8

13

money. They may pledge the faith of the bank where the act is not ultra vires, define the authority of its officers,10 employ and empower its officers and agents to do anything the board could lawfully do;" may delegate certain powers to a committee whose acts will bind the bank.12 They may ratify acts of officers done without authority, unless they are acts which the board itself could not lawfully do or authorize to be done. They may authorize by their conduct a particular course of dealing beyond an officer's general authority, and they may make the bank liable by their negligence in keeping a dishonest officer, or by keeping silent when it is their duty to speak.16 They have the power finally to make a general assignment of the bank's property for the benefit of creditors," or they may authorize and direct a certain officer to do it; and they may in such an assignment, if the act be not forbidden by law, make preferences among creditors if the same be not fraudulent.18

15

§ 98. President.-The president is one of the general executive officers of a bank, but in the case of banking presidents a very restrictive rule is put upon their powers. It is agreed that he has the power to control and direct the liti

8 Western Nat. Bank v. Arm- Nat. Bank v. First Nat. Bank, 82 strong, 152 U. S. 346. Fed. R. 961.

9 State v. Bank of La., 5 Mart. (N. S.) 344. But they have no power to pledge the future earnings of the bank without authority from the stockholders. Brown v. Bradford, 103 Iowa, 378.

10 Even verbally. Stamford Bank v. Benedict, 15 Conn. 437.

11 First Nat. Bank v. Kimberlands, 16 W. Va. 555; Merrick v. Bank of Metropolis, 8 Gill, 59; Northampton Bank v. Pepoon, 11 Mass. 288.

12 Wallace v, Exchange Bank, 126 Ind. 265; Waxahachie Bank v. Vickery, 26 S. W. R. 876.

13 See § 109, infra, and Am. Ex.

14 First Nat. Bank v. Graham, 79 Pa. 106, a case where cashier received special deposits; Neiffer v. Bank of Knoxville, 1 Head, 162, a case where president acted instead of cashier. See §§ 105, 109, infra. 15 Prather v. Kean, 29 Fed. R. 498; Steffe v. Bank of Conneautville, 22 Pitts. L. J. 157.

16 Kelsey v. National Bank, 69 Pa. 426.

17 Merrick v. Bank of Metropolis, 8 Gill, 59; Dana v. Bank of U. S., 5 Watts & S. 223.

18 See 2 Cook on Corp., sec. 691.

gation of the bank;' to employ counsel,2 and to appear for the bank. Why this is so is not apparent. If given the power to convey land he may make a deed in the name of the bank and affix the corporate seal. He has power to receive a deposit, but he has no power to bind the bank by admissions of a different contract than the one made when the deposit was received. If he has the authority to transfer the bank paper to a creditor as collateral, the power to indorse it will be presumed. His guaranty of the payment of a note by the bank's indorsement was in one case presumed to be authorized. But the cases are more numerous on a negative construction of his powers. If he transfers a judgment of the bank without collecting it the transfer is presumed to be unauthorized, since he has no power to sell the corporate property or exchange it." Nor has he authority to mortgage the real estate of the bank,10 nor the power to assign its property for the benefit of creditors," unless authorized by the charter or by the board of directors.

1 Citizens' Bank v. Berry, 53 Kan. 696; Savings Bank v. Benton, 2 Met. (Ky.) 240; Merchants' Nat. Bank v. Eustis, 8 Tex. Civ. App. 350. But not where the by-laws give this authority to the directors. Citizens' Bank v. Keim, 1 Wkly. Notes Cas. 263. He has been held to have power to offer a reward for the arrest of a defaulting teller. Bank of Minneapolis v. Griffin, 168 Ill. 314.

2 See cases last cited. 3 See cases last cited.

4 Burill v. Nahant Bank, 2 Met. 163. But his lease of an elevator where no authority has been given to him by the board of directors is not binding on the bank. Tulley v. Citizens' State Bank, 18 Ind. App. 240.

8

He

6 Irons v. Manufacturers' Nat. Bank, 27 Fed. R. 591.

7 City Nat. Bank v. Thomas, 46 Neb. 861; People's Bank v. National Bank, 101 U. S. 181, as to vice-president.

8 Cox v. Robinson, 70 Fed. R. 760. He has no power to release a claim upon part payment. State Sav. Co. v. Stewart. 65 Ill. App. 391.

9 Greenawalt v. Wilson, 52 Kan. 109; Asher v. Sutton, 31 Kan. 286. The property in this latter case was the bank safe. The exceeding value attached to the safe may be the basis of the popular superstition that the only capital needed to start a bank in Kansas is a safe. 10 Leggett v. New Jersey, etc. Co., Saxt. 541.

11 Gibson v. Goldthwaite, 7 Ala.

5 Hazleton v. Union Bank, 32 281; Hallowell Bank v. Hamlin, 14 Wis. 34.

Mass. 180.

12 See cases last cited.

13

14

has no power to compromise 13 or release claims of the bank,14 unless the bank ratifies the act,15 or authorizes it by a course of dealing 16 He cannot waive a stipulation in the bank's contract for the sale of land." His prima facie authority does not extend to any acts which are usually within the scope of the cashier's powers, such as indorsing or transferring the bank's paper.18

§ 99. Vice-president.- The vice-president, as a general rule, acts simply in the place of the president. All the foregoing section is applicable to the vice-president when acting as president, and all the decisions which follow are applicable to the president as well. He has no prima facie power to borrow money for the bank, nor to use the bank's assets as collateral to raise funds for the bank. He has no authority to guarantee the payment of the bank paper except as a part of a transfer, where he has been authorized to make the transfer.3

§ 100. Cashier.- The cashier is the general executive officer of the bank. He is the general agent of the bank in dealing with its customers, and the general rule resulting from his situation is that his contractual acts bind the bank, unless they are contrary to law or to what stands for the bank's charter or to public policy. He is not the agent of

13 Wheat v. Bank of Louisville, 5 S. W. R. 305. But for a peculiar case where the contrary was held, see Chem. Nat. Bank v. Kohner, 85 N. Y. 189. And see Case v. Hawkins, 53 Miss. 702; Farmers' Nat. Bank v. Templeton, 40 S. W. R. 412. 14 Olney v. Chadsey, 7 R. I. 224; Loomis v. Fay, 24 Vt. 240.

15 Winton v. Little, 94 Pa. 64.

strong, 152 U. S. 346, except by usage.

2 Stewart v. Armstrong, 56 Fed. R. 167, though bank was held because it got the money, although its cashier wrongfully gave the money away.

* People's Bank v. National Bank, 101 U. S. 181, also a case of estoppel. 1 Squires v. First Nat. Bank, 59

16 Martin v. Webb, 110 U. S. 7, as Ill. App. 134; Wakefield Bank v. to cashier.

Truesdell, 55 Barb. 602. Under a

17 Chadbourne v. Stockton Sav. statutory system in Louisiana see Soc., 36 Pac. R. 127.

18 Smith v. Lawson, 18 W. Va. 212. 1 Western Nat. Bank v. Arm

Union Bank v. Bagley, 10 Rob. (La.) 45; Clinton Co. v. Kernam, 10 Rob. (La.) 176; Ried v. Powell, 10 Rob.

5

the board of directors, but of the bank itself. His general powers are not affected by statutes or charters which require the agreements or contracts of the bank to be executed in a certain way. In spite of such statutes he may sign and issue checks of his bank upon another bank. He has power to borrow money for the bank when the act is done in the usual course of business, but not otherwise, and he has power to certify checks upon the bank. He has power to transfer the bank's paper by indorsing it, and he has power to receive paper for collection and to do all acts proper in making the collection. It is one of the usual duties of the cashier to transfer stock on the books of the bank, and the bank is bound by his wrongful refusal to make a transfer,1o just as it is bound by his transfer even in a case where the bank lost its lien by the transfer and the cashier was a member of the firm to which the stock was transferred." He may extend the time of payment upon the bank's paper,12 and he may bind the bank by his statements made at the time of selling bills and notes sold by the bank. He has power to

13

(La.) 98; Union Bank v. Jones, 4 Austin, 21 Barb. 241. He has power La. Ann. 220. to indorse paper in payment of

2 Bissell v. First Nat. Bank, 69 Pa. bank's debts. Fleckner v. United 415.

3 See note 10 to $ 96, supra.

4 See note 10 to § 96, supra. 5 Barnes v Ontario Bank, 19 N. Y. 152, a certificate of deposit; Donnell v. Lewis Co. Sav. Bank, 80 Mo. 165. Compare Ballston Spa Bank v. Marine Bank, 16 Wis. 125; Eastern Township Bank v. Vernon Nat. Bank, 22 Fed. R. 186; Ringling v Kohn, 6 Mo. App. 333.

6 Merchants' Bank v. State Bank, 10 Wall. 604; Farmers' Bank v. Butchers' Bank, 16 N. Y. 125. Contra, Mussey v. Eagle Bank, 9 Met. 306.

7 Bank of Genessee v. Patchen Bank, 19 N. Y. 312; Wild v. Passamaquoddy Bank, 3 Mason, 505, and many other cases. See Barrick v.

States Bank, 8 Wheat. 338. But it is said he has no power to indorse to a third party except for collec tion. See Elliot v. Abbott, 12 N. H. 549; State Bank v. Farmers' Bank, 36 Barb. 332.

8 Warren v. Gilman, 17 Me. 360; Brudenbecker v. Lowell, 32 Barb. 9. 9 National Bank v. Watsontown Bank, 105 U. S. 217.

10 Case v. Citizens' Bank, 100 U. S. 446.

11 National Bank v. Watsontown Bank, 105 U. S. 217.

12 Wakefield Bank v. Truesdell, 55 Barb. 602.

13 Sturges v. Bank of Circleville, 11 Ohio St. 153; Union Nat. Bank v First Nat. Bank, 45 Ohio St. 236.

employ special counsel to collect a claim for the bank.1 And if he receives checks signed in blank by a customer, who desires to go abroad and leaves the signed checks with the cashier to dispose of as she should direct, and if, after the customer has returned, he fraudulently fills up one of the checks and draws and appropriates the money obtained upon it from the bank, the bank cannot claim such money as against the customer.15 But a large number of acts have been held to be not within the scope of his general authority. He has no power to transfer judgments of the bank or to dispose of its property other than its paper; 16 he cannot buy real estate for or sell the real estate of the bank," nor may he mortgage its real estate; 18 but he may properly acknowledge an authorized deed of the bank.19 If authorized to borrow money out of the usual course of business he may do so, and the bank is liable even though he misappropriates the money.20 But he cannot give the bank's note to the president to enable that officer to pay his own debt. Such an act does not release the maker of the note.21 He cannot make a contract in the bank's name for transferring money for the government; he cannot compromise or settle the claims of the bank,23 or release its claims,24 unless au

22

14 Root v. Olcott, 42 Hun, 536, 115 N. Y. 635.

15 Daniels v. Empire City Bank, 92 Hun, 450. This seems a very close case. The decision might just as well have been that the customer constituted the cashier her agent to draw checks. Information which he received as her agent would, however, be imputable to the bank if he alone acted in cashing the check. The decision can be justified upon that ground and on no other. Compare with this case, Alpena Nat. Bank v. Greenbaum, 80 Mich. 1.

16 Holt v. Bacon, 25 Miss. 567; Asher v. Sutton, 31 Kan. 286. See Bank v. Warren, 7 Hill, 91.

17 Winson v. Lafayette Co. Bank, 18 Mo. App. 665.

18 Leggett v. New Jersey, etc. Co., Saxt. 541.

19 Sheehan v. Davis, 17 Ohio St. 571.

20 Chemical Nat. Bank v. Armstrong, 56 Fed. R. 392, 16 U. S. App. 465.

21 Rhodes v. Webb, 24 Minn. 292. 22 United States v. City Bank, 21 How. 356. Nor can he bind the bank by agreeing to pay usurious interest. Hanson v. Heard, 38 Atl. R. 788.

23 Bank of Commerce v. Hart, 37 Neb. 197.

24 Thompson v. McKee, 5 Dak. 172; Ecker v. First Nat. Bank, 59 Md.