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 disdemands of trade and commerce. Mo- count. A bank of discount alone is Cullough's Com. Dict., vol. 1, p. 63; defined to be one that furnishes Am. Cyc., vol. 2, title Banks. 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 Banks. "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, SUTHERLAND, J., adopts the regulations as experience has suggested same definition; and GARDINER, J., to be necessary to subserve the pur- in delivering the opinion of the court poses of their creation, and to protect in Talmage v. Pell, 7 N. Y. 328, 343, alike the banks and the public from declares that "to discount bonds, in the evils of general insolvency-sure banking, is only a mode of loaning to follow the general absorption and money. In Fleckner v. Bank of Uniemployment of the banking capital of ted States, 8 Wheat. 338, 350, STORY, J., a country in purely speculative enterprises for purposes of private gain alone. Under the act in question the business of banking is authorized to be carried on "by discounting bills, notes and other evidences of debt, and by loaning money on real and personal security," (§ 13) and the rate of interest allowed to be charged for such discounts and loans is limited to 12 per cent, taken in advance. ($33.) The ODV.ous intent of this legislation was to secure to the public business-loans an accommodations at what was then regarded reasonable and not exorbitant rates of interest, and also to protect the shareholders of banks, and the banks themselves, against the risk of loss from indequate securities such as would likely be taken under the tempting influence of high rates of interest, regulated only by the necessities of borrowers and the cupidity of bank directors. If, however, as is claimed on the part of plaintiff, associations organized under this enactment possess the unlimited power of dealing in promissory notes another evidences of debt as property and choses in action, the same as individuals, then, obviously, this restriction upon the rate of interest is a practical nullity, as the bank has the power of evading it at any time by simply buying the paper instead of loaning money upon it. No judicial construction leading to such a result is allowable unless required by some clear and unmistakable provision of the statute. It is not contended, and cannot be, that the power to purchase and traffic in promissory notes, as a species of personal property, belongs to any bank as a necessary incident to its existence, or to the exercise of any of its powers as a bank of circulation and deposit uses the following language: "Nothing can be clearer than that, by the language of the commercial world and the settled practice of banks, a discount by a bank means, ex vi termini, a deduction or drawback made upon its advances or loans of money upon negotiable paper, or other evidences of debt, payable at a future day, which are transferred to the bank. We suppose that the Legislature used the language in this its appropriate sense." The correct proposition, as we understand it, is concisely stated in the syllabus of the case of Niagara County Bank v. Baker, 15 Ohio St. 68, as follows: To discount paper, as understood in the business of banking, is only a mode of loaning money, with the right to take the interest allowed by law in advance." Discounting a note and buying it are not identical in meaning, the latter expression being used to denote the transaction "when the seller does not indorse the note, and it is not accountable for it" (1 Bouv. Law Dict., title Discount, citing Pothier De l'Usure, 128), and it is admitted that such was the character of the transaction in this case. In view of this understanding of the functions of a bank of discount, the legal signification attached to the word "discount," and the distinction between it and the word "purchase," when applied to the business of banking, it is obvious that the power "to carry on the business of banking, by discounting notes, bills, and other evidences of debt," is only an authority to loan money thereon, with the right to deduct the legal rate of interest in advance. This right can be fully enjoyed without the possession of the unrestricted power of buying and dealing in such securities as choses in First National Bank of Rochester v. Pierson. action and personal property. Though, desired information. The obvious purpose of the section was, not to define the powers of these institutions, or the manner in which they might be exercised, but to procure a true and correct statement of their condition, at stated periods, for the use and benefit of the public; and, hence no power can be implied from any of its provisions, unIt follows from these premises that less the implication is rendered necesthe powers claimed cannot be regarded sary and unavoidable, both from the as necessarily incidental to that branch language and the context. All the proof the banking business which pertains visions of this chapter of our laws havto 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 bills of exchange." Promissory the case of Talmage v. Pell, 7 N. Y. 328, notes, however, are not included. the question arose whether a bank orClearly, as is suggested by GARDINER, J., in Talmage v. Pell, 7 N. Y. 328, the maxim expressio unius, etc., is applicable here. If an express grant of power was deemed necessary to enable a bank created under this statute to deal in "gold and silver bullion, coin and bills of exchange," and to invest its funds therein, it is difficult to see why it was not also given as to promissory notes, if it was intended that the bank might ever exercise any such power in respect to them. ganized under that statute had any legal capacity to purchase the negotiable bouds of the State of Ohio, for purposes of gain or profit. After full and exhaustive argument, the Court of Appeals decided, in an opinion covering the whole ground, that it had no such power. In the case of Niagara County Bank v. Baker, decided by the Supreme Court of the State of Ohio (15 Ohio St. 68), the same statute came under review, upon a state of facts presenting the precise point involved in this case, and it was held that a power to carry on the business of banking, by discounting promissory notes, was not a power to purchase such notes, but to loan money thereon. Recognizing the principle of these decisions as correct, it must be regarded as decisive of the present case. In the itemized statement of assets and liabilities, which each bank is required to make quarterly, by section 34 of the statute, it is made the duty of the bank to report, among other things, the aggregate amount of its loans and discounts, and also, separately, its "promissory notes.' No inference can be drawn from this that the notes 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 attemptcu 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 sory notes may be lawfully obtained v. First Nat. Bunk of Brattleboro, and held, and, if knowledge of the 47 Vt. 546; S. C., 19 Am. Rep. 122; Matamount of such kind of paper was thew v. Skinker, 62 Mo. 329; S.C., 21 Am. deemed important for any purpose, Rep. 425; Kansas Valley; Nat. Bank the provision in question was not only v. Rowell, 2 Dillon, 371 (ante, p. 264); pertinent, but absolutely necessary; Hoffman v. John Ilancock Mut. Life for it is apparent that a mere state- Ins. Co., 92 U. S. 161. ment of the total amount of its loans and discounts would not disclose the Upon this ground the order denying a new trial is affirmed. Horne v. Green. HORNE V. GREEN. (52 Mississippi, 452.) Taxation of National bank bills. The circulating notes of National banks are not subject to taxation.* ILL in equity for an injunction to restrain Horne, tax collector BILL 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. Nugent, for Horne. Frank Johnston, for Green. PEYTON, C. J., [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 associations, 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 February 25, 1863, March 3, 1863, June 3, 1864, June 30, 1864. * See, contra, Board of Commissioners v. Elston, ante, p 425. + The opinion of Chief Justice PEYTON was withdrawn 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 SIMRALL. Coffey v. The National Bank of Missouri. COFFEY V. THE NATIONAL BANK OF MISSOURI. (46 Missouri, 140.) Bank - Reorganization under United States law — Effect of change- Measure of damages. 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 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 plaintiff sues in trover to recover the value of a special deposit originally made with the Bank of the State of Missouri, March 20, 1865, consisting of $90.95 in silver and $1,415 in gold coin. It is alleged that the defendants, July 1, 1867, converted the deposit to their own use, the bank at that time having taken its present name and become organized as a National institution. 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 plaintiff. At the trial the plaintiff 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 allegations of the petition, and to show that the reorganization contemplated by the act of March 5th was in fact effected 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 conversion the currency value of the coin, the rate of premium having been agreed on between the parties. The defendants controvert *See Kelsey v. National Bank of Crawford, post; Maynard v. Bank, post. Coffey v. The National Bank of Missouri. the correctness of this instruction, and deny their legal accountability for the acts or negligence of the Bank of the State of Missouri. C. F. Burness, for appellant. Crews & Laurie, for respondent. CURRIER, J. 1. By the act of Congress making provision for a National currency (U. S. Stats. at Large, chap. 106, p. 112, § 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 certificate 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 provisions of said act." Under the legislation of the State and of Congress, the Bank of the State of Missouri became a National banking 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 stockholders or officers of the corporation, nor did it enlarge or diminish 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 liabilities by the change. The change was a transition, and not a |