"264

capital engaged in operations of banking, capital that is money, or being employed as a source of profit by its use as money.263 Conversely, moneyed capital "does not include capital which does not come into competition with the business of national banks.' The restriction does not apply to capital invested in mining, manufacturing, or transportation.265 An exemption of the stocks and bonds of insurance, wharf, and gas companies, or other noncompeting capital or credits is not an unlawful discrimination against national banks, whose shares are taxed.266 .Where trust companies are not banks in the commercial sense, and do not perform the functions of banks in carrying on the exchanges of commerce, a franchise tax based upon their income, at least when it does not appear that a less rate of taxation falls on this form of capital than that imposed on national bank shares, does not show discrimination.207 Although the deposits of savings banks are moneyed

1121, 32 L. Ed. 118. Cf. First Nat. Bank v. Ayers, 160 U. S. 660, 16 Sup. Ct. 412, 40 L. Ed. 573; First Nat. Bank v. Chapman, 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669. See "Taration," Dec. Dig. (Key No.) § 12; Cent. Dig. § 30.

263 Mercantile Nat. Bank v. New York, 121 U. S. 138, 7 Sup. Ct. 826, 30 L. Ed. 895. See "Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. § 30.

264 First Nat. Bank v. Chapman, 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669. See, also, First Nat. Bank v. Chehalis County, 166 U. S. 440, 17 Sup. Ct. 629, 41 L. Ed. 1069; Commercial Nat. Bank v. Chambers, 182 U. S. 556, 21 Sup. Ct. 863, 45 L. Ed. 1227. See

"Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. § 30.

265 Talbott v. Silver Bow County, 139 U. S. 438, 11 Sup. Ct. 594, 35 L. Ed. 210. See "Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. $.30.

266 First Nat. Bank v. Chehalis County, 166 U. S. 440, 17 Sup. Ct. 629, 41 L. Ed. 1069. See "Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. & 30.

267 Mercantile Nat. Bank v. New York, 121 U. S. 138, 7 Sup. Ct. 826, 30 L. Ed. 895; National Bank of Redemption v. Boston, 125 U. S. 60, 8 Sup. Ct. 772, 31 L. Ed. 689; Jenkins v. Neff, 186 U. S. 230, 22 Sup. Ct. 905, 46 L. Ed. 1140. See "Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. § 30.

capital in the hands of individuals, they are not within the restriction in such sense as to require that, if they are exempted from taxation, shares of stock in national banks shall also be exempted; it being the policy of the state to encourage such institutions, and the exemption not being an unfriendly discrimination against investments in national bank shares.268

268 National Bank of Redemption v. Boston, 125 U. S. 60, 8 Sup. Ct. 772, 31 L. Ed. 689; Mercantile Nat. Bank v. New York, 121 U. S. 138, 7 Sup. Ct. 826, 30 L. Ed. 895; Davenport Nat. Bank v. Board of Equalization, 123 U. S. 83, 8 Sup. Ct. 73, 31 L. Ed. 94. See, also, First Nat. Bank v. Chapman, 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669. See "Taxation," Dec. Dig. (Key No.) § 12; Cent. Dig. § 30.

114. A savings bank, in the stricter sense, is a corporation, without capital stock and stockholders, created for the purpose of receiving the moneys of small depositors and investing them, subject to the restrictions of the charter, solely for the benefit of the depositors, repaying to them the amount of their deposits, with interest, as payment may be called for from time to time. In some states, however, savings banks may be incorporated with a capital stock, in which the stockholders receive the profits over the interest reserved to the depositors.

In General

A savings bank, using the term in its stricter sense, is an incorporated agency for receiving the moneys of depositors in small or moderate amounts, and investing them merely for the use and benefit of the depositors, who are to receive the advantage thereof in just proportion. The chief purpose is

1 Lewis v. Lynn Inst. for Savings, 148 Mass. 235, 19 N. E. 365, 1 L. R. A. 785, 12 Am. St. Rep. 535. See, also, Mitchell v. Beckman,

to encourage frugality by affording to persons of small means an opportunity to have their savings cared for by persons of experience, who, by combining the deposits, can make advantageous investments not available for small investors.2 Usually, therefore, the corporation has no capital stock, and no profit or benefit accrues to the managers, beyond their salaries.3 Sometimes, however, the original and strict type of savings banks is departed from, and savings banks are incorporated with a capital stock, in which the stockholders participate in the profits over the interest reserved to the depositors, and other incidents of corporations organized as commercial enterprises, such as the liability of the stockholders to creditors,

64 Cal. 117, 28 Pac. 110; Hannon v. Williams, 34 N. J. Eq. 255, 38 Am. Rep. 378; Barrett v. Bloomfield Sav. Inst., 64 N. J. Eq. 425, 54 Atl. 543; People v. Binghamton Trust Co., 139 N. Y. 185, 34 N. E. 898.

Whether a bank is a savings bank depends, not on its designation, but on its functions. State v. Lincoln Sav. Bank, 82 Tenn. 42.

Under a constitutional provision that no act authorizing corporations or associations with banking powers shall take effect until submitted to the people, an act authorizing savings societies is included. Reed v. People ex rel. Hunt, 125 Ill. 592, 18 N. E. 295, 1 L. R. A. 324. See "Banks and Banking," Dec. Dig. (Key No.) § 289; Cent. Dig. §§ 1128, 1130.

2 See Huntington v. Nat. Sav. Bank, 96 U. S. 388, 24 L. Ed. 777; Lewis v. Lynn Inst. for Savings, 148 Mass. 235, 19 N. E. 365, 1 L. R. A. 785, 12 Am. St. Rep. 535. See "Banks and Banking," Dec. Dig. (Key No.) § 289; Cent. Dig. §§ 1128, 1130.

3 Lewis v. Lynn Inst. for Savings, 148 Mass. 235, 19 N. E. 365, 1 L. R. A. 785, 12 Am. St. Rep. 535; Dickson v. Kittson, 75 Minn. 168, 77 N. W. 820, 74 Am. St. Rep. 447. See, also, Sheren v. Mendenhall, 23 Minn. 92. See "Banks and Banking," Dec. Dig. (Key No.) §§ 289, 294; Cent. Dig. §§ 1128, 1139.

4 See Newton v. Eagle & Phenix Mfg. Co. (C. C.) 101 Fed. 149; Murphy v. Pacific Bank, 119 Cal. 334, 51 Pac. 317; Ackenhausen v. People's Sav. Bank, 110 Mich. 175, 68 N. W. 118, 33 L. R. A. 408, 64 Am. St. Rep. 338. See "Banks and Banking," Dec. Dig. (Key No.) $$ 289, 293; Cent. Dig. §§ 1128, 1133–1135.

may exist. Recently so-called postal savings banks have been created by act of Congress."

Under the normal type of savings bank, the relation between the bank and its depositors is one of trust, defined by its charter and by-laws. The depositors are not, as such, stockholders or members of the corporation. The moneys deposited are not used in making ordinary loans and discounts, as in the case of commercial banks, and usually the law of incorporation carefully defines the securities in which the trustees may invest, such as real estate mortgages, bonds of the United States and of states and municipalities, railroad bonds, and the like, and also provides for and regulates the management of the bank to the end that the savings of the depositors may be safely invested and secured. A discussion of the questions presented under these statutory provisions will not be attempted. The principal questions to be considered are those that arise from the relation between the depositors and the bank. Powers of Bank-Ultra Vires

As with other incorporated banks, the powers of a savings. bank are, of course, to be determined by its charter or the act under which it is incorporated. Like other corporations created for business purposes, unless expressly restrained, savings banks have implied power to incur debts in the course of

See Queenan v. Palmer, 117 Ill. 62, 619, 7 N. E. 470, 613; Herron v. Vance, 17 Ind. 595; Franklin Sav. Bank v. Fatzinger (Pa.) 4 Atl. 912; In re Gibbs, 157 Pa. 59, 27 Atl. 383, 22 L. R. A. 276. See "Banks and Banking," Dec. Dig. (Key No.) § 293; Cent. Dig. §§ 1133– 1135.

• Act June 25, 1910, c. 386, 36 Stat. 814.

7 See Dickson v. Kittson, 75 Minn. 168, 77 N. W. 820, 74 Am. St. Rep. 447; Dodd v. Una, 40 N. J. Eq. 672, 5 Atl. 155; Barrett v. Bloomfield Sav. Inst., 64 N. J. Eq. 425, 54 Atl. 543, affirmed 66 N. J. Eq. 431, 57 Atl. 1131. See "Banks and Banking," Dec. Dig. (Key No.) §§ 293, 294; Cent. Dig. §§ 1133-1149.

8 Savings Bank of New London v. Town of New London, 20 Conn. 111. See "Banks and Banking,” Dec. Dig. (Key No.) § 293; Cent. Dig. 88 1133-1135.

Ante, p. 273.