiff, refusing to pay the 
 tax upon the warrant of the collector of the city issued in April, 
 1870, was duly arrested by the sheriff of Penobscot county on May 
 36, 1870, for the tax, when he paid it, under protest, together 
 with costs of arrest to the sheriff, who paid it to the city treasurer. 
 The action is to recover the money thus paid, and if not maintain- 
 able, the plaintiff to be nonsuit. 
 
 J. A. Peters and F. A. Wilson, for plaintiff. 
 H. C. Ooodenow, city solicitor, for defendants. 
 
 AppLETOif, 0. J. The tax in question was duly and legally as- 
 sessed under the provisions of the act of 1867 (ch. 126). Packard 
 V. Lewiston, 55 Me. 456 ; Abbott v. Bangor, 56 id. 310. 
 
 The collection of this tax, like that of all other taxes duly 
 assessed, is to be enforced in accordance with the general laws of 
 the State on that subject. 
 
 The act of March 6, 1868 (ch. 209), relates exclusively to the 
 assessment of taxes. The rules prescribed vary from those of the 
 act of 1867 (ch; 126). The act is prospective in its operation. It 
 looks only to the future. " All acts and parts of acts inconsistent 
 with this act are hereby repealed." That is, a new rule as to the 
 future assessment of taxes is established, nothing more. 
 
 The act in no way affects the collection of taxes, which have 
 been duly assessed under previously existing law. It does not pro- 
 hibit the enforcement of a tax as in Augusta v. North, 57 Me. 
 392. It in no way alludes to the collection of taxes. 
 
 Had the tax been paid as in AUott v. Bangor, 56 Me. 310, its re- 
 payment could not have been enforced. The tax being duly assessed, 
 and constituting a portion of what the plaintiff was equitably 
 
SUPEEME JUDICIAL COURT, 1874. 523 
 
 Hagar v. Union National Bank . 
 
 bound to pay toward the public burdens, it can hardly be sup- 
 posed that the Legislature intended to relieve him from a just lia- 
 bility. By a long neglect to pay his taxes, the plaintiff is not to 
 be in a better condition than if he had promptly done his duty. 
 
 Plaintiff nonsuit. 
 
 Hagae v. UiTiON National Ban^k. 
 
 (63 Maine, 509.) 
 
 Lien of National hank on dwidends — Attachment of shares — Demand of 
 
 dindend. 
 
 A ITational bank has a lien on and the right to hold a cash dividend as pledge 
 for the indebtedness of the shareholder to the bank. 
 
 A National bank may attach the shares of a stockholder therein for his debt 
 due the bank. 
 
 A National bank sued a shareholder therein for money due and attached his 
 shares. Pending the suit he demanded payment of the dividends declared 
 upon the attached shares, which was refused. He afterward settled the suit 
 and brought an action for his dividends, without renewing his demand. Held , 
 that the demand while the shares were attached was a nullity, and as divi- 
 dends were not payable until demanded, the action could not be maintained. 
 
 ACTION of assumpsit to recover dividends declared by the 
 defendant, a National bank, on forty-five shares of stock owned 
 by the plaintiff. 
 
 Prior to the time such dividends were declared the bank had sued 
 the plaintiff upon two notes due from him to the bank and had 
 attached his shares of stock. After the dividends were declared, 
 but while the suit was pending, the plaintiff demanded the divi- 
 dends and they were refused. He subsequently settled the suit 
 and then brought this action, without having renewed his demand 
 for the dividends. One of the dividends was earned but not de- 
 clared before the attachment of the share. 
 
 /. W. Spaulding, for plaintiff. 
 
 J. H. Drummond, for defendant. 
 
524 MAINE 
 
 Hagar v. Union National Bank. 
 
 ViRQiif, J. There are two fatal objections to the mamtenanee of 
 this action : 
 
 I. A bank has the right to hold a cash dividend as pledged for 
 the indebtment of the shareholder to the bank. 
 
 It has been expressly decided in the Supreme Court of the Uni- 
 ted States, that since the National Bank Act of June 3, 1864, went 
 into eilect, neither by the act itself, nor by any by-law based upon 
 any authorized provision in the " articles of association," can a 
 National bank create a lien upon the shares of its stockholders for 
 their indebtment to the bank. That such a lien is contrary to the 
 whole policy of the act is manifested by the repeal of such a pro- 
 vision in the act of 1863, and inconsistent with the spirit of section 35- 
 in the act of 1864. Banh v. Lanier, 11 Wall. 369 (ante, p. 70) ; Bul- 
 lard V. Bank, 18 id. 589. See, also, Evansville Nat. Banh v. Me- 
 tropolitan Nat. Banh, 2 Biss. 537 {ante, p. 189). To the same pur- 
 port is Banh of Louisville v. Banh of Newarh, 10 Bush, 367.* 
 
 The rule has long prevailed in many jurisdictions that a corpora- 
 tion has no implied lien on the shares of its stockholder for debts 
 due from him and cannot hold them against a purchaser or attach- 
 ing creditor {Sargent v. Franhlin Ins. Co., 8 Pick. 90 ; Mass. Iron 
 Co. V. Hooper, 7 Cush. 187) ; but that a bank deals with its stock- 
 holders in the same manner as it does with its general customers, 
 taking the same security and not relying upon its stock. A differ- 
 ent rule was adopted in relation to dividends declared. They were 
 considered as so much money in the possession of the bank belong- 
 ing to the stockholder, but which should be considered as pledged 
 toward the payment of any just debt then due from him. Bates 
 V. N. Y. Ins. Co., 3 Johns. Gas. 238. This rule was considered a 
 " reasonable one," and was adopted by the court in Sargent v. Franh- 
 lin Ins. Co., supra. We fail to perceive any real objection to such 
 a rule. It is not inconsistent with any provision in the Bank Act, 
 and neither is it in conflict with any principle of public policy. It 
 cannot affect the free sale and transfer of shares, for the dividend does 
 not pass with the transfer of the share, being the property of him 
 who is the shareholder when it is declared. So long, then, as the 
 
 * The following is all that is said in this case on the subject : 
 " The claim of the Louisville Bank to a lien ou the stock under and by virtue 
 of its articles of association or by-laws cannot be maintained. This question 
 is settled beyond all controversy by the two oases of the Banh v. Lanier, 11 
 Wall. 369, and Bullard v. Bank, 18 id. 589. No banking association or- 
 ganized under the National Currency Act of 1864 can create or hold such liens." 
 
SUPREME JUDICIAL COURT, 1874. 525 
 
 Hagar v. Union National Bank. 
 
 plaintifE's overdue notes remained unpaid, he could not recover the 
 dividends declared upon his shards, because of this equitable lien. 
 
 And neither could he maintain an action therefor without a pre- 
 vious demand. Scott v. Gent. R. R. Co., 53 Barb. 45. The law does 
 not require a bank, after declaring its dividends, to hunt up and 
 tender to its stockholders their respective dividends, in order to 
 avoid the liability of actions therefor. Dividends are usually de- 
 clared payable at the banking-room, whither the owner may go and 
 there on demand receive them — ^provided his indebtmeut to the 
 bank does not contravene. To be available the demand should have 
 been made when and where the bank was bound to pay. If made 
 while the money was considered as pledged for the indebtment of 
 the demander, it would be as useless as if made before the dividends 
 had been declared. As well might a mortgagor of chattels demand 
 them before he had discharged the debt secured thereby, and after 
 payment bring his action without rerjewing his demand. In the 
 case at bar the plaintiff, after dissolving the lien by payment of his 
 notes, could doubtless have obtained the dividends, by asking for 
 them at the banking-room ; but, for some reason, he chose to sue 
 without any other demand ; and we think his action was prema- 
 turely commenced. Hagar v. Randall, 62 Me. 439. 
 
 II. It had a special lien created by the attachment of his shares 
 on June 31, 1873, which continued until July 10, 1873, when the 
 attachment was dissolved. 
 
 The net profits of a bank remain the property of the bank and 
 are inseparable and undistinguishable from it, and will pass by the 
 name of stock by sale, bequest or levy, until by the resolution 
 of the directors, they are separated and set apart as dividends. This 
 almost necessarily results from the utter impracticability of ascer- 
 taining the real circumstances of the bank until the expiration of 
 the full period for which they are declared ; and when declared 
 they become the property of the then stockholders. Goodwin v. 
 Hardy, 57 Me. 143 ; March v. Eastern R. R. Go., 43 N. H. 515 ; 
 Foote, appellant, 33 Pick. 399 ; Granger v. Bassett, 98 Mass. 469 ; 
 Minot V. Paine, 99 Mass. 101. 
 
 Shares are a peculiar property, but are declared by all modern 
 charters to be personal property. The title is a legal one, created 
 and defined by law, and it may be transferred by contract, bequest 
 or levy. The mode for securing a lien thereon and passing the 
 title by levy is expressly provided by our own statute, as follows : 
 
526 MAINE 
 
 Hagai V. Union National Bank. 
 
 " When the share or interest of any person in any incorporated 
 company is attached on mesne process, an abtested copy of the 
 writ with a notice thereon of the attachment, signed by the officer, 
 shall be left with the clerk, cashier or treasurer of the company ; 
 and such attachment shall be a lien on such share or interest, and 
 on all accruing dividends." B. S., ch. 81, § 25. 
 
 The attachment was perfected in strict compliance with this 
 provision. We can hardly conceive of a better "notice" of an 
 attachment than an attested copy of the officer's return of the at- 
 tachment, indorsed upon an attested copy of the writ. The attach- 
 ment being valid, it created a lien on the shares "and on all 
 accruing dividends," i. e., all dividends declared on such shares 
 during the continuance of the attachment regardless of the time 
 when the acquisitions out of which they are declared may have 
 accrued. In perfect accord with this view, the statute further 
 provides that " if such shares were attached in the suit in which 
 the execution issued," the purchaser at the sale on execution "shall 
 have all dividends which accrued after the attachment." E. S., ch. 
 84, § 15. 
 
 The plaintiff invokes section 35 of the Act of Congress of 1864 (13 
 Stat, at Large, 103), viz. : "That no association shall make any 
 loan or discount on the security of the shares of its own capital 
 stock, nor be the purchaser nor holder of any such shares, unless 
 such security or purchase shall be necessary to prevent loss upon 
 a debt previously contracted in good faith ;" and contends that this 
 provision forbids the attachment by the bank of any shares of its 
 own capital stock, " unless it shall be necessary to prevent loss," 
 etc. We do not understand that the attachment or sale on execu- 
 tion of shares implies a purchasing or holding on the part of the 
 creditor. Shares are personal ; and any person may purchase at 
 the sale. If, like a levy on real estate, the title necessarily passed 
 to the creditor, the construction contended for by the plaintiff 
 would be much strengthened. But although, to use the language 
 of Mr. Justice Datis, ia Banh v. Lanier, supra,, " so marked is 
 the policy of Congress on this subject, that it does not allow a 
 bank to become the purchaser or holder of its shares at all, unless 
 absolutely necessary to prevent loss on a debt," etc., and "that if 
 the power were given to a bank to loan money on the security of 
 its shares, it would imply a power to become the owner of those 
 shares, and this Congress intended to guard against," we are not 
 
COURT OP APPEALS, 1870. 527 
 
 State V. The National Bank of Baltimore. 
 
 prepared to believe that Congress intended to require a bank to 
 go out and accurately inform itself of the necessity before it can 
 by the forms of law attach the shares of a stockholder for his debt 
 due the bank and sell them to whomsoever may purchase. 
 
 If the defendant did have a lien on the shares by reason of the 
 attachment, then the demand will not avail the plaintiff in the 
 maintenance of this action. Plaintiff nonsuit, 
 
 ApPLETOJf, C. J., CUTTIKG, DlCKERSOiT, BaKKOWS AlfD DaN- 
 
 FOKTH, 33., concurred. 
 
 State v. The Natioital Bank of Baltimobb, 
 
 (33 Maryland, 75.) 
 Conversion of State bank into National bank — Bight of State to exact bonus. 
 
 A State bank was by its charter required to pay the State a tax or bonus on 
 its capital paid in. A statute afterward authorized State banks to reorgan- 
 ize as National banks, provided that all sums required by their charters to 
 be paid to the State continued to be paid as theretofore. Held, that a State 
 bank had the right to surrender its charter, and by so doing discharged itself 
 from its obligation to pay the required bonus, and that the State could not 
 require it, in reorganizing as a National bank, to pay any bonus. 
 
 THIS suit was instituted by the appellant in accordance vrith the 
 requirements of Resolution No. 4, of the General Assembly 
 of Maryland of 1868, to recover certain sums of money claimed to 
 be due and payable by the appellee, under the acts of Assembly of 
 1853, chapter 441, and 1865, chapter 144, for the augmentation of 
 the free school fund of the State. 
 
 Attorney- General Jones, for appellant. 
 
 L. Nevett Steele, for appellee. 
 
 Mattlsbt, J., delivered the opinion. 
 
 The act of 1853, chapter 441, rechartered several of the banks 
 of this State whose charters were about to expire, and amongst 
 
528 MAEYLAND 
 
 State V. The National Bank of Baltimore. 
 
 others the Bank of Baltimore, since converted into a National 
 association under the act of Congress of 1864, chapter 106. 
 
 The 5th section of the act of 1853 provided that each of the 
 banks should annually pay to the treasurer of the State of Mary- 
 land, on the first Monday of January, the sum of twenty cents on 
 every hundred dollars of the capital stock actually paid in, to be 
 applied in augmentation of the free school fund, and that, if any of 
 said banks failed to make said payment within six months after it 
 became payable, its charter should be forfeited, and be deemed 
 null and void. 
 
 The 17th section did not provide a mode in which the banks, or 
 any of them, should evidence a determination to close banking 
 operations, or a particular means by which said operations should 
 be closed, and the assets distributed, as seemed to be supposed in 
 the argument of the Attorney-General ; but provided simply, that 
 if the president and directors, or a majority of the stockholders in 
 general meeting assembled, should, at any time, determine to close 
 the banking operations of any of said banks, it should not be law- 
 ful for such corporation thereafter to resume the exercise of its 
 banking powers and franchises. 
 
 There is no provision of the act of 1853 restraining any of the 
 banks incorporated by it from ceasing to exercise the powers and 
 franchises conferred by it, at any time when the president and 
 directors, or a majority of the stockholders, might so determine. 
 On the contrary, the 17th section expressly recognizes the right 
 to do so, at any time during the corporate existence authorized by 
 the act. 
 
 The Bank of Baltimore availed of the rights and franchises 
 granted, and assumed the obligation to pay twenty cents on every 
 hundred dollars of its capital stock paid in annually, so long as it 
 should continue its existence under the authority of the act. The 
 franchise granted was to conduct banking operations. All other 
 provisions of the act were incident to the exercise of this franchise. 
 The right of " closing its banking operations " necessarily per- 
 tained to the corporation, from the nature of its being, and, as 
 stated, was recognized by the 17th section. 
 
 The bank was in existence under the authority of the act of 
 Assembly of 1853, when the act of Congress of 1864 was passed. 
 The latter act was passed " to provide a National currency, secured 
 by a pledge of United States bonds, and to provide for the re- 
 
COURT OP APPEALS, 1870. 529 
 
 State V. The National Bank of Baltimore. 
 
 deniption and circulation thereof." It proposed to efEect this by 
 means of authorizing associations to be organized " for carrying on 
 the business of banking." The 5th and following sections, to 43d 
 inclusive, provided in detail for the means and the manner in 
 which they were to be applied. The 44th section provided, " that 
 any bank, incorporated by special law, or any banking institution 
 organized under a general law of any State, may, by authority of 
 this act, become a National association under its provisions," and 
 proceeded to detail the manner in which a banking institution might 
 become organized as a National association, as in the preceding 
 sections the manner had been detailed in which persons might 
 organize for the same purpose. 
 
 The power of Congress to pass the act of 1864 is not made a 
 question in this case, which is against a defendant existing under 
 its authority, and we are, therefore, relieved of the duty of express- 
 ing an opinion on that subject. In this opinion, we must assume 
 the constitutionality of all those parts of the act of 1864 which 
 are necessarily involved in the decision of the case before us. It 
 provided full and perfect means by which to enable the Bank of 
 Baltimore to become changed and converted into a National asso- 
 ciation. 
 
 The record shows that, on the 13th of July, 1865, the owners of 
 the capital stock of the Bank of Baltimore organized an association 
 under the act of Congress, and determined to conduct their busi- 
 ness, from and after the 1st day of August, under the title of the 
 National Bank of Baltimore, and that on the 17th day of July the 
 Governor of the State, by his proclamation, announced that the 
 charter of the Bank of Baltimore, as granted by the General Assem- 
 bly, had been surrendered, and that its corporate powers, under 
 said charter, would thenceforth cease. 
 
 The charter being surrendered and annulled, on what ground 
 can the State demand the price which was payable whilst the char- 
 ter continued, for the privileges granted by it ? 
 
 " The bonus imposed by the charter of banks is not a tax on 
 the franchises granted, but a price to be paid for the right of 
 exercising the powers, and enjoying the immunities conferred by 
 the charters." 6 Gill, 288. 
 
 This suit is against the National Bank of Baltimore, to recover 
 the bonus imposed by the act of 1853, on the Bank of Baltimore, 
 which has accrued and become payable, as alleged, since the change 
 67 
 
530 MAEYLAND 
 
 State V. The National Bank of Baltimore. 
 
 and conyersion of the Bank of Baltimore into The National Bank 
 of Baltimore. 
 
 The right to recoyer is not, and could not be maintained on the 
 ground that the State is entitled to the price to be paid by the 
 Bank of Baltimore for the right of exercising the powers and 
 enjoying the immunities conferred by its charter. That has been 
 surrendered and annulled. The right to recoyer is yested on the 
 ground of contract, and it is contended that, by the act of Assem- 
 bly of Maryland, of 1865, chapter 144, the Bank of Baltimore was 
 enabled to abandon its charter, and avail of the proyisions of the 
 act of Congress, and to continue " to use its corporate name for 
 the purpose of prosecuting and defending suits instituted by or 
 against it, and of enabling it to close up its affairs," and to have 
 all its assets, real and personal, vested in the association organized 
 under the act of Congress, without other transfer, on condition 
 "that the existing laws of the State providing for taxes on the 
 State banks, for the purposes enumerated therein, shall extend and 
 apply to all State banks and other institutions, availing themselves 
 of the provisions of this act, when they shall have become banking 
 institutions under the act of Congress, and all sums required by 
 the charter of said institutions and banks to be paid to the State, 
 shall continue as heretofore to be paid." 
 
 The money sued for was payable to the State under the act of 
 1853, as a price for the right of exercising the powers and enjoy- 
 ing the immunities of the State charter. When that charter was 
 surrendered and annulled, the money could no longer be payable 
 for that right. If the duty of continuing to pay it could be 
 imposed on the new association created by the act of Congress, and 
 existing under its authority, it could only be by virtue of power in 
 the State to impose it as a tax. It is clear that it could be 
 demanded only as payment for a right granted by the State, or as 
 a tax imposed by the State. It is clear that the State had no 
 power to impose it as a tax. 
 
 In McOulloch v. The State of Maryland, 4 Wheat. 316, the Su- 
 preme Court said: "The State governments have no right to tax 
 any of the constitutional means employed by the government of 
 the Union to execute its constitutional powers," and "the States 
 have no power, by taxation or otherwise, to retard, impede, burden, 
 or in any manner control the operations of the constitutional 
 
COUET OP APPEALS, 1873. 53I 
 
 The Chesapeake Bank v. The First National Bank of Baltimore. 
 
 laws enacted by Congress to carry into effect the powers Tested in 
 the National government." 
 
 And in Howell t. State, 3 Gill, 14, our own Court of Appeals 
 said: "State sovereignty extends to everything which exists by its 
 own authority, or is introduced by its permission, but not to those 
 means employed by Congress to carry into execution powers con- 
 ferred by the Constitution of the United States." 
 
 The prayers of the plaintiff below rested on the ground of con- 
 tract, and were addressed to the point, that it ought to be left to 
 the jury, on all the facts and circumstances of the case, to find an 
 implied agreement by the defendant to pay the money sued for. 
 It could not be competent to the jury to find an implied con- 
 tract by the defendant to pay to the State a bonus for the priv- 
 ileges and franchises of defendant's charter. No charter from the 
 State was in existence. The defendant derived the franchises and 
 privileges which it enjoyed from the act of Congress. It would 
 have been contrary to law for the jury to so find. So, it could 
 not be competent for the jury to infer a promise by defendant 
 to pay to the State a tax which the State had no right to 
 demand. The attempt by the State to impose such a tax would be 
 void, and there could be incumbent on the defendant no duty to 
 pay it, on which a promise to pay could be raised by implication. 
 In no view do we think that the jury could have been justified in 
 finding a contract by the defendant on which the action could 
 have been maintained, and we, therefore, concur with the court 
 below in the propriety of rejecting the appellant's prayers. 
 
 Judgment affirmed. 
 
 The Chesapeake Bake, appellant, t. The First National 
 Bank op Baltimore. 
 
 (40 Maryland, 289.) 
 
 National banks — Mesne process against, from State court. 
 
 The act of Congress providing that no attachment, injunction or execution 
 shall be issued against a National bank, before final judgment, in any action 
 in a State court, is constitutional. 
 
532 MAEYLAND 
 
 The Chesapeake Bank v. The First National Bank of Baltimore. 
 
 ATTACHMENT on warrant against the First National Bank of 
 Baltimore, as garnishee of the First National Bank of "Wash- 
 ington. The opinion states the case. 
 
 George H. Williams, for appellant. 
 A. Sterling, Jr., for appellee. 
 
 Miller, J. The appellant on the 18th of September, 1873, 
 caused an attachment on warrant to be issued out of the Superior 
 Court of Baltimore city to afEect the property and credits of the 
 First National Bank of the city of Washington, District of Colum- 
 bia, as a non-resident debtor, which was laid in the hands of the 
 First National Bank of Baltimore, as garnishee. In October fol- 
 lowing, the garnishee filed a motion to quash for reasons alleged, 
 and from the judgment of the court quashing the writ, this appeal 
 is taken. It is conceded the decision of the Superior Court was 
 based upon the first reason stated in the motion, as follows : 
 
 That said First National Bank of Washington was, before said 
 attachment and at the time of the issue thereof, and still is, an 
 association for the purpose of carrying on the business of banking, 
 duly organized under the act of Congress of June 3, 1864, and 
 that, by the 3d section of the act of Congress, approved March 3, 
 1873, it is enacted that the 57th section of the first-mentioned act 
 be amended by adding thereto the following : " That no attach- 
 ment, injunction or execution shall be issued against such associa- 
 tion or its property before final judgment in any such suit, action 
 or proceeding in any State, county or municipal court," and that, 
 by the force of said section, of said acts, the said attachment is 
 illegal and void. 
 
 We shall not stop to inquire what is the true construction of the 
 original 57th section of the act of 1864, because it is clear the case 
 before us is embraced by the terms of the amendment thereto made 
 by the act of 1873. The constitutionality of the National Banking 
 Acts is admitted, their purpose being, as expressed in the title to 
 the original act of 1864, " To proTide a National currency secured 
 by a pledge of United States bonds, and to provide for the circula- 
 tion and redemption thereof ; " but it is insisted these particular 
 provisions, or features of them, are unconstitutional and void. 
 The argument is that it is not within the power of Congress to 
 
COUKT OF APPEALS, 1875. 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 clothe these banking associations as to their contracts and dealings 
 with the world, with any special immunities and privileges exempt- 
 ing them, in their trade and intercourse with others, from the laws 
 and remedies applicable in like cases to other citizens. But the 
 power to create these banks as instrumentalities of the goTernment, 
 being, as it confessedly is, within the rightful powers of Congress, 
 we cannot say that provisions like these, defining in what tribunals 
 they shall be sued and to what suits or actions they shall be sub- 
 jected, are not appropriate and necessary to carry out this admitted 
 power. It must plainly appear that such provisions are inappro- 
 priate and unnecessary for this purpose, in order to justify a court 
 in declaring that Congress has transcended its authority in enact- 
 ing them. In our opinion Congress has the power to make any 
 provisions which tend to promote the efiBciency of these banks in 
 performing the functions by which they were designed to serve the 
 government, and to protect them, not only against interfering 
 State legislation, but also against suits or proceedings in State 
 courts by which that efficiency would be impaired. We are unable 
 to perceive that the provisions here assailed are not of that char- 
 acter, and therefore cannot pronounce them void. 
 
 Judgment affirmed. 
 
 Wbcklbe v. The Pibst National Bank of Hagerstown. 
 
 (42 Maryland, 581.) 
 
 National bank — Ultra mres — When not liable for representations of officer. 
 
 Selling railroad bonds upon commission is not within the scope of the corpor- 
 ate powers of a National bank ; and therefore no action lies against such cor- 
 poration for false representations made by its teller to induce the plaintiff to 
 buy bonds.* 
 
 ACTION to recover damages for fraudulent representations made 
 by defendants' teller upon sale of bonds to plaintiff. 
 
 H. H. Keedy, for appellant. This is an action for deceit. Whether 
 
 * See Wiley v. First National Bank of Brattleboro, post, and note. 
 
534 MARYLAND 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 an action of this" kind can be maintained against a private corpora- 
 tion is no longer an open question. Tome v. Parkersburg Branch 
 R. R. Go., 39 Md. 70 ; Merchants Bank v. StaU Bank, 10 Wall. 644 ; 
 Barwich v. Eng. Joint Stock Bank, L. R., 2 Bxch. 259 ; Swift v. 
 Wintherlotham, L. R., 8 Q. B. 244 ; Phil, Wil. <& Bait. R. R. Co. 
 T. Quigley, 21 How. 202. 
 
 The instruction of the court is clearly erroneous, independent of 
 the fact that it goes upon the assumption that the transaction com- 
 plained of was a purchase and sale of these bonds, which the facts 
 in the case do not warrant, it lays down the broad proposition that 
 the purchase and sale of bonds are not within the chartered pow- 
 ers of a National bank. It has long been established by the Ameri- 
 can courts, that the bonds of railroads, as well as State and munic- 
 ipal bonds, made payable to bearer or holder, are negotiable instru- 
 ments — commercial paper. Wliite y. Vermont and Mass. Railway 
 Co., 21 How. 575 ; Mercer County v. Hacket, 1 Wall. 95 ; Oelpcke 
 T. Dubuke, id. 206 ; Aurora City v. West, 7 id. 105 ; City of Lexing- 
 ton Y. Butler, 14 id. 295 ; White t. Railroad, 21 How. 576 ; Thom- 
 son V. Lee County, 3 Wall. 331. 
 
 The ruling of the court is then reduced to this, that the pur- 
 chase and sale of negotiable instruments, or negotiable evidences 
 of debt, are not within the chartered powers of a National bank. 
 The National Banking Act, section 8, says : " Shall exercise under 
 this act all such incidental powers as shall be necessary to carry on 
 the business of banking by discounting and negotiating promissory 
 notes, drafts, bills of exchange and other evidences of debt, by 
 receiving deposits, by buying and selling exchange, coin and bul- 
 lion." To discount, signifies the act of buying a negotiable instru- 
 ment for a less sum than that which, upon its face, is payable, and 
 to negotiate means " to sell, to pass, to transfer for a valuable con- 
 sideration ; as to negotiate a bill of exchange." (See Bouvier's Law 
 Dictionary, Discount, and Webster's Dictionary, Negotiate.) Giv- 
 ing these meanings to these words, the ruling of the court below 
 was in direct conflict with the very words of the statute. What can 
 be meant by " other evidences of debt," if it does not refer to the class 
 of securities under consideration ? 
 
 If it is lawful for National banks, under any circumstances, to 
 sell bonds, the defense of ultra vires will not be available. 
 
 It will not be controverted that a National bank can invest its own 
 funds in bonds of the class in question ; that if it becomes tired of 
 
COURT OP APPEALS, 1875. 535 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 the investment or finds it unprofitable, it can sell these bonds and 
 buy others, in other words, can change its investments. Nor will 
 it be denied that if, at one season of the year, its funds are more 
 than sufficient to supply the demands of its customers, it could pur- 
 chase bonds ; and at another season of the year, when the wants of 
 its customers increase, could sell them. It has been decided by 
 this court in First National Bank of Charlotte v. National Banh 
 of Baliniore, 39 Md. 600,* that a National bank could legitimately 
 even become possessed of stocks and sell them ; and if it could own 
 stocks under certain circumstances, it could surely, under similar 
 circumstances, own bonds and sell them ; and again, it is usual for 
 banks to loan money with bonds as collateral security, and upon 
 default in payment, to sell such bonds. The law applicable to this 
 branch of the case is well settled. 
 
 If the contract can be valid under any circumstances, an inno- 
 cent party has a right to ■presume its validity, and the corporation 
 is estopped from denying it. The appellant in this case was an 
 innocent party; at the time of the transaction she was not made 
 acquainted with the circumstances under which the appellee was 
 selling these bonds; the words used by the officers were, "we can 
 give you letter bonds." Miner's Ditch Co. v. Zellerhach, 37 Oal. 543; 
 Merchants' BanTc v. State BanJc, 10 Wall. 644 {ante, p. 47) ; Rash- 
 dell V. Ford, L. E., 2 Eq. Cas. 750; Houghton v. First National 
 Banh of Elkhorn, 26 Wis. 662; S. C, 7 Am. Eep. 107; North River 
 . BanTc v. Aymar, 3 Hill, 262. 
 
 The buying and selling of bonds by a National bank is not ultra 
 vires. It is a fact known to all persons, that National banks, from 
 their organization, have been engaged in the sale of government 
 and other bonds. They have advertised them; their windows have 
 been filled with fac similes'ot them — and every means has been 
 employed to give the public notice that such w|ts a part of their busi- 
 ness. It is not necessary that the act of incorporation should give a 
 bank particular power to do an act, to enable it to do it, for if so, its 
 movements, for all practical purposes, would not last for a day. It 
 is sufficient if it is the ordinary course of banking business. Ba^ih 
 of Kentucky v. Schuylkill Bank, Parsons' Sel. Cases, 237. 
 
 In the face of an usage so broad and general, it would be a harsh 
 rule to declare a transaction illegal or ultra vires, which had been 
 entered into in good faith. Happily we are not without authority 
 
 * Affirmed by the Supreme Court of the United States, see ante, p. 124. 
 
536 MAKYLAND 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 upon this question, for it has been directly settled by several 
 decisions. Caldwell t. The National Mohawk Valley Bank, 64 Barb- 
 333; Van Leuven y. First National Bank of Kingston, 54 K. Y. 
 671 (post), and 6 Lans. 373; Leach v. Hale, 31 Iowa, 70 (ante, p. 466.), 
 Matthews v. The Mass. National Bank, 1 Holmes, 396; Foster v. 
 Essex Bank, 17 Mass. 495. 
 
 Albert Small and George Schley, for appellee. Two questions 
 only are involved in this issue. First. Does an action of deceit lie 
 against a corpoi'ation? and Second. Conceding the facts alleged, 
 and that the action will lie, is the appellee liable, the acts com- 
 plained of being clearly ultra vires. 
 
 1. An incorporated company cannot, in its corporate character, 
 be called on to answer in an action for deceit. Western Bank of 
 Scotland v. Addie, L. E., 1 H. L. Sc. 145. The only late case in 
 conflict (Swift v. Winterbottom, P. 0., L. E., 8 Q. B. 244) is expressly 
 overruled on appeal to the Exchequer Chamber in same case sub 
 nom., Sioift v. Jewsiury, P. 0., L. E., 9 Q. B. 301. See Benjamin 
 on Sales, B. 3, ch. 2, § 3, pages 336-350, and 8 Am. Law Eev. 631- 
 648. 
 
 2. The acte complained of are ultra vires, and the appellee can- 
 not be bound by any act or representation of its officer in this 
 behalf. Tome v. Parkersburg Branch Railroad Company, 39 Md. 
 36; Penn., Del. & Md. Steam Navigation Company v. Dandridge, 
 8 Gill & J. 248; Duncan v. Maryland Savings Institution, 10 id. 
 299; U. S. V. City Bank of Columbus, 21 How. 356; Merchants' 
 Bank v. Marine Bank, 3 Gill, 125; Minor v. Mechanics' Bank of 
 Alexandria, 1 Pet. 46; Head v. Providence Ins. Co., 2 Cranch, 
 127, 169; Dartmouth College v. Woodward, 4 Wheat. 518; Bank of 
 the U. S. V. Dandridge, 12 id. 64. 
 
 Banking, apart fr«m the very elaborate definition given in the 
 act of Congress, is defined in Duncan v. Maryland Savings Institu- 
 tion, supra, as " consisting of the right of issuing negotiable notes, 
 discounting notes and receiving deposits," citing The People v. The 
 President, etc., of the Manhattan Co., 5 Conn. 383; The People v. 
 The Utica Insurance Co., 15 Johns. 390. And see Angell & Ames 
 on Corp., § 55, n. 3; Grant on Banking, 1, 6, 381, 614; Bank for 
 Savings v. The Collector, 3 Wall. 495. To this general definition- 
 the act of Congress adds, " buying and selling exchange, coin and 
 bullion." 
 
COURT OF APPEALS, 1875. 537 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 The construction of the act, since banking is not in itself a cor- 
 porate franchise, but a limitation upon and in derogation of com- 
 mon-law rights, must be strict and exclusive. Curtis v. Leavitt, 
 15 ISr. Y. 53; Bullard v. Banh, 18 Wall. 589 {ante, p. 93). This sec- 
 tion is a rescript of section 18 of the General Banking Law of N"ew 
 York, passed in 1838, and as to these provisions is in totidem veriis. 
 The New York act has passed under careful scrutiny, and has met 
 with frequent Judicial interpretation. The question in this issue — 
 the power of a bank to traffic in stocks — arose under the New 
 York act, in Talmage v. Pell, 7 N. Y. (3 Seld.) 337, and the court, 
 after conceding that stocks might be legitimately bought or 
 taken for many purposes incident to the express power to conduct 
 the business of banking, at p. 343, says: "The proposition, how- 
 ever, to be established, is the right to traffic in them, or to acquire 
 them for the special objects contemplated by the arrangement of 
 the parties in this case; and these sections neither prove nor tend 
 to prove any authority of that nature." * * * " I am, for the 
 •reason suggested, of the opinion that this bank had no authority 
 to traffic in stocks as an article of merchandise." 
 
 The same point was ruled in Banh Commissioners v. St. Lawrence 
 Banh, 7 E". Y. 513; Curtis v. Leavitt, 15 id. 168, and in Barnes v. 
 Ontario Bank, 19 id. 153. 
 
 In the construction of the powers of National banking associa- 
 tions, in other matters, as given in section 8 of the act, similar views 
 are held by the Supreme Court of Pennsylvania, in Fowler v. Sculley, 
 73 Penn. St. 516 {post), and in The First National Banh of Lyons 
 V. The Ocean National Banh, 60 N. Y. 378 {post); Shinhle v. 
 The First National Banh of Ripley, 33 Ohio, 516 {post); Shoemaher 
 V. The National Mechanics' Banh, 3 Abb. (U. S.) 416 {ante, p. 169); 
 and Stewart v. The National Union Banh, id. 434 {ante, p. 175). 
 And the principle announced in these cases is fully recognized 
 by this court in The First National Banh of Charlotte v. The 
 National Exchange Banh of Baltimore, 39 Md. 610. 
 
 The only case in conflict is Leach v. Hale, 31 Iowa, 69 {ante, p. 
 466), and that is so evidently a case of bailment, and nothing more, 
 that not even the positive assertion of the court can avail against the 
 facts. The view taken in this case, too, is fully and satisfactorily 
 controverted in the analogous case of Wiley v. The First National 
 Banh of Brattleloro, 47 Vt. 546 {post). The cases of Caldwell v. 
 The National Mohawh Valley Bank, 64 Barb. 333, a State bank at 
 68 
 
538 MARYLAND 
 
 Weckler v. The First National Bank of Hagersto'Wn. 
 
 the time of the contract, and Van Leuven v. The First National 
 Banh of Kingston, 6 Lans. 373, and 54 N. Y. 671 {post), a 
 designated depositary under section 45 of the act (Rev. Stat. U. S. , 
 § 5153) — are for these reasons not in point, and the former is 
 ignored, and the latter explained by the Court of Appeals of New 
 York in its latest utterance in 60 N. Y. 378. 
 
 The construction thus given is aliKe applicable to the purchase or 
 sale of all kinds of marketable securities other than bills of ex- 
 change, where gain or any other purpose than those specially men- 
 tioned is the object of its dealing. Inasmuch, then, as the corpo- 
 ration itself could not lawfully engage in such purpose or sale, it 
 could not authorize its agents so to deal, and the contracts or 
 representations of the agent could not fall within the scope of his 
 authority. U. S. v. TJie City Banh of Columbus, %\ How. 556. 
 And as persons dealing with the agents or officers of a corporation 
 are held to know the powers of the corporation {The Miner's Ditch 
 Company v. Zellerlack et al., 1 "Withrow's Am. Corp. Cases, 275 [37 
 Cal.] 543), there can be no implication of authority. Pierce v. . 
 Madison & Ind. Railroad Co., 21 How. 443. Nor will a corpora- 
 tion be held liable for the fraud of its agent committed colore 
 officii. Mayor and Conunon Council v. Eshlach, 18 Md. 276; Same 
 V. Reynolds, 20 id. 1 ; Co. Commissioners A. A. Co. v. Duckett, 
 id. 468 ; Horn v. Mayor and Common Council, 30 id. 218 ; Foster 
 V. Essex Banh, 17 Mass. 599 ; Mechanics' Banh v. N. Y. and N, 
 H. Railroad Co., 13 N. Y. (3 Kern.) 600. 
 
 Is the appellee estopped from making such a defense ? 
 
 The doctrine of estoppel, as applicable to such a defense by a cor- 
 poration, is very clearly put in Hood v, N. Y. & if. H. Railroad 
 Co., 22 Conn, 1, 502, thus : "Where a corporation has the power 
 to do an act, they may be estopped from objecting that the form they 
 adopted was not the exact mode prescribed by the charter ; but 
 where the question is one of power, they cannot be deemed estopped 
 to deny that they have done what they never could by legal possi- 
 bility have done." And this principle is held and enforced in 
 The Penn., Del. & Md. Steam Navigation Co. v. Dandridge, 8 Gr. & J. 
 248, and cases cited at p. 320; in the cases last above cited, and 
 in Albert and Wife v. The Savings Banh, 2 Md. 159. 
 
 MiLLEE, J. A question of importance and of first impression 
 in this State arises on this appeal. The suit was instituted by the 
 
COUET OP APPEALS, 1875. 539 
 
 Weckler v. The First National Bank of Hagerstowu. 
 
 appellant against appellee, a National baifk organized under the act 
 of Congress, approved June 3, 1864, known as the " National Cur- 
 rency Act," The first and second counts of the declaration aver 
 in substance, that the defendant, as part of its business as such 
 banking association, was engaged in the sale of the bonds of 
 the Northern Pacific Eailroad Company, and in soliciting orders 
 for the purchase of the same and receiving commissions for such 
 sales and orders, and by means of certain specified false, fraudu- 
 lent and deceitful representations made by its teller, the plaintiff 
 was induced to and did purchase from the bank two of said 
 bonds of $500 each, and paid the bank therefor the sum of $1,000, 
 and was thereby damnified. The case was tried upon issue joined 
 on the plea of not guilty. There was conflicting proof as to the 
 making of the alleged false representations by the teller. The court 
 rejected all the prayers offered on both sides and instructed the jury 
 in effect that the National Banking Act, under which the defend- 
 ant was organized, limits the action of the bank to the pursuit of 
 the object specified in the act of Congress, and that the purchase 
 and sale of such bonds is not within the chartered powers of the 
 defendant, and that the plaintiff cannot recover against the defend- 
 ant in this action, although the jury may find from the evidence 
 that the teller of the bank fraudulently induced the plaintiff to 
 purchase the bonds in question by making the alleged false repre- 
 sentations, and that she suffered loss thereby. This presents 
 broadly and clearly the question whether the bank has authority 
 for selling bonds of railroad companies on commission. 
 
 A bank, like other private corporations, is confined to the sphere 
 of action limited by the terms and intention of its charter. The 
 Supreme Court, in the case of the Bank of the United States v. 
 Dandridge, 12 Wheat. 68, states the rule by which the powers of 
 the bank are to be determined thus : "Whatever may be the im- 
 plied powers of aggregate corporations by the common law, and 
 the modes by which those powers are to be carried into operation, 
 corporations created by statute must depend, both for their powers 
 and the mode of exercising them, upon the true construction of 
 the statute itself." And in that case the court adopt, as entirely 
 correct and applicable to the bank, the doctrine laid down by 
 Marshall, Ch. J., in 3 Cranch, 167, in reference to an insurance 
 company, viz. : " Without ascribing to this body, which in its cor- 
 porate capacity is the mere creature of the act to which it owes its 
 
540 MAEYLAND 
 
 Weckler V. The First National Bank of Hagerstown. 
 
 existence, all the qualities' and disabilities annexed by the common 
 law to ancient institutions of this sort, it may be correctly said to 
 be precisely what the incorporating act has made it, to derive all 
 its powers from that act, and to be capable of exerting its faculties 
 only in the manner in which that act authorizes." And in this 
 State the law is well settled that a corporation created for a specific 
 purpose not only can make no contract forbidden by its charter, 
 but in general can make no contract which is not necessary, either 
 directly or incidentally, to enable it to answer that purpose. In 
 deciding, therefore, whether a corporation can make a particular 
 contract, it must be considered in the first place, whether its 
 charter or some statute binding upon it forbids or permits it to 
 make such a contract ; and if the charter and valid statutory law 
 are silent upon the subject, in the second place, whether the power 
 to make such a contract may not be implied on the part of the 
 corporation as directly or incidentally necessary to enable it to 
 fulfill the piirpose of its existence ; or whether the contract is en- 
 tirely foreign to that purpose ; a corporation has no other powers 
 than such as are specifically granted, or such as are necessary for 
 the purpose of carrying into effect the powers expressly granted. 
 Steam Nav. Go. v. Dandridge, 8 G. & J. 318, 319. We must, there- 
 fore, determine the true construction of the act of Congress author- 
 izing the formation of these banking associations, and whether the 
 power to make contracts like the one in question is expressly con- 
 ferred upon them, or is directly or incidentally necessary to enable 
 them to fulfill the purpose of their creation, or is entirely foreign 
 to that purpose. 
 
 So far as the purpose of the law is indicated by its title, it is, "to 
 provide a National currency secured by a pledge of United States 
 bonds, and to provide for the circulation and redemption thereof." 
 After prescribing in previous sections the mode by, and the con- 
 ditions under which banking associations may be formed, the 8th 
 section declares that every association so formed shall become a 
 body corporate, from the date of its certificate of organization, but 
 shall transact no business " except such as may be incidental to its 
 organization, until authorized by the Comptroller of the Currency 
 to commence the business of lanhing." Power is then given it 
 to adopt a corporate seal, to have succession by the name designated 
 in its organization certificate, and in that name to make contracts 
 and sue and be sued, to elect directors and other oflScers, " and 
 
COUET OP APPEALS, 1875. 541 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 exercise under this act all such incidental powers as shall be 
 necessary to carry on the business of banking by discounting and 
 negotiating promissory notes, drafts, bills of exchange, and other 
 evidences of debt, by receiring deposits, by buying and selling 
 exchange, coin, and bullion, by loaning money on personal secu- 
 rity, and by obtaining, issuing and circulating notes according to 
 the provisions of this act." This is the only portion of the statute 
 to vrhich, for the purposes of this case, it is necessary to refer. 
 By it the associations are not simply incorporated as ianks, and 
 the scope of their corporate business left wholly to implication, but 
 the kind of banking which they may conduct is limited and de- 
 fined. As we read the language of this 8th section, it authorizes 
 the associations to carry on banking "by discounting and negotiat- 
 ing promissory notes," etc., and to exercise '•' all such incidental 
 powers " as shall be necessary to conduct that business. The mode 
 in which the incidental powers maybe exercised is not defined, but 
 all incidental powers which they can exercise must be necessary or 
 incidental to the business of banking, thus limited and defined. 
 To the usual attributes of banking, consisting of the right to issue 
 notes for circulation, to discount commercial paper and receive 
 deposits, this law adds the special power to buy and sell exchange, 
 coin, and bullion, but we look in vain for any grant of power to 
 engage in the business charged in this declaration. It is not em- 
 braced in the power to "discount and negotiate " promissory notes, 
 drafts, bills of exchange and other evidences of debt. The ordi- 
 nary meaning of the terms " to discount," is to take interest in 
 advance, and in banking is a mode of loaning money. It is the 
 advance of money not due till some future period, less the interest 
 which would be due thereon when payable. The power " to nego- 
 tiate " a bill or note is the power to indorse and deliver it to 
 another so that the right of action thereon shall pass to the 
 indorsee or holder. No construction can be given to these terms 
 as used in this statute, so broad as to comprehend the authority to 
 sell bonds for third parties on commission, or engage in business of 
 that character. The appropriate place for the grant of such a 
 power would be in a clause conferring authority to " buy and sell," 
 but we find that limited to specific things, among which bonds are 
 not mentioned, and upon the maxim expressio unius est exclusio 
 alterius, and in view of the rule of interpretation of corporate 
 powers before stated, the carrying on of such a business is pro- 
 
542 MAEYLAND 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 hibited to these associations. Nor can we perceive it is anywise 
 necessary to the purpose of their existence, or in any sense inci- 
 dental to the business they are empowered to conduct, that they 
 should become bond-brokers or be allowed to traffic in every species 
 of obligations issued by the innumerable corporations, private and 
 municipal, of the country. The more carefully they confine them- 
 selves to the legitimate business of banking as defined in this law, 
 the more effectually will they subserve the purposes of their crea- 
 tion. By a strict adherence to that, they will best accommodate 
 the commercial community, as well as protect their shareholders. 
 
 Such is our construction of this statute, and it is supported by 
 the best considered authorities and the decided preponderance of 
 judicial opinion in other States. This 8th section is almost iden- 
 tical in terms (and as respects the present question, completely 
 so) with the Banking Act of New York, of 1838, ch. 260, and the 
 Court of Appeals of that State, in Talmage v. Pell, 3 Seld. 338, 
 held that banking associations formed under that law have author- 
 ity only to carry on the business of banking in the manner and with 
 the powers specified in the act, and have no power to purchase State 
 stocks, to sell at a profit, or as a means of raising money, except 
 when received as security for a loan, or taken in payment of a loan 
 or debt. In speaking of the transaction under review in that 
 case, the court say the banking company " purchased these bonds 
 as they might have purchased a cargo of cotton to send to market 
 to be sold at the risk of the vendor for the highest price that could 
 be obtained. No authority to traffic in either commodity is expressly 
 given by the law of 1838. It is, therefore, claimed as a power inci- 
 dent to the business of hanking. But the 18th section of the act 
 declares that this business shall be carried on by discounting bills, 
 notes and other evidences of debt, by loaning money on real and 
 personal security, by buying and selling gold and silver bullion, 
 foreign coin and bills of exchange, etc. The subjects pertaining 
 to the business of banking are designated, and the express powers 
 of the association are limited to them, and to such incidental powers 
 as may be necessary to transact the business thus defined by the 
 Legislature." 
 
 They then proceed to show that the claim to base the validity of 
 the contract upon any incidental power was unfounded, and pro- 
 nounce the transaction illegal, and the assignment by the company 
 of mortgages which they held as collateral security for the purchase, 
 
COTJET OP APPEALS, 1875. 543 
 
 Weckler v. The First National Bank of Hagerstown. 
 
 Toid. So also in recent decisions of the courts of last resort in several 
 of the States where this act of Congress, and especially its 8th 
 section, has been considered, we find it construed in entire accord 
 with the view we have taken of it. We refer to Fowler v. Scully, 
 73 Penn. St. 456 {post) ; Shinkle v. First ITational Bank of Ripley, 
 %% Ohio St. 516 {post) ; Wiley v. First National Bank of Brattle- 
 loro, 47 Vt. 546 ; S.- C, 19 Am. Eep. 122 {post) ; and First National 
 Bank of Lyons v. Ocean National Bank, 60 N. T. 378 ; S. 0. , 19 
 Am. Eep. 181 {post). In the last-mentioned case there is a very able 
 opinion of the court by Allen", J., in which he says he fully con- 
 curs in the views expressed by Judge "Wheelee in the Vermont 
 case, and in reference to the case of Van Leuven v. First National 
 Bank of Kingston, shortly reported (the opinions of the judges not 
 being given) in 54 N. Y. 671 {post), which has been pressed upon 
 our attention by the appellant's counsel, he says it decided no gen- 
 eral principle, but by a divided court it was determined " that the 
 contract in that case, under the circumstances, was the contract of 
 the corporation, and not the individual contract of the president." 
 
 We are, therefore, clearly of opinion that this business of selling 
 bonds on commission is not within the scope of the powers of the 
 corporation, and the bank could not, under any circumstances, 
 cany it on, and being thus beyond its corporate powers, the defense 
 of ultra vires is open to the appellee. 8 Q-. & J. 248. And it fol- 
 lows from this that the bank is not responsible for any false repre- 
 sentations made by its teller to the appellant, by which she was 
 induced to purchase the bonds in question. Hence there was no 
 error in the court's instruction to the jury nor in rejection of the 
 appellant's first and second prayers. 
 
 But by the third and fourth counts of the declaration, and the 
 appellant's third and fourth prayers it is sought to give another 
 character to the transaction, and to place the right to recover upon 
 a different ground. They present the case in this view, viz. : 
 that there was no sale and purchase of the bonds, but by the false 
 representations of the teller the appellant was induced to receive 
 them instead of money, in payment of the draft on New York, 
 which she presented at the bank to be cashed or collected. It is 
 argued that in this aspect the transaction amounts to the same 
 thing as if the teller had cashed the draft, by paying her over the 
 counter in depreciated or worthless bank notes, representing them 
 to be good. But the answer to this position is, that there is no 
 
544 MARYLAND 
 
 Weckler v. The First National<Baiik of Hagerstown. 
 
 evidence in the record to support it. The proof shows that on the 
 6th of October, 1871, the appellant presented at the bank a draft 
 on New York, for $1,047, and asked Mr. Newcomer, the teller, if 
 it was good, and if he would cash it. The teller gave her 847 in 
 money, and a certificate of deposit for the balance to the effect that 
 she " has deposited in this bank $1,000, payable to the order 
 of herself on return of this certificate properly indorsed." This 
 instrument is in the usual form of a certificate of deposit, bears 
 date the 6th of October, 1871, and is signed by the teller for 
 the cashier. There is a discrepancy in the testimony as to 
 whether any thing was said at that time about investing her 
 money in Northern Pacific bonds. According to her testimony, as 
 stated in the record, it may be inferred the alleged false represen- 
 tations were then made, but whether before or after she received 
 the certificate of deposit does not clearly appear, and according to 
 the testimony on the other side, nothing was said about these bonds 
 until some ten or twelve days thereafter, when she returned and 
 insisted upon investing her money. But it is immaterial when this 
 occurred, because it is an undisputed fact that she received and 
 accepted the certificate on that day, long before the bonds were de- 
 livered to her. The draft to the extent of $1,000 was receivec. by 
 the bank as money, and as such it passed to her credit, and she be- 
 came the creditor of the bank for that amount as an ordinary 
 depositor. Whatever may have been said at or before this time, it 
 is clear beyond dispute that by this transaction the draft was, as 
 between the bank and herself, cashed or converted into money 
 which became hers in the cofEers of the bank, to use and dispose of 
 as she saw fit. It is further shown by undisputed testimony, that 
 these bonds were ordered by the cashier from the Baltimore brokers, 
 and received on the 19th of October, 1871, a few days after the 
 order for them was sent ; that they remained in the bank until 
 some time in April following, when the appellant either in person 
 or through an agent returned the certificate of deposit, and got the 
 bonds, paying the interest accrued at the time of the purchase out 
 of the January coupons on the bonds which the teller then cashed 
 for her ; that she thereafter retained the bonds, collecting the in- 
 terest upon them up to July 1st, 1873, and that they were sold in 
 the market at par and accrued interest up to the financial crisis in 
 the fall of 1873. Prom these facts the law can regard the transac- 
 tion in no other light than as a purchase of these bonds by the 
 
COUKT OP APPEALS, 1876. 545 
 
 Third National Bank of Baltimore v. Boyd. 
 
 appellant through the teller or cashier, she paying therefor her own 
 maney deposited to her credit in the bank. It was entirely com- 
 petent for the bank to receive it as a deposit of so much money, 
 and there is no evidence in the case legally sufiBcient to authorize 
 a jury to infer that the teller (acting as he would be in that respect 
 in the discharge of his duty, and within the scope of his employ- 
 ment) cashed that draft by passing off upon her these bonds 
 instead of money in payment therefor. For these reasons there 
 was no error in the rejection of the two last prayers of the appel- 
 lant, and the judgment must be affirmed. 
 
 Having disposed of the case in this way, it becomes unnecessary 
 to express any opinion upon the question argued at bar, whether an 
 action like this will lie against a corporation in its corporate char- 
 acter, for deceit practiced by its officers or agents. 
 
 Judgment affirmed. 
 
 Thied National Bank of Baltimore, appellant, v. Boyd. 
 
 (44 Maryland, 47.) 
 
 National bank — Power of, to take collateral security — Deposits for safe-keep- 
 ing — Measure of damages on loss of bonds. 
 
 A National bank received from a customer bonds as collateral security for a 
 debt then existing, and for future obligations. Afterward, and after the 
 customer had paid his indebtedness, the bonds were stolen from the bank. 
 Held, (1) that the bank was not a gratuitous baUee of such bonds ; (3) that 
 it had power to take the bonds as security for existing or future loans ; (3) 
 that it was liable if it failed to exercise ordinary care and diligence in keep- 
 ing the bonds ; and (4) that the measure of damage was the value of the 
 bonds when stolen and not when demand of them was made.* 
 
 ACTION by Boyd to recover the value of certain stocks and 
 bonds. The opinion sufficiently states the case. The verdict 
 and judgment were for the plaintiff, and the defendant appealed. 
 
 Henry Stocklridge & Thomas Donaldson, for appellant. 
 
 John H. Thomas & 8. Teackle Wallis, for appellee. 
 
 * See Wiley v. First National Bank of Srattleboro, post, and note. 
 69 
 
546 MARYLAND 
 
 Third National Bank of Baltimore v. Bovd. . 
 
 Baetol, 0. J. This suit was brought by the appellee, to re- 
 coTer the value of certain coupon bonds and stocks, that passed 
 like bank notes, by delivery, which had been deposited by the plain- 
 ti£E with the defendant, and which had been stolen from the defend- 
 ant, in consequence of its alleged failure to exercise ordinary care 
 in the custody of them. 
 
 The case is one that, from its nature, depended at the trial be- 
 low mainly on the questions of fact arising upon the evidence, with 
 regard to the manner in which the bonds were lost, and the vigi- 
 lance and care exercised by the bank in their custody. These were 
 questions exclusively for the jury, whose province it was to decide 
 whether there was any want or omission of ordinary care and dili- 
 gence on the part of the bank, from which the loss of the plaintiff's 
 property resulted. These questions were submitted to the jury by 
 the Circuit Court, were decided by them against the bank, and we 
 have no authority or power to review their verdict. 
 
 All the prayers asked by the defendant, being either conceded by 
 the plaintiff's counsel or granted by the Circuit Court except the 
 tenth, the only matters presented for our consideration on this ap- 
 peal arise upon the defendant's tenth prayer, which was refused ; 
 and ihQ first, fourth, fifth, sixth and seww^A prayers of the plaintiff, 
 which were granted. 
 
 It appears by the evidence that the appellant was a bank organ- 
 ized under " the National Currency Act of 1864." The firm of 
 William A. Boyd & Co., of which the appellee was senior member, 
 was a large customer of the bank, through which all the banking 
 business of the firm was transacted, and from which it received ac- 
 commodations as needed. On the 5th day of February 1866, the 
 firm was indebted to the bank about 85,000, when the appellee vol- 
 untarily proposed to the president of the bank to deposit with the 
 bank a large amount of bonds, about $37,000, as collateral security 
 for his present and future indebtedness. The terms of the deposit 
 as agreed on between Mr. Boyd and the president were dictated by 
 the latter to the discount clerk — and were as follows : 
 
 "Third National Bakk, Februa/ry 5, 1866. 
 "William A. Boyd has deposited with the Third National Bank of Baltimore 
 $20,000 in United States 5-30 bonds, and $1,500 5-20, July, 1865 ; $5,000 Hud- 
 son County, New Jersey ; $5,000 Town of Saratoga, New fork, 7 per cent > 
 bonds ; $5,000 stock of Third National Bank of Baltimore, as collateral secu- 
 rity for the payment of all obligations of Wm. A. Boyd and Wm. A. Boyd & 
 
COUET OF APPEALS, 1876. 547 
 
 Third National Bank of Baltimore v. Boyd. 
 
 Co., to the Third National Bank of Baltimore, at present existing, or that may- 
 be incurred hereafter, with the understanding that the right to sell the above 
 collaterals in satisfaction of such obligations is hereby vested in the oflScers of 
 the Third National Bank, 
 
 (Signed) " A. H. Basnitz, 
 
 Discount Clerk." 
 
 This paper was kept by the cashier of the bank in the same 
 envelope with the bonds — afterward memoranda were inclosed 
 therein, signed by the appellee's attorney and by the cashier, showing 
 that certain of the bonds originally deposited had been withdrawn, 
 and others deposited to replace them. 
 
 It appears from the evidence "that while these collaterals 
 remained in the bank, the firm kept a deposit account with the 
 bank, having an average amount of about $4,000 on deposit, and 
 from time to time as it needed, obtained discounts ranging from 
 $2,000 to S15,000 on the security of the collaterals, but frequently, 
 an4 for considerable times, as much as five months at a time, it 
 sometimes owed the bank nothing, but left the bonds in its vault ; 
 that at times when the firm wanted money for a very short time, it 
 had obtained it from the bank, on the security of these collaterals 
 on what were called ' call loans' by checks such as the following: 
 
 " Baltimore, July 13, 1871. 
 " Third National Bank of Baltimore pay to order of call loan on general 
 collaterals,/iw»" tTiousand dolla/ra. 
 
 " William A. Boyd & Co." 
 
 " The firm was not indebted to the bank subsequent to July, 
 1873, when it paid its last indebtedness ; the bonds were not with- 
 drawn, but left with the defendant under the original agreement." 
 The bank was robbed and the bonds stolen in the manner described 
 in the testimony, between Saturday evening, the 17th, and Mon- 
 day morning, the 19th of August, 1872. It p,ppears from the proof 
 that the giving of the bonds as collateral security was the volun- 
 tary act of the plaintiff, not done at the instance or request of the 
 defendant ; that the bank officers considered the account of the 
 plaintiffs firm a very desirable one, and considered the arrange- 
 ment by which every liability of theirs was secured by the collater- 
 als, very advantageous to the bank ; " which was under no obliga- 
 tion to lend them any thing ; but the bonds and stocks were to be 
 held as collateral security for all loans that might be made to them, 
 
548 MAKYLAND 
 
 Third National Bank of Baltimore v. Boyd. 
 
 and for their liability on any paper signed or indorsed by them, 
 which might at any time be held by the bank." 
 
 The defendant, by its tenth prayer, asked the court to instruct 
 the jury "That the defendant had no power, by the act of Con- 
 gress under which it was incorporated, to assume and undertake 
 the keeping of the plaintiff's bonds, while they were not held as 
 collateral security for debts owing to it, and if the jury shall find 
 that when the bonds were stolen * * * there was not, and had 
 not been for nearly three weeks, any indebtedness for which they 
 were held as security, that the plaintiff cannot recover in this 
 action." 
 
 This prayer raises the question of the power of the bank to 
 accept and retain the deposit of the plaintiff's bonds, in the man- 
 ner and for the purpose disclosed in the evidence. Having been 
 organized under the act of Congress of 1864, chapter 106, the powers 
 of the bank are limited and defined by the provisions of that act. 
 
 By section 8 it is authorized " to exercise all such incidental 
 powers as shall be necessary to carry on the business of banking by 
 discounting promissory notes, drafts, bills of exchange and other 
 evidences of debt ; by receiving deposits ; by buying and selling 
 exchange, coin and bullion ; by loaning money on personal security, 
 and by obtaining, issuing and circulating notes according to the 
 provisions of this act." 
 
 The construction of this section was considered by this court m 
 Weckler v. First National Bank of Hagerstown, 43 Md. 581; S. C, 
 20 Am.Rep. 95 {ante, p. 533). The precise question, however, now pre- 
 sented, did not arise in that case. There the attempt was made to 
 hold the bank responsible for alleged fraudulent representations 
 made by its teller in the sale of bonds of the ITorthern Pacific Eail- 
 road Company, which the narr. alleged the bank was engaged in 
 selling on commission. It was decided, that " the business of sell- 
 ing bonds on commission was not within the scope of the powers 
 of the corporation," under the act of Congress to which we have 
 referred. It was further held that the defense of ultra vires was 
 open to the bank under the decision in " The Steam Navigation 
 Co. V. Dandridge, 8 G. & J. 318, 319; and consequently that the 
 bank was not responsible for any false representations made by its 
 teller to the plaintiff, whereby she was induced to purchase the 
 bonds in question." It is contended that the case now under con- 
 sideration comes within that decision. In the argument of the 
 
COURT OF APPEALS, 1876. 549 
 
 Third National Bank of Baltimore v. Boyd. 
 
 cause, the counsel for the appellant has treated the transaction as 
 a mere gratuitous deposit, simply for the conTenience or accommo- 
 dation of the appellee, and for the purpose of affording a place of 
 safe-keeping for his bonds, and has argued that the bank had no 
 power to accept ♦a bailment of that kind, or in other words, to be- 
 come a mere safe deposit company, and was not, therefore, respon- 
 sible for the loss. There is very strong ground, both upon reason 
 and authority, in support of the proposition that a National bank, 
 denying its existence and exercising its powers under the act of 
 Congress referred to, is not authorized to enter into a contract as a 
 mere gratuitous bailee, by receiving on special deposit for safe- 
 keeping merely, coin, jewelry, plate, bonds or other valuables. 
 Such a contract does not appear to be authorized by the terms and 
 the 8th section, as a transaction "within the ordinary course of 
 business of banking, or incident to it; " and has been decided by 
 the Supreme Court of Vermont to be unauthorized by the law, and 
 beyond the scope of the corporate powers. Wiley v. First National 
 Bank of Brattleiorough, 47 Vt. 546; S. C, 19 Am. Eep. 132 {post). 
 The very-well-considered opinion by Judge Wheelee in this case 
 will be found in The American Law Eegister (S. S. ), vol. 14, p. 343, 
 accompanied by an able note from the pen of Judge Redfield, in 
 which the cases are collected and reviewed. 
 
 In the case of The First National Banh of Lyons y. The Ocean 
 National Banh, 60 K Y. 378; S. C, 19 Am. Rep. 181 {post), the 
 Court of Appeals of New York have recently made a similar 
 decision. 
 
 Assuming these decisions to be correct, and we are not disposed 
 to question their soundness, it is clear that the contract entered into 
 by the bank in this case was not a mere gratuitous bailment. As 
 shown by the paper of February 5th, 1866, the bonds were not 
 received on special deposit, for safe-keeping merely, but were 
 received as collateral security for a debt then existing, and for all 
 obligations that might thereafter be incurred by the depositor. 
 
 We entertain no doubt of the power of the bank to enter into a 
 contract of that kind. To accept such collateral security for exist- 
 ing debts and for future loans and discounts is a transaction within 
 the usual course of the business of banking, and incident thereto, 
 and, therefore, within the terms of the act of Congress. 
 
 The power of National banks to receive such deposits was dis- 
 tinctly recognized by the Supreme Court of Vermont and the Court 
 
550 MAEYLAND 
 
 Third National Bank of Baltimore v. Boyd. 
 
 of Appeals of New York, in the cases before cited, and we are not 
 aware that it has ever been questioned. On this point we refer to 
 the able opinion of Judge Shakswood, in Erie Bank y. Smith, 
 Randolph S Co., 3 Brewst. 9. 
 
 In Maitland t. The Citizens' National Bank, 40 Md. 540; S. 0., 
 17 Am. Eep, 620, this court affirmed the right of a National bank 
 to receive on deposit the note of a third person as collateral security 
 for future loans or advances to the depositor. 
 
 The original contract of bailment being valid and binding, the 
 obligation of the bank for the safe custody of the deposit did not 
 cease when the appellee's debt had been paid. There is no evi- 
 dence that the contract was changed; on the contrary, the evidence 
 shows "the bonds remained with the bank under the original 
 agreement," as collateral security for any indebtedness of the appel- 
 lee that might thereafter accrue, and for any liability of himself, 
 or of the firm of which he was a member, or any. paper signed or 
 indorsed by them, which might at any time be held by the bank. 
 For <;hese reasons the Circuit Court committed no error in refusing 
 the appellant's tenth prayer. 
 
 The appellant's counsel have argued that the memorandum of 
 February 5th, 1866, cannot be construed as a contract made by 
 the appellant, because it does not appear that the officers by whom 
 it was made were authorized to bind the bank. 
 
 This point is not properly before us, was not made in the Circuit 
 Court, and is not presented by the bill of exceptions. All the 
 prayers of the appellant go upon the theory that the bonds were 
 held by the bank as collateral security. 
 
 But, even if the question of the authority of the officers to bind 
 the appellant were open on this appeal, it may be observed that 
 the contract of bailment being one which it was competent for the 
 corporation to make, and having been made by its officers, acting 
 within the scope of their general powers and apparent authority, 
 and in the exercise of powers usually delegated to like officers, the 
 bank would be estopped to deny their authority. It may be added 
 further, that there was evidence from which the jury might properly 
 have inferred that the authority had been conferred upon the 
 president and cashier, and that their acts were known to and sanc- 
 tioned by the directors. Union Bank v. Ridgely, 1 H. & G. 325, 
 413, 430. 
 
 But, as we have before said, the question of the authority of the 
 
COUET OP APPEALS, 1876. 551 
 
 Third National Bask of Baltimore v. Boyd. 
 
 officers to act for the bank in the transaction is not before us. 39 
 Md. 2, Rule 4. 
 
 With respect to the several prayers of the appellee which were 
 granted by the Circuit Court, and referred to in the bill of excep- 
 tions, we do not understand that any objection is made to them by 
 the appellant, so far as they instructed the jury upon the question 
 of the degree of care which the appellant's officers were bound by 
 law tt» exercise in the custody of the appellee's bonds. In this re- 
 spect they do not differ from the prayers granted at the instance of 
 the appellant. 
 
 By the appellee's first prayer, the jury were instructed that the 
 defendant would be responsible if the jury found from the evidence 
 that the bonds had been stolen, " in consequence of the failure on 
 the part of the defendant to exercise such care and diligence in 
 the custody or keeping of them as, at the time, banks of common 
 prudence, in like situation and business, usually bestowed in the cus- 
 tody and keeping of similar property belonging to themselves ; that 
 the care and diligence ought to have been such as was properly 
 adapted to the preservation and protection of said property, and to 
 have been proportioned to the consequence likely to arise from any 
 improvidence on the part of the defendant." No objection has 
 been made, nor could any be justly urged against this proposition. 
 The prayer further instructed the jury, that in determining whether 
 or not such care and diligence were used, " the jury may take into 
 consideration whether it was a proper precaution for the defendant 
 to have had an inside watchman at night, and on Sundays, whether 
 such watchman ought to have kept awake at night, and whether 
 the bank ought ever to have been without an inside watchman at 
 any part of the day on Sunday, and that they may take into con- 
 sideration the nature and value of said bonds, their liability to 
 loss, the temptation they offered to theft, the difficulty of recover- 
 ing them if stolen, the situation of the building and vault, and the 
 sufficiency of the safe in which the defendant kept them at the 
 time they were stolen." 
 
 Exception has been taken to the last part of the prayer, because 
 of the enumeration of certain questions, as proper to be considered 
 by the jury, in determining whether such care and diligence had 
 been used by the bank, as was defined in the prayer. But we find 
 no error in this part of the instruction ; the particular subjects of 
 inquiry mentioned were proper for the consideration of the jury ; 
 
552 MARYLAND 
 
 Third National Bank of Baltimore v. Boyd. 
 
 their province was not invaded, nor was there any thing to mislead 
 them ; they were not told that in any of the particulars mentioned, 
 the evidence showed a want of due and ordinary care on the part of 
 the bank ; and by the appellee's seventh prayer they were instructed, 
 "that it was a question to be determined by them from all the 
 facts and circumstances in the case, whether there was or was not 
 that degree of care and diligence used by the defendant, in the 
 protection and preservation of the plaintifE's property, which is 
 defined in the plaintifE's first prayer." 
 
 The degree of care and diligence required by the law was prop- 
 erly defined by the Circuit Court ; the question, whether it had 
 been exercised by the defendant, was fairly submitted to the jury 
 upon all the facts and circumstances of the case. This was a ques- 
 tion of fact, exclusively within the province of the jury to decide. 
 We have no power to disturb their verdict, and we have refrained 
 from stating the facts and circumstances showing the manner in 
 which the most extraordinary and unforeseen robbery was commit- 
 ted upon the bank. 
 
 The only question left for us to consider is, as to the proper 
 measure of damages. This was decided by the Circuit Court tc^be, 
 " the value of the bonds at the time they were stolen." The ap- 
 pellant contends that this was error, and insists that the true meas- 
 ure is their value on the 9th day of September, 1872, when they 
 were demanded by the appellee. It appears by the agreement of 
 counsel that the bonds had slightly diminished in value between 
 the time of the robbery and the time they were demanded. At 
 the former date they were worth $25,911.35, and at the latter their 
 value was $25,400.63. 
 
 In our opinion the rule laid down by the Circuit Court is cor- 
 rect. In a case of this kind the measure of damages is the value of the 
 property lost ; the only question is, at what time is this value to be 
 computed ? Its value not being fixed and permanent, but liable 
 to fluctuate, the time fixed for ascertaining it may become of much 
 importance, and has been the subject of considerable discussion in 
 the courts, and the decisions are by no means uniform. In Mary- 
 land the measure of damages in trover is ordinarily the value of the 
 property at the time of the conversion {Hepburn v. Sewell, 5 H. & 
 J. 211 ; Stirling v. Garriiee, 18 Md. 468) and we think the same 
 rule may, by analogy, be applied to the present case. Here the 
 ground of the action is the alleged breach of the contract of bail- 
 
COUET OP APPEALS, 1876. 553 
 
 Third National Bank of Baltimore v. Boyd. 
 
 ment, by reason of the failure on the part of the bank to exercise 
 due care in the custody of the bonds, whereby they were lost ; the 
 true measure of damages would seem to be their market value, com- 
 puted, at that time. This question arose in Maryland Marine Ins. 
 Go. V. Dalrymph, 25 Md. 244. In that case there was a pledge or 
 hypothecation of stock as collateral ; the contract of bailment hav- 
 ing been broken by the illegal sale of the stock by the bailee, the 
 other party, being cognizant of the breach, 'waited for two years, 
 and the stock having risen in the market, demanded the same, 
 offering to redeem, and claimed that the value of the stock should 
 be computed at the time of his demand. But it was held that the 
 measure of damage was its value at the time of the breach. 
 
 Without repeating the reasons and authorities upon which that 
 decision was placed, we refer to the opinion of the court at pages 
 305, 306, 307, 308. 
 
 In Maury and Osburn v. Coyle, 34 Md. 235, cited by the appel- 
 lant, it was ruled that the plaintiff was entitled to recover the value 
 of the bonds deposited, ascertained at the date they were demanded. 
 But that case is not applicable here ; there was no evidence of the 
 time when they had been lost, or that they had changed in value ; 
 and the contract there sued on was not the same as this. In that 
 case, by the contract of bailment, the bailee had the option to re- 
 turn the securities deposited, or their value in money on demand. 
 In this case, the legal obligation of the bailee was to keep the bonds 
 of the appellee safely, and to return them to him when the contract 
 ended. Strictly, this obligation could not be discharged by the 
 payment to the appellee of their value in money ; after the bonds 
 had been lost, and it had become impossible to return them, there 
 was no necessity for a demand, and when made, it could have no 
 significance or effect in determining the rights of the parties, these 
 had become fixed when the breach occurred, by the loss of the 
 bonds, and in our judgment, the proper measures of damages is 
 their value computed at that time. Finding no error in the rulings 
 of the Circuit Court, the judgment must be afQrmed. 
 
 Judgment affirmed. 
 
 10 
 
554 MARYLAND 
 
 Magruder v. Colston. 
 
 MaGKUDEK T. COLSTOir. 
 (41 Maryland, 349.) 
 National lank — LioibUity of pledgee of stock. 
 
 Stock in a National bank was pledged to secure a debt, with power to the 
 pledgee to sell it on default of payment. Held, that a sale by him pursuant 
 to the power was not voidable as a fraud on creditors of the bank, though 
 he sold because he believed the bank insolvent, and in order to escape per- 
 sonal liability as a stockholder. 
 
 Persons who hold stock of a National bank in pledge, the certificates of which 
 stand on the books of the bank in the name of the pledgee, are, in contem- 
 
 ,[ plation of the National Banking Act, stockholders, and so long as they thus 
 hold the stock in pledge are responsible to the creditors of the bank in pro- 
 portion to the amount so held.* 
 
 ACTION by Magruder, as receiver of the Merchants' National 
 Bank, of Washington, against Colston and others, to recover, 
 from the defendants, as stockholders of the said bank, the par 
 value of stock in said bank. The opinion states the case. 
 
 The jury rendered a verdict for the defendants, and from the 
 judgment entered thereon plaintifE appealed. 
 
 William M. Merrick, for appellant. The holder of stock, 
 knovring a bank to be insolvent, for the purpose of escaping his 
 responsibility to the creditors of the bank, cannot lawfully 
 transfer his stock for nominal consideration to a man of straw, 
 and thereby rid himself efEectually of his obligation to contrib- 
 ute an amount equal to the value of his stock to satisfy the 
 debts of the bank under the 12th section of the Banking Law. 
 Fraud vitiates every thing, as well an assignment of stock as 
 any other act intended to prejudice the rights of innocent parties. 
 Marcy v. ClarTc, 17 Mass. 334 ; Holyoke Bank v. Burnham et al., 
 11 Cush. 183 to 186 ; Roman v. Fry, 5 J. J. Marsh. 634 ; Moss v. 
 Oakley, 3 Hill, 370 ; Adderly v. Storm, 6 id. 624 to 628 ; Hale v. 
 Walker, 31 Iowa, 344, 354 ; Matter of the Empire City Bank, 18 
 N. Y. 223 ; Rosevelt v. Brown, 1 Kern. 148 ; Onslow v. Gorrie, 2 
 Madd. 340; M parte Be Pass, 5 Jurist (N. S.), 1193,1194; Angell 
 & Ames on Corporations, § 623 ; Orease et al. v. Baicock et al. 10 
 Mete. 547. 
 
 * See Wheelock v. Kost, ante, p. i06; Bale v. Walker, ante, p. 471. 
 
COUET OP APPEALS, 1876. 555 
 
 Magruder v. Colaton. 
 Charles Marshall, for appellees. 
 
 Geason, J. The question presented by some of the prayers, as 
 to the organization of the Mechanics' National Bank of Washing- 
 ton, having been abandoned by the counsel of the appellant, the 
 questions before the court upon this appeal arise upon his third 
 and fourth prayers, which were rejected by the court below, and 
 the appellees' second prayer, which was granted. The record shows 
 that, some time before the failure of the bank, the appellees, who 
 were bankers and brokers in Baltimore city, lent to Bayne & Com- 
 pany eight thousand dollars, payable on call, and took from them 
 as collateral security for repayment of the loan, one hundred shares 
 of the stock of the Merchants' National Bank of Washington, fifty 
 shares of which were in a certificate standing in the name of Oscar 
 A. King, and indorsed in blank by him, and the remaining fifty 
 shares in a certificate standing in the name of Bayne & Company, 
 and indorsed in blank by them. The appellees held these two cer- 
 tificates until the 36th day of April, 1866, when having previously 
 called upon Bayne & Co. for repayment of the loan, and they hav- 
 ing made default and instructed the appellees to sell, the latter 
 requested the bank to transfer the stock to them and to issue certi- 
 ficates to them in their own name for it. The bank transferred the 
 fifty shares standing in King's name and issued the certificates 
 therefor to the appellees, but refused to transfer the fifty shares 
 standing in the name of Bayne & Company, because Bayne & 
 Company were indebted to the bank. The appellees sold the 
 whole of the stock to Colston on the 3d day of May, 1866, for 
 one dollar, and delivered to him the certificate for the fifty shares 
 originally standing in the name of King, as well as the certificate 
 standing in the name of Bayne & Co., and the bank thereupon 
 issued a new certificate to Colston in his own name for the fifty 
 shares originally standing in King's name, and delivered it to him 
 on the 3d day of May, the day before the bank failed, and while it 
 was still open and doing business. The appellees proved that at 
 the time of the sale they did not consider the stock worth any 
 thing, and that they intended, when they made the sale to Colston, 
 to avoid complication and difficulties, fearing that the bank, which 
 they had heard was in difficulties, might prove insolvent. They 
 ^further proved that Colston was not pecuniarily responsible for the 
 amount of the par value of the stock so sold and transferred to 
 
556 MARYLAND 
 
 Magruder v. Colston. 
 
 him. The bank closed its doors on the 3d day of May, at 3 o'clock, 
 p. M., and turned out to be insolvent, and this suit was brought 
 by the receiver to recover from the appellees, as stockholders of the 
 bank, the par value of the fifty shares of stock, the certificate of 
 which had been issued to them, and by them transferred to Col- 
 ston. Upon these facts the appellant',g third and fourth prayers 
 asked instructions that if the jury should find that the transfer of 
 the fifty shares of stock was made by the appellees to Colston, with 
 a view and for the purpose of evading or escaping their responsi- 
 bility under the 13th section of the National Banking Act, such 
 transfer constituted no defense to this action, and did not relieve 
 the appellees from the responsibility which would have attached to 
 them in case the transfer had not been made, and that, if they had 
 so sold the stock under their agreement with Bayne & Co., as a 
 pledge to secure a loan of money, they were still responsible in law 
 to the same extent as if they had been the absolute owners and had 
 sold the legal title to the stock. The appellees' second prayer con- 
 tained the converse of these propositions. 
 
 The 12th section of the National Banking Act provides for the 
 personal liability of stockholders of National banks for the debts 
 of the corporation, in proportion to the amount of stock held by 
 them, and enacts that every person, becoming a shareholder by 
 transfer, shall succeed to all the rights and liabilities of the prior 
 holder of such shares. After a careful examination of the authori- 
 ties cited in the argument, we are of opinion that persons who 
 hold stock in pledge, the certificates of which stand on the books 
 of the bank in the name of the pledgee, are, in contemplation of 
 the Banking Act, stockholders, and, so long as they thus hold the 
 stock in pledge, are responsible to the creditors of the bank in pro- 
 portion to the amount so held. The reason for this is obvious. The 
 stock stands on the books of the bank in his name and he is thus 
 held out to the public as shareholder, and persons dealing with the 
 bank have no means of knowing the nature of the contract under 
 which he holds the stock, and have a right to presume, and are led 
 to believe that he is the absolute owner of it, and it is but fair to 
 presume that they deal with the bank upon the faith and credit of 
 parties thus appearing as stockholders. Stockholders are those who 
 appear on the books of the bank as owners of shares,' and who are 
 entitled to manage its affairs, and they can only throw off the lia- 
 bilities incident to that relation by transferring the stock. Until 
 
COUKT OF APPEALS, 1876. 557 
 
 Magruder v. Colston. 
 
 this is done they continue to be stockholders within the meaning 
 of the Banking Act. If Ve depart from the terms of the law and 
 inquire into the equities which may exist between the stockholders 
 and third persons, it cannot fail to embarrass creditors in seeking 
 a remedy for the wrongs which may have been done by the corpora- 
 tion. If creditors must look beyond the legal title, as exhibited by 
 the books of the bank, they can never know against whom to pro- 
 ceed. Rosevelt v. Brown, 1 Kern. 153 ; Adderly v. Storm, 6 Hill, 
 624 ; Worrell v. Judson, 5 Barb. 210 ; Crea.se et al. v. Babcock et al., 
 10 Mete. 545 ; United States Trust Co., of New .York, Receiver, 
 V. The United States Fire Ins. Co., 18 N. Y. 224; Holyoke Bank 
 \. Burnham et al, 11 Gush. 187. These cases arose under State 
 laws making stockholders in corporations personally liable for the 
 debt of the corporation, but the principles announced in them are 
 applicable to cases arising under the act of Congress of 1864, chapter 
 106. That act makes stockholders only personally liable, and the 
 appellees had parted witk their stock when thjB bank failed, and had, 
 therefore, ceased to be stockholders. 
 
 But it was contended by the counsel of the appellanb that inas- 
 much as the assignment and transfer of the stock was made to Col- 
 ston, under the circumstances detailed in the proof and for a nom- 
 inal consideration, and with the view and purpose of avoiding any 
 complications and difficulties in which a failure of the bank might 
 involve them, the transfer was a fraud upon the creditors of the 
 bank, and the appellees ought, therefore, to be held to the same 
 liability to which they would have been subjected had they never 
 made the transfer. It must be recollected, however, that they had 
 no right, under their contract with Bayne & Co., to hold the stock 
 as their own property, but had to sell it after the default of the 
 latter in repaying the loan. The only case that bears directly upon 
 this question to which we have been referred, or which we have been 
 able to find, is that of Holyoke Bank v. Burnham, reported in 11 
 Gush. 187. In that case Joseph Burnham transferred certain shares 
 of stock of a manufacturing company to Charles Burnham, who 
 gave his note to Joseph for eight hundred dollars, and the agree- 
 ment between the parties provided that any time within two years 
 either party should have the right to rescind the sale by a re-transfer 
 of the shares and a surrender of the note. Within the two years 
 the sale was reseiDded by Joseph surrendering the note, and Charles 
 re-transferring the shares. Suit was brought against Charles as 
 
558 MARYLAND 
 
 Magruder v. Colston. 
 
 shareholder of the corporation, by one of its creditors under the per- 
 sonal liability act of the Legislature of Massachusetts, and it was 
 held that as the shares of stock had been re-transferred under a 
 stipulation which formed part of the original contract between the 
 parties, Charles Burnham was not liable, notwithstanding the trans- 
 fer had been made for the purpose of avoiding liability under the 
 act. The case was heard by fiye of the six judges of the Supreme 
 Court of Massachusetts, and Judge Dbwbt, in delivering the opinion 
 of the court, says : " As to the second question, the right of the de- 
 fendant to re-transfer to Joseph Burnham the eleven shares and 
 thus divest himself of subsequent liability arising from, his holding 
 stock, the contract between the parties made at the time of the 
 transfer, authorizing such re-transfer at the election of the parties 
 at any time within two years, becomes material, and we are of opin- 
 ion that under the agreement made at the time of the transfer, and 
 the re-transfer being only an act in execution of it, it is not obnox- 
 ious to the charge of having been done in fraud of creditors, 
 although its leading object and purpose might have been, on the 
 part of the defendant, to avoid liability as a member of said cor- 
 poration. * * * It is unnecessary to consider, therefore, the 
 general question how far persons owning shares in a manufacturing 
 company may, by transferring them to some third person with a 
 view to avoid liability as such owner to the creditor, effectually do 
 so in the absence of such original contract for a re-transfer." 
 
 In this case it was part of the original contract between Bayne & 
 . Co. and the appellees, that the latter should sell the stock upon the 
 failure of the former to repay the loan upon call, and the sale to 
 Colston was only in execution of it. These facts are very similar 
 to those in the case of the Holyohe Bank v. Burnham, and the jus- 
 tice and reason of the principle applied in that case commend them- 
 selves to our approval, and we think it ought to be applied to this, 
 and so applying it we find no error in the rulings of the court below. 
 
 Judgment affirmed. 
 
COURT OF APPEALS, 1877. 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 Oedwat V. The Central National Bank of Baltimore.* 
 
 Action against National bank after it has gone into liquidation — Penalties for 
 taking uswrious interest — Action for, in State courts. 
 
 An action may be prosecuted against a National bank, although it has resolved 
 to go into liquidation and has provided for the redemption of its circulating 
 notes.f 
 
 An action lies against a National bank in a State court to recover the penalties 
 imposed by Congress for exacting unlawful interest.]: 
 
 ACTION of debt against the Central National Bank of Balti- 
 more, to recoTer double the amount of interest taken by the 
 bank of the plaintiff in alleged violation of the 30th section of the 
 National Banking Act. 
 
 * 
 
 Marshall <& Fisher, for appellants. 
 
 Machen & Qittings and Oeo. H. Williams, for appellee. 
 
 Alvet, J. If it be true, as suggested by the appellee, that the 
 corporation was actually dissolved at the expiration of six months 
 from the 15th of July, 1874, then, of course, this action must 
 abate; for it is perfectly well settled that a suit can no more be 
 prosecuted and judgment recovered against a dead corporation than 
 against a dead man. Mumma v. The Potomac Oo., 8 Pet. 281; Na- 
 tional Bank V. Golby, 21 Wall. 615. 
 
 But has the corporation been dissolved? We think not. It has 
 suspended active operations as a banking association — has resolved 
 to go into a state of liquidation — has deposited the money with 
 the Treasurer of the United States, with which to redeem its out- 
 standing circulation, and has received, by re-assignment, its bond 
 deposited to secure the payment of its notes, and it thenceforth 
 stands discharged from all liability on account of such circulating 
 notes, but the statute has not declared that these acts, of their own 
 
 * To appear in 46 Maryland Reports. 
 
 + See Bank of Bethel v. Pahquioque Bank, ante, p. 77; Green v. Walkill Na- 
 tional Bank, post. 
 
 t See State v. Tuller, ante, p. 375 ; Missouri River Telegraph Co. v. National 
 Bank, ante, p. 401; Newell v. National Bank, ante, p. 501. 
 
560 MARYLAND 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 mere operation, shall effect an absolute and total dissolution of the 
 corporation. And it would be strange if such were the case. There 
 are many other obligations to be provided for beside the circulat- 
 ing notes, and there may be many rights to be protected which 
 would require the continued existence of the corporation. It is not 
 reasonable to suppose Congress intended that, upon simply resolv- 
 ing 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 be left utterly without remedy for the enforce- 
 ment of the plainest right or recompense for the most grievous 
 wrong 
 
 As we read bhe sections 5221, 5222, 5223 and 5224, of the Rev. 
 Stats., no such result was ever contemplated. On the contrary, those 
 sections would seem plainly to contemplate the continued existence 
 of the corporation after the re-assignment of the bonds, and the cer- 
 tificate of discharge from the liability for the circulating notes of 
 the banking association; and such would seem to be the construc- 
 tion of the Supreme Court of the United States in the case of Ken- 
 nedy V. Gibson, 8 Wall. 498, 506, and Banh of Bethel v. Pahquioque 
 Bank, 14 id. 383, 398. There has been no actual and formal 
 surrender of franchises, and no judicial declaration of dissolution; 
 and acts of a more decisive character than those relied on in 
 this case have been held to be insnflBcientto operate a final dissolu- 
 tion. State V. Bank of Maryland, 6 Gill & Johns. 205; Brinker- 
 lioff V. Brown, 7 Johns. Ch. 217; Boston Glass Manuf. Co. v. 
 Langdon, 24 Pick. 49; Ang. & Am. on Corp., § 773. It would 
 seem, therefore, that the learned judge below was entirely correct 
 in holding that there had been no abatement of the action by 
 dissolution of the corporation. 
 
 The next question to be considered is that raised by the demurrer 
 to the appellant's amended declaration ; and that is, whether the 
 action can be sustained in the courts of this State, the action being 
 founded on a statute of the United States .' 
 
 The action is one of debt, brought by the appellant against the 
 appellee, under the 30th section of the National Banking Act, ap- 
 proved June 3, 1864, to recover double the amount of interest 
 unlawfully taken by the appellee. In the section referred to, it is 
 provided that the knowingly taking, receiving, reserving or charg- 
 ing a rate of interest greater than the rate fixed by the previous 
 
COUET OP APPEALS, 1877. 561 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 part of the section, '■•' shall be held and adjudged 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 pay- 
 ing the same, or the legal representatires, may recover back, in any 
 action of debt, twice the amount of the interest thus paid, from the 
 association taking or receiving the same, provided that the action is 
 commenced within two years from the time the usurious transac- 
 tion occurred." The recited provision constitutes section 5198 of 
 the Rev. Stats. U. S., page 1013, which went into operation June 
 22, 1874. The causes of action set forth in the declaration arose in 
 the year 1873, and the suit was brought as of July 25, 1874. 
 
 The 57th section of the Banking Act, under which the appellee 
 was organized, and which was in force at the time of the transac- 
 tion out of which the causes of action arose, provided " that suits, 
 actions and proceedings, against any association under this act, 
 may be had in any circuit, district, or territorial court of the Uni- 
 ted 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 juris- 
 diction in similar cases." This provision of the act of 1864 was 
 omitted in the Rev. Stats. ; but in that revision, by section 5597, it 
 is provided that "the repeal of the several acts embraced in said 
 revision shall not afEect any act done, or any right accruing or 
 accrued, or any suit or proceeding had or commenced in any civil 
 cause before said repeal, but all rights and liabilities under said 
 acts shall continue, and may be enforced in the same manner as if 
 said repeal had not ieen made." And in the next succeeding section 
 (5598) it is further provided that "all offenses committed, and all 
 penalties or forfeitures incurred under any statute embraced in said 
 revision prior to said repeal, may be prosecuted and punished in 
 the same manner and with the same effect as if said repeal had not 
 been made." This latter section, manifestly, has reference to pub- 
 lic prosecutions alone. In this case the cause of action is a for- 
 feiture, a penalty of a civil nature, for the exacting and taking of 
 usuiious interest upon moneys loaned, and the remedy given by the 
 statute is by private civil action of debt to the party grieved. The 
 government or the public is not concerned with it. It is, therefore, 
 a private right, pursued by a private civil action. And it has been 
 decided that the section of the statute upon which the action is 
 71 
 
562 MAEYLAND 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 founded is remedial as well as penal, and it is to be liberally con- 
 strued to effect the object which Congress had in view in enacting 
 it. Farmer^ National Bank v. Bearing, 91 U. S. 29, 35 (ante, p. 
 117). 
 
 This is not unlike in principle the case of debt brought by a 
 landlord against his tenant for double value for not quitting in 
 pursuance of notice given under statute 4 Geo. 2, ch. 28. In such 
 case, because the penalty or forfeiture prescribed by the act is made 
 to accrue to the party grieved and to be recovered by private 
 action of debt, the courts have taken a distinction between such 
 penalty and a penalty prescribed as criminal punishment, and hold 
 the statute to be remedial. Wilhinmn v. Golley, 5 Barr, 2694; 
 Lake v. Smith, 4 Bos. & Pul. 174. In the last case referred to, 
 being an action of debt on the statute, Heath, J., said : " The 
 double value has been called a penalty, and it is so in some degree, 
 but the law is also a remedial law." And Rooke, J., observed : 
 " The act indeed does give a penalty, but it is to the party grieved, 
 and this is a distinction which has often been taken between reme- 
 dial and penal laws." The action of debt is an ordinary common 
 law remedy, and it lies in the courts of this State, having general 
 common law jurisdiction, as the court in which this action was 
 instituted, on statutes at the suit of the party grieved, either where 
 it is expressly given to such party, as by the statute under consid- 
 eration, or where a statute prohibits the doing an act under a pen- 
 alty or forfeiture to be paid to the party grieved, and there is no 
 specific mode of recovery prescribed. This is the well-established 
 doctrine in England (1 Chitty's PL 112, and authorities there cited), 
 and it is the law here. There is, therefore, no question but that 
 the court below has jurisdiction in similar cases to that provided 
 for by the statute under which this action was brought. 
 
 But it is contended that, notwithstanding the comprehensive 
 and explicit terms employed in section 57 of the act of 1864, ch. 106, 
 giving the right to sue in State courts, inasmuch as the cause of 
 action is a penalty or forfeiture, the remedy can only be brought in 
 the Federal tribunals. It is contended, 1st, that the language of 
 the 57th section should be construed with reference and in subjec- 
 tion to the pre-existing law, and that by the pre-existing law the 
 jurisdiction of the State tribunals in such case as the present was ex- 
 cluded by express provision of the statute ; 2d, if such construction 
 be not adopted, then that the savings in the Revised Statutes do 
 
COUET OF APPEALS, 1877. 563 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 not embrace the right to sue in a State court in a case like the 
 present ; and 3d, that though the statute may confer the right. 
 Congress has no constitutional power to give the State courts cog- 
 nizance of penal actions, and those courts should refuse to take 
 such cognizance. 
 
 The argument in reference to the first proposition, that is on 
 the construction of the 57th section of the National Banking Act, 
 is founded upon the 9th section of the Judiciary Act of 1789 ( 1 Stat. 
 76), wherein the jurisdiction of the District Courts of the United 
 States is defined. In that section of the Judiciary Act it was de- 
 clared that the District Courts should ha^e, exclusively of the courts 
 of the several States, cognizance of all crimes and offenses that were 
 cognizable under the laws of the United States, committed within 
 their respective districts, etc., and, among other subjects of juris- 
 diction, it was declared that such District Courts should "have ex- 
 clusive origitial cognizance of all seizures on land or other waters 
 than as aforesaid made, and of all suits for penalties and forfeitures, 
 incurred under the laws of the United States. This latter provis- 
 ion in regard to penalties and forfeitures has been inserted in the 
 Eevised Statutes in section 711, in defining the jurisdiction of the 
 United States courts that is exclusive of the courts of the several 
 States. 
 
 Now, looking at the broad, unqualified language employed in sec- 
 tion 57 of the act of 1864, there would seem to be no doubt but 
 that it was the design of Congress that the State courts should take 
 cognizance of actions like the present, as well as all other civil 
 actions against banking associations, and that, if it had been the 
 design to exclude the State courts in such cases, appropriate terms 
 would have been employed to express the intention, as in other acts 
 of Congress when conferring jurisdiction. And though the par- 
 ticular provision has been omitted from the Eevised Statutes, yet 
 the saving, by section 5597, is ample to continue the jurisdiction in 
 the State courts as to all transactions occurring before the Eevised 
 Statutes were adopted. It is expressly provided that all rights and 
 liabilities under said act shall continue, and may be enforced in the 
 same manner as if said repeal had not leen made. But if it were 
 conceded that such construction is erroneous, then the question 
 would arise, what is the proper construction of that provision in 
 the Eevised Statutes in reference to the exclusive jurisdiction of 
 the Federal courts of all suits for penalties and forfeitures which 
 
564 MARYLAND 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 was taken from the Judiciary Act of 1789 ? And, in answer to this 
 question, it would seem to require no strained construction to 
 warrant the conclusion that that provision of the statute has no 
 application to this case whatever; that it has reference to and con- 
 templates only those penalties and forfeitures of a public nature 
 which may be sued for by the government, or some person in its 
 behalf. And this construction is strongly enforced by several pro- 
 visions to be found in the Eevised Statutes, such as that which 
 requires the district attorneys to furnish statements of all suits 
 instituted by them for the recovery of any fines, penalties or for- 
 feitures. § 773. There is great reason for confining suits of 
 that character to the Federal jurisdiction, but none, it would 
 seem, for excluding the State jurisdiction in a case like the pres- 
 ent, where the right is private and is being pursued by a private 
 civil action by the party grieved. 
 
 Having shown that there is nothing in the statute of the United 
 States to exclude the State jurisdiction in a case like the present, 
 the question is: 1st, whether in the absence of express terms con- 
 ferring jurisdiction on the State courts, those courts have jurisdic- 
 tion to enforce a right under a statute of the United States in a 
 case of the character now under consideration ? and if not, 3d, 
 whether Congress can rightfully, by express terms, confer such 
 jurisdiction ? 
 
 The position and argument of the appellee, if sustained, would 
 result in both these questions being resolved in the negative. If, 
 however, either be resolved in the affirmative, the judgment ap- 
 pealed from must be reversed. The question of the concurrent 
 jurisdiction of the State courts with those of the United States 
 has been the subject of a good deal of discussion both by states- 
 men and the courts of the country. It was one of the objections 
 urged against the adoption of the Federal Constitution, that it 
 would detract from and materially impair the existing jurisdiction 
 of the State courts. This objection was answered by Mr. Hamil- 
 ton in the 82d number of the Federalist, in which he maintained 
 that the Congress of the Union, in the course of legislation upon 
 the objects intrusted to their direction, might or might not com- 
 mit the decision of causes arising upon the regulation of any par- 
 ticular subject, to the Federal courts solely, but that, in every case 
 in which the State courts are not expressly excluded by the stat- 
 utes, they would of course take cognizance of the causes to which 
 
COURT OF APPEALS, 1877. 565 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 those acts might give origin. This he inferred from the nature of 
 the judiciary power, and from the general genius of the system. 
 And Chancellor Kent, taking the same view of the subject, and 
 after a full review of the course of decisions, State and Federal, 
 down to the time he wrote, concludes that, in judicial matters, 
 the concurrent jurisdiction of the State tribunals depends alto- 
 gether upon the pleasure of Congress, and may be revoked and ex- 
 tinguished whenever they think proper, in every case in which the 
 subject-matter can constitutionally be made cognizable in the 
 Federal courts; and that, without an express provision to the con- 
 trary, the State courts will retain a concurrent jurisdiction in all 
 cases where they had jurisdiction originally over the subject-mat- 
 ter. 1 Kent's Com. 396-400. The reasoning of the two distin- 
 guished writers just mentioned has remained without refutation ; 
 and without restatement of their arguments or an attempt to re- 
 view the decisions upon the subject, it is sufficient to refer to the 
 recent case in the Supreme Court of the United States, which 
 would seem to conclude the very question now under consideration. 
 The case to which we refer is that of Olaflin v. Houseman, 
 assignee, 93 U. S. 130; 3 Cent. L. J. 803. In that case the 
 action was brought in a State court by an assignee in bankrupcy 
 to recover against the defendant an amount of money which the 
 latter had collected on a judgment recovered against the bankrupt 
 within four months before the commencement of the proceedings 
 in bankruptcy. The defense taken was, that inasmuch as the 
 assignee was a creature of an act of Congress, and derived all his 
 rights and powers from the Bankrupt Act, and the right to recover 
 was exclusively referable to that statute, the action could not be 
 sustained in a State court, but should have been brought in a court 
 of the United States. This was the only question considered by 
 the court, and the opinion was unanimous that the State court had 
 complete cognizance of the action. It was there held that, inas- 
 much as the Bankrupt Act gave no exclusive jurisdiction to the 
 courts of the United States, the assignee might well maintain a 
 suit in the State court to recover the assets of the bankrupt ; and 
 further, that the statutes of the United States, made in pursuance 
 of the Constitution, are as much the law of the land in the States 
 as the statutes of the States can be, and although exclusive juris- 
 diction for their enforcement may be given to the Federal courts, 
 yet where it is not given, either expressly or by necessary implica- 
 
566 MAEYLAND 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 tion, the State courts, haying competent jurisdiction in other 
 respects, may be resorted to for the enforcement of rights under 
 such statutes. 
 
 The whole subject is well reasoned in the opinion, and the de- 
 cisions reviewed, and the court very justly observe that when the 
 structure and true relations of the Federal and State governments 
 are considered, there is really no "foundation for excluding the 
 State courts from the exercise of such jurisdiction. In dis- 
 cussing the relation of the two governments and the operation 
 of the laws of the Union, the court say : " The laws of the 
 United States are laws in the several States, and just as much 
 binding on the citizen and courts thereof as the State laws are. 
 The United States is not a foreign sovereignty as regards the 
 several States, but it is a concurrent, and, within its jurisdiction, 
 paramount sovereignty. Every citizen of a State is a subject of 
 two distinct sovereignties, having concurrent jurisdiction in the 
 State, — concurrent as to place and persons, though distinct as to 
 subject-matter. Legal or equitable rights acquired under either 
 system of laws may be enforced in any court of either sovereignty 
 competent to hear and determine such kind of rights and not 
 restrained by its Constitution in the exercise of such jurisdiction. 
 Thus, a legal or equitable right acquired under State laws may 
 be prosecuted in the State courts, and also, if the parties reside in 
 different States, in the Federal courts. So rights, whether legal or 
 equitable, acquired under the laws of the United States courts, 
 may be prosecuted in the United States courts, or in the State 
 courts competent to decide' rights of like character and class, sub- 
 ject, however, to this qualification, that where a right arises under 
 a law of the United States, Congress may, if it see fit, give to the 
 Federal courts exclusive jurisdiction." 
 
 And again, in pursuing the argument, it is said : " This juris- 
 diction is sometimes exclusive by express enactment, and sometimes 
 by implication. If an act of Congress gives a penalty to a party 
 aggrieved, without specifying a remedy for its enforcement, there 
 is no reason why it should not be enforced, if not provided other- 
 wise by some act of Congress, by a proper action in a State court. 
 The fact that a State court derives its existence and functions 
 from the State laws is no reason why it should not afford relief, 
 because it is subject also to the laws of the United States, and is 
 just as much bound to recognize these as operative within the State 
 
COURT OF APPEALS, 1877. 567 
 
 Ordway v. The Central National Bank of Baltimore. 
 
 as it is to recognize the State laws. The two together form one 
 system of jurisprudence, which constitutes the law of the land for 
 the State ; and the courts of the two jurisdictions are not foreign 
 to each other, nor to be treated by each other as such, but as courts 
 of the same country, having jurisdiction partly different and partly 
 concurrent. That case leaves nothing to be said as to either aspect 
 of the question here involved ; and, therefore, whether the right 
 to maintain this action be placed upon the express terms of the 
 statute giving cognizance to the State courts, or simply upon the 
 non-exclusion of State jurisdiction, in either case the action is 
 maintainable. And that the cause of action is a penalty, to be 
 recovered in a civil action of debt by the party grieved, constitutes 
 no objection to the State courts taking cognizance of it and enforc- 
 ing the right." 
 
 The case of the First National Banh of Plymouth v. Price, 33 
 Md. 487, has no similitude to the present. In that case the pen- 
 alty was given by a statute of Pennsylvania, and the decision pro- 
 ceeded upon the principle that, as the law had no extra-territorial 
 operation, the courts of one State will not enforce penalties im- 
 posed by the laws of another. But, as has been clearly shown, no 
 such reason or principle applies as to the laws of the United States, 
 when sought to be enforced in the courts of the several States. 
 The Constitution and laws of the Union are the supreme law of the 
 land, and are as much a part of the law of each State, and as bind- 
 ing upon the courts and people as its own local constitution and 
 laws. 
 
 Prom what has been said it follows that the demurrer, so far as 
 it is grounded upon the want of right or power in the court to take 
 cognizance of the case, must be overruled. 
 
 There are certain other objections raised under the demurrer to 
 the amended declaration, of a purely technical character ; but these 
 objections appear to be without any substantial foundation, and 
 therefore may be dismissed without comment. For the reasons 
 assigned, the judgment of the court below must be reversed, and 
 the demurrer overruled, and the cause remanded to be proceeded 
 with in regular course. 
 
 Judgment reversed and cause remanded. 
 
568 MASSACHUSETTS 
 
 Commonwealth v. Tenney. 
 
 Commonwealth v. Tenm^bt. 
 
 (97 Massachusetts, 50.) 
 
 lEVamMient conversion by National hank officers of property deposited with 
 
 iamk — Jurisdiction of State courts of offenses by officers of National 
 
 banks — Fradulent conversion — Intent. 
 
 A State statute made it larceny for any " oflScer of an incorporated bank " to 
 fraudulently convert to his own use property of the bank or belonging to 
 any person and deposited therein. Sdd, (1) to apply to officers of National 
 banks located in the State ; and (3) that a State court had jurisdiction of an 
 indictment under the statute against an officer or servant of a National bank 
 for the fraudulent conversion of the property of individuals deposited in 
 such bank.* 
 
 An officer of a National bank took bonds deposited with the bank and sent 
 them.to a broker in another State as collateral security for money advanced. 
 Held, a fraudulent conversion and larceny within the statute. 
 
 INDICTMENT under Gen. Stats., ch. 161, § 39, which is as fol- 
 lows : "If an officer of an incorporated bank, or any person 
 in the employment of such bank, fraudulently converts to his own 
 use, or fraudulently takes and secretes, with intent so to do, any 
 bullion, money, note, bill, or other security for money, belonging 
 to and in possession of such bank, or belonging to any person and 
 deposited therein, he shall, whether intrusted with the custody 
 thereof or not, be deemed guilty of larceny in said bank and be pun- 
 ished," etc. 
 
 The indictment set forth that the defendant at Greenfield on 
 March 1, 1866, " then and there being a clerk of the Eirst National 
 Bank of Greenfield, a corporation then and there duly and legally 
 established, located, organized and existing under and by virtue of 
 the laws of the United States," did fraudulently convert to his 
 own use certain United States bonds belonging to one Purple, and 
 then and there being deposited in the said bank. 
 
 *In Cominonwealth v. Sail, 97 Mass. 570, it was held on the strength of this 
 case that National bank bills are within a State statute punishing the having in 
 possession counterfeits of bank biUs "issued by an incorporated banking com- 
 pany established in this State or within the United States." The opinion ou 
 this point was simply a statement of the point. As to embezzlements, etc., by 
 officers of National banks, see Van Campen Case, ante, p. 185 ; United States v. 
 Taintor, ante, p. 256; Steele v. Tuller, ante, p. 375; Commonwealth v. Felton,post; 
 Commonwealth v. Barry, post, note. 
 
SUPKEME JUDICIAL COURT, 1867. 
 
 Commouwealtli v. Tenney. 
 
 The eTidence showed that the defendant while a clerk in the bank, 
 as alleged, took the bonds from their place of deposit and sent them 
 to a broker in New York as collateral security for adrances made in 
 stock speculations, but with the understanding that the bonds were 
 not to be sold. 
 
 The defendant was convicted, and alleged exceptions. 
 
 G. Allen, Attorney-General, for the Commonwealth. 
 D. Aiken and S. 0. Lamb, for defendant. 
 
 PosTEE, J. This indictment is founded on Gen. Stats., ch. 161, • 
 § 39, within the proTisions of which, we have no doubt, National 
 banks, created under the laws of the United States, must be held to be 
 included. The words " incorporated bank " are broad enough to 
 embrace not only banks existing at the date of the passage of the 
 act, but such as have been chartered since ; and they are not lim- 
 ited to corporations created by the laws of Massachusetts, but like- 
 wise include such National banking corporations as are located 
 within this Commonwealth, if the offense to be punished is here 
 committed. 
 
 The further objection is made, that the courts of the United 
 States are vested by the Judiciary Act of September 34, 1789 (U. 
 S. Stat. 1789, chap. 20, § 11), with exclusive cognizance of all 
 crimes cognizable under the authority of the United States, except 
 where it is otherwise provided by the acts of Congress. But an 
 examination of the statutes of the United States leads us to the 
 conclusion that the offense charged in this indictment has not 
 been made punishable by any act of Congress. The enactments 
 cited on behalf of the defendant punish the embezzlement of the 
 property of National banks, but not of the property of individuals, 
 deposited with and in the custody of such banks. U. S. Stats. 
 1863, chap. 58, § 52; U. S. Stats. 1864, chap. 106, § 55. As the 
 Federal courts have no criminal jurisdiction except that conferred 
 by Congress, no question can be made as to the constitutionality of 
 State legislation punishing such frauds, until they have been made 
 punishable by the Federal laws. There is no view of the relative, 
 or of the concurrent powers of the two governments, which affects 
 the decision of the present case ; for all courts and jurists agree 
 that State sovereignty remains unabridged for the punishment of 
 all crimes committed within the limits of a State, except so far as 
 72 
 
570 MASSACHUSETTS 
 
 Commonwealth r. Tenney. 
 
 they haTe been brought within the sphere of Federal jurisdiction 
 by the penal laws of the United States. Commonwealth v. Fuller, 
 8 Mete. 313; Commonwealth v. Peters, 13 id. 387. 
 
 The objection that the First National Bank of Greenfield had 
 not been duly organized as a corporation was not insisted upon at 
 the argument, and, so far as we can judge from the evidence re- 
 ported, appears to have no foundation. 
 
 [The court then decided that a former acquittal on the trial of a 
 common law indictment for a larceny of the bonds was not a good 
 plea in bar and continued. ] 
 
 . With reference to the fraudulent and felonious character of the 
 acts proved, and their sufiBciency to warrant a conviction, we enter- 
 tain no doubt. To take from their place of deposit the bonds of a 
 depositor and send them out of the State to be used as collateral 
 security for the defendant's own debt, was a fraudulent conversion. 
 Intention to restore the bonds, and the agreement of the party who 
 received them not to sell or dispose of them, cannot do away with 
 the criminal nature of the transaction. A guilty intent is neces- 
 sarily inferred from the voluntary commission of such an act, the 
 inevitable efEect of which is to deprive the true owner of his prop- 
 erty and appropriate it to the defendant's own use. Perhaps in a 
 majority of cases the party who violates his trust in such a manner 
 does not expect or intend that ultimate loss shall fall upon the 
 person whose property he takes and misuses. But no hope or expec- 
 tation of replacing the funds abstracted can be admitted as an 
 excuse before the law. The forger who means to take up the forged 
 instrument, the thief who contemplates making eventual restitu- 
 tion, and the man who embezzles money or bonds with the design 
 of restoring them, all fall under like condemnation in courts of 
 justice and wherever the rules of sound morality are respected. 
 
 Exceptions overruled. 
 
SUPREME JUDICIAL COURT, 1868* 571 
 
 Flint V. Board of Aldermen of Boston. 
 
 Flint t. Boakd of Aldbemest of Boston. 
 
 (99 Massacliuaetts, 141.) 
 Taxation of shares in a National hank situated in another State. 
 
 Congreaa has the conBtltutional right to establish National banks in any State 
 and to provide that the shares of their capital stock shall be exempt from 
 taxation by other States. 
 
 Under section 41 of the National Banking Act of 1864, it is unlawful for a 
 State to impose a tax on shares owned by an inhabitant thereof in the capi- 
 tal stock of a National Bank located in another State. * 
 
 PETITION for a writ of certiorari to the Aldermen of Boston to 
 reverse their action in refusing to abate a tax assessed to the 
 petitioner, a resident of Boston, on shares of stock in a National 
 bank located in New York. 
 
 C. B. Goodrich and L. J. Austin, for petitioner. 
 
 G. H. Hill and J. P. Healy, for respondents. 
 
 HoAE, J. The petitioner is a resident of the city of Boston 
 and has been assessed in that city upon the shares owned by him in 
 a National banking association located in the city of New York. 
 We think the case must be governed by the principles in the decis- 
 ion in Austin v. Aldermen of Boston, 14 Allen, 359. The National 
 banks are artificial bodies created by the laws of the United States. 
 
 *The material portion of U. S. Stat, of 1864, oh. 106, §41, is as follows: 
 " Provided, that nothing in this act shall be construed to prevent all the shares 
 in any of the said associations, held by any person or body corporate, from 
 being included in the valuation of the personal property of such person or 
 corporation in the assessment of taxes imposed by or under State authority at 
 the place where such bank is located, and not elsewhere, but not at a greater 
 rate than is assessed upon other moneyed capital in the hands of Individual 
 citizens of such State. Provided, further, that the tax so imposed under the 
 laws of any State upon the shares of any of the associations authorized by 
 this act, shall not exceed the rate imposed upon the shares in any of the 
 banks organized under authority of the State where such association is 
 located. Provided, also, that nothing in this act shall exempt the real estate 
 of associations from either State, county, or municipal taxes to the same ex- 
 tent, according to its value, as other real estate is taxed." 
 
572 MASSACHUSETTS 
 
 Flint V. Board of Aldermen of Boston. 
 
 The power of Congress to establish them arises from their being 
 suitable instruments for the performance of functions pertaining 
 to the Ifational government. As such instruments, they are not 
 subject to taxation under State authority, and although the shares 
 in their capital stock are so far distinct from the corporations them- 
 selves as to be the subject of State taxation if such taxation is not re- 
 stricted or prohibited 'by Congress, yet it has been expressly decided 
 by the Supreme Court of the United States that they are " a sub- 
 ject-matter over which Congress and the States may exercise a con- 
 current power, but from the exercise of which Congress, by reason 
 of its paramount authority, may exclude the States." Van Allen v. 
 Assessors, 3 Wall. 573 {ante, p. 1). In that case it was held that a 
 tax on shares in Kational banks was invalid, which was not levied 
 in conformity with the stipulations in the proviso of the U. S. 
 Stat, of 1864, ch. 106, § 41. 
 
 By the construction which was given to that proviso by this 
 court in Austin v. Aldermen of Boston, Congress has thereby pro- 
 hibited the assessment of taxes by any State upon the shares of a 
 National bank established in any other State. The purpose may 
 have been to attract banking capital, and induce the formation of 
 National banks within those States where the rate of taxation is 
 low. 
 
 But whatever may have been the design or motive, we can have 
 no doubt that it is within the constitutional power of Congress to 
 establish a National bank in any State, and to provide that its 
 shares shall have such a local nature as to be exempt from taxation 
 by other States; and that this power has been exercised in the 
 present instance. Abbott v. Bangor, 54 Me. 540. 
 
 Certiorari to issue. 
 
SUPEEME JUDICIAL COUKT, 1869. 573 
 
 Commonwealth v. Felton. 
 
 COMMOKWEALTH T. PeLTOK. 
 
 (101 Massachuaetta, 201.) 
 
 Embezzlement hy officers of National banks — Jurisdiction of offense. 
 
 A State court has no jurisdiction of the crime of embezzlement by an officer 
 of a NationaF bank situate within the State ; and since the National Bank 
 ing Act makes such embezzlement a misdemeanor, an accessory thereto can- 
 not be indicted in a State court under a statute making an embezzlement, or 
 the being accessory thereto, a felony.* 
 
 INDICTMENT under the statute of Massachusetts charging that 
 one Martin, as cashier of the National Hide and Leather Bank, 
 embezzled the funds of the bank, and that the defendant, Felton, 
 was an accessory thereto before the fact. 
 
 The defendants filed separate pleas to the jurisdiction, alleging 
 that the United States courts had exclusive cognizance of the 
 offenses charged in the indictment, as against both defendants, 
 and that they both had, before the pendency of this indictment, 
 been indicted in the United States Circuit Court. In the Superior 
 Court, Ames, 0. J., allowed Martin's plea, but overruled the plea 
 of Felton, who thereupon pleaded nola contendere, and alleged 
 exceptions. 
 
 A. A. Ramsey, for Felton. 
 
 C. Allen, Attorney-General {J. C. Davis, Assistant Attorney- 
 General, with him), for the Commonwealth. 
 
 Ames, J. The indictment against this defendant charges him 
 with a crime of so grave a character, that it ought to be made a 
 matter of judicial investigation somewhere, upon the facts and 
 merits. But as he is indicted for the same transaction in two dif- 
 ferent jurisdictions, namely, in the Circuit Court of the United 
 States and in the Superior Court of this Commonwealth, it be- 
 comes necessary to decide to which, if to either, of these two juris- 
 dictions he is properly amenable; or, to state the question with 
 more strict accuracy, whether he is liable to be proceeded against 
 under the laws of this Commonwealth. 
 
 * See Commonwealth v. Barry, post, and note . 
 
574 MASSACHUSETTS 
 
 Commonwealth v. Pelton. 
 
 The statutes of this Commonwealth (Gen. Stats., ch. 161, § 89) 
 have made full and ample provision for the case of the embezzle- 
 ment or fraudulent appropriation by any cashier or other oflScer of 
 any incorporated bank, of any of the funds of such bank. This 
 description of crime, by our laws, is a felony, and is punishable by 
 imprisonment in the State prison. It has recently been decided 
 that the language of this statute is broad enough to include bank- 
 ing corporations organized under the laws of the United States 
 and located in Massachusetts as well as like corporations created 
 by the laws of this State. Oommonwealth v. Tenney, 97 Mass. 50 
 {ante, p. 568). So far as the case depends on our own legislation, and 
 if nothing has been done to impair the jurisdiction of our own 
 tribunals in such a case, there can be no doubt that Martin, the 
 cashier of the Hide and Leather National Bank, could well be in- 
 dicted, and tried, in the Superior Court for embezzlement of the 
 funds of the bank, and this defendant could also in like manner 
 be indicted jointly with him, or separately, as accessory before the 
 fact to the same embezzlement. 
 
 But the act of Congress (U. S. Stat. 1864, ch. 106) from which 
 the National banks derive their existence and organization, con- 
 tains a section (§ 39) which also makes full and ample provision 
 for the punishment of the crime of embezzlement and fraudulent 
 appropriation of any funds of a JSTational bank by any cashier, 
 etc., of such bank. It exactly covers the crime imputed to Mar- 
 tin. It declares that description of crime to be a misdemeanor, 
 and makes it punishable by imprisonment in the State prison. It 
 makes no provision or reservation for its prosecution and punish- 
 ment by any State authority, but makes it cognizable under the 
 authority of the United States. By the terms of the Judiciary 
 Act (U. S. Stat. 1789, ch. 20, § 11), the courts of the United 
 States are vested with the exclusive cognizance of all crimes that 
 are punishable by the act of Congress, except where' the act of 
 Congress makes other provisions, and it would therefore seem that 
 the crime of embezzlement by a cashier of a National bank located 
 within our territory is taken out of the jurisdiction of our courts. 
 This is at least strongly implied in Commonwealth v. Tenney, and 
 in fact is conceded by the learned Attorney-General in the argu- 
 ment of this case. See also Oommonwealth v. Fuller, 8 Mete. 313. 
 If Martin, then, as a bank officer, is not amenable in our courts 
 for embezzlement from the bank, can Pelton be indicted in the 
 
SUPKBME JUDICIAL COURT, 1869. 575 
 
 Crocker v. Marine National Bank of New York. 
 
 same courts as an accessory before the fact, for the same embezzle- 
 ment? The technical and somewhat narrow rule of the common 
 law on the subject of principal and accessory has been very exten- 
 sively and reasonably enlarged by modern legislation. " Whoever 
 counsels, hires, or otherwise procures a felony to be committed, 
 may be indicted and convicted as an accessory before the fact, 
 either with the principal felon, or after his conviction ; or may be 
 indicted and convicted of a substantive felony, whether the prin- 
 cipal felon has or has not been convicted, or is not amenable to 
 justice. Gen. Stats., ch. 168, § 4. But the difficulty in the way 
 of holding the defendant upon the present indictment is, that the 
 act of Congress has taken the crime of the principal out of our 
 jurisdiction. Our courts cannot deal with him upon that charge. 
 By the terms of the same act, which in this matter is the controll- 
 ing authority, the crime of the principal has ceased to be a felony, 
 and has become a misdemeanor only — a description of a crime, in 
 which there are no accessories. A defaulting cashier of a National 
 bank, however flagrant his embezzlement may be, so far from 
 being a principal felon, is not in legal strictness a felon at all; and 
 it would seem to be impossible, therefore, to say that Felton, even 
 if he in fact counseled, hired, or otherwise procured the crime 
 to be committed, can be said to be thereby rendered accessory to a 
 felony, within the terms of the above-cited statute. Gen. Stats., 
 ch. 168, § 4. The effect of our decision may very probably be to 
 leave what it charged as a great crime to go wholly unpunished and 
 untried; but that is a result which we have no power to prevent. 
 
 Exceptions sustained. 
 
 Ceockee v. Maeiue National Bank of New Yoek. 
 
 (101 Massachusetts, 340.) 
 
 National bank — Actions against in State courts. 
 
 A banking association organized under act of Congress, of 1864, chapter 106, 
 can be sued in a State court, only in the city or county where it is located.* 
 
 T 
 
 IHE facts are stated in the opinion. 
 
 * See Cooke v. State National Bank, post, and note. 
 
576 MASSACHUSETTS 
 
 Crocker t. Marine National Bank of New York. 
 
 J. 0. Abbott and H. 0. Hutchins, for plaintifEs. 
 E. D. Sohier aad Q. A. Welch, for defendant. 
 
 Geat, J. These actions are brought, the one by citizens of New 
 York and the other by citizens of Massachusetts, against a banking 
 association established in the city of New York, under the act of 
 Congress of 1864, chap. 106, entitled " An act to provide a National 
 currency secured by a pledge of United States bonds, and to pro- 
 vide for the circulation and redemption thereof." The first ques- 
 tion to be decided is that of jurisdiction; for, if the court has no 
 jurisdiction, it has no authority to consider the merits of the actions. 
 
 The general principle is weU settled, that civil cases arising 
 under the Constitution and laws of the United States may be tried 
 and determined in the State courts, unless the National Constitu- 
 tion and laws have vested exclusive jurisdiction of them in the 
 Federal tribunals; but that Congress may prohibit the State courts 
 from entertaining Jurisdiction of such cases. 1 Kent's Com. (6th 
 ed.) 396 ef seq.j Bank of United States v. JDeveaux, 5 Cranch, 85, 
 86; OsbornY. United States Bank, 9 Wheat. 738; Teall v. Felton, 1 
 Comst. 537; S. C, 12 How. 384; Ward v. Jenkins, 10 Mete. 591. 
 The question in this case, therefore, depends upon the intention of 
 Congress, as manifested in the act of 1864. 
 
 The 8th section of that act declares that every banking associa- 
 tion, formed and organized pursuant to its provisions, shall be a 
 body corporate, with the usual powers of a corporation, and among 
 others, to have a corporate name and seal, and " by such name it 
 may make contracts, sue and be sued, complain and defend, in any 
 court of law and equity, as fully as natural persons." If the act 
 contained no further provision upon this subject, the corporations 
 thus established might doubtless be sued, as well as sue, in the 
 State courts of appropriate jurisdiction, and could be sued in only 
 such courts of the United States as the citizenship of the parties 
 would warrant. Bank of United States v. Deveaux; Teall y. Felton 
 and Ward v. Jenkins, above cited. 
 
 But by the 5th section it is enacted that ' suits, actions and pro- 
 ceedings against any association under this act may be had in any 
 circuit, district or territorial court of the United States, held within 
 the district in which such association may be established; or in any 
 State, county or municipal court in the county or city in which 
 said association is located, having jurisdiction in similar cases; " 
 provided, however, that all proceedings to enjoin the Comptroller 
 
SUPEEME JUDICIAL COUET, 1869. 577 
 
 Crocker v. Marine National Bank of New York. 
 
 of the Currency under this act shall be had in a court of the United 
 States. 
 
 The plaintiffs contend that this section, except the final proviso, 
 is merely permissive, and does not exclude the bringing of such 
 suits in any court, National or State, having jurisdiction in similar 
 cases. But, according to their construction, so much of it as relates 
 to courts of the United States would seem to have no effect, except 
 in the case of a plaintiff residing in the district in which the asso- 
 ciation is established; and so much as relates to the State courts 
 would seem to be wholly useless and superfluous. And the effect 
 would be, that, while a citizen of New York could not sue this 
 association in any Federal court held beyond the limits of that 
 State, he might bring a suit against it in the courts of any State of 
 the Union, by the laws of which a corporation established in 
 another State might be sued, and in which it might be effectually 
 served with process. Folger v. Columbian Insurance Co., 99 Mass. 
 272. 
 
 Upon full consideration, we are unanimously of opinion that the 
 construction of the act of Congress for which the plaintiffs contend 
 cannot be supported, and that the opposite construction must pre- 
 vail. The whole purpose of the 8th section appears to have been 
 to clothe the association with the attributes of a corporation, includ- 
 ing that of suing and being sued. Unaccompanied by further 
 legislation, that would have left the jurisdiction over suits against 
 it to be regulated, according to the subject-matter involved or the 
 parties interested, by the existing laws of the United States, and 
 the several States respectively. But the 57th section designates 
 not only the judicial district of the courts of the United States, 
 but the locality of the State courts, within which suits may be 
 brought against such associations; and, by thus regulating the whole 
 subject of suits against such corporations, so far supersedes all 
 other rules, or to speak more accurately, prevents them from ever 
 applying to such suits. This section manifests the intention of 
 Congress that each of these associations should be sued, either in 
 the Federal or in the State courts, only in the judicial district in 
 which it is established, and in which its officers may be summoned 
 and i ts books brought into court with the least interruption and 
 inconvenience of its business; and that the election of plaintiffs to 
 sue in any court whatever should be confined within these limits 
 in all cases. Action dismissed for want of jurisdiction. 
 
 73 
 
578 MASSACHUSETTS 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 Peovidbnce In'stitutioh' foe Savings and Jewell v. City of 
 
 Boston. 
 
 (101 MassachusettB, 675.) 
 
 Constitutional Icm — Gonatruction of statute — Taacation of National hank sTiares. 
 
 By the statute of June, 1868, chapter 349, of Massachusetts, entitled " An act 
 concerning the taxing of bank shares," it was provided that the shares in 
 National banks owned by non-residenta of the Commonwealth shall be 
 assessed to the owners thereof in the cities or towns where the banks are 
 located ; that the rate of taxation shall be the same as on other moneyed 
 capital ; that the value of such shares shall be omitted from the valuation 
 upon which the rate is to be based, and that the act shall " apply to taxes 
 assessed and collected for the present year in the same manner and to the 
 same effect as if it had been in force on the first day of May. " Held, that 
 the act was not unconstitutional, either as being in violation of the act of 
 Congress of 1864, chapter 106, section 47, and 1868, chapter 7, or as levy- 
 ing a tax in a disproportional manner, or as being retrospective in its opera- 
 tion. 
 
 ACTION to recover the amount of taxes paid under protest. The 
 taxes were assessed by the assessors of Boston, under the stat- 
 ute of 1868, chap. 349, on shares owned by the plaintiffs, in the 
 National Eeyere Bank, which was established at Boston under 
 United States statute of 1864, chap. 106. One of the plaintifEs 
 was a corporation of Rhode Island, the other was a citizen of Con- 
 necticut. Several of the provisions of the statute of 1868, chap. 
 349, are referred to in the opinion. It was also provided by the 
 act, that it should " apply to taxes assessed and collected for the 
 present year in the same manner and to the same effect as if it had 
 been in force on the first day of May." 
 
 B. F. Thomas, for plaintiffs. 1. The shares in a bank are per- 
 ■Bonal property, and follow the person of the owner. McGullooh v. 
 Maryland, 4 Wheat. 316, 437 ; TJUca v. GhurcMll, 33 N. Y. 233. 
 
 2. The tax is disproportional on account of the mode of valua- 
 tion. Oliver v. Washington Mills, 11 Allen, 268, 275 ; Gommon- 
 wealth V. People's Savings Bank, 5 id. 428, 431 ; Portland Bank 
 v. Apthorp, 12 Mass. 252, 255, 
 
 3 . The statute of 1868, chap. 349, is retrospective in its operation. 
 
SUPEEME JUDICIAL OOTJET, 1869. 579 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 Cases above ; Gommonwealth t. Provident Institution for Savings, 
 12 Allen, 313. 
 
 4. The statute is unconstitutional because it conflicts with the 
 Constitution of the United States, ■which provides that " citizens of 
 each State shall be entitled to all privileges and immunities of citi- 
 zens of the several States." See also Garfield v. Coryell, 4 "Wash. C. 
 C. 380 ; Grandall v. State, 10 Conn. 843 ; Campbell v. Morris, 3 
 Ear. & McHen. 534, 535. 
 
 C. Allen, Attorney-General, and C. H. Hill, for defendants. 
 
 Ames, J. By the terms of the act of Congress of June 30, 1864 
 (U. S. Stat. 1864, ch. 106), under which the National banks have 
 come into existence, all the shares in each of said banks are made 
 taxable in the place in which the bank is " located," without any 
 regard whatever to the legal domicile of the shareholders respect- 
 ively. This provision forms a part of the organic law under which 
 every such bank has its being, and under which the stockholders 
 contribute to its capital. This court has recently decided that the 
 word "place," as used in the statute, means the State within which 
 the bank is located. Austin v. Aldermen of Boston, 14 Allen, 359. 
 And the subsequent amendatory act of Congress of February 10, 
 1868 (U. S. Stat. 1868, ch. 7), uses the following language : The 
 words " place where the bank is located and not elsewhere " shall 
 be construed and held to mean the State within which the bank is 
 located ; and the Legislature of each State may determine and 
 direct the manner and place of taxing all the shares of National 
 banks located within said State, subject to the restriction that the 
 taxation shall not be at a greater rate than is assessed upon any 
 other moneyed capital in the hands of individual citizens of such 
 State ; and provided, always, that the shares of any National bank 
 owned by a non-resident of any State shall be taxed in the city or 
 town where said bank is located, and not elsewhere." The Legis- 
 lature of this Commonwealth, by the statute of 1868, chap. 349, 
 passed June 11th of that year, entitled " An act concerning the 
 taxing of bank shares," has undertaken to determine and direct the 
 manner in which all the shares of stock in banks, whether of issue 
 or not, existing by authority of the United States, shall be taxed. 
 The act provides, among other things, that such shares owned by 
 non-residents of this Commonwealth shall be assessed to the owners 
 thereof in the cities or' towns where such banks are located, and 
 
580 MASSACHUSETTS 
 
 Providence Institution for Savings and Jewell v. City of Boston, 
 
 not elsewhere ; that the tax shall be a lien on their shares ; that 
 the value of such shares shall be omitted from the valuation upon 
 which the rate is to be based ; and that the proceeds of the tax on 
 such shares, when collected, shall be paid over by the treasurer of 
 the town or city to the State treasurer. The plaintiffs insist that 
 this statute, so far as it applies to non-resident stockholders, is one 
 which the Legislature had no right to enact ; that the tax assessed 
 under it upon such stockholders is invalid ; and that the lien it 
 assumes to create upon the stock cannot be enforced. 
 
 The counsel for the plaintiffs insists that three "landmarks" 
 have been established in this broad field of inquiry, namely, that 
 the shares of the stockholders of the National banks are distinct 
 subjects of taxation ; that they may be assessed and taxed without 
 deducting^from their valuation that portion of the corporate capi- 
 tal invested in the bonds of the United States; and last, and most 
 important of all, for the purposes of this inquiry, that, the banks 
 being agencies of the general government in the execution of its 
 powers and functions, the States have no power to tax their capital 
 except under the permission of Congress. It is also established by 
 statute that the shares are taxable in the place (that is to say, the 
 State) where the bank is located, and not elsewhere; that the Legis- 
 lature of each State may determine and direct the manner and 
 place within such State of taxing such shares (with a restriction 
 against oppressive and hostile taxation); and that, in the case of 
 shares belonging to persons not residing within the State, the place 
 of taxation shall be the city or town in which the bank is located, 
 and not elsewhere. A citizen of Connecticut or Ehode Island, 
 therefore, owning shares in a National bank in Massachusetts, is 
 not to be taxed for them in Connecticut or Ehode Island. They 
 can only be taxed in Massachusetts, a provision which relieves him 
 of all danger of being twice taxed for the same property. Flint v. 
 Aldermen of Boston, 99 Mass. 141{ante, p. 571). The acts of Congress 
 in regard to such shares belonging to non-resident stockholders ap- 
 parently are intended to annul, as to them, the general rule that per- 
 sonal property follows the person, and has no locality other than the 
 domicile of the owner, and to attach to such shares, for some pur- 
 poses, and to some extent, the local character and fixity of real 
 estate. They are proper subjects of taxation in the town where 
 the bank in question is located; and the Legislature of the Com- 
 monwealth (as the above-quoted act of Congress expressly provides 
 
SUPREME JUDICIAL COURT, 1869. 581 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 that it may) has, by the statute in question, determined and 
 directed the manner in which they shall be taxed. 
 
 If the statute of 1868, chapter 349, is to be interpreted as pro- 
 viding for the imposition of an excise, in the proper sense of that 
 term, and as distinguished from a tax, it would be liable to all the 
 objections so fully pointed out in the recent case of Oliver v. Wash- 
 ington Mills, 11 Allen, 268, and could not be sustained. But the 
 plaintiffs do not claim that it was intended to proyide for an excise, 
 in the proper sense of that term. On the contrary, they insist that 
 it is intended to authorize a tax, and not an excise; that the act 
 bears the title of " An act concerning the taxation of bank shares; " 
 that "tax," and in no case "duty" or "excise," is the term used 
 throughout the statute; that t^e provisions for the assessment 
 and collection are appropriate to a tax rather than to- a duty or 
 excise, and are assimilated to the existing provisions of law for the 
 assessment and collection of taxes on similar property ; that the 
 rate of taxation is required to be the same as on other moneyed 
 capital; that the same form of expression is used in the statute and 
 in the acts of Congress above cited, showing that a tax on property, 
 and not a duty or excise on the franchise, was intended to be per- 
 mitted by Congress and imposed by the State; and that the statute 
 has not been so framed that it could be held valid either as tax or 
 an excise, whichever its true nature might be. On the assumption, 
 then, that this argument on the part of the plaintiffs is well 
 founded, and that the true construction of the statute is that it is 
 intended for taxation, and not for an excise or duty, can it be 
 maintained as a valid exercise of power on the part of the Legisla- 
 ture? 
 
 The objection that it conflicts with the restrictions expressly pro- 
 vided for by the two acts of Congress is one which meets us at the 
 threshold of the inquiry, and may very properly be considered 
 first. The power of the State to tax the shares is subject to the 
 restriction that the tax shall not be "at a greater rate than is 
 assessed upon any other moneyed capital in the hands of individual 
 citizens of the State." We think that this clause was obviously 
 intended to preclude the possibility that property of that description 
 should be singled out for special and peculiar taxation. Its opera- 
 tion would be, to prevent oppressive and hostile discriminations 
 unfavorable to the banks. A State, if there were no such restrictions, 
 might so aiTange its method of taxation as substantially to expel 
 
582 MASSACHUSETTS 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 the National banks from its limits. It must be assumed that this 
 system of banking was devised by the National Legislature for 
 National purposes, as an agency of the government in the exercise 
 of its powers and functions, and that for public reasons it was in- 
 tended that it should be general and uniform throughout the 
 country. It might well seem reasonable to Congress to take some 
 precaution that the banks in each State should be taxed only at the 
 same rate, and generally in the same manner, as the moneyed capital 
 of individual citizens is taxed in the same State. The language of 
 the act of Congress does not require the strict, literal and narrow 
 interpretation that might be j)roper in the construction of a penal 
 statute. It means, merely, as we think, that such shares shall be 
 taxed upon a general system and in compliance with a set of rules 
 and principles applied alike throughout the State to the taxation 
 of all moneyed capital. It means, that the rate upon a thousand 
 dollars, invested in such a bank, shall be the same as the rate upon 
 a like sum put out at interest on good security ; that, as far as mere 
 taxation is concerned, the owner of the one investment shall fare 
 neither better nor worse than the ascertained owner of the other ; 
 that banks are not to be oppressed or incommoded, nor their opera- 
 tions as agencies of the general government to be prevented or 
 impeded by invidious and unfavorable rates, as compared with 
 other property of the same general kind in the same place. A 
 strictly literal construction of the clause would lead to such results 
 that practically it would be a matter of almost insuperable difficulty 
 to lay any legal tax at all upon that form of investment. If the 
 words mean that the rate is to be the lowest that is assessed upon 
 any moneyed capital in any part of the Commonwealth, one result 
 would be, that the owners of bond stock would be assessed, in 
 Boston for example, at less than the rate of taxation on other 
 moneyed capital, or other property generally, owned by other 
 residents of the same city. It may be assumed that generally the 
 taxation in large cities will be at a higher rate than in rural and 
 small farming towns. There would not only be one rate on bank 
 stock, and another and higher rate on other property, but the 
 assessors of Boston, before fixing upon the rate for bank stock, must 
 inform themselves what is the lowest rate of taxation on moneyed 
 capital in any one of the very many municipal bodies into which 
 this State is subdivided. When they have obtained that informa- 
 tion, on this construction of the act of Congress, they will have 
 
SUPEEME JUDICIAL OOUKT, 1869. 583 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 ascertained the maximum rate proper to be observed in the taxation 
 of bank stock. Then suppose that Boston, on its being ascertained 
 tiiat the tax on moneyed capital in some small town in the county 
 of Berkshire, or in the county of Franklin, has been fixed at five 
 cents on the 1100 of Taluation, should adopt that same rate 
 for the taxation of bank stock ; and suppose it should happen that 
 the assessors of the city of Worcester, for example, in order to be 
 certain not to endanger the validity of their tax by adopting too 
 high a rate should take the precaution to fix their rate upon bank 
 stock at four cents and nine mills on the $100, is the Boston tax 
 to be thereby rendered illegal and void for being in conflict with 
 the restriction contained in the act of Congress of February 10, 
 1868 ? Why not, if the lowest rate on any moneyed capital is the 
 only legal rate ? 
 
 Is the tax on bank stock throughout the Commonwealth to be 
 determined and absolutely controlled by the decision of some small 
 country village, in which there happens to be no bank, and in which 
 the municipal wants and expenses are slight and insignificant ? 
 Yet the literal construction of the words " at a rate no greater than 
 is assessed upon any other moneyed capital in the hands of indi- 
 vidual citizens of the State " would lead to precisely this result. It 
 is impossible to believe that such was the purpose of the act, or that 
 such would be a reasonable and fair interpretation of its meaning. 
 In our judgment, it satisfies the meaning of the restriction, if the 
 rate upon bank shares is the same as the rate upon moneyed capital 
 in the hands of individual citizens in the town or city where the 
 bank is located. 
 
 Another objection, which is the one principally urged in the 
 argument, is that the tax in controversy is not proportional. If 
 this objection should prove to be well taken, the tax is illegal and 
 void. It is not in the power of Congress to authorize the legislature 
 to adopt a system which fails in so important and vital a particular. 
 But in what way does this alleged want of fair proportion manifest 
 itself, and in what does it consist ? If we compare the case of the 
 non-resident stockholder with that of those resident in the town 
 where the bank is established, we find that they pay at exactly the 
 same rate on their shares. If we compare his case with that of 
 individuals, citizens of the same place, owning other moneyed capi- 
 tal, we find that they also pay at the same rate on their respective 
 valuations. Suppose it to be true that they all pay at a higher rate 
 
584 MASSACHUSETTS 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 than would be charged if the shares belonging to non-residents were 
 included in the valuations, yet, as they all pay at one uniform rate, 
 there is no disproportion as among themselves. The rate in one 
 town may be very different from the rate in the adjoining town ; but 
 it is not necessary, in order to meet the requirement tha^t taxes shall 
 be proportional, that the rate shall be identical in all the very great 
 number of municipal corporations throughout the State. Each 
 town determines for itself what amount of expenditure its wants 
 require, or its valuation and local circumstances will justify ; and, 
 of course, the rates differ very widely in different places, yet they 
 have never been called in question as not being proportional, on 
 account of discrepancies of that nature. We do not understand 
 that there is any complaint that one set or class of stockholders in 
 banks is taxed on a different system from the rest ; or that there is 
 any want of due proportion among the stockholders, as compared 
 with each other, or with other individuals owning moneyed capital. 
 The proportion, on which we understand the plaintiffs to insist as 
 the only constitutional and legal basis on which taxes can be 
 assessed, is that which the whole amount to be raised by taxation, 
 under the description of State, county and municipal taxes, bears 
 to the entire amount of all the property taxable within the Com- 
 monwealth. How stands the case in view of this objection ? 
 
 If our statute of 1868, chapter 349, had simply provided that the 
 tax on bank shares belonging to persons not residing within the 
 State should be paid into the treasury of the town or city where the 
 bank is, and should make a part of the funds of such town or city ; 
 in other words, if such shares were included in the valuation, and 
 taxed as the real estate of non-resident owners is taxed, the case 
 would present no difiBculty, or, rather, the case would not have 
 arisen. But the statute requires that the value of such shares shall 
 be omitted from the valuation upon which the rate is to be based ; 
 and also that the taxes upon such shares, though paid in the first 
 instance to the treasurer of the town or city where the bank is, 
 shall be accounted for by him to the State treasurer, and appropri- 
 ated to the use of the Commonwealth. The effect of the statute, 
 then, will be that the whole amount of the State, county and town 
 taxes (so far as they affect property and not polls) is levied upon 
 the whole amount of taxable property in the State, except only the 
 shares of non-resident stockholders in the National banks established 
 within the State. That is to say, the whole of the property tax. 
 
SUPREME JUDICIAL COUET, 1869. 585 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 falling within that qualification, is imposed upon only a part of the 
 taxable property of the Commonwealth ; a large part, undoubtedly, 
 but confessedly only a part. The plaintifEs claim that the rate of 
 taxation is higher and the tax larger, to each individual tax payer, 
 than they would be if literally the whole of the taxable property 
 were charged with the whole of the tax. 
 
 As we understand the argument in behalf of the plaintiffs it may 
 be illustrated in this manner : Suppose the whole amount of the 
 property, which, by the terms of the statute, is to be omitted from 
 the general valuation forming the basis of taxation, to be sufB- 
 ciently large for its omission to diminish that valuation to such 
 an extent that, in order to raise the whole amount of the taxes, it 
 should become necessary to increase the rate of taxation from four 
 cents on each $100 to five cents. Of course these figures are 
 here taken arbitrarily, merely for the purpose of illustration, and 
 without any attempt to approximate to the exact state of the 
 facts. Assuming these figures, we should have the taxes upon prop- 
 erty included in the valuation apparently twenty-five per cent 
 higher than they would be under a system requiring the whole 
 of the taxable property to pay the whole of the property tax. This 
 same rate, made by the operation of the statute, as the plaintiffs 
 insist, to stand at twenty-five per cent above the true constitutional 
 ratio, and its true and legal proportions, is then imposed by the 
 statute upon the shares belonging to non-resident owners. And 
 the plaintiffs insist that, whatever may be the state of things among 
 the stockholders as compared with each other, the rate and the 
 amount both are not in that ratio to the taxable property which 
 alone is recognized by the Constitution as the true and Just propor- 
 tion. 
 
 It is quite apparent that this objection, if well founded, is very 
 far from being peculiarly applicable to the case of non-resident 
 owners of bank stock. If the fact that the whole amount of the 
 property taxes is levied upon less than the whole amount of tax- 
 able property is a valid objection, it is sufficient to vitiate the whole 
 tax. The owners of bank stock, moneyed capital, or in fact, of any 
 other description of taxable property included in the valuation, 
 would apparently have as much reason to complain of the dispro- 
 portion as the non-resident owners of bank stock. If the prin- 
 ciple of assessment should prove to be erroneous and vicious, and 
 prohibited by the terms of the Constitution, the tax is all wrong, 
 74 
 
586 MASSACHUSETTS 
 
 Providence InBtitution for Savings and Jewell v. City of Boston. 
 
 from beginning to end, and cannot be enforced against owners of 
 bank stock, whether resident or not resident in the State, nor in 
 fact against any owners of property whatever. 
 
 It is true, that under the operation of the statute, a part only of 
 the taxable property of the Commonwealth is made to pay the 
 whole of the county tax, the city and town tax, and also the whole 
 amount of what is annually voted by the Legislature specifically as 
 the State tax, so far as these three descriptions of tax are assessed 
 upon property and not upon polls. The money obtained from the 
 assessinent of bank stock belonging to non-resident owners does 
 not make any part of either one of these three descriptions of tax. 
 But, although not known as the State tax eo nomine, it is never- 
 theless a tax for the use and benefit of the State. It goes into the 
 public treasury, and makes a part of the annual ways and means 
 of the State. The effect of the statute, if carried out, would be to 
 furnish the Commonwealth with a regular source of income capable 
 of making a valuable addition to the public revenue, varying perhaps 
 somewhat from year to year, but not subject to any violent or sudden 
 fluctuations, and generally admitting of a reasonably close estimate 
 in advance. We are bound judicially to know the fact that the 
 large amounts annually appropriated by the Legislature for the 
 payment of the expenses of the Commonwealth are mainly sup- 
 plied by the imposition of the State tax. We are bound also to 
 assume that, in determining the amount of that State tax, the Legis- 
 lature takes into consideration all the sources of income, from 
 any quarter, which the State has at its command, including among 
 them the tax provided for by this statute, and that the general 
 State tax annually voted is intended to cover deficiencies of rev- 
 enue, and to provide the necessary ways and means for the varying 
 exigencies of the public service. The acts of Congress have made 
 certain property taxable here, which without these acts might not 
 be so taxable. They have also permitted the Legislature to deter- 
 mine and direct the manner of such taxation. This it has under- 
 taken to do by a statute which provides that the new taxation shall 
 be so managed as to inure wholly to the benefit of the State treas- 
 ury, and not be applied to merely local and municipal purposes. 
 The statute assumes that, to the stockholder not residing within 
 the State, the appropriation of such a tax is a matter of no interest 
 or importance. It does not concern him, so long as the amount is 
 ascertained on the same principles and the tax is assessed at the 
 
SUPREME JUDICIAL COURT, 1869. 587 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 same rate as it would be if he resided in the city or town where the 
 bank is established. 
 
 We do not understand the plaintiffs to deny that their shares are 
 proper subjects of taxation in Boston, or to complain that there is 
 any disproportion in the taxation of resident and non-resident 
 shareholders in the same place, as compared with each other. The 
 objection is, that by the operation of the statute they are made tax- 
 able at a higher rate, and so for a larger amount, than they would 
 be if they were included in the yaluation upon which the rate is to 
 depend. Is this complaint well founded ? It is to be remembered 
 that whatever amount may be added to the public revenue by the 
 operation of the statute diminishes to exactly the same extent the 
 amount necessary to be raised by the State, properly and techni- 
 cally so called. The annual resolve for the assessment of a State 
 tax is what, in parliamentary language, is usually called a " defi- 
 ciency bill." Suppose that, after considering all sources of income 
 other than taxation, the Legislature should find that the sum of 
 81,300,000 is needed to cover the public expenditures of the State, 
 and that the tax on bank shares belonging to non-residents and 
 provided for in the terms of the statute, would produce the sum of 
 $200,000 annually? And here it maybe repeated that these figures 
 are assumed arbitrarily, and njerely as illustrative of the argument. 
 Upon these figures a tax of $1,000,000 would supply the deficiency. 
 But, if the statute were to be repealed or pronounced unconstitu- 
 tional and void, and the law so far changed that the bank shares 
 belonging to non-residents should be included in the municipal val- 
 uations, and taxed as other property of the same kind is taxed, the 
 State would lose from its annual revenue the sum of $200,000. The 
 valuations which form the basis of taxation would be increased by 
 the addition of property producing $300,000 in taxes annually. The 
 county and municipal taxes, not being increased, would be assessed 
 upon a larger amount, and of course at a lower rate; but the State tax, 
 on the other hand, would be raised from $1,000,000 to $1,300,000. 
 The general result would be, that the tax payers would pay exactly 
 what they did before, with not the slightest change of rate-or pro- 
 portion. In either mode of taxation, the taxable property would 
 pay into the treasury of the State exactly the same sum, namely, 
 $1,300,000. The non-resident stockliolders, as a class, do not 
 appear, then, to have any cause to complain that the tax upon 
 them as such, under our statute, is not proportional; and we find 
 
588 MASSACHUSETTS 
 
 Providence Institution for Savings and Jewell v. City of Boston. 
 
 nothing in the agreed facts that distinguishes these plaintiffs from 
 other non-resident owners generally. 
 
 There is a provision in the statute, that, in assessing such shares, 
 there shall be a deduction of a proportionate part of the yalue of 
 the real estate belonging to the bank. To that extent the non- 
 resident stockolder is privileged and favored, as there seems to be 
 no law requiring or permitting any such allowance in favor of 
 stockholders residing in the State. This disproportion was not 
 alluded to in the argument, and no importance, as we suppose, was 
 intended to be attached to it. It certainly is not one of which 
 these plaintiffs can reasonably complain. 
 
 The conclusion, then, at which we arrived is that the statute of 
 1868, chapter 349, does not transcend or conflict with the limita- 
 tions expressly set forth in the acts of Congress; that practically, it 
 produces no appreciable disproportion among tax payers as com- 
 pared with each other; that the omission of the shares of non- 
 residents from the town valuations produces no actual want of due 
 proportion, for the reason that the general result of the taxation, 
 supposing the statute to be held valid, is substantially identical, to 
 each tax payer, with what it would be if the shares of non-residents 
 were included in those valuations, and taxed in the same manner 
 in all respects as the real estate of non-resident owners is taxed; 
 and that, although in one mode of proceeding the sum total of the 
 valuations is less than in the other, yet the aggregate of the amount 
 to be raised under the heads of county, municipal and State taxes 
 is diminished in exactly the same proportion. 
 
 As tg the objection that it is retrospective in its operation, it 
 seems to be enough to say that, under the acts of Congress, the 
 property was certainly taxable in such lawful manner as the Legis- 
 lature of the Commonwealth should direct. Whoever, then, on 
 the 1st day of 'May, 1868, held such property knew, or was bound 
 to know, that it was taxable like' other moneyed capital as of that 
 day, in such manner as by law might be provided. 
 
 We do not find, in the various objections taken on behalf of the 
 plaintiffs, and so ably and forcibly urged by their learned counsel, 
 any thing that convinces us that the statute ought to be pro- 
 nounced unconstitutional, or that the tax imposed in pursuance of 
 it is unlawful and void. And according to the terms of the agree- 
 ment there must be, in each case. 
 
 Judgment for the defendant. 
 
SUPREME JUDICIAL COURT, 1871. 589 
 
 Hungerford National Bank v. Van Nostrand. 
 
 HUN-GEEFOBD NATIONAL BaNK Y. YaTS NOSTKAND. 
 
 (106 Massachusetts, 559.) 
 
 National banks — Bmdence of incorporation in suits by. 
 
 In an action by a National bank against the maker of a promissory note, the 
 fact that the note is made payable at the plaintiff bank is not conclusive 
 evidence that such bank is a corporation.* 
 
 CONTRACT by the Hungerford National Bank, alleged in the • 
 writ to be "a corporation duly established by law at Adams, 
 in the State of New York," on two promissory notes signed by the 
 defendants, each " payable at Hungerford National Bank, Adams,"' 
 to the order of Rufus P. White, and by him indorsed to the plain- 
 tiffs. The answer denied all the allegations of the declaration. 
 
 At the trial in the Superior Court, before Loed, J., the signa- 
 tures of the defendants and of "White on the notes were admitted, 
 and there was some evidence, which it is unnecessary to state in 
 detail, that the plaintiffs were a corporation, and also other evi- 
 dence now immaterial. The defendants contended that the plain- 
 tiffs were not a corporation 
 
 The judge ruled " that there was sufficient evidence for the jury 
 to find the organization for the plaintiff corporation;" "that the 
 whole evidence was insufficient to show either payment of the notes, 
 or that the plaintiff took them subject to the equities between the 
 original parties; and that there was not sufficient evidence in the 
 case to warrant the jury in finding a verdict for the defendants; " 
 
 * In Washington County S'ational Bank v. Lee, 113 Mass. 521, a National bank 
 brought an action, describing itself as " the Washington County National 
 Bank, a corporation duly established by law, and doing business in Greenwich, 
 in the State of New York," and to prove its corporate existence, introduced an 
 organization certificate of "The Washington County National Bank of Grreen- 
 wich," to " be located .... in the town of Greenwich, county of Washington 
 and State of New York," and a certificate 3f the Comptroller of the Currency 
 that "the Washington County National Bank of Greenwich, In the county of 
 Washiugtou, and State of New York," had been duly organized. Held, that in 
 the absence of evidence of the existence at Greenwich of another bank named 
 "the Washington County National Bank of Greenwich," the evidence would 
 warrant the inference of the plaintiffs due organization. See Thatcher v. West 
 River Nat. Bank, post. 
 
590 MASSACHUSETTS 
 
 First National Bank of Eocheste^v. Harris. 
 
 and ordered a verdict for the plaintifE for the amount of the notes 
 and interest. The defendants alleged exceptions. 
 
 iV. Morse, for defendants. 
 
 G. W. Ware, Jr., for plaintiffs. 
 
 Wells, J. The answer put the plaintiff to the proof of every 
 fact necessary to the maintenance of the action. One fact to be 
 proved was the organization or corporate existence of the plaintifE. 
 There was some evidence upon that point, but it was not conclu- 
 sive, so as to enable the court to determine it as a matter of law. 
 The notes were not made payable to the bank as a party. The bank 
 is mentioned only as the place of payment. That does not neces- 
 sarily indicate a corporation established under that name. 
 
 In ordering a verdict for the plaintiff, the court, no doubt inad- 
 vertently, overlooked this question of fact, which, upon the evidence 
 in the case, the burden being upon the plaintifE to establish it, 
 must necessarily be submitted to the ju^y. 
 
 Exceptions sustained. 
 
 FiEST Natioital Bank op Eochesxee v. Haeeis. 
 
 (108 Massachusetts, 514.) 
 National banks may buy checks — Delay in presenting check for payment. 
 
 A National bank has authority to buy checks of individuals on other banks, 
 whether payable to bearer or to order.* 
 
 A check drawn in Boston on a bank in Boston was sent by mail to Rochester, 
 N. T., and there bought by a National bank four days after its date and two 
 days after was presented for payment. Held, that there was no unreasona- 
 ble delay, and that the buyer was not subject to equities existing between 
 the original paitiea. 
 
 ACTION by the First National Bank of Kochester against Harris 
 & Company on a check drawn by the defendants on the Second 
 National Bank of Boston, payable to the order of Johnson & Com- 
 pany and indorsed in blank by them. 
 
 * See First National Bank of Boch&ster v. Pierson, post. 
 
SUPREME JUDICIAL COURT, 1871. 591 
 
 First National Bank of Rochester v. Harris. 
 
 The defendants alleged th,at Johnson & Company had obtained 
 the check from them through fraud and without consideration; that 
 it was overdue when indorsed to plaintifE and subject to the equi- 
 ties between the original parties ; that it had not been duly pre- 
 sented for payment and that they had not had due notice of non- 
 payment. 
 
 At the trial in the Superior Court, before Dbvens, J., without a 
 jury, it was agreed " that plaintiffs are a corporation duly organ- 
 ized under the laws of the United States ; that on Thursday, No- 
 Tember 10, 1870, the defendants signed the check, and sent it by 
 mail to H. Johnson & Company in Rochester, New York ; that H. 
 Johnson & Company indorsed it and delivered it to the plaintiffs ; 
 that the plaintiffs received it on Monday, November 14, 1870, with- 
 out actual or implied notice of any defect in the title of the indors- 
 ers to it, and at the same time paid the face of the check after de- 
 ducting one-eighth of one per cent ; that H. Johnson & Company 
 never kept an account at, and never were depositors with, the 
 plaintiffs' bank ; that on November 16, 1870, the plaintiffs duly 
 presented the check to the Second National Bank of Boston for 
 payment, which was refused ; that due notice of its non-payment 
 was given to defendants ; that the check has not since been paid ; 
 and that the defendants have a good and valid defense to any action 
 on the check, brought against them by H. Johnson & Company." 
 It was not agreed whether the plaintiffs bought the check from H. 
 Johnson & Company on said November 14, or received it from 
 them for collection only ; but the judge found that they bought it. 
 
 It further appeared that on November 18, 1870, Henry S. Bil- 
 lings sued H. Johnson & Company in a trustee process in the Supe- 
 rior Court m this county, and summoned these defendants on that 
 day as trustees therein ; and that the suit is still pending. 
 
 By consent of the parties, the judge reported the case for the de- 
 termination of this court on these feicts. 
 
 W. P. Walley, for plaintiffs. 
 
 W. H. Twone, for defendant. 
 
 Chapmait, U. J. We cannot doubt that the plaintiffs had 
 authority to buy checks. The power conferred on National Banks 
 by the U. S. statutes of 1864, chapter 106, section 8, expressly con- 
 fers it, in the clause which authorizes them to discount and negoti- 
 
592 MASSACHUSETTS 
 
 Qoldsbury v. Inhabitants of Warwick. 
 
 ate promissory notes, drafts, bills of exchange and other evidences 
 of debt. Dealing in checks is also a part of the usual business of 
 banking, and would be within the general powers of a bank, with- 
 out special mention. Nor is there any difference, in this respect, 
 between a check payable to bearer and one payable to order. Nor 
 does section 10 of the General Statutes, chapter 53,* apply to 
 checks, either by its terms, or by its object. 
 
 The plaintiffs appear to have bought the check in question in 
 good faith, and presented it for payment in two days thereafter ; 
 and this does not appear to have been an uiireasonabie delay, con- 
 sidering the relative situation of the parties. Thus the case is 
 governed by the case of Ames v. Meriam, 98 Mass. 294, and the 
 plaintiffs are not subject to the defense set up. 
 
 The action of Billings against Johnson and these defendants as 
 his trustees cannot affect these plaintiffs ; for they were not parties 
 to it, and their rights, as against the defendants, were fixed before 
 the action was brought. Judgment for the plaintiffs. 
 
 GOLDSBUBT V. INHABITANTS OF WaEWICK. 
 
 (112 Massachusetts, 381.) 
 
 Taxation — GonsPmction of State statute — place of taxation. 
 
 A statute made it the duty of every shareholder in a National bank to give 
 notice to the bank of his true residence each year, and, in case of neglect, 
 made the shares taxable where the bank was located as well as where the 
 shareholder resided. Held, that a shareholder was rightfully taxed upon 
 his shares in the town where he resided although he had, through an honest 
 mistake, notified the cashier that his residence was in another town. 
 
 ACTION to recover back the amount of tax assessed on plaintiff 
 for shares in a National bank owned by him. At the trial 
 the plaintiff offered evidence tending to show that although for- 
 
 * " In any action by an indorsee against the promisor, brought upon a prom- 
 issory note made after the sixth day of May, eighteen hundred and thirty-nine, 
 and payable on demand, any matter shall be deemed a legal defense which 
 would be a defense to a suit thereupon if brought by the promisee ; provided 
 that no matter arising after notice of the indorsement or transfer of such note 
 iB given to the promisor shall constitute a defense. 
 
SUPKEME JUDICIAL COURT, 1873. 593 
 
 Golds bury v. Inhabitants of Warwick. 
 
 merly a resident of Warwick, she was a resident of Bernardston, 
 and that she had so notified the bank. The defendants insisted 
 that she was a resident of Warwick. 
 
 Upon notice to them, the defendants produced a printed docu- 
 ment, sent to them by the tax commissioner, purporting to be a 
 list of all the shareholders in the seyeral National banks of this 
 Commonwealth, with their residences, by which it appeared that 
 the plaintiff was returned as the owner of these shares and as 
 resident in Bernardston. This document was put in evidence 
 against the objection of the defendants. 
 
 The presiding judge ruled, that under the Statute of 1873, chapter 
 321, in order to render the plaintifE liable to taxation for the bank 
 shares aforesaid, in Warwick, the burden was on the defendants to 
 show that the statement made to the cashiers by the plaintifE, as to 
 her residence in the town of Bernardston, was intentionally false; 
 and the jury having returned a verdict for the plaintifE, he re- 
 ported his rulings to this court for determination. 
 
 D. Aiken, for defendants. 
 
 W. S. B. Hopkins, for plaintifE. 
 
 Colt, J. The Statute of 1873, chapter 331, providing for the 
 collection of taxes upon bank shares, contains provisions for ascer 
 taining and certifying to the assessors of the several cities and towns 
 the true residence of every stockholder. To that end, it is made the 
 duty of every shareholder to give notice to the bank of his true 
 residence each year. If he refuses or neglects to do this, his shares 
 are made subject to taxation in the city or town where the bank is 
 located as well as in the city or town where he resides. 
 
 The plaintifE gave notice to the banks in which she held shares 
 that her residence was then in Bernardston, and would continue 
 there until she should inform them to the contrary. She was 
 taxed for these shares in Warwick, the place of her former resi- 
 dence, and seeks in this action to recover back the amount paid 
 under protest. 
 
 It was ruled that under the statute, in order to render the plain- 
 tifE liable to taxation on these shares in Warwick, the burden was 
 on the defendants to show that the statements made to the banks 
 by the plaintiif as to her residence in Bernardston was intentionally 
 
 75 
 
594 MASSACHUSETTS 
 
 Goldsbury v. Inhabitants of Warwick. 
 
 The defendants' objection to this ruling is well taken. The 
 actual residence of the shareholder fixes the place where he is 
 liable to be taxed. It is easy and simple in most cases to determine 
 as a matter of fact where that residence is. The actual facts are 
 ordinarily so decisive that no declared intention will be permitted 
 to control them. It is only where the facts are ambiguous and 
 uncertain in the absence of any settled and permanent abode, that 
 a party will be permitted to elect in which of one or more places of 
 partial residence he will exercise his rights of citizenship and sub- 
 ject himself to taxation. To this extent weight is given to ex- 
 pressed intention without impairing the rule that in all cases, in 
 order to establish a change of domicile, the actual fact of residence 
 and the intention must concur. Hallett v. Bassett, 100 Mass. 167, 
 171. 
 
 The construction of the statute contended for sets up a new rule 
 of evidence, changing the burden of proof, and applicable only to 
 questions of residence as affecting liability to taxation for bank 
 shares. It puts it in the power of the shareholder practically to 
 fix his residence by a statement of his intention in that respect, 
 unless it can be shown that the statement was intentionally false, 
 and this without reference to the actual facts of his residence. It 
 is enough if he is honestly mistaken in deciding a question which 
 is sometimes difficult as to which there is much misapprehension. 
 His decision must stand as conclusive unless impeached as inten- 
 tionally false. 
 
 There is no difficulty in giving effect to all the provisions of the 
 statute without adopting an interpretation which leads to such 
 results. Its purpose is to provide for bringing to the knowledge 
 of the assessors the actual ownership of property of this descrip- 
 tion. It secures this by requiring notice of residence to be given 
 by the shareholder to the bank, to be transmitted by the bank to 
 the assessors. It attempts to insure a compliance with its provis- 
 ions by subjecting the shares to double taxation in case of a refusal 
 or neglect on the part of the owaer to make the required state- 
 ments. But it expressly declares that they shall not be exempt 
 from the payment of a tax legally assessed in the city or town 
 where the owner resides. This leaves the question of residence to 
 be settled by the usual rules, giving no more weight to the state- 
 ments contained in the notice required by section 6 as evidence 
 than would be given to it as an expression of intention by the rules 
 
SUPEEME JUDICIAL COURT, 1874. 
 
 Central National Bank v. Pratt . 
 
 above stated. It is not necessary to inquire whether the double 
 taxation of the statute can be enforced against one who has, with- 
 out intention, incorrectly stated the place of his residence. It is 
 enough that, between these parties, the rules of evidence are not 
 affected. The question of the admissibility of the document pro- 
 duced by the defendants on notice, or of the validity of the plain- 
 tiff's notice to the banks, it is not necessary to consider. 
 
 New trial ordered. 
 
 Cekteal National Bajtk v. Pratt. 
 
 (115 Massachusetts, 639.) 
 National hank not governed by State Usury Lopoi. 
 
 It is within the constitutional power of Congress to fix the rate of interest 
 which a National bank may take upon a loan of money and to determine the 
 penalty to be imposed for taking a greater rate, and such power, when exer- 
 cised by Congress, is exclusive of State legislation. 
 
 The provision of the National Banking Act, limiting the forfeiture for the 
 making usurious charges by National banks to the interest, applies as well 
 to banks established in States where a rate of interest is fixed by law, as to 
 banks in States where no rate is fixed. 
 
 The laws of New York inposing penalties for taking usury do not apply to 
 National banks established within the limits of that State.* 
 
 CONTRACT by a National bank organized under the National 
 Banking Acts of the United States, and having its place of 
 business in the city of New York, against the indorser of a bill of 
 exchange drawn by Joseph M. Strong of New York upon Matt 
 Ellis of Boston, payable to the order of the defendant, and by him 
 indorsed to the plaintiff, and accepted by Ellis. Trial in the Su- 
 
 *Iu First, National Bank of Whitehall v. Lamb, 50 N. Y. 95, decided by the 
 Court of Appeals of New York, in 1873, it was held that National banks, lo- 
 cated in the State of New York, were subject to the usury laws of the State ; 
 and this decision was followed in Farmers' Bank v. Male, 59 N. Y. 53, but 
 these decisions were subsequently overruled by the Supreme Court of the 
 United States ia Farmers and Mechanics' Bank v. Hearing, ante, p. 117, and by 
 the Court of Appeals in Hintermister v. First National Bank, 64 N. Y. 312 {post). 
 
 That National banks are not bound by the usury laws of a State was also 
 held in First Nat, Bank v. Oarlvnghoitse, 33 Ohio St. 493; S. C, 10 Am. Rep. 751. 
 
596 MASSACHUSETTS 
 
 Central National Bank v. Pratt. 
 
 perior Court, before Devbits, J., who reserved the case for the con- 
 sideration of this court on the following report : 
 
 " The bill of exchange was discounted by the plaintiff in New 
 York on the day of its date, upon presentation for discount by said 
 Strong. It was agreed by the defendant at the trial that the plain- 
 tiff was entitled to recover, unless the plaintiff took or reserved a 
 greater rate of interest for discSunting said bill than seven per 
 centum per annum, and unless the bill of exchange was void by 
 virtue of the laws of the State of New York against usury. The 
 defendant's answer set up that in discounting the bill of exchange, 
 the plaintiff lent to the drawer a sum of money for which it re- 
 ceived usurious interest contrary to the laws of New York, and 
 that, by so doing, the bill of exchange was void, 
 
 " The plaintiff contended that the laws of New York against 
 usury were controlled by the National Banking Acts, and that the 
 bill of exchange sued upon would not be void even if usurious in- 
 terest had been reserved or taken by the plaintiff in discounting 
 said bill ; and this question is reserved, at the request of both par- 
 ties, for determination by the Supreme Judicial Court. If the 
 court shall hold that such usury does not render the bill of ex- 
 change void then judgment is to be rendered for the plaintiff ; if 
 such usury does render the bill of exchange void, the case is to 
 stand for trial in the Superior Court." 
 
 D. E. Ware and /. T. Morse, Jr., for plaintiff. 
 S. Avery and R. G. Lincoln, for defendant. 
 
 MoETOir, J. The 30th section of the act to provide a National 
 currency is as follows : " Every 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 allowed by the laws of the State or territory 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 issue organized under 
 State laws, the rate so limited shall be allowed for associations 
 organized in any such State under this act. And when no rate is 
 fixed by the laws of the State or territory, the bank may take, 
 receive, reserve or charge a rate not exceeding seven per centum, 
 and such interest may be taken in advance, reckoning the days for 
 which the note, bill or other evidence of debt has to run. And the 
 
SUPREME JUDICIAL COURT, 1874. 597 
 
 Central National Bank v. Pratt. 
 
 knowingly taking, receiving, reserving or charging a rate of inter- 
 est greater than aforesaid, shall be held and adjudged 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 per- 
 sons paying the same, or their legal representatives, may recover 
 back, in any action of debt, twice the amount of the interest thus 
 paid from the association taking or receiving the same. Provided 
 that such action is commenced within two years from the time the 
 usurious transaction occurred. But the purchase, discount or sale 
 of a 'bona fide bill of exchange, payable at another place than the 
 place of such purchase, discount or sale, at not more than the cur- 
 rent rate of exchange for sight drafts in addition to the interest, 
 shall not be considered as taking or receiving a greater rate of 
 interest." U. S. Stat. 1864, chap. 106, § 30. 
 
 The first question in this case is as to the true construction of 
 this section. The defendant contends that in the provision that 
 " the knowingly taking, receiving, reserving or charging a rate of 
 interest greater than aforesaid, shall be held and adjudged a for- 
 feiture of the entire interest," the word " aforesaid " refers only 
 to the. rate established by the paragraph immediately preceding, 
 " when no rate is fixed by the laws of the State or territory." If 
 this be so, then the act of Congress provides no penalty for taking 
 usurious interest when the rate of interest is fixed by the laws of 
 the State or territory where the bank is located, and the defendant 
 contends that the penalty is to be determined by the laws of the 
 State. On the other hand, if the true construction of the statute 
 is, that the penalty therein provided applies uniformly to all banks 
 which take more than a legal rate of interest, it is clear that it 
 supersedes the State law so far as repugnant to it. It cannot be 
 contended that Congress intended to expose banks located in States 
 wherein the rate of interest is fixed by law, to a double penalty ; 
 but if the act imposes a uniform penalty upon all banks, this ex- 
 cludes the power of the States to legislate upon the same subject, 
 and annuls or renders inoperative the State laws in their applica- 
 tion to banks established under the act. 
 
 In construing statutes it is to be assumed that the framers 
 intended the meaning which the words used naturally convey to 
 the reader. And this rule determines the construction unless there 
 be found something in the context, or in the nature and relations 
 
598 MASSACHUSETTS 
 
 Central National Bank v. Pratt . 
 
 of the subject-matterj which clearly shows a different intention. 
 In the act in question it seems clear to us that, by the natural and 
 obyious meaning of the language, the penalty of a forfeiture of the 
 entire interest applies to all cases where a rate of interest is 
 charged by any bank greater than the rate which the bank is 
 authorized to take by the previous provisions of the section. The 
 expression " a rate of interest greyer than aforesaid " refers as well 
 to the rate established by adopting the rate allowed by the laws of 
 the States or territories, as to the rate fixed at seven per cent if no 
 rate is fixed by such laws. There is no rule of grammatical con- 
 struction which limits its reference to the paragraph immediately 
 preceding. We think, in view of the whole act, that the policy of 
 Congress clearly was to keep within its own control the penalties to 
 be imposed upon the banks for violating the provisions of the act. 
 This view is confirmed by the history of the legislation upon this 
 subject. The original Currency Act, of February 25, 1863, of 
 which the act of 1864 is a revision and amendment, provided that 
 every association might charge such rate of interest as was the 
 established rate in the State where it was located, and that the 
 charging a greater rate should be held a forfeiture of the debt, thus 
 making the rate conform to the laws of the State, but establishing 
 a fixed and uniform penalty for a violation of the act, and showing 
 that it was the policy of the legislation upon this subject to keep 
 the matter of the penalties to be imposed upon the banks for 
 usurious transactions within the control of Congress. 
 
 It seems to us, therefore, that considering the natural meaning 
 of the language, the context, and the history of legislation, by the 
 only reasonable interpretation of this section, a bank located in a 
 State wherein the rate of interest is fixed by its laws, which takes 
 a greater rate of interest, is subject to the penalty of a forfeiture of 
 the entire interest provided by the act, and is not subject to a 
 greater or different penalty provided by the State laws against usury. 
 
 The defendant also contends that the provision, thus construed, 
 exceeds the constitutional powers of Congress, and is invalid. 
 
 It is settled, as a judicial question, that the Constitution confers 
 upon Congress the power to establish a bank or a system of banks, 
 as necessary instrumentalities for executing the powers expressly 
 given it and performing the duties imposed upon it. This was 
 decided by the Supreme Court of the United States in 1819, in the 
 case of M' Culloch v. Maryland, 4 "Wheat. 316. Chief Justice Mae- 
 
SUPEEME JUDICIAL COUET, 1874. 599 
 
 Central National Bank v. Pratt. 
 
 SHALL, in delivering the opinion of the court, puts the case upon 
 the ground that a National bank was a convenient, useful and 
 essential instrument in the prosecution of the fiscal operations of 
 the government. 
 
 In the later case of Oshorn v. United States Bank, 9 Wheat. 738, 
 859, the question was reconsidered, and the doctrine reaffirmed, 
 that a National bank was an instrument which was necessary and 
 proper for carrying into efEect the powers vested in the government ; 
 that Congress had the power to create a bank for National purposes 
 and to endow it with such faculties and functions as were neces- 
 sary to enable it to efEect its object, and that among these is the 
 faculty of lending and dealing in money. 
 
 The precise question in these cases was as to the right of a State 
 to tax the National bank, but the principles upon which this ques- 
 tion was decided are decisive of the case at bar. 
 
 The power of the government to create a bank is supreme ; from 
 its nature it includes the power to endow it with all such faculties 
 as are appropriate to accomplish its object. It is clear, as stated 
 in Osborn v. United States Banh, supra, that the faculty of lending 
 and dealing in money is an appropriate and necessary faculty for a 
 bank, and that without it the bank would want the capacity to per- 
 form its public functions in the most efficient manner. The rate 
 of interest to be charged for the use of money is a necessary inci- 
 dent of a loan, and the pojrer in Congress to authorize a bank to 
 lend money involves the power to fix the rate of interest and the 
 penalty for taking a greater rate. If a State may fix the rate of 
 interest, it may practically destroy this faculty of the bank. The 
 power to create a bank includes the power to fix the limitations 
 within which it may exercise its functions and faculties, and to 
 determine the causes for which and the manner in which it may 
 be destroyed. This power vested in Congress is inconsistent with 
 a power in any State or territory to affix penalties upon the bank 
 for taking unlawful interest or for any other violation of the act 
 of Congress. We are of opinion that it was within the constitu- 
 tional power of Congress to fix the rate of interest which a National 
 bank might take upon a loan of money, and to determine the pen- 
 alty to be imposed for taking a greater rate ; that such power, 
 when exercised by Congress, is exclusive of State legislation ; that 
 the provision of the 30th section of the act of Congress we are consid- 
 ering, imposing a penalty for taking unlawful interest, applies as 
 
600 MASSACHUSETTS 
 
 Davis V. Randall. 
 
 well to banks established in States where a rate of interest is fixed 
 by law, as to banks in States where no rate is fixed, and therefore 
 that the laws of New York imposing penalties for taking usury do 
 not apply to National banks established within its limits. The 
 Supreme Court of Ohio has taken the same view of the constitu- 
 tionality and construction of the statute which we entertain. First 
 National Bank of Oolumbus v. Garlinghouse, 22 Ohio St. 492 ; S. 
 C, 10 Am. Eep. 751. We are aware that the Court of Appeals 
 of New York has decided differently upon both points. First 
 National Bank of Whitehall y. Lamb, 50 N. Y. 95; S. C, 10 Am. 
 Eep. 438. But, notwithstanding the great respect we have for 
 that eminent tribunal, we are unable to concur in the conclusions 
 it reached. 
 
 Judgment for plaintiff. 
 
 Davis v. Eandall. 
 
 (115 Massachusetts, 547.) 
 National hanks — Usury — AccommodcUion acceptance — Evidence. 
 
 The provisions of the United States Statutes o^ 1864, chapter 106, section 30, 
 imposing penalties upon National banks for taking usury, supersede the 
 State laws upon that subject. 
 
 It is no defense to a suit against the acceptor of a draft which has been dis- 
 counted, and upon which money has been advanced by the plaintiff, that the 
 draft was accepted for the accommodation of the drawer. 
 
 Even if it is within the authority of the president of a National bank to bind 
 the bank by an agreement, with the acceptor of a draft which is discounted 
 by the bank, not to enforce the draft against him, yet oral evidence of such 
 an agreement is not competent, in defense of a suit by the bank against the 
 acceptor. 
 
 CONTEACT against the acceptor of two bills of exchange. Trial 
 in the Superior Court, before Dbvens, J., who reported the 
 case for the consideration of this court, in substance as follows : 
 The plaintifE, to maintain the issues on his part, proved that the 
 Ocean National Bank, of the city of New York, a National bank- 
 ing association, formed pursuant to the laws of the United States, 
 and located in the city of New York, having failed to redeem its 
 
SUPEEME JUDICIAL COUKT, 1874. fifll 
 
 Davis V. Randall. 
 
 circulation notes when payment thereof was legally demanded at 
 the office of said association, he, was, on December 13, 1871, duly 
 appointed by the Comptroller of the Currency of the Treasury 
 Department of the United States receiver of said Ocean National 
 Bank; that he accepted said office, took possession of the assets of 
 the bank, and that the drafts in suit had come into his possession 
 as such receiver as part of the assets of said bank; that William 
 
 B. Fiske & Company, a firm doing business in New York city, 
 made the bills and drafts in suit payable to their own order, and 
 indorsed the same to said Ocean National Bank, presenting the 
 same for discount at New York city, accepted by the defendant; 
 that said bank discounted one of the drafts for $684.11, on Sep- 
 tember 16, 1871, and the other for 8843.07, on November 11, 1871, 
 and passed the proceeds to the credit of said W. B. Fiske & Co., 
 less the discount; that said drafts were severally unpaid. The 
 drafts were put in evidence, and the plaintiff rested his case. 
 
 The defendant, to sustain the issues on his part, proved, under 
 objection, the evidence being admitted to be considered if compe- 
 tent, that on or about August 1, 1871, said firm of W. B. Fiske & 
 Co. obtained a loan of $5,000 of said Ocean National Bank, through 
 
 C. S. Stevenson, its president, and secured the same by a mortgage 
 to the bank of real estate to the amount of $5,000, agreeing to pay 
 twelve per cent per annum, the rate required by said bank for said 
 loan; that the amount of said loan was passed to the credit of 
 said W. B. Fiske & Co., who were entitled to draw the same at 
 sight; that on applying to the bank for the money on said loan, 
 the bank, through its president, requested Fiske & Co. not to draw 
 out said loan at once, but to present drafts or bills to said bank on 
 sixty and ninety days, or other short periods, as they might need 
 the money, up to said $5,000, so that the same would look more 
 bankable, and that said bank would discount the same at the rate 
 of twelve per cent per annum, and keep on discounting drafts as 
 fast as the same matured; that Fiske & Co., in order to oblige or 
 accommodate the bank, through its president, in this respect, 
 agreed to avail themselves of the loan in this way, but informed 
 the president that such paper would have to be accommodation 
 paper; that they knew several parties, amongst others the defend- 
 ant in this action, who might be willing to accept for their accom- 
 modation, but it must be understood and agreed by the bank that 
 the parties so accepting drafts or bills were not to be looked to for 
 
 16 
 
602 MASSACHUSETTS 
 
 Davis V. Randall. 
 
 payment, or to be held liable thereon in any way; but the bank 
 must look to its mortgage security for the amounts received by said 
 firm on said bills or drafts, so to be presented to said bank for dis- 
 count, and that the acceptors must be informed of this arrange- 
 ment to induce them to accept; that the president replied all 
 right, the bank "wdll discount such paper for you; that thereafter 
 Piske & Co. informed the defendant fully of the loan secured by 
 mortgage, and of the understanding and agreement with said bank 
 as above stated, and Piske & Co. solicited the defendant to accept 
 drafts to be drawn by said firm upon the defendant, informing him 
 the bank had agreed not to look to him for payment in any way, 
 and knew that his acceptances were to be wholly for accommoda- 
 tion; that the defendant, having no business relations with Fiske 
 & Co., and being in no ways indebted to them, and having no 
 efEects of said firm in his possession or control, and solely for the 
 accommodation of Fiske & Co., and to enable said firm to oblige 
 the bank in the respect above stated, and to avail of said loan, and 
 believing and relying on the fact that he was not to be called upon 
 for payment as acceptor or otherwise by said bank or any other 
 person, did accept in all some four or five bills or drafts, at difEer- 
 ent times, including the two drafts in suit. 
 
 The manner of acceptance was as follows : Drafts or bills with 
 the amounts for which same were drawn, and on which the name 
 of W. B. Piske & Co. did not exist, were by Piske & Co. presented 
 to the defendant, and the word "accepted," with the defendants' 
 name, were written thereon, the same returned to Piske & Co., and 
 thereafter Piske & Co. filled up said drafts, putting in dates, mak- 
 ing them payable to their own order, signing, indorsing and deliver- 
 ing the same to said bank for discount, the president knowing the 
 drafts had been accepted by the defendant for accommodation 
 iinder said arrangement, and the bank never sending any drafts to 
 the defendant for acceptance at any time, or having any corre- 
 spondence with the defendant; that all the drafts accepted by the 
 defendant, except those in suit, had been taken up or paid by Piske 
 & Co. at maturity, and that the defendant had never been called 
 upon to pay the same, or had paid the same in any way, the 
 defendant regarding and believing his acceptance would be the 
 last he should hear of the same; that the drafts or bills in suit were 
 sent to him for collection after said bank had failed, or gone into 
 the hands of the plaintiff as receiver, and that, when called upon 
 
SUPEEME JUDICIAL COURT, 1874. 603 
 
 Davis V. Randall. 
 
 for payment, he declined to pay the same on the ground that his 
 acceptance was for the accommodation of Fiske & Co.; that he had 
 no funds of theirs, and that the Ocean Bank had agreed not to look 
 to him for payment ; that the whole amount obtained by Fiske & 
 Co. on bills discounted by said bank, including these in suit, was 
 about $5,000, the amount of the original loan, and that the receiver 
 of the bank still holds the mortgage given by Fiske & Co. as part 
 of the assets of said bank ; that the defendant had never received 
 any consideration, payment, benefit or advantage, in any way for 
 his acceptances, nor held any security indemnifying him for the 
 same from any one. 
 
 That all drafts on which hia name appeared as acceptor, includ- 
 ing those in suit, were presented by Fiske & Co., and were dis- 
 counted by said bank in the city of New York. The defendant 
 further proved that at the times of the discount of the bills or 
 drafts in suit, the rate of twelve per cent per annum was demanded 
 by said bank and agreed to be paid by said Fiske & Co. on the 
 discount of same by said bank ; that seven per cent was deducted 
 at the time of their discount, and thereafter, and before the maturity 
 of either, and on November 23, 1871, the bank sent to Fiske & Co. 
 for the additional five per cent, which was paid by said firm, mak- 
 ing twelve per cent in the whole, paid on the loans or discounts on 
 said bills or drafts. 
 
 That under the laws of the State of New York, seven per cent 
 per annum is the legal rate of interest, and that all bonds, bills, 
 notes, assurances, conveyances, all other contracts or securities 
 whatsoever, except bottomry and respondentia bonds and contracts, 
 and all deposits of goods or other things whatsoever, wherefore or 
 whereby these shall be reserved or taken, or agreed to be reserved 
 or taken, any greater sum or greater value for the loan or forbear- 
 ance of any money, goods or things in action, than is above pre- 
 scribed (seven per cent), shall be void ; and the statute being an 
 act to prevent usury, passed May 15, 1837, relating thereto, was read 
 in evidence to the jury and may be referred to. 
 
 The plaintifE not controverting the evidence on behalf of the 
 defendant as to the circumstances under which the notes were in- 
 dorsed and negotiated, and it appearing that no fact was in dispute 
 between the parties, the presiding judge directed & pro forma ver- 
 dict to be entered for the plaintifE for the amount of the drafts, 
 and reported the case for the consideration of this court, such ver- 
 
604 MASSACHUSETTS 
 
 Davis V. Randall. 
 
 diet to stand or be amended to a verdict for the defendant as this 
 court should determine. 
 
 G. M. Reed, for plaintiff. 
 
 G. H. Randall, pro se. 
 
 MoETON, J. The defense that the drafts in suit are void, under 
 the laws of New York against usury, cannot be sustained. The act 
 of Congress to provide a National currency supersedes the State 
 laws upon this subject so far as applicable to National banks. U. S. 
 Stat. 1864, chap. 106, § 30 ; Central National Bank of New York 
 V. Pratt, ante, p. 595. 
 
 The other defense relied upon is, in substance, that the defendant 
 accepted the drafts in suit for the accommodation of W. B. Piske & 
 Co., and that before they were accepted the president of the bank 
 orally agreed that the defendant should not be called upon to pay 
 the drafts, but the bank would look to other securities which it 
 held. 
 
 The fact that the defendant accepted the drafts for the accommo- 
 dation of the drawers is immaterial. They were discounted by the 
 bank and the money advanced upon them. This was a suflScient 
 consideration for the acceptance, and the defendant is liable as ac- 
 ceptor, unless the alleged agreement not to enforce them against 
 him is a defense. But, if it was within the authority of the presi- 
 dent to bind the bank by such an agreement (which need not be 
 decided), we are of opinion that oral evidence of such agree- 
 ment is not competent. It violates the rule of law that oral 
 evidence is not admissible to control or vary the terms of a written 
 contract. 
 
 The acceptance of the defendant was an absolute promise to pay ; 
 it is not competent for him to contradict the written contract by 
 proof of an oral agreement that he accepted the drafts upon the 
 condition that he should not be called upon to pay them according 
 to their tenor. Wright v. Morse, 9 Gray, 337 ; Allen v. Furbish, 
 4 id. 504, and cases cited. 
 
 According to the terms of the report, there must be 
 
 Judgment on tJie verdict for the plaintiff. 
 
SUPEEME JUDICIAL COURT, 1874. 605 
 
 Commonwealth v. Barry. 
 
 Commonwealth v. Baebt. 
 
 (116 Massachusetts, 1.) 
 Larceny and embeezlement by officers of National hanks — Jurisdiction. 
 
 State courts have jurisdiction over larcenies committed upon the property of 
 National banks, by their officers. {See note, p. 610.) 
 
 The fact that an officer of a National bank, who has stolen its property. Is sub- 
 ject to punishment for embezzlement under the National Banking Act does 
 not relieve him from liability to punishment for the same act as a larceny 
 at common law, or under the statutes of a State. 
 
 Where the property of a National bank is intrusted to the teller during the 
 day while engaged in transacting its business but at night is placed in a safe 
 which he cannot rightfully open, if he abstracts the property from the safe 
 at night and converts it to his own use, his offense is larceny and not embez- 
 zlement. 
 
 INDICTMENT under the General Statutes, chapter 161, section 
 43, charging that the defendant on October 21, 1871, with feloni- 
 ous intent, did buy and receiye and aid in concealing certain prop- 
 erty belonging to the National Mechanics' Bank, knowing the same 
 to have been stolen. 
 
 At the trial in the Superior Court, before Rockwell, J., the 
 defendant pleaded in bar to the jurisdiction that the ofEense set 
 forth in the indictment was only cognizable by the Circuit Court 
 of the United States for the District of Massachusetts; but the 
 presiding judge disallowed and overruled the plea. 
 
 William S. Hine was called as a witness, and testified as follows : 
 " I was the book-keeper and teller of the National Mahawie Bank 
 of Great Barrington, Massachusetts, from February 1, 1869, to 
 October 21, 1871, inclusive; as such teller I had the control of the 
 combination locks of three of the four doors of the vault and safe 
 (there being two doors on the vault and two on the safe), the 
 cashier had the other combination; without a knowledge of the 
 combinations of these four locks, access could not be obtained to 
 the inner safe, in which the money of the bank was kept; the 
 cashier did not have the combinations of the three locks which I 
 had, nor I of the one which he had, which was that of the outside 
 door of the inner safe, being the third door of the vault. At noon, 
 October 21, 1871, the cashier left the bank to go to dinner, putting 
 
606 MASSACHUSETTS 
 
 Commonwealth v. Barry . 
 
 the money into the vault, and locked the outside door of the vault, 
 leaving the outside door of the inner safe standing open; I opened 
 the outer door of the vault, the combination of which lock I had, 
 and finding the outside door of the inner safe open, I took a screw 
 driver and removed the brass box which held the number of the 
 combination on that door, and in that way obtained a knowledge 
 of the combination of that lock, which enabled me to unlock that 
 door when locked while the combination was in use. There being 
 an error in the books of, the bank, the cashier and I remained in 
 the bank that evening till half -past eight o'clock, at which time I 
 placed the money in the safe and fastend the doors; the cashier and 
 I then left the bank together, he going toward his home, and I 
 then returned to the bank, unlocked the door, entered the bank, 
 lighted a candle, and unlocked the doors of the safe and vault, using 
 the same combination which existed at noon-time, and removed all 
 the funds and money of the bank, wrapped them up in a paper and 
 left the bank, locking all the doors, and proceeded with the money 
 to my boarding-house. On Friday, October 20, 1871, I received 
 notice from the cashier that I would be discharged from the em- 
 ploy of the bank on account of my irregular habits; on the evening 
 of that day, at about nine o'clock, having made up my mind to 
 take the funds of the bank, I met the defendant Barry in the 
 streets of Great Barrington, and asked him to drive me to Pitts- 
 field the next afternoon, as I wanted to take the nine o'clock p. m. 
 train from Pittsfield to Albany, and agreed to give him $50 if he 
 would get me there in time to do so; he seemed astonished at the 
 ofEer; I told him if I chose I could take the funds of the bank, and 
 I thought of doing so the next day; he asked me if I meant busi- 
 ness, and I said yes; we then proceeded down the railroad track 
 some distance, and I then disclosed to him my plans; this was the 
 commencement of the defendant's knowing or having any thing to 
 do in the transaction; after I had taken the funds of the bank to 
 my boarding-house, and placed them in a satchel, I proceeded 
 with the money from my boarding-house to Humphrey's Bridge, 
 the place agreed upon for meeting Barry; I found Barry there with- 
 out a conveyance of any kind, and we then concluded to walk to 
 Van Deusenville, where I was to take the cars, and did so; I took 
 from the satchel three packages of money, amounting in all to 
 about $1,700, and delivered them to the defendant Barry, and took 
 the train for Pittsfield; that was the last I saw of Barry." 
 
SUPKBME JUDICIAL COUET, 1874. 607 
 
 Commonwealth v. Barry . 
 
 It was proved that Hine at January term, 1873, of the Supreme 
 Court in Berkshire, had pleaded guilty to an indictment lor larceny 
 of $24,894 of the moneys of the said National Mahawie Bank from 
 the building of said bank, and been sentenced thereon to the house 
 of correction for two years. 
 
 The government proved the organization of the National Maha- 
 wie Bank, under the laws of the United States, and in accordance 
 with the provisions of the acts of Congress in relation to the 
 organization of National banks contained in the U. S. Statutes 1864, 
 chapter 106. 
 
 The defendant asked the judge to rule that upon this evidence 
 his offense was not within the jurisdiction of the court. The judge 
 declined so to rule; the jury returned a verdict of guilty and the 
 defendant alleged exceptions. 
 
 J. M. Barler {E. M. Wood with him), for defendant. 1. The 
 offense of the defendant was only cognizable by the courts of the 
 United States. It appeared in evidence that Hine was the teller of 
 the National Mahawie Bank, which was organized under the United 
 States Statutes of 1864, chapter 106, and that while such teller, he 
 abstracted, and took from the vault of the bank a large sum of money 
 belonging to the bank, and converted it to his own use. This was 
 an offense under section 65 of that act, and was punishable as a mis- 
 demeanor. There was evidence tending to show that the defendant 
 aided and abetted Hine in taking said money and converting it to 
 his own use, advising with him in regard to taking the money, and 
 assisting him in carrying the same to Van Deusenville, and receiv- 
 ing and concealing a portion of the same. By so doing he com- 
 mitted an offense under the United States Statutes of 1869, chapter 
 145. TJde offense was only cognizable by the courts of the United 
 States. 
 
 The United States Statutes of 1789, chapter 20, section 11, pro- 
 vides that the Circuit Courts of the United States " shall have 
 exclusive cognizance of all crimes and offenses cognizable under 
 the authority of the United States, except where this act otherwise 
 provides, or the laws of the United States shall otherwise direct." 
 No law of the United States gives to the State courts cognizance 
 of offenses under the United States Statute of 1864, chapter 106, 
 or the United States Statutes of 1869, chapter 145. It therefore 
 
608 MASSACHUSETTS 
 
 C!ommonwealth v. Barry. 
 
 follows that the State courts have no jurisdiction of the offense 
 committed by the defendant. Commonwealth v. Felton, 101 Mass. 
 204 (ante, p. 573); Prigg's Case, 16 Pet. 539, 617; Houston v. 
 Moore, 5 Wheat. 1, 27; 1 Kent's Com. (12th ed.) 399; Commonwealth 
 T. Fuller, 8 Mete. 313, 319; Commonwealth v. Tenney, 97 Mass. 50 
 {ante, p. 568). 
 
 2. The offense of Hine, as stated in his own testimony, was em- 
 bezzlement, and not larceny. He was the teller of the bank; that 
 is, the oflBcer who receives and pays out its money; and, as he testi- 
 fies, that upon that evening at half -past eight o'clock, he himself 
 placed the moneys of the bank in the safe, inside the vault, and 
 fastened the doors; as teller of the bank he could lawfully take its 
 moneys from the safe and pay them to third persons, and his oflQce 
 of teller continued in the night time as well as during the day. 
 This case is distinguishable from Commonwealth v. Davis, 104 
 Mass. 548, by the fact that in the latter case the defendant had no 
 right to remove the goods, or to sell them, or had even the- bare 
 custody of them, being simply a clerk and packer in the employ 
 of the owner of the goods. 
 
 3. It is entirely immaterial whether the crime of Hine was 
 embezzlement or larceny. "Whichever it was, all the acts which he 
 did from the time when he took the money out of the vault, until 
 he and the defendant parted at Van Deusenville, constituted an 
 offense under the U. S. Stat, of 1864, chapter 106, section 55, and 
 in doing all these acts he was, according to the testimony, aided 
 and abetted by the defendant, who, in doing all that he did, com- 
 mitted an offense under the U. S. Statute of 1869, chapter 145, 
 which offense was cognizable by the courts of the United States and 
 only there. 
 
 G. R. Train, Attorney-General, for the Commonwealth. 
 
 Wells, J. The only question argued before us by the defendant 
 is that of jurisdiction. It is contended that when an offense is 
 punishable both by the laws of a State and by those of the United 
 States, the jurisdiction of the courts of the latter excludes that of 
 the State courts, unless otherwise provided by the laws of the 
 United States. 
 
 If we assume that position to be correct, it does not meet this 
 case. The offense charged in the indictment upon which the 
 
SUPEEME JUDICIAL COUET, 1874 609 
 
 Commonwealth v. Barry. 
 
 defendant was found guilty, is that of receiving and aiding in the 
 concealment of stolen property, under the General Statutes, chap- 
 ter 161, section 43. The count recites the previous larceny of the 
 property, consisting of money, from the National Mahawie Bank, by 
 William S. Hine. Both this and the principal offense of Hine, as 
 set forth, are independent of any trust, and of any relation of 
 either to the bank as officer, clerk or agent. But such relation and 
 breach of trust are essential elements in the offense, punishable 
 under the laws of the United States. TheU. S. Statutes of 1864, 
 chapter 106, section 55, provides: "That every president, director, 
 cashier, teller, clerk, or agent of any association, who shall embezzle, 
 abstract or willfully misapply any of the moneys, funds or credits 
 of the association " shall be deemed guilty of a misdemeanor, and 
 upon conviction thereof shall be punished by imprisonment not 
 less than five nor more than ten years. The two offenses are essen- 
 tially different. The statute of the United States does not purport 
 to punish larceny as such. The obvious inference is that Congress 
 did not intend to interfere with the jurisdiction of State laws and 
 State courts over offenses of that class against the property of 
 National banks. 
 
 The defendant contends that, as it appeared in evidence that 
 Hine was in fact teller of the bank, and was enabled through that 
 position to secure the means by which to "abstract" the funds 
 from its vault, his offense comes within the terms of the statute of 
 the United States, and is punishable exclusively under it ; and 
 therefore that the accessorial offense of Barry cannot be punished 
 at all. Commonwealth v. Felton, 101 Mass. 204 {ante, p. 573). 
 
 In our opinion, neither branch of this proposition can be main- 
 tained. In the first place, if the fact that Hine was teller of the 
 bank subjects him to the punishment imposed for his breach of 
 trust in that capacity, under the statute of the United States, it 
 does not relieve him from his liability to punishment for the lar- 
 ceny at common law or under the statutes of the State. There is 
 no identity in the character of the two offenses, although the same 
 evidence may be relied upon to sustain the proof of each. An 
 acquittal or conviction of either would be no bar to a prosecution 
 for the other. Gommomoealtli v. Tenney, 97 Mass. 50 {ante, p. 568); 
 Oommonwealth v. Hogan, 97 Mass. 132; Commonwealth v. Harrison, 
 11 Gray, 308 ; Commonwealth v. Shea, 14 id. 386 ; Commonwealth 
 V. Carpenter, 100 Mass. 204; Morey v. Commonwealth, 108 id. 433. 
 77 
 
610 
 
 MASSACHUSETTS 
 
 Commonwealth v. Barry. 
 
 Exclusive jurisdictiou of the one does not exclude jurisdiction of 
 the other. 
 
 Upon the facts stated it is clear that the offense of Hine was 
 larceny and not embezzlement. Although as teller he was intrusted 
 with funds of the bank while engaged in transacting its business, 
 at night they were withdrawn frqm his possession and placed in 
 such custody that he could not lawfully resume possession until 
 the return of business hours and the concurrence of the cashier 
 authorized him to do so. That custody was possession by the bank ; 
 and his wrongful yiolation of it made the taking of the funds lar- 
 ceny. Gommonwealth v. Berry, 99 Mass. 438 ; Commonwealth v. 
 Davis, 104 id. 548. 
 
 In the second place the offense of receiving stolen property is a 
 substantive crime in itself, and not merely accessorial to the prin- 
 cipal offense of larceny. In this respect the case is clearly dis- 
 tinguishable from that of Gommonwealth v. Felton, supra. 
 
 Exceptions overruled. 
 
 In state, v. TuUer, ante, p. 375, the 
 Supreme Court of Connecticut held 
 that while a State court has no juris- 
 diction of the offense of embezzlement 
 by an officer of a National bank of the 
 property of the bank, it has Jurisdic- 
 tion of the larceny or purloininB by 
 such officer of the property of others 
 left with the bank for safe-keeping. 
 This conclusion was based upon the 
 argument that the exclusive Federal 
 jurisdiction was limited to offenses 
 arising out of the internal working of 
 such banks— to offenses arising out of 
 the relation between the officers, 
 clerks and agents of the bank, and the 
 bank itself ; but that as to the offen- 
 ses arising out of the business relations 
 between the bank or its officers and 
 agents and its customers the state court 
 had jurisdiction. Thus the court said: 
 "It is theft by our law to steal from a 
 National bank ; it is burglary to break 
 into one for the purpose of stealing; 
 and it is cheating to obtain money 
 from one by false pretenses. As a cor- 
 porate being, located in the State, its 
 property and interests and business 
 are protected by state laws and sub- 
 ject to state legislation, and so it is 
 competent for the legislature to pro- 
 tect its customers, the citizens of the 
 State, in their business dealings with 
 it, whatever they may be, whether 
 constituting the relation of borrower 
 and lender or of special or general de- 
 positor and bailee ; and they may be 
 coutrolled aud protected by penal en- 
 
 actments, without interference with 
 the laws of Congress." 
 
 InGommonwealth v. Tenney,ante,p.5G8. 
 the Supreme Judicial Court of Massa- 
 chusetts held that a State court had ju- 
 risdiction of an indictment against an 
 officer of a National bank for fraudu- 
 lently converting to his own use the 
 property of an individual deposited 
 in the bank, under a state statute 
 making such fraudulent conversion 
 "larceny." This was on the ground 
 that the offense charged had not been 
 made punishable by act of Congress, 
 as the 55th section of the National 
 Banking Act only applied to embezzle- 
 ment of the property of Nationai 
 banks. 
 
 Again, in Coinmonwealth v. Felton, 
 ante, p. 573, the same court held that a 
 State court had no jurisdiction of the 
 crime of embezzlement by an officer 
 of a National bank of the funds of 
 the bank since such offense is exactly 
 covered by the act of Congress, and 
 also that as Congress had made such 
 offense a misdemeanor, only an acces- 
 sory could not be punished under a 
 state statute making the offense a 
 felony. 
 
 The foregoing case of Commonwealth 
 V. Barry is in accordance with these 
 decisions, holding that while a State 
 court has not jurisdictiou of the of- 
 fense of enibezslement of the property 
 of the bank by an officer thereof, '* 
 has jurisdiction of the offense of lar- 
 ceny of the property of the bank by 
 
SUPEBME JUDICIAL COUET, 1874. 611 
 
 Tapley v. Martin. 
 
 such officer. The case turned on the custody, and placed beyond his lawful 
 distinction between " embezzlement " reach, his offense was larceny. 
 and "larceny." Had the teller appro- Whether the provision of the Re- 
 priated to his own use the property of vised Statutes has wrought any change 
 the bank while it was intrusted to him on this subject seems not to have been 
 during the day, the offense would have decided. See the section of the Re- 
 been embezzlement, and not punishable vised Statutes quoted in full to note to 
 in the State courts; but having pur- Unted States y. Taintor, ante, p. 256. 
 loined such property after it had been As to intent, see that case ; also Matter 
 withdrawn from hia possession and of Van Campen, ante, p. 185, — Rep. 
 
 Taplet V. Maktist. 
 
 (116 Massachusetts, 275.) 
 Certificate of organization as evidence — JUdbUitiea of sureties on cashier's bond. 
 
 Under the National Banking Act, a copy of the certificate of organization of 
 a United States National bank, which is certified by the Comptroller of the 
 Currency and authenticated by his seal of office, is competent evidence in a 
 State court.* 
 
 A surety on the bond of the cashier of a. National bank is not discliarged by 
 the fact that the cashier had, before the bond was given, committed frauds 
 upon the bank, if such frauds were unknown to the officers of the bank, 
 although they were guilty of gross negligence in not discovering them. {See 
 note, p. 614.) 
 
 In an action by a surety on the bond of an officer of a bank to recover an 
 amount paid on the bond without suit, against one who had agreed to save 
 him harmless from all loss which he might suffer as surety, the o«urt 
 instructed the jury that if the plaintiff made the payment without the assent 
 of the defendant, he must show that he was legally liable, but if he pro- 
 cured the assent in good faith, he could recover. Held, that the defendant 
 had no ground of exception. 
 
 CONTEACT on an agreement made by the defendant to indem- 
 nify the plaintiff for any loss or damage sustained by him as 
 surety on the bond of James D. Martin, as cashier of the Hide 
 and Leather National Bank, Boston. At the trial, before Wells, 
 J., the jury returned a verdict for the plaintiff, and the defend- 
 ant alleged exceptions. The nature of the case appears in the 
 opinion. 
 
 A. A. Ranney, as amicus curicB, in support of the exceptions. 
 
 G. 0. Shaituck S 0. W. Holmes, Jr., for plaintiff. 
 * See Thatcher v. West River National Sank, post. 
 
612 MASSACHTJSBTTS 
 
 Tapley v. Martin. 
 
 MoETOiT, J. [After deciding that a party does not, by removing 
 into another State after suit brought, entitle himself to remove 
 the suit into the United States Circuit Court.] 
 
 3. The copy of the certificate of organization of the Hide and 
 Leather National Bank, certified by the Comptroller of the Cur- 
 rency, was properly admitted in evidence. The act of Congress 
 provides that copies of such certificates, duly certified by the 
 Comptroller, and authenticated by his seal of ofiice, shall be evi- 
 dence " in all courts and places within the United States." U. S. 
 Stat. 1864, ch. 106, § 6. And, independently of this provision, 
 such certificates, when filed, are a part of the public records, and 
 may be proved by duly authenticated copies. Stetson v. Gulliver, 
 2 Cush. 494; Oakes v. Hill, 14 Pick. 442. 
 
 3. The court ruled "that there was no evidence in the case, as 
 tendered, which showed such knowledge by the officers of the 
 bank of frauds or defalcations by Martin before the date of his 
 bond as cashier, that the failure to communicate the information 
 to the sureties would discharge them from the obligation of their 
 bonds; " and the defendant excepted. 
 
 To understand this question it is necessary to state the facts 
 bearing upon it. James D. Martin, a son of the defendant, was 
 appointed cashier of the Hide and Leather National Bank, in Jan- 
 uary, 1867. The plaintiff, at the request of the defendant, became 
 one of his sureties, and the defendant gave the bond in suit to 
 indemnify him against any loss by reason of his becoming surety. 
 Martin had been a book-keeper in the bank before he was appointed 
 cashier, and the defendant introduced evidence tending to show 
 that while he was book-keeper he was guilty of frauds and defalca- 
 tions similar to those of which he was guilty after he became cash- 
 ier, and for which the plaintiff, as his surety, was liable. She also 
 introduced evidence tending to show that while Martin was book- 
 keeper, the attention of the directors was called to the fact that 
 there were errors and inaccuracies in his books. But there was no 
 evidence that the ofl&cers of the bank had knowledge that Martin, 
 while book-keeper, was guilty of frauds or defalcations. 
 
 The defendant contended at the trial that the officers were guilty 
 of gross negligence in not examining the books, and that the sure- 
 ties were thereby discharged. But the court ruled, that unless the 
 defendant proved actual knowledge by the officers of previous fraud, 
 the sureties would not be discharged ; that negligence in failing to 
 
SUPEEME JUDICIAL COUET, 1874. 613 
 
 Tapley v. Martin. 
 
 examine, however gross, would not discharge the sureties, and, as 
 before stated, that there was no evidence of such knowledge by the 
 officers of the bank. 
 
 We are of opinion that these rulings were sufficiently favorable 
 to the defendant. 
 
 Upon examining the evidence reported in the bill of exceptions, 
 it is clear that there is no evidence which would justify the jury 
 in finding that the officers of the bank had actual knowledge of 
 Martin's frauds while he was book-keeper. We are not, therefore, 
 called upon to decide whether, if they had such knowledge and 
 failed to communicate it to the sureties on Martin's bond as cashier, 
 the bond would be thereby avoided as to the sureties. The only 
 question is, whether their negligence in failing to examine the 
 books discharges the obligations of the sureties. We can see no 
 principle upon which it can be held to have this effect. The object 
 of the bond is to guarantee to the bank the faithful performance by 
 the cashier of his duties. His duties and obligations are not affected 
 by the negligence of the other officers or agents of the bank, and 
 such negligence does not discharge his sureties. In Amherst Bank 
 V. Root, 2 Mete. 532, which was similar to the case at bar. Chief 
 Justice Shaw says : " The idea that the cashier is excused by the 
 act of negligence of the directors arises from considering the board 
 of directors as the corporation, and then applying a very equitable 
 principle, that one ought not to recover of a surety damages caused 
 by himself. We think the principle does not apply." In the case 
 at bar the plaintiff was not induced to sign the bond by any fraud 
 of the directors, and the court correctly ruled that he would not be 
 released from his obligations as surety by their alleged negligence 
 in failing to examine the books and affairs of the bank. Minor v. 
 Mechanics' Banh of Alexandria, 1 Pet. 46 ; United States v. Kirk- 
 patrick, 9 Wheat. 730 ; Franklin Bank v. Stevens, 39 Me. 533 ; 
 Farmington v. Stanley, 60 id. 472. 
 
 4. It appeared that the plaintiff paid the amount of his bond to 
 the bank without a suit ; and the court instructed the jury that if 
 he made this payment without the assent of the defendant, he must 
 show that he was legally liable ; but if he procured her assent, and 
 made the payment in good faith upon that assent, she could not 
 put the plaintifE to proof that he was legally liable ; to which the 
 defendant excepted. This ruling was correct, accompanied, as it 
 was, with the further instruction, that good faith, in the sense 
 
614 MASSACHUSETTS 
 
 Tapley v. Martin. 
 
 intended in the ruling, required that the plaintiff should iniorm 
 the defendant of all facts known to himself bearing upon his lia- 
 bility. The plaintiff had only a nominal interest in the question 
 of his liability on the bond. The defendant was the real party in- 
 terested in this question. It was her right and duty to judge 
 whether any defense should be made to the claim of the bank. 
 After she had requested him to pay, or assented to his paying, he 
 could not properly aefend against the claim. If he did so, it 
 would be at his own risk and expense, and he could not recover of 
 the defendant any of the expenses of such unauthorized defense ; 
 he had the right to act upon her assent, and pay the claim without 
 a suit ; such payment was made at her request, and she is liable for 
 the amount paid, and cannot defend upon the ground that there 
 was a defense to the claim of the bank which she neglected to make 
 before the payment. 
 
 We have considered all the questions raised by this bill of ex- 
 ceptions, although some of them have become immaterial by the 
 special finding of the jury in the case. In answer to a special 
 question submitted to them, they have found that the plaintiff 
 made the payment to the bank with the assent of the defendant 
 and in good faith. It was within the discretion of the court to 
 submit this question to them, and their finding upon it is conclu- 
 sive, and renders immaterial all questions as to the liability of the 
 plaintiff on his bond. Exceptions overruled. 
 
 NoTB.-See Oraves v.The Lebanott Na- In Atlas Bank v. Brownell, 9 R. I. 
 Uonal Bank,ante,p.i9'i, wherein is oou- 168.; S.C., 11 Am. Rep. 231, it was lield 
 eidered what negligence on the part of in a suit on a cashier's bond, that it 
 directors of a bank will discharge the was no defense ; that the directors had 
 sureties on a cashier's bond. It is to been negligent in examining his ac- 
 he observed, however, that that case counts. There the alleged negligence 
 turned on the fact that the directors occurred after the bond was executed, 
 held out the cashier as a trustworthy. The defendants offered further to 
 honest official, and presumably there- prove that prior to the execution of 
 by induced the sureties to become the bond the cashier had lost money 
 such, when in fact the cashier was a de- by gambling ; that the directors knew 
 faulter and the directors should and it and in consequence concluded to iu- 
 would with reasonable diligence have crease the bond, that thereafter the de- 
 known it. fendauts became surety on the bond, 
 It may be generally stated that the and that the directors did not com- 
 law requires that perfect good faith munioate to the defendants the fact of 
 should be adhered to between obligees thegambling. The court held that the 
 and sureties, and that whenever there evidence was properly excluded on the 
 is any misrepreaentation or even con- ground that the information withheld 
 cealment by the obligee from the sure- related, not to the business which was 
 ty as to any material fact which, had the subject of the suretyship, and not 
 he been aware of, he might not have to the conduct of the cashier as cashier, 
 entered into the contract of surety- but to his general character, 
 ship, he will be discharged. Ree3 v. The court said, "Ordinarily, the con- 
 £errington, 'i White & Tudor's Lead, cealment, to make void a contract, 
 Cas. 1871. 'must amount to the suppression of 
 
SUPEEMB JUDICIAL COIJKT, 1874. 
 
 615 
 
 Tapley v. Martin. 
 
 facts which one party is bound In con- 
 science and duty to disclose to the 
 other, and in respect to which he can- 
 not innocently be silent." Story's Eq. 
 Jur., § 204 But Judge Story lays 
 down further, that, in the case of a 
 surety, concealment of facts which go 
 to increase his risk amounts to a fraud 
 on the surety ; and the omission to dis- 
 close is equivalent to an afBrmatioii 
 that the facts do not exist. Story's 
 Eq. Jur., §§ 2U, 215, 324, 383. But we 
 think this doctrine of the text-books 
 is stated much more strongly than the 
 decided cases warrant. In Railton v. 
 Matthews, 10 CI. & F. 934, plaintiffs ap- 
 pointed an agent and took bond, they 
 knowing the agent had misapplied 
 moneys iu a former agency, and not 
 communicating it. It was contended 
 that, to discharge the surety, the con- 
 cealment must be willful, and with a 
 view to the advantage of the obligee. 
 Lord CAMPBEiiL, iu delivering judg- 
 ment ill the House of Lords, said it 
 would do to make the liability depend 
 on the motive of concealment ; it was 
 enough that the plaintiffs knew facts 
 material for the surety to know and 
 did not disclose them; the motive 
 might have been kindness to the agent ; 
 the effect would be the same ; the fact 
 that he was in arrear, and had been 
 guilty of fraudulent conduct, and was 
 a defaulter, were facts material for the 
 surety to know. In a later case (Ham- 
 ilton V. Watson, 12 CI. & F. 109), Lord 
 CAMPBBiii,, in delivering the judgment 
 of the House of Lords, said that it 
 would put an end to the Scotch prac- 
 tice of giving security for cash loans, 
 if it was necessary for the creditor to 
 disclose every thing material for the 
 surety to know; and laid down this 
 as the criterion whether the disclosure 
 should be voluntarily made by the 
 creditor; ' whether there is any thing 
 that might not naturally be expected 
 to take place in the transaction, i. e., 
 ■whether there be a contract between 
 the debtor and creditor, to the effect 
 that his position shall be different 
 from that which the surety might 
 naturally expect," but that if there be 
 nothing of this sort, then the surety, if 
 he would protect himself, must in- 
 quire.' 
 
 " In North Brit. Ins. Co. v. Lloyd, 10 
 Exch. 523, B, who was surety for a 
 loan upon stock for A, applied to the 
 plaintiffs, before the loan became due, 
 to be released on procuring other sure- 
 ty, and plaintiffs consented. A ap- 
 plied to the defendant to become 
 surety, and represented that his stock 
 would otherwise be sacrificed, but did 
 not communicate the fact that the 
 former surety was to be released. The 
 
 defendant testified, that if he had 
 known that, he would not have become 
 surety; but, on cross-examination, ad- 
 mitted " that he relied on the solvency 
 of Sir T. Branche," the principal. 
 In the course of a desultory running 
 argument between the court and coun- 
 sel, the judges criticised the decision 
 iu Railton v. Matthews, as going too 
 far, and say that the point decided by 
 Lords Campbell and Cottenham in 
 that case was, iu effect, that it was not 
 necessary to render a oonoealmeiit 
 fraudulent, that it should be made 
 with a view to the advantage of the 
 person concealing. The court hold 
 that the non-disclosure of the change 
 of security would not vitiate the guar- 
 anty, unless fraudulently kept back, 
 and that there was no ground in this 
 case to impute fraud; that the former 
 surety might well wish to be released 
 for other reasons than doubt of Sir T. 
 Branohe's solvency. 
 
 " In the Franklin Bank v. Cooper, 36 
 Me. 179, the directors knew of the cash- 
 ier's default, and took bond from him 
 to account for all property heretofore 
 intrusted to him, etc. Held, that the 
 surety had a right to presume that 
 the transaction was in the ordinary 
 course of business; that the bank 
 was bound to communicate facts 
 increasing the risks, and which would 
 have an important influence on the de- 
 cision of the surety. 
 
 " Iu the case of Bank of the United 
 States V. Etting, 11 Wheat. 59, the 
 United States Supreme Court, being 
 equally divided in opinion, the question 
 was not decided. 
 
 ' 'We think that it is going too far to say 
 that the creditor is, in all cases, and 
 without being inquired of, bound to 
 communicate every thing that it is im- 
 portant for the surety to know, and 
 that would increase his risk. Under 
 such a rule no one would ever know 
 when he could rely on a bond, and it 
 would lead to a good deal ot litigation. 
 
 "We think the safe rule is that, to avoid 
 the bond, there must be, on the part of 
 the creditor, a fraudulent concealment, 
 or withholding of something material 
 for the surety to know. Would the fact 
 which the defendant offered to prove, if 
 proved, have amounted to a fraudulent 
 concealment or withholding ? It is not 
 alleged here that the directors withheld 
 any information inquired for, or said or 
 did any thing which could have a tend- 
 ency to mislead the surety, or made 
 any, the least, effort to induce the de- 
 fendant to become surety. If there had 
 been an actual default, and an attempt 
 by the directors to cover it up, or re- 
 imburse themselves at the expense of 
 the surety, the case would be different. 
 
616 
 
 MASSACHUSETTS 
 
 Tapley v. Martin. 
 
 "Moreover, the cases which we have 
 referred to are cases in which the in- 
 formation withheld or not disclosed, 
 related in some way to the business 
 which was the subject of the surety- 
 ship. In this case, the undisclosed 
 information related, not to the busi- 
 ness which was the subject of the 
 suretyship, and not to the conduct 
 of the cashier, as cashier, but to his 
 general character. It did not follow 
 that because he gambled he would fail 
 in his duty as cashier, and the excep- 
 tions do not show that his actual de- 
 linquency had any coTuiection with his 
 gambling. The directors may have 
 deemed it advisable to demand an in- 
 crease of his bond because of his 
 gambling; and so they might have 
 deemed if they had learned he was 
 keeping a fast horse, or speculating in 
 the stocks. But would it have been 
 their duty, unless inquired of, to im- 
 part their knowledge to the sureties ? 
 We think not, in the absence of a more 
 confidential relation than that which is 
 implied in the mere giving and accept- 
 ing of the surety-bond . If, when there 
 is no such confidential relation, the 
 sureties wish to have the obligees af- 
 fected with a duty to give such infor- 
 mation, they should inquire for it. 
 Otherwise, it may be supposed that 
 they are content with what they them- 
 selves know, or with inquiries which 
 they have made elsewhere." 
 In Oweii, V. Homan, 8 Mac. & G. 378, the 
 creditor or obligee was held to be bound 
 to make a full, fair and honest com- 
 munication to the surety of all circum- 
 stances connected with the transaction 
 to which the suretyship is to be applied, 
 which are calculated to influence the 
 discretion of the surety in entering 
 into the required obligation. See that 
 case on appeal, 4 H . Jj. Cas. 997 . Mat- 
 ters unconnected with the transaction 
 of the suretyship need not be disclosed 
 to the surety unless he inquire concern- 
 ing them. Wythes v. Labenchere, 3 
 DeG. &J. 593. 
 
 Mere negligence of a bank in detect- 
 ing dishonest practices of a cashier will 
 not discharge his sureties. There must 
 be such negligence as in law amounts 
 to a fraud on the sureties to accomplish 
 that result. 
 
 The distinction between mere negli- 
 gence and/rat4(J on the part of obligees 
 as to the liability of sureties was clearly 
 stated in United States v. Kirkpatrick, 
 9 Wheat. 720. That was an action on 
 an official bond taken by the govern- 
 ment. The defense was neglect on the 
 part of the collecting ofScer of the 
 government to sue within the time 
 prescribed by law. The court, Story, 
 J., delivering the opinion, said : " It is 
 
 admitted that mere laches, unaccom- 
 panied with fraud, forms no discharge 
 of a contract of this nature between 
 private individuals ; such is the clear 
 result of the authorities. ' ' The same 
 distinction was applied to cashier's 
 bonds in State Bank v. Chetwood, 3 
 Halst. 1, and in Taylor -v .Bank of Ken- 
 tucky, a J. J. Marsh. 565 ; Morris Canal 
 Co. V. Tan Forst, 1 Zabr. 100. 
 * So, in Minor v. Bank of A.lexandria, 
 1 Pet. 61, it was held that a usage of 
 the board of directors to permit the 
 cashier to misapply the funds of the 
 bank would not exonerate his sureties. 
 Stobt, J., who delivered the opinion 
 of the court, said : " The question then 
 conies to this, whether any act or vote 
 of the board of directors, in violation 
 of their own duties and in fraud of the 
 rights and interests of the stockholders 
 of the bank, could amount to a justifi- 
 cation of the cashier, who was a partv- 
 ceps criminis. We are of opinion that 
 it could not. However broad and 
 general the powers of the direction 
 may be for the government and man- 
 agement of the concerns of the bank, 
 by the general language of the charter 
 and by-laws, those powers are not 
 unlimited, but must receive a rational 
 exposition. It cannot be pretended 
 that the board could, by a vote, author- 
 ize the cashier to plunder the funds of 
 the bank, or to cheat the stockholders 
 of their interest therein. No vote 
 could authorize the directors to divide 
 among themselves the capital stock, or 
 justify the officers of the bank in an 
 avowed embezzlement of its funds. 
 The cases put are strong, but they 
 demonstrate the principle only in a 
 more forcible manner. Every act of 
 fraud, every known departure from 
 duty by the board in connivance with 
 the cashier, for the plain purpose of 
 sacrificing the interests of the stock- 
 holders, though less responsible in 
 morals or less pernicious in its effects 
 than the cases supposed, would still be 
 an excess of power, from its illegality, 
 and, as such, void as an authority to 
 protect the cashier iu his wrongful 
 compliance. Now, the very form of 
 these pleas sets up the wroug and con- 
 nivance cannot for a moment be admit- 
 ted as an excuse for the misapplication 
 of the funds of the bank by the cash- 
 ier." 
 
 The same rule was held in Amherst 
 Bank v. Root, 'i Meto . 532 ; Taylor v. 
 Bank of Kentucky, 3 J. J. Marsh. 665, 
 and in Sparks v. Fa/rmers' Bank, 9 Am. 
 Law Reg. 365. 
 
 So in Attantic and Pacific Telegraph 
 Co. V. Barnes, 64 N.Y. 385; S.C., 31 Am. 
 Rep. 631, in an action upon a bond 
 given by an employee to his employer, 
 
, SUPEEME JUDICIAL COUKT, 1874. 
 
 617 
 
 Tapley v. Martin. 
 
 conditioned that the former would 
 faithfully account for all moneys and 
 property coming to his hands, it was 
 held that the sureties were not dis- 
 charged from subsequent liability by 
 an omission of the employer to notify 
 them of a default by the employee 
 which was known to the employer and 
 a continuance of the employment after 
 3uoh default where it did not appear 
 that such default arose through the 
 fraud or dishonesty of the employee. 
 The court expressed the opinion that 
 had the default arisen through the dis- 
 honesty of the servant, a withholding 
 of the fact fromi the sureties and the 
 continuance of him in the service 
 would have discharged the sureties. 
 
 This was held in Phillips v. Foxg.ll, 
 L. B., 7 Q.B. 666, where on a continuing 
 guaranty of the honesty of a servant it 
 was held if the master discovered that 
 the servant has been guilty of dishones- 
 ty in the course of the service and in- 
 stead of dismissing the servant he 
 chooses to continue him in his employ 
 without the knowledge and consent of 
 the sureties, he cannot afterward have 
 recourse to the surety to make good 
 any loss arising from the dishonesty of 
 the servant during the subsequent ser- 
 vice. The same principle was held in 
 Sanderson v. Aston, L. R., 8 Exch. 73, 
 •Mid in Burgess v. Eve, L. R., 13 Eq. 
 450. 
 
 la Slack V. Ottoman Bank, 15 Moore's 
 P. G. 473; S. C.,8Jur. (N. S.) 801, the 
 surety on the bond of a bank cashier 
 was held not to be discharged by a 
 failure of the bank to use diligence in 
 guarding against the cashier's dishon- 
 esty — that mere negligence wouldjnot 
 absolve the surety ; and inUauisonv. 
 Lawes, Kay, 280; S. C, 23 L. J. Chan. 
 434, it was held that to discharge a 
 surety for the due performance of du- 
 ties, there must be on the part of the 
 obligee an act of connivance or gross 
 negligence, amounting to willful shut- 
 ting of the eyes to fraud or something 
 approximatiug it. There must be 
 something amounting to fraud to ena- 
 ble a surety to say that he is released 
 from his contract ou account of 
 misrepresentations or concealments. 
 Fledge v. Buss, Johns. (Eug.) 663. 
 
 A concealment by a creditor that at 
 the time of the contract the principal 
 debtor was already indebted to the 
 ci-editor iu a considerable sum, of 
 which fact the surety was ignorant, 
 lias been held evidence to go to the 
 jury of such fraud on the surety as 
 would discharge him. Leev. Jones, 14 
 C. B. (N. S ) 386. tiee, also, Hamilton v. 
 Watson, 12 C. & F. 258 ; Smith v. Bank 
 of Scotland, i Dow. 273; Padcock v. 
 Bishop, 3 B. & 0. 605 ; Peel v. Tatlouk, 
 
 1 Bos. & P. 419 ; Squire v. Whitten, 1 
 H. L. Gas. 333; and the same rule 
 would apply to sureties on cashiers' 
 bonds as to ooneealmeuts by the bank. 
 
 m Lee V. Jones, supra, affd. oa ap- 
 peal, 17 C. B. (N. S.) 482, P. had been 
 employed by the plaintiffs in the sale of 
 coal for them on commission, for which 
 he at the end of each month gave them 
 his acceptance, and by the terms of his 
 agreement ' he was to hand over to them 
 within six days all moneys he received 
 from customers. P. having fallen in ar- 
 rear to the extent of 1,372!., the plain- 
 tiffs required him to find security to the 
 amount of 300!., and at his request 
 the defendant consented to guarantee 
 100!. The agreement of guaranty re- 
 cited the terms of dealing between the 
 plaintiffs and P. ; but the fact that P. 
 was already indebted to the plaintiffs 
 iu the large sum above mentioned was 
 concealed from the sureties. In an ac- 
 tion against the defendant upon the 
 agreement, he pleaded that he was in- 
 duced to make it by the fraudulent con- 
 cealment by the plaintiffs of a material 
 fact: Held, that the non-communica- 
 tion by the plaiiitiffs to the defendant 
 of the fact that P. was at the time in- 
 debted to them was evidence for the 
 jury iu support of the plea. 
 
 Farmington y. Stanley, 60 Me. 472, 
 cited in the principal case, held that the 
 failure of selectmen to examine the 
 accounts of a town treasurer as by 
 statute directed or to detect an error in 
 his accounts would not discharge a 
 surety on his bond. This decision was 
 put upon the ground that the select- 
 men were only agents of the town with 
 limited powers ; that they had no au- 
 thority directly to discharge the sure- 
 ties on the treasurer's bond and could 
 not therefore do it indirectly. 
 
 In tly) Board of Supervisors v. Otis, 
 6i N. Y. 88, it was held that neither 
 negligence nor malfeasance of a board 
 of supervisors iu their transactions 
 with a county treasurer, would dis- 
 charge the sureties ou the bond of such 
 treasurer. 
 
 Acashier'sbond;(and the bondsof other 
 bank ofBoers are governed by thu same 
 rules) covers all duties annexed to the 
 office from time to time, either by law 
 or by the directors, and the sureties are 
 liable for any default iu such duties. 
 'Minor v. Bank of Alexandria, 1 Pet. 
 46; Morris Canal Co. v. Van Vorst, 1 
 Zabr. 100. 
 
 Such bonds are a surety not only for 
 honesty, but for reasonable skill and 
 diligence, so that it a cashier violates 
 his duties through negligence or want 
 of capacity hiasureties are liable. Minor 
 y.Bank of Alexandria, 1 Pet. 64; State 
 Bank v. Chetwood,S Halst.l ; American 
 
618 MASSACHUSETTS 
 
 Upton V. National Bank of South Reading. 
 
 Bank v. Adams, 12 Pick. 303; Union to allow an overdraft. Bank of St. 
 
 Bank v. Forrest, 3 Cranoh, 218; Com- Mary v. Calder, 3 Strobh. (8. C.) 403; or 
 
 mercial Bank v. Ten Eyak, 48 N. Y. 305. to certify a check without funds ; or that 
 
 The failure of a cashier to be sworn a deposit has been made when in fact 
 when that is required does not vitiate none has been made, or to change with- 
 his bond but is rather a breach of it. out authority the securities of the bank 
 Staie Bank v. Chetwood, 3 Halst. 1. But Barrington v. Bank of Washington, 14 
 it is no forfeiture of a bond conditioned Serg. & B. (Penn.) 405; to omit some 
 for the faithful service of a cashier duty required of him by law, as to make 
 that a loss has occurred by mere acci- a,report to the Comptroller of the Cur- 
 dent or mistake. Morris Canal Co. v. rency, whereby the bank has been sub- 
 Fan Vorst, 1 Zabr. 100 jected to a fine or otherwise injured. 
 
 So it is a breach of a cashier's bond Bank of Washington v. Barrington, 2 
 
 for him to change, without authority, Penn. 27. To violate any valid by law, 
 
 the securities of the bank. Barrington the corporation may prescribe. Bank 
 
 V. Bank of Washington, 14 Serg. & R. of Carlislev. Hopkins, 1 Miu. (Ky.) 245. 
 
 405. And in each case the sureties to the 
 
 It is a violation of duty for a cashier cashier's bond are liable. 
 
 TJiTois' V. Natiojtal BAifK OF South Eeadiitg. 
 
 (120 Massachusetts, 153.) 
 Purchase of real estate ly National bank. 
 
 A National bank has authority to purchase such real estate as may be neces- 
 sary in order to secure a debt due to it, although in excess thereof, if the 
 security of the debt be the real object of the purchase. 
 
 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 indebted- 
 ness. Held, that the transaction was valid under the National Banking Law.* 
 
 BILL in equity by the assignee in bankruptcy of one Em- 
 erson, to redeem certain lands from a mortgage given by 
 Emerson to John Sawyer, to secure the payment of $4,500, and 
 assigned by several conveyances to defendant. 
 
 The bill alleged that the debt for which the mortgage was given 
 had been all paid, except the sum of $800 and interest from August, 
 1873, and that, before this suit was begun the plaintiff was ready 
 and offered to pay that sum to the bank. 
 
 The defendant's answer admit'ted these allegations, and alleged 
 that prior to February 21, 1871, the bank had three notes against 
 Emerson amounting to $911.21, and that by a parol agreement, 
 which was set forth in the answer, between Emerson and the bank, 
 
 *See Ornn v. Merchants' National Bank, ante, p. 490; First National Bank v. 
 Haire, ante, p. 480; Fowler v. ScuUy, post, and note. 
 
SUPEEME JUDICIAL COURT, 1876. 619 
 
 Upton V. National Bank of South Reading. 
 
 the latter agreed to lend $3,000 on the mortgage and to take an as- 
 signment of the same to secure said $3,000 and the said three notes. 
 A general replication was filed, and an issue for the jury was 
 framed and tried before Wells, J. The judge found that such an 
 agreement was made. 
 
 The plaintiff objected to the proof of such an agreement by oral 
 evidence; and asked the judge to rule as follows : 
 
 " 1. That it was not competent for the defendant to set up and 
 prove such an oral agreement for the purpose for which the evidence 
 was ofEered under the answer. 
 
 " 3. That the purchase of the mortgage by the defendant, and 
 the loan made thereon were contrary to the U. S. Statute of 1864, 
 chapter 106, section 28, and the bank could not legally hold the 
 same for the purposes set forth in the answer." The judge over- 
 ruled both objections. 
 
 It appeared that on February 31, 1871, the mortgage was held 
 by Abbott & Thomas, and that the full amount of the mortgage 
 note, $4,500, was then due and unpaid. Emerson had been in 
 negotiation withanofiBcer of the defendant bank, who was also an 
 oflScer of the South Eeading Agricultural and Mechanic Association, 
 for an advance of $3, 000, to enable him, with other funds which he 
 expected to procure, to take up his mortgage from Abbott & Thomas. 
 Some objection was suggested as existing, under the act of Congress, 
 against making the transaction directly with the bank ; and it was 
 then proposed and arranged that the transaction should be had with 
 the association aforesaid. Emerson thereupon procured an assign- 
 ment of the mortgage to the association to be made and executed by 
 Abbott & Thomas, and procured Abbott to go with him to the count- 
 ing-room of the bank and association. The officers of the associ- 
 ation declined to take the assignment and to make the advance 
 of $3,000; whereupon Emerson arranged with the defendant to 
 make the advance, and as a part of the arrangement and as induce- 
 ment thereto made the oral agreement, above referred to, that the 
 bank should hold said mortgage as security as well for the three 
 notes amounting to $911.31 already held and due to said bank, as 
 for the $3,000 then to be advanced. 
 
 To carry this arrangement into effect, Thomas not being pres- 
 ent, an assignment from the association to the bank was there- 
 upon prepared and executed; the bank advanced $3,000 to Emer- 
 son; he paid over the same sum, with $1,500 more which he had 
 
620 MASSACHUSETTS 
 
 Upton V. National Bank of South Reading. 
 
 procured elsewhere, to Abbott for Abbott & Thomas, adjusted the 
 interest to that date, which last was indorsed upon the note, and 
 the note, with no payments indorsed except of the interest, to- 
 gether with the mortgage thus assigned, were deliTered to the de- 
 fendant. 
 
 Upon the foregoing facts and i\e finding of the jury upon the 
 issue submitted to them as aboTe stated, the judge ruled and held 
 that the defendant was entitled to hold the mortgage for security 
 of the three notes aforesaid, as well as for the $3,000 advanced; 
 and ordered a decree to be entered for redemption upon payment 
 of the amount now remaining due of said two sums, and costs for 
 the defendant; and reported the case for the consideration of the 
 full court. If the ruling were wrong, and the bank was entitled 
 to hold only for what remains due of the $3,000 so advanced, the 
 decree was to be modified accordingly, with costs for the plaintiff, 
 or such other disposition of the case was to be made as should to 
 justice and equity appertain. 
 
 G. P. Judd, for plaintiff. 
 
 0. W. Eaton & 8. X. Hamilton, for defendant. 
 
 Dbvbks, J. While it is not lawful for banking associations, 
 established under the United States Statutes of 1864, chapter 106, 
 to purchase, hold and convey real estate except in certain specified 
 cases, among these exceptions are included such real estate "as 
 shaU be mortgaged to it in good faith by way of security for debts 
 previously contracted; such as shall be conveyed to it in satisfac- 
 tion of debts previously contracted in the course of its dealings; 
 such as it shall purchase at sales under judgments, decrees or 
 mortgages held by such association, or shall purchase to secure ' 
 debts due to said association." Under the latter clause it cannot 
 be deemed that the only authority given to such associations is to 
 purchase only to the exact amount of the debts which may be 
 owing to them, but they are entitled to purchase such real estate - 
 as may be necessary in order to secure the debts due to them so 
 long as the security of such debts is the real object of the purchase. 
 
 Upon advancing $3,000 for the purchase of the mortgage which 
 had been assigned to the South Eeading Agricultural and Mechanic 
 Association, Emerson himself paid $1,500 of the debt of $4,500 
 
SUPEEME JUDICIAL COURT, 1876. 621 
 
 Upton V. National Bank of South Beading. 
 
 which the mortgage was originally given to secure, and consented 
 that the bank should hold the mortgage to secure the sum of $3,000 
 thus advanced, and also three notes amounting to about $911 then 
 due from him to the bank. The claim that this was a loan of 
 money upon real estate security or a purchase of real estate, is not 
 maintained when it is found as a fact that the inducement to this 
 transaction was the agreement that the mortgage and the real 
 estate upon which it «was secured should be held for the antecedent 
 debt due to the bank. 
 
 The objection that such an oral agreement could not be put in 
 evidence cannot be maintained. While an indebtedness, other 
 than that for which the mortgage was given, cannot legally be 
 attached to such mortgage, yet it is competent, in answer to a bill 
 in equity to redeem a mortgage, for the defendant to show that it 
 would be inequitable to allow the plaintiff to do so upon payment 
 of the amount apparently due thereon, inasmuch as the defendant 
 had for valuable consideration orally agreed that it should not 
 thus be discharged, but should remain as security for other debts. 
 Joslyn V. Wyman, 5 Allen, 62; Stone v. Lane, 10 id. 74. Had 
 any question of title arisen between the defendant and a subse- 
 quent mortgagee, attaching creditor or bona fide purchaser, or even 
 if an action at law had been brought by the defendant to foreclose 
 the mortgage, it must have been decided that the defendant could 
 enforce the mortgage only for that portion of the $3,000 now actu- 
 ally due. But, if the present bill had been brought by Emerson, 
 he could not have been allowed to obtain a release or discharge of 
 the mortgage from the defendant, to whom it has been assigned, 
 except upon the performance of his oral agreement with the 
 defendant in relation to his antecedent debt. Joslyn v. Wyman, 
 ubi supra ; Stoiie v. Lane, ubi supra. 
 
 By the assignment in bankruptcy, the assignee has succeeded 
 to all the rights of Emerson, but his rights here are not superior 
 to those of Emerson. He has come into a court of equity to 
 seek its aid in obtaining those rights, and is, therefore, to do 
 what Emerson would have been compelled to do. In order to 
 obtain a decree for the redemption of the mortgage, he must 
 perform the oral agreement that the debt of $911 due the bank 
 should be paid, as well as pay the balance of the $3,000 which is 
 now due. Decree accordingly. 
 
622 MICHIGAN 
 
 Thatcher v. West River National Bank. 
 
 Thatcher v. West Rivbk National Bank. 
 
 (19 Michigan, 196.) 
 
 Evidence of incorporation — Certificate of organization — Defense to accommo- 
 dation note. 
 
 In an action by " The West River National Bank of Jamaica, Vermont," held, 
 that the certificate of the Comptroller of the Currency of the existence of a 
 corporation under the name of " The West Biver National Bank of Jamaica," 
 described as located in the town of Jamaica, Vermont, was admissible under 
 the general issue for the purpose of proving the plaintiffs corporate exist- 
 ence. 
 
 It is no objection to the admission in evidence of the certificate of the organi- 
 zation of a National bank, that the notary before whom it was acknowledged 
 was one of the shareholders of the bank. The Comptroller's certificate of 
 compliance with the act of Congress removes any objection which might 
 otherwise have been made to the evidence on which he acted.* 
 
 A National bank discounted a note made by the defendant for the benefit of 
 the payee and which the payee agreed to take care of at maturity. Held, 
 that the bank could recover on the note although it had when it took the 
 note full notice of the circumstances under which it was given. 
 
 ACTION on a promissory note made by the defendant Thatcher, 
 payable to the order of " L. N. Sprague, Agt./' and indorsed 
 by him to the plaintiff for value and before maturity. 
 
 The declaration described the plaintifE as " The West River 
 National Bank of Jamaica, Vermont." The defendant pleaded 
 the general issue and gave notice that the payee was the agent of 
 the Jamaica Leather Company, and that the note was given with- 
 out consideration and for the benefit of such company, of which 
 the plaintifE had notice when it discounted the note. 
 
 On the trial the plaintifE ofEered in evidence a doeument pur- 
 porting to be a certified copy of the organization certificate of 
 "The West River National Bank of Jamaica," dated August 17, 
 1865, to which the Comptroller of the Currency certifies that the 
 original was filed and recorded in his office on the 35th day of Au- 
 gust, A. D. 1865 ; and which document contained the following 
 recitals : 
 
 "First. The name and title of this association shall be The 
 West River National Bank of Jamacia." 
 
 * See Tapley v. Martin, ante, p. 611. 
 
SUPREME COUET, 1869. 623 
 
 Thatcher v. West Kiver National Bank. 
 
 " Second. The said association shall be located and continiied 
 in the town of Jamaica, county of Windham and State of Vermont, 
 where its operations of discount and deposit are to be carried on." 
 
 And also a certificate of the Comptroller of the Currency that 
 the plaintifE had complied with the act of Congress. 
 
 It appeared by the certificate of acknowledgment of the docu- 
 ment first mentioned, that the acknowledgment was taken before 
 Jno. A. Butler, notary public ; and by said document it further 
 appeared that J. A. Butler was a subscribing shareholder named 
 therein. To the reading these papers in evidence the defendant 
 objected: (1) That the name of the plaintiff in this suit is "The 
 West Eiver National Bank of Jamaica, Vermont," and not the 
 name of the institution set forth in said documents; (2) that the 
 certificate of acknowledgment of said first-named document is not 
 sufficient, because it appears upon the face of said first-mentioned 
 document that the notary public taking said acknowledgment is 
 one of the shareholders mentioned in the document; and (3) that 
 it is not alleged in the declaration that the plaintiff is a corpora- 
 tion, nor that it is organized in manner and form as set forth in 
 said documents 
 
 The Circuit judge overruled the several objections and allowed 
 the documents to be read in evidence ; to which the defendant 
 excepted. 
 
 Evidence was offered by the defendant to show the knowledge of 
 the bank of the circumstances under which the defendant signed 
 the note ; but the view taken by the court of this point in the de- 
 fense renders it unnecessary to state in detail this evidence, or the 
 ruling of the court below upon its admissibility and effect. 
 
 The defendant requested the court to charge the jury that it was 
 necessary for the plaintiff to prove the indorsement of the note ; 
 the judge declined, but charged the jury that the note and indorse- 
 ment had been read in evidence without objection, and there was 
 no aflBdavit denying the execution of said indorsement, the de- 
 fendant was therefore precluded now from disputing it ; to which 
 the defendant- excepted. The jury found for the plaintiff, and the 
 judgment entered on the verdict is brought into this court by writ 
 of error. 
 
 P. Thatcher, plaintiff in error, in person. 
 
 W. L. Webber, for defendant in error. 
 
624 MICHIGA]^ 
 
 Thatcher v. West River National Bank. 
 
 ChristiInoy, J. There was no error in allowing the plaintifE 
 below (defendant in error) to introduce, for the purpose of prov- 
 ing its corporate existence, the organization certificates, upon which 
 was certified by the Comptroller of the Currency that the original 
 was filed in his office, nor in the admission of the certificates of 
 said Comptroller (of Sept. 31, 1865), that the bank had complied 
 with the provisions of the act of Congress, " To provide a Na- 
 tional Currency," etc., of June 3, 1864. 
 
 The objection made by the defendant below was, in substance, 
 that by the declaration, the plaintifE claimed to be a corporation by 
 the name of " The West Eiver National Bank of Jamaica, Ver- 
 mont," and that the certificates did not tend to prove the existence 
 of a corporation by this name, but only of one by the corporate 
 name of "The "West Eiver National Bank of Jamaica." 
 
 There being no plea in abatement, and the objection arising upon 
 the general issue, the question is whether this is a substantial vari- 
 ance ; or rather it is merely a question of identity arising upon the 
 evidence ; and no slight variation, which does not go to raise a 
 doubt of the identity, is to be regarded. 
 
 The plaintifE is described in the declaration as " The West Eiver 
 National Bank of Jamaica, Vermont," a corporation organized 
 under the act of Congress entitled," etc. (giving the title of the 
 act). 
 
 The organization certificate filed with the Comptroller of the 
 Currency, it is true, declares that " the name and title of this asso- 
 ciation shall be The West Eiver National Bank of Jamaica ;" but 
 it also declares that " the said association shall be located and con- 
 tinued in the town of Jamaica, county of Windham, and State of 
 Vermont, where its operations of discount and deposit shall be 
 carried on." And the certificate of the Comptroller, showing a 
 compliance with the provisions of the act of Congress, recites, that 
 " Whereas, by satisfactory evidence presented to the undersigned, 
 it has been made to appear that ' The West Eiver National Bank 
 of Jamaica,' in the county of Windham, in the State of Vermont, 
 has been duly organized," etc. 
 
 It is clear enough, therefore, that the bank, the existence of which 
 is proved by the certificate, is " The West Eiver National Bank of 
 Jamaica," in the State of Vermont. And the addition of the word 
 " Vermont " at the end of the proper corporate name in the declara- 
 tion, rather tends to render the indemnity more specific ; and may 
 
SUPEBME COUET, 1869. 625 
 
 Thatcher v. West River National Bank. 
 
 properly be treated as intended only to show in what State the bank 
 was located. And, upon the evidence, we see no reason to doubt 
 the identity of the plaintifE with the bank whose existence is proved 
 by the certificate. 
 
 The objection that the organization certificate appears to have 
 been acknowledged before a notary, who by the same document is 
 shown to have been a shareholder in the bank, is one which might 
 have been raised by, or before, the Comptroller, but of which we 
 can take no cognizance here. It was for him to decide upon the 
 sufiBciency of th'e evidence of compliance with the act of Congress, 
 and we cannot review his decision. His certificate of compliance 
 removes any objection which might otherwise have been made to 
 the evidence upon which he acted. 
 
 But it is further objected that the evidence of witnesses in the 
 case goes to show that the plaintifE was a bank doing business long 
 prior to the date of these certificates, and therefore that the plain- 
 tiff cannot be the same corporation to which the certificates allude. 
 This objection is answered by the 44:th section of the act of 
 Congress in question (Statutes at Large, Vol. 1-3, p. 112), making 
 full provision for banks incorporated under State laws to organize 
 under this act. And we think the fair tendency of the evidence 
 referred to is only to show that this had been such State institu- 
 tion, doing business prior to its organization as a National bank 
 under the act of Congress. 
 
 The evidence of the corporate existence of the plaintiff was full 
 and complete, and there was no evidence of an opposite tendency. 
 
 The defense relied upon by the defendant below, without going 
 here into unnecessary particulars, was substantially, that the note 
 was given to L. N. Sprague, agent of the Jamaica Leather Com- 
 pany (to whose order it was made payable), without considera- 
 tion, and merely for the accommodation of said Leather Company, 
 upon the assurance of Sprague that the note would be taken care 
 of and the defendant protected; and that the bank, the indorsee 
 and plaintiff below, received it with a full notice of these facts. 
 
 The testimony of the defendant himself, and perhaps some other 
 testimony in the cause, tended to show, that the note was given for 
 the purpose above stated, and without consideration, and with the 
 assurance of Sprague above stated. 
 
 But the defendant's own testimony further tended to show that 
 the note was given for the express purpose, and with the full under- 
 79 
 
626 MICHIGAN 
 
 Thatclier v. West Eiver National Bank. 
 
 standing that it was to be negotiated to the bank to enable the 
 Leather Company to raise money upon it. It was also clearly shown 
 by other evidence that the bank did discount the note indorsed in 
 blank by Sprague, as agent, and paid the money for it ; and there 
 was no evidence of a contrary tendency. 
 
 We think it, therefore, wholly immaterial whether the bank had 
 notice, or not, of the circumstances under which, and the purpose 
 for which it was given, and of the other facts relied upon in the 
 defense. Had the directors of the bank, knowing the nature of the 
 previous transactions between defendant and the Leather Company, 
 been present and heard and known the whole arrangement between 
 Sprague and the defendant when the vote was given, the bank would 
 still be entitled to recover. See Charles v. Marsden, 1 Taunt. 224 
 Smith V. Knox, 3 Esp. 46 ; Thompson v. Shepherd, 12 Mete. 311 
 BrownY. Mott, 7 Johns. 361; Lordy. Oceew 5aw^, 30 Penn. St. 384 
 Grant v. Ellicott, 7 Wend. 327 ; Renwich v. Williams, 3 Md. 356 
 Molson V. Hawley, 1 Blatchf. 409 ; Caruthers v. West, 11 Q. B. 143. 
 
 The want of consideration, and the assurance of Sprague that 
 the note would be taken care of, do not affect the right of the bank 
 as indorsee, though taking it with notice. Mere accommodation 
 paper is generally at least, without consideration, and such assur- 
 ances, express or implied, are always given or relied upon, when 
 such accommodation paper is given. Such facts might constitute 
 a good defense as against the party for whose accommodation it is 
 given ; but to allow them to defeat a recovery by an indorsee who 
 advances money upon it — when that is the purpose for which it is 
 given — would defeat the very purpose for which such paper is made, 
 and render the transaction absurd. 
 
 As between the defendant and the indorsee, the defendant took 
 the risk of Sprague's assurances being made good, and his remedy 
 is upon him or the party he represented. 
 
 These conclusions render it unnecessary to notice the defendant's 
 requests to charge with reference to the want of consideration, and 
 the question of notice, or the charges given upon these points. 
 
 The Circuit Court was right in holding that there was no evi- 
 dence tending to show that the Leather Company had any interest 
 in the money sought to be recovered in this suit. 
 
 A copy of the note with the indorsement, accompanied the declar- 
 ation, and the note and indorsement were read in evidence, with- 
 out objection, and no evidence was given tending to disprove the 
 
STTPEBME COURT, 1877. 627 
 
 Howell V. The Village of Cassopolis. 
 
 indorsement. The court was therefore right in refusing to charge 
 that it was necessary to prove the indorsement in any other way. 
 
 We see no error in the record, and the judgment must he affirmed, 
 with costs. 
 
 The other justices concurred. 
 
 Howell v. The Village op Cassopolis. 
 
 (35 Michigan, 471.) 
 
 National bank stock — Taxation. 
 
 By general law of a State, shares of stock in National banks were to be taxed 
 in the township where the bank was located, except that where a stock- 
 holder resided in another township in the same county, his shares were to 
 be there taxed. A village charter authorized the taxation of " all property, 
 real and personal, within the limits of said village." Held, not to authorize 
 a tax on shares of stock in a National bank located in such village, ovmed 
 by a resident of another township in the same county. 
 
 THIS was an action to recoyer back a tax of one dollar and fifty 
 cents, levied by the village on the National bank stock of the 
 plaintiff, who was a resident of another township in Cass county. 
 The tax was paid under protest to save plaintiff's property from sale 
 on seizure by the village marshal by virtue of process to enforce the 
 payment of such tax. Judgment passed for defendant, and the 
 plaintiff brings the case up for review. 
 
 Hoioell & Carr, for plaintiff. 
 
 L. H. Glover, for defendant. 
 
 Campbell, J. The village of Cassopolis levied taxes on the 
 I^ational bank stock of plaintiff, who was a resident of another 
 township in the same county, claiming the right to do so because 
 the bank was located in the village. 
 
 The charter of the village authorizes the taxation of "all prop- 
 erty, real and personal, within the limits of said village," if not 
 exempt from taxation for county and township purposes. 
 
 The general laws of the State provide for the taxation of N"ational 
 bank stock in the township where the bank is located, except that 
 
628 MICHIGAN 
 
 Howell V. The Village of CaBBopolis. 
 
 where a stockholder resides in another township in the same 
 county, he is taxable in his own township. Laws 1875, p. 185. 
 Before the act of 1875 no shares of non-residents of the place 
 where the bank was located were taxable there, unless against non- 
 residents of the State. C. L., § 974. 
 
 The National Banking Law allows the stock in the hands of in- 
 diyiduals to be taxed in such manner and place as the State may 
 determine, subject only to two conditions, one of which is, that 
 the rate shall not be greater than that of taxation on other 
 moneyed capital of citizens, and the other, that non-residents of 
 the State holding stock shall be taxed in the city or town where 
 the bank is located. B. S. of U. S., § 5319. 
 
 The State legislation is therefore valid, and the only question is, 
 whether the village charter authorizes taxation of stock in the 
 hands of owners, not residing in Oassopolis, but in another town 
 in Cass county. 
 
 There is no proper sense in which the stock of a non-resident 
 can be regarded as personal property within the village, unless 
 some statute has so declared. If the bank itself could be taxed, 
 no doubt its personal property would be within the village, because 
 following the domicile. But intangible property, like stock, must 
 always follow the domicile, unless separated from it by positive 
 law. 
 
 The only laws of this State which create this separation define its 
 extent, and do not authorize it as against residents of the same 
 county who reside in another township. The act of Congress only 
 requires it in case of non-residents of the State, and as to all State 
 residents, authorize the State to determine its own policy. The 
 statutes are too plain to require construction. 
 
 It would be contrary to all sound rules of construction to adopt 
 an interpretation which should change the operation of the general 
 taxing laws in particular localities, unless where there is a plain 
 intent to do so. In the present case the intent is, we think, quite 
 as plainly opposed to any such discrimination, and except for the 
 general laws, stock of non-residents of the village could not be 
 taxed at all. 
 
 The judgment below must be reversed, and judgment rendered 
 on the finding in favor of the plaintiff in error for one dollar and 
 fifty cents damages, with costs of both courts. 
 
 The other justices concurred. 
 
SUPREME COURT, 1877. 629 
 
 CommiBsioners of Rice County y. Citizens' National Bank of Faribault. 
 
 Board of Oountt Commissionebs of Rice County v. Citizens' 
 National Bank of Paeibault. 
 
 (23 Minnesota, 280.) 
 
 National bank — Taxation of bcmhing-house. 
 
 Under a statute requiring shares in National banks to be taxed at their actual 
 value without reduction for real estate, the banking-offlce and lot, owned 
 and occupied as its place of business by a National bank created, is not 
 liable to assessment and taxation as real estate eo nomine against the bank.* 
 
 IN proceedings under the tax law of 1874, to enforce the pay- 
 naent of delinquent taxes in Rice county, the defendant inter- 
 posed a defense to the tax assessed upon its banking-house in the 
 city of Faribault, and returned as delinquent. In its answer the 
 defendant averred that it was a National bank, organized under 
 the act of Congress; that the real estate in question consisted of 
 land which was purchased, and a building thereon which was 
 erected, with money forming part of defendant's capital stock, for 
 its immediate accommodation in the transaction of its business; 
 that such land and building thereupon became and are a part of 
 the defendant's capital stock, included in the 800 shares into which 
 such capital stock is divided; that all said shares were assessed and 
 taxed, in 1874, to the holders thereof, at their full value in money, 
 without deduction of the value of such real estate therefrom, and 
 all the taxes as assessed on such shares were duly and fully paid; 
 and that the taxes in question, which were assessed in 1874 on the 
 before-mentioned real estate, were assessed on property which had 
 already been duly assessed and taxed at its par value, for the same 
 year, and the taxes on which had been fully paid. 
 
 At the trial in the District Court for Rice county, before Lord, 
 J., it was agreed that the facts were as stated in the answer, and 
 the court made a decision, pro forma, sustaining the assessment 
 and tax, and, upon defendant's request, certified the case to this 
 court, under Laws of 1874, chapter 1, section 130. 
 
 * See City National Bank v. Paducdh, ante, p. 300 ; People ex rel. Oallatin Na- 
 tional Bank v. Commissioners, post. 
 
630 MINNESOTA 
 
 Commissioners of Eice County v. Citizens' National Bank of Faribault. 
 
 Gordon E. Cole, for defendant. 
 
 Geo, P- Wilson, Attorney-General, and Geo. N. Baxter, for plain- 
 tifE. 
 
 CoBiirELL, J. Is real property, lawfully owned and used as a 
 place for the transaction of its business by a bank created and exist- 
 ing under the National Banking Law, taxable eo nomine against the 
 bank, under Laws 1874, chapter 1, it being conceded that the specific 
 provisions of that statute require the assessment and taxation of 
 all the shares comprising the entire capital stock of the association 
 in the name of the respectiye shareholders, and at their actual cash 
 value, without any deduction on account of the real property so 
 held by the bank, and in which a portion of its capital is invested? 
 This is the sole question for consideration in this case, and its de- 
 termination depends upon the character and efEect of that statute. 
 
 The general policy of the law is to avoid duplicate taxation. No 
 one subject of taxation ought to be required to contribute more 
 thau once to the same public burden, while other subjects of taxa- 
 tion, belonging to the same class, are required to contribute but 
 once. In the exposition of any tax law, therefore, a construction 
 leading to any such result should be avoided, unless the cogency 
 of some express provision or unavoidable implication of the statute 
 compels its adoption. Says Judge Coolet, in his valuable treatise 
 on the law of Taxation: "It is a fundamental maxim in taxation 
 that the same property shall iu)t be subject to a double tax payable 
 by the same party, either directly or indirectly; and when it is 
 once decided that any kind or class of property is liable to be taxed 
 under one provision of the statute, it has been held to follow, as a 
 legal conclusion, that the Legislature could not have intended the 
 same property should be subject to another tax, though there may 
 be general words in the law which would seem to imply that it may 
 be taxed a second time." Oooley on Taxation, 165, and authorities 
 cited in the notes. Especially should this rule obtain in the courts of 
 a State whose Constitution contains an express provision requiring 
 equality and uniformity in the imposition of taxes upon property, 
 according to a cash valuat on. 
 
 The aggregate capital stock of any corporation is but the repre- 
 sentative of its entire property, including the corporate franchise, 
 and the actual cash value of the former depends wholly upon the 
 
SUPEEME COUET, 1877. 631 
 
 Commissioners of Rice County v. Citizens' National Bank of Faribault. 
 
 productiTe character and real cash value of the latter. Intrinsic- 
 ally it possesses no Talue, and can have none, as separate and 
 distinct from the corporate property it represents; nor is the prop- 
 erty, character, or value of such stock increased, or in any way 
 affected, by its division into a given number of shares, unless the 
 proposition be conceded that all the parts are greater or less than 
 the whole. Each share but represents a proportional interest in 
 the corporate property, determined by the esact ratio existing 
 between it and the entire stock, and it possesses a like correspond- 
 ing value. Sever the connection between the stock and the shares 
 comprising it, on the one hand, and the corporation and its prop- 
 erty, on the other, and nothing remains to the former but a mere 
 shadow, to which no real property or commercial value can be im- 
 parted by any legislative device whatever. The authorities bearing 
 upon these propositions are very fully collated and cited by Judge 
 CooLET, in his work on Taxation, pages 164 and 166 inclusive, and 
 the notes appended thereto, although no authority would seem 
 necessary to establish their correctness. 
 
 Any legislation, therefore, which requires, for the purpose of 
 taxation, an ad valorem assessment of all the shares of stock in a 
 bank, as property, without allowing any deduction on account of 
 the value imparted to them as the representatives of the corporate 
 property and franchise of the bank, and also a like assessment of 
 the corporate property itself under its own proper designation, 
 necessarily provides for double taxation, and in order to give the 
 statute under consideration that effect, it must clearly appear to 
 have been intended by some express provision or necessary impli- 
 cation. 
 
 The law under consideration (Laws 1874, ch. 1) contains specific 
 provisions for listing and assessing the property of every incorpo- 
 rated and unincorporated company or association, (§ 28) and of 
 " every bank, whether of issue or deposit (other than a National 
 bank), " and of "every banker, broker, or stock-jobber." §29. 
 It is not disputed that these specific provisions are so far exclusive 
 in their character that other clauses of the statute, relating gen- 
 erally to the assessment and taxation of real and personal property, 
 can have no application whatever to cases clearly falling within the 
 purview of these sections, unless made applicable by express refer- 
 ence or necessary implication; and, that there might be no doubt 
 as to the legislative intent, it is expressly declared that the tax- 
 
632 MINNESOTA 
 
 CommiBsioners of Kice County v. Citizens' National Bank of Faribault. 
 
 ation of banking corporations " is specifically provided for in 
 this act." § 38. Tliat the phrase, "banking corporations," as 
 here used, is to be understood as including not only every corpo- 
 rate body doing a general banking business, whether under State 
 or National authority, but also all property employed in banking, 
 whether owned by corporations or individuals, is evident from the 
 sections immediately following the one containing this declaration 
 of legislative intent. Section 39 in terms relates to banks created 
 under State authority, to private bankers, and to property em- 
 ployed in banking by both, while the exception from its provisions 
 of National banks shows the latter to have been in the mind of the 
 Legislature while framing the provisions of the statute. Sections 
 30 to 34, inclusive, refer exclusively and particularly to these in- 
 stitutions, and their duties in respect to the matter of taxation; 
 and no good reason is perceived why these provisions are not to be 
 treated as covering the whole subject of taxation, as affects them, 
 their property, or stockholders. It is made the duty of each 
 National bank to furnish to the assessor a full and correct list of 
 all its stockholders, with the number of shares held by each; and 
 such shares are required to be assessed and taxed at the locality of 
 the bank, upon their value, subject to the sole restriction that 
 such taxation shall not be at a greater rate than is assessed upon 
 other capital or property in the hands of individuals. This clearly 
 indicates that such value is to be ascertained with reference to the 
 actual amount and productive character of the entire corporate 
 property and franchise, represented by the aggregate number of 
 shares, and without any deduction on account of any portion of the 
 capital of the corporation being invested in real estate, or property 
 exempt from taxation. Pull and adequate provision is also made 
 for enforcing the payment of every such tax, through the instru- 
 mentality of the bank, upon which the duty is imposed to retain 
 the amount out of the dividends due to the respective stock- 
 holders. 
 
 It is obvious from these provisions that the entire corporate 
 property and franchises of these institutions are subjected to as- 
 sessment and taxation once in respect to every public burden or 
 matter of taxation. This is manifestly just, as respects both 
 the State and the stockholders of the association, because all the 
 actual property, represented both by the banks and the stock- 
 holders as such, is required to contribute its equal and pro- 
 
SUPREME COURT, 1877. 633 
 
 Commissioners of Rice County v. Citizens' National Bank of Faribault. 
 
 portionate share toward tlie support of the public burden, and no 
 more. If, however, the real property of these associations is liable 
 to assessment and taxation eo nomine, in addition to the tax upon 
 the shares, it is quite clear that the banking capital or property- 
 represented by the National banks is subject to duplicate taxation 
 to the extent of that so imposed directly upon the real estate. 
 Moreover, it would violate the principle of equality as between the 
 stockholders of different banks; for it is obvious that a shareholder 
 in a bank having a part of its capital invested in real estate would 
 be subjected, directly and indirectly, to a greater amount of tax 
 upon his investment than one holding stock of like value and 
 amount in an institution owning no real property. A construction 
 leading to such results is repugnant to all correct ideas of justice 
 and equality. No such feature of duplicate taxation is found in 
 any of the provisions of this statute relating to the taxation of 
 other banking or corporate property. As respects the State banks, 
 they are taxed only upon the valuation of their taxable property, 
 which is required specifically to be listed for that purpose; their 
 shares of stock are not subject to taxation. As to the companies 
 mentioned in section 28, as amended in 1875 (to cure an evident 
 omission), they are subjected to taxation upon the assessed value of 
 their real and personal property, and also their capital stock, after 
 deducting therefrom indebtedness for current expenses, and the 
 value of such real and personal property. In view of these facts, 
 the legislative intent not to require any assessment of the real 
 property of the National banks eo nomine, as against the corpora- 
 tions, seems too plainly manifest to admit of any reasonable doubt. 
 If such an assessment had been intended it would have been speci- 
 fically provided for as in the case of the State banks under section 
 39, and the othei? companies and associations referred to in sec- 
 tion 38. 
 
 Reference was made, in the argument, to section 1 of the statute, 
 as indicating an intention to require the assessment and taxation 
 of all real estate eo nomine. The evident purpose of this section 
 was to declare, in general terms, that all property, both real and 
 personal, within the jurisdiction of the State, unless specially 
 exempted, should be subject to taxation. It does not, however, 
 require the listing and assessment of the property in specie. Its 
 language is : " Such property, or the value thereof, shall be entered 
 in the list of taxable property for that purpose, in the manner pre- 
 80 
 
634 MINIfESOTA 
 
 Commissioners of Rice County v. Citizens' National Bank of Faribault. 
 
 Bcribed by this act." The mode and manner in which this is to be 
 done is to be sought for, therefore, in the subsequent provisions of 
 the statute. An assessment of corporate property, made by assess- 
 ing its capital stock, or its shares of stock, upon a valuation fixed 
 with reference to the actual .value of the entire corporate property, 
 would not be repugnant to any thing contained in this section. 
 
 It is further objected, by respo"%ident, that section 3, article 9, of 
 the Constitution, requires the Legislature to pass laws " taxing all 
 moneys, credits, investments in bonds, stocks, joint-stock compa- 
 nies, or otherwise, and also all real or personal property, according 
 to its true value in money ; " that this means the enactment of 
 laws providing for the taxation of these items of property in specie 
 or eo nomine, and, as it must be presumed that the Legislature 
 intended to conform to this constitutional requirement, the statute 
 in question must receive a corresponding construction. This sec- 
 tion must be construed in connection with sections 1 and 4 of the 
 same article, and also in view of the condition of things existing 
 at the time of the adoption of the Constitution. Section 1 declares 
 that " all taxes to be raised in this State shall be as nearly equal as 
 may be, and all property on which taxes are to be levied shall have 
 a cash valuation, and be equalized and uniform throughout the 
 State." Section 4 provides that " laws shall be passed for taxing 
 the notes and bills discounted or purchased, moneys loaned, and 
 all other property, effects, or dues, of every description, of all banks 
 and all bankers, so that all property employed in banking shall 
 always be subject to a taxation equal to that imposed on the prop- 
 erty of individuals." The leading and controlling purpose of these 
 provisions was to subject all property, of every kind and nature, 
 within the jurisdiction of the State, except such as is specially au- 
 thorized to be exempted, to taxation upon a basi? of a cash valua- 
 tion, and to secure, so far as practicable, absolute equality and uni- 
 formity in the apportionment of taxes, so that every piece of 
 property should bear its just and proportionate share of the public 
 burden in the exact ratio of its cash value to that of the entire 
 taxable property of the State. To this end section 3 is directed as 
 specially applicable to all property not employed in banking, nor 
 embraced within the purview of section 4. 
 
 Though a distinction seems to have been made between the 
 kinds of property mentioned in section 3 and that referred to in 
 section 4, it is obviously not one founded upon the idea of any dis- 
 
SUPKBMB OOUET, 1877. 035 
 
 Commissioners of Eice County r. Citizens' National Bank of Faribault. 
 
 crimination to be exercised between them in the imposition of 
 taxes ; for the like rules of equality and cash Taluation are clearly 
 recognized as necessary to be observed as to each. It seems rather 
 to have been the result of an abundance of caution, and an appre- 
 hension on the part of the framers of that instrument that the 
 banking capital of the State might possibly, through the oversight 
 or inadvertence of the Legislature, escape its just and equal share 
 of taxation, unless guarded against by some specific provision par- 
 ticularly directing the attention of the law-making power to the 
 subject. To this end section 4 makes it the special duty of the 
 legislature to provide by law for the taxation of all property, of 
 every description,, of all banks and of all bankers, "so that all 
 property employed in banking shall always be subject to a taxation 
 equal to that imposed on the property of individuals." The sub- 
 jection of all such property to equal taxation, upon a like basis 
 with all other property, is the sole and declared purpose of the 
 section. The mode and manner of accomplishing this, so that 
 these rules are observed and the end attained, are matters left en- 
 tirely to legislative discretion. It may be done, as to State banks, 
 by taxing, upon a cash valuation, and in the name of each, all its 
 taxable property eo nomine, either in the aggregate or in detail ; or 
 its entire capital, in case none of it is invested in property exempt 
 from taxation ; or — what would be equivalent thereto — by taxing 
 all its shares of stock against and in the name of the shareholders, 
 upon a like ad valorem assessment. Either of these modes would 
 accomplish the result aimed at by the Constitution ; but the impo- 
 sition of the same tax upon both the capital and the property in 
 which it is invested, or upon either and the shares representing it, 
 would violate the cardinal principle of equality in taxation, which 
 constitutes its distinguishing feature. 
 
 As to National banks, they were unknown at the time of the 
 adoption of the Constitution. They have been brought into exist- 
 ence since, under Federal authority, partly to serve the purpose of 
 the National government, as convenient fiscal agents, and partly 
 to promote the same ends, and accomplish the same objects, in- 
 tended to be subserved by the State banks. In this latter charac- 
 ter they have neafly succeeded in replacing all the State institu- 
 tions, and in absorbing the entire banking capital and business of 
 the country, so that they represent, in fact, the principal property 
 interests which were intended to be affected by section 4, article 9, 
 
636 MINNESOTA 
 
 Commissioners of Eice County v. Citizens' National Bank of Faribault. 
 
 of the Constitution, and to this extent they fall within the spirit, 
 though not perhaps the letter, of its provisions. Inasmuch, how- 
 ever, as the agencies created and established by the Federal govern- 
 ment, to assist in the execution of its powers, are exempt from 
 State taxation save as allowed by Congress, the State can only exer- 
 cise its taxing powers over the National banks, and the capital 
 they employ and represent, in the manner and to the extent per- 
 mitted by Congressional authority. Under this authority it is per- 
 mitted to the State to tax the real property of the banks as such, 
 and also all the shares of stock, as personal property belonging to 
 the shareholders, provided the rate of valuation and assessment of 
 the latter is no greater than is assessed upon other moneyed capi- 
 tal in the hands of individuals. Within the limits of this author- 
 ity the State may fully exercise its taxing powers, in strict obedi- 
 ence, however, to the requirements of its own Constitution. 
 
 As equality in taxation is the constitutional policy of this State, 
 no scheme of taxation can be presumed to have been intended by 
 the Legislature, which necessarily involves, in its practical results, 
 the imposition of a greater proportionate share of its burdens upon 
 moneyed capital, invested in the business of banking under National 
 laws, than is imposed upon capital similarly employed under State 
 authority. The law under consideration provides for the assess- 
 ment of the real property of the State banks eo nomine, but does 
 not authorize its assessment in any other form. Capital thus 
 invested is, therefore, subjected to taxation but once for any one 
 object. If a like mode of assessment had been intended in respect 
 to the real property of the National banks, it must be presumed 
 that some provision would have been made for deducting the value 
 of such property from the total value of the shares, in order to fix 
 upon a correct valuation of the latter for the purpose of taxation. 
 The omission of any such provision was manifestly intentional, as 
 the shares are required to be assessed at their true and full value, 
 without any deduction whatever ; and in this way the real property 
 belonging to these associations is always subjected to its proper 
 share of taxation. 
 
 The decision of the District Court, sustaining the assessment 
 and tax in question, is reversed, and judgment ordered in accord- 
 ance with the prayer contained in the answer of the bank. 
 
SUPEEME COTJET, 1877. 637 
 
 First National Bank of Rochester T. Pierson. 
 
 First National Bank of Eochestbk v. Pieksok'. 
 
 (16 Albany Law Journal, 319.) 
 Bight of National banks to purcTuise notes. 
 
 The purchase of a promissory note by a National bank for purpos es of speo- 
 ulatiou is ultra vires, and the bank acquires no title to and cannot recover on 
 a note so purchased. {See note, p. 639.) 
 
 APPEAL by plaintiff from a judgment in favor of defendant in 
 the District Court of Olmstead county. The action vas upon 
 a promissory note made by defendant and held by plaintiff. Such 
 other facts as are material appear in the opinion. 
 
 Jones S Gove, for appellant. 
 
 Charles O. Wilson, for respondent. 
 
 CoENBLL, J. It is expressly found as a fact by the District 
 Court, before whom this cause was tried, without a jury, "that 
 the transaction, under which the plaintiff claimed to hare acquired 
 the note in question, was a purchase and not a discount, or lend- 
 ing of money on the credit of it; " and we have no hesitation in 
 saying that, upon the evidence, we fully concur with the court that 
 such was undoubtedly the real nature of the transaction as intended 
 by the parties thereto. As a conclusion of law from this finding, 
 the court held "that the plaintiff, a National bank corporation, 
 had no authority to purchase or traflSc in promissory notes as 
 choses in action, and did not in law acquire, by the supposed pur- 
 chase, any title to the note in question, and cannot recover upon 
 it in this action." 
 
 Upon the fact as thus found it will be seen that the only ques- 
 tion presented is, whether a National bank, created and organized 
 under the act of Congress, " to provide a National currency," etc., 
 is authorized to deal or traffic in promissory notes, as a species of 
 personal property, or to acquire any title to such paper by a pur- 
 chase, made admittedly not in the way of discount, or by lending 
 money on the credit of it. In the case of the Farmers S Mechanics' 
 Bank T. Baldwin, 23 Minn. 198, it was expressly held that no 
 
638 MINNESOTA 
 
 First National Bank of Rochester v. Pierson. 
 
 power of this character is conferred by a law of the State, which 
 authorizes State banks, organized under its provisions, " to carry 
 on the business of banking by discounting bills, notes and other 
 eyidences of debt, by receiving deposits, by buying and selling 
 gold and silver bullion, foreign coin, and foreign and inland bills 
 of exchange, by loaning money on real and personal securities, and 
 by exercising such incidental powers as may be necessary." And 
 that a purchase of such paper, made not in the way of discount, 
 was tdira vires, as outside the legitimate scope and pui-poses of 
 such institutions. 
 
 Under the Congressional enactment, the authority which is 
 given is " to exercise all such incidental powers as shall be necessary 
 to carry on the business of banking, by discounting and negotiat- 
 ing promissory notes, drafts, bills of exchange, and other evidence 
 of 'debt, by receiving deposits, by buying and selling exchange, coin 
 and bullion; by loaning money on personal security, and by ob- 
 taining, issuing and circulating notes according to the provisions 
 of said title." U. S. Eev. Stats., § 5,136. 
 
 This is substantially like the State statute, which was under 
 consideration in the Farmers S Mechanics' Banlc v. Baldwin, supra. 
 The word "negotiating," as used in this section, and likewise in 
 section 29 of the same statute, is used in its ordinary and appropri- 
 ate transitive sense, to indicate, not an act of purchase, but one of 
 transfer, whereby the negotiated paper is passed from the holder 
 or owner and put into circulation. Hence the incidental power to 
 negotiate notes to the extent necessary to carry on the business of 
 banking, simply implies an authority to realize upon such commer- 
 cial paper as the bank may receive in the lawful conduct of its bus- 
 iness, by negotiating, selling and transferring it by means of a 
 rediscount, obtained or otherwise. 
 
 It gives no implied authority to speculate or traffic in paper of 
 the character of the note in question, or in financial securities of 
 any description. Morse on Banking, 4 and 5. 
 
 The powers, therefore, which are conferred by this section, in 
 respecb to the acquisition of commercial or business paper, are in 
 no way affected or enlarged by the use of the term "negotiating." 
 
 In the absence of any authoritative exposition of the Federal 
 statute in this regard, the principle settled in the Farmers S 
 Mechanics' Bank v. Baldwin must be regarded as decisive of the 
 present cage. 
 
SUPREME COURT, 1877. 639 
 
 First National Bank of Rochester v. Pierson. 
 
 It is suggested by counsel for appellant, that upon the evi- 
 dence this case is distinguishable from that of the Farmers & 
 Mechanics' Bank r. Baldwin, supra, in that the note sued on here 
 was indorsed by Butler, the holder at the time of the transfer to 
 the plaintiff. 
 
 This fact is undoubtedly a distinguishing, though not conclu- 
 sive test of the character of the transaction, and ordinarily raises a 
 strong presumption denoting the existence of the relation of lender 
 and borrower, between the bank and the party so making the trans- 
 fer, and thereby indicates that the parties really intended a loan of 
 money upon the credit of the paper so indorsed. And we have no 
 doubt when such is the intention, " a borrower may," as was held 
 in Smith v. Exchange Bank of Pittsburg, cited by appellant, 
 "obtain the discount by a bank of the existing notes and 
 bills of others of which he is the holder, as well as of his own 
 paper made directly to the bank." And that the bank will thereby 
 acquire a valid title to such paper because it makes the purchase 
 by discount or through the exercise of its discounting powers.. But 
 where the acts of the parties, and the circumstances surrounding 
 the transaction clearly rebut any presumption arising from the 
 indorsement, and indisputably indicate the real nature of the 
 transaction, intended by the parties to be, in the language of the 
 court below, "an out and out purchase of the note, and not dis- 
 counting it or lending money on the credit of it," the mere fact of 
 indorsement is not sufficient to warrant the court in treating the 
 transaction as something different from what was intended. 
 
 We fully concur with the court below in its conclusion as to the 
 character of the transaction in this case. 
 
 It was an ordinary case of note shaving, pure and simple, for 
 purposes of gain alone, outside the circle of any legitimate bank- 
 ing business, and foreign to any purpose for which those institu- 
 tions are established. No loan was made or intended, nor was 
 there any discount in the ordinary and legal acceptation of that 
 term as applied to the business of banking. 
 
 Judgment affirmed. 
 
 Note.— As to the power of National The following is the decision in 
 
 Banks to purchase checks, notes, etc., Farmers and Mechanics' Bank v. Bald- 
 
 Bee First National Bank v. Harris, ante, win, upon which the foregoing case was 
 
 p. 590 ; Leach v. Hale, ante, p. 466 ; as to decided . 
 
 general powers of National banks, see Cornell, J. It ia conceded that plain- 
 
 Wiley V. First National Bank, post, and tifTs only title to the note in question 
 
 note. rests upon its absolute purchase, as a 
 
640 
 
 MINNESOTA 
 
 First National Bank of Eoohester v. Pierson. 
 
 chose in action, from one Patterson, subject to the restrictions and pro- 
 the then owner, for a specific sum visions of this chapter. Section 13, 
 agreed upon and paid at the time of which specifically defines the powers 
 the purchase. Patterson did not in- of such corporations, is as follows: 
 dorse the note, nor expressly assume " Such person or association has power 
 any obligation in connection with the to carry on the business of banking, hj 
 transfer. Inasmuch as the ownership discounting bills, notes, and other evi- 
 of the note by plaintiff is put in issue dences of debt, by receiving deposits, 
 by the pleadings, the question neoes- by buying and selling gold and silver 
 sarily arises whether the plaintiff had bullion, foreign coin, and foreign and 
 the corporate power to make the pur-, inland bills of exchange, by loaning 
 chase in the manner it did, and wheth- money on real and personal securities, 
 er, by such alleged purchase, it acquired and by exercising such incidental pow- 
 any title which it could enforce against ers, as may be necessary to cany on 
 either the maker, or Baldwin, the such business."* Section 33 provides 
 indorser. that " such bank or banking associa- 
 
 The doctrine that a corporation can tion may demand and receive for loans 
 only exercise such powers as are ex- on real and personal security, or for 
 pressly granted, or as are incidental to notes, bills, or other evidences of debt 
 its existence, or necessary to enable it to discounted, such rate of interest as 
 execute some one or more of its express may be agreed upon by the parties, not 
 powers, is too firmly established, both exceeding 12 per cent per annum; 
 upon principle and authority, to admit subject, however, to such general laws 
 of any doubt or discussion. This rule, regulating and fixing the rate of Inter- 
 by which courts must be governed in est as may hereafter be passed by the 
 all inquiries into the existence of any Legislature ; and it shall be lawful to 
 corporate power, is aptly and justly receive the interest in advance, accord- 
 declared to be axiomatic, in the opinion ingto the ordinary usage of banking 
 of the court in First National Bank v. institutions, and in general to do aU 
 Ocean National Bank, 60 N. Y. 278, things, and have all the privileges, 
 294; Dwrtmoiifh College V. Woodward, i incident to banking associations or 
 Wheat. 518,636; 3 Kent, 299; Hehool corporations." Section 43 prescribes a 
 District v. Thompson, 5 Minn. 280, 286. penalty for any violation of the pro- 
 So, when an express power is granted, visions of the chapter, 
 and the specific mode or manner of its These sections contain all the provis- 
 exeroise is prescribed, it can only be ions of law having any bearing upon 
 exercised in that particular way. Ba/nk the question under consideration. In 
 of Augusta v. Earle, 13 Pet. 519, 587; 2 construing them, regard must be had 
 Kent, 290, 299. to the general nature and purpose of 
 
 Plaintiff derives its corporate exist- banking institutions, and it must be 
 ence and powers from Gen. St. , ch. 33, assumed that the language and terms 
 as it existed prior to the amendment in employed in framing the statute were 
 1876 (Laws 1876, chapter 92) ; and, if it so used in their then ordinary and ap- 
 had the power in question at all, it propriate sense — nothing appearing in 
 must be found in some of the provisions the enactment itself to show a different 
 of that chapter, which relates to banks meaning 
 
 and banking. Section 2 provides that Bouvierdeflues abankto be "an in- 
 " any person or association of persons stitution authorized to receive deposits 
 ma;^ establish offices of discount, de- of money, to lend money, and to is- 
 posit, and circulation, and become sue promissoiy notes." These are its 
 incorporated, upon the terms and con- principal attributes. First Nat. Bank 
 ditions, and subject to the liabilities v. Ocean Nat. Bank, 60 N. Y. 278, 288. 
 prescribed in this chapter." Section 11 Banks are of three kinds, known as 
 prescribes the manner in which such banks of discount, deposit and ciroula- 
 corporation shall be formed, and tion, though usually in every American 
 declares that upon such its forma- system of banking, all these functions 
 tion as a body politic and corporate are united in the same institution, as is 
 by its assumed name, it shall, by the case under the present law. Gen. 
 such name, "have power to con- St., ch. 33, § 10. Their chief purpose and 
 tract and be contracted with, sue design are to furnish safe places of de- 
 and be sued, and shall have all other posit for money, to facilitate its pay- 
 powers, privileges and immunities in- ment and exchanges between different 
 oident to corporations and applicable persons and places — thereby serving 
 to the ends of such establishmeuts, as clearing-houses were located — and 
 
 * In this section , as amended by Laws 1869, ch. 85, the last clause of the above quota- 
 tion reads : "And by exercising all the usual and incidental powers and privileges be- 
 longing or pertaining to such business." 
 
SUPREME COURT, 1877. 641 
 
 First National Bank of Rochester v. Pierson. 
 
 to accommodate the business public alone. It is not conferred, in express 
 with loans or discounts to such an ex- terms, by any provision of the statute, 
 tent and on such terms as are compati- It must exist, therefore, if at all, as an 
 ble with their continued safety and solv- incident necessary to enable it to 
 ency, and the legitimate wants and transact its business as a bank of dis- 
 demands of trade and commerce. Mc- count. A bank of discount alone is 
 CuUough'a Com. Diet., vol. 1, p. 63; defined to be "one that furnishes 
 Am. Cyc, vol. 2, title JBanfes. In view loans upon drafts, promissory notes, 
 of these public purposes, in all legisla- bonds, or other securities." Am. Cyc, 
 tion authorizing their creation, it has vol. 2, title jBanfcs . " The discounting 
 been usual to designate the character of notes," says Spencer, J., in People 
 of the securities which they shall be v. Utica Ins.Co., 15 Johns. 358, 392," is 
 permitted to take upon their loans or one mode of lending money." In New 
 discounts, to limit the rate of interest York Firemen Ins. Co. v. Ely, Cowen, 
 and to prescribe such other wholesome 678,699, Suthebiand, J., adopts the 
 regulations as experience has suggested same definition ; and Gakdinek, J., 
 to be necessary to subserve the pur- in delivering the opinion of the court 
 poses of tlieir creation, and to protect in Talniage v. Pell, 7 N. Y. 328, 343, 
 alike the banks and the public from declares that "to discount bonds, la 
 the evils of general insolvency — sure banking, is only a mode of loaning 
 to foUow the general absorption and money." In Fleokner v. Bank of XJni- 
 employment of the banking capital of ted States, 8 Wheat. 338, 350, Stort, J., 
 a country in purely speculative enter- uses the following language : "Noth- 
 priseij for purposes of private gain ing can be clearer than that, by the 
 alone. language of the commercial world and 
 
 Under the act in question the busi- the settled practice of banks, a discount 
 ness of banking is authorized to be by a bauk means, ex vi termini, a de- 
 carried on "by discounting bills, notes duotion or drawback made upon its 
 and other evidences of debt, and by advances or loans of money upon nego- 
 loaning money on real and personal se- tiable paper, or other evidences of 
 curity," ( § 13) and the rate of inter- debt, payable at a future day, which 
 est allowed to be charged for such are transferred to the bank. We sup- 
 discounts and loans is limited to 12 per pose that the Legislature used the lan- 
 ceiit, taken in advance. (§33.) The guage in this its appropriate sense." 
 obvious intent of this legislation was The correct proposition, as we uuder- 
 to secure to the public business-loans an stand it, is concisely stated in the syl- 
 accommodations at what was then re- labus of the case of Niagara County 
 garded reasonable and not exorbitant Bank v. Baker, 15 Ohio St. 68, as 
 rates of interest, and also to protect the follows : ' To discount paper, as under- 
 Bhareholders of banks, and the banks stood in the business of banking, is 
 themselves, against the risk of loss from only a mode of loaning money, with 
 inadequate securities such as would the right to take the interest allowed 
 likely be taken under the tempting in- by law in advance." 
 fluence of high rates of interest, regu- Discounting a note and buying it are 
 lated only by the necessities of borrow- not identical in meaning, the latter ex- 
 ers and the cupidity of bank directors, pression being used to denote the 
 If, however, as is claimed on the part of transaction " when the seller does not 
 plaintiff, associations organized under indorse the note, and it is not aocounfc- 
 this enactment possess the unlimited able for it" (IBouv. Law Diet., title 
 power of dealing in promissory notes Discount, citing Pothier De I'Usure, 
 an J other evidences of debt as property 128), and it is admitted that such was 
 and choses in action, the same as indi- the character of the transaction in this 
 viduals, then, obviously, this restric- case. In view of this understanding 
 tion upon the rate of interest is a of the functions of a bank of discount, 
 practical nullity, as the bank has the the legal signification attached to the 
 power of evading it at any time by sim- word " discount," and the distinction 
 ply buying the paper instead of loaning between it and the word "purchase," 
 money upon it. Ho judicial construe- when applied to the business of bank- 
 tion leading to such a result is allowable ing, it is obvious that ttie power "to 
 unless required by some clear and uu- carry on the business of banking, by 
 mistakable provision of the statute. discounting notes, bills, and other evi- 
 
 It is not contended, and cannot be, dences of debt," is only an authority 
 that the power to purchase and traffic to loan money thereon, with the right 
 iu promissory notes, as a species of per- to deduct the legal rate of interest in 
 sonal property, belongs to any bank as advance. This right can be fully eu- 
 a necessary incident to its existence, .joyed without the possession of the 
 orto the exercise of any of its powers unrestricted power of buying and 
 as a bank of circnlatiou and deposit dealing in such securities as ohoses in 
 
 81 
 
642 MINNESOTA 
 
 First National Bank of Rochester v. Pierson. 
 
 action and personal property. Though, desired information. The obvious 
 as is urged by plaintiff, the bcnlc purpose of the section was,not to define 
 acquires a title to discounted paper, the powers of these institutions, or the 
 and hence may, in a certain sense, be manner in which they might be exer- 
 said to have purchased it, ^et it is a cised, but to procure a true and correct 
 purchase by discount — which is per- statement of their condition, at stated 
 mitted — and does not involve the ex- periods, for the use and benefit of the 
 eroise of a power of purchase in any public; and, hence no power can be 
 other way than by discount. implied from any of its provisions, un- 
 
 it follows from these premises that less the implication is rendered neoes- 
 the powers claimed cannot be regarded sary and unavoidable, both from the 
 as necessarily incidental to that branch language and the context. All the pro- 
 of the banliing business which pertains visions of this chapter of our laws hav- 
 to a bank of discount alone. Except ing any bearing upon the question under 
 as a bank of circulation, the specific consideration are essentially the same 
 powers conferred upon institutions as those contained in the New York 
 organized under the provisions of this statute upon the same subject, from 
 chapter are all enumerated and defined which ours seems to have been copied, 
 by section 13. Among them is an ex- Section 13 of our statute, in particular, 
 press grant of power to deal in certain which relates to the powers of these 
 articles of personal property, to wit, associations, is identical in substance, 
 "buying and selling gold and silver and nearly in language, with a similar 
 bullion, foreign coin, and foreign and section in the New York statute. In 
 inland biUs of exchange." Promissory the case of Talmagev. Pell, 7N.Y. 328, 
 notes, however, are not included, the question arose whether a bank or- 
 Clearly, as is suggested by Gaedineb, ganized under that statute had any 
 J ., in Talmage, v. Pell, 7 N. Y. 828, the legal capacity to purchase the negotia- 
 maxim exipresslo unius, etc., is applica- ble bonds of the State of Ohio, for 
 blehere. If an express grant of power purposes of gain or profit. After full 
 was deemed necessary to enable a bank and exhaustive argument, the Court of 
 created under this statute to deal in Appeals decided, in an opinion cover- 
 "gold and silver bullion, coin and bills ing the whole ground, that it had no 
 of exchange," and to invest its funds such power. 
 
 therein, it is diflScult to see why it was In the case of Niagara County Bank 
 not also given as to promissory notes, if v. Baker, decided by the Supreme 
 it was intended that the bank might Court of the State of Ohio (15 Ohio St. 
 ever exercise any such power in respect 68), the same statute came under re- 
 tothem. view, upon a state of facts presenting 
 
 In the itemized statement of assets the precise point involved in this case, 
 and liabilities, which each bank is re- audit was held that a power to carry 
 quired to make quarterly, by section on the business of banking, by dis- 
 34 of the statute, it is made the duty of counting promissory notes, was not a 
 the bank to report, among other things, power to purchase such notes, but to 
 the aggregate amount of its loans and loan money thereon. Recognizing the 
 discounts, and also, separately, its principle of these decisions as correct, 
 "promissory notes." No inference it must be regarded as decisive of the 
 can be drawn from this that the notes present case. 
 
 here referred to are any other than Having no corporate capacity to 
 those lawfully acquired by the bank, make the contract of purchase, the 
 through the exercise of its conceded plaintiff never acquired any title to 
 powers, in making loans on personal the note in suit, and the attempted act 
 securities and in discounting commer- of purchase was strictly ultra vires, and 
 cial paper. In both these ways promis- conferred no rights whatever. Wyley 
 Bory notes may be lawfully obtained v. First Nat. Bank oj Brattleboro, 
 and held, and, if knowledge of the irVt. 546;S. C, 19 Am.Rep. 122; Jfa(- 
 amount of such kind of paper was t/iew) v. Sfcmfcer, 62Mo. 329; S.C., 21 Am. 
 deemed important for any purpose. Hep. 425; Kansas FaHej/; Nat. Bank 
 the provision in question was not only v. Bowell, 2 Dillon, 371 (ante, p. 264) ; 
 pertinent, but .absolutely necessary; Hoffman v. John Ilanoook Mut. Life 
 for it IS apparent that a mere state- Ins. Co., 92 U. S. 161. 
 ment of the total amount of its loans Upon this ground the order denying 
 and discounts would not disclose the a new trial is a£&rmed. 
 
SUPEEMB COURT, 1876. 643 
 
 Home V. Green. 
 
 HOENB V. GBEBIir. 
 (53 Mississippi, 452.) 
 Taxation of National hank hUls. 
 The eiroulating notes of National banks are not subject to taxation.* 
 
 BILL in equity for an injunction to restrain Home, tax collector 
 from selling certain real estate, levied upon by him for taxes 
 assessed against complainant, on National bank notes and other 
 property. The Chancellor held that the tax on the National bank 
 notes was legal. Green appealed. 
 
 W. L. Nv^eni, for Home. 
 Frank Johnston, for Green. 
 
 Pettok, 0. J., t [After deciding that United States treasury 
 notes (part of the property assessed), -were not taxable.] 
 
 2. The National bank notes issued by the National banking asso- 
 ciations, under authority of Congress, are also obligations of the 
 National government, the only difference between them and the 
 legal-tender notes being that the government is primarily liable for 
 the latter, and secondarily liable for the former, upon the failure 
 or default of the National banks issuing the notes. Acts of Feb- 
 ruary 25, 1863, March 3, 1863, June 3, 1864, June 30, 1864. 
 
 * See, contra. Board of Commissioners v. Elston, ante, p. 425. 
 
 + Tlie opinion of Chief Justice Peyton was witlidrawn upon a motion for a 
 reargument. Upon the reargument it was sustained on this point without 
 comment and was reported as above, by order of Chief Justice Simkall. 
 
644 MISSOURI 
 
 Coffey V. The National Bank of Missouri. 
 
 OoFBET Y. The National Bank of Missouei. 
 
 (46 Missouri, 110.) 
 
 Banh — Beorganimtion under United States law — Effect of change — Measure 
 
 of damages. 
 
 When a bank, organiaed under the laws of a State, reorganizes as a National 
 
 bank under the act of Congress, it escapes none of its liabilities by the 
 
 change.* 
 In an action of trover against a bank, after its reorganization as a National 
 
 bank, for the value of certain special deposits in coin made prior thereto ; 
 
 held, that the measure of damage was the value of the coin at the date of 
 
 its conversion, with interest thereon. 
 
 THE plaintifE sues in trover to recover the value of a special 
 deposit originally made with the Bank of the State of Mis- 
 souri, March 20, 1865, consisting of $90.95 in silver and $1,415 in 
 gold coin. It is alleged that the defendants, July 1, 1867, con- 
 verted the deposit to their own use, the bank at that time having 
 taken its present name and become organized as a Kational institu- 
 tion. The answer denies both the fact of the deposit and of the 
 alleged conversion, but admits that certain packages were deposited, 
 and avers that they were duly returned to the plaintifE. 
 
 At the trial the plaintifE read in evidence the act of March 5, 
 1866 (Sess. Acts, 1865-6, p. 15), authorizing the Bank of the State 
 of Missouri to reorganize as a National institution under the act of 
 Congress, and also gave other evidence tending to prove the allega- 
 tions of the petition, and to show that the reorganization contem- 
 plated by the act of March 5 th was in fact efEected prior to the 
 alleged conversion of the plaintiff's deposit, and that said deposit 
 had passed into the possession of the defendant. No available 
 objection was made to the proofs. At the instance of the plaintiff 
 the court, among other instructions, directed the jury, in case they 
 found for the plaintiff, to assess as damages for the alleged conver- 
 sion the currency value of the coin, the rate of premium having 
 been agreed on between the parties. The defendants controvert 
 
 *SeeKdseyy. National Bank of Crawford, post ; Maynao'dv. Bank, post. 
 
SUPEBME COURT, 1870. 645 
 
 Coffey V. The National Bank of Missouri. " 
 
 the correctness of this instruction, and deny their legal accounta- 
 bility for the acts or negligence of the Bank of the State of Mis- 
 souri. 
 
 G. P. Burness, for appellant. 
 
 Orews & Laurie, for respondent. 
 
 CuRKiBK, J. 1. By the act of Congress making provision for a 
 National currency (TJ. S. Stats, at Large, chap. 106, p. 113, § 44), 
 it is provided " that any bank incorporated by special law, or any 
 banking institution organized under a general law of any State, 
 may, by authority of that act, become a National association under 
 its provisions, by name prescribed in its organization certificate; 
 and in such cases the articles of association and the organization 
 certificate required by the act may be executed by a majority of the 
 directors of the bank or banking institution; and that said 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 said bank or banking institution into a National 
 association under said act ; and a majority of the directors, after 
 executing said articles of association and organization certificate, 
 shall have power to execute all other papers, and 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 said conversion; 
 and the directors aforesaid may be the directors of the association 
 until others are elected or appointed in accordance with the pro- 
 visions of said act." Under the legislation of the State and of Con- 
 gress, the Bank of the State of Missouri became a National bank- 
 ing association, as the evidence tended to show, and as the jury 
 found the fact to be. It thus passed from one jurisdiction to 
 another; but its identity was not thereby necessarily destroyed. It 
 remained substantially the same institution under another name. 
 The transition did not disturb the relation of either the stock- 
 holders or officers of the corporation, nor did it enlarge or dimin- 
 ish the assets of the institution. These all remained the same 
 under the National as they were under the State organization. 
 The bank neither lost any of its assets nor escaped any of- its lia- 
 bilities by the change. The change was a transition, and not a 
 
646 MissouEi 
 
 Coffey V. The National Bank of Missouri. 
 
 new creation. See Grocers' National Bank v. ClarJc, 48 Barb. 26;* 
 Thorp T. Wegefarth, 56 Penn. St. 82. 
 
 2. The court laid down a correct rule of damages. It is but plain 
 justice that the plaintiff should have back his deposit in specie, or 
 else its value in currency. The rule of damages in trover is the 
 value of the converted property at the date of the conversion, with 
 the interest thereon. The plaintiff was entitled to the marketable 
 value of his coin at that time. This subject is discussed in The 
 Bank of the State, etc., v. Burton, 27 Ind. 426. There the court 
 say: "While we have two kinds of money, made by statute exact 
 equivalents for the purposes of ordinary tender and payment, and 
 yet of notoriously irregular values in commerce, results will now and 
 then follow the application of the law which are not consonant 
 with justice. Must it be so in this case? It has been often held, 
 that, where the amount of debt has b^en ascertained, the courts 
 cannot, in view of the aet of Congress, recognize any difference 
 between the gold dollar and the legal tender note of the denomina- 
 tion of one dollar as a means of tender or payment. But it does 
 not follow that when the bailee of specific gold coin, to be redeliv- 
 ered in specie, sells the same for a premium, and fails to redeliver 
 it on demand, he shall not answer in damages to the amount which 
 he has realized by the conversion. That he should have the right 
 to make a profit for himself by his own wrongful act is a proposi- 
 tion having no foundation in justice, and is not sanctioned by any 
 principle of law." 
 
 The case referred to was decided in accordance with the forego- 
 ing views, the court holding, that, when a bailee converted to his 
 own use coin intrusted to his care, the recovery should be for the 
 currency value of the coin. See also Frothingham v. Morse, 45 
 N. H. 545. In the case at bar the verdict of the jury established 
 the fact that the plaintiff left with the defendant, or with the Bank 
 
 * In this case it was held that a right of action against an officer of a State 
 bank for fraudulent misapplication of the property of the bank was assignable 
 and passed as assets from such State bank on its reorganization as alfational 
 bank by operation of Laws 1865, ch . 97, § 6, which provided that as soon as every 
 State bank should receive the " certificate of the Comptroller of the Currency 
 authorizing it to commence the business of banking under the laws of the 
 XTnited States, all the assets, real and personal, of the said bank shall immedi- 
 ately, by act of law, and without any conveyance or transfer, be vested in and 
 become the property of the National Banking Association into which said bank 
 shall have been converted." 
 
SUPEBMB OOTJKT, 1876. 647 
 
 Matthews v. Skinker. 
 
 of the state of Missouri — which, for the purposes of this suit, is 
 the same thing — the amount of coin stated in his petition, as a 
 special deposit, to be returned in specie on demand ; that demand 
 of it was duly made, and that the defendant neglected and refused 
 to return the deposit upon such request. Such refusal was evidence 
 of conversion, and, unexplained, was conclusive of the fact. There 
 was no explanation, and the defendant is liable for the conversion, 
 and, as already stated, the court gave the correct rule of damages 
 applicable to the facts of the case. 
 
 3. The question as to the measure of diligence does not arise in 
 the case. The bank does not put its defense upon the ground that 
 the coin committed to its care was lost while in its custody, without 
 fault or negligence on its part, or on the part of its officers. That 
 is not its line of defense. It denies that it ever had possession of 
 the coin, and insists that if it ever did have it the same was returned 
 to the plaintiff. So the pleadings stand, and the case appears to 
 have been tried upon that theory. The question, therefore, of dili- 
 gence on the part of the bailee does not come up. It would seem 
 somewhat absurd for a party to insist that he had kept with reason- 
 able care, as a gratuitous bailee, and faithfully returned what never 
 came to his possession. 
 
 Some other objections of a technical character are made in the 
 brief of the defendant's counsel, but it is not perceived that the 
 court committed any error that would warrant a disturbance of 
 the judgment. It will, therefore, be affirmed. The other judges 
 concur. 
 
 Matthews v. Skinkee. 
 
 (63 Missouri, 329.) 
 
 National bank — Taking security on real estate iy, ultra vires. 
 
 A National bank has no power to take a deed of trust or mortgage on real 
 estate to secure a contemporaneous loan, and a sale under such deed or mort- 
 gage to satisfy the loan will be enjoined.* 
 
 ILL for an injunction to restrain the sale of real estate. The 
 opinion states the case. 
 
 B 
 
 * See Fowler v. ScvUy, post, and note. 
 
648 MISSOURI 
 
 Matthews v. Skinker. 
 
 Britton A. Hill, for plaintifEs in error. 
 
 Nolle S Orrick, for defendant in error. 
 
 Wagitbk, J. The error complained of in this case is the action 
 of the court in rendering a perpetual injunction restraining the 
 trustees from selling the plaintiff's property. From the record it 
 appears that the plaintiff executed her note payable to Sterling 
 Price & Co. for $15,000, due two years after date, and to secure 
 payment of the note she made a deed -of trust, bearing even date 
 with the same, on certain real estate belonging to her. The note 
 and deed of trust were delivered to Sterling Price & Co., who after- 
 ward transferred them to the Union National Bank of St. Louis, a 
 banking institution organized under the act of Congress, to secure 
 a loan for $15,000, advanced to Price & Co. by the bank. Price & 
 Co. having failed to pay the money advanced on the note, and se- 
 cured by the deed of trust, the trustee, at the request of the bank, 
 advertised the property for sale, and the plaintiff filed her petition 
 to enjoin the trustee and the bank from proceeding with the sale. 
 Whether the deed of trust in the hands of the bank amounted to a 
 valid security, which could be enforced in payment of the money 
 advanced, depends upon the construction of the act of Congress 
 providing for the formation of National Banking Associations. E. 
 S. (U. S.), p. 998. By section 5136 of the Kevised Statutes, author- 
 ity is given to the banking associations " to exercise by its board of 
 directors, or duly authorized ofificers or agents, subject to law, all 
 such incidental powers as shall be necessary to carry on the busi- 
 ness of banking, by discounting and negotiating promissory notes, 
 drafts, bills of exchange and other evidences of debt ; by receiving 
 deposits ; by buying and selling exchange, coin and bullion, by 
 loaning money on personal security," etc. By section 5137 it is 
 provided that: " A National Banking Association may purchase, 
 hold and convey real estate for the following purposes, and for no 
 other : 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 previ- 
 ously contracted. Third, such as shall be conveyed to it in satis- 
 faction of debts previously contracted in the course of its dealings. 
 Fourth, such as it shall purchase at sales under judgments, de- 
 crees or mortgages held by the association, or shall purchase to 
 secure debts due to it." 
 
SUPREME COURT, 1876. 649 
 
 Mattliewa v. Skinker. 
 
 The act, as will be thus seen, gives the association power to loan 
 money on personal security, and to purchase, hold and convey real 
 estate in certain specified cases. 
 
 The general principles defining the extent and mode of exercise 
 of corporate powers are well settled and have often been passed 
 upon by this court. Corporations have only such powers as are 
 specially given by their charters, or are necessary to carry into 
 effect some specified power. St. Louis v. Russell, 9 Mo. 507; Blair 
 V. Perpetual Ins. Go., 10 id. 559; Buggies v. Collier, 43 id. 353. 
 They must act strictly within the scope of the powers conferred 
 on them by the act calling them into being; and where a grant of 
 power from the Legislature is relied on, the mode prescribed in 
 that grant for doing any particular thing must be pursued accord- 
 ing to the law creating them. Han. <& St. Joe R. R. Oo, v. Marion 
 Co., 36 Mo. 394. The distinction between natural persons and cor- 
 porations is, that while the former may make any contract not pro- 
 hibited by law or against public policy, the latter can exercise no 
 powers not expressly conferred on them by their charters. Banlc 
 of Louisville v. Young, 37 id. 398. In Great Eastern Railway v. 
 Turner, L. R., 8 Ch. App. 152, Lord Chancellor Selbornb gave 'a 
 brief and comprehensive statement of the law applicable to ques- 
 tions of corporate powers. He said: " The company is a mere 
 abstraction of law. All that it does, all that the law imputes to it 
 as its act, must be that which, can be legally done within the powers 
 vested in it by law. Consequently an act, which is ultra vires, 
 and unauthorized, is not an act of the company, in such a sense, 
 as that the consent of the company to that act can be pleaded." 
 As this case depends upon the interpretation of a National statute 
 we may refer to some of the cases in the United States Supreme 
 Court to see what view that tribunal has taken of the law con- 
 struing the powers of corporations. 
 
 In The Bank of the U. S. v. Dandridge, 13 Wheat. 64, the rule 
 is stated to be that " whatever may be the implied powers of aggre- 
 gate corporations by the common law, and the Diodes by which these 
 powers are to be carried into operation, corporations created by 
 statute must depend, both for their powers and the mode of ex- 
 ercising them, upon the construction of the statute itself." 
 
 In Head v. Providence Ins. Co., 2 Cranch, 127, Chief Justice 
 Maeshall defines the powers and limitations of statutory corpo- 
 rations with great clearness as follows : "Without ascribing to this 
 82 
 
650 MISSOUEI 
 
 Matthews v. Skinker. 
 
 body, which in its corporate capacity is the mere creature of the 
 act to which it owes its existence, all the qualities and disabilities 
 annexed by the common law to ancient institutions of this sort, 
 it may be correctly said to be precisely what the incorporating 
 act has made it; to derive all its powers from that act and 
 to be capable of exerting its faculties only in the manner the act 
 authorizes." Judge Steokg, now of the Supreme Court of the 
 United States, in delivering the opinion of the Pennsylvania court, 
 in a case where the National Banking Law was directly brought in 
 question, said: "The bank is a creature of the act, dependent on 
 it for all its powers, and controlled by all the restrictions which the 
 act imposes." Venango Nat. Bank v. Taylor, 56 Penn. St. 15 
 {•post). 
 
 In all the cases where questions have been raised respecting the 
 powers and liabilities of National banks, it has been invariably 
 held that the banks have only the powers conferred upon them in 
 the act providing for their formation. That from that act they 
 derive their sole authority, and that they must be strictly governed 
 by it and kept within the line of its limitations. In Wiley v 
 The First Nat. Bank of BrattUloro, 47 Vt. 546; S. C, 19 Am. 
 Eep. 122 {post), it was decided, that the taking of special deposits, to 
 keep merely for the accommodation of the depositoi*, was not 
 within the authorized business of the banks organized under the 
 act of Congress, and thaf the cashiers of such banks had no power 
 to bind them on any express contract accompanying, or on any 
 implied contract arising out of such taking. So, in a recent case 
 in Maryland ( Weckler v. The First Nat. Bank of Hagerstown, 42 
 Md. 581 [ante, p. 533]), it was held that in the act authorizing the 
 incorporation of National banking associations, the kind of banking 
 was limited and defined, and as the act contained no grant of 
 power to engage in bond-brokerage, it was, therefore, prohibited 
 to the banks, and that it was not necessary to the purpose of their 
 existence, or in any sense incidental to the business of banking. 
 It was, accordingly, decided in an action of deceit against a 
 National bank, seeking to recover damages for the alleged fraudu- 
 lent representations of its tellers made in the sale to the plaintiff 
 of certain railroad bonds, that the business of selling bonds on 
 commission was not within the scope of the powers of National 
 banking associations, and that the bank could not, under any cir- 
 cumstances, carry it on, and being thus beyond its corporate 
 
SUPREME COURT, 1876, 651 
 
 Matthews v. Skiuker. 
 
 powers, the defense of ultra vires was open to it, and that, it was 
 not responsible for any false representations made by its teller by 
 which the plaintiff might have been damaged. 
 
 The very question which comes up for adjudication in this case 
 was presented and passed upon in Fowler v. Scully, 73 Penn. St. 
 456; S. C, 13 Am. Eep. 699 (post). In that case Fowler, without 
 any, previous indebtedness, gave to the First National Bank of 
 Pittsburgh a mortgage to secure the bank for notes, etc., thereafter 
 to be discounted for him. Upon a proceeding for foreclosure the 
 court decided that lending money by a National bank on mortgage 
 on real estate security was ultra vires and forbidden and the mort- 
 gage was declared to be void. 
 
 National banks possess just such powers as the act incorporating 
 them gives to them — ^no more. They are the creatures of the act, 
 and controlled by all its restrictions and limitations. Express power 
 is given to them to " carry on the business of banking by discount- 
 ing and negotiating promissory notes, drafts, bills of exchange and 
 other evidences of debt ; by buying and selling exchange, coin and 
 bullion ; by loaning money on personal security ; by obtaining, issu- 
 ing and circulating notes according to the provisions of the act." 
 Banks are formed and organized for commercial purposes, and not 
 to deal in real estate. Their business is to discount and negotiate 
 promissory notes, drafts, bills of exchange and other evidences of 
 debt, the buying and selling of bills, bullion, and lending of money 
 on personal security. To permit them to loan their money on real 
 estate security would be destructive of their efficiency and defeat 
 the object had in view in their creation. Instead of being agents 
 for purposes of trade, dealing in commercial paper, discounting 
 notes and furnishing the necessary facilities for loans, they would 
 have their capital locked up in landed property, and thus be power- 
 less to carry on the business which induced their organization. 
 These speculations in real estate are also hazardous, and have no 
 legitimate connection with the business of banking ; they require 
 the employment of outside parties to look after the land and exam- 
 ine titles and are apt to embark the bank into enterprises which 
 sooner or later will end in insolvency. Congress doubtless had 
 these considerations in view when it provided that the money should 
 be loaned on personal security. When the mode of personal secu- 
 rity was declared and pointed out, that excluded all others, for the 
 maxim expressio unius est exclusio alterius must prevail in this case. 
 
652 NEBEASKA 
 
 Richards v. Eountze. 
 
 But the intention does not rest merely on the provision requiring 
 personal security on loans. Section 5137 specifies for what pur- 
 poses National banking associations may purchase, hold and con- 
 Tey real estate, and forbids their dealing in that kind of property 
 for any other purposes. They may purchase and hold so much 
 real estate as may be necessary for their immediate accommoda- 
 tion in the transaction of their business ; such as may be mortgaged 
 to them in good faith by way of security for debts previously con- 
 tracted ; such as shall be conveyed to them in satisfaction of debts 
 previously contracted in the course of their dealings, and such as 
 they shall purchase at sale under judgments, decrees or mortgages 
 held by them, or shall purchase to secure debts already due. These 
 are the specified instances, and the only instances in which it is per- 
 missible for National banking associations to purchase or hold real 
 property. Aside from the real estate necessary for the transaction 
 of their business, they can only acquire that description of property 
 to enable them to secure themselves for debts previously contracted. 
 But in no case can they loan money on the faith of real estate security 
 where the debtor was not previously indebted to them. If they do, the 
 security taken is ultra vires and void, and may be pleaded by the 
 party as a defense against its enforcement. 
 
 The case at bar shows that there were no previous dealings be- 
 tween the plaintiff and the bank ; the bank loaned the money and 
 took the deed of trust as security. This it had no power to do, 
 and the judgment of the court below wiU be afi&rmed. 
 
 All the judges concur, except Judge Voeies, who is absent. 
 
 Judgment affirmed. 
 
 KiCHAEDS V. KOTJKTZE. 
 
 (4 Nebraska, 200.) 
 
 Assignmera of mortgage to National tank. 
 
 Notes secured by mortgages were assigned to a National bank, and by it to 
 plaintiff. Seld, in an action of foreclosure, that the mortgages were not 
 extinguished by the assignment to the bank, and were valid in the hands of 
 the plaintiff, he being a bona fide purchaser. 
 
 In the absence of evidence showing the purpose and object of the assignment 
 to the bank, it cannot be presumed that it was for a debt created in presenfi, 
 in violation of the National Banking Act. 
 
SUPREME COUET, 1876. 653 
 
 Bichards v. Kountze. 
 
 Semble, that the limitations of the National Banking Act apply to transact- 
 ions in real property, independent of legitimate banking operations, and 
 not to mortgage securities.* 
 
 ACTION upon four promissory notes, executed by Richards, the 
 plaintiff in error, dated April 6, 1870, payable one year after 
 date with interest at the rate of ten per cent per annum, secured 
 by mortgages upon real estate situated in Omaha, and made paya- 
 ble to the order of John A. Parker. The notes and mortgage 
 securities were assigned by Parker to Augustus and Herman 
 Kountze, who afterward assigned them to the First National 
 Bank, by whom they were assigned to Herman Kountze, the 
 defendant in error, who brought this suit to foreclose the mort- 
 gages and recover the debt secured by them. 
 
 Section 28 of the National Banking Act provides as follows: 
 
 "It shall he lawful for any such association to purchase, hold, and convey, 
 real estate as follows : 
 
 1. Such as shall be necessary for its immediate accommodation in the trans- 
 action of its business. 
 
 3. Such as shall be mortgaged to it in good faith by way of security for 
 debts previously contracted. 
 
 3. Such as shall be conveyed to it in satisfaction of debts previously con- 
 tracted in the course of its dealings. 
 
 4 Such as it shall purchase at sales, under judgments, decrees or mort- 
 gages, held by such association, or shall purchase to secure debts due to said 
 association. 
 
 Such association shall not purchase or hold real estate in any other case or 
 for any other purpose than is specified in this section." 13 U. S. Statutes at 
 Large, 107. 
 
 The court below rendered a decree in favor of Herman Kountze 
 for the principal of the notes with interest at ten per cent, and for 
 a sale of the mortgaged premises. Richards brought the case here 
 by petition in error. 
 
 T. W. T. Richards, pro se. 
 
 George I. Oilbert, for defendant in error. 
 
 G-ANTT, J. [After deciding another point.] Again as a de- 
 fense, it is contended that when the notes passed into the hands 
 
 * See FowUr v. SmUy, post, and note. 
 
654 NEBEASKA 
 
 Bichards v. Kountze. 
 
 of the bank, the mortgage securities became extinguished, on the 
 ground, as alleged, that under the act of Congress in relation to 
 National banking associations, the bank could not hold and con- 
 vey real estate under the purchase of the mortgage securities in this 
 case ; hence, the mortgage securities became separated from the 
 debt. 
 
 Many authorities were cited to slio-w that the mortgage security 
 is an accessory or incident to the debt, or the instrument given as 
 the evidence of the debt ; and that the mortgage security cannot 
 be separated from the debt ; or as is said in the case of Jackson v. 
 Blodgett, 5 Cow. 296, the mortgage "cannot exist as an independ- 
 ent security in the hands of one person while the bond belongs to 
 another." This proposition is true, and a simple transfer of the 
 mortgage without the debt, or note which is the evidence of the 
 debt, is a nullity, for distinct from the debt, the mortgage has no 
 determinate value ; and also the transfer of the debt only reserving 
 the pledge as an independent security, renders the mortgage a nul- 
 lity. In legal parlance, the pledge being an incident to the debt, 
 so far as regards its determinate value, it cannot be detached from 
 the debt. It seems, therefore, that in order to work an extinguish- 
 ment of the mortgage security, the transfer must be with intent to 
 separate the one from the other ; that is, to detach the debt so as 
 to leave the mortgage a separate and independent security. 
 
 The mere fact, however, that after the assignment of the debt, 
 the mortgage remains in the hands of the mortgagee, or in the 
 hands of any person other than the assignee of the debt, will not 
 of itself work an extinguishment of the mortgage security. To do 
 so, the mortgage must be held to operate as a separate independ- 
 ent security. It is said by a very able jurist that " if a mortgage 
 is made to one person to secure several notes or bonds made to him, 
 and the mortgagee assign the notes or bonds to different persons, 
 but continues to hold the mortgage security in his own name, he 
 will hold it in trust for the several persons to whom he has as- 
 signed the lAortgage notes, bonds, or other evidences of the debt 
 due him." Perry on Trusts, § 593. This is upon the principle 
 that the mortgage security is an incident to the debt, and follows 
 or passes with the assignment of the debt, unless by the intent of 
 parties it is detached from the debt. 
 
 In the case at bar, the evidence will not at all justify the con- 
 clusion that it was the intention of any one of the parties con- 
 
SUPEEME OOUET, 1876. 655 
 
 Richards v. Kountze. 
 
 cerned, to separate or detach the mortgage securities from the debt, 
 and therefore the point so strongly urged by the counsel for plain- 
 tiff in error will not, as an abstract principle of law, apply to this 
 case. 
 
 But did the assignment to the bank of itself extinguish the 
 mortgage securities ? Uuder the act of Congress, the bank is per- 
 mitted to hold and conyey such real estate as shall be mortgaged 
 to it in good faith by way of security for debts preTiously contracted 
 or such as shall be conveyed it in satisfaction of debts preyiously con- 
 tracted in the course of its dealings. Now whether the sale and 
 assignment of the notes to the bank were not made in satisfaction 
 of or security for a debt previously contracted is not at all clear 
 from the evidence reported in this case. It is not shown by the 
 evidence for what purpose the sale and assignment were made to 
 the bank ; and to say that the notes and mortgages were assigned 
 to the bank for a debt created in presenti would be the assumption 
 of a fact not proved in the case. And it will hardly be urged that 
 the court shall presume a person or a corporation to have been guilty 
 of the violation of law ; and hence, it will not be presumed that 
 the bank received the notes and mortgages for a debt created in 
 presenti. It has an undoubted right to take and hold such securi- 
 ties for a debt previously contracted. Was it not the intention of 
 Congress to prohibit banking associations, organized under the law, 
 from dealing in real property as a business independent of their 
 legitimate banking operations ? This would seem to be the pur- 
 pose of the limitations of the act ; and from all that appears in the 
 record, there is nothing to justify the conclusion that these limi- 
 tations have been transgressed in this case. 
 
 But the notes and mortgages passed into the hands of a person 
 in no way incapacitated to take and receive them. Herman 
 Kountze, the plaintiflE in the court below, and defendant in error 
 here, became the owner of them in good faith for value, and in 
 Willmouth V. Crawford, 10 Wend. 343, it was contended that the 
 note was given to a corporation for a purpose or consideration for 
 which the law forbid the corporation to receive " any note or other 
 evidence of debt in payment." The court held that " conceding 
 the note to be taken without authority, it is valid in the hands of 
 a lonafide holder." 
 
 It, however, appears that while the notes remained in the hands 
 of the bank, Eichards, the plaintiff in error, paid to it, in excess of 
 
656 NEVADA 
 
 Davis V. Cook. 
 
 the interest stipulated in the original contract, the amount of 
 $8.96. This sum, according to the rule stated in the fourth propo- 
 sition, should haye been deducted from the debt as of the time 
 when it was paid, and the finding and decree should have been for 
 $949.28. Therefore the finding must be made, and decree now 
 rendered in this court, in favor of Herman Kountze and against 
 T. W. T. Eichards in accordance %ith the views expressed in this 
 opinion. Decree accordingly. 
 
 Maxwell, J., concurred. Lake, Ch. J., did not sit, having tried 
 the cause in the court below. 
 
 Davis v. Cook. 
 
 (9 Nevada, 134.) 
 
 National hank citizen of State wTiere located. 
 
 A National bank is a citizen of the State wherein it is located.* 
 
 ACTIOE" by Davis as receiver of the First National Bank of 
 Nevada against Cook and others on two promissory notes for 
 six thousand five hundred dollars. Two of the defendants peti- 
 tioned to have the cause removed into the Circuit Court of the 
 United States on the ground that they were non-residents of the 
 State, one of them claiming to be an alien and the other a resident 
 of California. The other defendant was not served with the sum- 
 mons. 
 
 The District Court refused to remove the cause, and defendant 
 appealed. 
 
 Mesick <& Wood, for appellants. 
 
 Ellis & King, for respondent. 
 
 Belknap, J. [After holding that the defendants were not enti- 
 tled to a removal under the Judiciary Act of 1789, as the application 
 
 * See CooUe v. State National Bank, post; Manufacturers' National Bank v. 
 Book, ante, p. 161 ; National Park £ank v. Chunst, post. 
 
SUPREME COUET, 1874. 657 
 
 Davis V. Cook. 
 
 was not made when they entered their appearance ; nor under the 
 act of 1867, as that act does not apply where one of the defendants 
 is an alien.] 
 
 It is urged by respondent in justification of the ruling of the Dis- 
 trict Court upon defendant's motion for removal that as the Eirst 
 National Bank of Nevada was incorporated under an act of the Con- 
 gress of the United States it is a citizen of the United States, and 
 cannot be treated as a citizen of this State for jurisdictional pur- 
 poses. This question was thoroughly investigated by Judge Blatoh- 
 FOKD, in the case of the Manufacturers' National Bank v. Banck, 
 3 Abb. (U. S.) 233 (ante, p. 161). The various provisions, in 
 respect to the " location " of banking associations incorporated 
 under the act of Congress of June 3, 1864, 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," 
 are there discussed. By the 6th section of the act it is provided 
 that the persons uniting to form a banking association under the 
 act shall specify in an organization certificate the place where its 
 operations of discount and deposit are to be carried on, designating 
 the State, territory or district, and also the particular county and 
 city, town or village. And by the 8th section it is provided that 
 its usual business shall be transacted at an office or banking-house 
 located at the place specified in its organization certificate. The 
 9th section provides that the affairs of such banking association 
 shall be managed by a board of directors, at least three-fourths of 
 whom shall have resided in the State, territory or district in which 
 such association is located one year next preceding their election as 
 directors, and be residents of the same during their continuance in 
 ofiice. Further sections speak of the place where the association is 
 "located" and "established." "It is quite apparent from all of 
 these statutory provisions," says Judge Blatchford, "that Con- 
 gress regards a National banking association as being ' located ' at 
 the place specified in its organization certificate. If such place 
 is a place in a State, the association is located in the State. It is, 
 indeed, located at but one place in the State; but when it is so 
 located, it is regarded as located in the State. The requirement 
 that at least three-fourths of the directors of the association shall 
 be residents, during their continuaace in oflSce, in the State in 
 which the association is located, especially indicates an intention 
 on the part of Congress to regard the association as belonging to 
 83 
 
658 NEW HAMPSHIRE 
 
 First National Bank v. Peterborough. 
 
 such State. Three-fourths of the legal representatiTes of the un- 
 known associates forming the corporation, with which representa- 
 tives any person dealing with the corporation must deal, are 
 required to reside in the State where the corporation is ' located.' " A 
 corporation existing by virtue of an act of the Congress of the United 
 States must be considered a citizen of the United States. But a 
 citizen of the United States, resident in any State in the Union, is 
 a citizen of that State. Oaines v. Ballou, 6 Pet. 761. The resi- 
 dence of the National Bank being in Nevada, it follows that it is a 
 citizen of Nevada. The motion to remove the cause to the Federal 
 Court was properly denied. 
 [The court then disposed of other questions not here material.] 
 
 FiKST National Bake v. Petebboeottgh. 
 
 (56 New Hampshire, 38.) 
 National hanks — Taxation of surplus capital. 
 
 Where the shares of National banks are by statute required to be taxed at 
 their par value, the surplus fund of such banks, in excess of the amount 
 they are required by law to keep on hand, is taxable by the states in which 
 the banks are located.* 
 
 PETITION by the First National Bank for the abatement of a 
 tax. The following facts were agreed upon: 
 In April, 1873, the selectmen of Peterborough, legally chosen 
 and qualified, assessed, among other taxes for that year, a tax 
 against said bank upon ten thousand dollars of its surplus, amount- 
 ing to one hundred and seventy-five dollars; that at the time of 
 the assessment of the tax the undivided profits of the bank were 
 more than ten thousand dollars in addition to and in excess of 
 nine thousand six hundred and fifty-four dollars and thirteen cents, 
 the ten per cent of net profits required by the National Currency 
 Act of the United States to be kept on hand by the bank as a sur- 
 
 * See state v. City of Newark, post, 672. In those States where the shares are 
 taxed at their market value, the surplus as surplus is, of course, not taxable, that 
 being taken into account in fixing the market value. — Bxp. 
 
SUPEEME COUET, 1875. 659 
 
 First National Bank v. Peterborough. 
 
 plus fund; that before the aasessment of the tax by the selectmen 
 they called upon the proper officers of the bank to exhibit to them 
 an account of the surplus capital of the bank, which exhibit the 
 bank, by their officers, refused to make, claiming that the same 
 was not taxable property. The selectmen thereupon set down the 
 surplus capital of the bank at ten thousand dollars, and assessed 
 the same at the same rate as other property in town. The select- 
 men placed said tax with others in the hands of John H. Steele, 
 collector of taxes in said town, for collection. Steele gave the 
 bank notice in writing, dated November 6, 1873, requesting them 
 to pay the tax. The bank, on February 31, 1874, presented their 
 petition to the selectmen recited in this bill; this petition was 
 signed by five of the directors of the bank; and the selectmen 
 refused to abate the tax in accordance with the prayer of the 
 petition. The questions arising on the foregoing agreed statement 
 of facts were transferred to this court by Eand, J. 
 
 E. M. Smith and Morrison S Hiland, for plaintiffs. 
 A. S. Scott, for defendants. 
 
 Smith, J. By General Statutes, chapter 49, section 5, the sur- 
 plus capital on hand of banking institutions is made liable to taxa- 
 tion, and, by chapter 50, section 4, it is made subject to taxation 
 in the towns wherein such banking institutions are located. By 
 chapter 15, section 1, Laws of 1868, all shares of the capital stock 
 of banks, located in this State, whether private. State or National, 
 are subject to be taxed at their par value to the owners thereof in 
 the town in which they reside, if in this State; otherwise in the 
 town where the bank is located. Under the statutes of this State, 
 therefore, there is no question that the plaintiffs were properly 
 taxed. The statute is explicit, that the surplus capital shall be 
 taxed, — and it is admitted that the plaintiffs had a surplus in excess 
 of the amount of net profits they were required by the act of Con- 
 gress to keep on hand, — if more than $10,000. The question, 
 then, remains, whether the above-cited statutes of this State are 
 in conflict with the statutes of the United States. 
 
 The act of Congress establishing National banks, approved June 
 3, 1864 (13 Stats, at Large, 111), enacts: 
 
 " Sec. 33. That the directors of any association may, semi-annually, each 
 year, declare a dividend of so much of the net profits of the association as 
 
660 NEW HAMPSHIEB 
 
 First National Bank v. Peterborough. 
 
 they shall judge expedient ; but each association shall, before the declaration 
 of a dividend, carry one-tenth 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." 
 
 " § 40. That the president and cashier of every such association shall cause 
 to be kept a correct list of the names and residences of all the shareholders in 
 the association, and the number of shares held by each, and such list shall be 
 open to the inspection of the officers authorized to collect taxes under State 
 authority. 
 
 " § 41. Provided, that nothing in this act shall be construed to prevent all 
 the shares in any of the said associations, held by any person, from being 
 included in the valuation of the personalty of such person in the assessment 
 of taxes imposed by or under State authority, at the place where such bank is 
 located, and not elsewhere ; but not at a greater rate than is assessed upon 
 other moneyed capital in the hands of individual citizens of such State. Pro- 
 vided further, that the tax so imposed under the laws of any State, upon the 
 shares of any of the associations authorized by this act, shall not exceed the 
 rate imposed upon the shares of any of the banks organized under authority 
 of the State where such association is located." "Provided, also, that nothing 
 in this act shall 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." 
 
 The supplementary act of Congress, approved February 10, 1868, 
 defines the word " place," as used in the original act, to mean 
 "State," and provides that "the Legislature of each State may 
 determine and direct the manner and place of taxing all the shares 
 of National banks located within said State subject to the restric- 
 tion that the taxation shall not be at a greater rate than is assessed 
 upon other moneyed capital in the hands of individual citizens of 
 such State." 
 
 Provision is thus made by Congress by which the shares of the 
 stockholders in National banking associations may be taxed by 
 authority of the States in which banks are located. No restriction 
 is placed upon the amount of the tax that may be assessed, except 
 that the rate shall not exceed that imposed upon similar institutions 
 created by State authority, while the manner and place of taxing 
 such shares is left to be determined exclusively by State legislation. 
 Accordingly, in some States the tax is levied upon the bank itself 
 at a certain rate per share of one hundred dollars, which has been 
 held constitutional {National Bank v. Gommonwealth, 9 Wall. 353 
 {ante, p. 34] ), the bank being regarded as the vehicle or conduit 
 through which the taxes of the several stockholders are collected. In 
 
STJPEEME COIIRT, 1875. 661 
 
 First National Bank v. Peterborough. 
 
 other States the tax is assessed to the stockholder upon the marlcet 
 value of his share, by which mode the owner is taxed, indirectly, for 
 his proportionate share of the surplus of the bank, including that 
 part of the surplus which the bank is required to set apart when- 
 ever it declares a dividend, until the amount shall equal twenty 
 per cent of its capital stock. The Legislature of this State, how- 
 ever, has enacted that the owner shall be assessed only upon the par 
 value of his stock, and the bank, as such, is made subject to tax- 
 ation for the surplus capital. Can the Legislature thus reach in- 
 directly what it might do directly ? There is nothing in the acts 
 of Congress that forbids it. The surplus is the exclusive property 
 of the bank. The National government has no interest in it. 
 It shares in none of the profits of the bank, and is responsible for 
 none of its defaults; and it is difficult to see how the taxation of 
 this surplus can interfere in any way with the operations of the 
 bank as an instrument of the National government to carry its 
 delegated powers into execution. If taxed at all, as the law of this 
 State now stands, it must be taxed as surplus. No reason is per- 
 ceived why so large a sum should escape the tax which it is as able 
 to bear at least, as most other kinds of property. The power to tax 
 the people and property of the several States has never been sur- 
 rendered by the States to the general government. " The agencies 
 of the Federal government are only exempted from State legisla- 
 tion so far as that legislation may interfere with or impair their 
 efiSciency in performing the functions by which they are designed 
 to serve that government. Any other rule would convert a princi- 
 ple, founded alone in the necessity of securing to the United States 
 the means of exercising its legitimate powers, into an unauthorized 
 invasion of the rights of the States." National Bank v. Gommon- 
 weaWi, 9 Wall. 353 {ante, p. 34). 
 
 " These banks are subject to the laws of the States and are gov- 
 erned in their daily course of business far more by the laws of the 
 State than of the Union. All their contracts are governed and 
 construed by State laws. Their acquisition and transfer of prop- 
 erty, their right to collect their debts, and their liability to be sued 
 for debt, are all governed by State law. It is only when a State 
 law incapacitates them from discharging their duties to the gov- 
 ernment that it becomes unconstitutional." Id. 362. 
 
 In Bank v. Lamb, 50 N. Y. 95; S. C, 10 Am. Eep. 438, it is 
 said: "In so far as their private business and contracts are con- 
 
662 NEW HAMPSHIRE 
 
 First National Bank v. Peterborougl. 
 
 cerned, the act does not assume to place them upon any different 
 footing from natural persons selected by the government for the 
 performance of some special public function, and at the same time 
 carry on a priTate business on their own account. In so far as the 
 right to carry on their private business is essential to enable them 
 to perform any public function authorized by the Constitution, 
 such right is doubtless protected from State interference or State 
 prohibition. But no public charter, or privilege of immunity 
 from State laws in respect of their private dealings, appears to have 
 been conferred on them." 
 
 Again, on page 104: "These banks are created on the theory 
 that there are agents of the government for the accomplishment of 
 certain purposes authorized by the Constitution; that, to enable 
 them to perform their functions, it is necessary that they should 
 have the power of transacting within the States a general banking 
 business on their own account. It is only upon the theory that this 
 power of transacting banking business is essential to enable them 
 to perform their functions for the government that the granting of 
 such a power by Congress can be sustained. The power to create a 
 corporation as an appropriate instrument for the execution of a 
 constitutional power does not carry with it authority to confer 
 upon that corporation unlimited privileges or immunities from 
 State law, but only such as are necessary to enable it to effect the 
 legitimate National objects for which it is created." 
 
 Congress, in the title to the act of 1864, expressed the leading 
 object of the establishment of these banks to be, "to provide a 
 National currency secured by a pledge of United States bonds, and 
 to provide for the circulation and redemption thereof." An impor- 
 tant particular in which they differ from banks created by authority 
 of this State is, that they are required to deposit with the Treas- 
 urer of the United States a certain amount of United States bonds, 
 upon which they receive bills or notes to an amount not exceeding 
 90 per cent of the par value of the bonds deposited, which they 
 may circulate as currency for their own benefit. " Their principal 
 office seems to be to act as vehicles for the issue of a currency 
 based upon the credit of the government. But the government 
 has no concern with their business operations. The currency they 
 issue is protected wholly independently of the result of these." 
 Banlc V. Lamb, supra, 95, 98. The accumulation of a surplus ia 
 excess of the amount required by statute is a voluntary matter on 
 
SUPKEME COUET, 1875. 663 
 
 First National Bank v. Peterborough. 
 
 the part of the bank. It is neither forbidden nor required by the 
 statute. Its net earnings in excess of the amount required to be 
 set aside as a surplus fund may be divided among the stockholders. 
 If so divided, it of course becomes the absolute property of the 
 stockholders, but until so divided their interest in the same is only 
 contingent, but the fund, while undivided, tends to increase the 
 market value of their shares. The neglect to divide the net earn- 
 ings to the extent allowed by law can in no way defeat or obstruct 
 or affect the object which the government had in view in the es- 
 tablishment of these banks. The only effect of the neglect to di- 
 vide such earnings is to increase the strength and efficiency of the 
 bank, and thereby more certainly accomplish the object of its estab- 
 lishment. The surplus, to the extent above named, being then a mat- 
 ter wholly outside the requirements of the statute, and in no way 
 impairing or defeating the object of establishing such agencies of 
 the National government, but having, on the contrary, rather the 
 opposite effect, and the surplus being the exclusive property of the 
 bank, subject to its unrestricted control, I see no reason why the 
 State in the exercise of a power which it never surrendered to the 
 National government, to wit, that of taxing the polls and estates 
 within its limits, cannot provide for the taxation of the surplus 
 earnings of the National banks located within its borders to the 
 extent above named. It is only doing directly what it has un- 
 doubtedly the right to do indirectly, as has before been remarked, 
 if it should see fit to enact that the shares of such banks should be 
 taxed at their market instead of at their par valu 
 
 In National Bank v. Commonwealth, 9 Wall. 353 (ante, p. 34), it 
 was held that the doctrine which exempts the instrumentalities of the 
 Federal government from the influence of State legislation is not 
 founded on any express provision of the Constitution, but in the 
 implied necessity for the use of such instruments by the Federal 
 government ; and that such doctrine is, therefore, limited by the 
 principle that State legislation, which does not impair the useful- 
 ness or capability of such instruments to serve that government, is 
 not within the rule of prohibition. 
 
 In Thomson v. Pacific Railroad, 9 Wall. 579, Mr. Chief Justice 
 Chase remarks as follows : " We fully recognize the soundness of 
 the doctrine that no State has a ' right to tax the means employed 
 by the government of the Union for the execution of its powers." 
 But we think there is a clear distinction between the means em- 
 
664 NEW HAMPSHIEE 
 
 First National Bank v. Peterborough. 
 
 ployed by the goTernment, and the property of agents employed 
 by the government. Taxation of the agency is taxation of the means; 
 taxation of the property of the agent is not always or generally taxa- 
 tion of the means. 
 
 " No one questions that the power to tax all property, business, 
 and persons, within their respective limits, is original in the States, 
 and has never been surrendered. It cannot be so used, indeed, as 
 to defeat or hinder the operations of the National government; 
 but it will be safe to conclude, in general, in reference to persons 
 and State corporations employed in government service, that when 
 Congress has not interposed to protect their property from State 
 taxation, such taxation is not obnoxious to that objection." Lane 
 County V. Oregon, 7 "Wall. 77. 
 
 In Railroad Company v. Peniston, 18 Wall. 5, it is said: "It 
 may, therefore, be considered as settled, that no constitutional 
 implications prohibit a State tax upon the property of an agent of 
 the government, merely because it is the property of such an agent. 
 A contrary doctrine would greatly embarrass the States in the col- 
 lection of their necessary revenue, without any corresponding 
 advantage to the United States. A very large proportion of the 
 property within the States is employed in execution of the powers 
 of the government. It belongs to governmental agents, and it is 
 not only used, but it is necessary for their agencies. United States 
 mails, troops, and munitions of war are carried upon almost every 
 railroad. Telegraph lines are employed in the National service. 
 So are steamboats, barges, stage-coaches, foundries, shipyards, and 
 multitudes of manufacturing establishments. They are the prop- 
 erty of natural persons, or of corporations, who are instruments 
 or agents of the general government, and they are the hands by 
 which the objects of the government are attained. Were they ex- 
 empt from liability to contribute to the revenue of the States, it is 
 manifest the State governments would be paralyzed. While it is of 
 the utmost importance that all the powers vested by the Constitu- 
 tion of the United States in the general government should be pre- 
 served in full efficiency, and while recent events have called for the 
 most unembarrassed exercise of many of those powers, it has never 
 been decided that State taxation of such property is impliedly pro- 
 hibited." 
 
 It seems to me to be abundantly settled, both upon authority and 
 principle, that the States, under the existing legislation by Con- 
 
SUPREME COURT, 1875. 665 
 
 First National Bank v. Peterborough. 
 
 gress, have the unquestionable right to tax the surplus earnings of 
 National banks within their limits, to the extent attempted in the 
 case now before us. The services which these banks render to the 
 government are only an incident to their general business. Their 
 operations are only accidentally, not incidentally, connected with 
 those of the government. Their efficiency to discharge their duties 
 is not impaired by the taxation complained of ; their property only, 
 and not their operations, is subjected to taxation ; and it is emi- 
 nently just and reasonable that these institutions should bear their 
 proportion of a common burden, in order that the State may throw 
 around these institutions, as well as all others, and around all its 
 subjects protection to life and property. 
 
 Gushing, C. J. Those portions of the statutes of the United 
 States and of this State, which are involved in this case, are suffi- 
 ciently cited in the opinion of my brother Smith, and it is, there- 
 fore, unnecessary to cite them again. 
 
 Are these provisions in the law of the United States and in the 
 law of the State in conflict with each other ; and are they so in 
 conflict that the law of New Hampshire cannot be enforced ? 
 
 It is conceded in this case that the par value of the shares is 
 much less than their actual value. What might be the construc- 
 tion if there were no surplus, and the shares were below par, is not 
 now necessary to be considered. 
 
 The Legislature of New Hampshire has, for reasons satisfactory 
 to those whom it represents, provided that a certain portion of bank- 
 ing capital shall be taxed to the stockholders in the towns where 
 they live, and a certain other portion in the towns where the banks 
 are located. It is probable that there are satisfactory reasons why 
 this should be so. It seems reasonable that banking corporations 
 should contribute something toward the expenses of those towns of 
 whose institutions and governmental arrangements, police and 
 otherwise, they have the benefit. This might be effected by taxing 
 the shares at their par value to the owners in the towns where they 
 reside, and the excess over the par value of each share due to the 
 surplus capital proposed to be taxed, to the owners in the towns 
 where the banks are located. This would be exactly within the 
 terms of the United States statute, and would be, as it seems to 
 me, entirely unobjectionable. If, now, it were further provided 
 that this tax on these shares should be paid by the bank, and 
 84 
 
666 NEW HAMPSHIEE 
 
 First National Bank v. Peterborough. 
 
 charged to each shareholder's accoant, this would obviously be a 
 very great convenience, would be entirely consistent with the 
 law, and, I think, could not in any way be objected to. National 
 Bank v. Commonwealth, 9 Wall. 353 {ante, p. 34). 
 
 Now, the surplus capital proposed to be taxed is precisely the 
 aggregate of the values above par of all the shares due to that sur- 
 plus, and the dividends payable to each stockholder are precisely 
 the profits not reserved divided by the whole number of shares. 
 If, then, the surplus capital is taxed in one sum to the bank, and 
 paid by the bank out of its profits, precisely the same result would 
 be produced, excepting in a more convenient and less expensive 
 form. All the shares would be taxed exactly as before, each share 
 would bear the same sum, the same amount would be taken out of 
 the fund for division, and each shareholder's dividend would be 
 diminished by the exact amount of his tax. Identically the same 
 result would be produced as if the statute had been more literally 
 followed, the only difference being that in this mode the shares are 
 taxed to all the shareholders by the name of their association. 
 
 In this nutshell lies the whole question. The result produced by 
 this mode of taxation is demonstrably exactly the same. Can the 
 State do, in this slightly indirect mode, what it is conceded they 
 may do directly? It appears to me that the objection is untenable, 
 and a very poor kind of word-catching. 
 
 It may also be remarked that, in so far as the objection founded 
 on any supposed interference with a government agent is concerned, 
 it cannot possibly make any difference whether any surplus capital 
 should be taxed to each shareholder by increasing the appraisal of 
 his stock, or to the shareholders all together by their corporate 
 name. The statute expressly authorizes doing it in the first mode. 
 
 The Supreme Court of the United States is, of course, the tri- 
 bunal of last resort. I know of no case which has yet been decided, 
 involving the exact point presented by this case. As at present 
 advised, I find no difficulty in agreeing to the results which the 
 court has reached. 
 
 Ladd; J. I am also of opinion that the statute under which this 
 tax was assessed is not in conflict with the Constitution or any law 
 of the United States. The property upon which it was laid con- 
 sists of the earnings and income of shares in a National bank, 
 which the bank voluntarily reserved in excess of the surplus 
 
SUPEBME COURT, 1875. 667 
 
 First National Bank v. Peterborough. 
 
 required to be kept on hand by the act of Congress. It was not 
 capital of the bank, within the meaning of the laws of the United _ 
 States, as interpreted and applied by the Supreme Court in 
 repeated decisions since the passage of the act under which the 
 bank was established, but simply a fund which the bank might 
 legally have divided and paid over to the owners of its stock, in the 
 way of dividends, but which it chose rather to retain for the pur- 
 pose of enlarging and facilitating the transaction of its business. 
 It was tangible property, situated within our territorial limits, 
 entitled, as much as the property of any other citizen, to the full 
 protection of our municipal laws; and it is not easy to imagine any 
 just reason why it should not be charged with its due and equal 
 proportion of the burden of maintaining and administering those 
 laws. 
 
 It has not, indeed, been claimed by counsel for the bank that 
 this surplus is not in some form a legal and proper object of State 
 taxation. But the objection is, that the mode in which the Legis- 
 lature have undertaken to reach it is not warranted by the Consti- 
 tution, or authorized by the act of Congress under which the bank 
 was established; that it should have been levied by the name of a 
 tax upon shares instead of a tax against the bank by name; that 
 the true construction of the Constitution and act of Congress for- 
 bids a State tax of any kind, except upon real estate, to be assessed 
 against a bank created by act of Congress, is an agent in the 
 administration of the National finances. 
 
 It seems to me, such a construction can only be sustained by 
 sticking very closely to somewhat narrow interpretation of the letter 
 of the act, and disregarding altogether the spirit and purpose of both 
 the act and the Constitution of the United States. The broad 
 reason, upon which it was held, in McOulloch v. Maryland, 4 Wheat. 
 316, chat State governments have no right to tax any of the con- 
 stitutional means employed by the government of the Union to exe- 
 cute its constitutional powers any further than such right may be 
 given by the act creating the agency, and so that a State, within 
 which a branch of the bank of the United States had been estab- 
 lished, could not, constitutionally, tax that branch, was said by 
 Chief Justice Makshall to rest upon three very plain abstract 
 propositions: (1) That a power to create implies a power to pre- 
 serve; (3) that a power to destroy, if wielded by a different hand, 
 is hostile to and incompatible with these powers to create and pre- 
 
668 NEW HAMPSHIEB 
 
 First National Bank v. Peterborough. 
 
 serve; (3) that -where this repugnancy exists, that authority which is 
 . supreme must control, not yield to that over which it is supreme. 
 The power of Congress to create and continue a bank having been 
 established in a preceding part of the opinion, he remarks that it 
 is too obvious to be denied that the power of taxing it by the States 
 may be exercised so as to destroy it; hence the conclusion that 
 such power to tax does not exist in the States. 
 
 In the present case the Legislature have left untouched the cap- 
 ital of the association, nor has there been any attempt to tax that 
 portion of the earnings of its shares which the bank was required 
 to set aside as a surplus for the greater security both of the gov- 
 ernment and the people. It is perfectly obvious that the levying 
 of this tax does not touch the institution at any point where it is 
 shielded from State taxation by the reasons upon which McCulloch 
 V. Maryland, and the numerous cases following it, are placed. It 
 is not taxing an instrument or agent of the government for prop- 
 erty which, by the act creating it, is in any way made part of the 
 plan of its existence, or the basis of its operations. 
 
 But it is argued that the case of Van Allen v. The Assessors, 3 
 Wall. 573 (anie, p. 1), establishes the doctrine, that although this 
 property was legally subject to taxation by the State, still, inas- 
 much as the Legislature have directed it to be assessed against the 
 bank instead of the stockholders individually, our statute must be 
 held void as being repugnant to the law of Congress which allows 
 the shares only to be taxed . I do not think the case goes that 
 length. The main question there discussed was, whether the shares 
 of a National bank could be taxed at all by State authority, except 
 for what remained of their value after deducting the National 
 securities in which part or the whole of the capital of such bank 
 was invested; and it was held that they might be thus taxed. It was 
 further held, that a statute of the State of New York laying a tax 
 upon shares in such banks, which contained no provision that 
 such tax should not exceed the tax upon shares in State banks, 
 could not be upheld. If there were any doubt, however, as to the 
 doctrine of that case, it certainly seems to be quite removed by the 
 latter case of national Bank v. Commonwealth, 9 Wall. 353 {ante, 
 p. 34); and, as this case seems to me decisive of the present, it will 
 be necessary to examine it somewhat at length. 
 
 It was error to the Court of Appeals of Kentucky. A statute of 
 that State lays a tax as follows : " On bank stock, or stock in any 
 
SUPEEME OOUKT, 1875. 669 
 
 First National Bank v. Peterborough. 
 
 moneyed corporation of loan or discount, fifty cents on each share 
 thereof equal to one hundred dollars, or on each one hundred dol- 
 lars of stock therein owned by individuals, corporations or socie- 
 ties." And the same statute goes on to enact: " The cashier of a 
 bank whose stock is taxed shall, on the, first day of July in each 
 year, pay into the treasury the amount of tax due. If such tax be 
 not paid, the cashier and his sureties shall be liable for the same, 
 and twenty per cent upon the amount; and the said bank or cor- 
 poration shall thereby forfeit the privileges of its charter." 
 
 Acting under this statute, the Commonwealth demanded of the 
 plaintiffs in error — the First National Bank of Louisville — $4,000 
 with interest, the sum which a tax of fifty cents per share on the 
 shares of the bank gave. 
 
 There was judgment against the bank in the State court, and 
 that judgment was here afBrmed. 
 
 In argument, it was strenuously urged by counsel for the bank 
 that the State had no legal or constitutional power to coerce the 
 bank itself to pay the tax in solido for its stockholders ; that to pre- 
 vent these organizations from being made the servants and agents 
 of the States in the collection of taxes, thus clothing the State with 
 an authority not justified by the Constitution, Congress had par- 
 ticularly prescribed the mode of collection, as well as the extent of 
 it. 
 
 Mr. Justice Millee delivered the unanimous judgment of the 
 court, in the course of which he says : 
 
 " It is strongly urged that it is to be deemed a tax on the capital 
 of the bank, because the law requires the officers of the bank to pay 
 this tax on the shares of its stockholders. "Whether the State has 
 the right to do this we will presently consider, but the fact that it 
 has attempted to do it does not prove that the tax is any thing else 
 than a tax on these shares. It has been the practice of many of 
 the States for a long time to require of its corporations thus to 
 pay the tax levied on their shareholders. It is the common if not 
 the only mode of doing this in all the New England States ; and 
 in several of them the portion of this tax, which should properly go 
 as the shareholders' contribution to local or municipal taxation, is 
 thus collected by the State, of the bank, and paid over to the local 
 municipal authorities. * * * But it is argued that the banks, 
 being instrumentalities of the Federal government, by which some 
 of its important operations are conducted, cannot be subjected to 
 
670 NEW HAMPSHIEE 
 
 First National Bank v. Peterborough. 
 
 such State legislation. * * * The most important agents of 
 the Federal government are its oflBcers; but no one will contend 
 that when a man becomes an oflBcer of the government he ceases to 
 be subject to the laws of the State. The principle we are discuss- 
 ing has its limitation, a limitation growing out of the necessity on 
 which the principle itself is founded. That limitation is, that the 
 agencies of the Federal government are only exempted from State 
 legislation so far as that legislation may interfere with, or impair 
 their eflnlciency in performing the functions by which they are 
 designed to serve that government. Any other rule would convert 
 a principle, founded alone in securing to the government of the 
 United States the means of exercising its legitimate powers, into 
 an unauthorized and unjustifiable invasion of the rights of the 
 States. The salary of a Federal officer may not be taxed; he may 
 be exempted from any personal service which interferes with the 
 discharge of his official duties, because those exemptions are essen- 
 tial to enable him to perform those duties. But he is subject to all 
 the laws of the State which affect his family or social relations, or 
 his property, and he is liable to punishment for crime, though that 
 punishment be imprisonment or death. So of the banks. They 
 .are subject to the laws of the State, and are governed in their 
 daily course of business far more by the laws of the State than of 
 the Nation. All their contracts are governed and construed by 
 State laws. Their acquisition and transfer of property, their right 
 to collect their debts, and their liability to be sued for debts, are 
 all based on State law. It is only when the State law incapacitates 
 the banks from discharging their duties to the government that it 
 becomes unconstitutional. * * * 
 
 " A very nice criticism of the proviso to the 41st section of the 
 National Bank Act, which permits the States to tax the shares of 
 such bank, is made to us to show that the tax must be collected of 
 the shareholder directly, and that the mode we have been consider- 
 ing is by implication forbidden. But we are of opinion that, while 
 Congress intended to limit State taxation to the shares of the bank, 
 as distinguished from its capital, and to provide against a discrim- 
 ination in taxing such bank shares unfavorable to them, as com- 
 pared with the shares of other corporations and with other moneyed 
 capital, it did not intend to prescribe to the States the mode in 
 which the tax should be collected. The mode under consideration 
 is the one which Congress itself has adopted in collecting its tax on 
 
STJPEEME COUET, 1875. 671 
 
 First National Bank v. Peterborough. 
 
 dividends, and on the income arising from bonds of corporations. 
 It is the only mode which, certainly and without loss, secures the 
 payment of the tax on all the shares, resident or non-resident ; and, 
 as we haye already stated it, it is the mode which experience has 
 justified in New England States as the most conTenient and proper, 
 in regard to the numerous wealthy corporations of those States. 
 It is not to be readily inferred, therefore, that Congress intended 
 to prohibit this mode of collecting a tax which they expressly per- 
 mitted the States to levy." 
 
 Now let us see how this reasoning applies to the case before us. 
 By section 1, chapter 15, Laws of 1868, " all shares of the capital 
 stock of the banks located in this State, whether private, State, or 
 National, shall be taxed at their par value to the owners thereof, in 
 the town in which they reside, if in this State," etc. By section 4, 
 chapter 50, General Statutes, an act which had been in force for 
 many years in this State when the National Bank Act was passed, 
 " the surplus capital on hand in banking institutions shall be taxed 
 in the towns wherein such banking institutions are located;" and to 
 prevent the possibility of wrong from thus separating what might 
 perhaps well enough be treated as a single interest, it is expressly 
 provided that " no statute provisions shall be so construed as to 
 subject any stock to double taxation." Gen. Stats., ch. 49, § 7. 
 
 It is not pretended that there is any double taxation here, nor is 
 it claimed but that this surplus voluntarily reserved by the bank 
 beyond what it is required by the act of Congress to retain, en- 
 hances the value of the shares just as directly as though it were 
 actually divided and added to the shares by some act of the bank. 
 That is, the shares represent the interest of their owners in this 
 surplus, just as much as they do the interest of the shareholders in 
 the capital stock and property of the bank, which is made exempt 
 from State taxation by the Federal law. To continue, so far as 
 might be consistent with the full operation of the new system, 
 established by the National Legislature, a mode of taxation to 
 which our people from long use had become accustomed, and thus 
 provide that the great change made in the currency of the country 
 by the National Bank Act should go into effect with as little fric- 
 tion as possible, our Legislature did not change the law of the 
 State in this regard, but still continued to towns in which a bank 
 may be situated the right to tax this surplus as property located 
 within their corporate limits, instead of treating the surplus as an 
 
672 NEW JEESEY 
 
 North. Ward National Bank of Newark v. City of Newark. 
 
 increment to the shares, which it really is, and dividing the tax 
 upon it among the Tarious towns where the shares are owned. Most 
 clearly it is a tax upon value, represented by the shares. In sub- 
 stance, it is a tax upon the shares and nothing else. The only dif- 
 ference is, that by our statute it is to be paid out of funds, the 
 beneficial ownership of which is in the shareholders, by the hand of 
 the bank, whereas, if it were assessed upon the shareholders indi- 
 Tidually, it would be paid by them directly without the interyention 
 of the bank. The legal title to the money may be in the corpora- 
 tion until it is divided and handed over to the stockholders, but 
 this legal ownership is of no higher character than that of a trustee 
 for the owners of the shares ; and, in reality, it is only by consent 
 of the shareowners that the surplus is not distributed to them. 
 
 In National Bank v. Gommonwealth it was held, as we have seen, 
 that a tax upon shares might legally be levied directly against the 
 bank. Is it to be held that a tax, which is in fact and to all prac- 
 tical intents upon shares, cannot be levied against the bank, merely 
 because the Legislature call it by another name, and assess it upon 
 a surplus always definite and easy to be ascertained ? I think not. 
 See Thomson v. Pacific Railroad, 9 Wall. 579 ; Railroad Company 
 V. Penniston, 18 id. 5. My opinion, therefore, is, that the case is 
 entirely within the doctrine of National Bank v. Gommonwealth ; 
 and as this is the opinion of all the members of the court, the 
 
 Petition must he dismissed. 
 
 State, North Waed NATioifrAL Bank of Newark, Prosbcijtok, 
 V. City of Newark. 
 
 ClOVrooiu.380.) 
 Taxation of surplus — National bank stock — How taxed in New Jersey. 
 
 The undivided surplus of a National bank — if not invested in Federal securi- 
 ties — may be taxed against the bank, provided it is not included in assess- 
 ing the value of the shares of stock in the hands of stockholders.* 
 
 A local statute providing a special method of taxing shares of stock in National 
 banks was rendered void by a constitutional amendment providing that 
 " property shall be assessed for taxes under general laws and by uniform 
 rules." 
 
 * See, also, First National Bank v. Peterborough, ante, p. 658. 
 
SUPREME COURT, 1877. 673 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 By the present law of New Jersey the stock in National banks owned by non- 
 residents of the State is taxable in the township or ward where the bank is 
 situated, and that owned by residents of the State ia taxable in the town- 
 ship or ward where the owners respectively reside. 
 
 The restriction on the power of the States in the matter of taxation of Na- 
 tional banks does not arise from the fact that they are created corporations 
 under an act of Congress. The States may lawfully tax the property merely 
 of a corporation created by act of Congress, in common with other prop- 
 erty of the same description throughout the State. But to the extent that 
 such property is invested in the securities of the Federal government, it is 
 beyond the power of the States to tax it against the corporation, without 
 permission of Congress, for the reason that taxation, in that respect, would 
 be indirectly a tax upon the credit and securities of the Federal govern- 
 ment. 
 
 ON certiorari. The following state of the case was agreed upon 
 by the counsel of the, respective parties. 
 
 The North Ward National Bank of Newark, the prosecutor, is a 
 banking association, organized under the act of Congress of the 
 United States, having its banking-house in the city of Newark, in 
 the county of Essex, in the State of New Jersey. 
 
 The capital of the said banking association is the sum of $350,000, 
 and its surplus the sum of $11,000. 
 
 The stock is largely held by persons who do not reside in the 
 city of Newark, or county of Essex, and a true list of the said 
 stockholders, and their respective places of residence at the time of 
 the tax assessment complained of, are contained in the return made 
 by the defendant to the writ of certiorari. 
 
 The said banking association is assessed by the municipal author- 
 ities of the city of Newark on the whole amount of its capital 
 stock and surplus, under and by virtue of an act of the Legislature 
 of New Jersey, entitled " A supplement to the act entitled ' An 
 act relating to the assessment and revision of taxes in the city of 
 Newark, approved March fifteenth, one thousand eight hundred 
 and sixty-six,' " approved April 4th, 1873. 
 
 Argued at February Term, 1877, before Justices Depue, Vah 
 Stceel and Scuddee. 
 
 Joseph Coult, for plaintifE in certiorari. 
 
 Henry Young, for defendant. 
 
 Depue, J. The restrictions on the power of the States in the 
 85 
 
674 NEW JEESEY 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 matter of taxation of National banks do not arise from the fact 
 that they are created corporations under an act of Congress. The 
 exemption of a corporation, created as one of the agencies of the 
 Federal government, from taxation by the States, is dependent 
 not upon the nature of the agent, nor upon the mode of its consti- 
 tution, but upon the efEect of the tax ; whether the tax does, in 
 truth, deprive it of the power to serve the government as it was 
 intended to serev it, or hinder the efficient exercise of its powers. 
 A tax upon the property merely of such a corporation, having no 
 such necessary efEect, may be rightfully laid by the States. Rail- 
 road Company v. Peniston, 18 Wall. 5. 
 
 The moneyed capital of a bank is an entirely different thing 
 from its capital stock. The former is the property of the corpora- 
 tion. It may consist of cash or of bills discounted, or be in part 
 invested in real estate, or in the securities of the Federal govern- 
 ment. In whatever form it is invested, it is owned by the bank as 
 a corporate entity, and not by the stockholders. The stock or 
 shares represent the interests of the shareholders, which "entitle 
 them to participate in the net profits of the bank in the employ- 
 ment of its capital, and is a distinct and independent interest or 
 property in the shareholders, held by them like other property. To 
 the extent that the capital is invested in the securities of the Fed- 
 eral government, it is beyond the power of the States to tax it as 
 against the corporation, for the reason that taxation in that instance 
 would be indirectly a tax upon the credit and securities of the 
 government. This distinction between the capital of a bank and 
 its stock is pointed out by Mr. Justice Miller in National Bank v. 
 Commonwealth, 9 Wall. 353 {ante, p. 34), and by Mr. Justice Nelsoit 
 in Van Allen v. Assessofs, 3 id. 573 {ante, p. 1), as one that has 
 been adopted by the Supreme Court of the United States in adju- 
 dicating upon the power of the States in the taxation of National 
 banks. In McOulloch v. Maryland, 4 Wheat. 316, it was held that 
 the Bank of the United States, which was incorporated by act 
 lof Congress, was taxable by the State of Maryland on lands which 
 were the property of the bank, in common with other real property 
 in the State, and that citizens of the State might also be taxed on 
 the interest which they held in the bank, in common with other 
 property of the same description throughout the State. The dis- 
 tinction is between taxation of a corporation created by or employed 
 by the Federal government, and taxation of the instrumentalities 
 
SUPREME COURT, 1877. 675 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 or means of the government in the possession of such corporation. 
 The States may tax banking institutions, but they cannot tax the cur- 
 rency or government bonds belonging to such banks. Western Union 
 Telegraph Co. v. Giiy of Richmond, 3 Am. Law Times (N. S. ) Rep. 
 149; 26 Gratt. The cases are cited and commented on by Mr. 
 Justice Steoitg, in Railroad Company v. Penniston, supra, and by the 
 court in Western Union Telegraph Oo. v. Gity of Richmond. They 
 fully establish the doctrine that the property merely of a corporation, 
 created by act of Congress, may be taxed by the States, provided 
 such taxation be not indirectly a tax upon the credit and securities 
 of the Federal government. That this principle will apply to the 
 undivided surplus of a National bank and to other investments of 
 its capital, if the same be not invested in the securities of the Fed- 
 eral government, is apparent from the cases above cited. The 
 States possess an inherent power of taxation of such property inde- 
 pendently of any grant of authority by Congress. 
 
 The power of the States to tax, in the hands of stockholders, the 
 stock of National banks, which is invested in Federal securities, rests 
 upon different grounds. The States have no inherent powers of 
 taxation in that respect. Whatever powers they have of taxation 
 in that form is derived exclusively from the authority conferred by 
 Congress. By the act of Congress of June 3, 1864 (2 Bright. Dig. 
 60, § 41), as amended by the act of February 10, 1868 (U. S. Stat. p. 
 34), the States were empowered to tax the shares of stock of National 
 banks by including them in the valuation of the personal property of 
 the owners in the assessment of taxes. The only restriction on this 
 power of taxation is, that taxation thereon shall not be at any 
 greater rate than is assessed on other moneyed capital in the hands 
 of individual citizens of the State, and that shares owned by non- 
 residents of the State shall be taxed in the city or town where the 
 bank is located. In every other respect the power of the States to 
 impose the tax is unrestrained. It may be laid on the stock, 
 although the capital of the bank is invested in Federal securities 
 {National Bank v. Commonwealth, 9 Wall. 573 {ante, p. 34] ) ; and 
 be assessed for purposes of taxation at an amount above its par 
 value, if such valuation is made by the State law on other moneyed 
 capital in the assessment of taxes {Hepburn v. School Directors, 28 
 Wall. 480 [ante, p. 109]) ; and be separated from the person of the 
 owner, and given a situs of its own for the purposes of taxation. Tap- 
 pen T. Merchants' National Bank, 19 WaU. 490 {ante, p. 100). The 
 
676 NEW JEESEY 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 mode in which the tax shall be assessed and collected, and the place 
 where it shall be laid upon resident stockholders, are left to the 
 discretion of the Legislature of the State in which the banks are 
 respectively located. We must look, therefore, to our own Consti- 
 tution and laws to ascertain whether the assessment in controversy 
 was legally made. 
 
 The Legislature of this State, "by the 16th section of the gen- 
 eral tax law of April 11th, 1866 (Nix. Dig. 954), provided that 
 the stock of National and State banks should be taxed to stock- 
 holders in the township or ward wherein the bank is located, and 
 it was made the duty of the bank to retain and pay the amount of 
 the tax out of dividends from time to time declared, and such tax was 
 made a lien on the shares of the stock, and the same were made liable 
 to be sold by virtue of a tax-warrant against the person taxed, as in 
 other cases. By the act of April Isfe, 1869 (Acts, 1869, p. 1149), 
 stockholders resident in the State were required to be taxed for the 
 stock of National banks in the townships or wards in which they 
 respectively resided, and the bank was to be assessed for stock 
 owned or held by non-residents of this State. In these particulars 
 only, the act of 1866 was altered by the act of 1869. By force of 
 these two acts, the mode of taxing the stock of National banks was 
 this : stockholders, resident in this State, should be taxed therefor 
 in the township or ward where they reside, respectively, and the 
 assessment on the stock of non-resident stockholders should be 
 made in the township or ward where the bank is located, and, in 
 form, against the bank, the tax being a lien on the stock, and pay- 
 able out of the dividends thereon, at least so far as it was laid for 
 stock owned or held by stockholders residing out of the State. This 
 system of taxation of the stock of National banks, by force of these 
 two acts, became the general law on the subject, in force through- 
 out the State. 
 
 In 1873, by a supplement to " An act relating to the assessment 
 and revision of taxation in the city of Newark" (Acts, 1872, p. 
 1165), the 16th and 17th sections of the act of April 11th, 1866, 
 were " declared to be in full force and effect, so far as relates to 
 the city of Newark." Upon the idea that, in this obscure way, the 
 16th section of the act of 1866 was revived and re-enacted, without 
 regard to the alterations of it by the act of 1869, as a local and 
 special law in force in the city of Newark, the assessment in ques- 
 tion was made. It was made against the bank on its surplus of 
 
SUPEEMB COURT, 1877'. 677 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 $11,000, which was held by the bank, and does not appear to have 
 been invested in government securities, and also upon its entire 
 capital stock of $250,000, which was owned by persons residing in 
 the city of Newark and elsewhere in the State of New Jersey, and 
 by stockholders non-residents of this State. 
 
 The objection of the prosecutor, that the tax is assessed against 
 the bank, and not to the individual stockholders, should not, under 
 the circumstances, be allowed to prevail. It is purely a formal 
 objection, and is not specifically taken in the reasons assigned. 
 Undoubtedly, a strict adherence to the words of the act of Con- 
 gress would require the assessment to be directly against the indi- 
 vidual stockholders. To such an assessment, it would be competent 
 for the Legislature to annex a lien on the stock, with a power to 
 sell in satisfaction of the tax of the delinquent stockholders. This, 
 in substance, so far as the interests of the bank are involved, is the 
 effect of this assessment. The tax can only be collected out of the 
 dividends. In National Bank v. Commonwealth, 9 Wall. 353 {ante, 
 p. 34), and Lionierger^. Rouse, id. 468-477 (ante, p. 41), the assess- 
 ments were in form against the bank, and were sustained by the 
 court. While the 16th section of the act of 1866 was in force — 
 the tax on all the stockholders being laid at the place where the 
 bank was located, and paid by the bank — it was the universal cus- 
 tom, adopted for the convenience of all parties, to make the assess- 
 ment in form against the bank, instead of individual stockholders, 
 and to pay it out of the general funds of the bank, instead of 
 charging the several amounts to the accounts of individual stock- 
 holders. Since 1873, this custom has been continued in the city 
 of Newark, for the same reasons of convenience. Without any 
 application having been made to the commissioners of taxation to 
 change the form of the assessment, and transfer it from the bank to 
 individual stockholders, it would be unjust to the public to allow 
 the objection to the form of the assessment to be taken, where no 
 reason presenting the precise ground of exception to the tax has 
 been filed. ' 
 
 The other objection presents the material question in the cause. 
 It is, that the act of 1873, as a local and special act on the subject 
 of taxation, became inoperative by the adoption of Paragraph 13 of 
 the Constitution of this State, as amended in 1875. That para- 
 graph is as follows: " Property shall be assessed for taxes under 
 general laws, and by uniform rules, according to its true value." 
 
678 ^EW JERSEY- 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 It was contended by the city counsel that it is a fundamental rule 
 of construction, of uniyersal application, that constitutional pro- 
 yisions will have operation only prospectiyely. If by this proposition 
 be meant merely that a new constitutional amendment will be 
 inoperative to make null transactions past and done under a pre- 
 existing law, which were valid when the transactions took place, 
 the position is conceded to the fullest extent. The destruction of 
 Tested rights, whether by a statute or constitutional amendment, 
 by implication, will never be presumed. Osborne v. Nicholson, 13 
 Wall. 654. But the argument does not touch the point of this 
 case. For instance, an assessment of taxes made under an existing 
 law, which was repealed after the assessment, but before its collec- 
 tion, is a thing passed and completed, and is unaffected by such 
 repeal. Town of Belvidere v. Warren B. R. Co., 5 Vroom, 193; S. 
 C. in error, 6 id. 584. So, also, a conviction and sentence, under a 
 statute in force when judgment is pronounced, will not be vacated, 
 or the term of imprisonment terminated by a subsequent repeal of 
 the statute. But in taxation from year to year, each successive act 
 of taxation is a separate and distinct thing, appealing to a law in 
 force when the tax is laid, to support the imposition. 
 
 Nor can it be questioned that a constitutional provision will 
 operate, ^ro^rto vigore, to repeal existing statutes, if such be the 
 intention of the framers of the instrument. In People v. Super- 
 visors of Westchester, 13 Barb. 446, a constitutional amendment, 
 "that when private property shall be taken for public use, the 
 compensation to be made therefor, when such compensation is not 
 made by the State, shall be ascertained by a jury, or by not less 
 than three commissioners appointed by a court of record, as shall 
 be prescribed by law," was held to abrogate a prior statute provid- 
 ing for a different mode of assessment of the damages. In Pierce 
 V. Delamater, 1 Oomst. 17, a statute which disqualified a judge of the 
 Court of Appeals from taking part in the decision of a cause or 
 matter which was determined by him when sitting as a judge in 
 any other court, was held to be abrogated by a constitutional pro- 
 vision subsequently adopted, which prescribed the qualifications of 
 the members of the court, and did not disqualify for that reason. 
 In St. Joseph Board of Public Works v. Patten, 62 Mo. 444, it was 
 held that a constitutional provision that taxation for school pur- 
 poses should not exceed forty cents on the $100, executed itself ; 
 that it required no legislation to enforce it, and therefore went 
 
SUPKEME OOTJET, 1877. 679 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 into efEect on the adoption of the Constitution. The fifteenth 
 amendment of the Constitution of the United States invested the 
 citizens of the .United States with the right of exemption from 
 discrimination in the exercise of the elective franchise, on 
 account of race, color, or previous condition of servitude. It was 
 so held by the Supreme Court of the United States, in United 
 States V. Reeve, 93 U. S. (2 Otto) 215. Congress was, by the same 
 amendment, empowered to enforce that right by appropriate legis- 
 lation, that the right conferred might be more effectually pro- 
 tected; but practically, the word "white," used in the Constitu- 
 tion of this State in designating the persons entitled to suffrage, 
 was eliminated from that instrument by this amendment, although 
 it was not in fact expunged until the amendment of the State 
 Constitution in 1875. Other instances of the self-executing qual- 
 ity of constitutional amendments, abrogating prior institutions, 
 laws and Constitutions, and becoming propria vigore, the supreme 
 law, without legislative aid, will be found in the following cases: 
 Permoli v. First Municipality, 3 How. (U. S.) 589; OcliiUree v. 
 The Railroad Company, 21 Wall. 249; In matter of Oliver Lee & 
 Co.'s Bank, 21 N. Y. 9. In Groves v. Slaughter, 15 Pet. 449, the 
 court held that an article in the Constitution of the State of Mis- 
 sissippi, that " The introduction of slaves into this State as mer- 
 chandise, for sale, shall be prohibited from and after the • 1st day 
 of May, 1833," was not operative as a law of prohibition. This 
 decision was reafiSrmed in Rowan v. Runnels, 5 How. 134, although, 
 in the meantime, the courts of Mississippi had decided otherwise. 
 The decision in the Supreme Court of the United States was put 
 upon the peculiar language of the enacting part of the article — 
 "shall be prohibited" — which they construed to be a command 
 addressed to the Legislature to do a certain act, and also on the 
 ground that legislative action was indispensable to carry into effect 
 the object of the prohibition. 
 
 The effect of a constitutional amendment on existing laws is a 
 question of intent. The inquiry is whether the particular provis- 
 ion is one that is capable of self-execution, and was so intended 
 by its framers, or whether legislative action was needed to give it 
 effect, or its operation was designed to be on future Legislatures, 
 either to enlarge their powers or restrict them . 
 
 Of the constitutional amendments of 1875, the paragraphs 
 which were directed to be inserted in the then existing Constitu- 
 
680 ]^EW JEESEY 
 
 Nortli Ward National Bank of Newark v. City of Newark. 
 
 tion, as paragraphs 11 and 13, are illustrations of two of these 
 classes of constitutional provisions. 
 
 Paragraph 11 is as follows: "The Legislature shall not pass 
 private, local or special laws in any of the following enumerated 
 cases, that is to say, laying out, opening, altering, and working 
 roads or highways; vacating any road, town plot, street, alley, or 
 public grounds; regulating the internal affairs of towns and coun- 
 ties; appointing local offices or commissions to regulate municipal 
 affairs; selecting, drawing, summoning, or empaneling grand or 
 petit jurors; creating, increasing, or decreasing the percentage or 
 allowance of public officers during the term for which said officers 
 were elected or appointed; changing the law of descent; granting 
 to any corporation, association, or individual any exclusive privilege, 
 immunity, or franchise whatever; granting to any corporation, 
 association, or individual the right to lay down railroad tracks; 
 providing for changes of venue in civil or criminal cases; provid- 
 ing for the management and support of free public schools. The 
 Legislature shall pass general laws providing for the cases enumer- 
 ated in this paragraph, and for all other cases which, in its judg- 
 ment, may be provided for by general laws. The Legislature shall 
 pass no special act conferring corporate powers, but they shall pass 
 general laws under which corporations may be organized and cor- 
 porate powers of every nature obtained, subject, nevertheless, to 
 repeal or alteration, at the will of the Legislature." 
 
 This paragraph is plainly operative only on future legislation. 
 It prohibits, in the future, the adoption of any local or special legis- 
 lation on the enumerated subjects, and enjoins the passage of 
 general laws on such subjects. Its prohibition is laid on, and its 
 commands addressed to, subsequent legislatures only. Its effect is 
 upon what the Legislature may do in the future, and not upon 
 what has been done by it in the past. 
 
 Then follows paragraph 12: "Property shall be assessed for 
 taxes under general laws, and by uniform rules, according to its 
 true value." The change in the language of this command from 
 that in the preceding paragraph is significant, inasmuch as the 
 two paragraphs follow in immediate succession. The mandate is 
 not, as it is in the preceding paragraph, addressed to the Legisla- 
 ture. It would have been easy and quite natural for the framers 
 of the constitutional amendments to have added the subject of this 
 paragraph to the preceding one, and have enjoined the passage by 
 
SUPREME COURT, 1877. 681 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 the Legislature of general laws on ^his subject also, if it had been 
 the intention of the authors of the amendments to leave the execu- 
 tion of the policy in this paragraph established to the Legislature 
 in its discretion. But the framers of the amendments deter- 
 mined otherwise. They declared that " property should be assessed " 
 — which is a new and distinct process every time taxation is 
 made — " under general laws." 
 
 At the time these constitutional amendments were drafted by 
 the commissioners, and were voted on by the people, general laws 
 for the assessment of property for taxes were in force, fulfilling 
 completely the requirements of this paragraph. The act of 1866 
 (Nix. Dig. 951), under which taxes were assessed generally in the 
 State, was a law that, in all respects, fulfilled the new constitu- 
 tional requirements as to the valuation of property for the purposes 
 of taxation. As amended by the act of 1869, which classified shares 
 of National banks with other personal property of citizens of the 
 State, a general law, in the usual acceptation of that term, was then 
 in force in the State, which provided for assessing the property on 
 which the present tax is laid at its true value. These laws not 
 being inconsistent with the constitutional amendment, continued 
 to be applicable to taxation after the amendment went into effect. 
 Hill V. Hunt, Spenc. 476. In the then condition of the tax laws, 
 no new legislation was indispensable to carry into effect the policy 
 established in the adoption of this amendment. To accomplish the 
 result which was intended, nothing more was necessary than the 
 abrogation of special and local laws on the subject, which were in- 
 consistent with the existing general law. To effect that result, a 
 repealer, by express words, was not necessary. Where it clearly 
 appears that it was the intention of the law-making power to pre- 
 scribe a uniform rule, which shall be the only rule applicable to the 
 entire subject, all laws inconsistent therewith are repealed, with- 
 out the use of express words of repeal. Industrial School v. White- 
 head, % Beas. 390; State v. Gomm'rs of R. R. Taxation, 8 Vroom, 
 228; S. C, 9 id. 473. That it was intended by this amendment to 
 establish a uniform rule, which should be the only rule for assess- 
 ing property, is so plainly manifested- in the language used as to 
 admit of no doubt. 
 
 "With a general tax law in existence, conforming in every par- 
 ticular to the constitutional requirements, it would have been use- 
 86 
 
682 NEW JEESEY 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 less to require the Legislature to re-enact its proTisions. There 
 being no power to coerce the legislative department to enact laws, 
 to have left the execution of the policy on which the paragraph 
 "was founded to depend on legislative action, might have defeated, 
 or, at least, delayed the consummation of the plan of taxation 
 devised by the framers of the amendments. To reach a result so 
 easily attainable, and secure, beyond a peradventure, the proposed 
 end, the commission commanded that property should be assessed 
 under general laws, and by a necessary implication interdicted 
 assessments for taxes thereafter under special laws. 
 
 Nor should the circumstances connected with the adoption of 
 the constitutional amendments of 1875 be overlooked in the search 
 after the intent of this amendment. The two grievances which, 
 in a great measure, led to the. creation of a commission to frame 
 amendments to be proposed for adoption by the people, were the' 
 existence of a multitude of local and special laws on a variety of 
 subjects, and the inequality of taxation arising from local and 
 special laws. To have abrogated all special laws in existence by 
 the proposed amendments, would have led to great confusion, and 
 was impracticable. The commission, therefore, contented itself 
 with a mandate to the Legislature to pass general laws on the sub- 
 jects enumerated in the eleventh paragraph, and an injunction 
 against the passage of local or special laws on such subjects in 
 the future. No such embarrassments or diflBculties were in the 
 way of the immediate execution of the proposed scheme of taxa- 
 tion under general laws. General laws were then in force, adequate 
 to accomplish the purpose, and no embarrassment or confusion 
 could arise from the assessment of property under such laws. Con- 
 sequently when the commission came to deal with taxation, they 
 departed from the formula in which special laws were interdicted 
 in the eleventh paragraph, and declared that property should be 
 assessed for that purpose under general laws. It only required 
 such a declaration to give effect at once to the will of the law- 
 makers. 
 
 The argument so strongly urged in favor of holding this para- 
 graph to be operative only on future legislation — that it is placed 
 under the legislative head — ought not to be permitted to over- 
 come the clear and unequivocal language employed. As a prohi- 
 bition on future legislation at variance with the policy adopted 
 for the present and the future, the paragraph was not inappropri- 
 
SUPEEMB COUET, 1877. 683 
 
 North Ward National Bank of Newark v. City of Newark. 
 
 ately put in that place. The constitutional commission was deal- 
 ing with the subject of local and special laws — conspicuous 
 among which, in the history of past legislation, were local and 
 special laws on the subject of taxation. In doing so, they nat- 
 urally grouped together all the provisions they proposed to adopt to 
 remove the evils arising from that class of legislation. They pro- 
 vided for special legislation on the enumerated subjects in the 
 eleventh paragraph, by prohibiting it in the future, and empower- 
 ing the Legislature • to pass general laws thereon, and then, in a 
 separate paragraph, made a present command, that "property 
 shall be assessed for taxes under general laws and by uniform rules, 
 according to its true value." 
 
 In my judgment, the act of 1873, which was a special law for the 
 taxation of the stock of National banks in the city of Newark, 
 was abrogated by the twelfth paragraph of the constitutional 
 amendment. It was not only a special law for assessing property 
 for taxes, but also afforded a striking instance of the violation of 
 uniformity of rule in the assessment of property for taxation, and 
 of inequality in taxation, under special and local laws. Under its 
 sway, the owners of the stock of National banks located elsewhere 
 in the State, who resided in, and were taxable in, the city, were 
 free from taxation upon their stock; and the owners of stock in 
 banks located in the city, who resided elsewhere in the State, were 
 subjected to double taxation — taxation in the city, under the act 
 of 1873, and taxation at their places of residence, under the act of 
 1869. 
 
 Taxation of National banks in the city, after the constitutional 
 amendments were adopted, could only be made under the act of 
 1866, as amended by the act of 1869. The assessment, therefore, 
 cannot be sustained, except in so far as it is consistent with these 
 two acts. By these acts, the stock owned by persons not residents 
 of this State is taxable in the township or ward where the bank is 
 located, and that owned by residents of this State is taxable in the 
 township or ward where the owners respectively reside. 
 
 The stock owned by non-residents of the State was lawfully 
 taxed in the ward where the banking-house is located. With re- 
 spect to the stock owned by persons residing in the city of New- 
 ark, it was taxable to them in the city. It does not appear that 
 any of such stockholders whose stock was included in the valuation 
 did not reside in that ward. The court, therefore, will not dis- 
 
684 NEW YORK 
 
 People ex rel. Cagger v. Dolan. 
 
 turb the assessment, so far as this stock is concerned. But so far 
 as relates to the stock owned by persons residing in this State, 
 but not in the city of Newark, the assessment is set aside. These 
 individuals were taxable on their stock at their places of residence. 
 
 The undiyided surplus, not being invested in Federal securities, 
 might have been lawfully taxed against the bank; but the State 
 law seems to contemplate that it be taxed in connection with the 
 capital stock in the hands of the stockholders. It should, there- 
 fore, be taken into consideration in estimating the taxable value of 
 the stock. 
 
 Counsel will make a calculation which will carry into effect the 
 opinion of the court, and enter a rule accordingly. 
 
 People ex eel. Cagger v. Dolan. ' 
 
 (36 New York, 69.) 
 
 Taxation of National bank aha/rea — Deduction for debts in New York. 
 
 By statute in New York, individuals were taxed on " the full value of all their 
 personal property, after deducting the just debts owing by them." Asubse- 
 quent statute provided that the owners of shares of stock in National banks 
 situated in the State should be '' taxed on the value of their shares of stock 
 therein." HM, that a shareholder was not entitled to a reduction on the 
 assessed value of his shares on account of debts,* 
 
 APPEAL from an order of the General Term of the Third Dis- 
 trict, commanding the appellants, as assessors of the city of 
 Albany, to reduce the assessment against the relator to the sum of 
 one dollar, in accordance with the request contained in his affida- 
 vit. The facts are stated in the opinion of the court. 
 
 A. J. Parlcer, for appellants. 
 
 Samuel Hand, for respondents. 
 
 Hunt, J. The relator resides in the sixth ward of the city of 
 Albany. The National Commercial Bank, in which he owns eleven 
 
 * See City National Bank v. Pa&uoah, ante, p. 300. 
 
COUET OF APPEALS, 1867. 685 
 
 People ex rel. Cagger v. Dolan. 
 
 hundred and four shares of stock, of the yalue of $20 each, is 
 located in the fourth ward of the same city. Under the act of the 
 Legislature of this State, passed April 23, 1866, the relator was 
 assessed $22,800 as the par valuation of his bank shares. The 
 defendants are the board of assessors of the city of Albany. On 
 the 24th of September, 1866, the relator presented to the said 
 defendants an afQdavit, in which he stated "that the value of the 
 personal estate owned by him does not exceed the sum of one dol- 
 lar, after deducting his just debts, and his property invested in the 
 stocks of corporations, liable to be taxed therefor," and claimed 
 that the assessment should be reduced in accordance therewith to 
 the sum of one dollar. 
 
 The defendants refused to reduce the assessment, and the relator 
 moved at Special Term for a mandamus directing them to make 
 such deduction. This motion was granted, and upon appeal by 
 the defendants to the General Term of the Third District, the 
 order was affirmed. The defendants now bring their appeal to 
 this court. 
 
 The respondents claim that the assessment and taxation upon 
 bank shares, authorized by the act of April 23d, 1866, stand upon 
 the same basis as all other taxation of personal property, under 
 the laws of this State; that the relator was entitled to deduct from 
 Buch assessment his personal indebtedness, and that he was sub- 
 ject to taxation upon the balance only. The appellants claim that 
 there was intended to be established a distinct system of taxation 
 in reference to shares of bank stock, by which they were to be 
 assessed and taxed upon their actual value, independent of the 
 condition or circumstances of the owner. 
 
 By the General Tax Law of the State, each individual is assess- 
 able in the town or ward in which he resides, and not elsewhere, 
 for all personal estate owned by him. Between the first days of 
 May and July the assessors of each town are required to ascertain, 
 by diligent inquiry, the names of the taxable inhabitants, and the, 
 taxable property, real or personal, in their respective towns. In 
 the fourth column of the assessment roll to be prepared by them, 
 it is directed that the assessors shall set down "the full value of all 
 the taxable personal property owned by such person, after deducting 
 the just debts owing by him." 1 E. S. 891. It is the duty of the 
 assessors to meet at a time appointed to hear complaints and make 
 corrections of their rolls. It was at the time thus appointed that 
 
686 IfEW YORK 
 
 People ex rel. Cagger v. Dolan. 
 
 the relator made the af&davit before set forth, and it is conceded 
 that in regard to taxation for personal property generally, it was 
 sufficient to entitle him to the deduction claimed. 
 
 The legislation upon the subject of the taxation of banks has 
 been heretofore regulated upon a plan by itself, and a reference to 
 this system will aid us in reaching a correct conclusion upon the 
 question before us. The general System of legislation upon the 
 subject-matter of a statute may be taken into view, to aid the con- 
 struction of a particular statute relating to the same subject. 
 {Holbrooh v. Holbrook, 1 Pick. 248, 354 ; Mendon v. Worcester, 10 
 id. 241. The first statute of this State that imposed a tax upon 
 bank stock, as such, was that of 1823 (Session Laws 1833, p. 390), 
 which enacted " that all goods, chattels, bonds * * * bank 
 stock * * * gjjall be subject to taxation under the mean- 
 ing of this act." By section 14 the officers were required to de- 
 liver to the assessors a statement of their real estate, and the 
 amount of their capital stock paid in or secured to be paid in, and 
 the assessors were directed to insert in the roll " the amount of 
 such real and personal property." It was further provided, that it 
 should be the duty of the cashier or treasurer to pay the amount 
 of such tax, " and to deduct the same from the dividends of the 
 stockholders, in proportion to the amount of stock held by them 
 respectively, except the stock held by the State or by literary or 
 charitable institutions, from which no deductions shall be made." 
 § 15. The companies were further authorized to commute for 
 such taxes, by the payment of ten per cent upon the amount of 
 their dividends or income. The imposition of this tax was made 
 upon the recommendation of the then Comptroller of the State, 
 and was the subject of complaint on the part of the banks. It con- 
 tinued, however, to be the law of the State, until the adoption of 
 the Eevised Statutes. By the Eevised Statutes of 1828 it was pro- 
 vided that all moneyed or stock corporations, deriving an income 
 or profit from their capital or otherwise, should be liable to taxa- 
 tion on their capital. 1 E. S. 414. The assessment of such cor- 
 porations was made: (1) Upon the real estate owned by them, if 
 any, and (2) upon the capital stock actually paid in, and secured to 
 be paid in, excepting therefrom the sums paid for real estate, and 
 the amount of such capital stock held by the State, and by any 
 incorporated literary or charitable institutions. The safety fund 
 banking system, which came into operation in the year 1829, 
 
COURT OF APPEALS, 1867. gg? 
 
 People ex rel. Cagger v. Dolan. 
 
 required that the capital of all banks should be fully paid in. At 
 this time, then, banks, as such, were taxable upon the amount of 
 their capital stock paid in, with the two exceptions stated, to wit: 
 of stock held by the State, and by literary or charitable institu- 
 tions. It was thus taxable, whatever might be the diminished value 
 of its shares, unless it was able to .show that it was not in the 
 receipt of any income or profits whatever. Id. 416. So, on the 
 other hand, it was subject to no greater taxation, however valuable 
 its shares might become. Bank of Utica v. The Gity of Utica, 4 
 Paige, 399. Its nominal capital was the standard of taxation, 
 although its shares might be reduced below that value, or might be 
 greatly above it. 
 
 By the act of December 7, 1847 (4 E. S. [Edmonds' ed.J, 151) 
 it was enacted that all individual bankers and all banking associa- 
 tions " shall be subject to taxation on the full amount of actual 
 capital paid in, or secured to be paid in, as such capital, by them 
 severally, at the actual 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 was also enacted that taxes upon incorporated companies 
 should be demanded from the president of the company, and that 
 the same should "be paid out of the funds of the company, and 
 be ratably deducted from the dividends of those stockholders whose 
 stock was taxed, or shall be charged upon such stock, if no divi- 
 dends be afterward declared." 1 E. S. (Edmonds' ed.) 377, § 18. 
 
 In the year 1853 this system was amended by providing that the 
 assessment upon incorporated companies should be upon their real 
 estate, upon the amount of their capital stock paid in, or secured 
 to be paid in, together with the amount of all surplus or secured 
 funds, exceeding ten per cent of their capital, but deducting as 
 before the amount of said stock that should be held by the State, or 
 by any literary or charitable institution. 1 E. S. (Edmunds' ed.) 
 375. And again in the year 1857 (Session Laws 1857, 3d vol., p. 1), 
 the Legislature enacted that this assessment, with the exception 
 aforesaid, should be upon the capital stock, together with its sur- 
 plus profits exceeding ten per cent, "at its actual value," thus sub- 
 stituting the principle of ascertaining the value of the stock to be 
 assessed, instead of taxing upon its nominal amount. 
 
 The law continued in this form, without alteration, with the 
 exception of the invalid law of 1864, hereafter noticed, until the 
 
688 NEW YOEK 
 
 People ex. rel Cagger v. Dolan. 
 
 year 1865. Tlie NatioEal bank system had then become established, 
 and the State banks were rapidly organizing themselves under that 
 authority. The Legislature in that year passed an act (Laws 1865, 
 oh. 97, p. 172) legalizing and facilitating such transfers. In section 
 10 of the act, they enacted, that all the shares in any of the said 
 banking associations held by any person or body corporate should 
 be included in the valuation of th« personal property of such per- 
 son or body corporate, in the assessment of taxes in the town or 
 ward where such banking association is located, and not elsewhere. 
 This act having been declared by the Supreme Court of the United 
 States to be illegal, on a ground not here material, another act 
 was passed by the Legislature of New York, on the 33d day of 
 April, 1866 (Laws 1866, p. 1647), being the act under which the 
 present question arises. By the first section of this act it is provi- 
 ded that hereafter no tax shall be assessed upon the capital of any 
 bank, * * * ]y^^ ^-j^q stockholders in such bank shall be assessed 
 and taxed on the value of their shares of stock therein. The assess- 
 ment is to be made in the place where the bank is located, and not 
 elsewhere, and the proportionate value of the real estate of the 
 bank is to be deducted from the stock of each shareholder. 
 
 We thus see that for a period of nearly fifty years the policy 
 of the Legislature in regard to the taxation of bank capital and 
 bank shares has been uniform. The stock has been taxed at its 
 nominal value, without deduction for debts or charge for surplus, 
 or, as more recently, at its actual value. We see that, as to indi- 
 vidual bankers, it was expressly enacted that the capital employed 
 by them should be taxed at the market value of their securities 
 employed, and without deduction for their individual debts. We 
 see again that the taxation of the capital was considered as the 
 taxation of the shares, when the Legislature enact that such taxes 
 shall be deducted from the dividends of the shareholders, or be 
 charged against dividends subsequently to be made. In all of these 
 statutes, the assessment and taxation were based upon the value of 
 the stock of the incorporation. The debits and credits and actual 
 funds of the bank established the subject of taxation, and the con- 
 dition or circumstances of the individual owning the shares did 
 not enter into the account. 
 
 We come then to the inquiry whether under the acts of 1865 and 
 1866 'the same system is carried out, and the shares, are to be 
 
COTJET OF APPEALS, 1867. 689 
 
 People ex rel. Cagger v. Dolan. 
 
 assessed and taxed at their value, without regard to the condition 
 of the owner, or whether that system was then abandoned. 
 
 It will be borne in mind that the present question is upon the 
 intention of the Legislature, and not upon its power. The power 
 of the Legislature to say that the taxation shall be enforced with- 
 out regard to the circumstances of the owner, is not disputed- 
 Prior to the organization of the National banking system, the 
 State banks paying taxes upon their capital to the State and to the 
 municipal authorities, possessed an aggregate capital of more than 
 a hundred millions of dollars. Nearly all of these banks have 
 transferred themselves to the United States organization. The 
 State possesses the same power of taxation upon the shareholders 
 (with certain qualifications not here important to be noticed) that 
 it formerly had upon the banks. It has exercised this power, 
 has preserved the forms and manner of bank taxation, so far as 
 they were,appropriate,^and has given no evidence of any intention 
 to abandon the large field of taxation, so long used by it, or to 
 embarrass and reduce it by allowing the circumstances of the share- 
 holders to form an element in the case. The statute, on the other 
 hand, apparently intends to preserve, as fully as possible, all the 
 connections before existing on this subject. It says that " no tax 
 shall hereafter be assessed upon the capital of any bank or any 
 banking association organized under the authority of this State or of 
 the United States, but the stockholders in such banks and banking 
 associations shall be assessed and taxed on the value of their shares 
 of stock therein." It is quite unusual for the Legislature to enact 
 what they do not intend to tax, or what they do not intend to do 
 in any respect. This preliminary statement, as here embodied, 
 shows that the Legislature wished to preserve the connection and 
 the identity as far as possible between these two subjects of tax- 
 ation. It is as if they had said, we cannot now tax the National 
 banks as we have been accustomed to do; but instead thereof we will 
 tax their shareholders, and we will apply to them the system of 
 taxation that we have heretofore imposed upon the banks, so far as 
 it is lawful to do so. If such had not been their intention it would 
 have been very easy to have said, that shares in banks shall be taxed 
 like other personal property, in the same manner, and subject to 
 the same rules. On the contrary, they adopt a special system of 
 taxation for those shares, in close resemblance to the mode of tax- 
 ing bank capital, and declare that such shareholders shall be " as- 
 87 
 
690 NEW YOEK 
 
 People ex rel. Cagger v. Dolan. 
 
 sessed and taxed on the value of their shares." In the general 
 statute which I have before quoted, the assessors are directed to as- 
 sess to the person named " the full value of all the personal property 
 owned by such person, after deducting the just debts owing by 
 him." 1 E. S. 391. Upon the balance the tax is to be imposed. 
 Under the present statute, no such deduction is referred to, but 
 the person is to be "assessed*" not only, but " taxed on the value of 
 their shares of stock therein." The difference is significant. 
 
 The direction of the assessors to deduct from the value of the 
 shares of each person a proportionate sum for the real estate owned 
 by the corporation is significant also. It is so not only upon the 
 principle of expressio unius, but as indicating the design of the 
 framers of the statute. No such direction is contained in the gen- 
 eral tax law, but real estate is there assessed and taxed in one col- 
 umn, and the residue of personal estate, after deducting debts, in 
 another. By the statutes of the United States, the real estate 
 owned by a bank is taxable under the State authority directly 
 against the bank, and the revenue on that subject of taxation is 
 obtained as formerly. When the assessment is made upon the 
 shares, the proportionate value of the real estate is deducted; and 
 the State thus obtains from the bank and the shareholder together, 
 as it did before from the bank alone, a tax upon the full 
 value of both its real and its personal estate. There are still other 
 provisions of this statute which are evidence of the legislative in- 
 tention to arrange a system of taxation of this kind of property 
 which should be separate from the general system. Thus, by sec- 
 tion 5, an action is given to the county treasurer " to collect the 
 tax from the avails of the sale of his shares of stock, and the tax 
 on such shares of stock shall be and remain a lien thereon till the 
 payment of the said tax." No such provision for sale of choses in 
 action is declared by the general tax law, and no such lien is de- 
 clared in any other part of the tax law of this State upon the prop- 
 erty assessed. The 6th section also contains the usual provision, 
 that it shall be the duty of the bank to retain so much of the 
 dividends belonging to such stockholder, as shall be necessary to 
 pay the taxes assessed in pursuance of this act. No such provision 
 was ever introduced into the general tax law of this State, or now 
 exists under the general system. These unusual provisions and 
 directions concur with the previous legislation, in indicating the 
 statutory intent, to establish for bank shares a system of taxation 
 
GOURT OP APPEALS, 1867. 691 
 
 People ex rel. Cagger v. Dolan. 
 
 peculiar to itself, and independent of the general system of taxation 
 in existence in the State. The act of April, 1863, chapter 240, is 
 also strongly indicative of the same intention. 
 
 By that act, the Legislature evidently intended to tax the whole 
 available interest in the bank or in its shares. They there provided 
 that a tax should be laid upon " a valuation " equal to the amount 
 of their capital stock paid in and the surplus earnings, less ten per 
 cent, without any deduction. This act was declared void by the 
 Supreme Court of the United States, as laying a tax on the prop- 
 erty of the bank, which property, in whole or in part, consisted 
 of stocks of the Federal government. Immediately after this act 
 was declared invalid, the acts of 1865 and of 1866, already cited, 
 were passed by the Legislature. 
 
 It is argued in behalf of the respondents that, inasmuch as the 
 statute directs the assessment of the bank shares to be included in 
 " the valuation of the personal property of such stockholder," it 
 subjects it to the operation of the general law in regard to assess- 
 ments. It is to be observed, however, that this valuation is 
 directed to be thus made in the ward where the bank is located and 
 not elsewhere, whether the stockholder reside in said ward or not. 
 It was the case with this relator, as it must be with many others, 
 that he did not reside in the ward where the bank was located. It 
 thus, by its terms, becomes at once distinguished from the general 
 tax law, which requires this valuation to be made in all cases at the 
 residence of the stockholder, and the indication is given that this 
 valuation was intended to be a part of the special system, which I 
 have already discussed. Ihave endeavered to show that such was 
 the intention, and this provision is not in conflict with that idea, 
 but forms a convenient portion of the machinery to accomplish it. 
 
 It is said that the expression " but not at a greater rate than is 
 assessed upon other moneyed capital in the hands of individuals in 
 this State," aids the argument of the respondent. It is argued 
 that an individual owning a bond and mortgage for $1,000, and 
 being indebted $500 could, by the general law, claim to have the 
 $500 deducted from the value of his bond and mortgage, and that 
 his assessment and taxation should be upon the remaining $500 
 only ; and that the refusal of a like deduction in favor of the share- 
 holder of $1,000 would subject him to taxation upon twice as 
 large an amount as was imposed upon the individual. This, it is 
 said, would be imposing a greater rate of taxation upon the share- 
 
692 NEW YOEK 
 
 People ex reL Cogger v. Dolan. 
 
 holder. The "rate," or "ratio," is the percentage merely ; the 
 " proportion," the " degree." ("Webster ; Worcester.) If the State 
 imposes a tax of fiye mills upon the dollar on all the real and per- 
 sonal property of the State, five mills on the dollar is the " rate," 
 the degree, the proportion, the percentage of taxation. This is 
 distinct from the question of exemption. Almshouses and institu- 
 tions of learning, and the estates of clergymen, to a limited extent, 
 are exempt from taxation. This exemption may compel the pay- 
 ment of a larger amount by the Temaining tax payers, in an indi- 
 rect manner, for the reason that so large a sum does not come into 
 the treasury of the State as if there were no exemptions. If so, it 
 is not because the rate is altered, but because there is less material 
 upon which the tax may attach itself. Eate and exemptions are in 
 no way connected. In their nature, they have no necessary relation 
 to each other. The one directs how much shall be raised upon 
 certain valuations, while the other directs what property shall be 
 subject to taxation and what shall be exempt. The possession of 
 United States securities by a State bank exempts so much of its 
 capital, as is thus invested, from State taxation, but the possess- 
 ion by a National bank of the like securities does not relieve its 
 shareholders to the like amount. Both of these propositions were 
 decided by this court in The City ofUtica v. Churchill 33 N. Y. 161, 
 and Van Allen v. The Assessors, before cited, 3 Wall. 200 {ante, p. 
 1); Bank Tax Case, 3 Black, 630. The same question was de- 
 cided by this court, in October last. The People ex rel. Kennedy 
 V. The Commissioners of New Yorlc. The fact, therefore, that the 
 same percentage will not produce the same amount of tax when 
 imposed upon a State bank, with a capital of $100,000, that it does 
 when imposed upon National shareholders to that amount, does 
 not affect the legality of the tax, and as a corollary, does not im- 
 pose a different rate of taxation. If it imposed a different rate, 
 the tax would be invalid. The case of The People ex rel. v. The 
 Commissioners of New York, I understand to be decisive against 
 the argument now under consideration. See opinion of Daties, 
 Ch. J., pp. 15, 19, 30. 
 
 In Van Allen v. Tfis Assessors, supra, the Supreme Court of the 
 United States say " upon the whole, after the maturest considera- 
 tion we have been able to give that case, we are satisfied that the 
 States possess the power to tax the whole of the interest of the 
 shareholder, in the shares held by him in these associations, within 
 
, COUET OF APPEALS, 1867. 693 
 
 Conklin v. The Second National Bank. 
 
 the limit prescribed by the act authorizing their organization." 
 This proposition was asserted in denial of a claim that the inter- 
 est of shareholders should be subject to taxation so far only as the 
 capital of the bank was not invested in United States securities, 
 exempt by law from taxation. I think it is correct in its applica- 
 tion to the present case. The assessors did right in refusing to 
 make the deduction claimed, and the order appealed from should 
 be reversed with costs. 
 
 All the judges concurred in the foregoing opinion, except Poe- 
 TEK and BocKES, JJ., who dissented. 
 
 Parkeb, J., delivered a concurring opinion. 
 
 Order reversed. 
 
 OoNKLis" V. The Secoistd National Bank. 
 
 (45 New York, 655.) 
 National hanks have no lien on sha/reafor debts. 
 
 A National bank can acquire an interest in ita own stock only by a purchase 
 to prevent a loss upon a debt previously contracted in good faith ; and a 
 provision in certificates of stock in such bank that they shall not be trans. 
 ferred until all the liabilities of the stockholder to the bank are paid is void 
 and of no effect. * 
 
 ACTION to recover shares of stock in defendant's bank which 
 were assigned by one Chandler to the plaintiff. The certificates 
 of shares provided (as did also the by laws of defendant's bank), 
 " that this stock is not transferable until all liabilities of the stock- 
 holder to this bank are paid." 
 
 * The Supreme Court of New York, in Rosenback v. The Salt Springs National 
 Bank, 53 Barb. 495, held that a National bank could not by a by-law create 
 a lieu on its own stock in ita favor, but thought that such lieu might be valid if 
 provided for in the " articles of association." The Supreme Court of the Uni- 
 ted States has, since that case, settled the question by holding that neither by 
 its articles of association, by its by-laws, nor by any agreement in the certifi- 
 cates of shares, can a National bank acquire a lien on its stock. BuUard v. 
 Bank, ante, p. 93. See also Evansiille National Bank v. Metropolitan National 
 Bank, ante, p. 189 ; Johnson v. Liflin, ante, p. 331. 
 
 The Court of Chan«ery of New Jersey held that a National bank could acquire 
 a lien under a by-law to that effect. Young v. Vough, 8 C. B. Green, 325, 
 afiSrmed by the Court of Errors and Appeals, 9 id. 535; but such' is not the law 
 since BuUard v. Bank. — Rep. 
 
694 NEW YOEK 
 
 Conklin v. The Second Ifational Bank. 
 
 At the time Chandler transferred the stock to plaintiff, he was 
 indebted to the bank in the sum of $4,000 for moneys which he had 
 collected for the bank, but had not paid over. The defendant 
 claimed to have a lien on the stock for such indebtedness. 
 
 The plaintiff had a judgment which was affirmed by the Supreme 
 Court, at General Term (53 Barlj. 512), and defendant appealed. 
 
 John G. Churchill, for appellant. 
 
 Amasa J. Parker, for respondent. 
 
 Gkovbe, J. The defendant, as appears by the case, was incor- 
 porated under the National Currency Act of 1863. Section 35 of 
 that act provides that the banks shall have a lien upon the stock 
 of each stockholder for all debts and liabilities from him to the 
 bank unpaid, and no transfer of the stock of the bank shall be 
 valid until all debts and liabilities of the stockholder making the 
 transfer are paid, and this provision shall be inserted in substance 
 in the certificates of stock issued by the bank. Section 21 provides 
 that certificates of stock signed by the president and cashier may 
 be issued to stockholders, and the certificates shall state on the 
 face thereof that the stock is transferable only upon the books of 
 the bank, and that, when the stock is transferred, the certificate 
 thereof shall be returned to the bank and canceled, and new certifi- 
 cates issued. The certificates for stock issued by the defendant to 
 the plaintiff's assignor, pursuant to the requirement of the 25th 
 section, expressed on their face that the stock was not transferable 
 until all liabilities of the stockholders to the bank were paid. It ig 
 entirely clear that, by the Currency Act of 1863, a lien was given, 
 to all banks organized under it, upon the stock of each stockholdei 
 for all debts and liabilities to the banks. This lien did not arise 
 from any by-law of the banks, but was given expressly by the stat- 
 ute authorizing the incorporation of this class of institutions. But 
 the act of 1863 was repealed by the 62d section of the Currency 
 Act of 1864, passed June 3d of that year. 13 "U. S. Stat, at Large, 
 99. That section provides that the act entitled an act to provide 
 a National currency, etc., approved February 25th, 1863, is hereby 
 repealed; provided that such repeal shall not affect any appoint- 
 ments made, acts done, or proceedings had, or the organization, 
 acts or proceedings of any association organized or in the process 
 of organization under the act aforesaid, and provided also that all 
 
COURT OP APPEALS, 1867. 
 
 Conklin v. The Second National Bank. 
 
 such associations, organized or in process of organization, shall 
 enjoy all the rights and privileges granted, and be subject to all 
 the duties, liabilities and restrictions imposed by this act, and pro- 
 vided, further, that the circulation issued or to be issued by such asso- 
 ciation shall be considered as a part of the circulation provided for in 
 this act. The intention of this section was to continue in existence 
 all banks organized under the act of 1863, with the same powers and 
 privileges, and subject to all the restrictions conferred and imposed 
 upon those thereafter organized under the act of 1864. The pro- 
 visions giving a lien to a bank upon the stock of its stockholders 
 or any debt or liability of a stockholder to the banks and for ex- 
 pressing such liability upon the face of the certificates issued to 
 holders of stock contained in the act of 1863, were not re-enacted 
 by the act of 1864. The defendant cannot, therefore, sustain the 
 Hen claimed upon the act of Congress under which it is incor- 
 porated. Were there no restrictions imposed by the act of 1864, 
 upon banks acquiring liens upon its stocks for the debts and liabili- 
 ties of its stockholders to it, the only question in the case would 
 be, whether a lien in its favor was created by the by-law enacted 
 by its directors, declaring that its stock should be subject to such 
 lien. But the act of 1864 does impose restrictions upon banks 
 in this respect. Section 35, 13th U. S. Statutes at Large, 110, pro- 
 vides that no association shall make any loan or discount on the 
 security of the shares of its own capital stock, nor be the purchaser 
 or holder of any such shares, unless such security or purchase shall 
 be necessary to prevent loss upon a debt previously contracted in 
 good faith, and stocks so purchased or acquired shall, within six 
 months from the time of its purchase, be sold or disposed of at 
 public or private sale, in default of which a receiver may be ap- 
 pointed to close up the business of the association according to the 
 provisions of the act. It was held by the United States Supreme 
 Court in The First National JBanh of South Bend v. Lanier, 
 {ante, p. 70), that a pledge of his stock to the bank as a 
 security for such money as the bank might deposit with a bank- 
 ing firm of which the stockholder was a member, was prohibited 
 by the above section, and therefore void. Justice D atis in giving 
 the opinion of the court says: " These institutions were created to 
 subserve public purposes, and not the mere private interests of 
 their stockholders, and in no better way could this object be attained, 
 than by placing shareholders in their pecuniary dealings with the 
 
696 NEW YOEK 
 
 Conklin v. The Second National Bank. 
 
 bank on the same footing with other customers. Besides, how 
 oould the capital of the bank be kept available for active use, if 
 the shareholder, who had pledged his stock for borrowed money, 
 should be unable to meet his obligation ? To the extent of the 
 debt, the capital would be withdrawn, and it is hardly possible that 
 this could be the case for any length of time were the debt secured 
 outside of the stock." The learned justice answers the argument 
 of the plaintiff's counsel: That deposits are neither loans nor dis- 
 counts, and comes to the conclusion that they are loans within 
 both the letter and spirit of the section, whether interest was 
 agreed to be paid thereon or not. The question in the present 
 case is not, upon principle, distinguishable from The Bank of South 
 Bend v. Lanier {ante, p. 70). In the present case the plaintiff's as- 
 signor, who was a private banker, and the defendant, were the 
 agents of each other for the collection of paper belonging to one 
 against parties in the vicinity of .the other, and for paying checks 
 drawn upon the other presented by holders thereof. The course 
 of business was that each credited the other in account for the 
 money collected upon paper sent for collection, and charged such 
 checks drawn upon the other as were paid. These accounts were, 
 from time to time, settled, and any balance due paid by the debtor 
 party. The money collected upon paper remitted for that purpose, 
 when credited in account by a banker, with the consent of the 
 party owning the paper, becomes, to all intents and purposes, a 
 deposit, and comes directly within the rule settled in The Bank v. 
 Lanier. Besides, the construction put upon the section in that 
 case, and the reasons assigned therefor, lead necessarily to the con- 
 clusion that all agreements by a stockholder, providing that the 
 bank shall have a lien upon his stock for any liability thereafter 
 created by him to the bank, are within section 35 of the act, and 
 void. That the bank can only acquire an interest in its stock by 
 an absolute purchase, to prevent a loss upon a debt previously con- 
 tracted in good faith. When the statute has prohibited all express 
 agreements between a bank and its stockholders for a lien in favor 
 of the former upon the stock of the latter, to secure any debts or lia- 
 bilities of the stockholders to the bank, that no such lien can be cre- 
 ated by a mere by-law of the bank is too clear to require discussion. 
 
 The judgment appealed from must be affirmed with costs. 
 
 All agreeing, except Peokham, J., who does not vote. 
 
 Judgment affirmed. 
 
COUET OF APPEALS, 1872. 597 
 
 First National Bank of Sandy Hill v. Fancher. 
 
 PiasT National Bakk op Sakdt Hill t. Panchee. 
 
 (48 New York, 524.) 
 Tax on Nationalhank shares — Bight of collector to seiae property of hank. 
 
 A warrant for the collection of a tax assessed to the shareholders on shares 
 of stock in a National bank, directed the collector " to levy the same of the 
 goods and chattels of such persons." Held, that the collector could not 
 thereon seize the property of the bank to pay the tax. 
 
 ACTION by the bank for trespass by the defendant, a collector of 
 taxes of the Tillage of Sandy Hill, in taking possession of the 
 money and property of the bank. The defendant having a war- 
 rant to collect a tax assessed on certain residents of Sandy Hill on 
 stock owned by them in the First National Bank of Sandy Hill, 
 and which directed him " to levy the same of the goods and chattels 
 of such persons," demanded payment thereof of defendant, which 
 being refused he seized the property of the bank. All the stock- 
 holders assessed had personal property in the village. 
 
 L. H. Northrup, for appellant, 
 
 U. G. Paris, for respondent. 
 
 Hunt, C. The warrant in the hands of the defendant, as col- 
 lector, directed him to collect the amounts specified from the per- 
 sons named, and " to levy the same of the goods and chattels of such 
 persons." Assuming the regularity of the assessment, that the 
 property was subject to the assessment made, and that the bank 
 held the funds with which the tax shoald have been paid, the de- 
 fendant is not justified. By his warrant, if necessary to obtain 
 payment, he was authorized to levy upon the goods of the persons 
 named. No other authority was confided to him. This authority 
 is special and exceptional. It must be pursued according to its 
 terms. Allen Brothers were the first persons named in the assess- 
 ment-roll given in evidence. Their property was assessed at 
 110,000, and a tax of sixteen dollars was imposed upon the same. 
 This tax the collector was authorized and directed to collect by a 
 levy and sale of the goods and chattels of the Messrs. Allen, if this 
 88 
 
NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 sum should not be voluntarily paid. But he had no authority to 
 levy upon the goods of another person to make this sum. His au- 
 thority did not reach to that extent. He probably had no authority 
 to make such a levy and sale, even with the consent of such other 
 person. His authority was limited to two precise acts ; first, to 
 receive a voluntary payment ; second, if such payment was not 
 made, to levy upon and sell the goods of the persons named in the 
 tax list. If the Sandy Hill Bank had undertaken to pay these 
 taxes, there was probably a way in which the performance of their 
 engagement could have been enforced, if payment could not have 
 been otherwise obtained. But it is too clear for argument, that a 
 tax collector could not enforce such an agreement by a seizure and 
 sale of the property of the bank. 
 
 The assessment upon the shares of a National bank was for a tax 
 imposed by authority of the State of New York. It was made in 
 the autumn of the year 1865, and by virtue of the statute of the 
 State of New York, passed in that year. Laws 1865, eh. 97, § 10, 
 p. 173. It has been expressly adjudged by the Supreme Court of 
 the United States ( Van Allen v. The Assessors, 3 Wall. 573 [ante, 
 p. 1]), that this statute was invalid, and that a tax imposed under 
 its authority could not be enforced. The Gity of Utica v. Ghurchill, 
 33 N. Y. 161, holding the contrary doctrine, was reversed by the 
 case of Van Allen v. The Assessors. The tax sought to be enforced 
 in this case was not therefore legally imposed. The judgment must 
 be affirmed, with costs. 
 
 All concur. Judgment affirmed. 
 
 Cooke t. The State National Bank of Boston. 
 
 (52 New York, 96 ) 
 
 NationaX hanks — Action against,, in State court — Bemoval of cause — Certifica- 
 tion of check. 
 
 Action brought by a citizen of New York, in a State court of New York, 
 against a National bank located in Boston. Held, (1) that the court was not 
 ousted of jurisdiction by section 57 of the National Currency Act (13 Stat, 
 at Large, 99), th,at statute being permissive and not mandatory as to the 
 courts in which a National bank maybe sued; and, scmftZe, that Congress 
 
COUET OF APPEALS, 1873. ggg 
 
 Cooke V. The State National Bank of Boston. 
 
 had not the power to deprive State courts of jurisdiction in such cases ; (2) 
 that the defendant was a citizen of Massachusetts, within the meaning of 
 the acts relating to the removal of causes to the Federal courts ; (3) that the 
 joinder in the action as defendants, of the drawers of the check, would not 
 deprive the bank of the right to alone apply for a removal of the case to the 
 Federal court, the causes of action being distinct and only properly joined 
 by virtue of a State statute; (4) by a divided court, that the cause could not 
 be removed by the bank into the Federal court, under the act of Congress 
 of March 3, 1867, as, being a corporation, it could not make the affidavit 
 required by the act. (See note, p. 714.) 
 In an action by a bona fide holder of a check drawn on defendant, a National 
 bank, and certified by its cashier, held, that the defendant was liable, 
 although the drawer had no funds in the bank when the check was certified. 
 
 APPEAL from a judgment of the Supreme Court, at General 
 Term, in the First Department, afiSrming a judgment in favor 
 of the plaintiff, entered upon a verdict. S. C, 50 Barb. 339; 1 
 Lans. 494. 
 
 The action was upon a check, drawn by the defendants, Mellen, 
 Ward & Carter, under their firm name of Mellen, Ward & Co., 
 upon the defendant, the State National Bank of Boston, and certi- 
 fied by its cashier. At the commencement of the suit, the plaintiff 
 was a citizen and resident of the State of INew York, and a mem- 
 ber of-H;he firm of Jay Cooke & Co., of the city of New York, and 
 had been such member for a year previous, and was so at the time 
 of the trial. 
 
 The defendant, the bank, was a duly organized National bank, 
 under the National Bank Act of June 3, 1864, and carried on bus- 
 iness in the city of Boston, Mass., and not elsewhere. The 
 defendants, Mellen, Ward & Carter, were, at the time of the trans- 
 action in question, money brokers in Boston, under the firm name 
 of Mellen, Ward & Co. They did not appear in the action. 
 
 The check, upon which the action was brought, was drawn by 
 Mellen, Ward & Co. upon the State National Bank of Boston, 
 dated Boston, February 38, 1867, payable to Gould or bearer, for 
 $135,000. Across the. face of the check was written, " Good, 0. H." 
 Smith, Cash." C. H. Smith was then the cashier of said bank. 
 The check was indorsed as follows : 
 
 " Pay Jay Cooke & Co., or order, 
 
 " And. J. Loud, Cas. 
 " Pay to the order of Pitt Cooke, without recourse to Jay Cooke & Co." 
 
 Andrew J. Loud was then the cashier of the Second National 
 Bank, Boston. 
 
700 NEW YORK 
 
 Cooke V. The State National Bank of Boston. 
 
 The check, with this -writing across the face of it, was delivered 
 by Ward, Mellen & Co. to the Second National Bank, together 
 with $15,000 iu bills, on the day of its date, in payment of a draft 
 by Jay Cooke & Co., on said Mellen, Ward & Co., for $140,050, 
 dated February 27, 1867, drawn against a remittance of $100,000 
 in gold certificates, which were sent at the same time to the Second 
 National Bank, to be delirered to Mellen, Ward & Co. on their 
 payment of the draft. The bank, on receiving the check and bills, 
 delivered the gold certificates to Mellen, Ward & Co. 
 
 The check was received by the Second National Bank, near the 
 close of business hours, and at the suggestion of Mellen, Ward & 
 Co. it was kept back, and not sent to the clearing house on that 
 day. Mellen, Ward & Co. were not depositors in the State National 
 Bank, and had no funds in the bank at the time. The next day 
 (March 2) the check was presented for payment, through the clear- 
 ing house, and payment refused. 
 
 On the 21st of November, 1866, about three months prior to the 
 receipt of the cheek by the Second National Bank, a meeting of the 
 banks in Boston was held at the clearing house, to consider the sub- 
 ject of receiving certified checks, instead of bills, in payment. Both 
 the Second National Bank and the State National were represented 
 at this meeting. A resolution was adopted in substance, that the 
 associated banks approved adopting a custom of receiving certified 
 checks, " provided that the directors of each bank, so certifying, 
 shall first have passed a vote agreeing that their respective banks 
 shall be bound by such act of certification." Of the banks present, 
 all except three voted in favor of the resolution. The State 
 National was one of the three voting in the negative. The Second 
 National voted in the affirmative. The action of the president of 
 the bank, in voting in the negative, was reported to the board of 
 directors, at its first meeting afterward and was approved by the 
 directors. On the 5th of December, 1866, a circular was sent by 
 the manager of the clearing house to all the banks in Boston, mem- 
 bers of the clearing house association, and among others, 'to the 
 Second National Bank, containing the names of the banks which 
 had voted to authorize their officers to certify checks under the 
 resolution, and notifying the banks who intended to enter into the 
 arrangement, to inform the manager of the clearing house, " in 
 order that the banks may receive an early notice of the same." The 
 State National Bank did not enter into the arrangement. 
 
COUET OP APPEALS, 1873. 701 
 
 Cooke y. The State National Bank of Boston. 
 
 In December, 1868, after this suit was at issue, the defendant, 
 the State National Bank, applied to the court, at Special Term, upon 
 an affidavit of seven of the directors of the bank, for the removal 
 of the canse into the Circuit Court of the United States for the 
 Southern District of New York. An order was made by Judge 
 Cakdozo transferring the cause to that court, and directing this 
 court to proceed no further in the- action, as against -the bank, 
 which order was reversed by the General Term on appeal, and on 
 re-argument, the General Term reaffirmed its former decision, on 
 the ground that Mellen, Ward & Carter were not parties to the 
 application. 
 
 On the trial, before the case had been opened by the plaintiff's 
 counsel, a protest was made on the part of the bank, that the court 
 had no jurisdiction to hear or try the action, on the ground that 
 it had been removed to and was then pending in the Pederal court. 
 And a motion was made to dismiss the complaint for want of juris- 
 diction on that ground, which was denied. The counsel for the 
 bank also protested that the court had no jurisdiction to hear and 
 try the action, on the ground that under the act of Congress of 
 June, 1864, under which the bank had been created a National 
 bank, it could only be sued in a Circuit or District Court of the 
 United States, held within the State of Massachusetts, or in a court 
 in the county or city, in which the bank was located, having juris- 
 diction in similar cases, and moved to dismiss the complaint for 
 want of jurisdiction, on that ground. This motion was also denied. 
 The defendant's counsel also moved to dismiss the complaint on 
 the ground that there was not sufficient evidence to entitle the 
 plaintifE to go to the jury and also moved the court to direct a ver- 
 dict for the defendants, both of which motions were denied. 
 
 The court directed the jury to find a verdict for the plaintiff for 
 the amount of the check in suit $125,000, with interest, to which 
 direction and decision the defendant's counsel excepted. The jury 
 thereupon found a verdict for the plaintiff for $153,999.88. 
 
 E. W. Stoughton, for appellants. After an order is properly 
 made, removing a cause into the Federal court, the State court 
 has no jurisdiction. Act of Congress, March 2, 1867; 14 Stat. 
 at Large, 558 ; Kanouse v. Martin, 15 How. 198 ; Gordon v. Long- 
 est, 16 Pet. 97 ; Livermore v. Jenks, 11 How. Pr. 479 ; Vandervoort v. 
 Palmer, 4 Duer, 677 ; Ilius v. N.Y.&N. H. B. R. Co., 13 N. Y. 597 ; 
 
702 NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 Stevens t. Phoenix Ins Go., 41 id. 149 ; Bee Bliven v. New England 
 Screw Go., 3 Blatchf. Ill ; Disbrow v. Driggs, 8 Abb. 306 ; Jones t. 
 Seward, 26 How. Pr. 436. While the bank was a State bank, Massa- 
 chusetts was its halitat, and from that a conclusive presumption 
 would arise that its officers and managers were citizens of that State. 
 Bundle t. Del. & Raritan Ganal Co., 14 How. 80 ; Marshall v. Bait. 
 & Ohio R. R. Co., 16 id. 14 ; Louisville R. R. Go. t. Letson, 3 id. 
 497 ; Covington Draw Bridge Go. v. Shepherd, 30 id. 333 ; Ohio (& 
 Mississippi R. R. Co. v. Wheeler, 1 Black, 386. The rule is the 
 same in respect to National banks. Manuf. Nat. Bank v. Baack, 
 40 How. Pr. 409 ; 8 Blatchf. 137. The union of parties, without 
 interest, with the real parties to a litigation cannot oust the Federal 
 courts of Jurisdiction if the character of the real parties is such as 
 to confer it. Wood v. Davis, 18 How. 467 ; Wormley t. Wormley, 
 8 "Wheat. 451; Louisville R. R. Co. v. Letson, 3 How. 497 ; Browne 
 V. Strode, 5 Cr. 303 ; Livingston v. Gibbons, 4 Johns. Ch. 94 ; 
 Ward Y. Arredondo, 1 Paine's C. 0. 410 ; Norton t. Hayes, 4 Denio, 
 245 ; Vandevoort v. Palmer, 4 Duer, 677. Under the act of June 3, 
 1864, a National bank can be sued only in a Circuit or District Court 
 of the United States, or in a State, county, or municipal court 
 of the State in which the bank is located, having jurisdiction in sim- 
 ilar cases. 13 Stat, at Large, 99 ; 13 id. 665, § 59 ; Bank of U. S. 
 V. Deveux, 5 Or. 85, 86 ; Osborn v. Bank of U. S., 9 Wheat. 738 ; 
 Grisp V. Banbury, 8 Bing. 394 ; Minor v. Mechs, Bank, 1 Pet. 
 46, 64 ; Crocker v. Marine Nat. Bank, 101 Mass. 340. The certifi- 
 cation of the cashier was void. F. & M. Bank Case, 16 N. Y. 135 ; 
 N. H. R. R. Case, 34 id. 30 ; Bank of U. S. v. Dunn, 6 Pet. 51 ; 
 Fleckner v. U. S. Bank, 8 Wheat. 338 ; U. S. v. City Bank, 31 
 How. 356 ; Mussey v. Eagle Bank, 9 Mete. 306 ; Fulton Bank v. 
 N T. & Sharon Canal Co., 4 Paige, 137 ; Kirk v. Bell, 13 Eng. 
 Law & Eq. 385 ; Ang. & Ames on Corp., §§ 399, 300, 301 ; Story 
 on Agency, §§ 114, 115 ; 13 Stat, at Large, 19. The rule laid down 
 in N. Y. & N. Haven R. R. Co. v. Schuyler, 34 N. Y. 38, if it be 
 now the law of New York, is not the law of Massachusetts. Mussey 
 V. Beecher, 3 Cush. 511; Lowell Bank v. Winchester, 8 Allen, 109 ; 
 Benoit v. Conway, 10 id. 538. Nor is it the law of England 
 {Grant v. Norway, 10 C. B. 665; Hulberstyy. Ward, 8 Exch. 330 ; 
 Alemnder v. Mackenzie, 6 C. B. 766 ; Stagg t. Elliott, 13 0. B. [N. 
 S.] 373 ; Baines v. Ewing, Law Kep., 1 Exch. 330), or of the Na- 
 tional courts. Freeman v. Buckingham, 18 How. 183. The check 
 
COUKT OF APPEALS, 1873. 703 
 
 Cooke V. The State National Bank of Boston. 
 
 was certified to be used as currency ; the certificate was void, being 
 without power under the organic law, and as creating a currency 
 prohibited by that law. 12 Stat, at Large, ch. 106, §§ 8, 23, 23, 
 24, 45; Davidson v. Lanier, 4 Wall. 447; Bank of U. 8. v. Owens, 
 2 Pet. 527 ; Root v. Oodard, 3 McL. 102 ; Hayden v. Davis, id. 276 ; 
 Safford\. Wychoff, 1 Hill, 11; Smith v. Strong, 2 id. 241; Banh 
 of Orleans v. Merrill, id. 295; Leavitt v. Palmer, 3 N. Y, 19 ; Veazie 
 Bank v. Fenno, 8 Wall. 533. Notice to the Second National Bank 
 of a want of authority to certify, on the part of the defendant's 
 cashier, was, in law, notice to Jay Cooke & Co. and to the plaintiff. 
 Story's Eq. 408, and note ; Toulmin t. Steere, 3 Meriv. 222 ; Har- 
 greaves t. Rothwell, 1 Keen. 154 ; Nixon t. Hamilton, 2 Dru. & 
 War. 391 ; Fuller t. Bennett, 2 Hare, 394 ; Gerrard t. O'Reilly, 3 
 Dru. & War. 414 ; Majoribanks v. Hovenden, Drury, 11; Story on 
 Agency, § 139 ; Lowther v. Garleton, 2- Atk. 342; 1 Liv. on Agency, 
 ch. 10, § 3 ; Fulton Bank v. N. Y. <& Sharon Canal Co., 4 Paige, 
 137. 
 
 John E. Burrill, for respondent. 
 
 Chukch, Ch. J. The jurisdiction of the State court is denied 
 upon two grounds : 1. That the National Currency Act of Congress 
 prohibited original jurisdiction ; and 2. That the cause has been 
 removed from the State to the Federal courts. 
 
 The alleged prohibitory statute is the 57th section of the afore- 
 said act ( 13 Stat, at Large, 99 ), and provides : " That suits, 
 actions and proceedings against any association under this act may 
 be had in any circuit, district or"territorial courts 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. Pro- 
 vided, however, that all the proceedings to enjoin the Comptroller 
 under this act shall be had in the circuit, district or territorial court 
 of the United States held in the district in which the association 
 is located." 
 
 I think the proper construction of this section is to regard the 
 power conferred, of bringing actions against the associations in 
 specified courts, as permissive and not mandatory. The frame- 
 work of the section implies that intention. The words "may" 
 and " shall " are both used ; the former to confer a privilege, the 
 
704 NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 latter as a mandate. It is presumed that the attention of CongresE 
 was drawn to the distinction between the ordinary import of the 
 two words, and that they were used with reference to that distinc- 
 tion, and hence that, if it had been designed to limit prosecutions 
 to the specified courts, the same word would have been employed 
 as in limiting a particular proceeding to a specified court. 
 
 There are no words of exclusiori in the act, and it is a general 
 rule as to jurisdiction, that to confer it 7ipon one court does not 
 operate to oust other courts before possessing it, for the reason that 
 concurrent jurisdiction is not inconsistent. 2 Hill, 164. This rule 
 would be specially applicable to the 59th section of the act of 
 1863, of which the section in question is an amendment. By that 
 section, suits by and against these associations were authorized to 
 be brought in the Circuit and District Courts of the United States, 
 without mentioning State courts ; and no one, I think, ever sup- 
 posed that the privilege conferred by that section precluded actions 
 in State courts. There is some force in the argument that the 
 specification of State courts in the act was unnecessary and useless, 
 unless the clause was intended as restrictive ; but this is far from 
 conclusive. Words are often used in a statute for the purpose of 
 producing or preventing a particular inference from other words, 
 and sometimes without necessity or pertinency. After authorizing 
 suits in local Federal courts, a similar power in local State courts 
 may have been deemed proper to prevent an inference that juris- 
 diction was intended to be restricted to the former. At all events, 
 I am unwilling to hold that the jurisdiction of the State courts 
 was intended to be taken away upon doubtful or ambiguous lan- 
 guage. Such a construction would enable these associations to de- 
 lay and defraud their creditors, and produce inconvenience and 
 expense to suitors, involving an amount of injustice which we can- 
 not attribute to the intention of the law-making power. I lay no 
 stress upon the 8th section, because the authority to sue and be 
 sued conferred by that section confers a corporate attribute and 
 does not relate to jurisdiction. 
 
 But if this construction of the act is erroneous, I do not think 
 it competent for Congress to deprive the State courts of jurisdic- 
 tion in all actions against these banking associations. It is proper 
 to observe in the first place that there are no words of exclusion in 
 the Constitution itself. The second section of the third article de- 
 clares that " the judicial power shall extend to all cases arising under 
 
COUET OP APPEALS, 1873. 705 
 
 Cooke V. The State National Bank of Boston 
 
 this Constitution, the laws of the United States, and treaties made," 
 etc., and it may well be doubted whether as to such jurisdiction as 
 the State courts before possessed, not relating to subjects growing 
 out of the organization of the goTernment or the specific powers 
 conferred upon it, it was intended to confer by this clause any 
 other than concurrent power. Federalist, No. 82, 2 Hill, supra. 
 Howeyer this may be, it is clear that the exercise of the power 
 must be confined to the cases to which the judicial power extends, 
 viz., to cases arising under the Constitution, laws or treaties of the 
 United States, and unless it can be established that every possible 
 action is a case arising under the Constitution or laws of the 
 Union, a general prohibition against actions in State courts would 
 be invalid, and a restriction to particular courts equally so. The 
 case of Oshorn v. The Banh of the United States, 9 Wheat. 738, is 
 relied upon as authority for the exercise of this power. That was 
 an action in equity, brought by the bank to restrain the ofilcers of 
 the State of Ohio from collecting a penalty imposed by way of a 
 tax in gross, for its continuing to transact business within the 
 State after a certain period. Upon the theory upon which the 
 bank was created as one of the agencies of the government, that 
 was clearly a case to which the judicial power of the Union ex- 
 tended, and it was competent to authorize such an action to be 
 brought in the United States Circuit Court, and the question of 
 jurisdiction might have been disposed of by restricting the act to 
 such cases. 
 
 The opinion of Chief Justice Maeshall goes to the length, 
 however, of holding that every action which the bank might bring 
 was a case arising under the Constitution and laws of the Union, and 
 this was placed mainly upon the ground that the right to sue 
 depended upon its corporate existence, created by Federal power, 
 and that the possibility that this right might be questioned in any 
 suit constituted a case arising under the Constitution and laws of 
 the United States, without regard to the fact whether any such 
 question was raised or not. 
 
 As an original question, I should doubt the soundness of this 
 view, and prefer to adopt the views expressed in the dissenting 
 opinion of Johis^son-, J. But the decision is not decisive of the 
 question as presented in this case. It would be an unwarrantable 
 extension of the principle of that case to apply it to every action 
 against a corporation created by Congress. Whether a corporation 
 89 
 
706 NEW YOEK 
 
 Cooke v. The State National Bank of Boaton. 
 
 ■was created by one power or another is manifestly immaterial in 
 many actions which might be brought against it. The commence- 
 ment of a suit admits the capacity of the corporation to be sued, 
 and the very first step of the plaintiff may show that no question 
 can arise of Federal cognizance. Take, for example, an action to 
 recoTer money, the complaint alleging that the plaintiff deposited 
 $100 with the bank defendant, which on demand it refused to pay, 
 and issue is joined by a denial that the plaintiff ever deposited the 
 money. Can it be that this is a case arising under the Constitu- 
 tion and laws of the United States? To regard it as such involves 
 the perversion of legal language. Nor can any reason be assigned 
 why a strained or artificial construction • should be adopted for the 
 purpose of depriving State tribunals of their legitimate functions. 
 Under the appellate jurisdiction of the Supreme Court of the 
 United States, which is referable to the same general power as the 
 original jurisdiction, it is well settled that it is not sufficient to 
 show that a question might have arisen, unless it is shown that it 
 did in fact arise in the case. 10 Pet. 368 ; 13 Wheat. 117. I insist 
 that the possibility of a question does not make a case arising under 
 Federal law; but if it did, in the case supposed, and in most others 
 likely to be brought, it is difficult to see how any such question 
 could be raised. 
 
 The existence of the corporation is conceded by suing it as such, 
 and the issue made is confined to the fact of receiving the money. 
 This view can work no injustice to these associations nor deprive 
 them of any right to be heard in the United States court, if the 
 case is one to which the jurisdiction extends, as the right of remo- 
 val, both on account of the nature of the case and the condition of 
 citizenship, is secured by various statutes. 
 
 The United States Bank was chartered as a fiscal agent of the 
 government, while these associations were created under a supposed 
 power to furnish a Ifational paper currency ; but the distinction, so 
 far as it has any bearing upon the present question, is in favor of 
 the jurisdiction of the State courts, and against the power of 
 restriction. Upon all questions respecting State and Federal powers, 
 the utmost fairness and forbearance should be exercised in drawing 
 the line between them. There is no antagonism in theory between 
 the two governments, and if each would refrain from the exercise 
 of doubtful powers, no collision would ever occur. While, as we 
 hold, Congress did not intend to oust the State courts of jurisdic- 
 
OOUET OF APPEALS, 1873. 707 
 
 Cooke V. The State National Bank of Boston. 
 
 tion by this act, we are confident tliat no such power has been con- 
 ferred by the Constitution. If the Federal Legislature may create 
 corporations for the ti'ansaction of the banking business of the 
 country, and confine all legal proceedings by and against them 
 to Federal courts, it requires only another step in the same direc- 
 tion to create corporations for the transaction of railroad, tele- 
 graph, express and manufacturing business, and thus to usurp 
 control OTer the whole business of the country and the internal 
 afEairs of the States, absorbing the judicial functions of State courts 
 and reducing the States themselves to mere goyernment skele- 
 tons without power or vitality, a result which no friend of the 
 Constitution or of republican institutions can desire. 
 
 The second objection to the jurisdiction of the court is that the 
 cause was lawfully removed from the State to the Federal court. 
 The removal is claimed to have been effected under the act of 
 March 2, 1867. No order of the State court is necessary, but the 
 removal is effected by a compliance with the statute. The only 
 discretion which the State court can exercise is in respect to the 
 sufficiency of the surety. 5 Blatchf. 336; 6 id. 363. 
 
 The counsel for the plaintiff urges three objections to the validity 
 of the removal: 1. That the bank defendant, being an association 
 organized under the National Currency Act, is not a citizen of 
 Massachusetts within the meaning of the Constitution. 
 
 The Federal courts at an early day felt some embarrassment in 
 holding that corporations were entitled to the rights of citizens in 
 suing and being sued, resulting from an opinion then entertained 
 that corporations could not be regarded as citizens within the 
 meaning of the United States Constitution. The difficulty was at 
 first overcome -by holding that the court would look behind the 
 artificial being, to the corporators, and if all of them resided in a 
 different State from the one in which the suit was brought, and 
 where the other party resided, it should be deemed a suit between 
 the corporators and the other party. 3 Cranch, 267; 5 id. 84. 
 These decisions necessarily involved the act that all corporators 
 must reside in one State. 14 Pet. 60. 
 
 But in the case of the L. 0. & G. R. R. Go. v. Letson, 3 How. 
 (U. S. ) 497, this doctrine was modified; and it was decided that a 
 citizen of one State could sue a corporation created by and tran- 
 sacting its business in another State, although some of the members 
 of the corporation were not citizens of that State. 
 
708 NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 It was stated by Chief Justice Taney, 1 Black, 296, that the 
 decision in the Letson case was based upon the legal presumption 
 that all the members of a corporation are citizens of the State in 
 which alone the corporate body has a legal existence, and that no 
 averment or CYidence to the contrary is admissible; and, hence, 
 that a suit by or against a corporation is a suit by or against citi- 
 zens of the State which created the corporate body. The same 
 thing had been stated by the same learned judge in 30 How. 233 ; 
 and is reiterated by Blatchfobd, J., in M. N. Bank of Gliicago t. 
 Baack, reported in 40 How. Pr. 409. Oatboit, J., in Rundle v. D. 
 and R. C. Co., 14 How. (U. S.) 95, states that the Letson case de- 
 cided that, if the president and directors are citizens of the State 
 where the corporation was created, and the other party is a citizen 
 of another State, the Federal courts have jurisdiction; while, in 
 Cowles V. Mercer County, 1 Wall. 131, the present chief justice 
 states that the decision in the Letson case is, " that a corporation 
 created by the laws of a State, and having its place of business 
 within that State, must, for the purposes of suit, be regarded as a 
 citizen within the meaning of the Constitution, giving jurisdiction 
 founded upon citizenship;" and he adds: "In the case before us 
 the corporators are all citizens of Illinois, and the corporation is 
 liable to suit within the narrowest construction of the Constitu- 
 tion." 
 
 With these conflicting views as to the decision in Letson's case, 
 the only safe guide is the opinion pronounced; and with all due 
 respect, it seems to me that it was intended to decide that corpora- 
 tions are citizens of the States which create them, irrespective of 
 the residence of the corporators; and that the presumption of such 
 residence formerly indulged, and whether regarded as one of fact or 
 law was intended to be ignored and disregarded. Wayne, J., in 
 delivering the opinion, declared that the court intended to decide 
 " that a corporation, created by and doing business in a particular 
 State, is to be deemed to all intents and purposes as a person, 
 although an artificial person, an inhabitant of the same State, for 
 the purposes of its incorporation, capable of being treated as a 
 citizen of that State as much as a natural person ;" and, in closing 
 his opinion, adds: "We confess our inability to reconcile these 
 qualities of a corporation — residence, habitancy and individu- 
 ality — with the doctrine that a corporation aggregate cannot be a 
 citizen for the purposes of a suit in the courts of the United States, 
 
COURT OP APPEALS, 1873. 709 
 
 Cooke V. The State National Bank of Boston. 
 
 unless in consequence of a residence of all its corporators, being of 
 the State in which the suit is brought. When a corporation exer- 
 cises its powers in the State which chartered it, that is its residence ; 
 and such an averment is sufficient to give the Circuit Courts juris- 
 diction." 
 
 As an original question, it seems clear that the residence and citi- 
 zenship of a corporation should be determined without regard to 
 the residence of its corporators. No valid reason is perceived for 
 applying the presumption, or, if applied, it furnishes no ground 
 for the doctrine that the suit is by the corporators in their personal 
 capacity. Although they have an interest in the suit, they are not 
 parties in any legal sense, and their interests are merged in the cor- 
 porate bo&j. But I cannot agree with the counsel for the plaintiff, 
 that if the doctrine of presumption is to be maintained it would 
 not apply to these banking associations. Their location and place 
 of business are fixed by the law of their creation. They are made 
 inhabitants of States for the purposes of taxation, and a majority 
 of their managing officers are required by law to reside in the 
 States of their respective location. I see no reason why this arti- 
 ficial presumption should not as well apply to them as if incorporated 
 by State authority, especially as in this case where a State bank by 
 virtue of the statute was transmuted from a State to a National 
 bank. The day before the change it is admitted that the presump- 
 tion would apply, while the day after it is insisted that it would not, 
 although the change was in form only, and not in substance. Inde- 
 pendent of this presumption, these banks should be deemed citizens 
 of the States where by law they are located, within this clause of 
 the Constitution, and this does not impair the decisions in this 
 State, holding that they are foreign corporations under our attach- 
 ment laws, although located here, because these decisions are based 
 upon the statutory definition of foreign corporations. 
 
 My opinion is that the bank defendant had a right, as citizen of 
 another State, to apply for a removal of the suit. 40 How. Pr. 409. 
 
 The next objection is, that all the defendants residing in Massa- 
 chusetts did not apply, and that it is not competent for one of 
 several defendants residing in another State to remove a suit. 
 This is the general rule. It was frequently so held under the act 
 of 1789, and I think is the rule under all the acts, except the act of 
 1866, which expressly provides for a removal by one or more defend- 
 ants. I think also, although with some doubt, that applications 
 
710 NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 under this act must come under the general rule. This doubt arises 
 from the fact that this act was passed as an amendment to the act 
 of 1866, which provided for a removal by one of several parties, and 
 from the peculiar phraseology of the act, that when a suit is pend- 
 ing "in which there is a controversy," etc., between citizens of 
 different States it may be removed, but although called an amend- 
 ment to the act of 1866, it provides for a new cause of removal and 
 by either party, and for remoAring the entire suit, and the word 
 " controversy " should be held co-extensive with the whole issue. 
 The general rule, that all the parties must join in the application 
 for removal is applicable to applications under this act, but the 
 objection is answered by the exception established to the general 
 rule, which is, that improper, formal or unnecessary parties need 
 not join in the application. 8 Wheat. 451 ; 5 Cranch, 303 ; 2 How. 
 497 ; 4 Johns. Ch. 94. There are in this case two actions in one, 
 against different parties, and the actions are united by virtue of a 
 statute of this State. The action is against the bank defendant as 
 the certifier of the check, and against the other defendants as 
 drawers. It was unnecessary, and, but for the statute, improper to 
 unite the causes of action in one suit. The defenses are distinct 
 and entirely independent of each other, and separate judgments 
 could be entered. It would be unjust to deprive one party of the 
 right of removing his suit, because another action against other 
 parties was allowed to be united in the same suit, and I do not 
 think that a statute of this State can have that effect upon the right 
 of removal by other parties under a Federal law. It is not neces- 
 sary to determine whether such removal would carry the suit against 
 the other parties into the Federal court or not. My opinion is that 
 it would not, and that by the removal the action would become 
 severed, one going to the Federal and the other remaining in the 
 State court. 
 
 The last objection to the validity of the removal is, that a cor- 
 poration cannot avail itself of the act of 1867, by reason of its 
 incapacity to make the afiQdavit required by the act. It is urged by 
 counsel that this act confers upon one party extraordinary power 
 over the litigation, enabling it, by an ex parte oath of mere belief 
 of the existence of a fact, which cannot be contradicted, and after 
 having the benefit of all the "law's delay" in the State court, to 
 remove the suit to another court, and that it should be strictly con- 
 strued, and hence that it should be held to apply to such a party 
 
COUET OF APPEALS, 1873. 7J[1 
 
 Cooke V. The State National Bank of Boston. 
 
 only as is capable of entertaining and expressing a belief, and that 
 the affidavit can in no case be made by any other than the party 
 himself. 
 
 There is a difference of opinion among the members of the court 
 upon the point; and upon consultation we have concluded, as 
 probably the most conducive to the interests of both parties in 
 facilitating the final disposition of the case, to sustain the objection 
 and hold, that it was not removed. 
 
 This brings us to the exceptions at the trial upon the merits. 
 The views expressed by the Supreme Court of the United States in 
 the recent case of Merchants' Bank v. This Same Defendant, 10 
 Wall. 604 {ante, p. 47), and which accord with repeated decisions 
 of this court, render an elaborate discussion unnecessary. 
 
 The certification of a check, if written out, would contain a state- 
 ment that the drawer had funds sufficient to meet it in the bank 
 applicable to its payment, and an agreement on behalf of the bank 
 that these funds should be retained and paid upon the check when- 
 ever it was presented. The cashier has a right, by virtue of his 
 office, to make this certificate when the drawer has funds. He is 
 the custodian of the funds of the bank and of the books; he receives 
 money and gives vouchers therefor; and whether upon receiving a 
 check he pays it in money or gives the holder a certificate of deposit 
 or draft, or a certificate that he will retain sufficient of the money 
 standing to the drawer's credit to pay it when presented, he is, in 
 either case, acting within the line of his duty and within the scope 
 of the authority which necessarily attaches to his office. 
 
 Whether the bank might not restrict this authority, so as to affect 
 the rights of persons having notice, is not material. It is sufficient 
 that the public have a right to regard his authority as co-extensive 
 with these duties, and that such authority is inherent in the 
 office. This is substantially conceded by the learned counsel for 
 the appellants, but they insist that the cashier has no power to 
 make the certificate when the drawer has no funds. I agree that 
 he has not, as between him and the bank, and the liability of the 
 bank is not based upon his power to bind them by such a contract 
 without funds, but upon the ground that the bank cannot dispute 
 the fact that there are funds, and hence the contract is enforced as 
 though there were funds to meet it. It follows that a bona fide holder 
 only can enforce the liability against the bank, where the certificate 
 is given in the absence of funds. 
 
712 NEW YOEK 
 
 Cooke V. The State National Bank of Boston. 
 
 The bank having placed the cashier in the position which implies 
 this inherent authority, those who deal with the bank have a right 
 to infer that he possesses it, and although the exercise of it in a 
 given case may not be warranted on account of the existence or 
 non-existence of some extrinsic fact peculiarly within its official 
 knowledge, yet the bank is responsible instead of an innocent 
 party, upon every principle of reason and morality. This principle 
 applies to the ordinary relation of principal and agent, and, a for- 
 tiori, when the employment concerns the general public involving 
 extensive commercial transactions. Farmers', etc., Bank v. Butch- 
 ers', etc., Bank, 16 N. Y. 135; Schuyler's Case, 34 id. 30. Ultra 
 vires cannot be alleged for telling the truth, even by bank officers, 
 nor can they insist upon a falsehood to the injury of one who has 
 confided in their veracity. 
 
 The import of a certification and the liability of the bank upon 
 the principle here indicated legally result from the nature of the 
 agreement and the application of well-settled rules of law, and do 
 not depend upon usage or custom. Whether it is competent for 
 banks, by usage or express agreement, to extend their liabilities so 
 as to include cases where certificates are issued without funds, to 
 the knowledge of the holder, it is unnecessary to determine. Sbl- 
 DEN, J., in 16 N. Y. 128, expressed the opinion that banks have no 
 power to loan their credit in that form. It is clear, however, that 
 where such a certificate is made without funds, by a cashier in 
 fraud of the rights of the bank, no one but a hona fide holder can 
 enforce it. 
 
 It is claimed by the counsel for the appellants that the refusal of 
 the bank defendant to unite with other banks in Boston in the 
 adoption of a custom to receive from each other certified checks in 
 payment for balances and collections, of which the Second National 
 Bank, the agent of the plaintifE's assignors, and who received the 
 check in question, had notice operated to charge such agent with 
 notice that the cashier had no authority to certify this particular 
 check, and that the principals. Jay Cooke & Co., are chargeable 
 with the knowledge of their agent ; and hence that the plaintiff, 
 having only their title, is not a bona fide holder. Without inquir- 
 ing whether all these consequences would follow, I am of opinion 
 that the principal proposition is untenable, viz. : that notice of the 
 refusal to co-operate with the other banks by the bank defendant 
 operated as a notice of a want of authority by the cashier to certify 
 
COURT OF APPEALS, 1873. 713 
 
 Cooke V. The State National Bank of Boston. 
 
 this check. The proposed custom of settling balances at the clear- 
 ing house by certified checks was a clearing house arrangement for 
 the conyenience of the banks themselves, and was subject to sxich 
 restrictions and regulations as they saw fit to impose or adopt ; but 
 the refusal of any particular bank to enter into the arrangement 
 would not afEect the power of its cashier to certify checks in the 
 ordinary manner when the drawer had funds, nor the liability of 
 the bank to a bona fide holder when he had not. 
 
 The most that can be claimed is that the Second National Bank 
 had constructive notice that the defendant refused to approve of 
 the new custom, which was not only confined to a special purpose, 
 but, for that purpose, contemplated an unqualified contract on the 
 part of the banks consenting to it to be bound by certifications, 
 without regard to the presence of funds, which, if valid, could be 
 enforced as a binding contract in cases where an ordinary certifi- 
 cate could not. The case in 9 Mete. 601, was evidently based upon 
 the idea that the liability of banks upon certified checks depended 
 upon usage or custom, and that a teller did not possess the power 
 of a cashier in this respect. The decision was made over twenty 
 years ago, and has not, as I am aware, been repeated by the courts 
 of Massachusetts, although the practice of using certified checks 
 must have prevailed there as elsewhere. It has been repudiated in 
 this and other States, and should not at this day be regarded as the 
 law in Massachusetts, to override a general rule of construction 
 based upon painciples of the common law, of universal application. 
 
 It is also urged that the court erred in not submitting the iona 
 fides of the plaintiff's title to the jury. Ordinarily the question of 
 good faith is a question of fact for the jury. Perhaps if a specific 
 request to that effect had been made at the trial, it would have 
 been the duty of the court to submit it, although, with the notice 
 relative to the clearing house arrangement out of the way, I am 
 unable to discern a single fact in the case tending to impeach the 
 good faith of the Second National Bank in receiving this check. 
 It was received in part payment for a draft of $150,000 on Mellen, 
 Ward & Co. , and $100,000 gold certificates which were parted vidth 
 and delivered at the time ; and no fact is disclosed throwing sus- 
 picion upon the transaction. But the answer to the position is 
 that no such request was made, nor was the attention of the court 
 called to it. 
 
 The first six requests are substantially that, as a matter of law, 
 90 
 
714 NEW YORK 
 
 Cooke V. The State National Bank of Boston. 
 
 the cashier had no authority, and that there was no e\ddence 
 authorizing the jury to infer it. The seventh request relates to the 
 effect of the notice as to the clearing house arrangement, which has 
 been already referred to. The eighth and ninth are that Jay Cooke 
 & Co. and the plaintiil are chargeable with the knowledge of their 
 agent ; and the tenth, that the law in New York is not controlling. 
 These requests, and the additional one asking the court to direct a 
 verdict for the defendants, show that the defendants expected 
 and desired the court to dispose of the case as a question of law ; 
 and, as they did not ask that any question of fact should be sub- 
 mitted to the jury, the general exception to the direction to find 
 for the plaintiff is not available, upon appeal, to raise the question. 
 
 The result involves, evidently, a considerable loss from the 
 wrongful act of the cashier ; but in ethics, as well as law, the party 
 who employed him, and clothed him with the power, should suffer 
 the loss rather than the party who parted with his property upon 
 the faith of the proper exercise of the power. Whenever one of 
 two innocent parties must suffer by the acts of the third, he who 
 has enabled such third person to occasion the loss must sustain it. 
 2 T. E. 70. 
 
 The judgment must be affirmed. 
 
 All concur, except Allbs, J., not voting. 
 
 Judgment affirmed. 
 
 Note. — The present statute as to ao- Appeals went further and denied the 
 
 tions against National banks is substan- power of Congress to deprive State 
 
 tiallj the same as when the above decis- courts of j nrisdictiou of actions against 
 
 ion was made. Sec. 5198 of the Revised such banks. 
 
 Statutes, as amended in 1876, reads: In Bank of Bethel v. Pdhqwioque 
 
 " That suits, actions, and proceedings Bank, ante, p. 77 it was only held that 
 
 against any association under this title the State courts in the city or county 
 
 may be had iu any circuit, district or where the bank is located has juris- 
 
 territorial court of the United States, diction of actions against such banks, 
 
 held within the district In which such and the question considered in theprin- 
 
 associatiou may be established, or in cipal case did not arise, 
 
 any State, county or municipal court In Manufacturers' National Bank v. 
 
 in the county or city in which said Boacfc, ante, p. 161, the question was as to 
 
 association is located, having jurisdic- the jurisdiction of the Circuit Court of 
 
 tion in similar cases." the United States. 
 
 In Crocker v. Tfte Marine National In Cadle v. Tracy, ante, p. 230, it was 
 
 Sank, ante, p. 575, the Supreme Court held by the Cnited States Circuit 
 
 of Massachusetts held that the Ian- Court that the Supreme Court of New 
 
 guage of Congress was restncM'ue rather York had no jurisdiction of an action 
 
 than permissive, and that, therefore, an against a National bank located in 
 
 action lay against such bank,only in the Alabama. 
 
 city or county in which the bank was In Ada/ms v. Daunis, ante, p. 510, the 
 
 located. The above case of Gookev. Supreme Court of Louisiana ruled 
 
 The National State Bank, and the case substantially in accordance with the 
 
 of Crocker v. The Marine National principal case of Cooke v. The State 
 
 Bank, are, therefore, on this point di- National Bank, and decided that an 
 
 rectly at variance; but the Court of action would lie against the receiver 
 
COURT OF APPEALS, 1873, 715 
 
 National Bank of Chemung v. Elmira. 
 
 of aNational bank (and sembJe against are the Supreme Court of Maaaaohu- 
 
 the bank) in a pariah other than that setts, the Court of Appeals of Mary- 
 
 in which the bank was located and In land andthe Circuit Court of the United 
 
 which the receiver had his domicile. States for the Southern District 
 
 Again on the other hand the Court of New York, holding that actions in 
 of Appeals of Maryland, in TJie Ches- State courts against a National bank 
 peake Bank v. first National Bank, will lie only in the city or county 
 ante,p. 531, held that the provision that where the bank is located, while on the 
 mesne process from State courts should other side the Court of AppKils of New 
 not be issued against National banks, York and the Supreme Court of Louis- 
 was valid and constitutional and the iana hold a contrary doctrine, 
 arguments used apply as well, and were See also as to actions against Na- 
 in fact applied by the court, to the pro- tional banks. Main v. Second National 
 vision with regard to suita against Na- Bank, ante, p.200 ; Missouri River Tele- 
 tioual banks in State courts. graph Co. v. First National Bank, ante, 
 
 It thus appears that on the one side p. 401. — Bef. 
 
 Natiokal Bantk of Chemukg v. Blmiea. 
 
 (53 New York, 49.) 
 
 Taxation of Naiional hanks — When assessment void — Beoovery back of taxes 
 
 paid. 
 
 Assessors of taxes possess no authority except such as is conferred upon them 
 by statute, and they must see to it that they are within the authority com- 
 mitted to them. 
 
 Assessors assessed a tax on the capital stock of a National bank, which was 
 expressly prolubited by statute. The property of the bank was seized by 
 the collector of taxes and sold to pay such tax and the proceeds paid over 
 to the municipal treasurer. Seld, that the assessment was void and that an 
 action lay on behalf of the bank against the municipal corporation to recover 
 the money. {See note, p. 722.) 
 
 ACTION by the National bank of Chemung against the city of 
 Elmira to recover money alleged to have been wrongfully 
 taken from plaintiff and paid into defendant's treasury. The 
 plaintiff was located in the said city of Elmira, and had a capital 
 stock of $100,000 invested in United States government bonds. 
 
 The assessors of defendant's city in the year 1868 assessed the 
 bank on $95,000 so invested and $50,000 on real estate, and the 
 comnion council of said city imposed a tax on such assessment of 
 , $2,000. 
 
 The collector of taxes levied upon the personal property of the 
 bank and sold it to pay such tax and also a county tax which had 
 likewise been assessed on said bank, and paid the amount of the 
 city tax to the city treasurer. 
 
716 NEW YOEK 
 
 National Bank of Chemung v. Elmira. 
 
 The referee held that the assessors had jurisdiction and acted 
 judicially, and that their decision could not be questioned in this 
 action, but that the assessors' aflGldavit was defective and insuflS.- 
 cient to give defendant jurisdiction to issue its warrant. He 
 therefore ordered judgment in favor of the plaintiff, which was 
 reversed by the Supreme Court at^ General Term and a judgment 
 directed for the defendant. 
 
 E. R. Benn, for appellant. 
 
 S. P. Tomlinson, for respondent. 
 
 Chukch, C. J. The assessment and tax against the plaintiff 
 were void. They were made and levied not only without authority, 
 but in violation of an express statute. Chapter 761 of the Laws 
 of 1866 declares that " no tax shall hereafter be assessed upon the 
 capital of any bank or banking association organized under the 
 authority of the State, or of the United States, but the stockhold- 
 ers in such banks and banking associations shall be assessed and 
 taxed on the value of their shares of stock therein." 
 
 It is undisputed that the plaintiff was a banking association, 
 organized under the authority of the United States, and that the 
 assessment and tax in question were upon the capital of the bank, 
 and that the amount of the- tax was compulsorily collected of the 
 plaintiff, and paid into the treasury of the defendant. A mere 
 statement of the case ought to be sufficient to determine it, with- 
 out further elaboration ; but it is due to the importance of the 
 question, and to those entertaining other views, to advert to some 
 of the principles governing this class of cases. 
 
 It is conceded that the plaintiff is entitled to recover, if the 
 assessment is to be regarded as illegal, and not simply erroneous. 
 It is claimed that the assessors had jurisdiction to make the assess- 
 ment, that their act was judicial, and, although erroneous, is con- 
 clusive until reversed by a direct proceeding instituted for that 
 purpose. This proposition cannot be predicated of this case, either 
 in fact or in law. Some of the duties of assessors are judicial in 
 their nature, and as to these, when acting within the scope of their, 
 authority, they are protected from attack, collaterally, to the same 
 extent as other judicial officers ; but they are subordinate officers, 
 possessing no authority, except such as is conferred upon them by 
 statute, and it is a well-settled and salutary rule that such officers 
 
COURT OP APPEALS, 1873. 717 
 
 Kational Bank of Chemung v. Elmira. 
 
 must see that they act within the authority committed to them. 
 15 N. Y. 321j and cases cited. When they have no power to act 
 at all in a given case, either as to person or property, their acts are 
 void. So when their right to act depends upon the existence of 
 some fact, which they erroneously determine to exist, their acts are 
 void. So in performing a ministerial duty their acts are void, if 
 not in accordance with law." But having jurisdiction of the per- 
 son and subject-matter, if they err in the exercise of it, they are 
 protected. These general principles are elementary, and are abund- 
 antly sustained by authority, and if any confusion exists upon the 
 question, it has arisen from a failure properly to apply them. This 
 court held in 15 N. Y. 316, that if the assessors erred in determin- 
 ing whether a person was a taxable inhabitant of a town, they did 
 so at their perU, and were liable to an action by the party aggrieved. 
 This was upon the principle that the fact, although judicial in its 
 nature, and requiring the exercise of judgment, was nevertheless 
 necessary to confer jurisdiction, which could not be conferred by 
 an erroneous decision. In Whitney v. TTiomas, 33 N". Y. 381, 
 lands owned by a non-resident were assessed to a resident of the 
 town as resident lands. They were afterward sold by the Comp- 
 troller, and a deed given, which was held void on account of the 
 illegal assessment. The same argument was advanced in that case 
 as in this. Sbldek, J., in delivering the opinion of the court, 
 said: " The supposition entertained by the counsel, that the assess- 
 ors have jurisdiction in consequence of their obligation to assess 
 all the lands in the town or ward, and that if they make due in- 
 quiries and assess according to the best information they can 
 obtain, their action cannot be impeached in any collateral proceed- 
 ing, is erroneous. * * * The assessors have no jurisdiction to 
 assess, except as the statute prescribes, and unless they pursue the 
 directions of the statute, the assessment is unauthorized and void." 
 In 45 N. Y. 676, we held that where the supervisors added an un- 
 paid tax upon lands for one year to a tax upon the same lands for 
 the next year, against a person who had in the mean time pur- 
 chased, instead of returning it to the Comptroller as the statute 
 directed, the act was void, and an action would lie against the 
 county to recover back the money collected. Chegaray v. Jenkins, 
 5 N. Y. 376, was an action against the receiver of taxes, an officer 
 corresponding to that of collector, for an assessment upon a building 
 claimed to be exempt as a seminary of learning under the statute. 
 
718 NEW YOEK 
 
 National Bank of Chemung v. Elmira. 
 
 The court decided that the action would not lie against the receiver 
 of taxes, within the principle of Savacool t. Boughton, 5 Wend. 
 170, but the learned judge who delivered the opinion enunciated 
 the correct principle applicable to these cases. In speaking of the 
 assessors, Eitgglbs, J., said: " But being officers clothed with lim- 
 ited powers conferred by statute, their decision on a question 
 in which their own authority to act was involved, was not for all 
 purposes conclusive. The general principle is that the proceedings 
 of magistrates and officers having special and limited jurisdiction 
 must bear on their face the evidence of their jurisdiction, or they 
 will be judged invalid, and that in collateral actions their judg- 
 ment may be questioned and disregarded, if it appears that in fact 
 they had no authority to act in a given case. " Weaver v. Devendorf, 
 3 Den. 118, will serve to show the distinction between a case 
 where the assessors have jurisdiction and where they have not. 
 That was an action by a minister for not allowing him the statu- 
 tory exemption of $1,500. It appeared that he had more property 
 than the amount of the exemption, and was therefore taxable. 
 The assessors had jurisdiction to act and were not liable for mak- 
 ing the assessment too high. Bbaedslet, J., said: "It was, 
 therefore, not a case in which the property of the plaintiff was 
 totally exempt from taxation, and over which the defendants had 
 no jurisdiction whatever, but one in which they were authorized 
 and required by law to make an assessment of the property, even 
 if he was a minister of the gospel." The case was properly 
 decided upon the ground that in fixing the value of property the 
 power exercised is judicial. In Prosser v. Secor, 5 Barb. 608, it 
 was held that if it appeared that a minister of the gospel did not 
 possess property to the amount of the exemption, the assessors 
 had no jurisdiction of his person or his property, and could not 
 obtain any by deciding, wrongfully, that he was not a minister, 
 and thus confer authority on themselves. Johitsok, J., said: "It 
 must be quite apparent that the assessors could not, by any deter- 
 mination they have power to make, subject the property of any 
 person to taxation, which the law exempts. In determining 
 whether they have jurisdiction or not in a given case, assessors do 
 not act judicially. ISTo officer can acquire jurisdiction by deciding 
 that he has it," and he cites Weaver v. Devendorf, supra, as sus- 
 taining the distinction referred to. This case, although' criticised 
 in 35 N. Y. 238, has been cited three times with approval by this 
 
COUET OF APPEALS, 1873. 719 
 
 National Bank of Chemung t. Blmira. 
 
 court in cases coining under my obserrationj in 11 N". Y. 563, by 
 Pabkek, J., in 15 N. Y. 316, by Denio, J., and in 45 N. Y. 683, by 
 FoLGEB, J. It is not referred to now for the purpose of approval 
 or disapproval, but to sbov, in connection with the general current 
 of authority, how uniformly and inflexibly the general principles 
 referred to have been, with slight exceptions, maintained and 
 adhered to by the courts. In 40 IST. Y. 373, an assessment in 
 Brooklyn upon land, to the wrong person, for a street improvement, 
 was held void, and the consideration allowed to be recovered back 
 by the purchaser upon the same principle. 
 
 The cases of BarJiyte v. Shepherd, 35 N. Y. 338, and Swift v. 
 City of Poughkeepsie, 37 id. 511, are chiefly relied upon for the 
 application of judicial irresponsibility to this case. The first was 
 the case of a minister claiming exemption, and in its facts analo- 
 gous to that in Weaver v. Devendorf, 3 Denio, supra. The plain- 
 tiff owned property to the amount of $3,500, and was assessed 
 $1,050. The assessors had jurisdiction, therefore, to assess him for 
 some amount, and whether they assessed him too high in conse- 
 quence of not allowing the exemption, or from an erroneous valu- 
 ation of his property, was immaterial. In either ease their decis- 
 ion was conclusive within all the authorities, and the case was 
 rightly decided. The learned judges who delivered opinions 
 seemed to have ignored or overlooked the distinction recognized in 
 Weaver v. D&vendorf, Ghegaray v. Jenkins, and Prosser\. Secor, and 
 I infer intended to hold that in all cases, in determining whether 
 property was exempt, the assessors acted judicially and are pro- 
 tected. The case was one also involving serious doubt whether the 
 person claiming the exemption was a minister of the gospel, within 
 the meaning of the statute. He was, in fact, a farmer, and worked 
 upon a farm week days, and although he preached on the Sabbath, 
 he had no employment and no salary. From a perusal of the opin- 
 ions, it is apparent that the learned judges misapprehended to 
 some extent the doctrine of some of the cases, and I am not pre- 
 pared to assent to their reasoning, but it is quite unnecessary in 
 this case to determine whether it is correct or not. If we assume 
 that the case decides that assessors have jurisdiction, where the per- 
 son is otherwise a taxable inhabitant, and the property otherwise 
 taxable, and that the question of exemption is a judicial act, and 
 that the assessors are protected for an erroneous judgment, it falls 
 far short of being an authority against the plaintiff in this case. 
 
720 NEW YORK 
 
 National Bank of Chemung v. Elmlra. 
 
 Here the statute declared that certain property was not taxable. The 
 property was specifically described. The assessors had no judg- 
 ment to exercise in regard to it, and no decision to make. One of 
 the learned judges who delivered an opinion in the case, I infer did 
 not intend to depart from established principles upon this subject, 
 from expressions in an opinion since delivered by him in 48 N. Y. 
 93, and which are appropriate tff this case. In commenting upon 
 Whitney v. Thomas, 23 IS. Y. 381, supra, he said: "It was not a 
 mere error of the assessors, but a disregard of the facts of the case. 
 They entered a false judgment not warranted by any facts proven. 
 It could not be called a mistake of law or fact, such as the assessors 
 acting as g-wasi- judicial officers might honestly make. It was 
 simply an assessment, without the slightest color to warrant or 
 authorize it." * * * «A flagrant disregard of the facts, or 
 assessing in opposition to the clear and undisputed facts, when the 
 application of the statute could not by any means be doubtful, 
 might, as in the case of Wliitney v. Thomas, present a case where 
 the officer would be without jurisdiction." 
 
 In the other case relied upon, in 37 N". Y. 511, the assessors 
 assessed the value of the shares of stock of the Farmers and Me- 
 chanics' National Bank to the plaintiff at their par value, although 
 the bank held a quantity of government bonds as a part of their 
 capital. In making this assessment, the assessors acted in strict 
 conformity to the State law, as it existed at that time. The law 
 was afterward declared invalid by the Supreme Court of the United 
 States, on the ground that it conflicted with a law of Congress. It 
 was assumed that the assessors had jurisdiction of the person and 
 subject-matter, upon the authority of two other similar cases not 
 reported, and the only question discussed is whether the money 
 could be recovered of the city upon the general principle of the 
 plaintiff's equitable right to it. The assessors acted in accordance 
 with the State law, which was sustained by the decision of the 
 highest court in the State. They were obliged to act, and would 
 have been liable to indictment if they had refused. It is true that 
 the decision of the United States court established that the State 
 law was invalid, and in theory that the assessors had no legal justi- 
 fication under it, but the court might well have hesitated to hold 
 them liable in trespass. The final decision may have established 
 that they erred in law, but the State court would not be likely to 
 hold a subordinate officer culpable for acting in accordance with its 
 
COUKT OP APPEALS, 1873. 721 
 
 National Bank of Chemung v. Blmira. 
 
 own decision. Besides, if there was no special act for taxing shares 
 of stock, the assessors might assess them against the owner under 
 the general power to assess personal property. If so, they had 
 jurisdiction over the subject-matter, and if they erred in assessing 
 it at too high a rate, either because a part of the capital was 
 invested in government bonds, or for any other reason, it was an 
 error merely. This is confirmed by BAOOifr, J., who, in delivering 
 the opinion, said: "That the determination of the assessors to 
 impose the tax, at the rate specified by them, was a judicial deter- 
 mination." At all events, the case is not an authority for protect- 
 ing officers in the assessment of property contrary to an express 
 statute, and if such a doctrine is inferable from it, I have no hesita- 
 tion in saying that it should not be followed. 
 
 While there 'is some apparent conflict in the application of settled 
 principles to particular cases, I am confident that no adjudged case 
 can be found which will relieve the defendants from liability. The 
 distinction is between an erroneous and an illegal assessment. The 
 former is when the officers have power to act, but err in the exer- 
 cise of the power; the latter where they have no power to act at all, 
 and it does not aid them to decide that they have. 
 
 It is argued that they have jurisdiction to determine what prop- 
 erty is taxable in the town. This is a mistake. The Legislature 
 determines that question, and the officers have no power over it. 
 The statute requires the assessors to "ascertain, by diligent in- 
 quiry," two things: 1. The taxable inhabitants. 2. The taxable 
 property. Where they decide erroneously as to a taxable inhabitant 
 it is conceded, and the Mygatt Oase, 15 N. Y., holds that they are 
 liable as trespassers. Why not when they err as to taxable property? 
 The duty is precisely the same, and the power conferred in the 
 same language. Assessors must have jurisdiction over the person 
 and subject-matter. The person must be an inhabitant of the 
 town, and the property must be taxable. Otherwise, the assess- 
 ment is illegal and void. The Legislature has declared that the 
 capital of N"ational banks is not taxable property. Bank shares 
 are not capital. 3 Wall. 573. The assessors have therefore no 
 jurisdiction over it. In this case they exercised no judgment- 
 there was none to be exercised. There was no dispute about the 
 facts. There was no pretense of mistake even. They simply 
 decided to violate the statute; and while bad faith will not be im- 
 puted, we must assume that they did so voluntarily and intention- 
 91 
 
722 NEW YOEK 
 
 National Bank of Chemung v. Elmlra. 
 
 ally, and yet sucli an act is claimed to be judicial, and therefore 
 exempt from collateral attacks. 
 
 The remedy by certiorari is not adequate. It is dilatory, and 
 rests in the discretion of the court to giye it or not. It is appro- 
 priate to review erroneous assessments. Taxation for public pur- 
 , poses is a conceded power of government, but it must be enforced 
 strictly according to law, or it becomes the most obnoxious means 
 of confiscation. The rights of the citizen should be sedulously 
 guarded and protected against the lawless imposition of burdens, 
 and the principle involved in this case is vital to the protection of 
 private property from the grasp of irresponsible power. The plain- 
 tiff's property has been forcibly taken from it in violation of law, 
 and it would be discreditable to the proper administration of jus- 
 tice not to give an effectual remedy. 
 
 I think, also, that the deputy county clerk had no authority to 
 take the affidavit of the assessors. The county clerk and his 
 deputy are, with other officers, authorized to administer oaths and 
 take affidavits, with some specified exceptions ; and, except when 
 such oaths are required to be taken by particular officers. The 
 oath of the assessors is required to be taken before a justice of the 
 peace of the city, which is a particular officer within the meaning 
 of the statute. 
 
 The plaintiff can only recover the amount collected by the de- 
 fendant for city taxes. The city is not liable for the amount col- 
 lected by the county. 
 
 The judgment must be reversed and a new trial granted, unless 
 the plaintiff stipulates to reduce the recovery to the amount col- 
 lected by the city, and, if so modified, the judgment upon the 
 report of the referee affirmed without costs to either party. 
 
 All concur except Geoveb, J., who dissents. 
 
 Judgment accordingly. 
 
 Note. — As to when an injunction multiplicity of suits or produce irrepar- 
 
 will bo granted to restrain the collec- able injury, or throw a cloud upon the 
 
 tion of a tax, see City National Bank title to real property. See, also, Hey- 
 
 V. Paducah, ante, p. 300; St. Louis Nor- wood, v. City of Buffalo, 14 N. Y. 534; 
 
 tional Bank v. Papin, ante,, p. 326. Susquehanna Bank v. Supervisors, '& 
 
 In Dowsv. City of Chioago,!! Wall. id. 312; Cook County v. Chicago, etc., 
 
 108, the Supreme Court of the United R.B. Co., 35 lU. 465; First National 
 
 States held the collection of a tax Bank v. Cook, 77 id. 622. 
 
 would not be restrained on the sole In order that a tax shall constitute 
 
 ground that the tax was illegal, but an incumbrance or cloud upon the title 
 
 that there must exist, in addition, spe- to real estate the tax must be appar- 
 
 oial oircumstauces , such as that the en- ently regular and valid, for if it appear 
 
 forcemeat of the tax would lead to a upon the face of the proceedings that 
 
COUKT OP APPEALS, 1873. 
 
 723 
 
 National Bank of Chemung v. Elmira. 
 
 the tax waa wholly unwarranted by 
 law, or is for any reason void, or if one 
 knowing the law — and every man ia 
 oonoluaively presumed to know tne 
 law — would be able to see that 
 the tax waa invalid, it is no cloud 
 on title. Cooley on Taxation, 643; 
 Detroit v. Martin, Si Mich. 170; 
 S. C, 22 Am. Rep. 612; Peyser v. 
 Mayor of New York, 16 Alb. Law Jour. 
 283. Thus a tax under an unconstitu- 
 tional law is not a cloud upon title 
 and its collection wUl not be restrained 
 nor will au action lie to recover it 
 back if paid to prevent a sale of the 
 land. Detroit v. Martin, supra. 
 
 It may be stated as a general prin- 
 ciple that one who has voluntarily 
 paid a tax cannot recover it back al- 
 though it was illegally assessed; but 
 that money involuntarily paid on an 
 illegal assessment may be recovered. 
 What constitutes voluntary or involun- 
 tary payment ? A payment is not gen- 
 erally rendered "involuntary" by a 
 protest of the payer (Flower v. Lance, 
 59 N. T. 603); there must be in addi- 
 tion some coercion either in fact or 
 law. Coercion in fact was defined 
 by FoLGER, J., in Peyser v. Mayor of 
 New York, swpra, to be " that duress of 
 person or goods where present liberty 
 of person or immediate possession of 
 goods is 80 needful and desirable as 
 that an action or proceedings at law 
 to recover them will not at all answer 
 the pressing purpose." Coercion by law 
 was defined thus : "Where a court hav- 
 ing jurisdiction of the person and the 
 subject-matter has rendered a judg- 
 ment which is collectible in due course. 
 There the party cast in judgment may 
 not resist the execution of it. His 
 only remedy is to obtain a reversal, if 
 he may, for error in it. As he can- 
 not resist the execution of it when ex- 
 ecution is attempted, he may as well 
 pay the amount at one time as at an- 
 other, and save the expense of delay. 
 It may be well to say, that if the judg- 
 ment is not afterward reversed, but 
 is invalid for any collateral reason, or 
 the process issued upon it is illegal, 
 payment with knowledge of the fact 
 would, perhaps, be voluntary, which 
 seems a sound distinction taken by 
 Emott, J., in Lott v. Sweesy, 29 Barb. 
 
 87-92." To each case of coercion by 
 law, as is above given, are to be added 
 those quasi adjudications of inferior tri- 
 bunals, such as assessors of taxes or as- 
 sessments where their proceedings are 
 regular on their face or on presentation 
 make out a right to have and demand 
 the amount levied, and to collect it in 
 due course of law by sale of goods or 
 municipal lease of real estate." Un- 
 less void on their face, they have the 
 force of a judgment ; the party is le- 
 gally bound to pay, and has no lawful 
 mode of resisting. The only remedy 
 is a reversal of the adjudication. Un- 
 til reversed, they give the collector of 
 the tax the right to take and sell goods, 
 and the assessment remains a primo 
 facie valid lieu upon real estate. 
 
 Thus where a tax was paid in order to 
 prevent the issuing of a warrant of 
 distress with which he was threatened 
 and which would issue of course, un- 
 less the tax was paid, the payment was 
 held to be involuntary. Preston v. Bos- 
 ton, 12 Pick. 7. And i a Boston Glass Co. 
 y. Boston, 4 Mete. 181, it was held— fol- 
 lowing the above case — that "payment 
 of taxes to a collector who has a tax 
 bill and warrant in the form prescribed 
 by law, is to be regarded as compulsory 
 payment, and if such taxes were as- 
 sessed without authority, they may be 
 recovered back in an action for money 
 had and received although the party 
 made no protest before payment." 
 
 In Qrim v. School District, 67 Penn. 
 St. 434, it was said to be settled that 
 "a party who, when threatened with 
 a distress, pays an illegal tax under 
 protest and notice of suit may main- 
 tain an action to recover it back ; and 
 in Hendy v. Soule, Deady, 400,it was de- 
 cided that wheu taxes are paid on de- 
 maud of an oflScer having authority to 
 collect them by distraint, there is suf- 
 ficient duress of the property to make 
 the payment involuntary. But it is 
 to be observed that in these cases the 
 payment was held involuntary because 
 the collector had authority to directly 
 enforce his demand by levy and seiz- 
 ure of property. 
 
 See further as to voluntary payments, 
 Cooley on Taxation, 566 ; Burroughs 
 on Taxation, 266; Broom's Legal Max- 
 ims.— Rep. 
 
724 NEW YOKE 
 
 Van Leuven v. First National Bank. 
 
 Van Lettven v. Fiest Katiokal Bajstk. 
 
 (54 New York, 671.) 
 Right of National hanks to dealin government securities.* 
 I, that National banks can deal in and exchange government securities. 
 
 ACTION to recover the value of United States securities alleged 
 to have been delivered to defendant to be exchanged for other 
 United States securities. 
 
 The plaintiff having on deposit with the defendant United States 
 7-30 notes and desiring to exchange them for 5-30 bonds, went to 
 the bank and told Hasbrouck, defendant's president, of his desire. 
 Hasbrouck said : " We will do it. We are doing it for a great 
 many." PLaintiff thereupon got his 7-30 notes from the bank 
 vault and delivered them to Hasbrouck, who gave a receipt there- 
 for, written upon the ordinary bank letter paper, which read : 
 
 " TUs is to certify that I have received from C. F. Van Leuven TJ. S. 7-30 
 notes, $10,000, which I am to exchange for same amount of V. S. 5-30 bonds 
 and deliver to him . 
 
 " 10,000." J. H. Hasbrouck." 
 
 It appeared on the part of defendant, that before the organiza- 
 tion of defendant as a bank, Hasbrouck was doing business as a 
 private banker, and that plaintiff then dealt with him in reference 
 to bonds. It also appeared that, prior to the transaction above 
 stated, plaintiff at one time went to the bank and inquired for 
 Hasbrouck, who was out. He then inquired of the cashier in refer- 
 ence to certain bonds which he said were in the bank vault, and 
 showed the cashier a receipt signed by Hasbrouck, the precise form 
 of which did not appear ; the cashier informed him that it was the 
 individual business of Hasbrouck, with which the bank had noth- 
 ing to do. 
 
 The court, upon these facts, directed a verdict for plaintiff. 
 
 * In First National Bank v. Ocean National Bank, post, the Court of Appeals 
 of New York said : " No general principle was decided in Van Leuven v. First 
 National Bank, 54 N. T. 671." This decision was there explained. A memo- 
 randum of the case only is given in the 54 New York Beports. 
 
COUET OP APPEALS, 1874. 725 
 
 Piatt V. Beebe. 
 
 Held (Rey:s(0'lds and Johnson, CO., dissenting), no error; that 
 the receipt being giyen as a part of the transaction and as a Toucher 
 merely, and no eyidence appearing of an intent to alter the efEect 
 of what had been before said, imported simply, when read in the 
 light of the surrounding circumstances, a transaction with the 
 bank, and that it mattered not how Hasbrouck understood it, but 
 the question was how plaintiff did and had the right to understand 
 it; also held, that the dealings between Hasbrouck and plaintiff, 
 before the former became defendant's financial oflBcer, were imma- 
 terial, as was also the evidence in regard to the prior receipt. 
 
 That the business of exchanging government securities was such 
 as a National bank, through its officers, could properly and legally 
 engage in, was held in the prevailing opinion, and was concurred in 
 by all. 
 
 F. L. Westbrooh, for appellant. 
 
 Samuel Hand, for respondent. 
 
 Bael, 0., for affirmance. 
 
 LoTT, Oh. C, and Geat, C, concurred. 
 
 Eetnolds and Johnson-, CO., read for reversal. 
 
 Judgment affirmed. 
 
 Platt v. Beebe. 
 
 (57 New York, 339.) 
 
 Evidence of appointment of receiver of National bank 
 
 The certificate of the Comptroller of the Currency duly raade is suflScient evi- 
 dence of the appointment of the receiver in an action brought by him.* 
 
 ACTIOlSr by Platt, as receiver of the Farmers and Citizens' Na- 
 tional Bank, upon a promissory note belonging to the bank. 
 Upon the trial the plaintiff to prove his title as receiver gave in 
 
 * See Tliatcher v. West River National Bank, ante, p. 623 ; Tapley v. Martin, ante, 
 p. 611. To the same effect, also, is Merchants' National Bank v. Cardoso, 3 Jones 
 & S. 162. 
 
726 NEW YORK 
 
 Piatt V. Beebe. 
 
 evidence a certificate of the Comptroller of the Currency approved 
 and concurred in by the Secretary of the Treasury reciting the exist- 
 ence of the facts necessary to authorize him to appoint a receiver 
 of the said bank, and appointing the plaintiff such receiver. Judg- 
 ment for the plaintiff was affirmed by the Supreme Court at Gen- 
 eral Term, and defendant appealed. 
 
 Erastus Cooke, for appellant. 
 
 A. M. Cunningham, for respondent. 
 
 Gray, C. The plaintiff's appointment to the receivership of the 
 bank is conceded ; the validity of the appointment is questioned ; 
 and is involved in the motion made by the defendant at the close 
 of the plaintiff's evidence for the dismissal of his complaint, upon 
 the ground stated, viz., that there was no evidence of the facts au- 
 thorizing his appointment. The evidence of the facts consisted of 
 a statement contained in a certificate made by the Comptroller of 
 the Currency, under an act of Congress to provide a National cur- 
 rency and for its security and redemption, approved June 3d, 1864. 
 13 U. S. Stat, at Large, 99, § 50. By which it is simply required 
 of the Comptroller that he be satisfied of the existence of the facts 
 authorizing him to make such appointment ; to proceed as he did, 
 in this case, and with the concurrence of the Secretary of the 
 Treasury, and make it. No objection was made to receiving the 
 certificate in evidence, or that it was not evidence that the 
 Comptroller was satisfied of the existence of the facts stated 
 in it, but rather upon the ground that the facts alleged in it 
 were not established by competent legal evidence on the trial, 
 as in other ex parte proceedings, in which an officer, upon 
 proof of a special state of facts, is given authority to act. 
 These banks are located in different parts of the United States, 
 most of them at a great distance from the city of Washington and 
 from each other, and all under the supervision of officers residing 
 in that city ; and among them, to a great extent, the Comptroller 
 of the Currency, who for the purpose of protecting the public, and 
 among them those who, confiding on the solvency of the banks, 
 have business with them, is under the necessity of taking from such 
 of them as fail to comply with the law, their management, and 
 confiding them to the care of a receiver ; and sometimes, and per- 
 
COUET OP APPEALS, 1874 727 
 
 Piatt V. Beebe. 
 
 haps often, under an emergency, when, owing to the distant loca- 
 tion of the bank from the city of Washington, and where to a moral 
 certainty he is satisfied that the causes exist for placing them in 
 the custody of a receiver, when strictly legal evidence of the fact is 
 not attainable in time to save those interested from sudden mis- 
 fortune. The act, in its peculiarity of expression, is framed to 
 meet such an emergency, and authorizes the Comptroller, when 
 satisfied of the existence of a given state of facts, to make the ap- 
 pointment. Such words, as upon proof or evidence, indicating it 
 to be the design of the framers of the law that it should be upon 
 legal proof or evidence of the facts, are carefully omitted ; and the 
 Comptroller is left to be satisfied as best he can be, under the pecu- 
 liar circumstances of each case, of the existence of the facts and 
 the necessity of his action. The question whether Crawford noti- 
 fied the bank that the note was for the drawer's benefit, is put at 
 rest by the finding of the referee that he did not. 
 
 It is claimed that the bank, of whose assets the plaintiff was re- 
 ceiver, held the note as collateral security for the payment of the 
 sum drawn by Crawford. I do not so understand the transaction. 
 The amount paid to him upon his drafts was on account of and 
 against this note, left for discount, and was so much paid by the 
 bank for the note. It was a discount of the note to the amount 
 paid on Crawford's drafts against it. But if it was otherwise, and 
 the note left as it was, and drawn against, was a mere pledge for 
 the sum paid upon the drafts, the note, being commercial paper, 
 the bank was not subject to the rule regulating the rights and lia- 
 bilities of a pledgee, but is regarded as a holder for value. Bank 
 of New York v. Vanderhorst, 32 N. Y. 553, 559, 560. 
 
 The judgment should be aflEirmed. 
 
 All concur. 
 
 Judgment affirmed. 
 
728 NEW YOEK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 FiEST National Bank of Lyons v. Ocean .National Bank, 
 
 appellant. 
 
 (60 New York, S78.) 
 National hank — Liability for deposits for safe-keeping — Ultra vires. 
 
 The cashier or other executive officer of a National bank has not, in the 
 absence of special authority from the directors or of a usage or practice so 
 to do, power to receive, on behalf of the bank, property for safe-keeping. 
 
 Quere as to the power of a National bank to become a bailee of property either 
 gratuitously or for hire.* 
 
 A gratuitous bailee is only ^able for gross negligence ; he is not bound to any 
 special or extraordinary measures to protect the property, and the negli- 
 gence with which he can be charged, or which is the proper subject of evi- 
 dence, is only that which is connected with and directly contributes to the 
 loss. 
 
 In an action against a bank for the loss of property which it had received as 
 gratuitous bailee, held, that the declaration and admissions of the president, 
 tending to show negligence on his part, made after the transaction, and when 
 not acting within the limit of his authority, were not binding upon the bank. 
 
 ACTION to recover the value of United States bonds delivered 
 by plaintifE to defendant for safe-keeping, and alleged to have 
 been lost through the defendant's negligence. 
 
 Both the plaintifE and the defendant were banking corporations, 
 organized under the act of Congress of 1864: (13 U. S. Stat, at 
 Large, 99), the plaintiff being located in Lyons, Iowa, and the 
 defendant in the city of New York. 
 
 The plaintiff's evidence tended to show that it became a depos- 
 itor with defendant in consequence of a circular signed by the de- 
 fendant's cashier, soliciting the accounts of the banks to which 
 it was sent, offering to allow four per cent interest on daily bal- 
 ances, to pass cash items to the credit of the correspondent on day 
 of receipt, without charge, and to buy and sell government bonds, 
 gold and stocks, without charge. The bonds in question were 
 received and receipted for, part by defendant's cashier and part by 
 its assistant cashier, as held subject to plaintiff's order. A portion 
 of them were purchased by defendant for plaintiff. Letters from 
 defendant's cashier showed that on three occasions the coupons 
 were, by plaintiff's directions, cut from the bonds and the proceeds 
 
 * See Wiley v. First National Sank, post, and note. 
 
I 
 COUET OP APPEALS, 1875. 729 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 credited to plaintiff's account. No charge was made against plain- 
 tiff for purchasing the bonds or collecting the coupons. Defendant's 
 banking-house and vault was broTsen open by burglars, and the 
 bonds, with a large amount of other securities and money belong- 
 ing to defendant, stolen. 
 
 The further facts appear sufficiently in the opinion. 
 
 Judgment was entered on a verdict in favor of the-plaintiff, which 
 was affirmed at General Term in the Common Pleas of New York 
 city. Defendant appealed. 
 
 F. N. Bangs, for appellant. 
 
 Lucien Birdseye, for respondent. 
 
 Allen, J. The point was distinctly made at the close of the 
 plaintiff's evidence, and renewed at the close of the trial, that there 
 was no evidence that the corporation defendant had made any con- 
 tract of bailment with the plaintiff, or assumed any obligation as 
 bailee of the plaintiff's property, and that there was no evidence 
 that the officers of the corporation had power or authority to make, 
 in behalf of the corporation, any contract of bailment, or assume 
 any liability as a custodian and bailee of the securities of the plain- 
 tiff under the circumstances. This is entirely distinct from the 
 very serious question back of it, and to be met, if this position of 
 the counsel for the defendant is not well taken, that the defendant 
 had not power or authority to assume the duties and obligations of 
 a naked bailee of property, whether gratuitously or for hire, and 
 that the contract of bailment, if one was made by or in behalf of 
 the corporation, was ultra vires, and imposed no legal obligation 
 upon the corporation as such. Or, if the power to become the 
 bailees or depositaries of property for safe-keeping be conceded, a 
 question may arise as to the contract implied, and the extent of the 
 obligation assumed by the mere receipt of, and placing the property 
 in the vaults of the bank in the absence of a special contract, in 
 view of the special purposes for which the corporation was created, 
 and the limited powers expressly conferred. 
 
 The bonds in question were the absolute property of the plain- 
 tiff. The defendant had no special property in them. It had no 
 lien upon them, and they were not ' deposited or held as a security 
 for or in connection with the business of the defendant as a bank- 
 ing corporation, or its transactions with the plaintiff, either present 
 92 
 
730 NEW YOEK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 or prospectiTe. If a bailment to the defendant, it was a simple 
 deposit without interest in, or compensation to, the depositary. It 
 was a naked bailment of property to be kept for the bailor without 
 recompense, and to be returned when the bailor should require it. 
 This is the legal definition of a deposit of this character. Story on 
 Bailments, § 4. 
 
 The relation of bailor and bailee imports a trust, and a contract, ex- 
 press or implied, to re-deliver the property when the purposes of the 
 trust shall be accomplished, and the contract is supported, in the 
 case of a naked bailment and simple deposit, by the yielding up of 
 the present possession or custody by the bailor, upon the faith of 
 the engagement of the bailee to re-deliver. Story on Bailment, § 
 2 and note 4, and cases cited. The duties and obligations of a bailee 
 cannot be thrust upon one against his consent, but must be volun- 
 tarily assumed by the party himself, or some authorized agent, as 
 in every obligation founded upon contract, express or implied. A 
 corporation can only act by agents, and it follows that it cannot be 
 subjected to the responsibilities and liabilities of a bailee, except 
 by the acts and contracts of its agents duly authorized, or by agents 
 acting within the scope of their general powers and apparent author- 
 ity under circumstances which would estop the corporation from 
 denying that their real was not co-extensive with their apparent 
 authority, or that they were not authorized to exercise the powers 
 usually delegated to like officers and agents in other corporations of 
 the same character. There is an entire absence of evidence that it 
 was the habit and practice of the defendant to receive special de- 
 posits and valuable property or securities for safe-keeping, or. that 
 they had done it for any other person or corporation, except in 
 the case of O'Kell, a tenant, occupying a part of the same building, 
 as its lessee. It would seem that he had been in the habit of depos- 
 iting a small trunk, used in his daily business, in the vault of the 
 defendant for safe-keeping over night. It was not proved that 
 the directors, or any one of them, had ever sanctioned the receipt of 
 special deposits of any kind for safe-keeping, or that they had any 
 knowledge of the deposit of these securities, or of any other like 
 deposit. If it be assumed that the circular issued by the officers 
 of the defendant, inviting the correspondence of other banks, was 
 known to or authorized by the directors, it presented no evidence 
 of a consent to become a general bailee and depositary for their 
 correspondents. A proffer to buy and sell securities comes far short 
 
COUET OF APPEALS, 187S. 731 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 of an undertaking to act as a depositary of them, for an indefinite 
 time, or for any time beyond that necessary to accomplish the 
 precise agency assumed. It is one thing to act as an agent in the 
 purchase and sale of property, and quite another and a different 
 thing to receive it on deposit and assume the responsibilities of a 
 bailee. The case is also barren of evidence that other banks were 
 in the habit of receiving deposits of a like character and under like 
 circumstances. There was no attempt to prove a general custom or 
 usage upon the subject, even if that could have affected the liability 
 of the defendant, or been given in evidence as tending to prove the 
 authority of the bank officers in the premises. 
 
 Both the plaintiff and the defendant were banking corporations 
 incorporated pursuant to the act of Congress 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 3, 1864, known as the " National Currency Act," 
 and the officers and agents of each must be assumed to be familiar 
 with the powers of the other, and the general gowers and duties of 
 its officers. The governing body of National banks is the board of 
 directors, authorized by section 9 of the act, and such board has the 
 management and control of the affairs of the corporation, and may 
 do and transact any and all business within the limits of the powers 
 conferred by the act of Congress. To the extent of the powers 
 given by the act the directors may bind the corporation, and the 
 shareholders, who are the constituent body ; and the shareholders, 
 who are, by section 13, made personally responsible " for all con- 
 tracts, debts and engagements," of the association, to the extent of 
 th& amount of their stock therein, in addition to the amount in- 
 vested in such shares. This responsibility is necessarily limited to 
 such contracts, debts and engagements as may lawfully be made or 
 incurred in the exercise of the corporate powers as limited and pre- 
 scribed by the act of Congress. The managing officers of corpora- 
 tions formed under the act, those who transact the current business 
 of the association, are appointed by the corporation, which has 
 power to appoint them and define their duties. They are a presi- 
 dent, vice-prosident, and a cashier, and such other officers as may 
 be found necessary, but by whatever name known they only possess 
 such powers as are delegated by the governing body, or the corpora- 
 tion, either in terms or by implication. Act, supra, § 8. There 
 is no evidence that the powers and duties of the managing officers 
 
732 NEW YORK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 of the defendant were specifically defined by any act or resolution 
 of the corporation or the board of directors. It must be assumed, 
 therefore, and the public and those dealing or having business trans- 
 actions with the bank had the right to assume, that they had and 
 exercised the powers and performed the duties usually devolved 
 upon and performed by person^ occupying the same position in 
 other banks, and such as they were in the habit of performing in 
 the transaction of the current and ordinary business of the bank, 
 and within this limit the corporation would be bound by their acts 
 in the absence of proof that their powers were limited or restricted, 
 and that such restriction and limitation was known to the person 
 dealing with them. Story on Agency, § 114, and cases cited in 
 notes. Whatever may be the extraordinary or incidental powers of 
 the corporation under its charter, power to bind the corporation 
 can only be presumed to exist in its executive agents and officers 
 within the scope of its ordinary business and their ordinary duties. 
 Life and Fire Ins. Go. v. Mech, Fire Ins. Co., 7 Wend. 31 ; Minor 
 v. Mech. Bank of Alexandria, 1 Pet. 46; Hoyt v. Thompson, 1 Seld. 
 320 ; Leggett v. JST. Y. Manf. Co., Sandf. Oh. 541. 
 
 The powers of the corporation defendant are banking powers 
 only, with such incidental powers as may be necessary to carry on 
 the business of banking, witji the privilege of buying and selling 
 exchange, coin and bullion. This does not necessarily include the 
 business of a safe deposit company, or business of receiving for 
 safe-keeping, and storing for hire, or without compensation, jew- 
 elry and valuables, or property of any kind. If the power exists in 
 the corporation as part of its franchise, it is only as an incident of 
 its principal business. The duties of the executive officer of a 
 banking corporation, who is ordinarily the cashier, are very well 
 understood, and while those of the president are not so well defined, 
 he is but the executive agent of the board of directors, to perform 
 such duties as may be devolved upon him, and is not the corpora- 
 tion, and cannot take the place of the governing board, and make 
 contracts or incur liabilities outside of the ordinary business of the 
 bank, without special authority. The corporations formed under 
 the Currency Act are banks of deposit as well as circulation. They 
 are authorized to issue their own notes for circulation, and to re- 
 ceive from others their money and circulate it. Money so received 
 from others is termed a deposit, although it has none of the quali- 
 fications of a bailment. There is no trust or promise to re-deliver 
 
COUET OP APPEALS, 1875. 733 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 the same money. By the deposit the money becomes the property 
 of the bank, and the relation of debtor and creditor is created be- 
 tween the depositor and the bank. Commercial JBanh of Albany t. 
 Hughes, 17 Wend. 94; Marine Bank v. Fulton BanJc, 2 Wall. 253. 
 This is the character of the deposit which, by the Currency Act, 
 the defendant was expressly authorized to receiye, anij in receiving 
 such a deposit the cashier would be acting within the scope of his 
 authority, and the bank, by his act, would become a debtor to the 
 depositor. 
 
 The principal attributes of a bank are, the right to issue circu- 
 lating notes, discount commercial paper, and receiTe deposits of 
 money. Per Spbncee, J., 15 Johns. 390; JST. Y. Firemen's Insur- 
 ance Go. T. Ely, 2 Cow. 678, 710. 
 
 The act of Congress under which the plaintiff and defendant be- 
 came incorporated makes them banking corporations, and confers 
 upon them banking powers, and all such incidental powers as shall 
 be necessary to carry on the business of banking, by discounting 
 and negotiating promissory notes, drafts, bills of exchange and 
 other evidences of debt; by receiving deposits; by buying and sell- 
 ing exchange, coin and bullion; by loaning money on personal secu- 
 rity; by obtaining, issuing and circulating notes, according to the 
 provisions of the act. The statutory powers and franchise are 
 entirely coincident with the attributes of banking corporations as 
 defined by the law-merchant. The National banking associations 
 are required, by law, to have on hand, at all times, lawful money to 
 a prescribed amount as a reserve fund; and are permitted to "keep 
 one-half of the lawful money reserve in cash deposits " in the city 
 of New York, but the bonds in controversy were not, and could 
 not have been, deposited with or received by the defendant under 
 this provision of law. Act, supra, §§ 31, 33. 
 
 The deposit of these bonds cannot be distinguished from a deposit 
 of jewelry or plate, or other valuable property, and was a special 
 transaction not within the ordinary course and business of banking, 
 or necessarily incident to it. If authorized, it added greatly to the 
 risk of loss to the shareholders, without adding to their gains. It 
 was a holding out of greater inducements to burglars and robbers 
 from without, and might prove of greater temptation to dishonesty, 
 on the part of clerks and employees, within the bank. As a busi- 
 ness, it could not have been undertaken at the risk and responsi- 
 bility of the corporation by the executive officers, or without the 
 
734 NEW YOEK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 special authority of the board of directors, and a single transaction 
 was without the general scope of the powers and duties of the 
 executiye officers of the institution. 
 
 Oiblin r. McMullen, L. E., 3 P. C. Cases, 337, was an appeal 
 from the Supreme Court of Victoria. The defendant represented 
 the Union Bank of Australia, and no question was made as to the 
 authority of the manager of the bank to receive the special deposit; 
 and it is expressly said that the railway debentures, which were 
 stolen by the cashier, were placed in the defendant's care by a cus- 
 tomer, in the ordinary course of their business as bankers. The 
 case turned upon the liability of the bailee for a theft by the offi- 
 cers of the bank, and the court, following Foster v. Essex Banh, 
 Vt Mass. 479, held the defendant not liable. Foster v. Essex BanJe 
 was a special deposit of coin, and the bank was held to be the de- 
 positary, rather than the cashier or other officers, although not held 
 liable in the action, on the ground of a general recognition and 
 authorization of the practice by the directors; and Paekee, C. J. , 
 places the responsibility of the defendant solely on that ground, 
 and applying the principles of master and servant, and deducing 
 the relation of bailor and bailee, says: "Not so, if the servant 
 secretly, and without the knowledge, express or implied, of the 
 master, he not having authorized or submitted to the practice, 
 receives the goods for such purpose, for no man can be made the 
 bailee of another's property, without his consent; and there must 
 be a contract, express or implied, to induce a liability. The 
 knowledge and permission, expressly found or legally to be pre- 
 sumed in this case, establishes a contract between the parties." 
 
 Scott V. National Bank of Chester, 73 Penn. St. 471 {post), fol- 
 lowed the case last cited, in principle. A case very analogous to, 
 if not in all respects like this in principle, was Lloyd v. West 
 Branch Bank, 15 Penn. St. 173, and it was adjudged that the 
 cashier had no authority to receive, as a special deposit, a sealed 
 package of small notes, issued by a corporation, without authority 
 of law, and that if so received, without the permission of the 
 directors, or their knowledge of any usage or practice to receive such 
 packages on deposit, the law would not imply a contract on the 
 part of the corporation with the depositor for the safe-keeping of 
 the package. Coultee, J. , says, that " it was never designed by 
 the provisions of the statute that the bank should be converted 
 into a kind of pawnbroker shop." The case turned upon the point 
 
COUKT OP APPEALS, 1875. 735 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 as expressed by the court, that there was " no eyidence that the 
 hank made any contract with Oliver (the depositor), express or 
 implied." The whole tenor of authority is in fayor of holding cor- 
 porations for the acts of their ofiQcers, especially executive officers 
 and general agents within the general scope and apparent sphere of 
 their duties, and not holding them for acts done without special 
 authority in the cases without such general scope and sphere 
 of duty. The cases are all reconcilable and sustainable on this 
 principle and no other. Courts and judges have spoken cautiously 
 on the subject, but the language has been uniform, limiting the 
 responsibility of corporations for the acts of their officers and agents, 
 in the absence of an express authority to do the particular act, t& 
 those performed in the discharge of their ordinary duties in the 
 usual course of business, and within the sphere and scope of such 
 duties. Such are presumed to be by authority of and within the 
 knowledge of the directors; and within the rule are included such 
 acts as are shown to have been performed with the knowledge and 
 implie'd consent of the directors, although out of the line of ordi- 
 nary duty and usual course of business. The duties of the cashier 
 are well understood, and as recognized judicially are restricted to 
 the care and management of the property and fiscal concerns of the 
 bank, in the conduct of its business as a bank, in the usual and 
 ordinary way. Story on Agency, §§ 114, 115 ; Badger v. Batik 
 of Gumlerland, 26 Me. 438 ; Merchants' Bank v. State Bank, 
 10 Wall. 604 ; Bank of Genesee v. PatcUn Bank, 3 Kern. 309. 
 The president and cashier of a bank cannot assign the choses 
 in action of the corporation to its creditors as a security 
 for the payment of a precedent debt, without authority from the 
 board of directors. They can do no act outside of their ordinary 
 duties in the conduct and management of the banking business, 
 unless by authority, either express or implied, from the fact that 
 they have been permitted to do the like acts without objection. 
 Hoyt v. Thompson, 1 Seld. 330. Judge Watije, in United States 
 V. Gity Bank of Colunibus, 21 How. (U. S.) 356, says : " The court 
 defines the cashier of the bank to be an executive officer by whom 
 its debts are received and paid, and its securities taken and trans- 
 ferred, and that his acts, to be binding upon a bank, must be done 
 within the ordinary course of his duties. His ordinary duties are 
 to keep all the funds of the bank, its notes, bills and other choses 
 in action, to be used from time to time, for the ordinary and 
 
736 NEW TOEK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 extraordinary exigencies of the bank. He usually receives directly 
 or through the subordinate ofi&cers of the bank, all the money and 
 notes of the bank, delivers up all discounted notes and other secu- 
 rities when they have been paid, draws checks to withdraw the funds 
 of the bank when they have been deposited, and, as the executive 
 officer of the bank, transacts most of the business." After this 
 summary of the duties and powers of the cashier, the same judge 
 says that he may not make any contract involving the payment of 
 money not loaned in the usual or customary way, or purchase or 
 sell property, or create an agency of any kind for the bank unless 
 expressly authorized by those to whom has been confided the power 
 to manage the business of the bank, both ordinary and extraordi- 
 nary. Judge Stoet limits the authority of bank officers to bind the 
 corporation to acts and contracts within the ordinary sphere of 
 their duties, and the scope of the ordinary business. Minor v. Mech. 
 Bank of Alexandria, 1 Pet. 46, 70 ; Fleckner v. Bank of United 
 States, 8 Wheat. 338 ; see, also, Fulton Bank v. New York and 
 Sharon Canal Co., 4 Paige, 327. The doctrine of estoppel may 
 give effect to the acts of the officers of a corporation as against the 
 corporation, as in other cases of principal and agent. Farmers and 
 Mechanics' Bank v. Butchers and Drovers' Bank, 16 N". Y. 135. 
 But there is no question of estoppel in this case. 
 
 A class of cases was cited by the learned counsel for the plaintiff 
 which do not very directly bear upon the question under consider- 
 ation. They are those in which a statutory power has been confer- 
 red and has been executed, apparently within the terms and in the 
 manner and by the agents prescribed by statute, and a presumption 
 has been allowed in favor of validity of the execution of the power 
 in favor of those who have in good faith acted upon the apparent 
 compliance with the statute and the terms of the grant. The cases 
 are circumstantially different, but all may be brought within one 
 general principle, and they do not conflict with the views before 
 advanced. Commissioners of Knox County v. Aspinwall, 21 How. 
 539 ; Royal British Bank v. Turquand, 5 E. & B. 248 ; S. C, 6 id. 
 337; Society for Savings^. City of New London, 29 Conn. 174 ; Com- 
 monwealth V. Pittsburgh, 34 Penn. St. 496 ; Farmers' L. and T. Co. 
 V. Curtis, 3 Seld. 466, are among the cases cited by counsel, and 
 illustrate the principles governing all. They do not touch the 
 principle upon which this branch of the present appeal rests. 
 
 No general principle was decided in Van Leuven v. First National 
 
COUET OP APPEALS, 1875. 737 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 Bank of Kingston, 54 N. Y. 671 {ante, p. 724). By a diTided court 
 it was held that the contract in that case, under the peculiar cir- 
 cumstances, was the contract of the corporation, and not the indi- 
 vidual contract of the president. The question now under consid- 
 eration was not considered by the learned commissioner, and does 
 not appear to have been made in the action. 
 
 It was very earnestly and ably urged upon the court by the coun- 
 sel for the plaintifE that the corporation was liable as a wrong-doer 
 or tortfeasor within the principle of Philadelphia, Washington and 
 Baltimore Railroad Company v. Quigley, 21 How. (U. S.) 202, and 
 other cases which were cited, in which the doctrine was applied 
 under different circumstances. The difiEiculty with this argument 
 is, that there was no wrong by the corporation, and could be none, 
 if there was no contract. If there was no bailment to the corpora- 
 tion it neglected no duty, and was guilty of no negligence. The 
 whole duty of a bailee rests upon contract, and if there was no 
 contract there was no duty. Neither a corporation nor individual 
 can be called upon to pay that which he or it does not owe, and 
 neither is responsible for want of care or for neglect in protecting 
 property of which he or it has not assumed the custody, or anv re- 
 lation of duty or trust in respect to it. 
 
 Having arrived at the conclusion that if the power of the cor- 
 poration to assume the position of bailee, with its responsibilities 
 and obligations, be conceded, there was no evidence of the delega- 
 tion of the power to the executive and ministerial officers of the 
 bank, and that for that reason the judgment should be reversed 
 and a new trial granted, it is unnecessary to consider the question 
 back of it as to the power of the corporation itself in that direc- 
 tion. It is a question not free from difficulty, but can be more sat- 
 isfactorily considered when it becomes (if it shall) necessary to a 
 judgment. 
 
 The public are interested in restraining corporations to the en- 
 joyment 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 dele- 
 gated power with which they are clothed. It is axiomatic that a 
 corporation can make no contracts 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 
 93 
 
738 NEW YOEK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 powers and the mode of exercising them, upon the construction of 
 the statute which gives them life and being. Whether the receipt 
 of goods and securities on deposit for safe-keeping is within the 
 powers, express or implied, of National banks, will not be consid- 
 ered. The case has been considered as one of gratuitous bailment, 
 as that was the theory upon which it was tried. If any other rela- 
 tion existed between the parties* in respect to the bonds than that 
 of bailor and bailee without compensation, or any other obligation or 
 liability rested upon the defendant other than that which would 
 result from such relation, it must be dcYcloped on another trial. 
 
 Since writing the above the case of Wiley v. First National Bank 
 of Brattleboro, recently decided by the Supreme Court of Vermont 
 (see post), has come to my notice. That learned court held that 
 the cashier of a National bank has no power to receive special de- 
 posits in behalf of the bank for the accommodation of the depos- 
 itor, or to bind the bank to any liability or any express contract 
 accompanying, or any implied contract arising out of, such taking, 
 and the judgment is sustained by a well-considered opinion of 
 Judge Whbelee. In his views I fully concur. 
 
 Several exceptions were taken at the trial to the admission and 
 exclusion of evidence, some of which we think were well taken. 
 The defendant was a gratuitous bailee, that is, a depositary with- 
 out compensation for the benefit of the bailor, and was, therefore, 
 only liable for gross negligence, which is defined in various ways. 
 The term itself has been quarreled with, but it still has a place in 
 the law, and must have, so long as the measure of liability implied 
 by the term is recognized, and until some better term can be in- 
 vented to give expression to it. It is incapable of precise defini- 
 tion, and its application and use may lead, in some cases, to results 
 unsatisfactory; but that comes as directly from the nature and ex- 
 tent of the duty in the particular case, as from the phrase by which 
 a breach of the duty is expressed. I cannot but think that, in 
 this case, the defendant was held to a higher standard of obliga- 
 tion than the circumstances warranted, but the question is not 
 before us. What constitutes gross negligence, that is, such want 
 of care as would charge a gratuitous bailee for loss, must depend 
 very much upon the circumstances to which the term is to be 
 appHed. It has been defined to be the want of that ordinary dili- 
 gence and care which a usually prudent man takes of his own prop- 
 erty of the like description. Qiblin v. McMullen, supra. This 
 
COUET OP APPEALS, 1875. 739 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 definition is given by a reference to the degree of care, rather than 
 the degree of negligence, which may be the easier and more intel- 
 ligible mode of defining the extent of the obligation, and the meas- 
 ure of duty assumed. Ordinary care, as well as gross negligence, 
 the one being in contrast with the other, must be graded by the 
 nature and value of the property and the risks to which it is 
 exposed. A depositor of goods or securities for safe-keeping with 
 a gratuitous bailee can only claim that diligence which a person of 
 common sense, not a specialist or expert in a particular department, 
 should exercise in such department. "Wharton on Negligence, 
 § 470. The bank, as depositary, taking no pay and taking no 
 risks, was not bound to resort to any special or extraordinary meas- 
 ures to protect the property of the depositor, and the negligence 
 for which it could be charged, or which was the proper subject of 
 evidence upon the trial, was only that which was connected with, 
 and directly contributed to the loss. Independent acts of negli- 
 gence, disconnected with the loss, were not properly admissible in' 
 evidence. Scott v. National Bank of Chester Valley, supra. 
 
 The defendant was not chargeable with negligence or want of 
 care for not acting upon facts or circumstances not coming to the 
 knowledge of its directors or ofiBcers. Pacts not brought home to 
 them, tending to show that the property was exposed to loss from 
 some unusual cause, to some peril growing out of peculiar circum- 
 stances, were not admissible in evidence against the defendant. 
 The bailee was only called upon to take such care as became neces- 
 sary to protect it against risks known to it, or of which it had 
 notice. There was great latitude in the evidence on the part of 
 the plaintiffs, and some of it was quite dramatic in its character ; 
 the purpose and end was to show that the place of deposit was 
 peculiarly and extraordinarily exposed to perils from robbers at 
 that time, calling for more than the usual cautions from the bailee. 
 This was competent, so far as facts and circumstances proved to 
 exist were communicated to the ofiicers of the bank, but no 
 farther. Without stopping to inquire whether all the evidence of 
 this character was competent, or whether all the facts, which, if 
 known, might have alarmed the oflScers of the bank, and stirred 
 them up to greater diligence, were made known to them, I will 
 refer to a single exception 'which is fatal to the recovery. The 
 plaintiff was permitted to prove a conversation between one Holley 
 and the president of the bank, immediately after the robbery, in 
 
740 NEW YORK 
 
 First National Bank of Lyons v. Ocean National Bank. 
 
 which the presideut, Mr. Martin, was made to say, " For God's sake 
 and mine, never make mention of any conversation that has ever 
 passed between you and me, in relation to the robbery of this bank." 
 Holley had testified to several prior conversations, in which he 
 claimed to have made known to the president some attempt by 
 burglars to enter the bank building, and of indications of an 
 intended robbery, and urged upon him the necessity of greater 
 precautions. The admission of the evidence which formed the 
 subject of the exceptions is sought to be justified as the act of the 
 defendant, by its authorized agent, to suppress testimony, to con- 
 ceal and cover up evidence. The statement or request, if made by 
 Mr. Martin, was only material as an implied admission of culpable 
 negligence on his part, that which would subject him to censure, 
 and, perhaps, loss of place ; and if this deposit was in his mind, 
 possibly charge the bank with its value. That it was in the mind 
 of Martin, or that he intended to suppress, or foresaw the neces- 
 sity of suppressing evidence in any action in a court of justice, 
 there is not the least evidence. The request was made, doubtless, 
 if made at all, to save himself and his acts from criticism, and for 
 no other purpose ; and it was only important as an admission, by 
 implication, of neglect in protecting the bank against the robbery. 
 If made for the purpose suggested, it was not an act by the corpora- 
 tion. He did not, in that conversation, although he may have sup- 
 posed he was acting in the interest of the bank, represent it. He 
 had no authority to speak or act for it, and it could not be affected 
 by its acts and declarations made after the transaction, and when 
 not acting within the limit of his authority, or in respect to a busi- 
 ness over which he had authority to act for the bank. He had no 
 incidental authority to make any declaration, binding upon the 
 bank, in matters not within the scope of his ordinary duties. Story 
 on Agency, § 115. An authority to speak and act for the corpora- 
 tion, in respect to litigations not pending or even anticipated, can- 
 not be presumed. As a mere declaration or admission, tending to 
 prove the fact in issue, it was not admissible, and should have been 
 excluded. There is no principle upon which its admission can be 
 sustained, and it should have been excluded. Luby v. Hudson 
 Riv. R. R. Co., ir N. Y. 131 ; Hamilton v. N. Y. G. R. R. Go., 54 
 id. 334 ; Packet Boat Co, v. Glough, MS. opinion of Judge Steom-g, 
 U. S. Sup. Ct., Oct. 7, 1874. 
 The declarations of agents are only admissible when made as 
 
COUET OF APPEALS, 1876. 741 
 
 HintenuiBter v. First National Bank. 
 
 part of the res gestm, or in the performance of the duties of their 
 agency. 
 
 The judgment must be reversed, and a new trial granted. 
 
 Eapallo and Andbews, JJ., concur ; all the other judges con- 
 cur in result. 
 
 Judgment reversed. 
 
 HiKXBEltlSTEE V. FiRST NATIONAL BaKTK. 
 (64 New York, 212.) 
 Uawry ly National banks — Action for pcTudty — Amount of recovery. 
 
 In an action against a National bank to recover the penalty imposed by tbe 
 act of Congress for taking a greater rate of interest than is allowed by law, 
 the plaintiff is entitled to recover only twice the amount taken in excess of 
 the legal interest, and not twice the amount of the entire interest paid.* 
 
 In an action to recover the penalties imposed for taking unlawful interest, the 
 plaintiff is entitled to recover twice the amount he has paid for usury 
 within two years prior to the commencement of the action, whether the 
 amount was paid in one or several payments. 
 
 Semble, that the " forfeiture of the entire interest " imposed for taking illegal 
 interest is enforced only in actions brought upon or to enforce the usurious 
 contract. 
 
 ACTION by Hintermister against the First National Bank of 
 Chittenango, to recover, under section 30 of the National 
 Banking Act, twice the amount of interest upon a note and the 
 renewals thereof, on the ground of usury. The court found as 
 facts, that the interest charged was in excess of that allowed by 
 the law of this State and the act of Congress, and that such excess 
 was twenty dollars in addition to the interest secured upon the 
 note and upon such renewal thereof. The court ordered judgment 
 for twice the amount of the entire interest paid upon these renew- 
 als, and twice the twenty dollars paid in excess upon the last 
 renewal. This judgment was reversed by the General Term (5 T, 
 & 0. 484) and a new trial ordered. 
 
 * See Brovm v. Second, National Bank, post; but see also Overholt v. National 
 Bank, post, wherein Brown v. Second National Bank is explained and limited. 
 
742 NEW YOEK 
 
 HintermiBter v. First National Bank. 
 
 W. E. Lansing, for appellant. 
 D. D. Walrath, for respondent. 
 
 Alleit, J. The Supreme Court of the United States having 
 given an interpretation to the act of Congress regulating the inter- 
 est which may be lawfully taken by National banks, and declaring 
 the penalties for demanding or receiving interest at a greater rate 
 than that allowed by law, adverse to the views of this court, as 
 expressed in The National Bank of Whitehall v. Lamb, 50 N. Y. 
 95, neither that case nor that of The Farmers' Bank of Fayette- 
 ville V. Hale, 59 N. Y. 53, can be longer considered as furnishing 
 a rule for decision in cases within the principle of the adjudication 
 by the Federal court. The decisions of that court in all matters 
 of Federal jurisprudence and of the interpretation of the acts of 
 Congress, are paramount to and binding upon all other courts. 
 
 The judgment in The Farmers' Bank of Fayetteville v. Hale was 
 a necessary sequence of that in the case of Lamb, the statute of 
 the State being in all respects a transcript of the act of Congress, 
 and both received the same interpretation. But by the authorita- 
 tive decision of the court at Washington, the act of Congress 
 receiving a different interpretation from that which we thought it 
 would bear, it follows, that in order to give efEect to the evident 
 intention of the Legislature of this State, the statute enacted in 
 1870 to put the State banks upon an equality with the National 
 banks, should have the same interpretation and efEect as is given 
 to the act of Congress. Any other interpretation would do vio- 
 lence to the clearly expressed will of the Legislature, do injustice 
 to the State institutions, and give undue efEect to the legislation 
 of Congress so far as it is hostile to the State banks. Both cases 
 may, therefore, be regarded as overruled. 
 
 The plaintifE was, upon the facts found by the trial court, en- 
 titled to a judgment for the penalty given by the act of Congress, 
 when a greater rate of interest than is allowed by law has been 
 actually paid (U. S. E. S., § 5198) ; and the sole question is whether 
 the penalty should be twice the amount of the entire interest 
 paid or twice the amount of the excess of legal interest only. The 
 language of the statute is not so explicit as to render its interpreta- 
 tion free from difficulty. The clause under which this action is 
 brought is penal in its character, and therefore should be strictly 
 
COUET OF APPEALS, 1876. 743 
 
 Hintermister v. First National Bank. 
 
 construed ; that is, not extended by implication so as to give a 
 greater penalty than that which the terms of the act will clearly 
 warrant. The first clause of the section forfeits the entire interest 
 wheneyer interest greater than is allowed by section 5197 is either 
 received or reserved ; but it would seem that this forfeiture 
 attaches, and is enforced only in actions brought upon or to en- 
 force the usurious contract. It limits the right of the recovery by 
 the plaintiffs in such actions to the money actually loaned without 
 interest. The other clause of the section, in declaring the penalty 
 which a party paying the illegal interest may recover, employs dif- 
 ferent language. It enacts that " in case a greater rate of interest 
 has been paid " than allowed by law, "twice the amount of the 
 interest thus paid may be recovered from the association taking or 
 receiving the same." The language of the act is satisfied by re- 
 stricting it to the interest paid in excess of the legal rate. It 
 seems to have respect to " the greater rate " as distinguished from 
 the entire interest mentioned in the first paragraph of the section. 
 " The greater rate " does not necessarily include the legal rate of 
 interest, and when the statute declares that twice the amount of 
 the interest "thus paid" may be recovered, it may well be held to 
 mean twice the amount paid as for " the greater rate " that is in 
 excess of the lawful interest. "With great hesitation I incline to 
 favor this interpretation of the penal clause under consideration. I 
 am the more inclined to this view of the statute by reason of the 
 general character of the legislation of Congress in respect to Na- 
 tional banks. If these institutions are not, as is said in Tiffany 
 V. ISTat. BTc. of Missouri, 18 Wall. 409 {ante, p. 90), " National 
 favorites," they have been greatly favored by Congress to the pre- 
 judice of the State banks, and it cannot be supposed that Congress 
 would impose very stringent burdens or very heavy penalties upon 
 them in matters in respect to which they might come in conflict 
 with State banks. The policy of the legislation by Congress, as 
 intimated in Tiffany v. Bank of Missouri {supra), was to give ad- 
 vantages to National banks over their State competitors. In this 
 view of the policy of Congress the lower penalty must be assumed 
 to have been intended in the use of the ambiguous phrase of the 
 statute. When the act forfeits the entire interest, the forfeiture is 
 only of the one sum reserved as interest ; while, in giving penalty 
 of twice the amount, the usurious interest only is double. If this 
 is not so, the borrower would be the gainer by paying the usurious 
 
744 NEW YORK 
 
 Hintennister v. First National Bank. 
 
 interest, and suing at once to recover twice the amount, while by 
 resisting payment he could only save the one sum. The Supreme 
 Court of Pennsylvania have given the game interpretation to the 
 act of Congress, in Brown v. Second Nat. Bank of Erie, 73 Penn. 
 St. 209 (see post*) . The judgment of the court below should have 
 been a mere reduction of the recovery at Special Term to the amount 
 to which the plaintifE was entitled in accordance with these views. It 
 is objected that but one penalty can be recovered in a single action. 
 The authorities to which reference is had in support of this objec- 
 tion (Sturgess v. Spofford, 45 N. Y. 446 ; Fisher v. iV. T. G. and 
 H. R. R. R. Co., 46 id. 644), and other cases to which reference 
 might be made, were decided upon the peculiar language of the 
 acts giving the penalties. The act of Congress under which this 
 action is brought regulates the recovery by the amount illegally 
 received and taken, and does not give a fixed sum as an arbritrary 
 penalty, and the party entitled to maintain the action is entitled to 
 recover within the terms of the act twice the amount which he has 
 paid for usury within two years prior to the commencement of the 
 action, whether the amount has been paid in one or several pay- 
 ments. 
 
 The order of the General Term of the Supreme Court should be 
 modified and the judgment of the Special Term reversed, and a 
 new trial granted, costs to abide the event, unless the plaintiff stip- 
 ulates to reduce the recovery to $160 for the penalty ; and in case 
 he so stipulates, the judgment to be affirmed for that amount, 
 without costs to either party in this court. 
 
 All concur. 
 
 Judgment accordingly. 
 
 * See, however, Ove/rholt v. National Bank, post. 
 
COUET OF APPEALS, 1877. 745 
 
 Crocker v. Whitney. 
 
 Ceockbk t. Whitney.* 
 
 Mortgotge to National hanks. 
 National banks cannot take mortgages on real estate to secure future advances.f 
 
 APPEAL from an order of the General Term of the Supreme 
 Court affirming an order of the Special Term disposing of 
 moneys arising from a mortgage foreclosure. 
 
 Wm. G. Watson, for appellant. 
 
 M. H. Pick, for respondent. 
 
 Andrews, J. The National Bank of Genesee, on the 12th day 
 of January, 1871, when the mortgage from Whitney to the bank 
 was executed, held his indorsed paper, which it had previously 
 discounted for him, to the amount of $3,300. The mortgage was 
 given to secure the indebtedness, and also any debts of the mort- 
 gagor to the bank thereafter contracted. 
 
 It is conceded that the mortgage was a valid security for the 
 notes of Whitney held by the bank at its date, but it is claimed, 
 and the referee has found, that these notes were subsequently paid, 
 and unless the bank is entitled to have this finding set aside, its 
 right to the surplus money arising on the sale under the judgment 
 in this action will depend upon the question of the validity of the 
 mortgage, regarding it as a mortgage to secure future loans or dis- 
 counts, under the provisions of the act of Congress known as the 
 National Bank Act of June 3, 1864. 
 
 If valid in that view, the right of the bank to priority of pay- 
 ment out of the fund is conceded, but the respondents, who are 
 mortgagees of Whitney subsequent to the bank, contest the valid- 
 ity of the bank mortgage as a security for future liabilities, and 
 reposing upon this claim and the finding of the referee, that the 
 debts owing by Whitney to the bank at the date of the mortgage 
 have been paid, they insist that, disregarding the debt Subsequently 
 
 * Not yet reported in the TSem York Reports. 
 + See Woods v. People's National Bank, post, and note. 
 94 
 
746 NEW YOKK 
 
 Crocker v. Whitney. 
 
 incurred and now owing by Whitney to the bank, they are entitled 
 to have the surplus money applied upon their mortgage, and that 
 the claim of the bank thereto should be rejected. 
 
 The appellant claims that the finding that the indebtedness of 
 Whitney to the bank at the date of the mortgage has been paid is 
 not sustained by the eTidence,^and that in fact it entered into and 
 forms a part of the debt of $5,160.10 now owing by Whitney to the 
 bank, represented by his note for that amount, of June 18, 1874, 
 and they further claim that if the original debt is regarded as paid, 
 the mortgage nevertheless is an authorized and valid security, 
 under the National Bank Act, for the debt of Whitney to the bank, 
 incurred after it was executed. 
 
 We are of opinion that upon the facts proved the notes of Whit- 
 ney, held by the bank when the mortgage was given, were paid, and 
 the referee was amply justified in his conclusion upon that ques- 
 tion. 
 
 Whitney was a miller, and manufactured flour for sale. He was 
 a dealer with the bank. The bank discounted his notes and passed 
 the proceeds to his credit on its books. He drew drafts on his 
 customers, which the bank received and credited to him, and he 
 deposited in the bank money received in his business. The items 
 of credit and debit were entered in a single account, and it was the 
 usual, and, so far as appears, the uniform practice, that when his 
 notes matured they were charged in his account and afterward sur- 
 rendered. The notes held by the bank January 13, 1871, accord- 
 ing to the usual custom, were not protested, but as they matured 
 were charged, to his account, and were afterward surrendered, and 
 his credit on the books of the bank, made up of this blended fund, 
 derived from discounts, drafts and deposits, was in consequence 
 reduced to the extent of the paper charged against it. 
 
 There was no indorser on the notes discounted after January 12, 
 1871. They were discounted on the credit of Whitney and in reli- 
 ance on the mortgage. The debit side of the account from Janu- 
 ary, 1871, to August, 1874, amounted to $171,175.83, and the 
 credits to $168,237.51. 
 
 It is, we think, a clear proposition, in view of these facts, that 
 the notes held by the bank in January, 1871, were paid. The cred- 
 its to Whitney were applied to the payment of the notes as they 
 matured. There is no other inference to be drawn from the acts 
 of the bank. If the notes were not deemed to be paid, why were 
 
OOUET OF APPEALS, 1877. 747 
 
 Crocker v. Whitney. 
 
 the indorsers discharged and the notes given up. It was not the 
 case of a mere renewal of notes. The transaction does not differ 
 in legal effect from what it would have been if Whitney, having 
 funds in the bank, had as each note matured drawn his check upon 
 the bank for the amount and delivered it to the bank and the bank 
 had received it and charged it to his account and then surrendered 
 the not 
 
 We deem it unnecessary to consider the rule for the application 
 of payments, when neither party have made the application. In 
 this case, there was by force of the transaction and the manner of 
 keeping and dealing with this account, an appropriation of the 
 credits ^ro tanto to pay the maturing notes by the consent of both 
 debtor and creditor and this in law was payment. The consent is 
 inferable from the manner in which the business was conducted. 
 There is no ground for the inference that the bank intended to 
 keep alive the debt existing when the mortgage was given, for it 
 was evident that it relied upon the mortgage as a valid security for 
 the final balance of the account and for debts which might be con- 
 tracted after its execution, as well as those existing at that time. 
 We conclude, therefore, that the finding of the referee, that the 
 bank debt owing by Whitney when the mortgage was given was 
 afterward paid, cannot be disturbed. See Clayton's case, 1 Mer. 
 608 ; Truscott v. King, 6 N. Y. 147. 
 
 We come then to the only remaining question in the case, viz. : 
 Whether E"ational banks are prohibited by the act of June 3, 1864, 
 from taking a mortgage on real estate as security for loans or dis- 
 counts which the bank may thereafter make to the mortgagor. The 
 business of a banking corporation-necessarily involves the making of 
 contracts, the loaning of money and the existence of the relation 
 of creditor and debtor between the bank and its customers. A cor- 
 poration has incidentally at common law, in the absence of any 
 restriction imposed by its charter or implied from the nature and 
 object of the incorporation, the power to take and hold real estate 
 and gnay deal in respect to it to the same extent as a natural per- 
 son. 3 Kent, 381; Ang. & Ames on Corp., § 145. A banking business 
 or trading corporation having the right to make contracts and to 
 become creditors may secure their debts by taking a mortgage on 
 real estate or in any way provided for by the convention of the par- 
 ties and we see no reason to doubt that a bank, unless restrained by 
 its charter, may take a mortgage in advance to secure anticipated 
 
748 NEW YORK 
 
 Crockery. Whitney. 
 
 liabilities, as well as those existing at the time. This is a conven- 
 ient and ordinary method, when a continuous dealing upon credit 
 is contemplated, of securing the final iadebtedness. But the Leg- 
 islature, by whose flat the corporation exists and whose creation it 
 is, may prescribe and regulate the mode of its operation and in 
 what manner its powers shall be, exercised. It may by special re- 
 strictions in the charter define and limit the incidental powers 
 which the corporation shall possess, and so far as this is done the 
 statute and not the common law will determine what their powers 
 are. Bank of U. S. y. Pardridge, 13 Wheat. 64; Head v. Prov. 
 Ins. Co., 2 Cranch, 127. 
 
 It follows from this familiar doctrine in respect to the powers 
 of corporations, that in the absence of any restriction in the Na- 
 tional Bank Act upon the power of the National bank to take 
 mortgages on real estate to secure future loans or discounts, the 
 power to do so cannot be successfully challenged, and those who 
 deny that the power exists must show that its exercise is prohib- 
 ited or restrained by the statute under which the banks are organ- 
 ized. 
 
 We come then directly to the consideration of this question. 
 
 The 8th section of the National Bank Act specifies the banking 
 powers of institutions organized under it, viz. : " to carry on the 
 business of banking ; by discounting and negotiating promissory 
 notes, drafts, bills of exchange and other evidences of debt : by 
 receiving deposits ; by buying and selling exchange, coin and bul- 
 lion ; by loaning money on personal security, and by obtaining, 
 issuing and circulating notes according to this title," and they 
 are especially authorized to exercise all such incidental powers as 
 shall be necessary to carry on the business of banking. The words 
 "personal security" used in the section are manifestly, we think, used 
 in contradistinction to real security, and define the description of 
 securities upon which loans by National banks are to be made. 
 Loans upon individual credit, or upon the pledge or security of per- 
 sonal property, are within the description, but a loan made upon a 
 real estate mortgage is a loan upon real security, whether the 
 mortgage is regarded as conveying to the mortgagee an estate in the 
 land, as in some of the States, or as creating a lien simply to be 
 enforced by foreclosure and sale as in this. This specification of 
 the banking powers of National banks is very similar and nearly 
 identical with the specification in the General Banking Law of this 
 
COUET OF APPEALS, 1877. 749 
 
 Crocker v. Whitney. 
 
 State of 1838. It difEers in this. Under our State law among 
 other powers specified was this " loaning money on real and per- 
 sonal security. " The change in the National Bank Act, which was 
 framed doubtless with knowledge of the prorisions of our State 
 law, is significant of the intention of Congress to restrict National 
 banks to loaning upon personal property as distinguished from real 
 security. 
 
 If the argument upon the point we are considering rested solely 
 upon the language of the 8th section of the National Bank Act it 
 might be strongly pressed that the authority to loan on personal 
 security being specified, a prohibition was implied against loaning 
 on real estate security, and that upon this ground alone the mort- 
 gage in question could not be held a Talid security for Whitney's 
 debt to the bank, contracted after the mortgage was given. Upon 
 this point the language of Chief Justice Thompson in The People 
 T. Utica Ins. Go., 15 Johns. 383, where the point was, whether 
 the insurance company could under its charter exercise banking 
 powers, is very suggestive. He says: " The specification of certain 
 powers (in a charter) operates as a restraint to such objects only, 
 and is an implied prohibition of the exercise of other distinct 
 powers." And in New York Firemen's Ins. Co. v. Ely, 2 Cow. 
 300, SuTHBBLAifD, J., referring to the claim that the company was 
 not prohibited from investing its surplus funds in loans upon prom- 
 issory notes, said: " The 16th section of the act expressly pro- 
 vides that it shall be lawful for the corporation to invest their 
 capital, or any portion of it, either in the stock of the United 
 States, or of the individual States, thus by the strongest impli- 
 cation prohibiting any other mode of investment, and destroy- 
 ing the inference which might have resulted from the absence of 
 all regulations on the subject." 
 
 But we are not required to decide in this case whether the taking 
 of a mortgage by a National bank to secure future loans is pro- 
 hibited by the true construction of the 8th section of the act, 
 standing alone, but a reference to the 28th section of the act, in 
 connection with the 8th section, makes it very clear that it was the 
 intention of Congress to prohibit the taking by a National bank of 
 a real estate mortgage for that purpose. That section is as follows: 
 " It shall be lawful for any such association to purchase, hold and 
 convey real estate for the following purposes and for no other: 
 First, such as shall be necessary for its immediate accommoda- 
 
750 NEW YOEK 
 
 Crocker v. Whitney. 
 
 tion in the transaction of its business; second, such as shall be 
 mortgaged to it in good faith by way of security for debts pre- 
 viously contracted; third, such as shall be conveyed to it in satis- 
 faction of debts previously contracted in the course of its deal- 
 ings; fourth, such as it shall purchase at sales under judgments, 
 decrees or mortgages held by the association, or shall purchase to 
 secure debts due to it. But ho 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." 
 
 It is apparent on reading this section that it was the intention of 
 Congress to enable Ifational banks to acquire real estate for a bank 
 building and accommodations, and in payment of, or to secure 
 debts existing when the title was acquired, and to prohibit them 
 from purchasing or holding lands under any other circumstances. 
 
 The second specification must be construed as prohibiting the 
 taking of a mortgage as a security except for debts previously con- 
 tracted, i. e., contracted before the mortgage was given. It has no 
 other reasonable or sensible meaning, and this meaning is in har- 
 mony with the general object of the section, which was to prevent 
 National banks from having their capital tied up in real estate 
 investments or securities. The usefulness of the bank in aiding 
 the business of the country depends to a great extent upon the 
 mobility of their capital, and the readiness with which it can be 
 turned and employed in aid of commerce, and the dangers to which, 
 in the view of Congress, the banking system would be exposed 
 by an unlimited power to the banks to loan their funds on real 
 estate securities, may have led to the prohibition in question. The 
 closing paragraph of the section indicates also perhaps a mortmain 
 policy as in the view of Congress, although I apprehend the limit 
 of five years, beyond which the banks are prohibited from holding 
 real property as mortgagee in possession, or the title to purchase 
 to secure debts due to them, was mainly designed as an additional 
 guard against the withdrawal of bank capital from active use, and 
 locking it up in real estate. 
 
 The suggestion that a bank by taking a mortgage on lands in 
 this State is not a holder of the lands mortgaged and has no estate 
 therein, and is therefore not within the prohibition against holding 
 lands by mortgage to secure future loans, is specious, but not, we 
 think, sound. The intention of Congress in passing the Bank Act 
 was to provide for the creation of banking corporations throughout 
 
COUET OP APPEALS, 1877. 751 
 
 Crocker v. Whitney. 
 
 the Union with uniform organization and powers. It was not 
 intended to allow National banks in any State to take mortgages to 
 secure future loans, and to prohibit banks in another State from 
 doing so, depending upon the nature and character of a mortgagee's 
 interest in the land so defined by the laws of different States. The 
 bank becomes a holder of real estate by taking a mortgage thereon 
 within the true meaning and intendment of the 38th section of 
 the act. 
 
 Having reached the conclusion that the National Bank of Gen- 
 esee was prohibited from taking a mortgage of real estate except to 
 secure a pre-existing indebtedness, the further conclusion seems to 
 follow that the mortgage from Whitney cannot be enforced. It 
 was not, at the time of the sale upon which the surplus moneys 
 were realized, a subsisting valid lien upon the land, and as the 
 equity of redemption was not bound by the mortgage, the bank 
 had no claim upon the surplus moneys. 
 
 It is perfectly well settled in the law that the courts will not 
 enforce a contract, the subject-matter of which is either malum pro- 
 hibitum, or malum in se. 
 
 A contract made in violation of a statute is void, and it is imma- 
 terial that it is not so declared in the statute itself. The law 
 adjudges it to be so, and courts do not undertake to pass upon the 
 wisdom of the policy of the Legislature in enacting prohibitory 
 statutes. Our attention has been called to the case of The Silver 
 Lake Bank v. North, 4 Johns. Oh. 370. 
 
 The statute under consideration in that case, as the chancellor 
 construed it, did not prohibit the taking of the mortgage of the 
 bank. There is no room, we think, in this case to doubt upon the 
 language of the Bank Act, that it was the intention of Congress 
 to prohibit banks taking a mortgage on lands to secure futurs 
 advances, and this being so, a security taken for such a purpose is 
 void within numerous authorities. North River Ins. Go. v. Law- 
 rence, 3 Wend. 483 ; Life and Fire Ins. Co. v. Merchants' Ins. Co., 
 7 id. 31 5 New York Ins. Co.y. Ely, 2 Cow. 678; Bank of Salina v. 
 Alvord, 31 ]Sr. Y. 473, and cases cited. 
 
 The construction we have given to the 28th section of the Na- 
 tional Bank Act is supported by the following cases: Fowler v. 
 Scully, 73 Penn. St. 456 {post); National Bank v. Rowell, 3 Dill. 0- 
 Ct. E. 371 {ante, p. 364); Ripley v. Harris, 3 Biss. C. Ct. E. 190. 
 
 The order should be affirmed. 
 
 " All concur. Eapallo, J., not voting ; FoLGEE, J., absent." 
 
752 NEW YORK 
 
 People V. Commissioners of Taxes and Assessments. 
 
 People ex rel. Teadbsmeij- IfATioij-AL Bake v. Commissioners of 
 Taxes and Assessments. * 
 
 Taxation — Bate of, how determined in New Torh — Deduction for real estate. 
 
 In assessing shares of stock in National banks in New York, the assessors must 
 determine the actual value of the shares — taking into consideration all the 
 capital of the bank, whether surplus or in reai estate or otherwise, and 
 then deduct from such value, such sum as represents the proportion which 
 the assessed value of the real estate bears to the assessed value of the en- 
 tire capital.f 
 
 Thus, the capital of a National bank was $1,000,000, and was represented by 
 25,000 shares of $40 each. The assessors assessed the shares at $56 each, 
 making in the aggregate $1,400,000, and the real estate at $300,000. Sdd> 
 that they should deduct from the assessed value of each share $8, being 
 one-seventh or the proportion which the real estate bore to the aggregate 
 assessed value of the shares. 
 
 APPEAL from the order of the General Term of the Supreme 
 Court modifying an assessment. The case was reported below 
 in 9 Hun, 650. 
 
 Hugh L. Gole, for appellants. 
 
 Horace Barnard, for respondents. 
 
 MiLiiEK, J. The relator claims relief upon the ground that the 
 commissioners of taxes and assessments did not obey the mandate 
 of the statute in making the proper deduction from the value of 
 each share of the capital stock of the bank as the law required. 
 The capital of the bank was $1,000,000, and was represented by 
 35,000 shares at $40 a share. The commissioners valued the shares 
 
 * This case will appear in 68 New York Reports. 
 
 + See Feoiile v. Commissioners of Taxes and Assessments, ante, p. 130, which is 
 an af&rmanoe of the decision of the Court of Appeals in the case of People ex 
 rel. Gallatin National Bank mentioned in the following opinion. See, also, 
 Hepburn v. The School Directors, ante, p. 113. 
 
 In the Matter qf The Farmers' National Bank of Uudson, 1 Thomp. & C. 383, 
 it was held that, in the absence of proof to the contrary, assessors, In assessing 
 National bank stock, will be presumed to have made the proper deduction for 
 the real estate of the bank ; and further, that if there be an omission to de- 
 duct the real estate, it is 'not " a manifest clerical or other error," to be cor- 
 rected under chapter 695, Laws 1871. — Rbp. 
 
COUET OF APPEALS, 1877. 753 
 
 People v. Commlasiouers of Taxes and AesessmeutB. 
 
 at $56 each, and assessed the real estate at $300,000, making the 
 total value of the capital stock, including the real estate, $1,400,000. 
 They deducted from the yalue of each share $8, being the one-sev- 
 enth, or the proportion which the real estate bore to the whole 
 amount of the capital stock, including the real estate, making the 
 entire assessment upon the shares $1,300,000. It is urged that this 
 deduction was erroneous, and that instead thereof one-fifth of the 
 value of each share, $11.30, should have been deducted, thus reduc- 
 ing the value of each share to $44.80 in the place of $48, the 
 amount of the actual assessment, and making a difference of $80,- 
 000 in total amount of the taxable property assessed. 
 
 The statute under which the commissioners acted (chap. 761, Laws 
 of 1866, § 1) declares, that the stockholders of any bank "shall 
 be assessed and taxed on the value of their shares of the stock 
 therein" * * * * " but not at a greater rate than is assessed 
 on other moneyed capital in the hands of individuals in this State. 
 And in making such assessment there shall also be deducted from 
 the value of such shares such sum as is in the smne proportion to 
 suck value as is the assessed value of the real estate of the bank * * 
 to the whole amount of the capital stock of the said bank," etc. 
 
 The evident object and purpose of the act from which the fore- 
 going provision is cited, was to provide a system of taxation of the 
 stockholders of National banks by which they should be assessed 
 for their shares in the same method and bear the same burthens as 
 are assessed upon other property, and thus be compelled to pay 
 their fair and just proportion of taxes to be levied. The clause in the 
 section cited, to the effect that they were not to be assessed at a 
 greater rate than other moneyed capital, clearly meant that they 
 should be assessed as much and to the same extent and not a less 
 rate than assessments are imposed upon individual owners of such 
 capital according to law. They were to be assessed, as the act pro- 
 vides, on the value of their shares, meaning the market value or 
 the price which such shares would bring without regard to the 
 value of the real estate which was to be assessed separately. When 
 the assessors had fixed upon the value of such shares then the 
 deduction was to be made from the value of the shares of the real 
 estate, and here the real point of the controversy is presented as 
 to what that deduction shall be. It is to be proportionate and as 
 the assessed value of the real estate is to the capital stock. The 
 phraseology last employed must be considered in the connection 
 95 
 
754 NEW YORK 
 
 People V. CommissioneTS of Taxes and Assessments. 
 
 with the " value of the shares " which have previously been inserted 
 in the statute, and when the statute speaks of the " whole amount 
 of the capital stock," it is reasonable to suppose that it had refer- 
 ence to its fair value and not to the nominal amount of the capital- 
 It certainly includes the value as that constitutes the actual amount, 
 and the important element which was to be taken into considera- 
 tion in the assessment of the shares. The words last cited, as 
 expressed in the section cited, include evidently every part of the 
 assets of the bank from which an income is derived and from which 
 the dividends earned are to b& paid. This clearly comprehends 
 the surplus on hand as well as any other investment which consti- 
 tutes a portion of the capital. These sources of income represent 
 the capital and form a material part of it, which is liable to be 
 assessed as the act directs. The assessors are to consider every 
 thing which gives value to the shares in fixing the basis of assess- 
 ment. The People ex rel. Gallatin Bank v. Commissioners, etc., 
 67 N. Y. 516. Such being the principle upon which the assess- 
 ment is based it is not apparent in what manner a deduction can 
 be made from the value of the shares in proportion to the nomi- 
 nal capital instead of the real capital according to its value. The 
 word " nominal " is not used, and while the amount of the capital 
 may be nominal it may also, when it has increased in value by profits 
 earned, be far beyond that. And when it has thus become actually 
 more valuable than the nominal amount there is no valid ground 
 for holding that the latter sum should be the criterion. In fact 
 the language cited would seem to indicate that it was intended by 
 the Legislature to exclude any such construction 
 
 In support of the construction placed upon the statute in ques- 
 tion it may be observed that it tends to carry out the apparent 
 intention of the law-makers to fix a fair and just valuation upon 
 property of this description, while a contrary rule would operate 
 unjustly and render a uniformity of assessment almost out of the 
 question. No rule appears to be more equitable, rational and fair, 
 than to assess the shares of bank stocks at their value, and then 
 make the deduction in proportion to the real capital, as we think 
 the statute authorizes. If it were otherwise, banking institutions 
 which had been prosperous and successful and whose shares had 
 been raised far above the par value might escape taxation upon a 
 large portion of the amount of their capital, while those which had 
 been unfortunate and reduced in value might be taxed upon a far 
 
SUPREME COURT, 1864. 755 
 
 Taylor v. Hutton. 
 
 greater amount than their entire capital, upon entirely a fictitious 
 basis of value, and upon property which in fact had no existence. 
 This clearly never was intended, and the rule applicable to the con- 
 struction of statutes does not require such a strict interpretation of 
 the law as will thus frustrate its design and completely pervert the 
 object of the law-makers. 
 
 It may also be remarked that the basis of taxation adopted by 
 the commissioners in this case appears to have been followed and 
 approved in the case of The People ex rel. Gallatin Banh v. The 
 Commissioners, etc., supra, recently decided by this court. 
 
 The General Term were in error in its decision and the judgment 
 should be reversed and the writ of certiorari quashed. 
 
 Judgment reversed. 
 
 Tatloe v. Hutton. 
 
 (43 Barbour, 195.) 
 Bight of directors of National bank to remove offloers. 
 
 Where the articles of association of a National bank, signed by all the original 
 stockholders, and giving express authority to the directors to remove the 
 president, bave been transmitted to the Comptroller of the Currency, who 
 has, on receiving the same, issued circulating notes to the bank, he will be 
 deemed to have approved of the articles, and the directors will have the 
 power to remove the president, even though the bank has never legally 
 adopted any by-laws. 
 
 It is not necessary that any by-laws should be adopted before a president may 
 be chosen or removed, and another appointed in his place. 
 
 Section 11 of the act of Congress, relative to National banks, authorizes the 
 directors to remove the president of a banking association. 
 
 APPLICATION for the continuance of a preliminary injunction. 
 The action was brought by two of the directors and two of 
 the stockholders of the Fourth National Bank, in the city of New 
 York, against the remaining directors, to restrain them from 
 removing the presiden^ Mr. George Opdyke, from his oflQce. 
 
 Z>. D. Field, for plaintiffs. 
 
 L. B. Woodruff and Jos. H. Ghoate, for defendants. 
 
756 NEW YOEK 
 
 Taylor v. Hutton. 
 
 Peckham, J. This is substantially an application for the con- 
 tinuance of an injunction to prevent the alleged illegal removal of 
 the president of the Fourth National Bank, threatened by two- 
 thirds of the directors, defendants herein.- It is charged in the 
 complaint that the defendants entered into a combination shortly 
 after the election of the president to " drive him from his office 
 with a view of putting a more pliable person in his place, and using 
 the funds of the bank to aid in stock operations, instead of employ- 
 ing them in legitimate commercial and banking operations." The 
 suit is commenced by two of the directors and two stockholders of 
 the bank, the president not being a party. The purpose of the 
 removal is very fully and specifically denied, though the intent to 
 remove is admitted, and, as the defendants insist, for the true 
 interests of the bank. 
 
 It appears from the papers in this motion that from soon after 
 the election of the president on the 19th of January last, until the 
 commencement of this suit, unpleasant difficulties and difEerences 
 have existed between the president and a majority of the directors, 
 as to the proper officers of the bank, and as to some other matters 
 not material to specify. The directors finally determined to remove 
 him, and it is now insisted that they have no such power. No 
 allusion was made in the complaint, on which the temporary injunc- 
 tion was obtained, to the articles of association of this bank, signed 
 by the stockholders. 
 
 The chief ground urged against the authority of the board to 
 remove the president is, that the bank has never legally adopted 
 any by-laws, and that there are none now existing ; that they should 
 be adopted by the stockholders and not by the directors, and that 
 they should also be approved by the Comptroller of the Currency. 
 They have been adopted by the directors only. It is conceded that 
 they have never been adopted by the stockholders, nor in form by 
 the Comptroller of the Currency. But suppose there are no by- 
 laws yet adopted, I do not think it follows that the directors may 
 not remove the president. The articles of association, signed by 
 all the original stockholders (in some degree in the nature of a 
 charter), give express authority to remove. Its sixth article pro- 
 vides that " the board of directors fa majorily of whom shall be a 
 quorum to do business] shall elect one of their number to be presi- 
 dent, who shall hold his office [unless he should become disquali- 
 fied or sooner removed by a two-third vote of all the members of 
 
SUPEEME OOTTET, 1864. 757 
 
 Taylor v. Hutton. 
 
 the board] for the term for which he was elected a director." These 
 articles of association, so adopted and signed, are to be, and in 
 this case, from the facts presented, have been transmitted to the 
 Comptroller of the Currency, who is by law required " to record 
 and carefully preserve the same in his office." § 6 of the act. 
 He must then, in substance, have approved of them, or he would 
 not have issued the circulating notes to this bank, which he 
 in fact issued under the 16th section of this act. The act of Con- 
 gress also, in my judgment, authorizes this removal. In speaking 
 of the powers of the directors, as I interpret the act, it says " they 
 shall have power to carry on the business of banking by obtaining and 
 issuing circulating notes in accordance with the provisions of this 
 act, by discounting bills, notes and other evidenoes of debt, etc., etc. , 
 to choose one of their number as president of such association, and 
 to appoint a cashier and such other officers and agents as their bus- 
 iness may require, and to remove such president, cashier, officers 
 and agents at pleasure, and appoint others in their places." § 11 
 of the act. I think this construction of the act, as having ref- 
 erence to the directors bo do these things, and not , to the siock- 
 Tiolders, is quite plain. 
 
 It does not seem to be at all necessary that any by-laws should 
 be adopted before a president may be chosen or removed, and an- 
 other appointed in his place. This power is expressly given to the 
 board, irrespective of any by-laws, both by the articles of associa- 
 tion and by the act of Congress. Besides, it is a power that might 
 be required to be exercised, or that it might be expedient to exercise, 
 prior to the adoption of any by-laws. 
 
 It is also insisted that one of the defendants (Mr. Whitewright) 
 is not legally a director, and has no right to unite in the removal. 
 It appears that one of the original directors resigned, and that Mr. 
 Whitewright was appointed to fill the vacancy, by the other mem- 
 bers of the board, without any nomination at a prior meeting of the 
 board as required by the by-laws, which, as the plaintiffs allege, 
 were adopted by the board. Here the plaintiffs must invoke the 
 aid of by-laws. The act of Congress prescribes that the vacancy ' 
 in the board shall be filled by appointment by the remaining direct- 
 ors. § 43. 
 
 Assuming the plaintiffs to be correct in their position, that there 
 are no by-laws, there is certainly no objection to the appointment 
 under the statute. Besides, I may add, that the statute seems to 
 
758 NEW YORK 
 
 Piatt V. Bentley. 
 
 require the aid of no by-laws, and that none could be made to 
 annul it. 
 
 If the by-laws exist and are valid, I do not think they apply to 
 the appointment of a director, though it might have been a sound 
 provision, had it been made. Irrespective of the by-laws and of 
 the articles of association, the board have power, under the act, to 
 remove the president by a mere majority vote; assuming that they 
 modify and qualify the act, a two-thirds vote is required. 
 
 It is argued that the court should stay the action of the board 
 until the 14th instant, when a meeting of the stockholders will be 
 held and the whole difficulty settled. On mere questions of expe- 
 diency of this character, courts have no power to interfere with 
 the action of a bank or its officers. 
 
 The preliminary injunction is therefore dissolved, and the motion 
 for its continuance is denied, with costs. 
 
 [ At Chambers, New York, April 13, 1864:, before Pbokham, 
 Justice.] 
 
 Platt, Eeceiver, v. Bbntlet. 
 
 (11 American Law Beglster, Vth) 
 Offset iy depositors. 
 
 A depositor in a National bank 1^111011 has failed and passed into the hands of 
 a receiver, may set off the amount of his deposit against his debt to the 
 bank on a note.* 
 
 THE plaintiff, as receiver, took possession of the Farmers and 
 Citizens' National Bank, September 5th, ISe?. The defend- 
 ant then had on deposit in the bank to his credit $571.37. The 
 
 * See, however, Venango National Bank v. Taylor, post. In Osborn v. Byrne, 
 43 Conn. 155; S. C, 21 Am. Eep. 641, it was held that upon the insolvency of a 
 savings bank a depo^tor cannot set ofT his deposit against a debt due from 
 him to the bank, unless, perhaps, if the deposit was made for the purpose of 
 applying on such indebtedness and the bank o£Scer knew that fact. 
 
 On the other hand the Special Term of the Supreme Court of New York in 
 Matter of New Amsterdam Savings Bank v. Oartter, 54 How. 385, it was held 
 that a depositor in a savings bank was entitled to set off his deposit against his 
 indebtedness to the bank. 
 
SUPEEME COtJET, 1872. 759 
 
 Piatt V. Bentley. 
 
 bank then held the defendant's note for $800, to become due on 
 the 5th day of NoYember, 1867. The defendant paid the differ- 
 ence between the amount of the deposit and the note and interest, 
 and for the rest claimed to offset the deposit in full, as against the 
 equal balance of the note. The bank being insolvent, plaintiff, as 
 receiver, brought suit on the note and claimed that the defendant 
 should pay his note in full, and accept such dividends as the assets 
 of the bank might apportion on the amount of the deposit. 
 
 Theo. F. Jackson, for plaintiff. 
 
 /. M. Stearns and Homer A. Nelson, for defendant. 
 
 J. F. Barnaed, J. It was the settled law in this State, even 
 before our statute was passed, that a receiver of a bank takes the 
 assets subject to subsisting rights between the bank and its cus- 
 tomers, and that set-ofls and counter-claims became operative to 
 the same extent as if the bank was solvent and continuing busi- 
 ness. !N"ow, it is made statute law. If the plaintiff were the 
 receiver of a State bank, there would be no question but that the 
 defendant should be allowed his deposit upon his note. I see noth- 
 ing in the Currency Acts which introduce any new principle. The 
 receiver, it is true, is to collect aU the debts and pay over proceeds 
 to the United States Treasurer. But what is a debt? A customer 
 of a bank, having a note about to mature, makes provision to meet 
 and pay it by depositing in the bank having his note, the amount 
 or part of the amount to be paid. It seems to me that the only 
 debt the receiver takes is the balance between the note and deposit. 
 
 Judgment of the Special Term reversed and 
 
 New trial granted. 
 
760 NEW YOEK 
 
 Harrington v. First National Bank of Chittenango. 
 
 Haeeib-gtok V. FiEs:: Natioi^al Bank of Ohittbnakgo, 
 
 appellant. 
 
 (1 Thompson & Cook, 361.) 
 Officers and servants of National bank) — Term of engagement — Discharge of. 
 
 Plaintiff, wto had been hired by the president of a National bank as teller 
 for a specified time, refused to obey certain orders of the cashier. Some 
 time afterward the cashier informed the president of such disobedience, and 
 he thereupon, before the expiration of the specified time, discharged plain, 
 tiff. Seld, that plaintiff was not entitled to recover his salary for the unex- 
 pired portion of the term of service. 
 
 A servant may be discharged by the master for misconduct before the expira- 
 tion of the time for which he was hired, although the discharge is not made 
 at the precise time of the misconduct, nor the grounds stated. 
 
 A National bank cannot hire one of its officers for a specified time. 
 
 Knowledge, without objection, by the directors of a bank that one is acting in 
 its employ does not ratify the details of a contract for his employment, by 
 the president, unless they know of such details. 
 
 THIS was an action by the plaintiff to recover wages or salary, as 
 the teller of a bank, from September, 1870, at which time he 
 was discharged, until 1st April, 1871, which he claims was the 
 end of the year for which he was employed, at the rate of $70 per 
 month. 
 
 The plaintiff recoTered a verdict at the Circuit for the amount of 
 his claim. Exceptions were taken by the defendant, an order made 
 allowing a case to be made, and that the exceptions be heard in the 
 first instance at the General Term of the Supreme Court. The 
 exceptions, and the facts upon which they were founded, sufSciently 
 appear in the opinion. 
 
 Lansing & Kellogg, for plaintiff. 
 
 D. D. Walrath and Charles Mason, for defendant. 
 
 P. PoTTEH, J. The plaintiff was dismissed by the president of 
 the defendants. It was one of the defenses, set up in the answer, 
 that during the plaintiff's employment he was insubordinate and 
 
SUPEEMB OOTJET, 1873. %l 
 
 Harrington v. First National Bank of Chittenango. 
 
 disobedient to the directors of the defendant; that he disobeyed 
 and disregarded their lawful instructions and commands, specify- 
 ing the particulars, thereby forfeiting his position; and that for 
 that reason he was dismissed, etc. Theve was evidence in the case 
 that the plaintifE was left in charge of the bank after bank hours 
 and at night. The bank is a place of deposit of bonds of the 
 bank, of the stockholders, directors, and people of the yicinity, 
 the outside windows slide up and down, but the building had 
 inside iron shutters. These inside shutters the plaintifE left open 
 at night. The evidence was, that he was remonstrated with by the 
 cashier for this, and informed that it would not answer ; that there 
 was too much property there to be thus exposed; that the plaintifE 
 replied that the windows would be left open if he desired it; that 
 on that afternoon the cashier closed the iron shutters, and found 
 out the next day they had been open again. The cashier testifies 
 that he had another interview with the plaintifE next evening; that 
 the plaintifE persisted in his conduct, and said he should open them 
 Just when he pleased. 
 
 There is some conflict of evidence as to those interviews, but 
 none to the fact of leaving the windows open. There was also 
 evidence of disobedience of the commands of the cashier about 
 the entries in the books, not necessary to be stated. By the testi- 
 mony of the cashier, the plaintifE was a relative of his, and he did 
 not inform the president of his misconduct until about the time 
 the plaintifE was dismissed. There is some conflict of evidence 
 about the time of these occurrences, and the period between them 
 and the discharge, and also as to the time when the president was 
 informed of them. The president was seldom at the bank. This 
 statement, however, is suflBcient to present one of the points. The 
 defendant's counsel asked the judge to charge, as a proposition, 
 among other things, as follows: " Twelfth. Mr. Stewart (the 
 president) was justified in dismissing the plaintifE for misconduct." 
 This the court refused, and there was an exception; and also, 
 
 " Thirteenth. The president was not required to state any of his 
 reasons for dismissing the plaintifE. If they existed, that was 
 ienough." The court refused to charge this, and there was an ex- 
 ception. 
 
 If these propositions were right, and the refusal so to charge was 
 error, the learned judge did not cure the twelfth proposition by his 
 subsequently charging it with a qualification as follows: "There 
 96 
 
762 NEW YOEK 
 
 Harrington v. First National Bank of Chittenango. 
 
 were Bufificient grounds for defendants' discharging the plain tifE 
 from their employment, if such grounds had leen acted upon when 
 they occurred, or had been stated to the plaintiff when he was dis- 
 charged." The learned judge then adopts these qualifications as 
 law, and adds: "As no reason or ground was stated to the plaintifE 
 for his dismissal, when he was dismissed from the defendants' em- 
 ployment by the defendants' pre^dent, his discharge is not justified 
 by the evidence if there was a valid contract then in force for 
 plaintiff's employment for the term of one year from the 1st day 
 of April, 1870, or by the month during the year." This portion 
 of the charge was also duly excepted to. 
 
 I am inclined to think there was error both in the refusals to 
 charge, and in this portion of the charge. It is assumed by the 
 learned judge in these propositions, that the president of this bank 
 had the power to dismiss the plaintiff from employment, upon suf- 
 ficient grounds, if done at the proper time, if the grounds upon 
 which he was dismissed had been stated when he was discharged. 
 The jury were bound to regard this as the law, and to act upon it 
 accordingly. The finding of the jury, then, being in favor of the 
 plaintiffs, we must assume that the fact was established, in their 
 minds, that though there was sufficient ground for dismissal, yet 
 the discharge was illegal, because the discharge was not made when 
 the act which was the cause of discharge was committed, or because 
 the ground of discharge was not stated at the time of discharge. I 
 think both these hypotheses are unsound. The first was dependent 
 upon the existence of certain facts, which the judge assumed, but 
 which were in conflict, and were therefore for the consideration of 
 the jury. There is evidence that the discharge was made by the 
 president about the time he was informed of the plaintiff's miscon- 
 duct. If the fact of delay had been certain, as the judge assumed, 
 it might perhaps have been proper to have submitted to the jury, 
 whether the delay was not unreasonable, and whether the objection 
 had not been waived or condoned. No such proposition was charged- 
 From the charge, the jury were certainly instructed, in effect, that 
 the discharge was illegal because the grounds were not stated to 
 plaintiff at the time. 
 
 It is not necessary to discuss the proposition that for misconduct, 
 or disobedience to lawful orders, the plaintiff could be dismissed — 
 the judge correctly so charged. So, too, the judge charged that in 
 this case, sufiQcient grounds existed for the plaintiff's discharge. 
 
SUPEEME COUET, 1873. 763 
 
 Harrington v. First National Bank of Chittenango. 
 
 We have, therefore, upon this point only to examine the legal propo- 
 sitions : 1st. Whether the dismissal must of necessity be at the 
 time of the occurrence of the misconduct ; and, also, 3d. If it is 
 required by law, that the grounds of the discharge be given at the 
 time the discharge is made. 
 
 The case of Oussons v. Skinner, 11 Mees. & Wels. 161, was the 
 case of the dismissal of the manager of a corporation for disobedi- 
 ence and misconduct. It was held that where there has been an act 
 of disobedience or misconduct by a servant, known to the master at 
 the time he discharges him, although the master does not mention 
 that as the precise ground of discharge, he may afterward, by show- 
 ing the fact existed, and that he knew it, justify such discharge. 
 That case, it is true, turned upon a question of pleading, whether 
 upon the defense of willful disobedience and loss consequent, the 
 defense was not bound to prove these allegations, but as a general 
 rule it was laid down as above cited. But that court cited as au- 
 thority to sustain their holding, the case of Ridgway v. Hunger- 
 ford Market Co., reported in 3 Ad. & Ellis, 171 ; and 4 Nev. & 
 Man. 797. That was the case of the dismissal of a clerk hired at a 
 salary of £300 per annum, payable quarterly. Various questions 
 arose in that case, the decision of which will apply to other points 
 in the case at bar ; but on the argument at bar in the Court of 
 King's Bench, the counsel for the plaintiff put a supposed case to 
 the court as follows: "Suppose a servant guilty of misconduct in 
 June, and that the master, knowing it, retains him till November ; 
 or, suppose a master, in ignorance of misconduct, dismisses a servant, 
 can the misconduct be set up as determining a contract which was 
 deliberately determined on another ground ? " Lord Dekham, Ch. 
 J,, replied to these suppositions as follows : " In the present case 
 the misconduct was known ; and we cannot say the employers were 
 bound to allege it at the time as the reason for dismissal ; nor can 
 we inquire as to their motives. If a sufficient cause of dismissal 
 existed, they had a right to use it." (P. 174). Afterward, in bank, 
 in consultation with the judges. Lord Denman said : "It is unnec- 
 essary to discuss how it would be, if the master, at the time of the 
 dismissal, had no knowledge of the fact which was to justify it, yet 
 I think the justification would be go(jwi, even if the fact, existing at 
 the time, were not known to the master." Littledalb, J., said in 
 the same case : " Neither the court nor the jury can discuss the ulti- 
 mate motive. If a justifying cause exists, the master may assign it 
 
764 IfEW YOEK 
 
 Harrington v. First National Bank of Chittenango. 
 
 whenever the action is brought ; and whether any other cause exists 
 is not material. It may be that the master dislikes the servant, and 
 chooses to take advantage of some improper act," Coleridge and 
 LiTTLEDALBj JJ., expressed opinions to the same effect. 
 
 The same principle was held in Baillie v. Kell, 4 Bing. N. C. 651. 
 It was like a case of suit for wages, after a dismissal of a clerk. 
 Some grounds were assigned; otfier grounds were proved on the 
 trial. In delivering the opinion of the court, Paekb, J., said: 
 "But it is said the defendants did not, in fact, discharge the 
 plaintiff for any one of the grounds alleged. That was entirely a 
 question for the jury, who might well have thought that the 
 defendants, without waiving the objection, Tcindly abstained from 
 sending the plaintiff forth from their service with a stigma on his 
 character." These cases have not been questioned, to my knowledge, 
 in our courts. If they correctly hold the law, there was no error 
 in the case at bar on the trial. But it is argued that the proposi- 
 tions above discussed, charged and refused to be charged by the 
 judge, must be viewed as connected with other parts, and with the 
 whole charge, and was only a hypothetical view of the proposi- 
 tions, as connected with the president's power, and not that of the 
 defendants, and that the jury must so have understood. This 
 argument is not sustained by the facts. The last request made of the 
 judge by defendants' counsel, and the reply made to it by the judge 
 is an answer to this view. That request to charge was, "that the 
 defendant was not bound to allege any special case of misconduct, 
 because of his dismissal being for a special cause." To which the 
 judge replied: "I should say that, if it was acted upon at that 
 time." Certainly, either the president or the defendant did possess 
 the power to discharge. The judge held the same rule as to each, 
 viz.: " That the grounds must be stated at the time." The learned 
 judge was fair and frank in expressing his legal view to the jury. 
 He informed them that no grounds were stated for the discharge, 
 and it was left to rest on the ground in regard to the shutters. (I 
 think this was an error of fact. The cashier expressly testifies to 
 disobedience in relation to entries in the books as to a check. ) But, 
 still referring to the plaintiff's conduct in regard to the shutters, 
 the judge expresses his legal opinion, "that these grounds cannot 
 now be considered as a justification for his discharge." This would 
 seem to be in direct conflict with what he had previously charged, 
 but for the reason given in the argument, he addressed to the jury 
 
SUPEBME COUET, 1873. 765 
 
 Harrington v. First National Bank of CWttenango. 
 
 by way of illustration; which was, in effect, that the discharge was 
 too long after the offense, and that he could not then be discharged 
 unless he had repeated the offense, " without giving him the reason." 
 The question of lapse of time after the offense was not a question 
 of law for the judge; besides the fact as to time was greatly in 
 conflict. It was a question of fact for the jury. It was error for 
 the judge to assume that knowledge of the offense had been for a 
 long time; that it was in the month of May, as testified by plain- 
 tiff, and ignore the testimony of the cashier; that it was in August 
 or September of the same year when the president was first informed 
 of it. 
 
 I have thus far discussed this question upon the doctrine of the 
 common law. I think the power as well as the right of the defend- 
 ants to dismiss the plaintiff exists by the act of Congress, under 
 which all National banking institutions are organized, of which 
 law the plaintiff is presumed to haye notice. That act, among 
 other things, authorizes such associations " to appoint a cashier 
 and such other oflScers and agents as their business may require, 
 and to remove them at pleasure and appoint others in their place." * 
 The plaintiff's appointment could legally be made in no other way, 
 and could only be held by the tenure specified, to wit: the pleasure 
 of the appointing power, and the place must be regarded as having 
 been taken and accepted under the provisions of this act. 
 
 If I am right in this view, then the learned judge erred in refus- 
 ing to charge the sixth proposition of the defendants' counsel, that 
 "the by-laws of the bank and the charter of the defendant will 
 not permit any oflBcer or officers of the bank to make a contract 
 which will deprive the directors of the free right to remove their 
 teller at any time they please, and if such a contract was made by 
 Mr. Stewart (president), as the plaintiff claims, for a year, it is 
 illegal and void, being in contravention of the charter, and is also 
 void upon principles of public policy." Though the learned Judge 
 refused to charge this in the form requested, and an exception was 
 taken, he did afterward charge it, with a qualification, "that the 
 contract was invalid unless ratified by the directors; and that if 
 such a contract was made as plaintiff claimed, and it was ratified 
 
 * Section 5136, Rev. Stats., provides that National banks should have power, 
 among other things : Fifth. To elect or appoint directors, and ^j 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 them, at pleasure, and appoint others to fill their places. 
 
766 NEW TOEK 
 
 Eairiugton v. First National Bank of Cbittenango. 
 
 by the directors of tlie defendant, by acquisoence, with, knowledge 
 that the plaintiff was in service of the defendant as their teller or 
 clerk, the contract became valid by such ratification, and the plain- 
 tiff is entitled to recover damages for being so discharged. And 
 he. afterward charged them, " that if the contract was made by the 
 president and was ratified," as above stated, the plaintiff was enti- 
 tled to recover for seven months' wages, as damages, at the rate of 
 8840 per year," all of which was excepted to. It will be remem- 
 bered he had before also charged them, " that sufiBcient grounds 
 existed for plaintiff's discharge, if the grounds had been acted 
 upon when they occurred, or the grounds had been stated when he 
 was discharged." I think this whole charge, though by no means 
 intended, was calculated to mislead the jury, and that it is not 
 sound. 
 
 The plaintiff's discharge was ratified precisely in the same man- 
 ner that his employment was. If the employment was ratified, 
 the discharge was also. The judge concedes there was sufficient 
 grounds for the discharge ; he concedes the discharge to have been 
 made by the defendants ; yet holds the law to be, upon this 
 hypothesis, that if the employment was in form for a year, the 
 plaintiff can recover his salary, even after his discharge, for the 
 remainder of the year. I do not concur in these views. I think 
 there was another condition in the contract, a condition that is 
 always implied in every contract of the kind. Whether it was for 
 a month, a year, a definite or indefinite time, it was subject to the 
 right of the employer to dismiss the employee for sufficient cause ; 
 and if sufficient cause for dismissal exists against the employee, it 
 is a forfeiture of future salary. One of the considerations, which 
 enter into the contract between the employer and employee, is 
 good conduct by the employee, at least so good as not to furnish 
 sufficient cause for dismissal ; and a failure so to perform amounts 
 to a forfeiture of the contract, and justifies a discharge. The case 
 of Bidgioay v. Hungerford Market Co., supra, was an employment 
 by express contract, at a salary of £300 per annum, payable quar- 
 terly. His employment commenced on the 10th June, 1830 ; he 
 was continued to the 17th April, 1833, when he was dismissed ; he 
 offered and was willing to remain in service. He brought this 
 action in December, 1853, for three-quarters salary. It was con- 
 tended by the defendants, that being dismissed for sufficient cause, 
 he was not entitled to any portion of his current salary. Lord Oh. 
 
SUPREME COUET, 1873. 767 
 
 Handngton v. First National Bank of Chittenango. 
 
 J. DEifMAiir tried the cause, and submitted it as a fact to the jury 
 whether the cause for discharge was sufl&cient. The jury found the 
 cause sufficient. The issue, then, as a question of law, was pre- 
 cisely the same as the question in the case at bar ; and thus it 
 came before the Court of King's Bench. The Lord Chief Justice 
 said : " The jury having found the cause of discharge sufficient, the 
 court must so hold," and he added, " Turner t. Robinson, 5 Barn, 
 & Adol. 789, and many other cases, have shown that if a party 
 hired for a certain time so conduct himself that he cannot give the 
 consideration for his salary, he shall forfeit the current salary even 
 for the time for which he has served." PATTisoif, J., in the same 
 case concurring, says : "By his own act he gives the defendants 
 the power of displacing him." And Colekidge, J., said: "Al- 
 though a party be hired for a given time, the master is justified in 
 dismissing him for misconduct ; and, in that case, he cannot 
 recover ^ro rata." The case of Turner v. Robinson, 35 Eng. Com. 
 L. 357, was a like case of a servant employed at a salary of £80 per 
 annum, dismissed for misconduct before the year expired, and who 
 sued for his wages for the year, and was nonsuited on the trial ; 
 and, upon a rule to show cause, the case was brought before the 
 full bench. Paeke, J., who gave the opinion, said (assuming 
 the employment to be for a year): "Having violated his duty 
 before the year expired, so as to prevent the defendants from hav- 
 ing his services for the whole year, he cannot recover wages pro 
 rata." So, too, in the case of Spain v. Arnott, 3 Stark. N. P. 337, 
 it was held by Lord Ellenboeough, "that if a servant, hired for 
 a year, refuse to obey his masters's orders, the master is justified 
 in dismissing him before the end of the year, and the servant can- 
 not recover any wages." See, also, Baillie v. Eell, 4 Bing. N. C. 
 638. This same rule is laid down by Chitty on Cont. (10th Am. 
 Ed., by Perkins) 638, 639. See, also, Amor v. Fearon, 9 Ad. & Ell. 
 551. I find nothing to shake the authority of these, and a great 
 number of other cases to the same effect. I think, therefore, the 
 refusal to charge as requested was error. Where the servant is 
 hired for a time certain, and dismissed without sufficient cause, 
 then the rule, it is conceded, is as charged by the learned judge. 
 Parsons, in his treatise on Contracts, adopts the same rule, as the 
 established law, vol. 1, pp. 530, 531, and notes and cases cited. 
 
 I think there was another error in the charge of the learned 
 judge, in his fourth proposition, as explained by the seventh. In 
 
768 NEW YOEK 
 
 Harrington t. First National Bank of Chittenango. 
 
 the fourth proposition he charged the jury that if the president 
 had made such a contract with the plaintiff as plaintiff claims, 
 and that contract was subsequently ratified by the directors of the 
 defendant by the acquiescence with knowledge that the plaintiff was 
 in the service of the defendant as its teller or clerk, the contract 
 became valid by such ratification, and the plaintiff "is entitled 
 to recover damages for being* so discharged," If this charge 
 carried to the mind of the jury that what was specified in it con- 
 stituted a legal ratification (as to my mind clearly it did), it was 
 erroneous. The jury could well so understand. The language 
 of the charge had a clear tendency to make them understand 
 that a ratification by the defendant, by acquiescence, not with 
 knowledge that the president had employed him, but with 
 knowledge that he was in their service as their teller or clerk, 
 and that an acquiescence in that knowledge was a ratification 
 of the president's contract, of which employment by the president 
 there is no evidence of the knowledge. The evidence that he was 
 in their service adda nothing to the evidence of ratification, but 
 the contrary. He had been for years in their employment, per- 
 forming the same duties, under an express contract made by them- 
 selves, made by resolution, made at a specified consideration. The 
 legal presumption, then, is, that he was continuing on under that 
 contract until the defendants were informed to the contrary. But 
 by the explanation made by the judge of his meaning, in his 
 seventh proposition, it is clear that his definition of what consti- 
 tutes a legal ratification, especially as applied to this case, was 
 erroneous. He says: " The defendant acquiesced in the employ- 
 ment of the plaintiff by their president, if they knew he was actiag 
 in their bank as teller or clerk, and made no objection to his serv- 
 ing there at or after the defendant's directors had a meeting at 
 their bank." To make a ratification by the principal of the 
 unauthorized act of an agent good, it must be made with a full 
 knowledge of the facts which affect the rights of the principal. 
 This main feature of ratification is omitted. This knowledge was 
 a question for the jury, not for the judge. The facts, if they were 
 as assumed by the judge (as I think they were not), were greatly 
 in conflict, and were insufficient to constitute a valid ratification. 
 Nixony. Palmer, 8 N. Y. 398; Brassy. Worth, ^0 Barb. 648. There 
 was not only no direct evidence of knowledge by the defendants of 
 the president's hiring the plaintiff, but the president's testimony. 
 
SUPEEME OOUKT, 1874. 769 
 
 Chattam Nat. Bank of New York v. Merchants' Nat. Bank of West Virginia. 
 
 to the contrary, is as follows: "I don't think I communicated to 
 any of the directors about the hiring of him." " No action of the 
 board of directors, in regard to the increase of wages to him." 
 "There was no meeting of the finance committee after January and 
 prior to July of that year." The yice-president swears he knew 
 nothing of the hiring by the president until the plaintiff was dis- 
 charged. Daniel Gates, a director, swears to the same, and the 
 only knowledge the cashier had was the fact that he found, on the 
 39th of June, 1870, that the plaintiff had credited himself on the 
 books of the bank for April and May, $70 each. 
 
 Without noticing other objections, I think those that hare been 
 discussed are sufficient to justify the ordering a new trial, costs to 
 abide the event. 
 
 MiLLBE, P. J., and Pabkeb, J., concurred in the result. . 
 
 New trial ordered. 
 
 Chatham National Bautk of New York v. MsRCHAincs' 
 Nattoij-al Bake of "West Virgikia, appellant. 
 
 (4 Thompson & Cook, 196.) 
 
 National tank — " Citizen" of State where located — Entry of appearance — Re- 
 moval of came from State to Federal court. 
 
 In an action by a National bank of New York against a National bank of West 
 Virginia, held, that the defendant was not deprived of the right to demand 
 a removal of the cause from the State court to a Federal court. National 
 banks are " citizens " of the State in which they are organized and located.* 
 
 Defendant served a notice of appearance on December 15th, but did not file a 
 petition for the removal of the cause from the State to the Federal court 
 until January 7th, the petition stating that defendant then entered its appear- 
 ance and had not done so before. Held, a valid compliance with the Federal 
 statute requiring the defendant, " at the time pf entering his appearance in 
 the State court," to file his petition. 
 
 * As to removal of actions against National banks, see Cooke v. State National 
 Bank, ante, 698 ; Bird's Executors v. Cockrem, ante, p. 284. By the Rev. Stats., § 
 640, (which is the act of July 27, 1868), National banks are expressly excluded 
 from its provisions. 
 
 For judicial purposes National banks are regarded as citizens of the States 
 where they are located . Dams v. Cook, ante, p. 656 ; Cooke v. State National 
 Bank. But ia National Park Bank v. Chunst, post, and note, it was decided that 
 a National bank was a foreign corporation within the act requiring security for 
 costs. 
 
 97 
 
770 NEW YOEK 
 
 Chatham Nat. Bank of New York v. Merchants' Nat. Bank of West Virginia. 
 
 APPEAL by defendant from an order denying a motion on the 
 part of defendant for the remoyal of the cause to the United 
 States Circuit Court for the Southern District of New York. The 
 action was brought by the Chatham National Bank of the city of 
 New York against the Merchants' National Bank of West Virginia 
 to recover the proceeds, amounting to $3,242.83, of various checks 
 alleged to have been received b/ defendant for collection for plain- 
 tiff. The plaintiff is a corporation created and existing by the 
 laws of the State of New York and of the United States, and is 
 located and doing business in New York city. The defendant is a 
 corporation created and existing under the laws of West Virginia 
 and of the United States, and is located and doing business at 
 Wheeling, in that State. Defendant filed a petition stating the 
 above facts and demanding a removal of the cause to the Federal 
 court. The petition was denied and defendant appealed. The re- 
 maining facts appear in the opinion. 
 
 Chapman, Scott <& Gmuell, for appellant. 
 
 J. H. S B. F, Watson, for respondent. 
 
 Daniels, J. The sworn petition of the defendant stated that 
 the plaintiff was a corporation or banking association, created and 
 existing under and by the laws of the State of New York and of 
 the United States, located and doing business at the city of New 
 YoA, in the State of New York, and at the time of bringing the 
 suit was, and stiU is, a citizen of the State of New York. This 
 was not denied on the part of the plaintiff, and should for that 
 reason be accepted as the truth; and, as such, it was sufficient to 
 present a case within the act of Congress providing for the removal 
 of causes into the Circuit Court of the United States, so far as the 
 right depended upon that circumstance. 
 
 It is claimed, however, that the name by which the plaintiff has 
 been incorporated indicates it to be an association formed for bank-, 
 ing purposes under the laws of the United States providing for the 
 ■creation and circulation of a National currency; and that circum- 
 stance, added to the fact stated in the petition, that it is a corpora-; 
 tion or banking association created and existing under the laws of 
 the United States as well as of this State, sufficiently warrants that 
 conclusion. 
 
 But that does not divest the defendant of the right to insist upon 
 
SUPREME OOUET, 1874. 771 
 
 CSiatham Nat- Bank of New York v. Merchants' Nat. Bank of. West Virginia. 
 
 the removal of the cause into the Circuit Court of the United 
 States, even though it may have been withheld where each of the 
 parties to the action is shown to be a foreign corporation. Ay res v. 
 Western Railroad Co., 48 Barb. 133. These associations have been 
 held liable to the attachment laws of this State, although existing 
 and transacting their business within its boundaries, because the 
 remedy they provide for includes such associations, on account of 
 the circumstances of their creation under the laws of another gov- 
 ernment than that of the State. Bowen v. First National Banh 
 of Medina, 34 Howard, 408. But that does not justify the 
 conclusion that they are foreign corporations within the ordinary 
 signification of those terms. That, certainly, cannot properly be 
 said to be their character; for, when they are organized and located 
 within this State, they are as completely citizens of the State, within 
 the signification of the act of Congress providing for the removal 
 of causes into the Circuit Court, as though they were incorporated 
 exclusively under its laws. The act of Congress upon this subject 
 constitutes, under the Constitution of the United States, a portion 
 of the laws of the State, paramount even to those enacted by its 
 own Legislature. It exists through and extends over the State as 
 completely and entirely as any legislation can by possibility do; 
 and it is a portion of the positive law required to be observed and 
 maintained by all its citizens and inhabitants. When an associa- 
 tion for banking purposes is formed within the boundaries of the 
 State for the purpose of being located and transacting business 
 within its limits, it necessarily becomes an inhabitant of the State. 
 This is clearly implied by the provision of the act requiring the 
 certificate under which the association may be formed to state the 
 place where its operations of discount and deposit are to be carried 
 on, designating not only the State, territory or district, but the 
 particular county and city, town, or village. 13 U. S. Statutes at 
 Large, 101, § 6, subd. 3. Besides that, the names and residences 
 of the shareholders are also required to be stated; and the general 
 power is to be conferred upon it of suing and of being sued in any 
 court of law and equity, as fully as natural persons; and its usual 
 business is required to be transacted at an office or banking-house 
 located in the place stated in its organization certificate. Id., § 3, 
 subd. 3, also § 8. The association, when formed, has no other resi- 
 dence or domicile than that designated under the provisions of the 
 act in the certificate, and that substantially and effectually renders 
 
772 NEW YORK 
 
 Chatham Nat. Bank of New York v. Merchants' Nat. Bank of West Virginia. 
 
 it a corporation of the State within which it may be located, formed 
 under that portion of its laws which, under the Constitution, haye 
 been enacted for its inhabitants by the general government. As 
 such, it is to be presumed, under the construction given to the act 
 of Congress providing for the removal of causes, to be created and 
 formed by citizens of the State in which it may exist, and for that 
 reason to be a citizen of the State within the meaning of that act. 
 Louisville, etc., R. R. Go. v. Letson, 3 How. (U. S.) 497; Stevens v. 
 Phoenix Ins. Go., 41 N. Y. 149, and cases referred to in the opinion. 
 
 The act of Congress of July 27, 1868, does not deprive the defend- 
 ant, although itself a banking association organized under the 
 United States Banking Laws, of its right to insist upon the removal 
 of the cause. That act provides for the removal of actions brought 
 against corporations organized under a law of the United States, 
 or any of their members in a new class of cases not within the 
 other provisions of congressional legislation on this subject. And it 
 permits that to be done when the defendant states in the petition 
 that a defense exists, arising under or by virtue of the Constitu- 
 tion or any treaty or law of the United States. Prom this priv- 
 ilege banking associations organized under the laws of the United 
 States are excluded by an exception contained in the act. 15 U. S. 
 Statutes at Large, 256, 257. But the exception by its terms 
 extends no farther than the subject-matter of the act in which it 
 is contained, and consequently can have no efEect upon the pro- 
 vision made for the removal of causes in other cases by the preced- 
 ing law. It simply left these associations unaffected by its pro- 
 visions, and entitled to the privileges provided in this respect for 
 suitors by other acts of Congress. And among them the right of 
 removing the action into the Circuit Court of the United States, 
 when the circumstances of the case appear to be such as are 
 required to justify that proceeding. 
 
 By the act under which the application was made in this case, 
 the petition was required to be filed at the time of entering the 
 defendant's appearance in the action (1 U. S. -Statutes at Large, 
 79, § 13), and that, it is claimed, was not done in this case. Other 
 objections of a mere formal nature were relied upon by way of 
 answer to the application. They were predicated upon defects in 
 the copies of the papers served upon the plaintiff's attorneys; but 
 as they did not exist in the papers themselves, on which the appli- 
 cation was made, they were very properly disregarded upon the 
 
SUPREME COTJET, 1S74. 773 
 
 Chatham Nat. Bank of New York v. Merchants' Nat. Bank of West Virginia. 
 
 hearing. The more substantial objection was placed upon the cir- 
 cumstance that a notice of the defendant's appearance was served 
 in the action on the 15th day of December, 1873, while the peti- 
 tion itself was not presented until the 7th of the following 
 January; and upon that reason the court denied the application 
 for the removal of the cause, holding that the appearance was 
 entered within the meaning of the terms used in the law at the 
 time when the notice itself was served. 
 
 But this was a mistaken view of the provision requiring the peti- 
 tion for the removal of the cause to be filed at the time of entering 
 the defendant's appearance; for the mere notice of appearance was 
 not the entering of an appearance required by the act of Congress. 
 That by Eule 7 of this court is something more than the mere 
 service of a notice. It contemplates an act to be performed on the 
 filing of the notice with proof of its service. Upon that being 
 done, the rule authorizes the defendant's appearance to be entered 
 as of the time when the notice itself was served. The notice was 
 simply a notice of the defendant's appearance, without an entry of 
 it; and was no more than the notice of retainer, which, under the 
 preceding practice, the defendant was authorized to serve in the^ 
 action, which was held insufficient to constitute the entry of ap- 
 pearance required by the act of Congress providing for the removal 
 of causes into the United States Circuit Court, on the ground on 
 which the right is claimed in this action. Norton v. Hayes, 4 
 Denio, 245. 
 
 No other act appeared to have been performed on the part of the 
 defendant, before the filing of the petition, from which it could be 
 claimed that an appearance of the' defendant had been entered, 
 while the petition contained the statement that it then entered its 
 appearance, and had not done so before; and the order requiring 
 the plaintiff to show cause why the application should not be 
 granted recited the fact that the defendant, on the day of its date, 
 had entered its appearance, and at the same time filed its petition 
 for the removal of the cause, and offered the security required by 
 the act, by a bond then filed; and as there was no contradiction of 
 this statement, it should be accepted as true, as long as the mere 
 service of the notice was not the entry of an appearance. Porter 
 V. Branson, 20 How. 292; Rugg v. Spencer, 59 Barb. 388. 
 
 No appearance appeared by the papers to have been previously 
 entered, and this statement, as well as the other to the same effect 
 
774 NEW YOEK 
 
 Security Bank of New Tork v. National Bank of the Commonwealth. 
 
 contained in the petition, sufficiently showed its entry at the time 
 when the order was made, to constitate a performance of what the 
 act of Congress required to be done in that respect. 
 
 But if it did not, procuring the order and making the motion 
 were equivalent to the entry of an appearance, within the techni- 
 cal meaning of those terms, for by such acts the defendant of 
 necessity appears in court. They could not be performed without 
 an appearance in court, as well as an appearance in the action. 
 This was substantially held in the case of Ayres t. Western R. R. 
 Co., 48 Barb. 133, where obtaining an order extending the time to 
 answer was considered to be the entry of an appearance, and for 
 that reason sufficient to justify the denial of a motion afterward 
 made for the removal of the cause. See, also, Gooley v. Lawrence, 
 13 How. 176. 
 
 The provisions of the act of Congress were complied with in all 
 other particulars, and an order should, therefore, have been directed 
 for the removal of the cause. The order appealed from should be 
 reversed, with costs, and an order entered directing the removal of 
 the cause into the Circuit Court of the United States. 
 
 Davis, P. J., concurred. 
 
 Security Bank op New Yoek y. Natioital Bank of the Com- 
 monwealth. 
 
 (4 Thompson & Cook, 618.) 
 National hank — Action against, after appointment of receiver 
 
 An action may be brought against a National bank notwithstanding a receiver 
 of it has been appointed.* 
 
 APPEAL from an order at Special Term denying a motion to 
 open a judgment against defendant entered by default. The 
 action was brought by the Security Bank of the city of New York 
 against The National Bank of the Commonwealth, to recover for 
 a loan. A judgment was entered by default, and this motion 
 was made upon the application of the receiver of the defendant, 
 appointed linder the National Currency Act to open the same. 
 * See Qreen v. Walkill National Bank, post, p 786. 
 
SUPEEMB COUKT, 1874. 775 
 
 Security Bank of New York v. National Bank of the Commonwealth. 
 H. Edwin Tremain, for appellant. 
 Arnoiix, Hitch & Woodford, for respondent. 
 
 Daniels, J. A receiver was appointed, under the National 
 Currency Act (13 U. S. Stat, at Large, 115), of the books, assets 
 and records of the defendant, as an insolvent National banking 
 association, in September, 1873, and he entered upon the discharge 
 of his duties in that capacity. After that, and on the 4th of 
 March, 1874, the summons in this action was served upon George 
 Ellis, the defendant's president. And he, to use his own language 
 concerning his singular and extraordinary conduct following the 
 service, supposing that his connection with the bank ceased by the 
 appointment of the receiver, " took no notice of any papers that 
 were served upon him, as an officer thereof, and did not do so in 
 regard to the summons herein, nor did he inform said receiver of 
 said service." This is the sworn statement of the defendant's 
 president. And it so completely describes his utter want of moral, 
 as well as official sense of accountability, as to dispense with all 
 further attempts at characterizing his conduct. The consequence 
 of this inexcusable neglect to inform the receiver of the service of 
 the summons was, that on the 17th of April, 1874, a judgment 
 was entered in favor of the plaintiff, and against the defendant, 
 for nearly $57,000, and the receiver swears that his first knowledge 
 of its recovery, or of the commencement of the suit, was on or 
 about the 21st day of April, 1874, when a transcript of the judg- 
 ment was presented to him by the plaintiff's attorney. 
 
 On the 11th day of May, 1874, an order was procured at the 
 instance of the receiver, and some of the defendant's directors, 
 who were actuated by a different sense of duty from that which 
 impressed its delinquent president, for the plaintiff to show cause 
 why "the judgment should not be set aside and the defendant 
 have leave to answer the complaint," and on the 36th of that month 
 the motion was heard and denied, with liberty to renew it, on further 
 affidavits. It was renewed again, on additional affidavits, on the 
 16th of June, 1874, and then finally denied. 
 
 The present appeal is from the order then made, and it is resisted 
 strenuously, on the ground, among other reasons, that the order is 
 not appealable. 
 
 [The court decided that the order was appealable and other 
 questions of practice, and continued.] 
 
776 NEW YOEK 
 
 People ex rel. Williams v. Aasessora of Albany. 
 
 The bank continued to exist notwithstanding the appointment 
 of the receiver. The suit was therefore properly instituted against 
 it, and the defense should accordingly be made by it. Banh of 
 Bethel v. Paliquioque Bank, 14 Wall. 383 (ante, p. 77). The order 
 appealed from should be reversed with $10 costs, and disburse- 
 ments on the appeal to the defendant and appellant, and an order 
 should be entered setting aside *the judgment and allowing the 
 defendant, within ten days after notice of the order, to serve an 
 answer to the complaint, on payment within that time of $10 costs 
 of opposing the motion, and the disbursements made on the entry 
 of the judgment. 
 
 Ordered accordingly. 
 
 People ex rel. Williams v. Assbssoes of Albaity. 
 
 (5 Thompson & Cook, 155.) 
 
 Assessment of National bank stock — Value of stock, how determined — Correc- 
 tion of erroneous assessment. 
 
 Bank stock should be assessed at its f uU and true value, and, therefore, where 
 assessors assessed stock at its par value, when its actual or market value 
 was in excess of the par value, Tield, error. 
 
 The relators were owners of stock in the N. bank, which was assessed at par, 
 but which was worth more than par in the market. The shares of the M. 
 bank, located in the same city, were also assessed at par, although they were 
 worth more than the shares in the N. bank. The relators demanded a 
 reduction of the assessment on their stock, either by a direct order of the 
 court or by reassessment, on the ground that their stock, being less valuable 
 than that of the M. bank, was erroneously taxed at the same rate. Seld, 
 (1) that the assessment was erroneous ; (3) that although the assessment on 
 the shares of the relators would be increased on a reassessment of their 
 property pursuant to the statute, yet, as their shares were worth less than 
 those of the M. bank, the failure to tax the latter at their full value increased 
 the ratio of taxation upon the shares of the relators, and thereby injured 
 them ; (3) that as the return to the certiorari did not set forth the value of 
 all the bank stock worth more than par in the city or ward, the court had 
 not the facts from which to determine the real extent of the injury, and 
 could not, therefore, direct a reduction of the assessment ; and (4) that the 
 court could not, under the circumstances, direct a reassessment. 
 
SUPEEME COURT, 1874. 777 
 
 People ex rel. Williams v. Assessors of Albany. 
 
 CERTIOEARI to the board of assessors of the city of Albany 
 upon the relation of Ohauncey P. Williams and others, to 
 correct an assessment made by the board of assessors of the city of 
 Albany, 
 
 The case came before the court upon the return of the defend- 
 ants to such writ of certiorari, and upon a motion of the defend- 
 ants to quash or supersede the writ. The relators vere owners of 
 stock of the National Exchange Bank of Albany, the actual or 
 market value of which was fifty-two per cent more than par. The 
 Mechanics and Farmers' Bank of Albany was located in the same 
 ward, and the actual value of its shares was largely in excess of 
 that of the shares of the National Exchange Bank. The defend- 
 ants adopted the par value as the standard of valuation in the 
 assessment of bank stock whenever it was worth par or any greater 
 sum, and accordingly assessed the shares of both of said banks at 
 their par value after deducting the assessed value of their real 
 estate. The relator Williams appeared before the board and de- 
 manded that the shares of the National Exchange Bank be reduced 
 in forty-one per cent of the shares of the Mechanics and Farmers' 
 Bank, that being the difference in their real value. The board 
 refused to make the reduction. 
 
 Matthew Male, for relators. 
 
 R. W. PecTcham, for defendants. 
 
 BocKES, J. This case is before the court, on the return to a writ 
 of certiorari, having for its object the correction of assessments, 
 made by the board of assessors of the city of Albany against the 
 shareholders of the National Exchange Bank of that city. The 
 relators demand by way of relief a reduction of the assessments 
 against them on their shares of stock, either by the direct order of 
 the court, or by a reversal of the proceedings of the board as to 
 them, with directions which would secure the result. There is 
 also a motion on the part of the defendants to quash the writ. 
 
 The case has given us great anxiety in its consideration, sur- 
 rounded as it is with perplexing questions, affecting both public 
 and private interests. It is, as we think, entirely plain that the 
 basis of assessment against the owner of shares of stock of the 
 banks, as certified to us by the board of assessors in answer to the 
 98 
 
778 NEW YORK 
 
 People ex rel. Williams v. Assessors of Albany. 
 
 writ in this case, is erroneous. The assessments have not been 
 made against the shareholders " on the value of their shares of 
 stock," as the law requires (Laws of 1866, ch. 761), but were made, 
 as the fact is certified in the return, at par value, without regard to 
 the true value, in excess of par. Such basis of assessment was in 
 manifest disregard of the plain directions of the statute. This 
 seemed so utterly indefensible, 1;hat on our first consideration of 
 the case, we concluded to reverse the proceedings of the board of 
 assessors, and to direct a reassessment. But on further examina- 
 tion and reflection, we find that this disposition of the case would 
 be attended with serious difficulties. Such revisions of the roll, if 
 ordered in this proceeding, could be but partial; nor would it at all 
 correct the error we deem so palpable. 
 
 The only alteration which could be made on this proceeding 
 would be by way of reduction of the assessment of the shares held 
 by the relators, the shareholders in the National Exchange Bank. 
 This only they demand. They ask for a reduction of the assessed 
 value of their shares of stock which are already assessed too low ; 
 and, as has been already suggested, a reassessment of all the prop- 
 erty on the roU, with a view to secure entire fairness and equality 
 of taxation as regards all the tax payers, is at this late day im- 
 practicable. The complaint here is not that the relators are assessed 
 too high, but that some other parties on the roll (the shareholders 
 in the Mechanics and Farmers' Bank) are assessed too low. Yet 
 it 'is not claimed that the assessment against the latter can now be 
 raised. To reduce the assessment against the relators might pro- 
 duce equality as between them and the shareholders in the Mechan- 
 ics and Farmers' Bank; but it would also produce inequality, as 
 between them and all others on the roll, who must be presumed to 
 be represented fairly thereon. The rights of all the tax payers on 
 the roll should be considered, and no order or direction should be 
 here given which would work general inequality and injustice. 
 
 "We are unwilling to give even apparent sanction to the action 
 of the board of assessors, as certified to us in the return. The 
 statute under which such action was taken was not duly observed. 
 But to grant the relators the relief demanded by them, either by 
 here reducing the assessments against them, or by directing a reduc- 
 tion by the board of assessors, would but give sanction to the error 
 already perpetrated, and enhance its enormity. We are therefore 
 led to the conclusion, contrary to our first impressions, that the 
 true course to be adopted by us is to quash the writ. 
 
STJPEBME COUET, 1874. 779 
 
 People ex rel. Williams v. Assessors of Albany. 
 
 CoTTKTKTMAK, J. It is an undisputed fact appearing in the 
 return that the board of assessors, in the assessment of all bank 
 stock in the^city of Albany, adopted as their standard of valuation 
 the par value of the shares whenever the actual or market value 
 was equal to or exceeded the par value, and regardless of the ac- 
 tual value whenever it exceeded par. This 'was a palpable violation 
 of the laws of this State, requiring and regulating the assessment 
 of property for the purpose of taxation. The Eevised Statutes 
 require that "all real and personal estate liable to taxation 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 solvent debtor." 1 E. S. 393, § 17. And to secure a strict per- 
 formance of this duty, the assessors are also required by a subse- 
 quent enactment, for a willful violation of which they incur the 
 penalties of pei-jury, to make oath that the "assessment roll con- 
 tains a true statement of * * * the taxable personal estate 
 of each and every person * * * at the full and true value 
 thereof, according to their best judgment and belief." Laws of 
 1851, ch. 176, § 8 (3 Edm. Stat, at Large, 350, § 8). The rule had 
 been uniform for many years prior to the organization of National 
 banking associations; under the acts of Congress (12 U. S. Stat, at 
 Large, 665; 13 id. 99), to assess the capital stock of all the banks 
 against the corporation themselves, in the same manner and at the 
 same valuation as other personal property against private individ- 
 uals. Laws of 1853, ch. 654, § 10; Laws of 1857, ch. 456, § 3. 
 
 But after the enactment of the Federal law, and the organization 
 of National banks, it became necessary, to obviate the difficulties 
 caused by the subsequent decisions of the Supreme Court of the 
 United States {Bank Tax Case, 2 Wall. 200 ; Van Allen v. Assess- 
 ors, 3 id. 573 [ante, p. 1]), to make the assessment upon the stock 
 of these associations against the individual shareholders, and to 
 adopt a rule for the assessment of this species of property, which 
 should be applicable alike to all the banks, whether organized 
 under the laws of the State or of the United States. The act of 
 1866 (Laws of 1866, ch. 761) was passed for this purpose, and 
 rendered the shares of stock in the National banks equally liable to 
 taxation with the shares in the State banks. The act provides 
 that the shareholders in all of these corporations, State and 
 National, shall be based and taxed on the value of their shares of 
 stock, which " shall be included in the valuation of the personal 
 
780 NEW YORK 
 
 People ex rel. Williams v. AaaesBors of Albany. 
 
 property of such stockholder in the assessment of taxes, but not at 
 a greater rate than is assessed upon other moneyed capital in the 
 hands of individuals in this State. The mode of ascertaining the 
 value of the stock is not prescribed in the act, as this had been pre- 
 viously done in the Eevised Statutes, accompanied with an express 
 declaration that the same method " shall be followed in all assess- 
 ments, except where the assessors shall be specially required by law 
 to observe a different rule." 1 E. S. 393, § 18. The purpose of 
 the act was three-fold : 1. To make the stock in the National 
 banks liable to taxation under the laws of the State. 2. To pro- 
 vide " that the tax so imposed * * * shall not exceed the rate " 
 imposed upon the shares of the State banks, as required by the act 
 at Congress. 3. To prevent an assessment " at a greater rate than 
 is assessed upon other moneyed capital in the hands of individual 
 citizens," in compliance also with the Federal law. The adoption 
 by the Legislature of these additional limitations in the act of 
 1866 is, therefore, no indication of an intention to change the rule 
 enjoined in the Eevised Statutes for ascertaining the value of this 
 kind of property or of prescribing a different value for any of the 
 purposes of assessment and taxation. These provisions were neces- 
 sary in compliance with the conditions imposed in the act of Con- 
 gress, which only permitted the State authorities upon these terms 
 to levy a tax on the shares of stock in the National banks. 13 U. 
 S. Stat, at Large, 105, § 16 ; 104, § 21 ; 112, § 41 ; Van Allen v. 
 Assessors, 3 "Wall. 357 {ante, p. 1). The conclusion is inevitable that 
 it was the duty of the defendants to have assessed the shares of 
 stock in all of the banks at their true value instead of their par 
 value, and that all of the assessments are unauthorized and errone- 
 ous where the actual value of the stock is above par. 
 
 It is urged, however, that the relators cannot complain, because 
 upon their own statements they have not been injured, as the 
 shares of the National Albany Exchange Bank, in which they are 
 stockholders, have only been assessed at their par value, whereas 
 their real value, as claimed by the relators themselves, is fifty-two 
 per cent more than par ; so that their assessments would be in- 
 creased on a reassessment of their property pursuant to the statute. 
 But this objection ignores another very important fact, to wit : 
 that the shares of the relators are nevertheless worth only about 
 forty-one per cent of the actual value of the shares of the Mechan- 
 ics and Farmers' Bank, which are also assessed only' at their par 
 
SUPREME COUET, 1874. 781 
 
 People ex rel. Williams v. Assessors of Albany. 
 
 value. It thus appears that as between the two banks, the shares of 
 the former are assessed at the same valuation as those of the latter, 
 whereas if the correct standard had been followed, the assessment 
 of the shares of the former would have been fifty-nine per cent 
 lower than that of those of the latter bank. 
 
 It also appears from the reports of the officers of The Mechanics 
 and Farmers' Bank, annexed to the return, that the amount of 
 surplus and undivided profits in the bank, which escapes taxation 
 under the method of valuation adopted by the board of assessors, 
 is over $750,000. The result is apparent that the amount of tax 
 assessed against all the other taxable property included in the 
 assessment roU must necessarily be increased. All of the tax pay- 
 ers, including the relators, may therefore be injured by the erron- 
 eous assessment made against the shareholders in the Mechanics 
 and Farmers' Bank. In the language of Geovbe, J., in the case 
 of People ex rel. Marsh v. Delaney, 49 N. Y. 655 (opinion not re- 
 ported), " the grievance does not consist in a violation of law, in 
 consequence of which the assessment of the relators' property is 
 larger than it should have been, but in a violation whereby the 
 capital stock of the defendant's corporation has been assessed at a 
 sum less than it should have been, thereby increasing the ratio of 
 taxation upon the property of the relators to some extent, and also 
 upon the property of every tax payer in the city." 
 
 We have endeavored to find some practical legal remedy to cor- 
 rect these serious irregularities. The relators ask to have their as- 
 sessment reduced to forty-one per cent of the assessment upon a 
 corresponding number of shares of the Mechanics and Farmers' 
 Bank, or if that be held inadmissible, a reassessment on the shares 
 of both banks, based upon their actual value. Both of the reme- 
 dies proposed are as bad as the disease, and the adoption of either 
 would necessarily result in a violation of the statute. We cannot 
 redress one wrong by the perpetration of another, under the 
 forms of law, equally flagrant and indefensible. It does not 
 follow because the shares of a particular bank, severally repre- 
 senting a par value of $100, were actually worth in the market over 
 $350, that all other bank stock in' the ward except the relators' was 
 also of the same value ; and that the relators are therefore entitled 
 to have their assessments reduced to the same proportionate valua- 
 tion. In all the cases cited on the argument, where the court, on 
 a certiorari, made an order reducing the assessment of the relator 
 
782 NEW YORK 
 
 People ex rel. Williams v. Assessora of Albany. 
 
 to a definite amount, the facts fully appeared in the return, so that 
 upon a comparison of his assessment with all the others on the roll, 
 according to the true standard of valuation, the precise extent of 
 the injury could be ascertained. But in this case the return does 
 not contain these essential facts, and we have no means of deter- 
 mining, even from annexed exhibits, the real value of the stock of 
 any of the banks except the relators' and the one selected as the 
 subject for their complaint. It is quite possible that the shares of 
 stock thus selected and presented to the court are of much higher 
 value than those of any other bank in the city, and indeed that the 
 shares of all the other banks are of far less value than those of the 
 relator's. However this may be, the relators should have procured 
 a return, setting forth the real value of all the bank stock worth 
 more than par in the city, or at least in the sixth ward, if they 
 desired an order requiring the assessors to make a specific reduction 
 of their assessment. The other alternative suggested by the rela- 
 tors, of directing a reassessment of the assessors upon the shares 
 of both banks, on the basis of their actual value, is equally untena- 
 ble. If any reassessment were ordered, it should include all the 
 bank stock, worth more than par, in the ward if not in the city, 
 and this relief we would readily grant if it could be made effectual. 
 But an insuperable diflSculty is presented, from the fact that none 
 of the assessments against shareholders in the banks can now be 
 increased, and a reassessment, therefore, upon the only feasible 
 basis, according to the rate of valuation of the shares of the high- 
 est value appearing on the assessment roll, would require a read- 
 justment of all the property on the roll, which, at this late day, is 
 quite impracticable. Besides, it would involve the same violation 
 of the statute under the sanction of the court, of which complaint 
 is now made, as it would require a reassessment of all the taxable 
 property at less tha.n one-third of its real value. The writ of cer- 
 tiorari, in cases of this character, does not issue ex debito justitice, 
 but, in the sound discretion of the court upon special cause shown, 
 and when issued, will be superseded, if the remedy sought be 
 inconsistent with the interests of public justice and convenience. 
 People V. Supervisors of Allegany, 15 Wend. 198 ; People ez rel. 
 Marsh v. Delaney, 49 N. Y. 65S. We are constrained, in view of 
 all the difficulties suggested, and the public embarrassments which 
 would ensue from an interference at this time with the assessments, 
 to supersede the writ, and the motion to quash must, therefore, be 
 granted, without costs. Writ quashed. 
 
SUPEEME OOUET, 1875. 783 
 
 Havens v. National City Bank of Brooklyn. 
 
 Haveks t. National City Bank of Beookltn. 
 
 (8 Thonrpaon & Cook, 346.) 
 
 National bank cannot be gamisheed. 
 
 A National bant holding funds belonging to a bankrupt estate as depositary of 
 a bankrupt court cannot be garnisheed in proceeding supplementary to exe- 
 cution. 
 
 PEOCEEDING-S supplementary to execution on a judgment re. 
 coTered in an action by Haven against Dutcher, assignee in 
 bankruptcy of the Central Bank of Brooklyn, upon an indebtedness 
 of said bank. The defendant had money deposited with it, belong- 
 ing to said Central Bank, but deposited to the credit of said 
 Dutcher as assignee in bankruptcy. 
 
 The Special Term made an order requiring said National City 
 Bank to pay over to the judgment-creditor the amount of his judg- 
 ment out of the moneys deposited. 
 
 The bank appealed. 
 
 W. H. Hollis, for appellant. 
 
 E. L. Sanderson and John H. Bergen, for respondents. 
 
 Baenaed, p. J. The defendant, the National City Bank of 
 Brooklyn, is not a corporation having property of the judgment- 
 debtor under section 394 of the Code. 
 
 It is a depositary of the Bankrupt Court of the United States 
 for the Eastern District of New York. It has no power to pay out 
 any of the funds so deposited except upon a warrant of the as- 
 signee in bankruptcy countersigned by the District Judge or by a 
 Eegister in Bankruptcy of the district. 
 
 The fund is in the Bankrupt Court and is to be disposed of by 
 order of that court. Bankrupt Law of 1867, § 27. 
 
 The Bankrupt Court has the sole jurisdiction over the bankrupt 
 estate. 
 
 Order reversed, with $10 costs. 
 
784 NEW YORK 
 
 National Bank of Fairhaven v. The Phoenix Warehousing Company. 
 
 National Bank of Faiehavbn v. The Pnffijsax Waeehofsing 
 
 Company. 
 
 (6 Hun, 71.) 
 National banks cannot maintain branch offices in New York. 
 
 A National bank located in another State cannot keep an office for discount 
 and deposit in New York, and cannot maintain an action upon a note dis 
 counted at such office. 
 
 One accustomed to deal with a National bank as such, and who so deals with 
 it in respect to a promissory note, is estopped from denying the incorpora- 
 tion of the bank in an action on the note.'* 
 
 ACTION" upon promissory notes made by the defendant and 
 indorsed to tlie plaintiff, a National bank. The referee to 
 whom the case was referred found that the bank was organized 
 under the National Banking Act, and was located in Massachu- 
 setts, and that the notes were due and unpaid. 
 
 F. E. Dana, for appellant. 
 
 John Winslow, for respondent. 
 
 Davis, P. J. The plaintiff suflSciently proved its incorporation 
 under the general banking laws of the United States by the pro- 
 duction of the certificate of the Comptroller of the Currency. The 
 point that a copy, and not the original certificate, was produced, 
 was distinctly waived, and cannot now be urged. Besides, it ap- 
 peared by the evidence in the case that the defendant was accus- 
 tomed to deal with the plaintiff as a corporation, and did so deal 
 in respect of the notes in suit. The defendant was thereby 
 estopped from denying the incorporation of the plaintiff. Palmer 
 V. Lawrence, 3 Sandf. 161 ; Steam Nav. Go. v. Weed, 17 Barb. 378 ; 
 White V. Coventry, 29 id. 305 ; Sands v. Hill, 43 id. 651 ; White v. 
 Ross, 15 Abb. Pr. 66. There was sufQcient evidence to show the 
 making of the notes by the defendant. Its incorporation was ad- 
 mitted by the answer. The signatures of the president and secre- 
 
 * SoeSvffaker v. NatianaX Bank, ante, p. 601. 
 
SUPREME COUET, 1875. 785 
 
 National Bank of FalrhaVen v. The Phoenix Warehousing Company. 
 
 tary to the notes in suit were proven. That was enough to show, 
 prima facie, at least, that the notes were properly made on behalf 
 of the corporation, and to devolve the burthen on the defendant to 
 show that they were made without authority and outside of the 
 business of the corporation. No attempt was made to do this: 
 
 The offer of the defendant to show failure of consideration of 
 the notes, in whole or in part, was properly rejected. It was not 
 accompanied with any offer to show that plaintifE was not a holder 
 of the paper in good faith and for value in due course of business; 
 and it already appeared that its notes had been discounted or taken 
 in renewal of discounted paper, in due course of business. It was 
 of no importance that, after the non-payment of the notes at ma- 
 turity, the plaintiff had received collateral security from the 
 indorser of the notes. That fact could not affect the plaintiff's 
 right to enforce the notes still held by it as the principal indebted- 
 ness. There is nothing in the point that the referee allowed inter- 
 est in the notes. The law awards interest, and the court or a 
 referee may compute it without any other proof than what appears 
 on the face of the notes. 
 
 This disposes of all the points of the appellant but one, and that 
 seems to us altogether more serious. 
 
 The plaintiff was a banking corporation, organized under the 
 laws of the United States, doing business in the State of Massa- 
 chusetts. It was, therefore, a foreign corporation, and as such 
 was subject to the restraining laws of this State whenever it 
 attempted to do banking business within this State. 
 
 The defendant offered to show, that at the time of the discount 
 of the original notes and of the discount of the notes in suit, 
 plaintiff had an office in the city of New Tork for banking pur- 
 poses, and that these notes were discounted at that office. " The 
 proof of the offered fact would prima facie show an illegal dis- 
 counting of the paper ia this State, in direct violation of the 
 statute, which prohibits all corporations, not authorized by the 
 laws of this State, from keeping an office in this State for the pur- 
 pose of discount or deposit (1 R. S. [2d ed.] 70S, §§ 6, 7), and 
 would have devolved upon the plaintiff the necessity of showing 
 that it was authorized by law to keep such ofBce and discount the 
 notes in this State. 
 
 The authorities settle that there can be no recovery in the courts 
 of this State upon paper thus discounted by a corporation acting 
 99 
 
786 NEW YOEK 
 
 Green v. The Walkill National Bank. 
 
 in violation of our statutes. De Qroot v. Van Duzer, 20 Wend. 
 390; New Hope Delaware Bridge Co. v. T%e Poughkeepsie Silk Co., 
 25 id. 648; 1 K. S. (2d ed.) 708, §§ 6, 7. Section 2 of article 
 1, title 4, chapter 8, part 3 of the Kevised Statutes (2 K. S. 458), 
 provides that where by the laws of this State any act is forbidden 
 to be done by any corporation^ of this State, without express au- 
 thority of law, and such act is done by a foreign corporation, it 
 shall not be authorized to maintain any action founded upon such 
 act, or upon any liability or obligation, express or implied, arising 
 out of, or entered into in consideration of such act. The provis- 
 ions of these statutes are still in force, and we see no reason why 
 they are not as applicable to the National banks located and doing 
 business in other States, as to any other class of foreign corpora- 
 tions. It is no answer to say that the evidence already given by 
 the plaintiff showed that such offer was not founded in fact. The 
 defendant was not estopped by that evidence from showing the fact 
 to be otherwise, and in accordance with the assertion of its offer. 
 It seems highly probable that it would have failed in the attempt ; 
 but that is no legal reason for denying the right to give evidence, 
 tending to prove the offered facts, for the consideration of the 
 referee. 
 
 The exceptions to the refusal to permit proof under the offer was 
 well taken, and for this error the judgment must be reversed and 
 a new trial granted, costs to abide the event. 
 
 Daniels and Bkadt, JJ., concurred. 
 Judgment reversed and new trial granted, costs to abide event. 
 
 'Gkben v. The Walkill National Bank.' 
 
 (7 Hun, 63.) 
 
 Action against Natvmal banks after dissolution. 
 
 An -action may be maintained against a National bank after a receiver of it has 
 been appointed by the Comptroller of the Currency.* 
 
 ACTION against a National bank and its receiver. The opinion 
 states the case. 
 
 *See Ordway v. Central National Bank, ante, p. 559; Security Bank v. 
 National Bank, ante, p. 774. 
 
SUPEEME COURT, 1875. 787 
 
 Green v. The Walkill National Bank. 
 D. D. McKoon, for appellant. 
 
 Dill d Royce, for respondent. 
 
 Tappek, J. This is an appeal from a judgment dismissing the 
 plaintiff's complaint at the Orange Circuit. The action is brought 
 to recover the value of a bond for $1,000, which plaintiff alleges 
 the bank converted to its own use, etc. The bank failed in Decem- 
 ber, 1873, and the Comptroller of the Currency appointed Bur- 
 roughs receiver, who is joined as defendant, it being alleged that 
 he refuses to allow or to hear the plaintiff's claim; no personal 
 judgment is sought against him. The court dismissed the com- 
 plaint at the Circuit before any proofs were offered. The defend- 
 ant moved for the dismissal upon the ground that no cause of 
 action was stated against either defendant. The exceptions were 
 ordered to be heard at the General Term in the first instance. The 
 defendants argue, at General Term, in support of the dismissal, that 
 no action will lie against the bank because of its dissolution, 
 and that it is no longer a body corporate. 
 
 A similar question was presented in Pahquioque Banh v. First 
 National Bank of Bethel, 36 Conn. 325, and the appellate court 
 then held that the appointment of a receiver under the National 
 Bank Act does not work an absolute dissolution of the corporation. 
 The law under which the bank was organized is known as " An 
 act to provide a National currency," etc., approved February 35th, 
 1863, and June 3d, 1864. It provides in the 50th section that 
 in the case of banks which have suspended and are being wound 
 up by the Comptroller by means of a receivership, the Comptroller 
 shall make a ratable dividend on all claims that may have been 
 proved to his satisfaction or adjudicated in a court of competent 
 jurisdiction. 
 
 Jurisdiction is given by the act to State courts in a county 
 where the institution is located. The Connecticut case, which will 
 also be found in 4 Wallace, 283, also holds further, that when the 
 creditor has established his claim he does not acquire a lien on the 
 property nor secure any preference; that he must take his position 
 with other creditors whose claims are allowed or proven, and await 
 the action of the Comptroller in the distribution of the assets real- 
 ized by the receiver. 
 
 That the action is maintainable in this form is also held in Ken- 
 
788 NEW YOEK 
 
 Green v. The Walkill National Bank. 
 
 nedy y. Cfibson, 8 Wall. 506. The receiver is a proper party in 
 proceedings for the adjudication of claims against the bank. 
 Turner t. Bank of Keokuk, 26 Iowa, 363. The act of Congress 
 has not made either the Comptroller or the receiTcr the final tri- 
 bunal for the decision of the rights of parties making claims 
 against a National bank which is being closed out, and such legis- 
 lation, if attempted, would be of doubtful validity. In Bank v. 
 Kennedy, 7 Wall. 19, the court held that the receiver might sue in 
 his own name or in the name of the bank. The two positions 
 taken by the defendant are not consistent with each other ; they 
 firstly claim that the Comptroller is the only party to whom the 
 claim can be presented, or "who can be sued;" and, on the other 
 hand, they quote the case of The Bank of Selma v. Golly, U. S. 
 S. C.J Oct., 1874, to the effect that the Comptroller is to discharge 
 his duties in disposing of and distributing the assets "without 
 interference iy courts." 
 
 We think the rule laid down in the Connecticut case is the law, 
 and hold that the corporation is not absolutely dissolved; that both 
 it and the receiver may be made parties to an action to establish 
 the claim of a creditor which has been rejected either by the Comp- 
 troller or receiver, and that the plaintiff's action was well brought 
 for that purpose; and further, that the recovery of a judgment 
 does not either give lien or priority to the creditor. It seems that 
 the peculiar or indefinite language of section 50 of the act, leaves 
 it in doubt whether the receiver or the Comptroller is the proper 
 party for the adjudication of claims ; but the receiver being the 
 active agent for the protection of the bank and its creditors, and 
 being within the same jurisdiction as the bank, he is a proper party 
 in such proceedings. 
 
 The judgment should be reversed, and new trial ordered at Cir- 
 cuit, costs to abide the event. 
 
 Present — TAPPBif and Taicott, J J. Baknakd, P. J., not 
 sitting. 
 
 New trial ordered; costs to abide event. 
 
SUPREME COTJET, 1876. 789 
 
 Southwick V. The First National Bank of Memphis. 
 
 SouTHWiCK V. The First Katiokal Bank oe Memphis. 
 
 .. (7 Hun, 96.) 
 
 Attaehment against non-resident National banks. 
 
 The provision of the National Banking Act that attachments, injunctions, etc., 
 shall not be issued by State courts against National banks before final judg- 
 ment relates only to actions against banks where the action is brought, and 
 not to cases where the action is against a non-resident corporation. 
 
 APPEAL from an order of the Special Term of the Supreme 
 Court denying motion to Tacate an attachment. 
 
 Francis G. Barlow, for appellant. 
 John E. Burrill, for respondent. 
 
 Davis, P. J. The defendant is a National bank located at Mem- 
 phis, Tenn. At the beginning of this action the plaintiif obtained 
 an attachment against the defendant and levied the same upon 
 moneys in the Park Bank, in the city of New York, belonging to 
 the defendant. 
 
 The defendant having appeared generally in the action, now 
 moves to vacate the attachment, on the ground that it was obtained 
 and issued in violation of section 57 of the National Banking Act 
 of 1864, as amended by section 2, chapter 269 of the Laws of Con- 
 gress of 1873 (3d session.) As so amended, that section reads as 
 follows: 
 
 " Sec. 57. And be it further enacted, that suits, actions and proceedings 
 against any association under this act may be had in any circuit, district or 
 territorial court of the United States, held within the district in which such 
 association may be established, or in any State, county or municipal court in 
 the county or city in which said association is located, having j urisdiction in 
 similar cases. Provided, however, that all proceedings to enjoin the Comp- 
 troller under this act shall be had in a circuit, district or territorial court of 
 the United States, and held in the district in which the association is located . 
 And provided, ftirtlier, that no attachment, injunction or execution shall be 
 issued against such association or its property, before final judgment in any 
 such suit, action or proceedings in any State, county or municipal court. 
 
 "The court below held that the case of Gook v. The State National 
 
790 NEW YOEK 
 
 Southwick V. The Firat National Bank of Memphig. 
 
 Bank of Boston necessarily involres the question presented in this 
 motion, and accordingly refused to vacate the attachment. That 
 case holds, in substance, that section 57 of the act of 1864 did not 
 intend to take away the general jurisdiction of State courts over 
 corporations created under the Ifational Banking Act, wherever 
 the same may be located, and that it is not competent for Congress 
 to deprive the State courts of jurisdiction in all actions against 
 banking associations organized under the act, or to restrict the 
 jurisdiction to particular courts. It accordingly upheld the juris- 
 diction of the State courts of this State, in an action against a 
 National banking association located and doing business in the 
 State of Massachusetts. 
 
 We are not asked by the learned counsel for the appellant to dis- 
 regard the rulings of the Court of Appeals in Gook v. The State 
 National Bank of Boston, but to hold that Congress has power, 
 notwithstanding the general jurisdiction of the State courts, in 
 suits against such National banks, to enact that no attachment, 
 injunction or execution against such association or its property, 
 shall be issued before final judgment ; and he insists that by the 
 amendment of section 57, passed in 1873, Congress has imposed 
 such restriction on the State courts, as well in actions against 
 associations located in other States, as in actions against associa- 
 tions established in the State where suit is brought. The amend- 
 ment of 1857 was probably made because of the decisions of the 
 courts of this State holding that National banking associations, 
 located and doing business in this State, were subject to the process 
 of attachment as foreign corporations, under the peculiar definition 
 of such corporation given by our Code of Procedure, to wit: " A 
 corporation created ly or under the laws of any other State, govern- 
 ment or country." Code, §§ 237, 427. The amendment should be 
 construed with an eye to the mischief sought to be prevented, and it 
 should not be held that Congress intended to take away the ordi- 
 nary, and, in many cases, the only process by which suits in State 
 courts can be commenced against banking associations located in 
 other States. It is not necessary to consider the question whether 
 Congress has power to inhibit the commencement of suits against 
 National banks in the State courts by attachment, where property 
 of such banks is within the jurisdiction of the court, although the 
 bank itself is established in another State, unless we are satisfied that 
 the true construction of the amendment of 1873 raises that questioii. 
 
SUPEEME COFET, 1876. 791 
 
 Sonthwick v. The First National Bank of Memphis. 
 
 The amendment referred to constitutes the second proviso of 57, 
 above quoted, as is in these words : " And provided, further, that 
 no attachment, injunction or execution shall be issued against such 
 association, or its property, before final judgment in any such suit, 
 action or proceeding in any State, county or municipal court." 
 The prohibition, it will be observed, is not extended to any suit, 
 action or proceeding, but to " any such suit, action or proceeding," 
 and the use of the word" such, " in connection with suit, action or 
 proceeding, requires us to ascertain to what it relates in the section 
 of the act in which it is used. In doing this, we find that the pre- 
 ceding language of the section speaks, so far as it relates to State, 
 county and municipal courts, only of suits, actions and proceed- 
 ings against associations located where the suit is brought, or, in 
 the words of the act, of suits " in the county or city in which such 
 association is located;" and it is only "in any such suit, action or 
 proceeding, in any State, county or municipal court," that the pro- 
 viso forbids the issuing of an attachment, injunction or execution 
 before final judgment. This seems to be the plain, common sense 
 construction of the language used; and if we accept the decision of 
 the Court of Appeals, above referred to, as a correct exposition of 
 the law, as this court is bound to do, then we are not at liberty, by 
 any liberal or implied construction, to extend the prohibition to such 
 suits as that now before us. If suits may be brought in this court 
 against National banking associations located in other States, not- 
 withstanding the restrictions expressed or implied in the 57th sec- 
 tion of the National Banking Act, then there seems to be no 
 difficulty in holding that such suits may be commenced by the ordi- 
 nary and only process known to our laws, which, in this case, is the 
 process of attachment against property situated within this State. 
 
 There seems to us no reason to question the power of Congress 
 to prohibit "attachment, injunction and execution before judg- 
 ment " in actions brought in our courts against associations located 
 in our State. Such prohibition may be wise and salutary, inasmuch 
 as those banks may be proceeded against by the ordinary process of 
 the courts without resort to provisional remedies. The prohibition 
 does not disarm the State courts of jurisdiction, and Congress alone 
 is to determine whether the several remedies named will tend to de- 
 stroy or impair the usefulness of the National banks in their locali- 
 ties, and should, therefore, be prohibited. See opinion of Swatne, 
 J., in The National Bank of Buffalo v. Bearing, ante, p. 117. 
 
792 NEW YOEK 
 
 Ocean National Bank v. Carll. 
 
 The right of the corporations or associations "to sue and be 
 sued, complain and defend in any court of law and equity as fully 
 as natural persons," is given in the most general terms by subdivis- 
 ion 4 of section 8 of the act under which they are created. See 
 U. S. Eev. Stats., p. 999. And Congress has gone no further in 
 the provisions of the 57th section, than to protect them from 
 the summary processes specially named in suits brought in the 
 State, county or city of their location. As to suits against such 
 corporations as cannot be reached by personal process, Congress 
 has left intact the remedies provided by State laws. It follows from 
 these views, and from the law as laid down in Cook v. The State 
 National Bank of Boston, uM supra, that the attachment in this 
 case was properly issued. 
 
 The order should, therefore, be affirmed, with $10 costs, besides 
 disbursements. 
 
 Brady and Daitiels, JJ., concurred. 
 
 Order affirmed, with $10 costs and disbursements. 
 
 Ocean Natioital Bank v. Cabll. 
 
 (7 Hun, 237.*) 
 
 BeeevBer — Control of State court over. 
 
 A State court cannot order a receiver for a National bank, appointed by the 
 Comptroller of the Currency, to pay a judgment recovered against the bank 
 before the appointment of the receiver. 
 
 APPEAL from an order of the Special Term denying defendants' 
 motion that the receiver of the Ocean National Bank (the 
 plaintifE) pay out of the moneys in his hands the judgment in favor 
 of the defendants for costs in this action. 
 
 Nelson Smith, for appellant. ' 
 
 Dunning, Sdsell S Hart, for respondent. 
 
 *This report contains only an abstract of the opinion which is there given in 
 full. 
 
SUPKEME COUKT, 1876, 793 
 
 Ocean National Bank v. Carll. 
 
 Davis, P. J. The action was commenced in this court by the 
 Ocean National Bank in December, 1870, and has been continued in 
 the name of such bank. On the second trial thereof which took 
 place December 34, 1874, the plaintiff's complaint was dismissed 
 with costs and judgment was entered against the Ocean National 
 Bank for such costs. 
 
 On the 15th of December, 1871, Theodore M. Davis was appointed 
 by the Comptroller of the Currency, under section 50 of the Na- 
 tional Banking Act, receiver of said bank, and under that appoint- 
 ment took possession of the assets of said bank and had in his 
 hands money sufficient to satisfy the Judgment. The bank is in- 
 solvent. Prior to making the motion the defendant's attorney 
 requested the receiver to pay the judgment, which he refused to do. 
 The motion was denied. 
 
 The receiver was not an officer of this or of any other court. He 
 was appointed by the Comptroller of the Currency under section 
 50 of the National Currency Act, and as such was the agent or 
 officer of the Comptroller, clothed with the powers and duties spe- 
 cially conferred by the act of Congress. 
 
 By section 50 under which his appointment was made he is re- 
 quired, under the direction of the Comptroller, to " take possession 
 of the -books, records and assets of every description of such asso- 
 ciation, collect all debts, dues and claims belonging to it " * * 
 * * to " pay over all money so made to the Treasurer of the 
 United "States subject to the order of the Comptroller, and also make 
 report to the Comptroller of all his acts and proceedings." 
 
 The disposition of all moneys so collected and paid over is given 
 to the Comptroller of the Currency, and the receiver does not pay 
 out the moneys of the bank, or have any authority to make other 
 disposition of them than to pay them into the treasury of the 
 United States, subject to the order of the Comptroller. §§ 5234, 
 5236, E. S, of the U. S. 
 
 It seems to us. very clear, under the provisions of the act referred 
 to, that no order can be made by this court directing the receiver 
 to pay the costs of the judgment against the Bank: First, because 
 the court has not jurisdiction of the receiver in a case in which he 
 has not been made a party to the record, to make such an order ; 
 secondly, because the receiver has no power to pay out the moneys 
 collected by him for the purpose of extinguishing the judgment, 
 inasmuch as his duty is to pay the same into the treasury of the 
 100 
 
794 NEW YOEK 
 
 Bushnell v. The Chautauqua County National Bank. 
 
 United States, subject to the order of the Comptroller. The de- 
 mand upon him is therefore nugatory. 
 
 The defendant should have presented his claim to the Comp- 
 troller of the Currency for payment out of the proceeds of the 
 assets received by him. 
 
 "We do not intend, in deciding this motion, to determine what 
 power the courts may possess if the receiyer had brought the action, 
 or had been made a party to the record and prosecuted the same, 
 after his appointment, in his own name as such receiyer. 
 
 The only question now determined is, that upon the state of 
 facts presented upon the motion the defendant was not entitled to 
 the order sought for. 
 
 The order must be afiSrmed with 610 costs besides disbursements. 
 
 Bushnell t. The Chautauqua Oouittt N'ation'al Bake. 
 
 aO Hun, 378.) 
 
 Nationallank — Deposits in, as collateral security for tTie performaruie of agree- 
 ments between third paHies — TTltra vires — When no defense. 
 
 A National bank indorsed upon a contract of sale and delivery between A and 
 B, that B had deposited $3,500 in the bank, " to be held by us as collateral 
 security for the faithful fulfillment of the within contract." Held, (1) that 
 the bank had the power to receive the deposit and enter into the said con- 
 tract ; (2) but that, even if the contract was ultra vires, the bank would be 
 estopped from setting up that defense in an action by A, as he had per- 
 formed his part of the agreement, relying on the undertaking of the bank. 
 
 ACTION to recover the sum of $3,500 deposited with the defend- 
 ant bank by one Shaw. In September, 1874, the plaintiff 
 Bushnell and said Shaw entered into an agreement in writing, 
 whereby the former sold and agreed to deliver to the latter ten 
 thousand barrels of crude petroleum, for which Shaw agreed to 
 pay one dollar and twenty cents per barrel on delivery. Thereupon, 
 and as part of the agreement, Shaw deposited with defendant 
 $2,500, and the bank indorsed on the said agreement the follow- 
 ing : "Jamestown, September 26, 1874. T. A. Shaw has this day 
 
SUPREME OOUET, 1876. 795 
 
 Bushnell v. The Chautauqua County National Bank. 
 
 deposited in the Chautauqua County National Bank of Jamestown, 
 N. Y., twenty-five hundred dollars ($2,500), which is to be held by 
 us as security on the faithful fulfillment of the within contract." 
 This was signed by the cashier. Plaintiff claimed to have per- 
 formed his part of the agreement, but that Shaw had not performed 
 his. 
 
 The defendant demurred to the complaint, and the demurrer 
 was sustained and the complaint dismissed by the Special Term of 
 the Supreme Court. 
 
 E. G. Sprague, for appellant. 
 
 R. P. Marvin, for respondent. 
 
 Smith, J. [After construing the contract.] Another point 
 taken by the respondent's counsel is, that the contract of 
 the bank was ultra vires. By undertaking to hold the money 
 as security for the fulfillment of Shaw's contract, the bank, 
 in our opinion, impliedly promised the plaintiff that, in case Shaw 
 failed to perform, the bank would pay to the plaintiff his damages 
 thereby incurred, not exceeding $3,500. The promise is implied 
 from the terms of the undertaking, and from the fact that the 
 bank caused Shaw's acceptance, with the indorsement of the bank 
 upon it, to be delivered to the plaintiff before he signed the con- 
 tract with Shaw. The bank had power to receive the deposit. As 
 an incident to that power, it had authority to assent to any terms 
 or conditions respecting the use or disposal of the money depos- 
 ited which the depositor saw fit to impose, provided they were not 
 illegal or prohibited by the defendant's charter. If Shaw had 
 chosen to deposit the money payable absolutely to the plaintiff or 
 his order, the receipt of it by the bank, and the issuing of a cer- 
 tificate in accordance with those terms, would have been strictly 
 within its legitimate and ordinary business. What difference does 
 it make as to the power of the bank to receive and hold the money, 
 that the deposit was payable to the plaintiff upon the happening 
 of a future contingent event, and that the amount to be paid to 
 him was also contingent and uncertain, but was capable of being 
 definitely ascertained, and was in no event to exceed the amount 
 of the deposit. It is said that a trust was created. In the same 
 sense there is a trust in the case of every bank deposit by one per- 
 
796 NEW YORK 
 
 Bushnell v. The Chautauqua County National Bank. 
 
 son to the use or credit of another. It is argued by the respond- 
 ent's counsel that the bank became a surety for Shaw. Not at all. 
 Its obligation was that of a principal debtor. It was indebted to 
 Shaw for the money deposited, and it agreed to discharge its 
 indebtedness by paying to the plaintiff. We are not aware of any 
 provision of law which incapacitates a National bank from receiv- 
 ing a deposit of money on the tetms above stated. 
 
 But assuming that the undertaking of the bank was ultra vires, 
 yet, as it was not illegal, we think the defendant is estopped from 
 setting up that defense. As has been said, the legal efEect of the 
 transaction between the bank and the plaintiff was that the bank 
 agreed, if he would enter into the contract with Shaw, that he 
 should be compensated out of the money deposited from any dam- 
 age he might sustain from 'Shaw's failure to perform. The condi- 
 tion on which Shaw made the deposit was that the bank should 
 undertake to that effect. The agreement of the bank was an ap- 
 propriation by it of the deposit to the plaintiff's use, by the direc- 
 tion of the depositor. The agreement has been fully executed on 
 the part of the plaintiff by his entering into the proposed obliga- 
 tion to Shaw. It would be a fraud upon him to release the de- 
 fendant from its part of the agreement, and the bank is therefore 
 estopped from setting up a mere want of power. Whitney Arms 
 do. V. Barlow, 63 N. Y. 62. 
 
 It was not necessary or proper for the plaintiff to set out the im- 
 plied promise of the defendant in the complaint. It was enough 
 to allege the facts out of which the implication arises. Eno v. 
 Woodivorth, 4 Comst. 349; Glenny v. HitcMns, 4 How. Pr. 98; 
 Crapsey v. Sweeny, 27 Barb. 310; Moak's Van Santvoord's PL (3d 
 ed.) 186, and cases there cited. 
 
 These views, if correct, dispose of the several positions taken by 
 the learned counsel for the respondent. 
 
 The judgment appealed from should be reversed, and judgment 
 ordered for the plaintiff on the demurrer, with leave to the defend- 
 ant to answer in twenty days, on payment of the costs of the 
 demurrer and of this appeal. 
 
 MuLLiir, P. J., and Talcott, J., concurred. 
 
 Ordered accordingly. 
 
SUPREME COURT, 1876. 797 
 
 National Park Bank v. Gunst. 
 
 National Park Bank v. GtUNSt. 
 
 (1 Abbott'8 New Cases, 293.) 
 
 National tank — Citizenship of 
 
 A National bank is a foreign corporation under a statute requiring corpora- 
 tions created by " the laws of any other State or country," to give security 
 for costs. 
 
 MOTION to compel the plaintiff, a National bank, to give secu- 
 rity for costs on the ground that it was a corporation organ- 
 ized under the laws of another State or country within the statute 
 which provides that " a foreign corporation created by the laws of 
 any other State or country may, upon giving security for the payment 
 of the costs of suit, prosecute, in the courts of this State, in the 
 same manner as corporations created under the laws of this State." 
 2 Rev. Stat. 457. 
 
 G. E. Souther, for the motion. 
 
 Peter B. Olney, contra, 
 
 MoNELL, Oh. J., decided in favor of the defendant, and an 
 order was entered requiring the bank to file the requisite bond as 
 security. 
 
 Note.— No opinion is reported in ing Act was afterward amended so as 
 
 the foregoing case. The counsel cited to prohibit attachments of National 
 
 the case of Merchants' National Bank banks before judgment and the case is 
 
 V. MacNaughton (not reported), de- therefore no longer authority and is 
 
 cided at Chambers Supreme Court by not included in this volume. That 
 
 Leonabd, J., who held, on a question case is not only not an authority for 
 
 regarding pleadings and proof of incor- the above case of National Park Bank 
 
 poration, that "the plaintiff must be v. (hmst, but the reasoning of the 
 
 held to be aforeign corporation," citing court is against it. In Gunst's case 
 
 Bowen v. First National Bank of Me- the statute related to corporations 
 
 dma, 34 How. 409. No opinion was re- created by the laws of "any other 
 
 ported. State or country " while in Bo wen's 
 
 In Bowen v. First Nat. Bank, supra, case the statute related to corpo- 
 
 the General Term of the Supreme rations created by or under the laws of 
 
 Court, First District, held, that Na- "any other State, government, or 
 
 tional banks were foreign corporations country, " and it was on the word 
 
 under a statute authorizing attach- "government" that the court based 
 
 ments against "corporations created by its opinio a that National banks were 
 
 or under the laws of any other State, within the act. — Rep. 
 government or country." The Bank- 
 
798 NEW YOEK 
 
 National State Bank of Newark v. Boylan. 
 
 National State Bank of Newaek v. BoTLAisr. 
 
 (2 Abbott's New Cases, 216.) 
 Usury — Oounter-claim for interest in action by National bank — Limitation of. 
 
 In an action by a National bank the defendant cannot be allowed a counter- 
 claim for unlawful interest paid by Mm more than two years prior thereto.* 
 
 One of two or more defendants cannot set up an individual counter-claim' 
 unless, under the pleadings, there can be a several judgment against him. 
 
 ACTION by the National State Bank of Newark against James 
 B. Boylan and John Boylan on judgments against them ob- 
 tained in the Supreme Court of New Jersey. 
 
 The defendant, John Boylan, answering separately, alleged, 
 among other things, that he was liable, if at all, only as surety and 
 .conditionally, and that between February, 1871, and June, 1875, 
 the plaintifE had exacted from him usurious and unlawful interest 
 for loans and discounts made to and for him, and that the plaintiiis 
 had so received from him $7,000 in excess of the lawful interest 
 allowed by the laws of the State and the act of Congress under 
 which plaintifE was incorporated. For which sum defendant asked 
 a judgment in his favor. The plaintifE demurred. 
 
 Martin & Smith, for plaintifE. 
 Oliver J. Wells, for defendant. 
 
 Sedgwick, J. The decision of this demurrer involves a con- 
 struction of section 30 of 13 TJ. S. Statutes at Large, June 3, 1864, 
 as to the time within which an action for an excess of interest 
 received by the plaintiff on a usurious loan by it to the defendant 
 may be brought. 
 
 The act declares that every association may receive on a loan or 
 discount " interest at the rate allowed by the laws of the State or 
 territory where the bank is located, and no more." <» * * 
 "And the knowingly taking," etc., " a rate of interest greater than 
 
 * See Shingle v. First National Bank, post. 
 
SITPERIOB OOURT, 1877. 799 
 
 National State Bank of Newark v. Boylan 
 
 the aforesaid shall be held and adjudged a forfeiture of the entire 
 interest, which the * * * eyadence 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 pei-son or persons pay- 
 ing the same * * * may recover back, in an action of 
 debt, twice the amount of interest thus paid, from the association 
 taking * * * ^jjg same; provided that such action is 
 commenced within two years from the time the usurious transac- 
 tion occurred." 
 
 Whether or not the statute gives a general cause of action, based 
 upon the illegality of a National bank taking more interest than 
 is allowed by the law of the State where the bank is situated, 
 as declared by the first part of the section, in addition to the par- 
 ticiilar causes of the action given thereafter, such general cause of 
 action to be governed by the statute of limitations of the State or of 
 the United States, in case there should be one, is to be determined 
 solely by the intent of the section. It was competent, of course, 
 for Congress to declare that a borrower should have no such gen- 
 eral cause of action. 
 
 I am of opinion that the section provides in its special clauses, 
 for all the causes of action that result from an infraction of the 
 section. The special clauses are so framed and attached to the rest 
 of the section, that thereby is implied the negative of there being 
 a general cause of action so to call it. 
 
 The statute did not take away the right to recover the principal 
 of a loan on which usurious interest has been taken or agreed for. 
 It proceeds to say, that the taking or charging a usurious rate is 
 to be held a forfeiture of the entire interest, and if a usurious rate 
 has been paid, twice its amount may be recovered back, provided 
 the action has been begun within two years. An entire scheme of 
 protection, involving a policy peculiar to it, is thus given to a bor- 
 rower. In case the interest has been paid, twice the amount of the 
 usurious rate may be recovered, and in all other cases, the bank for- 
 feits all right to the interest 
 
 At common law, if the borrower were oppressed, as he was sup- 
 posed to be, by the usurer, and paid the usurious rate, he could 
 recover it, because, although, in pari delicto, he was a victim. The 
 United States statute gives an action in such a case of a peculiar 
 kind, which makes the bon-ower whole and enforces the policy of 
 the statute. 
 
800 NEW YORK 
 
 National State Bank of Newark v. Boy Ian. 
 
 At common law, if he had not paid the usurious interest, and 
 then, on demand, voluntarily paid it with the principal due, in the 
 absence of some statutory action he could not recover the excess of 
 interest back. Under the United States statute the interest being 
 forfeited, if the borrower voluntarily pays it, without something 
 more, but for the action to be brought within two years, the bor- 
 rower cannot recover it back. * 
 
 So that we see th6 statute by a way of its own provides for all 
 the cases in which a borrower may be protected, just as did the 
 common law, and in such a form, that to me it seems clear that 
 the particular provisions are meant to include all the consequences 
 to be attached to a violation of the provision that says a bank shall 
 take the interest of the particular State and no more. Farmers', 
 etc., Nat. Bank v. Bearing, 1 Otto, 39; Palen '^.Johnson, 50 N. Y. 
 49; Smith v. Marvin, 37 id. 137; Wheaton v. Hiilard, 30 Johns. 
 290. The reasoning of Palen v. Johnson is to be applied in this 
 case, and the United States statute takes hold of the right of 
 action, under the general prohibition, and regulates its exercise, just 
 as in that case the statute took hold of the right under the section 
 declaratory of the common law and regulated its exercise. 
 
 Palen v. Johnson is a precedent to allow advantage being taken 
 by demurrer of a limitation of this kind, instead of by pleading 
 the statute of limitation. 
 
 On general principles it seems to me clear, that, if, especially 
 when all circumstances of oppression are wanting, the borrower 
 chooses to pay voluntarily, his action is confined to the statute. 
 
 There are some parts of the counter-claim which refer to interest 
 received within two years. There is a doubt raised, whether part 
 of the counter-claim, being on this point good, a demurrer will lie 
 to the whole counter-claim. It is unnecessary to decide this at 
 this time, because I find a fatal objection to the whole counter- 
 claim. 
 
 It is based upon an objection peculiar to the defendant John 
 Boylan, individually. This "is not proper matter for a counter- 
 claim, unless there could be, under the pleadings, a several judg- 
 ment against him. There could not be, because the complaint is 
 upon a judgment against him and another jointly. 
 
 Without at all deciding that if this judgment were against an in- 
 dorser and a maker of a note, it is joint, there is no allegation of the 
 answer that such is the character of the judgment, or that the defend- 
 
SUPEEME COUET, 1876. gOl 
 
 Central National Bank v. Ricliland National Bank. 
 
 ant is liable thereon as a surety. The answer says that if the plaintiff 
 have any claim against him it is only on his liability as surety, but 
 this supposition or possibility does not refer to the judgment pleaded, 
 for the defendant denies that there was such a judgment, by denying 
 any knowledge of its execution or any information sufiQcient to 
 form a belief as to its existence. Perry t. Chester, 12 Abb. Pr. (N. 
 S.) 131; Bathgate v. HasKii, 59 N. T.*533. 
 
 The demurrer should be sustained with costs, with leave to amend 
 within twenty days upon payment of costs. No amendment should 
 be permitted, however, which includes in a counter-claim sums 
 paid for alleged usurious interest, both before and after the com- 
 mencement of the two years specified by the statute, but they may 
 be separately stated, so that the question of law may be clearly set- 
 tled. 
 
 There was no appeal, and the defendant amended his answer. 
 
 Cemteal National Bank v. Eichland National Bank. 
 
 (53 Howard, 136.) 
 Attachments agaimt NationdL ianks! 
 
 An attachment cannot lie issued from a State court against a National bank 
 before final judgment, whether such bank be located in this State or not. 
 
 MOTION to vacate an attachment granted in an action in the 
 Supreme Court of New York by the Centra;l National Bank 
 against the Eichland National Bank, of Mansfield, Ohio, and 
 under which, the property of the latter in New York was attached. 
 
 G. A. Davison, for plaintiff. 
 B. F. Lee, for defendant. 
 
 Bareett, J. An attachment is not always essential to the 
 acquisition of jurisdiction in a suit against a foreign corporation. 
 Such jurisdiction is acquired in several ways. 1st. In all cases by 
 the personal service of the summons, within this State, upon its 
 president, secretary or treasurer. 3d. If the cause of action arose 
 in this State, by such service upon (in addition to the three officers 
 101 
 
802 NEW YOEK 
 
 Central National Bank y. Richland National Bank. 
 
 named) any other of the corporation, its cashier, or a director, or 
 managing agent thereof. 3d. By such service upon any one of 
 such persons when the corporation has property within this State. 
 4th. By the publication of the summons in either one of two cases 
 — (a) when the cause of action has arisen in this State ; (b) when 
 the corporation has property within this State. Code, §§ 134, 135. 
 
 These provisions are apparently decisive of this motion, because 
 it is only where jurisdiction cannot be acquired without resort to 
 an attachment that the power of Congress to inhibit, or rather to 
 postpone, the use until final judgment of such a provisional remedy 
 seems to be at all questionable 
 
 The Court of Appeals did not deny this power in Ooolce v. The 
 State National Bank of Boston, 53 N. Y. 96 {ante, p. 698). It 
 merely decided that it is not competent for Congress to deprive the 
 State courts of jurisdiction in all actions against National banks, 
 nor to restrict such jurisdiction to the Federal courts. The Su- 
 preme Court of the United States, however, in The Farmers and 
 Mechanics' BanTc of Buffalo v. Bearing, ante, p. 117, asserted a 
 power in Congress wide enough to deprive us of all jurisdiction 
 over such corporations. " The State can exercise no control over 
 them," says Mr. Justice SwAYiq"B, "nor in anywise affect their 
 operation, except in so far as Congress may see proper to permit." 
 Be that as it may, the decisions are unanimous as to the power to 
 relieve National banks from the garnishee process. Crocker v. 
 Marine National Bank, 101 Mass. 240 {ante, p. 575); Chesapeake 
 Bank v. First National Bank, 40 Md. 269 {ante, p. 531); Cadle 
 V. Tracey, 11 Blatchf. 102 {ante, p. 230). The power to create, as 
 was said in the Farmers and Mechanics' Bank of Buffalo v. Bearing, 
 ubi supra, carries with it the power to preserve ; and if Congress 
 is of the opinion that the usefulness of these institutions is likely to 
 be impaired by the tying up of their funds in distant States, pending 
 a litigation, protection therefrom is a reasonable exercise of such 
 power to jpreserve. 
 
 This was conceded in Southwick v. The National Bank of Mem- 
 phis, 7 Hun, 96 {ante, p. 789). The question in that case was 
 whether the power had been exercised by section 57 of the act of 
 1864, as amended by section 2 of chap. 269 of the laws of Con- 
 gress of 1873 ; and it was held, owing to the peculiar and some- 
 what obscure phraseology of the act, that the intention was merely to 
 inhibit attachments against such corporations when located within 
 
SUPREME COURT, 1876. 803 
 
 Central National Bank v. Richland National Bank. 
 
 our own jurisdiction. All question as to the intention of Con- 
 gresSj howeyer, was set at rest by the Revised Statutes of 1874, 
 sections 5243, 5198, as corrected in the appendix. As if to meet 
 the construction thus placed upon the words " such action or pro- 
 ceedings" in the connection in which they are found in the 
 amendment of 1873, the prohibitory clause is remored from its old 
 connection and transferred to section 5243, in which no particular 
 class of suits is previously designated. Then the word " such " is 
 omitted, and now the provision reads as follows : " No attach- 
 ment, injunction or execution shall be issued against any such 
 association or its property before final judgment in any suit, action 
 or proceeding in any State, county or municipal court." 
 
 This clearly meets the suggestion of the presiding justice in the 
 Southwich Case, that the prohibition " is not extended to any suit, 
 action or proceeding, but to any such suit, action or proceeding. " 
 
 It is peculiarly fitting that the plaintiff, itself a National bank, 
 should submit, in matters of detail intended for the common bene- 
 fit of such institutions, to the will of the law-making power under 
 which it was created and is operated. 
 
 There is nothing in rule 34 which can afiect the result. For- 
 merly that rule required proof, where the summons had been 
 served by publication, of the issuing of an attachment, etc. 
 
 It may be a question whether this did not require more in actions 
 against foreign corporations than did sections 134 and 135 of the 
 Code above cited, and whether in such cases, and to that extent, 
 the rule was not in conflict with such actions. 
 
 But at all events the rule has been amended, and, as it now 
 reads, such proof is only required " if the case be one in which an 
 attachment may be issued." This, as we have seen, is not such a 
 case. 
 
 The motion to vacate the attachment must, therefore, be granted, 
 with $10 costs. 
 
804 NEW YOKE 
 
 Seeley v. The New York Exchange National Bank. 
 
 Seelbt V. The New Yoek Exchange Natiokal Bank.* 
 
 Reduction of capital stock. 
 
 Where a National hank reduces its capital stock it cannot retain as a surplus 
 fund, or for other purposes, the whole or any portion of the money which it 
 receives for the stock which is retired. 
 
 VAN HOESEN, J. Section 5143 of the Eevised Statutes of the 
 United States provides that a National banking association 
 may reduce its capital stock. The principal question in this case 
 is, whether a National bank may, 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 ? The defendant reduced its capital stock from 8500,000 
 to $300,000. "What is to become of the $200,000 which was sub- 
 scribed and paid for the stock that has been called in ? Must it be 
 paid to the stockholders who surrender the retiring stock, or may it 
 be retained by the bank? A certificate of stock is merely the evi- 
 dence of an interest in dividends as they are declared, and of a 
 right to a pro rata distribution of the effects of the corporation on 
 hand at the expiration of the charter. Angell and Ames on Cor- 
 porations (8th ed.), § 560. 
 
 If the defendant had determined to discontinue business and 
 wind up its affairs, there is no doubt that the shareholders would 
 be entitled to a distribution of whatever assets of the corporation 
 might remain after its debts had been paid. If, instead of surren- 
 dering, all its corporate powers, a corporation, by reducing its cap- 
 ital, relinquishes a portion of them, it seems to me that the share- 
 holders may properly claim a distribution of the money which the 
 corporate body has no longer the right to use as capital. The 
 abandonment by a corporation of all its corporate rights gives the 
 stockholders a right to the distribution of all the net assets ; why 
 should not an abandonment of a portion of those rights give the 
 stockholders a right of distribution pro tanto ? Of course, if the 
 capital stock has been impaired, the amount to be returned to the 
 stockholders must be diminished. 
 
 * This case is not otherwise reported. 
 
COMMON PLEAS, 1877. 805 
 
 Seeley v. The New York Bxcliange National Bank. 
 
 It is said that the capital of the defendant has not been impaired, 
 but that the directors deem it advantageous to retain as a surplus 
 one-half of the amount which was subscribed and paid for the 
 stock which has been called in. The reason assigned is not, in my 
 opinion, any justification for withholding from the plaintiff his 
 share of the money that was paid in exchange for the stock that is 
 retired. That money was paid as capital, and if it be not required 
 for the payment of debts, it has accomplished the end for which it 
 was subscribed, and it ought to be returned to the shareholders. 
 The bank has gone out of existence as a corporation with a capital 
 of $500,000. Under a modified charter it commences a new life, 
 with a capital of $300,000. So far as the $300,000 of reduced stock 
 is concerned, the corporation must be considered as having sur- 
 rendered its charter and wound up its business. This being so, 
 tlfere is no doubt of the duty it owes to the stockholders who own 
 the retired stock. 
 
 The able counsel for the defendant insists that it is discretion- 
 ary with the directors either to return the money to the share- 
 holders, or to retain it as a surplus; and that by retaining it the 
 bank does the plaintiff no injury, inasmuch as his shares will in- 
 crease in market value as they diminish in number, and as he will 
 own one two-hundredth part of the new capital stock just as he 
 owned one two-hundredth part of the old capital stock. It is true 
 that his proportion of the capital stock will relatively be as great 
 as before the reduction, but it is altogether a matter of conjecture 
 as to the future market value of a share of the reduced stock. The 
 return of the retired capital to the shareholders is not, however, a 
 subject for the exercise of a director's discretion. If the retired 
 capital be a liability of the corporation in favor of the shareholders 
 who give up the stock that is called in, the payment of that debt 
 cannot be in any man's discretion. Payment cannot be deferred 
 because the directors believe it for a creditor's advantage to keep 
 him out of his money. 
 
 "Where a dividend has once been declared, the directors cannot 
 afterward refuse to pay it because they have determined to estab- 
 lish a surplus fund with a view to benefit the corporation and its 
 stockholders. The dividend, when declared, becomes a debt, and 
 connot thenceforth be disposed of without the consent of him 
 who is entitled to it. Beers v. Bridgeport Spring Co., 3 Weekly 
 Digest, 8. 
 
806 NOETH OAEOLmA 
 
 Buffin V. Board of Commissioners. 
 
 It would be strange if capital — capital which has accomplished 
 its mission — could be diverted from its owners, and used against 
 their protest to build up a surplus fund, when even a dividend, 
 once declared, cannot be. 
 
 The controversy in this case really is, whether or not the defend- 
 ant shall be compelled to pay the plaintiff the value of five shares, 
 the amount which the direetorsTiave determined to retain as a sur- 
 plus. If directing judgment for the value of those shares would 
 bring the litigation to a close, I should go no further than make 
 an order to that effect. But it appears to be necessary to provide 
 for the indemnification of the plaintiff for the loss of his twenty- 
 five shares, the transfer of which the defendant refuses to make 
 upon its books. If I should order judgment merely for the value 
 of the five shares, it is possible that the defendant would refuse to 
 give the plaintiff a new certificate for fifteen shares, and to pay him 
 the $500 which the directors have ordered to be paid to those who 
 consent to relinquish two-fifths of their shares. To give the plain- 
 tiff adequate relief, it seems to me to be necessary to direct judg- 
 ment for the value of the whole twenty-five shares. The defend- 
 ant is liable for that value, having refused to permit the shares to be 
 transferred upon its books. 
 
 Judgment for the plaintiff. 
 
 Kttfi'in v. Board of Commissioitees. 
 
 (89 North Carolina, 498.) 
 
 Taxation of circulation of National hanks. 
 
 The power of a State to tax the circulation of the National banks depends 
 upon whether such circulation is for the use of the United States govern- 
 ment or for private profit. Congress can protect the circulation of those 
 hanks, by forbidding the States to tax it ; until this is done the States have 
 the right to tax it.* 
 
 PETITION by the plaintiff to the board of commissioners of 
 Orange county, praying a revision and correction of the list 
 of taxables given in by her. 
 
 The court below ordered a correction of the tax list. 
 
 ♦ This decision is only an obiter dictum. The court expressed a like opinion 
 in Lily v. The Commissioners, 69 N. C. 300. 
 
SUPEEME COUKT, 1873. 807 
 
 Ruffin V. Board of CommissionerB. 
 T. L. Hargrove, for board of commissioners. 
 John W. Graham, contra. 
 
 Eeade, J. [After deciding that money deposited became the 
 money of the bank and was taxable to the depositor only as " credit."] 
 The point most discussed at this bar was whether United States 
 treasury notes and National bank bills were liable to taxation by 
 the State. And, although, as we have seen, it is not necessary to 
 the decision of the case, yet, as his honor's judgment was based 
 upon it, and as it is a matter of general interest, it may be proper 
 that we should express our opinion upon it. It seems to be settled 
 by numerous cases in the United States Supreme Court, cited in 
 plaintiflE's brief, beginning mth McGullock t. The State of Mary- 
 land, that United States treasury notes cannot be taxed by the 
 State, because they are of the means used for the support and 
 administration of the United States government. And if a State 
 could tax them, then unfriendly States might so tax them as to 
 destroy their usefulness; and in that way, and to that extent, de- 
 stroy the United States government. And it is equally well set- 
 tled that the United States government cannot tax any of the 
 necessary means used to administer the State government. But 
 whether a State can tax National bank bills seems to be a debat- 
 able question. The case cited against the power of the State to 
 tax is Veazie Bank v. Fenno, 8 "Wall. 533 {ante, p. 22). We do not 
 think that case supports the position. It is there decided by a 
 divided court, that Congress may tax the circulation of banks 
 chartered by the State; and that, although the tax was so heavy — 
 about sixteen per cent — as to destroy them. It is not pretended 
 that this tax could have been imposed if the bank had been char- 
 tered for the use of the State and as a means of administering its 
 government. But it is put upon the ground that they are corpo- 
 rations for private profit. 
 
 And the power of Congress to tax the circulation of State banks 
 depends upon whether they are for the use of the State government 
 or for private profit; so the power of the State to tax the circula- 
 tion of National banks depends upon whether they are for the use 
 ' of the United States government or for private profit. It is true 
 they are authorized by Congress, as a currency, convenient and 
 useful for circulation, just as State bank bills are authorized by the 
 State. But in neither case have they necessarily any connection 
 
808 NOKTH OAEOLINA • 
 
 Kyle V. The Mayor, Etc 
 
 with the government. The act of Congress authorizing National 
 banks imposed a tax on their circulation of two per cent. And 
 surely that would not have been done if they had been regarded as 
 a part of the government, as that would have been the same as for 
 the government to tax itself. The truth is that the United States 
 government has no interest in Kational banks. It authorizes them 
 in order to provide a currency, not for the government, but for the 
 people. And it has the power to regulate and to protect them. 
 To this end it provides for the redemption of their notes, protects 
 them from the imposition of counterfeits and from injurious com- 
 petition of State banks, by a heavy tax on State bank bills, and no 
 doubt might further protect them by forbidding the State to tax 
 them. But this has not been done, and until it is done we sup- 
 pose the State has the power to tax them. It seems that all that 
 is to be inferred from the decision in Veazie Bank v. Fenno, supra, 
 is not that ISTational bank bills are exempt, but that Congress has 
 the power to exempt them from State taxation. See Lilly v. Com- 
 missioners of Cumberland, at this term, 69 N. C. 300. 
 
 Per Curiam. Order of the court ielow reversed. 
 
 Kyle v. The Maxoe, etc. 
 
 (75 North Carolina, 445.) 
 
 Taacation of shares of nonresidents. 
 
 Under a State Constitution requiring all property not specifically exempt, to 
 be taxed, State assessors must tax the shares of National bank stock belong- 
 ing to non-residents of the State in the city or town where the bank ia 
 located, although there is no State statute expressly directing such taxa- 
 tion. 
 
 THIS was a civil action, for injunction and other relief, heard 
 before his honor, Judge Buxton', at Chambers, in Cumber- 
 land county, on the 20th day of November, 1875. 
 
 PlaintifE alleged in his complaint that he is a non-resident of the 
 State; that he was the owner of 108 shares of stock of the People's 
 National Bank of Fayetteville," on April 1st, 1875; that the same 
 
STJPEEME COURT, 1876. 809 
 
 Kyle V. The Mayor, Etc. 
 
 had been placed by the tax list takers for the town of Fayetteville 
 upon the tax list, and that plaintiff had been assessed the sum of 
 $183.50 as taxes thereonj that the tax list had been placed in the 
 hands of the defendant Mallett for collection, and that he had 
 levied upon certain real estate of the plaintiff, and advertised the 
 same for sale, to satisfy said tax assessment. Plaintiff asked that 
 defendants be restrained from selling said property, etc. 
 
 Upon this complaint his honor granted a restraining order, and 
 an order to defendants to show cause on November 20th, why an 
 injunction should not be granted as prayed for. 
 
 Defendants in their answer admitted the main allegations of the 
 complaint, but they insisted that the tax assessed on plaintiff's 
 shares of stock was uniform and at the same rate as was levied upon 
 all other property subject to taxation in the town of Fayetteville, 
 and that the same was valid and according to law. 
 
 Upon the hearing, his honor held that the assessment for taxa- 
 tion of plaintiff's shares of stock by the authorities of the town of 
 Payetteville, and all proceedings thereunder were without authority 
 of law, and granted the injunction. 
 
 From which order defendants appealed. 
 
 Ray, for appellant. 
 
 McRae & Broadfoot, contra. 
 
 Bykum, J. It is admitted that the town of Payetteville pos- 
 sesses the power of taxation for corporate purposes, by virtue of its 
 charter and the general laws of the State. 
 
 This concession, we think, is decisive of the case before us. For 
 whenever the power is exercised, all taxes, whether State, county 
 or town, by force of the Constitution, must be imposed upon all the 
 real and personal property, money, credits, investments in bonds, 
 stocks, joint-stock companies, or otherwise, situate in the State, 
 county or town, except property exempted by the Constitution. 
 Art. 5, §§ 3 and 7; art. 7, § 9. 
 
 It is the provision, and was the purpose of the Constitution, 
 that thereafter there should be no discrimination in taxation in 
 favor of any class, person, or interest, but that every thing, real 
 and personal, possessing value as property, and the subject of 
 ownership, shall be taxed equally and by a uniform rule. 
 102 
 
810 NORTH CAROLINA 
 
 Kyle V. The Mayor, Etc. 
 
 In this respect the present Constitution shows no favors and 
 allows no discretion. If, then, the town of FayetteviUe has the 
 power to tax, the Constitution steps forward and commands that 
 all property shall be taxed and by a uniform rule. Shares in a 
 National bank are investments in stocks, and comprise the largest 
 portion of the moneyed wealth of the country. They are not only 
 a proper subject of taxation in themselves, but are made taxable 
 expressly both by the Constitution of the State and the National 
 Banking Act which brought them into existence and stamped upon 
 them their character. National Bank v. Commonwealth, 9 Wall. 
 353; 4 id. 344. The Banking Act, ratified the 3d of June, 
 1864, and amended by an act ratified the 10th of February, 1868, 
 confers upon the States in which they are located the power of tax- 
 ing the shares in National banks. There are two restrictions upon 
 the power. The first is, that the tax shall be no greater than is im- 
 posed upon other moneyed capital in the hands of individual citi- 
 zens of such State. The second is, that shares owned by-non resi- 
 dents of any State shall be taxed in the city or town where the bank 
 is located and not elsewhere. Therefore, if non-resident shareholders 
 are not taxed in the State, county and town where the bank is, they 
 escape taxation altogether. Taxation is prohibited in the State of 
 the non-resident. Such gross inequality and injustice was never 
 intended and is expressly provided against. By the Banking Act it 
 is wholly immaterial where the shareholder lives. The taxing 
 power looks, not for the individual, but for the bank. Where that 
 is found the shares are taxed by the State, county or city of its 
 locality. 
 
 In our view it was unnecessary for the Revenue Act of the State 
 or the charter of the town of FayetteviUe to tax specifically the 
 National bank shares of either residents or non-residents. 
 
 Whenever and wherever these institutions spring into existence, 
 and become the heads of moneyed investment and the representa- 
 tives of wealth, the Constitution seizes them and exacts from them 
 their proportional share of the public burdens. Neither the Legis- 
 lature nor the town corporation can exempt them from taxation 
 without doing violence to the Constitution. 
 
 In the view we have taken of this case, it is unnecessary to ex- 
 amine the several revenue and other acts of the Legislature, cited 
 and commented upon in the argument. It is enough to know, 
 first, that Congress has impressed these bank shares with the 
 
SUPREME COURT, 1872. 811 
 
 The First National Bank of Columbus v. Garlingliouse. 
 
 character of taxable property in the States where located; second, 
 that the Constitution of the State requires that all the property of 
 the plaintiff in the State, including these investments, is to be 
 taxed equally; and third, that the town of Payetteyille possesses 
 the power to tax, and has levied the tax upon the bank shares, ad 
 valorem, and uniform, as upon other property. 
 
 It is not alleged that the town tax is not uniform with the tax 
 upon similar property, or that the assessment is in excess of that 
 made by the township trustees. ISo point is made upon that. But 
 it is proper to say, that all assessments of property for taxation, 
 under the Constitution, must be made by the township board of 
 trustees. Art. 7, § 6. 
 
 We have heretofore decided that this board must assess the value 
 of property for State and county taxation, and we think, for the 
 same reasons of convenience and uniformity, that city and town 
 taxation should be based upon the same valuation as that for the 
 State and county. Wil., Col., S A. A. B. R. Go. v. Commissioners 
 of Brunswick, 72 N. C. 15. 
 
 There is error. Judgment reversed, injunction dissolved and 
 action dismissed. 
 
 Pbk Cueiaj' Judgment accordingly. 
 
 The First Natiokal Bank of Columbus, plaintiff in error, v. 
 Gaklinghouse et al. 
 
 (W Ohio state, 492.) 
 
 National banks not bound by State usury laws — Promissory notes — Discha/rge 
 
 of sureties. 
 
 National banks organized under act of Congress are not bound by the usury 
 
 laws of the States in which they are situated.* 
 The discounting of a promissory note by a National bank, at an unlawful rate 
 
 of interest, does not render the note void in toto, but only to the extent of 
 
 the interest. 
 The discounting of a note for the principal maker, at all unlawful rate of 
 
 interest, is not such an unauthorized use of the note as will discharge the 
 
 * See Farmers and Mechanics' National Bank v. Dea/ring, ante, p. 117. 
 
812 OHIO 
 
 The First National Bank of Columbus v. Garlinghouse. 
 
 sureties from liability. In the absence of any express agreement or under- 
 standing on that subject between the sureties and the principal, of which 
 the holder had notice, or any intention to practice a fraud on the sureties, 
 they must be held to have trusted to the judgment and discretion of the 
 principal, as to the terms on which the note might be discounted. 
 
 EEROE to the Court of Common Pleas of Delaware county. 
 Eeserved in the District Court for decision in the Supreme 
 Court. 
 
 The plaintiff in error brought an action in the Court of Common 
 Pleas against the defendant in error, upon a joint and sevei^l 
 promissory note for $6,000, dated Columbus, Ohio, November 13, 
 1867, made by George Garlinghouse, Daniel Hunt, James Budd 
 and Jonathan Bateson, and payable to the order of George Garling- 
 house, on the 1st of March, after date, without grace. It was 
 indorsed by Garlinghouse. 
 
 The defendants. Hunt and Bateson, filed an answer, containing 
 five defenses. The first was nil debet, because they alleged that 
 they executed the note as sureties only for Garlinghouse and for 
 his accommodation, for the purpose only of having the same dis- 
 counted, or money borrowed thereon at the rate of interest allowed 
 by law in the State of Ohio, being six per cent per annum; that on 
 or about the 13th day of November, 1867, the plaintiff, well know- 
 ing that said defendants were sureties only for Garlinghouse, upon 
 said note, by agreement of Garlinghouse only, without the defend- 
 ant's knowledge or consent, discounted the same for the sole use 
 and benefit of said Garlinghouse; and on said discount took and 
 reserved from him, as interest for the money loaned him upon said 
 note, for the time the same had to run, a greater rate of interest 
 than six per cent per annum, the rate allowed by law in Ohio, to 
 wit, interest at the rate of over nine per cent per annum, being the 
 sum of $137.50; that the interest so taken and reserved by the 
 plaintiff was usurious and illegal, done only by agreement of the 
 plaintiff and Garlinghouse, without the knowledge or consent of 
 the defendants, and in fraud of their rights as sureties of Garling- 
 house. 
 
 The fourth defense was nil debet, because the defendants alleged 
 that the plaintiff was an association formed under the act of Con- 
 gress to provide &, National currency, etc., approved June 3, 1864, 
 located and doing business at Columbus, Ohio; that by the pro- 
 visions of said act the plaintiff was authorized to take, receive, re- 
 
SUPEEMB OOUET, 1873. §13 
 
 The First National Bank of Columbus v. Garlinghouse. 
 
 serve and charge upon any loan or discount made by it, or upon 
 any note, etc., interest at the rate of six per cent per annum, that 
 being the rate of interest allowed by law in the State of Ohio, and 
 no more; that the defendants executed the note in suit, as sureties 
 only, for said Garlinghouse; that the plaintiff discounted the note 
 for Grarlinghouse; and on such discount took, received, reserved 
 and charged more interest than six per cent per annum, to wit, in- 
 terest at the rate of over nine per cent per annum, and the defend- 
 ants alleged that the loan and discount so made for Garlinghouse 
 by the plaintiff, of said note, was unauthorized by the provisions 
 of the act of Congress and contrary thereto, and was illegal and 
 void. 
 
 To each of said first and fourth defenses the plaintiff demurred. 
 The court rendered judgment, overruling the demurrers, and dis- 
 missing the action as to said Hunt and Bateson, with costs. 
 
 R. A. Harrison, for plaintiff in error. 
 
 Carper S Van Deman, L. English, J. Wm. Baldwin, and Eeid 
 & Powell, for Hunt and Bateson. 
 
 "White, C. J. The plaintiff is a banking corporation organized 
 under the act of Congress "to provide a Ifational currency, 
 secured by a pledge of United States bonds, and to provide for the 
 circulation and redemption thereof," approved June 3, 1864. 13 
 Stat, at Large, 99. 
 
 The judgment of the court below is sought to be sustained on 
 three general grounds : 
 
 First. That the note in question, having been discounted by the 
 plaintiff at an unlawful rate of interest, is void under the act of 
 Congress referred to. 
 
 Second. That, if not void under the act, the note is void under 
 the statute of this State, passed March 19, 1850, entitled " an act 
 to restrain banks from taking usury." 1 S. & 0. 149. 
 
 Third. That the defendants being sureties, the discounting of 
 the note by the plaintiff for their principal, at an unlawful rate of 
 interest, was an unauthorized use of the note which discharged 
 them from liability thereon. 
 
 These grounds we will consider in their order. 
 
 1 . The sections of the National Banking Law preceding section 
 8, prescribed the mode in which associations may be formed " for 
 
814 OHIO 
 
 The First National Bank of ColumbuB v. Garlinghouse. 
 
 carrying on the business of banking." By section 8, the associa- 
 tions so formed are, among other things, authorized to carry on 
 the business of banking, by discounting and negotiating prom- 
 issory notes, drafts, bills of exchange, and other evidences of debt ; 
 by receiving deposits, by buying, selling exchange, coin, and bull- 
 ion ; by loaning money on personal security ; by obtaining, issuing, 
 and circulating notes, according'to the provisions of the act, etc. 
 
 Section 30 is a limitation of the general powers specified in sec- 
 tion 8 ; and on the construction of the former section, the ques- 
 tion now under consideration depends. 
 
 Section 30 is as follows : 
 
 " § 30. And be it further enacted, that every association may take, receive, 
 reserve, and charge on any loan or discount made, or upon any note, bill of 
 exchange, or other evidence of debt, interest at the rate allowed by the laws of 
 the State or territory where the bank is located, and no more, except that 
 where, by the law of any State, a diflFerent rate is limited for banks of issue or- 
 ganized under State laws, the rate so limited shall be allowed for associations 
 organized in any such State under this act. And when no rate is fixed by the 
 laws of the State or territory, the bank may take, receive, or charge a rate not 
 exceeding seven per centum, and such interest may be taken in advance, reck- 
 oning the days for which the note, bill, or other evidence of debt has to run. 
 And the knowingly taking, receiving, or reserving, or charging a rate greater 
 than aforesaid, shall he held and adjudged 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 same, or their legal representa- 
 tives, may recover back in an action of debt twice the amount of the interest 
 thus paid, from the association taking or receiving the same. Provided, that 
 such action is commenced within two years from the time the usurious tran- 
 saction occurred. Buf the purchase, discount or sale of a bona fide 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, payable at another 
 place than the place of purchase, discount or sale, at not more than the cur- 
 rent rate of exchange for sight drafts, in addition to the interest, shall not be 
 considered as taking or receiving a greater rate of interest." 
 
 This section is a substitute for section 46 of the original act of 
 February 35, 1863 ; and in giving construction to the section as 
 found in the present act, it is worthy of remark that the forfeit- 
 ure, as declared by the original act, was of the entire debt or de- 
 mand on which the interest was taken, reserved or charged. 
 
 The effect of agreeing for unlawful interest, as the section now 
 stands, is quite obvious. The forfeiture is expressly limited to the 
 
SUPREME COURT, 1872. 815 
 
 The First National Bank of Columbus v. QarlinghouBe. 
 
 interest which the note, bill or other evidence of debt carries with 
 it, or which has been agreed to be paid thereon. In thus limiting 
 the forfeiture to the interest, the right of the bank to the princi- 
 pal is necessarily implied. And, so far as the argument as to the 
 entire invalidity of the note is founded on the supposed want of 
 power or capacity in the bank, it is enough to say that authority 
 implied is as effective and available as authority expressly conferred. 
 The statute operates on the instrument given for the loan, and, 
 in effect, declares it to be invalid as to the entire interest, but valid 
 and binding as an obligation for the payment of the principal. 
 
 The construction we give to the statute now under consideration 
 renders the decision in the case of The Banh of Ohillicothe v. 
 Swayne et ah, 8 Ohio, 286, and the subsequent cases referred to, 
 recognizing the same principle, inapplicable to the present case. 
 In each of those cases the contract was declared void, not because 
 of any illegal element or stipulation entering into the consideration 
 of the instrument, but for want of legal capacity on the part of 
 the corporation conferred by its charter. Selser v. BrocTc, 3 Ohio 
 St. 306. 
 
 We have not overlooked the recent case of First National Banh 
 of Whitehall v. Lamb, decided by the Court of Appeals of New 
 York, 50 N. Y. 95. We have considered the opinion in that 
 case with the respect due to the learned tribunal in which it was 
 pronounced. But, after an attentive consideration of it, we are 
 unable to concur in the views therein expressed as to the true con- 
 struction of the act of Congress now in question. The question 
 decided in the case was that the contract then in controversy was 
 void under the usury laws of New York. The contract was 
 usurious, both under the laws of the State and the law of Con- 
 gress. The usurious part of the transaction was forbidden by 
 both laws, the difference in' their operation being as to the extent 
 of the penalty or forfeiture. The statutes of New York declare 
 void all contracts reserving a greater rate of interest than seven' 
 per cent per annum, and preclude a recovery thereon of either 
 principal or interest. In this State we have no such statute. 
 Whether, therefore, it is competent for the State to impose addi- 
 tional penalties for forfeitures to those prescribed by Congress, 
 where the authority given by Congress has been exceeded in the 
 usurious transaction, is a question which does not arise in this 
 case, and as to which we express no opinion. 
 
816 OHIO 
 
 The First National Bank of Columbus v. Garlinghouse. 
 
 The construction given to section 30, in Banh of Whitehall v. 
 Lamb, to which we dissent, is in limiting the operation of the 
 clause declaring the forfeiture of States and territories, where, by 
 the local law, no rate of interest is fixed. 
 
 The preceding clauses prescribe the rate of interest to gorern in 
 all cases. Where the local law prescribes no rate of interest, it is 
 declared that the rate allowed shall be seven per centum. In all 
 other cases, the rate fixed by the local law is adopted by Congress 
 to govern the National banks. It seems to us that, upon a fair 
 construction of the section, the operation of the clause declaring 
 the forfeiture, must be regarded as co-extensive with the authority 
 conferred in the preceding clauses as to exacting interest; and as 
 applying to all loans and discounts made under these clauses, 
 irrespective of the locality in which they were made. 
 
 The construction given to the section in the opinion referred 
 to, of the Court of Appeals, seems to have been influenced by the 
 idea that, unless the forfeiting clause was limited to cases where, 
 by the local law, no rate of interest is fixed, the provision would be 
 unconstitutional. But we do not perceive that the question of 
 constitutional power is varied by such limitation. If, in the absence 
 of a State law fixing the rate of interest. Congress has power to pre- 
 scribe a rate of interest for the banks, and the consequences of 
 taking interest in excess of the rate allowed, the power must be 
 derived from the Constitution of the United States; and, if so 
 derived, its exercise cannot be made dependent on State authority. 
 If, therefore, the power exists in Congress to prescribe for the 
 National banks a rate of interest in any of the States, the power 
 must exist to the same extent in all the States, irrespective of the 
 rates prescribed by State laws. 
 
 The question, whether Congress had power to establish the 
 National banks, must be regarded by the judicial tribunals as set- 
 tled by the repeated decisions of the Supreme Court of the United 
 States. McCulloch v. The State of Maryland, 4 "Wheat. 316; Osborn 
 V. United States Bank, 9 id. 738; Yeazie v. Fenno, 8 Wall. 533. 
 
 In speaking of the faculty of lending and dealing in money, 
 which Congress was authorized to confer upon the United States 
 Bank, Chief Justice Maeshall uses this language: 
 
 "Why is it that Congress can incorporate or create a bank? 
 This question was answered in the case of McOulloch v. The State 
 of Maryland. It is an instrument which ' is necessary and proper ' 
 
SUPEEMB COUET, 1873. 817 
 
 The First National Bank of Columbus v. GarlinghouBe. 
 
 for carrying on the fiscal operations of the government. Can this 
 instrument, on anj rational calculation, efEect its object unless it 
 be endowed with that faculty of lending and dealing in money 
 which is conferred by its charter? If it can, if it be as competent 
 to the purposes of goTcrnment withou^, as with, this faculty there 
 will be much difficulty in sustaining that essential part of the char- 
 ter. If it cannot, then this faculty is necessary to the legitimate 
 operations of goyernment, and was constitutionally and rightfully 
 engrafted on the institution. It is, in that yiew of the subject, 
 the Tital part of the corporation; it is its soul; and the right to 
 preserve originates in the same principle with the right to preserve 
 the skeleton or body which it animates. The distinction between 
 destroying what is denominated the corporate franchise, and de- 
 stroying its vivifying principle, is precisely as incapable of being 
 maintained, as a distinction between the right to sentence a human 
 being to death, and a right to sentence him to a total privation of 
 sustenance during life. Deprive a bank of its trade and business, 
 which is its sustenance, and its immortality, if it have that prop- 
 erty, will be a very useless attribute. 
 
 " This distinction, then, .has no real existence. To tax its facul- 
 ties, its trade and occupation, is to tax the bank itself. To destroy 
 or preserve the one, is to destroy or preserve the other. * * * 
 
 " The currency which it (the bank) circulates, by means of its 
 trade with individuals, is believed to make it a more fit instrument 
 for the purpose of government than it could otherwise be; and if 
 this be true, the capacity to carry on this trade is a faculty indis- 
 pensable to the character and object of the institution." 9 Wheat. 
 861-4. 
 
 In Veazie v. Fenno, supra, in the opinion delivered by the pres- 
 ent chief justice, referring to the National banking system, it is 
 said : 
 
 " The methods adopted for the supply of this currency were 
 briefly explained in the first part of this opinion. It now consists 
 of coin, of United States notes, and of the notes of the National 
 banks. Both descriptions of notes' may be properly described as 
 bills of credit, for both are furnished by the government; both are 
 issued upon the credit of the government ; and the government is 
 responsible for the redemption of both; primarily as to the first 
 described, and immediately upon default of the bank as to the 
 second. * * * Having thus, in the exercise of undisputed 
 103 
 
818 OHIO 
 
 The First National Bank of Columbus v. Garlinghouse. 
 
 constitutional powers, undertaken to provide a currency for the 
 whole country, it cannot be questioned that Congress may con- 
 stitutionally secure the benefit of it to the people, by appropriate 
 legislation." 
 
 It being thus established Jhat Congress can provide a National 
 currency through the agency of the banks, and authorize them to 
 put it in circulation, it seems to us necessarily to follow that it can 
 prescribe the terms or rate of interest upon which it is to be 
 supplied and kept in circulation. 
 
 The power to create implies the power to preserve. The lending 
 of the currency they issue is a vital element in the system of 
 National banks, and the right to take interest is a necessary inci- 
 dent of the power to loan. If the States can, in derogation of the 
 act of Congress, limit the capacity or right of the banks as to the 
 rate of interest they may charge, the States would seem to have 
 plenary power over the whole subject ; and could so exercise it, if 
 they saw proper, as to destroy, for all practical purposes, the value 
 of the franchise. The power would seem to extend not only to 
 prescribing the rate of interest, but to include also authority to 
 prescribe the character of the securities to be discounted by the 
 banks, and the terms in all other respects on which they were to 
 exercise the power to loan. 
 
 2. The next question is, whether the statute of this State, of 
 March 19, 1850, already referred to, affects the note now in ques- 
 tion. We are clearly of opinion that it does not. The third sec- 
 tion of the act, which is the only one that can be supposed to have 
 any application, was intended to operate on banking institutions 
 in this State whose authority to discount or purchase notes, bills 
 or other evidences of debt, was subject to the control of the legis- 
 lation of this State, and was intended to limit such authority. It 
 Imposes no penalty. It has no application to banking institutions 
 existing and exercising their power under the authority of Con- 
 gress. 
 
 3. The remaining question is, whether the discounting of the 
 note, at an illegal rate of interest, was such a misuse of the note as 
 discharged the defendants as sureties from liability. 
 
 This question was determined in the negative by this court, in 
 Selser v. Brock, 3 Ohio St. 302. It was held in that case, that 
 where a joint and several promissory note in blank is signed by 
 several persons as sureties, and delivered to the principal debtor, 
 
SUPEEME COURT, 1872. gjg 
 
 The First National Bank of Columbus v. Garllnghouse. 
 
 to be by him filled up and given to the payee, if an illegal rate of 
 interest be agreed upon between the principal debtor and the cred- 
 itor, and incorporated in the amount for which the note is made 
 payable, the contract is Toidable to the extent of the usury only, 
 and creates a binding obligation on the part of the surety for the 
 principal and legal interest, whether the usury be inserted with 
 the knowledge and consent of the surety or not. 
 
 Usury, it is said in the opinion, will not avoid a contract as to a 
 surety beyond the extent to which it is vitiated as to the principal. 
 And it may be remarked that, in this State, the effect of usury is 
 not to vitiate the entire contract, but only to the extent of the 
 usury. 
 
 It may be inferred from the answer that the note in the present 
 case was filled up at the time it was signed by the sureties. But it 
 can make no difference in principle whether the note is made to 
 cover illegal interest by filling it up^ if it is in blank, for a larger 
 amount than the actual loan and lawful interest, or, where it is 
 already written out, by diminishing the amount of the actual loan. 
 The effect is the same in either case. 
 
 It is not averred in the answer that there was any agreement 
 between the defendants and Garlinghouse, the principal, that the 
 note was not to be used unless it could be discounted at the legal 
 rate of interest. The averment is that the defendants executed the 
 note for the accommodation of their principal, for the purpose 
 only of having it discounted at that rate. Whether this purpose 
 was communicated to the principal does not appeal-. In the absence 
 of any express agreement or understanding between the sureties 
 and the principal, of which the creditor had notice, and of any 
 intention to practice a fraud on the sureties, they must be held to 
 have trusted to the judgment and discretion of the principal as to 
 the terms on which the note might be discounted. 
 
 Judgment reversed, and cause remanded for further proceedings. 
 
 Day, J., did not sit in this case. 
 
820 OHIO 
 
 Shunk V. The Firat National Bank of Gallon. 
 
 Shunk, plaintiffs in error, t. The First National Bank 
 
 OF Galion. 
 
 (22 Ohio State, 508.) 
 National hanks — Usury — Forfeiture of interest — Btate hanks. 
 
 Under section 30 of the National Currency Act (13 Stat, at Large, 108), the 
 taking or charging a rate of interest greater than six per cent per annum, 
 in advance, by a National bank located in Ohio, ia a forfeiture of the entire 
 interest which the note or other evidence of debt carries with it, or which, 
 has been agreed to be paid thereon ; as well the interest accruing after 
 maturity and before judgment, as the interest which accrued before the 
 maturity thereof. 
 
 A National bank is limited, in its right to take or charge interest on its loans 
 and discounts, to the rate of interest allowed by the State laws to banks of 
 issue organized under those laws, if the rate so allowed is difEerent from the 
 general rate allowed by the laws of the State. 
 
 EEEOR to the District Court of Cuyahoga county. 
 The original judgment was rendered upon a cognovit, in the 
 Court of Common Pleas of Cuyahoga county, on the 23d of Novem- 
 ber, 1871, in favor of the First National Bank of Galion against 
 Shunk and others, for $3,183.50 and costs, upon a note for $3,000, 
 dated October 1, 1870, payable to said bank, one year after date, 
 with interest at the rate of eight per cent from date. Shunk and 
 others moved to vacate the judgment, for the reason, among others, 
 that usurious interest had been included therein. The plaintiff in 
 the action entered a remittitur, upon the record, for the sum of 
 $165.83, being the interest, at the rate of eight per cent, from the 
 date to the maturity of the note, and two per cent of the interest 
 thereon, from its maturity to the date of the judgment. The court 
 thereupon overruled the motion, and awarded execution on the 
 judgment for $3,017.67, being the principal of the note and six per 
 cent interest thereon from its maturity to the entry of the judg- 
 ment. 
 
 The defendants excepted to the ruling and judgment of the court, 
 and tendered a bill of exceptions, and prosecuted their petition of 
 error in the District Court, which resulted in an afiBrmance of the 
 judgment below. 
 
SUPREME COUET, 1872. 821 
 
 Shunk V. The First National Bank of Gallon. 
 
 This action was prosecuted to reverse the judgment of affirmance, 
 and also the original judgment of the Court of Common Pleas. 
 And it was, among other things, alleged by the plaintiffs, that it 
 was error to include in the judgment upon the note any interest 
 whatever accruing before the rendition of the judgment. 
 
 A. K. Dunn and James Marshman, for plaintiffs in error. 
 
 H. 0. Carhart and Jacob Scroggs, for defendant in error. 
 
 McIlvaine, J. Was the plaintiff in the original action entitled 
 to have interest at the rate of six per centum per annum, from the 
 maturity of the note to date of judgment, included in the judg- 
 ment ? 
 
 The First National Bank of Gallon was organized within the 
 State of Ohio, under the act of Congress of June 3, 1864, com- 
 monly called the National Currency Act. The 13 th section of this 
 act provides certain rules by which the rate of interest is to be 
 ascertained and fixed, which National banks are allowed to take, 
 receive, reserve and charge on loans and discounts made on notes, 
 bills of exchange or other evidences of debt, and then declares that 
 " the knowingly taking, receiving, reserving or charging a rate of 
 interest greater than aforesaid, shall be held and adjudged a forfeit- 
 ure 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." 
 According to our understanding of this provision, it is made the 
 duty of the court having jurisdiction of an action brought on a 
 note, bill, or other evidences of debt, discounted by a National 
 bank at a rate of interest greater than that allowed by law, or if an 
 agreement has been made to pay such greater rate of interest 
 thereon, to hold and adjudge the entire interest which the note, bill, 
 or other evidence of debt carries with it, or which has been agreed 
 to be paid thereon, to be forfeited ; as well the interest accruing 
 after maturity and before judgment, as the interest which accrued 
 before the maturity thereof. 
 
 The rate of interest, which the note- in this action carried with 
 it, and which was agreed to be paid thereon, was "eight per cent 
 from date." Was this rate of interest greater than that allowed to 
 the defendant in error, under the rules established by section 30 
 of the Currency Act ? 
 
 The section reads as follows : 
 
822 OHIO 
 
 Shunk V. The First National Bank of Qalion. 
 
 " Tliat every aBSociation may take, receive, reserve and charge on any loan 
 or discount made upon any note, bill of exchange or other evidences of debt, 
 interest at the rate allowed by the laws of the State or territory 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 issue, organized under State laws, the 
 rate so limited shall be allowed for associations organized in any such State 
 under this act, and when no rate is fixed by the laws of the State or territory, 
 the bank may take, receive, reserve, or charge a rate not exceeding seven per 
 centum, and such interest rtiay be taken in advance, reckoning the days for 
 which the note, bill, or other evidence of debt has to run." 
 
 It is quite certain, we think, that the defendant in error was 
 limited, by the provisions of this section, in its right to take or 
 charge interest on its loans and discounts, either to the rate of 
 interest fixed by the first rule named therein, or to the rate fixed by 
 the exception to that rule. In other words, it was limited to the 
 rate of interest allowed by the State laws to banks of issue, organ- 
 ized under the laws of the State, if the rate so allowed was differ- 
 ent from the general rate allowed by the laws of the State ; but if 
 there was no difEerence between such rates, or if there was no rate 
 limited for banks of issue organized under State laws, then, and 
 only then, was the defendant in error entitled to take or charge 
 the general rate allowed by the laws of the State. 
 
 By the act of the Legislature of this State, passed March 31, 
 1851, known as the Free Banking Act (S. & 0. 168), and also the 
 act of March 9, 1850 (S. & C. 149), which contain special pro- 
 visions for the organization and regulation of banks of issue, and 
 limit their powers in respect to taking and charging interest on 
 loans and discounts, the maximum rate allowed is fixed at six per 
 centum per annum in advance. Such, also, was the rule under the 
 act of February 34, 1845, known as the State Bank of Ohio Act (S. 
 & C. 117), which was in force at the date of the passage of the 
 National Currency Act. Indeed, the general policy of the State 
 has ever been to limit the rate of interest allowed for banking cor- 
 porations at six per centum per annum. True, we are not advised, 
 in the record of this case, whether banks, organized under the act 
 of March 31, 1851, or under any other statute, are still engaged in 
 issuing bank paper. But we suppose it matters not, as that act, 
 at least, is still in force. 
 
 Now, from what we have already said, it must follow that 
 National banks located in this State are limited by the six per cent 
 rule thus established by these special enactments, unless the pro- 
 
SUPKEME COTJET, 1872. 823 
 
 Shunk V. The First National Bank of Galion, 
 
 visions of the first section of the general act of May 4, 1869 
 (66 Ohio L. 91), extend to and embrace banks of issue, organized 
 under those special and particular statutes. It provides " that the 
 parties to any bond, biU, promissory note or other instrument of 
 writing, for the forbearance or payment of money at any future 
 time, may stipulate therein for the payment of interest upon the 
 amount of such bond, bill, note, or other instrument of writing, at 
 any rate not exceeding eight per centum per annum, payable an- 
 nually." 
 
 Although the terms of this section are sufficiently comprehen- 
 sive to include banks of issue among the parties authorized to stip- 
 ulate for eight per cent interest, yet, inasmuch as the statute was 
 passed as a substitute for one that clearly did not relate to such 
 banks, and inasmuch as the provisions of prior statutes specially 
 limiting the rate of interest allowed to such banks were not ex- 
 pressly repealed or modified thereby, we are of opinion that the 
 Legislature did not intend to change the rule or enlarge the 
 powers of banking corporations in respect to the taking or charg- 
 ing of interest on loans and discounts. In thus holding, we adopt 
 and approve the principle of the rule laid down in Fosdich v. 
 Perry sburg, 14 Ohio St. 473, and other cases, to wit: "That a sub- 
 sequent statute treating a subject in general terms, and not ex- 
 pressly contradicting the provisions of a prior act, shall not be con- 
 sidered as intended to affect the more particular and positive pro- 
 visions of the prior act, unless it be absolutely necessary to do so 
 m order to give its words any meaning." 
 
 Our attention has been called to the case of Parks et al. v. First 
 National Bank of Missouri, as reported in the Bankers' Magazine 
 for December, 1870, page 416, wherein it is said that the Circuit 
 Court of the United States for Missouri held, in substance, that a 
 National bank located in a State where one rate of interest is 
 allowed by law, generally, and another is fixed for banks of issue 
 organized under the State laws, may take, receive, reserve, or charge 
 the greater rate. We cannot approve this construction of the 
 30th section of the National Currency Act. The clause, "ex- 
 cept where by the laws of any State a different rate 'is limited for 
 banks of issue organized under State laws, the rate so limited shall 
 be allowed for associations organized in any such State under this 
 act," is not a mere qualification of the preceding phrase "and no 
 more." But, on the contrary, it was intended as an exception to , 
 
824 OHIO 
 
 Shinkle v. The First National Bank of Eipley. 
 
 the preceding rule, and as a substitute for such rule in all cases 
 where a National bank is located in a State where a different rate 
 of interest is fixed for local banks, from that allowed generally. 
 "We are satisfied that Congress not only intended to place National 
 banks and State banks upon a perfect equality in this respect, but 
 further intended to adopt the policy and views of the people of the 
 eeyeral States as expressed by their legislation in regard to the rate 
 of interest to be allowed for banking corporations. 
 
 The judgment of the District Court must be reversed, and unless 
 the defendant in error, within thirty days, remit from the judg- 
 ment of the Court of Common Pleas all interest included therein, 
 that judgment will also be reversed. 
 
 White, C. J., and West, J., concurred. Welch, J., dissented. 
 Day, J., did not sit in this case. 
 
 Judgment reversed. 
 
 Shinkle v. The Fiest National Bank of Eiplbt. 
 
 (22 Ohio state, 516.) 
 
 Usury — Right of National hanks to take notes and mortgages — Oounter-claim 
 for illegal interest, lehen barred. 
 
 The reservation of illegal interest by a Kational bank does not avoid the 
 principal. 
 
 Defendant being indebted to a National bank on certain promissory notes 
 made a new note and a mortgage to secure it, which were, by an agreement 
 with the bank and for its use and benefit, executed and delivered to one S. 
 without consideration from him, who also, without consideration, trans- 
 ferred them to the bank, and the old notes were thereupon delivered up and 
 canceled. Seld, (1) that there was a sufficient consideration for the note and 
 mortgage; (2) that the bank had power to take notes and mortgages in such 
 way and form for the purpose of securing its claim. 
 
 Where the two years within which an action lies to recover back twice the 
 amount of illegal interest paid to a National bank have elapsed, the right 
 to offset such interest against any claim of the bank is also barred.* 
 
 * Brown v. Second National Bank, post ; Overliolt v. First National Bank, 
 post; Lucaav. Government National £ank, post; Highyv. First National, Bank, 
 post. 
 
SXJPEEME COURT, 1873. 825 
 
 Shinkle v. The First National Bank of Kipley. 
 
 MOTION" for leave to file a petition in error to the District 
 Court of Brown county. 
 
 The original case was an action by the bank, against Shinkle and 
 wife, to recover the amount of Shinkle's promissory note for $1,400, 
 and to foreclose a mortgage executed by him and his wife to secure 
 its payment. The note and mortgage were dated August 34, 1867, 
 and were both executed and delivered to one A. J. Stires, and by 
 him assigned and transferred to the bank. 
 
 The defenses set up were, that the rate was made without con- 
 sideration; that the bank was not the owner of the note; and that 
 it included, or was given in part for, usurious interest. Issues 
 were taken on these several matters of defense, and on the trial 
 the court, to which the cause was submitted without the interven- 
 tion of a jury, made a special finding of the facts. These facts are 
 substantially as follows: 
 
 The plaintiff in error, John G. Shinkle, with "Walter L. Shinkle 
 and Barton B. Shinkle, were partners under the name of J. G. 
 Shinkle & Co. Prior to the date of the note and mortgage in suit, 
 the firm had two several loans of money from the defendant in 
 error — one for $5,000, dated July 35, 1864, and the other for 
 $6,768, dated December 30, 1865. They had also made a loan of 
 $1,600 from the Farmers' National Bank of Ripley, Ohio, dated 
 March 36, 1867. On each of these loans Michael Shinkle was 
 surety, and on each interest was charged and reserved at the rate 
 of ten per cent. These loans were continued, by renewing the 
 notes given for them from time to time, at the same rate of inter- 
 est, down to the time of executing the note and mortgage in suit. 
 The Shinkles then being unable to pay their debts, and having 
 lately, at the request of these two banks, made an assignment of 
 their property for the benefit of creditors, by agreement of all the 
 parties to these loans, an arrangement was entered into as follows: 
 
 The aggregate amount due on the three loans, including the 
 illegal interest, was divided into four several sums, in proportions 
 agreed upon and arranged between the Shinkles themselves, of 
 which portions each was to assume and pay one, in five annual 
 installments, at six per cent interest, and to secure the same by 
 mortgage on his individual property, with a proviso that, if the 
 interest should not be paid at the end of each year, the principal 
 sum should become due in two years and six months. The por- 
 tion thus assumed and agreed to be secured and paid by said John 
 104 
 
826 OHIO 
 
 Shinkle v. The First National Bank of Ripley. 
 
 G. Shinkle was $1,400, and it was for the security and payment 
 of that sum, and in fulfillment of said agreement on his part, that 
 the note and mortgage in suit were executed. The portion so 
 assumed and secured by Walter L. Shinkle was $4,400; that assumed 
 and secured by Barton B. Shinkle, $4,000; and that assumed by 
 Michael Shinkle, $4,765. 
 
 The notes and mortgages were*all executed and delivered accord- 
 ing to this agreement, and by the consent of the two banks, and 
 for their use and benefit, were executed and delivered to Stivers, 
 without any consideration moving from Stivers, and were trans-, 
 ferred by him to the defendant in error without any new considera- 
 tion, and by consent of all parties; and by like consent the old 
 notes were canceled and given up. 
 
 On this finding of facts, the court rendered a judgment in favor 
 of the defendant in error, for the amount of the note in suit, with- 
 out interest, but including the usurious interest so incorporated in 
 the note. 
 
 White S Waters, for motion. 
 Baird & Young, contra. 
 
 Welch, J. [After deciding another point.] But the plaintiffs 
 in error insist that, upon the facts found, the bank was entitled to 
 no judgment: (1) because the original notes for which, in part, 
 the note in suit was given, were void for usury; (2) because the 
 bank was not authorized by its charter to take a note and mort- 
 gage executed to a third person; and (3) because no consideration 
 was paid by Stivers for the note and mortgage, nor was any paid 
 by the bank to him. They also insist, that if the bank was enti- 
 tled to any judgment, no interest should have been allowed or 
 recovered upon the note in suit, and that the usurious interest 
 reserved upon the old notes, and incorporated into the note in suit, 
 should have been excluded. 
 
 We have already held, in the case of the First National Bank of 
 Columbus V. OarlingJiouse, decided at the present term {ante, p. 811) 
 that the reservation of illegal interest by a National bank, organ- 
 ized or acting under the act of 1864, does not render the note 
 or bill discounted void in toto. These old notes were, therefore, 
 at the time of the making and execution of the note and mortgage 
 
SUPEEME COUKT, 1873. 827 
 
 Shinkle v. The First National Bank of Ripley. 
 
 in suit, valid and subsisting securities, and their surrender was a 
 sufficient consideration to support the note and mortgage in suit. 
 And there is clearly nothing in the objection that the note and 
 mortgage were made to Stivers, and without consideration moving 
 from him, and transferred by him to the bank without any consid- 
 eration from the bank to him. This was a mere form of executing 
 the new notes and mortgages to the bank. Stivers took them, of 
 course, as mere agent or trustee for the bank. The whole thing 
 was done by the mutual agreement of all parties, and that agree- 
 ment and its execution on the part of the bank, and by Stivers, 
 was the real consideration for the notes and mortgage executed by 
 the Shinkles. 
 
 "We are equally clear in the opinion that the bank had power, by 
 its charter, to take notes and mortgages in this way and form, for 
 the purpose of securing its claims. The power to adopt reasonable 
 and necessary measures for the collection and security of debts is 
 necessarily incident to the power of banking. 
 
 As we construe section 8 of the act of Congress of 1864, it ex- 
 pressly gives all such necessary incidental powers, without limita- 
 tion as to the particular modes in which they are to be exercised. 
 The words, " by discounting promissory notes, drafts, bills of ex- 
 change," etc., contained in that section, are not to be read as lim- 
 iting the modes of exercising the incidental powers granted, but 
 as limiting and defining the kind of banking which is authorized 
 by the act. In other words, the association is authorized by sec- 
 tion 8 to carry on " banking by discounting and negotiating prom- 
 issory notes, drafts, bills of exchange," etc., and to exercise " all 
 such incidental powers as shall be necessary " for that purpose. 
 
 But did the court err in allowing the bank to recover interest 
 upon the new note, and to recover the illegal interest reserved 
 upon the old notes, or, rather, the pro rata part of such illegal 
 interest incorporated in the new notes ? We think not. We regard 
 the transaction of settlement between these parties as an absolute 
 payment of the old notes, and in no sense a renewal or continuance 
 of the indebtedness which they were given to secure. In legal 
 effect the transaction was equivalent to an actual payment of the 
 old debts in money, and the borrowing anew by each party of the 
 amount for which he so executed his new note and mortgage. 
 Viewed in this light, it is undeniable that the new note in suit, 
 not being in itself usurious, would bear interest. It would follow 
 
^8 OHIO 
 
 Allen V. The First National Bank of Xenia. 
 
 also that the Shinkles, under the provisions of section 30 of said 
 act, would have the right to recover back from the bank double 
 the amount of the usurious interest so paid. But this right to 
 recover double the amount of interest is limited by the act to two 
 years from the time the interest was paid, and unless it is exer- 
 cised within that period it is gone. In the present case the period 
 of two years had elapsed long Before the commencement of the 
 action. The right to recover the interest being barred, the right 
 to offset the amount against any claim of the bank is also barred. 
 It is unnecessary, therefore, to inquire whether a pro rata, or any 
 other part of the usurious interest so paid upon the old debts, 
 could, in case the right of recovery had not been so barred, be offset 
 against the claim of the bank in the present case. It is enough 
 to say, if the right ever existed, it has been extinguished by lapse 
 of time. Motion overruled. 
 
 AxLEK V. The Fiest Natiokal Bank op Xenia. 
 
 (23 Ohio state, 97.) 
 Loans in excess of one-tenth of capital — Usury — Mortgage to bank. 
 
 Where a National bank, organized from a State bank under the provisions of 
 the National Currency Act, at the time of its organization took from such 
 State bank, among the discounted notes, one for a larger amount than the 
 National bank was authorized to loan to a single borrower, such note is not, 
 nor is any note subsequently given in renewal thereof, to be regarded, with- 
 in the meaning of section 39 of said act, as given for money borrowed of the 
 National bank. 
 
 In an action brought by a National bank on a note given by way of renewal 
 for a balance due on a previous loan, which had been reduced by renewals 
 and payments below the maximum sum which it was authorized to loan to 
 a single borrower, it is no defense that the original loan was for a larger 
 sum than the bank was, by its charter, authorized to make. 
 
 National banks are authorized to take mortgages on real estate in good faith 
 to secure debts previously contracted. A National bank extended the time 
 of payment of indebtedness at a usurious rate of interest, and took therefor 
 notes and a mortgage made by the debtor to a third person, the notes being 
 indorsed by the latter. Held, that the usury only avoided the interest, and 
 
SUPEBME OOUET, 1873. 829 
 
 Allen V. The First National Bank of Xenia. 
 
 that to the extent the debt was valid the mortgage was a bona fide security 
 and that the bank, by becoming the owner of the notes, acquired the equity 
 in the mortgage. 
 
 EEKOE to the District Court of Green county. 
 The original suit was brought by the defendant in error against 
 the plaintifE in error, Allen, upon four promissory notes and upon 
 a mortgage executed to secure their payment. The notes were 
 dated July 13, 1866, each being for $5,000, and payable one year 
 after date to the order of 0. E. Merrick, and were signed by Allen, 
 as sole maker, and indorsed by Merrick. The mortgage was also 
 executed by Allen to Merrick, and was duly recorded. 
 
 These notes and mortgage were delivered by Allen to the bank 
 to pay the balance due on two other promissory notes then held by 
 the bank against him. In addition to the amount of such indebt- 
 edness, there was included in said notes interest at the rate of nine 
 per cent per annum from their date to maturity. 
 
 The two notes held by the bank, in satisfaction of which said 
 four notes were given, had been, at the time of giving said last-named 
 notes, some time overdue, and were as follows : One dated Decem- 
 ber 16, 1865, for $16,000, payable four months after date to the 
 order of the bank, and signed by said Allen and by Merrick, 
 McClure & Co., and Henry Neville, as makers. The other dated 
 January 30, 1866, for $10,000, payable four months after date to 
 the order of said bank, and signed by Henry Neville, said Allen, 
 and Gr. Snyder as makers. 
 
 The note of $16,000 was for the balance of a loan of $36,000, 
 which had been made to Allen by the Xenia Branch of the State 
 Bank of Ohio before that bank had been organized into the First 
 National Bank of Xenia, the present defendant in error, under 
 and by virtue of section 44 of the act of Congress known as the 
 National Currency Act, approved June 3, 1864, and by the trans- 
 fer of the assets of the said Xenia Branch of the State Bank of 
 Ohio to the defendant in error, became the property of the latter. 
 The original loan had been reduced by payments, and the time 
 extended by renewals subsequent to the transfer. 
 
 The note of $10,000 was given for the balance due on two loans 
 originally made by the defendant in error, in 1864, to Merrick, 
 McClure & Co., to secure which to the bank, Allen was one of 
 their sureties. By an arrangement between Allen and Merrick, 
 
830 OHIO 
 
 Allen Y. The First National Bank of Xenia. 
 
 McClure & Co., Allen subsequently assumed to pay $14,000 of their 
 indebtedness to the bank. To carry out his arrangement with 
 Merrick, McClure & Co., Allen gave to the bank his note, on which 
 Merrick, McClure & Co. were sureties. This note was from time 
 to time renewed and reduced by payments, until finally the note 
 aboTe named of $10,000 was given. 
 
 The paid-up capital of the defehdant in error at no time exceeded 
 $120,000. 
 
 The balance due from Allen to the defendant in error, on the 
 13th of July, 1866, the date of the four notes sued on, was $18,- 
 351.7"?, for which judgment was rendered, and on default of pay- 
 ment the mortgaged premises were ordered to be sold. 
 
 The District Court on error affirmed this judgment. The pres- 
 ent petition in error is prosecuted in this court to obtain the re- 
 versal of these judgments. 
 
 Goode S Bowman, for plaintiff in error. 
 
 B. Nesbitt, for defendant in error. 
 
 White, C. J. One of the assignments in error in this case has 
 already been decided, at the present term, adversely to the plain- 
 tiff in error. The First National Bank of Columbus v. Garling- 
 house et al, 22 0. S. 493. 
 
 In considering that case, we had before us the argument in this 
 case of the counsel of the present plaintiff in error on the question 
 then decided ; and it is sufficient now to say, that we are satisfied 
 with that decision. 
 
 2. Another ground of error assigned is, that the notes sued on 
 were taken by the defendant in error in violation of section 30 of 
 the National Currency Act of June 3, 1864. That section provides 
 as follows : 
 
 " That the total liabilities to any association of any person, or of any com- 
 pany, corporation, or firm, for money borrowed, including in the liabilities of 
 a company or firm the liabilities of the several members thereof, shall at no 
 time exceed one-tenth part of the amount of the capital stock of such associa. 
 tion actually paid in : Provided, that the bona fide bills of exchange drawn 
 against actually existing values, and the discount of commercial or business 
 paper actually owned by the person or persons, corporation or firm negotiat- 
 ing the same, shall not be considered as money borrowed." 
 
 We are not called on by the facts of this case to determine what 
 
SUPEEME OOUET, 1872, 831 
 
 Allen V. The First National Bank of Xenia. 
 
 ■would be the rights of the bank on a note or other eyidence of 
 indebtedness given for money borrowed of it in excess of the 
 amount allowed by this section ; for we do not regard the notes 
 sued on in this case as coming within the operation of the section. 
 The consideration of the four notes in controversy was the two 
 notes previously held by the bank against Allen and his sureties. 
 If these notes were valid, there could be no objection to the bank, 
 if it saw proper, extending the time of payment for the conveni- 
 ence of Allen, the principal debtor, or to its taking other security 
 in lieu of what it then held, to insure final payment. 
 
 That the two previous notes were not affected by the section of 
 the statute in question, to us seems clear. 
 
 The balance due on the note of $16,000 was for money borrowed 
 by Allen of the Xenia Branch of the State Bank of Ohio before its 
 conversion into a National bank. This indebtedness passed to and 
 became the property of the defendant in error on its organization. 
 The indebtedness, it is true, had been continued by renewals, and 
 reduced by payments, from time to time. But the consideration of 
 the note was at no time money borrowed of the defendant in error. 
 
 The consideration of the note of $10,000 was for money originally 
 borrowed of the bank by Merrick, McClure & Co. Of this indebt- 
 edness, Allen assumed to pay $14,000, and gave his note to the 
 bank therefor. This amount was for more than one-tenth of the 
 capital stock of the bank paid in. Allen's note to the bank was 
 from time to time renewed and reduced by payments, until this 
 note of $10,000 was given. 
 
 Assuming, for the purposes of this case (though not conceding 
 the correctness of the assumption), that Allen's note for $14,000 is 
 to be regarded as given for money borrowed by him of the bank, 
 and that the note for this amount would have been invalid ; yet, 
 if such were the case, it would not affect the validity of the note 
 now under consideration. No part of the consideration was illegal 
 in the sense of the maxim ex turpi causa, non oritur actio. If 
 invalid at all, it would be so simply from want of corporate capacity 
 on the part of the bank to make a contract in derogation of the 
 authority conferred by its charter, and not because of any illegal 
 element entering into the consideration of the note. First National 
 Bank of Columbus v. Oarlinghouse, 22 0. S. 502; Bissell v. The 
 Michigan Southern and Northern Indiana B. R. Co., 22 N. Y. 259; 
 Parish y. Wheeler, id. 494. 
 
832 OHIO 
 
 Allen V. The First National Bank of Xenia. 
 
 Kegarding Allen as having borrowed a larger sum of money from 
 the bank than it was authorized to loan to him, its repayment was 
 neither contra ionos mores, nor forbidden by law. It was just and 
 right for him to repay it. And having, by voluntary payments, 
 reduced his apparent indebtedness below the amount which the 
 bank was authorized to loan to a single borrower, the fact that it 
 may have before taken his obligation for a loan in excess of its 
 authority can constitute no ground for his discharge from an obli- 
 gation given to the bank for the balance, and which it was clearly 
 within the corporate capacity of the bank to take. 
 
 3. The remaining ground of error is the alleged invalidity of the 
 mortgage. 
 
 By section 28 of the National Currency Act, the defendant in 
 error is authorized to purchase and hold such real estate as may be 
 mortgaged to it in good faith, by way of security for debts pre- 
 viously contracted. 
 
 We think the mortgage in this case comes within this provision 
 of the statute. It was given to secure a debt previously contracted. 
 The debt was valid to the extent of the principal sum included in 
 the notes. The usury operated no further than to defeat the 
 interest ; and to the extent that there was a valid indebtedness, 
 the mortgage was a bona fide security. The fact that time was 
 given for payment can make no difference. 
 
 Nor do we think the objection is well taken that the mortgage 
 was made to Merrick, and not assigned by him to the bank. The 
 notes and mortgage were both made to Merrick, and the circum- 
 stances show this to have been done with his consent. The mort- 
 gage was a mere security for the payment of the notes; and both 
 notes and mortgage were delivered to the bank in pursuance of an 
 arrangement made between it and Allen for extending time on his 
 indebtedness, and for giving up the securities the bank then held. 
 By the indorsement and delivery of the notes, the bank acquired 
 the equity in the mortgage. 
 
 Judgment affirmed. 
 
SUPEEME COUKT, 1875. 833 
 
 Higley v. The First National Bank of Beverly. 
 
 Higley v. The Fiest National Bajstk of Bbveklt. 
 
 (36 Ohio state, 75.) 
 
 National hank — Uswry — Lmitatianof right to recowp or counter-claim illegal 
 
 interest. 
 
 The knowingly taking or receiving by a National bank of a rate of interest 
 greater than is allowed by law upon a loan of money does not entitle the 
 person paying the same to have it applied as a payment of so much of the 
 principal, in an action brought to recover the principal debt more than two 
 years after such payment was made. The rights and liabilities of the 
 parties in such case are prescribed in the National Bank Act, and cannot be 
 controlled by State legislation.* 
 
 MOTION" for leave to file a petition in error to the District Court 
 of Washington county. 
 
 This action was brought in the Washington County Common 
 Pleas by the First National Bank of Beverly, Ohio (a corporation 
 organized under the act of Congress passed June 3, 1864), against 
 B. S. Higley and others, on two promissory notes, each dated June 
 18, 1874 (one for $3,000, the other for $102.50), and both payable 
 at said bank, to the order of its cashier, ninety days after date. 
 The petition demanded judgment for $3,102.50, with interest 
 thereon from September 19, 1874. 
 
 The answer was in two counts, both of which set out that the 
 notes sued on were made in renewal of a series of other notes 
 given for a loan of $3,000 from said bank, July 5, 1871. The first 
 count also alleges th,e payment of usurious interest on said loan, 
 which was knowingly taken and received by said bank, as follows: 
 July 5, 1871, $77.50; October 6, 1871, $77.50; January 6, 1873, 
 $77.50; April 8, 1872, $77.50; July 10, 1873, $77.50; total $387.50. 
 
 The second count also sets out the payment of usurious interest 
 on said loan, knowingly taken and -received by said bank, in addi- 
 tion to the sums mentioned in the first count, as follows: October 
 11, 1873, $77.50; January 13, 1873, $77.50; April 13, 1873, $77.50; 
 
 *See Fanners' National Bank y. Bearing, ante, p. 117; National Sank v. 
 Davis, ante, p. 350; Duncan y. First National Bank, ante, p. 360; Wiley v. 
 Starbuck, ante, p. 436; Shinkle v. First National Bank, ante, p. 824. 
 
 105 
 
834 OHIO 
 
 Higlej V. The First National Bank of Beverly. 
 
 July 14, 18113, $77.50; October J5, 1873, $77.50; January 16, 1874, 
 $40; April 1, 1874; $60.50; June 18, 1874, $103.50; total, $593.50. 
 
 In the Common Pleas, the bank interposed a general demurrer 
 to the first count of the answer, ■vrhich was sustained. To the 
 second count the bank replied, alleging that the payment of $77.50, 
 October 11, 1873, was made " more than two years " before the 
 filing of the answer, which was October 34, 1874. There was a 
 general demurrer to this reply, which was overruled. Thereupon 
 judgment was entered against the defendants, in favor of the bank, 
 for the whole amount claimed in the petition (except interest), less 
 $1,030, a penalty in twice the amount of the usurious interest paid 
 within two years before filing the answer; to which judgment, as 
 well as to the action of the court upon the two demurrers, the 
 defendants below excepted; and afterward, at the April term 
 thereof, 1875, prosecuted their petition in error in the District 
 Court, which resulted in an affirmance of the judgment below. 
 
 This action is prosecuted to reverse the judgment rendered in 
 the District Court, and also the original judgment of the Common 
 Pleas. 
 
 Swart (& Silley, and Higley, for the motion. 
 
 .8. B. Bobinson, contra. 
 
 McIltaibte, 0. J. The main question in this case is thus stated 
 by counsel for plaintiff in error: " Does the knowingly taking and 
 receiving a rate of interest greater than is lawful, by a National 
 bank, on a loan made, or note discounted by it in this State, entitle 
 the party paying the illegal interest to have it applied as a payment 
 of so much of the principal deit, in an action drought more than two 
 years after the payment was made, to recover the principal sum ? " 
 
 This question, we think, must be answered in the negative. 
 
 By section 8 of the National Bank Act, there is conferred upon 
 National banks general powers necessary to carry on the business of 
 banking, "by discounting and negotiating promissory notes, drafts, 
 bills of exchange, and other evidences of debt," etc. By section 
 30, the rate of interest which such banks may lawfully take, receive, 
 reserve, and charge is limited; and it is also therein declared that 
 " the knowingly taking, receiving, reserving, or charging a rate of 
 interest greater than aforesaid shall be held and adjudged a forfeit- 
 
SUPEEMB COUET, 1875. 835 
 
 Higley v. The First National Bank of Beverly. 
 
 ure 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 same, or their legal representatiTss, may re- 
 coyer back, in any action of debt, twice the amount of interest thus 
 paid from the association taking or receiving the same ; provided 
 that such action is commenced within two years from the time the 
 usurious transaction occurred." Laws 1st Sess. 38th Cong. 114, 
 §30. 
 
 Without stopping to inquire how a bank may be affected in its 
 relations to the government by reason of usurious transactions, it 
 is quite certain that a customer who participates in the ofEense by 
 paying or agreeing to pay a usurious rate of interest to such bank, 
 is entitled to no relief or remedy except as provided in this sec- 
 tion. 
 
 By the first provision in that part of the section above quoted, if 
 the contract or promise to pay usurious interest be unexecuted, it 
 cannot be enforced; and in such case the debtor is released from 
 the payment, not only of the interest in excess of the lawful rate, 
 but " the entire interest which the note, bill, or other evidence of 
 debt carries with it, or which has been agreed to be paid thereon," 
 must be held and adjudged to be forfeited. By the latter provis- 
 ion, if usurious interest " has been paid," twice the amount of in- 
 terest paid may be recovered back from the association " taking or 
 reeeiving " it, provided the action therefor be commenced within 
 two years from the time the usurious transaction occurred. And 
 by construing the whole section together we are inclined to believe 
 that in case usurious interest has been "reserved" at the time of 
 the loan or discount, there is left to the bank a locus jpenitentice. 
 In such case the bank may, upon receiving payment of the debt, 
 discharge itself from all liability to the debtor by giving credit for 
 the amount of interest reserved; otherwise the debtor may insist 
 upon a reduction of his indebtedness to the amount actually loaned 
 or advanced, or he may pay the whole claim, and afterward, within 
 two years, recover back twice the amount of interest paid. 
 
 On this construction of section 30, it is clear that defendants 
 below had no right, by virtue of the National Bank Act, to recoup 
 from plaintiff's claim any sam whatever on account of usurious 
 interest paid to the bank more than two years next preceding the 
 time of filing their answer in the action below. 
 
^6 OHIO 
 
 Smith V. The Exchange Bank of Pittsburg. 
 
 Whether the rebatement made from the plaintiff's claim of twice 
 the amount of usurious interest paid thereon within two years next 
 preceding was properly allowed is a question not now before us. 
 
 It is also contended that, under the statute law of this State, if 
 not the entire interest, at least the excess above the rate allowed 
 by law, paid by the defendants below, should have been held as 
 payments made on account of the principal. 
 
 Conceding that National banks are in many respects subject to 
 the laws of the States where situate, and especially to their remedial 
 laws, it is a good answer to the above claim to say that, in relation 
 to usury and the rights and liabilities of the parties participating 
 in the offense, Congress has assumed to make provision, and the 
 provision so made must be regarded as exclusive. In this respect 
 the act of Congress prescribes the only rule, and over it the legis- 
 lative power of the State has no control. 
 
 The point is also made that a person entitled to recover back 
 twice the amount of usurious interest paid is entitled to interest 
 thereon from the date of payment until the time of recovery. On 
 this point also we differ with counsel. The amount thus recover- 
 able is in the nature of a penalty, and the statute must be strictly 
 construed. Interest on such claim, before judgment, not being 
 expressly given by the statute, cannot be allowed. 
 
 Motion overruled. 
 
 Welch, White, Eex and Gilmoee, JJ., concurred. 
 
 Smith v. The Exchange Bank of Pittsbueg. 
 
 (26 Ohio state, 141.) 
 
 Purchase of notes hy National banks — Usury — W?io entitled to forfeiture of 
 
 interest. 
 
 In the business of banking, the purchasing and discounting of paper is only 
 a mode of loaning money ; and a National bank is authorized thus to acquire 
 notes and bills which are perfect and available in the hands of the bor- 
 rower, aa well as his own paper made directly to the bank.* 
 
 Where a note or bill is an existing security in the hands of the holder, the 
 
 *See First National Bank v. Pierson, ante, p. 637, and note 
 
SUPEBME OOUET, 1875. 837 
 
 Smith V. The Exchange Bank of Pittsburg. 
 
 usury exacted by the bank in its acquisition is not available, by way of de- 
 fense, to the antecedent parties. Their rights and liabilities are not aflfected 
 by the usurious character of a transaction in which they did not partici- 
 pate. 
 The party with whom the bank had the usurious transaction is the party to 
 whom, under the National Banking Act, the forfeiture of interest is to be 
 adjudged; and who, in case the interest has been paid, is authorized to re- 
 cover back twice the amount. 
 
 MOTION for leave to file a petition in error to reverse the judg- 
 ment of the District Court of Pranklin county. 
 On the 17th day of October, 1874, the defendant in error com- 
 menced an action in the Court of Common Pleas of Franklin 
 coHnty, against Benjamin E. Smith, "William Dennison, James M. 
 McKee, Francis Collins, D. T. Thompson, A: J. Ware and G. E. 
 Griggs, upon a bill of exchange, of which the following is a copy, 
 with the indorsements thereon: 
 
 " $6,000. Columbus, Ohio, March 5, 1874. 
 
 Five months after date pay to the order of Harhaugh, Matthias & Owens, 
 six thousand dollars, at St. Nicholas National Bank, New York city, value 
 received, and charge to account of B. E. Smith. To Thompson, Griggs & Co. 
 Columbus, Ohio. Accepted : Thompson, Griggs & Co." 
 
 Indorsed: " Pay order of Exchange National Bank of Pittsburgh. Har- 
 baugh, Matthias & Owens." 
 
 The petition in the action alleges, among other facts, that the 
 bill was accepted in writing by said Thompson, Griggs & Co., on 
 the 4th day of April, 1874, and was on that day indorsed and 
 delivered for value to the defendant in error; that said Smith is 
 liable on the bill as drawer, and all the defendants are liable thereon 
 as acceptors; that on the day the bill became due no part thereof 
 was paid, although then presented to said Thompson, Griggs & Co., 
 at said St. Nicholas National Bank, in New York, for payment, and 
 protested — of all which said Smith had then due notice; that said 
 St. Nicholas National Bank is situate in the State of New York, 
 and the legal rate of interest therein is seven per centum per an- 
 num; that there is due from the defendants to the plaintiff the 
 sum of $6,000, with interest thereon, at the rate of seven per 
 centum per annum, from August 8, 1874, and $3.49 cost of pro- 
 test; and for all which the plaintiff prayed judgment. 
 
 On the 18th of November, 1874, two of the defendants —namely, 
 Smith and Dennison — filed their answer. It sets up three grounds 
 of defense: 
 
838 omo 
 
 Smith V. The Exchange Bank of PittBbarg. 
 
 1. That the plaintiff is not entitled to recover interest upon 
 the amount of said bill at the rate of seven per cent per annum from 
 August 8, 18-74, on which day the bill became payable. 
 
 2. That on the 4th of April, 1874, the plaintiff in the action 
 purchased said bill of said Harbaugh, Matthias & Owens, the payees 
 thereof; and that, by the provisions of the act of Congress to pro- 
 vide a National currency, the plaintiff had no authority to purchase 
 said bill, and therefore has no legal right to maintain the action. 
 
 3. That the plaintiff has its place of business in the city of 
 Pittsburg, Pennsylvania; that by the law of that State the rate 
 of interest is six p6r cent per annum, and by said act of Congress 
 plaintiff is only entitled to charge interest at that rate upon its 
 loans, discounts, etc. ; but that in the purchase of said bill the 
 plaintiff, as the defendants are informed and believe, and from 
 such belief aver, charged and received interest at the rate of nine 
 per cent per annum, and that such act was illegal, usurious and 
 void, and the plaintiff has no legal right to maintain said action 
 on said bill. 
 
 On the 1st of December, 1874, the plaintiff filed a demurrer to 
 each ground of defense. 
 
 Afterward — to wit, December 21, 1874 — the plaintiff moved the 
 court to hear the issues of law raised by said demurrers, out of the 
 order in which the cause had been placed on the trial docket. 
 Smith and Dennison resisted the motion, and filed a paper styled 
 an answer to the motion, in which they claimed that their legal 
 counsel had not "prepared properly for the hearing and argument 
 of said issues of law '' at the term of the court then being holden, 
 and asserted that the court could not legally order the cause to be 
 heard on the demurrers until it was regularly reached on the docket. 
 
 The motion was sustained, and the cause heard upon said demur- 
 rers, and taken under advisement by the court. 
 
 At the January term, 1875, the demurrers were sustained. There- 
 upon, said Smith not asking leave to amend his answer to the peti- 
 tion, nor to plead further, the plaintiff submitted the cause to the 
 court ; whereupon the court found that said Smith, as drawer of 
 said bill of exchange, owed to the plaintiff the sum of $6,321. 82, 
 as alleged by the plaintiff, and that the action was one in which a 
 several Judgment could properly be rendered against said Smith as 
 drawer of said bill, leaving the action to proceed against the par- 
 ties defendant charged in the petition as acceptors ; and a judg- 
 
SUPEEME COUET, 1875. 
 
 Smith V. The Exchange Bank of Pittsburg. 
 
 ment was accordingly rendered against said Smith for said sum, 
 and an order entered that the action proceed against the defend- 
 ants charged in said petition as acceptors of said bill. 
 
 Smith afterward filed a petition in error in the District Court to 
 reverse said judgment. Before the cause came on to be heard, the 
 plaintifE below, by leave of the court, remitted from said judgment 
 the sum of 132, as of the date of rendition thereof, being the 
 amount of interest included therein over and above the rate of six 
 per cent per annum, computed on the amount of said bill of 
 exchange after its maturity, and leaving due on said judgment, at 
 the rendition thereof, the sum of 16,189.82. And thereupon the 
 cause was heard, and the court adjudged that said judgment, de- 
 ducting said sum of $32 remitted as aforesaid, be aflBrmed, but at 
 the costs of the defendant in error. 
 
 The entry of the remittitur of all interest over and above six 
 per centum per annum, from the maturity of the bill to the rendi- 
 tion of the judgment, put an end to the question made by the 
 demurrer to the first defense. 
 
 Leave is now asked to file a petition in error in this court, to re- 
 verse the judgment of afiQrmance of the District Court, and also 
 the judgment of the Court of Common Pleas. 
 
 L. English and /. W. Baldwin, for the motion. 
 
 Hfirrison & Olds, contra. 
 
 White, J. We find no error in this case. 
 
 We will briefly consider the several questions raised in argument. 
 
 [The court here considered a question of practice.] 
 
 The objections to the action of the court in sustaining the de- 
 murrers are in substance : 
 
 1. That the bank, the plaintiff below, had not capacity to acquire 
 title to the bill sued on. 
 
 '2. That if it had such capacity, the usurious transaction by 
 which it acquired the bill from the holders, Harbaugh, Matthias & 
 Owens, disables it from collecting any interest from the antecedent 
 parties. 
 
 As to the first of these objections, the answer in the first defense 
 sets up that the bank purchased the bill of the holders, the payees.* 
 It does not state that the purchase was made at a usurious rate of 
 discount ; but it avers that under the act of Congress to provide a 
 
840 OHIO 
 
 Smith V. The Exchange Bank of Pittsburg. 
 
 National currency, under which the act was incorporated, it had 
 no authority to purchase the bill. 
 
 It seems to be the idea of counsel making the objection, that 
 negotiable paper, perfect and available in the hands of the holder, 
 is not the subject of purchase by a National bank at any rate of 
 discount. This yiew, we think, entirely erroneous. We see noth- 
 ing in the act of Congress nor in reason why a borrower may not 
 obtain the discount by a bank of the existing notes and bills of 
 others of which he is a holder, as well as of his own paper, made 
 directly to the bank. 
 
 It is true that, as between natural persons, the purchase of such 
 paper, when made in good faith, and not as a disguise for a loan, 
 is not subject to the usury laws ; but it is otherwise as to a bank. 
 In the business of banking, the purchasing and discounting of 
 paper is only " a mode of loaning money." Niagara County Bank 
 T. Baker et al., 15 Ohio St. 69 ; Flechner v. Tlie Bank of the United 
 States, 8 Wheat. 333. 
 
 As to the second objection — namely, that the usury exacted by 
 the bank from Harbaugh, Matthias & Owens, in the acquisition of 
 the paper, disables it from recovering any interest from the ante- 
 cedent parties. 
 
 The general rule is, that where a bill or note is valid, as between 
 the drawer or maker and the payee, so that the latter can main- 
 tain an action upon it against the former, it is valid in the hands 
 of an indorsee, who has discounted it at a usurious rate of inter- 
 est, and he may recover the full amount of the bill or note against 
 the maker or acceptor. Munn v. Commission Gompany, 15 Johns. 
 44 
 
 The question is, whether this principle has been modified by the 
 act of Congress now in question. 
 
 Section 8 of the act defines the powers of The National banks. 
 It declares, among other things, that they shall be authorized "to 
 carry on the business of banking, by discounting and negotiating 
 promissory notes, drafts, bills of exchange, and other evidences of 
 debt." 
 
 Section 30 prescribes limitations upon these powers, and imposes 
 |)enalties upon the banks for the transgression of such limitations. 
 
 The section declares " that every association may take, receive, 
 reserve and charge on any loan or discount made, or upon any note. 
 
SUPEEME COUET, 1875. 841 
 
 Smith V. The Exchange Bank of Pittsburg. 
 
 bill of exchange, or other evidence of debt, interest at the rate 
 allowed by the State or Territory -where the bank is located, and no 
 more," etc. It also declares that " the knowingly taking, receiv- 
 ing, or reserving, or charging a rate greater than aforesaid, shall 
 be held and adjudged 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." The section also contains a pro- 
 vision, that in case a greater rate of interest has been paid, the 
 person or persons paying the same may recover back twice the 
 amount of the interest thus paid. 
 
 Now, manifestly, this section has reference to the agreement or 
 transaction between the bank and its customer. It is the party 
 with whom the bank had the usurious transaction to whom the 
 forfeiture of the entire interest is to be adjudged, and who, in case 
 it has been paid, is authorized to recover back twice the amount. 
 The rights and liabilities of antecedent parties cannot be affected 
 by the usurious character of a transaction in which they did not 
 participate. 
 
 In the present case, if the indorsers to the bank, Harbaugh, 
 Matthias & Owens, should take up the bill, under their indorse- 
 ment, their right to recover the full amount from the drawer and 
 the acceptors would be unaffected by the fact as to whether they 
 had or had not asserted against the bank their rights growing out 
 of the usurious transactions. 
 
 The remaining objection is to the action of the court in render- 
 ing a separate judgment against the plaintiff in error, and contin- 
 uing the case as to the other defendants. 
 
 The liability of the drawer of a bill of exchange is a several 
 liability, and at common law was required to be enforced by a sepa- 
 rate action. The Code, by allowing all the parties to the bill to be 
 joined in one action, does not require a joint judgment against all. 
 Section 371 expressly provides that, " in an action against several 
 defendants, the court may, in its discretion, render judgment 
 against one or more of them, leaving the action to proceed against 
 the others, whenever a several judgment may be proper." Where a 
 separate action might have been maintained against a party, a 
 separate judgment under this provision of the Code is certainly 
 proper. 
 
 What effect the fact that the drawer is also one of the firm who 
 106 
 
842 PENNSYLVANIA 
 
 The Venango National Bank v. Taylor. 
 
 accepted the bill may have on the right of the plaintifE to take a 
 future judgment against the acceptors, we are not called on now to 
 consider. Leave refused. 
 
 McIlvaisb, 0. J., Welch, Eex and Gilmoeb, JJ., concurred. 
 
 The Venah-go National Ban's v. Tatlob. 
 
 ( 66 FenDsylvanla State, 11.) 
 
 Deposits in National bank — Offset of, against debt due bank. 
 
 A National bank having become insolvent, a depositor therein assigned his 
 deposit to a debtor of the bank. Held, that the latter could not ofEset such 
 deposit against his debt in an action thereon.* 
 
 THE following facts appeared in a case stated, agreed upon by 
 the parties: 
 
 On the 14th of April, 1865, Taylor gaTe to the bank his bond 
 for $65,000, with warrant of attorney to confess judgment, and at 
 the same time deposited with the bank $31,000 of United States 
 bonds as collateral security for the bond. The bank sold the bonds 
 in June, 1865, with the understanding that their proceeds were to 
 be credited on Taylor's bond. These proceeds, with interest, 
 amounted to $33,000, but the credit was not given. 
 
 One John Eynd had to his credit on deposit in the bank, on the 
 Zlfh of March, 1866, $43,743.35. On that day the bank closed its 
 doors and suspended payment, being then and ever since insolvent; 
 and on the same day suit was brought by Kynd to the use of 
 Taylor to recover his deposit. The writ was served the same day. 
 On the 38th of March, Eynd assigned his deposit to Taylor, and 
 afterward, on the same day, the bank entered judgment against 
 Taylor on his above-mentioned bond. 
 
 On the 33d of April, judgment was entered for the plaintiff in 
 the suit Eynd to the use of Taylor against the bank, for want of an 
 afBdavit of defense; the judgment, on the 12th of May, was liqui- 
 dated at $44,071.33. 
 
 ♦See Piatt v. Bentley, ante, p. 758. 
 
SUPEEME COUET, 1867. 843 
 
 The Venango National Bank v. Taylor. 
 
 On the 1st of May, the judgment of the bank against Taylor was 
 opened, and Taylor let into a defense on the above-stated facts. 
 On the 8th of May a receiver was appointed, who has the bank in 
 charge. 
 
 " On these facts the defendant claims a credit of, first, of the 
 $32,000, and next by way of set-off of so much of the Eynd judg- 
 ment as will satisfy the residue of the bank judgment, and if the 
 court is of the opinion that he is entitled to it, judgment to be 
 entered in his favor; or, if he is entitled to a credit for the $32,000, 
 but not to a set-off of the Eynd judgment, then judgment to be 
 entered for the bank for $35,024; and if he is not entitled to a credit 
 of either, judgment to be entered for the plaintiff for $65,000, with 
 interest from April 14th, 1865." 
 
 The court (GtOrdon-, A. J.) entered judgment generally for the 
 defendant, and this is the error assigned in the Supreme Court. 
 
 D. Derrichson, for plaintiff. 
 
 Taylor <& Mackey and A. H. M. Miller, for defendant. 
 
 Steokg, J. The only question in this case is, whether the 
 defendant is entitled to use, as a defense to his bond, the de- 
 posit assigned to him by John Eynd. The bank became insolv- 
 ent on the 27th day of March, 1866. On that day it closed its 
 doors and suspended payment, and on the 8th of May next follow- 
 ing a receiver was appointed by the Comptroller of the Currency in 
 accordance with the provisions of the act of Congress of June 3d 
 1864. The receiver still has the assets of the bank in charge. On 
 the 28th of March, 1866, Eynd had to his credit for deposits made 
 in the bank the sum of 143,743.25, and on that day he assigned 
 the deposit to Taylor, the defendant. It is this deposit, thus 
 assigned, for which judgment was subsequently recovered, that 
 the defendant claims a right to set off against a claim of the bank 
 against him on his bond for $65,000, given April 14th, 1865. 
 
 It is plain that, if he can use his equitable title to the deposit 
 made by Eynd as a defense against the legal claim of the bank, a 
 preference of one creditor of the bank over others is wrought out 
 and secured after the act of insolvency. 
 
 But this is the very thing which, in our opinion, the act of 
 Congress aimed to prevent. The bank is a creature of the act. 
 
844 PENNSYLVAOTA 
 
 The Venango National Bank v. Taylor. 
 
 dependent upon it for all its powers, and controlled by all the 
 restrictions which the act imposes. And creditors dealing with 
 the bank can obtain only such rights as it is authorized to give. 
 
 In seeking for the meaning of the act of Congress we are to note 
 its spirit as well as its letter, and its general intent is not difficult 
 to discover. 
 
 It provides a system for closing the affairs of an insolvent bank, 
 the clear design of which is to place all creditors, except the gov- 
 ernment and note-holders, on an equal footing. Its purpose is to 
 disallow preference of one creditor over another, and it denies the 
 power to make such preference at any time after an act of insolv- 
 ency. The 50th section provides that after such an act a receiver 
 may be appointed who shall take possession of the assets of every 
 description, collect all debts, sell all real and personal property, 
 and pay over all money so made into the treasury of the United 
 States, subject to the order of the Comptroller of the Currency. 
 
 The section then provides for a ratable division of the money 
 among the creditors after paying the government for the redemp- 
 tion of the circulating notes outstanding. The 52d section enacts 
 " that all transfers of the notes, bonds, bills of exchange and other 
 evidence of debt owing to any association ' (bank),' or of deposit 
 to its credit; all assignments of mortgages, securities on real estate, 
 or of judgments or decrees in its favor; all deposits of money, 
 bullion or other valuable things for its use, or for the use of any 
 of its shareholders or creditors; and all payments of money to 
 either, made after the commission of an act of insolvency, or in 
 contemplation thereof, with a view to prevent the application of 
 its assets in the manner prescribed by this act (that is, ratably), 
 or with the view to the preference of one creditor to another, ex- 
 cept in payment of its circulating notes, shall be utterly null and 
 void." 
 
 This section is too plain to be misunderstood; read in connec- 
 tion with the 50th section it admits of no doubt that the purpose 
 of Congress was to secure all the assets of the bank existing at the 
 time of its act of insolvency for ratable distribution. 
 
 "We cannot assent to the argument that it was intended for no 
 more than to avoid all acts of the bank itself, all voluntary trans- 
 fers by it of its notes, bonds, deposits, etc., with a view to giving 
 preferences. Its language is general, as applicable to legal as to 
 voluntary transfers. 
 
SUPEBME COUET, 1867. 845 
 
 The Venango National Bank v. Taylor. 
 
 But if the deposit made by John Eynd can be set off against the 
 bond debt due by Taylor to the bank, what is it but a transfer of 
 the bond debt to the satisfaction of a creditor, thus giving him a 
 preference ? It is not contended that the bank was not prohibited 
 from doing this, but it is insisted the transfer maybe accomplished 
 by an adversary proceeding at the suit of Eynd for tlie use of Tay- 
 lor. It is not denied that Eynd, had he made no assignment of his 
 claim, could not have obtained payment of the debt due him by 
 calling upon the bank after the 27th day of March, 1866, when its 
 doors were closed, and when it suspended payments. The bank, 
 it is conceded, was not at liberty to transfer to him either their 
 claim against Taylor or any of their assets, or to pay him any 
 money; and if so, can the thing be secured by a hostile proceed- 
 ing ? Will the law compel a payment or a transfer which the law 
 prohibits a debtor from making ? A bank after an act of insolv- 
 ency has no more right to pay a judgment or an execution than 
 it has to pay a debt before it has passed into Judgment. But if 
 Eynd could in no way have obtained payment of the deposit due 
 him after the 37th day of March, 1866, except through the Comp- 
 troller of the Currency, how could he give to Taylor, by his assign- 
 ment of the deposit, any right which he did not himself possess ? 
 In this case the assignment was only an equitable one. It did 
 not pass the legal ownership. Taylor had but an equity, and 
 strictly must have gone into equity to obtain any benefit from the 
 transfer. Yet had a chancellor been called upon to enforce the 
 equity, it is plain he would not have enforced it at the expense of 
 other creditors who had a right to a ratable proportion of the assets 
 of the insolvent banking association. Much less would he have 
 compelled the bank to do what the act of Congress had denied it 
 power to do. It may be conceded, as was insisted in the argument, 
 that there is nothing in the act of Congress which declares that the 
 assets of a bank vest in the receiver immediately from and after an 
 act of insolvency, or that the appointment of the receiver relates 
 back to such act. Indeed at no time does the property in those 
 assets vest in the receiver. The difficulty of the defendant does 
 not lie here, but it is found in the prohibition of any transfer or 
 disposition of the assets until after a receiver has been appointed, 
 coupled with the manifest purpose for which the prohibition was 
 made. The bank's property is placed by the act under the immedi- 
 ate potential control of the government. It is noticeable that the 
 
846 PENNSYLVANIA 
 
 The Venango National Bank v. Taylor. 
 
 first object sought to be secured was the payment of the circulating 
 notes. The money obtained by the receiver, after being paid into 
 the treasury, is to be applied first to satisfying the government for 
 the redemption of such notes, and next to payment of creditors of 
 the bank, among whom, of course, are included depositors rat- 
 ably. But this primary object would be defeated if depositors can 
 transfer their deposits to the debtor of the bank, and enable them 
 by set-off to relinquish the debts. By such process the depositors 
 would secure payment of their claims in preference to the note- 
 holders or the government, and ratable distribution among other 
 creditors than the note-holders be frustrated. It need hardly be 
 said that no construction can be given to the act of Congress so 
 directly at war with its spirit. 
 
 The defendant has called our attention to Miller v. Black, 1 
 Barr. 430. There an attachment execution had been laid upon a 
 debtor's property after he had made a voluntary application for the 
 benefit of the Bankrupt Act of 1843, but before he was declared a 
 bankrupt; and it was held that the lien of the attachment was 
 preserved by the act, and that it was good against the assignee in 
 bankruptcy. 
 
 The case has but a slight resemblance to the present. It is true, 
 the act contained a provision that "all payments, securities, con- 
 veyances or transfers of property, or agreements made or given 
 subsequently to the time when the act was to come into operation, 
 by any bankrupt in contemplation of bankruptcy, and for the pur- 
 pose of giving any creditor, indorser or surety, or other person, any 
 preference or priority over the general creditors of such bankrupt, 
 should be deemed utterly void and a fraud upon the act." This 
 was aimed expressly against fraudulent acts of the bankrupt, 
 alone. And the act also contained a provision preserving liens on 
 real and personal property valid by the laws of the State, and not 
 inconsistent with the provisions of its 3d and 5th sections. More- 
 over, it enacted that the property of the bankrupt should be divested 
 and become vested in the assignee from the time of the decree in 
 bankruptcy. The assignee was clothed with such rights as might 
 have been exercised by the bankrupt "at the time of his bankruptcy 
 declared." The ruling of the court appears to have rested upon 
 the clause which preserved liens on the debtor's property. Besides it 
 was a case of a voluntary petition. The petitioner might have 
 withdrawn his application at any time before the decree, and the 
 
SUPEEMB COUET, 1871. 847 
 
 Kelsey v. National Bank of Crawford. 
 
 fact that he could have discontinued his proceeding was given as 
 another reason why an execution against his property should be 
 held valid. 
 
 It is by no means certain that had he been proceeded against by 
 a creditor with a view to having him declared a bankrupt, the same, 
 ruling would have been made. However this may be, the provis- 
 ions of the Bankrupt Act were so unlike those of the Banking Act 
 that the decision of Miller v. Black gives us no assistance in the 
 construction of the latter. 
 
 We hold, then, that there was error in allowing the deposit made 
 by Eynd to be used as a set-ofE against the claim of the Bank v. 
 Taylor. The defendant was entitled to a credit for the $33,000, 
 realized from the sale of the United States bonds, for there had 
 been an understanding that the proceeds of such sale should be ap- 
 plied on the debt due by him, but he was entitled to no other 
 credit. 
 
 The judgment is reversed, and judgment is entered for the plain- 
 tiff for the sum of $35,034, according to the case stated. 
 
 Kelset t. Watiokal Bank of Ceawfoed. 
 
 (69 Pennsylvania State, 4P6.) 
 
 BespormbUity of National bank for liabilities of State bank. 
 
 A State bank was robbed and a reward was offered by the cashier for the 
 detection of the thieves. The bank afterward became a National bank, and 
 suit was brought against it as such for the reward. Held, that the action 
 was properly brought, as the National bank was responsible for all the lia- 
 bilities of the State bank. 
 
 ACTION to recover a reward offered by the cashier of the Bank 
 of Crawford county for the detection of the thieves who had 
 robbed said bank. The plaintiff detected the thief. Afterward the 
 bank became a National bank. There was evidence tending to 
 show that the directors ratified the act of the cashier in offering 
 the reward. 
 The plaintiff was nonsuited. 
 
848 PENNSYLVANIA 
 
 Kelsey v. National Bank of Crawford. 
 
 D. M. Farrelly S A. B. Richmond, for plaintifE in error. 
 P. G. S D. Derrickson, for defendant in error. 
 
 Williams, J. [After deciding that whether or not the cashier 
 had power ex officio to offer the reward, the acquiescence of the 
 directors amounted to a ratification.] But it is contended that the 
 action will not lie, because it was brought against the wrong cor- 
 poration. It was the State bank that was robbed and offered the 
 reward, and the National bank is the corporation sued. But 
 under the provisions of the act of the 23d of August, 1864 (P. L. 
 977), " enabling the banks of this Commonwealth to become asso- 
 ciations for the purpose of banking, under the laws of the United 
 States," upon the surrender of its charter all the assets of the.State 
 bank were immediately, by act of law, without any conveyenoe or 
 transfer, Tested in the National bank, and all its liabilities and 
 obligations were devolved upon it. Why, then, should not the rem- 
 edy for the liabilities incurred by the former be by action against the 
 latter ? It was admitted on the argument that the National bank 
 is bound to discharge and satisfy all the obligations and liabilities 
 of the State bank, but it was insisted that under the proviso of 
 the enabling act, continuing the State bank a body corporate for 
 the term of three years after the surrender of its charter, for the 
 purpose of prosecuting and defending suits by and against it, that 
 suits to enforce the payment of its obligations and liabilities must 
 be brought against the State, and not against the National bank. 
 Undoubtedly an action will lie against the State bank for any of 
 its liabilities, if brought within the time limited in the proviso; 
 but it does not follow that it will not lie, if brought against the 
 National bank. Why compel the plaintiff to bring an action 
 against the State bank when it has no assets to meet and satisfy 
 the demand? Why not avoid circuity of action by bringing suit 
 in the first instance against the corporation invested by act of law 
 with all the assets, and made responsible for all the engagem ents 
 of the State bank ? Why bring two suits when one will suflSce ? 
 We discover no provision in the act making it the duty of the 
 plaintiff to proceed in the first instance against the State bank, 
 and are of the opinion that the action is rightly brought against 
 the National bank. 
 
 But it is objected that the declaration is defective in not setting 
 
SUPEBME COUET, 1871. 849 
 
 Brown v. The Second National Bank of Crawford. 
 
 out the facts, with the necessary averments, on which the liability 
 of the. corporation sued arises. And for this reason it is urged 
 that the nonsuit was properly entered. It is admitted that the 
 declaration is defective, but this objection was not made in the 
 court below as one of the grounds for the nonsuit. If it had 
 been, the plaintifi might have amended his declaration, and there- 
 fore we will allow him to amend nunc pro tunc, and treat the case 
 as if the amendment had been made in the court below when the 
 motion for the nonsuit was entered. 
 
 It follows from what we have said that the plaintiff is entitled to 
 recover if the directors had notice of the ofEer, and did not 
 promptly disavow it. 
 
 Judgment reversed and a procedendo awarded. 
 
 Beown v. The Second National Bank of Beie. 
 
 (72 Pennsylvania State, 209.) 
 Usury — Forfeiture of interest — Actions for penalty — Limitation of. 
 
 Under the 30th section of the National Banking Act, the remedy of the " for- 
 feiture of the entire interest " for the exacting of unlawful interest can only 
 he had by way of defense to an action on the note, or to recover the loan, 
 but no action lies for it. 
 
 Where usury has been actually paid to and received by a bank, the only 
 remedy is an action for the penalty of " twice the amount of interest thus 
 paid." 
 
 The limitation of two years within which an action for the penalty must be 
 brought commences to run from the actual payment of the usury * 
 
 ACTION of assumpsit by the Second National Bank of Brie 
 against the Executor of Brown, deceased, to recover the 
 amount of three promissory notes made by one Thompson, payable 
 to the order of said Brown, and by said Brown indorsed. The 
 plaintiff discounted the notes for said Thompson. It appeared at 
 the trial that Brown had an assumpsit with the bank, whereby the 
 latter had discounted a number of notes for him at nine per cent 
 
 * See Overholt v. First National Bank, post, explaining this case; see, also, 
 Lucas V. Government National Bank, post. 
 
 107 
 
850 PENNSYLVANIA 
 
 Brown v. The Second National Bank of Erie. 
 
 discount; and that the notes in suit were in renewal of other notes, 
 and were discounted at the same rate. The amount of the notes 
 in suit was 133,000, and each was for sixty days. 
 
 The lawful rate of interest in Pennsylvania, where the bank was 
 located, was six per cent. 
 
 The excess of legal interest retained by discount on the notes in 
 suit was $133. The legal questions inyolved in the case were thus 
 stated in the charge of JoHsrsou', P. J., viz. : 
 
 The United States Banking Law, under which the plaintifl bank 
 was organized, forbids the taking of any more interest for the loan 
 of money than is allowed by the State in which the particular bank 
 is located. The plaintiff being located in Pennsylvania could, 
 therefore, legally charge only six per cent per annum for money 
 lent to its customers. 
 
 " If this prohibition of the act be violated by the bank a penalty 
 is imposed. It is this : 
 
 " 1. If the contract to take. a greater interest than six per cent 
 be executory the whole interest for the period of discount is for- 
 feited, and the bank can only recover the principal from and after 
 the maturity of the note or contract. 
 
 " 3. If the usurious interest has actually been paid, the borrower 
 may sue and recover twice the amount so paid, provided he sues 
 for it within two years from the time of payment. 
 
 " In neither case does the statute declare the real debt or money 
 borrowed forfeited, or deny the right of the bank to recover it. The 
 act of Congress having prescribed the penalty for its violation in 
 this respect, no other or different one can be imposed by the court, 
 nor any other consequences declared than such as its framers have 
 ordained. 
 
 "The proof shows, without denial or contradiction, that in 
 1864-5-6, V. M. Thompson, whose indorser the defendant's testa- 
 tor was, had a continuous line of discounts at the Second National 
 Bank of Erie, and was charged nine per cent per annum, besides 
 exchange. His notes and bills were all made payable at New York, 
 where some of them were paid by him and other parties. Others 
 were paid by renewals or new discounts at the defendant bank, 
 and the usual exchange between this city and New York charged. 
 
 " Prom this state of undisputed facts the defendants deduce 
 several inferences, and ask us to declare to you as the law: 
 
 "1. That the plaintiff having discounted a long series of notes 
 
SUPEEME OOUET, 1871. §51 
 
 Brown v. The Second National Bank of Erie. 
 
 for V. M. Thompson, of which those in suit are the culmination, 
 in -violation of the express words and against the policy of its funda- 
 mental law, it cannot recover at all any part of its claim. 
 
 "2. That having charged and received unlawful interest on 
 money, notes and bills preceding those in suit, it thereby forfeited 
 and became liable to pay to V. M. Thompson double the amount of 
 interest so paid, and that he has a right to defalk those amounts 
 and have the same credited on the notes now in suit against his 
 surety. 
 
 "That if he is not entitled to this credit he should, at least, 
 have credit for the excess of interest or discount that he has paid 
 from time to time as of the date of the notes on which this suit is 
 brought. 
 
 " 3. That he is entitled to an abatement of the interest on the 
 notes in suit because they were discounted at a higher rate of 
 interest than six per cent per annum. 
 
 " I believe these embrace substantially all the legal propositions 
 presented by the defendant's counsel, pertinent to the issues raised 
 by the facts in the case. 
 
 " From the first and second of these propositions we dissent. 
 
 " The act of Congress is the law of these National banks. It 
 prescribes no such penalty as a forfeiture of the debt for a viola- 
 tion of its restriction as to the amount of interest to be charged. 
 It does impose a penalty, and the only duty of the courts is to in- 
 flict it in the mode prescribed. For having taken usurious interest 
 on previous loans the bank might have been sued within two years 
 and double the amount so received recovered by the party injured. 
 This was not done, and therefore all redress for that infraction of 
 the law is gone. It is enough to say of that claim that it is out- 
 lawed — without deciding whether unsued for, it could have been 
 claimed as a set-off even within the two years after the penalty 
 had been incurred. 
 
 " We therefore charge you that the plaintiff is not barred from 
 its recovery upon the notes in suit, by reason of its having taken 
 usurious interest upon them, or on any previous notes or drafts 
 discounted by it from the claim. 
 
 " Nor is the plaintiff entitled to set off or claim credit for double 
 the amount of interest paid by Thompson on notes or bills previ- 
 ously discounted by the defendant for him. 
 
 "To the third proposition we agree, and say to you that for any 
 
852 PENNSYLVANIA 
 
 Brown v. The Second National Bank of Erie. 
 
 excess of interest taken by the plaintifE in the discount of notes or 
 drafts previous to those in suit for Thompson in the regular course 
 of business, he is entitled to a credit, and the defendants may claim 
 it as a set-off in this case. Such amounts being received in viola- 
 tion of law cannot be retained, and neither time nor contract will 
 sanctify them or legalize the defendant's possession as against the 
 rightful owner. • 
 
 " "We also approve the fourth proposition, that the defendants 
 are entitled to an abatement of all interest or discount charged for 
 the loan of money upon the notes in suit prior to their maturity. 
 This is conceded. This amount, Mr. Curry states, was 8355, which 
 the defendants are entitled to have credited on the notes and 
 deducted therefrom at their respective dates." 
 
 The verdict was for the plaintiff for $23,849.50. 
 
 The defendants removed the record to the Supreme Court, by 
 writ of error, and there assigned for error the rulings of the court 
 in the charge. 
 
 /. R. Thompson and C. B. Curtis (with whom was B. Grant) ^ 
 for plaintiff in error. 
 
 /. G. Marshall and J. H. Walker (with whom was F. F. Mar- 
 shall), for defendant in error. 
 
 Shaeswood, J. A close examination of the words of the act 
 of Congress of June 3d, 1864, under which the defendants in error 
 were organized and incorporated as a National bank, will show, 
 we think, that it was intended to draw a distinction between the 
 case of the reservation of a discount at an unlawful rate of interest 
 and the actual consummation of the usury by the receipt of it by 
 the payment of the note or loan when due. It is declared by the 
 30th section that " the knowingly receiving, reserving or charging 
 a rate of interest greater than aforesaid shall be held and adjudged 
 a forfeiture of the entire interest which the note, bill or other 
 evidence carries with it, or which was agreed to be paid thereon." 
 This has evident reference to the enforcement of the contract by 
 judicial process, in which case it is provided that it shall be held 
 and adjudged that the bank shall forfeit the entire interest — that 
 is, shall recover only the sum actually loaned or advanced without 
 any interest at all. There is a marked difference in the language 
 of the clause which follows and which makes provision for the case 
 
SUPREME COURT, 1871. §53 
 
 Brown v. The Second National Bank of Erie. 
 
 where the usury had been consummated by the actual receipt by the 
 bank of the usury. "And in case a greater rate of interest has 
 been paid, the person or persons paying the same, or their legal 
 representatives, may recover back in any action of debt twice the 
 amount of interest thus paid from the association taking or receiv- 
 ing the same : Provided, that such action is commenced within 
 two years from the time the usurious transaction occurred." Upon 
 any other construction it would be difficult to make the different 
 clauses of the section consistent. For if on payment simple inter- 
 est is forfeited, why not also provide for its recovery back by action 
 as well as for the penalty of double the amount ? Nothing would 
 have been easier than to have expressed the intention chat the 
 entire interest should be recovered back in all cases, but double 
 the amount only by an action instituted within two years. The 
 maxim well applies, Expressio unius est exclusio alterius. If there 
 were no special limitations in the act, and it has no necessary con- 
 nection with the other clauses, no consistent construction could 
 be put upon the language of the section taken altogether, except 
 by holding that no action can be maintained for the simple interest, 
 neither before nor after it is paid; but as to that, the remedy is by 
 defense to the action on the note or loan, in which case the entire 
 interest " shall be held and adjudged " to be forfeited. There may 
 be a good reason for this if it was the intention of Congress to give 
 the bank a locus pcenitenticB so far as the penalty of double the 
 amount was concerned, and allow them to save it by not actually 
 taking it upon the maturity and payment of the debt. This 
 accords with the general current of the decisions upon the construc- 
 tion of the usury laws whenever the contract is not itself declared 
 to be void by the statutes. It is actual payment on the foot of the 
 usurious contract, either in part or in whole, which consummates 
 the usury, and from which the limitation of the action for the 
 penalty commences to run, but lawful interest may be recovered in 
 an action for the principal. WycoffY. Longhead, 2 Ball. 92; Turner 
 Y. Calvert, 13 S. & R. 46; Musgrave v. Gibbs, 1 Dall. 316; Kirk- 
 patrickY. Houston, 4 W. & S. 115; Lamb v. Lindsey, id, 44; Thomas 
 v. Shoemaker, 6 W. & S. 179; Oyster v. Longnecker, 4 Harris, 269; 
 Craig y. Pleiss, 2 Casey, 271. These views dispose of the only 
 assignments of error which we consider it necessary to discuss. 
 
 Judgment affirmed. 
 
854 PENNSYLVANIA' 
 
 Fowler v. Scully. 
 
 EowLEE V. Scully. 
 
 (72 Pennsylvania State, 456.) 
 
 National bank — V^idity of mortgage to. 
 
 P. gave to a National bank a mortgage to secure notes thereafter to be dis- 
 counted for him. Hdd, that under the National Currency Act of June 3, 
 1864, the mortgage was void, and could not be enforced against the assignee 
 of F. for benefit of creditors of F.* 
 
 SCIRE FACIAS issued by John D. Scully in trust for the First 
 National Bank of Pittsburg against Silas S. Fowler and 
 William Vankirk, to enforce the payment of a mortgage given by 
 Fo"wler to Scully in trust for the bank. Vankirk was the assignee 
 of Fowler, for benefit of his creditors. The object of the mort- 
 gage is thus recited in the instrument: "Whereas, the said bank 
 hath agreed to discount for said Fowler an amount in the aggregate 
 not exceeding $100,000, such negotiable business paper as he shall 
 ofEer for that purpose, consisting chiefly of bills of exchange, or 
 drafts drawn by him on his customers on account of work, etc. , 
 done, and orders filled by him for them from time to time in the 
 course of his business; and, whereas, said Fowler wishes to avoid 
 the necessity of procuring the additional indorsement to said 
 paper by a third party.'" * * * * * * * 
 The defense was by Vankirk to the effect that the mortgage was 
 void under the act of Congress relative to banking companies, of 
 June 3, 1864. The court ordered judgment for plaintiff. The 
 defendant brought error to this court. 
 
 Q. Shir as, Jr., and Hopkins & Lazar, for plaintiff in error. 
 
 M. W. Acheson, for defendant in error. 
 
 Agnew, J. The First National Bank of Pittsburg asked the 
 District Court to enforce by sctVe/aa'as the payment of a mortgage 
 for future advances. The defendant, the owner of the mortgaged 
 land, asserts that the mortgage is forbidden by the act of Congress> 
 
 * See WooA v. People's National Bank, post, and note. 
 
SUPEEME COUET, 1873. 855 
 
 Fowler v. Scully. 
 
 which confers upon the bank its charter and all its powers. The 
 simple question is-: Is the mortgage valid or Toid ; and if void, 
 will the law enforce it? In deciding this question, we must be 
 guided by the Federal laws and Federal precedents, for the subject 
 is one of Federal origin and Federal control. The plaintiff is a cor- 
 poration created and governed by the act of Congress, approved 
 the 3d of June, 1864, commonly called the National Bank Act. 
 What is the Federal rule to be applied to such a corporation ? In 
 the Banh of U. S. v. Dandridge, 13 Wheat. 64, Justice Stobt lays 
 down this rule : "Whatever may be the implied powers of aggre- 
 gate corporations by the common law, and the modes by which 
 these powers are to be carried into operation, corporations created 
 by statute must depend, both for their powers and the mode of ex- 
 ercising them, upon the construction of the statute itself." For 
 this he cites the following language of Chief Justice Marshall, in 
 Head v. Prov. Ins. Co., 4 Cranch, 127 : " Without ascribing to 
 this body, which in its corporate capacity is the mere creature of 
 the act to which it owes its existence, all the qualities and disabili- 
 ties annexed by the common law to ancient institutions of this 
 sort, it may be correctly said to be precisely ivhat the incorporating 
 act has made it; to derive all its powers from that act and to be 
 capable of exerting its faculties only in the manner the act author- 
 izes." These propositions are repeated by himself in Dartmouth 
 College v. Woodward, 4 Wheat. 636, and by Taney, C. J., in Banh 
 of Augusta v. Earle, 13 Pet. 587, and Penrise v. GJiesapeahe & Del- 
 aware Canal Co., 9 How. 184. In our own State, the same doc- 
 trine is recognized in the case of a Kational bank. Justice Steong 
 said : " The bank is a creature of the act, dependent on it for all 
 its powers, and controlled by all the restrictions which the act im- 
 poses. " Venango National Banh v. Taylor, 6 P. F. Smith, 14. 
 
 This being the settled rule of interpretation, the question is : 
 " Does the act of Congress authorize or permit a National bank to 
 take a mortgage of lands, to secure the payment of future loans 
 and discounts ? " 
 
 The banking powers of these associations are to be found in the 
 8th section, and are " to carry on the business of banking by dis- 
 counting and negotiating Tpvomissory notes, drafts, bills of exchange 
 and other evidences of debt ; by buying and selling exchange, coin 
 and bullion ; by loaning money on personal security; by obtaining, 
 issuing and circulating notes according to the provisions of the 
 
856 PENNSYLVANIA 
 
 Fowler v. Scully. 
 
 act." In view of the rule of interpretation of such charters given 
 to us by the Federal courts, and the maxim mpressio unius est 
 exclusio alterius, the argument might close with the terms of the 
 power to loan money on personal security ; for agreeably to this 
 rule and maxim, no other security than personal can be taken for 
 money lent. This is the law of the bank's capacity, and of its 
 control. It accords also with the nature of banking as a business, 
 which is precisely described in the language of the law itself ; the 
 discounting and negotiating of promissory notes, drafts, bills and 
 other evidences of debt (meaning of course, debts ejusdem generis, 
 such as checks, certificates of deposits, etc.), the buying and sell- 
 ing of bills of exchange, bullion, and lending of money on personal 
 security. The reasons are manifest. The business of a bank is 
 commercial, not that of dealing in real estate, brokerage, etc. It, 
 therefore, does not buy and sell real estate, ground-rents, mort- 
 gages, stocks, produce, etc. 
 
 It deals in commercial paper, on the security afforded by the 
 personal responsibility of drawers, indorsers and payers, and this 
 because banks are created for the purpose of trade, which require 
 ready access to loans of money, and discounts on business paper 
 made in the course of trade. Experience also has shown, that 
 whenever banks abandon the legitimate practice of loaning or dis- 
 counting on the well-known standing of the parties to commercial 
 paper ; to lend money on the hypothecation of stocks, real estate, 
 etc., alone in lieu of personal security, they enter an uncertain and 
 unknown region of credit. The directors can well know or ascer- 
 tain the standing of drawers and indorsers as men of capital or 
 means in the community, but the moment they leave this plain field 
 to enter the region of corporation stocks, real estate and liens, they 
 take a leap in the dark, and must resort to outside agents, such as 
 lawyers, brokers, etc. The internal affairs and condition of a cor-- 
 poration are known to few, while the security of a mortgage rests 
 on both title and liens, requiring professional skill to explore them. 
 The evident intent of Congress is, that National banks should be 
 institutions of commerce, not dealers in real estate, stocks or pro- 
 duce. What power there may be to accept a hypothecation of 
 stocks in addition, and to strengthen a loan, we do not say. We 
 are discussing the power conferred to make or create loans. 
 
 Another obvious purpose of confining their loans of money to 
 personal security, is to prevent these associations from splitting on 
 
SUPEEME COURT, 1873. 857 
 
 Fowler v. Stully. 
 
 the rock which has ruined so many banks, to wit: That of lending 
 too much of their capital to one person or firm. The 29th section 
 provides: " That the total liabilities to any association, of any per- 
 son, or. of any company, corporation, or firm for money borrowed, 
 including in the liabilities of a company or firm, the liabilities of 
 the several members thereof, shall at no time exceed one-tenth part 
 of the amount of the capital stock of such association actually paid 
 in." Thus Congress has prohibited an undue aggregation of its 
 capital in single hands even though each note or bill may be well 
 secured by the names upon it. Then what must we say of large 
 aggregations of capital in the hands of one man, without personal 
 security on the faith of an estimated value of real estate and the 
 risk of title and conflicting liens? In the present case we see an 
 aggregate of loans to Fowler, the mortgagor, of $76,303.59 ; the 
 very mortgage reciting that it was taken to dispense with personal 
 security, and to extend to the sum of 8100,000. How much the 
 paid-in capital of this bank is, we do not know. That such a trans- 
 action is contrary to the first principles of correct banking and to 
 the charter, is obvious. 
 
 The intention of Congress is manifested by other features of the 
 act. The 35th section declares: " That no association shall make 
 any loan or discounts on the security of the shares of its own cap- 
 ital stock, nor be the purchaser or holder of any such shares, unless 
 such security or purchase shall be necessary to prevent loss upon 
 any debt previously contracted in good faith, and stocks so purchased 
 or acquired shall, within six months from the time of its purchase, 
 be sold or disposed of at public or private sale, in default of which 
 a receiver may be appointed to close up the business of the associa- 
 tion according to the provisions of this act." What is this, but to 
 repeat to the bank — you must lend money only on personal secu- 
 rity. Then comes the 37th section, prohibiting the bank from 
 hypothecating its circulating notes to procure money to pay on its 
 capital, or to be used in its banking operations, or from using its 
 notes so as in any form to increase its capital. These two sections, 
 the 35th and 37th, when viewed together, teach another lesson, 
 that these banks shall not live upon themselves, so that, when com- 
 pelled to wind up, creditors and stockholders shall not then dis- 
 cover that their apparent assets are composed of their own decayed 
 viscera, instead of outside personal security. In this way only can 
 the public be made safe against mismanagement. 
 108 
 
858 PENNSYLVANIA 
 
 Fowler v. Scully. 
 
 Here the argument might rest, that the lending of money on 
 mortgage or real estate security is ultra vires and forbidden. But 
 Congress has left nothing to implication, and in the 38 th section 
 has said in what cases these banks may hold real estate, and has 
 forbidden all others. The 28th section reads thus: "That it shall 
 be lawful for any such association to purchase, hold and conyey 
 real estate as follows: " Then follow four numbered cases. 
 
 "First. Such as shall be necessary for its immediate accommo- 
 dation in the transaction of its business. 
 
 " Second. Such as shall be mortgaged to it in good faith by way 
 of security for Aobi previously contracted. 
 
 "Third. Such as shall be conveyed to it in satisfaction of debts 
 previously contracted in the course of its dealings. 
 
 "Fourth. Such as it shall purchase at sales under judgments, 
 decrees, mortgages held by such association, or shall purchase to 
 secure debts due to such associations." 
 
 ' Now comes the prohibition against any other mode, and the ap- 
 pointed time such as shall have been legally acquired, shaU be 
 held. 
 
 " Such association shall not purchase or hold real estate in any 
 other case or for any other purpose than as specified in this section, 
 nor shall it hold possession of any real estate under mortgage, or 
 hold the title and possession of any real estate purchased to secure 
 any debts due to it, for a longer period than five years." 
 
 Thus the section speaks to the bank in plain language, you shall 
 not purchase or hold real estate (besides your banking-house) except 
 in good faith to secure debts already contracted, and you shall not 
 hold in mortmain, for a longer period than five years, that which 
 you can legally take. This section is interpreted also by the 35th 
 section, which forbids the bank from taking its own stock in 
 security, except to prevent the loss of a debt previously contracted 
 in good faith; and when stock shall be so taken it shall not be held 
 longer than six months. The language of prohibition in the 38th 
 section is quite clear. The bank " shall not purchase or hold real 
 estate in any other case or for any other purpose than as specified in 
 this section." The second specified case in this section is, "such 
 as shall be mortgaged to it in good faith by way of security for 
 debts previously contracted." The law, therefore, says plainly, 
 you shall not hold a mortgage for future loans, for that is another 
 case. 
 
SUPREME COUET, 1873. §59 
 
 Fowler v. Scully. 
 
 If any thing were wanting to make plain that which is clear, it 
 is the amendment of the 3d clause in the 38th section, and the 
 debate on it in the Senate, See Cong. Globe, April 36, 1864. The 
 amendment of the committee proposed to strike out, " for loans 
 made by such association in the usual course of its banking busi- 
 ness or for money due thereto," and to insert " for debts preyiously 
 contracted," so as to make the clause read, " such as shall be mort- 
 gaged to it in good faith by way of security for debts previously 
 contracted." At the call of Senator McDougall, Senator Sherman 
 explained the amendment of the committee to allow the banks 
 to take a mortgage for a pre-existing debt ; but not to loan money 
 on real estate security. " Not to loan money on mortgage.'" said 
 Mr. McDougall. Mr. Sherman again replied, " They have no right 
 to loan money upon mortgage; they must take personal security, 
 but after a debt is contracted, they may, in order to secure the 
 debt, take a mortgage upon real estate." The amendment was 
 adopted, and the section now stands so. 
 
 It is argued, however, that a mortgage is not real estate, and 
 therefore it cannot be said that the bank holds real estate when it 
 holds a mortgage. The 'criticism is unsound, in forgetting that 
 the law is its own interpreter. A mortgage is one of the four 
 enumerated cases of which the law says the bank may hold real 
 estate as follows. Then followed the second case. It is also one 
 of the cases referred to when the law says, the bank shall not hold 
 in any other case than is specified in this section. The criticism 
 overlooks the fact also that the act as a Federal law is intended to 
 embrace the various conditions of the law of mortgage as realty or 
 personalty, in the several States. Even in Pennsylvania, where no 
 Court of Chancery existed, though viewed only as a security for 
 money, mortgages have been regarded as conveyances of real estate 
 in form and subject to real estate remedies, as by ejectment, and 
 by writ of waste. 
 
 The argument founded on the 53d section is unsound. The 
 mortgages therein referred to are of course those which may be law- 
 fully taken for pre-existing debts, which, when found among the 
 assets of the bank, shall not be so assigned as to create preferences 
 among creditors. The express prohibition of the 38th section can- 
 not be repealed by this reference to mortgages in the 53d section, 
 when so ready a meaning can be found for the latter. 
 
 It is a clear and incontrovertible position, therefore, that a 
 
860 PENNSYLVANIA 
 
 Fowler V. Scully. 
 
 National bank cannot lend money on the security of a mortgage, 
 and that its power to take and hold a mortgage is confined to the 
 second case in the 28th section, for debts previously contracted. 
 
 It is argued that the mortgage before us is not a mortgage for 
 future advances of money, because of the recital that the bank 
 " hath agreed to discount for said Fowler an amount in the aggre- 
 gate not exceeding $100,000, such negotiable paper as he shall offer 
 for that purpose." It is said this is a covenant or obligation on 
 the part of the bank to loan that sum, and, therefore, the money to 
 be lent is not a future loan. But this confounds distinctions and 
 ignores facts. Treat the recital as a covenant to lend, still the 
 loans and discounts to be made are future. The bank did not owe 
 Fowler $100,000, and if it did, it had a security without a mort- 
 gage. The mortgage before us is not to secure a debt from the 
 bank to Fowler, but a debt from Fowler to the bank, not exceed- 
 ing $100,000, which is to consist of negotiable business paper dis- 
 counted for him without the necessity of procuring the additional 
 indorsement for said paper by a third party. If the bank is bound 
 to make the discounts, the breach of the covenant would be fol- 
 lowed by such damages only as Fowler could show. So much is 
 drawn from the instrument itself. Then the fact is, as it appears 
 in the schedule of discounts, that though the mortgage bears date 
 the 21st October, 1869, acknowledged and recorded on the same 
 day, the first discount claimed under it was on the 11th April, 
 1870, after which comes twenty-two others, down to September 26, 
 1870. These are Fowler's debts to the bank, and they are all future 
 to the mortgage. It would be an unmitigated fraud upon the act 
 of Congress if a bank could first covenant to lend the money, and 
 then found upon its own covenant a mortgage to cover a line of 
 future loans and discounts. 
 
 The distinction between a mortgage to cover future advances at 
 the discretion of the mortgagee, and one to cover advances he is 
 bound to make, recognized in Ter Hoven v. Kerns, 3 Barr. 99, and 
 other cases, has no bearing on the present question. That distinc- 
 tion was taken to regulate the rights and equities of lien-creditors 
 among themselves, but does not change the nature of the advance 
 itself. The advance in either case is future, but the effect upon 
 the lien is different, just as the creditor was bound or not bound 
 to make the advance. 
 
 It is further argued that to prevent injustice, equity will regard 
 
STJPEEME OOUKT, 1873. 861 
 
 Fowler v. Scully. 
 
 the mortgage as delivered anew, on each discount or advance. 
 This will do inter partes, to prevent wrong ; but such a fiction 
 cannot confer a power upon a corporation, withheld from it by its 
 charter. The error is in forgetting that this is a question of stat- 
 ute power and public policy, not of mere equity between the par- 
 ties. Any want of corporate power might be supplied by this 
 means, and the mere interests of parties be made to override the 
 law. 
 
 Whether VanKirk, the voluntray assignee of Fowler, can set up 
 the defense here, depends, not on his character as a volunteer, but 
 on the question whether the law will aid the plaintiff's recovery. 
 If it will not, it is clear that VanKirk, as the owner of the estate 
 by assignment, and under bond to administer his trust according 
 to law, may and ought to defend for the interests of the creditors. 
 This brings us to the second question stated in the outset of this 
 opinion. The mortgage being void, will the law enforce it ? All 
 the authorities, English, Federal and State, say no. Mr. Powell, 
 in his work on Contracts, page 166, says that all contracts repug- 
 nant to the welfare of the State, or against some maxim or rule in 
 law, or in contradiction to some positive statute, are void. Then 
 follow numerous instances. Mr. Comyn, in his work on Contracts, 
 pages 59 to 67, enumerates many statutes upon which contracts 
 have been declared by the courts to be void as mala prohihita, and 
 it is not essential that the statute itself should declare the contract 
 to be void. 
 
 The doctrine that a contract in violation of the provisions of a 
 statute, though not expressly made void by it, is null and will not 
 be enforced by the courts, is very distinctly stated and sustained 
 by authorities in the case of the Banlc of the U. 8. v. Owens, 2 Pet. 
 538. Johnson, J., said : " No court of justice can in its nature 
 be made the handmaid of iniquity. Courts are instituted to carry 
 into efEect the laws of the country ; how can they become auxiliary 
 to the consummation of violation of law ? There can be no civil 
 right where there can be no legal remedy, and there can be no legal 
 remedy for that which is itself illegal." The same principles are 
 recognized in Coppell v. ITall, 7 Wall. 558. Justice Swatne, com- 
 menting on the instruction of the court below, that the illegality 
 had been waived by the act of the defendant, says: "In such 
 cases there can be no waiver. The defense is allowed, not for the 
 sake of the defendant, but of the law itself." Again, " Whenever 
 
862 PENNSYLVANIA 
 
 Fowler v. Scully. 
 
 the illegality appears, whether the eyidence comes from one side 
 or the other, the disclosure is fatal to the case. No consent of the 
 defendant can neutralize its eflEect. A stipulation in the most 
 solemn form to waive the objection would be tainted with the 
 vice of the original contract, and void for the same reasons. Where 
 the contamination reaches, it destroys. The principle to be extracted 
 from all the cases is, that the law will not lend its support to a 
 claim founded on its own violation." See also Bank v. Lanier, 11 
 Wall. 369. And in Banh of Augusta v . Earle, 13 Pet. 587, Taney, 
 C. J., says : " It may be safely assumed that a corporation can 
 make no contracts and do no acts within or without the State 
 which creates it, except such as are authorized by its charter." 
 
 Coming now to our own State, a long line of decisions testifies 
 that our courts will not lend their aid to enforce illegal contracts. 
 In Mitchell v. Smith, 1 Binn. 110, a case of the sale and purchase 
 of a Connecticut title to Pennsylvania lands, Shippen, C. J., says: 
 " The contract is illegal, being founded on the breach of the law, 
 and of consequence is a void contract and cannot be enforced in a 
 court of law." In Siedenbender v. Charles, administrator, 4 S. & 
 K., it was held that there could be no recovery upon a ticket in an 
 illegal lottery. Tilghmajst, 0. J., said: "I consider it perfectly 
 settled that an action cannot be sustained, founded on a transac- 
 tion prohibited by statute, although it is not expressly declared 
 that the contract is void." Page 160, Yeates, J., said : "The 
 principle of public policy is, that no court will lend its aid to a man 
 who grounds his action upon an immoral or illegal act. Justice as 
 between these individuals would require either payment of the 
 money or reconveyance of the property, but principles of public 
 convenience demand that the justice of the case shall yield to 
 higher considerations, the operation of the precedent on public 
 morals and the public interest. It is for these reasons courts of 
 justice will not assist an illegal transaction in any respect." In 
 Biddis V. James, 6 Binn. 339, a case of lottery ticket also, Tilgh- 
 MAN, C. J., states the same doctrine in fewer words. There is, 
 therefore, no room for equitable presumptions, or estoppels, in cases 
 of illegal contracts. Without protracting the statement too much, 
 I may refer to the following cases of illegal contracts, which the 
 courts have refused to aid by a recovery : Maybin v. Coulon, 4 Dall. 
 298 ; Duncanson v. McLure, id. 308 ; Badgeley v. Beale, 3 Watts, 
 
8UPKEME COURT, 1873. ggS 
 
 Fowler v. Scully. 
 
 263 ; Eepner v. Keefer, 6 id. 231 ; Wagonseller t. Snyder, 7 id. 343 ; 
 Clippenger v. Sepeaugh, 5 W. & S. 315 ; Filson t. Himes, 5 Barr, 
 458 ; Columbia Bank & Bridge Go. v. Haldeman, 7 W. & S. 233 ; 
 App V. Coryell, 3 Penn. 494 ; Edgell v. McLaughlin, 6 Whart. 176 ; 
 Brua's Appeal, 5 P. P. Smith, 295. Two of these cases may be 
 noticed particularly on the ground that the contracts were collat- 
 eral to the illegal act, and that the court refused its aid. Badgeley 
 V. Beale was for wages as a marker at an illicit billiard table ; and 
 Columbia Bank, etc. v. Haldeman, was on a bond of indemnity to a 
 stakeholder for paying over money won on a wager on an election. 
 Here the bank, as plaintifE, asks to recoyer on an illegal mortgage ; 
 and it follows, from the doctrine stated, that the court will not 
 assist the illegal act ; and that the argument in regard to the State, 
 being the only party to avail herself of the illegal forfeiture, has 
 no place here. The defendant has the right to avail himself of the 
 defense, and prevent a recovery. The doctrine of Leazure v. JliU- 
 egas, 7 S. & E. 313, and cases following in its track, is founded on 
 the law of Pennsylvania as to corporations, that though they may 
 take real estate, except for superstitious uses, yet they cannot hold 
 it in consequence of the statutes of mortmain, but as the title has 
 passed into the corporation, it must rest there, till the State enfor- 
 ces the forfeiture. This is very clearly shown by TiLGHMAifr, C. J., 
 in that case. But in the case now before us, as we have seen, the 
 act of Congress forbids the taking of a mortgage, except as a secu- 
 rity for debts previously contracted. The disability attaches, there- 
 fore, to the acquisition, and not to the retaining of the mortgage. 
 The transaction is without authority and illegal from the start, 
 and the law will not enforce it. The defendant may, therefore, 
 defend against it, not because of his own merit, but because the 
 law will not suffer itself to be prostituted. This being the rule, it 
 only remains to state the test adopted. " The test," says Judge 
 Duncan, in Swan v. Scott, 11 S. & E. 164, " whether a demand con- 
 nected with an illegal transaction is capable of being enforced at 
 law is whether the plaintifE requires the aid of the illegal transac- 
 tion to establish his case. If the plaintifE cannot open his case 
 without showing that he has broken the law, the court will not 
 assist him, whatever his claim in justice may be upon the defend- 
 ant." This test has been repeated in the following cases : Thomas 
 V. Brady, 10 Barr, 170 ; Scott v. Duffy, 2 Harris, 30 ; Evans v. 
 Dravo, 12 id. 65. The mortgage of Fowler to the plaintiff is, on 
 
864 PENNSYLVANIA 
 
 Scott V. National Bank of Chester Valley. 
 
 its face, a security for future advances, and the schedule of the 
 debts claimed under it shows also their subsequent character. The 
 plaintiff could not open its case, therefore, without disclosing that 
 it sought the enforcement of an illegal security — one forbidden by 
 the law. The action must, therefore, fail. 
 
 Judgment reversed. 
 
 Shakswood and Williams, JJ., dissented. 
 
 Scott, plaintiff in error, v. National Bank of Ohestee Valley. 
 
 (72 Pennsylvania State, 111.) 
 
 Bailment — Liability of bank for deposits for safe-keeping. 
 
 In an action to recover of a bank the value of bonds deposited for safe-keep- 
 ing by plaintiff, and stolen by the teller of the bank, field, that the bank 
 being a gratuitous bailee was not liable, although an examination of the 
 teller's accounts, after the theft, proved them to have been falsely kept, and 
 showed that he had been abstracting funds for two years, and although it 
 was known to the president of the bank that he had dealt once or twice in 
 stocks. Mistaken confidence is not a ground of liability in such cases.* 
 
 ACTION brought by John Scott, Jr., and Amos Scott, consti- 
 tuting the firm of Scott & Brother, against the National 
 Bank of Chester Valley to recover the value of four government 
 bonds of the value of $1,000 each, which had been placed by plain- 
 tiffs with the bank for safe-keeping, and which had been stolen by 
 a clerk or teller of the bank. It appeared that when the bonds 
 were deposited the bank gave a check or card in the form: "Scott 
 & Brother left with the bank a package containing valuable secu- 
 rities, said depositor assuming all risk from robbery or otherwise." 
 The teller absconded after the theft, when, on examining his books, 
 it was found that his accounts had been falsely kept for two years, 
 and that he had abstracted funds to the amount of $26,000. Prom 
 the evidence he appeared to have had the confidence of the entire 
 community as well as the bank oflBoers. The cashier and president 
 
 * See Wiley v. First NationcU Hank, post, and note. 
 
SUPEEMB COURT, 1874. §65 
 
 Scott V. National Bank of Chester Valley 
 
 knew that he had dealt in stocks once or twice. The judge 
 charged that the bonds were delivered to the officers of the bank 
 as mere depositees, without any benefit to the depositee so far as 
 had been proved, and for the convenience of the plaintiffs, and the 
 bank was bound to no greater care of the deposit than a person of 
 ordinary care and prudence generally takes of his goods of equal 
 value. The bank was not bound to search into the accounts of 
 the teller for the benefit of a gratuitous bailor, and his loss did not 
 arise out of any account kept by the teller, but from a transaction 
 outside of his employment. It is assumed that if the bonds were 
 stolen by defendant's teller it is liable whether his propensity to 
 steal was known or not, and without regard to his general character. 
 We instruct you that there is no legal principle as applied to the 
 loss of goods bailed without hire for the accommodation of the 
 bailor. "The defendants had a verdict, whereupon the plaintifE 
 brought error to this court." 
 
 W. B. Waddell and W. Darlington, with whom was R. T. Corn- 
 well, for plaintifl: in error, cited Story on Agency, § 453; Bank of 
 Kentucky v. Schuylkill Bank, 1 Pars. 215, 316. 
 
 J. S. Futhey and P. Frazer Smith, with whom was Q. F. Smith, 
 for defendants in error, cited Goggs v. Bernard, 2 Ld. Eaym. 909; 
 Mytton V. Cock, 2 Strange, 1099; Finucane v. Small, 1 Esp. 315; 
 Shiells V. Blacklurne, 1 H. Black. 158; Foster v. The Essex Bank, 
 17 Mass. 479; Tompkins v. Saltmarsh, 14 Serg. & Rawle, 375; 
 Doorman v. Jenkins, 2 Ad. & Ell. 356; Lancaster County Bank v. 
 Smith, 13 P. P. Smith, 47. 
 
 Agnew, C. J. As early as the case of Tompkins v. Saltmarsh, 
 14 Serg. & Eawle, 275, it was decided that a delivery of a package of 
 money to a gratuitous bailee, to be carried to a distant place, and 
 delivered to another for the benefit of the bailor, imposes no liability 
 upon the bailee for its safe-keeping, except for gross negligence. In 
 that case, the package was stolen from the valise of the bailee, at an 
 inn, in the course of his journey, after it had been carried to his 
 room, in the usual custom of inns in that day (1833). The same 
 rule is laid down by Justice Coultee, arguendo in Lloyd v. West 
 Branch Bank. He says, a mere depositary, without any special un- 
 dertaking, and without reward, is accountable for the loss of the 
 109 
 
866 PENNSYLVANIA 
 
 Scott V. National Bank of Chester Valley. 
 
 goods only in case of gross negligence, which in its effects on con- 
 tracts is equivalent to fraud. He further remarks, that the accom- 
 modation here was to the bailor, and to him alone, and he ought to 
 be the loser, unless he in whom he confided, the bank or cashier, 
 had been guilty of bad faith in exposing the goods to hazards to 
 which they would not expose their own. These rules he derived 
 from Goggs v. Bernard, % Ld. Baym. 909, and Foster v. Essex Bank, 
 17 Mass. 501. In the latter case the law of bailment was exhaust- 
 ively discussed by Paekbk, C. J., and the conclusions were as above 
 stated. It was further held, that the degree of care which is neces- 
 sary to avoid the imputation of bad faith is measured by the care- 
 fulness which the bailee uses toward his own property of a similar 
 kind. When such care is exercised, the bailee is not answerable 
 for a larceny of the goods, by the theft even of an officer of the 
 bank. It is further said that from such special bailments, even of 
 money in packages for safe-keeping, no consideration can be im- 
 plied. The bank cannot use the deposit in its business, and no 
 such profit or credit from the holding of the money can arise as 
 will convert the bank into a bailee for hire or reward of any kind. 
 The bailment in such case is purely gratuitous and for the benefit 
 of the bailor, and no loss can be cast upon the bank for larceny, 
 unless there has been gross negligence in taking care of the deposit. 
 These appear to be just conclusions, drawn from the nature of the 
 bailment. The rule in this case is restated by Thompson, C. J., in 
 Lancaster Bank y. Smith, 13 P. P. Smith, 54. He says: "The 
 case on hand was a voluntary bailment, or, more accurately speak- 
 ing, a bailment without compensation, in which the rule of lia- 
 bility for loss is usually stated to arise on proof of gross negligence." 
 That case went to the jury on the question of ordinary care, and 
 hence the observation of the chief justice that the same idea was 
 sufficiently expressed by the judge below, in using the words " want 
 of ordinary care." It may be proper, however, to say that want of 
 ordinary care is applicable to bailees with reward, when the loss 
 arises from causes not within the duty imposed by the contract of 
 safe-keeping, as from fire, theft, etc., and hence is not the measure 
 in such a case as that before us, which we have seen in gross negli- 
 gence. That case was one where the teller of the bank delivered 
 the deposited bonds to a stranger calling himself by the name of 
 the bailor, without taking sufficient care to be certain that he was 
 delivering the package to the right person, and the bank was held 
 
SUPEEME COURT, 1874 {^67 
 
 Scott V. National Bank of Chester Valley. 
 
 responsible for his negligence. Then the teller, in giving out the 
 deposit, was acting in his official capacity, and hence the liability 
 of the bank. The case before ns now is different, the bonds being 
 stolen by the teller, who absconded. This teller was both clerk 
 and teller, but the taking of the bonds was not an act pertaining 
 to his business as either clerk or teller. The bonds were left at 
 the risk of the plaintiffs, and never entered into the business of 
 the bank. Being a bailment merely for safe-keeping for the bene- 
 fit of the bailor, and without compensation, it is evident the dis- 
 honest act of the teller was in no way connected with his employ- 
 ment. Under these circumstances, the only ground of liability 
 must arise in a knowledge of the bank that the teller was an unfit 
 person to be appointed or to be retained in its employment. So 
 long as the bank was ignorant of the dishonesty of the teller, and 
 trusted him with its own funds, confiding in his character for 
 integrity, it would be a harsh rule that would hold it liable for an 
 act not in the course of the business of the bank, or of the employ- 
 ment of the officer. There was no undertaking to the bailor that 
 the officers should not steal. Of course there was a confidence 
 that they would not, but not a promise that they should not. The 
 case does not rest on a warranty or undertaking, but on gross neg- 
 ligence in care-taking. Nothing short of a knowledge of the true 
 character of the teller, or of reasonable grounds to suspect his 
 integrity, followed by a neglect to remove him, can be said to be 
 gross negligence, without raising a contract for care, higher than 
 a gratuitous bailment can create. The question of the bank's 
 knowledge of the character of the teller was fairly submitted to the 
 jury. 
 
 But it turned out that after the teller absconded, his accounts 
 were found to be false, and that he had been abstracting the funds 
 of the bank for about two years, to an amount of about $26,000. 
 It was contended that the want of discovery of the state of his 
 accounts for such a length of time, especially as he had charge of 
 the individual ledger, was such evidence of negligence as made the 
 bank liable. The court negatived this position, and held that the 
 bank was not bound to search his accounts for the benefit of a 
 gratuitous bailor, whose loss arose, not from the accounts as kept 
 by him, but from a larceny, a transaction outside of his employ- 
 ment. We perceive no error in this. The negligence constituting 
 the ground of liability must be such as enters into the cause of loss. 
 
868 PENNSYLVANIA 
 
 Scott v. National Bank of Chester Valley. 
 
 But the false entries in the books, and the want of their discovery, 
 was not the cause of the bailor's loss, and not connected with it. 
 True, the same person was guilty of both ofEenses, but the acts 
 were unconnected and independent. True, the bank did not dis- 
 cover in time the injury he did to it, but the very fact that it did 
 not discover his false entries and his peculations repels the knowl- 
 edge of his dishonesty. The -neglect was culpable, and might 
 have led to responsibility to those with whom they had dealings, 
 if they suffered from that neglect. But this neglect to examine 
 into his accounts was not the cause of the bailor's loss. His loss 
 was owing to the immediate act of dishonesty of the teller, and 
 not to his purloining the funds, or falsifying the accounts of the 
 bank. The argument of the plaintiff results simply in this : that 
 mistaken confidence is a ground of liability. But if this were the 
 rule, business would stand still ; for without a common degree of 
 confidence in agents and officers, much of the business of the world 
 must cease. The facts were fairly left to the jury, with the proper 
 instruction. 
 
 Another complaint is, that the teller was suffered to remain in 
 employment after it was known that he dealt once or twice in 
 stocks. Undoubtedly the purchase or sale of stocks is not ipso 
 facto the evidence of dishonesty, but as the judge well said, had he 
 been found at the gaming-table, or engaged in some fraudulent or 
 dishonest practices, he should not be continued in a place of trust. 
 So, if the president of the bank, when he called on the brokers 
 who acted for the teller in the purchase of the stock, had discovered 
 that he was engaged in stock-gambling, or in buying and selling 
 beyond his evident means, a different course would have been called 
 for. No officer in a bank, engaged in stock-gambling, can be 
 safely trusted, and the evidence of this is found in the numerous 
 defaulters, whose peculations have been discovered to be directly 
 traceable to this species of gambling. A cashier, treasurer, or 
 other officer having the custody of funds, thinks he sees a desir- 
 able speculation, and takes the funds of his institution, hoping to 
 return them instantly, but he fails in his venture, or success 
 tempts him on ; and he ventures again to retrieve his loss, or 
 increase his gain, and again and again he ventures. Thus the first 
 step, often taken without a criminal intent, is the fatal step, which 
 ends in ruin to himself and to those whose confidence he has 
 betrayed. Hence any evidence of stock-gambling, or dangerous 
 
SUPREME COURT, 1874 
 
 O'Hare v. Second National Bank of Titueville. 
 
 outside operations, should be visited with immediate dismissal. In 
 this case, the operations of the teller in stocks as a gambler in them, 
 were unknown to the officers of the bank until after he had ab- 
 sconded. Upon the whole, the case appears to have been prop- 
 erly tried, and finding no error in the record, the judgment is 
 affirmed. 
 
 Judgment affirmed. 
 
 O'Haee v. Secoitd National Bank oi' Titusville. 
 
 (77 Pennsylvania State, 96.) 
 
 Loans in excess of one-tenth of capital stock. 
 
 In an action against the indorser of a note discounted by a National bank it is 
 no defense that at the time of the discount the maker of the note was in- 
 debted to the bank for money lent in excess of one-tenth of its capital stock. 
 
 ACTION upon two promissory notes indorsed by the defendant 
 and discounted for the maker by the plaintiff, the Second 
 National Bank. The defense was that the maker of the notes was, 
 at the time of their being discounted, indebted to the plaintiff for 
 money loaned in excess of one-tenth of its capital stock, and that 
 the plaintiff was an accommodation indorser. Judgment was 
 entered against the defendant for a want of a sufficient affidavit of 
 defense. 
 
 B. J, Reid and J. A. Neill, for plaintiff in error. 
 
 R. Sherman and M. 0. Beehe, for defendant in error. 
 
 Agnew, C. J. The main question in these cases is, whether the 
 notes in suit are illegal, and cannot be recovered upon, because at 
 the time they were discounted the bank had previously lent the 
 drawer, for whose accommodation O'Hare indorsed, more than 
 one-tenth part of its capital. It is contended that the discount 
 was contrary to the 39th section of the National Bank Law of 
 June 3, 1864, providing that "the total liabilities to any associa 
 
870 PENNSYLVANIA 
 
 O'Hare v. Second National Bank of Titusville. 
 
 tion, of any person, or of any company, corporation or firm for 
 money borrowed, including in tlie liabilities of a company or firm, 
 the liabilities of the several members thereof, shall at no time 
 exceed one-tenth of the amount of the capital stock of such asso- 
 ciation actually paid in : Provided, that the discount of bona fide 
 bills of exchange drawn against actually existing yalues, and the 
 discount of commercial business paper, actually owned by the per- 
 son or persons, corporations or firms, negotiating the same, shall 
 not be considered as money borrowed." 
 
 The affidavits of defense, upon which the question is raised, do 
 not aver that the excess above one-tenth of the paid-in capital was 
 knowingly and voluntarily lent to the drawer of the note. This 
 defect in the affidavit would support the judgment, for surely It 
 cannot be contended that an accidental excess made in mistake or 
 in ignorance would forfeit an honest loan. But without resting 
 the case on this defect, we cannot think that an excess known to 
 the bank only is such an unlawful act, entering into the validity 
 of the loan, as will avoid it. The fact of an excess of indebtedness 
 over one-tenth of the paid-in capital is a matter aside from the 
 loan itself, not entering into its terms, and, therefore collateral. 
 The loan of the money is an act within the authorized power of 
 the bank ; a part of its proper business, and, therefore, not in itself 
 illegal. The note or security given for the money was an instru- 
 ment within the power of the bank to accept. The drawer had a 
 right to make it, and the bank had a right to discount it. In this 
 lies the difference between this case and that of Fowler v. Scully, 
 33 P. P. Smith, 456 {ante), relied on as authority. There the very 
 instrument itself, a mortgage of real estate, for future advance- 
 ment, was illegal and void, being forbidden to the bank as well as 
 to the mortgagor, who is presumed to know the law. It appeared 
 on the face of the mortgage that it was given to secure future dis- 
 counts up to the sum of $100,000, and for the express purpose of 
 enabling the mortgagor " to avoid the necessity of procuring the 
 additional indorsement to said paper by a third party." It there- 
 fore presented a case where both parties combined purposely to do 
 an act expressly forbidden by the law, and where the thing itself 
 (the mortgage) was the very ground of attempted recovery by law 
 and of the court to enforce the illegal instrument. Fowler v. 
 Scully is no authority for this case. What might be the conse- 
 quence if the bank and Garfield, the drawer, had combined know- 
 
SUPREME COURT, 1874. §71 
 
 O'Hare v. Second National Bank of Titusville. 
 
 ingly and willfully to defeat the restriction in the 29th section re- 
 ferred to, it is not proper to say or to speculate upon. Therein, 
 however, lies the difference between the case of the Morris Bun 
 Goal Company v. BarMey Coal Company, 18 P. P. Smith, 174, cited 
 and relied on in this case. There the contract was void because in 
 restraint of trade, both parties were in pari delicto, and the draft 
 sued on was the provided instrument for carrying the illegal agree- 
 ment into execution. Hence, it was said there, " the illegal con- 
 sideration entered directly into the instrument, and is followed up, 
 because the law will not permit itself to be violated by mere indi- 
 rection." Here the fact of the excess of the indebtedness, and the 
 bank's knowledge of the fact, were 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 fraud upon the law. Both the consid- 
 eration and the note were lawful in themselves. The affidavit 
 does not charge combination or conspiracy to defeat the law. 
 
 Other considerations connect themselves with the question. It 
 was evidently not the intention of Congress to aim at the securi- 
 ties taken by the bank and declare them illegal, as it was in the 
 28th section, forbidding mortgages other than those taken to secure 
 previously contracted debts. The securities not being referred to 
 in the 29th section, or declared illegal, we are at liberty to inquire 
 into the true purpose of Congress, in considering whether we 
 should declare the securities themselves illegal by implication. If 
 such were not the real intent of Congress, we ought not to raise an 
 implication to defeat recovery. Evidently the limitation of the in- 
 debtedness to the one-tenth in the 29th section was intended as a 
 general rule for conducting the business of the bank ; a rule laid 
 down from experience to regulate its loans for its own best interest 
 and those of stockholders and creditors, not a rule to regulate its 
 customers. It was, as remarked in Fowler v. Scully, a regulation 
 to prevent these associations from splitting on the rock which has 
 ruined so many banks, to wit, that of lending too much of their 
 capital to one person or firm. The intention being to protect the 
 association and its stockholders and creditors from unwise banking, 
 we cannot suppose it was meant to injure them by forbidding re- 
 covery of the injudicious loans. We should not interpret the sec- 
 tion so as to carry its prohibition beyond its true purpose, and thus 
 cause it to destroy the very interest it intended to protect by the 
 
872 PENNSYLVANIA 
 
 Lucas V. Government National Bank of Pottsville. 
 
 regulation. To do so would be, as said by the court below, to de- 
 mand a penalty in fayor of an individual for an ofEense against the 
 country, and invite to dishonesty under a pretense of a regard for 
 the law. 
 
 As to the usurious interest we shall say nothing, the defendant in 
 error having, in his paper-book, agreed to correct the judgments 
 by proper deduction. We leave the enforcement of this agreement 
 to the court below, if the correction should not be voluntarily 
 made. 
 
 Judgment affirmed. 
 
 LtrCAS T. GOTBEN'MBN'T NATIONAL BaKK OF POTTSVILLB. 
 
 (78 Pennsylvania State, 228.) 
 
 National hank — Usury — Set-off — Limitation of a:Ctions for excessive interest. 
 
 Where a National bank exacts illegal interest on the discount of a note the 
 interest-bearing power of the obligation is destroyed and there will be 
 no time from which it can bear interest. 
 
 In an action by a National bank on negotiable paper discounted by it, the 
 defendant may set oflf the amount of interest in excess of the lawful rate 
 paid on other transactions. The interest paid by the defendant beyond that 
 authorized by the act of Congress belongs to him, and the bank can hold it 
 only for his use. * 
 
 In such action, a State statute limiting the time within which action to recover 
 excessive interest may be brought does not apply. 
 
 i CTION on promissory notes. The opinion states the case. 
 
 D. A. Jones and /. W. S J. Ryon, for plaintiffs in error. 
 
 G. R. Kaercher, for defendant in error. 
 
 GoEDON, J. This was an action brought by the Government 
 National Bank of Pottsville against John Lucas & Co., on two cer- 
 tain notes and one check, all of which were drawn by George J. 
 Eichardson to the defendants, and by them indorsed to the plain- 
 
 * See Overholt v. Nat. Bank, post, wherein this case is explained. 
 
STJPEEME COUET, 1875. 873 
 
 Lucas V. Government National Bank of Pottsville. 
 
 tiff. Jolin Lucas, on the part of the defendants, filed an affidavit 
 of defense, setting forth, " That the said John Lucas & Co. were 
 the payees on the notes and check upon which suit is founded, and 
 that George J. Eichardson was the maker. That said notes and 
 check were sold to the said plaintiff at a discount of from 18 to 34 
 per cent per annum, and that the defendants receired from the 
 plaintiff the amount of said notes and check, less said rate of dis- 
 count. In addition to the above, said plaintiff has received from 
 George J. Eichardson (corrected by a supplemental affidavib to 
 read ' defendants,' instead of ' George J. Eichardson'), on his (their) 
 notes, not less than $3,000 in excess of the legal rate of interest^ 
 the same having been purchased by the plaintiff at about the rate 
 of 21 to 34 per cent per annum discount from the said defendants; 
 and said defendants claim from the plaintiffs double the amount 
 of interest under the act of Congress." On the 7th day of July, 
 1873, on motion of the plaintiffs' counsel, the court entered judg- 
 ment against the defendants for the whole amount of the plain- 
 tiffs' claim with interest from and after the maturity of the paper, 
 striking out and disallowing, however, 18 per cent, the amount of 
 discount. The Judgment is erroneous in that it includes interest on 
 the paper in suit from the time it fell due. The act of Congress 
 speaks in this wise : " And knowingly taking, receiving or charg- 
 ing a rate of interest greater than aforesaid, shall be held and 
 adjudged 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." Eev. Stat., § 5198. 
 
 Observe, it is the entire interest which the bill or note carries 
 with it that is forfeited, and not merely that which the party bor- 
 rowing may agree to pay. The illegal act destroys the interest- 
 bearing power of the obligation, and as there can be no point in 
 the history of such paper at which it is freed from the taint of 
 illegality, so it follows there can be no point of time from which it 
 can bear interest. The plaintiff was entitled to recover the face of 
 the note and check, and no more. Brown v. Second Nat. Banh of 
 Erie, 22 P. P. Smith, 209 {ante, p. 849). 
 
 Technically, the latter part of the affidavit of defense is bad, for 
 it claims, as a set-off, that which the act of Congress imposes as a 
 penalty on the usurious transaction, to wit, double the amount of 
 interest paid. In this, defendants had no such interest as would 
 enable them to use it by way of defalcation, for it could be ac- 
 
874 PENNSYLVANIA 
 
 Lucas V. Government National Bank of Potts ville. 
 
 quired only through an action of debt under the statute; and until 
 the forfeiture was pronounced in their favor, by judgment of the 
 court, they had nothing therein which would be the subject of 
 set-off. But, as we hold that the defendants are entitled to defalk 
 the amount of the usurious discounts, which they paid the plain- 
 tiffs on previous transactions, we are disposed to treat the affidavit 
 as faulty only in form, rather *than substance. The money paid 
 to the plaintiff, over and above that which the act of Congress au- 
 thorized it to receive, belonged to the defendants, and the bank 
 could hold it only for their use. This very point was raised 
 and decided in Thomas v. Shoemaker, 6 W. & S. 179. That case 
 ruled that usurious interest paid might be recovered back in an 
 action for money had and received, and that it was not question- 
 able, but that such interest secured on previous transactions might 
 be defalked against the plaintiff's claim in the suit then pending. 
 This decision was made under the act of 1823, then in force, by 
 which, where more than legal interest was received, the money or 
 other things lent was wholly forfeited. 
 
 The reason lying at the foundation of this and all similar decis- 
 ions is very obvious. The receiving of such excessive interest is 
 treated by the supreme power in the State as a public evil, and as 
 such prohibited; consequently, when taken against the statutory 
 prohibition, it is acquired without right, and no title thereto was 
 in the taker. In such case he is to be held as one wrongfully in 
 possession of his neighbor's property. 
 
 This reason applies a fortiori to the case in hand, for these 
 National banks are the mere creatures of the act of Congress. 
 From it they derive all the powers they possess; when, therefore, 
 they act contrary to its express provisions and mandates, they usurp 
 powers that do not belong to them, and such act is clearly ultra 
 vires and void. In the case now in hand, if the aflBdavit of John 
 Lucas be true, this bank has taken from the defendants some 
 $3,000, which the act of Congress has not only, in express terms, 
 declared it should not take» but impose a penalty upon it for 
 taking. 
 
 By no right, then, does the plaintiff hold this money; it has no 
 property therein, and its possession thereof is but that of a trustee 
 or bailee of the defendants. 
 
 Another error into which the court fell was in supposing that the 
 case came within the provision of our act of March 38th, 1858, 
 
SUPEBME COURT, 1875. 875 
 
 First National Bank of Carlisle v. Graham. 
 
 which provides, that where the debt and excessive interest have 
 been paid, no action to recover back such excess can be maintained 
 but within six months after such payment. But this case does not 
 come under that act, but, as we have seen, under the act of Con- 
 gress, which operates upon a subject of its own creation, and over 
 which it has supreme control; hence our act cannot be made to sup- 
 plement the National statute with a limitation not found in it. As 
 the only limitation found in the act of Congress applies alone 
 to the action for the penalty, it follows that the claim of the 
 defendants ca n only be barred by a failure to sue for the same 
 within the period of six years after it accrued. 
 
 The judgment is reversed and a procedendo awarded. 
 
 First "NrATioiirAL Bank of Caklisle v. G-eaham. 
 
 (79 Pennsylvania State, 106.) 
 
 National lank — Deposits for safe-keeping — Liability of bailee. 
 
 In an action against a National bank to recover bonds deposited witli it for 
 safe-keeping, without compensation, and which the bank alleged were stolen 
 from its vaults, heCd,4X) ^^'^ ^^^ bank was liable only for gross negligence ; 
 (3) that its failure to give prompt notice of the robbery was a question for 
 the jury as bearing on the question of negligence ; and (3) that while the 
 mere voluntary act of the cashier in receiving the funds would not subject 
 the bank to liability, yet if the deposit was known to the directors and they 
 acquiesced in its retention, a contract relation was created by which the 
 defendants would be held bound.* 
 
 ACTION of assumpsit to recover the value of four United States 
 bonds of $1,000, cash, deposited with the defendant by the 
 plaintiff for safe-keeping, and for which there was given to the 
 plaintiff the following receipt : 
 
 " Caelislb, Pa., Octolier 33cZ, ; 
 
 " Miss F. L. Graham has left in this bank, for safe-keeping, four thousand 
 
 dollars in U. S. 5-30 bonds of 1867, to be returned on the return of this receipt. 
 
 " Chablbs H. Hepburn, Cashier." 
 
 When the plaintiff demanded the bonds, they were not delivered 
 to her, the officers of the bank informing her that they had been 
 
 * See WUey v. First National Bank, post, and note. 
 
876 PENNSYLVANIA 
 
 First National Bank of Carlisle v. Graham. 
 
 stolen, August 5th, 1871, from the yault of the bank, with other 
 valuables. The plaintifE alleged that the bonds were lost through 
 the negligence of the defendant. 
 
 On the trial it was proved that the fact of the robbery had never 
 been publicly disclosed. The officers feared that such a disclosure 
 would injuriously affect the credit of the bank, and the president 
 and cashier undertook, in theip individual capacities, to become 
 liable for the principal, interest and premium of the bonds of 
 depositors that had been lost. Notice was given to the Assistant 
 United States Treasurer in New York, and to the Treasury Depart- 
 ment at Washington. The plaintiff was informed of the loss 
 through her brother, residing in Monmouth, 111., some bonds issued 
 by an association there being among the securities lost. And 
 notice was given to the association by the officers of the bank. 
 
 The verdict was for the plaintiff for $4,790, and the defendant 
 took writ of error. 
 
 8. Hepburn, Jr., and W. F. Sadler, for plaintiff in error. 
 
 /. Hays, and J. H. Graham, for defendant in error. 
 
 WooDWAED, J. [After deciding a question of evidence.] The 
 next question is presented by the series of assignments which allege 
 error in the instructions given to the jury as to the measure and 
 extent of the responsibility of the defendants. Assuming for pres- 
 ent purposes, on the faith of the verdict, that the act of the cash- 
 ier was so far acquiesced in and ratified by the officers and direct- 
 ors, as to create a contract between the plaintiff and the bank, it is 
 manifest that the contract amounted at the utmost to a naked 
 bailment. It was a deposit without compensation. No under- 
 taking was expressed except that the bonds were to be returned on 
 the return of the cashier's receipt. The law regulating such a con- 
 tract has been settled since the decision of Coggs v. Bernard, 2 
 Ld. Eaym. 909, in the year 1703. " Where a man takes goods into 
 his custody to keep for the use of the bailor," it was said by Holt, 
 0. J., in that case, "he is not answerable if they are stole without 
 any fault in him, neither will a common neglect make him charge- 
 able, but he must be guilty of some gross neglect." The principles 
 which govern the relations between bailors and bailees are suc- 
 cinctly stated in Story on Bailments, § 23. " When the bailment 
 is for the sole benefit of the bailor, the law requires only 
 
SUPEEME COURT, 1875. 877 
 
 First National Bank of Carlisle v. Graham. 
 
 diligence on the part of the bailee, and of course makes him 
 answerable only for gross neglect. When the bailment is for the 
 sole benefit of the bailee, the law requires great diligence on the 
 part of the bailee, and makes him responsible for slight neglect. 
 When the bailment is reciprocally beneficial to both parties, the 
 law requires ordinary diligence on the part of the bailee, and 
 makes him responsible for ordinary neglect." In Tompkins v. Salt- 
 marsh, 14 S. & R. 375, DuKCAN, J., in delivering the opinion of 
 the court, said: "Where one undertakes to perform a gratuitous 
 act, from which he is to receive no beheflt, and the benefit is to 
 accrue solely to the bailor, the bailee is liable only for gross negli- 
 gence, dolo proximus, a practice equal to a fraud. It is that omis- 
 sion of care which even the most inattentive and thoughtless men 
 take of their own concerns. There is this marked difference in 
 cases where ordinary diligence is required, and where a party is 
 accountable only for gross neglect. Ordinary neglect is the want 
 of that diligence which the generality of mankind use in their own 
 concerns, and that diligence is necessarily required where the con- 
 tract is reciprocally beneficial. The bailee without reward is not 
 bound to ordinary diligence, is not responsible for that care which 
 every attentive and diligent person takes of his own goods, but 
 only for that care which the most inattentive take." 
 
 These principles were applied by Coultee, J., in Lloyd v. The 
 West Branch Bank, 3 Harris, 176, and by the present chief jus- 
 tice in Scott V. The National Bank of Chester Valley, 23 P. P. Smith? 
 471 {ante, p. 864) ; and were recognized by Thompsok, C. J., in 
 The Lancaster County Bank v. Smith, 13 P. P. Smith, 54. In 
 view of these well-established rules, the presentation to the jury of 
 the legal aspects of this cause was inadequate and imperfect. 
 There was no dispute that this was a gratuitous bailment, and in 
 the general charge the court properly limited the responsibility of 
 the defendant to a case of gross neglect. But this gross neglect 
 was defined to be " the omission of those precautions which per- 
 sons of common care and common prudence would naturally 
 adopt, though they might, in reference to their own goods, omit 
 them." 
 
 In the plaintiff's first point, the court were asked to charge that 
 the defendants were " bound to exercise ordinary care, skill and 
 diligence to keep and return the bonds safely; such care as men of 
 ordinary prudence exercise in the care of their own property." 
 
878 PENNSYLVANIA 
 
 First National Bank of Carlisle v. Graham. 
 
 The answer was in these words: "First point affirmed, and for the 
 meaning of gross negligence the jury are referred to the general 
 charge. In the plaintiff's third point the court was asked to say, 
 that " if the defendants were negligent, and did not exercise ordi- 
 nary care, skill and caution, to keep the plaintiff's bonds safely, 
 then they are liable for their Talue, no matter how negligent they 
 may have been in taking care of their own property." The 
 answer was: "Affirmed — see general charge." The defendants 
 had the right to complain of the manner in which the cause was 
 submitted to the jury. The standard of duty established for them 
 was one to which they could not, under the evidence, be justly 
 held. In the language of Judge Dun'can', in Tomphins v. Salt- 
 marsh, " they were responsible for the omission of care which even 
 the most inattentive and thoughtless men take of their own con- 
 cerns." 
 
 ■ Upon the trial the ground was assumed by the defendants that 
 there could be no recovery against them if the jury should find 
 that they had taken the same care of the plaintiff's bonds that they 
 had taken of their own securities, and complaint is now made of 
 the failure of the court to sustain their position. In a multitude 
 of cases language has been used by judges which would seem to 
 indicate the existence of the rule for which the defendants con- 
 tend. Such language was employed in Foster v. The Essex Bank, 
 17 Mass. 479, and in the cases already referred to, of Goggs v. Ber- 
 nard, Lloyd V. The West Branch Bank, and Scott v. National Bank 
 of Chester Valley. In general, however, this view of the law has 
 been abstractly stated, and where it has been applied, as in Lloyd 
 v. The West Branch Bank, the diligence used by the bailee in the 
 oversight equally of the deposit and his own property, correspond 
 with that diligence to which, in the circumstances of the particu- 
 lar bailment, the law held him bound. The authorities relied on 
 by the defendants " do not seem," Judge Stokt has said, " to ex- 
 press the general rule in its true meaning. The depositary is 
 bound to slight diligence only, and the measure of that diligence 
 is that degree of diligence which persons of less than common 
 prudence, or indeed of any prudence at all, take of their own con- 
 cerns. The measure, abstractly considered, has no reference to the 
 particular character of an individual, but it looks to the conduct 
 and character of a whole class of persons." Story on Bailments, 
 564. The fact that the bailee keeps the property of the bailor, 
 
SUPEEMB COURT, 1875. 879 
 
 First National Bank of Carlisle v. Graham. 
 
 with the ordinary care with which he keeps his own, does not ful- 
 fill the measure of his legal duty where the contract is one which 
 requires strict diligence and extraordinary care. So, under a con- 
 tract of bailment, in which the benefits are reciprocal, the bailee is 
 not shielded from liability for neglect of ordinary care by proving 
 that he has been careless, inattentive and reckless in the manage- 
 ment of his goods as well as those of the bailor. Cases for the ap- 
 plication of the maxim of the Emperor Constantine, quoted in 
 Jones on Bailments, 83, " Aliena negotia exacto officio gerunter," 
 must constantly arise. The terms used in the authorities referred 
 to are employed more by way of illustration than as a statement of 
 the legal rule. That the bailee has dealt with his property and the 
 bailor's in the same way is a fact which may be always shown as 
 an element in adjusting the standard of duty, and deciding the 
 question of its performance, as well as a test of the bailee's good 
 faith. On the proof of such a fact, a presumption of adequate 
 diligence would ordinarily arise. But the question of the bailee's 
 responsibility must be finally settled by a resort to the settled prin- 
 ciple which deduces the measure of his duty in each particular 
 bailment, from a comparison of his conduct with the conduct not 
 of individuals, but of classes of men. The instructions of the court 
 on this subject in the general charge were, that, if the bailee " takes 
 the same care of the goods bailed that he does of his own, that 
 ordinarily repels the presumption of gross negligence. The desire to 
 preserve one's own property from loss from any cause is, as a rule, so 
 universal, that the mind rests with satisfaction on the evidence 
 which shows the same care of the bailed property which the 
 bailee took to save his own, unless it was shown that he was grossly 
 negligent of both, and when this is done he is not excused, but 
 held answerable." It is conceived that these instructions were un- 
 objectionable. Whether the defendants were guilty of such gross 
 negligence as to make them liable, was a question which, like that 
 which was raised as to the fact of robbery, and like the other issues 
 involved, it was for the jury, under all the evidence, exclusively 
 to decide. 
 
 Another error is alleged to have consisted in the answer by the 
 court to the plaintiff's seventh point, relating to the failure of the 
 bank to give notice of the robbery, and in the direction given to 
 the jury on the same subject in the general charge. The discus- 
 sion of the point undoubtedly was unduly amplified. The limita- 
 
880 PENNSYLVANIA 
 
 First National Bank of Carllale v. Graham. 
 
 tion of the plaintiff's right to a verdict only in the event that gross 
 negligence should be made out, was neither expressed nor implied. 
 The instruction in substance was, that she could recover if injury 
 resulted to her from the failure of the defendants to give her notice, 
 and that she could recover for such injury, if found, even though 
 the presumption of negligence arising from the want of notice was 
 repelled by proof. The effect of such a direction could only be to 
 leave the precise , question on which the jury were to pass in ob- 
 scurity and doubt. The plaintiff in her testimony stated that she 
 received intelligence of the loss through her brother in Monmouth 
 three or four weeks alter it occurred. Charles H. Hepburn thought 
 the interval between the loss and the conversation he had with the 
 plaintiff in regard to it was only eight or ten days. From the time 
 she received notice, if upon a fair representation of their views and 
 motives, she acquiesced in the policy of silence which the ofiScers 
 of the bank had adopted, it would be unjust to permit her to set 
 up the subsequent maintenance of that policy as a ground for the 
 imputation of gross negligence against the defendants. But the 
 fact that no announcement was made in the interval, whatever it 
 was before the plaintiff was informed of the loss, was fairly a sub- 
 ject for the consideration of a jury. It was for them to weigh it 
 in connection with the other evidence, in deciding the material 
 issues in the cause. Its relevancy and value are shown by the sig- 
 nificance that was attached to the proof of the conduct of a bailee 
 contemporaneously with and immediately after a loss of property, 
 in TompTcins v. Saltmarsh, supra. "1 am of opinion likewise," 
 Judge DuNCAsr said, " that evidence ought to have been received 
 of the hue and cry immediately after the discovery — his assiduous 
 and indefatigable pursuit, and strict search, both at the inn and 
 the steamboat. If he had made no complaint or inquiry, remained 
 with his arms folded and his mouth shut, this would have afforded 
 strong evidence of his delinquency; and though it has been said 
 this would have been the course of a guilty man, yet it is one 
 which an innocent man would naturally take, and which, if he did 
 not take, all would condemn him. Nothing would more strongly 
 prove his neglect than this silepce, this indifference; the jury would 
 have drawn the most unfavorable conclusions from it." Every case 
 must stand, of course, on its facts. It may well be that the 
 reasons for the action of the officers of the bank would be satisfac- 
 
SUPEEME OOUET, 1875. gg| 
 
 First National Bank of Carlisle v. Graham. 
 
 tory to a jury, but the necessity is ineyitable of submitting the 
 question to them whether that action inyolYcd gross neglect. 
 
 The remaining question arises out of the answer of the court to 
 the second point of the defendants. The mere voluntary act of 
 the cashier in receiying the plaintifE's securities would not subject 
 the bank to liability. But if the deposit was known to the direct- 
 ors, and they acquiesced in its retention, a contract relation was 
 created, by which the defendants should be held bound. The ques- 
 tion arose in Foster v. The Essex Bank, 17 Mass. 479. That was an 
 action to recover the value of a special deposit. The bank had no 
 express power by charter to receive deposits of any kind, but the 
 verdict found that the practice had been to receive them always; 
 and Pabkbe, C. J., said: "As the bank from the time of its in- 
 corporation has received money and other valuable things in this 
 way, and as the practice was known to the directors, and we think 
 must be presumed to have been known to the company, as far as a 
 corporation can be affected with knowledge; and as the buildings 
 and vaults of the company were allowed to be used for this pur- 
 pose, and their officers employed in receiving into custody the 
 things deposited, the corporation must be considered the depositary, 
 and not the cashier or other officer through whose agency com- 
 modities may have been received into the bank. The rule thus 
 stated has been uniformly applied by this court in cases involving 
 the rights and duties of the National banks. The principle announced 
 in the recent New York and Vermont cases of The First National 
 Bank of Lyons v. The Ocean National Banlc, 19 Am. Eep. 181 (ante, 
 p. 738), and Wiley v. The First National Bank of Brattleboro, id. 
 133 {post, p. 905), has never been adopted here, so far as it is in 
 conflict with the rule. If the question here had grown out of an 
 act prohibited by law, the principle of these recent authorities 
 would be applicable, as it was applied' in Fowler v. Scully, 33 P. P. 
 Smith, 456; S. C, 13 Am. Eep. 699 {ante, p. 854). But the ques- 
 tion arises out of an act which has been neither directly nor im- 
 pliedly forbidden by statute. The answer of the court was accurate, 
 and the complaint alleged against it in the supplemental assign- 
 ment of error is unfounded. 
 
 Judgment reversed, and a venire facias de novo awarded. 
 Ill 
 
882 PENNSYLVANIA 
 
 De Haven v. Kensington National Bank 
 
 De Haven v. Ken-siu-gtoij Natiostal Bank. 
 
 (81 PennsylvaDla State. 95.) 
 
 Negligence in keeping deposits for safe-keeping. 
 
 Whethei or not a National bank has the power to take bonds, etc., on deposit 
 for safe-keeping, it is not liable for the loss of such property so taken with- 
 out compensation, unless it has been guilty of gross negligence contributing 
 
 to the loss.* 
 
 ACTION against a National bank to recover the value of certain 
 bonds which plaintiff had deposited with the defendant for 
 safe-keeping and which had been stolen from defendant's posses- 
 sion. Defendant was a gratuitous bailee of such property. The 
 eyidence tended to show that during the day on which the bonds 
 were stolen a man dressed as a police oflBcer told the cashier, in 
 presence of a watchman of the bank, that he had been directed 
 by the lieutenant of the police to warn him that there were " sus- 
 picious characters about;" the cashier told the watchman to admit 
 no one, but he made no inquiry of the lieutenant. After the bank 
 was closed, there then being another watchman there, the first was 
 called from the outside by name; he opened the door; a man dressed 
 as a policeman and two others in ordinary dress came in ; they 
 OTerpowered the watchman, took securities, etc., from the Tault, 
 including plaintiff's. 
 
 On the evidence the court directed a nonsuit and plaintiff took 
 a writ of error. 
 
 D. W. Sellers, for plaintiff in error. 
 
 A. D. Campbell & R. 0. McMurlee, for defendant in eiTor. 
 
 Per CuKiAM. We discover no sufficient evidence in this case to 
 charge a mere voluntary bailee, without reward, for a loss by rob- 
 bery. Waiving the question of the want of power in a National 
 bank to take bonds, etc., on a deposit for safe^keeping, the officers 
 here took as much care of them as they did of the property of the 
 
 * See Wiley v. First National Bank, post. 
 
SUPEEMB COUET, 1876. 883 
 
 Overholt v. National Bank of Mt. Pleasant. 
 
 bank. The robbery was effected by a most ingenious and un- 
 expected device, calculated to succeed with the most careful of 
 persons, and made successful by its very openness and apparent 
 freedom from design. The cashier had no reason to suspect an 
 attack on his bank, the message of the pseudo police officer being 
 merely that there were suspicious persons about; that is, in the 
 city. Hence his omission to call at the police precinct was no evi- 
 dence of such carelessness as would charge the bank. He took all 
 proper precautions. The nonsuit was properly granted. 
 
 Judgment affirmed. 
 
 OVEBHOLT V. NATIOK-AL BaNK OF Mt. Pleasan't. > 
 (83 Pennsylvania State, 490.) 
 Usury — Effect of — What interest forfeited — Set-off ofiUegal interest. 
 
 Where National banks stipulate for an illegal rate of interest all payments of 
 interest, and not merely the excess, is illegal. 
 
 In an action by a National bank to recover the amount of a note which was 
 given in renewal of other notes, the defendant is entitled, where illegal 
 interest has been exacted, to credit for all the interest he has paid from the 
 beginning on the loan and not merely to the excess above the lawful rate. 
 
 In an action by a National bank on a promissory note the defendant cannot 
 Bet oflF the entire interest agreed to be paid on another and independent note 
 although such interest was usurious.* 
 
 * See Farmers and Mechanics' National Bank v. Hearing, ante, pp. 117, 122, 123 ; 
 Tiffany v. National Bank, ante, p. 90; Central National Bankv. Pratt, ante, p. 
 595; Dams'v. Randall, ante, p. 600; First National Bank\. Qarlinghouse, ante, -p. 
 811; SMnklev. Sank, onte, p. 824. 
 
 In Crocker v. First National Bank, ante, p. 317, it was held that in an action 
 to recover the penalty for taking illegal interest, the recovery should be twice 
 the full amount of interest paid, and not twice the excess of interest paid over 
 the legal rate. The same rule was held in National Bank v. Davis, ante, 
 p. 350. 
 
 On the other hand in Bintermister v. First National Bank, ante, p. 741, it was 
 decided that in an action to recover such penalty the recovery could only be 
 twice the amount taken in excess of the legal interest. Allen, J., who deliv- 
 ered the opinion of the court, said : " "With great hesitation we incline to 
 favor this interpretation of the penal clause under consideration," and Brown 
 
884 PENNSYLVANIA 
 
 Overholt v. National Bank of Mt. Pleasant. 
 
 ACTION of assumpsit by the First National Bank of Mt. Pleas- 
 ant against Overholt and others, upon two promissory notes 
 which were discounted by said bank. 
 
 Defendants in their affidavit of defense alleged that upon various 
 renewals on the first note in suit they had paid the plaintiffs $1,- 
 057.16 as interest, at the rate of nine per cent per annum; upon 
 renewals on the second note in suit, $1,087.30 as interest, at the 
 rate of eight and nine per cent per annum; and upon the renewals 
 upon a third note not in suit, for $4,000, dated April 3d, 1873, 
 they had paid plaintiffs $1,314.09 interest, at the rate of nine per 
 cent, and claimed to set off double the amount so paid as interest 
 on each note, making an aggregate of $6,917.10, or so much thereof 
 as would extinguish plaintiff's claim. 
 
 A rule for judgment for want of a sufficient affidavit of defense 
 was taken by plaintiffs, which the court made absolute, and deliv- 
 ered the following opinion : 
 
 " The cases of Brown v. Second National Bank of Erie, 22 P. P. 
 Smith, 209 {ante, p. 849), and Lucas v. Government National Bank, 
 28 id. 328 {ante, p. 873), establish that whilst all the interest is 
 forfeited upon the obligation in suit, yet that the forfeiture of 
 double the interest cannot be defalked until acquired by recovery 
 in action of debt. The affidavit of defense, therefore, in this case 
 is good as to the interest of the obligation in suit, but not good in 
 so far as it seeks to defalk double that interest. The same prin- 
 ciple makes the affidavit at fault in trying to set off double the 
 interest on previous renewals. As to these having been paid by 
 the renewals, the liability to forfeiture of double the interest was 
 incurred, but this, as we have seen, can only be enforced after 
 recovery by action. Still the excess over the legal rate retained in 
 these renewals can be set off. 
 
 " The $4,000 note has its origin since the notes in suit, and is 
 yet unpaid. Its excess interest, as well as penalty, if recovered, can 
 be defalked against its principal. The affidavit and its schedule 
 advise us that this note is mature, and it is not alleged to be out 
 of first hands. The balance yet due upon it exceeds the entire 
 
 V. Second National Bank, ante, p. 849, waa cited aa an authority for that coiiolu- 
 fsion, but the oaae can hardly be considered an authority therefor. 
 
 As to the recoupment of Interest, see National Bank v. Davis, ante, p. 350; 
 Wiley V. Starbuck, ante, p. 436; Brown v. Second National Bank, ante, p. 849. 
 
 As to actions for recovery of penalties, seeMissowri, etc., Co. v. First Na- 
 tional Bank, ante.v- *01; N'ewell v. National Bank, ante, p. 501; Orckoayy. 
 Central National Bank, ante, p. 559. 
 
SUPEEME COURT, 1876. ggS 
 
 Overholt v. National Bank of Mt. Pleasant. 
 
 penalty, and no equity invites us to allow the usurious interest 
 collected upon its renewals to be used as set off here. One danger 
 of doing so is illustrated by the fact that this same note is sought 
 to be used as a defense between the same parties in Nos. 513 and 
 514 of the same term as this. Wherefore [judgment is entered in 
 favor of the plaintiff for $3,485.18 (being principal of notes in suit, 
 less excess interest paid), to which amount no suflBcient affidavit of 
 defense has been filed, and with the usual per cent attorney's com- 
 mission, a-nd with leave to plaintiff to file forthwith his praecipe 
 under Eule 13 as to balance of his claim.]" 
 
 There were three other cases: one agaioet an indorser on one of 
 the notes in suit; one against B. F. Overholt & Oo. on other notes: 
 and one against the indorser of the latter, which were ruled by the 
 court as above in the same opinion, and which it was agreed should 
 be determined by the decision in this cause. 
 
 The defendants took this writ and the errors assigned were : 1. 
 In entering judgment for want of a sufficient affidavit of defense. 
 2. In entering judgment as above in brackets. 3. In refusing to 
 allow defendants credit for the whole amount of interest charged, 
 whether paid or not, both on the notes in suit, the previous renew- 
 als thereof, and on note or notes not in suit. 4. In refusing to 
 decree forfeiture of all the interest paid on the several notes set 
 forth in the affidavit of defense. 5. In refusing to allow the defend- 
 ant to set off the excess of interest paid upon the $4,000 note, and 
 the series of renewals of which it was the last, said note being dated 
 14th February, 1875, is unpaid, and not yet sued upon. 
 
 Edgar Cowan and Markle £ McCullough, for plaintiffs in error. 
 
 A. M. Fulton, for defendant in error. 
 
 Shakswood, J. The 30th section of the act of Congress of June 
 3d, 1864, under which the defendants in error were organized and 
 incorporated as a National bank declares that " the knowingly re- 
 ceiving, reserving or charging," by a National bank, " a rate of in- 
 terest greater than" that lawful in the State in which such bank 
 may be located, " shall be held and adjudged a forfeiture of the 
 entire interest which the note, bill or other evidence carries with 
 it, or which was agi'eed to be paid thereon ; and in case a greater 
 interest has been paid, the person or persons paying the same or 
 their legal representatives may recover back in any action of debt 
 
886 PENNSYLVANIA 
 
 Oveiholt V. National Bank of Mt. Pleasant. 
 
 twice the amount of interest thus paid, from the association taking 
 or receiving the same : provided, that such action is commenced 
 within two years from the time the usurious transaction occurred." 
 It is very clear we think that Congress intended that the Na- 
 tional banks should be effectually prevented, as far as legislation 
 could prevent it, from either charging or receiving more than the 
 legal rate of interest in the States jn which they might be located 
 and carry on their business. Experience had abundantly shown 
 that to do this it would not be sufficient to provide that the excess 
 over the lawful rate only should be illegal. These institutions of 
 large capital would natujally exercise great power over those who 
 should stand in need of their assistance ; for it is as true now as it 
 was in the days of Solomon, " The rich ruleth over the poor and 
 the borrower is servant to the lender." It was considered, no doubt, 
 that it would be too severe a measure to provide that the debt 
 itself should be forfeited or the security given for it declared void. 
 That too had been tried in England and some of the United S bates, 
 but was found not to arrest the practice, but only to increase the 
 unjust gain of the usurer, who required to be indemnified by the 
 needy borrower for the risk he run by a much increased rate. It 
 was deemed a sufiBciently effectual prevention to enact that wher- 
 ever the bank violated the law by " knowingly receiving, reserving 
 or charging" more than the lawful interest, they should recover 
 none, and that where the unlawful interest had been voluntarily 
 paid, the debtor s];iould be entitled to recover as a penalty double 
 the whole interest paid, provided suit were brought within two years. 
 Wherever the bank must resort to a suit, there the forfeiture of 
 the entire interest, when an illegal rate has been stipulated or taken, 
 follows as a necessary result. It was abundantly shown in Camp- 
 tell V. Sloan, 12 P. P. Smith, 485, by numerous English and 
 American authorities cited in the opinion of the court, that where 
 there has been a series of renewal notes given for the continuation of 
 the same original loan or advance, the taint of usury in the first 
 transaction follows down the descent through the entire line. A 
 renewal note is not payment of the original debt, and a new debt 
 or novation in view of the usury laws, however it may be, if the 
 parties so intend, as to other questions. If it were held otherwise 
 nothing would be so easy as to evade the statute. What the cred- 
 itor is entitled to recover is the original loan with lawful interest, 
 and the borrower is entitled to credit for all that he has paid beyond 
 
SUPEBMB COURT, 1876. 887 
 
 Overholt v. National Bank of Mt. Pleasant. 
 
 what by law he was bound to pay. It is clear then as to the Na- 
 tional banks that whenever they charge or stipulate lor an illegal 
 rate all payment of interest and not merely the excess is illegal. 
 " The Illegal Act," as is well remarked by Mr. Justice Goedost in 
 Lucas T. Government National Bank, 28 P. P. Smith, 331 {ante, 
 p. 872)," destroys the interest-bearing power of the obligation." " The 
 receiving of such excessive interest is treated by the supreme power 
 in the State as a public evil and as such prohibited ; consequently 
 when taken against the statutory prohibition, it is acquired without 
 right and no title thereto vests in the taker. In such case he is to 
 be held as one wrongfully in possession of his neighbor's property." 
 It follows that when the bank resorts to legal proceedings to recover 
 its debt on the last of the series of renewal notes, the borrower is 
 entitled to credit for all the interest he had paid from the begin- 
 ning on the loan and not merely to the excess above the lawful 
 rate. 
 
 This question was not before the court, and was not decided in 
 Brown v. Second National Banh of Erie, 32 P. P. Smith, 209 
 {ante, p. 849). The only matters which could avail the plaintiff in 
 error there, were the answers to the two first points which he made 
 below. These were, that the bank could not recover any part of its 
 claim, and that if it could the debtor was entitled to defalk double the 
 amount of interest paid. These the court below refused, and their 
 judgment was affirmed. His third point was, that he was entitled 
 to credit for the excess of the interest he had paid from time to 
 time on the renewal notes ; and his fourth was, that he was enti- 
 tled to an abatement of all the interest on the note in suit ; and 
 these the court below affirmed. What is stated in the syllabus as 
 decided by the court below — ^if indeed it was meant to say that the 
 debtor could only set off the excess of interest on previous notes — 
 was not involved in the affirmance of the judgment. In Lucas v. 
 Government National Banlc, 28 P. P. Smith, 228 {ante, p. 872), the 
 credit claimed was not for interest paid on former notes of which 
 the note in suit was the last renewal, but upon entirely independ- 
 ent loans which had been paid in full ; and the defendant claimed 
 to defalk double the amount which he had paid. This the court 
 held he could not do, but that he was entitled to defalk the usu- 
 rious interest he had paid on previous transactions. The affidavit 
 of defense stated that the defendant had paid not less than $3,000 
 in excess of the legal rate of interest ; and this, it was held, he had 
 
888 PENNSYLVANIA 
 
 Woods V. People's National Bank of Pittsburgh. 
 
 a right to defalk. Further than this it was npt necessary to go in 
 order to reverse the judgment and award a procedendo. 
 
 We are of opinion that the defendant below was not entitled 
 to defalk the interest on the four-thousand-dollar note, which was 
 not in suit. The words of the act of Congress, " shall be held a 
 forfeiture of the entire interest which the note, bill or other evi- 
 dence carries with it," as was said in Brown v. The Second Na- 
 tional Bank of Erie, have evident reference to the enforcement of 
 the contract by judicial process. No action is given to recover 
 back the interest charged, and if not, there can be no defalcation 
 against an independent claim. Ron constat that the principal of 
 the four-thousand-dollar note will ever be sued for ; but when it 
 is, all the interest paid on the notes of which it is the last renewal 
 will be a credit upon it. 
 
 Judgments reversed and writs of procedendo awarded. 
 
 Woods v. People's National Bank of Pittsburgh. 
 
 (83 Pennsylvania State, 57.) 
 
 ' Mortgage on real estate to National hank. 
 
 A mortgage to a National bank is valid as to pre-existing debts, but void as to 
 
 future loans.* 
 
 ASSUMPSIT against Robert Woods as indorser of three prom- 
 issory notes. 
 In 1869 and 1870 Robert Woods, the defendant below, indorsed 
 three accommpdation notes of R. L. McAboy, to the amount of 
 $7,000, which notes were discounted by the People's National 
 
 * That a mortgage of real estate to a National bank to secure a contempo- 
 raneous or a future loan is void, was held in the following cases : Kansas VaUey 
 National Bank v. Bowell, ante, p. 264; Merchants' National Bank v. Mears, ante, 
 p. 353; First National Ba/nk v. Haire, ante, p. 480; Orrni v. Merchants' National 
 Bank, ante, p. 490; MatthewsM. Skinker, ante, p. 647; Crocker v. Whitney, ante, 
 p. 745; Fowler V. Scully, ante, p. 854. 
 
 Por special oiroumstanoes under which a mortgage to a National bank has 
 been held valid, see First National Bank v, Haire, ante, p. 180; Omnv, Mer- 
 
SUPEEME COURT, 1876. ggQ 
 
 Woods V. People's National Bank of Pittsburgli. 
 
 Bank of Pittsburgli, the plaintifE below. In March, 1870, the bank 
 loaned McAboy $5,055 upon his own note unindorsed. On Sep- 
 tember 1st, 1870, the wife of McAboy executed a mortgage to the 
 bank for $30,000 to secure the aboye notes and to secure an addi- 
 tional loan to McAboy of 18,000, which latter was made to him 
 September 8th, 1870, McAboy giving the bank two notes for $4,000 
 each. The notes indorsed by Woods were subsequently renewed. 
 Afterward, upon default in payment of the various notes, the bank 
 brought suit upon its mortgage and recovered $13,564.83 upon it, 
 and then brought this action against Woods upon the notes in- 
 dorsed by him. Upon these facts the court below (Stowe, A. J.) 
 instructed the jury to find for the plaintiff, which they did in the 
 sum of $9,338.94. After judgment the defendant below took this 
 writ of error, assigning for error the charge of the court and the 
 refusal of evidence of an admission made by the president of the 
 bank tending to show the purpose for which the mortgage in ques- 
 tion was given to it. 
 
 Hampton & Dalzell, for plaintiff in error. 
 
 M. W. Acheson and W. L. Chalfant, for defendant in error. 
 
 Paxok, J. It was held in Fowler v. Scully, 33 P. P. Smith, 
 456, that the loaning of money by a National bank upon mortgage 
 or other real estate security is ultra vires, and forbidden by the 
 act of Congress. This of course does not apply to the case where a 
 bank has in good faith taken a mortgage by way of security for a 
 previously existing debt. Such case comes within one of the 
 express exceptions of the act of Congress. It follows, therefore, 
 that in so far as the mortgage of Mrs. McAboy to the People's 
 National Bank of Pittsburgh was given to secure money thereafter 
 to be loaned to her husband, it was ultra vires. It is manifest from 
 
 chants' National Bank, ante, p. 490; Upton y. National Bank, ante, p. 618; Bich- 
 a/rds V. Kountz, ante, p. 653. 
 
 A National bank may sell real estate owned by it and take back a mortgage 
 for the purchase-money. New Orleans National Bank v. Raymond, ante, p. 
 516. So a National bank may purchase such real estate as may be necessary to 
 secure a debt due it, though the value of the property be in excess of the debt 
 provided the intent be bona fide, Upton v. National Bank, ante, p. 618. 
 
 See Allen V. Freedman's Savings and Trust Co., 14 Fla. 418, wherein It was 
 held that one who has borrowed money from a bank upon securities on which 
 it was prohibited from lending, cannot avail himself of the prohibition as a 
 defense to an action for the money. 
 112 
 
890 PENNSYLVANIA 
 
 Cake y. The Firat National Bank of Lebanon. 
 
 the evidence that the loan of $8,000 to Mr. McAboy on or about the 
 8th of September, 1870, was upon the faith of the mortgage. As 
 to this loan the mortgage was not a valid security. But it was 
 good as to the indebtedness of Mr. McAboy to the bank existing 
 prior to its execution, amounting to about $13,055. For $7,000 of 
 this sum the bank held the indorsements of the plaintifE in error. 
 His contention is that the bank was bound to apply the money 
 received from a sheriff's sale of the mortgaged premises to the 
 notes held by it at the time the mortgage was given. In this we 
 think he is right. As the indorser of Mr. McAboy's notes, held 
 by the bank, he had a right to call upon the latter to apply the 
 money to the payment of the notes for which alone the mortgage 
 was legally held as security. The mortgage was as much for his 
 benefit as for the bank. The latter has no right to apply the pro- 
 ceeds thereof to the two unsecured notes of $4,000 each. Under 
 the authority of Fowler v. Scully, supra, Mr. McAboy could have 
 objected to such appropriation. Whatever he might have done in 
 this respect, the plaintifE in error as his indorser may do also. 
 
 From what has been said it will be seen that both the assign- 
 ments of error are sustained. 
 
 The judgment is reversed, and a venire facias de novo awarded. 
 
 Cake v. The Fiest Nation-al Ban-kop Lebajston.* 
 Renewal notes — Acceptance of — Set-off for usury. 
 
 Whether other notes have been accepted by a bank in renewal of notes sued 
 on is a question for the jury. 
 
 Where there has been a series of renewal notes given for the continuation of 
 the same original loan, a taint of usury in the first transaction follows down 
 through the whole, and in an action by a National bank on the last of the 
 series, the borrower is entitled to credit for aO, the interest he has paid from 
 the beginning.! 
 
 ACTION against the defendant as an accommodation indorser of 
 a draft and a note, discounted by the plaintifE, a National 
 bank, for the maker, Stine. 
 
 * Not yet reported in the Pennsylvania Reports. 
 + See Overholt v. Sank, ante, p. 883. 
 
SUPEEME COURT, 1878. 891 
 
 Cake V. The First National Bank of Lebanon. 
 Sharp & Alleman, for plaintifE in error. 
 A. L. Smith, for defendant in error. 
 
 Shaeswood, J. We think the first, third, fourth and fifth 
 assignments of error must be sustained, but not the second. 
 
 The defendant below was accommodation indorser for Stine on 
 two notes, which had been discounted by the bank, and being 
 unpaid at maturity were duly protested. Stine procured Cake to 
 indorse renewal notes, and sent them to the bank, who retained 
 them until at least after one of them had fallen due, and then 
 informed Stine that they had not accepted them. No notice of 
 non-payment was giyen Cake on these notes. This suit was insti- 
 tuted on the first notes. It is the very case of Hart t. Boiler, 15 
 S. & R. 162, in which this court held that it was error to take from 
 the jury the question whether the renewal notes were accepted in 
 payment. 
 
 We think, too, that OverhoU v. The National Bank of Mt. Pleas- 
 ant, 1 .Norris, 490, is directly in point on the question raised as to 
 the usurious interest received by the bank. It was there decided 
 that where there has been a series of renewal notes given for the 
 continuation of the same original loan, the taint of usury in the 
 first transaction follows down the descent through the whole line, 
 and when therefore a National bank sues to recover its debt on the 
 last of the series of renewal notes, the borrower is entitled to credit 
 for all interest he has paid from the beginning on the loan, and 
 not merely to the excess above the lawful rate. 
 
 Judgment reversed, and venire facias de novo aioarded. 
 
892 PENNSYLVANIA 
 
 Maynard v. Bank. 
 
 Matuaed V. Bank. 
 
 a Brewster, 483.) 
 ConverHon of State bank info National bank — Effect of. 
 
 The conversion of a State bank into a National bank, under the act of Congress 
 of June 3d, 1864, did not work an annihilation or dissolution, but only a 
 change of the bank. 
 
 Such change does not adeem a residuary legacy in certain shares of the bank, 
 limited upon a life estate in such shares which is to become an absolute 
 one, in case the bank should pay off or refund its stock, by reason of the ex- 
 piration of its charter or from any other cause. The change Is not equiva- 
 lent in law, to a paying off in fact, and the residuary legatee is entitled to the 
 stock on the death of the legatee for life, 
 
 M. Arnold, Jr., for complainant. 
 
 Furman Sheppard, for defendant. 
 
 W. J. McElroy, for the bank. 
 
 Bebwstee, J. This case has been argued on bill and answer. 
 The object of the proceeding is to test the title to 34 shares of 
 stock of the Mechanics' National Bank of this city. 
 
 All the relief sought for by the complainant, save the injunc- 
 tion, could be obtained at law; but as the parties have elected this 
 forum, we have endeavored to consider the case and the able argu- 
 ment on both sides with care. 
 
 The stock in controversy was owned by Anthony Finley in his 
 life-time. By his will he bequeathed the dividends thereon to his 
 sister, Eliza Pinley, for her sole use during her natural life. Then 
 follow the words which have given rise to this litigation : " I do 
 hereby will," the testator says, " that if, at any time during the 
 life of my said sister, the whole or any part of said stock shall be 
 paid off and refunded, by the expiration of the charter, or from 
 any other cause whatsoever, then the amount so paid off and 
 refunded shall be paid to my said sister, for her sole and absolute 
 use and benefit foreYcr." 
 
COMMON PLEAS, 1870. 893 
 
 Haynard v. Bank. 
 
 The bill avers that neither the whole nor any part of the stock 
 has been paid off and refunded, but that the same still stands in 
 the name of Anthony Finley on the books of the bank; that Eliza 
 Finley died in the early part of this year ; that the complainant, as 
 residuary legatee of Anthony Finley, is entitled to the stock, and 
 as executrix of his will is priyileged to transfer it ; but that the 
 bank, having been notified of a claim to said stock by "William 
 Ayres, has refused to permit the complainant to transfer it. 
 
 The answer of the defendant Ayres, admitting all the averments 
 of the bill save that of title in the complainant, presents a claim 
 to the stock founded upon the fact that the bank was formerly a 
 State institution ; that, having become "an association for carry- 
 ing on the business of banking under the laws of the United 
 States," it is "to be deemed as having surrendered its charter," 
 and that thereby the stock became the property of Eliza Finley, 
 precisely as if it had been paid off and refunded as provided for by 
 the will. 
 
 The answer of Mr. Ayres then presents his title through Eliza 
 Finley, under an instrument of date February 18th, 1867, whereby, 
 in consideration of his agreeing to pay her an annuity of $135, she 
 transferred to him inter alia this stock. 
 
 She died before the first installment of the annuity fell due, but 
 his rights are the same as if she had lived many years. 
 
 The question, therefore, is simply this: Was the change from a 
 State to a National bank a paying off and a refunding of the 
 stock ? It is very clear that the shares were never, in fact, paid off; 
 for had this been done, Eliza Finley would have had the cash. I 
 do not dwell on the word " refunded," which, in strictness, meaning 
 " to pour back," was evidently used by the testator as a synonym 
 for "paid," which is also one of its definitions. 
 
 The complainant says the stock has never been paid off or re- 
 funded, but that it still stands in the name of Anthony Finley. 
 The defendant does not deny this averment, but simply contends 
 that by the change in the character of the institution the shares 
 " became vested in the said Eliza Finley for her sole and absolute 
 use." The answer to this is, that the will does not so read. The 
 testator does not say if this bank shall surrender this charter or 
 become a National bank the stock shall belong to Eliza Finley; 
 but, regarding it probably as the best investment of the money, 
 and willing that she should have the dividends for life, he yet 
 
894 PENNSYLVANIA 
 
 Maynard v. Bank. 
 
 foresaw that from some cause the shares might be paid off, and in 
 that contingency she was to be the absolute owner of the money. 
 She might, perhaps, have claimed an appraisement of the stock, 
 but it is useless to inquire whether she had this right, for if pos- 
 sessed of it, she never exercised it, and was content to allow the 
 stock to stand, as it had stood since her brother's decease, in his 
 name. Unless, therefore, the defendant can establish the impos- 
 sible proposition that stock still outstanding has been paid ofE, his 
 case would seem to be hopeless. 
 
 Since, then, these shares were never paid off by the bank or 
 received by the legatee, it would seem to be unnecessary to con- 
 sider the question presented by the defendant Ayres, that this 
 change in the character of the bank was equivalent to a refunding 
 of the stock, or, in other words, was a payment in law if not in 
 fact. The act of Congress under which this transition occurred 
 was approved June 3d, 1864. The 44th section, 15 Stat, at Large, 
 pp. 112, 113, enacts that any bank incorporated by special law of 
 any State may become a National bank, and the required certifi- 
 cate may be made by the directors, and they must certify that 
 two-thirds of the stockholders have authorized them to change and 
 convert the bank into a National bank. It would seem, therefore, 
 that there was to be no annihilation or dissolution, but rather a 
 "change." But were this otherwise, it would seem to be well 
 settled that the transformation from State to National bank stock 
 did not adeem the legacy, for an ademption can only take place in 
 the life-time of the testator, and the principles governing such cases 
 would seem to be conclusive against the defendant. See 1 Eoper 
 jOn Legacies, 340, 241; Walton y. Walton, 7 Johns. Ch. Cas. 358, 
 land Bringhurst v. CutKbert, 6 Binn. 398. • 
 
 Let a decree be drawn for the complainant. 
 
SUPEEMB COURT, 1869. 895 
 
 Lockwood V. The American National Bank. 
 
 LooKwooD V. The Ambkioan Natiokal Baitk. 
 
 (9 Rhode Island, 308.) 
 Nationai banks — Directors — QucUifleation of — By-laws. 
 
 Where no qualification is required and there is no usage to control, a person 
 who is elected a bank director is presumed to accept the oflBoe unless he de- 
 cline it. This presumption may be rebutted. Whether simple non-action 
 as a director, for five months, would be ordinarily sufficient to rebut it — 
 query. But where the stockholders of a bank, in an instrument authorizing 
 its conversion from a State to a National bank, named all the directors who 
 had been elected at the last annual election as those who are now directors 
 of said bank," the court cannot hold that two of those so named were not 
 ■directors at the time of such conversion, because they had never acted in 
 that capacity since their election five months previously. 
 
 By the provisions of section 44 of the National Banking Act, upon conversion 
 of a State to a National bank, all the directors of the former become those 
 of the latter, until an election or appointment by the National bank. Senible, 
 that no oath is required from these ad interim directors, the oath prescribed 
 by section 9 of the aforesaid act being designated for those regularly elected 
 by the National bank, but, assuming its necessity, a majority of those who 
 were the directors of the State bank before its conversion is necessary to 
 make a quorum of the board of the National bank. 
 
 In all cases where an act is to be done by a corporate body or a part of a cor- 
 porate body and the number is definite, a majority of the whole number is 
 necessary to constitute a legal meeting, although at a legal meeting, where 
 a quorum is present, a majority of those present may act. 
 
 Hence, a by-law adopted at a meeting of six ad interim directors of a National 
 bank, which had twelve directors before its conversion, is invalid, because 
 not adopted by a majority or quorum of the board. 
 
 ACTION on the case to recover damages of the defendant bank 
 for refusing to permit transfers to be made on their banks to 
 the plaintiff of certain shares of the stock. The defense was, that 
 tinder a by-law of the bank no stockholders of the bank could sell 
 and transfer his stock while indebted to the bank, and that the 
 stockholder in whose name the shares stood on the books of the 
 bank, and from whom plaintiff claimed, was indebted to the bank 
 when he made the sale. In several other cases considered at the 
 same time the Supreme Court of Ehode Island held that such a 
 
896 RHODE ISLAND 
 
 Lockwood V. The American National Bank. 
 
 by-law was Talid {Lockwood v. Merchants' National Bank, 9 E. I 
 308); but the Supreme Court of the United States has since decided 
 that in no way can a National bank restrain a transfer of its stock. 
 Bank v. Bullard, ante, p. 93; therefore the decision of the Ehode 
 Island court on that question is not included. 
 
 Currey S Rogers, for plaintiff. 
 
 Bradley, Hart S Markland, for defendants. 
 
 DuKFBE, J, The defendants claim that the by-law in question 
 was adopted by a quorum of the directors of the American 
 National Bank on the two grounds: first, that there were only ten 
 directors of- the bank prerious to its conversion; and, second, that 
 the ten directors who executed the organization certificate and 
 took the oath, became, under the United States law, the directors 
 of the National bank, exclusively of any others. 
 
 1. The non-acting directors were elected with the other directors 
 by the bank when a State bank. No subsequent qualification was 
 required of them. They never signified their acceptance. The 
 other directors never elected others to fill their places at the board. 
 For any thing we can see, they might have acted as directors at any 
 time before the conversion, if they had chosen. Where no qualifi- 
 cation is required and there is no usage to control, we think a per- 
 son who is elected a bank director may be presumed to accept 
 unless he declines. This presumption may doubtless, be rebutted, 
 and perhaps simple non-action for five months would be sufficient 
 to rebut it in some cases. But in this case the stockholders who 
 authorized the conversion recognized the non-acting directors as 
 directors at the time of the conversion. They name them, in the 
 instrument authorizing the conversion, with the other ten as those 
 " who are now the directors of said American Bank." The instru- 
 ment may be invalid in so far as it was intended to operate as a 
 reappointment, but considered as a recognition of the status of the 
 non-acting directors, it is none the less significant. We think we 
 ought not to find for the benefit of the bank that there were only 
 ten directors previous to its conversion because of the simple non- 
 action of these two, when the stockholders authorizing the conver- 
 sion recognized these two with the other ten at the time they 
 authorized the same. 
 
SUPEBME COUET, 1869. 897 
 
 Lockwood V. The American National Bank. 
 
 2. The National Currency Act, section 44, prescribes the mode 
 in which State banks may become National banks. It provides 
 that " in such case, the articles of association and the organization 
 certificate required by this act may be execubed by a majority of the 
 directors of the bank or banking institution;" that "the certificate 
 shall declare that the owners of two-thirds of the capital stock 
 have authorized the directors to make such certificate," etc.; that 
 " a majority of the directors, after executing said articles of asso- 
 ciation and organization certificate, shall have power to execute all 
 other papers and to do whatever may be required to make its organ- 
 ization perfect and complete as a National association," etc., and 
 that " the directors aforesaid may be the directors of the association 
 until others" are elected or appointed in accordance with the pro- 
 visions of this act." 
 
 We think the words, "the directors aforesaid," mean those who 
 are the directors of the State bank, the design being that the 
 directors of the State bank should be the directors of the National 
 bank until an election or appointment by the National bank. 
 They are " the directors," a majority of whom are authorized by 
 the section to do certain acts. This seems to us to be the natural 
 construction, and we think of no good reason for not adopting it. 
 We cannot suppose it was designed that the bank should lose the 
 services of a director or of its president, merely because he did not 
 sign the articles of association and the organization certificate; for 
 the omission may have been owing to a temporary sickness or 
 absence. If the intention had been that those only of the direct- 
 ors of the State bank, who executed the articles and certificate, 
 should be directors of the National bank, the intention would, we 
 think, as it very easily could, have been more unmistakably ex- 
 pressed. 
 
 We also think that no oath was, by the act, required of these ad 
 interim directors. Section 9 provides that " each director, when 
 appointed or elected, shall take an oath," etc. These directors were 
 not elected or appointed for the interim, but held under the act by 
 virtue of their former election. The 44th section says, " the direct- 
 ors aforesaid may be the directors of the association until others 
 are elected or appointed in accordance with the provisions of this 
 act." It adopts the directors of the State bank as the directors of 
 the National bank for the time being. It makes no mention of 
 any oath as being required of them, and it might happen that 
 113 
 
898 SOUTH CAROLINA 
 
 Charleston v. People's National Bank. 
 
 some of the directors thus adopted, not being owners of the amount 
 of stock required by the act, could not take the prescribed oath. 
 And see Comptroller's Instructions, is_sued in 1864, page 9. 
 
 But even if the oath be necessary, it does not follow that a 
 majority of only those who take the oath would constitute a quorum 
 of the !N"ational board. On the contrary, we think it would 
 still require, to make up such a 'quorum, a majority of "the direct- 
 ors aforesaid," i. e., of those who were the directors of the bank 
 before its conyersion. 
 
 We consequently still feel constrained to adhere to our former 
 opinion, that the twelve directors elected by the State bank 
 became, by force of the National Currency Act, the directors of 
 the National bank, and that, therefore, the by-law in question, 
 being adopted by only six of them, was not adopted by a majority 
 or quorum of the board, and so did not become a valid by-law. 
 We therefore render 
 
 Judgment for the plaintiffs. 
 
 Chaelestok v. People's National Bakk. 
 
 (5 South Carolina, 103.) 
 National hank — Increase of capital stock — Taxation of increased stock. 
 
 Where a National bank voted to increase its capital stock, and the requisite 
 number of new shares were subscribed and paid for before the 1st of Janu- 
 ary, 1873, and a semi-annual dividend, declared as of that day, was paid upon 
 the new shares, as well as the old, but such increase of capital was not 
 approved by the Comptroller of the Currency, nor his certificate issued until 
 the 5th of January, 1872. Meld, that such new shares were not the subjects 
 of taxation under an ordinance imposing a tax on bank shares "in the 
 hands of the tax payers on the 1st of January, 1872." 
 
 There can be no increase of the capital of a National bank until the Comp- 
 troller of the Currency approves thereof and issues his certificate, as pro- 
 vided by section 13 of the act of Congress providing for the organization of 
 National banks. 
 
 CASE agreed upon in a controversy submitted without action. 
 The city council of Charleston claims to recover of the stock- 
 holders of the People's National Bank $6,312.50. 
 
SUPEEME OOUKT, 1874. 
 
 Charleston v. People's National Bank. 
 
 The following are the facts upon which said controversy de- 
 pends: 
 
 1. That the city council of Charleston is a municipal corporation 
 under the laws of the State of South Carolina, " with power and 
 authority to make such assessments on the inhabitants of Charles- 
 ton, or those who hold taxable property within the same, for the 
 safety, convenience, benefit and advantage of the said city as shall 
 appear to them expedient." 
 
 2. That an ordinance to raise supplies for the year 1873, ratified 
 on the day of , 1872, by said city council imposed a 
 tax of two per cent upon the taxable property within said city, in 
 the haiids of tax payers, on the 1st of January, 1872. 
 
 3. That the People's National Bank, a banking association 
 within the limits of the city of Charleston, organized under the 
 laws of the United States, on the 12th day of February, 1872, 
 returned seven thousand five hundred shares, valued at $100 each, 
 as in the hands of its stockholders, subject to taxation, upon 
 which, after deducting value of real estate and city stock, at 
 $23,440, a tax of two per cent was duly assessed by the city 
 appraiser, and the same has been duly paid by said bank for its 
 stockholders, pursuant to section 28 of ordinance of February 10, 
 1870. 
 
 4. That, on the 1st day of July, A. D. 1871, said banking associ- 
 ation voted to increase the number of shares of capital stock in 
 said bank to one thousand, subject to the approval of the Comp- 
 troller of the Currency. Between the 1st of July, 1871, and the 1st 
 of January, 1872, said two thousand five hundred additional shares 
 were duly subscribed, and the amount thereof, $250,000, secured to 
 be paid to said banking association, and the securities were held by 
 the cashier in trust for it. The said banking association declared 
 and paid a semi-annual dividend upon all of its said stock, includ- 
 ing said increase of two thousand five hundred shares, on the 7th 
 day of January, A. D. 1872, for the half year ending January 1, 
 1872. 
 
 5. That the subscribers to said additional shares of stock did re- 
 ceive certificates of stock representing the same after the 2d of 
 January, 1872. 
 
 6. That on the 15th day of June, A. D. 1872, said banking asso- 
 ciation having failed to return said additional shares for taxation 
 to the city council, the city appraiser, pursuant to sections 29 and 
 
900 SOUTH CAEOLINA 
 
 Charleston v. People's Kational Bank. 
 
 38 of the ordinance of the city, of February 10th, 1873, proceeded 
 to list said two thousand five hundred shares of stock for taxation, 
 and fixed the value thereof at $100 per share, amounting in 
 all to $250,000, and levied pursuant to ordinance of city council, 
 of the day of , A. D. 1873, a tax of two per cent 
 
 thereon, which tax amounted to the sum of $5,000, which, not 
 having been paid at the times recfuired by ordinance, is subject to 
 a penalty of twenty per cent for non-payment, pursuant to section 
 48 of the ordinance of February 10th, 1873, amounting to $1,000. 
 There has been a school tax assessed by the Charleston city board 
 of school commissioners, of three hundred and twelve dollars and 
 fifty cents ($312.50), to be collected by the city council of Charles- 
 ton, and if said stock is taxable the same is now due to plaintiff. 
 
 7. The said banking association did not obtain leave of the 
 United States Comptroller of Currency to increase its capital stock 
 till after the 1st day of January, 1873; and the Comptroller of Cur- 
 rency refused to recognize any increase of the capital stock of the 
 bank until the 5th day of January, 1872; and, the 3d day of Janu- 
 ary, 1873, said banking association returned to the Comptroller of 
 CuiTsncy, at Washington, only seven thousand five hundred shares 
 as the amount of its capital stock, subject to taxation by the gen- 
 eral government, paid the tax thereon, and the said return and 
 payment were accepted by the said Comptroller. 
 
 The question submitted to the court is: Had the city council a 
 right to levy the tax on the two thousand five hundred shares of 
 stock, under the facts stated? 
 
 The court below ordered that judgment be entered against the 
 defendant in the sum of $6,312.50, with costs, and that the plain- 
 tiff have execution thereof. 
 
 The defendant appealed. 
 
 Simonton, for appellant. 
 
 Minot, city attorney, Corhin S Stone, for respondent. 
 
 MosBS, C. J. The single question presented by the case agreed 
 upon in a controversy submitted without action between these par- 
 ties is, whether the city council of Charleston had a right to levy 
 the tax on the twenby-five hundred shares of the stock referred to 
 in the brief. 
 
SUPEEME OOUKT, 1874. 90] 
 
 Charleston v. People's National Bank. 
 
 It is not necessary to repeat the facts on which our judgment is 
 to be pronounced, for they are recited in the agreement which pre- 
 cedes this opinion. 
 
 The ordinance of the city council imposed the tax '* on the shares 
 in the hands of its shareholders, respectively" (§ 22, p. 96, city 
 ordinances, ISbQ-lO), and if the shares upon which it is claimed 
 the proposed tax is to operate can be comprehended within its 
 terms, the judgment of the Circuit Court must be affirmed. 
 
 The institution in question was established and organized as one 
 of the National banks, under the act of Congress of 3d June, 1865, 
 "to provide a National currency secured," etc. (13 TJ. S. Statutes, 
 99). For its formation it was necessary that'a certificate ahould be 
 prepared and filed with the Comptroller of the Currency at "Wash- 
 ington, which should contain, among other things, a specification 
 of the amount of its capital stock, and the number of shares into 
 which it was to be divided. This is the evidence of the amount of 
 such capital stock and its distribution into shares, and these last 
 are then fixed, designated and known at the bureau of currency 
 by the record preserved in the proper office thereof. The act 
 further provides by its 13th section, page 103, " for an increase of 
 the capital from time to time, provided that the maximum of such 
 increase shall be determined by the Comptroller of the Currency; 
 and no increase shall be valid until, the whole amount of such 
 increase shall be paid in, and notice thereof transmitted to the 
 Comptroller, and his certificate obtained, specifying the amount 
 of such increase of capital stock, with his approval thereof, and 
 that it has been duly paid in as a part of the capital of such asso- 
 ciation. " 
 
 The argument, on the part of the respondent, proceeds upon the 
 ground that the proposed increase of the capital by the said twenty- 
 five hundred shares was effected by the subscription to that extent, 
 and the acceptance of certain securities therefor, held by the cashier 
 in trust for the association. If this is well founded, then the 
 increase does not depend on a compliance with the conditions 
 expressed in the act of Congress, but on arrangements which the 
 shareholders, originally organized under it, may make with third 
 persons, in the face of the very law to which they owe the exist- 
 ence of their association, and under which, it is to be assumed, 
 they are at least to carry out the obligations which it imposes. 
 The error is in the attempt to give force to these shares as valid 
 
902 SOUTH CAROLINA 
 
 Charleston v. People's National Bank. 
 
 and properly constituted shares of the association, before the 
 approval of the ComptroUerj when, in point of fact, the increase of 
 the capital depended upon it. The resolution on the lat day of 
 July, 1871, to increase the number of shares, by its very terms, 
 made it dependent on such approval. Until obtained, the capital 
 remained as originally fixed. The act of the stockholders to that 
 end was no more than a proposition among themselves, the effect 
 of which was subject to the assent of the higher authority desig- 
 nated by the act of Congress. A solution of the proposition may 
 be tested by the inquiry, whether, if before the 7th January, 1872, 
 any one of the so-called stockholders could have required the asso- 
 ciation to issue a certificate for the shares so agreed to be taken by 
 him. Only one answer couid be given to it, and that, it appears 
 to us, would conclude the respondent from imposing the tax, which 
 must be upon shares of the capital stock, which, before the 7th 
 January, 1873, was limited to the amount originally allowed by 
 the certificate of organization. 
 
 It is supposed that these additional shares are subject to the tax 
 because the $250,000 which they represent was actually paid before 
 the 1st of January, 1872, and a semi-annual dividend declared and 
 paid on them for the half year then ending. The ordinance in 
 question "imposed the tax on taxable property within the said city 
 in the hands of tax payers on 1st January, 1872." 
 
 The proposed increase of the capital was required by the act of 
 Congress to be paid in as a precedent condition, on the performance 
 of which the approval of the Comptroller depended. If he had 
 withheld it, the very requisite which was necessary to make the 
 money deposited the medium through which the certificates of the 
 additional shares could of right be demanded, was wanting. 
 
 That the money thus subscribed remained in possession of the 
 bank, and that those who had advanced it, received on 7th January, 
 1872, a dividend for the half year ending on the first day of the 
 said month, in common with the original stockholders, cannot af- 
 fect the question. The original stockholders could apply the prof- 
 its of the bank at their own pleasure, and if those, who were in- 
 terested in restricting the application of the dividends to the orig- 
 inal stock do not complain, their want of objection cannot con- 
 vert what must be considered as mere proposals for stock into 
 valid and legal shares. The tax is not on the dividend, but on the 
 share. The view which the Comptroller of the Currency took of 
 
SUPEBME COUET, 1875. 
 
 National Bank of Chattanooga v. Mayor. 
 
 the liability of the said twenty-five hundred shares to the tax of 
 the government is clear, from the fact that although the said bank- 
 ing association, on 3d January, 1872, returned to him, subject to 
 taxation by the government, only seven thousand five hundred 
 shares, he imposed no tax beyond them, and accepted the said re- 
 turn payment as a compliance with the law. 
 
 While we are in no way bound by his decision, it cannot preju- 
 dice our conclusion, that the public officer charged by Congress 
 with the duty of estimating the capital of these associations, on 
 which the United States tax was to be laid, on the same facts 
 before him, with the knowledge of the further extension of the 
 capital of this bank, did not exact any tax on the said twenty-five 
 hundred shares. 
 
 The answer of the court is, that the city council of Charleston 
 did not have the right to levy the tax on the twenty-five hundred 
 shares under the facts stated. 
 
 The judgment of the Circuit Court is, therefore, reversed. 
 
 Judgment reversed. 
 
 Nationai Bank oi' Chattan'ooga v. Matob. 
 
 (8 Heiskell, 814.) 
 NatwriM banks not liable to privilege tax. 
 
 National banks are not liable to a privilege tax imposed by city ordinance on 
 occupations and business transactions altbough " banks and banking " are 
 in terms included. 
 
 APPEAL by complainant from the decree of the Chancery Court 
 at Chattanooga, dismissing bill on demurrer, April Term, 
 1875. D. M. Key, Ch. 
 
 Wheeler & Marshall, for complainants. 
 
 Q. A. Wood, for defendants. 
 
 NiCHOLSOK, C. J., delivered the opinion of the court. 
 This bill is filed in this case to enjoin the enforcement of a dis- 
 tress warrant, issued by the corporate authorities of Chattanooga 
 
904 TENNESSEE 
 
 National Bank of Chattanooga v. Mayor. 
 
 against the First National Bank, for failing to pay a tax of $100, 
 assessed by them on the priTilege of banking. The bill was de- 
 murred to on several grounds, and the demurrer sustained and the 
 bill dismissed. The National Bank has appealed. 
 
 The charter of the city of Chattanooga authorizes its municipal 
 authorities to levy and collect taxes on all privileges taxable by the 
 laws of the State. By section 46>of the act of 1873, chapter 118, 
 it is enacted, " that the occupation and business transactions that 
 shall be deemed privileges, and be taxed, and not pursaed or done 
 without license, are the following," and among others, " banks and 
 banking." By this enactment, the occupation of banking is for- 
 bidden, except upon license issued, and then it becomes a privilege 
 and subject to taxation. If under this act, banking is taxable as a 
 privilege, by the State, then the corporation of Chattanooga had 
 the power to levy the tax complained of. 
 
 We think it manifest that it was not the intention of the Legis- 
 lature to subject the National banks to taxation for the exercise of 
 the privilege. To constitute a privilege, the occupation or busi- 
 ness transactions must be such, that the Legislature could forbid 
 it to be pursued or done, and which could only be pursued or done, 
 under a license issued by the authority of the State. The Na- 
 tional banks are authorized to pursue their banking business by 
 virtue of acts of Congress. As the Legislature has no power to 
 prohibit the exercise of the privilege so conferred by Congress, it 
 would seem clear that it was not in their contemplation to include 
 National banks among the privileges to be taxed. 
 
 It follows that the corporate authorities of Chattanooga had no 
 power to tax the First National Bank as a privilege, and that the 
 distress warrant was illegally issued and is void. 
 
 The bank might have proceeded by certiorari and supersedeas, 
 to have the warrant quashed, but it is well settled that the Chan- 
 cery Court has jurisdiction, to declare void, judgments rendered 
 without authority, and to enjoin process issued thereon. 
 
 The decree sustaining the demurrer is sound, and the cause re- 
 manded for answer and further proceedings. The costs of the 
 court will be .paid by the defendant. 
 
SUPKEMB COUET, 1875. 905 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 WiLET T. The First National Bank of Bbattleboko. 
 
 (47 Vermont, 646.) 
 NationaZ banks — Special deposits for safe-keeping. • 
 
 The taking of special deposits, to keep merely for the accommodation of the 
 depositor, is not within the authorized business of National banks ; and the 
 cashiers of suth banks have no power to bind them on any express contract 
 accompanying, or any implied contract arising out of, such taking. {See 
 note, p. 911.) 
 
 ACTION on the case with a count in trover for certain United 
 States bonds. Plea, the general issue. 
 The plaintifE's evidence tended to show that defendant was a 
 National bank organized under the act of Congress of June, 1864, 
 known as the " National Currency Actj " that in January, 1869, he 
 delivered, at their banking-house in Brattleboro, to S. M. Waite, 
 the cashier. United States bonds of the value of $3,400, and 
 received a written receipt therefor, as follows: 
 
 " The First National Bank op Bbattleboko. 
 
 " Brattleboro, Vt., Jan. 8, 1869. 
 " Lucius L. Wiley has deposited in this bank twenty-four hun-j^j^ ,_ ,jjj 
 dred dollars of b-203, 1867, for safe-keeping, as a special deposit. jj?y i| mo 
 
 " 8. M. Waite, C." '""• '■ '"' 
 
 That at the several dates minuted on the margin of said paper, 
 he called at said bank and said Waite paid him the interest on said 
 bonds and entered said memoranda on the margin of the paper; 
 that in August, 1871, he presented said receipt to said Waite at said 
 bank, and demanded said bonds of him; that said Waite did not 
 then, nor had he since, delivered said bonds to the plaintiff; that 
 some time before said demand was made, said Waite informed him 
 that said bonds had been stolen the June before. The defendant 
 offered no evidence, and declined to go to the jury with any ques- 
 tion of fact, but asked the court to hold as matter of law that 
 under said act of Congress National banks could not be held liable 
 for special deposits; that said Waite could only bind himself, and 
 114 
 
906 VEEMONT 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 not the bank, by the contract set forth in said receipt. No other 
 question was raised by defendant. 
 
 The court, pro forma, declined to hold as requested, but directed 
 a Terdict for the plaintiff; to which the defendant excepted. 
 
 Field & Tyler and E. J. Phelps, for defendant. 
 
 G. N. Davenport, for plaintiff. 
 
 Whbelee, J. Although the plaintiff has in this action declared 
 as for a tort, still, so far as the tort rests upon contract, the same 
 rules are to goyern that would if the contract itself had been 
 declared upon; as was said concerning actions of tort founded on 
 the contracts of infants, in Towns v. Wiley, 33 Vt. 355, and was 
 held respecting the tort of a married woman resting on her con- 
 tract, in Woodward v. Barnes, 46 Vt. 333. The assumption of the 
 obligation that the law imposes upon a depositary to keep the 
 deposit is, of itself, a contract, as is apparent from the nature of 
 the transaction and from authority. Jones on Bailm., § 50. In 
 this case there is no evidence of any actual conversion of the plain- 
 tiff's bonds to the use of the defendant bank. And in the evidence 
 of some constructive conversion, which the demand and refusal 
 might otherwise afford, what was said in connection with making 
 the refusal is to be taken as a part of it, and altogether that does 
 not show any refusal in denial of the plaintiff's right, but rather a 
 want of power to deliver, and an excuse for it, which would be 
 very doubtful if not insufficient evidence of a conversion if the 
 demand had been made of the party who had become the depositary. 
 3 Greenl. Ev., § 644. And would be none whatever of a conver- 
 sion by the bank, in this case, unless it had itself become the 
 depositary. The transactions by which the plaintiff claims that 
 the bank had become the depositary were wholly with the cashier, 
 and their effect to charge the bank rests entirely upon his power 
 in that direction. There is no controversy, and could not properly 
 be any, but that if the taking of these bonds to keep, as they were 
 taken by the cashier, was within the scope of the corporative busi- 
 ness of the bank, then the bank did become the depositary of them, 
 subject to the liabilities of that relation, and, if without, not. A 
 bank is an institution for the custody, loaning, exchange, or issue 
 of money, and for facilitating the transmission of funds by drafts 
 
SUPEBMB COURT, 1875. 907 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 or bills of exchange. Webster's Diet., Burrill's Law Diet., Boa- 
 Tier's Law Diet., tit. Banks. In Foster v. Essex Bank, 17 Mass. 
 497, the bank was chartered by that name, with power to contract 
 by it, and without other express powers, leaving the scope of its 
 corporate business almost wholly to implication; but, according to 
 the special verdict in the case, it had always been its practice to 
 receive special deposits of money and other valuable things, with 
 the knowledge of and without objection by its directors. An im- 
 portant question in the case, which was debated by as able counsel 
 as any in the country, was as to the power of the president and 
 cashier to bind the bank by taking a large amount of gold coin in 
 kegs to keep, on the taking of which a memorandum of its weight 
 and amount was made, to which the president appended a state- 
 ment signed by him, but not by his official title, that the coin was 
 weighed in his presence, and the cashier a statement signed by 
 him as cashier, that it was left at the laank for safe-keeping. After 
 much deliberation it was decided that, on account of that prac- 
 tice, and pot because it was a part of legitimate banking business, 
 the bank became charged with the liabilities of a depositary of the 
 coin. That case is much relied upon for the plaintiff in this case, 
 and no other case, as to the scope of the powers of banks, of sufll- 
 cient importance to attract the attention of counsel, appears to 
 have arisen and been decided "between that and the passage of the 
 act of Congress in 1864, under which this bank was organized. In 
 authorizing the formation of banks under that act, the framers of 
 it must have had in view what the objects of banks were defined 
 to be, what their powers were understood to be. And with those 
 things in view, after providing how the banks might be organized 
 and officered, make contracts, sue and defend, they enacted that 
 the banks might exercise, under that act, "all such incidental 
 powers as shall be necessary to carry on the business of banking by 
 discounting and negotiating promissory notes, drafts, bills of ex- 
 change, and other evidences of debt; by receiving deposits; by 
 buying and selling exchange, coin and bullion; by loaning money 
 on personal security; by obtaining, issuing, and circulating notes 
 according to the provisions of this act." Deposits in banks had 
 then long been well understood to mean the placing of money in 
 banks to the credit of the depositors, to be used by the banks as 
 their own, and be drawn against by, or paid to the depositors at 
 their pleasure, and not the delivery of either money, securities or 
 
908 VERMONT 
 
 Wiley Y. The First National Bank of Brattle boro. 
 
 other property, to be specifically kept and redelivered. These lat- 
 ter had been equally well known as special deposits. Story on 
 Bailm., § 88; Foster v. Bssex Bank, 17 Mass. 497. The receiving 
 of such special deposits is not in any sense necessary to carrying on 
 the business of banking. If made of money, even, no use could be 
 made of it whatever; nor could any profit be derived from it, 
 unless charge should be made* for the custody; and then that 
 business would be more like that of a warehouseman than that of a 
 banker. The receiving of such general deposits is a part of ordin- 
 ary banking business, and power to receive them is necessary to 
 carrying on that part, and useful to carrying on others; and when 
 Congress granted to the banks the incidental powers necessary to 
 carry on the business of banking by receiving deposits, the kind of 
 deposits that the settled meaning of the term, used in such con- 
 nection, would apply to, and the kind that would answer the 
 description as to being necessary, must have been intended. The 
 express grant of the powers mentioned is, on familiar principles, 
 an Implied exclusion of all not mentioned. It has been urged with 
 plausibility for the plaintifE, that the mention of special deposits 
 in section 46 of the act, shows that such were meant to be included 
 among those that the banks, by section 8, are authorized to receive . 
 But the provisions of section 46 are made solely with reference to 
 winding up the affairs of banks after their business has been 
 stopped, and not at all with reference to the prosecution of it ; 
 and this part of the section has especial reference to restricting, and 
 not any to enlarging their powers. And then banks that would 
 have deposits as security for loans might have their business 
 stopped; and, if so, under the provision that they should not 
 prosecute business except to receive and keep their money, they 
 might be embarrassed about such special deposits, on payment of 
 the debts, without such a provision as that in section 46 authoriz- 
 ing the delivery of them. But whatever else may have been the 
 purpose of inserting that clause there, it seems plain that it was 
 not intended to add to powers that had been so categorically set 
 forth in another separate section as to indicate that all were in- 
 tended to be named there. This act of Congress, besides authoriz- 
 ing the formation of banks, provided a mode for organizing them 
 "by the shareholders signing a certificate stating the name, place, 
 and amount of stock of the bank, the number of shares to each 
 stockholder, and a declaration that the certificate was made to enable 
 
SUPEEME COUET, 1875. 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 them to avail tliemselves of the advantages of that act. In the 
 absence of any showing, it is presumed from the concession that 
 this is a National bank organized under that act, that it was 
 organized in that mode. And in organizing in that way, the share- 
 holders would have a right to and would understand that they 
 were engaging in no business except that which the act authorized; 
 and that their officers chosen by them under the act would have no 
 authority to enter into any business other than that, to bind them; 
 and to allow the officers to jeopardize their interests by engaging 
 in other business to the advantage of other persons, would allow 
 the officers to perpetrate a fraud on the shareholders for the benefit 
 of others. 
 
 It is insisted for the plaintiff, that the cashier, by taking the 
 bonds and delivering the written certificate that they were de- 
 posited in the bank for safe-keeping, bound the bank to keep them 
 safely, and that it has thereby become responsible for them. But, 
 although Lord Coke in his report of Southcot^s case, 4 Eep. 83, 
 and in his commentary on Littleton, 1 Inst. 89, a, i, considered 
 that a bailment to keep merely, and one to keep safely, were of the 
 same obligation; other reports of that case do not seem to warrant 
 his conclusion from it. Souihcote v. Bennett, Cro. Eliz. 815. And 
 it appears to be now well settled, that there is a substantial differ- 
 ence between the two undertakings. Goggs v. Bernard, 2 Ld. 
 Eaym. 911; Jones on Bailm. 43; Story on Bailm., § 72. In Foster 
 V. Essex Bank, it was expressly decided that neither the cashier nor 
 the president of the bank, even when it had followed the practice 
 of taking special deposits, could bind it by an express promise to 
 keep the coin deposited safely, because such a promise would be 
 outside the practice of taking to keep merely. And clearly on the 
 authority of that case, the cashier in this case could not bind this 
 bank by an express promise to keep the plaintiff's bonds safely. 
 And the undertaking to keep, implied from the mere acceptance 
 of a deposit, is as far outside the authorized business of this bank, 
 as that express undertaking was outside the practice of that one. 
 This case does not show that the cashier placed these bonds in the 
 vault, or with the property of the bank at all; but doubtless the 
 plaintiff expected he would and he did put them into the vault of 
 the bank. But if he did, he did not do it as the agent of the 
 shareholders of the bank in their corporate capacity, for he had 
 not been made agent for that purpose. If he had himself become 
 
910 VERMONT 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 the depositary, and put them there because he considered that to 
 be a safe place for him to keep them in, then the bank is no more 
 liable for them than it would be for bonds of his own if he should 
 put them there, for the same reason. If he was the plaintiff's agent 
 in the putting them there, they were there at the plaintiff's risk, as 
 much as they would have been if the plaintiff had himself, with leave 
 of the person in charge, placed them there. In neither case would 
 the bank be any more liable than a merchant would be if the 
 plaintiff should get his clerk to lock bonds of the plaintiff in his 
 safe; or than a town would be if he should get the town clerk to 
 lock his bonds into the safe used to keep the town records in. The 
 cashier had no authority to bind the bank by any contract for the 
 custody of the bonds and the mere fact, if it was the fact, that 
 they got into the vault of the bank, would not charge the bank 
 with their custody. National banks have uses for government 
 bonds, and might in various ways, probably, convert them to their 
 use, and should they do so, they would unquestionably be liable 
 for the tort, as natural or other artificial persons would; but as 
 this case now stands, no such cause of action appears. 
 
 Foster v. Essex BanTc is the only one of the cases cited in argu- 
 ment, or that has been observed, that has involved any question . 
 enough like the leading one in this case, to afford any direct guide 
 for its decision; and there is this difference between that case and 
 this, that in that case the charter did not proceed to express what 
 powers the bank should have to make contracts and to do business, 
 while in this, the act under which this bank is organized does 
 expressly set forth what powers the bank should have, and does 
 not include power to take special deposits among them. This case 
 would have been like that as to powers of the banks, if the act of 
 Congress, after authorizing the formation of the banks with powers 
 to contract, sue and be sued, had stopped there, without setting 
 forth any thing about the business as to which they might contract. 
 As it is, the case has had to be decided more upon the construc- 
 tion of the act of Congress, considered with reference to settled 
 principles that stand about the subject, than upon decided cases. 
 And upon that act, so considered, it is determined here that the 
 taking such special deposits to keep, merely for the accommodation 
 of the depositor, is not within the authorized business of such 
 banks, and that their cashiers have no power to bind them to any 
 liability on any express contract accompanying, or any implied con- 
 
SUPKBMB COUET, 1875. 
 
 911 
 
 Wiley V. The First National Bank of Brattleboro. 
 
 tract arising out of, such taking. And this conclusion cannot 
 work any injustice or hardship to the plaintifE, for he dealt with 
 the cashier because he chose to, not because he was obliged to; 
 and if the cashier in the dealings assumed to have any power he 
 did not have, the plaintiff trusted him in that respect, and has his 
 responsibility to rely upon to vindicate the assumption. And if 
 the cashier incurred any liability as for himself, the plaintiff like- 
 wise trusted him about that, and has the same responsibility of the 
 cashier to look to for it. 
 
 Judgment reversed and cause remanded. 
 
 Note. — The doctrine of this case 
 was approved by Aixen, J., who de- 
 livered the opinion of the Court of Ap- 
 peals in First Nat. Bank v. Ocean Nat. 
 Bank, ante, 128, and by the Court of 
 Appeals of Maryland in the two cases 
 below cited, but in neither case was 
 the question of the power of National 
 banks to receive deposits for safe-keep- 
 ing before the court. The Supreme 
 Court of Pennsylvania does not, how- 
 ever, accept the opinion in the princi- 
 pal case. 
 
 In Chattahoochee Nat. Bank v. Schley, 
 ante, 379, the Supreme Court of Geor- 
 gia remarked that a National bank 
 which habitually receives special de- 
 posits for safe-keeping, as matter of 
 accommodation, is bound by the act of 
 the cashier in receiving such deposits 
 and liable for a loss thereof occasioned 
 by its gross negligence. The question 
 was not, however, before the court. 
 In First Nat. Bank v. Ocean Nat. 
 £amk, ante, 728, the Court of Appeals 
 of New York held that in the absence 
 of special authorityfrom the directors, 
 or of usage so to do, the cashier of a 
 National bank has no power to receive 
 special deposits for safe-keeping; 
 and the judge writing the opinion ex- 
 pressed his concurrence with the views 
 of the foregoing case of Wiley v. First 
 Nat. Bank, but only two judges "con- 
 curred " in the opinion, the others con- 
 curring in the "result." The action 
 was against the bank to recover bonds 
 deposited with it for safe- keeping , and 
 which were stolen by burglars. Judg- 
 ment was rendered for the plaintiff, 
 which was afflrmftd by the General 
 Term of the Common Pleas. This 
 judgment the Court of Appeals re- 
 versed, but as the majority concurred 
 only in the "result," it is impossible 
 to say whether the reversal was be- 
 cause it was not shown that the de- 
 fendants were grossly negligent, or 
 because the cashier had no authority 
 to take the deposit and bind the bank. 
 
 Both the case of WUey v. First Na- 
 tional Bank, and First National Baitk 
 V. Ocean National Bank, were ap- 
 proved in Third National Bank v. 
 Boyd, ante, 545, but the point was 
 not in issue there. In that case the 
 bank had taken bonds as collateral se- 
 curity for a debt and they were stolen 
 while yet in the possession of the 
 bank although after the debt was paid. 
 The court held that the bank was not 
 a gratuitous bailee and that it was li- 
 able if it had failed to exercise ordi- 
 nary care. See, also, Weckler v. First 
 National Bank, ante, p . 553 ; and Sec- 
 ond National Bank v. Ocean National 
 Bank, 11 Blatohf . 362. 
 
 In Lancaster National Bank v. 
 Smith, 63 Penn. St. 48; and Scott v. 
 National Bank of Chester Valley, 72 
 Penn. St. 471 (ante, p. 864) the Supreme 
 Court of Pennsylvania passed upon the 
 liability of National banks for deposits 
 for safe-keeping, but in neither case 
 was the question raised as to the 
 power of such banks to take such de- 
 posits. These cases turned on the 
 question of negligence. In First Na- 
 tional Bank v. Graham, 79 Penn. St. 
 106 {ante, p. 875) the same court held 
 that while the mere voluntary act of 
 the cashier of a National bank in re- 
 ceiving special deposits for safe-keep- 
 ing would not subject the bank to lia- 
 bility, yet if the deposit was known 
 to the directors and its retention ac- 
 quiesced in by them, or if there was a 
 custom for the bank to receive such 
 deposits, the bank would be bound. 
 This decision is in accordance with 
 Foster v. Essex Bank, 17 Mass. 479, 
 which is the leading case on the sub- 
 ject. 
 
 In De Haven v. Kensington National 
 Bank, 81 Penn. St.95 (a»ite,p. 882), it was 
 held that whether or not National 
 banks have the power to take special 
 deposits for safe-keeping they are not 
 liable for a loss of them unless they have 
 been guilty of gross negligence. See, 
 
912 VEEMONT 
 
 First National Bank of Montpelier v. Hubbard and others. 
 
 also, Leach v. Hall, ante, p. 466 ; First Bank of Kentucky, 10 Bush, 314 ; Dear- 
 National Bank v. Piergon, ante, p. 637. bom v. Union National Bank, 58 Me. 
 In Smith V. First National Bamk, 99 273; S. C, 61id. 369, and cases cited 
 Mass. 605, the action was to recover in Scott v. National Bank, ante ; First 
 the value of a special deposit for sate- National Bank v. Oraham, ante. A 
 keeping, but the question of the power bank is bound to take only ordinary 
 of National banks to take such depos- care of bonds pledged with it, as col- 
 its was not raised. The court held the lateral security. Jenkins v. National 
 defendants liable only for want of Village Bank, 58 Me. 275 ; Dearborn v. 
 ordinary care. This rule of liability is Union National Batik, 61 id. 369. — 
 sustained by the decisions. Ray v. « Rep. 
 
 PiEST National Bake of Mon-tpelibk v. Hubbard and 
 
 Others. 
 
 (49 Vermont, 1.) 
 
 Jurisdiction of State courts of suits brought by National banks. 
 
 State courts have jurisdiction of suits brought by National banks, it not hav- 
 ing been taken away by section 57 of the National Banking Act.* 
 
 ASSUMPSIT upon a promissory note. At the September Term, 
 1875, the defendant Hubbard moved to dismiss the action, for 
 that National banks could not maintain actions in the State courts, 
 and that the United States courts alone had jurisdiction of such 
 actions. The other defendants were defaulted. Motion overruled 
 and judgment for plaintifE. Exceptions by Hubbard. 
 
 J. A. Wing, for defendant, cited Stats. U. S. 1863-4, No. 85, 
 § 57; The Bank of Bethel v. The Pahquioque Bank, 14 Wall. 383; 
 Kemnedy v. Gibson et al., 8 id. 498. 
 
 Gleason S Field, for plaintiff. 
 
 KoTCB, J. In the County Court the defendant Hubbard moved 
 the court to dismiss the action on the ground that National banks 
 cannot maintain actions in the State courts, and that the United 
 States courts alone have jurisdiction of such actions. The court 
 
 * See Claflim v. Houseman, 93 U. S. 130, wherein the analogous question of the 
 jurisdiction of State courts of actions by an assignee iu bankruptcy is dis- 
 cussed at great length and with great learning. The court held that where the 
 Federal courts are not expressly given exclusive jurisdiction, the State courts 
 may be resorted to to enforce rights arising under Federal Statutes. See, also, 
 OrdMioj/ V. Ceniral National Bank, ante, p.559, and cases there referred to.— Rep. 
 
SUPREME COURT, 1876. 913 
 
 First National Bank of Montpelier v. Hubbard and others. 
 
 overruled the motion, and the only question presented is as to the 
 correctness of that ruling. 
 
 The plaintiff is a banking association, established under the act 
 of Congress of 1864, entitled " An act to provide a National cur- 
 rency secured by a pledge of United States bonds, and to provide 
 for the circulation and redemption thereof." The 8th section of 
 that act declares that every banking association formed and organ- 
 ized pursuant to its provisions shall be a body corporate, with the 
 usual powers of a corporation; may have a corporate name and 
 seal; may make contracts, and sue and be sued, complain and de- 
 fend, in any court of law and equity, as fully as natural persons. 
 In the absence of any restrictive legislation upon the subject, a 
 corporation established under that act would have the right to main- 
 tain a suit in its corporate name in any State court of appropriate 
 jurisdiction; for it is well settled, that civil cases arising under 
 the Constitution and laws of the United States may be tried and 
 determined in the State courts, unless the National Constitution 
 and laws have vested exclusive jurisdiction of them in the Federal 
 courts, but that Congress may prohibit the State courts from enter- 
 taining jurisdiction of such cases. 1 Kent's Com. 396; .Bank of 
 the United States v. Devereaux, 5 Cranch, 85; Osiorn v. United 
 States Bank, 9 Wheat. 738; Teale v. Felton, 1 Comst. 537; Ward v. 
 Jenkins, 10 Mete. 591; Gooke v. The State National Bank of Boston 
 52 N. Y. 96 {ante, p. 698). 
 
 It is claimed that exclusive jurisdiction of all suits instituted by 
 any such corporation is given to the district and circuit courts by 
 section 59 of the act of Feb. 25, 1863, and the 57th section of the act 
 of 1864. Section 59 of the act of 1863 provided that all suits, ac- 
 tions, and proceedings ly or against any association under the act, 
 may be had in any circuit, district, or territorial court of the Uni- 
 ted States held within the district in which such association may 
 be established. The 57th section of the act of 1864 provides that 
 suits, actions, and proceedings against anj such association maybe 
 had in the same courts, or in any State, county, or municipal court 
 in the county or city in which said association is located, having 
 jurisdiction in similar cases. 
 
 In Kennedy v. Gibson etals., 8 Wall. 498 {ante, p. 17) which went 
 
 by appeal from the Circuit Court to the Supreme Court of the United 
 
 States, and was heard on demurrer to the petition, one question that 
 
 arose was, whether, in view of the omission in the 57th section of the 
 
 115 
 
914 VEKMONT. 
 
 First National Bank of Montpelier v. Hubbard and others. 
 
 act of 1864 (literally read) of the word ly, the bill could be sustained 
 in the court where brought. In the opinion delivered by Justice 
 SwATifE, he says, " The 59th section of the act of Feb. 25, 1863, 
 proTides that all suits iy ov against such association may be brought 
 in the proper courts of the United States. The 57th section of the 
 act of 1864 relates to the same subject, and rcTives and enlarges 
 the provisions of the 59th section of the preceding act. In the lat- 
 ter, the word ly, in respect to such suits, is dropped. The omission 
 was doubtless accidental. It is not to be supposed that Con- 
 gress intended to exclude the association from suing in the courts 
 where they can be sued. If this be not the proper construction, 
 while there is provision for suits against the associations, there is 
 none for suits by them in any court." This construction would 
 give the plaintifE the right to sue in either of the courts designated 
 in the 57th section of the act of 1864, not upon the ground that 
 the right to sue in the State courts was given by the act of Con- 
 gress, because it was held in Houston v. Moore, 5 "Wlieat. 1, that 
 Congress cannot confer jurisdiction upon any courts but such as 
 exist under the Constitution and laws of the United States, but 
 upon the ground that State courts may exercise jurisdiction in 
 cases authorized by the laws of the State, and not prohibited by 
 the exclusive jurisdiction of the Federal courts. I think the proper 
 construction to be put upon section 57 of the act of 1864, in regard 
 to the power conferred of bringing actions in specified courts, is 
 permissive and not mandatory. 
 
 There are no words of 'exclusion in the act ; and it is a general 
 rule as to jurisdiction, that to confer it upon one court does not 
 operate to oust other courts otherwise possessing it, for the reason 
 that concurrent jurisdiction is not inconsistent. Delafield v. State 
 of Illinois, 2 Hill, 160. At all events, the jurisdiction of State 
 courts should not be taken away upon doubtful or ambiguous lan- 
 guage. 
 
 Judgment affirmed. 
 
SUPEEME COURT, 1874. 915 
 
 First National Bank v. Merchants' National Bank. 
 
 « 
 
 FiBST ]S"ATioiq-AL Bakk V. Merchakts' Natioital Bank. 
 
 (7 West Virginia, 544.) 
 Acceptance of checks by National hank. 
 
 The act of Congress of 3d March, 1869 (E. S., § 5308) making it unlawful for 
 National hanks to certify checks unless the drawer has at the time an 
 amount of funds on deposit equal to the amount specified in the check, 
 does not invalidate an oral acceptance of a check or promise to pay a check, 
 there being at the time sufficient funds of the drawer in possession to 
 meet it. 
 
 A check drawn on a National bank was presented for acceptance, whereupon 
 the bank promised to pay it as soon as it received information that a certain 
 draft left with it for collection was paid. The draft was paid and the 
 bank informed. Hdd, that the acceptance was good and binding on the bank. 
 
 WRIT of error and supersedeas granted on the petition of the 
 First National Bank of Wheeling to reverse a judgment of 
 the Circuit Court of Ohio county, and award a new trial, in a suit 
 therein pending, wherein the Merchants' National Bank of Wheel- 
 ing was plaintiff, and said First National Bank of Wheeling 
 defendant. 
 
 So many of the facts as are deemed material appear in the opin- 
 ion of the court. 
 
 The Hon. Johit Blair Hoqe, judge of the Third Judicial Cir- 
 cuit, presided at the trial below. 
 
 G. W. B. Allison, for appellant. 
 
 Daniel Lamb, for appellees. 
 
 Paull, J. This was an action of assumpsit brought by the 
 plaintiff, on a check of which the following is a copy: 
 
 "Wheeling, W. Y\.,'2Ath Feby., 1871. 
 " First National Bank of Wheeling : 
 
 " Pay to S. Brady, Esq., Cas., or bearer, fifteen hundred dollars. 
 $1500. " A. C. QuAKKiBR, Treaa." 
 
 There are two special counts in the declaration; t\ie first setting 
 
916 WEST VIRGINIA 
 
 First National Bank v. Merchants' National Bank. 
 
 forth the drawing of the check, and its presentation to and accept- 
 ance by the defendant, in consideration whereof the defendant 
 undertook and promised to pay the plaintiff the amount thereof. 
 
 The second special count recites the making of the check; that 
 the same was presented to defendant for acceptance, and that 
 defendant promised to pay said check, as soon as it received infor- 
 mation that a certain draft, of the Savings Institution of Wheel- 
 ing, of which it was proved the said Quarrier was treasurer, upon 
 
 of Alleghany county, Pennsylvania, had been paid, which 
 
 last-mentioned draft had been placed in its hands for collection; 
 that defendant received information that said draft so left with it 
 for collection had been paid, and the amount of, exceeding $1,500, 
 was in fact paid to defendant, whereby it became liable to pay to 
 the plaintiff the said sum of 11,500. The declaration also con- 
 tains the usual common counts. With the declaration an account 
 was filed for the amount of said check, which, not being paid, was 
 duly protested. 
 
 The plaintiff demurred to the second special count in the decla- 
 ration, in which there was a joinder by the defendant; and also 
 filed the plea of non-assumpsit. Eo action seems to have been had 
 upon the demurrer, by the Circuit Court, but as there is no excep- 
 tion or complaint disclosed by the parties on that account, we do 
 not propose to take any notice of that fact. 
 
 At the May term of the Circuit Court, 1873, a jury was empan- 
 eled to try the issue, and rendered a verdict in favor of the plain- 
 tiff for $1,705. A motion for a new trial was made by the defend- 
 ant, for the reasons assigned in the record, and for the matters set 
 forth in defendant's bills of exception; this motion was overruled 
 by the court, and judgment entered on the verdict ; and from this 
 action and judgment of the court an appeal is now taken. 
 
 We now proceed to notice the grounds of the appeal, so far as 
 it may seem proper or material for a right decision of the cause. 
 
 [The court here decided a question of evidence. ] 
 
 The next ground of exception taken by the defendant is to the 
 instruction given by the court to the jury, at the instance of the 
 plaintiff. 
 
 As we understand the evidence, that instruction, taking the first 
 part in connection with the modification thereof, as given by the 
 court, and designed as an independent instruction, is irrelevant to 
 the issue before the jury, and should have been refused. It was to 
 
SUPREME COUET, 1874. 917 
 
 First National Bank v. Merchants' National Bank. 
 
 the following efEect, that if the jury find that the acceptance of 
 the check, if any, made by the defendant, was conditional, and 
 that such acceptance was withdrawn or countermanded, at such 
 time, and in accordance with such usages between the parties, as 
 that checks, which had been accepted and paid by either party, 
 could be returned, or the acceptance countermanded, and as a con- 
 sequence, as we interpret the instruction, that no loss or damage 
 could result from such withdrawal, the jury should find for the 
 plaintifE. With this understanding of the effect of the instruction, 
 we do not think it was erroneous. 
 
 The third exception of the defendant is to the rejection by the 
 court of the three instructions asked for, on its behalf, and which 
 inTolve an application of the act of Congress, of March 3, 1869, in 
 reference to certified checks. The act is very brief, and simply 
 makes it unlawful for any officer of a bank to certify a check, 
 unless the drawer has funds on deposit, at the time, equal to the 
 amount specified in such check ; and after declaring such check 
 good, affixes a penalty for the yiolation of the act, subjecting the 
 bank to the action of the goTernment. With this act in view the 
 defendant asks the court to instruct the jmj, first, that in order to 
 maintain the plaintiff's action, the jury must find, from the 
 evidence, that the check sued upon was accepted, or certified, in 
 writing. The instruction was refused, and we think properly. 
 Can it be successfully maintained, and should it be established as 
 a fixed principle, that because a statute prohibits (to give it the 
 greatest effect that can be claimed by defendant) a bank from 
 certifying a check, when the drawee has not in its possession an 
 amount of funds equal to the amount specified in the check, that, 
 therefore, a verbal acceptance or promise made, on its behalf, by a 
 proper officer, to pay a check, when the drawer has an amount of 
 funds in possession of the bank, sufficient for the purpose, is null 
 and void, and cannot be enforced ? We assume here, without argu- 
 ment, that it is sufficiently established, by both English and 
 American authorities, that the conditional acceptance of a check, 
 as also the oral acceptance of a check, or the oral promise to pay a 
 check, are valid, and can be maintained. Because the bank must 
 not in writing certify a check, when there are no funds of the 
 drawer in its possession, therefore it shall not verbally agree to pay 
 a check when there are funds in possession sufficient for the pur- 
 pose ; for this, at least, is implied in such an argument. This 
 
918 WEST VIRGINIA 
 
 First National Bank v. Merchants' National Bank. 
 
 would seem to be giving a strained and improper effect to the act 
 of Congress. 
 
 The second instruction asked for involves the same mode or 
 principle of construction. It recites that if the jury find that the 
 check sued on, and given in evidence by the plaintiff, was taken by 
 the plaintiff from the defendant, with the understanding that there 
 was then no money of the drawer of the check on deposit in de- 
 fendant's bank to pay the same, and that it was to be paid out of 
 the proceeds of a claim of the drawer in the hands of the defend- 
 ant at Pittsburgh, and not yet collected or matured, and that the 
 acceptance by the defendant, if any was made, was conditional upon 
 the future collection or payment of such claim, then the plaintiff 
 is not entitled to recover in this action. "We think this instruction 
 was properly refused. Because the act of Congress prohibits a 
 bank from certifying a check when the drawer has no funds, why 
 should that invalidate a promise on its part to pay a check when 
 the drawer shall have funds for the purpose in its possession? 
 This is but acting in accordance with the spirit of the act itself, 
 refraining from making any promise which is operative until the 
 bank is in the condition contemplated by the act. It is not seen 
 how any interests of the bank are endangered by pursuing this 
 course. Indeed, such a promise seems to be implied in the very 
 existence of the bank, and the nature of the business it transacts. 
 It says to the public and customers by the very laws of its being, I 
 will pay all checks drawn upon sufficient funds of the drawer in 
 my possession, and such is its legal and moral obligation. 
 
 The third instruction involves the liability of the bank on an 
 accepted or certified check, when the drawer had not funds in its 
 possession equal to the amount specified in the check. We think 
 this question does not arise upon the record. It does not present 
 a state of facts to which the instruction can be applied. The 
 claim of the plaintiff rests wholly, so far as the evidence indicates, 
 upon a conditional acceptance, if there was any acceptance what- 
 ever, giving the plaintiff the benefit of the evidence in its strongest 
 form, as stated by its principal witness, and it proves that the 
 check was accepted to be paid only when the Pittsburgh draft 
 should have been paid, and the defendant had no offsets. There 
 is, therefore, no absolute certified or accepted check given when 
 there were no funds sufficient to meet it in the hands of the bank 
 presented for our consideration in this controversy, and it wiU be 
 
SUPREME COURT, 1874 9] 9 
 
 First National Bank v. Merchants' National Bank. 
 
 better, perhaps, to postpone a decisiop upon the yalidity of such a 
 check until the question is fairly presented. 
 
 The fourth instruction recites, if the jury find that the defend- 
 ant did not accept the draft sued upon and given in evidence by 
 the plaintiff, either unconditionally or upon the single condition 
 alleged in the declaration of the plaintiff, but did accept the same 
 with conditions other (or additional) than as set out in the decla- 
 ration, the plaintiff cannot recover in this action. It is certainly 
 true, that if the plaintiff proves another and substantially different 
 contract than that upon which he declares, as a general rule the 
 variance will be fatal. This seems to be the effect of the instruc- 
 tion in question, and to it there seems no valid objection. 
 
 The only question remaining to be determined arises on the 
 motion for a new trial, and which was overruled by the court. 
 The grounds for this motion, as they stand connected with the 
 instructions given or refused by the court, have been already con- 
 sidered. The only remaining ground is connected with the 
 evidence. The verdict is claimed to be against the evidence. 
 
 How far an appellate court will interfere in a question of this 
 kind may depend very much upon the frame of the bill of excep- 
 tions to the decision of the court below for a new trial. In the 
 case of Bennett v. Hardaivay, 6 Munf. 135, the court expressed its 
 views as to the proper frame of such a bill, and declares that it 
 should not state all the evidence given to the jury on the trial, but 
 only the facts appearing to the court to have been proved by the 
 evidence. It was not regarded as competent for the appellate 
 court to review and reverse the opinion of the court below, on 
 a question touching the weight of the evidence and credit of the 
 witness, and that if this were otherwise, it would have to do so 
 "in the dark, or at least with lights inferior to those possessed by 
 that court." But when the facts only are stated, it is competent 
 for the appellate court to review and reverse the opinion of the 
 court below founded on those facts; by doing which it does not 
 depart from or overrule the decision of the latter court, as to the 
 weight of testimony, or the credit due to any witness, nor bring 
 the whole matter again into controversy. See Judge Baldwin's 
 opinion in Patterson v. Ford, 2 Gratt. 18, where the case of Bennett 
 V. Hardaway is reviewed and sustained, and which has been recog- 
 nized in all subsequent cases. He further says that a bill of excep- 
 tions is not properly taken, unless strictly confined to the facts 
 
920 WEST VIEGINIA 
 
 First National Bank v. Merchants' National Bank. 
 
 proved by the evidence; for i:^ any opening is left, by the introduc- 
 tion into it of evidence, as contradistinguished from the facts, the 
 supposition that the cause may have turned before the jury upon 
 the credit and weight of the evidence, and so have furnished room 
 for the discretion of the court, the appellate forum will not inter- 
 fere with what may have been an exercise of that discretion. To 
 do so would, he apprehends, much impair the value of jury trials. 
 
 Upon examining the bill of exceptions in the case before us, we 
 find that it is of a mixed character; it certifies facts which were 
 proved, and also certifies the evidence of the chief witnesses, as 
 taken down, apparently, at the time of the trial, and which is 
 spread out in the record. The jury passed upon the whole of the 
 evidence, some of which is conflicting, as connected with the 
 origin, at least, of this transaction. While citing these authorities, 
 however, as to what has been heretofore regarded as the form and 
 effect of bills of exception, the rule applicable to the case, as the 
 evidence appears in the bill of exceptions now before us, will be 
 found in the case of Carrington v. Goddin, 13 Gratt. 587, where it 
 was held, on a bill of exceptions to the refusal of the court to 
 grant a new trial, because the verdict was contrary to the evidence, 
 the evidence, and not the facts proved, is stated; the court will 
 reject all the parol evidence of the exceptor, and give full faith and 
 credit to all the evidence of his adversary; and will not reverse the 
 judgment, unless it then appears to be wrong. In applying this 
 rule, it will only be necessary to refer to a single particular. The 
 plaintiff's right to recover depended upon satisfactory proof of 
 the payment of the Pittsburgh draft. The acceptance and pay- 
 ment of the check sued upon was made conditional upon this fact, 
 and it must, therefore, be fully established by competent testimony. 
 
 We find little or no testimony in the record tending to establish 
 this indispensable fact, but the telegraphic dispatch purporting to 
 have been sent by J. D. Scully, of the Pittsburgh bank. But, as 
 we have heretofore seen, this testimony is incompetent, and its 
 introduction erroneous. Excluding this testimony, and there 
 is no proper or stable foundation, on which the verdict of the jury 
 can rest. It then appears to be wrong, and the judgment founded 
 upon it erroneous. 
 
 It was error, therefore, in the Circuit Court to refuse to grant the 
 motion for a new trial, and the judgment rendered on the 3d day 
 of June, 1873, is reversed, and the verdict set aside, with costs to 
 
SUPEEMB OOUET, 1876. 921 
 
 Simmona v. Aldrich. 
 
 the appellant, and this case is remanded to the Circuit Court of 
 Ohio county for a new trial to be had therein, in accordance with 
 the principles herein set forth. 
 The other judges concurred. 
 
 Jvdgment reversed and cause remanded. 
 
 Simmons v. Aldkich. 
 
 (41 Wisconsin, 240.) 
 
 Lien of tax upon sha/res — Damages for sale of aha/rea falsely represented to 
 'be free from such lien. 
 
 The statute of Wisconsin made taxes assessed on shares of stock in National 
 banks a lien on such stock. The defendant sold to plaintiflF shares of stock 
 in a National bank upon which was an unpaid tax. Defendant gave plaintiflF 
 a written statement purporting to contain all facts affecting the value of the 
 stock, but in which the tax was not mentioned. The tax was paid by the 
 bank. Held, that plaintiflf could recover damages of the defendant to the 
 amount of the tax. 
 
 APPEAL from the Circuit Court for Kenosha county. 
 In 1871 the plaintifE purchased of the defendant a large 
 amount of the stock of the First National Bank of Kenosha. Be- 
 fore making such purchase, he required the defendant to furnish 
 a statement of every thing affecting the value of such stock ; and 
 the latter delivered to him a writing or schedule purporting to be 
 such a statement, but no reference was made therein to the fact, of, 
 which the plaintiff was ignorant, that the taxes on such stock for 
 the years 1865 and 1866, imposed under and by virtue of chapter 
 400, Laws of 1865, had never been paid. 
 
 The plaintiff subsequently paid such taxes, or, what is the same 
 thing, they were paid by the bank, pursuant to chapter 33, Laws 
 of 1873, to the amount of $753. 
 
 This action was brought to recover damages for the alleged 
 fraudulent concealment by the defendant of the fact that the taxes 
 were unpaid. The cause was tried by the court without a jury, 
 and afterward the judge filed his findings of fact as follows : 
 116 ' 
 
922 WISCONSIN 
 
 Simmons v. Aldrich. 
 
 " 1st. That the First National Bank of Kenosha is, and at all 
 the times named in the complaint was, a corporation duly organ- 
 ized, existing and doing business in the city of Kenosha, under and 
 by virtue of the act of Congress, in manner and form as set forth in 
 the complaint herein." 
 
 (The complaint avers that the bank was organized March 8, 1864, 
 under the act of Congress. It was stated on the argument, and 
 not denied, that there is a clerical error in the date, which should 
 be 1865 instead of 1864. Such is doubtless the fact. ) 
 
 •' 3d. That on or about the 23d day of January, 1871, the defend- 
 ant ofEered to sell, and did sell, to the plaintiff two hundred and 
 fifty-one shares of the capital stock of said bank, representing a 
 par value of one hundred dollars per share, at and for the sum of 
 twenty-two thousand dollars. 
 
 "3d. That prior to said sale, and as one of the inducements 
 thereto, at the special instance and request of the plaintiff, the de- 
 fendant caused to be prepared a schedule purporting to show the 
 assets and liabilities of the said bank, the condition and value of 
 said assets, the amount of taxes unpaid upon said stock, and all 
 other facts having a bearing upon the value of such stock. 
 
 " 4th. That the defendant, prior to said sale, did represent to the 
 plaintiff that the said schedule contained and comprehended all the 
 facts affecting the value of the said stock, known to the defend- 
 ant. 
 
 " 5th. That the plaintiff relied upon such statements and repre- 
 sentations of the defendant, in making said purchase of stock. 
 
 " 6th. That at the time of said sale, the State taxes for the years 
 1865 and 1866 upon said stock had not been paid, and said stock 
 was subject to the lien of such unpaid taxes for said two years, 
 being one and one-half per cent on the par value of said stock for 
 each of said years. 
 
 " 7th. That in the year 1867, by virtue of the statute in such 
 case made and provided, and by virtue of the directions of the State 
 treasurer of the State of Wisconsin, the treasurer of the city of 
 Kenosha did spread out upon the tax roll of that city for the year 
 1867, then in his hands as such treasurer, the names of the de- 
 fendant and the other stockholders in said bank, the par value of 
 the shares owned by each of them, together with the amount of 
 tax due thereon for the years 1865 and 1866, being one and one- 
 half per cent on the par value of such shares for each of said years; 
 
SUPEEME COURT, 1876. 923 
 
 Simmons v. Aldrich. 
 
 and that the entire amount of the capital stock of said bank, to 
 wit, $50,000, was so entered upon said tax roll as subject to said 
 delinquent taxes for said years 1865 and 1866. 
 
 " 8th. That during said year. 1867, and while the said tax roll 
 was in the hands of said collector, he (said treasurer of the city of 
 Kenosha) made personal demand upon the defendant for the pay- 
 ment of said delinquent taxes upon said shares of stock then owned 
 by the defendant, which payment was refused. 
 
 "9th. That during the year 1867 the defendant was elected 
 president of said bank, and so remained until about the 23d day of 
 January, 1871 ; and that prior to the time of his election as pres- 
 ident, said defendant had been a director in said bank. 
 
 " 10th. That at the time of said sale, the defendant well knew 
 of the existence of said taxes for the years 1865 and 1866, and the 
 amount of the same, and that they had not been paid, and were 
 liens upon said stock. 
 
 " 11th. That at the time of said sale, and for some time there- 
 after, the plaintifE was entirely ignorant of the existence of said 
 unpaid taxes. 
 
 "13th. That said schedule so prepared by the direction of the 
 defendant did not contain any mention of said unpaid taxes, or 
 any part or portion thereof, nor did the defendant in any way make 
 known to the plaintiff, before said sale, the existence of said un- 
 paid taxes. 
 
 " 13th. That on or about the loth day of March, 1873, pursuant 
 to chapter 23 of the general laws of the year 1872, the said delin- 
 quent taxes for the said years 1865 and 1866, upon the whole cap- 
 ital stock of said bank, to wit, one and one-half per cent upon the 
 par value of said stock for each of said years, were duly paid to the 
 treasurer of the State of Wisconsin by the said National bank, to wit, 
 the sum of $1,500; and that the plaintifE owned the said two hundred 
 and fifty-one shares of said stock at the time of such payment. 
 
 " 14th. That the said two hundred and fifty-one shares of said 
 stock were at the time of said sale worth $753 less than represented 
 by the defendant, by reason of the existence and non-payment of 
 said taxes for said years 1865 and 1866." 
 
 And as conclusion of law from these facts, the court held, " that 
 the plaintiff is entitled to recover of the defendant the sum of 
 $753, with interest thereon from the 15th day of March, 1872, as 
 well as the costs of this action." 
 
924 WISCONSIN 
 
 Simmons v. Aldrich. 
 
 The averments of the complaint correspond substantially with 
 the findings of fact. 
 
 Judgment for the plaintiff was entered pursuant to the conclu- 
 sion of law above stated ; and the defendant appealed therefrom. 
 
 Winson & Winson, for appellant. 
 
 J. V. Quarles, for respondent. 
 
 Ltok, J. We are satisfied that there was no error in the rulings 
 of the court upon objections to the admission of testimony, or, at 
 least, none which could possibly prejudice the defendant, and that 
 the findings of fact are sustained by the evidence. 
 
 The act of 1865, chapter 400, which imposed the taxes in question, 
 is a valid law. It was so held by this court in Van Slyhe v. The State, 
 23 Wis. 655, and in Bagnall v. The State, 25 id. 112 ; and this 
 ruling has been affirmed by the Supreme Court of the United 
 States. That law makes the taxes which it imposes a lien upon 
 the shares of stock taxed (§ 2); and we are not aware of any 
 subsequent legislation which removed such lien. 
 
 Hence, when the plaintiff purchased the stock, it was subject to 
 a lien for the unpaid taxes, and remained subject thereto until they 
 were paid pursuant to chapter 23, La ws of 18 72. It requires but little 
 evidence to prove that the stock was lessened in value by the non- 
 payment of the taxes, in an amount equal to the taxes. And, the 
 taxes having been lawfully imposed, there can be no doubt that 
 the plaintiff or the bank might pay them at any time, if payment 
 thereof was necessary to the maihtenance of this action. 
 
 Legislation on the subject since 1865 for the purpose of enforcing 
 payment of the taxes imposed by the law of 1865, is of no import- 
 ance in the case. It is quite immaterial whether such legislation 
 was or was not effectual to accomplish the intended purpose. If 
 not effectual for such purpose, the controlling facts still remain, 
 that when the plaintiff purchased the stock it was subject to the 
 lien for the taxes, and that such taxes were paid pursuant to law. 
 
 Peters v. Myers, 22 Wis. 602, illustrated these views, and is a 
 stronger case for the plaintiff. The point there decided is cor- 
 rectly stated in a head-note as follows : " Land conveyed in 1861, 
 with covenant against incumbrances, was subsequently sold for 
 taxes of 1857, reassessed in 1862 under an act of the Legislature of 
 that year, the original assessment being invalid. Held, that there 
 
SUPREME OOUET, 1876. 925 
 
 Simmons v. Aldricb. 
 
 was a breach of the covenant, the lien of the tax relating back to 
 the time when the land was entered on the assessment roll, and the 
 aggregate amount of taxes for the year 1857 determined." 
 
 It appearing, therefore, that the defendant, when he sold the 
 stock, concealed a fact, known by him and not known by the 
 defendant, which rendered the yalue of the stock less than it other- 
 wise would have been, and that the difference equals the judgment, 
 it necessarily follows that the plaintiff is entitled to the judgment 
 he has recovered. 
 
 By the court. 
 
 Judgment affirmed. 
 
926 UNITED STATES 
 
 Merchants' National Bank of Toledo v. Cummlng. 
 
 Mbechajs'ts' National Baitk of Toledo v, Cummiitg. 
 
 Taxation of shares — Uiijust discrimination — Bestrainmg collection of tax at 
 
 suit ofJ>ank. 
 
 The shares of stock of a National bank were taxed at their full value, while 
 other property was assessed at from thirty to forty per cent of its real value. 
 Held, that the discrimination was illegal and unjust, and that the bank was 
 a proper party to maintain a bill to restrain the collection of the tax beyond 
 the proportion assessed on other property. 
 
 (Circuit Court, Sixth Circuit.) 
 
 ACTION by the Merchants' National Bank of Toledo against 
 Cumming, collector of taxes, to restrain him from collecting 
 a tax assessed for the year 1876 on the shares of stock of plaintiff's 
 bank. The late Judge Emmons of the same circuit, before his 
 death, granted a preliminary injunction. 
 
 Judge Ranney and Wager Swayne, of Toledo, for plaintiffs. 
 
 Judge Qriswold and F. K. Hamlin, for respondent. 
 
 Baxter, Circuit Judge, made the following memorandum : * 
 There were several points presented and urged in the argument 
 of this case, on the hearing which, in the view I have taken of it, 
 need not be discussed here. SufBce it to say that, from the plead- 
 ings and proofs, it very satisfactorily appears that complainant's 
 capital stock was assessed for the year 1876 at its full value, while 
 all other property was assessed at from thirty to forty per cent only 
 of its real value, and that, by reason of this unequal assessment, 
 complainant's capital stock was in the hands of its shareholders 
 onerated with an undue proportion of the public taxes. It is not 
 important to inquire into the methods leading to such a result. 
 Whether from inadvertence or design, the consequences are the 
 same to the complainant. It is an injustice that contravenes the 
 
 *The clerk of the court, in a letter to the reporter of this volume, under 
 date of April 15, 1878, says: "There was no written opinion in the case other 
 than the memorandum herewith inclosed." 
 
OIECUIT COUET, 1878. 927 
 
 Merchants' National Bank of Toledo v. Gumming. 
 
 Constitution of Ohio, as well as the provisions of the National 
 Banking Law, and a wrong which the courts may, when their 
 powers are properly invoked, take cognizance of to redress. But 
 the defendant insists that the wrong complained of is a wrong to 
 complainant's shareholders, against whom the tax was assessed, and 
 not against the complainant. This objection seemed, on first im- 
 pression, to have been well taken, but further reflection induces 
 the belief that it involves the rights of complainant as well as the 
 rights of its corporators. Between the two there is an intimate 
 connection; the legal entity — the corporation — is distinct from 
 the shareholders, but the former is a trustee for the latter, and cus- 
 todian of corporate funds; and if it shall pay the taxes so assessed, 
 and assume to deduct the same from dividends declared, or to be 
 hereafter declared in favor of its shareholders, it may, and the 
 averment is that it will, subject itself to a multiplicity of suits with 
 its own shareholders; whereas, if it refuses to pay these taxes, it 
 will impair its credit, embarrass its business, and expose itself to 
 vexatious and expensive suits, and entail upon itself irremediable 
 injuries in resisting the illegal exactions made upon it. 
 
 Hence, in view of the probable consequences, I have reached the 
 conclusion that the complainant, in its corporate capacity, is enti- 
 tled to a standing in this court, and to relief, and I shall, therefore, 
 authorize a decree permitting complainant to pay to the defendant, 
 or into the registry of the court, forty per cent of the amount of 
 the tax assessed against its shareholders, in accordance with its 
 tender heretofore made, and, on this being done, an injunction be 
 issued perpetually enjoining the collection thereof. The costs will 
 be decreed against defendant, to be paid out of the money to be 
 realized under decree hereinbefore authorized. 
 
MEMOKANDA 
 
 OF CASES NOT REPORTED IN FULL. 
 
 KiriGHT V. Old National Bank. 
 
 (4 American Law Times Reporter, 240.) 
 
 11HAT National banks could, by by-law, restrain the transfer of 
 stock by a stockholder indebted to the bank. The Supreme 
 Court of the United States has decided otherwise. Bullard v. 
 Bank, ante, 93. 
 
 National Exchange Bank v. Mooeb. 
 
 (3 Bond, 170.) 
 
 IN this case it was decided that the penal consequence of making 
 a usurious loan by a National bank is forfeiture of twice the 
 amount of illegal interest, under section 30 of the National Bank 
 Act of Congress of June 3, 1864. The principal debt is not for- 
 feited. Nor does the mere fact that such a loan is prohibited by 
 statute, without any words declaring the contract void, preclude 
 the bank from recorering back the amount loaned. 
 
 The point adjudicated in this case has since been settled by the 
 Supreme Court of the United States. See Farmers and Mechanics'' 
 National Banh v. Bearing, ante, p. 117. 
 
 Citizens' National Bank y. Lbming. 
 
 (8 Internal Revenue Record, 133.) 
 
 IT was held in this case that under section 30 of the National 
 Banking Act, where a bank in Ohio charged more than the 
 legal rate of interest of that State, it forfeited the whole of the 
 117 
 
930 MEMOEANDA. 
 
 usurious interest, and could have judgment only for the original 
 sum loaned. The act was not intended to work a forfeiture of the 
 whole debt. See Farmers and Mechanics' National Bank t. Dear- 
 p. 117. 
 
 BOWDEN T. MOEKIS. 
 (1 Hughes' Cirgult Court, 378.) 
 
 HEEB, on the trial of a suit at law, brought by the receiver of 
 a National bank against its stockholders for a contribution 
 of a hundred per cent to meet the liabilities of the bank, under 
 section 5151 of the Eevised Statutes of the United States, no evi- 
 dence was presented to show that the bank was insolvent, or that 
 it was so to the extent of a hundred per cent of its capital stock; 
 but the plaintiff, as to such liability, produced only a letter of the 
 Comptroller of the Currency to the receiver, alleging that he had 
 " determined that, in order to discharge the legal debts and liabili- 
 ties of the bank, it would be necessary to enforce and collect the 
 whole amount of the personal liability of the individual stock- 
 holders." It was held that the plaintiff was not entitled to recover, 
 as no proof established by legal evidence had been presented at the 
 trial of the fact that the bank was insolvent, and insolvent to the 
 extent of one hundred per cent of its capital. 
 
 It was not decided in the above case that the letter was not properly 
 authenticated or that it was not a sufficient order, but that extrinsic 
 facts must be proved. In Casey v. Galli, ante, p. 143, it was held 
 by the Supreme Court of the United States that the order or de- 
 termination of the Comptroller is conclusive. 
 
 State v. Phcenix Bakk. 
 
 (34 Connecticut, 205.) 
 
 IT was decided in this case that the voting stockholders of the 
 Phcenix Bank had the right, under Conn. Stat. 1863 and 1864, 
 to make a transfer of the assets and re-organize under the National 
 Banking Law. The act of 1863 authorized the voting stockholders 
 to surrender the charter, and upon their doing so, divested the 
 qualified stockholders of all further rights, except their right of 
 equitable ownership in the assets of the deceased institution. The 
 act of 1864 left it optional with the voting stockholders to accept 
 
MEMOEANDA. 931 
 
 its provisions or to act without regard to them under the act of 
 1863. After they did so act, the State and other qualified stock- 
 holders had no right to insist upon a representation in the stock of 
 the bank. The qualified stockholders were, however, entitled to 
 such a distribution of the assets as they would have been entitled 
 to if the affairs of the bank had been wound up, or its assets sold 
 bodily in the market, that is, a full share of all the assets or avails 
 of the sale ; and they could not be required to accept par and 
 interest for their stock. A court of equity could enforce these 
 rights. 
 
 This case has been omitted from this volume because it was 
 decided on a state of facts so pecu.liar as to render it quite improb- 
 able that the case would ever be useful as a precedent. 
 
 I 
 
 State v. Haetfoed Bank. 
 
 (34 Connecticut, 240.) 
 
 E" this case it was held that a bank which has assumed to in- 
 clude the State and other qualified stockholders as equals in a 
 new organization under the National Banking Act, without jiursn- 
 ing strictly and technically the provisions of the State act of 1864, 
 is in no condition to insist on the exclusion of such stockholders, 
 on the ground that the latter have not complied technically with 
 the provisions of the act of 1864. The act of the bank in includ- 
 ing qualified stockholders in its organization certificate, without 
 previously ascertaining, in the mode pointed «ut by statute, whether 
 they assented or not, was substantially an assumption that they 
 assented, and a waiver of the provision of the statute as to notice 
 and dissent, so far as made for their benefit. The action of the 
 bank in soliciting the assent of the State treasurer, acting upon 
 the knowledge that he intended to elect, and including the State in 
 the organization certificate, and publishing that certificate as em- 
 bracing the State, was calculated to mislead the treasurer and 
 induce him to believe that his assent would be assumed unless he 
 dissented, and to neglect to make any resi^onse to the notice given 
 by the bank; and under such circumstances the State will not be 
 held to a forfeiture. 
 
 This case has been omitted for the same reason as the preceding 
 case. 
 
932 MBMOEAT^DA. 
 
 Craft v. Tuttlb. 
 
 (Z! Indiana, 832.) 
 
 IN this case it was held that under the then existing statutes of 
 Indiana no tax could be imposed for municipal purposes on 
 shares of stock in National banks. 
 
 The statute construed was afterward repealed, and proTision 
 made for taxing such shares. See 1 Davis' Stats, of Indiana. 90, 
 §70. 
 
 City of Evaksvillb v. Batakd. 
 
 (39 Indiana, 450.) 
 
 THIS case was to the same effect, and has been omitted for the 
 same reason as the foregoing. 
 
 Stiltz v. Tutewilek. 
 
 (1 Wilson, 507.) 
 
 AFPIEMED, 48 Ind. 600 ; on the decision in Oity of Richmond 
 Y. Scoit, ante, p. 445. 
 
 HUBBAED T. SUPERVISOES OF JOHN'SOIS'. 
 (23 Iowa, 130.) 
 
 IN this case it was held that under the law of Iowa as it then was, 
 no tax could be •levied on the shares of stock in National 
 banks. A statute was subsequently passed providing for such 
 taxation. Laws 1868, eh. 153. See Horseman v. YoimJcin, ante, 
 p. 460. 
 
 Sbcon'd National Ban's v. National State Bank. 
 
 (10 Bush, 367.) 
 
 National banks can acquire no lieu on their own stock to secure indebtedness 
 
 of stockholders. 
 
 THE only part of the opinion relating to National banks was as 
 follows: 
 " The claim of the Louisville bank to a lien on the stock under 
 and by virtue of its articles of association or by-laws cannot be 
 
^ MEMORANDA. 933 
 
 maintained. This question is settled beyond all controversy by the 
 two cases of the Bank v. Lanier, 11 Wall. 369; and Bullard v. 
 Bank, 18 id. 589. No banking association organized under the 
 National Currency Act of 1864 can create or hold such liens." 
 
 Case, Receiver, v. Bbbwin. 
 
 {W Louisiana Annual, 321.) 
 
 The receiver of a National bank, appointed by the Comptroller of the Cur- 
 rency, may take all necessary legal proceedings to collect debts due the 
 hank. 
 
 THE following is the only part of the judgment relating to 
 National banks: 
 " The statute of the United States, providing a National currency, 
 directs that when the Comptroller shall be satisfied that any asso- 
 ciation has refused to pay its circulating notes, and is in default, 
 he may appoint a receiver, who, under the direction of the Comp- 
 troller, shall take possession of the books, records, and assets of 
 every description, of such association, and collect all debts, dues and 
 claims belonging to the association. Statutes at Large, 1864, 114, 
 § 50. The power to collect debts embraces the right to use all neces- 
 sary means to obtain the object of the agency. The exception was 
 correctly overruled." 
 
 Abbott v. City of Baitgok. 
 
 (54 Maine, 840.) 
 
 IT was herein decided that the statutes of Maine, as they existed 
 in 1865 and 1866, taken in connection with the act of Congress 
 of June 3, 1864, ch. 106, §§ 40 and 41, did not authorize the assessors 
 of a city or town, in which a National bank was located, to assess 
 taxes for State, county and municipal purposes, upon the stock of 
 such bank owned by non-residents. 
 
 Packaed v. The City of Lewiston. 
 
 (55 Maine, 456.) 
 
 THE word "place," as used in the proviso in § 41, ch. 106, of 
 the act of Congress of June 3, 1864, refers to the location of 
 the bank and not to the State authority under which the tax is to 
 be assessed. See Austin v. Board of Aldermen, post. 
 
934 MBMOEANDA. 
 
 « 
 
 Abbott v. Inhabitants of Bangoe. 
 
 (56 Maine, 310.) 
 
 THIS was a decision as to the Talidity of a tax on shares of stock 
 in a National bank under a statute which has been since re- 
 pealed. 
 
 Shoemaker v. The National Mbchanics' Bank. 
 
 (31 Maryland, 396.) 
 
 An injunction will not be granted to restrain a National bank from prosecuting 
 a suit to collect securities given as collateral to a loan, on the ground tbat 
 such loan was in excess of one-tenth of the capital stock of the bank. 
 
 SINCE the decision of the United States Supreme Court in Union 
 Gold Hill Mining Company t. RocTcy Mountain National Bank, 
 ante, 151, there has been no possible question as to the validity of 
 loans by National banks in excess of one-tenth of the capital stock. 
 
 Austin t. Boaed of Aldeemen oe the City of Boston. 
 
 (14 Allen, 359.) 
 
 IN this case it was held that a State may tax shares held in Na- 
 tional banks organized therein under U. S. Statute of 1864, ch. 
 106, and may authorize the assessment of such tax in the city or 
 town within the same State, where the owner resides. 
 
 The principal question in this case — the place of taxation — 
 was settled by the act of Congress approved February 10, 1868, 
 which provided that " the words ' place where the bank is located 
 and not elsewhere' in section 41 " of the National Banking Act 
 should be construed to mean " the State within which the bank is 
 located." 
 
 The above decision was affirmed, though on other grounds, by the 
 United States Supreme Court. See Austin y. Aldermen, ante, p. 15. 
 
 Smith v. First National Bank. 
 
 on Michigan, 479.) 
 
 In this case it was held a special tax on the capital of National banks was 
 
 invalid. 
 
 THE court said, " this case is too plain for argument," and cited 
 Van Allen v. Assessors, People v. Commissioners, Bradley 
 V. People, ante. 
 
MEMOEANDA. 935 
 
 Smith v. Webb. 
 
 (11 Minnesota, 600.) 
 
 IT was held in this case that under the law of Minnesota as it 
 was in force in 1865, no tax could be levied on National bank 
 shares. The law has since been amended. See ante, p. 629. 
 
 FiKST Natioital Bank ov Memphis t. Kidd. 
 
 (20 Minnesota, 201.) 
 
 T was held in this case that a copy of the organization certificate 
 of a National bank, certified and sealed by the Comptroller of 
 the Currency, is sufficient evidence of the corporate existence of a 
 National bank. 
 
 The opinion simply refers to Laws TJ. S. 1864, oh. 106, § 6, as 
 conclusive on that point. 
 
 I 
 
 CuETis V. Ward. 
 
 (58 Missouri, 295.) 
 
 IN this ease it was held that shares of stock in a National bank 
 were taxable, though owned by a non-resident of the State, 
 and the judgment was based solely on Lionberger v. Rouse, ante, 
 p. 41, and Tappan v. Merchants' National Bank, ante, p. 100. 
 
 Young v. Voucjh. 
 
 (8 0. E. Green, 325.) 
 
 IT was held in this case that a National bank could by a by-law 
 prevent the transfer of shares by a stockholder indebted to the 
 bank. The Supreme Court of the United States has since held 
 otherwise. Bullard v. Bank, ante, p. 93. 
 
 BowEN V. FiEST National Bank of Medina. 
 
 (34 Howard, 408.) 
 
 IT was held in this case that National banks are foreign corpora- 
 tions, and liable to attachment under a statute authorizing 
 attachments in actions against " corporations created by or under 
 the laws of any other State, government or country." 
 
 In 1873, March 3, the 53d section of the National Banking Act 
 was amended so as to forbid attachment, etc. See ante, p. 331. 
 
936 MEMOEANDA. 
 
 Merchants akd Faemees' National Bank t. Mtbbs 
 
 (74 North Carolina, 514.) 
 
 IN this case it was held that National banks are subject only to 
 the penalties prescribed by the United States. The opinion 
 states the conclusion only. 
 
 Peazee v.' Seibeen. 
 
 (16 Ohio state, 614.) 
 
 IT was held in this case that shares of stock in National banks 
 could be taxed, although the tax against State banks was not 
 eo nomine a tax on shares, it being, howerer, equivalent to such 
 tax. The law relating to taxation of National banks has since 
 been changed in Ohio. See 64 0. L. 304; S. & S. 763; 74 0. L. 88. 
 
 Lee t. Citizens' National Bank. 
 
 (2 Cincinnati Superior Court, 298.) 
 
 HELD, that National banks could restrain the transfer of stocks 
 by one indebted to the bank, but that, under the special cir- 
 cumstances of that case, the transfer was good. The case is of no 
 value; so far as its general principles are concerned, it is not law. 
 
 MiNTZEE T. OOUNTT OF MONTGOMEET. 
 (54 PennsylTsinla State, 139.) 
 
 IN this case it was held that stock in National banks is taxable 
 for State purposes in the hands of shareholders. The point is 
 too well settled to be questioned. 
 
 City ob Pittsbitegh v. Piest National Bank. 
 
 (55 Pennsylvania State, 45.) 
 
 DECIDED that a tax on National banks not in entire conformity 
 with the act creating them was unconstitutional. 
 
MEMOEANDA. 937 
 
 Evekett's Appeal. 
 
 (71 Pennsylvanla.Sta,te, 316.) 
 
 IT was held in this case that National bank shares were taxable 
 at their market value for county purposes, although certain 
 other property was exempt. The same point was afterward settled 
 by the Supreme Court of the United States. He^gburn t. School 
 Directors, ante, p. 113. 
 
 Manuj?acxueeks and Mechanics' Bake t. The Commonwealth. 
 
 (72 Pennsylvania State, 70.) 
 
 A STATE bank, under the act of Congress of June 3d, 1864, be- 
 came a National bank on the 28th of October, 1864; on the 
 15th of December it furnished to the Auditor-General the evidence 
 that it had complied with the requirements of the State Enabling 
 Act of August 2d, 1864, which was certified December 19th by the 
 Auditor-General to the Governor, who caused publication to be 
 made, on the 21st, that the bank had become a National institu- 
 tion. Held, that the bank was liable to the State for all taxes to 
 December 19th, 
 
 GoKGAs' Appeal. 
 
 (79 Pennsylvania State, 149.) 
 
 IN this case it was decided that a tax on National bank shares 
 was not illegal because certain other property was exempt from 
 taxation. This point is fully covered by Hepburn v. School Direct- 
 ors, ante, p. 113. 
 
 Ely y. Second National Bank. 
 
 (79 Pennsylvania State, 458.) 
 
 IN this case it was held that a National bank could recover money 
 loaned, although the amount exceeded one-tenth of the capi- 
 tal stock. The case was decided solely on the authority of O'Hare 
 T. Second National Bank, ante, p. 869. 
 
 118 
 
938 MEMORANDA. 
 
 H 
 
 Stobt t. O'Doisru'ELL. 
 
 (31 Legal Intelligencer, 269.) 
 
 ELD that shares of stock in National banks belonging to non- 
 residents must be taxed at the place where the bank is situ- 
 ated, and that the State may direct the manner and place of taxing 
 the shares of resident owners, and the Legislature of Pennsylrania 
 not having separated such shares from the person of their owners, 
 their situs, like that of other personal property, is at the domicile 
 of their owner, and they are to be taxed in the town or city where 
 he resides, not in that where the bank is located. 
 
 This is substantially only a restatement of the act approved 
 'February 10, 1868. 
 
 Matob v. Thomas. 
 
 (5 Coldwell, 600.) 
 
 IN this case it was held that, under the law of Tennessee, as it 
 then was (1868), shares of stock in National banks were not 
 taxable. The law was afterward amended. 
 
 McLaughlis- t. Chadwell. 
 
 (7 Helskell, 389.) 
 
 ELD that shares of stock in National banks were subject 
 to State, county and municipal taxes. The same statute 
 was construed in Adams v. Mayor, ante, p. 148. 
 
 H 
 
 Clapp v. City of Burlington'. 
 
 (42 Vermont, 579.) 
 
 IN this case it was held that the owner of shares of stock in a 
 National bank should be taxed therefor in the city or town 
 where he resides, and not in the city or town where the bank is 
 located. This case attempted to give a construction to the act of 
 Congress, and as it then read, provided that shares of stock in a 
 National bank should be taxed " at the place where such bank is 
 located." Subsequently Congress declared that the words " place 
 where such bank is located " should be held to mean " the State 
 wibhin which the bank is located." Act approved Feb. 10, 1868. 
 
M'EMOKANDA. 939 
 
 Van Sltke t. State. 
 
 (23 Wisoonaln, 656.) 
 
 IN this case it was decided that a State tax on shares of stock in 
 National banks was valid, although the tax on State banks 
 was not eo nomine a tax on shares, it being an equivalent to a tax 
 on shares. The ease was affirmed in Baynall v. State, 35 Wis. 112. 
 When this case was decided, the 41st section of the National 
 Banking Act provided that a tax on shares of stock in National 
 banks should not exceed "the rate imposed upon the shares in any 
 of the banks organized under the authority of the State where such 
 association is located." The section was afterward amended so as 
 to omit such limitation. See lAonberger v. Rouse, ante, pp. 41, 44. 
 
INDEX. 
 
 ABATEMENT. 
 
 An action against a National bank abates upon its dissolution by decree of 
 a competent court. National Bank v. Colby, 109. 
 
 ACCEPTANCE. 
 
 1. Accommodation acceptance.'] It is no defense to a suit against the acceptor of 
 a draft which has been discounted, and upon which money has been 
 advanced by the plaintiff, that the draft was accepted for the accommoda- ' 
 tion of the drawer. Davis v. Bandall, 600, 
 
 3. Hvidence.] Even if it is within the authority of the president of a National 
 bank to bind the bank by an agreement, with the acceptor of a draft which 
 is discounted by the bank, not to enforce the draft against him, yet oral 
 evidence of such an agreement is not competent, in defense of » suit by 
 the bank against the acceptor, lb. 
 
 ACCESSORY. 
 To embezzlement by bank officers.} See Embezzlement and Larceny, 573. 
 
 ACCOMMODATION ACCEPTANCE. 
 See Acceptance, 600. 
 
 ACCOMMODATION NOTE. 
 See Banking BtrsiNESs, 623. 
 
 ACTION. 
 1. By National banks.'] Actions may be brought by National banks, as well 
 
 as against them under section 57 of the National Banking Act. Kennedy 
 
 Y. Gibson, 17. 
 3. .] National banks may, by reason of their character as such, sue in the 
 
 Federal courts. First Nat. Bank v. County of Douglas, 267. 
 3. 'Where may be brought.] A National bank located in one State may bring 
 
 an action in the Circuit Court of the United States sitting within another 
 
 State against a citizen thereof. Manufacturers' Nat. Bank v. Baaak, 161. 
 4. .] In such action it will be presumed, so far as the question of j uris- 
 
 diction is concerned, that the stockholders of such bank are citizens of 
 
 the State where the bank is located, lb. 
 5. Bight of bank to sue not controlled by Judiciary Act.] Held, that the plain- 
 
 tiflF, a National bank, had the right to bring suit in the United States Cir- 
 
942 INDEX. 
 
 ACTION— Gontinued. 
 cuit Court of the district where the bank was located, upon two notes 
 indorsed to it by the payee, who was also a citizen of the State and resi- 
 dent of the district. Commercial Bank of Cleveland v. Simmons, 394. 
 
 6. .] That a National bank does not sue by virtue of any right con- 
 ferred by the Judiciary Act, but by virtue of the right conferred upon 
 it by the act of 1864, authorizing and creating it, and which constitutes 
 its charter, that having no right to sue under the Judiciary Act, the lim- 
 
 . itation in the 11th section, as to suits on indorsed notes and choses in 
 action, does not apply, lb. 
 
 7. Jurisdiction of State courts.] State courts have jurisdiction of actions by 
 
 National banks. First Nat. Bank v. Hubiard, 912. 
 
 8. Against National banks in Federal courts.] A National bank cannot be 
 
 sued in the district courts outside the district where it is located. Ser- 
 vice on the cashier, when found in another district, does not give jurisdic- 
 tion, Main v. Second Nat. Bank, 200. 
 ■ 9. Against National banks in State courts.] An action against a National 
 bank may be brought in any State, county or municipal court having 
 jurisdiction of similar controversies in the county or city where the 
 bank is located. Bank of Bethel v. Pahquioque Bank, 77. 
 
 10. .J An action lies in a State court against a National bank only in the 
 
 city or county where the bank is located. Crocker v. Marine Nat. Bank, 
 575. 
 
 11. .] A State court of New York has no jurisdiction of an action against 
 
 a National bank located in Alabama. Cadle v. Tracy, 330. 
 
 13. .] National banks can be sued only in the courts designated in the 
 
 National Banking Act. lb. 
 
 13. .] An action may be brought against a National bank in the courts of a 
 
 State other than that where it is located. Cooke v. State Nat. Bank, 698, 
 and note. 
 
 14. .] Semhle,th.a.t Congress has not the power to deprive State courts 
 
 of jurisdiction in such cases, lb. 
 
 15. Against National banks and receivers of National banks.] National banks, 
 like any other corporations, and the receivers of them may sue and be 
 sued in the State courts of their domicile. Adams v. Daunis, 510. 
 
 16. .] The receiver of a National bank is amenable to the jurisdiction of a 
 
 State court in a parish other than that in which the bank was located 
 and in which he has his domicile, lb. 
 
 17. Against National bank after it Tuzs gone into liquidation.] An action may 
 be prosecuted against a National bank, although it has resolved to go into 
 liquidation and has provided for the redemption of its circulating notes. 
 Ordway v. The Central Nat. Bank of Baltimore, 559. 
 
 18. After appointment of receiver.] An action may be brought against a 
 National bank after the appointment of a receiver. Bank of Bethel v. 
 Pahquioque Nat. Bank, 77 ; Security Bank v. Nat. Bank, 774; Orem v, 
 Walkill Nat. Bank, 786. 
 
INDEX. 943 
 
 AGTION—Oontimted. 
 
 19. Abatement on dissolution of corporation.} An action against a National 
 bank to collect a claim is abated by a decree dissolving tbe corporation and 
 forfeiting its rights and francbises. Nationai Bank v. Golby, 109. 
 
 20. Receiver may be made party.'] In an action on a claim against a National 
 bank which has suspended the receiver may be made a party defendant. 
 I'umer v. Mrst Nat. Bank, 454. 
 
 31. By receivers against stockholders .] The provision of the National Banking 
 Act that suits under it, in which officers or agents of the United States are 
 parties, shall be conducted by the district attorney, is directory only, and 
 the fact that private counsel is employed to conduct a suit by the receiver 
 of a National bank against the stockholders thereof is not a matter of 
 defense to the stockholders. Kennedy v. Qibson, 17. 
 
 33. VomptroUer to determine when proceedings necessary.] It is the duty of 
 the Comptroller of the Currency to decide when proceedings are necessary 
 against the stockholders of a National bank to enforce their personal 
 liability, and to what extent such liability shall be enforced ; and in an 
 action by a receiver to enforce such liability, such prior determination of 
 the Comptroller must be distinctly averred and proved. lb. 
 
 23. Parties.] Where less than the entire liability of stockholders is sought 
 to be enforced, proceedings may be had in equity and an interlocutory 
 decree may be taken for contribution. Where contribution only is sought, 
 all the stockholders who can be reached by the process of the court may 
 be joined in the suit, and it will be no objection that there are others, 
 beyond the jurisdiction of the court who cannot, for that reason, be made 
 co-defendants, lb. 
 
 24. .] Creditors of a National bank cannot proceed directly in their own 
 
 name against the stockholders or debtors of the bank, nor are they proper 
 parties to a suit by a receiver, lb. 
 
 35. To recover interest on claims against bank.] Where on winding up a bank 
 there are found to be funds enough to pay all claims and leave a surplus, 
 the Comptroller should allow interest on the claims during the winding 
 up proceedings, and an action will lie against the bank to recover such 
 interest. Chemical Nat. Bank y. Bailey, 260. 
 
 26. Jurisdiction — estoppel.] A receiver of a National bank does not, by causing 
 himself to be substituted as defendant in an action against the bank, 
 estop himself from questioning the jurisdiction of the court. Oadle v. 
 Tracy, 230. 
 
 37. Decision of receiver as to validity of claim.] An action may be maintained 
 in a State court on a claim against a National bank, although the receiver 
 of the bank has disallowed the claim. Bank of Bethel v. Pahquioque 
 Nat. Bank, 77. 
 
 Against National banks for liabilities of State bank.] See National Banks, 846. 
 
 For penalty for usury, when barred.] See Interest, 860, 849, 872. 
 
 In State courts to recover penalties for taking unlawful interest.] See Jtjeis- 
 
 DICTION. 
 
944 INDEX. 
 
 ACTVm—Oontinued. 
 Wlien hank can maintain, to enjoin tax on shares.'] See Taxation, 935. 
 To recover hack taxes unUmefully assessed.] See Taxes, 737, and note. 
 For deposits.] See Deposits, 360. 
 
 WiU not lie for the interest forfeited for usury.] See Intbeest. 
 Removal of, from State to Federal courts.] See Removal of Causes, 
 
 ADMISSIONS. 
 
 Of bank officers, how far binding on ba^k.] The declarations and admissions 
 of bank officers not made by the express authority of the bank, or when 
 acting within the limit of their authority, or in respect to a business in 
 which they have authority to act for the bank, are ^not bindirg on the 
 bank. Mrst Nat. Bank v. Occam, Nat. Bank, 738. 
 
 ASSESSMENT. 
 See Taxation. 
 
 ASSIGNMENTS. 
 By National banks, when void.] See Insolvency, 376, 385. 
 
 ATTACHMENT. 
 
 1. A National bank may attach the shares of a stockholder therein for his 
 debt due the bank. Eagar v. Union Nat. Bank, 533. 
 
 3. Cannot be issued by State courts.] The act of Congress providing that no 
 
 attachment, injunction or execution shall be issued against a National 
 bank, before final judgment, in any action in a State court, is constitu- 
 tional. TTie Chesapeake Bank v. T/ie Mrst Nat. Bank of Baltimore, 531. 
 8. Against non-resident National banks.] The provision of the National 
 Banking Act (prior to the Revised Statutes), that attachments, injunctions, 
 etc., shall not be issued by State courts against National banks before final 
 judgment, relates only to actions against banks where the action is brought 
 and not to cases where the action is against a non-resident corporation. 
 Southwicky. First Nat. Bank, 789. 
 
 4. Cannot be issued.] Under the provisions of the Revised Statutes of the 
 
 United States, an attachment cannot be issued from a State court against 
 a National bank before final j udgment, whether such bank be located in 
 the State or not. Central Nat. Bank v. Biohland Nat. Bank, 801. 
 
 5. National banks cannot be garnisheed.] A National bank holding funds 
 
 belonging to a bankrupt estate as depositary of a bankrupt court, cannot 
 be garnisheed in proceedings supplementary to execution. Savens v. 
 Nat. City Bank, 783. 
 
 6. Sale of attached property after appointment of receiver.] Attached prop- 
 
 erty of a National bank cannot be sold under the attachment after a 
 receiver has been appointed. National Bank v. Colby, 109. 
 
 See Dividends, 533. 
 
INDEX. 945 
 
 BAILMENT. 
 See Banking Bttsiness ; Deposits fob Safe-keeping. 
 
 BANKING BUSINESS. 
 
 1. A National bank may buy cbeclja drawn on other banks, whether payable 
 
 to bearer or order. First Wat. Bank v. Harris, 590. 
 
 2. Right of National iaiiks to purchase notes.] The purchase of a promissory 
 
 Eote by a National bank for purposes of speculation is ultra vires, and 
 the bank acquires no title to and cannot recover on a note so purchased. 
 Mrst National Bank of Bochester v. Pierson, 637, and note, 639. 
 8. Purchase of negotiable pa/per.] In the business of banking, the purchas- 
 ing and discounting of paper is only a mode of loaning money ; and a 
 National bank ia authorized thus to acquire notes and bills which are 
 perfect and available in the hands of the borrower, as well as his own 
 paper made directly to the bank. Smith v. Exchange Bank, 836. 
 
 4. May take notes and mortgages to secure debt.] Defendant being indebted 
 
 to a National bank on certain promissory notes made a new note and a 
 mortgage to secure it, which were, by an agreement with the bank and for 
 its use and benefit, executed and delivered to one S. without consideration 
 from him, who also, without consideration, transferred them to the bank, 
 and the old notes were thereupon delivered up and canceled. Held, (1) 
 that there was a sufficient consideration for the note and mortgage ; (2) 
 that the bank had power to take notes and mortgages in such way and 
 form for the purpose of securing its claim. Shinkle v. First Nat. Bank, 
 824. 
 
 5. Bight of National banks to exchange securities.'] Where a National bank 
 
 received on deposit United States bonds of one class for the purpose of 
 converting the same into bonds of another class, held, (1) that the bank 
 was not a mere mandatory or bailee acting without compensation, but 
 was liable to the depositor for the value of the bonds on its refusal to 
 deliver them on demand ; (3) that the business of receiving one class of 
 United States bonds, to be converted into another, is within the scope of 
 the powers conferred upon National banks by the act of Congress under 
 which they are organized ; (8) that where a certificate of deposit ia 
 inadmissible as evidence for want of a proper stamp, parol evidence is 
 admiaaible of the facts it recites. Leach v. Hale, 466. 
 
 6. .] Semble that National banks can deal in and exchange government 
 
 securities. Van Leuven v. First Nat. Bank, 724. 
 
 7. Dealing in stocks.] While National banks cannot deal in atocks, they 
 
 may take stock to avoid loss on a debt. First Nat. Bank v. Excliange Nat. 
 Bank, 134. 
 
 8. Power of, to take collateral security — Deposits for safe-ke&ping — Measure of 
 
 damages on loss of bonds.] A National bank received from a customer 
 bonds aa collateral security for a debt then existing, and for future obli 
 gations. Afterward, and after the customer had paid his indebtedneaa, 
 the bonds were atolen from the bank. Held, (1) that the bank was not a 
 gratuitous bailee of auch bonda ; (3) that it had power to take the bonds 
 as security for existing or future loans ; (3 that it was liable if it failed 
 119 
 
946 INDEX. 
 
 BANKING BUSINESS— 0oratotte(Z. 
 to exercise ordinary care and diligence in keeping the bonds ; and (4)'that 
 the measure of damage was the value of the bonds when stolen and not 
 when demand of them was made. Third Nat Bank of Baltimore v. Boyd, 
 545. 
 
 9. WTien National banks are not liable for representations of officer.] Selling 
 
 railroad bonds upon commission is not within the scope of the corporate 
 powers of a National bank ; and therefore no action lies against such cor- 
 poration for false representations made by its teller to induce the plaintiff 
 to buy bonds. Weckler r. The Mrst Nat. Bank of Hagerstovm, 533. 
 
 10. Deposits in, as a collateral security for the performance of agreements be- 
 tween third parties — Ultra vires when no defense.'] A National bank" in- 
 dorsed upon a contract of sale and delivery between A and B, that B had 
 deposited $3,500 in the bank, " to be held by us as collateral security for 
 the faithful fulfillment of the within contract." Held, (1) that the bank had 
 the power to receive the deposit and enter into the said contract ; (3) but 
 that, even if the contract was ultra vires, the bank would be estopped from 
 setting up that defense in an action by A, as he had performed his part of 
 the agreement, relying on the undertaking of the bank. Bushnell v, 
 Chautauqua Nat. Bank, 794. 
 
 11. Accommodation notes.] It is no defense to an action by a National bank on 
 a note discounted by it that the defendant made it for the benefit of the 
 payee, and the payee agreed to pay it at maturity, and that the bank had 
 knowledge of these facts. Thatcher v. West Biver Nat. Bank, 633. 
 
 13. " Office or banking-house."] The provision of the National Banking Act 
 requiring National banks to transact their " usual business " at an office 
 or banking-house in the place specified in their organization certificates 
 does not prevent the purchase of coin by one bank at the banking-house 
 of another bank. Merchants' Nat. Bank v. State Nat. Bank, 47. 
 
 See Acceptance, 600 ; Deposits pok Safe-keeping. 
 
 BANKING-HOUSE. 
 
 Taxation of] ySee Taxation, 639. 
 
 BANKRUPT ACT. 
 
 National banks not subject to.] National banks are not subject to the Bankrupt 
 Act, and bankruptcy courts have no jurisdiction as against such associa- 
 tions. If insolvent they can be wound up only in the mode provided by 
 the National Banking Act. In re Manufacturer^ Nat. Bank, 193. 
 
 BANKRUPTCY. 
 Bight of assignee to recover illegal interest paid by bankrupt.] See Intbbbst, 
 317. 
 
 BILLS. 
 
 See ClKCTILATION. 
 
 BILLS AND NOTES. 
 ' See Banking Business ; Checks ; Pkomissory Notes ; Sijketibb, 811. 
 
INDEX. 947 
 
 BOND. 
 
 1. Sureties on official bond of cashier released hy negligence of directors.'] De- 
 fendants became sureties on the ofllcial bond of a bank cashier, being 
 Induced so to do by a statement published by the directors, according to 
 law, whereby the affairs of the bank appeared to be well managed. The 
 cashier of the bank was a defaulter when the statement was published, 
 of which fact the directors, by the use of slight care, might have learned. 
 In an action on the bond for subsequent embezzlements, held, that the 
 sureties were not liable ; they had a right to believe that, before publish- 
 ing the statement, the directors had used reasonable diligence in ascer- 
 taining the condition of the bank, and, being misled by the statement, 
 were not bound. Oraees v. T7ie Lebanon Nat. Bank, 493. 
 
 3. Presumption as to date of instrument.] A bond was dated the day of 
 
 1869. Seld, that the legal presumption was that it did not become 
 
 binding on the obligors until the last day of that year. lb. 
 
 3. Acceptance of bond.] It is not essential that National banks shall signify 
 
 their acceptance of the oflBcial bonds of their officers in writing. lb. 
 
 4. Mobilities of sureties on cashier's bond.] A surety on the bond of the cashier 
 
 of a National bank is not discharged by the fact that the cashier had, 
 before the bond was given, committed frauds upon the bank, if such 
 frauds were unknown to the officers of the bank, although they were 
 guilty of gross negligence in not discovering them. Ta/pley v. Martin, 611, 
 and note, 614. 
 
 5. .] In an action by a surety on the bond of an officer of a bank to recover 
 
 an amount paid on the bond without suit, against one who had agreed 
 to save him harmless from all loss which he might suffer as surety, 
 the court instructed the jury that if the plaintiff made the payment with- 
 out the assent of the defendant, he must show that he was legally liable, 
 but if he procured the assent in good faith, he could recover. Held, that 
 the defendant had no ground of exception, lb . 
 
 Deposited hy bank to secure circulation — courts cannot control.] See Juiiis- 
 DiCTiON, 208, 319. 
 
 BT-LAWS. 
 By-laws prohibiting the transfer of stock by any stockholder who is indebted 
 to the bank are invalid. Bullard v. Bank, 93 ; Bank v. Lanier, 70. 
 See DiBECTOES, 895. 
 
 CAPITAL STOCK. 
 See Stock; Taxation. 
 
 CASHIER. 
 1. Power to certify checks.] The cashier of a National bank may, without 
 special authority, certify checks ; but the directors may limit the exercise 
 of this power. Such limitation will not, however, affect one ignorant of 
 tt and dealing with the cashier in the usual course of business. Merchants' 
 Nat. Bank v. State Nat. Bank, 47, and note, 61. 
 
948 INDEX. 
 
 CASEIER— Continued. 
 
 8. As to the powers and duties of cashiers, see note, 61. 
 
 3. Lists of s!iareliolders.\ A State statute requiring cashiers of National banks 
 to send, annually, lists of shareholders and the amount of their shares to 
 the ^town clerks, is valid, and a cashier is liable to the penalty imposed 
 for a failure to comply with the law. Waite v. Dowley, 137. 
 
 Authority of, to take special deposits.] See Deposits fob Safe-keeping. 
 Official bond o/] See Bond. 
 
 CERTIFIED CHECK. 
 See Check. 
 
 CHATTEL MORTGAGE. 
 
 1. Bight of National hank to take chattel mortgage.'] A National bank has a 
 right to take a chattel mortgage for the purpose of securing a previ- 
 ously contracted debt, and to enforce the same. Spafford v. First Nat. 
 Bank of Tama City, 486. 
 
 3. .] National banks may take chattels as security for loans and discounts 
 
 Pittsburgh, etc., v. State Nat. Bank, 315. 
 
 CHECK. 
 
 1. Certification of checks by National hanks.] National banks have the power 
 to certify checks, and this power may be exercised by the cashier with- 
 out special authorization. The directors may limit his exercise of this 
 power as they may deem proper, but such limitation will not aflfect a per- 
 son ignorant thereof who deals with the cashier in relation to matters ap- 
 parently within the scope of his power. Merchants' Nat. Bank v. State. 
 Nat. Bank, 47, and note, 61. 
 
 3. Power of cashier — question for jury.] Whether or not a cashier has 
 power to certify checks in a given case is a question for the jury. lb. 
 
 3. Effect of certification of check.] A certificate of a bank that a check is 
 
 good is equivalent to an acceptance ; it implies that the check is drawn 
 upon sufficient funds in the hands of the drawee, that they have been set 
 apart for its satisfaction, and that they shall be so applied whenever the 
 check is presented for payment. lb. 
 
 4. Wlien hank liable on.] A National bank is liable to the holder in good 
 
 faith of a check certified by the cashier, although the drawer had no 
 funds in the bank when the check was certified. Cooke v. State Nat. 
 Bank, 698. 
 
 5. Acceptance of checks by National hanks — parol acceptance.] The act of 
 
 Congress of March 3d, 1869 (R. S., § 5208) making it unlawful for National 
 banks to certify checks unless the drawer has at the time an amount of 
 funds on deposit equal to the amount specified in the check, does not in- 
 validate an oral acceptance of a check or promise to pay a check, there 
 being at the time sufficient funds of the drawer in possession to meet it. 
 Mrst Nat. Bank v. Merchants' Nat. Bank, 915. 
 
INDEX. 949 
 
 CBBCK— Continued. 
 
 6. .] A check drawn on a National bank was presented for acceptance, 
 
 whereupon the bank promised to pay it as soon as it received information 
 that a certain draft left with it for collection was paid. The draft was 
 paid and the bank informed. Held, that the acceptance was good and 
 binding on the bank. lb. 
 
 7. Ifational banks may buy checks^ A National bank has authority to buy 
 
 checks of individuals on other banks, whether payable to bearer or to 
 order. First Nat. Bank of Rocliester v. Harris, 590. 
 
 8. Delay in presenting check for payment.'] A check drawn in Boston on a 
 
 bank in Boston was sent by mail to Rochester, N. Y., and there bought by 
 
 , a National bank four days after its date, and two days after was presented 
 
 for payment. Held, that there was no unreasonable delay, and that the 
 
 buyer was not subject to equities existing between the original parties. 76. 
 
 Bight of revenue collector to examine.] See Examination, 154. 
 
 CIRCULATION. 
 
 1. Congress may lawfully tax the circulation of State hanks used for currency 
 
 or paid out by State or National banks. Veazie Bank v. Fenno, 22. 
 
 2. Congress may restrain the circulation of notes issued by State banks, lb. 
 
 3. National bank bills are United States currency."] The notes or bills 
 
 issued by the National banks of the United States, which are authorized 
 by law to circulate throughout the Union as a medium of trade, are 
 included in the phrase, " United States currency." Larceny of such notes 
 is, therefore, larceny of United States currency. State v. Oasting, 508. 
 
 4. Taxation of circulation.] The circulating notes and bills of National banks 
 
 may be taxed by the State. Board v. Mston, 425; Buffin v. Board, 806 ; 
 contra. Home v. Green, 643. 
 
 CITIZENSHIP. 
 
 1. A National bank is a foreign corporation under a statute requiring cor 
 
 porations created by " the laws of any other State or country," to give 
 security for costs. Nat. Park Bank v. Ounst, 797, and note. 
 
 2. As to removal of causes.] National banks are citizens of the State where 
 
 located within the meaning of the statutes relating to removal of causes. 
 Davis V. Oook, 656 ; Cooke v. State Nat. Bank, 698; Chatham Nat. Bank v. 
 Merchants Nat. Bank, 769. 
 
 COLLATERAL SECURITY. 
 
 1. National banks may take personal chattels as security for loans and discounts, 
 
 Pittsburgh, etc., v. State Nat. Bank, 315. 
 
 2. National banksman make loans on security of their own stocks only to pre- 
 
 vent loss on debts previously contracted . Bank v. Lanier, 70. 
 
 3. A National bank may take bonds and stocks as security for existing or future 
 
 loans and is liable for only ordinary care in preserving such security. 
 Third Nat. Bank v. Boyd, 545. 
 
950 INDEX. 
 
 COLLATERAL SECURITY- Continiied. 
 
 4. National banks may lend money upon the personal obligation of the bor- 
 rower secured by a pledge of stock of a corporation as collateral security. 
 /Shoemaker v. Ifaf. Mechanies' Bank, 169; Ganfield v. State Nat. Bank, 312. 
 
 When one luolding shares in National hanks as collateral security is liable to 
 creditors.] See Stockholdbb, 406, 471, 554. 
 
 COMPROMISE. 
 See JuBiSDiCTiON, 181. 
 
 COMPTROLLER OP CURRENCY. 
 
 1. Determination of, as to proceedings against stockholders.] It is the duty of the 
 Comptroller of the Currency to determine when proceedings shall be taken 
 against stockholders to enforce their liability and to what extent such lia- 
 bility shall be enforced, and such prior determination must be alleged and 
 proved in an action to enforce such liability. Kennedy v. Gibson, 17. 
 
 2. .] The determination of the Comptroller of the Currency as to when and to 
 
 what extent the individual liability of stockholders shall be conferred, is 
 conclusive. Kennedy v. Gibson, 17 ; Gasey v. Galli, 142 ; Bailey v. Sawyer, 
 356. 
 
 CONSTITUTIONAL LAW. 
 
 1. Bight of Congress to tax circulation of State banks!] The tax of ten per cent 
 
 imposed by the act of July 13, 1866 (14 Stat, at Large, 146, § 9) on the cir- 
 culation of State banks used for currency and paid out by the National or 
 State banks is not repugnant to the Constitution, either on the ground 
 that the tax is a direct tax, which must be apportioned among the sev- 
 eral States, or that the act impairs franchises granted by ' the State. 
 Veazie Bank v. Penno, 32. 
 
 2. Restraint of circulation of notes of State banks.] Congress, having undertaken, 
 
 in the exercise of undisputed constitutional power, to provide a currency 
 for the whole country, may constitutionally secure the benefit of it to 
 the people by appropriate legislation, and to that end may restrain, by 
 suitable enactments, the circulation of any notes not issued under its own 
 authority, lb. 
 
 3 . .] Semble, that Congress has no constitutional right to deprive State courts 
 
 of jurisdiction of actions against National banks located in other States. 
 Oooke V. State Nat. Bank, 698. 
 
 See Attachment, 581. 
 
 CONVERSION. 
 1. Of State bank into National bank — right of State to exact bonus.] A State 
 bank was by its charter required to pay the State a tax or bonus on its 
 capital paid in. A statute afterward authorized State banks to reorganize 
 as National banks, provided that all sums required by their charters to 
 be paid to the State continued to be paid as theretofore. Held, that a State 
 bank had the right to surrender its charter, and by so doing discharged 
 
INDEX. 951 
 
 CONVERSION— CoKiiwMed 
 itself from its obligation to pay the required bonus, and that the State could 
 not require it, in reorganizing as a National bank, to pay any bonus 
 State V. The Nat. Bank of Baltimore, 538. 
 
 2. Effect o/.] The conversion of a State bank into a National bank, under 
 
 the act of Congress of June 3d, 1864, did not work an annihilation or 
 dissolution, but only a change of the bank. Maynard v. Bank, 893. 
 
 3. .] Such change does not adeem a residuary legacy in certain shares of 
 
 the bank, limited upon a life estate iu such shares which is to become an 
 absolute one, in case the bank should pay off or refund its stock, by 
 reason of the expiration of its charter or from any other cause. The 
 change is not equivalent in law to a paying oil iu fact, and the residuary 
 legatee is entitled to the stock on the death of a legatee for life. lb. 
 
 4. .] When a. bank, organized under the laws of a, State, reorganizes 
 
 as a National bank under the act of Congress, it escapes none of its liabil- 
 ities by the change. Goffey v. The National Bank of Missouri; 644. 
 
 5. Measure of -damages.^ In an action of trover against a bank, after its 
 
 reorganization as a National bank, for the value of certain special deposits 
 in coin made prior thereto ; held, that the measure of damage was the 
 value of the coin at the date of its conversion, with interest thereon. lb. 
 
 CORPORATION. 
 
 Evidence of incorporation^ See Evidbnok ; Organization. 
 
 When incorporation cannot be questioned.'] See Estoppel, 143, 406, 784. 
 
 COSTS. 
 A National bank suing in New York must give security for costs. Nat. 
 Park Bank v. Gunst, 797, and note. 
 
 COUNTER-CLAIM. 
 
 1. In an action by a National bank the defendant cannot be allowed a 
 
 counter-claim for unlawful interest paid by him more than two years prior 
 thereto. Nat. State Bank v. Boylan, 798. 
 
 2. One of two or more defendants cannot set up an individual counter- 
 
 claim, unless, under the pleadings, there can be a several judgment against 
 him. lb. 
 
 CREDITORS. 
 Creditors are not proper parties to an action against stockholders, to enforce 
 their liability. Kennedy v. Gibson, 17. 
 
 CURRENCY. 
 
 See ClBCULATION. 
 
 When transfer of stock to escape liability to, void.} See Stockholders, 371. 
 
 DAMAGES. 
 On loss of bonds pledged as collateral.] See Banking Business, 545 ; Conver- 
 sion, 644. 
 For sale of shares subject to lien.] See Sale, 931. 
 
952 INDEX. 
 
 DEBTS. 
 
 Where, from tlie tax on other moneyed capital, the entire indebtedness of the 
 owner was deducted, a tax on National bank shares was held invalid, 
 because no similar deduction was made. City Nat. Bank v. Paducah, 300. 
 
 Against National hanks, what are.] See Winding Up, 454. 
 
 Deduction from tax on account of.} See Taxation, 684. 
 
 DEPOSITARIES. 
 Ofpvilic moneys.} See Public Dbpositabies, 363. 
 
 DEPOSITORS. 
 
 See Set-opp, 758. 
 
 DEPOSITS. 
 
 1. Setoff against debt in bank.} A National bank having become insolvent, a 
 depositor therein assigned his deposit to a debtor of the bank. Held, 
 that the latter could not offset such deposit against his debt in an action 
 thereon. Venango Nat. Bank v. Taylor, 843. 
 
 3. .] A depositor may set-off his deposit against a debt due the bank when 
 
 the bank becomes insolvent. Plait v. Bently, 758. 
 
 3. When demand of , not necessary.} Where a National bank has, by its own 
 
 default, been placed in the hands of a receiver, a demand of payment of 
 a deposit is no longer a necessary condition precedent to a right of action 
 for the deposit, and the deposit bears interest from the time of such 
 default. Chemical Nat. Bank v. Bailey, 260. 
 
 4. Interest on, after demand and refusiU.} A National bank, holding deposits, 
 
 refused to pay the same on demand and thereafter a receiver was ap- 
 pointed. Held, that the depositor was entitled to interest thereon from 
 the date of the demand. Nat. Bank of Commonwealth v. Mechanics' 
 Nat. Bank, 133. 
 
 5. .] The entire principal of the deposits, but no interest thereon, was 
 
 paid by the receiver. Held, that interest upon the aggregate of unpaid 
 interest was recoverable. lb. 
 
 6. Nature of claim for deposits.} The claims of depositors in a suspended 
 
 National bank' are, when proved to the satisfaction of the Comptroller of 
 the Currency, on the same footing as if they were reduced to iudgments. 
 lb. 
 Of bank to secure circulation — courts cannot interfere with.} See Jurisdic- 
 tion, 208, 319. 
 
 DEPOSITS FOR SAFE-KEEPING. 
 1 , National bank not aut/iorized to take.} The taking of special deposits, to 
 keep merely for the accommodation of the depositor, is not within the 
 authorized business of National banks ; and the cashiers of such banks 
 have no power to bind them on any express contract accompanving, or 
 any implied contract arising out of, such taking. WUey v. Mrsi Nat. Bank, 
 905, and note. 
 
INDEX. 953 
 
 DEPOSITS FOR SAFE-KEEPING— Comemwed. 
 8. Power of cashier to take.] The cashier or other executive officer of a, 
 National bank has not, in the absence of special authority from the 
 directors or of a usage or practice so to do, power to receive, on behalf of 
 the bank, property for safe-keeping. Mrst Nat. Bank v. Ocean Nat. 
 Bank, 728. 
 
 3. ■] Quere as to the power of a National bank to become a bailee of prop- 
 erty either gratuitously or for hire. lb. 
 
 4. Liability /o?'.] A gratuitous bailee is only liable for gross negligence ; he 
 
 is not bound to any special or extraordinary measures to protect the 
 property, and the negligence with which he can be charged, or which is 
 the proper subject of evidence, is only that which is connected with and 
 directly contributes to the loss. Ih. 
 
 5. Admissions of officers.] In an action against a bank for the loss of prop- 
 
 erty which it had received as gratuitous bailee, held, that the declaration 
 and admissions of the president, tending to show negligence on his part, 
 made after the transaction, and when not acting within the limit of his 
 authority, were not binding upon the bank. lb. 
 
 '6. Liability of National banks as to deposits for safe-keepingf] Semble, a 
 National bank which habitually receives special deposits for safe-keep- 
 ing as matter of accommodation, is bound by the act of its cashier in 
 receiving, on special deposit, a package of stocks and bonds. The bank, 
 though acting without reward, becomes a bailee and is responsible for 
 gross negligence. Chattalutochee Nat. Bank v. Schley, 379. 
 
 7. Power to withdraw deposits.] If a person withdraws from a bank a special 
 
 deposit, in pursuance of authority conferred upon him by the depositor, 
 the bank is discharged, though at the time its officers were not aware of 
 his authority. lb. 
 
 8. .] Written authority indorsed on a certificate of deposit of stocks and 
 
 bonds to pay to a certain person dividends or coupons is no authority for 
 surrendering the stocks and bonds themselves, lb. 
 
 9. Liability of National bank for. ] In an_ action to recover of a bank the 
 
 value of bonds deposited for safe-keeping by plaintiflF, and stolen by the 
 teller of the bank, held, that the bank being a gratuitous bailee was not 
 liable, although an examination of the teller's accounts, after the theft, 
 proved them to have been falsely kept, and showed that he had been 
 abstracting funds for two years, and although it was known to the presi- 
 dent of the bank that he had dealt once or twice in stocks. Mistaken 
 confidence is not a ground of liability in such cases. Scott v. Nat. Bank, 
 864. 
 
 10. Negligence in keeping.] Whether or not a National bank has the power to 
 take bonds, etc., on deposit for safe-keeping, it is not liable for the loss of 
 such property so taken without compensation, unless it has been guilty of 
 gross negligence contributing to the loss. De Somen v. Kensington Nat. 
 Bank, 888. 
 
 11. Liability of bailee.] In an action against a National bank to recover bonds 
 deposited with it for safe-keeping, without compensation, and which the 
 
 120 
 
954 INDEX. 
 
 DEPOSITS FOR SAFE-KBEPUiiQ—OonUnued. 
 bank alleged were stolen from its vaults, held, (1) that the bank was liable 
 only for gross negligence ; (2) that its failure to give prompt notice of the 
 robbery was a aiestion for the jury as bearing on the question of negli- 
 gence ; and (3) that while the mere voluntary act of the cashier in receiv- 
 ing the funds would not subject the bank to liability., yet if the deposit 
 was known to the directors and they acquiesced in its retention, a contract 
 relation was created by which the defendants would be held bound. Mrst 
 Nut. Bank v. Graham, 875. 
 
 See Bankin(? BusisTBSs. 
 
 DIRECTORS. 
 
 1. Qualification of.] Where no qualification is required and' there is no 
 
 usage to control, a person who is elected a bank director is presumed 
 to accept the oifice unless he decline it. This presumption may be rebut- 
 ted. Whether simple non-action as a director, for five months, would be 
 ordinarily suflB.cient to rebut it — query. But where the stockholders of 
 a bank, in ah instrument authorizing its conversion from a State to a 
 National bank, named all the directors who had been elected at the last 
 annual election as those who are now directors of said bank," the court 
 cannot hold that two of those so named were not directors at the time of 
 such conversion, because they had never acted in that capacity since their 
 election five months previously. Lockwood v. American Mat. Bank, 895. 
 
 2. .] By the provisions of section 44 of the National Banking Act, upon 
 
 conversion of a State to a National bank, all the directors of the former 
 become those of the latter, until an election or appointment by the 
 National bank. Bemhle, that no oath is required from these ad interim 
 directors, the oath prescribed by section 9 of the aforesaid act being 
 designated for those regularly elected by the National bank, but, assum- 
 ing its necessity, a majority of those who were the directors of the State 
 bank before its conversion is necessary to make a quorum of the board of 
 the National bank. lb. 
 
 3. Number necessary to hold meeting. ] In all cases where an act is to be 
 
 done by a corporate body or a part of a corporate body and the number is 
 definite, a majority of the whole number is necessary to constitute a legal 
 meeting, although at a legal meeting, where a quorum is present, a 
 majority of those present may act. lb. 
 
 4. By-laws.'] Hence, a by-law adopted at a meeting. of six ad i»imm directors 
 
 of a National bank, which had twelve directors before its conversion, is 
 invalid, because not adopted by a majority or quorum of the board, lb. 
 
 Bight of, to remove officers.] See Opficbrs. 
 
 Negligence of.] See Bonds ; Deposits for SAFE-KEBPiNtr. 
 
 DISCOUNTS. 
 See Loans and Discounts. 
 DISSOLUTION. 
 0/ National banks abates actions against.] See Action, 109. 
 
INDEX. 955 
 
 DISTRAINT. 
 See Payment, 268. 
 
 DIVIDENDS. 
 1. Iden of National harik on dividends.'l A National bank has a lien on and 
 the right to hold a cash dividend as pledge for the indebtedness of the 
 shareholder to the bank. Uagar v. Union Nat. Bank, 533. 
 
 3. Attachment of shares^ A National bank may attach the shares of a stock- 
 holder therein for his debt due the bank. lb. 
 
 3. Demand, of dividen^d.] A National bank sued a shareholder therein for 
 money due and attached his shares. Pending the suit he demanded pay- 
 ment of the dividends declared upon the attached shares, which was 
 refused. He afterward settled the suit and brought an action for his divi- 
 dends, without renewing his demand. Held, that the demand while the 
 shares were attached was a nullity, and as dividends were not payable 
 until demanded, the action could not be maintained, lb. 
 
 DEAPT. 
 See Accept ANCB. 
 
 EMBEZZLEMENT AND LARCENY. 
 
 1. Embezzlement and false entries by officers of National banks.] The presi- 
 dent of a National bank was charged before a United States Commissioner 
 with embezzlement of the funds of the bank, and with having made false 
 entries in its books, and, after examination, was held for trial. The pro- 
 ceedings having been brought before the District Court for review by 
 habeas corpus, and certiorari, held, (1) that the court would examine the 
 evidence and do what the commissioner ought to have done ; (3) that if 
 the evidence showed probable cause of the defendant's guilt he was right- 
 fully held for trial ; (3) that proof of the de facto existence of a bank 
 called a National bank and that the defendant acted as president of it was 
 sufficient to establish the legal incorporation of such bank and of the 
 defendant's official connection therewith. In the Matter of Van Ga/mpen, 
 185. 
 
 3. False entries.] Where false entries are made in the books of a bank by a 
 clerk in the bank, by direction of the president, the latter is liable there- 
 for as principal, lb. 
 
 3. Intent.] An intent to defraud a bank is to be inferred from the fact of 
 
 embezzlement, lb. 
 
 4. What is embezzlement] Where the president of a National bank, charged 
 
 as trustee with the administration of the funds of the bank in his hands, 
 converts them to his own \ise, he embezzles and abstracts them, within 
 section 55 of the National Banking Act (13 Stat, at Large, 116) unless he 
 shows authority for so doing. lb. 
 
 5. Indictment for embezzling and misapplying funds of bank — evidence of 
 
 intent.] The cashier of a National bank was indicted under section 55 of 
 the act of 1864 (13 Stat, at Large, 116), for embezzling, abstracting and 
 
956 INDEX. 
 
 EMBEZZLEMENT AND LARCENY— Cto»<i«Med 
 willfully misapplying the moneys and funds of the bank " with intent to 
 injure or defraud the association." Held, that the intent to injure or de- 
 fraud was conclusively presumed upon proof of the act charged, and that 
 therefore evidence was not admissible to prove that the cashier used the 
 funds with the knowledge and consent of the president, and some of the 
 directors of the bank, and on account of and for the benefit of the bank. 
 United States v. Taintor, 356. 
 
 6. By officers and servants of National, banks — jurisdiction of State courts 
 
 of the offense.] A State statute prescribed punishment for any officer 
 or servants of any bank, " incorporated by authority in this State " who 
 should purloin, etc., any moneys, etc., belonging to or deposited in such 
 bank. Held, (1) to apply to tellers of National banks ; (3) that a teller of 
 such bank could be punished under the statute for purloining property 
 deposited with the bank for safe-keeping, but (3) semble that such teller 
 could not be punished under the statute for purloining or embezzling the 
 property of the bank. State v. Tuller, 375 . 
 
 7. .] State courts have no jurisdiction of ofEenses created by act of 
 
 Congress, 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. lb. 
 
 8. .] A State statute made it larceny for any " officer of an incorporated 
 
 bank " to fraudulently convert to his own use property of the bank or be- 
 longing to any person and deposited therein. Sdd, (1) to apply to officers of 
 National banks located in the State ; and (3) that a State court had jurisdic- 
 tion of an indictment under the statute against an officer or servant of a 
 National bank for the fraudulent conversion of the property of individuals 
 deposited in such bank. Oommonwealth v. Tenrmy, 568. 
 
 9. Fraudulent conversion — intent.] An officer of a National bank took bonds 
 
 deposited with the bank and sent them to a broker in another State as 
 collateral security for money advanced. Held, a fraudulent conversion and 
 larceny within the statute. lb. 
 
 10. By officers of National banks — jurisdiction of offense.] A State court 
 has no jurisdiction of the crime of embezzlement by an officer of a 
 National bank situate within the State ; and since the National Bank- 
 ing Act makes such embezzlement a misdemeanor, an accessory thereto 
 cannot be indicted in a State court under a statute making an embezzle- 
 ment, or the being accessory thereto, a felony. Commonwealth v. Felton, 
 573. 
 
 11. .] State courts have jurisdiction over larcenies committed upon the 
 
 property of National banks, by their officers. Commonwealth v. Ba/rry, 
 605, and note, 610. 
 
 13. .] The fact that an officer of a National bank, who has stolen its prop- 
 erty, is subject to punishment for embezzlement under the National Bank- 
 ing Act, does not relieve him from liability to punishment for the same 
 act as a larceny at common law, or under the statutes of a State, lb. 
 
INDEX. 957 
 
 EMBEZZLEMENT AND h&.UCE^Y— Continued. 
 
 13. .] Where the property of a National bank is intrusted to the teller 
 
 during the day while engaged in transacting its business, but at night is 
 placed in a safe which he cannot rightfully open, if he abstracts the prop- 
 erty from the safe at night and converts it to his own use, his ofifense is 
 larceny and not embezzlement, lb. 
 
 See State v. Qabting, 508. 
 
 ESTOPPEL. 
 
 1. An action having been commenced in a State court against an insolvent Na- 
 
 tional bank, the receiver of the bank appointed by the Comptroller of the 
 Currency was, on his own application, substituted as defendant. Held, 
 that the receiver was not thereby estopped from questioning the jurisdic- 
 tion of the court. Oadle v. Tracy, 230. 
 
 2. A shareholder in a National bank, who has participated in its trans- 
 
 actions as such and received dividends, is estopped from denying the 
 legality of its incorporation. Gaaey v. Oalli, 142 ; WTieelook v. Kost, 406. 
 
 3. One accustomed to deal with a National bank as such, and who so 
 
 deals with it in respect to a promissory note, is estopped from denying 
 the incorporation of the bank in an action on the note. Nat. Bank v. 
 Phmnix Wa/rehoudng Co., 784. 
 
 See Banking Business, 794. 
 
 EVIDENCE. 
 
 1. Of appointment of receiver.} The certificate of the Comptroller of the Cur- 
 
 rency duly made is sufficient evidence of the appointment of the receiver 
 in an action brought by him. Piatt v. Beebe, 725. 
 
 2. .] A copy of the certificate of organization of a National bank, certified 
 
 by the Comptroller of the Currency and authenticated by his seal of office, 
 is competent evidence in a State court. Tapley v. Martin, 611. 
 
 3. Of incorporation — certifleate of organization.'] In an action by " The West 
 
 River National Bank of Jamaica, Vermont," held, that the certiiicate of 
 the Comptroller of the Currency of the existence of a corporation under 
 the name of " The West River National Bank of Jamaica," described as 
 located in t'h^ town of Jamaica, Vermont, was admissible under the general 
 issue for the purpose of proving the plaintiff's corporate existence 
 Tlmtcher v. We%t Bi'ier Nat. Bank, 622. 
 
 4. .] It is no objection to the admission in evidence of the certificate of 
 
 the organization of a National bank, that the notary before whom it was 
 acknowledged was one of the shareholders of the bank. The 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, lb. 
 
 5. .] The certificate of the Comptroller of the Currency is conclusive evi- 
 dence of the validity of the organization of the bank in an action against 
 the stockholders. Casey v. Oalli, 142. 
 
 6. Of incorporation in suits by National bank.] In an action by a National 
 
958 INDEX. 
 
 EVIDENCE— Continued. 
 bank against the maker of a promissory note, the fact that the note is 
 made payable at the plaintiff bank is not conclusive evidence that such 
 bank is a corporation. Hungerford Ifat. Bank v. Van Nostrand, 589. 
 See Acceptance ; Admissions. 
 
 EXAMINATION. 
 
 1. Of National lank by revenue coUectors.] Paid bank checks which were 
 duly and sufficiently stamped at the time they were made are not " articles 
 or objects subject to taxation," and an oiScer of a bank may lawfully 
 refuse to allow a collector of internal revenue to examine such checks. 
 United States v. Mann, 154. 
 
 3. .] The law under which National banks are incorporated does not 
 
 exempt them from examination by the internal revenue officers, men- 
 tioned in section 3177 of the Revised Statutes. The United States v. 
 Bhawn, 358. 
 
 3. .] A clerk of a supervisor of Internal revenue is, however, not such 
 
 an officer. lb. 
 
 FOREIGN CORPORATION. 
 See Citizenship. 
 
 FRAUDULENT CONVERSION. 
 See Embezzlement and Larceny, 568. 
 
 INCREASE OF CAPITAL STOCK. 
 See Stock, 898. 
 
 INCORPORATION. 
 
 Of National hank.} See Obganization. 
 
 INDICTMENT. 
 See Embezzlement and Labcbnt. 
 
 INJUNCTION. 
 A Circuit Court may, at the suit of a stockholder, enjoin officers of a National 
 bank from any misapplication of the funds. Shoemaker v. Nat. Mechanic!^ 
 Bank, 169. 
 
 When granted to restrain collection of tax on bank.] See Taxation, 367, 326. 
 WTien granted at suit of bank to restrain tax on sTtares.'] See Taxation, 367, 
 300, 926. 
 
 INSOLVENCY. 
 1. Hvidenceofl A. Tetnm ol nvila bona, made by a sheriff upon an execution 
 
INDEX. 959 
 
 INSOLVENCY— CoraimMecZ. 
 issued against a National bank, is sufficient evidence of its insolvency. 
 WheelockY. ^osi, 406. 
 
 2. Transfers ofbank property in contemplation of insohenop .} To render a 
 
 transfer by a National bank made after an act of insolvency, or in con- 
 templation of insolvency, void, under section 53 of the act of 1864 (R. 
 S., § 5343), it must have been made either with a view to prevent the 
 application of the assets in the manner prescribed by the National Bank- 
 ing Act, or with a view to the preference of one creditor to another. Oasey 
 V. La Societe de Credit Mdbilier de Paris, 385. 
 
 3. .] The preference of one creditor to another, mentioned in section 
 
 53 of the act of 1864, is a preference given to an existing creditor for a pre- 
 existing debt ; and does not refer to a case where one makes a loan to a 
 bank and receives a concurrent transfer of property aa security therefor. 
 lb. 
 
 4. .] A bank, being in an embarrassed financial condition, received a loan 
 
 of money from defendant upon depositing with a certain commercial firm 
 a portion of its assets as security. Held, that the fact that one of the 
 members of such firm was president of the bank did not render the 
 transaction illegal ; and that the bank could not escape liability for 
 such loan on the ground that the president had no authority to effect it 
 where it appeared that it was effected with the knowledge of the direct- 
 ore, and the money was received and used by the bank. lb. 
 
 5. National ban'ks.\ The word " insolvency," as used in section 53 of the act 
 
 of 1864 (13 Stat, at Large, 115 ; E. S., § 5343), making void all transfers, 
 assignments, payments, etc., "made after the commission of an act of 
 insolvency or in contemplation thereof," is synonymous with the same 
 word as used in the Bankrupt Act, and means a present inability to pay 
 in the ordinary course of business. Gase v. Citizens' Bank of Louisi- 
 ana, 376. 
 
 6. Transfers in contemplation of.] To make transfers, assignments, etc., void 
 
 under said section 53, it is only necessary that the insolvency should be 
 in the contemplation of the bank making transfers; the party receiving 
 the transfers need not know of or contemplate such, insolvency, lb, 
 See Winding Up. 
 
 INSOLVENT BANKS. 
 See Winding Up. 
 
 INTENT. 
 See Embezzlement and Laecbnt, 185, 256. 
 
 INTEREST. 
 
 1. National banks not governed by State usury lavSs.] National banks are not 
 governed by the usury laws of a State, and the only penalties incurred by 
 them for taking excessive interest, are those imposed by the National 
 Banking Act. Farmers cmd MeeTianio^ Nat. Bank v. Bearing, 117; 
 
960 INDEX. 
 
 INTEREST — Continued. 
 Davis V. Bandall, 600 ; Centrai Nat. Bank v. PraM, 595 ; Mrst Nat. 
 Bank v. Oarlinglwuse,SXl ; ShinUe v. First Nat. Bank, 834. 
 3. Effect of usury on note.] Where a National bank exacts illegal interest 
 on the discount of a note the interest-bearing power of the obligation is 
 destroyed and there will be no time from which it can bear interest. 
 Lucas V. Qovernment Nat. Bank, 873. 
 
 3. What interest National banks may change.] Where the general rate of in- 
 
 terest in a State is higher than tha^ allowed to State banks of issue, Na- 
 tional banks may take the higher rate. Tiffany v. Nat. Bank, 90. 
 
 4. .] A National bank is limited, in its right to take or charge interest 
 
 on its loans and discounts, to the rate of interest allowed by the State 
 laws to banks of issue organized under those laws, if the rate so allowed 
 is difEerent from the general rate allowed by the laws of the State. 
 Skunk V. First Nat. Bank, 820. 
 
 5. .] National banks are not authorized to take the rate of interest al- 
 lowed by special statutes of a State to a few banks of issue where such 
 rate is higher than that allowed to banks of issue generally. Duncan v. 
 First Nat. Bank ofMt. Pleasant, 360. 
 
 6. .] By the statute of Kentucky no more than six per cent interest could 
 
 be exacted, but parties were allowed to contract to pay and receive ten 
 per cent " by memorandum in writing, signed by the party chargeable 
 thereon, and not otherwise." A National bank located in the State dis- 
 counted notes, charging interest in advance at the rate of ten per cent 
 without other "memorandum in writing " than the notes, wherein was 
 a promise to pay the principal and accrued interest at the rate of ten 
 per cent, neld, that the transaction was not usurious. Newell v. Nat. 
 Bank of Somerset, 501. 
 
 7. .] By the statute of a State, six per cent was declared to be the 
 
 legal rate of interest, but parties were authorized to agree in writ- 
 ing for a higher rate not exceeding ten per cent. Held, that National 
 banks located in the State could charge ten per cent. Wiley v. Starbiick, 
 436. 
 
 8. On loans to corporations in New York.] In New York the rate of interest 
 
 which a corporation may pay is not limited. A National bank, located in 
 that State, loaned money to a corporation at a rate of interest exceeding 
 seven per cent per annum. Held, that the interest on the loan was for- 
 feited under section 30 of the National Banking Act (18 Stat, at Large, 
 108), which provided that when no rate of interest was fixed by the law of 
 a State, a National bank might charge a rate not exceeding seven per 
 cent, and that if it charged more, the entire interest should be forfeited. 
 In re Wild, 346. 
 
 9. Forfeiture.] In an action by a National bank upon a note discounted at a 
 
 usurious rate of interest the bank can recover the amount of the principal 
 less the interest received. Farmers & Meclianics' Nat. Bank v. Bearing, 
 117. 
 
 10. Extent of forfeiture — interest after maturity.] Under section 30 
 
INDEX. 961 
 
 mTmiEST— Continued. 
 of . the National Currency Act (13 Stat, at Large, 108), the taking or 
 charging a rate of interest greater than six per cent per annum, in ad- 
 vance, by a National bank located in Ohio, is a forfeiture of the entire 
 interest which the note or other evidence of debt carries with it, or 
 which has been agreed to be paid thereon ; as well the interest accru- 
 ing after maturity and before judgment, as the interest which accrued 
 before the maturity thereof. Skunk v. Mrst Nat. Bank, 830 ; Lucas v. 
 Bank, 872. 
 
 11. Set off, amount o/.] In an action by a National bank on negotable paper dis- 
 counted by it, the defendant may set off the amount of interest in excess 
 of the lawful rate paid on other transactions. The interest paid by the 
 defendant beyond that authorized by the act of Congress belongs to him, 
 and the bank can hold it only for his use. Lucas v. Bank, 873. 
 
 13. .] Where National banks stipulate for an illegal rate of interest all 
 
 payments of interest, and not merely the excess, is illegal. Overholt v. 
 Nat. Bank, 883. 
 
 13. .] In an action by a National bank to recover the amount of a note 
 
 which was given in renewal of other notes, the defendant is entitled, 
 where illegal interest has been exacted, to credit for all the interest he 
 has paid from the beginning on the loan and not merely to the excess 
 above the lawful rate. lb. 
 
 14. .] In an action by a National bank on a promissory note the defend- 
 ant cannot set off the entire interest agreed to be paid on another and 
 independent note although such interest was usurious, li. 
 
 15. .] Where there has been a series of renewal notes given for the 
 
 continuation of the same original loan, a. taint of usury in the first 
 transaction follows down through the whole, and in an action by a Na- 
 tional bank on the last of the series, the borrower is entitled to credit for 
 all the interest he has paid from the beginning. Cake v. Mrst Nat. Bank, 
 890. 
 
 16. Recovery or recoupment of excessive interest.] If a National bank discount 
 
 a note at a usurious rate of interest, paying the borrower the proceeds 
 less the interest, it can recover only the face of the note less the entire 
 interest received. But if such note be renewed, the borrower paying 
 the usurious interest out of his pookeL, in advance, the defendant may 
 recoup, or recover, in an independent action, double the amount of the 
 entire interest paid at the renewal. If, instead of paying the usurious in- 
 terest at each renewal, it be added to the principal and included in the re- 
 newal notes, the bank can only recover the amount originally paid to the 
 borrower, i. e., the amount of the last of the renewal notes less all inter- 
 est included in it. Nat. Bank of Madison v. Davis, 350. 
 
 17. .] Under the 30th section of the National Banking Act, the remedy 
 
 of the " forfeiture of the entire interest " for the exacting of unlawful 
 interest can only be had by way of defense to an action on the note, or 
 to recover the loan, but no action lies for it. Brown v. Tlie Second Nat. 
 Bank, 849. 
 
 121 
 
962 INDEX. 
 
 INTEREST— Contowed. 
 
 18. .] Semble, that the " forfeiture of the entire interest " imposed for 
 
 taking illegal interest ia enforced only in actions brought upon or to 
 enforce the usurious contract. Sintermister v. Mrst Nat. Bank, 741. 
 
 19. Becoupment of interest paid in ad/oanee.l In an action on a note given 
 
 for money bbrrowed of a National bank, the defendant cannot recoup il- 
 legal interest paid in advance. The remedies given by the National Bank- 
 ing Act for the taking of unlawful interest are exclusive and cannot be 
 supplemented by the statutes of the State. Wiley v. Starbuck, 436. 
 
 20. Counter-claim for excessive interest.] In an action by a National bank the 
 defendant cannot be allowed a counter-claim for Unlawful interest paid by 
 him more than two years prior thereto. Ifat. State Bank v. Boylan, 798. 
 
 31. when rigid of, tarred.] The knowingly taking or receiving by a 
 
 National bank of a rate of interest greater than is allowed by law 
 upon a loan of money does not entitle the person paying the same to 
 have it applied as a payment of so much of the principal, in an action 
 brought to recover the principal debt more than two years after such 
 payment was made. The rights and liabilities of the parties in such 
 case are prescribed in the National Bank Act, and cannot be controlled by 
 State legislation. Higley v. The Mrst Nat. Bank ofBewrly, 833. 
 
 32. .] Where the two years within which an action lies to recover back 
 
 twice the amount of illegal interest paid to a National bank have elapsed, 
 the right to oflfset such interest against any claim of the bank is also 
 barred. Shinkle v. First Nat. Bank, 884. 
 
 33. Actions for penaUy.] Where usury has been actually paid to and received 
 by a bank, the only remedy is an action for the penalty of " twice the 
 amount of interest thus paid. Brown v. Bank, 849. 
 
 24. Limitation of.] The limitation of two years within which an action for 
 the penalty must be brought commences to run from the actual payment 
 of the usury, lb. 
 
 25. .] Where a National bank has taken usurious interest on a loan or 
 
 discount, it may elect to apply the excess of interest on the principal at 
 any time before the loan is paid in full, or before judgment is entered 
 for the full amount. Therefore, the two years within which an ac- 
 tion may be brought to recover twice the amount of interest paid, do 
 not begin to run until the principal has been paid or a judgment entered 
 for the full amount thereof, lb.; Duncan v. Mrst Nat. Bank, 360. 
 
 36. lAmitation of actions for excessive interest.] In an action by a, National 
 bank on negotiable paper discounted by it, a State statute limiting the 
 time within which action to recover excessive interest may be brought 
 does not apply, lb.; Lucas v. Bank, 873. 
 
 27. Amount of recovery in actions for penalty .] In an action against a National 
 bank to recover the penalty imposed by the act of Congress for taking 
 a greater rate of interest than is allowed by law, the plaintiff is entitled 
 to recover only twice the amount taken in excess of the legal interest, 
 
INDEX. 963 
 
 mTEREST— Continued. 
 and not twice tlie amount of the entire interest paid. Hintermister v. 
 Mrst Nat. Bank, 741. 
 
 38. .] In an action to recover the penalties imposed for taking unlawful 
 
 interest, the plaintiff is entitled to recover twice the amount he has 
 paid for usury within two years prior to the commencement of the action, 
 whether the amount was paid in one or several payments. lb, 
 
 29. Revised Statutes, %%5W^,5\^B, construed — rate of interest^ A National 
 bank located in Kansas charged and received interest at the rate of eigh- 
 teen per cent per annum. Held, that it was liable under the National 
 Banking Act (Rev. Stats., §g 5197, 5198) to pay back twice the amount of 
 interest thus received. Crocker, assignee, v. First Nat. Bank of Chetopa, 
 317. 
 
 30. Extent of recovery .'l The amount of the recoveiy is twice the full amount 
 of interest paid, and is not limited to twice the excess of interest paid over 
 the legal rate. lb. 
 
 81. Right of action to recover back illegal interest passes to assignee in bankruptcy. 1 
 If the person who paid such illegal interest is adjudged a bankrupt, the 
 right of action passes to his assignee in bankruptcy, such assignee being 
 his "legal representative" within the meaning of section 5198 of the 
 Revised Statutes, lb. 
 
 32. To whom the remedies for usury are a/vailable.] When note or bill is an 
 existing security in the hands of the holder the usury exacted by the 
 bank in its acquisition is not available, by way of defense, to the ante- 
 cedent parties. Their rights and liabilities are not affected by the usurious 
 character of a transaction in which they did not participate. Smith v. 
 Exchange Bank, 836. 
 
 88. .] The party with whom the bank had the usurious transaction is 
 
 the party to whom, under the National Banking Act, the forfeiture of 
 interest is to be adjudged; and who, in case the interest has been paid, is 
 authorized to recover back twice the amount. lb. 
 
 34. Interest on claims against insolvent banks.'] Where a National bank is 
 declared in default by the Comptroller of the Currency, and a receiver is 
 appointed, and a sufficient fund is realized from its assets to pay all 
 claims against it and leave a surplus, the Comptroller should allow 
 interest on the claims, during the period of administration, before appropri- 
 ating the surplus to the stockholders of the bank. Chemical Nat. Bank 
 V. Bailey, 360. 
 
 35. .] An action of assumpsit to recover such interest will not lie against 
 
 the Comptroller of the Currency or the receiver of the bank, but will lie 
 against the bank. lb. 
 
 36. On deposits . ] Where a bank has, by reason of its own default, been placed 
 in the hands of a receiver, a demand of payment by a depositor is no 
 longer a necessary condition precedent to a right of action for the deposit ; 
 and the deposit bears interest from the time of such default, lb. 
 
 37. Usury does not avoid collateral security.] A National bank extended the 
 time of payment of indebtedness at a usurious rate of interest, and took 
 
964 INDEX. 
 
 INTEREST— Continued. 
 therefor notes and a mortgage made by the debtor to a third person, the 
 notes being indorsed by the latter. Held, that the usury only avoided 
 the interest, and that to the extent the debt was valid the mortgage 
 was a bona fide security, and that the bank, by becoming the owner of the 
 notes, acquired the equity in the mortgage. Allen v. Mrst Nat. Bank, 838. 
 
 38. Jurisdiction of action for penalties.'] The courts of one State have no j uris- 
 
 diction of an action against a National bank located in another State to 
 recover penalties imposed by the NSitional Banking Act for taking unlaw- 
 ful interest. Missouri, etc., Oo. v. First Nat. Bank, 4fll. 
 
 39. .] Senible, that State courts will not enforce the penalties imposed by 
 
 the National Banking Act for exacting unlawful interest. Jb.j Newell v. 
 Nat. Bank, 501. 
 
 40. .] An action lies in a State court against a National bank to recover 
 
 the penalties imposed by Congress for exacting unlawful interest. Ord- 
 way V. Central Nat. Bank, 559. 
 
 On deposits.1 See Deposits. 
 
 INTERNAL REVENUE. 
 See Examination. 
 JURISDICTION. 
 1. Of actions against National banks to recover penalties.'] The courts of one 
 State have no iurisdiction of an actiou against a National bank located 
 in another State, to recover the penalty imposed by the act of Congress 
 for the taking of unlawful interest. Missouri Biver Telegraph Company 
 V. First Nat. Bank of Sioux City, 401. 
 
 3. .] Semble, that State courts have no jurisdiction of actions to recover 
 
 penalties imposed by the National Banking Act. lb.; Newell v. Nat. Bank, 
 501. 
 
 3. .] A State court has jurisdiction of an action against a National bank 
 
 to recover the penalties imposed by Congress for taking unlawful interest. 
 Ordway v. Central Nat. Bank, 559. 
 
 4. Of District Court to order compromise.} A District Court of the United 
 
 States may order the receiver of a National bank to compromise doubt- 
 ful debts under section 50 of the National Banking Att (13 Stat, at Large, 
 115), which authorizes receivers to compromise such debts " on the order 
 of a court of record of competent jurisdiction." Petition of Piatt, 181. 
 
 5. Of action to collect claim due bank.} The receiver of a National bank 
 
 appointed by the Comptroller of the Currency is an officer of the United 
 States, and therefore the District Court has jurisdiction of an action at 
 common law to collect a claim due the bank at the time of the receiver's 
 appointment. Piatt v. Beacli, 183. 
 
 6. Of court to appoint a receiver.} A receiver of a National bank may be 
 
 appointed by the court. Irons v. ManufacturetV Nat. Bank, 303; 
 "WrigM v. Merclmnts' Nat. Bank, 331. 
 
 7. Of suit to enjoin misapplication of funds by officers.} The Circuit Court of 
 
 the United States has jurisdiction of a suit to enjoin the officers of a 
 
INDEX. 965 
 
 JURISDICTION— Coraimwet?. 
 National bank from any misapplication of funds which might result from 
 any act not warranted by its charter, or which would amount to a breach 
 of trust. Bkoemaker v. Nat. Mechanics' Bank, 169. 
 
 8. OnDcr deposits to secure circulation — courts cannot control disposition o/.] 
 
 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, ia the discharge of their duties, in 
 respect to bonds deposited with the Treasurer to secure the redemption 
 of circulating notes of a National bank. Van Antwerp v. Mulburd, 308- 
 219. 
 
 9. .] The provisions of sections 56 and 57 of the National Banking Act 
 
 explained. lb. 
 
 Of actions iy and against National l)anlcs.'\ See Actions. 
 
 Of State court over receiver.'] See Receiver, 793. 
 
 Of indictments against National hank officers .] See Embezzlement and Lae- 
 
 CENV. 
 
 LARCENY. 
 See Embezzlement and Labceny. 
 
 LIEN. 
 1. Loans and discounts on security of bank's own stock.] National banks can 
 
 make valid loans or discounts on the securityof their own stock only when 
 
 necessary to prevent loss on debts previously contracted in good faith. 
 
 Bank v. Lanier, 70. 
 3. .] The placing by one bank of its funds on permanent deposit with 
 
 another bank is a loan within the prohibition. lb. 
 
 3. Lien on stock.] Loans by National banks to their stockholders do not give 
 
 them a lien on the stock of such stockholders. Ih. 
 
 4. .] A bank issued two certificates of stock to C, declaring him the 
 
 owner of one hundred and fifty shares, and that they were transferable 
 on the books of the bank " only on the surrender of the certificate.'' A 
 purchased some of these shares of C, 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 de- 
 posits made by it with him, and had already been sold and transferred to 
 other parties under a power of attorney from C before the bank had 
 notice of A's purchase. A 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, lb. 
 
 5. National banks cannot acquire lien on their own stock.] The articles of as- 
 
 sociation and the by-laws of a National bank prohibited the transfer of 
 stock owned by any stockholder indebted to the bank until such indebted- 
 ness should be satisfied. Meld, that the prohibition was invalid, under 
 section 35 of the National Banking Act, and that the bank could not thus 
 acquire a lien on the shares of the stockholders. Bullard v. Bank, 93 ; 
 
966 INDEX. 
 
 hlEN— Continued. 
 EvanamUe Nat. Bank, v. Metropolitan Wat. Bank, 189 ; Oonklin v. Second 
 Nat. Bank, 693. 
 '6. Paramount lien of United States on assets of National banks.} The National 
 Banking Act gives to the United States a first and paramount privilege 
 upon all tlie assets of a banking association organized under the act to 
 reimburse to the United States the amount expended in paying the cir- 
 culating notes of such bank association. Therefore, the privilege given 
 to an attaching creditor over the assets of the First National Bank of Selma 
 must be postponed to that of the privilege of the United States where it 
 is shown, as in this case, that the Louisiana National Bank, a debtor of 
 the First National Bank of Selma, had notice of the claim of the United 
 States on the assets of the First National Bank of Selma before the seiz- 
 ure by the creditors under the attachment. Schmidt v. Mrst Nat. Bank, 
 505. 
 
 Sale of sTia/res suiject to.] See Sale, 921, 
 
 LIMITATION OF ACTION. 
 Where action for penalty for excessive interest barred.] See Intbebst, 360, 824, 
 849,' 88B. 
 
 See Sbt-off. 
 
 LOANS AND DISCOUNTS. 
 
 1. When banks can make, on security of its own stock.] National banks can 
 
 make valid loans and discounts on the security of their stock only when 
 necessary to prevent loss on debts previously contracted in good faith. 
 Bank v. Lanier, 70. 
 
 2. .] The placing' by one bank of its funds on permanent deposit with 
 
 another bank is a loan within the prohibition, lb. 
 
 3. .] Loans by National banks to their stockholders do not give them a 
 
 lien on the stock of such stockholders, lb. 
 
 4. Bank may take stock as collateral security.] National banks may take stock 
 
 as collateral security for a loan. Shoemaker v, Nat. Mechanic^ Bank, 
 169 ; Oanfield v. State Nat. Bank, 312. 
 
 5. National banks may take pledge of chattels.] National banks may take 
 
 personal chattels {e. g., a locomotive) as security for loans and discounts. 
 Pittsburgh Locomotive and Gar Works v. State Nat. Bank of Keokuk, 315. 
 
 6. Loans m excess of one-tenth of capital.] Loans by a National bank to a 
 
 person or corporation are valid and recoverable, although in excess of 
 one-tenth of its capital stock. Union Bill Mining Co. v. Boehy Mountain 
 Nat. Bank, 151 ; Shoemaker v. Nat. Mechanics' Bank, 169 ; Stewart \.Nat. 
 Union Bank, 175 ; Allen v. First Nat. Bank, 838 ; Elder v. First Nat. 
 Bank, 488 ; O'Sa/re v. Second Nat. Bank, 869. 
 
 7. Renewal notes, acceptance of] Whether other notes have been accepted 
 
 by a bank in renewal of notes sued on is a question for the jury. Cake 
 V. First Nat. Bank, 890. 
 
INDEX. 967 
 
 MESNE PROCESS. 
 See Attachment. 
 
 MISAPPLTINa FUNDS. 
 Injunction to restrain.] See Injunction. 
 
 MORTGAGE. 
 
 Sight of National banks to take.] See Rbai Estate ; Chattel Moetgage, 
 486. 
 
 NATIONAL BANKS. 
 
 1. Liable for obligations of State bank.] A State bank was robbed, and a 
 
 reward was offered by the cashier for the detection of the thieves. The 
 bank afterward became a National bank, and suit was brought against it 
 as such for the reward. Beld, that the action was properly brought, as 
 the National bank was responsible for all the liabilities of the State 
 bank. Kelsey v. Nat. Bamlk, 847. 
 
 2. .] No authority from a State is necessary to enable a State bank to 
 
 become a National bank. Gasey v. Qalli, 143. 
 
 Cannot be gamisheed.] See Havens v. Nat. City Bank, 783. 
 
 Cannot keep a branoh office for discount and deposit in another State.] See 
 Office, 784. 
 
 NEGLIGENCE. 
 Liability of banks for, in preserving special deposits.] /S«e Deposits foe Safe- 
 keeping. 
 When discharges sureties on cashier's bond.] See Bond. 
 
 NOTES. 
 See Circulation ; Peomissort Notes. 
 
 NOTICE. 
 Where a statute required, that on complaint to the board of equalization that 
 another was assessed too low, notice of such complaint should be given to 
 such other or his agent, held that a National bank was the agent of its 
 shareholders, and that notice to the bank was suflScient. Nickerson v. 
 Kimball, 409. 
 
 OFFICE. 
 National banks cannot maintain branch offices in New York.] A National 
 bank located in another State cannot keep an office for discount and 
 deposit in New York, and cannot maintain an action upon a note dis- 
 counted at such office. Nat. Bank v. Phmnix Wa/rehousing Co., 784. 
 
 OFFICERS. 
 1. Bemoval of.] Where the articles of association of a National bank, signed by 
 all the original stockholders, and giving express authority to the directors 
 to remove the president, have been transmitted to the Comptroller of the 
 
968 INDEX. 
 
 OFFICERS— Cmtiniied. 
 Currency, who has, on receiving the same, issued circulating notes to the 
 bank, he will be deemed to have approved of the articles, and the 
 directors will have the power to remove the president, even though the 
 bank has never legally adopted any by-laws. Taylor v. Button, 755. 
 
 2. .] It is not necessary that any by-laws should be adopted before a 
 
 president may be chosen or removed, and another appointed in his place. 
 lb. 
 
 3. ,] Section 11 of the act of Congress, relative to National banks, 
 
 authorizes the directors to remove the president of a banking associa- 
 tion, lb. 
 
 4. Directors may remove at any tvme.'\ Plaintiff, who had been hired by the 
 
 president of a National bank as teller for a specified time, refused to 
 obey certain orders of the cashier. Some time afterward the cashier 
 informed the president of such disobedience, and he thereupon, before the 
 expiration of the specified time, discharged plaintiff. £«M,that plaintiff 
 was not entitled to recover his salary for the unexpired portion of the term 
 of service. Harrington v. First Nat. Bank, 760. 
 
 5. .] A servant may be discharged by the master for misconduct before 
 
 the expiration of the time for which he was hired, although the discharge 
 is not made at the precise time of the misconduct, nor the grounds stated. 
 lb. 
 
 6. .] A National bank cannot hire one of its officers for a specified time. 
 
 lb. 
 
 7. .] Knowledge, without objection, by the directors of a bank that one 
 
 is acting in its employ does not ratify the details of a contract for his 
 employment, by the president, unless they know of such details, lb. 
 
 Indictment o/.] See Embezzlement. 
 
 When, bank not bound by representations of.~\ See Banking Business, 533. 
 
 OFFICIAL BOND. 
 
 Bee Bond. 
 ORGANIZATION. 
 
 1. Of National bank — Tiovi put in issue.'] The organization of a National bank 
 
 under the National Banking Act may be put in issue by a party who has 
 not estopped himself. But a party who has accepted as payee a promis- 
 sory note payable at a banking institution which the parties to the note 
 style a. National bank, and has sold and transferred the note to such 
 banking institution, cannot be allowed to raise that issue by merely 
 averring want of knowledge or information sufficient to form a belief as 
 to whether the institution is a body corporate, etc. Huffaker v. Nat. 
 Bank, 504. 
 
 2. .] The certificate of the Comptroller is conclusive evidence of the 
 
 validity of the organization of the bank in an action by a receiver against 
 stockholders. Casey v. Oalli, 142. 
 
 See Estoppel ; Evidence. 
 
INDEX. 969 
 
 PAKTIES. 
 To an action to enforce liability of s7bareholders.] See Action, 17. 
 WTien bank may maintain suit to restrain tax on shares.] See Taxation, 825. 
 
 PAYMENT. 
 1. Of tax.] National banks may be required to pay the tax assessed on the 
 
 shares. If at. Bank v. Commonwealth, 34 
 3. .] Under a statute providing that the tax levied against shares of 
 
 stock should be paid by the bank, held, that payment of a tax so levied 
 
 could be enforced by distraint of the property of the bank. First Nat. 
 
 Bank V. Douglas County, 268. 
 
 3. .] In the absence of express statutory authority, a tax collector cannot 
 
 seize the property of the bank to enforce a tax assessed against share- 
 holders. Mrst Nat. Bank v. Her shire, 465. 
 
 4. .] Where the warrant for the collection of a tax assessed against share- 
 holders directs the collector " to levy the same of the goods and chattels 
 of such person," the collector cannot seize the property of the bank 
 thereon. First Nat. Bank v. Fancher, 697. 
 
 Presenting check for.] See Check, 590. 
 
 PENALTIES. 
 Action to recover.] See Actions ; Intbebst. 
 
 PERSONAL PROPERTY. 
 Not taxable.] The personal property of National banks, such as safes, office 
 furniture, etc., is not taxable. Nat. Bank v. Young, 451. 
 
 PLACE OP BUSINESS. 
 See Banking Business. 
 
 PLEADING. 
 In an action against a stockholder to enforce his liability, the prior determina- 
 tion of the Comptroller that such proceeding is necessary and the extent 
 to which the liability shall be enforced must be pleaded and proved. 
 Kennedy v. Gibson, 17. 
 
 PLEDGE. 
 Liability of pledgee of stock.] See Stockholdbb, 406, 471, 554. 
 
 PLEDGEE. 
 See Stockholdbb. 
 
 PRESIDENT. 
 See Acceptance, 600. 
 
 PRINCIPAL AND SURETY. 
 See Bond. 
 
 PRIVILEGED DEBTS. 
 See Lien. 
 122 
 
970 INDEX. 
 
 PROMISSORY NOTES. 
 Benewal notes — aeceptaneeof.} Whether other notes have been accepted by 
 
 a bank in renewal of notes sued on ia a question for the jury. Cake v. 
 
 First Nat. Bank, 890. ' 
 
 Right of hank to purcTiase.'] See Banking Busimebs, 639. 
 Aocommodation note.] See BANKnsiG Business, 623. 
 Sureties on.] See Sueeties, 811. 
 
 PUBLIC DEPqglTARIBS. 
 
 1. National banks as depositaries of public money.] Designating a National 
 bank as a depositary of public moneys does not constitute it an agent of 
 the government, or render the government liable for moneys lost by a 
 failure of such bank. Branch v. The United States, 363. 
 
 3. .] Such bank does not become a custodian of the public moneys 
 
 deposited with it, but it becomes a debtor to the United States the same 
 as it does to other depositors for individual deposits, lb. 
 
 3. .] Certain moneys coming into the possession of the clerk of a Fed- 
 eral 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. lb. 
 
 REAL ESTATE. 
 1. When National hanks can take mortgages on.] A National bank may 
 take a mortgage on real estate to secure a debt previously contracted, but 
 not to secure either a contemporaneous loan or future advances. Kan- 
 sas Valley Nat. Bank v. Bawell, 264 ; Merchants^ Nat. Bank v. Mears, 358 ; 
 Pi/rst Nat. Bank v. Havre, 480; Omn v. Merchants Nat. Bank, 490; 
 Matthews v. SHnker, 647; Crocker y. Whitney, 745; Mien v. Virst Nat. 
 Bank, 828; Fowler v. ScvMy, 854 ; Wood v. People's Nat. Bank, 888. 
 
 3. When National hanks can take real security.] A National bank cannot 
 
 loan money on real estate security ; but after a creditor has made default, 
 or after a loan has been actually made, the bank may take real estate 
 security therefor unless the transaction be colorable for the purpose of 
 evading the statute. Merchants' Nat. Bank v. Mears, 353. 
 8. When National bank may take mortgage on real estate.] A National bank 
 ^ loaned money upon a note made by one member of a firm to another, and 
 indorsed by the latter to the bank. The maker, when the note was made, 
 gave the indorser a bond and mortgage on real estate to secure him 
 against loss, and it was agreed between the parties and the bank that in 
 case of default the security should inure to the bank. Held, that the bond 
 and mortgage were not within the provision of the National Banking Act 
 forbidding National banks purchasing real estate, and that they were legal 
 and binding and could be enforced by the bank. First Nat. Bank v. 
 Haire, 480.' 
 
 4. Mortgage of, to National hank.] A National bank took a mortgage on real 
 
 estate to secure the payment of money previously loaned. There was a 
 
INDEX. 971 
 
 REAL ESTATE— Continued. 
 prior lien on the property which the mortgagor agreed to discharge, but 
 he being unable to do so, the bank at his request and in order to protect 
 its own lien advanced the money and took another bond and mortgage to 
 secure such advance. Held, that such second bond and mortgage were 
 valid. Ornn v. Merchants' Nat. Bank, 490. 
 
 5. Assignment of mortgage to National iank^ Notes secured by mortgages 
 
 were assigned to a National bank, and by it to plaintiff. Held, in an 
 action of foreclosure, that the mortgages were not extinguished by the 
 assignment to the bank, and were valid in the hands of the plaintiff, he 
 being a l>ona fide purchaser. BicTiards v. Kountze, 653. 
 
 6. .] In the absence of evidence showing the purpose and object of the as- 
 signment to the bank, it cannot be presumed that it was for a debt created 
 in presenti, in violation of the National Banking Act. lb. 
 
 I. .] SemUe, that the limitations of the National Banking Act apply to 
 
 transactions in real property, independent of legitimate banking oper- 
 ations, and not 'to mortgage securities. lb. 
 
 8. Sale under mortgage will be enjoined.] A National bank has no power to 
 
 take a deed of trust or mortgage on real estate to secure a contemporan- 
 eous loan, and a sale under such deed or mortgage to satisfy the loan will 
 be enjoined. Matthews v. Skinker, 647. 
 
 9. Purchase of, by National bank.] A National bank has authority to pur- 
 
 chase such real estate as may be necessary in order to secure a debt 
 due to it, although in excess thereof, if the security of the debt be the 
 real object of the purchase. Upton v. Nat. Bank of South Beading, 618. 
 
 10. .] 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. B^eld, that the transaction was valid under the National Bank- 
 ing Law. B). 
 
 II. National bank may sell real estate and take mortgage.] A National bank 
 may sell real estate owned by it and take back a mortgage thereon to se- 
 cure the payment of the purchase-money. New Orleans Nat. Bank v. 
 Ba/ymond, 516 . 
 
 13. Deduction of, on taxation.] A tax against National bank shares is invalid 
 when no provision was made for deducting the value of the real estate 
 owned by the bank from the value of the shares. City Nat. Bank v. 
 Paducah, 300. 
 
 BedMctims fori] See Taxation, 753. 
 
 RECEIVER. 
 
 1. Evidence of appointment of] The certificate of the Comptroller of Cur- 
 
 rency, duly made, is sufScient evidence of the appointment of a receiver 
 in an action brought by him. Piatt v. Beebe, 735. 
 
 2. Debtors cannot impeach appointment o/.] The debtors of a National bank, 
 
 when sued by a receiver of the bank, cannot inquire into the validity of 
 hip appointment. CaMe v. Baker, 108. 
 
INDEX. 
 
 RECBIVEE— Co««mM(!. 
 
 3. .] The receiver of a National bank appointed by the Comptroller of 
 
 the Currency isanoflBicer of the United States. Piatt v. Beach, 183. 
 
 4. .J The receiver of a National bank holds the same title to the assets 
 
 of the bank that the bank held, and he has no greater right in enforcing 
 their recovery than the bank itself would have. Oasey v. La SocietS de 
 Credit MoUlier, 385. 
 
 5. Whom he represents.'] The receiver of a National bank represents the 
 
 bank, its stockholders and its creditors, but not in any sense the National 
 government ; nor can the government be subjected to litigation, growing: 
 out of its relations to these banks in all the various courts in which their 
 affairs may be the subject of judicial controversy. Case v. Terrell, GT. 
 
 6. Appointment of, iy State court.} A State court may appoint a. receiver 
 
 of a National bank where facts are presented calling for such relief, and 
 which do not bring the case within the exact provisions of the National 
 Banking Act. Irons v. Manufacturers' Nat. Bank, 303. 
 
 7. .] The provisions of the General Banking Law for winding up Na- 
 tional banks under the direction of the Comptroller of the Currency, are 
 not exclusive and were not intended to oust the courts of their power to 
 appoint a receiver upon a judgment-creditor's bill. Wrights. The Mer- 
 chants' Nat. Bank, 331. 
 
 8. Power of State court over.] A State court cannot order a receiver for a 
 
 National bank, appointed by the Comptroller of the Currency, to pay a 
 judgment recovered against the bank before the appointment of the 
 receiver. Ocean Nat. Bank v. Oarll, 793. 
 
 9. Action by, to collect debts.] The receiver appointed to wind up a National 
 
 bank may bring suit to collect debts due the bank either in his own name 
 as receiver or in the name of the bank. Bank v. Kennedy, 87. 
 
 10. .] Such receiver may bring an action to recover an ordinary debt 
 
 due the bank without an order from the Comptroller of the Currency. lb. 
 
 11. Beceiver may be made party to suit against bank.] In an action on a claim 
 against a National bank which has suspended the receiver may be made a 
 party defendant. Turner v. First Nat. Bank, 454. 
 
 13. Action by, against stockholders.] In an action by a receiver of an insolvent 
 National bank against the stockholders the determination of the Comp- 
 troller as to the amount necessary to be collected is conclusive; and the 
 shareholders are estopped from denying the validity of the organization. 
 Casey v. Galli, 143. 
 
 13. Bemoval of cause against.] Eeeeivers of National banks are not entitled 
 to remove suits against them from the State courts to the United States 
 courts. Bird's Executors v. Cockrem, 384. 
 
 14. Action against bank after appointment o/.] An action may be brought 
 against a National bank after a receiver has been appointed. Bank of 
 Bethel v. Pahquioque Nat. Bank, 77 ; SeeuHty Bank v. Nat. Bank, 774 ; 
 Qreen v. Walkill Nat. Bank, 786. 
 
 Actions against.] See Actions. 
 
 Action by, against stockholders, to enforce liabUity — parties to.] See Actions. 
 
INDEX. 973 
 
 RECOUPMENT. 
 
 Of excesHve interest.] See Intebbst. 
 
 EEDTJCTION OP CAPITAL. 
 See Stock. 
 
 REMOVAL OP CAUSE. 
 
 1. A National bank is a citizen of tte State where it is located, within the act 
 
 relating to the removal of causes from State to Federal courts. Gooke v. 
 State Nat. Bank, 698, and note, 714 ; Dams v. Gook, 656. 
 
 2. .] A National bank cannot have a cause removed into the Federal 
 
 court under the act of March 3, 1867, as, being a corporation, it cannot 
 make its affidavit required by the act . lb. 
 
 Z. National hanks are '^ citizens" of State where located.] In an action by a 
 National bank of New York against a National bank of West Virginia, 
 lield, that the defendant was not deprived of the right to demand a 
 removal of the cause from the State court to a Federal court. Chatha/m 
 Nat. Bank v. Merchants^ Nat. Bank, 769. 
 
 4. .] National banks are " citizens " of the State in which they are organ- 
 ized and located. lb. 
 
 5. Entry of appearance.'] Defendant served a notice of appearance on Decem- 
 
 ber 15th, but did not file a petition for the removal of the cause from the 
 State to the Federal court until January 7th, the petition stating that 
 defendant then entered its appearance and had not done so before. Held, 
 a valid compliance with the Federal statute requiring the defendant, " at 
 the time of entering his appearance in the State court," to file his peti- 
 tion, lb. 
 
 6. Actions against receivers of National banks — removal of, to United States 
 
 courts.] Receivers of National banks have not the privilege in all cases 
 of being sued in the Federal courts, and are not entitled to remove causes 
 against them from the State to the United States courts. Bird's Execu- 
 tors V. Gockrem, 384. 
 
 REORGANIZATION. 
 
 Of State bank under National Banking Act.] See Contbesion. 
 
 RESTRAINING TAX. 
 When bank may maintain suit for.] See Taxation, 935. 
 
 REVENUE COLLECTOR. 
 Bight of, to examine paid checks.] See Examination. 
 
 SALE. 
 1. Of shares.] A shareholder has an absolute right to sell and transfer his 
 shares, and this right the directors can neither cut oflf nor abridge. Bank 
 V. Lanier, 70 ; BvMa/rd v. Bank, 93 ; Johnson v. Laflin, 331. 
 
974 INDEX. 
 
 SALE — Continued. 
 
 2. .] After a sale of shares and a transfer on the bonds, the vendor ceases 
 
 to be a shareholder, and is freed from liability as such. lb. 
 
 3. .] SemUe, that where the sale is complete except the transfer on the 
 
 books, the vendor may file a bill to compel the vendee to record the trans- 
 fer ; and so the vendee may compel the bank to register the transfer or 
 hold it liable in damages for a wrongful refusal. Johnson v. Laflin, 331, 
 
 344. 
 
 ♦■ 
 
 4. Damages for sale of aha/res falsely represented to be free from such lien of 
 
 tax.} The statute of Wisconsin made taxes assessed on shares of stock in 
 National banks a lien on such stock. The defendant sold to plaintiff 
 shares of stock in a National bank upon which was an unpaid tax. De- 
 fendant gave plaintiff a written statement purporting to contain all facts 
 affecting the value of the stock, but in which the tax w^s not mentioned. 
 The tax was paid by the bank. Held, that plaintiff could recover dam- 
 ages of the defendant to the amount of the tax. Simmons v. Aldrie7i, 931. 
 See Stockholder. 
 
 SECURITY. 
 See CoiiLATEBAL Securitt. 
 
 SERVANTS. 
 Discharge of] See Officer. 
 
 SET-OFF. 
 
 1. By depositors.} A depositor in a National bank, which has failed and 
 passed into the hands of a receiver, may set off the amount of his deposit 
 against his debt to the bank on a note. Piatt, receiver, v. Bentley, 758. 
 
 3. Of deposits.] A National bank becoming insolvent, a depositor therein 
 assigned his deposit to a debtor to the bank. Held, that the latter could 
 not set off such deposit against the debt. VeTiango Nat. Bank v. Taylor, 
 843. 
 
 8. Of excessive interest.] Where the two years within which an action lies 
 to recover back twice the illegal interest paid, have elapsed, the right to 
 set off such interest against a claim of the bank is also barred. Bhinkle 
 V. Nat. Bank, 834 ; Higley v. Bank, 833. See, however, Duncan v. Bank, 
 360. 
 
 See Interest. 
 
 SHARES. 
 Taaiation of.] See Taxation. 
 
 SHAREHOLDERS. 
 See Stockholders. 
 
 STATE BANKS. 
 1. State banks may become National banks without authority from the State. 
 Casey v. Oalli, 143. 
 
INDEX. 975 
 
 STATE BAISKS—OonUTtued. 
 
 2. Congresa may lawfully tax notes issued by State banks, or restrain tbeir 
 
 circulation. Veazie Bank v. Pernio, 33. 
 Change of, into National hanks.'\ See CoNVEnsiON, 537. 
 See National Banks ; Taxation. 
 
 STATUTE OF LIMITATION. 
 See Limitation of Action. 
 
 STOCK. 
 1. National banks cannot acquire a lien on their own stock. Bank v. Lanier, 
 70 ; Bulla/rd v. Bank, 93. 
 
 3. Increase of— taxation of increased stoek^ Where a National bank voted 
 
 to increase its capital stock, and the requisite number of new shares 
 were subscribed and paid for before the Ist of January, 1873, and a semi- 
 annual dividend, declared as of that day, was paid upon the new shares , as 
 well as the old, but such increase of capital was not approved by the 
 Comptroller of the Currency, nor his certificate issued until the 5th of 
 January, 1873. Held, that such new shares were not the subjects of taxa- 
 tion under an ordinance imposing a tax on bank shares " in the hands 
 of the tax payers on the 1st of January, 1873." Charleston v. People's 
 Nat. Bank, 898. 
 
 3. How stock increased.'] There can be no increase of the capital of a National 
 
 bank until the Comptroller of the Currency approves thereof and issues 
 his certificate, as provided by section 13 of the act of Congress providing 
 for the organization of National banks. lb. 
 
 4. Reduction o/.] Where a National bank reduces its Qapital stock it cannot 
 
 retain as a surplus fund, or for other purposes, the whole or any portion 
 of the money which it receives for the stock which is retired. Seeley v. 
 Th^ New York Exchange Nat. Bank, 804. 
 
 5. Right of Natiofnal banks to purchase.] Although National banks are im- 
 
 pliedly prohibited from dealing in stocks, yet they may take stock in 
 payment or compromise of a doubtful debt, or may purchase it to avoid 
 loss on a debt, and with an honest intent to convert it into money. Mrst 
 Nat. Bank v. Nat. Exchange Bank, 134. 
 
 STOCKHOLDiiR. 
 
 1. What constitutes.] Shares of stock in a National bank were issued to 
 defendant as collateral security for money loaned the bank, and the divi- 
 dends thereon were paid to him. Held, that defendant thereupon became 
 a shareholder as to creditors and liable as such. Wheelock v. Kost, 406. 
 
 3. Estopped from questioning incorporation!] A stockholder in a de facto 
 National bank, who has participated in its transactions as such and received 
 dividends, is estopped from denying the legality of its incorporation, lb. 
 
 3. Liability of one lixMing stock as collateral.] A person who appears upon 
 the books of a National bank as the legal owner of shares of its stock is, 
 upon the failure of such bank, liable for the debts of the association to 
 
976 INDEX. 
 
 STOCKROhJiEBr-Oontinued. 
 the extent of the shares held by him, although he received and holds 
 such shares as collateral security for a loan to a shareholder. Hale v. 
 Walker, 471 ; Magruder v. Colston, 554; Wheeloeh v. Kost, 406. 
 
 4. Liability of pledgee of stock.] Stock in a National bank was pledged to 
 
 secure a debt, with power to the pledgee to sell it on default of payment. 
 Seld, that a sale by him pursuant to the power was not voidable as a 
 fraud on creditors of the bank, though he sold because he believed the 
 bank insolvent, and in order to escape personal- liability as a stockholder. 
 Magruder v. Colston, 554. 
 
 5. .] Persons who hold stock of a National bank in pledge, the certifi- 
 cates of which stand on the books of the bank in the name of the pledgee, 
 are, in contemplation of the National Banking Act, stockholders, and so 
 long as they thus hold the stock in pledge are responsible to the cred- 
 itors of the bank in proportion to the amount so held. lb. 
 
 6. Transfer of stock to escape liability to creditors.] Shareholders in a National 
 
 bank, knowing it to be insolvent, transferred their shares for the purpose 
 of escaping liability to creditors. Seld, that as to such creditors the trans- 
 fer was void. Bowden v. Santos, 371. 
 
 7. Shareholder's right to transfer shares in a National hank.] Under the 
 
 National Banking Act, a shareholder has the right to make an actual and 
 bona fide sale and transfer of his shares to any person capable in law of 
 taking and holding the same, and of assuming the transferor's liabili- 
 ties in respect thereto ; and, in the absence of fraud, this right is not sub- 
 ject to a veto by the direotors or the other shareholders. Johnson v. Laf. 
 Un, 331. 
 
 8. LiaMlity terminates- on transfer.] Where such a sale of shares is made 
 
 and the transfer entered on the books of the bank, the transferor ceases to 
 be a shareholder, and is freed from liability in respect of such shares. lb. 
 
 9. Directors cannot restrain right.] The provision of the National Banking 
 
 Act (Rev. Stats., § 5139) that shares shall " be transferable on the books 
 of the association," construed ; and held not to give the directors the 
 power to refuse to register a bona fide transfer of stock without some valid 
 and sufficient reason for such refusal. lb. 
 
 10. Elements of a complete transfer.] As between the seller and purchaser 
 of shares in a National bank, the sale is complete when the certificate of 
 the shares duly assigned, with power to transfer the same on the books of 
 the bank, is delivered to the buyer, and payment therefor is received by 
 the seller ; and either the purchaser or seller may compel a registration 
 of the transfer on the books of the bank, unless the bank has some valid 
 and suflicient ground for refusing to register the transfer, lb. 
 
 11. Sale to president of bank — how fa/r sha/reholder is affected with knowledge 
 of condition of bank.] The defendant Lafiin, owning full-paid shares of 
 stock in a National bank of which his co-defendant, Britton, was the 
 president, employed a broker to sell the same in the market ; the broker, 
 without Laflin's direction or knowledge at the time, sold the same at the 
 market value to Britton individually, and received in payment his individ- 
 
INDEX. 977 
 
 STOCKnOhHEn— Continued. 
 ual check on the bank for "the purchase-price, and delivered to the pur- 
 chaser the share certificates assigned in blank with blank powers of attor- 
 ney thereon indorsed, authorizing the transfer of the shares on the books 
 of the bank ; subsequently, after the amount of the check had been col- 
 lected, but on the same day, the president, without the knowledge of 
 Lafliu or the . broker, directed the book-keeper of the bank to credit his 
 individual account with the amount of the check which he had given 
 for the shares, and to transfer the shares (the book-keeper inserting his 
 own name in the blank power of attorney as attorney to make the trans- 
 fer) to Britton, "trustee," not specifying for whom he was trustee, and 
 charging the sum to the "sundry stock account" of the bank, all of 
 which was done. The bank, although it had not committed any act 
 of insolvency, was then insolvent, but this fact was not known by Laf- 
 lin or the broker. Seld, that, although the bank, or its officers for it, 
 was prohibited from purchasing its own shares (Rev. Stat., § 5201), yet 
 that Laflin having sold in good faith, without notice of the illegal pur- 
 pose of Britton in buying the stock, or of his intended misappropriation of 
 the funds of the bank in paying therefor, was not liable to pay back to 
 the receiver the money received in payment of the shares. lb. 
 
 12. Presumption as to citizenship.'} In an action by a National bank in the 
 
 United States Circuit Court, the stockholders of the bank will be pre- 
 sumed to be citizens of the State where the bank is located. Manufactur- 
 ers' Wat. Bank v. Baack, 161. 
 
 13. Action to enforce liability of.} The Comptroller of the Currency must 
 decide when and to what extent proceedings shall be taken to enforce the 
 liability of shareholders in National banks, and in au action therefor 
 such determination must be averred and proved. Kennedy v. CHbson, 17. 
 
 14. Parties to such actions.} When contribution only is aoaght, all the stock- 
 holders who can be reached by the process of the court may be joined in the 
 suit, but it will benoobjection that there are others beyond the j urisdiction 
 of the court who cannot for that reason be made co-defendants. lb. 
 
 15. Action by creditors.} Creditors cannot proceed directly in their own name 
 against stockholders of National bank, nor are they proper parties to a 
 suit by the receiver. (See, however, at Act June 80, 1876.) lb. 
 
 16. Liability of , how enforced — determination of Oomptroller as to liability of, 
 conclusive.} The order of the Comptroller of the Currency determining 
 to what extent the individual liability of the stockholders of an insolvent 
 National bank shall be enforced, is conclusive on the stockholders ; and 
 the amount bears interest from the date of the order. Oasey v. Galli, 142. 
 
 17. Action at law — estoppel.} When the order is to collect the full amount of 
 
 the par of the stock, the action therefor must be at law, and in such 
 action the stockholder is estopped from denying the existence or the 
 validity of the corporation ; the certificate of the Comptroller is conclusive 
 as to the validity of the organization of such corporation, lb. 
 
 18. Indimdual liability of stockholders, liow enforced.} In winding up au in- 
 solvent National bank, the Comptroller of the Currency is vested with 
 authority to determine when a deficiency of assets exists, so that the 
 
 123 
 
978 INDEX. 
 
 STOCKHOLDER— Co«.feM6(i. 
 individual liability of the stockholders may be enforced, and no appeal 
 lies from his decision. Bailey v. Sawyer, 356. 
 
 19. Liability, when fixed.} The liability of a stockholder of a National bank 
 is several, and is fixed by his taking stock in the corporation. lb. 
 
 20. Action to enforce.} When an assessment upon the stockholders is ordered 
 by the Comptroller, a suit at law is the proper remedy to enforce it. lb. 
 
 31. Attachment of stock.} The shares of a stockholder maybe attached by 
 the bank for a debt due it. Haga/r v. Union Nat. Bank, 533. 
 
 23. State statute, requiring cashier to send list of shareholders to town clerks 
 valid.} A State statute required, under a penalty for his neglect or re- 
 fusal, the cashier of each National bank within the State to transmit an- 
 nually to .the clerks of the several towns in which any stock or share- 
 holder should reside, a true list of the names of such stock or shareholders 
 on the books of such banking association, together with the amount of 
 money actually paid in on each share. Held, that the statute was valid. 
 Waite V. Dowley, 137. 
 
 33. Reduction of capital.} Upon the reduction of the capital stock of a Na- 
 tional bank, it cannot retain as a surplus, or for other purposes, the money 
 received for the stock retired. Seeley v. New York Exchange Nat. Bank, 
 804. 
 
 SUITS. 
 See AcTioisrs. 
 
 SURETIES. 
 
 Usury does not discharge.} The discounting of a note for the principal maker, 
 at an unlawful rate of interest, is not such an unauthorized use of the 
 note as will discharge the sureties from liability. In the absence of any 
 express agreement or understanding on that subject between the sureties 
 and the principal, of which the holder had notice, or any intention to 
 practice a fraud on the sureties, they must be held to have trusted to the 
 judgment and discretion of the principal, as to the terms on which the 
 note might be discounted. First Nat. Bank v. Qarlinghouse, 811. 
 
 On bond of cashier.} See Bond. 
 
 SURPLUS. 
 
 1. Where the shares in National banks are required by statute to be assessed 
 at their par value, the surplus fund of such banks in excess of the 
 amount required by law to be kept on hand is taxable. Mrst Nat. Bank 
 V. Peterborough, 658. 
 
 3. The undivided surplus of National banks, if not invested in Federal secu- 
 rities, may be taxed against the bank, where it is not included in estimat- 
 ing the value of the shares. State v. Oity of Newark, 673. 
 
INDEX. 979 
 
 TAXATION. 
 
 1. Ofca/pital!\ Wliere the capital stock of a National bank is invested in 
 United States securities it cannot be taxed by the State. Van Allen v. 
 Assessors, 1 ; People v. Commissioners, 9 ; Bradley v. People, 14 ; Ifat. 
 Bank V. Commonwealth, 84 ; Collins v. Chicago, 191. 
 
 3. Of shares of stock in National 'banks.'] A State may authorize the taxation 
 of the shares of stock of National banks in the hands of stockholders, 
 although the capital of such bank be wholly invested in stocks and bonds 
 of the United States. Van Allen v. Assessors, 1 ; People v. Commissioners, 
 9 ; Bradley v. People, 14 ; Nat. Bank v. Commonwealth, 34. 
 
 3. Limit of restriction on State taxation.'] The National Banking Act does not 
 
 curtail the power of the State to tax shares of stock in National banks, or 
 cut oflF the right of the State to exempt certain kinds of property if it 
 chooses to do so. Its only object is to prevent unfriendly discrimination 
 against National banks. Adams v. Mayor, 148 ; National Bank v. Com- 
 monwealth, 34 ; Lionberger v. Bouse, 41. 
 
 4. Of shares at their market value.]. Shares of stock in National banks may 
 
 be taxed at their market value. Hepburn v. School Directors, 113 ; People 
 V. Commissioners of Taxes and Assessments, 130 ; People v. Assessors, 776. 
 
 5. Effect of exemption of certain moneyed capital.] The fact that under a 
 
 State statute, certain property is exempt from taxation, does not render 
 invalid a tax against shares of stock in National banks. Hepburn v. 
 School Directors, 113 ; Lionberger v. Bouse, 41 ; People v. Commissioners, 9 ; 
 Adams v. Mayor, 148 ; but see City Nat. Bank v. Paducah, 300. 
 
 6. Section 41 of the National Bank Act construed — rate of taxation.] The 
 
 41st section of the National Banking Act which provides that shares in 
 National banks may be taxed by the States, " but not at a greater rate 
 than is assessed upon other moneyed capital in the hands of individual 
 citizens of such States," means thait the rate of taxation of the shares 
 shall be the same, or not greater than upon moneyed capital of the in- 
 dividual citizen which is subject to taxation. Therefore, held, that the 
 fact that individual citizens were not assessed on United States securi- 
 ties owned by them was not a valid reason against the validity of the 
 State tax on the shares of National banks, the capital of which was in- 
 vested in United States bonds. People v. The Commissioners, 9. 
 
 7. State banks and National banks must be taxed alike.] A tax on the capital 
 
 of a bank is not equivalent to a tax on the shares, and therefore, where 
 State banks are taxed on their capital only, a State statute imposing a tax 
 on the shares of National banks is void. Van Allen v. Assessors, 1 ; 
 Bradley v. People, 14. 
 
 8. 'When National banks may be taxed beyond State banks^ When a State 
 
 has, by contract, disabled itself from taxing State banks of issue beyond 
 a certain amount, but not its banks of discount and deposit, a tax levied 
 on shares of stock in all banks is valid as to National banks, although 
 greater than the State can collect of the State banks of issue. Lionberger 
 V. Bouse, 41 ; but see City Nat. Bank v. Paducah, 800. 
 
980 INDEX. 
 
 TAXATlOl!!— Continued. 
 
 9. Aotion to enjoin taxes.^ A National bank is a proper party complain- 
 
 ant to a bill in equity, to enjoin the collection of a tax upon its shares, 
 assessed against its stockholders, if it be shown that the bank would 
 be subjected to a multiplicity of suits, whereby its business will be 
 interfered with, its credit impaired and its stock depreciated. Oiiy Yat. 
 Bank v. Paducah, 300. See, also, Ver chants' Bank v. Oumming, 936. 
 
 10. Tax when enjoined.'] The remedy by injunction to stay the collection of a 
 tax upon personal property may be^invoked where the enforcement of 
 the tax would lead to the multiplicity of suits, or where the law author- 
 izing the tax is itself valid, lb. 
 
 11. Bate of taxation.] "WTiere, by the laws of a State, or municipality, differ- 
 ent rates of taxation are imposed upon different classes of moneyed cap- 
 ital, such State or municipality may not tax the shares of National banks 
 at the highest rate imposed upon any class, regardless of the proportion 
 which that class bears to other classes ; nor, upon the other hand, is it 
 confined to the lowest rate imposed upon any class. IT). 
 
 VZ. .] Where different rates of taxation are prescribed for different 
 
 classes of " other moneyed capital," the rate imposed upon shares in Na- 
 tional banks should not, as a general rule, exceed that imposed upon other 
 moneyed capital of the same class, viz ., shares in State banks, lb. 
 
 13. Discrimination against National banksi] Where, practically, the entire 
 banking capital of the State of Kentucky was exempted from taxation 
 beyond fifty cents per share, and included in this enumeration was a 
 State bank in Paducah, the capital stock of which exceeded that of 
 all the National banks located there, it was held that an ordinance im- 
 posing a tax of $1.05 nominally upon all banks in the city, but from 
 which the State banks had been adjudged exempt, was an unlawful dis- 
 crimination against the National banks, and therefore invalid, lb. 
 
 14 Deduction for debts.] Where other moneyed capital than bank stocks was 
 also taxed at $1.05, but with a proviso that from the amount of this cap- 
 ital the entire indebtedness of the owner should be deducted before the 
 assessment was made, and no such deduction was allowed where such cap- 
 ital consisted of shares in National banks,,the tax upon such shares was 
 held invalid, lb. 
 
 15. Deduction for real estate.] The tax was also held invalid for the reason 
 that no provision was made for deducting the value of real estate owned 
 by the bank, which was thereby subjected to double taxation, lb. 
 
 16. When court vyill restrain collection of taxes.] Where there is no means of 
 recovering back from the State taxes illegally assessed and paid into the 
 treasury, a court of equity will enjoin their collection ; and when both 
 State and county taxes are included in one warrant and are for a common 
 reason illegal, the court will at the same time determine the validity of 
 both the State and the county taxes. First Nat. Bank of Omaha v. 
 County of Douglas, 267. 
 
 17. .] State authorities will be enjoined from collecting a tax on the capital 
 
 stock of a National bank, invested in United States securities, lb. 
 
INDEX. 981 
 
 TAXATION— Core<mM«iZ. 
 
 18. Unjust discrimination — restraining collection of tax at suit of hank — par- 
 ties^ The shares of stock of a National bank were taxed at their full 
 value, while other property was assessed at from thirty to forty per cent 
 of its real value. Held, that the discrimination was unjust, and that the 
 bank was a proper party to maintain a bill to restrain the collection of the 
 tax beyond the proportion assessed on other property Merchants' Hank 
 V. Gumming, 926. 
 
 19. Authority of assessors.] Assessors of taxes possess no authority except 
 such as is conferred upon them by statute, and they must see to it that 
 they act within the authority committed to them. Nat. Bank of 
 Chemung v. Ulmira, 715, and note, 733. * 
 
 30. When assessment void — recovery baak of taxes.] Assessors assessed a tax 
 on the capital stock of a National bank, which was expressly prohibited 
 by statute. The property of the bank was seized by the collector of taxes 
 and sold to pay such tax and the proceeds paid over to the municipal 
 treasurer. Held, that the assessment was void and that an action lay on 
 behalf of the bank against the municipal corporation to recover the money. 
 lb. and note, 733. 
 
 21. Where State hanks are exempt.] State banks were exempt from taxation 
 under a statute passed prior to the National Banking Act. Held, that 
 shares in National banks could nevertheless be taxed. City of Biehmond 
 V. Scott, 445. 
 
 33. Double taxation!] A tax was levied on money belonging to plaintiff on the 
 first day of January. In March, he bought, with this money, shares in 
 the stock of a National bank. Held, that the shares could be also assessed 
 under a statute providing that persons should be assessed for bank stock 
 held by them on April first. lb. 
 
 33. Restraining collection of tax.] Where shares are taxable and no excessive 
 valuation is complained of, the collection of a tax will not be restrained 
 even though the assessors have arrived at a correct result by an erroneous 
 method. St. Louis Nat. Bank v. Papin, 336. 
 
 34. Sha/res, how assessed — cash value.] A statute which requires assessors to 
 tax shares of stock in National banks at their actual cash value, and in 
 ascertaining that value to include in the estimate all reserve funds, profits, 
 earnings and other values of the bank is valid, lb. 
 
 25. Of surplus capital.] Where the shares of National banks are by statute 
 required to be taxed at their par value, the surplus fund of such banks, 
 in excess of the amount they are required by law to keep on hand, is tax- 
 able by the States in which the banks are located. Fi/rst Nat. Bank 
 V. Peterborough, 658. 
 
 36. .] The undivided surplus of a National bank — if not invested 
 
 in Federal securities — may be taxed against the bank, provided it is not 
 included in assessing the value of the shares of stock in the hands of 
 stockholders. State, North Ward National Bank of Newark, Prosecutor, 
 V. City of Newark, 672. 
 
982 INDEX. 
 
 TAXATlO^H—ConUnmd. 
 
 27. How faxed in New Jersey."] A local statute providing a special metliod of 
 taxing shares of stock in National banks was rendered void by a consti- 
 tutional amendment providing tliat " property shall be assessed for taxes 
 under general laws and by uniform rules . " lb. 
 
 38. .] By the present law of New Jersey the stock in National banks 
 
 owned by non-residents of the State is taxable in the township or ward 
 where the bank is situated, and that owned by residents of the State la 
 taxable in the township or ward where the owners respectively reside. lb. 
 
 39. Nature of restriction on power of State to tax.] The restriction on the 
 power of the States in the matter of taxation of National banks does 
 not arise from the fact that they are created corporations under an act of 
 Congress. The States may lawfully tax the property merely of a corpora- 
 tion created by act of Gongress, in common with other property of the 
 same description throughout the State. But to the extent that such prop- 
 erty is invested in the securities of the Federal government, it is beyond 
 the power of the States to tax it against the corporation, without per- 
 mission of Congress, for the reason that taxation, in that respect, would 
 be indirectly a tax upon the credit and securities of the Federal gov- 
 ernment, lb. 
 
 30. Bate of how determined — deductions for real estate.] In assessing shares 
 of stock in National banks in New York, the assessors must determine the 
 actual value of the shares — taking into consideration all the capital of 
 the bank, whether surplus or in real estate or otherwise, and then de- 
 duct from such value such sum as represents the proportion which the 
 assessed value of the real estate bears to the assessed value of the entire 
 capital. People v. Commissioners, 753. 
 
 31. .] Thus, the capital of a National bank was $1,000,000, and was rep- 
 resented by 35,000 shares of $40 each. The assessors assessed the shares 
 at $56 each, making in the aggregate $1,400,000, and the real estate at 
 $200,000. Held, that they should deduct from the assessed value of 
 each share $8, being one-seventh, or the proportion which the real estate 
 bore to the aggregate assessed value of the shares, lb. 
 
 32. Erroneous assessment — failure to tax at real value — ■ injury to other share- 
 holders — correction of assessment. ] The relators were owners of stock in 
 the N. bank, which was assessed at par, but which was worth more than 
 par in the market. The shares of the M. bank, located in the same city, 
 were also assessed at par, although they wereworth more than the shares 
 in the N, bank. The relators demanded a reduction of the assessment 
 on their stock, either by a direct order of the 'court or by reassessment, 
 on the ground that their stock, being less valuable than that of the M. 
 bank, was erroneously taxed at the same rate. Held, (1) that the assess- 
 ment was erroneous ; (3) that although the assessment on the shares of 
 the relators would be increased on a reassessment of their property pur- 
 suant to the statute, yet, as their shares were worth less than those of 
 the M. bank, the failure to tax the latter at their full value increased the 
 ratio of taxation upon the shares of the relators, and thereby injured 
 
INDEX. 983 
 
 TAXATION— Continued. 
 them ; (3) that as the return to the certiorari did not set forth the value 
 of all the bank stock worth more than par in the city or ward, the court 
 had not the facts from which to determine the real extent of the injury, 
 and could not, therefore, direct a reduction of the assessment ; and (4) 
 that the court could not, under the circumstances, direct a reassessment. 
 People V. Assessors, 776. 
 
 83. Of shares in a National hank situated in another State.'] Congress has 
 the constitutional right to establish National banks in any State, and to 
 provide that the shares of their capital stock shall be exempt from taxa - 
 tion by other States. Flint v. Board of Aldermen of Boston, 571. 
 
 34. .J Under section 41 of the National Banking Act of 1864, it is un- 
 lawful for a State to impose a tax on shares owned by an inhabitant 
 thereof in the capital stock of a National bank located in another State, lb- 
 
 85. Of shares of non-residents.'] Under a, State Constitution requiring all 
 property not specifically exempt, to be taxed, State assessors must tax 
 the shares of National bank stock belonging to non-residents of the State 
 in the city or town where the bank is located, although there is no State 
 statute expressly directing such taxation. Kyle v. T?ie Mayor, 808. 
 
 36. Where shares to he taxed.] A State statute required the assessors of each 
 city and town in which any shareholder in National banks resided to 
 include such shares in the assessment of _such person. The defendant 
 resided in Boston, owned shares in several National banks there situar 
 ted, and was there assessed on such shares. He refused to pay the tax 
 on the ground that the State statute was in violation of the National 
 Banking Act permitting States to tax shares of National banks " at the 
 place where such bank is located and not elsewhere." Held, that as in 
 this case the assessment was in conformity to the act of Congress, the 
 defendant had no cause for complaint and could not impeach the validity 
 of the State statute. Austin v. The Aldermen, 15. 
 
 37. Validity of statute providing where tax shall 'be assessed.] A State statute 
 provided that the stockholders in National banks should be taxed on 
 such stock in the county, town or district within the State where such 
 bank was located, whether such stockholders resided in such town, 
 county or district, or not. Held to be constitutional and valid. Tappan 
 V. Merc'hants' Nat. Bank, 100. 
 
 38. Constitutional law.] By an act of the Indiana Legislature passed in 
 March, 1867, shares of the capital stock of National banks within the 
 State were taxed for that year, and the cashier of each bank was required 
 to represent each stockholder in Ifsting and valuing his stock. Meld, 
 that the statute took effect from the 1st day of January, 1867, that it was 
 a valid exercise of the taxing power, and that it did not conflict with 
 the constitutional requirement of " a uniform and equal rate of assess- 
 ment and taxation." Whitney v. Bagsdale, 429. 
 
 39. Place of taxation^ The requirement of such act, that the stock shall he 
 taxed at the place where the bank is located, is not invalid where the 
 owner of the stock lives in another county or State, lb. 
 
984 INDEX. 
 
 TAXATION— ConimMed. 
 
 40. What is not a tax for " municipal purposes."] Under a statute of Indiana, 
 National bank stock was not taxable for municipal purposes. Held, that 
 a tax for school purposes or for a donation by a township to aid in build- 
 ing a railroad was not a tax for " municipal purposes," and, therefore, 
 not within the restriction. Boot v. Erdelmeyer, 432. 
 
 41. Of personal property of Nationai banks.'] The personal property and as- 
 sets of National Tjanks, such as safes, oflSce furniture, etc., arei not taxa- 
 ble. N'at. State Bank of Oskaloosa v. Toung, 451. 
 
 43. Of banking-house.] Under a statute requiring shares in National banks 
 to be taxed at their actual value without reduction for real estate, the 
 banking-office and lot, owned and occupied as its place of business by a 
 National bank created, is not ■ liable to assessment and taxation as real 
 estate eo nomine against the bank. Board of County Commissioners of 
 Bice County v. Citizens' Nat. Bank of Faribault, 639. 
 
 43. Bequiring banks to •pay tax assessed on shareholders.] National banks 
 may lawfully be required to pay the tax assessed on the shares of stock. 
 Nat. Bank v. Commonwealth, 34 ; First Nat. Bank v. Douglas County, 268. 
 
 44. Bayment of tax by bank.] Under the statute of Iowa a National bank is 
 not liable for the tax assessed against a shareholder unless it have in its 
 possession dividends or property belonging to such shareholder. HersTii/re 
 V. The First Nat. Bank, 476. 
 
 45. Distraint of bank property to enforce payment of tax.] A State statute 
 provided that " the stockholders of every National bank located in this 
 State, or of any bank incorporated under the laws of the State, shall be 
 assessed and taxed on the value of their shares of stock therein, sub- 
 ject to the restriction that taxation of such shares shall not be at a 
 greater rate than is assessed upon any other moneyed capital in the 
 hands of individual citizens of this State in the county or precinct where 
 such bank is located. The taxes against such shares shall be levied 
 against the holder of the same, and shall be paid by the bank.'' Held, 
 that a tax so imposed on the shares of a National bank was valid, and 
 that payment thereof could be enforced by distraint of the property of 
 the bank. First Nat. Bank v. Douglas County, 368. 
 
 46. .] A collector of taxes has not, in the absence of express statutory 
 
 authority therefor, no authority to seize the property o£ a National bank 
 to satisfy a tax against a shareholder. Mrst Nat. Bank v. Hershire, 465. 
 
 47. ■ .] A warrant for the collection of a tax assessed to the shareholders 
 
 on shares of stock in a National bank, directed the collector " to levy the 
 same of the goods and chattels of such persons." Eeld, that the collector 
 could not thereon seize the property of the bank to pay the tax. First 
 Nat. Bank of Sandy Hill v. Faneher, 697. 
 
 48. How collected in Maine.] The plaintiff, a non-resident of Bangor, was duly 
 assessed therein, upon his shares of stock in the First National Bank. After 
 legal demand, the plaintiff, refusing to pay the tax upon the warrant of the 
 collector of the city, issued April, 1870, was duly arrested by the sheriff 
 of the county in the following May, for the tax, which the plaintiff then 
 
INDEX. 985 
 
 TAXATION— C 
 
 paid under protest, together with costs, to the officer, and he to the city 
 treasurer. In assumpsit to recover the money thus paid, held, (1) that 
 the collection of such tax is to be enforced in accordance with the general 
 law ; and (3) that chapter 309 of the Public Laws of 1868 related exclu- 
 sively to the assessment, and in nowise afEected the collection of taxes 
 duly assessed under previously existing laws . Weld y. Oity of Bangor, 
 531. 
 
 49. List of aliareliolders — State statute. '\ A State statute requiring the 
 cashiers of National banks to send list of shareholders to town clerks is 
 valid. Waite v. Dowley, 137. 
 
 50. Must be expressly authorized . ] Municipal officers cannot assess a tax on 
 shares of stock of a National bank unless authorized by a law of the 
 State. Stetson v. The Gity of Bangor, 520. 
 
 51. .] A statute authorizing " the taxation of all shares in moneyed cor- 
 porations," held sufficient authority to tax shares in National banks. lb. 
 
 53. State statute prohibiting banking companies.] A State statute prohibiting 
 the establishment of banking companies in the State, without authority 
 of the Legislature, does not apply to National banks. lb. 
 
 53. On increased capital.} Where there is a vote to increase the capital stock 
 of a National bank and the shares are issued and paid for, they cannot be 
 taxed until the Comptroller of the Currency has approved of the increase 
 and issued his certificate therefor. Charleston v. People's Nat. Bank, 898. 
 
 54. Not liable to privilege tax.] National banks are not liable to a privilege 
 tax imposed by city ordinance on occupations and business transactions 
 although "banks and banking" are in terms included. Nat. Bankr. 
 May on, 903. 
 
 55. Construction of statute.] A State statute imposed a tax " on bank stock, 
 of fifty cents on each share thereof equal to one hundred dollars of stock 
 therein owned by individuals, corporations or societies." Held, to be a 
 tax on the shares of the stockholders. Nat. Bank v. Commonwealth, 34. 
 
 56. .] Under the Eliuois statute of Jane, 1867, no deductions from the 
 
 assessed value of shares in National banks could be made for the debts 
 of the owner. McVeaghy. Chicago, 381. 
 
 57. .] Method of taxation under the Illinois statute of 1867, explained. 
 
 lb. 
 
 58. .] A statute providing that shares of stock in National banks shall be 
 
 taxed in the county, town, or district -sphere such banks are situated, 
 whether the shareholder resides there or not, is valid. Mrst Nat. Bank 
 V. Smith, 390. 
 
 59. Construction of Alabama statute.] A State statute provided that all prop- 
 erty, real and personal, not otherwise specified therein, or exempt from 
 taxation, should be " listed " for taxation. There was an exemption of 
 " all shares of the capital stock of any company or corporation which is 
 required to list its property for taxation." Seld, that this exemption did 
 not apply to National banks whose capital was invested in government 
 
 124 
 
986 INDEX. 
 
 lAXATlO'S—Oontin'ued. 
 bonds, and that the shares of such banks were property to be listed. 
 Mclver v. BoUnson, 373. 
 
 60. Of both shares and real estate — where no cause for complaint.'] A National 
 bank alleged that it had been assessed on both its shares and its real 
 estate, and that the value of the real estate was not deducted from the 
 gross value of the shares. It appeared that the assessed valuation of 
 both the real estate and stock was less than half their real value. Held, 
 that the bank had no cause to complain. Niekerson v. Kimball, 409. 
 
 61. Taxation in Illinois.] The Illinois Statute (Hurd's Rev. Stats., § 36), pro- 
 viding for the taxation of National banks, is constitutional. That statute 
 explained and construed. lb. 
 
 63. Construction of Iowa statute.] A State statute providing for the taxation 
 of shares in National banks having been declared illegal by the court 
 because the capital instead of the shares of State banks were taxed, the 
 Legislature passed a new statute for taxing shares in National banks, and 
 therein repealed " all acts and parts of acts inconsistent " with its provis- 
 ions. Held, that the repealing clause amounted to a repeal of the pro- 
 vision taxing the capital of State banks, and since those banks, if any there 
 were, could be taxed on their shares under the general revenue law of 
 the State, the provision for taxing National banks was iu accordance with 
 the act of Congress. Morseman v. Younkin, 460. 
 
 63. Construction of Massachusetts statute.] By the statute of June, 1868. 
 chapter 349, of Massachusetts, entitled " An act concerning the taxing of 
 bank shares," it was provided that the shares in National banks owned 
 by non-residents of the Commonwealth shall be assessed to the owners 
 thereof in the cities or towns where the banks are located ; that the rate 
 of taxation shall be the same as on other moneyed capital ; that the 
 value of such shares shall be omitted from the valuation upon which the 
 rate is to be based, and that the act shall " apply to taxes assessed and 
 
 . collected for the present year in the same manner and to the same effect 
 as if it had been iu force on the first day of May. " Held, that the act 
 was not unconstitutional, either as being in violation of the act of Con- 
 gress of 1864, chapter 106, section 47, and 1868, chapter 7, or as levying 
 a tax in a disprop'ortional manner, or as being retrospective in its operation. 
 Providence Institution for Bailings and Jewell v. City of Boston, 578. 
 
 64. Construction of Massachusetts statute — place of taxation.] A statute 
 made it the duty of every shareholder in a National bank to give notice 
 to the bank of his true residence each year, and, in case of neglect, made 
 the shares taxable where the bank was located as well as where the share- 
 holder resided. Held, that a shareholder was rightfully taxed upon his 
 shares in the town where he resided although he had, through an honest 
 mistake, notified the cashier that his residence was in another town. 
 Qoldsbury v. Inhabitants of Warwick, 593. 
 
 65. Construction of Michigan statutes.] By general law of a State, shares of 
 stock in National banks were to be taxed in the township where the bank 
 was located, except that where a stockholder resided in another township 
 
INDEX. 987 
 
 TAXATION— C 
 
 in tlie same county, his shares were to be there taxed. A village charter 
 authorized the taxation of " all property, real and personal, within the 
 limits of said village." Held, not to authorize a tax on shares of stock in 
 a National hank located in such village, owned by a resident of another 
 township in the same county. Howell v. Village of OassopoUs, 627. 
 
 66. Deduction for debts in New York.] By statute in New York, individuals 
 were taxed on " the full value of all their personal property, after deducting 
 the just debts owing by them." A subsequent statute provided that the 
 owners of shares of stock in National banks situated in the State should be 
 " taxed on the value of their shares of stock therein." Held, that a share- 
 holder was not entitled to a reduction on the assessed value of his shares 
 on account of debts. People ex rel. Cagger v. Dolan, 684. 
 
 67. Of National hank notes.] The circulating notes of National banks are 
 not exempt from taxation by States. Board v. Elston, 435 ; contra, Home 
 V. Oreen, 643. 
 
 Of circulation of State banks.] See Constitutional Law, 32 ; Cibculation. 
 When lien on shares — saie of shares without discharging lien.] Bee Sale, 921. 
 Of circulation of National banks.] See Cikculation. 
 
 TELLER. 
 
 See EMBBZ2XBMBNT AND LaKCBNY. 
 
 TRANSFER. 
 
 1. Of stock — bank cannot prohibit.] National banks can acquire no lien on 
 their own stock, and cannot, by law or otherwise, prevent a stockholder 
 who is indebted to the bank from transferring his shares. Bulla/rd v . 
 Bank, 93 ; Bank v. Lanier, 70. 
 
 2. .] A shareholder in a National bank has, in the absence of fraud, an 
 
 absolute right to sell and transfer his shares, and this right is not subject 
 to be cut off or abridged by either the directors or other shareholders . 
 Johnson V. Laflin, 331. 
 
 To avoid liability to creditors^] See Stockholder, 2'(1. 
 By National bank, when void.] See Insolvency, 276, 285. 
 See Stockholders. 
 
 ULTRA VIRES. 
 
 1 . A National bank cannot deal in stocks, but it may take stocks in payment 
 or compromise of a debt in order to avoid loss. Mrst Nat. Bank v. Nat . 
 SxcJiange Bank, 124. 
 
 3. Where a National bank received a deposit to hold as collateral security for 
 the performance of an agreement between certain parties, held, that it 
 was estopped from setting up the defense of ultra vires to an action to 
 recover the deposit by one of the parties who had performed his part of 
 the agreement, relying on. the undertaking of the bank. Bushnell v. 
 Chautauqua Nat. Bank, 794. 
 
988 INDEX. 
 
 ULTRA YTSE,^— Continued. 
 3. Where a National bank has entered into a contract not authorized by its 
 charter it cannot repudiate the contract and at the same time retain its 
 fruits. Casey v. La SooiStS de Credit Mobilier, 285. 
 
 See Banking Business ; Deposits fob Safe-keeping. 
 
 UNITED STATES. 
 Paramount lien . ] See Lien. 
 
 USURY. 
 
 See toTEKEST. 
 
 WINDING UP. 
 
 1. An action may be brought against a National bank after a receiver has 
 been appointed. Sank of Bethel v. Pahquioque Nat. Bank, 77 ; Security 
 Bank v. Nat. Bank, 774; Qreen v. Walkill Nat. Bank, 786. 
 
 3. An action may be prosecuted against a National bank although it has 
 resolved to go into liquidation and has provided for the reduction of its 
 circulating notes. Ordway v. Central Nat. Bank, 559. 
 
 3. In winding up a National bank, the Comptroller of the Currency must 
 
 determine when and to what extent the liability of stockholders must be 
 enforced, and this determination is conclusive ; and in an action to enforce 
 the liability, such determination must be pleaded and proved. Kennedy 
 V. CHbson, 17 ; Casey v. Qalli, 143 ; Bailey v. Sawyer, 356. 
 
 4. Where less than the entire liability of stockholders is to be enforced, 
 
 a proceeding may be had in equity ; but where the entire liability is to be 
 enforced, the action must be at law. lb. 
 
 5. National banks can be wound up only in the mode provided in the National 
 
 Banking Act. Re Manufacturers' Bank, 193. 
 
 6. In cases not within the special provisions of the National Banking Act, a 
 
 National bank may be proceeded against in the same manner as any other 
 debtor or corporation. Irons v. Manufacturers' Nat. Bank, 303. 
 
 7. What are debts against.} Under section 50 of the act entitled " An act to 
 
 provide a National currency," etc., the assets in the hands of the receiver 
 of a bank that fails are, when reduced to money, to be ratably divided 
 and appropriated to the payment of all legal liabilities of the association, 
 whether such liabilities are debts, technically so called, or result from the 
 non-feasance or malfeasance of the association in respect of its binding 
 obligations and duties — as from its failures while in possession of bonds 
 left by an individual with it on special deposit or for safe-keeping. Turner 
 V. The Mrst Nat. Bank, 454. 
 
 8. Parties.'] In a proceeding for the adjudication of a claim against a National 
 
 bank that has suspended, the receiver appointed under the National Bank- 
 ing Act may be properly joined as a party defendant, lb. 
 
 9. Where the funds of an insolvent bank are sufficient to pay all claims 
 
 against it and leave a surplus, the Comptroller should allow interest on 
 
INDEX. 989 
 
 WINDING VP— Continued. : 
 claims during tlie winding up proceedings ; and an action to recover such 
 interest -will lie against the bank. Chemical Nat. Bank v. Bailey, 260. 
 
 See Insolvency; RBCflrvEB. 
 
 WORDS. 
 " lTisoViDency."'\ See Inbolyency, 276, 285. 
 " United States currency."'] See Cibctilation, 508. 
 " Municipal pu/rposes."] See Taxation, 433.