acted upon by third parties, they are liable to respond for the injury done to the one defrauded thereby, and that the liability provided for, in the National Banking Act cannot be deemed to preclude the right to maintain a common-law action for deceit for such false and fraudulent representation." Prescott v. Haughey, 65 Fed. Rep. 653, 659, which distinguishes Bailey v. Mosher, 11 C. C. A. 304, 63 Fed. Rep. 488; Delano v. Case, 121 Ill. 247, 12 N. E. Rep. 676; 3 Thomp. Corp. § 4304. The allegations and proof as to declaring dividends out of deposits, and allowing an official to borrow more than one-tenth of the capital stock, are not the basis of this action. If they were, then the receiver should have brought the action; but they are merely evidential to show the negligence whereby the plaintiff, not the bank, was injured, and to support her action for the injury to herself.

2. "That the plaintiff cannot recover unless the jury sha!! believe from the evidence that the defendants participated in the fraudulent statement made by other officers of the bank; and unless the plaintiff has shown such participation, the jury will answer the second issue, 'No.'" Refused, and the defendants excepted. There was no error in refusing this prayer. The ground of recovery is not the participation of the defendants in fraud, but that, by their gross negligence, they permitted the statements to be put forth upon their authority showing the bank to be amply solvent, with large surplus, and the declaration of 4 per cent. semi-annual dividends out of profits, when there had been no profits, as to all of which the defendants should have been informed. It was in evidence, and not denied, that all the directors were present when the dividend of January, 1890, was declared, and Starr alone voted "No," as to whom a non-suit was entered. As was said in Solomon v. Bates, 118 N. C. 311, 24 S. E. 478, and reaffirmed in same case, 118 N. C. 321, 24 S. E. 746, and Caldwell v. Bates, 118 N. C. 323, 24 S. E. 481: "If false and fraudulent statements of the condition of the corporation are put forth under the authority of the directors, it is not necessary that they should know them to be such. It is their duty to know them to be true, and they are liable for damages sustained by any one dealing with the corporation, relying upon the truth of such reports." 1 Morse, Banks, §§ 132, 137;

Kinkler v. Junica, 84 Tex. 116, 19 S. W. 359. So salutary and just a rule is supported by ample authority elsewhere; and, if it were not, it is correct in itself, and a just protection, to which the public are entitled. It is not necessary, as the defendants asked the court to instruct the jury, that these defendants "participated in the fraudulent statements; but, if the statements were given to the public by the authority of the board of directors (which is not controverted), and were in fact false and fraudulent, and the plaintiff relying thereon (as she had a right to do), was induced to buy stock, or had made deposits whereby she suffered injury, all the directors are liable whether they "participated" in the fraud or not. Arnison v. Smith, 41 Ch. Div. 348; 3 Thomp. Corp. § 4108.

§ 116. Compensation of directors.

The general rule is that directors of banks are acting as trustees and as such are supposed to serve without compensation.

A governing statute may allow them to regulate their own compensation; but in the absence of a statute or by-law their services are supposed to be gratuitous.

They cannot recover compensation for doing what they should have done as directors.39

They cannot vote themselves salaries. Such a resolution is veid, as being a promise without a consideration.40

They cannot vote themselves a compensation for services already performed.a1

They may recover for services, however, which are rendered outside of their duty.42

It is claimed they may recover for services rendered prior to organization.43

Such services may be recovered for if authorized by a majority of the shareholders.*

39 Brown v. Valley View Mining Co., 127 Cal. 630, 66 Pac. 424; Brown. Republican Mountain Silver Mines, 17 Colo. 421, 30 Pac. 66; Brown v. Beck, 83 Ga. 471, 10 S. E. 121.

40 Gardner v. Butler, 36 N. J. Eq. 702.

41 Blue r. Canfield Nat. Bank, 145 Ind. 518, 43 N. E. 655.

44

42 Bassett r. Fairchild, 132 Cal. 637; Fitzgerald, etc., Coast Co. v. Fitzgerald, 137 U. S. 98.

43 Mobile Branch Bank r. Collins, 7 Ala. 95: Allerton First Nat. Bank r. Hoch, 89 Pa. St. 324.

44 Tift r. Quaker City Nat. Bank, 141 Pa. St. 550.

CHAPTER IX.

THE PRESIDENT.

117. General qualifications.

The executive business of a bank is conducted by its president, vice-president, cashier and secretary. They having been duly elected or appointed by the board of directors, as the law may require, assume the management and conduct its affairs.

The president of a bank should be educated. He must have obtained at least a liberal education. He should be able to speak and write the English language fluently and correctly.

It may not be considered necessary in the successful management of a bank, that the president or managing officer should have graduated from a university, but it cannot be said of a president of a bank who has matriculated that his attainments and distinction as a scholar are a detriment to him in his profession as a banker. The deeper his education. and training are laid in youth, the broader his comprehension and ability to preside in his profession. He should be able to speak well that he may be correctly understood, and write well, so that the meaning of his words cannot be misconstrued. To be concise and accurate in his speech and correspondence forms a very important part in the management of a large bank. There are numerous instances where the correspondence has been loosely prepared, possibly having a double meaning, which has brought litigation and loss to the bank. It must be borne in mind that the statements either verbally made or reduced to writing by an officer of the bank, while in charge of its business,, are binding upon it; and the stockholders may be held liable. An officer being in charge of the affairs of a bank, and directing its business, is sufficient presumption of authority to bind the bank; and the representations of the president of a bank made in transacting its business are admissible in evidence against the bank, but statements made by him away from the bank, and in which the bank has no interest, are not admissible in evidence against the bank.

The duties of a president, as his office indicates, are executive. He should preside at all meetings of the board of directors; and upon such occasions it frequently becomes necessary to formulate an important document, to draft a preamble or resolution. These meetings are usually, if not always, secret sessions; and the business is therefore secret and the president of a bank should at least have such an education as would qualify him for this work.

It is an erroneous opinion which is held by some, that a preparation or education for the profession in the management of a bank is unnecessary. To say that a banker should have some preparation for his work" is not a sufficient qualification, or the standard, which is required in the race for prominence and success. "Some preparation" does not qualify the mechanic in the construction and building of the perfect engine, which hauls the great passenger trains that are filled with precious lives.

A banker is like the educated and trained pilot, and, when a financial storm sweeps over the country, he should be at the helm; his training and preparation for his work will then prove a storehouse of wealth, and his bank, otherwise properly guarded, cannot be foundered.

To be the trustee of the stockholder and the guardian of the people's money is a responsible position, and ignorance should not be crowned as manager to execute such trusts.

It is no uncommon thing to learn after a bank has failed that it was caused by the officers using and speculating with the bank's funds, or permitting the use of the same by others in violation of law.

I believe the records will justify the statement that 50 per cent. of all bank failures are brought about in this way. A bank officer should not be a speculator, or become directly or indirectly a partner in speculations in connection with his depositors. If he is engaged in outside interests there is serious danger that he will neglect the interests of the bank. A banker who is a speculator, without any previous thought of wrong or injury to the bank, becomes himself a heavy borrower of the bank's funds. There being no restriction or limitation as to the amount he may borrow, he finds it a very easy matter to give his note and take the money. He has all confidence in

his ability to replace the accommodation at any moment; but he seldom calls upon himself to pay back money so easily borrowed, and reverses set in. His judgment proved bad, and finally a general depression sweeps over the country and the bank fails. What is the cause?

The practice is dangerous. It should be stopped. There is precedent after precedent where bank officers have granted to themselves unlimited credit in their own bank, or to others with whom they were interested in business, which caused ruin to depositors and stockholders alike.

It is said that no law is a barrier to those who intend to disobey it, but there is no criminal who does not contemplate the force and effect of the law, and if a strict limitation prohibiting such accommodations were upon the statute books, it would be the means of saving many banks from ruin and future insolvency. It is argued by some that such strict limitations should not be enforced against the bank officers by legislative action, but should be placed in the hands of the directors. That they are better qualified to determine the ability of the borrower to repay, than the law which would fix by arbitrary legislation a limit upon his credit. Upon this question there are various and interesting opinions, from our best financiers; but many leading bankers who have given this subject unprejudiced consideration are almost unanimously in favor of restricting, or limiting, the amount an officer or other parties can borrow from his own bank. Several States have put themselves on record and have enacted such a law. The National Banking Law has never been construed upon this question to operate as a barrier to business. Neither has it had the effect to deter honest and intelligent men from serving. as directors.

The president of a bank should be qualified to preside over the bank, and he should not delegate his responsibility or authority to the cashier and reply, if disaster comes (as it may if he fails in the performance of his trust), "I could not prevent the crisis. The cashier failed to give me notice of the dangerous condition of matters until it was too late." It is his duty to know the condition of the bank, and when the storm is on he should be at the helm. To be the trustee of