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plication must be negatived in the indictment." The making of an injudicious loan is said not to be a criminal offense under this section of the law.12 A definition of the offense was attempted in the statement that it meant knowingly applying the funds of the bank in a manner forbidden by statute, whether the officers of the bank knew of the act or not.13 But this definition is not correct, for it is held that neither the declaration of an illegal dividend, nor a conspiracy alleged to have for its object the declaration of an illegal dividend, are offenses under this statute; nor is the conversion of the funds of the bank in making an illegal purchase of its own shares," nor in making an improvident loan to an officer,16 nor the permission to an officer to overdraw his account with knowledge on the part of the association." It seems that any act ratified by the association cannot be a misapplication of its funds.18 It is said to mean a misapplication of the funds to the use of some other person than the banking association.19 The result is that it is very difficult to tell what this statute means.20 If the president of a bank should unload upon it worthless loans, which the board of directors should accept, he would be guilty of an offense under this statute. drawing with knowledge that the checks are to be fraudulently paid and concealed by the teller would be an offense.22 A cashier making loans to himself upon the notes of insolvent makers 23 commits a violation of the statute. But the

Over

11 Both cases last cited apply in drawal or conversion of the funds. principle. Renewals are not a conversion.

12 United States v. Harper, 33 Fed. Mohrenstecker v. Westervelt, 87 R. 471. Fed. R. 157.

13 United States v. Taintor, 11 Blatchf. 374.

20 For matters in regard to the indictment see Claasen v. United

14 United States v. Britton, 108 States, 142 U. S. 140; Evans v. United

U. S. 199.

15 United States v. Britton, supra. 16 United States v. Britton, supra. 17 United States v. Warner, 26 Fed. R. 616.

18 United States v. Warner, supra. 19 United States v Britton, 108 U. S. 199. There must be a with

States, 153 U. S. 584; Batchelor v.
United States, 156 U. S. 426.

21 Agnew v. United States, 165 U. S. 36.

22 United States v. Kenney, 90 Fed. R. 257.

23 United States v. Youtsey, 91 Fed. R. 864.

mere payment of checks upon overdrafts does not prove necessarily a fraudulent appropriation. But at any rate the dicta in United States v. Britton have been considerably modified.

94. Other offenses concerning national banks.-The wrongful certifying of a check where the depositor has not sufficient funds in the bank to meet the check is an offense, but a secured overdraft may be money on deposit.' The forgery of a promissory note for the purpose of deceiving the bank examiner is not a forgery to defraud the United States under section 5418 of the Revised Statutes.2 For technical matters in regard to the form of an indictment for wrongfully certifying a check, the cases referred to in the note are authorities."

ARTICLE II.-REPRESENTATION OF BANK BY ITS OFFICERS.

§ 95. The general principle. The law relating to the powers of bank officers, or indeed any corporate officers, is but a development of the law of principal and agent The rule is that the agent can bind his principal in regard to any act done within the scope of the agent's authority. The extent and scope of the authority in the case of a bank officer depend upon the provisions of the general law, the provisions of the special charter if there be one, the provisions of the articles of agreement, where the organization is made thereby, the nature and character of the office, the general usages and customs, which are a part of the business of banking, which define the power and authority annexed to a particular office, and the power and authority given to a particular office by a particular course of dealing in a particular bank. Certain modifications arise from a condition

24 Dows v. United States, 82 Fed. R. 904.

1 Potter v. United States, 155 U. S. 438.

2 Cross v. North Carolina, 132 U. S. 131.

3 United States v. Potter, 56 Fed. R. 83; Potter v. United States, 155 U.S. 438.

of fact when the officer is acting in regard to his own private interests as well as those of the bank, and when the same officer is acting for some other person or corporation dealing with the bank, and when the third person has or has not knowledge of the want of authority. The subject is further modified by the principles of acquiescence and delay in objecting to an officer's unauthorized act, or a ratification thereof by the corporation. The questions of admissions made by corporate officers as to corporate transactions require examination; and finally the subject of notice of a fact given to a corporation through its officers-a subject which is also modified by the fact that a corporate officer may be interested in a transaction in regard to which notice is sought to be imputed to the bank through that officer's knowledge. These various subjects will be examined in

order.

§ 96. General scope of authority.-The officers of a bank are held out to the public as having the general power to bind the bank according to the powers of the office as fixed by the general law and by the charter or the instru ment that stands therefor,' as well as by the by-laws of the bank when they are known to the person dealing with the bank. They are also represented by the bank to have the powers which are annexed to the particular office by the general usages and course of business applying to banks.3 This general scop of authority the bank may modify as it pleases by reducing the power of its corporate officers, unless forbidden to do so by the general law and the governing instruments of incorporation; and any one who has knowledge of the corporate agent's lack of authority in doing a particular act cannot rely upon that act as against the corporation.*

'Reed v. Powell, 11 Rob. (La.) 98. 2 Mechanics' Bank v. Smith, 19 Johns. 115.

3 Lloyd v. West Branch Bank, 15 Pa. 172; Miner v. Mechanics' Bank, 1 Pet. 46; Eastman v. Coos Bank, 1 N. H. 23; Neiffer v. Bank of Knox

ville, 1 Head, 162; First Nat. Bank v. Kimberlands, 16 W. Va. 555. This is so even in quo warranto without a special restriction. State v. Comm. Bank, 5 Smedes & M. 218. 4 Savannah Bank v. Hartridge, 73 Ga. 223; Stallcup v. Nat. Bank of

Persons dealing with a corporation are presumed to know the powers given to its agents by the general law and by the governing instruments of incorporation, the special charter or the articles of agreement. They are presumed to know the powers which general custom and usage have given to a particular officer in the bank. Granted, however, that the person dealing with the bank has no notice of the lack of the agent's power, and that the person claimed to be acting for the corporation is really its agent, for of course the bank is not responsible for the act of a person who is not acting for it, he may rely upon the agent's act, if it is not contrary to law and is within the general scope of the agent's usual authority. If the agent is forbidden by law to do the act, the person dealing with the corporation can have a remedy only as pointed out in sections 32 and 27, ante, unless he can show a ratification or estoppel. If the act be merely beyond the corporate power, the remedy is to be sought according to the rules of section 33, ante, but modified by matters of acquiescence, delay or ratification by the corporation. It is needless to say that a general law which imposes a disability to act upon corporate officers renders the act unlawful and void. But in connection herewith it is to be noticed that statutes or charters which require all bills, bonds, notes and all other contracts or agreements of a bank to be signed by one officer and countersigned by another are held upon principles of business necessity not to apply to the acts usually performed by the cashier.10 The

Republic, 15 N. Y. St. R. 39; Smith the protest (May v. Jones, 88 Ga. v. Lawson, 18 W. Va. 212.

5 This is the principle which governs the doctrine of ultra vires. See $33, supra.

308), or for a cashier's slander. Etting v. Comm. Bank, 7 Rob. (La.) 459. 8 See § 105, 106, 109, infra.

9 Atkinson v. Roch. Printing Co.,

6 Farmers' Bank v. Troy Bank, 1 114 N. Y. 168, a decision which con

Doug. 459.

7 Thacher v. State Bank, 5 Sandf. 121. On this ground the bank is not responsible for the act of a notary hired by it to protest a note, in making a malicious publication of

tains some very erroneous dicta on the ruling of trust funds.

10 Mechanics' Bank v. Bank of Columbia, 5 Wheat. 326; Northern Bank v. Johnson, 5 Cold. 88; Merchants' Bank v. Central Bank, 1 Ga.

old theory was that the act of an officer in doing something forbidden by law would not make the bank responsible unless the corporation adopted or ratified the act; " but this theory is wholly exploded as to torts committed in the corporation's business, and the doctrine of the Supreme Court of the United States is that an act prohibited by law, where it is relied upon as a contract, cannot be ratified by the corporation or made the basis of an estoppel.12

97. Board of directors.- A board of directors is not an adjunct of a private bank, unless it be a joint-stock company, but sometimes a private bank has what is called a discount or loan committee. A board of directors, it has been said, is not necessary to a corporation,' but it is believed that now no corporation for banking purposes exists without a body of officers corresponding thereto, whether they are called directors, governors or trustees. The directors acting as a board are charged with all the corporate power. They may deal with the bank's property and transfer it in whole or in part. They may release its obligations and compromise its claims. They may loan its funds' and borrow

418; Casey v. McDonald, 7 Ga. 84. And a bank may contract through other officers. Dana v. Bank of St. Paul, 4 Minn. 385.

bank. Louisiana State Bank v. Senecal, 13 La. 525; Hughes v. Bank of Somerset, 5 Litt. 45; Harper v. Calhoun, 7 How. (Miss.) 203; East River

11 Clark v. Metropolitan Bank, 3 Bank v. Hoyt, 41 Barb. 440. Duer, 241.

12 See § 32 and 33, supra. A tort by officers of the corporation, committed on its business, while it makes the corporation responsible for compensatory damages, will not necessarily render it liable for exemplary damages. See Lake Shore Ry. Co. v. Prentiss, 147 U. S. 101, and Goddard v. Grand Trunk Ry., 57 Me. 202.

1 Gillett v. Campbell, 1 Denio, 520. 2 Acting individually when not specially authorized, the directors are not agents or officers of the

3 Percy v. Millaudon, 3 La. 568; Burrill v. Nahant Bank, 2 Met. 163. 4 Descombes v. Wood, 91 Mo. 196; National Bank v. Shumway, 49 Kan. 224; Cross v. Rowe, 22 N. H. 77. See also note 17.

Olney v. Chadsey, 7 R. I. 224; Lewis v. Eastern Bank, 32 Me. 90. 6 Wolf v. Bureau, 1 Mart. (N. S.) 162; Baird v. Bank of Washington, 11 S. & R. 411. Their fraud is immaterial as to one who acted in good faith. Frankfort Bank v. Johnson, 24 Me. 490.

7 Leavitt v. Yates, 4 Edw. Ch. 136.

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