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THE LIBRARY

OF

THE UNIVERSITY

OF CALIFORNIA

LOS ANGELES



SCliG^i. O:^ LAW



A Treatise



ON THE LAW OF



BANKS AND BANKING



By the Editorial Staft of The Michie Company



UNDER THE SUPERVISION OF



THOMAS JOHNSON MICHIE



Volume III



The Michie Company, Law Publishers

Charlottesville, Va.

1913



>i'3



I
19*3



Copyright 1913

BY

The Michie Company



BANKS AND BANKING



CHAPTER XV. .

IV. National Banks.

§ 232. Nature and Status.
§ 233. Power to Control and Regulate.
§ 233 (1) Power of Congress.
§ 233 (2) Power of States.

§ 233 (3) Power of Comptroller and Bank Examiner.
§ 233 (4) National Bank Examiner.
§ 235. Regulation and Supervision in General.
§ 236. Organization and Corporate Existence.
§ 236 (1) In General.

§ 236 (la) Power to Create.

§ 236 (lb) Articles of Agreement and Comptroller's Certificate.
§ 236 (Ic) Corporate Existence Necessary to Validity of Transac-
tions.
§ 236 (Id) Time Limit.

§ 236 (le) Corporate Existence Continued after Time Limit.
§ 236 (2) Evidertlce of Corporate Existence.
§ 236 (2a) In General.
§ 236 (2b) Certificate of Comptroller.
§ 236 (2ba) In General.
* § 236 (2bb) Admissibility of Certificate.

§ 236 (2c) Parol Evidence as to Engaging in General Bank Busi-
ness.
§ 236 (3) Estoppel to Deny Corporate Existence.
§ 236 (4) Collateral Impeachment of Organization.
§ 237. Reorganization of State Banks as National Banks.
§ 238. Name.

§ 239. Location and Place of Business.
§ 240. By-Laws.
§ 241. Capital and Shares.

§ 241 (1) Definitions and Nature.
§ 241 (2) Increase of Capital Stock.

§ 241 (2a) Requisites and Validity.
§ 241 (2aa) In General.
§ 241 (2ab) Assent of Stockholders.

§ 241 (2ac) Payment in Full of Whole Amount of Subscrip-
tion.
§ 241 (2aca) In General.

§ 241 (2acb) Reduction of Amount of Proposed In-
crease.
§ 241 (2acc) Waiver of Right to Insist upon Payment
of Full Amount.



IJJQ BANKS AND BANKING.

§ 241 (2ad) Approval and Certificate of Comptroller.
§ 241 (2ae) Delivery of Certificate of Stock.
§ 241 (2b) Recovery Back of Payment Where Increase Fails.
§ 241 (2c) Estoppel to Question Regularity.
§ 241 (2d) Action to Enforce Payment.
§ 241 (3) Reduction of Stock.
§ 241 (4) Conversion of Stock by Bank.
§ 242. Subscription to and Issue of Stock.

§ 242 (1) Effect and Purpose of Issue of Certificate.
§ 242 (2) Payment.
§ 242 (3) Rescission.

§ 242 (4) Issuance of Duplicate in Place of Lost Certificate.
§ 242 (5) Actions to Enforce.
§ 243. Transfer of Stock.

§ 243 (1) Power to Transfer.
§ 243 (la) In General.
§ 243 (lb) Executor.
§ 243 (2) Persons and Corporations to Whom Transferable.
§ 243 (2a) In General.

§ 243 (2b) Purchase by Bank of Its Own Stock.
§ 243 (2c) Purciiase of Shares of Another National Bank.
S 243 (3) Mode and Sufficiency.
§ 243 (3a) In General.

§ 243 (3b) Payment and Delivery of Certificate.
§ 243 (3c) Deed.
§ 243 (3d) Recording Transfer.

§ 243 (3da) Power of Bank to Refuse.
§ 243 (3db) Necessity.

§ 243 (3dba) In General.
§ 243 (3dbb) As between the Parties.
§ 243 (3dbba) In General.

§ 243 (3dbbb) Priority as to Assignee in Bank-
ruptcy.
§ 243 (3dbbc) Priority as to Attachment.
§ 243 (3dbc) Pledge of Stock.

§ 243 (3dc) Mode and Sufficiency.

§ 243 (3dca) Production or Surrender of Certificate.
§ 243 (3dcb) Issuance of New Certificate.
§ 243 (4) Operation and Efifect of Transfer.

§ 243 (4a) Notice of Provisions of Articles of Association.
§ 243 (4b) Right, Title and Liability of Purchaser or Transferee.
§ 243 (4c) Eflfect on Title to Assets of Corporation.
§ 243 (4d) Pledge.
§ 243 (4c) Transfer in Trust.
§ 243 (5) Damages for Breach of Agreement to Transfer.
§ 243 (6) Enforcement against Bank.
§ 243 (7) Remedy in Equity to Set Aside Transfer.
§ 244. Dividends.
§ 24.'). Lien of Bank on Stock or Dividends.

§ 245 (1) Lien on Stock for Debts Due Bank.
§ 245 (la) In General.



NATIONAL, BANKS. 1771

§ 245 (lb) Provisions in Charter, By-Laws and Stock Certificates.
§ 245 (Ic) Express Agreements.
§ 245 (Id) Liquidation of Bank.
§ 245 (2) Setting Off Debts from Stockholder against Dividends.
§ 246. Rights and Liabilities of Stockholders in General.
§ 246 (1) Right to Examine Books, Papers, etc.
§ 246 (2) Assessment to Restore Impaired Capital Stock.
§ 246 (2a) Who May Make.
§ 246 (2b) Enforcement.
§ 246 (2c) Rights of Paying and Nonpaying Shareholders upon

Liquidation of Bank.
§ 246 (2d) Collateral Agreements between Shareholders.
§ 246 (3) Withdrawal upon Renewal of Charter.
§ 246 (4) Right of Voting Trust to Divert Funds.
§ 247. Liability of Stockholders for Debts of Bank.

§ 248. Nature and Extent.

§ 248 (1) In General.

§ 248 (la) Nature and General Rule as to Liability.

§ 248 (lb) Persons Deemed to Be Shareholders for Purpose of

Assessment.
§ 248 (Ic) Obligations for Which Stockholders Liable.
§ 248 (Id) Amount of Liability.
§ 248 (le) Facts Relieving from Liability.
§ 248 (If) Persons Who May Enforce.
§ 248 (Ig) Release, Satisfaction and Discharge.
§ 248 (Ih) Right of Stockholder to Prefer Creditors of Bank.
§ 248 (2) Decision of Comptroller of Currency.
§ 248 (2a) Authority, Time and Data.
§ 248 (2b) Necessity.
§ 248 (2c) Operation and Effect.
§ 248 (2ca) In General.
§ 248 (2cb) Conclusiveness of Decision.

§ 248 (2cc) Liquidated Claim Subject to Assignment Sale,
etc.
§ 248 (2d) Second or Successive Assessment.
§ 248 (3) Liability of One Holding Stock as Trustee.
§ 248 (4) Liability of Pledgees.
§ 248 (4a) In General.
§ 248 (4b) L^nregistered Pledgee.
§ 248 (4c) Transfer to Pledgee Absolute in Form.
§ 248 (4d) Transfer to Pledgee "as Pledgee."
§ 248 (4e) Transfer to Third Person to Secure Unpaid Debt Due

Pledgee.
§ 248 (4f) Pledgee Forced by Failure of Pledgor into Position of

Ownership.
§ 248 (4g) Pledgee Becoming Real Owner of Stock.
§ 248 (4h) National Bank a Pledgee.
§ 248 (5) Liability of Married Women.
§ 248 (6) Deceased Stockholders.

§ 248 (6a) Liability of Estate in Hands of Executor or Adminis-
trator.
§ 248 (6b) Liability of Devisee and Legatee or of Heir and Dis-
tributee.



J772 BANKS AND BANKING.

§ 248 (7) Estoppel to Deny Liability of Shareholder.

§ 248 (8) Failure of Some Stockholders to Pay Assessments.

§ 248 (9) Liability for Interest.

§ 249. Effect of Transfer of Stock.

§ 249 (1) Liability of Transferror.
§ 249 (la) In General.

§ 249 (lb) Knowledge of Insolvency and In^tent to Evade Liability.
§ 249 (ic) Capacity and Solvency of Transferee.
§ 249 (Id) Colorable Transfer.
§ 249 (Ida) In General.
§ 249 (Idb) Transfer by Executor.
§ 249 (le) Transfer on Books of Bank.
§ 249 (2) Liability of Both Transferror and Transferee.
§ 249 (3) Liability of Transferee.

5; 250. .Actions and Proceedings to Enforce.

§ 250 (1) Nature and Form.

§ 250 (la) Voluntary Liquidation.
§ 250 (lb) Involuntary Liquidation.
§ 250 (Iba) Receivership.

§ 250 (Ibaa) Necessity for and Powers Generally.
§ 250 (Ibab) Right of Receiver to Sue.
§ 250 (Ibac) Sale or Assignment by Receiver.
§ 250 (Ibad) Compromising or Compounding Statutory
Liability of Stockholder.
§ 250 (Ibb) Action at Law or Suit in Equity.
§ 250 (Ibc) Courts and Venue.

§ 250 (Ibd) Set-Off by Receiver in Suit on Stockholder's De-
posit Claim.
§ 250 (Ibe) Enjoining Assessment.
§ 250 (2) Time to Sue and Limitations.
§ 250 (:i) Conditions Precedent and Defenses.
§ 250 (3a) Action of Comptroller.

§ 250 (3aa) Involuntary Liquidation of Bank.
§ 250 (3ab) Voluntary Liquidation of Bank.
§ 250 (3b) Defenses and Facts Relieving from Liability.

§ 250 (3ba) Nonexistence or Invalidity of Corporation.

§ 250 (3bb) Fraud, Irregularity or Illegality in Organization,

Management or Issue of Stock.
§ 250 (3bc) Fraud or Illegality in Purchase or Transfer of

Stock.
§ 250 (3bd) Withdrawal or Renewal of Charter.
§ 250 (3be) Payment of Assessment to Restore Capital Stock.
§ 250 (3bf) Voluntary Liquidation.
§ 250 (3bg) Illegality of Receiver's Appointment.
§ 250 (3bh) Suit Conducted by Private or Special Counsel.
§ 250 (3bi) Failure to Collect First Assessment and Realize

on Assets.
§ 250 (3hj) Sale or Assignment of Claim by Receiver.
§ 250 (3bk) Set-Off and Counterclaim.
§ 250 (3bka) Counterclaim.
§ 250 (3bkb) Set-Off.
§ 250 (3bl) Compromise by Receiver.



NATIONAL BANKS.



1773



§ 250 (4) Parties and Pleading.
§ 250 (4a) Parties.

§ 250 (4aa) Persons Wlho May Sue and Parties Plaintiff.
§ 250 (4aaa) Involuntary Liquidation.
§ 250 (4aab) Voluntary Liquidation.
§ 250 (4ab) Defendants.
§ 250 (4b) Pleading.

§ 250 (4ba) Bill, Petition or Complaint.

§ 250 (4baa) Involuntary Liquidation.
§ 250 (4bab) Voluntary Liquidation.
§ 250 (4bb) Ansvi^er.
§ 250 (5) Evidence.
§ 250 (6) Trial and Judgment.

§ 250 (6a) State Laws as Rules of Decision in Federal Courts.
§ 250 (6b) Judgment.

§ 250 (6ba) Validity, Form and Sufficiency.
§ 250 (6bb) Operation and Effect.
§ 250 (7) Liability for Costs.
§ 251. Election or Appointment of Officers.
§ 251^. Qualifications of Officers.
§ 251J^. Resignation and Removal of Officers.
§ 252. Rights and Liabilities of Officers.

§ 253. Nature and Extent.

§ 253 (1) President.
§ 253 (2) Directors.

§ 253 (2a) In General.

§ 253 (2b) For Particular Acts.

§ 254. Actions to Enforce Liability.

§ 255. Criminal Responsibility of Officers or of Persons Aiding or Abetting
Them.

§ 256. Offenses.

§ 256 (1) Making False Entries or Reports.
§ 256 (la) In General.

§ 256 (lb) What Amounts to False Entry or Report.
§ 256 (Ic) By Whom Entry Made.
§ 256 (2) Wrongfully Certified Check.

§ 256 (3) Misapplication^ Abstraction, or Embezzlement of Funds.
§ 256 (3a) In General.

§ 256 (3b) Means of Commission of Offense.
§ 256 (4) Receiving Deposits after Insolvency.
§ 256 (5) Aiding or Abetting.

§ 257. Prosecution and Punishment.

§ 257 (1) Requisites and Sufficiency of Indictment.
§ 257 (la) Necessity for Indictment.

§ 257 (lb) Embezzlement, Abstraction and Misapplication.
§ 257 (Ic) False Entries or Reports.
§ 257 (Id) Wrongfully Certifying Check.
§ 257 (le) Aiding and Abetting.
§ 257 (If) Quashing Indictment.
§ 257 (Ig) Construction of Indictment.
§ 257 (2) Issues, Proof and Variance.
§ 257 (2a) Issues.
§ 257 (2b) Proof.



1774 BANKS AND BANKING.

§ 257 (2c) Variance.
§ 257 (3) Evidence.

§ 257 (3a) Admissibility.

§ 257 (3aa) As to Misapplication.
§ 257 (Sab) As to Abstraction.
§ 257 (Sac) As to False Entries.
§ 257 (3ad) As to Unlawfully Certifying Check.
§ 257 (3b) Weight and Sufficiency.
§ 257 (4) Trial.

§ 257 (4a) Jurisdiction.
§ 257 (4b) Instructions.
§ 257 (4c) Questions of Law and Fact.
§ 258. Banking Powers.
§ 259. Property and Conveyances.

§ 259 (1) Right to Acquire Property or Interest Therein.
§ 259 (la) Real Property.

§ 259 (laa) In General.

§ 259 (lab) As Security for Debt.

§ 259 (laba) Where Taken Directly.
§ 259 (labb) Where Taken by Assignment.
§ 259 (labc) Where Taken by Subrogation.
. § 259 (lac) Power to Lease Land.
§ 259 (lb) Personal Property.
§ 259 (2) Right to Improve Property.
§ 259 (3) Right to Convey Property.
§ 260. Contracts and Dealings.
§ 260 (1) In General.

§ 260 (2) Acquiring or Dealing in Stock of Other Corporations.
§ 260 (2a) In General.

§ 260 (2b) As Investment or Speculation.
§ 260 (2c) As Satisfaction of Debt.
§ 260 (2d) As Security for Loan.
§ 260 (2e) As Agent or Broker.
§ 260 (2f) Efifect of Ultra Vires Act.
§ 260 (3) Purchase by Bank of Its Own Stock or Loaning Money on Se-
curity Thereof..
§ 260 (4) Guaranty or Indemnity.

§ 260 (5) Acquiring or Dealing in State and Municipal Securities.
§ 260 (6) Purchase and Discount of Negotiable Paper.
§ 261. Effect of Acts Ultra Vires.
§ 262. Representation of Bank by Officers.

§ 262 (1) Power of Bank to Entrust Authority to Its Agents.
§ 262 (2) When Officer Regarded as Representing Bank.

§ 262 (2a) As Dependent upon Scope or Apparent Scope of Duties.
§ 262 (2aa) In General.
§ 262 (2ab) Applications of Rules.

§ 262 (2ac) Liability of Bank for Mistakes, Fraud, or Mis-
representations of Agents.
§ 262 (2ad) Notice to Officer as Notice to Bank.
§ 262 (2b) Ratification of Acts, or Estoppel to Deny Authority of
Officer.
§ 262 (3) Effect of Acts of Officers before Organization of Bank.
§ 262 (4) Power after Bank Has Gone into Liquidation.



NATIONAL BANKS.



1775



§ 263. Deposits in General.

§ 264. Payment, Acceptance or Certification of Checks.

§ 265. Certificates of Deposit.

§ 266. Special Deposits.

§ 267. Deposits of Public Money.

§ 268. Collections.

§ 269. Loans and Discounts.

§ 269 (1) Power of Bank in General.
§ 269 (2) What Constitutes Discount.
§ 269 (3) Power with Regard to Security Taken.
§ 269 (4) Failure to Exact Security.
§ 269 (5) Loan to Ofificers.

§ 269 (6) Loans Made in Excess of Prescribed Limit.
§ 269 (6a) In General.
§ 269 (6b) Who May Raise Question.
§ 269 (7) Repayment of Loan.
§ 270. Interest or Rate of Discount, and Usury.

§ 270 (1) What Law Governs — Application of State Laws.
§ 270 (2) When Liability to Penalty for Taking Usury Incurred.
§ 270 (3) Application of Statute to Discoimts.
§ 270 (4) Renewal of Usurious Note at Legal Rate.
§ 270 (5) What Rate of Interest May Be Charged.
§ 270 (6) Remedies for Taking Usury.

§ 270 (7) Usury as Defense or Set-Off or Counterclaim in Action by Bank.
§ 270 (7a) Where Actually Paid.
§ 270 (7b) Where Not Paid.
§ 270 (8) Whether Payments Made Shall Be Applied to Principal or For-
feited Interest.
§ 270 (9) Amount or Extent of Penalty for Taking Usury.
§ 270 (9a) In General.

§ 270 (9b) Where Interest Actually Paid.
§ 270 (9c) Where Interest Not Paid.
§ 270 (9ca) In General.
§ 270 (9cb) Interest Discounted.
§ 270 (9cc) Interest on Renewal Note.
§ 270 (9cd) Interest on Overdrafts.
§ 270 (9ce) Period for Wihich Forfeited.
§ 270 (10) Efifect of Taking Usury upon Contract.
§ 270 (11) Action for Penalty or to Recover Back Usury Paid.
§ 270 (11a) Jurisdiction.
§ 270 (lib) Who May Maintain Action.
§ 270 (lie) Prerequisites to Bringing Suit.
§ 270 (lid) Form of Action.
§ 270 (lie) Pleadings.

§ 270 (llf) Defenses to Action for Penalty.
§ 270 (llg) Limitation of Actions.
§ 270 (llh) Burden of Proof.
§ 270 (Hi) Effect of Recovery of Penalty.
§ 270 (llj) Compromise and Settlement.
§ 270 (12) Criminal Prosecution under State Statute.
§ 271. Dealings in Exchange, Money and Securities.
§ 272. Circulating Notes.

§ 273. Actions by or against National Banking Associations.
§ 273>^. Scope of Treatment.



1776 BANKS AND BANKING.

§ 274. Capacity to Sue and Be Sued.

§ 275. Jurisdiction and Venue.

§ 275 (1) Jurisdiction in General.

§ 275 (la) Jurisdiction of Federal Courts.

§ 275 (laa) Rule Prior to Act of 1882.
§ 275 (lab) Rule under Act of 1882.
§ 275 (lac) Rule under Acts of 1887 and 1888.
§ 275 (lb) Jurisdiction of State Courts.
§ 275 (2) Suits by and against Receivers.
§ 275 (3) Suits by and against Agents.

§ 276. Parties.

§ 277. Process and Appearance.

§ 278. Attachment and Garnishment.

§ 279. Injunction.

§ 280. Pleading.

§ 280J/2. Execution and Enforcement of Judgment.

§ 281. Voluntary Liquidation.
§ 281 (1) In General.
§ 281 (2) Effect of Liquidation.

§ 282. Reorganization.

§ 283. Consolidation.

§ 284. Forfeiture of Franchise and Dissolution.
§ 284 (1) Grounds.
§ 284 (2) Effect of Act of Comptroller of Currency in Closing Bank and

Appointing Receiver.
§ 284 (3) Proceedings to Enforce Forfeiture.
§ 284 (4) Effect of Decree of Dissolution and Forfeiture.
§ 285. Insolvency and Its Effect in General.
§ 286. Transfers and Preferences Affected by Insolvency.
§ 286 (1) Statutory Prohibition of Preferences.
§ 286 (2) Statute Construed and Applied.
§ 286 (3) Right of Debtor to Set Oflf Claim against Bank.
§ 287. Assets and Receivers on Insolvency.
§ 287 (1) In General.

§ 287 (2) Appointment or Election of Receiver, or Agent of Stockholders.
§ 287 (2a) Manner.

§ 287 (2aa) Appointment of Receiver by Comptroller of the

Currency.
§ 287 (2ab) Appointment of Receiver by Court of Equity.
§ 287 (2b) Effect of Appointment of Receiver.
§ 287 (3) Status, Powers and Duties of Receiver or Agent.
§ 287 (3a) Receivers.
§ 287 (3b) Agent of Stockholders.
§ 287 (4) Actions by or against Receiver or Agent.
§ 287 (4a) Authority to Sue or Defend.
§ 287 (4b) Jurisdiction.
§ 287 (4c) Parties.
§ 287 (4d) Conduct of Suits.
§ 287 (4e) Pleading.
§ 287 (4f) Proof.
§ 287 (4g) Province of Court and Jury.



9^?



NATIONAL BANKS.



1777



§ 287 (4h) Judgment.

§ 287 (4i) Costs.
§ 288. Presentation, Allowance, and Payment of Claims.
§ 288 (1) In General.

§ 288 (2) Allowance or Rejection by Comptroller.
§ 288 (3) Claims Provable.
§ 288 (4) Basis of Distribution of Assets.
§ 288 (5) Priorities.
§ 288 (6) Allowance of Interest on Claims.

IV. NATIONAL BANKS.

§ 232. Nature and Status. — National banks are instruments designed
to be used to aid the government in the administration of the public serv-
ice, created for a public and national purpose, and appropriate to that
end.i They are public institutions and operate as fiscal agents of the gov-
ernment,- notwithstanding they are the subject of private ownership.^



1. National banks defined. — Easton
f. Iowa, 188 U. S. 220, 47 L. Ed. 452,
23 S. Ct. 288; Farmers', etc., Nat. Bank
V. Bearing, 91 U. S. 29, 23 L. Ed. 196:
Davis V. Elmira Sav. Bank, 161 U. S.
275, 40 L. Ed. 700, 16 S. Ct. 502; Mc-
Clellan v. Chipman, 164 U. S. 347, 41
L. Ed. 461, 17 S. Ct. 85; Owensboro
Nat. Bank v. Ownesboro, 173 U. S.
664, 43 L. Ed. 850, 19 S. Ct. 537; Ran-
kin V. Barton, 199 U. S. 228, 50 L. Ed.
163, 26 S. Ct. 29; Bank v. State, 58 W.
Va. 559, 52 S. E. 494. See oost. "Reeu-
lation and Supervision in General,"
§ 235.

National banking corporations are
agencies or instruments of the general
government, designed to aid in the
administration of an important branch
of the public service, and are an ap-
propriate constitutional m.eans to that
end. Pollard v. State, 65 Ala. 628.

"National banks organized under the
act are instruments designed to be
used to aid the government in the ad-
ministration of an important branch
of the public service. They are means
appropriate to that end. Such being
the nature of these national institu-
tions, it must be obvious that their
operations can not be limited or con-
trolled by state legislation." Easton
V. Iowa, 188 U. S. 220, 47 L. Ed. 452,
23 S. Ct. 288. See post, "Power to
Control and Regulate," § 233.

National banks are created by vir-
tue of the banking laws of the United
States, and are held to be instruments
designed to be used to aid the United
States government in the administra-
tion of an important branch of the
public service. Brooks t'. State (Tex.
Civ. App.), 58 S. W. 1032, 1034.



"The qualities, powers, and duties,
as national agencies, of these associa-
tions, resemble, in almost all essential
particulars, those of the Bank of the
United States authorized by the act of
April 10th, 1816. Like that bank, they
are organized under national legisla-
tion. Their capital, like four-fifths of
the capital of that bank, is supplied by
individual subscriptions. They are
employed, like that bank, as agents and
depositories of the national govern-
ment." (Dissenting opinion of three
iudges.) Van Allen v. Assessors (U.
S.). 3 Wall. 573, 1 L. Ed. 229.

"The national banking associations
are much more intimately connected
in their functions and operations with
the national government, than was the
Bank of the United States. They are,
therefore, entitled to all the protec-
tion and all the immunities to which
that bank was entitled." (Dissenting
opinion of three judges.) Van Allen
z: Assessors (U. S.), 3 Wall. 573, 18
L. Ed. 229.

"The national banking system was
national in its design, coextensive in
its operation with the territorial limits
of the United States, and intended to
be the banking system for the whole
country, territories as well as states."
Talbott V. Silver Bow. 139 U. S. 438,
35 L. Ed. 210, 11 S. Ct. 594.

2. Operation as fiscal agent of gov-
ernment. — National banks are fiscal
agents of the federal government.
Adair ?•. Robinson, 6 Tex. Civ. App.
275, 25 S. W. 734. affirmed in 93 Tex.
635, no OD.

3. Although subject to private own-
ership. — Guthrie v. Harkness, 199 U.
S. 148, 157, 50 L. Ed. 130, 26 S. Ct. 4;



1778



BANKS AND BANKING.



§ 232



They are created for the purpose of establishing a currency for the whole
country and to provide a market for the loans of the general government,
and not solely for private gain."*



P"armers", etc., Nat. Bank z-. Dearing,
91 U. S. 29, 23 L. Ed. 196; Christopher
r. Xorvelk 201 U. S. 21G, 50 L. Ed. 732,
26 S. Ct. 502.

4. To provide a national currency.
— Lionherger f. Rouse (U. S.), 9 Wall.
468, 19 L. Ed. 721; Twin City Bank v.
Xebeker. 167 U. S. 196, 42 L. Ed. 134.

"The object had in view by the pas-
sage of the act authorizing national
banks, was to create a national cur-
rency secured by United States bonds.
The successful operation of these
banks it was supposed would materi-
ally aid the government itself in its
various departments." McLaughlin v.
Chadwell. 54 Tenn. (7 Heisk.) 389.

.■\s said in Tififany v. National Bank
(U. S.). 18 Wall. 409, 21 L. Ed. 862,
national banks "were established for
the purpose, in part, of providing a
currenc}' 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 un-
friendly legislation I)y the states, or
to ruinous competition with state
banks." Daggs v. Phoenix Nat. Bank,
177 U. S. 549, 44 L. Ed. 882, 20 S. Ct.
732.

"The object of the act, as its title
imports, was to create a national cur-
rency secured by a pledge of the
bonds of the United States. .\nd to
that end it requires security in gov-
ernment bonds for all notes issued;
and in case any bank fails to redeem
its notes on demand, it provides for
their payment on presentation at the
treasury of the United States." First
Nat. Bank r. Colby (U. S.;, 21 Wall.
609. 22 L. Ed. 687.

The federal legislation creating and
regulating national banks has in view
ihe erection of a system extending
throughout the country, and independ-
ent, so far as powers conferred are
concerned, of state legislation whicii,
if permitted to be applicable, might
impose limitations and restrictions as
various and as numerous as the states.
Having due regard to the national
character and purposes of that sys-
tem, national banks, in respect to the
powers conferred upon them, are not
to be viewed as solely organized and
operated for private gain. The prin-
ciples enunciated in McCuUoch f.
Maryland (U. S.). 4 Wheat. 315. 4 L.



Ed. 579, and in Osborn v. United
States Bank (U. S.), 9 Wheat. 738, 6
L. Ed. 204, though expressed in re-
spect to banks incorporated directly
by acts of congress, are yet applicable
to the latter and present system of
national banks. Easton v. Iowa, 188
U. S. 220, 47 L. Ed. 452, 23 S. Ct. 288.
See Cook County Nat. Bank v. United
States, 107 U. S. 445, 27 L. Ed. 537, 2
S. Ct. 561. See, also, Talbott v. Silver
Bow, 139 U. S. 438, 35 L. Ed. 210, 11
S. Ct. 594, where it was said that the
intent was to create a national bank-
ing system coextensive with the terri-
torial limits of the United States, states
and territories as well, and uniform
therein.

The United States Bank.— The
United States Bank was not consid-
ered as a private corporation, wnose
principal object is individual trade and
individual profit; but as a public cor-
poration, created for public and na-
tional purposes. That the mere busi-
ness of banking is, in its own nature,
a private business, and may be carried
on by individuals or companies having
no political connection with the gov-
ernment, is admitted; but the bank
was not such an individual or com-
pany. It was not created for its own
sake, or for private purposes. It has
never been supposed that congress
could create such a corporation. The
whole opinion of the court, in the case
of McCulloch r. Maryland (U. S.), 4
Wheat. 315, 4 L. Ed. 579, is founded
on, and sustained by, the idea that the
bank was an instrument which was
"necessary and proper for carrying



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