for the old notes which it secured. In re Freyvogel, (1878) 25 Pittsb. Leg. J. N. S. (Pa.) 109, 9 Fed. Cas. No. 5,115; Worcester Nat. Bank v. Cheeney, (1878) 87 Ill. 602; Howard Nat. Bank v. Loomis, (1879) 51 Vt. 349.

Taking stock of land company as security. -The taking of stock in a corporation whose property consists wholly of real estate as security for a contemporaneous loan is not equivalent to taking a mortgage on real estate as security for a loan. Western Imp. Co. v. Des Moines Bank, (1897) 103 Iowa 455; Baldwin v. Canfield, (1879) 26 Minn. 43. Discounting paper secured by mortgage. The cases distinguish between a loaning of money on real estate and the discounting of a note which is secured by a deed of trust or mortgage. The loan in the latter case is not prohibited and the bank may take an assignment of such security. The right to enforce the security would in any event pass to the bank as an incident to the note without an assignment. Merchants Nat. Bank v. Mears, (1878) 8 Biss. (U. S.) 158, 17 Fed. Cas. No. 9,450; National Bank v. Whitney, (1880) 103 U. S. 99; Union Nat. Bank v. Matthews, (1878) 98 U. S. 621; Mathews v. Abbott, (1878) 2 Hask. (U. S.) 289, 16 Fed. Cas. No. 9,275; Ft. Dodge First Nat. Bank v. Haire, (1873) 36 Iowa 443; Weir v. Birdsall, (1898) 27 N. Y. App. Div. 404; Oldham v. Wilmington First Nat. Bank, (1881) 85 N. Car. 240; Allen . Xenia First Nat. Bank, (1872) 23 Ohio St. 97; Aberdeen First Nat. Bank v. Andrews, (1893) 7 Wash. 261.

Effect of ultra vires Act. Though a loan on real-estate security is prohibited, the securities so taken are not void, and the objection cannot be raised by the parties thereto to defeat their enforcement. The United States only can take advantage of the violation of the statute. Schuyler Nat. Bank v. Gadsden, (1903) 191 U. S. 451; Union Nat. Bank v. Matthews, (1878) 98 U. S. 621; Fortier v. New Orleans Nat. Bank, (1884) 112 U. S. 439, reversing Crocker v. Whitney, (1877) 71 N. Y. 161; Camp v. Land, (1898) 122 Cal.

167; Warner v. De Witt County Nat. Bank, (1879) 4 Ill. App. 305; Waterloo First Nat. Bank v. Elmore, (1879) 52 Iowa 541; State Nat. Bank v. Flathers, (1893) 45 La. Ann. 75; Grand Rapids Fifth Nat. Bank v. Pierce, (1898) 117 Mich. 376; Thornton v. National Exch. Bank, (1879) 71 Mo. 21; Hall v. Farmers, etc., Bank, (1898) 145 Mo. 418; Riesterer v. Horton Land, etc., Co., (1901) 160 Mo. 141; Sutton First Nat. Bank v. Grosshans, (1901) 61 Neb. 581; Scofield v. State Nat. Bank, (1879) 9 Neb. 316; Graham v. National Bank, (1880) 32 N. J. Eq. 804; Atlantic State Bank v. Savery, (1880) 82 N. Y. 291; Simons v. Union Springs First Nat. Bank, (1883) 93 N. Y. 272; Oldham v. Wilmington First Nat. Bank, (1881) 85 N. Car. 240; Winton v. Little, (1880) 94 Pa. St. 64; Wroten v. Armat, (1879) 31 Gratt. (Va.) 228.

Overruled cases.— - Kansas Valley Nat. Bank v. Rowell, (1873) 2 Dill. (U. S.) 371, 14 Fed. Cas. No. 7,611; Fridley v. Bowen, (1877) 87 Ill. 151; Matthews v. Skinker, (1876) 62 Mo. 329; Richards v. Kountze, (1876) 4 Neb. 200; Crocker v. Whitney, (1877) 71 N. Y. 161; Fowler v. Scully, (1872) 72 Pa. St. 456; Woods v. Peoples' Nat. Bank, (1876) 83 Pa. St. 57.

The government alone can take advantage of an ultra vires purchase of real estate by a national bank. Union Nat. Bank v. Matthews, (1878) 98 U. S. 621, reversing (1876) 62 Mo. 329; Reynolds v. Crawfordsville First Nat. Bank, (1884) 112 U. S. 405; Brown v. Schleier, (C. C. A. 1902) 118 Fed. Rep. 981; Mapes v. Scott, (1880) 94 Ill. 379; Hennessy v. St. Paul, (1893) 54 Minn. 219; Merchants Nat. Bank v. Hanson, (1884) 33 Minn. 40; Wherry v. Hale, (1882) 77 Mo. 20.

Conveyance of real estate. There is no restriction as to the power of a national bank to convey real estate, and it may sell its real estate and reserve a mortgage to secure the price, New Orleans Nat. Bank v. Raymond, (1877) 29 La. Ann. 355; Memphis First Nat. Bank v. Kidd, 20 Minn. 234; or it may take chattels in payment. Ottumwa First Nat. Bank v. Reno, (1887) 73 Iowa 145.

This section was amended to read as above by Act of March 14, 1900, ch. 41, sec. 10, 31

Stat. L. 48.

The section originally read as follows: "SEC. 5138. No association shall be organized under this Title with a less capital than one hundred thousand dollars; except that banks with a capital of not less than fifty thousand dollars may, with the approval of

the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants. No association shall be organized in a city the population of which exceeds fifty thousand persons with a less capital than two hundred thousand dollars." Act of June 3, 1864, ch. 106, 13 Stat. L. 101.

Act of June 3, 1864, ch. 106, 13 Stat. L. 102.

Scope of notes. - This section has been construed most often in connection with R. S. sec. 5151 (infra, p. 105), in relation to the individual liability of shareholders for debts. For convenience of the reader the cases on the question of liability, so far as they turn upon the question of ownership or transfer of the shares, are treated hereunder.

TRANSFER OF SHARES.

Control by states. - The negotiability or transferable quality of national bank stock depends upon the laws of the United States, and cannot be controlled by state statutes and decisions. Continental Nat. Bank v. Eliot Nat. Bank, (1881) 7 Fed. Rep. 369; Scott v. Pequonnock Nat. Bank, (1883) 15 Fed. Rep. 494; Bath Sav. Inst. v. Sagadahoc Nat. Bank, (1897) 89 Me. 500; Dickinson v. Central Nat. Bank, (1880) 129 Mass. 279; Central Nat. Bank v. Williston, (1885) 138 Mass. 248; Doty v. Larimore First Nat. Bank, (1892) 3 N. Dak. 9.

The right of an executor to sell stock is governed by the law of the state of the domicil of the bank. Hobbs v. Western Nat. Bank, (1880) 8 W. N. C. (Pa.) 131, 12 Fed. Cas. No. 6,551a. A sale by an executor does not pass a good title where he was not authorized by the state law to make the sale. Weyer v. Franklin Second Nat. Bank, (1877) 57 Ind. 198.

In Hobbs v. Western Nat. Bank, (1880) 8 W. N. C. (Pa.) 131, 12 Fed. Cas. No. 6,551a, it was held that in Pennsylvania, where the by-laws or articles of association of a national bank do not otherwise prescribe, the bank is bound under Act Pa. June 26, 1836, sec. 3, and Act of Pa. April 8, 1873, sec. 11, to recognize a transfer of its stock by a foreign executor duly appointed in another state.

Control by bank. National bank stock is salable and transferable at the will of the owner, like other personal property, and neither the directors nor stockholders can control the right of a stockholder to make an absolute sale of his stock to any person capable of purchasing and holding it and assuming the liability of the transferrer in respect thereto. Johnson v. Laflin, (1878) 5 Dill. (U. S.) 65, 13 Fed. Cas. No. 7,393, affirmed (1880) 103 U. S. 800.

The authority to prescribe the manner of the transfer permits only conditions which are essential to the protection of the association against transfers which are fraudulent

or which may be designed to evade the just responsibility of the stockholder. Johnston v. Laflin, (1880) 103 U. S. 800. It was enacted for the benefit of the corporation, its shareholders, and its creditors only. As to all other parties a transfer good at common law is good under the statute. Scott v. Pequonnock Nat. Bank, (1883) 15 Fed. Rep. 494; McNeil v. New York Tenth Nat. Bank, (1871) 46 N. Y. 325; Doty v. Larimore First Nat. Bank, (1892) 3 N. Dak. 9.

As between the parties to a sale, it is enough that the certificate is delivered by the holder to the purchaser or pledgee with power to transfer the stock on the books of the bank, and either party may compel its registration and transfer. Scott v. Pequonnock Nat. Bank, (1883) 15 Fed. Rep. 497. And the same rule applies where the certificate of stock is delivered as collateral security for a loan. Dickinson V. Central Nat. Bank, (1880) 129 Mass. 279.

This statute is sufficient to authorize a bylaw that the stock shall be transferable only at the bank on the books. Lockwood v. Mechanics Nat. Bank, (1869) 9 R. I. 335.

A provision in the charter and by-laws of a national banking association carried into the certificates of stock as a condition, forbidding a transfer where the holder is indebted to the bank, is repugnant to the National Bank Act, and void and inoperative for any purpose. Buffalo Third Nat. Bank v. Buffalo German Ins. Co., (1904) 193 U. S. 581.

Essentials to transfer. The cashier is the proper officer to make the transfer, and a demand of him is sufficient to render the bank liable for a refusal to make the transfer. Case v. Citizen's Bank, (1879) 100 U. S. 446.

A surrender of the certificate is essential to the issuance by the bank of another certificate upon a transfer made by the apparent owner either in person or by attorney to deprive the real owner of his shares. South Bend First Nat. Bank v. Lanier, (1870) 11 Wall. (U. S.) 369; Johnston v. Laflin, (1880) 103 U. S. 800, affirming (1878) 5 Dill. (U. S.) 65; Bath Sav. Inst. v. Sagadahoc Nat. Bank, (1897) 89 Me. 504.

The rights of a transferee under an unrecorded transfer good at common law are superior to the rights of a subsequent attaching creditor of the transferee without notice. Continental Nat. Bank v. Eliot Nat. Bank, (1881) 7 Fed. Rep. 369; Scott v. Pequonnock Nat. Bank, (1883) 15 Fed. Rep. 494; Hazard v. National Exch. Bank, (1886) 26 Fed. Rep. 94; Bath Sav. Inst. v. Saga

dahoc Nat. Bank, (1897) 89 Me. 504; Sibley v. Quinsigamond Nat. Bank, (1882) 133 Mass. 515; Doty v. Larimore First Nat. Bank, (1892) 3 N. Dak. 9.

The shares, however, cease to be transferable as such after the bank has begun proceedings to wind up its affairs at the end of the original period for which it was organized. Richards v. Attleborough Nat. Bank, (1889) 148 Mass. 187.

Real and apparent owner. -There is a conflict of authority whether the real owner may be treated as a shareholder where his name has not appeared on the books of the bank. It has been said that "the real owner of shares of capital stock of a national banking association may in every case be treated as a shareholder," within the meaning of the statute, Pauly v. State L. & T. Co., (1897) 165 U. S. 619; and this though his name never appeared on the books of the bank in any form, Davis v. Stevens, (1879) 17 Blatchf. (U. S.) 259, 7 Fed. Cas. No. 3,653; Houghton r. Hubbell, (C. C. A. 1899) 91 Fed. Rep. 453; Lucas v. Coe, (1898) 86 Fed. Rep. 972; Horton v. Mercer, (C. C. A. 1895) 71 Fed. Rep. 156; Case v. Small, (1881) 10 Fed. Rep. 722; Laing v. Burley, (1882) 101 Ill. 591; Lesassier v. Kennedy, (1884) 36 La. Ann. 539. Thus, one who bought stock and had it registered in the name of his agent was held liable though there was nothing on the books of the bank to show the real title. Houghton v. Hubbell, (C. C. A. 1899) 91 Fed. Rep. 453, affirming (1898) 86 Fed. Rep. 547. On the other hand, it has been said that by the above section of the Revised Statutes those persons only have the rights and liabilities of stockholders who appear to be such as registered on the books of the association, the stock being transferable only in that way. No person becomes a shareholder subject to such liabilities and succeeding to such rights except by such transfer. Until such transfer the prior holder is the stockholder for all the purposes of law. Richmond v. Irons, (1887) 121 U. S. 58, followed in Robinson v. Southern Nat. Bank, (C. C. A. 1899) 94 Fed. Rep. 964.

In Johnston v. Laflin, (1880) 103 U. S. 800, it was said by Field, J., that "the entry of the transaction on the books of the bank where stock is sold is required, not for the translation of the title, but for the protection of the parties and others dealing with the bank, and to enable it to know who are its stockholders entitled to vote at their meetings and receive dividends when declared. It is necessary to protect the seller against subsequent liability as a stockholder, and perhaps also to protect the purchaser against proceedings of the seller's creditors."

"The word invested' [as used in section 5151] plainly has reference to those who originally or by subsequent purchase become the real owners of the stock, and cannot refer to those who never invested money in the shares, but only received the certificates of stock, or it may be the legal title thereto, as collateral security for debts or obligations already or to be contracted." Per Harlan, J., in Pauly v. Statę L. & T. Co., (1897) 165 U. S. 621.

5 F. S. A. -7

97

A transfer of shares in trust to enable the transferee to become a director of the bank does not release the transferrer from liability as a shareholder. Witters v. Sowles, (1887) 32 Fed. Rep. 130.

The purchasers of stock from a bank president who had certificates issued in their names and the transfers made on the books of the bank are held to have both the rights and liabilities of shareholders, though the president did not cancel the old certificates, but sold them, and thereby created an overissue. Davis v. Watkins, (1898) 56 Neb. 288.

Apparent holder. It is generally held that any person who holds himself out as the owner of shares by allowing himself to appear as the registered owner on the books of the bank may be treated as a shareholder. Rankin v. Fidelity Ins., etc., Co., (1903) 189 U. S. 247; Pauly v. State L. & T. Co., (1897) 165 U. S. 606; Turnbull v. Payson, (1877) 95 U. S. 421; Finn v. Brown, (1891) 142 U. S. 56; Anderson v. Philadelphia Warehouse Co., (1884) 111 U. S. 479; Irons v. Manufacturers' Nat. Bank, (1886) 27 Fed. Rep. 591; Lewis v. Switz, (1896) 74 Fed. Rep. 381; Horton v. Mercer, (C. C. A. 1895) 71 Fed. Rep. 153; Case v. Small, (1881) 10 Fed. Rep. 722; Stufflebeam v. De Lashmutt, (1897) 83 Fed. Rep. 449; Scott v. Latimer, (C. C. A. 1898) 89 Fed. Rep. 843; Keyser v. Hitz, (1890) 133 U. S. 138; Davis v. First Baptist Soc., (1877) 44 Conn. 582, 7 Fed. Cas. No. 3,633; Kerr v. Urie, (1897) 86 Md. 72; Weyer v. Franklin Second Nat. Bank, (1877) 57 Ind. 198; Koons v. Jeffersonville First Nat. Bank, (1883) 89 Ind. 178.

An agreement by an officer of the bank that if the defendant would buy certain shares of the bank, and let them stand in his name, the bank would buy the shares from him at any time he may so wish, is void, since a national bank cannot purchase its own stock; and such agreement cannot be set up to relieve the apparent holder of such stock from liability. Bowden v. Santos, (1877) 1 Hughes (U. S.) 158, 3 Fed. Cas. No. 1,716.

One who holds stock merely as a trustee for the bank cannot set up that fact to relieve himself of liability. Lewis v. Switz, (1896) 74 Fed. Rep. 381.

In Wheelock v. Kost, (1875) 77 Ill. 296, it appeared that a national bank transferred shares of its stock to the defendant as collateral security for loans by him to the bank, and as an indemnity against his liability on an accommodation note made by him for the bank. In an action against him for an assessment it was held that whatever might be his relation to the bank, so far as its creditors were concerned he was liable as a stockholder.

A certificate of stock may be shown to have been issued to the apparent owner as collateral security for a loan where it does not appear that there was any transfer on the stock register or that the apparent owner had participated in any stockholders' meeting or in any declared dividends. Williams v. American Nat. Bank, (C. C. A. 1898) 85 Fed. Rep. 376.

A person to whom stock is transferred on the books of the bank without his knowledge Volume V.

or consent has a right to repudiate the transaction, Finn v. Brown, (1891) 142 U. S. 56; Keyser v. Hitz, (1890) 133 U. S. 149; yet he is presumed to be the owner of the stock, and the burden is upon him to show that he was not such owner. Finn v. Brown, (1891) 142 U. S. 56, wherein it was held that a person to whom fifty shares of stock had been transferred on the books of the bank without his knowledge or consent, and who was subsequently elected a director of the bank and its vice-president, and acted as such at a time when he had no other stock, should be conclusively presumed to be the owner of such stock from the time of his appointment as director and vice-president.

So also the subsequent approval or ratification of such a transfer or an acceptance of any of the benefits arising from the ownership will make the person liable as a shareholder with such responsibility as the law imposes thereon, and it is immaterial whether a new certificate of stock is issued or not. Keyser v. Hitz, (1890) 133 U. S. 149, affirming (1883) 2 Mackey (D. C.) 496.

A person whose name appears on the bank books as a stockholder cannot be held liable as such where it also appears from the bank's books that both at the time of the sale and since that time the seller's entire holdings were pledged to others. Burt v. Richmond, (1901) 107 Fed. Rep. 387.

Necessity of transfer on books of bank neglect to have transfer made. - The individual liability of a stockholder continues until there is a transfer of the stock on the books of the bank. Irons v. Manufacturers' Nat. Bank, (1886) 27 Fed. Rep. 591, affirmed (1887) 121 U. S. 27; Matteson v. Dent, (1900) 176 U. S. 521; Robinson v. Southern Nat. Bank, (C. C. A. 1899) 94 Fed. Rep. 964. And this is so even where he has in good faith previously sold it and delivered to the buyer the certificate of stock with the power of attorney in such form as to enable the transfer to be made on the books of the bank (Richmond v. Irons, (1887) 121 U. S. 27; Price v. Whitney, (1886) 28 Fed. Rep. 297), relying upon the promise of the buyer to have the transfer made, Whitney v. Butler, (1886) 118 U. S. 655. Or where the certificate and power of attorney are delivered to the bank without communicating to its officers the name of the buyer. Whitney v. Butler, (1886) 118 U. S. 655; Man v. Cheeseman, (1874) 16 Fed. Cas. No. 9,002a.

And so a seller of stock failing to have the transfer made continues liable as a stockholder, though it was sold to a director who promised to have the stock transferred. Schofield v. Twining, (1904) 127 Fed. Rep. 486.

But the transferrer will not be held responsible for the neglect and carelessness of an officer of the bank where he has done all that a prudent man should do. Whitney v. Butler, (1886) 118 U. S. 655. And though no formal transfer is made on the books of the bank, he will be released from liability where he has taken the precaution after the sale of his stock to surrender the certificates therefor to the bank either in person or accompanied by a power of attorney, which would

enable the bank officers to make the transfer on the register. Earle v. Carson, (1903) 188 U. S. 44, affirming (C. C. A. 1901) 107 Fed. Rep. 639; Matteson v. Dent, (1900) 176 U. S. 521; Briggs v. Spaulding, (1891) 141 U. S. 153; Whitney v. Butler, (1886) 118 U. S. 655; Hayes v. Shoemaker, (1889) 39 Fed. Rep. 319; Hayes v. Yawger, (1889) 39 Fed. Rep. 912; Young v. McKay, (1892) 50 Fed. Rep. 394; Earle v. Coyle, (1899) 95 Fed. Rep. 99; Cox v. Elmendorf, (1896) 97 Tenn. 519. And this is so even though the officer to whom the certificate and power of attorney are delivered, and who has the authority to make the transfer is the purchaser of the stock. Briggs v. Spaulding, (1891) 141 U. S. 153; Earle v. Coyle, (1899) 95 Fed. Rep 99; Snyder v. Foster, (C. C. A. 1896) 73 Fed. Rep. 136; Cox v. Elmendorf, (1896) 97 Tenn. 518. But where anything occurs that would justify the transferrer in believing or even suspecting that the transfer has not been promptly made on the books, he is perhaps wanting in due diligence where he does not by inspection of the transfer books ascertain the facts. Whitney v. Butler, (1886) 118 U. S. 662.

Transfer in pledge. One who has taken stock in pledge as collateral security for a loan cannot be charged with liability as a shareholder unless it is made to appear that he has either become the owner of the shares in fact or has held himself out to be the owner and thereby estopped himself to deny liability as such. Rankin v. Fidelity Ins., etc., Co.. (1903) 189 U. S. 249, affirming (C. C. A. 1901) 108 Fed. Rep. 475.

One to whom stock has been transferred in pledge or as collateral security for money loaned is liable as a stockholder if by his direction or with his knowledge the shares are placed on the books of the bank in such a way as to imply that he is the real owner. Rankin v. Fidelity Ins., etc., Co., (1903) 189 U. S. 247; Pullman v. Upton, (1877) 96 U. S. 328; Germania Nat. Bank v. Case, (1878) 99 U. S. 628; Bowden v. Farmers', etc., Bank, (1877) 1 Hughes (U. S.) 307, 3 Fed. Cas. No. 1,714; Moore v. Jones, (1877) 3 Woods (U. S.) 53, 17 Fed. Cas. No. 9,769; Wheelock v. Kost, (1875) 77 Ill. 296; Hale v. Walker, (1871) 31 Iowa 344; Magruder v. Colston, (1875) 44 Md. 349. And this is so though the loan has been paid at the time of the suspension of the bank, and though he had delivered to the borrower the certificate with power of attorney to retransfer the stock. Bowden v. Farmers', etc., Bank, (1877) 1 Hughes (U. S.) 307, 3 Fed. Cas. No. 1,714. This is upon the ground that by allowing his name to appear upon the stock list as owner he represents that he is such owner, and he will not be permitted after the bank fails, and when an assessment is made, to assume any other position as against creditors. Pauly v. State L. & T. Co., (1897) 165 U. S. 606; Tourtelot v. Stolteben, (1900) 101 Fed. Rep. 362. The courts have placed his liability upon three grounds: That he is estopped from denying his liability because he has vol. untarily held himself out to the public as the owner of the stock; that by taking the lega

title he has released the former owner from liability; and that after having taken the apparent ownership, and become entitled to the privileges of a stockholder, it would be unreasonable to release him from the responsibilities of a stockholder. Robinson Southern Nat. Bank, (C. C. A. 1899) 94 Fed. Rep. 967.

v.

The delivery to the proper officer of the bank in its banking house, at the place where transfers are made, of the stock certificate, with an adequate power of attorney to make the transfer and a request that the stock be transferred, where the officer of the bank stated that the transfer would be made, is sufficient to relieve the transferrer from liability, though the transfer was not made as requested and the transferrer was ignorant of such fact. Earle v. Carson, (1903) 188 U. S. 42, affirming (C. C. A. 1901) 107 Fed. Rep.

639.

A pledgee, however, who holds the stocks solely as collateral security for a debt due to him from the real owner, cannot be held liable as owner when his name has never appeared upon the books of the bank. Anderson v. Warehouse Co., (1884) 111 U. S. 479; Robinson v. Southern Nat. Bank, (1901) 180 U. S. 295; Welles v. Larrabee, (1888) 36 Fed. Rep. 866. And it has been so held though seeking to avoid responsibility as a stockholder he causes such shares to be transferred on the books to a third person under an agreement to hold them as security for the debt. Hayes v. Fidelity Ins., etc., Co., (1900) 105 Fed. Rep. 160, affirmed (C. C. A. 1901) 108 Fed. Rep. 475, (1903) 189 U. S. 247; Pauly v. State L. & T. Co., (1897) 165 U. S. 606; Anderson v. Warehouse Co., (1884) 111 U. S. 479.

Causing the stock to be transferred to an employee, and paying an assessment levied upon the shareholder where the pledgor is still considered the owner of the stock, will not make the pledgee liable as a shareholder. Rankin v. Fidelity Ins., etc., Co., (1903) 189 U. S. 249, affirming (C. C. A. 1901) 108 Fed. Rep. 475.

The transferee will not be held liable as a stockholder where in good faith he has the transfer made, accompanied with the entry as pledgee," as collateral," as trustee," or "as cashier," and he actually and in good faith holds the stock in such relation. Pauly

66

99 66

State L. & T. Co., (1897) 165 U. S. 606; Rankin v. Fidelity Ins., etc., Co., (1903) 189 U. S. 247; Germania Nat. Bank v. Case, (1878) 99 U. S. 628; Beal v. Essex Sav. Bank, (1895) 33 U. S. App. 101; Welles v. Larrabee, (1888) 36 Fed. Rep. 866; Lucas v. Coe, (1898) 86 Fed. Rep. 972; Frater v. Old Nat. Bank, (C. C. A. 1900) 101 Fed. Rep. 391: Baker v. Old Nat. Bank, (1898) 86 Fed. Rep- 1006. In such case the transferrer remai ns the actual owner of the stock, and is liable as a shareholder. Anderson v. Philadelphia Warehouse Co., (1884) 111 U. S. 479. Fraudulent transfer of stock. The validity of a sale of stock is to be tested by the good faith of the seller and not upon the unknown financial condition of the buyer. The fact that the purchaser of stock was insolvent

will not make the sale fraudulent as to the creditors of the bank where at the time the seller had no knowledge of that fact. Earle v. Carson, (1903) 188 U. S. 54, affirming (C. C. A. 1901) 107 Fed. Rep. 639.

"Taking into view the whole Act, the provision conferring the power to transfer stock; the one already referred to, which avoids contracts made in contemplation of insolvency; the authority conferred upon the comptroller to constantly test the condition of a national bank; the right given him to suspend the business of such bank when the exigencies of its situation require it; and the double liability imposed on the registered stockholders, - we think it results that the power to transfer stock like other personal property is not limited by the mere fact that at the time of the transfer the bank, which was a going concern, was insolvent in the sense that its assets if liquidated would not discharge its liabilities, unless it be shown that the seller was aware of the fact, and had sold his stock to avoid the double liability which was impending." Earle v. Carson, (1903) 188 U. S. 48.

But where the transferrer, possessed of information showing that there is good ground to apprehend the failure of the bank, colludes and combines as in this case with an irresponsible transferee with the design of substituting the latter in his place and thus leav ing no one with any ability to respond for the individual liability imposed by the statute, in respect of the shares of stock transferred, the transaction will be decreed to be a fraud on the creditors and [he] will be held to the same liability to the creditors as before the transfer." Bowden v. Johnson, (1882) 107 U. S. 261.

"The rule on this subject was clearly stated in the passage which has already been excerpted from Bowden v. Johnson, (1882) 107 U. S. 251, where in declining to follow the English rule upholding a real or out-and-out sale even if the purpose was to avoid impending liability, the court said that the transfer must not be to a person known to be irresponsible, and collusively made with the intent of escaping liability and defeating the rights given by statute to creditors,' a principle which has been since expressly reiterated in Matteson v. Dent, (1900) 176 U. S. 521." Earle v. Carson, (1903) 188 U. S. 55.

Where the real owner of shares transfers them to another person or causes them to be placed on the books of the association in the name of another person with the intent simply to evade the responsibility imposed by the statute, such owner may be treated as a shareholder. Pauly v. State L. & T. Co., (1897) 165 U. S. 606; Matteson v. Dent, (1900) 176 U. S. 521.

The transferrer is not relieved from liability as a shareholder where with knowledge of the failing condition of the bank and for the purpose of escaping liability he causes the transfer to be made on the books of the bank to a person financially irresponsible with the understanding with him that the stock shall be retransferred on request. Germania Nat. Bank v. Case, (1878) 99 U. S. 628.