forbidden by its charter or by a governing statute it may not do so. But how such a purchase can be a banking transaction, unless the stock is taken to cancel a stockholder's debt to the corporation,3 or as collateral to a debt, is hard to understand. There seems to be no difficulty in holding that a bank may take a lien upon its own shares to secure a previously existing debt, or that it may take its own shares to cancel a debt from a stockholder. National banks are prohibited from purchasing their own shares, nor can the bank by such a purchase, it has been held, vest title in another. But this latter case is wrong, because a national bank may under some circumstances sell its shares, and a purchaser in good faith would obtain a good title, whatever might be the holding as to one cognizant of the defect in the title. It has been held that one who sells to a broker, who is really acting for the bank, stock in the bank, makes a valid sale, where he did not know the broker was acting for the bank. Of course the bank can sell its own stock, even upon credit, where it has lawfully acquired it. Even if the purchase by bank officers were illegal it has been held that the bank may ratify the act; 10 but an illegal act, our v. Beall, 26 Ga. 17. Contra, German Sav. Bank v. Wulfekuhler, 19 Kan. 60. See also Bundy v. Jackson, 24 Fed. R. 628, as to a ratification. 2 Gillett v. Moody, 3 Comst. 479; Myers v. Valley Nat. Bank, Fed. Cas. No. 9519. stances the bank can acquire its own stock, and in any event its transfer is good. Wallace v. Hood, 89 Fed. R. 11. If cognizant of the defect the purchaser could be said to be a party to an illegal transaction, yet 3 Taylor v. Miami Ex. Co., 6 Ohio, it is the purchase and not the sale 177. which is illegal. But the bank can 4 German Sav. Bank v. Wulfekuh- not agree to take shares in payler, 19 Kan. 60. ment of a note which has been 5 Taylor v. Miami Ex. Co., 6 Ohio, given to it for shares sold. Att177. water v. Stromberg, 77 N. W. R. 963. Myers v. Valley Nat. Bank, Fed. Cas. 9519. This case holds that a national bank cannot be sued in trover for conversion of its shares, because judgment satisfied passes title to bank. But the case is hopelessly wrong, because under some circum highest court holds, cannot be ratified by the bank so as to make itself liable on a contract." Sometimes the statute. forbids a bank to loan money upon its own shares, and such a loan is illegal though made in the form of a deposit in another bank.12 120. Purchasing stock of corporations.- A banking corporation has not the right to become a stockholder in another corporation, unless the act is made necessary to preserve a security 2 which it has taken in a banking transaction, or unless it is permitted to do so in order to make a deposit of securities under a banking law. It has no power to subscribe for stock in a railroad corporation, nor to engage in the business of buying and selling stocks for profit; and if a bank buys stock in its own name which it has no authority to buy it will not be held as a stockholder. Where the bank is prohibited from purchasing or holding stock in another bank, it has been held that the bank cannot take a pledge of such stock. National banks have no power to engage in the selling of stocks or railroad bonds on commission," 8 11 See § 33, ante, and note 3, § 105, ante. But if it converts property it has agreed to sell, it is liable in conversion. First Nat. Bank v. Anderson, 172 U. S. 573. 12 Bank v. Lanier, 11 Wall. 369. See also Bridgeport Bank v. New York, etc. R. R. Co., 30 Conn. 270. 1 Bank of Commerce v. Hart, 37 Neb. 197; Franklin Bank v. Commercial Bank, 36 Ohio St. 350, and cases cited therein. But on a wrong construction of a statute it is held that the bank can do so. Latimer v. State Bank, 71 N. W. R. 225. 2 See cases in notes 10, 11 and 12, infra. 3 Curtis v. Leavitt, 17 Barb. 309. 4 Nassau Bank v. Jones, 95 N. Y. 115. But see City of Goodland v. Darlington Bank, 74 Mo. App. 365. 5 Talmage v. Pell, 7 N. Y. 328. 6 Cal. Bank v. Kennedy, 167 U. S. 362. 7 Franklin Bank v. Commercial Bank, 36 Ohio St. 350. 8 Searle v. First Nat. Bank, 2 Walk. (Pa.) 395; First Nat. Bank v. Nat. Ex. Bank, 92 U. S. 122. 9 Weckler v. First Nat. Bank, 42 Md. 581. This case was very well argued. It holds that a representation never ratified made by an agent as to an ultra vires contract is not within the scope of the agent's authority and therefore not binding on the bank. See Willett v. Farmers' Sav. Bank, 77 N. W. R. 519. The case is rightly decided as to that point. The third person had no right to rely on the representation. See also Farmers' Nat. because such banks have only the powers that are granted to them by the national banking act. Yet those banks may accept stocks in satisfaction of a doubtful debt, and may, in order to settle claims wherein the bank is interested, pay a larger amount than would otherwise have been exacted and take stocks as part of the settlement, provided the stocks are taken to be sold afterwards and the act is necessary to avert loss." National banks may loan money on the security of stocks, and may sell the same under a power,12 and may purchase the same in order to protect their own interests.13 § 121. Other mercantile and banking transactions.— It is perhaps needless to say that a bank cannot buy and sell merchandise, but it may under peculiar circumstances have a single transaction of purchase, and it may take charge of a shipment of goods in order to credit the amount on a bill which it holds, and if goods are taken as collateral the bank may ship and sell them. But a bank by merely collecting a draft attached to a bill of lading, where the collection is made in order to credit a depositor, does not become liable as the seller of the goods," although in such cases the bank has the power to take a bill of lading as collateral security. The bank, it seems, would not be held vires, the bank is not liable even though the cashier and president agree to defraud the customer, where the bank is not benefited. Grow v. Cockrill, 63 Ark. 418. 2 Sackett's Harbor Bank v. Lewis Co. Bank, 11 Barb. 213. 3 Bates v. State Bank, 2 Ala. 451. 4 Commercial Bank v. Nolan, 7 How. (Miss.) 508. If the bank sells it may give a warranty of its title. Talman v. Rochester Bank, 18 Barb. 123. 5 Fourth Nat. Bank v. Mayer, 89 Ga. 108. See Addendum. 6 Freeman v. Bank, 3 Wills. Civ. Cas., sec. 839. upon a representation as to what was being forwarded by the drawer of a draft which the bank was collecting. National banks being endowed with general banking powers have the right to do whatever is necessary to preserve their claims. Thus, such a bank may take an elevator stored with grain in payment of its claim. It may take and enforce a chattel mortgage in order to secure a previously existing debt. It may secure itself on an existing indebtedness by taking an assignment from contractors with a city of money due or to become due to the contractors.10 It has power to engage in the business of dealing in government securities," and will be liable for a failure to perform its contracts in regard thereto.12 But a national bank has no power to make a donation to a manufacturing plant to prevent it from removing its plant from the city where the bank is located.13 It cannot make a valid agreement to procure insurance for a certain person, but it would, of course, be liable in quasicontract for the benefit received. But where the transaction can fairly be said to be connected with a banking operation, the courts are liberal in permitting it. Thus a bank, where it has acquired property lawfully taken, may do what is necessary to make the property productive.1 It 'Littleton v. People's Bank, 63 N. W. R. 666. This is a very close case and might just as well have been decided otherwise. The real ground of the decision ought to have been either that the representation was not one of fact or that the plaintiff did not rely upon it. v. Tamblyn, 7 Mo. App. 570); or a judgment. Harwood v. Ramsey, 15 S. & R. 31. 11 Van Leuven v. First Nat. Bank, 54 N. Y. 671; Leach v. Hale, 31 Iowa, 69; Yerkes v. National Bank, 69 N. Y. 382. 12 See cases cited in last note; but compare First Nat. Bank v. Hoch, 8 German Nat. Bank v. Meadow- 89 Pa. 24. croft, 4 Bradw. 630. 9 Gaar V. 10 First Nat. Bank v. Ottawa, 43 Kan. 294. Or a bank may take an assignment of any account to protect itself (Bank of North America 13 McCory v. Chambers, 48 Ill. App. 445. 14 Dresser v. Traders' Nat. Bank, 165 Mass. 120. The bank should have been held liable on the contract under the doctrine stated in section 33, ante. 15 Reynolds v. Simpson, 74 Ga. 454. 17 21 may contract in order to prevent its own building from being injuriously affected by the erection of another building.16 It may receive personal property in exchange for its real estate. It may assign or sell its own judgment,18 or transfer it in payment of its own debt.19 It may take almost any species of property as collateral security unless forbidden to do so,20 and in holding escrows, or in transactions analogous thereto, may hold securities to obtain the performance of the agreement. A bank may sell all its securities to another bank in consideration of the latter assuming all its liabilities.22 In Kansas the supreme court found it necessary to decide that a national bank could agree to pay interest on a city deposit.23 The power of an ordinary chartered bank to maintain a savings department seems not to have been made the subject of adjudication. But since the receiving of deposits is a banking transaction, and since the maintenance of a savings department is merely one method of receiving deposits, there ought to be no doubt in the mind of any judge that such a proceeding is within the corporate power of either a national or a state chartered bank. § 122. Dealings in real estate. The general rule applicable to all banking institutions which are incorporated is that they can acquire land only as permitted by their charters or governing statutes. They have the power to acquire This case, extraordinarily enough, holds that the question may be left to the jury. 16 First Presby. Church v. Nat. State Bank, 57 N. J. Law, 27, 58 N. J. Law, 406. would seem to be a simple process for putting the depositors' money into grain speculations. 21 Bushnell v. Chatauqua Co. Nat. Bank, 74 N. Y. 290. 22 Stetson v. City Bank, 12 Ohio 17 First Nat. Bank v. Reno, 73 St. 577. Compare Mitchell v. BeckIowa, 145. 18 Emory v. Joice, 70 Mo. 537. 19 Gillett v. Campbell, 1 Denio, 520. 20 Morris v. Dixon Nat. Bank, 55 Ill. App. 298. The property here was board of trade options. This man, 64 Cal. 117, where it was held that after a long lapse of time the transaction would not be disturbed. 23 Interstate Nat. Bank v. Ferguson, 48 Kan. 732. 1 State Bank v. Brackenridge, 7 Blackf. 395. A law against a bank's |