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which provides that the guarantee of the debt of another must be in writing.

LIABILITY FOR REPRESENTATIONS CONCERNING THE VALUE OF STOCK.

A director who makes false and misleading statements concerning the value of the stock of his bank, knowing such statements to be false, and for the sole purpose of influencing persons to purchase the stock, will render himself liable to such persons if loss is sustained thereby. Or if he issues circulars or prospectuses regarding the value of the stock, knowing them to be untrue, for the purpose of deceiving the public and inducing them to buy the stock, he will be held responsible for injuries thus sustained.

OBLIGATIONS OF A DIRECTOR WHEN PURCHASING STOCK OF HIS BANK.

A director of a bank in negotiating with a stockholder for the purchase of his stock is not obliged to communicate to him his knowledge of the value of the stock, and therefore is not liable if he should purchase the stock below the regular market price.

LIABILITY FOR FRAUD AND EMBEZZLEMENT.

Directors are, of course, personally liable as individuals, and not jointly as directors, for the willful breach of their trust by embezzle

ment or misapplication of the funds of the bank and by fraud and deceit whereby the bank sustains pecuniary loss. For instance, a director would be liable as trustee for wrongfully appropriating the bonds of the bank to his own use, and for aiding in the passing of a resolution which enabled him to do so.

WHEN LIABLE FOR THE FRAUD AND EMBEZZLEMENT OF OFFICERS.

Directors are liable for the misconduct and fraud of any of their subordinate officers, employes, or agents, when it is shown that such fraud and misconduct was possible through the willful neglect and inattention of the directors, or could have been prevented had they given ordinary and proper care to their duties. Directors must not only act in good faith, but must use ordinary care and discretion in the management of the bank. They must particularly look to the proper disbursement of the funds intrusted to them, and if the funds are in any way appropriated for any other purpose than that for which they were intended by the directors, or by any of their agents or employes, through their inattention to business, they will be compelled to answer for it.

Directors, however, are not always held responsible for the wrong-doing of their officers. The mere fact of their being directors at the time is not in itself sufficient to establish their

liability. They must have had some knowledge, or participated either directly or indirectly in the wrong-doing, or must have been guilty of mismanagement or the violation of some law. In a case where a stockholder was represented as a director of a bank, and advertised as such, but had never participated in any way in the management of the bank, it was held that he was not liable for the fraud of the other directors.

PRESUMPTION OF KNOWLEDGE OF WRONG-DOING.

Before they can be held liable for the misdoings of their officers, directors must have had some knowledge of their acts; but under certain circumstances such knowledge would be attributed to them, although they may not have had any actual knowledge of misconduct. For instance, if it were shown that had the directors used ordinary skill and caution in the performance of their duties, the wrongful acts would have been brought to light, then actual knowledge would be presumed.

DIRECTORS' LIABILITY AS AFFECTED BY STATUTE OF LIMITATIONS.

What protection is afforded bank directors by the statute of limitations is concisely stated by Mr. Bolles: "When the liability of a director is special, in other words is created by statute or charter, the ordinary statute of

limitations does not apply to him. Nor does a statutory limitation bar the claim of stockholders which springs from a trust relation existing between them, and when the director of an insolvent bank fraudulently receives from the cashier, without the knowledge or authority of the directors, bills and notes belonging to the bank, the statute of limitations will not bar a recovery. But it may bar a recovery for shares purchased on false representations. Thus, the directors of a bank made false representations concerning its condition, whereby new subscribers were led to purchase a new issue of shares. After its true condition became known the stockholders, old and new, united in an assessment to pay the bank's indebtedness. More than six years after the discovery of the fraud, the new stockholders filed a bill against the others praying for an accounting and the repayment of the money paid for the shares, and to discharge the debts of the bank. The statute of limitations barred the proceedings."

CRIMINAL LIABILITY OF DIRECTORS

The offenses for which directors of national banks may be held criminally liable are given under section 5209 of the National Bank Act, which says: "Every president, director, cashier, teller, clerk, or agent of any association who embezzles, abstracts, or willfully 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, bond, draft, bill of exchange, mortgage, 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 individual person, or to deceive any officer of the association or any agent appointed to examine the affairs of any such association; and every person who with like intent aids or abets any officer, clerk, or agent in any violation of this section, shall be deemed guilty of

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